Notice: This document has been translated from Japanese original for reference purpose only, without any warranty as toits accuracy or as to the completeness of the information. The Japanese original version is the sole official version.
May 9, 2017

Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2017
[Japanese GAAP]
Company name: EM SYSTEMS CO., LTD.
Stock code:
4820
Representative: Kozo Kunimitsu, Chairman and CEO
Contact:
Takeshi Shigeyama, Director
Tel: +81-6-6397-1888
Scheduled date of Annual General Meeting of Shareholders:
Scheduled date of payment of dividend:
Scheduled date of filing of Annual Securities Report:
Preparation of supplementary materials for financial results:
Holding of financial results meeting:

Listing: Tokyo Stock Exchange, First Section
URL: http://www.emsystems.co.jp

June 20, 2017
June 21, 2017
June 20, 2017
Yes
Yes (for securities analysts)(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2017 (April 1, 2016 – March 31, 2017)(Percentages represent year-on-year changes)(1) Consolidated operating results
Net sales

Operating profit

Million yen%%

Million yen%

Fiscal year ended Mar. 31, 2017
13,676
3.6
2,597
39.5
3,163
29.3
Fiscal year ended Mar. 31, 201613,199
17.2
1,861
51.0
2,446
43.7
Note: Comprehensive income (million yen)
Fiscal year ended Mar. 31, 2017: 2,091 (up 35.7%)
Fiscal year ended Mar. 31, 2016: 1,541 (up 51.8%)

2,116
1,621

30.5
68.0

Net income pershare

Million yen

Profit attributable toowners of parent

Ordinary profit%

Million yen

Diluted net income
Ordinary profit on
Return on equity
per share
total assets

Yen

Yen

%

Operating profit
to net sales%%

Fiscal year ended Mar. 31, 2017
120.60119.52
16.2
15.2
19.0
Fiscal year ended Mar. 31, 2016
93.38
92.51
14.1
12.4
14.1
Reference: Equity in earnings of affiliates (million yen): Fiscal year ended Mar. 31, 2017: - Fiscal year ended Mar. 31, 2016: Note: EM SYSTEMS CO., LTD. (hereafter, the “Company”) conducted a common stock split according to a ratio of 1:2 effective on
April 1, 2016. Net income per share and diluted net income per share are calculated as if this stock split had taken place at the
beginning of the fiscal year ended March 31, 2016.

(2) Consolidated financial position
Total assets

Net assets

Million yen

Net assets per share

Equity ratio

Million yen

Yen%

As of Mar. 31, 2017
21,34814,06365.4
790.96
As of Mar. 31, 2016
20,31012,17259.6
693.68Reference: Shareholders’ equity (million yen) As of Mar. 31, 2017:
13,964As of Mar. 31, 2016:
12,107
Note: The Company conducted a common stock split according to a ratio of 1:2 effective on April 1, 2016. Net assets per share arecalculated as if this stock split had taken place at the beginning of the fiscal year ended March 31, 2016.

(3) Consolidated cash flows
Cash and cash
equivalents at end of
periodCash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Million yen

Million yen

Million yen

Million yen

2,080
2,108

577
597

(1,091)(1,277)

7,901
6,354

Fiscal year ended Mar. 31, 2017
Fiscal year ended Mar. 31, 2016

2. Dividends
Dividend per share
1Q-end2Q-end3Q-endYear-end

Yen

Yen

Yen

Yen

Total
Payout ratio
dividends (consolidated)

Total
Yen

Million yen%

Dividend on
equity(consolidated)%

Fiscal year ended Mar. 31, 2016
16.00
31.00
47.00
409
25.2
3.6
Fiscal year ended Mar. 31, 2017
8.00
23.00
31.00
546
25.7
4.2
Fiscal year ending Mar. 31, 2018
11.00
20.00
31.00
25.2
(forecast)
Note: The Company conducted a common stock split according to a ratio of 1:2 effective on April 1, 2016. Dividend per share forthe fiscal year ended March 31, 2016 is the actual amount before the stock split.

3. Consolidated Earnings Forecasts for the Fiscal Year Ending March 31, 2018 (April 1, 2017 – March 31, 2018)
Net salesFirst half
Full year

Operating profit(Percentages represent year-on-year changes)
Profit attributable to
Net income per shareowners of parent

Ordinary profit

Million yen%

Million yen%

Million yen%

Million yen

%

Yen

7,100
13,835

8.9
1.2

1,340
2,600

16.6
0.1

1,643
3,205

14.6
1.4

1,096
2,137

14.5
1.0

63.11
123.08

* Notes(1) Changes in significant subsidiaries during the period (changes in scope of consolidation): None
(2) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others: Yes
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting-based estimates: None
4) Restatements: None
Note: Please refer to “3. Consolidated Financial Statements and Notes, (5) Notes to Consolidated Financial Statements,
Changes in Accounting Policies” on page 15 of the attachments for further information.

(3) Number of outstanding shares (common stock)1) Number of shares outstanding at the end of period (including treasury shares)
As of Mar. 31, 2017:18,055,900 shares

As of Mar. 31, 2016:

17,855,700 shares

As of Mar. 31, 2016:

400,954 shares

2) Number of treasury shares at the end of period
As of Mar. 31, 2017:

400,954 shares

3) Average number of shares outstanding during the period
Fiscal year ended Mar. 31, 2017:

17,546,928 sharesFiscal year ended Mar. 31, 2016:

17,366,946 shares

Note: The Company conducted a common stock split according to a ratio of 1:2 effective on April 1, 2016. Number ofoutstanding shares (common stock) is calculated as if this stock split had taken place at the beginning of the fiscal year
ended March 31, 2016.

Reference: Summary of Non-consolidated Financial Results
1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2017 (April 1, 2016 – March 31, 2017)(1) Non-consolidated operating results(Percentages represent year-on-year changes)

Fiscal year ended Mar. 31, 2017
Fiscal year ended Mar. 31, 2016

Net sales
Million yen
11,746
10,956%
7.2
7.3

Operating profit
Million yen
%
2,366
44.8
1,635
29.7

Ordinary profit
Million yen
%
2,914
32.4
2,201
24.7

Net income
Million yen
%
1,975
50.5
1,312
15.1

Net income per share Diluted net income per share
Yen
Yen
Fiscal year ended Mar. 31, 2017112.58111.57
Fiscal year ended Mar. 31, 2016
75.58
74.87
Note: The Company conducted a common stock split according to a ratio of 1:2 effective on April 1, 2016. Net income per share anddiluted net income per share are calculated as if this stock split had taken place at the beginning of the fiscal year ended March
31, 2016.

(2) Non-consolidated financial position
Total assets
Net assets
Equity ratio
Net assets per share
Million yen
Million yen%
Yen
As of Mar. 31, 2017
20,39913,64666.4
767.34As of Mar. 31, 2016
19,568
11,871
60.3
676.44
Reference: Shareholders’ equity (million yen):
As of Mar. 31, 2017: 13,547
As of Mar. 31, 2016: 11,807
Note: The Company conducted a common stock split according to a ratio of 1:2 effective on April 1, 2016. Net assets per share arecalculated as if this stock split had taken place at the beginning of the fiscal year ended March 31, 2016.
* The current financial report is not subject to audit procedures.
* Explanation of appropriate use of earnings forecasts, and other special items
Forecasts of future performance in this report are based on assumptions judged to be valid and information available to theCompany’s management at the time the materials were prepared, but are not promises by the Company regarding future
performance. Actual results may differ significantly from these forecasts for a number of reasons. Please refer to “1. Overview ofResults of Operations, (4) Outlook” on page 4 for forecast assumptions and notes of caution for usage.

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17

Contents of Attachments
1. Overview of Results of Operations

2(1) Results of Operations

2(2) Financial Position

4(3) Cash Flows

4(4) Outlook

4

2. Basic Approach to the Selection of Accounting Standards

5

3. Consolidated Financial Statements and Notes

6(1) Consolidated Balance Sheet

6(2) Consolidated Statements of Income and Comprehensive Income

8

Consolidated Statement of Income

8

Consolidated Statement of Comprehensive Income

10(3) Consolidated Statement of Changes in Equity

11(4) Consolidated Statement of Cash Flows

13(5) Notes to Consolidated Financial Statements

15

Going Concern Assumption

15

Changes in Accounting Policies

15

Segment and Other Information

15

Per Share Information

18

Subsequent Events

18

1

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17

1. Overview of Results of Operations(1) Results of Operations
The Japanese economy continued to recover at a moderate pace during the fiscal year that ended on March 31,2017 and the performance of Japanese companies continued to improve. The main reason was improvements incorporate earnings and employment situation due to economic and monetary policy initiatives of the Japanese
government and the Bank of Japan However, the outlook remains unclear due to negative consumer sentimentcaused by concerns about the future and other reasons. Major changes are taking place in the operating
environment for pharmacies in Japan, the primary market for the products of EM SYSTEMS (the “Company”).
Pharmacies are facing challenges due to the saturation of Japan’s pharmacy market and the April 2016 revisions
to drug dispensing fees and National Health Insurance (NHI) drug prices. Due to these events, a realignment isoccurring due to activities aimed at business expansion that include mergers and acquisitions involving large
pharmacy chains. This environment is making the business climate even more difficult for small and midsize
pharmacy companies. Revisions to medical care payments planned for 2018 will make the operating environment
even more challenging. To help pharmacies overcome these challenges so they can continue using the Company’s
products for many more years, the monthly basic fee was reduced by 10% beginning in January 2017. In addition,customers using the Company’s products for more than six years are receiving additional basic monthly fee
discounts that increase depending on the length of use.
One significant source of change is Japan’s aging population. This is symbolized by the so-called 2025 problem,
which is about when the cost of senior healthcare is expected to start to skyrocket. To achieve closer ties between
healthcare (clinics and pharmacies) and nursing care, the Company started a full-scale operation of the IT systems
business for nursing care providers and launched Hirogaru Care Net for linking healthcare and nursing care datasystems in March 2017. The Company aims for realizing efficient ties between healthcare and nursing care bycreating functions for seamless ties with systems that the Company provides to clinics, pharmacies and nursing
care providers.
For the fiscal year that ended on March 31, 2017, the Company reported consolidated net sales of 13,676 million
yen (up 3.6% year on year), operating profit of 2,597 million yen (up 39.5%), ordinary profit of 3,163 million yen(up 29.3%) and profit attributable to owners of parent of 2,116 million yen (up 30.5%).
Results by business segment were as follows. Segment sales and operating profit (loss) in this section are before
the inter-segment eliminations.
Starting in the current fiscal year, the Company is using revised reportable segments. In prior years there were
two segments: Systems and Related Businesses and Other Business. Now there are three segments: IT Systems
and Related Business for Pharmacies, IT Systems and Related Business for Clinics, and Other Businesses.
Segment information for the previous fiscal year has been restated based on these new segments after the change
in the organizational structure.
IT Systems and Related Business for Pharmacies
Major activities in this segment included measures to strengthen sales activities targeting pharmacy chains, using
sales agents and OEM supply agreements to continuously expand sales channels, and increasing sales of the
Recepty NEXT prescription system and the Bungyo-mate system for pharmacies.
Although the number of systems sold was below the fiscal year plan, there was growth in billing service sales dueto the increasing number of users. Steady replacement demand for hardware and continuing growth in sales ofsupplies also contributed to this segment’s performance. As a result, sales met the fiscal year plan. Earnings
benefited from ongoing measures to cut the cost of sales and operating expenses. Consolidated subsidiary
COSMOSYSTEMS Co., Ltd. continued to make a contribution to sales and earnings.
As a result, the segment recorded sales of 11,122 million yen (up 5.2% year on year) and operating profit of 2,644
million yen (up 30.6%).

2

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17

IT Systems and Related Business for Clinics
Sales of Ortia, software for an electronic patient record system, began in July 2016 and there were numerous
activities for establishing sales channels for this software throughout Japan. The Company proactively
participated in industry exhibitions to maximize the exposure of our products while increasing referrals fromexisting clients and from websites specializing in medical services. In addition, the Company continued to focus
on increasing sales of the Medical Recepty NEXT (MRN) Clerk Style and UNI-MEDICAL medical accounting
systems and the Medical Recepty NEXT (MRN) Karte Style electronic patient record system. On the Company’s
website, there was a steady increase in requests for product information and reservations for productdemonstrations.
These activities have started to expand sales channels, resulting in higher sales of MRN products than in theprevious fiscal year. A decrease in UNI-MEDICAL replacement orders negatively affected segment performance.
Billing service sales continued to climb along with the increasing number of users, making this service profitable
for the first time within this business segment. Measures to lower the cost of sales and operating expenses
continued during the current fiscal year.
As a result, the segment recorded sales of 1,670 million yen (down 0.8% year on year) and operating profit of 17
million yen (compared with operating loss of 222 million yen one year earlier).
Other Businesses
The medical and nursing care linkage business launched Hirogaru Care Net in March 2017, which is provided toclinics, pharmacies and nursing care providers for supporting the establishment of the Regional Comprehensive
Care System of the Japanese government. There were heightened activities for more growth of sales of Tsunagaru
Care NEXT, an ASP nursing care provider support system that the Company started shipping in October 2016.
The Hiroshima office of the Japan Health Insurance Association asked for bids for the establishment of an online
insurance coverage qualification verification system used to help produce forms for health insurance claims at
pharmacies. On December 13, 2016, the Company was selected for this project. Pharmacies that are underjurisdiction of the Hiroshima office of the Japan Health Insurance Association and use this system are now able toconfirm the qualifications of an individual with Japan Health Insurance Association coverage on a computer
screen on a real-time basis as part of standard procedures. This improves pharmacy efficiency by eliminating theneed to deal with insurance claims rejected due to ineligibility and reissue invoices. The decision has been madeto continue expanding the use of this verification system to include clinics as well as pharmacies. To contribute toprogress in the healthcare industry, the Company will be actively engaged in research and development activities
as well as demonstration projects for electronic prescriptions, electronic health records (EHR) and personal healthrecords (PHR). The Company has been participating in a joint research program with the Japan Medical Association,
Japan Pharmaceutical Association and Nihon University concerning an infectious disease outbreak notification service.
Currently, over 10,000 pharmacies in Japan are using this service. In addition, consolidated subsidiary Brick Pharmacy
Co., Ltd. operates a pharmacy, and consolidated subsidiary LASANTE Co., Ltd. operates fitness clubs, a conference
room rental business and a nursery school business.
Sales and earnings in the IT systems business for nursing care providers were far below the fiscal year plan
because of a delay in the full-scale start of operations. In the pharmacy business, sales were down mainly becauseof revisions to drug dispensing fees National Health Insurance (NHI) and drug prices. However, earnings werehigher due to measures to cut the cost of sales and operating expenses. LASANTE’s performance exceeded thefiscal year plan, although sales and earnings were down from one year earlier due to the reorganization of thiscompany’s operations. Sales in this segment were 982 million yen (down 8.4% year on year) and operating loss
was 32 million yen (compared with operating profit of 117 million yen one year earlier).
Segment sales and operating profit in this section are before the inter-segment eliminations.

3

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17(2) Financial Position
Total assets were 21,348 million yen at the end of the fiscal year, 1,037 million yen more than one year earlier.
Cash and deposits increased while property, plant and equipment and real estate for investment decreased becauseof depreciation.
Total liabilities decreased 853 million yen from the end of the previous fiscal year to 7,284 million yen, due to anincrease in notes and accounts payable-trade, and decreases in loans payable and income taxes payable.
Net assets increased 1,891 million yen to 14,063 million yen mainly because of an increase in retained earnings
associated with the fiscal year’s profit.
(3) Cash flows
Cash and cash equivalents increased 1,547 million yen from the end of March 2016 to 7,901 million yen at theend of March 2017. This was mainly attributable to increases in profit before income taxes along with the strong
earnings in the current fiscal year and proceeds from rental of real estate for investment.
Cash flows from operating activities
Net cash provided by operating activities was 2,080 million yen, compared with 2,108 million yen provided in theprevious fiscal year. Strong earnings in the current fiscal year were the primary reason for this increase.
Cash flows from investing activities
Net cash provided by investing activities was 577 million yen compared with 597 million yen provided in theprevious fiscal year, mainly because of proceeds from rental of real estate for investment.
Cash flows from financing activities
Net cash used in financing activities was 1,091 million yen compared with 1,277 million yen used in the previous
fiscal year. The repayment of loans payable was the primary use of cash.
Reference: Cash flow indicators
FY3/13

FY3/14

FY3/15

FY3/16

FY3/17

Shareholders’ equity ratio (%)

45.6

50.1

56.8

59.6

65.4

Shareholders’ equity ratio based on market value (%)

82.6

101.3

82.7

113.4

149.5

Ratio of interest-bearing debt to cash flows (years)

5.4

3.5

2.6

1.4

1.0

Interest coverage ratio (times)

22.2

38.0

48.5

82.1

121.1

Shareholders’ equity ratio: Shareholders’ equity / Total assets
Shareholders’ equity ratio based on market value: Market capitalization / Total assets
Ratio of interest-bearing debt to cash flows: Interest-bearing debt / Cash flows
Interest coverage ratio: Cash flows / Interest payments
Notes: 1. All indicators are calculated based on consolidated figures.
2. Market capitalization is calculated based on the number of shares outstanding after the deduction of treasury shares.
3. Cash flows are calculated using the figures for operating cash flows in the consolidated statement of cash flows.
4. Interest-bearing debt includes all debt on the consolidated balance sheet that incur interest.

(4) Outlook
Even more measures are expected in Japan in order to hold down the cost of health care because of revisions to
medical care payments planned for 2018. Furthermore, the increasing pace of mergers and acquisitions amonglarge pharmacy companies and increasing number of drug stores that also dispense prescriptions are widening the
gap between companies with strong earnings and others. Small and midsize pharmacy companies will face evenmore serious challenges due to this environment. To succeed, pharmacies will have to become even more efficient,such as by increasing the use of generic drugs and more closely managing left-over drugs. In addition, pharmacies
4

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17

must provide personal care pharmacists and be a source of support for staying healthy. The Ministry of Health,Labour and Welfare no longer prohibits the use of electronic prescription bags when certain requirements are met
and more than 35% of clinics in Japan are using electronic patient records. As a company already participating in
PHR and EHR demonstration trials in various locations, we believe that our role will become more important as
the use of digital data continues to grow. We will make greater use of solutions that incorporate IT to be a leader
in the provision of support for more advances with medical services. To create a link for healthcare (clinics andpharmacies) and nursing care data, we are expanding the functions of the Hirogaru Care Net for linking
healthcare and nursing care data systems. Our goal is to increase sales of Hirogaru Care Net by making it astandard component of all IT systems for pharmacies, clinics and nursery care providers.
Our goals are more growth of our group’s business activities that generate consistent fee income, further
improvements of product quality, and R&D activities involving advanced technologies that produce innovative
next-generation products. We will also retain an aggressive stance concerning mergers and acquisitions.
To respond to changes in the operating environment, we revised our organizational structure on April 1, 2017.
The goals are strengthening ties between the IT system businesses for pharmacies and nursing care providers andproducing more synergies. Four divisions were reorganized to create three new divisions. The previous four
divisions are Prescription Systems, Medical Systems, Health Care-Nursing Care Cooperation, and Sales andServices. The operations of these divisions are now organized as the IT Systems Business for Pharmacies Nursing
Care Providers, IT Systems Business for Clinics and Sales and Services. These business units have the following
functions.
1. IT Systems Businesses for Pharmacies and Nursing Care Providers
Operations of the IT system businesses for pharmacies and nursing care providers include business strategies,
product planning and development, establishing new sales channels and other activities involving these two typesof IT systems.
Operations of healthcare data linkage business include business strategies, product planning and development,
establishing new sales channels and other activities. This business also conducts activities to provide a link
between healthcare (clinics and pharmacies) and nursing care data.
2. IT Systems Business for Clinics
Operations of this business include business strategies, product planning and development, establishing new sales
channels and other activities involving medical care IT systems.
3. Sales and Service Business
By unifying the sales and support services division, this business performs sales activities for all products andservices. There is a separate organizational unit for each job category in order to strengthen specialized skills andachieve greater customer satisfaction.
The EM SYSTEMS Group forecasts FY3/18 consolidated net sales of 13,835 million yen (up 1.2% year on year),
operating profit of 2,600 million yen (up 0.1%), ordinary profit of 3,205 million yen (up 1.4%), and profit
attributable to owners of parent of 2,137 million yen (up 1.0%).
The above projections are based on information available at the time of release of this report. Actual results may
differ from these projections due to a variety of factors.
2. Basic Approach to the Selection of Accounting Standards
The EM SYSTEMS Group currently applies Japanese accounting standards for its consolidated financial
statements. We will take suitable actions with regard to the application of International Financial ReportingStandards (IFRS) by taking into account associated factors in Japan and other countries.
5

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17

3. Consolidated Financial Statements and Notes(1) Consolidated Balance Sheet(Millions of yen)
FY3/17(As of Mar. 31, 2017)

FY3/16(As of Mar. 31, 2016)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets

6,354
2,622
172
1
244
365
(2)
9,757

7,901
2,582
159
0
190
391
(3)
11,221

Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation

1,545
(682)

1,506
(679)

862
670
225
(126)

827
632
163
(106)

99

57

Rental assets
Accumulated depreciation
Rental assets, net

52
(26)
25

63
(41)
21

Construction in progress
Other
Accumulated depreciation

3
673
(574)

651
(527)

Buildings and structures, net
Land
Leased assets
Accumulated depreciation
Leased assets, net

Other, net

98

124

1,761

1,663

313
6
368
7

259
39
311
5

696

616

35
9,960
(2,542)35
9,960(2,744)

Real estate for investment, net

7,418

7,215

Lease and guarantee deposits
Deferred tax assets
Net defined benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets

146
315
132
43
(0)
8,091

147
316
107
22
(0)
7,844

10,54910,1243
3

1
1

20,31021,348

Total property, plant and equipment
Intangible assets
Software
Software in progress
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Real estate for investment
Accumulated depreciation

Total non-current assets
Deferred assets
Share issuance cost
Total deferred assets
Total assets

6

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17(Millions of yen)
FY3/17(As of Mar. 31, 2017)

FY3/16(As of Mar. 31, 2016)
Liabilities
Current liabilities
Notes and accounts payable-trade

915

1,030

Short-term loans payable

500

300

Current portion of long-term loans payable

590

526

Accounts payable-other

401

434

Lease obligations

61

45

Income taxes payable

718

545

Accrued consumption taxes

169

148

Provision for bonuses

394

394

Provision for point card certificates
Other
Total current liabilities

2

2

855

823

4,609

4,250

1,778

1,255

Non-current liabilities
Long-term loans payable
Lease obligations

61

31

Net defined benefit liability

797

875

Provision for product warranties

220

177

Long-term guarantee deposited

671

695

3,528

3,034

8,137

7,284

Capital stock

2,306

2,394

Capital surplus

2,614

2,702

Retained earnings

7,435

9,140

Treasury shares

(223)

(223)

Total shareholders’ equity

12,132

14,013

Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity

Accumulated other comprehensive income
Foreign currency translation adjustment

56

36

Remeasurements of defined benefit plans

(80)

(85)

Total accumulated other comprehensive income

(24)

(48)

Subscription rights to shares
Total net assets
Total liabilities and net assets

7

64

99

12,172

14,063

20,31021,348EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income
FY3/16(Apr. 1, 2015 – Mar. 31, 2016)(Millions of yen)
FY3/17(Apr. 1, 2016 – Mar. 31, 2017)13,19913,676

Net sales
Cost of sales

6,119

6,062

Gross profit

7,080

7,614

30

35

Selling, general and administrative expenses
Promotion expenses
Packing and transportation expenses

38

27

Advertising expenses

43

51

Provision of allowance for doubtful accounts

1

1

Provision for product warranties

116

25

Directors’ compensations

240

259

Salaries and allowances

2,011

1,883

Bonuses252

297

Provision for bonuses

373

356

-

35

Retirement benefit expenses

115

143

Legal welfare expenses

395

390

Traveling and transportation expenses

160

125

Communication expenses

101

88

Depreciation

164

138

Amortization of goodwill

101

57

Rents

292

254

Share-based compensation expenses

Research and development expenses
Other
Total selling, general and administrative expenses

0

34

779

812

5,218

5,017

1,861

2,597

Interest income

1

1

Dividend income

26-

Rent income of real estate

946

974

Gain on sales of securities

33-

Operating profit
Non-operating income

Miscellaneous income

15

12

1,023

988

Interest expenses

24

16

Commission fee

5

1

386

379

1

1

Total non-operating income
Non-operating expenses

Rent expenses on real estates
Amortization of share issuance cost
Miscellaneous loss

20

22

Total non-operating expenses

439

422

2,446

3,163

Ordinary profit

8

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17

FY3/16(Apr. 1, 2015 – Mar. 31, 2016)(Millions of yen)
FY3/17(Apr. 1, 2016 – Mar. 31, 2017)

Gain on sales of non-current assets-

26

Gain on sales of investment securities

226

-

2

-

228

26

Extraordinary income

Gain on reversal of subscription rights to shares
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets

19

3

Loss on sales of non-current assets-

11

Impairment loss

80-

Amortization of goodwill

115

-

8

3

Loss on cancellation of leases

1

-

225

18

2,449

3,171

Income taxes - current

977

999

Income taxes - deferred

(149)

55

Loss on liquidation of subsidiaries and associates
Total extraordinary losses
Profit before income taxes

827

1,055

Profit

1,621

2,116

Profit attributable to owners of parent

1,621

2,116

Total income taxes

9EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17

Consolidated Statement of Comprehensive Income
FY3/16(Apr. 1, 2015 – Mar. 31, 2016)(Millions of yen)
FY3/17(Apr. 1, 2016 – Mar. 31, 2017)

1,621

2,116

Valuation difference on available-for-sale securities(9)-

Foreign currency translation adjustment

(12)

(19)

Remeasurements of defined benefit plans, net of tax

(58)

(5)

Total other comprehensive income

(80)

(24)

1,541

2,091

1,541

2,091

-

-

ProfitOther comprehensive income

Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

10

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17(3) Consolidated Statement of Changes in Equity
FY3/16 (Apr. 1, 2015 – Mar. 31, 2016)(Millions of yen)
Shareholders’ equity
Capital stock
Balance at beginningof current period
Changes of items
during period
Exercise ofsubscription rights tosharesCapital surplus

2,243

2,551

62

62

Retained earnings

Treasury shares

Total shareholders’equity

6,212

(123)

10,884125

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
sharesNet changes of items
other thanshareholders’ equity
Total changes of items
during period
Balance at end ofcurrent period

(399)

(399)

1,621

1,621
(99)

(99)

62

62

1,222

(99)

1,247

2,306

2,614

7,435

(223)

12,132(Millions of yen)
Accumulated other comprehensive income

Balance at beginningof current period
Changes of items
during period
Exercise ofsubscription rights tosharesValuationdifference on
available-for-salesecurities

Foreigncurrencytranslation
adjustment

9

68

Total
Remeasurements accumulated
otherof definedcomprehensive
benefit plansincome(21)

56

Subscription
rights toshares71

11,012

125

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
sharesNet changes of items
other thanshareholders’ equity
Total changes of items
during period
Balance at end ofcurrent period

Total net
assets

(399)
1,621
(99)
(9)

(12)

(58)

(80)

(7)

(88)

(9)

(12)

(58)

(80)

(7)

1,159

-

56

(80)

(24)

64

12,17211

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17

FY3/17 (Apr. 1, 2016 – Mar. 31, 2017)(Millions of yen)
Shareholders’ equity
Capital stock
Balance at beginningof current period
Changes of items
during period
Exercise ofsubscription rights tosharesCapital surplus

2,306

2,614

87

87

Retained earnings

Treasury shares

Total shareholders’equity

7,435

(223)

12,132

175

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
sharesNet changes of items
other thanshareholders’ equity
Total changes of items
during period
Balance at end ofcurrent period

(411)

(411)

2,116

2,116

87

87

1,705

-

1,881

2,394

2,702

9,140

(223)

14,013(Millions of yen)
Accumulated other comprehensive income
Foreigncurrencytranslation
adjustment

Valuationdifference on
available-for-salesecurities
Balance at beginningof current period
Changes of items
during period
Exercise ofsubscription rights toshares-

Total
Subscription
Remeasurements accumulated
rights to shares
otherof definedcomprehensive
benefit plansincome

56

(80)

(24)

64

12,172

175

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
sharesNet changes of items
other thanshareholders’ equity
Total changes of items
during period
Balance at end ofcurrent period

Total net
assets

(411)
2,116

-

(19)

(5)

(24)

34

10

(19)

(5)

(24)

34

1,891

36

(85)

(48)

99

14,06312

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17(4) Consolidated Statement of Cash Flows(Millions of yen)
FY3/16
FY3/17(Apr. 1, 2015 – Mar. 31, 2016) (Apr. 1, 2016 – Mar. 31, 2017)
Cash flows from operating activities
Profit before income taxes

2,449

3,171

Depreciation

673

611

Amortization of goodwill

216

57

Amortization of share issuance cost

1

1

Impairment loss

80-

Loss on liquidation of subsidiaries and associates

1-

Decrease (increase) in net defined benefit asset

(3)

(3)

Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for directors’ retirement
benefits
Increase (decrease) in provision for product warranties

42

98

(70)

-

36

(43)

Increase (decrease) in provision for bonuses

50

(0)

Increase (decrease) in provision for point card certificates

0(0)Increase (decrease) in allowance for doubtful accounts

1

1

Interest and dividend income

(28)

(1)

Rent income of real estate

(946)

(974)

Expenses of real estate rent

161

153

Interest expenses

24

16

Loss on retirement of non-current assets

19

3

Loss on cancellation of leases

8-

Share-based compensation expenses-

40

Gain on reversal of subscription rights to shares(2)-

Loss (gain) on sales of securities

(33)

-

-

(15)

Loss (gain) on sales of non-current assets
Loss (gain) on sales of investment securities

(226)

-

Decrease (increase) in notes and accounts receivable-trade

(350)

39

Decrease (increase) in inventories

285

13

Decrease (increase) in other current assets

28

(25)

Increase (decrease) in notes and accounts payable-trade

20

115

Decrease (increase) in consumption taxes refund receivable

6-

Increase (decrease) in accrued consumption taxes

(47)

(14)

Increase (decrease) in other current liabilities

132

(4)

Other, net

2954

Subtotal

2,564

3,296

28

1

Interest and dividend income received
Interest expenses paid

(25)

(17)

Income taxes paid

(458)

(1,200)Net cash provided by (used in) operating activities

2,108

2,080

13

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17(Millions of yen)
FY3/16
FY3/17(Apr. 1, 2015 – Mar. 31, 2016) (Apr. 1, 2016 – Mar. 31, 2017)
Cash flows from investing activities
Purchase of securities(1,084)-

Proceeds from sales of securities

1,213

-

Purchase of property, plant and equipment

(63)

(95)

Proceeds from sales of property, plant and equipment
Purchase of intangible assets

1

54

(132)

(228)

Proceeds from sales of investment securities

226-

Purchase of shares of subsidiaries and associates

(10)

-

Payments for transfer of business

(367)

-

Proceeds from rental of real estate for investment

948

977

Payments for rental of real estate for investment

(173)

(148)

Collection of loans receivable

24

5

Payments of loans receivable

-

(10)

Proceeds from guarantee deposits received

19

31

Repayments of guarantee deposits received

(3)

(7)

Net cash provided by (used in) investing activities

597

577

Net increase (decrease) in short-term loans payable

(98)

(200)

Repayments of long-term loans payable

(692)

(586)

Repayments of lease obligations

(106)

(64)

Proceeds from issuance of common shares

119

170

Purchase of treasury shares

(99)

-

Cash dividends paid

(399)

(411)

Cash flows from financing activities(1,277)(1,091)

Effect of exchange rate change on cash and cash equivalents

Net cash provided by (used in) financing activities

(11)

(19)

Net increase (decrease) in cash and cash equivalents

1,416

1,547

Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents from newly consolidated
subsidiary

4,928

6,354

10

-

Cash and cash equivalents at end of period

6,354

7,901

14

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Changes in Accounting Policies
Application of Practical Solution on a Change in Depreciation Method due to Tax Reform 2016
Following the revision of the Corporation Tax Act, the Company has applied the “Practical Solution on a Change
in Depreciation Method due to Tax Reform 2016” (Accounting Standards Board of Japan (ASBJ) Practical Issues
Task Force (PITF) No. 32, June 17, 2016) from the current fiscal year, and changed the method for the
depreciation of facilities attached to buildings and structures acquired on or after April 1, 2016, from thedeclining-balance method to the straight-line method.
The effect of this change on profit/loss is insignificant.
Segment and Other Information[Segment information]
1. Overview of reportable segment
Segments used for financial reporting are the EM SYSTEMS Group’s constituent units for which separate
financial information is available and for which the Board of Directors performs periodic studies for the purposesof determining the allocation of resources and evaluating performance.
The EM SYSTEMS Group consists of business units organized according to product categories and business
operations that are divided among different companies. Starting in the current fiscal year, the Company is using
revised reportable segments. In prior years there were two segments: Systems and Related Businesses and Other
Business. Now there are three segments: IT Systems and Related Business for Pharmacies, IT Systems andRelated Business for Clinics, and Other Businesses. Segment information for the previous fiscal year has been
restated based on these new segments after the change in the organizational structure.
Major products for each reportable segment are as follows:
Reportable segment

Major products

IT Systems and Related Business for
Pharmacies

Development and sales of systems that perform administrative tasks forpharmacies

IT Systems and Related Business forClinics

Development and sales of systems that perform administrative tasks forclinics

Other Businesses

Development and sales of systems for supporting nursing careproviders, Management of a fitness club, nursery school and pharmacy

Segment information for the previous fiscal year has been restated based on these new segments.
2. Calculation methods for net sales, profit/loss, assets, liabilities and other items for each reportable segment
The accounting methods for reportable segments comply with accounting policies used for the preparation of theconsolidated financial statements.
Profit for reportable segments is operating profit figures.
Inter-segment sales and transfers are based on prevailing market prices.

15

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17

3. Information related to net sales, profit/loss, assets, liabilities and other items for each reportable segment
FY3/16 (Apr. 1, 2015 – Mar. 31, 2016)(Millions of yen)

IT Systems
and Related
Business for
Pharmacies

Reportable segment
IT Systems
and Related
Other
Business for Businesses
Clinics

Amounts recordedin consolidated
Adjustment
financialstatements (Note)

Total

Net sales
External sales
Inter-segment sales andtransfers
Total

10,572

1,683

1,031

13,288(88)

13,199

3

-

40

44

(44)

-

10,575

1,683

1,072

13,332(132)

13,199Segment profit

2,025

(222)

117

1,920

(58)

1,861

Segment assets

4,299

758

772

5,831

14,47920,310

Other items
Depreciation
276
145
24
446
226
673
Increase in property, plant and
123
87
41
252
(0)
251
equipment and intangible assets
Note: Segment profit is adjusted to be consistent with operating profit recorded in the consolidated financial statements.
FY3/17 (Apr. 1, 2016 – Mar. 31, 2017)(Millions of yen)

IT Systems
and Related
Business for
Pharmacies

Reportable segment
IT Systems
and Related
Other
Business for Businesses
Clinics

Amounts recordedin consolidated
Adjustment
financialstatements (Note)

Total

Net sales
External sales
Inter-segment sales andtransfers
Total

11,121

1,670

976

13,768(92)

13,676

1

-

5

6

(6)

-

11,122

1,670

982

13,775(98)

13,676

Segment profit

2,644

17

(32)

2,629

(32)

2,597

Segment assets

4,110

711

778

5,600

15,747

21,348Other items
Depreciation
245
129
29
403
207
611
Increase in property, plant and
157
130
57
346
346
equipment and intangible assets
Note: Segment profit is adjusted to be consistent with operating profit recorded in the consolidated financial statements.

4. Reconciliation of amounts recorded in consolidated financial statements with total reportable segments(Millions of yen)
Net sales

FY3/16

Total for reportable segments

FY3/17
13,332

13,775

Transfer to non-operating income

(88)

(92)

Eliminations for inter-segment transactions

(44)

(6)

13,19913,676

Net sales on the consolidated financial statements(Millions of yen)
ProfitFY3/16

Total for reportable segments

FY3/17
1,920

2,629

Transfer to non-operating income

(16)

(16)

Eliminations for inter-segment transactions
Operating profit on the consolidated financial
statements

(42)

(16)

1,861

2,597

16

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/17(Millions of yen)
AssetsFY3/16

FY3/17

Total for reportable segments

5,831

5,600

Corporate assets (Note)

15,321

16,361Eliminations for inter-segment transactions

(842)

(614)

Total assets on the consolidated financial statements
20,31021,348
Note: Corporate assets mainly include cash and deposits and real estate for investment that are not attributable to reportablesegments.
(Millions of yen)Amounts recorded in
Total reportable segment
Adjustment
consolidated financial
Other items
statements
FY3/16
FY3/17
FY3/16
FY3/17
FY3/16
FY3/17446

Depreciation

403

226

207

673

611

Increase in property, plant and
252
346
(0)
251
equipment and intangible assets
Note: The adjustment to increase in property, plant and equipment and intangible assets includes eliminations forinter-segment transactions.

346

Per Share Information(Yen)
FY3/16(Apr. 1, 2015 – Mar. 31, 2016)

FY3/17(Apr. 1, 2016 – Mar. 31, 2017)

Net assets per share

693.68

Net assets per share

790.96

Net income per share

93.38

Net income per share

120.60

Diluted net income per share

92.51

Diluted net income per share

119.52

Notes: 1. The Company conducted a common stock split according to a ratio of 1:2 effective on April 1, 2016. Net assets per
share, net income per share and diluted net income per share are calculated as if this stock split had taken place atthe beginning of the fiscal year ended March 31, 2016.
2. The basis of calculating net income per share and diluted net income per share is as follows:(Millions of yen)
FY3/17(Apr. 1, 2016 – Mar. 31, 2017)

FY3/16(Apr. 1, 2015 – Mar. 31, 2016)
Net income per share
Profit attributable to owners of parent
Amounts not available to common stock
shareholders
Profit attributable to owners of parent
available to common stock
Average number of shares of common stock
outstanding during the period (Shares)

1,621

2,116

-

-

1,621

2,116

17,366,946

17,546,928--

164,442

158,234

Diluted net income per share
Adjusted profit attributable to owners ofparentIncrease in the number of shares of common
stock (Shares)
Summary of potential stock not included in thecalculation of “Diluted net income per share”
since there was no dilutive effect--

Subsequent Events
Not applicable.
This financial report is solely a translation of the Company’s Kessan Tanshin (including attachments) in Japanese, which has
been prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience ofreaders who prefer an English translation.

17