A N N U A L
R E P O R T
FY2013
For the year ended March 31, 2014
Courtesy of Mizushima LNG Co., Ltd.
Financial Highlights
Profile
Founded in 1948 in the post war period to reconstruct Japan, Chiyoda started its engineering
business for domestic projects mainly in the petroleum refining, gas processing and petrochemical
fields, and expanded into overseas projects in the 1960’s. Since then, Chiyoda has been and is
growing steadily under the corporate philosophy of enhancing its business by aiming for harmony
between energy and the environment and contributing to the sustainable development of society.
Global situations are dramatically changing, especially those related to energy, including
increasing demand in developing countries caused by economic growth, “Shale Revolution” and
“Gas Shift,” as well as there being a call to develop renewable energies. We have to recognize that it
is time for us to meet these challenges.
Under these challenges, we set up last year a mid-term management plan (MT-Plan), “Seize the
moment, Open up new frontiers,” and will pursue the growth strategies and operating foundation
strategies under the MT-Plan.
Our engineering company will be a company that can shoulder the full task of building any
infrastructure that demands cutting-edge technologies. We will seize the moment and open up
new frontiers to create value through our “Asset Management.”
Contents
01 Financial Highlights
02 At a Glance
03 To Our Shareholders
08 Corporate Governance
10 Corporate Information
12 Directors and Officers
04 Management’s Discussion and Analysis
13 Stock Information
06 Topics
Years Ended March 31, 2014, 2013, 2012, 2011 and 2010
For the Year (Millions of Yen)
Revenues
Cost of revenue
Operating income
Income before income taxes
and minority interests
Net income
At Year-End (Millions of Yen)
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)
2014
2013
2012
2011
2010
¥446,147
¥398,918
¥254,675
¥247,082
¥312,985
404,685
21,079
22,538
13,447
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
1,702
4,714
2,953
¥475,288
¥435,379
¥365,795
¥353,392
¥328,174
198,031
156.3
189,356
166.3
168,737
165.5
155,758
173.8
¥51.91
758.31
16.0
5.0
7.0
¥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
Note: Yen amounts are rounded down to the nearest million. U.S. dollar amounts and percentages are rounded to the nearest unit.
Revenues
(Billions of yen)
Operating Income
(Billions of yen)
Net Income
(Billions of yen)
Billions of yen
Billions of yen
Billions of yen
Billions of yen
Billions of yen
Billions of yen
Billions of yen
Billions of yen
Billions of yen
800
800
800
700
700
700
600
600
600
500
500
500
400
400
400
300
300
300
200
200
200
100
100
100
0
0
0
446.1
446.1
446.1
398.9
398.9
398.9
313.0
313.0
313.0
247.1
247.1
247.1
254.7
254.7
254.7
2010
2010
2010
2011
2011
2011
2012
2012
2012
2013
2013
2013
2014
2014
2014
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
21.1
21.1
21.1
17.5
17.5
17.5
30
30
30
20
20
20
16.1
16.1
16.1
14.4
14.4
14.4
13.4
13.4
13.4
1.7
1.7
1.7
10
10
10
8.0
8.0
8.0
3.0
3.0
3.0
2010
2010
2010
2011
2011
2011
2012
2012
2012
2013
2013
2013
2014
2014
2014
0
0
0
2010
2010
2010
2011
2011
2011
2012
2012
2012
2013
2013
2013
2014
2014
2014
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, 2014. 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 regula-
tions, addition or elimination of products, and exchange rate fluctuation, among others.
1
CHIYODA CORPORATION ANNUAL REPORT FY2014 At a Glance
To Our Shareholders
Revenues
New Orders
Backlog of Contracts
(Billions of yen)
17
21
6
11
46
446.1
Billion yen
LNG
8
8
7
3
74
5
19
4
2
70
589.9
Billion yen
1,072.2
Billion yen
203.0 (46%)
437.0 (74%)
755.6 (70%)
Gas Processing*1
47.5 (11%)
Fine Industries*2
94.3 (21%)
Petroleum and Petrochemicals
76.0 (17%)
Others
25.3 (6%)
14.3 (2%)
41.0 (7%)
21.6 (2%)
42.6 (4%)
49.2 (8%)
203.4 (19%)
48.4 (8%)
49.1 (5%)
*3
*4
*5
*6
*7
Major Projects in Progress
(as of August 1, 2014)
Arzew
Algeria/LNG
Arzew
Algeria/LNG
Laffan Refinery Phase 2 Project
Yamal LNG
Yamal LNG
Russia/LNG
Russia/LNG
New Ulaanbaatar International Airport
Mongolia/Infrastructure
New Ulaanbaatar International Airport
Mongolia/Infrastructure
Jangkrik FPU
Indonesia/Offshore
Long Term Service Agreement
Shell Asia/Downstream
Abadi LNG
Indonesia/FLNG
Puerto La Cruz
Freeport LNG Tr. 1 & 2
USA/LNG
LNG Canada
Canada/LNG
LNG Canada
Canada/LNG
Golden Pass LNG
USA/LNG
Nghi Son Refinery
Nghi Son Refinery
Long Term Service Agreement
Shell Asia/Downstream
Cameron LNG
USA/LNG
Golden Pass LNG
USA/LNG
Freeport LNG Tr. 1 & 2
USA/LNG
Cameron LNG
USA/LNG
Ichthys LNG
Abadi LNG
Australia/LNG
Indonesia/FLNG
Ichthys LNG
Australia/LNG
Arrow LNG
Australia/LNG
Arrow LNG
Australia/LNG
Puerto La Cruz
Laffan Refinery Phase 2 Project
Plateau Maintenance Project
Qatar/LNG
Long Term Service Agreement
(RasGas/Qatargas/Shell)
Qatar/LNG, GTL
Plateau Maintenance Project
Qatar/LNG
Long Term Service Agreement
(RasGas/Qatargas/Shell)
Qatar/LNG, GTL
Jangkrik FPU
Mozambique LNG
Indonesia/Offshore
Mozambique/LNG
Mozambique LNG
Mozambique/LNG
EPC*/EPCm**/EPsCm***/EPCI****
FEED*****/Feasibility Study
EPC:
Engineering, Procurement and Construction
*
** EPCm: Engineering, Procurement and Construction management
*** EPsCm: Engineering, Procurement support and Construction management
**** EPCI:
***** FEED: Front-end Engineering and Design
Engineering, Procurement, Construction and Installation
EPC*/EPCm**/EPsCm***/EPCI****
FEED*****/Feasibility Study
*1: Classified as “Other Gas Related Works” in “Consolidated Financial Results” *2: Classified as “General Chemicals/Industrial Facilities” 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
2
Shogo Shibuya
President & CEO
Chiyoda Corporation
Thank you for your continuing support over the past 12 months.
We would like to present Chiyoda Group’s corporate overview for the fiscal year ended March
31, 2014, which was the first fiscal year of our Medium-Term Management Plan entitled “Seize the
moment, Open up new frontiers.”
Various measures have been implemented in accordance with the growth strategies and oper-
ation foundation strategies that are key to the Plan and which are aimed at achieving the vision for
the Chiyoda Group 10 years on. As a result, we have received orders for large LNG EPC (Engineering,
Procurement, and Construction) projects in the United States, and orders for studies and basic
design for LNG projects in Canada, Russia, and Africa. In doing so, we have created the groundwork
for receiving further EPC project orders in the future.
In the field of infrastructure, we received an order for the construction of an international airport
in Mongolia and orders for several mega-solar projects in Japan.
In terms of backlog projects, we completed an LNG plant in Papua New Guinea, a polycrystalline
silicon plant in Malaysia and an LNG receiving terminal project in Japan, and steady progress is
being made on the construction of an LNG plant in Australia and an oil refinery in Vietnam. As a
result, revenues were up year on year.
The world is currently facing an increasing demand for energy due to economic growth in
emerging countries, the Shale Revolution taking place mainly in North America, marine energy
development, and the increasing pressure to develop energy sources with less environmental
impact, such as renewable energy. Initiatives taken over this past fiscal year in response to these
needs include efforts to capture further project demand in North America, entering a capital
alliance with a marine resource development consulting company in the United Kingdom, con-
structing and operating a concentrating solar power (CSP) generation demonstration plant in Italy,
and commercialization of a large-scale hydrogen storage and transport system.
In the upcoming fiscal year ending in March 2015, each and every executive and employee will
use his or her utmost effort to continue steadily progressing projects in our existing businesses
including LNG, oil, and industrial facilities while, at the same time, fostering the growth of new
businesses into large and successful ones.
We have decided to pay a dividend of ¥16 per share, in line with our earnings for fiscal year 2013.
We ask all of our shareholders for their continued support in our ongoing efforts.
June 2014
3
CHIYODA CORPORATION ANNUAL REPORT FY2014CHIYODA CORPORATION ANNUAL REPORT FY2014
Management’s Discussion and Analysis
Results of Operations
During the fiscal year under review, despite there being a lull in the European debt crisis, we saw
Analysis
of
Results
changes in the world economy affected by the slowdown in the economy of emerging countries
such as China, the future policy trends of USA and geo-political concerns. However, in the energy
field, with which the Chiyoda Group has close links, preparations for investment in numerous gas
related facilities are being encouraged by the continuing increase in energy demand, the Shale
Revolution and the tide of Gas Shift. The Japanese economy has gradually recovered, largely due to
the measures taken by the government which are intended to pull Japan out of deflation.
Faced with these conditions, the Chiyoda Group entered the U.S. market as part of its drive to
become involved in the planned construction of numerous LNG projects throughout the world,
especially in the North America. While the Group continued to strengthen its core business in the
fields of oil and gas, it is also accelerating its expansion into new business fields such as offshore and
upstream, and new and renewable energy including Chiyoda’s own technologies for a Hydrogen
Supply Chain and solar power generation.
Execution of ongoing projects continued smoothly, including LNG plants in Papua New Guinea
and Australia, an overseas project for Japanese clients in Vietnam, refinery projects in Saudi Arabia,
Qatar and Venezuela, and LNG receiving terminals in Japan.
Consolidated new orders for the fiscal year amounted to 589,867 million yen (46.4% increase
year on year). The backlog and revenues were 1,072,218 million yen (19.1% increase) and 446,147
million yen (11.8% increase) respectively. The operating income amounted to 21,079 million yen
(16.1% decrease year on year), ordinary income to 22,837 million yen (10.5% decrease), and net
income resulted in 13,447 million yen (16.4% decrease).
LNG Plants/Other Gas Related Works
The Group was awarded Engineering, Procurement and Construction (EPC) contracts for huge
natural gas liquefaction facilites in U.S. to be fed by shale gas. The EPC execution of an LNG plant
in Papua New Guinea was completed and another LNG project in Australia is progressing as
planned. Moreover the Group has been executing Front End Engineering Design (FEED) works for
an LNG plant in Mozambique and a Floating LNG (FLNG) facility in Indonesia. Our Qatari subsidiary
is executing the Engineering, Procurement and Construction management (EPCm) works for the
maintenance and modification of existing LNG and gas processing plants built mainly by the Group.
In Japan, the Naoetsu LNG Receiving Terminal was completed, and several EPC works on LNG
receiving terminals and the expansion/modification works of existing plants are ongoing in parallel.
LNG plants and other gas-related works constitute our core business and, in this regard, we
will pursue any such project whether onshore/offshore, overseas/domestic or conventional/
unconventional.
Petroleum/Petrochemicals/Gas Chemicals
Several EPC works are ongoing globally for a refinery and petrochemical complex in Vietnam and a
refinery project in Qatar. The group completed the EPC works for a heavy oil cracking unit in Saudi
Arabia and a petrochemical plant in Singapore. Additionally, our subsidiary in Singapore is perform-
ing the project management services under an Enterprise Framework Agreement for downstream
projects within Asia, while the Engineering, Procurement support and Construction management
Results by
Business
Segment
(EPsCm) services for heavy crude oil upgrading facilities in Venezuela continue.
In Japan, we continued to perform the EPC work for a Trans-Alkylation Unit, the diagnosis of
existing facilities, maintenance and upgrading works, studies and construction works aimed at
energy saving in the facilities, and studies to fortify the infrastructure of a refinery in case of the
possible catastrophe.
Mining/Mineral Refining/Offshore/General Chemicals/Environment/Other Fields
As part of the Mid-Term Business Plan to expand our business fields, we are targeting new orders
and are steadily executing backlog contracts, both overseas and domestically, for offshore and
upstream projects, and non-hydrocarbon projects. The Group, in cooperation with our strategic
alliance partner Xodus Group, started providing integrated services in the offshore/upstream field
especially for domestic customers.
EPC works for polycrystalline silicon plants in Malaysia and a nickel refinery in the Philippines
were successfully completed. We have been reinforcing our efforts and developing our sales
activities to meet the needs of Japanese companies expanding their operations overseas.
We are operating a demonstration plant in Italy for a Concentrating Solar Power (CSP) system,
and accelerating our efforts to prove this technology in order to develop the business opportunities
for the CSP system, including EPC projects.
The Group is moving forward with the EPC execution of a new international airport in Mongolia
and is preparing bids for further airport and/or railway projects. While we are performing works on
a demonstration project for an industrial wastewater treatment/water recycling system in Saudi
Arabia, we have started business development for the EPC works for medium-small sized water
treatment projects in an effort to expand our recycled water-related business into the Middle East,
by establishing a framework in our group company to execute these works.
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 phar-
maceutical facilities for bulk vaccine and in vitro diagnostics, and are executing EPC works for fluid
infusion facilities, nanotechnology research development facilities in cooperation with industry,
government and academia, and newly awarded bio-medicine plant. On the other hand, to achieve
a hydrogen-based society, we are studying/discussing with the parties concerned (both overseas
and domestic) to establish a hydrogen supply chain through our own-developed technology to
transport and deliver large volumes of hydrogen.
Outlook for the Next Fiscal Year
Chiyoda will continue to accelerate its sales activities and 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 project in Australia.
In consideration of these circumstances, and assuming an exchange rate of ¥100/dollar, our forecasts for the
fiscal year ending March 31, 2015 include 800.0 billion yen in new consolidated contracts and 465.0 billion yen in
revenues. Our forecast for the consolidated operating income is 19.0 billion yen, consolidated ordinary income is
21.0 billion yen, and the consolidated net income is 13.5 billion yen.
4
5
CHIYODA CORPORATION ANNUAL REPORT FY2014CHIYODA CORPORATION ANNUAL REPORT FY2014
Topics
Continuing to lead in the LNG business
Saudi Arabia: Completion of construction of coker unit
As a leading contractor with a track record of constructing more than 40% (based on production capability) of LNG plants
In July 2009, Saudi Aramco Total Refining and Petrochemical
worldwide, including a super-large LNG plant in Qatar, we are leveraging our technical expertise and knowledge for
Company (SATORP) of Saudi Arabia contracted Chiyoda for the con-
projects in various stages of the LNG value chain, from gas production to end-use.
The global market for LNG plants is expanding into new regions such as
East Africa and North America, where shale gas has revitalized the business,
as well as forging ahead in the traditional production centers of the Middle
East, Southeast Asia, and Oceania. The industry is also seeing the develop-
ment of new technologies, such as floating liquefied natural gas (FLNG)
facilities.
We are well positioned at the forefront of new developments in the
USA, a prime expanding market for LNG plants, where we have been
awarded an Engineering, Procurement, and Construction (EPC) contract by
Cameron LNG LLC. We will continue our activities in this field and plan to
open up new markets and advance to new frontiers in LNG.
Signing the EPC contract with Cameron LNG of the US (from left
to right: Philip K. Asherman, President and CEO of CB&I; Octávio
Simões, President of Sempra LNG; Nobuyuki Uchida, President of
Chiyoda International Corporation)
struction of Saudi Arabia’s first heavy oil cracking facilities (103,000
barrels/day) as part of the Jubail Export Refinery project. The project
was completed in October 2013 and 29 million man hours were
expended without lost time incident.
A coker unit is a heavy oil cracking facility that converts residual
oil from a vacuum distillation column into naphtha, light and heavy
gas oils, liquefied petroleum gas (LPG), petroleum coke, and other
refined products.
View of the completed Coker Unit
As crude oil prices rise, oil companies will be looking to make use of heavy oil, which is difficult to process. Chiyoda is
ready to provide the oil companies with its know-how and technological expertise in this area.
Japan: Construction work finished on the Naoetsu LNG Terminal
Indonesia: First order for an FPU
INPEX CORPORATION celebrated completion of construction
of its first LNG receiving facility, the Naoetsu LNG Terminal, on 9
In February 2014, Eni Muara Bakau awarded Group company PT Chiyoda International Indonesia, in collaboration with
December 2013.
three local companies, a contract for Engineering, Procurement, Construction, Installation (EPCI) and test run assistance
INPEX is a supplier of imported LNG to Japan, particularly LNG
for a Floating Production Unit (FPU).
The FPU will be used in developing the Jangkrik and Jangkrik North East deep-sea gas field in Kalimantan. Gas
from the Ichthys Project currently under construction in Australia.
INPEX developed the terminal as a base from which the imported
extracted from the seabed will be processed offshore on the FPU
before being delivered to Bontang LNG Plants, which were con-
structed by Chiyoda.
We are accelerating our involvement in the floating business
worldwide. Our medium-term business plan targets the offshore and
upstream sphere of the industry as part of our growth strategy and
LNG will be delivered via natural gas pipelines to industrial plants
View of the completed Naoetsu LNG Terminal
Source: Courtesy of INPEX
and urban gas suppliers throughout Japan. Chiyoda is supporting stable natural gas supplies for Japan through its
involvement both in natural gas liquefaction/export and LNG receiving terminals.
this project is our first EPCI contract in this field.
Computer-graphics for FPU
Mozambique: Concludes MOU on engineer training
Qatar/Middle East: Expanding global operations
Chiyoda Almana Engineering LLC, our Group company in Qatar, is developing a Project Lifecycle
Engineering (PLE) business that has close links with the local communities and, to date, we have
been awarded nine long-term service contracts by eight local companies.
In 2013, we won an EPC contract with RasGas Company Limited for the onshore facilities
of a natural gas flow assurance project (to prevent hydrate formation). This is just one example
where our Group’s global operations are taking a lead role in expanding our business.
Chiyoda has used its extensive experience to provide learning opportunities
to engineers from various countries in design and engineering techniques
for LNG and other hydrocarbon processing plants.
The latest opportunity for these young engineers came in January 2014,
when Chiyoda concluded a Memorandum of Understanding (MOU) on
training Mozambique engineers during Prime Minister Shinzo Abe’s visit to
the country.
Chiyoda will deliver comprehensive training for the engineers to acquire
technical knowledge and practical engineering skills, which will provide
support for Mozambique’s sustainable development.
Joaquim Caronga, CFO of ENH, and Takashi Kubota, Executive
Chairman of Chiyoda, signing the MOU, witnessed by Japanese
Prime Minister Shinzo Abe and Mozambique President Armando
Emilio Guebuza
6
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CHIYODA CORPORATION ANNUAL REPORT FY2014CHIYODA CORPORATION ANNUAL REPORT FY2014
Corporate Governance System
Group
Companies
Business Execution Departments
(Risk Manager)
Self-Assessment
Corporate Governance
The Chiyoda Group believes that CSR-oriented management that earns the support and trust of all its stakeholders,
including shareholders, customers, and employees, is the basis of its corporate activities. We are therefore working in var-
ious ways to enhance corporate governance and actively implement CSR-oriented management, including maintaining
transparency and soundness.
Chiyoda has established the Compliance & CSR Unit and the Operational Auditing Unit to raise the quality and transpar-
ency of management, improve response to stakeholders and reinforce risk management and the compliance system.
We also established the Safety, Quality and Environmental (SQE) Unit and an internal control system directly linked to
management.
To ensure speedy and accurate decision-making to deal with rapidly changing social and economic conditions,
Chiyoda has adopted the executive officer system, which separates the functions of directors, who are responsible for
management supervision, from those of executive officers, who are responsible for the execution of business operations.
The Board of Directors and Meetings of the Board of Directors
The Board of Directors is composed of 9 directors. Important matters concerning the Company are reported and resolved
at meetings of the Board of Directors. The Executive Committee, made up of the four representative directors, examines
matters before they are submitted for resolution at meetings of the Board of Directors. It makes decisions about business
execution matters by unanimous resolution.
Audit & Supervisory Board
Chiyoda has also adopted the corporate auditor system. The Audit & Supervisory Board is made up of three outside
corporate auditors who closely monitor the execution of duties by directors and executive officers. The corporate auditors
attend meetings of the Executive Committee and express their opinion when necessary. In addition, their responsibilities
include deciding the content of resolutions submitted to the General Meeting of Shareholders, such as the appointment
Corporate Governance and Internal Controls
Election
Submit/Report
Report
Election
Report
Election
General Shareholders’ Meeting
Directors
Board of Directors
Election
Supervision
Election
Submit/Report
Audit Referral
Executive Officers
Executive Officer Meeting
4 Representative Directors
Executive Committee
Submit/
Report
Scheduled Reports
(deliverables, etc.)
Organization Staffing
Submit/Report
(advice) Submit/Report
Survey, Report Request
Compliance Committee
Internal Controls Management Committee(ICMC)
Risk Management & CSR Division
Report
Audit
Corporate Auditors
Audit & Supervisory Board
Report
Accounting
Auditor
Department Internal Controls
Global Operation Unit
Corporate Planning Unit
Corporate Services Unit, HRM* Unit
Finance & Project Audit Unit
*HRM: Human Resource Management
Operational Auditing Unit
SQE Unit
Compliance & CSR Unit
Crisis Management Unit
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Financial
Audit
External Director and Outside Corporate Auditors (as of June 25, 2014)
External Director 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 Mikio Kobayashi and Yukihiro Imadegawa, both of whom are on file
with the Tokyo Stock Exchange as independent directors) are as follows:
Name
Rationale for Election as External Director and Outside Audit & Supervisory Board Member
Masaji Santo
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.
Munehiko Nakano
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.
Mikio Kobayashi
Based on his experience as Representative Director and President of Ryoshin Credit Service Co., Ltd. and Representative Director
and Deputy President of Japan Property Solutions Co., Ltd., he contributes to ensuring the soundness of the Company’s business
management by conducting audits from a neutral and objective perspective.
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 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
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.
or dismissal of accounting auditors, auditing consolidated financial documents in close cooperation with the accounting
Yukihiro Imadegawa
auditors, and preparing audit reports.
Executive Officer System
Where necessary, executive officers cooperate with outside specialists such as corporate lawyers in carrying out duties
assigned to them at meetings of the Board of Directors and the Executive Committee. Executive officers provide regular
progress reports at executive officer and Executive Committee meetings attended by directors and corporate auditors.
Reinforcing Internal Controls
The Chiyoda Group constantly conducts self-assessments of existing internal control functions and reinforces internal
control systems. In addition, the Group has established the Operational Auditing Unit as an autonomous unit to perform
evaluations. Chiyoda has a system in place for auditing the development and operation of a suitable overall internal control
framework and constituent components, and for submitting reports to the Executive Committee.
• To ensure the transparency of information and raise the effectiveness of audits, Chiyoda aims to establish an integrated
framework of internal controls and a real-time monitoring system for senior management.
• To prevent insider trading, an information management system is in place that encompasses Group companies. All
important information is appropriately reported to the Board of Directors and the Executive Committee.
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
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
3
¥192 million
¥69 million
¥47 million
¥ 55 million
—
—
Notes:
1. Total director compensation is ¥308 million. Total audit &
supervisory board member compensation is ¥55 million. Total
outside audit & supervisory board member (three 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 who retired as of
the General Shareholders’ Meeting held on June 25, 2013.
8
9
CHIYODA CORPORATION ANNUAL REPORT FY2014CHIYODA CORPORATION ANNUAL REPORT FY2014
Corporate Information (As of March 31, 2014)
Corporate Data
Chiyoda Global Headquarters
Minato Mirai 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 May 1, 2014)
Number of Employees
1,630 (Non-Consolidated)
6,062 (Consolidated)
Annual Fiscal Close
March 31
Shareholders’ Meeting
June
Board of Directors
Audit & Supervisory Board
Executive Committee
President
Executive Office Unit
Risk Management & CSR Division
Technology & Engineering Division
Downstream & Non Hydrocarbon Project Operations
SQE Unit
Compliance & CSR Unit
Operational Auditing Unit
Crisis Management Unit
Corporate Planning Management & Finance Division
Corporate Planning Unit
IR & Public Relations Sec.
Corporate Services Unit
HRM* Unit
Finance & Project Audit Unit
Legal Sec.
Investment Promotion Team
Business Development Division
Strategic Business Planning &
Administration Unit
Corporate Relations Sec.
Business Development Unit 1
Business Development Unit 2
Business Development Unit 3
Energy Infrastructure Planning Unit
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
Project Logistics & Construction Division
PLC* Planning & Administration Unit
Procurement Unit
Construction Unit
Commissioning Unit
Offshore & Upstream Project Operations
Offshore & Upstream
Business Planning Unit
Offshore & Upstream
Business Operation Unit
Global Project Management Division
Gas & LNG Project Operations No. 1
Gas & LNG Project Unit No. 1
Strategic Project Development Unit
Project Team
Project Administration Unit
Project Management Unit
IT Management Unit
Global Operation Unit
Global Human Resource Planning Unit
BPM* Team
Work Process Innovation Task Team
Chiyoda Globalization Task Force Team
Change the Mindset
Oil & Petrochemical Project Unit
Gas Energy Project Unit
International Downstream &
Non-Hydrocarbon Project Unit
Project Team
Infrastructure Project Operations
IP* Planning & Administration Unit
Strategic Business & Investment
Management Unit
Hydrogen Supply Chain
Development Unit
Green Infrastructure Project Unit
Green Materials Project Unit
Pharmaceutical & Environmental
Project Unit
Technology Development Unit
Research & Development Center
ChAS Project Operations
ChAS Business Planning &
Administration Unit
ChAS Marketing Unit
Advanced Process Engineering Unit
Plant Diagnosis Unit
Project Lifecycle Engineering Unit
Program Management
Consulting Unit
Space Solution Unit
HRM: Human Resource Management BPM: Business Process Management PLC: Project Logistics & Construction IP: Infrastructure Project
Gas & LNG Project Operations No. 2
Gas & LNG Project Unit No. 2
Project Team
Global Project Management-Asia (GPM-A) Operations
GPM-A Project Unit
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
Xodus Group (Holdings) Ltd
Milan Representative Office
Chiyoda Corporation Netherlands B.V.
Chiyoda & Public Works Co., Ltd.
Sales Base
Engineering Center
Procurement Center
Project Execution Base
Operation Support
Beijing Office
Chiyoda International Corporation
Chiyoda Corporation (Shanghai)
Korea Representative Office
The Netherlands
UK
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
PT. Chiyoda International Indonesia
Singapore Human Resources International (Pte) Limited
Chiyoda Singapore (Pte) Limited
Chiyoda Malaysia Sdn. Bhd.
Chiyoda Sarawak Sdn. Bhd.
Chiyoda (Thailand) Limited
Chiyoda do Brasil Representações Ltda.
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.
10
11
CHIYODA CORPORATION ANNUAL REPORT FY2014CHIYODA CORPORATION ANNUAL REPORT FY2014 Directors and Officers (As of June 25, 2014)
Stock Information (As of March 31, 2014)
Board of Directors
Representative Directors
Directors
Executive Chairman
Takashi Kubota
Executive Vice President
Katsuo Nagasaka
President & CEO
Shogo Shibuya
Senior Vice President
Ryosuke Shimizu
Senior Executive Vice
President
Senior Executive Vice
President
Executive Vice
President & CFO
Keiichi Nakagaki
Senior Vice President
Masahiko Kojima
Hiroshi Ogawa
Director
Masaji Santo*1
Masahito Kawashima
Audit & Supervisory Board Members
Munehiko Nakano*3
Mikio Kobayashi*2/*3
Yukihiro Imadegawa*3
Executive Officers
Executive Vice President
Satoru Yokoi
Vice President
Eisuke Oki
Executive Vice President
Tadashi Izawa
Vice President
Masao Ishikawa
Executive Vice President
Takao Kamiji
Vice President
Yasumitsu Abe
Senior Vice President
Katsutoshi Kimura
Vice President
Toshiyuki Kariya
Senior Vice President
Mamoru Nakano
Vice President
Seiichiro Ikeda
Senior Vice President
Akira Fujisawa
Vice President
Arata Sahara*2
Senior Vice President
Nobuyuki Uchida
Vice President
Terunobu Iio*2
Senior Vice President
Hiromi Koshizuka
Vice President
Yasuo Hosono
Vice President
Shuichi Wada*2
Vice President
Hideaki Tomiku*2
Vice President
Noriyuki Kasuya
Vice President
Mitsuya Ogawa
*1: External
*2: New Assignments
*3: Outside Corporate Auditor
12
Authorized Shares
570,000,000
Number of Shareholders
14,375
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 31,2014)
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
BNP Paribas Securities (Japan) Limited
Trust & Custody Services Bank, Ltd.
State Street Bank and Trust Company 505225
Meiji Yasuda Life Insurance Company
The Bank of New York Mellon SA/NV10
Breakdown by shareholder
86,931
16,056
14,863
9,033
6,960
3,522
2,814
2,592
2,265
2,138
Ratio
Shares Owned
(%)
33.39
6.16
5.70
3.47
2.67
1.35
1.08
0.99
0.87
0.82
Total Number of
Shares Issued:
260,325
thousand
10.91
27.59
20.10
4.06
37.34
Financial Institutions
Securities Companies
Other Corporations
Foreign Investors and Others
Individuals and Others
Monthly Stock Price Range on the Tokyo Stock Exchange
Share Price (left)
Volume (right)
Nikkei Stock Average (right)
(Yen)
2,100
1,400
700
0
(Yen)
21,000
14,000
7,000
(Thousands
of shares)
100,000
50,000
4 5 6 7 8 9 101112
2009
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
2010
2011
2012
2013
0
1 2 3
2014
13
CHIYODA CORPORATION ANNUAL REPORT FY2014CHIYODA CORPORATION ANNUAL REPORT FY2014 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 2014)
Selected in FTSE Group’s responsible
investment index
ANNUAL REPORT FY2012
For the year ended March 31, 2013
Consolidated
F i n a n c i a l
S t ate m e nt s
Fo r t h e Ye a r E n d e d M a rc h 31, 2 014 ,
a n d I n d e p e n d e n t A u d i t o r ’s R e p o r t
Consolidated Balance Sheet
Chiyoda Corporation and Consolidated Subsidiaries
Chiyoda Corporation and Consolidated Subsidiaries
(March 31, 2014)
Consolidated Balance Sheet
March 31, 2014
Consolidated Balance Sheet
March 31, 2014
Millions of Yen
ASSETS
ASSETS
2014
2013
2014
Thousands of
U.S. Dollars
Millions of Yen
(Note 1)
2013
2014
Thousands of
U.S. Dollars
(Note 1)
2014
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
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
contracts (Notes 4 and 13)
contracts (Notes 4 and 13)
Costs of construction contracts in process
Accounts receivable—other
Jointly controlled assets of joint venture (Note 13)
Deferred tax assets (Note 10)
Prepaid expenses and other
Costs of construction contracts in process
Accounts receivable—other
Jointly controlled assets of joint venture (Note 13)
Deferred tax assets (Note 10)
Prepaid expenses and other
¥ 145,303
64
56,502
(3 )
¥ 180,229
¥ 145,303
2,400
226
64
37,917
56,502
(3)
(3 )
$ 1,410,712
¥ 180,229
2,400
622
226
548,564
37,917
(31)
(3)
16,503
33,826
4,936
127,466
18,868
5,629
27,477
16,503
15,295
33,826
8,476
4,936
94,696
127,466
13,162
18,868
3,329
5,629
160,227
27,477
328,412
15,295
47,927
8,476
1,237,539
94,696
183,185
13,162
54,650
3,329
Total current assets
Total current assets
409,096
383,206
409,096
3,971,810
383,206
PROPERTY, PLANT AND EQUIPMENT:
PROPERTY, PLANT AND EQUIPMENT:
Land
Land
Buildings and structures
Buildings and structures
Machinery and equipment
Machinery and equipment
Tools, furniture, and fixtures
Tools, furniture, and fixtures
Construction in progress
Construction in progress
Total
Total
Accumulated depreciation
Accumulated depreciation
5,265
12,557
944
7,106
286
26,159
(11,201 )
5,375
5,265
11,711
12,557
1,124
944
5,450
7,106
494
286
24,156
26,159
(9,609)
(11,201 )
51,122
5,375
121,916
11,711
9,166
1,124
68,990
5,450
2,783
494
253,979
24,156
(108,753)
(9,609)
Net property, plant and equipment
Net property, plant and equipment
14,958
14,547
14,958
145,226
14,547
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 5 and 13)
Investments in and advances to unconsolidated
subsidiaries and associated companies (Note 6)
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 5 and 13)
Investments in and advances to unconsolidated
subsidiaries and associated companies (Note 6)
Goodwill
Software
Asset for retirement benefits
Other assets (Note 10)
Allowance for doubtful accounts
Goodwill
Software
Asset for retirement benefits
Other assets (Note 10)
Allowance for doubtful accounts
21,131
23,740
21,131
205,163
23,740
8,155
12,395
7,056
34
2,528
(68 )
5,164
8,155
675
12,395
5,987
7,056
34
2,138
2,528
(80)
(68 )
79,177
5,164
120,343
675
68,512
5,987
333
24,552
2,138
(669)
(80)
Total investments and other assets
Total investments and other assets
51,233
37,624
51,233
497,414
37,624
$ 1,410,712
622
548,564
(31)
160,227
328,412
47,927
1,237,539
183,185
54,650
3,971,810
51,122
121,916
9,166
68,990
2,783
253,979
(108,753)
CURRENT LIABILITIES:
CURRENT LIABILITIES:
Short-term bank loans
Short-term bank loans
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
Millions of Yen
2014
2013
2014
Thousands of
U.S. Dollars
Millions of Yen
(Note 1)
2014
2013
Thousands of
U.S. Dollars
(Note 1)
2014
¥
1,283
82
145,392
80,182
5,513
4,985
507
4,002
19,730
¥
1,283
82
91
¥
145,392
117,769
80,182
79,210
5,513
8,500
4,985
6,822
507
480
4,002
1,291
5
19,730
16,259
$
12,464
91
¥
800
117,769
1,411,574
79,210
778,473
8,500
53,527
6,822
48,398
480
4,924
1,291
38,856
5
16,259
191,553
$
12,464
800
1,411,574
778,473
53,527
48,398
4,924
38,856
191,553
Total current liabilities
Total current liabilities
261,679
230,431
261,679
230,431
2,540,573
2,540,573
LONG-TERM 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 (Note 10)
LONG-TERM 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 (Note 10)
10,040
2,080
365
970
2,121
10,040
10,135
2,080
2,310
365
364
970
957
2,121
1,822
10,135
97,477
2,310
20,202
364
3,543
957
9,424
1,822
20,598
97,477
20,202
3,543
9,424
20,598
Total long-term liabilities
Total long-term liabilities
15,578
15,591
15,578
15,591
151,246
151,246
COMMITMENTS AND CONTINGENT LIABILITIES (Notes 7, 12, 14 and 15)
COMMITMENTS AND CONTINGENT LIABILITIES (Notes 7, 12, 14 and 15)
145,226
EQUITY (Notes 9 and 18):
Common stock—authorized, 570,000 thousand shares;
issued, 260,324 thousand shares in 2014 and 2013
EQUITY (Notes 9 and 18):
Common stock—authorized, 570,000 thousand shares;
issued, 260,324 thousand shares in 2014 and 2013
205,163
79,177
120,343
68,512
333
24,552
(669)
497,414
Capital surplus
Retained earnings
Treasury stock—at cost, 1,310 thousand shares in 2014 and
Capital surplus
Retained earnings
Treasury stock—at cost, 1,310 thousand shares in 2014 and
1,279 thousand shares in 2013
1,279 thousand shares in 2013
Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Defined retirement benefit plans
Total
Minority interests
Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Defined retirement benefit plans
Total
Minority interests
43,396
37,112
109,525
43,396
43,396
37,112
37,112
109,525
100,988
43,396
421,324
37,112
360,316
100,988
1,063,358
421,324
360,316
1,063,358
(1,390)
(1,349)
(1,390)
(1,349)
(13,498)
(13,498)
4,920
648
2,486
(287)
196,411
1,619
6,584
2,890
(1,235)
4,920
648
2,486
(287)
196,411
188,386
1,619
969
6,584
47,768
2,890
6,291
(1,235)
24,137
(2,787)
188,386
1,906,910
969
15,721
47,768
6,291
24,137
(2,787)
1,906,910
15,721
TOTAL
TOTAL
¥ 475,288
¥ 435,379
¥ 475,288
$ 4,614,451
¥ 435,379
$ 4,614,451
TOTAL
TOTAL
¥ 475,288
¥ 435,379
¥ 475,288
¥ 435,379
$ 4,614,451
$ 4,614,451
Total equity
Total equity
198,031
189,356
198,031
189,356
1,922,632
1,922,632
See notes to consolidated financial statements.
See notes to consolidated financial statements.
- 2 -
- 2 -
1
2
Consolidated Financial StatementsConsolidated Financial Statements
Consolidated Statement of Income
Chiyoda Corporation and Consolidated Subsidiaries
(Year Ended March 31, 2014)
Consolidated Statement of Comprehensive Income
Chiyoda Corporation and Consolidated Subsidiaries
(Year Ended March 31, 2014)
Consolidated Statement of Income
Year Ended March 31, 2014
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2014
Millions of Yen
2014
2013
Thousands of
U.S. Dollars
(Note 1)
2014
Millions of Yen
2014
2013
Thousands of
U.S. Dollars
(Note 1)
2014
¥ 446,147
¥ 398,918
$ 4,331,530
NET INCOME BEFORE MINORITY INTERESTS
¥ 13,210
¥ 16,391
$ 128,260
REVENUE
COST OF REVENUE
Gross profit
41,462
42,515
402,548
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
(Note 11)
20,383
17,402
197,897
404,685
356,402
3,928,981
OTHER COMPREHENSIVE INCOME (LOSS) (Note 16):
Unrealized (loss) gain on available-for-sale securities
Deferred (loss) gain on derivatives under hedge accounting
Foreign currency translation adjustments
Share of other comprehensive income of associates
accounted for using the equity method
(1,664)
(2,242)
3,625
5,075
2,448
1,081
(16,156)
(21,768)
35,194
104
85
1,016
Operating income
21,079
25,113
204,651
Total other comprehensive (loss) income
(176)
8,690
(1,713)
COMPREHENSIVE INCOME
¥ 13,034
¥ 25,082
$ 126,546
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Minority interests
¥ 13,087
(53)
¥ 24,723
358
$ 127,061
(514)
See notes to consolidated financial statements.
OTHER INCOME (EXPENSES):
Interest and dividend income
Interest expense
Equity in (losses) 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
Retirement benefit expenses (Note 8)
Other—net
2,590
(233)
(374)
(145)
(299)
(78)
2,321
(206 )
145
(1,681 )
1,704
(244 )
(230 )
(173 )
25,151
(2,271)
(3,636)
(1,408)
(2,906)
(762)
Other income—net
1,459
1,634
14,165
INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS
22,538
26,747
218,816
INCOME TAXES (Note 10):
Current
Deferred
13,101
(3,773)
11,669
(1,313 )
127,196
(36,639)
Total income taxes
9,327
10,356
90,556
NET INCOME BEFORE MINORITY INTERESTS
13,210
16,391
128,260
MINORITY INTERESTS IN NET INCOME
(236)
314
(2,294)
NET INCOME
¥ 13,447
¥ 16,077
$
130,555
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2014
Yen
U.S. Dollars
2014
2013
2014
PER SHARE OF COMMON STOCK (Notes 2.y and 17):
Basic net income
Cash dividends applicable to the year
- 3 -
¥ 51.91
16.00
¥ 62.06
19.00
(Continued)
$ 0.50
0.16
- 5 -
See notes to consolidated financial statements.
3
4
- 4 -
(Concluded)
Consolidated Financial StatementsConsolidated Financial Statements
Consolidated Statement of Changes in Equity
(Year Ended March 31, 2014)
Chiyoda Corporation and Consolidated Subsidiaries
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2014
Consolidated Statement of Changes in Equity
Year Ended March 31, 2014
Thousands
Outstanding
Number of
Shares of
Common
Stock
Common
Stock
Thousands
Outstanding
Number of
Shares of
Common
Stock
Capital
Surplus
Millions of Yen
Millions of Yen
Accumulated Other Comprehensive Income (Loss)
Retained
Earnings
Common
Stock
Treasury
Stock
Capital
Surplus
Unrealized
Gain on
Available-
for-Sale
Securities
Retained
Earnings
Deferred
Gain on
Derivatives
under Hedge
Accounting
Treasury
Stock
Unrealized
Gain on
Available-
for-Sale
Securities
Foreign
Currency
Translation
Adjustments
Deferred
Gain on
Derivatives
under Hedge
Accounting
Defined
Retirement
Benefit
Plans
Foreign
Currency
Translation
Adjustments
Total
Defined
Retirement
Benefit
Plans
Minority
Interests
Total
Equity
Total
Minority
Interests
Total
Equity
BALANCE, APRIL 1, 2012
BALANCE, APRIL 1, 2012
259,065
¥ 43,396
¥ 37,112
259,065
¥ 89,346
¥ 43,396
¥ (1,328)
¥ 37,112
¥ 1,509
¥ 89,346
¥ 442
¥ (1,328)
¥ (2,358 )
¥ 1,509
¥ 442
¥ 168,120
¥ (2,358 )
¥ 617
¥ 168,737
¥ 168,120
¥ 617
¥ 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
(19 )
Purchase of treasury stock
Net change in the year
16,077
(4,404)
(31)
16,077
(4,404)
(31)
(19 )
(21)
(21)
5,075
2,448
1,123
5,075
2,448
16,077
(4,404)
(31)
(21)
8,646
1,123
BALANCE, MARCH 31, 2013
BALANCE, MARCH 31, 2013
259,045
43,396
37,112
259,045
100,988
43,396
37,112
(1,349)
6,584
100,988
2,890
(1,349)
(1,235 )
6,584
2,890
188,386
(1,235 )
Net income
Cash dividends, ¥19.00 per share
Change of scope of consolidation
Purchase of treasury stock
Net change in the year
Net income
Cash dividends, ¥19.00 per share
Change of scope of consolidation
Purchase of treasury stock
(31 )
Net change in the year
13,447
(4,921)
12
13,447
(4,921)
12
(31 )
(40)
(40)
(1,664)
(2,242)
3,721
(1,664)
¥ (287 )
(2,242)
13,447
(4,921)
12
(40)
(472)
3,721
16,077
(4,404)
(31)
(21)
8,998
16,077
(4,404)
(31)
(21)
8,646
189,356
188,386
13,447
13,447
(4,921)
(4,921)
12
12
(40)
(40)
(472)
178
351
969
650
¥ (287 )
16,077
(4,404)
(31)
(21)
8,998
189,356
13,447
(4,921)
12
(40)
178
351
969
650
BALANCE, MARCH 31, 2014
BALANCE, MARCH 31, 2014
259,014
¥ 43,396
¥ 37,112
259,014
¥ 109,525
¥ 43,396
¥ (1,390)
¥ 37,112
¥ 4,920
¥ 109,525
¥ 648
¥ (1,390)
¥ 2,486
¥ 4,920
¥ (287 )
¥ 648
¥ 196,411
¥ 2,486
¥ 1,619
¥ (287 )
¥ 198,031
¥ 196,411
¥ 1,619
¥ 198,031
Thousands of U.S. Dollars (Note 1)
Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income (Loss)
Common
Stock
Capital
Surplus
Retained
Earnings
Common
Stock
Treasury
Stock
Capital
Surplus
Unrealized
Gain on
Available-
for-Sale
Securities
Retained
Earnings
Deferred
Gain on
Derivatives
under Hedge
Accounting
Treasury
Stock
Unrealized
Gain on
Available-
for-Sale
Securities
Foreign
Currency
Translation
Adjustments
Deferred
Gain on
Derivatives
under Hedge
Accounting
Defined
Retirement
Benefit
Plans
Foreign
Currency
Translation
Adjustments
Total
Defined
Retirement
Benefit
Plans
Minority
Interests
Total
Equity
Total
Minority
Interests
Total
Equity
BALANCE, MARCH 31, 2013
BALANCE, MARCH 31, 2013
$ 421,324
$ 360,316
$
$ 421,324
980,469
$ (13,103)
$ 360,316
$ 63,924
$
980,469
$ 28,059
$ (13,103)
$ (11,991)
$ 63,924
$ 28,059
$ 1,828,999
$ (11,991)
$ 9,409
$ 1,838,409
$ 1,828,999
$ 9,409
$ 1,838,409
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
130,555
(47,785)
119
130,555
(47,785)
119
(395)
(395)
130,555
(47,785)
119
(395)
(16,156)
(21,768)
36,128
$ (2,787 )
130,555
130,555
(47,785)
(47,785)
119
119
(395)
(395)
(4,582)
6,311
130,555
(47,785)
119
(395)
1,728
BALANCE, MARCH 31, 2014
BALANCE, MARCH 31, 2014
$ 421,324
$ 360,316
$ 1,063,358
$ 421,324
$ (13,498)
$ 360,316
$ 47,768
$ 1,063,358
See notes to consolidated financial statements.
See notes to consolidated financial statements.
$ 6,291
$ (13,498)
$ 24,137
$ 47,768
$ (2,787 )
$ 6,291
$ 1,906,910
$ 24,137
$ 15,721
$ (2,787 )
$ 1,922,632
$ 1,906,910
$ 15,721
$ 1,922,632
- 6 -
- 6 -
5
Consolidated Financial Statements
Consolidated Financial Statements
6
Consolidated Statement of Cash Flows
Chiyoda Corporation and Consolidated Subsidiaries
(Year Ended March 31, 2014)
Consolidated Statement of Cash Flows
Year Ended March 31, 2014
OPERATING ACTIVITIES:
Income before income taxes and minority interests
¥ 22,538
¥ 26,747
$ 218,816
Millions of Yen
2014
2013
Thousands of
U.S. Dollars
(Note 1)
2014
Adjustments for:
Income taxes paid
Depreciation
Amortization of goodwill
(Reversal of) allowance for doubtful accounts—net
(Reversal of) allowance for warranty costs for
completed works
Allowance for loss on construction contracts
Liability for retirement benefits—net
Loss (gain) on sales and disposals of fixed assets
Foreign exchange gain—net
Equity in losses (earnings) of associated companies
Changes in operating assets and liabilities:
Increase 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 in trade notes and accounts payable
(Decrease) increase in advance receipts on
construction contracts
Decrease (increase) in accounts receivable—other
Increase in jointly controlled assets of joint venture
(Decrease) increase in deposits received
Increase in interest and dividend receivable
Other—net
Total adjustments
(13,709)
3,196
825
(12)
(4)
2,534
(768)
31
(224)
374
(130 )
2,580
41
(11 )
187
723
(185 )
(1,460 )
(125 )
(145 )
(1,896)
(16,974)
23,650
(20,453 )
(1,714 )
30,130
(2,111)
2,519
(31,955)
(2,141)
(713)
(2,334)
(39,715)
992
(3,170 )
(28,603 )
619
(674 )
8,799
(12,599 )
(133,101)
31,034
8,016
(116)
(45)
24,610
(7,461)
301
(2,179)
3,636
(18,416)
(164,801)
229,617
(20,504)
24,456
(310,252)
(20,787)
(6,925)
(22,668)
(385,587)
Net cash (used in) provided by operating
activities
¥ (17,177)
¥ 14,147
$ (166,770)
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2014
INVESTING ACTIVITIES:
Net decrease in time deposits
Purchases of marketable securities
Proceeds from redemption 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
Purchase of shares of subsidiaries resulting in change in
scope of consolidation
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
Millions of Yen
2014
2013
Thousands of
U.S. Dollars
(Note 1)
2014
192
2,400
(1,981)
90
(3,294)
(7)
(4,046)
(9,134)
(445)
(712)
101
41
127
(2,400 )
(3,620 )
7,020
(3,502 )
(66 )
(2,450 )
81
(514 )
35
32
1,866
23,300
(19,238)
879
(31,988)
(67)
(39,285)
(88,682)
(4,327)
(6,915)
983
400
Net cash used in investing activities
(16,796)
(5,257 )
(163,075)
FINANCING ACTIVITIES:
Net increase in short-term bank loans
Proceeds from long-term debt
Repayments of long-term debt
Payments of cash dividends
Payments of cash dividends to minority shareholders
Chiyoda Corporation and Consolidated Subsidiaries
Other—net
Consolidated Statement of Cash Flows
Year Ended March 31, 2014
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON
CASH AND CASH EQUIVALENTS
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
INCREASE IN CASH AND CASH EQUIVALENTS FROM
NEWLY CONSOLIDATED SUBSIDIARY
DECREASE IN CASH AND CASH EQUIVALENTS
RESULTING FROM EXCLUSION OF SUBSIDIARIES
FROM CONSOLIDATION
11
(264)
(4,914)
(8)
(72)
10,000
(10,000 )
(4,397 )
(7 )
(27 )
109
(2,570)
(47,713)
(85)
(704)
(5,249)
(4,432 )
(50,963)
3,974
Millions of Yen
2,024
2014
¥ (35,249)
2013
¥ 6,482
Thousands of
38,584
U.S. Dollars
(Note 1)
2014
$ (342,224)
323
3,137
(22 )
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
180,229
173,769
1,749,799
CASH AND CASH EQUIVALENTS, END OF YEAR
¥ 145,303
¥ 180,229
$ 1,410,721
- 7 -
(Continued)
See notes to consolidated financial statements.
- 8 -
(Continued)
7
8
- 9 -
(Concluded)
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
Chiyoda Corporation and Consolidated Subsidiaries
(Year Ended March 31, 2014)
Notes to Consolidated Financial Statements
Year Ended March 31, 2014
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 ("Japanese GAAP"), 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 have been made in the 2013 consolidated financial
statements to conform to the classifications used in 2014.
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 ¥103 to $1, the approximate rate of exchange at March 31, 2014. 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, 2014, include the accounts of the
Company and its 29 significant (18 in 2013) subsidiaries (together, the "Group").
Under the control and influence concepts, 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 five (two in 2013) associated companies are accounted for by the equity method in 2014.
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.
Most of the foreign consolidated subsidiaries have a December 31 year-end which does not accord with that of
the Company. As a result, adjustments have been made for any significant transactions which took place
during the period between the year-end of these subsidiaries and the year-end of the Company.
Effective the year ended March 31, 2014, one of these consolidated subsidiaries changed its fiscal year end to
March 31 to improve the accuracy of group consolidation and closing. As a result of this change in the fiscal
year end, the consolidated financial statements for the year ended March 31, 2014, included the results for a
15-month period for this consolidated subsidiary from January 1, 2013 to March 31, 2014.
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 5 to 20 years.
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 also eliminated.
b. Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial
Statements—In May 2006, the Accounting Standards Board of Japan (the "ASBJ") issued ASBJ Practical
Issues Task Force ("PITF") No. 18, "Practical Solution on Unification of Accounting Policies Applied to
Foreign Subsidiaries for the Consolidated Financial Statements." PITF No. 18 prescribes that the accounting
policies and procedures applied to a parent company and its subsidiaries for similar transactions and events
under similar circumstances should in principle be unified for the preparation of the consolidated financial
statements. However, financial statements prepared by foreign subsidiaries in accordance with either
International Financial Reporting Standards or generally accepted accounting principles in the United States of
America tentatively may be used for the consolidation process, except for the following items that should be
adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP,
unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of actuarial gain or loss
of pensions that has been directly recorded in equity; (c) expensing capitalized development costs of R&D;
(d) cancellation of the fair value model of accounting for property, plant and equipment and investment
properties and incorporation of the cost model of accounting; and (e) exclusion of minority interests from net
income, if contained in net income.
c. Business Combinations—In October 2003, the Business Accounting Council issued a Statement of Opinion,
"Accounting for Business Combinations," and in December 2005, the ASBJ issued ASBJ Statement No. 7,
"Accounting Standard for Business Divestitures" and ASBJ Guidance No. 10, "Guidance for Accounting
Standard for Business Combinations and Business Divestitures." The accounting standard for business
combinations allowed companies to apply the pooling of interests method of accounting only when certain
specific criteria are met such that the business combination is essentially regarded as a uniting of interests. For
business combinations that do not meet the uniting of interests criteria, the business combination is considered
to be an acquisition and the purchase method of accounting is required. This standard also prescribes the
accounting for combinations of entities under common control and for joint ventures.
- 10 -
9
10
- 11 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
In December 2008, the ASBJ issued a revised accounting standard for business combinations, ASBJ Statement
No. 21, "Accounting Standard for Business Combinations." Major accounting changes under the revised
accounting standard are as follows: (1) The revised standard requires accounting for business combinations
only by the purchase method. As a result, the pooling of interests method of accounting is no longer allowed.
(2) The previous accounting standard required research and development costs to be charged to income as
incurred. Under the revised standard, in-process research and development costs (IPR&D) acquired in the
business combination are capitalized as an intangible asset. (3) The previous accounting standard provided for
a bargain purchase gain (negative goodwill) to be systematically amortized over a period not exceeding 20
years. Under the revised standard, the acquirer recognizes the bargain purchase gain in profit or loss
immediately on the acquisition date after reassessing and confirming that all of the assets acquired and all of
the liabilities assumed have been identified after a review of the procedures used in the purchase price
allocation. The revised standard was applicable to business combinations undertaken on or after April 1, 2010.
The Company acquired 76% of total voting right of Xodus Group (Holdings) Limited on June 28, 2013, and
accounted for it by the purchase method of accounting. The related goodwill is systematically amortized over
10 years.
d. Construction Contracts—In December 2007, 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 as follows:
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 cost of revenue.
e. 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.
f. 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 a 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.
g. 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.
h. 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.
i. 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.
j. 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.
k. Long-Lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes in
circumstance 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.
l.
Software—Software for internal use is amortized on a straight-line basis over its estimated useful life (five
years at the maximum).
m. Other Assets—Intangible assets are carried at cost less accumulated amortization, which is calculated by the
straight-line method over their estimated useful lives.
n. Allowance for Warranty Costs for Completed Work—The allowance for warranty costs for completed work is
provided based on past rate experience.
o. 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 in the balance
sheet.
p. 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.
11
12
- 12 -
- 13 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
q. Retirement and Pension Plans—The Company and consolidated subsidiaries have funded or unfunded
defined benefit pension plans and a defined contribution pension plans for employees. Certain consolidated
subsidiaries have defined benefit corporate pension plans or severance lump-sum payment plans, and calculate
retirement benefit expenses by using the simplified method.
Effective April 1, 2000, the Company and its domestic consolidated subsidiaries adopted a new accounting
standard for 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 projected benefit obligations are attributed to
periods on a straight-line basis. Actuarial gains and losses are amortized on a straight-line basis over 10 years
within the average remaining service period. Past service costs are amortized on a straight-line basis over 10
years within the average remaining service period.
The transitional obligation of ¥5,696 million ($55,300 thousand) is being amortized and charged to income
over 15 years using the straight-line amortization method and included in an operating expense in the
consolidated statements of income for the years ended March 31, 2014 and 2013.
In May 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 were followed by partial
amendments from time to time through 2009.
(a) Under the revised accounting standard, actuarial gains and losses and past service costs that are yet to be
recognized in profit or loss are recognized within equity (accumulated other comprehensive income),
after adjusting for tax effects, and any resulting deficit or surplus is recognized as a liability (liability for
retirement benefits) or asset (asset for retirement benefits).
(b) The revised accounting standard does not change how to recognize actuarial gains and losses and past
service costs in profit or loss. Those amounts are recognized in profit or loss over a certain period no
longer than the expected average remaining service period 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 are 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 (see Note 2.aa).
(c) The revised accounting standard also made certain amendments relating to the method of attributing
expected benefit to periods and relating to the discount rate and expected future salary increases.
This accounting standard and the guidance for (a) and (b) above are effective for the end of annual periods
beginning on or after April 1, 2013, and for (c) above are effective for the beginning of annual periods
beginning on or after April 1, 2014, or for the beginning of annual periods beginning on or after April 1, 2015,
subject to certain disclosure in March 2015, both 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 applied the revised accounting standard and guidance for retirement benefits for (a) and (b)
above, effective March 31, 2014. As a result, asset for retirement benefits of ¥34 million ($333 thousand) and
liability for retirement benefits of ¥2,080 million ($20,202 thousand) was recorded as of March 31, 2014, and
accumulated other comprehensive income for the year ended March 31, 2014, decreased by ¥287 million
($2,787 thousand). In addition, net assets per share decreased by ¥1.11 for the year ended March 31, 2014.
r. Asset Retirement Obligations—In March 2008, the ASBJ issued 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.
s. Research and Development Costs—Research and development costs are charged to income as incurred.
t. 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 notes 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 that 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.
u.
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 income tax
rates 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.
13
14
- 14 -
- 15 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
v. 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. Foreign Currency Financial Statements—Balance sheet accounts of consolidated foreign 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.
x. 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.
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, 2014 and 2013.
z. Accounting Changes and Error Corrections—In December 2009, the ASBJ issued ASBJ Statement 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.
Derivative financial instruments are classified and accounted for as follows:
aa. New Accounting Pronouncements
(1) All derivatives are recognized as either assets or liabilities and measured at fair value, with 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.
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 were followed by partial amendments from time to time through 2009.
The major change is as follows:
Amendments relating to the method of attributing expected benefit to periods and relating to the discount
rate and expected future salary increases
Foreign currency deposits are held to hedge foreign exchange risks derived from forecasted purchases of fixed
assets denominated in foreign currency.
The revised accounting standard also made certain amendments relating to the method of attributing
expected benefits to periods and relating to the discount rate and expected future salary increases.
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.
y. 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 fiscal years, including dividends to be paid after the end of the year.
The Company expects to apply the above from April 1, 2014. The effects of applying the revised accounting
standard are estimated as follows: (1) Retained earnings as of April 1, 2014, would be decreased by
¥579 million ($5,629 thousand). (2) Operating income and income before income taxes and minority interests
for the next fiscal year ending March 31, 2015, would not be material.
3. BUSINESS COMBINATION
On June 28, 2013, the Company acquired 76% of total voting rights of Xodus Group (Holdings) Limited ("Xodus
Group"). Xodus Group provides integrated services from conceptual definition through design and construction to
operation in international oil & gas and low carbon industries. This acquisition was made to complement the
Company's competence in offshore and upstream projects. The results of operations for Xodus Group are included
in the Company's consolidated financial statements from July 1, 2013.
The Company accounted for this business combination by the purchase method of accounting.
15
16
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Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
The acquisition cost was ¥9,899 million ($96,112 thousand) in cash in accordance with the Share Purchase
Agreement dated June 28, 2013. The total cost of acquisition has been allocated to the assets acquired and the
liabilities assumed based on their respective fair values. Goodwill recorded in connection with the acquisition
totaled ¥5,695 million ($55,297 thousand) for the reason that excess earnings are expected as a result from Xodus
Group's business expansion in the future.
The assets acquired and the liabilities assumed at the acquisition date are as follows:
5. HELD-TO-MATURITY SECURITIES AND INVESTMENT SECURITIES
Held-to-maturity securities and investment securities at March 31, 2014 and 2013, consisted of the following:
Millions of Yen
2014
2013
Thousands of
U.S. Dollars
2014
Millions of Yen
Thousands of
U.S. Dollars
Current—Held-to-maturity securities
Noncurrent—Equity securities
¥ 21,131
¥ 2,400
23,740
$ 205,163
Current assets
Fixed assets
Total assets
Current liabilities
Fixed liabilities
Total liabilities
¥ 5,061
2,540
¥ 7,602
¥ 2,856
166
¥ 3,022
$ 49,141
24,669
$ 73,810
$ 27,728
1,616
$ 29,345
If this business combination had been completed as of April 1, 2013, the beginning of the current fiscal year, the
unaudited condensed pro forma consolidated statement of income for the year ended March 31, 2014, would be as
follows:
Sales
Operating income
Income before income taxes and minority interests
Net income
Millions of Yen
Thousands of
U.S. Dollars
¥ 6,370
(585 )
(966 )
(676 )
$ 61,848
(5,688)
(9,383)
(6,568)
After the above stated business combination, the Company acquired additional shares of Xodus Group during this
fiscal year ended March 31, 2014. The acquisition cost was ¥505 million ($4,910 thousand) in cash. Goodwill
recorded in connection with the acquisition totaled ¥587 million ($5,706 thousand).
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, 2014 and 2013, were as follows:
Millions of Yen
2014
2013
Thousands of
U.S. Dollars
2014
The costs and aggregate fair values of held-to-maturity securities and investment securities at March 31, 2014 and
2013, were as follows:
March 31, 2014
Securities classified as—
Available-for-sale—equity securities
March 31, 2013
Securities classified as:
Available-for-sale—equity securities
Held-to-maturity
March 31, 2014
Millions of Yen
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
¥ 11,465
¥ 7,128
¥ 2
¥ 18,591
Millions of Yen
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
¥ 11,455
2,400
¥ 9,991
¥ 112
¥ 21,334
2,400
Thousands of U.S. Dollars
Unrealized
Gains
Unrealized
Losses
Fair
Value
Cost
Securities classified as—
Available-for-sale—equity securities
$ 111,320
$ 69,204
$ 23
$ 180,501
Available-for-sale securities whose fair value was not readily determinable at March 31, 2013, were as follows.
Similar information for 2014 is disclosed in Note 13.
Costs and estimated earnings
Amounts billed
¥ 379,837
(363,334)
¥ 329,290
(301,813 )
$ 3,687,743
(3,527,516)
Net
¥ 16,503
¥ 27,477
$
160,227
March 31, 2013
Securities classified as—
Available-for-sale—equity securities
Carrying Amount
Millions of Yen
¥ 2,406
17
18
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Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
6.
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED
COMPANIES
Commitment-line contracts at March 31, 2014, were as follows:
Investments in and advances to unconsolidated subsidiaries and associated companies at March 31, 2014 and 2013,
were as follows:
Investments
Long-term receivables
Total
7. LONG-TERM DEBT
Millions of Yen
2014
2013
Thousands of
U.S. Dollars
2014
¥ 7,183
971
¥ 4,686
477
$ 69,743
9,434
¥ 8,155
¥ 5,164
$ 79,177
Long-term debt at March 31, 2014 and 2013, consisted of the following:
Long-term loans principally from banks, due serially
through 2018, with interest rates ranging from
1.9% to 2.0% at 2014 and 2013—Unsecured
Obligations under finance leases
Total
Less current portion
Millions of Yen
2014
2013
Thousands of
U.S. Dollars
2014
¥ 10,023
99
10,122
(82)
¥ 10,221
5
10,226
(91 )
$ 97,315
962
98,277
(800)
Commitment-line contracts
Unused commitments
8. RETIREMENT AND PENSION PLANS
Millions of Yen
¥ 15,000
¥ 15,000
Thousands of
U.S. Dollars
$ 145,631
$ 145,631
The Company and consolidated subsidiaries have funded or unfunded defined benefit pension plans and a defined
contribution pension plans for employees.
Under defined benefit corporate pension plans, all of which are funded, employees are entitled to certain lump-sum
payments or pension payments based on cumulated points which are granted in accordance with years of
continuous employment, occupational classification and performance evaluation. Under severance lump-sum
payment plans, employees are entitled to certain lump-sum payments based on salary and service period.
Certain consolidated subsidiaries have defined benefit corporate pension plans or severance lump-sum payment
plans, and calculate retirement benefit expenses by using the simplified method.
One of domestic consolidated subsidiaries implemented a defined benefit pension plan and a defined contribution
pension plan in this fiscal year ended March 31, 2014, by which the former severance lump-sum payment plan was
terminated, and changed the accounting method to calculate retirement benefit obligations from the simplified
method to the principle method. As a result, retirement benefit expenses of ¥299 million ($2,906 thousand) is
recorded as other expense for the year ended March 31, 2014.
Year Ended March 31, 2014
Long-term debt, less current portion
¥ 10,040
¥ 10,135
$ 97,477
(1) The changes in defined benefit obligation for the year ended March 31, 2014, were as follows:
Annual maturities of long-term debt, excluding finance leases (see Note 12), at March 31, 2014, were as follows:
Year Ending
March 31
2015
2016
2017
2018
2019
2020 and thereafter
Total
Millions of Yen
Thousands of
U.S. Dollars
¥
4
4
4
10,004
4
1
¥ 10,023
$
43
44
40
97,128
40
17
$ 97,315
Balance at beginning of year
Current service cost
Interest cost
Actuarial losses
Benefits paid
The amount of obligation processing with
the changes from simplified method to
the principle method
Millions of Yen
¥ 20,630
593
326
176
(1,691 )
Thousands of
U.S. Dollars
$ 200,294
5,761
3,171
1,713
(16,418)
1,751
17,007
Balance at end of year
¥ 21,787
$ 211,529
19
20
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Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
(2) The changes in plan assets for the year ended March 31, 2014, were as follows:
Balance at beginning of year
Expected return on plan assets
Actuarial losses
Contributions from the employer
Benefits paid
The amount of asset processing with the
changes from simplified method to
the principle method
Millions of Yen
¥ 17,705
707
853
1,477
(1,691 )
Thousands of
U.S. Dollars
$ 171,893
6,868
8,283
14,344
(16,418)
1,318
12,803
Balance at end of year
¥ 20,370
$ 197,775
(3) The changes in the liability recorded in the consolidated balance sheet by using the simplified method for the
year ended March 31, 2014, were as follows:
Balance at beginning of year
Benefit costs
Benefits paid
Contribution to the plans
Decrease by implementation of defined
contribution plans
The amount of expense processing with the
changes from simplified method to the
principle method
Change of scope of consolidation
Others
Balance at end of year
Millions of Yen
Thousands of
U.S. Dollars
¥ 943
300
(46 )
(332 )
(173 )
(433 )
71
299
¥ 629
$ 9,162
2,920
(451)
(3,225)
(1,683)
(4,203)
691
2,906
$ 6,115
Others are benefit costs recognized by changing the pension plans and the accounting method to calculate
retirement benefit obligations from the simplified method to the principle method.
(4) Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined
benefit obligation and plan assets as of March 31, 2014
Funded defined benefit obligation
Plan assets
Unfunded defined benefit obligation
Millions of Yen
¥ 23,088
(21,511 )
1,577
469
Thousands of
U.S. Dollars
$ 224,160
(208,847)
15,313
4,555
Net liability for defined benefit obligation
¥ 2,046
$ 19,869
Liability for retirement benefits
Asset for retirement benefits
Millions of Yen
Thousands of
U.S. Dollars
¥ 2,080
(34 )
$ 20,202
(333)
Net liability for defined benefit obligation
¥ 2,046
$ 19,869
(5) The components of net periodic benefit costs for the year ended March 31, 2014, were as follows:
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Recognized actuarial losses
Amortization of transitional obligation
Benefit costs in simplified method
Others
Net periodic benefit costs
Millions of Yen
Thousands of
U.S. Dollars
¥ 593
326
(707 )
(176 )
2
608
300
299
¥ 1,248
$ 5,761
3,171
(6,868)
(1,711)
27
5,911
2,920
2,906
$ 12,117
Others are benefit costs recognized by changing the pension plans and the accounting method to calculate
retirement benefit obligations from the simplified method to the principle method.
(6) Accumulated other comprehensive income on defined retirement benefit plans as of March 31, 2014
Unrecognized prior service cost
Unrecognized actuarial losses
Unamortized transitional obligation
Total
(7) Plan assets as of March 31, 2014
a. Components of plan assets
Plan assets consisted of the following:
Debt investments
Equity investments
General accounts
Others
Total
Millions of Yen
Thousands of
U.S. Dollars
¥ (323 )
157
608
¥ 442
$ (3,137)
1,524
5,911
$ 4,298
26 %
37
25
12
100 %
21
22
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- 23 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
b. Method of determining the expected rate of return on plan assets
9. EQUITY
The expected rate of return on plan assets is determined considering the long-term rates of return which
are expected currently and in the future from the various components of the plan assets.
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:
(8) Assumptions used for the year ended March 31, 2014, were set forth as follows:
a. Dividends
Discount rate
Expected rate of return on plan assets
1.5 %
3.7
(9) The Company and consolidated subsidiaries have ¥550 million ($5,342 thousand) of payables to defined
contribution plans.
Year Ended March 31, 2013
The liability for retirement benefits at March 31, 2013, consisted of the following:
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
Net liability for employees' retirement benefits
Millions of Yen
¥ 23,727
(19,858)
(1,217)
(839)
499
2,310
¥ 2,310
The components of net periodic benefit costs for the year ended March 31, 2013, 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
Net periodic benefit costs
Assumptions used for the year ended March 31, 2013, 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
Millions of Yen
¥ 721
326
(275)
608
591
(176)
1,796
372
¥ 2,168
1.5%
1.6%
10 years
15 years
10 years
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 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.
23
24
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Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
10.
INCOME TAXES
The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the
aggregate, resulted in a normal effective statutory tax rate of approximately 38% for the years ended March 31,
2014 and 2013.
The tax effects of significant temporary differences, which resulted in deferred tax assets and liabilities at March
31, 2014 and 2013, were as follows:
Deferred tax assets:
Cost of revenue
Allowance for employees' bonus
Allowance for losses on construction contracts
Retirement benefits
Defined retirement benefit plans
Future deductible depreciation
Costs of construction contracts in process
Other
Less valuation allowance
Millions of Yen
2014
2013
¥ 14,927
1,438
1,305
647
1,079
657
3,224
(1,084)
¥ 11,438
1,641
104
792
636
566
4,220
(1,082 )
Thousands of
U.S. Dollars
2014
$ 144,926
13,965
12,679
6,282
10,478
6,385
31,306
(10,530)
Total
22,195
18,317
215,493
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Profit/loss in joint venture
Other
Total
2,460
433
145
457
3,414
1,852
402
380
23,889
4,208
1,412
4,438
3,496
6,050
33,949
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, 2014, is as follows:
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Nontaxable dividend income
Tax rate changes due to tax reform
Actual effective tax rate
2014
38 %
1
(1)
3
41 %
For the year ended March 31, 2013, a reconciliation was not disclosed because the difference is less than 5% of the
normal effective statutory tax rate.
New tax reform laws enacted in 2014 in Japan changed the normal effective statutory tax rate for the fiscal year
beginning on or after April 1, 2014, from approximately 38% to 35%. The effect of this change was to decrease
deferred tax assets in the consolidated balance sheet as of March 31, 2014, by ¥740 million ($7,191 thousand) and
to increase income taxes—deferred in the consolidated statement of income for the year then ended by ¥757 million
($7,354 thousand).
11. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥2,424 million ($23,537 thousand) and ¥2,323 million for
the years ended March 31, 2014 and 2013, 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:
Net deferred tax assets
¥ 18,699
¥ 12,267
$ 181,543
Year Ended March 31, 2014
Prior to April 1, 2013, "Allowance for losses on construction contracts" and "Costs of construction contracts in
process" were included in "Other" within the deferred tax assets section. From this fiscal year ended March 31,
2014, the amounts are disclosed separately due to the increase in materiality.
Prior to April 1, 2013, "Enterprise tax" and "Loss on valuation of investment securities" were disclosed separately.
From this fiscal year ended March 31, 2014, the amounts are included in "Other" within the deferred tax assets
section due to the decrease in materiality.
Net deferred tax assets as of March 31, 2014 and 2013, were recorded in the accompanying consolidated balance
sheet as follows:
Current assets—Deferred tax assets
Investments and other assets—Other assets
Long-term liabilities—Other
Millions of Yen
2014
2013
Thousands of
U.S. Dollars
2014
¥ 18,868
685
(854)
¥ 13,162
570
(1,465 )
$ 183,185
6,655
(8,296)
Due within one year
Due after one year
Total
Millions of Yen
Finance
Leases
Operating
Leases
Thousands of
U.S. Dollars
Finance
Leases
Operating
Leases
¥ 77
21
¥ 99
¥ 214
917
¥ 1,132
$ 756
205
$ 962
$ 2,084
8,908
$ 10,992
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.
25
26
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Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
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
Millions of Yen
Buildings
and
Structures
Tools,
Furniture,
and Fixtures
Other
Total
¥ 16
9
¥ 6
¥ 51
42
¥ 8
¥ 26
18
¥ 8
¥ 93
70
¥ 23
Obligations under finance leases for the year ended March 31, 2013, were as follows:
Due within one year
Due after one year
Total
Millions of Yen
2013
¥ 9
13
¥ 23
Depreciation expense as lessee, which is not reflected in the accompanying consolidated statement of income,
computed by the straight-line method was ¥13 million for the year ended March 31, 2013. 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.
For the year ended March 31, 2014, pro forma information of leased property whose lease inception was before
March 31, 2008, on an "as if capitalized" basis was not disclosed because the balances are not material.
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 have short maturities 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.x 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.
27
28
- 28 -
- 29 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
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.
March 31, 2013
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.
(a) Fair values of financial instruments
March 31, 2014
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
Short-term bank loans
Current portion of long-term debt
Notes and accounts payable—trade
Income taxes payable
Long-term debt
Total
Unrealized
Gain (Loss)
Carrying
Amount
¥ 145,303
64
56,502
16,503
127,466
18,591
Millions of Yen
Fair Value
¥ 145,303
64
56,502
16,503
127,466
18,591
¥ 364,431
¥ 364,431
¥
1,283
4
145,392
5,513
10,018
¥
1,283
4
145,392
5,513
10,018
¥ 162,212
¥ 162,212
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, 2014
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
Thousands of U.S. Dollars
Carrying
Amount
Fair Value
Unrealized
Gain (Loss)
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
Short-term bank loans
Current portion of long-term debt
Notes and accounts payable—trade
Income taxes payable
Long-term debt
Total
$ 1,410,712
622
548,564
$ 1,410,712
622
548,564
160,227
1,237,539
180,501
160,227
1,237,539
180,501
$ 3,538,168
$ 3,538,168
$
12,464
43
1,411,574
53,527
97,271
$
12,464
43
1,411,574
53,527
97,271
$ 1,574,881
$ 1,574,881
29
30
- 30 -
- 31 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
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.
Short-Term Bank Loans, Notes and Accounts Payable—Trade and Income Taxes Payable
The carrying values of accounts mentioned above approximate fair value because of their short
maturities.
Current Portion of Long-Term Debt (Bank Loans) and Long-Term Debt (Bank Loans)
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
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
Millions of Yen
2013
2014
Thousands of
U.S. Dollars
2014
¥ 2,537
¥ 2,403
$ 24,633
2
2
28
7,183
4,686
69,743
(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
March 31, 2014
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
Total
March 31, 2013
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
March 31, 2014
Millions of Yen
Due after
1 Year
through
5 Years
Due after
5 Years
through
10 Years
Due in
1 Year
or Less
¥ 145,266
64
71,347
127,466
¥ 1,658
¥ 344,144
¥ 1,658
Millions of Yen
Due after
1 Year
through
5 Years
Due after
5 Years
through
10 Years
Due in
1 Year
or Less
¥ 180,194
2,400
226
64,861
94,696
¥ 532
¥ 342,378
¥ 532
Thousands of U.S. Dollars
Due after
1 Year
through
5 Years
Due after
5 Years
through
10 Years
Due in
1 Year
or Less
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
Total
$ 1,410,357
622
692,689
1,237,539
$ 16,102
$ 3,341,209
$ 16,102
31
32
- 32 -
- 33 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
Please see Note 7 for annual maturities of long-term debt and Note 12 for obligations under finance leases.
March 31, 2014
14. DERIVATIVES
Derivative Transactions to Which Hedge Accounting Is Not Applied
March 31, 2014
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 AUD/selling Euro
Buying TWD/selling U.S.$
Total
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
Millions of Yen
Contract
Amount
Due after
One Year
¥ 2
22
Fair
Value
(Loss)
¥ (18 )
(1 )
13
8
5
(59 )
Unrealized
Gain (Loss)
¥ (18)
(1)
13
8
5
(59)
Contract
Amount
¥ 21,406
4,771
1,259
6,939
56
13
1,699
39
¥ 36,185
¥ 24
¥ (54 )
¥ (54)
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
Contract
Amount
¥ 14,267
11,243
284
1,933
276
79
¥ 28,085
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 AUD/selling Euro
Buying TWD/selling U.S.$
Thousands of U.S. Dollars
Contract
Amount
Due after
One Year
$ 25
213
Fair
Value
(Loss)
$ (181 )
(18 )
(6 )
129
80
53
(574 )
(9 )
Unrealized
Gain (Loss)
$ (181)
(18)
(6)
129
80
53
(574)
(9)
Contract
Amount
$ 207,829
46,327
12,223
67,369
552
126
16,502
387
Total
$ 351,319
$ 239
$ (525 )
$ (525)
Derivative Transactions to Which Hedge Accounting Is Applied
March 31, 2014
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 Euro/selling U.S.$
Buying TWD/selling U.S.$
Buying KRW/selling U.S.$
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
¥ 9,921
909
22
10,074
84
4,029
¥ 5,689
193
5,329
2,766
¥ (405)
29
7
296
(1)
184
¥ 25,041
¥ 13,978
¥ 111
Receivables
Payables
¥
32
365
186
¥
584
Interest rate swaps*2 (fixed rate payment,
Long-term debt
¥ 10,000
¥ 10,000
floating rate receipt)
Total
¥ 10,000
¥ 10,000
33
34
- 34 -
- 35 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
March 31, 2013
March 31, 2014
Millions of Yen
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
Total
Other*1:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen
Total
Foreign currency
forecasted
transaction
Receivables
Payables
Interest rate swaps*2 (fixed rate payment,
floating rate receipt)
Current portion of
long-term debt
Total
¥ 1,863
4,489
584
221
¥
513
1,056
461
¥ (220)
851
116
3
¥ 7,158
¥ 2,031
¥ 752
¥
693
948
372
18
¥
101
¥ 2,032
¥
101
¥ 10,000
¥ 10,000
¥ 10,000
¥ 10,000
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 Euro/selling U.S.$
Buying TWD/selling U.S.$
Buying KRW/selling U.S.$
Total
Other*1:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Total
Thousands of U.S. Dollars
Hedged Item
Contract
Amount
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Foreign currency
forecasted
transaction
$ 96,325
8,831
218
97,807
816
39,122
$ 55,234
1,877
51,740
26,858
$ (3,936)
286
74
2,879
(19)
1,795
$ 243,120
$ 135,710
$ 1,079
Receivables
Payables
$
311
3,551
1,811
$
5,674
Interest rate swaps*2 (fixed rate payment,
Long-term debt
$ 97,087
$ 97,087
floating rate receipt)
Total
$ 97,087
$ 97,087
*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 for 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, 2014, the Group had the following contingent liabilities:
Guarantees on employees' housing loans
Performance bond for an unconsolidated subsidiary
¥
89
1,907
$
871
18,520
Millions of Yen
Thousands of
U.S. Dollars
35
36
- 36 -
- 37 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
16. COMPREHENSIVE INCOME
There is no dilutive effect for the year ended March 31, 2014.
The components of other comprehensive income for the years ended March 31, 2014 and 2013, were as follows:
Year Ended March 31, 2013
Millions of Yen
2014
2013
Thousands of
U.S. Dollars
2014
¥ (2,619)
(2,619)
955
¥ 7,564
231
7,796
(2,721 )
$ (25,429)
(25,429)
9,273
Millions
of Yen
Net
Income
Thousands
of Shares
Weighted-Average
Shares
Yen
EPS
Basic EPS—Net income available
to common shareholders
¥ 16,077
259,053
¥ 62.06
There is no dilutive effect for the year ended March 31, 2013.
¥ (1,664)
¥ 5,075
$ (16,156)
18. SUBSEQUENT EVENT
Unrealized (loss) gain on available-for-sale securities:
(Losses) gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Deferred (loss) gain on derivatives under hedge
accounting:
Gains 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 of associates
accounted for using the equity method—
Gains arising during the year
Total
¥ 2,651
(3,573)
(2,729)
(3,652)
1,410
¥ 6,362
(2,299 )
(117 )
3,945
(1,497 )
$ 25,739
(34,697)
(26,503)
(35,462)
13,693
¥ (2,242)
¥ 2,448
$ (21,768)
¥ 3,625
¥ 1,081
$ 35,194
¥ 3,625
¥ 1,081
$ 35,194
¥
¥
104
104
¥
¥
85
85
$
$
1,016
1,016
Total other comprehensive (loss) income
¥
(176)
¥ 8,690
$
(1,713)
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, 2014 and 2013, is as follows:
Year Ended March 31, 2014
Millions
of Yen
Net
Income
Thousands
of Shares
Weighted-Average
Shares
Yen
U.S. Dollars
EPS
Basic EPS—Net income available
to common shareholders
¥ 13,447
259,030
¥ 51.91
$ 0.50
The following appropriation of retained earnings at March 31, 2014, was approved at the Company's shareholders'
meeting on June 25, 2014:
Millions of Yen
Thousands of
U.S. Dollars
Year-end cash dividends, ¥16.00 ($0.15) per share
¥ 4,144
$ 40,235
19. SEGMENT INFORMATION
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.
(1) Description of Reportable Segments
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 transfers are
measured at the quoted market price.
37
38
- 38 -
- 39 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
(3) Information about Sales, Profit (Loss), Assets, Liabilities, and Other Items
Year Ended March 31, 2014
Year Ended March 31, 2014
Millions of Yen
Reportable
Segment
Engineering
Other*1
Total
Reconcili-
ations*2
Consoli-
dated*3
Sales:
Sales to external customers
Intersegment sales or transfers
¥ 441,615
14
¥ 4,532
6,280
¥ 446,147
6,295
¥ (6,295 )
¥ 446,147
Total
¥ 441,629
¥ 10,813
¥ 452,443
¥ (6,295 )
¥ 446,147
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, 2013
¥ 20,788
470,188
267,501
¥
282
4,773
1,781
¥ 21,070
474,961
269,283
¥
8
326
7,973
¥ 21,079
475,288
277,257
3,175
795
5,375
21
29
3,196
825
5,375
4,126
27
4,154
3,196
825
5,375
4,154
Millions of Yen
Reportable
Segment
Engineering
Other*1
Total
Reconcili-
ations*2
Consoli-
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
¥ 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
Engineering
Other*1
Total
Reconcili-
ations*2
Consoli-
dated*3
Sales:
Sales to external customers
Intersegment sales or transfers
$ 4,287,526 $ 44,004 $ 4,331,530
$ 4,331,530
142
60,978
61,120 $ (61,120 )
Total
$ 4,287,668 $ 104,982 $ 4,392,651 $ (61,120 ) $ 4,331,530
Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associated
companies
Increase in property, plant
and equipment and
intangible assets
201,825 $
$
4,564,932
2,597,104
2,740 $
204,566 $
84 $
46,344
17,300
4,611,277
2,614,404
3,174
77,414
204,651
4,614,451
2,691,819
30,825
7,725
52,186
208
291
31,034
8,016
52,186
40,061
269
40,331
31,034
8,016
52,186
40,331
Notes for the year ended March 31, 2014:
*1 "Other" represents industry segments, which are not included in the reportable segment, consisting of
temporary staffing services and travel services.
*2 The detail of the reconciliations is as follows:
(1) The reconciliation in segment profit of ¥8 million ($84 thousand) is the elimination of intersegment
trades.
(2) The reconciliation in segment assets of ¥326 million ($3,174 thousand) is the result of the elimination
of intersegment trades of ¥(2,047) million ($(19,881) thousand) and the Group's assets of
¥2,374 million ($23,056 thousand), which are not included in the reportable segment.
(3) The reconciliation in segment liabilities of ¥7,973 million ($77,414 thousand) is the result of the
elimination of intersegment trades of ¥(2,026) million ($(19,672) thousand) and the Group's liabilities
of ¥10,000 million ($97,087 thousand), which are not included in the reportable segment.
*3 The calculation of the segment profit is based on the operating income in the consolidated statement of
income.
39
40
- 40 -
- 41 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
Notes for the year ended March 31, 2013:
Year Ended March 31, 2013
*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 ¥(235) million is the elimination of intersegment trades.
(2) The reconciliation in segment assets of ¥1,104 million is the result of the elimination of intersegment
trades of ¥(2,066) million and the Group's assets of ¥3,170 million, which are not included in the
reportable segment.
(3) The reconciliation in segment liabilities of ¥7,949 million is the result of the elimination of
intersegment trades of ¥(2,050) million and the Group's liabilities of ¥10,000 million, which are not
included in the reportable segment.
(4) The reconciliation in depreciation of ¥(36) million is the elimination of intersegment trades.
(5) The reconciliation in increase in property, plant and equipment and intangible assets of ¥(300) 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, 2014
Japan
Australia
Papua New Guinea
Malaysia
Others
Total
Millions of Yen
¥ 128,743
114,894
68,990
53,380
80,138
Thousands of
U.S. Dollars
$ 1,249,936
1,115,482
669,810
518,254
778,046
¥ 446,147
$ 4,331,530
Japan
Malaysia
Papua New Guinea
Australia
Others
Total
Millions of Yen
¥ 150,800
83,685
66,143
44,559
53,729
¥ 398,918
Note: Revenue is classified in countries or regions based on location of construction site.
(b) Property, plant and equipment
Year Ended March 31, 2014
Japan
Asia
Others
Total
Year Ended March 31, 2013
Japan
Asia
Others
Total
(3) Information about Major Customers
Year Ended March 31, 2014
Name
Related Segment
Millions of Yen
Ichthys Lng Pty Ltd.
Esso Highlands Ltd.
Tokuyama Malaysia Sdn. Bhd
Engineering
Engineering
Engineering
¥ 109,964
68,788
49,934
Millions of Yen
¥ 12,454
1,746
757
Thousands of
U.S. Dollars
$ 120,914
16,957
7,354
¥ 14,958
$ 145,226
Millions of Yen
¥ 12,935
1,377
234
¥ 14,547
Thousands of
U.S. Dollars
$ 1,067,617
667,847
484,804
41
42
- 42 -
- 43 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
Independent Auditor’s Report
Year Ended March 31, 2013
Name
Tokuyama Malaysia Sdn. Bhd
Esso Highlands Ltd.
Ichthys Lng Pty Ltd.
Related Segment
Millions of Yen
Engineering
Engineering
Engineering
¥ 82,921
65,159
42,185
(4) Information about Goodwill by Segments
Ending balance of goodwill as of March 31, 2014 and 2013, was as follows:
Millions of Yen
2014
¥ 11,930
464
2013
¥ 180
494
Thousands of
U.S. Dollars
2014
$ 115,829
4,513
¥ 12,395
¥ 675
$ 120,343
Engineering
Other*
Total
* Other involves temporary staffing services.
* * * * * *
43
44
- 44 -
Consolidated Financial StatementsConsolidated Financial Statements
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 2014)
Selected in FTSE Group’s responsible
investment index
ANNUAL REPORT FY2012
For the year ended March 31, 2013
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