The 2nd Quarter FY2017
Summary of Financial Results
November 10, 2017

Sanki Engineering Co., Ltd.
1Contents
Key Points of Financial Results
FY2017 2Q 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/Net Sales>
Operating Results over the Last 5 Years(Consolidated) <Profit>
Orders Received by Industry (Consolidated)
Orders Received by Type
Main Major Projects Received
Main Major Completed Construction Projects
Major Projects Received over 1 Billion Yen (by Industry)
Profit Improvement Factors and Measures
Balance Sheet (Consolidated)
Statement of Cash Flows (Consolidated)
Dividends and Others
FY2017 Full Year Forecast (Consolidated)
FY2017 Forecast of Orders Received and Net Sales by Segment(Consolidated)

03
04
05
06
07
08
09
10111213
14
15
16
1718
192021
2

Key Points of Financial Results<Orders received>
Industrial HVAC and Electrical Systems firmed; however, HVAC and Plumbingfor Buildings declined due to factors such as being on the downward end ofan received ordering cycle of large-scale projects, resulting in a decrease inorders received for Facilities Construction Business overall.
On the other hand, Plant & Machinery Systems Business (machinery andenvironmental) increased significantly, receiving some large-scale projects inthis period. As a result, there was an increase in the total amout of orders
compared with the same period of the previous year.
<Net Sales & Profit>
Net sales increased overall, due to the dramatic increase in
HVAC and Plumbing for Buildings compared with the same period of theprevious year.
In terms of profit, gross profit margin improved even more as a result offurther pursuing initiatives, including the enhancement of our site supportsystems.Gross profit, operating income, and ordinary income increased yearon year basis.
3

【Overall Results】
FY2017 2Q Results (Consolidated)
・Orders received increased greatly, due to factors such as receipt of large-scale project for Plant & Machinery Systems. Net sales exceeded compared withthe same period of the previous year overall, due to the dramatic increase in HVAC and Plumbing for Buildings.
・Gross profit margin further improved due to increased construction profitability, and there were increases in gross profit, operating income, and ordinary income.
・Profit attributable to owners of parent decreased due to recording extraordinary loss, such as loss on retirement of noncurrent assets, etc.
associated with the Yamato Site Redevelopment Plan.

(Millions of yen)

September
2015

September
2016

September
2017

Year on year

Rate ofchange(%)

Orders received

99,20690,912

95,7754,862

5.3

Balance carried forward

125,745

126,960

147,026

20,06515.8

Net sales

75,48070,341

72,5062,165

3.174,668

69,491

71,561

2,070

3.0

812

849

944

94

11.1

8,103

8,144

9,319

1,174

14.4

7,918

7,940

8,972

1,032

13.0

185

204

346

142

69.9

10.7

11.6

12.9

1.3pt.

―

7,926

8,087

8,829

742

9.2

Operating income (loss)

176

57

489

432

753.5

Non-operating income

347

311

462

151

48.6

Non-operating expenses

524

368

952

583

158.2

Ordinary income (loss)

（25)

(32)

(1,134)(1,101)

―

255

229

(95)

(324)

―

Completed construction contracts
Real Estate and Others
Gross profit
Completed construction contracts
Real Estate and Others
Gross profit margin(%)
Selling, general and administrative expenses

Profit attributable to owners of parent (loss)4【Orders Received】
Orders Received by Segment (Consolidated)
・With regard to Facilities Construction Business, orders received for Industrial HVAC and Electrical Systems, including some large-scale projects, firmed; however,
HVAC and Plumbing for Buildings declined due to factors such as being on the downward end of an ordering cycle for large-scale projects, resulting in a decrease inoverall Facilities Construction Business compared with the same period of the previous year.
・With regard to Plant & Machinery Systems Business, there was a dramatic increase in both Machinery Systems and Environmental Systems receiving somelarge-scale projects in this period. As a result, the total amount of orders increased compared with the same period of the previous year. (Millions of yen)

September
2015

September
2016

September
2017

Year onyear

Rate ofchange(%)

HVAC and Plumbing for Buildings

34,02333,97928,860(5,119)(15.1)

Industrial HVAC

25,29427,39927,060

(339)

(1.2)

Electrical Systems

12,6998,337

10,394

2,057

24.7

Facility Systems

6,623

5,274

5,487

213

4.0

78,642

74,99071,803(3,186)(4.2)

Machinery Systems

6,981

3,287

6,506

3,218

97.9

Environmental Systems

13,133

12,451

16,634

4,183

33.6

20,115

15,73823,141

7,402

47.0

98,75790,72994,9454,215

4.6

Real Estate Business

766

787

860

73

9.3

Others

272

259

305

45

17.7

Adjustments *(590)

(864)

(335)

528

―

99,20690,912

95,7754,862

5.3

Segment

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 increased overall for Facilities Construction Business, due to a dramatic increase in HVAC and Plumbing for Buildings over the previous fiscal year,
having the abundant large-scale projects balance carried forward at the beginning of the fiscal year.
・Plant & Machinery Systems Business also increased, recording an overall increase compared with the same period of the previous year.
(Millions of yen)

September
2015

September
2016

September
2017

Year onyear

Rate ofchange(%)

HVAC and Plumbing for Buildings

28,25524,00127,802

3,801

15.8

Industrial HVAC

22,23022,082

20,898(1,184)(5.4)

Electrical Systems

10,0109,065

8,785(279)(3.1)

Facility Systems

4,884

4,587

3,687

(900)

(19.6)

65,381

59,736

61,173

1,437

2.4

Machinery Systems

3,307

4,384

4,522

138

3.2

Environmental Systems

6,134

5,782

6,139

357

6.2

9,441

10,166

10,662495

4.9

74,82369,903

71,835

1,932

2.8

Real Estate Business

766787

860

73

9.3

Others

259

254

291

36

14.4

Adjustments *(368)(604)

(482)

122

―

75,48070,341

72,5062,165

3.1

Segment

Total of Facilities Construction BusinessTotal of Plant & Machinery Systems Business
Sub-totalTotal＊ Adjustments eliminate inter segment transactions included in each segment.

6

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

September
2015

September
2016

September
2017

Facilities Construction

866

(15)

597

612

―

Machinery Systems

(251)

119

6(112)(94.2)

Environmental Systems

(941)

(755)

(789)

(33)

―(325)

(651)

(184)

466

―

Real Estate Business

114

103

238

134

130.6Others

17204221101.0

Adjustments *718

895

856(39)

(4.4)

524

368

952

583

158.2

＊ 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

Segment Profit (Loss)

Sub-total

Total

Year onyear

Rate ofchange(%)

【Overall Results】
Quarterly Results (Consolidated)
FY2015FY2016FY2017

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

Orders received

46,38552,82048,31135,75355,33835,57347,25047,71638,20957,566

Net sales

34,49540,985

47,02256,39733,86636,47444,222

53,94932,93339,573Gross profit

3,291

4,812

6,043

8,783

3,905

4,238

5,566

8,827

3,482

5,837

9.5

11.7

12.9

15.6

11.5

11.6

12.6

16.4

10.6

14.8

Selling, general and administrative expenses

3,921

4,005

3,783

4,709

4,171

3,915

3,798

4,640

4,442

4,386

Operating income (loss)

(630)

807

2,259

4,073

(265)

323

1,767

4,187(960)

1,450

(1.8)

2.0

4.8

7.2(0.8)

0.9

4.0

7.8(2.9)

3.7

Ordinary income (loss)

(254)

778

2,554

5,055

27341

2,085

4,425(593)1,546Extraordinary income (loss)(55)3096(371)

―(32)

(43)

200(327)(806)

Profit attributable to owners of parent (loss)

(266)

521

1,790

3,282(2)

232

1,349

3,119(604)508Gross profit margin(%)

Operating profit margin(%)

8

【Operating Results】
Operating Results over the Last 5 Years(Consolidated) <Orders Received/Net Sales>(Millions of yen)
200,000
180,000

Orders received

160,000

Net sales

140,000

Balance carriedforward120,000
100,000
80,00060,00040,00020,00002013

2014

2015

2016

2017

FY（Forecast）

9

【Operating Results】
Operating Results over the Last 5 Years(Consolidated) <Profit>（％）(Millions of yen)
30,00016.0

14.0
25,00012.0

Gro ss profit （left axis)

20,000Operating income（left a xis)

10.0
Ordinary income（left a xis)

15,0008.0

Gro ss profit ma rgin（right a xis)
Operating profit margin（right a xis)6.0
10,000Ordinary profit margin（right axis)

4.0

5,000
2.0

0

0.0
2,013

2014

2015

2016

2017
FY（Forecast）

10

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

September 2015

September 2016

September 2017

Government

Medical services

Wholesale and retail trade

Miscellaneous businessservices
Education

Real estate

Finance and Insurance

Food

ChemicalMachinery

Pharmaceutical Industry

Automobile

Electrical Machinery

20,00018,00016,00014,00012,00010,000
8,000
6,000
4,000
2,000
011

【Orders Received】
Orders Received by Type(Millions of yen)
FY2014FY2015FY2016

Orders received (Non-consolidated ：Facilities
Construction Business)

143,708

145,069

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

68,963Rate of orders received from generalcontractors(Non-consolidated：Facilities
Construction Business) (%)

48.0

Orders received(Consolidated)

September
2016

September
2017

139,997

71,86068,608(3,252)72,751

61,49328,04528,459

414

50.1

43.9

39.0

41.5

2.5

Diff.

pt.

173,398

183,270

185,880

90,912

95,775

4,862

2,931

2,343

1,612

803

562

(241)

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

1.7

1.3

0.9

0.9

0.6(0.3)

Orders received for renewal construction(Consolidated)

93,33999,920101,11446,04753,6707,622

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

53.8

54.5

54.4

50.7

56.0

5.3

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

pt.

pt.

96,46896,32593,602

39,106*SANKI CONSTRUCTION ENGINEERING(SHANGHAI)CO.,LTD. ,unconsolidated subsidiary , is not included inorders received from overseas projects .

37,338(1,768)12

【Orders Received】
Main Major Projects Received○Major Projects Received
・Pharmaceutical Yokohama Research Institute(HVAC and Plumbing for Buildings) <New construction work>
・Narita International Airport Corporation, PTB 1 North Wing
in-line system refurbishment (BHS)(Transport facilities) <Renewal>

・Renovation work in Tsushima Clean Center(Waste treatment facilities) <Renovation>
・Waste Treatment Facilities with Energy Recovery Typein the Tenzan area
(Waste treatment facilities) <New construction, operation,and maintenance>
Four other projects*The property name is the name being used by the Company. This may differ from the name used on the construction contract. 13

【Orders Received】
Main Major Completed Construction Projects○Major Completed Construction Projects
・Saitama Sekishinkai Hospital, HVAC work for hospital relocation(HVAC work) <New construction work>
・Yokota Air Base Yokota High School, machinery work for reconstruction(HVAC and plumbing work) <New construction work>
・Nakanoshima Festival Tower West
(Office HVAC) <New construction work>
・Takamatsu Sunport Combined Government Offices (South building)(HVAC and plumbing work) <New construction work>
・NKC Nagai Green Power,
Wood Biomass Gasification Power Generation Facility(HVAC and Plant Systems) <New construction work>

One other project*The property name is the name being used by the Company. This may differ from the name used on the construction contract. 14

【Orders Received】
Major Projects Received over 1 Billion Yen (by Industry)
September 2015

September 2016

September 2017

Office231Factory

3

2

2

Hospital

1――

Research institute

1

―

1

11 Projects

8 Projects―

Waste processing facility

3Power station,
Substation―＊Orders received from
Customers : 3 Projects

1＊Orders received from
Customers : 5 Projects―＊Orders received from
Customers : 6 Projects

Water and sewage treatment
facility―＊Orders received fromgeneral contractors:8 Projects1＊Orders received fromgeneral contractors:2 Projects―＊Orders received fromgeneral contractors:2 Projects

Others――1School building, Lecture hall

1――

（19,091 million yen）―

7 Projects

Railway, Airport―

1（17,852 million yen）

2

（19,052 million yen）

15

【Profit】
Profit Improvement Factors and Measures○Improvement of the external environment○Thorough cost management○Developing site support systems
・Improved support for purchasing operations by the Procurement
Division (established in 2015)
・Expanded target of documentation support by theSite-Documentation Support Center (established in 2015)
・Expanded support for design work by the Design and Engineering
Support Center (established in 2016)
・ICT support at work sites (introduction of tablet devices to all sites)
・Quality audits by technical experts○Strengthening relationships with business partners
・Conducting the Liaison Meeting for subcontractor groups
・Implementing the Sanki Super Meister System
・Implementing the Sanki Best Partners System16

【Financial Conditions】
Balance Sheet (Consolidated)(Millions of yen)
End of
FY 2016

September
2017

Diff.

Rate ofchange(%)

September
2016

Current assets

114,906

100,231(14,675)(12.8)

95,581Noncurrent assets

51,70555,3783,672

7.1

49,851

Current liabilities

68,77658,349(10,426)(15.2)

53,359Noncurrent liabilities

11,875

12,790915

7.7

11,148

Total net assets

85,961

84,469(1,491)(1.7)

80,925

Total assets

166,612

155,609(11,002)(6.6)

145,433

Book-value per share (yen)1,350.08

1,367.78

17.70―

1,271.10

51.5

54.2

2.7

―

55.6

(3.0)

5,824

Equity ratio (%)

pt.

Interest-bearing liabilities(consolidated)

5,654

5,483

(171)

17【CF】
Statement of Cash Flows (Consolidated)
・The balance of cash and cash equivalents decreased from the end of the previous fiscal year (a slight increase year on year).
The increase in cash flows from operating activities was mainly due to the collection of receivables.
The decrease in cash flows from investing activities was mainly due to savings in time deposits.
The decrease in cash flows from financing activities was mainly due to the purchase of treasury stock and the payment of dividends.

(Millions of yen)
FY 2013

FY 2014

FY 2015

FY 2016

September2016

September
2017

Cash flows from operating
activities(9,403)

(139)

5,220

10,845

3,502

1,556

Cash flows from investing
activities(3,506)

3,440

5,520

(1,644)(397)(2,599)Cash flows from financing
activities(4,152)(2,901)(1,826)(2,458)(1,573)(3,813)

Cash and cash equivalents
at end of period

23,51023,66732,501

39,18733,93334,359

Capital investment(including intangible assets)

545

395

855

1,015

126

720

Depreciation andamortization

740

723

723

718

338

392

18

【Shareholder Returns】
Dividends and Others
・Interim dividends for FY2017 are 15 yen per share (interim dividends for FY2016 were 10 yen per share).
Annual dividends are scheduled to increase from 20 yen to 30 yen per share.

FY2013

FY2014FY2015FY2016

September2016（Forecast）

26.46

38.30

83.84

73.91

(1.51)

80.13

Cash dividends per share: regular dividends (yen)

15

15

18

20

1020

Cash dividends per share: commemorative
dividends (yen)

―

5―

――

―

Cash dividends per share: extra dividends (yen)

―

―

12105

1015

2030

30

1530

Payout ratio (consolidated) (%)

56.752.2

35.8

40.6

Number of shareholders at end of period

3,598

3,375

3,397

3,157

2,909

654

930

901

958

1,262

Acquisition of treasury stock (thousand shares)

4,000

2,000

―

―

1,955

Retirement of treasury stock (thousand shares)

4,800

3,000

―

―

3,000

ROE (Return on Equity) (%)

2.3

3.0

6.3

5.5

5.7

ROA (Return on Assets) (%)

1.9

2.2

4.7

4.1

4.6

Earnings per share (yen)Cash dividends per share (yen)Stock price at end of period (yen)FY 2017

37.4<Reference>19

【Overall Forecast】
FY2017 Full Year Forecast (Consolidated)
・There is no change to the initial forecast values from May 12, 2017.

(Millions of yen)

FY 2017 Forecast(as of November 10)
TotalOrders received

186,000

Net sales

180,000

Operating income

7,000

Ordinary income

7,500

Profit attributable to owners ofparent

5,000
20

【Forecast of Orders Received and Net Sales】
FY2017 Forecast of Orders Received andNet Sales by Segment (Consolidated)
FY 2017
Orders ReceivedForecast(as of November 10)

Segment(Millions of yen)
FY 2017
Net sales Forecast(as of November 10)

HVAC and Plumbing for Buildings65,700

69,700Industrial HVAC

51,00046,000Electrical Systems

22,00023,000

Facility Systems

9,500

9,500

148,200

148,200

Machinery Systems

12,00010,000

Environmental Systems

24,00020,00036,00030,000184,200

178,200

1,800

1,800

Others500500Adjustments*(500)(500)

186,000

180,000

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

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

21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 November 10,2017.
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 CommunicationsDepartment

 Risk in Regal regulation.

TEL：+81-3-6367-7041

 Outbreak of the natural disaster.

22