Message fromthe Chief Financial Officer
Now that we are able to secure profits consistently,
we will invest in growth toward the next era.

Director, Managing Executive Officer, General Managerof the Accounting Division, and Chief Financial Officer

Providing Stable and Continuous Returns toShareholders

Extending Current Investments into Future
Growth Drivers
As our efforts to enhance the Company’s quality and reliability
in Phases 1 and 2 have enabled us to consistently secure profits,
I believe that now is the right time to actively invest for thenext era. Specifically, we have set aside a total of 20 billion yen
for growth investment during Phase 3. Of this amount, in fiscal
2022, we invested 3.2 billion yen in growth, including the M&Aof a company with expertise in BIM. Looking ahead, we will
introduce solar power generation at Sanki Engineering Group
companies toward achieving carbon neutrality and promote

As for cash flow, despite fluctuations due to property
sales, we have secured adequate working capital. We also
have sufficient equity capital and are in position to provide
stable returns to shareholders. With due consideration forachieving the optimal capital structure, we will proceed
to implement our 20 billion yen investment and apply
leverage, depending on the nature of specific investments.

Simultaneously Improving Corporate, Social,and Environmental Value
Our most important management resource is our humanresources. Investment in human resources is essential for
extending our business beyond the technology and expertise
we have gained so far and achieving further development.

From the perspective of sharpening our competitive edge,
social investment is just as important as diligently working toachieve our performance targets for Phase 3. Given that SankiEngineering’s business is directly linked to decarbonizationand conservation of the global environment, we havedeclared that our mission is to improve corporate value
while also improving environmental and social value at thesame time. We will strive to achieve sustainable corporate
growth so as not to betray the stakeholder trust we havebuilt up over the years.

Message from the Chief Financial Officer

Phase 3 of the Medium-Term Management Plan “Century2025” was launched in fiscal 2022, and we have returned
profits to shareholders and invested in growth in linewith our new management targets. Fully aware that theongoing implementation of these measures will dependon posting stable profits, we will work to secure higher
profit margins by collaborating with each businessdepartment with due consideration to risks such as therecent surge in raw material prices.
With regard to our capital policy, providing stable
and continuous returns to stakeholders will remain a key
mission in fiscal 2023. While shareholder returns will still becentered on dividends, we will also systematically acquireand cancel treasury stocks by keeping an eye on the statusof profits and dividends. Additionally, we will constantly
seek to improve payment terms for our business partners.
In Phase 3, we set our ROE at 8.0%. In addition to
paying stable dividends and acquiring treasury stocks,
we will review our cross-shareholdings to improve theefficiency of our cost of capital. Gross profit is the mostimportant indicator for increasing our return on capital,
and in Phase 3, investments in growth will be made tofurther increase profit. Although our Price Book-value
Ratio is currently below 1x, these measures will be firmly
implemented and information will be actively disseminatedto raise public recognition of Sanki Engineering andimprove our stock price.

collaboration with startup companies in the Facility Systems
Business, which we have positioned as a growth business.

Growth Strategies and Sustainability Management

Yoshio Kawabe

Investments for theNext Era❶ ICT investment❷ H uman capital
investment❸ R&D investment❹ M&A investment

FY2022
Invest a total of
3.2 billion yen out of the20.0 billion yen growthinvestment budget for
the Phase 3 period❺ Capital investment

SANKI REPORT 2023

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