MIRAI ENGINEERINGA Grand Opportunity for the Future

ANNUAL REPORT FY2017
For the year ended March 31, 2018

CORPORATE PHILOSOPHY

Enhance our business in aiming for harmony
between energy and the environment andcontribute to the sustainable development ofsociety as an integrated engineering company
through the use of our collective wisdom andpainstakingly developed technology.
Every Chiyoda Group employee engages in our corporate activities with thisphilosophy in mind as we strive for corporate group management that earns
the trust and empathy of all our stakeholders, including shareholders,­customers, business partners, employees, and local communities.

01

70 Years of
ChiyodaMirai Engineering
The Chiyoda Group aims to be a global top-tier “Integrated Engineeringand Service Provider” in the energy and environment fields.
World-leading contractor of liquefied natural gas (LNG) plant construction
Steady progress in the life science and new energy fields—pharmaceuticals, photovoltaic, and hydrogen
Strategic move into advanced medical and cutting-edge digital technologies
 orporate operations with greater awareness of society, health, safety, and environment (HSE)C
and diversity

On January 17, 2018, Chiyoda Corporation celebrated the 70th anniversary of its founding.

1948~

1958~

1968~

1978~

1988~

1998~

2008~

2018~

Supports rebuildingof the postwar oil
industry in Japan

Establishes its
position as a reliable
engineering company

Contributes todevelopment of theoil and gas industry
beyond the oil shock

Accelerates its executionof overseas projects inmainly the Middle Eastand Southeast Asia

Expands its businessfield beyond the oiland gas industry

Executes several LNG
projects worldwide
timed to take advantageof the natural gas boom

Establishes its position
as the No. 1 LNG contractor and expands
into the U.S. market

Accelerates its
Medium-Term
Management Plan,“Mirai Engineering”

Scheduled to complete
Japan’s first demonstration
plant for renewable jet anddiesel fuels for euglena Co.,
Ltd.

1948

1960

1974

1984

1993

2003

2014

The Company’s founding

Grass-roots refinery in
Mizushima, Japan

Completion of Petromin
Jeddah and Riyadh
refineries

Completion of Petromin
Mobil Yanbu Refinery in
Saudi Arabia

Order awarded for Qatargas LNG Project in Qatar

Order awarded for
Sakhalin II LNG Project by
Sakhalin Energy in Russia,
the first LNG plant in Russia

Order awarded for
Cameron LNG Projectin the United States

1956

1965

1976

1986

1996

2004

2014

25,000 barrels per day at
Crude Distillation Unit in
Kawasaki, Japan

Jeddah Refinery in
Saudi Arabia

Completion of LNG plantfor Abu Dhabi Gas Liquefaction in UAE

Food processing plant for
Nada-Kobe Consumers’
Co-operative Society in
Kobe, Japan

Order awarded for PT.
Smelting Copper Smelter
Project in Indonesia

Order awarded for
Qatar-gas II LNG Projectin Qatar, the largest LNG
plant in the world

Order awarded for Yamal
LNG Project in Russia

Chiyoda’s AI Solution: New
technology development
for the next generation withBig Data / IoT / AI / robotics

SPERA Hydrogen®:
Chiyoda’s Hydrogen
Supply Business—Largescale storage and transport of hydrogen utilizing
the organic chemical
hydride (OCH) method

02

Chiyoda Corporation Annual Report 201703

PROFILE

INDEX

Chiyoda Corporation is a leading integrated engineering company with a01   Corporate Philosophy

significant presence in the global oil and gas market, and customers in more02   70 Years of Chiyoda

than 60 countries. Especially in the field of LNG plant engineering andconstruction, Chiyoda is a global leader, with a track record of undertaking04   Profile

projects that account for around 40% of the world’s total LNG plant capacity.

06   At a Glance

Established in 1948, Chiyoda started with domestic projects in petroleum
refining, petrochemicals, and gas processing. Since the 1970s, Chiyoda

08   Business Trends

has developed a powerful global footprint, taking advantage of the many10   Major Project List

opportunities in the engineering, procurement, and construction (EPC) of

12   Message from the CEO

energy-related plants, while building a first-class reputation for technological16   Message from the CFO

capability, safety, and reliability.
During its 70-year history, the Chiyoda Group has been growing steadily
under the corporate philosophy of enhancing business by aiming for “Energy
and the Environment in Harmony,” while contributing to the sustainable development of society. In addition, Chiyoda has expanded its business into the
new energy and renewable energy markets.

18   Introducing New Chief Officers
20  SPECIAL FEATURES– Yamal LNG Project– Other Projects
24   Segment Overview
30   Value Creation
31   Message from the CSO
32   ESG Initiatives
34  Risk Management
36   Directors & Executive Officers
38   Message from the Chairman
39  Corporate Governance:
The Sustainable Enhancement ofCorporate Value
42  Discussion: Chairman & Outside Director
44  OUR SHARED VALUES– Value Creation Story– CSR Values– Social Contribution Activities
52   Financial Section
59  Corporate Data and Stock Information
Forward-Looking Statements
Statements made in this annual report with respect to plans, strategies,
and future performance that are not historical facts are forward-looking
statements involving risks and uncertainties. Chiyoda cautions thata number of factors could cause actual results to differ materially fromsuch statements including, but not limited to, general economic
conditions in Chiyoda’s markets; demand for, and competitive pricing
pressure on, Chiyoda’s products in the marketplace; Chiyoda’s ability tocontinue to win acceptance for its products in these highly competitivemarkets; and movements of currency exchange rates.
Note: FY2017 and the year under review represent the one-year period
ended March 31, 2018, and FY2018 represents the one-year period
ending March 31, 2019.

04

Chiyoda Corporation Annual Report 201705

Who We Are

At a Glance
FY2017
Revenue

Chiyoda Corporation is a world-leading, integrated engineering company.
The Chiyoda Group has developed its cutting-edge technologies in this highly challenging
industry and accumulated a wealth of experience over the last seven decades.
The Group provides excellent services backed by ample experience and technical know-how,

¥

510.9

FY2017
New Orders¥

billionwhile also striving to realize vital business with “Energy and the Environment in Harmony.”

FY2017
Backlog of Contracts

301.2

¥

653.5
billionbillionJapan
Overseas

Existing major projects and key data are reflected on this page.

Major Projects in Progress(As of March 2018)65.51
millionYamal LNG

~40%

Safe Man-Hours without
LTI* in PNG LNG Project* LTI: Lost time incidentof the World’s Total
LNG Plant Capacity
New Ulaanbaatar
International Airport

GlobalHeadquarters~1,500Group Companies
in Japan~1,500Group Companies
Overseas~3,200

6,200
employees

Including Overseas Engineering Satellites ~1,600

Freeport LNG

Titanium Sponge Plant

AroundCameron LNG

RasGas Helium 3

More than20
locations

New Bohol Airport

RAPID
Tank Terminal

Copper Smelter
Tangguh Tr. 3(Affiliates and Branches)

Jangkrik FPU
Ichthys
Mozambique Area 1

More than60
countries(Executed Projects)
Business Field
LNG / Gas

Offshore

Petrochemicals / Refineries

Infrastructure

Metals06

Chiyoda Corporation Annual Report 2017

Oil Refineries

EnergyValue Chain
Projects

EPC
Execution
GlobalEnvironment
EnergyProjects

Chemicals & Petrochemicals
Gas Processing & LNG(Liquefaction / Export Terminal & Import /Regasification Terminal)

Metal Smelter
Environmental Protection Projects(Flue Gas Desulfurization / Water Treatment Facilities)

Fine Chemicals / Pharmaceuticals
Industrial Facilities(Factory Automation / Food Processing Plant, etc.)

Renewable Energy(Photovoltaic / Wind / Biomass)

Infrastructure Projects(Airport)07

Who We Are

Business Trends
Financial Highlights

Non-Financial Highlights

Revenue and Gross Margin

Operating Income (Loss) andOperating Income (Loss) to Revenue

Billions of Yen

%

800

12

9.3

9.5

600

446.1

481.0

611.5

30

21.1

603.7

15

4.7

6

16.0

15.7

Tons

t-CO2

12

25,000

5,000

2.6

2.6

4,000

3,591

3,000

15,00011,3540

3,364

12,242

10,9362,000

10,000

7,670
1,146

3

1.7
0

2013

2014

2015

2016

5,000

–2.4

0

2017

–15

2013

(FY)

2014

2015

2016

–12.3

–6

2017

(FY)

1,000

Ordinary Income (Loss) and
Ordinary Income (Loss) to Revenue
Billions of Yen

%

36

9

0

0

2013

2015

2016

2017

(FY)

22.3
4.6

2014

2015

2016

2017

Ratio of Female Employees among New Recruits

Billions of Yen

%

%

%

20

8

100

(FY)

87.8

40

91.5

33

80
30

3.0

5

1.3

3.4
0.6

24

60

6.4

0
0

89.5

4

2.3
3

92.0

11.0
10

16.2

6

13.4

6

2.6

12

20

2
0

–3.1
–2.0
2014

2015

2016

2017

–3

2013

2014

19

20

–6.8
–10.1

18

10

–0.5

–12

18

40

0

2013

2013

Industrial Waste Recycling Rate

15

5.1

2014

Net Income (Loss) Attributable to Owners of the Parent andNet Income (Loss) Attributable to Owners of the Parent to Revenue

90.3
22.8

901

Operating Income (Loss)
Operating Income (Loss) to Revenue (right)

Revenue
Gross Margin (right)

24

4,124

19,209

6

0
200

%

20,000

4.5

6.3

400

CO2 Emissions

21.5

9

510.9
6.8

Billions of Yen

Industrial Waste Disposal Quantity

–41.1

–60

2013

(FY)

2014

2015

2016

–20

2017

0

0

2013

(FY)

2014

2015

2016

2017

(FY)

2015

2016

2017

4

4

2016

2017

(FY)

Net Income (Loss) Attributable to Owners of the Parent
Net Income (Loss) Attributable to Owners of the Parent to Revenue (right)

Ordinary Income (Loss)
Ordinary Income (Loss) to Revenue (right)

Shareholders’ Equity, ROE, andShareholders’ Equity Ratio
Billions of Yen

%

300

90

New Orders / Backlog of Contracts

Number of Non-Japanese Employees

Number of Outside Directors

Billions of Yen

Persons

Persons

1,600

100

5

1,417
200

196.4
41.3

206.4
40.0

200.2

60

155.3
37.9

33.7

156.1
37.5

100

5.5

4.1

1.7

–23.1

–100

2014

2015

2016

Shareholders’ Equity
ROE (right)
Shareholders’ Equity Ratio (right)

08

66

Chiyoda Corporation Annual Report 2017

0

654

–30

2017

(FY)

404

400

3

49

747

800

4

71

71

60

590

0

2013

1,072
877

30

7.0

1,200

82

80

1,165

352

2

40

301

1

20

0

0

2013

2014

2015

2016

2017

(FY)

2

2

2014

2015

1

0

2013

2014

2015

2016

2017

(FY) FY

2013

(FY)

New Orders
Backlog of Contracts09Who We Are

Major Project List
The Chiyoda Group has successfully completed various types of facilities all across the world
over the past 70 years.
The following list shows our major projects under execution and recently completed projects.
CS: Construction Supervision

E: Engineering P: Procurement C: Construction
CC: Construction and Commissioning I: Installation V: Validation
BPSD: Barrel Per Stream Day SCFD: Standard Cubic Feet Per Day

Energy Business
ClientProject

Location

Capacity

Scope of Work

Project Status

LNG Plants & Other Gas-Related WorkINPEX Operations Australia Pty Ltd.

Ichthys Onshore LNG Facilities Project

Darwin, Australia

4.45 x 2 MMTY

E.P.C.

Ongoing

FLNG Liquefaction, LLC

Freeport LNG Export Project

Freeport, Texas, U.S.

4.64 x 2 MMTY

E.P.C.

Ongoing

FLNG Liquefaction 3, LLC

Freeport LNG Export Project Train 3

Freeport, Texas, U.S.

4.64 x 1 MMTY

E.P.C.

Ongoing

Cameron LNG, LLC

Cameron LNG Project

Hackberry, Louisiana, U.S.

4.5 x 3 MMTY

E.P.C.

Ongoing

JSC Yamal LNG

Yamal LNG Project

Sabetta, Yamal-Nenets, Russia

5.5 x 3 MMTY

E.P.C.

Ongoing

BP Berau Ltd.

Tangguh LNG Project

West Papua, Indonesia

3.8 x 1 MMTY

E.P.C.

Ongoing

Floating (FPU)

ENI Muara Bakau B.V.

FPU

Jangkrik Gas Field, Indonesia

150 x 3 MMSCFD

E.P.C.I.

Completed*1

Helium Recovery Unit

RasGas Company Ltd.

Helium 3

Ras Laffan, Qatar—

E.P.C.

Ongoing

Catalytic Reforming UnitJXTG Nippon Oil & Energy Corporation—

Negishi, Japan

30,000 BPSD

E.P.C.

Completed*1

Hydrocracking UnitPDVSA Petroleo, S.A.

—

Puerto La Cruz, Venezuela

100,000 BPSD

E.PS.CS.

Ongoing

Fluid Catalytic Cracking Unit

Showa Yokkaichi Sekiyu Co., Ltd.

—

Yokkaichi, Japan

61,000 BPSD (Partial Renewal)

E.P.C.

Completed*1

PRPC Refinery and Cracker Sdn. Bhd.

—

Johor, Malaysia

70,000 x 2 BPSD (for Residue Oil)

E.P.C.C.

Ongoing

Residuum Hydrodesulfurization Unit

Nghi Son Refinery Petrochemical Ltd.

—

Nghi Son, Vietnam

105,000 BPSD

E.P.C.

Completed*1

Refrigerated Gaseous Tank Facility for
Ethylene and Propylene

Dialog Plant Services Sdn. Bhd.

—

Pengerang, Johor State, Malaysia—

E.P.C.C.

Ongoing

Non-Ferrous Metals Plants

Toho Titanium Co., Ltd. and Advanced Metal Industries Cluster Company Ltd.

Titanium Sponge Plant

Yanbu, Saudi Arabia

15,600 ton/year

E.P.C.

Completed*1

Capacity

Scope of Work

Project Status

LNG Plants (EPC)

Refineries / Petrochemicals / Metals

Environmental Business
ClientProject

Location

Pharmaceuticals / Biochemistry / General Chemistry
Pharmaceuticals

Nichi-Iko Pharmaceutical Co., Ltd.

Finishing, Commercial

Toyama, Japan—

E.P.C.V. *2

Ongoing

CMIC CMO Co., Ltd.

Finishing, Commercial

Tochigi, Japan—

E.P.C.V.

Ongoing

Nippon Shokubai Co., Ltd.

API Commercial

Osaka, Japan—

E.P.C.V. *Ongoing

Tosoh Corporation

Offices

Yamaguchi, Japan—

E.P.C.

Ongoing

PeptiStar, Inc.

Manufacturing Plant No.1 and No.2

Osaka, Japan—

E.P.C.

Ongoing

Fukuoka, Japan

500 t/d

E.P.C.

Ongoing2

Environment / New Energy / Infrastructure
CCS (Carbon Capture & Storage)

Toshiba Energy Systems & Solutions Corporation

Large-Scale Carbon Capture Facility

Photovoltaic Power Plants

Sanco Real Estate Co., Ltd.

CIS Photovoltaic Power Plant (On Ground) Mie, Japan

14,000 kW

E.P.C.

Completed*1

Sanco Real Estate Co., Ltd.

CIS Photovoltaic Power Plant (On Ground) Mie, Japan

12,800 kW

E.P.C.

Completed*1

Solar Frontier K.K.

CIS Photovoltaic Power Plant (On Ground) Iwate, Japan

13,000 kW

E.P.C.

Completed*1

SDT Solar Power K.K.

CIS Photovoltaic Power Plant (On Ground) Yamaguchi, Japan

17,300 kW

E.P.C.

Completed*1

Pacifico Energy Toyota LLC

Photovoltaic Power Plant (On Ground)

Aichi, Japan

62,000 kW

E.P.C.

Ongoing

Civil Aviation Authority of Mongolia

AirportUlaanbaatar, Mongolia

—

P.C.

Completed*1

Department of Transportation and Communication, the Government of the Republic of the Philippines

AirportPanglao Island, Bohol Province,
the Republic of the Philippines

—

P.C.

Ongoing

Undisclosable

Precious Metal Recycling Plant

Chiba, Japan—

E.P.C.

Ongoing

Transportation Projects

Environment, Energy Conservation, andIndustrial Facilities*1 Completed in 2017

*2 Main Contractor: Chiyoda Techno Ace Co., Ltd.

For a complete list of major projects, please refer to the Major Project booklet on our corporate website:www.chiyodacorp.com/projects/MajorProjects_201803_e_1.pdf

10

Chiyoda Corporation Annual Report 201711

Management View

Message from the CEO
Looking Back at Fiscal 2017
Fiscal 2017 was my first year as President & CEO of Chiyoda and the start of the new
Medium-Term Management Plan (MTMP), “Mirai Engineering—A Grand Opportunity for the
Future.”Our business environment is experiencing major challenges which offer opportunities for
the Company to adapt and grow, such as changes in the structure of energy supply anddemand, increasing environmental awareness, and revolutions in digital technologies andbiotechnologies.
Consequently, we are organizing our future growth strategies in line with these opportunities while introducing structural reforms to the way we do business.
Looking back at our business performance in fiscal 2017, we were able to record net
income attributable to owners of the parent of ¥6.4 billion (compared with net loss of ¥41.1
billion in the previous fiscal year, and 129% of the forecast), a positive sign for stakeholders.
Meanwhile, we also faced internal challenges as consolidated revenue fell 15.4%, to ¥510.9
billion, and we recorded operating loss of ¥12.3 billion (compared with operating income of¥15.7 billion in the previous fiscal year), mainly because of incremental cost increases atongoing U.S. projects.
As for new orders, we saw a growth in the environmental business field, where we put
focus on the MTMP. New orders in this field grew 26%, to ¥122.7 billion, and accounted forroughly 41% of total new orders, while the total amount of new orders itself decreased
14.4%, to ¥301.2 billion, as no final investment decision (FID) for new LNG projects wasmade in fiscal 2017.

Masaji Santo
President & CEO

Structural Reforms for Minimizing Volatility
The new MTMP simultaneously promotes structural reforms in the management of theCompany and a transformation of its business model to focus on growth for the next
10 years. Management reforms include strengthening risk management capabilities,
increasing core earnings strength and resilience, and expanding our human resource base.
Major changes are being introduced in fiscal 2018 and 2019, and the Company has alreadymade a solid start.

In creating shared values, it is importantthat we approach sustainability not asa tactic or a single objective, but as a wayof doing business.

12

Chiyoda Corporation Annual Report 2017

Of the three reforms undertaken, we are putting special emphasis on our earnings
strength and resilience. Engineering, our core business, is vulnerable to market volatility—
hence our focus on minimizing volatility by reducing costs. In addition, we see opportunities
in small- and medium-sized projects which present less risk than the larger-scale projects
in which we historically compete and excel. In the highly competitive overseas refinery andpetrochemical fields, a change to a more centralized bidding process will allow us to engage
our core expertise and work on cost reduction more effectively.

13

Management View

Message from the CEO

Growth Strategy for Expanding Business Activities
and Innovation in Our Business Model
Our new growth strategy introduces three major objectives in addition to our pursuit of major
LNG plant contracts, which is the cornerstone of our business. These objectives are to: (1)build an energy value chain business; (2) expand our engagement in and the global environmental engineering sector; and (3) develop a business model for the digital society.
Underlying our enthusiasm for our new growth strategy is the belief that demand for LNG
will continue to increase, that new large-scale projects will move forward, and that additional
opportunities will arise in projects already under way. Our expertise in front-end engineeringand design (FEED) will lead to new orders while our development work for a carbon-freesociety in Japan and around the world is presenting opportunities in renewable energy,

Enhancing Corporate Governance and Working
toward Sustainability

including solar energy and biomass power generation. While renewable energy projects may
not be large scale at the moment, the experience and knowledge they provide will be ofEnhancing corporate governance to improve the decision-making process can be a major

great value in the future.

contributor toward achieving sustainable growth and increasing shareholder value.
Recently, Chiyoda has increased the size of the Audit & Supervisory Committee andbrought in more outside directors to foster a culture that is more open to thoughtful discus-

Efforts toward the Establishment of Hydrogen Energy

sion and diverse points of view. However, we continue to look for further improvement,

We expect hydrogen to be a pillar of long-term growth. Technical challenges today include

increase the size of the team auditing business operations, installing a Chief Compliancestorage and transportation in large quantities, and Chiyoda is developing technologies that

Officer (CCO) and appointing a Chief Sustainability Officer (CSO) to help with the Company’s

address those problems, in part by using the existing infrastructure that supports the oil

pursuit of a carbon-free society.

recognizing the need to consistently meet stakeholder expectations. For example, we will

industry. While a small business today, the potential for hydrogen as a major source ofenergy makes this a very exciting prospect.

Efforts toward Training Human Resources
Human resources are our most important asset. Attracting, cultivating, and retaining high-level
talent is key to creating long-term value at Chiyoda, and we have appointed a new Chief
Human Resources Officer (CHRO) and a Chief Talent Management Officer (CTMO) to further
those aims. Under these two executives, we will utilize our human resources more effectively, improve the development of those assets, proactively place skilled personnel in
optimum positions, and promote mobility within the entire Group.
In closing, I must express my gratitude for the praise we receive from customers around theworld for our technological and project execution capabilities. Our core value of promoting“Energy and the Environment in Harmony” remains as true today as at our founding. As we
pursue new goals of technological innovation and the sustainability of corporate value, ouroriginal values remain the same. We kindly ask our stakeholders for their continued guidanceand encouragement as we pursue these goals going forward.
July 2018

Masaji Santo
President & CEO

14

Chiyoda Corporation Annual Report 201715

Management View

Message from the CFO
Working toward Sustainable Growthin the Medium to Long Term

In addition, we will increase the breadth of our activities

Hirotsugu Hayashi
CFO and CCO

less on highly volatile LNG-centered EPC profits andby taking our established EPC work and diversifying into

expanding into industries and services that offer a more

operations and maintenance, consulting, and technicalstable earnings stream.

services. We will further balance our portfolio by relying

Since my appointment as CFO in 2017, the energy sector continues to face challenges that have impacted Chiyoda inmany ways. While the level of oil and gas prices and demand may be fluctuating, there are signs that the overall environ-Maximizing Our Financial Resources

ment for Chiyoda and its partners in the energy construction industry is improving. Chiyoda has worked hard to increasefinancial efficiency and introduce the structural reforms announced last year.

Business Performance for fiscal 2017

An essential part of our structural reforms is addressing

domestic and global operations will allow us to maximize

fixed costs toward increasing our profitability. In the fiscal

growth in the medium to long term.

year under review, SG&A expenses fell 7.1%, to ¥20.9

Meanwhile, we need to focus on achieving high liquidity

billion, and we plan to reduce this even further, to ¥18.5

in order to provide flexible support for EPC execution, ourbillion, in fiscal 2018 by reviewing our overseas businesses.

core business. We will utilize cash on hand toward the

We believe that reducing our fixed costs in tandem withsmooth development of our business.

The Chiyoda Group recorded ¥510.9 billion in consolidated¥15.7 billion in the previous fiscal year. Net income at-revenue for completed construction work in the fiscal year

tributable to owners of the parent increased ¥47.6 billion

under review, a decline of 15.4% from the previous fiscal

over the previous fiscal year, to ¥6.4 billion. The Company

year. Total cost of sales, at ¥502.3 billion, also declined,recorded an extraordinary profit of ¥15.0 billion in the fiscal

11.2%, and due to significant cost increases in costs foryear under review compared with an extraordinary loss of

LNG projects in the United States, gross profit declined¥23.4 billion in the previous fiscal year, due to a reversal of

Dividend Policy

77.5%, to ¥8.6 billion. At the operating level, Chiyoda

provision for loss on business of subsidiaries and associ-

Under the latest MTMP, we continue to set the consoli-

Based on this policy we will increase the annual

recorded a loss of ¥12.3 billion compared with income of

ated companies.

dated payout ratio at a minimum of 30% of net income

dividend for fiscal 2017 by ¥1.5 per share, to a total of

attributable to owners of the parent but set a new¥7.5 per share. Thus, the payout ratio is 30.1%, and we

minimum for full-year dividends of ¥6 per share.

will continue to seek stable returns for our shareholders in

Stabilization of Core Earnings

diversifying our sources of revenue throughout our

the future.

A key initiative of our new MTMP, “Mirai Engineering—A

While developing the Company’s core energy sector

Grand Opportunity for the Future,” launched in Augustbusiness, we will focus on increasing our activities in the2017, is to strengthen core earnings via structural reforms

global environmental engineering sector. Over the nextthat balance those core earnings with costs in the medium

decade, we plan to increase our global environment businessto long term.

from the current level of 15% of total sales to 25-45%.

Dividends per Share and Payout Ratio

EBITDA and EV / EBITDA

Billions of Yen

%

76.7

20

Movements of Cash Flows80

Billions of Yen

Times

30

15

26.2

26.0

16
15

60

Billions of Yen

20

13

20.0
8.09

10

15.7
6.34

60

55.5

10

10

30.8

38.7

30.5

40

4.02

10

7.5

40

6

30.1

5

20

0

0

0

0

20

‒6.3
‒26.38

10.4
0
–20

–3.9

–5.4 –4.6–5.2–1.4 –1.5

–2.7

–4.3

2013
Dividends per Share
Payout Ratio (right)–17.2 –16.8
–24.1

–40

2013

2014

2014

2015

2016

2017

(FY)

5

3.41

–10

2013

2014

2015

2016

2017

–30

(FY)

EBITDAEV / EBITDA (right)

–26.8
2015

2016

–34.1

2017

(FY)

Operating Activities
Investing Activities
Financing Activities

16

Chiyoda Corporation Annual Report 201717

Management View

Introducing New Chief Officers
Chiyoda Corporation introduced theChief Officer System in April 2018,

Hirotsugu Hayashi

Ryosuke Shimizu

Arata Sahara

Yasumitsu Abe

Toshiaki Furugori (left)

CFO and CCO

CSO

CTMO

CHRO

CDO

which serves to streamline

Toshiya Momose (right)

processes and create new growth

Co-CDO

opportunities. In accordance with
the MTMP released in August
2017, the new organization
focuses on the three elements ofEnergy, Environment, and Digital
Technologies. In that regard, weare pleased to announce theappointment of six new chief officers:
CCO (Chief Compliance Officer)
Responsible for ensuring employees focus
on matters of compliance
CSO (Chief Sustainability Officer)
Responsible for working toward a sustainable
society and decarbonization
CTMO (Chief Talent Management Officer)
Responsible for optimizing human resources
CHRO (Chief Human Resources Officer)
Responsible for promoting human resources
development
CDO (Chief Digital Officer)
Responsible for exploring new businessfields with cutting-edge digital technologies
Co-CDO (Co-Chief Digital Officer)
Responsible for developing engineering tools
by utilizing digital technologies• Establishes a compliance and ethics
program within the Chiyoda Group toaddress ever changing complianceissues• Promotes compliance communication
within the Group via continued
education and knowledge sharing• Manages compliance issues as
a Group based on smooth andcomprehensive reporting andcooperation• Maintains ongoing study of applicablelaws, regulations, and industry bestpractices to provide a basis forcompliance promotion within
the Group

Their immediate response is towork in line with the needs andgoals of the CEO, adapting to• Manages environmental, social, andgovernance (ESG) risks andopportunities•O ffers opportunities to employees
to enhance their careers throughcomprehensive development• Oversees Chiyoda’s human capitalmanagement and HR technology
systems• Are engaged in transformational roles
responsible for the adoption of digitaltechnologies across the entire business• Formulates the Chiyoda Group’s
sustainable development goals•C reates flexibility within the workforce
to encourage development in otherareas of the Company• Works closely with the CTMO to ensure
a constant influx of top-class talent• Are responsible for converting
traditional EPC businesses intobusinesses compatible with the digitalera, using Big Data and artificial
intelligence (AI) applications• Undertakes strategic planning to ensure
a low-carbon / zero-carbon society• Promotes the Group’s ESG activities;
Chiyoda is a leading EPC contractor,
long engaged in efforts to placesustainability at the core of corporate
strategy•O rganizes allocation of personnel,
especially project key personnel(PKP), within the Group to optimize
resources relative to needs witha focus on the best allocation ofproject teams• Supports the United Nations
Sustainable Development Goals(SDGs); our management decisionmaking process includes efforts toaddress global needs and embrace
the challenge of “converting” theminto functional business solutions• Addresses organizational andstrategic business needs through theestablishment of “Learning Zones”
and “Performing Zones”• Works as a direct link between
employees and senior management,
and is responsible for addressing the
feedback and concerns of both parties• Oversee operations in the rapidly
developing digital sectors (AI, theInternet of Things (IoT))• Keep abreast of new technologicaladvances occurring worldwide thatcan enhance Chiyoda’s operations
and benefit its clientschanges in energy demand andsupply with increased awareness

Comment

Comment

Comment

Comment

Commentof the global environment andAside from my duties as CFO, I am

I will focus on strengthening the supply

It is clear now more than ever that there

I believe HR is one of the biggest differ-

As CDO and Co-CDO, we work on thechanges in industry structure.

also responsible for overseeing thechain, leading Chiyoda toward

is a need for highly skilled personnel for

entiators of organizational performancedevelopment and revisions of policies

Chiyoda continues digitizing

Chiyoda Group’s compliance program.

achieving the SDGs and realizingorganizations to be successful. Having

and needs to be seen as a criticaland procedures for the general opera-

engineering tools and is ready toThis involves promoting compliancea more prosperous society for all.

a skilled workforce is crucial tostrategic function within Chiyoda. In mytion of Chiyoda’s digital strategy andcommunication both within andMy hope is that my work as CSO, inremaining competitive. By achieving thenew position as CHRO, I will manage

related activities. Developing a digitaloutside the Group, which is integral

combination with Chiyoda’s corporate

right balance of employees and level ofthe HR Leadership Team by aligning thestrategy, and designing and imple-

to engaging with stakeholders andengagement, will lead us to broad

talent, and integrating everyone into

priorities and investment needs of thementing the Company’s digital

gaining their confidence and trust.

improvements in our sustainability efforts.

a successful team, a company canteam with Chiyoda’s business priorities.

roadmap, is a major task in this fast-enjoy a harmonious workforce andI will focus on building and maintainingchanging world. As such, two-way

experience less disruption during

the best team that will serve Chiyoda’scommunication will be key.

economic downturns.

long-term organizational goals. I will also

meet the challenges of an everchanging world.

design “Learning Zones” to continuously
improve by trial and error the skills of ourpersonnel in a low-risk environment toachieve better results in “Performing
Zones.” By repeating this cycle, we cansmoothly execute and accomplish
stronger results every time.

18

Chiyoda Corporation Annual Report 201719

SPECIAL FEATURE 1

Yamal LNG Project
The Yamal LNG Project is an integrated facility for natural gas liquefaction owned by NOVATEK (50.1%), Total
S.A. (20%), CNPC (20%), and SRF (9.9%). The project is located in Sabetta in the northeast corner of the Yamal
Peninsula, Russia. Chiyoda Corporation, together with JGC and TechnipFMC, started EPC work for the Yamal
LNG Project in 2014. The Yamal LNG plant will comprise three liquefaction trains with a total capacity of 16.5
million tons of LNG per year when fully operational.
The 1st LNG train started operation successfully in December 2017, as scheduled. The 2nd and 3rd LNG
trains will be commissioned in 2018 and 2019, respectively.

Q&A with a Project Director at Chiyoda

Hidetaka Fujihara

A Challenge in the Extreme Cold of the Russian Arctic

Q

Project Director

While it has certainly been difficult to accomplish

French staff at Total while the JV side was also led byprojects in addition to coordinating severala French company, Technip (now TechnipFMC), so

engineering centers and module yards, what incommunication between the parties and the ability toparticular has proven to be the most difficult?

communicate well in Paris was a huge factor in the project

We produced close to 150 modules concurrently at 10

running so smoothly. Furthermore, important decision-

fabrication yards spread throughout Asia. During thatmaking was conducted promptly by the chairman of theprocess, we faced some difficult decisions, including a yard

Russian client’s parent company, and the client’s construc-that went bankrupt and descoping two locations in a timely

tion and operation organizations, which were made up ofmanner. To perform fabrication at multiple locations

primarily Russians, consistently followed the direction of

we were forced to relocate managers and supervisors andthe parent company without fail. As a result, the Russian

ultimately decided to oversee all yards from the office ofclients and the JV shared the same goal—prompt

our joint venture (JV) based in Shanghai. Our company

production of LNG—which allowed them to integrate theirwas in charge of the Tianjin Yard. We did not have much

efforts and display their true power.

experience with large-scale module projects at the time,and I think the task provided me with more lessons learned(LL) than in previous projects.
Experiencing the tools and methods utilized in

Q

With regard to Chiyoda’s business, what was themost important thing you gained from the Yamal
I think that completing a plant’s design and construction

and the precise manner in how they are used is a goodin a location where the temperatures are bitterly cold,

example of such an LL. I think such methods havereaching as low –50  °C, and realizing the success of ourapplications in future projects.

first large-scale module project will be advantageous

The Yamal LNG Project was deemed quite difficult by

when entering into future projects in extreme
cold locations.

and the level of cooperation with our clients and overall
organizational structure that made this possible. The teamcontrolling the engineering and procurement phase on theclient side was centered in Paris and organized by the20

Chiyoda Corporation Annual Report 2017

Planned launch of
2nd LNG train Developed in the Arctic: 290 days of ice, and extreme cold
temperatures with average annual temperatures of –10  °C World’s Largest Modularized Project: A total of 142 modules
constructed in 10 fabrication yards in Asia

Planned launchof 3rd LNG train

Contract signed Remarkable Safety Record: More than 50 million man-hours
achieved without LTI at yards A Global Footprint: 10 countries, and 52 nationalities –Directorate in Paris, 7 engineering centers worldwide, and 10
module yards, etc. – involved

1st LNG Train Was Launched: Left from Yamal
LNG Sabetta

2014

2015

2016

2017

2018

2019

2020

Summer and Winter Shipping RouteYamal LNG
Sabetta

The first of the three LNG train comprises 5.5 million tons

Summer RouteRussia to China
18 days

per annum and commenced LNG production in the fourth
quarter 2017 with the loading of the inaugural tanker inTransshipment
Zeebrugge

December 2017.
In March 2018, Yamal LNG had shipped its first million
tons of LNG produced at its first train, shipped on the 14th
cargo loaded and dispatched at the Sabetta seaport,
supplying European and Asian markets. The LNG
produced at Yamal LNG is transported by “Arc7” ice classcarriers, each holding 170 thousand cubic centimeter(around 74 thousand tons).

Winter RouteRussia to China
53 days

The 1st LNG cargo is thanks to the tremendous effortsof the JV contractors and project partners who committed
to deliver Yamal LNG on time and on budget. Chiyoda isproud to be a part of the JV executing EPC work at one of
the world’s most competitive LNG projects. This giant
project is another milestone in Chiyoda’s history.

LNG loading in mid-winter: LNG production and export does not stop even when
the sea is totally covered with ice

Unique Arctic Location
Arctic Circle in the estuary of the Ob River—a wild andit was possible for the 1st LNG train to be completed
In short, I think it was the leadership of the JV project

Launch of 1st LNG train

Sabetta, the Yamal LNG Project site, is located above thejust about everyone. Knowing this, why do you thinkon schedule?

Schedule Overview 3 LNG trains with a total of 16.5 million tons per year
production capacity

LNG Project?

overseeing the construction work of a yard subcontractor

Q

In a Nutshell

remote region that is frozen about eight months a year

Hidetaka Fujihara
Project Director

Mr. Fujihara has been assigned to
the JV Directorate in Paris since
May 2014 as Chiyoda’s Project
Director, and engaged in management of JV project operation.

and where winter temperatures can drop to as low as–50°C. The polar night lasts from November to February.
Chiyoda is proud to help build a world-class LNG
project in extreme conditions to exploit vast gas resources.
Yamal LNG construction site overview: Construction work continues all
through the year

21SPECIAL FEATURE 2

Other Projects
CASE

1

CASE

Titanium Sponge Plant in Saudi Arabia

SPERA Hydrogen®: Chiyoda’s Hydrogen Supply Business

The Titanium Sponge Plant Project is a construction
project in the Yanbu Industrial Complex in the Madinah
Region, the Kingdom of Saudi Arabia. Chiyoda took on
the EPC work on a lump-sum contract basis for thisproject in 2015, with a contract value of about US$290
million. The project was completed on schedule in 2017.
Titanium, a rare metal, is used in a range of industries,
such as aircraft engines and materials for aircraft
fuselages, and plumbing and heat exchangers at plants,
because of its light weight, high intensity, high heat resistance, and high corrosion resistance. To satisfy the risingdemand worldwide for titanium sponge for general industrial applications and aerospace, Advanced Metal
Industries Cluster and Toho Titanium Metal Company
Limited (ATTM), a JV between Toho Titanium Co., Ltd.

Chiyoda, together with several partners, established theAdvanced Hydrogen Energy Chain Association forTechnology Development (“AHEAD”) and launched theworld’s first global hydrogen supply chain demonstration
project.
Project: In 2020, AHEAD will transport hydrogen from
Brunei Darussalam to Japan in liquid at ambient temperatureand pressure with Chiyoda’s SPERA Hydrogen® technology.

and Advanced Metal Industries Cluster Company Ltd. in
Saudi Arabia, has launched this project to meet the needfor the stable supply of this material.
Chiyoda has a strong track record in plant constructionin the field of non-hydrocarbons in Japan as well as
overseas, and has also been executing a plant construction
project in Japan for Toho Titanium, one of the world’s
leading manufacturers of titanium sponge.
The construction of this plant will not only contribute to
the stable supply of titanium sponge for Japan but will
also help promote and diversify industries in Saudi Arabia.
The plant has become a bridge in industrial cooperation
between the two countries.

CASE

Capacity

15,600 tons/year

Location

Yanbu, Saudi Arabia

Scope of Work

E.P.C.

Year of Completion

2017

Pharmaceutical / Life Science
Chiyoda has been engaged in the field of engineering andconstruction of pharmaceutical facilities for more than 40
years, and has experience in more than 400 projects.
The domestic Japanese market for pharmaceuticalfacilities is recently increasing, according to current
development trends, in highly potent active pharmaceuticalingredients (API). Chiyoda has extensive experience inengineering and constructing containment facilities forpotent compounds and can offer appropriate facilities andequipment according to hazard class. In response to
growing business opportunities, in April 2017 Chiyoda
established the in-house research and development
laboratories for biotechnology and regenerative medicine
offering high-quality facility engineering / construction andother services, including highly advanced technologies.
For more information on related key businesses andtechnologies, please visit our corporate website.

Chiyoda Corporation Annual Report 2017

GMP Vector Manufacturing Plant for tissue engineering(Courtesy of I’ROM Group Co., Ltd. / ID Pharma Co., Ltd.)

Isolator for clinical trial lab

This project is funded by New Energy and Industrial Technology Development
Organization (NEDO) and the Ministry of Economy, Trade and Industry (METI).

CASE

2

Isolator with half suitHydrogen Production andHydrogenation Plant(Brunei Darussalam)In the supply country,
hydrogen, chemically fixed
to toluene, is converted into
methylcyclohexane (MCH) byhydrogenation reaction forstorage and transport.

Dehydrogenation Plant(Kawasaki, Japan)
In the consumer country,
hydrogen gas will then be
extracted from the dehydrogenation reaction andsupplied as hydrogen gas
to a thermal power plant.

Advanced Metal Industries Cluster andToho Titanium Metal Company Limited(ATTM)

Client22

3

4

Regenerative Medicine: iPS Cells
One of the keys in the endeavor of induced pluripotent
stem (iPS) cells is that they have the ability to change
various cells in the body, which opens new pathways inresearch into regenerative medicine and drug discovery.
With the increase of the average life span and theeconomic development of emerging economies, society’s
expectations of more effective and safer medical care,
medical technology, and related products are everincreasing. The Chiyoda Group has been contributing
to the fields of health care and life science through theengineering and constructing of advanced pharmaceuticalplants for pharmaceutical companies to date.
Further, the Chiyoda Group has established the
Biotechnology Development Office and Regenerative
Medical Technology Development Office in its Koyasu
Office Research Park to reinforce technical capabilities inthese fields and to provide better services to pharmaceutical companies and society.

Chiyoda provides advanced engineering services to thefacility for the developing of regenerative medicine, basedon the experiences of EPC services to pharmaceuticalfacilities and the knowledge accumulated in our laboratory
through the research and development of iPS and otherstem cells.

Our laboratory at the Koyasu Office Research Park

Isolator for filter dryer

23

Review of Operations

Segment Overview
Chiyoda Corporation has developed a wealth of skills and experience over the decades in thishighly challenging industry. The world-class services offered by Chiyoda are supported byextensive technological expertise in pursuit of “Energy and the Environment in Harmony.”
The industry is highly complex, requiring a long-term commitment of capital, humanresources, know-how and experience, and the ability to develop technological superiority
at all levels of the business. Chiyoda meets those goals.

LNG Plants & Other Gas-Related Work
Since the construction of the first LNG plant in the Middle East in the 1970s, Chiyoda has successfully
constructed numerous LNG plants all over the world. Chiyoda has consolidated its position as the world’s
leading contractor of LNG plants with its proven track record. The Company contributes to stable energy
supply throughout the world and low-carbon emissions with its ongoing efforts to improve plant design and

Our Consolidated BusinessDespite geopolitical tensions in the Middle East and theto develop and apply new technologies.
Consequently, on a consolidated basis, new orders,

Korean Peninsula and the spread of protectionism amongfor fiscal 2017 amounted to ¥301,214 million (downOverseas

Recent Achievements

major countries, macroeconomics in Asia, Europe, and the

14.4% year on year). Backlog of contracts amounted to

Chiyoda is executing EPC work for projects in Australia,

Chiyoda is also bidding for new LNG plant projects in

United States remained relatively stable during the fiscal¥653,516 million (down 25.5% year on year). Revenue

the United States, Russia, and Indonesia. In Russia, thethe United States. In Qatar, the Group has been engaged

year under review. The price of crude oil has remained in aamounted to ¥510,873 million (down 15.4% year on year),

1st LNG train of the Yamal LNG Project was completed

under long-term engineering, procurement, construction,

range of approximately US$50–60 per barrel and invest-

and operating loss totaled ¥12,330 million (compared withand started production in December 2017. In addition,and management (EPCm) contracts on a helium produc-

ment activities for new large-scale LNG projects haveoperating income of ¥15,680 million in the previous fiscal

Chiyoda is conducting pre-contract work on an LNG

tion facility and the renovation and modification of LNG

year). Ordinary loss came to ¥10,100 million (¥3,080 million

project in Mozambique as the selected EPC contractor.

and gas processing plants previously constructed by

gradually increased based on steady LNG demand growth.
Through its LNG core business, Chiyoda continued

the Company.

in the previous fiscal year). Net income attributable toto implement large-scale projects worldwide, and wasowners of the parent amounted to ¥6,445 million

Japan

awarded FEED work for the Qatar expansion project in the(compared with net loss of ¥41,116 million in the previous

EPC activities have commenced for the renovation andIn the Futurefiscal year).

modification of existing LNG receiving terminals similarly

In Qatar, owing to successful completion of the debottle-

built by Chiyoda.

necking study, Chiyoda was awarded FEED work for an

fiscal year under review. In addition, the Company is also
implementing structural reforms and the growth strategy

Operating and ordinary losses were recorded due todetailed in its MTMP, “Mirai Engineering—A Grand Opportunity

anticipated increases in costs on LNG projects currently

expansion project with 7.8 million tons/year by three trains.

for the Future,” announced in August 2017. This includes

under way in the United States. Net income attributable toFurther, a fourth train can be added in the future as

expansion into new markets, such as renewable energy

owners of the parent increased to ¥6,445 million following

an option.

and life science, and new areas for future businessrecovery of subsidiary losses and federal corporation tax

models, such as leveraging Big Data and AI technology.

refunds to the U.S. subsidiary.

Outlook for Fiscal 2018
Although LNG project FIDs remain outstanding, bidding

Under these operating conditions, the Company

Outlook for Fiscal 2018
LNG continues to be Chiyoda’s most important businessbe awarded a large-scale project in either the United

with a forecast for the total amount of new orders of ¥800

States or Mozambique. If two or more projects arebillion for fiscal 2018. New orders totaling ¥650 billion areawarded, this amount will increase significantly.

and investment activities have gradually increased.

forecasts consolidated new orders of ¥800 billion, revenue

expected from the energy business, including ¥400 billion

The Chiyoda Group will steadily execute constructionof ¥400 billion, operating income of ¥11.5 billion, ordinary

from LNG / Gas based on the forecast that Chiyoda will

projects on hand, including LNG projects in progress inincome of ¥12.5 billion, and net income attributable toAustralia, the United States, Russia, and Indonesia.

owners of the parent of ¥6.5 billion in fiscal 2018. The

In addition, the Group will proceed with structuralreforms and the growth strategy described in the MTMP
and further expand into new areas and pursue futurebusiness models.

exchange rate assumption is ¥105 per U.S.$1.

Revenue of LNG Plants & Other Gas-Related WorkBusiness Developments in the Energy Business
Large-scale LNG / Gas EPC projects with a focus on:• Projects with high viability• Clients with whom Chiyoda has ample experience• Positive new markets

Billions of Yen
500

429.6
388.9

400
300

250.5
200

14.4

22.1

201.4

In increasing new orders for large-scale overseas
projects and promoting business throughout the value
chain, our areas of focus are the United States,
Mozambique, Papua New Guinea, Qatar, Russia, as
well as other countries.

25.6

47.5
366.8
203.0

11.2

282.0

73.0
100

372.8

361.6

415.2

256.4

128.4
0

2012

2013

2014

2015

2016

2017

(FY)

LNG Plants
Other Gas-Related Work24

Chiyoda Corporation Annual Report 201725

Review of Operations

Segment Overview

Refineries / Petrochemicals / Metals

Pharmaceuticals / Biochemistry / General Chemistry

Chiyoda started its business with domestic petroleum refineries, and has been expanding into otherChiyoda has been engaged in the field of engineering and construction of pharmaceutical facilities for more

­petrochemicals and metals areas, with a focus on continuous innovation. We provide a wide range ofthan 40 years, and has experience in more than 400 projects.

services in these areas, from the planning phase to EPC, operation and maintenance, expansion, andIn addition to conventional low molecular-weight pharmaceutical manufacturing facilities (finishing andrevamping. In addition, Chiyoda’s service covers the introduction of process technologies which support

API), Chiyoda has expanded its knowledge of biotechnology and cell technology, and is increasing its

clients’ environmental requirements and more.

project experience in such new fields as high molecular-weight pharmaceuticals, medium molecular-weight
pharmaceuticals, and regenerative medicine.

Overseas

Japan

FEED work for the petrochemical project in the United

Chiyoda continues to facilitate inter-refinery cooperationJapan

development trends, in highly potent API. It is Chiyoda’s

States was completed as planned. A Group company inin the mutual accommodation of fuel through its EPC

Chiyoda has been involved in major societies, especiallygoal to further develop EPC projects and technology in theSoutheast Asia is executing engineering, procurement,

operations. The Group continues to renovate and upgradefor pharmaceutical, and obtained latest domestic andpharmaceutical and life science fields and to expand into

construction, and commissioning (EPCC) activities forexisting facilities in accordance with the Basic Act forinternational regulatory trends of GMP and a new

advanced pharmaceutical and medical fields, adding ona residue fluid catalytic cracking (RFCC) project in Malaysia

National Resilience and to carry out routine maintenancetechnology. In regard to medium molecular-weight

to its many years of experience in engineering andand EPC operations on a petrochemical tank terminal in

to improve energy efficiency in existing petrochemical

pharmaceutical manufacturing facilities, Chiyoda has been

constructing containment facilities for potent compounds

Southeast Asia. In addition, Chiyoda completed the

production and other facilities.

awarded an EPC contract for the development of peptide

and offering appropriate facilities and equipment according

Titanium Sponge Plant Project in Saudi Arabia intherapeutics, a medium molecular-weight drug that is

to hazard class. The life science field includes high ­molecular-

May 2017.

expected to grow in demand globally. Chiyoda also partici-

weight pharmaceuticals, medium molecular-weightpated as an equity participant in this project.

pharmaceuticals, regenerative medicine, biotechnology• Projects where Chiyoda has technological strength• Increasing new orders for large-scale overseas projects• Projects where competition is limited

and promoting business throughout the value chain—• The United States, Indonesia, and other countries

Structure for promoting the value chain business• Forecast for consolidated orders received during fiscal
2018: ¥250 billion

Revenue of Refineries / Petrochemicals / Metals

Business Environment• Improving the crude oil supply-and-demand balancethrough collaborations to reduce production, andincreasing demand in emerging countries

Billions of Yen
150

138.8
108.6

• Continued investment and development in U.S.
shale petroleum & petrochemical projects

101.1

100

and antibody drugs, and continuous flow production

The market for pharmaceutical facilities employing

Outlook for Fiscal 2018

containment technology is increasing, according to current

Outlook for Fiscal 2018
The pharmaceutical and life science fields are regarded as

facilities. We have recently invested in the development of

future growth drivers. In life science, we will increase our

peptide-based medicine, a type of medium molecular-

efforts in medium molecular-weight / polymers, regenera-

weight drug. Other than EPC, we wish to proceed withtive medicine, and regenerative medicine production

these projects, even if only in small measures at the start.

Revenue of Pharmaceuticals / Biochemistry /General Chemistry

Future Growth of the Life Science BusinessBillions of Yen



34.4
31.0

30

Development of EPC projects and technology in thepharmaceutical and life science fields

33.7
29.7

• High m­ olecular-weight pharmaceuticals,
medium molecular-weight pharmaceuticals,
regenerative medicine• Biotechnology and antibody drugs• Continuous flow production technology

52.7
10

0

0

2014

26

2015

Chiyoda Corporation Annual Report 2017

2016

2017

(FY)

Life Science

40

20
50

technology.

2014

2015

2016

2017

(FY)

Expand into advanced pharmaceutical and medical fields

27

Review of Operations

Segment Overview

Environment / New Energy / Infrastructure

New Business Fields (Big Data / IoT / AI / Robotics)

The interest in global environmental preservation issues such as global warming due to greenhouse gases

In fields related to digital innovation, Chiyoda established a business alliance agreement with GRID, Inc.,

is increasing. Aiming to achieve “Energy and the Environment in Harmony,” Chiyoda has been offering

one of the leaders in AI technologies in Japan, and started studies for enhancing the productivity of plants

environmental preservation technologies since its foundation. In addition to offering licensed technologies,

by using AI technologies. The Company has started demonstration projects of AI technology application

Chiyoda has been active in developing its own technologies in the fields of air pollution control and waste-

for several clients.

water treatment, and has delivered these technologies to various clients as environmental pollution control
technologies. Continuing in this spirit, Chiyoda is developing new technologies as well as improving
existing technologies.

Environment

solar power generation, electricity storage, biomass power

Business Development of Our
Digital Technology Innovation Field andAcceleration of Digital Strategy

Chiyoda plans to expand environment-related businesses

generation, and offshore wind power generation.

• Promotion of AI, Big Data, and IoT in the energy business• Services that combine AI technology• Rapid evolution and expansion of options of• Services centered on plant digital twin

and make progress in new material technology, focusing
on low environmental load and the development of energy-

Infrastructure (Hydrogen Supply Chain)saving technology (next-generation materials).

Chiyoda announced the commencement of construction

Expansion of Partnering by Development andProvision of• Plant smart IoT services

digital technology

Development of New Business Models

for a hydrogen supply chain demonstration project. In April

Chiyoda’s target is to optimize plant operation and

New Energy

2018, a groundbreaking ceremony was held in Brunei for

maintenance and production efficiency by providing

In a fast-changing world with an increasing demanda project to demonstrate Chiyoda’s SPERA Hydrogen®

digital technology combining its plant engineering

for clean energy, Chiyoda is responding to expanding

technology. The world’s first global hydrogen supply chain

technology and state-of-the-art AI technology. In May

Companywide Digitization­renewable energy market needs through businesses into connect Brunei and Japan is scheduled to commence

2018, we introduced digital technology for ADNOC LNG.

• Accelerate digitization of Chiyoda and improvein 2020.

• Integration of plant engineering technology(e.g., advanced analysis and digital innovation)

EPC performance

Outlook for Fiscal 2018

Key Business and Technology

The global environmental engineering business will

The new energy and life science fields are regarded as• Heat and Fluid Dynamics Simulation Technology• Material and Corrosion Control Technologies

increase investment in renewable energy and electricity

future growth drivers. In new energy, we are aiming for the• Sound Environment Design and Consulting

storage, with the aim of a decarbonizing society andaward of large-scale electricity storage facilities, biomass• Structural Analysis• Asset Risk Management Implementation andSupport Services

developing energy storage technologies. We forecast

electric power generation, as well as conventional mega

• Consultation on Plant Diagnoses• Integrated System Engineering

further orders in the environment business, mainly in thesolar projects this term. In electricity storage, our focus will

• Training Programs for Overseas Engineers

new energy sector, and the ¥150 billion forecast for fiscal

be on the energy management business and EPC, and we• Consulting Service on Operation Improvement andBusiness Innovation Support

2018 is promising, considering that multiple projects are atare preparing for entry into offshore wind power projects.

• Process Dynamic Simulation / Water Hammer Analysis• Space Utilization / Development Technology

an advanced stage.

• Acoustic Analysis Technologies and Acoustic Fatigue
Revenue of Environment /New Energy / Infrastructure

Averagefrom FY2013
to FY2016

60

46.2

43.2
33.6

15%

36.1

• Integrity Assessment and Monitoring for Aged Facilities

FY2018
New Order
Forecast
Environment
Business

40• Earthquake-Resistant Technology

Earnings Portfolio Transition

Billions of Yen

For more information on new businesses, please visit our corporate website:www.chiyodacorp.com/en/service/chas/

Target for FY2020*
Environment
Business

19%

Environment
Business

30%

20

13.3

EnergyBusiness

85%02013 2014 2015 2016 201728

Chiyoda Corporation Annual Report 2017

(FY)

EnergyBusiness

81%

EnergyBusiness

70%* Source: MTMP 201729

Chiyoda’s Sustainability

Chiyoda’s Sustainability

Value Creation

Message from the CSO“Mirai Engineering”: Chiyoda’s Sustainable Management Pathway

Ryosuke Shimizu

Promotion of ESG Initiatives at Chiyoda

Executive Vice President,
CSO, Division Director,
Corporate Planning Division

Climate change and its impact on our environment has led

but create new business fields and new value. Throughto an increase in environmental awareness, energy efficiency,

the efforts of “Mirai Engineering,” we can contribute to an

Each year we use this section of our annual report to highlight the latest achievements of our ESG activities and accom-and sustainability efforts within the field of engineering

increasingly important area of engineering operations.

plishments of the past year. This year’s interview with our Chief Sustainability Officer (CSO) is a forward-thinking discussion

services. Moreover, our fast-paced, changing world, which

In response to the needs of global markets and themust grapple with further urbanization and economic

greater society, the Chiyoda Group, as an integrated

uncertainties, is calling for new sustainable solutions.

engineering company, will enhance its business sustain-

Chiyoda Corporation’s “Mirai Engineering” was devel-

For more details on Chiyoda Corporation’s sustainability policies and programs, including stakeholder engagement andhealth and well-being initiatives, please visit our corporate website to view our annual sustainability reports.

ability in the pursuit of “Energy and the Environment in

oped under a new conceptual framework for its value

Harmony”—offering comprehensive engineering services

creation business model. We believe that, by strengthening

in energy and environmental fields in order to create new

and integrating our expertise in energy solutions, environ-value for society. (For more details, please see our MTMP,

mental solutions, and technology and business model

about the CSO’s role in leading a company on the path toward sustainable growth.

“Mirai Engineering—A Grand Opportunity for the Future.”)innovation, we will not only expand our business portfolio

Participation in International Initiatives

United Nations Global Compact
Chiyoda signed to be a participant in the United Nations Global Compact (UNGC) in
November 2012. The UNGC is a voluntary corporate responsibility initiative establishedin the United Nations Headquarters in 2000. Chiyoda has established the Codeof Conduct in line with its corporate philosophy, “Energy and the Environment inHarmony,” and has been expanding its business globally. As an endorser of the UNGC
10 principles in four fields—human rights, labor, environment, and anti-corruption—
Chiyoda further implements its role as a good corporate citizen and aims to contributeto the sustainable growth of international society.
External Evaluation—ESG Index Selection

FTSE4Good Index & FTSE Blossom Japan Index
Chiyoda has maintained its position as one of the constituents of the FTSE4Good Index
since 2005 by demonstrating strong ESG practices. In addition, Chiyoda has beenchosen as one of the constituents of the FTSE Blossom Japan Index that FTSE Russell
started in July 2017. The FTSE Blossom Japan Index includes Japanese companies
which are promoting advanced ESG initiatives. The Chiyoda Group strives to communicate with stakeholders, and will contribute to the realization of a sustainable society
aiming to help resolve global issues through engineering. FTSE Russell evaluatescompanies in terms of ESG requirements such as corporate governance, health andsafety, anti-corruption, and climate change.

Q

Mr. Shimizu, recently the role of a senior executive in

At Chiyoda, sustainability is a daily business as we

charge of sustainability or corporate responsibility iscontribute energy and environmental technology to the

becoming more and more important. What kind ofworld through engineering solutions. Striving for a cleaner

expertise is necessary to become a CSO?

world every day, we work to minimize environmental

Many CSOs have solid backgrounds in economics or

impact and address global climate change. As one

business management. As an engineer, this of course was

example of our efforts, we developed the new technology

not the career path I followed. I believe it is important to

SPERA Hydrogen®, which we believe will greatly contributehave both tangible and intangible skill sets, and a CSO

to a low-carbon society while being one of the keys to ourmust also have a real passion for leading a company

sustainable growth. Throughout this report, you will read

toward sustainable growth. In this role, I am confident thatabout our initiatives and commitment to sustainability. And

I will be able to set objectives and develop strategies inwhile we are proud of our accomplishments, we under-

consideration of ESG factors. While the focus is often

stand there is much more that we can and have to do.

centered on corporate social responsibility (CSR), I believe

So we are excited to share with you our ideas on “Mirai

that integrating these ESG factors into our core businessEngineering” and our goals for 2020, which for the firststrategy is the best way to realize a successful transforma-time in our history include environmental solutions astion, which was outlined by our President & CEO, Mr.

growth strategies.

Masaji Santo, in the MTMP, “Mirai Engineering—A Grand
Opportunity for the Future.” Sustainability touches all
departments, which means that in order to accurately
assess all data across the Company, the entire Chiyoda
Group must work together as one.

Q

It is very inspiring to see a CSO working toward agreater good, and to do so with such creativity andcollaboration. Aside from your commitment topurpose-driven goals that help Chiyoda grow as an

SNAM Sustainability Indexorganization while addressing pressing social issues,With its high ESG evaluation, Chiyoda retained its position as one of the constituentsof the SNAM Sustainability Index that SOMPO JAPAN Nippon Asset Management(SOMPO JAPAN) started in August 2012. Chiyoda was first included in 2016. The
SNAM Sustainability Index is intended for socially responsible investment (SRI) fund forpension funds or institutional investors to invest widely in companies with high ESG
evaluation ratings. The Chiyoda Group will continue to promote communication withstakeholders, as well as contribute to the realization of a sustainable society aiming tohelp resolve global issues through engineering.

what is a CSO’s job all about?

Chiyoda supports the SDGs

I would simply say, “it’s all about aiming for sustainability• Plant Construction & Providing Infrastructure• Cultural Advancement & Support of Communities• Sharing Technical Knowledge & Job Creation• Working in Partnership with Local Communities• Technical Development for a Low-Carbon andCarbon-Free Society• Environmental Protection & Climate Change Aversion• Stable, Safe, and Affordable Energy Production• Effective Use of Natural Resources

and making that your business.” If we integrate the United
Nations Sustainable Development Goals (SDGs) into ourstrategies and operations, assess the impact of ourbusiness on society, and then report on our sustainability
activities, we will certainly be encouraged by this process,which will reinforce our commitment to serving agreater purpose.

30

Chiyoda Corporation Annual Report 201731

Chiyoda’s Sustainability

ESG Initiatives
The Chiyoda Group has embraced “Energy and the Environment in Harmony” since its
foundation, understanding the contribution of such collaboration to the sustainable development of society. We recognize the unique responsibilities of major corporations in theengineering sector, and the obligation to search for business strategies that benefit all
members of society. In that regard, we promote open, transparent communication with all
our stakeholders about the operations of the Chiyoda Group, including its ESG initiatives.

Environment• Biological diversity• Pollution & resources•S upply chain / Environment-oriented
proposals in project work

E
S

G

Creating Shared Values
SocialGovernance•S afety, quality, environment, and­information security (SQEI) management• Labor standards• Human rights• Reliability• Supply chain / Knowledge sharing• Long-term contribution to local
communities• Enhanced corporate governance policy• Risk management• Tax transparency• Anti-corruption practices• Enhanced compliance program

An important outcome of a vigorous
approach to ESG issues is Creating
Shared Values for the Company and its
stakeholders. Creating Shared Values
can be defined as the product ofsustainable growth using sustainablemeans; the creation of long-term growth
for the Company by methods that
address important environmental andsocial challenges with corporate governance duly practiced. Within the
Chiyoda Group, our Creating Shared
Values approach is built on a social­responsibility-oriented culture thatrecognizes the risks inherent in theengineering business, and aims torealize “Energy and the Environment
in Harmony” using all the resources
available.

Environmental Data of Chiyoda Group Company Offices
Power consumption (CGH, Koyasu, TW100, Tokyo Office)Energy consumption (CGH, Koyasu, TW100, Tokyo Office)CO2 emissions (CGH, Koyasu, TW100, Tokyo Office)
Chilled water consumption (CGH, Koyasu)
Steam consumption (CGH)
Waste disposal volume (CGH, Koyasu)
Waste recycling rate (CGH, Koyasu)
Printing paper consumed (CGH, Koyasu)

Diversity of Employees
Ratio of female employees among new recruits
Number of female employees among new recruits
Ratio of women among all employees
Average service years of female employees
Number of women in management positions
Ratio of women in management positions
Ratio of employment of persons with disabilities
Number of non-Japanese employees
Assistance for Employees
Number of employees taking childcare leave
Number of employees taking sick of injured childcare leave
Numbers of employees taking nursing care leave
Numbers of employees taking temporary retirement for nursing care
Number of employees working reduced hours for childcare
Number of employees dispatched for onsite training /onsite instruction
Volunteer Activities
Number of employees participating in reconstruction assistance
Number of employees participating in cleanup activities aroundthe office location
Vaccine donation by Ecocap collection
Donation of school lunches by TABLE FOR TWO

2013

2014

2015

2016

2017 (FY)

Tons

11,354
1,010
4,124
90.3
87.6
153

19,209
1,435
3,591
92.0
95.6
230

10,936
1,065
3,364
89.5
93.5
206

7,670
783
1,146
87.8
95.8
221

12,242
614
901
91.5
93.2
299

12,627
4,027
6,535
13.4
7,201
238
94.6
150

12,609
4,016
6,518
14.9
6,564
247
95.8
128

11,635
3,624
6,886
13.7
5,840
264
94.6
106

12,526
3,826
7,287
17.5
5,914
262
92.3
88

11,129
3,430
6,367
15.5
5,168
233
93.8
66

%
%
Cases

1,000 kWhkl*
t-CO2
1,000 m3
GJ
Tons
%
Tons

2014

2015

2016

2017

Years

12.9
41.7
1.8

13.0
41.0
1.6

12.9
40.8
1.9

12.9
40.9
2.4

13.2
41.6
4.5

18
16
13
6.5
22
2.5
1.5
49

18
16
13
7.1
23
2.6
1.7
66

19
13
13
7.5
23
2.6
1.7
71

24
18
14
8.0
23
2.6
1.5
82

33
19
19
7.6
24
3.2
1.5
71

Persons

11
–
–
1
3

7
0
1
1
6

15
2
8
0
14

22
1
4
0
19

27
7
9
0
14

Persons

83

83

64

70

53

Years
%
%
Persons%
Years
Persons%%
Persons
Persons
Persons
Persons
Persons

Persons

63

35

62

70

54

Persons

0

32

95

127

157

Vaccines

21
1,693

209
1,817

267
1,782

228
1,860

231
1,581

0.13
0.004

0.32
0.018

0.13
0.010

0.10
0.001

0.11
0.119

Lunches
%
%

KPI
Tons

2013

(FY)

We are dedicated to achieving even greater transparency and stability by conducting ouroperations fairly in accordance with the highest ethical standards.

Unit

t-CO2

Unit

Governance Initiatives

Our economic and social activities are intended to continuously enhance our business, while
striving toward the objective of “Energy and the Environment in Harmony” and further
contributing to the sustainable development of society.

KPI

KPI

Safety Data
Accident frequency rate
Accident severity rate

Environmental Initiatives

Environmental Data of Domestic Construction Sites
Industrial waste disposal quantity
Final landfill disposal quantity
CO2 emissions
Industrial waste recycling rate
E-manifesto penetration rate
Environmental proposals

Through our business, we contribute to local communities in many ways including humanresources development, initiatives on human rights, labor, and social contributions. Further,
we will create a corporate culture where the diversity, individuality, and character of employees
are respected, where people are motivated to do their best, and of which employees
and their families are proud.
Situation of Employees
Average years of service
Average age of employees
Turnover rate excluding retirement

Creating Shared Values by Promoting ESG• Climate change• Water consumption

Social Initiatives

Actions for Compliance
Number of employees receiving compliance training(Freshmen and mid-career hire and executive, associate executive)
Number of employees receiving compliance training for overseas
assignment, site managers of field offices and export controls
Number of employees attending compliance seminars
Number of employees receiving compliance e-learning
Number of reports to the Compliance Consultation andReporting System
Initiatives for Business Continuity
Business continuity plan training
Actions for Information Security
Number of serious information security-related incidents
Data Related to Governance
Number of outside directors

Unit

2013

2014

2015

2016

2017

Persons

139

279

156

166

150

Persons

200

551

512

523

314

Persons
Persons

88
–

264
2,611

389
2,849

717
2,841

662
5,213

Reports

7

14

15

24

25

Trainings

–

–

1

2

2

Incidents

0

0

0

0

0

Persons

1

2

2

4

4

(FY)

* Crude Oil equivalent

32

Chiyoda Corporation Annual Report 201733

Chiyoda’s Sustainability

Risk Management
Project Risk Management and Corporate Risk Management

The engineering industry is a challenging business that builds facilities insome of the most difficult parts of the world, designed to deliver a productProject Risk Management

Corporate Risk Managementthat everybody needs. Given the nature of our business, no shortcuts can

Successful project execution is the lifeblood of Chiyoda’s

Corporate management covers day-to-day investment andever be taken and a razor-like focus on not just what we do but how webusiness, and its projects will confront risks along the roadcorporate risk. Investment risk refers to financial risk bothdo it is essential for all of our stakeholders—including shareholders,to completion. Risk will be assessed continually throughout

within Chiyoda and with third-party relationships such as

clients, employees, and communities.

a project as various milestones are reached. In the early

JV partners, as well as the setting of return objectives

Yasuyuki Maeda

stages of a project, estimations, counterparty due diligence,(hurdle rates) and exit strategies.

Deputy Division Director,
Corporate Management Division

and work volumes and schedules must all be studied.

Corporate risk strategy also assesses the overall risk

Further into a project, the inevitable operational changes

to the corporation, by division or by segment, taking into

must be managed while in the closing stages, and varia-

consideration the environment in which the Company istions on target dates and outputs must be assessed. All of

operating (e.g., in terms of competition, global economics,

this activity needs constant monitoring and evaluation and,politics, etc.). It will also consider the role and effectivenessat times, risk mitigation assessment.

of Group management in the process and how the Plan–

Risk management plays a vital role in any organization,

First of all, we identify the three different types ofand as deputy director of the Corporate Management

risks that we confront, arranged under two headings:

Division I am responsible for the identification, manage-

Project Risk Management, which comes with each indi-

Do–Check–Act (PDCA) cycle, a model for change, may bement, and reporting of all the risks that we face at Chi-vidual project execution risk we undertake worldwide, andable to improve the process.

yoda Corporation. The Board of Directors is charged with

Corporate Risk Management, which is managed by Headthe ultimate oversight of risk within the Company and

Office functions such as the management of investment

It is also worth noting that while project execution and financial risks exist for the duration of a project, many corporate risks

regularly reviews the effectiveness of the risk manage-

exposure and corporate functions that are common to all

are continually present. As a result, monitoring and auditing are a constant presence in the management of both risk andment process. This includes oversight of the corporateof our activities across the Company.

the oversight procedures in place.

Code of Conduct and matters concerning investigations

Each risk approach requires a different assessment.

of non-compliance and oversight of ESG risks, including

We recognize the need to follow established global stan-

scenario planning and ESG solutions.

dards, both for their appeal to our stakeholders and also

Given the risks inherent in our business, we believe it

for the depth and detail of knowledge they add to ourvital to inform and reassure our stakeholders about theown experiences. The unique nature of Chiyoda’srisks that we face and the steps we are continually taking

businesses must always be our primary focus, but theto manage potential problems. The following analysis willconsideration of well-researched standards achieved

provide ­readers with information on how we approach risk

elsewhere in the engineering and construction industry

at Chiyoda and how we can make it manageable at every

offer opportunities for substantial benefit.

Chiyoda Corporation Risk Matrix
Project Risk Management
Category

Project Execution Risk

level of the C­ ompany.

Comprehensive Coverage Leading to Strong Risk Management
Chiyoda employs various management
systems that provide comprehensive
coverage of the three main centers of
risk—Project Execution, Investment,
and Corporate—which focus on
occupational safety, quality, theenvironment, and digital security.

The use of these management
systems is governed by senior
management to meet internal audit
and CSR standards, the legal requirements set forth in the Companies
Act and J-SOX, and global CSR
standards and the risk management
standard ISO 31000.

Through internal and external audits of
the SQEI (Safety, Quality, Environment,
and Information Security) Management
System, Chiyoda continuously
improves its business practices,
contributes to the global community,and enhances its shareholder value.

Chiyoda employs internal controls for risk management. For more information on this policy, please visit our corporate website:www.chiyodacorp.com/en/csr/management/basic-policy/

34

Chiyoda Corporation Annual Report 2017

Keywords

Period of Exposure

Impact on B/S & P/L• Estimation• Risk mitigation• Counterparty due diligence• Check / estimate• Double-check & evaluate• Milestone monitoring• Schedule & work volume• Management of change

Project lifetime(Years)DirectPeriod of Exposure

Impact on B/S & P/L

Corporate Risk Management
Category

Keywords

Investment Risk

• Internal risk assessment• Third-party assessment• Hurdle rates & exit strategies• Monitoring & auditing

Investment lifetime(Decades)DirectCorporate Risk

• Risk heat map• External environment• Group management• Improvement through the PDCA cycle

Corporate lifetime(Permanent)

Indirect35

Chiyoda’s GovernanceDirectors & Executive Officers
As of June 21, 2018
6
7
8

10

11

5

12

9

14

13

MEMBERS OF THE BOARD

EXECUTIVE OFFICERS

Representative Directors

Chairman of the Board

Vice Presidents

1

Katsuo Nagasaka

Katsuo Nagasaka

Eisuke Oki

2Masaji Santo

President & CEO

3

Arata Sahara

Deputy Division Director,
Project Logistics & Construction Division

Masaji Santo

4

Hirotsugu Hayashi

General Manager,
Structural Reform Promotion OfficeDirectors

3

1

2

4

5

Masahiko Kojima

6

Ryosuke Shimizu

7

Nobuyuki Uchida

8

Nobuo Tanaka*

9

Hiroshi Sakuma*

Katsuo Nagasaka
Representative Director,
Chairman of the Board 1
Since joining the Company, Mr. Nagasaka has long been involvedin management of the International Business Divisions, and since
being appointed Senior Vice President in April 2012, has overseen
overall business development of the Company. He has abundant
experience and knowledge regarding management of the­Company and the Chiyoda Group after having served as theRepresentative Director, Senior Executive Vice President fromFebruary 2017 and the Representative Director, Chairman of theBoard from June 2017. Leveraging his global work experience andknowledge, he is qualified to contribute to improving the corporate
value of the Company.

36

Chiyoda Corporation Annual Report 2017

Masaji Santo
Representative Director,
President & CEO 2
Mr. Santo is well versed in the businesses of the Company and its
Group companies from having served as an outside director of theCompany for three years from June 2013, after having served as
President of Mitsubishi Chile Ltda. and Senior Vice President of
Mitsubishi Corporation. He is qualified to contribute to improving
the corporate value of the Company as a leader by leveraging his
global work experience and knowledge, having been appointed
Representative Director, President & CEO in June 2017.

Deputy Division Director,
Technology & Engineering Division

Senior Executive Vice Presidents

Hideaki Tomiku

Arata Sahara
Chief Talent Management Officer

Deputy Division Director,
Growth Strategy Division

Hirotsugu Hayashi

Jinei Yamaguchi

Chief Financial Officer,
Chief Compliance Officer,
Deputy General Manager,
Structural Reform Promotion Office

Deputy Division Director,
Corporate Planning Division

Hiroyuki Shimizu

Executive Vice Presidents

Deputy Operations Director,
Energy Project Operations Division

Masahiko Kojima

MEMBERS OF THE AUDIT &SUPERVISORY COMMITTEE

Toshiaki Furugori

Assistant to President — Growth Strategy,
Deputy General Manager,
Structural Reform Promotion OfficeMembers of the Audit &Supervisory Committee

Ryosuke Shimizu

Chief Digital Officer,
Operations Director,
ChAS & Digital Technology Project
Operations Division

10 Mikio Kobayashi*

The President & CEO of Chiyoda Corporation, in partnershipwith the Board of Directors and in addition to their responsibilities
managing the day-to-day affairs of the Company, must lead
Chiyoda toward future success, guided by the Company’s corporate philosophy and in keeping with the core values of safety andteamwork. The management will strive to enhance the sustainablecorporate value of our company as “One Team.” Members of theBoard also represent the interests of Chiyoda’s shareholders, andall directors, executive and non-executive, act in line with the Codeof Conduct, following best practices of corporate governance andthe highest standards of ethical business conduct. From thisfoundation, we can maximize long-term shareholder value.
We are pleased to take this opportunity to introduce our executive management team. These are the people who struggle with afeeling of the greatest responsibility for the success of Chiyoda andare key to our efforts to maximize business opportunities while
overcoming the challenges of our industry, and to whom all stakeholders look for strategic direction and tactical guidance.

Toshiyuki Kariya

11 Takahiro Kitamoto
12 Hiroshi Yamaguchi*
13 Tetsuya Aiba
14 Mika Narahashi*

Chief Sustainability Officer,
Division Director, Corporate Planning Division

Mamoru Nakano
Operations Director,
Energy Project Operations Division
General Manager,
Gas & LNG Project Department

Senior Vice Presidents

Nobuyuki Uchida
Deputy Operations Director,
Energy Project Operations Division

Masao Ishikawa

Arata Sahara
Representative Director, CTMO 3
Mr. Sahara, after having served as the Deputy Division Directorof International Project Division 1, was appointed Director of theCompany in June 2015, and Representative Director, Senior
Executive Vice President in June 2017. He has provided­centripetal force in leading projects in the field of downstream &non-­hydrocarbon project operations, one of the Company’s core
operations.

Division Director,
Business Development Division

Masaki Kadono
Deputy Division Director,
Project Management Division
General Manager,
Project Management Department

Masakazu Fujiwara
Energy Project Operations Division
Project Director, IGL Team

Munetaka Horiguchi

Division Director,
Technology & Engineering Division

Deputy Division Director,
Business Development Division
Growth Strategy Division

Yasumitsu Abe

Norimasa Matsuoka

Chief Human Resources Officer,
Division Director,
Project Management Division

Division Director, Growth Strategy Division

Shuichi Wada

Co-Chief Digital Officer,
Deputy Division Director,
Corporate Planning Division

Division Director,
Corporate Management Division

Masao Fujiwara
Hirotsugu Hayashi
Representative Director, CFO & CCO 4

Division Director,
Project Logistics & Construction Division

Mr. Hayashi, after serving as Branch Manager of the Chicago
Branch of The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Full-Time
Corporate Auditor of Mitsubishi Plastics, Inc., was appointed
Representative Director, Senior Executive Vice President, and
CFO of the Company in June 2017.

Setsuo Iuchi
Assistant to President — Corporate Relations

Terunobu Iio* Outside director as provided for in Article 2-15 of
the Companies Act

Hideo Matsui

Toshiya Momose

Yasuyuki Maeda
Deputy Division Director,
Corporate Management Division

Junichi Kunihiro
Deputy Operations Director,
Global Environment & Green Energy Project
Operations Division

Operations Director,
Global Environment & Green Energy Project
Operations Division37

Chiyoda’s Governance

Chiyoda’s Governance

Message from the Chairman

Corporate Governance:
The Sustainable Enhancement of Corporate Value

Strong, effective, and transparent corporate governance is essential for the efficient

The Company pledges to constantly strive for sustainable growth and to enhance the corporate

functioning of the entire Chiyoda Group. Improvement in our governance practices

values of the Chiyoda Group on a medium- to long-term basis. To achieve this goal, the Groupwill further enhance corporate value and sustainability.

established the Chiyoda Corporation Corporate Governance Policy in 2015, which developed
the Company’s basic views and guidelines with regard to corporate governance. The Company
will continue to actively secure soundness and transparency of its corporate management
through the Policy.
Katsuo Nagasaka
Chairman of the Board

Basic Views on Corporate GovernanceIn order to further reinforce its corporate governanceTo ensure speedy and accurate decision-making to deal

Impact of Corporate Governanceon Sustainability

chief officers will be combining their management oversight

structure, the Company shifted to a “Company with Audit

with rapidly changing social and economic environments,

function with their key operational role, which will lead toand Supervisory Committee” system. The Company

the Company adopted the executive officer system. By

This year, Chiyoda is celebrating the 70th anniversary of its

greater efficiency and results with regard to their decision-

established the Legal & Compliance Department, theshifting to the Company with Audit and Supervisory

founding in 1948. I have the great privilege and responsibility

making ability. Underpinning each area of business

SQEI Risk Management Department, the Crisis

Committee system, with the new functions, responsibilities,

as Chairman to address topics of the highest importanceexecution are the following principles:Management Department, and the Internal Audit Division.

and authorities that are described above, the Company will

• We must enhance accountability to shareholders and

To reinforce internal controls, the Company established

be able to improve and implement the soundness andthe Internal Control Committee and the Compliancetransparency of management and prompt decision-making,Committee.

and further enhance its corporate value.

with all our stakeholders while striving for long-termsustainable goals. Aside from providing great technologicalsolutions as an integrated engineering company, we
also need to make a positive contribution to society. Everyother stakeholders; and• We must maintain high standards of business ethics
and integrity.

company must have an aim, a purpose, and an ultimate
vision to achieve its full potential. Along with delivering solid
financial results in the short to medium term, we must also

Building on Success, Supported byStrong Fundamentals

realize our mission and innovations for long-term, sustain-

Chiyoda will continue to pursue innovative ways to meetable growth.

the challenge of longevity as an “Integrated Engineering

Chiyoda’s Corporate Governance System and Internal Control(As of April 2018)

General Meeting of Shareholders

and Service Provider” in the fields of energy and theManagement and New Governance Structure

environment. We will continue to embrace globalization

The global landscape of corporate governance is driving

and will promote the importance of focusing on long-term

our transformation. It is essential for management tooutcomes. Guided by our philosophy of “Energy and theregularly engage in deep dialogue with stakeholders

Environment in Harmony,” we are changing lives forto reinforce the prospects of long-term growth. To ensure

the better through innovative engineering solutions

such productive engagement with shareholders, we strive

and technology.

Appoint / Dismiss

Suggest / Report

Appoint / Dismiss

Appoint / Dismiss

Report / State Opinions

Audit / Report

Board of Directors
Directors(Excluding Audit & Supervisory
Committee Members)

Audit & Supervisory Committee

Appoint /Dismiss

Directors(Audit & Supervisory Committee Members)

ReportAccounting Auditors

Reportto discuss a diverse array of topics and identify ways to

I would like to thank all our stakeholders for placing yourbuild a better framework that serves all of our stake-trust in Chiyoda and for supporting us as we move forward

holders. With the creation of the new chief officer role forwith the next step in our strategy and focus

each area of business execution, we aim to improve theon ensuring that Chiyoda evolves to the next level

Major Committees for Internal Control

effectiveness of our existing leadership roles. These newof its transformation.

Internal Control Committee

Appoint

Compliance Committee

Propose / Report

Cooperate
Cooperate /ReportReportExecutive Committee

ReportRepresentative Director
President & CEO

InstructInternal Audit
Division

Financial
Audit

Audit
Instruct

Propose / Report

Internal
Audit

Business Execution Divisions
Control / Supervise

Group Companies

38

Chiyoda Corporation Annual Report 201739

Chiyoda’s Sustainability

Corporate Governance: The Sustainable Enhancement of Corporate Value

Organizational Structure
Board of Directors

Outside Directors

Executive Officers
We have appointed executive officers to expedite the

Chiyoda’s Board of Directors decides important matters

implementation of business operations. Executive officers

concerning the Company’s management, including

are responsible for carrying out operations in accordance

management policy and business strategies, in accordancewith the policies adopted by the Board of Directors. We

with the law, the Articles of Incorporation, and Board ofhave 26 executive officers, with seven acting in dual

Directors’ regulations. The Board of Directors also receives

capacity as directors. The term of office for executive

reports from directors and others on the performance ofofficers is one year.

duties, financial situation, and operating results, andoversees the performance of duties by each director.

The Management Meeting supports the decision-making

whom are independent outside directors having no conflictof our management by providing a forum for deliberationof interest with general shareholders. The term of office ofon such vital matters as corporate strategy and capital

directors is one year, in order to make the administrative

investment, including matters to be deliberated in theorganization responsive to changes in the business

Board of Directors for discussion and reports to be madeenvironment and to establish clear administrative

to the Board. The Executive Committee consists of four

responsibility and roles of directors.

directors, some of the executive officers of corporate

with special meetings convened as needed. To ensure thedivisions, and one standing corporate auditor. Meetings
are held 24 times a year as a rule.

results is done.

Nobuo Tanaka

Hiroshi Sakuma

Mr. Sakuma has served extensively as a corporate
director and executive officer for a number of companies
and is well versed in a wide range of business fields,
including infrastructure development in the petroleum /gas, electric power, and new energy sectors. During his
tenure as an outside director of the Company, he has
utilized his global experience and industry knowledge toensure his effectiveness in the performance of his duties.

Apr. 2011: S enior Vice President, Deputy Division COO of New Energy & Power
Generation Division (concurrently); General Manager of Power
Generation & Marketing, International Unit of Mitsubishi Corporation
Apr. 2012: S enior Vice President, Division COO of New Energy & Power
Generation Division of Mitsubishi Corporation
Apr. 2014: E xecutive Vice President, Group CEO of Global Environmental &Infrastructure Business Group of Mitsubishi Corporation(current position)

Mikio Kobayashi

Mr. Kobayashi has extensive experience as a corporate
director and officer for a number of companies andhas also served as an Audit & Supervisory Committee
member of the Company. He has consistently offeredexpert opinions from a neutral and objective point of view,and the Company expects that his experience and insightwill be beneficial to management oversight.

Oct. 2005: E xecutive Officer, General Manager of Business Division I of
Mitsubishi UFJ Trust and Banking Corporation
Jun. 2007: Representative Director, President of Ryoshin Credit Service Co., Ltd.
Jun. 2008: R epresentative Director, Deputy President of Japan Property
Solutions Co., Ltd.

Hiroshi
Yamaguchi

Mr. Yamaguchi has abundant knowledge and experience
Apr. 2016: R epresentative Executive Vice President and Chief Engineer, Safety
in the energy industry, and the Company expects that heManagement of Tokyo Electric Power Company Holdings, Inc.
will leverage these assets in his role as an outside director, Jun. 2017: Chairman of the Board of KANTO ELECTRICAL SAFETY INSPECTION
contributing to sound management decision-making
ASSOCIATION (current position)
through effective audits from a neutral and objective
May 2018: P
 resident of The Institute of Electrical Engineers of Japan (IEEJ)
perspective.
(current position)

Mika Narahashi

Ms. Narahashi has expert knowledge and experience asa lawyer in addition to her background in corporate law.
The Company expects that she will greatly contribute tothe oversight of management from the perspectives oflaw, compliance, and governance.

Committees
We enhance our business activities and oversight functions
by establishing internal meetings (committees) to deliberate

Audit & Supervisory Committee

Company, and the Group, from broad and diverse

composed of five directors (including three outside officers)

viewpoints. Of these committees, the Internal Control

as Audit & Supervisory Committee members who closely

Committee, the Compliance Committee, and themonitor the execution of duties of directors and executive

Responsible Care Committee and others are attended by

officers. The Audit & Supervisory Committee members

directors and others, as well as the standing corporate

attend meetings of the Executive Committee and express

auditor, who serves as an observer.

their opinion when necessary. In addition, their responsibilito the General Meeting of Shareholders, suchas the appointment or dismissal of accounting auditors,
auditing consolidated financial documents in close
cooperation with the accounting auditors, and preparing

Aug. 2003: Joined Anderson Mori & Tomotsune
Jan. 2015: J oined AIG American Home Assurance Company, Ltd.;
Head of Legal Affairs Office of AIG American Home Assurance
Company, Ltd.
Apr. 2017: Senior Partner of TH Law Office (current position)

on important matters concerning the management of the

The newly established Audit & Supervisory Committee isties include deciding the content of resolutions submitted

BackgroundJul. 2004: Director of Directorate for Science, Technology and Industry of OECD
Sep. 2007: E xecutive Director of International Energy Agency
Jun. 2012: O utside Audit & Supervisory Board Member of TEIJIN LIMITED(current position)effectiveness of the Board of Directors, assessments andanalyses are conducted annually and the follow-up to the

PurposeMr. Tanaka has appropriately carried out his duties as
an outside director of the Company by drawing on his
abundant knowledge and experience in the energy field,
gained through his position as executive director of theInternational Energy Agency.

Executive Committee

The Board currently consists of 14 directors, four ofBoard of Directors’ meetings are held monthly as a rule,

Name

Name of Committee

PurposeNumber of
Meetings
in FY2017

Internal Control
Committee

Deliberate measures to build
and improve a proper internal
control system

2Compliance
Committee

Promote compliance-oriented
business management

4

Remuneration for Directors and Audit & Supervisory Committee Members
No. of Persons

Base Remuneration(Millions of yen)

Performance-BasedRemuneration(Millions of yen)

Remuneration forPurchase ofTreasury Stock(Millions of yen)

Directors(Who are not Audit & Supervisory Committee members)

11

201

28

40

Directors(Who are Audit & Supervisory Committee members)

3

58

N/A

N/A

System of Remuneration
Category

audit reports.

Concept

Remuneration for directors is ¥300 million
or less per year.

Performance-based remuneration

Corresponds to the achievements
for each term

Taking into account the levels of net income
and dividend for the consolidated fiscal year
under review and qualitative elements such as
the degree of achievement of management
objectives, the amount is kept within ¥200
million, or 1% of the amount of net income
attributable to owners of the parent.

Remuneration for purchase oftreasury stock

Linked to long-term achievement
improvement

Directors (excluding outside directors)
acquire treasury shares of ¥90 million
or less per annum through the Directors
Holding Association for continuous holding
until retirement from positions.

Base remuneration

Corresponds to roles andresponsibilities

Remuneration for Audit & Supervisory
Committee members is ¥84 million or lessper year.

Base remuneration

Directors

For Chiyoda’s complete Corporate Governance Report, please visit our corporate website:www.chiyodacorp.com/about/Governanve_Report_Eng_20180402.pdf

40

Chiyoda Corporation Annual Report 2017

Audit & Supervisory
Committee members

OutlineCorresponds to roles andresponsibilities

41

Chiyoda’s Sustainability

Discussion: Chairman & Outside Directora sustainable fuel for the future. This may be one of thereasons that Chiyoda asked me to be a Board member.

Nagasaka

What special skills and experience do you
bring to the Board, and how would you liketo make an impact in the years ahead?

TanakaPerforming senior roles at some of the world’s
leading institutions has given me a global

perspective that, I believe, fits well with Chiyoda’s in-house
expertise. While there are many companies that strive forsuccess in energy construction, the way they approach the

Katsuo Nagasaka

Nobuo Tanaka

Chairman of the Board

Outside Director

industry’s challenges can differ depending on their skills and

we receive substantial information about the condition

experience. I can add valuable insight into how Chiyoda canand operations of the Company on a regular basis, thecompete in this highly technical world. My objective would

unexpected can happen. If the need arises, we canbe to make a lasting contribution to Chiyoda’s success by

consult by phone and arrange informal meetings tointroducing a truly global perspective to the conversations

discuss any pertinent issues, ensuring that senior

and decision-making that are so essential to Chiyoda’s

management have the benefit of our advice as soon

future. For example, Chiyoda heavily depends on fossil

as possible. In all meetings, agenda matters are discussed

fuel-related businesses—LNG, in particular. But the worldin detail, voted upon, and passed on for execution.

is moving toward decarbonization much faster thananybody had expected.

Chiyoda’s Quest for Economic and Sustainable Development Is
the Promotion of Good Governance

The IEA declared in its recently published World Energy

The government’s recent efforts to bring the expertise,perspective, and skills of women into Japan’s business
community offers a rich, new opportunity both for the

Outlook that solar photovoltaic generation will be thecompanies they serve and the individuals themselves.

cheapest source of energy in the future. This would have

I am delighted to welcome the first female member of the

In partnership with Chiyoda’s senior management, theThe following excerpt is taken from a recent discussion

significant impacts on the future of fossil fuels and nuclear

Board, Ms. Mika Narahashi. Certainly her expertise, perspec-

Board of Directors, led by its Chairman, Mr. Katsuo

between Chairman Nagasaka and Director Nobuo Tanaka,

power. Although a fossil fuel, LNG would be a more attrac-

tive, and skills offer a rich, new opportunity for Chiyoda.

Nagasaka, is responsible for overseeing the Company’s

one of the Company’s outside directors, and should shedtive energy source than coal or oil because it is considerably

operations and works closely with the President & CEO,some light on the workings of Chiyoda’s Board of Directors

cleaner. Nevertheless, I strongly urged Chiyoda’s manage-

Mr. Masaji Santo, and his management team in planningand its deliberations.

ment to appoint a Chief Sustainability Officer in order toand executing Chiyoda’s strategy.
The composition of the Board of Directors is key toensuring that Chiyoda is best positioned to face thevarious challenges in the marketplace and benefit from its

prepare for this kind of future, and recently they did just that.
Nagasakaprocess. How were you approached and how

many times were you interviewed by the Board?

selection of its outside directors. The knowledge that theybring from their diverse experiences greatly complements

TanakaEconomic Co-operation and Development (OECD), andChairman’s role to maximize the value of such assets.

the International Energy Agency (IEA) had been recognized

Operational performance and corporate governance are two critical issues for executive andnon-executive management. How do you intend to

Please tell us about how the Board operates:
the number of meetings; committee appoint-

decision-making process.

TanakaChiyoda’s corporate philosophy of “Energy andthe Environment in Harmony” constitutes a real

challenge to any company operating in this difficult andever changing market. However, our role on the Board isTrade and Industry (METI), the Organization for

the wealth of knowledge at Chiyoda, and it is the

TanakaThe Board meets monthly, where we spend

to ensure that the Company makes every effort to promote

hours deliberating over an agenda that is sent

workplace safety, and to recognize the risks inherent in theby Chiyoda as both relevant in terms of the global energy

to us several days in advance. This gives us an opportunity

energy business, extracting valuable energy commodities

business and with regard to my knowledge about how

to prepare our own responses to the matters at hand but

from hard-to-reach places in a multitude of environments.

businesses operate around the world. Before my appoint-

also to research specific issues that may be related toment to the Board in 2016, I met with the Company’s

Chiyoda’s needs and challenges.

senior management to discuss my experience andChiyoda’s Audit & Supervisory Committee now has five

Chiyoda works very hard to be a leader in energy
construction but also strives to maintain a strong emphasison corporate governance in all of its operations. We

business philosophy and how they could be of service tomembers that are responsible for the oversight of thebelieve that operating in a way that is sensitive to all ESG

Chiyoda’s business, employees, and shareholders. I came

Company’s financial operations and are tasked withmatters makes Chiyoda a better, more successful

to learn about Chiyoda’s SPERA Hydrogen project andmaintaining an optimal financial condition and ensuring

company, and we will work hard to stay on that path

I support it enthusiastically, because hydrogen can bethat the Company’s finances are running smoothly.

toward sustainable success.

®

Chiyoda Corporation Annual Report 2017

Nagasakaments; informal discussions between meetings; and the
My experiences at the Ministry of Economy,

Nagasaka

manage the competing influences of the two?

Please tell us about the Board’s selection

opportunities, and a key function of the Board lies in the42

While our meetings are scheduled well in advance and43

OUR SHARED VALUES

Value Creation Story
The Chiyoda Group pledges to continue as an enterprise that optimizes use of cutting-edge
technology and human resources to create value for society. Our corporate philosophy
proclaims “Energy and the Environment in Harmony” and we are pursuing business with our
CSR values as shared values. In order to respond to the requirements of global markets andRealization of the
Corporate Philosophy— The Mission for Us to Accomplish —Enhance our business in aiming for harmoney between energy andcommunities, we aim to be a top-tier provider of comprehensive engineering services in boththe environment and contribute to the sustainable development of societyenergy and environmental fields by implementing our Medium-Term Management Plan

as an integrated engineering company through the use of our collective
wisdom and painstakingly developed technology.

(MTMP), “Mirai Engineering—A Grand Opportunity for the Future.”

Medium-Term Management Plan
“Mirai Engineering”—A Grand Opportunity for the Future—

Global Standards

EnergySolutions

Environmental
Solutions

Build Energy
Value Chain Business

Expand Global
Environmental
Engineering Business• ISO 26000• United Nations Global Compact(UNGC)“Mirai Engineering”• SDGs• Paris Climate Agreement• United Nations Convention
on Biological Diversity• Achievement of the SDGs
• Enhancement of Corporate Value—A Grand Opportunity for the Future—
At the Chiyoda Group, we are aiming to become
the new leading engineering company that works with technology andpassion to create the future of energy and the global environment.

Chiyoda Group’s
CSR Values
1. A Reliable Company
2. Environmental Initiatives
3. Social Contributions
4. Respect for Human Rights
5. Commitment to Fairness

Technology andBusiness Model Innovation
Develop a New Business Modelfor a Digital Society

Social Issues
What Are the SDGs (Sustainable Development Goals)?

• Human Rights• Anti-Corruption

These are goals that need to be realized by the year 2030 in order to achieve• Climate Change

a sustainable development of society. They consist of 17 major goals and• Global Warming• Economic Disparity• Appropriate Employment• Individual Issues in
Local Communities• Securing Energy Resources

44

Chiyoda Corporation Annual Report 2017

Initiatives in 2017–2018• Appointed Chief Sustainability Officer (CSO)• Established the Decarbonization
Advancement Office

169 targets that were adopted by the United Nations General Assembly in
September 2015 to provide a basic framework for action in the international
community of both developing and developed countries.
In this report, we are reconfirming our own corporate activities and displaying
icons for the relevant SDGs side by side with such activities.

45

OUR SHARED VALUESCSR Values
We are responding to the ever charging business environment andcontributing to the realization of a s­ ustainable society.

The Chiyoda Group’s CSR Values

1
2
3
4
5
46

A Reliable Company
We strive to be a reliable company to ourcustomers and all our stakeholders by providing
world-class technologies and knowledge.

Environmental Initiatives
We will work to remain an invaluable company
to society by utilizing refined technologies topromote harmony between the global
environment and economic and social activities.

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

Respect for Human Rights
We are dedicated to respecting the humanrights of all people. We will create a corporate
culture where the diversity, individuality, andcharacter of employees are respected, where
people are motivated to do their best, and ofwhich employees and their families are proud.

Commitment to Fairness
We are dedicated to achieving even greatertransparency and stability by conducting ouroperations fairly in accordance with the highest
ethical standards.

Chiyoda Corporation Annual Report 2017

Why

How

FY2017 Activities

For a corporation, the trust of its stakeholders provides the foundation for
management. Through its business, the Chiyoda Group will contribute to
the resolution of global issues and the sustainable development of society
so as to continue earning the trust of its stakeholders.

• Provide safe, reliable plants• Execute high-quality engineering• Provide engineering solutions for the sustainable
development of society• Share our CSR philosophy with business
partners through our supply chain• Perform facility renovations in line with thedemands of the times• Development Project Initiatives on
the Northernmost Energy Frontier• Collaboration with suppliers to keep
improving quality• Effectively using sustainable energy by facility
renovation work in line with the demands ofthe times.
• Developing industrial infrastructure by­providing high-performance productsEver since the Chiyoda Group was founded, we have engaged with thecontradictory theme expressed as “Energy and the Environment inHarmony.”
In order for the global environment and human society to be sustainable, we will aim to use engineering to realize climate change countermeasures and a carbon-free society. As we contribute to solutions for newissues as they arise, we will continue to be a leading company.

• Environmental preservation throughproject execution• Initiatives for effective use of water• Technological proposals to mitigate
climate change• Development and provision of environmental
preservation technologies• Effective energy utilization by improving
energy efficiency• Reducing CO2 emissions throughengineering business• Technology development to reduce
environmental impact• Demonstration project to recycle and reuseindustrial wastewater in water stress areas• Collaboration with Kawasaki City tocontribute to a carbon-free society

The social responsibility of engineering firms is to address issues
surrounding society and to provide solutions for those issues. Beyond
providing industrial plants, we are gradually expanding the applicationof our engineering expertise to tackle social issues such as social
infrastructure and food shortages.

• Establish industrial infrastructure• Add value by integrating cutting-edge
technologies• Human resources development and technology
transfer in countries where we carry out projects• Resilient infrastructure development• Establishing industrial infrastructure throughstable food self-sufficiency promotion• Plant diagnosis by acoustic
emission technique• Global group operation andtechnology transfer• Resilient infrastructure improvement for asustainable society

Human resources are valuable assets for an engineering company.
We realize the growing necessity to respect diversity, cultivate global
human resources development, and implement workstyle reforms in orderto create a corporate climate that both employees and their families cantake pride in.

• Create a lively working environment• Implement workstyle reforms• Instill safety as a core value and shared mindset• Enhance crisis management systems• Reinforce corporate strengths by developing
global human resources• Nurturing the next generation ofhuman resources• Promotion of a safety culture• Promotion of diverse human resources

Commitment to fairness is the foundation for the Company’s continuing
existence. The Chiyoda Group has pursued stronger governance andmore thorough compliance, however, there is a growing demand for
management transparency and fairness both domestically and overseas.

• Expansion of corporate management systemwith transparency and soundness• Initiatives to prevent misconduct• Conduct a thorough risk management program• Thorough compliance and export
control education• Global development of Compliance Consultation
and Reporting System (Whistleblowing System)• Expansion of corporate governance system• Education and system reinforcement to raisecompliance awareness and structure

Related SDGs

47

OUR SHARED VALUESCSR Values

As our corporate activities have been increasingly global in scope, we are dedicated to developing opportunities in which employees as well as other stakeholders such as customers,
business partners, and local communities can participate and play an active role, regardlessof gender, nationality, age, or religion in a spirit of respecting human rights, above all.

1

A Reliable Company

3

Social Contributions• Yamal LNG Project achieves its 1st LNG cargo shipment in 44 months• The 18th Valve Summit• RFCC Unit Regenerator cyclone system renovation work
• Completed construction of chemicals manufacturing facility onstruction of New Ulaanbaatar
CInternational Airport in Mongolia

4
RFCC Unit Regenerator cyclone system unit renewal work

2
w

Environmental
Initiatives• Construction of demonstration vegetable cultivation factory in Dubai• Science and technology award conferred for development of global diagnostic technology• Completion of Paku Gajah Gas Development Project• Construction of New Ulaanbaatar International Airport

Demonstration plant for Dubai
vegetable cultivation factory
Respect for
Human Rights• Acceptance of internships / Dispatch of employees to universities as instructors for lectures• Conclusion of MOU with National Enterprise of Hydrocarbons (ENH) in the Republic ofMozambique• Education on risks and dangers through virtual reality (VR) technology• Participation in Yokohama Woman’s Leadership Program18th Valve Summit• Mega solar plant construction effectuates CO2 emissions reduction• Technology award from the Catalyst Manufacturers Association Japan• Demonstration project of recycling industrial wastewater in Saudi Arabia• Constructing a hydrogen supply network

Constructing Mega Solar Power Plants to
Reduce CO2 Emissions

Industrial Wastewater Recycling Demonstration Project
Seawater desalination
systemVolume of newdesalinatedwater reduced

Up to 2040:

70%

Plant uses
recycled water

25 to 30%
Membrane

37 plants constructed by Chiyoda• 4.5 million tons•

Chiyoda and ENH sign a Memorandum of Understanding (MOU)

Plant

Drainage

Energy fordesalination
reduced articipants in the Yokohama Women’s Leadership Program
P
Source: www.city.yokohama.lg.jp/shimin/kochosodan/kocho/tea/29/270419.html(in Japanese only)

5

Commitment toFairness• Making the corporate governancesystem stronger• Appointment of Chief Compliance
Officer (CCO) / Thorough complianceeducation / Reinforcement of whistleblowing system

FY2017 Whistleblowing andConsultation Record(Cases reported to Chiyoda only)


25
cases

Legal violations & corruption 0
Power harassment(Abuse of power)
Sexual harassment

Total

9
1
11

Labor, work rules, morals

CO2 emissions reduction

SeawaterShima City Ago Tategame Mega Solar Plant

48

Chiyoda Corporation Annual Report 2017

Other consultations

4
Training on preventing harassment

49

OUR SHARED VALUES

Social Contribution Activities
For our social contribution as a good corporate citizen, we focus on the following five areas among
other things:

Why

How

The Chiyoda Group is actively seeking
solutions to global issues in order tohelp create a better society. This is notjust a matter of social contributions
through business. We will also continue
working closely with local communities
to contribute to the sustainable
development of society.

Taking “CSR promotion by all members together” as our motto,
and with collaboration and coexistence with local communities
as our objective, we will continue our corporate existence as acontributor to the sustainable development of society. By
having our employees participate in these activities, we arealso heightening their motivation to contribute to society anddeveloping human capital that will be capable of contributing
not just to business performance but to society as a whole.

Contributions to
Health & Welfare
TABLE FOR TWO*
(Facilitated by the Chiyoda Group in Japan)

Offered 1,581 school lunches to children indeveloping countries.

Assistance to Areas Hit
by Disasters
 mployee Volunteers Dispatched to AreasE
Hit by Disasters(Implemented by the Chiyoda Group in Japan)

Dispatched 54 members
to Kamaishi City andOtsuchi Town in Iwate
Prefecture over six visits.

Blood Donation

Through these activities, and widening the circle of exchange and collaboration with local communities, we aim to contribute to resolving such issues specific to the places we operate to help realize thesustainable development of society, being recognized as a company needed by society. Further, it is ourbelief that employees’ participation in such activities leads them to raise awareness of the importance ofsuch activities and behave duly considering the social values as well in conducting their business activities.

Educational Support & Human
Resources Development
Internships / University Lecturers

Cleanup Activities

C&PW shared engineering knowledge with theyounger generation ofEngineers of Myanmar, inorder to fill the knowledge
gap of the fresh graduate
engineers and students
as well as to let them
explore the working experience that is related to theirfield of studies.

(Implemented by the Chiyoda Group in Japan, Chiyoda-Almana, and CSL)

Support for People
with Special Needs

Hosted three company
visits and two off-siteclasses for students
to aid their careerdevelopment.

(Implemented by CPh and L&TC)

L&TC believes that no celebration is complete withouta noble gesture. As part of the Incorporation Day
celebrations, L&TC organized a blood donation campon November 17, 2017.

Japan Philharmonic Performance of
Beethoven’s 9th Symphony Concert
Invitations Provided to Those with
Visual Impairments(Implemented by CGH)

Have sponsored theJapan Philharmonic
Orchestra’s performance of Beethoven’s
9th Symphony since2011, inviting 25 pairsof 50 visually impaired
people from Yokohama
City each year.

50

Chiyoda Corporation Annual Report 2017

Environmental
Conservation

Cooperated in cleanup activities in Minatomirai andKoyasu districts, with 157 participants in total.

Student Visits to the Company© TABLE FOR TWO* The TFT menu provided at employee dining halls includesa ¥20 donation, and each ¥20 can provide one school meal
in a developing country.

1. Collaboration with municipal authorities & NGOs / NPOs
2. Assistance to areas hit by disasters
3. Contributions to health & welfare
4. Educational support & human resources development
5. Environmental conservation

Grade School Campaign Drive
Donated school supplies, etc., to local
elementary schools.

Tree Planting(Implemented by CPW)

Planted 99 trees incollaboration with the City
Environment and Waste
Management Office.

Donation of Unused Pamphlets(Implemented by Alc)

Donated 12 cartons of unused
pamphlets to the JATA Environmental
Fund. The proceeds were used forprotection and preservation of naturaland cultural heritage sites.

51

Financial Section

Eleven-Year Financial Summary
Chiyoda Corporation and Consolidated Subsidiaries
As of and for the years ended March 31

Millions of yen (Except amounts per share and key ratios)

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Revenue¥603,559¥446,438¥312,985¥247,082¥254,675¥398,918¥446,147¥480,979¥611,548¥603,745¥510,873

Cost of Revenue

583,035

427,461

298,766

215,563

215,783

356,402404,685

435,327570,028565,521502,255

Gross Profit

20,524

18,977

14,21931,51938,891

42,51541,46245,651

41,52038,223

8,618

SG&A Expenses

11,684

11,74912,517

13,974

14,693

17,402

20,38324,18525,50522,543

20,948Operating Income (Loss)

8,839

7,227

1,702

17,54424,197

25,11321,07921,466

16,015

15,680(12,330)Net Income (Loss) Attributable to Owners of the Parent

9,640

6,498

2,953

7,979

14,364

16,077

13,447

11,0293,375(41,116)

6,445

Capital Expenditure

1,679

2,159

1,853

2,085

3,409

9,428

4,453

4,107

2,698

2,131

2,400

Depreciation

1,594

1,957

2,059

2,566

2,637

2,580

3,196

3,569

3,589

3,643

3,545

Cash Flows from Operating Activities

14,274

8,971

8,613

(5,229)55,61514,147(17,177)(24,145)

55,526(4,375)(34,115)

Cash Flows from Investing Activities(3,917)(1,072)(2,722)(2,577)(9,140)(5,257)(16,796)(5,444)(26,750)

10,433(1,428)Cash Flows from Financing Activities(17,219)58,548(2,079)(805)(2,899)(4,432)(5,249)(4,569)(3,942)(2,693)(1,468)Cash and Cash Equivalents, at End of Year

70,089135,536

139,790

130,618

173,769

180,229

145,303113,246

136,919

138,889

101,767

Total Assets¥378,819¥357,816¥328,174¥353,392¥365,795¥435,379¥475,288¥515,839¥528,219¥461,331¥420,704

Total Equity

81,637

145,917

149,253

155,758

168,737

189,356

198,031

208,405

202,128

157,125

159,41822

10,00410,000

10,208198

10,132

10,01810,015

10,0094

10,000Results for the Year:

Cash Flows:

Financial Position at Year-End:Long-Term Loans Payable
Interest-Bearing Debt

10,061

10,022

10,004

10,208

10,198

10,22011,305

11,01010,348

10,211

10,000Shareholders’ Equity

81,226

145,513

148,683

155,242

168,120

188,386

196,411

206,395

200,166

155,339

156,099¥  50.15¥  25.58¥  11.39¥  30.79¥  55.44¥  62.06¥  51.91¥  42.58¥  13.03¥ (158.76)¥  24.89

Net Assets per Share422.44561.12573.61599.15648.95727.24758.31796.89772.89599.83608.41Dividends per Share

10

7.5

3.5

11

17

19

16

13

10

6

7.5

Return on Assets (ROA) (%)

4.7

3.1

1.4

4.6

6.6

6.4

5.0

4.5

3.1

(0.6)

(2.3)

Return on Equity (ROE) (%)

12.2

5.7

2.0

5.3

8.9

9.0

7.0

5.5

1.7

(23.1)

4.1

Shareholders’ Equity Ratio (%)

21.4

40.7

45.3

43.9

46.0

43.3

41.3

40.0

37.9

33.7

37.5

EV / EBITDA (Times)

5.39

0.79

15.64

4.20

4.12

3.55

8.09

6.34

4.02

3.41

26.38

Amounts per Share (Yen):
Basic Net Income (Loss) per Share

Key Ratios:

Debt Equity Ratio (%)

0.12

0.07

0.07

0.07

0.06

0.05

0.06

0.05

0.05

0.07

0.06

Current Ratio (%)

115.0

161.1

175.2

173.8

165.5

166.3

156.3

151.0

146.3

141.2

153.0

Payout Ratio (%)

19.9

29.3

30.8

35.7

30.7

30.6

30.8

30.5

76.7

38.7

30.1

Price Earning Ratio (PER) (%)

18.0

20.9

81.5

24.7

19.0

16.9

25.6

24.1

63.3

(4.5)

40.3

Number of Employees

3,067

3,376

3,670

4,104

4,530

4,915

6,062

6,097

5,866

5,367

6,176

Share Price Range: High

2,930

1,274

946

963

1,093

1,309

1,669

1,455

1,164

933

1,110

Low

865

348

529

546

702

901

912

903

722

611

537

Others:52

Chiyoda Corporation Annual Report 201753

Financial Section

Consolidated Balance Sheet
Chiyoda Corporation and Consolidated Subsidiaries
March 31, 2018 and 2017

Thousands of
U.S. Dollars

Millions of Yen

2018

2017

2018

Assets2018

Current Liabilities:¥101,767¥138,889$ 960,075

Short-term borrowings¥

203

Short-term investments

2,240

4,483

21,140Current portion of long-term debt¥

2

10,023$

Notes and accounts receivable—trade36,46640,377344,023

Notes and accounts payable—trade147,654

160,096

1,392,968

Costs and estimated earnings on long-term construction contracts

40,41819,487

381,302

Advance receipts on construction contracts

76,29485,187

719,763

Costs of construction contracts in process

15,91624,220150,155

Income taxes payable

894

668

8,439

Accounts receivable—other

41,967

7,761

395,920

Deposits received

1,224

1,087

11,550

Jointly controlled assets of joint venture

131,374

164,283

1,239,384

419

319

3,955

5,948

9,586

56,113

Allowance for losses on construction contracts

3,288

3,315

31,025Prepaid expenses and other

5,563

17,69652,482

Provision for loss on business of subsidiaries and associated companies

Allowance for doubtful accounts(1,245)(1,541)(11,745)

Accrued expenses and other

18,88317,360178,150

380,418

425,2443,588,852

248,663

301,182

2,345,882

Deferred tax assets

Total current assets
Property, Plant and Equipment:

Allowance for warranty costs for completed works

Total current liabilities

28

22,919Long-Term Liabilities:

Land

4,952

5,266

46,718Long-term debt

10,02230

94,550

Buildings and structures

13,504

13,892

127,396

Liability for retirement benefits

1,176

1,522

11,096

Machinery and equipment

522

547

4,932

Provision for treatment of PCB waste

Tools, furniture and fixtures

6,142

7,236

57,943

Asset retirement obligations

Construction in progress

115

22

1,091

Other

25,236

26,965238,082(13,165)(13,806)(124,201)

12,071

13,158113,881

2,067

2,748

19,507

Total
Accumulated depreciation
Net property, plant and equipment
Investments and Other Assets:
Investment securities

344

338

3,248

1,008

1,010

9,516

70

121

667

12,622

3,023

119,080

issued, 260,324 thousand shares in 2018 and 2017

43,39643,396

409,400

Capital surplus

37,112

37,112

350,119

77,024

72,132

726,650(1,434)(1,431)(13,537)

Total long-term liabilities
Commitments and Contingent Liabilities
Equity:Common stock—authorized, 570,000 thousand shares;

Investments in and advances to unconsolidated subsidiaries andassociated companies

6,183

5,616

58,337

Goodwill

468

2,051

4,423

Retained earnings

Software

5,194

5,989

49,006

Treasury stock—at cost, 1,356 thousand shares

203

84

1,920

in 2018 and 1,351 thousand shares in 2017

Deferred tax assets

6,328

4,967

59,698

Accumulated other comprehensive income (loss):

Other assets

7,953

1,806

75,034

Unrealized gain on available-for-sale securities

64

379

605

Deferred (loss) gain on derivatives under hedge accounting(1,778)499(16,775)

Foreign currency translation adjustments

2,159

2,656

20,370Defined retirement benefit plans

1,013

592

9,558

157,557

155,339

1,486,391

1,861

1,785

17,560159,418

157,125

1,503,951¥420,704¥461,331$3,968,913

Asset for retirement benefits

Allowance for doubtful accounts
Total investments and other assets

(185)

(336)

(1,746)28,21522,928266,180

Total
Noncontrolling interests
Total equity
Total

54

2017

2018

Liabilities and Equity

Current Assets:
Cash and cash equivalents

Thousands of
U.S. Dollars

Millions of Yen

Chiyoda Corporation Annual Report 2017

¥420,704¥461,331$3,968,913

Total

55

Financial Section

Consolidated Statement of Income

Consolidated Statement of Comprehensive Income

Chiyoda Corporation and Consolidated Subsidiaries
Years Ended March 31, 2018 and 2017

Chiyoda Corporation and Consolidated Subsidiaries
Years Ended March 31, 2018 and 2017

Thousands of
U.S. Dollars

Millions of Yen
Thousands of
U.S. Dollars

Millions of Yen

2018

2017

2018

¥ 6,602¥(41,251)$ 62,283(315)(2,006)(2,979)Net Income (Loss)

2018

2017

2018

Revenue¥510,873¥603,745$4,819,565

Cost of Revenue

502,255

565,521

4,738,263

Deferred (loss) gain on derivatives under hedge accounting(2,276)2,129(21,476)

Gross Profit

8,618

38,22381,302Foreign currency translation adjustments(1,001)(1,102)(9,452)

Selling, General and Administrative Expenses
Operating (Loss) Income

Other Comprehensive Income (Loss):
Unrealized loss on available-for-sale securities

20,94822,543

197,631

Defined retirement benefit plans

420

291

3,968

(12,330)

15,680(116,329)

Share of other comprehensive income (loss) of associates

450

(451)

4,250

(2,723)(1,139)(25,689)¥ 3,878¥(42,391)$ 36,594¥ 3,775¥(42,228)$ 35,616

103

(162)

977

Total other comprehensive loss
Other Income (Expenses):Comprehensive Income (Loss)

Interest and dividend income

2,585

2,487

24,393Equity in earnings (losses) of associated companies

680(17,106)

6,424

Gain on sales of investment securities

202

1,937

1,913

Reversal of provision for loss on business of subsidiaries andTotal Comprehensive Income (Loss) Attributable to:
Owners of the parent
Noncontrolling interests

associated companies

12,441

117,373

Gain on sales of shares of subsidiaries and associated companies

1,732

16,348Interest expense

(212)

(209)

(2,005)

Foreign exchange loss

(667)

(3,455)(6,301)

Commission fee

(208)

(59)

(1,964)

Loss on valuation of investment securities(393)

Impairment loss

(766)

Provision for loss on business of subsidiaries and associated companies(22,919)

Loss on sales of shares of subsidiaries and associated companies(1,146)

Other—net

Consolidated Statement of Changes in Equity
Chiyoda Corporation and Consolidated Subsidiaries
Years Ended March 31, 2018 and 2017
Thousands

643

(418)

6,068

Balance, April 1, 2016

Other income (expenses)—net

17,198(42,048)

162,250

Income (Loss) before Income Taxes

4,867(26,368)

45,921

Net loss attributable toowners of the parent

Outstanding
Number of
Shares ofCommonStockCommonStockCapitalSurplusRetained
Earnings

TreasuryStock258,984¥43,396¥37,112¥115,839¥(1,422)

Deferred (Loss)
Unrealized
Gain onForeign
Gain onDerivatives
Currency
Available-for- under Hedge Translation
Sale Securities Accounting Adjustments¥ 2,386

15,026(5,475)(51,660)

Balance, March 31, 2017

3,741

(143)

35,297

Net income attributable toowners of the parent(1,734)

14,883(16,362)

6,602(41,251)

62,283

Cash dividends,¥6.00 per share

156

(135)

1,472

¥  6,445¥ (41,116)$   60,810

Deferred
Total income taxes
Net Income (Loss)Net Income (Loss) Attributable to Noncontrolling Interests

Purchase of treasury stock¥  300¥200,166

258,973

43,396

37,112

72,132(41,116)(2,589)(2,589)¥37,112¥ 77,024(1,514)291(1,111)(175)(1,287)

379

499

2,656

592

155,339

1,785

157,125(1,431)¥(1,434)

(8)

2,118

6,445

6,445

(1,553)(1,553)(3)¥43,396¥202,128(2,006)(1,553)258,967¥1,961

(8)

6,445

(5)

Noncontrolling
Interests
Total Equity(41,116)(8)(3)

Net changes in the year
Balance, March 31, 2018

¥ 4,171

Total(2,589)(11)

Net changes in the year

Current¥(1,618)

DefinedRetirement
Benefit Plans(41,116)

Cash dividends,¥10.00 per share
Purchase of treasury stock

Income Taxes:

Net Income (Loss) Attributable to Owners of the Parent

Millions of Yen
Accumulated Other Comprehensive Income (Loss)

¥

(3)

(315)

(2,277)

(497)

420

(2,670)76(2,594)64¥(1,778)¥ 2,159¥1,013¥157,557¥1,861¥159,418

Thousands of U.S. Dollars

Yen

2018

Accumulated Other Comprehensive Income (Loss)

U.S. Dollars

2017

2018

Per Share of Common Stock:
Basic net income (loss)
Cash dividends applicable to the year

¥

24.89

¥ (158.76)

7.50

6.00

$

CommonStockCapitalSurplusRetained
Earnings

TreasuryStock$409,400$350,119$680,498$(13,500)

0.23

Balance, March 31, 2017

0.07

Net income attributable toowners of the parent

60,810Cash dividends,$0.05 per share(14,658)

Purchase of treasury stock

Deferred (Loss)
Unrealized
Gain onForeign
Gain onDerivatives
Currency
Available-for- under Hedge Translation
Sale Securities Accounting Adjustments$ 3,584

56

Chiyoda Corporation Annual Report 2017$25,065$409,400$350,119$726,650$(13,537)

Total

Noncontrolling
Interests
Total Equity$5,590 $1,465,470$16,843 $1,482,313

60,81060,810(14,658)(14,658)

(36)

(36)

Net changes in the year
Balance, March 31, 2018

$ 4,712

DefinedRetirement
Benefit Plans$(2,979)(21,488)(4,695)605$(16,775)$20,370

3,968(25,194)$9,558 $1,486,391

(36)
717

(24,477)$17,560 $1,503,951

57

Financial Section

Corporate Information

Consolidated Statement of Cash Flows

Corporate Data and Stock Information

Chiyoda Corporation and Consolidated Subsidiaries
Years Ended March 31, 2018 and 2017

(As of March 31, 2018)2018

Operating Activities:
Income (loss) before income taxes
Adjustments for:
Income taxes paid
Depreciation
Impairment loss
Amortization of goodwill
Decrease in allowance for doubtful accounts
Increase (decrease) in allowance for warranty costs for completed works(Decrease) increase in allowance for losses on construction contracts
Increase (decrease) in liability for retirement benefits
Foreign exchange loss (gain)—net(Decrease) increase in provision for loss on business of subsidiaries
and associated companies(Gain) loss on sales of shares of subsidiaries and associated companies
Equity in (earnings) losses of associated companies
Gain on sales of investment securities
Loss on valuation of investment securities
Changes in operating assets and liabilities:(Increase) decrease in trade notes and accounts receivable, andcosts and estimated earnings on long-term construction contracts
Decrease in costs of construction contracts in process(Decrease) increase in trade notes and accounts payable
Decrease in advance receipts on construction contracts
Increase in accounts receivable—other
Decrease in jointly controlled assets of joint venture
Increase in interest and dividends receivable
Other—net
Total adjustments
Net cash used in operating activities
Investing Activities:
Net decrease in time deposits
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of intangible assets
Payments for purchases of investment securities
Proceeds from sales of investment securities
Proceeds from sales of shares of subsidiaries resulting in change
in scope of consolidation
Payments of loans receivable
Proceeds from collections of loans
Other—net
Net cash (used in) provided by investing activities
Financing Activities:
Net increase (decrease) in short-term borrowings
Proceeds from long-term debt
Repayments of long-term debt
Payments of cash dividends
Other—net
Net cash used in financing activities
Foreign Currency Translation Adjustments on Cash and Cash Equivalents
Net (Decrease) Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year

58¥

Corporate Data

Stock Information

Founded

1948

Closing Date

Paid-In Capital¥43,396 million

45,921

Number of Employees

6,176 (Consolidated)
1,495 (Non-consolidated)

Ordinary General June
Meeting of
Shareholders

Chiyoda Global
Headquarters

Minatomirai Grand Central Tower,
4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan

Thousands of
U.S. Dollars

Millions of Yen

2017

2018

4,867

¥ (26,368)(1,750)3,545(13,821)
3,643
766
547
(701)
(15)
154
(428)
(186)

(16,513)33,45022,9191,146
17,106(1,937)393(120,538)(16,348)(6,424)(1,913)

327
(218)
102
(25)
44
477
(12,777)(1,732)
(680)
(202)

$

3,092
(2,065)
962
(244)
421
4,507

8,141
10,786
11,401(48,668)(1,901)
13,666(1,029)11
21,993¥ (4,375)(184,442)
78,198(98,308)(75,611)(254,648)
301,136(5,955)(6,524)(367,768)$ (321,846)

2,028
(550)
362
(2,044)
(338)
896

3,043
(649)
46
(1,451)(351)
15,554

19,133(5,189)3,420(19,286)(3,193)
8,461(12,188)
6,382
49
10,433

15,890(39,900)
7,145
47(13,472)

1,684(4,229)757
5(1,428)149
10,000(10,004)(1,552)(61)(1,468)(108)(37,121)
138,889¥101,767(50)(3)(2,586)(52)(2,693)(1,395)
1,969
136,919¥138,889

Contact Information

1,412
94,339(94,379)(14,650)(577)(13,855)(1,025)(350,199)
1,310,274$ 960,075

Minatomirai Grand Central Tower,
4-6-2, Minatomirai, Nishi-ku, Yokohama 220-8765, Japan
Phone: +81-45-225-7734
Fax: +81-45-225-7748
Major Shareholders
Number of
Ratio of
Shares Owned Shares(Thousands Ownedof shares)(%)

Mitsubishi Corporation

86,931

33.39

The Master Trust Bank of Japan, Ltd. (Trust A/C)

16,061

6.16

Japan Trustee Services Bank, Ltd. (Trust A/C)

11,755

4.51

The Bank of Tokyo-Mitsubishi UFJ, Ltd.*

9,034

3.47

NORTHERN TRUST CO. (AVFC) RE
SILCHESTER INTERNATIONAL INVESTORSINTERNATIONAL VALUE EQUITY TRUST

7,294

2.80

MSCO CUSTOMER SECURITIES

5,826

2.23

STATE STREET LONDON CARE OF STATESTREET BANK AND TRUST, BOSTONSSBTC A/C UK LONDON BRANCHCLIENTS- UNITED KINGDOM

5,676

2.18

NORTHERN TRUST CO. (AVFC) SUB A/CNON TREATY

5,162

1.98

Mitsubishi UFJ Trust and Banking Corporation

4,274

1.64

NORTHERN TRUST CO. (AVFC) RE U.S.
TAX EXEMPTED PENSION FUNDS

4,195

1.61

570,000,000

Number of issued andoutstanding shares

260,324,529

Number of shareholders

18,233

Listing of shares

Tokyo

Stock transaction unit

100 shares

Register of Shareholders
Mitsubishi UFJ Trust and Banking Corporation
1-1 Nikko-cho, Fuchu-shi, Tokyo 183-0044, Japan
Stock Transfer Agency Department
Phone: 0120-232-711 (Toll free within Japan)
Breakdown of Shareholders
Individuals and Others

Financial Institutions

14.6%

23.9%

Foreign Investors
and Others

24.0%

Total Number ofIssued Shares:

260,324,529

Securities
Companies

1.7%

SharesOther Corporations

35.8%* The Bank of Tokyo-Mitsubishi UFJ, Ltd. changed its trade name to
MUFG Bank, Ltd., effective as of April 1, 2018.

Monthly Stock Price (April 2014–March 2018)
Yen
1,500

1,200

900

Thousandsof Shares
600

100,000

300

50,0000

Share Price (right)

Chiyoda Corporation Annual Report 2017

Number of authorized shares

IR, PR & CSR Department

Shareholder(19,550)
8,289(10,420)(8,014)(26,992)
31,920(631)(691)(38,983)¥ (34,115)

Common Stock

March 312014

Volume

2015

2016

2017

2018

0

59

Chiyoda Global Headquarters
Minatomirai Grand Central Tower, 4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Phone: +81-45-225-7734 Fax: +81-45-225-7748

Printed in JapanMIRAI ENGINEERINGA Grand Opportunity for the Future

Consolidated Financial Statements FY2017
For the year ended March 31, 2018

CORPORATE PHILOSOPHY

CONTENTS

Enhance our business in aiming for harmony between energy and the environment andcontribute to the sustainable development of a society as an integrated engineering
company through the use of our collective wisdom and painstakingly developed technology.

02   Consolidated Balance Sheet

Every Chiyoda Group employee engages in our corporate activities with this philosophy in mind as we strive for corporategroup management that earns the trust and empathy of all of our stakeholders, including shareholders, customers, business
partners, employees, and local communities.

07   Consolidated Statement of Changes in Equity

04   Consolidated Statement of Operations
06   Consolidated Statement of Comprehensive Income

10   Consolidated Statement of Cash Flows
12   Notes to Consolidated Financial Statements
46   Independent Auditor’s Report01Consolidated Balance Sheet
March 31, 201802

Chiyoda Corporation Consolidated Financial Statements FY201703

Consolidated Statement of Operations
Year Ended March 31, 201804

Chiyoda Corporation Consolidated Financial Statements FY201705

Consolidated Statement of Comprehensive Income
Year Ended March 31, 201806

Chiyoda Corporation Consolidated Financial Statements FY201707

Consolidated Statement of Changes in Equity
Year Ended March 31, 201808

Chiyoda Corporation Consolidated Financial Statements FY201709

Consolidated Statement of Cash Flows
Year Ended March 31, 201810

Chiyoda Corporation Consolidated Financial Statements FY201711

Notes to Consolidated Financial Statements
Year Ended March 31, 201812

Chiyoda Corporation Consolidated Financial Statements FY201713

Notes to Consolidated Financial Statements

14

Chiyoda Corporation Consolidated Financial Statements FY201715

Notes to Consolidated Financial Statements

16

Chiyoda Corporation Consolidated Financial Statements FY201717

Notes to Consolidated Financial Statements

18

Chiyoda Corporation Consolidated Financial Statements FY201719

Notes to Consolidated Financial Statements

20

Chiyoda Corporation Consolidated Financial Statements FY201721

Notes to Consolidated Financial Statements

22

Chiyoda Corporation Consolidated Financial Statements FY201723

Notes to Consolidated Financial Statements

24

Chiyoda Corporation Consolidated Financial Statements FY201725

Notes to Consolidated Financial Statements

26

Chiyoda Corporation Consolidated Financial Statements FY201727

Notes to Consolidated Financial Statements

28

Chiyoda Corporation Consolidated Financial Statements FY201729

Notes to Consolidated Financial Statements

30

Chiyoda Corporation Consolidated Financial Statements FY201731

Notes to Consolidated Financial Statements

32

Chiyoda Corporation Consolidated Financial Statements FY201733

Notes to Consolidated Financial Statements

34

Chiyoda Corporation Consolidated Financial Statements FY201735

Notes to Consolidated Financial Statements

36

Chiyoda Corporation Consolidated Financial Statements FY201737

Notes to Consolidated Financial Statements

38

Chiyoda Corporation Consolidated Financial Statements FY201739

Notes to Consolidated Financial Statements

40

Chiyoda Corporation Consolidated Financial Statements FY201741

Notes to Consolidated Financial Statements

42

Chiyoda Corporation Consolidated Financial Statements FY2017

43

Notes to Consolidated Financial Statements

44

Chiyoda Corporation Consolidated Financial Statements FY201745

Independent Auditor’s Report46

Chiyoda Corporation Consolidated Financial Statements FY2017

Chiyoda Global Headquarters
Minatomirai Grand Central Tower, 4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Phone: +81-45-225-7734 Fax: +81-45-225-7748

Printed in Japan