February 7 2019

Summary of Consolidated Financial Results for the Third Quarter of the Year Ending March 31, 2019

Company name:

SRA Holdings, Inc.
(URL: https://www.sra-hd.co.jp/)
Stock listing:Tokyo Stock Exchange
Code number:
3817
President:
Toru Kashima
For inquiries, please contact:
Toshiaki Kobayashi, General Manager, Finance Department, Administrative HeadquartersTel:(03)-5979-2666
Scheduled date of submission of quarterly securities report:
February 8, 2019
Scheduled commencement of dividend payment:
Quarterly Results Supplemental Materials
Yes
Quarterly Results Presentation MeetingNo

1. Consolidated results for the Third quarter of the fiscal year ending March 2019(from April 1, 2018 to December 31, 2018)(1) Consolidated Operating Results (cumulative total)(All amounts rounded down, % change YoY)
Profit attributable

Net Sales

Ordinary Profit

Operating Income

to owners of the parent

Third quarter of fiscal
2019
Third quarter of fiscal
2018

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

29,831

2.0

2,739

(0.7)

3,074

10.9

1,505

115.7

29,241

3.4

2,759

(2.2)

2,772

(10.6)

697(64.6)

Note：Comprehensive Income
Third quarter of fiscal 2019
Third quarter of fiscal 2018

Third quarter of fiscal
2019
Third quarter of fiscal
2018¥882million((34.2)%)¥1,340million(66.3%)

Net Income

Net Income

per Shareper Share after Dilution

Yen

Yen

122.09

-

56.96

56.65

(2) Consolidated Financial Position

Third quarter of fiscal
2019
Fiscal2018

Total Assets

Net Assets

Shareholders’ Equity Ratio

Millions of yen

Millions of yen%

35,561

20,98859.0

37,756

21,43856.6

Reference: Shareholders’ equity
Third quarter of fiscal 2019 : ¥20,972million
Fiscal 2018: ¥21,379million

2. Dividends
Dividend per Share
End of First QuarterEnd of Second QuarterEnd of Third Quarter

Year-end

Yen

Yen

Yen

Yen

Yen

―
―

40.00
40.00

―

70.00

110.00―65.00

105.00Fiscal 2018
Fiscal 2019
Fiscal 2019(forecast)

Note: Revision of dividend forecast in this quarter:

For the YearNo

70 yen of year-end dividend for FY 2018 includes 10 yen of memorial dividend for the 50th anniversary of business establishment.

3. Consolidated Earnings Forecast for Fiscal 2019(from April 1, 2018 to March 31, 2019)(% of change from FY 2018）

Net Sales

Operating Income

Profit attributable

Ordinary Profit

to owners of the parent

FY2019Net Income
per Share

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

40,000

1.5

4,400

5.4

4,400

(7.6)

2,800

35.9

227.13

Note: Revision of consolidated results forecast in this quarter:No

4. Others(1) Changes to significant subsidiaries during the current period :No(2) Application of simplified accounting and application of special accounting :(3) Changes in accounting principles and procedures, presentation, etc.
1. Changes caused by revision of accounting standards, etc. :2. Changes other than 1. above:
No

No

No

(4) Number of shares outstanding (common stock)
1. Number of shares outstanding (including treasury stock)
Third quarter of fiscal 2019:15,240,000 sharesFiscal 2018:15,240,000 shares
2. Number of treasury stock
Third quarter of fiscal 2019:
2,903,218 sharesFiscal 2018:
2,935,755 shares
3. Average number of shares over period (consolidated total for quarter)
Third quarter of fiscal 2019:12,327,534 shares
Third quarter of fiscal 2018:12,247,095 shares*Indication of quarterly review procedure implementation status
This earnings release is not subject to the quarterly review process as required by the Financial Instruments and Exchange Act of Japan.
As of the date when this earning release was issued, the review process on quarterly financial statements as required by the Financial
Instruments and Exchange Act had been finished.

*Explanation relating to the appropriate use of results forecasts, and other noteworthy items
Forward-looking statements in this earnings release, such as forecasts of results of operations, are based on the information currently
available and the certain assumptions that we regard as reasonable and therefore actual results may differ materially from those containedin or suggested by any forward-looking statements.

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 20191) Qualitative Information Concerning Third-Quarter Consolidated Business Results(1) Explanation Concerning Business Results
During the third quarter of the fiscal year (April 1, 2018 to December 31, 2018), the Japanese economy continued amoderate recovery amid a gradual increase in capital investment and an improvement in corporate earnings.
In the information services industry, despite an increase in IT investments, mainly by large and medium-sizedcompanies, the environment for securing orders remained severe due to intensifying competition.
Within this business environment, based on our Medium-Term Management Strategy, we will implement thefollowing key measures to enhance corporate and shareholder value, promote earnings structure reform andestablish a high-income model, while working to further enhance shareholder returns.

1) Improving profitability in existing operations• Further raise the gross profit margin
We are working to raise profitability by enhancing and strengthening project management, continuously reduce
production overhead costs, carry out SRA’s proprietary IP product business and promote the appropriate level ofproduction staff.
• Improve SG&A expenses-to-sales ratio
We will strive to raise operation efficiency by introducing an account manager system while working to reduce
operational costs of Head Office staff departments and SRA Professional Service, Co., Ltd., which handles a sharedservice.
• Expand orders and sales
Priority measures will be to increase customer share of wallet by deeply cultivating existing customers as well as tofocus on securing new customers in growth fields, and in doing so, we will work to expand orders and sales.

2) Transforming the SRA business model•We will work to promote a convergence between “SRA’s proprietary IP product business and higher added value inexisting operations.” At the same time, we will strive to provide SRA’s proprietary IP products and new services insuch growth sectors as the Internet of Things (IoT), mobile computing, security, cloud computing, Big Data andsocial networking technology fields.
3) Strengthening linkages between SRA’s proprietary IP product business and overseas operations•We intend to expand and upgrade the line of SRA’s proprietary IP products for growth fields as well as promotebusiness that targets overseas markets, which are growth markets.

Due to the above initiatives, our consolidated business results for the third quarter of the fiscal year were as
follows.

1

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2019

Sales of the Systems Development business, System Operations and Infrastructure Development business andProduct Sales business all increased. Therefore, consolidated net sales amounted to ¥29,831 million, a 2.0% increase
from the same period of the previous fiscal year.
At the profit level, gross profit increased as a result of a focus on measures to improve the profit margin.
However, operating income decreased 0.7% from the same period of the previous fiscal year to ¥2,739 million
owing to an increase in selling, general and administrative expenses due in part to the impact of selling expenses ofan overseas subsidiary that was newly incorporated into business results as a consolidated subsidiary from the third
quarter of the fiscal year. Ordinary profit increased 10.9% to ¥3,074 million and profit attributable to owners of theparent amounted to ¥1,505 million, a 115.7% increase from the same period of the previous fiscal year, as boththese profit categories posted increases.

A summary of consolidated business results for the third quarter by business segment is shown below.

1) Systems Development
The Systems Development business recorded increases in sales to manufacturing industries and the financial industry.
As a result, net sales increased 2.4% from the previous fiscal year to ¥15,880 million.

2) System Operations and Infrastructure Development
Orders from companies and university-related orders increased. As a result, net sales of the System Operations andInfrastructure Development business increased 3.8% from the previous fiscal year to ¥3,569 million.

3) Product Sales
SRA recorded a decrease in device sales but Advanced Integration Technology, Inc. posted an increase in device sales.
As a result, net sales of the Product Sales business increased 0.8% from the same period in the previous fiscal year to¥10,380 million.

(2) Explanation Concerning Financial Condition
Total assets at the end of the third quarter amounted to ¥35,561 million, a decrease of 5.8% from the end of theprevious fiscal year. Total liabilities decreased 10.7% from the end of the previous fiscal year to ¥14,573 million andnet assets decreased 2.1% to ¥20,988 million from the end of the previous fiscal year. Details of the principal increases
and decreases from the end of the previous fiscal year are as follows.

(Total Assets)
Short-term loans receivable increased ¥2,264 million to ¥2,680 million and investment securities increased ¥1,610
million to ¥10,964 million due to such factors as the purchase of shares of an affiliated company. On the other hand,
long-term loans receivable decreased ¥1,878 million to ¥1,301 million.

2

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2019

(Total Liabilities)
Advances received increased ¥623 million to ¥3,532 million. Conversely, provision for loss on
litigation decreased ¥1,198 million, short-term loans payable decreased ¥609 million to ¥570
million due to the repayment of bank loans, and income taxes payable decreased ¥490 million to ¥245
million owing to the payment of corporate income taxes.
(Total Net Assets)
Retained earnings increased ¥150 million to ¥17,515 million. On the other hand, valuation difference on availablefor-sale securities decreased ¥457 million to ¥196 million due to changes in the market prices of marketable andinvestment securities and foreign currency translation adjustment decreased ¥163 million to ¥282 million due tofluctuations in exchange rates.

(3) Explanation Concerning Consolidated Results Forecast and Other Future Projections
No revision has been made to the consolidated financial results forecast in Summary of Consolidated Financial
Results for the Year Ended March 31, 2018 released on May 10, 2018.

3

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2019

2. Consolidated Financial Statements(1) Consolidated Balance Sheets(Millions of Yen)
As of March 31, 2018

As of December 31, 2018ASSETS
Current assets:
Cash and deposits

7,629

4,100

Notes and accounts receivable—trade

6,932

6,178

Securities

108

45

Merchandise and finished goods

647

881

1,566

1,540

Short-term loans receivable

416

2,680

Accounts receivable—other

2,874

2,785

Other

1,922

848

Allowance for doubtful accounts
Total current assets(37)
22,061(19)
19,042

Buildings

376

391

Accumulated depreciation

(268)

(284)

Buildings, net

107

106

Machinery, equipment and vehicles

530

547

Accumulated depreciation

(491)

(505)

39

41

136

162

(91)

(103)

Other, net

4558

Total property, plant and equipment

192

207

1,310

1,603

1,310

1,603

Investment securities

9,353

10,964Long-term loans receivable

3,179

1,301

Deferred tax assets

2,211

1,812

Guarantee deposits

384

385

Net defined benefit asset

46

49

Other

555

222

(1,519)(9)Work in process

Non-current assets:
Property, plant and equipment

Machinery, equipment and vehicles,
net Other
Accumulated depreciation

Intangible assets
Other
Total intangible assets
Investments and other assets

Allowance for doubtful accounts
4

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2019

Allowance for investment loss

(19)

(17)

Total investments and other assets

14,191

14,708

Total non-current assets

15,695

16,519Total assets

37,75635,561

5

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2019

(Millions of Yen)
As of March 31, 2018

As of December 31, 2018

LIABILITIESCurrent liabilities:
Accounts payable-trade

2,871

3,219

Short-term loans payable

1,179

570

Accrued expenses

859

713

Income taxes payable

735

245

Accrued consumption taxes

506

423

Advances received

2,908

3,532

Provision for bonuses

565

542

Provision for directors’ bonuses

49

134

Provision for loss on construction contracts

780

334

1,198

－

294

417

11,94910,132

68

79

4,134

4,171

Provision for directors’ retirement benefits

165

174

Other

－

15

4,368

4,441

16,317

14,573

Capital stock

1,000

1,000

Capital surplus

4,671

4,701

Retained earnings

17,364

17,515

Treasury stock(2,437)(2,402)

Total shareholders’ equity

20,59820,814654

196

Foreign currency translation adjustment

445

282

Remeasurements of defined benefit plans

(319)

(321)

Total accumulated other comprehensive income

780

158

Provision for loss on litigation
Other
Total current liabilities
Non-current liabilities:
Deferred tax liabilities
Net defined benefit liability

Total non-current liabilities
Total liabilities
NET ASSETS
Shareholders’ equity

Accumulated other comprehensive income
Valuation difference
securitiesonavailable-for-sale

6

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 201959

15

Total net assets

21,43820,988

Total liabilities and net assets

37,75635,561

Share acquisition rights

7

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2019(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income(Quarterly Consolidated Statements of Income)(Consolidated Cumulative Total for Third Quarter)(Millions of Yen)
Nine months ended
December 31, 2017

Nine months ended
December 31, 2018

Net sales

29,241

29,831

Cost of sales

23,07023,261Gross profit

6,171

6,569

Selling, general and administrative expenses

3,411

3,830

Operating profit

2,759

2,739

Interest income

61

105

Dividend income

6345

Foreign exchange gains

86

194

Other

40

49

Total non-operating income

252

394

Interest expenses

30

31

Stock transfer agency service fee

14

13

Equity in losses of affiliates

185

－

9

14

239

58

2,772

3,074

245

13

Gain on reversal of share acquisition rights

1

54

Other

2

16

248

84

Loss on retirement of non-current assets

02

Provision of allowance for doubtful accounts

－

254

1,612

17

18

6

Total extraordinary losses

1,631

280

Profit before income taxes

1,389

2,878

Income taxes-current

1,044

762

Non-operating income

Non-operating expenses

Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of investment securities

Total extraordinary income
Extraordinary losses

Loss on litigation
Other

8

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2019

Income taxes-deferred

(353)

610

Total income taxes

691

1,373

Net Profit

697

1,505

Loss attributable to non-controlling interests(0)－

Profit attributable to owners of parent

697

1,505

9

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2019

(Quarterly Consolidated Statements of Comprehensive Income)(Consolidated Cumulative Total for Third Quarter)(Millions of Yen)

ProfitNine months ended

Nine months ended

December 31, 2017

December 31, 2018

697

1,505

Valuation difference on available-for-sale securities

621

(457)

Foreign currency translation adjustments

(33)

(165)

Remeasurements of defined benefit plans, net of tax

7(1)

Share of other comprehensive income of entities
accounted for using equity method

48

2Total other comprehensive income

642

(622)

1,340

882

Comprehensive income attributable to owners of theparent1,340

882

Comprehensive income attributable to non-controllinginterests(0)－

Other comprehensive income

Comprehensive income(breakdown)

10

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2019(3) Notes Concerning Consolidated Financial Statements for the Third Quarter(Notes Concerning Premise of Going Concern)
None(Notes on Significant Changes in Shareholders’ Equity)
None(Changes to significant subsidiaries during the current period)
None
There were no changes to specified subsidiaries. However, in the second quarter, Proxim Wireless Corporation,
which became a subsidiary due to the acquisition of an additional equity interest, is included in the scope of
consolidation.

(Additional information)
Adoption of the Partial Amendments to Accounting Standard for Tax Effect Accounting
The Company has adopted the Partial Amendments to Accounting Standard for Tax Effect Accounting (ASBJ
Statement No. 28, February 16, 2018) from the beginning of the first quarter of the current fiscal year. As a result,deferred tax assets are presented in investments and other assets and deferred tax liabilities are presented in
noncurrent liabilities.

11

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2019

(Segment Information and others)[Segment Information]
I. Consolidated cumulative total for third quarter of the previous fiscal year (April 1, 2017 to December 31, 2017)
1. Information concerning net sales and income or losses for each reporting segment(Millions of Yen)
AmountSystemOperations

Systems
Development

andInfrastructurerecorded on
Product
Sales

Adjustment

Total

amount*1

the quarterly
consolidated
statements ofDevelopment

income*2

Sales(1) Sales to
Customers

15,502

3,440

10,29829,241－

29,241

17

151

285

454

(454)

－

Total sales

15,5203,591

10,58329,696(454)

29,241

Segment income

2,406

860

668

3,934

(1,175)2,759(2) Intersegment
sales or transfers

Notes:
1. The segment income adjustment of minus ¥1,175 million is a company-wide expense not apportioned to any
reporting segment. Company-wide expenses are general and administrative expenses and R&D expenses not
attributed to any reporting segment.
2. Segment income is adjusted in operating income on the quarterly consolidated statements of income.

2. Information concerning impairment loss on fixed assets or goodwill for each reporting segment
None

12

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2019

II. Consolidated cumulative total for third quarter of the fiscal year under review (April 1, 2018 to December 31, 2018)
1. Information concerning net sales and income or losses for each reporting segment(Millions of Yen)
AmountSystemOperations

Systems
Development

andInfrastructurerecorded on
Product
Sales

Adjustment

Total

amount*1

the quarterly
consolidated
statements ofDevelopment

income*2

Sales(1) Sales to
Customers

15,8803,569

10,38029,831－

29,831

9

162

193

365

(365)

－

Total sales

15,890

3,732

10,57330,196(365)

29,831

Segment income

2,709

894

299

3,903

(1,164)

2,739(2) Intersegment
sales or transfers

Notes:
1. The segment income adjustment of minus ¥1,164 million is a company-wide expense not apportioned to any
reporting segment. Company-wide expenses are general and administrative expenses and R&D expenses not
attributed to any reporting segment.
2. Segment income is adjusted in operating income on the quarterly consolidated statements of income.

2. Information concerning impairment loss on fixed assets or goodwill for each reporting segment
None

13

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2019

(Significant subsequent events)
Not applicable

14

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2019

3. Other Information
1. Status of Production, Orders and Sales
 Production amounts
Production by segment in the third quarter of the fiscal year under review is as follows.
Segment information by type of business

Nine months ended% change YoY

December 31, 2018

Systems Development (Millions of Yen)

15, 888

97.8

System Operations and Infrastructure
Development (Millions of Yen)

3,641

104.7

Total (Millions of Yen)

19,53099.0

Notes:
1. Amounts are based on sales price.
2. The amounts above do not include consumption tax.
3. Intersegment transactions are offset.

 Purchase amounts
Purchases by segment in the third quarter of the fiscal year under review are as follows.
Segment information by type of business

Nine months ended% change YoY

December 31, 2018

Product Sales (Millions of Yen)

6,096

103.5

Total (Millions of Yen)

6,096

103.5

Notes:
1. Amounts are based on purchase price.
2. The amounts above do not include consumption tax.
3. Intersegment transactions are offset.

15

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2019

 Status of orders
Status of orders by segment in the third quarter of the fiscal year under review is as follows.
OrdersSegment information by type of businessreceived(Millions ofOrder backlog% change YoY(Millions of
Yen)

Yen)

% change
YoY

Systems Development

15,922

98.8

4,860

93.2

System Operations and Infrastructure
Development

2,803

103.7

1,423

111.5

Product Sales

10,180

101.7

3,388

116.6

Total

28,905

100.3

9,672

102.9

Notes:
1. Amounts are based on sales price.
2. The amounts above do not include consumption tax.
3. Intersegment transactions are offset.

 Sales amounts
Sales by segment in the third quarter of the fiscal year under review are as follows.
Segment information by type of business

Nine months ended% change YoY

December 31, 2018

Systems Development (Millions of Yen)

15,880102.4

System Operations and Infrastructure
Development (Millions of Yen)

3,569

103.8

Product Sales (Millions of Yen)

10,380100.8

Total (Millions of Yen)

29,831102.0

Notes:
1. Amounts are based on sales price.
2. The amounts above do not include consumption tax.
3. Intersegment transactions are offset.

16