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 2021 3rd Quarter Financial Statement [Japan Standard] (Consolidated)
November 10th, 2021
Listed company name

EM Systems Co., Ltd.

Code No.

4820

URL: http://www.emsystems.co.jp

Representative:(Job title)

President&Representative
Director

Representative for inquiries(Job title)

Managing director in the company,
General Manager of Administration Headquarters

Planned date of subNovember 10th,
Planned starting date of payment
mission of quarterly
2021
of dividends
reportSupplementary explanatory materials created for quarterly financial statement
Quarterly financial results briefing held (For Use by Analysts)

Listed on: Tokyo
Stock Exchange(Name)
Hiromasa Kunimitsu(Name)
Megumi Seki

TEL:
+81(0)6-6397-1888

－
: No
: No

(Amounts of less than 1 million yen rounded down)
1. Consolidated results of December 2021 3rd Quarter Financial Statement (January 1st 2021 through September 30th, 2021)(1) Consolidated management performance (total)
Sales

December 2021
3rd quarter
December 2020
3rd quarter(Note) Comprehensive income

Millionsof yen10,386(% refers to rate of change over the same quarter in the previous year)
Operating profits%－

Millionsof yen1,172－－

December
2021 3rd
Quarter

1,277%

Quarterly net income
belonging to parent
company shareholders
Millions of
%
yen
－
1,251

Ordinary profits－

Millionsof yen
1,762

%
－

－

－

－

－

－

－

Millions of
yen

(－)

December2020 3rd
Quarter－

Millions of
yen

(－)

Quarterly net income per share after
potential stock adjustment
Yen 100ths of a yen
Yen 100ths of a yen
December 2021 3rd quarter
17.60
17.55
December 2020 3rd quarter－－(Note) The “Partial Amendment to the Articles of Incorporation” of the Company was approved at the 37th Ordinary General
Meeting of Shareholders held on June 16, 2020, changing the settlement period from March 31st to December 31st beginningin FY2020. As a result, since the consolidated financial statements for the third quarter of the fiscal year ending December
2020 have not yet been prepared, the percentage change for the same quarter of the previous year and the consolidated operating results (cumulative) for the third quarter of the fiscal year ending December 2020 are not stated.
Quarterly net income per share(2) Consolidated financial position
Total assets
Millions of yen
December 2021 3rd quarter
23,505
December 2020
23,096
December(Refer to) Net capi2021 3rd
18,151tal
Quarter

Net assets

Capital adequacy ratio

Millions of yen
18,252
17,734
Millions of
yen

1

%
77.2
76.4
December 2020
period17,655

Millions of yen

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 2020
–
4.00
–
4.00
December 2021
December 2021
(estimate)(Note)1. Revisions from the last published dividend estimates: None–––

End of term
Yen 100ths of a
yen
6.00

Total
Yen 100ths of a
yen
10.00

6.00

–

3. Estimated consolidated results of December 2021 period (January 1st, 2021 through December 31st, 2021)(% refers to rate of change over the previous term)
Net sales

Full year

Millionsof yen13,974

Operating profit％－

Millionsof yen1,508

Ordinary profit
Millionsof yen
2,017

％
－

％
－

Profit attributable to own- Net income
ers of parent
per share
Millions of
Yen 100ths％
yenof a yen
－
1,357
19.10

(Note) 1. Revisions from the last published forecast of financial results: None

2. Following the approval of the "Partial Amendment to the Articles of Incorporation" at the 37th Ordinary General Meeting of Shareholders held on June 16, 2020, as of the year ending December 2020, thecompany has changed the settlement date from March 31st to December 31st. In addition, domestic subsidiaries with fiscal periods ending on dates other than December 31 st will make a similar change. Accordingly, consolidated performance for the December 2020 period (the duration after the change to thefiscal period closing date) will be calculated based on the nine-month period from April to December forthe company and domestic subsidiaries with fiscal periods closing in March, and based on the twelvemonth period from January to December for overseas subsidiaries with fiscal periods closing in December. Therefore, regarding the consolidated performance forecast for the December 2021 period, the yearon-year rate of change will not be listed for the entire fiscal period.
* 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. : 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)
2. Number of own shares at end of term
3. Average number of shares outstanding
during term (quarterly total)

December 2021
3rd quarter
December 2021
3rd quarter
December 2021
3rd quarter

74,514,800 shares
3,333,417 shares
71,089,094 shares

2

December 2020
periodDecember 2020
periodDecember 2020
3rd quarter

74,514,800 shares
3,478,870 shares－

The company changed the settlement period from March 31st to December 31st beginning in FY2020. As a result, since theconsolidated financial statements for the third quarter of the fiscal year ending December 2020 have not yet been prepared,
average number of shares outstanding during term (quarterly total) are not stated.
* 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 ---------------------------------------- 5(1) Explanation regarding operating results ----------------------------------------------------------------------------------------------------------- 5(2) Explanation regarding financial position----------------------------------------------------------------------------------------------------------- 7(3) Explanation regarding information on future prospects such as forecast of consolidated financial results ------------------ 7
2. QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS AND MAJOR EXPLANATORY NOTES--------------------------- 8(1) Quarterly consolidated balance sheet --------------------------------------------------------------------------------------------------------------- 8(2) Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income ---------10(3) Addendums relating to quarterly consolidated financial statement ----------------------------------------------------------------------12(Explanatory notes regarding prerequisites of going concern)-------------------------------------------------------------------------------12(Explanatory notes for cases of considerable changes in amounts of shareholder's equity)----------------------------------------12(Application of special accounts processing in the creation of the quarterly consolidated financial statement)-------------124

1. Qualitative information relating to this quarter's financial results
Following the approval of the "Partial Amendment to the Articles of Incorporation" at the 37th Ordinary General Meeting of Shareholders held on June 16, 2020, our Group changed its fiscal year-end from March 31 to
December 31 from the fiscal year ending December 31, 2020.
For this reason, the comparisons in each segment are based on the reference figures calculated for the ninemonths from April to December 2020 as the year over year basis.
(1) Explanation regarding operating results
Although vaccination against COVID-19 is progressing, Japan's economy was still in a difficult situation during
the 3rd quarter of the current consolidated cumulative period due to recurring declarations of a state of emergency and semi-state of emergency measures as a result of an increase in the cases of infection, and it remains
difficult to predict the future at this point in time.
In the pharmacy industry, a major customer of our Group, the number of prescriptions has decreased becauseof prolonged prescription due to the spread of COVID-19, and the environment surrounding small and mediumsized pharmacies is becoming more severe. In the medical (clinic) industry, the number of patients has decreased due to restrictions in consultations of medical care subjects, and in the long-term care/welfare-relatedindustry, changes in the business environment of our customers, such as an increase of temporary closures in
outpatient care and short-term accommodation facilities, have had a considerable impact on our Group.
Under such circumstances, our Group has been focusing on web activities in addition to its usual business activities while taking proper infection control measures.
In addition, as part of the introduction of ICT in the medical field, we have started to roll out a system that enables My Number or health insurance card chips to be used at medical institution reception desks for checking
credentials online. Our Group has received orders from a large number of customers as planned, and the system has been in full operation since October, and we are gradually expanding the installation of the online qualification confirmation system for our customers.
As a result, our business results for this 3rd quarter consolidated cumulative period was 10,386 million yen insales (a 7.5% increase compared to the same period in the previous year), 1,172million yen in operating profits(a 13.0% increase), 1,762million yen in ordinary profits (a 19.9%increase), and 1,251 million yen in this quarterly net income belonging to parent company shareholders (a 17.8% increase).
Both initial sales and billed sales increased on a Year-over-Year basis as a result of an increase in the numberof existing systems sold. Furthermore, an expansion in the introduction of online qualification confirmation systems is contributing to sales. On the other hand, Capitalization following the release of the “MAPs series” hasdecreased, and manufacturing costs have increased due to higher maintenance costs.
On July 9, 2021, our Group received its primary judgment results regarding compliance with listing maintenance criteria in a new market category from Tokyo Stock Exchange, Inc., confirming that it meets the listing
maintenance criteria for the new Prime Market category. Based on this result, the board of directors decided
that the Company will apply to be listed in the Prime Market. Aiming to further promote understanding of theCompany's management philosophy to all stakeholders amid the demand for major changes, our Group has
newly rebuilt its brand identity to increase corporate value and growth, and has decided to adopt its new "#TX
Thanks Transformation" brand logo.
By segment results are as follows.
(ITS Systems and Related Business for Pharmacies)
In the IT systems and related business for pharmacies, initial sales are increasing due to an expansion in the
introduction of online qualification confirmation systems and an increase in the number of existing systemsales. Billing sales are also increasing as the number of customers’ increases. Consequently, IT Systems andRelated Business for Pharmacies for this 3rd quarter consolidated cumulative period resulted in 8,016million
yen in sales (a 7.6% increase compared with the same period in the previous year) and 1,197million yen in operating profits (a 10.9% increase).
In addition, our Group will launch its "EM Analysis Support" business support BI tool and "MAPs Option
BunseQI" service in October to provide total support with workload reduction and operation of pharmacies.

5To meet the increase in contactless needs and online medication guidance due to the spread of COVID-19,
our Group will start independently selling "Followcare", a tool for online medication guidance and follow-ups
during periods of administration, provided by Good Cycle System Inc.
(IT Systems and Related Business for Clinics)
Regarding IT systems and related business for Clinics, in order to expand the sales channels nationwide, weare taking a wide range of approaches by utilizing web marketing in addition to the conventional method of developing the clinic market.
In addition to increase in initial sales due to full-scale expansion of online qualification confirmation packs
and the increase in sales of existing systems, the number of customers has steadily increased due to the introduction of “MAPs for CLINIC,” etc., and billing sales are also steadily increasing.
Consequently, IT Systems and Related Business for Clinics for this 3rd quarter consolidated cumulative period resulted in1,427 million yen in sales (a 10.1% increase compared to the same period in the previous year)and 20million yen in operating profits (previous period: 35million yen in operating losses ).
In addition, to meet the various needs of medical institutions that require a transition to ICT, our Group has
released the cloud-based electronic medical record software “MAPs for CLINIC with ORCA” that links with Japan Medical Association standard receipt software ORCA provided by ORCA Management Organization Co.,Ltd.
(IT Systems and Related Business for Long-term Care/Welfare)In the IT systems and related business for long-term care/welfare, in addition to the introduction of “Sukoyaka Sun” by large-scale facilities, billing sales are steadily increasing due to an increase in the number of licenses.
On the other hand, following the revision of the Long-term Care Act, we have invested in new system development personnel to respond to the revision, resulting in a temporary decrease in new development of "MAPs for
NURSING CARE" and increased manufacturing costs.
IT Systems and Related Business for Long-term Care/Welfare for this 3rd quarter consolidated cumulative period resulted in 430 million yen in sales (a 14.4% increase compared with the same period in the previous year )and 35million yen in operating losses (previous period: 14million yen in operating losses).
(Other businesses)
Due to the decrease in the number of prescriptions caused by the spread of COVID-19, both the sales andoperating income of the pharmacy business decreased, and following the change in the operating system ofrental conference rooms, rental conference room sales are no longer included in the calculation of sales and operating income of other businesses, and both sales and operating income decreased. In addition, SG&A expenses
increased due to the initial development of the cashless business.
Consequently, other business for this 3rd quarter consolidated cumulative period resulted in 519 million yen
in sales (a 9.8% decrease compared to the same period in the previous year) and 33million yen in operating
losses (previous period: 7million yen in operating losses ).
（Segmented sales and operating profits and losses are the amounts before elimination of internal transactions
between segments.）
As a sports activity support initiative, our Group is supporting a tennis academy (Ai Love All Tennis Academy) that trains professional players competing in the world and young female players who are aiming to become professionals, and has signed a contract with professional tennis players. We hope to share the enjoyment
and excitement of tennis with the world, and promote communication among people in our Group to improvetheir physical and mental health level.
In addition, our Group is considering ways to realize its efforts at the SDGs Committee. Materiality was recently resolved at the board of directors meeting. Going forward, we will set more specific goals and announce
them as soon as the details of our initiatives are ready.

6

(2) Explanation regarding financial position(Assets)
Current assets at the end of 3rd quarter of the current consolidated fiscal year were 11,155 million yen, a decrease of 114 million yen from the end of the previous consolidated fiscal year. This was mainly due to an increase in merchandise and products of 388 million yen, and a decrease in cash deposits of 378 million yen. Fixed
assets were 12, 350million yen, an increase of 445 million yen from the end of the previous consolidated fiscal
year. This was mainly due to an increase in investment securities of 688 million yen.
As a result, total assets were 23,505 million yen, an increase of 409 million yen from the end of the previous consolidated fiscal year.
(Liabilities)
Current liabilities at the end of 3rd quarter of the current consolidated fiscal year were 3,361 million yen, a decrease of 114 million yen from the end of the previous consolidated fiscal year. This was mainly the result of anincrease in other current liabilities of 204 million yen, due to an increase in accrued corporate tax of 180 million
yen, a decrease in Notes payable and accounts payable of 140 million yen, a decrease in unearned income of 92
million yen. Fixed liabilities were 1,891 million yen, an increase of 5 million yen from the end of the previous
consolidated fiscal year. This was mainly due to an increase in retirement benefit liability of 44 million yen anda decrease of 35 million yen in product warranty reserves.
As a result, total liabilities were 5,253 million yen, a decrease of 109 million yen from the end of the previous
consolidated fiscal year.
(Net assets)
Net assets at the end of 3rd quarter of the current consolidated fiscal year were 18, 252 million yen, an increaseof 518 million yen from the end of the previous consolidated fiscal year. This was mainly due to attributable toowners of 1,251 million, a decrease in payment of dividend of 710 million yen and an increase in non-controllinginterests of 22 million yen.
As a result, equity ratio was 77.2% (76.4% at the end of the whole 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 2021 are unchanged from the information
provided in estimated Consolidated Results for the Full Year announced via the Summary of Accounts that was
released on February 10, 2021. In the future, if it becomes necessary to revise estimated results, we plan to disclose said revisions immediately.

7

2. Quarterly consolidated financial statements and major explanatory notes(1) Quarterly consolidated balance sheet(Units: millions of yen)Previous consolidated
fiscal year
(December 31st, 2020)
AssetsCurrent assets
Cash on hand and in banks
Notes and accounts receivable
Merchandise and products
Raw materials and supplies
Short-term loans receivable
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

8This 3rd quarter consolidated fiscal period(September 30th, 2021)

7,982
2,004
248
0
968
(14)
11,191

7,604
1,919
637
0
5
988
(0)
11,155

660
525
13
5
237
1,441

619
474
5
2
100
186
1,389

1,532
555
383
119
2,591

1,467
626
310
112
2,516

9
6,938
120
805
(0)
7,872
11,90523,096

697
6,796
128
834
(12)
8,444
12,35023,505

(Units: millions of yen)Previous consolidated
fiscal year
(December 31st, 2020)
Liabilities
Current liabilities
Notes and accounts payable
Accounts payable-other
Lease obligations
Income taxes payable, etc.
Provision for bonuses
Provision for points card certificates
OthersTotal current liabilities
Fixed liabilities

Lease obligations

Net defined benefit liability
Provision for product warranties
Long-term guarantee deposits
Total 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
Minority interests
Total net assets
Total liabilities and net assets

9This 3rd quarter consolidated fiscal period(September 30th, 2021)

833
506
24
176
344
3
1,586
3,476

693
416
5
356
502
4
1,382
3,361

5
1,065
86
728
1,885
5,362

2
1,109
51
728
1,891
5,253

2,785
3,283
13,216(1,610)17,675

2,785
3,347
13,538(1,539)18,131

31
(51)
(19)
55
23
17,73423,096

56
(36)
20
55
46
18,252
23,505

(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
Dividend 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
Total special profits
Special losses
Losses on sale of fixed assets
Losses on disposal of fixed assets
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

This 3rd quarter consolidated
cumulative period(From January 1st, 2021
To September 30th, 2021)
10,386
5,367
5,018
3,845
1,172
1
190
754
7
953
0
349
14
363
1,762
－
－
－
1
1
1,760
522
1,237
(13)
1,251

10

(Quarterly consolidated statements of comprehensive income)(3rd 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

This 3rd quarter consolidated
cumulative period(From January 1st, 2021
To September 30th, 2021)
1,237
24
15
39
1,277
1,290
(13)

11

(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 2nd quarter consolidated cumulative period.

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.

12