August 4, 2017

Summary of Consolidated Financial Results
for the First Quarter of Fiscal Year Ending March 31, 2018
(Three Months Ended June 30, 2017)
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 filing of Quarterly Report:
Scheduled date of payment of dividend:
Preparation of supplementary materials for quarterly financial results:
Holding of quarterly financial results meeting:[Japanese GAAP]
Listing: Tokyo Stock Exchange, First Section
URL: http://www.jast.jp
Tel: +81-6-4560-1000
August 7, 2017
None
None

Note: The original disclosure in Japanese was released on August 4, 2017 at 16:00 (GMT +9).
(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the First Quarter Ended June 30, 2017 (April 1, 2017 – June 30, 2017)(1) Consolidated results of operations(Percentages 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%
Three months ended Jun. 30, 2017
3,219
15.0
(10)
5
(2)
Three months ended Jun. 30, 2016
2,799
10.7
(177)
(162)
(123)
Note: Comprehensive income (million yen) Three months ended Jun. 30, 2017:
10 (- %)
Three months ended Jun. 30, 2016: (148) (- %)Three months ended Jun. 30, 2017
Three months ended Jun. 30, 2016

Net income per share

Diluted net income per
share

Yen

Yen

(0.55)(23.49)-(2) Consolidated financial position
Total assets
Net assets
Million yen
Million yen
As of Jun. 30, 2017
10,723
5,620
As of Mar. 31, 201710,281
5,741
Reference: Shareholders’ equity (million yen)
As of Jun. 30, 2017:
5,572

Equity ratio

Net assets per share
%
Yen
52.0
1,061.85
55.4
1,084.74
As of Mar. 31, 2017:
5,692

2. Dividends
1Q-end2Q-endYen

Fiscal year ended Mar. 31, 2017
Fiscal year ending Mar. 31, 2018
Fiscal year ending Mar. 31, 2018 (forecasts)
Note: Revisions to the most recently announced dividend forecast: None

Dividend per share
3Q-endYear-end

Total

Yen

Yen

Yen

Yen

0.00

-

25.00

25.00

0.00

-

25.00

25.00

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

Operating income

Ordinary income

Million yen%
Million yen% Million yen%
Full year
14,625
2.8
790
38.3
795
27.4
Note: Revisions to the most recently announced consolidated earnings forecasts: None

(Percentages represent year-on-year changes)
Profit attributable to
Net income perowners of parent
shareMillion yen
%
Yen
470
14.4
89.56

* Notes(1) Changes in consolidated subsidiaries during the period (changes in scope of consolidation): None
Newly added: -Excluded: -(2) Application of special accounting methods for presenting quarterly consolidated financial statements: None
(3) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others:None2) Changes in accounting policies other than 1) above:None3) Changes in accounting-based estimates:

None4) Restatements:

None(4) Number of outstanding shares (common shares)
1) Number of shares outstanding at the end of the period (including treasury shares)
As of Jun. 30, 2017:

5,612,230 shares

As of Mar. 31, 2017:

5,612,230 shares

As of Mar. 31, 2017:364,210 shares

2) Number of treasury shares at the end of the period
As of Jun. 30, 2017:364,210 shares

3) Average number of shares outstanding during the period
Three months ended Jun. 30, 2017:

5,248,020 shares

Three months ended Jun. 30, 2016:

5,248,020 shares

Note 1: The current quarterly summary report is not subject to quarterly review procedures.
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. Qualitative Information on Quarterly
Consolidated Financial Performance, (3) Explanation of Consolidated Forecasts and Other Forward-looking Statements” on page 3
for forecast assumptions and notes of caution for usage.

Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/18

Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance2(1) Explanation of Results of Operations

2(2) Explanation of Financial Position

3(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements

3

2. Quarterly Consolidated Financial Statements and Notes

4(1) Quarterly Consolidated Balance Sheet

4(2) Quarterly Consolidated Statements of Income and Comprehensive Income

6

Quarterly Consolidated Statement of Income
For the Three-month Period

6

Quarterly Consolidated Statement of Comprehensive Income
For the Three-month Period7(3) Quarterly Consolidated Statement of Cash Flows

8(4) Notes to Quarterly Consolidated Financial Statements

9

Going Concern Assumption

9

Significant Changes in Shareholders’ Equity

9

Segment and Other Information

91

Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/18

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the first quarter of the current fiscal year, the overall Japanese economy continued to recover at a moderatepace. The recovery is backed by the benefits of economic initiatives along with ongoing improvements incorporate profits, the number of jobs and personal income. However, the outlook remains unclear mainly becauseof concerns over increased uncertainty about overseas economies, such as political trends in the United States andEurope, slowing economic growth in China and other emerging countries in Asia, the U.K. leaving the EU, andcontinuous terrorism attacks.
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 May figures), net sales rose 1.3% year on year in Fiscal 2016
(compared with 2.6% annual growth in Fiscal 2015), keeping a positive trend. The monthly sales figuresincreased year on year for ten straight months since August 2016, indicating that the IT industry as a whole is ona moderate growth path.
In the first quarter, the Japan System Techniques Group (Japan System Techniques Co., Ltd. and its consolidated
subsidiaries, hereafter “the Group”) posted net sales of 3,219 million yen (up 15.0% year on year), operating lossof 10 million yen (vs. operating loss of 177 million yen in the same period of the previous fiscal year), ordinary
income of 5 million yen (vs. ordinary loss of 162 million yen in the same period of the previous fiscal year), andloss attributable to owners of parent of 2 million yen (vs. loss attributable to owners of parent of 123 million yen
in the same period of the previous fiscal year). Operations were solid as net sales and all profit levels increased
year-on-year. Results by segment were as follows.
In the software business (individualized contracted software development), net sales and profits increased. Sales
remained strong because orders from the service/retail industry, the manufacturing industry, thetelecommunications industry, the finance/insurance/brokerage industry, and educational institutions increased. As
a result, net sales in this business totaled 2,393 million yen (up 22.9% year on year) and operating income was 57
million yen (vs. operating loss of 82 million yen in the same period of the previous fiscal year).
In the package business (development, sale and related services of operational reform packages for schools), salesof end user computing (EUC: individualized contracted development of related systems) and maintenanceservices increased, while the IT equipment sales, operation services, and program product (PP) sales andimplementation support to universities declined. As a result, net sales totaled 405 million yen (down 8.1% year onyear) and operating loss was 31 million yen (vs. operating loss of 40 million yen in the same period of theprevious fiscal year).
In the system sales business (IT equipment sales and IT/telecom infrastructure construction), orders from highly
profitable system integration (SI) projects for public and education sectors increased. As a result, net sales totaled
255 million yen (up 0.5% year on year), and operating loss was 7 million yen (vs. operating loss of 20 million yen
in the same period of the previous fiscal year).
Lastly, in the medical big data business (inspection, analysis and related services of medical information),
introduction of cloud services for managing health insurance claims at local governments was strong. As a result,net sales totaled 164 million yen (up 4.7% year on year), and operating loss totaled 29 million yen (vs. operating
loss of 32 million yen in the same period of the previous fiscal year).
Features of the Group’s quarterly results
A feature of the Group’s software, package and systems sales businesses is that the delivery inspection period of
most customers concentrates in March, the last month of the fiscal year for most companies, and then in
September, the last month of the second quarter. This means that the Group’s earnings in the first and third
quarters tend to be much smaller than in the second and fourth quarters.

2

Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/18(2) Explanation of Financial Position
1) Balance sheet position
The balance of current assets at the end of the first quarter of the current fiscal year was 8,211 million yen, up 460
million yen from the end of the previous fiscal year. This was mainly due to the collection of accounts
receivable-trade and increases in advances received and cash and deposits caused by short-term loans payable.
The balance of non-current assets was 2,512 million yen at the end of the first quarter, down 17 million yen fromthe end of the previous fiscal year.
The balance of current liabilities at the end of the first quarter was 3,660 million yen, up 582 million yen from theend of the previous fiscal year. This was mainly due to an increase in advances received, short-term loans payable,
and decreases in provision for bonuses and accounts payable-trade. The balance of non-current liabilities was
1,442 million yen at the end of the first quarter, down 19 million yen from the end of the previous fiscal year.
The balance of net assets was 5,620 million yen at the end of the first quarter, down 120 million yen from the endof the previous fiscal year. The main factor of the change was the payment of dividends.
2) Cash flows
Cash and cash equivalents increased 1,532 million yen from 1,951 million yen at the beginning of the current
fiscal year to 3,484 million yen at the end of the first three months of the current fiscal year.
Cash flows by category were as follows.
Cash flows provided by operating activities totaled 1,425 million yen, an increase of 226 million yen from 1,198
million yen provided in the same period of the previous fiscal year. This increase was mainly due to increases inadvances received and profit before income taxes, while there was an increase in inventories.
Cash flows provided by investing activities totaled 4 million yen, a decrease of 76 million yen from 81 million
yen provided in the same period of the previous fiscal year. This decrease was mainly due to a decrease inproceeds from cancellation of time deposits while there was a decrease in purchase of shares of subsidiaries.
Cash flows provided by financing activities totaled 104 million yen, a decrease of 47 million yen from 152
million yen provided in the same period of the previous fiscal year. This decrease was mainly due to a decrease in
short-term loans payable.
(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements
We maintain the May 12, 2017 forecasts for the fiscal year ending March 31, 2018: net sales of 14,625 million
yen (up 2.8% year on year), operating income of 790 million yen (up 38.3% year on year), ordinary income of
795 million yen (up 27.4% year on year), and profit attributable to owners of parent of 470 million yen (up 14.4%
year on year).

3Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/18

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet
FY3/17(As of Mar. 31, 2017)(Thousands of yen)First quarter of FY3/18(As of Jun. 30, 2017)

AssetsCurrent assets
Cash and deposits

2,365,633

3,898,502

Notes and accounts receivable-trade

4,374,348

2,864,835

Merchandise and finished goods

86,509147,873

Work in process

505,244835,915

3,317

3,197

Deferred tax assets

270,257

344,014

Other

149,426

118,790

Allowance for doubtful accounts(3,858)(2,076)7,750,879

8,211,051

Raw materials and supplies

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

669,615

669,615(347,533)(356,146)

322,081

313,468Land

142,361

142,361

Other

375,955

380,708(241,349)(252,610)

134,606

128,098

599,049

583,928

Goodwill

40,491

36,227

Software109,996

99,688

7,626

7,626

158,114

143,542

Investment securities

625,020

657,938

Net defined benefit asset

479,037

483,723

Deferred tax assets

76,56065,892

Guarantee deposits

376,763371,550

Other

260,605

250,936

Allowance for doubtful accounts(44,649)(44,649)

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

Other
Total intangible assets
Investments and other assets

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

4

1,773,336

1,785,391

2,530,500

2,512,862

10,281,379

10,723,913

Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/18

FY3/17(As of Mar. 31, 2017)(Thousands of yen)First quarter of FY3/18(As of Jun. 30, 2017)

Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable

1,122,286

844,586

26,678275,000

8,400

8,400

Income taxes payable

281,537

87,442

Provision for bonuses

615,341

280,130

Provision for directors’ bonuses

29,174

6,968

Provision for loss on construction contracts

1,561

-

Other

993,321

2,158,269

3,078,301

3,660,798

Long-term loans payable

28,00025,900

Provision for directors’ retirement benefits

413,048405,272

Net defined benefit liability

870,683884,785

Other

150,188

126,630

1,461,920

1,442,588

4,540,222

5,103,387

1,076,669

1,076,669

Total current liabilities
Non-current liabilities

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

994,621994,621

Retained earnings

3,740,158

3,606,058

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

Total shareholders’ equity

5,544,909

5,410,809

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

85,686

108,442

Foreign currency translation adjustment(13,063)(18,020)

Remeasurements of defined benefit plans

75,22771,353

Total accumulated other comprehensive income

147,850

161,775

48,39647,941

5,741,157

5,620,526

10,281,379

10,723,913

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

5Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/18(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Three-month Period)(Thousands of yen)First three months of FY3/17 First three months of FY3/18(Apr. 1, 2016 – Jun. 30, 2016) (Apr. 1, 2017 – Jun. 30, 2017)
Net sales

2,799,786

3,219,208

Cost of sales

2,363,574

2,561,997

Gross profit

436,212657,210

Selling, general and administrative expenses

614,203

667,551(177,990)(10,340)

Operating loss
Non-operating income
Interest income

3,195

2,811

Dividend income

2,754

2,777

Rent income

3,559

3,373

Foreign exchange gains

-

1,327

Insurance premiums refunded cancellation

-

5,226

Other

8,526

3,331

Total non-operating income

18,036

18,849Interest expenses

184

517

Foreign exchange losses

547

-

2,004

2,241

144

332

2,880

3,091

Ordinary income (loss)(162,834)

5,417

Profit (loss) before income taxes(162,834)

5,417

Income taxes(33,705)

8,767

Loss

(129,128)(3,350)(5,829)(450)(123,299)(2,899)Non-operating expenses

Rent expenses
Other
Total non-operating expenses

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

6

Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/18

Quarterly Consolidated Statement of Comprehensive Income(For the Three-month Period)First three months of FY3/17(Apr. 1, 2016 – Jun. 30, 2016)(Thousands of yen)First three months of FY3/18(Apr. 1, 2017 – Jun. 30, 2017)(129,128)(3,350)

Valuation difference on available-for-sale securities(11,344)

22,755

Foreign currency translation adjustment(3,423)(4,962)Remeasurements of defined benefit plans, net of tax(4,655)(3,874)

Total other comprehensive income(19,424)

13,919(148,552)

10,569(140,496)

11,025(8,056)

(455)

Loss
Other comprehensive income

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

7

Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/18(3) Quarterly Consolidated Statement of Cash FlowsFirst three months of FY3/17(Apr. 1, 2016 – Jun. 30, 2016)(Thousands of yen)First three months of FY3/18(Apr. 1, 2017 – Jun. 30, 2017)(162,834)

5,417

Depreciation

17,14820,836

Amortization of software

9,380

10,591

Amortization of goodwill

2,000

4,264

(179,192)(335,114)

19,42014,063

Decrease (increase) in net defined benefit asset(4,204)(4,686)

Interest and dividend income(5,950)(5,589)184

517

1,441,264

1,507,750

304,056

624,759

Decrease (increase) in inventories(149,256)(391,929)

Increase (decrease) in notes and accounts payable-trade(325,287)(277,661)

Other, net

301,551

488,339

Subtotal

1,268,280

1,661,559

6,203

5,929

Cash flows from operating activities
Profit (loss) before income taxes

Increase (decrease) in provision for bonuses
Increase (decrease) in net defined benefit liability

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

Interest and dividend income received
Interest expenses paid

(300)

(466)

Income taxes paid

(75,999)(241,891)

Net cash provided by (used in) operating activities

1,198,184

1,425,131

Cash flows from investing activities
Decrease (increase) in time deposits

115,983(6)

Purchase of property, plant and equipment(5,486)(4,189)Purchase of software(1,375)(16,060)

(368)

(448)

(26,827)--

12,275Purchase of investment securities
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Proceeds from cancellation of insurance funds
Proceeds from collection of guarantee deposits
Payments for guarantee deposits
Other, net
Net cash provided by (used in) investing activities-

11,870

(301)

(723)

(54)

1,986

81,5704,703

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

294,628

248,595

Repayments of lease obligations(9,966)(10,772)

Repayments of long-term loans payable
Cash dividends paid-

(2,100)(131,200)(131,200)

Dividends paid to non-controlling interests(1,164)-

Net cash provided by (used in) financing activities

152,296

104,522

Effect of exchange rate change on cash and cash equivalents

1,286(1,658)Net increase (decrease) in cash and cash equivalents

1,433,337

1,532,698

Cash and cash equivalents at beginning of period

1,447,493

1,951,458

Cash and cash equivalents at end of period

2,880,830

3,484,157

8

Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/18(4) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.

Significant Changes in Shareholders’ Equity
Not applicable.

Segment and Other Information
Segment information
I. First three months of FY3/17 (Apr. 1, 2016 – Jun. 30, 2016)
1. Information related to net sales and profit or loss for each reportable segment(Thousands of yen)Amounts shown onquarterly
Adjustment
consolidated(Note 1)statement of income(Note 2)

Softwarebusiness

Packagebusiness

Systemsales
business

Medicalbig data
business

Total

1,947,080

440,964

254,238

157,5032,799,786-

2,799,786

Net sales
1. External sales
2. Inter-segment sales
and transfers
Total

19,522

-

9,958

-

29,480(29,480)-

1,966,602

440,964

264,196

157,5032,829,266(29,480)

2,799,786

Segment profit (loss)(82,884)(40,835)(20,073)(32,750)(176,544)(1,446)(177,990)

Notes: 1. Adjustment to segment profit (loss) represents eliminations for inter-segment transactions.
2. Segment loss is consistent with operating loss shown on the quarterly consolidated statement of income.
2. Information related to impairment losses on non-current assets, goodwill, etc. for each reportable segment
Significant change in goodwill
In the software business, the Company purchased the stock of ISR Co.,Ltd. and made it a consolidated subsidiary in the first
three months of FY3/17. Goodwill of 45,284 thousand yen emerged related to the purchases.
II. First three months of FY3/18 (Apr. 1, 2017 – Jun. 30, 2017)
1. Information related to net sales and profit or loss for each reportable segment(Thousands of yen)Amounts shown onquarterly
Adjustment
consolidated(Note 1)statement of income(Note 2)

Softwarebusiness

Packagebusiness

Systemsales
business

Medicalbig data
business

Total

1. External sales
2. Inter-segment sales
and transfers
Total

2,393,713

405,160

255,491

164,8423,219,208-

3,219,208

16,630

-

3,885

-

20,515(20,515)-2,410,343

405,160

259,376

164,8423,239,723(20,515)

3,219,208

Segment profit (loss)

57,184(31,959)(7,420)(29,954)(12,150)

1,809(10,340)

Net sales

Notes: 1. Adjustment to segment profit (loss) represents eliminations for inter-segment transactions.
2. Segment loss is consistent with operating loss shown on the quarterly consolidated statement of income.
2. Information related to impairment losses on non-current assets, goodwill, etc. for each reportable segment
Not applicable.

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.

9