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.

December 2023 3rd Quarter Financial Statement [Japan Standard] (Consolidated)
November 10th, 2023
Listed on: Tokyo
Stock Exchange

Listed company name

EM Systems Co., Ltd.

Code No.

4820

URL: https://emsystems.co.jp

Representative:(Job title)

President&Representative
Director(Name)
Hiromasa Kunimitsu

Representative for inquiries(Job title)

Managing director in the company,
General Manager of Administration Headquarters(Name)
Megumi Seki

Planned date of subNovember
Planned starting date of payment
mission of quarterly
10th, 2023
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

–
: Yes
: Yes

(Amounts of less than 1 million yen rounded down)
1. Consolidated results of December 2023 3rd Quarter Financial Statement (January 1st 2023 through September 30th, 2023)(1) Consolidated management performance (total) (% refers to rate of change over the same quarter in the previous year)
Sales

December 2023
3rd quarter
December 2022
3rd quarter(Note) Comprehensive income

Millionsof yen15,19812,491

Operating profits

21.7

Millionsof yen
1,804

20.3

1,450

Quarterly net income
belonging to parent
company shareholders
Millions of%yen(17.4)
1,357(14.6)

Millionsof yen2,199(10.5)

2,113

80.3

2,457

39.5

1,644

31.4

Millions ofyen(14.1)

December
2022 3rd
Quarter

1,688

Millions of
yen

32.2

%

December
2023 3rd
QuarterOrdinary profits%%

Quarterly net income per share after
potential stock adjustment
Yen 100ths of a yen
19.15
23.13

Quarterly net income per share
Yen 100ths of a yen
19.21
23.21

December 2023 3rd quarter
December 2022 3rd quarter(2) Consolidated financial position

December 2023 3rd quarter
December 2022
December(Refer to) Net
2023 3rd
capitalQuarter

Capital adequacy
ratio

Total assets

Net assets

Millions of yen
29,646
26,349Millions of yen
19,934
19,503

19,857

Millions ofyen

December
2022 period

%
67.0
73.7
19,424

Millions ofyen

2. State of dividends
End of 1st quarter
Yen 100ths of a yen

End of 2nd quarter
Yen 100ths of a yen

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

December 2022–
4.00
December 2023–
7.00
December 2023
(estimate)(Note)1. Revisions from the last published dividend estimates: None1––

End of term
Yen 100ths of a
yen
8.00

Total
Yen 100ths of a
yen
12.00

7.00

14.00

3. Estimated consolidated results of December 2023 period (January 1st, 2023 through December 31st, 2023)(% refers to rate of change over the previous term)
Net sales

Full year

Millionsof yen20,455

Operating profit％
20.9

Millionsof yen2,256Profit attributable to owners of parent
Millions of
％
yen
1,764
(6.8)

Ordinary profit

％
(5.8)

Millionsof yen
2,805

％
0.5

Net income
per share
Yen 100thsof a yen
24.97(Note) 1. Revisions from the last published forecast of financial results: Yes* 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 P10 "2. Quarterly consolidated financial statement and major explanatory notes (3) Addendums relating to quarterly consolidated financial statement (application of 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.

: Yes

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)
2. Number of own shares at end of term
3. Average number of shares outstanding
during term (quarterly total)

December 2023
3rd quarter
December 2023
3rd quarter
December 2023
3rd quarter

74,514,800 shares
3,818,149 shares
70,675,864 shares

December 2022
periodDecember 2022
periodDecember 2022
3rd quarter

74,514,800 shares
3,865,149 shares
70,851,772 shares* The quarter financial statement is not subject to quarterly review by certified public accountants or auditors.
* 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 ----------------------------------------------------------------------- 10(Explanatory notes regarding prerequisites of going concern) ------------------------------------------------------------------------------- 10(Explanatory notes for cases of considerable changes in amounts of shareholder's equity) ----------------------------------------- 10(Application of special accounts processing in the creation of the quarterly consolidated financial statement) -------------- 10(Accounting policy revisions) ---------------------------------------------------------------------------------------------------------------------------- 103

1. Qualitative information relating to this quarter's financial results(1) Explanation regarding operating results
During this 3rd quarter consolidated period, the Japanese economy showed signs of recovery, such asincreased inbound travel and improved business performance among export-related companies, against the
backdrop of a weak yen in the foreign exchange market due to the long-term interest rate differential between
Japan and the U.S. However, with prolonged uncertainty in the global condition, the business environment is
expected to remain harsh as the impact of soaring energy and raw material prices on import-related companies
and households becomes more apparent.
In the medical industry, the Group's main customer base, the introduction of a system that enables online
verification of eligibility information at medical institutions’ points of contact using a My Number Card or
health insurance card is progressing. In particular, encouraged by the introduction of special measures for therevision of the medical service fee system, introduction of the system had been accelerated in the run-up to thesystem becoming mandatory in April 2023 (transitional measures in effect until September 2023).
In addition, use of these online eligibility verification systems began in January 2023, and the commencementof electronic processing of prescriptions, which are currently paper-based, will gradually increase the number ofapplications for installation and expand deployment of the system.
In order to improve the Group’s name recognition and expand sales of the next-generation MAPs series products, we began restructuring the Group’s internal organizational structure last year and ran our first TV commercial to increase our market share. At the same time, we have also seen steady results in the clinic segmentfrom our efforts to enhance digital marketing, including website renewal, utilization of MA tools, provision of
online seminars, and improvements to the contents of installation case studies.
On June 30, the Group acquired all shares of Unike Software Research Co., Ltd. (hereinafter referred to as“Unike Co.”) and its management company from JMDC Inc., making it a consolidated subsidiary. As a result, asof the 3rd quarter, it is accounted for under the Group’s consolidated income statement, contributing to anincrease in net sales.
On the other hand, SG&A expenses increased due to the airing of TV commercials and the payment ofspecial compensation to employees for their contribution to the improvement of our business performance todate.
As a result, our business results for this 3rd quarter consolidated cumulative period was 15.198 million yen insales (a 21.7% increase compared to the same period in the previous year), 1.804 million yen in operating profits(a 14.6% decrease) 2.199 million yen in ordinary profits (a 10.5% decrease), and 1.357 million yen in this quarterly net income belonging to parent company shareholders (a 17.4% decrease).
By segment results are as follows.
(IT Systems for Pharmacies)
In regard to IT systems and related business for pharmacies, in addition to progress in replacements for“MAPs for PHARMACY DX” among our customers, initial sales also increased due to an increase in the numberof hardware replacements following the end of extended support for Windows 8.1. In addition, since Unike
Software Research Co., Ltd. has become a consolidated subsidiary on the income statement, billing sales haveincreased significantly in line with the increase in the number of customers. However, SG&A expenses haveincreased due to the implementation of the Group’s TV commercials, enhanced digital marketing, and special
compensation paid to employees.
Consequently, IT Systems and Related Business for Pharmacies for this 3rd quarter consolidated cumulative
period resulted in 11.953 million yen in sales (a 19.8% increase compared with the same period in the previousyear) and 2.169 million yen in operating profits (a 8.5% decrease).

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(IT Systems for Clinics)
In regard to IT systems and related business for clinics, in addition to the organizational restructuring implemented in the previous fiscal year, we are also taking a wide range of approaches utilizing web marketing.
Initial sales increased significantly due to the expansion of implementation measures for the online eligibility
verification system as well as expansion in sales of "MAPs for CLINIC," and billing sales in the medical segment
also grew steadily. However, SG&A expenses increased due to initiatives seeking to expand market share in the
medical systems market and due to special compensation paid to employees.
Consequently, IT Systems and Related Business for Clinics for this 3rd quarter consolidated cumulative period resulted in 2.249 million yen in sales (a 38.6% increase compared to the same period in the previous year)and 20 million yen in operating losses (previous period: 210 million yen in operating losses).
(IT Systems for Long-term Care/Welfare)In regard to IT systems and related business for long-term care/welfare, billing sales remain bullish due to anincrease in the number of licenses, while depreciation associated with the release of “MAPs for NURSING
CARE” has commenced and our SG&A expenses have also risen due to our efforts in expanding sales channels.
Consequently, IT Systems and Related Business for Long-term Care/Welfare for this 3rd quarter consolidated
cumulative period resulted in 416 million yen in sales (a 3.7% increase compared with the same period in theprevious year) and 404 million yen in operating losses (previous period: 33 million yen in operating losses)(Other businesses)
Sales increased due to expansion of the cashless business of the subsidiary ChoQi Co., Ltd. as well as due tothe contributions of the temporary staffing business of the subsidiary Unike Software Research Co., Ltd. Profit
contributions from overseas subsidiaries led to an improvement in the overall profitability of the sector, andoperating income was positive.
Consequently, other business for this 3rd quarter consolidated cumulative period resulted in 671 million yen
in sales (a 27.1% increase compared to the same period in the previous year) and 25 million yen in operatingprof- its (previous period: 35 million yen in operating losses).
（Segmented sales and operating profits and losses are the amounts before elimination of internal transactions
between segments.）(2) Explanation regarding financial position(Assets)
Current assets at the end of the 3rd quarter consolidated accounting period totaled 14.717 billion yen, up 868
million yen from the end of the previous consolidated accounting year. This was mainly due to a 450 million
yen increase in notes and accounts receivable and a 297 yen increase in cash and deposits resulting from theacquisition of shares of Unike Software Research Co., Ltd. and its management company, Launchpad13 Inc.
and acquisition of additional Good Cycle System Inc. shares. Fixed assets totaled 14.928 billion yen, up 2.428
billion yen from the end of the previous consolidated accounting year. This was mainly due to an increase of
1.353 billion yen in goodwill resulting from the aforementioned acquisition of shares, as well as due to anincrease of 1.167 billion yen in intangible fixed assets.
As a result, total assets were 29.646 million yen, an increase of 3.296 million yen from the end of the previous
consolidated fiscal year
(Liabilities)
Current liabilities at the end of the 3rd quarter consolidated accounting period totaled 6.031 billion yen, up
1.086 billion yen from the end of the previous consolidated accounting year. Although there was a 336 million
yen decrease in income taxes payable, etc. due to payment, this was mainly due to a 987 million yen increasein the current portion of long-term loans payable, a 422 million yen increase in other current liabilities due toan increase in deposits received in connection with the expansion of the cashless business in the otherbusinesses segment, and a 253 million yen increase in provision for bonuses. Long-term liabilities totaled
3.680 billion yen, up 1.778 billion yen from the end of the previous consolidated accounting year. This was
mainly due to a 909 million yen decrease in net defined benefit liability in connection with termination of theretirement benefit system, a 602 million yen increase long-term accounts payable, a 1.759 billion yen increase5

in long-term loans payable, and a 390 million yen increase in other fixed liabilities.
As a result, total liabilities were 9.711 million yen, an increase of 2.865 million yen from the end of theprevious consolidated fiscal year.
(Net assets)
Net assets in the 3nd quarter totaled 19.934 billion yen, an increase of 431 million yen from the end of theprevious fiscal year. This was mainly the result of a 297 million yen increase in quarterly net income belonging toparent company shareholders although due to the payment of dividends.
As a result, equity ratio was 67.0% (73.7% at the end of the previous consolidated fiscal year).
(1)Explanation regarding information on future prospects such as forecast of consolidated financial results
The Company has revised its full-year consolidated performance forecast for the fiscal year ending December 2023
as it pertains to performance during this consolidated accounting period and the future forecast due to expectedfluctuations in earnings accompanying the increase in the number of consolidated subsidiaries. For details, pleaserefer to the "Notification regarding Revisions to the Forecast of Consolidated Financial Results for the Full YearEnding December 2023," announced on November 10th, 2023.

6

2. Quarterly consolidated financial statements and major explanatory notes(1) Quarterly consolidated balance sheet(Units: millions of yen)Previous consolidated
fiscal year
(December 31st, 2022)
AssetsCurrent assets
Cash on hand and in banks
Notes and accounts receivable
Merchandise and products
OthersAllowance for bad debts
Total current assets
Fixed assets
Tangible fixed assets
Buildings and structures (net)Land
Lease assets (net)
Rental assets (net)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(September 30th, 2023)

8,881
2,761
1,084
1,123
(1)
13,849

9,178
3,211
1,247
1,082
(2)
14,717

575
474
97
1
222
1,371

582
474
73
0
241
1,372

1,574
461
188
99
2,323

2,125
486
1,542
1,267
5,421

1,263
6,519
7
1,025
(11)
8,805
12,50026,349

928
6,440
－
775
(11)
8,134
14,92829,646

(Units: millions of yen)Previous consolidated
fiscal year
(December 31st, 2022)
Liabilities
Current liabilities
Notes and accounts payable
Accounts payable-other
Current portion of long-term loans payable
Lease obligations
Income taxes payable, etc.
Provision for bonuses
Contract liability
OthersTotal current liabilities
Fixed liabilities
Long-term loans payable
Lease obligations
Net defined benefit liability
Provision for product warranties
Long-term guarantee deposits
OthersTotal 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
valuation difference on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total other cumulative comprehensive income
Subscription rights to shares
Minority interests
Total net assets
Total liabilities and net assets

8This 3rd quarter consolidated fiscal period(September 30th , 2023)

1,398
957
－
35
601
285
999
666
4,944

1,222
966
987
36
264
539
925
1,089
6,031

－
74
1,061
20
745
－
1,901
6,846

1,759
37
151
3
735
390
3,680
9,711

2,785
3,362
15,199(2,017)
19,3292,785
3,376
15,496(1,990)19,667

35
85
(26)
94
55
23
19,503
26,349

65
124
－
189
56
21
19,93429,646

(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
Equity Losses of Affiliated Companies
OthersTotal non-operating expenses
Ordinary profits
Special profits
Gain on abolishment of retirement benefit plan
Total special profits
Special losses
Losses on sale of fixed assets
Losses on disposal of fixed assets
Loss on step acquisitions
Total special losses
Quarterly net income before adjustment for taxes, etc.
Corporation tax, etc.
Quarterly net income
Loss attributable to non-controlling interests
Profit attributable to owners of parent

Previous 3rd quarter consolidated cumulative period(From January 1st, 2022
To September 30th, 2022)
12,491
6,230
6,260
4,147
2,113

This 3rd quarter consolidated
cumulative period(From January 1st, 2023
To September 30th,2023)
15,198
7,766
7,432
5,628
1,804

2
783
12
798

4
723
18
747

4
307
132
10
454
2,457

5
303
35
7
352
2,199

－
－

33
33

－
0
－
0
2,457
828
1,629
(14)
1,644

1
9
140
152
2,081
725
1,355
(2)
1,357

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

Quarterly net income
Other comprehensive income
valuation difference on available-for-sale securities
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 January 1st, 2022
To September 30th, 2022)
1,629This 3rd quarter consolidated
cumulative period(From January 1st, 2023
To September 30th, 2023)
1,355

2
45
10
58
1,688

29
39
26
95
1,450

1,702

1,452

(14)

(2)

9

(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)(Calculation of tax expense)
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.
(Accounting policy revisions)(Application of Accounting Standard for Calculation of Market Value)
The "Accounting Standard for Calculation of Market Value" (Corporate Accounting Standards Statement
No. 31, June 17, 2021; hereinafter referred to as "Accounting Standard for Calculation of Market Value")
went into effect from the beginning of the 1st Quarter consolidated cumulative period, and the new accounting policy stipulated by the "Accounting Standard for Calculation of Market Value" is considered effective
going forward in accordance with paragraph 27-2 of the "Accounting Standard for Financial Instruments".
Note, however, that the above does not entail any impact on the quarterly consolidated financial statements.

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.

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