ANNUALREPORT
FY2014
For the year ended March 31, 2015

Courtesy of Mizushima LNG Co., Ltd.

Financial Highlights
Years Ended March 31, 2015, 2014, 2013, 2012, and 2011

2015

2014

2013

2012

2011

Revenues¥480,979¥446,147¥398,918¥254,675¥247,082

Cost of revenue

435,327404,685

356,402

215,783

215,563

Operating income

21,466

21,07925,11324,197

17,544

Income before income taxes
and minority interests

22,012

22,53826,74723,543

11,476

Net income

11,02913,447

16,077

14,364

7,979

Total assets¥515,839¥475,288¥435,379¥365,795¥353,392

Total equity

208,405

198,031

189,356

168,737

155,758

151.0

156.3

166.3

165.5

173.8

Earnings per share (EPS)¥42.58¥51.91¥62.06¥55.44¥30.79Book value per share (BPS)

796.89758.31727.24648.95599.15

13.0

16.0

19.0

17.0

11.0

For the Year (Millions of Yen)At Year-End (Millions of Yen)

Pro fi l e

Current ratio (%)

Founded in 1948 in the post war period to reconstruct Japan, Chiyoda started its engineering business for domestic projects mainly in petroleum refining, gas processing andpetrochemical fields, and expanded into overseas projects in the 1960s. Since then, Chiyoda
has been and is growing steadily under the corporate philosophy of enhancing its businessby aiming for harmony between energy and the environment and contributing to thesustainable development of society.

Per Common Share (Yen)Dividend per share

Ratios (%)

Aiming to raise corporate value, the Group announced in 2013 a four-year business

Return on assets (ROA)

4.5

5.0

6.4

6.6

4.6

plan, “Seize the moment, Open up new frontiers”. The Medium-Term Management Plan

Return on equity (ROE)

5.5

7.0

9.0

8.9

5.3

includes a growth strategy and an operating foundation strategy. The Group aims toNote: Yen amounts are rounded down to the nearest million and percentages are rounded to the nearest unit.

maintain growth as a constant provider of the value and service required by society andcustomers, by identifying the current trend. The operating foundation strategy provides thebase for achieving the sustainable growth of the Group.
The management team and employees of the Group will adhere to Compliance, Health,
Safety and Environment (HSE) and risk management to fulfil Corporate Social Responsibility(CSR) when implementing each action plan.

Revenues(Billions of yen)

Operating Income

Billions
ofofofyen
Billionsyen
Billionsyen

Billions
Billions
ofofofyen
yenBillions
yen

800
800
800

3030
30

700
700
700

Co ntent s

398.9
398.9
398.9

400
400
400

446.1
446.1
446.1

481.0
481.0
481.0

300
300
300 247.1
254.7
254.7
247.1
247.1 254.7

01
02
03
04
06

Financial Highlights
At a Glance
To Our Shareholders
Management’s Discussion and Analysis
Topics

08
12
14
16
17

Commitment to CSR
Corporate GovernanceCorporate Information
Directors and Officers
Stock Information

25.1
25.1
25.1
21.5
21.5
21.1
21.1
21.1 21.5

17.5
17.5
17.5

2020
20

14.4
14.4
14.4

1515
15

16.1
16.1
16.1
13.4
13.4
13.4
11.0
11.0
11.0

1010
10

1010
10

200
200
200

8.0
8.0
8.0

5 55

100
100
100
0 00

(Billions of yen)

Billions
Billions
ofofofyen
yenBillions
yen

24.2
24.2
24.2

600
600
600
500
500
500

Net Income

3030
30

2525
25
2020
20

(Billions of yen)

2011
2015
2011
2012
2013
2014
2015
2011 20122012 20132013 20142014 2015

0 00

2011
2011
2012
2013
2014
2015
2015
2011 20122012 20132013 20142014 2015

0 00

2011
2011
2012
2013
2014
2015
2011 20122012 20132013 20142014 20152015

Forward-Looking Statements: This annual report contains forward-looking statements about Chiyoda Corporation’s outlooks, plans, forecasts, results and other items that may take placein the future. Such statements are based on data available as of July 1, 2015. Unknown risks and other uncertainties that happen in the future may cause our actual results to be different
from the forward-looking statements contained in this report. The risks and uncertainties include business and economic conditions, competitive pressure, changes in laws and regulations, addition or elimination of products, and exchange rate fluctuation, among others.

CHIYODA CORPORATION ANNUAL REPORT FY2014

1

At a Glance

To Our Shareholders

Revenues

New Orders

7

*3

2

7

54

22

2 5
12

5 8

8

9

Backlog of Contracts

78

74

8

481.0

746.8

Billion yen

Billion yen

LNG

257.9 (54%)

1,416.9
Billion yen*4

President & CEO
Chiyoda Corporation

550.8 (74%) 1,103.0 (78%)

Gas Processing*1

38.0 (8%)

Petroleum and Petrochemicals

106.7 (22%)

Fine Industries* 241.9 (9%)

Others36.5 (8%)

49.6 (7%)

33.3 (2%)

49.1 (7%)

170.0 (12%)

39.6 (5%)

33.1 (2%)

57.7 (8%)

77.6 (5%)*5*6Major Projects in Progress(As of June 2015)

Yamal LNG

Yamal
LNG
Russia/LNG
Russia/LNG
New Ulaanbaatar International Airport
Mongolia/InfrastructureNew
Ulaanbaatar International Airport
Titanium Sponge Plant
Saudi Arabia/Metal

Long Term Service Agreement
Laffan Refinery
Phase 2 Project(RasGas/Qatargas/Shell)

Mozambique/LNG
Mozambique
LNG Area 1
Mozambique/LNG

Long Term
Service Agreement
Shell Asia/DownstreamLong Term Jangkrik FPU
Service Agreement
Indonesia/Offshore
Shell Asia/Downstream

Mozambique LNG Area 4
Mozambique/LNG

Canada/LNG

Refinery
NewNghi
BoholSon
AirportPhilippines/Infrastructure
RAPID
New Bohol Airport
Malaysia/Refinery & Petrochemical

Laffan Refinery Phase 2 ProjectLong Term
ServiceLNG
Agreement
Mozambique
Area 1
Mozambique/LNG(RasGas/Qatargas/Shell)
Qatar/LNG,
GTL LNG Area 4
Mozambique

USA/LNGLNG Canada

Nghi Son Refinery

Titanium Sponge Plant
Saudi Arabia/Metal

Qatar/LNG, GTL

Alaska LNG
USA/LNG
Alaska LNG

Mongolia/Infrastructure

Jangkrik FPU
Indonesia/Offshore

Shogo Shibuya

LNG Canada
Golden Pass LNG
Canada/LNG
USA/LNG
Pass LNG
CameronGolden
LNG
USA/LNGUSA/LNG
Cameron LNG
Freeport LNG
USA/LNG
USA/LNG
Freeport LNG

Philippines/Infrastructure
Puerto La Cruz
Tangguh Tr. 3
USA/LNG
RAPID
Indonesia/LNG
Malaysia/Refinery&
Petrochemical
Abadi LNG
Puerto La Cruz
Indonesia/FLNG
Tangguh Tr. 3
Ichthys
LNG
Indonesia/LNG
Australia/LNG
Abadi LNG
Indonesia/FLNG
Ichthys LNG
Australia/LNG

EPC*/EPCm**/EPsCm***/EPCI****FEED*****/Feasibility Study*
EPC:
Engineering, Procurement and Construction** EPCm: Engineering, Procurement and Construction management*** EPsCm: Engineering, Procurement support and Construction management**** EPCI: Engineering, Procurement, Construction and Installation
EPC*/EPCm**/EPsCm***/EPCI********* FEED: Front-end Engineering and Design

Thank you for your continued support over the past 12 months.
We present Chiyoda Group΄s corporate overview for the fiscal year ended March 31, 2015, thehalfway our Medium-Term management Plan entitled “Seize the moment, Open up New Frontiers”.
As a result of implementing various measures in accordance with the growth strategies andoperation foundation strategies defined in the Plan, we have achieved impressive results, especiallyin the LNG and gas related field, or our core business. An LNG plant in Papua New Guinea, and LNG
receiving terminal projects in Japan were successfully completed. Now we are moving forwardwith the EPC works in Australia, the USA, Russia and Japan. All of them are progressing steadily.
As the global market environment in this field is becoming more uncertain in the short-term, we
have to carefully explore the possible market opportunities while continuing to build our technicalexpertise to strengthen and maintain our competitiveness.
In the Petroleum, Petrochemicals and Gas chemical field, which is also our core business, wehave maintained stable operations. Several projects in Japan and a large scale complex in Saudi
Arabia have also been completed successfully. In this field, the Group will aim to earn handsome
profits by implementing measures to select and concentrate on business opportunities in Asia andthe Middle East and by seeking projects which inevitably require our own technologies.
In the new business field in which we have been taking several measures, we have achieved
good results including two EPC contracts for an airport as social infrastructure and an Engineering,
Procurement, Construction and Installation (EPCI) contract in the offshore/upstream field. The Groupwill continue and accelerate the business development to produce more profits early.
In the pharmaceutical industry, the Group was newly awarded EPC works for manufacturing
facilities of active pharmaceutical ingredients and vaccines. The Group aims to advance into the life
science field by enhancing our function to provide advanced solutions.
In these two years, the business environment surrounding the Group has changed drastically,such as a plunge in oil prices. Now is the time for the Group to “seize the moment”, create new
added value and “open up new frontiers.”
We have decided to pay a dividend of ¥13 per share, in line with our earnings for the fiscal
year 2014.
We ask all of our shareholders for your continued support in our ongoing efforts.
June 2015

FEED*****/Feasibility Study*1: Classified as “Other Gas Related Works” in “Consolidated Financial Results” *2: Classified as “General Chemicals/Industrial Facilities” in “Consolidated Financial Results”*3: Courtesy of ExxonMobil PNG Limited *4: Courtesy of Shell *5: Courtesy of Solar Frontier K.K. *6: Courtesy of Kashima Aromatics Co., Ltd.

2CHIYODA CORPORATION ANNUAL REPORT FY2014

CHIYODA CORPORATION ANNUAL REPORT FY2014

3

Management’s Discussion and Analysis
Results of Operations
Analysis of Results
The global economic environment surrounding the Chiyoda Group has become more increasingly uncertain during
this fiscal year, mainly due to economic slowdowns in several regions, geopolitical fears and a plunge in crude oil prices
in the latter half of this fiscal year, while the US economy has continuously been relatively stable. Notwithstanding thepositive outlook for long-term future global energy demand, near-term investment decision making in numerous oil andgas-related facilities is becoming unpredictable. The recovery of the Japanese economy is only moderate as demand has
not fully recovered following the increase of consumption tax, despite government fiscal and monetary policies easing
and the depreciation of the Yen in global financial markets.
Under such circumstances, the Group has continued to strengthen its core business in the conventional fields of oil
and gas, according to strategies defined in its Medium-Term Management Plan. In parallel, the Group has accelerated
expansion in new business spheres including offshore and upstream business, new and renewable energy, such as theHydrogen Supply Chain, utilizing Chiyoda΄s own technologies, and solar power generation utilizing photovoltaic andconcentrating solar power technology.
Ongoing projects including LNG plants in Australia, the USA and Russia, refinery projects in Vietnam, Qatar and
Venezuela, the Mongolian international airport project and LNG receiving terminals and photovoltaic power generation
systems in Japan have all progressed properly.
Consequently, consolidated new orders for the fiscal year amounted to 746,791 million yen (26.6% increase
year on year). The backlog and revenues were 1,416,901 million yen (32.1% increase) and 480,979 million yen (7.8%
increase) respectively.
The operating income amounted to 21,466 million yen (1.8% increase), ordinary income to 22,271 million yen (2.5%
decrease year on year), and net income resulted in 11,029 million yen (18.0% decrease).
The decrease in incomes resulted from the increase in selling, general and administrative expenses, equity inlosses of associated companies, delays in recovery of overseas subsidiaries and reversal of deferred tax assets due totax rate reduction.

Results by Business Segment

LNG Plants/Other Gas Related Works
The Group has been moving forward with the EPC works for LNG plants in Australia, the USA and Russia, and Front End
Engineering Design (FEED) works in Indonesia, Mozambique, Canada and the USA, all of which have progressed properly.
Our Qatari subsidiary has been executing Engineering, Procurement and Construction management (EPCm) works forthe maintenance and modification of existing LNG and gas processing plants, most of which were originally built by theGroup. In Japan, two LNG receiving terminal projects have been completed and a further one is in the execution phase.
Modification studies and construction works for existing plants have been awarded and under execution. The Group willcontinue to pursue opportunities within LNG plants and other gas-related fields as the Group΄s core business, whether
onshore or offshore, overseas or domestic, and conventional or unconventional.

Petroleum/Petrochemicals/Gas Chemicals
The Group was awarded an Engineering, Procurement, Construction and Commissioning (EPCC) contract for a Residue
Fluid Catalytic Cracking (RFCC) plant in Malaysia. EPC works have been ongoing for a refinery and petrochemical complex
in Vietnam, a refinery project in Qatar and the Engineering, Procurement support and Construction management (EPsCm)
work for heavy crude oil upgrading facilities in Venezuela. Additionally, our subsidiary in Singapore has been performing

4

CHIYODA CORPORATION ANNUAL REPORT FY2014

project management services under an Enterprise Framework Agreement for downstream projects within Asia. In Japan,
we have completed an EPC work for a Trans-Alkylation Unit and continued to perform diagnosis of existing facilities,
maintenance and upgrading works, studies and construction works aimed at energy saving in the facilities, and studies
to strengthen the infrastructure of a refinery against possible catastrophe damage.

Mining/Mineral Refining/General Chemicals/Industries/Environment
The Group has been moving forward with an EPC execution of the international airport in Mongolia and newly
awarded one in the Philippines, and the preparation of tenders for future transport infrastructure projects. Inan effort to expand its business into medium-small sized water treatment systems, the Group is operating ademonstration plant for an industrial wastewater treatment/water recycling system in Saudi Arabia and is establishing a framework within the Group to execute these works in the Middle East and Asia. Meanwhile, we arealso responding to the expansion in demand of overseas Japanese clients΄ businesses in non-hydrocarbon fields.
In Japan, the Group has been awarded a number of EPC works for large-scale photovoltaic power generation
systems and further business opportunities are expected in this field. In pharmaceutical industry, the Groupwas newly awarded EPC works for manufacturing facilities of active pharmaceutical ingredient and vaccine. The
Group also executed several EPC works for manufacturing facilities of active pharmaceutical ingredients andnanotechnology research development facilities in cooperation with industry, government and academia.

New Business Fields
The Group, in cooperation with our strategic alliance partner Xodus Group, has started providing integrated services in theoffshore/upstream field especially for Japanese customers. The EPCI execution of a floating production unit in Indonesia isin progress. The Group is actively proceeding with business activities in the Subsea/Subsurface Engineering field. As part ofthis strategy, the Group has formed a new joint venture company with Xodus Group and Saipem International BV in order toenter into the subsea engineering business, while the Group also invested in a company established to develop commercially
viable technology for exploiting seabed methane hydrate. As for the concentrating solar power system, the Group continues
to operate a demonstration plant in Italy with the aim of developing business opportunities in this field. Furthermore, wehave developed our own technology to transport and deliver large volumes of hydrogen and are actively collaborating withvarious parties in order to establish a hydrogen supply chain to achieve a hydrogen-based society.
Moreover, the Group is considering to focus newly on the growing market for life science field symbolized by iPS cells,
applying our pharmaceutical and medical technologies.

Outlook for the Next Fiscal Year
With its highest backlog of contracts, the Group will continue to work diligently on the execution of existinglarge projects in Australia, Russia and U.S. which enhance its core business. To materialize The Medium-Term
Management Plan, the Group will also continue to accelerate our growth strategy to diversify the business portfolio by expanding new business fields.
In consideration of these circumstances, and assuming an exchange rate of ¥120/dollar, our forecasts for the
fiscal year ending March 31, 2016 include 350.0 billion yen in consolidated new contracts and 600.0 billion yen
in revenues. Our forecast for the consolidated operating profit is 20.0 billion yen, consolidated ordinary income is22.0 billion yen, and the consolidated net income is 12.0 billion yen.

CHIYODA CORPORATION ANNUAL REPORT FY2014

5

Topics
North America/Challenges in LNG Business
EPC projects in the USA, which were awarded lastyear, started smoothly and ground breaking ceremonies were held for Cameron LNG and Freeport
LNG respectively. The Group is performing at theforefront FEED works for Golden Pass LNG andLNG Canada, and a feasibility study for Alaska
LNG, all of which are expected to be potential
EPC targets.
Aiming to carry out each project properly, we
have established a scheme including the alliancewith local partners and carefully worked out eachindividual construction plan. As we are entering the field construction stage, we will reinforce our execution scheme andplan to improve efficiency through measures such as positive adoption of a modular construction method to achieve
successful completion.
Having anticipated the complicated situations because of the simultaneous execution of several mega projects
in North America, we are enhancing our scheme of the Group as a whole for North America. The scheme is intended
to carry out those projects efficiently while preparing the environment for producing a synergy effect with operation
foundation strategies implemented according to our Medium-Term Management Plan.

Philippines/Awarded the New Bohol Airport
In March, the Group and joint venture partner, Mitsubishi Corporation (MC) had reached an agreement with the
Department of Transportation and Communications of the Government of the Republic of the Philippines to construct
the New Bohol Airport in the Philippines.
The New Bohol Airport will have facilities such as a 2000-meter runway, a passenger terminal building which canaccommodate 1 million passengers annually, and airport special equipment. Built under the “Eco Airport” concept
and employing advanced Japanese technology, the airport will be furnished with a photovoltaic power generation
system and a filtering system to avoid polluting the surrounding environment by drainage during the construction.
It is the second airport construction project jointly executed by “Chiyoda
and MC,” the first being the new Ulaanbaatar International Airport project inMongolia, now under construction. As an integrated engineering company,
the Group will continue to explore its business opportunities in the transportation infrastructure industry, including the airport sector.

6

CHIYODA CORPORATION ANNUAL REPORT FY2014

Mozambique/Qatar/Saudi Arabia/UAE/
Engineering Training for Young Engineers from Overseas
Since 1970s, the Group has been accommodating over 4,100 engineers as trainees from overseas for engineering training, and in 2014, 34 engineers were trained from countries such as Mozambique, Qatar, Saudi Arabia and UAE.
Nowadays, the demand for such humanresources development is even more increasing,
especially in the oil and gas producing countries.
The training provided by the Group is intended tomeet such demand, and the trainees were givena chance to understand the Japanese people andculture as well, which we believe is meaningful.
The Group will work constantly onhuman resources development, expecting
to strengthen the relationship with countries
worldwide.

Japan/Commitment to CSR
As an integrated engineering company, the Group pledges to contribute to the sustainable development of society
through its business activity including the construction of energy plant and social infrastructure, and to take a variety
of social contribution activities such as supporting human resources development. In addition to our contribution fromour business activity, the Group constantly conducts CSR activities, for example, dispatching volunteers to the disaster
affected areas by the Great East Japan Earthquake, inviting vision-impaired people
to a Japan Philharmonic Orchestra Concert and sale of goods made by challenged
people (Heart-made Sale), both in collaboration with the Yokohama City Councilof Social Welfare, and supporting educational programs for elementary school andjunior high school.
Moreover, the Group has continuously supported and will continue to support
the spirit of the United Nations Global Compact (UNGC) which is a voluntary global
initiative that encourages businesses to act as good corporate citizens and achieve
Scene from the Heart-made Salesustainable growth.

CHIYODA CORPORATION ANNUAL REPORT FY2014

7

Commitment to CSR
The Chiyoda Group’s CSR

Environmental Initiatives

As an integrated engineering company, the Chiyoda Group pledges to contribute to the sustainable developmentof society through its business activities, and to constantly strive to increase corporate value and earn the trust andunderstanding of all stakeholders by adhering to the following principles.

Chiyoda Group CSR Visions
UN Global Compact

CSR Visions 1

A Reliable Company

We strive to be a reliable company to our customers
and other business partners by providing world-classtechnologies and knowledge.

CSR Visions 2

Environment

Contribution to local economic development and humanresource development● Tie-ups and cooperation with educational institutions to
educate the next generation● Continuous response to the Great East Japan Earthquake● Cooperation with the community and NPO● Support to challenged people●-

Creation of a pleasant work environment
Enhancement of the human resource development system● Enhancement of the safety culture● Enhancement of the crisis management system

CHIYODA CORPORATION ANNUAL REPORT FY2014◆ Commercialization of Hybrid Titania Catalysts for the Hydrodesulfurization (HDS) of Diesel Oil
The Group has successfully developed and commercialized the Hybrid Titania catalysts
by combining the advantages of titania, which has significantly high activity, and alumina carriers, which have superiority in material.
We have already established both a production method for Hybrid Titania catalysts
and a supply system.
The Hybrid Titania catalysts, with high HDS activity and high hydrodenitrogenation
selectivity, are highly promising in hydrotreating difficult desulfurization oils such as
Light Cycle Oil (LCO) from Fluid Catalytic Cracking (FCC), thermal cracked oil and vacuum gas oil.
The Hybrid Titania catalyst was adopted for use in the HDS unit of the Yamaguchi
Oil Refinery of Seibu Oil Company, Limited in Japan. This refinery started to produce sulfur-free kerosene and diesel oil at the beginning of 2014.

●●

Human Rights/ LaborCommitment to Fairness

We are dedicated to achieving even greater transparency and stability by conducting our operations fairlyin accordance with the highest ethical standards.

8

Continuous research and development for a low carbon
economy (energy conservation/effective utilization of CO2)
● Promotion of business development towards a hydrogen-based society● Expansion and promotion of renewable energy● Execution of environmentally friendly projects● Implementation of biodiversity preservation activities●

Respect for Human Rights

We are dedicated to respecting the human rights ofall people. We will create a corporate culture where
the diversity, individuality and character of employees are respected, where people are motivated to dotheir best, and of which employees and their families
are proud.

CSR Visions 5-

Social Contributions through Business Activities

Through our engineering business in Japan andoverseas, we contribute to local communities in ways
including human resources development, technology transfer and environmental protection.

CSR Visions 4

Initiatives for a stable supply of energy and reduction ofgreenhouse gas● Plant construction that lives up to customer trust● Enhancement of information security awareness●Chiyoda Group has accomplished effective utilization of CO2 by developing a high-efficiency reforming process—CT-CO2
AR®—employing a novel catalyst. This catalyst was already commercialized in an existing synthetic gas plant last year,
exhibiting smooth and safe operation.
The technology, comprising a catalyst with high resistance to carbon formation, produces synthetic gas from natural
gas with higher efficiency than conventional reforming technology. It reduces energy consumption by around 10% andreduces carbon dioxide emission drastically.
CT-CO2 AR® can not only reduce energy consumption by replacing the existing catalyst with a superior one, but canalso achieve remarkable environmental benefits when applied to grass-root plants. Furthermore, it leads to resource minimization by downsizing facilities, and is expected to effectively utilize the CO2 contained in natural gas.
The technology succeeds in greatly reducing the environmental burden from chemical plants, such as oxo-alcohols
and acetic acid.

Environmental Initiatives

We will work to remain an invaluable company tosociety by utilizing refined technologies to promoteharmony between the global environment and economic and social activities.

CSR Visions 3

Activities in FY2014◆ CT-CO2 AR®: High Efficiency Synthetic Gas Production Process Using CO2

Review of the compliance program and execution of its brief
explanation session to employees● Assignment of a compliance manager in each division,group companies and project teams● Continuous compliance training and monitoring● Continuous export control training and auditing● Operation of the consultation and reporting system“Welcome to All about Compliance”●

AntiCorruption◆ The Development of a New Manufacturing Process for
Production of Propylene
Propylene, one of the basic industrial chemicals, is mainly produced by thermal
steam-cracking of hydrocarbon feedstock such as naphtha at present,and alternative methods are desired to improve both high energy consumption and low
propylene selectivity.
The Group has been developing an energy saving propylene manufacturing
process by means of fixed-bed-type catalytic cracking using our own zeolite
catalysts, and we have received high appraisal for the results and won the Best Paper Award in the Fuels & Petrochemical
Division of the American Institute of Chemical Engineers.
The Group will accelerate its research and development to commercialize this technology and contribute to savingenergy and reducing CO2 emissions by applying it to non-conventional fossil resources such as shale gas and oil.

CHIYODA CORPORATION ANNUAL REPORT FY2014

9

Respect for Human Rights

Commitment to Fairness◆ Establishment of a Safety Culture by Sharing On-site Practices◆ Compliance Activities in 2014

In order to share knowledge and expertise from both outside and inside Chiyoda about Safety, Quality and theEnvironment (SQE), the Group has been holding a series of Corporate SQE Conventions.
In November 2014, the 7th Convention titled “Establishment of a Safety Culture by Sharing On-site Practices” wasa great success attended by more than 500 ardent participants including corporate management executives, where
the safety activities of the Papua New Guinea LNG Project (PNG) were introduced. Their methods and practices were
presented, then two-way communication in a pleasant atmosphere was demonstrated in front of the audience so thateveryone there could share one and the same understanding as themembers of the PNG Project, which has achieved the result of “over 65
million man-hours without lost time injury”, the best safety record in
Chiyoda’s history.
In this way, the Group will constantly make efforts to instill the corporate policy “Safety is a core value.”

In recent years broader and stricter requirements for compliance have been sought by the global community including
its clients, business partners. Chiyoda Corporation has reviewed and reinforced its overall compliance program to manage the Group-wide program as follows:◆ Activities on United Nations Global Compact (UNGC)
The Group has been supporting the principles of the UNGC for human rights, labor, environment and anti-corruption
to promote and enhance our CSR activities since November 2012. This year, as a member of the study groups in Global
Compact Network Japan on anti-corruption and supply chain management, the Group has discussed and studied how
to cope with the relevant global issues, and also assisted the Network Japan in the Roundtable conducted among Japan,
China and Korea by assigning language-aid staffers:● Anti-corruption:
Recognizing that corruption is a risk which will severely damage corporate
governance, trust and reputation in civil or administrative disposition andcriminal impeachment, effective measures are studied and discussed.
● Supply Chain Management:
Through the attendance at monthly sessions or seminars by experts, the study
is deepened on how to promote CSR procurement in collaboration between
buyers and suppliers while respecting the environment, the workplace and human rights.

To raise awareness and deepen knowledge of compliance through training courses and manuals among the employees.
To recognize and evaluate compliance risk our Group is faced with.
● To implement preventive measures* for major risks with periodic reporting.
● To review, improve and respond to the results by monitoring.
● Chiyoda has launched its management system of PDCA cycle on a periodical basis to cope with compliance risk.
●●* Chiyoda applies due diligence when deciding on business partners including vendors, subcontractors and consultants in terms of anti-corruption including prevention ofbribery to foreign public servants.

◆ Establishment of Corporate Risk Management Policy
The Chiyoda Group has established its Corporate Risk Management Policy. Under that Policy, the Group aims to promote the risk management activities and planning/implementing its Corporate Strategy, to maintain and enhance its
Corporate Value. The Group ensures that it discloses its business risk information to the stakeholders so as to increasetransparency, to mitigate the risk by taking proactive countermeasures, then to achieve the business target.

◆ Establishment of Business Continuity Plan (BCP)
In 2014, the Group established its BCP, anticipating various risks that would disrupt its business. The BCP provided the
direction and course of action in order to avoid such risks, or recover quickly even if such a disruption may occur, and was
known to all employees. When a disaster including a fire/an earthquake or any epidemic, terrorism/turmoil, occurs, andif the impact on the Group is anticipated to be large enough to disrupt its Group business/operation, the Group immediately declares the imposition of BCP. Then, based on the basic philosophy of “Employees’ safety First”, the Group makes
utmost efforts to continue its minimally required important business and to make a quick return to normal operation as
well as to contribute to the restoration of communities affected by such a disaster.

Continuous Social Contribution
The Group has been supporting its members to promote their social contribution in regional areas under the mottoof “CSR to be promoted by each as a participant”. As part of that, volunteer members of the Group employees havebeen dispatched twice a year to the disaster-affected areas of the Great East Japan Earthquake.
This year, volunteer activities have included the interaction with kindergarten children through environmental
lessons, reforestation activities, supporting the community in developing an energy circulation system, supportingthe construction of a workplace for making regional products. Then, those products have been sold in the Groupin-house sale in Yokohama.
Furthermore, the Group΄s employees visited a junior high school in the area and gave a lecture to the students
on its global activities, and also accepted them on their school trip to Chiyoda Global Headquarters in Yokohama.
The Group constantly continues with its efforts to improve its activities by way of exchanging views with regional
experts or local residents, and through discussion among volunteer members including in-house questionnaires.

10

CHIYODA CORPORATION ANNUAL REPORT FY2014

Main Activities in FY2014 (Including Domestic Group Companies)
Dispatch of lecturers to university

16 people

Training for interns

67 people

Visiting seminars

7 times

Community cleanup campaigns

32 people

Food aid activity TABLE FOR TWO

1,817 meals

ECOCAP program to enable the purchase of vaccines

For 231 people

Dispatch of volunteers to disaster-hit areas

37 people

Collaboration with NPO (Second Harvest Japan, Food Bank Yamanashi)
Support to challenged people• In-house sale events of goods made by challenged people: 7 times• Inviting 50 people from the Yokohama Blind Association to a concert
Soil preparation for afforestation

CHIYODA CORPORATION ANNUAL REPORT FY201411

Corporate Governance
The Chiyoda Group believes that CSR-oriented management that earns the support and trust of all its stakeholders,
including shareholders, customers, and employees, is the basis of its corporate activities. We are therefore working in various ways to enhance corporate governance and actively implement CSR-oriented management, including maintaining
transparency and soundness.

Corporate Governance and Internal Controls
General Shareholders’ Meeting
Election

Submit/ReportElection

Directors

ReportBoard of Directors
Election

Corporate Governance System
Chiyoda has established the Compliance Unit and the Internal Audit Unit to raise the quality and transparency of manage-

Supervision Election

4 Representative Directors

Group
Companies

management supervision, from those of executive officers, who are responsible for the execution of business operations.

Election

Business Execution
Departments(Risk Manager)
Self-Assessment

Audit & Supervisory Board

Accounting
AuditorSurvey, Report Request(advice) Submit/Report
Submit/ReportSubmit/Report

Internal Controls
Management Committee(ICMC)

Compliance
Committee

ReportDepartment Internal Controls

the Safety, Quality and Environmental (SQE) Unit and an internal control system directly linked to management.
To ensure speedy and accurate decision-making to deal with rapidly changing social and economic conditions,Audit Referral

Executive Committee

ment, improve response to stakeholders and reinforce risk management and the compliance system. We also established

Chiyoda has adopted the executive officer system, which separates the functions of directors, who are responsible for

Submit/ReportExecutive Officers

Organization
Staffing

Corporate Auditors

Audit

Executive Officer Meeting
Scheduled Reports(deliverables, etc.)

ReportReportInternal Audit Unit
Risk Management Division

Global Operation Unit

SQE Unit

Corporate Planning Unit
Corporate Services Unit, HRM* Unit
Finance & Accounting Unit
Legal & Project Audit Unit

Compliance Unit

Financial
Audit

Crisis Management Unit
(Crisis Manager)*HRM: Human Resource Management

The Board of Directors and Meetings of the Board of Directors
The Board of Directors is composed of 10 directors as of June 25, 2015. Important matters concerning the Company arereported and resolved at meetings of the Board of Directors. The Executive Committee, made up of the four representative■ : Important organizations and arms of the Company■ : Departments with internal control functions

directors, examines matters before they are submitted for resolution at meetings of the Board of Directors. It makes
decisions about business execution matters by unanimous resolution.

Risk Management

Audit & Supervisory Board

To manage individual project risk and profitability, the Group is increasing management transparency by implementing a

Chiyoda has also adopted the corporate auditor system. The Corporate Auditors Committee is made up of three outside

double-check/internal control function in administration divisions in addition to a self-auditing system in project operation

corporate auditors who closely monitor the execution of duties by directors and executive officers. The corporate auditors

divisions. Professional auditing teams from administration divisions have effectively implemented project audits to verify

attend meetings of the Executive Committee and express their opinion when necessary. In addition, their responsibilities

the validity of the project execution plans formulated by the project operation divisions.

include deciding the content of resolutions submitted to the General Meeting of Shareholders, such as the appointment

In accordance with our Corporate Risk Management Policy, the Group has established risk management and crisis

or dismissal of accounting auditors, auditing consolidated financial documents in close cooperation with the accounting

management systems to deal with significant risks and has appointed risk managers and crisis managers. We constantly

auditors, and preparing audit reports.

work to prevent the occurrence of problems. In the event that a problem occurs, we shall immediately activate a Crisis

Executive Officer System

Control Center that will minimize damage by mobilizing the entire workforce.

Where necessary, executive officers cooperate with outside specialists such as corporate lawyers in carrying out duties
assigned to them at meetings of the Board of Directors and the Executive Committee. Executive officers provide regularprogress reports at executive officer and Executive Committee meetings attended by directors and corporate auditors.

Reinforcing Internal Controls
The Chiyoda Group constantly conducts self-assessments of existing internal control functions and reinforces internal control systems. In addition, the Group has established the Internal Audit Unit as an autonomous unit to perform evaluations.
Chiyoda has a system in place for auditing the development and operation of a suitable overall internal control frameworkand constituent components, and for submitting reports to the Executive Committee.
•	To ensure the transparency of information and raise the effectiveness of audits, Chiyoda aims to establish an integrated
framework of internal controls and a real-time monitoring system for senior management.
•	To prevent insider trading, an information management system is in place that encompasses Group companies. All
important information is appropriately reported to the Board of Directors and the Executive Committee.

Disaster Prevention Measures
The Group has prepared Disaster Response Manual (Japanese and English versions) as part of its BCP. The Manual compiles
the actions to be taken in the event of a disaster by those working in the Group including all the directors, employees,
temporary staff members, customers and partners, and so on. Once a disaster occurs, the Chiyoda Disaster Prevention
Force is to be formed, and an emergency communication route is also to be set up to confirm the safety of all the above
personnel and their family members as a first priority.
Further to be prepared for a disaster, the Group has been taking the following measures:•	Stock of emergency supplies such as PHS, drinking water, foods, blankets•	Provision of helmets and emergency bags to all the personnel•	Formation of self-protective disaster prevention unit•	Participation in an emergency drill to be conducted twice a year both in Chiyoda Global Headquarters and in Koyasu
Office & Research Park•	Safety confirmation drill to be conducted a few times a year

12

CHIYODA CORPORATION ANNUAL REPORT FY2014

CHIYODA CORPORATION ANNUAL REPORT FY201413

Corporate Information (As of March 31, 2015)
Corporate Data

Global Network

Chiyoda Global Headquarters

Number of Employees

Minato Mirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku, Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)

1,573 (Non-Consolidated)
6,097 (Consolidated)

Annual Fiscal Close

EstablishedMarch 31January 20, 1948

Chiyoda’s global network enables Project Lifecycle Engineering to be offered all over the world. Chiyoda has expanded
its network in order to provide prompt support for customers’ business activities on a global scale. Our services cover
the entire life cycles of projects – from planning, engineering, procurement and construction through to operation andmaintenance. With a view to meeting the ever-changing needs of our customers, we offer services by utilizing local
offices and group companies with thorough knowledge of the latest local and global circumstances in countries aroundthe world.

Shareholders’ Meeting

Paid-in Capital

June

Chiyoda’s Global Network¥ 43,396 million

Organization Chart(As of May 1, 2015)

Board of Directors

Sales BaseEngineering Center

Xodus Group (Holdings) Ltd

Procurement Center

Project Execution Base

Xodus Subsea Ltd.

Operation Support

Milan Representative Office

Audit & Supervisory Board

Chiyoda Corporation Netherlands B.V.

Executive Committee

Chiyoda & Public Works Co., Ltd.

PresidentInternal Audit Unit

Chiyoda International Corporation

Beijing Office
Chiyoda Corporation (Shanghai)

Executive Office Unit

Korea Representative Office

Risk Management Division
SQE Unit
Compliance Unit
Crisis Management Unit

Corporate Planning & Management DivisionCorporate Planning Unit
IR, PR & CSR Section
Corporate Services Unit
HRM* Unit
Finance & Accounting Unit
Legal & Project Audit Unit

Business Development Division
Strategic Business Planning &Administration Unit
Corporate Relations Sec.
Business Development Unit 1
Business Development Unit 2
Business Development Unit 3
Energy Infrastructure Planning Unit

Technology & Engineering Division
Engineering Operation Unit
Gas & LNG Process Engineering Unit
Refinery, Petrochemical & New Energy
Process Engineering Unit
Integrity Management Unit
Mechanical Engineering Unit
Control System Engineering Unit
Electrical System & Smart Grid
Engineering Unit
Piping Engineering Unit
Civil Engineering Unit

Project Logistics & Construction Division
PLC* Planning & Administration Unit
Procurement Unit
Construction Unit
Commissioning Unit

HRM: Human Resource Management

14

Offshore & Upstream Project Operations
Offshore & Upstream
Business Planning Unit
Offshore & Upstream
Business Operation Unit

Gas & LNG Project Operations No. 1
Gas & LNG Project Unit No. 1
Strategic Project Development Unit

UK

The Netherlands
Italy

Infrastructure Project Operations
IP* Planning & Administration Unit
Strategic Business & Investment
Management Unit
Hydrogen Supply Chain
Development Unit
Green Infrastructure Project Unit
Environmental Project Unit
Technology Development Unit
Research & Development Center

Korea

Saudi Arabia

Qatar

China
India

UAE

Japan
<Chiyoda Global Headquarters>

MyanmarPhilippines
Thailand
Malaysia
Singapore

USA

Chiyoda Philippines Corporation

Indonesia
BrazilMozambique

Australia

Chiyoda Oceania Pty Limited

ChAS/Life Science Business Planning &Administration Unit
ChAS Marketing Unit
Advanced Process Engineering Unit
Plant Diagnosis Unit
Consulting Unit
Pharmaceutical Industries Project Unit
Space & Bio Engineering Unit

PT. Chiyoda International Indonesia
Chiyoda Human Resources International (Pte) Limited
Chiyoda Singapore (Pte) Limited
Chiyoda Malaysia Sdn. Bhd.
Chiyoda Sarawak Sdn. Bhd.
Chiyoda Mozambique Limitada

Chiyoda (Thailand) Limited

Chiyoda do Brasil Representações Ltda.

L&T-Chiyoda Limited
Bangalore Office
Abu Dhabi OfficeGas & LNG Project Operations No. 2
Gas & LNG Project Unit No. 2

PLC: Project Logistics & Construction

CHIYODA CORPORATION ANNUAL REPORT FY2014

Downstream & Chemical Project Unit
International Downstream Project Unit
Metals & Mining Project Unit
Global Collaboration Unit

ChAS & Life Science Project Operations

Global Project Management Division
Project Administration Unit
Project Management Unit
IT Management Unit
Global Operation Unit
Global Human Resource Planning Unit
Work Process Innovation Task Team
Chiyoda Globalization Task Force Team
Change the Mindset

Downstream & Non Hydrocarbon Project Operations

IP: Infrastructure Project

Chiyoda-CCC Engineering (Pte) Limited
Middle East Headquarters Doha Office
Chiyoda Almana Engineering LLC
Chiyoda Petrostar Ltd.

CHIYODA CORPORATION ANNUAL REPORT FY201415

Directors and Officers (As of June 25, 2015)

Stock Information (As of March 31, 2015)

Board of Directors
Representative Directors

Directors

President & CEO

Shogo Shibuya

Executive Vice President

Katsuo Nagasaka

Senior Executive Vice
President

Keiichi Nakagaki

Executive Vice President

Masahiko Kojima

Senior Executive Vice
President

Hiroshi Ogawa

Senior Vice President

Ryosuke Shimizu

Executive Vice
President & CFO

Masahito Kawashima

Senior Vice President

Arata Sahara

Director

Masaji Santo*1

Director

Munehiko Nakano*

Mikio Kobayashi*

2

Number of Shareholders

Stock Code570,000,000

24,863

Capital Stock Issued

Number of Shares per Unit

ISIN:
SEDOL1:TSE:

260,324,529

1,000

JP3528600004
6191704 JP
6366

Transfer Agent of Common Stock
Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi, Chiyoda-ku, Tokyo

Major Shareholders (As of March 31, 2015)

Nobuo Tanaka*1

Audit & Supervisory Board Members
2

Authorized Shares

Yukihiro Imadegawa*2

Number of
Shares Owned(Thousands of Shares)

Ratio
Shares Owned(%)

Mitsubishi Corporation

86,931

33.39

The Master Trust Bank of Japan, Ltd. (Trust Account)

11,991

4.60

Japan Trustee Services Bank, Ltd. (Trust Account)

10,759

4.13

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

9,033

3.47

The Mitsubishi UFJ Trust and Banking Corporation

5,888

2.26

BNP Paribas Securities (Japan) Limited

3,564

1.36

Meiji Yasuda Life Insurance Company

2,265

0.87

State Street Bank and Trust Company 505041

2,245

0.86

Trust & Custody Services Bank, Ltd.

2,179

0.83

Japan Trustee Services Bank, Ltd. (Trust Account 7)

1,728

0.66

Breakdown by shareholder
Total Number of
Shares Issued:

Executive Officers

260,325

Executive Vice President

Tadashi Izawa

Vice President

Eisuke Oki

Senior Vice President

Masao Ishikawa

Vice President

Masao Fujiwara

Senior Vice President

Mamoru Nakano

Vice President

Yasumitsu Abe

Senior Vice President

Akira Fujisawa

Vice President

Jinei Yamaguchi

Senior Vice President

Nobuyuki Uchida

Vice President

Toshiyuki Kariya

Senior Vice President

Hiromi Koshizuka

Vice President

Seiichiro Ikeda

Vice President

Shuichi Wada

Vice President

Terunobu Iio

Vice President

Noriyuki Kasuya

Vice President

Hideaki Tomiku*1: External Director*2: Outside Corporate Auditor

16

CHIYODA CORPORATION ANNUAL REPORT FY2014

thousand

20.84

Financial Institutions
Securities Companies
Other Corporations
Foreign Investors and Others
Individuals and Others

22.98
3.62

15.13
37.43

Monthly Stock Price Range on the Tokyo Stock Exchange
(Yen)
2,100

Share Price (left)

Volume (right)(Yen)
21,000

Nikkei Stock Average (right)

1,400

14,000700

7,000(Thousandsof shares)
100,000

0

50,0004 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3
2010
2011
2012
2013
2014
2015

0

CHIYODA CORPORATION ANNUAL REPORT FY201417

Minato Mirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
http://www.chiyoda-corp.com/en/

CORPORATE PHILOSOPHY
Enhance our business in aiming for harmony
between energy and the environment,
and contribute to the sustainable development ofa society as an integrated engineering company
through the use of our collective wisdom andpainstakingly developed technology.
(As of August 2015)

Selected in FTSE Group’s responsible
investment index

Consolidated
Financial
Statements
FY2014
For the Year Ended March 31, 2015,
and Independent Auditor’s ReportConsolidated
Balance
Sheet
Chiyoda Corporation
Chiyoda andCorporation
Consolidated
and Consolidated
Subsidiaries Subsidiaries(March 31, 2015)

Consolidated Balance
Consolidated
Sheet Balance Sheet
March 31, 2015 March 31, 2015

ASSETSASSETS

CURRENT ASSETS:
CURRENT ASSETS:
Cash and cash equivalents
Cash and cash
(Noteequivalents
13)(Note 13)
Short-term investments
Short-term(Noteinvestments
13)(Note 13)
Notes and accounts
Notes
receivable—trade
and accounts receivable—trade(Note 13)
(Note 13)
Allowance for doubtful
Allowanceaccounts
for doubtful accounts
Costs and estimatedCosts
earnings
and estimatedon long-term
earnings
construction
on long-term construction
contracts (Notes 3contracts
and 13) (Notes 3 and 13)
Costs of construction
Costscontractsof constructionin processcontracts in process
Accounts receivable—otherAccounts receivable—other
Jointly controlledJointly
assets controlledof joint venture
assets(Noteof joint
13)venture (Note 13)
Deferred tax assets
Deferred(Note 10)
tax assets (Note 10)Prepaid expensesPrepaid
and other
expenses and otherTotal current assets
Total current assets
PROPERTY, PLANT
PROPERTY,
AND EQUIPMENT:
PLANT AND EQUIPMENT:
Land
Land
Buildings and structures
Buildings and structures
Machinery and equipment
Machinery and equipment
Tools, furniture, andTools,
fixturesfurniture, and fixtures
Construction in progress
Construction in progress
Total
Total
Accumulated depreciation
Accumulated depreciation
Net property, plant
Netandproperty,equipment
plant and equipment
INVESTMENTSINVESTMENTS
AND OTHER ASSETS:
AND OTHER ASSETS:
Investment securities
Investment(Notes securities
4 and 13) (Notes 4 and 13)
Investments in and
Investments
advances toin unconsolidated
and advances to unconsolidated
subsidiaries and associatedsubsidiariescompanies
and associated(Notecompanies
5)(Note 5)
Goodwill
Goodwill
Software
SoftwareAsset for retirement
Asset
benefits
for retirement benefits
Other assets (NoteOther10) assets (Note 10)
Allowance for doubtful
Allowanceaccounts
for doubtful accounts
Total investmentsTotaland otherinvestments
assets and other assets

Thousands of
U.S. Dollars
Millions of Yen Millions of Yen(Note 1)
2015
2014
2015
2014
2015
¥ 113,246
69
29,740(56 )¥¥ 145,303
113,24664
69
56,502
29,740(56(3 ) )$¥ 145,303
943,719575
64
247,838
56,502(472(3 ) )

24,10059,66816,327
182,855
11,697
6,930

16,503
24,10033,826
59,66816,327
4,936
127,466
182,855
18,868
11,6975,629
6,930

200,834
16,503497,234
33,826
136,059
4,936
1,523,793
127,466
18,86897,48357,7505,629

444,578

409,096444,578

3,704,817
409,096

5,266
13,915721
7,211
16
27,131(12,304 )

5,265
5,266
12,557
13,915
944
721
7,106
7,211
286
16
26,15927,131(11,201(12,304) )43,884
5,265
115,958
12,557
6,016
944
60,096
7,106
286
137
226,093
26,159(102,538(11,201 ) )14,826

14,95814,826

123,555
14,95823,94021,131
23,940199,501
21,131

8,547
12,034
7,393
33
4,717
(231 )

8,155
8,547
12,395
12,034
7,056
7,393
34
33
2,528
4,717
(231
(68 ) )

71,227
8,155
100,283
12,39561,6117,056
280
34
39,314
2,528(1,930(68 ) )

56,434

51,23356,434

470,288
51,233Thousands of
U.S. Dollars(Note 1)2015 LIABILITIES AND
LIABILITIESEQUITY AND EQUITY$CURRENT LIABILITIES:CURRENT LIABILITIES:
943,719 Short-term bank loans
Short-term(Notebank13) loans (Note 13)
575 Current portion ofCurrent
long-term
portiondebtof(Notes
long-term
6, 12debt
and (Notes
13)
6, 12 and 13)
247,838 Notes and accounts
Notes
payable—trade
and accounts(Notepayable—trade
13)(Note 13)(472 ) Advance receiptsAdvanceon construction
receiptscontracts
on construction contracts
Income taxes payable
Income(Notetaxes13)payable (Note 13)
200,834 Deposits receivedDeposits received
497,234 Allowance for warranty
Allowance
costsforforwarranty
completed
costs
works
for completed works
136,059 Allowance for losses
Allowance
on construction
for lossescontracts
on construction contracts
1,523,793 Accrued expensesAccruedand other
expenses and other
97,48357,750Total current liabilities
Total current liabilities
3,704,817LONG-TERM LIABILITIES:LONG-TERM LIABILITIES:Long-term debt (Notes
Long-term
6, 12debt
and (Notes
13) 6, 12 and 13)
Liability for retirement
Liability
benefits
for retirement(Note 7)benefits (Note 7)
43,884 Provision for treatment
Provisionof PCBfor treatment
waste of PCB waste
115,958 Asset retirement Assetobligations
retirement obligations
6,016 Other (Note 10) Other (Note 10)
60,096
137
Total long-term liabilities
Total long-term liabilities
226,093(102,538COMMITMENTS)COMMITMENTS
AND CONTINGENT
AND LIABILITIESCONTINGENT LIABILITIES(Notes 6, 12, 14 and(Notes15)6, 12, 14 and 15)
123,555
EQUITY (Notes EQUITY
8 and 18):(Notes 8 and 18):
Common stock—authorized,
Common stock—authorized,
570,000 thousand570,000
shares; thousand shares;
issued, 260,324 thousand
issued, 260,324
shares inthousand2015 andshares2014in 2015 and 2014
199,501
Capital surplus Capital surplus
71,227 Retained earningsRetained earnings
Treasury
cost, 1,323
stock—atthousandcost,shares
1,323 inthousand2015 andshares in 2015 and100,283 Treasury stock—at
1,310 thousand shares
1,310 inthousand2014 shares in 2014
61,611
Accumulatedcomprehensive
otherincome
comprehensive(loss): income (loss):
280 Accumulated other
Unrealized gain on
Unrealized
available-for-salegain on available-for-salesecurities
securities
39,314
Deferred (loss) gain
Deferredon derivatives(loss) gain
under
on derivatives
hedge accounting
under hedge accounting(1,930 )Foreign currencyForeigntranslation
currency
adjustments
translation adjustments
Defined retirement
Definedbenefitretirementplans
benefit plans
470,288
Total
Total
Minority interestsMinority interests
Total equity

TOTAL

TOTAL

¥ 515,839¥¥ 475,288
515,839$¥ 4,298,660
475,288$ 4,298,660TOTAL

TOTAL

Total equity¥

Thousands of
U.S. Dollars
Millions of Yen Millions of Yen(Note 1)
2015
2014
2015
2014
2015

Thousands of
U.S. Dollars(Note 1)
2015

991
51
137,652
123,869
1,366
3,352
364
3,988
22,703

$

¥¥

1,283
991
82
51
145,392
137,652
123,869
80,182
5,513
1,366
4,985
3,352
507
364
4,002
3,988
19,73022,703

$¥

1,283
8,258
431
82
1,147,104
145,392
1,032,241
80,182
11,384
5,513
27,935
4,985
3,035
507
33,241
4,002
189,197
19,7308,258
431
1,147,104
1,032,241
11,38427,935
3,035
33,241
189,197294,339

261,679
294,3392,452,831
261,679

2,452,831

10,063
1,070
339
983
636

10,04010,063
2,080
1,070
365
339
970
983
2,121
636

10,04083,863
2,080
8,920
2,831
365
8,196
970
2,121
5,301

83,863
8,920
2,831
8,196
5,301

13,093

15,57813,093

109,113
15,578109,113

43,396
37,112
115,831

43,39643,396
37,112
37,112
109,525
115,831361,636
43,396309,272
37,112
109,525965,260

361,636309,272
965,260(1,405 )(1,390(1,405) )(11,712(1,390 ) )(11,712 )

7,218(2,064 )
5,229
1,076
206,395
2,010

4,920
7,218
(2,064
648 )
2,486
5,229
1,076
(287 )
196,411
206,395
1,619
2,010

60,152
4,920(17,201
648 )
43,5762,486(287
8,974)
1,719,959
196,411
16,756
1,619

60,152(17,201 )43,576
8,974
1,719,959
16,756

208,405

198,031
208,405

1,736,715
198,031

1,736,715¥ 515,839¥¥ 475,288
515,839$¥ 4,298,660
475,288$ 4,298,660

See notes to consolidated
statements.
See notesfinancial
to consolidated
financial statements.
-2-

1

Consolidated Financial Statements-2-

Consolidated Financial Statements2Consolidated
Statement of Income
Chiyoda Corporation and Consolidated Subsidiaries

Consolidated
Statement of Comprehensive Income
Chiyoda Corporation and Consolidated Subsidiaries(Year Ended March 31, 2015)(Year Ended March 31, 2015)

Consolidated Statement of Income
Year Ended March 31, 2015

Consolidated Statement of Comprehensive Income
Year Ended March 31, 2015

Millions of Yen
2015
2014
REVENUE

Thousands of
U.S. Dollars(Note 1)2015

¥ 480,979¥ 446,147$ 4,008,160

435,327404,685

3,627,728

45,651

41,462

380,432

24,185

20,383

201,543

21,466

21,079178,8893,111(255 )(783 )(1,182 )(258 )

2,590(233 )(374 )(145 )

25,925(2,128 )(6,532 )(9,851 )(2,157 )COST OF REVENUE
Gross profit
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES(Note 11)
Operating income
OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Equity in losses of associated companies
Foreign exchange loss
Loss on valuation of investment securities
Retirement benefit expenses (Note 7)
Other—net(85 )(299 )
(78 )

545

1,459

4,547

INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS

22,012

22,538183,436

INCOME TAXES (Note 10):
Current
Deferred

6,257
4,542

13,101(3,773 )52,14437,851

10,7999,327

89,995

11,212

13,21093,441183(236 )

1,529

Other income—net

Total income taxes
NET INCOME BEFORE MINORITY INTERESTSMINORITY INTERESTS IN NET INCOME
NET INCOME¥

11,029¥13,447Yen

PER SHARE OF COMMON STOCK (Notes 2.y and 17):
Basic net income
Cash dividends applicable to the year

¥ 42.58
13.00(708 )$

Millions of Yen
2015
2014
NET INCOME BEFORE MINORITY INTERESTS

Thousands of
U.S. Dollars(Note 1)
2015

¥ 11,212¥ 13,210

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

(1,664 )(2,242 )3,625

19,151(22,601 )23,461
11,367

142

104

1,189

3,908

(176 )

32,568COMPREHENSIVE INCOME¥ 15,121¥ 13,034$ 126,009

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Minority interests¥ 14,722
398¥ 13,087(53 )$ 122,687
3,322

OTHER COMPREHENSIVE INCOME (LOSS) (Note 16):
Unrealized gain (loss) on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Foreign currency translation adjustments
Defined retirement benefit plans
Share of other comprehensive income of associates
accounted for using the equity method
Total other comprehensive income (loss)$

93,441

See notes to consolidated financial statements.

91,911

U.S. Dollars¥ 51.91
16.00$ 0.350.10

See notes to consolidated financial statements.

-3-

3

Consolidated Financial Statements-4-Consolidated Financial Statements

4Consolidated Statement of Changes in Equity(Year
EndedCorporation
March 31, 2015)
Chiyodaand
ChiyodaConsolidated
Corporation
Subsidiaries
and Consolidated Subsidiaries
Consolidated Statement of Changes
Consolidated
in Equity
Statement of Changes in Equity
Year Ended March 31, 2015 Year Ended March 31, 2015
Thousands

Thousands

Outstanding
Number of
Shares ofCommonStock
BALANCE, APRIL 1, 2013

BALANCE, APRIL 1, 2013259,045

Millions of Yen
Millions of Yen
Accumulated Other Comprehensive
Accumulated
Income (Loss)
Other Comprehensive Income (Loss)
Unrealized
Deferred Unrealized
DeferredGain on(Loss) Gain on Gain on
Foreign (Loss) Gain
Definedon
ForeignDefinedAvailableDerivatives AvailableCurrency Derivatives
Retirement Currency
Retirement
Retained
for-Sale
Treasuryunder Hedge for-Sale
Translation under Hedge
Benefit
BenefitMinority
Translation
Earnings
Securities
Stock
Accounting Securities
Adjustments Accounting
Plans
Adjustments
Total
PlansInterests

Outstanding
Number of
Shares ofCommon Common
CapitalStock
Stock Surplus

CommonRetained
Stock Earnings¥ 43,396¥ 43,396¥ 100,988 ¥ 37,112¥ (1,349 ) ¥ 100,988¥ 6,584

Net income
Net income
Cash dividends, ¥19.00 per share
Cash dividends, ¥19.00 per share
Change of scope of consolidation
Change of scope of consolidation
Purchase of treasury stock
Purchase of treasury stock(31 )Net change in the year
Net change in the year

259,045¥ 37,112

13,447(4,921 )12(31 )BALANCE, MARCH 31, 2014BALANCE, MARCH 31, 2014
(APRIL 1, 2014, as previously (APRIL
reported)1, 2014, as previously
259,014reported)

43,396

259,01437,112

43,396 109,525

Cumulative effect of accountingCumulativechange effect of accounting change
BALANCE, APRIL 1, 2014 (asBALANCE,
restated) APRIL 1, 2014259,014(as restated)

Capital Treasury
Surplus Stock(40 )37,112 (1,390 )(579 )
43,396

Net income
Net income
Cash dividends, ¥16.00 per share
Cash dividends, ¥16.00 per share
Purchase of treasury stock
Purchase of treasury stock(12 )Net change in the year
Net change in the year

259,01437,112

43,396 108,946¥ 6,584¥ (1,235 )¥ 2,890(1,664 )(40 )(2,242 )(1,664 )3,721(2,242¥ )(287 )109,5254,920(1,390 ) 648

4,920 2,486

648 (287 )(579 )
37,112 (1,390 )11,029(4,144 )(12 )13,447(4,921 )
12¥ (1,349¥ 2,890)(15 )

108,9464,920
11,029(4,144 )2,298

ChiyodaandConsolidated
ChiyodaCorporation
Subsidiaries
and Consolidated
BALANCE,Corporation
MARCH 31, 2015
BALANCE,
MARCH
31, 2015
259,001¥ 43,396 Subsidiaries
259,001¥ 37,112 ¥ 43,396¥ 115,831 ¥ 37,112¥ (1,405 ) ¥ 115,831¥ 7,218¥ (1,235¥ 188,386
)

¥

969

¥ 188,386¥ 189,356

13,447(4,921 )12(40 )3,721 (472 ) ¥ (287 ) 650
2,486196,411(287 ) 1,619(579 )(1,390 ) 648

4,920 2,486

Total
Total Equity

648 (287 )

2,486195,831(15 )(2,712 )2,298 2,743(2,7121,363)

11,029(4,144 )(15 )2,743 3,693¥ (1,405¥ (2,064))¥ 7,218¥ 5,229¥ (2,064¥ 1,076)¥ 5,229¥ 206,395

Minority
Interests¥

Total
Equity969¥ 189,356

13,44713,447(4,921 )(4,921 )
1212(40 ) (40 )(472 ) 178

650

13,447(4,921 )
12
(40 )
178

196,411
198,0311,619

198,031(579 ) (579 )(287 ) 1,619

195,831
197,451

1,363(579 )
1,619

197,451391

11,02911,029(4,144 )(4,144 )(15 ) (15 )3,693 4,084

391

11,029(4,144 )
(15 )
4,084

¥ 1,076¥ 2,010¥ 206,395¥ 208,405¥ 2,010¥ 208,405

Consolidated Statement of Changes
Consolidated
in Equity Statement of Changes in Equity
Year Ended March 31, 2015
Year Ended March 31, 2015

CommonStockCapitalSurplus

CommonRetained
Stock
Earnings

CapitalTreasury
Surplus
Stock

Thousands of U.S. Dollars (Note 1) Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Accumulated
Income (Loss)Other Comprehensive Income (Loss)
Unrealized
Deferred
Unrealized
DeferredGain on(Loss) Gain on
Gain
Foreignon(Loss)
DefinedGain onForeignDefinedAvailableDerivatives
Currency
Derivatives
Retirement
AvailableCurrency
Retirement
Retained
for-Sale
under
Treasury
Hedge
Translation
Benefit
Benefit
Minority
under
Hedge
for-SaleTranslation
Earnings
Securities
Accounting
Stock
Adjustments
Securities
Accounting
Plans
Adjustments
Total
Plans
Interests

BALANCE, MARCH 31, 2014
BALANCE, MARCH 31, 2014
(APRIL 1, 2014, as previously reported)(APRIL 1, 2014, as previously$reported)
361,636$ 309,272$ 361,636$ 912,715$ 309,272$ (11,586 )$ $912,715
41,001

Cumulative effect of accounting change
Cumulative effect of accounting change
BALANCE, APRIL 1, 2014 (as restated)
BALANCE, APRIL 1, 2014 (as restated)
361,636
Net income
Cash dividends, $0.13 per share
Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2015

(4,831 )309,272

Net income
Cash dividends, $0.13 per share
Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2015 $ 361,636

361,636
907,883
91,911(34,535 )$ 309,272$ 361,636$ 965,260$$ (11,586
5,400)$$41,001
20,717$$ (2,392
5,400 )

(4,831 )309,272(11,586 )(125 )- 5 -)$ 309,272$ (11,712

907,883
41,001
91,911(34,535 )$ 20,717
1,636,765$ (2,392$ 13,494)(4,831 )(11,586
5,400)

41,001
20,717(2,3925,400 )

20,717
1,631,933

19,151(125 )(22,601 )19,151
22,858(22,601
11,366)

91,911(34,535 )(125 )
22,85830,775$ $965,260
60,152

5(17,201$$- (11,712))$$60,152
43,576$$ (17,201
8,974)$ 43,576
1,719,959

Total
Total
EquityMinority
Interests

Total
Equity$ 1,636,765$ 1,650,259$ 13,494$ 1,650,259(4,831(4,831) )(2,392
13,494)

1,631,933
1,645,427(4,831 )
13,494

1,645,427

11,366
3,262

91,911
91,911(34,535(34,535) )(125(125) )30,77534,038

3,262

91,911(34,535 )(125 )
34,038$ $8,974
16,756$ 1,719,959$(Continued)
1,736,715$ 16,756(Continued)$ 1,736,715

See notes to consolidated financial statements.
See notes to consolidated financial statements.

5

Consolidated Financial Statements

Consolidated Financial Statements

6Consolidated
Statement of Cash Flows
Chiyoda Corporation and Consolidated Subsidiaries

Chiyoda Corporation and Consolidated Subsidiaries(Year Ended March 31, 2015)

Consolidated Statement of Cash Flows
Year Ended March 31, 2015

Consolidated Statement of Cash Flows
Year Ended March 31, 2015
Thousands of
U.S. Dollars(Note 1)
2015

Millions of Yen
2015
2014
OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes paid
Depreciation
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Decrease in allowance for warranty costs for completed
works(Decrease) increase in allowance for losses on construction
contracts
Increase (decrease) in liability for retirement benefits
Loss on sales and disposals of fixed assets
Foreign exchange gain—net
Equity in losses of associated companies
Loss on valuation of investment securities
Changes in operating assets and liabilities:
Decrease (increase) in trade notes and accounts
receivable, and costs and estimated earnings onlong-term construction contracts
Increase in costs of construction contracts in process(Decrease) increase in trade notes and accounts payable
Increase (decrease) in advance receipts on construction
contracts(Increase) decrease in accounts receivable—other
Increase in jointly controlled assets of joint venture
Decrease in deposits received
Decrease (increase) in interest and dividend receivable
Other—net
Total adjustments
Net cash used in operating activities—(Forward)¥ 22,012¥ 22,538$

183,436(12,550 )
3,569
1,469
216

(13,709 )
3,196
825
(12 )

(104,587 )
29,745
12,2481,801(170 )(4 )(1,424 )

(47 )
100
338
(499 )
783
258

2,534
(768 )
31(224 )
374(395 )
839
2,820(4,164 )
6,532
2,157

21,217(25,282 )(9,759 )(1,896 )(16,974 )
23,650176,813(210,689 )(81,330 )43,019(4,872 )(55,246 )(1,710 )109(7,101 )(46,157 )(2,111 )
2,519(31,955 )(2,141 )(713 )(2,334 )(39,715 )358,494(40,602 )(460,391 )(14,251 )
913(59,176 )(384,648 )¥ (24,145 )¥ (17,177 )$ (201,211 )Millions of Yen
2015
2014
Net cash used in operating activities—(Forward)

Thousands of
U.S. Dollars(Note 1)2015

¥ (24,145 )¥ (17,177 )(1,441 )146(2,431 )(1,245 )192
2,400(1,981 )90(3,294 )(7 )(4,046 )(605 )
118
14(9,134 )(445 )(712 )
101
41(5,048 )985
123

Net cash used in investing activities(5,444 )(16,796 )(45,366 )FINANCING ACTIVITIES:Net (decrease) increase in short-term bank loans
Repayments of long-term debt
Payments of cash dividends
Other—net(390 )(4 )(4,139 )(34 )11(264 )(4,914 )(81 )(3,257 )(40 )(34,493 )(284 )Net cash used in financing activities(4,569 )(5,249 )(38,078 )FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS

2,101

3,974

17,514

NET DECREASE IN CASH AND CASH EQUIVALENTS(32,057 )(35,249 )(267,141 )INVESTING ACTIVITIES:Net decrease in time deposits
Proceeds from redemption of marketable securities
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of intangible assets
Payments for asset retirement obligations
Payments for purchases of investment securities
Purchase of shares of subsidiaries resulting in change
in scope of consolidation
Payments of short-term loans receivable
Payments of long-term loans receivable
Proceeds from collections of long-term loans
Other—net

INCREASE IN CASH AND CASH EQUIVALENTS FROMNEWLY CONSOLIDATED SUBSIDIARYCASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR$

(201,211 )(12,014 )
1,224(20,259 )(10,377 )323
145,303180,229¥ 113,246¥ 145,303

1,210,861$

943,719

See notes to consolidated financial statements.

-7-

7

Consolidated Financial Statements(Continued)-8-(Concluded)

Consolidated Financial Statements8

Chiyoda to
Corporation
and Consolidated Subsidiaries
Notes
Consolidated
Financial Statements(Year
Ended March 31, 2015)
Notes to Consolidated Financial Statements
Year Ended March 31, 2015
1.

BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

Investments in the remaining unconsolidated subsidiaries and associated companies are stated at cost. If theequity method of accounting had been applied to the investments in these companies, the effect on theaccompanying consolidated financial statements would not be material.

The accompanying consolidated financial statements have been prepared in accordance with the provisions set forthin the Japanese Financial Instruments and Exchange Act and its related accounting regulations and in accordancewith accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects
as to the application and disclosure requirements of International Financial Reporting Standards.

Most of the foreign consolidated subsidiaries have a December 31 year-end which does not accord with that of
the Company. As a result, adjustments have been made for any significant transactions which took place
during the period between the year-end of these subsidiaries and the year-end of the Company.

In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to
the consolidated financial statements issued domestically in order to present them in a form which is more familiar
to readers outside Japan. In addition, certain reclassifications have been made in the 2014 consolidated financial
statements to conform to the classifications used in 2015.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Chiyoda
Corporation (the "Company") is incorporated and principally operates. The translations of Japanese yen amounts
into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at therate of ¥120 to $1, the approximate rate of exchange at March 31, 2015. Such translations should not be construed
as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

The excess of the cost of acquisition over the fair value of the net assets of an acquired subsidiary at the date ofacquisition is being amortized over a period of 5 to 20 years.
All significant intercompany balances and transactions have been eliminated in consolidation. All material
unrealized profit included in assets resulting from transactions within the Group is also eliminated.
b.

Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial
Statements—In May 2006, the Accounting Standards Board of Japan (the "ASBJ") issued ASBJ Practical
Issues Task Force ("PITF") No. 18, "Practical Solution on Unification of Accounting Policies Applied toForeign Subsidiaries for the Consolidated Financial Statements." PITF No. 18 prescribes that the accounting
policies and procedures applied to a parent company and its subsidiaries for similar transactions and events
under similar circumstances should in principle be unified for the preparation of the consolidated financial
statements. However, financial statements prepared by foreign subsidiaries in accordance with either
International Financial Reporting Standards or generally accepted accounting principles in the United States ofAmerica tentatively may be used for the consolidation process, except for the following items that should be
adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP,
unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of actuarial gain or lossof pensions that has been recorded in equity through other comprehensive income; (c) expensing capitalized
development costs of R&D; (d) cancellation of the fair value model of accounting for property, plant andequipment and investment properties and incorporation of the cost model of accounting; and (e) exclusion ofminority interests from net income, if contained in net income.

c.

Unification of Accounting Policies Applied to Foreign Associated Companies for the Equity Method—In
March 2008, the ASBJ issued ASBJ Statement No. 16, "Accounting Standard for Equity Method of
Accounting for Investments." The new standard requires adjustments to be made to conform the associate's
accounting policies for similar transactions and events under similar circumstances to those of the parent
company when the associate's financial statements are used in applying the equity method unless it isimpracticable to determine such adjustments. In addition, financial statements prepared by foreign associatedcompanies in accordance with either International Financial Reporting Standards or generally accepted
accounting principles in the United States of America tentatively may be used in applying the equity method if
the following items are adjusted so that net income is accounted for in accordance with Japanese GAAP,
unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of actuarial gain or lossof pensions that has been recorded in equity through other comprehensive income; (c) expensing capitalized
development costs of R&D; (d) cancellation of the fair value model of accounting for property, plant andequipment and investment properties and incorporation of the cost model of accounting; and (e) exclusion ofminority interests from net income, if contained in net income.

Japanese yen figures less than a million yen are rounded down to the nearest million yen, except for per share data.
U.S. dollar figures less than a thousand U.S. dollars are rounded down to the nearest thousand U.S. dollars, except
for per share data.
2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.

Consolidation—The consolidated financial statements as of March 31, 2015, include the accounts of theCompany and its 30 significant (29 in 2014) subsidiaries (together, the "Group").
Under the control and influence concepts, those companies in which the Company, directly or indirectly, isable to exercise control over operations are fully consolidated, and those companies over which the Group has
the ability to exercise significant influence are accounted for by the equity method.
Investments in six (five in 2014) associated companies are accounted for by the equity method in 2015.

-9-- 10 -

9

Consolidated Financial Statements

Consolidated Financial Statements

10Notes to Consolidated Financial Statementsd.

Construction Contracts—In December 2007, the ASBJ issued ASBJ Statement No. 15, "Accounting Standard
for Construction Contracts" and ASBJ Guidance No. 18, "Guidance on Accounting Standard for Construction
Contracts." Under this accounting standard, construction revenue and construction costs should be recognizedby the percentage-of-completion method if the outcome of a construction contract can be estimated reliably.
When total construction revenue, total construction costs, and the stage of completion of the contract at thebalance sheet date can be reliably measured, the outcome of a construction contract is deemed to be estimatedreliably. If the outcome of a construction contract cannot be reliably estimated, the completed-contract methodshould be applied. When it is probable that the total construction costs will exceed total construction revenue,
an estimated loss on the contract should be immediately recognized by providing for a loss on construction
contracts.

j.

Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation is computedby the declining-balance method, except for buildings owned by the Company that are depreciated using thestraight-line method, at rates based on the estimated useful lives of the assets. The range of useful lives is from
8 to 57 years for buildings and structures, from 4 to 17 years for machinery and equipment, and from 4 to 15
years for tools, furniture, and fixtures. Equipment held for lease is depreciated by the straight-line method over
the respective lease periods.

k.

Long-Lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes incircumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment
loss is recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted 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 amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual
disposition of the asset or the net selling price at disposition.

l.

Software—Software for internal use is amortized on a straight-line basis over its estimated useful life (fiveyears at the maximum).

Concerning the construction contracts, the Group applies the accounting methods as follows:
Unbilled costs on contracts, which are accounted for by the completed-contract method, are stated as costsof construction contracts in process.
Payments received in excess of costs and estimated earnings on contracts, which are accounted for by thepercentage-of-completion method, and payments received on the other contracts, are presented as current
liabilities.
Costs of preparation work for unsuccessful proposals and other projects that are not realized are charged toincome, as incurred, and are included in cost of revenue.

n.

Allowance for Warranty Costs for Completed Work—The allowance for warranty costs for completed work isprovided based on past rate experience.

o.

Allowance for Losses on Construction Contracts—The allowance for losses on construction contracts isprovided for an estimated amount of probable losses to be incurred in future years in respect of construction
projects in progress. When there are losses on completed-contract method applied contracts, the allowance forlosses on construction contracts is offset against the costs of construction contracts in process in the balance
sheet.

e.

Cash Equivalents—Cash equivalents are short-term investments that are readily convertible into cash and thatare exposed to insignificant risk of changes in value. Cash equivalents include time deposits, certificates ofdeposit, and commercial paper, all of which mature or become due within three months of the date ofacquisition.

f.

Investment Securities—All marketable securities are classified as available-for-sale securities and are reported
at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component ofequity. The cost of securities sold is determined based on the moving-average method.

p.

Nonmarketable available-for-sale securities are stated at cost determined by the moving-average method. For
other-than-temporary declines in fair value, investment securities are reduced to net realizable value by acharge to income.

Provision for Treatment of PCB Waste—A provision for treatment of PCB (Poly Chlorinated Biphenyl)
waste is provided based on estimated costs of the treatment for PCB products and equipment as well as theircollection and transportation fees.

q.

Retirement and Pension Plans—The Company and consolidated subsidiaries have funded or unfunded
defined benefit pension plans and a defined contribution pension plans for employees. Certain consolidated
subsidiaries have defined benefit corporate pension plans or severance lump-sum payment plans, and calculate
retirement benefit expenses by using the simplified method.

g.

Short-Term Investments—Short-term investments are time deposits, which will mature three months after thedate of acquisition. Short-term investments are exposed to insignificant risk of changes in value.

h.

Jointly Controlled Assets of Joint Venture—The jointly controlled assets of the joint venture are jointly
controlled cash recognized based on the Company's share of the venture.

i.

Allowance for Doubtful Accounts—The allowance for doubtful accounts is stated in amounts considered to beappropriate based on the Group's past credit loss experience and an evaluation of potential losses in thereceivables outstanding.

- 11 -

11

m. Other Assets—Intangible assets are carried at cost less accumulated amortization, which is calculated by thestraight-line method over their estimated useful lives.

Consolidated Financial Statements

Effective April 1, 2000, the Company and its domestic consolidated subsidiaries adopted a new accounting
standard for retirement benefits and accounted for the liability for retirement benefits based on the projected
benefit obligations and plan assets at the balance sheet date. The projected benefit obligations are attributed toperiods on a straight-line basis. Actuarial gains and losses are amortized on a straight-line basis over 10 years
within the average remaining service period. Past service costs are amortized on a straight-line basis over 10
years within the average remaining service period.

- 12 -

Consolidated Financial Statements

12Notes to Consolidated Financial Statements

The transitional obligation of ¥5,696 million ($47,466 thousand) is being amortized and charged to income
over 15 years using the straight-line amortization method and included in an operating expense in the
consolidated statements of income for the years ended March 31, 2015 and 2014.

r.

Asset Retirement Obligations—In March 2008, the ASBJ issued ASBJ Statement No. 18, "AccountingStandard for Asset Retirement Obligations" and ASBJ Guidance No. 21, "Guidance on Accounting Standard
for Asset Retirement Obligations." Under this accounting standard, an asset retirement obligation is defined asa legal obligation imposed either by law or contract that results from the acquisition, construction,
development, and normal operation of a tangible fixed asset and is associated with the retirement of suchtangible fixed asset. The asset retirement obligation is recognized as the sum of the discounted cash flows
required for the future asset retirement and is recorded in the period in which the obligation is incurred if areasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot be made in
the period the asset retirement obligation is incurred, the liability should be recognized when a reasonableestimate of the asset retirement obligation can be made. Upon initial recognition of a liability for an asset
retirement obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related
fixed asset by the amount of the liability. The asset retirement cost is subsequently allocated to expense
through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its
present value each period. Any subsequent revisions to the timing or the amount of the original estimate ofundiscounted cash flows are reflected as an adjustment to the carrying amount of the liability and thecapitalized amount of the related asset retirement cost.

s.

Research and Development Costs—Research and development costs are charged to income as incurred.

t.

Leases—In March 2007, the ASBJ issued ASBJ Statement No. 13, "Accounting Standard for Lease
Transactions," which revised the previous accounting standard for lease transactions.

In May 2012, the ASBJ issued ASBJ Statement No. 26, "Accounting Standard for Retirement Benefits" andASBJ Guidance No. 25, "Guidance on Accounting Standard for Retirement Benefits," which replaced theaccounting standard for retirement benefits that had been issued by the Business Accounting Council in 1998
with an effective date of April 1, 2000, and the other related practical guidance, and were followed by partial
amendments from time to time through 2009.
(a) Under the revised accounting standard, actuarial gains and losses and past service costs that are yet to berecognized in profit or loss are recognized within equity (accumulated other comprehensive income),
after adjusting for tax effects, and any resulting deficit or surplus is recognized as a liability (liability for
retirement benefits) or asset (asset for retirement benefits).
(b) The revised accounting standard does not change how to recognize actuarial gains and losses and past
service costs in profit or loss. Those amounts are recognized in profit or loss over a certain period nolonger than the expected average remaining service period of the employees. However, actuarial gains
and losses and past service costs that arose in the current period and have not yet been recognized in
profit or loss are included in other comprehensive income, and actuarial gains and losses and past service
costs that were recognized in other comprehensive income in prior periods and then recognized in profit
or loss in the current period, are treated as reclassification adjustments.

Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased
property to the lessee were capitalized. However, other finance leases were permitted to be accounted for as
operating lease transactions if certain "as if capitalized" information was disclosed in the notes to the lessee's
financial statements. The revised accounting standard requires that all finance lease transactions be capitalized
by recognizing lease assets and lease obligations in the balance sheet.

(c) The revised accounting standard also made certain amendments relating to the method of attributing
expected benefit to periods, the discount rate, and expected future salary increases.
This accounting standard and the guidance for (a) and (b) above are effective for the end of annual periods
beginning on or after April 1, 2013, and for (c) above are effective for the beginning of annual periods
beginning on or after April 1, 2014, or for the beginning of annual periods beginning on or after April 1, 2015,
subject to certain disclosure in March 2015, all with earlier application being permitted from the beginning ofannual periods beginning on or after April 1, 2013. However, no retrospective application of this accounting
standard to consolidated financial statements in prior periods is required.
The Company applied the revised accounting standard and guidance for retirement benefits for (a) and (b)above, effective March 31, 2014, and for (c) above, effective April 1, 2014.
With respect to (c) above, the Company changed the method of attributing expected benefit to periods from astraight-line basis to a benefit formula basis, the method of determining discount rate from using the period
which approximates the expected average remaining service period to using a single weighted average
discount rate reflecting the estimated timing and amount of benefit payment, and recorded the effect of (c)above as of April 1, 2014, in retained earnings. As a result, liability for retirement benefits as of April 1, 2014,
increased by ¥901 million ($7,513 thousand), and retained earnings as of April 1, 2014, decreased by¥579 million ($4,831 thousand). The effect on the profit and loss for the year ended March 31, 2015, was notmaterial.

- 13 -

13

Consolidated Financial Statements

The Company applied the revised accounting standard effective April 1, 2008.
All other leases are accounted for as operating leases.
u.

Income Taxes—The provision for income taxes is computed based on the pretax income included in the
consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary differences between the carrying amounts andthe tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted income tax
rates to the temporary differences.
The Company and its wholly owned domestic subsidiaries file a tax return under the consolidated
corporate-tax system, which allows companies to base tax payments on the combined profits or losses of theparent company and its wholly owned domestic subsidiaries.

v.

Foreign Currency Transactions—All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet
date. Foreign exchange gains and losses from translation are recognized in the consolidated statement ofincome to the extent that they are not hedged by foreign currency forward contracts.

- 14 -

Consolidated Financial Statements

14Notes to Consolidated Financial Statementsw.

Foreign Currency Financial Statements—Balance sheet accounts of consolidated foreign subsidiaries aretranslated into Japanese yen at the current exchange rate as of the balance sheet date except for equity, which
is translated at the historical rate. Differences arising from such translation are shown as "Foreign currencytranslation adjustments" under accumulated other comprehensive income in a separate component of equity.
Revenue and expense accounts of consolidated foreign subsidiaries are translated into Japanese yen at thecurrent exchange rate as of the balance sheet date.

x.

Derivatives and Hedging Activities—The Group uses derivative financial instruments, including foreign
currency forward contracts and interest swap contracts, as a means of hedging exposure to foreign currency
risks and interest rate risks. The Group does not enter into derivatives for trading or speculative purposes.

z.

Derivative financial instruments are classified and accounted for as follows:(1) All derivatives are recognized as either assets or liabilities and measured at fair value, with gains or losses
recognized in the consolidated statement of income.

3.

Foreign currency deposits are held to hedge foreign exchange risks derived from forecasted purchases of fixed
assets denominated in foreign currency.
4.

Costs and estimated earnings
Amounts billed¥ 397,990(373,890 )¥ 379,837(363,334 )$ 3,316,590(3,115,755 )

Net

¥

¥

$

Diluted net income per share is not disclosed because there is no potential stock that has a dilutive effect for
the fiscal years ended March 31, 2015 and 2014.

Millions of Yen
2015
2014
Noncurrent—Equity securities

Consolidated Financial Statements

200,834¥ 23,940

Thousands of
U.S. Dollars
2015¥ 21,131$ 199,501

The costs and aggregate fair values of investment securities at March 31, 2015 and 2014, were as follows:
March 31, 2015

Cost
Securities classified as—
Available-for-sale—equity securities

15

16,503

Investment securities at March 31, 2015 and 2014, consisted of the following:

Cash dividends per share presented in the accompanying consolidated statement of income are dividends
applicable to the respective fiscal years, including dividends to be paid after the end of the year.

- 15 -

24,100INVESTMENT SECURITIESPer Share Information—Basic net income per share is computed by dividing net income available to commonshareholders by the weighted-average number of common shares outstanding for the period, retroactively
adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could occur if securities were exercised orconverted into common stock. Diluted net income per share of common stock assumes full conversion of theoutstanding convertible notes and bonds at the beginning of the year (or at the time of issuance) with anapplicable adjustment for related interest expense, net of tax, and full exercise of outstanding warrants.

Thousands of
U.S. Dollars
2015

Millions of Yen
2015
2014

Foreign currency forward contracts are utilized to hedge foreign exchange risks. Certain assets and liabilities
on construction contracts denominated in foreign currencies are translated at the contracted rates if the forward
contracts qualify for hedge accounting.

y.

CONSTRUCTION CONTRACTS
Costs and estimated earnings recognized with respect to construction contracts which are accounted for by thepercentage-of-completion method at March 31, 2015 and 2014, were as follows:(2) For derivatives used for hedging purposes, if such derivatives qualify for hedge accounting because ofhigh correlation and effectiveness between the hedging instruments and the hedged items, gains or losses
on derivatives are deferred until maturity of the hedged transactions.

Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured
at market value but the differential paid or received under the swap agreements is recognized and included ininterest expense.

Accounting Changes and Error Corrections—In December 2009, the ASBJ issued ASBJ Statement No. 24,"Accounting Standard for Accounting Changes and Error Corrections" and ASBJ Guidance No. 24, "Guidanceon Accounting Standard for Accounting Changes and Error Corrections." Accounting treatments under thisstandard and guidance are as follows: (1) Changes in Accounting Policies—When a new accounting policy isapplied following revision of an accounting standard, the new policy is applied retrospectively unless therevised accounting standard includes specific transitional provisions, in which case the entity shall comply
with the specific transitional provisions. (2) Changes in Presentation—When the presentation of financial
statements is changed, prior-period financial statements are reclassified in accordance with the newpresentation. (3) Changes in Accounting Estimates—A change in an accounting estimate is accounted for in
the period of the change 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 anerror in prior-period financial statements is discovered, those statements are restated.

¥ 11,471

Millions of Yen
Unrealized
Unrealized
Gains
LossesFair
Value¥ 10,426¥ 21,898- 16 -

Consolidated Financial Statements

16Notes to Consolidated Financial Statements

6.

March 31, 2014

Cost
Securities classified as—
Available-for-sale—equity securities¥ 11,465

Millions of Yen
Unrealized
Unrealized
Gains
LossesFair
Value¥ 7,128¥ 18,591¥2

Long-term debt at March 31, 2015 and 2014, consisted of the following:
Millions of Yen
2015
2014

March 31, 2015

Cost
Securities classified as—
Available-for-sale—equity securities$ 95,597

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
Losses$ 86,888

Fair
Value
$ 182,4855.

¥ 2,540INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATEDCOMPANIES
Investments in and advances to unconsolidated subsidiaries and associated companies at March 31, 2015 and 2014,
were as follows:
Millions of Yen
2015
2014
¥ 7,387
1,159¥ 7,183971$ 61,566
9,661

Total

¥ 8,547¥ 8,155$ 71,227¥ 10,020
95
10,115(51 )¥ 10,023
99
10,122(82 )$ 83,502
792
84,295(431 )

Long-term debt, less current portion¥ 10,063¥ 10,040$ 83,863

Millions of Yen
4
5
10,005
3

Thousands of
U.S. Dollars

2016
2017
2018
2019
2020
2021 and thereafter

¥

$

40
43
83,376
25

1

16

Total

¥ 10,020$ 83,502

Millions of Yen

Thousands of
U.S. Dollars

Commitment-line contracts¥ 15,000$ 125,000

Unused commitments¥ 15,000$ 125,000

Commitment-line contracts at March 31, 2015, were as follows:

Thousands of
U.S. Dollars
2015

Investments
Long-term receivables

Long-term loans principally from banks, due seriallythrough 2018, with interest rates at 2.0% (2015)
and ranging from 1.9% to 2.0% (2014)—Unsecured
Obligations under finance leases
Total
Less current portion

Year Ending
March 31

Carrying AmountMillions of Yen

Securities classified as—Available-for-sale—equity securities

Thousands of
U.S. Dollars
2015

Annual maturities of long-term debt, excluding finance leases, at March 31, 2015, were as follows:

Available-for-sale securities whose fair value cannot be reliably determined at March 31, 2014, were as follows.
Similar information for 2015 is disclosed in Note 13.
March 31, 2014

LONG-TERM DEBT

7.

RETIREMENT AND PENSION PLANS
The Company and consolidated subsidiaries have funded or unfunded defined benefit pension plans and a defined
contribution pension plans for employees.
Under defined benefit corporate pension plans, all of which are funded, employees are entitled to certain lump-sum
payments or pension payments based on cumulated points which are granted in accordance with years ofcontinuous employment, occupational classification and performance evaluation. Under severance lump-sum
payment plans, employees are entitled to certain lump-sum payments based on salary and service period.

- 17 -

17

Consolidated Financial Statements- 18 -

Consolidated Financial Statements

18

Notes to Consolidated Financial Statements

Certain consolidated subsidiaries have defined benefit corporate pension plans or severance lump-sum payment
plans, and calculate retirement benefit expenses by using the simplified method.

(3) The changes in the liability recorded in the consolidated balance sheet by using the simplified method for theyears ended March 31, 2015 and 2014, were as follows:(1) The changes in defined benefit obligation for the years ended March 31, 2015 and 2014, were as follows:
Millions of Yen
2015
2014
Balance at beginning of year (as previously
reported)
Cumulative effect of accounting change
Balance at beginning of year (as restated)
Current service cost
Interest cost
Actuarial losses
Benefits paid
The amount of obligation processing withthe changes from simplified method tothe principle method
OthersBalance at end of year

¥ 21,787
901
22,689913
198
6(1,709 )52¥ 22,151¥ 20,630
20,630593
326
176(1,691 )1,751¥ 21,787

Thousands of
U.S. Dollars
2015$ 181,562
7,513
189,076
7,609
1,657
58
(14,247 )441$ 184,594

Millions of Yen
2015
2014
Balance at beginning of year
Benefit costs
Benefits paid
Contribution to the plans
Decrease by implementation of defined
contribution plans
The amount of expense processing withthe changes from simplified method tothe principle method
Change of scope of consolidation
Others

¥ 629
235
(95 )
(107 )

Balance at end of year

Balance at beginning of year
Expected return on plan assets
Actuarial losses
Contributions from the employer
Benefits paid
The amount of obligation processing withthe changes from simplified method tothe principle method
Others¥ 20,370
405
1,495
1,195
(1,709 )Balance at end of year

¥ 21,815- 19 -

19

Consolidated Financial Statements

57¥ 17,705
707
853
1,477
(1,691 )1,318¥ 20,370

Thousands of
U.S. Dollars
2015$ 169,757
3,381
12,4589,963(14,247 )39(433 )
71
299

326

¥ 700

¥ 629

$ 5,839(4) Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined
benefit obligation and plan assets
Millions of Yen
2015
2014
Funded defined benefit obligation
Plan assets

Thousands of
U.S. Dollars
2015

Unfunded defined benefit obligation¥ 23,441(23,073 )367
669¥ 23,088(21,511 )
1,577
469

$ 195,345(192,282 )
3,062
5,576

Net liability arising from defined
benefit obligation

¥

¥

$

1,036

2,046

Millions of Yen
2015
2014

481
$ 181,795$ 5,249
1,959(799 )(895 )(173 )(2) The changes in plan assets for the years ended March 31, 2015 and 2014, were as follows:
Millions of Yen
2015
2014

¥ 943
300
(46 )
(332 )

Thousands of
U.S. Dollars
2015

8,639

Thousands of
U.S. Dollars
2015

Liability for retirement benefits
Asset for retirement benefits¥ 1,070(33 )¥ 2,080(34 )$ 8,920(280 )Net liability arising from defined
benefit obligation¥ 1,036¥ 2,046$ 8,639- 20 -

Consolidated Financial Statements

20Notes to Consolidated Financial Statements(5) The components of net periodic benefit costs for the years ended March 31, 2015 and 2014, were as follows:
Millions of Yen
2015
2014
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Recognized actuarial losses
Amortization of transitional obligation
Benefit costs in simplified method
Others¥913
198(405 )(176 )
134
608
235

Net periodic benefit costs¥ 1,507¥593
326(707 )(176 )
2
608
300
299

¥ 1,248(8) Plan assets

Thousands of
U.S. Dollars
2015
$

a.

Components of plan assets
Plan assets as of March 31, 2015 and 2014, consisted of the following:

7,609
1,657
(3,381 )(1,468 )
1,116
5,073
1,959

$ 12,566b.

¥ (176 )
1,620
608$ (1,468 )
13,507
5,073

Total

¥ 2,053$ 17,112(7) Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect ofdefined retirement benefit plans as of March 31, 2015 and 2014
Millions of Yen
2015
2014

Thousands of
U.S. Dollars
2015

Unrecognized prior service cost
Unrecognized actuarial (gains) losses
Unamortized transitional obligation¥(146 )(1,463 )¥ (323 )
157
608

$

(1,224 )(12,199 )Total¥ (1,610 )¥ 442$ (13,423 )Debt investments
Equity investments
General accounts
Others

24 %
40
24
12

26 %
37
25
12

Total

100 %

100 %

The expected rate of return on plan assets is determined considering the long-term rates of return which
are expected currently and in the future from the various components of the plan assets.
(9) Assumptions used for the years ended March 31, 2015 and 2014, were set forth as follows:

Thousands of
U.S. Dollars
2015

Prior service cost
Actuarial losses
Transitional obligation

2014

Method of determining the expected rate of return on plan assets(6) Amounts recognized in other comprehensive income (before income tax effect) in respect of defined
retirement benefit plans for the years ended March 31, 2015 and 2014
Millions of Yen
2015
2014

2015

Discount rate
Expected rate of return on plan assets

2015

2014

Mainly 0.7%
Mainly 1.9%

Mainly 1.5%
Mainly 3.7%

(10) Payables to defined contribution plans of the Company and consolidated subsidiaries for the years ended
March 31, 2015 and 2014, were ¥824 million ($6,871 thousand) and ¥550 million, respectively.
8.

EQUITYJapanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant provisions
in the Companies Act that affect financial and accounting matters are summarized below:a.

Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to theyear-end dividend upon resolution at the shareholders' meeting. For companies that meet certain criteria, theBoard of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if
the company has prescribed so in its articles of incorporation. However, the Company cannot do so because it
does not meet all the criteria.
The Companies Act permits companies to distribute dividends in kind (noncash assets) to shareholders subject
to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the company so stipulate. The Companies Act provides certain limitations on theamounts available for dividends or the purchase of treasury stock. The limitation is defined as the amountavailable for distribution to the shareholders, but the amount of net assets after dividends must be maintained
at no less than ¥3 million.

- 21 -

21

Consolidated Financial Statements- 22 -

Consolidated Financial Statements

22

Notes to Consolidated Financial Statements

b.

10.

Increases/Decreases and Transfer of Common Stock, Reserve, and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve(a component of retained earnings) or as additional paid-in capital (a component of capital surplus), dependingon the equity account charged upon the payment of such dividends, until the aggregate amount of legal reserve
and additional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount ofadditional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also
provides that common stock, legal reserve, additional paid-in capital, other capital surplus, and retained
earnings can be transferred among the accounts within equity under certain conditions upon resolution of theshareholders.

c.

The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in theaggregate, resulted in normal effective statutory tax rates of approximately 36% and 38% for the years ended March
31, 2015 and 2014, respectively.
The tax effects of significant temporary differences, which resulted in deferred tax assets and liabilities at March
31, 2015 and 2014, were as follows:
Millions of Yen
2015
2014

Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stockby resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amountavailable for distribution to the shareholders, which is determined by a specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of equity.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights andtreasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or
deducted directly from stock acquisition rights.

9.

INCOME TAXES

SUPPLEMENTAL CASH FLOW INFORMATION
Acquisition cost and net payments for assets and liabilities of Xodus Group (Holdings) Limited ("Xodus Group"), a
newly consolidated subsidiary acquired through share purchase, for the year ended March 31, 2014, were as
follows:
Millions of Yen
Current assets
Fixed assets
Goodwill
Current liabilities
Fixed liabilities
Foreign currency translation adjustments
Minority interests
Acquisition cost of Xodus Group's shares
Cash and cash equivalents
Exchange gain on the acquisition¥

Net payments for the acquisition

¥

5,061
2,540
6,283
(2,856 )(166 )(77 )(380 )
10,405(1,265 )
(5 )
9,134

There was no significant acquisition of newly consolidated subsidiaries for the year ended March 31, 2015.

Deferred tax assets:
Cost of revenue
Tax loss carryforwards
Allowance for losses on construction contracts
Allowance for employees' bonus
Deferred gain/loss on derivatives under hedge
accounting
Future deductible depreciation
Costs of construction contracts in process
Other
Less valuation allowance

¥

Total
Deferred tax liabilities:
Unrealized loss/gain on available-for-sale securities
Deferred gain/loss on derivatives under hedge
accounting
Profit/loss in joint venture
Other
Total
Net deferred tax assets

5,087
4,971
1,276
1,258

¥ 14,927
1,305
1,438

42,39841,428
10,635
10,490

885
811
709
4,082
(1,161 )

1,079
657
3,871
(1,084 )

7,381
6,758
5,916
34,023(9,683 )17,922

22,195

149,350

3,207

2,460

26,731

384

433
145
457

3,207

3,592

3,496

29,939¥ 14,329¥ 18,699$ 119,411

Net deferred tax assets as of March 31, 2015 and 2014, were recorded in the accompanying consolidated balance
sheet as follows:

Current assets—Deferred tax assets
Investments and other assets—Other assets
Long-term liabilities—Other

23

Consolidated Financial Statements$

Prior to April 1, 2014, "Defined retirement benefit plans" was disclosed separately. From this fiscal year ended
March 31, 2015, the amounts are included in "Other" within the deferred tax assets section due to the decrease inmateriality.

Millions of Yen
2015
2014

- 23 -

Thousands of
U.S. Dollars
2015¥ 11,697
2,631¥ 18,868
685(854 )

Thousands of
U.S. Dollars
2015$

97,48321,927- 24 -

Consolidated Financial Statements

24Notes to Consolidated Financial Statements

A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in theaccompanying consolidated statement of income for the year ended March 31, 2015, with the corresponding figuresfor 2014, is as follows:
2015

2014

Normal effective statutory tax rate
Expenses not deductible for income tax purposesTax benefits not recognized on operating losses of subsidiaries
Difference in tax base between corporate income tax and enterprise tax
Change in valuation allowance
Effect of reduction of income tax rates on deferred tax assets
Other—net

36%
1
(4)
4
3
6
3

38 %
1
(1)
(5)
2
3
3

Actual effective tax rate

49 %

41 %

New tax reform laws enacted in 2015 in Japan changed the normal effective statutory tax rate from approximately
36% to 33% for the fiscal year beginning on or after April 1, 2015, and to 32% for the fiscal year beginning on orafter April 1, 2016. The effect of these changes was to decrease deferred tax assets, net of deferred tax liabilities, by¥977 million ($8,148 thousand) and deferred loss on derivatives under hedge accounting by ¥71 million($599 thousand) and increase accumulated other comprehensive income for unrealized gain on available-for-salesecurities by ¥346 million ($2,886 thousand) and defined retirement benefit plan by ¥58 million ($483 thousand), in
the consolidated balance sheet as of March 31, 2015, and to increase income taxes—deferred in the consolidated
statement of income for the year then ended by ¥1,310 million ($10,919 thousand).
11.

RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥2,456 million ($20,471 thousand) and ¥2,424 million forthe years ended March 31, 2015 and 2014, respectively.

12.

LEASES

Future minimum payments under noncancelable operating leases were as follows:
Millions of Yen
2015
2014
¥

Total

¥ 1,222- 25 -

25

Consolidated Financial Statements

449
773

ASBJ Statement No. 13, "Accounting Standard for Lease Transactions" requires that all finance lease transactions
be capitalized to recognize lease assets and lease obligations in the balance sheet. However, ASBJ Statement No. 13
permits leases without ownership transfer of the leased property to the lessee and whose lease inception was before
March 31, 2008, to continue to be accounted for as operating lease transactions if certain "as if capitalized"
information is disclosed in the note to the financial statements. The Company applied ASBJ Statement No. 13
effective April 1, 2008, and accounted for such leases as operating lease transactions.
13.

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments for cash surpluses, if any, invested in low-risk financial assets, such as
certificates of deposit and deposits at call. For operating capital, the Group uses bank loans. Derivatives areused, not for speculative purposes, but to manage exposure to the market risk of fluctuation in foreign currency
exchange rates and interest rates.
(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables, such as trade notes and trade accounts, are exposed to customer credit risk. Although receivables
in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates, theposition, net of payables in foreign currencies, is hedged by using foreign currency forward contracts.
Cash equivalents include certificates of deposit, which have short maturities and are used for cash surpluses.
Short-term investments include deposits at call, which will mature three months after the date of acquisition.
Both certificates of deposit and deposits at call are exposed to default risk of the issuing financial institution.
Investment securities are equity securities related to the business, which the Group operates. Marketablesecurities are exposed to the risk of fluctuations in stock prices.
Payment terms of payables, such as trade notes and trade accounts, are generally less than one year. Althoughpayables in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates,
those risks are netted against the balance of receivables denominated in the same foreign currency as noted
above.

The Group leases certain machinery, computer equipment, and other assets.

Due within one year
Due after one year

Pro forma Information of Leased Property Whose Lease Inception Was before March 31, 2008

¥

214
917

¥ 1,132

Thousands of
U.S. Dollars
2015
$

3,746
6,442

Bank loans are used for operating capital. Although they are exposed to the market risks from changes ininterest rates, the risk is hedged by using interest rate swap contracts.
Derivatives are foreign currency forward contracts and interest rate swap contracts, which are used to manage
exposure to market risks from changes in foreign currency exchange rates of receivables and payables, andfrom changes in interest rates, respectively. Please see Notes 2.x and 14 for more details about derivatives.

$ 10,189- 26 -

Consolidated Financial Statements

26

Notes to Consolidated Financial Statements(3) Risk Management for Financial Instruments(a) Fair values of financial instruments
March 31, 2015

Credit risk management
Credit risk is the risk of economic loss arising from a counterparty's failure to repay or service debt according
to the contractual terms. The Group manages its credit risk from receivables on the basis of internal guidelines,
which include monitoring of payment terms and balances of major customers to identify the default risk ofcustomers at an early stage.
Certificates of deposit and deposits at call are exposed to insignificant default risk because transactions arelimited to major financial institutions.
With respect to foreign currency forward contracts, the Group limits the counterparties to those derivatives tomajor financial institutions that can bear losses arising from credit risk.
Market risk management (risk of foreign exchange and interest rates)
Foreign currency trade receivables and payables are exposed to market risk resulting from fluctuations inforeign currency exchange rates. Such foreign exchange risk is hedged principally with foreign currency
forward contracts.
Interest expense associated with long-term debts is exposed to market risk resulting from changes in interest
rates. Such risk is hedged by interest rate swap contracts.
Foreign currency forward contracts are controlled under internal guidelines. The position related to particularconstruction contracts is identified and is reviewed monthly. Reconciliation of the transaction and balanceswith customers' confirmation replies is made, and the transactions related to foreign currency forward
contracts are executed and accounted for under internal guidelines.

Carrying
AmountLiquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on their maturity
dates. The Group manages its liquidity risk by holding adequate volumes of liquid assets along with timely
adequate financial planning.
(4) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is notavailable, another rational valuation technique is used instead. Also, please see Note 14 for the details of fairvalue for derivatives.

- 27 -

27

Consolidated Financial Statements

Fair Value

Cash and cash equivalents
Short-term investments
Notes and accounts receivable
Costs and estimated earnings onlong-term construction contracts
Jointly controlled assets of joint venture
Investment securities¥ 113,246
69
29,740¥ 113,246
69
29,74024,100182,855
21,898

24,100182,855
21,898Total¥ 371,909¥ 371,909

Short-term bank loans
Current portion of long-term debt
Notes and accounts payable—trade
Income taxes payable
Long-term debt

¥

¥

Total

¥ 150,030

991
4
137,652
1,366
10,015

Unrealized
Gain (Loss)

991
4
137,652
1,366
10,015¥ 150,030

March 31, 2014

Marketable and investment securities are managed by monitoring the market values and financial position ofissuers on a regular basis. The Group assesses the stock price risk quantitatively so as to account for significant
declines in market value as impairment losses.
Liquidity risk management

Millions of Yen

Carrying
AmountMillions of Yen
Fair Value

Cash and cash equivalents
Short-term investments
Notes and accounts receivable
Costs and estimated earnings onlong-term construction contracts
Jointly controlled assets of joint venture
Investment securities¥ 145,303
64
56,502¥ 145,303
64
56,502

16,503
127,466
18,591

16,503
127,466
18,591

Total¥ 364,431¥ 364,431

Short-term bank loans
Current portion of long-term debt
Notes and accounts payable—trade
Income taxes payable
Long-term debt

¥

¥

Total

¥ 162,212

1,283
4
145,392
5,513
10,018

Unrealized
Gain (Loss)

1,283
4
145,392
5,513
10,018¥ 162,212- 28 -

Consolidated Financial Statements

28

Notes to Consolidated Financial Statements

March 31, 2015

Current Portion of Long-Term Debt (Bank Loans) and Long-Term Debt (Bank Loans)
Carrying
AmountThousands of U.S. Dollars
Unrealized
Fair Value
Gain (Loss)

Cash and cash equivalents
Short-term investments
Notes and accounts receivable
Costs and estimated earnings onlong-term construction contracts
Jointly controlled assets of joint venture
Investment securities$

943,719575
247,838
200,834
1,523,793
182,485

200,834
1,523,793
182,485

Total$ 3,099,248$ 3,099,248

Short-term bank loans
Current portion of long-term debt
Notes and accounts payable—trade
Income taxes payable
Long-term debt

$

8,258
40
1,147,104
11,384
83,462

Total$ 1,250,250$$

943,719575
247,8388,258
40
1,147,104
11,384
83,462$ 1,250,250

Cash and Cash Equivalents, Short-Term Investments, Notes and Accounts Receivable, and Costs andEstimated Earnings on Long-Term Construction Contracts
The carrying values of the accounts mentioned above approximate fair value because of their shortmaturities.
Jointly Controlled Assets of Joint Venture
The jointly controlled assets of the joint venture are jointly controlled cash recognized based on the
Company's share of the venture. The carrying values of jointly controlled assets of the joint venture
approximate fair value because of their short maturities.

The fair value of fixed rate loans is calculated by discounting total principal and interest payments topresent value using a discount rate equal to the rate that would be charged if the loan was newly
borrowed. The fair value of floating rate loans, which are subject to a specific method for interest rate
swaps, is calculated by discounting total principal and interest payments, which are handled together withinterest rate swaps, to present value using a discount rate equal to the rate that would be charged if theloan was newly borrowed.
Derivatives
Fair value information for derivatives is included in Note 14.
(b) Carrying amount of financial instruments whose fair values cannot be reliably determined

Investment securities that do not have a quoted
market price in an active market
Investments in equity instruments that do nothave a quoted market price in an active market
Investments in unconsolidated subsidiaries andassociated companies that do not have a quoted
market price in an active market

The above schedules do not include investment securities whose fair value cannot be reliably determined.
Short-Term Bank Loans, Notes and Accounts Payable—Trade and Income Taxes Payable
The carrying values of the accounts mentioned above approximate fair value because of their shortmaturities.

- 29 -

29

Consolidated Financial Statements¥ 2,038¥ 2,537$ 16,990

2

2

24

7,387

7,183

61,566The impairment losses on investment securities for the year ended March 31, 2015, were ¥258 million($2,157 thousand).
(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
March 31, 2015

Due in1 Yearor Less

Investment Securities
The fair values of investment securities are measured at the quoted market price of the stock exchange forthe equity instruments. Fair value information for investment securities by classification is included in
Note 4.

Thousands of
U.S. Dollars
2015

Millions of Yen
2015
2014

Millions of Yen
Due after
1 Yearthrough
5 Years

Due after
5 Years
through
10 Years

Cash and cash equivalents
Short-term investments
Notes and accounts receivable, and costs andestimated earnings on long-term construction
contracts
Jointly controlled assets of joint venture¥ 113,206
69
52,285
182,855

¥ 882

¥ 672

Total

¥ 348,415

¥ 882

¥ 672

- 30 -

Consolidated Financial Statements

30Notes to Consolidated Financial Statements

14.

March 31, 2014

Due in1 Yearor Less

Millions of Yen
Due after
1 Yearthrough
5 Years

Cash and cash equivalents
Short-term investments
Notes and accounts receivable, and costs andestimated earnings on long-term construction
contracts
Jointly controlled assets of joint venture¥ 145,266
64
71,347
127,466¥ 1,658

Total¥ 344,144¥ 1,658

Due after
5 Years
through
10 YearsThousands of U.S. Dollars
Due after
Due after
Due in1 Year
5 Years
1 Yearthroughthroughor Less
5 Years
10 Years

31$

435,708
1,523,793$ 7,356$ 5,607

Total$ 2,903,462$ 7,356$ 5,607

Consolidated Financial Statements

March 31, 2015
Millions of Yen
Contract
AmountFair
Due after
Value
One Year(Loss)

Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Selling MYR/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying Euro/selling U.S.$
Buying AUD/selling Euro¥ 36,414
4,738
4,704
13,571
2,640
17
3
210
795

¥ 509

Total

¥ 63,094¥ 621

Contract
AmountUnrealized
Gain (Loss)¥ (124 )
(6 )
(9 )
31
1
2

¥ (124 )
(6 )
(9 )
31
1
2

(22 )
5

(22 )
5

¥ (122 )¥ (122 )Millions of Yen
Contract
AmountFair
Due after
Value
One Year(Loss)

Unrealized
Gain (Loss)

2
109

March 31, 2014

Cash and cash equivalents
Short-term investments
Notes and accounts receivable, and costs andestimated earnings on long-term construction
contracts
Jointly controlled assets of joint venture- 31 -

Derivative Transactions to Which Hedge Accounting Is Not Applied

Contract
AmountMarch 31, 2015

Please see Note 6 for annual maturities of long-term debt.

DERIVATIVES

943,384
575

Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying AUD/selling Euro
Buying TWD/selling U.S.$¥ 21,406
4,771
1,259
6,939
56
13
1,699
39

¥ 2

Total

¥ 36,185¥ 24

22¥ (18 )(1 )

¥ (18 )
(1 )

13
8
5
(59 )

13
8
5
(59 )

¥ (54 )¥ (54 )

- 32 -

Consolidated Financial Statements

32

Notes to Consolidated Financial Statements

March 31, 2015

March 31, 2014

Contract
AmountThousands of U.S. Dollars
Contract
AmountFair
Due after
Value
One Year(Loss)

Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Selling MYR/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying Euro/selling U.S.$
Buying AUD/selling Euro

$ 303,456
39,48539,201
113,093
22,006
141
25
1,751
6,627

$ 4,246

Total$ 525,789$ 5,176

17
911

Unrealized
Gain (Loss)$ (1,034 )
(52 )
(82 )
261
14
17
(3 )
(187 )49$ (1,034 )
(52 )
(82 )
261
14
17
(3 )
(187 )49$ (1,018 )$ (1,018 )Derivative Transactions to Which Hedge Accounting Is Applied
March 31, 2015

Hedged Item
Foreign currency forward contracts—
Accounted for under deferred hedge
accounting method:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying Euro/selling U.S.$
Buying KRW/selling U.S.$

Foreign currency
forecasted
transaction

Total
Other*1:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen

Receivables
PayablesTotal
Interest rate swaps*2 (fixed rate payment,
floating rate receipt)

Long-term debt

Total

- 33 -

33

Consolidated Financial Statements

Millions of Yen
Contract
AmountContract
Due after
AmountOne Year

Fair
Value
(Loss)¥ 16,971
673
186
7,271
3,347

¥

5,396
207
102
726
616

¥ (2,295 )36(19 )(1,453 )65¥ 28,450¥

7,049¥ (3,666 )

¥

342
242
100

¥

28

¥

685

¥

28

¥ 10,000¥ 10,000¥ 10,000¥ 10,000

Hedged Item
Foreign currency forward contracts—
Accounted for under deferred hedge
accounting method:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying Euro/selling U.S.$
Buying TWD/selling U.S.$
Buying KRW/selling U.S.$

Foreign currency
forecasted
transaction

Total
Other*1:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen

¥

9,921
909
22
10,07484
4,029¥ 25,041
Receivables
PayablesTotal
Interest rate swaps*2 (fixed rate payment,
floating rate receipt)

Millions of Yen
Contract
AmountContract
Due after
AmountOne YearLong-term debt

Total

¥

32
365
186

¥

584

¥

5,689
193

Fair
Value
(Loss)

2,766¥ (405 )
29
7
296
(1 )
184

¥ 13,978

¥ 111

5,329

¥ 10,000¥ 10,000¥ 10,000¥ 10,000- 34 -

Consolidated Financial Statements

34

Notes to Consolidated Financial Statements

16.

March 31, 2015

Hedged Item
Foreign currency forward contracts—
Accounted for under deferred hedge
accounting method:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying Euro/selling U.S.$
Buying KRW/selling U.S.$

Foreign currency
forecasted
transaction

Total
Other*1:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen

Receivables
PayablesTotal
Interest rate swaps*2 (fixed rate payment,
floating rate receipt)

Long-term debt

Total

Thousands of U.S. Dollars
Contract
AmountFairContract
Value
Due after
AmountOne Year(Loss)$ 141,427
5,613
1,555
60,59627,893$ 44,971
1,726
850
6,054
5,138

$ (19,129 )
302(162 )(12,108 )542$ 237,086$ 58,741$ (30,556 )

$

2,851
2,023
835

$

235

$

5,710

$

235

$

83,333$ 83,333$

83,333$ 83,333

Millions of Yen

Consolidated Financial Statements

Total
Deferred loss on derivatives under hedge accounting:(Losses) gains arising during the year
Adjustment to acquisition cost of assets
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectDefined retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Share of other comprehensive income of associates
accounted for using the equity method—
Gains arising during the year

At March 31, 2015, the Group had the following contingent liabilities:

35

Unrealized gain (loss) on available-for-sale securities:
Gains (losses) arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect

Total

CONTINGENT LIABILITIES- 35 -

Millions of Yen
2015
2014

Foreign currency translation adjustments—
Adjustments arising during the year

*2 Interest rate swap contracts accounted for under a specific method are treated as part of the hedged long-term
debt, thus their fair values are integrally computed with those of the hedged long-term debt. See Note 13 for thefair value of long-term debt.

Guarantees on employees' housing loans
Performance bond for an unconsolidated subsidiary

The components of other comprehensive income for the years ended March 31, 2015 and 2014, were as follows:

Total*1 Foreign currency forward contracts, which are applied to the foreign currency translation at the contract rate of
the assets and liabilities on construction contracts denominated in foreign currencies.

15.

OTHER COMPREHENSIVE INCOME

¥

69
1,113

Thousands of
U.S. Dollars
$

580
9,280

Total
Total other comprehensive income (loss)

Thousands of
U.S. Dollars
2015¥ 2,787258
3,046(747 )¥ (2,619 )(2,619 )955$ 23,227
2,157
25,384(6,233 )¥ 2,298¥ (1,664 )$ 19,151¥(591 )(3,464 )100(3,955 )1,243¥ 2,651(3,573 )(2,729 )(3,652 )
1,410$¥ (2,712 )¥ (2,242 )$ (22,601 )¥ 2,815¥ 3,625$ 23,461¥ 2,815¥ 3,625$ 23,461(4,926 )(28,874 )835(32,965 )
10,364¥ 1,486566
2,053(689 )$ 12,391
4,721
17,112(5,745 )¥ 1,364$ 11,367

¥

142

¥

104

$

1,189

¥

142

¥

104

$

1,189

¥ 3,908¥(176 )$ 32,568- 36 -

Consolidated Financial Statements

36

Notes to Consolidated Financial Statements

17.

(1) Description of Reportable Segments

NET INCOME PER SHARE
A reconciliation of the differences between basic and diluted net income per share ("EPS") for the years ended
March 31, 2015 and 2014, is as follows:Year Ended March 31, 2015

Basic EPS—Net income available
to common shareholders

Millionsof YenNet
IncomeThousandsof Shares
Weighted-Average
Shares¥ 11,029

259,006

Yen

U.S. Dollars
EPS¥ 42.58$ 0.35

There is no dilutive effect for the year ended March 31, 2015.

Millionsof YenNet
IncomeBasic EPS—Net income available
to common shareholders¥ 13,447

Thousandsof Shares
Weighted-Average
Shares259,030

Yen¥ 51.91

SUBSEQUENT EVENT
The following appropriation of retained earnings at March 31, 2015, was approved at the Company's shareholders'meeting held on June 25, 2015:

Year-end cash dividends, ¥13.00 ($0.10) per share

Millions of Yen

Thousands of
U.S. Dollars¥ 3,367$ 28,058

SEGMENT INFORMATION
Under ASBJ Statement No. 17, "Accounting Standard for Segment Information Disclosures" and ASBJ Guidance
No. 20, "Guidance on Accounting Standard for Segment Information Disclosures," an entity is required to reportfinancial and descriptive information about its reportable segments. Reportable segments are operating segments oraggregations of operating segments that meet specified criteria. Operating segments are components of an entity
about which separate financial information is available and such information is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing performance. Generally, segment
information is required to be reported on the same basis as is used internally for evaluating operating segment
performance and deciding how to allocate resources to operating segments.

- 37 -

37

Consolidated Financial Statements

The accounting policies of each reportable segment are consistent with those disclosed in Note 2, "Summaryof Significant Accounting Policies."
The profit in reporting segments is based on the operating income. Intersegment income and transfers aremeasured at the quoted market price.

Year Ended March 31, 2015
Reportable
Segment
Engineering

EPS

There is no dilutive effect for the year ended March 31, 2014.

19.

(2) Methods of Measurement for the Amounts of Sales, Profit (Loss), Assets, Liabilities, and Other Items for
Each Reportable Segment(3) Information about Sales, Profit, Assets, Liabilities, and Other Items

Year Ended March 31, 201418.

The Group's reportable segments are those for which separate financial information is available and regular
evaluation by the Company's management is being performed in order to decide how resources are allocatedwithin the Group. The Group globally provides "Engineering" services, including planning, engineering,
construction, procurement, commissioning, and maintenance, adapting the most appropriate functions of eachrelated company.

Millions of Yen
Other*1

Total

Reconciliations*2

Consolidated*3

Sales:
Sales to external customers
Intersegment sales or transfers¥ 476,499
136

¥

4,479
6,678

¥ 480,979
6,814¥ (6,814 )Total¥ 476,635¥ 11,157¥ 487,793¥ (6,814 )¥ 480,979

Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associatedcompanies
Increase in property, plantand equipment andintangible assets

¥

¥

¥

¥

¥

21,146509,992
297,441
3,545
1,439

314
5,418
2,248
24
29

5,479
3,943

17

21,460515,411
299,690

6
427
7,742

¥ 480,979

21,466515,839
307,433

3,569
1,469

3,569
1,469

5,479

5,479

3,960

3,960

- 38 -

Consolidated Financial Statements

38

Notes to Consolidated Financial Statements

Year Ended March 31, 2014

Notes for the year ended March 31, 2015:
Millions of Yen

Reportable
Segment
Engineering

Other*1

Reconciliations*2

Total

Consolidated*3

Sales:
Sales to external customers
Intersegment sales or transfers¥ 441,615
14

¥

4,532
6,280

¥ 446,147
6,295¥ (6,295 )Total¥ 441,629¥ 10,813¥ 452,443¥ (6,295 )¥ 446,147

Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associatedcompanies
Increase in property, plantand equipment andintangible assets

¥

¥

¥

¥

¥

20,788470,188
267,501

282
4,773
1,781

3,175
795

21
29

5,375
4,126

27

21,070474,961
269,283¥ 446,147

8
326
7,973

21,079475,288
277,257

3,196
825

3,196
825

5,375

5,375

4,154

4,154

Year Ended March 31, 2015

Total

Reconciliations*2

Sales:
Sales to external customers
Intersegment sales or transfers$ 3,970,828
1,135$ 37,332
55,650$ 4,008,160
56,786$ (56,786 )Total$ 3,971,964$ 92,982$ 4,064,947$ (56,786 ) $ 4,008,160

Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associatedcompanies
Increase in property, plantand equipment andintangible assets

$

$

$

$

29,545
11,998

Consolidated Financial Statements

200
249

45,66332,858144

178,835
4,295,094
2,497,422(1) The reconciliation in segment profit of ¥6 million ($53 thousand) is the elimination of intersegment
trades.
(2) The reconciliation in segment assets of ¥427 million ($3,566 thousand) is the result of the eliminationof intersegment trades of ¥(2,275) million ($(18,962) thousand) and the Group's assets of¥2,703 million ($22,528 thousand), which are not included in the reportable segment.
(3) The reconciliation in segment liabilities of ¥7,742 million ($64,522 thousand) is the result of theelimination of intersegment trades of ¥(2,257) million ($(18,811) thousand) and the Group's liabilitiesof ¥10,000 million ($83,333 thousand), which are not included in the reportable segment.
*3 The calculation of the segment profit is based on the operating income in the consolidated statement ofincome.
Notes for the year ended March 31, 2014:*1 "Other" represents industry segments, which are not included in the reportable segment, consisting of
temporary staffing services and travel services.

(1) The reconciliation in segment profit of ¥8 million is the elimination of intersegment trades.

Other*1- 39 -

39

Thousands of U.S. Dollars

2,618
45,156
18,740*2 The details of the reconciliations are as follows:*2 The details of the reconciliations are as follows:

Reportable
Segment
Engineering

176,217
4,249,937
2,478,681*1 "Other" represents industry segments, which are not included in the reportable segment, consisting of
temporary staffing services and travel services.

53
3,566
64,522

Consolidated*3$ 4,008,160$

178,889
4,298,660
2,561,944

29,745
12,24829,745
12,24845,66345,66333,00333,003(2) The reconciliation in segment assets of ¥326 million is the result of the elimination of intersegment
trades of ¥(2,047) million and the Group's assets of ¥2,374 million, which are not included in thereportable segment.
(3) The reconciliation in segment liabilities of ¥7,973 million is the result of the elimination ofintersegment trades of ¥(2,026) million and the Group's liabilities of ¥10,000 million, which are notincluded in the reportable segment.
*3 The calculation of the segment profit is based on the operating income in the consolidated statement ofincome.
Related Information(1) Information about Products and Services
The proportion of engineering business is more than 90% of the total sales of the Group. Accordingly, thepresentation of the information about each service is not required under Japanese accounting standards.

- 40 -

Consolidated Financial Statements

40Notes to Consolidated Financial Statements(2) Information about Geographical Areas

Year Ended March 31, 2014
Millions of Yen(a) Revenue
Year Ended March 31, 2015
Millions of Yen

Thousands of
U.S. Dollars

Japan
Australia
RussiaAsia
Middle East
Others¥ 113,341
151,255
52,08773,93550,62439,735$944,508
1,260,461
434,059
616,128
421,869
331,133

Total¥ 480,979$ 4,008,160

Year Ended March 31, 2014
Millions of Yen
Japan
Australia
Papua New Guinea
Malaysia
Others¥ 128,743
114,894
68,99053,38080,138Total¥ 446,147

Note: Revenue is classified by country or region based on the location of construction sites.

Japan
Asia
Others¥ 12,454
1,746
757

Total

¥ 14,958(3) Information about Major Customers
Year Ended March 31, 2015

Name

Related Segment

Millions of Yen
Revenue

Ichthys Lng Pty Ltd.
OJSC Yamal LNG

Engineering
Engineering¥ 143,688
51,948

Thousands of
U.S. Dollars
Revenue$ 1,197,404
432,900

Year Ended March 31, 2014
Name

Related Segment

Millions of Yen
Revenue

Ichthys Lng Pty Ltd.
Esso Highlands Ltd.
Tokuyama Malaysia Sdn. Bhd

Engineering
Engineering
Engineering¥ 109,964
68,78849,934(4) Information about Goodwill by Segment
The ending balance of goodwill as of March 31, 2015 and 2014, was as follows:(b) Property, plant and equipment
Year Ended March 31, 2015
Millions of Yen

Thousands of
U.S. Dollars

Japan
Asia
Others¥ 12,183
1,974
668$ 101,530
16,453
5,571

Total

¥ 14,826$ 123,555

Millions of Yen
2015
2014

Thousands of
U.S. Dollars
2015

Engineering
Other*¥ 11,599
434¥ 11,930
464$

96,658
3,624

Total

¥ 12,034¥ 12,395$ 100,283* Other involves temporary staffing services.

******- 41 -

41

Consolidated Financial Statements- 42 -

Consolidated Financial Statements

42Independent Auditor’s Report

43

Consolidated Financial Statements

Minato Mirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
http://www.chiyoda-corp.com/en/

CORPORATE PHILOSOPHY
Enhance our business in aiming for harmony
between energy and the environment,
and contribute to the sustainable development ofa society as an integrated engineering company
through the use of our collective wisdom andpainstakingly developed technology.
(As of August 2015)

Selected in FTSE Group’s responsible
investment index