May 9, 2013

Summary of Consolidated Financial Results for the Year Ended March 31, 2013
Company name:

SRA Holdings, Inc.
(URL: http://www.sra-hd.co.jp/)
Tokyo Stock Exchange

Stock listing:Code number:President:
For inquiries, please contact:
Tel:

3817
Toru Kashima
Makoto Kitai, General Manager, Finance Department, Administrative Headquarters(03)-5979-2666
Date of ordinary general meeting of shareholders:June 26, 2013
Scheduled commencement of dividend payment:
June 12, 2013
Scheduled date of submission of financial reports:
June 26, 2013
Results Supplement Materials: Yes
Results Presentation Meeting : Yes (for institutional investors)

1. Consolidated Financial Results for Fiscal 2013(from April 1, 2012 to March 31, 2013)(1) Consolidated Operating Results(All amounts rounded down, % change YoY)Net Sales

Fiscal 2013
Fiscal 2012

Operating Income

Ordinary Profit

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

32,16833,416

（3.7）
0.8

2,436
2,490

（2.2）
11.2

2,883
2,656

8.6
11.9

1,681
1,233

36.3
（6.1）

Attention：Comprehensive Income
Fiscal 2013: ¥ 2,204million（80.7％）
Fiscal 2012: ¥ 1,219million（26.7％）
Net Income
per Share

Ratio of Net Income
to Shareholders’Equity%Net Income per Shareafter Dilution

Yen
Fiscal 2013127.96
Fiscal 2012
91.17
Reference: Gain (loss) on equity method investments:
Fiscal 2013: —Fiscal 2012: —Yen127.85—

Ratio of Ordinary
Profit to Total Assets

10.2
7.9

Ordinary Profit
Ratio

%

%

10.4
9.8

7.6
7.5

(2) Consolidated Financial Position
Millions of yen%

Shareholders’ Equity
per ShareYen

17,35915,67861.6
57.0

1,318.26
1,191.14

Cash Flows fromOperating Activities

Cash Flows from
Investing Activities

Cash Flows from
Financing Activities

Cash and Cash Equivalents
at the End of Period

Millions of yen

Millions of yen

Millions of yen

Millions of yen

1,622
2,836

(2,896)(1,280)(906)(1,345)

7,497
9,496

Total Assets

Net Assets

Millions of yen
Fiscal 2013
28,133Fiscal 2012
27,478Reference: Shareholders’ equity
Fiscal 2013: ¥ 17,319 million
Fiscal 2012: ¥ 15,649 million

Shareholders’ Equity Ratio(3) Consolidated Cash Flows

Fiscal 2013
Fiscal 2012

2. Dividends
Dividend per Share
Record dateFiscal 2012
Fiscal 2013
Fiscal 2014(forecast)End of

End of

End ofFirst

SecondThird

Quarter

Quarter

QuarterYear-end

For theyear

Total
Dividends(for the year)

Dividend
Propensity(consolidated)

Net Assets to
Dividend
Ratio(consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%

－
－
－

0.00
0.00
0.00

－
－
－

40.00
45.00
40.00

40.00
45.00
40.00

525
591
―

43.9
35.2
28.3

3.5
3.6
―

1

3. Consolidated Earnings Forecast for Fiscal 2014 (from April 1, 2013 to March 31, 2014)

Net Sales（% change YoY is for the fiscal year or for interim period）
Net Income
Ordinary Profit
Net Income
per Share

Operating Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

16,45034,900

8.5
8.5

1,070
2,900

19.0
19.0

1,120
3,000

16.9
4.0

695
1,860

35.9
10.6

52.90
141.57

Interim Period
Full Year

4. Others(1) Changes to significant subsidiaries during the current period :No

Note: Changes in specified subsidiaries during the current period that caused changes in the scope of consolidation(2) Application of simplified accounting and application of special accounting :No

Note: Application of simplified and special accounting for quarterly consolidated financial statements(3) Changes in accounting principles, changes in accounting estimates, and restatements
1. Changes caused by revision of accounting standards, etc. :Yes
2. Changes other than 1. above:No
3. Changes in accounting estimates:
Yes
4. Restatements:
No
Notes: Corresponds to “a case having difficulty in distinguishing changes in accounting principles from changes in accounting
estimates ”.

(4) Number of outstanding shares (common shares)
1. Shares issued at the end of term (including own shares)
Fiscal 2013: 15,240,000 sharesFiscal 2012: 15,240,000 shares
2. Own shares at end of term
Fiscal 2013: 2,101,709 sharesFiscal 2012: 2,101,630 shares
3. Average number of shares over period
Fiscal 2013: 13,138,321 sharesFiscal 2012: 13,525,481 shares[Reference] Summary of non-consolidated financial results（Reference）Non-Consolidated Financial Results for Fiscal 2013
(1) Non-Consolidated Operating Results
Net Sales

Fiscal 2013
Fiscal 2012

Operating Income(% change YoY)
Ordinary Profit

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen

%

1,192
1,241

(3.9)
1.2

856
853

0.3
6.8

846
837

1.1
5.9

845
825

2.3
3.7

Net Income
per Share
Fiscal 2013
Fiscal 2012

(from April 1, 2012 to March 31, 2013)

Net Income per Shareafter Dilution

Yen

Yen

58.98
56.13

58.93
―

(2) Non-Consolidated Financial Position
Net Income

Net Assets

Shareholders’ Equity Ratio

Millions of yen

Millions of yen%

Shareholders’ Equity
per Share
Yen

9,457
9,417
99.2
654.47
9,283
9,236
99.2
642.58Reference: Shareholders’ equity:
Fiscal 2013: ¥ 9,377million
Fiscal 2012: ¥ 9,207 million
Note: Forecast performance is predicted by the Company based on information currently available at the time of theforecast. Actual financial results may differ due to a number of factors.
Fiscal 2013
Fiscal 2012

2

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

1. Analysis of Business Results and Financial Position(1) Analysis of Business Results(Business results for the fiscal year)
During the fiscal year (April 1, 2012 to March 31, 2013), the Japanese economy was sluggish as personal
consumption was virtually flat and production and exports also declined due to the impact of a slowdown in the world
economy. Nevertheless, the economy showed signs of a pickup at the end of 2012, reflecting such factors as acorrection of the strong yen and a rise in stock prices.
In the information services industry, despite an ongoing recovery in IT investments by customers, the environment
for securing orders remained severe due to intensifying competition.
Amid this business environment, in the second year of its Medium-Term Management Plan, the SRA HoldingsGroup continued to make group-wide efforts to “increase and strengthen profitability by undertaking structuralreforms in existing businesses” as well as implemented our medium- and long-term growth strategy of “securing
growth potential by fully promoting our own IP products business* and undertaking new business overseas.”*

Own IP products business: Business for our extremely high-profit own-brand products covered by intellectual property rights■Increase and strengthen profitability by undertaking structural reforms in existing businesses
1. Expand orders and sales by strengthening business capabilities
As a result of efforts to further strengthen project management from creating projects to securing orders, SRA
America, Inc. and Software Science Inc. achieved year-on-year increases in sales. Advanced Integration Technology,
Inc. (AIT) posted a year-on-year decline in sales as opposed to large-scale orders received in the previous year. SRA(Europe) B.V. recorded lower sales due to the effects of restructuring at principal customers. SRA Tohoku, Inc. posted
lower sales owing to the impact of the earthquake.
2. Build a high-profit production structure
The gross profit margin rose from the previous fiscal year. This was the result of continuing to strengthen the
management of staff allocation and efforts to achieve an appropriate level of production overhead costs. Additionally,
we maintained a gross profit margin exceeding 20% for the third consecutive quarter in the mainstay Systems
Development business. Moreover, the gross profit margin improved from the previous year in the Systems Operations
and Infrastructure Development business and in the Product Sales business.
■Secure growth potential by fully promoting our own IP products business and undertaking new businessoverseas (“own IP products business” x “overseas business”)
The SRA Group is implementing our “own IP products business” x “overseas business” by identifying opportunities
for our advanced products in the United States in cloud computing, wireless data communications and other fields,
and deploying these as our own IP products in China, India, ASEAN and other growth markets. During this fiscal
year, we achieved progress in these efforts as detailed below.
1. Initiatives in cloud computing
Cavirin Systems, Inc.*1 will work to further strengthen its sales structure and carry out its own IP products businesscentered on NOVATM data center automation products and services and vNOVATM for cloud computing, targeting theUnited States as well as growth markets (China, India, ASEAN and others).
3

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

2. Initiatives in wireless data communications
Software Research Associates, Inc. (SRA) invested in Shenzhen Kingnet Technology Co., Ltd. (Kingnet), which has
powerful sales channels in China and manufactures and sells wireless devices. Through this investment, SRA has
secured sales channels in China and is utilizing these channels to sell products of Proxim Wireless Corporation*2,with which the SRA Group has business and capital alliances.
3. Initiatives in China businessWith the aim of further strengthening our business and capital alliances with SJI, Inc. and expanding our China
business, SRA accepted that company’s callable unsecured convertible bond-type corporate bonds with shareacquisition rights. To establish an industry top-level share in offshore development, SJI made the SinoCom SoftwareGroup Ltd. a subsidiary and is striving to strengthen profitability. In the event that SRA exercises the shareacquisition rights, SJI would become an SRA equity-method affiliate and SJI’s results would be included in SRA’s
consolidated results.
*1

Cavirin Systems, Inc.: This company was established in the United States in September 2012 to take over all assets, including

intellectual property rights, of nSolutions, Inc., a leading company in data center automation services.
*2

Proxim Wireless Corporation: U.S.-based wireless device manufacturer that produces and sells cutting-edge products in wireless data

communications. The company’s products have been widely introduced in countries throughout the world.

As a result of the preceding initiatives, consolidated business results for the fiscal year were as follows.
In terms of net sales, although sales of the Systems Development business increased slightly, sales of the System
Operations and Infrastructure Development business and sales of the Product Sales business declined. As a result,consolidated net sales amounted to ¥32,168 million, a 3.7% decrease from the previous fiscal year.
At the profit level, gross profit remained level as a rise in the profit margin covered the impact of a decrease in net
sales. Nevertheless, an increase in selling, general and administrative (SG&A) expenses due to the impact of thecorrection of the strong yen at U.S. consolidated subsidiaries resulted in a 2.2% decrease in operating income to¥2,436 million. Ordinary profit rose 8.6% to ¥2,883 million because of the impact of a foreign exchange gain, and net
income jumped 36.3% to ¥1,681 million.
As detailed above in the section on consolidated results for the fiscal year, net sales decreased slightly andoperating income declined. On the other hand, ordinary profit and net income rose. Net sales and operating income
were below our full-year forecast while the figures for ordinary profit and net income exceeded our fiscal year
forecast.
Consolidated Business Results(Millions of Yen)

FY2009FY2010FY2011FY2012

Net sales

41,777

34,05333,16433,416FY2013
Most recent forecast
figures(announced
May 10, 2012)
34,900Operating income

3,820

1,997

2,238

2,490

2,600

2,436

Ordinary profit

3,894

2,059

2,374

2,656

2,700

2,883

Net income

2,041

1,238

1,313

1,233

1,660

1,681

4

Actual32,168

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

A summary of business results for the fiscal year by business segment is shown below.
Systems Development
Despite a decline in sales to electric power industries, the Systems Development business recorded increases in sales
to manufacturing industries. As a result, net sales increased 1.7% from the previous fiscal year to ¥17,407 million.
System Operations and Infrastructure Development
Although there was an increase in university-related orders, there was a decline in orders from companies. As a result,net sales of the System Operations and Infrastructure Development business decreased 3.6% from the previous fiscal
year to ¥3,344 million.
Product Sales
AIT did not record orders comparable to the large orders in distribution sectors received in the previous fiscal year.
As a result, net sales of the Product Sales business declined 11.0% from the previous fiscal year to ¥11,416 million.
(Outlook for the Next Fiscal Year)In the next fiscal year, the Japanese economy is expected to head toward recovery owing to the effects of government
economic and financial policies. In the information services industry, a moderate recovery is expected to continue.
Under these conditions, the SRA Group will increase and strengthen profitability and expand its business scale byaccelerating efforts for “undertaking structural reforms in existing businesses,” which is part of our Medium-Term
Management Plan. At the same time, the SRA Group will implement its medium- and long-term growth strategy of“securing growth potential by fully promoting our own IP products business and undertaking new business overseas.”
Regarding the outlook for consolidated results for the fiscal year ending March 2014, while implementing theabove measures, we forecast net sales of ¥34,900 million, operating income of ¥2,900 million, ordinary profit of¥3,000 million and net income of ¥1,860 million.
(2) Analysis of Financial Position
Despite a decline in cash and deposits, total assets at the end of the fiscal year increased ¥655 million from the end of
the previous fiscal year due to an increase in investment securities. Total liabilities declined ¥1,025 million due to adecrease in short-term loans payable and a decrease in accounts payable—trade. Net assets increased ¥1,680 million
from the end of the previous fiscal year due to an increase in retained earnings.
Cash and cash equivalents on a consolidated basis at the end of the fiscal year decreased ¥1,999 million
compared with at the previous fiscal year-end to ¥7,497 million.
The status of cash flows and factors underlying changes in cash flows for the fiscal year are shown below.
Cash Flows from Operating Activities
Net cash provided by operating activities amounted to ¥1,622 million, a decrease of 42.8% from the previous fiscal
year. This consisted mainly of such cash inflows as income before income taxes and minority interests of ¥2,884
million and depreciation and amortization of ¥453 million, while cash outflows were primarily income taxes paid of¥1,163 million and a decrease in notes and accounts payable—trade of ¥390 million.
5

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

Cash Flows from Investing Activities
Net cash used in investing activities amounted to ¥2,896 million, an increase of 126.2% from the previous fiscal year.
This consisted mainly of such inflows as ¥820 million in proceeds from sales of investment securities and ¥505
million from the collection of loans receivable, while outflows included ¥3,600 million for payments of loans
receivable and ¥674 million for the purchase of investment securities.
Cash Flows from Financing Activities
Net cash used in financing activities amounted to ¥906 million, a decrease of 32.6% from the previous fiscal year.
This was due mainly to such cash outflows as ¥525 million in cash dividends paid and a net decrease in short-termloans payable of ¥380 million.
Cash Flow Indicators
FY2011
Shareholders’ equity ratio (%)
Shareholders’ equity ratio at market
value (%)
Debt redemption years to cash flow
(years)Interest coverage ratio (times)

FY2012FY2013

58.5

57.0

61.6

42.9

46.1

49.2

1.5

0.7

0.9

42.8

96.0

56.5

Notes:
Shareholders’ equity ratio: Shareholders’ equity/total assets
Shareholders’ equity ratio at market value: Market capitalization/total assets
Debt redemption years to cash flow: Interest-bearing debt/operating cash flow
Interest coverage ratio: Operating cash flow/interest expense
1. All indicators were calculated using consolidated financial figures.
2. Market capitalization is calculated using the total number of shares outstanding at the end of the fiscal period
excluding treasury shares.
3. Cash flows from operating activities is used for cash flow.
4. Interest-bearing debt includes all debt that pays interest as listed on the Consolidated Balance Sheets.
(3) Basic Policy on Profit Allocation and Dividends for the Fiscal Year under Review and the Next Fiscal Year
The Company’s basic policy regarding the allocation of profits is to enhance the redistribution of profits toshareholders in accordance with the state of its earnings, while also retaining earnings for R&D and the establishmentof a development environment for responding to the rapid and revolutionary technological advances within theindustry as well as to prepare for future business development.
The Company aims to allocate profits with a consolidated dividend payout ratio of 20%. Moreover, at theOrdinary General Meeting of Shareholders held on September 20, 2006, the Articles of Incorporation were changed
to allow for a flexible distribution of retained earnings as dividends based on resolutions by the Board of Directors.
Regarding dividends for the fiscal year ended March 31, 2013, in accordance with our dividend policy of striving torealize a consolidated payout ratio of 20% while considering various factors, the Company will pay regular cash
dividends per share of ¥40.00. In addition, the Company will pay a special ¥5.00 dividend to commemorate the 45th
anniversary of the founding of SRA, for total cash dividends per share of ¥45.00.
Regarding dividends for the fiscal year ending March 31, 2013, the Company plans to maintain ordinary cash
6

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

dividends per share of ¥40.00 for the reasons detailed below. In the event that these dividends are paid, theconsolidated payout ratio will be 28.3%.
1. One of the Company’s management targets is to “achieve and maintain double-digit consolidated ROE” and we
aim to carry out management that emphasizes the efficient use of shareholders’ equity.
2. Therefore, we are implementing a policy of making proactive investments (such as investments for M&A) in our
main businesses in working to ensure the Group’s growth.
3. At the same time, we also continually consider “redistributing profits to shareholders” from the perspective ofefficient use of shareholders’ equity.
4. Taking into consideration our ample liquidity in hand at present, as part of efforts to contribute to the efficientutilization of assets and capital, we have decided that “redistributing profits to shareholders” is a high priority.
We also regard the acquisition of treasury shares as an effective means of redistributing profits to shareholders.
Accordingly, we make such acquisitions appropriately while considering such factors as our stock price trends andfinancial condition.
(4) Business and Other Risks
The following principal risks could have an impact on the business results and financial condition of the Company as
the Group’s controlling company.
“Forward-looking” statements contained in this report represent judgments by the Group based on information
currently available to management as of the end of the fiscal period.
[1] Risk of fluctuations in business results of Group companies
An abrupt fluctuation in business results of Group companies due to various factors could have an adverse impact on
the Company’s business results.
[2] Maintaining confidentiality of customer information
In addition to being aware that it is an information processing company with numerous opportunities for handlingpersonal information, the SRA Holdings Group also sufficiently recognizes the critical nature of protecting personal
information, and thus, has established an internal monitoring structure. Concurrently, the SRA Holdings Group
provides education for its Group employees and business partners and makes efforts to protect personal information.
However, in the event of the unexpected leakage of information, besides losing the trust of business partners, the SRA
Holdings Group could become liable for payment of compensatory damages, which could have an effect on theGroup’s business results.
In addition to the above, the Company comprehensively incurs business and other risks of SRA, a main
subsidiary.
<SRA>* The below-mentioned “SRA Holdings Group” consists of Software Research Associates (SRA), Inc. and its
subsidiaries. The following principal risks could have an impact on the business results and financial condition of the7

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

SRA Holdings Group.
[1] Responses of business partners when production volume fluctuates
In the Systems Development and the System Operations and Infrastructure Development businesses, besides its own
in-house engineers, the SRA Holdings Group utilizes business partners for the planned augmentation of its staff ofin-house engineers and expansion of business, as well as to augment those areas where it does not possess
technologies and to respond flexibly to changes in production volumes during peak production.
The SRA Holdings Group also utilizes business partners as one means of reducing production costs.
Nonetheless, in the event of a sudden unforeseen fluctuation in production volume, the inability to secure enoughbusiness partners possessing requisite skills or to arrange for business partners to take timely action could have an
impact on the Group’s business results.
The utilization of business partners accounted for 45.0% of manufacturing costs as of the end of the fiscal period.
[2] Project profitability in Systems Development
In the core Systems Development business, the SRA Holdings Group concludes bulk subcontracting contracts
whereby it handles the entire system development and is responsible to its customers for completion. Therefore, evenfor projects for which a certain amount of income is expected at the time the order is received, there are instances
when profitability worsens because of such factors as customer requests for specification changes after commencing
development activities or a work process that exceeds the initial estimate. Moreover, incurring additional expenses
such as those related to defect guarantees after the confirmation of sales could result in lower profitability.
To prevent the occurrence of these projects, the Group reviews risk factors at the time an order is received andworks to improve the precision of its estimates while strengthening its project management structure in an organizedmanner. Nevertheless, any project incurring a large loss could have an effect on the Group’s business results.
[3] Maintaining confidentiality of customer information
Along with being aware that it is an information processing company with numerous opportunities for handlingpersonal information, the Group also sufficiently recognizes the critical nature of personal information, and thus, hasestablished an internal monitoring structure. Concurrently, as a company that has acquired Privacy Mark certification,
the SRA Holdings Group provides education for its Group employees and outsourced staff and makes efforts toprotect personal information. However, in the event of the unexpected leakage of information, besides losing the trustof business partners, the SRA Holdings Group could become liable for payment of compensatory damages, which
could have an effect on the Group’s business results.

2. Management Policy(1) The Company’s Basic Management Policy
The SRA Holdings Group adheres to a basic management policy of maximizing user satisfaction through IT based on
its management principle of “contributing to the future of humanity through professional practice that fosters progressin the fields of computer science,” which has been our guiding principle since the founding of SRA. In accordancewith this basic management policy, amid a rapidly changing business environment, we will strive to meet the
expectations of the information services industry while raising profits for shareholders and increasing corporate value
by pursuing profitability and growth.
Regarding the management of the SRA Holdings Group, under our management vision of “creating new value
together with people through a global perspective and technologies,” we will raise the overall capabilities of the8SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

Group with the aim of enhancing corporate value.
(2) Management Indicator Targets
The SRA Holdings Group has adopted “ordinary profit margin” as a representative indicator of the Company’s
overall earnings power and has set the medium- and long-term numerical target of quickly attaining and maintaining
an ordinary profit margin of 10% or higher.”Also, the SRA Holdings Group continues to use return on equity (ROE) as an indicator of efficient deployment ofshareholders’ equity. The Group has established the numerical target of “attaining and maintaining double-digit
consolidated ROE.”
The Group’s consolidated ordinary profit margin and ROE are as shown below.
Consolidated ordinary profit margin

Consolidated ROE

FY2009 (actual)

9.3%

15.0%

FY2010 (actual)

6.0%

8.5%

FY2011 (actual)

7.2%

8.6%

FY2012 (actual)

7.9%

7.9%

FY2013 (actual)

9.0%

10.2%

FY2014 (target)

8.6% (plan)

10.4% (plan)(3) Medium- and Long-term Management Strategy
With the aim of further raising profitability, the SRA Group has formulated and will implement a new Medium-Term
Management Plan running from the fiscal year ending March 2012 through the fiscal year ending March 2014. A
summary of the plan follows.
1. Management Targets[1] Increase and strengthen profitability by undertaking structural reforms in existing businesses.
[2] Secure medium- and long-term growth potential by fully promoting our own IP products businesses andundertaking new businesses overseas.
[3] In the fiscal year ending March 2014, the final year of our Medium-Term Management Plan, strive to record“operating income,” “ordinary profit” “and “net income” that exceeds our previous record for profits (operating
income and ordinary profit of ¥4,100 million and net income of ¥2,200 million) recorded for the fiscal year ended
March 2008 (fiscal 2007).
2. Management Strategies
The SRA Group made the following changes to its Medium-Term Management Plan, which it is implementing over athree-year period from fiscal 2011 (the year ended March 2012) through fiscal 2013 (the year ending March 2014).
[1] Extension of the implementation period of the Medium-Term Management Plan and revisions tomanagement targets
As issues under its Medium-Term Management Plan, over the past two years the SRA Group has focused on efforts
to “increase and strengthen profitability by undertaking structural reforms in existing businesses” as well as “secure
the Group’s growth potential by fully promoting our own IP products business and undertaking new business
9

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

overseas.”
Nevertheless, the business environment surrounding the SRA Group has changed dramatically from when theMedium-Term Management Plan was formulated and the impact of the Great East Japan Earthquake was significant.
Because of these factors, the Company will extend the final year of the Medium-Term Management Plan by one year
to fiscal 2014 (the fiscal year ending March 2015) while also revising its management targets.
[2] Management target values (consolidated)
Regarding “net income” for the final fiscal year (fiscal 2014) of the Medium-Term Management Plan, we have notchanged the thinking underlying our initial target of “exceeding results for the fiscal year ended March 2008” (fiscal
2007), namely record-high profits with net income of ¥2.2 billion. Therefore, we have set a “net income” target of¥2,230 million.
*

Other figures represent provisional targets at the present time.
Final year
FY2015 targets

Net sales

36,650Operating income

3,400

Ordinary profit

3,600

Net income

2,230

EPS (yen)

169.73[3] Medium- and Long-Term Growth Strategies(1) Utilize technological progressiveness, one of our strengths, and promote high-profit “product businesses.”
In product businesses, offer our own company IP products as well as advanced, high-profit products in Japan andoverseas.
[Targeted value]
Make IP products account for 10% of consolidated net sales in the year ending March 31, 2015 (the final year of
the Medium-Term Management Plan).
(2) Utilize “global reach,” one of our strengths, and undertake business in growth markets, beginning with China,
India and ASEAN.
[Targeted value]
Make overseas business account for 20% of consolidated net sales in the fiscal year ending March 2017.
* Underlined sections show parts that have changed.

(4) Issues to Be Addressed by the Company
The SRA Group will address the following specific issues with regard to the Medium-Term Management Plan’s aim
to “increase and strengthen profitability by undertaking structural reforms in existing businesses” as well as “secure
the Group’s growth potential by fully promoting our own IP products business and undertaking new businessoverseas.”10

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

■Increase and strengthen profitability by undertaking structural reforms in existing businesses
1. Expand orders and sales by strengthening business capabilities[Systems Development]・Create new projects through proposal-based sales that utilize our “strengths.”・Strengthen our order management structure that ensures projects reliably and efficiently lead to the securing of neworders.
・Specialize in fields of expertise in existing businesses (manufacturing embedded systems, financial, education).
・Transform business models for an expansion in orders (migration business, etc.).

[System Operations and Infrastructure Development]
・Make responses to customer needs (cost reductions, quality improvements, etc.) that utilize our experience in system

operations.
・Concentrate efforts toward education-related network operation business・Respond to virtualization and cloud computing in IDC[Product Sales]
・Expand target customers in device sales (manufacturing, securities, insurance, etc.).
・Expand collaborative business with manufacturers that utilizes our competitive advantage in cloud computing fields.
・Expand sales of our own IP products.

2. Build a high-profit production structure.
[1] Ensure appropriate production overhead costs.
[2] Increase the profitability of projects.
[3] Actively utilize offshore development.
3. Transform to a cost structure appropriate for our business scale.
▪ Ensure appropriate production costs and SG&A expenses.

■Secure the Group’s growth potential by fully promoting our own IP products business and undertaking new
business
1. Further promote “our own IP products business” x “overseas business.”[1] Invest in U.S. venture companies that handle cutting-edge products in growth fields (Cavirin Systems, Inc., which

engages in the cloud computing business, and Proxim Wireless Corporation, which carries out the wireless network
business).
[2] Invest in Kingnet, of China, with the aim of building sales channels in growth markets (China, India, ASEAN,etc.).
2. Expand China business by making business investments in SJI, Inc. (SRA’s acceptance of that company’s callable
unsecured convertible bond-type corporate bonds with share acquisition rights, etc.)
3. Expand business for our own IP products business (comprehensive education solutions “UniVision,” mail archive
11

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

“MailDepot,” etc.) and develop and sell our own new IP products.

(5) Other Important Management Matters
None

12

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

3. Consolidated Financial Statements(1) Consolidated Balance Sheets(Millions of Yen)FY2012FY2013(as of March 31, 2012)(as of March 31, 2013)ASSETS
Current assets:
Cash and deposits

8,697

7,197

Notes and accounts receivable—trade

6,444

6,299

Short-term investment securities

1,529

1,002

Merchandise and finished goods

349

242

Work in process

982

1,011

Deferred tax assets

498

531

Other

804

1,222

Allowance for doubtful accounts

(28)

(35)

19,277

17,473

Buildings

331

349

Accumulated depreciation

(215)

(253)

Buildings, net

115

96

Machinery, equipment and vehicles

568

569

Accumulated depreciation

(517)

(522)

Machinery, equipment and vehicles, net

50

46

Other

101

119

Accumulated depreciation

(69)

(77)

Other, net

3142

Total property, plant and equipment

197

184

Other

1,104

894

Total intangible assets

1,104

894

Investment securities

4,082

7,137

Deferred tax assets

1,289

1,049

Guarantee deposits

413

402

Other

1,205

1,093

Allowance for doubtful accounts

(14)

(14)

Allowance for investment loss

(78)

(87)

Total investments and other assets

6,897

9,580

8,200

10,660Total current assets
Noncurrent assets:
Property, plant and equipment

Intangible assets

Investments and other assets

Total noncurrent assets
13

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

27,478

Total assets

14

28,133

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

(Millions of Yen)FY2012FY2013(as of March 31, 2012)(as of March 31, 2013)

LIABILITIESCurrent liabilities:
Accounts payable—trade

2,804

2,447

Short-term loans payable

1,609

1,229

Accrued expenses

661

590

Income taxes payable

568

523

Accrued consumption taxes

290

241

Provision for bonuses

616

594

Provision for directors’ bonuses

58

50

Provision for loss on construction contracts

167

181

Asset retirement obligations

－

17

Other

906

807

7,682

6,683

Long-term loans payable

300

300

Deferred tax liabilities

1

3

3,659

3,620

154

165

1

0

4,116

4,090

11,79910,774

Capital stock

1,000

1,000

Capital surplus

4,483

4,483

Retained earnings

11,642

12,789Treasury stock(1,393)(1,393)

Total shareholders’ equity

15,732

16,879Valuation difference on available-for-sale securities

290

588

Foreign currency translation adjustments

(373)

(148)

Total accumulated other comprehensive income

(83)

439

29

39

Total net assets

15,67817,359Total liabilities and net assets

27,47828,133

Total current liabilities
Noncurrent liabilities:

Provision for retirement benefits
Provision for directors’ retirement benefits
OthersTotal noncurrent liabilities
Total liabilities
NET ASSETS
Shareholders’ equity

Accumulated other comprehensive income

Subscription rights to shares

15

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(Consolidated Statements of Income)(Millions of Yen)FY2012FY2013(April 1, 2011-(April 1, 2012-

March 31, 2012)

March 31, 2013)

Net sales

33,41632,168

Cost of sales

27,36926,094Gross profit

6,047

6,074

Selling, general and administrative expenses

3,556

3,637

Operating income

2,490

2,436

Interest received

120

201

Dividends received

34

37

Foreign exchange gains

16

176

Other

57

91

Total non-operating income

228

507

Interest expenses

30

29Transfer agent processing fee

18

20

Other

13

10

Total non-operating expenses

63

60

2,656

2,883

Gain on sales of investment securities

1

11

Reversal of allowance for investment loss－

3

Gain on reversal of subscription rights to shares

29

0

Other

141

0

Total extraordinary income

172

16

Loss on retirement of noncurrent assets

2

3

Loss on valuation of investment securities

227

10

Other

120

0

Total extraordinary loss

350

15

Income before income taxes and minority interests

2,477

2,884

Income taxes-current

1,019

1,120

Income taxes-deferred

224

83

Total income taxes

1,244

1,203

Income before minority interests

1,233

1,681

Net income

1,233

1,681

Non-operating income

Non-operating expenses

Ordinary profit
Extraordinary income

Extraordinary loss

16

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

(Consolidated Statements of Comprehensive Income)
Income before minority interests
Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustments
Total other comprehensive income
Comprehensive income(breakdown)Comprehensive income attributable to parent
company shareholders
Comprehensive income attributable to minority
shareholders

17

1,233

1,681

51

297

(64)

225

(13)

523

1,219

2,204

1,219

2,204

－

－

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

(3) Consolidated Statements of Changes in Net Assets(Millions of Yen)FY2012FY2013(April 1, 2011-(April 1, 2012-

March 31, 2012

March 31, 2013

Shareholders’ equity
Capital stock
Balance at beginning of period

1,000

1,000

－

－

1,000

1,000

4,483

4,483

－

－

4,483

4,483

10,963

10,642

Dividends from surplus

(553)

(525)

Net income

1,233

1,681

Change of scope of consolidation－(8)

Total change of items during the period

679

1,146

11,642

12,789(894)(1,393)Purchase of treasury stock

(499)

0

Total change of items during the period

(499)

0

(1,393)(1,393)

15,552

15,732

Dividends from surplus

(553)

(525)

Net income

1,233

1,681

Purchase of treasury stock

(499)

0

Change of scope of consolidation－(8)

Total change of items during the period

180

1,146

15,732

16,879Changes of items during the period
Total change during the period
Balance at the end of current period
Capital surplus
Balance at beginning of period
Changes of items during the period
Total change of items during the period
Balance at the end of current period
Retained earnings
Balance at beginning of period
Changes of items during the period

Balance at the end of current period
Treasury stock
Balance at beginning of period
Changes of items during the period

Balance at the end of current period
Total shareholders’ equity
Balance at beginning of period
Changes of items during the period

Balance at the end of current period

18

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Balance at beginning of period

239

290

Net change of items other than shareholders’ equity

51

297

Total change of items during the period

51

297

Balance at the end of current period

290

588

(309)

(373)

Net change of items other than shareholders’ equity

(64)

225

Total change of items during the period

(64)

225

Balance at the end of current period

(373)

(148)

(69)

(83)

Net change of items other than shareholders’ equity

(13)

523

Total change of items during the period

(13)

523

Balance at the end of current period

(83)

439

39

29

Net change of items other than shareholders’ equity

(10)

10

Total change of items during the period

(10)

10

Balance at the end of current period

29

39

15,522

15,678Dividends from surplus

(553)

(525)

Net income

1,233

1,681

Purchase of treasury stock

(499)

0

Change of scope of consolidation－(8)

Net change of items other than shareholders’ equity

(23)

533

Total change of items during the period

156

1,680

15,67817,359Changes of items during the period

Foreign currency translation adjustment
Balance at beginning of period
Changes of items during the period

Total accumulated other comprehensive income
Balance at beginning of period
Changes of items during the period

Subscription rights to shares
Balance at beginning of period
Changes of items during the period

Total net assets
Balance at beginning of period
Changes of items during the period

Balance at the end of current period

19

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

(4) Consolidated Statements of Cash Flows(Millions of Yen)FY2012FY2013(April 1, 2011-(April 1, 2012-

March 31, 2012

March 31, 2013

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

2,477

2,884

Depreciation and amortization

342

453

Increase (decrease) in provision for retirement benefits

27

(41)

(290)

11

Increase (decrease) in provision for bonuses

13

(22)

Increase (decrease) in provision for directors’ bonuses

57

(8)

Increase (decrease) in allowance for doubtful accounts

27

6

Increase (decrease) in allowance for investment loss

8

0

(155)

(239)

Interest expense

30

29

Loss (gain) on valuation of investment securities

227

10

Loss (gain) on sales of investment securities

(1)

(11)

Loss on valuation of stocks of subsidiaries and affiliates

51－

Loss (gain) on sales of noncurrent assets－(0)Loss on retirement of noncurrent assets

2

3

(348)

227

5

80

Increase (decrease) in notes and accounts payable—trade

823

(390)

Increase (decrease) in other liabilities

427

(140)

Increase (decrease) in accrued consumption taxes

(5)

(49)

Other, net

(17)

(131)

Subtotal

3,703

2,671

Interest and dividends income received

104

142

Interest expenses paid

(29)

(28)

Income taxes paid

(942)

(1,163)

Net cash provided by operating activities

2,836

1,622

(42)

(42)

0

2

(799)

(172)

Purchase of investment securities(2,467)(674)

Proceeds from sales of investment securities

1,878

820

Payments of loans receivable(1,407)(3,600)

Collection of loans receivable

1,357

505

Payments into time deposits

(74)

－

Payments for guarantee deposits

(10)

(4)

Increase (decrease) in provision for directors’ retirement benefits

Interest and dividend income

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

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

20

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

Proceeds from collection of guarantee deposited

6

15

278

255

(1,280)(2,896)

Net increase (decrease) in short-term loans payable

(292)

(380)

Proceeds from long-term loans payable

300－

Redemption of bonds

(300)

－

Purchase of treasury stock

(499)

(0)

Cash dividends paid

(553)

(525)

(0)

(0)

(1,345)(906)

Effect of exchange rate changes on cash and cash equivalents

(23)

125

Net increase (decrease) in cash and cash equivalents

187(2,054)

Cash and cash equivalents at beginning of period

9,309

9,496

－

55

9,496

7,497

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

Other
Net cash used in financing activities

Change of scope of net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at the end of period

21

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

Segment Information and Others
Segment Information
1. Summary of Reporting Segments
The Group’s reporting segments are those for which financial information separate from that of other units comprising theGroup can be obtained. Periodic reviews are made of reporting segments by the Board of Directors for determining theallocation of management resources and assessment of business results.
The Company carries out overall management of subsidiaries engaged in the three businesses of “Systems
Development,” “System Operations and Infrastructure Development” and “Product Sales.” Therefore, the Group’s threereporting segments are “Systems Development,” “System Operations and Infrastructure Development” and “Product
Sales.”
Principal contents of business in each segment
Business segment

Content of businessz

Integrated system development ranging from defining requirements todevelopment and maintenance of mainframe-based large systemsz

System integration covering system planning, development andintroduction of open systems

Systems Developmentz

Solutions business offering business tools that utilize various products
and toolszOpen source business that offers technical support for systems
through open source software

SystemOperations

andInfrastructure Development

Product Salesz

Operation management of computer systems and network systemszOverall operation that includes data management and facilities
managementz

Building of network systemsz

Outsourcing servicesz

Sales of packaged software that includes licensingz

Sales of system devices, centering on servers, in integration serviceszConsulting services related to the introduction of IT

2. Accounting Treatment Method of Net Sales and Income or Losses, Assets, Liabilities and Others for Each
Reporting Segment
The accounting treatment method for the reporting business segments is the same as that described in Principal Items that
Serve as the Basis for Preparing the Consolidated Financial Statements.
Inventories are valued at an amount prior to the writing down of carrying value.
The figures for segment profits are on the basis of operating income.
Intersegment sales or transfers are based on current market prices.

(Change in Method for the Allocation of Company-Wide Assets)
From the fiscal year ended March 31, 2013, the Company revised its method for the allocation of company-wide
assets to more properly carry out segment business evaluation management.
Segment information for the previous fiscal year is prepared and disclosed based on the method for the allocationof company-wide assets used after the change.
22

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

3. Information Concerning Net Sales and Income or Losses, Assets, Liabilities and Others for Each Reporting
Segment
I. Fiscal 2012 (from April 1, 2011 to March 31, 2012)(Millions of Yen)
AmountSystemrecorded on

Operations

Systems
Development

Product

andInfrastructure

Sales

Adjustment

Total

the

*1

amountconsolidated
statements ofDevelopment

income *2

Sales(1) Sales tocustomers

17,1183,468

12,83033,416－33,416

57

283

441

782

(782)

－

Total sales

17,175

3,752

13,271

34,199(782)

33,416

Operating income

2,475

631

655

3,762

(1,272)

2,490

Assets

7,964

1,447

5,558

14,97012,50727,478

150

13

176

340

2

342

120

2

675

799

16

815

(2) Intersegment
sales ortransfers

OthersDepreciation
Increase of
tangible andintangible
assets
Notes:
1. The adjustment amounts are as follows:(1) The segment income adjustment of minus ¥1,272 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) Total Company assets amounted to ¥12,507 million for the fiscal year. These consisted mainly of the Group’s surplus
operating assets (cash, deposits and marketable securities), short-term loans receivable, long-term invested assets(investment securities and long-term loans receivable) and deferred tax assets.
(3) Depreciation expenses and increases of tangible and intangible assets included depreciation and additions to long-term
prepaid expenses, respectively.
2. Segment operating income is adjusted in operating income on the consolidated statements of income.

23

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

II. Fiscal 2013 (from April 1, 2012 to March 31, 2013)(Millions of Yen)
AmountSystemrecorded on

Operations

Systems
Development

Product

andInfrastructure

Sales

Adjustment

Total

the

*1

amountconsolidated
statements ofDevelopment

income *2

Sales(1) Sales tocustomers

17,407

3,344

11,41632,168－32,168

65

351

509

926

(926)

－

Total sales

17,473

3,696

11,92533,095(926)

32,168Operating income

2,375

703

561

3,640

(1,204)

2,436

Assets

8,135

1,294

5,443

14,873

13,26028,133

166

13

268

448

5

453

43

9

152

205

－

205

(2) Intersegment
sales ortransfers

OthersDepreciation
Increase of
tangible andintangible
assets
Notes:
1. The adjustment amounts are as follows:(1) The segment income adjustment of minus ¥1,204 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) Total Company assets amounted to ¥13,260 million for the fiscal year. These consisted mainly of the Group’s surplus
operating assets (cash, deposits and marketable securities), short-term loans receivable, long-term invested assets(investment securities and long-term loans receivable) and deferred tax assets.
(3) Depreciation expenses and increases of tangible and intangible assets included depreciation and additions to long-term
prepaid expenses, respectively.
2. Segment operating income is adjusted in operating income on the consolidated statements of income.
3. Matters concerning change in reportable segments
As stated in “Change in accounting policy that is difficult to distinguish from change in accounting estimate,” along withthe revision of the Corporation Tax Act of Japan, from the first quarter of the fiscal year the Company and its domestic
consolidated subsidiaries have changed their method of depreciation based on the revised Corporation Tax Act for tangible
fixed assets acquired on or after April 1, 2012. Accordingly, their method of depreciation for reportable segments has been
24

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013changed to a method based on the revised Corporation Tax Law.
The impact of this change on profit in each segment in the period was immaterial.

25

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

Significant Subsequent Events
Consolidated Fiscal Year (April 1, 2012 － March 31, 2013)
Company subsidiary SRA provided loans to Shenzhen Kingnet Technology Co., Ltd. (Kingnet) with the aim ofstrengthening ties with that company. The Board of Directors of SRA convened on May 9, 2013 and resolved toextend the repayment date for two existing loans and to provide a new loan.
(1) Extension of repayment date
[1] Amount of loan: US$1,500 thousand
Load period before change: from December 28, 2011 to April 30, 2013
Loan period after change: from December 28, 2011 to April 30, 2014
[2] Amount of loan: US$3,000 thousand
Loan period before change: from August 30, 2012 to April 30, 2013
Loan period after change: from August 30, 2012 to April 30, 2014
(2) New loan
[1] Amount of loan: US$3,500 thousand[2] Loan period: from May 10, 2013 to April 30, 2014

(Additional information)
SRA, a Company subsidiary, filed a damage lawsuit against Happinet Corporation (hereafter Happinet) on March 31,
2011. In response, Happinet filed a lawsuit against SRA in the Tokyo District Court on April 6, 2011. These cases are
currently being litigated. In accordance with the progress of the lawsuits, we will promptly provide information on
any matters requiring disclosure.

26

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

4. Other Information
1. Status of Production, Orders and Sales(1) Production amounts
Production by segment in the fiscal year ended March 31, 2013 is as follows.
Consolidated cumulative total for
Segment information by type of businessfiscal 2013 (from April 1, 2012 to % change YoY
March 31, 2013)

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

17,418

102.6

3,365

97.3

20,783101.7

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

(2) Purchase amounts
Purchases by segment in the fiscal year ended March 31, 2013 are as follows.
Consolidated cumulative total for
Segment information by type of businessfiscal 2013 (from April 1, 2012 to % change YoY
March 31, 2013)

Product Sales (Millions of Yen)

7,035

84.2

Total (Millions of Yen)

7,035

84.2

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

(3) Status of orders
Status of orders by segment in the fiscal year ended March 31, 2013 is as follows.
OrdersSegment information by type of business

Order backlog

received(Millionsof% change YoY

System Operations and Infrastructure
Development

of % change YoY

Yen)

Yen)
Systems Development(Millions

17,803

101.9

4,259

110.2

3,406

98.9

1,463

104.4

27

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2013

Product Sales

11,071

82.8

3,205

90.3

Total

32,281

94.2

8,929

101.3

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

(4) Sales amounts
Sales by segment in the fiscal year ended March 31, 2013 are as follows.
Consolidated cumulative total for
Segment information by type of businessfiscal 2013 (from April 1, 2012 to % change YoY
March 31, 2013)

Systems Development (Millions of Yen)

17,407

101.7

3,344

96.4

Product Sales (Millions of Yen)

11,41689.0

Total (Millions of Yen)

32,16896.3

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.

28