EPS Holdings, Inc.

Financial Results
Overview
for the Fiscal Year
Ended September 30,
2019 (FY2019)

November 25, 2019
EPS Holdings, Inc.
Chairman & CEO
Yan HaoContents

1

Overview for FY2019 Financial Results

2

FY2020 Full-Year Plan

3

Revision of Mid-Term Business Plan

４

Shareholder Returns

Copyright © 2019 EPS All rights reserved.

2

1

Overview for FY2019 Financial Results

Copyright © 2019 EPS All rights reserved.

3

FY2019： EPS Group Business Areas
As of September 2019

DomesticBusinessCRO

EPS, ACM(CRO)EPS Associate

SMO

EP-SOGO

ES-Link

CSO

EP-PharmaLine, ACM(CSO)

NRO

EP-CRSU, EP-TechnoOverseas
BusinessGlobalResearch

China
OthersEPS International
Holdings
EPS EKISHIN,EPS (China)

EP Yamanashi
3 Chinese data service companies

Chinese CRO operating companies
Other overseas operating companies
Shanghai Hua Xin
ET MEDICAL TECHNOLOGY(SUZHOU) CO., LTD.
Other Chinese operating companies

EPBiz (Shared Services)

Copyright © 2019 EPS All rights reserved.

Notes: 1. From March 2019, AC MEDICAL has been included in the CROand CSO segments due to an M&A deal.
2. From FY2019, former e-Trial has been reclassified from the CRO tothe NRO segment and was renamed as EP-Techno upon absorbing
All Right Technology in April 2019.

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FY2019 Consolidated Financial Results（￥million）

FY2018Results

FY2019FY2019 Initial
Revised Plan
Forecast(Announced August 1)

FY2019Results

Percent
Percent
Change vs Change vsInitial
Revised
ForecastPlan

Net Sales 65,769 72,000 68,100 69,009 －4.2％
Operating
Income4.9%

7,193 7,200 5,700 6,279 －12.8％ 10.2％ －12.7%（Ratio） (10.9%)
Recurring
Profit1.3％

Percent
ChangeYoY(10.0%)(8.4%)(9.1%)

7,436 7,350 5,800 6,271（Ratio） (11.3%)(10.2%)(8.5%)

4,388 4,700 3,000 3,633（Ratio）(6.7%)

Copyright © 2019 EPS All rights reserved.

(4.4%)

8.1％－15.7%(9.1%)

ProfitAttributabletoOwners ofParent(6.5%)－14.7％－22.7％ 21.1％ －17.2%(5.3%)
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FY2019 Financial Results by Business Segment
FY2019 InitialForecast

CRO
Domestic

SMO
CSO

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

ＮRO Operating

Income (%)

OverseasGRChina

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

FY2019Results

Percent
Change vsInitial
Forecast

Percent
Change vs
Revised
Plan

－8.7％

1.2％

31,65028,9086,300 (19.9%)

5,031 (17.4%) －20.1％

14,30014,3391,450 (10.1%)8,500
406 (4.8%)
6,000355 (5.9%)
4,500
10 (0.2%)
11,280130 (1.2%)（￥million）

Percent
ChangeYoY

0.3%

2.3％ －20.6%

0.3％

0.3％

0.3%

1,679 (11.7%)

15.8％

8.3％

32.3%

9,399

10.6％

0.7％

20.3%

20.4％

1.9％

27.3%

－2.9％

－1.2％

117.9%

20.6％

7.0％

41.3%

489

(5.2%)

5,829
428(7.3%)

3,990－3－11.3％

8.7％ －19.3%－－－

11,543

2.3％

－3.8％

4.1%

381

(3.3%) 193.1％－4.8％

214.9％(－)

Notes: 1. The CRO segment in the earnings report (kessan tanshin) includes the NRO segment.
2. The calculation of segment operating income(1) Does not include management advisory fees for the holding company, andCopyright © 2019 EPS All rights reserved.
6(2) Includes amortization of goodwill and outsourcing expenses for shared services.

FY2019 Overview of Financial Results
Overview of Consolidated Financial Results
Net sales
・ Net sales decreased by 4.2% as strong performance in CSO versus
the initial forecast was offset by a significant shortfall in CRO andGR・ Net sales in GR were down year on year, mainly reflecting theimpact of losing an order for a major project・ Net sales in the other segments increased due to strong
performance and the effect of M&As
Operating income
・ Operating income was 12.8% lower than the initial forecast due toa significant shortfall in CRO
・ In other segments, operating income increased, generallyexceeding the forecast
・ Year on year, operating income decreased, as strong performancein other segments was unable to absorb the decrease in the CROsegment
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7

FY2019 Summary of Segment Operating Results

CRONet sales and operating income fell short of initial forecasts

・ Loss of a large planned project, cancellation of inquiry projects, cancellation of trials inprogress, and delayed starting times in monitoring services
・ Sluggish orders received for new projects and shortage of outsourcing projects
・ Delay in response of sales and management, leading to a drop in capacity utilization rates

SMO

Achieved sales target, exceeded initial forecast
for operating income

・ Strong performance in proposal-based sales activities achieved record-high new orders of¥20.0 billion
・ Number of case studies due to strengthening of the project management system
・ Enhanced productivity through organization of internal systems and resource optimizationin each region, etc.

CSO

Net sales and operating income exceeded initial forecasts

・ Rebuilt links within operation systems to strengthen supply capability
・ Expanded the existing operation scope for call centers and BPO to grow earnings
・ Steady performance in academic materials production support through expanded scope ofapplication for sales information provision guidelines and so forth

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8

FY2019 Summary of Segment Operating Results

NRO

Net sales slightly short of target, operating income exceeded
initial forecast

・ Smaller scale clinical research projects and delays in progress of undertaken
outsourcing projects
・ Maintained capacity utilization rates due to steady orders received forinvestigator-initiated clinical trials
・ In pharmaceutical IT, firm external sales of electronic data capture (EDC) systems
such as e-CatchGRNet sales and operating income fell short of initial forecasts

・ Intensified competition with global CROs, loss of large projects, and delays in development
・ Started rebuilding CRO business in China
・ Reduced losses by optimizing other overseas bases

China

Net sales and operating income exceeded initial forecasts

・ Strong sales in the pharmaceutical business・ Sales of medical devices grew with progress in opening up the market
・ Organized the product portfolio and concentrated management resources on profitableproducts

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9FY2019 Topics (M&A, Alliances)・CRO and CSO Acquisition of AC MEDICAL INC. (concluded on February 28, 2019)
For the purpose of expanding the Group’s customer base, enhancing resources, and sharing technologicalknowledge
Acquisition of AC MEDICAL as a company that provides services with high added value with the blending of
human resources and IT

・NROAcquisition of All Right Technology Inc. (concluded on November 1, 2018)

Integrated specialized clinical research services and medical IT services to build a platform to support nextgeneration pharmaceutical development

・GR

Strategic partnership with George Clinical Pty Ltd (Australia)(April 2019)Concluded a strategic partnership with George Clinical Pty Ltd to pursue strengthened supply capability and to
expand orders in the Asia-Pacific region

・EKISHIN

Owned of Suzuken (Shenzhen) in the group

Built a value chain for spreading products made by Japanese pharmaceutical companies more efficiently andeffectively in China by strengthening functions for academic sales promotion and distribution control in China

・Capital participation in CRO (TTC) for health foods
Entry into undeveloped clinical testing market for health foods, etc.
Development of new customers (markets) and relationship building through sales activities targeting food-relatedcompanies
Copyright © 2019 EPS All rights reserved.

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2

FY2020 Full-Year Plan

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11

FY2020： EPS Group Business Areas

DomesticBusinessCRO

EPS, ACM(CRO: merger planned)

SMO

EP-SOGOCSO

EP-PharmaLine,ACM(CRO: merger planned)

NRO

Yamanashi
EP-CRSU, EP-Techno 3EPChinese
data service companies

Overseas
Business

GlobalResearch

EPS International
Holdings(absorption-type merger with the former
EPS Associates Co., Ltd.)China

EPS EKISHIN,EPS (China)

OthersEPBiz (Shared Services)

Copyright © 2019 EPS All rights reserved.

ES-Link

Chinese CRO operating companies
Other overseas operating companies
Shanghai Hua Xin
ET MEDICAL TECHNOLOGY (SUZHOU)
CO., LTD.
Suzuken (Shenzhen)
Other Chinese operating companies

Notes: 1. EPS Associates merged with EPS International in October 2019
2. Suzuken (Shenzhen) was added from the current fiscal year

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FY2020 Consolidated Annual Budget（￥million）

FY2019Results

FY2020
Forecast

ChangeYoY

Percent
Change YoY

Net Sales

69,00972,500

3,491

5.1%

Operating
Income6,279

6,170（Ratio）(9.1%)(8.5%)

－109

－1.7％

Recurring
Profit6,271

6,320（Ratio）(9.1%)

0.8％

ProfitAttributable to
Owners ofParent(8.7%)

49

3,633

3,540(4.9%)－2.6％（Ratio）(5.3%)－93

Copyright © 2019 EPS All rights reserved.

13

FY2020 Annual Budget by Segment（￥million）

FY2019ResultsCRO
Domestic

SMO
CSO
NRO

OverseasGR
China

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

FY2020 Forecast

28,60028,9085,031(17.4%)

15,00014,3391,679(11.7%)(5.2%)(7.3%)(－)

450(6.9%)50(1.0%)12,000

11,543381(5.9%)

5,100

3,990
－3

641
6,500

5,829
428

1,757 (11.7%)
10,8009,399
489

5,168 (18.1%)(3.3%)

150(1.3%)

ChangeYoY

Percent
Change YoY

－308

－1.1%

137

2.7%

661

4.6%

78

4.6%

1,401

14.9%

152

31.1%

671

11.5%

22

5.1%

1,110

27.8%

53－

457

4.0%

－231

－60.6％

Notes: 1. The CRO segment in the earnings report (kessan tanshin) includes the NRO segment.
2. The calculation of segment operating income(1) Does not include management advisory fees for the holding company, and(2) Includes amortization of goodwill and outsourcing expenses for shared services. 14
Copyright © 2019 EPS All rights reserved.
3. EPS Associates that was in CRO in the previous fiscal year was transferred to GR

FY2020 Full-Year Plan Overview
1. Overview of the Plan

Net Sales ：Internal growth in each segment through strengthening sales capabilities
A decline in sales in the CRO segment is due to the impact of changes in its
constituent companies (EPS Associates)
Operating ：Advance cost structure reforms in response to changes in the business environment
IncomeStrengthen management structure and execute upfront investments as needed
Plan for level results year on year

2. Overview for Each Segment
Strengthen sales capability and promote cost management andCRO operation streamlining

Effective use of resources by executing regional strategies andSMO facility strategies

CSO Integrate unique services and differentiate with other companies
NRO Integrate specialized services and pharmaceutical IT services
GR Build a solid platform spanning Japan, Asia and China

China Expand business platform for products businessesCopyright © 2019 EPS All rights reserved.

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3

Revision of Mid-Term Business Plan

Copyright © 2019 EPS All rights reserved.

16

Revision of Mid-Term Business Plan
(Consolidated)（￥million）

Firstyear

Secondyear

Thirdyear

Fourthyear

Fifthyear

FY2017FY2018FY2019FY2020

FY2021Results

Results

Results

Forecast
for 2020/9

Initialforecast

Net sale

60,482

65,76969,00972,500100,000

80,000Operatingincome

7,591

7,193

6,279

6,170

12,5008,000

OperatingMargin

12.6％

10.9％

9.1％

8.5％

12.5％

10.0％

Copyright © 2019 EPS All rights reserved.

Revised plan

17Revision of Mid-Term Business Plan
(By Segment)（￥million）

Third year

Fourth year

Fifth year

FY2019FY2020

FY2021Results

Percent
ChangeYoY

Forecast

Percent
ChangeYoY

Forecast

Percent
ChangeYoY

CRO28,9080.3％

28,600－1.1％

30,000

4.9％

SMO

14,3390.3％

15,0004.6％

16,000

6.7％

CSO

9,399

20.3％

10,80014.9％

12,500

15.7％

NRO

5,829

117.9%

6,500

11.5%

8,000

23.1%

GR

3,990

－19.3％

5,100

27.8％

6,500

27.5％

China

11,543

4.1％

12,0004.0％

14,00016.7％

Copyright © 2019 EPS All rights reserved.

18

Key Initiatives (1)Expand and Strengthen Core Businesses
・ Proactive sales activities bringing together front lineand management, segments and holding company
・ Front-line driven improvement of existing services
and development of new products
・ Promote project management leveraging
Group strengths
・ Strengthen forecast and result management
through links with front line
・ Rejuvenate and invigorate segment management
teams
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19

Key Initiatives (2)Explore New Services and New Businesses
・ Commercialize high-end services, including
formulating development plans
・ Develop new business model・ Build a collaboration network in the academic
domain and digitalize clinical studies and clinicalresearch・ Develop and create peripheral business throughutilization of human resources
・ M&As and capital participation focused on businesssynergies
Copyright © 2019 EPS All rights reserved.

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Key Initiatives (3)Advance Platform Development inOverseas Business
GR・ Strengthen support systems for overseas clinical trials of Japanesecustomers
・ Support for Japanese market entry of overseas customers, particularlyventures (including Chinese companies)
・ Platform development for operations and management systems

China・ Stable operation of existing products businesses(pharmaceuticals and medical devices)
・ Evolve the specialist trading company concept to bridge the Japaneseand Chinese healthcare industries
・ Build a joint management structure for Japan and China
Copyright © 2019 EPS All rights reserved.

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Key Initiatives (4)Establish Group Management Structure
・ Strengthen business management under “OneEPS”
in the holding company
・ Reform cost structure and improve administrationand management functionality through personnel
system reforms and other means
・ Strengthen education of the next generation ofmanagement leaders

Copyright © 2019 EPS All rights reserved.

22

FY2020 Business Management Structure【Vertical Dimension】

EPS Holdings

Segment
CEOSegment
Vice CEOCROSMO

CSO

NROGlobalResearch

China

AndoNagaoka

Nishizuka

YamadaTanakaYanSasa

Yamamoto

GotoSong

Hayakawa

Tashiro・ Rejuvenate management at the segment level by appointing
young, next-generation personnel
・ Divide segments into business units of appropriate size dedicatedto daily operations, and control them
Copyright © 2019 EPS All rights reserved.

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FY2020 Business Management Structure【Horizontal Dimension】

Board of Directors

Board of Audit

Chief Executive Officer (CEO)Yan Hao, Chairman

President andCorporate Officer Tanaka

Vice Chairman andCorporate Officer Tashiro

Internal
Audit OfficeVice President andCorporate Officer Sekitani

Platform Business
Promotion
Headquarters(No. 1 CBO)

Quality Control
Promotion
Department

Exploration
Business
Promotion
Headquarter(No. 2 CBO)

Facility
Management
Department

PublicRelations
Division

Human
Resources
Strategy
Headquarters(CHO)

CorporateCommunications
Department(CCO)

GeneralAffairs
Department(CAO)

Finance andAccounting
Department(CFO)

Management
SupportDepartment(CPO)

Nagaoka

Abe

Okoso

Orihashi

ShimadaSekitani

Hirosaki

Sekitani

KoyamaJike・ The holding company will function as the central command point for
the OneEPS structure, strengthening the planning, adjustment, andpromotion functions for the entire group
・ Proactively appoint next-generation personnel from segments toconcurrent positions
Copyright © 2019 EPS All rights reserved.

24

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

Copyright © 2019 EPS All rights reserved.

25

4Shareholder Returns

Copyright © 2019 EPS All rights reserved.

26

Dividend Per Share¥50

Term End Dividend

Mid-term Dividend(Consolidated payout ratio)

27.1％

¥40

¥0

15.0

30.0

29.0

20.0

10.0

10.0

2016/92017/9Copyright © 2019 EPS All rights reserved.

SpecialDividend ¥4¥10CommemorativeSpecialDividend ¥5 Dividend ¥2¥2025.0

30.3％

SpecialDividend ¥8¥3029.7％

34.6％

28.0

36.2％

28.0(Plan)

17.0

15.0

15.0

12.0

13.0

13.0

2018/92019/92020/927

Total Return Ratio(￥million, ratio in %)4,500

111.2％

4,000

75.5％

3,500
3,000

2,790

2,500

1,988

53.8％

2,000

1,011

1,500
1,000
500
0

31.6％
684
Sep-15
2015/9Copyright © 2019 EPS All rights reserved.

1,122

Sep-16
2016/9

30.6％

1,385

1,323

1,250

2017年9月
2017/92018年9月
2018/92019年9月
2019/9Total dividend amountTreasury share repurchase28

Thank you for your attention.
Please direct inquiries toInvestor Relations, Finance and Accounting Department,
EPS Holdings, Inc.
Phone: +81-3-5684-7873 / Email：ir@eps.co.jp

EPS Holdings, Inc.

Copyright © 2019 EPS All rights reserved.

29

Disclaimer
The earnings forecasts and future predictions described in the document are made by ourcompany based on the available information at the time of the creation of the document,
and contain potential risks and uncertainties. Therefore, due to various factors such aschanges in the business environment, it is possible that 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 not a guarantee of completeness. Our company cannot be held liable forany problems or damages arising as a result of the information in this document. We
appreciate your understanding.
■For inquiries about this document
Investor Relations, Finance and Accounting
Department, EPS Holdings, Inc.
Phone: +81-3-5684-7873
e-mail: ir@eps.co.jp

Copyright © 2019 EPS All rights reserved.

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