Chiyoda Corporation (6366)
Consolidated Financial Results for the six months Ended September 30, 2017

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 Six Months Ended September 30, 2017
November 10, 2017
Company name:
Listing:
Stock code:
URL:
Representative:
Inquiries:TEL:

CHIYODA CORPORATIONFirst Section of the Tokyo Stock Exchange
6366
https://www.chiyodacorp.com/en/
Masaji Santo, President & CEO
Shinji Kusunoki, GM, Finance and Accounting Unit
+81-45-225-7745

Scheduled date to file Quarterly Report: November 13, 2017
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 Six months ended September 30, 2017
(1) Consolidated operating results(Percentages indicate year-on-year changes)

Net sales
Millions of yen

For the Six months ended
September 30, 2017
For the Six months ended
September 30, 2016
Note: Comprehensive Income:Operating income%

Millions of yen

250,652(9.5)(13,126)

276,928

(1.9)

4,558

%

Millions of yen%

Millions of yen%-(12,373)

-

3,480

(38)

(54.4)

10,273

(3.7)

5,610

0.8

the six months ended September 30, 2017:
the six months ended September 30, 2016:

Net income per share
For the six months ended
September 30, 2017
For the six months ended
September 30, 2016

Profit attributable toowners of parent

Ordinary income

2,887 million yen / (－)%
(3,772) million yen / (－)%

Fully diluted net
income per share

Yen

Yen

13.44

－

21.66

－

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Equity ratio

Millions of yen%

As of September 30, 2017
457,988
158,417
34.2
As of March 31, 2017
461,331
157,125
33.7
Reference: Equity
As of September 30, 2017: 156,597 million yen
As of March 31, 2017: 155,339 million yen

2. Cash dividends
Cash dividends per share
Record date

First quarter

Yen

Second quarter

Yen

Fiscal year ended March
31, 2017
Fiscal year ending March
31, 2018
Fiscal year ending March
31, 2018 (Forecast)
Note: Revision to the latest forecast announcement 2017: None

Third quarter

Fiscal year-end

Annual

Yen

Yen

Yen

-

6.00

6.00

6.00

6.00

-

Chiyoda Corporation (6366)
Consolidated Financial Results for the six months Ended September 30, 2017

3. Consolidated earnings forecasts for the fiscal year ending March 31, 2018 (from April 1, 2017 toMarch 31, 2018)(Percentages indicate year-on-year changes)

Net sales
Millions of yen

Operating income%

Millions of yen

Fiscal year ending
500,000 (17.1)(9,500)March 31, 2018
Note: Revision to the latest forecast announcement 2017: Yes

Profit attributable toowners of parent

Ordinary income

Net income
per share%

Millions of yen%

Millions of yen

%

Yen

-

(8,000)

-

5,000

-

19.31

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 Preparation of 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 September 30, 2017
260,324,529 shares
As of March 31, 2017
260,324,529 sharesb. Number of treasury stock at the end of the period
As of September 30, 2017
1,356,764 shares
As of March 31, 2017
1,351,100 sharesc. Average number of shares during the period
For the three months ended September 30, 2017258,969,995 shares
For the three months ended September 30, 2016
258,982,071 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.

Chiyoda Corporation (6366)
Consolidated Financial Results for the six months Ended September 30, 2017

Table of Contents for the appendices

1.

2.

3.

Qualitative Information Related to Consolidated Performance ................................................... 2(1)

Qualitative Information on Business Performance ............................................................... 2(2)

Financial Information on Business Performance .................................................................. 3(3)

Outlook for the Next Fiscal Year .......................................................................................... 3

Consolidated quarterly financial statements ............................................................................... 4(1)

Consolidated balance sheets .............................................................................................. 4(2)

Consolidated statement of income and comprehensive income .......................................... 6(3)

Consolidated quarterly statements of cash flow ................................................................... 8(4)

Notes on Consolidated Quarterly Financial Statements ....................................................... 9

Production, Contracts and Sales.............................................................................................. 10

1

Chiyoda Corporation (6366)
Consolidated Financial Results for the six months Ended September 30, 2017

1. Qualitative Information Related to Consolidated Performance(1) Qualitative Information on Business Performance
Despite geopolitical tensions in the Middle East and Korean Peninsula, macroeconomics in Asia, Europe
and the USA remained relatively stable during the first six months of the current fiscal year. The price of
crude oil recovered to approximately $50 per barrel and, although large scale Liquefied Natural Gas (LNG)
project final investment decisions remain outstanding, bidding and investment activities have graduallyprogressed.
Through its LNG core business, Chiyoda continued to implement large-scale projects worldwide whilst
expanding into new markets, such as renewable energy and life sciences and new areas for future businessmodels such as leveraging big data and AI technology.
The Company is also implementing structural reforms and the growth strategy detailed in its Medium-Term
Management Plan “Mirai Engineering – A Grand Opportunity for the Future” announced in August 2017.
Consequently, on a consolidated basis, New Orders for the fiscal year ending March 2018 amounted to150,622 million yen (up 13.0% year on year). The Backlog amounted to 767,783 million yen (down 12.4%
year on year). Revenues from completed construction contracts amounted to 250,652 million yen (down
9.5% year on year) and Operating Loss is 131 million yen (compared with the previous year’s consolidated
profit operating income of 4,558 million yen). Ordinary Income amounted to 12,373 million yen (comparedwith the previous year’s consolidated profit ordinary income of 10,273 million yen). Profit attributable toowners of parent reduced to 3,480 million yen (compared down to 38.0% year on year).
Operating Income and ordinary income is a loss due to the company anticipating an increase in costs on
LNG projects currently underway in the United States. On the other hand, profit attributable to owners ofparent was 3,480 million yen due to a recovery in subsidiary losses and Federal corporation tax refunds to
the U.S. subsidiary.

A summary of reportable engineering business activities is shown below.

LNG Plants and Other Gas Related Work
Overseas, Chiyoda is conducting pre-contract work on an LNG project in Mozambique as the selected
Engineering, Procurement and Construction (EPC) Contractor and continues EPC operations on LNG
projects in Australia, Russia, Indonesia and the USA. In Qatar, under an agreement with Qatar Petroleum
announced in June 2017, Chiyoda is conducting debottlenecking studies to increase the capacity of LNG
plants and the Group company has been engaged under long term Engineering, Procurement, Construction
and management (EPCm) contracts on a helium production facility and the renovation and modification of
LNG and gas processing plants previously constructed by the Company.
In Japan, EPC activities have commenced to renovate and modify existing LNG receiving terminals similarly
built by Chiyoda.

Refinery/Petrochemicals/Metal
Overseas, Front-End Engineering and Design (FEED) work for petrochemical project in the USA is
progressing well, as are Engineering, Procurement, Construction and Commissioning (EPCC) activities on
a Residue Fluid Catalytic Cracking (RFCC) project in Malaysia and EPC operations on a petrochemical tankterminal in Southeast Asia. Chiyoda has also been conducting under long term contracts to project managerefinery, chemical production and other downstream projects in Asia and in May 2017 completed a titanium
sponge plant in Saudi Arabia.
In Japan, Chiyoda continues to facilitate inter-refinery cooperation in the mutual accommodation of fuelthrough its EPC operations and optimize the configuration of refineries and other facilities. The Group
continues to renovate and upgrade existing facilities in accordance with the Basic Act for National Resilienceand carry out routine maintenance to improve energy efficiency in existing petrochemical production, andother, facilities.

Pharmaceutical/Biochemistry/General Chemistry/Environment/Infrastructure
Overseas, in transport infrastructure, the Group is completing EPC projects for new international airports in
Mongolia and Bohol in The Philippines. In the environment field, the Group aims to introduce the Chiyoda
Thoroughbred 121 (CT-121) Process into flue gas desulfurization facilities on an existing coal fired power
plant project in India. The Group is also executing a project in Dubai, UAE to demonstrate equipment forvegetable facilities that use artificial light and will continue to focus its introduction in the Middle East andRussia.

2

Chiyoda Corporation (6366)
Consolidated Financial Results for the six months Ended September 30, 2017

In Japan, Chiyoda is conducting EPC work on photovoltaic (mega solar) facilities and flue gas desulfurization
facilities on existing coal-fired power plants.
EPC operations in the food, pharmaceutical and biochemistry industries include: factories complying withthe latest food hygiene standards, research facilities capable of handling high-potency pharmacologically
active agents and therapeutic antibodies, including cutting-edge injection production facilities, andpharmaceutical/biomedicine manufacturing facilities. The Group will also complete Japan’s first
demonstration plant for bio-jet and diesel fuel production, for Euglena Co. Ltd, by October 2018.

New Business Fields
In the offshore and upstream fields, following approval of the ECS reorganization plan in June 2017, Chiyoda
has been in discussions with Subsea 7 S. A., ECS’s new parent, regarding future collaboration. Xodus
Group Ltd., Chiyoda’s subsidiary in the U.K., is continuing to advise on acquiring rights and provide planning,
design, consulting and other services to companies developing natural resources on the safe
decommissioning of obsolete facilities and on the construction of crude oil, gas production and other facilities.
In the new energy field, the Group jointly established the “Advanced Hydrogen Energy Chain Association
for Technology Development” with Mitsubishi Corporation, Mitsui & Co. Ltd. and Nippon Yusen (NYK Line)
to officially launch a demonstration project aimed at commercializing a hydrogen supply chain.
In the digital innovation business field, in a tie-up agreement with GRID Inc., a leading venture company inthe field of AI technologies in Japan, the Company commenced projects using AI technologies to improve
plant productivity.

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

(3) Outlook for the Next Fiscal YearAs announced on 12 May 2017, the company has revised the consolidated financial forecast for the fiscal
year ending 31 March 2018.
Please refer to the company’s release ‘Notice of Revisions to the Forecast of Consolidated Results”
published on November 7, 2017.

3

Chiyoda Corporation (6366)
Consolidated Financial Results for the six months Ended September 30, 2017

2. Consolidated quarterly financial statements(1) Consolidated balance sheets(Millions of yen)
As of March 31, 2017

As of September 30, 2017

AssetsCurrent assets
Cash and deposits
Notes receivable, accounts receivable fromcompleted construction contracts
Securities
Costs on uncompleted construction
contracts
Jointly controlled assets of joint venture
Other

135,373

109,424

59,86563,493

7,999

7,999

24,22030,377

164,283
35,044(1,541)

170,196
31,547(1,448)

6,627

6,286

Land
Other, net

5,266
1,265

4,952
1,089

Total property, plant and equipment

Allowance for doubtful accounts
Total current assets

425,244

Non-current assets
Property, plant and equipment
Buildings and structures, net

411,591

13,15812,327

Intangible assets
Investments and other assets

8,098

7,407

Investment securities
Other

7,707
7,458
(336)

7,815
19,179(333)

461,331457,988

Allowance for doubtful accounts
Total investments and other assets

14,830Total non-current assets

36,086

Total assets

4

26,661
46,396

Chiyoda Corporation (6366)
Consolidated Financial Results for the six months Ended September 30, 2017

(Millions of yen)
As of March 31, 2017

As of September 30, 2017

Liabilities
Current liabilities
Notes payable, accounts payable forconstruction contracts
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Advances received on uncompleted
construction contracts
Provision for warranties for completed
construction
Provision for loss on construction contracts

160,096

176,741203
10,004238
10,004668

446

85,18787,347

319

350

3,315

4,134

Provision for bonuses
Provision for loss on business of
subsidiaries and associates
Other

3,156

2,947

22,919－15,311

14,407

Total current liabilities

301,182

296,618

Long-term loans payable
Provision

4
338

2
359

Net defined benefit liability
Other

1,522
1,158

1,480
1,110

Non-current liabilities

Total non-current liabilities

3,023

2,952

304,206

299,571

43,39643,396

Treasury shares

37,112
72,132(1,431)

37,112
74,059(1,434)

Total shareholders' equity

151,210

153,133

379

102

499

976

2,656
592

1,709
673

4,128

3,463

1,785

1,820

157,125

158,417461,331457,988

Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeNon-controlling interests
Total net assets
Total liabilities and net assets

5

Chiyoda Corporation (6366)
Consolidated Financial Results for the six months Ended September 30, 2017(2) Consolidated statement of income and comprehensive income(Consolidated statement of income)(Millions of yen)Six months ended
September 30, 2016

Six months ended
September 30, 2017

Net sales of completed construction contracts

276,928

250,652

Cost of sales of completed construction contracts
Gross profit (loss) on completed construction
contracts
Selling, general and administrative expenses

261,853

254,033

15,075(3,380)10,516

9,746

Operating profit (loss)

4,558(13,126)

Non-operating income
Interest income

674

1,126

626

79

Dividend income
Share of profit of entities accounted for using
equity method
Foreign exchange gains
Other

－

660

4,605
156

150

Total non-operating income

6,063

2,017

105

105

184

－

－

990

58

167

Non-operating expenses
Interest expenses
Share of loss of entities accounted for using
equity method
Foreign exchange losses
Other
Total non-operating expenses

－

348

1,263

10,273(12,373)

1,965

203

－

12,127

1,965

12,331

Extraordinary losses
Loss on sales of shares of subsidiaries andassociates
Total extraordinary losses

1,146

-

1,146

-

Profit (loss) before income taxes

11,092(41)

Income taxes - current

6,605(1,154)(8,323)

Total income taxes

5,451(3,595)

Profit

5,641

3,554

Ordinary profit (loss)
Extraordinary income
Gain on sales of investment securities
Reversal of provision for loss on business of
subsidiaries and associates
Total extraordinary income

Income taxes - deferred

Profit attributable to non-controlling interests
Profit attributable to owners of parent

6

4,727

30

73

5,610

3,480

Chiyoda Corporation (6366)
Consolidated Financial Results for the six months Ended September 30, 2017

(Millions of yen)Six months ended
September 30, 2016
ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, netof taxShare of other comprehensive income ofentities accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to ownersof parent
Comprehensive income attributable to noncontrolling interests

7

Six months ended
September 30, 2017

5,641

3,554

(2,309)

(277)

(876)
(4,069)479(1,347)72

81(2,231)387(9,413)(676)(3,772)

2,877(3,638)

2,814

(133)

62

Chiyoda Corporation (6366)
Consolidated Financial Results for the six months Ended September 30, 2017(3) Consolidated quarterly statements of cash flow
Six months ended
September 30, 2016
Cash flows from operating activities
Profit (loss) before income taxes

11,092
1,780

Depreciation
Amortization of goodwill
Increase (decrease) in provision for loss on business of
subsidiaries and associates
Interest and dividend income
Share of (profit) loss of entities accounted for using equity
methodLoss (gain) on sales of investment securities
Loss (gain) on sales of shares of subsidiaries andassociates
Decrease (increase) in notes and accounts receivable trade
Decrease (increase) in costs on uncompleted construction
contracts
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in advances received on uncompleted
construction contracts
Decrease (increase) in jointly controlled asset of joint
ventureOther, net
SubtotalInterest and dividend income received

251－(1,301)

Net cash provided by (used in) operating activities
Cash flows from investing activities
Net decrease (increase) in time deposits

Proceeds from sales of investment securities
Payments of loans receivableCollection of loans receivable
Other, net

(203)

1,146
5,751
1,163

(5,793)(22,586)
6,018(8,475)

Net cash provided by (used in) investing activities

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period

8(3,988)(6,174)
17,616
3,175(7,184)(9,729)(17,333)(19,037)

393
(101)
(328)

(354)

3,334
(305)

15,460(10,231)790(4,224)

9,866(1,192)

359
(896)
(304)
49
5

(2,584)(26)

30(1,551)(31)(16,159)(22,536)

120,760

116,352(2,642)(6,049)136,919

Cash and cash equivalents at end of period－(19,001)(32)

Cash dividends paid
Other, net(660)(12,731)

6,341
0Cash flows from financing activities
Net increase (decrease) in short-term loans payable(12,463)(1,965)

22
(843)
(337)

Purchase of intangible assets
Purchase of investment securities

91

184

(192)

Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment

(41)
1,767

(1,206)862(105)(5,358)Interest expenses paid
Income taxes paid

(Millions of yen)Six months ended
September 30, 2017

(1,552)(753)

138,889

Chiyoda Corporation (6366)
Consolidated Financial Results for the six months Ended September 30, 2017(4) 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

9Chiyoda Corporation (6366)
Consolidated Financial Results for the six months Ended September 30, 2017

3. Production, Contracts and Sales(Millions of yen)
Apr. 1, 2017－Sept. 30, 2017

Apr. 1, 2016－Sept. 30, 2016
New
contracts(ratio)Net sales(ratio)Backlog ofcontracts(ratio)New
contracts(ratio)Net sales(ratio)Backlog ofcontracts(ratio)131,421275,101

905,509148,982

249,012

767,783

98.6%

99.3%

100.0%

98.9%

99.3%

100.0%

54,235

198,295

616,204

64,429184,663

473,420

40.7%

71.6%

68.1%

42.8%

73.7%

61.6%

Gas Development/
Processing/Receiving

6,235

4,926

18,743

1,593

7,015

6,084

4.7%

1.8%

2.1%

1.1%

2.8%

0.8%

Refinery/Petrochemical/
Metal

24,14643,250171,141

21,61625,654

152,723

18.1%

15.6%

18.9%

14.3%

10.2%

19.9%

Pharmaceutical/Biochemistry/
Chemical

21,512

16,18834,67928,704

12,54551,471

16.1%

5.8%

3.8%

19.0%

5.0%

6.7%

Environment/New Energy/

21,798

10,11360,67628,86014,924

77,269Infrastructure

16.4%

3.7%

6.7%

19.2%

5.9%

10.1%

3,492

2,327

4,064

3,778

4,208

6,813

2.6%

0.8%

0.4%

2.5%

1.7%

0.9%

1,827

1,827

－

1,640

1,640

－

1.4%

0.7%

－

1.1%

0.7%

－

133,249

276,928

905,509150,622250,652

767,783

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

73,52945,349122,732

76.76349,585

149,100

55.2%

16.4%

13.6%

51.0%

19.8%

19.4%

59,720231,579

782,776

73,859201,067

618,683

Engineering
LNG Plant

OthersOther Business

Total

Domestic
Overseas

44.8%
83.6%
86.4%
49.0%
80.2%
80.6%
Note1: The backlog of contracts for the three months ended September 30, 2017 includes a decrease due to changes inconstruction contracts acquired in prior fiscal years, and an increase due to foreign exchange translation
adjustments.
Note2: The total amount of the above table does not include consumption tax.

10