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 2016)
Selected in the FTSE4 Good
index series
Seize the Moment,
Open Up New Frontiers
ANNUAL REPORT FY2015
For the year ended March 31, 2016
Profile
Founded in 1948 in the post war period to reconstruct Japan,
Chiyoda started its engineering 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 also
reflect the aspects of Environment, Social and Governance (ESG)
to fulfil Corporate Social Responsibility (CSR) when implementing
each action plan.
Courtesy of Qatargas Operating Company Limited.
INDEX
2
3
4
Financial Highlights
To Our Shareholders
At a Glance
5 Qualitative Information on
Business Performance
8
Topics
10 Commitment to CSR
16 Corporate Governance
18 Corporate Information
20 Directors and Officers
21 Stock Information
1
CHIYODA CORPORATION ANNUAL REPORT FY2015 Financial Highlights
To Our Shareholders
Years Ended March 31,
2016
2015
2014
2013
2012
For the Year (Millions of yen)
Revenues
Cost of revenue
Operating income
Income before income taxes
and minority interests
Net income attributable to
owners of the parent
At Year-End (Millions of yen)
Total assets
Total equity
Current ratio (%)
Per Common Share (yen)
¥611,548
¥480,979
¥446,147
¥398,918
¥254,675
570,028
435,327
404,685
356,402
215,783
16,015
14,460
21,466
22,012
21,079
22,538
25,113
26,747
24,197
23,543
3,375
11,029
13,447
16,077
14,364
¥528,219
¥515,839
¥475,288
¥435,379
¥365,795
202,128
208,405
198,031
189,356
168,737
146.3
151.0
156.3
166.3
165.5
Earnings per share (EPS)
¥ 13.03
¥ 42.58
¥ 51.91
¥ 62.06
¥ 55.44
Book value per share (BPS)
Dividend per share
Ratios (%)
Return on assets (ROA)
Return on equity (ROE)
772.89
10.0
796.89
13.0
758.31
16.0
727.24
19.0
648.95
17.0
3.1
1.7
4.5
5.5
5.0
7.0
6.4
9.0
6.6
8.9
Note: Yen amounts are rounded down to the nearest million and percentages are rounded to the nearest unit.
“ Take on new challenges
for sustainable growth.”
On behalf of the Chiyoda Group, I highly appreciate
your continued support over the past 12 months. I am
pleased to present our corporate overview for the fiscal
year 2015 which is in the latter stage of the current
Medium-Term Management Plan, "Seize the moment,
Open up new frontiers.”
While implementing various measures in accordance
with the growth strategies and corporate system defined
in the Plan, we have reached some milestones which lead
to sustained growth in various fields.
Shogo Shibuya President & CEO, Chiyoda Corporation
In the field of LNG, a core segment of our business, in
Our financial results, however, deteriorated as a result
addition to ongoing large projects in Australia, Russia and
of an increase in construction costs for some petroleum
North America, we expanded our business into new areas
related projects and the worsening performance of over-
like Mozambique, to make our position more stable. In
seas group companies; especially our affiliate in the U.K.,
the fields of petroleum refineries, petrochemicals and
which was affected by a prolonged drop in oil prices. In
metals, we have won large projects in Saudi Arabia and
order to recognize the management’s responsibility, the
Indonesia. In the pharmaceutical and life science indus-
Group resolved to cut management compensation. In
tries, we made steady progress by receiving an order for a
addition, to regain the trust of stakeholders, we will make
development project on regenerative medicine which
every effort to improve profitability through the sound
has the potential for further orders.
implementation of each project, as well as implementing
Revenues
(Billions of yen)
Operating Income
(Billions of yen)
(Billions of yen)
In addition, the Group established EMAS CHIYODA
effective management measures in projects and group
611.5
24.2
25.1
21.1
21.5
481.0
446.1
398.9
254.7
Net income
attributable to
owners of the parent
16.0
16.1
14.4
13.4
11.0
3.4
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
Forward-Looking Statements: This annual report contains forward-looking statements about Chiyoda Corporation’s outlook, plans, forecasts, results and other items that may take place in
the future. Such statements are based on data available as of May 2016. Unknown risks and other uncertainties that happen in the future may cause our actual results to be different from
the forward-looking statements contained in this report. The risks and uncertainties include business and economic conditions, competitive pressure, changes in laws and regulations,
addition or elimination of products, and exchange rate fluctuation, among others.
2
Subsea Ltd. to perform Engineering, Procurement,
companies’ operations.
Construction and Installation (EPCI) for subsea projects.
Hereby, the Group is able to provide services for all phases
Consequently, we have decided to pay a dividend of
in the subsea value chain development from planning to
¥10 per share, in line with our earnings excluding impair-
commissioning. This joint venture is one of our strategic
ment loss for the fiscal year 2015.
actions to expand our business portfolio.
We ask all of our shareholders for your continued sup-
We have implemented systems for data manage-
port in our ongoing efforts.
ment and human resource training, which were
established as part of the plan to strengthen our core
business operations. We will continue to take on new
challenges for our further growth by making the best
use of such systems.
June 2016
3
CHIYODA CORPORATION ANNUAL REPORT FY2015CHIYODA CORPORATION ANNUAL REPORT FY2015 At a Glance
*3
*4
*5
*6
Revenues
611.5
(Billions of yen)
New Orders
403.6
(Billions of yen)
Backlog of Contracts
1,165.0
(Billions of yen)
LNG
366.8 60% 155.2 38% 860.3 74%
Gas Processing*1
22.1 4%
11.4 3%
19.8 2%
Petroleum and Petrochemicals
138.8 23% 161.5 40% 198.6 17%
Fine Industries*2
31.0 5%
32.7 8%
32.4 3%
Others
52.8 9%
42.8 11%
53.9 5%
Major Projects in Progress (As of May 2016)
Yamal LNG
New Ulaanbaatar
International Airport
Sakhalin II Tr.3
LNG Canada
Alaska LNG
Qualitative Information
on Business Performance
Results of Operations
Analysis of Results
beginning of the year and lower oil prices led to the mar-
ket contraction.
Under such circumstances, the Group was concentrat-
ing on the initiatives designed to create sustainable
growth by accelerating its growth strategy and operating
The global economic environment remained uncertain.
foundation defined in the Medium-Term Management
Emerging countries including China slowed down and
Plan beyond the mid-point of the 4-year term. The Group
geopolitical risk in the Middle East increased. The destabi-
had made progress toward the goal in the metal field
lization of Europe due to the recurrent terrorist attacks
including new orders received for a titanium sponge
continued. In a nutshell, global markets were in turmoil.
plant in Saudi Arabia followed by a large scale project in
Although oil prices, with an impact on the plant industry
Indonesia. While keeping a strong presence in the con-
Backlog of Contracts
1,165.0
and the Group’s
main business,
ventional field, the Group also received a letter of intent
for a Liquefied Natural Gas (LNG) plant, although it was
showed a sign of
subject to a Final Investment Decision (FID) to be made. In
bottoming out, they
parallel, the Group was set for expansion in new business
fluctuated due to the
fields including offshore and upstream where EMAS
unwillingness to
CHIYODA Subsea Ltd. was established to implement an
adjust production among oil-exporting countries. Under
Engineering, Procurement, Construction and Installation
those circumstances, our clients were prudent to proceed
(EPCI) business, new and renewable energy, including the
with their investment plans. The Japanese economy
Hydrogen Supply Chain utilizing its own technologies,
waxed and waned. Some capital investment was made,
and solar power generation utilizing photovoltaic and
backed by a high level of corporate earnings and
concentrating solar power technology, and life science
extremely low interest rates. The strong yen from the
like iPS related projects.
Courtesy of Laffan Refinery 2 Company Limited
Titanium Sponge Plant
Laffan Refinery Phase 2
RasGas Helium 3
Nghi Son Refinery
Mozambique Area 4
Mozambique Area 1
RAPID
Copper Smelter
New Bohol Airport
Tangghu Tr.3
Jangkrik FPU
Abadi, FLNG
Ichthys
*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.
4
Golden Pass
Freeport LNG
Cameron LNG
Puerto La Cruz
LNG/Gas
Petrochemical/Refinery
Metal
Offshore
Infrastructure
EPC*/EPCm**/EPsCm***/EPCI****
FEED*****/Feasibility Study
EPC:
*
Engineering, Procurement and Construction
** EPCm: Engineering, Procurement and Construction management
*** EPsCm: Engineering, Procurement support and Construction management
**** EPCI:
***** FEED: Front-end Engineering and Design
Engineering, Procurement, Construction and Installation
5
CHIYODA CORPORATION ANNUAL REPORT FY2015CHIYODA CORPORATION ANNUAL REPORT FY2015 Qualitative Information on Business Performance
The ongoing projects including LNG plants in
USA and one each in Russia and Australia and Front End
also continues to expand its sales activities in the petroleum
Australia, the USA and Russia, refinery plants in Vietnam,
Engineering and Design (FEED) works for LNG plants in
and petrochemical field.
Qatar and Venezuela, a Floating Production Unit (FPU) in
Mozambique and the USA are in progress as planned. The
Indonesia, a Titanium Sponge plant in Saudi Arabia, air-
Group has completed the FEED work in Indonesia and is
port projects in Mongolia and the Philippines, and LNG
currently under negotiation for an EPC contract. The
Pharmaceutical/Biochemistry/General
Chemistry/Environment/Infrastructure
New Business Fields
Chiyoda Corporation and Ezra Holdings Limited
established a joint venture named EMAS CHIYODA
Subsea Ltd. on March 31 of this year, in order to accelerate
its expansion of the Offshore & Upstream business field.
receiving terminals and photovoltaic power generation
Group has also completed the FEED work in Canada and
The Group has been moving forward with the EPC execu-
The transaction has been completed within this fiscal
systems in Japan, all progressed on schedule.
is negotiating for an EPC contract with the client. The
tion for a new international airport in Mongolia and a new
year. In parallel, the Group’s strategic alliance partner,
Consequently, consolidated new orders for the period
Group Company in Qatar has been carrying out EPC work
Bohol airport in the Philippines.
Xodus Group has been providing integrated services in
amounted to 403,595 million yen (46.0% decrease com-
for helium recovery facilities and the Engineering,
Meanwhile, the Group has also been responding to
the offshore and upstream field for resource exploration
pared to the same period of the previous fiscal year). The
Procurement and Construction management (EPCm)
the overseas expansion in Japanese clients’ businesses in
companies worldwide. The Group hereby has been set to
backlog and revenue were 1,164,991 million yen (17.8%
work for the maintenance and modification of the exist-
non-hydrocarbon fields. In Japan, the Group has won a
provide a value chain for resource development on off-
decrease from the end of the previous fiscal year), and
ing LNG and gas processing plants
611,548 million yen (27.1% increase year on year) respec-
built mainly by the Group. In Japan,
tively. Operating income amounted to 16,015 million yen
several EPC works on LNG receiving
(25.4% decrease), ordinary income to 16,205 million yen
terminals and the expansion/modifi-
(27.2% decrease), and profit attributable to owners of par-
cation of the existing plants are in
ent resulted in 3,375 million yen (69.4% decrease).
progress.
Revenues
611.5
number of EPC projects for large-scale photovoltaic
shore and upstream for all the phases from design to
power generation systems. The Group has been expand-
EPCI, including operation and maintenance.
ing its sales activities by enhancing its group operations
As for new energy fields, the Group has developed its
in this field. And the Group has been awarded EPC work
own technology for transporting and delivering a large
for a food factory to support food safety and hygiene
volume of hydrogen. The Group has been actively collab-
control. In the pharmaceutical industry, the Group has
orating with various parties in order to achieve a
Operating income was lower than the forecast due to
LNG plants and other gas-related facilities constitute
been awarded EPC work for an advanced pharmaceutical
hydrogen-based society.
the increase in construction costs to meet the delivery
the Group’s core business. In that regard, the Group will
plant to manufacture injections, and been carrying out
Moreover, the Group has been selected as an EPC
schedule for some petroleum related projects, as well as
pursue any such project globally.
EPC work for manufacturing facilities of active pharma-
contractor for Japan’s first demonstration plant to pro-
the worsening performance of overseas group compa-
nies including one in England and the prolonged tumble
Refinery/Petrochemicals/Metal
in oil prices. The profit attributable to owners of parent
Engineering, Procurement, Construction and
was also lower, mainly due to an extraordinary loss
Commissioning (EPCC) is progressing for a Residue Fluid
ceutical ingredients, vaccine and bio-medicine plants
duce and supply renewable jet and diesel fuels, and is
individually. The Group has been also gearing up for the
currently doing basic design work.
life science field as a growing market, marked by iPS cells
and regenerative medicine, applying our pharmaceutical
incurred by goodwill impairment in connection with
Catalytic Cracking (RFCC) project in Malaysia. EPC is ongo-
and medical expertise.
acquisition of the shares of a group company in England.
ing for a refinery and petrochemical complex in Vietnam
With great regret about lower earnings, the Group is
and a refinery project in Qatar. Engineering, Procurement
aiming to improve profitability, and recover stakeholders’
support and Construction management (EPsCm) for
trust by performing more rigorous management for profit
heavy oil upgrading facilities in Venezuela is going on.
and loss and for the Group Companies.
Additionally, the Group Company in Singapore is per-
Outlook for the Next Fiscal Year
forming project management under the Enterprise
With its highest backlog of contracts more than
rate of ¥110/US dollar, its forecast for the fiscal year
Results by Business Segment
LNG Plants/Other Gas Related Works
Framework Agreement for downstream projects within
one trillion yen, the group will continue to work
ending March 31, 2017 include 470.0 billion yen in
Asia. For metal fields, the Group has been awarded
Engineering and Procurement (EP) work for a Copper
diligently on the execution of existing large
consolidated new orders and 550.0 billion yen on
projects in Australia, U.S., and Russia. To
consolidated revenues. Its forecast for the
Smelter project in Indonesia, in addition to the EPC work
materialize the Medium-Term Management Plan,
consolidated operating income is 18.0 billion yen,
The Group has been selected as an Engineering,
for a Titanium Sponge Plant in Saudi Arabia.
the Group will also continue to accelerate its
consolidated ordinary income is 14.0 billion yen,
Procurement and Construction (EPC) contractor for an
In Japan, the Group continues to perform the EPC work
growth strategy to diversify the business portfolio
and the consolidated profit attributable to owners
LNG plant in Mozambique, contracts with the client for
for modification to fortify existing facilities in the case of a
by expanding new business fields. In consideration
of parent is 5 billion yen.
which are being negotiated and will be finalized in the
possible catastrophic event, a petrochemical plant and
of these circumstances and assuming an exchange
near future. The EPC execution of LNG plants, two in the
energy saving measures among several facilities. The Group
6
7
CHIYODA CORPORATION ANNUAL REPORT FY2015CHIYODA CORPORATION ANNUAL REPORT FY2015 Topics
Growing in the LNG industry
division of work on a worldwide basis by regional
strategic bases, included in the Medium-Term
Chiyoda has set up EMAS CHIYODA Subsea Ltd. (ECS),
and refining technologies and increasing production
a joint venture specializing in Engineering, Procurement,
capacity. We are aiming for further growth in this field, in
Chiyoda Group’s large-scale EPC projects are proceeding
Management Plan, is beginning to take shape.
Construction and Installation (EPCI) services in the subsea
addition to the LNG, oil and petrochemical industries,
well. For the projects in Australia and Russia, modules are
Chiyoda Almana Engineering LLC, Chiyoda’s Qatar-
construction field, and it came into operation on April 1,
Chiyoda’s speciality, to create a well-balanced
being produced across the world. We are employing the
based affiliate, is a pioneer in Chiyoda Group’s global
2016. That, coupled with the capital alliance with the
corporate portfolio.
modular construction method to enhance the
operations and is active in local-based Project Lifecycle
construction efficiency and adapt to the harsh local
Engineering (PLE).
UK-based consultancy Xodus, has completed a value
chain system covering all the phases of the offshore
construction environment. As for the Australian project,
In 2015, Chiyoda Almana renewed two (2) long-term
and upstream field from conceptual design to its EPCI
Growing in domestic businesses
some modules are already completed and assembled
service agreements while maintaining a total of eight (8)
and its operation.
While Chiyoda’s overseas businesses are greatly
onsite. For the project in North America, earthworks and
ongoing agreements by the end of 2015. In addition, it
We will expand the business of ECS by making the
expanding, its domestic businesses are steadily growing,
foundation construction are in progress.
won an order for a helium plant EPC project and started
most of our client network, including oil majors, and our
too. We are well regarded for our technological expertise
In those ongoing projects, we are trying to maintain
to implement the project.
capability to implement large projects in addition to our
and responsiveness to individual client requirements. We
good communication with clients and project partners
In Southeast Asia, the affiliates have been
past accomplishments. We believe the growth of the
are continuing with our efforts to improve on
and trying to be flexible about detailed requirements on
demonstrating the capability to implement projects. The
company will help ensure energy security at home
technologies and work closely with domestic affiliates to
specifications and schedules.
refinery upgrading project in the Philippines was
and abroad.
meet clients’ needs to further improve the Chiyoda
Chiyoda has been chosen as a contractor in a
completed in 2015. Chiyoda Singapore (Pte) Limited won
number of LNG projects planned around the world,
the order and Chiyoda Philippines Corporation
including ones in Mozambique and Canada. As the
implemented the project, working with other affiliates.
world’s No. 1 leading contractor, we are continuing with
our efforts to find new markets and to open a new
frontier to achieve further growth.
Enhancing global operations
Setting up an EPCI venture for offshore
construction, the first of its kind in Japan
Chiyoda Group is defining the offshore and upstream
business as a growth strategy in the Medium-Term
Winning orders for metal plant projects in
Saudi Arabia and Indonesia
brand image.
The domestic businesses include two projects
completed in 2015: a large LNG project for Hitachi and a
new onshore shipping facility of oil products as part of
In April 2015, Chiyoda won an order for the EPC service of
the Japanese government’s oil supply infrastructure
a titanium sponge production plant in Saudi Arabia. In
resilience project. We are also engaged in projects to help
March 2016, Chiyoda won an order for a large-scale EP
shape our future. The projects include a demonstration
service of a copper smelting plant in Indonesia.
plant to produce and supply renewable jet and diesel
Chiyoda Group has great experience in this field. We
fuels, a state-of-the-art plant for regenerative medicine
We are strengthening the performance and the
Management Plan. We are putting our efforts into the
are meeting the requirements of each client, utilizing our
using iPS cells, and projects related to renewable energy
competitiveness of our overseas affiliates to achieve a
offshore and upstream business to develop it into one of
comprehensive technology, including environmental
and hydrogen-based society.
system of local production for local consumption. The
our pillars, second to LNG.
protection as well as our expertise in improving smelting
Courtesy of FLNG Liquefaction LLC
Courtesy of INPEX Operations Australia Pty Ltd
Freeport LNG Plant site, Texas, USA
Large Scale module for Ichthys LNG, Australia
Most modernized and specialized vessel for subsea construction
Representatives from companies concerned with renewable jet and diesel fuels
8
9
CHIYODA CORPORATION ANNUAL REPORT FY2015CHIYODA CORPORATION ANNUAL REPORT FY2015 Commitment to CSR
Our Mission Chiyoda Group Corporate Philosophy
Chiyoda Group's CSR
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.
Our Values Chiyoda Group CSR Visions
As an integrated engineering company, the Chiyoda Group pledges to
contribute to the sustainable development of society through its business
activities, and to constantly strive to increase corporate value and earn the
trust and understanding of all stakeholders by adhering to the following
principles.
CSR Vision 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 Vision 2 Environmental Initiatives
We will work to remain an invaluable company to society
by utilizing refined technologies to promote harmony
between the global environment and economic and
social activities.
CSR Vision 3 Social Contributions through
Business Activities
Through our engineering business in Japan and overseas,
we contribute to local communities in ways including
human resources development, technology transfer and
environmental protection.
CSR Vision 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 employees are
respected, where people are motivated to do their best,
and of which employees and their families are proud.
ISO 26000
Core Subjects
Consumer
(customer)
issues
Community
involvement
and
development
Human rights
Labor practices
We believe the Chiyoda Group's corporate social responsibility is to accurately
assess the current demands and deploy engineering to provide the value that
society requires for addressing global challenges such as poverty,
environmental issues and securing resources, consistent with our Group
Corporate Philosophy.
In this respect, we will have all of our employees reflect the principles of
such global guidelines as the ISO 26000 Core Subjects, UN Global Compact
and Sustainable Development Goals in their behaviors and also work with
our business partners and other parties concerned to understand and comply
with the principles.
Our Group's basic stance towards communication in our business activities
is "Smile and Respect," meaning to smile to express a warm feeling and to
show respect to the other party, and we will continue to proactively engage
in CSR activities with the aim of being a reliable company for all stakeholders.
Compliance with International Guidelines
UN Global Compact
Action Policies
Activities in This Year
—
• Provide industrial plants that earn
customer trust through engineering of
outstanding quality
• Share our CSR principles with suppliers
and other business partners
The
environment
Principle 7: Businesses should support a precautionary
approach to environmental challenges;
Principle 8: undertake initiatives to promote greater
environmental responsibility; and
Principle 9: encourage the development and diffusion
of environmentally friendly technologies.
• Develop and provide environmentally
friendly energy and conservation
technologies
• Conduct business activities that
contribute to environmental conservation
—
• Contribute to society through integrated
engineering business activities
• Enhance social contribution activities by
providing knowledge and labor
• Initiatives for a stable supply of energy and reduction of greenhouse gases
• Contribution to diversification of energy sources
• Plant construction that lives up to customer trust
• Initiatives for enhanced awareness of information security management and
the training
• Initiatives for supply chain management
• Continuing research and development for a low-carbon society
(energy conservation/ effective utilization of CO2)
• Promotion of business development towards a hydrogen-based society
• Expansion and promotion of renewable energy
• Execution of projects that consider environmental conservation
• Implementation of biodiversity preservation activities
• Promotion and support of culture in the community
• Contribution to local economic development and human resource development
• Tie-ups and cooperation with educational institutions to educate the next
generation
• Response to the Great East Japan Earthquake
• Support for other major disasters
Principle 1: Businesses should support and respect the
protection of internationally proclaimed
human rights; and
Principle 2: make sure that they are not complicit in
human rights abuses.
Principle 3: Businesses should uphold the freedom of
association and the effective recognition of
the right to collective bargaining;
Principle 4: the elimination of all forms of forced and
compulsory labour;
Principle 5: the effective abolition of child labour; and
Principle 6: the elimination of discrimination in respect
of employment and occupation.
• Create a lively and energetic working
environment and help employees
develop their talents
• Instill in everyone involved that safety is a
core value
• Creation of pleasant work environments
• Establishment and enforcement of a safety culture
• Enhancement of human resource development systems
• Establishment of crisis management systems
• Promotion of diversity including active female participation
CSR Vision 5 Commitment to Fairness
We are dedicated to achieving even greater transparency
and stability by conducting our operations fairly in
accordance with the highest ethical standards.
Organizational
governance
Fair operating
practices
Principle 10: Businesses should work against corruption
in all its forms, including extortion and
bribery.
• Conduct business activities based on
strict compliance and a high degree of
transparency
• Conduct a thorough risk management
program
• Compliance Reinforcement Plan and Group Company Liaison Meeting on
Compliance established
• Continuous compliance training and auditing
• Promotion for better understanding of UN Global Compact
• Thorough awareness of export controls
• Establishment of "Chiyoda Corporation Corporate Governance Policy"
• Establishment of the Audit and Supervisory Committee
• BCP (Business Continuity Plan)
Basis of Our Actions
Code of Conduct of the Chiyoda Group / Chiyoda Group Compliance Manual (Employee’s Practical Guide)
Details of these philosophies, visions and guidelines can be viewed on the Chiyoda website.
http://www.chiyoda-corp.com/company/en/policy/index.html
10
11
CHIYODA CORPORATION ANNUAL REPORT FY2015CHIYODA CORPORATION ANNUAL REPORT FY2015 The Chiyoda Group’s CSR
CSR Vision 3
CSR Vision 2
Environmental Initiatives
Photo: Reforestation in Kamaishi
“SPERA Hydrogen®” System for Large-Scale
H2 Storage and Transportation Technology
(1) Efforts in
business operations
• Carbon management
The Japanese government has been promoting a “hydro-
gen society,” and Fuel Cell Vehicles (FCVs), hydrogen
refueling stations and residential fuel cells (ENE-FARM®)
have all been commercialized. A safe technology for the
large-scale storage and transportation of hydrogen is
required to increase the utilization of hydrogen energy.
Chiyoda completed a technical establishment of the
“SPERA Hydrogen®” System through a demonstration
operation with a pilot plant in 2013, the first in the world.
toward a low carbon society
• Optimizing energy consumption,
detoxifying, reducing and recycling emissions and waste
• Development of eco-friendly technologies
(2) Efforts in CSR activities
• “Chiyoda no mori (Chiyoda’s forest),” reforestation in
Kamaishi, Iwate Prefecture, as part of reconstruction
assistance for earthquake-stricken areas
Chiyoda received the “Jules Verne Award” from the
The report on this activity is posted on the website of
International Association of Hydrogen Energy in 2014, the
Green Wave launched by the UN Secretariat of the
first Japanese business in the Award’s history. In 2015,
Convention on Biological Diversity.
Chiyoda also received the “JIE Award” from the Japan
Institute of Energy, and the “Noguchi
Memorial Award” from the Japan
Petroleum Institute.
Chiyoda plans to play a role in
resolving the issue of global warm-
Launching the first project to produce and
supply renewable jet and diesel fuels in Japan
On 1 December 2015, Chiyoda Corporation attended a
ing through building a “hydrogen
press conference for “Launching the project to produce
society” with the “SPERA Hydrogen®”
and supply renewable jet and diesel fuels.”
System Technology.
It was sponsored by euglena Company, Limited at a
Commitment to biodiversity
Chiyoda Group is participating
in the Japan Business and Biodiversity
Haneda Airport hangar.
Our role is to build and complete a demonstration
plant to produce an ASTM-compliant renewable jet fuel
and a next-generation renewable diesel fuel.
Based on the knowledge, experience, and data to be
Partnership. Our aim of “harmony between energy and
acquired through the operation of the demonstration
the environment” defined in our corporate philosophy
plant, euglena is aiming to move on to a new program of
shares common points with the Vision 2050
“Living in harmony with nature” adopted at
the Convention on Biological Diversity
(COP10).
Chiyoda Group is making the efforts
below for conservation of biodiversity.
constructing a full scale commer-
cial plant sometime in the 2020s.
Chiyoda will support these
projects to the best of its ability.
Social Contributions through Business Activities
Sustainable activities for the
community as a corporate citizen
In educational aid, the following Chiyoda Group
companies received students to develop communication
skills and first hand technical knowledge for fostering
The Group has been supporting its members to
professionals capable of true leadership on a world stage
participate in social activities, understanding that society
under the Coupling Internship Program:
is the basis of our sustainable existence. The activities we
(1) Chiyoda Malaysia Sdn. Bhd. (CMSB) hosted 8 students
engage in are mainly categorized as follows:
from University of Malaya and Osaka University
1. Educational aid in career development for students from
(2) Chiyoda Almana Engineering LLC hosted 8 students
elementary school to university
from Qatar University and Osaka University under the
2. Support to communities including disaster-stricken areas
theme of “Practical Global Talent Development System."
3. Collaboration in social programs with NPOs , or other
social welfare organizations
To ensure performing such activities in a sustainable
manner, we have established the “CSR Promotion Staff”*
system to encourage the participation of all Group
members. In FY 2015 as well, our members visited the
Tohoku areas hit by the Great East Japan Earthquake to
continue the areas’ reconstruction support with the
Group’s monetary donations also made in
commemoration of the fifth anniversary of the disaster.
More donations for the Kumamoto Earthquake in the
Kyushu area were solicited in the Group in April 2016.
*CSR Promotion Staff
CSR Promotion Staff are volunteer members who take the lead in CSR activities,
involving of employees in all the Chiyoda Group companies.
Photo: Site visit at one of Petronas plants, Melaka Refinery
Main Activities in FY2015
(Including domestic Group Companies)
18 people
78 people
7 times
Dispatch of lecturers to universities
Training for interns
Visiting seminars
Dispatch of volunteers to disaster-stricken areas 64 people
95 people
Community cleanup campaigns
1,782 meals
Food aid as TABLE FOR TWO
ECOCAP program for the purchase of vaccines
For 267 people
Collaboration with NPO (Second Harvest Japan) 3 times
Support to challenged people with the Yokohama City Council of Social
Welfare
• In-house sale events of goods made by challenged people: 7 times
• Inviting 50 people from the Yokohama Blind Association to a concert
12
13
Image: Plant appearance
Photo: Support to Children Society in Singapore
CHIYODA CORPORATION ANNUAL REPORT FY2015CHIYODA CORPORATION ANNUAL REPORT FY2015 CSR Vision 4
Respect for Human Rights
The Chiyoda Group’s CSR
CSR Vision 5
Commitment to Fairness
Photo: Corporate SQEI Convention
Promotion of diversity
Chiyoda Group highly respects the diversity and
individuality of employees and their personalities. We are
making efforts to create a supportive environment,
provide assistance and change the employees’ mentality
to help them make the most of their potential in the
Promotion of a safety
culture through lessons learned of
excellent construction for domestic and
overseas projects
One of the Chiyoda Group’s CSR medium-term policies is to
A risk survey conducted
Chiyoda Corporation maps out a risk management plan
in accordance with the Corporate Risk Management
Policy established in 2015. We identify the risks we
The whistle blowing system
expanded into overseas subsidiaries
and affiliated companies
should prioritize and carry out a plan-do-check-act
Chiyoda Corporation has a whistleblowing system. The
(PDCA) cycle on the identified risks.
system is aimed at early detection of illegal activities or
workplace regardless of gender, nationality, age or religion.
instill in everyone involved the idea that safety is a core
To identify the risks to be prioritized, a risk survey has
unethical behavior by groups of people or individuals
As part of the efforts to promote diversity, Chiyoda is
value. We are making efforts to make all the employees fully
been conducted on more than 200 employees, includ-
and their remedy and prevention by handling informa-
engaged in two major activities. One of them is a task
understand that safety should be their number-one priority.
ing executives, by the Corporate Risk Management
tion on such activities and behavior according to the
team aimed at changing the employees’ mentality about
In order to share the knowledge and expertise from
Division. Those employees assessed 100 risks on a risk
established system.
female participation in the workplace. The task team,
both outside and inside Chiyoda about Safety, Quality
questionnaire from three perspectives, impact, fre-
The coverage of the whistleblowing system has
formed in 2014, gathers and exchanges information and
and the Environment (SQE), the Group is holding a series
quency and risk management. The questionnaire listed
been expanded. It was introduced into 16 overseas
organizes lectures by outside lecturers. The team is seeking
of Corporate SQEI Conventions.
risks to the Chiyoda Group in various aspects of its busi-
subsidiaries and affiliated companies in 2015. Until
to build a corporate culture and a system that enable
In July 2015, the 8th Convention titled “Promote a
ness, such as management, project implementation,
then, the system had been adopted by Chiyoda
women to fulfill their potential without depending much
Safety Culture through Lessons Learned about Excellent
natural disaster, IT, information security, and compliance
Corporation and eight domestic subsidiaries and affili-
on their own efforts, supervisors’ decisions, the working
Construction for Domestic and Overseas projects” was a
including corruption, human rights and harassment.
ated companies only.
environment or the atmosphere. The team provides not
great success attended by more than 500 ardent partici-
The departments in charge, the Corporate Risk
We offer those requesting consultation or whis-
only female but also male employees with a chance to
pants including corporate management executives. Two
Management Division and other relevant departments
tleblowers convenience and protection. All subsidiaries
review their ways of working in the light of development
(2) projects awarded by the incentive scheme of SQE activ-
will work closely together to avoid those identified risks
and affiliated companies, Chiyoda Corporation as the
and advancement of women in the workplace.
ities in FY2014 were presented and their excellent activities
or minimize the effects if the crises should ever arise.
global headquarters, and law firms in Japan and overseas
The other activity is the human rights working group
on safety management were shared by all the participants.
hosted by Global Compact Network Japan. We are dis-
After the presentation, a panel discussion took place in
cussing various subjects related to “businesses and human
order to recognize and study each other from the view
BCP (Business Continuity Plan) drill
serve as liaison points for those requesting consultation
or whistleblowers. The liaisons are open to not only
Chiyoda Group's employees but also the employees of
rights” with other participants. We feed back what is dis-
points of common or different aspects for domestic and
We conducted a BCP drill jointly with our domestic
the Group's business partners. Chiyoda Corporation has
cussed into our employee training to increase their
overseas projects as well as the issues to be learned or
subsidiaries on March 11, 2016. We conducted a real-time
also set up liaison points staffed by women.
awareness of human rights. That will help promote
Chiyoda’s diversity. Those subjects include the clear
understanding of LGBT and the attitude toward LGBT peo-
ple in recruitment.
* LGBT is an initialism for lesbian, gay, bisexual and transgender.
improved. Such panel discussion was also effective for the
persons not directly involved in the construction to imag-
ine how important safety is for construction.
In that way, the Group will constantly make efforts to
instill the corporate policy “Safety is a core value.”
simulation drill* assuming that an inland earthquake
measuring six on the Japanese scale of seven hit the Tokyo
Metropolitan area. All the participants actively gathered
information, analyzed it and took measures accordingly.
The results of the drill will be reflected in BCM
(Business Continuity Management). We will analyze the
problems found during the drill. Based on the analysis, we
will revise the BCP to enhance its effectiveness. The BCP
drill will be held annually in the future.
* Real-time simulation drill: The participants receive information, or reports on
damage, and inquiries chronologically about the events likely to occur within
several days from a disaster. The participants analyze a wide variety of informa-
tion flowing in simultaneously. Based on the information, the participants make
decisions and give instructions.
14
15
Photo: Medical Seminar during the celebration of International Women’s Day in Qatar
Photo: BCP drill
CHIYODA CORPORATION ANNUAL REPORT FY2015CHIYODA CORPORATION ANNUAL REPORT FY2015 Corporate Governance
The Company pledges to constantly strive for sustainable growth and to enhance the corporate values of the Chiyoda Group
on a mid- to long-term basis. To achieve this goal, the Group established the “Chiyoda Corporation Corporate Governance
Policy” in October, 2015, which developed the Group’s basic views and guideline with regard to corporate governance. The
Group will continue to actively secure soundness and transparency of its corporate management through the policy.
Corporate Governance System
In order to further reinforce its corporate governance
structure, the Company has sifted to a “Company with
Audit and Supervisory Committee.”
The Company has established the Corporate Risk
Management Division, which presides over the
Compliance Unit, the SQEI (Safety, Quality, Environment,
and Information Security) Management Unit, and the
Crisis Management Unit, and the Internal Audit Unit. The
Corporate Risk Management Division and the Internal
Audit Unit directly report to management to raise the
quality and transparency of management, enable timely
response to stakeholders, and reinforce the risk
management and the compliance system.
To ensure speedy and accurate decision-making to
deal with rapidly changing social and economic
environments, the Company 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.
By shifting to a Company with Audit and Supervisory
Committee, with the new functions, the Company will be
able to improve and implement the soundness and
transparency of management and prompt decision-
making, and further enhance its corporate value.
The Board of Directors and Meetings of the
Board of Directors
The Board of Directors is composed of 13 directors.
Important matters concerning the Company are reported
and resolved at meetings of the Board of Directors. The
Executive Committee, made up of the four representative
directors, examines matters before they are submitted for
resolution at meetings of the Board of Directors. It makes
decisions about business execution matters by unanimous
resolution.
Audit and Supervisory Committee
The newly established Audit and Supervisory Committee
is composed of 3 directors (including 2 Independent
officers) as Audit and Supervisory Committee members
who closely monitor the execution of duties by directors
and executive officers. The Audit and Supervisory
Committee members 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 assigned to them at meetings of the Board of
Directors and the Executive Committee. Executive officers
provide regular progress reports at executive officer and
Executive Committee meetings attended by directors
and corporate auditors.
Reinforcing Internal Controls
The Chiyoda Group constantly conducts self-assessments
of existing internal control functions and reinforces
internal control systems. In addition, its Internal Audit Unit
as an autonomous unit performs the evaluations,
including auditing the development and operation of a
suitable overall internal control framework and constituent
components, and submitting reports to the Executive
Committee. The unit aims to ensure the establishment of
an integrated framework of internal controls and a real-
time monitoring system to the management.
Furthermore, the information management system
encompasses the Group companies, so that all important
information can be appropriately handled among all
employees and reported to the Board of Directors and
the Executive Committee.
Development and Management of the Internal Control System
1. Framework of Compliance with Laws and Regulations
The Company conducts business activities based on corporate
philosophy and the principles provided in the Code of Conduct of
the Chiyoda Group, by setting compliance with domestic and
international laws and regulations and business execution in
accordance with corporate ethics as the top priority.
To enhance the framework of compliance with laws and
regulations, the Company has established the Compliance
Committee chaired by a Representative Director, which reports on
the status of compliance and proposes improvements to the
Executive Committee, as necessary. In addition, by creating
relevant rules and manuals, conducting various training and
providing relevant information, the Company thoroughly raises the
awareness of its executives and employees, as well as enhances the
effectiveness of compliance through the development of whistle-
blowing systems and consultation systems.
2. Framework of Information Retention and Management
3. Framework of Loss and Risk Management
The Company establishes a risk and crisis management framework
for each type of risk in accordance with basic policy regarding the
Company’s risk and crisis management, in-house regulations and
various manuals. In addition, the Company establishes an
organization that constantly monitors risks throughout the
Company to centrally supervise the risk management activities
implemented by the risk managers assigned to each division.
Corporate Governance and Internal Controls
The division in charge of risk supervision fulfills the crisis
management secretariat function in the event of a crisis and deals
with emergency situations, while it engages in constant activities
to prevent and manage risks including providing relevant
information and promoting awareness.
In terms of risk management associated with receiving contract
awards and executing awarded projects, which are the Company’s
core business, the Company develops several examination systems.
In addition, an organization is established to be responsible for
internal checking including cold-eye reviews and project audits.
4. Framework to Ensure Efficiency
5. Framework of internal control in the Chiyoda Group
The Chiyoda Group clearly sets forth the values to be shared by all
group executives and employees in its corporate philosophy and
the Code of Conduct of the Chiyoda Group, while the Company
and the group companies conduct business based on close mutual
cooperation.
6. Framework to Ensure the Effectiveness of Audits by
Audit & Supervisory Committee Members
7. Framework for Reporting to the Audit & Supervisory
Committee Members
8. Framework for Securing the Appropriateness of
Financial Reporting
General Shareholders’ Meeting
Election
Submit/Report
Election
Report
Election
Audit/Supervision
Audit/Supervision
Board of Directors
Directors
(excluding Audit & Supervisory Committee Members)
Audit & Supervisory Committee
Report
Directors (Audit & Supervisory Committee Members)
Election
Supervision
Election
Submit/Report
Supervision
(advice) Submit/Report
Audit Referral
Survey,
Report Request
Report
Report
Accounting
Auditor
Financial
Audit
Executive Officer Meeting
Executive Committee
Executive Officers
4 Representative Directors
Submit/
Report
Compliance
Committee
Internal Controls
Management Committee
(ICMC)
Scheduled Reports
(deliverables, etc.)
Organization
Staffing
Submit/
Report
Report
Department Internal Controls
Internal Audit Unit
Group
Companies
Business Execution
Departments
(Risk Manager)
Self-Assessment
Global Operation Unit
Corporate Risk Management Division
Corporate Planning Unit
Corporate Services Unit, HR* Unit
Finance & Accounting Unit
Legal & Project Audit Unit
*HR: Human Relations
SQEI Management Unit
Compliance Unit
Crisis Management Unit
(Crisis Manager)
■ : Important organizations and arms of the Company
■ : Departments with internal control functions
16
17
CHIYODA CORPORATION ANNUAL REPORT FY2015CHIYODA CORPORATION ANNUAL REPORT FY2015 Corporate Information
(As of March 31, 2016)
Corporate Data
Global Network
Chiyoda’s global network enables Project Lifecycle
through to operation and maintenance. With a view to
Engineering to be offered all over the world. Chiyoda has
meeting the ever-changing needs of our customers, we
expanded its network in order to provide prompt support
offer services by utilizing local offices and group
for customers’ business activities on a global scale. Our
companies with thorough knowledge of the latest local
services cover the entire life cycles of projects – from
and global circumstances in countries around the world.
planning, engineering, procurement and construction
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
Paid-in Capital
January 20, 1948
¥ 43,396 million
Number of Employees
1,573 (Non-Consolidated)
5,866 (Consolidated)
Annual Fiscal Close
Shareholders’ Meeting
March 31
June
Organization Chart
(As of April 1, 2016)
Board of Directors
Audit & Supervisory Committee
Executive Committee
President
Secretarial Office
Internal Audit Unit
Corporate Risk Management Division
Technology & Engineering Division
SQEI Management Unit
Compliance Unit
Crisis Management Unit
Corporate Planning & Management
Division
Corporate Planning Unit
IR, PR & CSR Sec.
Corporate Services Unit
Human Relations Unit
Finance & Accounting Unit
Legal & Project Audit Unit
Group Operation Unit
Business Development Division
Strategic Business Planning &
Administration Unit
Corporate Relations Sec.
Business Development Unit 1
Business Development Unit 2
Business Development & Planning Unit
Global Project Management Division
Project Administration Unit
Project Management Unit
IT Management Unit
Global Human Resource Planning Unit
Work Process Innovation Task Team
Chiyoda Global Taskforce 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
Development Unit
Offshore & Upstream Strategic Project
Development Unit
Offshore & Upstream Project 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
Downstream & Non Hydrocarbon Project
Operations
Downstream & Chemical Project Unit
International Downstream and Transport
Infrastructure Project Unit
Metals & Mining Project Unit
Global Collaboration Unit
Technology Development, Investment
and Project Operations
TIP* 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
PLC: Project Logistics & Construction TIP: Technology Development, Investment and Project
18
19
CHIYODA CORPORATION ANNUAL REPORT FY2015CHIYODA CORPORATION ANNUAL REPORT FY2015Sales BaseEngineering CenterProcurement CenterOperation SupportProject Execution BaseAbu Dhabi OfficeChiyoda-CCC Engineering (Pte) LimitedChiyoda Oceania Pty LimitedChiyoda Philippines CorporationChiyoda Corporation Netherlands B.V.Milan Representative OfficeBeijing Office Chiyoda & Public Works Co., Ltd.Chiyoda Corporation (Shanghai)Korea Representative OfficeChiyoda International CorporationMiddle East Headquarters Doha OfficeChiyoda Almana Engineering LLCChiyoda Petrostar Ltd.L&T-Chiyoda LimitedChiyoda Mozambique LimitadaPT. Chiyoda International IndonesiaChiyoda do Brasil Representações Ltda.Chiyoda Human Resources International (Pte) LimitedChiyoda Singapore (Pte) LimitedEMAS CHIYODA Subsea Ltd.Chiyoda Malaysia Sdn. Bhd.Chiyoda Sarawak Sdn. Bhd.Chiyoda (Thailand) LimitedXodus Group (Holdings) LtdUSABrazilJapanKoreaChinaMyanmarThailandMalaysiaSingaporeIndonesiaAustraliaIndiaUAEQatarSaudi ArabiaItalyThe NetherlandsUKPhilippinesMozambique
Directors and Officers
(As of June 25, 2016)
Stock Information
(As of March 31, 2016)
9
12
11
6
5
7
13
8
3
2
1
10
4
Board of Directors
Representative Directors
President & CEO
1. Shogo Shibuya
Senior Executive Vice President
2. Keiichi Nakagaki
3. Hiroshi Ogawa
Executive Vice President & CFO
4. Masahito Kawashima
Directors
Executive Vice President
5. Katsuo Nagasaka
6. Masahiko Kojima
7. Ryosuke Shimizu
8. Arata Sahara
Director
9. Nobuo Tanaka*
10. Tetsuji Nakagawa*
Audit & Supervisory Committee Member
11. Mikio Kobayashi*
12. Hideaki Takaishi
13. Yukihiro Imadegawa*
* External Director
Executive Officers
Executive Vice President
Tadashi Izawa
20
Senior Vice President
Masao Ishikawa
Yasumitsu Abe
Toshihiro Shimazaki
Mamoru Nakano
Akira Fujisawa
Nobuyuki Uchida
Hiromi Koshizuka
Vice President
Shuichi Wada
Hideo Matsui
Noriyuki Kasuya
Masao Fujiwara
Jinei Yamaguchi
Toshiyuki Kariya
Hiroyuki Shimizu
Terunobu Iio
Hideaki Tomiku
Eisuke Oki
Authorized Shares
Capital Stock Issued
570,000,000
260,324,529
Number of Shareholders
20,434
Number of Shares per Unit 1,000
Transfer Agent of Common Stock
Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi, Chiyoda-ku, Tokyo
Major Shareholders
Mitsubishi Corporation
Japan Trustee Services Bank, Ltd. (Trust account)
The Master Trust Bank of Japan, Ltd. (Trust account)
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Mitsubishi UFJ Trust and Banking Corporation
Trust & Custody Services Bank, Ltd.
Northern Trust Co. (AVFC) Re 15PCT Treaty Account
State Street Bank and Trust Company
Goldman Sachs Japan, Co., Ltd.
BNP Paribas Securities (Japan) Limited
Stock Code
ISIN:
JP3528600004
SEDOL1: 6191704 JP
TSE:
6366
Number of
Shares Owned
(Thousands of Shares)
Ratio of
Shares Owned
(%)
Breakdown by Shareholder
86,931
13,148
10,983
9,033
4,816
3,221
3,085
2,946
2,776
2,441
33.39
5.05
4.21
3.47
1.85
1.23
1.18
1.13
1.06
0.93
Total Number of
Shares Issued:
260,325
thousand
• 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
2011
2012
2013
2014
2015
2016
(Yen)
21,000
14,000
7,000
(Thousands
of shares)
100,000
50,000
0
21
CHIYODA CORPORATION ANNUAL REPORT FY2015CHIYODA CORPORATION ANNUAL REPORT FY2015 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 2016)
Selected in the FTSE4 Good
index series
Seize the Moment,
Open Up New Frontiers
ANNUAL REPORT FY2015
For the year ended March 31, 2016
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 2016)
Selected in the FTSE4 Good
index series
Seize the Moment,
Open Up New Frontiers
Consolidated Financial Statements FY2015
For the year ended March 31, 2016, and Independent Auditor’s Report
Consolidated Balance Sheet
(March 31, 2016)
Chiyoda Corporation and Consolidated Subsidiaries
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31, 2016
Consolidated Balance Sheet
March 31, 2016
ASSETS
ASSETS
2016
2015
2016
Millions of Yen
Millions of Yen
Thousands of
U.S. Dollars
(Note 1)
2016
2015
CURRENT ASSETS:
CURRENT ASSETS:
Cash and cash equivalents (Note 14)
Cash and cash equivalents (Note 14)
Short-term investments (Note 14)
Short-term investments (Note 14)
Notes and accounts receivable—trade (Note 14)
Notes and accounts receivable—trade (Note 14)
Costs and estimated earnings on long-term construction
Costs and estimated earnings on long-term construction
¥ 136,919
7,795
35,651
¥ 136,919
¥ 113,246
7,795
69
35,651
29,740
¥ 113,246
$1,211,678
68,985
69
315,499
29,740
contracts (Notes 4 and 14)
contracts (Notes 4 and 14)
Costs of construction contracts in process
Costs of construction contracts in process
Accounts receivable—other
Accounts receivable—other
Jointly controlled assets of joint venture (Note 14)
Jointly controlled assets of joint venture (Note 14)
Deferred tax assets (Note 11)
Prepaid expenses and other
Allowance for doubtful accounts
Deferred tax assets (Note 11)
Prepaid expenses and other
Allowance for doubtful accounts
33,644
35,053
7,112
179,360
12,889
8,888
(2,285 )
33,644
24,100
35,053
59,668
7,112
16,327
179,360
182,855
12,889
11,697
8,888
6,930
(2,285 )
(56 )
297,742
24,100
59,668
310,209
16,327
62,942
182,855
1,587,264
114,064
11,697
78,655
6,930
(20,223 )
(56 )
Total current assets
Total current assets
455,030
455,030
444,578
4,026,820
444,578
PROPERTY, PLANT AND EQUIPMENT:
Land
Buildings and structures
Machinery and equipment
Tools, furniture, and fixtures
Construction in progress
PROPERTY, PLANT AND EQUIPMENT:
Land
Buildings and structures
Machinery and equipment
Tools, furniture, and fixtures
Construction in progress
Total
Total
Accumulated depreciation
Accumulated depreciation
5,266
13,887
635
7,439
22
27,251
(13,309 )
5,266
5,266
13,887
13,915
635
721
7,439
7,211
22
16
27,251
27,131
(13,309 )
(12,304 )
46,602
5,266
13,915
122,899
5,627
721
7,211
65,839
195
16
241,164
27,131
(117,782 )
(12,304 )
Thousands of
U.S. Dollars
(Note 1)
2016
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
$1,211,678
68,985
315,499
CURRENT LIABILITIES:
Short-term borrowings (Note 14)
Current portion of long-term debt (Notes 8 and 14)
Notes and accounts payable—trade (Note 14)
Advance receipts on construction contracts
CURRENT LIABILITIES:
Short-term borrowings (Note 14)
Current portion of long-term debt (Notes 8 and 14)
Notes and accounts payable—trade (Note 14)
Advance receipts on construction contracts
Income taxes payable (Note 14)
Income taxes payable (Note 14)
Deposits received
Allowance for warranty costs for completed works
Allowance for losses on construction contracts
Accrued expenses and other
Deposits received
Allowance for warranty costs for completed works
Allowance for losses on construction contracts
Accrued expenses and other
Millions of Yen
Millions of Yen
2016
2015
2016
Thousands of
U.S. Dollars
(Note 1)
2016
2015
Thousands of
U.S. Dollars
(Note 1)
2016
¥
333
45
150,078
135,667
2,841
1,209
337
3,160
17,432
¥
¥
333
991
45
51
150,078
137,652
135,667
123,869
2,841
1,366
1,209
3,352
337
364
3,160
3,988
17,432
22,703
$
¥
991
2,950
405
51
137,652
1,328,130
1,200,593
123,869
25,145
1,366
3,352
10,702
364
2,988
3,988
27,969
154,267
22,703
$
2,950
405
1,328,130
1,200,593
25,145
10,702
2,988
27,969
154,267
Total current liabilities
Total current liabilities
311,106
294,339
311,106
2,753,153
294,339
2,753,153
LONG-TERM LIABILITIES:
Long-term debt (Notes 8 and 14)
Liability for retirement benefits (Note 9)
Provision for treatment of PCB waste
Asset retirement obligations
Other
LONG-TERM LIABILITIES:
Long-term debt (Notes 8 and 14)
Liability for retirement benefits (Note 9)
Provision for treatment of PCB waste
Asset retirement obligations
Other
10,036
2,134
340
996
1,477
10,036
10,063
2,134
1,070
340
339
996
983
1,477
636
88,814
10,063
1,070
18,886
339
3,013
983
8,820
13,079
636
88,814
18,886
3,013
8,820
13,079
Total long-term liabilities
Total long-term liabilities
14,985
13,093
14,985
132,614
13,093
132,614
COMMITMENTS AND CONTINGENT LIABILITIES
COMMITMENTS AND CONTINGENT LIABILITIES
297,742
310,209
62,942
1,587,264
114,064
78,655
(20,223 )
4,026,820
46,602
122,899
5,627
65,839
195
241,164
(117,782 )
Net property, plant and equipment
Net property, plant and equipment
13,942
13,942
14,826
123,381
14,826
123,381
(Notes 8, 13, 15 and 16)
(Notes 8, 13, 15 and 16)
INVESTMENTS AND OTHER ASSETS:
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 5 and 14)
Investments in and advances to unconsolidated
subsidiaries and associated companies (Note 7)
Investment securities (Notes 5 and 14)
Investments in and advances to unconsolidated
subsidiaries and associated companies (Note 7)
Goodwill (Note 6)
Goodwill (Note 6)
Software
Software
Asset for retirement benefits (Note 9)
Asset for retirement benefits (Note 9)
Other assets (Note 11)
Other assets (Note 11)
Allowance for doubtful accounts
Allowance for doubtful accounts
14,113
14,113
23,940
124,902
23,940
29,650
3,931
7,079
94
4,755
(379 )
29,650
8,547
3,931
12,034
7,079
7,393
94
33
4,755
4,717
(379 )
(231 )
8,547
262,395
12,034
34,795
62,651
7,393
837
33
4,717
42,088
(3,359 )
(231 )
Total investments and other assets
Total investments and other assets
59,247
59,247
56,434
524,310
56,434
124,902
262,395
34,795
62,651
837
42,088
(3,359 )
524,310
EQUITY (Notes 10 and 19):
EQUITY (Notes 10 and 19):
Common stock—authorized, 570,000 thousand shares;
Common stock—authorized, 570,000 thousand shares;
issued, 260,324 thousand shares in 2016 and 2015
issued, 260,324 thousand shares in 2016 and 2015
Capital surplus
Retained earnings
Treasury stock—at cost, 1,340 thousand shares in 2016 and
Capital surplus
Retained earnings
Treasury stock—at cost, 1,340 thousand shares in 2016 and
43,396
37,112
115,839
43,396
43,396
37,112
37,112
115,839
115,831
384,039
43,396
37,112
328,430
1,025,127
115,831
384,039
328,430
1,025,127
1,323 thousand shares in 2015
1,323 thousand shares in 2015
(1,422 )
(1,422 )
(1,405 )
(12,585 )
(1,405 )
(12,585 )
Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Foreign currency translation adjustments
Defined retirement benefit plans
Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Foreign currency translation adjustments
Defined retirement benefit plans
Total
Total
Noncontrolling interests
Noncontrolling interests
2,386
(1,618 )
4,171
300
200,166
1,961
2,386
7,218
(1,618 )
(2,064 )
4,171
5,229
300
1,076
200,166
206,395
2,010
1,961
7,218
21,120
(2,064 )
(14,324 )
5,229
36,918
2,663
1,076
206,395
1,771,389
17,354
2,010
21,120
(14,324 )
36,918
2,663
1,771,389
17,354
TOTAL
TOTAL
¥ 528,219
¥ 528,219
¥515,839
$4,674,512
¥515,839
$4,674,512
TOTAL
TOTAL
¥ 528,219
¥ 515,839
¥ 528,219
$4,674,512
¥ 515,839
$4,674,512
Total equity
Total equity
202,128
208,405
202,128
1,788,743
208,405
1,788,743
See notes to consolidated financial statements.
See notes to consolidated financial statements.
- 2 -
- 2 -
1
1
Consolidated Financial Statements
Consolidated Financial Statements
2
2
Consolidated Financial StatementsConsolidated Financial Statements
Consolidated Statement of Income
(Year Ended March 31, 2016)
Consolidated Statement of Comprehensive Income
(Year Ended March 31, 2016)
Chiyoda Corporation and Consolidated Subsidiaries
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2016
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2016
Millions of Yen
2016
2015
Thousands of
U.S. Dollars
(Note 1)
2016
Millions of Yen
2015
2016
Thousands of
U.S. Dollars
(Note 1)
2016
¥ 611,548
¥ 480,979
$5,411,937
NET INCOME
¥ 3,496
¥ 11,212
$ 30,944
REVENUE
COST OF REVENUE
Gross profit
41,520
45,651
367,438
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
(Note 12)
25,505
24,185
225,712
570,028
435,327
5,044,498
OTHER COMPREHENSIVE (LOSS) INCOME (Note 17):
Unrealized (loss) gain on available-for-sale securities
Deferred gain (loss) on derivatives under hedge accounting
Foreign currency translation adjustments
Defined retirement benefit plans
Share of other comprehensive (loss) income of associates
(4,831 )
441
(1,135 )
(775 )
(83 )
2,298
(2,712 )
2,815
1,364
142
(42,758 )
3,907
(10,050 )
(6,867 )
(740 )
Operating income
16,015
21,466
141,726
Total other comprehensive (loss) income
(6,385 )
3,908
(56,509 )
OTHER (EXPENSES) INCOME:
Interest and dividend income
Gain on sales of investment securities
Interest expense
Equity in losses of associated companies
Foreign exchange loss
Loss on valuation of investment securities
Impairment loss (Note 6)
Other—net
2,484
2,686
(216 )
(1,318 )
(665 )
(4,431 )
(93 )
3,111
(255 )
(783 )
(1,182 )
(258 )
(85 )
21,985
23,777
(1,912 )
(11,668 )
(5,890 )
(39,217 )
(829 )
Other (expenses) income—net
(1,554 )
545
(13,755 )
INCOME BEFORE INCOME TAXES
14,460
22,012
127,971
INCOME TAXES (Note 11):
Current
Deferred
8,708
2,255
6,257
4,542
77,062
19,964
Total income taxes
10,963
10,799
97,026
NET INCOME
3,496
11,212
30,944
NET INCOME ATTRIBUTABLE TO NONCONTROLLING
INTERESTS
121
183
1,075
NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT
¥ 3,375
¥ 11,029
$ 29,869
PER SHARE OF COMMON STOCK (Notes 2.z and 18):
Basic net income
Cash dividends applicable to the year
Yen
U.S. Dollars
¥ 13.03
10.00
¥ 42.58
13.00
$0.12
0.09
See notes to consolidated financial statements.
- 3 -
3
COMPREHENSIVE (LOSS) INCOME
¥ (2,888 )
¥ 15,121
$ (25,564 )
TOTAL COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO:
Owners of the parent
Noncontrolling interests
¥ (2,844 )
(44 )
¥ 14,722
398
$ (25,174 )
(390 )
See notes to consolidated financial statements.
- 4 -
4
Consolidated Financial StatementsConsolidated Financial Statements
Consolidated Statement of Changes in Equity
(Year Ended March 31, 2016)
Chiyoda Corporation and Consolidated Subsidiaries
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2016
Consolidated Statement of Changes in Equity
Year Ended March 31, 2016
Thousands
Thousands
Millions of Yen
Millions of Yen
Outstanding
Number of
Shares of
Common
Stock
Outstanding
Number of
Shares of
Common
Stock
Common
Stock
Capital
Surplus
Common
Stock
Retained
Earnings
Capital
Surplus
Treasury
Stock
Retained
Earnings
Noncontrolling
Interests
Total
Total
Equity
Noncontrolling
Interests
Total
Equity
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)
Unrealized
Gain on
Available-
for-Sale
Securities
Deferred
(Loss) Gain on
Derivatives
under Hedge
Accounting
Deferred
(Loss) Gain on
Derivatives
under Hedge
Accounting
Foreign
Currency
Translation
Adjustments
Unrealized
Gain on
Available-
for-Sale
Securities
Defined
Retirement
Benefit
Plans
Treasury
Stock
Foreign
Currency
Translation
Adjustments
Defined
Retirement
Benefit
Plans
Total
BALANCE, MARCH 31, 2014
(APRIL 1, 2014, as previously reported)
BALANCE, MARCH 31, 2014
259,014
(APRIL 1, 2014, as previously reported)
¥ 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
Cumulative effect of accounting
change (Note 2.r)
change (Note 2.r)
(579 )
(579 )
(579 )
(579 )
(579 )
(579 )
BALANCE, APRIL 1, 2014 (as restated)
BALANCE, APRIL 1, 2014 (as restated)
259,014
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
Net income attributable to owners
Net income attributable to owners
of the parent
of the parent
Cash dividends, ¥16.00 per share
Purchase of treasury stock
Net change in the year
Cash dividends, ¥16.00 per share
Purchase of treasury stock
Net change in the year
(12 )
(12 )
11,029
(4,144 )
11,029
(4,144 )
(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
BALANCE, MARCH 31, 2015
BALANCE, MARCH 31, 2015
259,001
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
11,029
(4,144 )
(15 )
3,693
11,029
(4,144 )
(15 )
4,084
391
391
2,010
206,395
208,405
2,010
Net income attributable to owners
Net income attributable to owners
of the parent
of the parent
Cash dividends, ¥13.00 per share
Purchase of treasury stock
Net change in the year
Cash dividends, ¥13.00 per share
Purchase of treasury stock
Net change in the year
(16 )
(16 )
(16 )
(16 )
3,375
(3,367 )
3,375
(3,367 )
(4,831 )
445
(4,831 )
(1,057 )
445
(775 )
(1,057 )
3,375
(3,367 )
(16 )
(6,219 )
(775 )
3,375
(3,367 )
(16 )
(6,219 )
3,375
(3,367 )
(16 )
(6,269 )
(49 )
(49 )
BALANCE, MARCH 31, 2016
Chiyoda Corporation and Consolidated Subsidiaries
BALANCE, MARCH 31, 2016
Chiyoda Corporation and Consolidated Subsidiaries
¥ 37,112
¥ 43,396
258,984
258,984
¥ 43,396
¥ 115,839
¥ 37,112
¥ (1,422 )
¥ 115,839
¥2,386
¥ (1,422 )
¥ (1,618 )
¥2,386
¥4,171
¥ (1,618 )
¥ 300
¥4,171
¥ 200,166
¥ 300
¥1,961
¥ 200,166
¥ 202,128
¥1,961
197,451
11,029
(4,144 )
(15 )
4,084
208,405
3,375
(3,367 )
(16 )
(6,269 )
¥ 202,128
Consolidated Statement of Changes in Equity
Year Ended March 31, 2016
Consolidated Statement of Changes in Equity
Year Ended March 31, 2016
Common
Stock
BALANCE, MARCH 31, 2015
BALANCE, MARCH 31, 2015
$ 384,039
Net income attributable to owners
Net income attributable to owners
of the parent
of the parent
Cash dividends, $0.12 per share
Purchase of treasury stock
Net change in the year
Cash dividends, $0.12 per share
Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2016
BALANCE, MARCH 31, 2016
$ 384,039
See notes to consolidated financial statements.
See notes to consolidated financial statements.
Capital
Surplus
Common
Stock
Retained
Earnings
Capital
Surplus
Treasury
Stock
Retained
Earnings
Noncontrolling
Interests
Total
Total
Equity
Noncontrolling
Interests
Total
Equity
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-
for-Sale
Securities
Deferred
Loss on
Derivatives
under Hedge
Accounting
Unrealized
Gain on
Available-
for-Sale
Securities
Foreign
Currency
Translation
Adjustments
Deferred
Loss on
Derivatives
under Hedge
Accounting
Defined
Retirement
Benefit
Plans
Treasury
Stock
Foreign
Currency
Translation
Adjustments
Total
Defined
Retirement
Benefit
Plans
$ 328,430
$ 384,039
$1,025,054
$ 328,430
$ (12,437 )
$1,025,054
$ 63,879
$ (12,437 )
$ (18,266 )
$ 63,879
$ 46,275
$ (18,266 )
$9,530
$ 46,275
$1,826,505
$9,530
$ 17,794
$1,826,505
$1,844,299
$ 17,794
29,869
(29,796 )
29,869
(29,796 )
(147 )
- 5 -
(147 )
(42,758 )
- 5 -
3,942
(42,758 )
(9,357 )
3,942
(6,867 )
29,869
(29,796 )
(147 )
(55,040 )
(9,357 )
(6,867 )
29,869
(29,796 )
(147 )
(55,040 )
29,869
(29,796 )
(147 )
(55,480 )
(Continued)
(439 )
(439 )
$ 328,430
$ 384,039
$1,025,127
$ 328,430
$ (12,585 )
$1,025,127
$ 21,120
$ (12,585 )
$ (14,324 )
$ 21,120
$ 36,918
$ (14,324 )
$2,663
$ 36,918
$1,771,389
$2,663
$ 17,354
$1,771,389
$1,788,743
$ 17,354
$1,844,299
29,869
(29,796 )
(147 )
(55,480 )
(Continued)
$1,788,743
5
6
- 6 -
- 6 -
(Concluded)
(Concluded)
Consolidated Financial StatementsConsolidated Financial Statements
Consolidated Statement of Cash Flows
(Year Ended March 31, 2016)
Chiyoda Corporation and Consolidated Subsidiaries
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2016
Consolidated Statement of Cash Flows
Year Ended March 31, 2016
OPERATING ACTIVITIES:
Income before income taxes
Adjustments for:
Income taxes paid
Depreciation
Impairment loss
Amortization of goodwill
Increase in allowance for doubtful accounts
Decrease in allowance for warranty costs for completed
works
Decrease in allowance for losses on construction contracts
(Decrease) increase in liability for retirement benefits
Foreign exchange loss (gain)—net
Equity in losses of associated companies
Gain on sales of investment securities
Loss on valuation of investment securities
Changes in operating assets and liabilities:
(Increase) decrease in trade notes and accounts
receivable, and costs and estimated earnings on
Millions of Yen
2016
2015
Thousands of
U.S. Dollars
(Note 1)
2016
¥ 14,460
¥ 22,012
$ 127,971
(1,673 )
3,589
4,431
1,256
2,387
(21 )
(826 )
(117 )
813
1,318
(2,686 )
(12,550 )
3,569
1,469
216
(170 )
(47 )
100
(499 )
783
258
(14,811 )
31,762
39,217
11,120
21,125
(186 )
(7,315 )
(1,037 )
7,197
11,668
(23,777 )
long-term construction contracts
(16,491 )
21,217
(145,944 )
Decrease (increase) in costs of construction contracts in
process
Increase (decrease) in trade notes and accounts payable
Increase in advance receipts on construction contracts
Decrease (increase) in accounts receivable—other
Decrease (increase) in jointly controlled assets of joint
venture
Decrease in deposits received
(Increase) decrease in interest and dividend receivable
Other—net
Total adjustments
24,543
13,293
12,184
5,158
3,501
(2,108 )
(812 )
(6,673 )
41,065
(25,282 )
(9,759 )
43,019
(3,637 )
217,194
117,641
107,830
45,646
(55,246 )
(1,710 )
109
(7,997 )
(46,157 )
30,987
(18,659 )
(7,192 )
(59,053 )
363,413
Net cash provided by (used in) operating
activities—(Forward)
¥ 55,526
¥ (24,145 )
$ 491,385
Millions of Yen
2016
2015
Thousands of
U.S. Dollars
(Note 1)
2016
Net cash provided by (used in) operating activities—(Forward)
¥ 55,526
¥ (24,145 )
$ 491,385
INVESTING ACTIVITIES:
Net increase in time deposits
Purchases of property, plant and equipment
Purchases of intangible assets
Payments for purchases of investment securities
Proceeds from sales of investment securities
Payments of loans receivable
Proceeds from collections of loans
Other—net
(7,739 )
(806 )
(1,801 )
(21,998 )
5,463
(382 )
489
25
(1,441 )
(2,431 )
(1,245 )
(605 )
118
161
(68,489 )
(7,140 )
(15,941 )
(194,680 )
48,346
(3,387 )
4,330
228
Net cash used in investing activities
(26,750 )
(5,444 )
(236,734 )
FINANCING ACTIVITIES:
Net decrease in short-term borrowings
Repayments of long-term debt
Payments of cash dividends
Other—net
(498 )
(4 )
(3,362 )
(76 )
(390 )
(4 )
(4,139 )
(34 )
(4,413 )
(41 )
(29,752 )
(680 )
Net cash used in financing activities
(3,942 )
(4,569 )
(34,888 )
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS
(1,159 )
2,101
(10,264 )
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
23,673
(32,057 )
209,498
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
113,246
145,303
1,002,180
CASH AND CASH EQUIVALENTS, END OF YEAR
¥ 136,919
¥ 113,246
$1,211,678
See notes to consolidated financial statements.
7
8
- 7 -
(Continued)
- 8 -
(Concluded)
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
(Year Ended March 31, 2016)
Chiyoda Corporation and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Year Ended March 31, 2016
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 2015 consolidated financial statements to conform to the classifications
used in 2016.
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 ¥113 to $1, the
approximate rate of exchange at March 31, 2016. 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, 2016, include the
accounts of the Company and its 30 significant (30 in 2015) 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 seven (six in 2015) associated companies are accounted for by the equity
method.
EMAS CHIYODA Subsea Limited, newly acquired through share purchase, has been accounted
for by the equity method for the year ended March 31, 2016.
- 9 -
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 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—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" which was
revised in March 2015 to reflect revisions of the relevant Japanese GAAP or accounting
standards in other jurisdictions. 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 (Financial Accounting
Standards Board Accounting Standards Codification) 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; and
(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.
c. Unification of Accounting Policies Applied to Foreign Associated Companies for the Equity
Method—ASBJ Statement No. 16, "Accounting Standard for Equity Method of Accounting for
Investments" which was revised in line with the revisions to PITF No. 18 above 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; and (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.
9
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10
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
d. Business Combinations—In September 2013, the ASBJ issued revised ASBJ Statement No. 21,
"Accounting Standard for Business Combinations," revised ASBJ Guidance No. 10, "Guidance
on Accounting Standards for Business Combinations and Business Divestitures," and revised
ASBJ Statement No. 22, "Accounting Standard for Consolidated Financial Statements." Major
accounting changes are as follows:
(a) Transactions with noncontrolling interest—A parent's ownership interest in a subsidiary might
change if the parent purchases or sells ownership interests in its subsidiary. The carrying
amount of noncontrolling interest is adjusted to reflect the change in the parent's
ownership interest in its subsidiary while the parent retains its controlling interest in its
subsidiary. Under the previous accounting standard, any difference between the fair value
of the consideration received or paid and the amount by which the noncontrolling
interest is adjusted is accounted for as an adjustment of goodwill or as profit or loss in the
consolidated statement of income. Under the revised accounting standard, such difference
is accounted for as capital surplus as long as the parent retains control over its subsidiary.
(b) Presentation of the consolidated balance sheet—In the consolidated balance sheet, "minority
interest" under the previous accounting standard is changed to "noncontrolling interest"
under the revised accounting standard.
(c) Presentation of the consolidated statement of income—In the consolidated statement of
income, "net income before minority interest" under the previous accounting standard is
changed to "net income" under the revised accounting standard, and "net income" under
the previous accounting standard is changed to "net income attributable to owners of the
parent" under the revised accounting standard.
(d) Provisional accounting treatments for a business combination—If the initial accounting for a
business combination is incomplete by the end of the reporting period in which the
business combination occurs, an acquirer shall report in its financial statements
provisional amounts for the items for which the accounting is incomplete. Under the
previous accounting standard guidance, the impact of adjustments to provisional amounts
recorded in a business combination on profit or loss is recognized as profit or loss in the
year in which the measurement is completed. Under the revised accounting standard
guidance, during the measurement period, which shall not exceed one year from the
acquisition, the acquirer shall retrospectively adjust the provisional amounts recognized at
the acquisition date to reflect new information obtained about facts and circumstances
that existed as of the acquisition date and that would have affected the measurement of
the amounts recognized as of that date. Such adjustments shall be recognized as if the
accounting for the business combination had been completed at the acquisition date.
(e) Acquisition-related costs—Acquisition-related costs are costs, such as advisory fees or
professional fees, which an acquirer incurs to effect a business combination. Under the
previous accounting standard, the acquirer accounts for acquisition-related costs by
including them in the acquisition costs of the investment. Under the revised accounting
standard, acquisition-related costs shall be accounted for as expenses in the periods in
which the costs are incurred.
The above accounting standards and guidance for (a) transactions with noncontrolling
interest, (b) presentation of the consolidated balance sheet, (c) presentation of the consolidated
statement of income, and (e) acquisition-related costs are effective for the beginning of annual
periods beginning on or after April 1, 2015. Earlier application is permitted from the beginning
of annual periods beginning on or after April 1, 2014, except for (b) presentation of the
consolidated balance sheet and (c) presentation of the consolidated statement of income. In
the case of earlier application, all accounting standards and guidance above, except for
(b) presentation of the consolidated balance sheet and (c) presentation of the consolidated
statement of income, should be applied simultaneously.
Either retrospective or prospective application of the revised accounting standards and
guidance for (a) transactions with noncontrolling interest and (e) acquisition-related costs is
permitted. In retrospective application of the revised standards and guidance, the accumulated
effects of retrospective adjustments for all (a) transactions with noncontrolling interest and
(e) acquisition-related costs which occurred in the past shall be reflected as adjustments to the
beginning balance of capital surplus and retained earnings for the year of the first-time
application. In prospective application, the new standards and guidance shall be applied
prospectively from the beginning of the year of the first-time application.
The revised accounting standards and guidance for (b) presentation of the consolidated
balance sheet and (c) presentation of the consolidated statement of income shall be applied to
all periods presented in financial statements containing the first-time application of the revised
standards and guidance.
The revised standards and guidance for (d) provisional accounting treatments for a business
combination are effective for a business combination which occurs on or after the beginning of
annual periods beginning on or after April 1, 2015. Earlier application is permitted for a
business combination which occurs on or after the beginning of annual periods beginning on
or after April 1, 2014.
The Company applied the revised accounting standards and guidance for (a) transactions with
noncontrolling interest, (b) presentation of the consolidated balance sheet, (c) presentation of
the consolidated statement of income, and (e) acquisition-related costs above, effective April 1,
2015, and (d) provisional accounting treatments for a business combination above for a
business combination which occurred on or after April 1, 2015. The revised accounting
standards and guidance for (a) transactions with noncontrolling interest and (e) acquisition-
related costs were applied prospectively.
With respect to (b) presentation of the consolidated balance sheet and (c) presentation of the
consolidated statement of income, the applicable line items in the 2015 consolidated financial
statements have been accordingly reclassified and presented in line with those in 2016.
There was no impact from these accounting changes.
e. Construction Contracts—Under Japanese accounting standards, 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.
11
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12
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
Concerning the construction contracts, the Group applies the accounting methods as follows:
m. Software—Software for internal use is amortized on a straight-line basis over its estimated
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.
f. 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.
g.
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 or at amortized cost. For other-than-temporary declines in fair value, investment
securities are reduced to net realizable value by a charge to income.
h. 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.
i.
Jointly Controlled Assets of Joint Venture—The jointly controlled assets of the joint venture
consist of jointly controlled cash recognized based on the Company's share of the venture.
j. 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.
k. 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.
l. 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.
useful life (five years at the maximum).
n. Other Assets—Intangible assets are carried at cost less accumulated amortization, which is
calculated by the straight-line method over their estimated useful lives.
o. Allowance for Warranty Costs for Completed Work—The allowance for warranty costs for
completed work is provided based on past rate experience.
p. 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.
q. Provision for Treatment of PCB Waste—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.
r. Retirement and Pension Plans—The Company and consolidated subsidiaries have funded or
unfunded defined benefit pension plans and 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.
The Company and its domestic consolidated subsidiaries account 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 benefit formula
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.
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.
13
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- 14 -
14
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
(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 the expected
benefit to periods from a straight-line basis to a benefit formula basis and the method of
determining the 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, retained earnings as of April 1, 2014, decreased
by ¥579 million. The effect on the profit and loss for the year ended March 31, 2015, was not
material.
s. Asset Retirement Obligations—Under Japanese accounting standards, 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.
t. Research and Development Costs—Research and development costs are charged to income as
incurred.
v.
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.
w. 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.
x. Foreign Currency Financial Statements—Balance sheet accounts of consolidated foreign
subsidiaries are translated into Japanese yen at the current exchange rate as of the balance
sheet date except for equity, which is translated at the historical rate. Differences arising from
such translation are shown as "Foreign currency translation adjustments" under accumulated
other comprehensive income in a separate component of equity. Revenue and expense
accounts of consolidated foreign subsidiaries are translated into Japanese yen at the current
exchange rate as of the balance sheet date.
y. 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:
(1) All derivatives are recognized as either assets or liabilities and measured at fair value, with
gains or losses recognized in the consolidated statement of income.
(2) For derivatives used for hedging purposes, if such derivatives qualify for hedge accounting
because of high correlation and effectiveness between the hedging instruments and the
hedged items, gains or losses on derivatives are deferred until maturity of the hedged
transactions.
Foreign currency forward contracts are utilized to hedge foreign exchange risks. Certain assets
and liabilities on construction contracts denominated in foreign currencies are translated at
the contracted rates if the forward contracts qualify for hedge accounting.
u. Leases—Japanese accounting standards require that all finance lease transactions be capitalized
by recognizing lease assets and lease obligations in the balance sheet.
Foreign currency deposits are held to hedge foreign exchange risks derived from forecasted
purchases of fixed assets denominated in foreign currency.
All other leases are accounted for as operating leases.
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.
15
- 15 -
- 16 -
16
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
z. 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.
4. CONSTRUCTION CONTRACTS
Costs and estimated earnings recognized with respect to construction contracts which are
accounted for by the percentage-of-completion method at March 31, 2016 and 2015, were as
follows:
Millions of Yen
2016
2015
Thousands of
U.S. Dollars
2016
Diluted net income per share is not disclosed because there was no potential stock having a
dilutive effect for the fiscal years ended March 31, 2016 and 2015.
Costs and estimated earnings
Amounts billed
¥ 550,114
(516,469 )
¥ 397,990
(373,890 )
$4,868,270
(4,570,528 )
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.
aa. Accounting Changes and Error Corrections—Accounting treatments under Japanese
accounting standards 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.
3. CHANGES IN PRESENTATION (Consolidated Statement of Cash Flows)
(1) "Loss (gain) on sales and disposals of fixed assets" and "Increase (decrease) in accrued
consumption taxes" included within operating activities, which had previously been separately
presented, are included in "Other" from the fiscal year ended March 31, 2016, because their
materiality has decreased. The prior period consolidated financial statements have been
reclassified in accordance with the new presentation.
(2) "Proceeds from sales of property, plant and equipment" included within investing activities,
which had previously been separately presented, is included in "Other" from the fiscal year
ended March 31, 2016, because its materiality has decreased. The prior period consolidated
financial statements have been reclassified in accordance with the new presentation.
(3) "Payments of short-term loans receivable" and "Payments of long-term loans receivable"
included within investing activities, which had previously been separately presented, are
included in "Payments of loans receivable" from the fiscal year ended March 31, 2016, because
their materiality has decreased. The prior period consolidated financial statements have been
reclassified in accordance with the new presentation.
(4) "Proceeds from collections of short-term loans" and "Proceeds from collections of long-term
loans" included within investing activities, which had previously been separately presented, are
included in "Proceeds from collections of loans" from the fiscal year ended March 31, 2016,
because their materiality has decreased. The prior period consolidated financial statements
have been reclassified in accordance with the new presentation.
Net
¥ 33,644
¥ 24,100
$ 297,742
5. INVESTMENT SECURITIES
Investment securities at March 31, 2016 and 2015, consisted of the following:
Millions of Yen
2016
2015
Thousands of
U.S. Dollars
2016
Non-current—Equity securities
¥ 14,113
¥ 23,940
$ 124,902
The costs and aggregate fair values of investment securities at March 31, 2016 and 2015, were as
follows:
March 31, 2016
Securities classified as—
Available-for-sale—equity securities
March 31, 2015
Securities classified as—
Available-for-sale—equity securities
March 31, 2016
Millions of Yen
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
¥8,697
¥3,382
¥ 12,080
Millions of Yen
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
¥ 11,471
¥ 10,426
¥ 21,898
Thousands of U.S. Dollars
Unrealized
Gains
Unrealized
Losses
Fair
Value
Cost
Securities classified as—
Available-for-sale—equity securities
$ 76,969
$ 29,933
$ 106,902
17
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18
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
Available-for-sale securities whose fair value cannot be reliably determined at March 31, 2015, were
as follows. Similar information for 2016 is disclosed in Note 14.
7. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED
COMPANIES
March 31, 2015
Securities classified as—
Available-for-sale—equity securities
Carrying Amount
Millions of Yen
¥2,041
Investments in and advances to unconsolidated subsidiaries and associated companies at March 31,
2016 and 2015, were as follows:
Millions of Yen
2016
2015
Thousands of
U.S. Dollars
2016
¥ 28,957
693
¥7,387
1,159
$ 256,257
6,137
The information for the available-for-sale securities which were sold during the year ended March
31, 2016, was as follows:
March 31, 2016
Investments
Long-term receivables
Securities classified as—
Available-for-sale—equity securities
March 31, 2016
Millions of Yen
Realized
Gains
Realized
Losses
Proceeds
¥5,467
¥2,686
Thousands of U.S. Dollars
Realized
Gains
Realized
Losses
Proceeds
Securities classified as—
Available-for-sale—equity securities
$ 48,388
$ 23,777
6. IMPAIRMENT LOSS OF LONG-LIVED ASSETS
Impairment loss on long-lived assets for the fiscal year ended March 31, 2016, was as follows:
Location
Used Status
Category of Assets
Millions of Yen
Thousands of
U.S. Dollars
Impairment Loss
—
—
Goodwill
¥4,431
$ 39,217
During the year ended March 31, 2016, the goodwill in relation to the Group subsidiary in UK was
impaired in the amount of ¥4,431 million ($39,217 thousand) as other expense following a fall in
the long term cash flow forecasts resulting from the decline in the price of oil. The carrying
amount of goodwill was written down to its recoverable amount. The recoverable amount was
measured at its value in use and the discount rate used for computation of the present value of
future cash flows was 16.9%.
Total
¥ 29,650
¥8,547
$ 262,395
8. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings as of March 31, 2016 and 2015, mainly consisted of notes to banks. The
weighted average interest rates of short-term borrowings as of March 31, 2016 and 2015, were 1.9%
and 1.7%, respectively.
Long-term debt at March 31, 2016 and 2015, consisted of the following:
Millions of Yen
2015
2016
Thousands of
U.S. Dollars
2016
Long-term loans principally from banks, due serially
through 2024, with interest rates at 2.0% (2016 and
2015)—Unsecured
Obligations under finance leases
Total
Less current portion
¥ 10,014
67
10,081
(45 )
¥ 10,020
95
10,115
(51 )
$ 88,626
593
89,220
(405 )
Long-term debt, less current portion
¥ 10,036
¥ 10,063
$ 88,814
Annual maturities of long-term debt, excluding finance leases, at March 31, 2016, were as follows:
Year Ending
March 31
2017
2018
2019
2020
2021
2022 and thereafter
Total
Millions of Yen
Thousands of
U.S. Dollars
5
¥
10,005
2
$
44
88,539
25
1
16
¥ 10,014
$ 88,626
19
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- 20 -
20
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
Commitment-line contracts at March 31, 2016, were as follows:
(2) The changes in plan assets for the years ended March 31, 2016 and 2015, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
Commitment-line contracts
¥ 15,000
$ 132,743
Unused commitments
¥ 15,000
$ 132,743
9. RETIREMENT AND PENSION PLANS
The Company and consolidated subsidiaries have funded or unfunded defined benefit pension
plans and defined contribution pension plans for employees.
Under defined benefit corporate pension plans, all of which are funded, employees are entitled to
certain lump-sum payments or pension payments based on cumulated points which are granted in
accordance with years of continuous employment, occupational classification and performance
evaluation. Under severance lump-sum payment plans, employees are entitled to certain lump-sum
payments based on salary and service period.
Certain consolidated subsidiaries have defined benefit corporate pension plans or severance
lump-sum payment plans, and calculate retirement benefit expenses by using the simplified
method.
(1) The changes in defined benefit obligation for the years ended March 31, 2016 and 2015, 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
Prior service cost
Others
Millions of Yen
2016
2015
Thousands of
U.S. Dollars
2016
¥ 22,151
22,151
966
228
229
(1,999 )
32
122
¥ 21,787
901
22,689
913
198
6
(1,709 )
52
$ 196,029
196,029
8,557
2,023
2,033
(17,698 )
290
1,087
Balance at beginning of year
Expected return on plan assets
Actuarial (gains) losses
Contributions from the employer
Benefits paid
Others
Millions of Yen
2016
2015
Thousands of
U.S. Dollars
2016
¥ 21,815
418
(852 )
947
(1,990 )
(24 )
¥ 20,370
405
1,495
1,195
(1,709 )
57
$ 193,056
3,705
(7,543 )
8,386
(17,615 )
(217 )
Balance at end of year
¥ 20,314
¥ 21,815
$ 179,772
(3) The changes in the liability recorded in the consolidated balance sheet by using the simplified
method for the years ended March 31, 2016 and 2015, were as follows:
Balance at beginning of year
Benefit costs
Benefits paid
Contribution to the plans
Others
Millions of Yen
2016
2015
Thousands of
U.S. Dollars
2016
¥ 700
288
(97 )
(91 )
(179 )
¥ 629
235
(95 )
(107 )
39
$6,201
2,554
(859 )
(809 )
(1,587 )
Balance at end of year
¥ 621
¥ 700
$5,498
(4) Reconciliation between the liability recorded in the consolidated balance sheet and the
balances of defined benefit obligation and plan assets
Funded defined benefit obligation
Plan assets
Total
Unfunded defined benefit obligation
Millions of Yen
2015
2016
Thousands of
U.S. Dollars
2016
¥ 22,892
(21,429 )
1,463
576
¥ 23,441
(23,073 )
367
669
$ 202,587
(189,637 )
12,949
5,099
Balance at end of year
¥ 21,732
¥ 22,151
$ 192,322
Net liability arising from defined benefit obligation
¥ 2,039
¥ 1,036
$ 18,049
Millions of Yen
2016
2015
Thousands of
U.S. Dollars
2016
Liability for retirement benefits
Asset for retirement benefits
¥2,134
(94 )
¥1,070
(33 )
$ 18,886
(837 )
Net liability arising from defined benefit obligation
¥2,039
¥1,036
$ 18,049
21
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- 22 -
22
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
(5) The components of net periodic benefit costs for the years ended March 31, 2016 and 2015,
(8) Plan assets
were as follows:
Service cost
Interest cost
Expected return on plan assets
Recognized actuarial losses
Amortization of prior service cost
Amortization of transitional obligation
Benefit costs in simplified method
Millions of Yen
2015
2016
Thousands of
U.S. Dollars
2016
¥ 966
228
(418 )
11
(114 )
288
¥ 913
198
(405 )
134
(176 )
608
235
$8,557
2,023
(3,705 )
103
(1,009 )
2,554
a. Components of plan assets
Plan assets as of March 31, 2016 and 2015, consisted of the following:
Debt investments
Equity investments
General accounts
Others
Total
2016
2015
26 %
35
25
13
24 %
40
24
12
100 %
100 %
Net periodic benefit costs
¥ 963
¥1,507
$8,523
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, 2016 and 2015
Prior service cost
Actuarial (gains) losses
Transitional obligation
Millions of Yen
2015
2016
Thousands of
U.S. Dollars
2016
¥ (146 )
(1,070 )
¥ (176 )
1,620
608
$ (1,299 )
(9,473 )
Total
¥ (1,217 )
¥2,053
$ (10,773 )
(7) Amounts recognized in accumulated other comprehensive income (before income tax effect)
in respect of defined retirement benefit plans as of March 31, 2016 and 2015
Unrecognized prior service cost
Unrecognized actuarial gains
Total
Millions of Yen
2015
2016
Thousands of
U.S. Dollars
2016
¥ (393 )
¥ (146 )
(1,463 )
$ (3,480 )
¥ (393 )
¥ (1,610 )
$ (3,480 )
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.
(9) Assumptions used for the years ended March 31, 2016 and 2015, were set forth as follows:
2016
2015
Discount rate
Expected rate of return on plan assets
Mainly 0.7%
Mainly 1.9%
Mainly 0.7%
Mainly 1.9%
(10) Payables to defined contribution plans of the Company and consolidated subsidiaries for the
years ended March 31, 2016 and 2015, were ¥653 million ($5,783 thousand) and
¥824 million, respectively.
10. 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. Additionally,
for companies that meet certain criteria, an Audit & Supervisory Board 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. The Board of Directors of a company with an audit and
supervisory committee (as implemented under the Companies Act effective May 1, 2015) may
also declare dividends at any time because such company, by its nature, meets the criteria
under the Companies Act. The Company is organized as a company with an audit and
supervisory committee, effective June 23, 2016. However, the Company does not meet all the
criteria.
23
- 23 -
- 24 -
24
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
The Companies Act permits companies to distribute dividends in kind (noncash assets) to
shareholders subject to a certain limitation and additional requirements.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in
deferred tax assets and liabilities at March 31, 2016 and 2015, were as follows:
Semiannual interim dividends may also be paid once a year upon resolution by the Board of
Directors if the articles of incorporation of the company so stipulate. The Companies Act
provides certain limitations on the amounts available for dividends or the purchase of treasury
stock. The limitation is defined as the amount available for distribution to the shareholders,
but the amount of net assets after dividends must be maintained at no less than ¥3 million.
b.
Increases/Decreases and Transfer of Common Stock, Reserve, and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated
as a legal reserve (a component of retained earnings) or as additional paid-in capital (a
component of capital surplus), depending on the equity account charged upon the payment of
such dividends, until the aggregate amount of legal reserve and additional paid-in capital
equals 25% of the common stock. Under the Companies Act, the total amount of additional
paid-in capital and legal reserve may be reversed without limitation. The Companies Act also
provides that common stock, legal reserve, additional paid-in capital, other capital surplus, and
retained earnings can be transferred among the accounts 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.
11. INCOME TAXES
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 33% and
36% for the years ended March 31, 2016 and 2015, respectively.
Deferred tax assets:
Cost of revenue
Tax loss carryforwards
Allowance for employees' bonus
Allowance for losses on construction contracts
Future deductible depreciation
Deferred loss on derivatives under hedge
accounting
Allowance for doubtful accounts
Costs of construction contracts in process
Other
Less valuation allowance
Millions of Yen
2015
2016
Thousands of
U.S. Dollars
2016
¥ 4,737
4,589
1,067
970
674
¥ 5,087
4,971
1,258
1,276
811
$ 41,929
40,611
9,447
8,588
5,965
671
610
600
3,428
(1,694 )
885
2
709
4,082
(1,161 )
5,940
5,400
5,316
30,336
(14,995 )
Total
15,655
17,922
138,541
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Other
987
171
3,207
384
8,737
1,521
Total
1,159
3,592
10,259
Net deferred tax assets
¥ 14,495
¥ 14,329
$ 128,282
Prior to April 1, 2015, "Allowance for doubtful accounts" was included in "Other" within deferred
tax assets section. From this fiscal year ended March 31, 2016, the amounts are disclosed separately
due to the increase in materiality.
Net deferred tax assets as of March 31, 2016 and 2015, were recorded in the accompanying
consolidated balance sheet as follows:
Current assets—Deferred tax assets
Investments and other assets—Other assets
¥ 12,889
1,606
¥ 11,697
2,631
$ 114,064
14,218
Millions of Yen
2016
2015
Thousands of
U.S. Dollars
2016
25
- 25 -
- 26 -
26
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,
2016, with the corresponding figures for 2015, is as follows:
13. LEASES
The Group leases certain machinery, computer equipment, and other assets.
2016
2015
Future minimum payments under noncancelable operating leases were as follows:
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Nontaxable dividend income
Jointly controlled assets of joint venture
Difference in tax base between corporate income tax and enterprise tax
Change in valuation allowance
Higher income tax rates applicable to subsidiaries
Effect of reduction of income tax rates on deferred tax assets
Equity in losses of associated companies
Other—net
33%
1
(3)
4
4
16
15
5
2
(1)
36 %
1
(4)
(1)
4
3
6
6
(2)
Due within one year
Due after one year
Total
Millions of Yen
2016
2015
Thousands of
U.S. Dollars
2016
¥ 731
1,691
¥ 449
773
$ 6,476
14,967
¥2,423
¥1,222
$ 21,443
14. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
Actual effective tax rate
76 %
49 %
(1) Group Policy for Financial Instruments
New tax reform laws enacted in 2016 in Japan changed the normal effective statutory tax rate from
approximately 32% to 31% 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 ¥534 million
($4,729 thousand) and deferred loss on derivatives under hedge accounting by ¥30 million
($269 thousand), and increase accumulated other comprehensive income for unrealized gain on
available-for-sale securities by ¥52 million ($466 thousand) and defined retirement benefit plans by
¥4 million ($40 thousand), in the consolidated balance sheet as of March 31, 2016, and to increase
income taxes—deferred in the consolidated statement of income for the year then ended by
¥561 million ($4,965 thousand).
In conjunction with the tax rate reduction, the reform laws limit the utilization of carryforward of
unused tax losses to 60% of taxable profit for the fiscal year beginning on or after April 1, 2016,
55% for the fiscal year beginning on or after April 1, 2017, and 50% for the fiscal year beginning on
or after April 1, 2018. The effect of this change on the consolidated financial statements is
immaterial.
12. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥1,908 million ($16,889 thousand) and
¥2,456 million for the years ended March 31, 2016 and 2015, respectively.
The Group uses financial instruments for cash surpluses, if any, invested in low-risk financial
assets, such as commercial paper. 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 commercial paper, which have short maturities and are used for cash
surpluses.
Short-term investments include time deposits, which will mature three months after the date
of acquisition. Both commercial paper and time deposits are exposed to default risk of the
issuing company.
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.
27
- 27 -
- 28 -
28
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
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.y
and 15 for more details about derivatives.
(a) Fair values of financial instruments
March 31, 2016
(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.
Commercial paper and time deposits are exposed to insignificant default risk because
transactions are limited to companies with high credit ratings.
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 15 for the details of fair value for derivatives.
Cash and cash equivalents
Short-term investments
Notes and accounts receivable—trade
Allowance for doubtful accounts*
Costs and estimated earnings on
long-term construction contracts
Jointly controlled assets of joint venture
Investment securities
Total
Short-term borrowings
Current portion of long-term debt
Notes and accounts payable—trade
Income taxes payable
Long-term debt
Millions of Yen
Carrying
Amount
Fair Value
Unrealized
Gain (Loss)
¥ 136,919
7,795
35,651
(2,283 )
33,644
179,360
12,080
¥ 136,919
7,795
35,651
(2,283 )
33,644
179,360
12,080
¥ 403,169
¥ 403,169
¥
333
5
150,078
2,841
10,009
¥
333
5
150,078
2,841
10,062
¥ 52
Total
¥ 163,268
¥ 163,320
¥ 52
March 31, 2015
Cash and cash equivalents
Short-term investments
Notes and accounts receivable—trade
Costs and estimated earnings on
long-term construction contracts
Jointly controlled assets of joint venture
Investment securities
Total
Short-term borrowings
Current portion of long-term debt
Notes and accounts payable—trade
Income taxes payable
Long-term debt
Total
Unrealized
Gain (Loss)
Millions of Yen
Carrying
Amount
¥ 113,246
69
29,740
24,100
182,855
21,898
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
29
- 29 -
- 30 -
30
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
March 31, 2016
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—trade
Allowance for doubtful accounts*
Costs and estimated earnings on
long-term construction contracts
Jointly controlled assets of joint venture
Investment securities
Total
Short-term borrowings
Current portion of long-term debt
Notes and accounts payable—trade
Income taxes payable
Long-term debt
$1,211,678
68,985
315,499
(20,203 )
$1,211,678
68,985
315,499
(20,203 )
297,742
1,587,264
106,902
297,742
1,587,264
106,902
$3,567,869
$3,567,869
$
2,950
44
1,328,130
25,145
88,582
$
2,950
44
1,328,130
25,145
89,045
$ 463
Total
$1,444,853
$1,445,316
$ 463
* Allowance for doubtful accounts corresponding to trade receivable is deducted.
Cash and Cash Equivalents, Short-Term Investments, Notes and Accounts Receivable—
Trade, 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 5.
The above schedules do not include investment securities whose fair value cannot be
reliably determined.
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 15.
(b) Carrying amount of financial instruments whose fair values cannot be reliably determined
Millions of Yen
2015
2016
Thousands of
U.S. Dollars
2016
Investment securities that do not have a quoted
market price in an active market
Investments in equity instruments that do not
have a quoted market price in an active market
Investments in unconsolidated subsidiaries and
associated companies that do not have a quoted
market price in an active market
¥ 2,030
¥2,038
$ 17,973
2
2
26
28,957
7,387
256,257
The impairment losses on investment securities for the year ended March 31, 2015, were
¥258 million.
(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
March 31, 2016
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
Due in
1 Year
or Less
¥ 136,625
7,795
67,010
179,360
¥3
¥ 390,791
¥3
Short-Term Borrowings, Notes and Accounts Payable—Trade and Income Taxes Payable
Total
The carrying values of the accounts mentioned above approximate fair value because of
their short maturities.
31
- 31 -
- 32 -
32
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
March 31, 2015
15. DERIVATIVES
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
¥ 348,415
¥ 882
¥ 672
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
$1,209,073
68,985
593,009
1,587,264
$ 27
$3,458,334
$ 27
Cash and cash equivalents
Short-term investments
Notes and accounts receivable, and costs and
estimated earnings on long-term construction
contracts
Jointly controlled assets of joint venture
Total
March 31, 2016
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
* Allowance for doubtful accounts is deducted.
Please see Note 8 for annual maturities of long-term debt.
Derivative Transactions to Which Hedge Accounting Is Not Applied
March 31, 2016
Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Selling MYR/buying yen
Buying Euro/selling U.S.$
Buying AUD/selling Euro
Buying U.S.$/selling Euro
Buying AUD/selling GBP
Buying U.S.$/selling GBP
Total
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
Millions of Yen
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Unrealized
Gain (Loss)
¥ 207
¥ (87 )
(1 )
¥ (87 )
(1 )
13
23
(55 )
(21 )
(3 )
(1 )
6
23
(55 )
(21 )
(3 )
(1 )
6
Contract
Amount
¥ 42,188
6,438
5,088
8,665
1,392
98
575
191
1,029
195
¥ 65,863
¥ 221
¥ (141 )
¥ (141 )
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
Total
¥ 63,094
¥ 621
¥ (122 )
¥ (122 )
33
- 33 -
- 34 -
34
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
March 31, 2016
March 31, 2015
Hedged Item
Foreign currency
forecasted
transaction
Millions of Yen
Contract
Amount
Due after
One Year
Contract
Amount
Fair
Value
(Loss)
¥ 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
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
Interest rate swaps*2 (fixed rate payment,
Long-term debt
¥ 10,000
¥ 10,000
floating rate receipt)
Total
¥ 10,000
¥ 10,000
Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Selling MYR/buying yen
Buying Euro/selling U.S.$
Buying AUD/selling Euro
Buying U.S.$/selling Euro
Buying AUD/selling GBP
Buying U.S.$/selling GBP
Thousands of U.S. Dollars
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Unrealized
Gain (Loss)
$1,835
123
$ (774 )
(13 )
(7 )
205
(487 )
(190 )
(27 )
(14 )
53
7
$ (774 )
(13 )
(7 )
205
(487 )
(190 )
(27 )
(14 )
53
7
Contract
Amount
$ 373,349
56,979
45,026
76,687
12,324
870
5,094
1,692
9,106
1,727
Total
$ 582,859
$1,959
$ (1,249 )
$ (1,249 )
Derivative Transactions to Which Hedge Accounting Is Applied
March 31, 2016
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
Millions of Yen
Hedged Item
Contract
Amount
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Foreign currency
forecasted
transaction
¥ 6,491
473
302
1,292
1,293
¥ 1,465
226
100
¥ (266 )
(23 )
(12 )
(106 )
33
¥ 9,852
¥ 1,792
¥ (376 )
Receivables
Payables
¥
415
64
22
¥
502
¥
¥
22
22
Interest rate swaps*2 (fixed rate payment,
Long-term debt
¥ 10,000
¥ 10,000
floating rate receipt)
Total
¥ 10,000
¥ 10,000
35
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36
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
March 31, 2016
17. OTHER COMPREHENSIVE (LOSS) INCOME
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
Foreign currency
forecasted
transaction
Thousands of U.S. Dollars
Contract
Amount
Due after
One Year
Contract
Amount
Fair
Value
(Loss)
$ 57,444
4,186
2,673
11,436
11,446
$ 12,965
2,006
892
$ (2,356 )
(211 )
(113 )
(942 )
292
$ 87,187
$ 15,864
$ (3,331 )
Receivables
Payables
$ 3,678
572
197
$
195
$ 4,448
$
195
Interest rate swaps*2 (fixed rate payment,
Long-term debt
$ 88,495
$ 88,495
floating rate receipt)
Total
$ 88,495
$ 88,495
*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 and thus their fair values are integrally computed with those of the
hedged long-term debt. See Note 14 for the fair value of long-term debt.
16. CONTINGENT LIABILITIES
At March 31, 2016, the Group had the following contingent liabilities:
Guarantees on employees' housing loans and others
Performance bond for an unconsolidated subsidiary
¥ 59
950
$ 526
8,414
Millions of Yen
Thousands of
U.S. Dollars
The components of other comprehensive (loss) income for the years ended March 31, 2016 and
2015, were as follows:
Unrealized (loss) gain on available-for-sale securities:
(Losses) gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Deferred gain (loss) on derivatives under hedge
accounting:
Gains (losses) arising during the year
Adjustment to acquisition cost of assets
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Millions of Yen
2016
2015
Thousands of
U.S. Dollars
2016
¥ (4,365 )
(2,686 )
(7,052 )
2,220
¥ 2,787
258
3,046
(747 )
$ (38,630 )
(23,777 )
(62,407 )
19,649
¥ (4,831 )
¥ 2,298
$ (42,758 )
¥ 534
202
(80 )
656
(214 )
¥ (591 )
(3,464 )
100
(3,955 )
1,243
$ 4,727
1,790
(711 )
5,805
(1,897 )
Total
¥ 441
¥ (2,712 )
$ 3,907
Foreign currency translation adjustments—
Adjustments arising during the year
¥ (1,135 )
¥ 2,815
$ (10,050 )
Total
¥ (1,135 )
¥ 2,815
$ (10,050 )
Defined retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
¥ (1,082 )
(135 )
(1,217 )
441
¥ 1,486
566
2,053
(689 )
$ (9,577 )
(1,196 )
(10,774 )
3,906
Total
¥ (775 )
¥ 1,364
$ (6,867 )
Share of other comprehensive (loss) income of
associates—(Loss) income arising during the year
¥
(83 )
¥ 142
$
(740 )
Total
¥
(83 )
¥ 142
$
(740 )
Total other comprehensive (loss) income
¥ (6,385 )
¥ 3,908
$ (56,509 )
37
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38
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
18. NET INCOME PER SHARE
b. Appropriations of Retained Earnings
A reconciliation of the differences between basic and diluted net income per share ("EPS") for the
years ended March 31, 2016 and 2015, was as follows:
The following appropriation of retained earnings at March 31, 2016, was approved at the
Company's shareholders' meeting held on June 23, 2016:
Year Ended March 31, 2016
Millions of Yen
Thousands of
U.S. Dollars
Millions
of Yen
Net Income
Attributable
to Owners of
the Parent
Thousands
of Shares
Weighted-
Average
Shares
EPS
Yen
U.S. Dollars
Year-end cash dividends, ¥10.00 ($0.09) per share
¥2,589
$ 22,918
20. SEGMENT INFORMATION
Basic EPS—Net income available
to common shareholders
¥3,375
258,990
¥ 13.03
$0.12
There is no dilutive effect for the year ended March 31, 2016.
Year Ended March 31, 2015
Millions
of Yen
Net Income
Attributable
to Owners of
the Parent
Thousands
of Shares
Weighted-
Average
Shares
Yen
EPS
Basic EPS—Net income available
to common shareholders
¥ 11,029
259,006
¥ 42.58
There is no dilutive effect for the year ended March 31, 2015.
19. SUBSEQUENT EVENTS
a. EMAS CHIYODA Subsea Limited Partnership
On May 27, 2016, the Board of Directors approved the Company's sale of a portion of its shares
in EMAS CHIYODA Subsea Limited (an equity method affiliate of the Company, "ECS"). On
June 10, 2016, the Company, Ezra Holding Limited ("Ezra"), and Nippon Yusen Kabushiki
Kaisha ("NYK") entered into a binding agreement for NYK to invest in ECS. Under this
agreement, the Company and Ezra will sell their 15% and 10% interests in ECS, respectively, to
NYK.
Through the acquisition of shares from Ezra and the Company, NYK will own 25% of ECS,
with Ezra and the Company retaining 40% and 35% shareholding, respectively, upon
completion of the transaction.
Under Japanese accounting standards, an entity is required to report financial and descriptive
information about its reportable segments. Reportable segments are operating segments or
aggregations of operating segments that meet specified criteria. Operating segments are
components of an entity about which separate financial information is available and such
information is evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. Generally, segment information is required to be
reported on the same basis as is used internally for evaluating operating segment performance and
deciding how to allocate resources to operating segments.
(1) Description of Reportable Segments
The Group's reportable segments are those for which separate financial information is available
and regular evaluation by the Company's management is being performed in order to decide
how resources are allocated within the Group. The Group globally provides "Engineering"
services, including planning, engineering, construction, procurement, commissioning, and
maintenance, adapting the most appropriate functions of each related company.
(2) Methods of Measurement for the Amounts of Sales, Profit (Loss), Assets, Liabilities, and
Other Items for Each Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in
Note 2, "Summary of Significant Accounting Policies."
The profit in reporting segments is based on the operating income. Intersegment income and
transfers are measured at the quoted market price.
39
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40
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
(3) Information about Sales, Profit, Assets, Liabilities, and Other Items
Year Ended March 31, 2016
Year Ended March 31, 2016
Millions of Yen
Reportable
Segment
Reconcili- Consoli-
Engineering Other*1
Total
ations*2
dated*3
Sales:
Sales to external customers
Intersegment sales or transfers
¥ 607,693
21
¥ 3,855
6,229
¥ 611,548
6,250
¥ (6,250 )
¥ 611,548
Total
¥ 607,715
¥ 10,084
¥ 617,799
¥ (6,250 ) ¥ 611,548
¥ 15,662
522,693
316,597
¥
328
4,771
1,476
¥ 15,990
527,464
318,074
¥
24
755
8,016
¥ 16,015
528,219
326,091
3,568
1,226
21
29
3,589
1,256
3,589
1,256
26,929
26,929
26,929
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
Thousands of U.S. Dollars
Reportable
Segment
Reconcili- Consoli-
Engineering Other*1
Total
ations*2
dated*3
Sales:
Sales to external customers
Intersegment sales or transfers
$5,377,822 $ 34,115 $5,411,937
55,126
189
55,316 $ (55,316 )
$5,411,937
Total
$5,378,011 $ 89,242 $5,467,254 $ (55,316 ) $5,411,937
Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associated
companies
Increase in property, plant
and equipment and
intangible assets
$ 138,607 $ 2,906 $ 141,513 $
4,625,607
2,801,751
4,667,829
2,814,821
42,221
13,070
213 $ 141,726
4,674,512
2,885,768
6,682
70,946
31,576
10,854
186
265
31,762
11,120
31,762
11,120
238,317
238,317
238,317
23,697
181
23,878
23,878
2,677
20
2,698
2,698
Notes for the year ended March 31, 2016:
Millions of Yen
Reportable
Segment
Reconcili- Consoli-
*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:
Engineering Other*1
Total
ations*2
dated*3
(1) The reconciliation in segment profit of ¥24 million ($213 thousand) is the elimination
of intersegment trades.
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
(2) The reconciliation in segment assets of ¥755 million ($6,682 thousand) is the result of
the elimination of intersegment trades of ¥(1,994) million ($(17,649) thousand) and
the Group's assets of ¥2,749 million ($24,331 thousand), which are not included in the
reportable segment.
(3) The reconciliation in segment liabilities of ¥8,016 million ($70,946 thousand) is
the result of the elimination of intersegment trades of ¥(1,983) million
($(17,549) thousand) and the Group's liabilities of ¥10,000 million ($88,495 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.
41
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42
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
Notes for the year ended March 31, 2015:
Year Ended March 31, 2015
*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 is the elimination of intersegment
trades.
(2) The reconciliation in segment assets of ¥427 million is the result of the elimination of
intersegment trades of ¥(2,275) million and the Group's assets of ¥2,703 million, which
are not included in the reportable segment.
(3) The reconciliation in segment liabilities of ¥7,742 million is the result of the
elimination of intersegment trades of ¥(2,257) 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 engineering business represents more than 90% of the total sales of the Group.
Accordingly, the presentation of the information about each service is not required under
Japanese accounting standards.
(2) Information about Geographical Areas
(a) Revenue
Year Ended March 31, 2016
Japan
Australia
Russia
U.S.A.
Vietnam
Others
Total
Millions of Yen
Thousands of
U.S. Dollars
¥ 111,464
143,980
117,274
79,750
71,885
87,193
$ 986,413
1,274,160
1,037,827
705,753
636,158
771,623
¥ 611,548
$5,411,937
Japan
Australia
Russia
Asia
Middle East
Others
Total
Millions of Yen
¥ 113,341
151,255
52,087
73,935
50,624
39,735
¥ 480,979
Note: Revenue is classified by country or region based on the location of construction
sites.
(b) Property, plant and equipment
Year Ended March 31, 2016
Japan
Asia
Others
Total
Year Ended March 31, 2015
Japan
Asia
Others
Total
(3) Information about Major Customers
Year Ended March 31, 2016
Millions of Yen
Thousands of
U.S. Dollars
¥ 11,732
1,704
504
$ 103,831
15,084
4,465
¥ 13,942
$ 123,381
Millions of Yen
¥ 12,183
1,974
668
¥ 14,826
Name
Related Segment
Millions of Yen
Revenue
Ichthys Lng Pty Ltd.
OJSC Yamal LNG
Nghi Son Refinery and Petrochemical
LLC
Cameron LNG LLC
Engineering
Engineering
Engineering
Engineering
¥ 134,100
116,803
71,867
63,619
Thousands of
U.S. Dollars
Revenue
$1,186,731
1,033,660
635,993
563,006
43
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- 44 -
44
Consolidated Financial StatementsConsolidated Financial Statements
Notes to Consolidated Financial Statements
Independent Auditor’s Report
Year Ended March 31, 2015
Name
Ichthys Lng Pty Ltd.
OJSC Yamal LNG
Related Segment
Revenue
Millions of Yen
Engineering
Engineering
¥ 143,688
51,948
(4) Information about Impairment Loss on Fixed Assets by Reportable Segment
Impairment loss of goodwill as of March 31, 2016 and 2015, were as follows:
Engineering
Total
Millions of Yen
2016
2015
¥4,431
¥4,431
Thousands of
U.S. Dollars
2016
$ 39,217
$ 39,217
(5) Information about Goodwill by Reportable Segment
The ending balance of goodwill as of March 31, 2016 and 2015, were as follows:
Millions of Yen
2016
2015
Thousands of
U.S. Dollars
2016
¥3,527
404
¥ 11,599
434
$ 31,212
3,583
¥3,931
¥ 12,034
$ 34,795
Engineering
Other*
Total
* Other involves temporary staffing services.
* * * * * *
45
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46
Consolidated Financial StatementsConsolidated Financial Statements
Minato Mirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
http://www.chiyoda-corp.com/en/
Corporate Philosophy
Enhance our business in aiming for harmony between energy and the environment,
and contribute to the sustainable development of a society as an integrated engineering company
through the use of our collective wisdom and painstakingly developed technology.
(As of August 2016)
Selected in the FTSE4 Good
index series
Seize the Moment,
Open Up New Frontiers
Consolidated Financial Statements FY2015
For the year ended March 31, 2016, and Independent Auditor’s Report