February 9, 2017

Summary of Consolidated Financial Results for the Third Quarter of the Year Ending March 31, 2017
Company name:

SRA Holdings, Inc.
(URL: http://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 10, 2017―
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 2017(from April 1, 2016 to December 31, 2016)(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
2016
Third quarter of fiscal
2015

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

28,293

(0.9)

2,820

10.8

3,100

11.3

1,971

17.1

28,562

10.4

2,545

43.8

2,787

15.1

1,683

78.0

Note：Comprehensive Income
Third quarter of fiscal 2016
Third quarter of fiscal 2015

Third quarter of fiscal
2016
Third quarter of fiscal
2015¥806 million ((54.1)%)¥1,756 million (11.5%)

Net Income

Net Income

per Shareper Share after Dilution

Yen

Yen

162.53161.78139.56138.79(2) Consolidated Financial Position

Third quarter of fiscal
2016
Fiscal 2015

Shareholders’ Equity Ratio

Total Assets

Net Assets

Millions of yen

Millions of yen%

33,062

18,76156.6

31,823

18,81959.0

Reference: Shareholders’ equity
Third quarter of fiscal 2016: ¥18,724 million
Fiscal 2015: ¥18,789 million

12. Dividends
Dividend per Share

Fiscal 2015
Fiscal 2016

End of First QuarterEnd of Second QuarterEnd of Third Quarter

Year-end

Yen

Yen

Yen

Yen

Yen

―
―

25.00
30.00

―

45.00

70.00

―

55.00

85.00

Fiscal 2016(forecast)
Note: Revision of dividend forecast in this quarter:

For the YearNo

3. Consolidated Earnings Forecast for Fiscal 2016 (from April 1, 2016 to March 31, 2017)(% of change from FY2015）

Net Sales

FY2016

Operating Income

Ordinary Profit

Profit attributable

Net Income

to owners of the parent

per Share

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

40,000

2.2

3,940

5.4

4,125

7.1

2,667

475.2

219.82

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

Yes

(4) Number of shares outstanding (common stock)
1. Number of shares outstanding (including treasury stock)
Third quarter of fiscal 2016: 15,240,000 sharesFiscal 2015:15,240,000 shares
2. Number of treasury stock
Third quarter of fiscal 2016: 3,094,575 sharesFiscal 2015:
3,113,555 shares
3. Average number of shares over period (consolidated total for quarter)
Third quarter of fiscal 2016: 12,132,906 shares
Third quarter of fiscal 2015: 12,063,766 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.

2

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2017

1. Qualitative Information Concerning Third-Quarter Consolidated Business Results(1) Explanation Concerning Business Results
During the third quarter of the fiscal year (April 1, 2016 to December 31, 2016), the Japanese economy continued amoderate recovery, as corporate earnings trended at a high level although improvements stagnated, and capital
investment also picked up. In the information services industry, despite a moderate increase in IT investments, theenvironment for securing orders remained severe due to intensifying competition.
Within this business environment, the SRA Holdings Group formulated a Medium-Term Management Strategy
that covers the three-year period from fiscal 2015 through fiscal 2017 (from the fiscal year ending March 2016 to thefiscal year ending March 2018). Under this plan, we will seek to enhance corporate and shareholder value, promoteearnings structure reform and establish a high-income model, while working to further enhance shareholder returns.
Accordingly, we will implement the following measures under the Medium-Term Management Strategy. (For asummary of the Medium-Term Management Strategy, please refer to Announcement of Medium-Term Management
Strategy released on June 24, 2015 http://www.sra-hd.co.jp/Portals/0/ir/english/mng_strategy.pdf).

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 and carry out SRA’s proprietary IP product business. As a result, the gross profit marginrose to an all-time high of 20.8% for the third quarter.
• 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.
・Raise the operating income ratio
Along with the rise in the gross profit margin, the operating income ratio reached an all-time high of 10.0% for thethird quarter.
• Expand orders and sales
A priority measure will be to increase customer share of wallet by deeply cultivating existing customers, and in doing
so, we will work to expand orders and sales.
2) Transforming the SRA business model• The SRA Group will leverage its high technological capabilities and solid track record in manufacturing/embedding
development, cloud computing and open source software and will combine these areas to promote new business in
the Internet of Things (IoT) field beginning with in-vehicle software.
Additionally, Software Research Associates, Inc. (SRA), SRA AMERICA, INC. and SRA (Europe) B.V. arejointly developing solutions in wearables, one field within IoT, and began providing proposals to customers in Japanand overseas.

3

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 20173) Strengthening linkages between SRA’s proprietary IP product business and overseas operations• We raised SRA’s gross profit margin sharply by promoting proprietary IP product business in the Product Sales
business, which up until now has a low gross profit margin compared with the Systems Development business andthe System Operations and Infrastructure Development business. “Qt” (GUI application framework), which boasts anextensive track record in car navigation systems, OA equipment and other devices and applications, recorded growthin both sales and profits. In the future, the SRA Group will leverage its strengths in “embedded” development and in“Qt” to promote SRA’s proprietary IP product business.
Due to the above initiatives, our consolidated business results for the third quarter of the fiscal year were as
follows.
Despite an increase in sales of the System Operations and Infrastructure Development business, sales of the
Systems Development business and the Product Sales business decreased. As a result, consolidated net sales
amounted to ¥28,293 million, a 0.9% decrease from the same period of the previous fiscal year.
At the profit level, thanks to an increase in gross profit accompanying an improvement in the profit margin,
operating income rose 10.8% from the same period of the previous fiscal year to ¥2,820 million, ordinary profit
increased 11.3% from the same period of the previous fiscal year to ¥3,100 million and profit attributable to ownersof the parent rose 17.1% from the same period of the previous fiscal year to ¥1,971 million.
As detailed above, we recorded an increase in profits compared with the same period of the previous fiscal year
and consolidated results for the third quarter moved virtually in line with our forecast.
Additionally, operating income, the operating income ratio, ordinary profit, the ordinary profit ratio and profit
attributable to owners of the parent all reached record highs for the third quarter.

A summary of consolidated business results for the third quarter by business segment is shown below.
1) Systems Development
Although the Systems Development business recorded increases in sales to some manufacturing industries, sales tobanks and securities companies decreased. As a result, net sales decreased 2.2% from the same period of the previous
fiscal year to ¥14,285 million.
2) System Operations and Infrastructure Development
Although university-related sales were flat, sales to companies increased. As a result, net sales of the System
Operations and Infrastructure Development business increased 7.3% from the same period of the previous fiscal yearto ¥3,161 million.
3) Product Sales
Despite an increase in package sales by SRA, device sales by Advanced Integration Technology, Inc. decreased. As aresult, net sales of the Product Sales business decreased 1.4% from the same period of the previous fiscal year to¥10,846 million.
(2) Explanation Concerning Financial Condition
Total assets at the end of the third quarter amounted to ¥33,062 million, an increase of 3.9% from the end of theprevious fiscal year. Total liabilities increased 10.0% from the end of the previous fiscal year to ¥14,300 million andnet assets decreased 0.3% to ¥18,761 million from the end of the previous fiscal year. Details of the principal
4

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2017

increases and decreases from the end of the previous fiscal year are as follows.
(Total Assets)
Investment securities increased ¥2,221 million to ¥7,967 million due to the purchase of shares of an affiliatedcompany. Work in process increased ¥640 million to ¥2,028 million due to such factors as a rise in contracted
development projects and long-term loans receivable increased ¥606 million to ¥2,544 million. On the other hand,notes and accounts receivable—trade decreased ¥1,362 million to ¥5,521 million due to the collection of tradereceivables and short-term investment securities declined ¥419 million to ¥90 million due to the redemption of
investment bonds and other factors.
(Total Liabilities)
Other increased ¥1,883 million to ¥3,183 million due to an increase in advances received. On the other hand, income
taxes payable decreased ¥272 million to ¥507 million owing to the payment of corporate income taxes and accounts
payable—trade decreased ¥228 million to ¥3,060 million due to an increase in the payment of trade payables.
(Total Net Assets)
Retained earnings increased ¥1,062 million to ¥15,852 million. On the other hand, valuation difference on
available-for-sale securities decreased ¥721 million to ¥270 million due to changes in the market prices of marketable
and investment securities. Foreign currency translation adjustments decreased ¥450 million to ¥6 million.
(3) Explanation Concerning Consolidated Results Forecast and Other Future Projections
No revision has been made to forecasts in Summary of Consolidated Financial Results for the Year Ending March 31,2017 released on May 16, 2016.

2. Summary Information (Notes)(1) Significant changes involving subsidiaries during the period: None
There were no significant changes to specified subsidiaries. However, as of the second quarter, Hackett Enterprises
Limited was included as an affiliated company accounted for by the equity method because SRA, a subsidiary of theCompany, acquired a partial equity interest in Hackett Enterprises Limited.
(2) Application of simplified accounting methods and accounting methods specific to the preparation of the quarterly
consolidated financial statements: None
(3) Changes in accounting principles, changes in accounting estimates and restatements(Application of Practical Solution for a Change in Depreciation Method Due to Tax Reform 2016)
Effective beginning in the first quarter of the fiscal year ending March 31, 2017, SRA has adopted the “Practical
Solution for a Change in Depreciation Method Due to Tax Reform 2016 (PITF No. 32 of June 17, 2016)”
accompanying the revision of the Corporation Tax Act. Accordingly, the Company changed its depreciation method
for structures and facilities attached to buildings acquired on and after April 1, 2016 from the declining-balancemethod to the straight-line method. The impact of this change on third quarter consolidated financial results is
minimal.

5

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2017(4)Additional information(Adoption of Guidance on Recoverability of Deferred Tax Assets)
Effective from the first quarter of the fiscal year ending March 31, 2017, the Company has adopted the“Implementation Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No. 26 of March 28, 2016).”

6

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2017

3. Consolidated Financial Statements(1) Consolidated Balance Sheets(Millions of Yen)FY2016(as of December 31, 2016)

FY2015(as of March 31, 2016)
ASSETS
Current assets:
Cash and deposits

8,813

6,619

Notes and accounts receivable—trade

6,884

5,521

Short-term investment securities

509

90

Merchandise and finished goods

751

718

1,387

2,028

Short-term loans receivable

139

457

Accounts receivable—other

2,641

2,655

Deferred tax assets

569

479

Other

528

1,570

Allowance for doubtful accounts

(19)

(16)

22,204

20,124

Buildings

334

330

Accumulated depreciation

(251)

(249)

Buildings, net

82

80

Machinery, equipment and vehicles

555

509

Accumulated depreciation

(509)

(466)

Machinery, equipment and vehicles, net

46

42

Other

114

125

Accumulated depreciation

(83)

(78)

Other, net

31

47

Total property, plant and equipment

160

170

55

36

1,061

1,289

1,117

1,325

Investment securities

5,746

7,967

Long-term loans receivable

1,937

2,544

Deferred tax assets

1,005

1,337

Guarantee deposits

338

326

Net defined benefit asset

46

48

Other

565

559

Allowance for doubtful accounts(1,282)(1,324)

Allowance for investment loss

(16)

(17)

Work in process

Total current assets
Noncurrent assets:
Property, plant and equipment

Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets

7

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2017

Total investments and other assets

8,341

11,442

Total noncurrent assets

9,619

12,938

Total assets

31,82333,0628

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2017

(Millions of Yen)FY2016(as of December 31, 2016)

FY2015(as of March 31, 2016)
LIABILITIESCurrent liabilities:
Accounts payable—trade

3,288

3,060

Short-term loans payable

1,179

1,179

Accrued expenses

811

754

Income taxes payable

779

507

Accrued consumption taxes

507

392

Provision for bonuses

559

421

Provision for directors’ bonuses

60

129

Provision for loss on construction contracts

415

443

5

–

Other

1,300

3,183

Total current liabilities

8,906

10,072

–

2

3,953

4,076

144

148

4,097

4,228

13,00414,300Capital stock

1,000

1,000

Capital surplus

4,524

4,542

Retained earnings

14,79015,852

Treasury stock(2,628)(2,607)

Total shareholders’ equity

17,686

18,787

Valuation difference on available-for-sale securities

992

270

Foreign currency translation adjustments

457

6

Remeasurements of defined benefit plans

(347)

(340)

Total accumulated other comprehensive income

1,102

(63)

30

37

Total net assets

18,81918,761

Total liabilities and net assets

31,82333,062

Asset retirement obligations

Noncurrent liabilities:
Deferred tax liabilities
Net defined benefit liability
Provision for directors’ retirement benefits
Total noncurrent liabilities
Total liabilities
NET ASSETS
Shareholders’ equity

Accumulated other comprehensive income

Subscription rights to shares

9

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2017(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income(Quarterly Consolidated Statements of Income)(Consolidated Cumulative Total for Third Quarter)
Consolidated cumulative
total for third quarter offiscal 2015 (from April 1,2015 to December 31,
2015)
28,562(Millions of Yen)
Consolidated cumulative
total for third quarter offiscal 2016 (from April
1, 2016 to December 31,
2016)
28,293

Cost of sales

23,33522,420Gross profit

5,227

5,873

Selling, general and administrative expenses

2,681

3,053

Operating income

2,545

2,820

Interest received

167

61

Dividends received

33

26

Foreign exchange gains

6

194

Guarantee commission received

6

–

Other

61

45

Total non-operating income

276

329

Interest expenses

1930

Stock transfer agency service fee

14

13

Other

0

5

Total non-operating expenses

34

48

2,787

3,100

20

0

securities

–

3

Other

1

–

Total extraordinary income

223

Loss on retirement of noncurrent assets

01

Loss on valuation of investment securities

87–

Loss on valuation of golf club membership–

9

Provision for allowance for investment loss

–

3

Other

2

0

Total extraordinary loss

89

14

Income before income taxes

2,719

3,089

Income taxes-current

893

1,043

Income taxes-deferred

142

73

1,035

1,117

Net sales

Non-operating income

Non-operating expenses

Ordinary profit
Extraordinary income
Gain on sales of investment securities
Reversal of loss on valuation of investment

Extraordinary loss

Total income taxes
10

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2017

Net income

1,683

1,971

Profit attributable to owners of the parent

1,683

1,971

11

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2017

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

Consolidated cumulative

total for third quarter of

total for third quarter offiscal 2015 (from April 1,

fiscal 2016 (from April 1,2015 to December 31,

2016 to December 31,

2015)

2016)

Net income

1,683

1,971

118

(721)

(53)

(450)

Remeasurements of defined benefit plans, net of tax

7

6

Total other comprehensive income

72(1,165)

1,756

806

1,756

806

－

－

Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustments

Comprehensive income(breakdown)Comprehensive income attributable to owners of
the parent
Comprehensive income attributable tonon-controlling interests

12

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2017(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(Segment Information and others)[Segment Information]
I. Consolidated cumulative total for third quarter of fiscal 2015 (from April 1, 2015 to December 31, 2015)
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

14,612

2,945

11,00428,562－

28,562

12

226

250

489

(489)

－

Total sales

14,624

3,172

11,25429,052(489)

28,562

Segment income

1,790

669

996

3,455

(910)

2,545

(2) Intersegment
sales ortransfers

Notes:
1. The segment income adjustment of minus ¥910 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, 2017

II. Consolidated cumulative total for third quarter of fiscal 2016 (from April 1, 2016 to December 31, 2016)
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

14,285

3,161

10,84628,293－28,293

11

164

265

440

(440)

－

Total sales

14,296

3,325

11,112

28,734(440)

28,293

Segment income

2,193

745

953

3,892

(1,072)2,820(2) Intersegment
sales ortransfers

Notes:
1. The segment income adjustment of minus ¥1,072 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(Significant subsequent events)
None

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SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2017

4. Other Information
1. Status of Production, Orders and Sales
 Production amounts
Production by segment in the third quarter of the fiscal year ending March 31, 2017 is as follows.
Consolidated cumulative total for
Segment information by type of businessthird quarter of fiscal 2016 (from
April 1, 2016 to December 31,% change YoY

2016)
Systems Development (Millions of Yen)
System Operations and Infrastructure
Development (Millions of Yen)
Total (Millions of Yen)

14,947

97.5

3,213

108.8

18,16099.3

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 ending March 31, 2017 are as follows.
Consolidated cumulative total for
Segment information by type of businessthird quarter of fiscal 2016 (from
April 1, 2016 to December 31,% change YoY

2016)
Product Sales (Millions of Yen)

6,460

100.5

Total (Millions of Yen)

6,460

100.5

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, 2017

 Status of orders
Status of orders by segment in the third quarter of the fiscal year ending March 31, 2017 is as follows.
Orders received
Segment information by type of business(Millions ofOrder backlog% change YoY

Yen)
Systems Development(Millions of% change YoY

Yen)

15,053

97.5

5,343

101.9

2,646

122.7

1,106

135.2

Product Sales

10,978

111.9

3,279

102.8

Total

28,678

104.6

9,729

105.2

System Operations and Infrastructure
Development

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 ending March 31, 2017 are as follows.
Consolidated cumulative total for
Segment information by type of businessthird quarter of fiscal 2016 (from
April 1, 2016 to December 31,% change YoY

2016)
Systems Development (Millions of Yen)

14,285

97.8

3,161

107.3

Product Sales (Millions of Yen)

10,846

98.6

Total (Millions of Yen)

28,293

99.1

System Operations and Infrastructure
Development (Millions of Yen)

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

16