November 9 2017

Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2018

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:
November 9, 2017
November 30, 2017
Scheduled commencement of dividend payment:
Quarterly Results Supplemental Materials
Yes
Quarterly Results Presentation MeetingYes

1. Consolidated results for the Second quarter of the fiscal year ending March 2018(from April 1, 2017 to September 30, 2017)(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
Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

20,002

6,1

1,768

(0.7)

1,736

17.7

1,154

23.6

18,850

4.4

1,781

15.8

1,476

(11.7)

933(3.3)

Note：Comprehensive Income
Second quarter of fiscal 2018
Second quarter of fiscal 2017

¥1,822million(-%)¥(93)million(-%)

Second quarter of fiscal
2018
Second quarter of fiscal
2017

Second quarter of fiscal
2018
Second quarter of fiscal
2017

Net Income

Net Income

per Shareper Share after Dilution

Yen

Yen

94.33

93.87

76.98

76.65

(2) Consolidated Financial Position

Second quarter of fiscal
2018
Fiscal2017

Shareholders’ Equity Ratio

Total Assets

Net Assets

Millions of yen

Millions of yen%

36,223

20,872

57.5

34,781

19,674

56.5

Reference: Shareholders’ equity
Second quarter of fiscal 2018 : ¥20,838million
Fiscal 2017: ¥19,640million

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

Year-end

Yen

Yen

Yen

Yen

Yen

―
―

30.00
40.00

―

60.00

90.00

―

70.00

110.00Fiscal 2017
Fiscal 2018
Fiscal 2018(forecast)

Note: Revision of dividend forecast in this quarter:

For the YearNo

60 yen of year-end dividend for FY 2017 includes 5 yen of special dividend,
and 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 2018(from April 1, 2017 to March 31, 2018)(% of change from FY 2017）

Net Sales

Operating Income

Profit attributable

Ordinary Profit

to owners of the parent

FY2018Net Income
per Share

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

40,500

3.5

4,155

(0.6)

4,155

(1.3)

2,611

(1.4)

213.36

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)
Second quarter of fiscal 2018:15,240,000 sharesFiscal 2017:15,240,000 shares
2. Number of treasury stock
Second quarter of fiscal 2018:
2,976,868 sharesFiscal 2017:
3,036,175 shares
3. Average number of shares over period (consolidated total for quarter)
Second quarter of fiscal 2018:12,237,255 sharesFirst quarter of fiscal 2017:12,130,716 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 Second-Quarter Consolidated Financial Results for the Year Ending March 31, 20181) Qualitative Information Concerning Second-Quarter Consolidated Business Results(1) Explanation Concerning Business Results
During the second quarter of the fiscal year (April 1, 2017 to September 30, 2017), the Japanese economy continued
a moderate recovery due to an improvement in corporate earnings and a pickup in capital investment.
In the information services industry, despite an increase in IT investments, mainly in manufacturing industries,
the environment for securing orders remained severe due to intensifying competition.
Within this business environment, the SRA Holdings Group formulated a Medium-Term Management Strategy.
Under this medium-term strategy, we will seek to enhance corporate and shareholder value, promote earnings
structure reform and establish 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
A priority measure will be to increase customer share of wallet by deeply cultivating existing customers, and indoing 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
in existing operations.” At the same time, we will strive to provide SRA’s proprietary IP products and new services
in such growth sectors as the Internet of Things (IoT), mobile computing, security, cloud computing, Big Data andsocial 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.

3

SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018

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

Sales of the Systems Development business, System Operations and Infrastructure Development business andProduct Sales business all increased. Therefore, consolidated net sales amounted to ¥20,002 million, a 6.1%
increase from the same period of the previous fiscal year.
At the profit level, although operating income declined 0.7% from the same period of the previous fiscal year to¥1,768 million, ordinary profit increased 17.7% from the same period of the previous fiscal year to ¥1,736 million
and profit attributable to owners of the parent increased 23.6% from the same period of the previous fiscal year to¥1,154 million.
Regarding consolidated business results for the second quarter, net sales, operating income andprofit attributable to owners of the parent exceeded our forecast and net sales, gross profit andordinary profit reached all-time highs for the second quarter.
A summary of consolidated business results for the second quarter by business segment is shown below.
1) Systems Development
The Systems Development business recorded increases in sales to some manufacturing industries. As a result, net
sales increased 6.4% from the previous fiscal year to ¥10,115 million.

2) System Operations and Infrastructure Development
Orders from companies increased sharply. As a result, net sales of the System Operations and Infrastructure
Development business increased 11.8% from the previous fiscal year to ¥2,281 million.

3) Product Sales
Device sales by Advanced Integration Technology, Inc. increased. As a result, net sales of the Product Sales
business rose 4.2% from the previous fiscal year to ¥7,605 million.

(2) Explanation Concerning Financial Condition
Total assets at the end of the second quarter amounted to ¥36,223 million, an increase of 4.1% from the end of theprevious fiscal year. Total liabilities increased 1.6% from the end of the previous fiscal year to ¥15,351 million andnet assets increased 6.1% to ¥20,872 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)
Investment securities increased ¥844 million to ¥8,574 million due to such factors as the purchase of shares of an

4

SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018affiliated company. Work in process increased ¥584 million to ¥2,024 million due to such factors as a rise incontracted development projects. Long-term loans receivable increased ¥442 million to ¥3,391 million. On the other
hand, notes and accounts receivable—trade decreased ¥637 million to ¥6,776 million due to the collection of tradereceivables. Long-term deferred tax assets decreased ¥308 million to ¥1,105 million.

(Total Liabilities)
Accounts payable—trade increased ¥393 million to ¥3,635 million due to an increase in trade payables. Advances

received increased ¥274 million to ¥2,943 million. On the other hand, income taxes payable decreased ¥378 million
to ¥677 million owing to the payment of corporate income taxes.

(Total Net Assets)
Valuation difference on available-for-sale securities increased ¥714 million to ¥818 million due to changes in themarket prices of marketable and investment securities. Retained earnings increased ¥422 million to ¥16,949 million.
On the other hand, foreign currency translation adjustments decreased ¥50 million to ¥263 million due tofluctuations in exchange rates.

(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 11, 2017.

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SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018

3. Consolidated Financial Statements(1) Consolidated Balance Sheets(Millions of Yen)
As of March 31, 2017

As of September 30, 2017

ASSETS
Current assets:
Cash and deposits

6,794

7,110

Notes and accounts receivable—trade

7,414

6,776

Short-term investment securities

126

161

Merchandise and finished goods

609

536

1,439

2,.024

Short-term loans receivable

412

435

Accounts receivable—other

2,644

2,968

646

638

Other

1,475

1,377

Allowance for doubtful accounts

(17)

(17)

21,54522,011

Buildings

360

369

Accumulated depreciation

(253)

(260)

Buildings, net

106

108

Machinery, equipment and vehicles

510

519

Accumulated depreciation

(469)

(479)

Machinery, equipment and vehicles, net

41

40

Other

129

135

Accumulated depreciation

(82)

(85)

Other, net

46

49

Total property, plant and equipment

194

198

27

13

1,265

1,311

1,293

1,325

Investment securities

7,729

8,574

Long-term loans receivable

2,948

3,391

Deferred tax assets

1,413

1,105

Work in process

Deferred tax assets

Total current assets
Noncurrent assets:
Property, plant and equipment

Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets

6

SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018

Guarantee deposits

377

378

Net defined benefit asset

46

47

Other

559

559

Allowance for doubtful accounts(1,308)(1,347)

Allowance for investment loss

(19)

(19)

Total investments and other assets

11,747

12,688

Total noncurrent assets

13,235

14,212

Total assets

34,781

36,2237

SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018

(Millions of Yen)
As of March 31, 2017

As of September 30, 2017

LIABILITIESCurrent liabilities:
Accounts payable—trade

3,242

3,635

Short-term loans payable

1,179

1,179

950

702

1,056

677

467

341

Advances received

2,669

2,943

Provision for bonuses

598

655

Provision for directors’ bonuses

97

89

Provision for loss on construction contracts

419

520

Other

167

261

10,84911,007

5

11

4,097

4,166

154

166

4,257

4,344

15,107

15,351

Capital stock

1,000

1,000

Capital surplus

4,589

4,633

Retained earnings

16,527

16,949Treasury stock(2,545)(2,481)

Total shareholders’ equity

19,571

20,101

Valuation difference on available-for-sale securities

103

818

Foreign currency translation adjustments

313

263

Remeasurements of defined benefit plans

(349)

(344)

68

736

34

34

Total net assets

19,67420,872

Total liabilities and net assets

34,781

36,223

Accrued expenses
Income taxes payable
Accrued consumption taxes

Total current liabilities
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

Total accumulated other comprehensive income
Subscription rights to shares

8

SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive
Income(Quarterly Consolidated Statements of Income)(Consolidated Cumulative Total for Second Quarter)(Millions of Yen)
Six months ended
September 30, 2016

Six months ended
September 30, 2017

Net sales

18,85020,002

Cost of sales

15,044

15,949Gross profit

3,805

4,053

Selling, general and administrative expenses

2,024

2,285

Operating income

1,781

1,768

Interest received

47

36

Dividends received

15

42

Refunded consumption taxes–

8

Foreign exchange gains

–

61

Other

36

18

Total non-operating income

98

168

8

19

374

–

Stock transfer agency service fee

89Equity in losses of affiliates

–

129

Other

12

42

Total non-operating expenses

403

200

1,476

1,736

Gain on sales of investment securities

0

279

Other

–

1

Total extraordinary income

0280

Loss on retirement of noncurrent assets

00Loss on sales of investment securities–

66

Loss on valuation of golf club membership

9

–

Other

0

0

Non-operating income

Non-operating expenses
Interest expenses
Foreign exchange losses

Ordinary profit
Extraordinary income

Extraordinary loss

9

SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018

Total extraordinary loss

1067

Income before income taxes

1,465

1,949

Income taxes-current

499

792

Income taxes-deferred

32

2Total income taxes

531

795

Net income

933

1,154

–

(0)

933

1,154

Profit (loss) attributable to non-controlling interests
Profit attributable to owners of the parent

10

SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018

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

Net income

Six months ended

Six months ended

September 30, 2016

September 30, 2017

933

1,154

(751)

714

(279)

(73)

Remeasurements of defined benefit plans, net of tax

4

4

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

22(1,027)

668

(93)

1,822

(93)

1,822

－

(0)

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

Total other comprehensive income
Comprehensive income(breakdown)Comprehensive income attributable to owners of theparentComprehensive income attributable to non-controllinginterests

11

SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018(3) Quarterly Consolidated Statements of Cash Flows(Millions of Yen)
Six months ended
September 30, 2016

Six months
ended September
30, 2017

1,465

1,949

Depreciation and amortization

203

229

Amortization of goodwill

12

13

Increase (decrease) in net defined benefit liability

85

69

(0)

11

Increase (decrease) in provision for bonuses

93

56

Increase (decrease) in provision for directors’ bonuses

25

(7)

Increase (decrease) in allowance for doubtful accounts

(2)

33

Increase (decrease) in allowance for investment loss

2

1

(62)

(79)

Interest expenses

8

19

Loss (gain) on valuation of investment securities–

66

Loss (gain) on sales of investment securities

(0)

(278)

Loss on retirement of noncurrent assets

00Decrease (increase) in notes and accounts receivable—trade

789

630

Decrease (increase) in inventories

(348)

(510)

Increase (decrease) in notes and accounts payable—trade

214

394

Increase (decrease) in other liabilities

1,337

141

Increase (decrease) in accrued consumption taxes

(222)

(126)

Other, net

115

195

Subtotal

3,717

2,809

Interest and dividends income received

29

72

Interest expenses paid

(8)

(19)

Income taxes paid

(755)

(1,389)Net cash provided by operating activities

2,982

1,472

(31)

(58)

0

–

Purchase of intangible assets

(89)

(209)

Purchase of investment securities

(93)

(767)

Net cash provided by (used in) operating activities:
Income before income taxes and minority interests

Increase (decrease) in provision for directors’ retirement
benefits

Interest and dividend income

Net cash provided by (used in) investing activities:
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment

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SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018

Proceeds from sales of investment securities

310

1,054

Purchase of stocks of subsidiaries and affiliates(3,500)–

Payments of loans receivable(1,124)(939)

Collection of loans receivable

348

517

Payments into time deposits

(80)

(150)

Payments for guarantee deposits(0)–Proceeds from collection of guarantee deposited

1

0

Other, net

(0)

(0)

(4,260)(554)

Proceeds from stock issuance to non-controlling shareholders

20

Purchase of treasury stock

(0)

(0)

(545)

(732)

Proceeds from exercise of stock option

14

98

Net cash used in financing activities

(529)

(633)

(202)

(14)

Net increase (decrease) in cash and cash equivalents(2,009)270

Cash and cash equivalents at beginning of period

8,833

6,265

Cash and cash equivalents at the end of quarter

6,823

6,536

Net cash used in investing activities
Net cash provided by (used in) financing activities:

Cash dividends paid

Effect of exchange rate changes on cash and cash equivalents

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SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018(4) Notes Concerning Consolidated Financial Statements for the Second 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 second quarter of the fiscal year ended March 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

9,506

2,041

7,302

18,850－18,850

7

112

164

284

(284)

－

Total sales

9,514

2,153

7,476

19,134(284)

18,850

Segment income

1,432

476

621

2,530

(749)

1,781

(2) Intersegment
sales ortransfers

Notes:
1. The segment income adjustment of minus ¥749 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

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SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018

II. Consolidated cumulative total for second quarter of the fiscal year ending March 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

10,115

2,281

7,605

20,002－20,002

17

102

198

318

(318)

－

Total sales

10,133

2,383

7,804

20,321(318)

20,002

Segment income

1,585

569

475

2,630

(862)

1,768

(2) Intersegment
sales ortransfers

Notes:
1. The segment income adjustment of minus ¥862 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

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SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018

(Significant subsequent events)
Not applicable

16

SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018

3. Other Information
1. Status of Production, Orders and Sales
 Production amounts
Production by segment in the second quarter of the fiscal year ending March 31, 2018 is as follows.
Segment information by type of businessSix months ended% change YoY

September 30, 2017

Systems Development (Millions of Yen)

10,765

108.2

2,318

113.2

13,083

109.1

System Operations and Infrastructure
Development (Millions of Yen)
Total (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.

 Purchase amounts
Purchases by segment in the second quarter of the fiscal year ending March 31, 2018 are as follows.
Segment information by type of businessSix months ended% change YoY

September 30, 2017

Product Sales (Millions of Yen)

4,613

101.2

Total (Millions of Yen)

4,613

101.2

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

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SRA Holdings, Inc. (3817) Summary of Second-Quarter Consolidated Financial Results for the Year Ending March 31, 2018

 Status of orders
Status of orders by segment in the second quarter of the fiscal year ending March 31, 2018 is as follows.
OrdersSegment information by type of business

Order backlog

received(Millions of% change YoY% change YoY

Yen)

Yen)
Systems Development(Millions of

10,957

108.2

5,931

114.1

1,779

103.2

1,510

115.7

Product Sales

7,324

100.8

2,914

93.6

Total

20,060104.9

10,356

107.7

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 second quarter of the fiscal year ending March 31, 2018 are as follows.
Segment information by type of businessSix months ended% change YoY

September 30, 2017

Systems Development (Millions of Yen)

10,115

106.4

2,281

111.8

Product Sales (Millions of Yen)

7,605

104.2

Total (Millions of Yen)

20,002

106.1

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.

18