OUTLINE OF THE JFE GROUP

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JFE URBAN DEVELOPMENT CORPORATION

JFE Urban Development is engaged in three main businesses: the first is the development of large-scale complexes, which entails the redevelopment of large plots of idle land owned by the JFE Group; the second is supplying condominiums, centering on high-quality units primarily in the Tokyo metropolitan area; and the third is the asset utilization business, which offers management services for land and buildings.

 THE FIRST MEDIUM-TERM BUSINESS PLAN

MAIN MEASURES
1. Promote the development and best use of large plots of land owned by the Group
2. Develop condominiums, primarily in the Tokyo metropolitan area, as the core profit-making business

CONSOLIDATED FINANCIAL TARGETS
  Billions of yen
  Actual
(approximate)
Actual Target* Plan's final target
(Years ended/ending
March 31)
2003 2004 2005 2006
Ordinary income 0.3  1.3  1.7  4.0 
Return on sales (ROS) 1.0%  5.0%  5.2%  8.5% 
* Estimated figures for the year ending March 2005 are those declared as of August 30, 2004.

 REVIEW OF EARNINGS FOR THE YEAR ENDED MARCH 2004
In the year ended March 2004, consolidated net sales fell 15.0% from the previous year to ¥26.2 billion, in part because of the liquidation of a subsidiary. However, we made steady advances in developing some of the Group's large land holdings and embarked on full-scale sales efforts centering on the Tokyo metropolitan area. As a result, consolidated operating income grew 36.9% to ¥1.4 billion, and consolidated ordinary income expanded by 4.3 times to ¥1.3 billion.

 FUNDAMENTAL STRATEGY
PROMOTING THE DEVELOPMENT AND EFFECTIVE USE OF LARGE PLOTS OF LAND
The Yokohama Yamanouchi Development Project got under way in August 2003. The aim behind this project is to develop a coastal city complex with about 1,000 high-rise condominiums, commercial facilities and office buildings over about seven hectares of idle land where NKK's Asano Dockyard once stood. The site offers spectacular views of Yokohama Port, and the first round of condominium sales is scheduled to begin in the autumn of 2004. In addition, in the Watarida District of the city of Kawasaki, we plan to convert existing research facilities (floor area: about 66,000 square meters) into a new type of research park. This project is known as Techno Hub Innovation Kawasaki (THINK).

BUILDING UP THE CONDOMINIUM BUSINESS
JFE Urban Development is focusing its energies on developing condominiums suitable for a variety of lifestyles. It is now promoting “Grand Scena,” a series of high-quality, unique condominium blocks aimed at the market consisting of the children of the baby-boom generation who live in the Tokyo metropolitan area and number about three million. Condominium prices in the Tokyo metropolitan area have now adjusted to reasonable levels. We therefore believe demand will remain strong for comfortable condominiums in appealing locations, particularly among the children of the baby-boom generation. We aim to sell 700 units in the year ending March 2006, up from 555 units in the year ended March 2004.

 OUTLOOK FOR THE YEAR ENDING MARCH 2005
In the year ending March 2005, we are beginning construction under the Yokohama Yamanouchi Development Project and the first phase of sales of these high-rise condominiums. We also continue to offer high-quality, distinctive condominiums in the Tokyo metropolitan area. We expect consolidated net sales to grow 30% to ¥33.0 billion, consolidated operating income to jump 35.7% to ¥1.9 billion, and consolidated ordinary income to increase 30.8% to ¥1.7 billion.