The 2nd Quarter FY2016
Summary of Financial Results
Nov 11, 2016

Sanki Engineering Co., Ltd.
1

Contents
03
Key Points of Financial Results04
The 2nd Quarter FY 2016 Results (Consolidated)
05
Orders Received by Segment (Consolidated)
06
Net Sales by Segment (Consolidated)
07
Ordinary Income and Loss by Segment (Consolidated）
08
Quarterly Results (Consolidated)
09
Operating Results over the Last 5 Years (Consolidated)
10
Orders Received by Industry (Consolidated)
11
Orders Received by Type
12
Major Projects
13
Major Projects over 1 Billion yen(By Industry)
14
Profit Improvement Factors and Measures
15
Balance Sheet (Consolidated)
16
Statements of Cash Flows (Consolidated)
17
Dividends and others
18
FY2016 Forecast (Consolidated)
19
FY2016 Forecast of Orders Received and Net Sales by Segment (Consolidated)
20
Long-Term Vision “Century 2025”
Medium-Term Management Plan “Century 2025” Phase1「Key Initiatives and Strategies」21
22
Medium-Term Management Plan “Century 2025” Phase1 「ESG Policy」

2Key Points of Financial Results〈Orders received〉
Orders received by Facilities Construction Business decreased
because of a decline in large-scale projects year-on-year basis,
while those by Industrial HVAC segment continued to increase.
Orders received by Machinery Systems decreased compared withthe same period of the previous year,in which a large-scale projectorder was received,and the overall orders received marked lower
than that period.

〈Net Sales , Profit〉
Net sales declined from the same period of the previous year due
to delays in construction progress and other factors. On the profit
side,gross profit margin continued to be improved because of
improved work efficiency in addition to rigorous cost management ;while operating income,ordinary income,and profit attributable toowners of parent declined due to the impact of decreased sales.
3

【 Overall Results 】
The 2nd Quarter FY 2016 Results(Consolidated)
・Net sales declined from the same period of the previous year due to delays in the construction progress,and as a result,the balance carried forward
continued at a high level.
・Operating income,ordinary income,and profit attributable to owners of parent exceed the each forecast amount at the beginning of FY,although
they all declined from the same period of the previous year. Both gross profit and gross profit margin continued to be improved. (Millions of yen)
September
2014

September
2015

September
2016

Year on year

Rate ofchange(%)

Orders received

81,24899,20690,912(8,293)(8.4)

Balance carried forward

113,960

125,745

126,960

1,214

1.0

Net sales

75,50775,48070,341(5,139)(6.8)

74,912

74,66869,491(5,177)

(6.9)

595

812

849

37

4.6

4,925

8,103

8,144

40

0.5

4,755

7,918

7,940

22

0.3

169

185

204

18

10.1

6.5

10.7

11.6

0.9pt.

―

Selling, general and administrative expenses

7,631

7,926

8,087

160

2.0

Operating income (loss)(2,705)

176

57

(119)

(67.6)

Non-operating income

734

603

515

(88)

(14.7)

Non-operating expenses

354

255

203

(52)

(20.5)

Ordinary income (loss)(2,325)

524

368

(155)

(29.7)

Profit attributable to owners of parent (loss)(1,327)

255

229

(25)

(10.1)

Completed construction contracts
Real Estate and Others
Gross profit
Completed construction contracts
Real Estate and Others
Gross profit margin(%)

4

【 Orders Received 】
Orders Received by Segment (Consolidated)
・Orders received by Facilities Construction Business decreased because of a decline in large-scale projects year-on-year basis,
while those by Industrial HVAC segment continued to increase.
・Orders received by Machinery Systems decreased compared with the same period of the previous year,(Millions of yen)in which a large-scale project order of machinery systems was received.

September
2014

September
2015

September
2016

Year onyear

Rate ofchange(%)

HVAC and Plumbing for Buildings

31,39634,02333,979

(44)

(0.1)

Industrial HVAC

21,94325,29427,3992,104

8.3

Electrical Systems

11,807

12,6998,337(4,362)(34.4)

Facility Systems

4,803

6,623

5,274

(1,349)(20.4)

69,95078,642

74,990(3,651)(4.6)

Machinery Systems

2,888

6,981

3,287

(3,694)(52.9)

Environmental Systems

7,971

13,133

12,451

(682)

(5.2)

10,85920,115

15,738(4,376)(21.8)

80,81098,75790,729(8,027)(8.1)

Real Estate Business

550

766

787

21

2.7

Others

228

272

259

(13)

(4.9)

Adjustments *

(340)

(590)

(864)

(273)

―

81,24899,20690,912(8,293)(8.4)

Segment

Total of Facilities Construction BusinessTotal of Plant & Machinery Systems Business
Sub-total

Total＊ Adjustments eliminate inter segment transactions included in each segment.

5

【Net Sales】
Net Sales by Segment (Consolidated)
・Net sales in HVAC and Plumbing for Buildings decreased due to delay of the construction progress,and as a result,the balance carried forward of this segment amounts to approximately 64,600 million yen.
・Net sales in Machinery Systems increased because there were a large amount of net sales from an order of a large-scale
project received in the previous year.
(Millions of yen)
September
2014

September
2015

September
2016

Year onyear

Rate ofchange(%)

HVAC and Plumbing for Buildings

31,051

28,25524,001(4,254)(15.1)

Industrial HVAC

21,272

22,23022,082

(147)

(0.7)

Electrical Systems

8,480

10,010

9,065

(945)

(9.4)

Facility Systems

3,945

4,884

4,587

(297)

(6.1)

64,74965,381

59,736(5,644)(8.6)

Machinery Systems

4,864

3,307

4,384

1,076

32.5

Environmental Systems

5,401

6,134

5,782

(351)

(5.7)

10,265

9,441

10,166725

7.7

75,01474,82369,903(4,919)(6.6)

Real Estate Business

550

766

787

21

2.7

Others

242

259

254

(4)

(1.9)

Adjustments *

(300)

(368)

(604)

(235)

―

75,50775,48070,341(5,139)(6.8)

Segment

Total of Facilities Construction BusinessTotal of Plant & Machinery Systems Business
Sub-total

Total＊ Adjustments eliminate inter segment transactions included in each segment.

6

【Profit】
Ordinary Income and Loss by Segment (Consolidated)(Millions of yen)
September
2014

September
2015

September
2016(2,011)

866

(15)

(881)

―

Machinery Systems

(54)

(251)

119

370

―

Environmental Systems

(931)

(941)

(755)

186

―

(2,996)

(325)

(651)

(325)

―

Real Estate Business

111

114

103

(11)

(9.7)

Others

22

17

20

2

16.2

Adjustments *

537

718

895

177

24.7

(2,325)

524

368

(155)

(29.7)＊ The amount of adjustments of profit and loss by segment indicates that of all company’s profit and loss not distributed
into each segment.

7

Segment
Facilities Construction

Segment Profit (Loss)

Sub-total

Total

Year onyear

Rate ofchange(%)

【Overall Result】
Quarterly Results (Consolidated)(Millions of yen)
FY2014FY2015FY2016

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

Orders received

42,48938,75855,92336,226

46,38552,82048,31135,75355,33835,573

Net sales

32,82542,682

47,14556,94534,49540,98547,02256,39733,86636,474Gross profit

1,700

3,224

4,753

8,287

3,291

4,812

6,043

8,783

3,905

4,238

5.2

7.6

10.1

14.6

9.5

11.7

12.9

15.6

11.5

11.6

Selling, general and administrative expenses

3,786

3,845

3,552

3,831

3,921

4,005

3,783

4,709

4,171

3,915

Operating income (loss)(2,085)

(620)

1,201

4,456

(630)

807

2,259

4,073

(265)

323

(6.4)

(1.5)

2.5

7.8

(1.8)

2.0

4.8

7.2

(0.8)

0.9

(1,846)

(478)

1,612

4,522

(254)

778

2,554

5,055

27

341

―

(18)

(116)

(312)

(55)

30

96

(371)

―

(32)

(1,215)

(111)

1,119

2,669

(266)

521

1,790

3,282

(2)

232

Gross profit margin(%)

Operating profit margin(%)
Ordinary income (loss)
Extraordinary income (loss)
Profit attributable to owners of parent (loss)

8【Operating Results】
Operating Results over the Last 5 Years (Consolidated)(Millions of yen)Orders received
and Net sales

Profit200,000

10,000Ordinary income (right axis)

Profit attributable to ownersof parent (right axis)

150,000

Orders received (left axis)
5,000
100,000

Net sales (left axis)

050,000

0
12

13

14

15

16

-5,000FY（Forecast）

9

【Orders Received】
Orders Received by Industry(Consolidated)(Millions of yen)

September 2015
September 2016
16,00014,00012,00010,000
8,000
6,000
4,000
2,000
0

Medical services
Wholesale and retail
trade
Miscellaneous businessservices
Education
Real estate
Finance and Insurance

Food
ChemicalMachinery
PharmaceuticalIndustry
Automobile
Electrical Machinery10【Orders Received】
Order Received by Type(Millions of yen)
FY
2013

FY
2014

FY
2015

Orders received (Non-consolidated ：Facilities
Construction Business)

137,027

143,708

Orders received from general contractors(Non-consolidated ：Facilities Construction
Business)

73,608Rate of orders received from generalcontractors(Non-consolidated：Facilities
Construction Business) (%)

53.7

Orders received(Consolidated)

September
2015

September
2016

145,069

75,31071,860(3,449)68,96372,751

39,59728,045(11,551)

48.0

50.1

52.6

39.0

(13.6)

Diff.

pt.

168,295

173,398

183,270

99,20690,912(8,293)

3,055

2,931

2,343

1,280

803

(476)

Rate of orders received from overseas
projects (Consolidated) (%)

1.8

1.7

1.3

1.3

0.9

(0.4)

Orders received for renewal construction(Consolidated)

88,473

93,33999,92054,202

46,047(8,155)Rate of orders received for renewal
construction (Consolidated) (%)

52.6

53.8

54.5

54.6

50.7

(3.9)

Orders received from overseas projects(Consolidated) *<Ref.>Net sales for renewal construction(Consolidated)

pt.

pt.

98,02496,46896,32537,372*SANKI CONSTRUCTION ENGINEERING(SHANGHAI)CO.,LTD. ,unconsolidated subsidiary , is not included inorders received from overseas projects .

39,106

1,734

11

【Orders Received】
Major Projects
・Bank of Yokohama , Head Office（ Air Conditioning (HVAC) works ）〈 Renovation work 〉
・NKC Nagai Green Power , Power Generation Facility（ Air Conditioning (HVAC) works ）〈 New construction work 〉
・Takeda Pharmaceutical Company Limited,HIKARI Factory（ Air Conditioning (HVAC) works ）〈 New construction work 〉
・The North Purification Center of the YAMATO City
（ Sewage treatment works ）〈 Maintenance management 〉
Other 3 projects•

The property name is the name which is being used in us and is sometimes different from the name on theconstruction contract.

12【Orders Received】
Major Projects over 1 Billion yen(By Industry)
September 2014

September 2015

September 2016

Office―2

3

Hospital

2

1―

Research
institute1

1―

Factory1

Waste
processing
facility―

Power station,
Substation―

Water andsewagetreatment facility

1School building,
Lecture hall―

5 Projects(6,439 million yen)
＊ Orders received from
customers ：1 Project＊ Orders received fromgeneral contractors：4 Projects

3
3
―
―

1

11 Projects(19,091 million yen)
＊ Orders received from
customers ：3 Projects＊ Orders received fromgeneral contractors：8 Projects

2
―
1
1

7 Projects(17,782 million yen)
＊ Orders received from
customers ：5 Projects＊ Orders received fromgeneral contractors：2 Projects―

13【 Profit 】
Profit Improvement Factors and Measures○ Improvement of the external environment.
○Thorough cost management.
○Maintenance of the site support system.
・Purchasing operations support by the Procurement Division.
・Documentation support by the Site-Documentation Support Center.
・Design work support by Design & Engineering Support Center.
・Quality management activities by technical experts.
○Strengthening of relations with business partners.
・Enforcement of the liaison Meeting for Subcontractor
Groups.
・Establishment of the Sanki Super Meister System.
・Enforcement of the Sanki Best Partners Choice System

14【Financial Condition】
Balance Sheet (Consolidated)(Millions of yen)
End of
FY 2015

September
2016

Diff.

Rate ofchange(%)

September
2015

Current assets

115,491

95,581(19,910)(17.2)

93,720Noncurrent assets

53,93149,851(4,079)(7.6)

56,405Current liabilities

72,86353,359(19,504)(26.8)

54,146

Noncurrent liabilities

12,001

11,148

(853)

(7.1)

13,841

Total net assets

84,55780,925(3,631)(4.3)

82,137

Total assets

169,423

145,433(23,989)(14.2)

150,126

Book-value per share (yen)1,328.60

1,271.10(57.50)(4.3)

1,290.56

49.8

55.6

5.8

―

54.6

(2.8)

6,164

Equity ratio (%)

pt.

Interest-bearing liabilities(consolidated)

5,992

5,824

(167)

15

【CF】
Statements of Cash Flows (Consolidated)
・It increases in the balance of cash and cash equivalents more than both at the end of the previous
fiscal year and year-on-year basis.
Cash flows from operating activities was increased by the collection of receivables.
Cash flows from investing activities was decreased by purchases of investment securities.
Cash flows from financing activities was decreased by payment of dividends.
(Millions of yen)
FY 2012FY 2013

FY 2014

FY 2015

September
2015

September
2016

Cash flows from operating
activities

9,729(9,403)

(139)

5,220

(1,330)3,502Cash flows from investing
activities(9,481)(3,506)

3,440

5,520

5,599

(397)

Cash flows from financing
activities(1,028)(4,152)(2,901)(1,826)(1,010)(1,573)

Cash and cash equivalents
at end of period

40,36723,51023,66732,501

26,87733,933

Capital investment(including intangible assets)

645

545

395

855

218

126

1,207

740

723

723

343

338

Depreciation andamortization

16

【Return to Shareholders】

Dividends and others
・ The interim dividends of FY 2016 are 10 yen per share. ( The interim dividends of FY 2015 were 9 yen per share.)

FY 2012FY 2013

FY 2014

FY 2015

September
2016(71.04)

26.46

38.30

83.84

3.61

Cash dividends per share: regular dividends (yen)

15

15

15

18

10

Cash dividends per share: commemorative
dividends (yen)

―

―

5

―

―

Cash dividends per share: extra dividends (yen)

―

―

―

12

―

Cash dividends per share (yen)

15

15

20

30

10

Payout ratio (consolidated) (%)

―

56.7

52.2

35.8

4,169

3,598

3,375

3,397

3,390

492

654

930

901

897

Acquisition of treasury stock (thousand shares)

1,988

4,000

2,000

―

―

Retirement of treasury stock (thousand shares)

―

4,800

3,000

―

―

ROE (Return on Equity) (%)

(6.4)

2.3

3.0

6.3

ROA (Return on Assets) (%)

1.6

1.9

2.2

4.7

Earnings per share (yen)Number of shareholders at end of period
Stock price at end of period (yen)<Reference>17

【Overall Forecast】
FY2016 Forecast (Consolidated)
・ The overall FY2016 forecast as of November 11,is not changed from the initial forecast as of May 13.

(Millions of yen)

FY 2016 Forecast(as of November 11)

Total
Orders received

183,000

Net sales

185,000

Operating income

6,500

Ordinary income

7,000

Profit attributable to owners of parent

4,900
18

【Forecast of Orders Received and Net Sales】
FY2016 Forecast of Orders Received and Net Sales by Segment（Consolidated）(Millions of yen)
FY 2016
Orders Received
Forecast(as of November 11)

Segment

FY 2016
Net sales Forecast(as of November 11)

HVAC and Plumbing for Buildings

64,90070,900Industrial HVAC

52,00052,000Electrical Systems

19,00022,000

Facility Systems

10,00010,000145,900

154,900

Machinery Systems

9,500

9,500

Environmental Systems

26,00019,000Total of Plant & Machinery Systems Business

35,50028,500Sub-total

181,400

183,400

1,600

1,600

500

500

(500)

(500)

183,000

185,000

Total of Facilities Construction Business

Real Estate Business
OthersAdjustments*
Total＊ Adjustments eliminate inter segment transactions included in each segment.

19

Long-Term Vision “Century 2025”
We will strive over the next 10 years to become the company of choice for customers byfurther enhancing the quality and reliability we provide.

2022–2025
Phase 34-year period to become
the company of choice

2019–2021
Phase 23-year period toenhance reliability

2016–2018
Phase 13-year period toenhance quality
FY2016FY2019FY2022

FY2025■ Phase 1 → We will enhance quality by refining our skills and wisdom and developing our humanresources as a foundation for responding to change.
■ Phase 2 → Superior quality generates customer satisfaction, and customer satisfaction andconfidence leads to reliability.
■ Phase 3 → Increased reliability will encourage more customers to choose our company.

20

Medium-Term Management Plan “Century 2025” Phase1

Key Initiatives and Strategies
1. Passing on Technical Skills
We will renovate the Sanki Yamato Building (Yamato City, Kanagawa Prefecture) andreopen it as the Sanki Techno Center (tentative name). This will be a comprehensive
training facility that imparts and develops the technical skills at the backbone of the SankiEngineering Group.
2. Anticipating the Age of Maintaining Building Stock
We will give a boost to the LCE business, as described in our SANKI VITAL PLAN 90th.
This will bolster our business foundation, allowing us to maintain sound corporate
management, even if the construction market experiences a slowdown.

3. Developing Next-Generation Technologies
We will establish a new R&D base inside the Sanki Techno Center. Here we will develop
technologies for the next generation while keeping up with advances in new technologies
such as robotics, IoT, and artificial intelligence.
21

Medium-Term Management Plan “Century 2025” Phase1

ESG Policy
Organically Integrate Existing Activities and Seek Strategic Deployment
OutlineEnvironment

As evidenced by the Paris Agreement, which created an international framework against global warming, and the
Act on Promotion of Global Warming Countermeasures as well as other legislation passed in Japan in response,
protecting the global environmental is becoming even more important. Recognizing that the business of the SankiEngineering Group could have a direct impact on protecting the global environment:
1. In our core Facilities Construction Business, we will contribute to reducing greenhouse gas emissions in theindustrial and operational sectors of society by developing and providing various facilities and systems for air
conditioning, plumbing, electricity, and network systems, as well as related services;
2. In our Plant and Facilities Division, we will develop equipment that offers greater energy savings; and3. We will be mindful of reducing the impact on the global environment in all aspects of our business operations
and pursue activities based on ISO 14000.

Social

1. We will continue our SANKI YOU Eco Contribution Point social contribution activity, in which we extend
donations to environmental conservation organizations according to the level of reduction in greenhouse gas
emissions.
2. We intend to create work environments that are even more worker friendly by implementing measures against
long working hours and expanding opportunities for women and the elderly.

Governance

1. In fiscal 2016, we will launch a full-scale initiative under the Sanki Engineering Corporate Governance
Guidelines established in December 2015.
2. Under the leadership of the Board of Directors, we will operate and improve our internal control system andrisk management systems to emphasize effectiveness.
3. We will abide by our rules of conduct, including the Sanki Engineering Group Compliance Declaration, SankiEngineering Group Code of Conduct and Action Guidelines, and Sanki Engineering Group Behavioral
Standards and Guidelines, and strive to maintain and develop our corporate culture of ethical conduct.

22

Thank you for your kind attention.
Remarks on Business Forecast
The descriptions contained in this material, except for those as to past or present facts, are based on anticipations,assumptions, evaluations and estimations in light of the information available as of November 11,2016.
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 exposure of client companies.
 Sudden changes in material and equipment cost and labor cost.
 Stock Market fluctuations.
 Increase in retirement benefits and debts.
 Country risk.
 Accident and disaster in Facilities construction and other.

 Outbreak of the unprofitable project.
 Risk in Real Estate Business.

For inquiries please contact: Risk in Regal action.

Corporate Communications
Department

 Risk in Regal regulation.

TEL：+81-3-6367-7041

 Outbreak of the natural disaster.

23