The 2nd Quarter FY2020
Summary of Financial Results
November 13, 2020

The 2nd Quarter FY2020 Financial Summary☆Key Points of Financial Results<Orders received> 103,236 million yen (100,901 million yen in the same period of the previous fiscal year)● Although orders received for small and miscellaneous projects declined due to the impact of the COVID-19 , there
was an overall increase in orders received over the same period of the previous fiscal year due to orders received
for large-scale industrial HVAC projects, particularly relating to semiconductors.
< Net sales> 80,864 million yen (91,845 million yen in the same period of the previous fiscal year)● In addition to a decline in net sales due to large-scale projects being off-crop season, net sales also fell short of thesame period of the previous fiscal year due to a decline in small and miscellaneous projects as a result of theimpact of the COVID-19.
<Gross profit> Gross profit margin of 13.3% (14.3% in the same period of the previous fiscal year)● Overall profitability remained at a high level, in spite of the gross profit margin falling short of the same period of
the previous fiscal year due to the impact of net sales for highly profitable large-scale projects being concentrated
in the second quarter of the previous fiscal year.
<FY2020 consolidated results forecasts>● No change from initial forecast* Although, at this stage, results have been incorporated, which take into account the impact of the COVID-19
pandemic on the Group’s business, business results may be further impacted due to altered circumstances in thefuture.
<Shareholder returns>● Conduct shareholder returns according to medium-term management plan “Century 2025” Phase 2 financial andcapital policies● Forecast interim dividend: 35 yen, year-end dividend: 35 yen, annual dividend: 70 yen.
*No change from initial forecast● Cancellation of 1 million shares of treasury stock was conducted on August 17, 2020.
1 million shares of treasury stock were acquired by October 27, 2020.
● Forecast payout ratio: 61.6%, Forecast total return ratio: 79.6%

2©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

Contents12334455

The 2ndQuarter
FY2020Results

The 2ndQuarter
FY2020
Balance Sheetand Statementof Cash FlowsFY2020
Forecast

Shareholder
Returns

Supplementary
Materials

P4-10

P11-13

P14-16

P17-19

P20-263©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

FY2020 2Q RESULTS

4©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Overall Results】
FY2020 2Q Results – Cumulative Results (Consolidated)(Millions of yen)

September
FY2018September
FY2019September
FY2020Orders received

103,819

100,901

103,236

2,334

2.3

Balance carried forward

167,809

158,885

158,534

(351)

(0.2)

Net sales

80,723

91,84580,864(10,980)(12.0)

Completed construction
contracts

79,71090,68579,643(11,042)(12.2)

Real estate and others

1,012

1,159

1,221

62

5.4

10,771

13,16810,757(2,410)(18.3)

Completed construction
contracts

10,407

12,744

10,277(2,466)(19.4)

Real estate and others

363

424

479

55

13.2

13.3

14.3

13.3

(1.0)pt.

－

Selling, general and administrative expenses

9,644

9,976

10,251275

2.8Operating income

1,126

3,191

505

(2,686)(84.2)

413

311

337

25

8.1

Ordinary income

1,540

3,503

842(2,660)(75.9)

Extraordinary income (loss)(150)

109(325)(435)－Profit attributable to owners of parent

796

2,485

821(1,663)(66.9)

Gross profit

Gross profit margin (%)

Non-operating income

Year onyear

Rate ofchange (%)

5©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

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

FY2018FY2019FY2020

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

Orders received

50,88552,934

51,22862,04846,69754,20450,031

43,08547,66055,575Net sales

35,25245,47061,32370,26740,88250,962

51,83364,00638,25342,611Gross profit

4,329

6,442

8,654

12,258

5,305

7,862

7,460

11,482

5,120

5,637

Gross profit margin (%)

12.3

14.2

14.1

17.4

13.0

15.4

14.4

17.9

13.4

13.2

Selling, general andadministrative expenses

4,571

5,072

4,965

6,437

4,983

4,992

5,063

6,396

5,274

4,976

Operating income (loss)

(242)

1,369

3,688

5,821

322

2,869

2,396

5,085

(154)

660

Operating profit margin (%)

(0.7)

3.0

6.0

8.3

0.8

5.64.6

7.9(0.4)

1.5

92

1,447

3,848

5,815

547

2,955

2,644

5,076

66

776

Extraordinary income (loss)

(147)

(3)

(1,167)1,439

248449(269)

(82)

(243)

Profit attributable toowners of parent (loss)

(66)

862

1,743

6,505

428

2,057

1,815

3,276

11809

Ordinary income

6©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

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

September
FY2018Segment

September
FY2019September
FY2020Year on year

Rate ofChange (%)

HVAC and Plumbing for
Buildings

32,38532,81033,153342

1.0

Industrial HVAC

38,49528,741

34,553

5,811

20.2

Electrical Systems

12,013

12,1989,802(2,395)(19.6)

Facility Systems

5,350

5,905

5,393

(512)

(8.7)

88,24479,65682,902

3,246

4.1

Machinery Systems

6,536

5,479

4,268

(1,211)(22.1)

Environmental Systems

8,776

14,933

15,049115

0.8

Total of Plant & Machinery
Systems Business

15,313

20,413

19,318(1,095)(5.4)

103,557

100,070

102,221

2,150

2.1

Real Estate Business

923

1,050

1,179

128

12.3

Others320324274(50)(15.5)

Adjustments *(982)

(543)

(438)

104

―

103,819

100,901

103,236

2,334

2.3

Total of Facilities Construction
Business

Sub-totalTotal* “Adjustments” eliminate inter-segment transactions included in each segment.

7©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Net Sales】
Net Sales by Segment (Consolidated)(Millions of yen)

September
FY2018Segment

September
FY2019September
FY2020Year on year

Rate ofChange (%)

HVAC and Plumbing for
Buildings

27,111

32,58022,614(9,965)(30.6)

Industrial HVAC

29,77430,84929,355(1,494)(4.8)

Electrical Systems

8,647

9,845

11,440

1,595

16.2

Facility Systems

4,460

4,962

4,397(565)(11.4)

69,99378,23767,807(10,430)(13.3)

Machinery Systems

4,377

5,294

4,459(835)(15.8)

Environmental Systems

6,132

7,413

7,610

196

2.7

Total of Plant & Machinery
Systems Business

10,50912,707

12,069

(638)

(5.0)

80,502

90,94579,876(11,068)(12.2)

Real Estate Business

923

1,050

1,179

128

12.3

Others

295

443

366

(76)

(17.3)

Adjustments*

(998)

(593)

(557)36―

80,723

91,84580,864(10,980)(12.0)

Total of Facilities Construction
Business

Sub-total

Total* “Adjustments” eliminate inter-segment transactions included in each segment.

8©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Profit】
Gross Profit by Segment (Consolidated)(Millions of yen)
September
FY2018September
FY2019September
FY2020Year on year

Rate ofChange (%)

8,529

10,565

8,375(2,189)(20.7)

641

824

663

(160)

(19.5)

9,171

11,3909,039(2,350)(20.6)

Machinery Systems

798

998

707

(291)

(29.2)

Environmental Systems

713

386

655

269

69.7

1,512

1,384

1,362

(22)

(1.6)

10,683

12,774

10,402(2,372)(18.6)

Real Estate Business

287

318

443

125

39.3

Others96

124

16(107)(86.6)

(296)

(49)

(105)

(55)

－10,771

13,16810,757(2,410)(18.3)

Segment
HVAC and Plumbing for
Buildings/Industrial
HVAC/Electrical Systems

Gross Profit by Segment

Facility Systems
Total of Facilities Construction
Business

Total of Plant & Machinery Systems
Business
Sub-total

Adjustments
Total

9©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Profit】
Initiatives to Improve Profits● Thorough cost management (thorough internal control processes)● Enhancement of the site support system through promotion of the Smile Site Plan*
・ Procurement Division: Purchasing support and introducing web-based procurement
support system
・ Design and Engineering Support Center: support for design work・ Technology Support Center: support and instruction for construction sites
・ Quality Management Center: Construction audits and quality management by the chiefengineer and technical experts
・ Branch office and branch site support divisions: support for on-site document creation
・ Information systems office: ICT support at work sites● Development of ICT technology that enables energy-saving construction andintroduction to sites
・ Improved work efficiency through use of autonomous airflow measurement robots
・ Improved construction management efficiency through use of digital information such asbuilding information modeling (BIM)● Strengthening relationships with business partners
・ Reviewing payment terms for partner companies with a capital of 40.00 million yen(payments made entirely in cash)
・ Conclusion of commitment line agreements for the purpose of catering to short-term
demand for financing and working capital in order to support the stable operation ofpartner companies* A specialist committee established in fiscal 2017 to reduce the burden on construction managers and promote businessefficiency.

10©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

FY2020 2Q
BALANCE SHEET AND
STATEMENT OF CASH
FLOWS

11

©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Financial Conditions】
Balance Sheet (Consolidated)
End of
September2020

End of
FY2019Currentassets(Millions of yen)
End ofprevious FY

End of
September
2019

Rate ofchange (%)

130,765

97,739(33,025)(25.3)

115,368

71,73948,317(23,422)(32.6)

56,31450,04051,9481,908

3.8

53,23524,01725,8881,870

7.8

27,61879,70552,395(27,309)(34.3)

64,50352,48932,444(20,044)(38.2)

44,735

Noncurrent liabilities

13,735

11,129(2,605)(19.0)

13,951

Total net assets

87,364

86,163(1,201)(1.4)

90,149(4,187)(2,820)1,366―(1,287)

Total assets

180,805

149,688(31,117)(17.2)

168,603

Book-value per share (yen)1,510.59

1,490.77(19.82)(1.3)

1,507.67

48.2

57.4

9.2

―

53.3

(6.5)

11,400Notes and accounts receivable
on completed construction
contracts and otherNoncurrent assets
Investment securities
Current liabilities
Notes and accounts payable
on construction contracts andother

Treasury stock

Equity ratio (%)

pt.

Interest-bearing liabilities (consolidated)

10,71910,024(694)12©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【CF】
Statement of Cash Flows (Consolidated)○The balance of cash and cash equivalents decreased from the end of the previous fiscal year (also a year-on-year decrease)• The decrease in cash flows from operating activities is due to contribution to retirement benefit funds and payment ofbonuses and corporation tax, etc., despite recovery of receivables exceeding payment of accounts payable.
• The decrease in cash flows from investment activities is mainly due to the acquisition of property, plant and equipment.
• The decrease in cash flows from financing activities is mainly due to the repayment of long-term loans payable and thepayment of dividends.
(Millions of yen)

FY2016FY2017FY2018FY2019September
FY2020

SeptemberFY2019

Cash flows from operating
activities

10,845

6,306

6,786

11,940(7,258)

5,369

Cash flows from investing
activities(1,644)(2,510)(3,775)

(303)

(897)

(584)

Cash flows from financing
activities(2,458)

1,814(5,215)(8,955)(4,390)(3,184)

Cash and cash equivalents
at end of period

39,18744,866

42,61245,94633,37844,865

Capital investment

1,015

3,772

6,110

2,197

1,082

1,449

718

818

1,340

1,643

825

814

Depreciation

13©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

FY2020 FORECAST

14©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Overall Forecast】
FY2020 Full-Year Forecast (Consolidated)(Millions of yen)

FY2020 forecast FY2020 forecast
FY2017FY2018(Interim forecast(Interim forecast
from August 7) from November 13)

FY2019A

B

Difference
B－A

Orders received

191,113217,096

194,018

190,000

190,000―

Balance carried forward

144,712

149,495

136,163

126,163

126,163―

Net sales

170,157

212,314207,684

200,000

200,000―

Gross profit

25,06031,684

32,11031,00031,000

―

14.7

14.9

15.5

15.5

15.5

―

Operating income

6,593

10,63710,674

9,0009,000―

Ordinary income

7,434

11,204

11,2249,500

9,500―

Profit attributable to ownersof parent

3,906

9,046

7,576

6,500

6,500

―

Regular dividends per share (yen)2040707070―

Extra dividends per share (yen)152025―

―

―

3560

957070―Gross profit margin (%)

Dividends per share (yen)* Although results have been incorporated, which take into account the impact of the spread of the novel coronavirus (COVID-19) on the Group’sbusiness, business results may be further impacted due to altered circumstances in the future.

15©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Forecast of Orders Received and Net Sales】
FY2020 Forecast of Orders Received andNet Sales by Segment (Consolidated)
FY2020Orders Received ForecastSegment(Millions of yen)
FY2020Net sales Forecast

HVAC and Plumbing for
Buildings

59,00060,000Industrial HVAC

63,00067,000Electrical Systems

22,00025,000

Facility Systems

11,00011,000155,000

163,000

Machinery Systems

10,00010,000

Environmental Systems

23,00025,000Total of Plant & Machinery
Systems Business

33,00035,000188,000

198,000

Real Estate Business

2,000

2,000Others

1,000

1,000

Adjustments*(1,000)(1,000)190,000

200,000

Total of Facilities Construction
Business

Sub-totalTotal*Adjustments eliminate inter-segment transactions included in each segment.

16©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

SHAREHOLDER
RETURNS

17©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Shareholder Returns】
Dividends and Others• Conducted shareholder returns according to medium-term management plan “Century 2025” Phase 2 financial and capital policies.
• Forecast interim dividend: 35 yen, year-end dividend: 35 yen, annual dividend: 70 yen (no change from initial forecast)• Retirement of 1 million shares of treasury stock was conducted on August 17, 2020.
• Acquisition of 1 million shares of treasury stock was conducted by October 27, 2020.

FY2016FY2017FY2018FY2019September
FY2020

FY2020(Forecast)

73.91

63.02

150.02128.51

14.25

113.58Cash dividends per share:
regular dividends (yen)

20

2040

70

35

70

Cash dividends per share:
extra dividends (yen)10152025――303560

95

3570

Payout ratio (%)

40.6

55.5

40.0

73.9

61.6Total return ratio (%)

40.6

148.9

52.9

111.4

79.6

Number of shareholders at end ofperiod

3,157

3,243

3,381

4,216

7,360

Share price at end of period (yen)

958

1,188

1,210

1,211

1,152

Acquisition of treasury stock(thousand shares)

―

3,000

1,000

1,958

110

1,000

Retirement of treasury stock(thousand shares)

―

3,000

1,000

2,000

1,0001,000

ROE (Return on Equity) (%)

5.5

4.5

10.3

8.6

7.4

ROA (Return on Assets) (%)

4.1

4.3

6.0

6.0

5.7

Earnings per share (yen)Cash dividends per share (total) (yen)18©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Shareholder Returns】
Total Return Ratio(%)

Phase 2Phase 1

(Millions of yen)
10,000160.0%

Price of acquired treasury stock (leftaxis)

140.0%

Dividends paid (left axis)

120.0%

Total return ratio (right axis)

148.9%

8,000
2,899

100.0%

111.4%

6,000

1,171
80.0%

1,191
4,000

79.6%

3,679

40.6%

60.0%

52.9%

2,000

5,543

2,1362016

2017

40.0%
4,001

3,595

1,906

←Total return ratio: 70%

20.0%

00.0%
2018

2019

2020 (Forecast)

19©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

SUPPLEMENTARYMATERIALS

20©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Orders Received】
Orders Received by Type(Millions of yen)
FY2017Full-year

FY2018Full-year

FY2019Full-year

September
2019
A

September
2020
B

Orders received (Non-consolidated: Facilities
Construction Business)

147,013

173,553

147,191

74,49879,163

4,665

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

67,34578,304

48,23819,141

36,137

16,996

45.8

45.1

32.8

25.7

45.6

19.9

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

Difference

B–A

pt.

191,113217,096

194,018

100,901

103,236

2,334

1,246

2,379

3,143

1,352

1,365

13

0.7

1.1

1.6

1.3

1.3

―

Orders received for renewal construction(Consolidated)

101,597

117,619

112,90960,80853,545(7,263)

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

53.2

54.2

58.2

60.3

51.9(8.4)<Ref.> Net sales for renewal construction(Consolidated)

94,601

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

pt.

116,627

114,208

48,34339,913(8,429)21©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Orders Received】
Orders Received by Industry (Consolidated)(Millions of yen)
30,000
September 2018

25,000
September 2019
20,000
September 2020
15,00010,0005,000
0Government Offices

Miscellaneous business services

Wholesale and Retail Trade

Education

Medical Services

Real Estate

Finance and Insurance

ChemicalMachineryFood

Pharmaceutical Industry

Automobile

Electrical Machinery

22©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Orders Received / Net Sales 】
Main Large-scale Projects Received and Large-scale Completed Construction Projects〇Main Large-scale Projects Received
Property nameItem of construction

Type of construction

Location

HVAC systems

New construction work

Tokyo

HVAC and Plumbingsystems

New construction work

Tochigi

Plumbing system

New construction work

Hyogo

Toyota Technical Center Shimoyama Plumbing and Electrical Systems
Project

Plumbing and electricalsystems

New construction work

Aichi

Kitatama Water Reclamation Center No. 1 Sludge Incineration SystemsReconstruction ProjectWater and sewage
treatment systems

Expansion

Tokyo

Kurita Water Industries Ltd. New Research and Development Facility
Construction Project (provisional name)
Kanae Tochigi Factory No. 3 Building
Kawanishi City General Medical Center Development Project(provisional name)

9 other projects〇Main Large-scale Completed Construction Projects
Property nameItem of construction

Type of construction

Location

Nissay Training Center

HVAC systems

Renovation

Chiba

DENSO Corporation Headquarters PT Development Center

HVAC systems

New construction work

Aichi

Tokyo Metropolitan Higashiyamato Medical Center for the Severely
DisabledPlumbing systems

RenovationTokyo

The Jikei University School of Medicine New Outpatient Building, etc.

Electrical systems

New construction work
RenovationTokyo

Chiba University (Hospital) Center for Treatment and Care New Building
and Other Mechanical Systems Project

HVAC and plumbing
systems

New construction work

Chiba

*The property name is the name being used by the Company. This may differ from the nameused on the construction contract.

1 other project

23©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Orders Received】
Main Large-scale Projects Received over 1 Billion Yen(by Industry)
September FY2018

September FY2019

September FY2020Office1－3Hotel1－－Factory

52

3

Research institute――3Logistics Center1

9 Projects－

7 Projects－

14 Projects

Hospitals andClinics

1(15,873 million yen)

1

(18,952 million yen)1

(26,427 million yen)

Other building
interiors―

Railway, Airport―

Waste processing
facility―

11

Water treatment
plants andsewage plants

―

1

1

* Orders received from
customers: 4 Projects* Orders received fromgeneral contractors:
5 Projects

2―* Orders received from
customers: 6 Projects* Orders received fromgeneral contractors:
1 Project

1
1* Orders received from
customers: 5 Projects* Orders received fromgeneral contractors:
9 Projects

24©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Operating Results】
Operating Results over the Most Recent 5 Years(Consolidated) <Orders Received/Net Sales>
Phase 1

(Millions of yen)Phase 2200,000

Orders received

150,000

Net sales

Balance carried forward
100,000

50,0000
2016

2017

2018

2019

2020 (Forecast)

25©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Operating Results】
Operating Results over the Most Recent 5 Years(Consolidated) <Profit>(Millions of yen)Phase 2Phase 135,000(%)
18.0

16.0
Gross profit (left axis)

30,000Operating income (left axis)
14.0

Ordinary income (left axis)
25,000Gross profit margin (right axis)

12.0
Operating profit margin (right axis)
Ordinary profit margin (right axis)

20,00010.0

8.0

15,000

6.0

10,000
4.0
5,000
2.0

00.0
2016

2017

2018

2019

2020 (Forecast)

26©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

Statements about the future, such as results forecasts included in thesematerials, are based on judgements made according to the information
available to the Company as of November 13. Actual results may differ fromthe figures contained herein due to a number of factors.
For inquiries, please contact:
Sanki Engineering Co., Ltd.
Corporate Communications Department

TEL: +81-3-6367-7041
27©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.