March 2019 1st Quarter Financial Statement [Japan Standard](Consolidated)

August 9, 2018
Listed company
Listed on: Tokyo Stock
EM Systems Co., Ltd.
name
Exchange
Code No.
4820
URL http://www.emsystems.co.jp
Representative (Job title) Executive director and CEO(Name) Kozo Kunimitsu
Representative
Managing director and operative officer,(Job title)(Name) Gen Aota
TEL +81-6-6397-1888
for inquiries
administrative planning office head
Planned date of submission of quarterly reportAugust 10, 2018

Planned starting date of payment of dividends－

Supplementary explanatory materials created for the 1st quarter financial statement: None

1st quarter financial statement briefing held

: None(Amounts less than 1 million yen rounded down)
1. Consolidated results of March 2019 1st Quarter Financial Statement (April 1 2018 through June 30, 2018)(1) Consolidated management performance (total)

Sales

March 2019 1st
Quarter Financial
Statement
March 2018 1st
Quarter(Note)
Comprehensive
income(% refers to rate of change over the same quarter in the previous year)

Operating profits

Ordinary profits

Belong to parent
company shareholders
Quarterly net income
Millions%of yenMillionsof yen%Millionsof yen%Millionsof yen

%

3,192

2.5

684

19.2

846

14.1

569

14.4

3,113

2.9

574

10.9

741

11.0

497

12.6

March 2019 1st
Quarter Financial
Statement

572

Millionsof yen（17.0%）March 2018
1st Quarter

488

Millionsof yen（12.2%）Per 1 share
After potential stock adjustment
Quarterly net income
Quarterly net income per 1 share
Yen 100th of yen
Yen 100th of yen
March 2019 1st Quarter Financial Statement
16.00
15.95
March 2018 1st Quarter
14.05
13.97
(Note) This company implemented a stock split at a rate of 2 shares per 1 share of ordinary stock with an effective
date of March 1, 2018. We have calculated "quarterly net income per share" and "quarterly net income after
potential stock adjustment "assuming that said stock split was conducted at in the previous fiscal year.
(2) Consolidated financial position

March 2019 1st
Quarter Financial
Statement
March 2018 period

Capital adequacy
Net assets per shareratio%

Total assets

Net assets

Millions of yen

Millions of yen

21,17816,09975.3

449.02

21,893

16,05272.7

446.82(Refer to) Net
March 2019 1st Quarter
Millions March 201815,941
15,906 Millions of yen
capitalFinancial Statementof yenperiod(Note) This company implemented a stock split at a rate of 2 shares per 1 share of ordinary stock with an effective
date of March 1, 2018. We have calculated "net income per share" assuming that said stock split was
conducted at in the previous fiscal year.

－

1 －2. State of dividends
End of 1st quarter
Yen 100th of yen
March 2018 period－－

March 2019 period
March 31 period(estimate)

End of 2nd quarter
Yen 100th of yen
13.00

Annual dividends
End of 3rd quarter
Yen 100th of yen

8.00

Total
Yen 100th of yen－

End of term
Yen 100th of yen
12.00

－

10.00

18.00

－

(Note) Revisions from the last published dividend estimates: None
This company implemented a stock split at a rate of 2 shares per 1 share of ordinary stock with an effective
date of March 1, 2018. Regarding the dividends of the 2nd quarter of the March 2018 period and earlier, wehave included the amounts of actual dividends before said stock split. The annual dividend amount per sharecalculate under the post-stock split standard is 18.5 yen for the March 2018 period
3. Estimated consolidated results of March 2019 period (April 1 2018 through March 31, 2019)(% refers to rate of change over the previous term for the full year, and rate ofchange over the same quarter in the previous year for quarters)
Sales

2nd quarter (total)
Full year

Millionsof yen6,398
12,875

Operating profits
%
△6.9
△7.7

Millionsof yen
1,186
1,509

%
△21.4
△50.7

Ordinary profits
Millionsof yen
1,500
2,138

%
△17.8
△40.9

Net income this term
Per 1 sharebelonging to parent
Net income ofcompany shareholders
this term
Millions
Yen 100th%of yenof yen
△20.1
970
26.49
△39.6
1,432
39.11

(Note) Revisions from the last published estimated results: None
* Addendums(1) Changes in major subsidiaries during consolidated cumulative quarter (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 "Quarterly consolidated financial statement andmajor explanatory notes (3) addendums relating to quarterly consolidated financial statement (applicationof special accounts processing in the creation 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 endof term (including own stock)

March 2019 period 1Q

36,347,400 Shares

March 2018 period

36,347,400 Shares

2.

Number of own shares at end of term

March 2019 period 1Q

844,606

March 2018 period

747,206 Shares

3.

Average number of shares
outstanding during term
（quarterly total）

March 2019 period 1Q

35,567,727 Shares

March 2018 period 1Q

35,401,180 Shares

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 by this company at the present time and certain assumptions this company deems reasonable, andthey may differ greatly to actual results due to a variety of factors.

－

2 －○Table of contents of attached materials
1. Qualitative information relating to this quarter's statement

4(1) Explanation regarding management performance

4(2) Explanation regarding financial position

6(3) Explanation regarding information on future prospects such as estimated consolidated results

6

2. Quarterly consolidated financial statement and major explanatory notes(1) Quarterly consolidated balance sheet(2) Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive
incomeQuarterly consolidated statements of income
1st quarter consolidated cumulative period

7
7
9

9

Quarterly consolidated statements of comprehensive income
1st quarter consolidated cumulative period

10(3) Addendums relating to quarterly consolidated financial statement

11(Explanatory notes regarding prerequisites of going concern)

11(Explanatory notes for cases of considerable changes in amounts of shareholder's equity)

11(Changes in major subsidiaries during consolidated cumulative quarter)(Application of special accounts processing in the creation of the quarterly consolidated financial
statement)(Important events after the reporting period)

11

－

3 －

11
11

1.Qualitative information relating to this quarter's statement(1) Explanation regarding management performance
Our country's economic condition in the 1st quarter consolidated cumulative period remains partiallyuncertain with the overseas economy due to US economic policies, however corporate earnings are firm
centered on companies exporting capital goods, and employment conditions have improved due to this. As real
income increases bullishly, consumer confidence among individuals also transitions bullishly, and Japan's
economy is seen as continuing to gently recover.
In pharmacies, which are our company's major sales outlet, while business restructuring continues due toexpansions in scale caused by major pharmacy chain M&As, etc., the environment surrounding the pharmacy
industry is increasingly harsh, and added value is currently required in the pharmacy business. The influenceon the results of our company caused by the simultaneous fee revisions in health insurance and nursing
insurance implemented in April 2018 have resulted in a favorable increase in monthly sales, but they remained
minimal.
Our group, focusing on the super-aging society which is symbolic of the "2025 problem" (*1), has made fullblown inroads into the systems for nursing operators business since October 2016 in order to achieve
information coordination with healthcare (clinics and pharmacies) and nursing. By constructing a network
between systems for clinics, pharmacies, and nursing operators, we will offer an environment that enables
seamless information coordination between healthcare and nursing. Additionally, in order to be able to develop
and offer products and services which can contribute even more to the citizens and healthcare industry in the
future, we are developing systems utilizing AI. Furthermore, in March 2018 we started collaborations with
Nippon Electric Company (NEC). As Japan approaches super-aging society, we are jointly developing nextgeneration systems in electronic medical records for clinics and medicine dispensing systems for insurance
pharmacies as a first step toward solving the issues of longer healthier lives for citizens and optimization ofsocial welfare spending. In the future we also plan to promote the utilization of ITC in the health and medicalcare fields such as information coordination between hospitals, clinics, insurance pharmacies, etc., and create
new services.
Our company has donated to the "Medical AI Development Studies", the endowed course of the Tokyo
University Graduate School of Medicine and Affiliated Hospital. Our company will continue to support suchresearch and development as best we can based on our corporate policy of "contributing to the improvement of
the health standards of citizens by applying the latest technology".
As a result, our performance for this 1st quarter consolidated cumulative period were 3,192 million yen insales (2.5% increase over the same period in the previous year), 684 million yen in operating profits (19.2%
increase), 846 million yen in ordinary profits (14.1% increase), and 569 million yen in quarterly net income
belonging to parent company shareholders (14.4% increase).
(*1) The baby boomer generation said to number approximately 8 million will reach age 75 by 2025, thereby
worsening issues such as increased social welfare spending and lack of workers in nursing.
By-segment results are as follows. Furthermore, by-segment sales and operating profits and losses are theamounts before elimination of internal transactions between segments.

(Business for Pharmacy and related business)
Regarding business for pharmacy and related business, we have continued to strengthen our approaches topharmacy 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, although number of systems sales was not as high as planned, the billing sales
have increased favorably and with hardware replacement also proceeding as planned, our supply sales havecontinued to be bullish. As a result, we achieved our planned sales and continued compression of cost prices
and expenses has contributed to our profits.
Consequently, business for pharmacy and related business in this 1st quarter consolidated cumulative period
were 2,540 million yen in sales (0.1% increase over the same period in the previous year) and 658 million yen(15.9% increase).
(Business for Clinic and related business)－

4 －Regarding business for clinic and related business, in order to expand our nation-wide sales channels wehave been cultivating markets in clinics through retail outlets. Furthermore, we have continued to focus efforts
on sales of the medical accounting systems "MRN (*2) Clerk Style" and "Uni-Medical", as well as the electronic
medical records systems "MRN Karte Style" and "Ortia".
As a result, we have achieved sound expansion of sales channels as well as sound increases in numbers of
new installations of MRN and system sales through third-party replacements. Furthermore, our billing sales
have increased favorably, with our supply sales also promising. Consequently, business for clinic and related
business in this 1st quarter consolidated cumulative period were 424 million yen in sales (14.1% increase overthe same period in the previous year) and 38 million yen (550.3% increase).
(*2)MRN:Medical Recepty NEXT－5 －(Other business)
Regarding other business nursing system business did not contribute to sales or profits due to a review ofour business strategy, etc. Our pharmacy operation business was partially impacted by medicine dispensing
fees and NHI drug price reforms, but sales were above initial estimates and operating profits only fell slightly
below estimates. Furthermore, Lasante Co., Ltd. exceeded planned sales and operating profits.
In our healthcare and nursing business, the number of subscribers to "Hirogaru Care Net" which we provide
for clinics, pharmacies, and nursing service operators increased slightly.
Furthermore, in the "commissioned online qualification checking system for prescription receipt creation at
pharmacies", with which we were commissioned by the Japan Health Insurance Association (Kyokaikenpo) on
December 13, 2016, we started offering it to clinics as well and have extended the initial contract periods tocontinue 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 HER(*3) and PHR(*4), in order to contribute to future
developments in the healthcare industry. In the "infectious disease outbreak detection services", which is a
joint research project between the Japan Medical Association, the Japan Pharmaceutical Association, andNihon University, the number of pharmacies using it has exceeded 10,000 nationwide.
Consequently, other business in this 1st quarter consolidated cumulative period was 255 million yen in sales(5.6% increase over the same period in the previous year) and 11 million yen in operating losses (0 million yen
in operating profits in the same period in the previous year).
(*3) HER:Electronic Health Record(*4) PHR:Personal Health Record(2) Explanation regarding financial position(Assets)
Current assets at the end of this 1st quarter consolidated cumulative period were 10,857 million yen, a 735
million yen decrease compared to the end of the previous fiscal year. This is due mainly to a 539 million yen
decrease in cash on hand and in banks due to the payment of dividends and corporation tax. Fixed assets
were 10,320 million yen, a 20 million yen increase compared to the end of the previous fiscal year. This is due
mainly to a decrease caused by a 136 million yen increase in software in progress and depreciation.
As a result, total assets were 21,178 million yen, a 714 million yen decrease compared to the end of theprevious fiscal year.
(Liabilities)
Current liabilities at the end of this 1st quarter consolidated cumulative period were 3,054 million yen, a
728 million yen decrease compared to the end of the previous fiscal year. This is due mainly to respective
decreases of 121 million yen in long-term debt planned for repayment within a year, 44 million yen in payments
of promissory notes and accounts payable, 49 million yen in arrears, 459 million yen in unpaid corporation tax,etc., and 156 million yen in provision for bonuses, as well as a 125 million yen increase in deposits due to endof term dividends and income tax withheld at the source for summer bonus payments, etc. Fixed liabilities
were 2,025 million yen, an 32 million yen decrease compared to the end of the previous fiscal year. This is due
mainly to a 22 million yen increase in liabilities relating to retirement packages, and 20 million yen and 7
million yen decreases in provision for product warranties and lease obligations, respectively.
As a result, total liabilities were 5,079 million yen, a 761 million yen decrease compared to the end of theprevious fiscal year.
(Net assets)
Net assets at the end of this 1st quarter consolidated cumulative period were 16,099 million yen, a 46 million
yen increase compared to the end of the previous fiscal year. This is due mainly to a 141 million yen increasein accumulated earnings and a 109 million yen decrease due to acquisition of our own stock.
As a result, our capital adequacy ratio was 75.3% (72.7% at the end of the previous fiscal year).
(3) Explanation regarding information on future prospects such as estimated consolidated results
Regarding estimated consolidated results of the full year ending March 2019, there are no changes since the
2nd quarter consolidated cumulative period and full year estimated consolidated results announced in the May
8, 2018 "March 2018 Period Financial Short Statement".
－

6 －2.Quarterly consolidated financial statements and major explanatory notes(1) Quarterly consolidated balance sheet(Units: millions of yen)This 1st quarter consolidated
cumulative period(June 30, 2018)

Previous fiscal year
(March 31, 2018)
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)Assets concerning bonus packages
OthersAllowance for bad debts
Total investments and other assets
Total fixed assets
Total assets

－

7 －

8,528
2,189
130
0
762
△ 19
11,592

7,989
1,924
138
0
823
△ 18
10,857

777
608
102
15
－
77
1,580

765
608
85
13
4
70
1,548

167
255
254
5
682

143
392
240
5
780

205
7,018
109
704
△0
8,037
10,30021,893

205
6,969
122
695
△0
7,991
10,32021,178

(Units: millions of yen)This 1st quarter consolidated
cumulative period(June 30, 2018)

Previous fiscal year
(March 31, 2018)
Liabilities
Current liabilities
Promissory notes and accounts payable
Long-term debt planned for repayment
within 1 year
Arrears
Lease liabilities
Unpaid corporation tax, etc.
Provision for bonuses
Provision for points
OthersTotal current liabilities
Fixed liabilities
Long-term debt
Lease liabilities
Liabilities concerning bonus packages
Provision for product warranties
Long-term guarantee deposits
Total fixed liabilities
Total liabilities
Net assets
Shareholder's equity
Capital stock
Capital surplus balance
Accumulated earnings
Own stockTotal shareholder's equity
Cumulative amount of other comprehensive
incomeForeign currency translation adjustments
Cumulative amount of adjustments
concerning bonus packages
Total other cumulative comprehensive
incomeStock acquisition rights
Total net assets
Total liabilities and net assets

－

8 －

760

715

517

396

418
48
763
350
3
921
3,782

368
41
303
193
4
1,030
3,054

137
72
917
214
715
2,058
5,840

111
65
940
193
714
2,025
5,079

2,445
2,808
10,878△ 208
15,9242,445
2,808
11,020△ 318
15,956

48

46

△ 66

△ 61

△ 17

△ 14

145
16,052
21,893

157
16,09921,178

(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)Previous 1st quarter
This 1st quarter consolidated
consolidated cumulative
cumulative period
period(From April 1, 2018
(From April 1, 2017
to June 30, 2018)
to June 30, 2017)
3,113
3,192
1,327
1,366
1,786
1,825
1,212
1,141
574
684

Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profits
Non-operating profits
Received interest
Real estate rental income
OthersTotal non-operating profits
Non-operating expenses
Paid interest
Real estate rental expenses
OthersTotal non-operating expenses
Ordinary profits
Special losses
Losses on disposal of fixed assets
Debt prepayment expenses
Total special losses
Quarterly net income before adjustment for taxes,
etc.
Corporation tax, etc.
Quarterly net income
Quarterly net income belong to parent company
shareholders

－

9 －

0
249
12
261

0
254
2
256

2
90
1
93
741

0
89
5
95
846

0
8
8

0
－

733

846

236
497

277
569

497

569

0

(Quarterly consolidated statements of comprehensive income)(1st quarter consolidated cumulative period)(Units: millions of yen)Previous 1st quarter
This 1st quarter consolidated
consolidated cumulative
cumulative period
period(From April 1, 2018
(From April 1, 2017
to June 30, 2018)
to June 30, 2017)
497
569

Quarterly net income
Other comprehensive income
Foreign currency translation adjustments
Adjustments concerning bonus packages
Total other comprehensive income
Quarterly comprehensive income(Breakdown)
Quarterly comprehensive income concerning
parent company shareholders
Quarterly comprehensive income concerning
non-controlling shareholders

－

10 －

△7
△0
△8
488

△2
5
2
572

488

572

－

－

(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.
(Changes in major subsidiaries during consolidated cumulative quarter)
There is no applicable information.
(Application of special accounts processing in the creation of the quarterly consolidated financial statement)
Regarding tax expenses, we have reasonably estimated the effective tax rate after application of tax effectaccounting for the income before taxes of the consolidated accounting period including this 1st quarter
consolidated cumulative period, and we have calculated said estimated effective tax rate for our quarterly net
income before taxes.
(Important events after the reporting period)
There is no applicable information.

－

11 －

－

12 －