Financial Results Overview
for the Fiscal Year Ended
September 30, 2017 (FY2017)
November 20, 2017
EPS Holdings, Inc.

Copyright © 2017 EPS Holdings All rights reserved.

Disclaimer

The earnings forecasts and future predictions described in the document are made by our company basedon the available information at the time of the creation of the document, and contain potential risks anduncertainties. Therefore, due to various factors such as changes in the business environment, it is possiblethat actual earnings results may differ greatly from the future outlook mentioned or described herein.
We have approached the creation of this document with caution, to ensure correctness. However, it is nota guarantee of completeness. Our company cannot be held liable for any problems or damages arising as aresult of the information in this document. We appreciate your understanding.

■For inquiries about this document
Investor Relations, Corporate Communication
Department, EPS Holdings, Inc.
Phone: +81-3-5684-7873
e-mail: ir@eps.co.jp

Copyright © 2017 EPS Holdings All rights reserved.

2

Overview for FY2017
Financial Results

Copyright © 2017 EPS Holdings All rights reserved.

3

FY2017： EPS Group Business Areas*as of September 30, 2017

Domestic BusinessCRO

EPS, EPS Associate, EPMate, e-Trial

SMO

EP-SOGO, Sogo Rinsho MédéfiCSO

EP-PharmaLine

CPO

EP-CRSU, EPI (Suzhou), EPI Yamanashi* EPI Japan Co., Ltd. and J-CRSU Co., Ltd. merged on April 1, 2017

Overseas Business

GlobalResearchEPS International Holdings etc.

China

EPS EKISHIN, EPS (China) etc.

OthersEPBiz

Copyright © 2017 EPS Holdings All rights reserved.

4

FY2017: Consolidated Financial Results
FY2016
Results

FY2017 Initial
Forecast

FY2017
Results

Net Sales

52,70358,00060,482

Operating
Income

6,224

6,500

7,591

（Ratio）(11.8%)(11.2%)(12.6%)

Recurring
Profit

6,589

6,500

7,809

（Ratio）(12.5%)(11.2%)(12.9%)

Profitattributable toowners ofparent

3,966

3,500

4,663

（Ratio）(7.5%)(6.0%)(7.7%)

Copyright © 2017 EPS Holdings All rights reserved.

（￥ million）

Versus planChange YoY

YoY

104.3%

7,778

14.8%

116.8%

1,366

22.0%

120.1%

1,220

18.5%

133.2%

697

17.6%

5

FY2017: Financial Results by Business Segment（￥ million）

CRO

Domestic

SMO
CSO
CPO

OverseasGR
China

HD Others

Total

Net Sales
Operating
Income(%)

Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)

Copyright © 2017 EPS Holdings All rights reserved.

FY2016 Results

FY2017 Results

26,895
6,099
10,961
610
7,509
426
1,552
-120
4,060
183
3,957
-31
-2,231-943
52,7036,224

28,0406,326
14,016
1,698
8,303
486
2,388
316
4,816
-536
6,199
251
-3,280-950
60,4827,591(22.7%)(5.6%)(5.7%)-(4.5%)--(11.8%)

Change YoY(22.6%)(12.1%)(5.9%)(13.2%)-(4.0%)-(12.6%)

YoY

1,145

4.3%

227

3.7%

3,055

27.9%

1,087

178.1%

793

10.6%

59

14.1%

836

53.9%

436

-

756

18.6%

-720

-

2,241

56.6%

283

-

-1,049

-

-7

-

7,778

14.8%

1,366

22.0%

6

FY2017: Financial Results by Business Segment（Includes management support fees)

CRO

Domestic

SMO
CSO

CPO

OverseasGR
China

HD Others

Total

Net Sales
Operating
Income(%)

Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)

Copyright © 2017 EPS Holdings All rights reserved.

（￥ million）

FY2016 Results

FY2017 Results

26,895
5,660
10,961
424
7,509
304
1,552
-143
4,060
133
3,957
-101
-2,231-53
52,7036,224

28,0405,819
14,016
1,463
8,303
344
2,388
287
4,816
-612
6,199
176
-3,280114
60,4827,591(21.0%)(3.9%)(4.0%)-(3.3%)-(11.8%)

Change YoY(20.8%)(10.4%)(4.1%)(12.0%)-(2.8%)-(12.6%)

YoY

1,145

4.3%

159

2.8%

3,055

27.9%

1,039

245.0%

793

10.6%

40

13.2%

836

53.9%

430

-

756

18.6%

-745

-

2,241

56.6%

277

-

-1,049

-

167

-

7,778

14.8%

1,366

22.0%

7

FY2017: Overview of Financial Results
1. Overview of Financial Results (Versus Initial Budget)
Net sales: Net sales rose nearly ¥8.0 billion due to an almost evenly balanced contribution
from internal and external growth. M&A and related initiatives: SMO, China, CPO)
Operating income : Highest-ever operating income since our founding atop higher earnings,
despite a loss posted by GR. The higher earnings mainly reflected earnings growthin segments other than GR, particularly SMO and CPO.

2. Overview by Business Segment (Key Initiatives)

CRO

Strengthened project management and promoted collaboration with clients

SMO

Developed a framework for realizing integration synergies and strengthened the oncology field

CSO

Actively promoted outbound call center services, steadily executed PMS services

CPO

Established a solid operating foundation, along with capturing new projects
and improving utilization rates

G R

Proactively captured global testing business, including Asian business

China

Benefited from the positive impacts of the acquisition of Shanghai Hua Xin High
Biotechnology Co., Ltd. and promoted the business partnership with SUZUKEN Co., Ltd.

Copyright © 2017 EPS Holdings All rights reserved.

8

FY2018 Annual Budget

Copyright © 2017 EPS Holdings All rights reserved.

9

FY2018: EPS Group Business Areas*as of October 31, 2017

Domestic BusinessCRO

EPS, EPS Associate, EPMate, e-Trial

SMO

EP-SOGO, EXAM CO., LTD.

* Consolidated on October 2, 2017

CSO

EP-PharmaLine

CPO

EP-CRSU, EPI Yamanashi, Sogo Rinsho Médéfi

Overseas Business

GlobalResearchEPS International Holdings etc.

China

EPS EKISHIN, EPS (China) etc.
EPS International (China), EPS Tigermed (Suzhou)

OthersEPBiz

Copyright © 2017 EPS Holdings All rights reserved.

10

FY2018 Annual Budget (Consolidated)（￥ million）

FY2017
Results

FY2018 Forecast

ChangeYoY

YoY

Net Sales

60,48266,000

5,518

9.1%

Operating Income

7,591

6,850

-741

-9.8%

（Ratio）(12.6%)(10.4%)

Recurring Profit

7,809

7,000

-809

-10.4%（Ratio）(12.9%)(10.6%)

Profit attributable toowners of parent

4,663

4,200

-463

-9.9%

（Ratio）(7.7%)(6.4%)

Copyright © 2017 EPS Holdings All rights reserved.

11

FY2018 Annual Budget by Segment
FY2017 Results

CRO

Domestic

SMO
CSO
CPO

OverseasGR

Net Sales
Operating
Income(%)

Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)
Net Sales

China

HD Others

Total

Operating
Income(%)
Net Sales
Operating
Income(%)
Net Sales
Operating
Income(%)

Copyright © 2017 EPS Holdings All rights reserved.

28,0406,326
14,016
1,698
8,303
486
2,388
316
4,816
-536
6,199
251
-3,280-950
60,482
7,591（￥ million）

FY2018 Forecast(22.6%)(12.1%)(5.9%)(13.2%)-(4.0%)(12.6%)

28,7005,775
15,250
1,580
8,400
550
2,600
180
4,100
-200
10,700-15-3,750-1,02066,0006,850

Change YoY

YoY(20.1%)

660
-551
1,234

2.4%
-8.7%
8.8%

(10.4%)

-118

-6.9%

97

1.2%

64

13.2%

212

8.9%

-136

-43.0%-716-14.9%

336

-

4,501

72.6%

-266

-

-470

-

-70

-

5,518

9.1%

741

-9.8%

(6.5%)(6.9%)-(10.4%)

12

FY2018 Annual Budget and Initiatives
1. Outline of Annual Budget
Net sales: Net sales are projected to increase, driven by internal growth (CRO, CSO, CPO) andexternal growth (M&A activity at SMO). Significant top-line growth is projected at
China business in view of the transition to gross recognition of revenue.
Operating income : Operating income is projected to decrease by a combined ¥0.8 billion for the
CRO and SMO businesses. However, overseas, operating income will benefit
from growth of ¥0.1 billion in higher-earning projects and the execution ofproactive upfront investments.

2. Outline by Segment (Main Initiatives)

CRO
SMO
CSO
CPO
G R
China

Reinforce the management structure and execute upfront investments to expand
new services
Integrate EXAM CO., LTD. at an early stage, along with strengthening sales andexploring new businesses
Build an organization with a view to nurturing professionals, along with expanding andexecuting new services
Develop product and supply systems, strengthen project management capabilities
Reinforce the operating foundation centered on Japan and advance sales activities
Strengthen the foundation of the new system (products business and specialized
services business)

Copyright © 2017 EPS Holdings All rights reserved.

13

Dividend Per ShareTerm
End Dividend
Year-end

Mid-term
Dividend
Interim
Dividend

Payout ratio
Ratio
Payout

¥50

40%

34.9%
31.0%

¥40

27.0%

30.0

¥30

25.0
¥20

¥10

29.7%

18.0

18.0

10.0

10.0

8.0

15.0

8.0

SpecialDividend
¥8

27.5%

30%

25.0
(Plan)

20%

20.0

13.0
10%

10.0

10.0

12.0

¥0

0%

2014/92015/92016/92017/92018/9*The dividend conditions shown in the above graph reflects retroactive revised data that takes into considering the effect of stock
splits.
Copyright © 2017 EPS Holdings All rights reserved.

14

EPS
Group Management Structure

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15

FY2018: EPS Group Management StructureManagement Structure (Business Management)
EPS Holdings
Representative Director: Yan
TashiroTanakaBusiness Segment

CRO

SMO

CSO

CPO

TashiroNishizuka

YamadaGlobalResearch

China(Segment CEO)TanakaCopyright © 2017 EPS Holdings All rights reserved.

Tanaka(concurrent)

Yan

16

Corporate Management Structure (As of October 1)
Board of Directors

Board of Audit

Yan (CEO)Internal
Audit Office

Risk Management
Committee
Tashiro (CRO)Business
Strategy
Department

Human
Resources
Strategy
Department

Marketing
Strategy
Department

Corporate
Communication
Department

Accounting& Finance
Department

Tanaka
(CBO)

Yan
(CHO)

Tashiro(CMO)

Sekitani（CCO)

Orihashi

Copyright © 2017 EPS Holdings All rights reserved.

Director in charge

Koyama(CFO)

Administration
Department

Corporate
Management
OfficeTakayaOrihashi(CAO) Director in charge
Yamada17

Matrix Management
Business segments: Independent andautonomous management

Cooperation

TensionHoldings:
Systematicmanagement

Balance

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18

Business Introduction of
EPS Group andInitiatives Ahead

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19

CRO BusinessInitiatives as a Leading CRO Company

1. Continue to expand existing businesses
・Strengthen project management
・Enhance quality and specialization
2. Brush up the organization
・Strengthen management personnel
・Promote the delegation of authority
3. New initiatives to drive further growth・Medical Information Strategy Office: Establish new unit
Construction of a Platform for Intractable Diseases: Participate as a joint research
partner in research projects led by the Japan Agency for Medical Research andDevelopment (AMED)

・Promote the regenerative medicine business・Support and collaboration to build the China Clinical Data Center(collaboration with Hangzhou Tigermed Consulting Co., Ltd.)・Participate in the Research Complex Promotion Program (Tonomachi site)
Seek to contribute to the program through the planning, implementation, andoperation of training programs for young researchers and companies
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20

SMO Business

Evolving into a firm No.1 SMO company

1. Maintain and expand the operating foundation
・Enhance profitability by revising contracted facilities
・Generate profits by driving growth in the oncology field, an area ofexpertise

2. Strengthen the organization and human resources
・Appoint human resources with a view to strengthening themanagement level
・Upgrade the skills of Clinical Research Coordinators (CRCs)

3. Drive further growth through M&As and other initiatives
・Realize synergies through integration with EXAM at an early stage
・Capture the industry’s top market share (40% or above)
・Create new services
Copyright © 2017 EPS Holdings All rights reserved.

21

SMO Business

Trends in the SMO Market(Annual trends in relevant industry bodies and companies with FY2010 as the base year)
160%

140%

153%

National Hospital Organization
Japan Association of Site Management Organizations
EP-SOGO
136%
130%
117%

120%

129%

129%

115%

109%
100%

130%

105%

101%

100%

100%

93%
96%

96%
90%

80%

60%
FY2010FY2011

Copyright © 2017 EPS Group All rights reserved.

FY2012FY2013

FY2014FY2015FY2016FY201722

SMO Business

SMO Market Environment

Trends in Japan Association of Site Management Organizations andin-hospital CRC market(estimates by EPS Holdings, Inc.)

In-hospital CRCs(¥ million)
80,000

Therapy Activation
Five-Year Plan
2007-2011

Clinical Research and Therapy
Activation Five-Year Plan 2012
¥64.2
billion70,000SMOs¥66.5
billion¥66.0
billion26,00029,000¥64.8
billion¥67.2
billion60,00023,00050,00020,00021,00032,00032,00040,000（40 companies）（40 companies ）（38 companies）（38 companies）（35 companies）

30,00020,00035,32535,635

2010

2011

41,27940,56337,02732,78235,214

2012

2013

2014

2015

2016

10,0000(Remarks)
If the SMO market is considered to be the market for CRC services, the size of the market would amount toapproximately ¥65.0 billion, including in-hospital CRC services. On this basis, the market has remained largely flat.
Copyright © 2017 EPS Group All rights reserved.

23

CSO Business

Key Initiatives

1. Revise and promote products (services)

・Promote selection and concentration based on verification of
profitability and growth potential
・Realign the sales organization to strengthen our ability to expand
products (services)

2. Strengthen the organization

Form an organizational foundation befitting a group of expert staff farahead of competitors
・Recruit expert staff in call centers and BPO services to bolster eachdepartment
・Enhance specialization of BPO products (services), including Drug
Information (DI) services
・Promote a multi-channel approach based on MR Direct

3. External growth・Advance M&A activity and alliances

Copyright © 2017 EPS Holdings All rights reserved.

24

CPO Business

Aspiring to Be a Leading Company inClinical Research Outsourcing Services

1. Develop product and supply systems
To pursue quality and growth in step with changes in the external
environment, we will:
・Arrange product lineups and develop new products in step with laws
and regulations and customer needs.
・Streamline the service supply system and enhance quality

2. Strengthen management capabilities (in anticipation of a 500strong workforce)・Strengthen project management capabilities
・Strengthen the segment management structure

Copyright © 2017 EPS Holdings All rights reserved.

25

Global Research Business

Key Initiatives

Business (Operations realigned into three regions)Japan:
Strengthen monitoring services
Secure higher orders by seeking to balance the difficulty of projects and theamount and quality of resources allocated to them
Asia-Pacific:
Review and plan resource allocations aimed at optimizing sites andresources
China:
Strengthen collaboration with China business and establish a joint businessplatform

Management
Japan: Unify and centralize GR’s management control functions at Tokyo
Asia-Pacific: Reconfigure with a view to streamlining the management
structure
China: Develop the framework through management by China business
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26

Global Research Business

Service regions

●

●

●
●

● ●Taiwan● Philippines●●

Indonesia●●

Copyright © 2017 EPS Holdings All rights reserved.

27

Management Structure(Business Management)

China business

SUZUKEN Co., Ltd.

ESP Holdings, Inc.
65%

35%

EKISHIN Group
Business Management

Corporate Management

EPS EKISHIN (Tokyo)
EKISHIN (China) (Suzhou)

Products business(Pharmaceuticals andmedical devices)

Specialized
services

International
trading business

Investment
business

SupportSupportSupportSupportSupport business
Management of companyowned buildings, etc.

Copyright © 2017 EPS Holdings All rights reserved.

EKISHIN Vocational Training
SchoolTshinghua Health Fund

28

China Business

Products Business (Pharmaceuticals)

Shanghai Hua Xin High Biotechnology Co., Ltd.

(Recombinant Human Interferon α2bVaginal Effervescent Capsules)

Copyright © 2017 EPS Holdings All rights reserved.

29

China Business

Products Business (Medical Devices)

ET MEDICAL TECHNOLOGY (SUZHOU) CO., LTD. (Sales)

ET MEDICAL TECHNOLOGY (NANTONG) CO., LTD.
(Manufacturing)

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30

China BusinessSpecialized Service (CRO+) Business
EPSInternational(China)(Shanghai regional holding
company)

上海日新(centered on CRO andmonitoring)
30%
Investment

北京科創(1)EKISHIN Tigermed (Suzhou)(Data services: Japanese)(2)EKISHIN Tigermed (Jiaxing)(Data services: English)(3)EKISHIN Tigermed (Nantong)(Big Data)

49%

Other

51%
40%

Investment

HangzhouTigermed

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31

China Business

Key Initiatives

Business(1) Strengthen the existing products business + introduce new products(2) Redevelop the operating foundation for CRO+(3) Investment + support ⇒ Incubation

Corporate(1) Advance the Matrix Management Structure (vertical and horizontal
dimensions)(2) Create a corporate culture through a fusion of Japanese and Chinese
cultures(3) Identify and nurture the next generation of human resources

Copyright © 2017 EPS Holdings All rights reserved.

32

Mid-Term Business Plan
（Vision30）

Copyright © 2017 EPS Holdings All rights reserved.

33

Positioning of FY2017 in the Mid-Term Business Plan
（ ¥ billion）

FY2017FY2016
Results

BudgetResults

Achievement
rate

Net sales

52.7

58.0

60.4

Operatingincome

6.2

6.5

7.5

(Ratio)

11.8%

11.2%

12.６％

Number of
employees

4,890

-

5,210

Overseas ratio

15.1％

19.1%

18.2％

10.0%

14.8%

CAGR

FY2019Forecasts

FY2021
Forecasts

104%

75.0

100.0

116%

9.0

12.5

12.0%

12.5%
8,000

25.3%

30.0%
13.7%

Solid progress in the firstyear of the Mid-term
Business Plan
Copyright © 2017 EPS Holdings All rights reserved.

34

Trend in Net Sales (from FY2007 to FY2021)
100.0

100.0

(¥ billion)

90.0
80.0

75.0
66.0

70.0

60.4
60.0

52.7

50.0
40.0

29.4

30.0
20.0

17.9

32.0

35.2 37.5

41.8

45.2

21.1 23.5

10.0
0.0
FY2007

FY2008FY2009FY2010

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FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY202135

Trend in Operating Income and Operating Margin(from FY2007 to FY2021)
Operating
営業利益
income(¥ billion)

Operating
営業利益率
margin

140
14

12.5

20%

120
12
100
10

9.5
7.5

880
660
440

2.9

3.4

5.1
4.8
4.0 4.4

5.4

6.2

6.8

15%

10%

4.4
3.4

5%

220
0%

00
2007/9 2008/9 2009/9 2010/9 2011/9 2012/9 2013/9 2014/9 2015/9 2016/9 2017/9 2018/9 2019/9 2020/9 2021/9

Copyright © 2017 EPS Holdings All rights reserved.

36

Objectives of Vision30
1. Establish a position as a Solutions Provider in the Healthcare
Industry (Solutions provided as infrastructure)
2. Build up business scale to compete effectively with the major
global players and strengthen global business expansion
3. Extend independent and autonomous business management
and promote Group management
4. Make the EPS Way transparent and instill it in the organization(build a corporate culture)
5. Nurture the next generation of management leaders
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37

Thank you for your attention.
Please direct inquiries to Investor Relations, Corporate Communication
Department, EPS Holdings, Inc.
Phone: +81-3-5684-7873 ／ Email：ir@eps.co.jp

Copyright © 2017 EPS Holdings All rights reserved.