The 3rd Quarter FY2016
Summary of Financial Results
Feb 8, 2017

Sanki Engineering Co., Ltd.
1

Contents
Key Points of Financial Results
The 3rd Quarter FY 2016 Results (Consolidated)
Orders Received by Segment (Consolidated)
Net Sales by Segment (Consolidated)
Ordinary Income and Loss by Segment (Consolidated）
Quarterly Results (Consolidated)
Operating Results over the Last 5 Years (Consolidated)
Orders Received by Industry (Consolidated)
Orders Received by Type
Major Projects
Major Projects over 1 Billion yen(By Industry)
Profit Improvement Factors and Measures
Balance Sheet (Consolidated)
Statements of Cash Flows (Consolidated)
FY2016 Forecast (Consolidated)
FY2016 Forecast of Orders Received and Net Sales by Segment (Consolidated)
Long-Term Vision “Century 2025”
Medium-Term Management Plan “Century 2025” Phase1 －Key Initiatives and Strategies －Overview of Sanki Yamato Site Redevelopment Plan (STeP : Sanki Techno Park Project)
The Outline of Sanki Techno Center
Medium-Term Management Plan “Century 2025” Phase1 － ESG Policy－

03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
2

Key Points of Financial Results〈Orders received〉
The overall orders received by Facilities Construction Business decreased
year-on-year basis, especially by HVAC and Plumbing for Buildings segment
and Electrical Systems segment, because of a decline in large-scale projects.
While orders received by Machinery Systems decreased compared with thesame period of the previous year, in which a large-scale project order wasreceived, those by Environmental Systems greatly increased because of alarge-scale project order received in this period. That led to the increase inorders received by the overall Plant & Machinery Systems Business. The
overall orders received by the whole company marked lower than that period.

〈Net Sales , Profit〉
Net sales, especially in HVAC and Plumbing for Buildings, declined from thesame period of the previous year. On the profit side, gross profit margin
continued to be improved because of improved work efficiency in addition torigorous cost management ; while operating income, ordinary income, andprofit attributable to owners of parent declined due to the decreased sales.
3

【 Overall Results 】
The 3rd Quarter FY 2016 Results(Consolidated)
・Orders received decreased because of a decline in large-scale projects year-on-year basis, along with net sales.
・Although operating income , ordinary income , and profit attributable to owners of parent declined from the high level in the same period of theprevious year, they all exceeded those in the same period of FY2014. Gross profit margin continued to be improved.

(Millions of yen)
December
2014

December
2015

December
2016

Orders received

137,172

147,517138,163(9,354)(6.3)

Balance carried forward

122,738

127,033

129,988

2,955

2.3

Net sales

122,653

122,503

114,563(7,940)(6.5)

121,670

121,264

113,289(7,975)

(6.6)

982

1,238

1,274

35

2.9

9,678

14,146

13,710

(435)

(3.1)

9,433

13,845

13,431

(413)

(3.0)

245

301

279

(21)

(7.3)

7.9

11.5

12.0

0.5pt.

―

Selling, general and administrative expenses

11,183

11,70911,885175

1.5Operating income (loss)(1,504)

2,436

1,825

(611)

(25.1)

Non-operating income

1,150

960

904

(56)

(5.9)

Non-operating expenses

359

318

274

(43)

(13.6)

Ordinary income (loss)

(713)

3,079

2,454

(624)

(20.3)

Profit attributable to owners of parent (loss)

(207)

2,045

1,578

(466)

(22.8)

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

Year onyear

Rate ofchange(%)

4

【 Orders Received 】
Orders Received by Segment (Consolidated)
・The overall orders received by Facilities Construction Business decreased year-on-year basis, especially by HVAC and Plumbing for Buildings segment andElectrical Systems segment, because of a decline in large-scale projects.
・Orders received by Machinery Systems decreased compared with the same period of the previous year, in which a large-scale project order was received.
・Orders received by Environmental Systems substantially increased year-on-year basis because of a large-scale project order received in this period. As aresult, those by the overall Plant & Machinery Systems Business turned to increase.

(Millions of yen)

December
2014

December
2015

December
2016

HVAC and Plumbing for Buildings

57,86456,50950,074(6,435)(11.4)

Industrial HVAC

34,48538,97735,684(3,293)(8.5)

Electrical Systems

19,21818,23914,570(3,668)(20.1)

Facility Systems

7,120

8,745

7,898

(846)

(9.7)

118,689

122,472

108,228(14,244)(11.6)

Machinery Systems

4,492

8,684

5,689

(2,994)(34.5)

Environmental Systems

13,271

15,67023,900

8,229

52.5

17,76324,35529,590

5,235

21.5

136,453

146,827

137,818(9,008)(6.1)

Real Estate Business

912

1,148

1,189

41

3.6

Others

353

411

371

(40)

(9.9)

Adjustments *

(546)

(870)

(1,216)(345)―

137,172

147,517138,163(9,354)(6.3)

Segment

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

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

Year onyear

Rate ofchange(%)

5

【Net Sales】
Net Sales by Segment (Consolidated)
・Net sales, especially in HVAC and Plumbing for Buildings, decreased substantially , and as a result , the balance carriedforward of this segment amounts to approximately 65,400 million yen.
・Net sales in Industrial HVAC continued to keep the high performance in the same period of the previous year.

(Millions of yen)
December
2014

December
2015

December
2016

HVAC and Plumbing for Buildings

50,23545,08839,264(5,824)(12.9)

Industrial HVAC

33,15435,88035,706

(174)

(0.5)

Electrical Systems

14,44915,573

14,271(1,302)(8.4)

Facility Systems

6,376

7,124

7,296

171

2.4

104,215

103,667

96,537(7,129)(6.9)

Machinery Systems

7,437

5,811

5,908

97

1.7

Environmental Systems

10,256

12,038

11,515

(523)

(4.3)

17,694

17,85017,424

(426)

(2.4)

121,909

121,517

113,961(7,555)(6.2)

Real Estate Business

912

1,148

1,189

41

3.6

Others

364

401

363

(37)

(9.4)

Adjustments *

(533)

(564)

(952)

(387)

―

122,653

122,503

114,563(7,940)(6.5)

Segment

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

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

Year onyear

Rate ofchange(%)

6

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

December
2015

December
2016

(987)

2,869

1,425

(1,443)(50.3)

20

(77)

45

122

―

(797)

(867)

(204)

663

―

(1,763)

1,924

1,266

(657)

(34.2)

Real Estate Business

176

164

147

(16)

(10.2)

Others

35

52

25

(26)

(51.3)

Adjustments *

838

938

1,014

76

8.1

(713)

3,079

2,454

(624)

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

7

Segment
Facilities Construction
Machinery Systems

Segment Profit (Loss)

Environmental Systems
Sub-total

Total

Year onyear

Rate ofchange(%)

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

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

Orders received

42,48938,75855,92336,226

46,38552,82048,31135,75355,33835,57347,250Net sales

32,82542,682

47,14556,94534,49540,98547,02256,39733,86636,47444,222Gross profit

1,700

3,224

4,753

8,287

3,291

4,812

6,043

8,783

3,905

4,238

5,566

5.2

7.6

10.1

14.6

9.5

11.7

12.9

15.6

11.5

11.6

12.6

Selling, general andadministrative expenses

3,786

3,845

3,552

3,831

3,921

4,005

3,783

4,709

4,171

3,915

3,798

Operating income (loss)(2,085)

(620)

1,201

4,456

(630)

807

2,259

4,073

(265)

323

1,767

(6.4)

(1.5)

2.5

7.8

(1.8)

2.0

4.8

7.2

(0.8)

0.9

4.0

(1,846)

(478)

1,612

4,522

(254)

778

2,554

5,055

27

341

2,085

Extraordinary income (loss)

―

(18)

(116)

(312)

(55)

30

96

(371)

―

(32)

(43)

Profit attributable to ownersof parent (loss)(1,215)

(111)

1,119

2,669

(266)

521

1,790

3,282

(2)

232

1,349

Gross profit margin(%)

Operating profit margin(%)
Ordinary income (loss)

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

Profit200,000

10,000Ordinary income (right axis)

Profit attributable to ownersof parent (right axis)

150,000

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

Net sales (left axis)

050,000

0
12

13

14

15

16

-5,000FY（Forecast）

9

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

December 2015
December 2016
30,00025,00020,00015,00010,0005,000

Electrical Machinery

Automobile

PharmaceuticalIndustry

Machinery

ChemicalFood

Finance and Insurance

Real Estate

Education

Wholesale and Retail
Trade
Miscellaneous
business services

Medical Services

Governmnet Offices010【Orders Received】
Orders Received by Type(Millions of yen)
FY
2013

FY
2014

FY
2015

Orders received (Non-consolidated ：Facilities
Construction Business)

137,027

143,708

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

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

53.7

Orders received(Consolidated)

December
2015

December
2016

145,069

117,229

103,753(13,476)

68,96372,75159,494

41,432(18,062)

48.0

50.1

50.8

39.9

(10.9)

Diff.

pt.

168,295

173,398

183,270

147,517138,163(9,354)

3,055

2,931

2,343

1,744

1,018

(725)

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

1.8

1.7

1.3

1.2

0.7

(0.5)

Orders received for renewal construction(Consolidated)

88,473

93,33999,92075,847

77,258

1,411

Rate of orders received for renewal
construction (Consolidated) (%)

52.6

53.8

54.5

51.4

55.9

4.5

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

pt.

pt.

98,02496,46896,32562,858*SANKI CONSTRUCTION ENGINEERING(SHANGHAI)CO.,LTD. ,unconsolidated subsidiary , is not included inorders received from overseas projects .

63,444586

11

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

Other 5 projects

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

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

December 2015

December 2016

Office133Complex building

―

1

―

Commercial
facility

11―

Factory―

3

2

School―1―

Hospital

2

Research institute2

9 Projects

2
1(16,733 million yen)

Government
office building

1

Waste processing
facility1＊ Orders received from
customers ：2 Project

16 Projects

1(28,026 million yen)―

＊ Orders received from
customers ：5 Projects

3＊ Orders received fromgeneral contractors：7 Projects

1(31,760 million yen)―

＊ Orders received from
customers ：7 Projects

1＊ Orders received fromgeneral contractors：11 Projects

Power station,
Substation―

Water and sewage
treatment facility

1

―

1

Others―1――

10 Projects

1＊ Orders received fromgeneral contractors：3 Projects

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

14【Financial Condition】
Balance Sheet (Consolidated)(Millions of yen)
December2015

End of
FY 2015

December
2016

Rate ofchange(%)

Diff.

103,887

115,491

103,755(11,736)(10.2)

Noncurrent assets

59,02653,931

54,598667

1.2

Current liabilities

61,97072,86361,513(11,349)(15.6)

Noncurrent liabilities

15,241

12,001

12,495493

4.1

Total net assets

85,701

84,557

84,344

△213

(0.3)

Total assets

162,913

169,423

158,354(11,069)(6.5)

Book-value per share(yen)

1,346.73

1,328.60

1,324.94

△3.66

(0.3)

52.5

49.8

53.2

3.4

―

Current assets

Equity ratio (%)

pt.

Interest-bearing liabilities(consolidated)

5,308

5,992

4,888

(1,103)(18.4)

15

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

(Millions of yen)

FY 2012FY 2013

FY 2014

FY 2015

December
2015

December
2016

Cash flows from operating
activities

9,729(9,403)

(139)

5,220

(1,383)

3,837

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

3,440

5,520

6,620

(1,452)

Cash flows from financing
activities(1,028)(4,152)(2,901)(1,826)(2,474)(3,183)

Cash and cash equivalents
at end of period

40,36723,51023,66732,501

26,37031,59516

【Overall Forecast】
FY2016 Forecast (Consolidated)
・ The overall FY2016 forecast as of February 8, is not changed from the initial forecast as of May 13.

(Millions of yen)

＜Reference＞
FY 2016 Forecast(as of February 8)

Total

Medium-Term Management Plan“Century2025”Phase1
Financial Performance Targets
FY2016FY2017FY2018Orders received

183,000―――

Net sales

185,000

185,000

190,000

195,000

Operating income

6,500

6,500

7,000

7,500

Ordinary income

7,000

7,000

7,500

8,000

Profit attributableto owners of parent

4,900

―

―

―
17

【Forecast of Orders Received and Net Sales】
FY2016 Forecast of Orders Received and Net Sales by Segment（Consolidated）(Millions of yen)
FY 2016
Orders Received Forecast(as of February 8)

Segment

FY 2016
Net sales Forecast(as of February 8)

HVAC and Plumbing for Buildings

64,90070,900Industrial HVAC

52,00052,000Electrical Systems

19,00022,000

Facility Systems

10,00010,000145,900

154,900

Machinery Systems

9,500

9,500

Environmental Systems

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

35,50028,500Sub-total

181,400

183,400

1,600

1,600

Others500

500

Adjustments*

(500)

(500)

183,000

185,000

Total of Facilities Construction Business

Real Estate Business

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

18

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

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

2019–2021
Phase 23-year period toenhance reliability

2016–2018
Phase 13-year period toenhance quality
FY2016FY2019FY2022

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

19

Medium-Term Management Plan “Century 2025” Phase1

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

3. Developing Next-Generation Technologies
We will establish a new R&D base inside the Sanki Techno Center. Here we will develop
technologies for the next generation while keeping up with advances in new technologies
such as robotics, IoT, and artificial intelligence.
20

Overview of Sanki Yamato Site Redevelopment Project（STeP：Sanki Techno Park Project）

Redevelopment of land and buildings we holdas our real estate in the Sanki Yamato Site
（Sanki Yamato Building and Yamato
Engineering Center, both in the Yamato City,
Kanagawa Prefecture）

１．Building “Sanki Techno Center”
２．Reorganizing manufacturing plants inthe machinery systems business
３．Making effective use of existing assets
21

The Outline of Sanki Techno Center＜How we wants it to be＞
Medium-Term Management Plan“Century 2025”Phase1
Enhancing “Quality” of our Technical Skills
and Human Resources＜Challegnges＞
Human
resources

Facilities

 Improve and pass along
techniques and skills
 Training（including partner firms）

 Expand training facilities
 Need for education andtraining using actual
equipments
 Consolidation of educational
and training sites andopportunities＜Educational and training facility＞
・Extensive training rooms
・Simulation with actual equipments
using large underground space・Integrated training for techniques,
skills, and safety
・Utilization of teachers with advanced
careers
・Sufficient lodging facilities＜R&D facility＞
・Development site for next-generation
technologies
・Expanded showroom＜Others＞
・Regional contributions

Realize improvement of various
aspects of our “quality” such astechnical quality and profit margin22

Medium-Term Management Plan “Century 2025” Phase1

ESG Policy
Organically Integrate Existing Activities and Seek Strategic Deployment
OutlineEnvironment

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

Social

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

Governance

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

23

Thank you for your kind attention.
Remarks on Business Forecast
The descriptions contained in this material, except for those as to past or present facts, are based on anticipations,assumptions, evaluations and estimations in light of the information available as of February 8,2017.
Therefore, the actual results may differ from those presented herein as a consequence of various factors including
uncertainties and prospective changes in the economic environment.
＜Major factors＞
 Credit exposure of client companies.
 Sudden changes in material and equipment cost and labor cost.
 Stock Market fluctuations.
 Increase in retirement benefits and debts.
 Country risk.
 Accident and disaster in Facilities construction and other.

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

For inquiries please contact: Risk in Regal action.

Corporate Communications
Department

 Risk in Regal regulation.

TEL：+81-3-6367-7041

 Outbreak of the natural disaster.

24