* 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 Sep. 30, 2016:

17,962,700 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 Sep. 30, 2016:

400,954 shares

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

17,494,146 shares

Six months ended Sep. 30, 2015:

17,341,846 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 ExchangeAct. 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 Second 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

42. 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 Six-month Period

7

Quarterly Consolidated Statement of Comprehensive Income
For the Six-month Period8(3) Notes to Quarterly Consolidated Financial Statements

9Going Concern Assumption

9Significant Changes in Shareholders’ Equity

91

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

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 that ending on
March 31, 2017 as economic and monetary policy initiatives of the Japanese government and the Bank of Japan
contributed to improvements in corporate earnings and employment situation. However, the outlook remains
unclear due to negative consumer sentiment caused by concerns about the future and other reasons. The operating
environment for dispensing pharmacies in Japan, the primary market for products of EM SYSTEMS (hereafter,the “Company”), is challenging due to the effects of drug dispensing fees and the National Health Insurance(NHI) drug price revisions in April 2016 and of mergers, acquisitions and other reorganization activities in thedispensing pharmacy sector.
In response to changing market conditions, the Company realigned sales organization by switching to a business
unit structure in April 2016. 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 (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 aims for realizing efficient ties between healthcare and senior nursing care by newly developing
Solutions for Linking Healthcare and Senior Nursing Care and creating functions for seamless ties with systems
that the Company provides to clinics, pharmacies and senior nursing care operators.
For the first half, the Company reported consolidated net sales of 6,522 million yen (up 4.4% year on year),
operating income of 1,148 million yen (up 67.7%), ordinary income of 1,434 million yen (up 52.6%) and profit
attributable to owners of parent of 957 million yen (up 18.8%).
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 thefirst half of the previous fiscal year has been restated based on these new segments.
Prescription Systems and Related Operations Business
Major activities in this segment included measures to strengthen sales activities targeting dispensing pharmacy
chains, using sales agents and OEM supply agreements to continuously expand sales channels, and increasing
sales of the Recepty NEXT prescription system and the Bungyo-mate system for dispensing 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 also contributed to thissegment’s performance. As a result, sales met the first half plan. Earnings benefited from ongoing measures to cut
the cost of sales and operating expenses. COSMOSYSTEMS Co., Ltd., which became a consolidated subsidiary
two years ago, continued to make a contribution to sales and earnings.
As a result, the segment recorded sales of 5,358 million yen (up 6.9% year on year) and operating income of
1,244 million yen (up 60.0%).

2

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

Medical Systems and Related Operations Business
Sales of Ortia, software for an electronic patient record system, began in July 2016 and there were numerous
activities for establishing sales channels for this software throughout Japan. The Company participated inindustry exhibitions to maximize the exposure of our products while increasing referrals from existing clients andfrom websites specializing in medical services. In addition, the Company continued to focus on increasing salesof the Medical Recepty NEXT (MRN) Clerk Style and UNI-MEDICAL medical accounting systems and theMedical Recepty NEXT (MRN) Karte Style electronic patient record system.
These activities have started to expand sales channels, resulting in higher sales of MRN products than in theprevious fiscal year. However, a decrease in UNI-MEDICAL replacement orders negatively affected segment
performance. Measures to lower the cost of sales and operating expenses continued during the first half.
As a result, the segment recorded sales of 725 million yen (down 10.8% year on year) and operating loss of 76
million yen (compared with operating loss of 142 million yen one year earlier).
Other Business
The Health Care-Nursing Care Cooperation Business Division is working on the development of Solutions for
Linking Healthcare and Senior Nursing Care, which is provided to clinics, pharmacies and senior nursing care
operators for supporting the Regional Comprehensive Care System of the Japanese government. Development
activities are also under way for Tsunagaru Care NEXT, an ASP system for supporting senior nursing care
operators. However, the Company was unable to start sales of this product in the first half of this fiscal year.
Shipments started at the end of October 2016. Research and development activities as well as demonstration
projects for electronic prescriptions, electronic health records (EHR) and personal health records (PHR) werecompleted in the previous fiscal year. To contribute to progress in the healthcare industry, the Company willcontinue to participate in these activities for increasing the use of information and communication technologies in
the healthcare sector. The Company has been participating in a joint research program with the Japan MedicalAssociation, Japan Pharmaceutical Association and Nihon University concerning an infectious disease outbreak
notification service. Currently, about 10,000 pharmacies in Japan are using this service. In addition, consolidated
subsidiary Brick Pharmacy Co., Ltd. operates a dispensing pharmacy, and consolidated subsidiary LASANTE Co.,
Ltd. operates fitness clubs, a conference room rental business and a nursery school business.
The Health Care-Nursing Care Cooperation Business Division made no contribution to first half sales andearnings because full-scale operations started in the second half of the fiscal year. Sales in the dispensing
pharmacy business increased because there were more business days than in the first half of the previous fiscalyear. However, earnings were lower than one year earlier in part because of revisions to drug dispensing fees andNHI drug prices. LASANTE’s performance exceeded the first half plan, although sales and earnings were downfrom one year earlier due to the reorganization of this company’s operations. Sales in this segment were 489
million yen (down 2.8% year on year) and operating loss was 9 million yen (compared with operating income of
70 million yen one year earlier).
(2) Explanation of Financial Position
AssetsAt the end of the second quarter of the current fiscal year, current assets were 9,929 million yen, an increase of
171 million yen from the end of the previous fiscal year. This was mainly due to a 147 million yen increase in
cash and deposits. Non-current assets decreased 150 million yen to 10,399 million yen, mainly because of a 101
million yen decrease in real estate for investment.
As a result, total assets increased 20 million yen to 20,330 million yen.

3

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

Liabilities
Current liabilities decreased 490 million yen to 4,119 million yen. The main factors were decreases of 197 million
yen in notes and accounts payable-trade and 228 million yen in income taxes payable. Non-current liabilities
decreased 262 million yen to 3,265 million yen, mainly due to a 259 million yen decrease in long-term loans
payable.
As a result, total liabilities decreased 753 million yen to 7,384 million yen.
Net assets
Net assets increased 774 million yen to 12,946 million yen mainly because of an increase in retained earnings.
Consequently, the equity ratio was 63.3% (compared with 59.6% 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 13,
2016 because of uncertainty about the performance in the fiscal year’s second half of dispensing pharmacies,
which are the primary market for products of the Company. An announcement will be made promptly if theCompany decides that the forecast needs to be revised.
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 reasonably estimating the effective tax rate after the application of tax
effect accounting 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 Changein 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 Second Quarter of FY3/17

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

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

6,354

6,502

Notes and accounts receivable-trade

2,622

2,289

172

156

10

Other609

983

Allowance for doubtful accounts(2)(3)9,757

9,929

Buildings and structures, net

862

844

Land

670

670

Leased assets, net

99

83

Rental assets, net

2523

Construction in progress

363

Other, net

98

86

1,761

1,772

313

284

Merchandise and finished goods
Raw materials and supplies

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

Total property, plant and equipment
Intangible assets
Software
Software in progress
Goodwill
Other
Total intangible assets

632

368

340

75696

661

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

35-

7,418

7,316

Net defined benefit asset

132131Other506

516

Allowance for doubtful accounts

(0)

(0)

Total investments and other assets

8,091

7,965

10,54910,399Total non-current assets
Deferred assets
Total assets

53

2

20,31020,330EM SYSTEMS CO., LTD. (4820) Financial Results for the Second Quarter of FY3/17(Millions of yen)
Second quarter of FY3/17(As of Sep. 30, 2016)

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

915

718

Short-term loans payable

500500Current portion of long-term loans payable

590

526

Accounts payable-other

401

433

Lease obligations

61

54

Income taxes payable

718

490

Provision for bonuses

394

416

22

Provision for point card certificates
Other

1,024

977

Total current liabilities

4,609

4,119

1,778

1,518

61

51

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

797

809

Provision for product warranties

220

193

Long-term guarantee deposited

671

692

3,528

3,265

8,137

7,384

Capital stock

2,306

2,353

Capital surplus

2,614

2,661

Retained earnings

7,435

8,121

Treasury shares

(223)

(223)

Total shareholders’ equity

12,132

12,912Foreign currency translation adjustment

56

25

Remeasurements of defined benefit plans

(80)

(66)

Total accumulated other comprehensive income

(24)

(41)

64

75

12,172

12,946

20,31020,330Total 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 Second Quarter of FY3/17(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Six-month Period)First six months of FY3/16(Apr. 1, 2015 – Sep. 30, 2015)(Millions of yen)First six months of FY3/17(Apr. 1, 2016 – Sep. 30, 2016)

Net sales

6,249

6,522

Cost of sales

2,965

2,827

Gross profit

3,284

3,695

Selling, general and administrative expenses

2,599

2,546

685

1,148

Interest income

00Dividend income2-471482

Operating income
Non-operating income

Rent income of real estateOther

44478

487

Interest expenses

139Rent expenses on real estates

193

180

Other

1712

Total non-operating expenses

224

202

939

1,434

Gain on sales of non-current assets-0Gain on sales of investment securities

226-

2-

228

0

Total non-operating income
Non-operating expenses

Ordinary income
Extraordinary income

Gain on reversal of subscription rights to shares
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets

02

Loss on cancellation of leases

80

Total extraordinary losses

82

Profit before income taxes

1,1591,431

Income taxes

354474

Profit805957

Profit attributable to owners of parent

805957

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

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

805957(7)-Profit
Other comprehensive incomeValuation difference on available-for-sale securities
Foreign currency translation adjustment

8(30)Remeasurements of defined benefit plans, net of tax

913

Total other comprehensive income

9(17)

814

939

814

939

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

8

EM SYSTEMS CO., LTD. (4820) Financial Results for the Second Quarter of FY3/17(3) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.

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

9