ANNUAL
REPORT
FY2014
For the year ended March 31, 2015
Courtesy of Mizushima LNG Co., Ltd.
Financial Highlights
Profile
Founded in 1948 in the post war period to reconstruct Japan, Chiyoda started its engi-
neering business for domestic projects mainly in petroleum refining, gas processing and
petrochemical fields, and expanded into overseas projects in the 1960s. 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.
Aiming to raise corporate value, the Group announced in 2013 a four-year business
plan, “Seize the moment, Open up new frontiers”. The Medium-Term Management Plan
includes a growth strategy and an operating foundation strategy. The Group aims to
maintain growth as a constant provider of the value and service required by society and
customers, by identifying the current trend. The operating foundation strategy provides the
base for achieving the sustainable growth of the Group.
The management team and employees of the Group will adhere to Compliance, Health,
Safety and Environment (HSE) and risk management to fulfil Corporate Social Responsibility
(CSR) when implementing each action plan.
Contents
01 Financial Highlights
02 At a Glance
03 To Our Shareholders
04 Management’s Discussion and Analysis
06 Topics
08 Commitment to CSR
12 Corporate Governance
14 Corporate Information
16 Directors and Officers
17 Stock Information
Years Ended March 31, 2015, 2014, 2013, 2012, and 2011
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)
2015
2014
2013
2012
2011
¥480,979
¥446,147
¥398,918
¥254,675
¥247,082
435,327
21,466
22,012
11,029
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
¥515,839
¥475,288
¥435,379
¥365,795
¥353,392
208,405
151.0
198,031
156.3
189,356
166.3
168,737
165.5
155,758
173.8
¥42.58
796.89
13.0
4.5
5.5
¥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
Note: Yen amounts are rounded down to the nearest million 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
30
30
30
25
25
25
25.1
25.1
25.1
24.2
24.2
24.2
21.1
21.1
21.1
21.5
21.5
21.5
481.0
481.0
481.0
446.1
446.1
446.1
20
20
20
17.5
17.5
17.5
800
800
800
700
700
700
600
600
600
500
500
500
400
400
400
300
300
300
247.1 254.7
247.1 254.7
247.1 254.7
398.9
398.9
398.9
200
200
200
100
100
100
0
0
0
2011
2011
2011
2012
2012
2012
2013
2013
2013
2014
2014
2014
2015
2015
2015
15
15
15
10
10
10
5
5
5
0
0
0
30
30
30
20
20
20
10
10
10
8.0
8.0
8.0
16.1
16.1
16.1
14.4
14.4
14.4
13.4
13.4
13.4
11.0
11.0
11.0
2011
2011
2011
2012
2012
2012
2013
2013
2013
2014
2014
2014
2015
2015
2015
0
0
0
2011
2011
2011
2012
2012
2012
2013
2013
2013
2014
2014
2014
2015
2015
2015
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, 2015. 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
8
9
22
8
54
5 8
7
7
5
2
12
2
74
78
481.0
Billion yen
746.8
Billion yen
1,416.9
Billion yen
257.9 (54%)
550.8 (74%)
1,103.0 (78%)
38.0 (8%)
49.6 (7%)
33.3 (2%)
106.7 (22%)
49.1 (7%)
170.0 (12%)
41.9 (9%)
36.5 (8%)
39.6 (5%)
57.7 (8%)
33.1 (2%)
77.6 (5%)
Major Projects in Progress
(As of June 2015)
*3
*4
*5
*6
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
Shogo Shibuya
President & CEO
Chiyoda Corporation
Thank you for your continued support over the past 12 months.
We present Chiyoda Group΄s corporate overview for the fiscal year ended March 31, 2015, the
halfway our Medium-Term management Plan entitled “Seize the moment, Open up New Frontiers”.
As a result of implementing various measures in accordance with the growth strategies and
operation foundation strategies defined in the Plan, we have achieved impressive results, especially
in the LNG and gas related field, or our core business. An LNG plant in Papua New Guinea, and LNG
receiving terminal projects in Japan were successfully completed. Now we are moving forward
with the EPC works in Australia, the USA, Russia and Japan. All of them are progressing steadily.
As the global market environment in this field is becoming more uncertain in the short-term, we
have to carefully explore the possible market opportunities while continuing to build our technical
expertise to strengthen and maintain our competitiveness.
In the Petroleum, Petrochemicals and Gas chemical field, which is also our core business, we
have maintained stable operations. Several projects in Japan and a large scale complex in Saudi
Arabia have also been completed successfully. In this field, the Group will aim to earn handsome
profits by implementing measures to select and concentrate on business opportunities in Asia and
the Middle East and by seeking projects which inevitably require our own technologies.
In the new business field in which we have been taking several measures, we have achieved
good results including two EPC contracts for an airport as social infrastructure and an Engineering,
Procurement, Construction and Installation (EPCI) contract in the offshore/upstream field. The Group
will continue and accelerate the business development to produce more profits early.
In the pharmaceutical industry, the Group was newly awarded EPC works for manufacturing
facilities of active pharmaceutical ingredients and vaccines. The Group aims to advance into the life
science field by enhancing our function to provide advanced solutions.
In these two years, the business environment surrounding the Group has changed drastically,
such as a plunge in oil prices. Now is the time for the Group to “seize the moment”, create new
added value and “open up new frontiers.”
We have decided to pay a dividend of ¥13 per share, in line with our earnings for the fiscal
year 2014.
We ask all of our shareholders for your continued support in our ongoing efforts.
June 2015
*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 ExxonMobil PNG Limited *4: Courtesy of Shell *5: Courtesy of Solar Frontier K.K. *6: Courtesy of Kashima Aromatics Co., Ltd.
2
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CHIYODA CORPORATION ANNUAL REPORT FY2014CHIYODA CORPORATION ANNUAL REPORT FY2014Puerto La CruzCameron LNGUSA/LNGFreeport LNGUSA/LNGFEED*****/Feasibility Study EPC*/EPCm**/EPsCm***/EPCI****Titanium Sponge PlantSaudi Arabia/MetalYamal LNGRussia/LNGLaffan Refinery Phase 2 Project Long Term Service Agreement (RasGas/Qatargas/Shell) Qatar/LNG, GTLIchthys LNGAustralia/LNGLong Term Service Agreement Shell Asia/DownstreamJangkrik FPU Indonesia/OffshoreNghi Son RefineryLNG CanadaCanada/LNGMozambique LNG Area 4Mozambique/LNGAbadi LNGIndonesia/FLNGTangguh Tr. 3Indonesia/LNGNew Ulaanbaatar International AirportMongolia/InfrastructureGolden Pass LNGUSA/LNGAlaska LNGUSA/LNGMozambique LNG Area 1Mozambique/LNGNew Bohol AirportPhilippines/InfrastructureRAPIDMalaysia/Refinery & PetrochemicalPuerto La CruzCameron LNGUSA/LNGFreeport LNGUSA/LNGFEED*****/Feasibility Study EPC*/EPCm**/EPsCm***/EPCI****Titanium Sponge PlantSaudi Arabia/MetalYamal LNGRussia/LNGLaffan Refinery Phase 2 Project Long Term Service Agreement (RasGas/Qatargas/Shell) Qatar/LNG, GTLIchthys LNGAustralia/LNGLong Term Service Agreement Shell Asia/DownstreamJangkrik FPU Indonesia/OffshoreNghi Son RefineryLNG CanadaCanada/LNGMozambique LNG Area 4Mozambique/LNGAbadi LNGIndonesia/FLNGTangguh Tr. 3Indonesia/LNGNew Ulaanbaatar International AirportMongolia/InfrastructureGolden Pass LNGUSA/LNGAlaska LNGUSA/LNGMozambique LNG Area 1Mozambique/LNGNew Bohol AirportPhilippines/InfrastructureRAPIDMalaysia/Refinery & PetrochemicalLNGGas Processing*1Petroleum and PetrochemicalsFine Industries*2Others Management’s Discussion and Analysis
Results of Operations
Analysis of Results
project management services under an Enterprise Framework Agreement for downstream projects within Asia. In Japan,
we have completed an EPC work for a Trans-Alkylation Unit and continued to perform diagnosis of existing facilities,
maintenance and upgrading works, studies and construction works aimed at energy saving in the facilities, and studies
to strengthen the infrastructure of a refinery against possible catastrophe damage.
The global economic environment surrounding the Chiyoda Group has become more increasingly uncertain during
this fiscal year, mainly due to economic slowdowns in several regions, geopolitical fears and a plunge in crude oil prices
Mining/Mineral Refining/General Chemicals/Industries/Environment
in the latter half of this fiscal year, while the US economy has continuously been relatively stable. Notwithstanding the
The Group has been moving forward with an EPC execution of the international airport in Mongolia and newly
positive outlook for long-term future global energy demand, near-term investment decision making in numerous oil and
awarded one in the Philippines, and the preparation of tenders for future transport infrastructure projects. In
gas-related facilities is becoming unpredictable. The recovery of the Japanese economy is only moderate as demand has
an effort to expand its business into medium-small sized water treatment systems, the Group is operating a
not fully recovered following the increase of consumption tax, despite government fiscal and monetary policies easing
demonstration plant for an industrial wastewater treatment/water recycling system in Saudi Arabia and is estab-
and the depreciation of the Yen in global financial markets.
lishing a framework within the Group to execute these works in the Middle East and Asia. Meanwhile, we are
Under such circumstances, the Group has continued to strengthen its core business in the conventional fields of oil
also responding to the expansion in demand of overseas Japanese clients΄ businesses in non-hydrocarbon fields.
and gas, according to strategies defined in its Medium-Term Management Plan. In parallel, the Group has accelerated
In Japan, the Group has been awarded a number of EPC works for large-scale photovoltaic power generation
expansion in new business spheres including offshore and upstream business, new and renewable energy, such as the
systems and further business opportunities are expected in this field. In pharmaceutical industry, the Group
Hydrogen Supply Chain, utilizing Chiyoda΄s own technologies, and solar power generation utilizing photovoltaic and
was newly awarded EPC works for manufacturing facilities of active pharmaceutical ingredient and vaccine. The
concentrating solar power technology.
Group also executed several EPC works for manufacturing facilities of active pharmaceutical ingredients and
Ongoing projects including LNG plants in Australia, the USA and Russia, refinery projects in Vietnam, Qatar and
nanotechnology research development facilities in cooperation with industry, government and academia.
Venezuela, the Mongolian international airport project and LNG receiving terminals and photovoltaic power generation
systems in Japan have all progressed properly.
New Business Fields
Consequently, consolidated new orders for the fiscal year amounted to 746,791 million yen (26.6% increase
The Group, in cooperation with our strategic alliance partner Xodus Group, has started providing integrated services in the
year on year). The backlog and revenues were 1,416,901 million yen (32.1% increase) and 480,979 million yen (7.8%
offshore/upstream field especially for Japanese customers. The EPCI execution of a floating production unit in Indonesia is
increase) respectively.
in progress. The Group is actively proceeding with business activities in the Subsea/Subsurface Engineering field. As part of
The operating income amounted to 21,466 million yen (1.8% increase), ordinary income to 22,271 million yen (2.5%
this strategy, the Group has formed a new joint venture company with Xodus Group and Saipem International BV in order to
decrease year on year), and net income resulted in 11,029 million yen (18.0% decrease).
The decrease in incomes resulted from the increase in selling, general and administrative expenses, equity in
losses of associated companies, delays in recovery of overseas subsidiaries and reversal of deferred tax assets due to
tax rate reduction.
Results by Business Segment
LNG Plants/Other Gas Related Works
The Group has been moving forward with the EPC works for LNG plants in Australia, the USA and Russia, and Front End
Engineering Design (FEED) works in Indonesia, Mozambique, Canada and the USA, all of which have progressed properly.
Our Qatari subsidiary has been executing Engineering, Procurement and Construction management (EPCm) works for
the maintenance and modification of existing LNG and gas processing plants, most of which were originally built by the
Group. In Japan, two LNG receiving terminal projects have been completed and a further one is in the execution phase.
enter into the subsea engineering business, while the Group also invested in a company established to develop commercially
viable technology for exploiting seabed methane hydrate. As for the concentrating solar power system, the Group continues
to operate a demonstration plant in Italy with the aim of developing business opportunities in this field. Furthermore, we
have developed our own technology to transport and deliver large volumes of hydrogen and are actively collaborating with
various parties in order to establish a hydrogen supply chain to achieve a hydrogen-based society.
Moreover, the Group is considering to focus newly on the growing market for life science field symbolized by iPS cells,
applying our pharmaceutical and medical technologies.
Outlook for the Next Fiscal Year
Modification studies and construction works for existing plants have been awarded and under execution. The Group will
With its highest backlog of contracts, the Group will continue to work diligently on the execution of existing
continue to pursue opportunities within LNG plants and other gas-related fields as the Group΄s core business, whether
large projects in Australia, Russia and U.S. which enhance its core business. To materialize The Medium-Term
onshore or offshore, overseas or domestic, and conventional or unconventional.
Management Plan, the Group will also continue to accelerate our growth strategy to diversify the business portfo-
Petroleum/Petrochemicals/Gas Chemicals
lio by expanding new business fields.
In consideration of these circumstances, and assuming an exchange rate of ¥120/dollar, our forecasts for the
The Group was awarded an Engineering, Procurement, Construction and Commissioning (EPCC) contract for a Residue
fiscal year ending March 31, 2016 include 350.0 billion yen in consolidated new contracts and 600.0 billion yen
Fluid Catalytic Cracking (RFCC) plant in Malaysia. EPC works have been ongoing for a refinery and petrochemical complex
in revenues. Our forecast for the consolidated operating profit is 20.0 billion yen, consolidated ordinary income is
in Vietnam, a refinery project in Qatar and the Engineering, Procurement support and Construction management (EPsCm)
22.0 billion yen, and the consolidated net income is 12.0 billion yen.
work for heavy crude oil upgrading facilities in Venezuela. Additionally, our subsidiary in Singapore has been performing
4
5
CHIYODA CORPORATION ANNUAL REPORT FY2014CHIYODA CORPORATION ANNUAL REPORT FY2014 Topics
North America/Challenges in LNG Business
Mozambique/Qatar/Saudi Arabia/UAE/
Engineering Training for Young Engineers from Overseas
EPC projects in the USA, which were awarded last
year, started smoothly and ground breaking cere-
monies were held for Cameron LNG and Freeport
LNG respectively. The Group is performing at the
forefront FEED works for Golden Pass LNG and
LNG Canada, and a feasibility study for Alaska
LNG, all of which are expected to be potential
EPC targets.
Aiming to carry out each project properly, we
have established a scheme including the alliance
with local partners and carefully worked out each
individual construction plan. As we are entering the field construction stage, we will reinforce our execution scheme and
plan to improve efficiency through measures such as positive adoption of a modular construction method to achieve
successful completion.
Having anticipated the complicated situations because of the simultaneous execution of several mega projects
in North America, we are enhancing our scheme of the Group as a whole for North America. The scheme is intended
to carry out those projects efficiently while preparing the environment for producing a synergy effect with operation
foundation strategies implemented according to our Medium-Term Management Plan.
Philippines/Awarded the New Bohol Airport
Since 1970s, the Group has been accommodating over 4,100 engineers as trainees from overseas for engineering train-
ing, and in 2014, 34 engineers were trained from countries such as Mozambique, Qatar, Saudi Arabia and UAE.
Nowadays, the demand for such human
resources development is even more increasing,
especially in the oil and gas producing countries.
The training provided by the Group is intended to
meet such demand, and the trainees were given
a chance to understand the Japanese people and
culture as well, which we believe is meaningful.
The Group will work constantly on
human resources development, expecting
to strengthen the relationship with countries
worldwide.
Japan/Commitment to CSR
As an integrated engineering company, the Group pledges to contribute to the sustainable development of society
through its business activity including the construction of energy plant and social infrastructure, and to take a variety
of social contribution activities such as supporting human resources development. In addition to our contribution from
our business activity, the Group constantly conducts CSR activities, for example, dispatching volunteers to the disaster
In March, the Group and joint venture partner, Mitsubishi Corporation (MC) had reached an agreement with the
Department of Transportation and Communications of the Government of the Republic of the Philippines to construct
the New Bohol Airport in the Philippines.
The New Bohol Airport will have facilities such as a 2000-meter runway, a passenger terminal building which can
affected areas by the Great East Japan Earthquake, inviting vision-impaired people
to a Japan Philharmonic Orchestra Concert and sale of goods made by challenged
people (Heart-made Sale), both in collaboration with the Yokohama City Council
of Social Welfare, and supporting educational programs for elementary school and
accommodate 1 million passengers annually, and airport special equipment. Built under the “Eco Airport” concept
junior high school.
and employing advanced Japanese technology, the airport will be furnished with a photovoltaic power generation
system and a filtering system to avoid polluting the surrounding environment by drainage during the construction.
It is the second airport construction project jointly executed by “Chiyoda
and MC,” the first being the new Ulaanbaatar International Airport project in
Mongolia, now under construction. As an integrated engineering company,
the Group will continue to explore its business opportunities in the trans-
portation infrastructure industry, including the airport sector.
Moreover, the Group has continuously supported and will continue to support
the spirit of the United Nations Global Compact (UNGC) which is a voluntary global
initiative that encourages businesses to act as good corporate citizens and achieve
sustainable growth.
Scene from the Heart-made Sale
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CHIYODA CORPORATION ANNUAL REPORT FY2014CHIYODA CORPORATION ANNUAL REPORT FY2014 Commitment to CSR
The Chiyoda Group’s CSR
As an integrated engineering company, the Chiyoda Group pledges to contribute to the sustainable development
Environmental Initiatives
◆ CT-CO2 AR®: High Efficiency Synthetic Gas Production Process Using CO2
of society through its business activities, and to constantly strive to increase corporate value and earn the trust and
Chiyoda Group has accomplished effective utilization of CO2 by developing a high-efficiency reforming process—CT-CO2
understanding of all stakeholders by adhering to the following principles.
AR®—employing a novel catalyst. This catalyst was already commercialized in an existing synthetic gas plant last year,
Chiyoda Group CSR Visions
exhibiting smooth and safe operation.
The technology, comprising a catalyst with high resistance to carbon formation, produces synthetic gas from natural
gas with higher efficiency than conventional reforming technology. It reduces energy consumption by around 10% and
UN Global Compact
Activities in FY2014
reduces carbon dioxide emission drastically.
CSR Visions 1
A Reliable Company
We strive to be a reliable company to our customers
and other business partners by providing world-class
technologies and knowledge.
-
CSR Visions 2
Environmental Initiatives
● Initiatives for a stable supply of energy and reduction of
greenhouse gas
● Plant construction that lives up to customer trust
● Enhancement of information security awareness
We will work to remain an invaluable company to
society by utilizing refined technologies to promote
harmony between the global environment and eco-
nomic and social activities.
● Continuous research and development for a low carbon
economy (energy conservation/effective utilization of CO2)
● Promotion of business development towards a hydro-
Environment
gen-based society
● Expansion and promotion of renewable energy
● Execution of environmentally friendly projects
● Implementation of biodiversity preservation activities
Social Contributions through Business Activities
Through our engineering business in Japan and
overseas, we contribute to local communities in ways
including human resources development, technol-
ogy transfer and environmental protection.
● Contribution to local economic development and human
resource development
● Tie-ups and cooperation with educational institutions to
-
educate the next generation
● Continuous response to the Great East Japan Earthquake
● Cooperation with the community and NPO
● Support to challenged people
CSR Visions 4
Respect for Human Rights
We are dedicated to respecting the human rights of
all people. We will create a corporate culture where
the diversity, individuality and character of employ-
ees are respected, where people are motivated to do
their best, and of which employees and their families
are proud.
● Creation of a pleasant work environment
● Enhancement of the human resource development system
● Enhancement of the safety culture
● Enhancement of the crisis management system
Human Rights
/ Labor
CSR Visions 5
Commitment to Fairness
We are dedicated to achieving even greater transpar-
ency and stability by conducting our operations fairly
in accordance with the highest ethical standards.
Anti-
Corruption
● Review of the compliance program and execution of its brief
explanation session to employees
● Assignment of a compliance manager in each division,
group companies and project teams
● Continuous compliance training and monitoring
● Continuous export control training and auditing
● Operation of the consultation and reporting system
“Welcome to All about Compliance”
CT-CO2 AR® can not only reduce energy consumption by replacing the existing catalyst with a superior one, but can
also achieve remarkable environmental benefits when applied to grass-root plants. Furthermore, it leads to resource min-
imization by downsizing facilities, and is expected to effectively utilize the CO2 contained in natural gas.
The technology succeeds in greatly reducing the environmental burden from chemical plants, such as oxo-alcohols
and acetic acid.
◆ Commercialization of Hybrid Titania Catalysts for the Hydrodesulfurization (HDS) of Diesel Oil
The Group has successfully developed and commercialized the Hybrid Titania catalysts
by combining the advantages of titania, which has significantly high activity, and alu-
mina carriers, which have superiority in material.
We have already established both a production method for Hybrid Titania catalysts
and a supply system.
The Hybrid Titania catalysts, with high HDS activity and high hydrodenitrogenation
selectivity, are highly promising in hydrotreating difficult desulfurization oils such as
Light Cycle Oil (LCO) from Fluid Catalytic Cracking (FCC), thermal cracked oil and vac-
uum gas oil.
The Hybrid Titania catalyst was adopted for use in the HDS unit of the Yamaguchi
Oil Refinery of Seibu Oil Company, Limited in Japan. This refinery started to produce sul-
fur-free kerosene and diesel oil at the beginning of 2014.
◆ The Development of a New Manufacturing Process for
Production of Propylene
Propylene, one of the basic industrial chemicals, is mainly produced by thermal
steam-cracking of hydrocarbon feedstock such as naphtha at present,and alter-
native methods are desired to improve both high energy consumption and low
propylene selectivity.
The Group has been developing an energy saving propylene manufacturing
process by means of fixed-bed-type catalytic cracking using our own zeolite
catalysts, and we have received high appraisal for the results and won the Best Paper Award in the Fuels & Petrochemical
Division of the American Institute of Chemical Engineers.
The Group will accelerate its research and development to commercialize this technology and contribute to saving
energy and reducing CO2 emissions by applying it to non-conventional fossil resources such as shale gas and oil.
8
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CHIYODA CORPORATION ANNUAL REPORT FY2014CHIYODA CORPORATION ANNUAL REPORT FY2014CSR Visions 3 Respect for Human Rights
◆ Establishment of a Safety Culture by Sharing On-site Practices
Commitment to Fairness
◆ Compliance Activities in 2014
In order to share knowledge and expertise from both outside and inside Chiyoda about Safety, Quality and the
In recent years broader and stricter requirements for compliance have been sought by the global community including
Environment (SQE), the Group has been holding a series of Corporate SQE Conventions.
its clients, business partners. Chiyoda Corporation has reviewed and reinforced its overall compliance program to man-
In November 2014, the 7th Convention titled “Establishment of a Safety Culture by Sharing On-site Practices” was
age the Group-wide program as follows:
a great success attended by more than 500 ardent participants including corporate management executives, where
the safety activities of the Papua New Guinea LNG Project (PNG) were introduced. Their methods and practices were
presented, then two-way communication in a pleasant atmosphere was demonstrated in front of the audience so that
everyone there could share one and the same understanding as the
members of the PNG Project, which has achieved the result of “over 65
million man-hours without lost time injury”, the best safety record in
Chiyoda’s history.
In this way, the Group will constantly make efforts to instill the corpo-
rate policy “Safety is a core value.”
◆ Activities on United Nations Global Compact (UNGC)
The Group has been supporting the principles of the UNGC for human rights, labor, environment and anti-corruption
to promote and enhance our CSR activities since November 2012. This year, as a member of the study groups in Global
Compact Network Japan on anti-corruption and supply chain management, the Group has discussed and studied how
to cope with the relevant global issues, and also assisted the Network Japan in the Roundtable conducted among Japan,
China and Korea by assigning language-aid staffers:
● Anti-corruption:
Recognizing that corruption is a risk which will severely damage corporate
governance, trust and reputation in civil or administrative disposition and
criminal impeachment, effective measures are studied and discussed.
● Supply Chain Management:
Through the attendance at monthly sessions or seminars by experts, the study
is deepened on how to promote CSR procurement in collaboration between
buyers and suppliers while respecting the environment, the workplace and human rights.
Continuous Social Contribution
The Group has been supporting its members to promote their social contribution in regional areas under the motto
of “CSR to be promoted by each as a participant”. As part of that, volunteer members of the Group employees have
been dispatched twice a year to the disaster-affected areas of the Great East Japan Earthquake.
This year, volunteer activities have included the interaction with kindergarten children through environmental
lessons, reforestation activities, supporting the community in developing an energy circulation system, supporting
the construction of a workplace for making regional products. Then, those products have been sold in the Group
in-house sale in Yokohama.
Furthermore, the Group΄s employees visited a junior high school in the area and gave a lecture to the students
on its global activities, and also accepted them on their school trip to Chiyoda Global Headquarters in Yokohama.
The Group constantly continues with its efforts to improve its activities by way of exchanging views with regional
experts or local residents, and through discussion among volunteer members including in-house questionnaires.
10
● To raise awareness and deepen knowledge of compliance through training courses and manuals among the employees.
● To recognize and evaluate compliance risk our Group is faced with.
● To implement preventive measures* for major risks with periodic reporting.
● To review, improve and respond to the results by monitoring.
● Chiyoda has launched its management system of PDCA cycle on a periodical basis to cope with compliance risk.
* Chiyoda applies due diligence when deciding on business partners including vendors, subcontractors and consultants in terms of anti-corruption including prevention of
bribery to foreign public servants.
◆ Establishment of Corporate Risk Management Policy
The Chiyoda Group has established its Corporate Risk Management Policy. Under that Policy, the Group aims to pro-
mote the risk management activities and planning/implementing its Corporate Strategy, to maintain and enhance its
Corporate Value. The Group ensures that it discloses its business risk information to the stakeholders so as to increase
transparency, to mitigate the risk by taking proactive countermeasures, then to achieve the business target.
◆ Establishment of Business Continuity Plan (BCP)
In 2014, the Group established its BCP, anticipating various risks that would disrupt its business. The BCP provided the
direction and course of action in order to avoid such risks, or recover quickly even if such a disruption may occur, and was
known to all employees. When a disaster including a fire/an earthquake or any epidemic, terrorism/turmoil, occurs, and
if the impact on the Group is anticipated to be large enough to disrupt its Group business/operation, the Group imme-
diately declares the imposition of BCP. Then, based on the basic philosophy of “Employees’ safety First”, the Group makes
utmost efforts to continue its minimally required important business and to make a quick return to normal operation as
well as to contribute to the restoration of communities affected by such a disaster.
Main Activities in FY2014 (Including Domestic Group Companies)
Dispatch of lecturers to university
Training for interns
Visiting seminars
Community cleanup campaigns
Food aid activity TABLE FOR TWO
16 people
67 people
7 times
32 people
1,817 meals
ECOCAP program to enable the purchase of vaccines
For 231 people
Dispatch of volunteers to disaster-hit areas
37 people
Collaboration with NPO (Second Harvest Japan, Food Bank Yamanashi)
Support to challenged people
• In-house sale events of goods made by challenged people: 7 times
• Inviting 50 people from the Yokohama Blind Association to a concert
Soil preparation for afforestation
11
CHIYODA CORPORATION ANNUAL REPORT FY2014CHIYODA CORPORATION ANNUAL REPORT FY2014 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.
Corporate Governance System
Chiyoda has established the Compliance Unit and the Internal Audit Unit to raise the quality and transparency of manage-
ment, 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 10 directors as of June 25, 2015. 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 Corporate Auditors Committee 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
or dismissal of accounting auditors, auditing consolidated financial documents in close cooperation with the accounting
auditors, and preparing audit reports.
Executive Officer System
Where necessary, executive officers cooperate with outside specialists such as corporate lawyers in carrying out duties
Corporate Governance and Internal Controls
General Shareholders’ Meeting
Election
Submit/Report
Election
Report
Election
Directors
Board of Directors
Election
Supervision
Election
Submit/
Report
Executive Officers
4 Representative Directors
Executive Officer Meeting
Executive Committee
Report
Report
Audit
Audit
Corporate Auditors
Audit Referral
(advice) Submit/Report
Submit/
Report
Compliance
Committee
Audit & Supervisory Board
Survey, Report Request
Internal Controls
Management Committee
(ICMC)
Scheduled Reports
(deliverables, etc.)
Organization
Staffing
Submit/Report
Report
Accounting
Auditor
Group
Companies
Business Execution
Departments
(Risk Manager)
Self-Assessment
Department Internal Controls
Global Operation Unit
Corporate Planning Unit
Corporate Services Unit, HRM* Unit
Finance & Accounting Unit
Legal & Project Audit Unit
*HRM: Human Resource Management
Internal Audit Unit
Risk Management Division
SQE Unit
Compliance Unit
Crisis Management Unit
(Crisis Manager)
Financial
Audit
■ : Important organizations and arms of the Company
■ : Departments with internal control functions
Risk Management
To manage individual project risk and profitability, the Group is increasing management transparency by implementing a
double-check/internal control function in administration divisions in addition to a self-auditing system in project operation
divisions. Professional auditing teams from administration divisions have effectively implemented project audits to verify
the validity of the project execution plans formulated by the project operation divisions.
In accordance with our Corporate Risk Management Policy, the Group has established risk management and crisis
management systems to deal with significant risks and has appointed risk managers and crisis managers. We constantly
work to prevent the occurrence of problems. In the event that a problem occurs, we shall immediately activate a Crisis
Control Center that will minimize damage by mobilizing the entire workforce.
assigned to them at meetings of the Board of Directors and the Executive Committee. Executive officers provide regular
Disaster Prevention Measures
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 con-
trol systems. In addition, the Group has established the Internal Audit 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.
The Group has prepared Disaster Response Manual (Japanese and English versions) as part of its BCP. The Manual compiles
the actions to be taken in the event of a disaster by those working in the Group including all the directors, employees,
temporary staff members, customers and partners, and so on. Once a disaster occurs, the Chiyoda Disaster Prevention
Force is to be formed, and an emergency communication route is also to be set up to confirm the safety of all the above
personnel and their family members as a first priority.
Further to be prepared for a disaster, the Group has been taking the following measures:
• Stock of emergency supplies such as PHS, drinking water, foods, blankets
• Provision of helmets and emergency bags to all the personnel
• Formation of self-protective disaster prevention unit
• Participation in an emergency drill to be conducted twice a year both in Chiyoda Global Headquarters and in Koyasu
Office & Research Park
• Safety confirmation drill to be conducted a few times a year
12
13
CHIYODA CORPORATION ANNUAL REPORT FY2014CHIYODA CORPORATION ANNUAL REPORT FY2014
Corporate Information (As of March 31, 2015)
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, 2015)
Number of Employees
1,573 (Non-Consolidated)
6,097 (Consolidated)
Annual Fiscal Close
March 31
Shareholders’ Meeting
June
Board of Directors
Audit & Supervisory Board
Executive Committee
President
Internal Audit Unit
Executive Office Unit
Risk Management Division
Technology & Engineering Division
Downstream & Non Hydrocarbon Project Operations
SQE Unit
Compliance Unit
Crisis Management Unit
Corporate Planning & Management Division
Corporate Planning Unit
IR, PR & CSR Section
Corporate Services Unit
HRM* Unit
Finance & Accounting Unit
Legal & Project Audit Unit
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
Global Project Management Division
Project Administration Unit
Project Management Unit
IT Management Unit
Global Operation Unit
Global Human Resource Planning Unit
Work Process Innovation Task Team
Chiyoda Globalization Task Force Team
Change the Mindset
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
Gas & LNG Project Operations No. 1
Gas & LNG Project Unit No. 1
Strategic Project Development Unit
Gas & LNG Project Operations No. 2
Gas & LNG Project Unit No. 2
HRM: Human Resource Management PLC: Project Logistics & Construction IP: Infrastructure Project
Downstream & Chemical Project Unit
International Downstream Project Unit
Metals & Mining Project Unit
Global Collaboration Unit
Infrastructure Project Operations
IP* Planning & Administration Unit
Strategic Business & Investment
Management Unit
Hydrogen Supply Chain
Development Unit
Green Infrastructure Project Unit
Environmental Project Unit
Technology Development Unit
Research & Development Center
ChAS & Life Science Project Operations
ChAS/Life Science Business Planning &
Administration Unit
ChAS Marketing Unit
Advanced Process Engineering Unit
Plant Diagnosis Unit
Consulting Unit
Pharmaceutical Industries Project Unit
Space & Bio Engineering 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
Xodus Subsea 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
Chiyoda International Corporation
Beijing Office
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
Mozambique
Chiyoda Oceania Pty Limited
Brazil
PT. Chiyoda International Indonesia
Chiyoda Human Resources International (Pte) Limited
Chiyoda Singapore (Pte) Limited
Chiyoda Malaysia Sdn. Bhd.
Chiyoda Sarawak Sdn. Bhd.
Chiyoda Mozambique Limitada
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.
14
15
CHIYODA CORPORATION ANNUAL REPORT FY2014CHIYODA CORPORATION ANNUAL REPORT FY2014 Directors and Officers (As of June 25, 2015)
Stock Information (As of March 31, 2015)
Board of Directors
Representative Directors
Directors
President & CEO
Shogo Shibuya
Executive Vice President
Katsuo Nagasaka
Senior Executive Vice
President
Senior Executive Vice
President
Executive Vice
President & CFO
Keiichi Nakagaki
Executive Vice President
Masahiko Kojima
Hiroshi Ogawa
Senior Vice President
Ryosuke Shimizu
Masahito Kawashima
Senior Vice President
Arata Sahara
Director
Director
Masaji Santo*1
Nobuo Tanaka*1
Audit & Supervisory Board Members
Munehiko Nakano*2
Mikio Kobayashi*2
Yukihiro Imadegawa*2
Executive Officers
Executive Vice President
Tadashi Izawa
Vice President
Eisuke Oki
Senior Vice President
Masao Ishikawa
Vice President
Masao Fujiwara
Senior Vice President
Mamoru Nakano
Vice President
Yasumitsu Abe
Senior Vice President
Akira Fujisawa
Vice President
Jinei Yamaguchi
Senior Vice President
Nobuyuki Uchida
Vice President
Toshiyuki Kariya
Senior Vice President
Hiromi Koshizuka
Vice President
Seiichiro Ikeda
Vice President
Shuichi Wada
Vice President
Terunobu Iio
Vice President
Noriyuki Kasuya
Vice President
Hideaki Tomiku
*1: External Director
*2: Outside Corporate Auditor
16
Authorized Shares
570,000,000
Number of Shareholders
24,863
Capital Stock Issued
260,324,529
Number of Shares 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, 2015)
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
Meiji Yasuda Life Insurance Company
State Street Bank and Trust Company 505041
Trust & Custody Services Bank, Ltd.
Japan Trustee Services Bank, Ltd. (Trust Account 7)
Breakdown by shareholder
86,931
11,991
10,759
9,033
5,888
3,564
2,265
2,245
2,179
1,728
Ratio
Shares Owned
(%)
33.39
4.60
4.13
3.47
2.26
1.36
0.87
0.86
0.83
0.66
Total Number of
Shares Issued:
260,325
thousand
20.84
22.98
15.13
37.43
3.62
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
2010
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
2011
2012
2013
2014
0
1 2 3
2015
17
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 2015)
Selected in FTSE Group’s responsible
investment index
Consolidated
F i n a n c i a l
S t a t e m e n t s
FY2014
For the Year Ended March 31, 2015,
and Independent Auditor’s Report
200,834
497,234
136,059
1,523,793
97,483
57,750
3,704,817
43,884
115,958
6,016
60,096
137
226,093
(102,538 )
Consolidated Balance Sheet
Chiyoda Corporation and Consolidated Subsidiaries
Chiyoda Corporation and Consolidated Subsidiaries
(March 31, 2015)
Consolidated Balance Sheet
March 31, 2015
Consolidated Balance Sheet
March 31, 2015
Millions of Yen
ASSETS
ASSETS
2015
2015
2014
Millions of Yen
Thousands of
U.S. Dollars
(Note 1)
2014
2015
Thousands of
U.S. Dollars
(Note 1)
2015
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
CURRENT ASSETS:
CURRENT ASSETS:
Cash and cash equivalents (Note 13)
Cash and cash equivalents (Note 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 3 and 13)
contracts (Notes 3 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
¥ 113,246
69
29,740
(56 )
¥ 113,246
¥ 145,303
69
64
29,740
56,502
(56 )
(3 )
¥ 145,303
943,719
$
575
64
247,838
56,502
(3 )
(472 )
$
CURRENT LIABILITIES:
Short-term bank loans (Note 13)
Current portion of long-term debt (Notes 6, 12 and 13)
Notes and accounts payable—trade (Note 13)
Advance receipts on construction contracts
CURRENT LIABILITIES:
Short-term bank loans (Note 13)
Current portion of long-term debt (Notes 6, 12 and 13)
Notes and accounts payable—trade (Note 13)
Advance receipts on construction contracts
943,719
575
247,838
(472 )
Income taxes payable (Note 13)
Income taxes payable (Note 13)
24,100
59,668
16,327
182,855
11,697
6,930
16,503
24,100
33,826
59,668
4,936
16,327
127,466
182,855
11,697
18,868
6,930
5,629
200,834
16,503
497,234
33,826
4,936
136,059
1,523,793
127,466
18,868
97,483
5,629
57,750
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
Accrued expenses and other
Accrued expenses and other
Millions of Yen
Millions of Yen
2015
2015
2014
Thousands of
U.S. Dollars
(Note 1)
2014
2015
Thousands of
U.S. Dollars
(Note 1)
2015
¥
991
51
137,652
123,869
1,366
3,352
364
3,988
22,703
¥
¥
991
1,283
82
51
145,392
137,652
80,182
123,869
1,366
5,513
4,985
3,352
507
364
4,002
3,988
22,703
19,730
¥
$
1,283
8,258
82
431
1,147,104
145,392
1,032,241
80,182
5,513
11,384
27,935
4,985
3,035
507
33,241
4,002
19,730
189,197
$
8,258
431
1,147,104
1,032,241
11,384
27,935
3,035
33,241
189,197
Total current assets
Total current assets
444,578
444,578
409,096
409,096
3,704,817
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
5,266
13,915
721
7,211
16
27,131
(12,304 )
5,265
5,266
12,557
13,915
721
944
7,211
7,106
16
286
26,159
27,131
(12,304 )
(11,201 )
43,884
5,265
115,958
12,557
6,016
944
7,106
60,096
137
286
26,159
226,093
(11,201 )
(102,538 )
Total current liabilities
Total current liabilities
294,339
294,339
261,679
261,679
2,452,831
2,452,831
LONG-TERM LIABILITIES:
Long-term debt (Notes 6, 12 and 13)
Liability for retirement benefits (Note 7)
Provision for treatment of PCB waste
Asset retirement obligations
Other (Note 10)
LONG-TERM LIABILITIES:
Long-term debt (Notes 6, 12 and 13)
Liability for retirement benefits (Note 7)
Provision for treatment of PCB waste
Asset retirement obligations
Other (Note 10)
10,063
1,070
339
983
636
10,063
10,040
1,070
2,080
365
339
970
983
636
2,121
10,040
83,863
2,080
8,920
2,831
365
8,196
970
2,121
5,301
83,863
8,920
2,831
8,196
5,301
Total long-term liabilities
Total long-term liabilities
13,093
13,093
15,578
15,578
109,113
109,113
COMMITMENTS AND CONTINGENT LIABILITIES
COMMITMENTS AND CONTINGENT LIABILITIES
Net property, plant and equipment
Net property, plant and equipment
14,826
14,826
14,958
14,958
123,555
123,555
(Notes 6, 12, 14 and 15)
(Notes 6, 12, 14 and 15)
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 13)
Investments in and advances to unconsolidated
subsidiaries and associated companies (Note 5)
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 13)
Investments in and advances to unconsolidated
subsidiaries and associated companies (Note 5)
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
23,940
23,940
21,131
21,131
199,501
8,547
12,034
7,393
33
4,717
(231 )
8,547
8,155
12,395
12,034
7,056
7,393
33
34
4,717
2,528
(231 )
(68 )
8,155
71,227
100,283
12,395
61,611
7,056
280
34
2,528
39,314
(68 )
(1,930 )
Total investments and other assets
Total investments and other assets
56,434
56,434
51,233
51,233
470,288
EQUITY (Notes 8 and 18):
Common stock—authorized, 570,000 thousand shares;
issued, 260,324 thousand shares in 2015 and 2014
EQUITY (Notes 8 and 18):
Common stock—authorized, 570,000 thousand shares;
issued, 260,324 thousand shares in 2015 and 2014
199,501
71,227
100,283
61,611
280
39,314
(1,930 )
470,288
Capital surplus
Retained earnings
Treasury stock—at cost, 1,323 thousand shares in 2015 and
Capital surplus
Retained earnings
Treasury stock—at cost, 1,323 thousand shares in 2015 and
1,310 thousand shares in 2014
1,310 thousand shares in 2014
Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale securities
Deferred (loss) 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 (loss) gain on derivatives under hedge accounting
Foreign currency translation adjustments
Defined retirement benefit plans
Total
Minority interests
43,396
37,112
115,831
43,396
43,396
37,112
37,112
115,831
109,525
361,636
43,396
309,272
37,112
109,525
965,260
361,636
309,272
965,260
(1,405 )
(1,405 )
(1,390 )
(1,390 )
(11,712 )
(11,712 )
7,218
(2,064 )
5,229
1,076
206,395
2,010
7,218
4,920
648
(2,064 )
2,486
5,229
(287 )
1,076
196,411
206,395
2,010
1,619
4,920
60,152
(17,201 )
648
43,576
2,486
8,974
(287 )
1,719,959
196,411
1,619
16,756
60,152
(17,201 )
43,576
8,974
1,719,959
16,756
TOTAL
TOTAL
¥ 515,839
¥ 515,839
¥ 475,288
¥ 475,288
$ 4,298,660
$ 4,298,660
TOTAL
TOTAL
¥ 515,839
¥ 515,839
¥ 475,288
¥ 475,288
$ 4,298,660
$ 4,298,660
Total equity
Total equity
208,405
208,405
198,031
198,031
1,736,715
1,736,715
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, 2015)
Consolidated Statement of Comprehensive Income
Chiyoda Corporation and Consolidated Subsidiaries
(Year Ended March 31, 2015)
Consolidated Statement of Income
Year Ended March 31, 2015
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2015
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
(Note 1)
2015
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
(Note 1)
2015
¥ 480,979
¥ 446,147
$ 4,008,160
NET INCOME BEFORE MINORITY INTERESTS
¥ 11,212
¥ 13,210
$ 93,441
OTHER COMPREHENSIVE INCOME (LOSS) (Note 16):
Unrealized gain (loss) on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Foreign currency translation adjustments
Defined retirement benefit plans
Share of other comprehensive income of associates
accounted for using the equity method
2,298
(2,712 )
2,815
1,364
(1,664 )
(2,242 )
3,625
19,151
(22,601 )
23,461
11,367
142
104
1,189
Total other comprehensive income (loss)
3,908
(176 )
32,568
COMPREHENSIVE INCOME
¥ 15,121
¥ 13,034
$ 126,009
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Minority interests
¥ 14,722
398
¥ 13,087
(53 )
$ 122,687
3,322
See notes to consolidated financial statements.
REVENUE
COST OF REVENUE
435,327
404,685
3,627,728
Gross profit
45,651
41,462
380,432
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
(Note 11)
24,185
20,383
201,543
Operating income
21,466
21,079
178,889
OTHER INCOME (EXPENSES):
Interest and dividend income
Interest expense
Equity in losses of associated companies
Foreign exchange loss
Loss on valuation of investment securities
Retirement benefit expenses (Note 7)
Other—net
Other income—net
3,111
(255 )
(783 )
(1,182 )
(258 )
(85 )
545
2,590
(233 )
(374 )
(145 )
(299 )
(78 )
1,459
25,925
(2,128 )
(6,532 )
(9,851 )
(2,157 )
(708 )
4,547
INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS
22,012
22,538
183,436
INCOME TAXES (Note 10):
Current
Deferred
Total income taxes
6,257
4,542
13,101
(3,773 )
10,799
9,327
NET INCOME BEFORE MINORITY INTERESTS
11,212
13,210
MINORITY INTERESTS IN NET INCOME
183
(236 )
52,144
37,851
89,995
93,441
1,529
NET INCOME
¥ 11,029
¥ 13,447
$
91,911
PER SHARE OF COMMON STOCK (Notes 2.y and 17):
Basic net income
Cash dividends applicable to the year
Yen
U.S. Dollars
¥ 42.58
13.00
¥ 51.91
16.00
$ 0.35
0.10
See notes to consolidated financial statements.
- 3 -
- 4 -
3
4
Consolidated Financial StatementsConsolidated Financial Statements
Consolidated Statement of Changes in Equity
(Year Ended March 31, 2015)
Chiyoda Corporation and Consolidated Subsidiaries
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2015
Consolidated Statement of Changes in Equity
Year Ended March 31, 2015
Thousands
Thousands
Outstanding
Number of
Shares of
Common
Stock
Outstanding
Number of
Shares of
Common
Stock
Capital
Surplus
Common
Stock
Millions of Yen
Millions of Yen
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)
Common
Stock
Retained
Earnings
Capital
Surplus
Treasury
Stock
Unrealized
Gain on
Available-
for-Sale
Securities
Retained
Earnings
Deferred
(Loss) Gain on
Derivatives
under Hedge
Accounting
Treasury
Stock
Unrealized
Gain on
Available-
for-Sale
Securities
Foreign
Currency
Translation
Adjustments
Deferred
(Loss) Gain on
Defined
Derivatives
Retirement
Benefit
under Hedge
Accounting
Plans
Foreign
Currency
Translation
Adjustments
Total
Defined
Retirement
Benefit
Plans
Minority
Interests
Total
Equity
Total
Minority
Interests
Total
Equity
BALANCE, APRIL 1, 2013
BALANCE, APRIL 1, 2013
259,045
¥ 43,396
259,045
¥ 37,112
¥ 43,396
¥ 100,988
¥ 37,112
¥ (1,349 )
¥ 100,988
¥ 6,584
¥ (1,349 )
¥ 2,890
¥ 6,584
¥ (1,235 )
¥ 2,890
¥ (1,235 )
¥ 188,386
¥ 969
¥ 188,386
¥ 189,356
¥ 969
¥ 189,356
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
Net change in the year
(31 )
BALANCE, MARCH 31, 2014
BALANCE, MARCH 31, 2014
(APRIL 1, 2014, as previously reported)
(APRIL 1, 2014, as previously reported)
259,014
13,447
(4,921 )
12
13,447
(4,921 )
12
(31 )
(40 )
(40 )
(1,664 )
(2,242 )
(1,664 )
3,721
(2,242 )
¥ (287 )
13,447
(4,921 )
12
(40 )
(472 )
3,721
¥ (287 )
650
13,447
(4,921 )
12
(40 )
(472 )
13,447
(4,921 )
12
(40 )
178
650
13,447
(4,921 )
12
(40 )
178
43,396
259,014
37,112
43,396
109,525
37,112
(1,390 )
109,525
4,920
(1,390 )
648
4,920
2,486
648
(287 )
2,486
196,411
(287 )
1,619
196,411
198,031
1,619
198,031
Cumulative effect of accounting change
Cumulative effect of accounting change
(579 )
(579 )
(579 )
(579 )
(579 )
(579 )
BALANCE, APRIL 1, 2014 (as restated)
BALANCE, APRIL 1, 2014 (as restated)
259,014
Net income
Cash dividends, ¥16.00 per share
Purchase of treasury stock
Net change in the year
Net income
Cash dividends, ¥16.00 per share
Purchase of treasury stock
Net change in the year
(12 )
43,396
259,014
37,112
43,396
108,946
37,112
(1,390 )
108,946
4,920
(1,390 )
648
4,920
2,486
648
(287 )
2,486
195,831
(287 )
1,619
195,831
197,451
1,619
197,451
11,029
(4,144 )
11,029
(4,144 )
(12 )
(15 )
(15 )
2,298
(2,712 )
2,298
2,743
(2,712 )
1,363
11,029
(4,144 )
(15 )
3,693
2,743
1,363
391
11,029
(4,144 )
(15 )
3,693
11,029
(4,144 )
(15 )
4,084
391
11,029
(4,144 )
(15 )
4,084
Chiyoda Corporation and Consolidated Subsidiaries
BALANCE, MARCH 31, 2015
259,001
BALANCE, MARCH 31, 2015
Chiyoda Corporation and Consolidated Subsidiaries
¥ 43,396
259,001
¥ 37,112
¥ 43,396
¥ 115,831
¥ 37,112
¥ (1,405 )
¥ 115,831
¥ 7,218
¥ (1,405 )
¥ (2,064 )
¥ 7,218
¥ 5,229
¥ (2,064 )
¥ 1,076
¥ 5,229
¥ 206,395
¥ 1,076
¥ 2,010
¥ 206,395
¥ 208,405
¥ 2,010
¥ 208,405
Consolidated Statement of Changes in Equity
Year Ended March 31, 2015
Consolidated Statement of Changes in Equity
Year Ended March 31, 2015
BALANCE, MARCH 31, 2014
BALANCE, MARCH 31, 2014
Common
Stock
Capital
Surplus
Common
Stock
Retained
Earnings
Capital
Surplus
Treasury
Stock
Thousands of U.S. Dollars (Note 1)
Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)
Unrealized
Gain on
Available-
Retained
for-Sale
Earnings
Securities
Deferred
(Loss) Gain on
Derivatives
Treasury
under Hedge
Stock
Accounting
Unrealized
Foreign
Gain on
Currency
Available-
Translation
for-Sale
Securities
Adjustments
Deferred
Defined
(Loss) Gain on
Retirement
Derivatives
Benefit
under Hedge
Accounting
Plans
Foreign
Currency
Translation
Adjustments
Total
Defined
Retirement
Benefit
Plans
Minority
Interests
Total
Equity
Total
Minority
Interests
Total
Equity
(APRIL 1, 2014, as previously reported)
(APRIL 1, 2014, as previously reported)
$ 361,636
$ 309,272
$ 361,636
$ 912,715
$ 309,272
$ (11,586 )
$ 912,715
$ 41,001
$ (11,586 )
5,400
$
$ 41,001
$ 20,717
5,400
$ (2,392 )
$
$ 20,717
$ 1,636,765
$ (2,392 )
$ 13,494
$ 1,636,765
$ 1,650,259
$ 13,494
$ 1,650,259
Cumulative effect of accounting change
Cumulative effect of accounting change
(4,831 )
(4,831 )
(4,831 )
(4,831 )
(4,831 )
(4,831 )
BALANCE, APRIL 1, 2014 (as restated)
BALANCE, APRIL 1, 2014 (as restated)
361,636
309,272
361,636
907,883
309,272
(11,586 )
907,883
41,001
(11,586 )
5,400
41,001
20,717
5,400
(2,392 )
20,717
1,631,933
(2,392 )
13,494
1,631,933
1,645,427
13,494
1,645,427
Net income
Cash dividends, $0.13 per share
Purchase of treasury stock
Net change in the year
Net income
Cash dividends, $0.13 per share
Purchase of treasury stock
Net change in the year
91,911
(34,535 )
(125 )
91,911
(34,535 )
19,151
(125 )
(22,601 )
19,151
22,858
(22,601 )
11,366
91,911
(34,535 )
(125 )
30,775
22,858
11,366
3,262
91,911
91,911
(34,535 )
(34,535 )
(125 )
(125 )
30,775
34,038
3,262
91,911
(34,535 )
(125 )
34,038
BALANCE, MARCH 31, 2015
BALANCE, MARCH 31, 2015
$ 361,636
$ 309,272
$ 361,636
$ 965,260
$ 309,272
- 5 -
$ (11,712 )
$ 965,260
$ 60,152
- 5 -
$ (11,712 )
$ (17,201 )
$ 60,152
$ 43,576
$ (17,201 )
$ 8,974
$ 43,576
$ 1,719,959
$ 8,974
$ 16,756
$ 1,719,959
(Continued)
$ 1,736,715
$ 16,756
(Continued)
$ 1,736,715
See notes to consolidated financial statements.
See notes to consolidated financial statements.
5
6
- 6 -
- 6 -
(Concluded)
(Concluded)
Consolidated Financial StatementsConsolidated Financial Statements
Consolidated Statement of Cash Flows
Chiyoda Corporation and Consolidated Subsidiaries
(Year Ended March 31, 2015)
Consolidated Statement of Cash Flows
Year Ended March 31, 2015
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2015
OPERATING ACTIVITIES:
Income before income taxes and minority interests
¥ 22,012
¥ 22,538
$ 183,436
Net cash used in operating activities—(Forward)
¥ (24,145 )
¥ (17,177 )
$
(201,211 )
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
(Note 1)
2015
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
(Note 1)
2015
Adjustments for:
Income taxes paid
Depreciation
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Decrease in allowance for warranty costs for completed
works
(Decrease) increase in allowance for losses on construction
contracts
Increase (decrease) in liability for retirement benefits
Loss on sales and disposals of fixed assets
Foreign exchange gain—net
Equity in losses of associated companies
Loss on valuation of investment securities
Changes in operating assets and liabilities:
Decrease (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
(Decrease) increase in trade notes and accounts payable
Increase (decrease) in advance receipts on construction
contracts
(Increase) decrease in accounts receivable—other
Increase in jointly controlled assets of joint venture
Decrease in deposits received
Decrease (increase) in interest and dividend receivable
Other—net
Total adjustments
(12,550 )
3,569
1,469
216
(13,709 )
3,196
825
(12 )
(104,587 )
29,745
12,248
1,801
(170 )
(47 )
100
338
(499 )
783
258
21,217
(25,282 )
(9,759 )
43,019
(4,872 )
(55,246 )
(1,710 )
109
(7,101 )
(46,157 )
(4 )
(1,424 )
2,534
(768 )
31
(224 )
374
(1,896 )
(16,974 )
23,650
(2,111 )
2,519
(31,955 )
(2,141 )
(713 )
(2,334 )
(39,715 )
(395 )
839
2,820
(4,164 )
6,532
2,157
176,813
(210,689 )
(81,330 )
358,494
(40,602 )
(460,391 )
(14,251 )
913
(59,176 )
(384,648 )
Net cash used in operating activities—(Forward)
¥ (24,145 )
¥ (17,177 )
$ (201,211 )
INVESTING ACTIVITIES:
Net decrease in time deposits
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
Payments of long-term loans receivable
Proceeds from collections of long-term loans
Other—net
192
2,400
(1,981 )
90
(3,294 )
(7 )
(4,046 )
(9,134 )
(445 )
(712 )
101
41
(1,441 )
146
(2,431 )
(1,245 )
(605 )
118
14
(12,014 )
1,224
(20,259 )
(10,377 )
(5,048 )
985
123
Net cash used in investing activities
(5,444 )
(16,796 )
(45,366 )
FINANCING ACTIVITIES:
Net (decrease) increase in short-term bank loans
Repayments of long-term debt
Payments of cash dividends
Other—net
(390 )
(4 )
(4,139 )
(34 )
11
(264 )
(4,914 )
(81 )
(3,257 )
(40 )
(34,493 )
(284 )
Net cash used in financing activities
(4,569 )
(5,249 )
(38,078 )
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS
2,101
3,974
17,514
NET DECREASE IN CASH AND CASH EQUIVALENTS
(32,057 )
(35,249 )
(267,141 )
INCREASE IN CASH AND CASH EQUIVALENTS FROM
NEWLY CONSOLIDATED SUBSIDIARY
323
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
145,303
180,229
1,210,861
CASH AND CASH EQUIVALENTS, END OF YEAR
¥ 113,246
¥ 145,303
$
943,719
See notes to consolidated financial statements.
- 7 -
(Continued)
- 8 -
(Concluded)
7
8
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
Chiyoda Corporation and Consolidated Subsidiaries
(Year Ended March 31, 2015)
Notes to Consolidated Financial Statements
Year Ended March 31, 2015
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 2014 consolidated financial
statements to conform to the classifications used in 2015.
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 ¥120 to $1, the approximate rate of exchange at March 31, 2015. 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, 2015, include the accounts of the
Company and its 30 significant (29 in 2014) 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 six (five in 2014) associated companies are accounted for by the equity method in 2015.
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.
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 recorded in equity through other comprehensive income; (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. Unification of Accounting Policies Applied to Foreign Associated Companies for the Equity Method—In
March 2008, the ASBJ issued ASBJ Statement No. 16, "Accounting Standard for Equity Method of
Accounting for Investments." The new standard requires adjustments to be made to conform the associate's
accounting policies for similar transactions and events under similar circumstances to those of the parent
company when the associate's financial statements are used in applying the equity method unless it is
impracticable to determine such adjustments. In addition, financial statements prepared by foreign associated
companies in accordance with either International Financial Reporting Standards or generally accepted
accounting principles in the United States of America tentatively may be used in applying the equity method if
the following items are adjusted 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 recorded in equity through other comprehensive income; (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.
- 9 -
9
10
- 10 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
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, certificates of
deposit, and commercial paper, all of which mature or become due within three months of the date of
acquisition.
f.
Investment Securities—All marketable securities are classified as available-for-sale securities and are reported
at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of
equity. The cost of securities sold is determined based on the moving-average method.
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 lease 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.
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.
11
12
- 11 -
- 12 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
The transitional obligation of ¥5,696 million ($47,466 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, 2015 and 2014.
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, are treated as reclassification adjustments.
(c) The revised accounting standard also made certain amendments relating to the method of attributing
expected benefit to periods, 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, all 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, and for (c) above, effective April 1, 2014.
With respect to (c) above, the Company changed the method of attributing expected benefit to periods from a
straight-line basis to a benefit formula basis, the method of determining discount rate from using the period
which approximates the expected average remaining service period to using a single weighted average
discount rate reflecting the estimated timing and amount of benefit payment, and recorded the effect of (c)
above as of April 1, 2014, in retained earnings. As a result, liability for retirement benefits as of April 1, 2014,
increased by ¥901 million ($7,513 thousand), and retained earnings as of April 1, 2014, decreased by
¥579 million ($4,831 thousand). The effect on the profit and loss for the year ended March 31, 2015, was not
material.
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.
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 and its wholly owned domestic subsidiaries file 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.
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.
13
14
- 13 -
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Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
w. Foreign Currency Financial Statements—Balance sheet accounts of consolidated foreign subsidiaries are
z. Accounting Changes and Error Corrections—In December 2009, the ASBJ issued ASBJ Statement No. 24,
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 Group 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 Group does not enter into derivatives for trading or speculative purposes.
Derivative financial instruments are classified and accounted for as follows:
"Accounting Standard for Accounting Changes and Error Corrections" and ASBJ Guidance No. 24, "Guidance
on Accounting Standard for Accounting Changes and Error Corrections." Accounting treatments under this
standard and guidance are as follows: (1) Changes in Accounting Policies—When a new accounting policy is
applied following revision of an accounting standard, the new policy is applied retrospectively unless the
revised accounting standard includes specific transitional provisions, in which case the entity shall comply
with the specific transitional provisions. (2) Changes in Presentation—When the presentation of financial
statements is changed, prior-period financial statements are reclassified in accordance with the new
presentation. (3) Changes in Accounting Estimates—A change in an accounting estimate is accounted for in
the period of the change if the change affects that period only, and is accounted for prospectively if the change
affects both the period of the change and future periods. (4) Corrections of Prior-Period Errors—When an
error in prior-period financial statements is discovered, those statements are restated.
(1) All derivatives are recognized as either assets or liabilities and measured at fair value, with gains or losses
3. CONSTRUCTION CONTRACTS
recognized in the consolidated statement of income.
(2) For derivatives used for hedging purposes, if such derivatives qualify for hedge accounting because of
high correlation and effectiveness between the hedging instruments and the hedged items, gains or losses
on derivatives are deferred until maturity of the hedged transactions.
Foreign currency forward contracts are utilized to hedge foreign exchange risks. Certain assets and liabilities
on construction contracts denominated in foreign currencies are translated at the contracted rates if the forward
contracts qualify for hedge accounting.
Foreign currency deposits are held to hedge foreign exchange risks derived from forecasted purchases of fixed
assets denominated in foreign currency.
Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured
at market value but the differential paid or received under the swap agreements is recognized and included in
interest expense.
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.
Diluted net income per share is not disclosed because there is no potential stock that has a dilutive effect for
the fiscal years ended March 31, 2015 and 2014.
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.
Costs and estimated earnings recognized with respect to construction contracts which are accounted for by the
percentage-of-completion method at March 31, 2015 and 2014, were as follows:
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
Costs and estimated earnings
Amounts billed
¥ 397,990
(373,890 )
¥ 379,837
(363,334 )
$ 3,316,590
(3,115,755 )
Net
¥ 24,100
¥ 16,503
$
200,834
4.
INVESTMENT SECURITIES
Investment securities at March 31, 2015 and 2014, consisted of the following:
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
Noncurrent—Equity securities
¥ 23,940
¥ 21,131
$ 199,501
The costs and aggregate fair values of investment securities at March 31, 2015 and 2014, were as follows:
March 31, 2015
Millions of Yen
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Securities classified as—
Available-for-sale—equity securities
¥ 11,471
¥ 10,426
¥ 21,898
15
16
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- 16 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
March 31, 2014
6. LONG-TERM DEBT
Securities classified as—
Available-for-sale—equity securities
March 31, 2015
Millions of Yen
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
¥ 11,465
¥ 7,128
¥ 2
¥ 18,591
Thousands of U.S. Dollars
Unrealized
Gains
Unrealized
Losses
Fair
Value
Cost
Securities classified as—
Available-for-sale—equity securities
$ 95,597
$ 86,888
$ 182,485
Available-for-sale securities whose fair value cannot be reliably determined at March 31, 2014, were as follows.
Similar information for 2015 is disclosed in Note 13.
March 31, 2014
Securities classified as—Available-for-sale—equity securities
Carrying Amount
Millions of Yen
¥ 2,540
5.
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED
COMPANIES
Investments in and advances to unconsolidated subsidiaries and associated companies at March 31, 2015 and 2014,
were as follows:
Long-term debt at March 31, 2015 and 2014, consisted of the following:
Long-term loans principally from banks, due serially
through 2018, with interest rates at 2.0% (2015)
and ranging from 1.9% to 2.0% (2014)—Unsecured
Obligations under finance leases
Total
Less current portion
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
¥ 10,020
95
10,115
(51 )
¥ 10,023
99
10,122
(82 )
$ 83,502
792
84,295
(431 )
Long-term debt, less current portion
¥ 10,063
¥ 10,040
$ 83,863
Annual maturities of long-term debt, excluding finance leases, at March 31, 2015, were as follows:
Year Ending
March 31
2016
2017
2018
2019
2020
2021 and thereafter
Total
Millions of Yen
Thousands of
U.S. Dollars
¥
4
5
10,005
3
1
$
40
43
83,376
25
16
¥ 10,020
$ 83,502
Millions of Yen
¥ 15,000
¥ 15,000
Thousands of
U.S. Dollars
$ 125,000
$ 125,000
Investments
Long-term receivables
Total
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
¥ 7,387
1,159
¥ 7,183
971
$ 61,566
9,661
¥ 8,547
¥ 8,155
$ 71,227
Commitment-line contracts at March 31, 2015, were as follows:
Commitment-line contracts
Unused commitments
7. 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.
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.
17
18
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- 18 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
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.
(3) The changes in the liability recorded in the consolidated balance sheet by using the simplified method for the
years ended March 31, 2015 and 2014, were as follows:
(1) The changes in defined benefit obligation for the years ended March 31, 2015 and 2014, were as follows:
Balance at beginning of year (as previously
reported)
Cumulative effect of accounting change
Balance at beginning of year (as restated)
Current service cost
Interest cost
Actuarial losses
Benefits paid
The amount of obligation processing with
the changes from simplified method to
the principle method
Others
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
¥ 21,787
901
22,689
913
198
6
(1,709 )
¥ 20,630
20,630
593
326
176
(1,691 )
1,751
$ 181,562
7,513
189,076
7,609
1,657
58
(14,247 )
52
441
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
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
¥ 629
235
(95 )
(107 )
39
¥ 943
300
(46 )
(332 )
(173 )
(433 )
71
299
$ 5,249
1,959
(799 )
(895 )
326
Balance at end of year
¥ 700
¥ 629
$ 5,839
(4) Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined
Balance at end of year
¥ 22,151
¥ 21,787
$ 184,594
benefit obligation and plan assets
(2) The changes in plan assets for the years ended March 31, 2015 and 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 obligation processing with
the changes from simplified method to
the principle method
Others
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
¥ 20,370
405
1,495
1,195
(1,709 )
¥ 17,705
707
853
1,477
(1,691 )
$ 169,757
3,381
12,458
9,963
(14,247 )
1,318
57
481
Balance at end of year
¥ 21,815
¥ 20,370
$ 181,795
Funded defined benefit obligation
Plan assets
Unfunded defined benefit obligation
Net liability arising from defined
benefit obligation
Liability for retirement benefits
Asset for retirement benefits
Net liability arising from defined
benefit obligation
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
¥ 23,441
(23,073 )
367
669
¥ 23,088
(21,511 )
1,577
469
$ 195,345
(192,282 )
3,062
5,576
¥ 1,036
¥ 2,046
$
8,639
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
¥ 1,070
(33 )
¥ 2,080
(34 )
$ 8,920
(280 )
¥ 1,036
¥ 2,046
$ 8,639
19
20
- 19 -
- 20 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
(5) The components of net periodic benefit costs for the years ended March 31, 2015 and 2014, were as follows:
(8) Plan assets
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
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
¥ 913
198
(405 )
(176 )
134
608
235
¥ 593
326
(707 )
(176 )
2
608
300
299
$ 7,609
1,657
(3,381 )
(1,468 )
1,116
5,073
1,959
a. Components of plan assets
Plan assets as of March 31, 2015 and 2014, consisted of the following:
Debt investments
Equity investments
General accounts
Others
Total
2015
2014
24 %
40
24
12
26 %
37
25
12
100 %
100 %
Net periodic benefit costs
¥ 1,507
¥ 1,248
$ 12,566
b. Method of determining the expected rate of return on plan assets
(6) Amounts recognized in other comprehensive income (before income tax effect) in respect of defined
retirement benefit plans for the years ended March 31, 2015 and 2014
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.
Prior service cost
Actuarial losses
Transitional obligation
Total
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
¥ (176 )
1,620
608
¥ 2,053
$ (1,468 )
13,507
5,073
$ 17,112
(7) Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of
defined retirement benefit plans as of March 31, 2015 and 2014
Unrecognized prior service cost
Unrecognized actuarial (gains) losses
Unamortized transitional obligation
Millions of Yen
2015
2014
¥
(146 )
(1,463 )
¥ (323 )
157
608
Thousands of
U.S. Dollars
2015
$
(1,224 )
(12,199 )
Total
¥ (1,610 )
¥ 442
$ (13,423 )
(9) Assumptions used for the years ended March 31, 2015 and 2014, were set forth as follows:
2015
2014
Discount rate
Expected rate of return on plan assets
Mainly 0.7%
Mainly 1.9%
Mainly 1.5%
Mainly 3.7%
(10) Payables to defined contribution plans of the Company and consolidated subsidiaries for the years ended
March 31, 2015 and 2014, were ¥824 million ($6,871 thousand) and ¥550 million, respectively.
8. EQUITY
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:
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the
year-end dividend upon resolution at the shareholders' meeting. For companies that meet certain criteria, the
Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if
the company has prescribed so in its articles of incorporation. However, the Company cannot do so because it
does not meet all the 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.
21
22
- 21 -
- 22 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
b.
Increases/Decreases and Transfer of Common Stock, Reserve, and Surplus
10.
INCOME TAXES
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 within equity 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.
9. SUPPLEMENTAL CASH FLOW INFORMATION
Acquisition cost and net payments for assets and liabilities of Xodus Group (Holdings) Limited ("Xodus Group"), a
newly consolidated subsidiary acquired through share purchase, for the year ended March 31, 2014, were as
follows:
Current assets
Fixed assets
Goodwill
Current liabilities
Fixed liabilities
Foreign currency translation adjustments
Minority interests
Acquisition cost of Xodus Group's shares
Cash and cash equivalents
Exchange gain on the acquisition
Net payments for the acquisition
Millions of Yen
¥ 5,061
2,540
6,283
(2,856 )
(166 )
(77 )
(380 )
10,405
(1,265 )
(5 )
¥ 9,134
There was no significant acquisition of newly consolidated subsidiaries for the year ended March 31, 2015.
The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the
aggregate, resulted in normal effective statutory tax rates of approximately 36% and 38% for the years ended March
31, 2015 and 2014, respectively.
The tax effects of significant temporary differences, which resulted in deferred tax assets and liabilities at March
31, 2015 and 2014, were as follows:
Deferred tax assets:
Cost of revenue
Tax loss carryforwards
Allowance for losses on construction contracts
Allowance for employees' bonus
Deferred gain/loss on derivatives under hedge
accounting
Future deductible depreciation
Costs of construction contracts in process
Other
Less valuation allowance
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
¥ 5,087
4,971
1,276
1,258
¥ 14,927
1,305
1,438
$ 42,398
41,428
10,635
10,490
885
811
709
4,082
(1,161 )
1,079
657
3,871
(1,084 )
7,381
6,758
5,916
34,023
(9,683 )
Total
17,922
22,195
149,350
Deferred tax liabilities:
Unrealized loss/gain on available-for-sale securities
Deferred gain/loss on derivatives under hedge
accounting
Profit/loss in joint venture
Other
3,207
2,460
26,731
433
145
457
384
3,207
Total
3,592
3,496
29,939
Net deferred tax assets
¥ 14,329
¥ 18,699
$ 119,411
Prior to April 1, 2014, "Defined retirement benefit plans" was disclosed separately. From this fiscal year ended
March 31, 2015, 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, 2015 and 2014, 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
2015
2014
¥ 11,697
2,631
¥ 18,868
685
(854 )
Thousands of
U.S. Dollars
2015
$ 97,483
21,927
23
24
- 23 -
- 24 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the
accompanying consolidated statement of income for the year ended March 31, 2015, with the corresponding figures
for 2014, is as follows:
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Tax benefits not recognized on operating losses of subsidiaries
Difference in tax base between corporate income tax and enterprise tax
Change in valuation allowance
Effect of reduction of income tax rates on deferred tax assets
Other—net
Actual effective tax rate
2015
2014
36%
1
(4)
4
3
6
3
38 %
1
(1)
(5)
2
3
3
49 %
41 %
New tax reform laws enacted in 2015 in Japan changed the normal effective statutory tax rate from approximately
36% to 33% for the fiscal year beginning on or after April 1, 2015, and to 32% for the fiscal year beginning on or
after April 1, 2016. The effect of these changes was to decrease deferred tax assets, net of deferred tax liabilities, by
¥977 million ($8,148 thousand) and deferred loss on derivatives under hedge accounting by ¥71 million
($599 thousand) and increase accumulated other comprehensive income for unrealized gain on available-for-sale
securities by ¥346 million ($2,886 thousand) and defined retirement benefit plan by ¥58 million ($483 thousand), in
the consolidated balance sheet as of March 31, 2015, and to increase income taxes—deferred in the consolidated
statement of income for the year then ended by ¥1,310 million ($10,919 thousand).
11. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥2,456 million ($20,471 thousand) and ¥2,424 million for
the years ended March 31, 2015 and 2014, respectively.
12. LEASES
The Group leases certain machinery, computer equipment, and other assets.
Future minimum payments under noncancelable operating leases were as follows:
Due within one year
Due after one year
Total
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
¥ 449
773
¥ 214
917
$ 3,746
6,442
¥ 1,222
¥ 1,132
$ 10,189
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.
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 details about derivatives.
25
26
- 25 -
- 26 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
(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 counterparties to those derivatives to
major financial institutions that can bear losses arising from credit risk.
Market risk management (risk of foreign exchange and interest rates)
Foreign currency trade receivables and payables are exposed to market risk resulting from fluctuations in
foreign currency exchange rates. Such foreign exchange risk is hedged principally with foreign currency
forward contracts.
Interest expense associated with long-term debts is exposed to market risk resulting from changes in interest
rates. Such risk is hedged by interest rate swap contracts.
Foreign currency forward contracts are controlled under internal guidelines. The position related to particular
construction contracts is identified and is reviewed monthly. Reconciliation of the transaction and balances
with customers' confirmation replies is made, and the transactions related to foreign currency forward
contracts are executed and accounted for under internal guidelines.
Marketable and investment securities are managed by monitoring the market values and financial position of
issuers on a regular basis. The Group assesses the stock price risk quantitatively so as to account for significant
declines in market value as impairment losses.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on their maturity
dates. The Group manages its liquidity risk by holding adequate volumes of liquid assets along with timely
adequate financial planning.
(4) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is not
available, another rational valuation technique is used instead. Also, please see Note 14 for the details of fair
value for derivatives.
(a) Fair values of financial instruments
March 31, 2015
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
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)
Unrealized
Gain (Loss)
Carrying
Amount
¥ 113,246
69
29,740
24,100
182,855
21,898
Millions of Yen
Fair Value
¥ 113,246
69
29,740
24,100
182,855
21,898
¥ 371,909
¥ 371,909
¥
991
4
137,652
1,366
10,015
¥
991
4
137,652
1,366
10,015
¥ 150,030
¥ 150,030
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
27
28
- 27 -
- 28 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
March 31, 2015
Current Portion of Long-Term Debt (Bank Loans) and Long-Term Debt (Bank Loans)
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
$
943,719
575
247,838
$
943,719
575
247,838
200,834
1,523,793
182,485
200,834
1,523,793
182,485
$ 3,099,248
$ 3,099,248
$
8,258
40
1,147,104
11,384
83,462
$
8,258
40
1,147,104
11,384
83,462
$ 1,250,250
$ 1,250,250
Cash and Cash Equivalents, Short-Term Investments, Notes and Accounts Receivable, and Costs and
Estimated Earnings on Long-Term Construction Contracts
The carrying values of the 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. Fair value information for investment securities by classification is included in
Note 4.
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 the accounts mentioned above approximate fair value because of their short
maturities.
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
Fair value information 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
2014
2015
Thousands of
U.S. Dollars
2015
¥ 2,038
¥ 2,537
$ 16,990
2
2
24
7,387
7,183
61,566
The impairment losses on investment securities for the year ended March 31, 2015, were ¥258 million
($2,157 thousand).
(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
March 31, 2015
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
Millions of Yen
Due after
1 Year
through
5 Years
Due after
5 Years
through
10 Years
¥ 882
¥ 672
Due in
1 Year
or Less
¥ 113,206
69
52,285
182,855
Total
¥ 348,415
¥ 882
¥ 672
29
30
- 29 -
- 30 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
March 31, 2014
14. DERIVATIVES
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, 2015
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
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
$
943,384
575
435,708
1,523,793
$ 7,356
$ 5,607
Total
$ 2,903,462
$ 7,356
$ 5,607
Please see Note 6 for annual maturities of long-term debt.
Derivative Transactions to Which Hedge Accounting Is Not Applied
March 31, 2015
Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Selling MYR/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying Euro/selling U.S.$
Buying AUD/selling Euro
Total
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.$
Millions of Yen
Contract
Amount
Due after
One Year
¥ 509
2
109
Contract
Amount
¥ 36,414
4,738
4,704
13,571
2,640
17
3
210
795
Fair
Value
(Loss)
¥ (124 )
(6 )
(9 )
31
1
2
(22 )
5
Unrealized
Gain (Loss)
¥ (124 )
(6 )
(9 )
31
1
2
(22 )
5
¥ 63,094
¥ 621
¥ (122 )
¥ (122 )
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
Total
¥ 36,185
¥ 24
¥ (54 )
¥ (54 )
31
32
- 31 -
- 32 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
March 31, 2015
March 31, 2014
Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Selling MYR/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying Euro/selling U.S.$
Buying AUD/selling Euro
Thousands of U.S. Dollars
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Unrealized
Gain (Loss)
$ 4,246
17
911
$ (1,034 )
(52 )
(82 )
261
14
17
(3 )
(187 )
49
$ (1,034 )
(52 )
(82 )
261
14
17
(3 )
(187 )
49
Contract
Amount
$ 303,456
39,485
39,201
113,093
22,006
141
25
1,751
6,627
Total
$ 525,789
$ 5,176
$ (1,018 )
$ (1,018 )
Derivative Transactions to Which Hedge Accounting Is Applied
March 31, 2015
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
Millions of 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,
floating rate receipt)
Long-term debt
¥ 10,000
¥ 10,000
Total
¥ 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 KRW/selling U.S.$
Total
Other*1:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Total
Hedged Item
Contract
Amount
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Foreign currency
forecasted
transaction
¥ 16,971
673
186
7,271
3,347
¥ 5,396
207
102
726
616
¥ (2,295 )
36
(19 )
(1,453 )
65
¥ 28,450
¥ 7,049
¥ (3,666 )
Receivables
Payables
¥
342
242
100
¥
28
¥
685
¥
28
Interest rate swaps*2 (fixed rate payment,
Long-term debt
¥ 10,000
¥ 10,000
floating rate receipt)
Total
¥ 10,000
¥ 10,000
33
34
- 33 -
- 34 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
March 31, 2015
16. OTHER COMPREHENSIVE INCOME
Thousands of U.S. Dollars
The components of other comprehensive income for the years ended March 31, 2015 and 2014, were as follows:
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 KRW/selling U.S.$
Total
Other*1:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Total
Hedged Item
Contract
Amount
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Foreign currency
forecasted
transaction
$ 141,427
5,613
1,555
60,596
27,893
$ 44,971
1,726
850
6,054
5,138
$ (19,129 )
302
(162 )
(12,108 )
542
$ 237,086
$ 58,741
$ (30,556 )
Receivables
Payables
$
2,851
2,023
835
$
235
$
5,710
$
235
Interest rate swaps*2 (fixed rate payment,
Long-term debt
$ 83,333
$ 83,333
floating rate receipt)
Total
$ 83,333
$ 83,333
*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, 2015, the Group had the following contingent liabilities:
Unrealized gain (loss) on available-for-sale securities:
Gains (losses) arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Deferred loss on derivatives under hedge accounting:
(Losses) 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
Defined retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Share of other comprehensive income of associates
accounted for using the equity method—
Gains arising during the year
Millions of Yen
Thousands of
U.S. Dollars
Total
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
¥ 2,787
258
3,046
(747 )
¥ (2,619 )
(2,619 )
955
$ 23,227
2,157
25,384
(6,233 )
¥ 2,298
¥ (1,664 )
$ 19,151
¥
(591 )
(3,464 )
100
(3,955 )
1,243
¥ 2,651
(3,573 )
(2,729 )
(3,652 )
1,410
$
(4,926 )
(28,874 )
835
(32,965 )
10,364
¥ (2,712 )
¥ (2,242 )
$ (22,601 )
¥ 2,815
¥ 3,625
$ 23,461
¥ 2,815
¥ 3,625
$ 23,461
¥ 1,486
566
2,053
(689 )
¥ 1,364
$ 12,391
4,721
17,112
(5,745 )
$ 11,367
¥
¥
142
142
¥
¥
104
104
$
$
1,189
1,189
Guarantees on employees' housing loans
Performance bond for an unconsolidated subsidiary
69
¥
1,113
$ 580
9,280
Total other comprehensive income (loss)
¥ 3,908
¥
(176 )
$ 32,568
35
36
- 35 -
- 36 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
17. NET INCOME PER SHARE
(1) Description of Reportable Segments
A reconciliation of the differences between basic and diluted net income per share ("EPS") for the years ended
March 31, 2015 and 2014, is as follows:
Year Ended March 31, 2015
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.
Millions
of Yen
Net
Income
Thousands
of Shares
Weighted-Average
Shares
Yen
U.S. Dollars
(2) Methods of Measurement for the Amounts of Sales, Profit (Loss), Assets, Liabilities, and Other Items for
EPS
Each Reportable Segment
Basic EPS—Net income available
to common shareholders
¥ 11,029
259,006
¥ 42.58
$ 0.35
There is no dilutive effect for the year ended March 31, 2015.
Year Ended March 31, 2014
Millions
of Yen
Net
Income
Thousands
of Shares
Weighted-Average
Shares
Yen
EPS
Basic EPS—Net income available
to common shareholders
¥ 13,447
259,030
¥ 51.91
There is no dilutive effect for the year ended March 31, 2014.
18. SUBSEQUENT EVENT
The following appropriation of retained earnings at March 31, 2015, was approved at the Company's shareholders'
meeting held on June 25, 2015:
Millions of Yen
Thousands of
U.S. Dollars
Year-end cash dividends, ¥13.00 ($0.10) per share
¥ 3,367
$ 28,058
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.
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.
(3) Information about Sales, Profit, Assets, Liabilities, and Other Items
Year Ended March 31, 2015
Millions of Yen
Reportable
Segment
Engineering
Other*1
Total
Reconcili-
ations*2
Consoli-
dated*3
Sales:
Sales to external customers
Intersegment sales or transfers
¥ 476,499
136
¥ 4,479
6,678
¥ 480,979
6,814
¥ (6,814 )
¥ 480,979
Total
¥ 476,635
¥ 11,157
¥ 487,793
¥ (6,814 )
¥ 480,979
Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associated
companies
Increase in property, plant
and equipment and
intangible assets
¥ 21,146
509,992
297,441
¥
314
5,418
2,248
¥ 21,460
515,411
299,690
¥
6
427
7,742
¥ 21,466
515,839
307,433
3,545
1,439
5,479
24
29
3,569
1,469
5,479
3,943
17
3,960
3,569
1,469
5,479
3,960
37
38
- 37 -
- 38 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
Year Ended March 31, 2014
Notes for the year ended March 31, 2015:
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, 2015
Sales:
Sales to external customers
Intersegment sales or transfers
¥ 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
Thousands of U.S. Dollars
Reportable
Segment
Engineering
Other*1
Total
Reconcili-
ations*2
Consoli-
dated*3
$ 3,970,828 $ 37,332 $ 4,008,160
55,650
1,135
56,786 $ (56,786 )
$ 4,008,160
Total
$ 3,971,964 $ 92,982 $ 4,064,947 $ (56,786 ) $ 4,008,160
Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associated
companies
Increase in property, plant
and equipment and
intangible assets
$
4,249,937
2,478,681
176,217 $ 2,618 $
178,835 $
53 $
45,156
18,740
4,295,094
2,497,422
3,566
64,522
178,889
4,298,660
2,561,944
200
249
29,545
11,998
45,663
29,745
12,248
45,663
32,858
144
33,003
29,745
12,248
45,663
33,003
*1 "Other" represents industry segments, which are not included in the reportable segment, consisting of
temporary staffing services and travel services.
*2 The details of the reconciliations are as follows:
(1) The reconciliation in segment profit of ¥6 million ($53 thousand) is the elimination of intersegment
trades.
(2) The reconciliation in segment assets of ¥427 million ($3,566 thousand) is the result of the elimination
of intersegment trades of ¥(2,275) million ($(18,962) thousand) and the Group's assets of
¥2,703 million ($22,528 thousand), which are not included in the reportable segment.
(3) The reconciliation in segment liabilities of ¥7,742 million ($64,522 thousand) is the result of the
elimination of intersegment trades of ¥(2,257) million ($(18,811) thousand) and the Group's liabilities
of ¥10,000 million ($83,333 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.
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 details of the reconciliations are as follows:
(1) The reconciliation in segment profit of ¥8 million is the elimination of intersegment trades.
(2) The reconciliation in segment assets of ¥326 million is the result of the elimination of intersegment
trades of ¥(2,047) million and the Group's assets of ¥2,374 million, which are not included in the
reportable segment.
(3) The reconciliation in segment liabilities of ¥7,973 million is the result of the elimination of
intersegment trades of ¥(2,026) million and the Group's liabilities of ¥10,000 million, 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.
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.
39
40
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- 40 -
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
(2) Information about Geographical Areas
(a) Revenue
Year Ended March 31, 2015
Japan
Australia
Russia
Asia
Middle East
Others
Total
Year Ended March 31, 2014
Japan
Australia
Papua New Guinea
Malaysia
Others
Total
Millions of Yen
¥ 113,341
151,255
52,087
73,935
50,624
39,735
Thousands of
U.S. Dollars
$
944,508
1,260,461
434,059
616,128
421,869
331,133
¥ 480,979
$ 4,008,160
Millions of Yen
¥ 128,743
114,894
68,990
53,380
80,138
¥ 446,147
Year Ended March 31, 2014
Japan
Asia
Others
Total
(3) Information about Major Customers
Year Ended March 31, 2015
Name
Ichthys Lng Pty Ltd.
OJSC Yamal LNG
Year Ended March 31, 2014
Name
Ichthys Lng Pty Ltd.
Esso Highlands Ltd.
Tokuyama Malaysia Sdn. Bhd
Millions of Yen
¥ 12,454
1,746
757
¥ 14,958
Related Segment
Revenue
Millions of Yen
Thousands of
U.S. Dollars
Revenue
Engineering
Engineering
¥ 143,688
51,948
$ 1,197,404
432,900
Related Segment
Engineering
Engineering
Engineering
Millions of Yen
Revenue
¥ 109,964
68,788
49,934
Note: Revenue is classified by country or region based on the location of construction sites.
(4) Information about Goodwill by Segment
(b) Property, plant and equipment
Year Ended March 31, 2015
Japan
Asia
Others
Total
Millions of Yen
¥ 12,183
1,974
668
Thousands of
U.S. Dollars
$ 101,530
16,453
5,571
¥ 14,826
$ 123,555
The ending balance of goodwill as of March 31, 2015 and 2014, was as follows:
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
¥ 11,599
434
¥ 11,930
464
$ 96,658
3,624
¥ 12,034
¥ 12,395
$ 100,283
Engineering
Other*
Total
* Other involves temporary staffing services.
* * * * * *
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Consolidated Financial StatementsConsolidated Financial Statements
Independent Auditor’s Report
43
Consolidated 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 2015)
Selected in FTSE Group’s responsible
investment index
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