SANKIREPORT 2014

2014
Engineeringfor
The future【Corporate Communications Department, Administration Division】
TEL.+81-3-6367-7041
http//www.sanki.co.jp

FAX.+81-3-5565-5102

SANKI ENGINEERING CO., LTD.

〒104-8506 St. Luke’s Tower, 8-1 Akashi-cho,chuo-ku, Tokyo 104-8506 JapanTo all stakeholders

We provide new value to society
by practicing our Company Credos
and enhancing “total engineering
competency”.
I would like to express my gratitude to everyone involved with the Sanki Engineering Group,
beginning with shareholders and investors and including customers, cooperating companies,business partners and local communities for the understanding and support of the Group’s
daily business activities.
The Sanki Engineering Group contributes to society in various business domains related tosocial infrastructure, including the Facilities Construction Business, which consists primarilyof heating, ventilation and air conditioning, plumbing, electrical systems, information andcommunications, and office relocation; the Machinery Systems Business, which consists
primarily of material handling systems and conveyors; and the Environmental Systems
Business, which consists primarily of water and sewage treatment facilities and waste
incineration facilities. These businesses are integrated across the Group, creating thecapabilities that comprise our “total engineering competency”.
I believe that the Sanki Engineering Group’s enhancement of “total engineering competency”
and practice of our Company Credos leads to the provision of new value. We seek a form ofbusiness that can provide new value to customers and work actively to communicate withstakeholders with the aim of becoming a corporate group that develops together with them.
Here we provide SANKI REPORT 2014. I hope you gain an understanding of SankiEngineering Group’s achievements and future direction through this booklet.

Company Credos
We will contribute to society through engineering.

Takuichi Kajiura
President

We will meet our customers’ needs
by working with them in good faith.
We will act in a considered manner,and always in a spirit of good fellowship.

02

SANKI REPORT 2014

03

Page

06

Interview with the President

Editorial policy
Aiming to produce a tool that further boosts understanding of
the Group
Sanki Engineering began publishing CSR reports in fiscal 2005 todisclose non-financial information on such areas as relationship withstakeholders and environmental initiatives. We started issuing the
SANKI REPORT in fiscal 2012, an annual publication that also
includes financial information such as operating results, management
strategy and business outline.
The Sanki Engineering Group is developing business activities withthe aim of both contributing to a sustainable society and boosting our

Page

14

Create value through“total engineering competency”

corporate value through “total engineering”. This report conveys
business activities of the Group in fiscal 2013 and future aims that are
not included in the financial statements, and we have positioned it as
an important communication tool to boost understanding of theGroup.
We welcome the honest opinions and requests of stakeholders
upon reading this report to help us continue driving sustainablegrowth for the Sanki Engineering Group together with society.
Reference guidelines• Ministry of the Environment“Environmental Reporting Guidelines 2012”• ISO 26000
Organizations covered by report• Non-financial information concerns Sanki Engineering Co., Ltd.
alone.
• When the information concerns the Group (e.g., complianceinformation), the text specifies that this is Group information.
• Financial information shows consolidated Group figures.

SANKI REPORT 201

The History of Sanki Engineering

Contents

02
04

Company Credos/Message from the President

06

Business Outline

06 The History of Sanki Engineering
08 Highlights of Business Activities in Fiscal 2013
10 Financial and Non-Financial Highlights
12 Summaries of Businesses by Segment
1418Interview with the President

20

Business strategy

24

32 Research and Development
34

59

In addition to past and present information concerning the Sanki EngineeringGroup, this report includes targets, plans, outlooks, strategies, forecasts ofsignificantly from these forecasts owing to changes in economic conditions,

Financial Report

60 11-year Consolidated Financial Summary
62 Business Overview/Cash Flows/Dividend information
64 Consolidated Balance Sheet
66 Consolidated Statement of Income and Comprehensive Income
67 Consolidated Statement of Changes in Net Assets
68 Consolidated Statement of Cash Flows
69 Notes to Consolidated Financial Statements

Precaution on performance outlooks, etc.

the information available at the time, and actual performance may differ

Sanki Engineering’s CSR Activities

34 Corporate Governance
35 An Overview of the Executives
42 CSR Management
44 Our Relationship with Our Customers
46 Our Relationship with Our Business Partners
47 Our Relationship with Our Shareholders and Investors
48 Our Relationship with Our Employees
50 Health and Safety in the Worksite
52 Our Relationship with Local Communities
54 Our Relationship with the Environment

period)forecasts are the best judgments of Sanki Engineering management based on

Reports by Segment

24 Facilities Construction Business
28 Machinery Systems Business
30 Environmental Systems Business
32 Real Estate Business

April 2013 - March 2014 (with some information from outside this“SANKI VITAL PLAN 90th” and other sources. Please be aware that these

Toward Realization of our Medium-Term Management Plan

20 “Total Engineering”, – a Strength of Sanki Engineering
22 Creating value through “total engineering capability”

Reporting period

future performance and so on as based on our medium-term management plan

Editorial policy/Contents

90
91
92

Independent Auditor’s Report
Corporate Information and Share Information
List of Business locations and Introduction to Group Companies

market trends, exchange rates and so on.

04
Page

22

SANKI REPORT 201405

Business Outline

The History of Sanki Engineering

1920

1930

1960

1980

1 Laying the base for technological competence

3 Sanki’s advanced technology bolsters

5 Feature as a manufacturer that responds to the7

Sanki Engineering got underway with two major projects for Toyo Rayon (currently
Toray Industries, Inc.), namely its Shiga manufacturing plant and Aomori
ice-making plant and refrigerated warehouse. At that time, Sanki Engineering was
engaged mainly in heating, plumbing, steel frame construction and building
materials. Sanki Engineering sought electrical technicians externally and ventured
into electrical construction before developing a proprietary incinerator forbuildings upon recognition of the need for urban environmental sanitation. SankiEngineering installed this incinerator in the Sanshin Building, becoming the firstcompany in Japan to do so in a large building.

During the construction boom that occurred before the outbreak of World War II,
Sanki Engineering incorporated the most advanced technology available at thetime. To give an example, Sanki Engineering introduced a power supply with thespecial high voltage of 22Kv to Daiichi Seimei’s main building completed in
1938, which boasted the largest central monitoring board of any building at thetime, located four floors underground. It also started manufacturing conveyors
and introduced various new technologies such as electric-resistance weldedsteel tube pipe technology.

In addition to long-distance conveyors for coal mines and dam construction
frames, demand was rising for portable conveyors used in steel plants andconstruction sites, and shipments increased. Sanki Engineering developed thehigh-quality, low-priced, standardized “6S sash”, which was broadly adopted infactories and offices nationwide, gaining the largest share of the market among
steel sash manufacturers.

Sanki Engineering started an information and communications business anddeveloped environment-related technology, including an ice thermal storage
system, sewage advanced treatment systems, and gasification and melting
furnaces in addition to information-related technology, such as LAN and monitoring
and control systems. Also, with an increase in office integration and moving, SankiEngineering’s Facility Systems Business began gaining attention as a unique
one-stop business for such moves.

by meeting the needs of the era

The 1920s:

a construction boom

The 1940s:

1923
Great Tokyo Earthquake strikes.
Building modernization drives up demand for building utilities such asheating, ventilation and air conditioning, water supplies and drainage, andelectrical fixtures and fittings and construction technology advances.
1925
On April 22, Sanki Engineering was established as a spin-off from former
Mitsui Bussan’s Machinery Department with capital of ¥500,000 and 12 staff.
1931
Moves head office to the Sanshin Building.
1933
Completes Tokyo Nihon Seimei Building (currently the Nihonbashi branch of
Takashimaya Department Store) and opens a branch in Dalian, Manchuria.
1935
Celebrates 10th anniversary and now comprises five branches, six field
offices, three affiliates and around 300 staff.

1930

needs of the era

The 1960s:

1941
Pacific War begins.
Sanki Engineering suffers a shortage of workers as well as materials due
to tight control over the distribution of goods.
1943
Emergency metal collection campaigns started nationwide. Kawasaki
and Tsurumi plants are designated military-industrial plants.
1945
War ends.
1950
The outbreak of the Korean War leads to a war-driven economy and theJapanese economy takes a favorable turn. Expansion of demand forbuilding construction and equipment results in a dramatic improvementin the Company’s business performance.
1958
Capital exceeds ¥1 billion.

1950

Opening the way to a new era: advances inenvironmental and information technology

The 1980s:

1963
Completes Sagami plant (currently Yamato Engineering Center), whichhas production equipment tailored for conveyor mass production.

1982
Builds Technical Research Laboratory equipped with basic research facilities andlarge-scale experimental facilities in Yamato, Kanagawa Prefecture.

1964
Participates in projects on the occasion of the 1964 Tokyo Olympics,
including the Yoyogi National Gymnasium and the NHK Broadcasting
Center.

1990
Bubble economy collapses.

1971
Environmental Agency inaugurated.
Sanki Engineering develops a track record in municipal solid waste
incineration facilities and industrial wastewater treatment facilities, andsets up an Environmental Administration office.
Spins off sash business and institutes centralized control on
departments.
Provides HVAC equipment for satellite communications ground stations
in places such as the Middle East, Africa and Venezuela, and builds
automotive testing equipment in Russia.

2000
Opens Shonan Training Center (Yokosuka City, Kanagawa Prefecture) andstrengthens human resource development.
2005
Shifts head office to Nihonbashi.
2011
Shifts head office to Tsukiji.
2012
Launches Smart Building Solution Business to provide Smart Buildings with a focus
on energy-saving business.

1970

2000

and expanded businesses led to
2 Diversified
greater technological competence

4 A proactive approach to technological innovation

6 Wide range of technological innovations

8

In 1930, Sanki Engineering began work in the air conditioning business after
establishing Toyo Carrier Industries together with US-based Carrier Engineering.
In 1937, it concluded sales contracts for machinery used in mining-related
chemistry with US-based Dorr Inc. and Oliver, Inc., and expanded its technologicalcapabilities. In addition to heating and cooling, sanitary water supplies, kitchen,electricity, sashes, building incinerators and other architectural businesses, SankiEngineering also began serving as a general agency for Mosler Safes andFukokuseki (an artificial stone cladding for decorating the outsides of buildings).

In 1953, Sanki Engineering completed Japan’s first all-fluorescent lighting
system in the Taisho Marine and Fire Insurance Building, and then in 1957delivered its roller conveyor to the Japanese Antarctic Research Expedition II.
Sanki Engineering also carried out a project to equalize airflow and suppress
noise in the high-speed ducts inside the Ohtemachi Building, which was thelargest building in the East at the time. The project was completed in only 20
months and represented a major advancement in air conditioning technology. It
also became involved in night-soil treatment plant disposal facilities.

In 1968, Sanki Engineering participated in construction of heating, ventilation,
and air conditioning, plumbing and electrical systems for Japan’s first real
skyscraper, the Kasumigaseki Building. Sanki Engineering built Japan’s first reallarge-scale clean room at NEC’s Sagamihara plant in the 1970s. SankiEngineering also built the world’s first unmanned automatic sorting system andairport baggage handling system, and its wide range of technologicalinnovations included introducing continuous sand filtering technology from
Sweden.

The 21st century has brought about increased need for energy saving and reducing
CO 2 emissions. Sanki Engineering has developed a wide variety of energy-saving
systems for various fields, including offices, industrial plants, hospitals and data
centers. It is actively importing technology from Europe, and this has resulted in thedevelopment of many major technologies, including AEROWING, Trans Heat
containers and next-generation stoker-type incineration plants.

06

Towards environmentally friendly technology

SANKI REPORT 201407

Business Outline

Highlights of Business Activities in Fiscal 2013
First installation of“Periloop” thermal
stratification air
conditioning system forlarge spaces
Highlight“Periloop” is a thermal1efficient cooling of the workspace.

stratification air conditioning

The system was adopted in a new wing of the Tokyo branch of Fuji

system that improves efficiency

Heavy Industries Ltd. in Mitaka City in 2013. The new wing requiredin heating and cooling large

efficient energy-saving heating and cooling for a large space and to

spaces such as factories andachieve this, the “periloop” thermal stratification air conditioning

gymnasiums. In this system,

system was installed. Sanki Engineering was in charge of theducts are arranged in a loop

construction for the HAVC and plumbing.

2013 Highlight
Development of conveyor
excluding hair in foodfactories

In food factory production

conditioning technology and conveyor technology and can be employedlines, there are cases whenon various manufacturing lines such as in the medical industry and thecontamination by hair,cosmetics industry.

eyelashes or eyebrow hairsfrom workers occurs. EachHighlight3

aim of early commercialization and sales of this product.

factory works hard on quality
control and health andshape on the wall approximately 3m above the floor and special nozzles

We will continue to further develop this system going forward andsafety, but the reality is that such cases are hard to eliminate. Inon the underside of the ducts blow air in the direction of the floor. In

to promote widespread use with the aims of facilitating energy savings

response to this problem, Sanki Engineering developed a conveyor

winter, cool air that enters from outside is blocked by a warm airand more comfortable air conditioning for even more customers.

system that prevents hair from contaminating the line throughcurrent that acts as a kind of curtain, and the space is heated down to

installation of a small duct system above the conveyor line that blows

foot level. In summer, cool air is accumulated through the formation ofout cleaning air.
The stronger the gust of air that is blown out from the ducts, the moretemperature stratification using difference in air density, thus enabling
When cooling(temperature stratification)

We are gathering information on different customer needs with theeffective it is in preventing hair from contaminating the line, but one

When heating(total air conditioning)issue was that the air blowing directly onto the bodies of the workers
was causing discomfort. In pursuit of a duct installation position thatwould avoid the eye level of workers, we derived optimum conditions

Non-air
conditionedarea

Warm air accumulates
Loop duct

based on tests of air speed and air volume using computer-based
air-flow simulations and testing equipment. This system is unique toSpecial nozzle
Heating down to foot level
Only work area is cooled

3m above floor

Contributing to theenergy-saving of the officethrough development of
SSOM lighting control
systemHighlight

2

Sanki Engineering and resolves a social challenge using “total

Air conditioned
areaThis lighting control system
can significantly reduce
power consumption of ceiling

New wing of Fuji Heavy Industries Ltd. Tokyo branch

power consumption in the office.
We aim to actively roll out this system as a highly effective
power-saving solution for offices.

lights in the office. Lighting
accounts for approximately

engineering competency”. It is highly original in that it integrates air

Launch sales of
AEROWING II low
pressure-drop membrane
panel-type air diffuser

20% of power consumed inHighlight

an office building. With the

4

In March 2014, SankiEngineering launched sales of
AEROWING II, an air diffuser
while maintaining high oxygen
transfer efficiency. Wastewater
treatment plants have been

seeking reductions in power consumption in light of the growing need

individual light basis, whereas it previously had to be turned on and off

for energy conservation and the current status of power supply inoperate the lighting remotely in accordance with the brightness required

Japan. The blower, which supplies air to the reaction tank, accounts for
Example of system configuration

30-50% of total power consumed at wastewater treatment plants, so

by his or her task. This was proven to result in a halving of the power

reducing this rate would contribute significantly to energy savings for

consumed by lighting without compromising the level of comfort.

the entire facility.

This individual lighting control is made possible by the Sanki SmartWith this in mind, Sanki Engineering developed AEROWING II, an

Office Manager (SSOM = management software for the smart control

improved version of AEROWING, which is a membrane panel-type airof power consumption in the office). By further introducing power line

diffuser with a delivery record of about 300 installations in Japan andcommunications to SSOM, less wiring is needed and costs are lowered,about 1,000 worldwide at public wastewater treatment facilities. The

thus significantly shortening the number of years required to recover

new system reduces pressure loss with superior energy saving

initial investment, which was an issue in equipment configuration in

performance while maintaining high oxygen transfer efficiency.

the past. The easy-to-use system combines optimal operation methods

This product has attained “construction technology review andsuch as a self-powered switch or phone, and enhances the visibility ofcertification” from the Japan Institute of Wastewater Engineering and08

Going forward, we will proactively expand proposal activities of thistechnology as a realization of energy-saving.

boasting lower pressure loss

new system, ceiling lighting can now be adjusted and operated on an
on an area basis. In addition, each person working in the office canTechnology for new technology in wastewater treatment.

Visualization system

SANKI REPORT 201409

Business Outline

Financial and Non-Financial Highlights
Orders received and sales

Ordinary income(Millions of yen)

(Millions of yen)Orders received

Sales

175,291
159,273(Unit: Millions of yen)

147,129

143,348

Year ended March 31, 2010 Year ended March 31, 2011 Year ended March 31, 2012 Year ended March 31, 2013 Year ended March 31, 2014

151,794

165,800
147,994

154,658

168,295

171,496

5,027
3,843

Fiscal year
Orders received

143,348

147,129

175,291

165,800

168,295

Sales

159,273

151,794

147,994

154,658

171,496

Selling, general and administrative expenses

15,41915,763

15,712

15,19915,604

Operating income or loss

5,027

3,843

2,525

2,391

2,818

Ordinary income or loss

5,456

4,239

2,268

2,680

3,146

Net income or loss

3,141

2,124

176

(4,992)

1,763

Cash flows from operating activities

1,294

11,554(2,697)

9,729(9,403)

Cash flows from investing activities(1,664)2,610(1,046)(9,481)(3,506)

Cash flows from financing activities(2,936)(1,883)(280)(1,028)(4,152)

Cash and cash equivalents at end of year

32,82545,13541,09740,36723,5102,525 2,391

’09

(FY)

’11

’13

’12

Operating income

Net income(Millions of yen)

(Millions of yen)

Total assets

163,307

158,501

163,120

166,477

170,181

Net assets

80,49879,833

79,662

76,932

74,917

’10

’11

’13

’12

2,272 2,316 2,289 2,246 2,283
3,141

3,146

Earnings per share (yen)

42.86

29.67

2.46

(71.04)

26.46

Book-value per share (yen)1,119.40

1,115.41

1,113.70

1,106.32

1,142.74

15.00

15.00

15.00

15.00

15.00

2,268

2,680
2,124

1,763

176
Other information(FY)

Equity ratio (%)

49.3

50.3

48.8

46.2

44.0

Return on assets (%)

3.2

2.6

1.4

1.6

1.9

Return on equity (%)

3.9

2.7

0.2

(6.4)

2.3

’09

’10

’11

’12

’13

Frequency of accidents

(FY)

’09

2,272

2,316

2,289

2,246

2,283

No. of accidents

6

11

7

3

7

Frequency of accidents *

0.57

1.03

0.68

0.28

0.90

CO2 emissions (t-CO2)

4,390

4,162

3,770

4,308

4,571

Waste emissions (t)11,272

12,034

12,07013,757

15,869’11’12(4,992)

’13

(FY)

’09

’10

’11

Waste emissions(t-CO2)

(t)

4,308

4,162

’13

’12

4,571

3,770

1.03

Year ended March 31, 2010 Year ended March 31, 2011 Year ended March 31, 2012 Year ended March 31, 2013 Year ended March 31, 2014
No. of employees’10

CO2 emissions

4,390

0.90
0.68

11,272

12,034 12,070

13,757

15,8690.57
0.28*Since absence from work of more than one day was set as the standard in the year ended March 2011, all prior figures have been stated using the same standard.
(FY)

10

’09

Number of employees

4,239

Per share information(From all Company construction sites and Yamato Engineering Center)

(FY)

5,456

As of end of fiscal year under review

Cash dividends (yen)

’10

2,818

’09

’10

’11

’12

’13

(FY)

’09

’10

’11

’12

’13

(FY)

’09

’10

’11

’12

SANKI REPORT 2014

’13

11

Business Outline

Summaries of Businesses by Segment
Main sales items

Facilities
Construction
Business
P24

HVAC systems
HVAC systems
Clean rooms
Environmental control
Freezing & refrigeration
District heating &cooling plant
Nuclear power-related
facilities

FY2013 results
Electrical systems
Electrical systems
ICT facilities
Instrumentation
Electrical civil engineering

●

●

●

●

●

●

●

●

●

●

●

Plumbing &drainage systems
Water supply & drainage
Kitchen systems
Disaster prevention systems

●

●

●

●

Water treatment
Water and sewage treatment facilities
Industrial waste water treatment facilities
Sludge treatment facilities
Sludge incineration facilities
Industrial plant facilities●●

Environmental
Systems
Business

143,697

Value provided

Global warming issues

Provide comfortable space

Energy resources issues

Energy and resource conservation

Equipment deterioration

Extended-life and longer-life
facilities

Secure human resources
for operation/management

Sales/Sales composition ratio

●

6%

●

Reduced life cycle costs
Improved asset value●

Society’s demands

Value provided

Eliminate product accidents

Safe and secure productinspection
Labor-saving
Response to declining birthrate
and aging society
Comfortable work environment
Reduced running costs
Energy and resource conservation

Improve productivity

●

9,846

Shortage of labor

million yen

Improve work environment
Energy resources issues

Sales/Sales composition ratio

●

●

10 %

●

●

●

17,169Society’s demands

Value provided

Global warming issues

Energy and resource conservation

Energy resources issues

Extended-life and longer-life
facilities

Aging facilities
Constraints on final landfill
sites

million yen

P30

Appropriate waste disposal

Water resource issues

Our real estate business includes operations in the areas of real estate leasing

Sales/Sales composition ratio

and building management. We are making efforts to expand into higher
value-added real estate while making use of our current technology.

Real EstateBusiness

Society’s demands

Increase in running costs

million yen

●

●

●

84 %

●

Waste treatment
Waste incineration
facilities
Landfill wastewater
treatment facilities●

Sales/Sales composition ratio●

Material handling systems
Clean conveyance systems
Material handling systems
Airport baggage and cargo handling systems
FA systems
Control and information systems●

P28

Smart building solutions
Central monitoring,
automated control systems
IP solutions
Network solutions●

Conveyance systems
Lightweight conveyers
Environmental-related
conveyers
Distribution-related
conveyers
Sorting devices
Automated bucket
warehouse●

Machinery
Systems
Business

Facility systems
Dealing rooms
Office relocation
Financial institution
branches and offices●

Society’s demands and value provided

1%

1,077
million yen

P32

Society’s demands

Value provided

Global warming issues

Energy and resource conservation

Energy resources issues

Extended-life and longer-life
facilities

Aging facilities

Improved asset value
Reduced running costs

Each segment includes intersegment transactions

12

SANKI REPORT 201413

Interview with the President

Through “total engineering
competency”, we aim to enhance
corporate value and drive
sustainable growth together
with society.

Takuichi Kajiura

President

Q2
A2

Can you tell us about the progress of “SANKI
VITAL PLAN 90th”?
We focused on strengthening sales capabilities, creating
an environment focused on results, and responding to risk.

of construction, which has improved the situation and enhanced
efficiency. We created a work environment that can produce
results by utilizing this framework and system.
Finally, on the management side, a new Overseas Risk
Subcommittee was established within the Risk Management
Committee. Sanki Engineering has been referred to as passive

Under “SANKI VITAL PLAN 90th”, we are aiming to realize

when it comes to overseas expansion. One of the reasons for thismedium- and long-term expansion based on the basic policies of:is that there are few cases in which we can maximize our“Maintain a profitability focus and secure orders on an optimal

strengths locally and that match our profit conditions. As an

scale”; “Further strengthen Core Businesses and expand Strategic

example, if we venture overseas for the sake of a single project,

Growth Businesses”; and “Exploit and cultivate New Businesses”.

once it’s completed that’s the end of the story. We don’t think thisHere, I will introduce three initiatives out of the variety ofis meaningful unless we can make use of the Sanki Engineering

measures undertaken in fiscal 2013, the third year of the plan.

Group’s comprehensive technological capability and build theFirst, to strengthen Core Businesses, the Sales Division wasbrand locally. In order to do this, business must be conducted with

set up with the aim of strengthening sales capabilities throughout

an understanding of local country risk, customs and culture, andthe entire organization. Its objectives are to further improve

we set up this subcommittee to serve in an information-gathering

proposal-making capabilities and reinforce “total engineering

capacity. We will make efforts to expand our business overseas

competency”. “Total engineering”, a strength of the Company,

while taking into account information from liaison offices andenables us to provide a plethora of technology and equipment inlocal subsidiaries in respective countries.

broad-reaching markets. In order to leverage this strength, it is(See page 18 for details of “SANKI VITAL PLAN 90th”)

imperative to connect respective businesses possessing different
technologies via cross-organizational information. The role of theSales Division is to collect and provide information within andQ1A1¥2,818 million (up 17.9% year on year) and ordinary income,First, please tell us about the business environment and results
for the fiscal year that ended on March 31, 2014 (fiscal 2013).
The Sanki Engineering Group posted together
increases in sales and profit.

including non-operating income and losses, totaled ¥3,146 million(up 17.4% year on year).
After recognizing a decline in profit brought by the terminationof contract period for large rental properties in the Real EstateBusiness, we began fiscal 2013 with the goal of covering this loss

The Japanese economy in fiscal 2013 recovered steadily due tothrough other businesses. I believe that we were able to clear thisgovernment-led fiscal and financial measures. Construction

challenge as a result of the Group coming together and working

investment rose smoothly in the public sector, supported by aas one. Nonetheless, concerns over upward pressure on labor

hefty supplementary budget, and private capital investment incosts and equipment prices as well as other factors in theJapan recovered moderately owing to resurgence in corporate

business environment have made it difficult to maintainrevenues.

profitability. Results in fiscal 2013, including responses to issues

Against this backdrop, the Sanki Engineering Group proactively

such as these, serve as a vital step toward achieving the

stepped up proposal-based sales for energy conservation andobjectives of our medium-term management plan “SANKI VITAL

power saving so as not to miss any opportunity for orders, and

PLAN 90th” in fiscal 2015, the final fiscal year of the plan.

worked to expand orders while emphasizing construction-related
profits. In fiscal 2013, orders received amounted to ¥168,295
million (up 1.5% year on year) and sales were ¥171,496 million(up 10.9% year on year). In terms of profit, operating income was

14

outside the company, and to specialize in a coordinating function
to enhance proposal-making capabilities to customers. In thesetimes, it is essential to add value in addition to considering cost.
Even in public works, there are a variety of evaluation standards

Q3
A3

Can you tell us the key points aimed at achieving
targets in the final fiscal year of the plan?
We will achieve targets by utilizing our “total engineering
competency” and human resource capabilities.

such as technological proposal-making capability and social
contribution capability. The Sanki Engineering Group will

The ultimate goals of “SANKI VITAL PLAN 90th” are consolidated

contribute to issue resolution in these markets and the demands

net sales of ¥200 billion and consolidated ordinary income of ¥10of society while working to further enhance proposal-making

billion in fiscal 2015. Many things happened between plancapabilities that will lead to growth for our company as well.

formulation and the current fourth year, such as a decline in

Next, we reviewed the personnel system and performance

public investment and a drastic decrease in profit in the Realevaluation system. By revising content toward greater coherence

Estate Business. Nonetheless, we have not lowered our targets

with business strategy, we are aiming to create an environment

and are instead pushing ahead steadily with different measures,in which employees working to achieve targets can grow andwith each employee enthusiastically working toward goal

operate more effectively as well as to invigorate the organizationachievement. There are two elements that are key to achieving

and promote target achievement. Moreover, we took measures toour targets in fiscal 2015.

improve business processes and enhance efficiency, including

The first is further strengthening “total engineering competency”.

responding to labor issues. Work sites tend to be bogged down

When you hear the phrase “total engineering”, you may think ofwith a lot of documents and cumbersome operations, so we built-

engineering involving all our businesses, including HVAC andin a system that enables workers to concentrate on their main job

plumbing, and electricity. But in fact, it means that we provide

SANKI REPORT 201415

value to customers by commanding and integrating the Group’ssocial responsibility as a corporation. Our company’s mission is toeradicate such incidents without the proper understanding amongwide range of technologies. In addition, we deliver solutions inprovide technology to society that labor saving and speeding,all employees in their regular duties of why such behavior isother fields to customers we have previously connected withconvenience and comfort, thus resolving customer and societal

wrong, I had opportunities for direct dialog. Through these, wethrough one of our sales items.

challenges. In order to be an essential entity to society, I believe

are exchanging opinions on topics including “the run-up to

Boosting “total engineering competency” has been my main

we must strive to integrate CSR programs into business activities

completion of SANKI VITAL PLAN 90th” and “transformation into

focus since becoming President. Currently, consolidated

and contribute to both a sustainable society and our own growth

a “total engineering” company”. First and foremost, we areawareness crossing Group company boundaries is growing

by providing value that is unique to the Group.

striving to strengthen the compliance system as an absolute basestronger, and motivation to create “total engineering” is also

Sanki Engineering had to undergo an on-site inspection by therising. Demand will increase going forward, particularly withJapan Fair Trade Commission on suspicion that we had breached(See page 38 for details of measures to prevent reoccurrence of non-compliance)

preparations for the Tokyo Olympics and Paralympics in 2020 and

the Anti-Monopoly Act in bidding for the Hokuriku Shinkansen

Safety is another characteristic that forms the basis of our

the need to renew aging infrastructure. Sanki Engineering wasconstruction project in September 2013. As a result of an internalbusiness, much like compliance. It is imperative that we formulateshareholders through the buyback of 4 million of our own shares.

responsible for the sports stadium, gymnasium and athletes’

investigation, it became clear that the act had indeed beenand put into effect all manner of measures regarding safety. For

We plan to provide an annual shareholder dividend of ¥15 pervillage facilities at the Tokyo Olympics in 1964, and we will

violated. I would like to offer my sincerest apologies for theexample, the effects of simply conducting safety campaigns andshare in fiscal 2014 as well (interim and year-end dividends ofcontinue to contribute to the society by our Group’s strengths, ourtrouble and concern this may have caused our shareholders,putting up posters are insufficient. In this area, executive officers¥7.50 each).

wide array of business domains and the technologies we possess.

investors and all other stakeholders.

and I take part in direct patrols and talk directly with employees.

for reestablishing society’s trust.

The second is meeting labor needs. As demand increases, a

The Sanki Engineering Group treats this incident with the

In fiscal 2013, we focused on preventing falls and other accidents,

major challenge will be to secure necessary personnel, including

utmost gravity and we are working hard to prevent reoccurrence

which have been an issue, and on a campaign to counter heatsite engineers within the Group as well as those from affiliates.

and establish a compliance system. We have implemented

stroke that has been ongoing since fiscal 2012. As a result, we

Rather than merely seeking to increase personnel for the near

various measures to prevent reoccurrence and I am personallyachieved zero incidents of heat stroke in fiscal 2013. We will

future, it is essential that we look further ahead beyond themaking the effort to visit sites, departments and branches aroundnever rest on our laurels when it comes to corporate risk. Instead,closing of the Olympics. For that purpose, one further important

Japan. I have held opinion-exchange sessions with employees on

we will continue to thoroughly implement initiatives.

point is the training and studies of our engineers, and the43 occasions and verified means of eradicating such behavior,cultivation of human resources to effectively utilize personnel. At

with everyone pledging their commitment to ensuring that similarpresent, we are focusing on education, including OJT (on-the-job

incidents never happen again. Complying with the law should betraining) to enhance wide-ranging basic knowledge and basica matter of course; however, because I don’t believe we can fully

technology for our young employees and staff of our affiliates.
Human resources are assets of the company, and we are

Dividends per Share
Year-end dividend (¥)

Interim dividend (¥)

Consolidated dividend payout ratio (%)

1000%
609.8
7.5

7.5

7.5

7.5

7.5 500%(Expected)

100%
56.7

Q5
A5

50.6

Please tell us your philosophy on shareholder
return and about dividends.
We are looking into comprehensive measuresrelated to shareholder return.

evaluated by the way our employees act on the front line. I haveconfidence in the capabilities of Group employees, and if they can

Sanki Engineering views the return of profits to shareholders as

embody the reasons Sanki Engineering is so necessary and why

one of our priority issues and recognizes our dividend policy as

we should be chosen over other companies, I believe we canthe basic measure for returning profit to shareholders. In the past,achieve our goals.

we sought to strike a balance between continuous business

Q6
A6

50%

7.5

7.5

7.5

7.5

’10

’11

’12

’13

7.5

(Expected)

’14

0
(FY)

Do you have a message for your stakeholders?

We will enhance corporate value and grow together
with society through “total engineering competency”.

development and short-term profit return to shareholders and

Q4
A4What is Sanki Engineering’s philosophy on CSR
and what initiatives are you focusing on?
We are concentrating on putting into practice ourCompany Credos and reestablishing society’s trust.

have increased dividends in line with results and other factors

The Sanki Engineering Group aims to respond to the demands ofwhile maintaining a basic policy of ensuring stable dividends.

society by enhancing corporate value and driving sustainable

While this policy is fundamental to our operations, we will look

growth alongside society through the contributions of “total

into comprehensive measures related to shareholder returns

engineering competency”. Going forward, we will listen closely toincluding share buyback.

our stakeholders and deepen communication in an effort to meet

We set a year-end dividend of ¥7.50 per share for the fiscal

expectations.

CSR at Sanki Engineering is the practice of the Company Credos

year (the same as in the previous fiscal year), and as a result the

Each employee has a strong sense of ethics and will strive toitself. This idea is stated in the Company Credos, “We will

total yearly dividend was ¥15 per share (the same as in thefulfill his or her responsibility to society. I ask for your continued

contribute to society through engineering”, and expresses ourprevious year). Moreover, as in fiscal 2012, we returned profits to

support and guidance going forward.

16

SANKI REPORT 201417

Toward Realization of
our Medium-Term
Management Plan

SANKI

Consolidated net sales (Unit: ¥100 million)

90

Core Businesses

VITAL PLAN

thManagement philosophy
Through its “total engineering”, the Sanki Engineering Groupshall promote the diffusion of energy saving and new-energy
systems to help achieve a comfortable low-carbon society.

Leveraging “total engineering”

contribute to society through engineering”. Corporate value for the

1,335

Machinery Systems

98

Environmental Systems

171

Strategic Growth Businesses

101

Unique New Businesses

0Real Estate Business

10

1,714

Overseas sales of above amount18

80

Consolidated ordinary income

31

Adjustments(9)

We shall strengthen Core Businesses, expand Strategic Growth Businesses
and create Unique New Businesses to ensure our long-term development.

Total

Financial performance targets

society, and for this reason we have integrated the execution of our

Fiscal 2015 consolidated sales: ¥200 billion
Consolidated ordinary income: ¥10 billion

business with the execution of CSR. In addition, we will make the mostof our “total engineering competency” to contribute to the resolution ofvarious social issues. This is a responsibility our Group must fulfill, and

1,760
1,370
150
240
190
20
30
ー
ー
2,000

6

VisionGroup is indivisible from contribution to the creation of a sustainable

FY2015 (Targets)

1,605

Facilities Construction

Other

The Sanki Engineering Group aims to achieve sustainable growth
together with society by realizing our Company Credos, “We will

FY2013 (Results)

The medium-term
management plan

1.8%

(Note) Percentage indicates ratio of consolidated ordinary income to consolidated sales.

90th year since founding

The Sanki Engineering Group is working to achieve the objectives of“SANKI VITAL PLAN 90th”, our medium-term management planscheduled to finish in fiscal 2015, the year of our 90th anniversary. We

Strategic growthbusinesses

are pushing ahead with various measures based on the basic policies
scale”; “Further strengthen Core Businesses and expand Strategic

Strengthening the management base

Growth Businesses”; and “Exploit and cultivate New Businesses”.
Helping to realize a low-carbon society and further enhancing corporate
value through our “total engineering competency” is expected to leadto the achievement of our objectives under the medium-term
management plan.

Strategic growthbusinessesCorebusinesses

of: “Maintain a profitability focus and secure orders on an optimal

Unique new businesses

Core businesses

Combine engineering from various
businesses● Energy saving ● New energies●●

Strengthening the management base

HVAC and Plumbing ● Facility Systems● Machinery Systems
for building● Environmental Systems● Industrial HVAC
● Electrical Systems●

Strategic growth businesses●●

Strengthening the customer base
Cultivation and appropriate allocationof human resources● Reform of work processes● Practice of efficient management

Renovation*
Integrated networks*● Life cycle engineering●* Integrated as Smart Building Solutions Business as of fiscal 2012

2013
Key initiatives taken in FY2013● Core Businesses
Strengthened company-wide cross-departmental sales capability
Established a Sales Division responsible for all businesses and promoted
sales proposals mainly to medical institutions and schools
Secured orders on an optimal scale while maintaining a focus on profit● Strategic Growth Businesses
Expanded growth strategy including Life Cycle Engineering (LCE)
Expanded and strengthened LCE by setting up a subsidiary site in the
Hokkaido region● Unique New Businesses
Strengthened “total engineering competency”
Newly established the Food Service Equipment Office to strengthen our foodservice equipment business and coordinated it with our Core Businesses

18

2015
Achieve SANKI VITAL PLAN 90th

Unique new businesses

doing so will bring opportunities for competitiveness and growth.

100 5.0%● Strengthening the management baseRevised the personnel system and performance evaluation system
Increased efficiency of on-site operations
Introduced a document creation support system using IT andsupported on-site operations
Enhanced corporate value by strengthening risk management andcorporate governanceWith the aim of expanding overseas business, set up theOverseas Risk Subcommittee to address risk overseas andstrengthened supervision

2014
Key initiatives
for FY2014● Core Businesses
Strengthen customer sales and proposal-based sales functions
Focus Sales Division functions into sales planning and sales development and work to gaincustomers
Continue promoting Recovery Project and Hospital Project company-wide● Strategic Growth Businesses
Expand growth strategy including Life Cycle Engineering (LCE)
Establish subsidiary site in the Chugoku region and strengthen LCE with enhanced Group coordination● Unique New Businesses
Strengthen “total engineering competency”: Promote planning based on an action plan for measures in each division● Strengthening the management base
Foster human resources that can take on the responsibility of developing business overseas
Enhance corporate value by bolstering risk management and corporate governance
Strengthen management of the different areas of risk identified by the Risk Management Committee
Bolster compliance
Eradicate legal violations with thorough legal compliance

Strengthen customer sales and proposal-based sales functions
We reformed the functions of the Sales Division to
enable a focus on sales planning and sales development,
which has further strengthened customer sales andproposal-based sales functions. The Sales Division will
strive to gain customers to expand our future base incollaboration with the Energy Solutions Center as asupport mechanism, primarily through market analysis,
sales development, customer management and sales
activity management.

Foster global human resources
Every year we continue to conduct a program thatcombines language learning and practical training by
utilizing an overseas training system. A total of nine
students in two graduating classes have alreadycompleted the program, and four of these students havebeen dispatched overseas to work as local staff. We
intend to maintain this training program in fiscal 2014
and beyond, and to promote the development of leaders
who can drive future business advancement in Japanand overseas.

SANKI REPORT 201419

Business strategy“Total Engineering”, – a Strength of Sanki Engineering
Create synergies through “total engineering”

Diversebusinessdomains

Provide an optimal environment utilizing wide-ranging business technologies

Sanki Engineering Group covers a wide

logistics

range of business areas, beginning with theequipment, and Environmental Systems

Facilities Construction Business, which

Business, comprising water and sewage

systemsandtransportation“Total engineering” is one of the areas of comparative

By creating synergies through “total engineering” , we canconsists primarily of heating, ventilation andtreatment facilities and waste treatment

advantage of the Sanki Engineering Group. This refers to ourfurther boost the value we provide to customers and society.

airfacilities.

ability to provide optimal solutions throughout the overall life

The Sanki Engineering Group delivers one-of-a-kind systems

systems, kitchen systems and smart building

By effectively integrating these businesses,

cycle of facilities in the numerous business domains the Group

with optimum added value in response to diverse needs related

solutions as well as facility systems. In

we can provide the optimal environment

operates in, backed up by exceptional technological capability.

to the environment, society and economy.

addition, we are engaged in Machineryfor our customers. This is the key element

Systems Business, consisting mainly ofof “total engineering”.

conditioning,plumbing,

electrical

Facilities
construction

Provideoptimalenvironment
Machinerysystems

Environmental
systems

Provide the optimal environment● Respond to every need in terms of building facilities and deliver one-stop solutions

●

●

●

● Supply one-of-a-kind systems by optimizing needs

Create social infrastructure

Ensure information security

Boost business efficiency

Use space efficiently

EconomyReduce costs

Exceptional
technologicalcapability

Increase asset value

LCE●

Diversebusinessdomains●

Three elements configuring “total engineering”

Create synergies

LCE

Respond to all needs throughout the life cycle

The comprehensive capabilities of theoperation/management and renewal.

Sanki Engineering Group enable provision

Life Cycle Engineering (LCE), intoof optimal solutions in every stage with awhich we have actively incorporated

focus on the entire life cycle of facilities,

state-of-the-art

up to and including response to aging

energy saving, is the second element ofequipment, from planning, design and“total engineering”.

technology,

includingPlanning･Basic design
Repair･
RenewalDesign

LCE

Life Cycle Engineering

construction to maintenance, inspection,
Maintenance･
Inspection

Responding to customer needs through Life Cycle Engineering●

Integrate group capabilities and provide optimal solutions in the life cycle of facilities●

Make multiple perspective proposals aiming to reduce life cycle costs●

Provide steady support through professionals well versed in customers’ facilities

Exceptional
technologicalcapability

Construction
Operation･
Management

Definitive technology supporting “total engineering”

The third element is technological capability, which underpins

line with customer needs through its multiple, unique and highly

our wide range of business domains and the creation of

specialized technologies. We will maximize synergistic effects

synergies through Life Cycle Engineering.

by integrating various technologies from diverse business

The Sanki Engineering Group can provide optimal solutions in

20

Business Strategy● Propose optimal energy-saving measures from an all-round perspective●●

Reduce usage of resources

Realize energy saving

Reduce CO2 emissions●●

Provide value to customers and society

Environment

Societydomains and generating new value.

SANKI REPORT 201421

01
Contributing to Japan’s highest skyscraper
Abeno Harukas

Construction of Abeno Harukas, Japan’s highest skyscraper at
Osaka in December 2013. It was built directly on top of Kintetsu

Corporation’s Osaka-Abenobashi Station and incorporates advanced
urban functionality with environmentally friendly features.

Responding to diverse needs with thecollective capabilities of the Group

LCE

300m above ground level, was completed in the Abeno district ofIndoor biogas system

Sanki Engineering is responsible for the design and constructionof facilities while Sanki Techno Support is responsible formaintenance. By concentrating the state-of-the-art technologiesof the Sanki Engineering Group, we can optimize the entire life
cycle in huge complexes.

Diversebusinessdomains

Providing optimum environments
through construction in wide-ranging fields

Advanced
technologicalexpertise●

We introduced Japan’s first indoor biogas system that converts

Kitchen systems

waste generated from each facility into power and hot water

The Sanki Engineering Group provided “total engineering

energy.

competency” for Abeno Harukas through construction of HVAC
and plumbing, and kitchen systems. By linking each facility andCreating systems that match thespecifications of highest skyscraper●“Total engineering” synergy

We implemented a vertical pipe wastewater disposal system,

which was previously difficult in super high-rises, by controllingsystem, we achieved effective energy source use and reduced

State-of-the-art eco-friendly building that reduces
environmental burden from multiple perspectives(reduces CO2 emissions by 25%, saves energy, and cuts
down on waste).

●costs.

●

Utilizing the characteristics of super high-rise architecture, we

introduced a falling water power generation system that uses

Overview of complex:
60 floors above ground, 5 floors underground (total floor area 306,000m2)
Facilities:

Support the maintenance of a sustainable futuristicbuilding by providing an optimal environment throughout
the entire life cycle.

●

non-fecal wastewater.

Indoor biogas system, vertical pipe wastewater disposal system,
falling water power generator, area heat recovery system, large diameter riser pipework,
ice-water thermal storage system, night purge control, outdoor air cooling system,
use of reclaimed water (rainwater and non-fecal water), installation of air flow windows,
thermal energy pipework connecting the tower and wing annexes

Business strategy

Creating value throughContributing to production
facilities for medical devices
Terumo Yamaguchi
Corporation“total engineering capability”
Diversebusinessdomains

3 floors above ground (total floor area: 15,348.8m2)
Facilities:

02

treatment facilities requiring enhancement at production facilities for
medical devices.
●

Responsible for HVAC/dust prevention system, utility system, andheat source equipment essential for the clean room.

●“Total engineering” synergy

Considering ways to optimize the entire system, wecreated flexible facilities that can be adapted to
expansion and changes in the production line.

●

Improved work efficiency and energy efficiency
through comprehensive equipment design.

●

Responsible for all areas from design to construction of wastewater
treatment facilities enabling advanced processing.

catheters in line with growing global demand.
Overview of complex:

Responsible for clean room utility equipment andwastewater treatment system

We were responsible for construction of plumbing and wastewater

Terumo Corporation established Terumo Yamaguchi
Corporation in response to increasing production ofAdvanced
technologicalexpertise

Micro-bubble air diffuser, membrane separator, sludge dehydrator, activated carbon filter●

Accommodate the strict standards and ensured the advanced
safety required of production facilities for medical devices

Created a production line in compliance with product quality
management standards (GMP).

●

Accommodated strict water outflow standards based on Seto

Inland Sea environmental preservation measures and minimized
environmental impact on the surrounding area.

22

SANKI REPORT 2014

Membrane separator

Business Strategy

pipe inner pressure and falling velocity.

23

Reports by Segment

The medium-term
management plan

Facilities Construction Business

SANKI

FY2015 (target)

90 156.0

VITAL PLAN

thOrders (billions of yen)billion of yen

Important policies for achieving our goals

Sales (billions of yen)

Increasing orders for proposed improvement projects
Strengthening cost competitiveness● Developing technology for next-generation energy-saving
and new energies● Strengthening and enhancing our bases in Southeast Asia●●

Sanki Engineering is creating facilities construction that isfriendly to both people and the environment through convenientand comfortable, yet energy-saving and efficient systems. We will
make unceasing efforts to continue our business activities whiledeveloping unique new technology and addressing thechallenges of globalization.

Summary of results and performance for FY2013
Orders in the Facilities Construction Business were 5.7%
higher than the previous fiscal year at ¥143,839 million. Sales
amounted to ¥143,697 million, up 11.7% from the previous
fiscal year due to an increase in the number of projects carriedover from the end of the previous fiscal year. As the yen
continued to depreciate while stock prices continued to climb
under the influence of governmental economic and financial
measures, resurgence in exports and improvement incorporate revenues, mainly in the manufacturing industry, led
to signs of recovery in construction investment in Japan,
including deferred maintenance, which had been restrained
previously. As a result, orders were up in all businesses
compared to the previous fiscal year. Nonetheless, concerns
remain over upward pressure on labor costs and the cost ofresources, equipment and materials, resulting in anenvironment in which it is becoming increasingly difficult tosecure profitability. While focusing on construction profits, we
worked to expand orders so as not to let opportunities slip by.

143.6

143.8

128.6
115.0

Progress in the medium-term management plan
Strengthen Core Businesses

(FY)

’11

’12

’13

(FY)

’11

’12

’13

technologies, including hygiene management for foodproducts, energy and power conservation, and environmental
measures in kitchen systems used in facilities such as hotels,
hospitals, factories and office buildings. In fiscal 2013, we
strengthened our organization by newly setting up the Food
Service Equipment Office. We are expanding sales of the“kitchen system” that covers all interior construction and related
equipment to meet improvement demands. Moreover, we areaiming to gain orders for food production factories that conductadvanced hygiene management. Beginning with clean
technology to guarantee a high degree of cleanliness in eachprocess, from material receipt to product shipment, we makeproposals for all areas of basic planning, construction execution
design, actual construction and maintenance, from efficient
production equipment layout, all the way up to conveyancesystems and waste and wastewater treatment.
Record of major projects implemented● Kintetsu Abeno Harukas Tower Building (HVAC and plumbing work)● Improvement work for Mitsui Sumitomo Insurance Co., Ltd.’s Kanda Surugadai Sanchome Project

Sanki Engineering strives to differentiate its offerings
through comprehensive engineering of each of our component(HVAC, plumbing and electrical systems, and facility systems)● Construction of Hamanomachi Hospital for Federation of National Public Service Personnel

Mutual Aid Associations (HVAC and plumbing work)● Toyota Motor Corporation’s New Experiment Wing (HVAC, electrical systems)

24

Increasing orders for proposed improvement projects
We are continuing to focus on proposal-based improvement
projects to meet customer challenges and needs and areproposing proactive solutions through integrated departmental
efforts.
●● Strengthening cost competitivenessWe are working to gather purchase data and strengthen
purchase power. We are also creating a system to reduce
work burden for on-site managers and improve businessprocesses. We are making effective use of this system to
execute continual improvements and reviews.

Expanding orders in strategic fields such as informationrelated facilities
We are proactively proposing unique technology such as"L-LAC®" , in HVAC systems for data centers. Moreover, in
May 2014 we announced the development of "Front Air®", ahigh-heat-generating server cooling system to counter thehigh density and increased heat generation from power
consumed in server racks.
●

Developing technology for next-generation energysaving and new energies
We are continuing to develop next-generation energy savingsand new energy-related technologies, including demonstration
experiments aimed at realizing energy self-sufficient plantfactories.
●

Strengthening and enhancing our bases in Southeast
Asia
We coordinate local overseas subsidiaries with domestic
departments by way of the Overseas Operations Control Officeestablished in fiscal 2013 to carefully consider risk anddevelop and strengthen overseas business. The opening
ceremony for a representative office in Bangkok was held in
April 2013.
●

Expand Strategic Growth Businesses
Life cycle engineering
We are expanding life cycle engineering in coordination with
the Group company, Sanki Techno Support Co., Ltd. by making
proposals starting from the design stage up to the life cycle
plan following completion of construction.
●

Renovation
Renovation refers to large-scale improvement work forexisting buildings that involves changing functionality andenhancing features and value. In terms of renovation, we areworking to make total engineering proposals and to raise
asset value for customers.
●

Integrated networks
Creating an integrated network for HVAC and plumbing, watersupply and drainage, electrical systems and a fourth element
infrastructure generates many benefits such as enhanced
building operational efficiency and real estate value, lower
costs, energy savings, intelligent systems and greater
stability. We are marketing this as a smart building solution.
●

SANKI REPORT 2014

25

Reports by Segment

134.8 136.1

Reports by Segment

Toward achieving the objectives of the medium-term
management plan

■HVAC and plumbing for buildings
Business in HVAC & Plumbing for Buildings aims to increase
orders with its “total engineering” technology, which
increases the added value of buildings, by integrating
functions such as heating, ventilation and air conditioning,water supply and drainage, and plumbing systems.
Of these, we are marketing our services to schools andmedical facilities as a key field and are working proactively onplans for the new construction and rebuilding of large-scale
structures. With new technologies unique to Sanki Engineeringthat not only lead to energy saving and power saving, but also
open the way for reduction in life cycle costs, we will broaden
our business fields.
■Industrial HVAC
In the Industrial HVAC Business, we are proposing solutions
for improving and upgrading HVAC equipment in order to saveenergy by taking advantage of our unique cleanroom
technology. Of these, we have positioned electronics industry
high precision equipment, medical and pharmaceutical, foodproduct, and automotive-related sectors as key fields.
Energy saving measures are directly connected to product pricecompetition owing to rising energy costs, and Sanki Engineering
makes proposals with a focus on reducing life cycle costs.

26■Smart building solutions
In the Smart Building Solutions Business, we provide smart
buildings that enhance energy-saving efficiency and comfort
through the combination of building automation technology
related to HVAC, plumbing and electrical systems andinformation communication technology. The Energy Solution
Center proposes technology developed by the TechnicalResearch & Development Institute, and the Electrical &Network Systems Engineering Department and Instrument &Control Engineering Department provide installation andconstruction as part of a system that connects energy-saving
technologies at each stage.
In January 2014, we developed an SSOM individual lighting
control system applying to various offices. Since this has theeffect of halving power consumption from lighting as well as
reduced wiring and lower costs, we are proactively marketingit as a practical power-saving solution.

■Facility systems
The Facility Systems Division offers design planning andproject management services for the office or the workplace,such as fit-outs and relocation. Consulting services for offices
and workplaces are another of our main functions. In
particular, we have an excellent achievement record for officerelocation such as dealing rooms for financial institutions, wehave an excellent achievement record for office relocation.

We are focusing on creating new value and further
strengthening our engineering capabilities by making use of
our unique know-how and integrating moving engineeringwith facilities management.
(Building monitoring systems and security systems, which were previously included in
the Smart Building Solutions Business, were transferred to the Facility Systems
Business, which is expanding proposals for similar projects, as of April 2014 to create
structural synergistic effects.)

Reports by Segment

Demand is growing for building reconstruction due to aging
structures while needs continue to increase for energy-saving
measures as well as building maintenance and management.
The Sanki Engineering Group will continue to promote life cycle
engineering by making proposals for entire facilities from acomprehensive perspective, from the maintenance,
management, improvement and renovation of buildings to theirdesign and construction. In order to enhance the informationgathering and proposal-making capabilities necessary to achievethis, we are providing training to strengthen our marketing
capabilities. Moreover, we place emphasis on reinforcing
construction capabilities in response to challenges related toworker shortage, labor costs and rising material prices, and to
this end, we will strengthen ties between sites andadministration and supporting departments as a means toenhance the quality of safety, quality and cost. In addition, we
will continue to contribute to the resolution of social issues suchas global warming, energy resource issues, and aging facilities
together with our efforts to achieve plan objectives.

■Electrical systems
In the Electrical Systems Business, we are offering systems toprovide stable power supply and make highly efficient use ofelectricity in the fields of lighting installation, power
substations, monitoring systems, information infrastructure
and intelligent building management.
Going forward, demand for further sophistication,
diversification and energy conservation will increase. In
response, we will aim to contribute to reductions in power
consumption and greater comfort and convenience primarily
by boosting energy savings in lighting and power outlets andmaking power usage more visible. Additionally, we will focus
on proposals that incorporate power-saving measures andguaranteeing power during emergencies.

Topics 1

Topics 2

Toyota Research and Development Center (China) Corporation

Hakkaisan Brewery Co., Ltd.

Installation of energy-saving systems adapted to
the local environment

Snow cooling system using natural energy

Sanki Engineering and a local subsidiary in Shanghai were responsible

Hakkaisan Brewery Co., Ltd., known for its signature brand of local

for low and high temperature environment testing facilities and wind

Niigata sake “Hakkaisan”, built a room for storing snow in 2013 thattunnel environment testing equipment as well as HVAC, water supply

uses snow to mature sake at cool temperatures. Sanki Engineering wasand drainage, and plumbing work for an experiment wing of the Toyota

responsible for construction of the air conditioning and plumbing as

Research and Development Center (China) Corporation (TMEC) inwell as a cooling system that utilizes natural energy.

Changsu, Jiangsu Province, China. Established in 2010, TMEC held an

The snow storage facility can store around 1,000 ton of snow fallen

opening ceremony upon initial completion in 2013, and marked thein winter and keep it throughout the summer as well. The facility

completion of the second phase of construction with a ceremony infeatures another storeroom for the sake within the same space as theJuly 2014. TMEC is the first development site for hybrid vehicles

snow storeroom. Cool air emanating from the surface of the snow

outside Japan, and research is being done there to lower the cost offlows into the sake storeroom via natural convection, thus enablingthese vehicles. It is an important base that aims to drive the future

cooling of the entire space without the use of power. About a maximum

spread of hybrid vehicles in China.

of 400,000 liters of sake can be stored in the storeroom. Moreover, theThe low and high temperature environment testing facilities

cold air can be sent into the adjacent product storehouse (fermentation

installed by Sanki Engineering and a Shanghai local subsidiary allowroom) for use as snow-based air-conditioning. In this system, numericalthe temperature of the testing room to be varied from -40°C to 50°C,

analysis of temperature distribution is used in advance confirmation

making it applicable to environments found throughout the vast

prior to construction and actual measurements during operation,

territory of China. Moreover, HVAC, water supply and drainage as wellhelping maintain a favorable environment all year round.

as plumbing facilities employ energy-saving devices and use reclaimed
drainage water among other measures to introduce energy-saving
design into each location.

SANKI REPORT 201427

Reports by Segment

The medium-term
management plan

Machinery Systems Business
Orders (billions of yen)

9.3

FY2015 (target)

90

15.0

VITAL PLANth

PICKOLLO

billion of yen

Important policies for achieving our goals

Sales (billions of yen)

10.8
10.8

8.4

SANKI

●

Entering new energy-related markets●

Developing and marketing new-type conveyors for specific markets●

Establishing competitive bases in overseas markets

6.5

Progress in the medium-term management plan
Strengthen Core Businesses

Sanki Engineering will provide material handling systems
corresponding to customers’ needs and challenges in supply
chain management, and we will also deal with the issues ofsociety through the development of technology.

Summary of results and performance for FY2013
Orders in the Machinery Systems Business were down 21.6%
from the previous fiscal year at ¥8,482 million, as domestic
capital investment in the manufacturing industry fell short offull-fledged recovery. Nonetheless, sales increased 51.4%
compared with the previous fiscal year to ¥9,846 million, due
to an increase in the number of projects carried over from theend of the previous fiscal year.
In the Factory Automation (FA) field, although we expected
to see investment in production equipment in Japanaccompanying the demise of the strong yen, no growth wasrecorded due to a wait-and-see attitude following theconsumption tax hike, and since production facilities could
already handle the rush in demand prior to the increase in
consumption tax. Moreover, with regard to the transfer of
production facilities overseas, the move toward local
production for local consumption is advancing continuously forequipment not deemed to be of high added value, even withthe weak yen. In the midst of this market environment,
demand for equipment used in production lines in such areas
as food products and containers for convenience stores andsupermarkets, and streamlining of equipment in theamusement and book printing industries were observed.

(FY)

’11

’12

’13

(FY)

’11

’12

’13

Additionally, in the logistics field, we provided sorting andconveyance equipment as well as picking systems on the backof buoyant demand for equipment in the logistics industry
related to mail order and home delivery services. In the area of
airport equipment, where the Company has earned high praise
and the trust of customers, we strengthened existing airport
facilities in the luggage conveyance field and introduced thelatest high-tech storage and logistics systems for cargoconveyance, despite a lull in new large-scale contracts for
airports in Japan.
In the medical field, with rising demand for labor-saving
devices backed by safety, we are working to develop
dispensers for blood tests and products using robots.

Entering new energy-related markets● In solar batteries, we are making an approach in line withsigns of recovery in domestic manufacturers following theimpact of stalled operations at solar power generation
manufacturers in China. In lithium batteries, we will expand
sales to meet solid demand for stationary equipment (mainly
home use).
Developing and marketing new-type conveyors for specificmarkets● Our business division operates under the idea that “allemployees are developers”, and we are focusing on thedevelopment of conveyor-related equipment in the threeindustrial markets of food products, pharmaceuticals, andcosmetics sundry goods.
Establishing competitive bases in overseas markets● We are conducting market analysis while carefully consideringrisk in order to select countries that are emerging as markets
and countries that will serve as production bases.

Record of major projects implemented● Mail order company: Introduced the “Cubic-Sorter System” for sorting

small packages● Mobile phone sales company: Introduced “PICKOLLO” for automatic

picking system of rechargeable battery
S-Con Mini SIMPLE

28

Reports by Segment

9.8

Cubic-Sorter System

Toward achieving the objectives of the medium-term
management plan
With the aim of achieving our objectives, we are focusing on
three key areas: “Strengthen product appeal to expand profits
in standard equipment businesses”, “Expand sales in
non-manufacturing industry fields such as medicine andpharmaceuticals and logistics”, and “Strengthen technologicalcapability through combination with robots”. To this end, weestablished a sales development team and a dedicateddevelopment team that are working with a focus on the fieldof medicine and pharmaceuticals.
S-Con Mini SIMPLE, which was launched in 2014, hasenhanced product appeal that matches customers’ needs forlighter weight, more compact design and lower price, and weare aiming to increase our industry share. In addition, we areconducting R&D using robots as system integrators andsetting various recognition devices and operating software
such as 3D vision. During fiscal 2014, we will establish a robot
center inside the Yamato Engineering Center in Kanagawa
Prefecture with plans to use it as a place to display various
robots and conveyance systems as well as for handling tests.
In conveyance technology, we will integrate HVAC
technology and food production equipment/machinery
technology to differentiate our products from other companies’
through “total engineering” . We will also contribute to society
by providing numerous one-of-a-kind products with enhanced
added value such as labor-saving features.
SANKI REPORT 201429

Reports by Segment

The medium-term
management plan

Environmental
Systems Business

SANKI

FY2015 (target)

90

24.0

VITAL PLANthbillion of yen

Important policies for achieving our goals

Orders (billions of yen)

Increasing orders for strategic, energy-saving products
for sewage treatment facilities● Development of major next-generation products for thefield of sewage treatment● Expanding our marketing networks overseas●

Sales (billions of yen)

28.8

19.8

Small binary power-generating system

Weedless V

Progress in the medium-term management plan
16.6
In water treatment and waste treatment facilities, we will work todevelop products and systems that conserve resources andlower greenhouse gas emissions as well as deal with problems
such as debris from earthquakes, while contributing to therealization of a low-carbon society.

Summary of results and performance for FY2013
Orders in our Environmental Systems Business were down
9.6% from the previous fiscal year to ¥15,029 million, due tothe impact of delays in orders for water supply and sewage
systems from public offices. Sales were 0.1% upper than theprevious fiscal year at ¥17,169 million.
Public investment for fiscal 2013 in public works such as
sewage treatment and waste treatment facilities, which are
key markets in the Environmental Systems Business, wasconcentrated in social infrastructure, including aging roads andbridges. Environment-related capital investment has been on
the decline, and in particular, orders for the sewage-related
sector have dipped and the scale of projects has contracted
dramatically. Conversely, existing facilities have entered aperiod of mass upgrades, and demand continues for life
extension and longer service life as well as the installation ofenergy-creating equipment required for energy-saving
treatment facilities and a stable power supply over the medium
to long term.
In March 2014, we launched sales of AEROWING II, alow-pressure drop membrane panel-type air diffuser that contributes
to a reduction in power consumption at sewage treatment centers.

30

(FY)

’11

’12

Strengthen Core Businesses

15.0

’13

(FY)

’11

’12

’13

This system makes improvements to AEROWING, which has
already been installed in approximately 300 public sewage
treatment facilities in Japan and about 1,000 worldwide.
AEROWING II maintains high oxygen transfer efficiency whilefurther reducing pressure loss. (For details, see page 9 underHighlights of Business Activities)
In addition, in light of the need to conserve and create
energy as well as the conditions of electric power in recent
times, we developed and began sales of a small-scale binary
cycle power generation system that can generate power using
unused waste heat from factories, geothermal heat, and hot
spring heat. As small-scale binary cycle power generation
systems come into the spotlight, the Company’s products havea variety of exceptional features such as high power generation
efficiency, ease of maintenance, and the ability to generatehigh power output even during waste heat load fluctuation.

Record of major projects implemented● Shimoda Water Purification Center: Installed first AEROWING II system● Terumo Yamaguchi Corporation: Wastewater treatment system* “Total engineering” with Facilities Construction Business Division (HVAC and plumbing work)

1. We established a sales expansion system and have launchedmarketing activities for AEROWING II as a means to expand
strategic energy-saving products for sewage treatment
facilities. In addition, we will conduct continued marketing
using actual performance data from a supercharged(turbocharged) fluidized bed incinerator installed at the
Asakawa Water Reclamation Center in Tokyo.
2. We are developing next version core products for theEnvironmental Systems Business. These include AEROWING II,
a low-pressure drop membrane panel-type air diffuser, andWeedless V, a low power agitator installed in the upper partof a water tank, in response to the need for a reduction in
power consumption while maintaining processed water
quality at sewage treatment facilities. We also developed asmall-scale binary cycle power generating system in responseto needs for energy creation.
3. We established a sales system for AEROWING (overseas
name: AEROSTRIP) as a means to expand the sales network
overseas. We have already concluded a sales allianceagreement with OVIVO USA, LLC, a leading plant manufacturer
in the North American market. AEROSTRIP Corporation (USA;100% owned subsidiary) of AQUACONSULT, which supplies
AEROWING to this company, has been placed under theumbrella of AQUACONSULT Anlagenbau GmbH (Austria; 100%
owned subsidiary). Through this, we have centralized oursystem for instructions and orders as well as informationexchange, and established a system to further strengthen
sales promotion activities in North America.

Toward achieving the objectives of the medium-term
management plan
In the Environmental Systems Business, we focus on thedevelopment and sales expansion of products that meet needs
for continuous energy saving and energy creation. We willpropose the supercharged (turbocharged) fluidized bed
incinerator, AEROWING, and its peripheral systems to sewage
treatment facilities, as well as power-generating systems towaste treatment facilities and private factories that generate
waste heat. Moreover, the Sanki Engineering Group will meetneeds for life extension and longer service life by providing
customers with a strength of the Group, life cycle engineeringfrom the planning of facilities to their design, construction,
follow-up service, maintenance, and management.
In private projects, we will leverage the channels of theentire organization as a “total engineering” company and focus
on expanding sales of water and wastewater treatment
systems for the medical and pharmaceutical fields.
As part of a society that demands energy and resource
conservation we will pursue added value relative to life cycle
costs, ease of maintenance and management, and extended
life and longer service life needs, and contribute to therealization of a low-carbon society.

SANKI REPORT 201431

Reports by Segment

17.1 17.1

Distributing information through the
Sanki Global Environment PlazaThe Sanki Global Environment Plaza, which was established in theReports by Segment

Technical Research & Development Institute, introduces Company efforts

Research and Development

and R&D related to the environment. Some 500 people, including
customers and local residents, visit the Plaza every year.

Tour inquiries:
Yamato Engineering Center,
Sanki Engineering Co., Ltd.
TEL: 046-274-4111

Real EstateBusiness

Summary of results and performance for FY2013
Sales in the Real Estate Business fell 60.8% from the previous
fiscal year to ¥1,077 million, due to the conclusion of thecontract period in the previous fiscal year for a large rental
property located in Yamato City, Kanagawa Prefecture.
In each facility, we made upgrades in response to aging
equipment and fixtures to maintain and secure rental
revenues. This included renewing lighting fixtures with LED
lighting, upgrading water heaters and coolers in HVAC, andrepairing the external walls.

Initiatives in FY2014
The large rental property located in Yamato City, Kanagawa
Prefecture was named “Sanki Yamato Building” whose
contract period has concluded on April 1, 2013. Going forward,a challenge for fiscal 2014 will be to examine the possibility ofeffective utilization of this asset and to draft plans from thisinvestigation into concrete measures.
In other properties, we will strive to secure stable revenues
by restructuring our business, such as through enhancing
added value by upgrading facilities and utilizing idle assets.

32

Message

Philosophy on R&D
Sanki Engineering engages in a variety of R&D related to ourdiverse business domains and works to develop newtechnology and improve conventional technology throughsophisticated capability and experienced engineering. We
believe that this technological development will meet customer
needs and lead to the resolution of social problems. Our threemain areas of focus are “energy saving”, “upgrading” and“renovation”. We aim to provide high value-added solutions by
striking a balance between fundamental research that is ofbenefit for the future and technological development that
directly meets market needs.
Also, we are conducting R&D covering all of our businessdomains based on aframework coordinatedwith the business division,
the Technical Research &Development Institute isplaced as the core of our
R&D.

Initiatives related to intellectual property
Sanki Engineering manages intellectual property based on thecode of conduct to “manage and reasonably protect company
rights and assets, and respect the rights and assets of others”.
We actively file patent applications under the philosophy thatinventions born from design and construction sites areperceived as intellectual property, such as inventions at theTechnical Research & Development Institute.
In terms of management, we have assigned a liaison person
for intellectual property in each business division, led by theIntellectual Property Department. The liaison person proactively
investigates intellectual property, for example from activities toimprove construction methods, and internally provides
information from meetings with intellectual property officials.
Moreover, we are working to enhance awareness in order toprotect our own technology and to ensure the intellectual
property rights of other companies are not violated, throughsuch means as sharing intellectual property-related information
via a database that includes an overview of patents and public
notifications concerning business, and conducting intellectual
property training for new recruits.

Creating appealing products and proactively supporting the site
The Technical Research & Development Institute conducts

capabilities. We create new value by leveraging this strength andfundamental research and investigation of new technologies in

integrating technologies, which we refer to as cross-departmental

addition to developing technologies. The institute has been focusingdevelopment. We hold study sessions twice a month and have set up

on 3 initiatives since fiscal 2013.

a consolidated business space for engineers from all departments to

The first is site visits. The objectives are to get first-hand insightinvigorate communication between engineers. Thanks to this

into needs at actual sites that cannot be obtained solely within theinitiative, the number of cases of development that leverage theconfines of the institute, and to provide direct technical support. By

strengths of the Group has been increasing.

doing so, we go beyond waiting for requests from customers andsales, and seek to discover potential needs.

In fiscal 2014, we will further promote these efforts and continue
with activities to create appealing

Second, we are taking measures to counter the rising cost of laborproducts and actively support

and price of resources, equipment, and materials, which are keysite by fusing society’ s needs

management issues. We are confronting these challenges from thewith those of the Company.

perspective of technological development by saving labor inconstruction and evaluating new resources, equipment, and materials
as well as construction methods.
Third, we are promoting cross-departmental development. Since
the Sanki Engineering Group maintains a wide range of businessdomains, we retain engineers who possess a variety of specialized

Hirotoshi Fukui

Executive Officer,
Chief Director ofTechnical Research &Development Institute

Develop cell culture facilities for regenerative medicine
Regenerative medicine is currently attracting interest from society for its ability to regenerate dysfunctional
tissue and organs and restore functionality. Cell culture for regenerative medicine uses small-scale bio
clean room facilities called Cell Processing Centers (CPC). This is a new field of technology, so necessary
and sufficient equipment specifications are under development and pursuing the suitable design for theequipment is not expected to be exceeded.
For certifying performance of equipments, Sanki Engineering created a mockup facility within theTechnical Research & Development Institute aimed at developing technology, and developed an air
cleaning technique that reuses exhaust air from the biosafety cabinet (BSC), the core equipment inside the
CPC. By rectifying the exhaust air and supplying it to the inside of the CPC, the air inside the CPC becomes a
one-directional down flow. This results in the ability to keep the air clean by handling less air volume than
before, leading to further energy savings of 20%.
We will contribute to the development of the regenerative medicine industry by promoting further
development using mockup facilities and gathering the opinions of actual users.

SANKI REPORT 2014

33

Reports by Segment

Our Real estate Business is involved in leasing operations andbuilding management, and we are working on expanding toinclude higher value-added properties

Research and Development

SankiEngineering’s
CSR Activities

An Overview of the Executives (As of June 26, 2014)

Corporate Governance

❾
⓫

❸

❼

❹
❶

❿

❻
❷

❽

⓬

In order to increase management
efficiency and speed up the decisionCorporate
making process, we are employing
an executive officer system in whichgovernancewe divide management functions
systembetween the Board of Directors,
which is responsible for decisionmaking and supervision functions,and executive officers, who are responsible for the execution ofbusiness affairs. We also have a system in place by means ofwhich the decision-making process of our Board of Directors andthe execution of business affairs by our executive officers are
subject to multifaceted monitoring and restraints from external
executive officers, a Board of Company Auditors (including
external auditors), an Internal Audit Department, and accounting
auditor in order to ensure the system of legality and appropriatenessof our business procedures.

s
’
g
s
n
i
e
r
i
ei
t
e
v
n
i
t
i
c
g
A
n
E
R
iS
k
C
n
a
S

Sanki Engineering identifies contribution
to society through engineering,
communication with all of ourBasicshareholders and other stakeholders,philosophy
and the realization of businessactivities that make us a company
both valued and trusted by thecommunity as our basic management
principles. In order to realize this, we recognize that a key
management challenge is to boost management efficiency andperformance with uncompromising enhancement of compliance.

❺

Framework of corporate governance system(As of June 26, 2014)

General Shareholders’ Meeting
Appointment to/removal from officeBusiness auditing
Accounting auditing

Board of Company Auditors
Of four auditors, two are external auditor

Appointment to/removal from office

Board of Directors

Accounting auditing

Of eight Directors, two are External Directors

Appointment to/removal from office

Accounting auditors(Ernst & Young ShinNihon LLC)

Reporting
Risk Management Committee
Executive Officer Committee

Appointment to/removal from office

Discussion,
reportingCorporate Ethics Committee

Management Meeting
Important matters /Discussion, reporting

Internal Finance Control Committee

Policy Meeting

Election, dismissal, supervision

President and Representative Director

Executive officers
Leadership, supervision

Monitoring / Guidance, support / Education

Sections, headquarters, research institute, business division,
centers, business divisions, branches and branch offices, subsidiaries

Board of Directors
The Board of Directors meets at least once a month in order to decide on important mattersand supervise the status of execution of business affairs.
Management Meeting
Made up of directors and executive officers nominated by the President. Meets weekly todeliberate on important matters, including those to be discussed by the Board of Directors.
Board of Company Auditors
Convened at least six times a year. The auditors attend Board Meetings and other important
meetings, and offer opinions as necessary. The Board conducts accounting auditing andbusiness auditing activities in cooperation with the accounting auditors, the Internal Audit
Department, and the Internal Controls Departments. In June 2012, a supplementary external
auditor was appointed in order to fill potential future vacancies in the Board.
Risk Management Committee: See p. 40
Internal Finance Control Committee
Chaired by the President, this committee’s central role is company-wide control, including
review and decision-making concerning important matters regarding internal controls forfinancial reporting.

34

Leadership, supervision❶ Representative Director and President
ReportingInternal Audit Department
Auditing

Corporate Ethics Committee
With the President as Chairperson, via this committee executive officers nominated by the
President to be responsible for corporate ethics oversee all matters related to corporate
ethics. The Committee is made up of executive officers, heads of divisions and thePresidents of branches and branch offices, and the CSR Promotion Division functions as
the Secretariat. The committee deliberates on action plans and other measures to achieve
further penetration and stricter observance of the company’s Code of Conduct and Action
Guidelines at two regularly scheduled meetings per year.
Internal Audit Department
This section conducts internal audits of the operations of each of the company’s businessdivisions, based on the Auditing Plan for that fiscal year. It verifies the appropriateness,
efficiency, etc. of the internal management system. As necessary, the Internal Auditing
Section exchanges opinions with or makes proposals concerning the improvement or
correction of a problem to the Internal Controls Departments of the Administration Divisionand other divisions. The Section reports the results of its audits to the President,
responsible executive officers and auditors.

❷	Representative Director and Senior Executive Officer, and General Manager, M&E Contracting Headquarters❸ Director, Senior Executive Officer

Takuichi Kajiura
Tsutomu Hasegawa
Tetsuo Usui

❹ Director, Managing Executive Officer, and General Manager, Administration Division

Mamoru Shimma❺ Director, Managing Executive Officer, and General Manager, CSR Promotion DivisionNobuo Kumura❻ Director, Managing Executive Officer, Deputy General Manager of M&E Contracting Headquarters (eastern Japan, western Japan control)❼ External Director		

Hidemi Fujii
Yukiteru Yamamoto❽ External Director		

Hiroki Nishio❾ Full-time Auditor		

Toshikatsu Yasunaga❿ Full-time Auditor		Masato Komura⓫ External Auditor		

Takeo Inokuchi⓬ External Auditor		

Mamoru Norisada

Executive Officers
Appointed by the Board of Directors, the executive officers are responsible for and possess
authority in relation to the execution of the affairs that fall under their purview.

SANKI REPORT 201435

Sanki Engineering’s CSR Activities

The Sanki Engineering Group’s Code of Conduct and Action Guidelines Formulated on December 1, 2002

Corporate Governance

Revised on May 1, 2012
Revised again on June 2, 2014
[The colored sentences (1-8) are our Code of Conduct, while the sentences in black print (①-㉞) are our Action Guidelines]

inspection by the Japan Fair Trade Commission on suspicion thatcompliance is in itself the foundation

we breached the Anti-Monopoly Act in bidding for the Hokuriku

for being a company that is trusted

Shinkansen construction project in September 2013. In order toby society. Based on our recognition

never again become the subject of suspicions of a breach ofof the overwhelming importance ofcompliance, we formulated the Sanki Engineering Group Compliancecompliance, we are pushing ahead

Declaration and the Sanki Engineering Group Behavioral Standards

with Sanki Engineering Group-wide

to ensure that business activities adhere to behavioral norms andcompliance initiatives centering on our Corporate Ethics

guidelines based on compliance with laws and regulations andCommittee, for which our President acts as Chairperson.

corporate ethics, throughout the Group and across all businesses

Compliance-related
initiatives

Despite this, Sanki Engineering had to undergo an on-site

irrespective of civil-service projects.

Sanki Engineering Group Compliance Declaration

Formulated: October 21, 2013

A policy of conducting business activities in compliance with laws and regulations and based on corporate ethics is the major premise behind the operations
undertaken by the Sanki Engineering Group, and is set forth in the Sanki Engineering Group Code of Conduct and Action Guidelines.
Activities related to the granting of contracts are also subject to this and the third provision of the Code of Conduct stipulates, “In seeking to win contracts,
we will observe the rules of fair market competition”.
Nonetheless, we have formulated the Sanki Engineering Group Behavioral Standards in order to clarify the above points in line with changes in theenvironment surrounding the Company in recent times.
Essential components of bidding for any contract include acting as an honest and fair competitor, or in other words, acting in accordance with the independentjudgments of the Company. Employees must strictly refrain from behavior swayed by the intentions of other companies or that impacts the actions of anothercompany. When bidding for a contract, it is unethical to talk with other bidders or take action to force an adjustment, actions which breach the Company’s
policy.
Accordingly, we declare as Company policy that all Sanki Engineering Group executive officers and employees shall comply faithfully with the items
stipulated in the Sanki Engineering Group Behavioral Standards.

Sanki Engineering Group Behavioral Standards
1.	No discussion, exchange of information, adjustment, or decision upon
the following between businesses shall take place.
(1) Method of selecting prospective candidates for a contract(2) Prospective contract candidates(3) Bidding price(4) Estimated price(5) Eagerness for contract, results of sales activities, contract results,
number of times nominated, etc.
(6) Order amount in stock, order reserve
2.	Approval shall be gained from your superior before attending a meeting
between businesses in the same industry. Following the meeting, recordof the content must be made and shall be reported to your superior.
3.	Such meetings shall not be attended if knowledge has been obtained inadvance that the topic of the meeting between businesses will concern
a matter related to any of the items in Provision 1 above.
4.	
Even when decisions on method of selecting prospective contract
candidates, prospective contract candidates, or bidding price are madebased on the guidance or at the request of the public office offering thecontract, you must not adhere to this since it is a violation of the AntiMonopoly Act.
5.	When setting up a joint-venture group to participate in a tender bid, youmust not negotiate or exchange opinions regarding the formation of saidgroup in a manner that includes persons aside from those that may be
involved as partners.

36

Formulated: October 21, 2013

6.	A subcontractor transaction or transaction that may be seen as giving
benefits must not be undertaken between the successful tender bidder
and another participating bidder for a property since this may lead tosuspicions of bid-rigging in the background.
7.	Actions that in any way that hinders or excludes participation in a bid on
the part of other businesses or force another business to withdraw froma bid shall not be taken.
8.	These standards shall apply to the following cases as well.
(1) When a trade association acts as agent(2) When the public office offering the contract offers an agreement
based on a method of estimate adjustment
9.	In the case that you come into contact with a fact or information thatsuggests the existence of bid-rigging in the Company’s businessactivities, you must report this to your superior or via the reporting
system (corporate ethics hotline) irrespective of whether or not it
concerns you.
10.	In the case that a doubt arises over the application of these standards,
you shall make judgment based on the “Guidelines Concerning the
Activities of Firms and Trade Associations with Regard to Public Bids”(Public Bidding Guideline) issued by the Japan Fair Trade Commission on
January 1, 2010.
Additional clause: These standards shall be implemented as of October 21, 2013.

Contribution to society through business activities
1.		Always taking our customers’ perspective, we will provide safe anduseful products and services that satisfy our customers and earn theirtrust, and we will contribute to the development of society throughTotal Engineering.
①	Taking our customers’ needs seriously, we will present solutions based on our
superior technological capacity as engineering professionals, enabling us toprovide safe and useful products and services.
②	We will strictly manage confidential information belonging to our customers
that we have access to in the course of our work, and we will only use suchinformation for legitimate purposes.
③	In the course of our business activities, we will present accurate information
concerning our products and services, and we will not make any statements thatmight potentially be misunderstood by our customers.
Disclosure of company information
2.		Recognizing our social responsibility as a listed corporation, we will
disclose the company information necessary to increasing ourmanagement transparency in an appropriate and timely manner,
improving our level of communication with our stakeholders andearning their trust.
④	We will disclose company information, including information concerning ourbusiness activities and our financial status, to our stakeholders in a timely andappropriate manner.
⑤ We will prioritize communication with our stakeholders in order to live up to thetrust placed in us by society.
⑥	We will not engage in insider trading or any form of buying or selling of shares,
etc. that may arouse suspicions of insider trading.
Fair market competition and trading
3.		In seeking to win contracts, we will observe the rules of fair market
competition, and in issuing contracts we will build fair, equal andtransparent business relationships with all of our business partners,*
and we will conduct honest transactions, in accordance with thestipulations of the related laws and regulations and the relevant
contracts.
*Business partners: Subcontractors and companies from which we purchase materials, etc.
⑦	We will pursue profits by means of free and fair competition, observing the
stipulations of the Anti-Monopoly Act and other relevant laws and regulations.
⑧	We will not make decisions based on discussion of prospective recipients ofcontracts or the method of selection of prospective recipients of contracts withcompanies involved in the contract bidding process, and we will not exchange
information concerning the granting of contracts.
⑨	We will always adopt a fair and unbiased viewpoint in our dealings withbusiness partners, and we will conduct honest transactions in accordance withthe stipulations of the related laws and regulations and the relevant contracts.
⑩	We will not exploit our position as the contracting party in order to coerce ourbusiness partners to engage in any improper actions.
⑪	In negotiating the offering of contracts, etc., we will not pursue individual profit.
⑫	We will not accept any entertainment, gifts, or other economic benefits from ourbusiness partners that exceed the bounds of ordinary social etiquette.
Respect for human rights
4.		In all of our business activities, we will respect the human rights ofevery individual with whom we have dealings, and we will eliminate
discrimination and any actions that impair the dignity of the individual.
⑬	We will ensure that every individual is able to work safely and healthily at all of
our worksites, including construction sites.
⑭ We will not discriminate or perform any action that impairs the dignity of theindividual on the basis of sex, age, place of birth, nationality, race, ethnicity,
creed, religion, physical characteristics, disabilities, etc.
⑮	We will not benefit from child labor or forced labor in our business activities.
⑯	In the course of our business activities, we will consider our impact on humanrights, and we will deal with any potential human rights violations.
⑰	
We will eliminate sexual harassment and power harassment from theworkplace, and we will prevent any deterioration in the working environment.
⑱	We will respect the privacy, individuality, and diversity of each person, and wewill work to harmonize work and life.

Management of company finances
5.		We will work to manage and protect company rights and assets, bothtangible and intangible, and will not use these for inappropriate
purposes such as personal use; in addition, we will respect the rights
and assets of others.
⑲	We will manage company assets appropriately and in accordance with therules, and we will not use them for other than business purposes.
⑳ We will secure and preserve company rights and assets, including intellectual
property rights, and we will also respect the rights and assets of others andavoid violating those rights.
㉑	We will manage information appropriately, based on our information systems
use standards.
㉒	In addition to protecting information provided by customers, we will treat all
personal information that we receive appropriately and manage it safely.
㉓	We will strictly manage company confidential information; during their period of
employment our employees will ensure that there are no leaks or disclosures of
information, and will continue to do so after having left employment withoutobserving fixed procedures. The same holds true for the confidential informationof others.
Protection of the global environment
6.		We will make active efforts for the protection of regional environments
and the global environment.
㉔	In our design of facilities, etc., we will contribute to the realization of a low-carbon
society by actively proposing means of conserving resources and energy.
㉕	In our respective workplaces, we will strive to prevent pollution andenvironmental contamination, and we will work to promote conservation of
resources and energy, reduction of industrial waste, and recycling.
㉖	In our business activities, we will always consider our impact on the environment,
and we will respect environment-related laws and regulations and actively work
towards the resolution of environmental problems.
Prevention of association with anti-social elements
7.		We will resolutely reject advances from anti-social elements thatthreaten the order and safety of civil society, and we will have noassociation with such elements.
㉗	If we receive improper requests or demands from anti-social elements or groups
that represent a threat to the order and safety of civil society, we will not yield
to these requests or demands, but will resolutely reject them. In addition, we
will not conduct any transaction with anti-social elements or groups, orindividuals associated with such elements or groups, for any reason whatsoever,
and will break off any contact with such elements or groups.
Respect for social rules
8.		Maintaining a constant awareness that we are members of society, we
will follow social rules and actively contribute to society, working to
win the trust of the community.
㉘ In the performance of our work duties, we will observe the stipulations of theConstruction Industry Act and other relevant laws and regulations, our Code of
Conduct and Action Guidelines, and our company regulations, and we will follow
social rules, maintaining a constant awareness that we are members of society.
㉙ When we stand to gain from such activities, we will not offer any favors such asentertainment or gifts to public officials or any equivalent person (including foreign
public officials), and even when we do not stand to gain we will not offer
entertainment, gifts, etc. to such persons that exceed the bounds of ordinary social
intercourse. We will not provide any economic benefits such as entertainment or
gifts that exceed the bounds of ordinary social common sense to the executives or
employees of our customers. In addition, when the company rules of our customers
prohibit the provision of entertainment, we will follow those rules.
㉚ We will not perform any actions that damage the good name or prestige of ourcompany.
㉛	We will work to contribute to society as a good corporate citizen and member ofsociety, seeking to contribute to the development of local communities.
㉜	When we engage in business activities overseas, we will respect both the rulesof the area in which we are conducting business and the international code of
conduct.
㉝	We will make our business partners aware of this Code of Conduct and these
Action Guidelines, and we will request their observance of them.
㉞ All personnel in managerial positions will actively practice the precepts of thisCode of Conduct and these Action Guidelines, and will provide instructions andengage in supervision to ensure that the personnel under their management
also observe them.
SANKI REPORT 2014

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For Sanki Engineering, absoluteSanki Engineering’s CSR Activities

Corporate GovernanceSanki Engineering conducts a yearly

We have set up “corporate ethics

Concerning breach of the Anti-Monopoly Act in the Hokuriku Shinkansen
construction project and measures to prevent reoccurrence
Although Sanki Engineering has always worked to comply with laws and regulations since its earliest days, we had to undergo an
on-site inspection by the Japan Fair Trade Commission on suspicion that we had breached the Anti-Monopoly Act in bidding for

Corporate ethics
hotlines(Whistle-blowing
system)hotlines” both within and outside
the company as an internal reporting
system. The internal hotline goes to
the CSR Promotion Division, while
the external hotline goes to oursurvey to ascertain awareness ofcompliance and CSR among executive
officers and employees. In fiscal 2014,
we conducted a survey in which
respondents could answer freely on

the Hokuriku Shinkansen construction project in September 2013. As a result of an internal investigation, it became clear that

consulting attorney’s office. We act

such matters as overall compliance

there had indeed been a breach of the Anti-Monopoly Act. We would like to offer our most sincere apologies to shareholders,with appropriate haste to resolve the issues that are reported,with the Code of Conduct and Action Guidelines, harassment, andinvestors and all other stakeholders for the concern and trouble we caused.

with consideration of the protection of the consultant and thecomprehension of the training. The contents of the survey covered a

Sanki Engineering realizes the serious nature of this matter and has cut the monthly remuneration of six executive officers,whistle-blower. All of the reported information is presented towide range of topics, so we will introduce only the most important

including the President and Representative Director, the executive officer in charge of the division involved in this matter, and thethe executives responsible for corporate ethics, and importantelements.

executive officer in charge of the management department, by 20 - 30% for a period of three months in order to clarify the locus

information is reported to the Management Meeting. In fiscalof responsibility in light of the gravity of the situation.

2013, there were 8 reported incidents (seven internally and one

reoccurrence in order to eradicate actions that violate laws and regulations. The Sanki Engineering Group will work as one toregain the trust of everyone as quickly as possible.

externally).
In addition, we created a new corporate ethics hotline cardthat we are distributing in order to raise awareness of thissystem throughout the entire Group.

2014(1) We revised the “Code of Conduct for Business with Public Offices” on October 21, 2013 and formulated the Sanki EngineeringGroup Compliance Declaration and Sanki Engineering Group Behavioral Standards.
(2) From October to December 2013, we convened the Corporate Ethics Committee and held special training on corporate ethics
for all executive officers of the Group as a means to redouble efforts concerning the Anti-Monopoly Act. At the same time, we
submitted a pledge outlining compliance with the Act.
informed them again of the compliance wistle-blowing system.

■ Survey period: April 30 to May 16, 2014
■ Participants: All Group executive officers and employees● Response format: Anonymous● Distributed: 2,429; Returned: 1,924 (79.2%)

Q：Do you think Company initiatives concerningcompliance are adequate?

Measures carried out to prevent reoccurrence

Moreover, we distributed the Compliance Handbook to all executive officers of the Group in order to boost awareness andResults of questionnaire regarding complianceawareness

Receipt ofcomplianceconfirmation sheetsfrom all executives
and employees

In order to refresh the awareness of
all Group executives and employeesof the responsibilities that they

Yes, they are adequate

80.6%

No, they are still insufficient

17.8%

Other

1.6%

Q：What do you think CSR means for the company?
(Multiple selections possible)
2014
Conducting social contribution activities

64.3%

Adhering to laws and regulations

81.1%

Protecting the environment

44.7%

Increasing profit, paying taxes and dividends toshareholders

26.0%

covering items such as observance of the Code of Conduct andProviding good services and products

45.0%

In order to totally eradicate risk of breaching the Anti-Monopoly Act, we formulated the Sanki Engineering Group’s initiatives

Action Guidelines, and eliminating criminal elements andgroups. We have been using e-Learning instead of written

55.9%(daily activities, regulations) as the efficient and practical Anti-Monopoly Act Compliance Program, and we will make sure that it

Meeting society’s expectations through businessactivities

becomes ingrained throughout the entire Group.

materials since fiscal 2013.

(3) We assigned a compliance manager to each operational department in February 2014 and resolved to perform an inspectionof the process for deciding on the bid amount for public works, led by the CSR Promotion Division. In addition, we made it
compulsory to submit an application in advance and an attended report when attending a meeting with any same industry
companies.

In fiscal 2014, we will undertake the following concrete measures.
•Clearly stipulate breaches of laws such as the Anti-Monopoly Act that are grounds for disciplinary action•

Promote further understanding by carrying out training that uses the Anti-Monopoly Act CompliancePrevent risk from arising by establishing a Compliance Risk Subcommittee within the Risk
Management Committee•

Reconsider membership in outside groups (businesses in same industry)•

Create a compliance system for overseas subsidiaries

positions and roles, complianceconfirmation sheets are submitted

Status of submission of compliance confirmation sheets(Fiscal 2014)
Sanki Engineering(Relevantemployees)

Subsidiaries(Relevantemployees)

Compliance confirmation sheets
concerning performance of duties

28 (28)27 (27)

Compliance confirmation sheets

1,985 (2,020)

338 (343)

manual•must fulfill in their respectiveat the beginning of each fiscal year

New measures to prevent reoccurrence

Compliance Handbook

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Going forward, we will work to strengthen compliance and thoroughly enforce and strictly execute measures to prevent

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Questionnaire
concerningcomplianceawareness*	Compliance confirmation sheets concerning performance of duties are submitted by directors
and executive officers.
*	Some individuals have not submitted compliance confirmation sheets, but these individuals
are on maternity leave, receiving medical treatment, etc.

Q：In what kinds of situations did you utilize the SANKIREPORT 2013? (Multiple selections possible)
2014
When conducting marketing to customers

30.4%

When I wanted to confirm the philosophy of the
management executive

26.2%

When I wanted to learn about the business ofother departments

26.0%

When I wanted to confirm CSR activities

24.4%

Preparation for and review of internal training

13.4%

SANKI REPORT 201439

Sanki Engineering’s CSR Activities

Corporate GovernanceSanki Engineering’s BCP (BusinessCompany-wide risk management

Continuity Plan) aims to ensure the

Responses todisaster risk
(Formulating a BCP)

system to comprehensively identify
and manage risk relevant to theGroup and prevent it from occurring,safety of all related persons,beginning with employees, basedon integrated effort from all

and to minimize loss in the case thatdivisions and employees as well as

it does occur. We newly set up a

formulate a framework to contribute

Risk Management Committee in fiscal 2012 that is chaired by ato customers and society through swift business restoration inrisk management officer to monitor important risk throughout

collaboration with business partners.
In fiscal 2013, we conducted drills and made investigations

the Group, formulate control plans, and monitor risk reported

into other risk aside from large-scale disasters in order to further

from subcommittees and divisions.
The Risk Management Committee convened a total of 4 times

enhance effectiveness, after conducting a review of internalin fiscal 2013 to report on risk that had arisen, to investigate

systems and procedures (system maintenance starting underrisk in order to prevent actualization, and to implement

ordinary conditions and clarification of behavioral standards andcountermeasures. Moreover, we established new subcommittees

division of roles in a disaster) for when a disaster strikes, so thatfor overseas risk and compliance risk, creating a system torestoration activities can be implemented more promptly.

promote the development and reinforcement of the management

TopicsConducting BCP drills
On December 9, 2013, Sanki Engineering conducted initial response drills as
part of our BCP for the Kanto region. In order to examine the effectivenessof the BCP, we held practical drills for the first time with a focus on initial
response in a disaster. On the day, we conducted drills in a “blind scenario
format” assuming that an earthquake with an intensity of upper-6 on the
Shindo scale (M7.3) had occurred directly under Tokyo at 1 PM during
working hours on a weekday, and that the status of facilities inside the head
office building, public transportation, infrastructure, etc. was initiallyunclear but gradually came to light. We also conducted “safety confirmation”
drills to report on the safety of employees and their families and the statusof property damage. In addition, we set up an “integrated disastercountermeasures head office” including the President and conducted drills
in such areas as gathering information on injured persons and providing aid,
responding to customers on premises, evaluating whether or not to returnhome and where to stay the night, external reporting, confirming the statusof damage to company facilities, and gathering information on damage tocustomers and planning emergency countermeasures. A total of 1,355
people participated and we examined the BCP manual, selecting issues thatneed to be improved.
In addition, we conducted BCP drills for a second time in May 2014. On
this occasion, we held recovery drills on-site, which focused on responding
to customers. Going forward, we will create measures that are effective andcan be adapted to the circumstances by conducting continuous training.
Also, we will expand training in phases at branches and branch offices.

system.
Social media continues to grow

Sanki Engineering works to handle
personal information appropriately

Framework of Risk Management System
ReportDiscussion on policy to respondto important risk

Internal audit department
Audit
ReportReport findings ofdeliberations

to avoid theft or leakage of data
provided by customers based on our“information security policy”. We
have established an information

rapidly in today’s society, and it isnecessary to be careful when using
it due to the significant social
impact it can have irrespective of
the user’s intentions.

security risk subcommittee within

In order to ensure accurate andChairperson: Risk management executive

the Risk Management Committee as a management system.

effective use of social media, in September 2013, we formulated

Members:

Through this system, we can control information security

guidelines for employees of the Group concerning its utilization.

1. Monitor important risk and formulate control planmeasures Company-wide and manage risk related to information

The guidelines have been included in the newly created

2. Monitor risk reported by subcommittees and divisions

security in an integrated manner.

Compliance Handbook, and we are working to ingrain them,

Risk Management Committee
Management meeting constituent members and persons nominatedby the chairperson

MonitorInitiatives to ensure
information security

Management meeting

Initiatives
concerning social
media

Roles:
Convenes:

MonitorOnce a quarter as a general rule, additionally as required

Making use of e-Learning, we are working to ensure that

Secretariat: Management Planning Officeeach of our executives and employees has a thorough grounding

while at the same time making efforts to enhance the level of
information security including social media.

in information security and the handling of personal information.
ReportIn fiscal 2013, we implemented a compliance awarenessMonitorquestionnaire along with e-Learning to cultivate awarenessSubcommittees
Divisions
Risk management division
All departments, divisions, research institutes, business divisions, centers,
business departments, branches and branch offices, subsidiaries

40«Committees/management system»

Information security risk
MonitorReport condition

Credit risk

Central disaster countermeasures committee
Corporate ethics committee

Operational risk

Internal finance control committee

Overseas risk

Quality management system

Compliance risk

Environmental management system, etc.

regarding risk. By continuing to carry out these measures in the
future, we will seek to raise our level of information security still
further.

SANKI REPORT 2014

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Risk management
systemSanki Engineering has established aCSR Management

The Sanki Engineering Group has

The foundation of Sanki Engineering’s

Our CSRphilosophy andpromotionsystemCSR initiatives is our continuing effort
to contribute to society through ourbusiness while respecting social norms
as a corporate citizen, and we takeSanki
engineeringgroup andstakeholders

stated as one of its Company Credos

Main initiatives with stakeholders“Taking customer and stakeholder
needs as our own, we will consider
how to respond and act accordingly”.

P.44

Customers

The business activities of the Sanki

We shall always take our customer’s perspective

very seriously as a means of enabling

Engineering Group are propped up by

to provide safe and useful products and services

us to gain an accurate understanding of the demands of society. This

the different stakeholders, namely customers, local communities,

in itself is the practice of our Corporate Credo, which we formulated

business partners, employees, shareholders and investors,

in 1980. At Sanki Engineering, the Corporate Ethics Committee withingovernment and NGO/NPO. Through communication with all of

the corporate governance structure takes on the role of promoting

these individuals, we aim to continually develop the Group andCSR to ensure continued response to societal demands. We aresociety. This philosophy has been elucidated in the Code ofin line with social rules and laws.

working steadily to make CSR part of our management practice,

Conduct and Action Guidelines as our responsibility to•Donate to NPO projects

towards the realization of socially responsible corporate management.

stakeholders.

•Promote dialog through collaborations and support

communication with our stakeholders

that satisfy our customers and earn their trust.
•Provide information, beginning with website

P.54

Government, NGO/NPO•Hold technical proposal study sessions

CSR Manifesto
and our Code of
Conduct andActionGuidelines

We formulated our Corporate Ethics
Regulations in December 2002. The

We shall cooperate with government and related

environmental conservation activities as a memberof the local community.
•Dispatch South Pole Regional Monitoring Team
•Interact with local communities through Sanki Nature

Corporate Ethics Regulations stipulated
that we should create a Code of
Conduct and Action Guidelines, andCorporate Ethics Committee in order toensure that they took root and were observed. Based on the spirit of
the Corporate Credo, the Code of Conduct and Action Guidelines are
not limited to simply requiring observance of laws and regulations, but
represent our CSR manifesto, indicating how Sanki Engineering
executives and employees should behave as corporate citizens.
In addition, we revised the Code and Guidelines in May 2012
to content that meets societal demands in light of the issuanceof ISO 26000 amid increasing calls for social responsibility thatcompanies must adhere to.

•Conduct cleanups and environmental beautification
activities

improvement activities, etc.

Local
communities

Government,
NGO/NPO

ensure thorough compliance with theCode of Conduct and Action Guidelines.
In fiscal 2013, 2,216 people took one ofSanki
EngineeringGroup

32 courses offered between June andestablish a structure centering on the

Park/accepting social studies field trips

Customers•Cooperate, liaise and share information on environmental

ethics training annually in order to

CSR Corporate
ethics training

We shall work on social contribution activities andgroups to resolve environmental and social problems

activities

Sanki Engineering conducts corporate

P.52

Local communities•Swiftly report trouble and claims and create reports

August. The themes of the training
were prevention of insider trading, harassment prevention, points ofShareholders
andinvestors

caution in conclusion of contracts, and management training forinternal controls. Special corporate ethics training regard to the AntiMonopoly Act held during October through December has been
undertaken by 2,298 people across 30 occasions. This training divides

Employees

participants into sales staff and others, with sales staff receiving
more detailed instruction regarding compliance with the AntiMonopoly Act.

Business
partners

Shareholders and investors

P.47

P.46

Business partners

We shall disclose the company information necessary

We shall build fair, equal and transparent businessto increase management transparency in an appropriate

relationships with all of our business partners andand timely manner and earn the trust of society.

conduct honest transactions when placing orders.
•Operate business partner reporting system•Disclose company information in a timely and appropriate

P.48

manner

Employees•Hold regular shareholder meetings and financial presentation

We shall ensure that every individual is able tomeetings•Return profit in an appropriate manner (stable dividends)

work safely and healthily in line with a basic policy•Communicate through regular briefing sessions andtraining sessions
Evaluate business partners●of respect for human rights.
•Promote diversity and a work-life balance•Create a company in which human resources aredeveloped and appropriately assigned positions•Implement special safety patrols to prevent accidents

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CSR Activities

Our Relationship with Our Customers

Sanki Engineering actively participatesin exhibitions so customers can become
Communication familiar with our unique technology
with ourutilizing comprehensive engineering
customers
and in order to cultivate new sales
domains. In fiscal 2013, we took partin 8 events where we provided technicalinformation related to energy conservation and showcased our total
engineering competency through press statements on newtechnologies, panel displays and exhibits of full-scale machinery.
[Exhibition participation in fiscal 2013]• 24th Design, Engineering & Manufacturing Solutions Expo
• 26th Interphex Japan• 12th Multi-system exhibition for smart Air-Conditioning and Sanitation• Health ingredients & Safety and technology Japan 2013
• 38th Hospex Japan 2013
• 2nd Data Center Expo (Autumn)• ENEX 2014 – 38th Energy and Environment Exhibition• Sewage Works Exhibition '13 Tokyo

Philosophy on quality
Sanki Engineering conducts operational
procedures and risk assessments based
Initiatives toon past experience and shares cases of
ensure quality
failure internally in order to prevent
quality-related accidents. We believethat preventing similar accidents andthe same claims from reoccurring as well as being able to respondquickly and appropriately in the event of an accident leads to improving
customer satisfaction.
Quality Management System
Sanki Engineering conducts quality management based on ISO
9001 at our department of Facilities Construction, Machinery
Systems and Environmental Systems. By autumn 2014, we aim tointegrate timeframes for QMS and EMS internal and external
audits in preparation for revisions to ISO standards and to reducethe burden of site managers’ auditing duties. Through this, we plan
to enable quality management, safety management andenvironmental protection with a focus on enhancing customer
satisfaction.

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Quality Management Activities by Technical Masters
Visiting activity by persons with high technical skills and experiencein management at a branch or branch office to sites to prevent
trouble and complaints and a technical master system to nurtureand guide junior employees were inaugurated in 2013. Technicalmasters attend construction audits during each process and stage
to provide technical checks and construction guidance on-site.
Technical masters checked drawings approximately 120 times infiscal 2013. Technical masters were renamed technical experts infiscal 2014 and integrated into the chief engineer office. Efforts arebeing made to strengthen ties with chief engineers and create asystem that maximizes their collective capabilities.
Construction Method Improvement Award and Other
Technical Awards
We present the Construction Method Improvement Award every
year to commend innovations in construction techniques atworksites. In fiscal 2013, we gave out five Construction Method
Improvement Awards and three Contribution to Customers
Awards from the 842 award proposals received. We establishedthe Superior Foreman Commendation System in fiscal 2014 andwill evaluate foremen from cooperating companies who have
top class skills.
Share information on trouble and complaints and ensureswift resolution
We debate the week’s bulletins on trouble and complaints andconvene meetings to evaluate trouble and complaints that
require a decision. In fiscal 2013, we added a human factor todecision classifications. Such analysis helps prevent trouble
stemming from human factors. In addition, material in the formof monthly reports is distributed to construction engineers,which includes the cause of issues, introduction to cases,
corrective measures, and preventive measures as a means to
notify the entire company and prevent reoccurrence.

Voice
I deliver bulletins when trouble or acomplaint arises in a Facilities Constructions
department and make sure it is sent to theentire company. There are around 300 casesa year, but we share technical information
quickly within the company to minimize
disturbance to customers.
The cause of trouble or a complaint may beTechnical Control Section,a product defect by the manufacturer, aTechnical Control Department,
Technical Administration
problem with maintenance or management,
Divisionor aging equipment, but it’s also true that
Shigerumany causes exist on the construction
Mizouecompany side. I feel that as a recent trend,
there have been many cases caused by alack of reporting, contacting and consultation. As an example, communication
on site is extremely important since unforeseen work and sole operation
often lead to trouble and complaints.
I hope that people read even bulletins that do not directly concern them, andthat bulletins on trouble and complaints help prevent accidents orreoccurrence.

Fostering human resources to sustain our technological level
Sanki Engineering provides education at our Technical Training
Center to improve basic knowledge, enhance construction
management skills, and promote attainment of qualifications. In
fiscal 2013, we incorporated such areas as drawing production
skills, response methods to trouble and complaints, andprevention of trouble through risk prediction into the skill leveltraining and provided practical training focused on actual
exercises.
Changes in the number of personnel withquality-related qualifications(Total number as of April 1 for each fiscal year)
Qualification

FY 2012FY 2013

FY 2014

93

90

92

1,212

1,170

1,154

Professional engineer
Project management technician(Civil works/Construction/
Electrical construction/Pipe-laying work)

Architect

40

40

41

Facilities construction architect

250

235

221

Electrical engineer

176

168

169

Chief electrical engineer

37

34

33

First class instrument engineer

292

284

299

Fire protection engineer

724

691

690

1,634

1,624

1,650

Qualified management engineer

Initiatives to develop human resources in fiscal 2013
Initiatives

Initiatives at theTechnology ResearchInstitute

Initiatives to pass ontechnology

Enhance technology atGroup companies andaffiliates

Training

Details of training

Workshop on acquiring qualification

Training sessions on test preparation for becoming a project management
technician or construction equipment engineer

121 participants

Step up workshop
1. Inexperienced, amateurs
2. Person with basic qualification
3. Person with actual qualification

Training according to the amount of actual experience or technical level of the
trainee140 participants

Strengthen training for construction
management· Strengthen training for design and facilities construction using actual equipment inside
the Shonan Training Center· Strengthen training for facilities construction such as for construction drawings
and supporting metallic materials· Establish training for automated control—

Introduce technical master system*

Technical master system* has started from fiscal 2013
(Technical expert system from fiscal 2014)—

Introduce cases at briefings andliaison meetings held at branches
and branch offices

Introduce cases of claims that have actually arisen

Conference on electricalconstruction quality for all stores(Shonan Training Center)

Grant internally certified qualification Sanki Engineering-certified Class A
Electrical Engineer to participants who took part in written and practical tests
using materials on actual claims against the company

Results

Tokyo 12 times, Kansai 4 times,
Tohoku branch office once
19 affiliates and 20 electricalengineers participated*Technical master system
A system in which efforts are made to improve the capabilities of technical staff and pass down technology through on-the-jobtraining (OJT) conducted by persons with high technical skills and experience in management at a branch or branch office.

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CSR Activities

Our Relationship with
Our Business Partners

Conducting transactions in
Building fair,accordance with the relevant
equal, andlaws and regulations and thetransparent
related contracts
business
Sanki Engineering is working to build
equal, fair and transparent relationships
relationships
with our business partners, withrespect for the stipulations of the relevant laws and contracts as amajor prerequisite. In addition to clearly specifying the nature of ourrelationship with our business partners in our Code of Conduct, we aim
to keep everyone informed through in-house education by distributing
manuals of contracting procedure to all executives and employees that,among other details, prohibit the abuse of a superior bargaining
position. The signing of a basic construction contracting agreement is aprerequisite for our transactions; following agreement on the conditionsof the individual contract, we are scrupulous regarding the conclusionof the individual contract by means of the issuing of order forms andacknowledgments of orders received. From fiscal 2011 onwards, wehave also requested the submission of pledge letters regarding
avoidance of involvement with criminal elements and groups from ourbusiness partners (3,347 companies as of March 31, 2014). We decideto undertake transactions based on a wide variety of objective criteria,
including the status of functioning of quality and environmental
management systems, construction ability, status of management,
quality, construction outcomes, and cost.
Operation of whistle-blowing
Strengthening hotline for business partners
Seeking to prevent any improper
cooperationtransactions, we have establishedwith businessand are operating a whistle-blowing
partners
hotline for our business partners. No
information was received frombusiness partners in fiscal 2013. In December 2013, posters forthe corporate ethics hotline were displayed in places that catchthe eye of suppliers such as on-site offices in an effort to promoteuse of the reporting system.
Communication with subcontractors
Cooperation with our business partners is essential to our

SankiEngineering’s
CSR Activities

ability to provide higher-quality equipment and services. At
Sanki Engineering, each of our Sales Division and our branches
establishes cooperative committees with business partners,
and we also work to improve technologies and realize goals
including thorough quality management and occupational
health and safety management at our business partners bymeans of regular liaison meetings held once a month andtraining workshops. In addition, we offer a variety of programstaught by Sanki Engineering employees, including occupational
health and safety education and education towards theacquisition of qualifications, and conduct joint safety patrols
confirming the conditions of health and safety and offering
guidance.
Implementing various labor-saving projects
At a liaison meeting held at the Tokyo branch, 7 labor-saving
projects were established and activities are being implemented to
improve quality, secure safety, and reduce cost and work hours. In
labor-saving projects in 2013, we conducted examinations ofquality, workability, labor-saving, and other areas for resin pipesfrom each manufacturer at suppliers’ distribution warehouses
with facilities capable of experimentation and training sessions.

Workshop on labor-saving projects

Investigation of quality and workability

Verifying relationships with business partners
We are working to enhance quality and improve operations
throughout the supply chain through annual surveys on theactual condition of dealings with business partners. As part ofthis initiative, we create a construction results evaluationtable and assess items such as quality, price, delivery andsafety based on appraisal standards pursuant to a quality
management system (ISO 9001). We feed back the results tothe business partners and exchange information on a timely
basis in order to make improvements.

Our Relationship with Our
Shareholders and Investors

Our thinking regarding disclosureof information

Timely andappropriate
information
disclosure

Enhancing information disclosure on the Web
In order to further communicate with shareholders and investors,

Sanki Engineering aims to disclose

we overhauled our website

required corporate information in

the existing disclosed information, we improved and expanded

an easy-to-understand, fair, speedy,

financial highlights and added new segment information. We

timely and appropriate manneralso introduced our company history and business activities.

in August 2014. In addition to

pursuant to the stipulations of our
Disclosure Policyon the company website. We also disclose

information that we are not obliged to disclose by law or
regulation if we deem it useful to shareholders and investors
with the aim of gaining trust and understanding. Going forward,

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we will ensure management transparency pursuant to the
Financial Instruments and Exchange Act and the Timely
Disclosure Rules set forth in the Tokyo Stock Exchange.

We publish IR information on our website.
Information for Investor Relations >> IR Library
http://www.sanki.co.jp/en/ir/

Our Disclosure Policy can be accessed on our website.
Information for Investor Relations >> Disclosure Policy
http://www.sanki.co.jp/en/ir/disclosure/Opportunities for communication

Communication
withshareholders
and investors

We conduct events including results
briefings for investment analysts andShareholder return

Our basic policy
concerning
returns toshareholders

At Sanki Engineering, dividends
form the basis of our policy to return
profit to shareholders and we viewthe return of profit to shareholders
as a key management issue. We

institutional investors (twice a year,

aim to provide stable dividends

in May and November; in fiscal 2013,

while considering the balance between sustainable corporatea total of 85 people participated),development and short-term returns to shareholders based on

individual meetings as necessary in

our basic policy of shareholder return. In light of demands from

response to requests, and tours of our Technical Researchshareholders, investors and society at large, we examine

Laboratories. Also, to enable more of our shareholders to attend

comprehensive methods of shareholder return, including share

our general shareholders’ meeting, we make it a rule to hold it one

buybacks. We also invest internal retained earnings in new

or two days before most other companies hold theirs (in 2014 thisbusinesses and technological development in order to strengthen

was June 26). We work to increase convenience for ourcompetitiveness and create a basis for business development

shareholders in other ways as well, for example by publishingwith the objective of continually boosting corporate value.

notification of the meeting on our website.

Financial results briefing

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SANKI REPORT 201447

Our Relationship with Our Employees

Employees are a vital asset for acompany
Our thinking
Our Company Credo contains thewith regard to phrase “Act in a considered manner,
our employees and always in a spirit of good
fellowship”, and on the basis of thisconcept we strive to create aworking environment and a corporate culture in which all
employees grow together with the company, respect eachother’s individuality, and are able to succeed and thrive.
The technical capabilities and skills of each employee are
precious assets of the company and we believe that humanresources are indispensable to an organization. As such, we are
creating an environment that nurtures human resources so thatthey can work to their full potential.
A System in which diverse personnel
can succeed
We believe that creating working
Promotingenvironments in which diverse personnel
diversity
are able to display their particular talents
leads to increased company value, andwe are therefore promoting diversity
among our employees and actively working to establish a variety ofsystems to make this a reality. In addition, we aim to create a workplaceenvironment in which women can play a more active role on site, and areworking to select issues and build a framework for this purpose.

Changes in employee data
FY 2009

FY 2010

FY 2011

FY 2012FY 2013

1,974(2,272)2,001(2,316)

1,965(2,289)1,918(2,246)

1,908(2,283)

Average age

42.7

42.5

42.8

42.7

42.7

Average number of yearsof employment

18.8

18.5

18.6

18.4

18.2

94
Number of disabled employees 37
Ratio of disabled employees (%) 1.94

98
37
1.98

63
35
1.80

55
36
1.97

92
39
2.13

43

43

53

55

38

8

12

15

10

16

Number of employees
Figures in parentheses
are consolidated

Number of new recruits

Number of reemployed postretirement-age employees
Number of employees taking
child-raising leave*As of March 31 in each fiscal year

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Employing disabled workers
We are working to create an environment in which disabled
employees can feel secure. (Number of disabled employees as ofJune 1, 2014: 38; employment ratio: 2.09%)
Career change system
In order to give those in regional positions increased opportunities toshow their abilities, we have introduced a career change system forcomprehensive work (34 people have changed careers as of April 1, 2014).
Hiring foreign employees
As part of our mid-term plan, we are making active efforts to recruit
foreign employees under the aim of fostering foreign personnel (8employees from 3 different countries have been hired as of April 1, 2014).
System for reemploying workers following retirement
Seeking to provide employment opportunities for older workers withadvanced skills and expertise, we led our industry by introducing asystem for the reemployment of workers following retirement. (55employees took advantage of the system in fiscal 2013.)

We are working to enhance various
support systems so that employees can
Promotinghandle both work and home-life. We
introduced a “refresh leave” system
work-life
under which employees are able tobalancetake five consecutive days of leave foreach five years of employment using
their reserved leave* (87% of employees took advantage of thissystem in fiscal 2013) and a system in which employees can also use
their reserved leave for childcare and family care.
As a system for the benefit of managers of construction sites, we
also have a continuous leave system for construction managers thatenables these employees to take 3 days of consecutive leave when
they have been onsite continuously for a period of six months or more,
and when they transfer to the next site.
*Reserved leave:
A unique Sanki Engineering system under which employees are able to reserve their unused
leave from the past 10 years and use it in the event of injury or illness occurring outside theworksite.

Employees by age (Non-consolidated) (No. of people)
20s

30s

40s

50s

60s

70s

Total

Male

302

341

527

299

206

1

1,676

Female

97

61

57

15

2

0

232

Total

399

402

584

314

208

1

1,908

TopicsAcquired Next-generation accreditation mark
KURUMIN and recognized by Nagoya City as a
Company that Supports Child-Raising
Sanki Engineering has been recognized as a general business that
conforms to next-generation standards based on the Act on
Advancement of Measures to Support Raising the Next Generation
and as a company that actively adheres to this act by the Tokyo Labor
Bureau in fiscal 2013, thereby attaining the KURUMIN accreditation
mark.
In addition, the Chubu branch was certified by Nagoya City as a company
that supports child-raising. This recognizes companies that actively
implement activities that are conducive to child-raising as part ofmeasures to support child-raising in Nagoya City, and the branch was
the first to attain the certificationin the construction equipment
industry.
The Company will continue working
to create a pleasant workplace Next-generation Nagoya City
certification markaccreditation
environment for employees.
for companies thatmark KURUMIN
support child-raising

As part of our attempts to prevent
sexual harassment, we formulated
guidelines, and we established a
Responses tosystem offering consultation on theharassment
subject at each branch and branch
office. In addition, we provide
consultation on a variety of issues
occurring in the worksite including power harassment. We set
up a counter staffed by qualified external counselors to make iteasy for employees to seek consultation.
To ensure that our employees and their
Maintaining and families are able to work in good healthboth mentally and physically, we
increasing the
introduced a 24-hour telephone healthhealth of ourconsultation service. A consultation
employees
center has been set up outside thecompany where employees and theirfamilies can receive consultation on mental and physical concerns aswell as medical-, nursing- and childcare-related issues free of charge.
The privacy of callers is strictly protected.

Training systems for each career
plan
Fostering
Sanki Engineering has created its
human
personnel system based on the
resources
concept of rewarding individuals fortheir abilities and their efforts. We
have established training systems
associated with each career such as management training,technical training and training by domain in order to strengthen
specialized skills, technical skills and management skills andboost personal growth.
In order to be a company in which people growWe created a new personnel system in fiscal 2013 to become acompany in which people grow in line with the key theme of our
medium-term management plan to “develop and appropriately
allocate human resources”.
First, we introduce a framework of company support to realize
future careers and aim to create an environment that provides
everyone with equal opportunity. We clarify evaluation standards
and recognize actual capability fairly in order to realize conditions
suitable to work content. As part of these efforts, we establishedan “early career system” for young employees in their 20s andintroduced a framework aimed at providing multiple work
experiences by enabling job rotation and inter-organizationaltransfers.
Implementing an overseas training program
In fiscal 2012, we established a one-year overseas training
program in order to foster personnel with a high ability tocommunicate and adapt to diverse environments. The program
involves practical training at one of our overseas worksites. In
fiscal 2013, 4 people were dispatched overseas under thissystem.

*As of March 31, 2014

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Health and Safety in the Worksite

Recently in Japan, demand in theSocial trends
and theconstructionindustry

entire construction industry is
increasing due mainly to full-scale
restoration and reconstruction work
following the Great East Japan
Earthquake and improvement ofaging equipment at public andprivate facilities. Against this background construction industry

Voice

Fiscal 2013 results
Key items implemented

Health and safety education

In fiscal 2013, we took steps to prevent accidents based on thefollowing three key items.
Eliminate accidents from falls

Sanki Engineering provides training on health and safety for

We conducted a campaign in July and October to prevent accidents from falls.

employees and affiliates at designated educational institutes
and in classes taught by in-house instructors. In order to

As a result, we reduced the number of accidents caused by falling from highimprove the quality of education by in-house instructors, weplaces to one incident.

shortages at sites and onsite management. In line with this,set up educational support teams for each branch within thePrevent incision wounds

occupational accidents throughout the construction industry

We achieved zero incidents of accidents caused by cuts and scrapes by making

Labor Safety, Quality Control & Environment Promotion Office

are on the rise.

it compulsory to wear gloves to prevent incision wounds.

is being forced to implement policies in response to personnel

Moreover, natural disasters believed to be caused by climatechange are increasing, including heat waves in summer,
typhoons, and localized heavy rainfall.
In light of this, efforts directed toward safety and health in
the site environment are necessary.

Strengthen health and safety education

nationwide. We also provide education using health andWe prepared educational tools to promote acquisition of qualifications required

safety handbooks for new visitors to worksites and throughfor on-site work and to prevent the concealment of work injuries.

joint efforts with Sanki Health and Safety Cooperative

Trends in number and frequency rate* of accidents

Associations. In fiscal 2013, we provided education to a totalof 1,516 employees of Sanki and our business partners.

Average frequency rate forthe general construction industry

Frequency rate for
Sanki Engineering(Accidents)

In the midst of such a social

Our occupational
health and safety
management
systeman occupational health and safety
management system (Sanki OHSMS) in October 2001 and areworking on this together with our affiliates.
We have been striving to improve health and safety action
policies and plans since 2013 and to make our PDCA cycle for

1.25
0.85
0.68

11
6

and satisfying site as our ultimate
and Safety Principles. We introduced

1.03

0.57

aims to create accident-free, bright(FY)

Number of individuals receiving health and safety educationin fiscal 2013

1.56
1.09

environment, Sanki Engineering

goal as stated in our Basic Healthto enable a system of dispatching specialist instructors

’09

7
’10

’11

0.83

0.9

0.28
3
’12

7
’13

Source for average frequency rate for the general construction industry: Survey on Industrial
Accidents, Ministry of Health, Labour and Welfare* From fiscal 2010, accidents resulting in one or more days’ absence from the worksite
became the subject of the statistics; figures for fiscal 2009 and before have been correctedon the same basis.
* Data for Sanki Engineering is measured for the fiscal year (April – March), while data for thegeneral construction industry is measured for the calendar year (January – December).
* Frequency rate: Calculated as the number of deaths and injuries caused by accidents in theworksite per one million working hours, this figure indicates the frequency with which
accidents occur.

risk management more visible, notably the identification of

Holding safety conventions and safety patrols

cause, improvement and prevention measures. Moreover, weEvery year during June, the preparatory month for National

formulated policies and key items for the next fiscal year related

Safety Week, Sanki Engineering holds safety conventions

to challenges that emerged from fiscal year results and areat each branch and branch office with the participation of

focusing on efforts to resolve these challenges.

top management. We also conduct a variety of safety
patrols in order to raise safety awareness. All directors
including the President participate in joint summer andyear-end patrols, visiting approximately 100 sites

Industrial Health Officer,
Construction Section,
Labour Standards Department,
Aichi Labour Bureau

Safety is defined as “freedom from unacceptablerisk”. To put it the other way around, this meansthat certain risks (residual risks) are deemed
acceptable and it is due to these risks that
accidents may occur. “Acceptable” does notmean that accidents are tolerated as a result,but that the possibility of accidents is
acknowledged and efforts are made to acquire
the knowledge and take the steps required toappropriately respond to said risks.

It is the job of management to make sureemployees have this knowledge and areequipped to take necessary action, but it’s
the job of each worker to do their part and comply with requirements.
Communication is essential for this. I strongly feel that the Sanki EngineeringGroup is ensuring that this concept is fully understood and taking innovative
steps to invigorate communication throughout the company. Going forward,
I would like to see the promotion of proactive health and safety management
and the continued cultivation of safe and secure workplaces.

Mr. Tsutomu Hamada

Number (Figures in brackets refer to employees of business partners)
Special education
Education on health and safety, including for foremen
Total

1,190

(946)

326

(302)

Health and safety guidelines for fiscal 2014

1,516 (1,248)

The central safety and health committee chairperson’s policy for fiscal 2014
was determined by the philosophy of the chairperson of the committee in
addition to challenges identified from social, industrial and corporate trends
as well as the key action item results for fiscal 2013. The philosophy of thecommittee chairperson is “Never give up on our goal of zero accidents”, andthe policy slogan is “Work Procedures: Discuss Thoroughly. Colleagues’
Opinions: Listen Carefully”. The subtitle is “Communicate! Experience,
Technique and Onsite Risk”, with the aim of reducing the risk of accidents
through communication based on discussion and listening. Key action items
are as follows.

* Limited to education by in-house instructors provided by Sanki Engineering or by SankiEngineering in cooperation with the Sanki Health and Safety Cooperative Associations;education provided at designated educational institutions is excluded from the figures.

TopicsCampaign to eliminate accidents from falls
In fiscal 2013, we undertook a campaign to prevent accidents
from scaffold falls and to “give a shout” with the aim ofeliminating accidents from falls. We created tools according to
the demands of the site and education methods that led toefforts to enhance health and safety.
■Round 1: We aimed to “give a shout” to one another bycalling out points that require caution and also prepared stickers
indicating items to be inspected prior to scaffold work.
■Round 2: We made leaflets
and had a discussion among
all employees on the causes ofexamples of accidents andcountermeasures during themorning meeting.

Eliminate risk that leads to accidents from falling or tumbling
Conduct scaffold-related education including experiential training in order to boost thecapabilities of site managers and employees with less experience.

Take steps to prevent occurrence of accidents in summer throughautumnConduct an autumn accident prevention campaign in September and October.

Increase capabilities through education• Undertake measures to prevent trouble due to airborne asbestos• Prepare tools to clearly demonstrate the most basic educational content onsite• Each executive office creates tools to enhance knowledge and capabilities

throughout the company totally.

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Our Relationship with Local Communities

We seek to contribute to society inorder to aid in the development of
Our thinking
with regard to local communities as a good corporate
citizen and member of society. As a
localmeans to contribute to society throughcommunities
our core business, we conduct social
activities that involve deepening
interaction with local communities. Into the future, we will
constantly maintain our awareness that we are a member of civilsociety, and we will go on fulfilling our corporate social responsibility
while maintaining active communication with the members of our
local communities and all of our stakeholders.
Concluded an agreement toprovide facilities in times ofMain social
disaster
contribution
In light of experiences during theactivities inGreat East Japan Earthquake, there
fiscal 2013
has been a move by local governmentsin each region nationwide to secure
temporary facilities that can accept people affected by a disaster,under the assumption that many people will not be able to return totheir homes following a major disaster.
In Yamato City, Kanagawa Prefecture, various measures arebeing taken to prevent disasters and reduce damage such asrevising the regional disaster prevention plan in order to ensure
the safety of citizens and avoid chaos when a disaster strikes.
As part of these efforts, city officials approached us to see if we
could provide our large-scale facilities for use as temporary
shelters, and in November 2013 we concluded an agreement

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stating that we would provide facilities as temporary shelters
for those unable to return home in a disaster. Going forward,
together with Yamato City officials, we intend to plan andconduct training in coordination with local public transport.
Cleanup, environmental beautification and cultural activities
Each branch and branch office participates in cleanup activities forareas surrounding offices and worksites, as well as environmental
beautification activities organized by local governments. In fiscal
2013, we engaged in a variety of activities, including cleanup
activities around St. Luke’s Tower, where our head office islocated, and beautification activities for a river near the Yamato
Engineering Center. The Hokkaido branch took part in the “Love
Earth Clean-Up in Hokkaido” event on Ishikari Beach.
In Yoichi, Hokkaido, we held workshops that were attended by
local elementary and junior high school teachers. They learned
about the snowmelt water on roads and water discharged intorivers that are used in water treatment processes. The aim of theactivities was to help schools provide education on the role ofdrainage and the principles of water treatment.

Welcoming social studies tours by local elementary
schools
The Yamato Engineering Center in Yamato City, Kanagawa
Prefecture participates with local cleanup activities and events
organized by the city as well as parent-child seminars as part ofits social contribution activities. In addition, it holds social study
tours twice a year for local elementary schools.
A total of 186 fifth-grade students from Kitayamato Elementary
School took the tour in July 2013 while 105 third-grade students
from Chuuourinkan Elementary School took the tour in November.
The tours included a look at the factory inside the premises, andthe children learned about the equipment that the Company
provides to airport facilities for use in transporting hand luggage.
At Sanki Nature Park, where spot-billed ducks have been observed
breeding, the children listened attentively to the tour guide’s
stories of 8 chicks that had flown the nest.
On June 11, 2013, the Sanki Nature Park at the Yamato
Engineering Center recorded its 3,000th visitor since opening to
the public in 2005. This milestone event was attended by agroup of five housewives living in Sagamihara who are walking
enthusiasts. They were presented with a commemorative gift by
Yamato Engineering Center.
A spot-billed mother and her ducklings were observed again
in June 2014, one year later. The ducklings can be seen
swimming with ease and flitting from pond to pond under thewatchful eyes of the mother duck this year as well.

Donations and contributions
In fiscal 2013, in addition to making donations to universities
and research institutes, we also supported cultural activities
through donations to the Japan Philharmonic Orchestra, theJapan Chamber Music Foundation, and other institutions. In
addition, each of our branches and Group companies take part ina variety of activities in which anyone can get involved, namely
donating used stamps and cards and collecting bottle caps for
ecological purposes. We willcontinue with initiatives that
stimulate employees to think
about recycling and theenvironment.

Donating blood
Our head office began blood donation activities in November
2013. A total of 89 people donated blood in one day.
Many of the participants expressed their satisfaction at being
able to help save precious lives, and the day provided theopportunity for each employee to further deepen their connection
with society.

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Our Relationship with the Environment

Sanki Engineering believes thatEnvironmental environmental problems represent
management at an important management issue
and we advance environmental
Sankimanagement with the aim ofEngineering
fulfilling two missions (see tablebelow). We have constructed asystem for the promotion of environmental management with
our president as the overall director. At company-wide
environmental conferences, which convene once a year, eachof our divisions reports on its activities and we decide on futureplans. We are working to enhance our environmental activities
through a PDCA cycle that calls for efficient and ongoing
operation of our environmental management system (EMS).

System for promotion of environmental management
Top manager (President)
Environmental conference
Reports on company-wide activities
and decisions on plans (Once per year)

Overall supervisor of environmental management
Company-wide EMS Secretariat(Labor Safety, Quality Control &Environment Promotion Office)Eachdivision

Divisional managers

Environmental Committee
Reports on divisional activities anddecisions on plans (Twice per year)

Divisional environmental management supervisors
Divisional EMS Secretariats

Environmental management at Sanki Engineering:
Two missions

To protect the global
environment by meansof our advanced
technological capability

To minimize theenvironmental burdencaused by ourbusiness activities• Development and introductionof technologies for exploitationof energy• Development and introductionof technologies for the effective
use of energy• Development and introductionof technologies enabling reuseof resources• Minimization of consumptionof energy and resources• Reduction of waste andpromotion of recycling• Provision of environmental
education for employees

Environmental management system (EMS)
Our entire company received ISO 14001 certification including
two of our subsidiaries (Sanki Kakou kensetsu Co., Ltd. andSanki Kankyo Service Co., Ltd.).
In fiscal 2013, two external ISO 14001 audits were conducted
and no cases of non-compliance were found.
Plans are in place to conduct internal audits in fiscal 2014
while considering integration of this system with the quality
management system.

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Staff responsible
for production andconstruction

Staff responsiblefor design
Maximization of energy
efficiency

Target management

Manufacturing andconstruction with minimal
environmental burden

Target management

Staff responsible
for office duties
Reduction of environmental
burden through increased
productivity

Target management

Developing human resources froman environmental perspective
Conducting
We offer introductory training in EMS
environmental and other forms of education every
year to new recruits, as well as mideducation
career recruits. In fiscal 2013, 79
employees received training tobecome internal environmental auditors, bringing the total numberof people qualified to conduct internal environmental audits to 899
on a non-consolidated basis and 942 on a group-wide basis.
Trends in number of employees withenvironment-related qualifications(Number of employees as of April 1 each year)

FY 2011

FY 2012FY 2013

FY 2014

8

8

7

7

Supervisor of managementof industrial waste subject
to special control

115

124

127

130

Pollution prevention manager

71

75

73

71

Certified environmental measurer

Education on harmful substances such as asbestos
We conducted awareness-raising activities for employees in
response to a forecasted increase in emissions of construction waste
containing asbestos and revision to the Air Pollution Control Act
enacted in fiscal 2014.
We implemented an e-Learning program to disseminate basic
knowledge about asbestos to all group employees including
executive officers, with all 2,383 people targeted for the course
completing it. We also created posters related to the appropriate
treatment of asbestos, PCBs, CFCs and halon and distributed them tobe posted at construction sites.
Environmental lecture meetings
Sanki Engineering continues to hold environmental lecture
meetings with presentations by company and external
instructors in order to increase awareness of environmental
conservation among all of our executives and employees. We
use a tele-conferencing system to enable company-wide
participation. Two courses were held in fiscal 2013 on thefollowing topics, and a total of 582 people were attended.
6th Environmental Lecture Meeting:May 30, 2013
Topic:“Why the environment now?”
Lecturer:
Ms. Atsuko Suzuki, Director of NPO Environmental Relations
Participants: 280
7th Environmental Lecture Meeting:
December 11, 2013
Topic:	“Why did the Fukushima nuclear accident occur? What lessons
have we learned?”
Lecturer:Mr. Keiichi Tadaki, lawyer at Mori Hamada & Matsumoto
Participants: 302

Dissemination of environment-related information
The Global Environment Department manages a column withenvironment-related information on the company’s internal
website as a tool to disseminate information to employees. We
aim to foster awareness among employees by transmitting
information in a timely manner within and outside the company.

Protecting the environment by

Initiatives toprevent global
warming andsave energymeans of our exceptional
technological capability
One mission of our environmental
management is to develop andintroduce technology and productsthat lead to energy conservationand the reduction of CO2 and lifecycle costs by improving
functionality and comfort through the technology of each of ourbusiness. In addition, the Energy Solutions Center is working to
improve activities on an ongoing basis by collecting energyrelated information and supporting technical development andproposals to customers.
Small-scale binary cycle power generation system
In conjunction with Sun-Wa Technos Corporation, we commercialized
a 125 kW small-scale binary cycle power generation system that uses
low- and medium-temperature heat waste of around 135-250°C. The
system features high power generation efficiency and ease ofmaintenance and is capable of high power output even during waste
heat load fluctuation.
Supercharged (turbocharged) fluidized bed incinerator
We introduced the world’s first supercharged (turbocharged)
fluidized bed incinerator at the Asakawa Water Reclamation Center
in Hino, Tokyo. This system saves energy and space and reduces
greenhouse gases by approximately 40% compared withconventional systems.
S-CON Mini Series
The new S-CON Mini uses biomass plastic that blends organic
resources extracted from corn for the component parts that use
plastic in standard products. It includes a motor structure that uses
a permanent magnet and it enhances efficiency while controlling
power loss, thus reducing power consumption by around 25%.

Proposals for CO2 reduction and outcomes

Proposedsolutions
Ordersreceived

FY 2011

FY 2012FY 2013

Number CO2 reduction

Number CO2 reduction

Number CO2 reduction

355

88,480366

78,549322

48,817129

31,095136

18,889124

11,273*Emission reduction unit is t-CO 2 /year.

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Sanki Engineering’s CSR Activities

Our Relationship with the Environment

Donation to tree-planting projects
Recipients of donations in fiscal 2013 were selected from theframework of environmental preservation activities mainly
handled by private non-profit organizations. This year, weselected the NPO Environmental Relations and the NPO
Laboratory of Earth Conscious Life.
Donation history for tree-planting projects
Recipient

Projects donated to

Amount donatedNPO
Environmental Relations

Cultivation of fish-breeding forests andtree planting in disaster-affected area
(Miyako City, Iwate Prefecture)

2H FY 2012
¥588,700
2H FY 2012

NPO Laboratory of
Earth Conscious Life

Tree planting to create abeech forest(Kijimadaira, Nagano Prefecture)¥723,600
1H FY 2013
¥349,000

We donated to the NPO Laboratory of Earth Conscious Lifefor the first time in fiscal 2013. The beneficiary of the donation
was a project to plant trees to create a beech forest in
Kijimadaira, Nagano Prefecture, where plans are being made to
return vacant pasture land that is not currently being used to its
former beech forest state. Saplings growing at the edges of thearea’s remaining beech forest are being dug up and replanted inorder to restore the native beech forest that covered the areaprior to the pasture land. Replanting saplings of the beech tree,
which is the tree most suited
to the snowy climate of
Kimadaira, has been reported
on by the Japanese Forest
Society and highly praised as
an ideal method of preserving
biodiversity and genetic Volunteers after planting of a beech tree
(Kijimadaira)diversity.

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Energy conservation activities
in the office
Sanki Engineering promotes
Initiatives
energy-saving activities based on ain the officecompany-wide objective for its
EMS activities to reduce energy
consumption by 6% compared withfiscal 2012 over a five-year period from fiscal 2013 to fiscal
2017. In fiscal 2013, we achieved a reduction of 8.7% in energy
consumption company-wide.
In addition, the company has developed the SSOM lighting
control system in which office workers themselves individuallycontrol single light sources. The system is designed to cut
power consumption of ceiling lights in the office. In order totest this technology, it has been introduced experimentally andthe effects are being measured. The system has primarily been
installed on the fifth floor and the sixth floor area of the Tokyo
branch, and the 42nd floor area of the Mechanical & Electrical
Contracting Headquarters (St. Luke’s Tower), with projectionsof a 60% reduction in power consumption from lighting as aresult. Moreover, the Technology Research and Development
Institute (Yamato City, Kanagawa Prefecture), and the Toyota
branch office use renewable energy such as solar power.

Industrial waste generated
The volume of industrial waste
Proper disposal generated at construction sites has
been increasing annually sinceof wastefiscal 2009. Comparing fiscal 2012
and fiscal 2013, the generated
volume of industrial waste increased
by 15.4% while construction revenue from renovation projects
increased 12.9%. Since renovation projects generate a large
amount of industrial waste, analysis suggests that this is theprimary cause of the increase in waste.

Introduction of a digital manifest
With the aim of ensuring proper disposal of industrial waste,
we are pushing ahead with the introduction of a digitalmanifest. In fiscal 2013, we conducted awareness-boosting
activities for all related departments throughout the company
in order to expand the ASP service “e-reverse”, which was first
introduced at Kansai branch worksites to streamline officework. As a result, 7 departments, including 3 branches and 2
branch offices, as well as one Group company have introduced
the digital manifest system as of June 2014 (including partial
introduction).

Topics
Dispatching members to the Japanese Antarctic Research Expedition

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We launched the SANKI YOU EcoContribution Point System in
SANKI YOU eco October 2010. Under this system,
contribution
when we propose an energy-saving
point systemsolution to a customer that reduces
CO2 emissions, and that proposal isadopted, the amount of theachieved emissions reduction is converted to “Eco Points” (100yen per one-ton reduction in CO2), which are aggregated for theentire company. In fiscal 2013, proposals made by us andadopted by our customers resulted in the reduction of 11,273
tons of CO 2 emissions, equivalent to 1,127,300 yen whenconverted to Eco Contribution Points.

Since 1991, 10 engineers from Sanki Engineering have been assigned to the National Institute ofPolar Research and dispatched to Antarctica as part of the Japanese Antarctic Research Expedition.
During that period, they conducted research into waste and wastewater treatment in the area.
Based on this expertise, they carried out planning and construction, and installed the first-everwastewater treatment facility at Showa Station.
I had stayed at Showa Station as a member of the 54th overwintering expedition for about 14
months from December 2012. The 54th overwintering expedition comprised 30 members in total,
including one expedition leader, 12 members of the observation group, and 17 members of theReducing copy paper
Comparing the purchase volume of copy paper in fiscal 2012
and fiscal 2013, even though the completed construction
revenue grew by 12.1%, copy paper usage increased by only
3.9%. This can be attributed to activities such as going
paperless in meetings, and we intend to continue with suchinitiatives going forward.

Daiki Kataoka, in charge of environmental protection for the
54th Japanese Antarctic Research Expedition(Photo by Mr. Taniguchi, a member of the 54th Japanese
Antarctic Research Expedition)

logistics group. I was in charge of environmental conservation within the logistics group and worked
toward preservation of the Antarctic environment primarily by carrying out processing of theeveryday drainage water and waste generated on the base.
For wastewater treatment, we revised the operating method of the system and changed part of it
in order to further purify the wastewater after processing and ensure stable discharge, with the aimof reducing the environmental burden on Antarctica. As a result, we vastly improved the quality ofwater being discharged and were able to reduce impact on the Antarctic ecosystem.
In recent years, sea ice had been thick and the Antarctic observation ship SHIRASE had been
unable to berth at Showa Station for two years in a row. Waste had been left behind at Showa
Station since the 52nd expedition, and with limited storage space, we sorted the waste as soon as
winter began. During winter we proactively collected waste left around the station and on the
Antarctic Continent, and prepared it for retrieval by the SHIRASE.
The next year (2014), the SHIRASE finally managed to berth, and was able to take a large amountof waste back to Japan. With limited loading time, we spent all night transporting the waste onto
the ship, and accumulated the largest amount of waste ever recorded for the trip back.
This year, my successor, Shigematsu will take part in the 56th overwintering expedition boundfor Antarctica. I hope to pass on my experiences so far, and provide support from Japan so that I
can continue contributing to the environmental preservation of Antarctica.
Aerowing Section, Aeration System Department,(Photo by Kataoka, a member of the 54th Japanese Antarctic
Research Expedition)

Environmental Systems Administration Division,
Plants & Machinery Systems Headquarters

Daiki
Kataoka

SANKI REPORT 201457

Sanki Engineering’s CSR Activities

Our Relationship with the Environment
To enable us to proceed with our environmental protection initiatives efficiently and effectively, we determine
and publish the cost of environmental protection in our business activities and the outcomes of ourEnvironmental
accounting

environmental protection initiatives.
Scope of aggregation: Sanki Engineering as a whole, or designated sections

Financial Report

Period: April 2013 – March 2014
Guidelines for reference:①Environmental Accounting Guidelines, Ministry of the Environment (2005 edition)②Environmental Accounting Guidelines for the Construction Industry (2002 edition)

Environmental protection costs (Aggregated expenditures for environmental protection in our business activities)(Unit: 1,000 yen)

Details of main initiatives Environmental protection costs

54,004

Cost of waste disposal (Construction sites)

412,898
472

Cost of environment-related education

Social activities costs

64 Consolidated Balance Sheet

Cost of exhibiting in exhibitions / publishing materials

10,868

Cost of introducing SSOM lighting control system

7,155

66 Consolidated Statement of Income and Comprehensive Income

Cost of cutting back vegetation at Yamato Engineering Center/
Cost of maintaining Nature Park

3,688

67 Consolidated Statement of Changes in Net Assets
68 Consolidated Statement of Cash Flows

421,111

Cost of environmental protection-related R&D

R&D costs

62 Business Overview/Cash Flows/Dividend information

6,379

Cost of operating under ISO 14001

Management costs

60 11-year Consolidated Financial Summary

Donations to environmental protection-related organizations

1,961

Cost of participating in environmental protection activities
and supporting education

2,438

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Cost of disposal of waste CFCs and halons

Resource recycling costs

Financial Report

Global environmental protection costs

69 Notes to Consolidated Financial Statements

Effects of environmental protection (Annual comparison of resources consumed, emitted gas, green purchasing results and waste products)
Details
Resources consumed

Number of sheets of copy paper purchasedfor offices (1,000 sheets)
Volume of water used at Yamato Engineering
Center (m3)

FY 2009

FY 2010

FY 2011

FY 2012FY 2013

17,96018,696

18,76820,511

21,30915,02312,12015,82815,506

17,187

Energy consumed

Energy consumed by offices (Crude oil equivalent; kℓ)

2,021

2,056

1,922

1,853

1,691

CO2 emissions (tCO2)

As a result of energy consumption in offices

3,377

3,146

2,931

3,419

3,490

(The CO2 emission factor has been
increasing since FY 2012)

As a result of energy consumption at worksites

1,013
11,272

1,016
12,034839
12,070889
13,757

15,86924,48032,50628,53731,45331,762

FY 2009

FY 2010

FY 2011

FY 2012FY 2013

Volume of industrial waste

Amount of industrial waste from company-wide
construction sites and Yamato Engineering Center (t)Green purchasing of stationery (1,000 yen)

Economic effects of environmental protection measures
Related departments

1,081(Unit: 1,000 yen)

Details

Construction sites

Profit from sale of scrap, etc.

22,76866,61588,238138,390

143,463

Yamato Engineering Center

Profit from sale of scrap, etc.

36

98

327

398

295

Company-wide

Subsidy to introduce eco-cars

—

—

—

2,700

—

*Income from the sale of scrap from construction sites, etc. in fiscal 2010 and 2011 has been recalculated based on a change of computation method.

58

SANKI REPORT 201459

Financial Section
11-year Consolidated Financial Summary(Millions of yen)
Year ended
March 31, 2004

Year ended
March 31, 2005

Year ended
March 31, 2006

Year ended
March 31, 2007

Year ended
March 31, 2008

Year ended
March 31, 2009

Year ended
March 31, 2010

Year ended
March 31, 2011

Year ended
March 31, 2012

Year ended
March 31, 2013

Year ended
March 31, 2014

Orders received¥212,379¥245,047¥235,401¥237,022¥218,256¥188,653¥143,348¥147,129¥175,291¥165,800¥168,295

Balance carried forward

143,999

155,876

153,593

144,456

108,253

93,566

77,641

72,976100,272

111,414108,219

Sales

213,924

233,170

237,684

246,159

254,460

203,340

159,273

151,794

147,994

154,658

171,496

Selling, general and administrative expenses

15,657

14,94814,42613,994

13,962

14,97815,41915,763

15,712

15,19915,604

Operating income or loss

3,314

4,281

2,892

(9,502)(3,958)

7,125

5,027

3,843

2,525

2,391

2,818

Ordinary income or loss

3,533

4,946

3,319

(8,782)(3,307)

6,900

5,456

4,239

2,268

2,680

3,146

Net income or loss

3,644

2,600

2,355

(6,536)

3,134

3,283

3,141

2,124

176

(4,992)

1,763

Cash flows from operating activities

11,942(3,151)(5,557)(2,819)(4,097)

19,177

1,294

11,554(2,697)

9,729(9,403)

Cash flows from investing activities(9,839)7,662(1,024)

2,833

11,511

1,726(1,664)2,610(1,046)(9,481)(3,506)

Cash flows from financing activities(3,345)(3,315)(3,067)(2,697)(3,812)(4,377)(2,936)(1,883)(280)(1,028)(4,152)¥27,170¥28,365¥18,717¥16,018¥19,617¥36,142¥32,825¥45,135¥41,097¥40,367¥23,510

Total assets

220,563240,234

245,367

251,323

215,680

176,664

163,307

158,501

163,120

166,477

170,181

Net assets

86,49187,774

98,333

88,94380,27678,78080,49879,833

79,662

76,932

74,917

Number of employees

2,371

2,327

2,332

2,179

2,225

2,239

2,272

2,316

2,289

2,246

2,283

Fiscal year

Cash and cash equivalents at end of year
As of end of fiscal year under review

Per share information
Earnings per share (yen)

46.93

34.49

31.46

(88.47)

42.42

44.45

42.86

29.67

2.46

(71.04)

26.46

Book-value per share (yen)1,145.59

1,187.36

1,330.41

1,203.57

1,086.02

1,065.77

1,119.40

1,115.41

1,113.70

1,106.32

1,142.74

15.00

18.00

15.00

15.00

15.00

15.00

15.00

15.00

15.00

15.00

15.00

Equity ratio (%)

39.2

36.5

40.1

35.4

37.2

44.6

49.3

50.3

48.8

46.2

44.0

Return on assets (%)

1.6

2.1

1.4

(3.5)

(1.4)

3.5

3.2

2.6

1.4

1.6

1.9

Return on equity (%)

4.4

3.0

2.5

(7.0)

3.7

4.1

3.9

2.7

0.2

(6.4)

2.3

Cash dividends (yen)Other information(Millions of yen)Orders received and sales

Profit300,000

Operating income (right axis)
Ordinary income (right axis)
Net income (right axis)
Orders received (left axis)
Sales (left axis)

250,000

25,00020,00015,000200,000
10,000150,000
5,000
100,000
0
50,000(5,000)0(10,000)
'03

60

'04

'05

'06

'07

'08

'09

'10

'11

'12

'13 (FY)

SANKI REPORT 2014

61

Business Overview for the Year Ended March 31, 2014

Segment information		

(Millions of yen)Orders received
Segment

Operations overview

Sales

Segment income

FY 2012FY 2013

Diff.

ChangeFY 2012FY 2013

Diff.

ChangeFacilities construction

136,144

143,839

7,694

5.7%

128,626

143,697

15,071

11.7%

FY 20121,196

FY 2013
3,260

Diff.
2,064

Change172.6%

Machinery systems

10,817

8,482(2,334)(21.6%)

6,501

9,846

3,344

51.4%

(1,119)

(287)

832

－

In the construction sector, public investment increased steadily,on-year to 2,818 million yen due to an increase in sales and profit insupported by large-scale supplementary budgets while private

equipment and construction-related business, mainly in theEnvironmental systems

16,62315,029(1,593)(9.6%)

17,145

17,169

24

0.1%

689

(23)

(712)

－

capital investment recovered moderately on the back of resurgence

Facilities Construction Business, despite a decrease associatedSubtotal

163,585

167,352

3,766

2.3%

152,273

170,71318,440

12.1%

766

2,949

2,183

285.0%

in corporate earnings. The business environment of the Sanki

with the termination of the contract period for a large rental

Real estate

2,747

1,077

(1,670)(60.8%)

2,747

1,077

(1,670)(60.8%)

1,305

147

(1,158)(88.7%)Engineering Group was characterized by an upward trend in labor

property in the Real Estate Business. Ordinary income increased by

－

583

583

－

－

607

607

－

－

63

63

－

costs and equipment prices, and it is becoming difficult to secure

17.4% to 3,146 million yen and net income returned to profitability

profitability. In light of these circumstances, we aggressively

with a total of 1,763 million yen compared with a net loss of 4,992

promoted proposal-based sales for energy- and power-saving

million yen in the previous fiscal year.

OthersAdjustments
Total

(533)

(717)

(184)

－

(362)

(902)

(540)

－

608

(13)

(621)

－

165,800

168,295

2,495

1.5%

154,658

171,496

16,837

10.9%

2,680

3,146

466

17.4%

Cash Flows

systems while emphasizing construction profitability, in an effort toNote that Shin-yu Service Co., Ltd., which was newly included in

expand orders and avoid missing opportunities for orders. As athe scope of consolidation this fiscal year, has been classified

result, with regard to consolidated results for this fiscal year,

under “Other” as a business segment not included in the reporting

Cash flows from operating activities

Cash flows from financing activities

orders received increased by 1.5% year-on-year to 168,295 million

segments. This company is a subsidiary mainly responsible for

Net cash used in operating activities was 9,403 million yen compared

Net cash used in financing activities was 4,152 million yen comparedyen, net sales increased by 10.9% year-on-year to 171,496 million

functions supplementing operations such as commission of generalwith 9,729 million yen net cash provided in the previous fiscal year.

with 1,028 million yen net cash used in the previous fiscal year. Thisbusiness affairs and leasing and insurance agency work.

This was mainly due to an increase in notes and accounts receivable

was due mainly to purchase of treasury stock and cash dividends

as well as payment of corporate taxes.

paid.

yen and the balance carried forward was down 2.9% year-on-year
to 108,219 million yen. Operating income increased by 17.9% year-

Segment overview

Cash flows from investing activities

Facilities Construction Business

Environmental Systems BusinessNet cash used in investing activities was 3,506 million yen compared

Orders received increased by 5.7% year-on-year to 143,839 million

Orders received decreased by 9.6% year-on-year to 15,029 million

with 9,481 million yen net cash used in the previous fiscal year. Thisyen, sales increased by 11.7% year-on-year to 143,697 million yen

yen due to the impact of delays in orders for water and sewage

was due mainly to the acquisition of commercial paper with aand segment income increased by 172.6% to 3,260 million yen due

treatment facilities from government offices. Sales were roughly on

redemption period exceeding three months and to payments into time

to a shift to favorable conditions in the field of HVAC and plumbing

par with the previous fiscal year, increasing by 0.1% year on year todeposits with a term exceeding one year.

for buildings. Sales and income were up on the back of an increase

17,169 million yen while significant segment loss was posted at 23

in the amount of construction carried forward from the end of theprevious fiscal year.

previous fiscal year.
Real Estate Business

Orders received decreased by 21.6% year-on-year to 8,482 million

Both orders received and sales decreased by 60.8% year-on-year toyen as growth in orders did not reach full-scale recovery in terms of

1,077 million yen. Segment income decreased by 88.7% year-on-

domestic capital investment in the manufacturing industry. Sales

year to 147 million yen. Sales and income declined significantly due

increased by 51.4% to 9,846 million yen, on the other hand, due to an

to the impact of the expiration of the contract period for a large

increase in the amount of construction carried forward from the end

rental property.

of the previous fiscal year. Segment loss amounted to 287 million

Other

yen compared with segment loss of 1,119 million yen in the previous

Orders received were 583 million yen, sales were 607 million yen

fiscal year.

and segment income was 63 million yen.

In terms of future outlook, in the construction industry, which hadenergy are expected to grow further as a result of rising energy

been undergoing prolonged contraction, there has been momentum

prices associated with the weak yen.

in reconstruction work following the Great East Japan Earthquake

Conversely, with concentration of construction demand over a

and an increase in public construction projects owing to the Plan for

short period and concerns over rising labor costs and equipment

National Resilience. Together with the economic recovery,

prices, we expect that it will remain difficult to secure profitability.

construction plans for buildings and condominium complexes have

Against this background, we will bolster our sales capabilities incontinued steadily in the private sector. Moreover, urban development

order to secure orders on an optimal scale while maintaining a focus

is being planned ahead of the 2020 Tokyo Olympics, and the businesson profit. Based on our medium-term management plan SANKI VITAL

environment is forecast to take a turn for the better.

PLAN 90th, we will further reinforce our Core Businesses and expand62

FY 2011

Cash flows from operating activities

1,294

11,554(2,697)

9,729(9,403)

YoY change(19,133)

Cash flows from investing activities(1,664)2,610(1,046)(9,481)(3,506)

5,975

Cash flows from financing activities(2,936)(1,883)(280)(1,028)(4,152)(3,123)

Cash and cash equivalents at end of period

32,82545,13541,09740,36723,510(16,857)

FY 2011

FY 2012FY 2013

Dividend information
Sanki Engineering’s basic policy of profit allocation is to enhanceshareholder return in a stable and continuous manner. In the fiscal
year ended March 31, 2014, we provided a total yearly dividend of
15 yen. The consolidated dividend payout ratio was 56.7%.

Challenges to be addressedmore energy-efficient and demand for implementation of renewable

FY 2010

million yen compared with segment income of 689 million yen in the

Machinery Systems Business

Additionally, demand for improvements to facilities to make them(Millions of yen)
FY 2012FY 2013

FY 2009

FY 2009

Dividends per share
Consolidated dividend payout ratio

FY 2010

¥15

¥15

¥15

¥15

¥15

35.0%

50.6%

609.8%－

56.7%

our Strategic Growth Businesses, as well as cultivate and foster new
businesses.

SANKI REPORT 201463

Consolidated Balance Sheet(Millions of yen)March 31, 2014

(Millions of yen)
As of March 31, 2013

As of March 31, 2014

As of March 31, 2014

¥ 51,853¥ 57,888

6,920

6,576

Liabilities:

AssetsCurrent liabilities:

Current assets:
Cash and deposits
Notes and accounts receivable on completed construction contracts andother
Securities¥ 36,368
63,2883,999¥ 23,510
78,101
3,998

Costs on uncompleted construction contracts

Notes and accounts payable on construction contracts and other
Short-term loans payable
Lease obligations
Income taxes payable

57

72

2,497

625

10

27

Advances received on uncompleted construction contracts

5,332

5,489

Accrued bonuses

2,176

2,286

Deferred tax liabilities

Inventories:
1,529

1,863

249

417

Deferred tax assets

1,889

1,661

Other

4,103

6,715

Accrued loss on construction contracts

801

567

Allowance for doubtful accounts

(282)

(328)

Other

3,461

4,698

111,146

115,941

Total current liabilities

73,54078,736

Raw materials and supplies

Total current assets

Noncurrent assets:
Buildings and structures—
363

Deferred tax liabilities

2,408

2,260

Accrued retirement benefits

7,313

—

3,756

Liability for retirement benefits

—

8,231

(3,310)Accrued directors’ retirement benefits

275

219

Accrued loss on guarantees

29

29

5,327

5,422

16,004

16,52689,544

95,263(34,672)(34,860)

5,176

4,934

3,987
(3,585)
402

445

4,331

4,124

401

509

Accumulated depreciation

(84)

(134)

Lease assets, net

317

374

10,227

9,878

491

436

Lease assets

Total property, plant and equipment
Intangible assets

Investments and other assets:
Investment securities (Note 1)

27,946

31,283Long-term loans receivable

346

258

Prepaid pension cost

7,312

—

Asset for retirement benefits

—

3,587

Deferred tax assets

136

130

1,067

1,080

Insurance funds

950

241

Other (Note 1)

7,972

8,463

Lease and guarantee deposits

428

331

Buildings and structures, net

Land

345

320

Accumulated depreciation

Machinery, equipment, vehicles, and tools, furnitureand fixtures, net

75

Accrued warranty costs

Lease obligations

39,795

Accumulated depreciation

83

Long-term loans payable

39,848

Machinery, equipment, vehicles, and tools, furniture and fixtures

Accrued directors’ bonuses

Noncurrent liabilities:

Property, plant and equipment:

Other
Total noncurrent liabilities
Total liabilities

Net assets:
Shareholders’ equity:
Capital stock

8,105

8,105

Capital surplus

4,181

4,181

Retained earnings

60,85558,935

Treasury stock(2,750)(2,444)

Total shareholders’ equity

70,391

68,777

6,631

9,095

(90)

29

—

(3,011)

6,540

6,114

Accumulated other comprehensive income:Unrealized gains on available-for-sale securities
Foreign currency translation adjustment
Retirement benefits asset and liability adjustments
Total accumulated other comprehensive income

Allowance for doubtful accounts(1,120)(1,121)

Subscription right to shares

Total investments and other assets

44,612

43,924

Total net assets

Total noncurrent assets
Total assets

64

As of March 31, 2013
Liabilities and Net Assets

55,331

54,239¥ 166,477¥ 170,181

Total liabilities and net assets—

25

76,932

74,917¥ 166,477¥ 170,181

See notes to consolidated financial statements.

SANKI REPORT 201465

Consolidated Statement of Income and Comprehensive Income(Millions of yen)
Year ended
March 31, 2013

Net sales:
Net sales of completed construction contracts
Net sales of real estate business and otherTotal net sales
Cost of sales:
Cost of sales of completed construction contracts (Note 1)
Cost of sales on real estate business and otherTotal cost of sales
Gross profit:
Gross profit on completed construction contracts
Gross profit on real estate business and otherTotal gross profit
Selling, general and administrative expenses:
Employees’ salaries and allowances
Provision for bonuses
Provision for directors’ bonuses
Retirement benefit expenses
Provision for doubtful accounts
Depreciation
Other
Total selling, general and administrative expenses
Operating income
Non-operating income:Interest income
Dividends income
Insurance income
Gain on sales of waste materials
Other
Total non-operating income
Non-operating expenses:
Interest expense
Equity in losses of affiliates
Foreign exchange losses, net
Provision for doubtful accounts
Other
Total non-operating expenses
Ordinary income
Extraordinary income:Gain on sales of noncurrent assets
Gain on sales of investment securities
Total extraordinary income
Extraordinary loss:
Impairment loss (Note 2)
Loss on sales of noncurrent assets
Loss on retirement of noncurrent assets
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on valuation of stock of unconsolidated subsidiaries
Total extraordinary losses(Loss) income before income taxes and minority interests
Income taxes:
Income taxes-current
Income taxes-deferred
Total income taxes(Loss) income before minority interests
Net (loss) income(Loss) income before minority interests
Other comprehensive income (Note 3):
Unrealized gains on available-for-sale securities
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive (loss) income
Comprehensive (loss) income attributable to:Shareholders of Sanki Engineering Co., Ltd.
Minority interests
See notes to consolidated financial statements.

¥ 151,910
2,747
154,658
135,746
1,321
137,068

Year ended
March 31, 2014
¥ 170,336
1,159
171,496
152,224848
153,072

16,163
1,426
17,59018,111311
18,423

6,050
950
83
552
28
433
7,099
15,199
2,391

6,022
1,006
75
497
42
398
7,559
15,604
2,818

58
515
155
108
112
951
95
6
160
72
327
662
2,680

(Millions of yen)
Shareholders’ equity

Balance at the beginning of current period

2,681(2,280)401(4,992)(4,992)

959
431
1,391
1,763
1,763

(4,992)

1,763

4,092
42
4,134
¥ (857)

2,464
120
2,584
¥ 4,348¥ 4,348¥ —Total shareholders’equity¥ 8,105¥ 4,181¥ 66,905¥ (1,936)¥ 77,256(1,058)(4,992)(4,992)—

Change in scope of consolidation(814)

Purchase of treasury stock

(814)
—

Retirement of treasury stock
Net changes in items other than shareholders’ equity——(6,050)(814)(6,864)¥ 8,105¥ 4,181¥ 60,855¥ (2,750)¥ 70,391

Total changes in items during the period
Balance at the end of current period

Accumulated other comprehensive income
Unrealized gains Foreign currency
on availabletranslation
for-sale securities
adjustment
Balance at the beginning of current period¥ 2,538

Retirement
benefits asset
and liability
adjustments¥—¥ (132)

Total accumulated
Subscription
othercomprehensive rights to sharesincomeTotal net assets¥—¥ 79,662¥ 2,405

Dividends from surplus(1,058)Net (loss) income(4,992)—

Change in scope of consolidation(814)

Purchase of treasury stock—

Retirement of treasury stock
Total changes in items during the period
Balance at the end of current period

4,092

—

42

—

4,134

4,134

4,092

42

—

4,134

—

(2,729)¥ 6,631¥ (90)¥—¥ 6,540¥—¥ 76,932[For the year ended March 31, 2014](Millions of yen)
Shareholders’ equity

Balance at the beginning of current period

Capital stock

Capital surplus

Retained earnings

Treasury stock

Total shareholders’equity¥ 8,105¥ 4,181¥ 60,855¥ (2,750)¥ 70,391

Changes in items during the period
Dividends from surplus(1,013)(1,013)

Net (loss) income

1,763

1,763

Change in scope of consolidation

44

44

Purchase of treasury stock
Retirement of treasury stock(2,714)(2,408)(2,408)2,714—

Net changes in items other than shareholders’ equity——(1,919)305(1,614)¥ 8,105¥ 4,181¥ 58,935¥ (2,444)¥ 68,777

Total changes in items during the period
Balance at the end of current period

Accumulated other comprehensive income
Unrealized gains Foreign currency
on availabletranslation
for-sale securities
adjustment
Balance at the beginning of current period¥ 6,631¥ (90)

Retirement
benefits asset
and liability
adjustments¥—

Total accumulated
Subscription
othercomprehensive rights to sharesincomeTotal net assets¥—¥ 76,932¥ 6,540

Changes in items during the period
Dividends from surplus(1,013)

Net (loss) income

1,763

Change in scope of consolidation

44

Purchase of treasury stock(2,408)—Retirement of treasury stock
Net changes in items other than shareholders’ equity
Total changes in items during the period
Balance at the end of current period

66

Treasury stock(1,058)

96
107
126
37
311
679
3,146

143
8
30
—
—
153
336
3,154

Retained earnings

Net (loss) income

Net changes in items other than shareholders’ equity

7,071
7
61
27
176
—
7,345
(4,591)

Capital surplus

Dividends from surplus

45
506
105
123
226
1,007

181
163
345

Capital stock

Changes in items during the period

Changes in items during the period

26
47
74

¥ (857)¥ —Consolidated Statement of Changes in Net Assets[For the year ended March 31, 2013]

2,464

120

(3,011)

(426)

25

(401)

2,464

120

(3,011)(426)

25(2,015)¥ 9,095¥ 29¥ (3,011)¥ 6,114¥ 25¥ 74,917

SANKI REPORT 201467

Consolidated Statement of Cash Flows(Millions of yen)
Year ended
March 31, 2013

Year ended
March 31, 2014

Notes to Consolidated Financial Statements

Cash flows from operating activities:¥ (4,591)¥ 3,154

Depreciation and amortization

1,207

740

Impairment loss

7,071

143

(Decrease) increase in allowance for doubtful accounts

(361)

46

Decrease in provision for retirement benefits

(642)

—

Decrease in liability for retirement benefits

—

(35)

(246)

(60)

Increase (decrease) in provision for loss on construction contracts

302

(233)

Interest and dividends income

(574)

(551)

(Loss) income before income taxes and minority interests

Decrease in provision for directors’ retirement benefits

Interest expense

95

96

Equity in losses of affiliates

6107

Gain on sales of property, plant and equipment

(18)

(172)

Gain on sales of investment securities

(20)

(163)

2,348

(14,613)

Decrease (increase) in notes and accounts receivable on completed construction
contracts and other
Decrease (increase) in costs on uncompleted construction contracts

595

(314)

Increase in notes and accounts payable on construction contracts and other

480

5,989

2,543

144

653

998

Other

1,024

(1,588)Subtotal

9,875(6,311)

Interest and dividends received

573

554

Interest paid

(94)

(95)

Income taxes paid

(805)

(3,554)

Income taxes refunded

180

2

9,729

(9,403)(4,200)(600)

Increase in advances received on uncompleted construction contracts
Increase in other current liabilities

Net cash provided by (used in) operating activities
Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits

300—

Purchase of securities—(3,998)Purchase of property, plant and equipment

(335)

(549)

Proceeds from sales of property, plant and equipment

128

287

(6,477)

(139)

971

407

Proceeds from redemption of investment securities

294

200

Execution of loan

(105)

(9)

Purchase of investment securities
Proceeds from sales of investment securities

Collection of loans receivable

76

194

Proceeds from maturity of insurance funds

148

844

Other

(282)

(141)

(9,481)(3,506)

Net cash used in investing activities
Cash flows from financing activities:
Net increase in short-term loans payable

1,233

Repayments of long-term loans payable

(340)

(340)

Purchase of treasury stock(814)(2,408)

(323)

(50)

(66)

Cash dividends paid

(1,058)(1,013)

Net cash used in financing activities(1,028)(4,152)

51

108

(729)

(16,953)

41,09740,367—96¥ 40,367¥ 23,510

Repayments of lease obligations

Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents due to inclusion in consolidation
Cash and cash equivalents at end of period (Note 1)
See notes to consolidated financial statements.

68

Basis of Preparation of Consolidated Financial Statements
1. Basis of Preparation
Sanki Engineering Co., Ltd. (the “Company”) and its domestic
subsidiaries maintain their books of account in conformity with thefinancial accounting standards of Japan, and its foreign subsidiaries
maintain their books of account in conformity with those of theircountries of domicile.
The accompanying consolidated financial statements have been
compiled from the consolidated financial statements prepared by theCompany as required under the Financial Instruments and Exchange
Law of Japan and, therefore, have been prepared in accordance withaccounting principles generally accepted in Japan, which are
different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards.
Certain amounts in the prior year’s financial statements have been
reclassified to conform to the current year’s presentation.
As permitted, amounts of less than one million yen have been
omitted. As a result, the totals shown in the accompanying
consolidated financial statements do not necessarily agree with thesums of the individual amounts.
2. Scope of consolidation(1) Number of consolidated subsidiaries: 7
Names of consolidated subsidiaries:
Sanki Techno Support Co., Ltd.
THAI SANKI ENGINEERING & CONSTRUCTION CO., LTD.
Sanki Sangyo Setsubi Co., Ltd.
Sanki Kako Kensetsu Co., Ltd.
Sanki Kankyo Services Co., Ltd.
AQUACONSULT Anlagenbau GmbH
Shin-yu Services Co., Ltd.
* Shin-yu Service Co., Ltd. was newly included in consolidation
due to its increased significance for the year ended March 31,
2014.
(2) Number of unconsolidated subsidiaries: 3
Names of unconsolidated subsidiaries:
Tomakomai Netsu Services Co., Ltd.
Sanki Construction Engineering (Shanghai) Co., Ltd.
AEROSTRIP Corporation(3) Reasons for exclusion of unconsolidated subsidiaries fromconsolidation
The three unconsolidated subsidiaries above were excluded fromconsolidation because their total assets and sales and theCompany's equity in their net income and retained earnings were
not material to the consolidated financial statements.
3. Application of the equity method umber of companies to which the equity method of(1) N
accounting has been applied:
Unconsolidated subsidiaries: –Affiliates: 2
Akita Eco Plash Co., Ltd.
Ou Clean Technology Co., Ltd.
(2) Number of companies excluded from application of theequity method:
Unconsolidated subsidiaries: 3
Affiliates: 2
Names of unconsolidated subsidiaries and affiliates:
Tomakomai Netsu Services Co., Ltd.
Sanki Construction Engineering (Shanghai) Co., Ltd.
AEROSTRIP Corporation
SHUN HING-SANKI JV LIMITEDPFI Okubo Techno Resource Co., Ltd.
(3) Reasons for exclusion of unconsolidated subsidiaries andaffiliates from the equity method of accounting
The three unconsolidated subsidiaries and two affiliates referred
to above were excluded from being accounted for by the equity
method because the Company's equity in their net income andretained earnings was not material to the consolidated financial
statements.
4. Fiscal year end of the consolidated subsidiaries
Names and the fiscal year end of the consolidated subsidiaries
whose fiscal year end is different from that of the consolidated
financial statements:
Name
AQUACONSULT
Anlagenbau GmbH
THAI SANKI ENGINEERING &CONSTRUCTION CO., LTD.

Fiscal year end
December 31
December 31

Financial statements of the above subsidiaries were consolidated
on the basis of its own fiscal year end. However, the necessary
adjustments were made to reflect any significant transactions
from the fiscal year end of the subsidiary to that of theconsolidated financial statements.
5. Accounting policies(1) Valuation policies for significant assets
Securities
Held-to-maturity securities:
Held-to-maturity securities are stated at cost and amortizedby the straight-line method.
Available-for-sale securities:
Marketable securities are stated at fair value with any
changes in unrealized gain or loss, net of the applicable
income taxes, included directly in net assets. Cost of
securities sold is determined by the moving average method.
Nonmarketable securities are stated at cost determined by
the moving average method.
SANKI REPORT 201469

Derivatives
Derivatives are stated at fair value.
Inventories
Costs on uncompleted construction contracts:
Costs on uncompleted construction contracts are stated atcost by the individual identification method.
Raw materials and supplies:
Raw materials and supplies are carried at cost determined by
the moving average method (in the case that the net selling
value falls below the cost at the end of the period, the bookvalue on the balance sheet is carried at the net selling value on
the balance sheet, regarded as decreased profitability of assets).
(2) Depreciation of significant assets
Property, plant and equipment (excluding lease assets)
Depreciation is calculated by the declining-balance method,
except for property, plant and equipment of the foreign
consolidated subsidiaries which are depreciated by the straightline method. The useful lives and the residual value are primarilyin accordance with those stipulated in the Corporation Tax Law.
Intangible assets (excluding lease assets)
Depreciation is calculated by the straight-line method. Depreciationof the software for internal use is computed by the straight-line
method over the useful life of the software (principally 5 years).
Lease assets
Finance lease assets which transfer ownership title to the lessee
Depreciation of finance lease assets which transfer ownership
titles to the lessee is calculated by the same method as thatfor property, plant and equipment owned.
Finance lease assets which do not transfer ownership title to the lessee
Depreciation of finance leases assets which do not transfer
ownership title to the lessee is calculated by the straight-line
method over the respective lease terms with a nil residual value.
Finance leases which do not transfer ownership title to thelessee, entered into on or before March 31, 2008, are accounted
for as operating leases.
(3) Significant provisions and allowances
Allowance for doubtful accounts
Allowance for doubtful accounts is provided at an amountsufficient to cover possible losses on collection. The allowance
consists of an estimate of the uncollectible amounts withrespect to specific receivables plus a percentage based on
historical losses on accounts receivable.
Accrued bonuses
Accrued bonuses are stated at an estimate of the amounts to
be paid by the Company and its consolidated subsidiaries forservices rendered by the balance sheet date.

70

Accrued directors’ bonuses
Accrued directors’ bonuses are stated at an estimate of theamounts to be paid by the Company and its consolidated
subsidiaries for services rendered by the balance sheet date.
Accrued warranty costs
Accrued warranty costs are provided at an estimated amountbased on historical experience and certain other factors.
Accrued loss on construction contracts
Accrued loss on construction contracts is provided at an amountof estimated loss if a significant amount of loss is expected tooccur for uncompleted construction contracts and the amountof the loss can be reasonably estimated.
Accrued directors’ retirement benefits
Accrued directors’ retirement benefits are stated at 100% of
the amount which would be required to be paid if all directors
and corporate auditors resigned their positions at the balance
sheet date.
(Additional information)
At the meetings of board of directors of the Company and its
domestic consolidated subsidiaries held in March 2012, it was
resolved that their retirement benefit plans for directors andcorporate auditors be terminated on March 31, 2012.
Subsequently, at the ordinary general meeting of shareholdersof each company held in June 2012, it was resolved that
retirement benefits shall be paid to directors and corporate
auditors, who were incumbent as of the close of the said
shareholders’ meeting, for their individual service periods toMarch 31, 2012. It was also resolved that retirement benefits
shall be paid at the time of their individual retirement and thatthe amount to be paid and the payment method for directors
would be determined at the meeting of the board of directors
and for corporate auditors by mutual agreement among thecorporate auditors.
As a result, the estimated amount of retirement benefits to be
paid to directors and corporate auditors of those companies is
included in accrued directors’ retirement benefits on the
consolidated balance sheet as of March 31, 2014.
Accrued loss on guarantees
Accrued loss on guarantees is provided at an amount of
estimated loss on fulfillment of guarantee obligations.
(4) Accounting for retirement benefitsMethod of attributing expected benefits to periods of service
The retirement benefit obligation for employees is attributed toeach period by the straight-line method.

 ethod of amortization for actuarial gain or loss, and prior service
M
cost
Prior service cost is amortized by the straight-line method overa period (10 years) within the average estimated remaining
years of service of the eligible employees.
Actuarial gain or loss is amortized in the year following the year
in which the gain or loss is recognized by the straight-line
method over a period (10 years) within the average estimatedremaining years of service of the eligible employees.
Adoption of simplified method for small-scale corporation
The liability for retirement benefits and the retirement benefit
expenses for each consolidated subsidiary are calculated basedon the retirement benefit obligation which is stated at theamount that would be paid if all eligible employees voluntarily
terminated their employment at the end of the period.
(5) Recognition criteria for significant revenues and expenses
Recognition criteria for revenues and costs of construction
contracts
Construction contracts, of which the percentage of completioncan be reliably estimated:
Revenues and costs of construction contracts, of which thepercentage of completion can be reliably estimated, arerecognized by the percentage-of-completion method. The
percentage of completion is calculated at the cost incurred asa percentage of the estimated total cost.
Other construction contracts:
Revenues and costs of construction contracts, of which thepercentage of completion cannot be reliably estimated, arerecognized by the completed-contract method.
For the year ended March 31, 2014, net sales of completed
construction contracts of ¥98,176 million was recognized by thepercentage-of-completion method.
(6) Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies
are translated into yen at the exchange rates prevailing at the
year-end date of the consolidated financial statements, with theresulting translation gains and losses credited or charged toincome.
Receivables and payables denominated in foreign currencies
hedged by the forward exchange contracts which qualify for theassigning method of hedge accounting are translated into yen attheir respective forward exchange contract rates.
The assets and liabilities and the revenue and expense accountsof the foreign subsidiaries are translated into yen at the exchange
rates prevailing at the fiscal year-end date of those respective
companies. The resulting translation adjustments are presented
as foreign currency translation adjustment in net assets.

(7) Hedge accounting
Principally, deferral hedge accounting is applied for derivatives
which qualify as hedges. For the forward exchange contracts
which meet certain criteria, the assigning method is applied.
Hedging instruments are the forward exchange contracts, andhedged items are receivables, payables and forecasted
transactions denominated in foreign currencies.
The Company uses the forward exchange contracts for the
purpose of mitigating risks arising from fluctuations in foreign
currency exchange rates. The Company does not enter into
derivative transactions for speculation.
Hedge effectiveness is assessed quarterly by matching changes
in market prices/rates or cash flows of hedged items with thoseof hedging instruments. Hedge effective is not assessed if thesubstantial terms and conditions of the forward exchange
contracts and the hedged items are the same because theircorrelation in future fluctuation in exchange rates is ensured.
(8) Scope of cash and cash equivalents in the consolidated
statement of cash flows
The scope of cash and cash equivalents in the consolidated
statement of cash flows covers cash on hand, deposits which canbe easily withdrawn at any time, and highly liquid investmentswith a maturity of three months or less when purchased.
(9) OtherConsumption taxes:
Transactions subject to consumption taxes are recorded at
amounts exclusive of consumption taxes.
However, non-deductible consumption taxes charged on assets
are recognized as expenses for the period when the relatedtransactions have occurred.

Accounting Changes
Application of accounting standards for retirement benefits
The Company adopted “Accounting Standard for Retirement
Benefits” (ASBJ Statement No.26, May 17, 2012) and“Guidance on Accounting Standard for Retirement Benefits”(ASBJ Guidance No.25, May 17, 2012) (except for certain
provisions described in the main clause of Section 35 of thestandard and in the main clause of Section 67 of the guidance)
as of the end of the fiscal year ended March 31, 2014.
These accounting standards require entities to apply a revised
method for recording the retirement benefit obligation, after
deducting pension plan assets, as a liability for retirement benefits
and for recording the excess amount of pension plan assets over
the retirement benefit obligation as an asset for retirement
benefits. In addition, unrecognized actuarial differences andunrecognized prior service costs are recorded as a liability for
retirement benefits.

SANKI REPORT 201471

Concerning the application of the Accounting Standard for
Retirement Benefits, based on the provisional treatment set out
in Section 37 of the standard, the effects of such changes in thecurrent fiscal year have been recorded in retirement benefits
asset and liability adjustments of accumulated othercomprehensive income.
As a result of this change, the asset and the liability for
retirement benefits were recognized at the amount of ¥3,587
million and ¥8,231 million, respectively, as of March 31, 2014.
In addition, accumulated other comprehensive income
decreased by ¥3,011 million.
The effect of this change on net assets per share is disclosed in“Per Share Data” of “Notes to Consolidated Financial
Statements”.

Accounting Standards issued but not yet effective“Accounting Standard for Retirement Benefits” (ASBJ Statement
No. 26, May 17, 2012) and “Guidance on Accounting Standard for
Retirement Benefits” (ASBJ Guidance No. 25, May 17, 2012)
1. Outline
The standard provides guidance for the accounting forunrecognized actuarial differences and unrecognized prior service
costs, the calculation methods for the retirement benefit obligationand service costs, and enhancement of disclosures taking into
consideration improvements to financial reporting andinternational trends.
2. Effective date
Revisions to the calculation methods for the retirement benefit
obligation and service costs are scheduled to be adopted fromthe beginning of the fiscal year ending March 31, 2015.
3. Effect of the change
The Company is currently evaluating the effect of thesemodifications on its consolidated financial statements.

Changes in Presentation of Consolidated Financial
Statements

Notes to Consolidated Statement of Income and Comprehensive Income

Consolidated Statement of Income and Comprehensive Income(Note 1)
Provision for loss on construction contracts included in cost of sales for the years ended March 31, 2013 and 2014 are as follows:“Rework cost on construction contracts”, which was presented
separately for the year ended March 31, 2013, is included in “Nonoperating expenses-Other” on the consolidated statement ofincome and comprehensive income for the year ended March 31,
2014 because its amount is not greater than 10% of the total nonoperating expenses.
For this change, the consolidated statement of income andcomprehensive income for the year ended March 31, 2013 isrepresented. As a result, “Rework cost on construction contracts”
of ¥70 million and “Non-operating expenses-Other” of ¥257 million
for the year ended March 31, 2013 are reclassified as “Nonoperating expenses-Other” of ¥327 million.

Notes to Consolidated Balance Sheet(Note 1)
1) The following assets have been pledged for opening the letter ofcredits:
Investments and other assets (time deposits)(Millions of yen)
FY 2012FY 2013¥ 4,200¥ 4,500(Millions of yen)
FY 2012FY 2013¥ 302¥ (233)(Note 2)
Impairment losses were recognized for the following assets for the year ended March 31, 2013:(Millions of yen)
Location

Use

Asset class

AmountBusiness-use assets

Land, Buildings, Structures¥ 46

Assets used for the real estate business

Buildings, Structures

7,025

Meguro-ku, Tokyo, and others
Yamato-shi, Kanagawa

The Company groups its business-use fixed assets based on the three business segments (facilities construction, machinery systems and environmental
systems) to perform assessments of impairment losses. For idle assets and assets used for the real estate business, the Company determines whether or
not indications of impairment exist on an individual asset basis. Fixed assets of its consolidated subsidiaries are grouped as one unit for each company.
The net book value of the business-use assets was reduced to their respective net realizable value (i.e., expected sales amount) since the Company decided
to sell these assets. The reduction was recognized as the impairment loss in the extraordinary losses.
The net book value of the assets used for the real estate business was reduced to their respective recoverable amount (i.e., estimate based on the realestate appraisal value) because the lease contract for these assets expired and the Company has little expectation for rental revenues from these assets
in the next or the near future years. The reduction was recognized as the impairment loss in the extraordinary losses.
Impairment losses were recognized for the following assets for the year ended March 31, 2014:(Millions of yen)

2) The following assets have been pledged as collateral for loans
payable of the affiliates and others:
Investment securities(Millions of yen)
FY 2012FY 2013¥5¥53) The following assets have been pledged as guarantees for thepayment of trade payable by the consolidated subsidiaries:
Investments and other assets (time deposits)

Location
Osaka-shi, Osaka,

FY 2013

¥ 33

¥ 33

(Millions of yen)72

FY 2012FY 2013

¥ 10

¥ 10

AmountBusiness-use assets

Land, Buildings, Structures¥ 143(Note 3)
The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive income for theyears ended March 31, 2013 and 2014:(Millions of yen)
FY 2012FY 2013¥ 6,183¥ 3,969

38(163)

Unrealized gains on available-for-sale securities:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income4) The following assets have been pledged as guarantees forlosses regarding capital investments in the consolidated
subsidiaries:
Investments and other assets (time deposits)

Asset class

The Company groups its business-use fixed assets based on the three business segments (facilities construction, machinery systems and environmental
systems) to perform assessments of impairment losses. For idle assets and assets used for the real estate business, the Company determines whether or
not indications of impairment exist on an individual asset basis. Fixed assets of its consolidated subsidiaries are grouped as one unit for each company.
The net book value of the business-use assets was reduced to their respective net realizable value (i.e., expected sales amount) since the Company decided
to sell these assets. The reduction was recognized as the impairment loss in the extraordinary losses.

(Millions of yen)
FY 2012

Use

Amount before tax effect

6,221

3,806

Tax effect(2,128)(1,342)

4,092

2,464

Unrealized gains on available-for-sale securities
Foreign currency translation adjustment:
Amount arising during the year

42

120

Total other comprehensive income¥ 4,134¥ 2,584

SANKI REPORT 201473

Notes to Consolidated Statement of Changes in Net Assets

4. Dividends(1) Dividends paid by the Company were as follows:[For the year ended March 31, 2013]

1. Types and total number of shares issued were as follows:(Shares)

Resolution

Type of shares

Total dividends(millions of yen)

Dividends per share(yen)

Record date

Effective date

Type of shares

As of April 1, 2012

Increase

Decrease

As of March 31, 2013

June 26, 2013 Ordinary general
meeting of shareholders

Common stock

521

7.50

March 31, 2013

June 27, 2013

Common stock

74,461,156——

74,461,156

November 8, 2013 Meeting ofboard of directors

Common stock

491

7.50

September 30, 2013

December 10, 2013

2. Types and number of treasury shares were as follows:(Shares)

Type of shares

As of April 1, 2012

Increase

Decrease

As of March 31, 2013

Common stock

2,931,889

1,990,094—

4,921,983(Note) Increase of 1,990,094 shares was due to purchase of treasury shares of 1,988,000 by resolution of the board of directors and repurchase of
fractional shares of 2,094.
3. Dividends(1) Dividends paid by the Company were as follows:(2) Dividends with the record date within this fiscal year and the effective date after the end of this fiscal year were as follows:
Resolution

Type of shares

Total dividends(millions of yen)

Source ofdividends

Dividends per
share (yen)Record date

Effective dateJune 26, 2014 Ordinary general
meeting of shareholders

Common stock

491

Retainedearnings

7.50

March 31, 2014

June 27, 2014

Notes to Consolidated Statement of Cash Flows

Resolution

Type of shares

Total dividends(millions of yen)

Dividends per share(yen)

Record date

Effective dateJune 27, 2012 Ordinary general
meeting of shareholders

Common stock

536

7.50

March 31, 2012

June 28, 2012

November 9, 2012 Meeting of board of
directors

Common stock

521

7.50

September 30, 2012

December 10, 2012

Resolution

Type of shares

June 26, 2013 Ordinary general
meeting of shareholders

Common stock

521(Millions of yen)
Cash and deposits
Short-term investments(2) Dividends with the record date within this fiscal year and the effective date after the end of this fiscal year were as follows:
Total dividends(millions of yen)

(Note 1)
Reconciliation of cash and deposits to cash and cash equivalents:

Source ofdividends

Dividends per
share (yen)Record date

Effective date

Retainedearnings

7.50

March 31, 2013

June 27, 2013(securities) with a maturity within threemonths after the acquisition dateCash and cash equivalents

FY 2012FY 2013¥ 36,368¥ 23,510

3,999—¥ 40,367¥ 23,510

Financial Instruments[For the year ended March 31, 2014]
1. Types and total number of shares issued were as follows:(Shares)

Type of shares

As of April 1, 2013

Increase

Decrease

As of March 31, 2014

Common stock

74,461,156—

4,800,000

69,661,156(Note) Decrease of 4,800,000 shares was due to retirement of treasury shares by resolution of the board of directors.
2. Types and number of treasury shares were as follows:(Shares)

Type of shares

As of April 1, 2013

Increase

Decrease

As of March 31, 2014

Common stock

4,921,983

4,002,221

4,800,000

4,124,204

1. Overview
1) Policy for financial instruments
The Company and its consolidated subsidiaries (collectively, the “Group”) invest funds in financial instruments such as debt securities withhigh credit ratings and with low risk for loss of principal. The Group raises funds through borrowings from banks and life insurance companies.
The Group uses derivatives for the purpose of reducing the foreign currency exchange risk arising from the receivables and payables
denominated in foreign currencies and the interest rate fluctuation risk for borrowings. The Group does not enter into derivative transactions for
speculative purposes.

(Note) Increase of 4,002,221 shares was due to purchase of treasury shares of 4,000,000 by resolution of the board of directors and repurchase of
fractional shares of 2,221. Decrease of 4,800,000 shares was due to retirement of treasury shares by resolution of the board of directors.
3. Details of subscription rights to shares were as follows
The Company(Parent company)
Total

74

(millions of yen)Type of subscription
rights to shares

Balance as ofMarch 31, 2014

Stock options

25
25

SANKI REPORT 201475

2) Types of financial instruments and related risks, and risk management for financial instruments
Trade receivables - notes and accounts receivable on completed construction contracts and other - are exposed to credit risk in relation tocustomers. To manage credit risk arising from trade receivables, each related division of the Group monitors due dates and outstandingbalances by individual customer. Further, it periodically monitors credit worthiness of the main customers.
Investment securities are composed mainly of held-to-maturity debt securities and the shares of common stock of other companies withwhich the Group has business relations. These investment securities are exposed to market fluctuation risk. The Group periodically reviews thefair values of such investment securities and the financial position of the issuers.
Most of the trade payables - notes and accounts payable on construction contracts and other - have payment due dates within one year.
Regarding derivative transactions, the Group uses derivatives for the purpose of reducing the foreign currency exchange risk arising from thereceivables and payables denominated in foreign currencies and the interest rate fluctuation risk for borrowing.
Those derivative transactions are entered into based on actual needs for hedging risks and not for speculative or trading purposes.
In conducting derivative transactions, the Group follows the internal policies established by the financial division, which set forth delegationof authority and maximum upper limit on position.
In addition, to mitigate the credit risk of derivatives, the Group transacts only with financial institutions which have a high credit rating.
Trade payables and borrowings are exposed to liquidity risk. Each company of the Group prepares and updates its cash flow plans monthly
to manage liquidity risk.
3) Supplementary explanation of the estimated fair value of financial instruments
The notional amounts of derivatives in “Derivatives” of “Notes to Consolidated Financial Statements” are not necessarily indicative of theactual market risk involved in derivative transactions.
2. Estimated fair value of financial instruments
Carrying value of financial instruments on the consolidated balance sheets, estimated fair value and unrealized gain (loss) are summarized in thefollowing table. The following table does not include financial instruments for which it is extremely difficult to determine fair value. (Please refer toNote 2 below.)(Millions of yen)

FY 2012
Carrying value
Assets:1) Cash and deposits
2) Notes and accounts receivable oncompleted construction contracts and other3) Securities and investment securities:
Held-to-maturity debt securities
Available-for-sale securities
Total assets
Liabilities:
Notes and accounts payable on
construction contracts and otherTotal liabilities
Derivative transactions*

FY 2013

Estimated fair value Unrealized gain (loss)

Carrying value

Liabilities:
Notes and accounts payable on construction contracts and other
Since these payables are settled in a short period of time, their carrying value approximates the fair value.
Derivatives:
Please refer to “Derivatives” of “Notes to Consolidated Financial Statements”.
(Note 2) Carrying value of financial instruments for which it is extremely difficult to determine the fair value(Millions of yen)Type
Unlisted stocks¥ 36,368¥—¥ 23,510¥ 23,510¥—

63,28863,288—

78,101

78,101—

4,503
24,814

4,511
24,8147—

4,302
28,516

4,310
28,516

7—

128,975

128,9827

134,431

134,4397

51,85351,853—57,88857,888—51,85351,853—57,88857,888—¥ (158)¥ (158)¥—¥ (301)¥ (301)¥—

FY 2012FY 2013¥ 2,002¥ 2,462

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are notincluded in “Assets: 3) Securities and investment securities” of the above table.
(Note 3) Redemption schedule for receivables and securities with maturities
FY 2012
Due within Due after one year Due after five years
one year through five years
through ten years¥ 36,360¥ —¥ —Cash and deposits
Notes and accounts receivable oncompleted construction contracts
63,288and other
Securities and investment securities:
Held-to-maturity securities (corporate
4,199
bonds)
Available-for-sale securities withmaturity date—
(corporate bonds)
Total¥ 103,847(Millions of yen)
FY 2013
Due within Due after one year Due after five years
one year through five years
through ten years¥ 23,449¥ —¥ —Due after
ten years¥ —Due after
ten years
¥ —

—

—

—

78,101

—

—

—

—

304

—

3,998

—

303

—

—

—

109

—

—

—

106

¥ —

¥ 304

¥ 109

¥ 105,549

¥ —

¥ 303

¥ 106

(Note 4) Redemption schedule for long-term loans payable, lease obligations and other interest-bearing debts

Estimated fair value Unrealized gain (loss)¥ 36,368

Carrying ValueDue after
Due within
one year
one year through two
years
Short-termloans payable
Long-termloans payableLease
obligations
Total

FY 2012Due after
Due after
Due after two
three years four years
years throughthrough four through five
three years
years
years

Due after
five years

Due within
one year

Due after
one yearthrough two
years(Millions of yen)
FY 2013
Due after
Due after
Due after four
Due after
two years three years
years throughfive years
through through four
five years
three years
years¥ 6,580

¥ —

¥ —

¥ —

¥ —

¥ —

¥ 6,256

¥ —

¥ —

¥ —

¥ —

¥ —

340

320

—

—

—

—

320

—

—

—

—

—

57

62

39

22

15

192

72

52

35

28

21

225

¥ 6,977

¥ 382

¥ 39

¥ 22

¥ 15

¥ 192

¥ 6,649

¥ 52

¥ 35

¥ 28

¥ 21

¥ 225

* The value of assets and liabilities arising from derivatives is shown at net value, and with the amount in parentheses representing net liability position.

(Note 1) Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivative transactions
Assets:1) Cash and deposits
Since all the deposits are short-term, their carrying value approximates the fair value.
2) Notes and accounts receivable on completed construction contracts and other
The fair value of these receivables is based on the present value of the receivables categorized by age, discounted by a discount rate that reflects
the remaining term and the credit risk. It was determined that, as of March 31, 2014, the fair value of these receivables was almost equal to theircarrying value.
3) Securities and investment securities
The fair value of stocks is based on quoted market prices. The fair value of debt securities is based on either quoted prices or prices provided by thefinancial institutions making markets in those securities. For information on securities classified by holding purpose, please refer to “Securities” of“Notes to Consolidated Financial Statements”.

76

SANKI REPORT 201477

Securities
1) Trading securities
Not applicable, because the Company and its consolidated subsidiaries had no trading securities both at March 31, 2013 and 2014.
2) Held-to-maturity debt securities(Millions of yen)Type

Carrying value

Securities whose fair value exceeded their carrying value
Government bonds
Corporate bonds
Other
Subtotal
Securities whose carrying value exceeded their fair value
Government bonds
Corporate bonds
Other

Difference

Carrying value

FY 2013
Fair value

Difference
¥ —

¥ —

¥ —

¥ —

¥ —

¥ —

1,304

1,312

7

303

312

8

—

—

—

—

—

—

1,304

1,312

7

303

312

8

—

—

—

—

—

—

3,199

3,198

(0)

3,998

3,997

(1)

—

—

—

—

—

—

3,199

3,198

(0)

3,998

3,997

(1)

¥ 4,503¥ 4,511¥7¥ 4,302¥ 4,310¥7

Subtotal
Total

FY 2012Fair value5) Impairment loss on securities
An impairment loss on investment securities of ¥176 million (available-for-sale securities with market value of ¥58 million and available-forsale securities for which it is extremely difficult to determine the fair value of ¥118 million) was recorded for the year ended March 31, 2013,
and an impairment loss on investment securities of ¥153 million (stock of unconsolidated subsidiaries with no market value of ¥153 million) wasrecorded for the year ended March 31, 2014.
For securities with market value, if the fair value of each security has declined by more than 30% from the acquisition cost, the Company
and its consolidated subsidiaries recognize an impairment loss after considering the potential recoverability. For securities for which it isextremely difficult to determine the fair value, if the net assets per share of each security based on the issuer’s most recent financial statements
available has declined by more than 50% from the acquisition cost, the Company and its consolidated subsidiaries recognize an impairment loss
after considering the potential recoverability.

Derivatives
1) Derivative transactions, to which hedge accounting is not applied
1. Currency-related transactions[For the year ended March 31, 2013]

3) Available-for-sale securities(Millions of yen)
Carrying value

FY 2012Acquisition cost

Difference

Carrying value

FY 2013
Acquisition cost

Difference¥ 24,549¥ 14,525¥ 10,023¥ 28,194¥ 14,348¥ 13,846

Bonds

109

107

2

—

—

—

Other

—

—

—

1

0

0

24,65914,633

10,02628,195

14,34913,846Type
Securities whose carrying value
exceeded their acquisition cost
Stock

Subtotal
Securities whose acquisition costexceeded their carrying value
Stock
Bonds

155

162

(7)

213

233

(20)

—

—

—

106

107

(0)

Other

—

—

—

0

0

(0)

Subtotal

155

162

(7)

321

342

(21)

¥ 24,814¥ 14,796¥ 10,018¥ 28,516¥ 14,691¥ 13,825

Total4) Information regarding sales of securities classified as available-for-sale securities:
Type(Millions of yen)Type of transactions

Type of derivatives

Transactions outside of market

Forward exchange contracts
Sell: U.S.Dollars

Notional amounts(total)(over one year)

Fair
value

Unrealized gain (loss)¥ 1,243¥ (158)(Note)¥ (158)¥ 746(Note) Fair value was estimated based on the price information provided by the financial institutions.

[For the year ended March 31, 2014](Millions of yen)Type of transactions

Type of derivatives

Transactions outside of market

Forward exchange contracts
Sell: U.S.Dollars

Notional amounts(total)(over one year)

Fair
value

Unrealized gain (loss)¥ 1,240¥ (301)(Note)¥ (301)—(Note) Fair value was estimated based on the price information provided by the financial institutions.
The valuation method of fair value has been changed since the year ended March 31, 2014 that excludes the contract value for the
calculation, in which the contract amounts had been taken into consideration in the previous year. The retrospective revaluation of fairvalue as of March 31, 2013 has been performed accordingly.

(Millions of yen)

FY 2012FY 2013

Proceeds from sales

Gross realized gain on sales

Gross realized loss on sales

Proceeds from sales

Gross realized gain on sales

Gross realized loss on sales

Stock

¥ 469

¥ 47

¥ 27

¥ 299

¥ 162

¥0

Bonds

503

—

0

108

1

—

Other

—

—

—

—

—

—

Total

¥ 973

¥ 47

¥ 27

¥ 407

¥ 163

¥0

(Note) “Securities classified as available-for-sale securities” presented above include securities for which it is extremely difficult to determine thefair value.

2. Interest-related transactions
Not applicable both for the years ended March 31, 2013 and 2014
2) Derivative transactions, to which hedge accounting is applied
1. Currency-related transactions
Not applicable both for the years ended March 31, 2013 and 2014
2. Interest-related transactions
Not applicable both for the years ended March 31, 2013 and 2014

78

SANKI REPORT 201479

Retirement Benefits

4) The assumptions used in accounting for retirement benefits were as follows:[For the year ended March 31, 2013]

Discount rate
Expected rate of return on plan assets

1) Summary of retirement benefit plans for employees
The Company and its consolidated subsidiaries including foreign subsidiaries have set up a lump-sum payment plan as a defined benefit plan.
The Company also has a defined-benefit corporate pension plan and a defined contribution pension plan. The Company has established an
employees’ retirement benefit trust. The Company and its consolidated subsidiaries may pay additional retirement benefits under certain
circumstances.
2) The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the consolidated balance sheet atMarch 31, 2013 for the Company’s and its consolidated subsidiaries’ defined benefit plans:
Retirement benefit obligation
Plan assets at fair value(Millions of yen)
¥ (25,170)
13,086

Assets in trust for employees’ retirement benefit

7,248

Unfunded retirement benefit obligation(4,836)

Unrecognized actuarial loss

5,270

Unrecognized prior service cost
Amounts recognized in the consolidated balance sheets, net

(434)
(0)

Prepaid pension cost
Provision for retirement benefits

7,312¥ (7,313)

The retirement benefit obligation for each consolidated subsidiary is stated at the amount which would be required to be paid if all employees
covered by the plans voluntarily terminated their employment at March 31, 2013.
The amount of assets to be transferred to the defined contribution plan was ¥380 million, which was planned to be transferred in 4 years. The
untransferred assets of ¥61 million at March 31, 2013 are included in “Current liabilities - Other”.
3) The components of retirement benefit expenses for the year ended March 31, 2013 are outlined as follows:(Millions of yen)
Service cost *2
Interest cost
Expected return on plan assets
Amortization of unrecognized actuarial loss
Amortization of unrecognized prior service cost
Total retirement benefit expenses
Other *3
Total

¥ 860
470
(337)
366
(202)
1,158
95
¥ 1,253*1: In addition to the amount presented above, additional retirement benefits of ¥17 million were paid for the year ended March 31, 2013. These
expenses have been included in cost of sales, and selling, general and administrative expenses.
*2: The consolidated subsidiaries’ retirement benefit expenses have been included in the service cost.
*3: “Other” shows the amount contributed to the defined contribution plan.

The retirement benefit obligation has been attributed to each year by the straight-line method over the estimated years of service of the eligible
employees.
Unrecognized prior service cost is amortized by the straight-line method over a period (10 years) within the average remaining years of service ofthe eligible employees.
Unrecognized actuarial gain or loss is amortized commencing the year following the year in which the gain or loss is recognized by the straight-line
method over a period (10 years) within the average remaining years of service of the eligible employees.

[For the year ended March 31, 2014]
1) Summary of retirement benefit plans for employees
The Company has funded defined benefit plans as well as a defined contribution plan. Its consolidated subsidiaries including foreign subsidiaries
have unfunded defined benefit plans.
Under the defined-benefit corporate pension plan, which is a funded plan, covered employees are entitled to lump-sum or, annuity payments
based on their basic rates of pay and length of service. For the defined-benefit corporate pension plan, a retirement benefit trust has been
established.
Under the lump-sum payment plans, covered employees are entitled to lump-sum payments based on their basic rates of pay and length ofservice. The lump-sum payment plans are principally unfunded plans. However, the Company’s lump-sum payment plan has funded status asa result of establishment of a retirement benefit trust.
The Company and its consolidated subsidiaries may pay additional retirement benefits under certain circumstances.
For the lump-sum payment plans of the consolidated subsidiaries, liabilities and expenses for retirement benefits are calculated using thesimplified method.
2) Defined benefit plans (including plans accounted for using the simplified method)
1. The changes in the retirement benefit obligation during the year ended March 31, 2014 are as follows:
Retirement benefit obligation at April 1, 2013
Service cost
Interest cost
Actuarial loss
Retirement benefit paid
Other
Retirement benefit obligation at March 31, 2014

(Millions of yen)
¥ 25,170
940
297
491
(1,585)
1¥ 25,316

2. The changes in the plan assets during the year ended March 31, 2014 are as follows:
Plan assets at April 1, 2013
Expected return on plan assets
Actuarial gain

(Millions of yen)
¥ 20,334
326
544

Contributions by employers—

Retirement benefits paid

(532)

Plan assets at March 31, 2014

80

1.2%
2.0%

¥ 20,672

SANKI REPORT 201481

3. The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheet at March 31, 2014
for the Company’s and its consolidated subsidiaries’ defined benefit plans:
Retirement benefit obligation under the funded plans
Plan assets at fair value(Millions of yen)
¥ 24,961(20,672)
4,289

Retirement benefit obligation under the unfunded plans
Net liability for retirement benefits

354
4,644

Liability for retirement benefits in the balance sheet
Asset for retirement benefits in the balance sheet
Net liability for retirement benefits

8,231(3,587)¥ 4,6443) Defined contribution plans
The amount contributed to the defined contribution plan by the Company for the year ended March 31, 2014 was ¥98 million.

Stock Options
1) Stock option expense of ¥25 million was included in “Selling, general and administrative expenses” for the year ended March 31, 2014.
2) 1. Description on the stock option plan:
Stock option plan

4. The components of retirement benefit expenses for the year ended March 31, 2014 are as follows:

Service cost
Interest cost

(Millions of yen)
¥ 940
297

Expected return on plan assets(326)

Amortization of actuarial loss

306

Amortization of prior service cost

(202)

Other
Retirement benefit expenses

18¥ 1,034

5. Unrecognized prior service cost and unrecognized actuarial loss included in retirement benefits asset and liability adjustments of accumulated
other comprehensive income (before tax effect) at March 31, 2014 are as follows:

Unrecognized prior service cost
Unrecognized actuarial loss
Total

(Millions of yen)
¥ (232)
4,911¥ 4,679

6. The fair value of plan assets, by major category, as a percentage of total plan assets at March 31, 2014 are as follows:
Bonds
Stock

Name of company

The Company

Resolution dateJune 26, 2013

Title and number of individuals covered by the plan:
Directors (except external directors)
Corporate officers (except persons concurrently serving as a director)
Type and number of shares to be issued upon exercise of the share subscription rights
Grant dateConditions for being vested
Required service period
Exercise period (Note)(Note) The consolidated subsidiaries’ retirement benefit expenses have been included in the service cost.

37%
21

Short-term funds

5Life insurance general accounts

21

Other

16

Total

100%

(Note) The plan assets included the retirement benefit trust for the corporate pension plans, which comprised 22% of the total, as well as theretirement benefit trust for the lump-sum payment plans, which comprised 11% of the total, at March 31, 2014.
The expected return on assets has been estimated based on the anticipated allocation to each asset class and the expected long-term returns on
assets held in each category.

July 11, 2013
None
None
July 12,2013
to July 11, 2043

2. The following table summarizes stock option activity under the stock option plan referred to above during the year ended March 31, 2014:
Stock option activity
Share subscription rights which are not yet vested(Number of shares):
Outstanding at March 31, 2013
Granted2013 Stock option(Share subscription rights)—
44,000 shares

Forfeited—

Vested44,000 shares

Outstanding at March 31, 2014
Share subscription rights which have already been vested(Number of shares):
Outstanding at March 31, 2013——

Vested44,000 shares

Exercised—

Forfeited
Outstanding at March 31, 2014
Weighted average exercise price (yen)Fair value per stock at the grant date (yen)Discount rate
Expected long-term rate of return on plan assets (principally)

8
20
Common stock
44,000 shares(Note) An individual to whom the share subscription rights are granted (a “Holder”) can exercise the rights only for the period of 10 days
following the date of his retirement from the position of a director and/or corporate officer. All the share subscription rights of a Holder
must be exercised at one time.
In the event that a Holder died, one of his heirs, spouse or one of first-degree family, can exercise the share subscription rights in placeof the Holder. In that case, all the rights must be exercised at one time.

Exercise price (yen)7. The assumptions used in accounting for the above plans are as follows:2013 Stock option(Share subscription rights)—
44,000 shares
¥ 1
—
¥ 579

1.2%*
2.5%*

* The weighted average rate is presented.

82

SANKI REPORT 2014833) Fair value at the grant date for stock options which were issued during the year ended March 31, 2014 was estimated using the Black-sholes
option pricing model with the following assumptions.

Expected volatility (Note 1)
Expected holding period (Note 2)
Expected dividend (Note 3)
Risk-free rate (Note 4)2013 Stock option(Share subscription rights)
30.039 %3.2 years¥ 15 per share
0.172 %FY 2012(Note1) The volatility of the share price is estimated based on the market prices of the Company’s stock from April 30, 2010 to July 11, 2013.
(Note2) The expected holding period is estimated based on the weighted average period of the grant date to the date when the share subscription
rights become exercisable, that is the date of each Holder’s retirement from the position of a director and/or corporate officer, assumingthat each Holder exercises his rights as soon as the rights become exercisable.
(Note3) The expected dividend is based on the dividends paid for the year ended March 31, 2013.
(Note4) Risk-free interest rate is the yield on government bonds for the period that corresponds to the remaining life of the option.
4) Because it is difficult to reasonably estimate the number of options that will expire in the future, the number of vested options is calculated only
based on the number of options that have actually forfeited .

Tax-effect Accounting(Millions of yen)

FY 2012FY 2013

¥ 380
831
211
2,546
130
304
2,611
—
107

¥ 431
819
50
2,355
151
202
—
4,074
85

Loss on devaluation of investment securities

653

621

Loss on devaluation of utility rights
Other
Subtotal
Valuation allowance for deferred tax assets
Total deferred tax assets

168
823
8,769
(3,325)
5,443

1,027
9,986
(3,312)6,673

2. Deferred tax liabilities
Deferred capital gains for tax purposes
Gain on valuation of investment securities
Unrealized gains on available-for-sale securities
Other
Total deferred tax liabilities
Net deferred tax liabilities

(889)

(832)

(1,470)(3,386)(90)(5,836)¥ (392)(1,470)(4,729)(135)(7,167)¥ (494)

84

Statutory tax rate
Items permanently not deductible for tax purposes
Items permanently not taxable
Inhabitants' per capita taxes
Valuation allowance
Effect of changes in effective statutory tax rate
Equity in losses of affiliates
Research and development tax credit
Other
Effective tax rates

38.0 %
(3.0)
3.4
(2.1)
(42.3)
(2.6)
(0.1)
1.5
(1.5)
(8.7) %FY 201338.0 %
4.6
(3.5)
3.0
(1.3)
4.2
1.3
(1.3)
(0.9)
44.1 %

3) The “Act for Partial Amendment of the Income Tax Act, etc”. was promulgated on March 31,2014 and, as a result, the Company is no longer
subject to the Special Reconstruction Corporation Tax effective for fiscal years beginning on or after April 1, 2014.
As a result, the effective statutory tax rate used to measure the Company’s deferred tax assets and liabilities was changed from 38.0% to35.6% for the temporary differences expected to be realized or settled for the fiscal year beginning April 1, 2014. The effect of the announced
reduction of the effective statutory tax rate was to decrease deferred tax assets after offsetting deferred tax liabilities by ¥134 million andincrease deferred income taxes by ¥134 million as of and for the year ended March 31, 2014.

Investment and Rental Properties

1) The significant components of deferred tax assets and liabilities at March 31, 2013 and 2014 were as follows:
1. Deferred tax assets
Allowance for doubtful accounts
Accrued bonuses
Accrued business taxes
Impairment loss
Accrued warranty costs
Accrued loss on construction contracts
Accrued retirement benefits
Liability for retirement benefits
Accrued directors’ retirement benefits

2) The reconciliations of the significant difference between the statutory tax rates and the effective tax rates reflected in the consolidated
statement of income and comprehensive income for the years ended March 31, 2013 and 2014 are presented as follows:

165

The Company owns commercial facilities and housing for rent in Kanagawa Prefecture and other areas. Profit from renting those real estate
properties was ¥1,426 million and ¥235 million for the years ended March 31, 2013 and 2014, respectively. Rental revenues were recorded as net
sales of real estate business and other, and rental expenses as cost of sales on real estate business and other. In addition, impairment loss onrental real estate properties of ¥7,025 million was recorded as extraordinary loss for the year ended March 31, 2013.
Carrying value on the consolidated balance sheets and corresponding fair value of those rental real estate properties for the years ended
March 31, 2013 and 2014 were as follows:(Millions of yen)
Carrying value
At beginning of the year
Net change during the year
At end of the year
Fair value at end of the year

FY 2012FY 2013¥ 10,987(7,465)
3,521¥ 12,866¥ 3,52137
3,559¥ 13,188

Notes:
1) The carrying value represents the acquisition cost less accumulated depreciation and impairment loss.
2) Decrease in the carrying value included in the net change during the year was mainly due to depreciation of ¥652 million and impairment lossof ¥7,025 million for the year ended March 31, 2013. Increase in the carrying value included in the net change during the year was mainly due
to acquisition of rental real estate properties of ¥280 million, and decrease in the carrying value mainly due to depreciation of ¥234 million, forthe year ended March 31, 2014.
3) The fair value is estimated for major rental properties based on the appraisal value obtained from outside real estate appraisers with reasonableadjustments for timing and for the other rental properties based on the assessed value for fixed-asset taxes.

SANKI REPORT 201485

Segment Information[For the year ended March 31, 2014](Millions of yen)

(Segment Information)

Reportable segments

1. Outline of reportable segments
The reportable segments of the Group are components for which discrete financial information is available and whose operating results are
regularly reviewed by the Executive Committee to make decisions on resource allocation and to assess performance.
The Group's business divisions are based on the activities of the Company. The consolidated subsidiaries of the Company conduct theirrespective business operations in cooperation with the relevant business divisions of the parent.
Thus, the Group consists of the segments based on the Company’s business divisions. It has four reportable segments: “Facilities construction”
offers general facilities construction services, “Machinery systems” offers services of industrial facilities such as FA systems, logistics systems
and conveyor equipment, “Environmental systems” offers services of environmental sanitation equipment such as equipment for cleaning
sewers, and “Real estate” offers services of rental and administration of real estate.
Effective the beginning of the year ended March 31, 2014, Shin-yu Services Co., Ltd. was newly included in consolidation. The subsidiary’s
business segments, which are not reportable segments, are stated as “Other”.
2. Calculation method for sales, profits or losses and other items by reportable segment
Accounting policies of the segments are substantially the same as those described in “Basis of Preparation of Consolidated Financial
Statements”. Segment performance is evaluated based on ordinary income or loss. Intersegment sales and transfers are recorded at the same
prices used in transactions with third parties.
Segment assets and liabilities are not disclosed because they are not reviewed to make decisions on resource allocation or to assess
performance.
3. Sales, profits or losses and other items by reportable segment[For the year ended March 31, 2013](Millions of yen)
Reportable segments
Facilities
construction

Machinerysystems

Environmental
systems

Real estate

Total

Adjustments(Note 1)

Consolidated(Note 2)

Sales to third parties¥ 128,358¥ 6,501¥ 17,038¥ 2,747¥ 154,646¥ 12¥ 154,658

Inter-segment sales
and transfers

267

0

106

—

374

(374)

—

¥ 128,626¥ 6,501¥ 17,145¥ 2,747¥ 155,020¥ (362)¥ 154,658¥ 1,196¥ (1,119)¥ 689¥ 1,305¥ 2,071¥ 608¥ 2,680

Sales :

Total sales
Segment profit (loss)

Facilities
construction

Machinerysystems

Environmental
systems

Real estate

Total

Other
(Note 1)

Total

Adjustments(Note 2)

Consolidated(Note 3)

Sales to third parties¥ 143,361¥ 9,846¥ 17,067¥ 1,077¥ 171,352¥ 132¥ 171,484¥ 11¥ 171,496

Inter-segment sales
and transfers

336

0

101

—

438

475

914

(914)

—

¥ 143,697¥ 9,846¥ 17,169¥ 1,077¥ 171,791¥ 607¥ 172,398¥ (902)¥ 171,496¥ 3,260¥ (287)¥ (23)¥ 147¥ 3,096¥ 63¥ 3,159¥ (13)¥ 3,146

Sales :

Total sales
Segment profit (loss)
Other items:
Depreciation

¥ 347

¥ 60

¥ 76

¥ 235

¥ 719

¥0

¥ 719

¥ 21

¥ 740

Interest income

16

0

5

—

22

0

22

23

45

Interest expenses

48

0

5

—

54

—

54

41

96

Equity in earnings(losses) of affiliates

—

—

1

—

1

—

1

(108)

(107)

(Note 1)
The category of “Other” includes business segments which are not reportable segments, such as leasing services, insurance agency services andothers.
Business segments of Shin-yu Services Co., Ltd., which was newly consolidated for the year ended March 31, 2014, were included in “Other”.
(Note 2)Adjustments for segment profit or loss of ¥13 million for the year ended March 31, 2014 included corporate general losses of ¥224 million whichwere not allocable to the reportable segments such as foreign exchange losses and reversal of interest expenses of ¥211 million which had been
allocated to each of the reportable segments for administrative purpose.
(Note 3)
Segment profit was adjusted to be equal to ordinary income in the consolidated financial statements.
(Other Information)

Other items:
Depreciation

¥ 377

¥ 74

¥ 80

¥ 652

¥ 1,184¥ 23¥ 1,207

Interest income

23

0

6

—

29

28

58

Interest expenses

48

2

6

—

56

38

95

Equity in earnings(losses) of affiliates

—

—

3

—

3

(9)

(6)

(Note 1)
Adjustments for segment profit or loss of ¥608 million for the year ended March 31, 2013 included corporate general profits of ¥191 million whichwere not allocable to the reportable segments such as interest and dividends income and reversal of interest expenses of ¥417 million which had
been allocated to each of the reportable segments for administrative purpose.

[For the years ended March 31, 2013 and 2014]
1. Product and service information
Disclosure of product and service information has been omitted because similar information was disclosed in “Segment information”.
2. Geographical information(1) Sales
Disclosure of geographical sales information has been omitted because the sales to third parties of the Japan operation accounted for over
90% of the sales in the consolidated statements of income and comprehensive income.
(2) Property, plant and equipment
Disclosure of property, plant and equipment information has been omitted because property, plant and equipment located in Japan accounted
for over 90% of property, plant and equipment in the consolidated balance sheets.

(Note 2)
Segment profit was adjusted to be equal to ordinary income in the consolidated financial statements.

86

SANKI REPORT 201487

3. Major customer information
Disclosure of major customer information has been omitted because the sales to any specific customers of third parties did not account forover 10% of the sales in the consolidated statements of income and comprehensive income.
(Information about impairment losses on tangible fixed assets by reportable segment)[For the year ended March 31, 2013]
Impairment loss

Facilities
construction¥—(Millions of yen)
Machinery systems¥—

Environmental
systems¥—

Real estate

Total

¥—

¥—

Adjustments(Note)¥ 7,071

Consolidated¥ 7,071(Note)
Adjustments of ¥7,071 million were impairment loss on rental real estate properties of ¥7,025 million and impairment loss on welfare facilities tobe sold of ¥46 million.

FY 2012FY 2013¥ 1,106.32¥ 1,142.74

Net income (loss) per share¥ (71.04)¥ 26.46

Diluted net income per share¥—¥ 26.45

Net assets per share

Disclosure of diluted net income per share for the year ended March 31, 2013 was omitted because net loss was recorded and there were no
dilutive shares for the year.
Basis for the calculation of net income (loss) per share and diluted net income per share is summarized as follows:(Millions of yen)

Facilities
construction

Machinerysystems¥—¥—

Environmental
systems

Real estate

Other

Total

Adjustments(Note)

Consolidated

¥—

¥—

¥—

¥—

¥ 143

¥ 143

(Millions of yen)

FY 2012FY 2013¥ (4,992)¥ 1,763

Basic:Net income (loss)——¥ (4,992)¥ 1,763

70,273 thousand shares

66,637 thousand shares

Adjustments to net income——

Increase in shares of common stock(Of which, exercise of stock subscription rights)—(—)

31 thousand shares(31 thousand shares)

Outline of dilutive potential which was not included in calculation ofdiluted net income per share due to non-dilutive effect——Amount not attributable to shareholders of common stock[For the year ended March 31, 2014]

Impairment loss

Per Share Data

Net income (loss) attributable to common stock
Average number of shares of common stock outstanding
Diluted:(Note)
Adjustments of ¥143 million were impairment loss on welfare facilities to be sold.
(Information about amortization and balance of goodwill by reportable segment)[For the years ended March 31, 2013 and 2014]
Not applicable(Information about gain on negative goodwill by reportable segment)[For the years ended March 31, 2013 and 2014]
Not applicableAs stated in “Accounting Changes” of “Notes to Consolidated Financial Statements”, the Company adopted “Accounting Standard for Retirement
Benefits” and applied the provisional treatment set out in Section 37 of the standard at the end of the year ended March 31, 2014.
As a result of this change, net assets per share decreased by ¥45.96 at March 31, 2014.

Subsequent Events
1. Retirement of treasury stock
According to the resolution at the meeting of its board of directors held on May 13, 2014, the Company has retired its treasury stock inaccordance with Article 178 of the Corporation Law as follows:
1) Type of stock:
Common stock of the Company
2) Total number of shares retired:
3,000,000 shares
3) Retirement date:
May 20, 20144) Total number of shares issued after retirement: 66,661,156 shares
2. Acquisition of treasury stock
It was resolved at the meeting of its board of directors held on June 26, 2014 that the Company would acquire its treasury stock in accordancewith Article 156 as applied with relevant changes in interpretation pursuant to the provision of Article 165, Section 3 of the Corporation Law.
(1) Purpose of acquisition
To exercise agile capital policies in response to changes in business environment and to return profits to shareholders(2) Outline of items related to acquisition
1) Type of stock:2) Total number of shares to be acquired:
3) Total amount of acquisition costs:
4) Period of acquisition:5) Acquisition method:

88

Common stock of the Company
2,000,000 shares (upper limit)¥1,700 million (upper limit)
From June 27 to September 30, 2014
Purchase on the Tokyo Stock Exchange
SANKI REPORT 201489

Independent Auditor’s Report

Corporate Information and Share Information(As of March 31, 2014)

Corporate information
Company name

SANKI ENGINEERING CO., LTD.

Date of establishment

April 22, 1925

Stated capital

8,105.18 million yen (As of March 31, 2014)

Representative

Takuichi Kajiura, President

Principal lines of business

Facilities construction, plant & machinery systems, real estate

Number of employees

Consolidated: 2,283 Non-consolidated: 1,908 (As of March 31, 2014)

Offices

Branch: 3 Branch Office: 15 Laboratory: 1 (As of June 26, 2014)

Head office8-1, Akashicho, Chuo-ku, Tokyo

Share information
Fiscal year
Annual general meeting ofshareholders
Trading unit

(As of March 31, 2014)

April 1 to March 31 of the following year

Ownership statistics

Late June, every year

Treasury stock 1
4,124 thousand shares (5.92%)

1,000 shares(Changed to 100 shares on September 1, 2014)

Number of shares authorized

192,945,000 shares

Number of shares issued

69,661,156 shares

Number of shareholders

3,598Transfer agent and special account management institution
Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo
Stock exchange listing

Tokyo Stock Exchange

Securities code

1961

Individuals and other 3,270
13,315 thousand shares(19.11%)
Financial institutions 36
29,701 thousand shares(42.64%)Foreign corporations and other 138
17,066 thousand shares(24.50%)

Other corporations 132
5,160 thousand shares

Securities companies 21
295 thousand shares（7.41%）（0.42%）

Major shareholders
Number of shares held (thousand shares)

Shareholding ratio (%)

Mitsui Life Insurance Company Limited.

6,500

9.92

Meiji Yasuda Life Insurance Company

5,700

8.70

Nippon Life Insurance Company

5,256

8.02

Sanki Kyoueikai

2,823

4.31

Japan Trustee Services Bank, Ltd. (Trust account)

2,571

3.92

CBNY DFA International Cap Value Portfolio

1,642

2.51

The Master Trust Bank of Japan, Ltd. (Trust account)

1,538

2.35

Sanki Engineering employee shareholders’ association

1,223

1.87

JP Morgan Chase Bank 385093

1,168

1.78

Ono Pharmaceutical Co., Ltd.

1,060

1.62

* Although the company holds 4,124 thousand shares of treasury stock, the company is excluded from the major shareholders listed above.
Shareholding ratio is calculated excluding treasury stock.

90

SANKI REPORT 201491

List of Business Locations and Introduction to Group Companies
The Sanki Engineering Group aims to build a comfortable environment for people and the earth by leveraging“total engineering competency” in a wide range of regions and business domains.
Together with our customers, we will strive as a Group to contribute to the realization of a comfortable,
low-carbon society.

Hokkaido branch office

Domestic business locations

Representative offices and Group companies overseas
Representative officeGroup company

AQUACONSULT
Anlagenbau GmbH
Tohoku branch office
Hokuriku
branch officeKantobranch office

Mikawa branch office
Chubu branch

Kyushubranch office

Chugokubranch office

Kyoto branch office
Kobebranch office

Manufacture and sale of aeration

Austria Office
Ibaraki branch office
Chiba branch officeHong Kong Office

Head office
Tokyo branch

THAI SANKI ENGINEERING &CONSTRUCTION CO., LTD.

Toyotabranch office

Shizuoka branch office

Sanki Construction
Engineering (Shanghai) Co., Ltd.

Manufacture and sale of aeration

Facility design, construction,
maintenance and consulting

Salt Lake City Office

Bangkok Office

Facility design, construction,
maintenance and consulting

Kansai branch
Shikokubranch office

AEROSTRIP
Corporation

Sanki Shonan Training Center
Yokohama branch office
Yamato Engineering Center
Technical Research &Development InstituteConsolidated subsidiaries

Non-consolidated subsidiary

Affiliates not accounted for by the equity method

Sanki Techno Support Co., Ltd.

Sanki Kankyo Service Co., Ltd.

Tomakomai Netsu Service Co., Ltd.

PFI Okubo Techno Resource Co., Ltd.

Established April 1, 1980 Capital ¥100 million
Business areas● Design, construction, operation/management, repair and maintenance of
HVAC, plumbing and electricity work
● Energy saving diagnosis and consulting● Building IP phone systems, call center systems and networks

Established June 29, 1990 Capital ¥50 million
Business areas● Design, construction, management and work contracting of environmental protection facilities including watersupply and sewage facilities and waste treatment facilities, etc.
● Operation, maintenance and management and sale of chemical products for above facilities

Established
CapitalBusiness areas

Established
CapitalBusiness areas

Sanki Sangyo Setsubi Co., Ltd.
Established May 1, 1980 Capital ¥20 million
Business areas● Installation, relocation, removal and altering of general equipment(production, transportation, etc.)● Electrical wiring, instrumentation work, computer software changes

Sanki Kako Kensetsu Co., Ltd.
Established September 1, 1980 Capital ¥80 million
Business areas● Design, construction, operation/management, maintenance, upgrading andimproving of waste treatment facilities● Manufacture, sale and installation of solid-liquid separators● Design, construction and maintenance/management of water/
wastewater treatment facilities

92

THAI SANKI ENGINEERING & CONSTRUCTION CO., LTD.
Established
CapitalBusiness areas

June, 2008
฿16 million
Facility design, construction, maintenance and consulting

Affiliates accounted for by the equity method

Shin-yu Service Co., Ltd.* *Became a consolidated subsidiary in fiscal 2013.
Established
CapitalBusiness areas

Period of business

December 3, 2004
¥10 million
Update, maintenance, management and operation of wastewater treatment facilities
and emergency generators at Okubo Water Purification Plant, Saitama Prefecture
Design and construction 3 years, 4 months; operation, maintenance and management
20 yearsOu Clean Technology Co., Ltd.
Established
CapitalBusiness areas

AQUACONSULT Anlagenbau GmbH
Acquired a controlling interest in September, 2006
Capital€18 thousand
Business areas Manufacture and sale of aeration

July 20, 1971
¥200 million
Heat supply to multi-unit housing, operation and maintenanceof cleaning center facilities

February 1, 2005
¥494,825,000
Treatment and incineration of industrial and general waste
and supply of heat

Akita Eco Plash Co., Ltd.
Established
CapitalBusiness areas

February 13, 2004
¥250 million
Waste plastic processing and production of recycled
products

August 1, 1980
¥10 million
Insurance agency, leasing

SANKI REPORT 201493