FY2019 to FY2021 Sanki Engineering Group Medium-Term Management Plan“Century 2025” Phase 2<Enhance reliability
and become the company of choice for customers>

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SANKI ENGINEERING CO., LTD.

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Contents● Relationship between the long-term vision
and Phase 2● Reflecting on Phase 1● Initiatives under Phase 2● Sanki standard● Contributing to the Group’s SDGs
● Finally

SANKI ENGINEERING CO., LTD.

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Relationship between the Long-Term Vision and Phase 2
We aim to further enhance quality and reliability through the long-term vision, “Century 2025,”
and become the company of choice for stakeholders.
In Phase 2, we will continue initiatives to enhance quality that were started under Phase 1 andpromote new initiatives to enhance reliability.
Phase 3 (FY2022 to FY2025)
Phase 2 (FY2019 to FY2021)

Company of choice

Enhance Reliability

Phase 1 (FY2016 to FY2018)

Enhance Quality
FY2016FY2019FY2022■Phase 1 ⇒ We will enhance quality by refining our skills and wisdom and developing our human resources as afoundation for responding to change.

2025年度■Phase 2 ⇒ Superior quality generates stakeholder satisfaction, and stakeholder
satisfaction and confidence leads to reliability.
■Phase 3 ⇒ Increased reliability will encourage more stakeholders to choose our company.

SANKI ENGINEERING CO., LTD.

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Reflecting on Phase 1

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Reflecting on Phase 1 (Key Initiatives)
Results

Initiatives under Phase 2

Increased productivity at construction sites through the introduction of electronic
procurement, establishment of on-site support mechanisms, creation of design support systems, Increase effectivenessand implementing the unique “Smile Site Plan” on-site support measure.

Machinery Systems BusinessMeeting the the need for labor reduction through the introduction of integrated robotic
systems and systems for logistics facilities

Build up the records fromsaid introductions

Environmental Systems
Business

Response to changes in social structure, as well as energy saving and energy creatingneeds, through receipt of orders for DBO projects and full-scale entry into the biomass
gasification generation market

Build up steady records

Redevelopment of Yamato
area

Promoted creation of the Sanki Techno Center, construction of the Machinery Systems
Division’s Yamato Product Center, and redevelopment of land for leasing

Full-scale operation

Initiatives to promote
growth strategy

Facilities Construction
Business

Challenge to expand business Created an environment for developing new technology by rebuilding the R&D Center
areas and create new(former Technical Research & Development Institute), and developed an aluminum refrigerant
technologies
piping method that achieves labor reduction

Initiatives toenhance the Sanki
Brand

Initiatives tostrengthen corebusinesses

Initiative

Enhance the Sanki spirit ofgroup employees

Reformed awareness through internal communication such as by holding meetings to
exchange opinions (CCUs) attended by employees and management (the President anddivision chiefs)

Continue

Create better working
conditions

Conducted a series of initiatives under the Smile Project, which is a unique project to combat
long work hours, and conducted systemic reform to allow for diverse working styles

Providing better
frameworks

Review operational processe

Introduced a range of health and safety-related tools, provided in-depth education relating tosuch, and promoted upskilling by providing training for young workers from veterans

Utilize the Sanki Techno
CenterPromotion of open
innovation

Secured future stock projects and promoted LCE by actively accepting orders for new largescale construction projects and challenging ourselves to undertake DBO projects for waste
incineration facilities

Build up steady records

Expansion of scope of Facility Build up records in PM, CM , and the smart building business (instrumentation, and ICT
Systems Businesssystems)

Expand scope of sales

Promotion of stock-based
businesses[Notes]• DBO (Design Build Operate) is a means of achieving the private management of publicly owned facilities by placing a blanket order for design, building, operation, and maintenance with a private enterprise• PM（Property Management）is a series of tasks that aims to increase the asset value of individual real estate assets. For the Company, this particularly relates to proposals to increase asset value through facility
management• CM (Construction Management) is a series of tasks for which a company is contracted by the customer to manage entire construction work projects from a neutral standpoint, to ensure that construction
progresses smoothly• LCE (Life Cycle Engineering) is a business concept created by the Group to provide new construction, management, maintenance, renewal, and reconstruction services throughout a building’s lifecycle• CCU (Century Communication Up) is a communication method that is unique to the Group. A range of communication is conducted, such as between the President and employees, between division chiefs andtheir subordinates, and between female employees

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Reflecting on Phase 1 (Consolidated Results)(Unit: billion yen)

(Unit: billion yen)

Net sales

35

250
200

Gross profit

185

195

190

212

170

168

31.6

30
25

25.0

22.0 22.5

23.0

FY2016FY2017

24.0

20

150

15

100

10
50

5
0

0
FY2016FY2017
Target(Unit: billion yen)

FY2018TargetResult(Unit: billion yen)

Operating income

12.0

10.6

10.0
8.0

FY2018ResultOrdinary income
11.2

12.0
10.0

6.5

7.0
6.0

7.5
6.6

8.0

6.0

6.0

4.0

4.0

2.0

2.0

0.0

0.0
FY2016FY2017
Target

FY20187.0

6.8

FY2016

Result7.5

FY2017
TargetSANKI ENGINEERING CO., LTD.

7.4

8.0

FY2018Result6

Reflecting on Phase 1 (Consolidated Results)<Gross profit margin>
Previous medium-term management plan term

16.0%
14.0%

12.8%

12.3%
11.4%

12.0%

10.7%

14.7%

14.9%

FY20182018年度Phase 1FY20172017年度

18.0%

13.4%

10.0%

10.0%
FY20162016年度FY20152015年度

2014年度FY20142013年度FY20132012年度FY2012

2011年度FY2011

8.0%<Ordinary profit margin>
Previous medium-term management plan term

7.0%

Phase 1
5.3%

6.0%
4.5%

5.0%

4.1%

Pursued measures to improve
quality

Both the gross profit margin andthe ordinary profit marginincreased compared to the termof the previous medium-term
management plan

4.4%

4.0%
1.8%

FY2012
2012年度FY20132013年度FY20142014年度

2.0%

1.7%

2.1%

1.5%

FY2011
2011年度3.0%

1.0%

SANKI ENGINEERING CO., LTD.

FY20182018年度FY20172017年度FY20162016年度FY20152015年度

0.0%

7Initiatives Under Phase 2

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Basic Policy of Phase 2
In Phase 2, we will enhance reliability by① In addition to further pursuing the measures in Phase 1 aimed at improving the quality of technology and humanresources,② enhancing understanding of the company by disclosing financial & capital policies and ESG policies, andby strengthening transmission of information
and becoming the company of choice during the next phase

Phase 3Phase 2Phase 1Company of Choice

Enhance Reliability

Improve component technologies
and achieve stable growth◆ Promote Growth
Strategies
Pursue future growth in the areasof technology and business◆ Enhance the Sanki
Brand
Develop human resources thatpossess the Sanki spirit,

Further pursue quality• Improve construction productivity• Meet energy saving and labor
reduction needs• Promote technological R&D• Continue to receive orders for stock
projects• Create better work conditions• Improve internal communication◆ Disclose financial & capital policies
and ESG policies◆ Reinforce Information Transmission

SANKI ENGINEERING CO., LTD.

Increasing reliability and becoming
the company of choice◆ Strengthen Core
Businesses

Refining Technical Skills
and Human Resources toEnhance Quality

Enhance Quality

Long-Term Vision“Century 2025”
Become the company
that is more likely to bechosen by stakeholders

9Phase 2 Business Environment and Issues●Social environments in which the Group operates
Social environment

Issues◆ Global movement away from carbon in order to achieve Paris Agreementtargets

Promoting introduction of systems that conserve and generateenergy◆ Trend towards declining birth rate, aging population, and declining population inJapan

Catering to labor reduction and automation needs◆ Advance workstyle reforms

Reduce total working hours by improving productivity●Business environment in the segment in which the Group operates
Segment

Business environment

IssuesFacilities
Construction
Business◆ Firm demand for large urban redevelopment projects
and capital investment in the manufacturing industry,etc.
◆ Rapidly changing social needs against a backdrop ofchanging social structures and technologicalinnovation, etc.
◆ Implementation of i-Construction and BIM, etc.
◆ Globalization of the Japanese manufacturing industry◆ Receiving orders for future stock projects for LCE
and preventing long working hours and overwork◆ Improving specialist knowledge and component
technologies◆ Speeding up development of ICT, AI, and cloudcomputing technologies◆ Constructing sturdy management bases atoverseas locations◆ Trend towards labor reduction and automation◆ Expansion of logistics market◆ Expanding business reach for hybrid systems thatcombine robotics and transport facilities◆ Developing market for material handling systems
for logistics facilities◆ Change in scale of infrastructure facilities in line withchanges to the composition of the population◆ Need to update and increase efficiency of aging
environmental systems facilities◆ Promotion of facilities planning and operation by theprivate sector◆ Developing a new system to deal with load
fluctuation◆ Acquiring technology aimed at energy saving andlabor reduction◆ Acquiring bid requirements for DBO projects, etc.

Machinery
Systems
Business

Environmental
Systems
Business

SANKI ENGINEERING CO., LTD.

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Key Initiatives in Phase 2

1. Initiatives to strengthen core businesses[Improve component technologies and achieve stable growth]
Segment

Facilities
Construction
Business

Initiatives
Improving productivity and maintaining high profitability by establishing company-wideorganizational construction systems, including subcontractors, and utilizing the “Sanki Techno
Center”
Improving construction quality through the use of digital tools such as ICT and BIM
Improving quality of sales and design by revitalizing internal communication

Facility Systems
Business

Providing new consulting services
Expanding hybrid system products and services to meet labor reduction and automation needs

Machinery
Systems Business

Environmental
Systems Business

Establishing production management systems and improving productivity at the new “Yamato
Product Center” plant
Proactively receive orders for infrastructure facilities corresponded to changes in the society
and environment, such as the declining population
Developing energy saving and energy creating fields such as biomass gasification power
generation facilities

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Key Initiatives in Phase 2

2. Initiatives to promote growth strategy[Pursue future growth in the arears of technology and business]
Item

Initiatives

Developing next-generation
technologies through the
R&D Center

Developing technology in digital fields such as ICT, AI, and cloudcomputing using open innovation

Further catering to labor
reduction and automation
needs

Creating next-generation technology at the new “Yamato Product Center”
plant

Steady development ofoverseas businesses

Rebuilding foundations for local systems with an eye to business tie-ups
and M&A

Rebuilding the food service
equipment business

Utilizing the food service equipment plans and management knowhow
accumulated by the Company

Promoting stock-based
businesses for the future

Proactively receiving orders for new large-scale construction projects and
DBO projects to expand LCE projects[Note]• Stock-based businesses are businesses that are based on the Group’s ample stock of construction , particularly focused on the LCE business.
They also include businesses for which stable long-term income is anticipated, through means such as long-term operation and management contracts basedon the PFI method, which are anticipated to increase in the future

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Key Initiatives in Phase 2

3. Initiatives to enhance the Sanki Brand[Develop human resources that possess the Sanki spirit and contribut to society]

Item

Enhancing qualityof human
resources andtechnology

Initiatives
Utilizing the “Sanki Techno Center” to provide thorough education and training on
topics such as technology, safety, ethics, management, and manners for everyone
from new employees to veteran employees, including subcontractors
Establishing better frameworks relating to HR, salaries, and welfare, etc. throughcommunication
Developing a healthy workforce and enabling the coexistence of a diverse workforce
through the “Smile Work Guidelines”

Social contribution
activities

Contributing to the resolution of global environmental problems through businessactivities
Proactively support culture and sports activities, starting with environmental activities[Note]• Smile Work Guidelines are guidelines that are unique to the Group, which provide tips on how to promote diverse work styles

SANKI ENGINEERING CO., LTD.

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Financial & Capital Policies in Phase 2

Financial & capital policies
Raising medium- and long-term corporate value
Workload that takes
workstyle reforms
into account

Maintaining andimproving profitability
Generate profits

Item

Initiatives

Investments in the
futureStrengthen investments for future growth, such as R&D, capital investments andeducation

Return of profits tosteakholders• Set total return ratio as targets and return profits to shareholders in a stable andcontinuous manner• Return funds to business partners by improving payment terms and other means

Improved capitalefficiency• Continuously reduce strategic shareholdings• Review the composition of epuity capital and ensure the flexibility and maneuverabilityof capital policies

ROE of 8.0% or more

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ESG Policies in Phase 2

ＥＳＧ Policies【Create sustainable social value】
Item

Initiatives

E (Environment)• Contribute to global environmental problems through businessactivities by decarbonization, saving energy and creating energy• Continue with “SANKI YOU Eco Contribution Points”• Continue to participate in cultivating “Sanki Forest” and theafforestation projects

S (Society)• Pursue workstyle reforms by continuing with the “Smile Project” and“Smile Site Plan”• Carry out measures to improve communication• Proactively carry out cultural and sports support, starting withenvironmental activities

G (Governance)Continue with initiatives aimed at achieving better governance, based on“Sanki Engineering’s Corporate Governance Guidelines”

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Reinforce Information Transmission in Phase 2

Proactive transmission of information【Spread Sanki brand even more within and outside of the Company】
Item

Initiatives

Augment IR
activities• Disclose basic policies for financial & capital policies• Continue to create opportunities for dialogue with shareholders andinvestors (such as implementation of corporate tours)• Continue to participate in exhibitions for individual investors• Augment the integrated corporate report, “SANKI REPORT”

Expand PR
activities• Continue to participate in exhibitions that have a high marketing effect• Promoting understanding of the Company through corporate
messaging and advertising• Appeal to a wide range of customers using a wide variety of media

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Financial Performance Targets in Phase 2
Aiming for sustainable growth and medium- to long-term increases in corporate value.
Phase 1 (FY2016 to FY2018)
Result
FY2016FY2017

Phase 2 (FY2019 to FY2021)
Target
FY2018FY2019FY2020

FY2021

Net sales¥168.5 bn¥170.1 bn¥212.3 bn¥200 bn

Gross profit(ratio)¥22.5 bn¥25.0 bn

¥31.6 bn

¥30.0 bn

¥31.0 bn

¥32.0 bn

(13.4%)(14.7%)(14.9%)(15.0%)(15.5%)(16.0%)

Ordinary
income (ratio)¥6.8 bn¥7.4 bn¥11.2 bn¥9.0 bn¥9.5 bn¥10.0 bn

(4.1%)(4.4%)(5.3%)(4.5%)(4.8%)(5.0%)

Approach to setting targets: Earnings were strong in fiscal 2018 due to robust capital investments by ourcustomers in the manufacturing sector during this fiscal year. We have set targets for fiscal 2019 andbeyond that take into account the possibility of a slowdown in this demand.

Ordinary profit
marginDividends

Annual dividends per share of ¥60 andhigher

100
80

9.0
6.8

9.5

10.0

7.4

60

Acquisition oftreasury stock

About 5 million shares

Total return ratio

70 % or higher

ROE

11.2

120

5.0% and higher (final fiscal year)

Aiming for ongoinggrowth from Phase 2

Ordinary income (Billion yen)Phase 2 Management targets

40
20

8.0 % or higher (final fiscal year)

0
FY2016FY2017SANKI ENGINEERING CO., LTD.

FY2018FY2019ResultPlan

FY2020

FY2021

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Sanki Standard
Sanki Engineering GroupManagement Philosophy<Sanki Standard>Company of Choice

Providing Satisfaction for Customers
Sanki’s technology plays a role in improving

It is not enough to rely solely on Sanki’s

the quality of products and services createdtechnology

by clients

We create comfortable environments throughengineering and widely contribute to social
development

Trust between people, a spirit of mutualThis is an example of putting the Sanki

cooperation, and a spirit of mutual growthEngineering Group Management Philosophy

are importantof “we create comfortable environments
through engineering and widely contribute tosocial development” into practice and I think

We will refine our skills and wisdom with the aim ofincreasing client satisfaction
We will place significance on communication andmutual respect

this is what reliability looks like

It is also important to ensure that the entire
Sanki group is trusted by society and is atrusted brand through our compliance,
stable management, and corporate culture in

To that end, we must improve our technology

order to be chosen by our customers and all

to cater to a range of needs and earnestlyof our stakeholders.

promote “refining our skills and wisdom with

“We will remain aware that we are a member

the aim of increasing client satisfaction”

of society and will act accordingly,” and we

We will remain aware that we are a member ofsociety and will act accordingly

will continuously and systematically
implement policies in-line with this
Our long-term vision, “Century” 2025 is areflection of Sanki Engineering GroupManagement Philosophy

President

SANKI ENGINEERING CO., LTD.

Tsutomu Hasegawa

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Contributing to the Group’s SDGs
Four sustainable initiatives for the future

1

2

3

4

Amenity

Industry

Eco&Energy

Environment

Technology that excludes factors
which cause discomfort, such asheat and cold, and provides asuitable environment is essential tohuman activities
This kind of technology can be said
to be essential to ensure a healthy
lifestyle, promote welfare and highquality education, and provide asuitable environment for activities,
so Sanki Engineering creates a
comfortable environment andcontributes to the broader
development of society through“Sanki Standard = Engineering.”

We support cutting-edge industry
with Sanki Engineering’s unique
technologies, such as clean room
technology and transporttechnology.
We support Japanese cutting-edge
industry through clean systems thathave clean capabilities to the highstandard required by thesemiconductor and pharmaceuticalfields and that combine energy
efficiency with space-savingfeatures, environmental testing
equipment and exhaust gas
treatment equipment that work in all
weather conditions, which isessential in the automotive industry,and high-level luggage transporttechnology that supports theoperation of international airports.
We work with other companies in
the Mitsui Group.

As a response to global
environmental issues, corporate
measures to combat global warming
are an essential social requirement,
Sanki Engineering provides general
support for energy efficiency
measures for buildings, from energy
analysis through to planning,
design, and construction. We
contribute to the prevention of
global warming by coordinating a
range of measures that arematched to the needs of clients andthe characteristics of local
communities, from introducing
highly efficient systems and optimal
control through to utilization of as
yet unutilized heat and energy
generation.

Providing fresh and safe water toeveryone. Cleaning dirty water andreturning it to the environment.

SANKI ENGINEERING CO., LTD.

We work to conserve theenvironment and create a recyclingbased society, preserve
biodiversity, and contribute to thesustainability of nature’s bounty
through the application of theunique engineering of SankiEngineering.

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Finally

The Sanki Group aims to become a company that all of our stakeholders
rely on by providing precise engineering and thorough communication
As a result, I believe that we will become a company of choice as
described in the long-term vision
We will achieve sustainable growth and medium to long-term
increases in corporate value

SANKI ENGINEERING CO., LTD.

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Remarks on Business Forecast
The descriptions contained in these materials, except for those as to past or present facts, are based on anticipations,assumptions, evaluations and estimations in light of the information available at the present moment.
Therefore, the actual results may differ from those presented herein as a consequence of various factors, including
uncertainties and prospective changes in the economic environment.
<Major factors>● Credit exposures of client companies.
● Sudden changes in material and equipment cost and labor cost.
● Stock Market fluctuations.
● Increase in retirement benefits or debts.
● Country risk.
● Accident or disaster in facilities construction and other.
● Outbreak of the unprofitable project● Risk in the Real Estate Business.
● Risk of legal action.
● Risk of legal regulation.
● Risk of the natural disasters.

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