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

March 2020 1st Quarter Financial Statement [Japan Standard] (Consolidated)
August 9th, 2019
Listed on: Tokyo
Stock Exchange

Listed company name

EM Systems Co., Ltd.

Code No.

4820

URL: http://www.emsystems.co.jp

Representative:(Job title)

Executive director and CEO(Name)
Kozo Kunimitsu

Representative forinquiries(Job title)

Managing director and operative
officer, administrative planning
office head

(Name) Gen Aota

Planned date ofAugust 9th,Planned starting date of payment
submission of
2019
of dividends
quarterly report
Supplementary explanatory materials created for quarterly financial
statement
Quarterly financial results briefing held
(For Use by Analysts)

TEL:+81(0)6-6397-1888－: None: None(Amounts of less than 1 million yen rounded down)
1. Consolidated results of March 2020 1st Quarter Financial Statement (April 1st 2019 through June 30th, 2019)(1) Consolidated management performance (total)
Sales

March 2020 1st
quarterMarch 2019 1stquarter(Note)
Comprehensive
incomeMillionsof yen
3,284
3,192
March
2020 1st
Quarter(% refers to rate of change over the same quarter in the previous year)
Operating profits%
2.9

Millionsof yen
544

2.5

684

481

Millions ofyen%(20.5)

Millionsof yen708(16.3)

19.2

846

14.1

569

14.4

March
2019 1st
Quarter

572

Millions of
yen

17.0%

( 15.9%)Quarterly net income per share
Yen 100ths of a yen
13.42
16.00

March 2020 1st quarter
March 2019 1st quarter

Quarterly net income
belonging to parent
company shareholders
Millions of%yen(17.1)
471

Ordinary profits%

Quarterly net income per share after
potential stock adjustment
Yen 100ths of a yen
13.22
15.95

(2) Consolidated financial position
Total assets
March 2020 1st quarter
March 2019
(Refer to) Net capital

Net assets

Millions of yen
21,96822,351March 2020
16,553
1st Quarter

Capital adequacy
ratio

Millions of yen
16,673
16,618Millions of yen

Net assets per share
%
75.4
73.8

March 2019 period

Yen 100ths of a yen
470.64469.07

16,489Millions of yen

2. State of dividends

March 2019

End of 1st quarter
Yen 100ths of a yen–

End of 2nd quarter
Yen 100ths of a yen
8.00

Annual dividends
End of 3rd quarter
Yen 100ths of a yen–

March 2020–
8.00
March 2020–
(estimate)(Note) Revisions from the last published dividend estimates: None1

End of term
Yen 100ths of a yen
11.00
11.00

Total
Yen 100ths of a yen
19.00
19.00

3. Estimated consolidated results of March 2020 period (April 1st, 2019 through March 31st, 2020)(% refers to rate of change over the previous term)
Net salesFirst half

Millionsof yen6,516

Full year

13,174

Operating profit(1.2)

Millionsof yen
710

0.3

1,358

％

Profit attributable toowners of parent
Millions of
％
yen
679
(43.3)

Ordinary profit(51.7)

Millionsof yen1,010(43.5)(48.2)

1,980(39.1)

％

％

1,307

Net income
per share
Yen 100thsof a yen
19.31(33.7)

37.18(Note) Revisions from the last published forecast of financial results : None

* Addendums(1) Changes in major subsidiaries during cumulative quarterly consolidated period (changes in designated subsidiaries
accompanied by changes within the scope of consolidation): None
(2) Application of special accounts processing in the creation of the quarterly consolidated financial statement: Yes(Note) For details, please see the attached document P.8 "2. Quarterly consolidated financial statement and major explanatory
notes (3) Addendums relating to quarterly consolidated financial statement (application of special accounts processing in thecreation of the quarterly consolidated financial statement)".
(3) Changes to accounting policy, changes to estimates in accounting, revised restatements
1. Changes to accounting policies accompanying revision to accounting standards, etc. : None
2. Changes to accounting policies other than 1.

: None3. Changes to estimates in accounting: None4. Revised restatement: None(4) Number of shares outstanding (ordinary stock)
1. Number of shares outstanding at end ofterm (including own stock)
2. Number of own shares at end of term
3. Average number of shares outstanding
during term (quarterly total)

March 2020
1st quarter
March 2020
1st quarter
March 2020
1st quarter

36,738,000 shares
1,564,925 shares
35,140,415 shares

March 2019
periodMarch 2019
periodMarch 2019
1st quarter

36,649,400 shares
1,495,006 shares
35,567,727 shares* The quarter financial statement is not subject to quarterly review by certified public accountants or auditors.
* Explanation regarding appropriate use of estimated results and other special notes
The descriptions of the future such as estimated results contained in this document are based on information possessed bythis company at the present time and certain assumptions this company deems reasonable, and they may differ greatly toactual results due to a variety of factors.

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○Table of contents of attached materials
1. QUALITATIVE INFORMATION RELATING TO THIS QUARTER'S FINANCIAL RESULTS ---------------------------------------- 4(1) Explanation regarding operating results ----------------------------------------------------------------------------------------------------------- 4(2) Explanation regarding financial position----------------------------------------------------------------------------------------------------------- 5(3) Explanation regarding information on future prospects such as forecast of consolidated financial results ------------------ 6
2. QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS AND MAJOR EXPLANATORY NOTES--------------------------- 7(1) Quarterly consolidated balance sheet --------------------------------------------------------------------------------------------------------------- 7(2) Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income ---------- 9(3) Addendums relating to quarterly consolidated financial statement ----------------------------------------------------------------------113

1. Qualitative information relating to this quarter's financial results(1) Explanation regarding operating results
In the healthcare (clinics and pharmacies) and long-term care/welfare industries during this 1st quarter
consolidated cumulative period, it is thought that market scale will continue to expand due to Japan’s
increasingly aging society and government policies aimed at dealing with the issue. However, in the pharmacy
industry, our main clients, major pharmacy chains and drug store chains showed a stark drop in profit rates intheir dispensing business due to last year’s simultaneous revision of medical and dispensing fees. They intend tocontinue to expand business scale and profits through M&A, etc.
In this environment, shifting our business model last October has enabled us to concentrate administrative
resources with the aim of moving further toward a subscription business model, and we are greatly contributing
to reducing the operating costs of our customers by providing products and services with high added value atlower prices.
In May, we began development of a prescription input support system in collaboration with GLORY LTD.
This combines IT systems for pharmacies provided by EM Systems with optical character recognition technology
from GLORY LTD. This system, which automates the input of prescription information that used to be typed
into receipt computers by hand, streamlines operations and greatly contributes to the prevention of input errors.
Through this collaboration, EM Systems is supporting the realization of workstyle reforms within the pharmacy
industry.
On July 1, we acquired whole shares of Pop-Creation Co., Ltd., which conducts clinic and pharmacy-oriented
business in the northern region of Kyushu. In the future, we will continue to expand our business in thenorthern region of Kyushu by providing our products and services to customers of Pop-Creation Co., Ltd. who
use products from other companies and by applying the sales support abilities of Pop-Creation Co., Ltd.
We held a press conference on May 15 to announce “MAPs for PHARMACY,” a pharmacy-oriented businesssupport system. Together with “Maps for CLINIC,” our “MAPs Series,” a shared information system baseapplicable to all healthcare fields (medical departments, pharmacies and long-term care/welfare), has been
extremely well-received. We intend to provide a higher level of support to improve the business andadministration quality of clinics, pharmacies and long-term care/welfare service providers through the various
functions possessed by this cloud-based system, which has unified systems in health care fields.
EM Systems aims to provide an environment that enables seamless information coordination between the
medical (clinics and pharmacies) and long-term care/welfare fields, including hospitals, and in collaboration
with NEC Corporation and CSI Co., Ltd., we are engaged in the creation of new services with a focus on the
coming super-aging society by promoting utilization and application of ICT in the healthcare and medical fields.
In addition, we have been continuing cooperation between our medical-oriented systems and other services
such as the drug evaluation bulletin board maintained by MedPeer, Inc. as well as provision of patient
instruction slips in order to provide an additional level of safety for patients and create further social value.
We will continue to support long-term care/welfare providers by providing long-term care providers, disability
welfare providers, and service providers targeting the facility-based service field and community-based
integrated care centers with Tsunagaru Care NEXT, “Hibiki” series, “Symphony” and Sukoyaka-san.
As a result, our performance for this 1st quarter consolidated cumulative period was 3,284 million yen insales (a 2.9% increase compared to the same period in the previous year), 544 million yen in operating profits (a20.5% decrease), 708 million yen in ordinary profits (a 16.3% decrease), and 471 million yen in this quarterly
net income belonging to parent company shareholders (a 17.1% decrease).
By-segment results are as follows. In addition, the by-segment sales and operating profits and losses listed
are the amounts before elimination of internal transactions between segments.
(IT Systems and Related Business for Pharmacies)
Regarding IT Systems and Related Business for Pharmacies, we have continued to strengthen our approaches
to pharmacy chains and our sales channels through OEM provision, etc., and we have focused our efforts on
expanding sales in systems for pharmacies, namely "Recepty NEXT" and "Bungyo Mate."
Under such circumstances, the number of systems sales and the amount of billing sales increased compared tothe same period in the previous year, and sales of consumables have continued to be bullish. As a result, weachieved our planned sales and operating profits.

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Consequently, IT Systems and Related Business for Pharmacies for this 1st quarter consolidated cumulative
period resulted in 2,458 million yen in sales (a 3.2% decrease compared with the same period in the previousyear) and 487 million yen in operating profits (a 26.0% decrease).
(IT Systems and Related Business for Clinics)
Regarding IT Systems and Related Business for Clinics, in order to expand our nation-wide sales channels,
we have been cultivating the clinic market through retail outlets. Furthermore, we have continued to focus
efforts on sales of the medical accounting systems "MRN (*1) Clerk Style" as well as the electronic medical
records systems "MRN Karte Style" and "Ortia."“Maps for CLINIC,” a diagnostic support system for clinics and one of the products in our “MAPs Series,” ashared information system base that we announced last year in November, has been extremely well-received at
exhibitions held in various regions.
Billing sales and sales of consumables were bullish due to sound increases in numbers of customers who
newly started MRN or replaced from the competitors.
Consequently, IT Systems and Related Business for Clinics for this 1st quarter consolidated cumulative
period resulted in 416 million yen in sales (a 1.9% decrease compared to the same period in the previous year)
and 59 million yen in operating profits (a 52.7% increase).
(*1) MRN: Medical Recepty NEXT
(Other businesses)
Regarding IT Systems for long-term care/welfare, we greatly exceeded planned sales through our “Hibiki”
series and “Symphony,” as well as through “Sukoyaka-san” by M-Win Soft Co., Ltd. As a result, we achieved ourplanned sales and operating profits. We achieved our planned sales and operating profits in our pharmacy
operation business, sports gyms and nursery school operation business.
Furthermore, in the "commissioned project to install an online qualification checking system into the receipt
creation support system for pharmacies," with which we were commissioned by the Hiroshima Branch of theJapan Health Insurance Association (Kyokaikenpo), we extended the initial contract periods to continue
providing the service.
At our company, we are proactively engaged in the realization of electronic prescriptions and research anddevelopment as well as verification projects relating to EHR (*2), in order to contribute to future developmentsin the healthcare industry. In regard to "infectious disease outbreak detection services," a joint research project
between the Japan Medical Association, the Japan Pharmaceutical Association, and Nihon University, thenumber of pharmacies using the services has reached nearly 12,000 nationwide.
Consequently, other business for this 1st quarter consolidated cumulative period resulted in 436 million yen
in sales (a 71.1% increase compared to the same period in the previous year) and 16 million yen in operating
profits (previous period: 11 million yen in operating losses).
(*2) EHR: Electronic Health Record(2) Explanation regarding financial position(Assets)
Current assets at the end of this 1st quarter consolidated cumulative period were 10,469 million yen, a 460
million yen decrease compared to the end of the previous consolidated fiscal year. While payments of dividends
and corporation tax were made, this is due mainly to a 256 million yen decrease in cash on hand and in banks
as well as a 289 million yen decrease in accounts receivable due to bullish performance and smooth collection of
accounts receivable. Fixed assets were 11,498 million yen, a 77 million yen increase compared to the end of theprevious consolidated fiscal year. While software in progress increased 230 million yen respectively
accompanying development of next generation systems, this is due mainly to a decrease accompanying a 37
million yen depreciation in goodwill and a 21 million yen depreciation in software.
As a result, total assets were 21,968 million yen, a 382 million yen decrease compared to the end of theprevious consolidated fiscal year.

5

(Liabilities)
Current liabilities at the end of this 1st quarter consolidated cumulative period were 3,377 million yen, a 287
million yen decrease compared to the end of the previous consolidated fiscal year. This is due mainly torespective decreases of 275 million yen in unpaid corporate taxes and 234 million yen in notes and accounts
payable and 188 million yen in provision for bonuses, etc. Fixed liabilities were 1,916 million yen, a 150 million
yen decrease compared to the end of the previous consolidated fiscal year. This is due mainly to respective
decreases of 73 million yen in provision for product warranties and 43 million yen in Net defined benefit
liability, etc.
As a result, total liabilities were 5,294 million yen, a 438 million yen decrease compared to the end of theprevious consolidated fiscal year.
(Net assets)
Net assets at the end of this 1st quarter consolidated cumulative period were 16,673 million yen, a 55 million
yen increase compared to the end of the previous consolidated fiscal year. This is due mainly to an increase of 84
million yen in earned surplus due to bullish performance, increase of 96 million yen in treasury shares due toacquisition of our own shares, etc., and respective increase on 33 million yen in capital and capital surplus due
to disposal of treasury shares accompanying execution of stock options and issuance of stocks with limitation ontransfer.
As a result, our capital adequacy ratio was 75.4% (compared to 73.8% at the end of the previous consolidated
fiscal year).
(3) Explanation regarding information on future prospects such as forecast of consolidated financial results
Estimated consolidated results for the full year ending March 2020 are unchanged from the information
provided in the 2nd Quarter Consolidated Cumulative Period and Estimated Consolidated Results for the FullYear announced via the Summary of Accounts for the period ending in March3rd Quarter 2020 Summary of
Accounts that was released on May 8, 2019. In the future, if it becomes necessary to revise estimated results, weplan to disclose said revisions immediately.

62. Quarterly consolidated financial statements and major explanatory notes(1) Quarterly consolidated balance sheet(Units: millions of yen)Previous consolidated
fiscal year
(March 31st, 2019)
AssetsCurrent assets
Cash on hand and in banks
Notes and accounts receivable
Merchandise and products
Raw materials and supplies
OthersAllowance for bad debts
Total current assets
Fixed assets
Tangible fixed assets
Buildings and structures (net)Land
Lease assets (net)
Rental assets (net)
Construction in progress
Others (net)Total tangible fixed assets
Intangible fixed assets
Software
Software in progress
Reputation
OthersTotal intangible fixed assets
Investments and other assets
Investment securities
Investment real estate (net)
Net defined benefit asset
OthersAllowance for bad debts
Total investments and other assets
Total fixed assets
Total assets

7This 1st quarter
consolidated fiscal period(June 30th, 2019)

7,487
2,456
164
0
842
(20)
10,930

7,231
2,167
192
0
897
(19)
10,469

737
589
57
10
210
70
1,676

729
589
49
10
225
65
1,669

82
1,172
669
5
1,930

61
1,402
632
5
2,101

7
6,823
123
861
(0)
7,814
11,421
22,351

7
6,774
115
831
(0)
7,727
11,49821,968

(Units: millions of yen)Previous consolidated
fiscal year
(March 31st, 2019)
Liabilities
Current liabilities
Notes and accounts payable
Long-term debt planned for repayment within 1 year
Accounts payable-other
Lease obligations
Income taxes payable, etc.
Provision for bonuses
Provision for points card certificates
OthersTotal current liabilities
Fixed liabilities

Long-term loans payable
Lease obligations
Net defined benefit loabolity
Provision for product warranties
Long-term guarantee deposits

Long-term accounts payable-otherTotal fixed liabilities
Total liabilities
Net assets
Shareholder's equity
Capital stock
Capital surplus balance

Retained earnings
Treasury stock
Total shareholder's equity
Cumulative amount of other comprehensive income
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total other cumulative comprehensive income
Subscription rights to shares
Total net assets
Total liabilities and net assets

8This 1st quarter
consolidated fiscal period(June 30th, 2019)

1,011
104
516
34
530
399
4
1,064
3,665

776
104
452
33
255
211
4
1,540
3,377

34
53
1,029
221
721
7
2,067
5,733

8
44
985
147
721
7
1,916
5,294

2,558
2,935
12,140(1,097)
16,5362,591
2,968
12,224(1,193)
16,590

34
(81)
(46)
128
16,61822,351

37
(74)
(37)
120
16,673
21,968

(2) Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive
income(Quarterly consolidated statements of income)(1st quarter consolidated cumulative period)(Units: millions of yen)

Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profits
Non-operating profits
Interest income
Real estate rental income
OthersTotal non-operating profits
Non-operating expenses
Interest expense
Real estate rental expenses
OthersTotal non-operating expenses
Ordinary profits
Special profits
Gain on reversal of subscription rights to shares
Total special profits
Special losses
Losses on disposal of fixed assets
Total special losses
Quarterly net income before adjustment for taxes, etc.
Corporation tax, etc.
Quarterly net income
Profit attributable to owners of parent

Previous 1st quarter
consolidated cumulative period(From April 1st, 2018
To June 30th, 2018)
3,192
1,366
1,825
1,141
684

This 1st quarter consolidated
cumulative period(From April 1st, 2019
To June 30th, 2019)
3,284
1,489
1,794
1,249
544

0
254
2
256

0
259
4
264

0
89
5
95
846

0
92
7
101
708

–
–

0
0

0
0
846
277
569
569

0
0
708
236
471
471

9

(Quarterly consolidated statements of comprehensive income)(3rd quarter consolidated cumulative period)(Units: millions of yen)

Quarterly net income
Other comprehensive income
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total other comprehensive income
Quarterly comprehensive income(Breakdown)
Quarterly comprehensive income concerning parent
company shareholders
Quarterly comprehensive income concerning
non-controlling shareholders

Previous 1st quarter
consolidated cumulative period(From April 1st, 2018
To June 30th, 2018)
569

This 1st quarter consolidated
cumulative period(From April 1st, 2019
To June 30th, 2019)
471

(2)
5
2
572

2
6
9
481

572

481

–

–

10

(3) Addendums relating to quarterly consolidated financial statement(Explanatory notes regarding prerequisites of going concern)
There is no applicable information.
(Explanatory notes for cases of considerable changes in amounts of shareholder's equity)
There is no applicable information.
(Application of special accounts processing in the creation of the quarterly consolidated financial statement)
We have calculated tax expenses by multiplying quarterly net income before taxes and effective tax ratethat were reasonably estimated, following application of tax effect accounting for the income before taxes of
the consolidated accounting period including this 3rd quarter consolidated cumulative period.
(Important events after the reporting period)
There is no applicable information.

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

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