Consolidated Earnings Report for the First Six Months of Fiscal 2019
[Japanese GAAP]May 8, 2019
Company Name:EPS Holdings, Inc.
Stock Listing:First Section, Tokyo Stock Exchange
Code Number:
4282
URL:
http://www.eps-holdings.co.jp
Representative Director:
Yan Hao, Chairman & CEO
Inquiries:
Kazuki Sekitani, Director, Managing Corporate OfficerTel:+81-3-5684-7873
Filing of Quarterly Securities Report:
May 15, 2019
Scheduled Payment of Dividends:
June 3, 2019
Supplementary explanatory materials prepared:
Yes
Explanatory meeting:Yes (for institutional investors and analysts)(¥ millions are rounded
down)
1. Consolidated Results for the First Six Months of Fiscal 2019 (October 1, 2018 to March 31, 2019)(1) Consolidated Operating Results(¥ millions; percentage figures represent year-on-yearchanges)
First Six Months

Net sales

Operating income

Profit attributable toowners of parent

Recurring profit

Fiscal 201933,5012.6%
3,179(17.0)%
3,275(15.8)%
2,065(17.2)%
Fiscal 2018
32,666
7.5%
3,828(17.4)%
3,891(18.5)%
2,495(2.3)%
Note: Comprehensive income: March 31, 2019: ¥2,592 million [0.2%], March 31, 2018: ¥2,586 million [(27.3)%]

First Six Months

Profitper share (¥)

Fiscal 2019
Fiscal 2018

45.61
54.08

Profitper share (diluted)(¥)－－(2) Consolidated Financial Position(¥ millions)
Total assets

Equity ratio(%)

Net assets

March 31, 2019
67,80947,96065.8
September 30, 2018
65,40546,743
66.6
Notes: 1. Equity: March 31, 2019: ¥44,605 million, September 30, 2018: ¥43,534 million
2. The Company has adopted “Partial Amendments to Accounting Standard for Tax Effect Accounting, etc.”(Accounting Standards Board of Japan (ASBJ) Statement No. 28, February 16, 2018) from the beginning of thethree months ended December 31, 2018. Accordingly, the Company has retroactively applied theseamendments to total assets and the equity ratio for the fiscal year ended September 2018.

2.

Dividends
Dividend per share (¥)
First Quarter

Second Quarter

Third Quarter

Fiscal 2018

－

12.00

－

Fiscal 2019

－

13.00

Year End

Fiscal 2019 (forecast)－
Notes: 1. Revisions to recent dividend forecasts: None
2. The year-end dividend for fiscal 2018 includes a special dividend of 4 yen per share.

Full Year

17.00

29.00

15.00

28.00

3.

Forecast of Consolidated Results for Fiscal 2019 (October 1, 2018 to September 30, 2019)(¥ millions; percentage figures represent year-on-year changes)
Profit attributable toProfitNet sales
Operating income
Recurring profit
owners of parent
per share (¥)
Full year
72,000 9.5%
7,200
0.1%
7,350
(1.2)%
4,700
7.1%
102.39Notes: 1. Revisions to recent consolidated results forecasts: None
2. The Company allotted 642,000 shares of treasury stock to the shareholders of All Right Technology Inc. as
consideration for a share exchange to convert All Right Technology Inc. into a wholly owned subsidiary on theeffective date of November 1, 2018. As a result, profit per share in the forecasts of consolidated results for theyear ending September 30, 2019 has been calculated based on the number of shares reflecting the
aforementioned share exchange.
*Notes(1) Changes to important subsidiaries during the first three months changes in specified subsidiaries resulting in revised
scope of consolidation: None
(2) Application of special accounting methods in the preparation of quarterly consolidated financial statements: None
(3) Changes in accounting principles, accounting estimates and restatements
a. Changes in accounting policies in conjunction with revisions to accounting standards: Noneb. Other changes: Nonec. Changes in accounting estimates: None
d. Restatements: None
(4) Number of shares issued (common stock)a. Number of shares issued at end of
Fiscal 2019, 2Q end
period (including treasury stock):

46,311,389 Fiscal 2018 end

46,311,389

b. Number of treasury stock at end of
Fiscal 2019, 2Q end
period:1,456,991 Fiscal 2018 end

1,049,754

c. Average number of stock during the
Fiscal 2019, 2Q
period:45,281,728 Fiscal 2018, 2Q

46,143,103

Note: The number of treasury shares at end of period (Fiscal 2019, 2Q end) includes 93,090 shares of the Company held
by EPS EKISHIN Co., Ltd.
* This financial report is outside the scope of the quarterly audit reviews performed by certified public accountants or
auditing firms.
* Explanation concerning the appropriate use of financial forecasts and other notable matters.
Earnings forecasts and other forward-looking statements in this report are based on data currently available tomanagement and certain assumptions that management believes are reasonable. Actual results may differ materiallyfrom these statements for various reasons.

Table of Contents of Supplementary Materials
1. Qualitative Information Concerning Quarterly Financial Statements and Other Matters ·····································2(1) Explanation Regarding Consolidated Operating Results ·····································································2(2) Explanation Concerning Forward-Looking Statements such as Consolidated Financial Forecasts ·····················3
2. Quarterly Consolidated Financial Statements ······················································································4(1) Quarterly Consolidated Balance Sheets ·························································································4(2) Quarterly Consolidated Statements of Income and Comprehensive Income ···············································6
Quarterly Consolidated Statements of Income(The six months ended March 31, 2019) ···················································································6
Quarterly Consolidated Comprehensive Income(The six months ended March 31, 2019) ·················································································7(3) Notes Concerning Quarterly Consolidated Financial Statements ··························································8(Notes Concerning the Going Concern Assumption) ······································································8(Note Concerning Significant Changes in the Amount of Shareholders’ Equity) ···································· 8(Segment Information) ·········································································································8
3. Supplementary Information ·········································································································9(1) Main Data Related to Consolidated Cash Flows ···············································································9(2) Orders Received ··················································································································911. Qualitative Information Concerning Quarterly Financial Statements and Other Matters(1) Explanation Regarding Consolidated Operating Results
Overview of Operating Results for the Six Months Ended March 31, 2019(¥ millions)
The First Six Months of
Fiscal 2018
Amount%The First Six Months of
Fiscal 2019
Amount%ChangeAmount%Net sales

32,666100.0

33,501

100.0

834

2.6

Operating income

3,828

11.7

3,179

9.5

(648)

(17.0)

Recurring profit

3,891

11.9

3,275

9.8

(615)

(15.8)

Profit attributableto owners ofparent

2,495

7.6

2,065

6.2

(430)

(17.2)

Forward-looking statements contained in this document are based on a judgment of operating results for the six months
ended March 31, 2019.
In the six months ended March 31, 2019, the EPS Group posted consolidated net sales of ¥33,501 million, an increase of
2.6% year on year. Despite sluggish growth in new projects awarded in the Global Research Business, the overall increasein net sales was mainly due to steady sales increases in other segments. Consolidated operating income declined by 17.0%
year on year to ¥3,179 million, due to a high profit margin reflecting favorable progress on projects made in the same
period of the previous fiscal year in the CRO Business, along with delays in winning projects in the Global ResearchBusiness.
Operational segment are outlined as follows.
Segment Overview
The Group primarily operates businesses in the following five segments (three domestic segments and two overseas
segments).
(¥ millions)
The First Six
The First Six
Months ofMonths of
ChangeFiscal 2018
Fiscal 2019234
Net sales
15,64915,884
CRO
Operating income
3,705
2,950
(754)
Domestic
Net sales
7,033
7,123
90
SMO
Business
312
Operating income
503
815
Net sales
3,903
4,070
166
CSO
(8)
Operating income
177
168
Net sales
2,660
2,002
(657)
GlobalResearch(216)
Operating income (loss)
120(96)
Overseas
EKISHIN
600
Net
sales
5,184
5,785
Business(China)285
Operating income (loss)
(144)
140
Business
1) CRO BusinessIn the CRO Business, the Group conducts operations based on the following structure:a. Contract-based clinical study and post-marketing surveillance (PMS) services: EPS Corporation1, EPS Associates Co.,
Ltd., and AC MEDICAL INC.1
b. Clinical research services: EP- CRSU Co., Ltd. and Sogo Rinsho Médéfi Co., Ltd.
c. On-site CRO services: EPMate Co., Ltd.
d. Pharmaceutical and medical IT services: e-Trial Co., Ltd. 2 All Right Technology Inc.2
Looking at performance in the CRO Business by service, in clinical study services, net sales and operating income wereslightly below forecasts, due to the impact of cancellations and delays of clinical trials and related issues. In PMS andrelated services, net sales and operating income were both higher than forecast, as projects currently under way performed
steadily. In on-site CRO services, net sales fell short of the forecast due to delays in securing resources, but operating
income surpassed the forecast primarily due to appropriate management of costs.
In clinical research services and pharmaceutical and medical IT services, results were largely in line with forecasts.

2

In the CRO Business, AC MEDICAL INC., which conducts businesses that integrate its abundant human resources andIT, has joined the Group. As a result, the Group can expect to fortify its data science platform, which is a core competenceof AC MEDICAL INC., along with further enhancing high-quality services and supply capabilities.
As a result, net sales were ¥15,884 million, an increase of ¥234 million, or 1.5%, year on year. Operating income was¥2,950 million, a decrease of ¥754 million, or 20.4% year on year. This decrease was due to a rebound from a high profit
margin reflecting favorable progress on projects made in the same period of the previous fiscal year; milestones progressing
faster than planned in the fourth quarter of the previous fiscal year; and the impact of increased amortization of goodwill.
2) SMO Business
The SMO Business is undertaken by EP-SOGO Co., Ltd.
In this business, the Group worked to strengthen the project management system and enhance business performance bybolstering the sales structure through such means as fully expanding proposal-based sales activities. Efforts were also madeto enhance the quality control system. As a result, in the SMO business, net sales rose ¥90 million, or 1.3%, to ¥7,123
million. Operating income was ¥815 million, an increase of ¥312 million, or 62.0%, year on year. This increase was mainly
due to cost-cutting measures including appropriate personnel placements.
3) CSO Business
The CSO Business is undertaken by EP-PharmaLine Co., Ltd., AC MEDICAL INC.1, and ES-Link Co., Ltd.
There were no notable changes in the environment for CMR (Contract Medical Representative) services forpharmaceuticals, and overall conditions did not improve. Nevertheless, the academic materials production and BPO
businesses trended favorably at EP-PharmaLine Co., Ltd. Other businesses, including CMR services for pharmaceuticals,
performed largely in line with forecasts.
ES-Link Co., Ltd., a joint venture between the Group and SUZUKEN Co., Ltd., seeks to strengthen sales of new services
through the fusion of marketing specialists (MS) and call centers with BPO. The joint venture is focusing on winning
projects based on inquiries received from customers.
Moreover, in March 2019, the Group integrated the UPSHE (CSO) business of AC MEDICAL INC. into the Group’s CSO
Business. With this step, the Group will deliver high-quality services by leveraging the abundant human resources of AC
MEDICAL INC.
As a result, net sales were ¥4,070 million, an increase of ¥166 million, or 4.3%, year on year, and operating income was¥168 million, a decrease of ¥8 million, or 4.7%, year on year.
4) Global Research Business
The Global Research Business comprises EPS International Holdings Co., Ltd. and its overseas group companies. Thisbusiness, which encompasses the CRO business in China, is primarily carried out in the Asia-Pacific region.
The number of global clinical trials in the Asia-Pacific region has been increasing. However, net sales and operating income
both were below forecasts, partly due to sluggish growth in newly awarded projects, which reflected intensifiedcompetition with global CROs. The Group will work to strengthen sales and enhance the quality control system, as wellas rigorously managing costs and aiming for stable performance.
As a result, net sales were ¥2,002 million, a decrease of ¥657 million, or 24.7%, year on year. Due partly to the impact oftransferring the CRO business and related services in China that had been conducted by the EKISHIN (China) Business inthe previous fiscal year, the Group recorded an operating loss of ¥96 million compared to operating income of ¥120 million
in the same period of the previous fiscal year.
5) EKISHIN (China) Business
The EKISHIN (China) Business is undertaken by the two regional holding companies EPS EKISHIN Co., Ltd. and EPS(China) Co., Ltd., and related Group companies in China.
In this business, under a solid capital and business partnership with SUZUKEN Co., Ltd., the Group provides four typesof services, specifically product-related services centered on pharmaceuticals and medical devices, investment-related
services, international trading-related services and peripheral support services. The Group is working to further expand
earnings as a specialist trading company in the healthcare industry linking Japan and China.
In the product-related services, steady progress in the continuous development of existing markets and cultivation of new
regional markets contributed to increased earnings.
As a result, from a performance aspect, net sales were ¥5,785 million, up ¥600 million, or 11.6%, year on year, andoperating income was ¥140 million compared to an operating loss of ¥140 million in the previous fiscal year.
*1 On February 28, 2019, the Company acquired all of the issued shares of AC MEDICAL INC., and incorporated
each of its businesses into the CRO segment and CSO segment. In addition, on April 1, 2019, EPS Corporation
absorbed EPMate Co., Ltd. through a merger.
*2 On April 1, 2019, e-Trial Co., Ltd. absorbed All Right Technology Inc. through a merger, and was renamed as
EP-Techno Co., Ltd.
(2) Explanation Concerning Forward-Looking Statements such as Consolidated Financial Forecasts
There have been no changes to the consolidated financial forecasts announced in the financial report for the fiscal year
ended September 30, 2018 issued on November 7, 2018.

3

2. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets
As of September 30, 2018
(Previous Fiscal Year-End)
AssetsCurrent assets:
Cash and time deposits
Notes and accounts receivable - tradeMarketable securities
Merchandise and finished goods
Work in process
Other current assets
Less: Allowance for doubtful accounts
Total current assets
Fixed assets:
Property, plant and equipment
Intangible fixed assets:
Goodwill
Other intangible fixed assets
Total intangible fixed assets
Investments and other assets:
Investment securities
Lease and guarantee deposits
Other investments and other assets
Less: Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

4(¥ millions)
As of March 31, 2019(End of the First Six Months)

17,857
15,746
1,357
849
1,473
3,094
(51)
40,326

17,916
16,608
1,231
905
1,637
3,096
(50)
41,345

4,892

5,222

6,629
773
7,402

7,380
918
8,298

5,999
1,867
5,815
(898)
12,78425,07865,405

5,773
2,012
6,054
(898)
12,942
26,46367,809(¥ millions)

Liabilities
Current liabilities:
Notes and accounts payable - trade
Short-term loans
Current portion of long-term loans payable
Income taxes payable
Allowance for employees’ bonuses
Provision for loss on order received
Other current liabilities
Total current liabilities
Non-current liabilities:
Long-term debt
Allowance for directors’ and corporate auditors’
retirement benefits
Net defined benefit liability
Asset retirement obligations
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity:
Capital stock
Additional paid-in capital
Retained earnings
Treasury common stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

5

As of September 30, 2018
(Previous Fiscal Year-End)As of March 31, 2019(End of the First Six Months)

456
65
602
1,251
2,732
242
9,237
14,587

834
565
645
1,351
2,941
216
9,270
15,825

918

684

453

378

1,428
556
716
4,073
18,661

1,407
619
932
4,022
19,8483,888
13,601
26,347(2,167)
41,6703,888
13,69027,643(2,803)42,418

1,012
861
(9)
1,864
3,209
46,74365,405

1,374
817
(5)
2,186
3,355
47,96067,809(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statements of Income(The six months ended March 31, 2019)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income:Interest income
Dividend income
Gain on insurance cancellation
Other non-operating income
Total non-operating income
Non-operating expenses:
Interest expenses
Foreign exchange losses
Other non-operating expenses
Total non-operating expenses
Recurring profit
Extraordinary gains:
Gain on sales of investment securities
Gain on step acquisitions
Total extraordinary gains
Profit (loss) before income taxes
Income taxes
Income tax adjustment
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

6

First Six Months of
Fiscal 2018
(October 1, 2017
to March 31, 2018)
32,666
21,107
11,558
7,729
3,828(¥ millions)First Six Months of
Fiscal 2019
(October 1, 2018
to March 31, 2019)33,501
21,542
11,958
8,778
3,179

19
23
31
85
159

51
23
63
20
158

9
81
6
97
3,891

7
39
14
62
3,275

－
－
－
3,891
1,408
(17)
1,390
2,500
4
2,495

263
198
461
3,737
1,357
102
1,460
2,277
211
2,065

Quarterly Consolidated Comprehensive Income(The six months ended March 31, 2018)

ProfitOther comprehensive income:
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

7

First Six Months of
Fiscal 2018
(October 1, 2017
to March 31, 2018)
2,500(¥ millions)First Six Months of
Fiscal 2019
(October 1, 2018
to March 31, 2019)
2,277

243
(94)
(62)

362
(51)
4

(0)

0

86
2,586

314
2,592

2,582

2,387

4

204

(3) Notes Concerning Quarterly Consolidated Financial Statements(Notes Concerning the Going Concern Assumption)
None(Note Concerning Significant Changes in the Amount of Shareholders’ Equity)
The Company implemented a share exchange of 642,000 shares of treasury stock for the shareholders of All Right
Technology Inc. to convert All Right Technology Inc. into a wholly owned subsidiary on the effective date of November
1, 2018.
The Company acquired 956,100 of its own shares in accordance with resolutions of the Board of Directors passed on
March 27, 2018 and February 1, 2019.
As a result, treasury shares increased by ¥636 million during the six months ended March 31, 2019, to stand at ¥2,803
million as of March 31, 2019.
(Segment Information)【Segment Information】
I. The First Six Months of Fiscal 2018 (October 1, 2017 to March 31, 2018)
1. Information Concerning Net Sales and Operating Income for Each Segment(¥ millions)

Net sales
Sales to outside
customers
Inter-segment
sales andtransfers
Total
Segment operating
income

CRO

SMO

CSO

GlobalResearch
Business

EKISHIN(China)Business

Others13,978

6,989

3,850

2,660

5,063

123

1,671

43

53

―

120

15,649

7,033

3,903

2,660

3,705

503

177

120

Adjustment(Note 1)

Amount recorded onquarterly consolidated
financial statements

32,666―

32,666704

2,593(2,593)

―

5,184

828

35,260(2,593)32,666

(144)

60

4,421

(593)

3,828

Total

Note: Adjustment of ¥(593) million for segment operating income includes inter-segment transactions of ¥23 million andcorporate expenses not allocated to each reportable segment of ¥(616) million. The main corporate expenses
comprise expenses related to the Company (the holding company).
Ⅱ. The First Six Months of Fiscal 2019 (October 1, 2018 to March 31, 2019)
1. Information Concerning Net Sales and Operating Income for Each Segment(¥ millions)

Net sales
Sales to outside
customers
Inter-segment
sales andtransfers
Total
Segment operating
income

CRO

SMO

CSO

GlobalResearch
Business

EKISHIN(China)Business

Others

14,528

7,092

4,022

1,970

5,765

122

1,356

31

47

32

19

15,884

7,123

4,070

2,002

2,950

815

168

(96)

Adjustment(Note )

Amount recorded onquarterly consolidated
financial statements

33,501―33,501865

2,352(2,352)

―

5,785

987

35,853(2,352)33,501

140

38

4,018

(838)

3,179

Total

Note: Adjustment of ¥(838) million for segment operating income includes inter-segment transactions of ¥10 million andcorporate expenses not allocated to each reportable segment of ¥(849) million. The main corporate expenses
comprise expenses related to the Company (the holding company).

2. Information Concerning Impairment Loss on Fixed Assets or Goodwill in Each Reportable Segment
In the three months ended December 31, 2018, All Right Technology Inc. became a wholly owned subsidiary of theCompany by means of a stock exchange with the Company. As a result, the amount of goodwill in the CRO
Business segment increased by ¥1,164 million.

83. Supplementary Information(1)

Main data related to consolidated cash flows(¥ millions)First Six Months of
Fiscal 2018
(October 1, 2017
to March 31, 2018)

First Six Months of
Fiscal 2019
(October 1, 2018
to March 31, 2019)

Ⅰ. Cash flows from operating activities

1,424

3,190

Ⅱ. Cash flows from investing activities(1,905)(377)

Ⅲ. Cash flows from financing activities(1,075)(2,903)

11(2)

Ⅴ. Net increase (decrease) in cash and cash equivalents(1,544)(92)

Ⅵ. Cash and cash equivalents at beginning of period

23,09718,753―323

21,553

18,984

Depreciation

403

403

Amortization of goodwill

576

621

Effect of exchange rate change on cash and cash
equivalents

Ⅳ.

Increase in cash and cash equivalents due to shareⅦ.
exchange
Ⅷ Cash and cash equivalents at end of period(2)

Orders Received(¥ millions)
The First Six Months of Fiscal 2019
(October 1, 2018 to March 31, 2019)
YoY (%)
Backlog
123.7
43,890

Segment
CRO BusinessNew orders
16,002

SMO Business

8,327

108.2

20,653

110.6

CSO Business

3,974

106.9

9,581

115.9

Global Research Business

2,895

149.2

8,960

113.2

EKISHIN (China) Business

5,785

121.8

74

28.6

120

100.0

6

73.0

119.0

83,166

112.0

Others37,106
Total
Notes: 1. Figures represent sales prices.
2. The above figures do not include consumption taxes.

9

YoY (%)
112.1