CHIYODA CORPORATION
Consolidated Financial Results

for the Six-Month Period Ended Sep. 30, 2006

This document has been prepared as a guide to non-Japanese investors and contains forwardlooking 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 fromexpectations. This document is a translation of excerpts taken from the Japanese language
original. All numbers are rounded down to the nearest unit in accordance with standard Japanesepractice. 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 Six-Month Period Ended September 30, 2006

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

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

1. Results of operation for the six-month period ended Sep. 2006
(April 1, 2006–September 30, 2006)
1) Consolidated Business Results
Millions of Yen
Apr. 1, 2006 –Sep. 30, 2006

Apr. 1, 2005 –Sep. 30, 2005

Change(%)

Revenues ..........................................
Operating Income .............................
Ordinary Income ..............................
Net Income .......................................
Net Income per Share (¥) .................
Fully Diluted Net Income per Share (¥) ...
(Notes)

210,981
13,49016,697
11,17358.14
58.06(reference)
Apr. 1, 2005 –Mar. 31, 2006

Change
(%)

27.5%
64.1%
84.9%
5.2%
-

165,515
8,218
9,029
10,622
55.55
55.20

42.2%
72.9%
75.2%
108.5%-

390,875
20,72923,161
19,400101.27100.801. Percentage change figures are comparisons with the same half year of the previous fiscal year.
2. Previous fiscal year six-month data and year-on-year comparisons are not presented since this is the first sixmonth financial report for Chiyoda.

2) Changes in Consolidated Financial Position
Millions of Yen
As ofSep. 30, 2006

As of
Sep. 30, 2005

(reference)
As ofMar. 31, 2006

Total Assets ......................................................
Net Assets.........................................................
Equity Ratio ......................................................

388,91264,593
16.5%

214,462
46,57921.7%

279,72155,508
19.8%

Net Assets per Share(¥)....................................

334.13243.10288.882

3) Consolidated Cash Flows
Millions of Yen(reference)
Apr. 1, 2005 –Mar. 31, 2006

Apr. 1, 2006 –Sep. 30, 2006

Apr. 1, 2005 –Sep. 30, 2005

Net cash provided by operating activities..................

5,941(2,814)

5,237

Net cash used in investing activities ..........................

(2,038)

1,757

1,051

Net cash used in financing activities..........................
Cash and cash equivalents at end of period...............

(2,006)
48,721(1,160)39,511(1,338)46,878

3. Consolidated Operations Forecast for the Year Ending March 31, 2007
Millions of Yen
Apr. 1, 2006 – Mar. 31, 2007
Full term
Revenues.............................................. ..........................................

420,000

Ordinary Income ...........................................................................

28,000Net Income ...................................................................................

16,500(Note) Projected net income per share for the year ending March 31, 2007

85.83yen3

(1) State of the GroupThe Chiyoda Group of Companies consists of the parent company, 17 subsidiaries, and 5 equity method affiliates.
As a comprehensive engineering services organization, the Group’s central business is its expertise in providing themost 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 groupmembers work in unison to conduct business operations. Through this approach, the Group responds flexibly to theneeds of today’s markets, society and regions. The Group’s business is divided into Engineering Businesses andOther Businesses, and the Group’s structure is outlined below.

Business Flowchart
Clients

Chiyoda Corporation
Comprehensive engineering business,
including consulting, planning,
designing, procurement, construction,
trial operation, maintenance and otherservices, for plants of all types

Engineering, Construction & Maintenance*1 Chiyoda Kosho Co., Ltd.
Plant engineering, construction, and maintenanceof energy and chemical plants*1 Chiyoda Techno Ace Co., Ltd.
Civil engineering of pharmaceutical and petroleum
plants*1 Chiyoda Keiso Co., Ltd.
Construction related to facilities for industries of all
types
Consulting*1 Chiyoda U-Tech Consulting Co., Ltd.
Consulting services of total engineering solutions
for a variety of industriies/ temporary help service

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

Overseas construction bases*1 Chiyoda Philippines Corporation (Philippines)*2 L&T Chiyoda Ltd. (India)
Global Engineering Satellites (GESs)*1 Chiyoda Singapore (Pte) Limited*1 PT. Chiyoda International Indonesia*1 Chiyoda (Thailand) Limited*1 Chiyoda Malaysia Sdn. Bhd.
*1 Chiyoda & Public Works Co., Ltd. (Myanmar)*2 Chiyoda Petrostar Ltd. (Saudi Arabia)

Other businesses

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

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

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

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

Overseas Accounting and Finance*1 Chiyoda Asia Pacific (Pte) Limited (Singapore)Consulting on accounting and finance*1： Consolidated subsidiary*2： Affiliated company accounted for by
the equity method
Direct Client Orders
Contracted Business, Entrusted
Businesses

Overseas sales bases*1 Chiyoda International Corporation (USA)*1 Chiyoda Nigeria Limited4

(2) Management Policies
1. Basic Management Policies
The Chiyoda Group has 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 starts in fiscal 2005 (ends in March 2006) andends in fiscal 2008 (ends in March 2009) is to enable the Group to consistently increase earnings.
The fundamental management policy is to achieve the targets of DSP2008 in order to achieve further gains incorporate value.
Management philosophy
The Chiyoda Group aims to conduct group management so as to earn the trust and understanding of shareholders,customers, suppliers, employees, communities and all other stakeholders.

Corporate Philosophy
As a comprehensive engineering services organization, the Group’s most important
objectives are to promote its business and to contribute to the sustainable development of asociety by sound application of its know-how and state-of-the-art technology.

Management Policies
Steadfast implementation of
Double Step-Up Plan (DSP) 2008

Quality management policy

Occupational health andsafety policy

Environmental policy

Information security policy

Code of business conduct

Privacy policy

2. Management Vision and Medium-Term Management Strategies

M e d iu m - T e rm M a n a g e m e n t P la n
D o u b le S te p - U p P la n (D S P ) 2 0 0 8
M a n a g e m e n t V is io n
M a n a g e m e n t V is io n
• S te p u p to b e c o m e t h e R e lia b ilit y N o .1 P r o je c t
Com pany .
• S t e p u p t o b e c o m e a n E x c e lle n t C o m p a n y a b le tos u s t a ine a r n in g s g r o w th .
M e d iu m - T e r m M a n a g e m e n t
M e d iu m - T e r m SMt raante
a ggeie
mse n tS ttr
r a t e g ie s
S1

S2
S3

S4

C o n d u c t b u s in e s s o p e r a tio n s b a s e d o n s u p e r io r
te c h n o lo g ie s , e s ta b lis h in g r e la tio n s h ip s a s ah ig h ly tr u s te d p a r tn e r fo r o u r c lie n ts .
F u r th e r u p g r a d e p r o je c t e x e c u tio n s k ills th r o u g h S m a r t
E P C th a t u tiliz e s th e G r o u p ’s c o lle c tiv e s tr e n g th s .
E s ta b lis h a c o n s is te n tly s o u n d fin a n c ia l p o s itio n a b le tos u p p o r t th e c r e a tio n o f n e x t- g e n e r a tio n b u s in e s s e s th a t
c a n s u s ta in e a r n in g s g r o w th .
C r e a te a n e n e r g e tic o r g a n iz a tio n a n d r e fin e e m p lo y e es k ills to p r o v id e a p le a s a n t a n d r e w a r d in g w o r k p la c e .

P la c e p r io r ity o n C o r p o r a te S o c ia l R e s p o n s ib ility ( C S R ) p r o g r a m s

5There are two fundamental elements of DSP 2008. The first is to resolutely retain the innovative thinking needed to“capitalize on change, and take on challenges posed by change” with the aim of becoming “the Reliability No.1
Project Company.” The second is to aim to become “an Excellent Company able to Sustain Earnings Growth throughconstant internal efforts.
In accordance with the above fundamental approaches, the Group has established medium- and long-term
strategies. All Group employees from senior management on down are working as one to achieve management
goals. To reach these goals, balance scorecards are used to facilitate comprehensive management of key targets foreach strategy, action plans and the status of progress toward goals.
3. Targeted Performance Indicators
The management goal of DSP 2008 is to raise the return on equity to at least 30% by fiscal 2008 (ends in March2009). The Group aims to further strengthen profitability through its own efforts and establish a permanently soundfinancial structure that can support the creation of next-generation businesses.
4. Fundamental Policy for Earnings Distributions
The Group is committed to being an organization able to perpetually grow and develop as well as to increase sales
and earnings. Accordingly, the fundamental earnings distribution policy is to further increase retained earnings inorder to maintain the consistently sound financial base needed to create next-generation businesses, to improve
remuneration for employees based on operating results, and to pay a consistent and stable dividend. Based on thisstandpoint, Chiyoda plans to pay an annual dividend of 10 yen per share.
5. Policy and Thinking Regarding Reduction in Investment Unit
The Group regards a change in the stock investment unit as an effective means of adding vitality to capital markets,and thus as an important management issue. Such actions will be taken based on a comprehensive evaluation ofstock market trends, changes in Chiyoda’s investment unit and other items.
6. Important Management Issues
One central issue is to build a solid base for the DSP2008 medium-term management plan by executing as planned
LNG projects now under way. Of particular importance is contracts received in the past and prior fiscal years forconstruction of the world’s largest LNG facilities in Qatar. The Group is dedicated to making steady progressconcerning DSP2008 with the aim of reinforcing the Group’s reputation for reliability by accurately responding tocustomers’ demands with regard to increasingly large and complex plant projects.
In addition, the Group must accommodate a variety of risks involving business activities and other items as well as
respond appropriately to revisions in laws and regulations. Through this stance, the Group is determined to be a
responsible corporate citizen.
7. Items concerning parent company
Chiyoda has no parent company.

6(3) Results of Operations and Financial Conditions
1. Consolidated Interim Operating Results for the Year ending March 2007
As to the business market environment the Chiyoda Group during the first six months of the current fiscal year,
gas-producing countries and international energy majors maintained a high level of investments in gas-related
development projects including upstream activities to cope with growing energy demand on a global basis. As aresult, the Group was able to accumulate results in the field of the gas value chain.
Looking to the domestic business environment, the Group was awarded multiple contracts mainly for desulfurizersof oil refineries and heavy oil crackers, as Japanese oil companies continued to invest in large-scale upgrading
projects associated with refineries to enhance competitiveness. Such investments include production facilities of
petrochemical products targeting Asian markets, measures responding to the increasing price disparity between
heavy and light grades of oil, and large-scale energy conservation projects.
Against such a backdrop, consolidated new contracts declined to 371.840 million yen (down 15.9 % year-on-year),with overseas new contracts decreasing 20.0 % to 300.954 million yen (down 20.0 % year-on-year) and domestic
new contracts increasing to 70.885 million yen (up 7.7 % year-on-year).
Billions of yen
Changes in new contracts,
New contracts
on a consolidated basis（Years from April 1 to March 31） Overseas
2002
180.4
2003
218.6
2004
321.7
2005
691.5
Interim results for 2006
(as of September 30)

300.9

Domestic

Backlog

Total
68.6
71.9
89.4
112.7

249.0
290.6
411.2
804.2

316.1
375.8
522.4
960.5

70.8

371.8

1130.9Major New Contracts
・Al Khaleej Gas Phase 2 Project for ExxonMobil in Qatar
・Feed gas preparation works of Pearl GTL project for Royal Dutch Shell in Qatar
Overseas・Integrated tank terminal (Phase 2) in Singapore (Chiyoda Singapore (Pte) Limited)・Fuji Oil Co., Ltd. expansion of No. 7 naphtha hydrodesulfurization plant・Fuji Oil Co., Ltd. off-site construction of No. 2 fluid catalytic cracker
Domestic・Maruho Co., Ltd. Hikone Plant, construction of No. 4 unit (Chiyoda TechnoAce Co., Ltd.)
Revenues from completed contracts increased to 210,981 million yen (a 27.5 % year-on-year increase), thanks tosteady progress of the on-going constructions and strong performances by group companies in Japan. Revenues
from overseas contracts amounted to 166,324 million yen (a 35.1% year-on-year increase) and those fromdomestic contracts rose to 44,657 million yen (a 5.3% year-on-year increase).
Major Completed Construction (*) Completed portion
・Al Khaleej Gas Phase 1 project for ExxonMobil in Qatar
・LNG plant Train 5 of Ras Laffan Liquefied Natural Gas Co., Ltd. (2) in Qatar (*)
・LNG plant Trains 4 & 5 for Qatar Liquefied Gas Company Limited (II) in Qatar (*)
Overseas
・LNG plant Trains 6 & 7 of Ras Laffan Liquefied Natural Gas (3) in Qatar (*)
・LNG plant Trains 6 & 7 of Qatar Liquefied Gas Company Limited (3) & (4) in Qatar (*)
・Sakhalin II LNG Project in Russia (*)
・BTX facility for Taiyo Oil Co., Ltd.
・Lube oil/grease mixing and filling plant for Nippon Petroleum Refining Co., Ltd.
・SHOWA YOKKAICHI SEKIYU Co., Ltd. HDS-3 Reactor Expansion
Domestic
・Aromatics complex for Kashima Aromatics Co., Ltd.
・Regulatory maintenance for Toa Oil Co., Ltd. (Chiyoda Kosho Co., Ltd.)
Earnings benefited from growth in revenues from completed contracts and a 1.4 point year-on-year improvementin the gross margin on such completions, therefore, gross profit on completed contracts rose to 18,934 million yen(a 49.6 % year-on-year increase), and operating income increased to 13,490 million yen (a 64.1 % year-on-yearincrease). Ordinary income boosted to 16,697 million yen (a 84.9 % year-on-year increase), due to the factors suchas increases in interest income resulting from growth in the Company’s share of joint venture assets, and interim
net earnings rose to 11,173 million yen (a 5.2 % year-on-year increase).

7

Billions of yen
Changes in
consolidated interim
financial results（Years from April 1 to
September 30）

Revenues fromcompletedcontracts

Gross profit on
projects
completed

OperatingincomeOrdinary
incomeInterim net
income

2003

88.6

6.5

2.4

3.0

2.1

2004

116.3

8.8

4.7

5.1

5.0

2005

165.5

12.6

8.2

9.0

10.6

2006

210.9

18.9

13.4

16.6

11.1

Pct YoY change

27.5%

49.6%

64.1%

84.9%

5.2%

(Reference) FY 2005
ended March 31, 2006

390.8

30.5

20.7

23.1

19.4

8

2. Financial conditions during the first six months of the current fiscal year
1) Assets, Liabilities and Shareholders’ Equity
AssetsDue to the factors such as growth in the Company’s share of joint venture assets associated with the increased
number of large-scale projects conducted as joint venture (JV), current assets increased to 108,477 million yen.
Fixed assets also increased by 713 million yen, primarily from acquisition of investments in securities. As a result,assets in total increased to 109,190 million yen compared with the end of the prior fiscal year.
Liabilities
Due to an increase of 108,575 million yen in advance receipts on construction contracts, liabilities rose to 100,428
million yen from the end of the previous fiscal year.
Shareholders’ equity
An increase of 9,163 million yen in retained earnings due to the interim net profit increased shareholders’ equity to
64,593 million yen. The equity ratio was down 3.3 point year-on-year to 16.5 %, mainly because of an increase of
109,190 million yen in assets associated with growth in the Company’s share of joint venture assets.
Billions of yen
As of
March
31,
2006
256.6

As of
Sep. 30,
2006

Change

365.1

108.4

47.0

48.8

1.8

64.8

62.5

(2.3)

131.3

240.1

108.7

13.3

13.5

0.2

Fixed Assets

23.0

23.8

0.7

Property, plant andequipment
Intangible fixed
assetsInvestments andother assets

7.0

7.2

0.1

3.1

3.1

0

12.8

13.4

0.6

Current Assets
Cash and time
deposits
Trade receivables
and costs ofrevenues in progress
Jointly controlled
assets of joint
ventureOther current assets

Total Assets

279.7

388.9

109.1

As of
March
31,
2006
205.1

As of
Sep. 30,
2006

Change

308.7

103.5

0

0

0

Trade payable andadvance receipts
on revenues
Other current
liabilities

187.8

290.8

102.9

17.2

17.8

0.5

Non-current
Liabilities
Long-term debt

18.6

15.5

(3.1)

10.1

10.1

0

Other long-term
liabilities
Shareholders’Equity (*)
Shareholders’EquityValuation andexchange rateadjustments
Minority Interests

8.5

5.4

(3.0)

55.8

64.5

8.7

55.7

64.8

9.0

(0.2)

(0.6)

(0.3)

0.3

0.3

0

279.7

388.9

109.1

Current
Liabilities
Short-term loans

Liabilities andSharholders’Equity(*)The figure as of March 31, 2006 recorded in the “Shareholders’ Equity” comprised traditional “Shareholders’Equity” and “Minority Interests”.

92）Cash flows during the first half of the current fiscal year
Operating activities
While there was an increase of 108,794 million yen in jointly controlled assets of joint ventures due to increasein large-scale projects conducted as joint ventures, profit before income taxes and minority interests was 17,758
million yen, depreciation and amortization was 759 million yen, and net changes in current assets and liabilities(total of changes in trade receivables, cost of construction contracts in process, trade payables, and advancereceipts on construction contracts) provided net cash of 105,501 million yen. As a result of the foregoing, net
cash provided by operating activities was 5,941 million yen.
Joint venture assets represent the share of the Company’s interest in balance sheet items as shown in joint
venture contracts associated with construction contracts. In effect, these assets thus represents the Company’s
share of cash and cash equivalents held in the name of the joint venture. Taking this into consideration, effective
net cash provided by operating activities was 114,736 million yen.
Investing activities
Though there were proceeds from collection of long-term loans, purchases of property, plant and equipment
including the investments in IT-related software amounted to 833 million yen, and acquisition of investments insecurities totaled 1,589 million yen. Net cash used in investing activities was 2,038 million yen.
Financing activities
Net cash used in financing activities was 2,006 million yen, primarily due to dividend payments.
As a result of the aforementioned, balance of cash and cash equivalents at the end of the first half of the current
fiscal year increased by 1,843 million yen from the end of the previous fiscal year to 48,721 million yen.
Billions of yen
Changes in
consolidated
financial conditions（Fiscal year ended
March 31）

Total
Assets

Total
Liabilities

Balance of

Net Cash provided by (used in)Shareholders’Equity(*)

Operating

Investing

Financing

Activities

Activities

Activities

Cash andCash
Equivalents

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

Six-month period
ended Sep. 30, 2006

388.9

324.3

64.5

5.9

(2.0)

(2.0)

48.7

(*) The figures for fiscal years of 2003, 2004, 2005 and 2006 recorded in the “Shareholders’ Equity” comprised
traditional “Shareholders’ Equity” and “Minority Interests”.
Cash Flow Indices（Fiscal year ended

Capital Adequacy Ratio

March 31）

Years for Debt
Redemption

Interest Coverage Ratio

2003

13.9 ％

2.7 year

11.7 times

2004

15.9 ％

0.7 year

42.4 times

2005

20.2 ％

21.3 year

1.6 times2006

19.8 ％

2.0 year17.3 times

Six-month period
ended Sep. 30, 2006

16.5 ％

0.9 year

39.1 times(Shareholders’ Equity -Interest-bearing Liabilities

Note

Minority Interests) / Total/ Cash Flow from

AssetsOperating Activities

Cash Flow from Operating
Activities / Interest Paid

(Note) The “Capital Adequacy Ratio” figures of fiscal 2003 to 2006 represent traditional “Shareholders’ Equity Ratio(Shareholders’ Equity / Total Assets)”. In calculating years for debt redemption for interim reporting, the amount ofcash flow from operating activities was doubled to obtain its annual amount.

103. Outlook for FY 2006 Business Results
In the global plant market, investments in gas-related development projects by gas-producing countries andinternational energy majors are expected to grow stronger, hence the Group will pursue opportunities of receiving
new orders in untapped regions with plans for gas-related development projects, on top of the Middle East
centering on Qatar.
Furthermore, as international energy majors are increasingly active in investing in oil and petrochemical projects,
the Group will be engaged in aggressive marketing activities toward receiving new orders in the said sector.
In the domestic plant market, large-scale capital expenditures by oil companies are expected to continue as they
aim at increasing production of petrochemicals as well as making their refineries more competitive. Thus the Groupwill choose and focus on orders where it can make the best of its technical advantage, and exert efforts to receive
such orders. In the pharmaceutical sector, Chiyoda will focus on developing projects and securing orders associatedwith facilities for high-mix/low-volume manufacturing of new drugs and intermediates. In the industrial machinery
sector, Chiyoda foresees steady growth and will be increasing efforts in receiving orders.
Additionally, in the U.S. where the government is moving toward stricter environmental regulations such as Clear
Air Act, in the EU zone where measures to comply with environmental regulations are being taken, and in Asian
countries where power demand is expected to increase, there is growing demand for flue gas desulfurization
facilities at coal-fired power plants. Therefore, the Group will license its CT-121 desulfurization technology andcontinue marketing activities concerning the said technology in those regions.
As to the outlook for revenues from completed contracts of fiscal 2006 ending March 31, 2007, the Group as awhole will exert best efforts to manage a large volume of outstanding contracts and to achieve on-time completionsof projects including large-scale LNG projects in Qatar.
Based on the aforementioned, and assuming an exchange rate of 110 yen to the U.S. dollar in the fiscal year
ending on March 31, 2007, Chiyoda is forecasting consolidated new contracts of 400 billion yen, revenues fromcompleted contracts of 420 billion yen, consolidated operating income of 25 billion yen, consolidated ordinary
income of 28 billion yen and consolidated net income of 16.5 billion yen. On a non-consolidated basis, Chiyoda isforecasting new contracts of 350 billion yen, revenues from completed contracts of 370 billion yen, operating
income of 22 billion yen, ordinary income of 25 billion yen and net profit of 15 billion yen. The projected year-end
dividend is 14 yen per share.

Outlook for FY 2006 Business Results

Billions in yen
Consolidated

Years from April 1 to March 31
2006

2005

Change (%)

New contracts

400.0

804.2

(50.3 ％)

Revenues

420.0

390.8

7.5 ％

Operating income

25.0

20.7

20.6 ％

Ordinary income

28.0

23.1

20.9 ％Net income

16.5

19.4

(14.9 ％)

11

4. Risk Factors
Presented below is a list of major items, including significant items concerning the Group’s financial condition,
operating results and cash flows, that may have a material effect on investment decisions, and the Group’s
responses to such items. The Group is aware of these risks and takes the greatest possible precautions to prevent
their occurrence. In the event that a problem occurs, the Group shall swiftly respond to minimize its impact.
Risk factors listed below that involve future events represent items that the Company currently recognizes asimportant with respect to risk management.
1) Foreign exchange rate volatility
In the cases of overseas construction projects, though most payments received are denominated in yen, foreign
currencies are used for most purchases of equipment and materials and for payments to subcontractors. As a result,an unexpected change in foreign exchange rates can have an effect on earnings. The Company takes all actions
possible to manage foreign exchange risk and hedge against the fluctuations by receiving payments in several
foreign currencies to match projected expenses, using foreign exchange forward agreements and taking other steps.
2) Higher cost of equipment and materials and limited supplies of basic materials and construction
workers
In cases of plant construction projects, there is a gap between the time when estimates are prepared and the time
when materials, equipment and subcontracting work are ordered. As a result, there may be cases where, after thesubmission of a bid for a project, there is an increase in the cost of labor, equipment or materials that exceeds
projections at the time of tender. Moreover, tight supplies of metals such as copper, nickel and aluminum maycause delays in the delivery of equipment and materials and in the installation of equipment. There may also bedelays in construction projects caused by a shortage of construction workers. Any of the above-mentioned events
may have an impact on earnings.
Chiyoda takes every possible measure to avoid and minimize exposure to these risks. The Company is diversifying
suppliers including making purchases in all areas of the world, and examining blanket procurement. Other measuresof risk management include ordering equipment, materials and subcontracting work at earlier timings, andestablishing collaborative ties with leading construction companies.
3) 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 Group offices at home and abroad, endanger construction site workers, force the suspension of
construction work or cause other problems resulting in expenses that cannot be passed on to customers. The Group
has a crisis management system that permits a rapid initial response, including collaboration with customers andother external parties, in case of an emergency.
4) Accidents at plants
There is a possibility of a serious accident such as an explosion or fire from any cause at a plant that is underconstruction or that has been constructed by the Group. In the event that the Group is judged to be responsible forthe cause of the accident, there could be an impact on earnings.
To prevent the occurrence of such accidents, the Group has established the best possible quality management,
construction safety management and other risk management systems. Furthermore, the Group purchases suitable
insurance coverage, incorporates in agreements a provision for reasonable division of the responsibilities fordamages with customers, and takes other necessary actions to avoid and minimize exposure to these risks.
Cautionary note regarding forward-looking statements
Forecasts for operating results contained in these materials are based on various assumptions concerning future
events. Actual results may differ significantly from these forecasts due to a wide range of factors. Investors are
therefore urged to refrain from reaching decisions based solely on these forecasts.

12

[Appendix]

1. Summary Consolidated Balance Sheets
Millions of Yen
1H FY2006
As of
Sept. 30, 2006%

1H FY2005
As of
Sept. 30, 2005

As ofMar. 31, 2006%%

AssetsCurrent Assets
Cash 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
Machinery, equipment and vehicles
Accumulated depreciation
Tools, furniture and fixtures
Accumulated depreciation
Land
Construction in progress
Total property, plant and equipment
Intangible fixed assets ...............................
Investments and other assets
Investment securities ............................
Long-term loans
Long-term accounts receivable
Deferred tax assets ...............................
Other ..................................................
Allowance for doubtful accounts
Allowance for capital loss on
investments
Total investments and other assets........
Total Fixed Assets ..................................
Total Assets ...........................................

48,87334,93827,5761,552
240,131
12,115(87)
365,100

6,581
3,528
908
276
5,318
3,642

39,656
51,52323,966
4,080
69,741
6,917(350)
195,535

93.9

6,410
3,338

3,052

91.2

315
5,482
4,039

1,676
1,850
10
7,222
3,103
7,183
536
―
2,834
3,534
（602）

498

279
5,248
3,567

1,442
1,904
1
6,919
2,901
4,392
597
1,911
756
3,200
(1,490)

537
1,681
1,852
7,085
3,168
5,701
533
662
4,157
3,522
(1,469)

―

(263)

(263)

13,48523,811
388,912

9,105
18,926
214,462

12,84423,097279,721

6.1
100.0

91.7

6,453
3,440
817

3,072

813
632

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

8.8
100.0

8.3
100.0

Liabilities and Shareholders’ Equity
Current Liabilities
Notes and accounts payable-trade...............
Current portion of long-term debt ..............
Income taxes payable................................
Deferred tax liability
Advance receipts on construction contracts ..
Indemnity allowance for completed
construction
Allowance for loss on construction
Accrued bonuses
Other ......................................................
Total Current Liabilities ..........................

80,27571
4,801―
210,554

82,955
10,061
388―
58,93485,901
46
3,989
1
101,979

1,636
10
3,727
7,654
308,731

79.4

934
2,480
5,524
161,279

75.2

1,870
146
3,856
7,402
205,192

73.4

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

10,133
2
3,260
417
1,774
15,587

4.0

203
0
5,598
363
136
6,308

2.9

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

6.7

13

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

324,319

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

167,582

78.1

223,890

80.1

─

301

0.2

322

0.1

─
─
─

12,823
6,607
28,100

6.0
3.1
13.1

12,901
6,684
36,877

4.6
2.4
13.2

─
─
─
─

39
(587)
(405)
46,579

0.0
(0.3)
(0.2)
21.7

44
(323)
(676)

0.0
(0.1)
(0.3)

55,50819.8

─214,462100.0

279,721

100.0

83.4

14

Summary of Consolidated Balance Sheets（continued）
Millions of Yen
1H FY2006
As of
Sept. 30, 2006%

1H FY2005
As of
Sept. 30, 2005

As ofMar. 31, 2006%%

Net Assets
Shareholders’ Equity
Common stock ....................................
Additional paid-in capital ......................
Retained earnings................................
Treasury stock ....................................
Total Shareholders’ Equity................
Valuation and Exchange Rate
Adjustments
Net unrealized loss on available-forsale securities ....................................
Deferred hedging losses .......................
Foreign currency translation
adjustments
Total valuation and exchange rateadjustments
Minority interests ................................
Total Net Assets ...............................
Total Liabilities and Net Assets.........

12,926―6,700
46,041（790）――

64,868

―

16.7

―

―

―

（133）
（210）

―
―

（290）
（634）
359
64,593388,912

―

―

―

―

―

―

―

―

（0.1）
16.6
100.0

15

2. Summary of Consolidated Statements of Income
Millions of Yen
1H FY2006
Apr. 1, 2006–Sept. 30,
2006%

1H FY2005
Apr. 1, 2005–
Sept. 30, 2005

210,981
192,047
18,934

100.0
91.0
9.0

165,515
152,854
12,660

100.0
92.4
7.6

390,875
360,32230,552

100.0
92.2
7.8

5,443
13,490

2.6
6.4

4,441
8,218

2.6
5.0

9,823
20,7292.5
5.3

Construction Contracts...................
Cost of Construction Contracts.......
Gross profit ......................................
Selling, General and
Administrative Expenses ................
Operating income..............................
Other Income
Interest .....................................
Dividend income .........................
Equity in earnings of associatedcompanies .................................
Rent income
Foreign exchange gain
Other .......................................
Other Expenses
Interest expense.........................
Cost of rent income
Foreign exchange loss
Other ........................................

Extraordinary Loss
Unrealized loss on investment
securities
Loss on termination of certain
retirement benefit plans ...............
Settlement of construction
contract
Impairment loss
Loss on sale of fixed assets...........
Other..........................................
Profit before income taxes andminority interests
Income taxes current
Income taxes deferred
Minority interests in net income (loss) .
Net income.....................................

%

%

3,388
17

863
17

2,638
29

144
131
―
155

1.8

51
138
3
46

0.7

193
269
―
151

3,280

0.8

629

0.3

150
89
―
70

310

0.2

302
148
174
223

848

0.2

16,697

7.9

9,029

5.5

23,161

5.9

1,590

0.4

2,845

0.7

21,906

5.6

152
80
343
52

Ordinary income ...............................
Extraordinary Gain
Reversal of allowance for
doubtful accounts .......................
Allowance for loss on
investments
Other ........................................

Apr. 1, 2005–
Mar. 31, 2006

3,836

688
263
124

1,120

1,167

1,076

0.5

―
3

1,367

1,170

0.7

―
223

14

―

―

—

—

1,995
469

—
—
―

4,876
1,675

—
—
14

0.0

17,758

8.4

6,551
33
11,173

3.1
(0.0)
5.3

478
(925)

2

0.0

10,197

6.2

(446)
21
10,622

127
20
233

4,478
(0.2) (2,011)(2,467)

0.6

(0.0)
6.4

39
19,400

(0.0)
5.0

16

3. Summary of Consolidated Statements of Cash FlowMillions of Yen
1H FY2006
Apr. 1, 2006–
Sept. 30, 2006
Cash Flow from Operating Activities
Profit before income taxes and minority interests .........
Depreciation and amortization ...................................
Decrease (increase) in allowance for bad debts
Interest and dividend income
Interest expense
Foreign exchange losses (gains)
Equity in earnings of associated companies
Loss on partial termination of retirement benefit
systemDecrease (increase) in trade notes and accounts
receivable ...............................................................
Decrease (increase) in costs of construction contracts
in process................................................................
Increase in trade notes and accounts payable ..............
Increase in advance receipts on construction contracts .
Increase (decrease) in accrued bonuses
Increase (decrease) in accrued retirement benefits
Increase (decrease) in indemnity allowance forcompleted construction
Increase in jonitly controlled assets of joint ventures ....
(Incease) decrease in consumption tax payable
Increase (decrease) in transfer of defined contribution
pension payable
Other ......................................................................
Subtotal ........................................................................
Interest and dividend income.....................................
Interest paid............................................................
Settlement of construction contract paid .....................
Income taxes paid ....................................................
Net Cash Provided by Operating Activities...................
Cash Flow from Investing Activities
Proceeds from refunds of time deposits withmaturities................................................................
Payments for purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Payments for purchase of intangible fixed assets
Payment for purchase of investment securties..............
Proceeds from sales of investment securities
Payment for purchase of consolidated subsisdiarystock ......................................................................
Net decrease in short-term loans
Long-term loans .......................................................
Proceeds from collections of long-term loans ...............
Other ......................................................................
Net Cash Used in Investing Activities .
Cash Flow from Financing Activities
Proceeds from long-term debt........... ................... ....
Repayments of long-term debt ..................................
Proceeds from new stock issue...................................
Cash dividends paid ..................................................
Cash dividends paid to minority shareholders...............
Other .....................................................................
Net Cash Provided by (Used in)
Financing Activities .....................................................

1H FY2005
Apr. 1, 2005–
Sept. 30, 2005

Apr. 1, 2005–
Mar. 31, 2006

17,758759(947)(3,405)
152
(5)
(144)

10,197686(1,152)
(880)
150
(89)
(51)

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

―

―

1,995

12,036(13,874)(9,100)(9,672)(5,452)
108,589(128)(4,701)

1,011
8,541
14,550
(344)
431

7,095
11,12257,479
1,039
798

(237)
(108,794)(1,706)

174(19,787)
(755)

1,103
(81,382)
1,031

2,450
3,511
10,063146―(878)(2,060)―(4,243)
6,163

(151)
(469)
(3,647)
5,941

299
(150)
—
(903)
2,814

321
(303)
―
(944)
5,237

—
(206)
6
(626)
(1,589)
―

654
(239)
49
(568)
(24)
―

703
(618)
139
(1,236)(1,272)
148

—
0
(15)
379

—
1
(19)
1,902
0

(121)
1
(33)
3,340

13
(2,038)

1,757

0
1,051

—
(10)
31
(1,913)
—
(114)

—
(50)
202
(1,138)(19)(154)

10,000(10,101)357(1,139)(36)(417)(2,006)(1,160)(1,338)17

Foreign Currency Translation Adjustments on Cashand Cash Equivalents...................................................
Net Increase (Decrease) in Cash and Cash
Equivalents ......................................... ........................
Cash and Cash Equivalents at Beginning of Period ......
Decrease in Cash and Cash Equivalents Elimination
From Consolidation .....................................................
Cash and Cash Equivalents at End of Period ................

13

135

333

1,909
46,878(2,083)
41,594

5,284
41,594(66)
48,721—
39,511―
46,87818

<Appendix to Consolidated Financial Statements>

Accounting Principles and Notes <Abstract>
1. Consolidated subsidiaries
P.T. Asian Engineering Contractors Indonesia was excluded from the consolidated subsidiaries, having lost
significance. U-Tech Consulting Co., Ltd. and C&E Corporation have changed their corporate names to
Chiyoda U-Tech Co., Ltd. and Chiyoda Philippines Corporation respectively.
2. Reserve for retirement benefits
The reserve is provided for the amount recognized to have incurred at the end of the current semiannual period,
based on the expected amounts of the retirement benefit liability and pension assets.
Additionally the difference caused by the accounting change (5,696 million yen) is equally written off annually overthe period of 15 years. (This accounting change difference arose from the transition to the defined benefit corporate
pension system (cash balance plan) and defined contribution pension system.)
The past service liability is written off as the operating cost over a fixed period (10 years) not longer than the
average of the remaining term of service under a straight-line method.
The actuarial difference is written off as the operating cost over a fixed period (10 years) not longer than the
average of the remaining term of service under a straight-line method from the next financial year.
3. Hedging Policy
Under the internal regulations and management rules concerning the management of foreign currency risk, thehedging is done for the purpose of fixing the foreign currency credits and debts as well as the Japanese yen cash
flows of the expected transactions and mitigating the fluctuation risk of exchange rates of foreign currency assets
and liabilities.
4. Accounting Standard for Presentation of Net Assets in the Balance Sheet
From the current semiannual financial year “Accounting Standard for Presentation of Net Assets in the Balance
Sheet” (Accounting Standard No.5 dated December 9, 2005) and “Guidance on the Application of AccountingStandard for Presentation of Net Assets in the Balance Sheet” (Accounting Standard Application Guidance No.8
dated December 9, 2005) are applied.
The amount to be booked to total shareholders’ equity under the old accounting method totals 64,444 million yen.
Additionally, as the Regulations on Interim Consolidated Financial Statements were amended, the net assets in thebalance sheet as of the end of the current semiannual financial year are stated in accordance with the Regulations
on Interim Consolidated Financial Statements as amended.
5. Fixed Assets
The gross receivables and other assets in the amount of 209 million yen from "KAFCO Japan Investment Co., Ltd. "are included in the "other" of the "Investments and other assets". All these assets were paid to the Company as of
October 31, 2006.

19

5. Production, Orders and Sales Situation (Consolidated)
Millions of Yen

New contracts%

1H FY2006
Apr. 1, 2006 –Sept. 30, 2006
Revenues%

Backlog%Business Segment
Engineering
LNG plant ..........................
Gas and power utilities ........
Gas chemicals ....................
Petroleum andpetrochemicals ...................
General chemicals ...............
Industrial machinery............
Environment and other........
Total Engineering

33,033
261,795
394

8.9
70.4
0.1

150,274
10,369
1,099

71.2
4.9
0.5

739,228
283,439
1,902

65.4
25.0
0.2

38,427
14,98012,767
7,183
368,581

10.4
4.0
3.4
1.9
99.1

33,940
7,310
2,401
2,328
207,723

16.1
3.5
1.1
1.1
98.4

60,301
27,087
12,0706,936
1,130,966

5.3
2.4
1.1
0.6
100.0

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

3,258

0.9

3,258

1.6

—

—

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

70,885300,954371,840

19.1
80.9
100.0

44,657
166,324
210,981

21.2
78.8
100.0

123,146
1,007,820
1,130,966

10.9
89.1
100.0

Millions of Yen
1H FY2005
Apr. 1, 2005 –Sep. 30, 2005
Revenues%

New contracts%

Backlog%Business Segment
Engineering
LNG plant ..........................
Gas and power utilities ........
Gas chemicals ....................
Petroleum andpetrochemicals ...................
General chemicals ...............
Industrial machinery............
Environment and other........
Total Engineering

366,595
7,906
257

82.9
1.8
0.1

86,541
24,216
5,406

52.3
14.6
3.3

671,634
52,788
4,853

82.7
6.5
0.6

53,194
4,915
3,005
3,869
439,743

12.0
1.1
0.7
0.9
99.5

27,924
14,164
2,249
2,646
163,148

16.9
8.5
1.4
1.6
98.6

60,691
14,5373,614
4,234
812,354

7.5
1.8
0.4
0.5
100.0

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

2,367

0.5

2,367

1.4

—

—

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

65,813376,297442,110

14.9
85.1
100.0

42,416
123,098
165,515

25.6
74.4
100.0

113,505
698,849
812,354

14.0
86.0
100.0

20

Millions of Yen

New contracts%

FY2005
Apr. 1, 2005 –Mar. 31, 2006
Revenues%

Backlog%Business Segment
Engineering
LNG plant ..........................
Gas and power utilities ........
Gas chemicals ....................
Petroleum andpetrochemicals ...................
General chemicals ...............
Industrial machinery............
Environment and other........
Total Engineering ............

675,208
16,848
515

83.9
2.1
0.1

230,227
54,278
7,952

58.9
13.9
2.0

846,92232,070
2,606

88.2
3.3
0.3

73,32819,9906,483
7,134
799,509

9.1
2.5
0.8
0.9
99.4

53,73324,2987,602
8,061
386,153

13.8
6.2
1.9
2.1
98.8

55,624
19,477
1,738
2,098
960,538

5.8
2.0
0.2
0.2
100.0

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

4,721

0.6

4,721

1.2

―

―

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

112,720
691,510804,231

14.0
86.0
100.0

105,329
285,545
390,875

26.9
73.1
100.0

97,484
863,054
960,538

10.1
89.9
100.0

(Note) The amount of the backlog is adjusted for any decreases in contract amounts due to changes in contracts andincreases due to adjustments in contracts booked before the previous fiscal year and the effect of foreign currencytranslation adjustments on foreign currency-denominated contracts.

21