Notice: This document has been translated from Japanese original for reference purpose only, without any warranty as toits accuracy or as to the completeness of the information. The Japanese original version is the sole official version.
November 10, 2017

Summary of Consolidated Financial Results for the Second Quarterof Fiscal Year Ending March 31, 2018
(Six Months Ended September 30, 2017)[Japanese GAAP]
Company name: EM SYSTEMS CO., LTD.
Listing: Tokyo Stock Exchange, First Section
Stock code:
4820
URL: http://www.emsystems.co.jp
Representative: Kozo Kunimitsu, Chairman and CEO
Contact:
Megumi Seki, Corporate Officer, General Manager of Administration Department
Tel: +81-6-6397-1888
Scheduled date of filing of Quarterly Report:
November 13, 2017
Scheduled date of payment of dividend:
December 4, 2017
Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results meeting:Yes (for securities analysts)(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Second Quarter Ended September 30, 2017
(April 1, 2017 – September 30, 2017)(1) Consolidated operating results
Net sales(Percentages represent year-on-year changes)
Profit attributable toOrdinary profit
owners of parent

Operating profit%

Million yen%

Six months ended Sep. 30, 2017
6,873
5.4
1,509
31.4
1,825
27.3
Six months ended Sep. 30, 2016
6,522
4.4
1,148
67.7
1,434
52.6
Note: Comprehensive income (million yen)Six months ended Sep. 30, 2017: 1,215 (up 29.3%)
Six months ended Sep. 30, 2016:
939 (up 15.3%)

Million yen

%

1,214
957

26.8
18.8

Net income per share
Six months ended Sep. 30, 2017
Six months ended Sep. 30, 2016

Million yen%

Million yen

Diluted net income per share

Yen

Yen

68.47
54.72

68.14
54.24

(2) Consolidated financial position
Total assets

Net assets

Million yen

As of Sep. 30, 2017
As of Mar. 31, 2017
Reference: Shareholders’ equity (million yen)

20,945
21,348
As of Sep. 30, 2017:

Net assets per share

Equity ratio

Million yen

15,012
14,063
14,891

Yen

%

71.1
65.4
As of Mar. 31, 2017:837.87790.96
13,964

2. Dividends
1Q-endDividend per share
3Q-end2Q-endYen

Yen

Year-end

Yen

Total
Yen

Yen

Fiscal year ended Mar. 31, 2017
8.00
23.00
31.00
Fiscal year ending Mar. 31, 2018
13.00
Fiscal year ending Mar. 31, 2018
20.00
33.00
(forecast)
Note: Revisions to the most recently announced dividend forecast: Yes
Regarding revisions to the dividend forecast, please refer to the press release “Announcement for dividends from surplus(interim dividend)” (Japanese version only) that was announced today (November 10, 2017).

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

Operating profit%

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

Ordinary profit%

Million yen%

Yen

Full year
13,835
1.2
2,600
0.1
3,205
1.4
Note: Revisions to the most recently announced consolidated earnings forecasts: None%

Million yen

2,137

1.0

123.08

* Notes(1) Changes in significant subsidiaries during the period (changes in scope of consolidation): None
(2) Application of special accounting methods for presenting quarterly consolidated financial statements: Yes
Note: Please refer to “2. Quarterly Consolidated Financial Statements and Notes, (3) Notes to Quarterly Consolidated
Financial Statements, Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial
Statements” on page 9 of the attachments for further information.

(3) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others: None
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting-based estimates: None
4) Restatements: None

(4) Number of outstanding shares (common stock)1) Number of shares outstanding at the end of period (including treasury shares)
As of Sep. 30, 2017:18,173,700 shares

As of Mar. 31, 2017:18,055,900 shares

As of Mar. 31, 2017:

400,954 shares

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

400,977 shares

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

17,736,489 shares

Six months ended Sep. 30, 2016:

17,494,146 shares* The current quarterly summary report is not subject to quarterly review procedures.
* Explanation of appropriate use of earnings forecasts, and other special items
Forecasts of future performance in this report are based on assumptions judged to be valid and information available to theCompany’s management at the time the materials were prepared. Actual results may differ significantly from these forecasts for anumber of reasons.

EM SYSTEMS CO., LTD. (4820) Financial Results for the Second 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

4(3) Explanation of Consolidated Earnings Forecasts and Other Forward -looking Statements

4

2. Quarterly Consolidated Financial Statements and Notes

5(1) Quarterly Consolidated Balance Sheet

5(2) Quarterly Consolidated Statements of Income and Comprehensive Income

7

Quarterly Consolidated Statement of Income
For the Six-month Period

7

Quarterly Consolidated Statement of Comprehensive Income
For the Six-month Period

8(3) Notes to Quarterly Consolidated Financial Statements

9

Going Concern Assumption

9

Significant Changes in Shareholders’ Equity

9

Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements

91

EM SYSTEMS CO., LTD. (4820) Financial Results for the Second Quarter of FY3/18

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
The Japanese economy continued to recover at a moderate pace in the first half of the fiscal year ending on March
31, 2018. The main reason was improvements in corporate earnings and jobs due to economic and monetary
policy initiatives by the Japanese government and the Bank of Japan. This recovery is now the second longest in
the postwar era. Furthermore, consumer sentiment is strong. All these factors point to a continuation of the slow
recovery of the Japanese economy.
Japan’s pharmacy sector, the primary market for the products of EM SYSTEMS (the “Company”), is undergoinga realignment as M&A activity at major chains and other activities create larger companies. At the same time, theenvironment for small and midsize pharmacy companies is becoming increasingly difficult. To succeed,
pharmacies must provide customers with added value. Revisions to medical care and nursing care payments thatare to be enacted in 2018 are likely to create more challenges for pharmacies. Realignments of the medical careand nursing care sectors are expected to accelerate as a result. Furthermore, the Japanese government plans totake many actions to increase the use of ICT in the healthcare sector. Consequently, the need for information links
and sharing among nursing care and other categories of healthcare is expected to become even greater.
Japan’s population is aging rapidly. There is much talk about the so -called “2025 problem.” In 2025, all of theapproximately 8 million baby boom generation people in Japan will have reached advanced old age. This is
expected to create serious problems like skyrocketing public-sector insurance payments for medical and nursing
care and shortages of nursing care workers. To provide a link between healthcare (clinics and pharmacies) andnursing care data, the Company started the full-scale operation of an IT systems business for nursing careproviders in 2016. Next was the March 2017 launch of the Hirogaru Care Net, which links healthcare and nursing
care data systems. In August 2017, sales of Tsunagaru Care NEXT started to meet the needs of companies in theat-home nursing care sector. The goal is to use a unified three-way network linking the systems that the Company
provides to clinics, pharmacies and nursing care providers in order to create an environment for the seamlesssharing of healthcare and nursing care information.
For the first half, the Company reported consolidated net sales of 6,873 million yen (up 5.4% year on year),
operating profit of 1,509 million yen (up 31.4%), ordinary profit of 1,825 million yen (up 27.3%) and profit
attributable to owners of parent of 1,214 million yen (up 26.8%).
Results by business segment were as follows.
IT Systems and Related Business for Pharmacies
In this segment, instructors and field service personnel were moved to sales positions, chiefly in the chain
pharmacy sales organization. Increasing points of contact with current customers allows identifying their needs
and strengthens the ability to supply services that meet customers’ expectations. In addition, this business sector
is using sales agents and OEM supply agreements to continue to expand sales channels and focusing on
increasing sales of the Recepty NEXT prescription system and the Bungyo-mate system for pharmacies.
Although the number of systems sold was below the first half plan, there was steady growth in billing service
sales due to the increasing number of users. Continuing growth in sales of supplies and maintenance services also
contributed to this segment’s performance. In addition, the OEM business is growing steadily. Due to these
activities, this segment continued to record consistent sales and earnings.
As a result, the segment recorded sales of 5,623 million yen (up 4.9% year on year) and operating profit of 1,420
million yen (up 14.1%).
IT Systems and Related Business for Clinics
There were activities to expand sales channels throughout Japan centered on the use of sales agents to increase2

EM SYSTEMS CO., LTD. (4820) Financial Results for the Second Quarter of FY3/18

interest in the Company’s products at clinics. In addition, the Company increased referrals from existing clientsand from websites specializing in medical services, and continued to focus on increasing sales of the Medical
Recepty NEXT (MRN) Clerk Style and UNI-MEDICAL medical accounting systems, and the Medical Recepty
NEXT (MRN) Karte Style electronic patient record system and Ortia. Also, increasing the number of visitors to
the Company website is producing growth in the number of requests for product information and the number of
online product demonstration reservations and demonstrations performed. These demonstrations allow
prospective customers to obtain information from almost anywhere and at any time.
These activities resulted in steady growth in sales channels. Furthermore, the realignment of sales resources tofocus on key categories produced consistent growth in the number of MRN systems sold. There were also a
steady increase in billing service sales along with the rising number of users and growth in sales of supplies.
As a result, the segment recorded sales of 851 million yen (up 17.4% year on year) and operating profit of 76
million yen (compared with operating loss of 76 million yen one year earlier).
Other Businesses
The medical and nursing care linkage business launched Hirogaru Care Net in March 2017, which is provide d toclinics, pharmacies and nursing care providers. In October 2016, this business started shipments of Tsunagaru
Care NEXT, an ASP nursing care provider support system. Work is proceeding on the development of morefunctions for this system in order to continue to increase sales.
On December 13, 2016, the Hiroshima office of the Japan Health Insurance Association selected the Company toestablish an online insurance coverage qualification verification system used to help produce forms for healthinsurance claims at pharmacies. Work has also started on a system for use by clinics. The initial contract for thisproject has been extended and the Company is continuing to provide these services.
To contribute to progress in the healthcare industry, the Company will be participating in research anddevelopment activities as well as demonstration projects for electronic prescriptions, electronic health records(EHR) and personal health records (PHR). The Company has been participating in a joint research program with
the Japan Medical Association, Japan Pharmaceutical Association and Nihon University concerning an infectious
disease outbreak notification service. Currently, over 10,000 pharmacies in Japan are using this service. In
addition, consolidated subsidiary Brick Pharmacy Co., Ltd. operates a pharmacy, and consolidated subsidiary
LASANTE Co., Ltd. operates fitness clubs, a conference room rental business and a nursery school business.
In August, the IT systems business for nursing care providers started sel ling Tsunagaru Care NEXT, which has
functions required by providers of services for at-home nursing care. Sales of this new product have been
increasing slowly.
The pharmacy business is performing well with sales and operating profit higher than planned. In addition,
operating profit was higher than one year earlier.
Sales and earnings in the business operated by LASANTE were down from one year earlier.
Sales in this segment were 481 million yen (down 1.6% year on year) and operating profit was 3 million yen(compared with operating loss of 9 million yen one year earlier) .
Segment sales and operating profit in this section are before the inter-segment eliminations.

3

EM SYSTEMS CO., LTD. (4820) Financial Results for the Second Quarter of FY3/18(2) Explanation of Financial Position
AssetsAt the end of the second quarter of the current fiscal year, current assets were 10,902 million yen, a decrease of
319 million yen from the end of the previous fiscal year. This was mainly due to a 1,369 million yen decrease in
cash and deposits resulting primarily from payments of income taxes, the year-end dividend and the early
repayment of loans in the first quarter. The collection of receivables contributed to an increase in current assets.
Non-current assets decreased 81 million yen to 10,042 million yen, mainly because of a 164 million yen increasein software in progress and a decrease due to depreciation.
As a result, total assets decreased 402 million yen to 20,945 million yen.
Liabilities
Current liabilities decreased 539 million yen to 3,710 million yen. The main factors were decreases of 255 million
yen in notes and accounts payable-trade and 300 million yen in short-term loans payable. Non-current liabilities
decreased 811 million yen to 2,222 million yen, mainly due to an 894 million yen decrease in long-term loans
payable.
As a result, total liabilities decreased 1,351 million yen to 5,933 million yen.
Net assets
Net assets increased 949 million yen to 15,012 million yen mainly because of increases of 820 million yen inretained earnings and 51 million yen each in capital stock and capital surplus resulting from the exercise of stock
options.
Consequently, the equity ratio was 71.1% compared with 65.4% at the end of the previous fiscal year.

(3) Explanation of Consolidated Earnings Forecasts and Other Forward -looking Statements
There are no revisions at this time to the full-year consolidated earnings forecast that was announced on May 9,2017 in the “Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2017 [Japanese
GAAP]” because of uncertainty about the performance after the first nine months of the current fiscal year of
dispensing pharmacies, which are the primary market for products of the Company. An announcement will bemade promptly if the Company decides that the forecast needs to be revised.

4

EM SYSTEMS CO., LTD. (4820) Financial Results for the Second Quarter of FY3/18

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Millions of yen)
Second quarter of FY3/18(As of Sep. 30, 2017)

FY3/17(As of Mar. 31, 2017)
AssetsCurrent assets
Cash and deposits

7,901

7,246

Notes and accounts receivable-trade

2,582

2,579

159

163

Merchandise and finished goods
Raw materials and supplies

0

0

Other

581

933

Allowance for doubtful accounts

(3)

(20)

11,221

10,902

Buildings and structures, net

827

803

Land

632

612

Leased assets, net

5785

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

Rental assets, net

21

17

Other, net

124

100

1,663

1,619

259

201

Software in progress

39

204

Goodwill

311

282

5

5

616

693

Total property, plant and equipment
Intangible assets
Software

Other
Total intangible assets
Investments and other assets
Investment securities
Real estate for investment, net

35

23

7,215

7,116

Net defined benefit asset

107

110

Other

486

487

Allowance for doubtful accounts

(0)

(8)

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

5

7,844

7,729

10,124

10,0421

021,34820,945EM SYSTEMS CO., LTD. (4820) Financial Results for the Second Quarter of FY3/18(Millions of yen)
Second quarter of FY3/18(As of Sep. 30, 2017)

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

1,030

774

Short-term loans payable

300-

Current portion of long-term loans payable

526

587

Accounts payable-other

434

336

Lease obligations

45

46

Income taxes payable

545

615

Provision for bonuses

394

384

2

3

Provision for point card certificates
Other
Total current liabilities

971

962

4,250

3,710

Non-current liabilities
Long-term loans payable

1,255

361

Lease obligations

31

50

Net defined benefit liability

875

906

Provision for product warranties

177

191

Long-term guarantee deposited

695

713

3,034

2,222

7,284

5,933

Capital stock

2,394

2,445

Capital surplus

2,702

2,753

Retained earnings

9,140

9,960

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

Treasury shares

(223)

(223)

Total shareholders’ equity

14,013

14,937

Foreign currency translation adjustment

36

35

Remeasurements of defined benefit plans

(85)

(81)

Total accumulated other comprehensive income

(48)

(45)

99

121

14,06315,012

21,34820,945

Accumulated other comprehensive income

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

6

EM SYSTEMS CO., LTD. (4820) Financial Results for the Second Quarter of FY3/18(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Six-month Period)First six months of FY3/17(Apr. 1, 2016 – Sep. 30, 2016)(Millions of yen)First six months of FY3/18(Apr. 1, 2017 – Sep. 30, 2017)

Net sales

6,522

6,873

Cost of sales

2,827

2,956

Gross profit

3,695

3,917

Selling, general and administrative expenses

2,546

2,408

Operating profit

1,148

1,509

Non-operating income
Interest income
Rent income of real estate
Other
Total non-operating income

0

0

482

498

4

13

487

512

Non-operating expenses
Interest expenses
Rent expenses on real estates

9

3

180

188

Other

12

4

Total non-operating expenses

202

196

1,434

1,825

0

-

Gain on reversal of subscription rights to shares-

0

Total extraordinary income

00

Ordinary profit
Extraordinary income
Gain on sales of non-current assets

Extraordinary losses
Loss on retirement of non-current assets

20

Impairment loss-

20

Expenses for advanced repayment of loans-

8

Loss on cancellation of leases

0-

Total extraordinary losses

229Profit before income taxes

1,431

1,796

Income taxes

474

581

Profit957

1,214

Profit attributable to owners of parent

957

1,214

7

EM SYSTEMS CO., LTD. (4820) Financial Results for the Second Quarter of FY3/18

Quarterly Consolidated Statement of Comprehensive Income(For the Six-month Period)First six months of FY3/17(Apr. 1, 2016 – Sep. 30, 2016)(Millions of yen)First six months of FY3/18(Apr. 1, 2017 – Sep. 30, 2017)

957

1,214

-

-

(30)

(3)

13

3

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income

(17)

0

939

1,215

939

1,215

-

-

Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests8

EM SYSTEMS CO., LTD. (4820) Financial Results for the Second Quarter of FY3/18(3) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.
Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements
The tax expense was calculated by first estimating the effective tax rate after the application of tax effectaccounting with respect to profit before income taxes during the fiscal year, and multiplying that rate by thequarterly profit before income taxes.

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

9