Program Management Contractor& Investment Partner

Annual Report 2012
April 1, 2011 — March 31, 2012

Profile
JGC Corporation was founded in 1928, and has since completed over 20,000 projects inapproximately 70 countries, making it one of the world’s top engineering contractors.
The Company has developed proprietary engineering technology and displayed unsurpassed
project management capabilities in the fields of petroleum refining and gas processing, LNG,
petrochemicals and other hydrocarbons, as well as those involving non-ferrous metals, nuclear
power, pharmaceuticals, hospitals, laboratories and numerous other sectors.
In order to respond to the diverse needs of its clients, JGC has moved beyond its role as anengineering contractor to expand its investment business into domains such as power g­ enerationand desalination, water, the environment, renewable energy and resource d­ evelopment. At thesame time, JGC provides planning and management services in the urban development domain.
JGC recently launched its medium-term management plan, “New Horizon 2015,” under which it
has charted a course to become a “Program Management Contractor & Investment Partner.”

JGC Corporation
Annual Report 201201

Corporate Philosophy
The JGC Group, with its core business of engineering-based services, reaffirms its corporate policy of pursuing
the highest standards of performance and achieving enduring growth as a globally active company, while contributing to world economic and social prosperity as well as to the conservation of the earth’s environment.

Core Values
Each and every person working in the JGC Group, from director to employee, full-time or part-time, understands and adheres to the core values stated below as integral to realizing corporate policy:
1. Decision-making: Highest ethical standards and sense of legal responsibility
2. Conduct: Fairness and transparency
3. Corporate atmosphere: Progressive spirit and open mind
4. Corporate direction: Customer satisfaction and trust of society, as well as corporate growth in harmony
with society

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02 JGC
Annual Report 2012

Management Policies
Sharing these core values, the JGC Group seeks to continuously provide services and products based on thehighest standards of technology and in compliance with the following management policies:
1. Secure profit and realize continuous growth
2. Strengthen power of JGC Group technologies and establish innovative technologies, as well as develop
lines of business with vertical and horizontal diversification
3.	Accumulate and utilize capital and resources with provision for the future
4. Maintain fair personnel policy and develop capabilities as well as vitality of individuals

Responsibilities
As a globally active entity with engineering-based services as its core business, JGC Group makes the maximum effort to enhance its corporate values and, in doing so, realize its corporate policy, with the fullest levelof recognition given to social responsibilities:
1. Conservation of the earth’s environment and engagement in corporate activities beneficial to society
2.	Accountability and integrity
3. Fair trade and fostering mutually beneficial relationships
4. Shareholders’ confidence

JGC Corporation
Annual Report 201203

Principles of Business Conduct
For the long-term stability of the JGC Group and for its further growth, each person working, from director to employee,
full-time or part-time, is required to keep in mind clear principles of business conduct and perform his or her daily
activities in compliance with such principles. Through continued stable operations, JGC Group achieves its Corporate
Philosophy by maintaining and honoring the following principles derived from the previously stated “Core Values”:

1. Decision-making: Highest ethical standards and sense of legal responsibility(1) Behave in accordance with the highest ethical standards, and in a socially acceptable manner.
(2) Understand the requirements, and observe the laws, regulations and rules of the business conducted.

2. Conduct: Fairness and transparency(1) Be fair, honest and transparent at all times in conducting business.
(2) Maintain integrity in all the relationships that constitute the business being conducted.

3. Corporate atmosphere: Progressive spirit and open mind
(1) Maintain a progressive spirit not restricted merely to established business practices, and behave at all times with a sense ofinnovation and improvement not limited to traditional practices.
(2) Based on a will to achieve objectives, devote oneself to the maximum extent possible as an individual and to the team.
(3)	Through free and aggressive exchanges, strive to enhance the intelligence of the organization.

4. Corporate direction: Customer satisfaction and trust of society,as well as corporate growth in harmony with society(1) Gain the trust of clients and shareholders by performing faithfully and by providing an adequate level of information.
(2) Direct efforts at providing reliable services and products that satisfy the client’s needs.
(3) Seek corporate growth together with the development of society, in the knowledge that without prosperity of society the JGCGroup will not grow.

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04 JGC
Annual Report 2012

Management Vision
The first principle at JGC is to have an accurate grasp of customer needs
and to bring the Company’s unique intellectual capital to bear on theseneeds, thereby contributing to prosperity by providing customer satisfaction.
Next, while moving forward with vertical integration and horizontal expansion, the Company is responding to changing customer requirements byusing its operational assets in unlimited innovation, striving to remain atrusted partner for success and a solutions provider.

JGC Corporation
Annual Report 201205

Contents
07 Financial Highlights
08 To Our Shareholders
11 Special Feature
12 Special Feature 1

LNG Plant Market Outlook and
JGC’s Initiatives
14 Special Feature 2

JGC’s Initiatives in the Oil and
Gas Exploration and Production Business16 Project Introduction

Completion of the World’s Largest Gas
to Liquids Plant
18
24
25
26
27
28
31
34

Review of Operations
Performance Highlights by Business Sector
Performance Highlights by Region
Major Projects
Major Contracts Awarded
Environmental Activities and Contribution to Society
Corporate Governance
JGC’s Top Management
Board of Directors, Auditors and Executive Officers
35 Financial Section
79 JGC Group
80 Outline of JGC

Caution Regarding Forward-Looking Statements
This annual report contains information about forward-looking statements related to such matters as the plans, strategies, and business results of JGC and the JGC Group. These
forward-looking statements represent judgments made by the Company based on information available at present and are inherently subject to a variety of risks (see page 41) and
uncertainties. The Company’s actual activities and business results could differ significantly due to factors including, but not limited to, changes in the economic environment,
business environment, demand, and exchange rates.
Corporation
06 JGC
Annual Report 2012

Financial Highlights
For the years ended March 31.
Yen amounts are in millions except per share data.

Thousands of
U.S. dollars

Millions of yen

Consolidated
Net Sales

2012

2011

2010

2012

¥  556,967¥  447,223¥414,258$ 6,776,579

67,05463,55941,919815,841

Operating Income
Income Before Taxes on Income and Minority Interestsin Earnings of Consolidated Subsidiaries

71,47952,77137,850869,680

Net Income

39,111

25,478

27,112475,861

Net Income per Share (in yen and U.S. dollars)

154.90100.83107.25

1.88

793,278

618,203

733,549

9,651,758

1,441,612

1,163,256

982,594

17,539,992

Millions of yen

Thousands of
U.S. dollars

New Contracts
Outstanding Contracts

Non-Consolidated
Net Sales

2012

2011

2010

2012

¥  451,724¥  359,561¥317,597$ 5,496,094

Operating Income

54,21851,91832,145

659,667

Income Before Taxes on Income

60,70845,20527,934

738,630Net Income

34,30422,853

21,271

417,374

Net Income per Share (in yen and U.S. dollars)

135.86

90.44

84.15

1.65

New Contracts

342,983

569,128

675,505

4,173,050

1,005,441

1,114,182

953,511

12,233,131

Outstanding Contracts

Notes: 1. U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥82.19=$1.00, the prevailing rate of exchange at March 31, 2012.
2. Net income per share is computed based upon the average number of shares of common stock outstanding during the period.

Net Sales

Net Income

New Contracts

Outstanding Contracts(Billions of yen)(Billions of yen)(Billions of yen)(Billions of yen)

600

450

900

50

1,500
1,441.6

556.9

551.0

793.2

40

460.1 450.9

447.2

34.3
359.5

30

31.5

30.0

21.3

1,000

982.5
953.5

569.1

1,005.4

506.1

27.1

20

618.2

600

30.2

317.5

300

1,163.2
1,114.1

675.5

414.2
349.9

733.5

39.1

451.7

25.4
21.2

440.5

22.8

402.3
348.7

632.8
342.9

300

671.3
641.7
607.3

500

150
10

0

0

0
2008 2009 2010 2011 2012

■ Consolidated■ Non-consolidated

2008 2009 2010 2011 2012

■ Consolidated■ Non-consolidated

0
2008 2009 2010 2011 2012

■ Consolidated■ Non-consolidated

2008 2009 2010 2011 2012

■ Consolidated■ Non-consolidated

JGC Corporation
Annual Report 201207

To Our Shareholders

Program Management Contractor& Investment Partner(left)

Keisuke Takeuchi
Chairman and Representative Director(right)Koichi Kawana
President and Representative Director

Corporation
08 JGC
Annual Report 2012

Record Earnings at All Levels in Fiscal 2011
In fiscal 2011 (the fiscal year ended March 31, 2012), JGC achieved consolidated net sales of ¥556.9 billion. We
achieved this with the support of our shareholders and clients, coupled with the earnest efforts of all those working for
the JGC Group. In terms of earnings, we recorded a gross profit of ¥86.7 billion, operating income of ¥67.0 billion, andnet income of ¥39.1 billion. All earnings figures were records for JGC. We paid a full-year dividend of ¥38.5 per share,as planned. Consolidated contracts received reached ¥793.2 billion as we received orders for large-scale LNG projects
as well as other projects, despite the highly competitive market.
Our forecasts for fiscal 2012 are for consolidated net sales of ¥600.0 billion, gross profit of ¥88.0 billion, operating
income of ¥67.5 billion, and net income of ¥44.0 billion. Furthermore, we plan to pay a dividend of ¥43.5 per share
applicable to the fiscal year. We have set a target for consolidated orders of ¥600.0 billion, and will do our best toachieve this target.
Fiscal 2011 was a year filled with uncertainty, as the European sovereign debt crisis triggered by the situation in
Greece weighed heavily on the global economy. It was also a period that saw the WTI price of crude oil rise from
US $80 to US $100 per barrel through the year, driven higher by population growth in emerging markets, increasing
demand for energy, and a growing trend toward urbanization. Against this backdrop, many capital investment plans
were implemented in connection with oil and natural gas development, as well as for oil refineries and petrochemical
facilities, notably in the Middle East, North Africa and Oceania.
JGC prevailed in fiscal 2011 in the face of fierce EPC business competition. In addition to winning contracts for
projects in Japan, we were also successful in gaining orders overseas for a crude oil processing facility in Algeria, an oil
refinery expansion project in Venezuela, a project to renovate cooling water facilities at a power plant in Iraq, and Front
End Engineering and Design (FEED) work for an LNG plant expansion project in Malaysia. In addition, we wereawarded a contract for the Ichthys LNG project, a mega-project being promoted by INPEX Corporation and Total.
These achievements helped our contracts received reach ¥793.2 billion on a consolidated basis, which significantly
exceeded our ¥550.0 billion target.
Meanwhile, in our investment business, we made considerable progress in fiscal 2011 in the resource development
field in particular. We decided to invest in shale oil production and development businesses in the U.S., and a shalegas development and production business in Canada. Production also commenced at a gas field in the U.S. in which
we own a working interest. Furthermore, we made the decision to invest in a Japan-China fund to promote energy
saving and environmental conservation. The fund will invest in Chinese venture firms operating in these sectors.
In another major move, since the beginning of fiscal 2012 full-scale trial operations have begun at a demonstration
plant for the production of slurry-form fuel made from unused low-rank coal deposits in Indonesia. This coal fuel canbe used as a substitute for heavy fuel oil.
As we look back, fiscal 2011, the first year of our new medium-term management plan “New Horizon 2015,” saw
us deliver the results we expected.

Client Investment Plans in Fiscal 2012 in a Wide Range of Fields, Upstream to Downstream, Mainly in
the Middle East and North Africa
For the engineering and construction market in fiscal 2012, we expect to see commitment of capital investments on alevel above that of fiscal 2011, with further EPC opportunities emerging for us. These capital investments will mainly
center on the Middle East and North Africa. Oil majors, national oil companies, and other companies will be investingin a wide range of areas, from upstream to downstream.
In the Middle East and North Africa, we will see the continued development of oil and natural gas. At the sametime, capital investments are planned in the oil refinery and petrochemical fields with the aim of adding value to these
JGC Corporation
Annual Report 201209

resources. In East Africa, LNG project plans are taking shape. In Asia and Oceania, we expect to see plans implemented
for the construction or expansion of LNG projects in response to growing LNG demand within Asia. In Japan, we anticipate continued capital investment in expanding and upgrading power supply facilities, and in the pharmaceutical industry.

Focus on Strengthening Cost Competitiveness, Developing New Markets, and Enhancing Technological
Capabilities
Given this market situation for the EPC business, in fiscal 2012 we will focus again on strengthening our cost competitiveness across the EPC spectrum. In tandem, we will work to maintain our solid position in the highly competitive LNG field.
Furthermore, in the Middle East and Africa, we will concentrate our efforts on developing new markets. We alsoplan to strengthen our technological capabilities, as an important element in order to be competitive in the EPC business. With an increasing number of projects expected to adopt a modular construction approach, we will endeavor tofurther enhance our project execution capabilities, and at the same time bolster our technological capabilities in new
areas of endeavor including floating LNG plants.
Plants have become larger in recent years and clients today expect contractors to possess advanced capabilities
not only with respect to technologies, but also the associated elements including health, safety and the environment(HSE). We are keenly aware that these demands on contractors will only grow and become more exacting in terms of
quality and scope. Our firm intention is to respond positively to these demands by improving related technologies anddeveloping new capabilities.
In the investment business in fiscal 2012, we plan to continue with our strict selection of prime investment projects.
We will focus on infrastructure-related businesses such as power and water; resource development businesses, including conventional and unconventional resources; solar power generation; and our new energy business for the effective
utilization of low-rank coal. We will also target the urban development business, with a focus on Asia.
It is without doubt that the energy market is witnessing dynamic changes, due to shale gas developments in North
America and other factors. These changes are spawning new markets that present us with major opportunities for
growth as an engineering contractor. It can be expected that we will target changing fields, as we make the maximum
possible efforts to achieve our consolidated targets for contracts awarded and our operating result forecasts, over the
coming year.
We ask our shareholders for their continued support and guidance as we continue to implement “New Horizon
2015” to drive further growth.
July 2012

Keisuke Takeuchi
Chairman and Representative Director

Koichi Kawana
President and Representative Director
Corporation
10 JGC
Annual Report 2012

Special FeatureSpecial Feature 1

LNG Plant Market Outlook and JGC’s Initiatives

p12

Special Feature 2

JGC’s Initiatives in the Oil and Gas Exploration
and Production Business

p14

Project Introduction

Completion of the World’s Largest Gas to Liquids Plant

p16

JGC Corporation
Annual Report 201211

Special Feature 1

LNG Plant Market Outlook and JGC’s Initiatives
Increasing Global LNG Demand
Following the outbreak of the Fukushima nuclear crisis in March 2011, Japan’s LNG imports in 2011 climbed byapproximately 12%, to about 78.5 million tons, up from approximately 70.0 million tons in 2010 before the disaster. This
was the highest LNG import volume in the past decade. LNG imports in 2012 and thereafter are expected to rise by
between 10 and 15 million tons compared with 2010, depending on the degree of resumption in operations at nuclear
power plants in Japan.
World forecasts for 2035 predict that LNG demand in Asia, including Japan, China and India, will rise to 281 million
tons, more than double the 2010 figure of 131 million tons. World demand is projected to climb to 454 million tons,
around 2.5 times the 220 million tons consumed in 2010. Driving factors for this increase are population growth andrising energy demand.
Since the outbreak of the Fukushima nuclear crisis, some countries including Japan have changed their energy policies
by shifting away from nuclear power and toward thermal power fired by fossil fuels such as coal, oil and natural gas.
Although these countries have also turned their attention to renewable energy sources such as solar and wind power, moretime is needed to stabilize power generation with green technology, and also to construct the necessary facilities for

Outlook for World LNG Demand
World LNG consumption in 2010: 220 million tons

Estimated demand in 2035: 454 million tons

(million tons/years)

Americas

Europe

Asia
281

114

21
2010
Actual452035
Forecast

131

64

2010
Actual2035
Forecast

2010
Actual2035
Forecast

Need to add facilities to meet needs for 9 million tons/year production increases annually over next 25 years
Source: IEE Japan Asia/World Energy Outlook 2011
BP Statistical Review of World Energy 2011

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12 JGC
Annual Report 2012

generating green power. Given these circumstances, demand is expected to grow for LNG, which is seen as a bridge energy
source toward a low-carbon society, due to its relatively low carbon dioxide emissions when compared with coal and oil.

LNG Projects Increase Worldwide in Step With Higher Demand
Many LNG plant construction or expansion projects are planned at present in Southeast Asia, East Africa, Australia,
Russia, and elsewhere based on this projected LNG demand growth. These projects are being developed by oil majors,
state-run oil and gas companies, and Japan’s general trading companies. In 2012, multiple planned LNG projects will
advance to the Front End Engineering and Design (FEED) stage, and in 2013 we expect international tenders to be
conducted for engineering, procurement and construction (EPC) for these projects.
Another dynamic that is shaping the market is the rapid
development of shale gas in recent years in the U.S. due
to advances in drilling and other technology; up until a few
years ago the U.S. was expected to import large volumesof LNG. Many plans are taking shape to produce LNG fromthe abundant and low-cost shale gas reserves for export toJapan and other Asian countries. With shale gas
development also taking place in Canada, LNG projects
are being evaluated with the aim of selling LNG to Asia.

JGC constructed this LNG plant at the Tangguh LNG project in Indonesia

The Top Contractor for LNG Plants
JGC has constructed approximately 30% of the world’s currently operating LNG plants. At present, we are executing three
LNG plant construction projects in Indonesia, Australia and Papua New Guinea, respectively, and in January 2012, wereceived an EPC contract for an LNG plants for the Ichthys LNG Project in Australia being promoted by INPEXCorporation. Therefore, JGC is now involved in four LNG plant projects. When these four projects are completed, they willproduce approximately 32 million tons of LNG per year, contributing significantly to the stability of energy supplies inJapan and elsewhere in the world. In March 2012, JGC was also awarded a contract from Malaysia’s state-owned oilcompany for the FEED services and Engineering, Procurement, Construction and Commissioning (EPCC) early work for
the PETRONAS LNG Train 9 Project.
Furthermore, planned LNG projects in the U.S. and Canada present JGC with an opportunity to make inroads in theplant EPC business field in a region where it has had little opportunity to do so until now. JGC is therefore actively
promoting business in this region. JGC also plans to target
floating LNG projects for the development of offshore gas
fields, as well as establish the concept of modular LNG
plants for small to medium-sized gas fields.
As a top global engineering contractor for LNG
plants, JGC will continue to respond to market and clientneeds, and contribute to the development of cleansources of energy like LNG, thereby helping in theArtist’s impression of the LNG plant for the Ichthys LNG Project in Australia

preservation of the global environment.
JGC Corporation
Annual Report 201213

Special Feature 2

JGC’s Initiatives in the Oil and Gas Exploration
and Production Business
Chalking Up Results in the E&P Business
Under “Scenario 2010,” the five-year medium-term plan begun in fiscal 2006, JGC declared our intention to enter theenterprise investment business. Since then JGC has steadily made a number of investments. Now, under “New Horizon
2015,” JGC’s current five-year medium-term management plan launched in April 2011, JGC aims to expand theenterprise investment business further. JGC sees the Oil and Gas Exploration and Production Business (E&P business)
as a key field in this context, and we have already chalked up several achievements in this sector.

Drilling Pad in Horn River Area

Cuervito Gas Field Gas Production Facilities

Little Lake Field Production Facilities[Canada Shale Gas Project][Cuervito and Fronterizo Gas Fields][Little Lake Oil & Gas Field]

Farm-in: August 2012
Area:	1,200 km2 (gross) in Horn
River, Cordova and Liard
area
Interest:	Nexen (operator)
60%
		INPEX Gas British
Columbia*40%* INPEX & JGC joint venture

Completion Rig in Eagle Ford

[Eagle Ford Shale Oil Field]
Farm-in: August 2011
Area: 300 km2 (gross) in oil window
Interest: Chesapeake (Operator) 50%
Stonegate40%
JGC10%

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14 JGC
Annual Report 2012

Multi-service contract with Pemex
Project started in 2004
JGC holds 10% share of project company through joint venture with INPEXJGC Energy Development (USA) Inc.
(JEDI)JGC holds 60–100% working Interest.
 ince 2007, JEDI has been operate ofS
production from its deep-horizon
development on this previously undeveloped gas field.

La Posada Well #1 Production Test

[Vermilion natural gas exploration
business, U.S.]
 xploration well drilled from March
E
2011 to August 2011
Discovered 248 ft gas column in July
2011
Started production in September 2012
JGC share: 8.5%

The year 2004 marked the beginning of investments,
when JGC became an equity partner in Teikoku Oil de
Burgos S.A. (TOB), a Mexican gas development company
established by Teikoku Oil Co., Ltd. (now INPEXCORPORATION) to develop gas fields in the northern
region of Mexico. This was followed by the establishmentof JGC Energy Development (USA) Inc. (JEDI) in 2006, awholly-owned subsidiary of JGC based in Houston, Texas,
U.S. JEDI is the JGC Group’s first E&P Company, andDrilling rig for the exploratory well

JEDI’s establishment marked JGC’s full-scale entry into the
upstream business. In 2007, through JEDI, JGC began our oil and gas field development business in earnest, as anindependent operator in the Little Lake Oil & Gas Field in Louisiana, U.S. Then, in 2010, JEDI joined a gas exploration
business in Vermilion Parish, Louisiana. In 2011, JEDI acquired an interest in the Eagle Ford shale oil assets in Texas.
This was followed by the signing of an agreement inprinciple for JGC and INPEX CORPORATION to jointly
acquire an interest in the shale gas projects (including a
producing gas field) in British Columbia, Canada, owned
by Nexen Inc., a Canadian oil and gas development
company based in Alberta. In August 2012, acquisition of
the assets through a JGC-INPEX joint venture company
was finalized. JGC has thus fully entered into theCompletion rig (Eagle Ford)

unconventional resource development business, throughshale oil and shale gas projects.

In 2010, JGC also participated in a conventional gas exploration project in Vermilion Parish, Louisiana, operated byPetroquest Energy Inc (USA). An exploratory well drilled in 2011 yielded discovery of a large gas column, and production
started from this well in March 2012. In February 2012, a delineation well was drilled and confirmed the gas reservoir tobe as expected. Production is expected to start from this second well in September 2012.
Full-scale development of the Eagle Ford shale oil business, in which JGC acquired an interest in 2011, is being led
by operator Chesapeake Energy Corporation. The Eagle Ford shale oil assets are considered highly promising, and thearea is attracting considerable interest.

Eyeing Further Expansion in the E&P BusinessOver many years working as an engineering contractor, JGC has amassed a wealth of technology and expertise. This
technology and expertise will be the driving force of JGC’s growth as we expand our enterprise investment business.
Looking ahead, JGC intends to broaden our field of operations by increasing working interests in North America, acquiring
rights to quality oil and gas field assets outside North America, and further developing unconventional resources such as
shale oil, shale gas, and mineral resources. We also plan to feed the experience and expertise we gain through our
upstream work in oil and gas field development back to our plant EPC business. In this way, we believe we can offer aunique contribution to clients, as an engineering contractor familiar with upstream operations that also can boast an
unparalleled breadth of technological capabilities.
JGC Corporation
Annual Report 201215

Project Introduction

Completion of the World’s Largest Gas to Liquids Plant
In Qatar, the largest gas producer in the Middle East, the Pearl GTL (Gas to Liquids) Project—jointly developed
by Qatar Petroleum and Shell—was officially inaugurated in November 2011. JGC’s involvement in the Project
started from the FEED (Front-End Engineering and Design) stage. The Project involved the construction of a plantwith a design capacity of producing 140,000 b/d of GTL products and 120,000 b/d of upstream products (LPG,
ethane, condensate) when operating at full production. JGC was responsible for the construction of the GTL
production unit, one of the plant’s core facilities. In addition, JGC, in collaboration with KBR, was responsible forthe overall management of the Project execution, contributing to a successful delivery of this world-class facility.
Pearl GTL demonstrates that GTL technology can be applied in a world-scale project to form the foundation fora safe, reliable and economically attractive business. This is particularly important given that supply of easy-toaccess oil is decreasing while the world’s reserves of gas provide for hundreds of years of continued production.

Growing Demand for GTL
GTL products represent a pioneering innovation to increase the supply of highly-demanded liquid hydrocarbons. On fullproduction, Pearl GTL will be the world’s largest source of high-quality GTL products. The product slate includes GTL
gasoil (diesel-type fuel), GTL kerosene for aviation, GTL base oil for lubricants and GTL Naphtha and Normal Paraffins
as chemical feedstock. Pearl GTL products are virtually sulphur free and have practically no contaminants such as heavy
metals or aromatics. Their paraffinic chemical nature ensures that they are highly biodegradable and almost odourless.
When GTL Gasoil is used in automotive applications such as buses, it can help improve local air quality, such as sootCorporation
16 JGC
Annual Report 2012

(particulates) emissions, when compared to use of conventional diesel fuel.

JGC: Aiming to Be One of the World’s Top Contractors for GTL Plants
In 1993, JGC completed the construction of the world’s first commercial GTL plant, for
Shell MDS in Bintulu, Malaysia. Since then, JGC has built up distinguished project
management skills and a highly advanced knowledge of GTL production technology, bothof which we applied to the successful completion of the Pearl GTL project in Qatar, whichis the largest of its kind in the world. JGC is working tirelessly to become a world-leading
contractor for GTL plants.

Established Incident/Injury-Free Record
A multi-cultural workforce from different nationalities and speaking diverse languages
worked in teams on the plant construction site. Constructing the plant involved numerous
high-risk tasks including heavy equipment positioning and performing a lot of work atheight, meaning that ensuring worker safety was the paramount concern and thus thehighest safety standards had to be applied. During the peak construction period, morethan 50,000 workers from over 60 countries were on site, making safety measures more
important than ever before. To support Shell and Qatar Petroleum’s comprehensive newsafety initiative, JGC took charge of improving the safety awareness of workers throughsafety education and by promoting safe construction methods, resulting in a total of 72.9
million lost time free man-hours, a company record. JGC’s efforts to promote safety werehighly evaluated by the client.
The completed Pearl GTL project

Taking the Initiative in On-Site Management
JGC aims to be the worldwide No. 1 contractor in the field of HSE (Health, Safety and Environment). Based on acomprehensive health and safety policy, we continuously strive to protect the health and safety of not only our own
employees, but also the employees of our business partners.
Through previous safety management statistics, JGC estimated that by the
project’s completion the number of fatalities could potentially reach a total often or more at the construction site, with a similar number resulting from roadaccidents. Shell instigated a program for HSE management known as “Incident
and Injury Free” (IIF), which was developed in collaboration with a consultant.
JGC adopted this program whereby, based on two simple principles—“carefor each other,” and “go home safely,” the IIF campaign promotes safety not as

Pre-work meetingsomething to be enforced from the outside, but as a sum of personal choices
made by each worker. In this way, we emphasized how individuals can makeefforts to alter their actions in order to build a new and stronger safety culture
for the whole organization. On site, the JGC project director and project
managers set an example by being among the first to put the new safetymeasures into practice, including achieving better communications withworkers, and encouraging workers to better communicate with one another,revitalizing as well as improving safety consciousness. With the success of thiscampaign, we achieved the already-mentioned record 72.9 million man-hours

Site managers actively engaged in dialogue withworkers at the construction site

without lost time incident, and we have now begun to apply the same safety
principles at other construction sites.
JGC Corporation
Annual Report 201217

Review of Operations

The market for the JGC Group’s total engineering business in fiscal 2011 saw the continuation of brisk capital investment in
oil and gas-related projects, particularly in oil and gas producing countries in the Middle East and North Africa. This capital
investment was prompted by rising energy demand due to population and economic growth in emerging countries, andconsistently high oil prices. At the same time, many LNG projects advanced steadily in China and India, Japan, South Korea
and Taiwan, as well as elsewhere in the Asia and Oceania region, due to a projected increase in demand for LNG as fuel for
power generation.
Under these circumstances, the JGC Group continued to draw on its strengths to bolster its cost competitiveness in allphases of its engineering, procurement, and construction (EPC) business. In projects currently underway, close attention was
paid to a variety of risks to ensure successful project execution.

Total Engineering business

Oil and Gas Development Projects
In the field of oil and gas development, capital investmentcompany Saudi Aramco involving off-site facilities (including

remained at a high level, due to investment by oil majors anda water-injection system used in oil fields, crude oil storage

major state-run oil companies, notably in the Middle Easttanks and shipping equipment) for a large-scale crude oiland North Africa.

processing facility in the Manifa region. This project is also

In the North Africa region, August 2011 saw JGC win anscheduled for completion in 2013. Meanwhile, in September

EPC order for the construction of a crude oil processing

2011, JGC Gulf International Co. Ltd., a Saudi Arabian sub-facility in Algeria as part of the Bir Seba Field Development

sidiary of JGC, was awarded a project to construct a gas

Project from Groupement Bir Seba, which is made up ofcompressor station in Bahrain by Bahrain’s state-run gas

Algerian state-owned oil and gas company Sonatrach, andcompany Banagas.

other parties. This project is scheduled for completion in thefirst half of 2014. Also in Algeria, JGC is engaged in a project
to construct a gas boosting compressor station in the In
Amenas region for Sonatrach. In addition, also for Sonatrach,
JGC is constructing a large gas processing facility in theGassi Touil field, which is scheduled for completion in 2013.
In the Middle East, JGC is constructing a large-scale gas
processing plant in Qatar that is being promoted by thestate-run oil company and ExxonMobil. Meanwhile, in the
Emirate of Abu Dhabi, United Arab Emirates (UAE), JGC isconstructing large-scale gas processing facilities for Abu
Dhabi Gas Industries Ltd. in the Habshan field. This projectis scheduled for completion in 2013. In Saudi Arabia, JGC is
executing an EPC services contract for the state-owned oil

Corporation
18 JGC
Annual Report 2012

Signing ceremony for a crude oil processing facility for Groupement Bir Seba
(Algeria)

Petroleum Refining Projects
In the petroleum refining field, oil companies, led by the oil

independently by PDVSA, in an existing oil refinery. The

majors, continued to shrink and separate downstream divi-

refinery will be the first in the world to commercially employ

sions in response to soft market conditions, including closing

this process.

ageing refining facilities with high maintenance costs in

In Singapore, JGC is constructing a diesel hydrotreater for

developed countries. At the same time, they are concentrat-

ExxonMobil Asia Pacific Pte. Ltd. This project has a target

ing business resources on upstream operations, especiallycompletion date of 2014.

the development and production of crude oil and naturalgas, as they aim to bolster their earning power. Meanwhile,

In addition, we are currently engaged in revamping refining facilities for oil companies in Japan.

in China, India, and developing countries in South America
and Southeast Asia, plans exist to construct and increase thecapacity of petroleum refineries on the back of impressive
economic growth.
In Venezuela, JGC was awarded a contract in December
2011 for an oil refinery expansion project by PDVSA Petroleo,
S.A. (PDVSA), the country’s state-run oil company. This
contract calls for the construction of heavy crude oil upgrading facilities that will employ the HDH Plus® heavy crude oil
cracking process technology, which was developed

Signing ceremony for an oil refinery expansion project for PDVSA (Venezuela)

LNG Projects
In the LNG field, demand is increasing in countries that have

expansion project from PETRONAS, Malaysia’s state-owned

long been importers of LNG, including Japan, South Korea

oil company.

and Taiwan. In addition, LNG demand is expected to increase

In Indonesia, JGC is constructing an LNG plant insteadily over the medium and long term in China, India and

Sulawesi for Sulawesi LNG Development, which is partiallyemerging countries in Southeast Asia. Against this backdrop

owned by Mitsubishi Corporation. This project is scheduledof robust demand for LNG, we expect to see LNG plants

for completion in 2014. Meanwhile, in Papua New Guinea,

constructed or expanded in Southeast Asia, Oceania, Russia,

JGC is constructing an LNG plant for Esso Highlands Limited,

and South Africa. Furthermore, the ongoing development of

which is owned by ExxonMobil and others.

shale gas in North America should prompt the construction of
LNG plants using shale gas as a feedstock in the U.S.
In January 2012, JGC was awarded a contract by Ichthys

In Japan, JGC is constructing an LNG receiving terminal
in Hachinohe, Aomori Prefecture, for JX Nippon Oil &Energy Corporation.

LNG Pty Ltd to construct an onshore LNG plant in Australia(Ichthys LNG Pty Ltd is a joint venture between INPEXCorporation and other shareholders). This LNG project isscheduled to begin production at the end of December 2016.
Seventy percent of the LNG produced by the project will be
exported to Japan, making this an important project in thecontext of Japan’s energy security. JGC is also constructing an
LNG plant for the Chevron-operated Gorgon LNG joint venture
on Barrow Island in northwestern Australia. In Malaysia, JGC
won a FEED contract in March 2012 for an LNG plantSigning ceremony for an LNG plant for Ichthys LNG Pty Ltd (Australia)
JGC Corporation
Annual Report 201219

Chemical Projects
In the petrochemical and chemical products field, manufac-

products.” As such, the Middle East is likely to become aturing bases for basic petrochemical products such as ethyl-

major export base for petrochemical products going forward.

ene and propylene are being shifted from Japan and other

In Saudi Arabia, JGC conducted project management

developed countries to oil and gas producing countries inservices for a feasibility study on the development of thethe Middle East, as well as to China, India and other emerg-

Rabigh Phase II project (Rabigh II Project), which is being

ing nations. In the Middle East in particular, we expect to see

promoted by Sumitomo Chemical Co., Ltd. and the state-

new projects led by various governments go ahead based onowned oil company Saudi Aramco. Also in Saudi Arabia,

the competitively priced feedstock available in the region

production began in fiscal 2011 at a large-scale ethylene

and their greater use of the capital, technology, and project

plant that JGC constructed for Saudi Polymers Company.

management expertise of foreign companies, in order to add
value to their resources and to diversify their industrial base.

In Japan, we are revamping petrochemical and chemical
product manufacturing facilities for a chemical company.

We believe that these moves will apply also to “specialty

Power Generation, Nuclear Power and New Energy Projects
Looking at the new energy field in fiscal 2011, JGC was

Nassiriyah. This is the first post-Iraq War lump-sum contract

active in the area of gas to liquids (GTL) as well as otherfor EPC services awarded to a Japanese company. The

projects. GTL refers to diesel, kerosene and other petroleum

project is scheduled for completion in the first half of 2013.

products produced from natural gas feedstock. GTL prod-

In addition, in Japan, JGC safely and quickly completed

ucts are attracting attention as a next-generation environ-construction of emergency power supply facilities for amentally friendly energy source as they contain no sulfur

power company as requested.

oxide or other substances of concern (SOC). In the U.S.,
where natural gas prices are falling due to the developmentof shale gas and rising crude oil prices, GTL production
plants are expected to be constructed in the near future.
In Qatar, JGC successfully completed a GTL project for
Qatar Shell GTL Limited, a subsidiary of Royal Dutch Shell plc,
in November 2011. JGC managed the entire project as well as
conducting EPC&M activities for the GTL synthesis facility, thecore facility of what is the world’s largest GTL project.
In the power generation field, in Iraq, JGC won a contractfrom the Ministry of Electricity of Iraq for a project to renovate cooling water facilities at a thermal power plant in

Corporation
20 JGC
Annual Report 2012

GTL plant for Qatar Shell GTL Limited (Qatar)Living and General Production Projects
In the field of pharmaceuticals, major pharmaceutical com-from Toyama Chemical Co., Ltd. to construct a plant for

panies continued to invest in facilities for manufacturing

manufacturing injectables.

antibodies and other substances. Investment in such facilities is expected to continue.
In fiscal 2011, JGC won orders for and constructed phar-In the field of non-ferrous metal refining, JGC is involvedin a project to construct a nickel refining plant that is being
promoted by Sumitomo Metal Mining Co., Ltd. in the Taganito

maceutical manufacturing facilities for several major domes-

district on the island of Mindanao in the Philippines. The

tic pharmaceutical companies. In addition, we won an orderproject is slated to begin production in 2013.

Environmental Protection, Social Development and IT Projects
In the field of medical facilities, JGC has constructed high-in Ibaraki Prefecture. Since the beginning of fiscal 2012, wequality medical facilities throughout Japan and provided

have also completed construction work of residences for the

project management services. Both types of services haveelderly for nursing business company I.P.C Ltd. in Ibaraki

received favorable evaluations from many clients. The medi-

Prefecture. In addition, in the engineering business in Japan,

cal facilities-related business continues to see the develop-

JGC became the first domestic engineering contractor to be

ment of projects utilizing the Private Finance Initiative (PFI)

selected as a hospital PFI operator, following construction of amethod for tapping private-sector capital and expertise for

new hospital wing for the Tokyo Metropolitan Matsuzawa

constructing and managing public infrastructure. We intend

Hospital. An agreement has been reached under which JGC

to be actively involved in this area, taking advantage of ourwill maintain, manage, operate, and carry out procurement ofexpertise based on our long history of working on projects insupplies for the whole hospital for 15 years.

the medical field.
In fiscal 2011, we won a number of orders, including a
project to develop a medical facility on the former site of acompany housing facility in Onazuka for Japan Freight Railway
Company in Tokyo; a project to refurbish the Kano Hospital in
Fukuoka Prefecture for Houshikai; and a project in Kanagawa
Prefecture to rebuild the Ushioda Clinic for the Yokohama
Labor Welfare Association. Also in fiscal 2011, we completed
a contract to rebuild Kido Hospital for the Niigata Medicalcare
Cooperative in Niigata Prefecture, as well as a renovation of
the Morita Hospital in Kanagawa Prefecture for the Yushinkai
Foundation, and have also been constructing a new headquarters building for the Ibaraki Resident Co-operative Union

Hospital for Niigata Medicalcare Cooperative (Niigata Prefecture)

JGC Corporation
Annual Report 201221

Enterprise Investment Business
Under “New Horizon 2015,” JGC’s medium-term manage-

promote energy saving and environmental conservation, by

ment plan launched in April 2011, JGC aims to expand its

providing funding to venture firms in China active in theseenterprise investment business. We plan to actively invest in

fields. In March 2012, we also invested in the venture firm

new fields where we can make use of our strengths, cen-

Granpa Co., Ltd., a company specializing in the development

tered on power generation, renewable energy, the environ-and marketing of air-dome greenhouses for the indoor culti-

ment, water and resource development fields.

vation of fresh vegetables. This investment marks JGC’s first

As we discussed in Special Feature 2: JGC’s Initiatives inforay into agribusiness.

Resource Development Fields (refer to pages 14 to 15), we

Furthermore, in March 2012, following completion ofrecorded a number of achievements in the resource devel-

power generation facilities, commercial operations began at

opment field in fiscal 2011. In June 2011, JGC Groupthe concentrating solar power business in Spain, which JGC

resource development company JGC Energy Development

has been promoting with Spanish company Abengoa Solar(USA) Inc. (JEDI) signed a purchase and sales agreement tosince September 2011.

acquire a stake in shale oil properties in the U.S., in order to

In addition, in May 2012 we completed a demonstration

begin participating in the full-scale production and develop-

plant in Indonesia for the production of a new liquid fuelment of shale oil. In August 2011, JEDI announced that afrom low-rank coal. The fuel bears the trademarked namelarge gas column that is expected to yield abundant reserves

JGC Coal Fuel (JCF®). Trial operations at the demonstration

was discovered at a natural gas exploration project in theplant have subsequently commenced.

U.S. that JEDI has been participating in since 2010. Production started at the first exploratory well in March 2012. Furthermore, in November 2011, through INPEX Gas British
Columbia (a Canadian joint venture between INPEX and
JGC), JGC agreed in principle to acquire an interest in shale
gas assets in British Columbia, and the assets were officiallyacquired in August 2012.
In fields other than resource development, in December
2012 JGC signed a Memorandum of Understanding (MOU)
in partnership with major Japanese and Chinese financial
institutions regarding the creation of a Japan-China fund to

Corporation
22 JGC
Annual Report 2012

Concentrating solar power facility (Spain)

Catalysts and Fine Products Business
For fiscal 2011, the catalysts business in the first half of the

impact of the Thailand floods. Because of this, sales were

fiscal year saw steady growth, supported by higher demand

down year on year as a whole in the fine products business.

for chemical catalysts in line with rising demand for chemical

The market environment for the catalysts and fine prod-

products in emerging markets, the acquisition of new clients,

ucts business in fiscal 2012 is expected to see the continua-

and expanding demand for cathode materials for lithium-ion

tion of harsh conditions due to protracted sluggishness inbatteries. However, market conditions reversed in the second

the U.S., European and Japanese markets, persistently highhalf of fiscal 2011. Product sales volumes fell due to eco-

prices for fuel and raw materials, and the continued ongoingnomic slowdowns in the U.S. and Europe, and as a reflection

strength of the yen.

of the effects of the flooding in Thailand and the European

In this business environment, the JGC Group will work tofinancial crisis. Exacerbating the difficult market conditions

further improve and expand sales of catalysts that require no

was intense competition with peer companies. Under theserare earths, which are part of the raw materials for the pro-market conditions, JGC Group companies in the catalysts

duction of FCC catalysts, or use substantially reduced

and fine products businesses worked to negotiate prices withamounts of rare earths. We will also work to strengthenclients, reduce product manufacturing costs, trim fixed

overseas sales systems, and to build a recycling system to

expenses and promote overseas business development,

avoid procurement and price-change risks with rare metals,

among other actions. As a result of these efforts, sales andthe raw materials for hydrotreating catalysts. In addition, JGC

operating income both reached record highs in fiscal 2011.

Group will strive to expand exports and shift to high value-

In the catalyst business, although sales of fluid catalytic

added products in step with moves by key chemical catalyst

cracking (FCC) catalysts, for which we hold the leading
market share in Japan, declined, we recorded higher sales

customers to relocate overseas.
In the fine products business, JGC aims to expand over-overall year on year. This growth was attributable to increasedseas bases for producing hard disk abrasives and panel

sales of hydrotreating and chemical catalysts due to firmmaterials for LCD TVs. In regard to cathode materials fordemand for petrochemical products in emerging markets.

lithium-ion batteries, we will further reduce costs in response

In the fine products business, sales were lackluster due

to dramatically changing markets, and accelerate the devel-

to inventory adjustments and stiffening competition in theopment of next-generation and generation-after-next prod-

second half of fiscal 2011, despite strong first-half sales ofucts. Furthermore, we will endeavor to expand sales tocathode materials for lithium-ion batteries. Sales of hard disk

overseas markets of optic materials for spectacles andabrasives and large TV panel materials were off on accountmaterials for cosmetics.

of the U.S. and European economic slowdowns and the

JGC Corporation
Annual Report 201223

Performance Highlights by Business Sector
All figures are on a consolidated basis.

(Billions of yen)600

Net Sales
Years ended March 31■ Oil and Gas Development■ Petroleum Refining
■ LNG

400

■ Chemical■ Power Generation,
Nuclear Power and New Energy■ Living and General Production

200■ Environmental Protection,
Social Development and IT■ Others02008 2009 2010 2011 2012

(Billions of yen)
900

Total Engineering Business and Other Business(Overseas)incl. Total Engineering Businessincl. Other Business■ Catalysts and Fine Products
Total■ Oil and Gas Development■ Petroleum Refining■ LNG■ Chemical■ Power Generation,
Nuclear Power and New Energy■ Living and General Production

300■ Environmental Protection,
Social Development and IT■ Others02008 2009 2010 2011 2012

(Billions of yen)
1,500

Total
(Overseas)incl. Total Engineering Businessincl. Other Business■ Oil and Gas Development■ Petroleum Refining
■ LNG
900

■ Chemical■ Power Generation,
Nuclear Power and New Energy■ Living and General Production

600■ Environmental Protection,
Social Development and IT■ Others

300

02008 2009 2010 2011 2012

Corporation
24 JGC
Annual Report 2012

2010

2009

2008

219,574(219,123)
42,191(14,682)
103,299(97,435)
51,426(29,338)
24,825(4,613)43,059(18,693)
21,570(176)
8,974(4,682)514,922(388,746)
506,177
8,745
42,045556,967

150,688(149,895)
40,292(8,711)
61,512(58,969)
84,377(64,049)
20,869(12,621)
17,255(7,938)25,344(46)
10,851(6,937)411,191(309,170)
401,198
9,992
36,031
447,223

59,382(58,753)
110,566(31,894)
42,428(41,122)
111,216(87,611)
20,391(12,359)
8,128(1,502)
16,488(15)
7,827(3,578)376,430(236,837)——
37,828414,258

51,304(48,470)
89,838(36,182)
36,261(35,627)
145,769(102,095)
25,281(16,230)
35,743(7,836)
20,788(1)
6,654(2,059)411,642(248,503)——
39,270450,91278,500(78,200)
131,116(48,809)
89,680(89,013)122,250(80,806)
34,096(21,365)
30,509(14,277)
18,144
(35)
4,419
(252)
508,717(332,762)——
42,345551,062

2012

2011

2010

2009

2008

53,909(53,322)62,672(34,935)
570,988(569,583)
33,865(10,539)
21,490(5,069)21,472(3,034)
19,610(176)
9,267(5,108)793,278(681,768)
784,642
8,636

264,042(263,483)
67,188(52,129)
180,096(157,267)
24,838(9,288)23,575(8,463)29,255(79)
11,280(94)
17,924(13,351)
618,203(504,157)
608,288
9,914

352,087(351,358)
39,358(13,228)
233,553(233,382)
25,492(6,495)15,038(2,249)48,902(34,325)
11,046(34)
8,069(3,844)
733,549(644,918)——

268,868(268,519)
50,826(7,716)
31,284(21,963)
78,492(60,685)
20,373(13,349)
6,759
(463)
43,376(1)
6,153(1,493)506,135(374,193)——

11,301(8,398)79,191(20,479)
16,019(15,541)
243,907(215,637)
17,756(6,153)
10,441(122)
19,234
(15)
4,498
(247)
402,352(266,596)
—
—

2012

2011

2010

2009

2008

433,606
599,271(433,391) (599,192)
84,31063,830(64,977)(44,724)
811,376
343,687(788,023) (315,875)
23,49541,055(13,625)(32,424)
16,345
19,681(3,260)(2,804)46,551
68,137(17,386)(33,045)
17,571
19,532
(67)
(67)
8,354
8,060
(7,240)(6,815)
1,441,612 1,163,256(1,327,972) (1,034,949)
1,439,789 1,161,323
1,823
1,932

501,414(501,034)
38,024(2,354)
232,881(225,311)
106,953(93,548)
19,541(9,035)49,029(33,449)
33,597
(19)
1,149
(596)
982,594(865,351)
980,664
1,929

227,740(227,460)
110,037(21,798)
44,960(36,255)
212,230(194,217)
27,677(21,927)
9,040(1,410)39,040(0)613(42)
671,341(503,112)——

38,128(35,362)150,081(51,065)
50,612(50,594)
304,917(261,032)
33,594(25,817)37,939(8,683)
16,408
(—)
1,144
(590)
632,827(433,147)——(Millions of yen)

Outstanding Contracts
Years ended March 31

1,200

2011

New Contracts
Years ended March 31

600(Millions of yen)

2012

Total
(Overseas)incl. Total Engineering Businessincl. Other Business(Millions of yen)

Performance Highlights by Region
All figures are on a consolidated basis.

(Billions of yen)600

Net Sales

400

200

2011

2010

2009

2008

■ Japan

126,176

102,020

139,592

163,138

175,952■ Asia60,686

31,24028,19764,73095,128■ Middle East

205,161

181,683

141,355

175,392

212,916■ Africa

44,34240,89930,533

7,068

21,494■ North and South America

5,140

4,633

18,42576

1,289■ Europe and CIS

2,122

1,342

5

38

404

■ Oceania

71,291

49,372

18,320

1,196

1,532

514,922411,191

376,430

411,642508,71742,04536,03137,82839,27042,345556,967

447,223

414,258

450,912551,062

2012

2011

2010

2009

2008

■ Japan

111,509

114,045

88,630131,942

135,753■ Asia22,333

189,61445,547

14,327

15,181■ Middle East

20,339264,921228,985299,650

232,030■ Africa

37,883

13,504

134,106

47,6097,556■ North and South America

33,09023,100

9,305

85

9,830

■ Europe and CIS

2,617

2,391

142

38

8

■ Oceania

565,505

10,625

226,831

12,483

1,991

Total

793,278

618,203

733,549

506,135

402,352

2012

2011

2010

2009

2008

■ Japan

113,639

128,306

117,243

168,228

199,679■ Asia168,661

207,01443,89628,17079,082■ Middle East

345,379

530,201

461,257

409,148

338,897■ Africa

96,310102,769

138,964

41,2502,125■ North and South America

46,81018,861

349

9,298

9,256

■ Europe and CIS

1,682

1,187

137

0

0

669,127

174,914

220,746

15,244

3,787

1,441,612 1,163,256

982,594

671,341

632,827

Total Engineering Business and Other Business■ Catalysts and Fine Products02008 2009 2010 2011 2012

(Billions of yen)
900

Total

New Contracts
Years ended March 31

600

300

(Millions of yen)

2012

Years ended March 31(Millions of yen)0
2008 2009 2010 2011 2012

(Billions of yen)
1,500

Outstanding Contracts
Years ended March 31

1,200(Millions of yen)

900

600

■ Oceania

300

Total
0
2008 2009 2010 2011 2012

JGC Corporation
Annual Report 201225

Major Projects

Business Sector

ContractsAwardedContracts
Completed

Project

Location

Oil and Gas Development Projects

Groupement Bir Seba

Crude Oil Processing Facilities

Bir Seba/Algeria

Petroleum Refining Projects

PDVSA Petroleo, S.A. (PDVSA)

Heavy Crude Oil Upgrading Facilities

Puerto La Cruz/Venezuela

LNG Projects

Ichthys LNG PTY LTD

LNG Plant

Darwin/Australia

PETROLIAM NASIONAL BHD. (Petronas)

FEED Service for LNG Plant

Bintulu/Malaysia

General Directorate of Electric Energy
Production In Nassiriyah

Cooling Water Facility

Nassiriyah/Iraq

Japan Nuclear Fuel Limited

Vitrification Facility

Aomori/Japan

Living and General Production Projects

TOYAMA CHEMICAL CO., LTD.

Pharmaceutical-related Facilities

Toyama/Japan

Environmental Protection, Social Development
and IT Projects

Japan Freight Railway Company

Hospital

Tokyo/Japan

Houshikai Foundation

Hospital

Fukuoka/Japan

Power Generation, Nuclear Power and New
Energy Projects

Contracts
Underway

ClientOil and Gas Development Projects

Ras Gas Company Limited

Gas Processing Plant

Ras Laffan/Qatar

Abu Dhabi Gas Industries Ltd.

Gas Processing Plant

Habshan/Abu Dhabi

Sonatrach

Gas Processing Plant

Gassi Touil/Algeria

Sonatrach

Gas & Oil Separation Facilities

Rhourde Nouss/Algeria

Saudi Arabian Oil Co. (Saudi Aramco)

Utilities, Storage and Shipping Facilities for
the Central Processing Facilities

Manifa/Saudi Arabia

Petroleum Refining Projects

ExxonMobil Asia Pacific Pte. Ltd.

Petroleum Refining-related Plant

Jurong/Singapore

LNG Projects

Sulawesi LNG Development

LNG Plant

Luwuk/Indonesia

JX Nippon Oil & Energy Corporation

LNG Receiving Terminal

Aomori/Japan

Chevron Australia Pty Ltd

LNG Plant

Barrow Island/Australia

Esso Highlands Limited

LNG Plant

Port Moresby/Papua New Guinea

Chemical Projects

Saudi Polymers Company

Petrochemical Plant

Al Jubail/Saudi Arabia

Living and General Production Projects

DENKA SEIKEN Co., Ltd.

Pharmaceutical-related Facilities

Niigata/Japan

Environmental Protection, Social Development
and IT Projects

Ibaraki Resident Co-operative Union

Headquarters Building

Ibaraki/Japan

Medical Co. LTA.

Hospital

Kumamoto/Japan

Hokuyokai Foundation

Hospital

Hokkaido/Japan

Medical Management Matsuzawa Co., Ltd.

Hospital

Tokyo/Japan

I. P. C Ltd.

Senior Citizen Complex

Ibaraki/Japan

Power Generation, Nuclear Power and New
Energy Projects

Qatar Shell GTL Ltd.

GTL Plant

Ras Laffan/Qatar

Environmental Protection, Social Development
and IT Projects

Niigata Medicalcare Cooperative

Hospital

Niigata/Japan

Yushinkai Foundation

Hospital

Kanagawa/Japan

Corporation
26 JGC
Annual Report 2012

Major Contracts Awarded

Announced as of March 31, 2009
Business
Sector*ClientProject

Location

Completion

OGD

Sonatrach

Gas & Oil Separation Facilities

Rhourde Nouss/Algeria

2011

OGD

Saudi Arabian Oil Co. (Saudi Aramco)

Utilities, Storage and Shipping Facilities for
the Central Processing Facilities

Manifa/Saudi Arabia—

LNG

INPEX Browse, Ltd.

FEED Service for LNG Plant

Darwin/Australia—

LIV

TOA EIYO LTD.

Pharmaceutical-related Facilities

Fukushima/Japan

2010

ENV

Medical Management Matsuzawa Co., Ltd.

Hospital

Tokyo/Japan

2013

ENV

Niigata Medicalcare Cooperative

Hospital

Niigata/Japan2011

Announced as of March 31, 2010
Business
Sector*

OGD

ClientProject

Location

Completion

Abu Dhabi Gas Industries Ltd.

Gas Processing Plant

Habshan/Abu Dhabi

2013

Sonatrach

Gas Processing Plant

Gassi Touil/Algeria

2013

Chevron Australia Pty Ltd.

LNG Plant

Barrow Island/Australia—

Esso Highlands Limited

LNG Plant

Port Moresby/Papua New
Guinea—CHM

Saudi Arabian Oil Co. (Saudi Aramco) and
Sumitomo Chemical Co., Ltd.

Engineering and Project Management
Services for the Feasibility Study

Rabigh/Saudi Arabia—

LIV

DENKA SEIKEN Co., Ltd.

Pharmaceutical-related Facilities

Niigata/Japan

2011

ENV

I. P. C Ltd.

Senior Citizen Complex

Ibaraki/Japan

2012

Yushinkai Foundation

Hospital

Kanagawa/Japan

2011

YASUHARA CHEMICAL Co., Ltd.

Research Center

Hiroshima/Japan

2010

LNG

Announced as of March 31, 2011
Business
Sector*ClientProject

Location

Completion

OGD

Ras Gas Company Limited

Gas Processing Plant

Ras Laffan/Qatar—

PET

ExxonMobil Asia Pacific Pte. Ltd.

Petroleum Refining-related Plant

Jurong/Singapore

2014

LNG

Sulawesi LNG Development

LNG Plant

Luwuk/Indonesia

2014

JX Nippon Oil & Energy Corporation

LNG Receiving Terminal

Aomori/Japan2015

Ibaraki Resident Co-operative Union

Headquarters Building

Ibaraki/Japan2012

Medical Co. LTA.

Hospital

Kumamoto/Japan2012

Hokuyokai Foundation

Hospital

Hokkaido/Japan

2012

ENV

* BUSINESS SECTOR

OGD: Oil and Gas Development Projects
LNG: LNG Projects
PWR: Power Generation, Nuclear Power and New Energy Projects
ENV: Environmental Protection, Social Development and IT Projects

PET: Petroleum Refining Projects
CHM: Chemical Projects
LIV: Living and General Production Projects

JGC Corporation
Annual Report 201227

Environmental Activities and Contribution to Society

In accordance with the JGC CSR Basic Policy, the JGC Group will continue to involve itself in activities that contribute to thewell-being and prosperity of society.

JGC CSR (Corporate Social Responsibility) Basic Policy
JGC is committed to fulfilling its role as a member of society (Corporate
Citizenship). We recognize that the foundation of our business isstrengthened by contributing to the prosperity of the world economy
and society; to the healthy preservation of the global environment; andto sustainable development of society in harmony with nature.
To meet this commitment, JGC hereby establishes the following
principles, which shall be applied, throughout its operations.
1. We shall conduct our business with a full understanding of theimportance of quality, safety, and the environment.
2. We shall make contributions to society that draw on the uniquestrengths of the JGC Group.
3. We shall comply with all legal requirements both within Japanand internationally, and conduct our business in a fair and transparent manner under a proper corporate governance system.
4. We shall disclose necessary information to our stakeholders in atimely and appropriate manner.
5. We shall endeavor to maintain and further improve fair humanresource management, to develop the abilities of our personnel
based on mutual trust and responsibility.
6. We shall promote CSR awareness and further develop our CSR
contributions, reflecting input from stakeholders.

Environmental Activities
JGC’s Engineering & Construction (E&C) business, which provides
engineering, procurement and construction (EPC) services for energyrelated plants such as those for oil and natural gas, is closely related toenvironmental protection in and of itself.
Since the 1960s, JGC has worked on environmental issues as anengineering contractor, striving to develop cleaner petroleum products,
make its plants more energy-efficient, and eliminate the production of
hazardous waste. Through to today, our understanding that ourbusiness activities can themselves contribute to environmental
protection has not changed, and is symbolically expressed in our
corporate philosophy.
Furthermore, we are expanding our environmental protection activities into a wider range of fields outside of our EPC business, including
our new clean development mechanism (CDM) business, which weare developing as part of our enterprise investment initiatives.
Working to provide our clients with plants that place a minimum
burden on the environment is also an important part of JGC’s environmental management approach. We engage in testing various techniques and improvements at each stage of our EPC business, and our
methods have been evaluated highly by our clients.

Corporation
28 JGC
Annual Report 2012

Measures taken to lessen the environmental impact of operations
at both our head office and the construction sites of our EPC projects
constitute the foundation of JGC’s environmental management
efforts. We have been improving our records every year for CO2
reductions at the head office and reduction/recycling of waste products at construction sites.

Considering HSE in Business Activities
The JGC Group executes projects around the world, in sectors ranging from resource development, oil, natural gas, and petrochemicals,
to the environment, catalysts and fine chemicals, pharmaceuticals,
water resources, and new energy. Through all these projects, the JGCGroup always strives to fully account for factors concerning health,safety, and the environment (HSE). HSE aspects must of course beconsidered in EPC services, but they must also be considered inmarketing and at all project stages, from feasibility studies to maintenance and plant decommissioning, as well as our investment andservices businesses. The JGC Group has added HSE factors to its
engineering and management capabilities, as it aims to help create asustainable society.
In this section, we look at some examples of how the JGC Groupconsiders the environment at the construction planning and construction stages of project execution.
<Construction Planning Stage>
Meticulous concern for sustainability at plant construction sites isessential. In many countries, construction of new plants requires
submission of an environmental impact assessment (EIA) report forthe purpose of minimizing environmental impacts wherever possible.
The EIA report describes in detail the impacts that construction work
will have on the air, water, soil, flora, fauna, and marine life. JGCapplies environmental management systems to construction work toensure that we demonstrate consideration for the environment incompliance with EIA reports, emphasizing the following points:➊ We practice strict legal compliance and environmental risk
management by identifying environmental laws and regulations
and environmental considerations that have a bearing on
construction work.
➋ We endeavor to increase customer satisfaction and reinforce
communication with stakeholders.
➌ We manage environmental risks and endeavor to minimize thepossibility of incidents that may have a negative impact on theenvironment by anticipating, preparing for, and speedily
responding to emergencies.

Before starting construction work, we consider the above mattersand unfailingly perform the following preliminary work:➊	Identifying environmental impacts of the construction work
➋ Setting environmental objectives and targets for the construction work
➌ Preparing an environmental management plan for construction work
➍ Providing new workers with environmental education and training
We incorporate the Zero Emissions Initiative 2015, a JGC Group
independent environmental conservation initiative, into this preliminary
work, and thoroughly confirm environmental conservation measures
before starting construction.
<Construction>
Construction work by JGC is preceded by thorough consideration of
possible effects on the environment at the planning stage.
Matters decided in the Construction Environmental Management
Plan include the project environmental policy, which organizations andpersons will be responsible for environment-related work, what environmental protection measures will be put in place, guidelines for environmental performance monitoring and measurement, emergency
prevention and mitigation procedures, environmental monitoring, andmonthly reporting. Following the start of construction, a review of theenvironmental aspects of the project (the relationship between
construction work and the environment) is conducted to confirm
whether the construction work differs from the plan. If any deviations
are found, the plan is revised to ensure that there are no omissions in
the environmental considerations included in the environmental
management framework.

Continuous Improvement of Environmental
Management Systems
In December 2003, JGC obtained international standard ISO 14001
certification for its environmental management systems from Lloyd’s
Register Quality Assurance (LRQA).
After two renewals, JGC completed the fiscal 2011 ­maintenanceexamination in September 2011, which included overseas sites.
Making Environmental Improvement Activities More Applicable toCore BusinessIn the past, environmental improvement activities at JGC’s headquarters
have tended to center on the reduction of waste, paper, and electricity
consumption. For this reason, the ­challenge for JGC has been to shiftfocus to environmental improvement activities more related to our corebusiness. In order to address this challenge, all department heads took
part in discussions about how to identify opportunities for environmental
conservation in their primary work and review target-setting procedures.
These discussions established the following shared awareness:· It is important to strive for the development of a sustainable society byaddressing environmental problems through our core business, and tolink this with the creation of corporate value and greater competitiveness.
· Amid rising global concern over environmental problems, JGC has
been helping to address environmental issues directly and indirectly
through its core business activities. JGC recognizes that its pursuit ofsustainability must be undertaken in its core business.
· JGC is mindful of the following points for achieving continuous
development.
➊ Maintaining and managing operations so as not to cause environmental problems.
➋ Making continuous improvements so as to raise earnings, while
taking environmental concerns into consideration.
Based on this shared understanding, JGC has continued to explore
the significance of environmental targets and goals, and has promoted
environmental management activities along the following lines:· Environmental management activities based on environmental
targets and goals are business operations in themselves, rather thanseparate activities.
· The operating policies of divisions and departments are set with theaim of raising the actual performance of the organization and business operations.
· The operating policies themselves are quality targets.
· The environmental targets of departments with an indirect environmental impact are to be considered as quality targets.
In this way, JGC’s environmental management system is loosely
linked to the quality management system, and JGC promotes environmental improvement activities that are applicable to its core businesses.
Construction Waste Recycling
JGC aims to minimize final waste through rigorous implementation of
the Zero Emissions Initiative 2015. In fiscal 2011, the final disposal
rate for construction work in Japan was 4.4%. Each site uses industrial
waste management survey forms prescribed by JGC to confirm therecycling rate with companies taking charge of intermediate waste
disposal before contracting with them. Because there is a large difference among waste disposal companies in terms of the disposal
method for construction sludge and the recycling rate in particular, an
extensive comparative analysis of each company is conducted regarding the disposal methods and disposal costs. Furthermore, appropriate
plans for separating waste are drawn up before the commencement ofconstruction based on the nature of the waste generated. During
construction, efforts are made to improve the recycling rate by rigidly
enforcing waste separation in accordance with the plan.

JGC Corporation
Annual Report 201229

Social Contribution Activities
Basic Policy for Social Contribution Activities
The JGC Group has declared that it will contribute to the sustainable
development of society and the global environment in the JGC CSR
Basic Policy. The Group has specified four key fields for realizing thisand for conducting suitable social contribution activities.
<Four Key Fields>
1. Environment
	Actively contribute to environmental conservation
2. Education
Support the professional development of future engineers
3. Science and Technology
Support science and technology as the basis for sustainable
development
4. Community Contribution
Contribute to the sustainable development of the communities where we conduct businessIn order to play a part in the recovery from an environmental
perspective, JGC solicited employees to take part in project volunteer
activities. In November 2011, the first volunteer helped with rice
paddy surveys carried out on Sabusawa Island, Shiogama City, Miyagi
Prefecture. The surveys involved monitoring the ecosystem, including
aquatic insects, plants, amphibious species and fish that call the ricepaddies home, as well as surveys of water and soil quality. In addition,
the volunteer helped with work to restore the rice paddies by removing
debris, making furrows and carrying out other tasks. This was anextremely valuable experience for the volunteer, who was able toappreciate firsthand the importance of an ecosystem through bothmind and body rather than just through words. The volunteer also felt
the necessity for conducting restoration measures that took into
account a long-term and multi-angle perspective as well as biodiversity, and were not merely short-term oriented.
JGC plans to continue our cooperation with this project.
Traffic Safety Workshops Held at Indonesian LNG Plant Construction Site

Here we introduce some examples of actual activities in the areasof education, science and technology, and community contribution.
Participation in Earthwatch Japan’s Post-Tsunami Monitoring Project
JGC is cooperating with Earthwatch Japan as a member company.
Earthwatch Japan launched the Post-Tsunami Monitoring Project in
the Tohoku region of Japan after the region was devastated by theGreat East Japan Earthquake that occurred in March 2011. The project is designed to help the disaster-hit region, which has strong agriculture, forestry and fishery industries, bounce back strongly througha green recovery—consideration for the natural environment anddevelopment of biodiversity.
A university (Tohoku University), NPOs, companies and private
citizens are taking part in the project, which will run over the relatively
long span of 10 years. With their cooperation, Earthwatch Japan will
monitor the ecosystem in the tsunami-hit region, with the aim of linking these efforts to a sustainable regional recovery.

In Indonesia, where JGC is currently constructing an LNG plant for the
Donggi-Senoro LNG Project, (the contract for which was received in
January 2011), local law enforcement is struggling with unlicensed andunderage children riding motorcycles in a dangerous manner, with little
mindfulness of traffic safety. In 2011, there was an approximate two-foldincrease year on year in traffic accidents around JGC's construction site,with 60% of these motorcycle accidents involving riders aged between
17 and 21. The risk of traffic accidents has increased along with anincrease in the number of vehicles visiting the site. Given this situation,
together with the local police, JGC held safety workshops for more than
1,000 students on 4 occasions at local schools from January 2012.
In their speeches at these workshops, JGC project leaders urged
the students to travel to school safely based on the construction site’sslogan of “Incident and Injury-Free.” The police also gave safe riding
demonstrations. The students packed the school halls despite the lackof air conditioning and contributed to a lively event with a steadystream of questions. Many students expressed their appreciation forbeing given this opportunity to learn about traffic safety.
JGC believes that in giving back to local communities where it has
plant construction projects it is extremely important to work as one withthe communities to help address
the problems they are grapplingwith. Looking ahead, JGC willcontinue to engage in these sorts

Enthusiastic volunteers conduct project surveysof activities at construction sites,
while also seeking new ways tocontribute to local communities,
based on their needs.

Corporation
30 JGC
Annual Report 2012

Group photo of traffic safety workshop
participantsCorporate GovernanceImproving Our Corporate Value by Fulfilling Our Social Responsibilities
JGC is keenly aware of the importance of proper corporate governance. Recognizing the need to foster that awareness in our
corporate culture and climate, we have formulated the JGC Corporate Philosophy. Through awareness-raising, education and training, we will work to win the public’s trust and maintain harmony with society in our corporate activities.
Under the JGC Corporate Philosophy, we are working to increase corporate value and realize the principles set out in this philosophy while keeping corporate social responsibility in mind. At the same time, we make it a rule to strive for fairness and transparency in our corporate activities, in accordance with our Code of Conduct.

Corporate Governance Framework
Executive Officer System
JGC has introduced an executive officer system, which clarifies thedivision of management decision-making and oversight functions fromexecutive functions. This has further enhanced management efficiency
and strengthened our executive accountability system.
Board of Directors
The Board of Directors, headed by the Chairman of the Board of
Directors, has 15 members and meets twice a month in principle.
JGC also has five corporate auditors (including three outside auditors) who regularly attend board meetings.
JGC recognizes the importance of mainly appointing directors
with a high degree of EPC business knowledge and who are wellversed in a wide range of business markets. As a result, at present
the Board of Directors comprises only internal directors with abundant experience. However, JGC will continue to consider the appointment of outside directors in the future based on the availability ofsuitable candidates.
Meetings for the Execution of Business Operations
JGC has a Director and Executive Officer Committee, which meetsonce a month in principle for the purposes of sharing information
regarding the status of management policies, and reporting/confirming the status of operations. The Chairman of the Board of Directors
heads this committee, which is composed of directors, executive
officers, and corporate auditors.
The Management Strategy Committee meets once a week inprinciple to examine important matters for JGC and the JGC Grouprelating to management strategy. The Chairman Emeritus of the JGCGroup heads this committee, which is comprised of directors,
corporate auditors, and other members.
JGC has also established the Operations Steering Committee toconsult and make decisions related to the execution of operations of
JGC Corporation and the JGC Group. Chaired by the President, thiscommittee includes corporate auditors and other individuals selectedby the President. The committee meets twice a month in principle.

In addition, a Nominating Committee and an Assessment
Committee have been established to enhance fairness and transparency in the selection of executive personnel and in the determinationof compensation issues. The Nominating Committee and the Assessment Committee each meet once a year in principle.
Board of Auditors
JGC has adopted the “company with internal auditors” model topreserve the effectiveness of corporate governance by strengthening
the framework of conducting audits by corporate auditors. At present, the Board of Auditors has five corporate auditors, including
three outside appointments. In collaboration with the Internal Audit
department and the accounting auditor, corporate auditors attend
meetings of the Board of Directors and other important meetings,
offer necessary comments when appropriate, and further improve
corporate governance through hearings regarding the businessexecution of the Company’s divisions and through surveys of domestic and overseas offices and plants.
Independent Auditor
The certified public accountants who audit JGC’s accounts are
Kazutoshi Isogai and Yoshihisa Uchida of KPMG AZSA LLC. Fourother CPAs and nine other individuals assist in carrying out theseaudits.

Status of the Internal Control System
Internal Control System
JGC has established an Internal Auditing Office to monitor, evaluate
and improve the effectiveness of the internal control systems of JGC
and of the Group as a whole, as well as to carry out individual audits
where necessary. Additionally, JGC has created management authority regulations that specify the authority and responsibilities of all
management personnel, thereby clarifying the system of accountability for corporate management and executive functions. JGC has
also established Group management regulations for each Group
member firm.

JGC Corporation
Annual Report 201231

Compliance
In order to conduct sustainable business development as a memberof the international community, JGC believes that it is essential foreach and every employee to conduct business in conformity withcorporate ethical standards, as well as to observe local laws andregulations not only in Japan but also overseas. To this end, JGC has
formulated a Corporate Philosophy for the entire JGC Group, a document on Principles of Business Conduct, and a Code of Conduct
manual. JGC also educates and trains employees on various laws
and regulations, as part of its efforts to raise employees’ complianceawareness.
JGC recognizes that the bar is being raised in terms of thecompliance level expected of global corporations. In order to respondto the demands of international society, JGC is strengthening its
internal compliance system by expanding its specialist departments
responsible for compliance.
Based on recognition of the importance of building a complianceframework that also encompasses JGC Group companies in Japanand overseas, JGC fosters close contact with compliance officers at
each company, and endeavors to establish various regulations andshare information so as to put in place and operate an effective
system for the entire JGC Group.
Corporate Information Disclosure
JGC discloses information in accordance with the statutory disclosure system based on the Japanese Financial Instruments andExchange Act. In addition, in accordance with the timely disclosuresystem at Japanese financial instruments exchanges, JGC promptly
discloses important company information through its Public Relations & Investor Relations Dept. JGC also proactively discloses corporate information falling outside the scope of such regulations andsystem through news organizations and other media, in cases where
it determines that disclosure is desirable.
Status of the Risk Management System<Corporate Risk Management>
JGC has established a Risk Management Committee as part of acomprehensive risk management system designed to systematically
identify risks throughout the Group, particularly company risk suchas risks related to management, disasters, incidents and society. The
Risk Management Committee meets as necessary.
<Project Risk Management>
Project risk management is conducted in three broad stages: 1) the
project selection stage, 2) the estimate and bidding stage, and 3) the
execution stage.

Corporation
32 JGC
Annual Report 2012

1) Project Selection StageThe Global Marketing Division is constantly gathering a wide range of
project information based on various factors such as region, client,and technical field, and activities to obtain orders are conductedbased on the study and evaluation of the following points:· Project size (value)· Technical expertise and experience required· Country risk
· Allocation of engineers· Competitive environment, etc.
The results of these studies and evaluations are used in determining
JGC’s level of interest in the respective projects.
2) Estimate and Bidding StageA Project Risk Review Meeting analyzes project-specific risks. The
main risk management items are as follows:· Clarity of the project plan and scope of responsibility· Client’s project funding plan and project execution policy· Level of technology required and degree of difficulty·	Price and supply-demand trends for materials, machinery and labor· Degree of difficulty in meeting deadlines· Existence of excessive contractual obligations· Competitiveness of bidding environment· Appropriateness of the project execution plan
A detailed estimate policy is drawn up and an estimate is createdbased on this risk analysis.
3) Execution Stage
Problems and other matters affecting the budget and timing that
occur during execution of the project are reported in a timely
manner, and problem areas are analyzed.
If improvement is needed, quick and smooth project management is supported through instructions and assistance designed tobring about appropriate improvements.
<Crisis Management>
Regarding crisis management, JGC has established a Security
Management Section to gather and process information related torisk management, conduct risk management training, and respondto any urgent issues that arise.
<Handling of Personal Information>
The JGC Group has established a Personal Information Protection
Policy and Personal Information Protection Regulations to build asystem for managing personal information centered on those
employees with duties that involve the handling of this information.

Executive Compensation
JGC’s basic policy on executive compensation is to secure themanagement personnel necessary for enhancing its global competitiveness as an engineering contractor and continuously raising its
corporate value. Executive compensation is set within the bounds ofthe remuneration cap stipulated by a resolution passed at the 113th
General Meeting of Shareholders held on June 26, 2009.
Compensation for the Company’s directors comprises fixedamount remuneration and performance-based remuneration.
Furthermore, this remuneration framework is structured so that
directors can approach their responsibilities from a medium- tolong-term perspective, considering that a number of years are
required from winning an order through to project completion in the
EPC business, JGC’s main business. The fixed-amount remuneration
is determined according to the position and responsibilities of eachdirector. The total amount of the performance-based remuneration islimited to a maximum of 1% of the net income of the fiscal year
under review, and each director’s remuneration is determined byreflecting the contributions of the directors to the successful accomplishment of their responsibilities and the fiscal year performance,
and to provide an incentive for the improvement of business performance. Each director’s contribution is determined after deliberationby the Assessment Committee to ensure the objectivity of theevaluation.

Corporate Governance System Diagram(

The compensation for corporate auditors is determined within aframework centered on fixed-amount remuneration in order to help
guarantee the appropriateness of audits as an independent mechanism that ensures suitable corporate governance.
JGC abolished the retirement benefit system for directors andcorporate auditors with the close of the 108th General Meeting of
Shareholders held on June 29, 2004. It was also resolved that directors and corporate auditors who remained in office after the close of
the same meeting would be paid retirement benefit allowances when
they retire for their period in office through to the abolition of theretirement benefit system.
Remuneration breakdown
Category

Fixed-amountremuneration

Performance-based
Total
remuneration
remuneration
available
Number
Total
NumberTotalof
remunerationofremunerarecipients
paidrecipients tion paid

17 directors¥609.30
million17¥484.80
million15¥124.50
million2 auditors (excluding
outside auditors)¥33.20
million2¥31.20
million2¥2.00
million4 outside executive
personnel (4 outside
auditors)¥31.28million4¥29.28million3¥2.00
millionNote: The annual compensation limit for directors is ¥690.00 million; the annual compensation
limit for auditors is ¥88.00 million.

) denotes “Direct” and “Report”

General Meeting of Shareholders
Appoint/Dismiss
Disclose/Explain

Appoint/Dismiss

Board of Auditors

Appoint/Dismiss

Independent Auditor

Audit

Audit

Nominating Committee
Board of Directors

Assessment Committee

Internal Auditing OfficeDirector and Executive Officer Committee
Management Strategy Committee
Operations Steering Committee

Business Divisions/Sections

Legal & Compliance Office
Risk Management Committee
Security Management Section
Subsidiaries and Affiliates

JGC Corporation
Annual Report 201233

JGC’s Top Management
Board of Directors, Auditors and Executive Officers
As of July, 2012

Chairman Emeritus of JGC Group

Yoshihiro Shigehisa

Executive Vice President

Chairman and
Representative Director

President andRepresentative Director

Keisuke Takeuchi

Koichi Kawana

Executive Vice President and Chief
Financial Officer and Senior General
Manager, Corporate Administrative &Financial Affairs Division

Tadashi Ishizuka

Masayuki Sato
Senior Managing Directors

Directors

Executive Officers

Yuji Kato

Yutaka Yamazaki

Toyohiko Shimada

Yusuke Shinoda

Senior General Manager,
International Project Division

Senior General Manager, Business Planning &Government/Industry Relations Office

General Manager, Business Promotion &Execution Division

General Manager, Business Promotion &Execution Division

Eiki Furuta

Yasumasa Isetani

Tadao Takahashi

Senior General Manager,
Global Marketing Division

Senior General Manager, Business Promotion& Execution Division

President, JGC Gulf International Ltd.

Tsutomu Akabane

Hiroyasu Fukuyama

General Manager, International Project Division

General Manager, Global Marketing Division

Managing Directors

Hideaki Miura
Senior General Manager, Engineering Division

Satoshi Sato
General Manager, International Project Division

Hitoshi Kitagawa
Senior General Manager, Industrial &Domestic Energy Project Division

Yasushi Momose
General Manager, Global Marketing Division

Takehito Hidaka
General Manager, Global Marketing DivisionCorporate Auditors

Teruo Nakamura
Minoru Sakuma*
Yukihiko Shimizu

Shigeru Abe
General Manager, International Project Division

Takashi Yasuda
Senior General Manager, Technology
Innovation Center

Toru Kikuchi
General Manager, Global Marketing Division

Yutaka Yamanaka
General Manager, Engineering Division

Hiroshi Bunazawa
Senior Manager, Business Strategy Office,International Project Division

Shin Matsui
Senior Manager, LNG Project, International
Project Division

Tokutaro Nomura

Masaru Yamamoto*

Senior Manager, Procurement Department,International Project Division

Masao Mori*

Shigeo Kobayashi

Hisakazu Nishiguchi
Senior General Manager,
Legal & Compliance OfficeKazuyoshi Muto
General Manager, Engineering Division

Takahiro Kobori
General Manager, Engineering Division

Yasutoshi Okazaki
Project Director, NSRP Project,International Project Division

Masato Kato
President & Treasurer, JGC (USA), Inc.

Nobuhiro Kobayashi
Executive Vice President, JGC Gulf
International Co. Ltd.

Kenichi Yamazaki
Senior Manager, Cost Engineering
Department, International Project Division

Hiroyuki Miyoshi
General Manager, Project Division,
International Project Division

Project Director, Gasco IGD Project,International Project Division

Yoshikatsu Nishida
General Manager, Business Promotion &Execution DivisionCorporation
34 JGC
Annual Report 2012

Note: * Outside Auditor

Financial Section

Contents
36

Six-Year Summary—Consolidated

37

Analysis of Performance and Financial Position

41

Risks Impacting Operations

42

Consolidated Balance Sheets

44

Consolidated Statements of Income

45

Consolidated Statements of Comprehensive Income

46

Consolidated Statements of Changes in Net Assets

47

Consolidated Statements of Cash Flows48

Notes to Consolidated Financial Statements

65

Internal Control Report

66

Independent Auditor’s Report

67

Six-Year Summary—Non-Consolidated

68

Non-Consolidated Balance Sheets70

Non-Consolidated Statements of Income

71

Non-Consolidated Statements of Changes in Net Assets

72

Notes to Non-Consolidated Financial Statements

78

Independent Auditor’s Report

JGC Corporation
Annual Report 201235

Six-Year Summary—Consolidated
For the six years ended March 31.
Yen amounts are in millions except per share data.

2012

2011

2010

2009

2008

2007

¥  556,967¥  447,223¥414,258¥450,912¥551,062¥608,530

Operating Income

67,05463,55941,91952,00344,896

26,413Net Income

39,111

25,478

27,112

31,54330,02020,187

Total Current Assets

376,173

319,464

283,538

335,220324,617327,333

Total Current Liabilities

205,772

174,293

137,728208,023

217,339

237,586

Working Capital

170,401

145,171

145,810

127,197

107,278

89,747

Current Ratio

182.8%

183.3%

205.9%

161.1%

149.4%

137.8%Net Property and Equipment

64,88764,634

66,05866,50968,45067,220Total Assets

526,169

468,503430,176

480,279

466,773

470,286

7,591

6,624

21,92623,25517,30017,799Total Net Assets

291,042

264,483

246,141

224,488

207,537

189,239

New Contracts

793,278

618,203

733,549

506,135

402,352

301,347

1,441,612

1,163,256

982,594

671,341

632,827

744,679

Net Income per Share (in yen)

154.90100.83107.25124.76118.33

79.52

Cash Dividends per Share (in yen)

38.50

30.0

21.0

30.0

21.0

15.0

Number of Employees

6,524

5,826

5,795

5,739

4,723

4,531

Net Sales

Long-Term Debt, Less Current Maturities

Outstanding Contracts

Corporation
36 JGC
Annual Report 2012

Analysis of Performance and Financial Position

Our View of the Operating Environment
The global economy remained uncertain during the fiscal year under review primarily because of the continued risk of adownturn in business conditions, mainly due to the negative impact in financial terms of the governmental debt crises insome countries in Europe. Japan’s economy showed signs of picking up after the Great East Japan Earthquake, but the highyen and the slowdown in the overseas economy meant the situation with the Japanese economy remained challenging.
In oil and gas producing countries, which have the greatest impact on the JGC Group’s total engineering business, investment continued in oil and gas resources, and oil refining, gas chemicals and other projects were planned with the aim ofadding value to oil and gas. These developments were due to increasing energy demand against the backdrop of a growing
global population and economic growth in emerging countries. In Asia and Oceania, it is expected that there will be increasing
LNG demand even in countries like China and India, as well as Japan, South Korea and Taiwan. As a result, many LNG projects are in the planning phase.
Under these conditions, in the fiscal year under review, the Group’s total engineering business won orders that included
the two projects of construction of an LNG plant in Australia and construction of a crude oil processing facility in Algeria. As aresult, orders received were higher than the Group’s initial target. Paying close attention to the various risks involved, theGroup worked to steadily implement projects, including those currently being carried out.

Results of Operations
Consolidated net sales for the Group in the year ended March 31, 2012 were ¥556,967 million, up 24.5% year on year. Consolidated operating income rose 5.5% to ¥67,054 million. Consolidated net income increased 53.5% to ¥39,111 million.

Net Sales
Reflecting steady progress in projects accounted for on a percentage of completion basis, consolidated net sales increased¥109,744 million year on year to ¥556,967 million.

Cost of Sales and Selling, General and Administrative Expenses
Cost of sales was ¥470,227 million, increasing ¥104,403 million year on year in line with higher net sales. Selling, general andadministrative expenses increased ¥1,846 million to ¥19,686 million.

Operating Income
Operating income increased ¥3,495 million to ¥67,054 million in line with higher net sales. The operating income ratio was
12.0%, compared with 14.2% in the previous fiscal year.

Other Income (Expenses)
Other expenses, net increased ¥15,213 million to ¥4,425 million, compared with a loss of ¥10,788 million in the previous
fiscal year. The main reasons for the increase were the settlement expenses that were generated in the previous fiscal year. As
a result, income before taxes on income and minority interests in earnings of consolidated subsidiaries rose ¥18,708 million
year on year to ¥71,479 million.

Taxes on Income
Income tax and other taxes increased ¥1,912 million to ¥25,405 million. This increase reflected an increase in income before
taxes on income and minority interests in earnings of consolidated subsidiaries. Deferred taxes on income were ¥6,483 million, meaning tax expenses (net) came to ¥31,888 million.

JGC Corporation
Annual Report 201237

Minority Interest in Earnings (Losses) of Consolidated Subsidiaries
Minority interests, primarily consisting of earnings allocated to minority shareholders of consolidated subsidiary JGC-ITC
Rabigh Utility Co., Ltd., were ¥480 million, an improvement of ¥200 million year on year.

Net Income
As a result of the above, net income increased by ¥13,633 million to ¥39,111 million.

Segment Information
Reporting Segment
Net sales in the total engineering business rose ¥104,978 million to ¥506,177 million, the result of steady progress with projects accounted for on a percentage of completion basis. Segment income was ¥59,420 million, due to the higher net sales.
Net sales in the catalysts and fine products business increased ¥6,014 million, to ¥42,045 million. The increase reflectedrising demand for chemical catalysts, the acquisition of new customers, and expanded demand for cathode materials forlithium-ion batteries. Segment income rose ¥1,858 million, to ¥6,847 million, reflecting the increased sales and reduced fixed
expenses. The total engineering business accounted for 91% of net sales and 89% of operating income.

Financial Position
Consolidated total assets at March 31, 2012 totaled ¥526,169 million, a year-on-year increase of ¥57,666 million.
Total liabilities increased ¥31,107 million to ¥235,127 million.
Total net assets were ¥291,042 million, up ¥26,559 million year on year.
The shareholders’ equity ratio was 55.2%.
Balance sheet indicators for the Group were as follows:
Current ratio (%)
Fixed asset ratio (%)

Mar. 2010

Mar. 2011

Mar. 2012

206
60

183
56

183
52

Notes: Current ratio: Current assets/current liabilities
Fixed asset ratio: Net property and equipment + total other assets/total net assets*All indicators are calculated using consolidated financial figures.

Net Sales by Reporting Segment(Billions of yen)
600
500 508.7

506.1
411.6

400

401.1
364.8

300
200
100
42.3

39.2

37.8

36.0

42.0

2008

2009

2010

2011

2012

0

■ Total Engineering Business■ Catalysts and Fine Products BusinessCorporation
38 JGC
Annual Report 2012

Effective from the year ended March 31, 2011, the Company adopted “Accounting Standard for Disclosures about Segments of anEnterprise and Related Information” and “Guidance on Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information.” Figures for the fiscal year ended March 31, 2010 have been retroactively restated.

Cash Flow
Cash and cash equivalents on a consolidated basis increased ¥57,124 million to ¥222,556 million.
Net cash provided by operating activities was ¥97,848 million, mainly reflecting ¥71,479 million in income before taxes
on income and minority interests in earnings of consolidated subsidiaries, income from an increase in advances received on
uncompleted contracts related to projects in hand, the steady collection of accounts receivable, and income taxes paid.
Investing activities used net cash of ¥18,746 million, mainly due to investments in new fields.
Financing activities used net cash of ¥20,536 million, mainly for the repayments of long-term bank loans and cash dividends paid.
Cash flow indicators for the Group are as follows:
Mar. 2010

Mar. 2011

Mar. 2012

57.1
98.0
—
—

56.3
104.9
0.4
86.2

55.2
123.1
0.1
145.3

Shareholders’ equity ratio (%)
Shareholders’ equity ratio (market basis, %)Years to redemption of liabilities (years)
Interest coverage ratio (times)
Notes: Shareholders’ equity ratio: (Total net assets–minority interests)/total assets
Shareholders’ equity ratio (market basis): Total market value of shares/total assets
Years to redemption of liabilities: Interest-bearing liabilities/net operating cash flow
Interest coverage ratio: Net operating cash flow/interest expenses*All indicators are calculated using consolidated financial figures.
*Interest-bearing liabilities include all liabilities posted on the Consolidated Balance Sheets on which interest was paid. Net operating cash flow istaken from the cash flow provided by operating activities, as reported in the Consolidated Statements of Cash Flows. Interest paid is taken fromthe amount of interest paid as reported in the Consolidated Statements of Cash Flows.
*Years to redemption of liabilities and interest coverage ratio are not shown for fiscal years in which net cash is negative.

Analysis of New Contracts
New contracts on a consolidated basis totaled ¥793,278 million. This figure exceeded our initial forecast of ¥550,000 million.
A breakdown of new contracts by business sector and region is as follows:

New Contracts by Business Sector(Billions of yen)Mar. 2011

Mar. 2012

Mar. 2012
Percentage of
new contracts

264.0
67.1
180.0
24.8
82.0

53.9
62.6
570.9
33.8
71.8

6.8%
7.9%
72.0%
4.3%
9.0%

Oil and gas development projects
Petroleum refining projects
LNG projects
Chemical projects
Other projects

Shareholders’ Equity and Shareholders’ Equity Ratio

Free Cash Flows(Billions of yen/%)(Billions of yen)

300
250
44.4

200

46.6

57.1

56.3

290.4

245.8

263.9

55.2

223.8

60

80

50

60

40

207.2

48.3

40
20

150

79.1

30

13.8

10.1

0
100

20

50

10

–40

0

0

–60

2008

2009

2010

2011

2012

–20

–45.0

2008

2009

2010

2011

2012

■ Shareholders’ Equity
Shareholders’ Equity Ratio

JGC Corporation
Annual Report 201239

Percentage of Region(Billions of yen)

Japan
Asia
AfricaMiddle East
Oceania and Others

Mar. 2011

Mar. 2012

Mar. 2012
Percentage of
new contracts

114.0
189.6
13.5
264.9
36.1

111.5
22.3
37.8
20.3
601.2

14.0%
2.8%
4.8%
2.6%
75.8%

Future Outlook
In the total engineering business, we expect our customers to continue robust capital investment in plant facilities in theGroup’s key markets centered on the Middle East, Southeast Asia and Africa, due to increasing energy demand against a
backdrop of increasing populations in emerging countries and economic growth. However, the competitive environment is
expected to remain severe because of escalating competition to win orders on the part of newly emerging contractors centered on Asia and Europe. Amid these conditions, fiscal 2012, the year ending March 31, 2013, the Group will continue its
Company-wide initiatives to strengthen its cost competitiveness in all processes of the EPC business. At the same time, theGroup will maintain a solid competitive position in fields where it has a highly competitive edge such as LNG, develop newmarkets, and steadily execute sophisticated projects such as those that apply modular construction.
In addition, the Group will make business investments in new fields such as urban infrastructure development as well as
in electricity generation, new energy fields, the environment and water sectors, and natural resource development.
In the catalysts and fine products business, the business environment is greatly changing, including the prolonged low
growth in Europe, the U.S. and Japan, the continued high prices of raw materials and fuel, and the firm establishment of theappreciation of the yen.
In the catalysts business, the JGC Group will work to further improve and expand sales of catalysts that either require norare earths, which are part of the raw materials of FCC catalysts, or use substantially reduced amounts of rare earths, tostrengthen overseas sales systems, and to build a recycling system to avoid procurement and price-change risks with rareearths, the raw materials for our hydrotreating catalysts. In addition, the Group will strive to expand exports and shift to highvalue-added products in step with the moving overseas of the production bases of chemical catalysts for key customers.
In the fine products business, the Group will work to further reduce costs for cathode (positive-electrode) materials forlithium-ion rechargeable batteries in response to drastically changing markets, and will accelerate the development of nextgeneration and generation-after-next products. The Group will also aggressively strive to expand sales to overseas markets for
optic materials for spectacles and materials for cosmetics, and to expand the Taiwan production bases for abrasives for harddisks and other applications.

Corporation
40 JGC
Annual Report 2012

Risks Impacting Operations

The following matters regarding risks associated with the businesses of the JGC Group could potentially have an effect on the
judgments and decisions of investors.
Forward-looking statements are based on the best information available and give consideration to the overall activities of
the JGC Group as of March 31, 2012.

1. Risks With Overseas Causes
Overseas businesses generate about 70% of the JGC Group’s total net sales. Such businesses are subject to country risks—
economic, political and social. These include political unrest, wars, revolutions, civil strife, changes in economic policy, default
on foreign debts and changes in exchange and taxation systems. To minimize the effects on its businesses arising from theserisks, the JGC Group continuously reviews and reinforces its risk management system, carries trade insurance, recovers
receivables as early in a project as possible, forms joint ventures, and takes various other steps. However, when changes inthe business environment are more radical than anticipated, and projects are canceled, suspended or delayed, the possibilityof a negative impact on JGC’s performance arises.

2. Risks Affecting Project Execution
Almost all contracts for projects in which the JGC Group participates are lump sum, full-turnkey contracts. However, to enable
hedging of some of the risks in these contracts, the Group uses cost-plus-fee contracts and contracts based on the cost disclosure estimate method, depending on the project. The Group draws fully upon its past experience to anticipate and incorporate into each contract provisions for dealing with the risks that threaten to arise during its execution. When confronted with
unforeseen impediments to the execution of a project, including sudden steep rises in the costs of materials, equipment,machinery and labor, outbreaks of disease, natural disasters, or if the JGC Group’s actions or a problem during project execution should cause a major accident, the economics of a project can be adversely affected, which can have a negative impact
on the JGC Group’s performance.

3. Risks Affecting Investing Activities
The JGC Group invests in resource development businesses including oil, gas, and new fuels, as well as water and power
generation businesses, and the global warming gas-emissions credits business. In making these decisions, new investments
and reinvestments are conducted and existing businesses are monitored to ensure the execution of appropriate risk management. However, unanticipated dramatic changes in the investing environment, such as sudden price fluctuations in oil, gas orother energy resources and changes in estimated reserves, can have a negative impact on the JGC Group’s performance.

4. Risks of Changes in Exchange Rates
Almost all of the income from JGC Group sales generated by overseas business is paid in foreign currencies. To hedge theassociated exchange rate risk, we have introduced countermeasures including signing project contracts denominated in
multiple currencies, conducting overseas procurement, ordering in overseas currencies, and entering into foreign exchange
contracts. However, sudden exchange rate fluctuations could negatively affect the JGC Group’s performance.

JGC Corporation
Annual Report 201241

Consolidated Balance Sheets
JGC CORPORATIONMarch 31, 2012 and 2011

AssetsMillions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

¥195,056¥131,894$2,373,233

Current Assets:
Cash and deposits (Notes 13 & 18)
Marketable securities (Notes 9, 13 & 18)

27,50030,000334,591

Notes and accounts receivable (Notes 2, 15 & 18)

87,248108,810

1,061,540

Inventories (Note 4)

36,862

24,348448,497

Deferred tax assets (Note 12)

11,516

10,240140,114

Other current assets (Notes 2, 10 & 18)

18,097

14,273

220,185

(106)

(101)

(1,289)376,173

319,464

4,576,871

Land (Notes 14 , 17 & 19 )25,99826,459316,316

Buildings and structures (Note 17)

58,51658,785

711,960

Machinery and equipment

51,052

47,205621,146

Construction in progress

2,430

821

29,566

Other (Note 19)

1,655

1,494

20,136

Allowance for doubtful accounts (Note 1 (v))
Total Current Assets

Property and Equipment (Note 3):

139,651

134,764

1,699,124Less accumulated depreciation(74,764)(70,130)(909,648)

Net Property and Equipment

64,88764,634789,476

Investments in unconsolidated subsidiaries and affiliates (Note 9)36,92036,147449,203

Marketable and investment securities (Notes 9 & 18)

29,952

29,967364,424

Long-term loans receivable (Notes 2 & 18)

1,598

1,780

19,443

Deferred tax assets (Note 12)

4,486

10,30454,581Other (Note 19)

12,1536,207

147,864

85,10984,405

1,035,515¥526,169¥468,503$6,401,862

Other Assets:

Total Other Assets
Total Assets
The accompanying notes are an integral part of these statements.

Corporation
42 JGC
Annual Report 2012

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

¥  1,498¥ 14,439$   18,226

Notes and accounts payable (Notes 2 & 18)

82,37670,762

1,002,263

Advances received on uncompleted contracts

66,03525,819803,443

Reserve for job warranty costs

2,176

312

26,475

Liabilities and Net Assets
Current Liabilities:
Short-term loans and current maturities of long-term debt (Note 3)

Reserve for losses on contracts

5,089

526

61,918

Income taxes payable

14,662

18,710178,392

Other current liabilities (Notes 2, 10 & 18)

33,93643,725412,897

205,772

174,2932,503,614

Long-Term Debt, Less Current Maturities (Notes 3 & 18)

7,591

6,624

92,359Retirement and Severance Benefits (Note 6)

13,695

14,623

166,626

Deferred Tax Liabilities for Land Revaluation (Notes 12 & 14)

3,692

3,783

44,920

Other Non-Current Liabilities (Notes 2 & 12)

4,377

4,697

53,255

235,127

204,020

2,860,774

286,057

Total Current Liabilities

Total Liabilities
Contingencies (Note 7)
Net Assets (Note 8):
Shareholders’ Equity
Common stock
Authorized — 600,000,000 shares,

23,511

23,511

Capital surplus

25,60325,603

311,510Retained earnings

255,323

224,347

3,106,497

Issued —       259,052,929 shares in 2012 and 2011

(6,257)(6,169)(76,129)298,180

267,292

3,627,935

2,319

3,338

28,215

39

2,519

475

Land revaluation, net of deferred tax portion (Note 14)(6,542)(6,553)(79,596)

Foreign currency translation adjustments(3,581)(2,613)(43,570)(7,765)(3,309)(94,476)

627

500

7,629

Total Net Assets

291,042

264,483

3,541,088

Total Liabilities and Net Assets¥526,169¥468,503$6,401,862

Treasury stock, at cost
Total Shareholders’ Equity
Accumulated Other Comprehensive Income (Loss)
Net unrealized holding gains on securities (Notes 9 & 18)
Deferred gains on hedges (Note 10)

Total Accumulated Other Comprehensive Income (Loss)
Minority Interests

JGC Corporation
Annual Report 201243

Consolidated Statements of Income
JGC CORPORATION
Years ended March 31, 2012, 2011 and 2010

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2010

2012

Net Sales (Note11)¥556,967¥447,223¥414,258$6,776,579

Cost of Sales

470,227

365,824

353,906

5,721,219

Gross profit

86,74081,39960,352

1,055,360

19,686

17,84018,433

239,519

67,05463,55941,919815,841

Interest and dividend income

4,681

2,672

1,814

56,953

Interest expense

(502)

(659)

(684)

(6,108)Loss on sales and disposal of property and equipment

(688)

(109)

(98)

(8,371)

Loss on impairment of fixed assets (Note19)

(420)

—

(3,649)(5,110)

Selling, General and Administrative Expenses
Operating income
Other Income (Expenses):

—

(197)

—

—

Exchange loss, net (Note 1 (v))

(686)

(4,707)(3,615)(8,347)

Equity in earnings of affiliates

1,177

2,153

2,556

14,320Gain on sales of marketable and investment securities

16

10,593

518

195

Gain on revision of pension plan

—

—

426

—

Provision for doubtful accounts (Note 1 (v))—

44

(1,496)—

Loss on devaluation of marketable and investment securities

Provision for retirement and severance benefits
Other, net

—

—

(138)

—

847

(20,578)297

10,307

4,425(10,788)(4,069)53,83971,47952,77137,850869,680

25,40523,493

12,431

309,101

Income before taxes on income and minority interests in earnings ofconsolidated subsidiaries
Taxes on Income (Note 12):Current
Deferred

6,483

3,520

(1,576)78,878

Income before minority interests

39,59125,75826,995

481,701

Minority Interests in (Earnings) Losses of Consolidated Subsidiaries
Net Income

(480)

(280)

117

(5,840)¥ 39,111¥ 25,478¥ 27,112$  475,861

Yen

U.S. dollars(Note 1)

Amounts Per Share of Common Stock
Net income¥ 154.90¥ 100.83¥ 107.25$     1.88

Cash dividends applicable to the year¥  38.50¥  30.00¥  21.00$     0.47

The accompanying notes are an integral part of these statements.

Corporation
44 JGC
Annual Report 2012

Consolidated Statements of Comprehensive Income
JGC CORPORATION
Years ended March 31, 2012, 2011 and 2010

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2010

2012

¥39,591¥25,758¥26,995$481,701

Net unrealized holding gains on securities (Notes 9 & 18)(1,019)(1,750)2,606(12,398)

Deferred gains (losses) on hedges (Note 10)(2,480)

(193)

3,739

(30,174)

Income Before Minority Interests
Other Comprehensive Income (Loss) (Note 20)

Land revaluation (Note 14)

63

—

—

767

Translation adjustments

(968)

(862)

(274)

(11,778)

(1)

1,230

253

(12)

¥ (4,405)¥ (1,575)¥ 6,324$ (53,595)¥35,186¥24,183¥33,319$428,106

Comprehensive Income attributable to JGC corporation¥34,706¥23,903¥33,434$422,266

Comprehensive Income (loss) attributable to minority interest¥   480¥   280¥    (115)$  5,840

Equity for equity method affiliates
Total Other Comprehensive Income (Loss)
Total Comprehensive Income

The accompanying notes are an integral part of these statements.

Effective from the year ended March 31, 2011, the new accounting standards for presentation of comprehensive income (ASBJ Statement No. 25) have been adopted andcertain prior year amounts have been reclassified to conform to the current year presentation.

JGC Corporation
Annual Report 201245

Consolidated Statements of Changes in Net Assets
JGC CORPORATION
Years ended March 31, 2012, 2011 and 2010

Thousandsof shares

Millions of yen
Common stock

SharesAmountCapitalsurplus

Balance at April 1, 2009
259,053
Net income for the year
Effect of change in scope of consolidation
Cash dividends
Gain on retirement of treasury stock
Land revaluation, net of deferred tax portion
Net unrealized holding gains on securities
Net deferred gains on hedges
Foreign currency translation adjustments
Increase of treasury stock
Net changes during the year

¥ 23,511¥ 25,599

Balance at March 31 and April 1, 2010 259,053
Net income for the year
Effect of change in scope of consolidation
Cash dividends
Gain on retirement of treasury stock
Land revaluation, net of deferred tax portion
Net unrealized holding losses on securities
Net deferred losses on hedges
Foreign currency translation adjustments
Increase of treasury stock
Net changes during the year

¥ 23,511

Balance at March 31 and April 1, 2011 259,053
Net income for the year
Effect of change in scope of consolidation
Cash dividends
Gain on retirement of treasury stock
Land revaluation, net of deferred tax portion
Net unrealized holding losses on securities
Net deferred losses on hedges
Foreign currency translation adjustments
Increase of treasury stock
Net changes during the year

¥ 23,511

Balance at March 31, 2012

¥23,511

259,053

Retainedearnings¥ 188,547
27,112(3,861)(7,584)

2

Treasurystock,
at costNet unrealized
holding gains(losses) on
securities(Notes 9 & 18)

Deferred
gains(losses) onhedges(Note 10)Landrevaluation,
net of deferred
tax portion(Note 14)

Foreigncurrencytranslation
adjustments

Minority
interests¥ (5,671)¥  2,481¥ (1,027)¥ (6,590)¥ (2,962)

¥ 600

(518)
2

(37)

37
2,606
3,739
500
(66)
(279)

¥ 25,601¥ 204,177
25,478¥ (5,735)¥  5,087¥  2,712¥ (6,553)¥ (2,980)

¥ 321

1,229
(5,308)2

2(1,749)
(193)
(862)
(436)
179

¥ 25,603¥ 224,347
39,111(611)(7,576)0¥ (6,169)¥  3,338¥  2,519¥ (6,553)¥ (2,613)

¥ 500

(322)
0

52

11
(1,019)(2,480)
(646)
(88)
127

¥25,603¥255,323¥(6,257)¥ 2,319¥   39¥(6,542)¥(3,581)¥ 627

Treasurystock,
at costNet unrealized
holding gains(losses) on
securities(Notes 9 & 18)

Deferred
gains(losses) onhedges(Note 10)Landrevaluation,
net of deferred
tax portion(Note 14)

Foreigncurrencytranslation
adjustments

Minority
interests$ 40,613$    30,648$ (79,730)$ (31,792)$ 6,083

Thousands of U.S. dollars (Note 1)

Commonstock

Capitalsurplus

Balance at April 1, 2011
Net income for the year
Effect of change in scope of consolidation
Cash dividends
Gain on retirement of treasury stock
Land revaluation, net of deferred tax portion
Net unrealized holding losses on securities
Net deferred losses on hedges
Foreign currency translation adjustments
Increase of treasury stock
Net changes during the year

$ 286,057$ 311,510

Balance at March 31, 2012

$286,0570$ 2,729,614 $ (75,058)
475,861(7,434)(92,177)
0633(3,918)134(12,398)(30,173)(7,860)(1,071)
1,546

The accompanying notes are an integral part of these statements.

Corporation
46 JGC
Annual Report 2012

Retainedearnings$311,510$3,106,497 $(76,129)$ 28,215 $   475

$(79,596)$(43,570)$7,629

Consolidated Statements of Cash FlowsJGC CORPORATION
Years ended March 31, 2012, 2011 and 2010

2012

2011

Millions of yen
2010

Thousands of
U.S. dollars(Note 1)
2012

¥ 71,479¥ 52,771¥ 37,850$  869,680

7,795
0
(208)
4,572
(954)
(4,681)502
1,211(1,177)
(16)
—
689
420
22,433(12,158)(6,425)
9,678
38,408(9,096)
122,4725,537(673)(29,488)
97,8487,517(6)(2,271)380(1,056)(2,672)659
3,788(2,153)(10,593)
197
109—(21,343)
12,451
4,474
11,450(20,948)
21,63354,387
6,783(559)(12,396)
48,215

9,134
391
780
(1,689)(375)(1,814)684(15)(2,556)
(518)
—
98
3,649
(14,973)
25,377(5,560)(22,014)(34,735)(3,404)(9,690)4,854(925)(19,419)(25,180)

94,8410(2,531)
55,627(11,607)(56,953)
6,108
14,734(14,320)
(195)
—
8,383
5,110
272,941(147,926)(78,173)
117,752
467,307(110,670)
1,490,108
67,368(8,188)(358,778)
1,190,510

Cash Flows from Investing Activities:
Payments for purchases of property and equipment
Proceeds from sales of property and equipment
Payments for purchase of intangible fixed assets
Payments for purchase of marketable and investment securities
Proceeds from sales of marketable and investment securities
Decrease in short-term loans receivable
Payments for long-term loans receivable
Proceeds from long-term loans receivable
Other
Net Cash Provided by (Used in) Investing Activities(8,055)732(7,695)(3,989)
443
30
—
—
(212)
(18,746)(3,252)57(1,179)(8,652)
13,740
72
(802)
56
76
116

(4,766)121(2,540)(12,494)
942
28
(528)
171
(758)
(19,824)(98,005)
8,906(93,625)(48,534)
5,390
365
—
—
(2,578)(228,081)

Cash Flows from Financing Activities:
Increase in short-term loans
Proceeds from long-term bank loans
Repayments of long-term bank loans
Repayments of finance lease obligation
Payments for purchase of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
Other
Net Cash Provided by (Used in) Financing Activities

541
1,600
(14,414)(250)(88)(7,572)(353)—(20,536)——(1,339)(234)(432)(5,296)(16)—(7,317)

—
—
(737)
(59)
(62)
(7,579)(20)(437)(8,894)

6,582
19,467(175,374)(3,042)(1,070)(92,128)(4,295)—(249,860)(1,442)
57,124
161,894
3,538¥222,556(2,928)38,086
123,808—¥161,894

2,290(51,608)
174,282
1,134¥123,808(17,545)
695,024
1,969,753
43,047$2,707,824

Cash Flows from Operating Activities:
Income before taxes on income and minority interests in earnings ofconsolidated subsidiaries
Adjustments to reconcile income before taxes on income and minority interests inearnings of consolidated subsidiaries to net cash provided by operating activities:
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts (Note 1 (v))
Increase (decrease) in reserve for losses on contracts
Decrease in retirement and severance benefits
Interest and dividend income
Interest expense
Exchange (gain) loss (Note 1 (v))
Equity in earnings of affiliates
Gain on sales of marketable and investment securities
Loss on devaluation of marketable and investment securities
Loss on sales and disposal of property and equipment
Loss on impairment of fixed assets (Note 19)
Decrease (increase) in notes and accounts receivable
Decrease (increase) in inventories
Decrease (increase) in other assets
Increase (decrease) in notes and accounts payable
Increase (decrease) in advances received on uncompleted contracts
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net Cash Provided by (Used in) Operating Activities

Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Increase in Cash and Cash Equivalents from Newly Consolidated Subsidiaries
Cash and Cash Equivalents at End of Year (Note 13)
The accompanying notes are an integral part of these statements.

JGC Corporation
Annual Report 201247

Notes to Consolidated Financial Statements

Note 1 — Summary of Accounting Policies(a) Basis of Presenting Consolidated Financial Statements

for by the equity method are carried at cost, adjusted for any substantial and

The accompanying consolidated financial statements of JGC Corporation (Nikki

non-recoverable decline in value. The effect on net income (loss) and

Kabushiki Kaisha, the Company) and its consolidated subsidiaries have beenretained earnings from those investments not accounted for under the equity

prepared in accordance with the provisions set forth in the Japanese Financial

method is immaterial.

Investments in non-consolidated subsidiaries and affiliates not accounted

At the year ended March 31, 2012, three of subsidiaries, JGC Gulf Interna-

Instruments and Exchange Law and its related accounting regulations, and in
conformity with accounting principles generally accepted in Japan (“Japanesetional Co. Ltd., JGC Exploration Eagle Ford LLC, and JGC OCEANIA PTY LTD

GAAP”), which are different in certain respects as to application and disclosure

were included in the scope of consolidation because their effect on the consoli-

requirements from International Financial Reporting Standards.

dated financial statement became significant and Nikki Construction Co., Ltd.

Prior to the year ended March 31, 2009, the accounts of consolidated

was excluded from the scope of consolidation because the company merged

overseas subsidiaries were based on their accounting records maintained in

into JGC Project Services Co., Ltd. (The company name after the merger : JGC

conformity with generally accepted accounting principles prevailing in the

PLANT SOLUTIONS., LTD.) and liquidated during the period.

respective countries of domicile. As discussed in Note 1 (e), the accounts ofAt the year ended March 31, 2011, one of affiliates, M. W. Kellogg Limited

consolidated overseas subsidiaries for the year ended March 31, 2010 were

was excluded from the scope of equity method because the Company sold out

prepared in accordance with either International Financial Reporting Stan-all securities.

dards or U.S. generally accepted accounting principles, with adjustments for

However, equity in earnings of M. W. Kellogg Limited before selling datethe specified six items as applicable. The accompanying consolidated financial

was included in consolidated statements of income for the year ended Marchstatements have been restructured and translated into English (with some

31, 2011.

expanded descriptions) from the consolidated financial statements of the

On March 10, 2008, the Accounting Standards Board of Japan issued

Company prepared in accordance with Japanese GAAP and filed with the

ASBJ Statement No. 16 “Accounting Standard for Equity Method of Account-appropriate Local Finance Bureau of the Ministry of Finance as required bying for Investments’’ and PITF No. 24 “Practical Solution on Unification of

the Japanese Financial Instruments and Exchange Law. Certain supplemen-

Accounting Policies Applied to Associates Accounted for Using the Equity

tary information included in the statutory Japanese language consolidated

Method.” This standard is effective from the year ended March 31, 2011.

financial statements, but not required for fair presentation, is not presented in

There were no effects of this change on the consolidated financial statements

the accompanying consolidated financial statements.

for the year ended March 31, 2011.

The translation of the Japanese yen amounts into U.S. dollars is included
solely for the convenience of readers outside Japan, using the prevailing(c) Consolidated Statements of Cash Flows

exchange rate at March 31, 2012, which was ¥82.19 to U.S.$1 The conve-

In preparing the consolidated statements of cash flows, cash on hand, readily

nience translations should not be construed as representations that theavailable deposits and short-term highly liquid investments with negligible risk

Japanese yen amounts have been, could have been, or could in the future be,of changes in value, and maturities not exceeding three months at the time of

converted into U.S. dollars at this or any other rate of exchange.

purchase are considered to be cash and cash equivalents.

(b) Reporting Entity
The consolidated financial statements include the accounts of the Company(d) Conversion of Foreign Currencies andTranslation of Statements

and its significant subsidiaries that include less than 50% owned affiliates

Receivables and payables denominated in foreign currencies are translated

controlled through substantial ownership of majority voting rights or existence

into Japanese yen at the year-end rates.
Balance sheets of consolidated overseas subsidiaries are translated intoof substantial control. All significant inter-company transactions and accountJapanese yen at the year-end rates except for net assets accounts, which arebalances are eliminated in consolidation.
Investments in non-consolidated subsidiaries and affiliates over which thetranslated at the historical rates. Income statements of consolidated overseas

Company has the ability to exercise significant influence over operating andsubsidiaries are translated at average rates except for transactions with thefinancial policies of the investees are accounted for by the equity method.

Company, which are translated at the rates used by the Company.

The number of consolidated subsidiaries and affiliates accounted forusing the equity method at March 31, 2012, 2011 and 2010, was as follows:(e) Unification of Accounting Policies Applied to Foreign
Subsidiaries for Consolidated Financial Statements

2012

2011

2010

Consolidated subsidiaries

16

14

14

On March 17, 2006, the Accounting Standards Board of Japan issued ASBJ

Affiliates under the equity method

2

2

3

Practical Issues Task Force No. 18 “Practical Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial
Statements” (“PITF No. 18”). PITF No. 18 requires that accounting policies
and procedures applied by a parent company and its subsidiaries to similar

48

JGC Corporation
Annual Report 2012transactions and events under similar circumstances should, in principle, becorresponding losses in the period of decline. In these cases, such fair market

unified for the preparation of the consolidated financial statements. PITF No.

value or the net asset value will be the carrying amount of the securities at the18, however, as a tentative measure, allows a parent company to prepare

beginning of the next year.

consolidated financial statements using foreign subsidiaries’ financial stateStandards or U.S. generally accepted accounting principles. In this case,(h) Recognition of Sales, Contract Works in Progress andAdvances Received on Uncompleted Contracts

adjustments for the following five items are required in the consolidation

On December 27, 2007, the Accounting Standards Board of Japan issued

process so that their impacts on net income are accounted for in accordance

ASBJ Statement No. 15, “Accounting Standard for Construction Contracts”

with Japanese GAAP unless the impact is not material.

and ASBJ Guidance No. 18, “Guidance on Accounting Standard for Construc-ments prepared in accordance with either International Financial Reporting(1) Goodwill not subjected to amortization

tion Contracts.” The new accounting standards require that if the construction(2)	Actuarial gains and losses of defined benefit plans recognized outside

activity deemed certain during the course of the activity, the percentage-of-profit or loss

completion method shall be applied (the percentage of the cost incurred to the(3) Capitalized expenditures for research and development activities

estimated total cost), otherwise the completed-contract method shall be(4)	Fair value measurement of investment properties, and revaluation of

applied. This standard is effective from the year ended March 31, 2010.

property, plant and equipment, and intangible assets

As a result, Net Sales increased by ¥2,407 million and Gross Profit,(5) Accounting for net income attributable to minority interests

Operating Income, and Income before taxes on income and minority interests

There were no material effects from adopting PITF No. 18 on the consoli-in earnings of consolidated subsidiaries increased by ¥318 million, respec-

dated financial statements for the year ended March 31, 2012.

tively for the year ended March 31, 2010.
Prior to the year ended March 31, 2010, the Company recognized sales(f) Allowance for Doubtful Accounts

on contracts using the completed-contract method except for long term con-Notes and accounts receivable, including loans and other receivable, aretract. Under this method, costs and advances received on uncompleted

valued by providing individually estimated uncollectible amounts plus thecontracts are accumulated during the period of construction. These costs andamounts for probable losses calculated by applying a percentage based on

advances received on uncompleted contracts are not offset and are shown ascollection experience to the remaining accounts.

contract works in progress and advances received on uncompleted contracts
in the accompanying consolidated balance sheets. Accordingly, no profits or(g) Marketable Securities, Investments in Unconsolidated
Subsidiaries and Affiliates, and Marketable and Investment
Securities

losses are recorded before the contract is completed.

The companies are required to examine the intent of holding each security and(components, parts, etc.) and construction on a full-turnkey basis, are recog-

classify those securities as (1) securities held for trading purposes, (2) debt

nized on the percentage-of-completion method, primarily based on contract

securities intended to be held to maturities, (3) equity securities issued bycosts incurred to date compared with total estimated costs for contract com-subsidiaries and affiliates, and (4) all other securities that are not classified inpletion. The percentage-of-completion method is adopted for large jobs forany of the above categories (hereafter, “available-for-sale securities”). The

which the construction period exceeds 24 months and the contract amountCompany and its domestic consolidated subsidiaries did not have the securities

exceeds ¥5,000 million (including jobs whose construction period exceeds 36

defined as (1) and (2) above in the years ended March 31, 2012 and 2011.

months and the contract amount exceeds ¥3,000 million). Revisions in con-Available-for-sale securities with available fair market values are stated atfair market value. Unrealized gains and losses on these securities are reported,

Sales on other contracts for relatively large projects, which require long
periods for completion and which generally include engineering, procurement

tract revenue and cost estimates are recognized in the period in which they
are determined.

net of applicable income taxes, as a separate component of net assets. Real-

Contract works in progress are stated at cost determined by a specificized gains and losses on the sale of such securities are computed using theidentification method and comprised of direct materials, components andmoving-average method. Other securities with no available fair market value

parts, direct labor, subcontractors’ fees and other items directly attributable toare stated at moving-average cost. Equity securities issued by subsidiaries andthe contract, and job-related overheads. Selling, general and administrative

affiliates, which are not consolidated or accounted for using the equity

expenses are charged to operations as incurred and are not allocated tomethod, are stated at moving-average cost.

contract job work costs.

If the market value of available-for-sale securities declines significantly,
such securities are restated at fair market value and the difference between

The Company normally receives payments from customers on a progressbasis in accordance with the terms of the respective construction contracts.

fair market value and the carrying amount is recognized as loss in the period
of decline (See Note 9). For equity securities with no available fair market
value, if the net asset value of the investee declines significantly, such securities are required to be written down to the net asset value with the
JGC Corporation
Annual Report 201249

(i) Inventories

result from the continued use and eventual disposition of the asset or asset

Prior to April 1, 2008, Inventories of the Company and its consolidated subsid-

group. The impairment loss would be measured as the amount by which theiaries were stated at cost determined using the moving-average method except

carrying amount of the asset exceeds its recoverable amount, which is thefor contract works in progress as stated Note 1(h).

higher of the discounted cash flows from the continued use and eventual
disposition of the asset or the net selling price at disposition.

(j) Operating Cycle
Assets and liabilities related to long-term contract jobs are included in current(m) Retirement and Severance Benefits and Pension Costs

assets and current liabilities in the accompanying consolidated balance(1) Employees’ severance and retirement benefits

sheets, as they will be liquidated in the normal course of contract completion,

The Company and its consolidated subsidiaries provide two types of post-

although it may require more than one year.

employment benefit plans, unfunded lump-sum payment plans andfunded non-contributory pension plans, under which all eligible employees(k) Property and Equipment, Depreciation and
Finance Leases
Property and equipment are stated at cost, except for certain revalued land asare entitled to benefits based on the level of wages and salaries at the timeof retirement or termination, length of service and certain other factors.
Some consolidated subsidiaries also have a defined contribution

explained in Note 14. Depreciation of property and equipment is calculated

pension plan, which was transferred from a portion of defined benefit

primarily using the straight-line method for buildings used for business opera-

pension plan.

tion, and the declining-balance method for other property and equipment

The Company and its consolidated subsidiaries provided allowance forover the estimated useful lives of the assets based on the Corporate Tax Codeemployees’ severance and retirement benefits at March 31, 2012 andof Japan.

2011, based on the estimated amounts of projected benefit obligation,

On March 31, 2008, the Accounting Standards Board of Japan issued
ASBJ Statement No. 18, “Accounting Standard for Asset Retirement Obligations” and ASBJ Guidance No. 21, “Guidance on Accounting Standard for

actuarially calculated using certain assumptions and the fair value of theplan assets at that date.
The estimated amount of all retirement benefits to be paid at theAsset Retirement Obligations”. The new accounting standards require compa-

future retirement date is allocated equally to each service year using thenies to recognize an asset retirement obligation as a liability and include theestimated number of total service years.

asset retirement cost corresponding to it in the cost of a tangible fixed asset.
This standard is effective from the year ended March 31, 2011.
As a result, Operating income decreased by ¥29 million, income before

The Company and its consolidated subsidiaries recognize prior service
costs as expenses in equal amounts over the average of the estimatedremaining service lives of the employees, and actuarial gains and losses astaxes on income and minority interests in earnings of consolidated subsidiaries

expenses using the declining-balance method over the average of thedecreased by ¥50 million, respectively for the year ended March 31, 2011.

estimated remaining service lives commencing in the following period.

And the effect of adopting this accounting standard for asset retirement obligation was ¥80 million.
All finance leasing transactions were capitalized except for finance leases

However, some consolidated subsidiaries recognized, prior service
costs, and actuarial differences as expenses in the period incurred.
Effective from the year ended March 31, 2010, the Company andwhich commenced prior to April 1, 2008 and have been accounted for as

consolidated domestic subsidiaries adopted the “Partial Amendments tooperating leases, continue to be accounted for as operating leases with disclo-

Accounting Standard for Retirement Benefits (Part 3)” (Accounting Stan-sure of “as if capitalized” information.

dards Board of Japan (“ASBJ”) Statement No. 19 issued on July 31,

Expenditures for new facilities and those that substantially increase the2008). The new accounting standard requires domestic companies to use

useful lives of existing property and equipment are capitalized. Maintenance,

the rate of return on long-term government or gilt-edged bonds as of therepair and minor renewals are charged to expenses as incurred.

end of the fiscal year for calculating the projected benefit obligation of a

The cost and accumulated depreciation applicable to assets retired ordefined-benefit plan. Previously, domestic companies were allowed to use

otherwise disposed of are eliminated from the related accounts and the gain ora discount rate determined taking into consideration fluctuations in theloss on disposal is credited or charged to income.

yield of long-term government and gilt-edged bonds over a certain period.
This change had no material impact on the consolidated financial state-(l) Imparment of Fixed Assets

ments for the year ended March 31, 2010.

The Company and its consolidated subsidiaries review their long-lived assets

From the year ended March 31, 2010 one consolidated domestic

for impairment whenever events or changes in circumstances indicate thesubsidiary changed the calculation method about allowance for employees’

carrying amount of an asset or asset group may not be recoverable. An impair-

severance and retirement benefit from accounting for 100% of the lump-ment loss would be recognized if the carrying amount of an asset or asset

sum retirement benefits to actuarially calculation.

group exceeds the sum of the undiscounted future cash flows expected to

As a result, income before income taxes on income and minority
interests in earnings of consolidated subsidiaries decreased by ¥13850

JGC Corporation
Annual Report 2012

million for the year ended March 31, 2010.

(s) Amortization of Goodwill

On July1, 2009, one consolidated domestic subsidiary unified its

Goodwill is amortized over five years on a straight-line basis, and either debited

employees’ severance and retirement benefits to the defined benefit pen-to the Selling, General and Administrative Expenses, or credited to other income.

sion plan. The transfer is accounted for in accordance with the “Guidanceon Accounting Standard for Transfer between Retirement Benefit Plans”(t) Derivatives and Hedge Accounting(Accounting Standards Board of Japan Guidance No. 1).

The accounting standard for financial instruments requires companies to state

On April 1, 2011, one consolidated domestic subsidiary transferred its

derivative financial instruments at fair value and to recognize changes in theemployees’ severance and retirement benefits to the defined benefit pen-fair value as gains or losses unless the derivative financial instruments aresion plan. And one consolidated domestic subsidiary terminated its definedused for hedging purposes.

benefit pension plan due to the merger. These transfers are accounted for

If derivative financial instruments are used as hedges and meet certainin accordance with the “Guidance on Accounting Standard for Transfer

hedging criteria, the Company and its domestic consolidated subsidiaries defer

between Retirement Benefit Plans” (Accounting Standards Board of Japan

recognition of gains or losses resulting from changes in fair value of derivative

Guidance No. 1).

financial instruments until the related losses or gains on the hedged items
are recognized.

(2) Officers’ severance and retirement benefits

However, in cases where forward foreign exchange contracts are used as

Domestic consolidated subsidiaries provide for liabilities in respect ofhedges and meet certain hedging criteria, forward foreign exchange contracts

lump-sum severance and retirement benefits to directors and corporateand hedged items are accounted for in the following manner (Allocation Method):statutory auditors computed on the assumption that all officers retired at a
year-end.

(1) If a forward foreign exchange contract is executed to hedge an existing
foreign currency receivable or payable,(n) Research and Development Costs(i)	The difference, if any, between the Japanese yen amount of the hedged

Research and development costs for the improvement of existing skills andforeign currency receivable or payable translated using the spot rate at

technologies or the development of new skills and technologies, including

the inception date of the contract and the book value of the receivable

basic research and fundamental development costs, are charged to operations

or payable is recognized in the statement of income in the period whichin the period incurred. The total amount of research and development
expenses, included in Cost of Sales and Selling, General and Administrative

includes the inception date, and(ii)	The discount or premium on the contract (that is, the difference between

expenses, was ¥5,042 million ($61,346 thousand), ¥4,998 million, andthe Japanese yen amount of the contract translated using the contracted¥5,009 million, respectively, in 2012, 2011 and 2010.

forward rate and that translated using the spot rate at the inception dateof the contract) is recognized over the term of the contract.

(o) Taxes on Income
The Company and its consolidated subsidiaries provide tax effects of temporary(2) If a forward foreign exchange contract is executed to hedge a future trans-differences between the carrying amounts and the tax basis of assets and liabili-

action denominated in a foreign currency, the future transaction will beties. The asset and liability approach is used to recognize deferred tax assets andrecorded using the contracted forward rate, and no gains or losses on theliabilities for the expected future tax consequences of temporary differences.

forward foreign exchange contract are recognized.
Also, where interest rate swap contracts are used as hedges and meet(p) Reserve For Job Warranty Costs

certain hedging criteria, the net amount to be paid or received under the

A reserve for the estimated cost of warranty obligations is provided for theinterest rate swap contract is added to or deducted from the interest on the

Company’s engineering, procurement and construction work at the time theassets or liabilities for which the swap contract was executed (Special method

related sales on contracts are recorded.

for interest rate swap).

(q) Reserve for Losses on Contracts(u) Accrued Bonuses to Directors and Corporate Auditors

A reserve for losses on contracts is provided for an estimated amount of prob-

The company and consolidated subsidiaries recognize director’s and corporate

able losses to be incurred in future years in respect of construction projects

auditor’s bonuses as expenses when incurred.

in progress.

(r) Per Share Information(v) Reclassification and Restatement
Certain prior year amounts have been reclassified to conform to the current

Cash dividends per share have been presented on an accrual basis andyear presentation except for the reclassification between provision for doubtful

include dividends to be approved after the balance sheet date but applicableaccounts and exchange gain or loss described below.

to the year then ended.
JGC Corporation
Annual Report 2012

51

The Company changed the recognition of exchange differences about foreign

Note 3 — Borrowings and Assets Pledged as Collateralcurrencies’ doubtful accounts from provision for doubtful accounts to exchange

Short-term loans consisted mainly of unsecured notes and bank overdrafts

gain or loss from the year ended March 31, 2011, due to proper presentation ofand bore interest at the annual rates of 0.80% and 0.95% at March 31, 2012provision for doubtful accounts without the effect of exchange fluctuation.

and 2011, respectively. Such loans are generally renewable at maturity.

These reclassifications had no impact on previously reported results ofLong-term debt consisted of the following:

operations or retained earnings.

(w) Accounting Changes and Error Corrections

March 31,

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

¥  402¥    951$  4,891

Secured LoansOn December 4, 2009, the Accounting Standards Board of Japan issued
ASBJ Statement No. 24, “Accounting Standard for Accounting Changes andError Corrections” and ASBJ Guidance No. 24, “Guidance on AccountingStandard for Accounting Changes and Error Corrections.” Accounting treatments under the new accounting standard are as follows:

0.55% – 1.75% loans froma governmental institution
due serially through 2014
Unsecured Debt
0.74% – 3.00% loans frombanks and insurance companies
due serially through 2016

(1) Change in Accounting Policies
When a new accounting policy is applied with revision of accounting
standards, the new policy is applied retrospectively unless revised accounting standards include specific transitional provisions. When revised

Less current maturities
Long-term debt due after one year

accounting standards include specific transitional provisions, an entity
shall comply with the specific transitional provisions.

8,176

20,08699,477

8,578

21,037104,368(987)(14,413)(12,009)¥7,591¥   6,624$ 92,359

Assets pledged as collateral for long-term debt and other non-current(2) Changes in Presentations

liabilities at March 31, 2012 and 2011, were as follows:

When the presentation of financial statements is changed, prior period financial statements are reclassified in accordance with the new presentation.

Millions of yen(3) Changes in Accounting Estimates

March 31,

A change in an accounting estimate is accounted for in the period of theLandchange if the change affects that period only, and is accounted for prospec-

Buildings and structures,at net book value

tively if the change affects both the period of the change and future periods.
(4) Corrections of Prior Period Errors

Machinery and equipment,
at net book value
Total

When an error in prior period financial statements is discovered, thoseThousands of
U.S. dollars(Note 1)

2012

2011

2012

¥ 5,071¥ 5,071$ 61,699

3,248

3,427

39,518

2,522

2,896

30,685¥10,841¥11,394$131,902

statements are restated.
This accounting standard and the guidance are applied to accountingchanges and corrections of prior period errors which are made from the begin-

The annual maturities of long-term debt outstanding at March 31, 2012,were as follows:
Amountning of the fiscal year that begins on or after April 1, 2011.

Significant receivables from and payables to unconsolidated subsidiaries andaffiliates at March 31, 2012 and 2011, were as follows:

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

$85,643

Notes and accounts receivable¥7,039¥7,875

Other current assets

2,731

2,234

33,228Long-term loans receivable

1,400

1,550

17,034

Notes and accounts payable

940

3,254

11,437

Other current liabilities

796

119

9,685

Other non-current liabilities

11

3

134

Corporation
52 JGC
Annual Report 20122013¥  987$ 12,009

2014

5,726

69,668

2015

283

3,443

2016

82

998

2017 and thereafter

1,500

18,250Total¥8,578$104,368

Year ending March 31,

Note 2 — Receivables From and Payables toUnconsolidated Subsidiaries and Affiliates

March 31,

Millions of yen

Thousands of
U.S. dollars(Note 1)

Note 4 — Inventories(4) Calculation method of depreciation equivalents

Inventories at March 31, 2012 and 2011, were summarized as follows:

Depreciation equivalents are computed by the straight-line method over theMillions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

¥25,705¥14,616$312,751

5,630

5,279

68,500March 31,

Inventories:
Contract works in progress
Finished goods and merchandiseWorks in process

1,991

1,614

24,224

Raw materials and others

3,536

2,839

43,022¥36,862¥24,348$448,497

Total

Note 5 — Lease Transactions
A. Lessee Leases(a) Finance Lease Transactions Without
Ownership Transfer to Lessee
Finance leases commenced prior to April 1, 2008 which do not transfer ownership of leased assets to lessees are accounted for as operating leases.

lease period without considering residual value.

(b) Operating Lease Transactions
Lease commitments under non-cancelable operating leases:

Millions of yen
March 31,

2012

2011

2012

Due within one year¥594¥  613$ 7,227

Due after one year

364

463

4,429

Total

¥958

¥1,076$11,656

B. Lessor Leases(a) Finance Lease Transactions Without
Ownership Transfer to Lessee, Whose Transaction Date Was
After April 1, 2008.
(1) Details of Investment in Leased assets

Assumed amounts of acquisition cost and accumulated depreciation atMarch 31, 2012 and 2011 were as follows:

Millions of yen(1) Purchase price equivalents, accumulated depreciation equivalents, andbook value equivalents

March 31,

Thousands of
U.S. dollars(Note 1)Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

Thousands of
U.S. dollars(Note 1)March 31,

2012

2011

2012

Lease payment receivable

¥80

¥86

$973

Estimated residual value

—

—

—

Interest Income

—

—

—

¥80

¥86

$973

Book value

Machinery and equipment and others:
Purchase price equivalents

¥ 527

¥ 688

$ 6,412

Accumulated depreciation equivalents

(332)

(411)

(4,039)Book value equivalents

¥ 195

¥ 277

$ 2,373

Purchase price equivalents are calculated using the inclusive-of-next five years was as follows:
AmountMillions of yen

Thousands of
U.S. dollars(Note 1)

2013

¥28

$341

2014

26

316

2015

16

195

2016

9

109

2017

1

12

¥80

$973

Year ending March 31,

interest method.
(2) Lease commitments

Millions of yen(2) As at March 31, 2012, the investment in leased assets due in each of theThousands of
U.S. dollars(Note 1)March 31,

2012

2011

2012

Due within one year

¥ 58

¥ 82

$  706

Due after one year

137

195

1,667

Total

¥195

¥277

$2,373Total(b) Finance Lease Transactions Without
Ownership Transfer to Lessee, Whose
Transaction Date Was Before March 31, 2008.
Finance leases commenced prior to April 1, 2008 which do not transfer own-

Lease commitments as lessee are calculated using the inclusive-of-

ership of leased assets to lessees are accounted for as operating leases.

interest method.

Assumed amounts of acquisition cost and accumulated depreciation atMarch 31, 2012 and 2011 were as follows:(3) Lease payments and depreciation equivalents

Millions of yen

Thousands of
U.S. dollars(Note 1)

Year ended March 31,

2012

2011

2010

2012

Lease payments

¥81

¥151

¥243

$986

Depreciation equivalents

81

151

243

986

JGC Corporation
Annual Report 201253

(1) Purchase price, accumulated depreciation and book value

March 31,

Included in the consolidated statements of income for the years ended

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

¥ 4

¥ 15

$ 49

(3)

(13)

(37)

¥ 1

¥  2

$ 12

March 31, 2012 and 2011, were severance and retirement benefit expenses
comprising the following:

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

¥1,667¥1,690$20,282

Machinery and equipment and others:
Purchase price
Accumulated depreciation
Book value(2) Lease commitments

March 31,

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

March 31,

Service costs — benefits earned
during the year
Interest cost on projected benefit
obligation

691

705

8,407

Expected return on plan assets

(384)

(389)

(4,672)

Amortization of net transition
obligation

3

3

37

Amortization of actuarial differences

936

1,020

11,388Due within one year

¥1

¥2

$12

Amortization of prior service costs

(217)

(211)

(2,640)Due after one year

—

0

—

Total

¥1

¥2

$12

Contribution for defined contribution
pension plan

141

107

1,716

Severance and retirement benefit
expenses¥2,837¥2,925$34,518

Lease commitments as lessor were calculated using the inclusive-ofinterest method.

The discount rate used by the Company and its domestic consolidated
subsidiaries was 1.5%–2.0% at March 31, 2012 and 2011. However, one(3) Rental income and depreciation

overseas consolidated subsidiary used the rate of 6.5% and 8.5 % at March 31,
Millions of yen

Thousands of
U.S. dollars(Note 1)

2012 and 2011 respectively. The rate of expected return on plan assets used by
the Company and its domestic consolidated subsidiaries was 1.5% for March

2012

2011

2010

2012

Rental income

¥2

¥14

¥38

$24

31, 2012 and 2011. However, some overseas consolidated subsidiaries used

Depreciation

2

9

30

24

the rate of 7.0% at March 31, 2012 and 2011. Actuarial differences are recog-

Year ended March 31,

nized in consolidated statements of income using the declining-balance method

Note 6 — Retirement and Severance Benefits

over 12 years to 15 years and 12 years to 16 years for the years ended March

The liabilities for employees’ severance and retirement benefits included in

31, 2012 and 2011, respectively, beginning the following fiscal year of recogni-

retirement and severance benefits in the liability section of the consolidated

tion. Prior service costs are recognized using the straight line method over 12balance sheets as of March 31, 2012 and 2011 consisted of the following:

years or 15 years for the years ended March 31, 2012 and 2011, from the fiscal

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

Projected benefit obligation¥ 44,500¥ 44,946$ 541,428

Less fair value of pension assets(27,555)(26,509)(335,259)

Unfunded projected
benefit obligation

16,945

18,437206,169

Less unrecognized net
transition obligation

(13)

(13)

(158)

Unrecognized actuarial differences(4,664)(5,490)(56,747)

Unrecognized prior service costs

1,093

1,350

13,29813,361

14,284

162,562

334

339

4,064

¥ 13,695¥ 14,623$ 166,626

March 31,

Net liability for employees’
severance and retirement benefits
Allowance for officers’ lump-sum
severance benefits
Retirement andseverance benefits

year incurred. Net transition obligation is amortized over 15years.

Note 7 — Contingencies(1) It is a business practice in Japan for a company to guarantee the indebtedness of certain of its trading agents, suppliers, subcontractors and certain
subsidiaries and affiliates. The aggregate amount of such guarantees were
¥15,520 million ($188,831 thousand) and ¥18,446 million at March 31,
2012 and 2011, respectively.
(2) The Company and one consolidated subsidiary have guaranteed employees’
housing loans and others from banks in the amount of ¥5 million ($61
thousand) and ¥11 million at March 31, 2012 and 2011, respectively.

Note 8 — Net Assets
Under the Japanese Corporation Law (“the Law”) and regulations, the entire
amount paid for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors, designate
an amount not exceeding one-half of the price of the new shares as additional
paid-in capital, which is included in capital surplus.

Corporation
54 JGC
Annual Report 2012

In cases where dividend distribution of surplus is made, the smaller of an

B. The following tables summarize book values of securities with no available

amount equal to 10% of the dividend or the excess, if any, of 25% of common

fair values or securities not valued by fair market prices as of March 31,

stock over the total of additional paid-in capital and legal earnings reserve2012 and 2011.

must be set aside as additional paid-in capital or legal earnings reserve.
Legal earnings reserve is included in retained earnings in the accompany-(a) Available-for-Sale Securities:

ing consolidated balance sheets.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. However, all additional paid-in capital and all legal earnings
reserve may be transferred to other capital surplus and retained earnings,
respectively, which are potentially available for dividends.

Millions of yen
2011

2012

¥10,046$141,854

38

39

462

27,50030,000334,591¥39,197¥40,085$476,907

Subscription certificate
Negotiable certificate of deposit

The maximum amount that the Company can distribute as dividends is

2012¥11,659

March 31,

Non-listed equity securities

Total

Thousands of
U.S. dollars(Note 1)

calculated based on the non-consolidated financial statements of the Company(b) Unconsolidated Subsidiaries and Affiliates:in accordance with the Law.
At the annual shareholders’ meeting of the Company held on June 28,
2012, the shareholders approved cash dividends amounting to ¥9,720 million

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

consolidated financial statements as of March 31, 2012. Such appropriations

Securities of unconsolidated
subsidiaries¥ 5,886¥ 6,940$ 71,615

are recognized in the period in which they are approved by the shareholders.

Securities of affiliates

31,03429,207

377,588

Total¥36,920¥36,147$449,203($118,263 thousand). Such appropriations have not been accrued in the

March 31,

Note 9 — Information on Securities
A. The following tables summarize acquisition costs and book values stated at

C. Available-for-sale securities with maturities are as follows:

the fair value of securities with available fair values as of March 31, 2012

Millions of yen

Withinone yearOver
one year
but within
five years

Overfive years
but within
ten yearsOverten years

Total¥27,500

¥—

¥—

¥—

¥27,500

Withinone yearOver
one year
but within
five years

Overfive years
but within
ten yearsOverten years

Total¥30,000

¥—

¥—

¥—

¥30,000

Withinone yearOver
one year
but within
five years

Overfive years
but within
ten years

Negotiable certificate
of deposit$334,591$—$—

and 2011.
March 31, 2012

Available-for-Sale Securities With Available Fair Values:

Negotiable certificate
of deposit(1) Securities with book values exceeding acquisition costs:
Millions of yen
March 31, 2012

Equity securities

Acquisition cost

Book value

Difference¥9,490¥15,087¥5,597
Millions of yen

March 31, 2011

Equity securities

Acquisition cost

Book value

Difference¥9,121¥15,971¥6,850Millions of yen

March 31, 2011

Negotiable certificate
of deposit

Thousands of U.S. dollars (Note 1)
Thousands of U.S. dollars (Note 1)
March 31, 2012

Equity securities

Acquisition cost

Book value

Difference$115,464 $183,563$68,099(2) Securities with book values not exceeding acquisition costs:
Millions of yen
March 31, 2012

Equity securities

Equity securities

Equity securities

Total$— $334,591

Book value

Difference

The Company and its domestic consolidated subsidiaries follow a policy of¥4,032¥3,168¥(864)

devaluation of available-for-sale securities. The policy of devaluation for theAcquisition cost

Book value

Difference¥4,405¥3,911¥(494)

Thousands of U.S. dollars (Note 1)
March 31, 2012Over
ten years

Acquisition cost

Millions of yen
March 31, 2011

March 31, 2012

Company and its domestic consolidated subsidiaries is that if the available fairvalue of the securities declines by 50% or more, compared with acquisition
cost, all the corresponding securities are devalued as such decline considered
to be substantial and non-recoverable decline in value. In addition, in the caseAcquisition cost

Book value

Difference

whereby the available fair value of the securities declines by more than 30%$49,057$38,545$(10,512)

but by less than 50%, the Company and its domestic consolidated subsidiaries examine the recoverability of the fair value of the securities and devaluate if
those securities are considered to be non-recoverable.

JGC Corporation
Annual Report 201255

Note 10 — Derivative Transactions and Hedge Accounting
As explained in Note 1 (t), the accounting standard for financial instruments(a) Fair Value of Undesignated Derivative
Financial Instruments

requires companies to state derivative financial instruments at fair value and to

Fair value of undesignated derivative financial instruments as of March 31,

recognize changes in the fair value as gains or losses unless derivative finan-

2012 and 2011 is summarized as follows:cial instruments are used for hedging purposes.

Millions of yen
Contract amounts

The Company utilizes foreign currency forward contracts and interest rate
swap contracts as derivative financial instruments only for the purpose of miti-

March 31, 2012

gating future risks of fluctuation of foreign currency exchange rates with respect

Forward exchange
contracts

to foreign currency receivable and payable and mitigating future risks of interest

Sell U.S. dollars

Due within Due after
one year one year

¥23,539

¥297

Total

Fair value

Profit or loss
evaluation¥23,836

¥(30)

¥(30)

rate increases and lowering the financing costs with respect to borrowings.
Millions of yen

Foreign currency forward contracts and interest rate swap contracts

Contract amounts

are subject to risks of foreign exchange rate changes and interest rate
March 31, 2011changes, respectively.
The derivative transactions are executed and managed in accordancewith the established policies and within the specified limit on the amounts of

Due within Due after
one year one year

Buy Euro¥72¥—

Foreign currency forward

Foreign currency trade receivable,

contractspayable and future transactions

Foreign currency deposit

Foreign currency trade receivable,

denominated in a foreign currency
payable and future transactions
denominated in a foreign currency
Interest rate swap contracts

Interest on loans payable

The Company evaluates hedge effectiveness semi-annually by comparing
the cumulative changes in cash flows from or the changes in fair value ofhedged items and the corresponding changes in the hedging derivative instruments. However, where the principal conditions underlying the hedging instruments and the hedged assets or liabilities are similar, the evaluation of hedge
effectiveness is not performed.
The Company’s financial instrument counter-parties were all prime banks
operating domestically in Japan, and the Company does not expect nonperformance by the counter-parties.

Corporation
56 JGC
Annual Report 2012

¥72

¥(4)

¥(4)

Contract amounts
March 31, 2012

Hedged items:

Profit or loss
evaluation

Thousands of U.S. dollars (Note 1)

The following summarizes hedging derivative financial instruments used

Hedging instruments:

Fair value

Forward exchange
contracts

derivative transactions allowed.
by the Company and hedged items:

Total

Due within Due after
one year one year

Total

Fair value

Profit or loss
evaluation$286,397 $3,614 $290,011$(365)$(365)

Forward exchange
contracts
Sell U.S. dollars

Fair value of forward exchange contracts is stated based on the quoted
price from banks.

(b) Fair Value of Derivative Financial Instruments
Designated as Hedging Instruments

Note 11 — Segment Information

Fair value of derivative financial instruments designated as hedging instru-“Accounting Standard for Disclosures about Segments of an Enterprise andments as of March 31, 2012 and 2011 is summarized as follows:

Related Information” (Accounting Standards Board of Japan (“ASBJ”) State-

Effective from the fiscal year ended March 31, 2011, the Company adopted theMillions of yen
March 31, 2012
Accounting
methodContract amounts
Hedgedinstruments

Hedgeditem

Allocation
Forward exchange contracts
methodSell U.S.
Accounts(Note 1 (t))
dollars
receivable
Sell Euro
Buy EuroContract
amountPortion over
one yearfor Disclosures about Segments of an Enterprise and Related Information”
Fair value¥13,400¥    —¥(246)¥ 1,643¥    —¥(154)

Accounts
payable¥23,975¥9,112¥ 463

Accounting
methodHedgeditem¥  411*

Buy Euro
Buy British
pound

Portion over
one year

Fair value¥37,305¥ 5,677¥3,351

Accounts
payable¥16,082¥10,807¥  793

Accounts
payable¥   127¥       —

¥    2

SpecialInterest rate swap contracts
method for Receive variable
Long-terminterest rate rate and Pay
debt
swap
fixed rate swap
(Note 1 (t))

financial statements can be obtained among the constituent units of theperformance. The operations of the Company and its consolidated subsidiaries
are classified into two reportable segments: the total engineering business andContract
amount

Allocation
Forward exchange contracts
methodSell U.S.
Accounts(Note 1 (t))
dollars
receivable

The reported segments of the Company are those units for which separate

sions on the allocation of management resources and for assessing business¥   822

Contract amounts
Hedgedinstruments(a) Overview of Reported Segments

Company and regularly examined by Chief Executive Officer (CEO) for deci-

Millions of yen
March 31, 2011

(ASBJ Guidance No. 20, issued on March 21, 2008). Certain prior year
amounts have been reclassified to conform to the current year presentation.

Accounts
receivable

SpecialInterest rate swap contracts
method for Receive variable
Long-terminterest rate
rate and Pay
debt
swap
fixed rate swap
(Note 1 (t))

ment No. 17 on March 27, 2009) and the “Guidance on Accounting Standard

the catalysts and fine products business.
Major activities included in the total engineering business are design,
procurement, construction and performance test services of machinery andplants for petroleum, petroleum refining, petrochemicals, gas, chemicals,
nuclear energy, metal refining, biochemical, food, pharmaceuticals, medical,
logistics, information technology, environment conservation and pollution
control. Major activities in the catalysts and fine products business include
manufacturing and distribution of chemical and catalyst products (FCC catalysts, hydrotreating catalysts, deNOx catalysts, petrochemical catalysts, etc),
and new functional material products (colloidal silica, coating materials for¥11,696¥   831*

surface treatment on cathode ray tubes, material for semiconductors, cathodematerials and cosmetic products, etc.).

Thousands of U.S. dollars (Note 1)
March 31, 2012
Accounting
methodContract amounts
Hedgedinstruments

Hedgeditem

Portion over
one year

Fair value

Allocation
Forward exchange contracts
methodAccounts
Sell U.S.
(Note 1 (t))
receivable $163,037 $      —dollars$(2,993)

Sell Euro

Accounts
receivable $ 19,990 $      —

$(1,874)

Buy Euro

Accounts
payable$291,702 $110,865$ 5,633$ 10,001 $  5,001*

Interest rate swap contracts
Specialmethod for Receive floating
Long-terminterest rate and Pay
debt
swap
fixed rate swap
(Note 1 (t))

Contract
amountFair value of forward exchange contracts is stated based on the quoted price from banks.
* The fair value of the interest rate swap was included in the long term debt.

JGC Corporation
Annual Report 201257

The following was information about sales and profit or loss by reported segment for the years ended March 31, 2012, 2011 and 2010:
Millions of yen
Reported Segment
Year ended March 31, 2012

Total
engineering

Catalysts andfine products

Subtotal

Others

Total

Adjustment

Consolidated¥506,177¥42,045¥548,222¥ 8,745¥556,967¥     —

¥556,967

60

232

292

5,064

5,356

(5,356)—¥506,237¥42,277¥548,514¥13,809¥562,323¥ (5,356)¥556,967

Net sales:
External customers
Inter-segment
Total
Segment profit¥ 59,420¥ 6,847¥ 66,267¥   694¥ 66,961¥    93¥ 67,054

Segment assets¥469,453¥40,769¥510,222¥35,828¥546,050¥(19,881)¥526,169

Depreciation and amortization¥  4,134¥ 2,572¥  6,706¥ 1,077¥  7,783¥     12¥  7,795

Capital expenditures¥   3,600¥ 2,919¥  6,519¥ 7,274¥ 13,793¥     —

¥ 13,793
Millions of yen

Reported Segment
Year ended March 31, 2011

Total
engineering

Catalysts andfine products

Subtotal

Others

Total

Adjustment

Consolidated¥401,199¥36,031¥437,230¥ 9,993¥447,223¥     —

¥447,223

24

13

37

5,097

5,134

(5,134)—¥401,223¥36,044¥437,267¥15,090¥452,357¥ (5,134)¥447,223

Net sales:
External customers
Inter-segment
Total
Segment profit¥ 57,688¥ 4,989¥ 62,677¥   784¥ 63,461¥      98

¥ 63,559

Segment assets¥421,190¥37,135¥458,325¥28,709¥487,034¥(18,531)¥468,503

Depreciation and amortization¥  3,660¥ 2,480¥  6,140¥ 1,368¥  7,508¥      9¥  7,517

Capital expenditures¥   4,598¥ 1,769¥  6,367¥   358¥  6,725¥   (164)¥  6,561
Millions of yen

Reported Segment
Year ended March 31, 2010

Total
engineering

Catalysts andfine products

Subtotal

Others

Total

Adjustment

Consolidated¥364,830¥37,828¥402,658¥11,600¥414,258¥     —

¥414,258

20

13

33

5,062

5,095

(5,095)—¥364,850¥37,841¥402,691¥16,662¥419,353¥ (5,095)¥414,258

Net sales:
External customers
Inter-segment
Total
Segment profit¥ 39,310¥ 2,583¥ 41,893¥    (70)¥ 41,823¥     
96

¥ 41,919

Segment assets¥382,371¥33,601¥415,972¥32,339¥448,311¥(18,135)¥430,176

Depreciation and amortization¥  3,617¥ 2,840¥  6,457¥ 2,708¥  9,165¥    (31)¥  9,134

Capital expenditures¥  4,086¥   720¥  4,806¥ 2,272¥  7,078¥    (16)¥  7,062

Thousands of U.S. dollars (Note 1)
Reported Segment
Total
engineering

Catalysts andfine products

Subtotal

Others

Total

Adjustment

Consolidated$6,158,620$511,559$6,670,179$106,400$6,776,579$        
—$6,776,579

730

2,823

3,553

61,61365,166(65,166)—

Total$6,159,350$514,382$6,673,732$168,013$6,841,745$ (65,166) $6,776,579

Segment profit$  722,959$ 83,307$  806,266$  8,444$  814,710

$    
1,132

Year ended March 31, 2012

Net sales:
External customers
Inter-segment$  815,842

Segment assets$5,711,802$496,033$6,207,835$435,917$6,643,752$(241,890) $6,401,862

Depreciation and amortization$   50,298$ 31,293$   81,591$ 13,104$   94,695$    146$   94,841

Capital expenditures$   43,801$ 35,515$   79,316$ 88,502$  167,818$        —

$  167,818

Corporation
58 JGC
Annual Report 2012

(b) Related Information
I. Information by Geography

V. Information on Gain on Negative Goodwill
Not Applicable for the years ended March 31, 2012, 2011 and 2010.

(1) Net Sales

Millions of yen

Thousands of
U.S. dollars(Note 1)

2010

2012

¥155,501 ¥130,975 ¥168,315$1,891,970

2012

Year ended March 31,

Japan

2011

East and Southeast Asia

61,53332,53333,911

748,668

Middle East

205,429

181,683

141,4672,499,440

Africa44,34340,90030,534

539,518

Oceania

72,057

49,901

18,607876,713

Other

18,104

11,231

21,424

220,270¥556,967 ¥447,223 ¥414,258$6,776,579

Total sales*1. Net sales are classified by the place of customers’ address.
*2.	Middle East includes Saudi Arabia ¥81,067 million ($986,337 thousand), ¥113,595 million, and¥104,995 million and United Arab Emirates ¥74,329million ($904,356 thousand) , ¥51,281
million, and ¥6,208 million for the years ended March 31, 2012, 2011, and 2010, respectively.

Note 12 — Taxes on Income
The statutory tax rate for 2012 was 40.7%, and for 2011 and 2010 were 36.2%.
(1) The following table summarizes the significant differences between thestatutory tax rate and the Company’s and its consolidated subsidiaries’
effective tax rate for financial statement purposes for the years ended
March 31, 2012, 2011 and 2010:
Statutory tax rate

2012

2011

2010

40.7%

36.2%

36.2%

Non-deductible expenses

0.7

0.2

0.3

Non-taxable dividend income

(1.5)

(3.0)

(3.0)

Tax credit utilized

(0.5)

(0.7)

(1.9)

Other

5.2

18.5

(2.9)

44.6%

51.2%

28.7%

Effective tax rate(1) Property and equipment
Property and equipment information is not disclosed, as the Company and its(2) Significant components of the Company’s and its consolidated subsidiaries’ deferred tax assets and liabilities as of March 31, 2012 and 2011,

consolidated subsidiaries operate mainly within Japan.

were as follows:

II. Information by Major Customers
Year ended March 31, 2012

Millions of yen

Thousands of
U.S. dollars(Note 1)

Related segments

74,281

903,772

Total engineering

Abu Dhabi Gas Industries Ltd.

The following is information on impairment loss by reported segments forthe year ended March 31, 2012 and 2010:
Millions of yen
Reported Segment

Year ended March 31, 2012

Impairment loss

¥420

¥—

Subtotal Others

Total

Adjustment

Consolidated¥420 ¥—

¥420

¥—

¥420

Thousands of U.S. dollars (Note 1)
Reported Segment

Year ended March 31, 2012

Catalysts
Total and fineengineering products

Impairment loss

$5,110Total

Adjustment

Consolidated$— $5,110 $— $5,110

Subtotal Others$—$5,110

2012

2011

2012

¥ 2,599¥ 2,538$ 31,622

812

102

9,880

Deferred tax assets:

Excess reserve forjob warranty costs

Not Applicable for the years ended March 31, 2011.

Thousands of
U.S. dollars(Note 1)

Current deferred taxes
Excess accrued
employees’ bonuses

III. Information on Impairment Loss

Catalysts
Total and fineengineering products

March 31,

Millions of yen

Excess reserve forlosses on contracts

1,801

194

21,913

Other

6,539

9,091

79,55811,751

11,925

142,973

Total current deferred
tax assets
Deferred tax liabilities:
Retained earnings offoreign subsidiaries

(44)

(164)

(535)

Other

(191)

(1,521)(2,324)

Total current deferred
tax liabilities
Net current deferred tax assets(235)(1,685)(2,859)¥11,516¥10,240$140,114

For the year ended March 31, 2012 and 2011, there was no valuation
Millions of yen
Reported Segment

Year ended March 31, 2010

Impairment loss

Catalysts
Total and fineengineering products¥3,603

Subtotal Others¥— ¥3,603

Total

Adjustment

Consolidated¥— ¥3,603¥—¥3,603

allowance.

IV. Information on Amotization of Goodwill and Amotized
BalanceThis information is not disclosed, as this is immaterial for the years ended
March 31, 2012, 2011 and 2010.

JGC Corporation
Annual Report 201259

Millions of yen

Thousands of
U.S. dollars(Note 1)

2011

2012

2012

March 31,

Non-current deferred taxes

Note 14 — Land Revaluation
Pursuant to Article 2 of the Enforcement Ordinance for the Law Concerning
Land Revaluation (the “Law”) effective March 31, 1998, the Company recorded
its owned land used for business at the fair value as of March 31, 2002, and theDeferred tax assets:

related revaluation difference, net of income taxes, was debited to “Land revalu-

Employee’s retirement andseverance benefits¥ 4,877¥ 5,216$ 59,338

Depreciation

363

382

4,417

Other

751

6,772

9,137

5,991

12,37072,892land is sold, land revaluation is reversed and debited to retained earnings.

Total non-current deferred
tax assets
Deferred tax liabilities:

ation, net of deferred tax portion” in the net assets section. The applicable
income tax portion was reported as Deferred Tax Liabilities for Land Revaluationin the consolidated balance sheet at March 31, 2012 and 2011. When such
Fair value of the revalued land as of March 31, 2012 was ¥2,919 million

Net unrealized gains
on securities
Other(1,283)(1,895)(15,610)($35,515 thousand) less than the book value as of March 31, 2012, which

(222)

(171)

(2,701)amounts include ¥1,227 million ($14,929 thousand) relevant to rental property.

Note 15 — Related Party Transactions

Total non-current deferred tax
liabilities(1,505)(2,066)(18,311)

Net non-current deferred tax assets¥ 4,486¥10,304$ 54,581

Deferred tax liabilities for land
revaluation¥ 3,692¥ 3,783$ 44,920

Deferred tax liabilities for full revaluationof the consolidated subsidiary¥    178¥   245$  2,166

26

5

316

¥   204¥   250$  2,482

OthersNon-current deferred tax liabilities

For the years ended March 31, 2012 and 2011, the valuation allowancesof ¥6,166 million ($75,021thousand) and ¥225 million have been deductedSignificant transactions with related parties for the years ended March 31,
2012, 2011 and 2010 were as follows:

Millions of yen
Year ended March 31,— Support management
and accept order forconstruction service

from the gross amount of the non-current deferred tax assets, respectively.
(3) Adjustment of deferred tax assets and liabilities for enacted changes in tax

Solacor Electricidad Dos S.A.
(affiliated company)

laws and rates
enacted into law. As a result of these amendments, net Deferred tax assets
and Net unrealized holding gains on securities increased by ¥261 million

2012

2011

2010

2012

¥7,653¥8,533¥—$93,114¥5,382¥5,763¥—$65,482¥5,321¥5,698¥—$64,740

Medical Management
Matsuzawa Co. Ltd.,

Solacor Electricidad Uno S.A.
(affiliated company)

On December 2, 2011, amendments to the Japanese tax regulations were

— guarantee obligation— guarantee obligation

The balances of the Company due to related parties as of March 31,
2012, 2011 and 2010 were as follows:($3,176 thousand) and ¥21 million ($256 thousand) as of March 31, 2012 .
And Deferred income tax expense recognized for the year ended March 31,

Millions of yen

2012 and Deferred gains on hedges as of March 31, 2012 decreased by ¥241

March 31,

million ($2,932 thousand) and ¥1 million ($12 thousand).

Medical Management
Matsuzawa Co. Ltd.,

Note 13 — Notes to the Consolidated Statements of Cash Flows
Reconciliation of cash in the consolidated balance sheets and cash and cash
equivalents in the consolidated statements of cash flows was as follows:

Millions of yen
2012

March 31,

Cash and deposits¥195,056

Marketable securities

27,500Cash and cash
equivalents¥222,556

Thousands of
U.S. dollars(Note 1)

2010

2012

¥131,894 ¥ 83,308$2,373,233

2011

40,500334,591¥161,894 ¥123,808$2,707,824

30,000Thousands of
U.S. dollars(Note 1)

— Accounts receivableThousands of
U.S. dollars(Note 1)

2012

2011

2010

2012

¥6,764¥7,837¥—$82,297

The Company doesn’t receive a guarantee charge from Solacor Electricidad
Uno S.A. and Solacor Electricidad Dos S.A.
The supporting management fee, the construction service fee and theinterest rate for the long-term loan receivable were reasonably determined,
considering the market interest rate. No pledged assets were furnished.

Note 16 — Business Combinations
Transactions under common control during the year ended March 31, 2012:(a) Outline of the Transactions(1) Name and business of combined entity
Merging company: JGC Project Services Co., Ltd, total engineering
Merged company: Nikki Construction Co., Ltd, total engineering
Corporation
60 JGC
Annual Report 2012

(2) Form of business combinations
Transactions under common control(3) Name of the entity after the reorganizationJGC PLANT SOLUTIONS CO., LTD.

(c) Amounts of Assets and Liabilities Received and Incurredon the Date of Business Combination
Total assets¥173 million

Total liabilities¥166 million(4) Outline and purpose of the transaction
JGC Project Services Co., Ltd, a consolidated subsidiary of the Company

Note 17 — Rental Property

merged with Nikki Construction Co., Ltd, a consolidated subsidiary of theEffective from the year ended March 31, 2010, the Company and its consoli-

Company as on April 1, 2011. The purpose of this merger was to reinforce

dated subsidiaries adopted the “Accounting Standard for Disclosures about Fairthe following:

Value of Investment and Rental Property” (Accounting Standards Board of[1] Increase cost competitivenessJapan (“ASBJ”) Statement No.20 issued on November 28, 2008) and “Guid-[2] Increase depth and breadth of business operations

ance on Accounting Standard for Disclosures about Fair Value of Investment[3] Expand overseas

and Rental Property” (ASBJ Guidance No.23 issued on November 28, 2008) for
the years ending on or after March 31, 2010. Pursuant to the new requirements,(b) Accounting Method

information about fair value of investment and rental property on the consoli-

These transactions were accounted for as a business combination among

dated financial statements at March 31, 2012, and 2011, were as follows:

entities under common control.

(c) Amounts of Assets and Liabilities Received andIncurred on the Date of Business Combination
Total assets¥7,461 million

Total liabilities¥2,845 million

Transactions under common control during the year ended March 31, 2010:(a) Outline of the Transactions(1) Name and business of combined entity
Merging company: JGC INFORMATION SYSTEMS COMPANY LIMITED(“J-SYS”), IT businessMerged company: J-SYS Software Co., Ltd. (“J-SYS SOFT”), software sales(2) Form of business combinations

Book value (net of depreciation)

Fair value

Decrease

March 31,2011

March 31,2011¥(124)¥7,973¥6,201March 31,2010

Decrease

March 31,2012

March 31,
2012

Millions of Yen¥ 7,973¥  (122)¥ 7,851¥ 6,201

Thousands of U.S dollars(Note 1)

$97,007$(1,484)$95,523$75,447

Millions of Yen

March 31,2010

¥8,097

Rental real estate assets are presented on the consolidated balance
sheets net of accumulated depreciation and accumulated impairment loss.
The reason of the decrease was mainly due to the depreciation of the assets.
The fair value was calculated by the Company based on “the guidance forapprising real estate.”
The Company has rental commercial properties (included land) at

Transactions under common control (Merger with companies which

Kanagawa prefecture. The rental incomes in the Other income were ¥404

develop information systems, and produce and sell software)

million ($4,915 thousand) and ¥407 million for the years ended March 31,(3) Name of the entity after the reorganization2012 and 2011, respectively.

JGC Information System Co., Ltd.
(4) Outline and purpose of the transaction

Note 18 — Financial Instruments

J-SYS, a consolidated subsidiary of the Company merged with J-SYS SOFT,

Effective from the year ended March 31, 2010, the Company adopted thea consolidated subsidiary of the Company as on April 1, 2009. The pur-revised Accounting Standard, “Accounting Standard for Financial Instru-

pose of this merger was to reinforce the following:ments” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 10[1] Restructuring sales transaction and improvement of sales force

revised on March 10, 2008) and the “Guidance on Disclosures about Fair

[2] Reinforcement of employees and human resources

Value of Financial Instruments” (ASBJ Guidance No. 19 revised on March 10,[3] Combine and develop customers’ information system and sales channel.

2008). Information on financial instruments for the year ended March 31,
2010 required pursuant to the revised accounting standards is as follows.

(b) Accounting Method
These transactions were accounted for as a business combination among
entities under common control.

A. Qualitative Information on Financial Instruments(a) Policies for Using Financial Instruments
The Company manages surplus capital using financial instruments that areshort-term and carry little or no risk. The Company uses derivatives to mitigate
the risks that are described below, and as a matter of policy does not use
derivatives for speculative transactions.
JGC Corporation
Annual Report 201261

(b) Financial Instruments, Associated Risks and The Risk
Management System(3) Management of liquidity risk associated with capital procurement (payment
default risk)

Notes and accounts receivable expose the Company to customer credit risk.

The Company manages liquidity risk by creating and updating a capitalMarketable securities are mainly negotiable certificate of deposit. Investment

deployment plan based on reports from each division.

securities are mainly related to the business and capital alliance companies
and expose the Company to the changes in market prices. Long-term loans
receivable are mainly related to subsidiaries and affiliates.
Most notes and accounts payable are due within one year. Some of(d) Supplemental Information on the Fair Value of Financial
Instruments
The fair value of financial instruments is based on market prices, or a reason-accounts payable associated with purchasing machines and construction

able estimate of fair value for instruments for which market prices are notcontracts are denominated in foreign currencies, which exposes the Company

available. Estimates of fair value are subject to fluctuation because they

to the risks of exchange rate fluctuations. The Company generally procures

employ variable factors and assumptions.

capital required under its business plan through bank loans. Some of bankIn addition, the contractual amounts of the derivatives transactions dis-loans expose the Company to the risks of interest rate fluctuations, which thecussed in B (a) below are not an indicator of the market risk associated with

Company uses interest rate swaps to hedge.

derivatives transactions.

The Company uses derivatives transactions including forward foreignexchange contracts to hedge the risk of exchange rate fluctuations associatedwith receivable and payable denominated in foreign currencies and interest
rate swaps to hedge the risk of interest rate fluctuations associated with loans.
‘Derivative Transactions and Hedge Accounting’ in Note 1 (t) and Note 10
presented earlier explain hedge accounting issues including methods, hedging
policies, hedged items and recognition of gain or loss on hedged positions.

B. Fair Values of Financial Information(a) Fair Values of Financial Instruments
Fair values of financial instruments as of March 31, 2012 and 2011 weresummarized as follows:
The financial instruments, whose fair value were difficult to measure, were
not included in the table below and were summarized in B (b).
Millions of yen
Carrying
amountEstimated
fair value(c) Risk Management System for Financial Instruments

March 31, 2012

(1) Credit risk management (counterparty risk)

Cash and deposits¥195,056¥195,056—

Marketable securities

27,50027,500——

The Company has established internal procedures for receivables underDifference

Notes and accounts receivable

87,24887,248Other receivable

13,745

13,745

toring counterparty status. The department manages amounts and settle-

Marketable and investment securities

18,255

18,255—ment dates by counterparty and works to quickly identify and mitigate

Long-term loans receivable, net*

1,598

1,659

¥61
¥61

which the related divisions are primarily responsible for periodically moni-payment risk that may result from situations including deterioration of the

Total Assets¥343,402¥343,463

financial condition of counterparties. Consolidated subsidiaries are subject

Notes and accounts payable¥ 82,376¥ 82,376—

Long-term Debt

7,591

7,675

¥84

Total Liabilities¥ 89,967¥ 90,051¥84

Derivative financial instruments, net¥     33¥     33—

Carrying
amountEstimated
fair value

Cash and deposits¥131,894¥131,894—

Marketable securities

30,00030,000—Notes and accounts receivable—to the same risk management rules.
In using derivatives transactions, the Company mitigates counterparty
risk by conducting transactions with highly creditworthy financial institutions.
(2) Market risk management (risk of exchange rate and interest rate fluctuations)

Millions of yen

The Company monitors the balance of the foreign currency receivable andpayable by each currency and every month and utilizes foreign currency
forward contracts and foreign currency deposit to hedge the risk of fluctuations. The Company uses interest rate swaps to mitigate the risk of interest
rate fluctuations associated with loans.
Regarding marketable securities and investment securities, the Company
periodically examines fair value and the financial condition of the issuingentities and revises its portfolio based on its relationships with issuing entities.
The derivative transactions are executed and managed in accordancewith the established policies and within the specified limit on the amountsof derivative transactions allowed. The Company handles the transactions
and periodically provides administrative reports on the results to the financial director and treasurer.

Corporation
62 JGC
Annual Report 2012

March 31, 2011

Difference

108,810

108,810

Other receivable

7,235

7,235

Marketable and investment securities

19,882

19,882—Long-term loans receivable, net*

1,780

1,836

¥ 56
¥ 56

Total Assets¥299,601¥299,657

Notes and accounts payable¥ 70,762¥ 70,762—

Long-term Debt

6,624

6,763

¥139

Total Liabilities¥ 77,386¥ 77,525¥139

Derivative financial instruments, net¥  4,142¥  4,142—

Thousand of U.S. dollars (Note 1)
Carrying
amountMarch 31, 2012

Estimated
fair value

Difference$2,373,233 $2,373,233

Cash and deposits
Marketable securities—

334,591

334,591——

Derivative financial instruments
Please refer to ‘DERIVATIVE TRANSACTIONS AND HEDGE ACCOUNTING’ in Note 1 (t) and Note 10.

1,061,540

1,061,540

Other receivable

167,234

167,234

Marketable and investment securities

222,107

222,107—

Long-term loans receivable, net*

19,443

20,185$  742

The financial instruments, whose fair value were difficult to measure, as of

Total Assets$4,178,148 $4,178,890$  742

March 31, 2012 and 2011, were summarized as follows:

Notes and accounts payable$1,002,263 $1,002,263

Notes and accounts receivable

92,359—93,381$1,022

Total Liabilities$1,094,622 $1,095,644$1,022Derivative financial instruments, net$     402 $     402—

Long-term Debt(b) Financial Instruments, Whose Fair Value Were
Difficult to Measure* The amounts for probable losses calculated by applying a percentage based on collection
experience to the remaining accounts are deducted.

The following methods and assumptions were used to estimate the fairvalue of the financial instruments.
Cash and deposits, and Marketable securities
All deposits and negotiable certificate of deposit are short-term. Therefore,
carrying amount is used for the fair value of these items because theseamounts are essentially the same.
Notes and accounts receivable

2012

2011

2012

Unconsolidated subsidiaries and affiliates¥36,920¥36,147$449,203

Non-listed equity securities

11,65910,046

141,854

38

39

462

March 31,

Subscription certificate

It is difficult to measure the fair value of these financial instruments
because there is no market price available and it is not efficient to calculate
future cash flow. Therefore, these financial instruments were not included in
the Marketable and investment securities described in B (a).

(c) Maturities of Financial Instruments
The maturities of the financial instruments at March 31, 2012 were as follows:
Millions of yen

Notes and accounts receivable are short-term. Therefore, carrying amountis used for the fair value of short-term receivable because these amounts
are essentially the same.

Year ending March 31,

2013 2014–2017 2018–2022

Cash and deposits¥195,056———

27,500

—

—

—

—

—

—

Notes and accounts receivable

87,248Other receivable are short-term. Therefore, carrying amount is used for

Other receivable

13,745the fair value of short-term receivable because these amounts are essen-Long-term loans receivable, net

tially the same.

Total Assets—¥1,094¥383¥121¥323,549¥1,094¥383¥121

Marketable and investment securities
exchanges for equities. In addition, Note 9 provides information on marketable securities by holding intent.

Thousand of U.S. dollars (Note 1)
Year ending March 31,$2,373,233

—

—

—

334,591———

Notes and accounts receivable
Other receivable

Notes and accounts payableNotes and accounts payable are short-term. Therefore, carrying amount is2023 and
thereafter

Cash and deposits

Fair value of long-term loans receivable are estimated as discounted
for equivalent new loans.

2013 2014–2017 2018–2022

Marketable securities

Long-term loans receivable
present value of total principal and interest using assumed interest rates

2023 and
thereafterMarketable securities

Other receivableMarketable and investment securities are the price listed on securities

Thousands of
U.S. dollars(Note 1)Millions of yen

Long-term loans receivable, net
Total Assets

1,061,540———

167,234

—

—

—

—

$13,311$4,660$1,472$3,936,598$13,311$4,660$1,472

Please see Note 3 for the maturities of Long term-debt.

used for the fair value of short-term payable because these amounts are
essentially the same.
Long-Term Debt
Fair value of long-term debt is estimated as discounted present value of
total principal and interest using assumed interest rates for equivalent
new loans. Interest rate swaps subject to special method are used forlong-term floating-rate loans. Principal and interest of the loans in whichthese interest rate swaps are embedded are discounted using a reasonable estimate of the interest rate on the loan at the time of issue.
JGC Corporation
Annual Report 201263

Note 19 — Impairment of Fixed Assets

Note 20 — Other Comprehensive Income

As discussed in Note 1 (l), the Company and its consolidated subsidiaries

Reclassification adjustments of the Company’s and its consolidated subsidiar-have applied the accounting standard for impairment of fixed assets.

ies’ other comprehensive income as of March 31, 2012 were as follows:

The Company and its consolidated subsidiaries have grouped their fixed
assets principally based on their business segment, while considering mutual

March 31, 2012supplementation of the cash flows.

Net unrealized holding gains on securities

Loss on impairment of fixed assets for the year ended March 31, 2012

Unrealized holding gains arising during the year
Reclassification adjustment for gains realized in
net income

consisted of the following:
Location

Use

Type of assets

Sendai (Japan)

Rental Property

Land

Carrying amount of certain assets were devalued to their recoverable
amounts, since the land’s market value have significantly declined. As a result,Millions of yen

Thousands of
U.S. dollars(Note 1)¥(1,641)$(19,966)

10

122(1,631)(19,844)

Deferred gains (losses) on hedges arisingduring the year

(3,885)(47,268)

Net deferred gains (losses) on hedges(3,885)(47,268)

Net unrealized holding gains on securities
Deferred gains (losses) on hedges

Translation adjustments

The Company recognized loss on impairment in the amount of ¥420 million

Translation adjustments arising during the year(968)

(11,778)($5,110 thousand). The recoverable amounts are calculated according to

Net translation adjustments(968)(11,778)

Equity for equity method affiliates arising during
the year

(1)

(12)

Net equity for equity method affiliates

(1)

(12)

(6,485)(78,902)

estimated net sales value, which are real-estate appraisal.
Loss on impairment of fixed assets for the year ended March 31, 2010
consisted of the following:
Location

Use

Type of assets

Houston (U.S.A) The concession for a Other— PROPERTY AND EQUIPMENT
mining area
Other—OTHER ASSETS
Carrying amount of certain assets were devalued to their recoverable
amounts, since the oil and gas reserves added by additional drilling have fallen

Equity for equity method affiliates

Before —tax amountTax Benefit
Other comprehensive income

2,080

25,307¥(4,405)$(53,595)

Tax effects allocated to each component of other comprehensive income
as of March 31, 2012 were as follows:

short of the originally expected reserves. As a result, The Company and one
consolidated overseas subsidiary recognized loss on impairment in the amountof ¥3,603 million, which consisted of other assets ¥2,716 million and property
and equipment ¥887 million.
The overseas subsidiary used the value in use which was calculated bydiscounting future cash flows at the interest rates of 10% based on U.S. GAAP.

Millions of yen
Year ended March 31, 2012

Before-tax
amountTax benefit(expense)

Net-of-tax
amountNet unrealized holding gains on
securities¥(1,631)¥   612¥(1,019)

Deferred gains (losses) on hedges(3,885)

1,405(2,480)

—

63

63

(968)

—

(968)

Land revaluation
Translation adjustments

(1)

—

(1)

Other comprehensive income¥(6,485)¥2,080¥(4,405)

Year ended March 31, 2012

Before-tax
amountEquity for equity method affiliates

Thousands of U.S. dollars (Note 1)
Tax benefit(expense)

Net-of-tax
amountNet unrealized holding gains on
securities$(19,844) $ 7,446$(12,398)

Deferred gains (losses) on hedges(47,268)

17,094(30,174)

—

767

767

(11,778)—(11,778)

(12)

—

(12)

$(78,902) $25,307$(53,595)

Land revaluation
Translation adjustments
Equity for equity method affiliates
Other comprehensive income

Note 21 — Subsequent Event
At the Company’s board of directors held on June 18, 2012, the board of
directors decided the Company’s wholly owned subsidiary JGC Corporation
Europe B.V., which is a hub of procurement of equipment, will liquidate before
the end of 2012. The effect on operations from the liquidation is immaterial.

Corporation
64 JGC
Annual Report 2012

Internal Control Report

1 Framework of Internal Control Over Financial Reporting
Keisuke Takeuchi, Chief Executive Officer, Koichi Kawana, Chief
Operating Officer, and Masayuki Sato, Chief Financial Officer of
JGC Corporation (“the Company”) are responsible for establishingand maintaining adequate internal control over financial reporting(as defined in the rule “On the Setting of the Standards and Practice Standards for Management Assessment and Audit concerning
Internal Control Over Financial Reporting”).
Because of its inherent limitations, internal control over financial reporting may not completely prevent or detect misstatements.

2 Assessment Scope, Timing and Procedures
Basis of Presenting Internal Control Report
The report on internal control over financial reporting of the consolidated financial statements of the Company (“Internal Control
Report”) is prepared on the basis of generally accepted assessment standards of internal control over financial reporting inJapan (“Assessment Standards”) and is compiled from the Internal Control Report prepared by the Company as required by the
Financial Instruments and Exchange Law of Japan (“the Law”).
The Assessment Standards require management to assess theinternal control over financial reporting (“ICOFR”), which consistsof the internal control over the consolidated/parent only financial
statements included in the Annual Securities Report filed under
the Law and the internal control over disclosure information andothers included in the Annual Securities Report that materiallyaffects the reliability of the financial statements.
The scope of management’s assessment of ICOFR in thisannual report is different from the scope required by the Assessment Standards. Management assessment of ICOFR for thisannual report covers the ICOFR with respect to the accompanying
consolidated financial statements only. In addition, as explained in
Note 1 on the basis of presenting consolidated financial statements, the accompanying consolidated financial statements arereclassified and modified from the consolidated financial statements prepared for the purpose of the Law. Supplementary information is also added to the consolidated financial statements. The
process of making reclassifications and modifications and the
addition of certain information is for the convenience of readers
outside Japan. Management voluntarily includes the process in its
assessment of ICOFR, even though it is outside the scope of theAssessment Standards.

identified a key control that would have a material impact on thereliability of financial reporting and assessed whether the basic
components of internal control are operating with regard to the
key control.
We assessed the effectiveness of ICOFR of the Company, consolidated subsidiaries and affiliates to the extent necessary in lightof their degree of impact on the reliability of financial reporting.
In assessing the effectiveness of internal control, we decided
on reasonable scope of assessment for the important businessprocesses in light of their degree of quantitative and qualitative
impact on financial reporting based on the assessment of thecompany-level control.
Locations and business units that did not have a material effecton financial reporting were excluded from the scope of assessments.
In assessing the period-end financial reporting process, we
decided on reasonable scope of assessment in light of its degreeof quantitative and qualitative impact on financial reporting in asimilar manner as company-level control.
In assessing the business processes other than describedabove, based on the assessment of the company-level controls,
we assessed the significant business locations based on the theirsales levels until their combined sales amounts reaches approximately two-thirds on a consolidated basis and the business processes which impact the accounts (sales, accounts receivable andinventory) that were closely associated with the significant business locations’ business objectives.

3 Results of assessment
Based on the above assessments, the Company’s management
has concluded that, as of March 31, 2012, the Company’s internal
control over financial reporting was effective.

4 Supplementary information
Not applicable.

5 Other
Not applicable.

Scope of Assessment
We have assessed our ICOFR as of March 31, 2012 in accordancewith the Assessment Standards.
We assessed the design and operation of our company-level
control and based on this assessment, we analyzed businessprocesses within the scope of the internal control to be assessed,

Keisuke Takeuchi
Chairman and Representative Director

June 28, 2012

JGC Corporation
Annual Report 201265

Independent Auditor’s Report
JGC CORPORATION

To the Board of Directors of JGC Corporation

Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of JGC Corporation and its consolidated subsidiaries, which
comprise the consolidated balance sheets as of March 31, 2012 and2011, and the consolidated income statements, statements of comprehensive income, consolidated statements of changes in net assets
and consolidated statements of cash flows for each of the years in
the three-year period ended March 31, 2012, and a summary ofsignificant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for suchinternal control as management determines is necessary to enable
the preparation of consolidated financial statements that are freefrom material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We conducted our
audits in accordance with auditing standards generally acceptedin Japan. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on our judgement,
including the assessment of the risks of material misstatement of
the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, we consider internal
control relevant to the entity’s preparation and fair presentation of
the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances, while theobjective of the financial statement audit is not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of JGC Corporationand its consolidated subsidiaries as of March 31, 2012 and 2011,
and their financial performance and cash flows for each of theyears in the three-year period ended March 31, 2012 in accordance with accounting principles generally accepted in Japan.

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2012
are presented solely for convenience. Our audit also included thetranslation of yen amounts into U.S. dollar amounts and, in our
opinion, such translation has been made on the basis describedin Note 1 to the consolidated financial statements.

Report on the Internal Control Report
We also have audited the accompanying report on internal control
over financial reporting of the consolidated financial statements of
JGC Corporation as of March 31, 2012 (“Internal Control Report”).
Management’s Responsibility for the Internal Control ReportManagement is responsible for the design and operation of internal
control over financial reporting and the preparation and fair presentation of the Internal Control Report in conformity with assessment
standards for internal control over financial reporting generally
accepted in Japan. Internal control over financial reporting may notcompletely prevent or detect financial statement misstatements.
Auditor’s Responsibility
Our responsibility is to independently express an opinion on theInternal Control Report based on our internal control audit. We
conducted our internal control audit in accordance with auditing
standards for internal control over financial reporting generally
accepted in Japan. Those standards require that we comply withethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Internal Control Report isfree from material misstatement.
An internal control audit involves performing procedures toobtain audit evidence about the assessment of internal control overfinancial reporting in the Internal Control Report. The procedures
selected depend on the auditor’s judgement, including significanceof effect on the reliability of financial reporting. Also, an internal
control audit includes evaluating the appropriateness of the scope,
procedures and result of the assessment determined and presented
by management, and the overall internal control report presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
OpinionIn our opinion, the Internal Control Report, in which JGC Corporation
states that internal control over financial reporting was effective asof March 31, 2012, presents fairly, in all material respects, theassessment of internal control over financial reporting in conformity with assessment standards for internal control over financial
reporting generally accepted in Japan.

(KPMG AZSA LLC)
Tokyo, Japan
June 28, 2012
Corporation
66 JGC
Annual Report 2012

Six-Year Summary—Non-Consolidated
For the six years ended March 31.
Yen amounts are in millions except per share data.

2012

2011

2010

2009

2008

2007

¥  451,724¥  359,561¥317,597¥349,925¥460,161¥528,794

Operating Income

54,21851,91832,14541,35630,55014,432

Income before Taxes on Income

60,70845,20527,93444,57832,832

21,538Net Income

34,30422,853

21,271

30,214

21,312

15,183

Total Current Assets

299,329

272,339

232,540

276,325

270,646

278,627

Total Current Liabilities

173,793

167,621

126,240

184,205

194,470

216,473

Working Capital

125,536

104,718

106,300

92,12076,176

62,154Current Ratio

172.2%

162.5%

184.2%

150.0%

139.2%

128.7%Net Property and Equipment

49,961

49,95650,36449,414

51,11553,081

Total Assets

444,659

415,737

374,549

412,893

404,424

418,285

2,486

1,663

16,104

16,757

15,51916,382

Total Net Assets

251,006

227,794

212,619

192,655

174,795

165,191

New Contracts

342,983

569,128

675,505

440,548

348,755

255,015

1,005,441

1,114,182

953,511

641,781607,378

728,168

Net Income per Share (in yen)

135.86

90.44

84.15

119.50

84.01

59.81

Cash Dividends per Share (in yen)

38.50

30.0

21.0

30.0

21.0

15.0

Number of Employees

2,155

2,137

2,107

2,069

2,014

1,953

JGC Corporation
Annual Report 2012

67

Net Sales

Long-Term Debt, Less Current Maturities

Outstanding Contracts

Non-Consolidated Balance Sheets
JGC CORPORATIONMarch 31, 2012 and 2011

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

Cash and deposits¥169,426¥123,530$2,061,394

Marketable securities

27,50030,000334,591

Notes and accounts receivable (Note 2)

51,68383,747

628,823

Contract works in progress

22,424

13,956

272,831

AssetsCurrent Assets:

Deferred tax assets (Note 7)

9,751

8,363

118,640

Other current assets (Note 2)

18,616

12,840226,500

(71)

(97)

(864)

299,329

272,339

3,641,915

Land (Notes 8 & 9)

21,931

22,391

266,833

Buildings and structures

48,363

48,831

588,429

Machinery and equipment

9,921

8,867

120,708

Construction in progress

2,172

438

26,427

Allowance for doubtful accounts (Note 1(r))
Total Current Assets

Property and Equipment (Note 3):82,38780,527

1,002,397(32,426)(30,571)(394,525)

49,961

49,956

607,872

Investments in subsidiaries and affiliates (Note 1(e))

48,50540,269590,157

Marketable and investment securities

29,84529,854363,122Long-term loans receivable (Note 2)

9,698

10,414

117,995

Deferred tax assets (Note 7)

4,137

9,163

50,335Less accumulated depreciation
Net Property and Equipment

Other Assets:

Other
Total Other Assets
Total Assets
The accompanying notes are an integral part of these statements.

Corporation
68 JGC
Annual Report 2012

3,184

3,742

38,73995,36993,442

1,160,348¥444,659¥415,737$5,410,135

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

¥ 13,833¥ 32,652$  168,305

Notes and accounts payable (Note 2)

57,25256,371

696,581

Advances received on uncompleted contracts (Note 2)

58,38925,720710,415

Reserve for job warranty costs

2,051

207

24,954

Liabilities and Net Assets
Current Liabilities:
Short-term loans (Notes 2 & 3)

Reserve for losses on contracts

4,107

119

49,970

Income taxes payable

11,65815,819141,842

Other current liabilities (Note 2)

26,50336,733

322,460

Total Current Liabilities

173,793

167,621

2,114,527

Long-Term Debt, Less Current Maturities (Note 3)

2,486

1,663

30,247Retirement and Severance Benefits

10,026

10,966

121,986

Deferred Tax Liabilities for Land Revaluation (Notes 7 & 8)

3,692

3,783

44,920

Other Non-Current Liabilities (Note 2)

3,656

3,910

44,482

193,653

187,943

2,356,162

23,511

23,511

286,057

Capital surplus

25,60325,603

311,510

Legal earnings reserve

2,693

2,693

32,765

209,758

182,978

2,552,111

Treasury stock, at cost

(6,375)(6,287)(77,564)

Net unrealized holding gains on securities

2,319

3,330

28,215

39

2,519

475

(6,542)(6,553)(79,596)

Total Net Assets

251,006

227,794

3,053,973

Total Liabilities and Net Assets¥444,659¥415,737$5,410,135

Total Liabilities
Contingencies (Note 5)
Net Assets (Note 6):
Common stock
Authorized — 600,000,000 shares,
Issued —       259,052,929 shares in 2012 and 2011

Retained earnings

Deferred gains on hedges
Land revaluation, net of deferred tax portion (Note 8)

JGC Corporation
Annual Report 201269

Non-Consolidated Statements of Income
JGC CORPORATION
Years ended March 31, 2012, 2011 and 2010

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2010

2012

Net Sales¥451,724¥359,561¥317,597$5,496,094

Cost of Sales

386,555

297,622275,446

4,703,187

Gross profit

65,16961,93942,151

792,907

Selling, General and Administrative Expenses

10,951

10,021

10,006133,240

54,21851,91832,145

659,667Interest and dividend income

9,181

8,642

8,569

111,705

Interest expense

(372)

(518)

(530)

(4,526)

Loss on sales and disposal of property and equipment

(722)

(32)

(73)

(8,785)Gain on sales of marketable and investment securities

16

—

516

195

Gain (loss) on sales of an affiliate security

(45)

9,665

—

(548)

Loss on devaluation of marketable and investment securities

—

(197)

—

—

Loss on devaluation of investment in subsidiaries——(6,364)—(1,318)——(16,036)(7,507)

Operating income
Other Income (Expenses):

Loss on allowance for investment (Note 1(e))(617)(4,293)(3,481)

Provision for doubtful accounts (Note 1(r))——(3,293)—

Loss on impairment of fixed assets (Note 9)

(420)

—

—

(5,110)Exchange loss, net (Note 1(r))

Other, net
Income before taxes on income

787(19,980)

445

9,575

6,490

(6,713)(4,211)

78,96360,70845,20527,934

738,630

252,841

Taxes on Income (Note 7):
Current

20,781

19,175

8,200

Deferred

5,623

3,177

(1,537)

68,415Net Income¥ 34,304¥ 22,853¥ 21,271$  417,374

Yen

U.S. dollars(Note 1)

Amounts Per Share of Common Stock
Net income¥ 135.86¥  90.44¥  84.15$     1.65

Cash dividends applicable to the year¥  38.50¥  30.00¥  21.00$     0.47

The accompanying notes are an integral part of these statements.

Corporation
70 JGC
Annual Report 2012

Non-Consolidated Statements of Changes in Net Assets
JGC CORPORATION
Years ended March 31, 2012, 2011 and 2010

Thousandsof shares

Millions of yen
Common stock

Balance at April 1, 2009

SharesAmountCapitalsurplusLegalreserve

Retainedearnings

Treasurystock,
at cost259,053¥  23,511¥  25,599¥  2,693¥  151,784¥ (5,790)

Net income for the year

21,271

Cash dividends(7,584)

Land revaluation, net of deferred tax portion

Net unrealized
holding gains(losses) on
securities

Deferred
gains(losses) onhedges(Note 1)

¥ 2,475¥  (1,027)¥ (6,590)(37)

Gain on retirement of treasury stock

2

37
2

Net unrealized holding gains on securities

2,600

Net deferred gains on hedges

3,739

Increase of treasury stock
Balance at March 31 and April 1, 2010Land
revaluation,
net of deferred
tax portion(Note 8)(66)
259,053¥  23,511¥  25,601¥  2,693¥  165,434

Net income for the year

22,853

Cash dividends(5,309)¥ (5,854)¥ 5,075¥  2,712¥ (6,553)

Land revaluation, net of deferred tax portion
Gain on retirement of treasury stock2

2

Net unrealized holding losses on securities(1,745)Net deferred losses on hedges(193)

Increase of treasury stock
Balance at March 31 and April 1, 2011

(435)
259,053¥  23,511¥  25,603¥  2,693¥  182,978

Net income for the year

34,304

Cash dividends(7,576)¥ (6,287)¥ 3,330¥  2,519

52

Land revaluation, net of deferred tax portion
0

Gain on retirement of treasury stock

11
0(1,011)

Net unrealized holding losses on securities¥(2,480)

Net deferred losses on hedges(88)

Increase of treasury stock
Balance at March 31, 2012

¥ (6,553)

259,053¥23,511¥25,603¥2,693¥209,758¥(6,375)¥ 2,319¥     39¥(6,542)

Thousands of U.S. dollars (Note 1)

Balance at April 1, 2011

Commonstock

CapitalsurplusLegalreserve

Retainedearnings

Treasurystock,
at costNet unrealized
holding gains(losses) on
securities$  286,057$   311,510$   32,765$  2,226,281$   (76,493)$    40,516

Net income for the year

417,374

Cash dividends(92,177)Land
revaluation,
net of deferred
tax portion(Note 8)$  30,648$   (79,730)

633

Land revaluation, net of deferred tax portion
0

Gain on retirement of treasury stock134
0(12,301)

Net unrealized holding losses on securities(30,173)

Net deferred losses on hedges(1,071)

Increase of treasury stock
Balance at March 31, 2012

Deferred
gains(losses) onhedges(Note 1)

$286,057$311,510$32,765$2,552,111$(77,564)$  28,215

$    
475

$(79,596)

The accompanying notes are an integral part of these statements.

JGC Corporation
Annual Report 201271

Notes to Non-Consolidated Financial Statements

Note 1 — Summary of Accounting Policies(a) Basis of Presenting Non-Consolidated Financial
Statements

fair market value. Unrealized gains and losses on these securities are reported,

The accompanying non-consolidated financial statements of JGC Corporation

ized gains and losses on the sale of such securities are computed using the(Nikki Kabushiki Kaisha, the “Company”) have been prepared in accordance

moving-average method. Other securities with no available fair market value

with the provisions set forth in the Japanese Financial Instruments andare stated at moving-average cost. Equity securities issued by subsidiaries andExchange Law and its related accounting regulations, and in conformity withaffiliates, which are not consolidated or accounted for using the equity

accounting principles generally accepted in Japan (“Japanese GAAP”), which

method, are stated at moving-average cost.

are different in certain respects as to application and disclosure requirementsof International Financial Reporting Standards.

Available-for-sale securities with available fair market values are stated at
net of applicable income taxes, as a separate component of net assets. Real-If the market value of available-for-sale securities declines significantly,
such securities are restated at fair market value and the difference between

The accompanying non-consolidated financial statements have beenfair market value and the carrying amount is recognized as loss in the period

restructured and translated into English (with some expanded descriptions)of decline. For equity securities with no available fair market value, if the net

from the non-consolidated financial statements of the Company prepared in

asset value of the investee declines significantly, such securities are required

accordance with Japanese GAAP and filed with the appropriate Local Financeto be written down to the net asset value with the corresponding losses in the

Bureau of the Ministry of Finance as required by the Japanese Financial

period of decline. In these cases, such fair market value or the net asset value

Instruments and Exchange Law. Certain supplementary information included

will be the carrying amount of the securities at the beginning of the next year.

in the statutory Japanese language non-consolidated financial statements, but
not required for fair presentation, is not presented in the accompanying non-(e) Allowance for Losses on Investment

consolidated financial statements.

Prepare for estimated losses to be incurred in the future, allowance for losses

The translation of the Japanese yen amounts into U.S. dollars is included
solely for the convenience of readers outside Japan, using the prevailingon investment is stated in amounts considered to be appropriate based on
financial condition of investments.

exchange rate at March 31, 2012, which was ¥82.19 to U.S. $1. The convenese yen amounts have been, could have been, or could in the future be,(f) Recognition of Sales, Contract Works in Progress andAdvances Received on Uncompleted Contracts

converted into U.S. dollars at this or any other rate of exchange.

On December 27, 2007, the Accounting Standards Board of Japan issued

nience translations should not be construed as representations that the Japa-

ASBJ Statement No. 15, “Accounting Standard for Construction Contracts”(b) Conversion of Foreign Currencies

and ASBJ Guidance No. 18, “Guidance on Accounting Standard for Construc-Receivables and payables denominated in foreign currencies are translatedtion Contracts.” The new accounting standards require that if the construction

into Japanese yen at the year-end rates.

activity deemed certain during the course of the activity, the percentage-ofcompletion method shall be applied (the percentage of the cost incurred to the(c) Allowance for Doubtful Accounts

estimated total cost), otherwise the completed-contract method shall be

Notes and accounts receivables, including loans and other receivables, areapplied. This standard is effective from the year ended March 31, 2010.

valued by providing individually estimated uncollectible amounts plus the

As a result, Net Sales increased by ¥1,580 million and Gross Profit,

amounts for probable losses calculated by applying a percentage based on

Operating Income, and Income before taxes on income increased by ¥207

collection experience to the remaining accounts.

million, respectively for the year ended March 31, 2010.
Prior to the year ended March 31, 2010, the Company recognized sales(d) Marketable Securities, Investments in Subsidiaries andAffiliates, and Marketable and Investment Securities

on contracts using the completed-contract method except for long term con-

The companies are required to examine the intent of holding each security

contracts are accumulated during the period of construction. These costs andand classify those securities as (1) securities held for trading purposes, (2)advances received on uncompleted contracts are not offset and are shown as

debt securities intended to be held to maturities, (3) equity securities issued

contract works in progress and advances received on uncompleted contracts

by subsidiaries and affiliates, and (4) all other securities that are not classified

in the accompanying non-consolidated balance sheets. Accordingly, no profits

in any of the above categories (hereafter, “available-for-sale securities”). Theor losses are recorded before the contract is completed.

Company did not have the securities defined as (1) and (2) above in the years
ended March 31, 2012 and 2011.

tract. Under this method, costs and advances received on uncompleted

Sales on other contracts for relatively large projects which require long
periods for completion and which generally include engineering, procurement(components, parts, etc.) and construction on a full-turnkey basis, are recognized on the percentage-of-completion method, primarily based on contract
costs incurred to date compared with total estimated costs for contract completion. The percentage-of-completion method is adopted for large jobs for72

JGC Corporation
Annual Report 2012

which the construction period exceeds 24 months and the contract amount(j) Retirement and Severance Benefits and Pension Costs

exceeds ¥5,000 million (including jobs whose construction period exceeds 36

The Company provides two types of post-employment benefit plans, unfundedmonths and the contract amount exceeds ¥3,000 million). Revisions in con-lump-sum payment plans and funded non-contributory pension plans, undertract revenue and cost estimates are recognized in the period in which they

which all eligible employees are entitled to benefits based on the level of wages

are determined.

and salaries at the time of retirement or termination, length of service andContract works in progress are stated at cost determined by a specificidentification method and comprised of direct materials, components andcertain other factors.
The Company provided allowance for employees’ severance and retire-parts, direct labor, subcontractors’ fees and other items directly attributable toment benefits at March 31, 2012 and 2011, based on the estimated amounts

the contract, and job-related overheads. Selling, general and administrativeof projected benefit obligation, actuarially calculated using certain assumptions

expenses are charged to operations as incurred and are not allocated toand the fair value of the plan assets at that date.

contract job work costs.
The Company normally receives payments from customers on a progressbasis in accordance with the terms of the respective construction contracts.

Prior service costs are recognized as expenses in equal amounts over the
average of the estimated remaining service lives of the employees (12 years),
and actuarial gains and losses are recognized as expenses using the decliningbalance method over the average of the estimated remaining service lives (12(g) Operating Cycle
Assets and liabilities related to long-term contract jobs are included in current

years) commencing in the following period.
Effective from the year ended March 31, 2010, the Company adopted theassets and current liabilities in the accompanying non-consolidated balance“Partial Amendments to Accounting Standard for Retirement Benefits (Part 3)”

sheets, as they will be liquidated in the normal course of contract completion,(Accounting Standards Board of Japan (“ASBJ”) Statement No. 19 issued on

although it may require more than one year.

July 31, 2008). The new accounting standard requires domestic companies to(h) Property and Equipment, Depreciation and Finance Leases

use the rate of return on long-term government or gilt-edged bonds as of the endof the fiscal year for calculating the projected benefit obligation of a defined-

Property and equipment are stated at cost, except for certain revalued land as

benefit plan. Previously, domestic companies were allowed to use a discountexplained in Note 8. Depreciation on property and equipment is calculated

rate determined taking into consideration fluctuations in the yield of long-term

using the straight-line method for buildings used for business operation, andgovernment and gilt-edged bonds over a certain period. This change had nothe declining-balance method for other property and equipment over thematerial impact on the financial statements for the year ended March 31, 2010.

estimated useful lives of the assets based on the Corporate Tax Code of Japan.
All finance leasing transactions were capitalized except for finance leases(k) Research and Development Costs

which commenced prior to April 1, 2008 and have been accounted for as

Research and development costs for the improvement of existing skills andoperating leases, continue to be accounted for as operating leases with disclo-technologies or the development of new skills and technologies, including

sure of “as if capitalized” information.

basic research and fundamental development costs, are charged to operations

Expenditures for new facilities and those that substantially increase thein the period incurred.

useful lives of existing property and equipment are capitalized. Maintenance,
repair and minor renewals are charged to expenses as incurred.

(l) Taxes on Income

The cost and accumulated depreciation applicable to assets retired or

The Company provides tax effects of temporary differences between theotherwise disposed of are eliminated from the related accounts and the gain or

carrying amounts and the tax basis of assets and liabilities. The asset andloss on disposal is credited or charged to income.

liability approach is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences.

(i) Impairment of Fixed Assets
The Company reviews its long-lived assets for impairment whenever events or(m) Reserve for Job Warranty Costs

changes in circumstances indicate the carrying amount of an asset or asset

A reserve for the estimated cost of warranty obligations is provided for thegroup may not be recoverable. An impairment loss would be recognized if theCompany’s engineering, procurement and construction work at the time thecarrying amount of an asset or asset group exceeds the sum of the undiscounted

related sales on contracts are recorded.

future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the(n) Reserve for Losses on Contracts

amount by which the carrying amount of the asset exceeds its recoverable

A reserve for losses on contracts is provided for an estimated amount of probableamount, which is the higher of the discounted cash flows from the continued use

losses to be incurred in future years in respect of construction projects in progress.

and eventual disposition of the asset or the net selling price at disposition.

JGC Corporation
Annual Report 201273

(o) Per Share Information

The Company changed the recognition of exchange differences about foreign

Cash dividends per share have been presented on an accrual basis andcurrencies’ doubtful accounts from provision for doubtful accounts to exchange

include dividends to be approved after the balance sheet date but applicablegain or loss from the year ended March 31, 2011, due to properly presentation of

to the year then ended.

provision for doubtful accounts without the effect of exchange fluctuation.
These reclassifications had no impact on previously reported results of(p) Derivatives and Hedge Accounting

operations or retained earnings.

The accounting standard for financial instruments requires companies to state
derivative financial instruments at fair value and to recognize changes in the(s) Accounting Changes and Error Corrections

fair value as gains or losses unless the derivative financial instruments are

On December 4, 2009, the Accounting Standards Board of Japan issued

used for hedging purposes.

ASBJ Statement No. 24, “Accounting Standard for Accounting Changes and

If derivative financial instruments are used as hedges and meet certain

Error Corrections” and ASBJ Guidance No. 24, “Guidance on Accounting

hedging criteria, the Company defers recognition of gains or losses resulting

Standard for Accounting Changes and Error Corrections.” Accounting treat-from changes in fair value of derivative financial instruments until the related

ments under the new accounting standard are as follows:

losses or gains of the hedged items are recognized.

(1) Change in Accounting Policies

However, in cases where forward foreign exchange contracts are used as

When a new accounting policy is applied with revision of accounting

hedges and meet certain hedging criteria, forward foreign exchange contracts

standards, the new policy is applied retrospectively unless revised account-and hedged items are accounted for in the following manner:

ing standards include specific transitional provisions. When revised(1) If a forward foreign exchange contract is executed to hedge an existingaccounting standards include specific transitional provisions, an entity

foreign currency receivable or payable,(i) The difference, if any, between the Japanese yen amount of the hedged
foreign currency receivable or payable translated using the spot rate at
the inception date of the contract and the book value of the receivableor payable is recognized in the statement of income in the period which
includes the inception date, and(ii)	The discount or premium on the contract (that is, the difference between
the Japanese yen amount of the contract translated using the contracted
forward rate and that translated using the spot rate at the inception dateof the contract) is recognized over the term of the contract.
(2) If a forward foreign exchange contract is executed to hedge a future trans-

shall comply with the specific transitional provisions.
(2) Changes in Presentations
When the presentation of financial statements is changed, prior period financial statements are reclassified in accordance with the new presentation.
(3) Changes in Accounting Estimates
A change in an accounting estimate is accounted for in the period of thechange if the change affects that period only, and is accounted for prospectively if the change affects both the period of the change and future periods.
(4) Corrections of Prior Period Errors
When an error in prior period financial statements is discovered, thosestatements are restated.

action denominated in a foreign currency, the future transaction will beThis accounting standard and the guidance are applied to accounting

recorded using the contracted forward rate, and no gains or losses on thechanges and corrections of prior period errors which are made from the begin-forward foreign exchange are recognized.

ning of the fiscal year that begins on or after April 1, 2011.

Also, where interest rate swap contracts are used as hedges and meetinterest rate swap contract is added to or deducted from the interest on theNote 2 — Receivables from and Payables to
Subsidiaries and Affiliates

assets or liabilities for which the swap contract was executed.

Significant receivables from and payables to subsidiaries and affiliates atcertain hedging criteria, the net amount to be paid or received under the

March 31, 2012 and 2011 were as follows:(q) Accrued Bonuses to Directors and Corporate Auditors
Millions of yen

The Company recognizes director’s and corporate auditor’s bonuses as
expenses when incurred.

(r) Reclassification and Restatement

March 31,

Notes and accounts receivableThousands of
U.S. dollars(Note 1)

2012

2011

2012

¥ 7,128¥ 8,335$ 86,726

Other current assets

8,369

4,423

101,825

Long-term loans receivable

9,688

10,377

117,873

Certain prior year amounts have been reclassified to conform to the current

Notes and accounts payable

11,093

9,375

134,968

year presentation except for the reclassification between provision for doubtful

Short-term loans

13,17518,787160,299

accounts and exchange gain or loss described below.

Advances received on
uncompleted contracts

221

151

2,689

Other current liabilities

1,509

573

18,360

184

176

2,239

Other non-current liabilities

Corporation
74 JGC
Annual Report 2012

Note 3 — Borrowings and Assets Pledged as Collateral(1) Purchase price equivalents, accumulated depreciation equivalents, andAt March 31, 2012 and 2011, short-term loans consisted of unsecured debt

book value equivalents:from subsidiaries and bore interest at TIBOR.

Millions of yen
March 31,

Long-term debt consisted of the following:

March 31,

Less current maturities
Long-term debt due after one year

2011

¥ 138

¥ 147

Machinery and equipment:

2012

Millions of yen

Thousands of
U.S. dollars(Note 1)

2011

2012

Unsecured Debt
0.74%–1.25% loans from banks
and insurance companies,
due serially through 20162012

¥3,144¥ 15,528$38,253(658)(13,865)(8,006)¥2,486¥  1,663$30,247

Purchase price equivalents
Accumulated depreciation equivalents
Book value equivalents

(54)

¥  76

¥  93

Thousands of
U.S. dollars(Note 1)
2012

March 31,

Machinery and equipment:$1,679Purchase price equivalents(754)

Accumulated depreciation equivalents
Assets pledged as collateral for other non-current liabilities at March 31,(62)$  925

Book value equivalents

2012 and 2011, were as follows:

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

Land

¥4,280¥4,280$52,074

Buildings and structures,at net book value

2,196

2,317

26,7192

3

24¥6,478¥6,600$78,817

March 31,

Machinery and equipment,
at net book value
Total

The annual maturities of long-term debt outstanding at March 31, 2012,

Purchase price equivalents are calculated using the inclusive-of-interest
method.
(2) Lease commitments

Millions of yen

Thousands of
U.S. dollars(Note 1)March 31,

2012

2011

2012

Due within one year

¥15

¥17

$183

Due after one year

61

76

742

Total

¥76

¥93

$925

are as follows:
AmountMillions of yen

Thousands of
U.S. dollars(Note 1)2013¥  658$ 8,006

2014

658

8,006

2015

246

2,993

2016

82

998

Year ending March 31,2017 and thereafter

1,500

18,250Total¥3,144$38,253

Lease commitments are calculated using the inclusive-of-interest method.
(3) Lease payments and depreciation equivalents

Millions of yen

Thousands of
U.S. dollars(Note 1)

Year ended March 31,

2012

2011

2010

2012

Lease payments

¥17

¥18

¥35

$207

Depreciation equivalents

17

18

35

207

(4) Calculation method of depreciation equivalents

Note 4 — Lease Transactions(a) Finance Lease Transactions Without OwnershipTransfer to Lessee

Depreciation equivalents are computed by the straight-line method over the

Finance leases commenced prior to April 1, 2008 which do not transfer own-(b) Operating Lease Transactions

ership of leased assets to lessees are accounted for as operating leases.

Lease commitments under non-cancelable operating leases:

lease period without considering residual value.

Assumed amounts of acquisition cost and accumulated depreciation atMarch 31, 2012 and 2011 are as follows:

Millions of yen

Thousands of
U.S. dollars(Note 1)March 31,

2012

2011

2012

Due within one year

¥542

¥532

$ 6,594

Due after one year

359

399

4,368

Total

¥901

¥931

$10,962

JGC Corporation
Annual Report 201275

Note 5 — Contingencies

Significant components of the Company’s deferred tax assets and liabili-(1) It is a business practice in Japan for a company to guarantee the indebted-

ties as of March 31, 2012 and 2011, were as follows:ness of certain of its trading agents, suppliers, subcontractors and certain
Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

¥1,781¥     1,660$ 21,669

779

75

9,478

subsidiaries and affiliates. The aggregate amount of such guarantees was¥20,191 million ($245,662 thousand) and ¥18,498 million at March 31,
2012 and 2011, respectively.

March 31,

Current deferred taxes
Deferred tax assets:(2) The Company has guaranteed employees’ housing loans and others frombanks in the amount of ¥5million ($61 thousand) and ¥11 million at March

Excess accrued
employees’ bonuses
Excess reserve forjob warranty costs

31, 2012 and 2011, respectively.

Note 6 — Net Assets

Excess reserve forlosses on contracts

1,561

43

18,993

Under the Japanese Corporation Law (“the Law”) and regulations, the entire

Other

5,806

8,086

70,641

9,927

9,864

120,781(176)¥  (1,501)(2,141)¥9,751¥     8,363$118,640

amount paid for new shares is required to be designated as common stock.

Total current deferred
tax assets

However, a company may, by a resolution of the Board of Directors, designate

Deferred tax liabilities:

an amount not exceeding one-half of the prices of the new shares as additional

Forward exchange
contract hedge

paid-in capital, which is included in capital surplus.
In cases where dividend distribution of surplus is made, the smaller of an

Net current deferred
tax assets

amount equal to 10% of the dividend or the excess, if any, of 25% of common
stock over the total of additional paid-in capital and legal earnings reserve

For the years ended March 31, 2012 and 2011, there is no valuationmust be set aside as additional paid-in capital or legal earnings reserve.

allowance.

Additional paid-in capital and legal earnings reserve may not be distribMillions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

Loss recognized on
percentage-of-completion
method not deductible forincome tax purposes¥  205¥    196$   2,494(1) The following table summarizes the significant differences between the

Employee’s Retirement andSeverance benefits

3,795

3,970

46,173statutory tax rate and the Company’s effective tax rate for financial state-

Excess bad debt expenses

633

6,295

7,702

Other

919

726

11,181

5,552

11,18767,551(1,282)(1,890)(15,598)

(133)

(134)

(1,618)(1,417)(2,024)(17,216)

Net non-current deferred
tax assets¥ 4,136¥   9,163$  50,322

Deferred tax liabilities for land
revaluation¥ 3,692¥   3,783$  44,920

uted as dividends. However, all additional paid-in capital and all legal earnings
reserve may be transferred to other capital surplus and retained earnings,

March 31,

Non-current deferred taxes

respectively, which are potentially available for dividends.

Deferred tax assets:

Note 7 — Taxes on Income
The statutory tax rates for 2012 was 40.7%, and for 2011 and 2010 was 36.2%.

ment purposes for the years ended March 31, 2012, 2011 and 2010:
Statutory tax rate

2012

2011

2010

40.7%

36.2%

36.2%

Total non-current deferred
tax assets
Deferred tax liabilities:

Non-deductible expenses

0.4

0.3

0.5

Non-taxable dividend income

(4.8)

(5.5)

(9.0)

Net unrealized holding gains on
securities

Tax credits utilized

(0.2)

(0.4)

(1.3)

Other

Other

7.4

18.9

(2.5)

43.5%

49.5%

23.9%

Effective tax rate

Total deferred tax liabilities

For the years ended March 31, 2012 and 2011, the valuation allowancesof ¥6,132 million ($74,608 thousand) and ¥145 million have been deductedfrom the gross amount of the non-current deferred tax assets, respectively.

Corporation
76 JGC
Annual Report 2012

(2) Adjustment of deferred tax assets and liabilities for enacted changes in tax
laws and rates
On December 2, 2011, amendments to the Japanese tax regulations wereenacted into law. As a result of these amendments, net Deferred tax assets
and Net unrealized holding gains on securities increased by ¥526 million($6,400 thousand) and ¥21 million ($256 thousand) as of March 31, 2012 .
And Deferred income tax expense recognized for the year ended March 31,
2012 and Deferred gains on hedges as of March 31, 2012 decreased by ¥506
million ($6,156 thousand) and ¥1 million ($12 thousand).

Note 8 — Land Revaluation
Pursuant to Article 2 of the Enforcement Ordinance for the Law Concerning
Land Revaluation (the “Law”) effective March 31, 1998, the Company
recorded its owned land used for business at the fair value as of March 31,
2002, and the related revaluation difference, net of income taxes, was debitedto “land revaluation, net of deferred tax portion” in the net assets section. The
applicable income tax portion was reported as DEFERRED TAX LIABILITIESFOR LAND REVALUATION in the non-consolidated balance sheet at March
31, 2012 and 2011. When such land is sold, land revaluation is reversed anddebited to retained earnings.
Fair value of revalued land as of March 31, 2012 was ¥2,919 million($35,515 thousand) less than the book value as of March 31, 2012.

Note 9 — Impairment of Fixed assets
As discussed in Note 1 (i), the Company have applied the accounting standard
for impairment of fixed assets.
The Company have grouped their fixed assets principally based on theirbusiness segment, while considering mutual supplementation of the cash flows.
Loss on impairment of fixed assets for the year ended March 31, 2012
consisted of the following:
Location

Use

Type of assets

Sendai (Japan)

Rental Property

Land

Carrying amount of certain assets were devalued to their recoverable
amounts, since the land’s market value have significantly declined. As a result,
The Company recognized loss on impairment in the amount of ¥420 million($5,110 thousand). The recoverable amounts are calculated according toestimated net sales value, which are real-estate appraisal.

Note 10 — Subsequent Event
At the Company’s board of directors held on June 18, 2012, the board of
directors decided the Company’s wholly owned subsidiary JGC Corporation
Europe B.V., which is a hub of procurement of equipment, will liquidate before
the end of 2012. The effect on operations from the liquidation is immaterial.

JGC Corporation
Annual Report 201277

Independent Auditor’s Report
JGC CORPORATION

To the Board of Directors of JGC Corporation

We have audited the accompanying non-consolidated financial statements of JGC Corporation which comprise the non-consolidatedbalance sheets as of March 31, 2012 and 2011, and non-consolidated statements of income and non-consolidated statements ofchanges in net assets for each of the years in the three-year period ended March 31, 2012, and a summary of significant accounting
policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation offinancial statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordancewith auditing standards generally accepted in Japan. Those standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the our judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances,while the objective of the financial statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the non-consolidated financial statements present fairly, in all material respects, the financial position of JGC Corporation
as of March 31, 2012 and 2011, and their financial performance for each of the years in the three-year period ended March 31, 2012in accordance with accounting principles generally accepted in Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying non-consolidated financial statements with respect to the year ended March 31, 2012
are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1 to the financial statements.

(KPMG AZSA LLC)
Tokyo, Japan
June 28, 2012

Corporation
78 JGC
Annual Report 2012

JGC GroupAs of March 31, 2012

OthersTotal engineering

System Solution Services
JGC Information Systems Co., Ltd.

Catalysts and fine products
JGC Catalysts & Chemicals Ltd.

JGC CORPORATION

Equipment Procurement
JGC Trading and Services Co., Ltd.
JGC Corporation Europe B.V.
JGC (USA), Inc.

Japan Fine Ceramics Co., Ltd.
Nikki-Universal Co., Ltd.

JGC Plant Solutions Co., Ltd.
JGC PLANTECH Co., Ltd.

Specialized Consulting Services
Japan NUS Co., Ltd.

JGC PLANTECH AOMORI Co., Ltd.
Nikki-Universal Co., Ltd.

Office Support Services
Nikki Business Services Co., Ltd.

JMD Greenhouse-Gas Reduction
Co., Ltd.

Water & Power Generation Business
JGC-ITC Rabigh Utility Co., Ltd.

JGC SINGAPORE PTE LTD

Oil & Gas Production and Sales Business
JGC Energy Development(USA) Inc.
JGC Exploration Eagle Ford LLC

PT. JGC INDONESIA

Provision of products and services

JGC PHILIPPINES, INC.

Consolidated subsidiaryNon-consolidated, non-equity-method
subsidiary
Equity-method subsidiary or affiliate
Non-equity-method subsidiary or affiliate

JGC Gulf International Co., Ltd.
JGC OCEANIA PTY LTD

Total engineering
BusinessEngineering & Construction
Services

CompanyCountry

Capital¥695,000,000

Capital ShareOther

JGC Plant Solutions Co., Ltd.

Japan

100%

JGC SINGAPORE PTE LTD

Singapore

S$2,100,000

100%

JGC PHILIPPINES, INC.

Philippines

P340,000,000

100%

PT. JGC INDONESIA

Indonesia

US$1,600,000

100%* JGC 70%
* JGC Plant Solutions 30%

JGC Gulf International Co. Ltd.

Saudi Arabia

SAR187,500,00

100%* JGC 92%

JGC OCEANIA PTY LTD

Australia

A$1,000,000

100%

JGC PLANTECH Co., Ltd.

Japan

¥135,000,000

100%

JGC PLANTECH AOMORI Co., Ltd.

Japan

¥50,000,000

100%

Process Licensing Services

Nikki-Universal Co., Ltd.

Japan

¥1,000,000,000

50%

Global Warming Gas-­Emissions
Credits BusinessJMD Greenhouse-Gas Reduction Co., Ltd.

Japan

¥30,000,000

47%* JGC SINGAPORE 8%
Maintenance Services* JGC PLANTECH 100%

Catalysts and fine productsCompanyCountryJGC Catalysts & Chemicals Ltd.

Japan

Japan Fine Ceramics Co., Ltd.
Nikki-Universal Co., Ltd.

CapitalCapital Share¥1,800,000,000

100%

Japan

¥300,000,000

100%

Japan

¥1,000,000,000

50%

Other

OthersBusiness

System Solution Services
Equipment Procurement

CompanyJGC Information Systems Co., Ltd.

Country

CapitalCapital Share

Japan¥400,000,000100%
24.50%JGC Trading and Services Co., Ltd.

Japan

¥40,000,000

JGC Corporation Europe B.V.

The Netherlands€2,768,000

100%

JGC (USA) Inc.

U.S.A.

US$100,000

100%

Specialized Consulting Services

Japan NUS Co., Ltd.

Japan

¥50,000,000

80%

Office Support Services

Nikki Business Services Co., Ltd.

Japan

¥1,455,000,000

100%

Water & Power Generation
Business

JGC-ITC Rabigh Utility Co., Ltd.

Japan

¥319,533,500

55.43%

Oil & Gas Production andSales Business

JGC Energy Development (USA) Inc.

U.S.A.

US$123,000,000

100%

JGC Exploration Eagle Ford LLC

U.S.A.

US$65,000,000

100%

Other

JGC Corporation
Annual Report 201279Outline of JGC
As of March 31, 2012

Established

October 25, 1928

Capital¥23,511,189,612

Number of Employees

2,155 (Consolidated: 6,524)

Major Shareholders

Number of shares(thousands)

Percentage of total(%)

Japan Trustee Services Bank, Ltd. (Trust Account)

19,648

7.58

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

17,036

6.57

JGC Trading and Services Co., Ltd.

12,112

4.67

Sumitomo Mitsui Banking Corp.

11,0004.24

JGC-S SCHOLARSHIP FOUNDATION

8,433

3.25

Mizuho Corporate Bank, Ltd.

5,700

2.20

SSBT OD05 OMNIBUS ACCOUNT - TREATY CLIENTS

3,942

1.52

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

3,636

1.40

State Street Bank and Trust Company 505223

3,421

1.32

State Street Bank and Trust Company

3,328

1.28

JGC’s treasury stock holdings total 6,572 thousands shares, approximately 2.53% of total shares issued.

Authorized Shares

600,000,000

Issued andOutstanding Shares

259,052,929

Number of
Shareholders

9,001

Administrator of the
Shareholders’Register

Mitsubishi UFJ Trust and Banking Corp.
4-5, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-8212, Japan

Distribution of Shareholders (%)
Banks 7.71

Other domestic
corporations 12.87

Trust banks (including trust accounts) 22.03

Foreign investors

Life and non-life insurance corporations 4.01

38.95

Financial instruments firms 4.22
Treasury stock 2.53

Individuals and others 7.68

Stock PriceJGC Stock Price (Yen)

Nikkei Stock Average (Yen)

3,000

45,000JGC Stock Price
2,000

30,0001,000

15,000

Nikkei Stock Average00Volume (Thousands of shares)

80,00060,00040,00020,0000 20091

Corporation
80 JGC
Annual Report 2012

2

3

4

5

6

7

8

2010
9 10 11 12 1 2

3

4

5

6

7

8

2011
9 10 11 12 1 2

3

4

5

6

7

8

9 10 11 12

2012
1 2

3

4

5

6

Domestic Offices Tokyo Corporate Office
New Ohtemachi Bldg., 2-2-1,
Ohtemachi, Chiyoda-ku,
Tokyo 100-0004, Japan
Tel: 81-3-3279-5441
Fax: 81-3-3273-8047
 Yokohama World Operations Center
2-3-1, Minato Mirai, Nishi-ku,
Yokohama 220-6001, Japan
Tel: 81-45-682-1111
Fax: 81-45-682-1112
 MM Park Building Office
3-6-3, Minato Mirai, Nishi-ku,
Yokohama 220-0012, Japan
Tel: 81-45-682-1111
Fax: 81-45-682-1112
Research and Development Center Research and Development Center
2205, Narita-cho, Oarai-machi,
Higashi Ibaraki-gun, Ibaraki Pref.
311-1313, Japan
Tel: 81-29-266-3311
Fax: 81-29-266-3310
 Osaka Office3-1-18, Kitahama, Chuo-ku,
Osaka 541-0041, Japan
Tel: 81-6-6208-0260
Fax: 81-6-6208-0265

Overseas OfficesAsia Beijing Office
Room No. 605, Office Tower I,
Henderson Centre, No. 18
Jianguomennei Dajie,
Dongcheng District, Beijing
100005, China
Tel: 86-10-6518-3001
Fax: 86-10-6518-3006
 Jakarta OfficeWisma Kyoei Prince, 12A Floor,
Jl. Jend. Sudirman Kav. 3,
Jakarta 10220, Indonesia
Tel: 62-21-572-3320
Fax: 62-21-572-4311
 JGC KOREA CORPORATION
Lotte Kwanak Tower 5th Floor
395-67, Shindaebang-Dong,
Dongjak-Gu, Seoul, Korea
Tel: 82-2-831-7316
Fax: 82-2-831-7317

 JGC Engineering Consultants (Shanghai)Co., Ltd.
Suite 1503-1504, POS-PLAZA,
1600 Century Avenue Pudong
New Area, Shanghai 200122, China
Tel: 86-21-5058-9881
Fax: 86-21-5058-9880
 JGC PHILIPPINES, INC.
2109 Prime Street,
Madrigal Business Park,
Ayala Alabang, Muntinlupa City,
Philippines
Tel: 63-2-876-6000
Fax: 63-2-807-0668
 TECHNOSERVE CONSTRUCTION CO.,INC.
19th Floor Export Bank Plaza, Chino Roces
Avenue, Corner Sen. Gil Puyat Avenue,
Makati City, Phillippines
Tel: 63-2-889-9440
Fax: 63-2-845-4533
 JGC VIETNAM COMPANY LIMITED
Unit 1709, 17F Keagnam Hanoi Landmark
Tower, Me Tri, Tu Liem, Hanoi, Vietnam
Tel: 84-4-3794-0520
Fax: 84-4-3794-0522
 PT. JGC INDONESIA
Jl. TB Simatupang 7-B Jakarta 12430,
Indonesia
Tel: 62-21-29976500
Fax: 62-21-29976599
 JGC SINGAPORE PTE LTD
29 International Business Park
#07-01 Acer Building, Tower A,
Singapore 609923, Singapore
Tel: 65-6-227-0122
Fax: 65-6-227-0358
 JGC CONSTRUCTION INTERNATIONAL
PTE. LTD.
29 International Business Park
#07-01 Acer Building, Tower A,
Singapore 609923, Singapore
Tel: 65-6-561-1255
Fax: 65-6-561-1767
 JGC MALAYSIA SDN. BHD.
Level 9, Wisma Genting, Jalan Sultan Ismail,50250 Kuala Lumpur, Malaysia
Tel: 60-3-21612155
Fax: 60-3-21619110

Oceania Perth Office
Level 18, Central Park 152-158
St Georges Terrace, Perth, WA 6000,
Australia
Tel: 61-8-9288-1828
Fax: 61-8-9288-4400

Middle East
 Abu Dhabi Office
Office No. 305, 3rd Floor
Al Salam Building
Junction of Zayed the 1st St./Al Salam Road
P.O. Box 28543,
Abu Dhabi, U.A.E.
Tel: 971-2-6443-335
Fax: 971-2-6444-204
 Doha Office
Al Fardan Tower 25F,
P.O. Box 22173, Doha, Qatar
Tel: 974-4409-3424
Fax: 974-4409-3557

 JGC Italy S.r.I.
Via Lallio n.35 Frazione
Sforzatica 24044-Dalmine (BG),
Italy
Tel: 39-035-373705
Fax: 39-035-373728
 JGC CORPORATION (UK) LIMITED401 Marble Arch Tower,
55 Bryanston St., London
WIH 7AA, U.K.
Tel: 44-20-7868-8012
Fax: 44-20-7868-8011

Africa Baghdad Office(Undisclosed for security reasons) Algiers Office
Boulevard du 11 decembre 1960,­Lotissement No. 6, El-Biar, Alger, Algerie
Tel: 213-21-91-2366
Fax: 213-21-91-2285

 JGC Arabia Limited
P.O. Box 2414, Al-Khobar 31952,
Saudi Arabia
Tel: 966-3-896-5055
Fax: 966-3-896-5056

 JGC Algeria S.p.A
Boulevard du 11 decembre 1960,­Lotissement No. 6, El-Biar, Alger, Algerie
Tel: 213-21-91-2366
Fax: 213-21-91-2285

 JGC Gulf International Co., Ltd.
P.O. Box 2257, Al-Khobar 31952,
Saudi Arabia
Tel: 966-3-896-5060
Fax: 966-3-896-5071

 JGC NIGERIA LIMITED
Block 1, Flat 6, Zion Court No. 1 Samuel
Adedoyin Street, Ikate Lekki, Lagos, Nigeria
Tel: 234-1-4630603

 JGC Middle East FZE(Jebel Ali Head Office):
Office No. LB13124
P.O. Box 18414, Jebel Ali,
Dubai, U.A.E.
Tel: 971-4-8812102
Fax: 971-4-8873102(Doha Branch):
Al Fardan Tower 25F, P.O. Box 22173,
Doha, Qatar
Tel: 974-4409-3424/3425
Fax: 974-4409-3557

Americas Basra Office(Undisclosed for security reasons)

Europe Almaty Office050059 Almaty Samal-2
Microdistrict Bldg. 56A
Office 203, Kazakhstan
Tel: 7-727-263-5185
Fax: 7-727-263-5187

 JGC (USA), Inc.
10370 Richmond Avenue, Suite 800,
Houston, TX 77042, U.S.A.
Tel: 1-713-789-1441
Fax: 1-713-975-7874
 JGC Energy Development (USA), Inc.
10370 Richmond Avenue Suite 810,
Houston, TX 77042, U.S.A.
Tel: 1-832-487-9965
Fax: 1-832-487-9973
 JGC VENEZUELA C.A.
Edificio Bancaracas Piso 6
Oficina 6-06,
Av. San Felipe con 2da Calle,
La Castellana, Caracas, Venezuela
Tel: 58-212-266-9155
Fax: 58-212-265-9231

 Paris Office
17 Rue de Quatre
Septembre 75002,
Paris, France
Tel: 33-1-4477-4300
Fax: 33-1-4477-4311

Tokyo Corporate Office
Yokohama World Operations Center
MM Park Building Office

JGC Corporation
Annual Report 201281

JGC CORPORATION Annual Report 2012

2-3-1, Minato Mirai, Nishi-ku, Yokohama 220-6001, Japan
TEL. 81-45-682-1111 FAX. 81-45-682-1112
www.jgc.co.jp

Printed in Japan