CHIYODA CORPORATION
Consolidated Financial Results
for the Year Ended March 31, 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 Financial Statements (Consolidated)
for the Year Ended March 31, 2006
Listed Exchanges
Head Office
Stock CodePresident & CEO
Inquiries
Telephone
U.S. GAAP Accounting Principles

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

Consolidated Business Results
for the Year Ended March 31, 2007

1) Consolidated Business Results(Percentages represent change compared with the previous fiscal year.)

Millions of Yen
Apr. 1, 2006–
Mar. 31, 2007

Apr. 1, 2005 –Mar. 31, 2006

Change(%)

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

484,895
28,70036,79723,531
122.41122.28
35.5%
10.2%
5.9%

Change(%)

24.1
38.5
58.9
21.3

(Note) Gain from investments in subsidiaries and affiliates accounted for by the equity method:Year ended March 31, 2007:
0Year ended March 31, 2006:

390,875
20,72923,161
19,400101.27100.80
42.0%
10.0%
5.3%

46.0
87.1
99.9
50.8

375 million yen
193 million yen

2) Changes in Consolidated Financial Position
Millions of Yen
Apr. 1, 2006–
Apr. 1, 2005–
Mar. 31, 2007
Mar. 31, 2006
Total Assets .................................................................................
Shareholders’ Equity ..................................................................
Equity Ratio .................................................................................
Shareholders’ Equity per Share (¥) ...........................................
(Note) Net Worth (Total Net Assets excluding Minority Interests):
Year ended March 31, 2007:
Year ended March 31, 2006:

442,952
77,41417.4%
400.56

279,72155,50819.8%
288.8877,022 million yen‐ million yen

23) Consolidated Cash Flows
Millions of Yen
Apr. 1, 2006–
Apr. 1, 2005 –Mar. 31, 2007
Mar. 31, 2006
Net Cash Provided by Operating Activities..............................
Net Cash (Used in) Provided by Investing Activities...............
Net Cash Used in Financing Activities ......………………………
Cash and Cash Equivalents at End of Period ..........................

35,531(3,458)(2,191)
77,0515,237
1,051(1,338)46,8784) Dividends

Dividends per Share.................................................................
Payment of Cash Dividends ....................................................
Payout Ratio (Consolidated) ...................................................
Dividend on Equity Ratio (Consolidated).. ……………………

Millions of Yen
Apr. 1, 2006–
Apr. 1, 2005 –Mar. 31, 2007
Mar. 31, 2006
15.00 yen
10.00 yen
2,884
1,921
12.3%
9.9%
4.4%
4.1%

(Note) Forecast dividends per share for the year ending March 31, 2008:
Payout ratio (consolidated) for the year ending March 31, 2008:

18. 00 yen

14.7%5) Consolidated Forecast of Results for the Year Ending March 31, 2008
(Percentages represent change compared with the previous interim period or full term, respectively)

Revenue..............................................................................
Operating Income ..............................................................
Ordinary Income ................................................................
Net Income .........................................................................
Net Income per Share........................................................

Millions of Yen
Apr. 1, 2007 – Mar. 31, 2008
Interim period
Full term%
275,000
30.3
550,000
15,00011.2
30,00019,50016.8
38,50012,000
7.4
23,50062.41 yen
122.21 yen

%
13.4
4.5
4.6
(0.1)

3

1. Results of Operations(1) Analysis of Operating Results
Regarding the market environment for Chiyoda during the year ended March 31, 2007, in the overseas
market for plants, investment by natural gas producing nations and Energy Majors in the gas value chain
was robust, reflecting worldwide growth in energy demand. In these conditions, Chiyoda successfullyreceived two contracts for gas processing plant projects in Qatar. As for ongoing projects, Chiyoda
completed a large-scale, 4.7million-ton LNG plant in the same country.
In the domestic market, with lively capital investment by oil and petrochemical companies, Chiyoda
achieved higher-than-forecast results for both new contracts and revenues, primarily in the fields of oil andpetrochemicals.
New contracts for the fiscal year were 557,707 million yen on a consolidated basis, a 30.7% decrease
compared with the previous fiscal year. New contracts decreased 41.8% to 402,409 million yen overseas
and increased 37.8% to 155,297 million yen in Japan. The backlog of contracts as of March 31, 2007 was
1,048,679 million yen.
New Contracts (Consolidated)(Billions of yen)
Fiscal years ended
March 31
2003
2004
2005
2006
2007

Overseas

Domestic

Total

Backlog ofcontracts

180.4
218.6
321.7
691.5
402.4

68.6
71.9
89.4
112.7
155.2

249.0
290.6
411.2
804.2
557.7

316.1
375.8
522.4
960.5
1,048.6

Major New Contracts
・Al Khaleej Gas Phase 2 project for ExxonMobil in Qatar
Overseas ・Feed gas preparation works of Pearl GTL project for Royal Dutch Shell in Qatar
・Integrated tank terminal (Phase 2) in Singapore (Chiyoda Singapore (Pte) Limited)
・CCR unit for Seibu Oil Co., Ltd.
・Expansion of No. 7 naphtha hydrodesulfurization plant for Fuji Oil Co., Ltd.
Domestic ・Expansion of L-2 unit for Eisai Co., Ltd.
・Utsunomiya No. 2 Plant for Hisamitsu Pharmaceutical Co., Inc.
・Hikone Plant, No. 4 unit (Chiyoda TechnoAce Co., Ltd.) for Maruho Co., Ltd.

4

Consolidated revenues increased 24.1% compared with the previous fiscal year to 484,895 million yen,exceeding forecasts. Factors behind the increase included full-scale work on ongoing projects. Overseas,revenues increased 32.5% to 378,345 million yen, and domestic revenues rose 1.2% to 106,550 million
yen.
Major Completed Construction (*) Completed portion
・LNG plant Train 5 for Ras Laffan Liquefied Natural Gas Co., Ltd. (2) in Qatar
・Al Khaleej Gas Phase 1 project for ExxonMobil in Qatar
・LNG plant Trains 4 & 5 for Qatar Liquefied Gas Company Limited (II) in Qatar (*)
Overseas
・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 (*)
・Sakhalin II LNG project in Russia (*)
・BTX plant for Taiyo Oil Co., Ltd.
・Lube oil/grease mixing and filling plant for Nippon Petroleum Refining Co., Ltd.
・Aromatics complex for Kashima Aromatics Co., Ltd. (*)
Domestic ・MXDA facility for Mitsubishi Gas Chemical Company, Inc. (*)
・LPG underground storage terminal in Namikata for Japan Oil, Gas and Metals National
Corporation (*)
・Fiscal 2006 regular maintenance of Mizue Plant for Toa Oil Co., Ltd. (Chiyoda Kosho Co., Ltd.)
Gross profit was 39,736 million yen, an increase of 30.1% compared with the previous fiscal year due tothe growth in revenues and a 0.4 point improvement in the gross margin. As a result of this increase and a
0.2 point decrease in the ratio of selling, general and administrative expenses to revenues, operating
income rose 38.5% to 28,700 million yen. Both ordinary income and net income were higher than forecast.
Ordinary income rose 58.9% to 36,797 million yen due in part to growth in interest income from anincrease in jointly controlled assets of joint venture. Net income increased 21.3% to 23,531 million yen.
(Billions of yen)
Fiscal years ended
March 31

Revenues

Gross profit

OperatingincomeOrdinary
incomeNet income

2003
2004
2005
2006
2007

166.3
206.8
267.6
390.8
484.8

10.4
14.1
19.7
30.5
39.7

1.5
5.8
11.0
20.7
28.7

2.3
6.3
11.5
23.1
36.7

1.9
6.6
12.8
19.4
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 invested strongly in the gas value chain –development of gas fields, construction of LNG plants, arrangements for LNG carriers and construction of
LNG receiving terminals – against a backdrop of continuing growth in global demand for natural gas. Amidthese conditions, Chiyoda successfully received two contracts for gas processing plant projects in Qatar.
As for ongoing projects, in November 2006 Chiyoda completed the 4.7 million ton LNG plant Train 5 of
Ras Laffan Liquefied Natural Gas Co., Ltd. (2), also in Qatar. Construction was completed in a very shorttime span of 28 months from receipt of contract. Full-scale construction also began for three other largescale LNG plants in Qatar (with an annual capacity at the 7.8 million ton level), and another in Sakhalin.
In Japan’s electric and gas industry, there is rising inclination to invest in new projects to deal with theenvironment and energy security, including new expansion plans for large-scale LNG receiving terminals
in response to the removal of boundaries in the energy industry and the shift to LNG and coal as fuels
because of persistently high prices for crude oil.
In the fiscal year ended March 31, 2007, new contracts were 420,797 million yen, a decrease of 39.2%
compared with the previous fiscal year. Revenues were 371,574 million yen, an increase of 30.6%.
Petroleum, Petrochemicals and Gas Chemicals
In the petroleum sector, ongoing projects and construction completions progressed smoothly. New
contracts also exceeded forecasts, including contracts for new large-scale projects in Japan, due to astrong drive to invest in facilities for processing heavy grades of oil and producing petrochemicals. In the
petrochemical sector, the drive to invest was also high as companies were able to reflect high crude oil
prices in product prices. In addition to expansion into Asian markets, a move toward investment in CRI
businesses (business that combine petroleum refining and petrochemicals) was evident.
In the fiscal year ended March 31, 2007, new contracts were 85,773 million yen, an increase of 16.2%
compared with the previous fiscal year. Revenues were 69,629 million yen, an increase of 12.9%.
General Chemicals and Industrial Machinery
In the general chemicals sector, the drive to invest in capacity strengthened industrywide in response tosignificant changes, including industry realignment due to mergers, an increase in integration andefficiency of R&D facilities and plants at all companies, and enhancements in new product development
capability and speed. In the industrial machinery sector, firm capital investment continued. Chiyoda
steadily received orders for new investment projects in both sectors.
In the fiscal year ended March 31, 2007, new contracts were 33,258 million yen, an increase of 25.6%
compared with the previous fiscal year. Revenues were 31,090 million yen, a decrease of 2.5%.
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 fiscal year ended March 31, 2007, new contracts were 11,091 million yen, an increase of 55.5%
compared with the previous fiscal year. Revenues were 5,815 million yen, a decrease of 27.9%.

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 proceed as scheduled on the three large-scale LNG projects in Qatar, and will work to achieve
steady progress on other ongoing projects in Japan and overseas.
Under these conditions, and assuming an exchange rate of 115 yen to the U.S. dollar, for the year
ending March 31, 2008, Chiyoda forecasts consolidated new contracts of 250.0 billion yen, revenues of
550.0 billion yen, operating income of 30.0 billion yen, ordinary income of 38.5 billion yen and net incomeof 23.5 billion yen.
Outlook for the Year Ending March 31, 2008 (Consolidated)(Billions of yen)
Fiscal years ended/ending
March 31
New contracts
Revenues
Operating income
Ordinary income
Net income

2008

250.0
550.0
30.0
38.5
23.5

2007

557.7
484.8
28.7
36.7
23.5

Change (%)(55 %)
13%
5%
5%
0%

7

(2) Analysis of Financial Condition
1) Assets, Liabilities and Net Assets
AssetsCurrent assets increased 161,413 million yen due to factors including growth in jointly controlled assetsof joint venture resulting from an increase in large-scale joint venture projects and an improvement in cash
provided by operating activities that included increases in cash and cash equivalents and time deposits.
Fixed assets increased 1,817 million yen due to factors including IT-related capital investments andpurchase of investment securities. As a result, total assets increased 163,231 million yen compared withthe end of the previous fiscal year.
Liabilities
Total liabilities increased 141,647 million yen. This included a 129,839 million yen increase in advancereceipts on construction contracts, a 911 million yen increase in notes and accounts payable –trade and a
9,080 million yen increase in income taxes payable.
Net Assets
Total net assets were 77,414 million yen due to a 21,521 million yen increase in retained earnings
compared with the end of the previous fiscal year resulting from the increase in net income and otherfactors. The shareholders’ equity ratio decreased 2.4 points to 17.4% due to the 163,231 million yen
increase in total assets resulting from significant growth in jointly controlled assets of joint venture.
(Billions of yen)
Fiscal years ended
March 31

2006

2007

ChangeCurrent assets

256.6

418.0

161.4

Current liabilities

Cash and cash
equivalents and time
deposits

47.0

77.1

30.1

Short-term loans

2006

2007

Change

205.1

351.4

146.2

0.0

0.0

0.0

187.8

318.6

130.7

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

64.8

66.3

1.4

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

Jointly controlled assetsof joint venture

131.3

256.0

124.7

Other current liabilities

17.2

32.7

15.4

Other current assets

13.3

18.4

5.1

Non-current liabilities

18.6

14.0

(4.6)

Fixed assets

23.0

24.9

1.8

Long-term debt

10.1

10.0

(0.1)

Property, plant andequipment

7.0

7.4

0.3

Other long-term liabilities

8.5

4.0

(4.5)

Intangible fixed assets

3.1

3.3

0.1

Total net assets (*)

55.8

77.4

21.5

Investments and otherassets

12.8

14.0

1.2

Shareholders’ equity

55.7

77.1

21.3

Valuation and exchange
rate adjustments

(0.2)

(0.1)

0.1

0.3
0.3
Total liabilities andTotal assets
279.7
163.2
279.7
442.9
442.9
net assets(*) Total net assets shown for the year ended March 31, 2006 are the sum of shareholders’equity as formerly calculated and minority interests.

0.0

Minority interests

163.2

8

2) Cash Flow
Cash flow from operating activities
Net cash provided by operating activities was 35,531 million yen. Income before income taxes of 37,935
million yen and changes in working capital resulting in a surplus of 129,445 million yen (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) offset anincrease in jointly controlled assets of joint venture that resulted from an increase in large-scale joint
venture projects.
Jointly controlled assets of joint venture, a line item on the balance sheet of the statement of accounts,
represents the equivalent of Chiyoda’s equity share in construction contracts at joint ventures. As such, it
indicates Chiyoda’s actual share of the balance of cash and cash equivalents and time deposits under thename of the joint venture. When this is taken into consideration, actual net cash provided by operating
activities was 160,256 million yen.
Cash flow from investing activities
Net cash used in investing activities was 3,458 million yen. Proceeds from collections of long-term loans
totaled 609 million yen, but this was offset by payments for purchases of investment securities totaling
2,419 million yen and capital investments including purchases of IT-related software totaling 1,779 million
yen.
Cash flow from financing activities
Net cash used in financing activities was 2,191 million yen due to payment of cash dividends and otherfactors.
As a result of the above, net cash and cash equivalents as of March 31, 2007 were 77,051 million yen,
an increase of 30,173 million yen from the end of the previous fiscal year.
Change in Financial Condition (Consolidated)(Billions of yen)
Cash andcash
Financingequivalents at
activities
year-end

Net cash provided by (used in)

Fiscal years
ended
March 31

Total
assetsTotalliabilities

Net assets
(*)

2003

120.2

103.1

17.1

6.9

(0.8)

(9.5)

34.9

2004

142.8

119.7

23.1

15.5

(1.2)

(8.2)

40.9

2005

182.8

145.6

37.2

0.4

(1.0)

1.1

41.5

2006

279.7

223.8

55.8

5.2

1.0

(1.3)

46.8

2007

442.9

365.5

77.4

35.5

(3.4)

(2.1)

77.0

Operatingactivities

Investingactivities(*) Total net assets shown for the years ended March 31, 2003, 2004, 2005 and 2006 are the sum ofshareholders’ equity as formerly calculated and minority interests.
Cash Flow IndicesFiscal years ended
March 312003

Shareholders’ equity ratio
(%)
13.9

Debt repayment period(Years)
2.7

2004

15.9

0.7

42.4

2005

20.2

21.3

1.6

2006

19.8

2.0

17.3

2007

17.4

0.3

114.4

Notes

Shareholders’ equity/Total
assetsInterest-bearing debt/Net
cash provided byoperating activities

Interest coverage ratio(Times)11.7

Net cash provided byoperatingactivities/Interest expense9(3) Fundamental Policy for Earnings Distributions and Dividends for the Years Ended March 31,
2007 and Ending March 31, 2008
Chiyoda is committed to perpetual growth and development. Accordingly, while further increasing
internal reserves to maintain the consistently sound financial structure needed to create next-generation
businesses as a company able to sustain earnings growth, Chiyoda pays dividends to shareholders as ameans of distributing earnings.
Chiyoda plans to pay a year-end dividend of 15 yen per share for the year ended March 31, 2007, and a
year-end dividend of 18 yen per share for the year ending March 31, 2008.

10

(4) Business and Other Risks
Presented below is a list of major items that may have a material effect on investment decisions,
including significant items concerning Chiyoda’s financial condition, operating results and cash flows, and
the Group’s responses to each. Based on an awareness of these risks, the Group takes the greatest
possible precautions to avoid them. In the event that a risk materializes, Chiyoda works to respond as
quickly as possible to minimize its impact.
Risks listed below that involve future events are those which Chiyoda regards as important with respect
to risk management as of today.

1) Exchange rate volatility
For overseas projects, payments for equipment, materials and subcontracting work are sometimes incurrencies other than Japanese yen. Consequently, changes in exchange rates can have an effect onearnings. Chiyoda works to minimize the risk of exchange rate volatility by receiving payments in multiple
currencies to match projected expenses and using forward foreign exchange contracts.

2) Higher cost of equipment and materials and limited supplies of basic materials
For plant construction projects, there is a gap between the time estimates are prepared and the time
materials, equipment and subcontracting work are ordered. As a result, there are cases when, following
the submission of a bid for a project, an increase in the cost of equipment or materials exceeds theoutlook at the time the estimates were prepared. Moreover, limited supplies of metals such as copper,
nickel, aluminum and zinc may cause delays in the delivery of equipment and materials and in the
installation of equipment. Any of these events may have an impact on earnings.
Chiyoda is doing everything possible to avoid and minimize these risks, including studying thediversification of suppliers in ways such as making purchase in all areas of the world, and the placementof bulk orders. Other measures include ordering equipment and materials as early as possible andestablishing cooperative relationships with major vendors.

3) Limited supplies of construction workers and increase in subcontracting costs
For plant construction projects, there is a gap between the time estimates are prepared and the time
subcontracting work is ordered. As a result, in the event that large-scale construction work expands, theincrease in labor costs may exceed the outlook at the time the estimates were prepared. In particular, an
increase in costs may occur when there is a shortage of good-quality labor in specific fields requiring
case-by-case response.
Chiyoda searches around the world for workers in every field based on cooperative relationships withmajor construction companies, and minimizes the impact of risks through measures including job skill
training for workers at each construction site.

4) Terrorism, hostilities in neighboring countries, strikes, anarchism and natural disasters
There may be an impact on earnings in the event that global terrorism or similar events directly damage
construction sites or Chiyoda offices in Japan or overseas, delay the delivery of equipment or materials,
endanger construction site workers, force the suspension of construction work or cause other problems
resulting in losses and expenses that cannot be passed on to customers.
Chiyoda has a crisis management system that permits a quick initial response, including collaboration
with customers and other external parties, should a crisis occur.

5) Accidents at plants
In the event that a serious accident, such as an explosion or fire, occurs at a plant that is underconstruction or that has been constructed by Chiyoda, and Chiyoda is judged to be responsible for thecause of the accident, there could be an impact on earnings.
To prevent the occurrence of such unforeseeable incidents, Chiyoda has established the best possible
quality management, construction safety management and other risk management systems. In addition,
Chiyoda purchases suitable insurance coverage, secures contractual provisions that appropriately divide
the burden of damages with customers, and takes other actions to avoid or minimize these risks.

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 Contruction*1 Chiyoda Keiso Co., Ltd.
Construction related to facilities for industries of all
Consulting and Temporary Help Service*1 Chiyoda U-Tech Co., Ltd.
Consulting for facilities for industries of all types /temporary help service
Advanced Engineering*1 Chiyoda Advanced Solutions Corporation
Computer aided engineering analysis, plant life
cycle engineering and risk management, etc.

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

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.
*To establish a course toward the future by carrying on the efforts of those who went before
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.

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.
* Equivalent to the current net worth ratio, one of the indices of the DSP2008 medium-term management
plan as announced in February 2005.

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
Millions of Yen
As of Mar. 31, 2006%

As of Mar. 31, 2007%
AssetsCurrent Assets
Cash and cash equivalents and time deposits ........
Notes and accounts receivable-trade ......................
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 and equipment
Tools, furniture and fixtures .............................
Accumulated depreciation ...............................
Book value of tools, furniture andfixturesLand.................................................................
Total property, plant and equipment ...................
Intangible fixed assets ..........................................

77,17738,65927,656
5,884
256,060
12,640(40)
418,037

94.4

47,033
46,976
17,923
1,750
131,336
11,769(167)
256,623

6,615
3,614
3,001
1,162
271
891
5,543
3,806

6,453
3,440
3,013
817
279
537
5,248
3,567

1,737

1,681

Difference

91.7

30,143(8,317)
9,732
4,133
124,724
870
127
161,413

(12)
353

56

1,835
7,464

1.7

1,852
7,085

2.6

(17)
379

3,352

0.7

3,168

1.1

184

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

14,097

3.2

12,844

4.6

1,253

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

24,915

5.6

23,097

8.3

1,817

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

442,952

100.0

279,721100.0

163,231

8,740
—
—
2,056
3,841
(539)

5,701
533
662
4,157
3,522
(1,469)

—

3,038
(533)
(662)
(2,101)
318
929

(263)

263

15

Millions of Yen
As of Mar. 31, 2006%

As of Mar. 31, 2007%
Liabilities and Shareholders’ Equity
Current Liabilities
Notes and accounts payable-trade ............................
Short-term loans .......................................................
Income taxes payable ................................................
Deferred tax liabilities.................................................
Advance receipts on construction contracts ..............
Allowance for warranty costs for completed works ...
Allowance for losses on construction contracts .........
Accrued bonuses .......................................................
Other .........................................................................
Total Current Liabilities...........................................

86,81396
13,070—231,818
1,581
10
5,096
12,957351,444

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

79.3

85,901
46
3,989
1
101,979
1,870
146
3,856
7,400
205,192

10,067
—
1,789
486
1,748
14,093

Total Liabilities .........................................................
Minority Interests .....................................................

Difference

73.4

911
50
9,080
(1)
129,839
(289)
(136)
1,240
5,556
146,252

3.2

10,168
0
7,962
430
136
18,698

6.7

(101)
(0)
(6,172)56
1,612(4,604)

365,537

82.5

223,89080.1

141,647

—

—

322

0.1

(322)

—
—
—
—
—
—
—

—
—
—
—
—
—
—

12,901
6,684
36,877
44
(323)
(676)
55,508

4.6
2.4
13.2
0.0
(0.1)
(0.3)
19.8

(12,901)(6,684)(36,877)
(44)
323
676
(55,508)——

279,721100.0(279,721)

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

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

2.9
1.5
13.2
(0.2)
17.4

—
—
—
—
—

—
—
—
—
—

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

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

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

0.1
(0.1)
0.0
(0.0)
0.1
17.5
100.0

—
—
—
—
—
—
—

—
—
—
—
—
—
—

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

Shareholders’ Equity
Common stock ...........................................................
Additional paid-in capital ............................................
Retained earnings ......................................................
Unrealized gain on available-for-sale securities ........
Foreign currency translation adjustments ..................
Treasury stock ...........................................................
Total Shareholders’ Equity .....................................
Total Liabilities, Minority Interests andShareholders’ Equity ...........................................

16

2. Consolidated Statements of Income
Millions of Yen
Apr. 1, 2005 –Mar. 31, 2006

Apr. 1, 2006 –Mar. 31, 2007
Revenues ................................................................
Cost of Revenues ...................................................
Gross profit...............................................................
Selling, General and
Administrative Expenses ...................................
Operating income .....................................................

484,895
445,158
39,736

%
100.0
91.8
8.2

11,03628,700Difference

390,875
360,32230,552

%
100.0
92.2
7.8

94,02084,836
9,183

2.3
5.9

9,823
20,729

2.5
5.3

1,212
7,970

1.9

2,638
29
193
269
151
3,280

0.8

6,092

0.2

426

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

8,442
68
375
259
226
9,373

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

310
628
138
197
1,275

0.2

302
174
148
223
848

Ordinary income .......................................................

36,797

7.6

23,161

5.9

13,635

0.2

1,367
―
223
1,590

0.4

(419)

Extraordinary Gain
Reversal of allowance for doubtful accounts....
Reversal of allowance for investment loss .......
Other ................................................................
Total Extraordinary Gain .......................................
Extraordinary Loss
Loss on valuation of investment securities .......
Loss on termination of certain retirement
benefit plans.................................................
Settlement of construction contract..................
Impairment loss................................................
Loss on removal of property, plant andequipment.....................................................
Other ................................................................
Total Extraordinary Loss .......................................

742
263
166
1,171
14

―

―
―
―

1,995
469
127

―
18
33

0.0

233
2,845

0.7

(2,812)

Profit before income taxes and minority interests ....

37,935

7.8

21,906

5.6

16,028

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

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

2.9
(0.0)
4.9

4,478
(2,011)
2,467
39
19,400

0.6
(0.0)
5.0

11,875
21
4,131

20

17

3. Consolidated Statements of Cash Flow

Cash Flow from Operating Activities
Income before income taxes and minority interests................................
Depreciation and amortization ................................................................
Amortization of goodwill ..........................................................................
Loss on impairment of long-lived assets .................................................
Reversal of allowance for doubtful accounts - net ..................................
Interest and dividend income .................................................................
Interest expense......................................................................................
Foreign exchange gain - net ...................................................................
Equity in earnings of associated companies ...........................................
Loss on sales and disposal of property,
plant and equipment ............................................................................
Loss on partial termination of a defined benefit pension
plan......................................................................................................
Project settlement money........................................................................
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 in trade notes and accounts payable........................................
Increase in advance receipts on construction contracts .........................
Increase in accrued bonuses ..................................................................
Increase (decrease) in retirement benefits..............................................
Provision for (reversal of) warranty costs for completed works...............
Increase (decrease) in allowance for investment loss ............................
Decrease (increase) in accounts receivable - other................................
Decrease (increase) in jointly controlled assets of joint venture .............
Decrease in long-term receivables .........................................................
Increase (decrease) in consumption taxes payable................................
Increase (decrease) in deposits received ...............................................
Increase in transfer of defined benefit pension plan payable..................
Other .......................................................................................................
Subtotal ........................................................................................
Interest and dividends received ..............................................................
Interest paid ............................................................................................
Project settlement money paid................................................................
Income taxes paid ...................................................................................
Net Cash Provided by Operating Activities ................................................

Apr. 1, 2006 –Mar. 31, 2007

Millions of Yen
Apr. 1, 2005 –Mar. 31, 2006

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

21,906
1,468
68
127(1,354)(2,667)
302
(236)
(193)

16,028
38
(68)
(127)
297
(5,843)
8
162
(182)

—

20

(20)

—
—

1,995
469

(1,995)
(469)

8,484
(9,728)947
129,741
1,240(6,172)
(305)
(136)
1,503
(124,724)—(1,707)
3,918
2,444
7,232
42,475
335
(317)
(469)
(6,492)35,531(9,100)
7,095
11,12257,479
1,039
798
1,103
146
(7,624)(81,382)
2,071
1,031
(1,752)—(2,230)
6,163
321
(303)
—
(944)
5,237

17,585(16,823)(10,174)
72,261
201(6,971)(1,408)(282)
9,128(43,341)(2,071)(2,738)
5,671
2,444
5,001
36,311
14
(14)
(469)
(5,547)30,294

Difference18Consolidated Statements of Cash Flow (Continued)
Apr. 1, 2006 –Mar. 31, 2007

Millions of Yen
Apr. 1, 2005 –Mar. 31, 2006

31
(460)
42
(1,319)(2,419)
32
―
―
(15)
609
40
(3,458)

703
(618)
139
(1,236)(1,272)
148
(121)
1
(33)
3,340
0
1,051

(672)
158
(96)
(83)
(1,146)
(116)
121
(1)
18
(2,730)40(4,509)Cash Flow from Financing Activities
Proceeds from long-term debt ................................................................
Repayments of long-term debt ...............................................................
Proceeds from issuance of common stock .............................................
Payment of cash dividends .....................................................................
Cash dividents paid to minority shareholders .........................................
Other - net ...............................................................................................

―
(46)
54
(1,915)(54)

10,000(10,101)357(1,139)(36)(10,000)
10,055
(303)
(775)
(18)

(229)

(417)

188

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

(2,191)(1,338)(853)

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

357

333

24

30,23946,8785,284
41,594

24,955
5,284

(66)

―

(66)

77,051

46,87830,173

Cash Flow from Investing Activities
Proceeds from refunds of fixed deposits.................................................
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.........................................
Payment for purchase of consolidated subsidiary stock .........................
Net decrease in short-term loans ............................................................
Disbursements for originating long-term loans........................................
Proceeds from collections of long-term loans .........................................
Other .......................................................................................................
Net Cash (Used in) Provided by Investing Activities ...............

Net Increase in Cash and Cash Equivalents...
Cash and Cash Equivalents, Beginning of Year ........................................
Cash and Cash Equivalents of Exclusion of Consolidated
Subsidiaries ..............................................................................................
Cash and Cash Equivalents, End of Year ...................................................

Difference194. Production, Orders and Sales
1. OrdersMillions of Yen
Apr. 1, 2006 –Apr. 1, 2005 –Mar. 31, 2007
Mar. 31, 2006
New contracts
Backlog
New contracts
Backlog
Amt
%
Amt
%
Amt
%
Amt
%
Business Segment
Engineering
LNG plants.....................................
Gas and power utilities ..................
Gas chemicals ...............................
Petroleum and petrochemicals ......
General chemicals.........................
Industrial machinery ......................
Environment and other ..................
Total Engineering

122,045-81.9%
298,751+1,673.2%521+1.3%
85,251+16.3%
19,377-3.1%
13,881+114.1%
11,091+55.5%
550,922-31.1%

21.9
53.5
0.1
15.3
3.5
2.5
2.0
98.8

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

6,785+43.7%

1.2

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

557,707-30.7%

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

675,208

83.9

28.3

16,848

2.1

0.2

515

0.1

7.0

73,3289.1

1.7

19,990

2.5

0.5

6,483

0.8

0.7

7,134

0.9

100.0

799,509

99.4

－

4,721

0.6

100.0

804,231100.0

846,922[23,671]
32,070[1,066]2,606[82]
55,624[939]
19,477[-510]
1,738
[-1]
2,098
[-509]
960,538[24,737]－[－]
960,538[24,737]

88.2
3.3
0.3
5.8
2.0
0.2
0.2
100.0

－
100.0

Breakdown of Domestic and Overseas Orders
Millions of Yen
Apr. 1, 2006 –Apr. 1, 2005 –Mar. 31, 2007
Mar. 31, 2006
New contracts
Backlog
New contracts
Backlog
Amt
%
Amt
%
Amt
%
Amt
%
Domestic........................................
Overseas .......................................
Total ..............................................

155,297+37.8%
402,409-41.8%
557,707-30.7%

27.8
72.2
100.0

145,542[-689]
903,136[16,017]
1,048,679[15,328]13.9

112,720

14.0

86.1

691,510

86.0

100.0

804,231100.0

97,484[-998]
863,054[25,736]
960,538[24,737]

10.1
89.9
100.0

(Note)
Numbers in brackets [ ] under “Backlog of orders” indicate the total of increases or decreases accompanying foreign currencytranslation adjustments related to foreign currency business, increases resulting from adjustments for new contracts, and decreases
resulting from contractual changes in orders received in previous fiscal years.

20

2. Sales

Business Segment
Engineering
LNG plants..........................................................................
Gas and power utilities .......................................................
Gas chemicals ....................................................................
Petroleum and petrochemicals ...........................................
General chemicals..............................................................
Industrial machinery ...........................................................
Environment and other .......................................................
Total Engineering
Other...................................................................................
Total ...................................................................................

Millions of Yen
Apr. 1, 2006 –Apr. 1, 2005–
Mar. 31, 2007
Mar. 31, 2006
Amt
%
Amt
%
337,927+46.8%
33,646-38.0%
1,419-82.2%
68,210+26.9%
20,918-13.9%
10,172+33.8%
5,815-27.9%
478,110+23.8%
6,785+43.7%
484,895+24.1%

69.7

230,227

58.9

6.9

54,278

13.9

0.3

7,952

2.0

14.1

53,73313.8

4.3

24,298

6.2

2.1

7,602

1.9

1.2

8,061

2.1

98.6

386,153

98.8

1.4

4,721

1.2

100.0

390,875

100.0

Breakdown of Domestic and Overseas Sales
Millions of Yen
Apr. 1, 2006 –Mar. 31, 2007
Amt
106,550+1.2%
378,345+32.5%
484,895+24.1%

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

Apr. 1, 2005–
Mar. 31, 2006
%

Amt

%

22.0

105,329

26.9

78.0

285,545

73.1

100.0

390,875100.0(Notes)(1)“Status of production” is not listed, because it is difficult to define production results for the Chiyoda Group.
(2)
The breakdown of sales results and percentages of total sales by main customers is as follows.

Millions of Yen
Apr. 1, 2006–
Mar. 31, 2007
Customer
Qatar Liquefied Gas Company Limited(2)
Ras Laffan Liquefied Natural Gas Co.,
Ltd. (3)
Qatar Liquefied Gas Company Limited(3)
Sakhalin Energy Investment Co., Ltd.
(3)

Amt
127,896

Apr. 1, 2005 –Mar. 31, 2006%
Customer
26.4 Qatar Liquefied Gas Company Limited (2)Amt
72,562%
18.6

72,28314.9 Sakhalin Energy Investment Co., Ltd.

55,531

14.2

65,53413.5 Ras Laffan LNG Co., Ltd.

44,646

11.4

48,624

10.0

Amounts contained in these tables do not include consumption tax.

21