Consolidated Earnings Report for the Fiscal Year Ended September 30, 2017
[Japanese GAAP]
November 7, 2017
Company Name:
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URL:
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Scheduled date of General Stockholders’ Meeting:
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Supplementary explanatory materials prepared:
Explanatory meeting:

EPS Holdings, Inc.
First Section, Tokyo Stock Exchange4282
http://www.eps-holdings.co.jp
Yan Hao, Chairman & CEO
Shuzo Orihashi, Director, Executive Corporate Officer+81-3-5684-7873
December 22, 2017
December 25, 2017
December 22, 2017
Yes
Yes (for institutional investors and analysts)(¥ millions are rounded down)
1. Consolidated Results for the Fiscal Year Ended September 30, 2017 (October 1, 2016 to September 30, 2017)(1) Consolidated Operating Results(¥ millions; percentage figures represent year-on-year changes)
Fiscal years ended
September 30

Net sales

Operating income

Recurring profit

Profit attributable toowners of parent

Fiscal 2017
60,482 14.8%
7,591
22.0%
7,809
18.5%
4,663
17.6%
Fiscal 2016
52,703 16.6%
6,589
22.9%
3,966
83.4%
6,224
13.5%
Note: Comprehensive income: September 30, 2017: ¥6,196 million [165.3%], September 30, 2016: ¥2,335 million [(20.2)%]
Fiscal years ended
September 30
Fiscal 2017
Fiscal 2016

Profitper share(diluted) (¥)

Profitper share (¥)

Return on equity(ROE)

Recurring profit/
Total assets

Operatingmargin

12.3%
13.9%

13.4%
14.3%

12.6%
11.8%

－
－

101.1792.32(2) Consolidated Financial Position
Total assets

Net assets

Equity ratio(%)

September 30, 2017
64,34544,862September 30, 2016
52,53034,364
Note: Equity: September 30, 2017: ¥41,818 million, September 30, 2016: ¥33,801 million

65.0
64.3

(3) Status of Consolidated Cash Flows
Fiscal years ended
September 30
Fiscal 2017
Fiscal 2016

Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

7,835
5,186

(3,726)(1,315)2,005(2,515)(¥ millions)
Net assets per share(¥)
906.64757.73(¥ millions)
Cash and cash
equivalents, endingbalance
23,097
16,607

2.

Dividends
Dividend per share (¥)
First
Quarter

SecondQuarter

Third
Quarter

Year
End

Full
Year

Total dividend
amount(¥ millions)

Dividend payout
ratio(consolidated)

Ratio ofdividends to net
assets(consolidated)
3.3%
3.6%

Fiscal 2016
10.00
25.00
1,122
27.1%
－
－ 15.00
Fiscal 2017
10.00
30.00
1,385
29.7%
－
－ 20.00
Fiscal 2018
12.00
25.00
－
－ 13.00－(forecast)
Notes: Components of the fiscal 2016 interim dividend: Ordinary dividend of 8 yen per share and commemorative dividendof 2 yen per share (commemorative dividend to mark the 25th anniversary of the Company’s founding)Components of the fiscal 2016 year-end dividend: Ordinary dividend of 10 yen per share and special dividend of 5
yen per share
Components of the fiscal 2017 year-end dividend: Ordinary dividend of 12 yen per share and special dividend of 8yen
per share

3.

Forecast of Consolidated Results for Fiscal 2018 (October 1, 2017 to September 30, 2018)(¥ millions; percentage figures represent year-on-year changes)
Profit attributable toProfitNet sales
Operating income
Recurring profit
owners of parent
per share (¥)
Full year
66,000 9.1%
6,850(9.8)%
7,000 (10.4)%
4,200(9.9)%
91.06
Note: Revisions to recent consolidated results forecasts: None

*Notes(1) Changes to important subsidiaries during the period (changes in specified subsidiaries resulting in revised scope of
consolidation): Yes
Newly included: 1 company (Name) Shanghai Hua Xin High Biotechnology Co., Ltd.
Excluded: – companies (Name)(2) 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
(3) Number of shares issued (common stock)a. Number of shares issued at end of
Fiscal 2017, end
period (including treasury stock):

46,311,389 Fiscal 2016 end

46,311,389

b. Number of treasury stock at end of
Fiscal 2017, end
period:186,899 Fiscal 2016 end

1,703,017

c. Average number of stock during the
Fiscal 2017
period:46,099,267 Fiscal 2016

42,965,500

Note: The total number of treasury shares included shares held by the employees’ shareholding trust, specifically 136,600
shares as of September 30, 2016 and 47,600 shares as of September 30, 2017.

(Reference) Summary of Non-Consolidated Results for Fiscal 2017
(1) Operating Results(¥ millions; percentage figures represent year-on-year changes)
Net sales
Operating income
Recurring profit
ProfitFiscal 2017
3,949
18.2%
2,757
22.6%
2,813
27.5%
2,118
(10.9)%
Fiscal 2016
3,340 (44.0)%
2,249
196.0%
2,206
133.2%
2,375－%
Profit per share (¥)
Fiscal 2017
Fiscal 2016

Profit per sharediluted (¥)
－
－

45.94
55.30

(2) Financial Position
Total assets

Net assets

Equity ratio(%)

Fiscal 201737,51733,156
Fiscal 2016
36,88929,780Note: Equity: September 30, 2017: ¥33,156 million, September 30, 2016: ¥29,780 million

88.4
80.7

(¥ millions)
Net assets per share(¥)
718.84667.60* This financial report is outside the scope of the audit review.
* 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. Please see “1. Summary of Operating Results and Other Matters” on page 2 of the
Supplementary Materials for information on the assumptions behind the earnings forecasts and cautionary statements
regarding the use of earnings forecasts and related matters.

Table of Contents of Supplementary Materials
1. Summary of Operating Results and Other Matters ………………………….………………………………………………2(1) Summary of Operating Results for the Fiscal Year Ended September 30, 2017…………………………………………
2(2) Summary of Financial Position as of September 30, 2017………………………………………………………………4(3) Summary of Cash Flows for the Fiscal Year Ended September 30, 2017………………………………………………4(4) Outlook……………………………………………………………………………………………………………………
5
2. Basic Policy Regarding Selection of Accounting Standards …………………………………………………………………
7
3. Consolidated Financial Statements and Main Notes……………………………………………………………………………
8(1) Consolidated Balance Sheets…………………………………………………………………..…………………………
8(2) Consolidated Statements of Income and Comprehensive Income ………………………………………………………
10
Consolidated Statements of Income……………………………………..…………………………………………….
10
Consolidated Statements of Comprehensive Income …………………………………………………………………
11(3) Consolidated Statements of Changes in Shareholders Equity …………………………………………………………….
12(4) Consolidated Statements of Cash Flow……………………………………………………………………………………
14(5) Notes Concerning Consolidated Financial Statements……………………………………………………………………
16(Notes Concerning the Going Concern Assumption) …………………………..………………………………………
16(Changes in Accounting Policies) ………………………………………………………………………………………
16(Segment Information)………..………………………………………………………………………………………
16(Per Share Information) ………………………………………………………………………………………………
19(Important Subsequent Events)…………………………………………………………………………………………
19
4. Other…………………………………………………………………………………………………………………………
20(1) Orders Received ………………………………………………………………………………………………………20

1

1. Summary of Operating Results and Other Matters(1) Summary of Operating Results for the Fiscal Year Ended September 30, 2017(¥ millions)Fiscal 2016
(Year Ended September 30, 2016)
Amount%Fiscal 2017
(Year Ended September 30, 2017)
Amount%ChangeAmount%Net sales

52,703100.0

60.482

100.0

7,778

14.8

Operating income

6,224

11.8

7,591

12.6

1,366

22.0

Recurring profit

6,589

12.5

7,809

12.9

1,220

18.5

3,966

7.5

4,663

7.7

697

17.6

92.31

－

101.17－－－

Profit attributableto owners of parent
Profit per share (¥)

Operating Results for the Fiscal Year Ended September 30, 2017
In the pharmaceutical and medical devices industry, which has a major bearing on the consolidated operating results of the
EPS Group, the external environment is being reshaped by changes such as NHI drug price revisions, the emergence ofgeneric drugs, and increases in development costs for new drugs. Against this backdrop, and under the Japanese
government’s policy of promoting the development of pharmaceuticals and medical devices originating in Japan, the EPSGroup continued to vigorously undertake activities targeting the fields of oncology, the central nervous system, andintractable and orphan diseases as growth fields for the development of new drugs.
Meanwhile, in the market for outsourcing services for the healthcare industry, which spans the development ofpharmaceutical and medical devices to post-market surveillance, inquiries from customers such as pharmaceutical companies
and medical device manufacturers continued to surge, as these customers implemented policies to reduce development leadtimes and curtail development costs in an effort to enhance their competitiveness. The market remains on a growth track bothin Japan and elsewhere around the world. Concurrently, however, it has also become an urgent priority for service providers
to further enhance the quality and efficiency of outsourcing services for the healthcare industry.
In this environment, in the three domestic segments undertaken by the EPS Group, specifically the CRO (Contract
Research Organization), SMO (Site Management Organization), and CSO (Contract Sales Organization) segments, theGroup strove to carefully identify customer needs, regulatory changes, and the future course of innovation in tandem withbolstering its organization, with a view to both maintaining its high operating efficiency and providing high-quality services.
Turning to the Group’s overseas segments, in the Global Research Business, the Group has been working to strengthen its
sales activities that target global pharmaceutical companies, and in the EKISHIN (China) Business, the Group has beenworking to establish an operating foundation as a specialist trading company in the healthcare industry.
As a result, in the year ended September 30, 2017, the EPS Group as a whole delivered record-high results surpassing its
forecasts. The Group posted consolidated net sales of ¥60,482 million, up 14.8% year on year, and consolidated operating
income of ¥7,591 million, up 22.0% year on year. Consolidated recurring profit rose by 18.5% year on year to ¥7,809 million
and profit attributable to owners of parent increased 17.6% year on year to ¥4,663 million.
Operational segment are outlined as follows.

2

Segment Overview
The Group primarily operates businesses in the following five segments (three domestic segments and two overseas
segments).
(¥ millions)Fiscal 2016
Fiscal 2017
(Year Ended(Year Ended
ChangeSeptember 30, 2016) September 30, 2017)
Net sales
28,12330,004
1,880
CRO
Operating income
5,985
6,653
668
Domestic
Net sales
10,961
14,016
3,055
SMO
Business
Operating income
610
1,698
1,087
Net sales
7,509
8,303
793
CSO
Operating income
426
486
59
GlobalNet sales
4,060
4,816
756
Research
Operating income (loss)
183
(536)
(720)
Overseas
EKISHIN
Business
Net sales
3,957
6,199
2,241
(China)Operating income (loss)
(31)
251
283
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 Corporation and EPS Associates Co.,Ltd.
b. On-site CRO services: EPMate Co., Ltd.
c. Pharmaceutical and medical IT services: e-Trial Co., Ltd.
d. Clinical research services: EP- CRSU Co., Ltd. (EPI Japan Co., Ltd. and J-CRSU Co., Ltd. merged on April 1, 2017).
Looking at performance by service, in clinical study services, net sales and operating income both surpassed forecasts,
supported mainly by measures to strengthen project management and to promote the integration of management systems formonitoring services and data management services. In PMS and related services, net sales and operating income were bothabove forecasts as a result of measures to strengthen the organizational structure and rigorously enforce cost controls.
In on-site CRO services, net sales were below plan due to delays in securing resources, while operating income exceeded
forecast due to rigorous enforcement of cost controls. In pharmaceutical and medical IT services, net sales and operating
income both surpassed their forecasts. In clinical research services, net sales and operating income both exceeded forecasts
due to favorable progress on contract-based projects.
As a result, in the CRO Business, net sales were ¥30,004 million, an increase of ¥1,880 million, or 6.7%, year on year,
and operating income was ¥6,653 million, an increase of ¥668 million, or 11.2%, year on year.
2) SMO Business
The SMO Business is undertaken primarily by EP-SOGO Co., Ltd. and Sogo Rinsho Médéfi Co., Ltd.
In this business, the Group developed a management structure capable of realizing integration synergies with the former
Sogo Rinsho Group, and strengthened the project management system. These and other measures led to steady progress on
case registrations. Incidentally, given that the integration with the former Sogo Rinsho Group was implemented in the six
months ended March 31, 2016, integration benefits for only nine months were reflected in operating results for the fiscal year
ended September 30, 2016. However, integration benefits for the full fiscal year were reflected in operating results for the
fiscal year ended September 30, 2017. This factor significantly increased net sales in the fiscal year under review.
As a result, in the SMO Business, net sales rose sharply by ¥3,055 million, or 27.9%, year on year to ¥14,016 million.
Operating income was ¥1,698 million, a significant increase of ¥1,087 million, or 178.1%, year on year, as higher earnings
from the integration outweighed the amortization of goodwill and profitability improved.
3) CSO Business
The CSO Business is undertaken by EP-PharmaLine Co., Ltd.
In CMR services for pharmaceuticals (CMR: Contract Medical Representatives), although the number of new customers isincreasing due to measures to strengthen sales activities, net sales decreased substantially as foreign-based pharmaceuticalcompanies implemented policies to reduce their MR staff. In the pharmaceutical call center division, amid changes in thesales techniques utilized by the MRs of pharmaceutical companies, net sales increased, reflecting a strong performance in
MR direct services (detailing services provided mainly over the telephone by personnel with MR qualifications),
multi-channel e-detailing services, and BCP response services, among others.
In PMS services, net sales increased significantly year on year as a result of the start of a major project involving
monitoring MRs closely tied to local communities, and a steady performance by BPO services. In medical devices services,3

net sales were up sharply in line with an increase in projects integrating CS (Contract Sales) services and help desk services
provided by call centers.
As a result, in the CSO Business, net sales were ¥8,303 million, an increase of ¥793 million, or 10.6%, year on year, andoperating income was ¥486 million, an increase of ¥59 million, or 14.1%, year on year.
4) Global Research Business
The Global Research Business comprises EPS International Holdings Co., Ltd. and its overseas Group companies.
In the Global Research Business, net sales rose ¥756 million, or 18.6%, year on year to ¥4,816 million atop strong
progress on current projects and a contribution from newly awarded major projects. Meanwhile, on the earnings front, theGroup recorded an operating loss of ¥536 million in the Global Research Business, compared with operating income of ¥183
million in the previous fiscal year. This loss mainly reflected higher costs due primarily to the end of a major project in Asia,
an increase in recruitment activities and personnel expenses to continue strengthening the operating structure, and an increasein the outsourcing ratio to Group companies in Japan.
5) EKISHIN (China) Business
The EKISHIN (China) Business comprises the two regional holding companies EPS EKISHIN Co., Ltd. and EPS (China)
Co., Ltd., and their respective overseas Group companies.
In the EKISHIN (China) Business, under a solid capital and business partnership with SUZUKEN Co., Ltd., the Group
provides five types of services, specifically, pharmaceutical-related services, medical device-related services,
investment-related services, international trading-related services and peripheral support services. The Group is working tofurther expand earnings as a specialist trading company in the healthcare industry linking Japan and China.
In the fiscal year ended September 30, 2017, the Group strengthened its operating foundation through the acquisition of a
Chinese pharmaceutical manufacturer (Shanghai Hua Xin High Biotechnology Co., Ltd.), which contributed to both businessdevelopment and earnings growth.
As a result, in terms of operating results, net sales were ¥6,199 million, up ¥2,241 million, or 56.6%, year on year. The
Group recorded operating income of ¥251 million in the EKISHIN (China) Business, compared with an operating loss of ¥31
million in the previous fiscal year. In investment-related services, the Group realized an investment gain by divesting some ofits shareholdings.
(2) Summary of Financial Position as of September 30, 2017
Status of Assets, Liabilities and Net Assets
Changes in the Group’s financial position during the fiscal year under review, compared with the previous fiscal year-end,
are outlined as follows:
Current assets amounted to ¥44,023 million as of September 30, 2017, an increase of ¥7,689 million from the previous
fiscal year-end. The main contributing factors were increases of ¥6,745 million in cash and time deposits, and ¥1,047 million
in trade notes and accounts receivable. Fixed assets amounted to ¥20,322 million, an increase of ¥4,125 million from theprevious fiscal year-end. The main contributing factors were increases of ¥1,258 million in property, plant and equipment,¥503 million in goodwill, and ¥2,369 million in investment securities. As a result, total assets stood at ¥64,345 million, an
increase of ¥11,815 million from the previous fiscal year-end.
In terms of liabilities, total liabilities amounted to ¥19,483 million as of September 30, 2017, an increase of ¥1,317
million compared with the previous fiscal year-end. This mainly reflected increases of ¥374 million in income taxes payable,¥324 million in allowance for employees’ bonuses and ¥1,482 million in other current liabilities. These increases were partly
offset by decreases of ¥284 million in trade notes and accounts payable and ¥1,084 million in short-term loans and long-term
debt.
In terms of net assets, total net assets amounted to ¥44,862 million as of September 30, 2017, an increase of ¥10,497
million from the previous fiscal year-end. This mainly reflected increases of ¥1,344 million in additional paid-in capital,¥4,038 million in retained earnings, and ¥2,480 million in non-controlling interests, along with a decrease of ¥1,783 million
in treasury common stock, at cost.
(3) Summary of Cash Flows for the Fiscal Year Ended September 30, 2017
In the fiscal year ended September 30, 2017, net cash provided by operating activities was ¥7,835 million, net cash used ininvesting activities was ¥3,726 million and net cash provided by financing activities was ¥2,005 million. These cash flows
were adjusted for the effect of exchange rate change on cash and cash equivalents of ¥375 million. As a result, cash and cash
equivalents at the end of September 30, 2017 stood at ¥23,097 million, an increase of ¥6,490 million from the previous fiscal
year-end.
(Cash flows from operating activities)
Net cash provided by operating activities was ¥7,835 million, an increase of ¥2,648 million from the previous fiscal year.
The main contributing factors were profit before income taxes of ¥8,034 million (an increase of ¥1,276 million year onyear), amortization of goodwill of ¥1,098 million (an increase of ¥379 million year on year), a decrease in inventories of¥639 million (a change of ¥1,017 million from an increase in inventories of ¥378 million in the previous fiscal year), an
4

increase in other current liabilities of ¥786 million (an increase of ¥201 million year on year), income taxes paid of ¥3,114
million (a decrease of ¥797 million year on year) and an increase in provision for bonuses of ¥310 million (a decrease of¥436 million year on year). These positive factors were partly offset by an increase in notes and accounts receivable-trade of¥534 million (an increase of ¥369 million year on year), a decrease in notes and accounts payable-trade of ¥464 million (adecrease of ¥1,159 million year on year) and gain on sale of subsidiaries and associates of ¥300 million.
(Cash flows from investing activities)
Net cash used in investing activities was ¥3,726 million, an increase of ¥2,410 million year on year. The main uses of cash
were the purchase of investment securities of ¥1,997 million (an increase of ¥1,986 million year on year), purchase ofproperty, plant and equipment and intangible assets of ¥810 million (an increase of ¥240 million year on year), purchase ofshares of subsidiaries resulting in change in scope of consolidation of ¥899 million. Meanwhile, these cash outflows werepartly offset by proceeds from sales and redemption of investment securities of ¥900 million (an increase of ¥585 million
year on year).
(Cash flows from financing activities)
Net cash provided by financing activities was ¥2,005 million, an increase of ¥4,521 million year on year.
The main contributing factors were proceeds from sales of treasury shares of ¥2,139 million (an increase of ¥2,012
million year on year), proceeds from issuance of common shares of ¥2,700 million, and proceeds from long-term loans
payable of ¥49 million (a decrease of ¥250 million year on year). These positive factors were partly offset by the purchase oftreasury shares of ¥104 million (a decrease of ¥906 million year on year), cash dividends paid of ¥1,131 million (an increaseof ¥303 million year on year), and payments from changes in ownership interests in subsidiaries that do not result in change
in scope of consolidation of ¥442 million.

(4) Outlook
In the fiscal year ended September 30, 2017, the EPS Group outperformed its forecasts for consolidated net sales,
consolidated operating income, and consolidated recurring profit. In the fiscal year ending September 30, 2018, the EPSGroup will strengthen Group management capabilities across both the horizontal and vertical dimensions of the organization
by encouraging autonomous activities in each segment, in tandem with efforts to further enhance the holding company
structure.
In terms of initiatives, the Group will proactively advance business expansion and make the necessary upfront
investments through such means as creating new added value and exploring further M&A opportunities, with a view toachieving the goals of the Mid-Term Business Plan devised in the previous fiscal year.
The outlook for each business segment is as follows:
1) CRO BusinessIn the CRO Business, the Group aims to achieve Group-wide growth by working to further strengthen collaboration withother business segments. At the same time, the Group will work to maximize profit by bolstering relationships of trust withcustomers and by rigorously enforcing cost controls. Efforts will also be made to build an unwavering system by enhancing
specialization and establishing new business models with customers and other partners. Moreover, the Group will also set its
sights on M&As and alliances targeting existing services and new business development.
In clinical study services, the Group will work to ensure quality and enhance productivity through measures to strengthen
management of overall clinical development and integrate internal management. In addition, the Group will also takeproactive steps to expand the range of new services.
In PMS and related services, the Group will work to generate steady profits by rigorously instilling an awareness ofstand-alone profitability through measures to strengthen the organizational structure. In addition, the Group will seek toexpand the scale of business by conducting vigorous activities to win orders by expanding the range of services.
In terms of cost, the Group will continue to proactively deploy expenses such as upfront investments to achieve
medium-term growth. Following on from the previous fiscal year, in order to respond to the growing number of customer
inquiries, measures will be taken to secure CRA (Clinical Research Associates) and other specialists, and to upgrade andexpand personnel and offices to address a full range of customer services. In parallel, the Group will reorganize
administrative divisions in an effort to strengthen their capabilities and boost efficiency.
2) SMO BusinessIn the SMO Business, the Group will work to spur further development by vigorously realizing integration synergies andconducting activities to create new businesses. In addition, the Group will strive to enhance operating results by taking
proactive initiatives including promoting quality control and project management in order to enhance customer satisfaction,
expanding oncology facilities and nurturing CRCs (Clinical Research Coordinators) with experience in the oncology field,
fully expanding proposal-based sales activities, and reassigning personnel to optimal positions.
5On October 2, 2017, EP-SOGO Co., Ltd. acquired all of the shares of EXAM CO., LTD. EXAM CO., LTD. is a fellow
SMO business operating in the same industry as EP-SOGO Co., Ltd. EXAM conducts business primarily in the Hokkaido,
Kanto, Kinki, and Kyushu regions, and has an extensive track record in clinical study support services in the field of
dermatology. The conversion of EXAM into an EPS Group company will enable the Group to reinforce various support
platforms for clinical studies and is expected to lead to further business expansion.
3) CSO BusinessIn the CSO Business, particularly CMR services for pharmaceuticals, the Group will work to differentiate itself fromcompetitors by bolstering internal structures and enhancing personnel capabilities in line with customer needs. In thepharmaceutical call center division, the Group will strive to reinforce its DI (Drug Information) services, in conjunction withfurther expanding peripheral services, such as the production of academic materials and compliance review services. In PMS
services and medical devices services, the Group will endeavor to increase sales and profits with an emphasis on expanding
existing services and developing new BPO services.
4) Global Research BusinessIn the Global Research Business, the Group will push ahead with laying solid foundations for becoming the leading CRO
company in the Asia-Pacific region covering over 10 countries. The first priority will be to provide superior products(services) to fulfill the sophisticated requests of customers in Japan and overseas. With this in mind, the Group will strive toreinforce its operating foundation centered on Japan and to conduct prudent sales activities, with the aim of improving
profitability.
5) EKISHIN (China) BusinessIn the EKISHIN (China) Business, the Group will work to bolster its foundations and expand earnings as a specialist trading
company in the healthcare industry linking Japan and China.
In terms of systems, the Group will integrate pharmaceutical-related services and medical device-related services into
product-related services, as part of efforts to further develop this service area. In addition, the Group will consolidate its CRO
business and related services in China into the EKISHIN (China) Business under the specialized services category, as ameans of laying a new foundation to put the Group on a growth trajectory. Through these and other measures, in the
EKISHIN (China) Business, the Group will seek to drive further evolution in the business based on a new system with five
service categories, specifically, products-related services, specialized services, international trading-related services,
investment-related services and peripheral support services.

6

Forecast of operating results for fiscal 2018 (October 1, 2017 to September 30, 2018)
Fiscal 2018
Consolidated performance
forecast

Year-on –yearchange (%)¥ millions

Net sales

66,000

9.1

Operating income

6,850

（9.8）

Recurring profit

7,000（10.4）

Profit attributable toowners of parent

4,200

（9.9）

（Segment Outlook）
Forecasts of net sales for each segment include inter-segment transactions.
Net sales
Year-on –year change(¥ millions)(%)
CRO

31,300

4.3

SMO

15,250

8.8

CSO

8,400

1.2

Global Research

4,100（14.9）EKISHIN (China) Business

10,70072.6

2. Basic Policy Regarding Selection of Accounting Standards
The EPS Group prepares its consolidated financial statements based on Japanese accounting standards, taking into
consideration the need to ensure the comparability of the consolidated financial statements between different accounting
periods and between different companies.
The Group intends to appropriately address the issue of adopting International Financial Reporting Standards (IFRS)
based on consideration of various conditions in Japan and abroad.

7

3. Consolidated Financial Statements and Main Notes(1) Consolidated Balance Sheets
Fiscal 2016
As of September 30, 2016
AssetsCurrent assets:
Cash and time deposits
Notes and accounts receivable - tradeMarketable securities
Merchandise and finished goods
Work in process
Deferred tax assets
Other current assets
Less: Allowance for doubtful accounts
Total current assets
Fixed assets:
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Furniture and fixtures
Accumulated depreciation
Furniture and fixtures, net
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible fixed assets:
Goodwill
Other intangible fixed assets
Total intangible fixed assets
Investments and other assets:
Investment securities
Long-term loans receivable
Lease and guarantee deposits
Deferred tax assets
Net defined benefit asset
Other investments and other assets
Less: Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

8(¥ millions)Fiscal 2017
As of September 30, 201716,027
12,071
599
1,120
2,131
1,272
3,157
(47)
36,333

22,773
13,119
662
1,052
1,756
1,706
3,004
(52)
40,023

3,029
(877)
2,151
1,370
(832)
537
378
(181)
197
2,886

4,387
(1,504)
2,883
1,737
(997)
739
954
(432)
522
4,145

6,603
658
7,261

7,107
726
7,834

1,670
889
1,669
566
37
2,119
(905)
6,047
16,19652,530

4,039
887
1,704
542
42
2,024
(898)
8,342
20,32264,345(¥ millions)Fiscal 2016
As of September 30, 2016

Fiscal 2017
As of September 30, 2017

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

9

1,404
265
774
1,531
2,515
21
6,883
13,395

1,120
65
774
1,905
2,840
215
8,365
15,287

2,544

1,660

263

320

1,247
460
254
4,770
18,165

1,245
497
472
4,195
19,483

3,888
12,107
19,398(2,014)33,3793,888
13,451
23,437(230)
40,545

(56)
730
(252)
422
563
34,36452,530

372
1,007
(107)
1,272
3,043
44,86264,345

(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Income(¥ millions)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Directors’ compensations
Salaries and bonuses
Provision for bonuses
Provision for directors’ retirement benefits
Retirement benefit expenses
Rent expenses
Commission fee
Other
Total selling, general and administrative expenses
Operating income
Non-operating income:Interest income
Gain on insurance cancellation
Commission fee
Gain on consumption tax filing
Dividend income
Foreign exchange gains
Other non-operating income
Total non-operating income
Non-operating expenses
Interest expenses
Provision of allowance for doubtful accounts
Share of loss of entities accounted for using equity
methodOther non-operating expenses
Total non-operating expenses
Recurring profit
Extraordinary gains:
Gain on sales of investment securities
Gain on sales of investments in capitalGain on sales of shares of subsidiaries and associates
Gain on step acquisitions
Total extraordinary gains
Extraordinary losses:
Loss on change in equity
Loss on valuation of investment securities
Other
Total extraordinary losses
Income before income taxes
Income taxes
Income tax adjustment
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

10

Fiscal 2016
(October 1, 2015
to September 30, 2016)
52,70337,175
15,527

Fiscal 2017
(October 1, 2016
to September 30, 2017)
60,482
41,406
19,075

727
3,458
363
65
103
680
528
3,376
9,303
6,224

765
4,102
437
64
126
716
508
4,760
11.484
7,591

39
79
10
351
18
―
108
608

66
49
10
―
31
124
50
334

33
95

40
―

67

26

47
243
6,589

48
115
7,809

196
70
―
48
315

10
―
300
―
311

95
37
13
146
6,758
2,962
(243)
2,719
4,038
72
3,996

86
―
―
86
8,034
3,423
(366)
3,057
4,977
313
4,663

Consolidated Statements of 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-controllinginterests

11

Fiscal 2016
(October 1, 2015
to September 30, 2016)
4,038(¥ millions)Fiscal 2017
(October 1, 2016
to September 30, 2017)
4,977

(121)
(1,185)
(259)

429
651
145

(136)

(6)

(1,703)
2,335

1,218
6,196

2,324

5,514

(10)

681

(3) Consolidated Statements of Changes in Shareholders Equity
Fiscal 2016 (From October 1, 2015 to September 30, 2016)
Shareholders’ Equity
Additional paid-in
capitalRetained earnings

Treasury shares

Total shareholders’equity

1,875

3,593

16,260(572)

21,155

2,012

8,521

10,534(8)(8)

Capital stock
Balance at beginningof current period
Changes of items
during period
Increase by shareexchanges
Capital increaseof consolidated
subsidiaries
Dividends ofsurplusProfit (loss)
attributable toowners of parent
Purchase oftreasury shares
Disposal of treasury
sharesNet changes of
items other thanshareholders' equity
Total changes of
items during period
Balance at end ofcurrent period(¥ millions)

(827)

(827)

3,966

3,966

0

(1,545)(1,545)

103

103

2,012

8,513

3,138

(1,441)

12,223

3,888

12,107

19,398(2,014)33,379

Accumulated other comprehensive income
Valuation
Foreign currency
difference ontranslation
available-for-saleadjustment
securities
Balance at beginningof current period
Changes of items
during period
Increase by shareexchanges
Capital increaseof consolidated
subsidiaries
Dividends ofsurplusProfit (loss)
attributable toowners of parent
Purchase oftreasury shares
Disposal oftreasury shares
Net changes of
items other thanshareholders' equity
Total changes of
items during period
Balance at end ofcurrent period

65

Remeasurements ofdefinedbenefit plans

Total
accumulated
othercomprehensive
income

7

2,063

1,990

Non-controllinginterests

Total net assets

370

23,59010,534
(8)
(827)
3,966
(1,545)103(121)(1,259)(259)(1,641)192(1,449)(121)(1,259)(259)(1,641)

192

10,774

(56)

730

(252)

422

563

34,36412

Consolidated Statements of Changes in Shareholders Equity
Fiscal 2017 (From October 1, 2016 to September 30, 2017)(¥ millions)Shareholders’ Equity

Capital stock
Balance at beginningof current period
Changes of items
during period
Changes in equity
in consolidated
subsidiaries
Change of scope ofequity method
Dividends ofsurplusProfit (loss)
attributable toowners of parent
Purchase oftreasury shares
Disposal of treasury
sharesNet changes of
items other thanshareholders’equityTotal changes of
items during period
Balance at end ofcurrent period

3,888

Additional paid-in
capitalRetained earnings

Treasury shares

Total shareholders’equity12,107

19,398(2,014)33,379

1,135

1,135
507

507

(1,132)(1,132)

4,663

4,663

208

(104)

(104)

1,888

2,097

－

1,344

4,038

1,783

7,166

3,888

13,451

23,437(230)

40,545

Accumulated other comprehensive income
Valuation
Foreign currency
difference ontranslation
available-for-saleadjustment
securities
Balance at beginningof current period
Changes of items
during period
Changes in equity
in consolidated
subsidiaries
Change of scope ofequity method
Dividends ofsurplusProfit (loss)
attributable toowners of parent
Purchase oftreasury shares
Disposal oftreasury shares
Net changes of
items other thanshareholders’equityTotal changes of
items during period
Balance at end ofcurrent period(56)

Remeasurements ofdefinedbenefit plans

Total
accumulated
othercomprehensive
income

(252)

422

730

Non-controllinginterests

Total net assets

563

34,364

1,135
507(1,132)
4,663
(104)
2,097
429

276

145

850

2,480

3,331

429

276

145

850

2,480

10,497

372

1,007

(107)

1,272

3,043

44,86213

(4)Consolidated Statements of Cash Flow

Cash flow from operating activities
Profit before income taxes
Depreciation
Amortization of goodwill
Share of loss (gain) of entities accounted for using equity method
Increase (decrease) in provision for bonuses
Loss (gain) on sales of shares of subsidiaries and associates
Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for directors’ retirement benefits
Interest and dividend income
Interest expenses
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Gain on sale of investments in capitalGain on step acquisitions
Loss (gain) on change in equity
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in other current liabilities
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flow from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from redemption of investment securities
Proceeds from sales of investment securities
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Purchase of insurance funds
Payments for investments in capital
Purchase of shares of subsidiaries resulting in change in scope of
consolidation
Proceeds from purchase of shares of subsidiaries resulting in change
in scope of consolidation
Other, net
Net cash provided by (used in) investing activities

14

Fiscal 2016
(October 1, 2015
to September 30, 2016)(¥ millions)Fiscal 2017
(October 1, 2016
to September 30, 2017)

6,758
587
719
67
747
－
120
33
(57)
33
(196)
37
(70)
(48)
95
(165)
(378)
694
585
(488)
9,075
57
(34)
(3,911)
5,186

8,034
762
1,098
26
310
(300)
209
57
(97)
40
(10)
－
－
－
86
(534)
639
(464)
786
254
10,89995(44)(3,114)
7,835

(8)
35
(443)
(125)
(11)
－
314
(108)
78
(144)
(375)

(327)
20
(629)
(180)
(1,997)
300
600
(148)
115
(151)
(423)

－

(899)

－

13

(526)
(1,315)(17)(3,726)

Consolidated Statements of Cash Flow(¥ millions)Fiscal 2017
(October 1, 2016
to September 30, 2017)

Fiscal 2016
(October 1, 2015
to September 30, 2016)
Cash flows from financing activities
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Purchase of treasury shares
Proceeds from sales of treasury shares
Proceeds from issuance of common shares
Proceeds from share issuance to non-controllingshareholders
Cash dividends paid
Dividends paid to non-controlling interests
Payments from changes in ownership interests in
subsidiaries that do not result in change in scope of
consolidation
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents through shareexchanges
Cash and cash equivalents at end of period

15

6,697
(7,050)300(867)(1,011)
126
－

3,060
(3,260)
49
(949)
(104)
2,139
2,700

－

46

(827)
(5)

(1,131)
(41)

－

(442)

122
(2,515)(553)
801
14,692

(61)
2,005
375
6,490
16,607

1,113－

16,60723,097

(5) Notes Concerning Consolidated Financial Statements(Notes Concerning the Going Concern Assumption)
None(Changes in Accounting Policies)
None(Segment Information)【Segment Information】
1. Summary of Reportable Segment(1) Method of Determining Reportable Segments
The EPS Group’s reportable segments are components of the Group for which discrete financial information is available andwhich the Board of Directors reviews regularly to make decisions about the allocation of resources and to assess businessperformance.
The EPS Group operates in industries related to pharmaceuticals development, primarily serving pharmaceuticalcompanies worldwide. The Group provides various services incidental to various stages of pharmaceuticals development,along with services associated with healthcare, pharmaceuticals, BPO and related areas in China. The Group has fivereportable segments: the CRO Business, SMO Business, CSO Business, Global Research Business, and EKISHIN (China)
Business.
(2) Types of services in each reportable segment
In the CRO Business, the Group provides various specialized services concerning the operation and management of clinicalstudies based on service contracts with pharmaceutical companies and other entities in connection with the implementation ofclinical studies (including post-marketing surveillance (PMS) and studies) in Japan.
In the SMO Business, the Group primarily provides specialized services centered on the assignment of CRCs (ClinicalResearch Coordinators), who assist medical institutions with the implementation of clinical trials, to medical institutions andthe provision of clinical study administrative support and related services.
In the CSO Business, the Group is contracted by pharmaceutical companies to provide services related to the sale ofpharmaceuticals. The Group primarily provides contract-based MR (Medical Representative) services and undertakes theassignment of MRs. Their main duties are to provide information on the quality, efficacy, safety and other attributes ofpharmaceuticals and collect and communicate information on side effects and other matters to medical professionals, for the
purpose of ensuring the proper use and widespread adoption of pharmaceuticals. In addition, the Group provides
pharmaceutical-related information and support services.
In the Global Research Business, the Group provides a variety of services in connection with the implementation ofclinical studies (including post-market surveillance (PMS) services and studies) in various countries in Asia, Europe and theAmericas, to address the global development activities of pharmaceutical companies.
In the EKISHIN (China) Business, the Group mainly provides optimal business solutions in line with the diverse needs ofcustomers in China in the healthcare field, including the research, development, manufacture and sales of pharmaceuticals, aswell as the manufacture and sales of medical devices.
(3) Notes Concerning Changes in Reportable Segments
From the fiscal year ended September 30, 2017, the Company has changed its method of disclosure for the CPO section,
which had previously been included in the reportable segment “Others,” by including it in the CRO Business. This change
was made because the main operations of the CPO section had become substantially identical to the CRO Business, as thebusiness model of the CPO section had shifted from BPO (Business Processing Outsourcing) services related topharmaceuticals and healthcare to various services related to the operation and management of clinical research.
Segment information for the fiscal year ended September 30, 2016 has been prepared based on the reclassified reportablesegments.
2. Information Concerning the Calculation Method for the Amounts of Net Sales, Profit or Loss, Assets, Liabilities and Other
Items by Reportable Segment
The accounting treatment method for reportable segments is the same as the method described in the section “Important
Matters as the Basis for Preparation of Consolidated Financial Statements.”
The segment operating income is based on the operating income.
Inter-segment net sales are generally based on reasonable transaction prices.

16

3. Information Concerning the Amounts of Net Sales, Profit or Loss, Assets, Liabilities and Other Items by Reportable
Segment
Fiscal 2016 (From October 1, 2015 to September 30, 2016)(¥ millions)

Net sales
Sales to outside
customers
Inter-segment
sales andtransfers
Total
Segment operating
incomeSegment assets
Other items
Depreciation
Amortization of
goodwill
Investment inentities accounted
for using theequity method
Increase inproperty, plantand equipment
and intangible
assetsGlobalResearch
Business

EKISHIN(China)Business

OthersAdjustment(Note 1)

Amount recorded on
consolidated
financial statements

52,703―52,703

1,108

3,262

(3,262)

―

3,957

1,353

55,966(3,262)52,703

183

(31)

9

7,183

(959)

6,224

3,248

2,906

8,463

609

55,634(3,104)52,530

136

113

13

44

9

563

24

587

125

487

12

4

116

―

746

(27)

719

―

―

―

―

557

―

557

―

557

259

6,624

55

34

75

36

7,086

14

7,101

CRO

SMO

CSO

Total

26,157

10,874

7,480

4,006

3,939

244

1,966

87

29

53

17

28,123

10,961

7,509

4,060

5,985

610

426

23,16017,244245

Notes:
1. Adjustment for segment operating income of ¥(959) million includes intersegment transactions of ¥80 million andnon-attributable corporate expenses not allocated to each segment of ¥(1,040) million. The main corporate expenses
comprise expenses related to the Company (holding company)
2. Adjustment for segment assets of ¥(3,104) million includes intersegment transactions of ¥(5,450) million andnon-attributable corporate assets not allocated to each segment of ¥2,346 million. The main corporate assets
comprise assets related to the Company (holding company).

17

Fiscal 2017 (From October 1, 2016 to September 30, 2017)(¥ millions)

Net sales
Sales to outside
customers
Inter-segment
sales andtransfers
Total
Segment operating
incomeSegment assets
Other items
Depreciation
Amortization of
goodwill
Investment inentities accounted
for using theequity method
Increase inproperty, plant andequipment andintangible assets

GlobalResearch
Business

EKISHIN(China)Business

Others

Total

Adjustment(Note 1)

Amount recorded on
consolidated financial
statements

CRO

SMO

CSO

27,053

13,898

8,251

4,800

6,183

294

60,482―60,482

2,950

118

52

15

15

1,389

4,542

(4,542)―30,00414,016

8,303

4,816

6,199

1,683

65,024(4,542)60,482

6,653

1,698

486

(536)

251

67

8,621

(1,029)7,591

25,765

18,235

3,481

2,404

11,3471,040

62,274

2,071

64,345

292

119

116

17

155

20

722

40

762

123

656

11

―

334

―

1,125

(27)

1,098

―

―

―

―

34

―

34

―

34

334

65

70

5

1,586

91

2,154

7

2,161

Notes:
1. Adjustment for segment operating income of ¥(1,029) million includes intersegment transactions of ¥30 million
and non-attributable corporate expenses not allocated to each segment of ¥(1,060) million. The main corporate
expenses comprise expenses related to the Company (holding company).
2. Adjustment for segment assets of ¥2,071 million includes intersegment transactions of ¥(3,474) million andnon-attributable corporate assets not allocated to each segment of ¥5,546 million. The main corporate assets
comprise assets related to the Company (holding company).
3. From the fiscal year ended September 30, 2017, the Domestic CRO, Domestic SMO, and Domestic CSO segments
have been renamed as the CRO Business, SMO Business and CSO Business, respectively. Segment information
for the fiscal year ended September 30, 2016 is presented based on the revised names of the reportable segments.

18

(Per Share Information)
Fiscal 2016
(October 1, 2015
to September 30, 2016)

Fiscal 2017
(October 1, 2016
to September 30, 2017)

Net assets per share¥757.73¥906.64

Amount of profit per share¥92.31¥101.17

Notes:
1. The amounts of diluted profit per share for the fiscal years ended September 30, 2016 and 2017 are not disclosed
because there were no dilutive shares.
2. The number of the Company’s own shares remaining in the employees’ shareholding trust, which are recorded as“treasury common stock, at cost” under shareholders’ equity, is included in the treasury shares that are deductedfrom the calculation of the average number of shares during the period for the purpose of calculating the amount of
profit per share. Moreover, these Company shares are included in the number of treasury shares that are deductedfrom the total number of issued shares at the end of the period for the purpose of calculating net assets per share.
The average number of the treasury shares during the period that were deducted for the purpose of calculating theamount of profit per share was 178,500 shares in the fiscal year ended September 30, 2016 and 85,500 shares in thefiscal year ended September 30, 2017. The average number of the treasury shares during the period that werededucted for the purpose of calculating net assets per share was 136,600 shares in the fiscal year ended
September 30, 2016 and 47,600 shares in the fiscal year ended September 30, 2017.
3. The basis for calculating the amount of profit per share is as follows:

Fiscal 2016
(October 1, 2015
to September 30, 2016)

Fiscal 2017
(October 1, 2016 to
September 30, 2017)

Amount of profit per share
Profit attributable to owners of parent (¥ million)

3,966

4,663

―

―

3,966

4,663

42,965,500

46,099,267

Amount not attributable to shareholders of common stock(¥ million)
Profit attributable to shareholders of common stock of theparent (¥ million)
Average number of common shares during the period
Dilutive stocks that were not included in the calculation of
profit per share after adjustment for dilution, because they
do not have a dilutive effect──────

(Important Subsequent Events)
None

19

──────

4. Other(1) Orders Received(¥ millions)

New orders
CRO Business
Monitoring
16,144
Data Management
11,389CRO Others
2,069
CRO Business total
29,603
SMO Business
11,187
CSO Business
9,756
Global Research Business
6,871
EKISHIN (China) Business
6,186
Others295
Total
63,900Notes:
1. Figures represent sales prices.
2. The above figures do not include consumption taxes.

Fiscal 2017
(October 1, 2016 to September 30, 2017)
YoY (%)
Backlog

20

133.2
103.1
67.3
112.8
95.7
126.5
127.4
155.4
119.5
115.6

20,07918,1781,746
40,003
16,692
8,400
9,124
83
11
74,315

YoY (%)
117.6
108.8
47.7
106.8
86.2
121.8
129.4
103.3
110.2
104.9