Status of Business Progress“Century 2025” Phase 1
FY2018 2nd Quarter
November 9, 2018
Sanki Engineering Co., Ltd.
1

Orders Received/Net Sales(Millions of yen)

Consolidated Orders Received

Consolidated Net Sales(Millions of yen)

200,000(Forecast)

200,0002018 planned value:
195 billion yen(Forecast)180,000

180,000

160,000

160,000

140,000

140,000

120,000

120,000

100,000

100,000

80,00080,00060,00060,00040,00040,00020,00020,00000
FY 2015

FY 2016
2Q

FY 2017
Full year“Century 2025”
Phase 1

FY 2018

FY 2015

FY 2016

FY 2017

2Q

Full year“Century 2025”
Phase 1FY 20182Gross Profit/Margin(Millions of yen)

Consolidated Gross Profit

30,000(％)(Forecast)

Consolidated Gross Profit Margin(Forecast)

16.0

14.0
25,0002018 planned value:
24 billion yen●2018 planned value:
12.3%

12.0

20,00010.0

15,0008.0

6.0
10,0004.0
5,000
2.000.0
FY 2015

FY 2016

FY 2017

2Q

Full year“Century 2025”
Phase 1

FY 2018

FY 2015

FY 2016
2Q

FY 2017

FY 2018

Full year“Century 2025”
Phase 13Orders Received by Segment (2Q)
(Millions of yen)

45,000HVAC and Plumbing for Buildings
Industrial HVACElectrical Systems
Facility Systems
Automobiles/
Machinery Systems
Semiconductors
Environmental Systems

40,00035,000HVAC and Plumbing for Buildings:
Increase

Industrial HVAC: Major increase
Electrical Systems: Increase

30,000

Facility Systems: Stable
25,000Machinery Systems: FlatTenzan
DBO

20,000

Environmental Systems:
Reactionary decline

15,000Overall progress including
Real Estate Business,etc.: 59.3%
Outlook: Positive

10,0005,00002013年9月
Sep. 20132014年9月
Sep. 20142015年9月
Sep. 20152016年9月
Sep. 20162017年9月
Sep. 20172018年9月
Sep. 2018

April 2016: Start of “Century 2025” Phase 1(51.5% YoY)
4Status of Measures○ FY 2018 2Q is the home stretch for “Century 2025” Phase 1○ Theme of Phase 1:“Refine Technology and People to Improve Quality”
Core challenge

Passing down
technical capacity

Present state・Completed the Sanki Techno Center, the core of the STeP
Project

Preparing for the stock ・Receiving orders for major construction projects that serveera
as future stock for the industrial HVAC sector
Next-generation
technology
development

・Established an R&D center in the Sanki Techno Center
・DOUPTM, an energy-saving HVAC system for cleanrooms
・IoT sensor network-enabled Heat Stroke Monitoring System○ Started proposals for Phase 2 with a theme of “Reliability.”5

Status of STeP Project*○ Completed the Sanki Techno Center
Completed construction/launched operations in October 2018

○ Operating a new Technical Research & Development
Institute (inside the Sanki Techno Center)
Changed the name of the Technical Research & Development Institute to“R&D Center” in October 2018

○ Completed demolition of the old Yamato Plant facilities
Began leasing the land to Nippon Life Insurance Company in June 2018
(They have broken ground on a logistics center)○ Launched construction on a new machinery systems plant(on the property of the old Yamato Plant)
Scheduled launch of new plant operation: August 2019
* The STeP (Sanki Techno Park) ProjectA project to redevelop the land and buildings on the Sanki Yamato property (the Sanki Yamato Building and the old Yamato Plant), a
real estate holding of Sanki Engineering.
Namely the construction of the Sanki Techno Center, followed by the reorganization of the machinery systems manufacturing plant andother effective uses of real estate holdings.

6Completion of the Sanki Techno Center
Completion
ceremony

Hands-on Safety Center

Showroom
Outer appearance of the facility
The Sanki Techno Center is one of the most important policies in our medium-term management plan,“Century 2025” Phase 1, which is in its final fiscal year (FY 2018). We renovated the old Sanki Yamato
Building A, which we own outright, to create a consolidated facility for research, training and study, andfunction as our headquarters for refining technology and people. With a total floor area of roughly 46,100
m2 spread across six above-ground floors and one basement floor, the spacious building houses training
facilities that comprise a diverse array of training rooms, a technology and skills area that simulates actual
plant conditions, and a hands-on safety area; an R&D center; a showroom; and a large-scale lodging
facility.
The facilities also feature a reception facility for stranded people based on a disaster prevention
agreement with Yamato City, and Sanki Environment Park, which is open to local residents.

Reception facility forstranded people

Unveiling the facilities to family
members on Family Day7

Status of Measures○ Established a Technical Assistance Center headquarters to provide support forthe construction work of the branch offices○ Established field support organizations (infrastructure maintenancedepartments/sections) at each location○ Launched a new system to provide support for creating documents in the field○ Revised the human resources and salary systems○ Continued CCU,* which provides opportunities for discussions between thecompany president and employees
1H: Veteran employees; 2H: Mid-level employees and the Ladies’ Forum*CCU＝Century Communication Up

8

Status of Measures○Initial Stages of ESG (Sustainability)
StatusEEnvironment
SSociety

GGovernance・ Continuous donation of “SANKI YOU Eco Contribution Points”
TM・ DOUP , an energy-saving A/C system for cleanrooms
・ Entered the fourth year of the company’s unique work style reform, “Smile Project”
・ Office reform, which includes work style reform (NEW OFFICE Project)・ “Heat Stroke Monitoring System” that protects workers on construction sites
・ Inculcation of SDGs (corporate ethics training, integrated reports)
・ Revised the structure of the Board of Directors
Added two directors to create an organization of five non-executive directors (two internal, threeexternal)
Added one auditor to create a system of five auditors (two internal, three external)
・ Continued to conduct meetings for directors with expertise in the corporate governance code toexchange opinions
・ Dialogue with shareholders (increased the number of opportunities,
held briefing sessions for individual investors)
・ Consideration of capital policy in light of capital costs
・ Continuous revision of strategically held shares
Many people visited ourbooth at this briefing forindividual investors

9

Main Technology Development○DOUPTM

TM

DOUP is an energy-saving air conditioning system for cleanrooms (CR) built
on the strength of the knowledge and experience with designing andconstructing CR we have amassed to date. The system provides climate
control with methods suited to each of two areas—the high-cleanliness
operation area, and the maintenance area in which manufacturing equipment
generates a lot of heat—according to the state of manufacturing equipment
operation.
TM
DOUP optimizes the temperature of cooling water for air conditioning toconserve energy during summer peak hours, and combines other energysaving methods to reduce cold/heat source power roughly 40% per year overconventional methods.

○Heat Stroke Monitoring System

We developed this system to serve as the underlying technology for aneasy-to-install, easy-to-transport IoT sensor network system forconstruction sites, and currently apply it as a monitoring system toprevent the occurrence of heat stroke in the field.
Our distinct cloud system, S-Cloud®, centrally manages and analyzes
data from each sensor to quantify workers’ risk of suffering from heatstroke.
We deployed the system at three of our own construction sites this pastsummer.

10Plant Department Topics
Environment systems business

Machinery systems business

Received first order for
Cross Belt Sorter CBII, astrategic project for thelogistics market

Australian group company Aquaconsult exhibited at the World
Water Congress & Exhibition 2018 of the International Water
Association (IWA). Officers were present to introduce “Aero Wing,”
our ultrafine bubble diffuser for wastewater treatment facilities

We exhibited our energysaving centrifugal dehydrator“SANDEC G3” and otherproducts at Sewage Works
Exhibition ’18 in Kitakyushu.

We exhibited our system for packing rice balls
sold at convenience stores and elsewhere into
shipping cases from production line conveyors
at FOOMA JAPAN 2018.

11

Securing/Cultivating Human Resources,Communication
April 2018: Welcomed 80 new employees

This year marked the sixth time weconducted training at Shinnyo-do
Temple in Kyoto. The grave ofTakatoshi Mitsui, founder of the MitsuiGroup, is shown in the picture.

Recruiting overseas
Group company Thai Sanki
exhibited at the 7th Thai-Japan
Business Matching in Bangkok,Thailand. We hired three people.

Opened the Sanki Hibiya Lounge

We established this communication baseat Tokyo Midtown Hibiya. Hibiya has long
been the location of our Headquarters.

CCU for veteranemployeesAwards ceremony
for long-timeemployees

Liaison conference for nationwide subcontractors

12Social Contribution Activities
Afforestation activities in various locations forenvironmental conservation

Supporting sports in various situations
One of our employees served as
the manager for Team Japan at theWorld Deaf Rugby 7’s Australia
2018 tournament. We supported
this tournament through the Japan
Deaf Rugby Football Union.

Meguri-no-Mori Forest

Mori ha Umi-no-Koibito
EventWe supported college sports
through our support for theannual Waseda-Keio
Classico soccer match.

Weeding at Sanki-noMori Forest

In addition to making donations through “SANKI YOU Eco Contribution
Points,” we participated in afforestation activities throughout Japan.
◆ 14th Shonan Village Center Meguri-no-Mori Forest Tree Planting/Caring
Festival (Kanagawa Prefecture)◆ 30th Mori ha Umi-no-Koibito Tree Planting Festival (Iwate Prefecture)→Members of our internal Earthquake Disaster Reconstruction Project
also participated◆ Employees participated in our weeding event at Sanki-no-Mori Forest(Yamanashi Prefecture)

We held our first company
athletic meet. It played a rolein improving communication
between employees.

13Social Contribution ActivitiesParticipation in community cleanup activities throughout Japan

Sanki Chemical Engineering &Construction Tsushima Business Office
Japanese/Korean civic beach cleanup(Nagasaki Prefecture)

Hokkaido Branch Office
Beach garbage cleanup at “Love
Earth Cleanup in Hokkaido 2018”(Hokkaido Prefecture)

Support for educational activities
We agreed to the content of corporate
training for mid-level public school
educators sponsored by the Tokyo
metropolitan government, andconducted a three-day training programfor five educators from public highschools in Tokyo and high schools
associated with national universities in
response to requests from the Tokyo
Chamber of Commerce and Industry
from July 30 to August 1.

Water sprinkling event

In response to a request from theTokyo metropolitan government, weinvited local residents to participate ina water sprinkling event at ourheadquarters

Great East Japan Earthquake disaster reconstruction

Tohoku Branch OfficeSendai City community cleanup
activity (Miyagi Prefecture)

Tohoku Branch Office Yamagata Local
OfficeCleanup strategy at Tsuruoka Higashi
Industrial Park (Yamagata Prefecture)

Sanki Techno Center
Volunteer cleanup around facilities(Kanagawa Prefecture)

The Earthquake Disaster
Reconstruction Project toured Namie
Town in Fukushima Prefecture.

We provided support at the “ThirdTsugaru Shamisen Michinoku
National Tournament.”
End of presentation

14