︱

Growth Strategies and Sustainability Management ︱Status of the Medium-Term Management Plan“Century 2025” Phase 3 (FY2022–2025)

FY2022 Results

Difference

Net sales

220.0 billion yen

190.8 billion yen­­­­–29.2 billion yen

Gross profit(ratio)36.0 billion yen (16.5%)

27.0 billion yen(14.2%)–9.0 billion yen(-2.3 pt)

Ordinary profit(margin)12.0 billion yen (5.5%)

6.2 billion yen(3.3%)–5.8 billion yen(-2.2 pt)

FY2022 Results

Ordinary profit
margin

5.0% or higher

3.3%

Dividend policy

Dividend payout ratioof 50% or more
Annual dividend per shareof 70 yen or more

Dividend payout ratio of 87.4%
Annual dividend per share of 75 yen

Acquisition oftreasury stock

About 5 million shares*

1.5 million shares (cumulative total of
1.5 million shares during the plan period)

8.0% or higher

5.1%

About 20.0 billion yen*

3.2 billion yen *Cumulative(cumulativetotal
totalduringof 3.2 thebillion
planyenperiodduring the plan period)

Enhance
Reliability

Promote Growth Strategies
Pursue future growth in the areas oftechnology and business

Enhance the Sanki Brand
Develop human resources thatpossess the Sanki spirit

FY

2016—2018• Improve construction productivity• Meet energy-saving and laborreduction needs• Promote technological research anddevelopment• Continue to receive orders for stockprojects• Create better work conditions• Improve internal communication

Disclose Financial andCapital Policies
Strengthen Information
Dissemination Capabilities

FY

2019—2021

Maturity and Evolution of Measures toEnhance Quality and Reliability

Further Pursue Quality

Refining Technical Skills andHuman Resources to Enhance Quality

Strengthen Core Businesses
Improve component technologies
and achieve stable growth

1 Strengthen Core Businesses

Measure2 Promote Growth Strategy

� Delivered an AI waste crane system to CleanHill Tenzan

Received many orders for large-scale urban redevelopment
projects and life cycle engineering* projects to build a legacy forthe future in semiconductor- and automobile-related fields*Sanki’s concept to target the entire life cycle of buildings

Facility Systems Business
Developing new services aimed at expanding capacity incollaboration with a startup company

Plants & Machinery Systems Business
Machinery Systems Business

Environmental Systems Business

Developed and launched newproducts targeting the logistics
market.

The AEROWING aeration system
for water treatment facilities is wellreceived worldwide.

Measures Carried Over from Phase 2

�P articipated in the Ministry of the Environment FY2022

Decarbonized Resource Recycling Business Demonstration
Project Utilizing Digital Technology�R eceived orders for energy-saving aeration systems for a largescale water treatment facility in Australia
�S elected for the Ministry of Land, Infrastructure, Transport andTourism FY2022 Breakthrough by Dynamic Approach in Sewage
High Technology Project FS**Feasibility study
Measure3 Enhance the Sanki Brand

�Continued to support environmental conservation in Antarctica� Launched the Earth MIRAI Project to explore new technologies
� Continued to support the Earthquake Recovery Project

Maturity and Evolution of Measures toEnhance Reliability

We will focus on further raising awareness of Sanki Engineering measures under Phase 2 to broaden the understandingof our stakeholders.
MeasureFinancial and
1 Disclose
Capital Policies

� P rovided stable and sustainable returns for

MeasureInformation
2 Strengthen
Dissemination Capabilities� I mplemented bus-wrap advertisingstakeholders

Becoming even more the companyof choice for stakeholders

3PhaseCompany of ChoiceLong-Term
Vision“Century 2025”*Cumulative total during the plan period

Phase 2

Enhance Quality

In Phase 3, we will continue to work on the three measures as we have done in Phase 1 and 2 to further improve quality.

New Measures from Phase 3

Enhance the Company’s Quality
and Reliability

Contribute to the Sustainabilityof Society

In Phase 3, which will mark the culmination of our long-term vision, we are implementing new measures for achieving
sustainable future growth.

Accelerate Work Style Reforms

MeasureInvest toward the Next Era

FY2022—2025

1 Contribute to the Sustainability of Society

�Strengthened the SANKI YOU Eco Contribution Point System
�Began supplying electricity sourced from renewable energy (solar power) for

the Sanki Techno Center and Yamato Product Center� Certified by CDP as an A List company
� Joined the Ministry of the Environment 30by30 Alliance for Biodiversity
� Established and disclosed the Sanki Engineering Group Human Rights Policy
Measure2 Accelerate Work Style Reforms

�Introduced a new personnel system, extending the retirement age to 65, actively

promoting young employees, and raising starting salaries

Measure3 Invest toward the Next Era

�Invested 3.2 billion yen out of the total four-year

Status of the Medium-Term Management Plan “Century 2025” Phase 3 (FY2022–2025)

Phase 3 Targets
FY2022–FY2025

Phase 1Maturity and Evolution of Measures toEnhance Quality

Facilities Construction Business

Phase 3 Targets
by FY2025

Growthinvestment

Measures Carried Over from Phase 1

MeasurePhase 3 Targets and First-Year Results

ROE

Status of Key Initiatives
Growth Strategies and Sustainability Management

Fiscal 2022 marked the start of the Medium-Term Management Plan “Century 2025” Phase 3 (FY2022–2025).
In this phase, we are working to achieve maturity and evolution for the Key Initiatives we have been implementing inPhases 1 and 2, while adding and promoting new measures for enhancing the Company’s quality and reliability.
Here we report on the status of Sanki Engineering’s initiatives as we strive ever harder to become the company ofchoice, the goal of our long-term vision.

investment budget of 20.0 billion yen.
�Engaged in M&A to promote BIM
�Decided on the construction of a clean room inside

the Yamato Product Center to develop clean roomproducts
�Positioned human capital investment, ICT investment,and R&D investment as investment toward the future�Made capital investments for decarbonization basedon Sanki’s carbon-neutral declaration

�Launched the new Career Return Program
�Renewed Company uniforms to create more comfortable working environments*The ESG Policy in Phase 2 has evolved into the Sustainability Policy in Phase 3.

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SANKI REPORT 2023

SANKI REPORT 2023

27

︱Growth Strategies and Sustainability Management ︱ Status of the Medium-Term Management Plan “Century 2025” Phase 3 (FY2022–2025)

Materiality and KPIs for Phase 3 (FY2022–2025)
Materiality

Contribute toa carbon-freesocietyPursuit ofhappiness forcolleagues

Use engineering
to build acomfortableenvironment
Create newsocial value

KPIs for Phase 3 (FY2022–2025)

FY2022 Results• Scope 1, 2 emissions: 40% reduction from FY2020 levels*• Scope 1, 2 emissions: 5.34kt-CO ₂ (34% reduction from FY2020 levels)• Scope 3 emissions: 10% reduction from FY2020 levels*• Scope 3 emissions: 3.93Mt-CO ₂ (36% reduction from FY2020 levels)• Reduce CO₂ emissions based on the SANKI YOU Eco Point system by anadditional 30% compared to the three-year average from FY2018 to FY2020*• 97% increase compared to the three-year average from FY2018 to FY2020• Rate of childcare leave taken: male 50%, female 100%•M ale 10.7% (44.6% by including Sanki Engineering’s own leave program),
female 100%

• Raise the ratio of women in managerial positions to 3.0% by April 2026

• 2.5% (as of April 2023)

Promotion of younger employees• Average age of managers (reduce by one year from average age levels as ofApril 2022 by April 2026): Manager 45.8, General Manager 50.2,
Executive Manager 53.5

•A
 verage age of managers (as of April 2023): Manager 46.4,
General Manager 51.8, Executive manager 54.1

• Monitoring based on employee satisfaction survey: maintain at least
a 90% ratio of respondents who wish to continue working at the SankiEngineering Group• Survey not conducted (FY2021 response ratio: 91.6%)• Respond to Japan’s revised Labor Standards Act in 2024

• Average additional work hours
Construction work: 42.2 hours per person (3.9% decrease from FY2021),
other work: 17.4 hours per person (3.9% decrease from FY2021)• Average number of paid leaves takenConstruction work: 10.6 days per person (8.2% increase from FY2021),
other work: 13.2 days per person (11.8% increase from FY2021)• A ttendance at corporate ethics training including human rights
issues: 100%*• Attendance at corporate ethics training: 99%• Implementation (market launch) of open innovation based researchoutcome : 5 projects• J oint research with universities and research institutions: 13 projects• Collaborative projects with private and venture enterprises: 19• Decide on a research field to be explored under the Earth MIRAI Project:
20 projects to be conducted in 4 years*• E mployee research applications: 122 projects (132 themes)

Contribute to society by supporting sports and the arts
• Sports: maintain 4 programs per year• Arts: maintain 2 programs per year• Support for cultural activities: maintain 1 program per year

• S ports: 10 programs• A rts: 2 programs• S upport for cultural activities: 1 program• Number of serious accidents: 0• Incidents involving suspension of production: 0• I mplement root-case analysis of problems and complaints within fiveyears following the completion of construction work: 100%
• Report on root-cause analysis: 4 times per year

• Number of serious accidents: 0• Incidents involving suspension of production: 0• P roblems and complaints within five years following the completion ofconstruction work: 42, of which root-case analysis implemented: 71%(12 continuations out of 30 incidents)• R eport on results of root-cause analysis made to the Quality Risk
Committee: 4 times per year• I mplement preventive measures to achieve zero accidents involving
suspension of operations• Creation of safety education materials reflecting accident tendencies: atleast 2 sets of materials each in the east and west regional blocks per year• Hold exchange between the east and west regional blocks: at least 2times a year

• A ccidents involving suspension of operations: 5• Creation of safety education materials: 2 sets of materials each for east
and west regional blocks• Cross-patrols between east and west regional blocks: 2 occasions• S afety education conducted for staff of subcontractors and supportingstaff: 100%

• S afety education conducted for staff of subcontractors and supporting
staff: 100%

• Develop digital and robotic technologies related to construction: 5projects per year• Actual cases of application of developed technology: 5 projects per year

• F Y2022 development themes: 6 projects•A ctual application of developed technology: 2 projects

Facilities
Construction
Business

Stable earnings and stronger business base

FacilitySystems
Business
Machinery
Systems
Business
EnvironmentalSystems
Business• Large-scale projects based on business headquarters system: 5• L arge-scale projects based on business headquarters system: 3• Orders received for consulting/facility engineering: 400 million yen• Orders received for consulting/facility engineering: 140 million yen• O rders received for projects related to NeWSICT (Next Work Style withICT): 500 million yen• Orders received for projects related to NeWSICT: 160 million yen• O rders received for project management and construction work
resulting from consulting and other sales approaches: 2.1 billion yen• Orders received for project management and construction work resulting
from consulting and other sales approaches: 1.08 billion yen• Net sales of robot systems: 5.0 billion yen (cumulative)• P roposals for facilities using robots: 14• N et sales of robot systems: 550 million yen• Orders received (cumulative): AEROWING: 3.6 billion yen, G3 decanter
centrifuge: 2.0 billion yen, fluidized bed incinerator: 2 units• O rders received (cumulative): AEROWING: 800 million yen, G3 decanter
centrifuge: 1 unit, fluidized bed incinerator: 0 units• AQUACONSULT: net sales of 1.2 billion yen• N et sales: 1.37 billion yenRaise labor productivity based on DX, Smile Plan, and other initiatives• A nnual work hours per person: 2,015 per year (reduction of 19 hours,• Annual work hours per person (hours per person per year): 1,951 (FY2025)
down 0.93% year on year)

Other• Investments for the next era (decarbonization technology, automationand labor-saving technologies, LCE business, DX): 20.0 billion yen*

• Total: 3.2 billion yen• Payout ratio: 50% or more*• Payout ratio: 87.4%• Annual dividend per share: 70 yen or more*• Annual dividend per share: 75 yen• A cquisition of treasury stock over the term of Phase 3: about 5,000,000shares*• Acquired 1,500,000 shares• ROE: 8.0% or more*• ROE: 5.1%
Note: KPIs with an asterisk are for the Sanki Engineering Group, while all others are non-consolidated.

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SANKI REPORT 2023