CHIYODA CORPORATION
Annual Report 2004
Fiscal Year Ended March 31, 2004

Rebuilding Chiyoda—
Only the finishing touches remain

CHIYODA CORPORATION, headquartered in Yokohama, Japan,
provides services on a global basis in the field of engineering,procurement and construction (EPC) for gas processing, refineries andother hydrocarbon or other industrial plant projects, particularly for
LNG, GTL, and gas chemicals. For more than 50 years, Chiyoda hasconstantly leveraged its extensive experience and far-reaching global
network to give it an unrivaled advantage. The Company will continue
its EPC business, while innovating an expanded business model that
includes plant lifecycle engineering (PLE). This will enable Chiyoda to
become a one-stop provider of everything its customers need in theway of plant development and operations.

Forward-Looking Statements
This annual report contains forward-looking statements about Chiyoda Corporation’s outlooks, plans, forecasts, results, and otheritems that may take place in the future. Such statements are based on data available when the report was published. 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 to laws
and regulations, addition or elimination of products, exchange rate fluctuation, among many more.

CONTENTS
Results ..............................................................................................................2
Summary ..........................................................................................................3
To Our Shareholders and Friends...................................................................4Management Policies ......................................................................................6
Rebuilding Chiyoda—Only the Finishing Touches Remain ..........................8
Forecasts.........................................................................................................13
Review of Operations Overseas ....................................................................14
Domestic ...................................................................17
Performance Highlights ................................................................................19
Financial Section
Consolidated Six-Year Financial Summary ..................20
Operating Results and Financial Position.....................21
Business Risk and Other Risks .....................................24
Consolidated Balance Sheets......................................26
Consolidated Statements of Income ...........................28
Consolidated Statements of Shareholders’ Equity .......29
Consolidated Statements of Cash Flows .....................30
Notes to Consolidated Financial Statements ...............31
Independent Auditors’ Report ....................................45
Global Network .............................................................................................46
Board of Directors, Corporate Auditors and Executive Officers ................48
Corporate Information ..................................................................................49

CHIYODA CORPORATION ANNUAL REPORT 2004 1

RESULTS
Thousands of
U.S. Dollars*Millions of Yen

Total assets

2004

2003

2004

¥142,860¥120,297$1,347,736

Total shareholders’ equity

22,767

16,670214,783

Construction contracts

206,817

166,367

1,951,104

Operating income

5,881

1,548

55,481

Net income

6,647

2,000

62,708New contracts

290,658

249,0932,742,057

Backlog of contracts

375,854

316,167

3,545,792

Per share of common stock:
Basic net income

Yen

¥

35.91

U.S. Dollars*

¥

10.79

$

0.34

* U.S. dollar amounts have been converted at the rate of ¥106=$1, the approximate rate of exchange at March 31, 2004.

2 CHIYODA CORPORATION ANNUAL REPORT 2004

SUMMARYs Recorded increased orders, sales and earnings forthe third consecutive year.
s Posted continuous growth in natural gas

business, and domestic business stayed firm.
s Eliminated the accumulated deficit on

a consolidated basis, and a small deficit remains
on a non-consolidated basis.

CHIYODA CORPORATION ANNUAL REPORT 2004 3

To Our Shareholders and Friends

DURING FISCAL 2004, ENDED MARCH 31, 2004, WE CONTINUED TO MAKE PROGRESSTOWARD MEETING THE GOALS OF OUR NEW RESTRUCTURING PLAN. WE ARE MEETING OUR
IMPROVEMENT TARGETS ONE BY ONE WITH THE AIM OF COMPLETING THE PLAN ASQUICKLY AS POSSIBLE. DUE TO THESE EFFORTS, WE RECORDED THE THIRD CONSECUTIVEYEAR OF GROWTH IN NEW CONTRACTS, SALES AND EARNINGS. AS A RESULT, WE ARE CERTAIN
TO MEET THE ULTIMATE GOAL OF THIS PLAN, WHICH IS TO ELIMINATE CONSOLIDATED AND
NON-CONSOLIDATED ACCUMULATED DEFICITS, ONE YEAR AHEAD OF SCHEDULE.

increased 232.4% to ¥6.6 billion, because of
the additional income by collection of overduelong-term receivables.
Strategy
Our primary strategy is to refine our current
business model by shifting the emphasis of ouroperations from the EPC (engineering,procurement and construction) to the PLE (plant
lifecycle engineering) domain, thus transforming
Chiyoda into an organization that can work
as a reliable partner with our customers inmanaging their assets. As Gas Value Chain plants
become larger and more complex, we will focus
In fiscal 2004, consolidated new contracts

on technology innovation to overcome

increased 16.7% to ¥290.7 billion, surpassing ourchallenges accompanying these projects. Our

target of ¥280 billion. Consolidated construction

plan, therefore, is to concentrate our activities oncontracts overseas were up 72.2% to ¥143.5

business fields where we can combine these twobillion, but down 23.7% to ¥63.4 billion in Japan.

evolutionary changes. Through this approach, we

Total consolidated construction contracts

will build positions of superiority in businesses

therefore increased 24.3% to ¥206.8 billion.

that demand advanced technology and present

Gross profit on completed construction

opportunities to add the most value. Even more

contracts increased 35.1% to ¥14.1 billion.

importantly, we will be able to offer customers

This was a reflection of growth in construction

superior services in terms of speed, efficiency andcontracts and the application of risk

quality. Accompanying these actions will be

management systems structured to ensure therigorous risk management and quantitative

profitability of new contracts. In addition,

management systems. By establishing a powerfuloperating income was up 279.9% to ¥5.9 billion

management framework, we intend to position

due to further reductions in selling, general

Chiyoda as the world’s most reliable project

and administrative expenses. Net income

engineering and management company.

4 CHIYODA CORPORATION ANNUAL REPORT 2004

Outlook

Message

Looking ahead, our primary source of earnings

In closing, I would like to briefly discuss thewill be energy and gas chemicals. A so-called

transition in how our employees solve problems.

“gas shift” is taking place at an unexpectedly

Our people are well aware of the challenges we

rapid pace, backed chiefly by solid growth inface. They also understand the need to go one

demand in the United States, Europe, India andmore step to do an excellent job. The mindset of

China. One noteworthy trend is the rising

employees and how they perform their jobs arenumber of ultra-large-scale LNG plants. Anothercritical to generating consistently soundis the rapid growth in plans for large chemical

operating results as well as earning the trust ofplants, such as ethylene plants, that use

our customers. I strongly believe that our

inexpensive casing-head gas obtained along with

employees have firmly embraced the mindset

gas used to produce LNG. These developments

required for success, giving us a powerful basemake the outlook encouraging for thefor advancing to our next strategic objectives.

foreseeable future. Making the outlook evenbrighter are rising capital investments in Japan,

June 28, 2004

where the economy has bottomed out, andgrowth in opportunities outside Japan.
In fiscal 2005, we expect further growth insales and earnings to continue. We also plan toresume dividend payments for the first time innine years. As our results improve, we areformulating our next management plan in order

Nobuo Sekito advance to the next step in our development.

President & CEO,As I stated earlier, our objective is to become the

Chiyoda Corporationworld’s most reliable project engineering andmanagement company. Regarding our businessmethodology, Chiyoda must gain more flexibility
and skills in systems and project execution in order
to contribute to customers’ projects irrespectiveof the operating climate or business field.

CHIYODA CORPORATION ANNUAL REPORT 2004 5

Management Policies

AT CHIYODA, EARNING THE TRUST AND UNDERSTANDING OF SHAREHOLDERS, SOCIETY AND
CUSTOMERS REPRESENTS THE BASIS OF ALL CORPORATE ACTIVITIES. FOR THIS PURPOSE, THE
COMPANY PLACES PRIORITY ON THE ESTABLISHMENT AND PROPER OPERATION OF FAIR
INTERNAL CONTROL SYSTEMS ROOTED IN THE PRINCIPLES OF MANAGEMENT TRANSPARENCYAND SOUNDNESS, AND ON THE TIMELY DISCLOSURE OF INFORMATION.

Corporate GovernanceCorporate auditors attend meetings of the

Chiyoda has adopted the executive officer

Executive Committee to express opinions as

system in order to strengthen management

necessary. This system provides for both speedyfunctions by separating the roles of decision-and transparent decision-making. Regarding

making and business execution. The corporate

compliance programs required for the execution

auditor system is also adopted, under which theof business activities, the Company has prepared

Company has four outside auditors.

a written code of conduct and makes all

To provide for accurate decision-making in

employees aware of this code. In the event of a

response to rapid shifts in the social andviolation of a law or regulation, there is a systemeconomic climate, Chiyoda has an Executive

for submitting compliance reports within theCommittee, which is composed of theCompany and to external parties, such as an

representative directors. Unanimous votes areattorney. Units overseen directly by the Executive

required for decisions concerning importantCommittee audit each operating division withmatters in regard to business execution.

regard to occupational safety and hygiene,

Corporate Governance Structure
Shareholders Meeting

Corporate Auditors

Board of Directors
Internal control
through PDCA cycle

Executive Committee(composed of representative directors)
Crisis manager

SQE Division
HSE Management
Quality Management
Information Security Management

Corporate Administration
Executive officer
Internal Checks and Balances
Risk manager

6 CHIYODA CORPORATION ANNUAL REPORT 2004

Compliance Management OfficeCompliance

Project Operations
Executive officer
Risk manager

Self Auditing

P(lan)D(o)C(heck)A(ct)continue to be placed on employee safety andmanagement system. Risk managers arehygiene management, such as through employee

appointed to oversee measures to prevent

training, enactment of suitable measures toproblems as well as to deal with any incidents

prevent accidents and other emergencies, andand minimize their consequences. Crisis

initiatives to preserve and enhance workplace

managers are appointed to supervise quick andsafety and hygiene. Regarding environmental

appropriate responses to incidents. In thismanagement, Chiyoda in March 2001 becamemanner, the Company maintains risk

Japan’s first specialized plant engineering

management and crisis management systems

company to earn ISO 14001 certification. Thisthat provide for the centralized handling ofcertification was extended at a renewal

information and directions in an emergency.

examination conducted in February 2004. The

With regard to the management of projects,

information security management system was

the Company has a rigorous project monitoring

reviewed in conjunction with revisions to thesystem operated by senior management.

BS7799-Part II (2002) standards. The Chiyoda

Chiyoda has a Cold Eye Review System underGroup is thus clarifying and systematizing thewhich sales activities are evaluated so that

preservation and handling of the information

potential sources of risk can be quickly identified

resources that represent the foundation of allprior to the preparation of estimates, submission

business operations.

20

15

10

5

0

Onshore Expansion

basis of its ability to succeed. Priority will

The Company maintains an effective risk

RasGasRisk Management(Million Man-hours)
25

Train 3safety and health for all Group employees as the

Oman LNG Trains 1 & 2

regards the protection and improvement in

Qatargasproblems to the Executive Committee.

Trains 1 & 2

any Chiyoda project in Japan. The Company

Pertamina Train G

During fiscal 2004, there were no accidents at

for immediately submitting reports concerning

Qatargas

security and other matters. There is a framework

Safety Records in LNG
Plant Construction(in Man-hours without
Lost Time Incident)
As of February, 2004

ADGAS Train 3

Health, Safety and the Environment

Pertamina Train F

quality, environmental issues, information’93 ’94 ’96 ’97 ’98 ’00 ’04

of bids and signing of contracts. In addition, theCompany conducts project audits, under which
specialized auditors from corporate
administrative sections verify the suitability of
project execution plans prepared by operating
divisions. Through these activities, the Company
is further strengthening internal controls andmaking operations more transparent.

CHIYODA CORPORATION ANNUAL REPORT 2004 7

Rebuilding Chiyoda—Only the Finishing Touches Remain

THE CHIYODA GROUP WILL CONTINUE TO BRING INNOVATION TO THE PLANT LIFECYCLE
ENGINEERING CONCEPT THAT GIVES IT A COMPETITIVE TECHNICAL ADVANTAGE INPROVIDING TOTAL SERVICE, STARTING WITH THE DEVELOPMENT OF HIGHLY COSTCOMPETITIVE PLANTS. OUR OBJECTIVE IS TO BECOME A ONE-STOP PROVIDER OFEVERYTHING THAT CUSTOMERS NEED AND THEREBY BUILD LONG-TERM RELATIONSHIPSWITH CLIENTS THAT WILL WIN INCREASED CONTRACTS AND PROFIT.

Plant Lifecycle Engineering Application of the plant lifecycle engineering (PLE)concept is an important element of Chiyoda’s growth strategy. PLE proactively facilitates optimization
at all stages of a plant’s lifecycle, thus maximizing the customer’s return on assets. Chiyoda’s PLE
concept takes a plant’s entire lifecycle into consideration. It begins with the basic business plan andcontinues through engineering, procurement, construction (EPC), operation, maintenance anddecommissioning, going all the way to planning the next investment. Using information in our data
warehouse, gathered in collaboration with our clients, Chiyoda analyzes costs, quality, stable
operations, labor health and welfare and environmental load factors to offer optimized service backed
up by the entire Chiyoda Group of companies.

i-PLANT21 i-PLANT21 is a project engineering system that
integrates design and project data used through the entire lifecycleof a plant. Built on an integrated platform, i-PLANT21 allows us todeliver high quality and low cost engineering, procurement andconstruction services, all on schedule. Designed to integrate large
volumes of data, the system is particularly suitable for large-scale
projects such as the design and construction of LNG plants,
refineries and gas chemical plants. Extracted knowledge, feasibility 3D model for Qalhat LNG S.A.O.C.
studies, front end engineering design (FEED), and trouble-shooting
from past projects can be brought to bear on the next project.
8 CHIYODA CORPORATION ANNUAL REPORT 2004

Global Engineering Operation The Chiyoda Group
offers internationally competitive, high quality engineering
services on a global scale, using its Global Engineering Satellites(GESs). GESs, with bases in the Philippines (C&E Corporation) andIndia (L&T-Chiyoda Limited), employs IT and 3-D CAD design tools
to offer competitive advantages in quality, technology and cost.
C&E Corporation
We are expanding the operations of our overseas bases toinclude procurement, construction and project support, thus
creating a global procurement network to bolster the Group’s
competitive position.

L&T-Chiyoda Limited

CHIYODA CORPORATION ANNUAL REPORT 2004 9

Rebuilding Chiyoda—Only the Finishing Touches Remain

Overseas
The Chiyoda Group has built up an excellent

boost exports to the U.S., Europe, China andtrack record in LNG plants and terminals in Japan

India, areas where demand for clean energy is

and around the globe, to the point that it has

expected to shoot up. Chiyoda is responding tobeen involved in the construction of one-third ofthese changes by concentrating corporate

all LNG plants built in the world. Currently, we

resources into a series of projects using natural

are constructing LNG plants and gas processing

gas as feedstock. In petroleum and chemicals,

plants in Qatar, Russia, Oman, U.A.E. and

we are winning more contracts andIndonesia. In April 2003, we reorganized our

implementing projects by leveraging our own

LNG Division to better prepare it for responding

technologies and combining them with ethylene

to the needs of all phases of natural gas use.

and other technologies we have licensed from

In our Gas Value Chain business we offer

third parties.

services to optimize processes across the entire

Demand for LNG Plants on a Sharp Risefrom gas processing and liquefaction plants to
LNG/LPG receiving/storage terminals and gas
chemical plants for ethylene, methanol and newenergies such as gas-to-liquids (GTL) anddimethyl ether (DME).
Natural gas producing countries in the
Middle East are planning larger LNG plants to(Million Tons)
60
50
40

(Million Tons)
250

To 30%

Chiyoda’s Share of LNG Plants ConstructedWorldwide (Production Capacity): 25%

200
150

30

Total World Production
Capacity of LNG Plants

20

100
50

10
0

’64 ’66 ’68 ’70 ’72 ’74 ’76 ’78 ’80 ’82 ’84 ’86 ’88 ’90 ’92 ’94 ’96 ’98 ’00 ’02 ’04

0

Total World Production Capacity

Chiyoda’s Cumulative Construction Record

Gas Value Chain, from upstream to the markets,

Year Operation Started

LNG Plant Capacity per Train

FEED/PS
2.5mtpa

3.5mtpa
5.0mtpa
4.4mtpa 3.3mtpa
2.95mtpa
3.3mtpa
4.8mtpa

3.0mtpa
2.65mtpa
2.5mtpa

1.1mtpa
1.1mtpa
1.1mtpa

1.76mtpa

2.5mtpa

3.0mtpa

1.76mtpa

4.7mtpa

3.3mtpa

4.8mtpa

7.8mtpa

2.0mtpa 2.0mtpa 3.3mtpa
2.3mtpa

EPC

7.8mtpa

2.5mtpa
2.3mtpa

4.7mtpa

3.3mtpa
4.7mtpa

2.3mtpa

4.8mtpa
4.8mtpa

4.7mtpa

1970

1975

10 CHIYODA CORPORATION ANNUAL REPORT 2004

1980

1985

1990

1995

2000

2005

2009

QatarRussiaIn Qatar, a major market, the Chiyoda GroupIn Russia, the country with the world’s largest

completed the LNG Trains 1, 2 & 3 for Qatar

gas reserves, the Chiyoda Group is working on

Liquefied Natural Gas Co., Ltd. (Qatargas) andthe two LNG trains (each 4.8 million tons per

the LNG Train 3 for Ras Laffan Liquefied Naturalyear). This will be the first LNG plant for the

Gas Co., Ltd. (RasGas) from 1993 to 2003. We

country, and also the first in the world to use

are currently involved in several major projects in

Shell’s Double Mixed Refrigerant (DMR)

Qatar, including a gas development project forliquefaction process. We will focus on building

ExxonMobil; LNG Trains 1, 2 & 3 debottlenecking

an excellent track record to expand our businessprojects for Qatargas; LNG Train 4 project forin the fast growing Russian market.

RasGas; and common cooling water systemproject for Qatar Petroleum Co., Ltd. Recently,

LNG Export Planin Qatar(Million Tons / Year)
70
60
50
40
30
20
10

we won two major contracts: LNG Train 5
project for RasGas and the FEED for LNG Trains

0’04 ’05 ’06 ’07 ’10

4 & 5 (each 7.8 million tons per year) for
Qatargas. Our presence is growing steadily in
Qatar, a core market for Chiyoda as we continue
to maintain an overwhelmingly strong
competitive position in LNG plants in the
Middle East.

CHIYODA CORPORATION ANNUAL REPORT 2004 11

Rebuilding Chiyoda—Only the Finishing Touches Remain

Japan
In Japan’s plant market, domestic oil refiners

contractor of choice. In the fine chemicals

and public utility companies are investing

sector, our goal is to boost profitability byactively in the area of environmental protection,

winning contracts for electronic materials,

such as production of sulfur-free gasoline andspecialty chemicals and other plants that involve

reduction of heavy oil consumption, andhigh value added process elements. In the newconservation of energy resources by switching toenergy area, we are focusing on promising

LNG. Chiyoda’s strategy is geared tothemes such as GTL technology and hydrogenstrengthening relations with customers whileenergy, and participating in projects to reducebolstering the Company’s competitive position,

total energy consumption at oil and chemical

to win recognition as the construction

complexes using the pinch technology.

R&D
The main thrust of our research anddevelopment is technologies and products that

our flue gas desulfurization (CT-121 process foradd value to our services, and so help us tocoal fired power stations) to meet specificcreate businesses in the fields of new energy, therequirements of the world market. A newenvironment, petroleum and chemicals.

commercial plant for the CASOX process—In new energy, Chiyoda has successfully

removal of SO2 from flue gas by catalytic

demonstrated outstanding performance of a CO2oxidation and its recovery as H2SO4—hasreforming process for effective syngas

operated successfully since April 2003.

production in the national project for gas-toGTL pilot plant in Yufutsu,
Hokkaido Prefecture
Photo courtesy of JOGMEC

In the environment, we continue to improve

In petroleum and chemicals, Chiyoda joined

liquid process development. Elsewhere, inan R&D program, sponsored by the New Energy

readiness for hydrogen-based energy, Chiyoda

and Industrial Technology Development

continues research in chemical hydride

Organization (NEDO), and has developed an

technology, particularly the chemical

active titania catalyst for diesel deep hydro-hydrogenation and dehydrogenation cycle.

desulfurization. This will be commercialized.

12 CHIYODA CORPORATION ANNUAL REPORT 2004

FORECASTS
Overseas, investment in the gas sector, including upstream areas of gas wells, is expected tocontinue to rise on the global scale, reflecting the ongoing shift to gas at energy majors.
In Japan, petrochemical firms are exploring the possibilities of enhancing
competitiveness through forging alliances between their individual petrochemical complexes.
Spurred by this trend, investment in energy conservation and environmental systems forindustry clusters, including investment by oil refiners, is expected to remain favorable.
Responding to these trends, Chiyoda will promote its plant lifecycle engineering (PLE)concept, which is designed to optimize the plant lifecycle by addressing such issues as facility
ageing and extension of the maintenance cycle by developing proposals backed by theGroup’s technological assets.
We expect continued revenue and profit growth in the current fiscal year, ending
March 31, 2005, enabling us to restore the dividend for the first time in nine years.

FY2004

FY2005¥206.8billion¥250.0billionOperating Income¥5.9

billion¥8.3

billionNet Income¥6.6

billion¥8.3

billion¥290.7billion¥260.0billionConstruction Contracts

New Contracts

CHIYODA CORPORATION ANNUAL REPORT 2004 13

Review of Operations

Overseas
China’s explosive economic growth is boosting capital investment and alongside this energy
consumption is rising rapidly. This key factor, combined with the active shift to gas at energy
majors, assures that the global market boom should continue, led by the Middle East, themajor oil and gas producing area.
Reflecting these and other factors, overseas new contracts increased 21.2% from theprevious fiscal year to ¥218.7 billion. Revenues from construction contracts were up 72.2%
to ¥143.5 billion.

◆New Contracts ◆◆Constructing Contracts ◆◆◆Backlog of Contracts
Locations

Clients

Projects

LNG Plant (Train 3)

MIDDLE EAST
Qatar

C◆◆

Ras Laffan Liquefied Natural Gas Co., Ltd. (2)

Qatar

C◆◆

Qatar Petroleum

Common Cooling Water System

Qatar

N◆

Ras Laffan Liquefied Natural Gas Co., Ltd.

LNG Plant

Qatar

N◆

ExxonMobil Middle East Gas Marketing Ltd.

Gas Development Project (additional work)

Qatar

N◆

Qatar Liquefied Natural Gas Co., Ltd.

LNG Plant (FEED)

Qatar

B◆◆◆

Ras Laffan Liquefied Natural Gas Co., Ltd. (2)LNG Plant (Train 4)

Qatar

B◆◆◆

ExxonMobil Middle East Gas Marketing Ltd.

Gas Development Project

Qatar

B◆◆◆

Qatar Liquefied Natural Gas Co., Ltd.

LNG Plant (debottlenecking)

Oman

B◆◆◆

Qalhat LNG S.A.O.C.

LNG Plant

Saudi Arabia B◆◆◆

International Methanol Company

Methanol Plant & Utility/Offsite

Saudi Arabia B◆◆◆

Jubail United Petrochemical Company

Ethylene Plant

China

N◆

Nantong SKT New Material Co., Ltd.

PVDC (polyvinylidene chloride) Plant

China

N◆

Mitsubishi Rayon Polymer Nantong Co., Ltd.

PMMA (polymethyl methacrylate)
Sheet Plant

China

B◆◆◆

CNOOC and Shell Petrochemicals Co., Ltd.

SM/PO and MPG/Polyols Plant

China

B◆◆◆

China National Bluestar (Group) Corporation

Bisphenol-A Plant

ThailandB◆◆◆

Thai Olefins Public Co., Ltd.

Ethylene Plant

Indonesia

B◆◆◆

PetroChina International Jabung Limited

Natural Gas Development Project

RussiaN◆

Sakhalin Energy Investment Company Ltd.

LNG Plant / Crude Oil Export Facilities

Venezuela

B◆◆◆

Petroleos de Venezuela S.A. (PDVSA)

Refinery Modernization

ASIA

RUSSIA AND OTHERS

14 CHIYODA CORPORATION ANNUAL REPORT 2004

(Left) President Nobuo Seki greeted theMinister of Energy and Industry, H.E.
Abdullah Bin Hamad Al Attiyah.
(Center) LNG14 conference(Right) Contract signing ceremony for thefertilizer plant in Iran

QatarsLNG14
Following on from the Perth (Australia) and Seoul

Energy and Industry, H.E. Abdullah Bin Hamad(South Korea) conferences, the 14th Liquefied

Al Attiyah, expanded on the Emir of State’s

Natural Gas Conference and Exhibition (LNG14)

remarks and announced that, “We anticipate

was held in Qatar in March 2004.

that our gas exports by 2010 will exceed 60

Some 2,500 LNG industry executives andmillion tons per annum. Such major projects will

152 firms from 36 countries attended this major

require the massive investment of US$30

event, which is held every three years. The

billion.” This means that Qatar will become the

Chiyoda booth featured a rotating LED display

largest LNG exporter.

and offered many valuable opportunities to meetsenior executives in the LNG sector.
Addressing the conference in the opening

During the conference a ceremony was held
to commemorate the completion of the RasGas
LNG Train 3 at Ras Laffan, with the presence of

ceremony, the Emir of the State of Qatar, His

the Emir of State. The ceremony was widelyHighness Sheikh Hamad Bin Khalifa Al Thanireported in local newspapers. Chiyoda wassaid, “The development of the gas sector andparticularly honored by the fact that thethe realization of optimum utilization of ourcommemoration ceremony was held at a timenatural resources are among our mostwhen LNG industry executives from around theimportant national goals.” The Minister ofworld were gathered in Qatar.

IransSecond order for fertilizer plants in Iran
An international consortium consisting of

urea plant in Bandar Assaluyeh. The signing

Chiyoda Corporation, Toyo Engineering

ceremony for the contract was held in February

Corporation (TOYO), and Petrochemical

2004 in Teheran. Within the consortium,

Industries Design and Engineering Company

Chiyoda covers the urea plant.

(PIDEC), an Iranian engineering firm, was

The consortium won this repeat orderawarded a contract by Petrochemical Industries

without competition on the basis of its track

Development Management Company (PIDMCO),

record in an identical adjoining complex currently

an affiliate of Iran’s National Petrochemical

under construction. The fertilizer complex will

Company (NPC), to construct a 2,050 tons peruse natural gas from the South Pars gas field

day ammonia plant and a 3,250 tons per day

as feedstock.

CHIYODA CORPORATION ANNUAL REPORT 2004 15

Review of Operations(Left) Environmental research at the riverthat flows through the plant site
(Right) Environmental research ofrare animals

RussiasSustainable development (Sakhalin II LNG Project)
The Sakhalin II LNG Project being executed in

What’s more, the river that flows through theRussia is still at an early stage, with theplant site is the spawning ground for salmon andconstruction of temporary facilities and atrout, and the northern of the project site is closematerial offloading facility constituting the mainto the habitats of seals, sea lions, sea elephants,

activities. Sakhalin experiences extremely coldgray whales and penguins. All these factors

winters and the southern part of the island,

make environmental considerations all the more

where the plant is to be built, is rich in nature.

important in executing the project.

CFW President Mamoru Nakano received theplaque from Shaikh Abdulla Bin ali Al Qatabi,
the President of Majles A’ Shura.

OmansCFW wins certificate of commendation
Chiyoda Foster-Wheeler and Company LLC

construction contractor, was the first private firm

(CFW) received a commendation from Oman’s

to win this award. The award ceremony,

Ministry of Labor for its significant contribution

attended by many government officials, was held

to increasing local employment. CFW, a leadingon the outskirts of Muscat.

16 CHIYODA CORPORATION ANNUAL REPORT 2004

Domestic
In Japan’s plant market, capital investment remained strong, supported by oil companies’
desulfurization projects for fuel. Furthermore, electric power utilities are shifting to LNG fromother energy sources in a bid to cut back on CO2 emissions. Several LNG receiving terminal
projects were launched in anticipation of increasing consumption of LNG as a clean fuel.
As a result of these and other factors, domestic new contracts increased 4.9% from theprevious fiscal year to ¥72.0 billion but revenues from completed construction contracts
declined 23.7% to ¥63.4 billion.

◆New Contracts ◆◆Constructing Contracts ◆◆◆Backlog of Contracts
Locations

Clients

Projects

DOMESTIC
Hyogo

C◆◆

Kobe Steel, Ltd.

Flue Gas Desulfurization Plant (No. 2)

ShizuokaC◆◆

Toyo Roki Mfg. Co., Ltd.

Factory Removal & Reconstruction

Ehime

C◆◆

Taiyo Oil Co., Ltd.

Expansion of Crude Distillation Unit

ShizuokaC◆◆

Chugai Pharmaceutical Co., Ltd.

Pharmaceutical Plant

AomoriC◆◆

Japan Nuclear Fuel Limited

Utility Facilities

Yamaguchi

N◆

Seibu Oil Co., Ltd.

Gasoline Sulfur Reduction Project

Mie

N◆

Showa Yokkaichi Sekiyu Co., Ltd.

Gasoline Sulfur Reduction Project

Kanagawa

N◆

Mitsubishi Pharma Corporation

Pharmaceutical Laboratory

IbarakiN◆

Japan LPG Storage Co., Ltd.

LPG Storage Terminal

Ehime

B◆◆◆

Japan LPG Storage Co., Ltd.

LPG Storage Terminal

IbarakiB◆◆◆

Eisai Co., Ltd.

Bulk Pharmaceutical Plant

Nagasaki

B◆◆◆

Japan LPG Storage Co., Ltd.

LPG Storage Terminal

OkayamaB◆◆◆

Mizushima LNG Co., Ltd.

LNG Receiving Terminal

CHIYODA CORPORATION ANNUAL REPORT 2004 17

Review of Operations(Left) Artist's conception of completed
LNG facility(Right) Inside of a LNG tank when empty

sMizushima LNG Receiving Terminal project nearing completion
Chiyoda was awarded a contract on a full turnkey

The tank will receive, via a pipeline, super-basis for Mizushima LNG Receiving Terminal forcooled (-162oC) LNG transported by tankers, forMizushima LNG Co., Ltd., jointly established bystorage at the same temperature. For delivery,

Chugoku Electric Power Co., Inc. and Nippon Oil

the LNG is either pumped to vaporizers, where it

Corporation. The scope of work on the projectis heated by seawater and turned into gas, or

includes installing one above-ground PC LNG

loaded on to LNG lorries in liquid form.

tank with a capacity of 160,000 kiloliters, theWe believe that award of the first EPC

largest in Japan. A ceremony to mark raising ofcontract for an LNG receiving terminal in Japanthe roof was held in March 2004. The innerrecognizes Chiyoda’s experience and outstanding

diameter of the secondary containment (such as

past achievements in engineering, procurement

the bund) of the tank is 80m. The roof, whenand construction (EPC) for LNG terminals. We areraised to its full height of 29.2m (it takes three

making every effort possible to assure safe

hours to raise the roof using air blowers), has acompletion of the project, which is slated forheight equivalent to that of a 17-story building

March 2006.

(approximately 51.7m).

sAccident-free day record
The year 2003 was accident-free for Chiyoda,
with no accidents at any of its 82 project sites(cumulative) in Japan.
This is an outstanding safety record that
surpasses all records since the Company started
compiling statistics back in 1959.
The record is a testimony to the high level ofsafety consciousness among Chiyoda Group
employees and to day-to-day safety
management in project implementation in Japan.

18 CHIYODA CORPORATION ANNUAL REPORT 2004

Number of Accidents (Japan)
Resulting in Work Stoppages
Year

Number of Accidents

’00
’01
’02
’03
’04

3
4
2
3
0

Performance Highlights

FY2004
Breakdown by Industry

FY2004
Breakdown by Region

LNG/Gas Processing
ChemicalsPetroleum
OthersMiddle East
Asia
Japan
Russia and Others

New Contracts
10%

16%

13%

8%
69%

8%

51%
25%

Construction Contracts
13%

17%
12%

45%

44%

30%

26%

13%

Backlog of Contracts
5%
8%

27%

10%

38%
77%

11%
24%

CHIYODA CORPORATION ANNUAL REPORT 2004 19

Financial Section

Consolidated Six-Year Financial Summary
Chiyoda Corporation and Consolidated Subsidiaries

Millions of Yen

For the Year:
Construction contracts
Cost of construction contracts
Income (loss) before income taxes
and minority interests
Net income (loss)
At Year-End:Total assets
Total shareholders’ equity
Working capital
Current ratio (%)
Long-term debt
Per Common Share (Yen):
Net income (loss)
Shareholders’ equity
Other Statistics:
Number of shares outstanding*(thousands)* At year-end

20 CHIYODA CORPORATION ANNUAL REPORT 2004

2004

2003

2002

2001

2000

1999

¥206,817
192,710¥166,367
155,924¥141,387
136,762¥128,665
131,240¥168,963
154,112¥312,234
308,703

5,370
6,647

2,509
2,000

1,861
121

(3,357)(4,607)

1,553
698(10,534)(11,623)¥142,860
22,767
15,719115.0
10,316¥120,297
16,670
7,526
108.4
10,422¥129,314
15,103
1,387
101.4
10,672¥114,652
15,023
2,241
102.6
11,346¥153,099
8,181(19,594)
84.5
12,545¥213,920
6,208(22,942)87.7
13,518

¥

¥

¥

¥

¥

¥

35.91
123

185,041

10.79
90

185,1990.65
81185,388(20)
81

185,4293
33

248,357(58)
25

248,357

Operating Results and Financial Position

1. REVIEW OF OPERATING RESULTS

b. Chemicals

a Summary

In bulk and commodity chemicals, Japanese companies

In fiscal 2004, ended March 31, 2004, revenues from

implemented initiatives to cope with propylene shortages,

construction contracts on a consolidated basis increased

reflecting a shift toward natural gas for the production of

24.3% from the previous fiscal year to ¥206.8 billion.

ethylene, while oil refiners showed a growing interest in

Operating income rose 279.9% to ¥5.9 billion and net

value-added products. The pharmaceuticals sector wasincome was up 232.4% to ¥6.6 billion. New contracts totaled

buffeted by changes in its operating environment that¥290.7 billion, up 16.7% from the previous fiscal year.

included the revision of the Pharmaceutical Law, a rush ofmergers and acquisition among Japanese pharmaceuticalb New contracts and construction contracts

firms, and the acquisition of domestic pharmaceutical

New contracts totaled ¥290.7 billion, as domestic orders

companies by their foreign counterparts, with the result

increased 4.9% over the previous fiscal year to ¥72.0 billion,

that domestic pharmaceutical firms aggressively outsourced

and overseas orders rose 21.2% to ¥218.7 billion. Revenues

their engineering work. Overseas, several major investment

from construction contracts were ¥206.8 billion. Revenues

plans were unveiled in the Middle East. Considerable

in Japan declined 23.7% to ¥63.4 billion but revenues from

activity was also seen in China, a potentially lucrative market

overseas rose 72.2% to ¥143.5 billion.

over the medium-to long-term, where foreign firms areactively setting up manufacturing facilities in the

The following is a summary of engineering operations,

automotive, consumer electronics, food and construction

which represent the bulk of the Company’s activities:

sectors. Japanese chemical producers are increasing
capacity in China to supply parts and raw materials to thesea. Petroleum
Japan’s petroleum sector experienced unprecedented

foreign transplants.
New contracts totaled ¥21.9 billion, a decline of 55.1%

change in fiscal 2004, characterized by progressivefrom the previous fiscal year. Major orders included aconsolidation in the domestic petroleum industry,

pharmaceutical laboratory for Mitsubishi Pharma

streamlining of refining facilities through facility

Corporation, PVDC (polyvinylidene chloride) plant for

consolidation, and sharply higher sales of heavy oil as safety

Nantong SKT New Material Co., Ltd. and PMMA

considerations forced shut downs of nuclear power plants.

(polymethyl methacrylate) sheet plant for Mitsubishi Rayon

Heightened awareness of environmental issues led toPolymer Nantong Co., Ltd. However, revenues fromaccelerated investment in gasoline, light oil and kerosene

construction contracts surged 51.4% to ¥54.2 billion,

desulfurization plants. As a result of these and other factors,

reflecting buoyant orders in previous years. Revenues

segment orders rose sharply.

included payment for the completed portion of construction

Aggregate new contracts increased 299.6% from theprevious fiscal year to ¥38.9 billion. Major orders included aof ethylene/methanol plants in Saudi Arabia and apharmaceutical plant for Chugai Pharmaceutical Co., Ltd.

hydrodesulfurization unit for Mizushima Refinery of Nippon
Petroleum Refining Co., Ltd. and gasoline sulfur reduction

c. Power and Gas

projects for Seibu Oil Co., Ltd. and Showa Yokkaichi Sekiyu

In Japan, gas companies are reporting growing sales ofCo., Ltd. Revenues from construction contracts fell 25.4%

natural gas as the volume to natural gas consumption

to ¥25.7 billion, reflecting weak orders for overseas

increases in both the consumer and industrial sectors.

petroleum-related projects in the previous fiscal year. Major

Increasing use of hot water in the home and a continuing

completions included an expansion of a crude distillation

shift to natural gas as an industrial energy source is driving

unit for Taiyo Oil Co., Ltd.

demand growth.

CHIYODA CORPORATION ANNUAL REPORT 2004 21

Overseas, production of natural gas in the U.S. andc Gross profit on construction contracts

Canada is declining steadily. In response, the U.S.

Gross profit on construction contracts increased 35.1%

government has unveiled policies aimed at boosting naturalcompared to the previous fiscal year, to ¥14.1 billion.

gas imports. In Europe, where deregulation of the gas

Higher gross profit reflects a recovery in gross profit margins

sector is spurring entry of new firms into the gas supply

on the strength of two factors: a growing level of sales, andbusiness, imports of LNG continue to increase. Elsewhere,

improvement in the gross profit margin through the firm

new customers are appearing in the market. India hasestablishment of risk management expertise at all projectsigned an agreement with Qatar for the purchase of 7.5

stages starting from the bidding stage aimed at assuring

million tons of LNG per year. China has also concluded gas

profitability on construction contracts. As a result of thesepurchase agreements with Indonesia and Australia. Against

and other factors, the gross profit margin on construction

the backdrop of these trends, investments in gas processing

contracts rose 0.5 percentage points to 6.8%.

plants increased and expansions of LNG/LPG plants
continued in the Middle East.
New contracts in the fiscal year under review rosed Selling, general and administrative expenses

Selling, general and administrative expenses declined ¥0.7

36.7% from the previous fiscal year to ¥201.0 billion,

billion from the previous fiscal year to ¥8.2 billion. The

reflecting several major orders that included the Sakhalin II

decline was achieved despite a ¥0.2 billion increase in

LNG project in Russia (LNG plant/crude oil export facilities)

research and development expenses and a ¥0.1 billion

for Sakhalin Energy Investment Company Ltd., an LNG plantincrease in personnel expenses, as we increased employee(additional work) in Qatar for Ras Laffan Liquefied Naturalcompensation to reward employees for the ongoing recovery

Gas Co., Ltd., a gas development project (additional work)in operating results. As operating divisions took over more

in Qatar for ExxonMobil Middle East Gas Marketing Ltd. andoffice space formerly used by the sales and administrative

an LPG storage terminal for Japan LPG Storage Co., Ltd.

divisions, expenses for office space included in the corporate

Revenues from construction contracts rose 94.8% to ¥93.4

account declined, bringing down SG&A expenses.

billion, due in part to payments received on major projects,
including a payment for the completed portion ofe Operating income

construction of LNG plant in Qatar, LNG plant in Oman andOperating income rose 279.9% from the previous fiscal year

Sakhalin II LNG project in Russia, as well as utility facilities

to ¥5.9 billion. The principal factors contributing to thisfor Japan Nuclear Fuel Limited.

growth were a higher level of revenues from construction
contracts, improved gross profit margins on construction

d. Infrastructure, general industries and others

contracts and lower selling, general and administrative

Chiyoda concentrated on winning orders for the

expenses. Consequently, the operating income margin

construction of new facilities and expansion of existing

improved 1.9 percentage points from 0.9% in the previous

facilities for electronic materials and high-performance films,

fiscal year to 2.8%.

areas in which the Company has an outstanding trackrecord. As a result we won orders for projects, particularly

f Other income (expenses)

for designing such facilities. However new contracts

Other expenses-net totaled ¥0.5 billion, a ¥1.5 billion

decreased 34.8% from the previous fiscal year to ¥25.3

decline from other income-net of ¥1.0 billion in the previous

billion and revenues from construction contracts fell 30.9%

fiscal year.

to ¥29.9 billion. Major completions included a flue gas
desulfurization plant (No. 2) for Kobe Steel, Ltd.

The interest balance (net)—interest and dividend
income, less interest expense—was ¥35 million, an
improvement of ¥205 million from a net expense of ¥169

22 CHIYODA CORPORATION ANNUAL REPORT 2004

million in the previous fiscal year. This was largely due tolong-term debt. Net cash provided by operating activities

lower interest expense, as interest-bearing debts werewas ¥15.6 billion, an increase of ¥8.6 billion from thebrought down. Foreign exchange gain totaled ¥0.3 billion, aprevious fiscal year, largely reflecting a sharp increase in

result of the cancellation of forward foreign exchange

working capital at the end of the year from advance receipts

contracts not deemed necessary.

on new contracts.

Equity in earnings of associated companies declined by

Jointly controlled assets of joint ventures substantially¥0.8 billion from the ¥1.0 billion posted in the previous

represent Chiyoda’s share of cash and cash equivalents at

fiscal year to ¥0.2 billion, due mainly to liquidation of

joint ventures. Net cash provided by operating activities,

Kellogg Chiyoda Service Limited, a joint venture for project

after adjustment for jointly controlled assets of joint

execution.

ventures, was ¥35.3 billion. As a result, the Group’s

For the most part, other expenses represented a ¥1.7

operating activities provided net cash of ¥69.3 billion.

billion loss on performance guarantee for an associatedcompany that more than offset a ¥0.6 billion reversal ofb Financing

provision for contingent loss from the ¥0.8 billion provision

The up-front costs of the construction of plants in Japan

made in the previous fiscal year.

and overseas, plus selling, general and administrative
expenses, account for the bulk of financing needs.

g Income, residential and enterprise taxes anddeferred tax adjustment

Significant components of selling, general andadministrative expenses are employee salaries andIncome before income taxes and minority interests was ¥5.4

allowances and outsourcing expenses. Personnel expenses

billion. Income, residential and enterprise taxes totaled only

related to R&D staff represent the majority of research and¥0.7 billion, due to a lower tax amount resulting from loss

development costs.

carryforwards for tax purposes.
Furthermore, the amount of deferred income taxes

c Financial strategy

increased by ¥1.8 billion to ¥1.9 billion, a result of the

The Company finances its working capital and investment

re-assessment of deferred tax assets, because improved

capital requirements through internal funds and bankproject cost management helped boost profit margins

borrowing. Regarding working capital, in February 2004 thesignificantly, which now makes it more probable that theCompany repaid ¥7.9 billion in short-term borrowings from

Company may generate sufficient taxable income in the

cash on hand. The Company also had a ¥12.0 billion short-next fiscal year to recover deferred tax assets.

term commitment line contract to meet any future demand
for funds.

h Net income

Regarding capital investments, current plans envision

Net income was ¥6.6 billion, an increase of ¥4.6 billion fromsmall-scale investments in IT systems. These will be financed

the previous fiscal year.

through internal funds.
Given the level of orders received, the current financial

2. SOURCE OF CAPITAL AND LIQUIDITY

position, the ability to generate operating cash flow and thea Cash flows

balance of unused commitments, the Group believes that

Cash and cash equivalents at the end of the fiscal year were

it has adequate access to funds that may be required to¥40.9 billion, an increase of ¥6.0 billion over the previous

drive growth.

fiscal year-end. The principal uses of cash were ¥1.7 billion
in capital expenditures, including IT-related investments, and¥8.2 billion for repayment of short-term bank loans and

CHIYODA CORPORATION ANNUAL REPORT 2004 23

Business Risk and Other Risks

The following is a list of major items, and Chiyoda’s

certain countries. This could have an effect on earnings

responses to those items, that may have a significant

because of delays in construction and other activities. Priorbearing on the decisions of investors with regard to theto the receipt of each order, the Company gathers extensive

Chiyoda Group’s financial position, operating results, cash

information to evaluate various risks.

flows and other important factors concerning risks
associated with an investment. The Group is aware of thepossibility that these problems may occur, and is exercising

3. SUDDEN INCREASES IN PRICES OF MATERIALS AND
OTHER ITEMS

extreme care to take preventive measures. The Group also

There is a gap between the time when estimates for plant

strives to respond quickly to any problem to minimize

construction projects are prepared and orders are placed for

its effect.

materials and equipment. Consequently, earnings at a

Certain items below concern risks that may occur in the

project are vulnerable to sudden increases in prices of labor,

future. These items represent risks that the Company

materials and equipment following the submission of anbelieves are significant with regard to its risk management

order. The completion of a project could be pushed backactivities as of June 28, 2004, the date when the Company

due to substantial increases in prices of materials andsubmitted its MOF securities report (Yuka Shoken

equipment or delays in the delivery of materials andHokokusho).

equipment caused by shortages or other factors. Suchdelays could affect earnings at a project. Recently, there has

1. FOREIGN EXCHANGE RATE MOVEMENTS

been significant growth in the price of materials. Since theFor overseas construction projects, a large share ofoutlook for these prices is uncertain, the Chiyoda Group is

payments received and payments made to procure materials

taking steps to shield itself from the risks associated withand equipment is in foreign currencies. Regarding ongoing

price movements. Actions include using suppliers in all areas

projects, the Company uses foreign exchange forwardof the world and taking steps to minimize the impact ofagreements and other instruments to minimize the potential

price increases. In addition, the Group is considering theimpact of foreign exchange movements on the earnings

placing larger orders as well as using a larger number offrom those projects. Regarding new orders, foreign

suppliers for the purpose of ensuring a reliable supply of

exchange movements may affect the competitiveness of thematerials and equipment along with strict adherence toCompany’s prices. However, overseas resources aredelivery schedules. When negotiating contracts with

employed and other steps taken in order to reduce risks

customers, the Company works hard at including

associated with foreign exchange movements as well as tosupplementary terms that address the possibility of anpreserve and enhance the Company’s ability to offer

unusual increase in prices.

competitive prices.
4. TERRORISM, POLITICAL UNREST IN NEARBY COUNTRIES,
2. FOREIGN TAXES, CUSTOM DUTIES AND VISASSTRIKES AND LACK OF GOVERNMENT CONTROLSFor overseas construction projects, the Company is at times

Global terrorism could directly harm the Company’s headobligated to pay corporate and other taxes in countries

office, construction sites or employees, cause thewhere projects are located. In some instances, there is asuspension of ongoing business activities, or reduce theneed to deal with unexpected problems, such as additional

volume of capital expenditures over the medium and longtax payments, resulting from inadequate laws andterms due to instability in the client countries in the Middle

regulations or other factors in a particular country.

East and elsewhere. Such events could affect earnings.

Such problems can have an effect on earnings. Furthermore,

There is also a possibility that the Company needs to ask

a long time is required to receive entry and working visas incustomers to postpone construction projects due to strikes

24 CHIYODA CORPORATION ANNUAL REPORT 2004

at suppliers or frequent general strikes and anarchism incompleted in the past. These problems range from minor

developing countries and regions. Although the Company

malfunctions of the devices that make up these plants to a

is taking actions to minimize exposure to this risk as muchmajor accident such as an explosion or fire. In the event thatas possible, there could be an impact on earnings if thethe Group is responsible for the cause of an accident,Group is unable to have customers pay for the resulting

earnings may be affected. In the event of a major accident,

additional expenses. The Group has established a crisis

the Group will conduct a rapid initial response based on its

management system so that a quick initial response can becrisis management system. The Group will also determine

made if a problem occurs.

the cause and, if the Group is responsible, respond in amanner that reflects the Group’s obligation to society. If the

5. SUPPLIER BANKRUPTCIES AND OTHER FINANCIAL
PROBLEMSGroup is not responsible, the Group will provide thecustomer with the best solution for the problem.

The Group procures on a global scale the materials andFurthermore, to prevent an accident from occurring, theequipment used to construct plants. A deterioration inGroup has quality management, safety management andeconomic conditions in the country or region where aother risk management systems in order to be certain of thesubcontractor or manufacturer is located could cause one orsafety of newly constructed plants.

more of these companies to declare bankruptcy or to fail todeliver products or services on schedule. Such events could
affect earnings. To manage this risk, the Group evaluates
the financial standing of these companies, inspects factories
and takes other actions on a regular basis.
6. ACCIDENTS DURING TRANSPORT OF MATERIALSAND EQUIPMENT
There is a risk that materials and equipment are damaged
during transport due to inclement weather or other natural
disaster. While goods are insured during transport,
insurance is not normally available to cover damage
resulting from the sudden breakout of hostilities or a war.
The Group is thus temporarily exposed to this risk whengoods are transported. War insurance is available in somecases once a certain period after the outbreak of hostilities
has passed. However, since insurance premiums are high,the resulting increase in insurance payments may affectearnings. In the event of an accident during the transport ofmaterials and equipment, the Group will quickly holddiscussions with customers and other related parties todetermine the best course of action.
7. PLANT ACCIDENTS
There is a possibility for a variety of problems to occur for
whatever reason at plants the Group is constructing or has

CHIYODA CORPORATION ANNUAL REPORT 2004 25

Consolidated Balance Sheets
Chiyoda Corporation and Consolidated Subsidiaries
March 31, 2004 and 2003
Thousands of
U.S. Dollars(Note 1)ASSETS
Millions of Yen

2004

2003

2004

¥ 40,903
710
18,881(432)
5,732
18,9182,101
28,4142,086
3,243¥ 34,940
1,172
20,325(629)
5,050
21,105
3,849
8,672
195
2,250

$ 385,877
6,698
178,123(4,075)54,075
178,472
19,821
268,057
19,67930,594

120,556

96,9291,137,321

PROPERTY, PLANT AND EQUIPMENT (Note 9):Land
Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Construction in progress
Total
Accumulated depreciation

2,527
6,353
870
5,270
2
15,022(8,099)

2,527
6,676
960
5,178
15,341(8,274)

23,84059,9348,207
49,717
19
141,717(76,406)

Net property, plant and equipment

6,923

7,067

65,311

1,726

1,835

16,283

3,794
686
7,819
2,532
82
2,296
(3,554)

3,650
615
9,918
2,234
83
2,451
(4,485)35,792
6,472
73,76423,887774
21,660(33,528)

15,381

16,301

145,104¥142,860¥120,297$1,347,736

CURRENT ASSETS:
Cash and cash equivalents
Time deposits
Notes and accounts receivable—trade (Note 3)
Allowance for doubtful accounts
Costs and estimated earnings on long-term construction contracts (Note 4)
Costs of construction contracts in process
Accounts receivable—other (Note 8)
Jointly controlled asset of joint venture
Deferred tax assets (Note 12)
Prepaid expenses and other (Note 15)
Total current assets

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 5 and 9)
Investments in and advances to unconsolidated subsidiaries andassociated companies (Notes 6 and 8)
Long-term loans (Note 7)Long-term receivables (Note 8)
SoftwareDeferred tax assets (Note 12)
Other investments
Allowance for doubtful accounts (Note 8)
Total investments and other assets
TOTAL
See notes to consolidated financial statements.

26 CHIYODA CORPORATION ANNUAL REPORT 2004

Thousands of
U.S. Dollars(Note 1)

LIABILITIES AND SHAREHOLDERS’ EQUITY
Millions of Yen

2004

CURRENT LIABILITIES:
Short-term bank loans (Note 9)
Current portion of long-term debt (Note 9)
Notes and accounts payable—trade (Note 3)
Advance receipts on construction contracts
Income taxes payable
Deposits received (Note 3)
Allowance for warranty costs for completed works
Allowance for contingent loss
Accrued expenses and other (Note 15)

2003

102
52,88837,062
195
5,245
1,079
200
8,066

7,939
263
46,511
25,172
295
1,120
694
800
6,609

104,837

89,403

989,028

NON-CURRENT LIABILITIES:Long-term debt (Note 9)
Liability for retirement benefits (Note 10)
Deferred tax liabilities (Note 12)
Other liabilities

10,3164,507
287

10,422
3,182
10
111

97,321
42,51919820

Total non-current liabilities

14,912

13,725

140,679

344

499

3,246

12,02812,028113,472

5,819
5,801
26
(767)

5,819
(497)
10
(642)

54,89654,727245(7,236)

(140)

(48)

(1,321)

22,767

16,670214,783¥142,860¥120,297$1,347,736

Total current liabilities

MINORITY INTERESTS

¥

2004

¥

$

962
498,943
349,641
1,840
49,481
10,1791,887
76,095

CONTINGENT LIABILITIES (Notes 3, 14, 15 and 16)
SHAREHOLDERS’ EQUITY (Notes 11 and 18):
Common stock—authorized, 570,000 thousand shares;
issued, 185,429 thousand shares
Preferred stock—authorized, 80,000 thousand shares
Additional paid-in capital
Retained earnings (accumulated deficit)
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Treasury stock—at cost, 387,854 shares in 2004 and229,340 shares in 2003
Total shareholders’ equityTOTAL

CHIYODA CORPORATION ANNUAL REPORT 2004 27

Consolidated Statements of Income
Chiyoda Corporation and Consolidated Subsidiaries
Years Ended March 31, 2004 and 2003
Thousands of
U.S. Dollars(Note 1)Millions of Yen

CONSTRUCTION CONTRACTS (Notes 3 and 4)
COSTS OF CONSTRUCTION CONTRACTS (Notes 3 and 4)

2004

2003

2004

¥206,817
192,710¥166,367
155,924$1,951,104
1,818,019

14,107

10,443133,085

8,226

8,895

77,604

5,881

1,548

55,481

411
(375)
156
294
(1,680)

360
(529)
1,000
(178)

3,877
(3,538)1,472
2,774(15,849)

Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Notes 3 and 13)
Operating income
OTHER INCOME (EXPENSES):Interest and dividend income (Note 3)
Interest expense
Equity in earnings of associated companies
Foreign exchange gain (loss)
Loss on performance guarantee for an associated company
Provision for contingent loss
Reversal of provision for contingent loss
Reversal of allowance for doubtful accounts
Provision for investment loss
Gain on sales of investments in subsidiaries
Loss on write-down of golf club membership
Other—net

(800)
600
486

5,660
4,585

(403)

1,167
(264)
315
(294)
184

(3,802)

(511)

961

(4,821)

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS

5,370

2,509

50,660

INCOME TAXES (Note 12):Current
Deferred
Refund of foreign income taxes

668(1,906)

951
(147)
(317)

6,302
(17,981)(1,238)487(11,679)

(39)

22

(369)

Other income (expenses)—net

Total
MINORITY INTERESTS IN NET INCOME
NET INCOME

¥

6,647

¥

2,000

See notes to consolidated financial statements.

28 CHIYODA CORPORATION ANNUAL REPORT 2004

¥35.91
34.99

62,708
U.S. Dollars(Note 1)Yen

PER SHARE OF COMMON STOCK (Note 17):
Basic net income
Diluted net income$¥10.79
10.77

$0.34
0.33

Consolidated Statements of Shareholders’ Equity
Chiyoda Corporation and Consolidated Subsidiaries
Years Ended March 31, 2004 and 2003
Thousands

Millions of Yen

Outstanding
Number of
Shares ofCommonStockCommonStock

Unrealized
Retained Gain (Loss) on Foreign
Additional
Earnings
AvailableCurrency
Paid-in(Accumulated for-Sale
Translation
CapitalDeficit)Securities Adjustments

Treasury
Stock

BALANCE, APRIL 1, 2002
185,388
Net income
Purchase of treasury stock(189)
Decrease in accumulated deficit due toassociated companies newly accounted
for by the equity method
Net increase in unrealized gain on
available-for-sale securities
Net change in foreign currency translation
adjustments¥12,028¥5,819¥ (6)BALANCE, MARCH 31, 2003

12,028Net income
Purchase of treasury stock
Increase in retained earnings due to
exclusion from consolidation of
consolidated subsidiaries
Decrease in retained earnings due to
exclusion from equity method accountingof associated companies
Net increase in unrealized gain on
available-for-sale securities
Net change in foreign currency translation
adjustments
BALANCE, MARCH 31, 2004

185,199¥(2,517)
2,000

¥ (1)

¥(220)

(42)

20
11
(422)
5,819

(497)

10

(642)

(48)

6,647
(158)

(92)

12

(361)
16
(125)
185,041¥12,028¥5,819¥5,801¥26¥(767)¥(140)

Thousands of U.S. Dollars (Note 1)

CommonStock

Unrealized
Retained Gain (Loss) on Foreign
Additional
Earnings
AvailableCurrency
Paid-in(Accumulated for-Sale
Translation
CapitalDeficit)Securities Adjustments

BALANCE, MARCH 31, 2003
Net income
Purchase of treasury stock
Increase in retained earnings due to
exclusion from consolidation of
consolidated subsidiaries
Decrease in retained earnings due to
exclusion from equity method accountingof associated companies
Net increase in unrealized gain on
available-for-sale securities
Net change in foreign currency translation
adjustments$113,472 $54,896 $ (4,689)
62,708BALANCE, MARCH 31, 2004

$113,472 $54,896

See notes to consolidated financial statements.

$ 94$(6,057)

TreasuryStock$ (453)(868)

113(3,405)151(1,179)$54,727$245$(7,236)$(1,321)CHIYODA CORPORATION ANNUAL REPORT 2004 29

Consolidated Statements of Cash Flows
Chiyoda Corporation and Consolidated Subsidiaries
Years Ended March 31, 2004 and 2003
Thousands of
U.S. Dollars(Note 1)Millions of Yen

OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes paid
Depreciation and amortization
Reversal of allowance for doubtful accounts—net
Provision for (reversal of) contingent loss
Provision for investment loss
Provision for (reversal of) warranty costs for completed works
Provision for retirement benefits—net
Gain on sales of investments in subsidiaries
Loss on write-down of golf club membership
Foreign exchange loss—net
Equity in earnings of associated companies
Changes in operating assets and liabilities:
Decrease in trade notes and accounts receivable, and costs
and estimated earnings on long-term construction contracts
Decrease in costs of construction contracts in process
Increase in jointly controlled asset of joint venture
Decrease in interest and dividend receivable
Increase in trade notes and accounts payable
Increase (decrease) in advance receipts on construction contracts
Increase (decrease) in deposits received
Other—net
Total adjustments
Net cash provided by operating activities
INVESTING ACTIVITIES:
Proceeds from refunds of fixed deposits
Proceeds from sales of investments in subsidiaries
Purchase of investment securities
Purchases of property, plant and equipment
Purchase of intangible assets
Proceeds from sales of property, plant and equipment
Disbursements for originating loans
Proceeds from collections of loans
Other—net
Net cash used in investing activities
FINANCING ACTIVITIES:Net decrease in short-term bank loans
Proceeds from long-term debt
Repayments of long-term debt
Other—net
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH
AND CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS OF NEWLY (EXCLUSION OF)
CONSOLIDATED SUBSIDIARIES, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
See notes to consolidated financial statements.

30 CHIYODA CORPORATION ANNUAL REPORT 2004

2004

2003

2004

¥ 5,370¥ 2,509$ 50,660

(705)
1,205
(1,128)(600)(6,651)
11,368(10,642)(5,660)

651
(156)

(790)
1,226
(968)
800
264
(140)
1,157
(315)
294
916
(1,000)762
2,187(19,742)255
6,377
11,8904,125
3,380
10,211
15,581

1,144
2,805
(450)
1,217
6,168
(8,541)
(760)
1,403
4,430
6,939

7,188
20,632(186,245)
2,406
60,160112,170
38,91531,887
96,330146,990

354

588
116
(118)
(296)
(853)
142
(638)
193
(7)
(873)

3,340

385
1,325

(20)
(751)
(993)
8
(144)
250
19
(1,277)(7,904)

3,632
12,5006,142(1,472)(189)(7,085)(9,368)76(1,358)2,358
179(12,047)(74,566)

(258)
(93)
(8,255)(8,718)
9
(793)
(42)
(9,544)

(78)
5,971

(459)
(3,937)(736)
56,330(8)
34,940¥40,903200
38,677¥34,940(75)
329,622$385,877(2,434)(877)(77,877)

Notes to Consolidated Financial Statements
Chiyoda Corporation and Consolidated Subsidiaries
Years Ended March 31, 2004 and 2003

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements havebeen prepared in accordance with the provisions set forth in
the Japanese Securities and Exchange Law and its related
accounting regulations, and in conformity with accounting
principles generally accepted in Japan, which are different
in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been madeto the consolidated financial statements issued domesticallyin order to present them in a form which is more familiar toreaders outside Japan. In addition, certain reclassifications
and rearrangements have been made in the 2003 financial

statements in order for them to conform to classifications
and presentations used in 2004.
The consolidated financial statements are stated inJapanese 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 convenienceof readers outside Japan and have been made at the rate of¥106 to $1, the approximate rate of exchange at March 31,
2004. 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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation
The consolidated financial statements for the year ended
March 31, 2004, include the accounts of the Company andits 20 (24 in 2003) significant subsidiaries (together, the“Group”). Under the control or influence concept, thosecompanies in which the Company, directly or indirectly, hasa control over operations are fully consolidated.
Investments in 5 (8 in 2003) associated companies areaccounted for by the equity method. Investments in the remaining unconsolidated subsidiaries and associated companies are stated at cost. If the equity method of accounting
had been applied to the investments in these companies,
the effect on the accompanying consolidated financial statements would not be material.
The excess of the cost of the Company’s investments inconsolidated subsidiaries and associated companies accounted
for by the equity method over the Company’s equity in the
net assets at the respective dates of acquisition was charged
to income at the time of acquisition as the amount involved
was not material.
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 eliminated.
b. Construction Contracts
Revenues on construction contracts greater than ¥5 billion
and having a construction duration of more than 18 months
are recognized on the percentage-of-completion method
based on the ratio of costs incurred to total estimated costs.
Under this method, related costs and estimated earnings inexcess of progress billings are presented as a current asset.

Unbilled costs on the other 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 the contracts, which are accounted for by the percentageof-completion method, and costs incurred on the other contracts are presented as a current liability.
Costs of preparation work for unsuccessful proposals andother projects which are not realized are charged to income
and are included in costs of construction contracts.
c. Cash and Cash Equivalents
Cash equivalents are short-term investments that are readily
convertible into cash and that are exposed to insignificant
risk of changes in value. Cash equivalents include time
deposits and short-term investments, all of which matureor become due within 3 months of the date of acquisition.
d. Investment Securities
All securities are classified as available-for-sale securities andare reported at fair value, with unrealized gains and losses,
net of applicable taxes, reported in a separate componentof shareholders’ equity. The cost of securities sold is determined based on the moving-average method.
Non-marketable securities are stated at cost determinedby the moving-average method. For other than temporary
declines in fair value, non-marketable securities are reduced
to net realizable value by a charge to income.
e. Allowance for Doubtful Accounts
The allowance for doubtful accounts is stated in amounts
considered to be appropriate based on the Group’s pastcredit loss experience and an evaluation of estimated losseson the receivables outstanding.

CHIYODA CORPORATION ANNUAL REPORT 2004 31

f. Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is computed using the declining-balance method,
except for buildings owned by the Company and leased
property owned by a certain leasing subsidiary which arecomputed using the straight-line method, based on theestimated useful lives of the assets. The range of useful lives
is from 11 to 57 years for buildings and structures, from 4
to 13 years for machinery and equipment and from 2 to 15
years for tools, furniture and fixtures.
g. Other Assets
Intangible assets are carried at cost less accumulated amortization, which is calculated by the straight-line method overtheir estimated useful lives. Software for internal use isamortized on a straight-line basis over its estimated usefullife (5 years at the maximum).
h. Allowance for Warranty Costs for Completed Works
The allowance for warranty costs for completed works isprovided at the amounts of warranty costs based on thepast experience rates.
i. Allowance for Contingent Loss
The allowance for contingent loss is provided at the amountdeemed necessary to cover possible losses on construction
contracts based on the estimation of each contingency.
j. Retirement Benefits
Employees of the Company and its certain consolidated subsidiaries are, under most circumstances, entitled to certain
lump-sum severance payments and pension payments.
Effective April 1, 2000, the Company and domestic consolidated subsidiaries adopted a new accounting standard
for employees’ retirement benefits and accounted for theliability for retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date.
The transitional obligation of ¥12,123 million ($114,368
thousand), determined as of April 1, 2000, is being amortized and charged to income over 15 years and presented
as an operating expense in the statements of income.
Retirement benefits to directors, officers and corporate
auditors are provided at the amount which would be required if all directors, officers and corporate auditors terminated at the end of each period.
k. Research and Development Costs
Research and development costs are charged to income
when incurred.
l. Leases
All leases are accounted for as operating leases. Under Japanese accounting standards for leases, finance leases that are
deemed to transfer ownership of the leased property to thelessee are to be capitalized, while other finance leases are

32 CHIYODA CORPORATION ANNUAL REPORT 2004

permitted to be accounted for as operating lease transactions if certain “as if capitalized” information is disclosed in
the notes to the lessee’s consolidated financial statements.
m. Income Taxes
The provision for income taxes is computed based on thepretax income included in the consolidated statements ofincome. The asset and liability approach is used to recognize
deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities. Deferredtaxes are measured by applying currently enacted tax laws
to the temporary differences.
The Group has filed a tax return under the consolidated
corporate-tax system from the fiscal year ended March 31,
2003, which allows companies to base tax payments on the
combined profits or losses of the parent company and its
wholly owned domestic subsidiaries. Under the consolidated
corporate-tax system, a surcharge tax of 2% of taxable income is levied in addition to the national corporate income
tax rate for the fiscal years ended March 31, 2004 and 2003.
n. Foreign Currency Transactions
Both short-term and long-term receivables and payables
denominated in foreign currencies are translated into
Japanese yen at exchange rates in effect at the balance
sheet date.
However, short-term and long-term receivables andpayables covered by forward exchange contracts aretranslated at the contract rates.
Any differences between the foreign exchange contract
rates and historical rates resulting from the translation ofreceivables and payables are recognized as income or expense over the lives of the related contracts.
o. Foreign Currency Financial Statements
The balance sheet accounts of the consolidated foreignsubsidiaries are translated into Japanese yen at the current
exchange rate as of the balance sheet date except for shareholders’ equity, which is translated at the historical rate.
Differences arising from such translation were shown as aseparate component of shareholders’ equity as “Foreign
currency translation adjustments.”
Revenue and expense accounts of consolidated foreignsubsidiaries are translated into Japanese yen at the current
exchange rate as of the balance sheet date.
p. Derivative Financial Instruments
The Company uses a variety of derivative financial instruments, including foreign currency forward exchange contracts, currency options and foreign currency deposits, as ameans of hedging exposure to foreign currency risks. The
Company does not enter into derivatives for trading or
speculative purposes.

Derivative financial instruments and foreign currencytransactions are classified and accounted for as follows:(a) all derivatives are recognized as either assets or liabilities
and measured at fair value, and gains or losses on derivativetransactions are recognized in the income statement and(b) for derivatives used for hedging purposes, if derivatives
qualify for hedge accounting because of high correlationand effectiveness between the hedging instruments and thehedged items, gains or losses on derivatives are deferred
until maturity of the hedged transactions.
The foreign currency forward exchange contracts are
utilized to hedge foreign exchange risks. Certain assets andliabilities on construction contracts denominated in foreign
currencies are translated at the contracted rates if the forward contracts qualify for hedge accounting.
Currency options are also utilized to hedge foreign exchange risks. These options which qualify for hedge accounting are measured at market value at the balance sheet date
and the unrealized gains or losses are deferred until maturity
as an other liability or other asset.
q. Per Share Information
Basic net income per share is computed by dividing net
income available to common shareholders by the weightedaverage number of common shares outstanding for theperiod, retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could occur if securities were exercised or converted
into common stock. Diluted net income per share of common
stock assumes full conversion of the outstanding convertible

notes and bonds at the beginning of the year (or at thetime of issuance) with an applicable adjustment for related
interest expense, net of tax, and full exercise of outstanding
warrants.
r. New Accounting Pronouncements
In August 2002, the Business Accounting Council issued
a Statement of Opinion, “Accounting for Impairment of
Fixed Assets,” and in October 2003 the AccountingStandards Board of Japan (“ASB”) issued ASB Guidance
No. 6, “Guidance for Accounting Standard for Impairmentof Fixed Assets.” These new pronouncements are effective
for fiscal years beginning on or after April 1, 2005 with early
adoption permitted for fiscal years ending on or after March
31, 2004.
The new accounting standard requires an entity to review
its long-lived assets for impairment whenever events orchanges in circumstances indicate that the carrying amountof an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amountof 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 theamount 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 dispositionof the asset or the net selling price at disposition.
The Company is currently in the process of assessing theeffects of adopting these pronouncements.

3. TRANSACTIONS WITH UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED COMPANIES
Significant transactions with and balances due from/(to) unconsolidated subsidiaries and associated companies are
summarized as follows:
Thousands of
U.S. Dollars

Millions of Yen

Transactions for the Year Ended March 31
Construction contract revenues
Costs of construction contracts
Selling, general and administrative expenses
Interest and dividend income
Balances at March 31
Notes and accounts receivable—trade
Notes and accounts payable—trade
Deposits received

2004

2003

¥

71
(3,793)(1,452)57¥ 38(2,340)
(923)
42

34
(396)
4,234

36
(422)

2004

$

670
(35,783)(13,698)
538
321(3,736)39,943

The Company has guaranteed the indebtedness of certain unconsolidated subsidiaries and associated companies in theamount of ¥4,405 million ($41,557 thousand) and ¥4,985 million at March 31, 2004 and 2003, respectively.

CHIYODA CORPORATION ANNUAL REPORT 2004 33

4. CONSTRUCTION CONTRACTS
Costs and estimated earnings recognized with respect to construction contracts which are accounted for by the percentageof-completion method at March 31, 2004 and 2003, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2004

2003

2004

Costs and estimated earnings
Amounts billed¥143,734(138,002)¥75,610(70,560)$1,355,981(1,301,906)

Net¥¥ 5,050$

5,732

54,075

5. INVESTMENT SECURITIESInvestment securities at March 31, 2004 and 2003, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Equity securities

2004

2003

2004

¥1,726¥1,835$16,283

The carrying amounts and aggregate fair values of investment securities with readily determinable fair values at March 31,
2004 and 2003, were as follows:
Millions of Yen

March 31, 2004
Available-for-sale—Equity securities
March 31, 2003
Available-for-sale—Equity securities

Cost

Unrealized
Gains

¥57

¥44

55

26

Cost

Unrealized
Gains

$538

$415

Unrealized
LossesFair Value

¥101
¥10

71

Thousands of U.S. Dollars

March 31, 2004
Available-for-sale—Equity securities

Unrealized
LossesFair Value$953

Available-for-sale securities whose fair value is not readily determinable at March 31, 2004 and 2003, were as follows:
Carrying AmountMillions of Yen

Equity securities
Proceeds from sales of available-for-sale securities for theyear ended March 31, 2004, were ¥4 million ($38 thousand)and gross realized losses on these sales, computed on themoving average cost basis, were ¥6 million ($57 thousand).

34 CHIYODA CORPORATION ANNUAL REPORT 2004

Thousands of
U.S. Dollars

2004

2003

2004

¥1,625¥1,764$15,330

Proceeds from sales of available-for-sale securities for theyear ended March 31, 2003, were ¥6 million and gross realized gains and losses on these sales, computed on the moving average cost basis, were ¥2 million and ¥3 million,
respectively.

6. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED COMPANIESInvestments in and advances to unconsolidated subsidiaries and associated companies at March 31, 2004 and 2003, were as
follows:
Thousands of
U.S. Dollars

Millions of Yen

2004

2003

2004

Investments
Allowance for investment loss
Advances¥2,600(263)
1,457¥2,371(264)
1,543$24,528(2,481)
13,745

Total¥3,794¥3,650$35,792

7. LONG-TERM LOANS
Long-term loans to employees are included in long-term loans in the amounts of ¥683 million ($6,443 thousand) and¥601 million at March 31, 2004 and 2003, respectively.

8. LONG-TERM RECEIVABLES
Long-term receivables at March 31, 2004 and 2003, include
receivables of ¥3,101 million ($29,255 thousand) and¥3,986 million, respectively, from Nigerian National Petroleum Corporation (“NNPC”) relating to services performedby the Company in 1995. The Company has negotiatedpayment terms with NNPC and has collected ¥849 million($8,009 thousand) and ¥4,047 million during the years ended
March 31, 2004 and 2003, respectively, but the repayment
schedule of the remaining balance is not determined due tothe economic and political circumstances in Nigeria.

The Company also has gross receivables and other assets
in the amount of ¥6,464 million ($60,981 thousand) and¥7,132 million at March 31, 2004 and 2003, respectively,from Karunaphuli Fertilizer Company Limited (“KAFCO”),
a Bangladesh company, and its related parties as follows.
In March 2001, KAFCO, its shareholders and banks reacheda basic agreement about financial restructuring under thesupervision of the Bangladesh government and KAFCO has
started making payments based on the schedule defined in
the financial restructuring plan.
Thousands of
U.S. Dollars

Millions of Yen

2004

40

2003

¥

41

2004

Accounts receivable—other
Investments in and advances to unconsolidated subsidiaries
and associated companies
Allowance for investment loss
Long-term receivables
Allowance for doubtful accounts

¥

$

377

2,789
(263)
3,635
(1,065)

2,873
(263)
4,218
(1,031)

26,311(2,481)
34,293(10,047)

Total¥5,136¥5,838$48,453

CHIYODA CORPORATION ANNUAL REPORT 2004 35

9. SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans bear interest at rates ranging from 1.625% to 7.65% at March 31, 2003. Short-term bank loans at
March 31, 2003, consisted of the following:
Millions of Yen

2003

Collateralized
Uncollateralized¥3,140
4,799

Total

¥7,939At March 31, 2004, the Group had no short-term bank loans.
Long-term debt at March 31, 2004 and 2003, consisted of the following:
Millions of Yen

Thousands of
U.S. Dollars

2004

2003

2004

Long-term loans from banks and insurance companies, maturing seriallythrough 2010, with interest rates ranging from 1.7% to 5.8% (2004)
and from 0.9% to 6.9% (2003):
Collateralized
Uncollateralized¥ 417
10,001¥ 664
10,021$ 3,934
94,349Total
Less current portion

10,418(102)

10,685(263)

98,283(962)

Long-term debt, less current portion¥10,316¥10,422$97,321Subordinated loans in the amount of ¥10,000 million ($94,340 thousand) from The Bank of Tokyo-Mitsubishi, Ltd. were
included in ’Uncollateralized’ at March 31, 2004 and 2003.
Commitment-line contracts at March 31, 2004, are as follows:
Millions of Yen

Thousands of
U.S. Dollars

Commitment-line contracts
Used commitments¥12,000$113,208

Unused commitments¥12,000$113,208

Millions of Yen

Thousands of
U.S. Dollars

Annual maturities of long-term debt at March 31, 2004, were as follows:Year Ending March 31

2005
2006
2007
2008
2009 and thereafter
Total

36 CHIYODA CORPORATION ANNUAL REPORT 2004

¥ 102
10,102
76
71
67

$ 962
95,302
717
670
632¥10,418$98,283

The following assets were pledged as collateral for long-term debt at March 31, 2004:
Millions of Yen

Thousands of
U.S. Dollars

Land
Buildings and structures—net of accumulated depreciation
Tools, furniture and fixtures—net of accumulated depreciation
Investment securities

¥ 695
684
6
4

$ 6,557
6,453
56
38

Total

¥1,389$13,104

10. RETIREMENT BENEFITS
Employees who terminate their services with the Company
are, under most circumstances, entitled to receive lump-sum
retirement benefits based upon their rates of pay at the timeof termination, years of service and certain other factors.
However, an employee who terminates at 50 years of age
or older with service of at least 20 years is entitled to receive
an annuity from the trustee under the pension plan which
covers such employees. If the annuity does not reach thelevel of total retirement benefits due, the remainder would
be paid by the Company.

Certain consolidated subsidiaries also have severance payment and pension plans similar to those of the Company.
Liability for retirement benefits includes retirement benefits to directors, officers and corporate auditors in theamount of ¥379 million ($3,576 thousand) and ¥271 million
for the years ended March 31, 2004 and 2003, respectively.
The retirement benefits to directors and corporate auditors
are paid subject to the approval of the shareholders.

The liability for employees’ retirement benefits at March 31, 2004 and 2003, consisted of the following:
Millions of Yen

Thousands of
U.S. Dollars

2004

2003

2004

Projected benefit obligation
Fair value of plan assets
Unrecognized transitional obligation
Unrecognized actuarial loss

¥34,026(15,594)(8,891)(5,413)¥34,212(14,195)(9,699)(7,407)$321,000(147,113)(83,878)(51,066)

Net liability¥ 4,128¥ 2,911$ 38,943

The components of net periodic benefit costs for the years ended March 31, 2004 and 2003, are as follows:
Millions of Yen

Thousands of
U.S. Dollars

2004

2003

2004

Service cost
Interest cost
Expected return on plan assets
Amortization of transitional obligation
Recognized actuarial loss

¥ 922
478
(196)
808
783

¥1,080
739
(365)
808
308

$ 8,698
4,509(1,849)
7,623
7,387

Net periodic benefit costs¥2,795¥2,570$26,368

CHIYODA CORPORATION ANNUAL REPORT 2004 37

Assumptions used for the years ended March 31, 2004 and 2003, are set forth as follows:
Discount rate
Expected rate of return on plan assets
Recognition period of actuarial gain/loss
Amortization period of transitional obligation

2004

2003

1.5%
1.5%
10 years
15 years

1.5%
2.5%
12 years
15 years

11. SHAREHOLDERS’ EQUITY
Japanese companies are subject to the JapaneseCommercial Code (the “Code”) to which various amendments have become effective since October 1, 2001.
The Code was revised whereby common stock par value
was eliminated resulting in all shares being recorded withno par value and at least 50% of the issue price of newshares is required to be recorded as common stock and theremaining net proceeds as additional paid-in capital. The
Code permits Japanese companies, upon approval of theBoard of Directors, to issue shares to existing shareholders
without consideration as a stock split. Such issuance ofshares generally does not give rise to changes within theshareholders’ accounts.
The revised Code also provides that an amount at least
equal to 10% of the aggregate amount of cash dividends
and certain other appropriations of retained earnings associated with cash outlays applicable to each period shall beappropriated as a legal reserve (a component of retained
earnings) until such reserve and additional paid-in capitalequals 25% of common stock. The amount of total additional paid-in capital and legal reserve that exceeds 25% of
the common stock may be available for dividends by resolution of the shareholders. In addition, the Code permits thetransfer of a portion of additional paid-in capital and legal

12. INCOME TAXESThe Company and its domestic subsidiaries are subject toJapanese national and local income taxes which, in theaggregate, resulted in a normal effective statutory tax rateof approximately 42% for the years ended March 31, 2004
and 2003.

38 CHIYODA CORPORATION ANNUAL REPORT 2004

reserve to the common stock by resolution of the Board of
Directors.
The revised Code eliminated restrictions on the repurchase and use of treasury stock allowing Japanese companies to repurchase treasury stock by a resolution of theshareholders at the general shareholders meeting and dispose of such treasury stock by resolution of the Board of
Directors beginning April 1, 2002. The repurchased amountof treasury stock cannot exceed the amount available for
future dividends plus the amount of common stock, additional paid-in capital or legal reserve to be reduced in thecase where such reduction was resolved at the generalshareholders meeting.
At the general shareholders meeting held on June 28,
2001, the shareholders approved a transfer of ¥23,654 million from additional paid-in capital as a reduction in accumulated deficit in order to improve the financial stability of
the Company.
The Company has a stock option plan which provides for
granting options to the Company’s directors, officers andkey employees to purchase an aggregate 7,820,000 sharesof the Company’s stock until June 30, 2009. The options
will be granted at an exercise price of ¥233 ($2.19) per share.

On March 31, 2003, a tax reform law concerning enterprise tax was enacted in Japan which changed the normal
effective statutory tax rate from 42% to 40%, effective foryears beginning on or after April 1, 2004. The deferred tax
assets and liabilities which will be realized on or after April
1, 2004, are measured at the effective tax rate of 40% as at
March 31, 2004 and 2003.

The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets andliabilities at March 31, 2004 and 2003, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2004

2003

2004

¥ 6,679
3,633
1,506
1,269
562
122
737
2,873
(15,197)¥23,231
4,216
896
1,929
180
181
734
3,143
(34,224)$ 63,009
34,274
14,208
11,972
5,302
1,151
6,953
27,103(143,368)

Total
Deferred tax liabilities

2,184
18

286
18

20,604170

Net deferred tax assets¥ 2,166

268$ 20,434

Deferred tax assets:
Tax loss carryforwards
Cost of construction contracts
Retirement benefits
Allowance for doubtful accounts
Loss on long-term construction contracts
Loss on write-down of costs of construction contracts in process
Loss on write-down of property, plant and equipment
Other
Less valuation allowance¥

A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statements of income for the years ended March 31, 2004 and 2003, is as follows:
2004

2003

Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Inhabitant taxes per capita levy
Foreign income taxes
Valuation allowance for deferred tax assets
Equity in earnings of associated companies
Lower income tax rates applicable to income
Unrealized profit
Other—net

42%
14
1
3
(75)
(1)
(1)
(5)
(1)

42%
6
3
4
(19)
(17)
(1)

Actual effective tax rate

(23)%

19%

1

Under the current Japanese tax regulations, a net operating
loss can be carried forward for five years and deducted fromany future taxable income. The Company and consolidated

subsidiaries have a net operating loss carryforward ofapproximately ¥16,438 million ($155,075 thousand) and¥55,940 million at March 31, 2004 and 2003, respectively.

13. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were¥653 million ($6,160 thousand) and ¥474 million for theyears ended March 31, 2004 and 2003, respectively.

CHIYODA CORPORATION ANNUAL REPORT 2004 39

14. LEASESIncome from equipment leases held by a subsidiary for theyears ended March 31, 2004 and 2003, was ¥21 million($198 thousand) and ¥139 million, respectively.
The Company and a subsidiary lease certain machinery,computer equipment, office space and other assets. Totallease payments under the above finance leases were ¥192

million ($1,811 thousand) and ¥157 million for the years
ended March 31, 2004 and 2003, respectively.
Pro forma information for leased property under financeleases that do not transfer ownership of the leased property
to the lessee on an “as if capitalized” basis for the years
ended March 31, 2004 and 2003, was as follows:Year Ended March 31, 2004
As Lessor
Millions of Yen
MachineryandEquipment

Tools,
Furnitureand Fixtures

Acquisition cost
Accumulated depreciation

¥175
174

¥81
78

Net leased property

¥

¥ 3

1

Thousands of U.S. Dollars

Total

MachineryandEquipment

Tools,
Furnitureand Fixtures

Total

¥256
252

$1,651
1,641

$764
736

$2,415
2,377

¥

$

$ 28

$

4

10

38

As Lessee
Millions of Yen

Thousands of U.S. Dollars

MachineryandEquipment

Tools,
Furnitureand Fixtures

Total

MachineryandEquipment

Tools,
Furnitureand Fixtures

Other

Other

Total

Acquisition cost
Accumulated depreciation

¥24
12

¥775
336

¥91
26

¥890
374

$226
113

$7,312
3,170

$858
245

$8,396
3,528

Net leased property

¥12

¥439

¥65

¥516

$113

$4,142$613$4,868Millions of Yen

Thousands of U.S. Dollars

Unearned
Lease Income(As Lessor)

Obligations
under
Finance Lease(As Lessee)

Unearned
Lease Income(As Lessor)

Obligations
under
Finance Lease(As Lessee)

Due within one year
Due after one year

¥2
2

¥208
308

$19
19

$1,962
2,906

Total

¥4

¥516

$38

$4,868Year Ended March 31, 2003
Millions of Yen
As Lessor
MachineryandEquipment

Tools,
Furnitureand Fixtures

Other

Acquisition cost
Accumulated depreciation

¥382
374

¥124
117

¥26
26

Net leased property¥¥

40 CHIYODA CORPORATION ANNUAL REPORT 2004

8

7

As Lessee

Total

MachineryandEquipment

Tools,
Furnitureand Fixtures

Other

Total

¥532
517

¥13
7

¥613
250

¥51
25

¥677
282

¥ 15

¥ 6

¥363

¥26

¥395

Millions of Yen
Unearned
Lease Income(As Lessor)

Obligations
under
Finance Lease(As Lessee)

Due within one year
Due after one year

¥14
4

¥158
237

Total

¥18

¥395

Depreciation expense as lessor, which is reflected in theaccompanying consolidated statements of income, computed by the straight-line method was ¥12 million ($113 thousand) and ¥63 million for the years ended March 31, 2004
and 2003, respectively.
Depreciation expense as lessee, which is not reflectedin the accompanying consolidated statements of income,computed by the straight-line method was ¥192 million($1,811 thousand) and ¥157 million for the years ended
March 31, 2004 and 2003, respectively.
The amounts of unearned lease income and obligations,acquisition cost and depreciation under finance leases
include the imputed interest income portion and interest
expense portion, respectively.

15. DERIVATIVESThe Company enters into foreign currency forward exchange
contracts, currency option contracts and foreign currency
deposits to hedge foreign exchange risk associated withcertain assets and liabilities on construction contracts denominated in foreign currencies. It is the Company’s policy
to use derivatives only for the purpose of reducing foreignexchange risks associated with such assets or liabilities. The
Company does not hold or issue derivatives for trading
purposes.

Because the counterparties to these derivatives are limited
to major international financial institutions, the Company
does not anticipate any losses arising from credit risk.
The basic policies for the use of derivatives are approvedby the management and the execution and control of derivatives are controlled by the Company’s financing department. Each derivative transaction is periodically reported to
the Company’s accounting department and executive officers.

The Group had the following derivative contracts outstanding at March 31, 2004:
Millions of Yen

Foreign currency forward exchange contracts:
Buying:
U.S.$
Euro
Other
Selling U.S.$

Contract
AmountFair Value

¥ 758
194
7
5,781

¥ 691
217
7
5,784

Derivative contracts which qualify for hedge accounting
for the year ended March 31, 2004, are excluded from thedisclosure of market value information.
The contract or notional amounts of derivatives which
are shown in the above table do not represent the amounts
exchanged by the parties and do not measure the Group’s
exposure to credit or market risk.

Thousands of U.S. Dollars

Unrealized
Gain/Loss

Contract
AmountFair Value

¥(67)
23

$ 7,151
1,830
66
54,538$ 6,5192,047
66
54,566(3)

Unrealized
Gain/Loss$(632)
217(28)

All of the derivative contracts outstanding at March 31,
2003, qualified for hedge accounting and disclosures ofmarket value information are not required to be and havenot been presented herein.

CHIYODA CORPORATION ANNUAL REPORT 2004 41

16. CONTINGENT LIABILITIESAt March 31, 2004, the Group had the following contingent liabilities:

Guarantees and similar items for bank loans

Millions of Yen

Thousands of
U.S. Dollars¥5,830$55,000

17. NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years ended March 31,
2004 and 2003, is as follows:
Millionsof YenThousandsof Shares

Year Ended March 31, 2004

Net Income

WeightedAverage Shares

Basic EPS—Net income available to common shareholders¥6,647

185,101

Effect of dilutive securities—Stock option
Diluted EPS—Net income for computation

Yen
EPS

¥35.91

$0.34
$0.33

4,852
¥6,647

189,953¥34.99Millionsof YenThousandsof Shares

Yen

Year Ended March 31, 2003

Net Income

WeightedAverage Shares

EPS

Basic EPS—Net income available to common shareholders¥2,000185,293¥10.79Effect of dilutive securities—Stock option
Diluted EPS—Net income for computation

U.S. Dollars

362¥2,000185,655¥10.77

18. SUBSEQUENT EVENT
The following proposed disposition of the accumulated deficit of the Company at March 31, 2004, was approved at thegeneral shareholders meeting held on June 25, 2004:

Accumulated deficit to be carried forward

42 CHIYODA CORPORATION ANNUAL REPORT 2004

Millions of Yen

Thousands of
U.S. Dollars¥350$3,302

19. SEGMENT INFORMATION
Information about geographical segments and sales to foreign customers of the Company and consolidated subsidiaries forthe years ended March 31, 2004 and 2003, was as follows:(1) Geographical Segments
Millions of Yen
Asia

EuropeNorth
America

Construction contract revenue:
Outside customers¥196,523
Intersegment
4¥10,240
808

¥ 54
338

¥ 33

Total
Operating expenses

196,527
190,561

11,048
11,162

392
384

33
33

Operating income (loss)¥

Assets¥139,233

Year Ended March 31, 2004

Japan

5,966

¥

(114)

¥ 6,487

¥

8

¥245

¥577

Subtotal

Eliminations(Corporate)¥206,817
1,183¥(1,183)¥ 12

208,000
202,152(1,183)(1,216)

206,817200,936¥ (12)

¥

¥

¥

¥125

¥146,667¥(3,807)¥142,860

Subtotal

Eliminations(Corporate)

Consolidated

Other

5,848

Consolidated¥206,817

33

5,881

Thousands of U.S. Dollars
EuropeNorth
America

Construction contract revenue:
Outside customers$1,853,991 $ 96,604
Intersegment
38
7,622

$ 509
3,189

$ 311

Total
Operating expenses

1,854,029
1,797,745

3,698
3,623

311
311

Operating income (loss)$

Assets$1,313,519 $ 61,198

Year Ended March 31, 2004

Japan

Asia

104,226
105,30256,284 $ (1,076) $75$2,311Other$1,951,104$1,951,104
11,160 $(11,160)$ 113

1,962,264
1,907,094$ (113) $$5,444$1,179(11,160)(11,471)

55,170 $311

1,951,104
1,895,623$

55,481$1,383,651 $(35,915) $1,347,736

Millions of Yen
Asia

EuropeNorth
America

Construction contract revenue:
Outside customers¥160,526
Intersegment
25,163¥5,659
624

¥ 48
200

¥134
42

Total
Operating expenses

185,689
183,426

6,283
6,473

248
250

176
200

Operating income (loss)

¥

2,263

¥ (190)¥ (2)Assets¥126,246¥7,446¥216

Year Ended March 31, 2003

Japan

Other

Subtotal

Eliminations(Corporate)

Consolidated¥166,367
26,029 ¥(26,029)¥166,367¥ 14

192,396
190,363

166,367
164,819¥ (24)¥ (14)

¥

¥636

¥160

¥134,704 ¥(14,407)(26,029)(25,544)2,033 ¥

(485)

¥

1,548

¥120,297

Notes: 1. The Company and consolidated subsidiaries are summarized into five segments by geographic area based on the countries where thecompanies are located.
The segments consisted of the following countries in 2004 and 2003:
Asia:
Indonesia, Singapore, Philippines, Myanmar, Malaysia, Thailand
Europe:United Kingdom, Germany, Poland
North America: United States of America
Other:
Nigeria
2. Corporate assets mainly consist of long-term loans and investment securities of the Company. Corporate assets as of March 31, 2004 and2003, were ¥3,015 million ($28,443 thousand) and ¥3,185 million, respectively.

CHIYODA CORPORATION ANNUAL REPORT 2004 43

(2) Sales to Foreign Customers
Millions of Yen

Year Ended March 31, 2004

Overseas sales (A)Consolidated sales (B)(A)/(B)Asia

The Middle
and Near East

Russia andCentral Asia

Other

Total

¥26,338¥90,787¥22,343¥3,99512.74%

43.90%

10.80%

1.93%¥143,463
206,81769.37%Asia

The Middle
and Near East

Russia andCentral Asia

Other

Total

$248,472$856,481$210,783$37,689

12.74%

43.90%

10.80%

1.93%$1,353,425
1,951,104
69.37%

Thousands of U.S. Dollars

Year Ended March 31, 2004

Overseas sales (A)Consolidated sales (B)(A)/(B)

Millions of Yen

Year Ended March 31, 2003

Overseas sales (A)Consolidated sales (B)(A)/(B)Asia

The Middle
and Near East

Russia andCentral Asia

Other

Total

¥25,368¥46,660¥685¥10,600

15.25%

28.04%

0.41%

6.37%

¥ 83,313
166,36750.07%

Note: The Company and consolidated subsidiaries are summarized into four segments by geographic area based on the countries where thecompanies are located.
The segments consisted of the following countries in 2004 and 2003:
Asia:
China, Indonesia and others
The Middle and Near East: Qatar and others
Russia and Central Asia:
RussiaOther:
Venezuela

The Company and its consolidated subsidiaries operate predominantly in the engineering business, while certain subsidiaries operate in leasing and software producing businesses which are minor in relation to the total business. Accordingly,
the presentation of industry segment information is not required under Japanese accounting standards.

44 CHIYODA CORPORATION ANNUAL REPORT 2004

Independent Auditors’ Report

To the Board of Directors and Shareholders of Chiyoda Corporation:

We have audited the accompanying consolidated balance sheets of Chiyoda Corporation and consolidated subsidiaries as ofMarch 31, 2004 and 2003, and the related consolidated statements of income, shareholders’ equity, and cash flows for theyears then ended, all expressed in Japanese yen. These consolidated financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these consolidated financial statements basedon our audits.

We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Chiyoda Corporation and consolidated subsidiaries as of March 31, 2004 and 2003, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally
accepted in Japan.

Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely forthe convenience of readers outside Japan.

June 25, 2004

CHIYODA CORPORATION ANNUAL REPORT 2004 45

Global Network(As of October 31, 2004)

OFFICES

Beijing Office
Room No. 1028, China World Trade CenterNo. 1, Jianguomenwai Street,
Chaoyang District
Beijing, 100004, China
Tel: (86) 10-6505-2678
Fax: (86) 10-6505-1118

Yokohama Head Office12-1, Tsurumichuo 2-chome
Tsurumi-ku
Yokohama 230-8601, Japan
Tel: (81) 45-521-1231
Fax: (81) 45-503-0200

Chiyoda Milan Representative Office
Viale Della Liberazione 18,
20124 Milano, Italy
Tel: (39) 2-303517-111
Fax: (39) 2-303517-35

Chiyoda Research Park
13, Moriya-cho 3-chome
Kanagawa-ku
Yokohama 221-0022, Japan
Tel: (81) 45-441-1268
Fax: (81) 45-441-1297•Research & Development Center
Tel: (81) 45-441-9132
Fax: (81) 45-441-9728

Doha Middle East Headquarters
7th Floor, Al Mana Tower
Airport Road, Doha
Qatar, P.O. Box 20243
Tel: (974) 4621-673, 4622-875
Fax: (974) 4622-716

Jakarta Office
9th Floor, Mid Plaza Bldg.
Jalan Jenderal Sudirman Kav. 10-11
Jakarta, 10220, Indonesia
Tel: (62) 21-570-7579
Fax: (62) 21-570-6276
Shanghai Office
Room 1501, CIMIC Tower,
No. 800 Shang Cheng Road
Pu Dong New Area
Shanghai, 200120, China
Tel: (86) 21-5836-0034
Fax: (86) 21-5836-0037
Singapore Human Resources Office
10 Anson Road, #03-02, International
Plaza, Singapore 079903
Tel: (65) 6324-0080
Fax: (65) 6324-0090

OVERSEAS NETWORK
Hague Office
Tauro Trade Center
President Kennedylaan 19
Postbus 17111 2502 CC
The Hague, The Netherlands
Tel: (31) 70-385-9453
Fax: (31) 70-346-3779

Abu Dhabi Office
P.O. Box 43928, Clock Tower Bldg.
Suite No. 0204, Al Najda Street
Abu Dhabi, U.A.E.
Tel: (971) 2-671-7161
Fax: (971) 2-671-7162

Teheran Office
2nd Floor, No. 16, Mahtab St. Aftab St.
Vanak Avenue, Teheran, 19949, Iran
Tel: (98) 21-803-6391, 805-8592
Fax: (98) 21-805-8967

PROJECT COMPANIESOman, Qatar, Russia, Venezuela

RussiaU.K.
The Netherlands
Italy
Saudi Arabia
Nigeria

China

Iran

Japan
India

Oman

Malaysia
Indonesia
U.A.E.
Qatar

46 CHIYODA CORPORATION ANNUAL REPORT 2004

U.S.A.

MyanmarThailandPhilippines
Singapore

Venezuela

MAJOR SUBSIDIARIES &AFFILIATED COMPANIESOVERSEAS
Chiyoda International Corporation
1177 West Loop South, Suite 680
Houston, TX 77027, U.S.A.
Tel: (1) 713-965-9005
Fax: (1) 713-965-0075
Chiyoda International Limited
4th Floor, Dorland House,
20 Regent Street
London SW1Y 4PH, U.K.
Tel: (44) 20-7867-1221
Fax: (44) 20-7867-1414
Chiyoda Singapore (Pte) Limited
14 International Business Park
Jurong East, Singapore 609922
Tel: (65) 6563-3488
Fax: (65) 6567-5231
Chiyoda Asia Pacific (Pte) Ltd.
14 International Business Park
Jurong East, Singapore 609922
Tel: (65) 6425-0368
Fax: (65) 6569-6102
Chiyoda Malaysia Sdn. Bhd.
15th Floor, Menara Maxisegar
Jalan Pandan
Indah, 4/2 Pandan Indah, 55100
Kuala Lumpur, Malaysia
Tel: (60) 3-4297-0988
Fax: (60) 3-4297-0800
Chiyoda (Thailand) Limited•Sriracha Office
P.O. Box 7, Ao-Udom
Sriracha, Cholburi, 20230 Thailand
Tel: (66) 38-352-315~8
Fax: (66) 38-352-321•Bangkok Head Office
5th Floor, Dusit Thani Office Bldg.
946 Rama IV Road Bangkok 10500,
ThailandTel: (66) 2-233-7521/7524
Fax: (66) 2-236-6841

PT. Chiyoda International Indonesia
Wisma Kalimanis, 10th Floor Suite 1001
Jl. MT. Haryono Kav. 33
Jakarta Selatan 12770, Indonesia
Tel: (62) 21-798-4680
Fax: (62) 21-798-6174
L&T-Chiyoda Limited
B.P. Estate, National Highway No. 8,
Chhani, Baroda-391740,
Gujarat State, India
Tel: (91) 265-2771003/2772855
Fax: (91) 265-2774985
C&E Corporation
C&E Corporation Bldg.
Meralco Avenue Corner,
General Araneta Street,
Pasig City, Metro Manila, Philippines
Tel: (63) 2-636-1001~8
Fax: (63) 2-636-1013/1022
Chiyoda Petrostar Ltd.
•Al-Khobar Office
P.O. Box 31707, Al-Khobar 31952
Saudi Arabia
Tel: (966) 3-864-0839
Fax: (966) 3-864-0986•Jeddah Head Office
P.O. Box 6188, Jeddah 21442
Saudi Arabia
Tel: (966) 2-647-0558
Fax: (966) 2-647-1908
Chiyoda Nigeria Limited•Abuja Office
C/O Peniel Apartments
Room No. B1E Plot 137
Ibb Way, Adetokunbo Ademola Crescent
Wuse II, Abuja, Nigeria
Tel: (234) 9-4130058
Fax: (234) 9-4130062•Lagos Office
Plot PC-43, (1st Floor), Nurses House
Afribank Street, Victoria Island
P.M.B 12541
Lagos, Nigeria
Tel: (234) 1-2613291
Fax: (234) 1-2612565

Chiyoda & Public Works Co., Ltd.
Sedona Hotel Rooms 307-309
No. 1, Kaba Aye Pagoda Road
Yankin Township, Yangon, Myanmar
Tel: (95) 1-706720
Fax: (95) 1-545227

DOMESTIC
Chiyoda Kosho Co., Ltd.
Plant Engineering, Construction and
Maintenance, and Insurance Service
Chiyoda Keiso Co., Ltd.
Electrical and Instrumentation Engineering
Equipment Supply, Installation and
Maintenance
Chiyoda TechnoAce Co., Ltd.
Consulting, Engineering and Constructionof Pharmaceutical Plants, Laboratories andResearch Centers
Chiyoda Advanced Solutions
Corporation
Computer Aided Engineering Analysis,
Plant Lifecycle Engineering and Risk
Management Utilization of Space
Environment
U-Tech Consulting Co., Ltd.
Consulting for Industrial and Social,
Regional Development
IT Engineering Limited
IT Solutions and Software Development
Arrow Business Consulting Corporation
Consulting Services for Finance andAccounting
Arrowhead International Corporation
Travel and Air Cargo Agent, Spare Parts
SupplyArrow Mates Co., Ltd.
Human Resources Supply and Training

CHIYODA CORPORATION ANNUAL REPORT 2004 47

Board of Directors, Corporate Auditors and Executive Officers(As of August 1, 2004)

BOARD OF DIRECTORSCORPORATE AUDITORSPRESIDENT &CHIEF EXECUTIVE OFFICER

Michihiko Kawana

Nobuo Seki*

Nobuyasu Kamei
Hideaki Fujioka
Yukihiro Imadegawa

EXECUTIVE VICE PRESIDENTS

Akira Yamamura*International Project & International Group
Companies Management

EXECUTIVE OFFICERS
Naotake Naritomi*
Domestic Project Operation

SENIOR EXECUTIVE OFFICERS

Yoshihiro Shirasaki
Technology & Engineering
SENIOR MANAGING DIRECTOR& CHIEF FINANCIAL OFFICER

Hiroshi Shibata*Corporate Management & Finance

SENIOR MANAGING DIRECTOR

Hiroshi Kobayashi*International Project Operation

Akira Kadoyama
Domestic Project Operation

Hideo Nakatani
Corporate Management & Finance

EXECUTIVE OFFICERS

Madoka Koda
International Project Operation

Junichi Sakaguchi
MANAGING DIRECTORSTechnology & Engineering

Atsuo Minamoto

Takashi Yamamoto

Operation Support

Chemicals, Pharmaceutical & Fine Industries Div.

Julian E. Pylant

Fumio Nagata

Office of Special Tasks

International Project Operation

Sumio Nakashima
Engineering Div.
DIRECTOR

Takashi Kubota
Office of Designated Projects
Notes: 1) * Representative directors2) All board members are also executive officers.

48 CHIYODA CORPORATION ANNUAL REPORT 2004

Satoru Yokoi
Energy & Environmental Div.

Takaharu Saegusa
Project Management Administration Div.

Corporate Information(As of March 31, 2004)

Established:
Paid-in Capital:
Number of Employees:
Annual Fiscal Close:
Shareholders Meeting:Number of Shares per Unit:
Stock Code:Transfer Agent of Common Stock:
Authorized Shares:
Capital Stock Issued:
Number of Shareholders:January 20, 1948
¥12,028 million
2,400 (Consolidated)
March 31
June
1,000
ISIN: JP3528600004
SEDOL 1: 6191704 JP
TSE: 6366
The Mitsubishi Trust and Banking Corporation
1-4-5 Marunouchi, Chiyoda-ku, Tokyo
650,000,000
185,428,529
13,893Major Shareholders:
Status of investors

Number of shares(thousands)

Percentage of total(%)

19,851
12,794
10,973
9,034
9,033
8,717
7,512
5,994
3,687
3,014

10.9
7.0
6.0
5.0
5.0
4.8
4.1
3.3
2.0
1.7

Mitsubishi Corporation
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
The Mitsubishi Trust and Banking Corporation
The Bank of Tokyo-Mitsubishi, Ltd.
J.P. Morgan Chase & Co. (Lending Account)
State Street Bank and Trust Company
KBR-MC Investment
Ebara Corporation
The Chase Manhattan Bank N.A. London

Breakdown by Shareholder

Total
13,893

Stock Price

Breakdown by Share (thousands)

Financial institutes: 55 (0.40%)
Securities companies: 34 (0.24%)
Companies and others: 370 (2.66%)
Foreign companies and foreign individuals: 138 (0.99%)
Individuals and others: 13,295 (95.70%)
Governments and local public organizations: 1 (0.01%)

(Yen)
800

Total
185,429
thousandFinancial institutes: 58,533 (31.57%)
Securities companies: 1,914 (1.03%)
Companies and others: 49,709 (26.81%)
Foreign companies and foreign individuals: 47,913 (25.84%)
Individuals and others: 27,356 (14.75%)
Governments and local public organizations: 1 (0.00%)(Yen)
15,000

Nikkei average (closing price)

10,000

700

5,000

600

Chiyoda
500
400
300

(Thousandsof shares)

200

Trading volume100

120,000
80,000~40,0000
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
FY2002

FY2003

FY2004CHIYODA CORPORATION ANNUAL REPORT 2004 49

12-1,Tsurumichuo 2-chome, Tsurumi-ku, Yokohama 230-8601, Japan
Tel: (81) 45-521-1231 Fax: (81) 45-503-0200

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