August 9 2018

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

Company name:

SRA Holdings, Inc.
(URL: http://www.sra-hd.co.jp/)
Stock listing:Tokyo Stock Exchange
Code number:
3817
President:
Toru Kashima
For inquiries, please contact:
Toshiaki Kobayashi, General Manager, Finance Department, Administrative HeadquartersTel:(03)-5979-2666
Scheduled date of submission of quarterly securities report:
August 10, 2018―
Scheduled commencement of dividend payment:
Quarterly Results Supplemental Materials
Yes
Quarterly Results Presentation MeetingNo

1. Consolidated results for the first quarter of the fiscal year ending March 2019 (from April 1, 2018 to June30, 2018)(1) Consolidated Operating Results (cumulative total)(All amounts rounded down, % change YoY)
Profit attributable

Net Sales

Ordinary Profit

Operating Income

to owners of the parent

First quarter of fiscal
2019
First quarter of fiscal
2018

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen

%

9,766

3.7

738

10.9

993

56.9

499

16.2

9,415

1.0

665

(17.0)

632

19.0

429

30.8

Note：Comprehensive Income
First quarter of fiscal 2017
First quarter of fiscal 2016

First quarter of fiscal
2019
First quarter of fiscal
2018¥ 202 million ((81.6)%)¥1,101 million (-%)

Net Income

Net Income

per Shareper Share after Dilution

Yen

Yen

40.57

-

35.17

35.00

(2) Consolidated Financial Position

First quarter of fiscal
2019
Fiscal 2018

Total Assets

Net Assets

Shareholders’ Equity Ratio

Millions of yen

Millions of yen%

37,147

20,78355.9

37,756

21,43856.6

Reference: Shareholders’ equity
First quarter of fiscal 2019: ¥20,783 million
Fiscal 2018: ¥21,379 million

2. Dividends
Dividend per Share

Fiscal 2018
Fiscal 2019

End of First QuarterEnd of Second QuarterEnd of Third Quarter

Year-end

Yen

Yen

Yen

Yen

Yen

―
―

40.00

―

70.00

110.00

40.00

―

65.00

105.00Fiscal 2019(forecast)
Note: Revision of dividend forecast in this quarter:

For the YearNo

70 yen of year-end dividend for FY 2018 includes 10 yen of memorial dividend for the 50th anniversary of business establishment,
and 65 yen of year-end dividend for FY 2019.

3. Consolidated Earnings Forecast for Fiscal 2019 (from April 1, 2018 to March 31, 2019)(% of change from FY2018 First Half or FY2018）

Net Sales

Operating Income

Ordinary Profit

Profit attributable

Net Income

to owners of the parent

per Share

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

FY2019 First Half
(for the six months ending
September 30, 2018)

19,000

(5.0)

1,850

4.6

1,850

6.5

1,200

4.0

97.49

FY201940,000

1.5

4,400

5.4

4,400

(7.6)

2,800

35.9

227.48

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

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

No

No

(4) Number of shares outstanding (common stock)
1. Number of shares outstanding (including treasury stock)
First quarter of fiscal 2019:15,240,000 sharesFiscal 2018:15,240,000 shares
2. Number of treasury stock
First quarter of fiscal 2019:
2,903,155sharesFiscal 2018:
2,935,755shares
3. Average number of shares over period (consolidated total for quarter)
First quarter of fiscal 2019:12,308,753 sharesFirst quarter of fiscal 2018:12,215,544 shares*Indication of quarterly review procedure implementation status
This earnings release is not subject to the quarterly review process as required by the Financial Instruments and Exchange Act of Japan.

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

SRA Holdings, Inc. (3817) Summary of First-Quarter Consolidated Financial Results for the Year Ending March 31, 20191) Qualitative Information Concerning First-Quarter Consolidated Business Results(1) Explanation Concerning Business Results
During the first quarter of the fiscal year (April 1, 2018 to June 30, 2018), the Japanese economy continued amoderate recovery due to a gradual increase in capital investment and an improvement in corporate earnings.
In the information services industry, despite a moderate increase in IT investments, the environment for
securing orders remained severe due to intensifying competition.
Within this business environment, the SRA Holdings Group formulated a Medium-Term Management Strategy.
Under this medium-term strategy, we will seek to enhance corporate and shareholder value, promote earnings
structure reform and establish a high-income model, while working to further enhance shareholder returns.
1) Improving profitability in existing operations• Further raise the gross profit margin
We are working to raise profitability by enhancing and strengthening project management, continuously reduce
production overhead costs, carry out SRA’s proprietary IP product business and promote the appropriate level ofproduction staff.
• Improve SG&A expenses-to-sales ratio
We will strive to raise operation efficiency by introducing an account manager system while working to reduce
operational costs of Head Office staff departments and SRA Professional Service, Co., Ltd., which handles ashared service.
• Expand orders and sales
Priority measures will be to increase customer share of wallet by deeply cultivating existing customers as well as
to focus on securing new customers in growth fields, and in doing so, we will work to expand orders and sales.

2) Transforming the SRA business model•We will work to promote a convergence between “SRA’s proprietary IP product business and higher added value inexisting operations.” At the same time, we will strive to provide SRA’s proprietary IP products and new services insuch growth sectors as the Internet of Things (IoT), mobile computing, security, cloud computing, Big Data andsocial technology fields.

3) Strengthening linkages between SRA’s proprietary IP product business and overseas operations•We intend to expand and upgrade the line of SRA’s proprietary IP products for growth fields as well as promotebusiness that targets overseas markets, which are growth markets.

1

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

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

Sales of the Systems Development business and the Products Sales business increased. Therefore, consolidated net
sales amounted to ¥9,766 million, a 3.7% increase from the same period of the previous fiscal year.
At the profit level, operating income increased 10.9% from the same period of the previous fiscal year to ¥738
million due to an increase in gross profit resulting from measures to improve the profit margin. Ordinary profit
increased 56.9% from the same period of the previous fiscal year to ¥993 million and profit attributable to ownersof the parent amounted to ¥499 million, a 16.2% increase from the same period of the previous fiscal year.

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

1) Systems Development
The Systems Development business recorded increases in sales to some manufacturing industries. As a result, net
sales increased 2.8% from the previous fiscal year to ¥4,919 million.
2) System Operations and Infrastructure Development
Orders from companies and university-related orders were virtually flat. As a result, net sales of the System
Operations and Infrastructure Development business decreased 1.1% from the previous fiscal year to ¥1,130
million.
3) Product Sales
Advanced Integration Technology, Inc. recorded an increase in device sales. As a result, net sales of the Product
Sales business increased 6.6% from the same period in the previous fiscal year to ¥3,716 million.

(2) Explanation Concerning Financial Condition
Total assets at the end of the first quarter amounted to ¥37,147 million, a decrease of 1.6% from the end of theprevious fiscal year. Total liabilities increased 0.3% from the end of the previous fiscal year to ¥16,363 million andnet assets decreased 3.1% to ¥20,783 million from the end of the previous fiscal year. Details of the principal
increases and decreases from the end of the previous fiscal year are as follows.

(Total Assets)
Short-term loans receivable increased ¥2,149 million to ¥2,566 million. On the other hand, other declined ¥1,079
million to ¥843 million and notes and accounts receivable—trade decreased ¥885 million to ¥6,047 million due tothe collection of trade receivables.
2

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

(Total Liabilities)
Accounts payable—trade increased ¥976 million to ¥3,847 million due to an increase in trade payables andadvances received increased ¥674 million to ¥3,583 million. On the other hand, income taxes payable decreased¥521 million to ¥213 million due to the payment of income taxes and provision for loss on construction contracts
decreased ¥407 million to ¥373 million(Total Net Assets)
Retained earnings decreased ¥361 million to ¥17,002 million. Foreign currency translation adjustments declined¥239 million to ¥206 million.

(3) Explanation Concerning Consolidated Results Forecast and Other Future Projections
No revision has been made to forecasts in Summary of Consolidated Financial Results for the Year Ending March
31, 2019 released on May 10, 2018.

3

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

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

As of June 30, 2018ASSETS
Current assets:
Cash and deposits

7,629

7,110

Notes and accounts receivable—trade

6,932

6,047

Securities

108

101

Merchandise and finished goods

647

806

1,566

1,530

Short-term loans receivable

416

2,566

Accounts receivable—other

2,874

3,114

Other

1,922

843

Allowance for doubtful accounts

(37)

(7)

22,061

22,113

Buildings

376

376

Accumulated depreciation

(268)

(272)

Buildings, net

107

104

Machinery, equipment and vehicles

530

539

Accumulated depreciation

(491)

(497)

Machinery, equipment and vehicles, net

39

41

Other

136

138

Accumulated depreciation

(91)

(93)

Other, net

4545

Total property, plant and equipment

192

191

1,310

1,276

1,310

1,276

Investment securities

9,353

9,207

Long-term loans receivable

3,179

2,912

Deferred tax assets

2,211

2,049

Guarantee deposits

384

384

Net defined benefit asset

46

46

Other

555

564

(1,519)(1,580)Work in process

Total current assets
Non-current assets:
Property, plant and equipment

Intangible assets
Other
Total intangible assets
Investments and other assets

Allowance for doubtful accounts

4

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

Allowance for investment loss

(19)

(18)

Total investments and other assets

14,191

13,565

Total non-current assets

15,69515,033

Total assets

37,75637,147

5

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

(Millions of Yen)
As of March 31, 2018

As of June 30, 2018

LIABILITIESCurrent liabilities:
Accounts payable-trade

2,871

3,847

Short-term loans payable

1,179

1,179

Accrued expenses

859

795

Income taxes payable

735

213

Accrued consumption taxes

506

278

Advances received

2,908

3,583

Provision for bonuses

565

958

Provision for directors’ bonuses

49

43

Provision for loss on construction contracts

780

373

1,198

-

294

724

11,94911,998

68

66

4,134

4,137

165

161

4,368

4,365

16,317

16,363

Capital stock

1,000

1,000

Capital surplus

4,671

4,699

Retained earnings

17,36417,002

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

Total shareholders’ equity

20,59820,299Valuation difference on available-for-sale securities

654

597

Foreign currency translation adjustment

445

206

Remeasurements of defined benefit plans

(319)

(320)

Total accumulated other comprehensive income

780

484

59

-

Total net assets

21,43820,783

Total liabilities and net assets

37,75637,147

Provision for loss on litigation
Other
Total current liabilities
Non-current liabilities:
Deferred tax liabilities

Net defined benefit liability
Provision for directors’ retirement benefits
Total non-current liabilities
Total liabilities
NET ASSETS
Shareholders’ equity

Accumulated other comprehensive income

Share acquisition rights

6

SRA Holdings, Inc. (3817) Summary of First-Quarter Consolidated Financial Results for the Year Ending March 31, 2019(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income(Quarterly Consolidated Statements of Income)(Consolidated Cumulative Total for First Quarter)(Millions of Yen)
Three months ended
June 30, 2017

Three months ended
June 30, 2018

Net sales

9,415

9,766

Cost of sales

7,583

7,763

Gross profit

1,832

2,002

Selling, general and administrative expenses

1,166

1,263

665

738

Interest income

16

24

Dividend income

2530

Foreign exchange gains

10

189

Other

16

23

Total non-operating income

70

267

Interest expenses

910

Stock transfer agency service fee

32Provision of allowance for doubtful accounts

330

Equity in losses of affiliates

56

-

Other

0

0

103

13

632

993

117

-

Gain on reversal of share acquisition rights

1

54

Other

-

0

119

54

Loss on retirement of non-current assets

0-Loss on litigation–

5

Total extraordinary losses

05Profit before income taxes

751

1,041

Income taxes-current

416

359

Income taxes-deferred

(93)

182

Operating Profit
Non-operating income

Non-operating expenses

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

Total extraordinary income
Extraordinary losses

7

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

Total income taxes

322

542

Net Profit

429

499

Profit attributable to owners of parent

429

499

8

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

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

ProfitThree months ended

Three months ended

June 30, 2017

June 30, 2018
429

499

Valuation difference on available-for-sale securities

750

(57)

Foreign currency translation adjustments

(80)

(238)

2

(0)

-

(0)

671

(296)

1,101

202

1,101

202

－

-

Other comprehensive income

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income(breakdown)Comprehensive income attributable to owners of theparentComprehensive income attributable to non-controllinginterests

9

SRA Holdings, Inc. (3817) Summary of First-Quarter Consolidated Financial Results for the Year Ending March 31, 2019(3) Notes Concerning Consolidated Financial Statements for the First Quarter(Notes Concerning Premise of Going Concern)
None(Notes on Significant Changes in Shareholders’ Equity)
None(Additional information)
Adoption of the Partial Amendments to Accounting Standard for Tax Effect Accounting
The Company has adopted the Partial Amendments to Accounting Standard for Tax Effect Accounting (ASBJ
Statement No. 28, February 16, 2018) from the beginning of the first quarter of the current fiscal year. As a result,deferred tax assets are presented in investments and other assets and deferred tax liabilities are presented in
noncurrent liabilities.

10

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

(Segment Information and others)[Segment Information]
I. Consolidated cumulative total for first quarter of the previous fiscal year (April 1, 2017 to June 30, 2017)
1. Information concerning net sales and income or losses for each reporting segment(Millions of Yen)
AmountSystemOperations

Systems
Development

andInfrastructurerecorded on
Product

Adjustment

Total

Sales

*1

amountthe quarterly
consolidated
statements ofDevelopment

income*2

Sales(1) Sales to
Customers(2) Intersegment
sales ortransfers
Total sales
Segment income

4,786

1,142

3,486

9,415

－

9,415

2

53

96

152

(152)

－

4,789

1,196

3,583

9,568

(152)

9,415

637

297

188

1,123

(457)

665

Notes:
1. The segment income adjustment of minus ¥457 million is a company-wide expense not apportioned to any reporting segment.
Company-wide expenses are general and administrative expenses and R&D expenses not attributed to any reporting segment.
2. Segment income is adjusted in operating income on the quarterly consolidated statements of income.

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

11

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

II. Consolidated cumulative total for first quarter of the fiscal year under review (April 1, 2018 to June 30, 2018)
1. Information concerning net sales and income or losses for each reporting segment(Millions of Yen)
AmountSystemOperations

Systems
Development

andInfrastructurerecorded on
Product

Adjustment

Total

Sales

*1

amountthe quarterly
consolidated
statements ofDevelopment

income*2

Sales(1) Sales to
Customers(2) Intersegment
sales ortransfers
Total sales
Segment income

4,919

1,130

3,716

9,766

－

9,766

2

51

67

121

(121)

－

4,922

1,181

3,783

9,887

(121)

9,766

751

276

115

1,143

(404)

738

Notes:
1. The segment income adjustment of minus ¥404 million is a company-wide expense not apportioned to any reporting segment.
Company-wide expenses are general and administrative expenses and R&D expenses not attributed to any reporting segment.
2. Segment income is adjusted in operating income on the quarterly consolidated statements of income.

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

12

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

(Significant subsequent events)
Not applicable

13

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

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

Three months ended% change YoY

June 30, 2018

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

5, 343

101.0

1,163

98.7

6,507

100.5

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

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

Three months ended% change YoY

June 30, 2018

Product Sales (Millions of Yen)

2,455

97.1

Total (Millions of Yen)

2,455

97.1

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

14

SRA Holdings, Inc. (3817) Summary of First-Quarter Consolidated Financial Results for the Year Ending March 31, 2019l Status of orders
Status of orders by segment in the first quarter of the fiscal year under review is as follows.
OrdersSegment information by type of businessreceived(Millions ofOrder backlog% change YoY% change YoY

Yen)

Yen)
Systems Development(Millions of

5,606

101.7

5,505

103.3

718

95.5

1,777

109.6

Product Sales

3,675

88.7

3,549

92.1

Total

10,00096.1

10,832

100.2

System Operations and Infrastructure
Development

Notes:
1. Amounts are based on sales price.
2. The amounts above do not include consumption tax.
3. Intersegment transactions are offset.
4. The percentages comparing order backlog with the same quarter of the previous fiscal year are comparisons with figures for which
the impact of the conclusion of litigation has been excluded from the previous year’s figures.

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

Three months ended% change YoY

June 30, 2018

Systems Development (Millions of Yen)

4,919

102.8

1,130

98.9

Product Sales (Millions of Yen)

3,716

106.6

Total (Millions of Yen)

9,766

103.7

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.

15