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.
August 9, 2016

Summary of Consolidated Financial Results for the First Quarterof Fiscal Year Ending March 31, 2017
(Three Months Ended June 30, 2016)[Japanese GAAP]
Company name: EM SYSTEMS CO., LTD.
Stock code:
4820
Representative: Kozo Kunimitsu, Chairman and CEO
Contact:
Ryoko Mitsuhashi, Director
Tel: +81-6-6397-1888
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:

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

August 10, 2016
None
None

(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the First Quarter Ended June 30, 2016 (April 1, 2016 – June 30, 2016)(Percentages represent year-on-year changes)(1) Consolidated operating results
Net sales
Million yen

Operating income%

Three months ended Jun. 30, 2016
3,025
Three months ended Jun. 30, 2015
2,768
Note: Comprehensive income (million yen):

Million yen

Profit attributable toowners of parent

Ordinary income%

Million yen%

Million yen

9.3
517
192.3
668
117.0
13.5
177
307
94.1
Three months ended Jun. 30, 2016:
435 (up 20.8%)
Three months ended Jun. 30, 2015:
360 (up 297.9%)

Net income per share

Diluted net income per share

Yen

Yen

441
357

%

23.4
271.4

Three months ended Jun. 30, 2016
25.27
25.06
Three months ended Jun. 30, 2015
20.62
20.44
Note: EM SYSTEMS CO., LTD. (hereafter, the “Company”) conducted a common stock split according to a ratio of 1:2 effective on
April 1, 2016. Net income per share and diluted net income per share are calculated as if this stock split had taken place at the
beginning of the previous fiscal year.

(2) Consolidated financial position
Total assets

Net assets

Million yen

Net assets per share

Equity ratio

Million yen

Yen%

As of Jun. 30, 2016
19,457
12,36563.2
703.46
As of Mar. 31, 2016
20,31012,17259.6
693.68Reference: Shareholders’ equity (million yen) As of Jun. 30, 2016:
12,301
As of Mar. 31, 2016:
12,107
Note: The Company conducted a common stock split according to a ratio of 1:2 effective on April 1, 2016. Net assets per share arecalculated as if this stock split had taken place at the beginning of the previous fiscal year.

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

Yen

Year-end

Yen

Total
Yen

Yen

Fiscal year ended Mar. 31, 2016
16.00
31.00
47.00
Fiscal year ending Mar. 31, 2017
Fiscal year ending Mar. 31, 2017
8.00
17.00
25.00
(forecast)
Notes: 1. Revisions to the most recently announced dividend forecast: None
2. The Company conducted a common stock split according to a ratio of 1:2 effective on April 1, 2016. Dividend per share forthe fiscal year ended March 31, 2016 is the actual amount before the stock split.

3. Consolidated Earnings Forecasts for the Fiscal Year Ending March 31, 2017 (April 1, 2016 – March 31, 2017)
Net sales
Million yen%

Operating income

Ordinary income

Million yen

Million yen%(Percentages represent year-on-year changes)
Profit attributable to
Net income per shareowners of parent%

Million yen%

Yen

First half
6,518
4.3
826
20.6
1,083
15.3
726
(9.9)
41.81
Full year
13,900
5.3
2,050
10.1
2,550
4.2
1,680
3.6
96.75
Notes: 1. Revisions to the most recently announced consolidated earnings forecasts: None
2. The Company conducted a common stock split according to a ratio of 1:2 effective on April 1, 2016. Net income per share
forecasts are calculated based on the number of shares outstanding (excluding treasury shares) after the stock split.

* 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(3) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others: Yes
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting-based estimates: None
4) Restatements: None
Note: Please refer to “2. Matters Related to Summary Information (Notes), (3) Changes in Accounting Policies andAccounting-based Estimates, and Restatements” on page 4 of the attachments for further information.

(4) Number of outstanding shares (common stock)1) Number of shares outstanding at the end of period (including treasury shares)
As of Jun. 30, 2016:

17,888,300 shares

As of Mar. 31, 2016:

17,855,700 shares

As of Mar. 31, 2016:

400,954 shares

2) Number of treasury shares at the end of period
As of Jun. 30, 2016:

400,954 shares

3) Average number of shares outstanding during the period
Three months ended Jun. 30, 2016:

17,468,813 shares

Three months ended Jun. 30, 2015: 17,344,546 shares

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

* Information regarding the implementation of quarterly review proceduresThis quarterly summary report is exempted from quarterly review procedures based on the Financial Instruments and Exchange Act.
At the time of disclosure, the review procedures for the quarterly consolidated financial statements have not been completed.
* 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 First Quarter of FY3/17

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 Earnings Forecasts and Other Forward-looking Statements

4

2. Matters Related to Summary Information (Notes)

4(1) Changes in Significant Subsidiaries during the Period

4(2) Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements

4(3) Changes in Accounting Policies and Accounting-based Estimates, and Restatements

4

3. Quarterly Consolidated Financial Statements

5(1) Quarterly Consolidated Balance Sheet

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

7

Quarterly Consolidated Statement of Income
For the Three-month Period

7

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

8(3) Notes to Quarterly Consolidated Financial Statements

9

Going Concern Assumption

9

Significant Changes in Shareholders’ Equity

9

Subsequent Events

91

EM SYSTEMS CO., LTD. (4820) Financial Results for the First Quarter of FY3/17

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
The Japanese economy continued to recover slowly in the first quarter of the fiscal year that ending on March 31,2017 as corporate earnings improved backed by economic and monetary policy initiatives of the Japanese
government and the Bank of Japan. However, the economic outlook is still unclear due to the effect of the volatile
stock and foreign exchange markets. In April, drug dispensing fees and the National Health Insurance (NHI) drug
prices were revised. The operating environment for dispensing pharmacies in Japan, the primary market for
products of EM SYSTEMS (hereafter, the “Company”), major dispensing pharmacy chains are expanding throughM&As, and capital and business tie-ups. But the level of progress in operational reforms required by thegovernment at individual pharmacies has led to differences in their profitability.
In response to changing market conditions, the Company realigned sales organization by switching to a business
unit structure. One significant source of change is Japan’s aging population. This is symbolized by the so-called
2025 problem, which is about when the cost of senior healthcare is expected to start to skyrocket. To achieve
closer ties between healthcare (hospitals, clinics and dispensing pharmacies) and senior nursing care, the HealthCare-Nursing Care Cooperation Business Division started full-scale operations for the development and sales ofsystems for nursing care operators. The Company is dedicated to making even greater use of solutions
incorporating IT in order to supply even more and better support for upgrading healthcare services.
For the first quarter, the Company reported consolidated net sales of 3,025 million yen (up 9.3% year on year),
operating income of 517 million yen (up 192.3%), ordinary income of 668 million yen (up 117.0%) and profit
attributable to owners of parent of 441 million yen (up 23.4%).
Results by business segment were as follows. Segment sales and operating income (loss) in this section are before
the inter-segment eliminations.
Starting in the first quarter of the current fiscal year, the Company is using revised reportable segments inassociation with the new organizational structure. In prior years there were two segments: Systems and Related
Businesses and Other Business. Now there are three segments: Prescription Systems and Related Operations
Business, Medical Systems and Related Operations Business, and Other Business. Segment information for the
first quarter of the previous fiscal year has been restated based on these new segments.
Prescription Systems and Related Operations Business
The operations of this segment were reorganized in response to the new fee structure introduced following therevision of dispensing fees in April. The Sales and Service Business Division responsible for marketing wasstrengthened to increase sales of the Recepty NEXT, a prescription system for pharmacies, by stepping-up
approaches to dispensing pharmacy chains, sales agents and expanding sales channels for OEM supplies.
Segment sales and operating income were favorable as we were able to secure orders from first-time users andpharmacies currently using systems of other companies and also win more orders for hardware replacement (PCs,etc.). Consolidated subsidiary COSMOSYSTEMS Co., Ltd. also contributed to higher sales and operating income.
Billing service sales increased along with rising user numbers and sales of supplies remained strong.
As a result, the segment recorded sales of 2,484 million yen (up 12.5% year on year) and operating income of 557
million yen (up 125.7%).
Medical Systems and Related Operations BusinessIn this segment, we developed “Ortia,” an electronic patient record system software, reinforced our salesorganization for improving sales and service, stepped up sales through the sales agency channel while increasingreferrals from existing clients and through websites specializing in medical services. Simultaneously, we focusedon expanding sales of medical accounting systems Medical Recepty NEXT (MRN) Clerk Style and
UNI-MEDICAL, and electronic patient record systems Medical Recepty NEXT Karte Style and UNI-KARTE.

2EM SYSTEMS CO., LTD. (4820) Financial Results for the First Quarter of FY3/17

Billing service sales rose along with the increase in number of users and sales of supplies also remained strong.
However, we were unable to win adequate level of orders for systems sold to first-time users and for replacementsfrom pharmacies currently using systems of other companies.
As a result, the segment recorded sales of 326 million yen (down 10.6% year on year) and operating loss of 51
million yen (compared with operating loss of 108 million yen one year earlier).
Other BusinessIn this segment, the Health Care-Nursing Care Cooperation Business Division is preparing for development andmarketing activities for the August start of sales of new systems for senior nursing care operators. In addition,
consolidated subsidiary LASANTE Co., Ltd. continues to operate fitness clubs, a conference room rental businessand a nursery school business. This segment also includes consolidated subsidiary Brick Pharmacy Co., Ltd.,
which operates a dispensing pharmacy. Both of these subsidiaries are performing well. In addition, the revised
2015 Japan Revitalization Strategy of the Japanese government positions the period from now until 2020 as aperiod for concentrated activities. The goal is to make extensive use of Information and Communication
Technology (ICT) in the healthcare sector. This includes two key initiatives. First is establishing regional
healthcare information sharing networks and increasing the use of electronic records for patients. Second isfurther increasing the use of data for various measures in the healthcare sector. To contribute to progress in thehealthcare industry, the Company will participate in R&D and demonstration projects for increasing the use of
ICT by healthcare service providers. These projects will involve electronic prescriptions, electronic healthrecords (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, about 10,000 pharmacies in Japan are using thisservice.
Sales in this segment were 245 million yen (up 4.0% year on year) and operating income was 20 million yen(down 58.4%).
(2) Explanation of Financial Position
AssetsAt the end of the first quarter of the current fiscal year, current assets were 8,982 million yen, a decrease of 775
million yen from the end of the previous fiscal year. This was mainly due to a 598 million yen decrease in cash
and deposits. Non-current assets decreased 76 million yen to 10,472 million yen, mainly because of a 50 million
yen decrease in real estate for investment.
As a result, total assets decreased 852 million yen to 19,457 million yen.
Liabilities
Current liabilities decreased 911 million yen to 3,698 million yen. The main factors were decreases of 261 million
yen in notes and accounts payable-trade, 484 million yen in income taxes payable and 197 million yen inprovision for bonuses. Non-current liabilities decreased 134 million yen to 3,394 million yen, mainly due to a 128
million yen decrease in long-term loans payable.
As a result, total liabilities decreased 1,045 million yen to 7,092 million yen.
Net assets
Net assets increased 192 million yen to 12,365 million yen mainly because of an increase in retained earnings.
Consequently, the equity ratio was 63.2% (compared with 59.6% at the end of the previous fiscal year).

3

EM SYSTEMS CO., LTD. (4820) Financial Results for the First Quarter of FY3/17(3) Explanation of Consolidated Earnings Forecasts and Other Forward-looking Statements
The Company currently maintains the first-half and full-year consolidated earnings forecasts that we disclosed in
the “Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2016 [Japanese GAAP]” on
May 13, 2016.
2. Matters Related to Summary Information (Notes)(1) Changes in Significant Subsidiaries during the Period
Not applicable.
(2) 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.
(3) Changes in Accounting Policies and Accounting-based Estimates, and Restatements
Changes in Accounting Policies
Application of Practical Solution on a Change in Depreciation Method due to Tax Reform 2016
Following the revision of the Corporation Tax Act, the Company has applied the “Practical Solution on a Change
in Depreciation Method due to Tax Reform 2016” (Accounting Standards Board of Japan (ASBJ) Practical Issues
Task Force (PITF) No. 32, June 17, 2016) from the first quarter of the current fiscal year, and changed the method
for the depreciation of facilities attached to buildings and structures acquired on or after April 1, 2016, from thedeclining-balance method to the straight-line method.
This change has no effect on profit/loss.

4

EM SYSTEMS CO., LTD. (4820) Financial Results for the First Quarter of FY3/17

3. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheet(Millions of yen)First quarter of FY3/17(As of Jun. 30, 2016)

FY3/16(As of Mar. 31, 2016)
AssetsCurrent assets
Cash and deposits

6,354

5,756

Notes and accounts receivable-trade

2,622

2,085

172

187

1

1

609

955

Merchandise and finished goods
Raw materials and supplies
Other
Allowance for doubtful accounts

(2)

(2)

9,757

8,982

Buildings and structures, net

862

855

Land

670

670

Leased assets, net

99

98

Rental assets, net

25

23

Construction in progress3

3

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

Other, net
Total property, plant and equipment

98

88

1,761

1,740

313

297

6

36

368

354

7

7

696

696

35

-

Intangible assets
Software
Software in progress
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Real estate for investment, net

7,418

7,367

Net defined benefit asset

132

129

Other

506

538

Allowance for doubtful accounts

(0)

(0)

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

5

8,091

8,035

10,54910,4723

220,31019,457

EM SYSTEMS CO., LTD. (4820) Financial Results for the First Quarter of FY3/17(Millions of yen)First quarter of FY3/17(As of Jun. 30, 2016)

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

915

653

Short-term loans payable

500

500

Current portion of long-term loans payable

590

556

Accounts payable-other

401

353

Lease obligations

61

60

Income taxes payable

718

233

Provision for bonuses

394

197

2

2

Other

1,024

1,140

Total current liabilities

4,609

3,698

1,778

1,650

61

62

Provision for point card certificates

Non-current liabilities
Long-term loans payable
Lease obligations
Net defined benefit liability

797

805

Provision for product warranties

220

199

Long-term guarantee deposited

671

676

3,528

3,394

8,137

7,092

Capital stock

2,306

2,320

Capital surplus

2,614

2,628

Retained earnings

7,435

7,606

Treasury shares

(223)

(223)

Total shareholders’ equity

12,132

12,331

Foreign currency translation adjustment

56

45

Remeasurements of defined benefit plans

(80)

(75)

Total accumulated other comprehensive income

(24)

(29)

64

63

12,172

12,365

20,31019,457

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

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 First Quarter of FY3/17(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Three-month Period)First three months of FY3/16(Apr. 1, 2015 – Jun. 30, 2015)(Millions of yen)First three months of FY3/17(Apr. 1, 2016 – Jun. 30, 2016)

Net sales

2,768

3,025

Cost of sales

1,251

1,296

Gross profit

1,516

1,729

Selling, general and administrative expenses

1,339

1,211

177

517

0

0

Operating income
Non-operating income
Interest income
Dividend income

1

-

237

244

Reversal of provision for product warranties

-

5

Other

0

0

240

250

Interest expenses

7

4

Rent expenses on real estates

95

89

Other

5

5

109

100

307

668

Rent income of real estate

Total non-operating income
Non-operating expenses

Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities

226-

Gain on sales of non-current assets

-

0

226

0

Loss on retirement of non-current assets

00Loss on cancellation of leases

8-

Total extraordinary losses

80Profit before income taxes

525

668

Income taxes

168

226

Profit357

441

Profit attributable to owners of parent

357

441

Total extraordinary income
Extraordinary losses

7

EM SYSTEMS CO., LTD. (4820) Financial Results for the First Quarter of FY3/17

Quarterly Consolidated Statement of Comprehensive Income(For the Three-month Period)First three months of FY3/16(Apr. 1, 2015 – Jun. 30, 2015)(Millions of yen)First three months of FY3/17(Apr. 1, 2016 – Jun. 30, 2016)

357

441

ProfitOther comprehensive income
Valuation difference on available-for-sale securities(2)-

Foreign currency translation adjustment

1

(10)

Remeasurements of defined benefit plans, net of tax

4

4

Total other comprehensive income
Comprehensive income

2

(5)

360

435

360

435

-

-

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 First Quarter of FY3/17(3) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.
Subsequent Events
Issuance of stock options (stock acquisition rights)
The Company’s Board of Directors decided on July 5, 2016 to establish terms and conditions regarding the offering ofstock acquisition rights and these rights were granted to directors and employees of the Company and its subsidiaries
on July 19, 2016.
1. Total number of stock acquisition rights
5,877 rights
2. Persons to be allotted the stock acquisition rights and the number thereof, and the number of stock acquisition rights to be
allotted
Persons to be allotted the stock acquisition rights

Number of persons to be
allotted

Directors of the Company
Employees of the Company
Directors of subsidiaries of the Company
Employees of subsidiaries of the Company

9
365
5
21

Number of stock acquisitionrights
1,350
4,161
100
266

3. Class and number of shares to be issued upon exercise of stock acquisition rights
587,700 shares of the Company’s common stock
4. Amount to be paid upon allocation of the stock acquisition rights
18,700 yen per stock acquisition right (187 yen per share)
The above amounts are the fair value of the stock acquisition rights that is calculated by using the Black-Scholesmodel on the allotment date. For individuals who receive these rights, the amount that is receivable as remunerationfrom the Company, which corresponds to the total amount paid for these rights, offsets the amount that is owed to theCompany for these rights.
5. Amount to be paid upon the exercise of stock acquisition rights
The value of the assets to be granted upon exercise of each stock acquisition right shall be the amount calculated bymultiplying the amount to be paid per share granted upon the exercise of each stock acquisition right (the “exercise
price”) by the number of shares granted. Exercise price shall be 1,304 yen.
6. Total issue price for shares to be issued upon exercise of stock acquisition rights
766,360,800 yen
7. Issue price for shares issued due to the exercise of stock acquisition rights and amount to be added to capital stock
1) In the case that shares are issued due to the exercise of stock acquisition rights, the amount added to capital stock
shall be half of the maximum increase in capital stock, etc. as prescribed in Company Calculation Rules Article 17,
Paragraph 1 with any fraction of one yen resulting from the calculation rounded up.
2) In the case that shares are issued due to the exercise of stock acquisition rights, the amount added to the legal
capital surplus shall be the maximum increase in capital stock in item 1) above less the amount added to capitalstock described in item 1) above.
8. Allotment date of stock acquisition rights
July 19, 2016
9. Exercise period of stock acquisition rights
From July 6, 2018 to June 30, 2020
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 of readers who
prefer an English translation.
9