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 8, 2018

Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2018
[Japanese GAAP]
Company name: EM SYSTEMS CO., LTD.
Listing: Tokyo Stock Exchange, First Section
Stock code:
4820
URL: http://www.emsystems.co.jp
Representative: Kozo Kunimitsu, Chairman and CEO
Contact:
Megumi Seki, Corporate Officer, General Manager of Administration Department
Tel: +81-6-6397-1888
Scheduled date of Annual General Meeting of Shareholders:June 19, 2018
Scheduled date of payment of dividend:
June 20, 2018
Scheduled date of filing of Annual Securities Report:
June 19, 2018
Preparation of supplementary materials for financial results:
Yes
Holding of financial results meeting: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, 2018 (April 1, 2017 – March 31, 2018)(1) Consolidated operating results(Percentages represent year-on-year changes)
Net sales

Operating profit

Million yen%%

Million yen%

Fiscal year ended Mar. 31, 2018
13,953
2.0
3,063
17.9
3,618
14.4
Fiscal year ended Mar. 31, 2017
13,676
3.6
2,597
39.5
3,163
29.3
Note: Comprehensive income (million yen)
Fiscal year ended Mar. 31, 2018: 2,400 (up 14.8%)
Fiscal year ended Mar. 31, 2017: 2,091 (up 35.7%)

2,369
2,116

12.0
30.5

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, 2018
66.72
66.56
15.9
16.7
22.0
Fiscal year ended Mar. 31, 2017
60.30
59.76
16.2
15.2
19.0
Reference: Equity in earnings of affiliates (million yen): Fiscal year ended Mar. 31, 2018: - Fiscal year ended Mar. 31, 2017: Note: EM SYSTEMS CO., LTD. (hereafter, the “Company”) conducted a common stock split according to a ratio of 1:2 effective on
March 1, 2018. 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, 2017.

(2) Consolidated financial position
Total assets

Net assets

Million yen

Net assets per share

Equity ratio

Million yen

Yen%

As of Mar. 31, 2018
21,893
16,05272.7
446.82As of Mar. 31, 2017
21,34814,06365.4
395.48Reference: Shareholders’ equity (million yen) As of Mar. 31, 2018:
15,906
As of Mar. 31, 2017:
13,964
Note: The Company conducted a common stock split according to a ratio of 1:2 effective on March 1, 2018. Net assets per share is
calculated as if this stock split had taken place at the beginning of the fiscal year ended March 31, 2017.

(3) Consolidated cash flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents
at end of period

Million yen

Million yen

Million yen

Million yen

2,324
2,080

316
577

(2,033)(1,091)

8,528
7,901

Fiscal year ended Mar. 31, 2018
Fiscal year ended Mar. 31, 2017

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, 2017
8.00
23.00
31.00
546
25.7
4.2
Fiscal year ended Mar. 31, 2018
13.00
12.00
658
27.7
4.4
Fiscal year ending Mar. 31, 2019
8.00
10.00
18.00
46.0
(forecast)
Note: The Company conducted a common stock split according to a ratio of 1:2 effective on March 1, 2018. Dividend prior to thesecond half of the fiscal year ended March 31, 2018 is the actual amount before the stock split. Dividend per share calculated
after the stock split for fiscal year ended March 31, 2017 and fiscal year ended March 31, 2018 are 15.5 yen and 18.5 yen,respectively.

3. Consolidated Earnings Forecasts for the Fiscal Year Ending March 31, 2019 (April 1, 2018 – March 31, 2019)
Net salesFirst half
Full year

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

Ordinary profit

Million yen%

Million yen%

Million yen%

Million yen

%

Yen

6,398
12,875

(6.9)
(7.7)

1,186
1,509

(21.4)(50.7)

1,500
2,138

(17.8)(40.9)

970
1,432(20.1)(39.6)

26.49
39.11

* 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: None
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting-based estimates: None
4) Restatements: None

(3) Number of outstanding shares (common stock)1) Number of shares outstanding at the end of period (including treasury shares)
As of Mar. 31, 2018:

36,347,400 shares

As of Mar. 31, 2017:36,111,800 shares

As of Mar. 31, 2017:

801,908 shares

2) Number of treasury shares at the end of period
As of Mar. 31, 2018:

747,206 shares

3) Average number of shares outstanding during the period
Fiscal year ended Mar. 31, 2018:35,513,775 sharesFiscal year ended Mar. 31, 2017:35,093,856 shares

Note: The Company conducted a common stock split according to a ratio of 1:2 effective on March 1, 2018. 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, 2017.

Reference: Summary of Non-consolidated Financial Results
1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2018 (April 1, 2017 – March 31, 2018)(1) Non-consolidated operating results(Percentages represent year-on-year changes)
Net sales
Fiscal year ended Mar. 31, 2018
Fiscal year ended Mar. 31, 2017

Operating profit

Ordinary profit

Net income

Million yen%

Million yen%

Million yen%

Million yen%

12,294
11,746

4.7
7.2

2,872
2,366

21.4
44.8

3,430
2,914

17.7
32.4

2,276
1,975

15.3
50.5

Net income per share

Diluted net income per share

Yen

Yen

Fiscal year ended Mar. 31, 2018
64.11
63.96
Fiscal year ended Mar. 31, 2017
56.29
55.79
Note: The Company conducted a common stock split according to a ratio of 1:2 effective on March 1, 2018. Net income per shareand 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, 2017.

(2) Non-consolidated financial position
Total assets
Million yen

Net assets

Equity ratio

Million yen

Net assets per share%

Yen

As of Mar. 31, 2018
21,034
15,50573.0
431.45
As of Mar. 31, 2017
20,39913,646
66.4
383.67
Reference: Shareholders’ equity (million yen):
As of Mar. 31, 2018: 15,359
As of Mar. 31, 2017: 13,547
Note: The Company conducted a common stock split according to a ratio of 1:2 effective on March 1, 2018. Net assets per share is
calculated as if this stock split had taken place at the beginning of the fiscal year ended March 31, 2017.
* The current financial report is not subject to audit by certified public accountants or audit firms.
* Explanation of appropriate use of earnings forecasts, and other special items
Note concerning forward-looking statements
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 5 for forecast assumptions and notes of caution for usage.

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18

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

5

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

Segment and Other Information

15

Per Share Information

18

Subsequent Events

18

1

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18

1. Overview of Results of Operations(1) Results of Operations
The Japanese economy continued to recover at a moderate pace in the fiscal year that ended on March 31, 2018.
The main reason was improvements in corporate earnings and jobs due to economic and monetary policy
initiatives by the Japanese government and the Bank of Japan. This recovery is now the second longest in the
postwar era. Furthermore, consumer sentiment is strong. All these factors point to a continuation of the slow
recovery of the Japanese economy.
Japan’s pharmacy sector, the primary market for the products of EM SYSTEMS (the “Company”), is undergoinga realignment as M&A activity at major pharmacy chains and other activities create larger companies. At thesame time, the environment surrounding pharmacy business is becoming increasingly difficult. To suc ceed,
pharmacies must provide customers with added value. In April 2018, revisions to medical care and nursing carepayments became effective as scheduled. Fortunately, the impact of the revisions toward our financial
performance was found to be not as significant as the Company expected. As a result of our efforts to reinforce
sales organization and expand system sales, the Company posted the record -high net sales, operating profit,
ordinary profit and profit for the fiscal year that ended on March 31, 2018.
In anticipation of super-aging society as symbolized by the so-called “2025 problem” (see note below), theCompany took a number of actions. To provide a link between healthcare (clinics and pharmacies) and nursing
care data, the Company started the full-scale operation of an IT systems business for nursing care providers in
October 2016. Next was the March 2017 launch of the Hirogaru Care Net, which links healthcare and nursing
care data systems. In August 2017, sales of Tsunagaru Care NEXT started to meet the needs of companies in theat-home nursing care sector. The goal is to use a unified three-way network linking the systems that the Company
provides to clinics, pharmacies and nursing care providers in order to create an environment for the seamlesssharing of healthcare and nursing care information. AI is one option that the Company is considering in order toenable the development and provision of products and services that contribute to people and the healthcare
industry. In December 2017, the Company invested in MICIN, Inc. to strengthen EM Systems ability tocommercialize its products. The acquisition of capital interest in MICIN will help maintain a lasting relationshipwith MICIN. The Company expects to further increase the added value of its p roducts by integrating MICIN’svarious medical technologies with EM System’s technologies and know-how. In March 2018, the Company
started collaboration with NEC Corporation with aims and plans to create new services in the health and medical
field by utilizing technologies and know-how of both parties.
For the fiscal year that ended on March 31, 2018, the Company reported consolidated net sales of 13,953 million
yen (up 2.0% year on year), operating profit of 3,063 million yen (up 17.9%), ordinary profit o f 3,618 million yen(up 14.4%), and profit attributable to owners of parent of 2,369 million yen (up 12.0%).
Results by business segment were as follows. Segment sales and operating profit (loss) in this section are before
the inter-segment eliminations.
IT Systems and Related Business for Pharmacies
Major activities in this segment included measures to strengthen sales activities targeting pharmacy chains, using
distributors 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 a steady growth in billing service
sales. Replacement of hardware that went as planned and continuing growth in sales of supplies also contributed
to this segment’s performance. As a result, sales met the fiscal year plan. Earnings benefited from ongoingmeasures to curtail the cost of sales and operating expenses.
As a result, for the fiscal year that ended on March 31, 2018, the segment recorded sales of 11,307 million yen(up 1.7% year on year) and operating profit of 2,870 million yen (up 8.5%).

2

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18

IT Systems and Related Business for Clinics
There were activities to increase interest in the Co mpany’s products at clinics through the use of distributors inorder to expand sales channels throughout Japan. In addition, the Company continued to focus on increasing salesof 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 and Ortia.
These activities resulted in steady growth in sales channels. Furthermore, the realignment of sales resources tofocus on key categories produced consistent growth in the number of MRN systems sold. There were also a
steady increase in billing service sales and growth in sales of supplies. As a result, the segment recorded sales of
1,765 million yen (up 5.7% year on year) and operating profit of 237 million yen (compared with operating profitof 17 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. In October 2016, this business started shipments of Tsunagaru
Care NEXT, an ASP nursing care provider support system. Work is proceeding on the development of morefunctions for this system in order to continue to increase sales.
On December 13, 2016, the Hiroshima office of the Japan Health Insurance Association selected the Company toestablish an online insurance coverage qualification verification system used to help produce forms for healthinsurance claims at pharmacies. Work has also started on a system for use by clinics. The initial contract for thisproject has been extended to continue the provision of these services.
To contribute to progress in the healthcare industry, the Company will be participating in research anddevelopment activities as well as demonstration projects for electronic prescriptions, electronic health records(EHR) and personal health records (PHR). The Company has been participating in a joint research program with
the Japan Medical Association, Japan Pharmaceutical Association and N ihon 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 subsidiar y
LASANTE Co., Ltd. operates fitness clubs, a conference room rental business and a nursery school business.
In August 2017, the IT systems business for nursing care providers started selling Tsunagaru Care NEXT, which
has functions required by providers of services for at-home nursing care. Sales of this new product have been
increasing slowly.
The pharmacy business is performing well with sales and operating profit higher than planned. In addition, bothsales and operating profit were higher than one year earlier.
In the business activities that LASANTE Co., Ltd. operates, operating profit was down from one year earlier
although sales was higher than one year earlier.
Sales and earnings in the IT systems business for nursing care providers were substantial ly below the fiscal year
plan because of a delay in the planned launch of the functional addition. In the pharmacy business, sales andoperating profit exceeded both the results of one year earlier and the fiscal year plan due to persistent
management efforts, although revisions to drug dispensing fees and National Health Insurance (NHI) drug prices
partially affected the business performance. LASANTE’s performance exceeded the fiscal year plan due tomanagement efforts including change in the operation policies, although operating profit were down from one
year earlier with sales up from one year earlier. Sales in this segment were 1,029 million yen (up 4.8% year onyear) and operating profit was 9 million yen (compared with operating loss of 32 million yen one year earlier).
Note: The 2025 problem refers to a social problem caused by an increase in the number of the elderly in the latter stage of l ife.
In 2025, approximately 8 million baby boomers in Japan will have reached the elderly in the latter stage of life, whichis expected to cause serious problems including skyrocketing public-sector insurance payments for medical and nursing
care and shortages of nursing care workers.

3

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18(2) Financial Position
Total assets increased 545 million yen from the end of the previous fiscal year to 21,893 million yen at the end of
the current fiscal year. This was due to increases of 627 million yen in cash and deposits and 169 million yen in
investment securities, which were partly offset by decreases of 83 million yen in property, plant and equipment asa result of depreciation, and 197 million yen in real estate for investment.
Total liabilities decreased 1,444 million yen from the end of the previous fiscal year to 5,840 million yen. Thiswas due to decreases of 270 million yen in notes and accounts payable-trade and 1,426 million yen in loans
payable primarily as a result of the early repayment of loans made during the first quarter of the current fiscal
year, which were partly offset by an increase of 217 million yen in income taxes payable.
Net assets increased 1,989 million yen to 16,052 million yen mainly because of a 1,738 million yen increase inretained earnings associated with the fiscal year’s profit.
(3) Cash flows
Cash and cash equivalents increased 627 million yen from the end of the previous fiscal year to 8,528 million yen
at the end of the current fiscal year. This was mainly attributable to increases in profit before income taxes alongwith 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 2,324 million yen, compared with 2,080 million yen provided in theprevious fiscal year. Strong earnings in the current fiscal year we re the primary reason for this increase.
Cash flows from investing activities
Net cash provided by investing activities was 316 million yen compared with 577 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 2,033 million yen compared with 1,091 million yen used in the previous
fiscal year. The repayment of loans payable was the primary use of cash.
Reference: Cash flow indicators
FY3/14

FY3/15

FY3/16

FY3/17

FY3/18

Shareholders’ equity ratio (%)

50.1

56.8

59.6

65.4

72.7

Shareholders’ equity ratio based on market value (%)

101.3

82.7

113.4

149.5

214.0

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

3.5

2.6

1.4

1.0

0.3

Interest coverage ratio (times)

38.0

48.5

82.1

121.1

389.6

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 outst anding 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 inte rest.

4

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18(4) Outlook
The revisions on pharmacies, the Company’s main customers, are likely to create more challenges particularly for
major pharmacy chains as examination of the revisions shows. Furthermore, the lowering of National Health
Insurance (NHI) drug prices is expected to affect them gradually. Even more measures are expected in Japan inorder to hold down the healthcare costs as part of the government’s fiscal policy. Consequently, the operating
environment for pharmacies in Japan will continue to be challenging.
Realignments of the medical care and nursing care sectors are expected to accelerate as a result. Furthermore, theJapanese government has clearly indicated its intention to thoroughly promote the use of ICT in the healthcare
sector. Consequently, it is expected that the need for information links and sharing among nursing care and othercategories of healthcare will become even greater.
Pharmacies must contribute proactively to community support by various measures, such as developing
appropriate pharmaceutical management and guidance system offered by personal care pharmacists, sharing caseinformation to improve safety, and putting in place prescription systems to accommodate any prescription at any
time. 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 EHR and PHR demonstration trials in va rious locations, we believe that ourrole will become more important as the use of digital data continues to grow. We will make greater use ofsolutions 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 and pharmacies) and nursing care data, we are promoting increased use of
the Hirogaru Care Net, which links healthcare and nursing care data systems, by making it a standard componentof all our IT systems for clinics, pharmacies and nursing care providers.
Our goals are more establishment of our group’s business activities that generate consistent fee income, and R&D
activities involving advanced technologies that will lead to development of innovative next -generation products.
We will also take an aggressive stance concerning mergers and acquisitions. Our specific goals are to gain market
shares of 50% for the IT systems for pharmacies, 10% for the IT systems for clinics and 5% for the IT systems fornursing care providers.
The EM SYSTEMS Group forecasts FY3/19 consolidated net sales of 12,875 million yen (down 7.7% year onyear), operating profit of 1,509 million yen (down 50.7%), ordinary profit of 2,138 million yen (down 40.9%),
and profit attributable to owners of parent of 1,432 million yen (down 39.6%).
The above projections are based on information available at the time of release of this report. Actual results may
differ from these forecasts for a number of reasons.
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 FY3/18

3. Consolidated Financial Statements and Notes(1) Consolidated Balance Sheet(Millions of yen)
FY3/18(As of Mar. 31, 2018)

FY3/17(As of Mar. 31, 2017)
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
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Land
Leased assets
Accumulated depreciation
Leased assets, net
Rental assets
Accumulated depreciation
Rental assets, net
Other
Accumulated depreciation
Other, net

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

8,528
2,189
130
0
170
762
(19)

11,221

11,763

1,506
(679)

1,494
(717)

827

777

632
163
(106)

608
195
(92)

57

102

63
(41)

44
(29)

21

15

651
(527)

532
(454)

124

77

1,663

1,580

Intangible assets
Software
Software in progress
Goodwill
Other

259
39
311
5

167
255
254
5

Total intangible assets

616

682

35
9,960
(2,744)205
9,960(2,942)

Real estate for investment, net

7,215

7,018

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

147
316
107
22
(0)

143
328
109
61
(0)

Total investments and other assets

7,844

7,866

Total property, plant and equipment

Investments and other assets
Investment securities
Real estate for investment
Accumulated depreciation

10,124

10,129Deferred assets
Share issuance cost

Total non-current assets

1-

Total deferred assets

1-

21,34821,893

Total assets

6

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18(Millions of yen)
FY3/18(As of Mar. 31, 2018)

FY3/17(As of Mar. 31, 2017)
Liabilities
Current liabilities
Notes and accounts payable-trade

1,030

760

Short-term loans payable

300-

Current portion of long-term loans payable

526

517

Accounts payable-other

434

418

Lease obligations

45

48

Income taxes payable

545

763

Accrued consumption taxes

148

115

Provision for bonuses

394

350

Provision for point card certificates
Other
Total current liabilities

2

3

823

805

4,250

3,782

1,255

137

Non-current liabilities
Long-term loans payable
Lease obligations

31

72

Net defined benefit liability

875

917

Provision for product warranties

177

214

Long-term guarantee deposited

695

715

3,034

2,058

7,284

5,840

Capital stock

2,394

2,445

Capital surplus

2,702

2,808

Retained earnings

9,140

10,878Treasury shares

(223)

(208)

Total shareholders’ equity

14,013

15,924

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

Accumulated other comprehensive income
Foreign currency translation adjustment

36

48

Remeasurements of defined benefit plans

(85)

(66)

Total accumulated other comprehensive income

(48)

(17)

Share acquisition rights
Total net assets
Total liabilities and net assets

7

99

145

14,063

16,052

21,34821,893

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income
FY3/17(Apr. 1, 2016 – Mar. 31, 2017)(Millions of yen)
FY3/18(Apr. 1, 2017 – Mar. 31, 2018)

Net sales

13,676

13,953

Cost of sales

6,062

6,077

Gross profit

7,614

7,876

Promotion expenses

35

33

Packing and transportation expenses

27

23

Advertising expenses

51

52

Provision of allowance for doubtful accounts

1

15

Selling, general and administrative expenses

Provision for product warranties

25

119

Directors’ compensations

259

254

Salaries and allowances

1,883

1,824

Bonuses

297

230

Provision for bonuses

356

306

Share-based compensation expenses

35

45

Retirement benefit expenses

143

99

Legal welfare expenses

390

370

Traveling and transportation expenses

125

128

Communication expenses

8864

Depreciation

138

116

Amortization of goodwill

57

57

Rents

254

245

Research and development expenses

34

42

Other

812

783

5,017

4,813

2,597

3,063

Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Rent income of real estate

1

0

974

1,006

Miscellaneous income

1222

Total non-operating income

988

1,029

Interest expenses

16

5Commission fee

1

1

379

443

1

1

Non-operating expenses

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

22

22

Total non-operating expenses

422

474

3,163

3,618

Ordinary profit

8

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18

FY3/17(Apr. 1, 2016 – Mar. 31, 2017)(Millions of yen)
FY3/18(Apr. 1, 2017 – Mar. 31, 2018)26

12

Extraordinary income
Gain on sales of non-current assets
Gain on reversal of share acquisition rights-

0

Total extraordinary income

26

13

Loss on retirement of non-current assets

3

1

Loss on sales of non-current assets

11-

Impairment loss-

20

Loss on cancellation of leases

3-

Loss on liquidation of subsidiaries and associates-

7

Expenses for advanced repayment of loans-

8

Total extraordinary losses

18

38

3,171

3,593

999

1,224

Extraordinary losses

Profit before income taxes
Income taxes - current
Income taxes - deferred

55

(0)

Total income taxes

1,055

1,223

Profit

2,116

2,369

Profit attributable to owners of parent

2,116

2,369

9

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18

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

FY3/18(Apr. 1, 2017 – Mar. 31, 2018)

2,116

2,369

Foreign currency translation adjustment

(19)

12

Remeasurements of defined benefit plans, net of tax

(5)

19

Total other comprehensive income

(24)

31

2,091

2,400

2,091

2,400

-

-

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 FY3/18(3) Consolidated Statement of Changes in Equity
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 of shareacquisition rights

Capital surplus

2,306

2,614

87

87

Retained earnings
7,435

(223)

12,132

175

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
shares
Disposal of treasury
sharesChange of scope of
consolidation
Net changes of items
other thanshareholders’ equity
Total changes of items
during period
Balance at end ofcurrent period

Total shareholders’equityTreasury shares

(411)

(411)

2,116

2,116
-

87

87

1,705

-

1,881

2,394

2,702

9,140

(223)

14,013

Accumulated other comprehensive income

Balance at beginningof current period
Changes of items
during period
Exercise of shareacquisition rights

Foreign currencytranslation
adjustment

Remeasurementsof defined benefit
plans

Total accumulated
othercomprehensive
income

56

(80)

(24)

Share acquisitionrightsTotal net assets

64

12,172

175

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
shares
Disposal of treasury
sharesChange of scope of
consolidation
Net changes of items
other thanshareholders’ equity
Total changes of items
during period
Balance at end ofcurrent period

(411)
2,116
(19)

(5)

(24)

34

10

(19)

(5)

(24)

34

1,891

36

(85)

(48)

99

14,06311

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18

FY3/18 (Apr. 1, 2017 – Mar. 31, 2018)(Millions of yen)
Shareholders’ equity
Capital stock
Balance at beginningof current period
Changes of items
during period
Exercise of shareacquisition rights

Capital surplus

2,394

2,702

51

51

Retained earnings
9,140

(223)

Total shareholders’equity14,013

103

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
shares
Disposal of treasury
sharesChange of scope of
consolidation
Net changes of items
other thanshareholders’ equity
Total changes of items
during period
Balance at end ofcurrent period

Treasury shares

(637)

(637)

2,369

2,369

54

(0)

(0)

15

69

6

6

51

105

1,738

15

1,911

2,445

2,808

10,878(208)

15,924

Accumulated other comprehensive income

Balance at beginningof current period
Changes of items
during period
Exercise of shareacquisition rights

Foreign currencytranslation
adjustment

Remeasurementsof defined benefit
plans

Total accumulated
othercomprehensive
income

36

(85)

(48)

Share acquisitionrightsTotal net assets

99

14,063

103

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
shares
Disposal of treasury
sharesChange of scope of
consolidation
Net changes of items
other thanshareholders’ equity
Total changes of items
during period
Balance at end ofcurrent period

(637)
2,369
(0)
69
6
12

19

31

46

78

12

19

31

46

1,989

48

(66)

(17)

145

16,05212

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18(4) Consolidated Statement of Cash Flows(Millions of yen)
FY3/17
FY3/18(Apr. 1, 2016 – Mar. 31, 2017) (Apr. 1, 2017 – Mar. 31, 2018)
Cash flows from operating activities
Profit before income taxes

3,171

3,593

Depreciation

611

539

Amortization of goodwill

57

57

Amortization of share issuance cost

1

1

Impairment loss-

20

Loss on liquidation of subsidiaries and associates-

7

Expenses for advanced repayment of loans-

8Decrease (increase) in net defined benefit asset

(3)

(2)

Increase (decrease) in net defined benefit liability

98

42

Increase (decrease) in provision for product warranties

(43)

37

Increase (decrease) in provision for bonuses

(0)

(43)

Increase (decrease) in provision for point card certificates(0)1

Increase (decrease) in allowance for doubtful accounts

1

14Interest and dividend income

(1)

(0)

Rent income of real estate(974)(1,006)

Expenses of real estate rent

153

246

Interest expenses

16

5

Loss on retirement of non-current assets

3

1

Share-based compensation expenses

40

51

Gain on reversal of share acquisition rights
Loss (gain) on sales of non-current assets
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories

-

(0)

(15)

(12)

39

399

13

29

(25)

(339)

Increase (decrease) in notes and accounts payable-trade

115

(270)

Increase (decrease) in accrued consumption taxes

(14)

(23)

Increase (decrease) in other current liabilities

(4)

(22)

Other, net

540

Subtotal

3,296

3,336

Decrease (increase) in other current assets

Interest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

13

1

0

(17)

(5)

(1,200)(1,006)

2,080

2,324

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18(Millions of yen)
FY3/17
FY3/18(Apr. 1, 2016 – Mar. 31, 2017) (Apr. 1, 2017 – Mar. 31, 2018)
Cash flows from investing activities
Purchase of property, plant and equipment(95)

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

(11)

54

21

(228)

(304)

-

(198)

Proceeds from rental of real estate for investment

977

1,008

Payments for rental of real estate for investment

(148)

(246)

Collection of loans receivable

5

13

Payments of loans receivable

(10)

(10)

Proceeds from guarantee deposits received

31

19

Repayments of guarantee deposits received

(7)

(0)

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

-

23

577

316

Cash flows from financing activities
Net increase (decrease) in short-term loans payable

(200)

(300)

Repayments of long-term loans payable(586)(1,126)

Repayments of lease obligations

(64)

(71)

Proceeds from issuance of common shares

170

100

Purchase of treasury shares
Cash dividends paid
Net cash provided by (used in) financing activities

-

(0)

(411)

(636)

(1,091)(2,033)

Effect of exchange rate change on cash and cash equivalents

(19)

5

Net increase (decrease) in cash and cash equivalents

1,547

612

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

6,354

7,901

-

14

Cash and cash equivalents at end of period

7,901

8,528

14

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
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. For the purpose of financial reporting, there are threereportable segments: IT Systems and Related Business for Pharmacies, IT Systems and Related Business forClinics, and Other Businesses.
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 for pharmacies

IT Systems and Related Business for Clinics

Development and sales of systems for clinics

Other Businesses

Development and sales of systems for nursing care providers,management of a fitness club, nursery school and pharmacy

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.
3. Information related to net sales, profit/loss, assets, liabilities and other items for each reportable segment
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.

15

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18

FY3/18 (Apr. 1, 2017 – Mar. 31, 2018)(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

11,261

1,760

1,025

14,048(94)

13,953

45

4

3

54

(54)

-

11,307

1,765

1,029

14,102(148)

13,953

Segment profit

2,870

237

9

3,116

(53)

3,063

Segment assets

3,506

859

870

5,236

16,656

21,893

Total

Other items
Depreciation
212
99
24
337
202
539
Increase in property, plant and
185
197
38
421
421
equipment and intangible assets
Note: Segment profit is adjusted to be consistent with operating profit recorded in the consolidat ed financial statements.

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

FY3/17

FY3/18

Total for reportable segments
Transfer to non-operating income
Eliminations for inter-segment transactions
Net sales on the consolidated financial statements

13,775

14,102

(92)

(94)

(6)

(54)

13,676

13,953(Millions of yen)

ProfitFY3/17

FY3/18

Total for reportable segments

2,629

3,116

Transfer to non-operating income

(16)

(21)

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

(16)

(31)

2,597

3,063
(Millions of yen)

AssetsFY3/17

FY3/18

Total for reportable segments

5,600

5,236

Corporate assets (Note)

16,361

17,249Eliminations for inter-segment transactions

(614)

(592)

Total assets on the consolidated financial statements

21,34821,893

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
FY3/17
FY3/18
FY3/17
FY3/18
FY3/17
FY3/18Depreciation

403

337

207

202

611

539

Increase in property, plant andequipment and intangible assets

346

421

-

-

346

421

16

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18

Related information
FY3/17 (Apr. 1, 2016 – Mar. 31, 2017)
1. Information about products and services
Descriptions of products and services are omitted because this information is presented in the segment information.
2. Geographical information(1) Net sales
This information is omitted because sales to external customers in Japan accounted for more than 90% of net sales in the
consolidated statement of income.
(2) Property, plant and equipment
This information is omitted because property, plant and equipment in Japan exceeded 90% of property, plant and equipmentin the consolidated balance sheet.
3. Information of specific major customer
This information is omitted because no specific customers accounted for 10% or more of net sales in the consolidated
statement of income.
FY3/18 (Apr. 1, 2017 – Mar. 31, 2018)
1. Information about products and services
Descriptions of products and services are omitted because this information is presented in the segment information.
2. Geographical information(1) Net sales
This information is omitted because sales to external customers in Japan accounted for more than 90% of net sales in the
consolidated statement of income.
(2) Property, plant and equipment
This information is omitted because property, plant and equipment in Japan exceeded 90% of property, plant and equipmentin the consolidated balance sheet.
3. Information of specific major customer
This information is omitted because no specific customers accounted for 10% or more of net sales in the consolidated
statement of income.

Impairment loss of non-current assets by reportable segment
FY3/17 (Apr. 1, 2016 – Mar. 31, 2017)
Not applicable.
FY3/18 (Apr. 1, 2017 – Mar. 31, 2018)
IT Systems and Related
Business for Pharmacies
Impairment loss
17

(Millions of yen)
IT Systems and Related
Business for Clinics
2

Other Businesses

Total
0

20

Amortization of goodwill and unamortized balance by reportable segment
FY3/17 (Apr. 1, 2016 – Mar. 31, 2017)
IT Systems and Related
Business for Pharmacies
Amortization for34
the period
Unamortizedbalance at the85
period-end(Millions of yen)
IT Systems and Related
Business for Clinics

17

Other Businesses

Total

-

22

57

-

226

311

EM SYSTEMS CO., LTD. (4820) Financial Results for FY3/18

FY3/18 (Apr. 1, 2017 – Mar. 31, 2018)
IT Systems and Related
Business for Pharmacies
Amortization for34
the period
Unamortizedbalance at the50
period-end(Millions of yen)
IT Systems and Related
Business for Clinics

Other Businesses

Total

-

22

57

-

203

254

Gain on bargain purchase by reportable segment
FY3/17 (Apr. 1, 2016 – Mar. 31, 2017)
Not applicable.
FY3/18 (Apr. 1, 2017 – Mar. 31, 2018)
Not applicable.

Per Share Information(Yen)
FY3/17(Apr. 1, 2016 – Mar. 31, 2017)
Net assets per share

FY3/18(Apr. 1, 2017 – Mar. 31, 2018)395.48

Net assets per share

446.82

Net income per share

60.30

Net income per share

66.72

Diluted net income per share

59.76

Diluted net income per share

66.56

Notes: 1. The Company conducted a common stock split according to a ratio of 1:2 effective on March 1, 2018. Net ass ets
per share, net income per share and diluted net income per share are calculated as if this stock split had taken placeat the beginning of the fiscal year ended March 31, 2017.
2. The basis of calculating net income per share and diluted net income per share is as follows:(Millions of yen)
FY3/17
FY3/18(Apr. 1, 2016 – Mar. 31, 2017)(Apr. 1, 2017 – Mar. 31, 2018)
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)

2,116

2,369

-

-

2,116

2,369

35,093,856

35,513,775--

316,468

82,699Diluted 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.

18