Business Results“Century 2025” Phase1～FY2017 2Q ～November 10, 2017
Sanki Engineering Co., Ltd.
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Orders Received and Net Sales（ Millions of yen ）Orders Received(Consolidated)（ Millions of yen ）（ Forecast ）200,000

200,000

180,000

180,000

160,000

160,000

140,000

140,000

120,000

120,000

100,000

100,000

80,00080,00060,00060,00040,00040,00020,00020,0000Orders Received(Consolidated)（ Forecast ）0
FY2014FY2015２Q

FY2016
Full Year

FY2017FY2014FY2015２Q

FY2016FY2017Full Year

2Gross Profit and Gross Profit Margin（ Millions of yen)（％）

Gross profit(Consolidated)（予想）（ Forecast)

30,000Gross profit margin(Consolidated)

16.0
14.0

25,00012.0
20,00010.0
8.0

15,000

6.0
10,0004.0
5,000
2.000.0
FY2014FY2015２Q

FY2016
Full Year

FY2017FY2014FY2015２Q

FY2016FY2017Full Year3Orders Received by Business (2Q)
(Millions of yen)

HVAC and Plumbing for Buildings
Industrial HVACElectrical Systems
Facility Systems
Machinery Systems
Environmental Systems

45,00040,00035,000HVAC and Plumbing for
Buildings: Lull
Industrial HVAC: Strong
Facilities Systems: Stable

30,000Electrical Systems andMachinery Systems: Recovering25,000

Environmental Systems:
Highest in the last 6 years

20,00015,00010,0005,0000
September
2012

September
2013

September
2014

September
2015

September
2016

September
2017

Positive outlook with an overall
progress rate of 51.5%,
including real estatebusiness,etc.
(49.7% in the same period ofthe previous year)4Progress of Measures (1)○FY2017 2Q is the halfway point of “Century2025” Phase 1○Theme: “Refining our Technical Skills and Human Resources,
to Enhance Quality”
Key Initiative

Current Status

Passing on technicalskills

・Full-scale construction of the “Sanki Techno Center”,
which is the centerpiece of the STeP Project

Anticipating the age of
maintaining building
stock・Orders received for DBO style of energy-recovery waste
treatment facilities including new construction work
・Promoted the new field of the “wood biomass gasification
power generation facility market”
・Operated the “S-Map”, construction history mapping system

Developing nextgeneration technologies

・New Technical Research & Development Institute underconstruction within the “Sanki Techno Center”
・Developed the “S-Cloud” ICT platform, which includes AI5

Progress of STeP Project○Commencement of full-scale construction of the “Sanki Techno Center”Scheduled to commence operation around October 2018

○Demolition of the Yamato Plant facilities (area scheduled for lease)
Scheduled to commence leasing around spring 2018

○Completion of the temporary relocation of the Machinery Systems plant(Shonan area)
Scheduled to commence operation of the new plant around
August 2019

○Temporary relocation of the Technical Research & Development
Institute (in the Sanki Yamato Building)
The new Technical Research & Development Institute is scheduled tocommence operation around April 2018 (in the Sanki Techno Center)6

Construction of Wood Biomass Gasification
Power Generation Facility

Exterior of plant building

Gasification furnaceThis project involved the construction of wood biomass gasification power generation facility in Nagai, Yamagata
Prefecture, in response to an order received from NKC Nagai Green Power Co., Ltd. in May 2016.
The percentage of renewable energy in Japan’s energy mix was around 11% as of FY2013, and the national energy
policy proposes to increase this to around 24% by 2030.
This power plant produces 14.8 million kWh (equivalent to approximately 3,000 standard households) of power per year,
using 26,000 tons per year of domestically sourced wood as fuel. The generation efficiency of the gas engine generator
is at least double that of steam turbines, which are generally used on this scale.
The Company was responsible for plant facility such as gasification facility and tar fuel facility , as well as
Construction HVAC, plumbing, and electrical systems at this power plant and the adjacent chip production plant.

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Yunohama Hot Spring Area
Large-Scale CO2 Reduction ProjectWater receiving tank and preheater

Heat exchanger chiller

This project promoted the reduction of CO2 emissions by effectively utilizing the as yet unutilized energy of the hot springs in thethe Yunohama hot spring area. It was selected as a subsidized project by the Ministry of the Environment. The Company wasresponsible for infrastructure construction. The organization responsible for implementing the project was Yunohama Hot Spring
Facilities Holding Co., Ltd., and support was provided by Yamagata Prefecture and Tsuruoka City.
Hotels and inns that consume large quantities of hot water have conventionally utilized boilers powered by fossil fuels to heat theirwater. By utilizing heat from hot springs, which had previously remained untapped, we were able to greatly reduce CO2 emissions.
It is expected that this project will achieve a reduction of 879 tons of CO2 per year (equivalent to approximately 180 standard
households), which is a 15% reduction over FY2015 levels.
Furthermore, this has increased the efficiency of the whole region by providing centralized hot water supply facilities.

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Progress of Measures (2-1)○Strengthening on-site support organizations
Organization

Current Status

Procurement Division

Commenced operation of the Procurement Web System, which digitizes ordering
operations for all branches, in April 2017

Site-Documentation
Support Center

Introduced green site requirements to our main-contractor worksites and expanded thescale of operations, such as by commencing support for labor safety management – 942
cases handled (up 91 cases year on year)

Design and Engineering
Support Center

Amalgamated Engineering Management Office with the Design and Engineering Support
Center and supported design operations at all branches - 59 cases handled (up 29 casesyear on year)○Investment in ICT for improved productivity
Theme

Current Status

Effective utilizationof tablets

1,200 tablet devices were introduced among the whole group, focusing on
construction sites.
We are continuing to promote work efficiency.

Development oftechnical data
search systems

We are in the process of building a system to enable employees of anygroup company to search the technical data that is spread throughout thecompany, no matter where they are. Operation is scheduled to commence
within this year.
9Progress of Measures (2-2)○Entering the third year of the work style reform “Smile Project”
An initiative that is led by the President and was launched in October 2015, prior to the society
Main Items Implemented

Content

Disseminating thePresident’s Message“The will to take leave, creating an environment to enable leave, and thedetermination to allow leave”

Reducing long working hours

Stipulating target overtime hours for each department

Close management of work hours

Introducing new overtime management tools in addition to duty rosters

Making work easier

Return to work, working from home (test implementation), review of
dormitory accommodation, etc.

○Initiatives to improve communication
Last fiscal year, the President visited all divisions and branches and conducted direct
opinion exchanges with approximately 300 employees.
This year, the same will be conducted by division chiefs and branch general managers.
We have planned a total of 55 forums, starting from the second half of this year.
We plan to conduct a second round of “Sanki Lady Forums,” which are female employee
meetings, following on from the previous fiscal year.
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Progress of Measures (2-3)○From the perspective of ESG
StatusEEnvironment

・Donated the “SANKI YOU Eco Contribution Points” from the second half of fiscal
2016
・Orders received for DBO of energy-recovery waste treatment facilities
including new construction work.
・Constructed wood biomass gasification power generation facility (related torenewable energy)・Constructed high-level energy-saving facility in Shanghai, China, inconjunction with NEDO and others
・Registered as a ZEB Planner, which is a license system that was instituted by theMinistry of Economy, Trade, and Industry in FY2017

SSociety

・Entered the third year of the company’s unique work style reform, “Smile Project”
・Designed the above project’s “Smile Site Plan” subcommittee, which is speciallycreated for work-site managers
・Established the “Women’s Hotline”, women-only consultation service

GGovernance・Increased the content of self-evaluation by the Board of Directors・Participated in a digital voting platform
・Conducted a meeting to exchange opinions about corporate governance・Engaged in revision of decision-making procedure standards for the Board of Directors
・Increased dialogue with shareholders (strengthened the system, increased11
thenumber of opportunities for dialogue, and held briefing sessions for individual

CSR Activities
Contributions through“SANKI YOU Eco Contribution Points”“Uchimizu Biyori” at St Luke’s Garden

Staff participated intree planting events
conducted byenvironmental
conservation groups
that received donations

SANKI YOU Eco Contribution Points are donated to environmental
conservation groups if the Company proposes energy-saving
operations of facilities to customers, which will reduce CO2
emissions, and then the customer adopts the proposal, with CO2
reductions being converted to Eco Contribution Points (1 ton of CO2
is converted to 100 yen). Eco Contribution Points donated for thelatter half of FY2016 amounted to 1,297,500 yen (12,975 tons ofCO2 reductions) in what was our 13th donation. The total amountdonated since the program commenced in 2010 aSmounts to14,676,000 yen.

On July 20, we held an uchimizu event that we called “SankiEngineering Uchimizu Biyori at St Luke’s Garden” in the Shinsui
Park on the second level of St Luke’s Garden in Chuo-ku, Tokyo.
Around 90 people participated in uchimizu, including employeesof the Group and the general public.
This event is conducted in support of the uchimizu event,“Uchimizu Biyori: The Wisdom of Edo and the Generosity ofTokyo,” which is held on the same day by Tokyo Metropolitan
Government Bureau of Environment.

Donation of emergency rations to NPOsOn June 12, we donated 5,000 servings of stockpiled precooked rice (replaced before the expiration date) from thehead office/Tokyo branch to NPOs as a part of our CSR
activities.

12Securing and Training of Human Resources
92 graduates joined the Company in April 2017

Recruiting event in Thailand

Thai Sanki Engineering&Construction Co., which is agroup company, exhibited atthe “6th Japan Job Fair” held inBangkok on July 16 and 17.
Many job seekers visited thebooth.

Partner company awards

On April 3, we welcomed 92 new staff. Subsequently, on April 7, we held our“Kyoto Shinnyo-do Training,” which is one of our signature new staff trainingprograms. Shinnyo-do is the temple of the Mitsui family. The purpose of thetraining is to encourage awareness of the significance of being part of theMitsui Group, which is often referred to as “Mitsui for people.”On the day, training was also attended by top management, such as theChairman and the President, and they helped to cultivate the kind personnel
that possess the Sanki sprit by participating in meditation and cleaning
alongside the new staff.

We presented the Sanki Super Meister
Award and the Sanki Best Partner Award atthe head office/Tokyo branch Safety andQuality Convention held on June 2.

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