May 10, 2012

Summary of Consolidated Financial Results for the Year Ended March 31, 2012
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, 2012
Scheduled commencement of dividend payment:
June 12, 2012
Scheduled date of submission of financial reports:
June 26, 2012
Results Supplement Materials: Yes
Results Presentation Meeting : Yes (for institutional investors)

1. Consolidated Financial Results for Fiscal 2012 (from April 1, 2011 to March 31, 2012)(1) Consolidated Operating Results(All amounts rounded down, % change YoY)Net Sales

Fiscal 2012
Fiscal 2011

Operating Income

Ordinary Profit

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

33,41633,164

0.8
(2.6)

2,490
2,238

11.2
12.1

2,656
2,374

11.9
15.3

1,233
1,313

（6.1）
6.1

Attention：Comprehensive Income
Fiscal 2012: ¥1,219 million（26.7％）
Fiscal 2011: ¥962million（（39.2％））
Net Income
per Share

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

Yen
Fiscal 2012
91.17
Fiscal 2011
94.93
Reference: Gain (loss) on equity method investments:
Fiscal 2012: —Fiscal 2011: —

Yen
—
—

Ratio of Ordinary
Profit to Total Assets

7.9
8.6

Ordinary Profit
Ratio

%

%

9.8
8.8

7.5
6.8

(2) Consolidated Financial Position
Millions of yen%

Shareholders’ Equity
per Share
Yen

15,67815,52257.0
58.5

1,191.14
1,118.71

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

2,836
1,458

(1,280)(1,548)(1,345)
(837)

9,496
9,309

Total Assets

Net Assets

Millions of yen
Fiscal 2012
27,478
Fiscal 2011
26,451
Reference: Shareholders’ equity
Fiscal 2012: ¥15,649 million
Fiscal 2011: ¥15,482 million

Shareholders’ Equity Ratio(3) Consolidated Cash Flows

Fiscal 2012
Fiscal 2011

2. Dividends
Dividend per Share
Record dateFiscal 2011
Fiscal 2012
Fiscal 2013 (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

%

%

－
－
－

－
－
－

－
－
－

40.00
40.00
40.00

40.00
40.00
40.00

553
525
―

42.1
43.9
31.7

3.6
3.5
―

1

3. Consolidated Earnings Forecast for Fiscal 2013 (from April 1, 2012 to March 31, 2013)

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

16,37034,900

3.0
4.4

920
2,600

13.1
4.4

970
2,700

9.4
1.7

600
1,660

（1.2）
34.6

45.67
126.35Interim Period
Full Year

4. Others(1) Changes to significant subsidiaries during the term (changes in specified subsidiaries due to change in scope of
consolidation):No(2) Changes in accounting principles, methods or reporting procedures
1. Changes due to change in accounting standards:
No
2. Changes other than 1. (above):No(3) Number of outstanding shares (common shares)
1. Shares issued at the end of term (including own shares)
Fiscal 2012: 15,240,000 sharesFiscal 2011: 15,240,000 shares
2. Own shares at end of term
Fiscal 2012: 2,101,630 sharesFiscal 2011: 1,400,230 shares
3. Average number of shares over period
Fiscal 2012: 13,525,481 sharesFiscal 2011: 13,839,770 shares[Reference] Summary of non-consolidated financial results

1. Non-Consolidated Financial Results for Fiscal 2012

(from April 1, 2011 to March 31, 2012)(1) Non-Consolidated Operating Results
Net Sales

Fiscal 2012
Fiscal 2011

Fiscal 2012
Fiscal 2011(% change YoY)
Operating Income

Ordinary Profit

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen

%

1,241
1,226

1.2
6.3

853
799

6.8
1.1

837
790

5.9
0.5

825
796

3.7
(7.3)

Net Income
per Share

Net Income per Shareafter Dilution

Yen

Yen

56.13
52.98

―
―

(2) Non-Consolidated Financial Position
Net Income

Net Assets

Shareholders’ Equity Ratio

Millions of yen

Millions of yen%

Shareholders’ Equity
per Share
Yen

9,283
9,236
99.2
642.58
9,577
9,536
99.2
631.84
Reference: Shareholders’ equity:
Fiscal 2012: ¥9,207 million
Fiscal 2011: ¥9,496 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 2012
Fiscal 2011

2

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

1. Business Results(1) Analysis of Business Results(Business results for the fiscal year)
During the fiscal year (April 1, 2011 to March 31, 2012), the Japanese economy faced severe conditions that included
a decrease in corporate earnings and flat exports and personal consumption due to the impact of the Great East Japan
Earthquake. Nonetheless, there were signs of a moderate pickup from the third quarter onward. However, the outlook
for the economy is uncertain owing to constraints on electric power supplies and as well as the risk of a downturn inoverseas economies amid the government debt crises in Europe.
In the information services industry, numerous corporate customers maintained a cautious stance toward IT
investments due to the unclear outlook for corporate earnings, and the trend toward curtailing investments continued.
However, signs of a recovery in investments began emerging in some sectors. On the other hand, the uninterrupted
drop in order unit prices is continuing and the environment for securing orders remained severe.
Amid this business environment, the SRA Holdings Group made group-wide efforts to “increase and strengthen
profitability by undertaking structural reforms in existing businesses” as well as implemented our medium- andlong-term growth strategy of “securing growth potential by fully promoting our own IP products business*1 andundertaking new business overseas.”■Increase and strengthen profitability by undertaking structural reforms in existing businesses
1. Expand orders and sales by strengthening business capabilities
Within the severe environment for securing orders, as a result of such efforts as bolstering our project
management, we achieved orders and sales as follows.
◎Software Research Associates, Inc. (SRA), a core business company that had continued to post year-on-year
declines in orders, achieved a turnaround with positive growth in orders, mainly in its Systems Development
business, from the third quarter onward. SRA’s results for the fiscal year also exceeded those of the previous
fiscal year.
◎Advanced Integration Technology, Inc. (AIT) continued to post favorable orders and sales by securing
large-scale transactions for device sales.
2. Build a high-profit production structure
The gross profit margin in the Systems Development business exceeded 20% for four consecutive quarters. This
was the result of efforts to achieve an appropriate level of production overhead costs by strengthening themanagement of staff allocation. The gross profit margin has risen each fiscal year.
3. Transform to a cost structure appropriate for our business scale
We implemented such initiatives as reducing sales expenses by realizing appropriate levels of personnel in sales
divisions.
■Secure growth potential by fully promoting our own IP products business and undertaking new businessoverseas
1. The SRA Holdings Group is implementing a medium- and long-term strategy of leveraging our own IP
products business in the United States in wireless data communications, cloud computing and other growthfields, and developing this business in China and other growth markets. (“own IP products business” x“overseas business”)
3

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

2. As the first step in these efforts, we utilized the sales network of Kingnet to commence sales in the China market
of products of Proxim Wireless Corporation*2, with which the SRA Group maintains a business and capitalalliance. When our sales volume in the China market reaches a certain scale, we anticipate being able to build
sales channels with Digital China Holding Limited*3, the largest IT services company in China.
*1

Own IP products business: Business for our extremely high-profit own-brand products covered by intellectual
property rights.

*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.

*3

China’s largest IT services company and the largest shareholder in SJI Inc., with which SRA Holdings concluded abusiness and capital alliance (February 2009).

As a result of the preceding initiatives, consolidated business results for the fiscal year were as follows.
In terms of sales, although sales declined in the Systems Development business and in the System Operations andInfrastructure Development business, sales increased in the Product Sales business. As a result, consolidated net sales
amounted to ¥33,416 million, an increase of 0.8% from the previous fiscal year.
At the profit level, an increase in gross profit due to a rise in the gross profit margin, coupled with promoting
efficiency in selling, general and administrative (SG&A) expenses, led to an 11.2% increase in operating income to¥2,490 million and an 11.9% rise in ordinary profit to ¥2,656 million. We recorded extraordinary income that
included insurance benefits received and extraordinary losses that included a loss on valuation of investment
securities. At the same time, in accordance with a revision to tax laws, we recorded a reversal of deferred tax assets asincome taxes-deferred. As a result, net income for the fiscal year decreased 6.1% from the previous fiscal year to¥1,233 million.
As detailed above in the section on consolidated results for the fiscal year, while net sales remained level,
operating income and ordinary profit increased. Moreover, net sales were virtually in line with our full-year forecast
while the figures for operating income and ordinary profit exceeded our fiscal year forecast.
Trends in Consolidated Business Results(¥ million)

FY2008FY2009FY2010FY2011

Net sales

45,05841,777

34,05333,164FY2012
Most recent forecast
figures (announced
May 12, 2011)
33,500Operating income

4,102

3,820

1,997

2,238

2,300

2,490

Ordinary profit

4,181

3,894

2,059

2,374

2,300

2,656

Net income

2,224

2,041

1,238

1,313

1,355

1,233

4

Actual
33,416

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

A summary of business results for the fiscal year by business segment is shown below.
Systems Development
Although sales to the non-life insurance industry increased, the Systems Development business posted declines insales to electric power industries and manufacturing industries. As a result, net sales declined 4.4% from the previous
fiscal year to ¥17,118 million.
System Operations and Infrastructure Development
Even though a decline in university-related orders was slight, there was a particularly large decrease in orders for
system operations in corporate-related business. As a result, net sales of the System Operations and Infrastructure
Development business decreased 6.9% from the previous fiscal year to ¥3,468 million.
Product Sales
Although SRA recorded lower sales of devices, AIT posted favorable sales of devices in the distribution industry. As
a result, net sales of the Product Sales business rose 11.3% from the previous fiscal year to ¥12,830 million.
(Outlook for the Next Fiscal Year)In the next fiscal year, there are expectations that a pickup in the economy will firmly take hold owing to the effectsof various government policies, including those for earthquake reconstruction. Nevertheless, reflecting such factors as
risks that the economy will be pulled down by a decline in overseas economies amid such circumstances as theEuropean debt crisis and by constraints in electric power supplies in Japan, the outlook is expected to remain unclear.
In the information services industry, cloud computing-related business remains firm and demand for integration
in banking-related industries is also anticipated. Also, a recovery in IT investments is expected on the back ofimproved corporate earnings and earthquake reconstruction.
Amid these conditions, during the next fiscal year, which also marks the second year of our Medium-Term
Management Plan, we will focus on “increasing and strengthening profitability by undertaking structural reforms inexisting businesses” as well as our 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 2013, while implementing theabove measures, we forecast net sales of ¥34,900 million, operating income of ¥2,600 million, ordinary profit of¥2,700 million and net income of ¥1,660 million.
(2) Analysis of Financial Position
Cash and cash equivalents on a consolidated basis at the end of the fiscal year increased ¥187 million compared withat the previous fiscal year-end to ¥9,496 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 ¥2, 836 million, an increase of 94.5% from the previous fiscal
year. This consisted mainly of such cash inflows as income before income taxes and minority interests of ¥2,477
million and an increase in notes and accounts payable—trade of ¥823 million, while cash outflows were primarily
income taxes paid of ¥942 million and a ¥290 million decrease in provision for directors’ retirement benefits.
5

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

Cash Flows from Investing Activities
Net cash used in investing activities amounted to ¥1,280 million, a decrease of 17.3% from the previous fiscal year.
This consisted mainly of such inflows as proceeds from sales of investment securities of ¥1,878 million andcollection of loans receivable amounting to ¥1,357 million, while outflows included for purchase of investment
securities of ¥2,467 million, payments of loans receivable of ¥1,407 million, and purchase of property, plant andequipment and purchase of intangible assets totaling ¥841 million.
Cash Flows from Financing Activities
Net cash used in financing activities amounted to ¥1,345 million, an increase of 60.8% from the previous fiscal year.
This was due mainly to such cash inflows as proceeds from long-term loans payable of ¥300 million, while cash
outflows consisted mainly of cash dividends paid of ¥553 million, purchase of treasury stock of ¥499 million,
payments for redemption of bonds totaling ¥300 million and a net decrease in short-term loans payable of ¥292
million.
Trends in Cash Flow Indicators
Shareholders’ equity ratio (％)
Shareholders’ equity ratio at
market value (％)
Dept redemption years to cash
flow (years)
Interest coverage ratio (times)

FY2010FY2011FY2012

55.4

58.5

57.0

43.0

42.9

46.1

1.2

1.5

0.7

52.5

42.8

96.0

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, 2012, in accordance with our dividend policy of striving
to realize a consolidated payout ratio of 20% while considering various factors, the Company will pay regular cash
6

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

dividends per share of ¥40.00.
Regarding dividends for the fiscal year ending March 31, 2013, the Company plans to maintain ordinary cash
dividends per share of ¥40.00 for the reasons detailed below. In the event that these dividends are paid, theconsolidated payout ratio will be 31.7%.
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
and in the fiscal year ending March 31, 2012, we thus plan to maintain cash dividends per share of ¥40.00.
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.
7

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

<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 the
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 42.8% 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 the8

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

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 theGroup 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 indictor 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

FY2008 (actual)

9.3%

18.0%

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 (target)

7.7% (plan)

10.2% (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 Targets①Increase and strengthen profitability by undertaking structural reforms in existing businesses.
②Secure medium- and long-term growth potential by fully promoting our own IP products businesses andundertaking new businesses overseas.
③In 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 Strategies①Promote structural reforms.
(1)[Systems Development and System Operations and Infrastructure Development]
Increase profitability by strengthening the foundations of existing businesses.
◎Expand orders by strengthening our business capabilities.
9

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

・Specialize in fields of expertise (manufacturing embedded systems, financial, education, and others).
・Undertake “cross-selling” in Systems Development, System Operations and Infrastructure Development, andProduct Sales.
・Refine business processes from creating projects to securing orders.
◎Build a high-profit production structure.
・Increase the profitability of projects.
・Ensure appropriate production overhead costs and increase productivity.
・Expand the scope of offshore production.
◎Transform to a cost structure appropriate for our business scale.
・Ensure appropriate production costs and SG&A expenses.
(2)[Product Sales]◎Promote new businesses with high growth potential and high profitability.
◎Develop business in China and other overseas countries.
②Medium- 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, 2014 (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 2016.
(4) Issues to Be Addressed by the Company
The SRA Holdings Group will execute the following tasks in the second fiscal year of its medium-term management
plan.
■Increase and strengthen profitability by undertaking structural reforms in existing businesses
1. Expand orders and sales by strengthening business capabilities①Priority business fields for expanding orders and sales[Systems Development]▪ Develop and create projects while carrying out business activities to ensure this can reliably and efficiently leadto the securing of new orders.
▪ Specialize in fields of expertise (financial, manufacturing embedded systems, education, others).
▪ Expand priority business.
Migration services*1 [ORACLE to PostgreSQL [PowerBuilder to Java][System Operations and Infrastructure Development].
▪ Expand business with existing customers (concentrate efforts toward education-related network operation
business, respond to virtualization and cloud computing in IDC).
10

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

[Product Sales]▪ Cultivate new customer fields (manufacturing, securities and insurance).
▪ Focus on products and services that have technological superiority and a proven track record (Qt*2/PostgreSQL
business) and strengthen the solutions business.
②Refine business processes.
▪ Refine business processes for creating opportunities and ensuring that this can reliably and efficiently lead to thesecuring of new orders.
▪ Increase business efficiency and strengthen coverage for each customer.
▪ Strengthen business skills.
2. Build a high-profit production structure.
①Ensure appropriate production overhead costs.
▪ Reduce production overhead costs via thoroughgoing personnel management.
②Increase the profitability of projects.
▪ Raise productivity and quality by introducing common development management environments and development
tools.
▪ Raise development efficiency by establishing processes for upstream processes.
③Actively utilize offshore development.
3. Transform to a cost structure appropriate for our business scale.
▪ Ensure appropriate production costs and SG&A expenses.
■Secure growth potential by fully promoting our own IP products business and undertaking new businessoverseas.

(“our own IP products business” x “overseas business”)

1. Uncover own IP products business in growth fields.
2. Develop business in China, ASEAN and other growth markets.
*1

Migration services
This refers to work for the conversion of data and programs along with system migration. Migrating an application
to a different operating system (OS) requires program migration and data migration and data conversion. Thesealso represent one migration service.

*2

Qt
A GUI development framework written in C++ language. Qt has been introduced in a wide range of fields
throughout the world, including automobiles, space exploration, visual specialty technologies and medical fields.
More recently, this has been used in the development of various touch panel screens, including for smartphones.
SRA employees who are accredited trainers have engaged in consulting and development services since 2002.

(5) Other Important Management Matters
None
11

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

3. Consolidated Financial Statements(1) Consolidated Balance Sheets(Millions of Yen)FY2011FY2012(as of March 31, 2011)(as of March 31, 2012)ASSETS
Current assets:
Cash and deposits

7,940

8,697

Notes and accounts receivable—trade

6,118

6,444

Short-term investment securities

1,504

1,529

Merchandise and finished goods

316

349

Work in process

1,024

982

Deferred tax assets

433

498

Other

922

804

Allowance for doubtful accounts

(2)

(28)

18,25919,277

Buildings

314

331

Accumulated depreciation

(191)

(215)

Buildings, net

123

115

Machinery, equipment and vehicles

561

568

Accumulated depreciation

(508)

(517)

Machinery, equipment and vehicles, net

52

50

Land

0

0

Other

100

100

Accumulated depreciation

(66)

(69)

Other, net

34

31

Total property, plant and equipment

211

197

Other

629

1,104

Total intangible assets

629

1,104

Investment securities

4,252

4,082

Deferred tax assets

1,579

1,289

Guarantee deposits

460

413

Other

1,145

1,205

Allowance for doubtful accounts

(13)

(14)

Allowance for investment loss

(73)

(78)

Total investments and other assets

7,351

6,897

Total current assets
Noncurrent assets:
Property, plant and equipment

Intangible assets

Investments and other assets

12

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

Total noncurrent assets
Total assets

13

8,192

8,200

26,451

27,478

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

(Millions of Yen)FY2011FY2012(as of March 31, 2011)(as of March 31, 2012)

LIABILITIESCurrent liabilities:
Accounts payable—trade

1,986

2,804

Short-term loans payable

1,901

1,609

Current portion of bonds

300－

Accrued expenses

430

661

Income taxes payable

489

568

Accrued consumption taxes

296

290

Provision for bonuses

602

616

0

58

Provision for loss on construction contracts

151

167

Provision for loss on liquidation of subsidiaries

14

41

698

865

6,872

7,682

Long-term loans payable－

300

Deferred tax liabilities

－

1

3,606

3,659

444

154

Negative goodwill

2－

Others

2

1

4,057

4,116

10,929

11,799

Capital stock

1,000

1,000

Capital surplus

4,483

4,483

Retained earnings

10,963

11,642

Treasury stock(894)(1,393)

Total shareholders’ equity

15,552

15,732

Valuation difference on available-for-sale securities

239

290

Foreign currency translation adjustments

(309)

(373)

Total accumulated other comprehensive income

(69)

(83)

Subscription rights to shares

39

29

Minority interests－－

Total net assets

15,522

15,678

Total liabilities and net assets

26,451

27,478Provision for directors’ bonuses

and affiliates
Other
Total current liabilities
Noncurrent liabilities:

Provision for retirement benefits
Provision for directors’ retirement benefits

Total noncurrent liabilities
Total liabilities
NET ASSETS
Shareholders’ equity

Accumulated other comprehensive income

14

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(Consolidated Statements of Income)(Millions of Yen)FY2011FY2012(April 1, 2010-(April 1, 2011-

March 31, 2011)

March 31, 2012)

Net sales

33,16433,416

Cost of sales

27,29227,369Gross profit

5,872

6,047

Selling, general and administrative expenses

3,633

3,556

Operating income

2,238

2,490

Interest received

55

120

Dividends received

26

34

Other

122

73

Total non-operating income

204

228

Interest expenses

34

30

Transfer agent processing fee

15

18

Purchase expenses of treasury stock

－

7

Other

19

6

Total non-operating expenses

69

63

2,374

2,656

Gain on reversal of subscription rights to shares

629

Insurance benefits received

－

141

Other

－

1

Total extraordinary income

6172

Loss on valuation of investment securities

52

227

Loss on valuation of stocks of subsidiaries and affiliates

153

51

Company funeral expenses

－

39

Other

96

32

Total extraordinary loss

302

350

Non-operating income

Non-operating expenses

Ordinary profit
Extraordinary income

Extraordinary loss

15

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

2,078

2,477

Income taxes-current

771

1,019

Income taxes-deferred

(6)

224

Total income taxes

764

1,244

1,313

1,233

－

－

1,313

1,233

Income before minority interests

1,313

1,233

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

(175)

51

(176)

(64)

(351)

(13)

962

1,219

962

1,219

－

－

Income before income taxes and minority interests

Income before minority interests
Minority interests in income
Net income(Consolidated Statements of Comprehensive Income)

Total other comprehensive income
Comprehensive income(breakdown)Comprehensive income attributable to parent
company shareholders
Comprehensive income attributable to minority
shareholders

16

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

(3) Consolidated Statements of Changes in Net Assets(Millions of Yen)FY2011FY2012(April 1, 2010-(April 1, 2011

March 31, 2011)

March 31, 2012

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

10,202

10,963

Dividends from surplus

(553)

(553)

Net income

1,313

1,233

760

679

10,963

11,642

(894)

(894)

Purchase of treasury stock

(0)

(499)

Total change of items during the period

(0)

(499)

(894)

(1,393)

14,792

15,552

Dividends from surplus

(553)

(553)

Net income

1,313

1,233

Purchase of treasury stock

(0)

(499)

Total change of items during the period

760

180

15,552

15,732

Changes 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

Total change 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

17

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

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

414

239

Net change of items other than shareholders’ equity

(175)

(51)

Total change of items during the period

(175)

(51)

Balance at the end of current period

239

290

(133)

(309)

Net change of items other than shareholders’ equity

(176)

(64)

Total change of items during the period

(176)

(64)

Balance at the end of current period

(309)

(373)

281

(69)

Net change of items other than shareholders’ equity

(351)

(13)

Total change of items during the period

(351)

(13)

Balance at the end of current period

(69)

(83)

19

39

Net change of items other than shareholders’ equity

20

(10)

Total change of items during the period

20

(10)

Balance at the end of current period

39

29

36

－

Net change of items other than shareholders’ equity－－

Purchase of shares of consolidated subsidiaries

(36)

－

Total change of items during the period

(36)

－

Balance at the end of current period－－

Changes 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

Minority interests
Balance at beginning of period
Changes of items during the period

18

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

Total net assets
Balance at beginning of period

15,12915,522

Dividends from surplus

(553)

(553)

Net income

1,313

1,233

Purchase of treasury stock

(0)

(499)

Purchase of shares of consolidated subsidiaries

(36)

－

Net change of items other than shareholders’ equity

(331)

(23)

Total change of items during the period

392

156

15,522

15,678Changes 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, 2012

(4) Consolidated Statements of Cash Flows(Millions of Yen)FY2011FY2012(April 1, 2010-(April 1, 2011

March 31, 2011)

March 31, 2012

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

2,078

2,477

Depreciation and amortization

289

342

Increase (decrease) in provision for retirement benefits

(10)

27

Increase (decrease) in provision for directors’ retirement benefits

22

(290)

Increase (decrease) in provision for bonuses

33

13

Increase (decrease) in provision for directors’ bonuses

(0)

57

Increase (decrease) in allowance for doubtful accounts

(36)

27

Increase (decrease) in allowance for investment loss

(11)

8

Interest and dividend income

(82)

(155)

Interest expense

34

30

Loss (gain) on valuation of investment securities

52

227

Loss (gain) on sales of investment securities－(1)

Loss on valuation of stocks of subsidiaries and affiliates

153

51

Loss (gain) on sales of noncurrent assets

0－Loss on retirement of noncurrent assets

92

Decrease (increase) in notes and accounts receivable—trade

101

(348)

Decrease (increase) in inventories

158

5

Increase (decrease) in notes and accounts payable—trade

(769)

823

Increase (decrease) in other liabilities

43

427

Increase (decrease) in accrued consumption taxes

53

(5)

Other, net

119

(17)

Subtotal

2,240

3,703

Interest and dividends income received

67

104

Interest expenses paid

(34)

(29)

Income taxes paid

(815)

(942)

Net cash provided by operating activities

1,458

2,836

(111)

(42)

0

0

(163)

(799)

1

－

(1,054)(2,467)

Proceeds from sales of investment securities

350

1,878

Purchase of investments in subsidiaries

(32)

－

Payments of loans receivable(607)(1,407)

Collection of loans receivable

23

1,357

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
Proceeds from sales of intangible assets
Purchase of investment securities

20

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

Payments into time deposits

(0)

(74)

Payments for guarantee deposits

(10)

(10)

Proceeds from collection of guarantee deposited78

6

Other, net

(22)

278

(1,548)(1,280)

(283)

(292)

Proceeds from long-term loans payable－

300

Redemption of bonds

－

(300)

Purchase of treasury stock

(0)

(499)

(553)

(553)

(0)

(0)

(837)

(1,345)

(88)

(23)

Net increase (decrease) in cash and cash equivalents(1,015)187

Cash and cash equivalents at beginning of period

10,324

9,309

Cash and cash equivalents at the end of period

9,309

9,496

Net cash used in investing activities
Net cash provided by (used in) financing activities:
Net increase (decrease) in short-term loans payable

Cash dividends paid
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents

21

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

Segment Information and Others
Segment Information
I. Fiscal 2011 (from April 1, 2010 to March 31, 2011)

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.

3. Information Concerning Net Sales and Income or Losses, Assets, Liabilities and Others for Each Reporting
Segment
22

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

(Millions of yen)AmountSystemOperations

Systems
Development

andrecorded on
Product

Infrastructure

Adjustment

Total

Sales

the

*1

amountconsolidated
statements ofDevelopment

income *2

Sales(1) Sales tocustomers

17,9093,723

11,531

33,164－33,164

78

253

422

754

(754)

－

Total sales

17,988

3,977

11,95433,919(754)

33,164

Operating income

2,405

817

826

4,049

(1,810)2,238

Assets

8,083

1,568

5,668

15,320

11,13026,451

191

17

78

288

1

289

161

35

96

293

0

293

(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 ¥1,810 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 ¥11,258 million for the fiscal year. These consisted mainly of the Group’s surplus
operating assets (cash, deposits and marketable securities), long-term invested assets (investment securities) 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.

II. Fiscal 2012 (from April 1, 2011 to March 31, 2012)

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.
23

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

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.

3. Information Concerning Net Sales and Income or Losses, Assets, Liabilities and Others for Each Reporting
Segment(Millions of yen)
SystemSystems
Development

Operations
andInfrastructure

AmountProduct
Sales

Development

Total

Adjustment
amount*1

recorded ontheconsolidated
statements of24

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

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

8,047

1,477

6,516

16,041

11,43627,478

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 ¥11,569 million for the fiscal year. These consisted mainly of the Group’s surplus
operating assets (cash, deposits and marketable securities), long-term invested assets (investment securities) 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. From the first quarter of fiscal 2011 (from April 1, 2010 to June 30, 2010), the Company changed the measurement
method for each business segment along with a change to its standards for evaluating segment business results inundertaking its business management. Compared with when applying the previous method, segment income declined by¥236 million in Systems Development, ¥53 million in System Operations and Infrastructure Development and ¥200
million in Product Sales.

25

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

Significant Subsequent Events
Consolidated Fiscal Year (April 1, 2011 – March 31, 2012)
1. The Board of Directors of Company subsidiary SRA convened on March 30, 2012 and resolved to acquire sharesof SJI Inc. held by King Tech Service HK Limited, with the aim of strengthening business and capital alliances with
SJI. The shares were acquired on April 6, 2012.
Details of share acquisition(1) Purpose of share acquisition
Cultivate markets through collaboration with SJI, which has a wide-ranging network in the China market, as well
as strengthen price competitiveness by utilizing offshore development.
(2) Name of party from which shares were acquired
King Tech Service HK Limited(3) Overview of company in which shares were acquired
SJI Inc.
Description of main businesses: System development business, software products business, information-related
products
Business scale (Fiscal year ended March 2011):
Capital: ¥2,843 million
Total assets: ¥18,789 million
Net assets: ¥10,076 million(4) Date of share acquisition
April 6, 2012(5) Number of shares acquired, acquisition cost and ownership ratio after acquisition
Number of shares held before the change: 50,500 shares (6.1% equity stake)
Number of shares acquired: 50,000 shares (acquisition cost of ¥650 million)
Number of shares held after the change: 100,500 shares (12.14% equity stake)2. The Board of Directors of Company subsidiary SRA convened on March 30, 2012 and on May 2, 2012 andresolved to provide loans to SJI with the aim of strengthening business and capital alliances with SJI. A payment of¥2,000 million was made on April 2, 2012 and a payment of ¥500 million was made on May 8, 2012, with therepayment date set for the end of June 2012.

(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, 2012

4. Other Information
1. Status of Production, Orders and Sales(1) Production amounts
Production by segment in the fiscal year ended March 31, 2012 is as follows.
Consolidated cumulative total for
Segment information by type of businessfiscal 2012 (from April 1, 2011 to % change YoY
March 31, 2012)

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

16,971

93.8

3,457

92.7

20,42893.6

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, 2012 are as follows.
Consolidated cumulative total for
Segment information by type of businessfiscal 2012 (from April 1, 2011 to % change YoY
March 31, 2012)

Product Sales (Millions of Yen)

8,359

116.9

Total (Millions of Yen)

8,359

116.9

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, 2012 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

17,464

100.9

3,863

109.8

3,443

95.7

1,402

98.3

27

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2012

Product Sales

13,377

112.5

3,550

118.2

Total

34,285

104.5

8,816

110.9

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, 2012 are as follows.
Consolidated cumulative total for
Segment information by type of businessfiscal 2012 (from April 1, 2011 to % change YoY
March 31, 2012)

Systems Development (Millions of Yen)

17,118

95.6

3,468

93.1

Product Sales (Millions of Yen)

12,830111.3

Total (Millions of Yen)

33,416

100.8

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