3393 star 2015 03 q1 2014 09 19 report english2.0 Company Profile Provider of Total IT Solutions Company Name STARTIA INC. Company Website IR Information Share Price Established 21

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URL: www.walden.co.jp

Written by Yoshiyuki Muroya

E-mail: [email protected]

Phone：+81 3 3553 3769

STARTIA (3393)Consolidated Fiscal Year Sales OP RP NP EPS DPS BPS

(Million Yen) (Yen) (Yen) (Yen)

FY03/2013 6,640 656 655 391 78.6 7.9 605.7

FY03/2014 8,167 829 856 432 85.5 15.0 689.7

FY03/2015CoE 9,248 840 866 433 85.5 12.8 -

FY03/2014 YoY 23.0% 26.5% 30.6% 10.5% - - -

FY03/2015CoE YoY 13.2% 1.3% 1.2% 0.2% - - -

Consolidated Quarter Sales OP RP NP EPS DPS BPS

(Million Yen) (Yen) (Yen) (Yen)

Q1 FY03/2014 1,728 (15) (20) (14) - - -

Q2 FY03/2014 1,955 253 261 159 - - -

Q3 FY03/2014 1,901 126 147 87 - - -

Q4 FY03/2014 2,581 465 467 200 - - -

Q1 FY03/2015 1,911 6 18 38 - - -

Q1 FY03/2015 YoY 10.6% - - - - - -

Source: Company Data, WRJ Calculation

1.0 Executive Summary (19 September 2014)

Frontloaded Investments not to Reappear

STARTIA, providing mainly small-&-medium-sized corporates with total IT solutions, has potentials to see

long-term earnings growth. The Company is now calling for prospective recurring profit ¥1,400m in

FY03/2017 versus ¥856m in FY03/2014, suggesting a CAGR of 17.8% over the next three years. Short-term,

however, earnings are rather under pressure by increasing expenses, stemming from frontloaded

investments, and thus earnings growth is not very high in FY03/2015, although the Company is to renew

record high earnings. They comprise a) “security enhancement in hosting services”, b) “initial costs

associated with Asian cultivations” and c) “increased spending on new recruits training”. Meanwhile, the

bulk of all those frontloaded investments are not to reappear in FY03/2016. By business domain, the

Company is looking to increasing sales of self-developed software to create AR (Augmented Reality) contents

as the utmost driver for long-term earnings growth. It is spotted that schemes based on AR contents have

decent potentials to replace existing equivalents based on QR code, etc., currently adopted in Smartphones.

In Q1 FY03/2015, sales came in at ¥1,911m (up 10.6% YoY), operating profit ¥6m (versus operating loss

¥15m over the year) and operating profit margin 0.3% (up 1.2% points). Flow sales (outright sales of

merchandises & services) increased some 10% over the year, so did stock sales (to persistently collect

compensations from customers in line with actual use, etc. of merchandises & services offered). In terms of

operating balance, the Company saw net increases ¥22m over the year, while ¥30m in Web Solutions (WS)

Business, driven most significantly by increasing outright sales of self-developed software to create AR

(Augmented Reality) contents from very low level over the year. To a large extent this was triggered by

launch of new version “COCOAR2” for this merchandise on 22 May 2014, as far as we could gather. In other

http://www.walden.co.jp/

mailto:[email protected]

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business segments, meanwhile, sales were buoyant across the board, but operating balance got worse over

the year, due mainly to expenses, stemming from aforementioned frontloaded investments in our view.

FY03/2015 Company forecasts are going for prospective sales ¥9,248m (up 13.2% YoY), operating profit

¥840m (up 1.3%) and operating profit margin 9.1% (down 1.1% points). The Company, in the process of

enlarging own sales territory not only in Japan but also in Asia through frontloaded investments in

headcounts, etc. while making corporate efforts for cross selling and/or up selling, is likely to see steady

sales growth short-term and long-term as well. Still, the current situation is that short-term earnings are

rather under pressure due to increasing expenses, stemming from frontloaded investments. For example, in

regards to “security enhancement in hosting services”, the Company is to see increasing expenses up to

¥170m from ¥50m over the year, while this project is to be accomplished towards the end of FY03/2015. The

expenses in here are to account for 1.8% of sales with the Company versus 0.6% over the year, implying

increasing exposure by 1.2% points. Thus, the issue in here only is more than enough to explain lowering

operating profit margin 9.1% (down 1.1% points) with the Company. While this is the case in FY03/2015, the

expenses in here are not to reappear in FY03/2016. A simple calculation implies that the Company is to see

net increases of earnings as much as this, i.e., ¥170m over the year in FY03/2016.

IR representative: Corporate Planning Office (+81 3 5339 2162 [email protected])


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2.0 Company Profile

Provider of Total IT Solutions

Company Name STARTIA INC.

Company Website

IR Information

Share Price

Established 21 February 1996

Listing 20 December 2005: Tokyo Stock Exchange Mothers (Ticker: 3393)

28 February 2014: Tokyo Stock Exchange First Section

Capital ¥824m (As of the end of June 2014)

No. of Shares 5,120,200 shares, including 225 treasury shares (As of the end of June 2014)

Main Features Providing small-&-medium-sized corporates, primarily based in government

-ordinance-designated cities with total IT solutions

Self-developed software to create E-book and AR contents

Starting up sales promotions in Asia

Businesses Ⅰ. Web Solutions (WS)

Ⅱ. Network Solutions (NS)

Ⅲ. Business Solutions (BS)

Top Management President & CEO: Hideyuki Hongo

Shareholders Hideyuki Hongo 43.9%, Akira Saiga 6.4%, Japan Trustee Services Bank (trust

account) 5.6% (As of the end of March 2014)

Headquarters Shinjuku-ku, Tokyo JAPAN

No. of Employees Consolidated: 550, Unconsolidated: 401 (As of the end of June 2014)

Source: Company Data

http://www.startia.co.jp/en/

http://www.startia.co.jp/en/ir/

http://www.bloomberg.com/quote/3393:JP

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3.0 Recent Trading & Prospects

Q1 FY03/2015 Results

In Q1 FY03/2015, sales came in at ¥1,911m (up 10.6% YoY), operating profit ¥6m (versus operating loss

¥15m over the year), recurring profit ¥18m (recurring loss ¥20m) and net profit ¥38m (net loss ¥14m),

while operating profit margin 0.3% (up 1.2% points).

Initial Company forecasts, calling for prospective sales ¥1,884m and operating loss.¥99m, were exceeded

¥27m (1.4%) in sales and ¥105m in operating balance. Positive impacts from nonoccurrence of some

expenses initially expected were not insignificant for the overshoot at the operating level, while the results

were effectively in line with expectations but for this.

Quarterly Sales by Business Segment

0

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Web Solutions Network Solutions Business Solutions(Million Yen)

Quarterly Operating Balance by Business Segment

(50)

0

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5Web Solutions Network Solutions Business Solutions Elimination(Million Yen)


5

Increasing sales with the Company were brought forth by increasing sales in all the three business

segments across the board. Sales of Web Solutions (WS) came in at ¥401m (up 8.0%), sales of Network

Solutions (NS) ¥558m (up 21.5%) and sales of Business Solutions (BS) ¥952m (up 6.0%).

Meanwhile, operating balance with the Company improved ¥22m to operating profit ¥6m from operating

loss ¥15m over the year. In WS, operating balance improved ¥30m to breakeven from operating loss ¥29m

over the year, while operating balance deteriorated ¥8m to operating profit ¥60m from operating profit

¥69m in NW and ¥2m to operating loss ¥44m from operating loss ¥41m in BS. Combined with net increases

¥3m to negative ¥9m from negative ¥12m for elimination, the net increases in operating balance with the

Company comprised all those net changes in the three business segments.

In WS, increasing outright sales of self-developed (by Startia Lab. Inc., i.e., a 100% consolidated subsidiary)

software to create AR (Augmented Reality) contents from very low level significantly contributed to

improving operating balance. To a large extent this was triggered by launch of new version “COCOAR2” for

this merchandise on 22 May 2014, as far as we could gather. In this business segment, sales of this

merchandise are estimated to have accounted for more than 30% of sales as a whole.

In NW, ongoing strengths for outright sales of network devices, benefiting from successful introduction of

appealing services of “Net Rescue” to provide customers with innovated solutions, were the key contributor

to earnings. Meanwhile, in hosting services, currently at the stage of security enhancement, sales were

sluggish while expenses were rising in line with progressing project to accomplish the security enhancement

towards the end of FY03/2015 with increasing headcounts to take care of this. Positive impacts from the

former were not enough to fully compensate for negative impacts from the latter and thus sales grew but

earnings adjusted in this business segment.

In BS, billing in line with the volume of emissions for hard copies by MFPs (multifunctional printers) to

have been provided with customers increased rapidly, having favorably contributed to earnings. Sales in this

business segment as a whole appear to have benefited from rush demand associated with consumption tax

rate hike as well as to have suffered reaction to this, but sales in Q1 increased over the year. Still, operating

balance remained roughly unchanged, presumably due mainly to some allocations of expenses associated

with frontloaded investments.

6

Income Statement (Cumulative, Quarterly)

Income Statement Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act

Q1 Q1 to Q2 Q1 to Q3 Q1 to Q4 Q1 Q1 to Q2 Q1 to Q3 Q1 to Q4 YoY

(Million Yen) 03/2014 03/2014 03/2014 03/2014 03/2015 03/2015 03/2015 03/2015 Net Chg.

Sales 1,728 3,684 5,585 8,167 1,911 - - - +182

Cost of Sales 918 1,838 2,799 3,922 1,006 - - - +88

Gross Profit 810 1,845 2,786 4,245 904 - - - +94

SG&A 826 1,608 2,422 3,415 898 - - - +72

Operating Profit (15) 237 364 829 6 - - - +22

Non Operating Balance (4) 3 24 26 12 - - - +16

Recurring Profit (20) 241 388 856 18 - - - +38

Extraordinary Balance 8 8 6 (71) 54 - - - +46

Pretax Profit (11) 249 394 784 72 - - - +84

Tax Charges etc. 2 105 163 352 34 - - - +32

Net Profit (14) 144 231 432 38 - - - +52

Sales YoY +14.9% +19.2% +19.3% +23.0% +10.6% - - - -

Operating Profit YoY - (13.9%) +10.2% +26.5% - - - - -

Recurring Profit YoY - (14.6%) +14.5% +30.6% - - - - -

Net Profit YoY - (13.4%) +18.1% +10.5% - - - - -

Gross Profit Margin 46.9% 50.1% 49.9% 52.0% 47.3% - - - +0.5%

(SG&A / Sales) 47.8% 43.7% 43.4% 41.8% 47.0% - - - (0.8%)

Operating Profit Margin (0.9%) 6.5% 6.5% 10.2% 0.3% - - - +1.2%

Recurring Profit Margin (1.2%) 6.6% 7.0% 10.5% 1.0% - - - +2.1%

Net Profit Margin (0.8%) 3.9% 4.2% 5.3% 2.0% - - - +2.8%

Tax Charges etc. / Pretax Profit - 42.1% 41.3% 44.9% 47.3% - - - -

Income Statement Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 YoY


Sales 1,728 1,955 1,901 2,581 1,911 - - - +182

Cost of Sales 918 919 961 1,123 1,006 - - - +88

Gross Profit 810 1,035 940 1,458 904 - - - +94

SG&A 826 781 813 993 898 - - - +72


Non Operating Balance (4) 8 20 1 12 - - - +16

Recurring Profit (20) 261 147 467 18 - - - +38

Extraordinary Balance 8 - (2) (77) 54 - - - +46

Pretax Profit (11) 261 145 389 72 - - - +84

Tax Charges etc. 2 102 57 189 34 - - - +32

Net Profit (14) 159 87 200 38 - - - +52

Sales YoY +14.9% +23.2% +19.5% +31.9% +10.6% - - - -

Operating Profit YoY - +39.1% +132.1% +43.1% - - - - -

Recurring Profit YoY - +32.8% +160.5% +47.9% - - - - -

Net Profit YoY - +29.4% +197.4% +2.8% - - - - -

Gross Profit Margin 46.9% 53.0% 49.5% 56.5% 47.3% - - - +0.5%

(SG&A / Sales) 47.8% 40.0% 42.8% 38.5% 47.0% - - - (0.8%)


Recurring Profit Margin (1.2%) 13.4% 7.7% 18.1% 1.0% - - - +2.1%

Net Profit Margin (0.8%) 8.1% 4.6% 7.8% 2.0% - - - +2.8%

Tax Charges etc. / Pretax Profit - 39.2% 39.9% 48.6% 47.3% - - - -


7

Segmented Information (Cumulative, Quarterly)

Segmented Information Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act



Web Solutions 371 861 1,321 1,943 401 - - - +29

Network Solutions 459 980 1,519 2,160 558 - - - +98

Business Solutions 898 1,842 2,745 4,063 952 - - - +53

Sales 1,728 3,684 5,585 8,167 1,911 - - - +182

Web Solutions +24.7% +28.4% +32.4% +31.2% +8.0% - - - -

Network Solutions +9.6% +14.7% +16.2% +17.2% +21.5% - - - -

Business Solutions +14.1% +17.7% +15.5% +22.6% +6.0% - - - -

Sales (YoY) +14.9% +19.2% +19.3% +23.0% +10.6% - - - -

Web Solutions 21.5% 23.4% 23.6% 23.8% 21.0% - - - -

Network Solutions 26.6% 26.6% 27.2% 26.4% 29.2% - - - -

Business Solutions 52.0% 50.0% 49.2% 49.7% 49.8% - - - -

Sales (Composition) 100.0% 100.0% 100.0% 100.0% 100.0% - - - -

Web Solutions (29) 79 146 323 0 - - - +30

Network Solutions 69 157 212 301 60 - - - (8)

Business Solutions (42) 26 41 254 (44) - - - (2)

Operating Profit (Before Elimination) (3) 262 401 879 15 - - - +18

Elimination (12) (25) (36) (49) (9) - - - +3


Web Solutions - +31.9% +164.7% +95.2% - - - - -

Network Solutions (17.8%) (6.2%) (14.9%) (16.8%) (13.0%) - - - -

Business Solutions - (60.9%) (25.2%) +50.2% - - - - -

Operating Profit （YoY） - (13.9%) +10.2% +26.5% - - - - -

Web Solutions - 30.1% 36.6% 36.7% 1.6% - - - -

Network Solutions - 59.9% 53.0% 34.3% 384.3% - - - -

Business Solutions - 10.0% 10.4% 29.0% (285.9%) - - - -

Operating Profit (Composition) - 100.0% 100.0% 100.0% 100.0% - - - -

Web Solutions (8.0%) 9.2% 11.1% 16.6% 0.1% - - - +8.1%

Network Solutions 15.0% 16.1% 14.0% 14.0% 10.8% - - - (4.3%)

Business Solutions (4.7%) 1.4% 1.5% 6.3% (4.7%) - - - +0.0%


Segmented Information Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act



Web Solutions 371 489 460 622 401 - - - +29

Network Solutions 459 521 538 640 558 - - - +98

Business Solutions 898 944 903 1,317 952 - - - +53

Sales 1,728 1,955 1,901 2,581 1,911 - - - +182

Web Solutions +24.7% +31.3% +40.6% +28.6% +8.0% - - - -

Network Solutions +9.6% +19.5% +19.2% +19.5% +21.5% - - - -

Business Solutions +14.1% +21.4% +11.1% +40.7% +6.0% - - - -

Sales (YoY) +14.9% +23.2% +19.5% +31.9% +10.6% - - - -

Web Solutions 21.5% 25.0% 24.2% 24.1% 21.0% - - - -

Network Solutions 26.6% 26.7% 28.3% 24.8% 29.2% - - - -

Business Solutions 52.0% 48.3% 47.5% 51.0% 49.8% - - - -

Sales (Composition) 100.0% 100.0% 100.0% 100.0% 100.0% - - - -

Web Solutions (29) 108 67 176 0 - - - +30

Network Solutions 69 88 55 88 60 - - - (8)

Business Solutions (42) 68 15 213 (44) - - - (2)

Operating Profit (Before Elimination) (3) 266 138 478 15 - - - +18

Elimination (12) (12) (11) (12) (9) - - - +3


Web Solutions - +104.0% - +60.1% - - - - -

Network Solutions (17.8%) +5.4% (32.6%) (21.3%) (13.0%) - - - -

Business Solutions - +25.6% - +87.0% - - - - -

Operating Profit （YoY） - +39.1% +132.1% +43.1% - - - - -

Web Solutions - 40.9% 49.0% 36.8% 1.6% - - - -

Network Solutions - 33.2% 39.9% 18.6% 384.3% - - - -

Business Solutions - 25.8% 11.1% 44.5% (285.9%) - - - -

Operating Profit (Composition) - 100.0% 100.0% 100.0% 100.0% - - - -

Web Solutions (8.0%) 22.3% 14.7% 28.3% 0.1% - - - +8.1%

Network Solutions 15.0% 17.0% 10.2% 13.9% 10.8% - - - (4.3%)

Business Solutions (4.7%) 7.3% 1.7% 16.2% (4.7%) - - - +0.0%



8

Balance Sheet (Quarterly)

Balance Sheet Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act



Cash & Deposit 1,857 1,978 2,018 2,247 2,126 - - - +268

Accounts Receivables 832 921 917 1,438 1,000 - - - +167

Inventory 51 55 41 31 56 - - - +4

Other 220 254 141 333 153 - - - (66)

Current Assets 2,962 3,209 3,119 4,051 3,336 - - - +373

Tangible Assets 97 106 100 105 112 - - - +15

Intangible Assets 360 408 482 502 545 - - - +185

Investments & Other Assets 486 504 501 507 462 - - - (24)

Fixed Assets 944 1,018 1,085 1,115 1,120 - - - +176

Assets Carried Forward 3 2 - - - - - - (3)

Total Assets 3,910 4,230 4,205 5,167 4,457 - - - +547

Accounts Payable 410 428 387 618 454 - - - +43

Short Term Debt - - - - - - - - -

Other 502 638 547 1,043 521 - - - +19

Current Liabilities 912 1,067 934 1,661 976 - - - +63

Long Term Debt - - - - - - - - -

Other - - 7 12 - - - - -

Fixed Liabilities - - 7 12 - - - - -

Total Liabilities 913 1,067 941 1,673 976 - - - +63

Shareholders' Equity 2,997 3,158 3,245 3,450 3,469 - - - +471

Other - 4 18 43 11 - - - +12

Net Assets 2,996 3,162 3,263 3,493 3,480 - - - +483

Total Liabilities & Net Assets 3,910 4,230 4,205 5,167 4,457 - - - +547

Equity Capital 2,996 3,161 3,262 3,492 3,479 - - - +483

Interest Bearing Debt - - - - - - - - -

Net Debt (1,857) (1,978) (2,018) (2,247) (2,126) - - - (268)

Capital Ratio 76.6% 74.7% 77.6% 67.6% 78.1% - - - +1.5%

Net Debt Equity Ratio (62.0%) (62.6%) (62.2%) (65.1%) (61.3%) - - - +0.7%

ROE (Net Profit / Equity Capital) (1.9%) 9.3% 9.8% 13.2% 4.4% - - - +6.3%

ROA (Recurring Profit / Total Assets) (2.0%) 11.4% 12.2% 18.1% 1.5% - - - +3.5%

Quick Ratio 295% 272% 314% 222% 320% - - - -

Current Ratio 325% 301% 334% 244% 342% - - - -


Cash Flow Statement (Cumulative, Quarterly)

Cash Flow Statement Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act



Operating Cash Flow (24) 126 243 638 4 - - - +29

Investing Cash Flow 52 21 (64) (286) (107) - - - (160)

Operating CF + Investing CF 28 148 178 352 (102) - - - (130)

Financing Cash Flow (32) (29) (29) (24) (19) - - - +12

Cash Flow Statement Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act



Operating Cash Flow (24) 151 116 395 4 - - - +29

Investing Cash Flow 52 (30) (86) (221) (107) - - - (160)

Operating CF + Investing CF 28 120 30 173 (102) - - - (130)

Financing Cash Flow (32) 2 0 4 (19) - - - +12


9

FY03/2015 Company Forecasts and Results

Consolidated Fisal Year Date Event Sales OP RP NP

(Million Yen)

FY03/2015CoE 9-May-14 Q4 Results 9,428 840 866 433

FY03/2015CoE 31-Jul-14 Q1 Results 9,428 840 866 433

Amount of Gap 0 0 0 0

Rates of Gap 0.0% 0.0% 0.0% 0.0%

FY03/2015CoE 9-May-14 Q4 Results 9,428 840 866 433

FY03/2015CoE 31-Jul-14 Q1 Results 9,428 840 866 433


Rates of Gap 0.0% 0.0% 0.0% 0.0%

Consolidated Half Year Date Event Sales OP RP NP

(Million Yen)

Q1 to Q2 FY03/2015CoE 9-May-14 Q4 Results 4,145 138 138 69

Q1 to Q2 FY03/2015CoE 31-Jul-14 Q1 Results 4,145 138 138 69


Rates of Gap 0.0% 0.0% 0.0% 0.0%

Consolidated Half Year Date Event Sales OP RP NP

(Million Yen)

Q3 to Q4 FY03/2015CoE 9-May-14 Q4 Results 5,283 702 728 364

Q3 to Q4 FY03/2015CoE 31-Jul-14 Q1 Results 5,283 702 728 364


Rates of Gap 0.0% 0.0% 0.0% 0.0%

Consolidated Quarter Date Event Sales OP RP NP

(Million Yen)

Q1 FY03/2015CoE 21-May-14 Q4 Results 1,884 (99) - -

Q1 FY03/2015Act 31-Jul-14 Q1 Results 1,911 6 19 38

Amount of Gap 27 105 - -

Rates of Gap 1.4% - - -


(Million Yen)

Q2 FY03/2015CoE 21-May-14 Q4 Results 2,261 237 - -


(Million Yen)



(Million Yen)



10

FY03/2015 Company Forecasts

FY03/2015 Company forecasts have remained unchanged, going for prospective sales ¥9,248m (up 13.2%

YoY), operating profit ¥840m (up 1.3%), recurring profit ¥866m (up 1.2%) and net profit ¥433m (up 0.2%),

while operating profit margin 9.1% (down 1.1% points).

In regards to prospective dividend per share, the Company announced, on 22 August 2014, to raise it up to

¥12.83 (¥4.28 as of the end of Q2 and ¥8.55 as of the end of Q4, collectively implying payout ratio 15.0%)

from ¥8.55 (¥2.85, ¥5.70, 10.0%) initially planned. This is in line with the Company’s decision-making to

raise target payout ratio up to 15% from 10% so that the Company should share earnings with shareholders

more than before as well as aiming at diversification of shareholder base.

Quarterly Sales & Operating Profit Margin

1,5

04

1,5

86

1,5

92

1,9

57

1,7

28

1,9

55

1,9

01

2,5

81

1,9

11

2,2

61

2,4

55

2,6

48

6.2%11.5%

3.4%

16.6%

(0.9%)

13.0%6.7%

18.0%

0.3%

10.5% 8.7%

18.5%

(30.0%)

(20.0%)

(10.0%)

0.0%

10.0%

20.0%

30.0%

0

1,000

2,000

3,000

Q1

FY0

3/2

01

3

Q2

FY0

3/2

01

3

Q3

FY0

3/2

01

3

Q4

FY0

3/2

01

3

Q1

FY0

3/2

01

4

Q2

FY0

3/2

01

4

Q3

FY0

3/2

01

4

Q4

FY0

3/2

01

4

Q1

FY0

3/2

01

5

Q2

FY0

3/2

01

5

Q3

FY0

3/2

01

5

Q4

FY0

3/2

01

5

Sales (Million Yen) Operating Profit Margin (%)


The number of headcounts stood at 472 as of the end of FY03/2014 for the Company, while the number of

new graduates came in at 84 for April 2014, having equated to no less than 17.8% of existing headcounts

with the Company. When simply compared with 87 new graduates for April 2013, expenses associated with

new graduates should come down from the level in FY03/2014. Nevertheless, the Company, in the process of

reinforcing in-service training for new graduates, has decided to extend the period to officially assign them

to take their positions after starting up the training to 12 months from 3 months so far. This is one of

management strategies to beef up long-term growth potentials for the Company and is a factor to boost

frontloaded investments at a time.

11

More importantly, security enhancement for hosting services is to be accomplished towards the end of

FY03/2015. The Company is to do this by means of employing headcounts more than the level in FY03/2014

and thus all those expenses stemming from here are to inevitably increase, up to ¥170m from ¥50m. In

terms of the ratio to sales with the Company, this is a change up to 1.8% in FY03/2015 from 0.6% in

FY03/2014. Thus, this is an issue to lower operating profit margin by 1.2% points versus prospective

operating profit margin 9.1% (down 1.1% points).

On top of all those issues, initial investments to start up overseas sales promotions in Shanghai and Taiwan

are to take place. In Shanghai, the Company is planning to get involved with establishment of “Global

Gateway” to connect between Japan and China for local bases of Japanese companies on a full-fledged basis

by means of supplying them with network devices and telecommunication infrastructures. Meanwhile, in

Taiwan, the Company is planning to reinforce sales of software to create E-book (Actibook). For the time

being, however, trading amounts for both remain limited and thus negative impacts from initial investments

are meaningful. It is suggested this incurs collective operating loss some ¥5m per month.

Another point to be raised is that sales as a whole are concentrated in Q4 and vice versa in Q1, due to

seasonal factors, etc., as far as the Company’s business model is concerned. Expenses on a quarterly basis

are affected by those trends of sales as well, but are less volatile than sales, eventually producing larger

swing of operating balance than that of sales.

12

Long-Term Prospects

Over three-year period, through FY03/2015 to FY03/2017, the Company is calling for CAGR 17.8% in

recurring profit. According to “2-Year Projections for Recurring Profit through FY03/2015 to FY03/2016”,

released on 9 May 2014, the Company is going for collective recurring profit ¥2,000m for FY03/2015 and

FY03/2016, respectively, ¥866m (up 1.2% YoY) and ¥1,134m (up 30.9%). On top of this, the Company

disclosed that prospective recurring profit in FY03/2017 is ¥1,400m (up 23.5%) in its results meeting, held

on 19 August 2014.

Long-Term Prospects

3,3544,000

5,0846,640

8,1689,248

165 278 476 656 856 866 1,134 1,400

4.9%

7.0%

9.4%9.9%

10.5%9.4%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0

5,000

10,000

15,000

FY03/2010 FY03/2011 FY03/2012 FY03/2013 FY03/2014 FY03/2015 FY03/2016 FY03/2017

Sales (Million Yen) Recurring Profit (Million Yen) Recurring Profit Margin (%)


Through FY03/2014 to FY03/2015, recurring profit margin is expected to come down to 9.4% (down 1.1%

points) from 10.5%. Presumably, increasing expenses for security enhancement for hosting services are to be

the key negative factor for this. As we have already suggested, those expenses stemming from here are to

account for 1.8% (up 1.2% points) of sales with the Company from 0.6%. More importantly, however, those

expenses are to be gone in FY03/2016 as the Company is to accomplish the security enhancement towards

the end of FY03/2015. As far as we could see, this will be a positive factor to boost recurring profit margin as

much as amounts of the expenses, being a main reason why the Company is going for steadily increasing

recurring profit in FY03/2016.

Business portfolio with the Company, having had experienced reorganization in FY03/2010, exclusively

comprises businesses with high growth potentials in the future. For example, self-developed (by Startia Lab.

Inc., i.e., a 100% consolidated subsidiary) software to create E-book (ActiBook) has been adopted in diverse

major corporates, belonging to publishing and newspaper industries, while it appears that the mainstay

customer base, i.e., small-&-medium-sized corporates have adopted it, combined with the Company’s web

application support services on their websites.

Going forward, the Company is looking to self-developed (by Startia Lab. Inc., i.e., a 100% consolidated

subsidiary) software to create AR (Augmented Reality) contents as the key merchandise for long-term

earnings growth with the Company, aiming at the establishment of de facto standard as soon as possible.

13

It is spotted that schemes based on AR contents have decent potentials to replace existing equivalents based

on QR code, etc., currently adopted in Smartphones, due to their high functionalities, etc. For example, one

of the customers with the Company issuing motorcycle magazine, having adopted the merchandise, i.e.,

“COCOAR”, highly appreciates the benefit. That is to say, the customer sees meaningfully positive impacts

in sales promotion through own advertising through the use of this, i.e., contributing to sales promotion for

its advertiser’s merchandises (motorcycles) posted on own magazine.

As far as schemes based on the existing QR code are concerned, readers of the magazine are only guided to

specific URL, based on data embedded in markers on the plane of magazine paper. Meanwhile, the schemes

based on AR contents enable readers to view still and/or motion images where actual images obtained

through Smartphone’s camera are fused with specific images requested and/or demanded by customers,

under a condition that specific app is installed in Smartphones. This is why it is called “Augmented Reality”.

In the above-mentioned example, images of motorcycles, i.e., the merchandises to be sold by the advertiser,

are fused with actual images (obtained through Smartphone’s camera), combined with actual sounds of

engine, etc. This creates a new way of appealing to consumers.

14

4.0 Business Model

STARTIA Group to Expand

STARTIA Group, headed by the Company, is in the process of expansion of its business operations for

long-term growth. The Company is based in Shinjuku, while it has been running own bases in Osaka and

Fukuoka, followed by a new opening of a branch in Nagoya (October 2011) and another one in Yokohama

(October 2012). On top of this, the Company newly set up East Tokyo branch in April 2013, basically as a

career-producing center for new graduates, collectively, implying persistently increasing potentials to

acquire new customers in sales territories that have not been covered until recently and/or to strengthen

dominant area strategy. Most recently, the Company newly set up a sales base in Kobe (June 2014) and thus

the Company is likely to persistently extend its business operations in the future.

Meanwhile, on top of existing consolidated subsidiaries, i.e., Startia Lab. Inc. (capital ¥99m, 100% owned)

and MAC Office, Inc. (capital ¥81m, 38.6% owned), the Company implemented capital injections to Urban

Plan Co., Ltd. (capital ¥26m, 34.2% owned) in January 2012, while having had completed registration of

STRATIASOFT INC. (capital ¥10m, 30.0% owned) in China. More recently, in March 2013, the Company

carried out capital injections in a subsidiary based in Shanghai (Startia Shanghai Inc., capital ¥35m, 100%

owned) in order to start up own business operations in China. Then, in June 2013, the Company carried out

capital injections in Horma Service Co., Ltd (capital NT$16m, 39.8% owned) based in Taiwan.

For example, one of the key operations with Startia Lab. Inc., in charge of Web Solutions by business

segment, represents developments of software to create E-book and AR contents. Meanwhile, the Company

carried out capital injections in STARTIASOFT INC. which is involved with planning and developments for

software, based in China, in order to pursue efficiency for developing software. The level of efficiency for

developing software in here far exceeds that of Japan, and the costs for the developments are roughly half of

those in Japan. Given favorable efficiency of the operations, the Company is planning to further increase the

number of engineers with STARTIASOFT INC., on top of the increases so far.

Meanwhile, it is spotted that capital injections in MAC Office, Inc. and Urban Plan Co., Ltd. are well

contributing to sales with the Company. They are basically involved with offering solutions for customers to

newly set up and/or relocate their offices but for those associated with IT environments, while a scheme is

established for the Company to take care of all those solutions associated with IT environments. In other

words, the Company sees new customer cultivations through them, while they benefit from enhanced

contents of their solutions in a view of customers.

15

Proposing Total IT Solutions for Corporates with Headcounts Fewer Than 300

The Company mentions its mission is "to become a leading company to produce excellent businesses and

human resources by means of identifying needs in society and markets, while creating future for people and

corporates”, being involved with operations to “propose total IT solutions for corporates with headcounts

fewer than 300”. For corporates with headcounts fewer than 300, it is increasingly demanded to get

equipped with decent IT systems just like larger competitors, but they often cannot afford running dedicated

team for this, while the largest system integrators and/or dealers of network devices are not so active in

selling to them due to inefficiency stemming from small headcounts fewer than 300 per company, according

to the Company. Now, for the advantage of the fact, the Company’s idea is to set this domain as the core part

to cultivate. It could be said that the Company is mainly in charge of outsourcing for IT operations of

corporates with headcounts fewer than 300.

The Number of Corporates with Headcounts Fewer than 300 (collectively 5.43m) by Region

1,346

743

325496

2,520

Kanto Region

Kansai Region

Kyusyu Region

Toukai Region

Other

(thousand)

Source: Ministry of Internal Affairs and Communications, 2012 Economic Census for Business Activity

The number of corporates with headcounts fewer than 300 is estimated at 5.43m, nation-wide, of which

almost half has been covered by the Company’s own bases in Tokyo, Osaka and Fukuoka as potential

customer base. They, respectively, cover Kanto region (Tokyo, Kanagawa, Saitama and Chiba), Kansai

region (Osaka, Hyogo and Kyoto) and Kyushu region (Fukuoka, Kumamoto and Saga). In all those existing

sales territories, there should be potentials to cultivate new customers more, while new opening of Nagoya

branch, in October 2011, created a new base for the Company to cover Tokai region (Aichi, Gifu and Mie),

having made itself exposed to potential customers as many as 2.91m, which is more than half of total 5.43m.

Meanwhile, the new opening of Yokohama branch in October 2012 substantially contributed to effective

sales territories expansion in Kanto region. On top of this, the Company newly opened East Tokyo branch in

April 2013, beefing up the Company’s dominant area strategy while being utilized as a career-producing

center for new graduates as well. Going forward, the Company is planning to set up new bases in

government-ordinance-designated cities, e.g., Kobe, Sendai, Sapporo and Hiroshima in the near future for

the sake of developing new sales territories. In fact, as mentioned earlier, the Company newly set up a sales

base in Kobe, in June 2014.

16

The characteristics of sales activities with the Company are that they are based on cross selling and/or up

selling. The Company’s sales activities are not supposed to increase the number of customers who buy in

specific merchandises and/or services but to increase sales per customer, while strengthening relationship

with them in a long term, by means of trying to sell diverse merchandises and/or services to each customer.

It is almost always the case that sales activities with new customers start up with opening new accounts

with them by offering specific merchandises and/or services, represented by OTOKU Line (low-cost

telephone services), as a hook to start up. Then, based on such hook, the Company aims at making

progresses in cross selling and/or up selling.

Meanwhile, the Company is pursuing stock sales (to persistently collect compensations from customers in

line with actual use, etc. of merchandises & services offered) in order to set up long-term stable business

relationship with customers. In fact, recent trading in FY03/2015 suggests that stock sales are steadily

going up, while the Company also makes corporate efforts to beef up flow sales (outright sales of

merchandises & services) with which the Company has been traditionally involved at a time, as taken for

granted.

Flow Sales and Stock Sales

2,851 3,4214,399

5,572 6,232

1,149 1,664 2,240 2,594 3,016

71.3% 67.3% 66.3% 68.2% 67.4%

28.7% 32.7% 33.7% 31.8% 32.6%

(60.0%)

(40.0%)

(20.0%)

0.0%

20.0%

40.0%

60.0%

80.0%

0

2,000

4,000

6,000

8,000

10,000

FY03/2011 FY03/2012 FY03/2013 FY03/2014 FY03/2015

Flow Sales (Million Yen) Stock Sales (Million Yen) Flow Sales Ratio (%) Stock Sales Ratio (%)


The Company has abundant in-house engineers in diverse domains, while they speak to each customer face

to face and thus distance with customers is set to be the shortest physically and psychologically, enabling the

Company to offer the most appropriate merchandises and/or services for customers. The number of

headcounts 550 with the Company, as of the end of Q1 FY03/2015, comprised those of sales representatives

301 (54.7% of total), engineers 156 (28.4%) and administration 93 (16.9%), suggesting sufficient number of

engineers versus that of sales representatives. Meanwhile, the Company introduces unified inquiry-

responding system as well as unified billing system, contributing to enclose customers. Providing customers

with such high quality solutions requires them to be physically located near the Company’s sales bases and

thus the Company adopts dominant area strategy where the Company basically deals with customers who

are based in territories where it takes no more than 60 to 90 minutes to arrive by travelling.

17

Web Solutions

Web Solutions comprises E-book-related business and web-related business. The former includes

developments and sales of software to create E-book, while the latter represents the software’s web

application supports. In FY03/2014, sales of the former accounted for three fourth of total and the latter for

the remaining one fourth.

Web Solutions (FY03/2014)

Sales Breakdown Gross Profit Breakdown

E-book-Related

Web-Related

E-book-Related

Web-Related


Network Solutions

Network Solutions comprises network devices, hosting services and managed gate, collectively constituting

the three major businesses in FY03/2014 on a sales basis. Meanwhile, the Company is also involved with ISP.

The key characteristics with this business segment are high exposure to stock sales, presumably at some

50% in terms of the ratio to total.

Network Solutions (FY03/2014)


ISP

Network Devices

Hosting Services

Managed Gate

ISP

Network Devices

Hosting Services

Managed Gate


18

Network devices, one of the three major constituents here in this business segment, represents outright

sales of major makers’ routers, etc., including sales through leasing contracts. On the other hand, managed

gate represents offering of the same devices on a rental basis. In this operation, the Company is not only

involved with rental of such devices but also with 24-hour maintenance (managed) services. At the same

time, the Company is also in charge of rental of peripheral software such as firewalls, and sales stemming

from here are included in those of managed gate.

Hosting services represents those based on servers run by the Company. In here, sales of self-developed

services, called, “Secure SAMBA”, are included and the adoptions of those services by customers are

favorably increasing, providing them with high conveniences.

“Secure SAMBA” represents unique on-line storage services on a SaaS basis by which customers are able to

share files among different bases as if they were running an internal file server in an office. For example,

instead of emitting hard copy of a facsimile message received by MFPs (multifunctional printers), those

services make it possible to store the message as digital data in file server, so that it should be viewed at any

convenience in terms of timing and format. Meanwhile, ISP represents sales of Internet access services for

customers.

Business Solutions

Business Solutions mainly comprises MFPs (multifunctional printers), OTOKU Line, counter and business

phones. In FY03/2014, collective sales of all those four main constituents almost equated to total sales of this

business segment. Meanwhile, the Company was barely exposed to the remainders, i.e., managed telephony,

rental MFPs and mobile phone incentives.

Business Solutions (FY03/2014)


MFPs

OTOKU Line

Counter

Business Phones

Managed Telephony

Rental MFPs

Mobile Phones Incentives

MFPs

OTOKU Line

Counter

Business Phones

Managed Telephony

Rental MFPs

Mobile Phones Incentives


MFPs represents outright sales of multifunctional printers as a multivendor, including those through

leasing contracts. Counter represents fees of services & maintenance for MFPs to have been sold and/or

rented to customers, of which the bulk is billing in line with the volume of emissions for hard copies.

19

OTOKU Line represents sales of low-cost telephone services for intra-city and/or international calls through

metal lines of Softbank Telecom Corp. Basically, this represents a business operation for the Company to

cultivate new customers on behalf of the service provider by means of introducing new customers to adopt

the services and eventually collecting fees associated with this from the service provider. Still, the Company

encloses some of them, as far as they have potentials to become own customers in the future, by means of

introducing a system called “Slim Billing” in which they receive invoices for the services as the Company’s

customers.

Business phones represents outright sales, installation works, services & maintenance, etc. for business

phones, while managed telephony rental of IP business phones, incorporating services & maintenance,

rental MFPs literally rental of MFPs for customers and mobile phone incentives those of sales for mobile

phones.

5.0 Financial Statements

Income Statement

Income Statement Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.CoE

FY FY FY FY FY FY YoY

(Million Yen) 03/2010 03/2011 03/2012 03/2013 03/2014 03/2015 Net Chg.

Sales 3,353 4,000 5,084 6,640 8,167 9,248 +1,080

Cost of Sales 1,386 1,742 2,305 3,152 3,922 - -

Gross Profit 1,966 2,257 2,779 3,487 4,245 - -

SG&A 1,806 1,984 2,319 2,831 3,415 - -

Operating Profit 160 273 459 656 829 840 +10

Non Operating Balance 4 4 16 - 26 25 -

Recurring Profit 164 278 475 655 856 866 +9

Extraordinary Balance (3) (20) 4 - (71) - -

Pretax Profit 160 257 480 655 784 - -

Tax Charges etc. 45 128 201 264 352 - -

Net Profit 115 129 278 391 432 433 +1

Sales YoY (29.7%) +19.3% +27.1% +30.6% +23.0% +13.2% -

Operating Profit YoY (33.8%) +70.8% +68.0% +42.9% +26.5% +1.3% -

Recurring Profit YoY (34.8%) +68.7% +71.1% +37.8% +30.6% +1.2% -

Net Profit YoY +22.5% +12.3% +115.2% +40.4% +10.5% +0.2% -

Gross Profit Margin 58.6% 56.4% 54.7% 52.5% 52.0% - -

(SG&A / Sales) 53.9% 49.6% 45.6% 42.6% 41.8% - -

Operating Profit Margin 4.8% 6.8% 9.0% 9.9% 10.2% 9.1% (1.1%)

Recurring Profit Margin 4.9% 7.0% 9.4% 9.9% 10.5% 9.4% (1.1%)

Net Profit Margin 3.4% 3.2% 5.5% 5.9% 5.3% 4.7% (0.6%)

Tax Charges etc. / Pretax Profit 28.4% 49.8% 42.0% 40.3% 44.9% - -


20

Segmented Information

Segmented Information Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.CoE



Web Solutions 444 701 1,073 1,482 1,943 2,202 +258

Network Solutions 1,048 1,225 1,424 1,843 2,160 2,567 +406

Business Solutions 1,860 2,073 2,585 3,314 4,063 4,479 +415

Sales 3,353 4,000 5,084 6,640 8,167 9,248 +1,080

Web Solutions - +57.9% +53.1% +38.0% +31.2% +13.3% -

Network Solutions - +16.9% +16.3% +29.4% +17.2% +18.8% -

Business Solutions - +11.4% +24.7% +28.2% +22.6% +10.2% -

Sales (YoY) (29.7%) +19.3% +27.1% +30.6% +23.0% +13.2% -

Web Solutions 13% 17.5% 21.1% 22.3% 23.8% 23.8% -

Network Solutions 31% 30.6% 28.0% 27.8% 26.4% 27.8% -

Business Solutions 55% 51.8% 50.9% 49.9% 49.7% 48.4% -

Sales (Composition) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% -

Web Solutions 136 113 220 165 323 - -

Network Solutions 4 109 179 362 301 - -

Business Solutions 66 69 91 169 254 - -

Operating Profit (Before Elimination) 207 292 492 697 879 - -

Elimination (47) (19) (33) (41) (49) - -

Operating Profit 160 273 459 656 829 840 +10

Web Solutions - (16.7%) +94.3% (25.1%) +95.2% - -

Network Solutions - - +64.5% +101.6% (16.8%) - -

Business Solutions - +5.2% +31.7% +84.4% +50.2% - -

Operating Profit （YoY） (33.8%) +70.8% +68.0% +42.9% +26.5% +1.3% -

Web Solutions 65.9% 38.8% 44.8% 23.7% 36.7% - -

Network Solutions 2.1% 37.3% 36.5% 52.0% 34.3% - -

Business Solutions 32.0% 23.8% 18.7% 24.3% 29.0% - -

Operating Profit (Composition) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% -

Web Solutions 30.8% 16.2% 20.6% 11.2% 16.6% - -

Network Solutions 0.4% 8.9% 12.6% 19.7% 14.0% - -

Business Solutions 3.6% 3.4% 3.6% 5.1% 6.3% - -

Operating Profit Margin 4.8% 6.8% 9.0% 9.9% 10.2% 9.1% (1.1%)


Cash Flow Statement

Cash Flow Statement Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.CoE



Operating Cash Flow 116 410 461 566 638 - -

Investing Cash Flow (140) (214) (240) (591) (286) - -

Operating CF + Investing CF (24) 196 221 (24) 352 - -

Financing Cash Flow 158 597 (186) (146) (24) - -


21

Per Share Data

Per Share Data Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.CoE

(Before Adjustments for Split) FY FY FY FY FY FY YoY

(Yen) 03/2010 03/2011 03/2012 03/2013 03/2014 03/2015 Net Chg.

No. of Shares FY End (-000 Shares) 22 4,953 4,956 5,012 5,064 - -

Net Profit / EPS (-000 Shares) - 3,205 0 - 22,994 - -

Treasury Stocks FY End (-000 Shares) 1 0 0 0 0 - -

Earnings Per Share 5,375.8 29.4 56.2 78.6 85.5 85.5 -

Earnings Per Share (Fully Diluted) 35,266.0 28.6 55.4 77.2 83.5 - -

Book Value Per Share 63,709.5 484.4 534.9 605.7 689.7 - -

Dividend Per Share 350.0 5.0 5.6 7.9 15.0 12.8 -

Payout ratio 6.5% 17.0% 10.0% 10.0% 17.5% 15.0% -

Per Share Data Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.CoE

(After Adjustments for Split) FY FY FY FY FY FY YoY

(Yen) 03/2010 03/2011 03/2012 03/2013 03/2014 03/2015 Net Chg.

Stock Split Factor 200 1 1 1 1 - -

Earnings Per Share 26.9 29.4 56.2 78.6 85.5 - -

Book Value Per Share 318.5 484.4 534.9 605.7 689.7 - -

Dividend Per Share 1.8 5.0 5.6 7.9 15.0 - -


Balance Sheet

Balance Sheet Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.CoE



Cash & Deposit 1,216 2,010 2,055 2,068 2,247 - -

Accounts Receivables 604 631 837 1,033 1,438 - -

Inventory 15 21 25 35 31 - -

Other 168 145 173 259 333 - -

Current Assets 2,004 2,808 3,092 3,396 4,051 - -

Tangible Assets 64 97 108 100 105 - -

Intangible Assets 199 240 258 327 502 - -

Investments & Other Assets 274 277 309 450 507 - -

Fixed Assets 538 615 676 878 1,115 - -

Assets Carried Forward - 14 9 4 - - -

Total Assets 2,543 3,439 3,777 4,279 5,167 - -

Accounts Payable 247 291 354 453 618 - -

Short Term Debt 299 151 141 - - - -

Other 340 454 631 789 1,043 - -

Current Liabilities 886 898 1,126 1,242 1,661 - -

Long Term Debt 293 141 - - - - -

Other - - - - 12 - -

Fixed Liabilities 293 141 - - 12 - -

Total Liabilities 1,179 1,039 1,126 1,243 1,673 - -

Shareholders' Equity 1,362 2,404 2,658 3,044 3,450 - -

Other - (4) (7) (8) 43 - -

Net Assets 1,363 2,399 2,650 3,035 3,493 - -

Total Liabilities & Net Assets 2,543 3,439 3,777 4,279 5,167 - -

Equity Capital 1,363 2,399 2,650 3,035 3,492 - -

Interest Bearing Debt 592 293 141 - - - -

Net Debt (624) (1,716) (1,913) (2,068) (2,247) - -

Capital Ratio 53.6% 69.8% 70.1% 70.9% 67.6% - -

Net Debt Equity Ratio (45.8%) (71.4%) (72.0%) (68.0%) (65.1%) - -

ROE (Net Profit / Equity Capital) 8.8% 6.9% 11.0% 13.8% 13.2% - -

ROA (Recurring Profit / Total Assets) 6.8% 9.3% 13.2% 16.3% 18.1% - -

Quick Ratio 205% 294% 257% 250% 222% - -

Current Ratio 226% 313% 275% 273% 244% - -


22

6.0 Other Information

TSE1 Listing

The Company, having made market changeover to TSE1 from TSE Mothers on 28 February 2014, was

founded on 21 February 1996, as Telecom-net Co. Ltd. in Tokorozawa, Saitama Prefecture. In those days, the

Company was basically involved with businesses, currently included in the business segment of Business

Solutions. Company name was changed to STARTIA INC. in April 2004 and the Company’s shares were

listed on Mothers of Tokyo Stock Exchange in December 2005. To date, the Company has been also involved

with Network Solutions and Web Solutions by business segment.

Top management with the Company is Hideyuki Hongo (born in 1966) who is the current president & CEO

and is the founder of the Company. At the same time, he is the top shareholder for the Company, holding

43.9% of the shares outstanding as of the end of FY03/2014. He believes that developments of human

resources are the key issue for the Company to achieve long-term growth and thus trying hard to hire

promising new graduates as many as possible, sparing own resources as much as possible for this.

Now, the Company, listed on TSE1, appears to be able to hire promising new graduates increasingly easier

than before, calling for the number of new graduates 95 for April 2015 versus 84 for April 2014. Meanwhile,

Hongo clearly reveals his enthusiasm for prospective Asian business operations by disclosing that he himself

spearheads the operations, likely to be a key driver for future earnings with the Company.

23

Company History

Date Events

February 1996 Established as Telecom-net Co. Ltd. with capital ¥3.0m

October 1996 Company name, changed to ND Telecom Co., Ltd.

September 1997Submitted written notice for general Type II telecommunications business and accepted

[A-09-2462]

January 2000 Started up hosting services “Digit@Link Rental Server"

May 2002 Opened Shinjuku branch

November 2002 Opened Osaka branch

April 2004 Company name, changed to STARTIA INC.

December 2005 Listed on Mothers of the Tokyo Stock Exchange

July 2006 Opened Fukuoka branch

April 2007 Osaka branch, becoming the second headquarter office

July 2007 Started to offer services of rental network devices, i.e., "managed gate”

October 2007 Acquired MFP customers and counter business from Arest Inc.

April 2009Established STARTIA Laboratory INC. as subsidiary to be in charge of developing

websites and software to create E-book.

June 2009MAC Office Inc., becoming an equity-accounted affiliate by underwriting third-party

allotment

July 2009 Facility Division, succeeded by MAC Office Inc.

October 2011 Opened Nagoya branch

October 2011 STARTIA SOFT INC., based in China, established as an equity-accounted affiliate

December 2011STARTIA INC. and Startia Lab. Inc., authorized by ISMA (Information Security

Management System)

January 2012Urban Plan Co., Ltd., becoming an equity-accounted affiliate by underwriting

third-party allotment.

October 2012 Opened Yokohama branch

January 2013 Established STARTIA SHANGHAI INC. (based in China) as a consolidated subsidiary

April 2013 Opened East Tokyo branch

June 2013 Signed up contract with Horma Service Co., Ltd (based in Taiwan) for business and

capital tie-ups to make it an equity-accounted affiliate

February 2014 Market Changeover to TSE1

24

Disclaimer

Information here is a summary of “IR Information” of the Company, compiled by Walden Research Japan,

from a neutral and professional standing point, in the form of a report. “IR Information” of the Company

comprises a) contents of our interview with the Company, b) contents of presentations for institutional

investors, c) contents of timely disclosed information and d) contents of the homepage etc.

Company name: Walden Research Japan Incorporated

Headquarters：#1110 4-12-4 Hatchobori, Chuo-ku, Tokyo 104-0032, JAPAN

URL: www.walden.co.jp

E-mail: [email protected]

Phone：+81 3 3553 3769

Copyright 2014 Walden Research Japan Incorporated

http://www.walden.co.jp/


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3393 star 2015 03 q1 2014 09 19 report english2.0 Company Profile Provider of Total IT Solutions Company Name STARTIA INC. Company Website IR Information Share Price Established 21