Translation

May 12, 2016

Consolidated Financial Results
for the Fiscal Year Ended March 31, 2016
Company name: CHIYODA CORPORATION
Listing:First Section of the Tokyo Stock Exchange
Stock code:
6366
URL:
http://www.chiyoda-corp.com/
Representative: Shogo Shibuya, President & CEO
Inquiries:
Nobuo Sekita, SL, Accounting Section
TEL: +81-45-225-7745 (from overseas)(Millions of yen with fractional amounts discarded, unless otherwise noted)

1. Consolidated performance for the fiscal year ended March 31, 2016
(from April 1, 2015 to March 31, 2016)(1) Consolidated operating results
Net sales
Millions of yen(Percentages indicate year-on-year changes.)

Operating income% Millions of yen

Ordinary income
Millions of% yenProfit attributable toowners of parent% Millions of yen%

Fiscal year ended
611,548 27.1
16,015 (25.4)
16,205 (27.2)
3,375 (69.4)
March 31, 2016
Fiscal year ended
480,979
7.8
21,466
1.8
22,271 (2.5)
11,029 (18.0)
March 31, 2015
Note: comprehensive income: Fiscal year ended March 31, 2016: (2,888) million yen
Fiscal year ended March 31, 2015: 15,121 million yen (16.0% increase year on year)

Net income per Fully diluted net Return on Equity Ratio of Ordinary Ratio of Operating
Income to Total
Income toshare
income per share(ROE)
Assets
Revenue
Yen
Fiscal year ended
March 31, 2016
Fiscal year ended
March 31, 2015

Yen

%

%

%

13.03

－

1.7

3.1

2.6

42.58

－

5.5

4.5

4.5

Reference: Equity in earnings of associated companies: Fiscal year ended March 31, 2016: (1,318) million yen
Fiscal year ended March 31, 2015: (783) million yen(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

As of March 31, 2016

528,219

202,12837.9

772.89As of March 31, 2015

515,839

208,40540.0

796.89Reference: Equity

As of March 31, 2016:

200,166 million yen

As of March 31, 2015:

206,395 million yen(3) Consolidated cash flows

Fiscal year ended
March 31, 2016
Fiscal year ended
March 31, 2015

Net cash provided byoperating activities

Net cash used ininvesting activities

Net cash used infinancing activities

Cash and cash
equivalents at end of
periodMillions of yen

Millions of yen

Millions of yen

Millions of yen

55,526(26,750)(3,942)

136,919(24,145)(5,444)(4,569)113,246

12. Cash dividends
Cash dividends per share
Record dateFiscal year ended
March 31, 2015
Fiscal year ended
March 31, 2016
Fiscal year ending
March 31, 2017
(Forecast)First
quarter

Secondquarter

Third
Fiscalquarter year-end Annual

Yen

Yen

Yen

–

–

–
–

PayoutDividend on
Equity Ratio
Ratio(Consolidated) (Consolidated)

Payment of
Cash
Dividends

Yen

Yen

Millions of
yen

%

%

–

13.00

13.00

3,367

30.5

1.7

–

–

10.00

10.00

2,589

76.7

1.3

–

–

6.00

6.00

31.1

3. Consolidated earnings forecasts for the fiscal year ending March 31, 2017(from April 1, 2016 to March 31, 2017)(Percentages indicate year-on-year changes.)
Profit attributable Net income per
Net sales
Operating income Ordinary income
to owners of
shareparentMillions ofMillions ofMillions ofMillions of
yen
yen
yen
yen
%
%
%
%
Yen
Fiscal year ending
March 31, 2017

550,000 (10.1)

18,00012.4

14,000 (13.6)

5,000 48.1

19.31

4. Others(1) Changes in Significant Subsidiaries during the Period (changes in specified
subsidiaries accompanying changes in the scope of consolidation): None
(2) Changes in Accounting Policies and Accounting Estimates / Restatements
a. Changes in accounting policies due to revisions of accounting standards, etc.: Yes
b. Changes in accounting policies other than a. above: Nonec. Changes in accounting estimates: None
d. Restatements: None
(3) Number of issued shares (common stock)a. Number of shares issued at year-end (including treasury shares)
March 31, 2016
260,324,529 shares
March 31, 2015
260,324,529 sharesb. Number of treasury shares at year-end
March 31, 2016
1,340,062 shares
March 31, 2015
1,323,232 sharesc. Average number of shares during each of the following fiscal years
Year ended March 31, 2016
258,990,754 sharesYear ended March 31, 2015
259,006,890 shares* Proper use of earnings forecasts, and other special directions
The forward-looking statements, including earnings forecasts, contained in these materials
are based on information currently available to the Company and on certain assumptions
deemed to be reasonable. Actual business and other results may differ substantially due
to a number of factors.

2

1. Qualitative Information related to Consolidated Performance(1) Qualitative Information on Business Performance
The global economic environment remained uncertain. Emerging countries including China
slowed down and geopolitical risk in the Middle East increased. The destabilization of Europe
due to the recurrent terrorist attacks continued. In a nutshell, global markets were in turmoil.
Although oil prices with an impact on the plant industry and the Group’s main businessshowed a sign of bottoming out, they fluctuated due to the unwillingness to adjust production
among oil-exporting countries. Under those circumstances, our clients were prudent toproceed with their investment plans. The Japanese economy waxed and waned. Some
capital investment was made, backed by a high level of corporate earnings and extremely
low interest rates. The strong Yen from the beginning of the year and lower oil prices led tothe market contraction.
Under such circumstances, the Group was concentrating on the initiatives designed to create
sustainable growth by accelerating its growth strategy and operating foundation defined in
the Medium-Term Management Plan beyond the mid-point of the 4-year term. The Group
had made progress toward the goal in the Metal field including new orders received for atitanium sponge plant in Saudi Arabia followed by a large scale project in Indonesia. While
keeping a strong presence in the conventional field, the Group also received a letter of intent
for a Liquefied Natural Gas (LNG) plant, although it was subject to Final Investment Decision(FID) to be made. In parallel, the Group was set for expansion in new business fields
including offshore and upstream where EMAS CHIYODA Subsea was established to
implement an Engineering, Procurement, Construction and Installation (EPCI) business, newand renewable energy, including the Hydrogen Supply Chain utilizing its own technologies,
and solar power generation utilizing photovoltaic and concentrating solar power technology,
and life science like iPS related projects.
The ongoing projects including LNG plants in Australia, the USA and Russia, refinery plants
in Vietnam, Qatar and Venezuela, a Floating Production Unit (FPU) in Indonesia, a Titanium
Sponge plant in Saudi Arabia, airport projects in Mongolia and the Philippines, and LNG
receiving terminals and photovoltaic power generation systems in Japan, all progressed onschedule.
Consequently, consolidated new contracts for the period amounted to 403,595 million yen(46.0% decrease compared to the same period of the previous fiscal year). The backlog andrevenue were 1,164,991 million yen (17.8% decrease from the end of the previous fiscal
year), and 611,548 million yen (27.1% increase year on year) respectively. The operating
income amounted to 16,015 million yen (25.4% decrease), ordinary income to 16,205 million
yen (27.2% decrease), and profit attributable to owners of parent resulted in 3,375 million
yen (69.4% decrease).
The operating income was lower than the forecast due to the increase in construction costs
to meet the delivery schedule for some petroleum related projects, as well as the worsening
performance of overseas group companies including one in England and the prolonged
tumble in oil prices. The profit attributable to owners of parent was also lower, mainly due toan extraordinary loss incurred by goodwill impairment in connection with acquisition of theshares of a group company in England.
With great regret about lower earnings, the Group is aiming to strive to improve profitability,
and recover stakeholders’ trust by performing more rigorous management for profit and loss
and for the Group Companies.
LNG Plants/Other Gas Related Works
The Group is selected as an Engineering, Procurement and Construction (EPC) contractor
for an LNG plant in the Mozambique, contracts for which with the client are being negotiatedand to be finalized in the near future. The EPC execution of LNG plants, two in the USA andeach one in Russia and Australia and Front End Engineering and Design (FEED) works for
LNG plants in Mozambique and USA are in progress as planned. The Group has completed
the FEED work in Indonesia and currently under negotiation for an EPC contract. The Group
has also completed the FEED work in Canada and is negotiating for an EPC contract with3

the client. The Group Company in Qatar has been carrying out EPC work for helium recovery
facilities and the Engineering, Procurement and Construction management (EPCm) work forthe maintenance and modification of the existing LNG and gas processing plants built mainlyby the Group. In Japan, several pieces of EPC work on LNG receiving terminals and the
expansion/modification of the existing plants are in progress.
LNG plants and other gas-related facilities constitute the Group’s core business. In thatregard, the Group will pursue any such project globally.
Refinery/Petrochemicals/Metal
Engineering, Procurement, Construction and Commissioning (EPCC) is working for a
Residue Fluid Catalytic Cracking (RFCC) project in Malaysia. EPC is working for a refineryand petrochemical complex in Vietnam and a refinery project in Qatar. Engineering,
Procurement support and Construction management (EPsCm) for heavy crude oil upgrading
facilities in Venezuela are going on. Additionally, the Group Company in Singapore is
performing project management under the Enterprise Framework Agreement for
downstream projects within Asia. For metal fields, the Group has been awarded Engineeringand Procurement (EP) work for a Copper Smelter project in Indonesia, in addition to the EPC
work for a Titanium Sponge Plant in Saudi Arabia.
In Japan, the Group has been continuing to perform the EPC work for modification to fortify
the existing facilities in the case of a possible catastrophic event, a petrochemical plant andenergy saving measures among several facilities. The Group has also been continuing to
expand its sales activity in the petroleum and petrochemical field.
Pharmaceutical/Biochemistry/General Chemistry/Environment/Infrastructure
The Group has been moving forward with the EPC execution for a new international airport
in Mongolia and a new Bohol airport in the Philippines.
Meanwhile, the Group has also been responding to the overseas expansion in Japaneseclients’ businesses in non-hydrocarbon fields. In Japan, the Group has won a number of EPC
projects for large-scale photovoltaic power generation systems. The Group has been
expanding its sales activity by enhancing its group operations in this field. And the Group has
been awarded EPC work for a food factory to support food safety and hygiene control. In thepharmaceutical industry, the Group has been awarded EPC work for an advanced
pharmaceutical plant to manufacture injections, and been carrying out EPC work for
manufacturing facilities of active pharmaceutical ingredients, vaccine and bio-medicine
plants individually. The Group has been also gearing up for the life science field as a growing
market, marked by iPS cells and regenerative medicine, applying our pharmaceutical andmedical expertise.
New Business Fields
Chiyoda Corporation and Ezra Holdings Limited established a joint venture named EMASCHIYODA Subsea on March 31 of this year, in order to accelerate its expansion of the
Offshore & Upstream business field. The transaction has been completed within this Fiscal
Year. In parallel, the Group’s strategic alliance partner, Xodus Group has been providing
integrated services in the offshore and upstream field for resource exploration companies
worldwide. The Group hereby has been set to provide a value chain for resource
development on offshore and upstream for all the phases from design to EPCI, including
operation and maintenance.
As for new energy fields, the Group has developed its own technology for transporting anddelivering a large volume of hydrogen. The Group has been actively collaborating withvarious parties in order to achieve hydrogen-based society.
Moreover, the Group has been selected as an EPC contractor for Japan’s first demonstration
plant to produce and supply renewable jet and diesel fuels, and currently doing basic design
work.
Outlook for the next Fiscal Year
With its highest backlog of contracts more than one trillion yen, the group will continue towork diligently on the execution of existing large projects in Australia, U.S., and Russia. To
materialize the Medium-Term Management Plan, the Group will also continue to accelerate
its growth strategy to diversify the business portfolio by expanding new business fields. In
consideration of these circumstances and assuming an exchange rate of ¥110/ US Dollar,4its forecast for the fiscal year ending March 31, 2017 include 470.0 billion yen in consolidated
new contracts and 550.0 billion yen on consolidated revenues. Its forecast for the
consolidated operating income is 18.0 billion JPY, consolidated ordinary income is 14.0
billion yen, and the consolidated profit attributable to owner of parents is 5 billion yen.
(2) Analysis of Financial Condition
1) Assets, Liabilities and Net Assets
Assets
While securities and cost on uncompleted construction contract decreased 74,499 million
yen and 24,614 million yen respectively from the previous fiscal year, current assets
increased 10,452 million yen due to 105,899 million yen increase in cash and deposits and15,455 million yen increase in notes receivable from completed construction contracts.
While goodwill decreased 8,102 million yen, non-current assets increased 1,927 million yen
due to 11,742 yen increases in investment securities. Total assets increased 12,380 million
yen.
Liabilities
While other current liabilities decreased 7,042 million yen, total liabilities increased 18,658
million yen due to 12,426 million yen increase in notes payable and accounts payable forconstruction contracts and 11,798 million yen increase in advance received on uncompleted
construction contracts.
Net Assets
While retained earnings increased 8 million yen from the previous fiscal year due to payment
of dividend and profit attributable to owners of parent, net assets were 202,128 million yen
due to 4,831 million yen decrease in the value of securities.
The equity ratio decreased 2.1 points year-on-year to 37.9%.
2) Cash Flow
Net cash from operating activities showed a 55,526 million yen increase due to a 14,460
million yen increase in income before income tax and minority interest and 33,529 million
yen increase in working capital (total in notes and accounts receivable-trade, costs on
uncompleted construction contracts, notes and accounts payable-trade and advances
received on uncompleted construction contracts).
The jointly controlled assets of joint ventures are shown on the JV balance sheet as theassets controlled by Chiyoda whereas, in real terms, it is equivalent to the portion of thecurrent deposit balance under the JV name that is allocated to Chiyoda.
Cash flow from investing activities
While 5,463 million yen came from sell of investment securities, net cash from investing
activities was a negative 26,750 million yen mainly due to 21,998 million yen expenditure forpurchase of investment securities and 7,739 million yen increase in time deposit.
Cash flow from financing activities
Net cash from financing activities was negative 3,942 million yen due to 3,362 million yen
paid in dividends and other factors.
As the result of the above factors, the account balance for the fiscal year for cash and cash
equivalent was 136,919 million yen which was a year-on- year increase of 23,673 million yen.

Cash Flow IndicesFiscal years ended
March 31

Interest
Debt
repayment
ratio
period (Years)(Times)Equity ratio(%)
5

coverage

2012
2013
2014
2015

46.0 %
43.3 %
41.3 %
40.0 %

0.2
0.7
–
–

267.9
68.6
–
–

2016

37.9 %

0.2

256.9

Notes

(Shareholders’ equity–
minority
interests)/Total
assetsInterest-bearing
debt/Net
cash
provided by operating
activities

Net cash provided byoperatingactivities/Interest
expenseNote: The debt repayment period and interest coverage ratio for the period both ended March
31, 2014 and 2015 are omitted due to there being a negative cash flow from operating
activities.
(3) Dividend Policy and Current/Next-Period Dividend Payments
Our basic policy for dividends is set to meet a payout ratio of 30% or above of consolidated
net income. This policy supports our desire to return profits to our shareholders, whilebuilding a stronger financial base by which we can finance our business growth.
We have set the dividend at 10.0 yen per share for the fiscal year ended March 31, 2016
after having set aside the extraordinary loss. As for the next fiscal year, we plan a year-end
dividend per share of 6.0 yen.
(4) Business Risks
Business risks may significantly impact the Chiyoda Group’s business operations andfinances. These risks have the potential to impact investor decision making. Recognizingthese risks, the Group has implemented risk mitigation plans to minimize consequences
when such events occur.
The risks below are those we recognize as of the date of the fiscal year ended.
(a) Changes in the Business Environment; Economic, Social and Political Factors
Various factors may require that modifications be made to clients’ investment plans, projectsuspension, delay or review. These factors include changes in global economic, social andpolitical environments, economic sanctions, changes in home country energy policies andcommodity prices such as oil, LNG and metal resources prices: All the factors may affect theGroup earnings. Changes in economic, social and political environments for clients,
subcontractors, suppliers and service providers could affect the Group’s project executionplans, profitability and, ultimately, its financial strength.
The Group monitors global economic and social trends for a potential impact on businessand strives to reduce such risk through rigorous contract negotiations. Due diligence is
executed for subcontractors, vendors and service providers and remedial action in the supply
chain is taken if necessary.
(b) Earthquakes and Natural Disasters, Terrorism, Wars and Other Force Majeure
EventsForce Majeure events such as earthquakes, natural disasters, terrorism and wars have thepotential to materially impact project sites or business locations. Disruption issues may
include personnel life crisis, delays in equipment and materials delivery and/or suspensionof field work.
The Group puts life and safety first and has the Crisis Management Unit, to compile andanalyze information to prevent human suffering or harm. The Group has established, and isreinforcing, the crisis management system, which advocates the employment of professional
security advisors in the regions requiring particular attention. Additionally, the Group
maintains the risk management system to rapidly react to various situations and to respondto an emergency immediately, including consulting with the clients and/or the parties
concerned to minimize force majeure risk.
The Group has formulated a Business Continuity Plan (BCP) for unexpected events including
6

as a massive earthquake to act smoothly in the initial stage and execute priority tasks. In thatway, the Group has been prepared to ensure business continuity by conducting emergency
response training.
(c) Fluctuations in Equipment and Material Costs
Under certain contracts, the Group is exposed to material/equipment cost fluctuation risk due
to the time difference between plant or material quotation and purchase. Specifically the priceof steel, which constitutes a major part of plant construction, could be severely impacted bya rise in commodity prices such as coal and iron ore. Future market prices of copper, nickel,
aluminum and zinc are similarly unpredictable.
The Group avoids such risks (or minimizes the impact) by diversifying supply sources,
placing early orders, maintaining alliances with major vendors/suppliers and identifying
market trends.
(d) Possible Shortages of Construction Workers/Equipment and Materials
A project may experience a delay and a cost impact if sufficient construction labor, equipment
and materials or other resources required for a project cannot be sufficiently procured.
The Group avoids such risk (or minimizes the impact) by applying diverse construction
methods including modular construction, in the areas where materials and/or adequately
qualified labor are scarce and by establishing communication and collaboration with reliable
subcontractors, vendors and suppliers. If a plant’s construction is suspended due to labor
disputes and the like, the Group minimizes risk by taking appropriate action in cooperation
with clients and the local authorities.
(e) Plant Accidents
Safety risk, the consequences of which could be serious for the Group’s operating capability,
is inherent in the construction industry.
Safety is of paramount importance to the Group, reinforced by the maxim “Safety is the Core
Value”. Through comprehensive Risk Identification and Management procedures, reinforced
by close collaboration with clients, designers, subcontractors and vendors, all the risks are
identified at every stage of project delivery, from feasibility through design and construction,and measures to negate or mitigate the identified risks are implemented.
(f) Exchange Rate Fluctuations
Some construction projects may involve payment settlements (subcontractors, vendors andsuppliers) in a currency that does not correspond with the currency received from the client
for the work. In such cases, exchange rate fluctuations can have an impact on earnings. The
Group avoids/minimizes exchange rate risk by reserving construction payments against suchrisk in multiple foreign currencies and by entering into exchange rate forward contracts.
(g) Compliance-related Risk
The Group’s global operations are required to comply with local laws, acts and regulations,both at home and abroad. Penalties or suspicious action resulting from non-compliance could
have a serious impact on a project’s execution or the business operation of the Group.
To prevent and/or minimize such compliance-related risk, the Group runs training courses
for employees including assembled induction and e-learning. Those are intended for them tounderstand and strictly observe the updated laws, acts, regulations or rules related to its
business operations including those for human rights and anti-bribery. The Group also makes
every effort to comprehend the present trend of stakeholders including the authorities
concerned and clients, both at home and abroad. Additionally, the Group has established aCompliance Committee under the direct control of the Executive Committee to negate suchrisk and endeavors to avoid compliance risk by putting senior management edict into thework process under the heading “Code of Conduct of the Group.”(h) Information Security Risk
The Group takes great care in managing information obtained from clients, subcontractors,
equipment and materials suppliers and other service providers. The information is necessary
7

in the performance of its business. The Group also possesses confidential information
related to technologies, sales, and other businesses. Many core corporate operations andbusiness transactions are conducted by making full use of the IT systems at global
subsidiaries. The Group operations are subject to system failure, information leakage andloss of important business information due to infection by computer viruses, external
unauthorized access and cyber-attacks. The Group, including the main subsidiaries andglobal headquarters, holds an ISMS (Information Security Management System) certificate
and performs competent information security management which includes training, auditing,and defensive and minimizing measures under its business continuity plan.
(I) Business Investment Risk
The Group makes business investment to pursue the growth strategy such as theestablishment of a new company or the purchase of the existing company to construct a new
business model including offshore and upstream fields. The Group is exposed to several
risks, such as changes in the business environment, lower earnings obtained than planned,
a downturn in business and incurring extra costs. Prior to deciding on business investment,
the Group does assess the feasibility through our standards and rules. After making an
investment, the Group regularly monitors the progress in the business and provide various
types of support as necessary, to avoid or minimize any loss.

82. Members of Chiyoda Group
Chiyoda Group consists of thirty (30) consolidated companies and seven (7) affiliatedcompanies applying equity method.
As an integrated engineering enterprise, the Group places top priority on the function toprovide the most effective solutions with the clients while satisfying their needs. The Group
flexibly responds to those needs as well as the requirements of time, society and/or region
by making use of the most advanced technologies and most optimized combination ofcapabilities of each Group company.
The Group’s business contents can be divided into “Engineering Business” and “BusinessSupport” as summarized below.
1)

Engineering Business:(Planning, design, procurement, construction, installation,
maintenance, etc. for every kind of plant and industrial facility.)

commissioning

andEngineering business constitutes the Group’s core business to cover overall planning,
design, engineering, procurement, construction commissioning and so on for every kindof industrial and infrastructure facilities including anti-pollution, environment-friendly andcounter-disaster facilities.
The particularity of our business exists in the consecutive project execution from planning
through commissioning and maintenance for the advanced industrial facilities, especiallychemical plants. Accordingly, our business can be commenced by orders of our clients.
The relationship with the Group companies in the Engineering Business is explained asfollows:
Chiyoda Kosho Co., Ltd. (consolidated) executes construction and maintenance forenergy and chemical-related plants in Japan. Chiyoda TechnoAce Co., Ltd.
(consolidated) constructs pharmaceutical and laboratory facilities. Chiyoda Corporation(CHIYODA) subcontracts to those two companies in domestic projects.
Chiyoda System Technologies Corporation (CST:consolidated) executes Engineering,
Procurement and Construction (EPC) and maintenance of electrical and instrumentationfor various industrial plants and performs consulting, development and operation of
integrated IT systems. CHIYODA subcontracts to CST, while CST engages indevelopment of system and software of CHIYODA and management for computer andinformation system of CHIYODA.
Chiyoda U-Tech Co., Ltd. (CUC: consolidated) engages in consulting for industrial
facilities and human resource placement. CUC is awarded consulting work and entrusted
the placement of technicians and office staff by CHIYODA.
MPDC Gabon Co., Ltd. (equity method) engages in the exploration and development ofoil and gas field in Gabonese Republic.
Chiyoda Philippines Corporation (consolidated) and L&T-Chiyoda Limited (equity
method) in India act as global engineering base.
Chiyoda Singapore (PTE.) Ltd. (consolidated), Chiyoda Malaysia Sdn. Bhd.
(consolidated), Chiyoda Almana Engineering LLC (consolidated) in Qatar, Chiyoda(Thailand) Limited (consolidated), PT. Chiyoda International Indonesia (consolidated),
Chiyoda & Public Works Co., Ltd. (consolidated) in Myanmar, Chiyoda Sarawak Sdn. Bhd.
(consolidated) in Malaysia, Chiyoda International Corporation (consolidated) in the USA,
Chiyoda Oceania Pty. Ltd. (consolidated) in Australia, Chiyoda Petrostar Ltd. (equity
method) in Saudi Arabia and Chiyoda-CCC Engineering (PTE.) Limited (equity method)in the UAE, all act as CHIYODA’s global business satellite.
Xodus Group (Holdings) Ltd. headquartered in UK globally provides services such as
investigation, study, planning and conceptual design, etc. in the field of offshore andupstream. EMAS CHIYODA Subsea Limited (equity method) engages in engineering,procurement, construction and installation of subsea facilities in the field of offshore andupstream business.
9

2)

Business Support
Arrow Business Consulting Corporation (consolidated) works consulting for finance,accounting and taxation and is entrusted accounting services by CHIYODA.
Arrowhead International Corporation (consolidated) is in charge of travel management
service and entrusted as travel agent by CHIYODA.
Arrow Human Resources Corporation (consolidated) engages in placement oftechnicians and office staff and is entrusted training courses by CHIYODA.
Chiyoda Business Solutions Co., Ltd. (consolidated) engages in service, management
and consulting for human resource and general administration and is awarded humanresource and corporate services management by CHIYODA.

10The above explanation can be shown in the following enterprise systematic plan.

＜Enterprise Systematic Plan＞
Clients

Chiyoda Corporation

Engineering Business（International）（Domestic）<Global Engineering Satellite ><Domestic EPC Work>○ Chiyoda Philippines Corporation(Philippines)○ Chiyoda Kosho Co., Ltd.

※ L&T-Chiyoda Limited(India)(Energy and chemical-related plant / Maintenance)○ Chiyoda TechnoAce Co., Ltd.
(Pharmaceutical and laboratory facilities)<Global Business Satelite >○ Chiyoda Singapore (PTE.) Ltd.(Singapore)<Domestic and EPC Work>○ Chiyoda Malaysia Sdn. Bhd.(Malaysia)○ Chiyoda System Technologies Corporation○ Chiyoda Almana Engineering LLC(Qatar)(Electrical and instrumentation related project.

○ Chiyoda (Thailand) Limited(Thailand)

Development and operation of integrated IT systems○ PT. Chiyoda International Indonesia(Indonesia)

Various service for social infrastructure)○ Chiyoda & Public Works Co., Ltd.(Myanmar)○ Chiyoda Sarawak Sdn. Bhd.(Malaysia)<Consulting>○ Chiyoda International Corporation(USA)○ Chiyoda U-Tech Co., Ltd.

○ Chiyoda Oceania Pty. Ltd.(Australia)※ Chiyoda Petrostar Ltd.(Saudi Arabia)<Exploration and Production of Oil Field>※ Chiyoda-CCC Engineering (PTE.) Limited(Singapore)※ MPDC Gabon Co., Ltd.

Business Support<Offshore & Upstream>○ Xodus Group (Holdings) Ltd.(UK)（Domestic）※ EMAS CHIYODA Subsea Limited(UK)<Finance, accounting and taxation>○ Arrow Business Consulting Corporation<Travel Agency>○ Arrowhead International Corporation<Placement of staff training>○ Arrow Human Resources Corporation<Human resource, Corporate services>○ Chiyoda Business Solutions Co., Ltd.

○ Consolidated※ Affiliates applying equity method
Orders from CHIYODA

11

Direct orders from clients3. Management Policy(1) Basic Management Policy
The shared corporate philosophy of the Chiyoda Group is to “enhance its business in aiming
for harmony between energy and the environment and contribute to the sustainable
development of society as an integrated engineering company through the use of its
collective wisdom and painstakingly developed technology”. Every Chiyoda Group employee
engages in the Group’s corporate activity with this philosophy in mind as the Group strives
for corporate group management that earns the trust and empathy of all our stakeholders,
including shareholders, customers, business partners, employees, and local communities.
(2) Management Indices to Measure Progress in the Medium-Term Business Plan,
and Targets
To improve our corporate value, we established and officially announced on May 10, 2013
the four-year business plan, “Seize the moment, Open up new frontiers”. This plan beganfrom April 1, 2013 and will run until March 31, 2017.
(See http://www.chiyoda-corp.com/ir/en for our four-year plan and financial report)
The Group established two basic strategies in the plan, i.e. growth strategy and operating
foundations. The growth strategy aims to maintain growth as a constant provider of thevalue and service required by society and/or customers, by identifying the trend of thetimes. The operating foundations help execute the growth strategy to achieve thesustainable development of the Group.
During this fiscal year, as the third year of the plan, we accelerated the implementation of
measures in accordance with the basic strategy set forth therein. The current businessenvironment around the Group is facing changes as our customers are prudent to proceedwith their investment plans due to prolonged lower oil and gas prices. The Group, however,was making every effort to expand its business by strengthening its core business anddiversifying its portfolio to reinforce new business fields. The Group will observe andrespect the provisions of compliance, CSR (Corporate Social Responsibility) and HSE(Health, Safety and Environment) when implementing each measure.
The management indices are shown in the plan.
(3) Issues to Address
In the energy field, with which the Chiyoda Group has a close link, preparations forinvestment in numerous gas related facilities are being encouraged by the continuing
increase in further energy demand from the mid- to long-term perspective. Meanwhile, wehave to make every management decision very carefully because the feasibility of eachproject becomes more difficult to assess than before due to prolonged lower oil and gas
prices and the slowdown in emerging countries.
Under those circumstances, the Group will concentrate on the key measures aiming tocontinue providing the service and value that society may need in the fields where we arepositioned in the first tier.
During the fiscal year ending March 2017, the Group will try to enhance our corporate value,
while maintaining and improving our quality as a whole, by combining the growth strategy
with the operating foundations for human resource development. The Group will also keep
on beefing up our corporate governance system to swiftly make every transparent and fairdecision while respecting all the stakeholders including shareholders, customers, employees
and community.
During the fiscal year ended March 2016, the Group opened up LNG projects, its corebusiness, especially in Mozambique and Canada. The Group will strive to further enhance
our capability to simultaneously and stably execute several mega-projects including thoseunder execution in the USA.
The Group was also awarded a contract for a copper smelting plant in Indonesia in the metal
field and another one for iPS related facilities in the life-science field. The Group kept on
working on a hydrogen supply chain to achieve hydrogen-based society. And the Groupestablished EMAS CHIYODA Subsea and has been set to provide the whole value chain in
offshore and upstream fields. The Group will keep on challenging itself to contribute to theenergy-security of Japan. Those activities are all intended to diversify our business portfolio.
12

4. Basic Concept of Accounting Criteria
The Chiyoda Group presents its consolidated financial statements based on Japanese
accounting criteria in consideration for comparison with those for the previous fiscal term as
well as comparison with the other companies' financial statements. The Group will follow
international accounting criteria in due course after examining the trend of Japaneseengineering contractors.

13

5.

Consolidated financial statements(1) Consolidated balance sheets (1/2)

AssetsCurrent assets
Cash and deposits
Notes receivable, accounts receivable from completed
construction contracts
Securities
Costs on uncompleted construction contracts
Deferred tax assets
Jointly controlled assets of joint venture
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery and vehicles
Accumulated depreciation
Machinery and vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
LandConstruction in progress
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Net defined benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

14

As of March
31, 2015(Millions of yen)
As of March
31, 2016

31,815

137,715

53,84069,296

81,49959,668
11,697
182,855
23,257(56)444,578

6,999
35,053
12,889179,360
16,000(2,285)455,030

13,915(6,172)
7,742
721
(340)
381
7,211
(5,791)
1,419
5,266
16
14,826

13,887(6,750)
7,137
635
(348)
287
7,439
(6,210)
1,229
5,266
22
13,942

12,0347,450
19,484

3,931
7,136
11,06831,328
33
5,820
(231)
36,95071,261
515,839

43,071
94
5,392
(379)
48,17873,189528,219

Consolidated balance sheets (2/2)(Millions of yen)

Liabilities
Current liabilities
Notes payable, accounts payable for construction
contracts
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Advances received on uncompleted construction contracts
Provision for warranties for completed construction
Provision for loss on construction contracts
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Provision for treatment of PCB waste
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

15

As of March
31, 2015

As of March
31, 2016

137,652

150,078

991
4
1,366
123,869
364
3,988
3,905
22,197294,339

333
5
2,841
135,667
337
3,160
3,527
15,155311,106

10,015
339
1,070
1,667
13,093
307,433

10,009
340
2,134
2,500
14,985
326,091

43,396
37,112
115,831(1,405)
194,934

43,396
37,112
115,839(1,422)
194,926

7,218(2,064)
5,229
1,076
11,4602,010
208,405
515,8392,386(1,618)
4,171
300
5,240
1,961
202,128
528,219

(2) Consolidated statement of income and comprehensive income(Consolidated statement of income)(Millions of yen)

Net sales of completed construction contracts
Cost of sales of completed construction contracts
Gross profit on completed construction contracts
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using
equity method
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Impairment loss
Loss on valuation of investment securities
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

16

Fiscal year ended
March 31, 2015

Fiscal year ended
March 31, 2016

(From April 1, 2014
to March 31, 2015)(From April 1, 2015
to March 31, 2016)

480,979
435,327
45,651
24,185
21,466

611,548
570,028
41,52025,50516,015

1,522
1,588
148
3,259

1,472
1,011
180
2,664

255

216

783

1,318

1,182
233
2,454
22,271

665
274
2,474
16,205

－
－

2,686
2,686

－
258
258
22,012
6,257
4,542
10,799
11,212
183
11,029

4,431
－
4,431
14,4608,708
2,255
10,963
3,496
121
3,375

(Consolidated statement of comprehensive income)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

17(Millions of yen)
Fiscal year ended
March 31, 2015

Fiscal year ended
March 31, 2016

(From April 1, 2014
to March 31, 2015)(From April 1, 2015
to March 31, 2016)

11,212

3,496

2,298
(2,712)
2,815
1,364

(4,831)441(1,135)
(775)

142
3,908
15,121
14,722398(83)(6,385)(2,888)(2,844)(44)

(3) Consolidated statement of cash flows (1/2)(Millions of yen)

Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment loss
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for warranties forcompleted construction
Increase (decrease) in provision for loss on construction
contracts
Increase (decrease) in provision for bonuses
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)Share of (profit) loss of entities accounted for using equity
methodLoss (gain) on valuation of investment securities
Loss (gain) on sales of investment securities
Decrease (increase) in notes and accounts receivable trade
Decrease (increase) in costs on uncompleted construction
contracts
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in advances received on uncompleted
construction contracts
Decrease (increase) in accounts receivable - other
Decrease (increase) in jointly controlled asset of joint
ventureIncrease (decrease) in deposits received
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Net decrease (increase) in time deposits
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Payments of loans receivableCollection of loans receivable
Other, net
Net cash provided by (used in) investing activities

18

Fiscal year ended
March 31, 2015
(From April 1, 2014
to March 31, 2015)

Fiscal year ended
March 31, 2016
(From April 1, 2015
to March 31, 2016)

22,012
3,569
－
1,469
216

14,460
3,589
4,431
1,256
2,387

(170)

(21)

(47)

(826)

(381)
100
(3,111)
255
(499)

(377)
(117)
(2,484)
216
813

783

1,318

258
－

－
(2,686)

21,217(25,282)(9,759)(16,491)

24,543
13,29343,01912,184(3,637)

5,158(1,710)(7,616)(14,560)
3,220
(255)
(12,550)(24,145)(2,108)(6,293)55,746
1,671(218)(1,673)55,526(55,246)－(1,441)(2,431)(1,245)
－
(605)
118
161
(5,444)

3,501(7,739)(806)(1,801)(21,998)
5,463
(382)
489
25
(26,750)

Consolidated statement of cash flows (2/2)(Millions of yen)

Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Repayments of long-term loans payable
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

19

Fiscal year ended
March 31, 2015
(From April 1, 2014
to March 31, 2015)

Fiscal year ended
March 31, 2016
(From April 1, 2015
to March 31, 2016)

(390)
(4)
(4,139)(34)(4,569)2,101(32,057)
145,303113,246(498)(4)(3,362)(76)(3,942)(1,159)23,673
113,246
136,919

6.

Production, Contracts and Sales
Millions of yen
Apr. 1, 2014 —Apr. 1, 2015 —Mar. 31, 2015
Mar. 31, 2016
New
Backlog ofNew
Backlog of
Net sales
Net sales
contracts
contracts contracts
contracts(ratio)(ratio)(ratio)(ratio)(ratio)(ratio)740,887

Engineering

99.2%

476,499 1,415,170
99.1%

399,861

607,693 1,164,991

99.9%

99.1%

99.4%

100.0%

256,374 1,103,124

LNG Plant

550,833

155,175

366,766

860,305

73.8%

53.3%

77.9%

38.5%

60.0%

73.8%

Gas Development/
Processing/Receiving
Refinery/Petrochemical/
Metal
Pharmaceutical/Biochemistry/
ChemicalEnvironment/New Energy/
Infrastructure

34,550
4.6%

25,591
5.3%

32,9892.3%

11,3942.8%

22,1393.6%

19,738
1.7%

60,142
8.1%

108,59222.6%

180,23112.7%

161,50240.0%

138,81122.7%

198,62217.0%

38,62034,40831,69932,67931,03532,377

5.2%

7.2%

2.3%

8.1%

5.1%

2.8%

51,871

46,17065,38732,12843,17850,856

6.9%

9.6%

4.6%

8.0%

7.1%

4.4%

4,869
0.6%

5,361
1.1%

1,739
0.1%

6,981
1.7%

5,762
0.9%

3,090
0.3%

5,903
0.8%

4,479
0.9%

1,731
0.1%

3,733
0.9%

3,855
0.6%

-

746,791

480,979 1,416,901

403,595

611,548 1,164,991

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

110,989
14.9%

113,34123.6%

100,218
7.1%

107,85626.7%

111,46418.2%

96,1048.2%

635,801

367,638 1,316,683

295,738

500,084 1,068,887

OthersOther Business
Total
Domestic
Overseas

85.1%

76.4%

20

92.9%

73.3%

81.8%

91.8%

7.

Changes to Directors(1) Nominees for Director (excluding Audit and Supervisory Committee members):
New Assignment
Shogo Shibuya
Keiichi Nakagaki

Hiroshi Ogawa
Masahito Kawashima
Katsuo Nagasaka
Masahiko Kojima
Ryosuke Shimizu

Current Position

Representative Director,
President & CEO
Representative Director,
Senior Executive Vice
President
Representative Director,
Senior Executive Vice
President
Representative Director,
Executive Vice President
Director, Executive Vice
President
Director, Executive Vice
President
Director,
Senior Vice President

The same
The same

The same
The same
The same
The same
The same

Arata Sahara

Director, Senior Vice President

The same

Nobuo Tanaka

Director

The same

Tetsushi Nakagawa

Director* The same means the new assignment on the left.
(2) Nominees for Directors, Audit and Supervisory Committee:

Mikio Kobayashi
Hideaki Takaishi
Yukihiro Imadegawa

New Assignment
Director, Audit and Supervisory
Committee
Director, Audit and Supervisory
Committee
Director, Audit and Supervisory
Committee

Current Position
Audit & Supervisory Board

Audit & Supervisory Board

Notes:
 The following members are nominees for Outside Directors:
Nobuo Tanaka
Tetsushi Nakagawa
Mikio Kobayashi
Yukihiro Imadegawa
The following members are nominees for Independent Directors regulated by the
Tokyo Stock Exchange, Inc.
Nobuo Tanaka
Mikio Kobayashi
Yukihiro Imadegawa(3) Retirement:
Masaji Santo and Munehiko Nakano are scheduled to retire as Director and as a memberof Audit & Supervisory Board respectively on June 23, 201621