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Scenario 2010: New Medium-Term Management Plan

Engineering the Future — JGC as a Standout Engineering Enterprise

In July 2005, JGC announced its new Scenario 2010 medium-term management plan, which sets forth the JGC Group's management strategies for the next five years. For the immediate future, JGC will further expand and strengthen its E&C business, while moving forward non-E&C businesses such as investing in water and power generation businesses. In addition, with the aim of becoming a "Standout Engineering Enterprise," the Company will develop production businesses such as industrial catalysts and chemical products, and also develop its service business such as plant operation and maintenance services, IT services, and consulting services in the environmental protection business.

In pursuit of the business domain expansion strategy set forth in the Scenario for Growth, the Company’s current mediumterm management plan, JGC has expanded past its core E&C activities into the thriving fields of petroleum refining, LNG, petrochemicals, and the life sciences, to establish operations in the fields of resource development, integrated gasification combined-cycle (IGCC) power generation, floating production, storage, and offloading (FPSO) facilities, petroleum desulfurization, and non-ferrous metal refining. The Company is also active in the non-E&C business of electric power generation, and has achieved successes that are very close to original projections. Management performance targets set in the Scenario for Growth, along with calls for non-consolidated net sales of ¥400.0 billion and net income of ¥10.0 billion, are likely to be met in the fiscal year ending March 31, 2006.
Working from the basis of the Scenario for Growth, JGC has put itself on a vector for sustained growth with the unveiling of its new medium-term management plan, Scenario 2010, which establishes the JGC Group's management strategy for the five-year period beginning with the fiscal year ending March 31, 2006.
Under Scenario 2010, JGC will make business investments in non-E&C businesses
in addition to its core E&C business, and will establish "combined business models"by maximizing the synergies of the JGC Group. This new business model is a unique sole-source model that differs from those of other firms in this or other industries, based on both the high level of technological expertise JGC has developed as an engineering company, and on the synergistic effects arising from the market and product competitiveness of the JGC Group. The new business model looks not just five years down the line, but will become the foundation of sustained growth for the JGC Group 10 and even 15 years ahead. The attainment of the goals set in this plan will make JGC unique in the world's engineering industry as a Standout Engineering Enterprise.

1. E&C business strategy
	(1)	Expand and maintain core businesses as an all-round player in the oil and gas industry
		-	Evolve operations in existing fields such as petroleum refining, LNG, etrochemicals, and life sciences
		-	Develop new domains such as resource development, IGCC plants, and FPSO facilities
		-	Focus on businesses based on new technologies, such as biomass feedstock and other new fuels
	(2)	Increase net sales by expanding the Group's domestic and overseas human resources by more than 20%, from approximately 7,000 to 8,500 (from 3,700 to 4,200 domestically and 3,300 to 4,300 overseas)
	(3)	Strengthen our Gas Alliance with KBR of the U.S.; pursue global LNG and GTL strategy
	(4)	Strategies by target
		By client
		-	Continuous focus on the major oil companies, state-owned oil companies, and domestic clients
		-	Continual approaches to major chemical companies and large pharmaceutical firms
		-	Attempt to develop new clients among the independent oil companies
		By business domain
		-	Expand and foster operations in existing fields in the hydrocarbon sector
		-	Achieve growth in the fields of new fuels, non-ferrous metal smelting, life sciences, and environmental protection
		By region
		-	Increase focus on operations in the Middle East and Africa
		-	Redouble efforts in Southeast Asia
		-	Explore operations in Russia, Central Asia, and South America

2. Non-E&C Business Strategy
	(1)	Investing in enterprises
		-	Accelerate investments in the resource development business area
		-	Press forward with petroleum-related businesses, new fuels businesses, water and power generation businesses, and businesses that earn emissions credits
		-	Strengthen JGC's position as a "unique player" with E&C expertise
		-	Make total investments of ¥40 billion by 2010; achieve an internal rate of return of 12% or better
	(2)	Production
		-	Become Japan's largest and strongest industrial catalyst development and producing group
		-	Accelerate overseas business activities
		-	Promote the development of new high-performance materials in the chemical products field
	(3)	Services
		-	Strengthen plant operations and maintenance services and IT-related services for the hydrocarbon sector
		-	Focus on environmental-related and plant analysis services

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