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 2nd Quarter Financial Statement [Japan Standard] (Consolidated)
August 9th, 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 subAugust 9th,Planned starting date of payment
mission of quarterly2023
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

September 4th,
2023
: Yes
: Yes

(Amounts of less than 1 million yen rounded down)
1. Consolidated results of December 2023 2nd Quarter Financial Statement (January 1st 2023 through June 30th, 2023)(1) Consolidated management performance (total) (% refers to rate of change over the same quarter in the previous year)
Sales

December 2023
2nd quarter
December 2022
2nd quarter(Note) Comprehensive income

Millionsof yen9,818

Operating profits%
20.3

Millionsof yen
1,144

8,164

22.4

December
2023 2nd
Quarter873%

Ordinary profits(15.9)

Millionsof yen1,394(13.0)

1,360

133.4

1,603

56.7

1,089

58.4

Millions ofyen(23.0)

December
2022 2nd
Quarter

1,134

Millions of
yen

59.4

Quarterly net income per share after
potential stock adjustment
Yen 100ths of a yen
11.13
15.31

Quarterly net income per share
Yen 100ths of a yen
11.17
15.35

December 2023 2nd quarter
December 2022 2nd quarter%

Quarterly net income
belonging to parent
company shareholders
Millions of%yen(27.6)
789(2) Consolidated financial position

December 2023 2nd quarter
December 2022
December(Refer to) Net
2023 2nd
capitalQuarter

Total assets

Net assets

Millions of yen
27,17026,349Millions of yen
19,852
19,503

19,777

Millions ofyen

Capital adequacy
ratio

December
2022 period

%
72.8
73.7
19,424

Net assets per
share
Yen 100ths of a yen
279.75274.94
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
–
7.00
December 2023
December 2023
(estimate)(Note)1. Revisions from the last published dividend estimates: Yes

1–

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 yen19,608Operating profit％
15.9

Millionsof yen2,827

Ordinary profit
Millionsof yen
3,333

％
18.0

％
19.4

Profit attributable to own- Net income
ers of parent
per share
Millions of
Yen 100ths％
yenof a yen
2,217
17.1
31.39

(Note) 1. 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.10 "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
2nd quarter
December 2023
2nd quarter
December 2023
2nd quarter

74,514,800 shares
3,816,949 shares
70,665,301 shares

December 2022
periodDecember 2022
periodDecember 2022
2nd quarter

74,514,800 shares
3,865,149 shares
70,960,450 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 the first half of the current consolidated fiscal year, the Japanese economy showed some signs of revitalization in some economic spheres, especially in capital investment and consumer spending, as “with Corona”
moved into a new phase, but the prolonged uncertainty in the global situation, combined with the depreciationof the yen in the foreign exchange market, has caused energy and raw material prices to soar and the impact on
businesses and households is becoming more apparent. Against this background, the business environment is
expected to remain harsh.
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, and, encouraged by the introduction of special measures for the revision of
the medical service fee system, the number of medical institutions that have introduced such systems has been
increasing in the run-up to the system 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.
In light of the above initiatives, we have decided to provide special compensation to employees for their contribution to the improvement of our business performance to date and to further encourage their efforts to this end
going forward.
Good Cycle System Inc. (hereinafter referred to as "Good Cycle System"), an equity-method affiliate, became aconsolidated subsidiary of the Group on February 27, and as of the second quarter, Good Cycle System is now
accounted for under the Group’s consolidated income statement, contributing to an increase in net sales.
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. By combining
our knowledge of IT-based services, we hope to further strengthen the Group's customer base and contribute to
the digital transformation of the pharmaceutical industry.
As a result, our business results for this 2nd quarter consolidated cumulative period was 9,818 million yen insales (a 20.3% increase compared to the same period in the previous year), 1,144 million yen in operating profits(a 15.9% decrease), 1.394 million yen in ordinary profits (a 13.0% decrease), and 789 million yen in this quarterly net income belonging to parent company shareholders (a 27.6% decrease).
By segment results are as follows.
(IT Systems for Pharmacies)
In regard to IT systems and related business for pharmacies, initial sales increased significantly due to expanded incorporation of the online eligibility verification system as well as to an increase in the number of hardware replacements following the end of extended support for Windows 8.1. Billing sales also increased alongwith the increase in the number of customers.
In addition, since Good Cycle System Inc. has become a consolidated subsidiary on the income statement, billing sales have increased significantly in line with the increase in the number of customers. However, SG&A expenses have increased due to the implementation of the Group's TV commercials, enhanced digital marketing,and special compensation paid to employees.
The Group has further increased its market share in the dispensing sector by making Unike Software Research Co., Ltd. a consolidated subsidiary, and has thus been able to maintain its solid position in the pharmacy
industry.
Consequently, IT Systems and Related Business for Pharmacies for this 2nd quarter consolidated cumulative
period resulted in 7, 681 million yen in sales (a 18.2% increase compared with the same period in the previousyear) and 1.405 million yen in operating profits (a 6.1% 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 2nd quarter consolidated cumulative period resulted in 1.529 million yen in sales (a 42.6% increase compared to the same period in the previous year)
and 7 million yen in operating losses (previous period: 184 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 2nd quarter consolidated
cumulative period resulted in 278 million yen in sales (a 3.8% increase compared with the same period in theprevious year) and 285 million yen in operating losses (previous period: 55 million yen in operating profits)(Other businesses)
Sales have increased due to the expansion of our subsidiary cashless business. Profit contributions from overseas subsidiaries led to an improvement in the overall profitability of the sector, and operating income was positive.
Consequently, other business for this 2nd quarter consolidated cumulative period resulted in 386 million yen
in sales (a 11.1% increase compared to the same period in the previous year) and 5 million yen in operating profits (previous period: 22 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 2nd quarter of the current fiscal year totaled 12.301 billion yen, down 1.547
billion yen from the end of the previous fiscal year. This was mainly due to a 2.435 billion yen decrease in cash
and deposits and a 489 million yen increase in notes and accounts receivable resulting from the acquisition ofshares of Unike Software Research Co., Ltd. and its management company, Launchpad13 Inc., acquisition of
additional Good Cycle System Inc. shares. Fixed assets totaled 14.869 billion yen, up 2.368 billion yen from theend of the previous fiscal year. This was mainly due to an increase of 2.190 billion yen in goodwill.
As a result, total assets were 27.170 million yen, an increase of 820 million yen from the end of the previous
consolidated fiscal year
(Liabilities)
Current liabilities at the end of the 2nd quarter amounted to 5.195 billion yen, up 250 million yen from theend of the previous fiscal year. This was mainly due to a 315 million yen increase in other current liabilities.
Long-term liabilities totaled 2.121 billion yen, an increase of 220 million yen from the end of the previous consolidated fiscal year. This was mainly due to a 186 million yen increase in long-term loans payable resulting
from a change in the scope of consolidation and a 162 million yen increase in liabilities for retirement benefits.
As a result, total liabilities were 7,317 million yen, an increase of 470 million yen from the end of the previous
consolidated fiscal year.
(Net assets)
Net assets in the 2nd quarter totaled 19.852 billion yen, an increase of 349 million yen from the end of theprevious fiscal year. This was mainly the result of a 223 million yen increase in retained earnings and a 62 million yen increase in marketable securities valuation difference.

5

As a result, equity ratio was 72.8% (73.7% 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 December 2023 remain unchanged from those announced on February 14, 2023 in the December 2022 Financial Statement.

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 2nd quarter consolidated fiscal period(June 30th, 2023)

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

6,445
3,250
1,555
1,049
0
12,301

575
474
97
1
222
1,371

593
475
81
0
253
1,404

1,574
461
188
99
2,323

2,034
676
2,378
95
5,185

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

968
6,491
9
821
(11)
8,278
14,86927,170(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 2nd quarter consolidated fiscal period(June 30th , 2023)

1,398
957
－
35
601
285
999
666
4,944

1,238
853
157
36
492
406
1,027
982
5,195

－
74
1,061
20
745
－
1,901
6,846

186
37
1,224
3
647
22
2,121
7,317

2,785
3,362
15,199(2,017)
19,3292,785
3,376
15,423(1,990)19,594

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

97
108
(23)
183
56
19
19,852
27,170(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
Equity Losses of Affiliated Companies
OthersTotal non-operating expenses
Ordinary profits
Special losses
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 2nd quarter consolidated cumulative period(From January 1st, 2022
To June 30th, 2022)
8,164
4,051
4,113
2,753
1,360

This 2nd quarter consolidated
cumulative period(From January 1st, 2023
To June 30th, 2023)
9,818
4,960
4,858
3,713
1,144

2
517
5
525

3
484
14
502

4
208
65
4
283
1,603

4
210
35
3
253
1,394

0
－
0
1,603
522
1,080
(8)
1,089

9
140
150
1,244
459
784
(4)
789

(Quarterly consolidated statements of comprehensive income)(2nd 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 2nd quarter consolidated cumulative period(From January 1st, 2022
To June 30th, 2022)
1,080This 2nd quarter consolidated
cumulative period(From January 1st, 2023
To June 30th, 2023)
784

－
46
7
53
1,134

62
23
3
88
873

1,142

878

(8)

(4)

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 2nd, 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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