SANKI REPORT 2013

E ngineer ing for the futur e

2013【Corporate Communications Department, Administration Division】
TEL.+ 81- 3-6367-7041 FAX.+ 81- 3-5565-5102
http//www.sanki.co.jp

SANKI ENGINEERING CO., LTD.

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

We aim to increase trust from all stakeholders
and become a company that is needed by society
by putting into practice our Company Credos.
I would like to express my gratitude to everyone involved with the Sanki Engineering Group, beginningwith shareholders and investors and including customers, cooperating companies, business partners andlocal communities for the understanding and support of the Group’s daily business activities.
We are currently faced with diverse challenges that must be resolved in order to create a sustainable
society, such as natural disasters, global warming, depletion of energy resources, strain on final landfill
sites and dilapidated facilities.
The business domains of the Sanki Engineering Group involve various fields of social infrastructure,including the Facilities Construction Business, which consists primarily of heating, ventilation, and air
conditioning, plumbing, electrical systems, smart building solutions and facility systems; the Machinery
Systems Business, which consists primarily of material handling systems and conveyors; and theEnvironmental Systems Business, which consists primarily of water and sewage treatment facilities andwaste incineration facilities.
While each of these is an individual business, the integration of business domains across the Group
creates “total engineering competency” to meet society’s needs. This concept is embodied in one of ourCompany Credos, “We will contribute to society through engineering.”
By putting into practice the Company Credos, we always keep in mind what is needed by society andwhat we should provide to society in our actions. One of our aims is to raise the corporate value of theGroup by contributing to the creation of a sustainable society.

Company Credos
We will contribute to society through engineering
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.

Takuichi Kajiura
President

02

03

Contents

To all stakeholders

02

Editorial policy/Contents

04

Business Outline

06

Page

The History of Sanki Engineering

08

The History of Sanki Engineering

06

Highlights of Business Activities in Fiscal 201208

Financial and Non-Financial Highlights

10

Summaries of Businesses by Segment

12

Page

Highlights of business activities in fiscal 2012

Interview with the President

14

Business Strategy
Toward Realization of our Medium-Term Management Plan

18

“Total Engineering,” a Strength of Sanki Engineering

20

FOCUS
Provide Comfortable Spaces Through “Total Engineering Competency”

22

Kyorin University Hospital No. 3 Ward

Reports by Segment

14

Page

Interview with the President

22

Page

Providing comfortable spaces through “total engineering competency”
Kyorin University Hospital No. 3 Ward

Editorial policy
About the publication of SANKI REPORT

Reference guidelines

Sanki Engineering began publishing CSR reports in fiscal 2005 to disclose●

non-financial information on such areas as relationships with stakeholders andenvironmental initiatives.
We started issuing the SANKI REPORT in fiscal 2012, an annual publication that●

Ministry of the Environment

This report conveys the business activities of the Group over the past year to
stakeholders and has been positioned as an important communication tool to boost
understanding.

Group together with society.

Real Estate BusinessResearch and Development

32

List of Business Locations and Introduction to Group Companies

34

Sanki Engineering’s CSR Activities
Compliance/Risk Management38

ISO 26000

CSR Management40

Our Relationship with Our Customers

42

Our Relationship with Our Business Partners

44

Non-financial information basically concerns
When the information concerns the Group

Our Relationship with
Our Shareholders and Investors

45

Our Relationship with Our Employees

46

Health and Safety in the Worksite

48

Our Relationship with Local Communities

50

Our Relationship with the Environment

52

An Overview of the Executives

56(e.g., compliance information),

We welcome the honest opinions and requests of stakeholders upon reading thisreport to help us continue driving sustainable growth for the Sanki Engineering

30

Global Reporting Initiative

Sanki Engineering Co., Ltd. alone.
●28

Environmental Systems Business

36

Organizations covered by report●

Machinery Systems BusinessCorporate Governancealso includes financial information such as operating results, management strategy
and business outline.

24“Environmental Reporting Guidelines 2012”“Sustainability Reporting Guidelines Version 3”●

Facilities Construction Businessthe text specifies that this is Group information.
●

Financial information shows consolidated Group figures.

Financial Report
11-year Consolidated Financial Summary

58

63

April 2012 - March 2013

Business Overview for Year Ended
March 31, 2013

Consolidated Statements of Income andComprehensive Income

60(with some information from outside this period)

Consolidated Balance Sheet

61

Consolidated Statement of Changes
in Net Assets

64

Consolidated Statement of Cash Flows

65

Reporting period (Fiscal year (FY) 2012)

Precaution on performance outlooks, etc.
In addition to past and present information concerning the Sanki Engineering Group, this report includes targets, plans, outlooks, strategies, forecasts of future performance and so on as based on our
medium-term management plan “SANKI VITAL PLAN 90th” and other sources. Please be aware that these forecasts are the best judgments of Sanki Engineering management based on the information

Independent Auditor’s Report82

available at the time, and actual performance may differ significantly from these forecasts owing to changes in economic conditions, market trends, exchange rates and so on.

Corporate Information and Share Information

83

04

SANKI REPORT 201305

Business Outline

The History of Sanki Engineering
Laying the base fortechnological competence bymeeting the needs of the era

Sanki’s advanced
technology bolsters
a construction boom

Feature as a manufacturer that
responds to the needs of the era

Opening the way to a new era:advances in environmental andinformation technology

Sanki Engineering got
underway with two major
projects for Toyo Rayon(currently Toray Industries,Inc.), namely its Shiga
manufacturing plant and its
Aomori ice-making plant andrefrigerated warehouse. At
that time, Sanki Engineering
was engaged mainly inheating, plumbing, steel
frame construction andbuilding materials. Sanki Engineering sought electrical technicians externallyand ventured into electrical construction before developing a proprietaryincinerator for buildings upon recognition of the need for urban environmental
sanitation. Installing in the Sanshin Building, Sanki Engineering was the firstcompany in Japan that installed this kind of incinerator for a large building.

During the construction
boom that occurred before
the outbreak of World War
II, Sanki Engineering
incorporated the mostadvanced technology
available at the time. To
give an example, SankiEngineering introduced apower supply with thespecial high voltage of 22kV
to Daiichi Seimei’s mainbuilding completed in 1938, which boasted the largest central monitoringboard of any building at the time, located four floors underground. It also
started manufacturing conveyors and introduced various new technologies
such as electric resistance welded steel tube pipe technology.

In addition to long-distanceconveyors for coal minesand dam construction frames,demand was rising for
portable conveyors used insteel plants and construction
sites, and shipments
increased. Sanki Engineeringdeveloped the high-quality,
low-priced, standardized 6S
sash, which was broadly
adopted in factories and offices
nationwide, giving the largest share of the market among steel sash
manufacturers.

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

Diversified and expandedbusinesses led to greater
technological competence

A proactive approach totechnological innovation

Wide range oftechnological innovations

Towards environmentallyfriendly technology

In 1968, Sanki Engineering
participated in construction ofheating, ventilation, and air
conditioning, plumbing andelectrial works for Japan’s
first real skyscraper, theKasumigaseki Building.
Sanki Engineering built
Japan’s first real large-scaleclean room at NEC’s Sagamihara
plant in the 1970s. SankiEngineering also built theworld’s first unmanned automatic sorting system and airport baggage
handling system, and its wide range of technological innovations included
introducing continuous sand filtering technology from Sweden.

The 21st century has brought
about increased need forenergy saving and reducing
CO2 emissions. Sanki Engineering
has developed a wide variety ofenergy-saving systems for various
fields, including offices, industrial
plants, hospitals and data
centers. It is actively importing
technology from Europe, andthis has resulted in thedevelopment of many major
technologies, including Aero Wing, Trans Heat containers and next-generation
stoker type incineration plants.

In 1930, Sanki Engineering
started 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 usedin mining-related chemistrywith US-based Dorr Inc. andOliver, Inc., and expanded
its technological capabilities.
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 ofbuildings).

The 1920s:
1923

1925

Great Tokyo Earthquake strikes.
Building modernization drives up demand for building utilities such asheating, cooling, water supplies and sewage, and electrical fixturesand fittings and construction technology advances.
On April 22, Sanki Engineering was established as a spin-off from
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.

06

1950

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. SankiEngineering also carried out aproject to equalize airflow andsuppress noise in thehigh-speed ducts inside the Ohtemachi Building, which was the largest
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.

The 1940s:
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 favourable turn. Expansion of demand forbuilding construction and equipment results in a dramatic improvementin the Company’s business performance.

1958

Capital exceeds ¥1 billion.

The 1960s:
1963

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

1964

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

1971

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

The 1980s:
1982

Builds Technical Research Laboratory equipped with basic researchfacilities and large-scale experimental facilities in Yamato, Kanagawa
Prefecture.

1990

Bubble economy collapses.

2000

Opens Shonan Training Center (Zushi, 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.

SANKI REPORT 201307

Business Outline

Highlights of Business Activities
in Fiscal 2012
Highlight

Highlight

Highlight

Highlight

1

2

3

4

Demonstration for an energy self-relianceplant factory in Fukushima

Developed “L-LAC®” air conditioning
system for data centers and createdmock-up facility equipment forproving tests

Operated the world’s firstsupercharged (turbocharged)
fluidized bed incinerator~ Asakawa Water Reclamation Center~

Developed the industry’s
fastest-class sample pre-treatment
instrument for medical-care andclinical testing facilities

In March 2013, as a part of recovery projects in Shinchi, Fukushima,

Amid higher density in IT equipment (servers) installed in data

Tokyo Metropolitan Government Bureau of Sewerage is pushing

In order to accelerate entry into the medical care and medication

we held a demonstration for an energy self-reliance plant factory

centers nowadays, demand has increased for the development ofahead with initiatives to reduce greenhouse gases emitted in its

market in line with the medium-term management plan, Sanki

with Fukushima Wagoen Co., Ltd. Previously, fossil fuels were usedhighly efficient cooling technology to cope with the increase inbusiness activities and introduced Sanki Engineering’s supercharged

Engineering concluded a business alliance with Precision

to manage the temperature in horticultural facilities, including for

power consumption and heat generation of the servers.

(turbocharged) fluidized bed incinerator, a world-first, at the

Shibazaki Co., Ltd. among others and developed a serum sample

Asakawa Water Reclamation Center in Hino, Tokyo.

pre-treatment instrument (device to distribute the necessary

plastic greenhouse culture. In recent years, however, there are

In response, Sanki Engineering developed L-LAC® (Local Air

rising needs for more efficient energy use due to increasing energy

Conditioner), an under-floor local air conditioning system as a cooling

The research and development for this system was conductedamount of serum from a blood collection tube for laboratory

prices and greater environmental awareness. Demonstration wastechnique for data centers collaborated with Nippon Steel & Sumikinin conjunction with Public Works Research Institute, National

testing to pre-treat the sample) with the industry’ s fastest-classconducted with the aims of using renewable energy in horticulturalEngineering Co., Ltd. L-LAC® , which is based on server cooling

Institute of Advanced industrial Science and Technology andprocessing capability and exceptional environmental performance.

facilities and contributing to earthquake disaster recovery.

technology for data centers, is a compact local air conditioning

Tsukishima Kikai Co., Ltd. In the system, sewage sludge is

The instrument is excellent at correcting the stop position andIn the test, a crown temperature control technique (techniquesystem installed directly below racks housing high-density servers

incinerated under a set pressure and the exhaust gas pressure istorque control thanks to the use of a servomotor. It also realizes

to directly heat and cool only the root) in addition to a solar energythat cools the servers via combined operation with autilized to drive a supercharger which generates compressed air.

the industry’ s fastest-class processing capability (1,000 bottles

collector made by UK-based Kingspan Renewables Co., Ltd. were

downward-blowing air conditioning unit. This enables up to around aThis compressed air is then used as combustion air in the

per hour) as well as space-saving design and energy saving. Total

used to collect heat energy, which was stored in Sanki

50% reduction in transfer power of air conditioning compared withincinerator. By doing so, both fluidized bed blower and induced

automation is possible, from receipt to transport, pre-treatment

Engineering’s own uniquely developed Trans Heat Container. The

isolated operation of conventional downward-blowing air

draft blower become unnecessary, thus making it possible notand storage, through combination with Sanki Engineering’ senergy was then used to heat up the plant factory at night. In

conditioning units. Sanki Engineering developed mock-up equipment

only to save energy but also its space. Compared with conventional

advanced proprietary technologies.

addition, we tested energy self-reliance cultivation system using(simulated data center) with a pilot-scale server room to investigate

fluidized bed incineration, the system can be expected to achieve

We commenced sales of the instrument to medical care andsunlight in combination with a light culture system operated via

full-scale experiments of L-LAC .

photovoltaic power generation and special electricity controller.
Going forward, we plan to work together with Fukushima

reductions of around 40% in power consumption, 10% in fuelclinical testing facilities nationwide in November 2012. Going

Going forward, we will vigorously market L-LAC® as a viableconsumption and 50% in N 2 O generation, resulting in a cut of

forward, we will develop devices and peripheral equipment as

system for a wide variety of data centers with technology to cope

approximately 40% in greenhouse gases from the system overall. Inwell as services that meet diverse needs.

®

Wagoen to spread the use ofwith high-density servers. The

addition, we are implementing asolar energy and an energy

mock-up equipment will be

project to retrofit the sewage

self-reliance cultivation

used as a place for full-scale

incinerator for Tokyo Metropolitan

system from Fukushima.

experiments and examination

Government Bureau of Sewerage’sof devices to cope with even

Shingashi Water Reclamation

higher-density servers andCenter in Itabashi Ward, Tokyo,

cloud computing to meetwhich will be Japan’s largest

customer’s expectations.

facility using this system when
it is completed in 2015.

08

SANKI REPORT 201309

Business Outline

Financial and Non-Financial Highlights
Financial data (consolidated)(Millions of yen)

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

Orders received and sales(Millions of yen)

Fiscal year
Orders received

188,653

143,348

147,129

175,291

165,800

Sales

203,340

159,273

151,794

147,994

154,658

Selling, general and administrative expenses

14,97815,41915,763

15,712

15,199Operating income or loss

7,125

5,027

3,843

2,525

2,391

Ordinary income or loss

6,900

5,456

4,239

2,268

2,680

Net income or loss

3,283

3,141

2,124

176

(4,992)

Cash flows from operating activities

19,177

1,294

11,554(2,697)

9,729

Cash flows from investing activities

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

Cash flows from financing activities(4,377)(2,936)(1,883)(280)(1,028)Cash and cash equivalents at end of year

36,14232,82545,13541,09740,367’08(FY)

Operating income

165,800

147,994’09’10

154,658

Ordinary income

7,125

163,307

158,501

163,120

166,477

Net assets

78,78080,49879,833

79,662

76,932

Earnings per share (yen)

44.45

42.86

29.67

2.46

(71.04)Book-value per share (yen)1,065.77

1,119.40

1,115.41

1,113.70

1,106.32

15.00

15.00

15.00

15.00

15.00

Equity ratio (%)

44.6

49.3

50.3

48.8

46.2

Net income

Return on assets (%)

3.5

3.2

2.6

1.4

1.6

(Millions of yen)

Return on equity (%)

4.1

3.9

2.7

0.2

(6.4)

’12

’11

6,900

(Millions of yen)

5,456

5,027

176,664

Cash dividends (yen)175,291
151,794

147,129

Orders received
Sales

Total assets

Per share information

159,273

143,348(Millions of yen)

As of end of fiscal year under review

203,340

188,653

4,239

3,843

(FY)

’08

’09

3,283

3,141

2,525

2,391

’11

’12

’10

2,268
’08

(FY)

’09

’10

2,680
’12

’11

Other information

Number of employees

2,124

’08

(FY)

’09

’10

’11

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
No. of employees
No. of accidents

2,239

2,272

2,316

2,289

5

6

11

7

3

0.57

1.03

0.68

0.28

CO2 emissions (t-CO2)

—

4,390

4,162

3,770

4,308

Waste emissions (t)17,712

11,272

12,034

12,07013,757(From all Company construction sites and Yamato Engineering Center)

2,246

’12
’08

(FY)

(4,992)

’09

’10

1.03

Frequency of
accidents (%)

CO2 emissions (t-CO2)

0.68

4,390
4,308

4,162

*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 restated using the same standard.

Wasteemissions (t)17,712

13,757

0.57
0.41
(FY)

10

’12

’11

2,246

0.41

Frequency of accidents (%)*

2,289

2,239
176

Non-financial data (employees only consolidated, others non-consolidated)

2,316
2,272

’08

’09

’10

’11

’12

11,272

3,770

0.28
(FY)

’09

’10

’11

’12

(FY)

’08

’09

12,034 12,070

’10

’11

SANKI REPORT 2013

’12

11

Business Outline

Summaries of Businesses by Segment

Main sales items

Sales composition

HVAC system

Facilities
Construction
Business

●

●

●

●

Electrical system

ICT facilities
Instrumentation●

Central monitoring,
automated control systems

IP solutions
Network solutions●●

Facility systems
Dealing rooms
OA office, relocation
Financial institution branches and offices●

Electrical system●

Water supply & drainage
Kitchen equipment
Disaster prevention systems●●

Nuclear power-related facilities

●

●

●

●

83%

Smart building solutions

Plumbing &drainage system

HVAC system
Clean rooms
Environmental control
Freezing & refrigeration
District heating & cooling plant●¥128,626●●

millionPage

Social issues●●●

Contribute to the resolution ofsocial issues through “total
engineering competency”●●

Conveyance systems

Waste processing

Water resources

Sales composition

Main sales items

Global warming●

Machinery
Systems
Business

●

●

●

●

4%

Material handling systems

Lightweight conveyers●

Environmental-related conveyers●

Distribution-related conveyers●

Clean conveyance systems

Material handling system

Airport baggage and cargohandling systems

Sorting devices

Automated bucket warehouse●●

Real EstateBusiness

FA systems

Control and information systems

Energy resources¥6,501
millionEquipment deterioration

Page

Main sales items
Waste treatment

Environmental
Systems
Business●●

Waste incineration facilities

Landfill wastewater treatment facilities

Water treatment
●

●

●

●

●

Water and sewage treatment facilities

11%

real estate while making use of our current
technology.

¥2,747
millionSludge treatment facilities

Industrial plant facilities

Our real estate business includes
operations in the areas of real estate leasing
efforts to expand into higher value-added

Industrial waste water treatment facilities

Sludge incineration facilities

28

and building management. We are making

Sales composition¥17,145
million

30

Page

12

24

2% 32
Page

SANKI REPORT 201313

Interview with the President

Can you describe business performance for the

Since being appointed president, I have advocated the idea offiscal year ended March 31, 2013 and touch on“further boosting total engineering competency,” but in all

your first year as president?

honesty after the past year I have come to realize that this is not

We have been implementing our medium-term management plan

The tough business environment continued in the fiscal year

an easy job. The concept of “total engineering” is yet to permeate“SANKI VITAL PLAN 90th” since fiscal 2011. This is our five-year

ended March 31, 2013, characterized by price competition forbehavior at Sanki Engineering and subsidiaries, while all employees

medium-term management plan that is effective to fiscal 2015,

orders in Japan, heightened risk in China and acceleration in thethroughout the Group haven’t quite come to a full understanding of

our 90th anniversary. Based on the management philosophy

shift to overseas production among domestic manufacturers.

the philosophy.

“Through its “total engineering”, the Sanki Engineering GroupQ

Q

Please tell us about the progress of“SANKI VITAL PLAN 90th.”

Against this backdrop, orders received amounted to ¥165,800

One of my missions in order to achieve our objectives as ashall promote the diffusion of energy-saving and new-energy

million, almost on par with the previous fiscal year with a drop of“total engineering” company is to become a Group comprised ofsystems to help achieve a comfortable low-carbon society,” we

5.4%, and sales were ¥154,658 million, up 4.5% year on year,

executives and employees with patterns of thinking that drive

uphold such basic policies as “Maintain a profitability focus anddespite falling short of the initial target of ¥170,000 million due

all sorts of technologies. The important thing is to get customers

optimum-sized orders,” “Further strengthen Core Businesses andto delays in commencement and progress of certain construction

to understand and trust the technologies that the Group

expand Strategic Growth Businesses” and “Exploit and cultivate

projects. In terms of profit, operating income decreased 5.3%

possesses. Although the construction market comprises a large

New Businesses” with the aim of realizing medium- to long-term

year on year to ¥2,391 million and ordinary income increased

portion of the work we do at Sanki Engineering, we have theadvancement.

18.1% year on year to ¥2,680 million, while Sanki Engineering

ability to provide an array of technologies and equipment inAgainst this backdrop, progress in the second year of theposted net loss of ¥4,992 million after recording impairment loss

diverse markets. A company like Sanki Engineering is uniquemedium-term management plan SANKI VITAL PLAN 90th in fiscalof over ¥7,000 million as extraordinary loss due to an inability toand bolstering the “total engineering competency” that comes2012 was as follows.

quickly anticipate succeeding lessees for a large rental property

from this competitive advantage will help drive growth for thewhere the contract period matured at the end of the fiscal year inorganization.

Real Estate Business.

We will achieve the targets of themedium-term management planand fulfill our social responsibility
by leveraging “total engineering
competency.”

3. Unique New Businesses
We are devising unique, cross-departmental technologies
that leverage our “total engineering competency,” while
increasing customer satisfaction as well as business
opportunities. In addition, we are cultivating new businessdomains by developing new technologies and launching
new products to the market in a timely manner.

4. Strengthening the management base
We started reforming the personnel system andperformance evaluation system (from fiscal 2013) andestablished a Risk Management Committee to monitor
and control risk.
We also worked to reduce costs by enhancing businessefficiency by taking such steps as creating a document
preparation support system using IT to assist with
operations on the frontline.

Q
1. Core Businesses
We are working to increase orders received by
implementing marketing activities and boosting synergies
across departments rather than be restricted by theframeworks of each business. We are also looking into
different ways to expand business domains from a varietyof angles.
We established a Sales Division to promote sales thatstraddle all businesses in Japan and overseas fromfiscal 2013. In addition, we are further strengthening
Core Businesses through such means as heightening
cost competitiveness by increasing business efficiency.

Can you tell us about business developments
overseas?

In February 2013, we established a representative office in
Bangkok aimed at expanding business in the Southeast Asia
market. We will conduct market surveys not only in Thailand but
also in neighboring countries and aim to expand business in thehigh-growth Southeast Asia region. Further to this, we will work toincrease overseas business by making full use of Sanki Engineering’s
channels, including representative offices in Austria and theUnited States as well as other overseas subsidiaries.

In order to exploit our technological capability, one of theareas of strength at Sanki Engineering, in the overseas business,

2. Strategic Growth Businesses

it is imperative that we develop local affiliates. If we do not do

We are striving to expand Strategic Growth Businesses
such as life cycle engineering by further deepening ties
with subsidiaries and reinforcing Group capabilities. We
plan to introduce a consolidated performance evaluation
system in fiscal 2013 and maximize Group synergies.

this, we won’t be able to succeed. With this in mind, we havedispatched representatives from Sanki Engineering who are in
the midst of training local personnel so that they become
proficient in our technologies.

Takuichi Kajiura
President

14

SANKI REPORT 201315

Can you tell us about the decision behind yourTo achieve this, it is important that Group employees haverepresents our basic business configuration and through thetargets for the final year of the plan (consolidated

the same mindset. Executive officers are currently distributing

business we get from customers we resolve social issues,

net sales of ¥200 billion and consolidated ordinary

information on this matter to employees and promoting dialog

which may also be potential needs.

income of ¥10 billion for fiscal 2015)?

with those on the front line. To give an example, since fiscal

At present, there is the problem of excess workload due to a

The business environment has changed dramatically since we2012 we have provided opportunities to explain information to

decline in the number of doctors, nurses and teachers at

formulated SANKI VITAL PLAN 90th.

employees at all locations one hour after announcing financial

hospitals and schools, a field we are focusing on. Since there isresults.

a lack of personnel, doctors, nurses and teachers are forced toQ

In the Real Estate Business, profit is expected to decline
significantly from fiscal 2013 due to the end of the contract

By enhancing communication in ways such as this, I believe

manage equipment at these hospitals and schools, which isperiod for a large rental property. Nonetheless, we are not

we can make sure we are on the same wavelength throughout

outside their primary work role. Amid rising need for labor-

impairment loss associated with the expiration of the contract

considering lowering our targets in line with changes in the

the Group and push toward our goals. Fiscal 2012 was a year

saving going forward, we hope to make a valuable contribution

period for a large rental property in the previous fiscal year,

environment. We will cover the decline in the Real Estate

for formulating various measures, while fiscal 2013 is a crucial

through “total engineering” aimed at reducing burden on

we have secured sufficient resources to maintain payments ofBusiness for example by strengthening Core Businesses,

year for shifting to genuine action and generating results.

personnel. The mission of the Sanki Engineering Group is notstable dividends to our

only to respond to customer needs but also to meet potential

shareholders. We set a

Strengthening CSR to ensure ongoing growth isneeds. Our desired stance is to be a company that thinks andyear-end dividend of ¥7.50

a key management challenge. Can you give us

acts together with the customer and can earn the trust of

per share (the same as the

SANKI VITAL PLAN 90th and achieve our targets for the final

your thoughts on this as well as your desired

society.

previous year) as a result,year of the plan in fiscal 2015.

stance?

expanding Strategic Growth Businesses and cultivating New
Businesses as stated in the medium-term management plan.
We aim to steadily implement measures formulated underQ

In order to realize this stance, Sanki Engineering revised its

the total yearly dividend

Dividend amount per share
Year-end dividend (¥)

Interim dividend (¥)

Consolidated payout ratio (%)

1000
609.8
7.5

7.5

7.5

7.5

7.5

(forecast)500

We have outlined eight key measures to achieve targets in

CSR at Sanki Engineering is akin to practicing the Company

Code of Conduct and Action Guidelines in fiscal 2012. We addedwas ¥15 per share (thefiscal 2013, the third year of the medium-term management plan.

Credos. This idea is expressed within the Company Credos, “We

respect for “international codes of conduct,” information

same as in the previous

will contribute to society through engineering,” and expresses

disclosure for stakeholders and communication with stakeholders

year). Our basic policy is to

our social responsibility as a company. A priority challenge foras new items. This was based on changing societal demands

ensure stable dividends

2. S trengthen Company-wide cross-departmental sales
capability

Sanki Engineering is to provide technology to society that saves

and because they are essential in developing overseas business.

going forward. In addition,on labor and increases speed, convenience and comfort, thereby

Our fundamental awareness in overseas business is underpinned

we repurchased 1,988,000(1) Establish Sales Division to promote cross-departmental sales
for all businesses worldwide(2) Implement recovery projects and focus on hospital, foodstuff,
medical care and school fields.

resolving customer issues. For Sanki Engineering, B-to-B

by our commitment to drive advancement in each region weshares of treasury stock

operate in upon identification of local needs, culture andduring the fiscal year as acustoms. To strengthen the development of human resources

measure to return profit to shareholders and we are retiringthat can play an active role on the world stage, we started a

and acquiring shares in fiscal 2013. Although the toughnew training system overseas.

business environment is expected to continue, we will do

1. Promote “total engineering”

3. E xpand Strategic Growth Businesses such as life
cycle engineering
4. Increase overseas business
5. Boost management efficiency mainly by effectively
controlling expenses and reviewing assets held
6. Develop and appropriately allocate human resources
7. Increase business efficiency through improvement ofbusiness processes
8. 
Enhance corporate value by strengthening risk
management and corporate governanceability to make proposals and take action as well as pride in the

50

7.5

7.5

7.5

7.5

’09

’10

’11

’12

7.5

(forecast)

0

’13

(FY)

everything we can to increase sales and profit and enhance2012 as a means to strengthen corporate governance, which

corporate value by steadily and swiftly implementing measures

we have identified as a critical measure. This Committee

one by one.

comprehensively identifies and manages risk that may inhibit

To reiterate, Sanki Engineering will leverage technology

the survival and development of the Sanki Engineering Group inmatching the needs of the time to meet customer needs, which

order to prevent it before it occurs. In case the risk does occur,

embodies our significance of existence. As a true “total

the Committee can enhance corporate value and trust fromengineering” company, we will realize the best mix of energy

stakeholders by minimizing loss.

saving and comfortable environment and contribute to society
through our core business.

Q

Do you have a message for shareholders andI ask our shareholders for their ongoing support and advice.

other stakeholders?

Company. I believe we can realize this if we are disciplined in

Returning profits to our shareholders is one of the mosttaking solid steps toward our goals.

important issues for management. Although we recorded

16

50.6

35.0

We established a Risk Management Committee in fiscal

In order to achieve the targets of the final year of the plan, it
is essential for employees to have technological capability, the100

SANKI REPORT 2013

17

2015

Business Strategy

Toward Realization of our Medium-Term
Management Plan

90th anniversary
Achieve the targets of the
SANKI VITAL PLAN 90th
FY2012 (Results)

FY2015 (Targets)

1,430

1,760
1,370
150
240
190
20
30

Consolidated net sales (Unit: ¥100 million)
Core Businesses
Facilities Construction

Aiming for ongoing growth for the Sanki EngineeringGroup and society
The Sanki Engineering Group conducts business activities
with a focus on driving ongoing growth together withsociety by realizing our Company Credo, “We willcontribute to society through engineering.” Enhancing
corporate value for the Group is indivisible fromcontributing to the creation of a sustainable society andthat’ s why we have integrated the execution of businesswith the execution of CSR. In addition, we will make themost of our “total engineering competency” in providing adiverse range of technologies and systems primarily under
our Facilities Construction Business, Machinery Systems
Business and Environmental Systems Business that
contribute to the resolution of various social issues. By
doing so, we can fulfill the Group’ s responsibilities and

The medium-term
management plancreate the opportunity to bolster competitiveness andensure growth.
The Sanki Engineering Group is working to achieve theobjectives of SANKI VITAL PLAN 90th, our five-year
medium-term management plan that runs until fiscal 2015
when we celebrate our 90th anniversary. We are aiming toachieve these objectives by further heightening “total
engineering competency” and enabling high-level growthand profitability through measures that are based on ourbasic policies to “Maintain a profitability focus andoptimum-sized orders,” “Further strengthen Core
Businesses and expand Strategic Growth Businesses” and“Develop and cultivate New Businesses.” Achieving theseobjectives will help us contribute to the realization of alow-carbon society and enhance the corporate value of theGroup.

Key measuresin fiscal

Unique new businesses

SANKI

●

VITAL PLAN●

90

Strategic growth businesses

Combine engineering from various businesses
Energy saving ● new energy●

Renovation*●

Integrated networks*●Life cycle engineering

Strengthening the management baseCore businessesthStrengthen management base to support target
achievement
The Sanki Engineering Group revised its performance evaluationand personnel system to content that further heightens
correlation with business strategy based on the idea that it ishuman resources that support the growth strategy. We will
generate momentum toward target achievement by revitalizing
the organization through a system that enables employees whotake up the challenge to grow further and play active roles.

●

Building HVAC and Plumbing●

Strengthening the customer base●Industrial HVAC●

Machinery Systems●

Practice of efficient management●

Electricity●

Environmental Systems●

Cultivation and appropriate allocation of human resources●

Facility Systems●

Reform of work processes

2013

Management
philosophy

Machinery Systems

65

Environmental Systems

171

Strategic Growth Businesses

92

Unique New Businesses

0Real Estate Business

27
1,546

ー
2,000

Overseas sales of above amount18

80

Consolidated ordinary income

26

Adjustments

(3)

Total

1.7%

100 5.0%(Note) Percentage indicates ratio of consolidated ordinary income to consolidated sales● Core businesses
Strengthen company-wide cross-departmental sales capability:
Establish a Sales Division to promote cross-departmental sales for all businesses worldwide Promote the recovery project and hospital project
Expand overseas business: Make maximum use of channels such as representative offices and local subsidiaries to expand overseas business● Strategic growth businesses
Expand strategic growth mainly for life cycle engineering
Introduce a consolidated performance evaluation system and further promote ties with subsidiaries to strengthen Group capabilities● Unique new businesses
Promote “total engineering”: Implement a plan based on an execution plan formulated for each division*Integrated as Smart Building Solution Business as of fiscal, 2012

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

1,193● Strengthening management base
Increase business efficiency primarily by reducing fixed costs and reviewing assets held

Unique new businesses

Develop and appropriately allocate human resources: Revise personnel system and performance evaluation system
Increase business efficiency by enhancing business processes and utilizing IT
Boost corporate value by improving risk management and strengthening corporate governanceVisionFinancialperformancetargets

We shall strengthen Core Businesses, expand Strategic GrowthBusinesses and create Unique New Businesses to ensure ourlong-term development.

Strategic growthbusinesses

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

Key measures implemented
until fiscal

2012

Strategic growthbusinessesCorebusinesses

Strengthening the management base

● Core businesses
Launched recovery project: Made a proposal leveraging “total engineering competency” aimed at recovery of disaster-affected regions
Launched hospital project: Made a proposal leveraging “total engineering competency” in areas of focus● Strategic growth businesses
Opened a model room in head office: Conveyed the Sanki Smart Office concept● Strengthening the management base
Consolidated head office, divisions and subsidiaries in the Tokyo region into St. Luke’s Tower:
Strengthened ties and exploited “total engineering competency”
Established Risk Management Committee: Specified risk and made evaluations

Reinforce management of risks specified by the Risk Management Committee■ Revised performance evaluation system
We added qualitative assessment including non-financial results toconventional quantitative assessment and created a general evaluation
system that is coherent with the growth strategy. By incorporating
initiatives to help achieve Company-wide shared policies to the evaluation
items, such as proposing energy savings and promoting “total
engineering,” we will strengthen the system for ongoing, stabledevelopment of Sanki Engineering.
In addition, we switched from non-consolidated-based evaluation toevaluation on a consolidated basis with the aim of boosting Groupcapabilities.
Quantitative evaluation

Qualitative evaluation

Results● Problem resolution ● Human resource development● Internal control ● Other■ Revised personnel system
In order to develop and appropriately allocate human resources, one of
the themes of the medium-term management plan, we created a new
personnel system to be a company in which people grow.
●

Encouraged job promotion and transfer between organizations●

Enhanced education of engineers and management●

Introduced “mentor system” for new employees●

Introduced a system that boosts company support for future careers

Furthermore, we incorporated transparent evaluation standards andconditions in line with results and revised conditions for construction
managers and full-time officers on the front line to produce a system witha focus on the frontline.

Opened a representative office in Salt Lake City: Expanded overseas business
Opened a representative office in Bangkok: Expanded overseas business

18

SANKI REPORT 201319

Business Strategy“Total Engineering,” a Strength of
Sanki Engineering
Create synergies through “total engineering”“Total engineering” is one of the areas of comparativeadvantage of the Sanki Engineering Group. This refers to
our ability to provide optimum solutions throughout theoverall life cycle of facilities in the numerous businessdomains the Group operates in, backed up by exceptional
technological capability. By creating synergies through“total engineering,” we can further boost the value we
provide to customers and society. The Sanki EngineeringGroup delivers one-of-a-kind systems with optimum added
value in response to diverse needs related to theenvironment, society and economy.

1 Provide an optimal environment by leveraging
diverse business domains

Sanki Engineering Group covers a wide range of businessareas, beginning with the Facilities Construction Business,
which consists primarily of heating, ventilation and air
conditioning, plumbing, electrical work and smart building
solutions as well as facility systems. In addition to this, we areengaged in Machinery Systems Business, which consists
primarily of material handling systems and transportationequipment, and Environmental Systems Business, which
consists primarily of water and sewage treatment facilities andwaste treatment facilities.
By effectively integrating these businesses, we canprovide the optimal environment for our customers. This is
the key element of “total engineering.”
Provide the optimal environment

2 Respond to all needs throughout the life cycle

3 Exceptional technological capability

The comprehensive capabilities of the Sanki Engineering Group
enable provision of optimal solutions supporting the entire life
cycle of facilities from planning, design and construction tomaintenance, inspection, operation/management and responseto and renewal of facilities.
Life Cycle Engineering (LCE), into which we have actively
incorporated state-of-the-art technology, including energy
saving, is the second element of “total engineering.”

The third element is technological capability, which underpins
our wide array of business domains and the creation ofsynergies through Life Cycle Engineering.
The Sanki Engineering Group can provide optimal solutions
in line with customer needs through its multiple, unique andhighly specialized technologies. We will maximize synergistic
effects by integrating various technologies from diverse
business domains and generating new value.

Planning∙
Basic design

RepairRenewal●Respond to needs across the board in terms of building

Provide value to customers andsociety through “total engineering”

LCE

facilities and deliver one-stop solutions

Life Cycle Engineering●Propose optimal energy-saving measures from an

all-round perspective●Supply one-of-a-kind systems by optimizing needs

DesignOperation
Management

construction

Society●

Increase asset value

Reduce costs

Use space efficiently

Provide optimal
environment

Machinerysystems

Create synergistic
effects
Environmental
systems

Create synergistic effects
Create synergies through“total engineering”

Diversebusinessdomains

MaintenanceInspection

Economy●●Realize energy saving●

Reduce usage of resources

Ensure information security●

Reduce CO2 emissions

Boost business efficiency●

Create social infrastructure

●

●

●

Environment

Facilities
construction

Provide value driven by technological capability
Save energy and reduce CO2 through multiple
technologies with high cost-benefit performance● Develop unique technology that integrates technologies
from different fields● Utilize the latest highly specialized technology supported by
exceptional planning and construction capabilities thatcombine extensive experience and know-how gained inwide-ranging business domains●

LCE

Exceptional
technologicalcapability

We aim to create synergistic effects by integrating andadding together our abundant experience as well as
highly specialized and unique technological capability
accumulated in a wide range of business domains.
● Promote energy savings and a reduction in CO2 emissions● Boost efficiency of space and enhance business efficiency● Increase asset value● Minimize costs

Responding to customer needs throughLife Cycle Engineering● Provide optimal solutions realized through comprehensive
support● Deliver proposals to reduce life cycle costs throughcomprehensive judgments● Provide optimal systems that integrate professionals wellversed in facilities and Sanki Engineering Group capabilities

Three elements supporting “total engineering”

20

SANKI REPORT 201321

Business Strategy

FOCUS

Provide Comfortable Spaces through“Total Engineering Competency”
Kyorin University Hospital No. 3 Ward
Kyorin University Hospital is an advanced treatment hospital that plays a role as a central medical center in theTama region of West Tokyo where our concept is to provide an environment in which patients and hospital
officials can be comfortable.
The No. 3 Ward completed in August 2012 has a quake-absorbing structure, the fifth of its kind since theoutpatient wing was completed in 1998. Sanki Engineering is in charge of the heating, ventilation and air
conditioning, plumbing and electrical work, and information and communications facilities construction in thebuilding. Through “total engineering” combined with Sanki Engineering’s technological capability, the building
provides a comfortable space and realizes risk and disaster countermeasures as well as energy saving and CO 2
reduction countermeasures. This is an example of contributing to an improvement in the quality of the medical
environment.

Kyorin University Hospital No. 3 Ward
10F/B1F/PH2 (Total floor area: approx. 22,000 m2)
Consolidated quake-absorbing structure with the existing
surgical wing
A total of 370 beds, including HCU (24 beds), cerebrovascular center(30 general hospital beds, 9 SCU beds, dedicated rehabilitation facility)
Includes a heliport that can handle large helicopters and a server room

Provision of comfortable space

Energy saving and CO2
reduction countermeasures

Comfortable space for medical carea medical space that is more comfortable for

Guaranteed power supply in an emergency

Highly reliable server room environment

Providing facilities that are good for the environment

The hospital rooms and corridors mainly use

patients as well as staff.

A 1,500 KVA generator for emergencies has

The building has a special server room to

The entire hospital ward is fitted with LED

indirect lighting to produce a soft, relaxing

Contributing to enhanced business efficiency

been installed on the first basement level

store essential, high-security medical data.

lighting. This helps reduce energy by 15%

space.

A total of 91 LAN antennas have been placed

which has automatic oil-supply equipment

Highly efficient air conditioning, double

through straight-pipe fluorescent LED lighting and

As a measure against the odors that are

inside the No. 3 Ward, enabling hospital staff

from a storage tank on the premises andpower source, and equipment for fast and

40% through fluorescent downlight LED lighting

unique to hospitals, we introduced a deodorizing

to operate medical-use laptops aroundwater-cooling equipment. This enables 72

duplicate data communication provide afor a total energy savings of 30%. In addition, airsystem for the 24 beds on the wing for ear, nose

patients.

hours of continuous operation. The generator

highly efficient server room environment evenconditioning saves energy and reduces CO2
through an individual air conditioning system.

and throat, cerebrovascular center and old-age

Also, the barcode band placed on patients’ensures power supply to lighting, electricalfor servers that generate a lot of heat tocare. The system incorporates oxygen clusters

wrists includes three different barcode numbers

outlets, air conditioning and water supply andprocess information using the latest thin

(deodorizers) into the air supply together withfor accurate reference in the following areas: (1)drainage so that medical treatment can also beclient system.

ventilation (air-flow control).

patient barcode; (2) barcode concerning medication

administered during an emergency.

At each bedside, medical gas, nurse call button,
and outlets that meet the needs of clinicaldepartments can also be installed, which provides

22

Risk and disaster countermeasures

Meanwhile, the use of highly efficient heatsource equipment that can handle partial
loading such as periods between cooling anddispensing; and (3) barcode listed on the medical

heating contributes to the realization of achart and prescriptions.

hospital ward that is comfortable as well as
good to the environment.

SANKI REPORT 2013

23

Reports by Segment

Reports by Segment

Facilities Construction Business

The medium-term
management plan

Facilities Construction
Business

SANKI
VITAL PLAN

90th

Mitsui Sumitomo Insurance Co., Ltd.
New Surugadai Building

Kobayashi Kako Co., Ltd. Oncology Wing

Important policies for achieving our goals

data centers and other unique technology with the aim ofdriving growth in orders. We also conducted a proving test
aimed at realizing an energy self-sufficient plant factory andconstructed a binary power plant as we continue to develop
next-generation energy-saving technology and newenergy-related technology.
Creating facilities constructionthat is friendly to both people and the environment
Sanki Engineering is creating facilities construction that isfriendly to both people and the environment with its convenient,
comfortable and yet energy-saving and efficient systems. We
will make unceasing efforts to increase our business activities
while developing unique new technology and address thechallenges of globalization.

Record of major projects implemented● Mitsui Sumitomo Insurance Co., Ltd. New Surugadai Building● Increasing orders for proposed renewal projects in response to the

Revised Energy Saving Act● Strengthening cost competitiveness● Developing technology for next-generation energy-saving and new energy● Streamlining and enhancing our bases in Southeast Asia

Consolidated sales FY2012 (actual)

128.6（billion of yen）

FY2015 (target)(HVAC, plumbing and electrical work, and smart building solutions)● Takeda General Hospital Foundation, Takeda General Hospital General Medical Center

156.0（billion of yen）

(HVAC, plumbing work)● Kobayashi Kako Co., Ltd. Oncology Wing

Progress in the medium-term management plan

(HVAC, plumbing work)● Head office moving project of Development Bank of Japan

Summary of results and performance for FY2012
Orders in the Facilities Construction Business were 0.9%
higher than the previous fiscal year at ¥136,144 million. Sales
amounted to ¥128,626 million, up 11.8% year on year due toan increase in the number of projects carried over from theend of the previous fiscal year. Tough conditions continued,
characterized by the shift of domestic manufacturing overseas
and delays in executing public work projects, while a morefavourable economic outlook emerged from the second half offiscal 2012. Nonetheless, this was not enough to impact
orders and sales. With respect to orders in fiscal 2012,business increased in such areas as HVAC and plumbing forbuildings and smart building solutions despite stagnation inindustrial HVAC due to on-going sluggish growth in capital
investment in the domestic manufacturing industry, including
the semiconductor industry. Sales increased year on year in all
businesses.
In the information-related facilities field, active marketing
activities focused on the L-LAC® air conditioning system for24(Project management work)

Orders(billion of yen)

134.8

136.1

’10

’11

’12

117.5

115.0

’10

’11

113.5

(FY)

Sales
(billion of yen)

(FY)

128.6

’12

1. Of the key measures implemented in the Facilities Construction
business, we are focusing on reinforcing Core Businesses.
This involves expanding orders for proposed renewal
projects in response to the Revised Energy Saving Act,strengthening cost competitiveness, and streamlining andenhancing our bases in Southeast Asia.
Orders for renewal projects in fiscal 2012 increased by
16.6% year on year. To strengthen cost competitiveness,
we bolstered purchasing power by gathering purchasingdata and making full use of it, and also reduced burden on
construction site managers by improving businessprocesses and created a system that enables them tofocus fully on construction.
2. To streamline and enhance our bases in Southeast Asia,
we opened a representative office in Bangkok in February
2013 and started operations there in March 2013. We willbolster connections between local subsidiaries overseas
and domestic departments by establishing an Overseas
Operations Control Office, which will work to promote
overseas business and secure human resources.

Initiatives in fiscal 2013
Reconstruction demand to replace dilapidated buildings andneeds for energy-saving measures and building maintenanceand management are expected to increase from fiscal 2013
onward. The Sanki Engineering Group will promote Life Cycle
Engineering that proposes a reduction of overall facility life
cycle costs from a comprehensive perspective up to design,
construction, maintenance management, repair and renewalof buildings, while contributing to society. In addition, we will
establish Food Service Equipment Office to develop thefoodstuff facilities business, which includes kitchenequipment and fixtures, and coordinate it with Core
Businesses. We plan to promote “total engineering,” including
hygiene control for foodstuffs, energy saving and powersaving, and environmental measures with the aim ofdifferentiating our operations. We also plan to actively
implement marketing activities for “system kitchen” thatcovers all interior construction and related equipment to meetrenewal demand.
■ HVAC & Plumbing for Buildings
Business in HVAC & Plumbing for Buildings aims to increase
orders with its “total engineering” technology, which enables
energy saving and increasing the added value of buildings, byintegrating functions such as heating, ventilation and air
conditioning, water supply and drainage, and plumbing
systems.
From fiscal 2013, we will further increase our overall
engineering capabilities in order to enhance our abilities topropose technology solutions to customers. With newtechnologies unique to Sanki Engineering that not only lead toenergy saving and power, but also open the way for reduction
in life cycle costs, we will broaden our business fields andguarantee growth potential.

SANKI REPORT 201325

Reports by Segment

Reports by Segment

Facilities Construction Business

Topics 1■ Industrial HVAC

■ Smart building solutions

In the Industrial HVAC Business, we are proposing solutions

In the Smart Building Solution Business, we provide smart

for improving and upgrading HVAC equipment in order to savebuildings that enhance energy-saving efficiency and comfort

energy by taking advantage of our unique cleanroom

through the combination of building automation technology

technology.

related to HVAC, plumbing and electrical work and information

Despite continued stagnation in capital investment in the

Renovation work for the
Tokyo Station Hotelin the Tokyo Station
Marunouchi Building

The Tokyo Station Marunouchi Building, built in 1914 and nearing 100 years old, has been designated as an important culturalproperty of the country. The steel-frame brick structure has been loved by people as a symbol of Tokyo with its stately yet
warm feel.
Preservation and restoration work for the building began in 2006 and Sanki Engineering was in charge of construction for
air conditioning work in the Tokyo Station Hotel in the building. Work was carried out in the backyard of the hotel onbasement level two, the wedding salon and office on basement level one, the banquet room and lobby on the first floor, andthe guest rooms and lounge from the second to fourth floors. The construction made themost of Sanki Engineering’s exceptional technological capability in such areas as energy
and electricity savings.
In particular, the guest lounge adopted an underfloor air-conditioning system since theroof is a pyramidal shape and the ceiling is high. Compared with systems in the ceiling, it
is possible to focus air conditioning only in the zone where people reside, thus providing ahighly energy-efficient space. Going forward, we will promote the development of newtechnologies to preserve historic buildings and concentrate on creating comfortable
spaces to realize a sustainable society.

communication technology.

manufacturing industry in Japan, including the semiconductor

Social needs for smarter buildings are rising, but challenges

industry, orders for cleanrooms for medical manufacturing andremain in the implementation phase. In response to thesefood production are on the rise. Going forward, in addition to thechallenges, on certain floors of Sanki Engineering we areenhancement of our competitiveness in domestic markets, we

introducing an individual lighting control system, developed

will pave our way for globalization by streamlining andwith the aim of reducing power consumption in lighting. In

enhancing our bases especially in Southeast Asia, so as to meet

addition, we worked on research into smart office environments

the demands arising from newly developing countries.

and the effects of reducing electricity in conjunction with Tokyo

東京丸の内駅舎内
東京ステーションホテルの保存・復元工事

Topics 2

Metropolitan University and Chiba Institute of Technology. The■ Electrical work

results of internal proving tests showed that the energy saving

In the Electrical Work Business, we are offering systems torate was around 50% compared with the level prior to systemprovide stable power supply and make highly efficient use of

introduction.

electricity in the fields of lighting installation, power
substations, monitoring systems, information infrastructure■ Facility systems

and intelligent building management.

The Facility Systems Division offers project management

We aim to achieve stable growth while pursuing comfort

service for the worksite, such as office planning, fit-outs andand convenience for electrical work required for more

relocation as well as consulting service for strategy andadvancement, diversification and energy-saving in the future.

management. In particular, we have a good achievement
record including dealing rooms for financial institutions.
Going forward, we will strive to boost customer satisfaction
by enhancing expertise and strengthening engineering
competency for customers.

26

Facilities supporting
Supercomputer “Kei”
RIKEN Advanced Institute for
Computational Science
Supercomputer “Kei”

Provided by RIKEN

Sanki Engineering was in charge of the air conditioning work of units at the RIKEN Advanced Institute for Computational
Science where the supercomputer “Kei” is housed, as well as the electrical work in a three-company joint venture. “Kei”
boasts one of the fastest computational speeds in the world with high-density and high-heat-generating calculating machinesthat reach 12,700 kW overall during peak times. As such, an efficient and stable cooling system is of utmost importance.
Against this backdrop, Sanki Engineering conducted a temperature distribution simulation for cool air and developed
various technologies to supply cool water in a uniform manner to the cooling module inside the 864 calculating machines
before making advanced adjustments. We also significantly reduced energy through the reuse of waste heat in thecogeneration system as a source of heat. In recognition of design and construction, including this result, we received theTechnology Award together with a design company from The Society of Heating, Air-Conditioning and Sanitary Engineers ofJapan (SHASE) at the 51st SHASE Awards Ceremony (fiscal 2013).

SANKI REPORT 201327

Reports by Segment

Machinery
Systems Business

Reports by Segment

conveyors at 65% load). We will develop a variety of uniqueproducts that leverage exceptional technological capability
and meet customer needs and challenges.
We will enhance the dedicated website (www.hansou.jp)
for transport equipment and systems by providing technicalmaterial such as product outline, a simple estimate service
and a customer inquiry section in order to secure closer
communication with customers.

Machinery Systems Business

The medium-term
management plan

SANKI
VITAL PLAN

90th

Important policies for achieving our goals● Venturing into new energy-related markets● Developing and selling new conveyors for specific markets● Establishing competitive bases in overseas markets

Consolidated sales FY2012 (actual)

6.5

Providing logistics systems that meet customer needs
and challenges
Sanki Engineering will provide material handling systems
corresponding to customers’ needs and challenges in supply
chain management, and we will deal with the issues of society
through the development of technology.

Record of major projects implemented

Initiatives in fiscal 2013
(billion of yen)

FY2015 (target)

15.0 (billion of yen)

● New construction of a line for color filters at Toray Industries, Inc.
● Construction of lithium-ion and layered product transportation facilities at

Nissan Motor Co., Ltd.

Progress in the medium-term management plan

● Construction project to replace the transport system of the TOHAN

Summary of results and performance for FY2012
Orders for the Machinery Systems Business increased 15.5%
year on year to ¥10,817 million due to multiple orders for large
cargo handling systems in airport-related facilities where
there is relatively minor impact from economic trends. Sales
were down 39.9% year on year to ¥6,501 million due to theeffect of sales for large-scale delivery facilities in the previous
fiscal year.
Investment for production facilities, a key market in thisbusiness, remained low due to continued stagnation. Despitea brighter outlook from the second half of fiscal 2012, this did
not stimulate investment activity for production facilities andstiff price competition for orders continued.
In contrast, the need for energy conservation continues togrow every year and advancements are being made in thedevelopment of devices that minimize energy consumption in
respective industries. Sanki Engineering developed anenergy-efficient conveyor series for logistics equipped with ahighly efficient motor boasting around a 40% reduction in
power saving (compared with Sanki Engineering’s conventional

28

Corporation Ageo Center

Orders(billion of yen)

11.8
9.3

(FY)

’10

’11

10.8

’12

Sales
(billion of yen)

9.4

(FY)

’10

10.8
6.5
’11

’12

1. We have a proven record in significantly reducing power
consumption compared with conventional methods throughthe combination of transport facilities and air conditioning
technology based on set conditions in a special
environment for the production of lithium-ion batteries
following entry into new energy-related markets. However,
the market is still not fully mature and there is minimal
scope for major business. It is a promising market,
however, and we will work to enhance the technologies
we already have.
2. In the medical and pharmaceutical field, one of our
focuses, we are working to develop the industry’s
fastest-class sample pre-treatment equipment and roll it
out across the entire market.
3. In terms of establishing sales sites overseas, we havenarrowed down markets based on the development ofcompetitive products and are looking for partners as well as
creating a sales structure and training human resources. In
construction results for fiscal 2012, we upgraded delivery
facilities for flat-panel displays in Taiwan and Korea.

In fiscal 2013, we forecast recovery in private capital
investment in line with advancement in the government’s
economic measures. So that we do not miss this opportunity,
we will focus on strengthening proposal-making capabilities,
product-development capability and quality in order to provide
solutions to customers and drive differentiation.
In particular, in the foodstuffs and pharmaceuticals field,
which has been positioned as a future growth market, we willbolster response to inspection lines using sophisticated,accurate sensing devices. At the same time, we will reinforce
our role as a system integrator that combines our own
material handling with general-purpose robots for the medical
and pharmaceuticals field. In accord with response to thesegrowth markets, we will promote response to transporttechnology under specific environments through integration
with air conditioning technology and work to expand sales
channels by making use of the Company-wide channel.
We will also strive to develop low-cost products andstrengthen ties with sales distributors as a means to expand
share of standard-type conveyors. In addition, we will start
supply and sale of components and materials incorporating aknock-down method in Japan and in the future look to
overseas markets.

SANKI REPORT 201329

Reports by Segment

Environmental
Systems BusinessContribution of fulfilling a low-carbon society throughdevelopment of our technologically superior products
Sanki Engineering is developing energy-saving devices,energy-saving systems, water and waste processing
equipment and systems that can deal with problems such as
the debris from earthquakes, and is helping bring about alow-carbon society with equipment and systems that reducegreenhouse gas emissions.

Reports by Segment

We delivered a supercharged (turbocharged) fluidized bed
incinerator that we have continued to develop as a facility tomeet the needs of the times to the Asakawa Water
Reclamation Center, Tokyo, in fiscal 2012 and succeeded withthe world’s first commercial application. This system is
expected to reduce greenhouse gas emissions by 40%
compared with conventional systems.
In addition, we completed without problem our recovery
project at the Minami-Gamo Purification Center in Sendai Cityin fiscal 2012 following the Great East Japan Earthquake andthen received an order for another recovery project in thesame fiscal year. Recovery of the Minami-Gamo Purification
Center held great significance for the recovery of key urban
infrastructure in Sendai City since the facility serves 710,000
people, 70% of the city’s population. Sanki Engineering
received an award for our earthquake recovery-related service
from Japan Sewage Works Agency. Following the completionof three recovery projects beginning with the Minami-Gamo
Purification Center.
Record of major projects implemented

The medium-term
management plan

SANKI
VITAL PLAN

90th

Important policies for achieving our goals● Increasing orders for strategic, energy-saving products for sewage

treatment facilities● Development of major next-generation products for the field of sewage

treatment● Expanding our marketing networks overseas

Consolidated sales FY2012 (actual)

17.1(billion of yen)

FY2015 (target)● Supercharged (turbocharged) fluidized bed incinerator at Asakawa Water

Reclamation Center, Tokyo

24.0 (billion of yen)

● Reconstruction following the Great East Japan Earthquake

Japan Sewage Works Agency/Miyagi Prefecture Kennan Purification Center
Japan Sewage Works Agency/Sendai City Minami-Gamo Purification Center

Summary of results and performance for FY2012
Orders in our Environmental Systems Business were down
42.3% year on year to ¥16,623 million due to delays in orders forwater supply and sewage systems from public offices as well as
multiple orders for large-scale sludge incineration facilities andlong-term, multi-year maintenance agreements in the previous
fiscal year. Sales were 13.5% lower than in the previous fiscal
year at ¥17,145 million due to strong sales of large-scale waste
treatment facilities in the previous fiscal year.
Capital investment in sewerage treatment facilities andwaste treatment facilities, key markets in the Environmental
Systems Business, has continued to decline little by little
since 2000 due to the impact of fiscal austerity measures by
local governments and the fact that environmental
infrastructure has already been upgraded. Based on this trend,
this period calls for extended life and longer service ofexisting facilities as well as the introduction of energy-saving
and energy-creating facilities such as power generation
throughout treatment facilities.

30

Progress in the medium-term management plan

Miyagi Prefecture Natori Pumping Station

Orders28.8(billion of yen)

17.7

(FY)

’10

Sales

20.7

(billion of yen)

(FY)

’10

16.6

’11

19.8

’11

’12

17.1

’12

Environmental Systems Business1. In expanding orders of energy-saving strategic products,
we delivered the first supercharged (turbocharged)
fluidized bed incinerator and are currently constructing thesecond. Going forward, we will call attention to its
energy-saving effects and greenhouse gas-reduction
effects to expand sales.
2. In developing core products for the next generation, we arefocusing on “energy saving and energy creation” with theintroduction of various technologies. We have now
delivered ultra-fine bubble diffusers (product name inJapan: Aero Wing) to more than 300 facilities, which wereleased to the market over 10 years ago. This product can
reduce power consumption by 50% in the reaction tank at
sewage treatment plants compared with conventional
diffusers. In order to further improve the product value of
Aero Wing, we are working to: (1) improve performance ofthe device itself; (2) maintain long-life performance; and (3)further save energy and operate more efficiently as asystem for aeration.

3. In overseas business developments, we are alreadydelivering products to 48 countries and are covering 61
countries in all through 21 distributors worldwide led by
AQUACONSULT Anlagenbau GmbH (Austria; 100% owned
subsidiary), which manufactures and markets Aero Wing
(overseas name: Aero Strip). We are striving to expand into
unexplored regions with our product sales network,
strengthen ties with leading distributors and enhance
product applications.

Initiatives in fiscal 2013
New economic policies center on public works with details
said to focus on disaster countermeasures in light of pastexperience and renewal projects for infrastructure (tunnels
and bridges) and capital investment in environment-related
facilities is expected to be in line with previous years.
However, the needs of the times have not changed andthere are calls for facilities based on the concept “energy
saving and energy creation.” The time has come to retrofit
sewerage treatment facilities and waste treatment facilities
all at once as needs increase for extended life and longer
service life. In response to the needs, we will propose a
combination of a supercharged (turbocharged) fluidized bed
incinerator, Aero Wing and its peripheral systems forsewerage treatment facilities and a combination of aboiler-type power generation system and a water-cooled
stoker incinerator for waste treatment facilities.
In private projects, we will enhance “total engineering
competency,” utilize the Company-wide channel and focus on
effluent water treatment systems in the medical andpharmaceuticals field in particular.
We will implement activities resolutely toward therealization of a low-carbon society.

SANKI REPORT 201331

Reports by Segment

Research and Development

Reports by Segment

Real Estate BusinessResearch and Development

Real Estate BusinessResearch and Development
Philosophy on R&D

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

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. These
technological developments enable to meet customer
demands and resolve social issues. Our three main areas offocus are “energy saving,” “upgrading” and “renewal.” We
aim to provide high value-added solutions by striking abalance between fundamental research that is of benefit for
the future and technological development that directly meets
market needs.
Our R&D system centers on the Technical ResearchInstitute in Yamato City, Kanagawa Prefecture, our corefacility, which links with planning and development
departments in each business of Facilities Construction,
Machinery Systems and Environmental Systems for R&D
across all of Sanki Engineering’s business domains.

Fiscal policy and initiatives at the Technology
Research Institute
Summary of results and performance for FY2012
Sales in the Real Estate Business were ¥2,747 million, down
2.7% year on year due to the impact of rental revision forcertain rental properties. Impairment loss of over ¥7,000 million
was recorded as extraordinary loss due to the conclusion of thecontract period for a large rental property located in Yamato
city, Kanagawa Prefecture at the end of the fiscal year and an
inability to quickly anticipate succeeding lessees for theproperty. In addition to seeking lessees, we are looking into thepossibility of new effective utilization for the property going
forward.

Initiatives in fiscal 2013
In the Real Estate Business, we will work to recreatebusinesses by improving added value through facility renewal
and utilizing idle assets. As a response to aging facilities, wewill shift to LED lighting when it is time to change lighting
fixtures, renew water heater-chillers with exceptional
environmental performance and repair the exterior to maintainand protect asset value.

32

In fiscal 2012, the Technology Research Institute pursued
development that was one step ahead of the market andworked to realize an intrinsic approach to technologicaldevelopment in order to meet customer and social demands
based on a policy to “creating shape to market needs withnew ideas and speed.”In fiscal 2013, we will focus on strengthening ties ofengineers in differing specialty fields based on the idea ofachieving a “breakthrough via total engineering competency.”
We will hold study sessions twice a month and gathered incommon workspace in order to vitalize communication
between engineers. We also aim to create attractive products
by integrating the technological capability between otherdepartments.

inventions born from design and construction sites areperceived as intellectual property, such as inventions at theTechnology Research Institute.
In terms of management, we have assigned a liaison
person for intellectual property in each business division, led
by the Intellectual Property Department. This person actively
uncovers intellectual property through activities to improve
construction methods in conjunction with the Intellectual
Property Department and also strives to strengthen
intellectual property by sharing topics each other that wereconceived of at meetings held by parties involved inintellectual property.

Distributing information through the
Sanki Global Environment PlazaThe Sanki Global Environment Plaza, which was establishedinside the Technology Research Institute, introduces Company
initiatives and R&D related to the environment. Some 500
people, including customers and local residents, visit the Plaza
every year.

Sharing and education on intellectual property information
We have released a database over the internal LAN systemthat includes an outline reports of business-related patents
and patent publications with the aim of sharing intellectual
property information. In addition, we provide education on

Tour inquiries:
Yamato Engineering Center,
Sanki Engineering Co., Ltd.
TEL: +81-46-274-4111

Development results in fiscal 2012
Development of thermal stratification air conditioning system (periloop ) for large spaces
Sanki Engineering has developed a thermal stratification air conditioning system (periloop ) for large
spaces such as factories and gymnasiums. With this system, ducts are placed on the wall about 2-3m
above the floor in a loop formation with a special nozzles on the underside of the duct blowing air inthe direction of the floor for efficient air conditioning in a large space. Temperature stratification iscreated when cooling in summer to save energy (up to 40% of energy is saved in the peak of summer),when heating in winter for air conditioning that warms as far as the feet, while cold air is suppressed.
In fiscal 2012, the system was installed for the first time into the new wing of Fuji Heavy Industries'
Ltd. Tokyo Office.

When cooling(temperature stratification)

Established mock-up data center
A mock-up data center has been
established at the Technology
Research Institute. This facility isused for full-scale experiments andinspections to improve technologicalcapabilities for data centers, which
is our strength field.

P.8

When heating(total air conditioning)

Non air
conditionedarea

Warm air accumulates
Loop duct

Initiatives related to intellectual property
Sanki Engineering manages intellectual property based on the
Code of Conduct to “manage and protect company rights andassets, and respect the rights and assets of others.” We
actively file patent applications under the philosophy that

intellectual property to all new employees and work toenhance awareness of the need to protect Sanki Engineering’s
technology and not to infringe on the intellectual property
rights of other companies.

Specialopening
Warms as far as feet
Only work area is cooledAirconditionedarea
3m above floor

SANKI REPORT 201333

List of Business Locations and Introduction to Group Companies

List of Business Locations andIntroduction to Group Companies

Representative offices and Group companies overseas

Hokkaido branch office

AQUACONSULT
Anlagenbau GmbHAEROSTRIP Corporation

Business areas: Manufacture and sale of aeration

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.

Sanki Construction Engineering(Shanghai) Co., Ltd.

Austria Office

Together with our customers, we will strive as a Group to contribute to the realization ofBusiness areas: Facility design, construction,
maintenance and consulting

a comfortable, recycling-oriented society.

THAI SANKI ENGINEERING &CONSTRUCTION CO.,LTD.

Tohoku branch office

Domestic business locations

Mikawa branch office
Chubu branch

Ibaraki branch office

Kanto branch office

Chiba branch office

Kobe branch office

Kyushu branch officeHong Kong Office
Bangkok Office

Head office
Tokyo branch

Representative officeKansai branchGroup company

Sanki Shonan Training Center

Shikoku branch office

Salt Lake City OfficeBusiness areas: Facility design, construction,
maintenance and consulting

Hokuriku branch office

Kyoto branch office
Chugoku branch officeBusiness area: Manufacture and sale of aeration

Toyoda branch office

Yokohama branch office

Shizuoka branch office

Yamato Engineering Center
Technical Research &Development Institute

TopicsOpened representative office in Bangkok, Thailand

In February 2013, we opened a representative office in the Thai capital of Bangkok and started operations there in March. The office will researchmarket trends in the high-growth-potential Southeast Asia region, including Thailand, and work to expand overseas business.

Domestic Group companies
Affiliates accounted for by the equity method

Affiliates not accounted for by the equity method

Shin-yu Service Co., Ltd.*Ou Clean Technology Co., Ltd.

PFI Okubo Techno Resource Co., Ltd.

Established
CapitalBusiness areas

Established
CapitalBusiness areas

Established
CapitalBusiness areas

Consolidated subsidiaries
Sanki Techno Support Co., Ltd.

Sanki Kako Kensetsu Co., Ltd.

August 1, 1980
¥10 million
Insurance agency, leasing

Established April 1, 1980 Capital ¥100 million
Established September 1, 1980 Capital ¥80 million
Business areas
Business areas● Design, construction, operation/management, maintenance● Design, construction, operation/management, maintenance,and repair of HVAC, plumbing and electricity work
upgrading and improving of waste treatment facilities● Energy saving diagnosis and consulting● Manufacture, sale and installation of solid-liquid separators● Building IP phone systems, call center systems and networks ● Design, construction and maintenance/management of water/
wastewater treatment facilities

Non-consolidated subsidiary

Sanki Sangyo Setsubi Co., Ltd.

Sanki Kankyo Service Co., Ltd.

Tomakomai Netsu Service Co., Ltd.

Established May 1, 1980 Capital ¥20 million
Business areas● Installation, relocation, removal and altering of generalequipment (production, transportation, etc.)● Electrical wiring, instrumentation work, computer softwarechangesEstablished June 29, 1990 Capital ¥50 million
Business areas● Design, construction, management and work contracting ofenvironmental protection facilities including water supply
and sewage facilities and waste treatment facilities etc.
● Operation, maintenance and management and sale ofchemical products for above facilities

Established
CapitalBusiness areas

34*Became a consolidated subsidiary in fiscal 2013.

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

February 1, 2005
¥494,825,000
Treatment and incineration of industrial and generalwaste 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

December 3, 2004
¥10 million
Update, maintenance, management and operation of wastewater treatment
facilities and emergency generators at Okubo Water Purification Plant,
Saitama Prefecture
Period of business Design and construction 3 years, 4 months; operation, maintenance andmanagement 20 years

SANKI REPORT 201335

Corporate GovernanceSanki Engineering’s CSR Activities

Sanki engineering’s basic concept of corporate
governance
Increasing the efficiency of management as a major
premise with absolute compliance
Sanki Engineering positions contribution to society throughengineering, communication with all of our shareholders and otherstakeholders, and the realization of business activities that make us
a company both valued and trusted by the community as our basic
management principles. In order to realize this, we recognize that a
key management challenge is to boost management efficiency andperformance while not compromising to enhance compliance.

Corporate governance system
In order to increase business efficiency and speed up the decisionmaking process, we are employing an executive officer system inwhich we divide management functions between the Board of
Directors, which is responsible for decision-making and supervisionfunctions, and executive officers, who are responsible for the executionof business affairs. We also have a system in place by means of which
the decision-making process of our Board of Directors and theexecution of business affairs by our executive officers are subject tomultifaceted 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 legality and appropriateness of our business procedures.

Diagram of corporate governance system

Business auditing
Accounting auditing

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

Appointment to/removal from office

Board of Directors

Accounting auditing

Appointment to/removal from office

Accounting auditors
Ernst & Young ShinNihon LLC

Executive Officer Committee

Discussion,
reportingCorporate Ethics Committee

Policy Meeting

President and Representative Director
Management Meeting

Leadership, supervision

Management Meeting
Made up of directors and executive officers nominated by the President. Meets
weekly to deliberate 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 otherimportant meetings, and offer opinions as necessary. The Board conducts accounting
auditing and business 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 futurevacancies in the Board.
Internal Financial Control Committee: See p. 37

Internal Financial
Control Committee

Individual responsible forInternal Audit
Department

Company-wide secretariat(Accounting Department, Administration Division)

ReportingBusiness divisions, branches, branch offices and offices consolidated subsidiaries

Leadership, supervision

Sections, head offices, 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 importantmatters and supervise the status of execution of business affairs.

Risk Management Committee: See p. 38

Highest authority(President)(General Manager, Administration Division)

Executive officers

Monitoring / Guidance, support / Education

Absolute compliance is the foundation of a trusted
company
Compliance at Sanki Engineering is not restricted to simply
obeying laws and regulations. We have a broader understandingof compliance as conforming to the standards of society, and webelieve that compliance is the requirement that must be fulfilled
above all others by a corporate citizen. Absolute compliance is in
itself the foundation for being a company that is trusted bysociety. Based on our recognition of the overwhelming importanceof compliance, we are pushing ahead with Sanki EngineeringGroup-wide compliance initiatives centering on our Corporate
Ethics Committee, of which our President acts as Chairperson.

Election, dismissal, supervision

Important matters /Discussion, reporting

Internal Finance Control Committee

Supervision of our main work processes
In order to ensure the reliability of financial reporting demandedby the Financial Instruments and Exchange Act, we operate asystem to promote internal controls, with the President as thehighest authority. As an independent initiative on our own part,
we also appoint Chief Auditors with specialized knowledge andexperience of construction to each of our worksites to act as
supervisors, constantly overseeing our main work processes.
In fiscal 2012, we verified the effectiveness of all Companywide control evaluations and IT control evaluations and received
an unqualified opinion from our accounting auditor. We will work
to enhance our internal control system further and ensure thereliability of our financial reporting.

Internal Financial
Control Committee

ReportingAppointment to/removal from office

Our concept of compliance and our management
systemInternal control promotion structure for financial reportingOf ten Directors, two are External Directors

Risk Management Committee

Promotion of Internal Financial Control Commitee(As of June 26, 2013)

General Shareholders’ Meeting
Appointment to/removal from officeInternal Audit Department

Individual responsible for internal controls in worksite(General Manager of division, branches, branch offices and offices, President of subsidiary)

Auditing

Corporate Ethics Committee
With the President as Chairperson, via this committee executive officers nominatedby the President to be responsible for corporate ethics oversee all matters related tocorporate ethics. The Committee is made up of executive officers, heads of divisions
and the Presidents of branches and branch offices, and the CSR Promotion Divisionfunctions as the Secretariat. The committee deliberates on action plans and othermeasures 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’sbusiness divisions, based on the Auditing Plan for that fiscal year. It verifies theappropriateness, 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 Division and other divisions. The Section reports
the results of its audits to the President, responsible executive officers and auditors.

Corporate GovernanceIndividual responsible for promotionof internal controls at worksite(General Manager of Sales Department andTechnical Administration Division, etc.)
Head of worksite secretariat(Manager of the section responsible for operations)

Corporate ethics training
We conduct corporate ethics training for all Group executives andemployees every year. In fiscal 2012, we explained the backgroundand history of past cases concerning surplus materials and waste
processing to all employees in order to prevent reoccurrence.

Corporate ethics training themes for fiscal 2012
①Outline of revision to Code of Conduct and Action Guidelines②Prevention of information leak
③The prevention of sexual harassment and power harassment④Appropriate processing of surplus material and waste material⑤Tax inspection findings⑥Key deficiencies in internal controls

Status of corporate ethics training
Worksite supervisors①Chief Cost Inspector at eachbranch②Manager (or Section Chief),
Management (or Administration)
Division General Manager,
Accounting Department

Highest authority: President
Responsible for all aspects of internal controls related to financial reporting.
Individual responsible for financial internal controls(General Manager of Administration Division)
The executive officer responsible for internal controls related to financial
reporting, acting as an aide to the President.
Financial Internal Controls Committee
With the president acting as Chairperson, this committee deliberates andmakes decisions on important matters in the area of internal controls related tofinancial reporting, and plays a central role in company-wide regulation.

PeriodAug-Sept 2012

Number of participants

Number of enrollments

2,211

2,320 **(As of April 1, 2012)

Questionnaire concerning compliance awareness
Sanki Engineering conducts a yearly survey to ascertain awarenessof compliance and CSR among executive officers and employees.
In fiscal 2013, we distributed the survey to 2,375 people throughe-Learning and 1,824 of them responded. We will use the findings
to further nurture awareness.

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

36

SANKI REPORT 201337

Sanki Engineering’s CSR Activities

Corporate ethics hotlines (Whistle-blowing system)
We have set up corporate ethics hotlines both within and outside
the company to enable employees to blow the whistle. Theinternal hotline goes to the CSR Promotion Division, while theexternal hotline goes to our consulting attorney’s office. We act
with appropriate haste to resolve the issues that are reported,with consideration of the protection of the consultant and thewhistle-blower. All of the reported information is presented tothe executives responsible for corporate ethics, and important
information is reported to the Management Meeting. In fiscal
2012, there were 4 cases of whistle-blowing, which did notconcern a major infringement.

Status of distribution of compliance confirmation sheets(Fiscal 2013)
Sanki Engineering (Relevant employees)

Subsidiaries (Relevant employees)

29（29）

29（29）

1,984（2,005）

640（641）

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

Established risk management committee
Sanki Engineering has established a Company-wide risk management
system to comprehensively identify and manage risk relevant to theGroup and prevent it from occurring, and to minimize loss in case it
does occur.
We have set up a Risk Management Committee chaired by arisk management officer to monitor important risk throughout theGroup, formulate control plans, and monitor risk reported fromsubcommittees and divisions.

Receipt of compliance confirmation sheets from executives
and employees
In order to refresh the awareness of all Sanki Engineering Group
executives and employees of the responsibilities that they must
fulfill in their respective positions and roles, since fiscal 2008 wehave distributed compliance confirmation sheets at the beginningof each fiscal year covering items such as observance of the Codeof Conduct and Action Guidelines and association with criminal
elements and groups.
We have been using e-Learning instead of written materials
since fiscal 2013.

Corporate Governance

Responses to disaster risk (Formulating a BCP)
Sanki Engineering’s BCP (Business Continuity Plan) aims to ensure
the safety of all related persons, beginning with employees,
based on integrated effort from all divisions and employees aswell as formulate a framework to contribute to customers andsociety through swift business restoration in collaboration withbusiness partners.
This plan is revised continuously and in fiscal 2012 we conducteda review of internal systems and procedures (establishment ofsystems in ordinary times and clarification of behavioural standards
and division of roles when a disaster occurs) so that activities canbe restored even faster. In fiscal 2013, we will conduct training andexamine risks aside from large disasters in order to further enhance
effectiveness.

Information security measures implemented in fiscal 2012
included the following:①Encoded hard disks on PCs already in the field and encoded
PCs in the office when they are replaced as measures to deal
with stolen PCs②Started automatic distribution of a Windows security
countermeasures program as an information security measure③Operated a file transfer system to enable large data thatcannot be sent by normal mail to be sent safely outside thecompany
In fiscal 2013, we plan to create a framework to prevent mailbeing erroneously sent to an external address and to ensure thatunauthorized terminals do not connect to the Company-wide
LAN system.

Initiatives to ensure Information security
Sanki Engineering works to handle personal information appropriately
to avoid theft or leakage of data provided by customers based on an
information security policy formulated in October 2003. In October
2012, we restructured the information security committee into theinformation security subcommittee in line with the establishment of
the Risk Management Committee. By doing so, we can control
information security measures Company-wide and manage risk
related to information security in an integrated manner.

Thoroughgoing efforts to increase awareness and provide
education in the area of information security
Making use of e-learning, we are working to ensure that each of
our executives and employees has a thorough grounding in
information security and the handling of personal information. In
fiscal 2012, we provided education on information security using
e-Learning to all Group executives and employees, with 2,315
people taking the course in all. We will continue our intensive
efforts to increase awareness and education into the future,seeking to raise our level of information security still further.

Diagram of Risk management system

ReportManagement meeting
Discussion on policy torespond to important risk

Risk Management Committee

Internal audit department
Audit

Report findings ofdeliberations

Disaster countermeasures head office

Chairperson: Risk management officer

ReportMembers:

Voice

management meeting members except president and CEO,plus person nominated by the chairperson

Roles:

Monitor

1.Monitor important risk and formulate control plan
2.Monitor risk reported by subcommittees and divisions

Convenes:

MonitorOnce a quarter as a rule or as required

Committees/management system
Division
Risk management division
Department, divisions, research institute, business division, centers,
business departments, branches and branch offices, subsidiaries

MonitorReport condition

When a disaster strikes, a BCP must enable instantaneous decisions on what to do and what to prioritize. The first priority
is to confirm the safety of employees and their families as well as other people who are on company premises at the time.

Secretariat: Management Planning Office

ReportOperation of the BCP depends on employee awarenessMonitorCentral disaster countermeasures committee

Subcommittee

Corporate ethics committee

Information security risk

Internal finance control committee

Credit risk

Quality management system

Operational risk

Environmental management system, etc.

Next, under Sanki Engineering’s BCP, support systems must be swiftly launched to ensure response to customers.
In addition, as a BCP is not just a plan, it is also important to implement training and testing to confirm theeffectiveness of the content that has been formulated. Is it essential that all executive officers and employees arementally prepared at all times for a potential disaster.

Norisuke Osawa
General Manager of the General Affairs Department, Administration Division

38

SANKI REPORT 201339

CSR Management

Sanki Engineering’s CSR Activities

Our basic concept of CSR and our promotion of CSR
Radicating CSR in our operations
The foundation of Sanki Engineering´s CSR initiatives is ourcontinuing effort to contribute to society through our businesswhile respecting social norms as a corporate citizen, and we takecommunication with our stakeholders very seriously as a meansof enabling us to gain an accurate understanding of the demandsof society. This in itself is the practice of our Corporate Credo,
which we formulated in 1980. At Sanki Engineering, the Corporate
Ethics Committee within the corporate governance structure
takes on the role of promoting CSR to ensure continued response
to societal demands. We are working steadily to make CSR partof our management practice, towards the realization of socially
responsible corporate management.

Sanki engineering group and stakeholders
Formulation of our code of conduct and action guidelines(The Sanki Engineering Group CSR Manifesto)
We formulated our Corporate Ethics Regulations in December
2002. The Corporate Ethics Regulations stipulated that we should
create a Code of Conduct and Action Guidelines, and establish a
structure centering on the Corporate Ethics Committee in order toensure that they took root and were observed. Based on the spiritof the Corporate Credo, the Code of Conduct and Action Guidelines
are not limited to simply requiring observance of laws andregulations, but represent our CSR manifesto, indicating how
Sanki Engineering executives and employees should behave as
corporate citizens. In addition, we revised these Codes andGuidelines in May 2012 in line with increased expectation in thesocial responsibilities the company ought to fulfill following
issuance of ISO 26000 certification.

groups. Through communication with all of these people, we aim
to continually develop the Group and society. This philosophy has
been elucidated in the Code of Conduct and Action Guidelines as
our responsibility to stakeholders.

The Sanki Engineering Group has stated as one of its Company
Credos “Taking customer and stakeholder needs as our own, we
will understand what they are looking for, consider how to
respond and act accordingly.” The business activities of the SankiEngineering Group are propped up by the different stakeholders,
namely customers, local communities, business partners, employees,
各ステークホルダーとのshareholders and investors, and government, NGO/NPO and civic

主な取り組みお客さま
行政
Customers*Business partners: Subcontractors and companies from which we purchase materials, etc.

Respect for human rights
4. In all of our business activities, we will respect the human rights of every
individual with whom we have dealings, and we will eliminate
discrimination and any actions that impair the dignity of the individual.
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.

40

Formulated on December 1, 2002
Revised on May 1, 2012

Protection of the global environment
6. We will make active efforts for the protection of regional environments
and the global environment.
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.
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.

供します。
●

Webサイトをはじめとした情報提供●

トラブル・クレーム速報の周知と報告書の作成●

技術提案検討会議の開催

地域社会
地域社会の一員として積極的に社会貢献活動

南極観測隊の派遣

自然環境園/
Customers●

Shareholders
andinvestors

Business
partners

お取引先や、環境保全活動に取り組みます。

●

Local
お取引先
communities

Sanki
Engineering
Group
業界関係者
従業員

が得られる、安全で有用な製品・サービスを提

業界関係者
Employees
受注活動においてすべてのお取引先と常に対
私たちは、業界の健全な発展のために、積極的に等・公正・透明な関係を構築し誠実な取引を行

情報交換を図り、共通課題解決のために協力しいます。

て取り組みます。

●

P.42

We社会科見学の受け入れによる交流
shall always take our customer’s perspective to● 清掃・環境美化活動
providesafe and useful products and services thatsatisfy our customers and earn their trust.
Action Guidelines
Action Guidelines have been established for each code of conduct. There are 34 Action
Guidelines in all. The following outlines the key guidelines (Number refers to number
within Action Guidelines).
⑮ We shall prevent child labor and forced labor. ⑯ In the course of our businessactivities, we shall deal with any potential human rights violations. ⑰ We shalleliminate and prevent sexual harassment and power harassment from the worksite. ⑱
We shall respect individuality and diversity, and work to harmonize work and life. We shall appropriately manage personal information.  We shall not provide any
favors to public officials (including foreign public officials, etc.) who have a vested
interest in the Company.  We shall contribute to society by helping to develop local
communities. ◯32 We shall respect international codes of conduct. ◯33 We shall makeour business partners aware of this Code of Conduct and these Action Guidelines, andrequest adherence.
See the Company website for the entire text of the Action Guidelines.
WWW
http://www.sanki.co.jp/corp_outline/compliance/etc01.html

三機

Government,
株主・
NGO/NPO
投資家
お客さまの立場に立ち、お客さまの満足と信頼

The Sanki Engineering Group’s code of conduct and action guidelines

地域社会

Main initiatives with stakeholders

お客さま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 through “total
engineering.”
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 and earning
their trust.
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.

CSR Management

Provideinformation, beginning with website
従業員
Swiftly report trouble and claims and create reports
人権の尊重を基本とし、すべての人々が安全で●Hold technical proposal study
sessions
健康に働くことができるようにします。

対等・公正・透明な関係構築

定期連絡会や研修会を
Business
partners

●

●

P.44

つうじたコミュニケーション
We shall build fair, equal and transparent business● お取引先評価の実施
relationships with all of our business partners andconduct honest transactions when placing orders.
Operatepartner reporting system
株主business・投資家
Communicate through regular briefing sessions and経営の透明性を高めるため、必要な企業情報をtraining sessions

●

●

●

●

開示し、
Evaluate社会からの信頼を確立します。
business partners●● サプライチェーン全体での環境問題解決に向We shall disclose the company information necessary to
けた協力
increasemanagement transparency in an appropriate
and timely manner and earn the trust of society.

Disclose
行政company information in a timely and appropriatemanner
社会のルールや法令に従い、さまざまな環境問●
Hold regular shareholder meetings
and financial
presentation meetings
題や社会問題の解決のために行政、関連団体の● Return profit in an appropriate manner (stable
皆さまと協力して取り組みます。
dividends)● 植林プロジェクトへの寄付●

ダイバーシティ・ワークライフバランスの推進●●

人財育成と適正配置による人が育つ会社づく
P.46り
Employees●

災害防止に向け特別安全パトロールの実施
We shall ensure that every individual is able to worksafely and healthily in line with a basic policy of respectfor human rights.

利益の適切な還元（安定的な配当）
We shall work on social contribution activities andenvironmental conservation activities as a member ofthe local community.

環境改善活動などの協力・連携・情報共有
We shall cooperate with government and relatedgroups to resolve environmental and social problems inline with social rules and laws.

●

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.

●

Dispatch South Pole Regional Monitoring TeamInteract with local communities through Sanki Nature
Park/accepting social studies field trips● Conduct cleanups and environmental beautification
activities

●

●

●

●

●

●

適時・適切な企業情報の開示

業界団体や経団連をつうじた対話

展示会参加による情報発信
・情報交換 P.45
Shareholders
and investors●

定時株主総会・決算説明会の開催
Local
communities

P.50

●

●

協働や支援活動による対話
Government,
NGO/NPO

P.52●

Donate to NPO projects
Promote dialog through collaborations and support
activities●Cooperate, liaise and share information on environmental
improvement activities, etc.

SANKI REPORT 201341

Our Relationship with Our Customers

The group acts as one to pursue improvement ofcustomer satisfaction
Sanki Engineering proceed on the basis of close cooperation
between all involved departments throughout the entire processfrom understanding what the customer needs, to design,development, construction and after service, pursuing customer
satisfaction with the Group working as a single unit.
We introduced the business support system SSSS (Tetris) in
fiscal 2010 to share information concerning customers’ requests
and other information throughout the Company and to make rapid
and appropriate responses.
In order to provide service and proposals from the customer’s
perspective, we held 43 technical proposal study sessions andtwo in-house training sessions for sales staff Company-wide infiscal 2012. In fiscal 2013, we will establish a Sales Division thatwill share information, liaise with other departments Companywide and integrate technologies.

Initiatives to ensure quality
Philosophy on quality
Sanki Engineering conducts operational procedures and risk
assessments based on past experience and shares cases offailure internally in order to prevent quality-related accidents. We
believe that preventing similar accidents and the same claims
from reoccurring as well as being able to respond quickly andappropriately in the event of an accident leads to improvecustomer satisfaction.
Quality management system based on ISO 9001
Our Facilities Construction Business Division, Machinery Systems
Business Division, and Environmental Systems Business Division
are each operating quality management systems based on ISO
9001, and are working to increase product quality by making
continuous improvements. Each business division has over 10
years of experience and we are conducting activities in fiscal
2013 that aim to integrate these management systems.

42

Operating a design review system
We systemized design review in 1982 led by Chief engineers,*
who are the top engineers, and division directors. Inspection frommultiple perspectives enables us to check if the design satisfies
the customer’s requirements and provides the opportunity for
feedback to designers to ensure continuous improvement. In fiscal
2012, we conducted design review for 186 facility construction
projects, 18 machinery system projects and 33 environmental
system projects.
*Chief engineers
Chief engineers provide advice and guidance across all technical areas as the top specialists intechnical fields, such as quality audit and design review, to achieve quality assurance.

Share information on trouble and claims and prevent
reoccurrence
We treat information on troubles and claims as an importantcompany asset, and we share details on the background to theoccurrence of the problem and its status, using this information to
help us prevent the same thing from occurring at other worksites.
We send bulletins on troubles and claims arising in the areas ofsales, design and construction to managers in charge and prepare
Troubles and Claim Reports that state corrective and preventive
measures on the basis of these bulletins. In case the problem
includes a technical cause that the chief engineers deem
necessary to notify all employees, we issue technologicalinstruction manuals and technological information to prevent the
problem reoccurring.
Sharing expertise and information towards the achievementof increased quality
We have offered the Construction Method Improvement Award tocommend innovations in construction techniques on the worksite
and reexaminations of techniques from a technological perspective.
In fiscal 2012, we received 842 award proposals. Among them, we
present the Contribution to Customers Award, honoring initiatives
that improve customers’ business efficiency.
All of the proposals submitted for the awards can be searchedin the Treasure Chest of Construction Method Improvements on
our in-house website, enabling us to share and spread examplesof improvements such as day-to-day innovations in construction
methods, the introduction of new technologies and changes inmanagement methods.

Sanki Engineering’s CSR Activities

Number of applications forConstruction Method
Improvement Award

890

(FY)

’08

905

901

842

786

’09

’10

’11

’12

In the Machinery Systems Business, we release technical materials
such as CAD data and technical drawings as well as a glossary

Our Relationship with Our Customers

Fostering human resources to sustain our technological level
It is important to develop human resources to improve andmaintain the quality of products and services. To ensure thetransmission and improvement of technological capability in thefield of on-site construction and encourage the acquisition ofqualifications, Sanki Engineering established the TechnicalTraining Center, which is working to enhance technical educationand training toward qualification attainment. In addition, we are
striving to increase skills by fostering internal auditors as part ofour quality-related education.
Changes in the number of personnel with quality-related qualifications(Total number as of April 1 for each fiscal year)of terms on a dedicatedinformation website (hansou.
jp), which specializes intransportation devices andsystems. We also provide
support through full-time staff
at the Customer Center.

Qualification

FY 2011

FY 2012FY 2013

89

93

90

1,234

1,212

1,170

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

Dedicated information website (hansou.jp)

Architect

36

40

40

Facilities construction architect

257

250

235

Electrical engineer

184

176

168

Chief electrical engineer

39

37

34

First class instrument engineer

291

292

284

749

724

691

1,629

1,634

1,624

Fire protection engineer

Initiatives to develop human resources in fiscal 2012
Initiatives

Initiatives at theTechnology ResearchInstitute

Initiatives to pass ontechnology

Enhance technology atGroup companies andaffiliates

Qualified management engineer

Training

Results

Details of training

Workshop on acquiring qualification

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

125 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 trainee

259 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 andsupporting metallic materials· Establish training for automated control—

Introduce technical master system*

Prepare for introduction of technical master system* (start system in fiscal 2013)—

Introduce cases at briefings andliaison meetings held at branches andbranch offices

Introduce cases of claims that have actually arisen

Conference on electrical construction
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

Tokyo 12 times,
Tohoku branch office twice
19 affiliates and
20 electrical engineers
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-job-training (OJT) conducted by persons with high technical skills and experience in management at a branch or branch office.

Voice

Thoughts of a technical master

Itaru Kai

Technical Master, Technical Administration Division,
Mechanical & Electrical Contracting Headquarters

When trouble occurs at a site, the person in charge is required to come up with the best resolution by referencing information learned in
textbooks and training as well as past examples of success and failure. As technical masters, we use our extensive experience andknowledge to provide guidance and support on things learned from the past according to the level of the individual and the conditions of
the site, which should lead to an increase in capabilities at the site. Nowadays it is possible to get information without conversation, butthings never go exactly as stated in the manual on site. One of our aims is to get people to understand the importance of learning from the past throughconversation when we visit a site. This is also one of the techniques we pass down. In particular, we would like young site managers to ask anything they likebecause a lot of beneficial information can be gleaned from conversations.

SANKI REPORT 201343

Our Relationship with Our Business Partners

Our Relationship with
Our Shareholders andInvestors

Building fair, equal, and transparent business
relationships

Ensuring management transparency by disclosing
information in a timely and appropriate manner

Conducting transactions in accordance with the relevantlaws and regulations and the related contracts
Sanki Engineering is working to build equal, fair and transparent
relationships with our business partners, with respect for the
stipulations of the relevant laws and contracts as a major
prerequisite.
In addition to clearly specifying the nature of our relationshipwith our business partners in our Code of Conduct, we distribute
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 theconditions of the individual contract, we are scrupulous regarding theconclusion of the individual contract by means of the issuing of orderforms and acknowledgments of orders received. From fiscal 2011
onwards, we have also requested the submission of pledge lettersregarding avoidance of involvement with criminal elements andgroups from our business partners (3,094 companies as of March
31, 2013). We decide to 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, andcost.
Establishment and operation of whistle-blowing hotline
for business partners
Seeking to prevent any improper transactions, we have establishedand are operating a whistle-blowing hotline for our business
partners. No information was received from business partners infiscal 2011.
Following on from the revision of our Code of Conduct andAction Guidelines, in May 2012 we contacted approximately
1,100 business partners to inform them of the revisions andrequest their cooperation, and at this time we also requested
once again that they make use of the hotline.

44

Strengthening cooperation with business partners
Communication via liaison meetings and training workshops
Cooperation with our business partners is essential to our ability
to provide our customers with higher-quality equipment andservices. At Sanki Engineering, our Sales Division and each of ourbranches establishes cooperative committees with business
partners from which it is requesting construction work, and we
also work to improve technologies and realize goals including
thorough quality management and occupational health and safety
management at our business partners by means of regular liaison
meetings and training workshops. In addition to these efforts, weoffer a variety of programs taught by Sanki Engineering employees,
including occupational health and safety education and education
towards the acquisition of qualifications. We also conduct safety
patrols in conjunction with business partners, confirming theconditions of health and safety at construction sites and offering
guidance.
A total of eight subcommittees were established at the Tokyo
branch (duct, plumbing, heat-retention, etc.) to conduct activities
to enhance quality, ensure safety and reduce costs.

Key members of management such as branch and branch office managers represent the company atregular liaison meetings.

Verifying relationships with business partners
We are working to enhance quality and improve operations
throughout the supply chain through annual surveys on the actual
condition of dealings with business partners. As part of thisinitiative, we create a construction results evaluation table andassess items such as quality, price, delivery and safety based on
appraisal standards pursuant to a quality management system(ISO 9001). We notify the business partners of the results andexchange information on a timely basis in order to make
improvements.

Our thinking regarding disclosure of information
Sanki Engineering aims to disclose required corporate informationin an easy-to-understand, fair, speedy, timely and appropriatemanner pursuant to the stipulations of our Disclosure Policyon the company website. We also disclose information that weare 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, we will ensure management transparency
pursuant to the Financial Instruments and Exchange Act and theTimely Disclosure Rules set forth in the Tokyo Stock Exchange.
WWW

WWW

Sanki Engineering’s CSR Activities

Our Relationship with Our Customers
Our Relationship with Our Shareholders and Investors

General Shareholders’ Meeting
To enable more of our shareholders to attend our generalshareholders’ meeting, we make it a rule to hold it one or twodays before most other companies hold theirs (in 2012 this wasJune 27, and in 2013, June 26). We work to increase conveniencefor our shareholders in other ways as well, for example bypublishing notification of the meeting on our website.
We will go on working to actively communicate with ourshareholders and investors, and we will make effective use of theopinions that they offer in our business management.

Our Disclosure Policy can be accessed on our website.
Information for Investors >> Disclosure Policy
http://www.sanki.co.jp/stockholder/disclosure.html
WWW

We publish IR information on our website.
Information for investors >> IR Library
http://www.sanki.co.jp/stockholder/index.html

Communication with shareholders and investors
Communication by a variety of means
We conduct events including results briefings for investment
analysts and institutional investors (twice a year, in May andNovember; in fiscal 2012, a total of 97 people participated),
individual meetings as necessary in response to requests, andtours of our Technical Research Laboratories. On our website“ ”, in addition to materials used at our results briefings andpress releases, we publish information including earnings summaries,
securities reports, and notifications for shareholders.This broad rangeof IR activities enables us to maintain communication with ourshareholders and investors, and all of our other stakeholders.
WWW

Our basic policy concerning returns to shareholders
Dividends are the fundamental means of returning profits
to shareholders
At Sanki Engineering, dividends form the basis of our policy toreturn profit to shareholders and we view the return of profit toshareholders as a key management issue. We aim to provide stabledividends while considering the balance between sustainablecorporate development and short-term returns to shareholders
based on our basic policy of shareholder return. In light ofdemands from shareholders, investors and society at large, we
examine comprehensive methods of shareholder return, including
share buybacks.
We also invest internal retained earnings in new businesses andtechnological development in order to strengthen competitivenessand create a basis for business development with the objective ofcontinually boosting corporate value.

Our President and executive officers responsible for management
provide explanations at a results briefing

SANKI REPORT 201345

Our Relationship with Our Employees

Our thinking with regard to our employees
Employees are a vital asset for a company
Our Company Credo contains the phrase “Act in a consideredmanner, and always in a spirit of good fellowship,” and on thebasis of this concept we strive to create a working environment
and a corporate culture in which all employees grow together
with the company, respect each other’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.

Promoting diversity
A System in which diverse personnel can succeed
We believe that creating working environments in which diverse
personnel are able to display their particular talents leads toincreased company value, and we are therefore promoting
diversity among our employees and actively working to establish
a variety of systems to make this a reality.

Changes in employee data
FY 2008

FY 2009

FY 2010

FY 2011

FY 2012

1,947(2,239)1,974(2,272)2,001(2,316)

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

Average age

42.6

42.7

42.5

42.8

42.7

Average number of years of
employment

18.9

18.8

18.5

18.6

18.4

Number of new recruits

101

94

98

63

55

Number of disabled employees
Ratio of disabled employees (%)

34
1.85

37
1.94

37
1.98

35
1.80

36
1.97

Number of reemployed
post-retirement-age employees
Number of employees
taking child raising leave

35

43

43

53

55

5

8

12

15

10

Number of employees
Figures in parentheses areconsolidated*As of March 31 in each fiscal year

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

30s

40s

50s

60s

70s

Total

Male

288

355

525

309

211

1

1,689

Female

91

70

49

16

3

0

229

Total

379

425

574

325

214

1

1,918

*As of March 31, 201346

Employing disabled workers
We are working to create an environment in which disabled
employees can feel secure and display their abilities to the greatest
possible extent. As of the end of fiscal 2012, Sanki Engineering had
36 disabled employees, representing 1.97% of our workforce.
Although the legal employment rate for disabled workers became
2.0% in April 2013, we had 37 disabled workers on our books as ofJune 1, representing 2.04% of our workforce.
Work transfer system
In fiscal 2007, seeking to create more opportunities for rank and file
employees to demonstrate their abilities, we introduced a worktransfer system enabling employees to upgrade to career positions.
To date, 33 employees have made use of the system. We shifted rank
and file occupations to local occupations in fiscal 2013.
Hiring foreign employees
Our mid-term plan that commenced in fiscal 2011, SANKI VITAL PLAN
90th, positions efforts to foster foreign employees as a means ofstrengthening our management foundations, and we are making
active efforts to recruit foreign employees on this basis. As of April
2013, we had hired eight employees from three countries.
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 in 2001 for the reemployment of workers following retirement.
Some 55 employees used the system in fiscal 2012.

Promoting work-life balance
We are working to enhance various support systems so that
employees can handle both work and home-life. In fiscal 2011 we
introduced a “refresh leave” system under which employees areable to take five consecutive days of leave for each five years of
employment using their accumulated reserved leave.* The
percentage of employees using the refresh leave system in fiscal
2012 stood at 88%.
Since 1992 we have had a child raising leave system, and in
2002 we introduced a family care leave system. Employees arealso able to use reserved leave for these purposes.
As a system for the benefit of managers of construction sites,
we also have a continuous leave system for construction
managers that enables these employees to take three days ofconsecutive leave when they have been onsite continuously for aperiod of six months or more, and when they transfer to the nextsite.
*Reserved leave: A unique Sanki Engineering system under which employees are able to reserve
their untaken leave for the past 10 years and use it in the event of injury or illness occurringoutside the worksite.

Sanki Engineering’s CSR Activities

Fostering human resources
Systems to provide support in line with career plan
Sanki Engineering has created its personnel system based on theconcept of rewarding individuals for their abilities and theirefforts. We have established various training schemes associatedwith each career such as management training, technical training
and training by domain in order to strengthen specialized skills,
technical skills and management skills and boost personal
growth.
In order to be a company in which people growWe created a new personnel system to become a company inwhich people grow in line with the key theme of our medium-term
management plan to “develop and appropriately allocate humanresources.”
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, rank and fileoccupations that were limited to supplementary-type work were
shifted to local occupations in April 2013. We believe that thegrowth of each employee is directly linked to the development of
Sanki Engineering and will implement further initiatives with thisin mind going forward.
New overseas training program
In fiscal 2012, we established a one-year overseas training
program in order to foster personnel with high ability to

Voice

Our Relationship with Our Employees

communicate and adapt to diverse environments. The program
involves practical training at one of our overseas worksites.
In fiscal 2012, five people were dispatched overseas under
this system.

Responses to harassment
As part of our attempts to prevent sexual harassment, weformulated guidelines and published them on our website in1999, and we established a system offering consultation on thesubject at each branches and branch offices. In addition, we
provide consultation on a variety of issues that include power
harassment, abuse and bullying in the worksite. We set up a
counter staffed by qualified external counselors in August 2011 to
make it easy for employees to seek consultation.

Maintaining and increasing the health of ouremployees
To ensure that our employees are able to work secure in theknowledge that they and their families are in good health bothmentally and physically, in April 2008 we introduced a 24-hour
telephone health consultation service. A consultation center has
been set up outside the company where employees and theirfamilies can receive consultation on mental and physical concerns
as well as medical-, nursing- and childcare-related issues free ofcharge. The privacy of callers is strictly protected.

Learned a lot in overseas training

I underwent language training in Singapore that started in April 2012, which involved general English conversation lessons as well as business English lessons
once a week at the National University of Singapore. The practical training was held in Thailand starting in July and here I mainly visited customers together withthe local president and managers, while I also learned practical accounting skills. What impressed me the most was thefact that each person is trying hard to boost skills through personal investment, even those who are already fully
functioning members of society. At the same time, it made me acutely aware of my own skill deficiency in a global setting.
That’s when I realized that I simply needed to learn a lot of different things. In addition to needing to boost my English skill,this is just a means to an end with the most important thing being what kind of work I do and what kind of humanrelationships I build by using English.

Koichi Kita (back row, third from left),
Bangkok Representative Office, Overseas Operations Control Office, Mechanical & Electrical Contracting Headquarters

SANKI REPORT 201347

Health and Safety in the Worksite

Our occupational health and safety management
systemPromoting initiatives towards an accident-free worksite
Based on our Basic Health and Safety Principles, and with therealization of accident-free, bright and satisfying worksites as ourultimate goal, we are working together with our business partners
to promote health and safety initiatives.
We introduced an occupational health and safety management
system (Sanki OHSMS) in October 2001, making us one of the firstto do so in the facilities construction industry. We implement
organized and continuous safety management tailored to thespecific characteristics of each of our business divisions based onhealth and safety guidelines formulated every year. We are also
working to reduce and remove potential risk of labor accidents
and improve the levels of health and safety.
In fiscal 2013, we integrated health and safety action policies
and plans that were previously separate at each branch andbranch office to make a unified Company-wide system. We arealso working to make our PDCA for risk management more visible,
notably the identification of cause, improvement and prevention
measures.
＜ ２０１２
１． 災害件数

年１月～１２月 全社災害発生状況＞○ 件 （ 2011 年
○ 件：
休業 休業
災害の型
不休
３０日 31日
1 墜落転落災害
2 熱中症災害
3 切れこすれ激突系災害
4 交通災害２． 切れこすれ、激突系災害の増加
2010年：２件、2011年：10件
３． 不休災害の増加
2010年：８件、2011年：15件（うち9件が、切れこすれ激突系）
４． 夏期（7月～9月）災害件数
2009年17件中７件(41%)、2010年17件中６件(35%)
2011年24件中５件(23%) 夏期の多発傾向は減少

２０１３年度 ○○支社・支店・事業部 安全衛生活動方針計画書

作成日

年

月

日

○件増）
死亡

カウン
ト外

安全衛生活動計画状況確認表

実施者
参加者

場所

目標値

店社安全衛生委員会

支店安全衛
生委員会委
員

支店

月１回

現場担当者
協力会社

現場

全 件

安全事務
局、協力会
社事業主

支店

月１回

若手社員

支店

会議

（日付）

会議 店社現場安全衛生協議会（○○現場中▽▽件）

会議 店社協力会安全衛生協議会（日付）＜２０１３年度 全社安全衛生活動方針＞
スローガン『一人ひとりが責任者 ”心”をこめて声掛けしよう』

行事 店社臨時安全集会等
教育”先ず確認！高所作業のリスク低減”

随時（安全大会etc、行事名）

サブタイトル
重点実施事項店社年間教育計画講習
（講義名）

４月
4/2
4/2

５月
5/7
5/7

６月

７月

８月

９月

１０月

１１月

１２月

１月

２月

３月

6/4

7/2

8/6

9/3

10/1

11/5

12/3

1/15

2/4

3/4

達成度

6/4

20現場中 20現場中 19現場中

19件

18件

4/10

5/8

4/10

5/8

19件
6/12

7/10

8/14

9/11

10/9

低圧

職長・安責

酸欠

高所作業

11/13

12/11

1/22

2/12

3/12

6/12

協力会総会

安全大会

4/28

6/6

随時

安全祈願

足場点検実務者

１．墜落災害をなくそう！
２．切創防止手袋の着用推進
３．安全衛生教育の受講強化◆ 2013年度○○支社・支店・事業部安全目標 ◆『リスクアセスメントによるリスクの低減を図り	
無災害を達成する』

リスク低減活1 動による災害の防止“社員・作業員のリスクに対する感受性を育てる”◇ 重点実施事項 ◇１．リスク低減活動による災害の防止
２．墜落・転落災害の撲滅
３．安全衛生指導の強化
４．安全衛生資格修得の推進

2012年度○○支社・支店・事業部 安全活動方針目標“リスクアセスメントによる作業前打合せを充実させ無災害の達成”

重
点
実
施
事
項
項
目

2

3

墜落・転落災害の撲滅

安全衛生指導の強化

2012年度○○支社・支店・事業部 重点実施事項①作業届でのリスクアセスメントの実施及び作業前打合せの充実②ライン長・事務局パトロールによるリスクの低減活動の強化③社員ならびに協力会社社員・作業員の安全衛生資格取得の推進＜ ２０１２
１． 災害件数

年１月～１２月 部店災害発生状況＞○ 件 （ 2011 年
○
休業
災害の型
不休
３０日
1 墜落転落災害
2 熱中症災害
3 切れこすれ激突系災害
4 交通災害２． 反省と課題

件：
休業
31日

○件増）
死亡

カウン
ト外

4

社員（外注社員含む）に対しての作業届作成
教育の実施（全員）職長に対しての作業届作成教育の実施（80
名）

年3回

―

―

6/4
20名
30名

随時

朝礼時の確認・指導の強化（パトロール時）

随時

20現場中 20現場中 19現場中
19件
20件
19件

危険有害作業事前計画書作成によるリスク
低減の実施

随時

20現場中 20現場中 19現場中
19件
20件
19件

随時

20現場中 20現場中 19現場中
19件
20件
17件

随時

20現場中 20現場中 19現場中
19件
20件
18件

足場の始業前点検の実施
安全パトロール時の重点実施確認項目の設定
社員（外注社員含む）に対しての安全衛生教
育の実施
切創防止用手袋のルール化
熱中症対策の教育実施

協力会社事業主に対する安全書類教育の実
施
社員ならびに 安全衛生教育計画に元づく各種安全衛生教
協力会社社
育の実施
員・作業員の 雇用教育、送り出し教育、新規入場時教育の
安全衛生資格 徹底（パトロール時確認）

労働者からの意見・要望等の件数／対応件数

６月
９月
10月より
６月
年3回
随時
随時

―

―

6/23

―

―

―

―

―

6/23
20名

―

―

6/12

―

―

―

20現場中 20現場中 20現場中
19件
20件
18件

全 件

2件

3件

4件

安全推進担当による活動計画実施状況チェック欄

4/30

5/31

6/30

▼反省点

総括安全
衛生管理者
の評価

▽課題

３２	

Health and safety action policies and plans

Basic Health and Safety Principles①Health and safety take precedence over all other considerations.
②Health and safety are an important responsibility for the entire organization(including business partners)③In the area of health and safety, we will always take the opportunity for
dialogue, and we will decide on and implement measures based onrelationships of trust.
④Health and safety will be promoted by everyone concerned, with SankiEngineering and its business partners, and supervisors and workers, acting
together as one.

5

Trends in number andfrequency rate* of
accidents

1.89

6

(FY)

11

’08

3 (Accidents)

1.09
1.03

0.41

7

0.57
’09

’10

0.85

0.83

0.68

0.28

’11

’12

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 beencorrected on the same basis.
* Data for Sanki Engineering is measured for the fiscal year (April – March), while data forthe general construction industry is measured for the calendar year (January –December).
* Frequency rate: Calculated as the number of deaths and injuries caused by accidents inthe worksite per one million working hours, this figure indicates the frequency withwhich accidents occur.

Overview of Fiscal 2012 Initiatives
In fiscal 2012, we worked on initiatives in three areas of focus: ①
Prevention of accidents from falls; ② Strengthening of healthand safety guidance; and ③ Elimination of accidents during
summer. In the area of eliminating accidents or illness during thesummer months, we made use of lessons learned from incidentsof heat stroke during the record extreme heat in fiscal 2011, andwe created prevention campaign posters and enhanced our
education on the matter by training heat stroke prevention
instructors. As a result, we had zero cases of heat stroke requiring
time off work in fiscal 2012.
In addition, we practiced a safety campaign in which employees
in the Machinery Systems Administration Division wear red
wristbands that read “Danger! Machine in operation!” Every
person involved in operations on the worksite wears thewristbands with the aim of increasing awareness of danger andpreventing accidents.
Into the future, we will continue to increase awareness ofhealth and safety in the worksite by measures including thoroughhealth and safety education, the holding of safety conventions
and the conducting of safety
patrols, and the publication of
information including Healthand Safety News, aiming torealize zero accidents.
Wristband that says “Danger! Machine inoperation!”

48

Thorough health and safety education

Safety conventions and safety patrols

Conducting education for Sanki employees and the employees
of our business partners
To ensure safety in the worksite, for employees we provide healthand safety education at designated educational institutions andin classes taught by in-house instructors. Besides educating
employees, we provide education to people who are newly
visiting a worksite by using health and safety notebooks.
In cooperation with the Sanki Health and Safety Cooperative
Associations, we also offer the health and safety education
stipulated by the Industrial Safety and Health Act to Sanki
employees and the employees of our business partners.
In fiscal 2012, we provided education to a total of 2,380
employees of Sanki and our business partners.

Raising safety awareness with the participation of top
management
Every year during June, the preparatory month for National Safety
Week, we hold safety conventions at each branch and branch
office with the participation of top management. Top management
provides direction for prioritizing safety and quality as part ofsocial responsibility, which Sanki Engineering ought to address,
and for reducing risk by creating worksites in which each person
is aware of the dangers and warns others.
We also conduct a variety of safety patrols in order to raise safety
awareness among workers on construction sites. In addition topatrols by top management and staff members of businessdivisions, branches and branch offices patrols by site supervisors,and patrols by the proprietors of business partners, we also
conduct special summer joint patrols and year-end joint patrols as
special events.

1.56

Frequency rate for Sanki Engineering
Average frequency rate for the general
construction industry

Health and Safety in the Worksite

Sanki Engineering’s CSR Activities

Number of individuals receiving health and safety
education in fiscal 2012
Number (Figures in brackets refer
to employees of business partners)

Special education

1,159

(902)

Education on health and safety, including for foremen

1,221

(737)

Total

2,380

(1,639)*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.
Meeting on safety at the Chubu branch

Voice

Conducting more independent-minded patrols

When I first got involved with this work, safety patrols were seen as patrols to be done by the general contractor, but recently, based on direction
from Sanki Engineering, patrols are to be led by the affiliate itself as the business proprietor.
Even if work rules are fully understood in the course of operations at a worksite, sometimes over-seriousness can lead to divergence from therules and there may be times that one becomes oblivious to the danger simply from constant exposure.
Now the business proprietor who is closest to the workers patrols the worksite and calls out to people to make surerules are not being ignored. If people know they are being observed, it can help prevent accidents. This is a reallyeffective method.
Going forward, I hope that Sanki Engineering and cooperative committees work closely together to achieve the ultimate
aim of creating accident-free, bright and satisfying worksites.

Mr. Yuji Shoji
President of Tohoku Sanki cooperative committees, Director of Sankyo Co., Ltd Sendai Office

SANKI REPORT 201349

Our Relationship with Local Communities

Our thinking with regard to local communities
Promoting activities that contribute to society as a good
corporate citizen
We seek to contribute to society in order to aid in the developmentof local communities as a good corporate citizen and member ofsociety. As means to contribute to society through core business,
we dispatch team members to the Japanese Antarctic Research
Expedition and conduct other social activities that involve
deepening interaction with local communities. Into the future, wewill constantly maintain our awareness that we are a member ofcivil society, and we will go on fulfilling our corporate social
responsibility while maintaining active communication with themembers of our local communities and all of our stakeholders.

Sanki Engineering’s CSR Activities

Main activities for social contribution in fiscal
2012
Offering support following the Great East Japan Earthquake
In May 2012, we launched the Earthquake Recovery Project
where the technology and know-how of the Sanki EngineeringGroup are put to use as much as possible to meet the needs of thedisaster-affected area. Team members have visited the area
many times to gather information on what kind of support thepeople actually need. We are also participating in a project being
implemented by the Reconstruction Agency called Yuinoba inwhich large private support companies are matched withcompanies damaged in the disaster.

Sanki Nature Park/Social studies field tour receive
The Sanki Nature Park at the Yamato Engineering Center in Yamato
City, Kanagawa Prefecture was developed in 2005 with a biotopethat makes maximum use of natural purifying effects. Visitors havethe opportunity to see a multitude of different living creatures and it
is being used as a place for nature observation classes for nearby
schools and as a place to come and relax for local residents. In
2012, the park received a total of 541 visitors, including 174
fifth-year students from Kitayamato Elementary School, 96
Letters from an elementary
school student and teacher
who took the tour

third-year students from Chuuourinkan Elementary School and 271
local residents. Students from Kitayamato Elementary School andChuuourinkan Elementary School also came on a social studies field

Topics & Voicetrip to learn about what we do in addition to visiting the park.
Through activities suchas this, we will promote

Dispatching members to the Japanese Antarctic Research Expedition
Sanki Engineering has cooperated with observation projects to Antarctica since 1991 after adopting the Protocol on Environmental
Protection to the Antarctic Treaty. Efforts include dispatching nine engineers as environmental conservation officials on the Japanese
Antarctic Research Expedition. We just added a 10th member to the over-wintering party for the 54th Japanese Antarctic Research
Expedition and our technology and human resources are contributing to environmental conservation at Showa Station.

interaction with people
from the local community.
Photo by Nobu
aki
the 53rd Japane Kadota, a member ofseResearch Exped Antarctic
ition

Contributing to society, carrying out duties as a team and a lot of moving experiences
For one year and two months from December 2011, I stayed at Showa Station as a member of the over-wintering team. The
53rd over-winter team comprised 31 people in all, including the team leader, 12 in the observation group and 18 in thelogistics group. I belonged to the environmental conservation group within the logistics group and was mainly in charge oftreating sewage and waste from the base. We also constructed a new wastewater treatment facility designed andproduced by Sanki Engineering.
In 2012, the condition of the ice was particularly severe and for the first time in 18 years our expedition SHIRASE was
unable to berth at Showa Station, which meant supplies didn’t arrive as planned, making it tough. Nonetheless, we werestill able to complete our planned mission without trouble.
Advancements have been made in infrastructure at the base and it was possible to use the phone, email and Internet,
so it was pretty comfortable and not too inconvenient at all. There was also a place to grow vegetables and although it
didn’t yield many it still gave me the chance to eat raw produce every now and then. In addition, I was lucky enough toexperience some amazing sights that I’ll never forget, like the aurora and penguins.
With 31 people each with different specialty roles living in close quarters, it is imperative to cooperate and support one
another so that the overall mission of the team in addition to individual missions can be achieved. I learned the importanceof communication and involving those around me to maximize the respective capabilities of each person to get the job done.
I hope to make the most of this experience in my work in the future.
My successor, Daiki Kataoka, is currently doing the winter shift at Showa Station with the 54th over-wintering team andseems to be doing well. He is working to ensure environmental conservation at the base by maintaining and managing
existing wastewater treatment facilities, which includes inspection of water processing equipment and facilities andanalysis of water quality, as well as managing waste.

Elementary school students
studying about the Nature Parkand the mechanism of the factory.

of the 53rd
izu, a member
Photo by Shim
Expedition
ctic Research
Japanese Antar

Environmental Protection Supervisor,
53rd Japanese Antarctic Research Expedition

Nobuaki Kadota (left in photo)
Environmental Protection Supervisor,
54th Japanese Antarctic Research Expedition

Cleanups and beautification of the environment by branches

Donations and contributions

Our branches and Group companies clean up around their respective

In fiscal 2012, in addition to making donations to universities

surrounding areas and participate in environmental beautification eventsand research institutes, we also supported cultural activities

organized by their municipalities. In fiscal 2012, we conducted a variety

through donations to the New National Theater, the Japanof activities that included a cleanup organized by The Former Foreign

Chamber Music Foundation, and other institutions. In addition,

Settlement Of Kobe with participation by the Kobe branch and a rubbish

each of our branches and Group companies take part in a variety

collection event as part of a beach walk with participation by theof activities that anyone can get

Hokkaido branch. The Chubu branch has been designated as an

involved in, namely donating used

exceptional ecological business site by Nagoya City for active

stamps and cards and collecting

environmental efforts in the course of business activities.

bottle caps for ecological purposes.
We will continue with initiatives

Daiki Kataoka (right in photo)that stimulate employees to think
about recycling and the environment.

Nobuaki Kadota

Eco caps collected at head officePlanning Section, Planning Department, Environmental Systems Administration Division, Plants & Machinery Systems

50

Our Relationship with Local Communities“Clean strategy” being implemented by the Kobe branch

SANKI REPORT 2013
Certificate for being an exceptional ecologicalbusiness site received from Nagoya City

51

Our Relationship with the Environment

Environmental management of Sanki Engineering
Sanki Engineering believes that environmental problems represent
an important management issue and we advance environmental
management with the aim of fulfilling two missions (see tablebelow). We have constructed a system for the promotion ofenvironmental management with our president as the overall
director. At Company-wide environmental conferences, whichconvene once a year, each of our divisions reports on its activities
and we decide on future plans. We are working to enhance ourenvironmental activities through a PDCA cycle that calls for efficientand 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(Heads of head office, business divisions,business departments, and branches)

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

Divisional environmental management supervisors

Environmental management of Sanki Engineering: Two missions
To protect the global environmentby means of our advanced
technological capability
Development and introduction oftechnologies for exploitation ofenergy● Development and introductionof technologies for the effective
use of energy● Development and introductionof technologies enabling reuseof resources●

To minimize the environmental
burden caused by ourbusiness activities
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 to include
two of our subsidiaries (Sanki Kakou and Sanki Kankyo Service
Co., Ltd.).
The external audit and ongoing audit of ISO 14001 showed noissues of noncompliance in fiscal 2012. There were also no
incidences or breaches of environmental laws or regulations.

Divisional EMS Secretariats
Staff responsiblefor design
Maximization of energy efficiency

Target management

Staff responsible for
production and construction

Staff responsible
for office duties

Manufacturing and construction
with minimal environmental burden

Reduction of environmental burdent
Through increased productivity

Target management

Target management

Conducting environmental education
Environmental lecture meetings
In order to increase awareness of environmental protection among allof our executives and employees, we hold environmental lecture
meetings via our tele-conferencing system, offering presentations bycompany and external instructors. 546 people took courses that were
held twice in fiscal 2012 under the following themes.
4th Environmental Lecture Meeting: May 30, 2012 (Wednesday)
Theme:
Trends in the Development through to Practical Application of Technologies
for the Use of Renewable Energies
Lecturer:Mr. Hironao Matsubara, Chief Researcher and Director, Institute for
Sustainable Energy Policies
Participants: 307
5th Environmental Lecture Meeting: November 16, 2012 (Friday)
Theme:
Japan’s Energy Management (Government) and Use of Nuclear Power
Lecturer:

Mr. Akihiro Sawa, Research Director of the International Environment andEconomy InstituteParticipants: 239

Lecture by Chief Researcher
Mr. Hironao Matsubara

52

Lecture by Research Director
Mr. Akihiro Sawa

Sanki Engineering’s CSR Activities

Other education
We offer introductory training in EMS and other forms ofeducation every year to new recruits, as well as mid-career
recruits. In fiscal 2012, 96 employees received training to become
internal environmental auditors, bringing our total number ofqualified staff to 899.
We are conducting environmental education in order tominimize environmental burden based on concrete environmental
targets for local employees of overseas subsidiaries (Shanghai,
Thailand).
Trends in number of employees withenvironment-related qualifications

Our Relationship with the Environment

Going forward, we will work to further reduce energy savingwith our goal to reduce energy saving by 6% relative to fiscal
2012 (crude oil conversion: kℓ) in the five-year period between
fiscal 2013 and fiscal 2017.
Management of harmful substances
We are creating a system that enables us to confirm the status ofhazardous waste emitted from worksites such as CFCs, halon andasbestos, and that these substances are being appropriately
managed. Through this system, we will work to ensure appropriate
management and reduction of harmful substances.

(Number as of April 1 each year)

FY 2010

FY 2011

FY 2012FY 2013

Certified environmental
measurer

9

8

8

7

Supervisor of managementof industrial waste
subject to special control

96

115

124

127

Pollution prevention
manager

70

71

75

73

Linking with the local community for environmental action
We are working on environmental education and environmental
conservation activities in conjunction with the local community.
We conserved green spaces and implemented a project todevelop more greenery through actions such as a committee toimprove the environment in Yamato.

Minimizing the burden on the environment caused
by our business activities
We are enhancing energy-saving activities in our offices
Sanki Engineering was designated as a “specific business
operator” based on the Revised Energy Saving Act. We are
implementing various energy-saving activities throughout theCompany. At head office we performed trials on shielding blinds,
promoted cool business attire earlier in summer and encouraged
warm business attire in winter, while at the Chubu branch weswitched to LED lighting and at head office and the Hokuriku
branch office we segmented lighting areas and introduced highly
efficient chillers in the Technology Research Institute. In anotherinitiative, we are proceeding experimentally with the use ofnatural energies, introducing solar and wind power at theTechnical Research Laboratories in our Yamato Engineering
Center and solar power in our Toyota branch office facility.

Protecting the environment by means of our exceptional
technological capability
In our facilities construction and machinery systems business, inaddition to seeking functionality and user-friendliness, we areconstantly working to develop new systems to assist in savingenergy and reducing life cycle costs. In the Environmental Systems
Business, we are working to reduce energy saving and CO2 throughthe introduction of a supercharged (turbocharged) fluidized
incinerator at a sewage treatment facility and a boiler-type power
generation system at a waste treatment facility.
At our Energy Solutions Center, in addition to collecting data
concerning subjects including the effective use of energy andenergy conservation to support technological development andthe proposal of solutions to customers, we also manage data on
these proposals and their implementation, and on orders received
and construction work performed, seeking to make constantimprovements.
Proposals for CO2 reduction and outcomes

Proposedsolutions
Ordersreceived

(FY)

2010

2011

2012

Number CO2 reduction

Number CO2 reduction

Number CO2 reduction

341

77,769355

88,480366

78,549116

19,954129

31,095136

18,889*The unit of CO 2 reduction is t-CO 2 /year.

SANKI REPORT 201353

Sanki Engineering’s CSR Activities

SANKI YOU eco contribution point system
We launched the SANKI YOU Eco Contribution Point System in
October 2010. Under this system, when we propose an energysaving solution to a customer that reduces CO2 emissions, andthat proposal is adopted, the amount of the achieved emissions
reduction is converted to “Eco Points” (100 yen per one-ton
reduction in CO2), which are aggregated for the entire company. In
fiscal 2012, proposals made by us and adopted by our customers
resulted in the reduction of 18,889 tons of CO2 emissions,equivalent to 1,888,900 yen when converted to Eco Contribution
Points.
Contribution to tree-planting projects
With a focus on non-profit organizations, we sought a recipientfor our donations working in the area of environmental protection
activities. We settled on the Present Tree* project conducted by
the NPO Environmental Relations. Our third donation was to atree-planting project for a watershed protection forest in the
Hida-Takayama area. Around 30 people took part in the treeplanting event organized by the project, including employees andtheir families. The fourth donation was made to a tree-planting
project to foster a woodland suitable for breeding fish in Miyako

City, Iwate Prefecture and to help drive recovery in the disasteraffected area.
*Present Tree
As its name suggests, Present Tree is a project that seeks to restore forests by planting seedlingsin areas that have not been replanted after clearing, areas struck by disaster, burnt-out areas, etc.,
as a gift to loved ones and to the planet’s future.

Group photo of people who took part in the tree-planting project in the Hida-Takayama area

Outcomes of donations to tree-planting projects
1st: Takayama City,
Gifu Prefecture(Donation made May 31, 2011)
Tree-planting project for a watershed protection forest

2nd: Sammu City,
Chiba Prefecture(Donation made December 28, 2011)
Develop a base for semi-urban woodland activities

3rd: Takayama City,
Gifu Prefecture(Donation made July 31, 2012)
Tree-planting project for a watershed protection forest

4th: Miyako City,
Iwate Prefecture(Donation made on December 28, 2012)
Tree-planting project to foster woodlands suitablefor breeding fish and to help drive recovery in thedisaster-affected area

CO2 reduction resulting
from proposal

Number oftrees planted

Second half, 2010:
725,200 yen

7,252 tons

207

Second half, 2011:
1,719,400 yen

First half, 2012:
576,600 yen

13,901 tons

Environmental accounting(1,000 yen)

Expenses

Investments

Cost of disposal of waste CFCs and halons

56,688

0

Resource recycling costs

Cost of waste disposal (Construction sites)

360,193

0

2,465

0

510

0

Cost of exhibiting in exhibitions / publishing materials

35,1340

Cost of replacing lights with LEDs

6,040

0

Cost of introducing shielding blinds

7,390

0

Cost of operating ISO 14001
Cost of environment-related education

17,194 tons

491Management costs
5,766 tons

Environmental protection costs

Global environmental protection costs

397

164

4,719

0

346,012

0Donations to environmental protection-related organizations

2,616

0

Cost of participating in environmental protection activities and supporting education

3,948

0

Cost of cutting back vegetation at Yamato Engineering Center / Cost of maintaining Nature ParkR&D costs

Cost of environmental protection-related R&D

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

Through tree-planting activities in the Hida-Takayama area

In November 2012, we started tree-planting activities in the Hida-Takayama area, Gifu Prefecture in an event jointly run between head office, theChubu branch and Hokuriku branch office with support from the NPO Environmental Relations.

Resources consumed

is on a steep slope that even makes it difficult to stand. It started raining midway through and we got covered in mud, but we still managed to

18,601

17,96018,696

18,76820,511

15,02312,12015,82815,506

2,021

2,056

1,922

1,853

CO2 emissions(t-CO2)

As a result of energy consumption in offices

—

3,377

3,146

2,931

3,419

As a result of energy consumption at worksites

—

1,013

1,016

839

889

17,712

11,272

12,034

12,07013,757

12,50624,48032,50628,53731,453

Volume of industrial waste

Amount of industrial waste from company-wide construction
sites and Yamato Engineering Center (t)Economic effects of environmental protection measures
Related departments

Hiroto Fukuyama

FY2012—

Green purchasing of stationery (1,000 yen)

Administration Section, Administration Department, Chubu branch

FY2011

14,552*Emissions calculated from the emission factor of FY2011.

lush forest and make a visit sometime in the future.

FY2010

Energy consumed by offices (Crude oil equivalent; kℓ)opportunity to give consideration to the natural environment together with my family.
region and society rather than just implementing a one-off action. I hope to see the trees we have planted grow into a

FY2009Volume of water used at Yamato Engineering Center (m )each tree with my bare hands so I could really feel that I was doing something good for the environment. It was a great
Environmental activities must be done with a view to passing them on from parent to child and to expand them to the

FY2008Energy consumed

plant 300 trees.
I often hear the term “environment” these days, but I rarely do anything environment-related in my daily life. On this occasion I got to plant

Number of sheets of copy paper
purchased for offices (1,000 sheets)3

A total of 30 people, including employees and their families, planted young Japanese zelkova and beech trees in degraded forestland. The site

54

Scope of aggregation:Sanki Engineering as a whole, or designated sections
Period:April 2012 – March 2013
Guidelines for reference:①Environmental Accounting Guidelines, Ministry of the Environment (2005 edition)②Environmental Accounting Guidelines for the Construction Industry (2002 edition)

Details of main initiatives

Social activities costs

Voicefactor was the halt to nuclear power facilities. The amount ofenergy consumed decreased by 8.3% over the three-year period
from fiscal 2010 on a crude oil conversion basis and going forward
we will strive to make continuous improvements.

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 andthe outcomes of our environmental protection initiatives.
In fiscal 2012, the number of sheets of copy paper purchased
increased beyond the level of sales growth. Going forward, we
will examine measures to reduce this. In addition, CO2 emissions
increased due to a significant change in the emission factor,
although they decreased by 10% year on year when calculated ona fiscal 2011 basis. The key reason for the change in emission

Environmental protection costs (Expenditures for environmental protection in our business activities are divided into expenses and investments for aggregation)

Amount of donation

First half, 2011:
1,390,100 yen

Our Relationship with the Environment(2,624)*(1,000 yen)

Details

FY2008FY2009FY2010FY2011FY2012

Construction sites

Profit from sale of scrap, etc.

34,316

22,76866,61588,238138,390

Yamato Engineering Center

Profit from sale of scrap, etc.

188

36

98

327

398

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.

SANKI REPORT 201355

An Overview of the Executives

Financial Report

⓬

❽

❼

❹

❺

❻

⓫

⓭

❾

❷

❶

❸

❿

⓮

Takuichi Kajiura❶

Representative Director and President❷

Representative Director and Senior Executive Officer❸

Representative Director and Senior Executive Officer, and General Manager,
Mechanical & Electrical Contracting Headquarters❹

Director, Senior Executive Officer, and General Manager, CSR Promotion Division❺

Director, Senior Executive Officer, and General Manager, Plants & Machinery Systems Headquarters❻

Director, Managing Executive Officer, and General Manager, Administration Division❼

Director, Managing Executive Officer, and General Manager, Kansai Branch (in charge of western Japan)

Nobuo Kumura❽

Director, Managing Executive Officer, and General Manager, Tokyo Branch (in charge of eastern Japan)

Hidemi Fujii❾

External Director

Hiroshi Nishimura❿

External Director

Mitsuhiro Masumi⓫

Full-time Auditor

Keiji Akamatsu⓬

Full-time Auditor

Toshikatsu Yasunaga⓭

External Auditor

Takeo Iguchi⓮

External Auditor

Mamoru Norisada

56

Takeo Kubota
Tsutomu Hasegawa
Masato Komura
Tetsuo Usui

11-year Consolidated Financial Summary

58

Business Overview for the Year Ended March 31, 201360

Consolidated Balance Sheet

61

Consolidated Statement of Income and Comprehensive Income

63

Consolidated Statement of Changes in Net Assets

64

Consolidated Statement of Cash Flows

65

Notes to Consolidated Financial Statements

66

Mamoru Shimma

SANKI REPORT 201357

Financial Section
ＳＡＮＫＩのＣＳＲ活動

お客さまとのかかわり

11-year Consolidated Financial Summary(Millions of yen)
Year ended
March 31, 2003

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

Fiscal year
Orders received¥ 214,276¥ 212,379¥ 245,047¥ 235,401¥ 237,022¥ 218,256¥ 188,653¥ 143,348¥ 147,129¥ 175,291¥ 165,800

Balance carried forward

145,544

143,999

155,876

153,593

144,456

108,253

93,566

77,641

72,976100,272

111,414

Sales

221,635

213,924

233,170

237,684

246,159

254,460

203,340

159,273

151,794

147,994

154,658

Selling, general and administrative expenses

16,04015,657

14,94814,42613,994

13,962

14,97815,41915,763

15,712

15,199Operating income or loss

5,805

3,314

4,281

2,892

(9,502)(3,958)

7,125

5,027

3,843

2,525

2,391

Ordinary income or loss

5,782

3,533

4,946

3,319

(8,782)(3,307)

6,900

5,456

4,239

2,268

2,680

Net income or loss

3,214

3,644

2,600

2,355

(6,536)

3,134

3,283

3,141

2,124

176

(4,992)

Cash flows from operating activities(20,808)

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

19,177

1,294

11,554(2,697)

9,729

Cash flows from investing activities

3,468(9,839)7,662(1,024)

2,833

11,511

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

Cash flows from financing activities(3,021)(3,345)(3,315)(3,067)(2,697)(3,812)(4,377)(2,936)(1,883)(280)(1,028)¥ 28,416¥ 27,170¥ 28,365¥ 18,717¥ 16,018¥ 19,617¥ 36,142¥ 32,825¥ 45,135¥ 41,097¥ 40,367

Total assets

214,605

220,563240,234

245,367

251,323

215,680

176,664

163,307

158,501

163,120

166,477

Net assets

80,01686,49187,774

98,333

88,94380,27678,78080,49879,833

79,662

76,932

Number of employees

2,463

2,371

2,327

2,332

2,179

2,225

2,239

2,272

2,316

2,289

2,246

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

Per share information
Earnings per share (yen)

41.04

46.93

34.49

31.46

(88.47)

42.42

44.45

42.86

29.67

2.46

(71.04)Book-value per share (yen)1,036.44

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

15.00

15.00

18.00

15.00

15.00

15.00

15.00

15.00

15.00

15.00

15.00

Equity ratio (%)

37.3

39.2

36.5

40.1

35.4

37.2

44.6

49.3

50.3

48.8

46.2

Return on assets (%)

2.6

1.6

2.1

1.4

(3.5)

(1.4)

3.5

3.2

2.6

1.4

1.6

Return on equity (%)

4.0

4.4

3.0

2.5

(7.0)

3.7

4.1

3.9

2.7

0.2

(6.4)

SANKI REPORT 201359

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)
'02

58

'03

'04

'05

'06

'07

'08

'09

'10

'11

'12

Business Overview for the Year Ended March 31, 2013

Consolidated Balance Sheet
March 31, 2013
お客さまとのかかわり
ＳＡＮＫＩのＣＳＲ活動
Year ended
March 31, 2012

Operations overview
In spite of a recovery trend in both public investment and private
investment in the construction sector, there was no effect of thisrecovery trend to the Sanki Engineering Group business andconditions continued to be severe due to intensifying order pricecompetition. Against this backdrop, the Sanki Engineering Group
increased orders by actively promoting proposal-based sales ofenergy- and power-saving systems in order to avoid missing thechance to receive orders, while placing emphasis on construction
profitability. With regard to consolidated results for this fiscal year,
orders received decreased by 5.4% year-on-year to 165,800 million

yen, net sales increased by 4.5% year-on-year to 154,658 million yen
and the balance carried forward was up 11.1% year-on-year to111,414 million yen. Operating income decreased by 5.3% year-onyear to 2,391 million yen due to the emergence of certain unprofitablebusiness and delays in construction progress, despite efforts tolower costs and expenses throughout the Group. Ordinary income,including non-operating income and expenses, increased by 18.1%
year-on-year to 2,680 million yen, while net loss was 4,992 million
yen due to the recording of impairment loss in an amount exceeding
7.0 billion yen for part of assets held as extraordinary loss.

Segment overview
Facilities construction
Orders received increased by 0.9% year-on-year to 136,144 million
yen, sales increased by 11.8% to 128,626 million yen and segment
income (ordinary income) amounted to 1,196 million yen relative tosegment loss (ordinary loss) of 561 million yen in the previous fiscal
year. Sales and income were up due to an increase in the amount ofconstruction carried forward from the end of the previous fiscal year.
Machinery systems
Orders received increased by 15.5% year-on-year to 10,817 million
yen, while sales decreased by 39.9% year-on-year to 6,501 million
yen and segment loss (ordinary loss) was 1,119 million yen comparedwith segment loss of 187 million yen in the previous fiscal year.
Although orders received increased due to orders for large transport
related equipment, sales and segment income (ordinary income)decreased due to the sales of large transport related equipment
recorded in the previous fiscal year.

Environmental systems
Orders received decreased by 42.3% year-on-year to 16,623 million
yen, while sales decreased by 13.5% year-on-year to 17,145 million
yen and segment income (ordinary income) decreased by 21.6% to689 million yen. Orders received decreased significantly as a resultof delays in orders for water and sewage treatment facilities frompublic office as well as the substantial amount of orders received in
the previous fiscal year. Sales and segment income (ordinary income)decreased due to the sales of a large-scale waste treatment plant
recorded in the previous fiscal year.
Real estate
Sales decreased by 2.7% year-on-year to 2,747 million yen andsegment income (ordinary income) decreased by 2.0% year-on-year
to 1,305 million yen. Sales and income were down due to rent
revision for certain rental properties.

In terms of future outlook, investment in construction is forecast to
improve on the back of progress in governmental economic measuresand demand for energy conservation and renewable energy is
expected to expand further as energy prices rise with the weak yen.
In contrast, we expect it to be difficult to secure profit again on
account of intensifying price competition and increasing equipment
prices due to the weak yen.
Amid these circumstances, we will combine our strengths tobolster our sales capabilities aimed at securing optimized-size orders
while maintaining a focus on profit, and based on our medium-term

management plan (SANKI VITAL PLAN 90th), further reinforce ourCore Businesses and expand our Strategic Growth Businesses aswell as cultivate and foster new businesses. In addition, for the Real
Estate Business, we will look into new tenants for a large rental
property that recorded an impairment loss this fiscal year due to theexit of tenants and aim to make new effective use of it. We will also
take steps to remedy other facilities that are aging, enhance added
value by upgrading facilities and make use of idle assets. By
recreating business in this and other ways, we are working to securestable profitability.

Sales

2011

2012

Diff.

Change

2011

2012

Diff.

Change

2011

2012

Diff.

Change134,878

136,144

1,266

0.9%

115,019

128,626

13,606

11.8%

(561)

1,196

1,758

̶

9,361

10,817

1,455

15.5%

10,8236,501(4,321)(39.9%)(187)(1,119)(931)

̶Environmental systems

28,833

16,623(12,209)(42.3%)

19,825

17,145(2,680)(13.5%)

879

689

(190)

(21.6%)

subtotal

173,072

163,585(9,487)(5.5%)

145,669

152,273

6,604

4.5%

130

766

635

488.7%

Real estate

2,824

2,747

(76)

(2.7%)

2,824

2,747

(76)

(2.7%)

1,331

1,305

(26)

(2.0%)

Adjustments

(606)

(533)

72

̶

(498)

(362)

136

̶

806

608

(197)

̶

175,291

165,800(9,490)(5.4%)

147,994

154,658

6,663

4.5%

2,268

2,680

411

18.1%

60

¥ 31,098¥ 36,368

Notes and accounts receivable on completed construction contracts andother65,37563,288

Securities

9,999

3,999

2,125

1,529

445

249

Deferred tax assets

1,809

1,889

Other

4,298

4,103

Allowance for doubtful accounts

(285)

(282)

114,866

111,146

Inventories:
Costs on uncompleted construction contracts
Raw materials and supplies

Total current assets
Noncurrent assets:
Property, plant and equipment:
Buildings and structures

46,87339,848

Accumulated depreciation(34,030)(34,672)

Buildings and structures, net

12,842

5,176

Machinery, equipment, vehicles, and tools, furniture and fixtures
Accumulated depreciation
Machinery, equipment, vehicles, and tools, furnitureand fixtures, net
Land
Lease assets

4,204

3,987

(3,695)(3,585)

508

402

4,468

4,331

284

401

Accumulated depreciation

(45)

(84)

Lease assets, net

239

317

18,058

10,227414

491

Investment securities (Note 1)

16,672

27,946Long-term loans receivable

409

346

7,646

7,312

Total property, plant and equipment

Investments and other assets:

Prepaid pension cost

125

136

Lease and guarantee deposits

1,057

1,067

Insurance funds

1,006

950

Other (Note 1)

4,341

7,972

Allowance for doubtful accounts(1,478)(1,120)Total investments and other assets

29,781

44,612

Deferred tax assets

Total noncurrent assets
Total assets

48,25455,331¥ 163,120¥ 166,477

Segment income

Machinery systems

Total

Cash and deposits(Millions of yen)Orders received

Facilities construction

Current assets:*See notes to consolidated financial statements.

Segment information
Segment

Year ended
March 31, 2013

AssetsIntangible assets

Challenges to be addressed(Millions of yen)

SANKI REPORT 2013

61

(Millions of yen)
Year ended
March 31, 2012
Liabilities and Net Assets
Liabilities:
Current liabilities:¥ 51,350¥ 51,853

5,669

6,920

Lease obligations

34

57

Income taxes payable

561

2,497

Deferred tax liabilities

14

10

Advances received on uncompleted construction contracts

2,788

5,332

Accrued bonuses

1,917

2,176

Notes and accounts payable on construction contracts and other
Short-term loans payable

Accrued directors’ bonuses

46

83

Accrued warranty costs

471

345

497

801

Other

2,508

3,461

Total current liabilities

65,86073,540Long-term loans payable

660

320

Lease obligations

231

331

Deferred tax liabilities

2,463

2,408

Accrued retirement benefits

8,288

7,313

Accrued directors’ retirement benefits

522

275

Accrued loss on guarantees

24

29

Other

5,407

5,327

Total noncurrent liabilities

17,597

16,00483,45889,544

Capital stock

8,105

8,105

Capital surplus

4,181

4,181

Retained earnings

66,90560,855

Accrued loss on construction contracts

Noncurrent liabilities:

Total liabilities
Net assets:
Shareholders’ equity:

Treasury stock(1,936)(2,750)Total shareholders’ equity

77,25670,391

2,538

6,631

Accumulated other comprehensive income:Unrealized gains on available-for-sale securities
Foreign currency translation adjustment

(132)

(90)

Total accumulated other comprehensive income

2,405

6,540

79,662

76,932¥ 163,120¥ 166,477

Total net assets
Total liabilities and net assets*See notes to consolidated financial statements.

Consolidated Statement of Income and Comprehensive Income

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 directors’ retirement benefits
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
Rework cost on construction contracts
Other
Total non-operating expenses
Ordinary income
Extraordinary income:Gain on sales of noncurrent assets
Gain on sales of investment securities
Gain on reversal of subscription rights to shares
Total extraordinary income
Extraordinary loss:
Impairment loss (Note 2)
Loss on disaster
Loss on sales of noncurrent assets
Loss on retirement of noncurrent assets
Loss on sales of investment securities
Loss on valuation of investment securities
Headquarters relocation expenses
Provision for doubtful accounts
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes:
Income taxes-current
Income taxes-correction
Income taxes-deferred
Total income taxes
Income (loss) before minority interests
Net income (loss)
Income (loss) before minority interests
Other comprehensive income (Note 3):
Unrealized gains on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income (loss)
Comprehensive income (loss) attributable to:Shareholders of Sanki Engineering Co., Ltd.
Minority interests(Millions of yen)

Year ended
March 31, 2012
お客さまとのかかわり
ＳＡＮＫＩのＣＳＲ活動

Year ended
March 31, 2013

¥ 145,170
2,824
147,994¥ 151,910
2,747
154,658

128,325
1,431
129,757

135,746
1,321
137,068

16,844
1,392
18,237

16,163
1,426
17,590

6,076
844
46
642
193
157
472
7,279
15,712
2,525

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

71
331
47
62
178
691

58
515
155
108
112
951

85
480
45
63
90
183
947
2,268

95
6
160
72
70
257
662
2,680

526
25
45
598

26
47
–
74

–
85
–
91
–
427
80
529
1,215
1,651

7,071
–
7
61
27
176
–
–
7,345
(4,591)

648
231
595
1,475
176
176

2,681
–
(2,280)401(4,992)(4,992)

176(4,992)

797
(4)
(21)
772
¥ 948

4,092
–
42
4,134
¥ (857)¥ 948¥–¥ (857)¥–*See notes to consolidated financial statements.

62

SANKI REPORT 201363

Consolidated Statement of Changes in Net Assets(Millions of yen)
Year ended
March 31, 2012

Shareholders’ equity
Capital stock
Balance at the beginning of current period
Balance at the end of current period
Capital surplus
Balance at the beginning of current period
Balance at the end of current period
Retained earnings
Balance at the beginning of current period
Changes in items during the period:
Dividends from surplus
Net income (loss)
Total changes in items during the period
Balance at the end of current period
Treasury stock
Balance at the beginning of current period
Changes in items during the period:
Purchase of treasury stock
Total changes in items during the period
Balance at the end of current period
Total shareholders’ equity
Balance at the beginning of current period
Changes in items during the period:
Dividends from surplus
Net income (loss)
Purchase of treasury stock
Total changes in items during the period
Balance at the end of current period

Cash flows from operating activities:¥ 8,105
8,105

4,181
4,181

4,181
4,181

67,802(1,072)
176(896)
66,90566,905(1,058)(4,992)(6,050)60,855(1,934)(1,936)(1)(1)(1,936)

(814)
(814)
(2,750)78,154

77,256(1,072)
176
(1)
(898)
¥ 77,256(1,058)(4,992)(814)(6,864)¥ 70,391¥ 1,740¥ 2,538

797
797
2,538

4,092
4,092
6,631

4

–

(4)
(4)
–

–
–
–

(111)

(132)

(21)
(21)
(132)

42
42
(90)

1,633

2,405

772
772
2,405

4,134
4,134
6,540

45

–

(45)
(45)
–

–
–
–

79,833

79,662(1,072)
176
(1)
726
(171)
¥ 79,662(1,058)(4,992)(814)
4,134(2,729)¥ 76,932(Millions of yen)
Year ended
March 31, 2012
お客さまとのかかわり
ＳＡＮＫＩのＣＳＲ活動

Year ended
March 31, 2013

¥ 1,651¥ (4,591)

1,367

1,207

Impairment loss

–

7,071

Amortization of goodwill

71–

Headquarters relocation expenses

80–

Increase (decrease) in allowance for doubtful accounts

667

(361)

Decrease in provision for retirement benefits

Income (loss) before income taxes and minority interests¥ 8,105
8,105

Accumulated other comprehensive income
Unrealized gains on available-for-sale securities
Balance at the beginning of current period
Changes in items during the period:
Net changes in items other than shareholders’ equity
Total changes in items during the period
Balance at the end of current period
Deferred gains or losses on hedges
Balance at the beginning of current period
Changes in items during the period:
Net changes in items other than shareholders’ equity
Total changes in items during the period
Balance at the end of current period
Foreign currency translation adjustment
Balance at the beginning of current period
Changes in items during the period:
Net changes in items other than shareholders’ equity
Total changes in items during the period
Balance at the end of current period
Total accumulated other comprehensive income
Balance at the beginning of current period
Changes in items during the period:
Net changes in items other than shareholders’ equity
Total changes in items during the period
Balance at the end of current period
Subscription rights to shares
Balance at the beginning of current period
Changes in items during the period:
Net changes in items other than shareholders’ equity
Total changes in items during the period
Balance at the end of current period
Total net assets
Balance at the beginning of current period
Changes in items during the period:
Dividends from surplus
Net income (loss)
Purchase 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

Consolidated Statement of Cash Flows

Year ended
March 31, 2013

Depreciation and amortization

(489)

(642)

Increase (decrease) in provision for directors’ retirement benefits

43

(246)

Increase in provision for loss on construction contracts

275

302

Interest and dividends income

(402)

(574)

Interest expense

85

95

Equity in losses of affiliates

480

6

Gain on sales of property, plant and equipment

(526)

(18)

Gain on sales of investment securities

(25)

(20)

(7,668)2,348(Increase) decrease in costs on uncompleted construction contracts

(479)

595

Increase in notes and accounts payable on construction contracts and other

6,404

480

(Decrease) increase in advances received on uncompleted construction
contracts

(449)

2,543

(Increase) decrease in notes and accounts receivable on completed construction
contracts and other(Decrease) increase in other current liabilities(1,523)

653

Other

(1,515)

1,024

Subtotal(1,955)9,875Interest and dividends received

401

573

Interest paid

(83)

(94)

(1,060)(805)

Income taxes paid–

180

(2,697)

9,729

Payments into time deposits(50)(4,200)

Proceeds from withdrawal of time deposits

50

300

Purchase of property, plant and equipment

(814)

(335)

Income taxes refunded
Net cash (used in) provided by operating activities
Cash flows from investing activities:

Proceeds from sales of property, plant and equipment
Purchase of investment securities
Proceeds from sales of investment securities

664

128

(1,563)(6,477)

234

971

–

294

Execution of loan

(22)

(105)

Collection of loans receivable

110

76

Proceeds from maturity of insurance funds

227

148

Other

115

(282)

(1,046)(9,481)

Net increase in short-term loans payable

16

1,233

Proceeds from long-term loans payable

1,000

–

Repayments of long-term loans payable

(194)

(340)

Purchase of treasury stock

(1)

(814)

Repayments of lease obligations

(28)

(50)

(1,072)(1,058)(280)(1,028)(14)

51

Net decrease in cash and cash equivalents(4,038)(729)

Cash and cash equivalents at beginning of period

45,13541,097

Cash and cash equivalents at end of period (Note 1)¥ 41,097¥ 40,367

Proceeds from redemption of investment securities

Net cash used in investing activities
Cash flows from financing activities:

Cash dividends paid
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents*See notes to consolidated financial statements.

*See notes to consolidated financial statements.

64

SANKI REPORT 201365

Notes to Consolidated Financial Statements
ＳＡＮＫＩのＣＳＲ活動

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) Number of companies excluded from application of theequity method:
Unconsolidated subsidiaries: 4
Affiliates: 2
Names of unconsolidated subsidiaries and affiliates:
Tomakomai Netsu Services Co., Ltd.
Shin-yu Services Co., Ltd.
Sanki Construction Engineering (Shanghai) Co., Ltd.
AEROSTRIP Corporation
SHUN HING-SANKI JV LIMITEDPFI Okubo Techno Resource Co., Ltd.

2. Scope of consolidation(1) Number of consolidated subsidiaries: 6
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

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:(2) Number of unconsolidated subsidiaries: 4Names of unconsolidated subsidiaries:
Tomakomai Netsu Services Co., Ltd.
Shin-yu Services Co., Ltd.
Sanki Construction Engineering (Shanghai) Co., Ltd.
AEROSTRIP Corporation(3) Reasons for exclusion of unconsolidated subsidiaries fromconsolidation
The four 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(1) N umber of companies to which the equity method of
accounting has been applied:
Unconsolidated subsidiaries: –Affiliates: 2
Akita Eco Plash Co., Ltd.
Ou Clean Technology Co., Ltd

66(3) Reasons for exclusion of unconsolidated subsidiaries andaffiliates from the equity method of accounting
The four 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.

Name
AQUACONSULT
Anlagenbau GmbH
THAI SANKI ENGINEERING &CONSTRUCTION CO., LTD.

Fiscal year end

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.

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).

Accrued retirement benefits
Accrued retirement benefits are provided based on theretirement benefit obligation and the fair value of the plan
assets as adjusted for the net unrecognized actuarial gain orloss and unrecognized prior service 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.

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.

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.

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, areaccounted for as operating leases.

(Additional information)
At the meetings of board of directors of the Company and fourof its domestic consolidated subsidiaries held in March 2012, it
was resolved that their retirement benefit plans for directors
and corporate 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, 2013.

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.
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.

お客さまとのかかわり(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.
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 loss on guarantees
Accrued loss on guarantees is provided at an amount of
estimated loss on fulfillment of guarantee obligations.

SANKI REPORT 2013

67

ＳＡＮＫＩのＣＳＲ活動(4) 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.
(5) 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.
(6) 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.

68(7) 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.
(8) 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 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
Accounting treatments of unrecognized actuarial gains and losses
and prior service cost as well as the calculation method for theretirement benefit obligation and service cost will be changed.
2. Effective date
The Company will apply this standard and related guidance fromthe fiscal year ending March 31, 2014. However, the calculation
method for the retirement benefit obligation and service cost is tobe applied from 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
Consolidated Statement of Income and Comprehensive Income
Insurance income and gain on sales of waste materials, whichwere included in “Non-operating income – Other” for the year
ended March 31, 2012, are presented separately on the
consolidated statement of income and comprehensive income forthe year ended March 31, 2013 because their each amountexceeds 10% of the total non-operating income.
For these changes, the consolidated statement of income andcomprehensive income for the year ended March 31, 2012 is represented. As a result, “Non-operating income - Other” of ¥288
million for the year ended March 31, 2012 is reclassified as“Insurance income” of ¥47 million, “Gain on sales of wastematerials” of ¥62 million and “Non-operating income - Other” of¥178 million.
Foreign exchange losses and provision of allowance for doubtful
accounts, which were included in “Non-operating expenses –Other” for the year ended March 31, 2012, are presented separately
on the consolidated statement of income and comprehensive
income for the year ended March 31, 2013 because their eachamount exceeds 10% of the total non-operating expenses.
For these changes, the consolidated statement of income andcomprehensive income for the year ended March 31, 2012 is represented. As a result, “Non-operating expenses - Other” of ¥292
million for the year ended March 31, 2012 is reclassified as“Foreign exchange losses” of ¥45 million, “Provision of allowancefor doubtful accounts” of ¥63 million and “Non-operating expenses- Other” of ¥183 million.

お客さまとのかかわり

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)
2011

2012

¥–

¥ 4,200

2) The following assets have been pledged as collateral for loans
payable of the affiliates and others:
Investment securities(Millions of yen)
2011

2012

¥5

¥5

3) The following assets have been pledged as guarantees for thepayment of trade payable by the consolidated subsidiaries:
Investments and other assets (time deposits)(Millions of yen)
2011

2012

¥ 33

¥ 33

4) The following assets have been pledged as guarantees forlosses regarding capital investments in the consolidated
subsidiaries:
Investments and other assets (time deposits)(Millions of yen)
2011

2012

¥ 10

¥ 10

Accounting Changes
In accordance with an amendment to the Corporation Tax Law
effective April 1, 2012, the Company and its domestic consolidated
subsidiaries have changed their depreciation method for property,
plant and equipment acquired on or after April 1, 2012 to reflect themethods prescribed in the amended Corporation Tax Law.
The effect of this change on operating income, ordinary income, andloss before income taxes and minority interests for the year ended
March 31, 2013 was immaterial.

SANKI REPORT 201369

お客さまとのかかわり

ＳＡＮＫＩのＣＳＲ活動

Notes to Consolidated Statement of Income and Comprehensive Income

Notes to Consolidated Statement of Changes in Net Assets(Note 1)
Provision for loss on construction contracts included in cost of sales for the years ended March 31, 2012 and 2013 are as follows:

1. Types and total number of shares issued were as follows:[For the year ended March 31, 2012](Millions of yen)
2011

2012

¥ 275

¥ 302

Type of shares
Common stock(Shares)

As of April 1, 2011

Increase

Decrease

As of March 31, 2012

74,461,156−−

74,461,156

2. Types and number of treasury shares were as follows:(Note 2)
No impairment losses were recognized for the year ended March 31, 2012.

As of April 1, 2011

Increase

Decrease

As of March 31, 2012

Common stock

2,929,184

2,705

−

2,931,889(Note) Increase of 2,705 shares was due to repurchase of fractional shares.

Impairment losses were recognized for the following assets for the year ended March 31, 2013:(Millions of yen)
Location(Shares)

Type of shares

3. Dividends(1) Dividends paid by the Company were as follows:

Use

Asset class

AmountBusiness-use assets

Land, Buildings, Structures¥ 46

Resolution

Type of shares

Total dividends(millions of yen)

Dividends per share(yen)

Record date

Effective date

Assets used for the real estate business

Buildings, Structures

7,025

June 28, 2011 Ordinary general
meeting of shareholders

Common stock

536

7.50

March 31, 2011

June 29, 2011

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.

November 11, 2011 Meeting ofboard of directors

Common stock

536

7.50

September 30,
2011

December 9, 2011

Meguro-ku, Tokyo, and others
Yamato-shi, Kanagawa(Note 3)
The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive income for theyears ended March 31, 2012 and 2013:2011(Millions of yen)
2012

¥ 596

¥ 6,183406

38

Amount before tax effect

1,002

6,221

Tax effect(204)(2,128)

797

4,092

Amount arising during the year

(4)

Reclassification adjustments for gains and losses included in net income(2)

Amount before tax effect(7)

Tax effect

2
(4)

–
–
–
–
–

Amount arising during the year

(21)

42

Total other comprehensive income¥ 772¥ 4,134(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
Type of shares (millions of yen)

Resolution
June 27, 2012 Ordinary general
meeting of shareholders

Commonstock

536

Source ofdividends

Dividends per
share (yen)Record date

Effective date

Retainedearnings

7.50

March 31,2012

June 28, 2012

[For the year ended March 31, 2013]
1. Types and total number of shares issued were as follows:
Type of shares
Common stock(Shares)

As of April 1, 2012

Increase

Decrease

As of March 31, 2013

74,461,156−−

74,461,156

Unrealized gains on available-for-sale securities:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income

Unrealized gains on available-for-sale securities
Deferred gains or losses on hedges:

Deferred gains or losses on hedges

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:
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 ofboard of directors

Common stock

521

7.50

September 30,
2012

December 10,
2012

Foreign currency translation adjustment:(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
June 26, 2013 Ordinary general
meeting of shareholders

70

Total dividends
Type of shares (millions of yen)
Commonstock

521

Source ofdividends

Dividends per
share (yen)Record date

Effective date

Retainedearnings

7.50

March 31,2013

June 27, 2013

SANKI REPORT 2013

71

ＳＡＮＫＩのＣＳＲ活動

Notes to Consolidated Statement of Cash Flows

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

2011

(Millions of yen)
Cash and deposits
Short-term investments(securities) with a maturity within three months
after the acquisition dateCash and cash equivalents

2011

2012

￥ 31,098￥ 36,368

9,999

3,999

¥ 41,097￥ 40,367

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

Financial Instruments

Liabilities:
Notes and accounts payable on
construction contracts and otherTotal liabilities
Derivative transactions*

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.
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.

2012

Estimated fair value Unrealized gain (loss)

Carrying value

Estimated fair value Unrealized gain (loss)¥ 31,098¥ 31,098¥̶¥ 36,368¥ 36,368¥̶

65,37565,375

̶63,28863,288

̶

10,79813,127
120,399

10,801
13,127
120,401

̶

2

4,511
24,814
128,982

̶

2

4,503
24,814
128,975

51,35051,350̶

51,85351,853

̶

51,350¥̶

51,350¥̶̶¥̶

51,853¥ (158)51,853¥ (158)

¥̶

7

7

̶

* 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, 2013, 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.”
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)
Carrying ValueType
Unlisted stocks

2011

2012

¥ 2,120¥ 2,002

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(Millions of yen)

2011

2012

Due within Due after one year Due after five years
one year through five years
through ten years¥ 31,090¥̶¥̶Cash and deposits
Notes and accounts receivable oncompleted construction contracts
65,375and other
Securities and investment securities:
Held-to-maturity securities (corporate
10,294bonds)
Available-for-sale securities withmaturity date̶
(corporate bonds)
Total¥ 106,759

72

お客さまとのかかわり

Due after
ten years¥̶

Due within Due after one year Due after five years
one year through five years
through ten years¥ 36,360¥̶¥̶

Due after
ten years
¥̶

̶

̶

̶

63,288

̶

̶

̶

̶

504

̶

4,199

̶

304

̶

201

298

̶

̶

̶

̶

109

¥ 201

¥ 803

¥̶

¥ 103,847

¥̶

¥ 304

¥ 109

SANKI REPORT 201373

ＳＡＮＫＩのＣＳＲ活動

Securities

Derivatives

1) Trading securities
Not applicable, because the Company and its consolidated subsidiaries had no trading securities both at March 31, 2012 and 2013.

1) Derivative transactions, to which hedge accounting is not applied2) Held-to-maturity debt securities(Millions of yen)

2011

Type

Fair value

Difference

Carrying value

Fair value

Difference

¥̶
2,294

¥̶
2,300

¥̶
5

¥̶
1,304

¥̶
1,312

¥̶
7

̶

̶

̶

̶

̶

̶

2,294

2,300

5

1,304

1,312

7

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

̶

̶

̶

̶

̶

8,504
̶

8,501

(2)

3,199

3,198

(0)

̶

̶

̶

̶

̶

8,504

8,501

(2)

3,199

3,198

(0)

¥ 10,801¥2¥ 4,503¥ 4,511¥73) Available-for-sale securities(Millions of yen)

2011

Type

Carrying value

Securities whose carrying value exceeded
their acquisition cost
Stock

2012

Acquisition cost

Carrying value

Difference

Acquisition cost

Difference¥ 11,881¥ 8,020¥ 3,861̶̶̶

Subtotal¥ 14,525
107¥ 10,023
2

̶

̶

̶

̶

̶

̶

8,020

3,861

24,65914,633

10,026

Securities whose acquisition cost exceeded
their carrying value
Stock

745
499

Bonds

804
505

(58)
(5)

155

162

(7)

̶

̶

̶

̶

̶

̶

̶

̶

̶

1,245

1,309

(63)

155

162

(7)

¥ 13,127¥ 9,329¥ 3,797¥ 24,814¥ 14,796¥ 10,018

Other
Subtotal
Total¥ 24,549
109

11,881Other[For the year ended March 31, 2013](Millions of yen)
Notional amounts(total)(over one year)

Type of transactions

Type of derivatives

Transactions outside of market

Forward exchange contracts
Sell: U.S.Dollars¥ 1,243

¥ 746

Fair
value

Unrealized gain (loss)¥1,400(Note)¥ (158)(Note) Fair value was estimated based on the price information provided by the financial institutions.
2. Interest-related transactions
Not applicable both for the years ended March 31, 2012 and 2013
2) Derivative transactions, to which hedge accounting is applied
1. Currency-related transactions(Millions of yen)

Hedge accounting method

Type of derivatives

Major hedged items

Assigning method for forward exchange
contracts

Forward exchange contracts
Sell: U.S.Dollars

Notes and accounts receivable oncompleted construction contracts and otherNotional amounts(total)(over one year)

¥ 336

̶

Fair
value

(*)

* Since the fair values of forward exchange contracts to which the assigning method was applied were treated as part of the hedged notes andaccounts receivable on completed construction contracts and other, their fair values were included in those notes and accounts receivables.
(Note) Fair value was estimated based on the price information provided by the financial institutions.
[For the year ended March 31, 2013]
Not applicable4) Information regarding sales of securities classified as available-for-sale securities:(Millions of yen)

2011

2012

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

¥ 46

¥ 25

¥̶

̶

̶

̶

¥ 469
503

¥ 47

Bonds

¥ 27
0

̶

Other

187

̶

1

̶

̶

̶

Total

¥ 234

¥ 25

¥1

¥ 973

¥ 47

¥ 27

(Note) “Securities classified as available-for-sale securities” presented above include securities for which it is extremely difficult to determine thefair value.
5) Impairment loss on securities
An impairment loss on investment securities of ¥427 million (available-for-sale securities with market value of ¥404 million and equity
securities of unconsolidated subsidiaries of ¥23 million) was recorded for the year ended March 31, 2012, and an impairment loss on investment
securities of ¥176 million (available-for-sale securities with market value of ¥58 million and available-for-sale securities for which it is extremely
difficult to determine the fair value of ¥118 million) was recorded for the year ended March 31, 2013.
For available-for-sale 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 available-forsale securities for which it is extremely 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.

74

Not applicable[For the year ended March 31, 2012]

Bonds

Type

̶

¥ 10,798

Subtotal
Total

1. Currency-related transactions[For the year ended March 31, 2012]

2012

Carrying value

Securities whose fair value exceeded their carrying value
Government bonds

お客さまとのかかわり

2. Interest-related transactions
Not applicable both for the years ended March 31, 2012 and 2013

Retirement Benefits
1) Summary of retirement benefit plans for employees
The Company and its consolidated subsidiaries including foreign consolidated 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 undercertain circumstances.

SANKI REPORT 201375

お客さまとのかかわり

ＳＡＮＫＩのＣＳＲ活動

2) The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the consolidated balance sheets at
March 31, 2012 and 2013 for the Company’s and its consolidated subsidiaries’ defined benefit plans:(Millions of yen)
Retirement benefit obligation
Plan assets at fair value
Assets in trust for employees’ retirement benefit
Unfunded retirement benefit obligation
Unrecognized actuarial loss
Unrecognized prior service cost
Amounts recognized in the consolidated balance sheets, net
Prepaid pension cost
Provision for retirement benefits2011¥ (23,858)
11,838
7,102(4,917)2012¥ (25,170)
13,086
7,248(4,836)

4,912

5,270

(636)
(642)
7,646
¥ (8,288)

(434)
(0)
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, 2012 and 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 years ended March 31, 2012 and 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

2011
¥ 908
491
(330)
483
(202)
1,350
90
¥ 1,441

2012
¥ 860
470
(337)
366
(202)
1,158
95
¥ 1,253*1: In addition to the amount presented above, additional retirement benefits of ¥21 million and ¥17 million were paid for the years ended March
31, 2012 and 2013, respectively. 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.
4) The assumptions used in accounting for retirement benefits were as follows:
Discount rates
Expected rate of return on plan assets

2011
2.0%
2.0%

2012
1.2%
2.0%

Tax-effect Accounting
1) The significant components of deferred tax assets and liabilities at March 31, 2012 and 2013 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
Accrued directors’ retirement benefits
Loss on devaluation of investment securities(Millions of yen)

2011

2012

¥ 399
731
46

¥ 380
831
211
2,546
130
304
2,611
107
653
168

̶

Tax loss carryforward
Other
Subtotal
Valuation allowance for deferred tax assets
Total deferred tax assets

179
189
5,464
225
610
190
274
729
9,040
(1,448)
7,591

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

2. Deferred tax liabilities
Gain on contribution of securities to retirement benefit trust
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(4,380)(910)(1,470)(1,258)(114)(8,134)¥ (542)(889)(1,470)(3,386)(90)(5,836)¥ (392)

Loss on devaluation of utility rights̶̶2) 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, 2012 and 2013 are presented as follows:

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

201140.7 %
10.7
(6.0)
6.3
1.8
15.3
11.1
(2.8)
11.8
̶

0.4
89.3 %

2012
38.0 %
(3.0)
3.4
(2.1)
̶

(42.3)
̶

(2.6)
(0.1)
1.5
(1.5)
(8.7) %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.

76

SANKI REPORT 2013

77

ＳＡＮＫＩのＣＳＲ活動

Investment and Rental Properties

3. Sales, profits or losses and other items by reportable segment

The Company owns commercial facilities and housing for rent in Kanagawa Prefecture and other areas. Profit from renting those real-estate
properties was ¥1,392 million and ¥1,426 million for the years ended March 31, 2012 and 2013, 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
on rental 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, 2012 and 2013 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

お客さまとのかかわり

2011

2012

¥ 11,644(656)
10,987¥ 24,902¥ 10,987(7,465)
3,521¥ 12,866(Millions of yen)
2011
Reportable segments
Facilities
construction

Machinerysystems

Environmental
systems

Real estate

Total

Adjustments(Note 1)

Consolidated(Note 2)

Sales to third parties¥ 114,525¥ 10,816¥ 19,812¥ 2,824¥ 147,979¥ 15¥ 147,994

Inter-segment sales
and transfers

493

7

12

̶

513

(513)

̶

¥ 115,019¥ 10,823¥ 19,825¥ 2,824¥ 148,493¥ (498)¥ 147,994¥ (561)¥ (187)¥ 879¥ 1,331¥ 1,462¥ 806¥ 2,268

¥ 396

¥ 103

¥ 90

¥ 748

¥ 1,340¥ 27¥ 1,367

̶

̶

71

̶

71

̶

71

Sales :

Total sales
Segment profit (loss)

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 ¥749 million for the year ended
March 31, 2012, and depreciation of ¥652 million and impairment loss of ¥7,025 million for the year ended March 31, 2013.
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.

Other items:
Depreciation
Amortization of
goodwillInterest income

15

0

6

̶

22

49

71

Interest expenses

50

0

3

̶

54

30

85

Equity in earnings(losses) of affiliates

̶

̶

4

̶

4

(484)

(480)
(Millions of yen)2012
Reportable segments

Segment Information(Segment Information)
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 six 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.
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.

Facilities
construction

Machinerysystems

Environmental
systems

Real estate

Total

Sales to third parties¥ 128,358¥ 6,501¥ 17,038¥ 2,747

Inter-segment sales
and transfers

267

0

106

̶

¥ 128,626¥ 6,501¥ 17,145¥ 1,196¥ (1,119)

Adjustments(Note 1)

Consolidated(Note 2)

¥ 154,646¥ 12¥ 154,658

374

(374)

̶

¥ 2,747¥ 155,020¥ (362)¥ 154,658¥ 689¥ 1,305¥ 2,071¥ 608¥ 2,680

Sales :

Total sales
Segment profit (loss)
Other items:

¥ 377

¥ 74

¥ 80

¥ 652

¥ 1,184¥ 23¥ 1,207

Amortization of
goodwill

̶

̶

̶

̶

̶

̶

̶

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)

Depreciation(Note 1)
Adjustments for segment profit or loss of ¥806 million for the year ended March 31, 2012 included corporate general profits of ¥411 million whichwere not allocable to the reportable segments such as interest and dividends income and reversal of interest expenses of ¥395 million which had
been allocated to each of the reportable segments for administrative purpose.
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.
(Note 2)
Segment profit was adjusted to be equal to ordinary income in the consolidated financial statements.

78

SANKI REPORT 2013

79

ＳＡＮＫＩのＣＳＲ活動

お客さまとのかかわり(Other Information)[For the years ended March 31, 2012 and 2013]

Per Share Data

1. Product and service information
Disclosure of product and service information has been omitted because similar information was disclosed in “Segment information.”

Net assets per share

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.

Disclosure of diluted net income per share for the year ended March 31, 2012 was omitted because it had no dilutive effect although there was
the dilutive potential.
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.

(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.

Basis for the calculation of net income (loss) per share for the years ended March 31, 2012 and 2013 is summarized as follows:

Net income (loss) per share

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.

[For the year ended March 31, 2012]
Not applicable¥ 1,113.70¥ 2.46¥ (71.04)

Net income (loss)

2012

¥ 176

¥ (4,992)–

̶Amount not attributable to shareholders of common stock
Net income (loss) attributable to common stock
Average number of shares of common stock outstanding(Millions of yen)

2011

¥ 176

¥ (4,992)

71,530 thousand shares

70,273 thousand shares

Stock subscription rights: 782 rights(Note)
Since the exercise period of the stock subscription
rights expired on July 25, 2011, all the rights havebeen forfeited as of March 31, 2012.

—

Subsequent Events[For the year ended March 31, 2013]
Impairment loss

2012
¥ 1,106.32

Outline of dilutive potential which was not included in calculation of diluted
net income per share due to non-dilutive effect(Information about impairment losses on tangible fixed assets by reportable segment)

Facilities
construction
¥̶

2011

(Millions of yen)
Machinery systems¥̶Environmental
systems¥̶Real estate

Total

¥̶

¥̶

Adjustments(Note)¥ 7,071¥ 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.
(Information about amortization and balance of goodwill by reportable segment)[For the year ended March 31, 2012](Millions of yen)
Facilities
construction

Machinerysystems

Environmental
systems

Real estate

Total

Adjustments

Consolidated

Amortization for the year

¥̶

¥̶

¥ 71

¥̶

¥ 71

¥̶

¥ 71

Balance of goodwill at end of the year

¥̶

¥̶

¥̶

¥̶

¥̶

¥̶

¥̶

[For the year ended March 31, 2013]
Not applicable(Information about gain on negative goodwill by reportable segment)[For the years ended March 31, 2012 and 2013]
Not applicable

1. Introduction of stock-based compensation in the form of stock options for directors and corporate officers

Consolidated

It was resolved at the 89th ordinary general meeting of shareholders of the Company held on June 26, 2013 and the meeting of its board of
directors held on the same date that the Company would adopt a stock-based compensation plan under which its directors (except outside
directors) and corporate officers are granted as compensation for their services stock options to purchase the Company’s common stock, in
accordance with the Corporation Law.
2. Acquisition of treasury stock
It was resolved at the meeting of its board of directors held on May 13, 2013 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:

Common stock of the Company
4,000,000 shares (upper limit)¥3,000 million (upper limit)
From May 14 to September 30, 2013
Purchase on the Tokyo Stock Exchange

3. Retirement of treasury stock
According to the resolution at the meeting of its board of directors held on May 13, 2013, 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:
4,800,000 shares
3) Retirement date:
May 20, 2013
4) Total number of shares issued after retirement:
69,661,156 shares

80

SANKI REPORT 201381

Independent Auditor’s Report

Corporate Information and Share Information
As of March 31, 2013

Corporate information
Company name

SANKI ENGINEERING CO., LTD.

Date of establishment

April 22, 1925

Stated capital

8,105.18 million yen

Representative

Takuichi Kajiura, President

Principal lines of business

Facilities construction, plant systems, real estate

Number of employees

Consolidated: 2,246 Non-consolidated: 1,918

Offices

Branch: 3 Branch office: 15 Laboratory: 1

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

Share information
Fiscal year
Annual general meeting ofshareholders

April 1 to March 31of the following year

Ownership statistics
Treasury stock 1
4,921 thousand shares (6.61%)

Late June

Trading unit

1,000 shares

Number of shares authorized

192,945,000 shares

Number of shares issued

74,461,156 shares

Number of shareholders

4,169

Individuals and other 3,814
14,629 thousand shares(19.65%)
Financial institutions 38
33,976 thousand share(45.63%)Foreign corporations
and other 145
15,102 thousand shares(20.28%)Transfer agent
Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo
Stock exchange listing

Tokyo Stock Exchange

Securities code

1961

Other corporations 143
5,207 thousand shares(6.99%)

Securities companies 28
626 thousand shares(0.84%)

Major shareholders
Number of shares held (thousand shares)

Shareholding ratio (%)

Mitsui Life Insurance Company Limited.

6,700

9.63

Meiji Yasuda Life Insurance Company

6,000

8.63

Nippon Life Insurance Company

5,840

8.40

Sanki Kyoueikai

2,741

3.94

Japan Trustee Services Bank, Ltd. (Trust account)

2,437

3.50

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

2,290

3.29

Japan Trustee Services Bank, Ltd. (Trust account 9)

2,288

3.29

CBNY DFA International Cap Value Portfolio

1,537

2.21

State Street Bank and Trust Company 505103

1,341

1.93

Sanki Engineering employee shareholders’ association

1,222

1.76

*Although the company holds 4,921 thousand shares of treasury stock, the company is excluded from the major shareholders listed above.

Shareholding ratio is calculated excluding treasury stock.

82

83