The 1st Quarter FY2016
Summary of Financial Results
Aug 10, 2016

Sanki Engineering Co., Ltd.
1Contents
Key Points of Financial Results
The 1st 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 by Segment (Consolidated)
FY2016 Forecast of Net Sales by Segment (Consolidated)
Long-Term Vision “Century 2025”
Medium-Term Management Plan “Century 2025” Phase1「Key Initiatives and Strategies」
Medium-Term Management Plan “Century 2025” Phase1 「ESG Policy」

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Key Points of Financial Results〈Order received〉
Orders received by Facilities Construction Business, such as HVAC andPlumbing for Buildings and Industrial HVAC segments, greatly increased
because of orders received of large-scale redevelopment projects in themetropolitan areas and continued steady domestic investments bymanufacturers. Orders received by Environmental Systems increased byhaving received orders of large-scale projects, while those received by
Machinery Systems decreased compared with the same period of the previousyear, in which a large-scale project order was received. As a result, orders
received by Plant & Machinery Systems Business slightly increased. The
overall orders received marked greatly higher than that period.

〈Net Sales, Profit〉
Even though net sales changed relatively flat year-on-year basis, gross profit
margin was improved due to improvement of work efficiency in addition tothorough cost management. Gross profit, operating income, ordinary income,and profit attributable to owners of parent were all greatly improved year-onyear basis.
3

【 Overall Results 】
The 1st Quarter FY 2016 Results(Consolidated)
・Orders received highly exceeded year-on-year basis, and net sales changed relatively flat.
・All profit categories, such as gross profit, operating income, ordinary income, and profit attributable to owners of parent(Millions of yen)were greatly improved year-on-year basis.
(reference)
June 2014

June 2015

Orders received

42,48946,385

Balance carried forward

117,883

Net salesYear on year

Rate ofchange(%)

55,338

8,952

19.3

113,910

127,860

13,95012.2

32,82534,49533,866

(628)

(1.8)

32,53334,08933,438(650)

(1.9)

292

406

427

21

5.3

1,700

3,291

3,905

614

18.7

1,614

3,190

3,786

595

18.7

85

100

118

18

18.7

5.2

9.5

11.5

2.0pt.

―

3,786

3,921

4,171250

6.4(2,085)

(630)

(265)

364

―

Non-operating income

426

488

400(88)(18.1)

Non-operating expenses

187

112

106(5)(5.1)

Ordinary income (loss)(1,846)

(254)

27281

―

Profit attributable to owners of parent (loss)(1,215)

(266)

(2)

263

―

Completed construction contracts
Real estate and others
Gross profit

Completed construction contracts
Real estate and others
Gross profit margin(%)
Selling, general and administrative expenses
Operating income (loss)

June 20164【 Orders Received 】
Orders Received by Segment (Consolidated)
・Orders received by HVAC and Plumbing for Buildings, and Industrial HVAC increased because of large-scale projects.
・Orders received by Machinery Systems decreased, but those by Environmental Systems increased year-on-year basis.
As a result, total orders received by Plant & Machinery Systems Business changed relatively flat.
(Millions of yen)
Rate ofJune 2015
June 2016
Segment
Year on yearchange(%)
HVAC and Plumbing for Buildings

13,674

19,835

6,161

45.1

Industrial HVAC

13,896

17,756

3,859

27.8

Electrical Systems

5,126

5,068

(57)

(1.1)

Facility Systems

3,979

3,210(769)(19.3)

36,67745,871

9,193

25.1

Machinery Systems

4,477

2,030

(2,447)(54.7)

Environmental Systems

4,842

7,459

2,616

54.0

9,320

9,489

169

1.8

45,99755,360

9,362

20.4

Real Estate Business

381

388

6

1.8

Others

142

142

(0)

(0.1)

Adjustments *(135)

(552)

(416)

―

46,38555,338

8,952

19.3

Total of Facilities Construction BusinessTotal of Plant & Machinery Systems Business

Sub-total

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

5

【Net Sales】
Net Sales by Segment (Consolidated)
・Net sales of Machinery Systems were increased due to the increase of the orders received balance at the beginning(Millions of yen)of this period.
Segment

June 2015

June 2016

Year on year

Rate ofchange(%)

HVAC and Plumbing for Buildings

13,572

12,161(1,410)(10.4)

Industrial HVAC

9,923

10,351427

4.3

Electrical Systems

4,759

4,410(349)(7.3)

Facility Systems

1,957

1,729

(227)

(11.6)

30,21328,653(1,560)(5.2)

Machinery Systems

1,587

2,434847

53.4

Environmental Systems

2,331

2,576

244

10.5

3,919

5,0101,091

27.9

34,132

33,663(468)(1.4)

Real Estate Business

381

388

6

1.8

Others

125

126

10.8

Adjustments *(144)

(312)

(168)

―34,495

33,866(628)(1.8)

Total of Facilities Construction BusinessTotal of Plant & Machinery Systems Business

Sub-total

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

6

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

June 2015

June 2016

Year on year

Rate ofchange(%)

Segment Profit (Loss)

Facilities Construction

121

46(74)(61.8)

Machinery Systems(171)

121292―

Environmental Systems

(689)

(546)

142―

(739)

(378)

360

―

Real Estate Business

66

62

(4)

(6.1)

Others

10

14

3

32.2

Adjustments *407

329

(78)

(19.2)

(254)

27281

―

Sub-total

Total＊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

【Overall Result】
Quarterly Results (Consolidated)(Millions of yen)
FY 2015

FY 2016

1Q

2Q

3Q

4Q

1Q

Orders received

46,38552,82048,31135,75355,338Net sales

34,49540,98547,02256,39733,866Gross profit

3,291

4,812

6,043

8,783

3,905

9.5

11.7

12.9

15.6

11.5

Selling, general and administrative expenses

3,921

4,005

3,783

4,709

4,171

Operating income (loss)

(630)

807

2,259

4,073(265)

(1.8)

2.0

4.8

7.2

(0.8)

Ordinary income (loss)

(254)

778

2,554

5,055

27

Extraordinary income (loss)(55)3096(371)―

Profit attributable to owners of parent (loss)

(266)

521

1,790

3,282(2)Gross profit margin (%)

Operating profit margin (%)

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)
150,000

Profit attributable to owners ofparent (right axis)
5,000

Orders received (left axis)
100,000

Net sales (left axis)
050,0000-5,000
1213

1415

16

FY（Forecast）

9

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

12,000June 2015
June 2016
10,000

8,000

6,000

4,000

2,000

0

Medical services
Wholesale and retail
trade
Miscellaneous
business services
EducationReal estate
Finance andInsurance

Food
ChemicalMachinery
PharmaceuticalIndustry
Automobile
Electrical Machinery10【Orders Received】
Order Received by Type(Millions of yen)Orders received (Non-consolidated ：Facilities ConstructionBusiness)
Orders received from general contractors (Nonconsolidated ：Facilities Construction Business)
Rate of orders received from general contractors (Nonconsolidated：Facilities Construction Business) (%)
Orders received(Consolidated)

FY
2013

FY2014FY2015

June2015

June2016

Diff.

137,027

143,708

145,069

35,032

44,245

9,212

73,60868,96372,75116,763

16,054(709)

53.7

48.0

50.1

47.9

36.3

(11.6)
pt.

168,295

173,398

183,270

46,38555,3388,952

Orders received from overseas projects (Consolidated) *

3,055

2,931

2,343

547

468(78)Rate of orders received from overseas projects(Consolidated) (%)

1.8

1.7

1.3

1.2

0.8(0.4)pt.

Orders received for renewal construction (Consolidated)

88,473

93,33999,92024,35523,724(631)

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

52.6

53.8

54.5

52.5

42.9

(9.6)

<Ref.>Net sales for renewal construction (Consolidated)pt.

98,02496,46896,325

18,255

20,525*SANKI CONSTRUCTION ENGINEERING(SHANGHAI)CO.,LTD. ,unconsolidated subsidiary, is not included inorders received from overseas projects .

2,270

11【Orders Received】
Major Projects

・Takeda Pharmaceutical Company Limited, HIKARI Factory（ Air Conditioning (HVAC) works ） 〈 New construction work 〉

・The North Purification Center of the Yamato City
（ Sewage treatment works ）〈 Maintenance management 〉

Other 3 projects* The property name is the name which is being used in us and is sometimes different from the name on theconstruction contract.

12【Orders Received】
Major Projects over 1 Billion yen(By Industry)
June 2015

June 2016

Office11Factory2

25 Projects
Research institute

1Waste processing
facility

1(6,379 million yen)

＊Orders received fromcustomers：1 Project

5 Projects――＊Orders received from generalcontractors：4 Projects(13,464 million yen)

＊Orders received fromcustomers：4 Projects＊Orders received from generalcontractors：1 Project

Water and sewage
treatment facility―

1Power station,Substation―113

【 Profit 】
Profit Improvement Factors and Measures○Thorough cost management.
○Maintenance of the site support system.
・Purchasing operations support by the Procurement Division.
・Documentation support by the Site-Documentation Support
Center.
・Design work support by Design & Engineering Support
Center.
・Quality management activities by technical experts.
○Strengthening of relations with business partners.
・Enforcement of the liaison Meeting for Subcontractor
Groups.
・Establishment of the Sanki Super Meister System.
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【Financial Condition】
Balance Sheet (Consolidated)(Millions of yen)
End ofFY 2015

June 2016

Diff.

Rate ofchange(%)

June 2015

Current assets

115,491

98,761(16,730)(14.5)

100,946

Noncurrent assets

53,931

50,567(3,363)(6.2)

60,272

34,78931,570(3,218)(9.3)

39,967

Current liabilities

72,86357,367(15,496)(21.3)

57,764

Noncurrent liabilities

12,001

11,023

(978)

(8.2)

19,493

Total net assets

84,55780,938(3,618)(4.3)

83,96013,012

10,541(2,471)(19.0)

15,575

Total assets

169,423

149,329(20,093)(11.9)

161,218

Book-value per share (yen)1,328.60

1,271.88(56.72)(4.3)

1,320.46

Equity ratio (%)

49.8

54.1

4.3
pt.

―52.0

Interest-bearing liabilities(consolidated)

5,992

5,138(853)(14.2)

5,272

Investment securities

Unrealized gains onavailable-for-salesecurities

15

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

June
2015

June
2016

FY 2012FY 2013

FY 2014

FY 2015

Cash flows from operating activities

9,729(9,403)

(139)

5,220

8,486

3,375

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

3,440

5,520

1,079(573)

Cash flows from financing activities(1,028)(4,152)(2,901)(1,826)(1,877)(2,224)

Cash and cash equivalents at end ofperiod

40,36723,51023,66732,501

31,282

33,04716【Overall Forecast】
FY2016 Forecast (Consolidated)
Net sales would increase, and operating income would remain relatively flat, because of the increase of the(Millions of yen)balance carried forward.
FY 2016 Forecast(as of August 10)

FY 2015 Results

Year on yearFirst
half ofyear

Secondhalf ofyear

Total

First
half ofyear

Secondhalf ofyear

Total

First
half ofyear

Secondhalf ofyear

Orders received

99,206

84,064

183,270

96,00087,000183,000(3,206)

2,936(270)

Net sales

75,480103,420

178,901

76,000109,000

185,000

520

5,580

6,099

Operatingincome(loss)

176

6,333

6,509(100)

6,600

6,500(276)267(9)

Ordinaryincome(loss)

524

7,610

8,135

300

6,700

7,000(224)(910)(1,135)

Profit attributableto owners ofparent (loss)

255

5,072

5,327

200

4,700

4,900(55)

(372)

(427)

Total17

【Forecast of Orders Received】
FY 2016 Forecast of Orders Received by Segment（Consolidated）
FY 2016 forecast of total orders received would remain relatively flat, compared with FY 2015 result.
(Millions of yen)
FY 2015 Results

FY 2016 Forecast(as of August 10)

HVAC and Plumbing for Buildings66,172

66,900728

Industrial HVAC

52,52252,000(522)Electrical Systems

22,66721,000(1,667)

Facility Systems

11,07010,000(1,070)

152,432

149,900(2,532)

Machinery Systems

10,3099,500(809)

Environmental Systems

19,61022,0002,390

Total of Plant & Machinery Systems Business

29,91931,5001,581

Sub-total

182,352

181,400

(952)

1,532

1,600

68

524

500

(24)

(1,139)

(500)

639

183,270

183,000(270)

Segment

Total of Facilities Construction Business

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

Diff.

18

【Forecast of Net Sales】
FY 2016 Forecast of Net Sales by Segment（Consolidated）
The forecast of net sales in HVAC and Plumbing for Buildings would greatly increase because of high(Millions of yen)
performance of orders received.
FY 2015 Results

Segment

FY 2016 Forecast(as of August 10)

Diff.

HVAC and Plumbing for Buildings

64,49270,9006,408

Industrial HVAC

52,08452,000(84)Electrical Systems

22,95822,000(958)

Facility Systems

10,416

10,000(416)149,952

154,900

4,948

Machinery Systems

9,217

9,500

283

Environmental Systems

18,73419,000266

Total of Plant & Machinery Systems Business

27,951

28,500549

Sub-total

177,904

183,400

5,496

1,532

1,600

68

542

500

(42)

(1,077)

(500)

577

178,901

185,000

6,099

Total of Facilities Construction Business

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

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

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

2019–2021
Phase 23-year period toenhance reliability

2016–2018
Phase 13-year period toenhance quality
FY2016FY2019FY2022

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

20

Medium-Term Management Plan “Century 2025” Phase1

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

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

Medium-Term Management Plan “Century 2025” Phase1

ESG Policy
Organically Integrate Existing Activities and Seek Strategic Deployment
OutlineEnvironment

As evidenced by the Paris Agreement, which created an international framework against global warming, and theAct 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 airconditioning, plumbing, electricity, and network systems, as well as related services;
2. In our Plant and Facilities Division, we will develop equipment that offers greater energy savings; and3. We will be mindful of reducing the impact on the global environment in all aspects of our business operations
and pursue activities based on ISO 14000.

Social

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

Governance

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

22

Thank you for your kind attention.
Remarks on Business Forecast
The descriptions contained in this material, except for those as to past or present facts, are based onanticipations, assumptions, evaluations and estimations in light of the information available as of May 13,2016.
Therefore, the actual results may differ from those presented herein as a consequence of various factors
including uncertainties and prospective changes in the economic environment.
＜Major factors＞
 Credit exposure of client companies.
 Sudden changes in material and equipment cost and labor cost.
 Stock Market fluctuations.
 Increase in retirement benefits and debts.
 Country risk.
 Accident and disaster in Facilities construction and other.

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

For inquiries please contact: Risk in Regal action.

Corporate Communications
Department

 Risk in Regal regulation.

TEL：+81-3-6367-7041

 Outbreak of the natural disaster.

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