Minato Mirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
http://www.chiyoda-corp.com/en/
CORPORATE PHILOSOPHY
Enhance our business in aiming for harmony
between energy and the environment,
and contribute to the sustainable development of
a society as an integrated engineering company
through the use of our collective wisdom and
painstakingly developed technology.
(As of August 2013)
Selected in FTSE Group’s responsible
investment index
ANNUAL REPORT FY2012
For the year ended March 31, 2013
Profile
Since its establishment in 1948, Chiyoda Corporation has engaged
in engineering and construction work and services at innumerable
industrial plants both in Japan and overseas in the fields of oil,
natural gas and other energy sources; petrochemicals and chemicals;
pharmaceuticals; and general industrial machinery.
Financial Highlights
Years Ended March 31, 2013, 2012, 2011, 2010 and 2009
For the Year (Millions of Yen)
Revenues
Cost of revenue
Operating income
Income before income taxes
and minority interests
Net income
2013
2012
2011
2010
2009
¥398,918
¥254,675
¥247,082
¥312,985
¥446,438
356,402
25,113
26,747
16,077
215,783
24,197
23,543
14,364
215,563
17,544
11,476
7,979
298,766
427,461
1,702
4,714
2,953
7,227
9,651
6,498
More than forty years ago in 1972, Chiyoda’s founder was already
At Year-End (Millions of Yen)
emphasizing in a booklet entitled Legacy for the Twenty-first Century
that sustainable social development should progress by harmonizing
nature and industrial development.
We were one of the first companies to state our intention to
contribute to sustainable social development through our engineering
and technology by providing appropriate solutions to the various
energy and environmental issues we currently face, and have been
putting those words into action ever since. This booklet is available on
our website.
With over 60 years of technological experience, Chiyoda is working
to build on its position as the “Reliability No. 1” project company
with a high level of customer and investor trust, not only in terms of
technology but also in terms of our people and management. At the
same time, we will continue to improve our financial strength and to
raise our corporate value.
Total assets
Total equity
Current ratio (%)
Per Common Share (Yen )
Earnings per share (EPS)
Book value per share (BPS)
Dividend per share
Ratios (%)
Return on assets (ROA)
Return on equity (ROE)
¥435,379
¥365,795
¥353,392
¥328,174
¥357,816
189,356
166.3
168,737
165.5
155,758
173.8
¥62.06
727.24
19.0
6.4
9.0
¥55.44
648.95
17.0
6.6
8.9
¥30.79
599.15
11.0
4.6
5.3
149,253
175.2
¥11.39
573.61
3.5
1.4
2.0
145,917
161.1
¥25.58
561.12
7.5
3.1
5.7
Note: Yen amounts are rounded down to the nearest million. U.S. dollar amounts and percentages are rounded to the nearest unit.
Contents
01 Financial Highlights
02 At a Glance
03 To Our Shareholders
04 Management’s Discussion and Analysis
06 The Medium-Term Management Plan
08 Topics
12 Corporate Governance
14 Corporate Information
16 Directors and Officers
17 Stock Information
Revenues
Billions of yen
Billions of yen
Billions of yen
800
800
800
700
700
700
600
600
600
500
500
500
446.4
446.4
446.4
400
400
400
300
300
300
200
200
200
100
100
100
0
0
0
398.9
398.9
398.9
313.0
313.0
313.0
247.1
247.1
247.1
254.7
254.7
254.7
2009
2009
2009
2010
2010
2010
2011
2011
2011
2012
2012
2012
2013
2013
2013
Operating Income
Net Income
Billions of yen
Billions of yen
Billions of yen
Billions of yen
Billions of yen
Billions of yen
30
30
30
25
25
25
20
20
20
15
15
15
10
10
10
5
5
5
0
0
0
25.1
25.1
25.1
24.2
24.2
24.2
17.5
17.5
17.5
30
30
30
20
20
20
16.1
16.1
16.1
14.4
14.4
14.4
7.2
7.2
7.2
1.7
1.7
1.7
10
10
10
6.5
6.5
6.5
8.0
8.0
8.0
3.0
3.0
3.0
2009
2009
2009
2010
2010
2010
2011
2011
2011
2012
2012
2012
2013
2013
2013
0
0
0
2009
2009
2009
2010
2010
2010
2011
2011
2011
2012
2012
2012
2013
2013
2013
Courtesy of Mizushima LNG Co., Ltd.
Forward-Looking Statements: This annual report contains forward-looking statements about Chiyoda Corporation’s outlooks, plans, forecasts, results and other items that may take
place in the future. Such statements are based on data available as of July 1, 2013. Unknown risks and other uncertainties that happen in the future may cause our actual results to be
different from the forward-looking statements contained in this report. The risks and uncertainties include business and economic conditions, competitive pressure, changes in laws and
regulations, addition or elimination of products, and exchange rate fluctuation, among others.
CHIYODA CORPORATION ANNUAL REPORT FY2012
1
At a Glance
To Our Shareholders
Revenues
New Orders
Backlog of Contracts
(Billions of yen)
6
11
33
32
18
398.9
Billion yen
LNG
12
6
29
50
402.9
Billion yen
23
11
8
58
900.6
Billion yen
128.4 (32%)
47.2 (12%)
521.2 (58%)
Gas Processing*1
73.0 (18%)
24.9 (6%)
69.9 (8%)
Fine Industries*2
130.4 (33%)
115.9 (29%)
94.7 (11%)
Petroleum and Petrochemicals
42.7 (11%)
200.6 (50%)
203.9 (23%)
Others
24.5 (6%)
14.2 (3%)
10.9 (0%)
*3
*4
*5
*6
*7
EPC* / EPCm** / EPsCm*** Execution
FEED**** / Feasibility Study
Overseas Projects under Execution
(As of June 30, 2013)
New Ulaanbaatar International Airport
Mongolia / Infrastructure
Al Jubail Export Refinery
Saudi Arabia / Oil Refinery
Industrial Wastewater Treatment
Saudi Arabia / Water Recycling
Arzew
Algeria / LNG
Plateau Maintenance Project
Qatar / LNG
Long Term Service Agreement
(RasGas / Qatargas / Shell)
Qatar / LNG, GTL
Laffan Refinery Phase 2 Project
Qatar / Condensate Refinery
Mozambique LNG
Area 1&4
Mozambique / LNG
Stolthaven
Singapore / Tank terminal
Shell Bukom
Singapore / Refinery
Infenium
Singapore / Chemical
Map Ta Phut Industrial Complex
Thailand / Energy Saving
Nghi Son Refinery
Vietnam / Refinery & Petrochemical
Nickel Refining Plant
Philippines / Material
Tokuyama Phase-2
Malaysia / Renewable Energy Material
PNG LNG
Papua New Guinea / LNG
Arrow LNG
Australia / LNG
Ichthys LNG
Australia / LNG
Abadi LNG
Indonesia / FLNG
Puerto La Cruz
Venezuela / Oil Refinery
: Engineering, Procurement and Construction
*EPC
**EPCm
: Engineering, Procurement and Construction management
***EPsCm : Engineering, Procurement support and Construction management
****FEED : Front-end Engineering and Design
*1: Classified as “Gas and power utilities” in “Consolidated Financial Results” *2: Classified as “Industrial machinery” and “General chemicals” in “Consolidated Financial Results”
*3: Courtesy of Qatargas Operating Company Limited *4: Courtesy of Shell *5: Courtesy of Solar Frontier K.K. *6: Courtesy of Kashima Aromatics Co., Ltd. *7: Water Treatment Plant
Takashi Kubota (Left)
Executive Chairman
Chiyoda Corporation
Shogo Shibuya (Right)
President & CEO
Chiyoda Corporation
Thank you for your continued support over
the growing trend of renewable energies,
this past 12 months.
as well as rapid urbanization. Under the
We would like to present the Chiyoda
new Medium-Term Management Plan titled
Group’s annual report for the fiscal year ended
“Seize the moment, Open up new frontiers”
March 31, 2013.
launched by the new management team in
Revenues and earnings rose year-on-year
fiscal 2013, we will further implement key
on the back of new contracts for refineries in
strategies of the previous plan. By executing
Southeast Asia and the Middle East, as well as
Engineering, Procurement, and Construction
steady progress made in executing backlog
(EPC) projects as usual, expanding our
projects such as LNG plants in Papua New
business through accelerated investment
Guinea and Australia. In the 12 months before
in fields related to our core business, and
the year under review, the final year of our
strengthening health, safety and environment
Medium-Term Management Plan entitled
(HSE) and risk management policies, the
“Engineering Excellence, Value Creation 2012”,
entire Chiyoda Group management team and
we implemented key strategies aimed at
staff will work eagerly to create new value
creating a firm basis for future growth.
and raise corporate value.
This is a time of major change both in
We paid a dividend of ¥19 per share, in
Japan and overseas, with increased demand
line with our earnings for fiscal 2012. We ask
for energy due to economic growth in
all of our shareholders for their continued
emerging countries, the momentum of
support in our ongoing efforts.
development from the shale revolution,
the continuing global shift from oil to gas,
2
CHIYODA CORPORATION ANNUAL REPORT FY2012
CHIYODA CORPORATION ANNUAL REPORT FY2012
3
Management’s Discussion and Analysis
Results of Operations
Analysis of Results
During the fiscal year under review, we saw a continuing sense of uncertainty in the world economy caused by
problems such as prolonged European debt crisis and the slowdown in the economy of emerging countries
such as China. Preparations for investment in numerous gas related facilities were now being encouraged by
the enduring increase in demand for energy, the shale revolution and the tide of the shift to gas. Many in Japan
expect the new Japanese government, in the second half of the fiscal year, to bailout deflation, to correct the
yen’s appreciation by following flexible and dynamic monetary policies for economic recovery, and to invest in
renewable energy projects, in which investment has increased rapidly under the Feed-in Tariff scheme.
Faced with these conditions, while the Chiyoda Group continued to expand its global operation and
enhance its operation in the hydrocarbon field, mainly in LNG (Liquefied Natural Gas), the Group also made
inroads into new business fields such as infrastructure and renewable energy. We placed particular focus on
bidding activities, making the most of our technological superiority in the market. We concluded contracts for
EPC (Engineering, Procurement, and Construction) works for oil refineries in Vietnam and the Middle East. We
won orders in Japan for the EPC of petroleum and petrochemical plants and large-scale photovoltaic power
generation systems. Additionally, we were awarded FEED (Front End Engineering and Design) works for an LNG
plant in Mozambique and a FLNG (Floating Liquefied Natural Gas) plant in Indonesia.
The projects under execution are progressing as planned, including the LNG plants in Papua New Guinea
and Australia, some overseas projects for Japanese clients and LNG receiving terminals in Japan. We are still
seeking an improvement in profitability by steadily executing backlog projects while reviewing the cost for
completed works during the warranty period.
The Group relocated the head office and integrated the company’s function to improve work efficiency.
As part of the integration process, we sold the land where the previous headquarters was located.
Consolidated new orders for the fiscal year amounted to 402,919 million yen (34.2% decrease year on
year). The backlog and revenues were 900,618 million yen (7.1% increase) and 398,918 million yen (56.6%
increase) respectively. The operating income amounted to 25,113 million yen (3.8% increase year on year),
ordinary income to 25,518 million yen (7.2% increase), and net income resulted in 16,077 million yen (11.9%
increase).
Results by Business Segment
LNG Plants/Gas and Power Utilities
The Group was awarded FEED contracts for an onshore natural gas liquefaction facility in Mozambique and an
FLNG facility in Indonesia. We are also focusing on study works for other FLNG projects. The EPC execution of
an LNG plant in Papua New Guinea and another LNG project in Australia is progressing as planned. Our Qatari
subsidiary is working on the maintenance and modification works for the existing LNG and gas processing
plants mainly built by the Group. In Japan, several EPC works on LNG receiving terminals, the expansion/
modification works of existing plants and various FEED works are ongoing in parallel.
LNG is our priority business field and we are focusing on related works for other LNG projects, which are
onshore / offshore and also overseas / domestic.
Petroleum, Petrochemicals and Gas Chemicals
In addition to the EPC contract for a refinery and petrochemical complex in Vietnam, the Group won an order
for the EPC for refinery project in the Middle East. Our subsidiary in Singapore signed an Enterprise Framework
Agreement for downstream projects within Asia and started the related study works. EPC works are progressing
favorably, including a heavy oil cracking unit in Saudi Arabia and petrochemical plant in Singapore, and EPsCm
(Engineering, Procurement support and Construction management) services for heavy crude oil upgrading
facilities in Venezuela and for a petroleum refinery in Singapore are progressing as well.
In Japan, we continued to perform the EPC work for a TransAlkylation Unit, the diagnosis of existing
facilities, maintenance and upgrading works, studies and construction works aimed at improving the
competitiveness of and energy saving in the facilities.
Industrial Machinery/Environment/ Chemicals and Other Fields
As part of the Mid-Term Business Plan to expand our business fields, we are developing our business activities
to include receiving orders and executing works for overseas and domestic non-hydrocarbon projects. EPC
works for polycrystalline silicon plants in Malaysia, the product used for photovoltaic cells, and EPC work for a
nickel refinery in the Philippines were executed smoothly. We have been reinforcing our efforts and developing
our sales activities to meet the needs of Japanese companies expanding their operations into Southeast Asia.
We have invested in an Italian company that is the only manufacturer of the solar collector tubes used
in the Molten Salt Parabolic Trough-Concentrating Solar Power (MSPT-CSP) system, and are accelerating our
efforts in demonstrating the technology and developing the business by building a demonstration plant in
Italy. Additionally, we are expecting several EPC contracts in the CSP system.
In an effort to expand our recycled water-related business into the Middle East, related works for a
demonstration project on an energy-saving water recycling system in Saudi Arabia were entrusted to a
member of our group. In addition, we are strengthening our position in the social infrastructure field and, in
collaboration with a capital alliance partner, aim to introduce airport and railway projects into our portfolio.
In Japan, we won a number of EPC works for large-scale photovoltaic power generation systems and are
executing and expanding our sales activities by enhancing our group operation in this field. We are also active
in the pharmaceutical field, having completed the construction of pharmaceutical bio-formulation plant, and
have executed EPC works for several facilities such as anti-cancer drugs, bulk vaccine and newly awarded In
Vitro Diagnostics. We are developing hydrogen-related technology and demonstrating the effectiveness of
our own catalyst at our demonstration plant. Once proven, the transportation and storage of large volumes of
hydrogen can be achieved safely and economically, which will pioneer the way to achieve a hydrogen-based
society.
Outlook for the Next Fiscal Year
Chiyoda will continue to accelerate its sales activities in order to win contracts in areas where Chiyoda can best leverage its
technological advantages. We will also continue to work diligently on the execution of existing overseas and domestic projects
including the large projects in Papua New Guinea and Australia.
In consideration of these circumstances, and assuming an exchange rate of ¥90/US$, our forecasts for the fiscal year
ending March 31, 2014 include 600.0 billion yen in consolidated new orders and 470.0 billion yen in revenues. Our
forecast for the consolidated operating income is 24.0 billion yen, consolidated ordinary income is 26.0 billion yen,
and the consolidated net income is 16.0 billion yen.
4
CHIYODA CORPORATION ANNUAL REPORT FY2012
CHIYODA CORPORATION ANNUAL REPORT FY2012
5
The Medium-Term Management Plan
“Seize the moment, Open up new frontiers”
The results of the previous Medium-Term Management Plan “Engineering Excellence, Value Creation 2012” were
comprehensively reviewed and, in consideration of such, The Medium-Term Management Plan (The MT-Plan) was
established with the slogan “Seize the moment, Open up new frontiers” with the objective of pursuing further growth of
the Chiyoda Group for the period covering Fiscal Years 2013 – 2016.
In order to establish The MT-Plan, the trend of influences and changes occurring in the external environment were
first analyzed. We then set the direction in which we would like to see the Group develop.
(1) Changes and trends of the external environment
The analysis of the changes occurring and trend of influences in the external environment showed that:
World energy demand is projected to further increase and changes are occurring in the structure of energy demand (shift to gas and renewable energy).
The developments in shale oil exploration have brought about a revitalization of the US market. Competition between contractors is escalating, including
those from Europe, the US and, particularly, Korea. Chiyoda Group envisages that the number of projects being developed in harsh areas of the world, such as
in severely cold climates and in deep seas will increase. Chiyoda has also observed that developing countries are emerging, national oil companies (NOC) are
growing presence, and Japanese companies are accelerating expansion of overseas business.
(2) Chiyoda Group 10 years on
The MT-Plan has been developed by 1) establishing a vision of how we want the Chiyoda Group to be “10 years on”, and 2) establishing what Chiyoda needs to
do in the first 4 years for that vision to become a reality.
This led us to consider the future direction we need to take in order to expand our business based on three axes, 1) Operation, 2) Business Model and 3)
Business Field/Area.
Direction of evolution
・Operation by Japanese nationals in Japan
Operation
Operation
local consumption
・Operation to execute medium and small size project on the basis of local production for
・Division of work on a worldwide basis by strategic regional operation centers
Current
Business
Domain
Growth of business through 3 axes of operation,
business and business field / area
Further evolution aimed at Chiyoda Group 10 years on
Business
Business
Model
Model
Business
Business
Field / Area
Field / Area
・Pillar of existing business: Gas value chain projects (from LNG to receiving
terminals), hydrocarbon downstream and non-hydrocarbon projects
・EPC (LSTK ＋ CR)
・Promotion of monetization of technology
&
・Offshore ・upstream
&
・Energy infrastructure, social infrastructure
&
・Expansion of business area (Australia, North America, East Africa)
・Investment based on Project Management know-how and technology
1) Axis: Operation
Chiyoda will pursue a “group style” operation for execution of regional medium / small size projects. We will establish several offices as Chiyoda Regional
Headquarters (CRH), the main overseas bases of operation, as well as setting up subsidiary offices operating under CRH, to encourage sharing the work among
Chiyoda Group companies on a worldwide basis.
2) Axis: Business Model
This axis designates the style of business that the Chiyoda Group should pursue. It is important that we secure a new sources of revenue from providing
professional services on a reimbursable basis, developing and licensing our advanced technology, etc, as well as continuing with our core business of
undertaking lump sum turnkey / engineering, procurement and construction (LSTK/EPC) contracts. We will, in addition, look to invest in the fields related to
Chiyoda’s core business and strongholds.
3) Axis: Business Field/Area
Chiyoda Group has long specialized in EPC contracts for onshore hydrocarbon projects. We will seek to expand our business under this axis into offshore and
upstream projects (related to exploration and treatment of oil and gas fields). Chiyoda Group perceives that energy / social infrastructure will provide new
sources of profit and will also allow us to further explore business opportunities in our existing main market of Asia / the Middle East / Oceania as well as in
Continental North America and Africa.
(3) Key Strategies under The MT-Plan
Chiyoda has established 5 key growth strategies and 5 key operating foundation strategies as the key strategies under The MT-Plan for Fiscal Years 2013 – 2016.
Growth Strategies
The growth strategies aim to improve the base level of profit by expanding the business to take account of any prevailing external environmental trends (a
shift to gas and a following wind of increasing demand for LNG) considered to be favorable for Chiyoda business based on:
• expansion of Chiyoda group core business in the fields of gas and LNG projects,
• expansion of business into offshore and upstream projects,
• increase in the number of domestic and overseas small/medium size projects to be undertaken,
• energy/social infrastructure
The main points of growth strategies are:
1 Strengthening of core business
• Pursuit of LNG project business opportunities to the maximum extent possible
• Challenges for unconventional projects (FLNG, projects in cold / deep sea area & under
harsh environment)
2
3
4
Expansion into new business fields, establishing new
business models and new sources of revenue
• Expansion of business field to offshore / upstream
• Expansion of business fields to new energy and renewable energies
Upgrading of services to address clients’ need for
commercialization
• Assistance to Japanese companies in their overseas expansion of business
• Acceleration in establishing professional service business and provision of front-end
services to international oil companies (IOC) at overseas bases adjacent IOC offices
Use of the economic vigor of emerging countries for the
growth of the Chiyoda Group
• Execution of medium and small size local projects
• Shift to EPC project execution based on consolidated global operation
5 Acceleration of investment
• Acceleration of investment in the fields related to Chiyoda's core business and
strongholds
Operating Foundation Strategy
Consolidation of Chiyoda’s “base” (global infrastructure) and ”resources” (secure, develop and reinforce the pool of human resources) will be continued as the
operating foundation for growth strategy. The main points the of operation foundation strategy are:
6
7
8
9
Strengthening of competitiveness and execution
capability
• Improve competitiveness against competitors and continue to improve execution
capability
Establishment and operation of data management
infrastructure
• Enhance utilization of data management (ERP) for efficient management and control of
operation / Establish global platform for operation
Promotion of consolidated operation base and global
operation
• Establish framework of global human resource management for utilization of global
resource
Securing / development of human resources,
optimization of allocation, and creation of a lively and
energetic working environment
• Establish framework for human resource development / increase and exchange of project
key personnel within the group companies
• Evolve into a company with a lively and energetic working environment regardless of
nationality, sex, age and so on
10
Strengthening of safety and risk management /
establishment of culture prioritizing the health of
employees
• Proactively strengthen the risk management framework to respond to changes in the
external environment and the times
• Promote culture prioritizing the safety and health of employees
(4) Quantitative Target (Profit Plan)
With the key measures in place, based on the key strategies, Chiyoda will be able to pursue diversification of its source of profit for stable growth. The target
management index is set at a consolidated net income of J. Yen 30 billion.
(5) Capital Plan / Investment Strategy
Chiyoda will provide a stable capital plan based on business performance. A high return of equity (ROE) of over 12% will be sought and a dividend ratio
of over 30% will be set.
In order to sustain further growth of the Chiyoda Group, the company will invest in areas that will contribute to Chiyoda’s growth, areas to consolidate
the operating foundation and areas to expand and stabilize profit.
In order to continue Chiyoda’s sustainable development, we plan to budget J. Yen 80 billion for our investment strategy. Such capital will be
distributed and invested prudently, flexibly and efficiently in accordance with the actual progress of The MT-Plan and changes in the business environment.
(6) Personnel Plan
The MT-Plan envisages that the Chiyoda group will have approximately 10,000 personnel in the expanded domestic and overseas operation base as of Fiscal
Year 2016.
With the centre of gravity of part of the work shifting from CGH to the group companies, and with the progress of sharing the work among group companies
in Japan and abroad, enhancement of the capability of the personnel at CGH will also be required.
6
CHIYODA CORPORATION ANNUAL REPORT FY2012
CHIYODA CORPORATION ANNUAL REPORT FY2012
7
Topics
Group Companies Awarded Long Term Contracts
SPERA* Hydrogen
EFA with Shell (Chiyoda Singapore)
SPERA Hydrogen is easy to use
* SPERA derives from the Latin for “hope”.
Chiyoda Singapore (Pte) Limited* signed an Enterprise Framework Agreement (EFA) with
Shell for Onshore Engineering and Project Management Services-Downstream covering
downstream projects within Asia. Under this EFA, Chiyoda Singapore will provide
a full range of services for Front End Engineering Design (FEED) and Engineering,
Procurement, and Construction Management (EPCm) by utilizing Chiyoda Group’s
regional capacity located in each country. Chiyoda Group places great importance on
the continuation of its valuable relationship with Shell.
* Chiyoda Singapore (Pte) Limited was established in 1971 and is a 100% subsidiary company of Chiyoda Corporation
Dr. Geok Yong, Vice President of Shell
Project & Technology with CSL’s President
Morita at the signing ceremony
Long Term Engineering Services Contracts in Qatar (Chiyoda Almana)
Chiyoda Almana Engineering LLC (“Chiyoda Almana”)*1 was awarded long term engineering services contracts by the
three companies; Qatar Chemical Company Limited (“Q-Chem”), Qatar Chemical Company II Limited (“Q-Chem II”) and
Ras Laffan Olefins Company Limited (“RLOC“).
Chiyoda and Chiyoda Almana are aiming to contribute further to Qatari sustainable development through the
engineering services of these contracts and through those contracts awarded previously. Chiyoda group intends
to expand its “Project Life Cycle Engineering”*2 services to other countries in the Middle East, and elsewhere, while
strengthening its regional business development through its global operation network.
*1: Chiyoda Almana was established by Chiyoda in March, 2008, in collaboration with a local company (Al-Mana Group), as a local company providing full engineering services in Qatar.
*2: A business model, involving both Chiyoda and the client, to provide feasibility studies, front-end engineering design (FEED), detailed engineering, procurement and construction (EPC),
operation, maintenance, expansion, modification, upgrading and revamping throughout the lifecycle of a project.
Signing Ceremony for Refinery and
Petrochemical Complex in Vietnam
On 27 January 2013, the signing ceremony for the Nghi Son Refinery and Petrochemical Complex took place in the Thanh
Hoa Province in Vietnam.
Almost 800 people attended the magnificent ceremony including Vietnamese Prime Minister Nguyen Tan Dung,
the Japanese Ambassador to Vietnam, Yasuaki Tanizaki, and representatives of Nghi Son Refinery and Petrochemical LLC
and investors from Idemitsu Kosan Co., Ltd., Kuwait Petroleum International, Vietnam Oil and Gas Corporation and Mitsui
Chemicas,Inc. A number of senior managements of the contractors forming a joint venture also joined the ceremony
including our then President Takashi Kubota as well as local entities concerned.
This project is a grassroots oil refinery and petrochemical complex, which will be the second refinery in Vietnam
and will have a daily processing capacity of 200,000 barrels of crude oil (atmospheric distillation basis). The completion is
scheduled for the second half of 2016.
Once considered a distant dream, hydrogen, as a source of conventional energy, has
become a reality, and Chiyoda Corporation has made it remarkably easy to use. Our
innovative technologies enable hydrogen, the lightest of gases and difficult to store
or transport under normal conditions, to be liquefied and consequently transported
at ambient temperature and pressure. We named this liquid “SPERA Hydrogen.”
Almost unthinkable before, this “hydrogen of hope” is highly safe and stable, is able
to survive transportation over long distances and can be stored over long periods of
time. It will overturn the conventional wisdom regarding hydrogen.
Two technologies have made SPERA Hydrogen possible
1. Hydrogenation
By applying Organic Chemical Hydride (OCH) Technology, the
hydrogen is fixed to toluene, a major component of gasoline, and
produces a liquid called methylcyclohexane (MCH), which is easy
to handle at ambient temperature and pressure. This is SPERA
Hydrogen. Our technology facilitates storage of hydrogen in large quantities and transportation over long distances in
a safe and stable manner, and at a low cost, because it eliminates the need for hydrogen to be liquefied at cryogenic
temperatures or pressurized in cylinders.
2. Dehydrogenation
The extraction of hydrogen from methylcyclohexane (MCH)
had, for some time, been considered impossible. However, in
2004 Chiyoda Corporation succeeded in developing the world’s
first dehydrogenation catalyst through the use of platinum
nanoparticles. We named this catalyst “SPERA Catalyst”. SPERA Catalyst not only makes it possible to easily extract
hydrogen from SPERA Hydrogen (MCH), but it has a long lifespan and can be mass produced.
Demonstration plant verifies “Large-Scale Hydrogen Storage and Transportation System”
In March 2013, Chiyoda completed a demonstration plant at its Koyasu
Office and Research Park to verify its “Large-Scale Hydrogen Storage and
Transportation System” and, thereafter, successfully achieved its expected
performance including 1) hydrogenation to fix hydrogen to toluene
producing SPERA Hydrogen, 2) storage and transportation of SPERA
Hydrogen, and 3) dehydrogenation to
extract hydrogen from SPERA Hydrogen
by using SPERA Catalyst. This system can
utilize existing infrastructures, including
Demonstration plant
oil tanks and tankers for storage and transportation, and proves that it is possible to
supply and deliver hydrogen on a commercial basis.
8
CHIYODA CORPORATION ANNUAL REPORT FY2012
CHIYODA CORPORATION ANNUAL REPORT FY2012
9
Topics
Challenge to Continue in Our LNG Business
Chiyoda and CCC Establish Joint Venture Company
In December 2012, CC JV, a joint venture comprising of Chiyoda and CB&I, was awarded a contract by Anadarko
In March 2013 Chiyoda Corporation and Consolidated Contractors
Moçambique Area 1, Limitada, for the Front End Engineering and Design (FEED) for an onshore natural gas liquefaction
Company (CCC, Head Office: Athens, Greece) established a joint
facility project in the Republic of Mozambique. Additionally, PT Chiyoda International Indonesia was awarded a FEED
venture company in Singapore, “Chiyoda-CCC Engineering (PTE.)
contract in January 2013 for Abadi Floating LNG (FLNG) Project in collaboration with PT Saipem Indonesia (Leader), PT
Limited (CCEL), having its regional headquarters in Abu Dhabi, United
Tripatra Engineers & Constructors , PT Tripatra Engineering and PT Rekayasa Industri. The Clients are INPEX Masela, Ltd.
Arab Emirates.
(Operator: 60%),Shell Upstream Overseas Services (I) Limited (30%) and PT EMP Energi Indonesia (10%).
The inauguration ceremony was held with about 200 people in
Such achievements reflect the high regard in which we are held based on our peerless technological capabilities
attendance, including our then President Kubota and representatives
accumulated through successful completion of large-scale LNG plants, which has enabled problem-free operation in
of CCC.
Qatar in the Middle East, and our first tier project management capabilities now being showcased at LNG plants under
The purpose of this establishment is to operate an engineering
construction in Papua New Guinea and Australia. We will continue to seek new frontiers, address the challenges of
company targeting certain hydrocarbon processing industries within
satisfying customers and meeting the needs of the times, regardless of location or technology.
the Middle East. Taking advantage of regional presence and resources,
CCEL will provide total project lifecycle services in energy, oil, gas,
Mr. Madoka Koda, President of CCEL at the inauguration ceremony
petrochemicals and utilities sectors.
“JAPAN-GTL Process” won the Japan Institute of Energy Award 2012
Chiyoda Licenses its Own Process Technology on Acetic Acid
Seven companies won the Japan Institute of Energy Award 2012 in Technical
Division for the establishment of a JAPAN-GTL (Gas to Liquids) Process. The seven
companies include Japan Oil, Gas and Metals National Corporation (JOGMEC),
INPEX CORPORATION, COSMO OIL CO., LTD, Japan Petroleum Exploration Co., Ltd, JX
Nippon Oil & Energy Corporation, NIPPON STEEL & SUMIKIN ENGINEERING CO., LTD
and Chiyoda Corporation.
Gas-To-Liquids (GTL) is a technology that uses natural gas as the raw material
and produces petroleum products such as naphtha, diesel oil and kerosene through
chemical reactions. JAPAN-GTL features the utilization of carbon dioxide as raw
material, which is a groundbreaking technology that would for the first time ever
allow for natural gas containing carbon dioxide to be used directly for conversion.
JAPAN-GTL Process
The winning companies of JAPAN-GTL joint
research receive their award
Natural Gas
CH4-CO2
+
Steam
Syngas
Production
Syngas
H2
CO
Main process facilities:
FT
Synthesis*
FT
Products
Upgrading
(Hydrotreating)
Petroleum
Products
Naphtha
Kerosens
Gas Oil
Chiyoda Corporation was awarded a Licensing and Engineering contract for the use of its technology, the Acetica®
process, to produce acetic acid.
This technology was sub-licensed for a gas-to-chemicals complex in Linhares, Espirito Santo State, southeast Brazil,
called Complexo Gás-Químico UFN-IV*.
Chiyoda developed the Acetica® process, a methanol-carbonylation process that use methanol and carbon
monoxide as feedstock, which employs a heterogeneous catalyst for the
efficient production of acetic acid.
The process has tangible advantages including
1) an easy-to-handle catalyst
2) limited loss of precious rhodium
3) efficient reactor
4) low content of by-products
5) relatively low corrosiveness and less utility consumption effected by the
use of a loop-typed bubbling reactor system.
Chiyoda aims to license its own technology and provide associated
engineering services which will contribute to the growing needs for
Linhares,
Estado do Espírito Santo
Syngas Producing Section FT (Fischer-Tropsch) Synthesis Section Upgrading (hydrotreating) Section
* This complex is planned to produce ammonia and urea fertilizers, methanol, acetic acid, formic acid and
melamine.
Through series of demonstration tests, the seven companies established the Japan-GTL Process as a technology
applicable to commercial plants. The seven companies will further continue studies of the Japan-GTL process for future
commercialization.
10
CHIYODA CORPORATION ANNUAL REPORT FY2012
CHIYODA CORPORATION ANNUAL REPORT FY2012
11
*FT Synthesis : Fischer- Tropsch Synthesis
materialization or expansion to produce acetic acid.
Corporate Governance
The Chiyoda Group recognizes that its management needs to focus on corporate social responsibility that inspires the
support and trust of shareholders, customers, employees, and other stakeholders. We believe that this is a foundation of
our corporate activities. As such, we continue working toward sustainable long-term qualitative growth, improving our
management basics, and ensuring management soundness and transparency. We have identified improved corporate
governance and a stronger internal controls structure as important issues for our company and we strive to further
enhance these areas.
Corporate Governance System
Overview and Rationale for Adoption of Corporate Governance System
The Chiyoda Group operates under an executive officer system and its efficiency in executing its business is based on the
establishment of a corporate auditor system. The Board of Directors has adopted this system of performing management
supervisory functions with the participation of one external director and three outside audit & supervisory board members,
which ensures that there is oversight from an objective and neutral standpoint.
The Board of Directors
The Board of Directors meets once a month. The Board is made up of nine directors, one of whom is an external director, and
three audit & supervisory board members, all of whom are outside audit & supervisory board members. The Board of Directors
decides on important business matters and oversees the execution of business operations. Appropriate decisions are made
and management oversight is conducted under the objective views of the external director and outside audit & supervisory
board members. In addition, an Executive Officer Meeting is held once a month, with Board members present, and its business
reports are presented at the monthly Board Meeting, thereby fulfilling its reporting function. The Company efficiently executes
business operations under an executive officer system.
The Executive Committee
The Company has established an Executive Committee as a decision-making body on matters concerning the execution of
business operations. The Executive Committee, composed of representative directors excluding the Chairman, makes prompt
decisions concerning the execution of business operations as stipulated by the Board of Directors’ resolutions. It also conducts
preliminary deliberations regarding matters to be brought before the Board of Directors for resolution.
Auditing by Audit & Supervisory Board Members
The Company has three audit & supervisory board members, all of whom are outside audit & supervisory board members;
two of the audit & supervisory members serve on a full-time basis. They are responsible for auditing the state of execution of
director duties. Two of the outside audit & supervisory board members are independent auditors and the other is exceptionally
well-versed in finance and accounting.
Status of Internal Controls System
The Company has structured and is operating a system of internal controls, in line with the unique nature and characteristics
of our business, which optimizes operational effectiveness and efficiency, financial reporting reliability, legal compliance, and
asset preservation.
The Company has established an Internal Controls Management Committee (ICMC) to improve our systems of internal
controls. The Director of the Risk Management & CSR Division chairs the committee and the heads of departments related to
internal controls serve as committee members.
The ICMC receives referrals from the Executive Committee to exchange information and coordinate with each
department to determine whether operations are being appropriately and efficiently carried out under an adequate system of
internal controls. At the end of the fiscal period, or as and when deemed necessary, the ICMC will offer advice to the Executive
Committee on improvements in internal controls .
The Executive Committee takes the advice received from the ICMC under consideration and submits proposed internal
controls improvements, if any, to the Board of Directors for decision.
Corporate Governance and Internal Controls
Election
Submit/Report
Report
Election
Report
Election
General Shareholders’ Meeting
Directors
Board of Directors
Election
Supervision
Election
Submit/Report
Executive Officers
Executive Officer Meeting
4 Representative Directors
Executive Committee
Scheduled Reports
(deliverables, etc.)
Organization Staffing
Submit/Report
Audit
Audit Referral
(advice)
Report
Survey, Report Request
Internal Controls Management Committee(ICMC)
Risk Management & CSR Division
Operational Auditing Unit
Department Internal Controls
Corporate Auditors
Audit & Supervisory Board
Report
Accounting
Auditor
Group
Companies
Business Execution Departments
(Risk Manager)
Self-Assessment
Global Operation Unit
Corporate Planning Unit
Corporate Services Unit, HRM* Unit
Finance & Project Audit Unit
*HRM: Human Resource Management
SQE Unit
CSR Unit
Crisis Management Unit
c
o
n
t
r
o
l
f
u
n
c
t
i
o
n
s
)
(
d
e
p
a
r
t
m
e
n
t
s
w
i
t
h
i
n
t
e
r
n
a
l
Financial
Audit
External Directors and Outside Corporate Auditors
External Directors and Outside Audit & Supervisory Board Members
The Company employs one external director and three outside audit & supervisory board members. The names of external
director and outside audit & supervisory board members, and the Company’s rationale for selecting them (including the
rationale for designation as independent directors of Hiroshi Ida and Yukihiro Imadegawa, both of whom are on file with the
Tokyo Stock Exchange as independent directors) are as follows.
Name
Masaji Santo
Hiroshi Ida
Munehiko Nakano
Yukihiro Imadegawa
Rationale for Election as External Director and Outside Audit & Supervisory Board Member
The individual is able to suitably perform his duties as an external director by putting to use his experience as the former President
of Mitsubishi Chile Ltda. and as a Senior Vice President of Mitsubishi Corporation.
The individual is able to contribute to the sound management of the Company through neutral and objective audits based on his
experience as a former executive officer with Mitsubishi UFJ Trust and Banking Corporation.
The individual is not involved in any matters that conflict with the interests of general Company shareholders, and is recognized as
an outside audit & supervisory board member having no conflict of interest with general Company shareholders.
The individual is able to contribute to the sound management of the Company through neutral and objective audits based on his
experience as a former corporate auditor with Lawson, Inc. and a finance and accounting executive with Mitsubishi Corporation
The individual is able to contribute to the sound management of the Company through neutral and objective audits based on his
expertise in corporate law as an attorney.
The individual is not involved in any matters that conflict with the interests of general Company shareholders, and is recognized as
an outside audit & supervisory board member having no conflict of interest with general Company shareholder.
There are no particular relationships of interest between Company and the external director and outside audit &
supervisory board members.
Rationale for Adoption of Current System
Based on its establishment of a corporate auditor system, the Chiyoda Group efficiently executes business operations under
an executive officer system. The Board of Directors has adopted an existing system of corporate governance that is capable of
sufficiently performing management supervisory functions from an objective and neutral standpoint with the participation of
one external director and three outside audit & supervisory board members.
Director Compensation, Etc
Total Compensation for Each Director Category;
Total Compensation by Director Type, and Number of Directors in Question
Number
Base
Compensation
Incentive
Compensation
Stock-Based
Compensation
Directors
Audit & Supervisory
Board Members
10
5
¥192million
¥79million
¥52million
¥ 61million
-
-
Notes:
1. Total director compensation is ¥325 million. Total audit &
supervisory board member compensation is ¥61 million.
Total outside audit & supervisory board member (four
individuals) compensation is ¥55 million.
2. The number of directors above discloses the number of
directors and audit & supervisory board members receiving
compensation during the fiscal period, including two
directors and two audit & supervisory board members who
retired as of the General Shareholders’ Meeting held on June
26, 2012.
12
CHIYODA CORPORATION ANNUAL REPORT FY2012
CHIYODA CORPORATION ANNUAL REPORT FY2012
13
Corporate Information (As of March 31, 2013)
Corporate Data
Chiyoda Global Headquarters
Minatomirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku, Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
Established
January 20, 1948
Paid-in Capital
¥ 43,396 million
Organization Chart
(As of July 1, 2013)
Number of Employees
1,519 (Non-Consolidated)
4,915 (Consolidated)
Annual Fiscal Close
March 31
Shareholders’ Meeting
June
Board of Directors
Audit & Supervisory Board
Executive Committee
President
Executive Office Unit
Corporate-service Review Team
Risk Management & CSR Division
Global Project Management Division
Offshore & Upstream Project Operations
SQE Unit
CSR Unit
Operational Auditing Unit
Crisis Management Unit
Project Administration Unit
Project Management Unit
IT Management Unit
Global Operation Unit
Global Human Resource Planning Unit
BPM* Team
Work Process Innovation Task Team
Global Operation Platform Task Team
Chiyoda Globalization Task Force Team
change the Mindset
Business Planning Unit
Business Operation Unit
Gas & LNG Project Operations
International Gas & LNG Project Unit
Strategic Project Development Unit
Project Team
Corporate Planning management & Finance Division
Technology & Engineering Division
Downstream & Non Hydrocarbon Project Operations
Corporate Planning Unit
IR & Public Relations Sec.
Corporate Services Unit
HRM* Unit
Finance & Project Audit Unit
Legal Sec.
Investment Promotion Team
Engineering Operation Unit
Gas & LNG Process Engineering Unit
Refinery, Petrochemical & New Energy
Process Engineering Unit
Integrity Management Unit
Mechanical Engineering Unit
Control System Engineering Unit
Electrical System & Smart Grid
Engineering Unit
Piping Engineering Unit
Civil Engineering Unit
Oil & Petrochemical Project Unit
Gas & Storage Project Unit
International Downstream &
Non-hydrocarbon Project Unit
Project Team
Infrastructure Project Operations
IP* Planning & Administration Unit
Strategic Business & Investment
Management Unit
Green Infrastructure Project Unit
Green Materials Project Unit
Pharmaceutical & Environmental
Project Unit
Technology Development Unit
Research & Development Center
Global Network
Chiyoda’s global network enables Project Lifecycle Engineering to be offered all over the world. Chiyoda has expanded
its network in order to provide prompt support for customers’ business activities on a global scale. Our services cover
the entire life cycles of projects – from planning, engineering, procurement and construction through to operation and
maintenance. With a view to meeting the ever-changing needs of our customers, we offer services by utilizing local
offices and group companies with thorough knowledge of the latest local and global circumstances in countries around
the world.
Chiyoda's Global Network
Sales Base
Engineering Center
Procurement Center
Project Execution Base
Milan Representative Office
Chiyoda Corporation Netherlands B.V.
Chiyoda & Public Works Co., Ltd.
Beijing Office
Chiyoda International Corporation
Chiyoda Corporation (Shanghai)
Korea Representative Office
The Netherlands
Italy
Saudi Arabia
Qatar
UAE
India
China
Myanmar
Thailand
Malaysia
Korea
Japan
USA
Philippines
Chiyoda Philippines Corporation
Singapore
Indonesia
Australia
Chiyoda Oceania Pty Limited
Brazil
Jakarta Office
PT. Chiyoda International Indonesia
Singapore Human Resources Office
Chiyoda Singapore (Pte) Limited
Chiyoda Malaysia Sdn. Bhd.
Chiyoda Sarawak Sdn. Bhd.
Chiyoda (Thailand) Limited
Chiyoda do Brasil Representações Ltda.
Business Development Division
Project Logistics & Construction Division
ChAS Project Operations
Strategic Business Planning &
Administration Unit
Corporate Relations Sec.
Business Development Unit 1
Business Development Unit 2
Business Development Unit 3
PLC* Planning & Administration Unit
Procurement &
Logistics Management Unit
Construction Unit
Commissioning Unit
Engineering Solution Unit
Project Lifecycle Engineering Unit
Program Management Consulting Unit
Space Solution Unit
ChAS Business Strategy Unit
HRM: Human Resource Management BPM: Business Process Management PLC: Project Logistics & Construction IP: Infrastructure Project
L&T-Chiyoda Limited
Bangalore Office
Abu Dhabi Office
Chiyoda-CCC Engineering (Pte) Limited
Middle East Headquarters Doha Office
Chiyoda Almana Engineering LLC
Chiyoda Petrostar Ltd.
14
CHIYODA CORPORATION ANNUAL REPORT FY2012
CHIYODA CORPORATION ANNUAL REPORT FY2012
15
Directors and Officers (As of July 1, 2013)
Board of Directors
Representative Directors
Directors
Executive Chairman
Takashi Kubota*1
Executive Vice President
Katsuo Nagasaka*1
President & CEO
Shogo Shibuya*1
Senior Vice President
Ryosuke Shimizu
Senior Executive Vice
President
Senior Executive Vice
President
Executive Vice
President & CFO
Keiichi Nakagaki*1
Senior Vice President
Masahiko Kojima*1
Hiroshi Ogawa*1
Director
Masaji Santo*1/*2
Masahito Kawashima
Audit & Supervisory Board Members
Hiroshi Ida*3
Munehiko Nakano*3
Yukihiro Imadegawa*3
Executive Officers
Executive Vice
President
Satoru Yokoi
Vice President
Eisuke Oki*1
Senior Vice President
Tadashi Izawa*1
Vice President
Masao Ishikawa*1
Senior Vice President
Katsutoshi Kimura
Vice President
Toshiyuki Kariya*1
Senior Vice President
Kenjiro Miura
Vice President
Yasumitsu Abe*1
Senior Vice President
Mamoru Nakano*1
Vice President
Nobuyuki Uchida
Senior Vice President
Takao Kamiji
Vice President
Yasuo Hosono*1
Senior Vice President
Hiromi Koshizuka
Vice President
Mitsuya Ogawa
Senior Vice President
Sumio Nakashima
Vice President
Seiichiro Ikeda
Senior Vice President
Koichi Shirakawa
Vice President
Akira Fujisawa*1
Vice President
Noriyuki Kasuya
*1 : New Assignments
*2 : External
*3 : Outside Corporate Auditor
16
CHIYODA CORPORATION ANNUAL REPORT FY2012
Stock Information
Authorized Shares
570,000,000
Number of Shareholders
14,503
Capital Stock Issued
260,324,529
Number of Share per Unit
1,000
Stock Code
ISIN:
SEDOL1: 6191704 JP
TSE:
6366
JP3528600004
Transfer Agent of Common Stock
Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi, Chiyoda-ku, Tokyo
Major Shareholders (as of March 31,2013)
Number of
Shares Owned
(Thousands of Shares)
Mitsubishi Corporation
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Mitsubishi UFJ Trust and Banking Corporation
Bank of New York GCM Client Account JPRD ISG (FE-AC)
State Street Bank and Trust Company
State Street Bank and Trust Company 505225
Tokio Marine & Nichido Fire Insurance Co., Ltd.
Mellon Bank N.A. as Agent for its Client Mellon Omnibus US Pension
Breakdown by shareholder
86,931
11,777
9,250
9,033
7,496
3,153
2,883
2,806
2,759
2,319
Ratio
Shares Owned
(%)
33.39
4.52
3.55
3.47
2.87
1.21
1.10
1.07
1.06
0.89
Total Number of
Shares Issued:
260,325
thousand
11.63
22.63
23.58
4.06
38.10
Financial Institutions
Securities Companies
Other Corporations
Foreign Investors and Others
Individuals and Others
Monthly Stock Price Range on the Tokyo Stock Exchange
(Yen)
2,400
1,600
800
0
Share Price (left)
Volume (right)
Nikkei Stock Average (right)
(Yen)
45,000
30,000
15,000
(Thousands
of shares)
160,000
80,000
4 5 6 7 8 9 101112
2008
1 2 3
4 5 6 7 8 9 101112
1 2 3
4 5 6 7 8 9 101112
1 2 3
4 5 6 7 8 9 101112
1 2 3
4
5 6 7 8 9 101112
2009
2010
2011
2012
0
1 2 3
2013
CHIYODA CORPORATION ANNUAL REPORT FY2012
17
Minato Mirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
http://www.chiyoda-corp.com/en/
CORPORATE PHILOSOPHY
Enhance our business in aiming for harmony
between energy and the environment,
and contribute to the sustainable development of
a society as an integrated engineering company
through the use of our collective wisdom and
painstakingly developed technology.
(As of August 2013)
Selected in FTSE Group’s responsible
investment index
ANNUAL REPORT FY2012
For the year ended March 31, 2013
Minato Mirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
http://www.chiyoda-corp.com/en/
CORPORATE PHILOSOPHY
Enhance our business in aiming for harmony
between energy and the environment,
and contribute to the sustainable development of
a society as an integrated engineering company
through the use of our collective wisdom and
painstakingly developed technology.
(As of August 2013)
Selected in FTSE Group’s responsible
investment index
Consolidated Financial Statements
For the Year Ended March 31, 2013, and Independent Auditor's Report
Chiyoda Corporation and Consolidated Subsidiaries
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Balance Sheet
Consolidated Balance Sheet
March 31, 2013
Consolidated Balance Sheet
March 31, 2013
Millions of Yen
ASSETS
ASSETS
2013
CURRENT ASSETS:
CURRENT ASSETS:
Cash and cash equivalents (Note 13)
Cash and cash equivalents (Note 13)
Held-to-maturity securities—current (Notes 5 and 13)
Held-to-maturity securities—current (Notes 5 and 13)
Short-term investments (Note 13)
Short-term investments (Note 13)
Notes and accounts receivable—trade (Note 13)
Notes and accounts receivable—trade (Note 13)
Allowance for doubtful accounts
Allowance for doubtful accounts
Costs and estimated earnings on long-term construction
Costs and estimated earnings on long-term construction
¥ 180,229
2,400
226
37,917
(3 )
contracts (Notes 4 and 13)
contracts (Notes 4 and 13)
Costs of construction contracts in process
Accounts receivable—other
Costs of construction contracts in process
Accounts receivable—other
Jointly controlled assets of joint venture (Note 13)
Jointly controlled assets of joint venture (Note 13)
Deferred tax assets (Note 10)
Prepaid expenses and other
Deferred tax assets (Note 10)
Prepaid expenses and other
Total current assets
Total current assets
PROPERTY, PLANT, AND EQUIPMENT:
Land
Buildings and structures
Machinery and equipment
Tools, furniture, and fixtures
Construction in progress
PROPERTY, PLANT, AND EQUIPMENT:
Land
Buildings and structures
Machinery and equipment
Tools, furniture, and fixtures
Construction in progress
Total
Total
Accumulated depreciation
Accumulated depreciation
Thousands of
U.S. Dollars
Millions of Yen
(Note 1)
2013
2012
Thousands of
U.S. Dollars
(Note 1)
2013
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
Millions of Yen
2013
2012
2013
Thousands of
U.S. Dollars
(Note 1)
Millions of Yen
2013
2012
2012
2013
¥ 173,769
¥ 180,229
2,400
307
226
30,051
37,917
(6)
(3 )
$1,917,333
¥ 173,769
25,531
2,407
307
403,376
30,051
(36)
(6)
13,788
27,477
13,419
15,295
7,282
8,476
65,794
94,696
12,987
13,162
3,083
3,329
292,309
13,788
162,713
13,419
90,174
7,282
1,007,408
65,794
140,029
12,987
35,421
3,083
320,478
383,206
4,076,670
320,478
$1,917,333
25,531
2,407
403,376
(36)
292,309
162,713
90,174
1,007,408
140,029
35,421
4,076,670
27,477
15,295
8,476
94,696
13,162
3,329
383,206
5,375
11,711
1,124
5,450
494
24,156
(9,609 )
12,736
5,375
16,072
11,711
1,220
1,124
5,201
5,450
109
494
35,340
24,156
(16,339)
(9,609 )
57,191
12,736
124,594
16,072
11,960
1,220
57,983
5,201
5,258
109
256,987
35,340
(102,226)
(16,339)
57,191
124,594
11,960
57,983
5,258
256,987
(102,226)
CURRENT LIABILITIES:
CURRENT LIABILITIES:
Current portion of long-term debt (Notes 7, 12 and 13)
¥
Current portion of long-term debt (Notes 7, 12 and 13)
Notes and accounts payable—trade (Note 13)
Notes and accounts payable—trade (Note 13)
Advance receipts on construction contracts
Advance receipts on construction contracts
Income taxes payable (Note 13)
Income taxes payable (Note 13)
Deposits received
Deposits received
Allowance for warranty costs for completed works
Allowance for warranty costs for completed works
Allowance for losses on construction contracts
Allowance for losses on construction contracts
Asset retirement obligations
Asset retirement obligations
Accrued expenses and other
Accrued expenses and other
91
117,769
79,210
8,500
6,822
480
1,291
5
16,259
¥
¥ 10,006
86,211
76,533
1,162
6,179
289
568
165
12,572
91
$
117,769
79,210
8,500
6,822
480
1,291
5
16,259
¥ 10,006
977
86,211
1,252,863
76,533
842,660
1,162
90,429
6,179
72,583
289
5,113
568
13,739
54
165
12,572
172,976
Total current liabilities
Total current liabilities
230,431
193,687
230,431
2,451,398
193,687
NONCURRENT LIABILITIES:
NONCURRENT LIABILITIES:
Long-term debt (Notes 7, 12 and 13)
Liability for retirement benefits (Note 8)
Provision for treatment of PCB waste
Asset retirement obligations
Other liabilities (Note 10)
Long-term debt (Notes 7, 12 and 13)
Liability for retirement benefits (Note 8)
Provision for treatment of PCB waste
Asset retirement obligations
Other liabilities (Note 10)
10,135
2,310
364
957
1,822
204
2,486
123
59
496
10,135
2,310
364
957
1,822
107,819
24,584
3,882
10,190
19,392
204
2,486
123
59
496
107,819
24,584
3,882
10,190
19,392
Total noncurrent liabilities
Total noncurrent liabilities
15,591
3,369
15,591
165,869
3,369
165,869
(March 31, 2013)
Thousands of
U.S. Dollars
(Note 1)
2013
$
977
1,252,863
842,660
90,429
72,583
5,113
13,739
54
172,976
2,451,398
Net property, plant, and equipment
Net property, plant, and equipment
14,547
19,001
14,547
154,761
19,001
INVESTMENTS AND OTHER ASSETS:
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 5 and 13)
Investments in and advances to unconsolidated
subsidiaries and associated companies (Note 6)
Investment securities (Notes 5 and 13)
Investments in and advances to unconsolidated
subsidiaries and associated companies (Note 6)
Goodwill
Software
Other assets (Note 10)
Allowance for doubtful accounts
Goodwill
Software
Other assets (Note 10)
Allowance for doubtful accounts
23,740
15,527
23,740
252,558
15,527
5,164
675
5,987
2,138
(80 )
2,668
716
3,215
4,277
(88)
5,164
675
5,987
2,138
(80 )
54,936
7,182
63,700
22,745
(859)
2,668
716
3,215
4,277
(88)
Total investments and other assets
Total investments and other assets
37,624
26,316
37,624
400,263
26,316
TOTAL
TOTAL
¥ 435,379
See notes to consolidated financial statements.
See notes to consolidated financial statements.
¥ 365,795
¥ 435,379
$4,631,695
¥ 365,795
COMMITMENTS AND CONTINGENT LIABILITIES
COMMITMENTS AND CONTINGENT LIABILITIES
(Notes 7, 12, 14 and 15)
(Notes 7, 12, 14 and 15)
154,761
EQUITY (Notes 9 and 18):
EQUITY (Notes 9 and 18):
Common stock—authorized, 570,000 thousand shares;
issued, 260,324 thousand shares in 2013 and 2012
Common stock—authorized, 570,000 thousand shares;
issued, 260,324 thousand shares in 2013 and 2012
Preferred stock—authorized, 80,000 thousand shares in 2013 and 2012
Preferred stock—authorized, 80,000 thousand shares in 2013 and 2012
Capital surplus
Capital surplus
Retained earnings
Retained earnings
Treasury stock—at cost, 1,279 thousand shares in 2013 and
Treasury stock—at cost, 1,279 thousand shares in 2013 and
1,260 thousand shares in 2012
1,260 thousand shares in 2012
Accumulated other comprehensive income (loss):
Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale securities
Unrealized gain on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Foreign currency translation adjustments
37,112
100,988
43,396
(1,349)
252,558
54,936
7,182
63,700
22,745
(859)
400,263
Total
Total
Minority interests
Minority interests
Total equity
Total equity
$4,631,695
TOTAL
TOTAL
- 2 -
- 2 -
43,396
43,396
461,663
43,396
37,112
89,346
37,112
100,988
394,815
1,074,343
37,112
89,346
461,663
394,815
1,074,343
(1,328)
(1,349)
(14,358)
(1,328)
(14,358)
6,584
2,890
(1,235)
188,386
969
6,584
1,509
2,890
442
(1,235)
(2,358)
188,386
168,120
969
617
70,044
30,746
(13,140)
2,004,116
10,310
1,509
442
(2,358)
168,120
617
189,356
¥435,379
168,737
189,356
2,014,427
168,737
¥365,795
¥435,379
$4,631,695
¥365,795
70,044
30,746
(13,140)
2,004,116
10,310
2,014,427
$4,631,695
1
Consolidated Financial Statements
Consolidated Financial Statements
2
Consolidated Statement of Income
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Chiyoda Corporation and Consolidated Subsidiaries
(Year Ended March 31, 2013)
Millions of Yen
2013
2012
Thousands of
U.S. Dollars
(Note 1)
2013
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2013
(Year Ended March 31, 2013)
Millions of Yen
2013
2012
Thousands of
U.S. Dollars
(Note 1)
2013
¥398,918
¥ 254,675
$4,243,814
NET INCOME BEFORE MINORITY INTERESTS
¥16,391
¥ 14,515
$174,380
Consolidated Statement of Income
Year Ended March 31, 2013
REVENUE
COST OF REVENUE
Gross profit
42,515
38,891
452,293
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
(Note 11)
17,402
14,693
185,133
356,402
215,783
3,791,520
OTHER COMPREHENSIVE INCOME (LOSS) (Note 16):
Unrealized gain on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Share of other comprehensive income (loss) of
associates accounted for using the equity method
5,075
2,448
1,081
1,738
97
(361 )
53,991
26,042
11,508
85
(105 )
913
Operating income
25,113
24,197
267,160
Total other comprehensive income
8,690
1,368
92,456
COMPREHENSIVE INCOME
¥25,082
¥ 15,884
$266,836
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Minority interests
¥24,723
358
¥ 15,761
123
$263,020
3,815
See notes to consolidated financial statements.
OTHER INCOME (EXPENSES):
Interest and dividend income
Interest expense
Equity in earnings of associated companies
Foreign exchange loss
Gain on sales of fixed assets
Loss on disposal of fixed assets
Loss on valuation of investment securities
Other—net
2,321
(206)
145
(1,681)
1,704
(244)
(230)
(173)
1,230
(207 )
72
(1,243 )
(250 )
(255 )
24,694
(2,193)
1,545
(17,886)
18,131
(2,599)
(2,454)
(1,846)
Other income (expenses)—net
1,634
(654 )
17,390
INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS
26,747
23,543
284,551
INCOME TAXES (Note 10):
Current
Deferred
11,669
(1,313)
2,310
6,717
124,140
(13,969)
Total income taxes
10,356
9,027
110,170
NET INCOME BEFORE MINORITY INTERESTS
16,391
14,515
174,380
MINORITY INTERESTS IN NET INCOME
314
151
3,345
NET INCOME
Chiyoda Corporation and Consolidated Subsidiaries
¥ 16,077
¥ 14,364
$ 171,035
Consolidated Statement of Income
Year Ended March 31, 2013
Yen
2013
2012
U.S. Dollars
2013
PER SHARE OF COMMON STOCK (Notes 2.w and 17):
- 3 -
Basic net income
Cash dividends applicable to the year
¥62.06
19.00
¥ 55.44
17.00
(Continued)
$0.66
0.20
- 5 -
See notes to consolidated financial statements.
3
Consolidated Financial Statements
Consolidated Financial Statements
4
- 4 -
(Concluded)
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Changes in Equity
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2013
Consolidated Statement of Changes in Equity
Year Ended March 31, 2013
Thousands
Thousands
Millions of Yen
Millions of Yen
Outstanding
Number of
Shares of
Common
Stock
Outstanding
Number of
Shares of
Common
Stock
Capital
Surplus
Common
Stock
Common
Stock
Retained
Earnings
Capital
Surplus
Treasury
Stock
Accumulated Other
Comprehensive Income (Loss)
Deferred
Gain on
Derivatives
Treasury
under Hedge
Stock
Accounting
Unrealized
(Loss) Gain
Foreign
on Available-
Currency
for-Sale
Translation
Securities
Adjustments
Accumulated Other
Comprehensive Income (Loss)
Deferred
Gain on
Derivatives
under Hedge
Accounting
Total
Unrealized
(Loss) Gain
on Available-
for-Sale
Securities
Retained
Earnings
Foreign
Currency
Translation
Adjustments
Minority
Interests
(Year Ended March 31, 2013)
Total
Equity
Total
Minority
Interests
Total
Equity
BALANCE, APRIL 1, 2011
BALANCE, APRIL 1, 2011
259,102
¥ 43,396
259,102
¥ 37,112
¥ 43,396
¥ 77,832
¥ 37,112
¥(1,295)
¥ 77,832
¥ (229)
¥(1,295)
¥ 345
¥ (229)
¥ (1,919 )
¥ 345
¥ 155,242
¥ (1,919 )
¥516
¥ 155,242
¥155,758
¥516
¥155,758
Net income
Cash dividends, ¥11.00 per share
Purchase of treasury stock
Net change in the year
Net income
Cash dividends, ¥11.00 per share
Purchase of treasury stock
Net change in the year
(37 )
14,364
(2,850)
(37 )
(32)
14,364
(2,850)
1,738
(32)
97
1,738
(438 )
14,364
(2,850)
(32)
1,396
97
(438 )
100
14,364
14,364
(2,850)
(2,850)
(32)
(32)
1,396
1,497
BALANCE, MARCH 31, 2012
BALANCE, MARCH 31, 2012
259,065
43,396
259,065
37,112
43,396
89,346
37,112
(1,328)
89,346
1,509
(1,328)
442
1,509
(2,358 )
442
168,120
(2,358 )
617
168,120
168,737
Net income
Cash dividends, ¥17.00 per share
Change of scope of consolidation
Purchase of treasury stock
Net change in the year
Net income
Cash dividends, ¥17.00 per share
Change of scope of consolidation
Purchase of treasury stock
Net change in the year
(19 )
16,077
(4,404)
(31)
(19 )
(21)
16,077
(4,404)
(31)
5,075
(21)
2,448
5,075
1,123
16,077
(4,404)
(31)
(21)
8,646
2,448
1,123
351
16,077
16,077
(4,404)
(4,404)
(31)
(31)
(21)
(21)
8,646
8,998
14,364
(2,850)
(32)
1,497
168,737
16,077
(4,404)
(31)
(21)
8,998
100
617
351
BALANCE, MARCH 31, 2013
BALANCE, MARCH 31, 2013
259,045
¥ 43,396
259,045
¥ 37,112
¥ 43,396
¥100,988
¥ 37,112
¥(1,349)
¥100,988
¥6,584
¥(1,349)
¥2,890
¥6,584
¥ (1,235 )
¥2,890
¥ 188,386
¥ (1,235 )
¥969
¥ 188,386
¥189,356
¥969
¥189,356
Thousands of U.S. Dollars (Note 1)
Thousands of U.S. Dollars (Note 1)
Common
Stock
Capital
Surplus
Common
Stock
Retained
Earnings
Capital
Surplus
Treasury
Stock
Retained
Earnings
Accumulated Other
Comprehensive Income (Loss)
Deferred
Gain on
Derivatives
Treasury
under Hedge
Stock
Accounting
Accumulated Other
Comprehensive Income (Loss)
Deferred
Gain on
Derivatives
under Hedge
Accounting
Total
Unrealized
Gain on
Foreign
Available-
Currency
for-Sale
Translation
Securities
Adjustments
Unrealized
Gain on
Available-
for-Sale
Securities
Foreign
Currency
Translation
Adjustments
Minority
Interests
Total
Equity
Total
Minority
Interests
Total
Equity
BALANCE, MARCH 31, 2012
BALANCE, MARCH 31, 2012
$ 461,663
$ 394,815
$ 461,663
$ 950,499
$ 394,815
$(14,131)
$ 950,499
$16,053
$(14,131)
$ 4,703
$16,053
$ (25,091 )
$ 4,703
$1,788,513
$ (25,091 )
$ 6,569
$1,788,513
$1,795,083
$ 6,569
$1,795,083
Net income
Cash dividends, $0.18 per share
Change of scope of consolidation
Purchase of treasury stock
Net change in the year
Net income
Cash dividends, $0.18 per share
Change of scope of consolidation
Purchase of treasury stock
Net change in the year
171,035
(46,852)
(338)
171,035
(46,852)
(338)
53,991
(227)
(227)
26,042
53,991
11,951
171,035
(46,852)
(338)
(227)
91,985
26,042
11,951
3,741
171,035
(46,852)
(338)
(227)
91,985
171,035
(46,852)
(338)
(227)
95,726
3,741
171,035
(46,852)
(338)
(227)
95,726
BALANCE, MARCH 31, 2013
BALANCE, MARCH 31, 2013
$ 461,663
$ 394,815
$ 461,663
$1,074,343
$ 394,815
$(14,358)
$1,074,343
$70,044
$(14,358)
$30,746
$70,044
$ (13,140 )
$30,746
$2,004,116
$ (13,140 )
$10,310
$2,004,116
$2,014,427
$10,310
$2,014,427
See notes to consolidated financial statements.
See notes to consolidated financial statements.
- 6 -
- 6 -
5
Consolidated Financial Statements
Consolidated Financial Statements
6
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
Year Ended March 31, 2013
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2013
Millions of Yen
2012
2013
Thousands of
U.S. Dollars
(Note 1)
2013
OPERATING ACTIVITIES:
Income before income taxes and minority interests
¥26,747
¥ 23,543
$284,551
Adjustments for:
Income taxes paid
Depreciation and amortization
(Reversal of) allowance for doubtful accounts—net
Allowance for (reversal of) warranty costs for completed works
Allowance for (reversal of) loss on construction contracts
Liability for retirement benefits—net
Gain on sales and disposals of fixed assets
Foreign exchange (gain) loss—net
Equity in earnings of associated companies
Changes in operating assets and liabilities:
(Increase) decrease in trade notes and accounts receivable,
and costs and estimated earnings on long-term
construction contracts
Increase in costs of construction contracts in process
Increase (decrease) in trade notes and accounts payable
Increase in advance receipts on construction contracts
(Increase) decrease in accounts receivable—other
(Increase) decrease in jointly controlled assets of joint
venture
Increase in deposits received
Increase in interest and dividend receivable
Other—net
Total adjustments
(130 )
2,580
(11 )
187
723
(185 )
(1,460 )
(125 )
(145 )
(10,820 )
2,637
4
(894 )
(489 )
(320 )
22
(72 )
(1,389)
27,450
(118)
1,998
7,695
(1,968)
(15,532)
(1,334)
(1,545)
(20,453 )
(1,714 )
30,130
992
(3,170 )
11,946
(796 )
(11,102 )
14,236
3,678
(217,595)
(18,243)
320,537
10,561
(33,730)
(28,603 )
619
(674 )
8,840
(12,599 )
22,776
1,640
(544 )
169
32,071
(304,290)
6,589
(7,177)
94,051
(134,042)
Net cash provided by operating activities—
(Forward)
¥ 14,147
¥ 55,615
$ 150,509
(Year Ended March 31, 2013)
Millions of Yen
2013
2012
Thousands of
U.S. Dollars
(Note 1)
2013
Net cash provided by operating activities—(Forward)
¥ 14,147
¥ 55,615
$ 150,509
INVESTING ACTIVITIES:
Net decrease (increase) in time deposits
Purchases of marketable securities
Purchases of property, plant, and equipment
Proceeds from sales of property, plant, and equipment
Purchases of intangible assets
Payments for asset retirement obligations
Payments for purchases of investment securities
Purchases of investments in subsidiaries
Payments of short-term loans receivable
Proceeds from collections of short-term loans receivable
Payments of long-term loans receivable
Proceeds from collections of long-term loans
Other—net
127
(2,400)
(3,620)
7,020
(3,502)
(66)
(2,450)
81
(514)
35
32
(234 )
(1,618 )
1,725
(1,380 )
(7,561 )
(57 )
(85 )
71
1,354
(25,531)
(38,518)
74,682
(37,260)
(705)
(26,070)
871
(5,473)
374
350
Net cash used in investing activities
(5,257)
(9,140 )
(55,926)
FINANCING ACTIVITIES:
Proceeds from long-term debt
Repayments of long-term debt
Payments of cash dividends
Payments of cash dividends to minority shareholders
Other—net
10,000
(10,000)
(4,397)
(7)
(27)
106,382
(106,382)
(46,784)
(74)
(293)
(2,844 )
(7 )
(47 )
Net cash used in financing activities
(4,432)
(2,899 )
(47,152)
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON
CASH AND CASH EQUIVALENTS
2,024
(424 )
21,532
NET INCREASE IN CASH AND CASH EQUIVALENTS
6,482
43,151
68,962
DECREASE IN CASH AND CASH EQUIVALENTS
RESULTING FROM EXCLUSION OF SUBSIDIARIES
FROM CONSOLIDATION
(22)
(237)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
173,769
130,618
1,848,609
CASH AND CASH EQUIVALENTS, END OF YEAR
¥180,229
¥ 173,769
$1,917,333
See notes to consolidated financial statements.
- 7 -
(Continued)
- 8 -
(Concluded)
7
Consolidated Financial Statements
Consolidated Financial Statements
8
Chiyoda Corporation and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
Year Ended March 31, 2013
1. BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the
provisions set forth in the Japanese Financial Instruments and Exchange Act and its related
accounting regulations and in accordance with accounting principles generally accepted in Japan,
which are different in certain respects as to the application and disclosure requirements of
International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements
have been made to the consolidated financial statements issued domestically in order to present
them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications
and rearrangements have been made in the 2012 consolidated financial statements to conform to
the classifications used in 2013.
The consolidated financial statements are stated in Japanese yen, the currency of the country in
which Chiyoda Corporation (the "Company") is incorporated and principally operates. The
translations of Japanese yen amounts into U.S. dollar amounts are included solely for the
convenience of readers outside Japan and have been made at the rate of ¥94 to $1, the approximate
rate of exchange at March 31, 2013. Such translations should not be construed as representations
that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
Japanese yen figures less than a million yen are rounded down to the nearest million yen, except
for per-share data.
U.S. dollar figures less than a thousand U.S. dollars are rounded down to the nearest thousand U.S.
dollars, except for per-share data.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Consolidation—The consolidated financial statements as of March 31, 2013, include the
accounts of the Company and its 18 significant (21 in 2012) subsidiaries (together, the
"Group").
Under the control or influence concept, those companies in which the Company, directly or
indirectly, is able to exercise control over operations are fully consolidated, and those
companies over which the Group has the ability to exercise significant influence are accounted
for by the equity method.
Investments in two associated companies are accounted for by the equity method in 2013 and
2012. Investments in the remaining unconsolidated subsidiaries and associated companies are
stated at cost. If the equity method of accounting had been applied to the investments in these
companies, the effect on the accompanying consolidated financial statements would not be
material.
The excess of the cost of acquisition over the fair value of the net assets of an acquired
subsidiary at the date of acquisition is being amortized over a period of 20 years.
- 9 -
(Year Ended March 31, 2013)
All significant intercompany balances and transactions have been eliminated in consolidation.
All material unrealized profit included in assets resulting from transactions within the Group is
eliminated.
b. Construction Contracts—In December 2007, the Accounting Standards Board of Japan (the
"ASBJ") issued ASBJ Statement No. 15, "Accounting Standard for Construction Contracts" and
ASBJ Guidance No. 18, "Guidance on Accounting Standard for Construction Contracts." Under
this accounting standard, construction revenue and construction costs should be recognized by
the percentage-of-completion method if the outcome of a construction contract can be
estimated reliably. When total construction revenue, total construction costs, and the stage of
completion of the contract at the balance sheet date can be reliably measured, the outcome of
a construction contract is deemed to be estimated reliably. If the outcome of a construction
contract cannot be reliably estimated, the completed-contract method should be applied.
When it is probable that the total construction costs will exceed total construction revenue, an
estimated loss on the contract should be immediately recognized by providing for a loss on
construction contracts.
Concerning the construction contracts, the Group applies the accounting methods below:
Unbilled costs on contracts, which are accounted for by the completed-contract method, are
stated as costs of construction contracts in process.
Payments received in excess of costs and estimated earnings on contracts, which are
accounted for by the percentage-of-completion method and payments received on the other
contracts, are presented as current liabilities.
Costs of preparation work for unsuccessful proposals and other projects that are not realized
are charged to income, as incurred, and are included in costs of revenue.
c. Cash Equivalents—Cash equivalents are short-term investments that are readily convertible
into cash and that are exposed to insignificant risk of changes in value. Cash equivalents
include time deposits, certificate of deposits, and commercial paper, all of which mature or
become due within three months of the date of acquisition.
d. Held-to-Maturity Securities and Investment Securities—Held-to-maturity securities and
investment securities are classified and accounted for, depending on management's intent, as
follows: (1) held-to-maturity debt securities, for which there is the positive intent and ability to
hold to maturity are reported at cost; and (2) available-for-sale securities are reported at fair
value, with unrealized gains and losses, net of applicable taxes, reported in a separate
component of equity.
Nonmarketable available-for-sale securities are stated at cost determined by the moving-average
method. For other-than-temporary declines in fair value, investment securities are reduced to
net realizable value by a charge to income.
e. Short-Term Investments—Short-term investments are time deposits, which will mature three
months after the date of acquisition. Short-term investments are exposed to insignificant risk
of changes in value.
f.
Jointly Controlled Assets of Joint Venture—Jointly controlled assets of a joint venture are the
equity amount equivalent of the Company and consolidated subsidiaries related to the cash
deposits of the joint venture.
9
Consolidated Financial Statements
- 10 -
Consolidated Financial Statements
10
Notes to Consolidated Financial Statements
g. Allowance for Doubtful Accounts—The allowance for doubtful accounts is stated in amounts
considered to be appropriate based on the Group's past credit loss experience and an
evaluation of potential losses in the receivables outstanding.
h. Property, Plant, and Equipment—Property, plant, and equipment are stated at cost.
Depreciation is computed by the declining-balance method, except for buildings owned by the
Company that are depreciated using the straight-line method, at rates based on the estimated
useful lives of the assets. The range of useful lives is from 8 to 57 years for buildings and
structures, from 4 to 17 years for machinery and equipment, and from 4 to 15 years for tools,
furniture, and fixtures. Equipment held for leases is depreciated by the straight-line method
over the respective lease periods.
i. Long-Lived Assets—The Group reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate the carrying amount of an asset or asset group may not be
recoverable. An impairment loss is recognized if the carrying amount of an asset or asset group
exceeds the sum of the undiscounted future cash flows expected to result from the continued
use and eventual disposition of the asset or asset group. The impairment loss would be
measured as the amount by which the carrying amount of the asset exceeds its recoverable
amount, which is the higher of the discounted cash flows from the continued use and eventual
disposition of the asset or the net selling price at disposition.
j.
Software—Software for internal use is amortized on a straight-line basis over its estimated
useful life (five years at the maximum).
k. Other Assets—Intangible assets are carried at cost less accumulated amortization, which is
calculated by the straight-line method over their estimated useful lives.
l. Allowance for Warranty Costs for Completed Work—The allowance for warranty costs for
completed work is provided based on past rate experience.
m. Allowance for Losses on Construction Contracts—The allowance for losses on construction
contracts is provided for an estimated amount of probable losses to be incurred in future years
in respect of construction projects in progress. When there are losses on completed-contract
method applied contracts, the allowance for losses on construction contracts is offset against
the costs of construction contracts in process on the balance sheet.
n. Provision for Treatment of PCB Waste—A provision for treatment of PCB (Poly Chlorinated
Biphenyl) waste is provided based on estimated costs of the treatment for PCB products and
equipment as well as their collection and transportation fees.
o. Retirement and Pension Plans—Employees of the Company are, under most circumstances,
entitled to payments from the defined contribution pension plan and the defined benefit
corporate pension plan. Employees of certain of the Company's consolidated subsidiaries are,
under most circumstances, entitled to certain lump-sum severance payments and pension
payments.
Effective April 1, 2000, the Company and its domestic consolidated subsidiaries adopted a new
accounting standard for employees' retirement benefits and accounted for the liability for
retirement benefits based on the projected benefit obligations and plan assets at the balance
sheet date.
The transitional obligation of ¥5,696 million ($60,599 thousand) is being amortized and
charged to income over 15 years using the straight-line amortization method and presented as
an operating expense in the consolidated statements of income for the years ended March 31,
2013 and 2012.
Certain of the Company's consolidated subsidiaries terminated their unfunded retirement
benefit allowance for all directors and officers under the resolution of the shareholders'
meeting and the board meeting during the year ended March 31, 2012. The outstanding
balance was reclassified to noncurrent liabilities—other liabilities in the years ended March 31,
2013 and 2012.
p. Asset Retirement Obligations—In March 2008, the ASBJ published ASBJ Statement No. 18,
"Accounting Standard for Asset Retirement Obligations" and ASBJ Guidance No. 21, "Guidance
on Accounting Standard for Asset Retirement Obligations." Under this accounting standard, an
asset retirement obligation is defined as a legal obligation imposed either by law or contract
that results from the acquisition, construction, development, and normal operation of a
tangible fixed asset and is associated with the retirement of such tangible fixed asset. The asset
retirement obligation is recognized as the sum of the discounted cash flows required for the
future asset retirement and is recorded in the period in which the obligation is incurred if a
reasonable estimate can be made. If a reasonable estimate of the asset retirement obligation
cannot be made in the period the asset retirement obligation is incurred, the liability should be
recognized when a reasonable estimate of the asset retirement obligation can be made. Upon
initial recognition of a liability for an asset retirement obligation, an asset retirement cost is
capitalized by increasing the carrying amount of the related fixed asset by the amount of the
liability. The asset retirement cost is subsequently allocated to expense through depreciation
over the remaining useful life of the asset. Over time, the liability is accreted to its present
value each period. Any subsequent revisions to the timing or the amount of the original
estimate of undiscounted cash flows are reflected as an adjustment to the carrying amount of
the liability and the capitalized amount of the related asset retirement cost.
q. Research and Development Costs—Research and development costs are charged to income as
incurred.
r. Leases—In March 2007, the ASBJ issued ASBJ Statement No. 13, "Accounting Standard for Lease
Transactions," which revised the previous accounting standard for lease transactions.
Under the previous accounting standard, finance leases that were deemed to transfer
ownership of the leased property to the lessee were capitalized. However, other finance leases
were permitted to be accounted for as operating lease transactions if certain "as if capitalized"
information was disclosed in the note to the lessee's financial statements. The revised
accounting standard requires that all finance lease transactions be capitalized by recognizing
lease assets and lease obligations in the balance sheet.
The Company applied the revised accounting standard effective April 1, 2008. In addition, the
Company continues to account for leases which existed at the transition date and do not
transfer ownership of the leased property to the lessee as operating lease transactions.
All other leases are accounted for as operating leases.
11
Consolidated Financial Statements
Consolidated Financial Statements
12
- 11 -
- 12 -
Notes to Consolidated Financial Statements
s.
Income Taxes—The provision for income taxes is computed based on the pretax income
included in the consolidated statement of income. The asset and liability approach is used to
recognize deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of assets and liabilities.
Deferred taxes are measured by applying currently enacted tax laws to the temporary
differences.
The Company files a tax return under the consolidated corporate-tax system, which allows
companies to base tax payments on the combined profits or losses of the parent company and
its wholly-owned domestic subsidiaries.
t. Foreign Currency Transactions—All short-term and long-term monetary receivables and
payables denominated in foreign currencies are translated into Japanese yen at the exchange
rates at the balance sheet date. Foreign exchange gains and losses from translation are
recognized in the consolidated statement of income to the extent that they are not hedged by
foreign currency forward contracts.
w. Per-Share Information—Basic net income per share is computed by dividing net income
available to common shareholders by the weighted-average number of common shares
outstanding for the period, retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could occur if securities were
exercised or converted into common stock. Diluted net income per share of common stock
assumes full conversion of the outstanding convertible notes and bonds at the beginning of
the year (or at the time of issuance) with an applicable adjustment for related interest expense,
net of tax, and full exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated statement of income are
dividends applicable to the respective years including dividends to be paid after the end of the
year.
Diluted net income per share is not disclosed because there is no potential stock, which has a
dilutive effect for the fiscal years ended March 31, 2013 and 2012.
u. Foreign Currency Financial Statements—Balance sheet accounts of consolidated foreign
x. Accounting Changes and Error Corrections—In December 2009, the ASBJ issued ASBJ Statement
subsidiaries are translated into Japanese yen at the current exchange rate as of the balance
sheet date except for equity, which is translated at the historical rate. Differences arising from
such translation are shown as "Foreign currency translation adjustments" under accumulated
other comprehensive income in a separate component of equity. Revenue and expense
accounts of consolidated foreign subsidiaries are translated into Japanese yen at the current
exchange rate as of the balance sheet date.
v. Derivatives and Hedging Activities—The Company uses derivative financial instruments,
including foreign currency forward contracts and interest swap contracts, as a means of
hedging exposure to foreign currency risks and interest rate risks. The Company does not enter
into derivatives for trading or speculative purposes.
Derivative financial instruments are classified and accounted for as follows:
No. 24, "Accounting Standard for Accounting Changes and Error Corrections" and ASBJ
Guidance No. 24, "Guidance on Accounting Standard for Accounting Changes and Error
Corrections." Accounting treatments under this standard and guidance are as follows:
(1) Changes in Accounting Policies—When a new accounting policy is applied following
revision of an accounting standard, the new policy is applied retrospectively unless the revised
accounting standard includes specific transitional provisions in which case the entity shall
comply with the specific transitional provisions. (2) Changes in Presentation—When the
presentation of financial statements is changed, prior-period financial statements are
reclassified in accordance with the new presentation. (3) Changes in Accounting Estimates—A
change in an accounting estimate is accounted for in the period of the change if the change
affects that period only, and is accounted for prospectively if the change affects both the period
of the change and future periods. (4) Corrections of Prior-Period Errors—When an error in
prior-period financial statements is discovered, those statements are restated.
(1) All derivatives are recognized as either assets or liabilities and measured at fair value, with
y. New Accounting Pronouncements
gains or losses recognized in the consolidated statement of income.
(2) For derivatives used for hedging purposes, if such derivatives qualify for hedge accounting
because of high correlation and effectiveness between the hedging instruments and the
hedged items, gains or losses on derivatives are deferred until maturity of the hedged
transactions.
Foreign currency forward contracts are utilized to hedge foreign exchange risks. Certain assets
and liabilities on construction contracts denominated in foreign currencies are translated at
the contracted rates if the forward contracts qualify for hedge accounting.
Foreign currency deposits are held to hedge foreign exchange risks derived from forecasted
purchases of fixed assets denominated in foreign currency.
Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are
not remeasured at market value but the differential paid or received under the swap
agreements is recognized and included in interest expense.
Accounting Standard for Retirement Benefits—On May 17, 2012, the ASBJ issued ASBJ Statement
No. 26, "Accounting Standard for Retirement Benefits" and ASBJ Guidance No. 25, "Guidance
on Accounting Standard for Retirement Benefits," which replaced the Accounting Standard for
Retirement Benefits that had been issued by the Business Accounting Council in 1998 with an
effective date of April 1, 2000, and the other related practical guidance, and followed by partial
amendments from time to time through 2009.
Major changes are as follows:
(a) Treatment in the balance sheet
Under the current requirements, actuarial gains and losses and past service costs that are
yet to be recognized in profit or loss are not recognized in the balance sheet, and the
difference between retirement benefit obligations and plan assets (hereinafter, "deficit or
surplus"), adjusted by such unrecognized amounts, is recognized as a liability or asset.
13
Consolidated Financial Statements
Consolidated Financial Statements
14
- 13 -
- 14 -
Notes to Consolidated Financial Statements
Under the revised accounting standard, actuarial gains and losses and past service costs
that are yet to be recognized in profit or loss shall be recognized within equity
(accumulated other comprehensive income), after adjusting for tax effects, and the deficit
or surplus shall be recognized as a liability (liability for retirement benefits) or asset (asset
for retirement benefits).
(b) Treatment in the statement of income and the statement of comprehensive income
The revised accounting standard does not change how to recognize actuarial gains and
losses and past service costs in profit or loss. Those amounts would be recognized in profit
or loss over a certain period no longer than the expected average remaining working lives
of the employees. However, actuarial gains and losses and past service costs that arose in
the current period and have not yet been recognized in profit or loss shall be included in
other comprehensive income and actuarial gains and losses and past service costs that
were recognized in other comprehensive income in prior periods and then recognized in
profit or loss in the current period shall be treated as reclassification adjustments.
This accounting standard and the guidance are effective for the end of annual periods
beginning on or after April 1, 2013, with earlier application being permitted from the
beginning of annual periods beginning on or after April 1, 2013. However, no retrospective
application of this accounting standard to consolidated financial statements in prior periods is
required.
The Company expects to apply the revised accounting standard from the end of the annual
period beginning on April 1, 2013, and is in the process of measuring the effects of applying
the revised accounting standard for the year ending March 31, 2014.
3. ACCOUNTING CHANGES
Changes in Accounting Policies That Are Difficult to Distinguish from Changes in Accounting
Estimates—In conjunction with the revision of the Corporation Tax Act, the Company and its
domestic consolidated subsidiaries have changed the depreciation method for property, plant, and
equipment acquired on or after April 1, 2012, to the depreciation method based on the revised
Corporation Tax Act. The impact of this change on income (loss) is minimal.
4. CONSTRUCTION CONTRACTS
Costs and estimated earnings recognized with respect to construction contracts which are
accounted for by the percentage-of-completion method at March 31, 2013 and 2012, were as
follows:
5. HELD-TO-MATURITY SECURITIES AND INVESTMENT SECURITIES
Held-to-maturity securities and investment securities at March 31, 2013 and 2012, consisted of the
following:
Millions of Yen
2013
2012
Thousands of
U.S. Dollars
2013
Current—Held-to-maturity securities
Noncurrent—Equity securities
¥ 2,400
23,740
¥15,527
$ 25,531
252,558
The costs and aggregate fair values of marketable and investment securities at March 31, 2013 and
2012, were as follows:
March 31, 2013
Millions of Yen
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Securities classified as:
Available-for-sale—equity securities
Held-to-maturity
¥11,455
2,400
¥9,991
¥ 112
¥21,334
2,400
March 31, 2012
Securities classified as—
Available-for-sale—equity securities
March 31, 2013
Millions of Yen
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
¥ 11,682
¥2,570
¥ 367
¥ 13,885
Thousands of U.S. Dollars
Unrealized
Losses
Unrealized
Gains
Fair
Value
$106,290
$1,196
$226,960
25,531
Cost
$121,866
25,531
Millions of Yen
2013
2012
Thousands of
U.S. Dollars
2013
Securities classified as:
Available-for-sale—equity securities
Held-to-maturity
Costs and estimated earnings
Amounts billed
¥329,290
(301,813)
¥282,492
(268,703 )
$3,503,090
(3,210,781)
Net
¥ 27,477
¥ 13,788
$ 292,309
Available-for-sale securities whose fair value was not readily determinable at March 31, 2012, were
as follows. Similar information for 2013 is disclosed in Note 13.
March 31, 2012
Available-for-sale—Equity securities
Carrying Amount
Millions of Yen
¥1,642
15
Consolidated Financial Statements
Consolidated Financial Statements
16
- 15 -
- 16 -
Notes to Consolidated Financial Statements
6. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED
8. RETIREMENT AND PENSION PLANS
COMPANIES
Investments in and advances to unconsolidated subsidiaries and associated companies at March 31,
2013 and 2012, were as follows:
Investments
Long-term receivables
Total
7. LONG-TERM DEBT
Millions of Yen
2013
2012
Thousands of
U.S. Dollars
2013
¥4,686
477
¥2,662
5
$49,858
5,078
¥5,164
¥2,668
$54,936
Long-term debt at March 31, 2013 and 2012, consisted of the following:
Millions of Yen
2013
2012
Thousands of
U.S. Dollars
2013
Long-term loans principally from banks, due serially
through 2018, with interest rates ranging from
1.9% to 2.0% at 2013 and 2012—Unsecured
Obligations under finance lease
Total
Less current portion
¥ 10,221
5
10,226
(91)
¥ 10,198
12
10,210
(10,006 )
$ 108,736
61
108,797
(977)
Long-term debt, less current portion
¥10,135
¥
204
$107,819
Annual maturities of long-term debt, excluding finance leases (see Note 12), at March 31, 2013,
were as follows:
Year Ending
March 31
2014
2015
2018
Total
Millions of Yen
Thousands of
U.S. Dollars
¥
88
132
10,000
$
941
1,411
106,382
¥10,221
$108,736
Commitment-line contracts at March 31, 2013, were as follows:
Commitment-line contracts
¥15,000
$159,574
Unused commitments
¥15,000
$159,574
Millions of Yen
Thousands of
U.S. Dollars
Employees of the Company are, under most circumstances, entitled to payments from the defined
contribution pension plan and the defined benefit corporate pension plan upon retirement or
termination.
Employees of certain of the Company's consolidated subsidiaries are, under most circumstances,
entitled to certain lump-sum severance payments and pension payments upon retirement or
termination.
The liability for employees' retirement benefits at March 31, 2013 and 2012, consisted of the
following:
Millions of Yen
2013
2012
Thousands of
U.S. Dollars
2013
Projected benefit obligation
Fair value of plan assets
Unrecognized transitional obligation
Unrecognized actuarial loss
Unrecognized prior service cost
Net amount booked in the consolidated balance sheet
Prepaid pension expenses
¥23,727
(19,858)
(1,217)
(839)
499
2,310
¥ 24,492
(18,429 )
(1,826 )
(2,432 )
675
2,479
(6 )
$252,418
(211,259)
(12,954)
(8,933)
5,312
24,584
Net liability for employees' retirement benefits
¥ 2,310
¥ 2,486
$ 24,584
The components of net periodic benefit costs for the years ended March 31, 2013 and 2012, were as
follows:
Service cost
Interest cost
Expected return on plan assets
Amortization of transitional obligation
Recognized actuarial loss
Amortization of prior service cost
Subtotal
Payment to defined contribution pension trust
Millions of Yen
2012
2013
Thousands of
U.S. Dollars
2013
¥ 721
326
(275)
608
591
(176)
1,796
372
¥ 829
341
(264 )
608
748
(176 )
2,086
294
$ 7,672
3,476
(2,930)
6,477
6,287
(1,875)
19,108
3,958
Net periodic benefit costs
¥2,168
¥2,381
$23,066
Assumptions used for the years ended March 31, 2013 and 2012, are set forth as follows:
Discount rate
Expected rate of return on plan assets
Recognition period of actuarial gain/loss
Amortization period of transitional obligation
Amortization period of prior service cost
2013
2012
1.5%
1.6%
10 years
15 years
10 years
1.5%
1.6%
10 years
15 years
10 years
17
Consolidated Financial Statements
Consolidated Financial Statements
18
- 17 -
- 18 -
Notes to Consolidated Financial Statements
9. EQUITY
10. INCOME TAXES
Japanese companies are subject to the Companies Act of Japan (the "Companies Act"). The
significant provisions in the Companies Act that affect financial and accounting matters are
summarized below:
The Company and its domestic subsidiaries are subject to Japanese national and local income taxes
which, in the aggregate, resulted in normal effective statutory tax rates of approximately 38% for
the year ended March 31, 2013, and 41% for the year ended March 31, 2012.
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in
addition to the year-end dividend upon resolution at the shareholders' meeting. For companies
that meet certain criteria, the Board of Directors may declare dividends (except for dividends in
kind) at any time during the fiscal year if the company has prescribed so in its articles of
incorporation. However, the Company cannot do so because it does not meet all the above
criteria. The Company is organized as a company with board committees.
The Companies Act permits companies to distribute dividends in kind (noncash assets) to
shareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of
Directors if the articles of incorporation of the company so stipulate. The Companies Act
provides certain limitations on the amounts available for dividends or the purchase of treasury
stock. The limitation is defined as the amount available for distribution to the shareholders,
but the amount of net assets after dividends must be maintained at no less than ¥3 million.
b.
Increases/Decreases and Transfer of Common Stock, Reserve, and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated
as a legal reserve (a component of retained earnings) or as additional paid-in capital (a
component of capital surplus), depending on the equity account charged upon the payment of
such dividends, until the aggregate amount of legal reserve and additional paid-in capital
equals 25% of the common stock. Under the Companies Act, the total amount of additional
paid-in capital and legal reserve may be reversed without limitation. The Companies Act also
provides that common stock, legal reserve, additional paid-in capital, other capital surplus, and
retained earnings can be transferred among the accounts under certain conditions upon
resolution of the shareholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such
treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased
cannot exceed the amount available for distribution to the shareholders, which is determined
by a specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of
equity.
The Companies Act also provides that companies can purchase both treasury stock acquisition
rights and treasury stock. Such treasury stock acquisition rights are presented as a separate
component of equity or deducted directly from stock acquisition rights.
The tax effects of significant temporary differences which resulted in deferred tax assets and
liabilities at March 31, 2013 and 2012, were as follows:
Deferred tax assets:
Cost of revenue
Allowance for employees' bonus
Retirement benefits
Future deductible depreciation
Enterprise tax
Loss on valuation of investment securities
Other
Less valuation allowance
Millions of Yen
2013
2012
Thousands of
U.S. Dollars
2013
¥11,438
1,641
792
636
511
424
3,955
(1,082)
¥ 10,712
1,475
859
1,876
160
342
2,695
(594 )
$121,690
17,460
8,428
6,766
5,436
4,520
42,075
(11,513)
Total
18,317
17,527
194,866
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Profit/loss in joint venture
Other
3,414
1,852
402
380
695
304
797
562
36,329
19,703
4,282
4,045
Total
6,050
2,359
64,365
Net deferred tax assets
¥12,267
¥ 15,168
$130,500
Prior to April 1, 2012, "Deferred gain on derivatives under hedge accounting" was included in
"Other" among the deferred tax liabilities section. Since this fiscal year ended March 31, 2013, the
amount is disclosed separately due to the increase in materiality.
Net deferred tax assets as of March 31, 2013 and 2012, were recorded in the accompanying
consolidated balance sheet as follows:
Millions of Yen
2013
2012
Thousands of
U.S. Dollars
2013
Current assets—Deferred tax assets
Investments and other assets—Other assets
Noncurrent liabilities—Other liabilities
¥13,162
570
(1,465)
¥ 12,987
2,204
(23 )
$140,029
6,065
(15,594)
19
Consolidated Financial Statements
Consolidated Financial Statements
20
- 19 -
- 20 -
Notes to Consolidated Financial Statements
A reconciliation between the normal effective statutory tax rate and the actual effective tax rate
reflected in the accompanying consolidated statement of income for the year ended March 31,
2012, is as follows:
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Nontaxable dividend income
Profit/loss in joint venture
Tax credit
Lower income tax rates applicable to subsidiaries
Tax rate changes due to tax reform
Actual effective tax rate
2012
41%
1
(1)
(6)
(1)
(2)
5
38%
For the year ended March 31, 2013, a reconciliation is not disclosed because the difference is less
than 5% of the normal effective statutory tax rate.
On December 2, 2011, new tax reform laws were enacted in Japan, which changed the normal
effective statutory tax rate from approximately 41% to 38% effective for the fiscal years beginning
on or after April 1, 2012 through March 31, 2015, and to 36% thereafter.
11. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥2,323 million ($23,007 thousand) and
¥1,848 million for the years ended March 31, 2013 and 2012, respectively.
12. LEASES
The Group leases certain machinery, computer equipment, and other assets.
Obligations under finance leases and future minimum payments under noncancelable operating
leases were as follows:
Year Ended March 31, 2013
Millions of Yen
Thousands of U.S. Dollars
Finance Leases
Off
On
Balance
Balance
Operating
Leases
Finance Leases
Off
On
Balance
Balance
Operating
Leases
Due within one year
Due after one year
Total
¥3
2
¥5
¥ 9
13
¥23
¥188
494
¥682
$36
24
$61
$ 99
147
$2,001
5,256
$ 246
$7,257
Pro forma Information of Leased Property Whose Lease Inception Was before March 31, 2008
ASBJ Statement No. 13, "Accounting Standard for Lease Transactions" requires that all finance lease
transactions be capitalized to recognize lease assets and lease obligations in the balance sheet.
However, ASBJ Statement No. 13 permits leases without ownership transfer of the leased property
to the lessee and whose lease inception was before March 31, 2008, to continue to be accounted for
as operating lease transactions if certain "as if capitalized" information is disclosed in the note to
the financial statements. The Company applied ASBJ Statement No. 13 effective April 1, 2008, and
accounted for such leases as operating lease transactions.
Pro forma information of leased property whose lease inception was before March 31, 2008, on an
"as if capitalized" basis was as follows:
Year Ended March 31, 2013
Acquisition cost
Accumulated depreciation
Net leased property
Year Ended March 31, 2012
Acquisition cost
Accumulated depreciation
Net leased property
Year Ended March 31, 2013
Acquisition cost
Accumulated depreciation
Net leased property
Millions of Yen
Buildings
and
Structures
Tools,
Furniture,
and Fixtures
Other
Total
¥16
9
¥ 6
¥51
42
¥ 8
¥ 26
18
¥ 8
Millions of Yen
Buildings
and
Structures
Tools,
Furniture,
and Fixtures
Other
¥67
32
¥34
¥79
61
¥17
¥ 26
15
¥ 10
Thousands of U.S. Dollars
Buildings
and
Structures
Tools,
Furniture,
and Fixtures
$172
100
$ 71
$543
454
$ 89
Other
$ 276
191
$ 85
¥93
70
¥23
Total
¥173
109
¥ 63
Total
$992
746
$246
21
Consolidated Financial Statements
Consolidated Financial Statements
22
- 21 -
- 22 -
Notes to Consolidated Financial Statements
Obligations under finance leases for the years ended March 31, 2013 and 2012, were as follows:
Due within one year
Due after one year
Total
Millions of Yen
2013
2012
Thousands of
U.S. Dollars
2013
¥ 9
13
¥23
¥ 47
16
¥ 63
$ 99
147
$246
Depreciation expense as lessee, which is not reflected in the accompanying consolidated statement
of income, computed by the straight-line method was ¥13 million ($142 thousand) and
¥53 million for the years ended March 31, 2013 and 2012, respectively. Lease payments were
approximately equal to the depreciation expense.
The amounts of obligations, acquisition cost, and depreciation under finance leases include the
imputed interest income portion and interest expense portion.
13. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
(1) Group Policy for Financial Instruments
The Group uses financial instruments for cash surpluses, if any, invested in low-risk financial
assets, such as certificates of deposit and deposits at call. For operating capital, the Group uses
bank loans. Derivatives are used, not for speculative purposes, but to manage exposure to the
market risk of fluctuation in foreign currency exchange rates and interest rates.
(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables, such as trade notes and trade accounts, are exposed to customer credit risk.
Although receivables in foreign currencies are exposed to the market risk of fluctuation in
foreign currency exchange rates, the position, net of payables in foreign currencies, is hedged
by using foreign currency forward contracts.
Cash equivalents include certificates of deposit, which mature shortly and are used for cash
surpluses. Short-term investments include deposits at call, which will mature three months
after the date of acquisition. Both certificates of deposit and deposits at call are exposed to
default risk of the issuing financial institution.
Investment securities are equity securities related to the business, which the Group operates.
Marketable securities are exposed to the risk of fluctuations in stock prices.
Payment terms of payables, such as trade notes and trade accounts, are generally less than one
year. Although payables in foreign currencies are exposed to the market risk of fluctuation in
foreign currency exchange rates, those risks are netted against the balance of receivables
denominated in the same foreign currency as noted above.
Bank loans are used for operating capital. Although they are exposed to the market risks from
changes in interest rates, the risk is hedged by using interest rate swap contracts.
Derivatives are foreign currency forward contracts and interest rate swap contracts, which are
used to manage exposure to market risks from changes in foreign currency exchange rates of
receivables and payables, and from changes in interest rates, respectively. Please see Notes 2.v
and 14 for more detail about derivatives.
(3) Risk Management for Financial Instruments
Credit risk management
Credit risk is the risk of economic loss arising from a counterparty's failure to repay or service
debt according to the contractual terms. The Group manages its credit risk from receivables on
the basis of internal guidelines, which include monitoring of payment terms and balances of
major customers to identify the default risk of customers at an early stage.
Certificates of deposit and deposits at call are exposed to insignificant default risk because
transactions are limited to major financial institutions.
With respect to foreign currency forward contracts, the Group limits the counterparty to those
derivatives to major financial institutions that can bear losses arising from credit risk.
Market risk management (risk of foreign exchange and interest rates)
Foreign currency trade receivables and payables are exposed to market risk resulting from
fluctuations in foreign currency exchange rates. Such foreign exchange risk is hedged
principally with foreign currency forward contracts.
Interest expense associated with long-term debts is exposed to market risk resulting from
changes in interest rates. Such risk is hedged by interest rate swap contracts.
Foreign currency forward contracts are controlled under internal guidelines. The position
related to particular construction contracts is identified and is reviewed monthly.
Reconciliation of the transaction and balances with customers' confirmation replies is made,
and the transactions related to foreign currency forward contracts are executed and accounted
for under internal guidelines.
Marketable and investment securities are managed by monitoring the market values and
financial position of issuers on a regular basis. The Group assesses the stock price risk
quantitatively so as to account for significant declines in market value as impairment losses.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full
on their maturity dates. The Group manages its liquidity risk by holding adequate volumes of
liquid assets along with timely adequate financial planning.
(4) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted
price is not available, another rational valuation technique is used instead. Also, please see
Note 14 for the detail of fair value for derivatives.
23
Consolidated Financial Statements
Consolidated Financial Statements
24
- 23 -
- 24 -
Notes to Consolidated Financial Statements
(a) Fair values of financial instruments
March 31, 2013
March 31, 2013
Thousands of U.S. Dollars
Cash and cash equivalents
Held-to-maturity securities—current
Short-term investments
Notes and accounts receivable
Costs and estimated earnings on
long-term construction contracts
Jointly controlled assets of joint venture
Investment securities
Total
Current portion of long-term debt
Notes and accounts payable—trade
Income taxes payable
Long-term debt
Total
March 31, 2012
Cash and cash equivalents
Short-term investments
Notes and accounts receivable
Costs and estimated earnings on
long-term construction contracts
Jointly controlled assets of joint venture
Investment securities
Total
Current portion of long-term debt
Notes and accounts payable—trade
Income taxes payable
Long-term debt
Total
Unrealized
Gain (Loss)
Unrealized
Gain (Loss)
Carrying
Amount
¥180,229
2,400
226
37,917
27,477
94,696
21,334
Millions of Yen
Fair Value
¥ 180,229
2,400
226
37,917
27,477
94,696
21,334
¥364,280
¥ 364,280
¥
88
117,769
8,500
10,132
¥
88
117,769
8,500
10,132
¥136,490
¥ 136,490
Carrying
Amount
¥173,769
307
30,051
13,788
65,794
13,885
Millions of Yen
Fair Value
¥ 173,769
307
30,051
13,788
65,794
13,885
¥297,597
¥ 297,597
¥ 10,000
86,211
1,162
198
¥ 10,000
86,211
1,162
198
¥ 97,572
¥ 97,572
Cash and cash equivalents
Held-to-maturity securities—current
Short-term investments
Notes and accounts receivable
Costs and estimated earnings on
long-term construction contracts
Jointly controlled assets of joint venture
Investment securities
Total
Current portion of long-term debt
Notes and accounts payable—trade
Income taxes payable
Long-term debt
Total
Unrealized
Gain (Loss)
Carrying
Amount
$1,917,333
25,531
2,407
403,376
Fair Value
$1,917,333
25,531
2,407
403,376
292,309
1,007,408
226,960
292,309
1,007,408
226,960
$3,875,327
$3,875,327
$
941
1,252,863
90,429
107,794
941
$
1,252,863
90,429
107,794
$1,452,028
$1,452,028
Cash and Cash Equivalents, Held-to-Maturity Securities—Current, Short-Term
Investments, Notes and Accounts Receivable, and Costs and Estimated Earnings on
Long-Term Construction Contracts
The carrying values of accounts mentioned above approximate fair value because of their
short maturities.
Jointly Controlled Assets of Joint Venture
The jointly controlled assets of the joint venture are jointly controlled cash recognized
based on the Company's share of the venture. The carrying values of jointly controlled
assets of the joint venture approximate fair value because of their short maturities.
Investment Securities
The fair values of investment securities are measured at the quoted market price of the
stock exchange for the equity instruments. The information of the fair value for
investment securities by classification is included in Note 5.
The above schedules do not include investment securities whose fair value cannot be
reliably determined.
Notes and Accounts Payable—Trade and Income Taxes Payable
The carrying values of accounts mentioned above approximate fair value because of their
short maturities.
25
Consolidated Financial Statements
Consolidated Financial Statements
26
- 25 -
- 26 -
Notes to Consolidated Financial Statements
Current Portion of Long-Term Debt (Bank Loans)/Long-Term Debt (Bank Loans)
March 31, 2012
The fair value of fixed rate loans is calculated by discounting total principal and interest
payments to present value using a discount rate equal to the rate that would be charged if
the loan was newly borrowed. The fair value of floating rate loans, which are subject to a
specific method for interest rate swaps, is calculated by discounting total principal and
interest payments, which are handled together with interest rate swaps, to present value
using a discount rate equal to the rate that would be charged if the loan was newly
borrowed.
Derivatives
The information of the fair value for derivatives is included in Note 14.
(b) Carrying amount of financial instruments whose fair values cannot be reliably determined
Millions of Yen
2013
2012
Thousands of
U.S. Dollars
2013
Investment securities that do not have a quoted
market price in an active market
Investments in equity instruments that do not
have a quoted market price in an active market
Investments in unconsolidated subsidiaries and
associated companies that do not have a quoted
market price in an active market
¥2,403
¥1,639
$ 25,565
2
2
31
4,686
2,662
49,858
(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
March 31, 2013
Millions of Yen
Due after
1 Year
through
5 Years
Due after
5 Years
through
10 Years
Due after
10 Years
Due in
1 Year
or Less
¥180,194
2,400
226
64,861
¥ 532
94,696
Cash and cash equivalents
Held-to-maturity securities—current
Short-term investments
Notes and accounts receivable, and
costs and estimated earnings on
long-term construction contracts
Jointly controlled assets of joint
venture
Total
¥342,378
¥532
27
Consolidated Financial Statements
- 27 -
Cash and cash equivalents
Short-term investments
Notes and accounts receivable, and
costs and estimated earnings on
long-term construction contracts
Jointly controlled assets of joint
venture
March 31, 2012
Total
March 31, 2013
Cash and cash equivalents
Short-term investments
Notes and accounts receivable, and
Cash and cash equivalents
costs and estimated earnings on
Held-to-maturity securities—current
long-term construction contracts
Short-term investments
Jointly controlled assets of joint
Notes and accounts receivable, and
venture
costs and estimated earnings on
long-term construction contracts
Total
Jointly controlled assets of joint
venture
March 31, 2013
Total
Millions of Yen
Due after
1 Year
through
5 Years
Due after
5 Years
through
10 Years
Due after
10 Years
Due in
1 Year
or Less
¥173,684
307
43,731
¥ 109
65,794
¥283,517
¥109
Millions of Yen
Due after
5 Years
Thousands of U.S. Dollars
through
Due after
10 Years
5 Years
through
10 Years
Due after
1 Year
through
Due after
5 Years
1 Year
through
5 Years
Due after
10 Years
Due after
10 Years
¥ 109
Due in
1 Year
or Less
Due in
1 Year
¥173,684
or Less
307
$1,916,958
25,531
43,731
2,407
65,794
690,018
¥283,517
$5,667
¥109
1,007,408
$3,642,324
Due in
1 Year
or Less
$5,667
Thousands of U.S. Dollars
Due after
5 Years
through
10 Years
Due after
1 Year
through
5 Years
Due after
10 Years
Please see Note 7 for annual maturities of long-term debt and Note 12 for obligations under
finance leases.
Cash and cash equivalents
Held-to-maturity securities—current
Short-term investments
Notes and accounts receivable, and
costs and estimated earnings on
long-term construction contracts
Jointly controlled assets of joint
venture
$1,916,958
25,531
2,407
690,018
$5,667
1,007,408
Total
$3,642,324
$5,667
Please see Note 7 for annual maturities of long-term debt and Note 12 for obligations under
finance leases.
Consolidated Financial Statements
28
- 28 -
- 28 -
Notes to Consolidated Financial Statements
14. DERIVATIVES
March 31, 2013
Derivative Transactions to Which Hedge Accounting Is Not Applied
March 31, 2013
Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Total
March 31, 2012
Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen
Buying Euro/selling U.S.$
Total
Millions of Yen
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Unrealized
Gain (Loss)
¥ (15 )
¥(15)
¥36
51
¥87
(4 )
52
12
(4)
52
12
¥ 45
¥ 45
Millions of Yen
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Unrealized
Gain (Loss)
¥ (34 )
7
¥(34)
7
(6 )
3
(5 )
(6)
3
(5)
¥ (34 )
¥(34)
Contract
Amount
¥14,267
11,243
284
1,933
276
79
¥28,085
Contract
Amount
¥18,468
4,492
182
81
119
42
3
391
¥23,781
Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Thousands of U.S. Dollars
Contract
Amount
Due after
One Year
$387
548
Fair
Value
(Loss)
$ (162 )
(2 )
(1 )
(46 )
561
135
Unrealized
Gain (Loss)
$(162)
(2)
(1)
(46)
561
135
Contract
Amount
$151,781
119,609
3,026
20,571
2,945
844
Total
$298,778
$935
$ 483
$ 483
Derivative Transactions to Which Hedge Accounting Is Applied
March 31, 2013
Foreign currency forward contracts—
Accounted for under deferred hedge
accounting method:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen
Total
Other*1:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen
Total
Millions of Yen
Hedged Item
Contract
Amount
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Foreign currency
forecasted
transaction
¥ 1,863
4,489
584
221
¥
513
1,056
461
¥(220)
851
116
3
¥ 7,158
¥ 2,031
¥ 752
Receivables
Payables
¥
693
948
372
18
¥
101
¥ 2,032
¥
101
Interest rate swaps*2 (fixed rate payment,
Long-term debt
¥10,000
¥ 10,000
floating rate receipt)
Total
¥10,000
¥ 10,000
29
Consolidated Financial Statements
- 29 -
- 30 -
Consolidated Financial Statements
30
Notes to Consolidated Financial Statements
March 31, 2012
March 31, 2013
Foreign currency forward contracts—
Accounted for under deferred hedge
accounting method:
Selling U.S.$/buying yen
Selling GBP/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen
Total
Other*1:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Total
Millions of Yen
Hedged Item
Contract
Amount
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Foreign currency
forecasted
transaction
¥ 1,785
25
6,492
1,041
46
¥
581
2,995
100
¥ (39)
(1)
242
14
2
¥ 9,391
¥ 3,677
¥218
Receivables
Payables
¥
43
267
6
¥
60
¥
317
¥
60
¥10,000
¥ 10,000
Interest rate swaps*2 (fixed rate payment,
floating rate receipt)
Current portion of
long-term debt
Thousands of U.S. Dollars
Hedged Item
Contract
Amount
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Foreign currency forward contracts—
Accounted for under deferred hedge
accounting method:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen
Foreign currency
forecasted
transaction
$ 19,823
47,759
6,217
2,357
$ 5,466
11,234
4,907
$(2,343)
9,058
1,244
42
Total
$ 76,158
$ 21,608
$ 8,001
Other*1:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen
Total
Receivables
Payables
$
7,375
10,092
3,959
195
$ 1,077
$ 21,622
$ 1,077
Interest rate swaps*2 (fixed rate payment,
Long-term debt
$106,382
$ 106,382
floating rate receipt)
Total
¥10,000
¥ 10,000
Total
$106,382
$ 106,382
*1 Foreign currency forward contracts, which are applied to the foreign currency translation at the
contract rate of the assets and liabilities on construction contracts denominated in foreign
currencies.
*2 Interest rate swap contracts accounted under a specific method, are treated as part of the hedged
long-term debt, thus their fair values are integrally computed with those of the hedged
long-term debt. See Note 13 for the fair value of long-term debt.
15. CONTINGENT LIABILITIES
At March 31, 2013, the Group had the following contingent liabilities:
Guarantees on employees' housing loans
Performance bond for an unconsolidated subsidiary
¥ 130
1,743
$ 1,387
18,544
Millions of Yen
Thousands of
U.S. Dollars
31
Consolidated Financial Statements
Consolidated Financial Statements
32
- 31 -
- 32 -
Notes to Consolidated Financial Statements
16. COMPREHENSIVE INCOME
There is no dilutive effect for the year ended March 31, 2013.
The components of other comprehensive income for the years ended March 31, 2013 and 2012,
were as follows:
Year Ended March 31, 2012
Unrealized gain on available-for-sale securities:
Gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Deferred gain on derivatives under hedge accounting:
Gains (losses) arising during the year
Adjustment to acquisition cost of assets
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Foreign currency translation adjustments—
Adjustments arising during the year
Total
Share of other comprehensive income (loss) in
associates—Gains (losses) arising during the year
Total
Millions of Yen
2012
2013
Thousands of
U.S. Dollars
2013
¥7,564
231
7,796
(2,721)
¥2,156
250
2,406
(668 )
$80,478
2,460
82,938
(28,947)
¥5,075
¥1,738
$53,991
¥6,362
(2,299)
(117)
3,945
(1,497)
¥ (424 )
549
6
131
(34 )
$67,690
(24,464)
(1,248)
41,977
(15,934)
Millions
of Yen
Net
Income
Thousands
of Shares
Weighted-Average
Shares
Yen
EPS
Basic EPS—Net income available
to common shareholders
¥ 14,364
259,086
¥ 55.44
There is no dilutive effect for the year ended March 31, 2012.
18. SUBSEQUENT EVENT
The following appropriation of retained earnings at March 31, 2013, was approved at the
Company's shareholders' meeting on June 25, 2013:
Year-end cash dividends, ¥19.00 ($0.20) per share
¥4,921
$52,360
Millions of Yen
Thousands of
U.S. Dollars
¥2,448
¥ 97
$26,042
19. SEGMENT INFORMATION
¥1,081
¥ (361 )
$ 11,508
¥1,081
¥ (361 )
$11,508
¥ 85
¥ (105 )
$
913
¥
85
¥ (105 )
$
913
Under ASBJ Statement No. 17, "Accounting Standard for Segment Information Disclosures" and
ASBJ Guidance No. 20, "Guidance on Accounting Standard for Segment Information Disclosures,"
an entity is required to report financial and descriptive information about its reportable segments.
Reportable segments are operating segments or aggregations of operating segments that meet
specified criteria. Operating segments are components of an entity about which separate financial
information is available and such information is evaluated regularly by the chief operating decision
maker in deciding how to allocate resources and in assessing performance. Generally, segment
information is required to be reported on the same basis as is used internally for evaluating
operating segment performance and deciding how to allocate resources to operating segments.
Total other comprehensive income
¥8,690
¥1,368
$92,456
(1) Description of Reportable Segments
17. NET INCOME PER SHARE
A reconciliation of the differences between basic and diluted net income per share ("EPS") for the
years ended March 31, 2013 and 2012, is as follows:
Year Ended March 31, 2013
Millions
of Yen
Net
Income
Thousands
of Shares
Weighted-Average
Shares
Yen
U.S. Dollars
EPS
Basic EPS—Net income available
to common shareholders
¥ 16,077
259,053
¥ 62.06
$0.66
The Group's reportable segments are those for which separate financial information is available
and regular evaluation by the Company's management is being performed in order to decide
how resources are allocated within the Group. The Group globally provides "Engineering"
services, including planning, engineering, construction, procurement, commissioning, and
maintenance, adapting the most appropriate functions of each related company.
(2) Methods of Measurement for the Amounts of Sales, Profit (Loss), Assets, Liabilities, and Other
Items for Each Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in
Note 2, "Summary of Significant Accounting Policies."
The profit in reporting segments is based on the operating income. Intersegment income and
transfer are measured at the quoted market price.
33
Consolidated Financial Statements
- 33 -
- 34 -
Consolidated Financial Statements
34
Notes to Consolidated Financial Statements
(3) Information about Sales, Profit (Loss), Assets, Liabilities, and Other Items
Year Ended March 31, 2013
Year Ended March 31, 2013
Millions of Yen
Reportable
Segment
Reconcili- Consoli-
Engineering Other*1
Total
ations*2
dated*3
Sales:
Sales to external customers
Intersegment sales or transfers
¥392,037
9
¥ 6,881
8,504
¥398,918
8,513
¥ (8,513)
¥398,918
Total
¥392,046
¥15,385
¥407,432
¥ (8,513)
¥398,918
Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associated
companies
Increase in property, plant, and
equipment and intangible
assets
Year Ended March 31, 2012
¥ 24,499
429,400
236,130
¥
848
4,874
1,943
¥ 25,348
434,274
238,073
¥ (235)
1,104
7,949
¥ 25,113
435,379
246,023
2,593
5
1,151
22
35
2,616
41
1,151
(36)
2,580
41
1,151
9,215
43
9,259
(300)
8,958
Thousands of U.S. Dollars
Reportable
Segment
Reconcili- Consoli-
Engineering Other*1
Total
ations*2
dated*3
Sales:
Sales to external customers
Intersegment sales or
transfers
$4,170,609 $ 73,205 $4,243,814
$4,243,814
97
90,472
90,570 $ (90,570)
Total
$4,170,707 $163,677 $4,334,384 $ (90,570) $4,243,814
Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associated
companies
Increase in property, plant,
and equipment and
intangible assets
$ 260,636 $
4,568,088
2,512,023
9,025 $ 269,662 $ (2,501) $ 267,160
4,631,695
2,617,267
4,619,946
2,532,698
11,748
84,568
51,858
20,675
27,591
59
12,250
244
378
27,836
438
12,250
(386)
27,450
438
12,250
98,038
463
98,501
(3,195)
95,306
Notes for the year ended March 31, 2013:
Millions of Yen
*1 "Other" represents industry segments, which are not included in the reportable segment,
consisting of temporary staffing services, IT services, and travel services.
Reportable
Segment
Reconcili- Consoli-
*2 The detail of the reconciliations is as follows:
Engineering Other*1
Total
ations*2
dated*3
Sales:
Sales to external customers
Intersegment sales or transfers
¥247,849
2
¥ 6,826
8,508
¥254,675
8,510
¥ (8,510)
¥254,675
Total
¥247,851
¥15,334
¥263,186
¥ (8,510)
¥254,675
Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associated
companies
Increase in property, plant, and
equipment and intangible
assets
¥ 23,755
358,155
185,832
¥
531
8,165
3,671
¥ 24,287
366,321
189,503
¥
(89)
(525)
7,553
¥ 24,197
365,795
197,057
2,664
945
21
84
2,685
84
945
(48)
2,637
84
945
3,631
4
3,635
(180)
3,455
(1) The reconciliation in segment profit of ¥(235) million ($(2,501) thousand) is the
elimination of intersegment trades.
(2) The reconciliation in segment assets of ¥1,104 million ($11,748 thousand) is the result
of the elimination of intersegment trades of ¥(2,066) million ($(21,985) thousand) and
the Group's assets of ¥3,170 million ($33,733 thousand), which are not included in the
reportable segment.
(3) The reconciliation in segment liabilities of ¥7,949 million ($84,568 thousand) is the
result of the elimination of intersegment trades of ¥(2,050) million
($(21,814) thousand) and the Group's liabilities of ¥10,000 million
($106,382 thousand), which are not included in the reportable segment.
(4) The reconciliation in depreciation of ¥(36) million ($(386) thousand) is the elimination
of intersegment trades.
(5) The reconciliation in increase in property, plant, and equipment and intangible assets
of ¥(300) million ($(3,195) thousand) is the elimination of intersegment trades.
*3 The calculation of the segment profit is based on the operating income on the consolidated
statement of income.
35
Consolidated Financial Statements
Consolidated Financial Statements
36
- 35 -
- 36 -
Notes to Consolidated Financial Statements
Notes for the year ended March 31, 2012:
Year Ended March 31, 2012
*1 "Other" represents industry segments, which are not included in the reportable segment,
consisting of temporary staffing services, IT services, and travel services.
*2 The detail of the reconciliations is as follows:
(1) The reconciliation in segment profit of ¥(89) million is the elimination of intersegment
trades.
(2) The reconciliation in segment assets of ¥(525) million is the result of the elimination of
intersegment trades of ¥(2,740) million and the Group's assets of ¥2,214 million, which
are not included in the reportable segment.
(3) The reconciliation in segment liabilities of ¥7,553 million is the result of the
elimination of intersegment trades of ¥(2,446) million and the Group's liabilities of
¥10,000 million, which are not included in the reportable segment.
(4) The reconciliation in depreciation of ¥(48) million is the elimination of intersegment
trades.
(5) The reconciliation in increase in property, plant, and equipment and intangible assets
of ¥(180) million is the elimination of intersegment trades.
*3 The calculation of the segment profit is based on the operating income on the consolidated
statement of income.
Related Information
(1) Information about Products and Services
The proportion of engineering business is more than 90% of the total sales of the Group.
Accordingly, the presentation of the information about each service is not required under
Japanese accounting standards.
(2) Information about Geographical Areas
(a) Revenue
Year Ended March 31, 2013
Japan
Malaysia
Papua New Guinea
Australia
Others
Total
Millions of Yen
Thousands of
U.S. Dollars
¥150,800
83,685
66,143
44,559
53,729
$1,604,255
890,274
703,655
474,040
571,589
¥398,918
$4,243,814
Japan
Papua New Guinea
Malaysia
Middle East
Others
Total
Millions of Yen
¥ 94,925
70,508
30,575
30,398
28,267
¥254,675
Note: Revenue is classified in countries or regions based on location of construction site.
(b) Property, plant, and equipment
Year Ended March 31, 2013
Japan
Asia
Others
Total
Year Ended March 31, 2012
Millions of Yen
Thousands of
U.S. Dollars
¥12,935
1,377
234
$137,611
14,653
2,496
¥14,547
$154,761
The proportion of fixed assets placed in Japan is more than 90% of the total fixed assets of
the Group. Accordingly, presentation of the information about fixed assets is not required
under Japanese accounting standards.
(3) Information about Major Customers
Year Ended March 31, 2013
Name
Related Segment
Millions of Yen
Thousands of
U.S. Dollars
Tokuyama Malaysia Sdn. Bhd
Esso Highlands Ltd.
Ichthys Lng Pty Ltd.
Year Ended March 31, 2012
Engineering
Engineering
Engineering
¥82,921
65,159
42,185
$882,146
693,190
448,783
Name
Related Segment
Millions of Yen
Esso Highlands Ltd.
Tokuyama Malaysia Sdn. Bhd
Engineering
Engineering
¥69,856
28,815
37
Consolidated Financial Statements
- 37 -
- 38 -
Consolidated Financial Statements
38
Notes to Consolidated Financial Statements
INDEPENDENT AUDITOR’S REPORT
(4) Information about Goodwill by Segments
Ending balance of goodwill as of March 31, 2013 and 2012, was as follows:
Millions of Yen
Engineering
Other*
Total
2013
¥180
494
¥675
* Other involves temporary staffing services and IT services.
* * * * * *
Thousands of
U.S. Dollars
2013
$1,917
5,265
2012
¥ 716
¥ 716
$7,182
39
Consolidated Financial Statements
- 39 -
Consolidated Financial Statements
40
Minato Mirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
http://www.chiyoda-corp.com/en/
CORPORATE PHILOSOPHY
Enhance our business in aiming for harmony
between energy and the environment,
and contribute to the sustainable development of
a society as an integrated engineering company
through the use of our collective wisdom and
painstakingly developed technology.
(As of August 2013)
Selected in FTSE Group’s responsible
investment index
Consolidated Financial Statements
For the Year Ended March 31, 2013, and Independent Auditor's Report
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