23rdBusiness Report
October 1, 2012, to September 30, 2013

To Our Shareholders and Investors

We regard the year ending September 30, 2014,
as “the first year of Group management.”
During this year, we intend to clarify theresponsibilities and authorities of all ourbusiness segments to strengthen theoverall Group management system.
Yan Hao, Chairman and Representative Director of EPS Corporation
Yan Hao was born in 1962 in Jiangsu Province, China.
In 1979, he entered Tianjin University. In 1981, he attended the Universityof Yamanashi as a government-sponsored exchange student from China.
He went on to specialize in medical statistics in a doctoral program at theUniversity of Tokyo, pursuing research and the handling of clinical studies.
In 1991, when he was studying at the University of Tokyo graduate school,
he established EPS Corporation. In 2001, EPS’s 10-year anniversary, thecompany was listed on the JASDAQ market and in September 2006, it
was listed on the First Section of the Tokyo Stock Exchange.

Q1 Could you sum up the businessperformance of this fiscal year?

Pulling out of deflation and rebuilding nation’s economy havebeen promoted by “Abenomics,” advocated by the SecondAbe Cabinet, which was inaugurated in December 2012. In
the medical and pharmaceutical fields, the government
developed the “5-Year Clinical Research and Trial Activation
Plan 2012” in March 2012 to encourage the ongoingdevelopment of pharmaceutical products and medical
devices. In addition, movements are underway to accelerate
development in preparation for a decline in revenues upon
the patent expiry (patent cliff) of leading products.
Furthermore, the pharmaceutical industry is marked by anincreasing trend toward outsourcing, aimed at reducing
delivery lead times and lowering costs.

1Under these circumstances, the EPS Group has beenworking to strengthen its management system, extend
service variations and improve price competitiveness in eachbusiness. As a result of these efforts, although sales ofdomestic businesses remained unchanged from the previous
fiscal year, overseas businesses showed particular growth.
Consequently, consolidated net sales totaled ¥37,584 million,
up 6.8% year on year. Profits of domestic businesses
decreased substantially from the previous year, withconsolidated operating income amounting to ¥3,497 million(down 32.4% year on year), consolidated ordinary income of¥3,540 million (down 30.5%), and consolidated net income of¥1,709 million (down 22.5%). Besides the completion of large
projects, we made up-front investments to strengthen ourbusiness system and suffered an impairment loss on ourChinese business due to the weak yen. As a result of thesefactors, we fell short of the target for consolidated operatingperformance we set at the beginning of the fiscal year.
However, we essentially achieved the sales and operating
income targets in our revised plan, announced in August,surpassing the ordinary income target by 4% and theconsolidated net income target by 35%.
We have set dividends for the full year at ¥1,800 per
share, taking into account the stock split.

Q2 Could you describe conditions ineach business segment?

Domestic CRO Business
Sales of the domestic CRO business amounted to ¥22,344
million (down 0.2% year on year), maintaining almost thesame level as in the previous year, and operating income
came to ¥2,858 million (down 33.0%). Sales exceeded thetarget in our revised plan, but operating income fell short of
the revised target by approximately 5%.
By type of business, sales increased from the previous
year due to the acquisition of large projects. Sales increased
steadily in the category of support for clinical studies,
investigator-initiated clinical trials and medical devices.
Conversely, sales of data management services decreased
from the previous year due to the completion of large projects
and downsizing of clinical studies. On the profit front, weestablished the Kofu Office to improve the productivity of ourdata management service, but profit was down year on year
as a result of up-front investments.

Domestic SMO Business
Sales of the domestic SMO business declined sharply,
amounting to ¥5,703 million (down 3.4% year on year), andoperating income came to ¥400 million (down 49.1%). The
main reason for the profit decline was that cost of sales
increased significantly in the first half of the year due theaddition of personnel in anticipation of orders for large-scale
projects. However, in the latter half of the year we were able
to ensure almost the same profit ratio as in the previous year,
owing to the receipt of the anticipated orders and the effectsof cost reductions. We essentially achieved the sales target inour revised plan, and operating income exceeded its target
by 24%.

Domestic CSO Business
Sales of the domestic CSO business nearly achieved thetarget outlined in the revised plan, amounting to ¥5,666
million (down 3.8% year on year). However, operating income
fell to ¥30 million, representing a sharp decline from theprevious year and falling short of the target in the revisedplan. The main reason for this decline was an increase in
up-front investment for recruitment and education in medical
representative (MR) dispatch services. We essentiallymaintained sales of drug information services forpharmaceutical companies and business process
outsourcing (BPO) services for the pharmaceutical, medical
and healthcare industries as planned, resulting in a
year-on-year increase in profit.

Global Research Business
Our Global Research business controls CRO and SMO
businesses overseas and provides support for global clinicalstudies in Japan, China and other countries.
In this term, we strove to improve our office network,
including through the July acquisition of Gleneagles CRC Pte,Ltd., which has extensive service bases in the Asia-Pacificregion. As a result, sales increased sharply, rising 49% year
on year, to ¥1,769 million, and exceeding the revised plan bymore than 7%. However, at the operating level performancefell to a loss of ¥52 million, due to the impact of the weak yen
and increased operating costs.

2

To Our Shareholders and Investors

China BusinessWe are developing our China business under the concept of“serving as a trading company specialized in healthcare
bridging Japan and China.” Our businesses span the sale ofmedical devices, drug development and services related togeneric drugs and BPO. Of these, sales of medical devices
performed especially well, generating steadily higher profits.
In addition, we generated profits from the sale of development rights previously owned by EPS China Co., Ltd.
Thanks to these contributions, sales increased eight-foldfrom the previous year, to ¥3,291 million. We also moved
into the black on an operating basis, with operating income
amounting to ¥256 million.

you please tell us about yourQ3 Would
directions for the coming fiscal year?
Although we achieved most of the goals in our revised plan,
we failed to achieve the targets we set in our initial plan at
the beginning of the year. In addition to improved profits, we
strive continuously to achieve the goals stated in our
performance plans in the interest of attaining long-term
growth. Looking at consolidated performance for the
coming year, we expect two of our domestic businesses torecover, due to receiving orders for large-scale CRO
projects. Therefore, we aim for a 9% year-on-year increasein sales and rises of more than 17% for both operating andordinary income.
To ensure the success of these policies and plans, ourGroup is changing to clarify organizational responsibility andthe individual authority for each business.
The Global Research business and the China businessof EPS (referred to from the upcoming fiscal year as theEKISHIN business) were spun off as separate entities on
October 1, 2013. In addition, we clearly divided our3

organization into two: one that manages the EPS Groupand one that manages the domestic CRO business.
In addition, the two companies handling the domestic
CSO business were combined into one large entity tostrengthen our sales force and propose and create newservices.
Going forward, Group management will reinforce andsupport the management of each business. This complex
system will reinforce our PDCA functions, including budgetary control. Furthermore, our Group management system
will promote marketing and alliances for the whole Groupand strengthen cross-sectional management by coordinating management resources.
Operating under this new management system, weregard the coming year as “the first year of Group management.” We will develop our business along five businesssegments composed of three domestic businesses—CRO,SMO and CSO—and two overseas businesses: Global
Research and EKISHIN. We will grow by improving groupwide profitability and generating synergistic effects.

Dividends
For the next fiscal year, we plan to maintain dividends at¥1,800 per share, the same level as during the year underreview.
Interim(Yen)

2,000
1,500
1,000
500
0

1,800

1,800

1,000

1,000

1,600(800)800

FY9/13 (Note)

Annual

FY9/14
Budget(Note) First-half dividends for the year under review were ¥1,600 per share.
Taking into account the 2-for-1 stock split on common stock on April 1, 2013,
dividends are calculated as ¥800 for the interim dividend and ¥1,000 for theyear-end dividend.

EPS GROUP
DomesticCRO
Business

Domestic
SMO
Business
Domestic
CSO
Business

GlobalResearchBusiness

EKISHIN
Business(China)as at October 31, 2013

Contract Research Organization
Support for implementation, operation andmanagement of clinical studies (clinical trials)
and PMS by pharmaceutical companies

Site Management Organization
CRC dispatch and organizing clinical studies(clinical trials) and PMS by medical institutions

Contract Sales Organization
Dispatch services for contracted MR and callcenter services related to pharmaceutical products

Global Research
CRO and SMO businesses in the Asia-Pacific regionand support for Asian and global clinical studies bypharmaceutical companies

China BusinessServices as a trading company specialized inhealthcare bridging Japan and China, developing
mainly the two businesses of selling pharmaceuticalproducts and manufacturing medical devices

Group Business
Promoting commercialization as a Group business of BPO and shared services.

BPO·Others

Business Process Outsourcing
Specialized services to spur innovation in the business processesof collecting, analyzing and processing various information

Shared Services

Non-Clinical Trial Related

4

Policy for the Year Ending September 30, 2014

To clarify responsibility and authority for all businesssegments and promote Group management
We aim to establish a stableprofit and growth model, withindependent accounting for all
five business segments—threedomestic and two overseas
businesses—with the aim ofclearly outlining the scope ofresponsibility. We will also
implement effective management to enhance productivity
and efficiency for the Group asa whole.

GroupManagement
A new organization will
be constructed in thefirst year of Group management• Promoting independent management
at each business segment• Strengthening cross-sectional
management functions• Marketing for the whole Group• Promoting alliances• Coordinating management resources

and performing other activities

5EUROPE
Domestic Businesses
DomesticCRO
Business

Domestic
SMO
Business

Domestic
CSO
Business

Improving profitability through independentmanagement• Securing resources in the strong monitoring service• Strengthening project management in the data management
service• Establishing management systems as an independent entity

Expanding business performance by improving
sales force and productivity• Training CRCs and expanding facilities to reinforce the cancerarea• Increasing orders through proposal-based sales strategies• Thoroughly implementing progress management to enhance
project quality and speed

Improving competitiveness throughhigh-value-added services• Strengthening the sales force by expanding the scale of business• Proposing a new service combining a call center service andan MR service• Reinforcing the organization and establishing a new
business model

ASIAJAPANUSA
Overseas Businesses

GlobalResearchBusinessStrengthening the organization to leadmulti-country CROs
• Strengthening sales activities targeting Japanesepharmaceutical companies• Improving area coverage and service quality• Exploring M&A opportunities

Establishing a business model to ensurestable profits
EKISHIN
Business(China)

PACIFICBPO·Others• Strengthening sales of medical devices and building a local
production system• Supporting sales of pharmaceutical products in the Chinese
market through joint business ventures• Reinforcing management of investment and profit returns toward
establishment of a specialized trading company model

Promoting commercialization as a Group business• Expanding BPO services with the aim of spinning the business
off as an independent segment• Promoting such businesses as shared services

6

Financial Information

Consolidated Balance Sheets(Thousands of yen)
September 30,2012

September 30,
2013

ASSETS
CURRENT ASSETS

20,543,338

21,867,224

FIXED ASSETS

6,104,074

8,456,510

Tangible assets

1,881,401

2,590,022

Intangible assets

814,248

1,410,862

3,408,423

4,455,626

26,647,412

30,323,735

Investments and other assets
TOTAL ASSETSFor the year ended For the year ended
September 30, 2012 September 30, 2013

NET SALES

35,202,880

37,584,381

COST OF SALES23,551,266

27,398,061

Gross profit

11,651,613

10,186,320

6,476,958

6,688,582

Operating income

5,174,654

3,497,737

Other income (expenses)-net(159,007)(61,228)

Income before income taxes andminority interests

5,015,647

3,436,508

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES

INCOME TAXES

LIABILITIESCurrent

2,332,291

1,455,587

CURRENT LIABILITIES

6,317,248

6,108,935

Deferred

154,195

151,419

LONG-TERM LIABILITIES

1,893,822

4,153,835

Total

2,486,486

1,607,007

TOTAL LIABILITIES

8,211,071

10,262,770

2,529,161

1,829,500

321,840

119,521NET INCOME

2,207,320

1,709,979

Income before minority interests

2,529,161

1,829,500

Shareholders' equity

Income before minority interests
MINORITY INTERESTSNET ASSETS

7

Consolidated Statements of Income andComprehensive Income(Thousands of yen)

15,785,945

16,870,034

Accumulated othercomprehensive income (or loss)(177,921)

615,828

OTHER COMPREHENSIVEINCOME

72,796

835,867

Minority interests

2,828,317

2,575,101

COMPREHENSIVE INCOME

2,601,957

2,665,368

TOTAL NET ASSETS

18,436,341

20,060,964Comprehensive income
attributable to parent shareholders

2,272,582

2,503,730

TOTAL LIABILITIES AND
NET ASSETS

26,647,412

30,323,735

Comprehensive income
attributable to minority interests

329,375

161,637

Consolidated Statements of Changes in Net Assets

Shareholders' equity

Common stock

Additional paid-in capital

Retained earnings

Consolidated Statements of Cash Flows(Thousands of yen)(Thousands of yen)

For the year ended For the year ended
September 30, 2012 September 30, 2013

For the year ended For the year ended
September 30, 2012 September 30, 2013

15,785,945

1,875,251

1,826,300

12,401,651

OPERATING ACTIVITIES

4,038,209

640,961

INVESTING ACTIVITIES(945,878)(3,028,172)

FINANCING ACTIVITIES(1,101,650)

1,849,250

EFFECT OF EXCHANGE
DIFFERENCE ON CASH & CASH
EQUIVALENTS

45,392

503,588

NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS

2,036,072(34,371)

BEGINNING OF BALANCE, CASH
AND CASH EQUIVALENTS

8,627,744

10,663,816

ENDING OF BALANCE, CASH
AND CASH EQUIVALENTS

10,663,816

10,629,445

16,870,034

1,875,251

1,826,300

13,485,740

Common stock for treasury(317,258)(317,258)

Accumulated othercomprehensive income (or loss)(177,921)

615,828

Industry Segment(Thousands of yen)

China Business
3,291,635

Unrealized gain (or loss) on
available-for-sale securities(57,555)(108,881)

Global Research
1,769,670

Foreign currency translation
adjustments(120,366)

724,710

CSO (Domestic)

Minority interests

TOTAL NET ASSETS

5,666,054
2,828,317

18,436,341

2,575,101

20,060,964

CRO(Domestic)
22,344,860

SMO (Domestic)
5,703,547*Except for the adjustments

8Company Information

Company Profile (as at October 1, 2013)
Capital:¥1875.25 million

Main Services: CRO, SMO, CSO, Global Research andChina business
Locations:Center Office
Tsuruya Bldg. 2-23 Shimomiyabicho,Shinjuku-ku, Tokyo 162-0822
TEL: +81-3-5684-7797

Members of the Board and Statutory Auditors(as at December 20, 2013)

Chairman & CEO

Yan HaoPresident & COO

Shinro Tashiro

Directors

Shuzo Orihashi
Kazuki Sekitani

Annex. 1
Kagurazaka AK Bldg. 1-8 Tsukudocho,
Shinjuku-ku, Tokyo 162-0821

Hisashi Tanaka
Junichi Nishizuka
Dan Weng

Annex. 2
Iidabashi MF Bldg. 1-1 Shinogawamachi,
Shinjuku-ku, Tokyo 162-0814
Annex. 3
Acropolis TOKYO. 6-29 Shinogawamachi,Shinjuku-ku, Tokyo 162-0814
Annex. 5KDX Iidabashi Bldg. 2-26 Shimomiyabicho,Shinjuku-ku, Tokyo 162-0822
Tsuruse Laboratory
2662 Tsuruma, Fujimi-shi, Saitama 354-0021
Osaka Branch
Nissei Shin-osaka Bldg. 3-4-30 Miyahara,
Yodogawa-ku, Osaka-shi, Osaka 532-0003
Nagoya BranchHoriuchi Bldg. 3-25-9 Meieki, Nakamura-ku,Nagoya-shi, Aichi 450-0002
Kofu Branch
101 Aria, Kawadamachi, Kofu-shi, Yamanashi400-0811

9Yoshinori Ando
Statutory auditors

Motohisa Fujii
Koichi Shibuya
Haruo Funabashi

Stock Information (as at September 30, 2013)

Authorized shares
Shares of common stock issued

1,296,000
361,600

Number of shareholders

4,148

Shareholder Breakdown
Other Japanese corporations
28.58%
103,355 shares,
23 shareholders

Foreign shareholders
37.28%
134,826 shares,
128 shareholders

Principal Shareholders
Sharesheld

Percentage
of total

Y&G Limited

97,44026.94

BBH FOR MATTHEWS ASIA DIVIDEND
FUND

29,184

8.07

Sumitomo Life Insurance Company

10,800

2.98

Japan Trustee Services Bank, Ltd.
(Trust Account)

10,664

2.94

JP MORGAN CHASE BANK 385078

10,664

2.94

PLEASANT VALLEY

9,952

2.75

JPM CHASE OMNIBUS US PENSIONTREATY JASDEC ACCOUNT

9,288

2.56

GOLDMAN, SACHS & CO. REG

7,947

2.19

Yan Hao

6,726

1.86

THE BANK OF NEW YORK, TREATYJASDEC ACCOUNT

6,604

1.82

Shareholder

Treasury stock
1.09%
3,948 shares,
1 shareholder
Securities
companies
1.32%
4,783 shares,
30 shareholders
Other Japanese financial
institutions 13.97%
50,518 shares,
29 shareholders

Individuals / Others
17.74%64,170 shares,
3,937 shareholders

10Stock Split
EPS conducted a stock split on April 1, 2013 (the effective date) to reduce its stock price pershare, broaden the investor base and increase share liquidity.

Outline of Stock Split
1. Method of stock split
The record date of the stock split was set on Sunday, March 31, 2013 (As this day was a holiday
for the shareholder registry administrator, the effective record date was Friday, March 29, 2013).
Each share of common stock held by shareholders entered or recorded in the latest shareholder
registry as of the said record date was split into two shares.
2. Increase in the number of shares due to the stock split
Total shares issued before the stock split:
Increase in the number of shares due to the stock split:
Total shares issued after the stock split:
Total number of shares authorized for issuance after the stock split:

180,800 shares
180,800 shares
361,600 shares
1,296,000 shares

Forward-Looking Statements
The items in this report include descriptions of future plans and forecasts. Actual performances may differ
substantially due to various factors.

MIX
Paper from
responsible sources

The paper used in this pamphlet is produced from fiber sourced from well-managed forestsand other forests where unacceptable sources have been excluded, as defined by the FSC.
The printing processes that are used do not involve the output of wastewater.