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 1st Quarter Financial Statement [Japan Standard] (Consolidated)
May 11th, 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 subPlanned starting date of payment
mission of quarterly
May 11th, 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

–
: No
: No

(Amounts of less than 1 million yen rounded down)
1. Consolidated results of December 2023 1st Quarter Financial Statement (January 1st 2023 through March 31st, 2023)(1) Consolidated management performance (total) (% refers to rate of change over the same quarter in the previous year)
Sales

December 2023
1st quarter
December 2022
1st quarter(Note) Comprehensive income

Millionsof yen4,877

Operating profits%
22.4

Millionsof yen
851

3,985

21.0

December
2023 1st
Quarter

535%

Ordinary profits

25.4

Millionsof yen
961

16.6

679

110.3

824

83.5

563

88.2

Millions of
yen

(8.7)

December
2022 1st
Quarter

586

Millions of
yen

83.7

Quarterly net income per share
Yen 100ths of a yen
7.24
7.93

December 2023 1st quarter
December 2022 1st quarter%

Quarterly net income
belonging to parent
company shareholders
Millions of
%
yen
(9.3)
511

Quarterly net income per share after
potential stock adjustment
Yen 100ths of a yen
7.22
7.91

(2) Consolidated financial position

December 2023 1st quarter
December 2022
December(Refer to) Net
2023 1st
capitalQuarter

Total assets

Net assets

Millions of yen
26,684
26,349Millions of yen
19,46819,503

19,390Millions ofyen

Capital adequacy
ratio

December
2022 period

%
72.7
73.7
19,424

Net assets per
share
Yen 100ths of a yen
274.47274.94
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–
December 2023
December 2023
5.00
(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

12.00

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 salesFirst half

Millionsof yen9,342

Full year

19,608Operating profit

14.4

Millionsof yen
1,033

15.9

2,827

％

Ordinary profit(24.0)

Millionsof yen1,290(19.5)

18.0

3,333

19.4

％

％

Profit attributable to own- Net income
ers of parent
per share
Millions of
Yen 100ths％
yenof a yen827(24.0)
11.72
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
1st quarter
December 2023
1st quarter
December 2023
1st quarter

74,514,800 shares
3,865,949 shares
70,649,018 shares

December 2022
periodDecember 2022
periodDecember 2022
1st quarter

74,514,800 shares
3,865,149 shares
71,092,683 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 consolidated fiscal year, the Japanese economy showed signs of recovery in some areas, mainly interms of personal consumption, as the country sought to engage in economic activities while still preventing new
COVID-19 infections. However, uncertainty regarding international affairs, instabilities in the European andUS financial markets due to sustained interest rate hikes, and sharp fluctuations in the yen exchange rate resulted in soaring energy costs and raw material prices, and the impact of these rising prices on households andsupply-side constraints continue to require attention.
In the medical industry, our main clients, medical institutions, etc. continue to introduce systems that enable
online verification of eligibility information using one’s Individual Number or health insurance card at the reception counter, and the pace of introduction is accelerating as this becomes mandatory from April 2023 (transitional measures apply until September 2023) due to revisions to the medical system enacted in April 2022. In
addition, use of these online eligibility verification systems began in January 2023, and the commencement ofelectronic processing of prescriptions, which are currently paper-based, will gradually increase the number ofapplications for installation and expand deployment of the system.
In addition, special demand for the replacement of PCs due to the end of extended support for Windows 8.1
has also proceeded ahead of schedule, contributing to an increase in sales.
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.
Furthermore, on February 27, the Group resolved to turn Good Cycle Systems Inc. (hereinafter “GCS Inc.”),an equity-method affiliate, into a consolidated subsidiary. The Group and GCS Inc. collaborated to jointly develop “MAPs for PHARMACY DX,” a system well-suited to our new era, and moving forward, we will strengthen
cooperation within the Group to accelerate the development of systems and related businesses for pharmacies
and improve our competitiveness. Moreover, GCS Inc.’s conversion into a consolidated subsidiary resulted in aloss on step acquisition.
As a result, our business results for this 1st quarter consolidated cumulative period was 4,877 million yen insales (a 22.4% increase compared to the same period in the previous year), 851 million yen in operating profits(a 25.4% increase), 961 million yen in ordinary profits (a 16.6% increase), and 511 million yen in this quarterly
net income belonging to parent company shareholders (a 9.3% 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.
By turning GCS Inc. into a consolidated subsidiary, we were able to further increase the Group’s market
share and maintain a firm position in the pharmacy segment.
Consequently, IT Systems and Related Business for Pharmacies for this 1st quarter consolidated cumulative
period resulted in 3,783 million yen in sales (a 20.1% increase compared with the same period in the previousyear) and 892 million yen in operating profits (a 18.9% increase).
(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.
Selling and administrative expenses have increased due to initiatives aimed at expanding our share of themarket for clinic systems. However, in addition to expanded incorporation of the online eligibility verification
system, initial sales increased significantly due to an increase in sales of “MAPs for CLINIC,” which also resulted in steady growth in billing sales in the clinic segment.

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Consequently, IT Systems and Related Business for Clinics for this 1st quarter consolidated cumulative period resulted in 791 million yen in sales (a 47.0% increase compared to the same period in the previous year)
and 51 million yen in operating profits (previous period: 95 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 sales and administrative 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 1st quarter consolidated
cumulative period resulted in 140 million yen in sales (a 2.9% increase compared with the same period in theprevious year) and 108 million yen in operating losses (previous period: 27 million yen in operating profits)(Other businesses)
Sales have increased due to the expansion of our subsidiary cashless business, operating income in the black
due to improvements in revenue and profits.
Consequently, other business for this 1st quarter consolidated cumulative period resulted in 187 million yen
in sales (a 8.7% increase compared to the same period in the previous year) and million yen in operating profits(previous period: 9 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 this 1st quarter consolidated accounting period were 13.950 billion yen, an increase of 101 million yen from the end of the previous consolidated fiscal year. This was mainly due to a 660million-yen increase in goods and products, and a 574 million yen decrease in other current assets. Fixed assets
were 12.734 billion yen, an increase of 233 million yen from the end of the previous consolidated fiscal year. Thiswas mainly due to a 508 million yen increase in goodwill resulting from turning GCS Inc. into a consolidated
subsidiary, and a 368 million yen decrease in investment securities.
As a result, total assets were 26.684 million yen, an increase of 335 million yen from the end of the previous
consolidated fiscal year
(Liabilities)
Current liabilities at the end of this 1st quarter consolidated accounting period were 5.209 billion yen, an increase of 264 million yen from the end of the previous consolidated fiscal year. This was mainly due to a decrease of 293 million yen in income taxes payable, etc. resulting from the payment of income taxes. Fixed liabilities were 2.006 billion yen, an increase of 104 million yen from the end of the previous consolidated fiscal year.
This was mainly due to a 222 million yen increase in long-term debts and a 97 million yen decrease in long-term
guarantee deposits received.
As a result, total liabilities were 7.216 million yen, an increase of 369 million yen from the end of the previous
consolidated fiscal year.
(Net assets)
Net assets at the end of this 1st quarter consolidated accounting period came to 19,468 million yen, a decreaseof 34 million yen compared to the end of the previous consolidated fiscal year. This was primarily due to retained earnings decreased by 59 million yen.
As a result, equity ratio was 72.7% (73.7% at the end of the previous consolidated fiscal year).

5(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 1st quarter consolidated fiscal period(March 31st, 2023)

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

8,163
3,494
1,744
548
(1)
13,950

575
474
97
1
222
1,371

586
474
89
1
256
1,407

1,574
461
188
99
2,323

1,816
559
696
96
3,169

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

895
6,470
9
794
(11)
8,157
12,734
26,684

(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 1st quarter consolidated fiscal period(March 31st , 2023)

1,398
957
－
35
601
285
999
666
4,944

1,691
735
182
36
307
462
1,096
697
5,209

－
74
1,061
20
745
－
1,901
6,846

222
37
1,075
18
647
5
2,006
7,216

2,785
3,362
15,199(2,017)
19,3292,785
3,362
15,139(2,017)
19,270

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

49
94
(23)
120
56
21
19,46826,684

(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)

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 1st quarter consolidated cumulative period(From January 1st, 2022
To March 31st, 2022)
3,985
1,930
2,054
1,375
679

This 1st quarter consolidated
cumulative period(From January 1st, 2023
To March 31st, 2023)
4,877
2,232
2,645
1,793
851

0
258
3
263

1
251
5
258

4
110
－
2
117
824

3
108
35
1
148
961

0
－
0
824
265
559
(4)
563

0
140
141
820
310
509
(1)
511

(Quarterly consolidated statements of comprehensive income)(1st 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 1st quarter consolidated cumulative period(From January 1st, 2022
To March 31st, 2022)
559

This 1st quarter consolidated
cumulative period(From January 1st, 2023
To March 31st, 2023)
509

－
23
3
27
586

13
9
3
26
535

591

537

(4)

(1)

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 1st, 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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