Review of Operations

Other business includes a wide variety of construction-related and peripheral businesses. These include engineering, environmental and design, as well as finance, property management and services. The majority of other business operations are handled through subsidiaries and affiliates.

Pioneer Display Products Yamanashi Plant

The value of contracts awarded in the engineering business reached ¥61.4 billion, significantly exceeding targets and making a strong contribution to earnings. Contracts in this business are mainly for the design and construction of production facilities, and optimal systems for production and distribution. The main reasons for the rise were increases in construction related to electronics devices (including at overseas sites) and pharmaceutical production.

Computer simulation of constructing a production line

Engineering is an area where Kajima can capitalize on its extensive capabilities in cutting-edge solutions, and we will make effective investments of management resources in this field. We will focus in particular on winning contracts for R&D facilities related to the life sciences, an area that is expected to grow significantly in the future. We are also taking proactive measures with regard to facilities related to agribio, and the project and construction management businesses.

Toyama Eco-Town "Metakles"

Yomiuri Land Hana House (Care facility for the elderly)

3D surround system "OPSODIS"

As a relatively new field, the environment-related market cuts across industries and business sectors, and competition is fierce. Nevertheless, Kajima was awarded contracts totaling ¥47.0 billion, far exceeding initial targets. The main areas of growth were construction of remediation facilities to clean up contaminated soil, contracts for facilities to handle PCB and other waste, and bulk contracts for construction of wind-generated power installations. At the same time, maturing markets have led to a gradual decline in orders for rural community sewerage and waste disposal facilities.

Kajima will concentrate on the four areas that generate the most order volume-waste disposal and recycling, soil remediation, water treatment, and new energy sources-while remaining sensitive to market trends and continuing to pursue the development of unique technologies. We will also focus on strengthening the environmental survey and consulting business, water supply and sewerage systems, private finance initiatives (PFI) for waste material, and overseas projects.

Kajima's new business development primarily focuses on non-construction fields. Business companies have been established to operate in such fields as environment and energy, medical treatment and welfare, content production and advertising. Kajima's current 10 business companies generated revenues during the financial year to March 2005 of ¥10.9 billion, with both revenues and earnings rising from the previous financial year.

During the subject financial year the business company focused on environment and energy participated in the development of a new biomass power generation project, the largest of its kind in Japan. This project is subsidized by the Japanese government, and with a time frame stretching over 17 years should provide a stable source of earnings.

In the medical field, Kajima completed commercialization of a "transparent MRI room" using its exclusive open magnetic shield technology, and presented an exhibition at the Radiological Society of North America (RSNA) that was well received by medical professionals, and contributed to orders for medical facilities.

Kajima has also developed a new type of 3D surround and hi-fi audio system, "OPSODIS," which has been highly praised by audiophiles. A joint venture company for the new system has been established with the patent management organization (Adaptive Audio Ltd.) of the University of Southampton, Kajima's R&D partner in the United Kingdom. The new company will begin licensing the technology to manufacturers of audio systems after 2005, and also plans to bring products to market.

For the financial year to March 2006 Kajima will seek to establish a business to generate revenue from royalties, mainly from products utilizing its open magnetic shield technology and its new audio system. Over the medium term, Kajima will focus on securing new revenue sources from non-construction fields, and realizing synergies within the corporate group through strategic collaboration with its construction business.

Kajima's subsidiaries and affiliates are involved in such areas as finance, property management, culture and services, and other businesses. One example is the consolidated subsidiary Kajima Leasing Corporation, which leases office equipment to external clients, and to all the domestic companies of the Kajima Group.

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