CHIYODA CORPORATION
Consolidated Financial Results
for the Six-Month Period Ended September 30, 2007

This document has been prepared as a guide to non-Japanese investors and contains forward-looking
statements that are based on managements’ estimates, assumptions and projections at the time of publication.
A number of factors could cause actual results to differ materially from expectations. This document is atranslation of excerpts taken from the Japanese language original. All numbers are rounded down to the nearest
unit in accordance with standard Japanese practice. Please be advised that the Company cannot accept
responsibility for investment decisions made based on the information contained in this report.
1Summary of Consolidated Financial Results
for the Six Months Ended September 30, 2007
(the Interim Period of the Year Ending March 31, 2008)

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Head Office
Stock CodePresident & CEO
Inquiries
Telephone
URL

Tokyo (First Section)
Kanagawa, Japan
6366
Takashi Kubota
Shinji Kusunoki, General Manager, Accounting Department+81-45-506-9410
http://www.chiyoda-corp.com/

1. Consolidated Results of Operations for the Six Months Ended September 30, 2007
(1) Consolidated Business Results
Millions of Yen
Apr. 1, 2007—
Sept. 30, 2007

Apr. 1, 2006 —Sept. 30, 2006

Change (%)

Revenues .........................................................
Operating Income ...........................................
Recurring Profit ..............................................
Net Income ......................................................
Net Income per Share (Yen) ...........................
Fully Diluted Net Income per Share (Yen) ................
Notes:

312,547
11,42017,303
10,641
55.35
55.32

48.1
(15.4)
3.6(4.8)(reference)
Apr. 1, 2006 —Mar. 31, 2007

Change (%)

210,981
13,49016,697
11,173
58.14
58.06

27.5
64.1
84.9
5.2

484,895
28,70036,79723,531
122.41122.28

1. Amounts less than 1 million are rounded down.
2. Percentage change figures are comparisons with the same period of the previous fiscal year.

(Reference) Equity in earnings of associated companies: Interim period ended September 30, 2007: 140
million yen, Interim period ended September 30, 2006: 144 million yen, Fiscal year ended March 31, 2007:
375 million yen(2) Change in Consolidated Financial Condition
Millions of Yen
As of
Sept. 30, 2007
Total Assets ..................................................................
Net Assets.....................................................................
Shareholders’ Equity Ratio .........................................
Shareholders’ Equity per Share (Yen)........................

449,387
85,15718.9%
440.88

As of
Sept. 30, 2006
388,91264,59316.5%
334.13(reference)
As ofMar. 31, 2007
442,952
77,41417.4%
400.56(Reference) Shareholders’ equity: Interim period ended September 30, 2007: 84,760 million yen, Interim
period ended September 30, 2006: 64,233 million yen, Fiscal year ended March 31, 2007: 77,022 millionyen2(3) Consolidated Cash FlowMillions of Yen

Net Cash (Used in ) Provided by Operating Activities.....................
Net Cash Provided by (Used in) Investing Activities ....................
Net Cash Used in Financing Activities ..............................................
Cash and Cash Equivalents, End of Period......................................

Apr. 1, 2007 —Sept. 30, 2007

Apr. 1, 2006 —Sept. 30, 2006

(reference)
Apr. 1, 2006 —Mar. 31, 2007

(1,883)117(3,050)72,3295,941(2,038)(2,006)
48,72135,531(3,458)(2,191)
77,051

2. Dividends per Share
Yen
Full term
Year Ended March 31, 2007 .........................................................................................
Year Ending March 31, 2008 (Forecast) .....................................................................

15.00
18.00

3. Outlook for the Year Ending March 31, 2008 (Consolidated)(Percentages represent change compared with the previous fiscal year)

Revenues .......................................................................................................................
Operating Income..........................................................................................................
Recurring Profit .............................................................................................................
Net Income .....................................................................................................................
Net Income per Share (Yen) .........................................................................................

Millions of Yen
FY2007 (Apr. 1, 2007 – Mar. 31, 2008)
Full term%
570,000
17.6
22,000(23.3)
32,000(13.0)
19,500(17.1)
101.43

4. Other(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries due to changes in thescope of consolidation): No(2) Changes in accounting rules, procedures, presentation method, etc. for the Consolidated Financial Statements(a) Changes in consolidated accounting methods: Yes(b) Changes other than (a), above: No(3) Number of share issued and outstanding (common stock)(a) Number of shares at end of period (including treasury stock): Interim period ended September 30, 2007:
193,137,529 shares, Interim period ended September 30, 2006: 193,029,529 shares, Year ended March
31, 2007: 193,125,529 shares(b) Treasury stock at end of period: Interim period ended September 30, 2007: 886,646 shares, Interim period
ended September 30, 2006: 788,105 shares, Year ended March 31, 2007: 836,169 shares

3

Results of Operations(1) Analysis of Operating Results
Regarding the market environment for Chiyoda during the six months ended September 30, 2007, inoverseas markets for plants, new plant construction plans around the world are being driven by continuing
growth in global energy demand. In the Middle East, where there is an ongoing rush to construct newplants, project execution remains severely constrained due to a continuing unavoidable decline inproductivity caused by a tight supply of skilled workers. Under these circumstances, the Chiyoda Group
continues to focus on steady execution of ongoing projects, mainly in Qatar.
In the domestic market, the drive to invest remains firm in projects for new construction and expansionof large-scale LNG receiving terminals, and investment remains firm in new facility construction andexisting facility renovation, mainly in the fields of petroleum and petrochemicals. Ongoing projects
centered on the petroleum field proceed smoothly as the Group steadily acquires new contracts centeredon processing heavy grades of oil.
Including a contract for a long residue catalytic cracker unit revamp project at a Singapore refinery, newcontracts on a consolidated basis were 180,313 million yen, a 51.5% decrease compared with the same
period of the previous fiscal year. Overseas new contracts were 75,149 million yen, a decrease of 75%,
and domestic new contracts were 105,163 million, an increase of 48.4%. The backlog of contracts was
918,861 million yen.
New Contracts (Consolidated)
Fiscal years ended March 31
2004
2005
2006
2007
Interim results for six months
ended Sept. 30, 2007

Overseas
218.6
321.7
691.5
402.4

Domestic
71.9
89.4
112.7
155.2

Total
290.6
411.2
804.2
557.7

(Billions of yen)Backlog ofcontracts
375.8
522.4
960.5
1,048.6

75.1

105.1

180.3

918.8

4

Consolidated revenues increased 48.1% compared with the same period of the previous fiscal year to
312,547 million yen due to the progress of ongoing projects. Overseas revenues increased 48.2% to246,541 million yen and domestic revenues rose 47.8% to 66,005 million yen.

Overseas

Domestic

LNG plant Trains 6 & 7 for Ras Laffan Liquefied Natural Gas Co., Ltd. (3) in Qatar
LNG plant Trains 6 & 7 for Qatar Liquefied Gas Company Limited (3) & (4) in Qatar
LNG plant Trains 4 & 5 for Qatar Liquefied Gas Company Limited (2) in Qatar
Sakhalin II LNG project in Russia• Aromatics complex for Kashima Aromatics Co., Ltd.
• MXDA facility for Mitsubishi Gas Chemical Company, Inc.
• Utsunomiya No. 2 Plant for Hisamitsu Pharmaceutical Co., Inc.
• 2007 shut-down maintenance (SDM) of Hokkaido refinery for Idemitsu Kosan Co., Ltd.
(CHIYODA INDUSTRY CO., LTD.)••••

Gross profit was 17,239 million yen, a decrease of 8.9% compared with the same period of the previous
fiscal year, despite an increase in revenues, due to a decline in productivity caused by a tight supply ofskilled workers which negatively impacted the gross profit margin. Operating income decreased 15.4% to11,420 million yen, recurring profit rose 3.6% to 17,303 million yen and net income decreased 4.8% to10,641 million yen.
Interim Financial Results (Consolidated)(Billions of yen)Six months ended
September 30
2004
2005
2006
2007
Reference: Fiscal year
ended March 31, 2007

Revenues

Gross profit

OperatingincomeRecurringprofit

Net income

116.3
165.5
210.9
312.5

8.8
12.6
18.9
17.2

4.7
8.2
13.4
11.4

5.1
9.0
16.6
17.3

5.0
10.6
11.1
10.6

484.8

39.7

28.7

36.7

23.5

5

Results by Business Segment
The following is a summary of consolidated operating results by business segment.
Natural Gas and Electric Power
Overseas, natural gas producing nations and Energy Majors continue to plan investments in the gas
value chain – development of gas fields, construction of LNG plants, arrangements for LNG carriers andconstruction of LNG receiving terminals – against a backdrop of continuing growth in global demand fornatural gas. Amid these conditions, the Group is focusing on receiving contracts for research and FrontEnd Engineering and Design (FEED), and continues working hard to ensure steady execution of ongoingprojects, mainly in Qatar.
In Japan’s electric power and gas sector, the drive to invest remains strong in projects for new
construction and expansion of large-scale LNG receiving terminals in response to the shift to LNG as afuel because of further increases in the price of crude oil.
In the six months ended September 30, 2007, new contracts were 63,395 million yen, a decrease of
78.5% compared with the same period of the previous fiscal year. Revenues were 244,799 million yen, an
increase of 52.4%.
Petroleum, Petrochemicals and Gas Chemicals
In the petroleum sector, ongoing projects and construction completions progressed smoothly. New
contracts for processing heavy grades of oil and maintenance of existing facilities were solid based on acontinued strong drive to invest. In the petrochemical sector, the drive to invest was also high ascompanies were able to reflect high crude oil prices in product prices. In addition to expansion into Asianmarkets, a move toward investment in chemical refinery integration (CRI) was evident.
In the six months ended September 30, 2007, new contracts were 85,967 million yen, an increase of
121.4% compared with the same period of the previous fiscal year. Revenues were 44,168 million yen, an
increase of 26.0%.
General Chemicals and Industrial Machinery
In the general chemicals and industrial machinery sectors, firm capital investment continued in theelectronics materials and pharmaceuticals industries.
In the six months ended September 30, 2007, new contracts were 15,242 million yen, a decrease of
45.1% compared with the same period of the previous fiscal year. Revenues were 18,507 million yen, an
increase of 90.6%.
Environment and Others
In the environment sector, Chiyoda continued to conduct sales activities both in Japan and overseas for
CT-121 flue gas desulfurization technology, which it developed to meet increasingly strict environmental
regulations, and secured new projects in other sectors as well.
In the six months ended September 30, 2007, new contracts were 15,708 million yen, an increase of
50.4% compared with the same period of the previous fiscal year. Revenues were 5,072 million yen, adecrease of 9.2%.

6

Outlook for the Year Ending March 31, 2008
While maintaining a balance with ongoing project execution, Chiyoda will work to acquire new contracts
with an eye on profitability and projects that capitalize on the Company’s technological advantages.
In ongoing projects, Chiyoda will deal with the high cost of materials and the tight supply of labor inorder to achieve steady execution of the three large-scale LNG projects in Qatar, and will work to ensure
other ongoing projects in Japan and overseas proceed on schedule.
Under these conditions, Chiyoda forecasts consolidated new contracts of 250.0 billion yen (comparedwith the initial forecast of 250.0 billion yen), revenues of 570.0 billion yen (compared with the initial
forecast of 550.0 billion yen), operating income of 22.0 billion yen (compared with the initial forecast of
30.0 billion yen), recurring profit of 32.0 billion yen (compared with the initial forecast of 38.5 billion yen)and net income of 19.5 billion yen (compared with the initial forecast of 23.5 billion yen). Chiyoda plans to
pay a year-end dividend of 18 yen per share for the year ending March 31, 2008.
The forecast for revenues increased because overseas projects now in progress, centered on design
and procurement work, advanced more quickly than initially forecast, and changes to specifications andhigher costs resulted in acquisition of additional contracts. The forecast for operating income decreased
because increased labor costs due to the tight market for construction workers as well as lower
productivity caused construction costs to increase. The reduced forecast for operating income led to adownward revision of the forecasts for recurring profit and net income, despite higher interest income due
to growth in jointly controlled assets of joint venture. Chiyoda also revised the exchange rate assumption
used for the above forecasts from 115 yen to 110 yen to the U.S. dollar.
Outlook for the Year Ending March 31, 2008 (Consolidated)(Billions of yen)

New contracts
Revenues
Operating income
Recurring profit
Net income

Fiscal year ending
March 31, 2008
250.0
570.0
22.0
32.0
19.5

Fiscal year ended
March 31, 2007
557.7
484.8
28.7
36.7
23.5

Difference (%)(55.2%)
17.6%(23.3%)(13.0%)(17.1%)

7

(2) Analysis of Financial Condition
1) Assets, Liabilities and Net Assets
AssetsCurrent assets increased 6,748 million yen due to factors including an increase in accounts receivable –trade resulting from the completion of large-scale projects. Fixed assets decreased 313 million yen due tofactors including a decrease in deferred tax assets. As a result, total assets increased 6,435 million yen
compared with the end of the fiscal year ended March 31, 2007.
Liabilities
Total liabilities increased 1,307 million yen. This was mainly due to a 9,950 million yen increase inadvance receipts on construction contracts accounts payable －trade, despite decreases of 8,973 million
yen in income taxes payable and 566 million yen in liability for retirement benefits.
Net Assets
Total net assets were 85,157 million yen due to a 7,756 million yen increase in retained earnings fromnet income and other factors. As a result, the shareholders’ equity ratio increased 1.5 points to 18.9%.
(Billions of yen)
As of
March
31, 2007

As of
Sept. 30,
2007

Difference

Current assets

418.0

424.7

6.7

Current liabilities

Cash and cash equivalents andtime deposits(*)

77.1

72.4

(4.7)

Short-term loans

As of
March
31, 2007

As of
Sept. 30,
2007

Difference

351.4

351.5

0.1

0.0

0.0

(0.0)

318.6

328.5

9.9

Operating assets(Notes and accounts receivable– trade, costs and estimatedearnings on long-term
construction contracts andcosts of construction contracts
in process)

66.3

83.0

16.7

Operating liabilities(Notes and accounts
payable – trade andadvance receipts on
construction
contracts)

Jointly controlled assets of joint
venture

256.0

252.4

(3.5)

Other current liabilities

32.7

22.9

(9.8)

Other current assets

18.4

16.8

(1.6)

Non-current
liabilities

14.0

12.6

(1.4)

Fixed assets

24.9

24.6

(0.3)

Long-term debt

10.0

10.0

(0.0)

Property, plant and equipment

7.4

7.6

0.2

Other long-term
liabilities

4.0

2.6

(1.4)

Intangible fixed assets

3.3

3.3

0.0

Total net assets

77.4

85.1

7.7

Investments and other assets

14.0

13.5

(0.5)

Shareholders’ equity

77.1

84.7

7.6

Valuation andexchange rateadjustments

(0.1)

(0.0)

0.1

Minority interests

0.3

0.3

0.0

Total liabilities
and net assets

442.9

449.3

6.4

Total assets

442.9

449.3

6.4

(*) Includes certificates of deposit.

82) Cash Flow
Cash flow from operating activities
Net cash used in operating activities was 1,883 million yen. A decrease of 6,704 million yen in working
capital (consisting of net changes in trade notes and accounts receivable, costs and estimated earnings
on long-term construction projects, trade notes and accounts payable and advance receipts on
construction projects), income taxes of 13,541 million yen and other factors offset income before income
taxes and minority interests of 18,029 million yen and depreciation and amortization of 728 million yen.
Cash flow from investing activities
Net cash provided by investing activities was 117 million yen. Capital investments including purchases of
IT-related software totaling 749 million yen were offset by proceeds from sales of investment securities
totaling 839 million yen.
Cash flow from financing activities
Net cash used in financing activities was 3,050 million yen due to payment of cash dividends and otherfactors.
As a result of the above, net cash and cash equivalents as of September 30, 2007 totaled 72,329 million
yen, a decrease of 4,722 million yen from the end of the previous fiscal year.
Change in Financial Condition (Consolidated)
Fiscal years
ended
March 31

Total
assetsTotalliabilities

Total net
assets (*)

2004

142.8

119.7

2005

182.8

2006
2007

Net cash provided by (used in)(Billions of yen)
Cash andcash
equivalents at
end of period

Operatingactivities

Investingactivities

Financing
activities

23.1

15.5

(1.2)

(8.2)

40.9

145.6

37.2

0.4

(1.0)

1.1

41.5

279.7

223.8

55.8

5.2

1.0

(1.3)

46.8

442.9

365.5

77.4

35.5

(3.4)

(2.1)

77.0

Six-month
period ended
449.3
364.2
85.1
(1.8)
0.1
(3.0)
September 30,
2007(*) Total net assets shown for the years ended March 31, 2004, 2005 and 2006 are the sum ofshareholders’ equity as formerly calculated plus minority interests.
Cash Flow IndicesFiscal years ended
March 31
2004

Shareholders’ equity ratio
(%)
15.9

Debt repayment period(Years)0.7

72.3

Interest coverage ratio(Times)
42.4

2005

20.2

21.3

1.6

2006

19.8

2.0

17.3

2007

17.4

0.3

114.4

Six-month period ended
September 30, 2007

18.9%

－

－

(Shareholders’ equity –Interest-bearing debt/Net
Net cash provided byminority interests)/Total
cash provided byoperatingassetsoperating activities
activities/Interest expense
Note: Shareholders’ equity ratio for the years ended March 31, 2004, 2005 and 2006 was calculated by
the former method (Shareholders’ equity / Total assets). Debt repayment period and interest coverage
ratio are not reported for the six months ended September 30, 2007 because cash flow from operating
activities was negative.

Notes

9

(3) Dividend Policy
The Chiyoda Group works to consistently develop itself and create next-generation businesses as a
growing, profitable company. The Chiyoda Group also works constantly to maintain a strong financial
structure by adding to internal reserves while considering shareholder returns in paying dividends.
Accordingly, the Chiyoda Group plans to pay a year-end dividend of 18 yen per share for the year
ending March 2008.

10

(4) Business Risks and Other Risks
Primary issues that could affect investor decisions regarding investment risk, such as material issues
related to the Chiyoda Group’s financial position, performance and cash flow and the Chiyoda Group’s
response to such issues, include but are not limited to the issues outlined below. The Chiyoda Group
recognizes the potential occurrence of these risks and works to avoid them to the maximum extent
possible. The Chiyoda Group also moves to respond as quickly as possible to minimize the impact ofissues that present risks when they occur.
As of November 9, 2007, Chiyoda Group management acknowledges the issues that may present risks
in the future outlined below and has made them the focus of risk management.

1) Changes in Exchange Rates
In overseas construction projects, construction payments are often in different currencies than paymentsfor vendors and/or subcontractors. Foreign currency exchange rates may therefore affect the financial
results of the projects. The Chiyoda Group works to avoid and minimize such foreign currency fluctuation
risks by using forward foreign exchange contracts and matching planned outlays in multiple currencies
with construction payments and receivables.

2) Rising Equipment and Resource Prices and Material Shortages
Plant construction entails a time lag between estimates and bids and orders for equipment, resources,materials and subcontracted construction. Consequently, actual prices for equipment and materials may
exceed those projected in estimates and bids. Moreover, restricted supplies of metals such as copper,
nickel, aluminum and zinc may cause problems including delays in the delivery and mobilization ofequipment and materials. Resulting delays in the progress of construction projects could affect the
Chiyoda Group’s results.
The Chiyoda Group works to avoid and minimize these risks to the best of its ability by diversifying
procurement in ways such as using multiple suppliers in various regions worldwide, considering bundledpurchases, ordering equipment and materials at an early stage, and structuring cooperative relationships
with suppliers.

3) Shortages of Construction Workers and Increased Subcontractor Expenses
Concentration of large-scale construction projects can tighten the supply of construction workers andother human resources, which may result in labor costs that exceed those projected in estimates and bids,
as well as additional expenses to make up for construction delays that result.
The Chiyoda Group works to minimize the impact of these issues by structuring cooperative
relationships with qualified construction companies, deploying personnel skilled in various professions
from various regions around the world, and improving the skills of construction workers at each job site.

4) Terrorism, Conflicts in Neighboring Countries, Strikes, Anarchy and Natural Disasters
Terrorism or conflicts may cause direct losses, delays in procuring or delivering materials andequipment, threats to the safety of workers on site, cessation of construction work, and other problems at
construction sites in Japan and overseas.
The Chiyoda Group has structured a threat management system that includes cooperation with clientsand other related parties to support rapid initial response should such issues occur. In addition, theChiyoda Group takes other actions to avoid or minimize these risks, including negotiating contractual
provisions that rationally allocate additional costs to clients.

5) Plant Accidents
Serious accidents including explosions or fire may occur due to various causes at plants that the
Chiyoda Group is constructing or has completed. The Chiyoda Group could be judged responsible forsuch accidents, including being held liable for damages, which could impact the Chiyoda Group’s
performance.
The Chiyoda Group works to avoid or minimize this risk in ways such as taking all possible measures topreclude the occurrence of accidents, including quality control and safety management. Other
countermeasures include maintaining appropriate insurance coverage and negotiating contracts thatrationally allocate client responsibility for damages.

11

2. State of the GroupThe Chiyoda Group of companies consists of the parent company, 16 subsidiaries, and 5 equity method
affiliates. As a comprehensive engineering services organization, the Group’s central business is its
expertise in providing the most efficient solutions based on an accurate understanding of customer needs.
By using highly advanced technologies and achieving the optimal combination of the project execution
skills of Group companies, all Group members work in unison to conduct business operations. Throughthis approach, the Group responds flexibly to the needs of today’s markets, society and regions. The
Group’s business is divided into Engineering Businesses and Other Businesses, and the Group’s structureis outlined below.

Business Flowchart
Clients

Chiyoda Corporation
Comprehensive engineering business,
including consulting, planning, designing,procurement, construction, trial operation,
maintenance and other services, for plants ofall types

Engineering
Domestic Construction*1 Chiyoda Kosho Co., Ltd.
Plant engineering, construction, and maintenance ofenergy and chemical plants*1 Chiyoda Techno Ace Co., Ltd.
Civil engineering of pharmaceutical and petroleum
plantsElectronic/Instrument Construction*1 Chiyoda Keiso Co., Ltd.
Construction related to facilities for industries of all
types
Consulting and Temporary Help Service*1 Chiyoda U-Tech Co., Ltd.
Consulting for facilities for industries of all types /temporary help service

Other businesses

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

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

Information System Development*2 IT Engineering Limited
IT solutions and software development
Human Resources Staffing and Training*2 Arrow Mates Co., Ltd.
Staffing and training

Advanced Engineering*1 Chiyoda Advanced Solutions Corporation
Computer aided engineering analysis, plant life
cycle engineering and risk management, etc.
Global Engineering Satellites (GESs)*1 Chiyoda Philippines Corporation (Philippines)*2 L&T Chiyoda Ltd. (India)*1： Consolidated subsidiary*2： Affiliated company accounted
for by the equity method

Overseas Construction Bases*1 Chiyoda Singapore (Pte) Limited*1 PT. Chiyoda International Indonesia*1 Chiyoda Malaysia Sdn. Bhd.
*1 Chiyoda & Public Works Co., Ltd. (Myanmar)*2 Chiyoda Petrostar Ltd. (Saudi Arabia)

Contracted Business, Entrusted
Businesses
Direct Client Orders

Overseas Sales Bases*1 Chiyoda International Corporation (USA)*1 Chiyoda Nigeria Limited
12

3. Management Policies
1. Basic Management Policies
Chiyoda aims to conduct Group management so as to earn the trust and understanding of shareholders,customers, suppliers, employees, communities and all other stakeholders.
Based on the above fundamental management philosophy, Chiyoda formulated, and on February 17,
2005 announced, a medium-term management plan called “Double Step-Up Plan 2008” (DSP2008). The
goal of the plan, which started in fiscal 2005 (the year ended March 31, 2006) and ends in fiscal 2008 (theyear ending March 31, 2009), is to enable Chiyoda to consistently increase earnings.
In steadily implementing its DSP2008 medium-term management plan, Chiyoda has established theslogan “Sustained Growth, Future Development”* with the aim of further solidifying the businessfoundations of Chiyoda’s Engineering Business and further increasing corporate value for the next
generation. Based on this slogan, Chiyoda will sow the seeds of future strategies for further significant
progress by focusing its business activities on sustaining the steady execution of construction contracts
already received and the creation of a culture of safety.
Specifically, under the policy of “intellectual property that defines the future,” Chiyoda intends to focus
on strengthening and using its own tangible and intangible intellectual property, including project execution,
within Chiyoda. Chiyoda’s intellectual property comprises not only environmental, catalyst and otherelemental technologies but also execution technologies including enhancements to state-of-the-art
integrated project engineering systems (i-Plant 21).
Next, in technological development, Chiyoda will work to develop environmentally friendly technologies
such as LNG and other natural gas-related technologies for clean energy, as well as technologies for
producing clean fuels from heavy oil.
In operations, Chiyoda aims to develop superb people management. It intends to create an organizationand company that continually fulfills its social responsibilities by creating a more mature organization
through the promotion of personal development in the workplace to establish respect and trust.
*To establish a course toward the future by carrying on the efforts of those who went before

2. Targeted Performance Indicators
The management goal of the DSP2008 medium-term management plan is to raise the shareholders’equity ratio to at least 30% by the year ended March 31, 2009 (fiscal 2008). Chiyoda aims to further
strengthen profitability through internal efforts and establish a consistently sound financial structure thatcan support the creation of next-generation businesses.

13

3. Medium-to-Long-Term Management Strategies
There are two fundamental approaches in the DSP2008 medium-term management plan. The first is toresolutely retain the innovative thinking needed to “capitalize on change, and take on challenges posed bychange” with the aim of becoming “the Reliability No. 1 Project Company.” The second is to aim tobecome “an excellent company that can increase earnings” through cumulative internal efforts, including
continuously strengthening competitiveness and improving business processes.
Chiyoda has established medium-to-long-term strategies based on these fundamental approaches. All
Chiyoda employees from senior management down are working as one to achieve management goals. To
reach these goals, balanced scorecards are used to facilitate comprehensive management of key targets
for each strategy, action plans and the status of progress.

MediumMedium-toto-LongLong-Term Management Strategies
Double Step-Up Plan (DSP) 2008
経営 ﾋﾞｼﾞｮﾝVision
Management
・ Step up to become the “Reliability No.1 Project Company”
・ Step up to become an Excellent Company able to“Sustain Earnings Growth”
MediumMedium-toto-LongLong-Term
Management Strategies
Build long-term relationships with clients as a highly trusted partner
S1●
based on superior technologies●
S2

Further strengthening of the project accomplishment power throughSmart EPC and utilizing Chiyoda’s collective strengths

Establish a lasting sound financial position able to support●
S3
the creation of next-generation business that can sustain earnings growth
Create an energetic organization and refine employee skills to provide
S4● a pleasant and rewarding workplace

Place priority on Corporate Social Responsibility (CSR) programs

4. Issues to be Dealt With
With the backlog of contracts at a high level, project execution is becoming more challenging due to anincrease in external factors causing uncertainty, including the tight supply of construction workers at oneof the world’s largest LNG projects currently underway in Qatar and large-scale petroleum projects inJapan. Chiyoda will focus on steady execution of large-scale projects in Japan and overseas, including
LNG contracts already received, by strengthening partnerships and IT systems, in addition to putting aneven stricter focus on risk management and safety. By doing so, Chiyoda will ensure a higher level ofreliability to respond to customer demands for increasingly large and complex plant projects, and steadily
implement the DSP2008 medium-term management plan.
In addition, Chiyoda will promote the steady fulfillment of its social responsibilities while sowing theseeds of its next strategies.

14

Financial Statements
1. Consolidated Balance Sheets
As of Sept. 30, 2006%
AssetsCurrent Assets
Cash and cash equivalents and time deposits ......
Notes and accounts receivable-trade....................
Marketable securities ............................................
Costs of construction contracts in process............
Deferred tax assets ...............................................
Jointly controlled asset of joint venture .................
Other .....................................................................
Allowance for doubtful accounts............................
Total Current Assets ...........................................
Fixed Assets
Property, plant and equipment
Buildings and structures ................................
Accumulated depreciation.............................
Book value of buildings and structures
Machinery and equipment.............................
Accumulated depreciation.............................
Book value of machinery andequipment
Tools, furniture and fixtures...........................
Accumulated depreciation.............................
Book value of tools, furniture andfixtures
Land ..............................................................
Construction in progress ...............................
Total property, plant and equipment .................

48,87334,938—27,5761,552
240,131
12,115(87)
365,100

93.9

Millions of Yen
As of Sept. 30, 2007%
50,95957,62721,50025,391
4,123
252,494
12,799(109)424,786

6,581
3,528
3,052
908
276

6,688
3,700
2,987
1,340
280

94.5

As of Mar. 31, 2007%
77,17738,659—27,656
5,884
256,060
12,640(40)
418,037

94.4

6,615
3,614
3,001
1,162
271

632

1,059

891

5,318
3,642

5,513
3,711

5,543
3,806

1,676

1,802

1,737

1,850
10
7,222

1,835
0
7,684

1,835
—
7,464

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

3,103

3,390

3,352

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

7,183
536
2,834
3,534
(602)
13,485

8,722
—
1,547
3,764
(509)
13,526

8,740
—
2,056
3,841
(539)
14,097

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

23,811

6.1

24,601

5.5

24,915

5.6

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

388,912100.0

449,387

100.0

442,952

100.0

15

As of Sept. 30, 2006%

Millions of Yen
As of Sept. 30, 2007%

As of Mar. 31, 2007%

Liabilities and Net Assets
Current Liabilities
Notes and accounts payable-trade ............................
Short-term loans ........................................................
Income taxes payable ................................................
Advance receipts on construction contracts...............
Allowance for warranty costs for completed works ...
Allowance for losses on construction contracts .........
Accrued bonuses .......................................................
Other .........................................................................
Total Current Liabilities ...........................................

80,27571
4,801
210,554
1,636
10
3,727
7,654
308,73179.4

93,667
92
4,096
234,915
1,871
15
3,875
13,048351,582

78.2

86,81396
13,070231,818
1,581
10
5,096
12,957351,444

79.3

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

10,133
2
3,260
417
1,774
15,587324,3194.0
83.4

10,036
—
1,223
466
922
12,648364,2302.8
81.0

10,067
—
1,789
486
1,748
14,093
365,537

3.2
82.5

Net Assets
Shareholders’ equity ................................................
Common stock ..........................................................
Additional paid-in capital ...........................................
Retained earnings .....................................................
Treasury stock...........................................................
Total shareholders’ equity .........................................

12,9166,700
46,041(790)
64,868

3.3
1.7
11.9
(0.2)
16.7

12,9296,712
66,155(1,033)84,765

2.9
1.5
14.7
(0.2)
18.9

12,9286,711
58,398(905)
77,133

2.9
1.5
13.2
(0.2)
17.4

Valuation and Exchange Rate Adjustments
Unrealized gain on available-for-sale securities........
Deferred loss on hedge transactions ........................
Foreign currency translation adjustments .................
Total valuation and exchange rate adjustments........
Minority interests .......................................................
Total Net Assets .....................................................
Total Liabilities and Net Assets ............................

(133)
(210)
(290)
(634)
359
64,593388,912

(0.0)
(0.1)
(0.1)
(0.2)
0.1
16.6
100.0

282
(584)
297
(4)
396
85,157449,387

0.0
(0.1)
0.1
(0.0)
0.1
19.0
100.0

247
(408)
49
(110)
392
77,414442,952

0.1
(0.1)
0.0
(0.0)
0.1
17.5
100.0

16

2. Consolidated Statements of Income

Revenues ...............................................................
Cost of Revenues..................................................
Gross profit .............................................................
Selling, General and
Administrative Expenses .................................
Operating income....................................................

Apr. 1, 2006 –Sept. 30, 2006%
210,981100.0
192,04791.0
18,934
9.0

Millions of Yen
Apr. 1, 2007 –Sept. 30, 2007%
312,547100.0
295,307
94.5
17,2395.5

484,895
445,158
39,736

%
100.0
91.8
8.2

5,443
13,490

2.6
6.4

5,819
11,4201.8
3.7

11,03628,700

2.3
5.9

1.8

5,943
44
140
121
82
6,332

2.0

8,442
68
375
259
226
9,373

1.9

0.2

310
628
138
197
1,275

0.2

5.5

36,797

7.6

0.3

―
742
263
166
1,171

0.2

0.0

Apr. 1, 2006 –Mar. 31, 2007

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

3,388
17
144
131
155
3,836

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

152
343
80
52
629

0.3

173
141
85
49
449

Recurring profit .......................................................

16,6977.9

17,303

0.5

644
31
―
50
726

14
―
14

0.0

―
―
―

―

14
18
33

Income before income taxes and minority
interests...............................................................

17,758

8.4

18,0295.8

37,935

7.8

Income taxes current .............................................
Income taxes deferred ............................................
Total Tax ................................................................
Minority interests in net income ..............................
Net Income.............................................................

4,876
1,675
6,551
33
11,173

3.1
0.0
5.3

5,002
2,377
7,380
7
10,641

2.4
0.0
3.4

16,209(1,866)
14,342
60
23,531

2.9
0.0
4.9

Extraordinary Gain
Gain on sales of investment securities ...........
Reversal of allowance for doubtful accounts ..
Reversal of allowance for investment loss......
Other...............................................................
Total Extraordinary Gain ......................................
Extraordinary Loss
Loss on valuation of investment securities .....
Other...............................................................
Total Extraordinary Loss......................................

―
688
263
124
1,076

17

3. Consolidated Statements of Cash Flow
Apr. 1, 2006 –Sept. 30, 2006

Millions of Yen
Apr. 1, 2007 –Sept. 30, 2007

Apr. 1, 2006 –Mar. 31, 2007

Cash Flow from Operating Activities
Income before income taxes and minority interests................................
Depreciation and amortization ................................................................
Reversal of (provision for) allowance for doubtful accounts - net ...........
Interest and dividend income .................................................................
Interest expense......................................................................................
Foreign exchange loss (gain) - net..........................................................
Equity in earnings of associated companies ...........................................
Gain on sales of investment securities....................................................
Decrease (increase) in trade notes and accounts receivable, andcosts and estimated earnings on long-term construction contracts.....
Decrease (increase) in costs of construction contracts in process .........
Increase (decrease) in trade notes and accounts payable .....................
Increase in advance receipts on construction contracts .........................
(Decrease) in accrued bonuses ..............................................................
(Decrease) in retirement benefits ............................................................
Provision for (reversal of) warranty costs for completed works...............
Decrease (increase) in jointly controlled assets of joint venture .............
Increase (decrease) in consumption taxes payable................................
Increase (decrease) in accrued liability of defined benefit pension plan.
Other .......................................................................................................
Subtotal ........................................................................................ .
Interest and dividends received ..............................................................
Interest paid ............................................................................................
Project settlement money paid................................................................
Income taxes paid ...................................................................................
Net Cash (Used in) Provided by Operating Activities................................

17,758759(947)(3,405)
152
(5)
(144)
—

18,029728
38(5,988)
173
46
(140)
(644)

37,935
1,507(1,056)(8,511)
310
(73)
(375)
—

12,036(9,672)(5,452)
108,589(128)(4,701)(237)(108,794)(1,706)2,450
3,511
10,063
146
(151)
(469)
(3,647)
5,941(18,782)
2,283
6,774
3,020
(1,227)
(566)
272
3,566
3,744
(826)
(951)
9,550
2,199
(91)
—
(13,541)(1,883)8,484(9,728)947
129,741
1,240(6,172)(305)(124,724)(1,707)2,444
12,51842,475
335
(317)
(469)
(6,492)35,531

Cash Flow from Investing Activities
Purchases of property, plant and equipment ..........................................
Proceeds from sales of property, plant and equipment...........................
Purchase of intangible fixed assets.........................................................
Payments for purchase of investment securities.....................................
Proceeds from sales of investment securities.........................................
Disbursements for originating long-term loans........................................
Proceeds from collections of long-term loans .........................................
Other .......................................................................................................
Net Cash Provided by (Used in) Investing Activities ...................................

(206)
6
(626)
(1,589)
—
(15)
379
13
(2,038)

(132)
5
(616)
(0)
839
—
28
(4)
117

(460)
42
(1,319)(2,419)
32
(15)
609
71
(3,458)Cash Flow from Financing Activities
Repayments of long-term debt ...............................................................
Proceeds from issuance of common stock .............................................
Payment of cash dividends .....................................................................
Cash dividents paid to minority shareholders .........................................
Other - net ...............................................................................................
Net Cash Used in Financing Activities........................................................ .

(10)
31(1,913)—(114)(2,006)(35)
2(2,877)(12)(127)(3,050)(46)
54(1,915)(54)(229)(2,191)

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

13

94

357

1,909
46,878(4,722)
77,051

30,23946,878

(66)

―

(66)

48,721

72,32977,051Net Increase in Cash and Cash Equivalents...............................................
Cash and Cash Equivalents, Beginning of Period .....................................
Cash and Cash Equivalents of Exclusion of Consolidated Subsidiaries.....................................................................................................................
Cash and Cash Equivalents, End of Period................................................

18

4. Production, Contracts and Sales
1. Orders
Apr. 1, 2006 –Sept. 30, 2006
New contracts
Backlog
Amt
%
Amt
%

Millions of Yen
Apr. 1, 2007 –Sept. 30, 2007
New contracts
Backlog
Amt
%
Amt
%

Apr. 1, 2006 –Mar. 31, 2007
New contracts
Backlog
Amt
%
Amt
%

Business Segment
Engineering
LNG plants ...................

33,0338.9

Gas and power utilities. 261,795

70.4

Gas chemicals .............

394

0.1

Petroleum andpetrochemicals .........

38,427

10.4

General chemicals .......

14,980

4.0

Industrial machinery.....

12,767

3.4

Environment and other.

7,183

1.9

368,58199.1

Total Engineering
Other ............................

3,258

Total ............................ 371,840

739,228[9,546]
283,439
[-56]
1,902
[0]
60,301[189]
27,087[-60]
12,070
[-34]
6,936
[-17]
1,130,966[9,569]－[－]1,130,966
100.0[9,569]
0.9

65.4
25.0
0.2
5.3
2.4
1.1
0.6
100.0

－
100.0

39,467[+19.5%]23,927[-90.9%]163[-58.5%]85,803[+123.3%]
11,209[-25.2%]
4,032[-68.4%]
12,980[+80.7%]
177,585[-51.8%]2,728[-16.2%]
180,313[-51.5%]

21.9
13.3
0.1
47.6
6.2
2.2
7.2
98.5

1.5
100.0

478,260[2,019]285,795
[90]
1,181
[－]
115,817[381]
14,723
[-2]
5,192
[－]
17,890[-73]
918,861[2,415]－[－]
918,861[2,415]52.1

122,045

21.9

31.1

298,751

53.5

0.1

521

0.1

12.6

85,25115.3

1.6

19,3773.5

0.6

13,8812.5

1.9

11,0912.0

100.0

550,922

98.8

－

6,785

1.2

100.0

557,707

100.0

646,332[15,291]
297,016[-159]
1,714[6]
73,104[438]
17,769[-166]
5,413
[-34]
7,327
[-47]
1,048,679[15,328]－[－]
1,048,679[15,328]

61.6
28.3
0.2
7.0
1.7
0.5
0.7
100.0

－
100.0

Breakdown of Domestic and Overseas Contracts
Apr. 1, 2006 –Sept. 30, 2006
New contracts
Backlog
Amt%
Amt%
Domestic .....................

70,885

19.1

Overseas..................... 300,954

80.9

Total ........................... 371,840

100.0

123,146[-566]
1,007,820[10,135]
1,130,966[9,569]

10.9
89.1
100.0

Millions of Yen
Apr. 1, 2007 –Sept. 30, 2007
New contracts
BacklogAmt%
Amt%
105,163[+48.4%]75,149[-75%]
180,313[-51.5%]

58.3
41.7
100.0

184,673[-27]
734,187[2,442]918,861[2,415]

Apr. 1, 2006 –Mar. 31, 2007
New contracts
Backlog
Amt
%
Amt
%

20.1

155,297

27.8

79.9

402,409

72.2

100.0

557,707100.0

145,54213.9[-689]
903,13686.1[16,017]
1,048,679
100.0[15,328](Note)
Numbers in brackets [ ] under “Backlog” indicate the total of increases or decreases due to foreign currency translation adjustments
related to construction business transacted in foreign currencies, increases due to adjustments in new contract amounts, anddecreases due to changes in construction contracts acquired in prior fiscal years.

192. Sales

Business Segment

Millions of Yen
Apr. 1, 2007 –Sept. 30, 2007
Amt%

Apr. 1, 2006 –Sept. 30, 2006
Amt%

Apr. 1, 2006 –Mar. 31, 2007
Amt%

Engineering
LNG plants .........................................................

150,274

71.2

Gas and power utilities .......................................

10,3694.9

Gas chemicals....................................................

1,099

0.5

Petroleum and petrochemicals...........................

33,940

16.1

General chemicals..............................................

7,310

3.5

Industrial machinery ...........................................

2,401

1.1

Environment and other .......................................

2,328

1.1

207,723

98.4

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

3,258

1.6

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

210,981100.0

Total Engineering

209,559+39.5%
35,239+239.8%696-36.6%
43,471+28.1%
14,253+95.0%
4,254+77.2%
2,343+0.7%
309,818+49.1%
2,728-16.2%
312,547+48.1%

67.0

337,927

69.7

11.3

33,646

6.9

0.2

1,419

0.3

13.9

68,210

14.1

4.6

20,9184.3

1.4

10,172

2.1

0.7

5,815

1.2

99.1

478,110

98.6

0.9

6,785

1.4

100.0

484,895

100.0

Breakdown of Domestic and Overseas Sales
Apr. 1, 2006 –Sept. 30, 2006
Amt%
Domestic ......................................................

44,65721.2

Overseas ......................................................

166,324

78.8

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

210,981100.0

Millions of Yen
Apr. 1, 2007 –Sept. 30, 2007
Amt%
66,00521.1+47.8%
246,54178.9+48.2%
312,547100.0+48.1%

Apr. 1, 2006 –Mar. 31, 2007
Amt%
106,550

22.0

378,34578.0

484,895

100.0(Note)
Production figures are not included in this report due to the lack of a suitable Group-wide definition for “production.”20