Consolidated Financial Report for the First Three Months of Fiscal 2020
[Japanese GAAP]
February 4, 2020
EPS Holdings, Inc.
First Section, Tokyo Stock Exchange4282
http://www.eps-holdings.co.jp
Yan Hao, Chairman & CEO
Kazuki Sekitani, Director, Managing Corporate Officer+81-3-5684-7873
February 12, 2020
－
None
None

Company Name:
Stock Listing:Code Number:
URL:
Representative Director:
Inquiries:
Tel:
Filing of Quarterly Securities Report:
Scheduled Payment of Dividends:
Supplementary explanatory materials prepared:
Explanatory meeting:(¥ millions are rounded down)
1. Consolidated Results for the First Three Months of Fiscal 2020 (October 1, 2019 to December 31, 2019)(1) Consolidated Operating Results(¥ millions; percentage figures represent year-on-year changes)
Profit attributable toFirst Three Months
Net sales
Operating income
Recurring profit
owners of parent
Fiscal 2020
15,053(6.9)%
740(52.9)%
892(43.7)%
491(58.1)%
Fiscal 2019
16,1622.5%
1,571 (12.2)%
1,586(16.1)%
1,172(7.0)%
Note: Comprehensive income: Fiscal 2020, 1Q: ¥74 million [(93.2)%], Fiscal 2019, 1Q: ¥1,093 million [(35.7)%]
First Three Months

Profitper share (¥)

Fiscal 2020
Fiscal 2019

Profitper share (diluted) (¥)

10.97
25.78

－
－

(2) Consolidated Financial Position(¥ millions)
Equity ratio
Total assets
Net assets(%)
December 31, 201965,21147,57568.4
September 30, 2019
66,566
46,33765.1
Notes: Equity: December 31, 2019: ¥44,598 million, September 30, 2019: ¥43,301 million
2.

Dividends
First Quarter

Dividend per share (¥)
Second Quarter
Third Quarter
13.00－

Fiscal 2019－
Fiscal 2020－
Fiscal 2020 (forecast)
Notes: Revisions to recent dividend forecasts: None

13.00

－

Year End
15.00

Full Year
28.00

15.00

28.00

3. Forecast of Consolidated Results for Fiscal 2020 (October 1, 2019 to September 30, 2020)(¥ millions; percentage figures represent year-on-year changes)
Profit attributable toProfitNet sales
Operating income
Recurring profit
owners of parent
per share (¥)
Full year
72,500 5.1%
6,170 (1.7)%
6,320 0.8%
3,540 (2.6)%
77.39
Notes: Revisions to recent consolidated results forecasts: None
* 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)(Shares)a. Number of shares issued at the end of
the period (including treasury stock):

Fiscal 2020, 1Q end

46,311,389 Fiscal 2019 end

46,311,389

b. Number of treasury stock at the end of
the period:

Fiscal 2020, 1Q end

653,547 Fiscal 2019 end

1,971,195c. Average number of stock during the
44,779,375 Fiscal 2019, 1Q
45,476,799
Fiscal 2020, 1Q
period:Note: 93,090 company shares owned by EPS EKISHIN Co., Ltd. have been included in the number of treasury stock at
the end of the period.
* 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 to management
and certain assumptions that management believes are reasonable. Actual results may differ materially from thesestatements for various reasons.

Table of Contents of Supplementary Materials
1. Qualitative Information Concerning Quarterly Financial Statements ······························································· 2(1) Explanation Regarding Consolidated Operating Results ········································································ 2(2) Explanation Concerning Forward-Looking Statements such as Consolidated Financial Forecasts ························ 4
2. Quarterly Consolidated Financial Statements and Notes ············································································· 5(1) Quarterly Consolidated Balance Sheets···························································································· 5(2) Quarterly Consolidated Statements of Income and Comprehensive Income·················································· 7
Quarterly Consolidated Statements of Income(First three months of Fiscal 2019 and 2020) ················································································· 7
Quarterly Consolidated Comprehensive Income(First three months of Fiscal 2019 and 2020) ················································································· 8(3) Notes Concerning Quarterly Consolidated Financial Statements ······························································ 9(Notes Concerning the Going Concern Assumption) ·········································································· 9(Note Concerning Significant Changes in the Amount of Shareholders’ Equity) ·········································· 9(Segment Information) ············································································································· 9

11. Qualitative Information Concerning Quarterly Financial Statements(1) Explanation Regarding Consolidated Operating Results
Overview of Operating Results for the Three Months Ended December 31, 2019
The First Three Months of
Fiscal 2019
Amount%The First Three Months of
Fiscal 2020
Amount%(¥ millions)
ChangeAmount%Net sales

16,162100.0

15,053100.0(1,109)(6.9)

Operating income

1,571

9.7

740

4.9

(830)

(52.9)

Recurring profit

1,586

9.8

892

5.9

(693)

(43.7)

Profit attributable toowners of parent

1,172

7.3

491

3.3

(680)

(58.1)

Forward-looking statements contained in this document are based on a judgment of operating results for the three months
ended December 31, 2019.
In the three months ended December 31, 2019, both net sales and operating income for the entire Group progressedlargely in line with consolidated forecasts.
The EPS Group posted consolidated net sales of ¥15,053 million, a decrease of 6.9% year on year, despite an increase inincome in the CSO Business. This decrease in sales was due to the temporary suspension of production lines at the EKISHIN(China) Business following the amendment of the Drug Administration Law in China, and conclusion of a large-scale projectin the Global Research Business in the previous fiscal year. Furthermore, operating income declined 52.9% year on year to¥740 million, owing to impacts from the conclusion of a very profitable monitoring project in the CRO Business in theprevious fiscal year and completion of a large-scale clinical research project, in addition to the suspension of product lines inthe EKISHIN (China) Business.
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 Three
The First Three
Months of fiscal
Months of fiscal
Change2019
2020
Net sales
7,001
6,926
(74)
CRO
Operating income
1,264
787
(477)
Domestic
Net sales
3,470
3,509
38
SMO
Operating income
477
471
(5)
Business
Net sales
1,952
2,831
878
CSO
Operating income
99
226
126
Overseas
Business

GlobalResearch

Net sales
Operating income

1,177
31

1,016
70

(160)
39

EKISHIN(China)Net sales
Operating income (loss)

3,149
77

1,160
(355)

(1,989)(433)

EPS Associates Co., Ltd. in the CRO Business in the first three months of fiscal 2019, merged with EPS International
Holdings Co., Ltd. in the Global Research Business on October 1, 2019. Consolidated figures in the year-on-year comparison
above have been reclassified to their business segments after the merger took place.

21) CRO BusinessIn the CRO Business, the Group conducts operations mainly based on the following structure:a. Contract-based clinical study and post-marketing surveillance (PMS) services: EPS Corporation and AC MEDICAL INC.
b. Clinical research services: EP-CRSU Co., Ltd.
c. Pharmaceutical and medical IT services: EP-Techno Co., Ltd.
Looking at performance in the CRO Business by service, sales and operating income declined in contract-based services,such as clinical studies and PMS services, as they were impacted by both the conclusion of high-value projects in monitoringthat ended in the previous fiscal year and sluggish inquiries in the second half of the previous fiscal year. However, whencompared against the forecast, sales and operating income have exceeded expectations as the trials currently underway areproceeding smoothly and acquisition of new projects are also steadily growing. Inquiries are also moving in a favorable
trajectory this fiscal year.
Clinical research services continued in line with the forecast. Profit has been decreasing due to the conclusion of a largescale clinical trial in the previous fiscal year; however, the operation rate is satisfactorily progressing due to active
acceptance of orders for doctor-initiated clinical trials.
In pharmaceutical and medical IT services, sales of external systems have been increasing.
As a result, net sales were ¥6,926 million, a decrease of ¥74 million, or 1.1%, year on year, and operating income was¥787 million, a decrease of ¥477 million, or 37.7%, year on year.
2) SMO Business
The SMO Business is undertaken by EP-SOGO Co., Ltd.
In the same business, the EPS Group is proactively undertaking initiatives such as full development of proposal-based
sales operations for clients requesting trials, securing orders through business alliance contracts, and focusing resources onsuperior facilities suited for case clustering.
At the same time, with maintenance of the Company’s internal structure and the appropriate placement of CRCs (clinical
trial coordinators) and SMAs (managers that support clinical trial centers), the EPS Group will push forward with improving
profitability and efficiency while strengthening specialized education, starting with the fields of cancer, mental diseases, anddermatology.
Furthermore, since the previous fiscal year, the Company has begun a collaborative project between the CRO Businessand the Global Research Business, and is undertaking development of a new business model for the purpose of speedilygathering cases and reducing clinical trial costs.
As a result, net sales were ¥3,509 million, up ¥38 million, or 1.1%, year on year. Due to human investment in theabovementioned initiatives, operating income decreased to ¥471 million, down ¥5 million, or 1.2%, year on year.
3) CSO Business
The CSO Business is undertaken by EP-PharmaLine Co., Ltd., AC MEDICAL INC. and ES-Link Co., Ltd.
In CMR (Contract Medical Representative) services for pharmaceuticals, performance was largely in line with forecasts
as the decrease in demand for CMRs originating from the recent decline in MRs in the pharmaceutical industry looped
around and inquiries trended toward recovery.
In the medical contact center business that undertakes call center operations for medical institutions, the Company
received orders for highly profitable spot projects and surpassed the forecast. Furthermore, CMRs for medical institutions,the academic and technical materials production business, and the BPO business proceeded largely according to forecasts.
As a result, net sales were ¥2,831 million, an increase of ¥878 million, or 45%, year on year with growth mainly focusedon the medical contact center business, and operating income was ¥226 million, an increase of ¥126 million, or 127.1%, year
on year.
4) Global Research Business
The Global Research Business comprises EPS International Holdings Co., Ltd. and its overseas group companies, and isdeveloping business focused on the Asia-Pacific region, including CRO business within China.
Orders from overseas for trials within Japan experienced a decrease in sales due to the conclusion of a large-scale projectin the previous fiscal year. The Company maintained its business base in the Asia-Pacific region, and is focusing on orders
for local projects in each country. Furthermore, for the CRO business within China, inquiries are increasing in line withexpansion in the China market, and the Company is looking to reinforce its operations there.
As a result, net sales were ¥1,016 million, a decrease of ¥160 million, or 13.7%, year on year, and operating income was¥70 million, an increase of ¥39 million, or 125.8%, year on year.

3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., as well as related Group companies in China.
In the EKISHIN (China) Business, under a solid capital and business partnership with SUZUKEN Co., Ltd., the Group
provides product-related services centered on pharmaceuticals and medical devices, international trading-related services andperipheral support services. The Group is working to further expand earnings as a specialist trading company in thehealthcare industry linking Japan and China.
Manufacture and sales of pharmaceutical products serve as the pillar of profit for product-related services; however, sales
and profit in this business declined due to impacts from the implementation of simultaneous inspections and investigations atexisting manufacturers in line with the announcement of revisions to China’s Drug Administration Law in August 2019 andtemporary suspension of manufacturing lines at a Group company in China. The affected manufacturing lines recommenced
operations in December 2019, however, there is a possibility that there will be an impact on supply going forward.
For sales of services such as for medical devices, sales and profits grew and new breakthroughs are proceeding favorably.
Furthermore, sales of products were brisk in international trading-related services.
As a result, net sales were ¥1,160 million, a decrease of ¥1,989 million, or 63.2%, year on year, and operating loss was¥355 million (¥77 million in operating income recorded in the previous fiscal year).
(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, 2019 issued on November 7, 2019.

4

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheets

As of September 30, 2019(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

5(¥ millions)
As of December 31, 2019(End of the First Three
Months)17,283
16,125
1,858
992
1,464
3,248
(137)
40,834

18,975
13,386
1,808
1,121
2,008
3,515
(158)
40,658

5,658

6,045

6,762
991
7,754

6,675
996
7,672

4,786
2,067
5,492
(27)
12,31925,732
66,566

4,201
2,169
4,491
(26)
10,83524,55365,211(¥ millions)

Liabilities
Current liabilities:
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

6

As of September 30, 2019(Previous Fiscal Year-End)As of December 31, 2019(End of the First Three Months)

648
1,265
449
1,302
3,051
242
9,030
15,991

777
965
372
92
1,438
225
9,746
13,618

424

367

395

106

2,146
614
656
4,238
20,229

2,110
596
836
4,017
17636

3,888
13,66928,628(3,765)42,4203,888
12,88928,454(1,178)44,054

808
544
(470)
881
3,035
46,33766,566

364
621
(441)
544
2,976
47,57565,211

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statements of Income

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income:Interest income
Gain on insurance cancellation
Foreign exchange gains
Other non-operating income
Total non-operating income
Non-operating expenses:
Interest expenses
Foreign exchange losses
Equity liquidation loss
Treasury stock disposal expenses
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 before income taxes
Income taxes
Income tax adjustment
Total income taxes
ProfitProfit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

7

First Three Months of
Fiscal 2019
(October 1, 2018
to December 31, 2018)
16,162
10,055
6,107
4,536
1,571

(¥ millions)First Three Months of
Fiscal 2020
(October 1, 2019
to December 31, 2019)15,053
10,889
4,164
3,423
740

27
27
－
31
85

26
25
61
70
184

3
57
－
－
9
70
1,586

3
－
14
11
2
32
892

256
198
454
2,040
73
659
733
1,307
134
1,172

－
－
－
892
(203)
748
545
347
(144)
491

Quarterly Consolidated Comprehensive Income

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-controllinginterests8(¥ millions)First Three Months of
Fiscal 2019
(October 1, 2018
to December 31, 2018)
1,307

First Three Months of
Fiscal 2020
(October 1, 2019
to December 31, 2019)
347

(70)
(146)
3

(449)
147
29

0

0

(213)
1,093

(273)
74

1,018

154

75

(80)

(3) Notes Concerning Quarterly Consolidated Financial Statements(Notes Concerning the Going Concern Assumption)
None(Note Concerning Significant Changes in the Amount of Shareholders’ Equity)
In accordance with a Board of Directors resolution adopted on October 29, 2019, the EPS Group undertook disposal of
1,400,000 shares of treasury stock to Hongkong Tigermed Co., Ltd. through a third-party allocation on December 12, 2019.
The Company acquired 82,000 of its own shares in accordance with a resolution of the Board of Directors on February 1,
2019.
As a result, treasury shares decreased by ¥2,586 million during the three months ended December 31, 2019, to stand at¥1,178 million as of December 31, 2019.
(Segment Information)
I. The First Three Months of Fiscal 2019 (October 1, 2018 to December 31, 2018)
1. Information Concerning Net Sales and Operating Income for Each Segment

Net sales
Sales to outside
customers
Inter-segment
sales andtransfers
Total

EKISHIN(China)Business

Others(¥ millions)Elimination/
Corporate(Note)

Amount recorded onquarterly
consolidated
statements of income

CRO
Business

SMO
Business

CSO
Business

GlobalResearch
Business

6,499

3,443

1,929

1,086

3,142

61

16,162－

16,162

502

26

23

90

7

417

1,067

(1,067)

－

7,001

3,470

1,952

1,177

3,149

478

17,230(1,067)

16,162

Total

Segment
1,264
477
99
31
77
2
1,952
(381)
1,571
operating income
Note: Eliminations/Corporate for operating income of ¥(381) million includes intersegment transactions of ¥8 million andnon-attributable corporate expenses not distributed to each segment of ¥(389) 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 Businesssegment increased by ¥1,164 million.
II. The First Three Months of Fiscal 2020 (October 1, 2019 to December 31, 2019)
1. Information Concerning Net Sales and Operating Income for Each Segment
CRO
Business

SMO
Business

CSO
Business

GlobalResearch
Business

EKISHIN(China)Business

Others(¥ millions)

Total

Elimination/
Corporate(Note)

Amount recorded onquarterly
consolidated
statements of income

Net sales
Sales to outside
6,522
3,500
2,802
957
1,158
113
15,053－
15,053customers
Inter-segment
sales and
404
8
29
59
1
419
922
(922)
－
transfers
Total
6,926
3,509
2,831
1,016
1,160
532
15,976(922)
15,053
Segment
787
471
226
70
(355)
30
1,230
(489)
740
operating income
Note: 1. Eliminations/Corporate for operating income of ¥(489) million includes intersegment transactions of ¥7 million andnon-attributable corporate expenses not distributed to each segment of ¥(497) million. The main corporate expenses
comprise expenses related to the Company (the holding company).
2. EPS Associates Co., Ltd. merged with EPS International Holdings Co., Ltd. on October 1, 2019, and EPS Associates
Co., Ltd. is changing its company name to EPS International Holdings Co., Ltd. In line with this change, its businesssegment has changed from the CRO Business to the Global Research Business. The Company is now disclosing
segment information from the first three months of fiscal 2019, based on the reporting segments for the first threemonths of fiscal 2020.
9