Other business comprises a wide variety of construction- related and peripheral businesses, including engineering, environmental and design, as well as finance, property management and other services. Other business operations are mainly handled through subsidiaries and affiliates.

The architectural design business received 608 design contracts totalling ¥4.2 billion during the financial year ended March 31, 2006, and 1,344 consulting contracts.

Improvement in the economy led to an increase in contracts for commercial facilities, and large-scale distribution centers. Greater capital investment led to an increase in orders for production facilities, as plants were merged and restructured both in Japan and overseas. The number of contracts for condominium design, which previously were declining, has begun to increase again as high-rise residential buildings are built throughout the country. However, contracts for largescale office buildings are decreasing in favor of small- and medium-sized buildings, resulting in a decline in contracts for office designs in the architectural design business.

We anticipate a number of PFI projects to be launched, mainly for large-scale hospitals and educational/cultural facilities. In anticipation of these projects we are strengthening internal collaboration, and enhancing project planning and other aspects of proposals. There has been an increase in contracts for technology-oriented proposals integrating comprehensive evaluation, design and construction, for which Kajima is responding with an expansion of applications for the Parallel Frame Seismic Reinforcement Method for external seismic retrofitting, the Water Screen Fire Disaster Prevention System, transparent magnetic resonance imaging (MRI) rooms, as well as a host of construction technologies.

Large-scale logistics centers have expanded from the Tokyo area nationwide with the rise of investment funds and growth in Internet-related business. Commercial facilities are also becoming larger and integrated, while large-scale retailers and logistic centers, faced with fierce price competition, demand lower costs for existing levels of quality. The Company is responding to these needs with technologies that integrate procurement and construction methods, such as the newly developed, non-fabricated steel frame (HeCT) method.

Pharmaceutical manufacturing process

The value of contracts awarded in the engineering business reached ¥73 billion, significantly exceeding targets once again, and contributing strongly 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 of large-scale pharmaceutical production facilities.

Kajima is making effective investments of management resources in engineering, a field where it can fully capitalize on its collective ability in project planning, technological capabilities and other areas. 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, and take proactive measures with regard to facilities related to the agribio business, and the project and construction management businesses.

Toyama Green Food Recycle, Inc.'s "Metakles" facility

As a relatively new field, the environmentrelated market cuts across industries and business sectors, and competition is fierce. Nevertheless, Kajima was awarded contracts totaling ¥47 billion, far exceeding initial targets. The main areas of growth were construction of remediation facilities to clean contaminated soil, and comprehensive contracts for "METAKLES" methane fermentation facilities, and windgenerated 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 renewable energy sources) while remaining sensitive to market trends and continuing to pursue the development of unique technologies. We will also focus on diversifying revenue sources by developing in such areas as environmental surveys and consulting, water supply and sewerage systems, PFIs for waste material, and the clean development mechanism (CDM) business.