Other business comprises a wide variety of construction-related and peripheral businesses including design, engineering and environmental businesses as well as finance, property management and other services.

Performance in the architectural design business improved by more than 30% in the last three years. Particularly noteworthy is an increase in the supply of condominiums in urban areas and strong orders for new constructions of office buildings and data centers. Contracts for education facilities are increasing as private institutions seek to enhance their appeal by reconstructing school buildings at a time when the birthrate is falling, while demand from public schools for earthquake-proofing reinforcement remains steady. Kajima captured much of this demand through unique planning and technological expertise. Contracts for production facilities declined slightly from the previous financial year but remain an extremely large proportion of design operations overall, and we expect the number of large projects to continue during the financial year ending March 31, 2008.

Kajima's design operations allow it to respond accurately to the needs of its clients, while at the same time that design capability has also been recognized in the areas of both new construction and renovation. During the previous financial year, two of Kajima's projects won architectural awards from the Building Contractors Society (BCS), while another project was awarded a prize from the Building and Equipment Life Cycle Association (BELCA).

1.	Although a series of mega-housing projects in urban areas will be completed, there are further plans for residential units from developers. Kajima seeks to boost its competitiveness in terms of cost and construction period by using such superior technologies as box frame-type flat slab structure for medium- and high-rise buildings, as well as increasing orders from the product planning stage with proposals to enhance profitability of sites being auctioned.
2.	With the globalization of the economy and expansion in the real estate securitization market, developers from a wide range of industries have entered the business for large-scale retail facilities, and a succession of mall-style, low-rise shopping centers have been opened in suburban areas. At the same time, the number of high-rise shopping centers in urban areas is expected to increase once revisions to three building laws (the City Planning Law, Large-Scale Retail Location Law and the Vitalization in the City Center Law) take effect in November. Kajima will adapt to these changes by employing the non-fabricated steel frame (HeCT) and other low-cost construction methods, along with high-performance designs.
3.	Education providers are facing an age of falling birthrates and open admission to college, and there is a growing need for stable business models and safe facilities. Kajima will meet the demand for campus renovations and building replacements by making design proposals that consider the business, environmental and operations aspects, which we anticipate will boost contract volume. For the existing earthquake-proofing reinforcement, we will continue to advocate such construction methods as the parallel frame system (external seismic retrofit), which offers strength along with a superior design.

Kajima established the Civil Engineering Design Division in 1963, making us the first general contractors in Japan to create a division dedicated to this type of design. The division, as the heart of civil engineering technology, plays an active role from marketing to maintenance in a wide range of such fields as design and planning for construction project bids, detail and temporary work design for contracts received, consulting in the form of outsourced designing for external companies, and technology development.

During the financial year ended March 2007, with the spread of comprehensive evaluation bidding formats and an increase in design-build projects, the division played an important role in winning construction projects. One such success was the contract for the Metropolitan Expressway, Central Circular Shinagawa Route, Shield Tunnel Construction (Northbound). The division's proposals aimed at reducing construction costs and lowering the impact on the surrounding environment were received favorably.

Our division has played a key role in completing the detail design for the fourth runway of the Tokyo International Airport, which is under construction. The detail design is characterized by a unique combination of land reclamation and steel pier construction requiring a broad range of technical skills from foundation work to steel and concrete structure construction. We believe this project was made possible as a result of our collective strength in design and construction execution.

Another project for which the division conducted the detailed design was the Uchimaki Viaduct in Shizuoka Prefecture, a connected rigid frame bridge utilizing a multi-sectional, pre-cast segment construction method. This bridge, now completed, won the Tanaka Prize from the Japan Society of Civil Engineers for 2006, one of the most prestigious prizes for planning, design, and construction of bridges.

The division maintains an active role in overseas civil engineering projects, too. One of the major overseas projects under way is the East-West Highway project in Algeria. The division set up a design team including overseas consultants and made an alternative design proposal, which was highly evaluated and adopted by the client.

In the consulting business, the Japanese government recently revised safety guidelines for nuclear power plants, creating a booming market for earthquake resistance evaluations based on the new guidelines. A substantial majority of the division's consulting business consists of such evaluations, and we expect this trend will continue for the next several years. In addition to the growing demand for consulting, the division is receiving a steady amount of R&D business for disposal of radioactive waste, as another consulting business.

The division is strengthening its ability to correspond with design-build projects in comprehensive evaluation bidding formats, which are expected to become more prevalent in the future.

In overseas operations, which in recent years have accounted for an increasingly large share of business in the civil engineering business segment, we are enhancing our design capabilities, including fostering cooperation with Japanese and overseas consultants, to handle the growing number of large-scale projects encompassing a wide range of design work.

In technology development, we are focusing on technologies that give us an advantage in the current comprehensive evaluation bidding formats, and next-generation technologies over the next five to 10 years that will differentiate Kajima in the future.

As a relatively new field, the environment-related market cuts across industries and business sectors, and competition is fierce. Strong growth was posted for construction of remediation facilities to clean contaminated soil, but the value of contract awards for construction of methane fermentation facilities and installations of wind-generated power facilities fell below targets. 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 facilities) while remaining sensitive to market trends and continuing to pursue the development of unique technologies. We will also focus on diversifying revenue streams through development in such areas as environmental surveys and consulting, water supply and sewerage systems, private finance initiatives (PFI) for waste material and the clean development mechanism (CDM) business.