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 2nd Quarter Financial Statement [Japan Standard] (Consolidated)
November 12th, 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 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 2nd Quarter Financial Statement (April 1st 2019 through September 30th, 2019)(1) Consolidated management performance (total)
Sales

March 2020 2nd
quarterMarch 2019 2ndquarter(Note) Comprehensive income

Millionsof yen
7,086
6,594
March
2020 2nd
Quarter(% refers to rate of change over the same quarter in the previous year)
Operating profits%
7.5

Millionsof yen
964

(4.1)

870

Quarterly net income
belonging to parent
company shareholders
Millions of%yen(28.0)
862

Ordinary profits%(34.3)

Millionsof yen1,283(28.2)

1,468

(2.7)

1,787

(2.1)

1,197

(1.4)

Millions ofyen( 27.7%)March
2019 2nd
Quarter

1,202

Millions ofyen( 1.0%)

Quarterly net income per share
Yen 100ths of a yen
24.51
33.79

March 2020 2nd quarter
March 2019 2nd quarter%

Quarterly net income per share after
potential stock adjustment
Yen 100ths of a yen
24.15
33.25

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

Net assets

Millions of yen
23,16922,351March 2020
17,039
2nd Quarter

Millions of yen
17,152
16,618Millions of yen

Capital adequacy ratio
%
73.5
73.8

March 2019 period

Net assets per share
Yen 100ths of a yen
483.07469.07

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 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)
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
2nd quarter
March 2020
2nd quarter
March 2020
2nd quarter

36,817,000 shares
1,542,990 shares
35,187,379 shares

March 2019
periodMarch 2019
periodMarch 2019
2nd quarter

36,649,400 shares
1,495,006 shares
35,449,044 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.

○Table of contents of attached materials

2

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 2nd 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 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.
It has been decided that Recepty NEXT, one of our pharmaceutical-related systems, will be used at medical
facilities in Olympic Village during the 2020 Tokyo Olympic and Paralympic Games. It is a great honor for us tohave our company’s experience and track record acknowledged by an international agency.
In July, we entered into a cooperative business agreement with AS ONE Corporation (listed on First Sectionof Tokyo Stock Exchange), a general trading company for physical science and chemical equipment, regarding
sales of equipment and consumables targeting medical and long-term care providers. We sell equipment andconsumables targeting the medical (clinics and pharmacies) field through the EM Online Shop. Our sales results have been increasing year by year, but through this business tie-up, we are now capable of offering products to an even larger number of customers by adding to our lineup the products handled by AS ONE, which
possesses advantages in the field of physical science and chemical equipment with a focus on equipment andconsumables used on-site when providing medical and long-term care.
We announced “Maps for CLINIC,” a diagnostic support system for clinics, and “MAPs for PHARMACY,” apharmacy-oriented business support system, as our “MAPs Series,” a shared information system base applicable
to all healthcare fields (medical departments, pharmacies and long-term care/welfare), and it was extremely
well-received. We intend to provide a higher level of support to improve the business and administration qualityof clinics, pharmacies and long-term care/welfare service providers through the various functions possessed bythis 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 developed 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.
In regard to long-term care providers, disability welfare providers, and service providers targeting the facilitybased service field and community-based integrated care centers, we will continue to provide support, including
information coordination with the medical field.
As a result, our performance for this 2nd quarter consolidated cumulative period was 7,086 million yen insales (a 7.5% increase compared to the same period in the previous year), 964 million yen in operating profits (a34.3% decrease), 1,283 million yen in ordinary profits (a 28.2% decrease), and 862 million yen in this quarterly
net income belonging to parent company shareholders (a 28.0% 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)

4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.
Under such circumstances, the number of systems sales and the amount of system usage fee sales increased
compared to the same period in the previous year, and sales of consumables have continued to be bullish. As aresult, we achieved our planned sales and operating profits.
Consequently, IT Systems and Related Business for Pharmacies for this 2nd quarter consolidated cumulative
period resulted in 5,484 million yen in sales (a 4.2% increase compared with the same period in the previousyear) and 960 million yen in operating profits (a 29.6% 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, has been extremely well-received at exhibitions
held in various regions.
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 2nd quarter consolidated cumulative period resulted in 924 million yen in sales (a 6.1% increase compared to the same period in the previous year) and94 million yen in operating profits (a 22.2% decrease).
(*1) MRN: Medical Recepty NEXT
(Other businesses)
Regarding IT Systems for long-term care/welfare, we reorganized our sales scheme and restructured our systems for achieving future growth. In addition, in regard to our “Hibiki” series and “Symphony,” during this 2ndquarter consolidated cumulative period, we changed initial sales from five-year gross sales to monthly sales.
We achieved our planned sales and operating profits in our pharmacy operation business, sports gyms andnursery 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, , and the Japan Pharmaceutical Association, the number of pharmacies
using the services has reached nearly 12,000 nationwide.
Consequently, other business for this 2nd quarter consolidated cumulative period resulted in 729 million yen
in sales (a 42.2% increase compared to the same period in the previous year) and 139 million yen in operating
losses (previous period: 17 million yen in operating losses).
(*2) EHR: Electronic Health Record(2) Explanation regarding financial position(Assets)
Current assets at the end of this 2nd quarter consolidated cumulative period were 11,608 million yen, a 678
million yen increase 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 672 million yen increase in cash on hand due to bullish
performance and smooth collection of accounts receivable. Fixed assets were 11,561 million yen, a 140 million
yen increase compared to the end of the previous consolidated fiscal year. This is due mainly to increase software in progress a 391 million yen and to a decrease accompanying a 97 million yen depreciation in investment
real estate and a 75 million yen depreciation in goodwill and a 37 million yen depreciation in software.

5As a result, total assets were 23,169 million yen, a 818 million yen increase compared to the end of the previous consolidated fiscal year.
(Liabilities)
Current liabilities at the end of this 2nd quarter consolidated cumulative period were 4,084 million yen, a 419
million yen increase compared to the end of the previous consolidated fiscal year. Current liabilities increased a
519 million yen, this is due mainly to increase deferred income. Fixed liabilities were 1,933 million yen, a 134
million yen decrease compared to the end of the previous consolidated fiscal year. This is due mainly to respective decreases of 62 million yen in provision for product warranties and 34 million yen in long-term loans payable, etc.
As a result, total liabilities were 6,017 million yen, a 284 million yen increase compared to the end of the previous consolidated fiscal year.
(Net assets)
Net assets at the end of this 2nd quarter consolidated cumulative period were 17,152 million yen, a 533 million yen increase compared to the end of the previous consolidated fiscal year. This is due mainly to an increaseof 475 million yen in earned surplus due to bullish performance and respective increase on 62 million yen incapital and 82 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 73.5% (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 2nd quarter consolidated fiscal period(September 30th, 2019)

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

8,159
2,435
157
0
876
(19)
11,608

737
589
57
10
210
70
1,676

720
589
43
9
233
86
1,682

82
1,172
669
5
1,930

45
1,563
594
5
2,208

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

9
6,726
117
818
(0)
7,670
11,561
23,169(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 2nd quarter consolidated fiscal period(September 30th, 2019)

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

1,021
85
464
33
464
344
4
1,665
4,084

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

–
36
1,007
159
721
7
1,933
6,017

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

2,620
3,018
12,615(1,175)
17,078

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

28
(67)
(39)
112
17,152
23,169(2) Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income(Quarterly consolidated statements of income)(2nd 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 2nd quarter consolidated cumulative period(From April 1st, 2018
To September 30th, 2018)
6,594
2,781
3,812
2,343
1,468

This 2nd quarter consolidated
cumulative period(From April 1st, 2019
To September 30th, 2019)
7,086
3,433
3,653
2,689
964

0
509
6
516

1
514
10
526

1
183
13
198
1,787

1
198
8
207
1,283

–
–
–

0
4
5

0
20
20
1,767
569
1,197
1,197

0
–
0
1,287
425
862
862

9

(Quarterly consolidated statements of comprehensive income)(2nd 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 2nd quarter consolidated cumulative period(From April 1st, 2018
To September 30th, 2018)
1,197

This 2nd quarter consolidated
cumulative period(From April 1st, 2019
To September 30th, 2019)
862

(5)
10
5
1,202

(6)
13
7
870

1,202

870

–

–

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) 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.

11