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 3rd Quarter Financial Statement [Japan Standard] (Consolidated)
February 12th, 2020
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 for inquiries(Job title)

Managing director and operative
officer, administrative planning
office head

(Name) Gen Aota

Planned date of subNovember 13th,
Planned starting date of payment
mission of quarterly
2019
of dividends
reportSupplementary explanatory materials created for quarterly financial statement
Quarterly financial results briefing held (For Use by Analysts)

TEL:+81(0)6-6397-1888

December 3rd, 2019
: Yes
: Yes

(Amounts of less than 1 million yen rounded down)
1. Consolidated results of March 2020 3rd Quarter Financial Statement (April 1st 2019 through December 31th, 2019)(1) Consolidated management performance (total)
Sales

March 2020 3rd
quarterMarch 2019 3rdquarter(Note) Comprehensive income

Millionsof yen10,3109,617
March2020 3rd
Quarter(% refers to rate of change over the same quarter in the previous year)
Operating profits%
7.2

Millionsof yen
1,265

(8.0)

1,180

%

Ordinary profits%

Quarterly net income
belonging to parent
company shareholders
Millions of%yen(30.0)
1,171(37.2)

Millionsof yen1,748(29.9)

2,014(13.0)

2,495(10.4)

1,675(10.0)

Millions ofyen( 29.9%)March
2019 3rd
Quarter

1,683

Millions ofyen( 10.0%)Quarterly net income per share after
potential stock adjustment
Yen 100ths of a yen
Yen 100ths of a yen
March 2020 3rd quarter
16.63
16.39
March 2019 3rd quarter
23.64
23.28
(Note) Our company conducted a stock split (effective day: January 1, 2020) at a ratio of 2 shares per 1 ordinary share. “Netquarterly profits per share” and “net quarterly profits per share after potential voting adjustments” were calculated as though
the stock split concerned occurred at the beginning of previous consolidated accounting period.
Quarterly net income per share(2) Consolidated financial position
Total assets

Net assets

Capital adequacy ratio
%
76.0
73.8

Net assets per share

Millions of yen
Millions of yen
Yen 100ths of a yen
22,545
17,238242.2622,351
16,618234.53
March 2020
(Refer to) Net capital
17,134
Millions
of
yen
March
2019
period16,489Millionsof yen3rd Quarter(Note) Our company conducted a stock split (effective day: January 1, 2020) at a ratio of 2 shares per 1 ordinary share. “Netassets per share” was calculated as though the stock split concerned occurred at the beginning of previous consolidated accounting period.
March 2020 3rd quarter
March 20191

2. State of dividends

March 2019

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

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

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

End of term
Yen 100ths of a yen
11.00

March 2020–
8.00
March 2020–
(estimate)(Note)1. Revisions from the last published dividend estimates: None

Total
Yen 100ths of a yen
19.00

5.50

－

2. Our company conducted a stock split (effective day: January 1, 2020) at a ratio of 2 shares per 1 ordinary share. 2ndquarter allotments for the fiscal years ending in March 2019 and March 2020 are recorded as the actual amount ofallotment prior to this stock split.
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 sales

Full year

Millionsof yen13,174

Operating profit％

0.3

Millionsof yen1,358

Ordinary profit
Millionsof yen1,980％(48.2)％(39.1)

Profit attributable to own- Net income
ers of parent
per share
Millions of
Yen 100ths％
yenof a yen
1,307(33.7)
18.59(Note) 1. Revisions from the last published forecast of financial results : None

2. Our company conducted a stock split (effective day: January 1, 2020) at a ratio of 2 shares per 1 ordinary share. Net
profits per share for this period listed in the consolidated performance forecast for the fiscal year ending in March
2020 take into account the effects of this stock split.
* 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)

March 2020
March 201973,813,600 shares
73,298,800 shares
3rd quarter
periodMarch 2020
March 2019
2. Number of own shares at end of term
3,087,870 shares
2,990,012 shares
3rd quarter
period
3. Average number of shares outstanding dur- March 2020
March 201970,470,781 shares
70,871,188 sharesing term (quarterly total)
3rd quarter3rd quarter(Note) Our company conducted a stock split (effective day: January 1, 2020) at a ratio of 2 shares per 1 ordinary share. Number of shares outstanding at end of term (including own stock)” and “Number of own shares at end of term” and “Average
number of shares outstanding during term (quarterly total) ”were calculated as though the stock split concerned occurred at
the beginning of previous consolidated accounting period.
* 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

2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.

○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 3rd 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. In the pharmacy industry, our main clients, major pharmacy chains and drug store chains have been expanding business scale and revenue throughM&As, and it is thought that there will be a prolonged period of even more intense competition as the industry
becomes dominated by a small number of large companies.
In this environment, shifting our business model in October 2018 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
at lower prices.
In regard to “MAPs for CLINIC,” a diagnostic support system for clinics from October 2019, we commenced
shipping from Osaka and Tokyo and are in turn expanding operations into other administrative districts. We
have received high praise from customers that have used to service. “MAPs for PHARMACY,” our pharmacyoriented business support system, has begun customer-side monitoring. In addition, we have begun development of “MAPs for NURSING CARE,” and expectations from the market have further increased as we work toprovide support for improving the quality of clinicians, pharmacists and nursing care/welfare service providers
through the functions possessed by our “MAPs Series,” a cloud-based system that integrates other systems
within the health care field.
In collaboration with GLORY LTD., we began sales of “Prescription Reader,” a prescription input support system. 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. “Prescription Reader” can be connected to “Recepty NEXT,” a system for pharmacies.
In addition, there was a surge in demand for hardware replacement accompanying Microsoft’s termination of
support for Windows7 on January 14, 2020, which contributed to an increase in sales during this 3rd quarter
period.
As a result, our performance for this 3rd quarter consolidated cumulative period was 10,310 million yen insales (a 7.2% increase compared to the same period in the previous year), 1,257 million yen in operating profits(a 37.6% decrease), 1,740 million yen in ordinary profits (a 30.2% decrease), and 1,163 million yen in this quarterly net income belonging to parent company shareholders (a 30.5% decrease). Sales increased during the previous period, and major factors behind the decrease in profits are a switch in hardware maintenance frommaintenance conducted by us to maintenance conducted by manufactures accompanying our change in businessmodel as well as a change in sales price to further reduce customer burden.
By-segment results are as follows. In addition, we have changed the description of “IT Systems for Long-termCare/Welfare” belonged to “other business” as the report segment owing to the increasing quantitative importance from this 3rd quarter consolidated fiscal period. The results compared to the same period in the previous year were published according to the part of report segment of this 3rd quarter consolidated cumulative
period.
(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 our market share relating to systems for pharmacies.
In addition, regarding “Prescription Reader”, we are actively promoting to our customers using “Recepty
NEXT,” a system for pharmacies.
Under such circumstances, the number of systems sales and the amount of system usage fee sales (with a focus on customers who replaced from competitors) increased compared to the same period in the previous year,
and although there was a downturn after the consumption tax hike, sales of consumables have continued to bebullish. As a result, we achieved our planned sales and operating profits.

4

Consequently, IT Systems and Related Business for Pharmacies for this 3rd quarter consolidated cumulative
period resulted in 8,012 million yen in sales (a 4.2% increase compared with the same period in the previousyear) and 1,336 million yen in operating profits (a 27.8% 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 by taking a broad approach using online marketing as well as conventional methods. 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."
Customers have begun full-scale operation of “MAPs for CLINIC,” a diagnostic support system for clinics.
System usage fee sales and sales of consumables were bullish due to sound increases in the number of customers who newly started MRN or replaced from the competitors.
Consequently, IT Systems and Related Business for Clinics for this 3rd quarter consolidated cumulative period resulted in 1,335 million yen in sales (a 7.1% increase compared to the same period in the previous year)
and 158 million yen in operating profits (a 11.5% decrease).
(*1) MRN: Medical Recepty NEXT(IT Systems and Related Business for Long-term Care/Welfare)
Regarding IT Systems for nursing care/welfare, we reorganized our sales scheme and restructured our systems for achieving future growth. We commenced development of “MAPs for NURSING CARE,” and we areworking toward achieving synergy with clinics and pharmacies. In addition, in regard to our “Hibiki” series and“Symphony,” during this 2nd quarter consolidated cumulative period, we changed initial sales from five-year
gross sales to monthly sales.
Consequently, IT Systems and Related Business for Long-termCare/Welfare for this 3rd quarter consolidated
cumulative period resulted in 335 million yen in sales (previous period : 27 million yen in sales) and 305 million
yen in operating losses (previous period: 82 million yen in operating losses).
(Other businesses)
Sales and operating profits in our pharmacy administration business are proceeding according to plan.
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, , and the Japan Pharmaceutical Association, the number of pharmacies
using the services were beyond 12,000 nationwide.
Consequently, other business for this 3rd quarter consolidated cumulative period resulted in 705 million yen
in sales (a 4.5% decrease compared to the same period in the previous year) and 74 million yen in operating
profits (a 0.2% increase).
(*2) EHR: Electronic Health Record(2) Explanation regarding financial position(Assets)
Current assets at the end of this 3rd quarter consolidated cumulative period were 10,860 million yen, a 70
million yen decrease compared to the end of the previous consolidated fiscal year. Primarily, this is due to thefact that, although the company paid corporate taxes, etc. and allotted year-end dividends, there was a 430 million yen decrease in notes receivables and accounts receivable even though there was a 289 million yen increasein cash and savings due to smooth collection of accounts receivable. Fixed assets were 11,677 million yen, a 256
million yen increase compared to the end of the previous consolidated fiscal year. This is due mainly to increasesoftware a 806 million yen and to a decrease accompanying a 187 million yen depreciation in construction in5

progress and a 223 million yen software in progress and a 145 million yen depreciation in investment real estate
depreciation and a 112 million yen depreciation in goodwill.
As a result, total assets were 22,537 million yen, a 185 million yen increase compared to the end of the previous consolidated fiscal year.
(Liabilities)
Current liabilities at the end of this 3rd quarter consolidated cumulative period were 3,383 million yen, a 281
million yen decrease compared to the end of the previous consolidated fiscal year. This was primarily due to adecrease of 152 million yen in notes payable and a 189 million yen in reserves for bonuses. Fixed liabilities were1,924 million yen, a 134 million yen decrease compared to the end of the previous consolidated fiscal year. Thisis due mainly to respective decreases of 64 million yen in provision for product warranties and 34 million yen in
long-term loans payable, etc.
As a result, total liabilities were 5,307 million yen, a 425 million yen increase compared to the end of the previous consolidated fiscal year.
(Net assets)
Net assets at the end of this 3rd quarter consolidated cumulative period were 17,230 million yen, a 611 million yen increase compared to the end of the previous consolidated fiscal year. This is due mainly to an increaseof 494 million yen in earned surplus due to bullish performance and respective increase on 95 million yen incapital and 116 million yen in capital surplus due to exercise of subscription rights and decrease on 78 million
yen in treasury stock due to acquisition of treasury stock.
As a result, our capital adequacy ratio was 76.0% (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 estimated Consolidated Results for the Full Year announced via the Summary of Accounts that was
released on May 8, 2019. In the future, if it becomes necessary to revise estimated results, we plan 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 3rd quarter consolidated fiscal period(December 31th, 2019)

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

7,776
2,026
223
0
852
(19)
10,860

737
589
57
10
210
70
1,676

709
589
37
8
23
295
1,662

82
1,172
669
5
1,930

889
948
565
5
2,408

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

9
6,677
119
809
(0)
7,614
11,68522,545

(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 3rd quarter consolidated fiscal period(December 31th, 2019)

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

858
60
539
33
53
210
4
1,623
3,383

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

–
28
1,009
156
721
7
1,924
5,307

2,558
2,935
12,140(1,097)
16,536

2,654
3,051
12,642(1,176)
17,172

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

22
(60)
(38)
103
17,23822,545

(2) Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income(Quarterly consolidated statements of income)(3rd 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
Negative goodwill amortization
Total special profits
Special losses
Losses on disposal of fixed assets
Losses on impairment 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 3rd quarter consolidated cumulative period(From April 1st, 2018
To December 31th, 2018)
9,617
4,103
5,514
3,499
2,014

This 3rd quarter consolidated
cumulative period(From April 1st, 2019
To December 31th, 2019)10,310
5,005
5,304
4,039
1,265

0
764
9
774

0
772
15
788

1
277
14
294
2,495

0
292
12
305
1,748

–
–
–

0
4
5

0
20
20
2,474
799
1,675
1,675

0
–
0
1,753
582
1,171
1,171

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 3rd quarter consolidated cumulative period(From April 1st, 2018
To December 31th, 2018)
1,675

This 3rd quarter consolidated
cumulative period(From April 1st, 2019
To December 31th, 2019)
1,171

(6)
15
8
1,683

(12)
20
8
1,180

1,683

1,180

–

–

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)
Stock split
Our company conducted a stock split dated January 1, 2020, based on a resolution at a meeting of theboard of directors held on December 10, 2019.
1. Purpose of stock split
The purposes are to improve the fluidity of the shares concerned and to expand the number of investors
by lowering the monetary amount of each investment unit.
2. Overview of stock split(1) Method of split
The record date is set as December 31, 2019, and ordinary shares possessed by shareholders listed orrecorded in the shareholder registry as of the end of said record date are to be split at a ratio of 2
shares per 1 ordinary share.
(2) Number of increased shares due to the split
Number of issued shares prior to stock split: 36,906,800 shares
Number of increased shares due to stock split: 36,906,800 shares
Number of issued shares after stock split: 73,813,600 shares
Total number of issuable shares after stock split: 132,000,000 shares(3) Schedule for the split
Date of public announcement of record date: December 10, 2019
Record date: December 31, 2019
Effective day: January 1, 2020
(4) Effects on information per share
Information per share is as follows when calculated as though the stock split concerned occurred at the
beginning of previous consolidated accounting period.
Previous 3rd quarter
consolidated cumulative period(From April 1st, 2018 To December 31st, 2018)

This 3rd quarter
consolidated cumulative period(From April 1st, 2019 To December 31st, 2019)

Net quarterly profits
per share

Yen 100ths of a yen
23.64

Yen 100ths of a yen
16.63

Net quarterly profits
per share after potential voting adjustments

Yen 100ths of a yen
23.28

Yen 100ths of a yen
16.39

11

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.

12