May 12, 2016

Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2016
[Japanese GAAP]
Listing: Tokyo Stock Exchange, Second Section
URL: http://www.jast.jp

Company name: Japan System Techniques Co., Ltd.
Stock code:
4323
Representative:
Takeaki Hirabayashi, President and CEO
Contact:
Noriaki Okado, Director and CFO
Scheduled date of Annual General Meeting of Shareholders:
Scheduled date of payment of dividend:
Scheduled date of filing of Annual Security Report:
Preparation of supplementary materials for financial results:
Holding of financial results meeting:Tel: +81-6-4560-1000
June 24, 2016
June 9, 2016
June 27, 2016
Yes
Yes (for analysts)

Note: The original disclosure in Japanese was released on May 12, 2016 at 16:30 (GMT +9).
(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2016 (April 1, 2015 – March 31, 2016)(1) Consolidated results of operations(Percentages for net sales and incomes represent year-on-year changes)
Profit attributable to
Net sales
Operating income
Ordinary income
owners of parent
Million yen%
Million yen%
Million yen% Million yen%
Fiscal year ended Mar. 31, 2016
11,821
2.7
401
10.4
441
1.2
291
27.7
Fiscal year ended Mar. 31, 2015
11,5056.2
363 (15.0)
435
(8.0)
228 (18.0)
Note: Comprehensive income (million yen) Fiscal year ended Mar. 31, 2016:
191 (down 39.0 %)Fiscal year ended Mar. 31, 2015:
314 (up 0.9%)
Ordinary income Operating income
Net income per
Diluted net
Return on equity
on total assets
to net sales
share
income per share
Yen
Yen
%
%
%
Fiscal year ended Mar. 31, 2016
55.62
5.4
5.0
3.4
Fiscal year ended Mar. 31, 2015
43.56
4.4
5.0
3.2
Reference: Equity in earnings of affiliates (million yen): Fiscal year ended Mar. 31, 2016: Fiscal year ended Mar. 31, 2015: (2) Consolidated financial position
Total assets
Net assets
Million yen
Million yen
As of Mar. 31, 2016
9,019
5,448
As of Mar. 31, 2015
8,717
5,433
Reference: Shareholders’ equity (million yen)
As of Mar. 31, 2016:
5,396

Equity ratio
%
59.8
61.4
As of Mar. 31, 2015:

Net assets per shareYen
1,028.31
1,020.03
5,353(3) Consolidated cash flows

Fiscal year ended Mar. 31, 2016
Fiscal year ended Mar. 31, 2015

Cash flows fromoperating activities
Million yen
(12)
(204)

Cash flows frominvesting activities
Million yen
119
(281)

Cash flows fromfinancing activities
Million yen
(216)
(102)

Cash and cash equivalents
at end of period
Million yen
1,447
1,559

2. Dividends
Dividend per share

Fiscal year ended Mar. 31, 2015
Fiscal year ended Mar. 31, 2016
Fiscal year ending Mar. 31, 2017
(forecasts)

1Q-end2Q-end3Q-endYear-end

Total

Total
dividends

Yen
-

Yen
0.00
0.00

Yen
-

Yen
25.00
25.00

Yen
25.00
25.00

Million yen
131
131

-

0.00

-

25.00

25.00

Dividend on
equity(consolidated)
%
%
57.4
2.5
45.0
2.4

Payout ratio(consolidated)

37.0

3. Consolidated Earnings Forecasts for the Fiscal Year Ending March 31, 2017 (April 1, 2016 – March 31, 2017)
Net salesFirst half
Full year

Million yen
6,216
13,120Operating income
%
11.8
11.0

Million yen
14
600

%
(60.0)
49.4

Ordinary income
Million yen
26
610

%
(51.8)
38.3(Percentages represent year-on-year changes)
Profit attributable to
Net income perowners of parent
shareMillion yen%
Yen
6(85.8)
1.14
355
21.6
67.64

* Notes(1) Changes in consolidated subsidiaries during the period (changes in scope of consolidation): None
Newly added: -Excluded: -(2) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others:

Yes2) Changes in accounting policies other than 1) above:None3) Changes in accounting-based estimates:

None4) Restatements:

None

Please refer to “Notes to Consolidated Financial Statements” 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, 2016:

5,612,230 shares

As of Mar. 31, 2015:

5,612,230 shares

As of Mar. 31, 2015:

364,210 shares

2) Number of treasury shares at the end of period
As of Mar. 31, 2016:

364,210 shares

3) Average number of shares outstanding during the period
Fiscal year ended Mar. 31, 2016:

5,248,020 sharesFiscal year ended Mar. 31, 2015:

5,247,753 shares

Reference: Summary of Non-consolidated Financial Results
1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2016 (April 1, 2015 – March 31, 2016)(1) Non-consolidated results of operations
Net sales
Million yen%
10,160
4.9
9,682
12.1

Fiscal year ended Mar. 31, 2016
Fiscal year ended Mar. 31, 2015

Operating income
Million yen
%
414
10.8
374
(7.2)

(Percentages represent year-on-year changes)
Ordinary income
Net income
Million yen% Million yen
%
437
2.3
288
29.4
428
(5.0)
223 (23.7)

Diluted net income per
share
Yen
Yen
55.04
42.54
-

Net income per share
Fiscal year ended Mar. 31, 2016
Fiscal year ended Mar. 31, 2015
(2) Non-consolidated financial position

Total assets
Net assets
Million yen
Million yen
As of Mar. 31, 2016
5,650
8,568
As of Mar. 31, 2015
8,314
5,503
Reference: Shareholders’ equity (million yen)
As of Mar. 31, 2016:
5,650

Equity ratio
%
65.9
66.2
As of Mar. 31, 2015:

Net assets per share
Yen
1,076.69
1,048.61
5,503

2. Non-consolidated Earnings Forecasts for the Fiscal Year Ending March 31, 2017 (April 1, 2016 – March 31, 2017)

First half
Full year

Net sales
Million yen
5,223
11,040%8.0
8.7

Operating income
Million yen%
26(69.2)
520
25.5

Ordinary income
Million yen%
40 (64.0)530
21.0(Percentages represent year-on-year changes)
Net income
Net income per share
Million yen%
Yen
26 (60.0)
4.95
330
14.2
62.88

Note 1: Information regarding the implementation of audit procedure
The current financial statements are exempted from audit procedures based on the Financial Instruments and Exchange Act. At thetime of disclosure, the audit procedure for these consolidated statements has not been completed.
Note 2: Cautionary statement with respect to forward-looking statements
Forecasts of future performance in these materials are based on assumption 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 materially from the forecasts. Please refer to “1. Analysis of Results of Operations andFinancial Position, (1) Analysis of Results of Operations” on page 2 for forecast assumptions and notes of caution for usage.

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

Contents of Attachments
1. Analysis of Results of Operations and Financial Position(1) Analysis of Results of Operations(2) Analysis of Financial Position(3) Basic Policy for Profit Distribution, and Dividends in the Current and Next Fiscal Years(4) Business Risks

2
2
3
4
4

2. Corporate Group6

3. Management Policies(1) Basic Management Policy(2) Performance Targets(3) Medium- and Long-term Business Strategy(4) Challenges

8
8
8
8
9

4. Basic Approach to the Selection of Accounting Standards

9

5. Consolidated Financial Statements(1) Consolidated Balance Sheet(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income(3) Consolidated Statement of Changes in Equity(4) Consolidated Statement of Cash Flows(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Changes in Accounting Policies
Reclassifications
Segment and Other Information
Per-share Information
Subsequent Events

10
10
12
12
13
14
16
17
17
17
17
18
21
21

6. Non-consolidated Financial Statements(1) Balance Sheet(2) Statement of Income(3) Statement of Changes in Equity

22
22
24
25

7. Others(1) Changes in Directors(2) Goods Manufactured, Orders Received and Sales

27
27
28

1

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

1. Analysis of Results of Operations and Financial Position(1) Analysis of Results of Operations
1) Summary of the fiscal year
In the current fiscal year, consolidated results of the Japan System Techniques Group (Japan System Techniques Co.,
Ltd. (JAST) and its consolidated subsidiaries, hereafter “the Group”) showed higher sales and profits as follows: net
sales of 11,821 million yen (up 2.7% year on year), operating income of 401 million yen (up 10.4% year on year),ordinary income of 441 million yen (up 1.2% year on year), and profit attributable to owners of parent of 291
million yen (up 27.7% year on year). Results by segment were as follows.
In the software business (individualized contracted software development), net sales increased but profits decreased.
Sales remained strong because orders from the telecommunications industry, the service/retail industry and thefinance/insurance/brokerage industry increased while there was a decrease in orders from the manufacturing industry,
the public sector, and educational and medical institutions. Costs were higher because of the occurrence of some
unprofitable projects. As a result, net sales in this business totaled 8,080 million yen (up 3.3% year on year) andoperating income totaled 203 million yen (down 0.4% year on year).
In the package business (sale and related services of operational reform packages for schools), both net sales andprofits declined. The program product (PP) sales to universities as well as implementation support and operation
services increased year on year, but end user computing (EUC: individualized contracted development of related
systems) and IT equipment sales declined. Net sales in this business totaled 2,117 million yen (down 0.7% year onyear), and due to an increase in research and development expenses for product development, operating income
totaled 218 million yen (down 19.5% year on year).
In the system sales business (IT equipment sales and IT/telecom infrastructure construction), net sales decreased but
profits increased. Equipment sales to universities declined, but orders from highly profitable system integration (SI)projects for public sectors increased. As a result, sales totaled 1,039 million yen (down 8.1% year on year) andoperating income totaled 5 million yen (vs. operating loss of 28 million yen in the previous fiscal year.)
Lastly, in the medical big data business (inspection, analysis and related services of medical information), net sales
totaled 584 million yen (up 39.5 % year on year), and operating loss totaled 26 million yen (vs. operating loss of 84
million yen in the previous fiscal year). This was due to the expansion of services for data analysis and notification of
the cost of medical care, cloud services for checking service providers, and support services for data health plans andother services in addition to automated inspection services for health insurance claims.
2) Forecasts for the new fiscal year
In the fiscal year under review, the overall Japanese economy continued to recover. Economic stimulus measures by
the government and the Bank of Japan’s monetary policy were partly responsible for this trend. Although exports
and some other economic indicators are weak, there are expectations for an increase in employment supported by the
improved corporate earnings and rises in capital investment. However, a risk of economic stagnation or a downturn
remains because of uncertainties on both the political and economic fronts, such as slowing growth in China andother major emerging countries, and the appreciation of the yen.
In the IT industry in Japan, according to the latest statistics in the “Survey of Selected Service Industries” by the
Ministry of Economy, Trade and Industry (the final February figures), net sales rose 2.6% year on year in 2015
(compared with 3.0% annual growth in 2014), keeping a recovery trend. The monthly figures for September 2015
showed year-on-year decline of 2.2%, suggesting that the strength of recovery remains weak.
The Group’s slogan for the fiscal year ending March 31, 2017 is “make a commitment to reaching targets yourcustomary thoughts and actions.” By learning lessons from events in the fiscal year under review, we will go back tothe basics for development operations, sales techniques, internal administrative procedures and all other aspects of
our operations. To achieve the goals of every department and person in our Group, we will make “thinking and2

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

translating thoughts into actions” the basis for everything we do. As a result, we aim to boost orders volume andenhance profitability in the contracted development business, as well as to achieve sustained growth by further
expanding JAST-driven business centering on proprietary brand products.
Based on the above, we expect increases in sales and profits for the fiscal year ending March 31, 2017; net sales of
13,120 million yen (up 11.0% year on year), operating income of 600 million yen (up 49.4% year on year), ordinary
income of 610 million yen (up 38.3% year on year), and profit attributable to owners of parent of 355 million yen(up 21.6% year on year).
(2) Analysis of Financial Position
1) Balance sheet position
The balance of current assets at the end of the current fiscal year was 6,597 million yen, up 6.4% over the end of theprevious fiscal year. This was mainly due to an increase in notes and accounts receivable-trade from higher sales atthe end of fiscal year, and a decrease in cash and deposits. The balance of non-current assets was 2,422 million yen
at the end of the current fiscal year, down 3.8% over the end of the previous fiscal year.
The balance of current liabilities at the end of the current fiscal year was 2,265 million yen, up 11.8% over the endof the previous fiscal year. This was mainly due to increases in notes and accounts payable-trade, and advances
received. The balance of non-current liabilities was 1,306 million yen at the end of the current fiscal year, up 3.8%
over the end of the previous fiscal year. This was mainly due to increases in net defined benefit liability andprovision for directors’ retirement benefits.
The balance of net assets was 5,448 million yen at the end of the current fiscal year, up 0.3% over the end of theprevious fiscal year. This was mainly due to an increase in retained earnings and a decrease in remeasurements ofdefined benefit plans.
2) Cash flows
Cash and cash equivalents decreased 112 million yen from 1,559 million yen at the start of the current fiscal year to
1,447 million yen at the end of the current fiscal year.
Cash flows by category were as follows.
Cash flows used in operating activities totaled 12 million yen, compared with 204 million yen used in the previous
fiscal year. This difference was mainly due to increases in notes and accounts payable-trade and advances received,
and a decrease in proceeds from collection of notes and accounts receivable-trade.
Cash flows provided by investing activities totaled 119 million yen, compared with 281 million yen used in theprevious fiscal year. This difference was mainly due to decreases in outlays for the purchases of property, plant andequipment and investment securities.
Cash flows used in financing activities totaled 216 million yen, compared with 102 million yen used in the previous
fiscal year. This difference was mainly due to payments for investments in capital of subsidiaries and associates that
do not result in change in scope of consolidation and a decrease in short-term loans payable.
Reference: Cash flow indicators
FY3/12Equity ratio (%)
59.2
Equity ratio based on market value (%)
38.7
Interest-bearing debt to cash flow ratio (years)
0.0Interest coverage ratio (times)
178.8
Notes: 1. The above figures are calculated as follows.
Equity ratio: Shareholders’ equity / Total assets

3

FY3/13
55.0
38.2
0.1
89.1

FY3/14
56.6
39.0
0.0
228.6

FY3/1561.4
50.0-

FY3/1659.8
38.6-

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

Equity ratio based on market value: Market capitalization / Total assets
Interest-bearing debt to cash flow ratio: Interest-bearing debt / Operating cash flows
Interest coverage ratio: Operating cash flows / Interest payments* Market capitalization is calculated by multiplying the closing share price at the end of the period by the
number of shares outstanding at the end of the period, excluding treasury shares.
* Interest-bearing debt is calculated using total loans-payable on the consolidated balance sheet.
* Interest payments use the amount of interest expenses paid stated on the consolidated statement of cash
flows.
2. There are no average debt repayment period and interest coverage ratio figures for FY3/15 and FY3/16
because the Company had negative operating cash flows.
(3) Basic Policy for Profit Distribution, and Dividends in the Current and Next Fiscal Years
The Company’s basic policy for dividends is the same as that for earnings: long-term stable growth. It will examine
specific policies and amounts, in light of the trend in earnings, its financial condition, and various businessenvironments, while taking into consideration the payout ratio. The Company will make effective use of retained
earnings to invest in the training of professional human resources, the creation of new businesses, the promotion ofvarious alliances, and R&D for new products.
The Group will pay a dividend of 25 yen for each common share, in accordance with initial plans, for the fiscal year
ended March 31, 2016, in response to support from shareholders and investors.
The Group plans a dividend of 25 yen for each common share in the fiscal year ending March 31, 2017 in light ofthe outlook for stable earnings growth.
(4) Business Risks
Listed below are the risk factors that may affect operating results and financial position as well as the stock priceand other performance indices of the Group. Forward-looking statements are based on the judgment of the Group asof the date of the release of these materials.
1) Risks related to defects in products and services
Information systems development within the IT industry, including the Group, has become increasingly complex due
to the growing sophistication of hardware and networking technologies, advances in operating systems, middlewareand development languages, and the rapid spread and transition in recent years to cloud and other new
information-processing technologies. Meanwhile, the demands of clients regarding quality have become stricter associety shows increased interest in quality and defect issues related to IT products and services given the growing
impact of such defects on society. Against this backdrop, the Group is very careful in thoroughly educating
employees about improving and stabilizing software quality, strengthening screening functions during the quote andorder process, improving quote technology, and enhancing project management. Nevertheless, the Group cannot ruleout the possibility of defects which could cause major projects to become unprofitable due to client indemnities andproduct repairs, and together with credit deterioration, result in a material impact on the Group’s businessperformance.
2) Risks related to information management, misuse, and negligence, etc.
To prevent the leak of confidential or personal information relating to clients or employees, as well as accidents due
to negligence of all kinds, and misuse, the Group has formulated internal guidelines, trained employees, and holds
regular inspections conducted by professional organizations. However, these problems may occur because no
preventive measures are absolutely reliable, and the materialization of such problems could lower the Group’s
creditworthiness, require indemnities, and have a material impact on the Group’s business performance.

4Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

3) Risks associated with overreliance on major clients
The Group’s top clients account for a comparatively high proportion of its overall sales. Its top three clients
accounted for approximately 21% of consolidated net sales in the fiscal year under review, and its top five clients
approximately 27%. Although the Group’s overreliance on these particular major clients has eased somewhat overthe past few years, a change in orders from major clients or in the industry environment for major clients could
cause significant fluctuations in the Group’s business performance.
4) Risks associated with the concentration of earnings towards the fiscal yearend
A unique feature of the Group’s contracted software development, package, and systems equipment sales businesses
is that product inspections tend to concentrate in March, which is the last month of the fiscal year for most clients.
As a result, most sales and operating income are recorded in the fourth quarter, as shown in the following table.
Delays in the recognition of revenue due to clients’ postponement of development processes, budget executions, or
product inspections could cause fluctuations in the Group’s business performance.
Quarterly sales and operating income in the fiscal years ended March 31, 2015 and 2016
(Millions of yen)

Sales
Operating income (loss)

Fiscal year ended March 31, 2015
1Q
2Q
3Q
2,678
2,746
2,574
(11)
90
(172)

4Q
3,506
456

Total
11,505363(Millions of yen)
1Q
Sales
Operating income (loss)

Fiscal year ended March 31, 2016
2Q
3Q
2,528
3,030
2,458
(76)
111
(152)

4Q
3,804
518

Total
11,821
4015) Risks associated with the valuation of assets
The Group owns marketable securities, real estate for rent, and other investment assets. The balance of these assets
is considerably smaller than its current assets which can be easily converted to cash. Still, unpredictable or rapidchanges in market prices or the bankruptcy of issuers, while difficult to forecast, could reduce the value of theseassets, impacting the Group’s business performance.
6) Risks related to large natural disasters
The outbreak of a large earthquake or other natural disaster could inflict devastating damage on the Group's
mainstay offices and injure many employees requiring expensive repairs and impacting the Group's businessperformance.

5Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

2. Corporate Group
Shanghai Jiafeng Information Technology Co., Ltd. was newly included in the scope of consolidation in the fiscal
year under review, in which the Company completed the payment for the investments in capital and a series ofproceedings to be registered as a foreign invested enterprise in China.
The Group is comprised of Japan System Techniques Co., Ltd. and its seven consolidated subsidiaries. It operates
four businesses including 1) the software business which develops software on contract to meet the specific needs ofclients, 2) the package business which develops and sells operations packages mainly for educational institutions, 3)
the system sales business which sells hardware and software, and 4) the medical big data business, which includes afull line of services including automated inspection services for health insurance claims, data analysis andnotification of the cost of medical care.
The table below shows the content of each of the Group’s businesses.
The business classification below is the same as in “5. Consolidated Financial Statements, (5) Notes to Consolidated
Financial Statements (Segment and Other Information)” on page 18.
Businesssegment
Softwarebusiness

Field
Businessapplications(office work
processing
system)Content

Company name- Systems for the manufacturing industry including production
management, logistics management, and order management- Systems for the retail and service industries including store
information, procurement, shipment management, virtual shopping
malls, and shopping mileage services- Systems for financial institutions including accounts, information,
global operations, business administration, and card loans- Systems for the securities industry including equity trading,investment trusts, dealing, and Internet securities trading- Systems for the insurance industry including contract management
and non-life new reserves- Systems for the public sector including phone billing, tax revenue
management, resident information, postal accounts, and highway ETC(electronic toll collection)- Systems for schools and students including entrance examinations,student registries, teaching, and job search support- Systems for website production, smartphone app development, andrelated network businesses- Accounting, personnel, ERP package introduction support, customer
relations management (CRM) systems, data warehousing
construction, biometric identification security systems, and otheroffice work processing systems- Vehicle dispatch and sales support systems for transport companies- Development, sales, maintenance, and introduction support for“BankNeo,” a data integration package for financial institutions, andcontracted development of related systems

Japan System
Techniques Co., Ltd.

Engineering
applications(communications,control,
technology
systems)- Embedded software for cell phones, digital audio-visual equipment,
and car mounted systems; IT/telecom systems for terrestrial digital
broadcasts, mobile communications, car navigation, and simulators

Event
applications(sports andcultural event
systems)- Sporting and cultural event management systems, such as for balletand other competitions

6

JAST
TECHNIQUES PTE.
LTD.
JASTEC(THAILAND) CO.,LTD.
NewNeeds Co., Ltd.
SafeNeeds Co., Ltd.
GuiLin Anxin
Software Co., Ltd.

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

Businesssegment
Packagebusiness

Field
Strategic
university
management
systemContent

Company name

- Large-scale university-edition ERP “GAKUEN REVOLUTION EX”
series development, sales, maintenance, introduction support, andcontract development of related systems- School office work support integrated system “GAKUEN EX” series
development, sales, maintenance, introduction support, and contractdevelopment of related systems- University integrated web service system “GAKUEN UNIVERSALPASSPORT EX” development, sales, maintenance, introduction
support, and contract development of related systems- School operations system consultation, end-user computing (EUC)
support, and business process reengineering (BPR) support andoperation services- Development, sales, maintenance, and introduction support for“GAKUEN EduTrack,” an online educational support system, andcontracted development of related systems

Japan System
Techniques Co., Ltd.
Alpha Computer
Co., Ltd.
Shanghai Jiafeng
Information
Technology Co., Ltd.

Systemsales
business

Information
systemequipment sales- Sale and maintenance of computers, network equipment, andsoftware packages- Provision of system solutions for universities and public bodies- Information communications network construction-Construction of security systems

Alpha Computer
Co., Ltd.

Medicalbig data
business

Inspection,
analysis andrelated servicesof medical
information- Automated inspection services for health insurance claims“JMICS”(JAST Medical Insurance Checking System)- Systems for medical information services sector including medical
expense notices- Cloud services for checking service providers- Support services for the preparation of data health plans

Japan System
Techniques Co., Ltd.
NewNeeds Co., Ltd.

The diagram below provides a visual representation of the positioning and relationships of businesses within theGroup.
Clients
Sale of products,
etc.
Consolidated subsidiary

Software development,
package sales and medical
information services

Software development
Consolidated subsidiary

Alpha Computer Co., Ltd.

JASTEC (THAILAND) CO., LTD.

(Head office: Tokyo)(Head office: Bangkok, Thailand)

Consolidated subsidiary

Software development

NewNeeds Co., Ltd.
(Head office: Osaka)

Consolidated subsidiary
GuiLin Anxin Software Co., Ltd.
(Head office: Guilin, China)

Software development
Consolidated subsidiary
SafeNeeds Co., Ltd.
(Head office: Osaka)
Sale of packages, etc.

Japan System Techniques Co., Ltd.

Software development

Software development
Consolidated subsidiary
JAST TECHNIQUES PTE. LTD.
(Head office: Singapore)

Investments

Related company
JUST Co., Ltd.
(Head office: Osaka)

7

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

3. Management Policies(1) Basic Management Policy
Japan System Techniques, since its founding, has maintained its complete independence, unaffiliated with any group,
based on the motto of “creating and providing information technology to contribute to society.” While challenging
the frontiers of the latest technologies, the Company has worked on systems development independent of any
specific industry, technology field, or manufacturer. As a comprehensive information services provider, thisindependence has allowed it to meet an extremely wide variety of needs as the description in “2. Corporate Group”
on page 6 shows. This is a major strength of the Company and has contributed significantly to its stable earnings
growth. It is the passion of each and every employee towards information systems development, and sincerity indealing with clients, that drives this growth. As such, the Company believes in “developing human resources” basedon the management philosophy that the most important management priority is for each and every employee topolish his or herself.
(2) Performance Targets
The Company understands the importance of achieving the sales and profit targets it discloses every fiscal year.
From the standpoint of improving enterprise value by seeking returns on shareholders’ equity, the Company’s basic
dividend policy is to aim for stable, long-term growth in line with operating performance, taking the payout ratio
into consideration. The Company also aims to further improve the ratio of net income to shareholders’ equity, orROE, which was 5.4% on a consolidated basis in the fiscal year under review.
(3) Medium- and Long-term Business Strategy
A key strength of the Company is that, through a business strategy of covering a wide variety of fields while also
focusing deeply on each and staying ahead of the latest technologies, it can maintain stable earnings, unaffected bybusiness environment changes such as the boom-bust cycles of specific industries or changes in technology trends,
while at the same time aiming for long-term growth.
However, in the uncertain economy of late, and particularly in the IT industry where the environment is extremely
volatile, the Company understands that it will be difficult to achieve growth into the future if it remains overly
dependent on contract development, the IT industry’s mainstay source of earnings to date.
Based on this understanding, the Group has formulated the “JAST Vision 2020” as its basic medium- to long-term
management policy. Specifically, in the contracted development business this policy calls for the Company toreinforce solution sales, with a focus on expanding direct agreements with end users. At the same time, we will
strive to strengthen management capabilities for production process, lower the cost of production through measures
such as promoting offshore development, and enhance our systems in the Tokyo metropolitan area—Japan’s largest
market. We intend to enhance the overall profitability of this business by increasing our volume of orders in this area.
In addition, to create new customers and demand by expanding our proprietary brand business, we will further
expand our product and service offerings around our existing brands: GAKUEN, JMICS and BankNeo. Meanwhile,
we will persist with R&D to ensure the continuous launch of new brands. In addition to these initiatives, we will
pursue globalization and the expansion of alliances, including through M&A, in the aim of boosting our proprietarybrand business to around 50% of net sales. Also, to further strengthen the growth base, it will continue to improve
project management technologies, increase added value by enriching the solutions menu, and introduce intensive
training and personnel systems capable of nurturing top-class talent.

8Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16(4) Challenges
Please see “1. Analysis of Results of Operations and Financial Position, (1) Analysis of Results of Operations, 2)
Forecasts for the new fiscal year” on page 2 for a description of current conditions and challenges in the IT industry
and the Group. Based on these conditions and challenges, our slogan for the fiscal year ending March 31, 2017 is“make a commitment to reaching targets your customary thoughts and actions.” We will go back to the basics fordevelopment operations, sales techniques, internal administrative procedures and all other aspects of our operations.
To achieve the goals of every department and person in our Group, we will make “thinking and translating thoughts
into actions” the basis for everything we do. As part of these actions, we have established the following nine key
challenges.
1) To achieve the objectives of JAST Vision 2020, everyone at the Group will focus on producing the greatest
possible accomplishments by creating specific actions for reaching goals and then translating words into actions.
2) All managers, from senior executives to project leaders, will be strong leaders based on an understanding of their
responsibilities as the managers of the organizational units they oversee.
3) We must eliminate problems by reinforcing our commitment to basic tasks like reports, communication,
consultations, thorough checks, extensive discussions and speedy actions.
4) Our goal is to become a prime vendor for contracted development projects; we will offer a one-stop lineup ofservices extending from definitions to development and operations in order to compete successfully against theindustry’s largest manufacturers and vendors.
5) We will make GAKUEN the clear leader in the field of education IT by enhancing current services, operating thisbusiness in other countries and offering more innovative solutions centered on new projects.
6) We will transform JMICS into a highly profitable business by covering more categories of services, improving theperformance of the inspection engine and using alliances to capture synergies.
7) We will make carefully selected and targeted investments, rigorously cut costs and strengthen sales activities tomake this the year when we turn around the performance of BankNeo.
8) We will take the first step toward establishing an outstanding workplace environment and unparalleled risk
management systems by continuing to enact personnel system reforms and upgrading our data management
infrastructure.
9) We will work relentlessly to make our people the leaders in their respective fields and achieve these key
challenges.
4. Basic Approach to the Selection of Accounting Standards
The Group will continue to prepare consolidated financial statements using generally accepted accounting principles
in Japan for the time being to permit comparisons with prior years and with the financial data of other companies.
We will take suitable actions with regard to the application of International Financial Reporting Standards (IFRS) by
taking into account associated factors in Japan and other countries.

9Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

5. Consolidated Financial Statements(1) Consolidated Balance Sheet
FY3/15(As of Mar. 31, 2015)(Thousands of yen)
FY3/16(As of Mar. 31, 2016)

AssetsCurrent assets
Cash and deposits

2,762,276

2,436,624

Notes and accounts receivable-trade

2,783,536

3,436,003

Merchandise and finished goods

59,36278,434Work in process

278,704

326,978

Raw materials and supplies

3,066

2,692

Deferred tax assets

202,070

191,764

Other

116,390

129,132

Allowance for doubtful accounts(4,519)(4,139)6,200,887

6,597,491

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures

612,788616,203

Accumulated depreciation(271,071)(310,047)

Buildings and structures, net

341,716

306,156Land

142,361

142,361

Other

288,023

284,375(189,891)(208,302)

98,131

76,072582,210524,591

Goodwill

18,001

10,001

Software149,314120,195

Other

7,189

7,189

174,505

137,385

Investment securities

580,032

564,136

Net defined benefit asset

481,576

447,426

Deferred tax assets

57,21965,580

Guarantee deposits

342,917

376,493

Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets

Total intangible assets
Investments and other assets

Other

352,690351,708

Allowance for doubtful accounts(54,288)(45,119)

Total investments and other assets
Total non-current assets
Total assets

10

1,760,149

1,760,225

2,516,865

2,422,202

8,717,753

9,019,694

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16(Thousands of yen)
FY3/16(As of Mar. 31, 2016)

FY3/15(As of Mar. 31, 2015)
Liabilities
Current liabilities
Notes and accounts payable-trade751,992

907,911

Short-term loans payable

23,367-

Current portion of long-term loans payable

1,800

-

Income taxes payable

84,486

104,706

Provision for bonuses

446,267

419,637

Provision for directors’ bonuses

20,62420,935-

6,079

Provision for loss on construction contracts
Other

697,818805,784

2,026,357

2,265,055

Provision for directors’ retirement benefits

350,248

372,585

Net defined benefit liability

772,160

800,914

Total current liabilities
Non-current liabilities

Other

135,979

132,686

1,258,387

1,306,186

3,284,745

3,571,242

Capital stock

1,076,669

1,076,669

Capital surplus

1,038,308

998,790

Retained earnings

3,299,968

3,460,641

Treasury shares(266,539)(266,539)

Total shareholders’ equity

5,148,407

5,269,562

61,26350,966

Foreign currency translation adjustment(9,647)(14,352)

Remeasurements of defined benefit plans

153,10990,400Total accumulated other comprehensive income

204,724

127,013

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

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

Non-controlling interests
Total net assets
Total liabilities and net assets

11

79,87551,8755,433,007

5,448,452

8,717,753

9,019,694

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income
FY3/15(Apr. 1, 2014 – Mar. 31, 2015)(Thousands of yen)
FY3/16(Apr. 1, 2015 – Mar. 31, 2016)

Net sales

11,505,104

11,821,083

Cost of sales

9,148,950

9,254,306

Gross profit

2,356,154

2,566,777

Selling, general and administrative expenses

1,992,473

2,165,167

363,681401,609

Interest income

10,041

7,262

Dividend income

6,219

6,141

Foreign exchange gains

1,303

-

Rent income

15,564

14,928Commission fee

1,804

1,745

Subsidy income

35,313

8,007

Other

13,875

13,888

Total non-operating income

84,123

51,975Interest expenses

1,610

2,023

Rent expenses

8,886

7,799

Other

1,347

2,590

Total non-operating expenses

11,844

12,413435,961

441,171-

117

Operating income
Non-operating income

Non-operating expenses

Ordinary income
Extraordinary losses
Loss on valuation of investment securities
Total extraordinary losses-

117

435,961

441,053

Income taxes - current

93,387

125,453

Income taxes - deferred

113,050

42,019Total income taxes

206,437

167,473

Profit229,523

273,580944(18,292)

228,579

291,873

Profit before income taxes

Profit attributable to non-controlling interests
Profit attributable to owners of parent

12

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

Consolidated Statement of Comprehensive Income
FY3/15(Apr. 1, 2014 – Mar. 31, 2015)(Thousands of yen)
FY3/16(Apr. 1, 2015 – Mar. 31, 2016)

229,523

273,580

Valuation difference on available-for-sale securities

9,071(10,296)

Foreign currency translation adjustment

14,073(8,593)Remeasurements of defined benefit plans, net of tax

61,958(62,709)

Total other comprehensive income

85,103(81,598)

314,626

191,981304,898

214,162

9,728(22,180)

ProfitOther comprehensive income

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

13

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16(3) Consolidated Statement of Changes in Equity
FY3/15 (Apr. 1, 2014 – Mar. 31, 2015)(Thousands of yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance
Changes of items during
periodIssuance of newshares-exercise ofsubscription rights toshares

1,071,446

Capital surplus

Retained earnings

1,033,084

3,025,811(266,539)

4,863,803

176,328
1,071,446

1,033,084

5,223

5,223

3,202,140

176,328(266,539)

5,040,131

10,446

Dividends of surplus
Profit attributable toowners of parent
Net changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
periodTotal shareholders’equityTreasury shares(130,750)(130,750)

228,579

228,579

5,223

5,223

97,828-108,275

1,076,669

1,038,308

3,299,968(266,539)

5,148,407

Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities
Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

52,191

Total
Subscription
NonForeign
Remeasurements accumulated
rights tocontrollingcurrencyof defined
othersharesinterests
translation
benefit planscomprehensive
adjustment
income(14,936)

91,150128,405514

73,686

5,066,409

176,328
52,191(14,936)

91,150128,405514

73,686

Changes of items during
periodIssuance of newshares-exercise ofsubscription rights to shares

5,242,738

10,446

Dividends of surplus
Profit attributable to ownersof parent
Net changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
periodTotal net
assets(130,750)
228,579
9,071

5,288

61,95876,318

(514)

6,189

81,993

9,071

5,288

61,95876,318

(514)

6,189

190,269

61,263(9,647)

153,109

204,724-

79,8755,433,007

14

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

FY3/16 (Apr. 1, 2015 – Mar. 31, 2016)(Thousands of yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Changes of items during
periodIssuance of newshares-exercise ofsubscription rights tosharesCapital surplus

1,076,669

Retained earnings

1,038,308

3,299,968(266,539)

5,148,407-

Dividends of surplus
Profit attributable toowners of parent
Change in treasury sharesof parent arising fromtransactions with
non-controllingshareholders
Net changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
periodTotal shareholders’equityTreasury shares(131,200)(131,200)

291,873

291,873(39,517)(39,517)-(39,517)160,672-

121,155

1,076,669

998,790

3,460,641(266,539)

5,269,562

Accumulated other comprehensive income

Balance at beginning ofcurrent period
Changes of items during
periodIssuance of newshares-exercise ofsubscription rights tosharesValuationdifference on
available-for-salesecurities

Foreigncurrencytranslation
adjustment

Remeasurementsof defined
benefit plans

61,263(9,647)

153,109

Total accumulated
Non-controlling
otherinterests
comprehensive
income204,724

79,8755,433,007-

Dividends of surplus
Profit attributable toowners of parent
Change in treasury sharesof parent arising fromtransactions with
non-controllingshareholders
Net changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
periodTotal net assets(131,200)
291,873(39,517)(10,296)(4,704)(62,709)(77,710)(28,000)(105,710)(10,296)(4,704)(62,709)(77,710)(28,000)

15,44450,966(14,352)

90,400127,01351,8755,448,452

15

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16(4) Consolidated Statement of Cash Flows
FY3/15(Apr. 1, 2014 – Mar. 31, 2015)(Thousands of yen)
FY3/16(Apr. 1, 2015 – Mar. 31, 2016)

Profit before income taxes

435,961

441,053

Depreciation

93,93077,333

Amortization of software

25,88837,450Cash flows from operating activities

Amortization of goodwill

8,236

14,929

Increase (decrease) in provision for bonuses(85,321)(26,473)

Decrease (increase) in net defined benefit asset(14,344)

34,150

Increase (decrease) in net defined benefit liability

44,784

29,630Interest and dividend income(16,260)(13,404)

1,610

2,023

(173,400)(654,038)

Interest expenses
Decrease (increase) in notes and accounts receivable-trade
Increase (decrease) in advances received

35,888125,419

Decrease (increase) in inventories(75,918)(67,152)

Increase (decrease) in notes and accounts payable-trade(154,760)

155,986

Other, net(45,173)(71,783)

Subtotal

81,12085,126

Interest and dividend income received

17,11815,389Interest expenses paid

(1,561)(1,956)

Income taxes paid

(301,019)(110,930)

Net cash provided by (used in) operating activities(204,341)(12,370)

Decrease (increase) in time deposits

181,033

206,411Purchase of property, plant and equipment(133,643)(15,725)

Purchase of software(17,322)(25,427)

Purchase of investment securities
Payments for investments in capital of subsidiaries andassociates resulting in change in scope of consolidation
Payments for guarantee deposits(208,061)(2,278)-(2,007)(47,514)(35,915)

Payments for asset retirement obligations(27,864)-

Cash flows from investing activities

Other, net(28,611)(5,452)

Net cash provided by (used in) investing activities(281,985)

119,604

23,367(21,893)-(11,507)

Repayments of long-term loans payable(2,400)(1,800)

Proceeds from issuance of common shares

9,932

-

(130,750)(131,200)-(48,000)(2,435)(2,324)

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

Cash dividends paid
Payments for investments in capital of subsidiaries andassociates that do not result in change in scope of
consolidation
Dividends paid to non-controlling interests
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents

(134)

-

(102,420)(216,725)

4,419(2,758)Net increase (decrease) in cash and cash equivalents(584,327)(112,250)

Cash and cash equivalents at beginning of period

2,144,070

1,559,743

Cash and cash equivalents at end of period

1,559,743

1,447,493

16

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.

Changes in Accounting Policies
Application of the Accounting Standard for Business Combinations, etc.
The Company has applied the “Accounting Standard for Business Combinations” (Accounting Standards Board of Japan (ASBJ)
Statement No. 21, September 13, 2013), “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22,
September 13, 2013), “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, September 13, 2013), etc. fromthe current fiscal year. Accordingly, difference arising from changes in the Company’s ownership interests in subsidiaries incases where control is retained is recognized in capital surplus, and acquisition-related costs in connection with businesscombinations are recognized as expenses in the fiscal year in which they arise. Regarding business combinations that take placeon or after the beginning of the current fiscal year, the Company has revised the method to reflect reviewed allocation of theacquisition costs arising from determination of the provisional accounting treatment on the consolidated financial statements towhich the date of the business combination belongs. In addition, the presentation of net income and other items has been revised,
and the minority interests item has been renamed non-controlling interests. For consistency with these changes, the consolidated
financial statements for the previous fiscal year has been revised.
The Company has adopted these accounting standards, etc. from the beginning of the current fiscal year, in accordance with thetransitional accounting treatments set forth in Article 58-2 (4) of the Accounting Standard for Business Combinations, Article
44-5 (4) of the Accounting Standard for Consolidated Financial Statements, and Article 57-4 (4) of the Accounting Standard forBusiness Divestitures.
Consequently, the balance of capital surplus at the end of the current fiscal year decreased by 39,517 thousand yen.
In the consolidated statement of cash flows for current fiscal year, cash flows associated with purchase or sales of shares ofsubsidiary not resulting in changes in the scope of consolidation are included in cash flows from financing activities. On theother hand, cash flows associated with acquisition-related costs for purchase of shares of subsidiary resulting in changes in thescope of consolidation or costs in connection with purchase or sales of shares of subsidiary not resulting in changes in the scopeof consolidation are included in cash flows from operating activities.
Capital surplus at the end of the current fiscal year in the consolidated statement of changes in equity decreased 39,517 thousandyen.
The effect of these changes on per-share information is shown in the corresponding section.

Reclassifications
Consolidated Statement of Cash Flows“Increase (decrease) in advances received,” included in “Other, net” under cash flows from operating activities in the previous
fiscal year, is reclassified and presented as a separate line item in the current fiscal year since it has increased materiality in thecontext of financial statements. The prior-period consolidated financial statements are restated to conform to the current-period
presentation.
“Other, net” under cash flows from operating activities (-9,285 thousand yen) shown in the prior-period consolidated statementof cash flows is reclassified and divided into “Increase (decrease) in advances received” (35,888 thousand yen) and “Other, net”(-45,173 thousand yen).
“Proceeds from collection of guarantee deposits” under cash flows from investing activities, presented as a separate line item inthe previous fiscal year, is included in “Other, net” in the current fiscal year given the reduced materiality of impact of theamount on the consolidated financial statements. The prior-period consolidated financial statements are restated to conform tothe current-period presentation.

17

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16“Proceeds from collection of guarantee deposits” under cash flows from investing activities (3,499 thousand yen) shown in theprior-period consolidated statement of cash flows is reclassified as “Other, net.”

Segment and Other Information
Segment information
1. Overview of reportable segment
Segments used for financial reporting are the Company and subsidiaries’ constituent units for which separate financial
information is available and for which the Board of Directors performs periodic studies for the purposes of determining theallocation of resources and evaluating performance.
The Group has four reportable business segments: software business, package business, system sales business and medical big
data business each of which conducts its business in line with the comprehensive strategy it has devised for products and services
in both domestic and overseas markets.
The software business handles the contracted software development. The package business is engaged in development, sale, andprovision of related services of operational reform packages for schools. The system sales business conducts IT equipment sales,
IT/telecom infrastructure construction. The medical big data business, which includes a full line of services including automatedinspection services for health insurance claims, data analysis and notification of the cost of medical care.
2. Calculation method for net sales, profit or loss, assets, liabilities, and other items for each reportable segment
The accounting method used for reportable business segments is generally the same as the methods listed in “Significant
Accounting Policies in the Preparation of Consolidated Financial Statements.”
Profits for reportable business segments are operating income figures.
Inter-segment sales and transfers are based on market prices.
3. Information related to net sales, profit or loss, assets, liabilities, and other items for each reportable segment
FY3/15 (Apr. 1, 2014 – Mar. 31, 2015)(Thousands of yen)
Medical big
databusiness

Adjustment(Note 1)
(Note 2)

Amounts shown on
consolidated
financialstatements(Note 3)-

11,505,104

100,928(100,928)-

Softwarebusiness

Packagebusiness

Systemsales
business

7,823,402

2,131,478

1,131,123

67,233-33,694

7,890,636

2,131,478

1,164,817

419,100 11,606,033(100,928)

11,505,104

204,479

271,659(28,990)(84,030)

363,118563

363,6814,434,169

1,393,463

825,288355,084

7,008,006

1,709,746

8,717,753

Total

Net sales
1. External sales
2. Inter-segment sales andtransfers
Total
Segment profit (loss)
Segment assets

419,100 11,505,104-

Other items
Depreciation
78,847
21,1992,416
14,260116,724
116,724
Increase in property, plant andequipment and intangible
5,684
4,612
9,339
5,319
24,956
122,109
147,066
assets
Notes:
1. Segment profit (loss) represents eliminations for inter-segment transactions.
2. Segment assets in the above adjustment consist mainly of corporate assets that cannot be attributed to any of thereportable segments.
3. Segment profit (loss) is adjusted with operating income shown on the consolidated statement of income.

18

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

FY3/16 (Apr. 1, 2015 – Mar. 31, 2016)
Medical big
databusiness

Softwarebusiness

Packagebusiness

Systemsales
business

8,080,536

2,117,057

1,039,010

125,909-

14,3788,206,445

2,117,057

1,053,388

203,703

218,686

5,467(26,066)

401,791

4,758,022

1,340,092

965,341

379,884

7,443,340

Total(Thousands of yen)Amounts shown on
Adjustment
consolidated(Note 1)
financial(Note 2)statements(Note 3)

Net sales
1. External sales
2. Inter-segment sales andtransfers
Total
Segment profit (loss)
Segment assets

584,479 11,821,083-

11,821,083

140,288(140,288)-

584,479 11,961,371(140,288)

11,821,083(181)

401,609

1,576,353

9,019,694-

Other items
Depreciation
73,86323,706
2,691
11,497111,758
111,758
Increase in property, plant andequipment and intangible
29,321
6,724
3,165
3,728
42,9409,720
52,660assets
Notes:
1. Segment profit (loss) represents eliminations for inter-segment transactions.
2. Segment assets in the above adjustment consist mainly of corporate assets that cannot be attributed to any of thereportable segments.
3. Segment profit (loss) is adjusted with operating income shown on the consolidated statement of income.
Related information
1. Information by product or service
This information is omitted because the same information is presented in segment information.
2. Information by region(1) Net sales
Geographical information concerning sales to external customers in Japan is not presented since sales to external customers
exceeded 90% of net sales shown on the consolidated statement of income.
(2) Property, plant and equipment
Geographical information concerning property, plant and equipment is not presented since property, plant and equipment inJapan exceed 90% of property, plant and equipment on the consolidated balance sheet.
3. Information by major client
FY3/15 (Apr. 1, 2014 – Mar. 31, 2015)
Company name
NTT COMWARE CORPORATIONNet sales

Business segment

1,021,979 thousand yen

Software business

FY3/16 (Apr. 1, 2015 – Mar. 31, 2016)
Company name
NTT COMWARE CORPORATIONNet sales

Business segment

1,369,203 thousand yen

Software businessInformation related to impairment of non-current assets for each reportable segment
Not applicable.

19

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

Information related to goodwill amortization and the unamortized balance for each reportable segment
FY3/15 (Apr. 1, 2014 – Mar. 31, 2015)
Softwarebusiness

Packagebusiness

System sales
business

Medical big
data business(Thousands of yen)
Elimination or
Total
corporate

Amortization for the period

8,236

-

-

-

-

8,236

Balance at the end of period

18,001----

18,001

FY3/16 (Apr. 1, 2015 – Mar. 31, 2016)
Softwarebusiness

Packagebusiness

System sales
business

Medical big
data business(Thousands of yen)
Elimination or
Total
corporate

Amortization for the period

8,000

6,928

-

-

-

14,929Balance at the end of period

10,001----

10,001

Information related to gain on bargain purchase for each reportable segment
Not applicable.

20

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

Per-share Information
FY3/15(Apr. 1, 2014 – Mar. 31, 2015)(Yen)
FY3/16(Apr. 1, 2015 – Mar. 31, 2016)

Net assets per share

1,020.03

1,028.31

Net income per share

43.56

55.62

Notes: 1. Diluted net income per share is not presented since the Company has no outstanding dilutive securities.
2. The basis of calculation is as follows.
(Thousands of yen)
FY3/15
FY3/16(As of Mar. 31, 2015)(As of Mar. 31, 2016)
Net assets per share
5,433,007

Total net assets on balance sheet

5,448,452

Deduction on total net assets

79,87551,875[Non-controlling interests][79,875][51,875]

Net assets applicable to common stock

5,353,131

5,396,576

5,248,020 shares

5,248,020 shares

FY3/15(Apr. 1, 2014 – Mar. 31, 2015)(Thousands of yen)
FY3/16(Apr. 1, 2015 – Mar. 31, 2016)

228,579

291,873

Number of common stock used in calculation of net
assets per share

Net income per share
Profit attributable to owners of parent--

Profit attributable to owners of parent applicable tocommon stock

228,579

291,873

Average number of shares outstanding during period

5,247,753 shares

5,248,020 shares

Amount not available to common shareholders

Note: As noted in the section “Changes in Accounting Policies,” the Company has started to apply the Accounting Standard forBusiness Combinations, etc. based on the transitional accounting treatments of these accounting standards.
As a result, net assets per share decreased 7.53 yen in FY3/16.

Subsequent Events
Not applicable.

21

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

6. Non-consolidated Financial Statements(1) Balance Sheet(Thousands of yen)
FY3/16(As of Mar. 31, 2016)

FY3/15(As of Mar. 31, 2015)
AssetsCurrent assets
Cash and deposits

1,943,231

Notes receivable-trade
Accounts receivable-trade

1,724,616

52,284

21,7142,493,905

2,971,606

Merchandise and finished goods

14,91460,202Work in process

206,588

158,833

Raw materials and supplies

3,007

2,639

Prepaid expenses

96,353

100,888

Deferred tax assets

185,926

167,508

1,735

9,945

Accounts receivable-other
Other

9,877

13,552

Allowance for doubtful accounts(4,268)(3,687)

5,003,556

5,227,820

328,275

294,375

Total current assets
Non-current assets
Property, plant and equipment
Buildings
Structures

62

30

Tools, furniture and fixtures

85,636

66,092

Land

142,361

142,361

Total property, plant and equipment

556,335

502,860

152,810

122,335

Intangible assets
SoftwareTelephone subscription right

6,180

6,180

158,990

128,515

Investment securities

580,032

564,136

Shares of subsidiaries and associates

Total intangible assets
Investments and other assets

997,367

997,367

Investments in capital of subsidiaries and associates-

61,447Long-term loans receivable
Long-term loans receivable from subsidiaries andassociates
Prepaid pension cost

-

4,446

26,232

49,998275,684

335,817Long-term time deposits

100,000

100,000

Deferred tax assets

121,223

94,768

Guarantee deposits

310,756

344,580

Real estate for rent

131,359

128,333

Membership

45,32445,324

Insurance funds

65,58767,868

Other

9,738

2,388

Allowance for doubtful accounts(67,404)(87,172)

Total investments and other assets

2,595,903

2,709,304

3,311,228

3,340,679

8,314,784

8,568,500

Total non-current assets
Total assets

22

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16(Thousands of yen)
FY3/16(As of Mar. 31, 2016)

FY3/15(As of Mar. 31, 2015)
Liabilities
Current liabilities
Accounts payable-trade555,967

654,876

Accounts payable-other

158,282

122,232

Accrued expenses

193,427

205,504

Income taxes payable

67,53584,219Accrued consumption taxes

145,043

148,114

Advances received

61,88358,050

Provision for bonuses

405,302382,929

Provision for directors’ bonuses

13,124

13,596-

6,079

Provision for loss on construction contracts
Other

21,051

24,236

1,621,619

1,699,838

Provision for retirement benefits

756,168

776,498

Provision for directors’ retirement benefits

298,432

314,420

Total current liabilities
Non-current liabilities

Provision for loss on guarantees

4,896

-

130,548

127,244

1,190,044

1,218,162

2,811,664

2,918,001

1,076,669

1,076,669

Legal capital surplus

1,038,308

1,038,308

Total capital surpluses

1,038,308

1,038,308

32,66532,665

3,159,000

3,249,000

401,753

469,429

Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus

Retained earnings
Legal retained earnings
Other retained earnings
General reserve
Retained earnings brought forward

3,593,418

3,751,094

Treasury shares

Total retained earnings(266,539)(266,539)

Total shareholders’ equity

5,441,856

5,599,532

Valuation difference on available-for-sale securities

61,26350,966

Total valuation and translation adjustments

61,26350,966

5,503,120

5,650,499

8,314,784

8,568,500

Valuation and translation adjustments

Total net assets
Total liabilities and net assets

23

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16(2) Statement of Income
FY3/15(Apr. 1, 2014 – Mar. 31, 2015)(Thousands of yen)
FY3/16(Apr. 1, 2015 – Mar. 31, 2016)

Net sales

9,682,373

10,160,749

Cost of sales

7,725,869

8,088,283

Gross profit

1,956,504

2,072,465

Selling, general and administrative expenses

1,582,437

1,658,136

374,066

414,329

Interest and dividend income

38,09423,540Rent income

13,56912,828Commission fee

1,804

1,745

Interest on securities

2,793

3,695

Subsidy income

20,637

8,007

-

4,896

Other

6,891

10,916

Total non-operating income

83,791

65,630Interest expenses

1,082

1,395

Rent expenses

8,886

7,799

Operating income
Non-operating income

Reversal of provision for loss on guarantees

Non-operating expenses

Provision for loss on guarantees

4,896

-

Provision of allowance for doubtful accounts

13,116

29,506

Other

1,758

3,282

Total non-operating expenses

29,73941,984428,119437,974-

117

20,535-

Ordinary income
Extraordinary losses
Loss on valuation of investment securities
Loss on valuation of shares of subsidiaries and associates
Total extraordinary losses

20,535

117

Profit before income taxes

407,583

437,857

Income taxes-current

69,941

97,317

Income taxes-deferred

114,396

51,663

Total income taxes

184,337

148,980

Profit223,245

288,87624

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16(3) Statement of Changes in Equity
FY3/15 (Apr. 1, 2014 – Mar. 31, 2015)(Thousands of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capitalstock

Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance
Changes of items during
periodIssuance of newshares-exercise ofsubscription rights to shares
Provision of general reserve

Legal
capitalsurplusTotal
capitalsurplusLegalretainedearnings

1,071,446 1,033,084 1,033,084 32,665

1,071,446 1,033,084 1,033,084 32,665

5,223

5,223

Total
retainedearnings

TreasurysharesTotalshareholders’equity(266,539)

5,162,586

Generalreserve

Retainedearnings
brought
forward2,999,000

292,929

3,324,594

176,328

176,328

469,258

3,500,923

2,999,000

176,328(266,539)

5,223

5,338,915

10,446160,000(160,000)--

Dividends of surplus(130,750)(130,750)(130,750)

ProfitNet changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period223,245

223,245

223,245-

160,000(67,504)

92,495-102,941

1,076,669 1,038,308 1,038,308 32,665

3,159,000

401,753

3,593,418(266,539)

5,441,856

5,223

5,223

5,223

Valuation and translation adjustments

Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance
Changes of items during
periodIssuance of newshares-exercise ofsubscription rights to shares
Provision of general reserve

Valuation difference on
available-for-salesecurities

Total valuation andtranslation adjustments

52,191

52,191

Subscription rights tosharesTotal net assets

514

5,215,292
176,328

52,191

52,191514

5,391,621

10,446-

Dividends of surplus(130,750)

ProfitNet changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period223,245
9,071

9,071

(514)

8,557

9,071

9,071

(514)

111,499

61,263

61,263-

5,503,12025

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

FY3/16 (Apr. 1, 2015 – Mar. 31, 2016)(Thousands of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capitalstock

Balance at beginning ofcurrent period
Changes of items during
periodIssuance of newshares-exercise ofsubscription rights to shares
Provision of general reserve

Legal
capitalsurplusTotal
capitalsurplusLegalretainedearnings

1,076,669 1,038,308 1,038,308 32,665

Generalreserve

Retainedearnings
brought
forward3,159,000

401,753

Total
retainedearnings

TreasurysharesTotalshareholders’equity3,593,418(266,539)

5,441,856

90,000(90,000)--

Dividends of surplus(131,200)(131,200)(131,200)

ProfitNet changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
period288,876

288,876

288,876

-

-

-

-

90,00067,675

157,675-

157,675

1,076,669 1,038,308 1,038,308 32,665

3,249,000

469,429

3,751,094(266,539)

5,599,532

Valuation and translation adjustments

Balance at beginning ofcurrent period
Changes of items during
periodIssuance of newshares-exercise ofsubscription rights to shares
Provision of general reserve

Valuation difference on
available-for-salesecurities

Total valuation andtranslation adjustments

61,263

61,263

Total net assets

5,503,120-

Dividends of surplus(131,200)

ProfitNet changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
period288,876(10,296)(10,296)(10,296)(10,296)(10,296)

147,379

50,96650,9665,650,499

26

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16

7. Others(1) Changes in Directors
1) Changes in representative
Not applicable.
2) Changes in other directors
Candidate for director
Director and Executive Officer

Yuji Tsuchiya

Director

Yutaka Yamashina

Note: Mr. Yutaka Yamashina is a candidate for an external director.
3) Effective dateJune 24, 201627

Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/16(2) Goods Manufactured, Orders Received and Sales
1) Goods Manufactured
Goods manufactured in the fiscal year under review are broken down by segment as follows.
(Thousands of yen)
FY3/16
Operating segment
Year-on-year (%)(Apr. 1, 2015 – Mar. 31, 2016)
Software business
6,909,001
105.1
Package business
1,246,241
98.1
System sales business
748,567
79.5
Medical big data business
350,497
96.9
Total
9,254,306
101.2
Notes: 1. The above amounts are based on cost of sales; inter-segment transactions have been eliminated.
2. The above amounts do not include consumption taxes.
2) Orders Received
Orders received in the fiscal year under review are broken down by segment as follows.
Operating segment
Orders received
Year-on-year (%)
Order backlog
Software business
8,358,231
103.9
1,545,641
Package business
2,187,182
93.6
674,624
System sales business
1,205,220
101.6
376,041
Medical big data business
1,058,868
248.6
684,040
Total
12,809,502
106.8
3,280,348
Notes: 1. The above amounts are based on selling prices; inter-segment transactions have been eliminated.
2. The above amounts do not include consumption taxes.
3) Sales(Thousands of yen)
Year-on-year (%)
121.9
111.6
179.2
326.3
143.1

Sales in the fiscal year under review are broken down by segment as follows.
(Thousands of yen)
FY3/16
Operating segment
Year-on-year (%)(Apr. 1, 2015 – Mar. 31, 2016)
Software business
8,080,536
103.3
Package business
2,117,057
99.3
System sales business
1,039,010
91.9
Medical big data business
584,479
139.5
Total
11,821,083
102.7
Notes: 1. Inter-segment transactions have been eliminated.
2. The following table indicates sales amounts to major customers and their ratios to total sales amount.
(Thousands of yen)
FY3/15
FY3/16(Apr. 1, 2014 – Mar. 31, 2015)(Apr. 1, 2015 – Mar. 31, 2016)
Customers
Customers
Amount%Amount%NTT COMWARE
NTT COMWARE
1,021,979
8.9
1,369,203
11.6
CORPORATIONCORPORATION
DUSKIN CO., LTD.
649,224
5.6 DUSKIN CO., LTD.
568,808
4.8
TIS Inc.
525,172
4.6 TIS Inc.
527,626
4.5
3. The above amounts do not include consumption taxes.
4. On July 1, 2014, NTT COMWARE CORPORATION merged its five regional group companies including NTT
COMWARE WEST CORPORATION. Accordingly, total sales amount of NTT COMWARE CORPORATION includes
results of NTT COMWARE WEST CORPORATION.

This financial report is solely a translation of “Kessan Tanshin” (in Japanese, including attachments), which has been
prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers
who prefer an English translation.

28