Chiyoda Corporation (6366)
Consolidated Financial Results for the three months Ended June 30, 2020

Abridged Translation:
The report is not audited and this translation is an abridged version prepared based on the statutory format in Japan for reference
purpose only. If there is any discrepancy between this translation and the original Japanese version, the Japanese shall prevail.

Consolidated Financial Results
for the Three Months Ended June 30, 2020
August 6, 2020
Company name:
Listing:
Stock code:
URL:
Representative:
Inquiries:TEL:

CHIYODA CORPORATION
Second Section, Tokyo Stock Exchange
6366
http://www.chiyodacorp.com/
Masaji Santo, President & COO
Masaru Akiyama, GM, Accounting Department+81-45-225-7281

Scheduled date to file Quarterly Report: August 6, 2020
Preparation of Quarterly Supplementary Explanation Material: Yes
Quarterly Financial Results Presentation Held: Yes (for Analysts and Institutional Investors)(Millions of yen with fractional amounts discarded, unless otherwise noted)

1. Consolidated performance for the three months ended June 30, 2020
(1) Consolidated operating results(Percentages indicate year-on-year changes)

Revenue

Operating income

Millions of yen

For the three months
ended June 30, 2020
For the three months
ended June 30, 2019
Note: Comprehensive Income:%Millions of yen

Profit attributable toowners of parent

Ordinary income%

Millions of yen%

Millions of yen%

65,537 (24.2)

5,294 (41.7)

4,843

31.0

4,475

96.8

86,471

9,076

3,698

－

2,274

－

(7.6)

－

the three months ended June 30, 2020:
the three months ended June 30, 2019:

Net income per share
For the three months
ended June 30, 2020
For the three months
ended June 30, 2019

4,689 million yen / (5.0)%
4,463 million yen / (－)%

Fully diluted net
income per share

Yen

Yen

15.26

4.59

8.78

－

(2) Consolidated financial position
Total assets
Millions of yen

Net assets

Equity ratio

Millions of yen%

As of June 30, 2020
355,599
29,632As of March 31, 2020
385,051
24,943
Reference: Equity as of June 30, 2020: 29,128 million yen
as of March 31, 2020: 24,423 million yen

2. Cash dividends
Record date

8.2
6.3

Cash dividends per shareFirst quarter
Yen

Second quarter
Yen

Fiscal year ended
March 31, 2020
Fiscal year ending
March 31, 2021
Fiscal year ending
March 31, 2021 (Forecast)
Note: Revision to the latest forecast announcement 2020: None

Third quarter
Yen

Fiscal year-end
Yen

Annual

Yen

-

0.00

0.00

-

-

-

Chiyoda Corporation (6366)
Consolidated Financial Results for the three months Ended June 30, 2019

3. Consolidated earnings forecasts for the fiscal year ending March 31, 2021
(from April 1, 2020 to March 31, 2021)(Percentages indicate year-on-year changes)

Revenue
Millions of yen

Operating income%

Millions of yen%

Fiscal year ending
280,000 (27.4)
11,000 (58.9)
March 31, 2021
Note: Revision to the latest forecast announcement 2020: None

Profit attributable toowners of parent

Ordinary income
Millions of yen

Net income
per share%

Millions of yen%

Yen

9,000 (51.7)

7,000(42.5)

18.92

4. Others(1) Changes in Significant Subsidiaries during the Period(changes in specified subsidiaries accompanying changes in the scope of consolidation): None

(2) Adoption of Specified Accounting Methods for the Preparationof Quarterly Consolidated Financial Statements: None
(3) Changes in Accounting Policies and Accounting Estimates / Restatements
a. Changes in accounting policies due to revisions of accounting standards, etc.: Noneb. Changes in accounting policies other than a. above: Nonec. Changes in accounting estimates: None
d. Restatements: None
(4) Number of issued shares (common stock)a. Total number of issued shares at the end of the period (including treasury stock)
As of June 30, 2020
260,324,529 shares
As of March 31, 2020
260,324,529 sharesb. Number of treasury stock at the end of the period
As of June 30, 2020
1,357,587 shares
As of March 31, 2020
1,357,497 sharesc. Average number of shares during the period
For the three months ended June 30, 2020
258,966,972 shares
For the three months ended June 30, 2019258,967,311 shares*Presentation of Implementation Status of Quarterly Review Procedure

The review procedure of quarterly financial statements based on the Financial Instruments and Exchange Law has not been
completed at the time of the disclosure of these Consolidated Financial Statements.

*Proper use of earnings forecasts, and other special directions

The forward-looking statements, including earnings forecasts, contained in these materials are based on information
currently available to the Company and on certain assumptions deemed to be reasonable. Actual business and other results
may differ substantially due to a number of factors.

Dividend Status of Class A SharesClass A Share
Record dateFiscal year ended
March 31, 2020
Fiscal year ending
March 31, 2020
Fiscal year ending
March 31, 2021 (Forecast)First quarter
Yen-

Cash dividends per share
Second quarter
Yen

Third quarter
Yen

-

-

-

-

Fiscal year-end
Yen

Annual

0.0

0.0

-

2

-

Yen

-

Chiyoda Corporation (6366)
Consolidated Financial Results for the three months Ended June 30, 2019

Table of Contents for the appendices1.

Qualitative Information Related to Consolidated Performance(1)
Qualitative Information on Business Performance(2)
Financial Information on Business Performance(3)
Outlook for the Next Fiscal Year

4
4
6
6

2.

Consolidated quarterly financial statements(1)
Consolidated balance sheets(2)
Consolidated statement of income and comprehensive income(3)
Notes on Consolidated Quarterly Financial Statements

7
7
9
10

3.

Production, Contracts and Revenue

12

4.

Others133

Chiyoda Corporation (6366)
Consolidated Financial Results for the three months Ended June 30, 2019

1. Qualitative Information Related to Consolidated Performance(1) Qualitative Information on Business Performance
Although business activity is gradually resuming, the overall stagnation of the global economy due to COVID19 remains fundamentally unchanged from the first quarter of this financial year. The severe businessenvironment surrounding Chiyoda is expected to continue and the future is impossible to predict.
Under these exceptional circumstances, the Group continues to execute ongoing projects in the worldwide
energy and global environment fields, prioritizing the health and safety of our employees and stakeholders andassessing the influence of ongoing projects in cooperation with our clients whilst evaluating their investment
plans.
In May 2019, Chiyoda launched a new medium-term management plan: “Chiyoda’s Revitalization Plan –Initiatives for Revitalization and the Future” and a Strategy & Risk Integration (SRI) Division to lead thereinforcement of a comprehensive risk management during all project phases.
To enhance EPC management, the Construction Division commenced operating under Energy Business
Operations from April 2020 and we are increasing resources for construction and commissioning to further
strengthen EPC operations.
Reduction of Capital and Capital Reserves and the Appropriation of Surplus to improve our financial position by
offsetting the loss of 135,494 million yen in retained surplus carried forward at the of end of March 2020 was
resolved at the June 2020 Ordinary General Meeting of Shareholders.
We released our ‘Principles for Human Resources Development’ as integrated guidelines to measure humanresources, cultivate organizational management capability and capture employee abilities.
In April 2020, Chiyoda ratified its ‘Declaration of Health and Productivity Management’ to actively promote
employee health management.
The medium-term management plan redefines Chiyoda’s engineering value in offering consummate EPC
management, and optimizing the practicality of new technologies. Chiyoda therefore aims to commercialize its
businesses in hydrogen and the carbon-cycle, utilities and data decentralization and pharmaceuticals and life
sciences accordingly.
Chiyoda combines engineering expertise with digital AI technology and utilizes its digitalization capabilities todevelop digital products to autotomize and optimize plant operations in the oil and gas field, and collaborates
with a specialist IT enterprise to enhance its IT infrastructure.
On consolidated basis, for the 1st Quarter of the fiscal year ending March 31, 2021, New Orders amounted to
23,095 million yen (down 30.6% YoY), Revenues to 65,537 million yen (down 24.2% YoY) and Backlog to
77,604 million yen (down 4.4% from last FY). Operating Income as anticipated amounted to 5,294 million yen(down 41.7% YoY) due to increased cost of construction for some projects; Ordinary income increased to 4,843
million yen (up 31.0% YoY). In addition, due to a reduction of corporate taxes, profit attributable to owners ofparent amounted to 4,475 million yen (up 96.8% YoY).
Construction delays and additional costs on some projects, caused by material and equipment purchasing
disruptions and construction operative dispatch restrictions as a result of COVID-19, are expected. Althoughproject risk estimates have been included following discussions with clients and after individual assessments of
their location, contractual conditions, completion status etc., revenue and cost estimates assume the following:
Construction costs, calculated using percentage-complete methodology, includes reasonable future evaluationsof the anticipated effects of COVID-19.
The figures provided have been estimated following current and reasonable assessments of the influence of
COVID-19. The full effects of the pandemic are impossible to analyze accurately however and its timing cannot
be predicted, and this could affect the information supplied.

4

Chiyoda Corporation (6366)
Consolidated Financial Results for the three months Ended June 30, 2019

New Orders in the current consolidated fiscal year (to 31 March 2021) can be summarized as follows:• Energy
LNG / Gas
【Overseas】
Chiyoda is in the EPC phase on projects in the USA, Indonesia, Mozambique and Nigeria. For Freeport LNG,
the third and final train commenced commercial operation in May 2020. For Cameron LNG, the third and final
train commenced production in May 2020, and is currently progressing towards commercial operation asplanned. The EPC phase of Golden Pass LNG is also progressing as planned. Chiyoda was also awarded the
EPC contract for Nigeria LNG Train 7 in May 2020 and is currently supporting its JV partner’s engineering review.
In Qatar, Chiyoda is modifying and revamping its previously constructed LNG/gas processing plants and ispreparing an EPC proposal for the North Field Expansion project, comprising 4 x 7.8 million ton/annum trains.
【Japan】
Renovations and modifications are underway on Chiyoda’s previously constructed LNG receiving terminals andseismic upgrades of facilities are progressing.
Refinery/Petrochemical/Metal【Overseas】
Chiyoda is executing a large-scale ethylene plant EPC project on the Gulf Coast in the USA and is executing
EPCC (EPC plus Commissioning) on a Residue Fluid Catalytic Cracking (RFCC) plant in Malaysia.
【Japan】
Chiyoda considers metals and mining as priority business fields and is actively involved in mining projects. The
Group is renovating existing refining facilities to reduce sulfur content in bunkering fuel in accordance with new
regulations and to increase their competitiveness, whilst conducting seismic upgrades of facilities under the
Basic Act for National Resilience. Chiyoda is also executing the EPC of the THC Catalyst (Toho High efficiency
Catalyst) plant.
•

Environment

Pharmaceutical/Biochemistry/General Chemistry
Chiyoda is executing the EPC of a synthetic raw materials plant for medicines, functionalized chemical facilities
and a hydrogenated petroleum resin production plant. Chiyoda is collaborating with MIRAI Co. Ltd, a major
production and administration company promoting the introduction of commercial facilities, on a vegetable
growing facility and was presented with an award from Qatar University for a pilot vegetable factory project.
Environment/New Energy/Infrastructure【Overseas】
Chiyoda has implemented its thoroughbred 121 (CT-121) process to flue gas desulfurization facilities on existingcoal fired plants in India.
【Japan】
In the environment field, Chiyoda is executing the EPC for fuel gas desulfurization facilities on existing coal fired
plants and CO2 separation unit demonstration facilities. In the new energy field, Chiyoda is executing the world’s
largest Battery Energy Storage System Project, photovoltaic (mega solar) facilities and the largest capacity
biomass firing plant in Japan. Chiyoda is also considering participating in a floating offshore wind farm, an area
where we anticipate further opportunities.
To demonstrate the development of “Advanced Hydrogen Energy Global Supply and Transportation” promoted
by an organization established jointly with Mitsubishi Corporation, Mitsui & Co., Ltd. and Nippon Yusen (NYKLine), a hydrogenation plant in Negara Brunei Darussalam and a dehydrogenation plant in Japan have been
completed and a display plant is ongoing. Chiyoda and Mitsubishi Corporation have entered into a Memorandumof Understanding (MOU) with five (5) companies in Singapore to jointly support its sustainable hydrogen
economy using Chiyoda’s highly regarded safe technology. Chiyoda also aims to develop its hydrogen5

Chiyoda Corporation (6366)
Consolidated Financial Results for the three months Ended June 30, 2019

importation and consumption business with our key technology.
Chiyoda has also entered into an MOU with Hazer Group Limited in Australia to collaborate on commercial
activities using the Hazer Process to produce and supply hydrogen without the need to store carbon-dioxide
utilizing methane as a feedstock to produce hydrogen and graphite. Discussions with prospective domesticclients are underway.
•

Digital Technology

In a tie-up agreement with GRID Inc., the Group aims to develop a new digital technology business byimplementing AI technologies on plants to improve productivity. Chiyoda has also developed AI to optimize theproductivity of PT. Donggi-Senoro LNG (Indonesia) plants, aiming to introduce the technology worldwide.
Chiyoda has signed an MOU with Abu Dhabi Gas Liquefaction Co. (UAE) to provide state-of-the-art digitaltechnologies for their LNG Plant, targeting early introduction to improve plant reliability.
Chiyoda is in the process of developing a group of digital products to optimize operation and improve theproductivity of oil and gas plants. Chiyoda brands this group “EFEXIS” and will promote the new products upon
their practical use.
We are also implementing the company-wide "Target 20" campaign to improve EPC management, work
efficiency and corporate management practice. Chiyoda applies Advanced Work Packaging (AWP) to enhance
project planning and control on current and future projects.
Chiyoda’s IT business domain, owned by its subsidiary Chiyoda System Technologies (CST), will be transferred
to a splitting company, established through an incorporation-type company split of CST on 1 October 2020, forthe purpose of reinforcing the IT infrastructure of the Group.
(2)

Financial Information on Business PerformanceThis section is not translated.
(3)

Full-Year Consolidated Financial Forecasts Outlook for the Next Fiscal YearFor detailed information, please refer to the notice “Full-year Forecast and Dividend Forecast for the Fiscal YearEnding March 31, 2021” published on 6th August, 2020.

6

Chiyoda Corporation (6366)
Consolidated Financial Results for the three months Ended June 30, 20192.
Consolidated quarterly financial statements(1) Consolidated Balance Sheet(Millions of yen)
As of March 31, 2020

AssetsCurrent assets
Cash and deposits
Notes receivable, accounts receivablefrom completed construction contracts
Costs on construction contracts inprogress
Accounts receivable - other
Jointly controlled assets of joint venture
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

7

As of June 30, 2020

124,404

100,534

61,182

53,940

5,261

7,320

68,712
96,0286,041(1,243)360,387

71,271
94,518
5,843(1,259)332,169

6,177
5,085
1,190
12,454
4,912

5,360
4,853
1,101
11,315
4,776

5,598
599
1,271
(172)
7,296
24,663385,051

5,659
550
1,301
(171)
7,338
23,430355,599

Chiyoda Corporation (6366)
Consolidated Financial Results for the three months Ended June 30, 2019

(Millions of yen)
As of March 31, 2020
Liabilities
Current liabilities
Notes payable, accounts payable forconstruction contracts
Current portion of long-term borrowings
Income taxes payable
Advances received on construction
contracts in progress
Provision for warranties for completed
construction
Provision for loss on construction
contracts
Provision for bonuses
Provision for business restructuring
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Provisions
Retirement benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive
incomeValuation difference on available-forsale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit
plans
Total accumulated othercomprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

8

As of June 30, 2020

137,546

115,136

122
1,212

123
147

119,911

115,089

860

851

34,871

27,2534,150
401
20,802319,878

1,375
86
25,867285,93135,747
239
1,986
2,255
40,229360,10735,716
239
2,146
1,933
40,035
325,966

78,396
72,128(127,778)(1,435)21,31078,396
72,128(123,302)(1,435)25,786

58

112

6
3,033

5
3,259

13

(35)

3,112

3,341

519
24,943385,051504
29,632355,599

Chiyoda Corporation (6366)
Consolidated Financial Results for the three months Ended June 30, 2019(2)

Consolidated statement of income and comprehensive income(Millions of yen)Three months ended
June 30, 2019
Net sales of completed construction
contracts
Cost of sales of completed construction
contracts
Gross profit on completed construction
contracts
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted forusing equity method
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of shares of subsidiaries
and associates
Total extraordinary income
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent

9

Three months ended
June 30, 2020

86,471

65,53773,43357,257

13,037

8,280

3,961
9,076

2,985
5,294

653
15

424
14

187

91

81
938

60
591

95
5,999
222
6,316
3,698

205
779
56
1,041
4,843

355

－

355
4,053
1,780
8
1,788
2,264
(10)

－
4,843
314
57
372
4,471
(3)

2,274

4,475

Chiyoda Corporation (6366)
Consolidated Financial Results for the three months Ended June 30, 2019

(Millions of yen)Three months ended
June 30, 2019
ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans,
net of tax
Share of other comprehensive income ofentities accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable toowners of parent
Comprehensive income attributable tonon-controlling interests

Three months ended
June 30, 2020

2,264

4,471

48

53

(19)
2,264

(0)
293

(65)

(49)

(29)

(79)

2,199
4,463

217
4,689

4,483

4,704

(19)

(15)

(3) Notes on Consolidated Quarterly Financial Statements(Notes on Assumptions for a Going Concern)
None(Notes on Significant Changes in the Amount of Shareholders’ Equity, if Applicable)
None(Additional Information)
This section is not translated.
(Business Separation)
At the Board of Directors meeting held on January 28, 2020 it was decided that Chiyoda Corporation’s IT
business domain, Chiyoda System Technologies (“CST”), will be transferred to a splitting company(“Splitting Company”), established through an incorporation–type company split of CST. Part of theSplitting Company shares will be transferred to TIS Inc. Conditions to be fulfilled on February 28 of thesame year. The internal approval of this transaction was reached, and on the same day, the share transfer
agreement was reached with TIS Inc.
1. Purpose of Company Split
CST provides clients with IT solutions covering project management, project control andoperational control of industrial plants to resolve business challenges. To further improve
performance as an IT solution provider, Chiyoda and CST will develop CST’s IT capability incollaboration with TIS Inc., a first class integrated IT enterprise in Japan and will execute a
company split of CST and transfer the Splitting Company’s shares to TIS Inc.
2.

Effective date of the Company Split
October 1, 2020 (planned)

10Chiyoda Corporation (6366)
Consolidated Financial Results for the three months Ended June 30, 2019

3. Rights and Obligations of Splitting Company
The Splitting Company succeeds part of assets, debts and contracts related to the IT businessdomain which CST owns before the effective date of the company split.
(Reduction of Capital and Capital Reserves and Appropriation of Surplus)
At the Board of Directors meeting on May 8, 2020, the Company resolved to discuss the reductionof share capital and disposal of surplus at the 92nd Ordinary General Meeting of Shareholders, tobe convened on June 25, 2020.
1. Purpose
The purpose of reducing capital stock and the disposal of surplus is to eliminate the cumulativeloss of the previous fiscal year to improve the company’s financial standing.
2. Capital Decrease(1) Reduced Capital
Capital was reduced by 63,381 million yen, from 78,396 million yen to 15,014 million yen.
(2) Reduction of Capital Reserves
The Capital Reserve of 72,112 million yen was reduced to zero (0) yen.
3. Disposal of Surplus
The sum of the reduced capital and capital reserves (135,494 million yen), will be transferred toretained earnings. As a result, the balance of retained earnings will be zero (0) yen.
4. Schedule
Board Resolution
Ordinary General Meeting of Shareholders
Date of Notice of Objection of Creditors
Deadline for objections of Creditors
Effective date of capital reduction

11

May 8, 2020
June 25, 2020
June 26, 2020
July 27, 2020
August 7, 2020 (planned)

Chiyoda Corporation (6366)
Consolidated Financial Results for the three months Ended June 30, 20193.

Production, Contracts and Revenue
Apr. 1, 2019－Jun. 30, 2019

(Millions of yen)
Apr. 1, 2020－Jun. 30, 2020

New
contracts(ratio)Revenue(ratio)Backlog ofcontracts(ratio)New
contracts(ratio)Revenue(ratio)Backlog ofcontracts(ratio)Engineering

33,053(99.4%)

86,258(99.8%)

954,107(100.0%)22,918( 99.2%)65,361( 99.7%)776,004(100.0%)LNG Plant

12,197(36.7%)

46,491(53.8%)

502,357(52.7%)

6,055(26.2%)

19,045(29.0%)

434,630(56.0%)

Gas Development/
Processing/Receiving

750(2.3%)

1,371(1.6%)

12,771(1.3%)

1,490(6.4%)

3,004(4.6%)

12,633(1.6%)

Refinery/Petrochemical/
Metal

15,622(47.0%)

21,918(25.3%)

303,464(31.8%)

9,853(42.7%)

30,739(46.9%)

217,265(28.0%)

Pharmaceutical/Biochemistry/
Chemical

1,103(3.3%)

7,173(8.3%)

17,728(1.9%)

3,182(13.8%)

4,826(7.4%)

18,379(2.4%)

Environment/New Energy/
Infrastructure

1,304(3.9%)

7,265(8.4%)

110,726(11.6%)

1,257(5.4%)

7,008(10.7%)

90,725(11.7%)

Others2,076(6.2%)

2,038(2.4%)

7,058(0.7%)

1,079(4.7%)

737(1.1%)

2,370(0.3%)

212(0.6%)

212(0.2%)－

176(0.8%)

176(0.3%)－

Total

33,266(100.0%)86,471(100.0%)954,107(100.0%)23,095(100.0%)65,537(100.0%)776,004(100.0%)

Domestic

15,624(47.0%)

23,928(27.7%)

208,825(21.9%)

16,258(70.4%)

28,412(43.4%)

610,531(78.7)%)

Other Business

17,64162,543745,2826,836
37,124
610,531(56.6%)(78.7%)(53.0%)(72.3%)(78.1%)(29.6%)
Note1: The backlog of contracts for the three months include an increase / decrease due to changes inconstruction contracts acquired in prior fiscal years, and an increase / decrease due to foreignexchange translation adjustments.
Note2: The total amount of the above table does not include consumption tax.
Overseas12

Chiyoda Corporation (6366)
Consolidated Financial Results for the three months Ended June 30, 2019

4. Others(Regarding Ichthys LNG Project)
Arbitration was filed by JKC Australia LNG Pty Ltd (JGC, KBR and Chiyoda joint venture) on a plant alreadyhanded over to the client as described below. Unfavorable outcomes will result in uncollectable construction
receivables and replacement costs which may affect Group business performance.
1) Disputes with client
Outstanding issues include scope of work changes and associated additional costs and contract priceadjustment.
2) Dispute with subcontractor
Arbitration to resolve a dispute with a subcontractor consortium awarded a lump sum contract consisting ofGeneral Electric Company, General Electric International Inc., UGL Engineering Pty Ltd and CH2M Hill
Australia Pty Limited.
During ongoing arbitration in the execution phase regarding additional expenses being sought by JKC, theconsortium independently breached the contract by withdrawing from site without prior agreement. JKC
subsequently re-subcontracted the remaining scope of work to fulfill its own contractual obligations and are
currently claiming costs of completing the Combined Cycle Power Plant (CCPP) from the consortium.

13