CHIYODA CORPORATION
Consolidated Financial Results
for the Year Ended March 31, 2008

This document has been prepared as a guide to non-Japanese investors and contains forward-looking
statements that are based on managements’ estimates, assumptions and projections at the time of publication.
A number of factors could cause actual results to differ materially from expectations. This document is atranslation of excerpts taken from the Japanese language original. All numbers are rounded down to the nearest
unit in accordance with standard Japanese practice. Please be advised that the Company cannot accept
responsibility for investment decisions made based on the information contained in this report.
1Summary of Consolidated Financial Resultsfor Year Ended March 31, 2008
Listed Exchanges
Head Office
Stock CodePresident & CEO
Inquiries
Telephone
URL

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

1. Consolidated Results of Operations for the Year Ended March 31, 2008
(1) Consolidated Business Results(Percentages represent change compared with the previous fiscal year.)

Millions of Yen
Apr. 1, 2007–
Mar. 31, 2008

Apr. 1, 2006–
Mar. 31, 2007

Change (%)

Change (%)

Revenues ...........................................................

603,55924.5

484,895

Operating Income..............................................

8,839(69.2)

28,70038.5

Recurring Profit ................................................

19,121(48.0)

36,79758.9

Net Income .........................................................

9,640(59.0)

23,531

21.3

Net Income per Share (¥) ..................................

50.15

122.41

Fully Diluted Net Income per Share (¥)..............

50.12

122.28Return on Equity (ROE) ...................................

12.2%

35.5%

Ratio of Ordinary Income to Total Assets.......

4.7%

10.2%

Ratio of Ordinary Income to Revenue .............

1.5%

5.9%

Notes:

24.1

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

(Reference) Equity in earnings of associated companies: Fiscal year ended March 31, 2008: 435 million yen, Fiscal year
ended March 31, 2007: 375 million yen(2) Change in Consolidated Financial Position
Millions of Yen
As of
As of
Mar. 31, 2008
Mar. 31, 2007
Total Assets .................................................................................

378,819442,952

Net Assets....................................................................................

81,637

77,414Equity Ratio .................................................................................

21.4%

17.4%

Shareholders’ Equity per Share (¥) ...........................................

422.44400.56(Reference) Shareholders’ equity: Fiscal year ended March 31, 2008: 81,226 million yen, Fiscal year ended March 31,
2007: 77,022 million yen

2(3) Consolidated Cash Flows
Millions of Yen
Apr. 1, 2007–
Apr. 1, 2006–
Mar. 31, 2008
Mar. 31, 2007
Net cash provided by operating activities ........................

14,274

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

(3,917)35,531(3,458)Net cash used in financing activities ................................

(17,219)(2,191)

Cash and cash equivalents at end of period ....................

70,08977,051

2. Dividends
Millions of Yen
Apr. 1, 2007–
Apr. 1, 2006–
Mar. 31, 2008
Mar. 31, 2007
10.00 yen
15.00 yen

Dividends per Share.............................................................
Payment of Cash Dividends ................................................

1,922

2,884

Payout Ratio (Consolidated) ...............................................

19.9%

12.3%

Dividend on Equity Ratio (Consolidated)...........................
(Note) Forecast dividends per share for the year ending March 31, 2009:11.00 yen
Payout ratio (consolidated) for the year ending March 31, 2009:30.0%

2.4%

4.4%

3. Outlook for the Year Ending March 31, 2009
(Percentages represent change compared with the previous interim period or full term, respectively)

Millions of Yen
Apr. 1, 2007 – Mar. 31, 2008
Interim period

Full term

Change (%)

Change (%)

Revenues ...........................................................

230,000(26.4)

460,000

Operating Income..............................................

5,000(56.2)

12,500(23.8)
41.4

Recurring Profit ................................................

7,000(59.5)

16,000(16.3)Net Income .........................................................

4,000(62.4)

9,500

(1.5)

Net Income per Share (¥) ..................................

16.08 yen

37.40 yen3

4. Other(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries due to changes in thescope of consolidation): No(2) Changes in accounting rules, procedures, presentation method, etc. for the Consolidated Financial Statements(a) Changes in consolidated accounting methods: Yes(b) Changes other than (a), above: No(3) Number of share issued and outstanding (common stock)(a) Number of shares at end of period (including treasury stock): Year ended March 31, 2008: 193,182,529
shares, Year ended March 31, 2007: 193,125,529 shares(b) Treasury stock at end of period: Year ended March 31, 2008: 903,520 shares, Year ended March 31, 2007:
836,169 shares

4Results of Operations(1) Analysis of Operating Results
Regarding the market environment for Chiyoda during the year ended March 31, 2008, in overseas
markets for plants, new plant construction plans around the world are being driven by growth in global
energy demand. In the domestic market, capital investment by oil and petrochemical companies was lively.
However, in Qatar, where the rush to build plants has created a tight supply of skilled construction workers,
execution of construction remains challenging.
In this environment, Chiyoda continued to implement a high level of risk management including
measures to counter rising costs and made concerted efforts to thoroughly execute ongoing projects
including a large-scale liquefied natural gas (LNG) plant in Qatar. For projects in Qatar, however, theincrease in labor costs and decrease in productivity due to the limited supply of construction workers haveexceeded initial predictions. The resulting increase in construction costs has made it difficult to avoid
decreased earnings.
The labor shortages and material cost increase that led to lower earnings are unique to Qatar and of ascale far beyond the limits of risk management measures of contractors. Overseas, projects are generally
proceeding smoothly. Profitability of projects in other countries including Japan, and results of Group
companies, are as planned.
Overseas, projects are generally proceeding smoothly. Construction of Train 1 of Sakhalin II, the first
LNG plant in Russia, was completed. In the domestic market, Chiyoda successfully acquired many newcontacts and steadily executed ongoing projects primarily in the fields of petroleum and petrochemicals,
yielding a high level of revenues.
Due to the acquisition of a contract for an expansion of a thermal cracking unit for Fuji Oil Co., Ltd., newcontracts for the fiscal year were 258,754 million yen on a consolidated basis, a 53.6% decrease
compared with the previous fiscal year. New contracts decreased 75.0% to 100,567 million yen overseas
and increased 1.9% to 158,187 million yen in Japan. The backlog of contracts as of March 31, 2008 was
670,050 million yen.
New Contracts (Consolidated)
Fiscal years ended March 31
2004
2005
2006
2007
2008

Overseas
218.6
321.7
691.5
402.4
100.5

Domestic
71.9
89.4
112.7
155.2
158.1

Total
290.6
411.2
804.2
557.7
258.7

(Billions of yen)Backlog ofcontracts
375.8
522.4
960.5
1,048.6
670.0

5

Consolidated revenues exceeded forecasts, increasing 24.5% compared with the previous fiscal year to603,559 million yen due to the progress of major ongoing projects. Overseas revenues increased 30.4%
to 493,486 million yen and domestic revenues rose 3.3% to 110,073 million yen.
Major Completed Construction (*) Completed portion• LNG plant Trains 6 & 7 for Ras Laffan Liquefied Natural Gas Co., Ltd. (3) in Qatar (*)• LNG plant Trains 6 & 7 for Qatar Liquefied Gas Company Limited (3) & (4) in Qatar (*)
Overseas• LNG plant Trains 4 & 5 for Qatar Liquefied Gas Company Limited (2) in Qatar (*)• Sakhalin II LNG project in Russia (*)• Aromatics complex for Kashima Aromatics Co., Ltd• Hikone Plant, No. 4 unit (Chiyoda TechnoAce Co., Ltd.) for Maruho Co., Ltd.
• MXDA facility for Mitsubishi Gas Chemical Company, Inc.
• CCR unit for Seibu Oil Co., Ltd. (*)
Domestic• Utsunomiya No. 2 Plant for Hisamitsu Pharmaceutical Co., Inc.
• 2007 shut-down maintenance (SDM) of Hokkaido refinery for Idemitsu Kosan Co., Ltd.
(Chiyoda Kosho Co., Ltd.)• Expansion of No. 7 naphtha hydrosulfurization plant for Fuji Oil Co., Ltd.
Although revenues increased, the increase in construction costs at projects in Qatar due to increasedlabor costs and lower productivity caused by the limited supply of skilled construction workers resulted in a
decline in the gross margin. Gross profit was 20,524 million yen, a decrease of 48.3% compared with theprevious fiscal year. Operating income also decreased 69.2% to 8,839 million yen. Recurring profit
decreased 48.0% to 19,121 million yen, and net income decreased 59.0% to 9,640 million yen.
Financial Results (Consolidated)(Billions of yen)
Fiscal years ended
March 31
2004
2005
2006
2007
2008

Revenues

Gross profit

OperatingincomeRecurringprofit

Net income

206.8
267.6
390.8
484.8
603.5

14.1
19.7
30.5
39.7
20.5

5.8
11.0
20.7
28.7
8.8

6.3
11.5
23.1
36.7
19.1

6.6
12.8
19.4
23.5
9.6

6

Results by Business Segment
The following is a summary of consolidated operating results by business segment.
Natural Gas and Electric Power
Overseas, natural gas producing nations and Energy Majors continue to plan investments in the gas
value chain – development of gas fields, construction of LNG plants, arrangements for LNG carriers andconstruction of LNG receiving terminals – against a backdrop of growth in global demand for natural gas.
Amid these conditions, the Group is focusing on acquiring contracts for research and Front-End
Engineering and Design (FEED) in order to win contracts for large-scale projects, and continues working
hard to ensure steady execution of ongoing projects, mainly in Qatar.
In Japan’s electric power and gas sector, growth in new contracts was firm, due to rising inclination toinvest in new projects. These include new expansion plans for large-scale LNG-receiving terminals in
response to the removal of boundaries in the energy industry, as exemplified by the sale of gas by oil andelectric power companies and the shift to LNG and coal as fuels because of persistently high crude oil
prices.
In the fiscal year ended March 31, 2008, new contracts were 95,532 million yen, a decrease of 77.3%
compared with the previous fiscal year. Revenues were 487,846 million yen, an increase of 31.3%.
Petroleum, Petrochemicals and Gas Chemicals
In the petroleum sector, execution of ongoing projects progressed smoothly, including the completion ofaromatics manufacturing facilities for Kashima Aromatics Co., Ltd. New contracts were also solid, mainly
for facilities for processing heavy grades of oil. In the petrochemical sector, although demand remained
firm for petrochemical products, revision of capital investment plans was also evident, due to the high costof construction and materials, and uncertainty regarding the economic outlook.
Nonetheless, on a Group-wide basis contract acquisition was brisk due to the continuing high level ofactivity in improving the efficiency of environmental measures and facility screening and maintenance.
Another factor was investment in production facilities in line with the change in the demand structure forpetroleum products. To meet the change in customer behavior, Chiyoda bolstered its Plant Lifecycle
Engineering (PLE) capabilities by concluding a collaboration agreement with Shell Global Solutions Japan.
Among overseas subsidiaries, Chiyoda Singapore (Pte) Ltd. won a contract for the construction of a largescale tank terminal.
In the fiscal year ended March 31, 2008, new contracts were 107,495 million yen, an increase of 25.3%
compared with the previous fiscal year. Revenues were 72,940 million yen, an increase of 4.8%.
General Chemicals and Industrial Machinery
In the general chemicals and industrial machinery sectors, responding to the trend of concentrated
customer investment in the strategic product sector including high-value-added electronics materials andfunctional chemical products, Chiyoda focused its efforts on development in Japan and Asia, which
resulted in the acquisition of new contracts including a contract from Thai MMA Co., Ltd. to construct anacrylic sheet plant. The drive to invest in new facilities such as plants and research laboratories rose in thepharmaceuticals industry due to changes in the business environment in recent years. In the fiscal year
ended March 31, 2008, new contracts were 32,538 million yen, a decrease of 2.2% compared with theprevious fiscal year. Revenues were 31,277 million yen, an increase of 0.6%.
Environment and Others
In the environment sector, Chiyoda continued to conduct marketing activities both in Japan andoverseas for CT-121 flue gas desulfurization technology, which it developed to meet increasingly strict
environmental regulations, and conducted marketing activities and secured new projects in other sectors.
In the fiscal year ended March 31, 2008, new contracts were 17,577 million yen, an increase of 58.5%
compared with the previous fiscal year. Revenues were 5,970 million yen, an increase of 2.7%.

7

Outlook for the Year Ending March 31, 2009
While maintaining a balance with ongoing project execution, Chiyoda will work to acquire new contracts
with a focus on profitability and projects that capitalize on the Company’s technological advantages.
In ongoing projects, Chiyoda will deal with the high cost of materials and the tight supply of labor inorder to keep the three large-scale LNG projects in Qatar on schedule, and will work to ensure steady
execution of other ongoing projects in Japan and overseas.
Under these conditions, and assuming an exchange rate of 100.0 yen to the U.S. dollar, Chiyoda
forecasts consolidated new contracts of 450.0 billion yen, revenues of 460.0 billion yen, operating incomeof 12.5 billion yen, recurring profit of 16.0 billion yen and net income of 9.5 billion yen.
Outlook for the Year Ending March 31, 2009 (Consolidated)(Billions of yen)

New contracts
Revenues
Operating income
Recurring profit
Net income

Fiscal year ending
March 31, 2009
450.0
460.0
12.5
16.0
9.5

Fiscal year ended
March 31, 2008
258.7
603.5
8.8
19.1
9.6

Difference (%)
73.9(23.8)
41.4(16.3)(1.5)

8

(2) Analysis of Financial Condition
1) Assets, Liabilities and Net Assets
AssetsCurrent assets decreased 79,829 million yen due to factors including a decrease in jointly controlled
assets of joint venture resulting from an increase in payments for vendors and subcontractors due toprogress of large-scale joint venture projects. Fixed assets increased 15,697 million yen due to factors
including IT-related capital investments and the merger by absorption of former office tenant Sunrise Real
Estate Co. Ltd. in January 2008. As a result, total assets decreased 64,132 million yen compared with theend of the previous fiscal year.
Liabilities
Total liabilities decreased 68,355 million yen. This was mainly due to a 46,795 million yen decrease in
the balance of advance receipts on construction contracts, a 12,775 million yen decrease in notes andaccounts payable - trade, and an 11,662 million yen decrease in income taxes payable.
Net Assets
Total net assets were 81,637 million yen due to a 6,756 million yen increase in retained earnings fromnet income and other factors. As a result, the shareholders’ equity ratio increased 4.0 points to 21.4%
compared with the end of the previous fiscal year.

9(Billions of yen)
As of
March
31,
2007

As of
March
31,
2008

Difference

Current assets

418.0

338.2

(79.8)Cash and cash equivalents
and time deposits (*)

77.1

70.9

(6.1)

As of
March
31,
2007

As of
March
31,2008

Difference

351.4

293.9

(57.4)

Short-term loans

0.0

10.0

9.9

318.6

259.0

(59.5)

Current liabilities

Operating assets(Notes and accounts
receivable – trade, costs
and estimated earnings onlong-term construction
contracts and costs ofconstruction contracts inprocess)

66.3

53.1

(13.1)

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

Jointly controlled assets ofjoint venture

256.0

192.6

(63.3)

Other current
liabilities

32.7

24.8

(7.8)

Other current assets

18.4

21.3

2.8

Non-current
liabilities

14.0

3.1

(10.8)

Fixed assets

24.9

40.6

Long-term debt

10.0

0

(10.0)

Property, plant andequipment

7.4

23.0

15.6
)
15.6

Other long-term
liabilities

4.0

3.1

(0.8)

Intangible fixed assets

3.3

4.7

1.3

Total net assets

77.4

81.6

4.2

Investments and otherassets

14.0

12.8

(1.2)

Shareholders’equity

77.1

83.7

6.6

Valuation andexchange rateadjustments

(0.1)

(2.5)

(2.4)

Minority interests

0.3

0.4

0.0

Total liabilities andnet assets

442.9

378.8

(64.1)

Total assets

442.9

378.8

(64.1)(*) Includes certificates of deposit, which are classified as short-term investments in securities.

102) Cash Flow
Cash flow from operating activities
Net cash provided by operating activities was 14,274 million yen. Contributing factors included a
decrease of 46,457 million yen in working capital (total notes and accounts receivable – trade, costs andestimated earnings on long-term construction projects, notes and accounts payable – trade and advancereceipts on construction projects), income taxes and minority interests of 18,991 million yen and adecrease of 63,377 million yen in jointly controlled assets of joint venture due to the progress of largescale joint venture projects.
Jointly controlled assets of joint venture, a line item on the balance sheet of the statement of accounts,
represents the equivalent of Chiyoda’s equity share in construction contracts at joint ventures. As such, it
indicates Chiyoda’s actual share of the balance of cash and cash equivalents and time deposits under thename of the joint venture.
Cash flow from investing activities
Net cash used in investing activities was 3,917 million yen. Payments for purchase of investment
securities totaled 2,305 million yen and capital investments including purchases of IT-related software
totaled 1,617 million yen.
Cash flow from financing activities
Net cash used in financing activities was 17,219 million yen. Factors included payment of cash
dividends totaling 2,879 million yen, and repayments of long-term debt totaling 14,083 million yen
including the debt of Sun Rise Real Estate Co., Ltd., which was absorbed through a merger with theCompany.
As a result of the above, net cash and cash equivalents as of March 31, 2008 totaled 70,089 million yen,a decrease of 6,962 million yen from the end of the previous fiscal year.
Change in Financial Condition (Consolidated)
Net cash provided by (used in)

Fiscal years
ended
March 31

Total
assetsTotalliabilities

Total net
assets (*)

2004

142.8

119.7

2005

182.8

2006

(Billions of yen)
Cash andcash
equivalents at
end of period

Operatingactivities

Investingactivities

Financing
activities

23.1

15.5

(1.2)

(8.2)

40.9

145.6

37.2

0.4

(1.0)

1.1

41.5

279.7

223.8

55.8

5.2

1.0

(1.3)

46.8

2007

442.9

365.5

77.4

35.5

(3.4)

(2.1)

77.0

2008

3,78.8

297.1

81.6

14.2

(3.9)

(17.2)

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

Shareholders’ equity ratio
(%)
15.9

Debt repayment period(Years)0.7

Interest coverage ratio(Times)
42.4

2005

20.2

21.3

1.6

2006

19.8

2.0

17.3

2007

17.4

0.3

114.4

2008

21.4%

0.7

35.3

Notes

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

Net cash provided byoperatingactivities/Interest
expense11

(3) Dividend Policy
The Chiyoda Group‘s basic dividend policy in the medium-term management plan is to maintain stabledividends of 10 yen or more per share. Because of the substantial decrease in income, it is with great
regret that we have set the planned year-end dividend at 10 yen.
From the fiscal year ending March 31, 2009, Chiyoda will implement a policy that emphasizes
distributing earnings to shareholders while strengthening the Company’s financial structure toaccommodate future expansion. Accordingly, we will aim for a payout ratio of 30% of consolidated income.
In line with this, Chiyoda plans to pay a year-end dividend of 11 yen per share for the fiscal year ending
March 31, 2009.

12

(4) Business Risks and Other Risks
Primary issues that could affect investor decisions regarding investment risk, such as material issues
related to the Chiyoda Group’s financial position, performance and cash flow and the Chiyoda Group’s
response to such issues, include but are not limited to the issues outlined below. The Chiyoda Group
recognizes the potential occurrence of these risks and works to avoid them to the maximum extent
possible. The Chiyoda Group also moves to respond as quickly as possible to minimize the impact ofissues that present risks when they occur.
As of March 31, 2008, Chiyoda Group management acknowledges the issues that may present risks inthe future outlined below and has made them the focus of risk management.
1) Changes in Exchange Rates
In overseas construction projects, construction payments are often in different currencies than paymentsfor vendors and/or subcontractors and equipment and materials. Foreign currency exchange rates may
therefore affect the financial results of the projects. The Chiyoda Group works to avoid and minimize suchforeign currency fluctuation risks by using forward foreign exchange contracts and matching planned
outlays in multiple currencies with construction payments and receivables.
2) Rising Equipment and Resource Prices and Material Shortages
In plant construction, because of the time lag between estimates and bids and orders for equipment andmaterials, actual prices for equipment and materials may exceed those projected in estimates and bids.
Iron and steel product prices are particularly susceptible to sudden increases in the price of raw materials.
The market price of metals such as copper, nickel, aluminum and zinc is also very difficult to predict.
The Chiyoda Group works to avoid and minimize these risks by diversifying procurement in ways suchas using multiple suppliers in various regions worldwide, ordering equipment and materials at an earlystage, structuring cooperative relationships with suppliers, and other measures.
3) Shortages of Construction Workers and Construction Materials
Concentration of large-scale construction projects can tighten the supply of construction workers andother human resources, construction materials, and construction infrastructure which may result in
subcontractor expenses that exceed those projected in estimates and bids, as well as additional expenses
to make up for construction delays caused by resource shortages or lower quality.
The Chiyoda Group works to minimize the impact of these issues by structuring cooperative
relationships with qualified construction companies, deploying personnel skilled in various professions
from various regions around the world, and improving the skills of construction workers at each job site.
4) Terrorism, Conflicts and other Force Majeure Events
Force majeure events such as terrorism or conflicts may cause direct losses, delays in procuring ordelivering materials and equipment, threats to the safety of workers, cessation of construction work, andother problems at construction sites in Japan and overseas.
The Chiyoda Group has structured a threat management system that includes cooperation with clientsand other related parties to support rapid initial response should such issues occur. In addition, theChiyoda Group takes other actions to avoid or minimize these risks, including negotiating contractual
provisions that rationally allocate additional costs to clients.
5) Plant Accidents
Serious accidents including explosions or fire may occur due to various causes at plants that the
Chiyoda Group is constructing or has completed. The Chiyoda Group could be judged responsible forsuch accidents, including being held liable for damages, which could impact the Chiyoda Group’s
performance.
The Chiyoda Group works to avoid or minimize this risk in ways such as taking all possible measures topreclude the occurrence of accidents, including quality control and safety management. Other
countermeasures include maintaining appropriate insurance coverage and negotiating contracts thatrationally allocate client responsibility for damages.

13

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

14

Business Flowchart
Clients

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

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

Other businesses

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

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

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

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

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

Contracted Business, Entrusted
Businesses
Direct Client Orders

Overseas Sales Bases*1 Chiyoda International Corporation (USA)*1 Chiyoda Nigeria Limited15

3. Management Policies
1. Basic Management Policies
Chiyoda aims to conduct Group management so as to earn the trust and understanding of shareholders,customers, suppliers, employees, communities and all other stakeholders.
Based on the above fundamental management philosophy, Chiyoda formulated and began
implementing a medium-term management plan called “Double Step-Up Plan 2008” (DSP2008). The goalof the plan, which started in fiscal 2005 (the year ended March 31, 2006) and ends in fiscal 2008 (the year
ending March 31, 2009), is to enable Chiyoda to consistently increase earnings.
In steadily implementing its DSP2008 medium-term management plan, Chiyoda has established theslogan “Sustained Growth, Future Development” with the aim of further solidifying the businessfoundations of Chiyoda’s Engineering Business and further increasing corporate value for the next
generation. Based on this slogan, Chiyoda will sow the seeds of future strategies for further significant
progress by focusing its business activities on sustaining the steady execution of construction contracts
already received and the creation of a culture of safety.
In order to achieve growth over the medium to long term, Chiyoda must strengthen its financial structureand establish a steady management foundation. To this end, on March 31, 2008, Chiyoda entered acapital and business alliance with Mitsubishi Corporation. By pursuing synergy with Mitsubishi Corporation,
Chiyoda aims to broaden the scope of operations in the plant lifecycle engineering services field todiversify and expand its operations regionally.
Continuous growth and expansion of this scale requires considerable funds, which Chiyoda procured on
April 30, 2008 through a third-party stock allocation to Mitsubishi Corporation.
Based upon the above, Chiyoda will formulate its medium-term management plan for the period
commencing April 1, 2009 during the fiscal year ending March 31, 2009. The plan will outline new
management indicators along with concrete initiatives to be implemented, which Chiyoda will achievethrough the united efforts of management and employees.

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

3. Medium-to-Long-Term Management Strategies
There are two fundamental approaches in the DSP2008 medium-term management plan. The first is toresolutely retain the innovative thinking needed to “capitalize on change, and take on challenges posed bychange” with the aim of becoming “the Reliability No. 1 Project Company.” The second is to aim tobecome “an excellent company that can increase earnings” through cumulative internal efforts, including
continuously strengthening competitiveness and improving business processes.
Chiyoda has established medium-to-long-term strategies based on these two fundamental approaches.
All Chiyoda employees from senior management down are working as one to achieve management goals.
Under the capital and business alliance with Mitsubishi Corporation, Chiyoda aims to achieve the vision of
the new medium-term management plan, outlined below.
・Respond to customer needs by becoming a world-class comprehensive engineering company
providing an end-to-end range of upstream and downstream facilities in the fields of energy,
resources and the environment.
・Strengthen the Chiyoda Group’s brand image as the “Reliability No.1” Comprehensive
Engineering Company that delivers outstanding technical capability with an established cultureof safety.
Having procured 60.5 billion yen through a stock allocation to Mitsubishi Corporation to establish a capitaland business alliance, Chiyoda will expedite investments to prepare the basic framework of the mediumterm management plan for the next term, and implement the following measures.
(1) Expand and strengthen the engineering work force16(2) Expand into business areas related to Plant Lifecycle Engineering (PLE)(3) Expand the scope of business into upstream resource development, including capital participation(4) Technology and R&D(5) Expand the geographic scope of business through capital reinforcement of local companies inSoutheast Asia and other regions.

4. Issues to be Dealt WithDue to the tight supply of construction workers at LNG projects currently underway in Qatar, labor costs
have risen above initial expectations, resulting in a significant reduction in earnings.
To counter this, Chiyoda will put an even stricter focus on cost management and safety and steadily
execute large-scale projects in Japan and overseas, including LNG contracts already received. In addition,
Chiyoda will endeavor to increase the amount received from customers under contracts in order toimprove profitability.

17

Financial Statements
1. Consolidated Balance Sheets
As of Mar. 31, 2008%
AssetsCurrent Assets
Cash and cash equivalents and time deposits ....
Notes and accounts receivable-trade...............
Marketable securities ....................................
Costs of construction contracts in process........
Deferred tax assets.......................................
Jointly controlled asset of joint venture ...........
Other ..........................................................
Allowance for doubtful accounts .....................
Total Current Assets .................................

60,48436,36810,50016,801
5,336
192,683
16,037(5)338,207

Fixed Assets
Property, plant and equipment
Buildings and structures .........................
Accumulated depreciation.......................
Book value of buildings andstructures
Machinery and equipment ......................
Accumulated depreciation...................... .
Book value of machinery andequipment
Tools, furniture and fixtures....................
Accumulated depreciation.......................
Book value of tools, furniture andfixtures
Land ....................................................
Construction in progress ........................
Total property, plant and equipment ........
Intangible fixed assets .............................

4,714

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

89.3

Millions of Yen
As of Mar. 31, 2007%

77,17738,659―27,656
5,884
256,060
12,640(40)
418,037

94.4

Difference(16,692)(2,290)10,500(10,854)(547)(63,377)
3,397
35(79,829)

14,893
6,538

6,615
3,614

8,354

3,001

1,261
330

1,162
271

930

891

5,467
3,615

5,543
3,806

1,852

1,737

114

11,935
0
23,072

6.1

1,835
―
7,464

1.7

10,100015,608

1.2

3,352

0.7

1,361

9,302
1,649
2,362
(490)
12,824

3.4

8,740
2,056
3,841
(539)
14,097

3.2

562
(407)
(1,478)49(1,273)

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

40,612

10.7

24,915

5.6

15,697

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

378,819100.0

442,952

100.0(64,132)

5,352

39

18

As of Mar. 31, 2008%
Liabilities and Shareholders’ Equity
Current Liabilities
Notes and accounts payable-trade ........................
Short-term loans ...............................................
Income taxes payable..........................................
Advance receipts on construction contracts ............
Allowance for warranty costs for completed works ..
Allowance for losses on construction contracts........
Accrued bonuses.................................................
Other ...............................................................
Total Current Liabilities....................................

74,037
10,0391,408
185,022
2,098
4,044
4,196
13,137
293,986

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

Millions of Yen
As of Mar. 31, 2007%

77.6

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

22
1,690
536
947
3,196

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

Difference

79.3(12,775)
9,942(11,662)(46,795)
517
4,034
(900)
180
(57,458)

0.8

10,067
1,789
486
1,748
14,0933.2(10,045)
(99)
49
(801)
(10,897)

297,18278.4

365,537

82.5(68,355)

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

12,934
6,718
65,155(1,059)83,748

3.4
1.8
17.2
(0.3)
22.1

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

2.9
1.5
13.2
(0.2)
17.4

6
6
6,756
(154)
6,615

Valuation and Exchange Rate Adjustments
Unrealized gain (loss) on available-for-salesecurities ........................................................
Deferred loss on hedge transactions ......................
Foreign currency translation adjustments...............
Total valuation and exchange rate adjustments ......

(847)(1,667)(6)(2,521)

(0.2)
(0.4)
(0.0)
(0.6)

247
(408)
49
(110)

0.1
(0.1)
0.0
(0.0)

(1,094)(1,259)(56)(2,411)

Minority interests ................................................
Total Net Assets ...............................................
Total Liabilities and Net Assets ........................

410
81,637
378,819

0.1
21.6
100.0

392
77,414442,952

0.1
17.5
100.0

18
4,222
(64,132)

19

2. Consolidated Statements of Income

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

Apr. 1, 2007 –Mar. 31, 2008%
603,559100.0
583,035
96.6
20,524
3.4
11,684
8,839

1.9
1.5

Millions of Yen
Apr. 1, 2006 –March 31, 2007%
484,895
100.0
445,158
91.8
39,736
8.2
11,03628,700Difference
118,664
137,876(19,211)

2.3
5.9

648
(19,860)

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

10,373
526

8,442
68

435
242
451
12,030

2.0

375
259
226
9,373

1.9

2,657

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

404
978
176
189
1,748

0.3

310
628
138
197
1,275

0.2

473

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

19,121

3.2

36,797

7.6(17,675)

0.2

(119)

Extraordinary Gain
Gain on sales of investment securities ........
Gain on reversal of impairment loss ...........
Reversal of allowance for doubtful
accounts ..............................................
Reversal of allowance for investment loss ...
Other .....................................................
Total Extraordinary Gain .............................
Extraordinary Loss
Loss on valuation of investment
securities ............................................
Loss on termination of retirement benefit
plan ...................................................
Other ....................................................
Total Extraordinary Loss ............................

644
267

―
―

71
―
68
1,051

742
263
166
1,171

0.1

616

14

485
79
1,181

0.2

―
18
33

0.0

1,148

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

18,991

3.1

37,935

7.8(18,943)

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

7,355
1,967
9,323
27
9,640

1.5
0.0
1.6

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

2.9
0.0
4.9

(5,019)(32)(13,890)20

3. Consolidated Statements of Cash Flow

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

Apr. 1, 2007 –Mar. 31, 2008

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

18,991
1,593
(267)
(77)
(10,900)
404
80
(435)
(644)
616
485

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

(18,943)
86
(267)
979
(2,389)
94
154
(59)
(644)
616
485

2,215

8,484

(6,269)10,854(12,740)(46,788)
(901)
(473)

(9,728)947
129,741
1,240(6,172)

20,583(13,687)(176,529)(2,141)
5,698

522
4,034
627

(305)
(136)
1,503

827
4,170
(875)

63,377351
183(124,724)(1,707)
3,918

188,101
2,058(3,735)

(832)
4,195
34,473
1,026
(312)
―
(20,912)

2,444
7,232
42,475
335
(317)
(469)
(6,492)(3,277)(3,037)(8,002)690
5469(14,420)

14,27435,531(21,257)

Difference21

3. Consolidated Statements of Cash Flow (Continued)
Apr. 1, 2007 –Mar. 31, 2008

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

(826)
68
(360)
5
(1,256)(2,305)
839
―
35
(115)
(3,917)

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

(826)
36
99
(37)
62
113
807
15
(574)
(156)
(459)

Cash Flow from Financing Activities
Repayments of long-term debt .........................................
Proceeds from issuance of new stock .................................
Payment of cash dividends ...............................................
Cash dividents paid to minority shareholders ......................
Other - net ....................................................................

(14,186)
13(2,879)
(12)

(46)
54
(1,915)(54)(14,139)
(40)
(964)
42

(154)

(229)

75

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

(17,219)(2,191)(15,028)

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

(99)

357

(457)

(6,962)
77,051

30,23946,878(37,202)30,173―70,089(66)
77,051

66(6,962)

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

Net Increase (Decrease) in Cash and Cash Equivalents .....
Cash and Cash Equivalents, Beginning of Period ...............
Cash and Cash Equivalents of Exclusion of Consolidation
Subsidiaries ...................................................................
Cash and Cash Equivalents at End of Period ......................

Difference22

Production, Orders and Sales
1. OrdersMillions of Yen
Apr. 1, 2007 –Apr. 1, 2006 –Mar. 31, 2008
Mar. 31, 2007
New contracts
Backlog
New contracts
Backlog
Amt
%
Amt
%
Amt
%
Amt
%
Business Segment
Engineering
LNG plants...........................
Gas and power utilities ..........
Gas chemicals ......................
Petroleum andpetrochemicals ..................
General chemicals ................
Industrial machinery .............
Environment and other..........
Total Engineering ...............
Other ..................................
Total ..................................

54,522-55.3
41,009
-86.3
306
-41.3
107,188
+25.7

21.1

22,157+14.3
10,380-25.2
17,577+58.5
253,143-54.1%

8.6

5,611
-17.3
258,754
-53.6

15.8
0.1
41.4

4.0
6.8
97.8%

2.2
100.0

290,599[-20,915]
226,651[-12,869]
1,072[−]
108,333[32]

43.4

122,045

21.9

33.8

298,751

53.5

0.1

521

0.1

16.2

85,251

15.3

17,227
[-2]
7,212
[−]
18,866[-68]
669,964[-33,823]

2.6

19,377

3.5

1.1

13,881

2.5

2.8

11,0912.0

100.0

550,922

98.8

0.0

6,785

1.2

100.0

557,707

100.0

86
[−]
670,050[-33,823]

646,332[15,291]
297,016[-159]
1,714[6]
73,104[438]

61.6

17,769[-166]
5,413
[-34]
7,327
[-47]
1,048,679[15,328]

1.7

−
[−]
1,048,679[15,328]

28.3
0.2
7.0

0.5
0.7
100.0

−
100.0

Breakdown of Domestic and Overseas Orders
Millions of Yen
Apr. 1, 2007 –Apr. 1, 2006 –Mar. 31, 2008
Mar. 31, 2007
New contracts
Backlog
New contracts
Backlog
Amt
%
Amt
%
Amt
%
Amt
%
158,187
1.9
Overseas.............................. 100,567-75.0
Total................................... 258,754-53.6

Domestic..............................

61.1

190,50828.4

155,297

27.8

71.6

402,409

72.2

100.0

557,707100.0[-3,147]38.9

479,541[-30,676]

100.0

670,050[-33,823]

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

13.9
86.1
100.0

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

23

2. Sales
Millions of Yen
Apr. 1, 2007 –Apr. 1, 2006 –Mar. 31, 2008
Mar. 31, 2007
Amt
%
Amt
%

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

389,340+15.2%
98,505+192.8%948-33.2%
71,991+5.5%
22,696+8.5%
8,581-15.6%
5,970+2.7%
598,034+25.1%
5,525-18.6%
603,559+24.5%

64.5

337,927

69.7

16.3

33,646

6.9

0.2

1,419

0.3

11.9

68,21014.1

3.8

20,9184.3

1.4

10,172

2.1

1.0

5,815

1.2

99.1

478,110

98.6

0.9

6,785

1.4

100.0

484,895

100.0

Breakdown of Domestic and Overseas Sales
Millions of Yen
Apr. 1, 2007 –Apr. 1, 2006 –Mar. 31, 2008
Mar. 31, 2007
Amt
%
Amt
%
110,073
22.0
18.2
106,550+3.3%
493,48678.0
81.8
378,345+30.4%
603,559100.0
484,895
100.0+24.5%

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

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

Millions of Yen
Apr. 1, 2007 –Mar. 31, 2008
CustomerRas Laffan Liquefied Natural Gas Co.,
Ltd. (3)
Qatar Liquefied Gas Company Limited(3)
Qatar Liquefied Gas Company Limited
(2)
(3)

Amt
118,044
114,225
90,029Apr. 1, 2006 –Mar. 31, 2007%
Customer
19.6 Qatar Liquefied Gas Company Limited (2)Amt
127,896%26.4

18.9 Ras Laffan Liquefied Natural Gas Co.,
Ltd. (3)14.9 Qatar Liquefied Gas Company Limited (3)72,28314.9

65,534

13.5

Sakhalin Energy Investment Co., Ltd.

48,624

10.0

Amounts contained in these tables do not include consumption tax.

24