Review of OperationsReview of OperationsOther BusinessDomestic OperationsOther BusinessOther business comprises a wide variety of construction-relatedand peripheral businesses, includingengineering, environmental and design, as wellas finance, property management and other services.Other business operations are mainly handledthrough subsidiaries and affiliates.Architectural DesignMarket Conditions and BusinessPerformance: Number of ContractsIncreasingThe architectural design business received608 design contracts totalling ¥4.2 billionduring the financial year ended March 31,<strong>2006</strong>, and 1,344 consulting contracts.18University of Tokyo Communication PlazaImprovement in the economy led to anincrease in contracts for commercial facilities,and large-scale distribution centers.Greater capital investment led to anincrease in orders for production facilities,as plants were merged and restructuredboth in Japan and overseas. The numberof contracts for condominium design,which previously were declining, hasbegun to increase again as high-rise residentialbuildings are built throughout thecountry. However, contracts for largescaleoffice buildings are decreasing infavor of small- and medium-sized buildings,resulting in a decline in contractsfor office designs in the architecturaldesign business.IKEA FunabashiKanagawa Institute of TechnologyFaculty of Information TechnologyStrategies for GrowthWe anticipate a number of PFI projects tobe launched, mainly for large-scale hospitalsand educational/cultural facilities. In anticipationof these projects we are strengtheninginternal collaboration, and enhancingproject planning and other aspects of proposals.There has been an increase in contractsfor technology-oriented proposalsintegrating comprehensive evaluation,design and construction, for which Kajima
is responding with an expansion of applicationsfor the Parallel Frame SeismicReinforcement Method for external seismicretrofitting, the Water Screen Fire DisasterPrevention System, transparent magneticresonance imaging (MRI) rooms, as well asa host of construction technologies.in particular on winning contracts for R&Dfacilities related to the life sciences, anarea that is expected to grow significantlyin the future, and take proactive measureswith regard to facilities related to theagribio business, and the project and constructionmanagement businesses.Review of OperationsOther BusinessLarge-scale logistics centers have expandedfrom the Tokyo area nationwide withthe rise of investment funds and growth inInternet-related business. Commercialfacilities are also becoming larger and integrated,while large-scale retailers andlogistic centers, faced with fierce pricecompetition, demand lower costs for existinglevels of quality. The Company isresponding to these needs with technologiesthat integrate procurement and constructionmethods, such as the newlydeveloped, non-fabricated steel frame(HeCT) method.Engineering BusinessMarket Conditions and BusinessPerformance: Kajima Exceeds ItsTargetsThe value of contracts awarded in theengineering business reached ¥73 billion,significantly exceeding targets once again,and contributing strongly to earnings.Contracts in this business are mainly forthe design and construction of productionfacilities, and optimal systems for productionand distribution. The main reasons forthe rise were increases in construction oflarge-scale pharmaceutical productionfacilities.Strategies for GrowthKajima is making effective investments ofmanagement resources in engineering, afield where it can <strong>full</strong>y capitalize on its collectiveability in project planning, technologicalcapabilities and other areas. We will focusPharmaceutical manufacturingprocessToyama Green Food Recycle, Inc.’s“Metakles” facilityEnvironmental BusinessMarket Conditions and BusinessPerformance: Growth in Constructionof Remediation and FermentationFacilitiesAs a relatively new field, the environmentrelatedmarket cuts across industries andbusiness sectors, and competition isfierce. Nevertheless, Kajima was awardedcontracts totaling ¥47 billion, far exceedinginitial targets. The main areas ofgrowth were construction of remediationfacilities to clean contaminated soil, andcomprehensive contracts for “METAKLES”methane fermentation facilities, and windgeneratedpower installations. At the sametime, maturing markets have led to a gradualdecline in orders for rural communitysewerage and waste disposal facilities.Strategies for GrowthKajima will concentrate on the four areasthat generate the most order volume(waste disposal and recycling, soil remediation,water treatment, and renewableenergy sources) while remaining sensitiveto market trends and continuing to pursuethe development of unique technologies.We will also focus on diversifying revenuesources by developing in such areas asenvironmental surveys and consulting,water supply and sewerage systems, PFIsfor waste material, and the clean developmentmechanism (CDM) business.19