Summarized Translation

Financial Results Overview(24th Term)
EPS Corporation
Chairman & CEO Yan Hao
November 21th, 2014

Copyright © 2014 EPS Group All rights reserved.

Contents

1. Financial Results Overview (24th Term)
2. Current Term Estimates (25th Term)
3. Future Business Strategy• Operational Structure(Transition to holding company structure, etc)
• Mid-term Targets

2Copyright © 2014 EPS Group All rights reserved.

Contents

1. Financial Results Overview (24th Term)
2. Current Term Estimates (25th Term)
3. Future Business Strategy• Operational Structure(Transition to holding company structure, etc)
• Mid-term Targets

3Copyright © 2014 EPS Group All rights reserved.

24th Business Segment of ＥＰＳ GroupCROEPS (CRO Company),

SMO

EP-Mint

CSO

EP-PharmaLine

GREPS International Holdings

Business

Domestic
Business

Business

Business

Overseas
Business
Others4Business

EKISHIN
Business

EPS Associates, EP-Mate, e-Trial

EPSI(China), GRI(USA), EPS GR(GCRC) etc

EPS EKISHIN, EPS(China) etc

BPO

EPI, EMS, EPI(Suzhou), EPS Yamanashi

OthersEPBiz, LSG

Business

Copyright © 2014 EPS Group All rights reserved.

24th Earnings Conditions (Consolidated)（ UNIT:JPY MILLION ）23th
Results

Estimates

24th
Results

Ratio forEstimates(%)

Y o Y(%)

Net sales

37,58440,96141,800102.0%

111.2%

Operating Income

3,497

4,110

4,491(%)(9.3%)(10.0%)(10.7%)

109.3%

128.4%

Ordinary Income

3,540

4,150

4,242(%)(9.4%)(10.1%)(10.1%)

102.2%

119.8%Net Income

1,709

2,006

1,828(%)(4.5%)(4.9%)(4.4%)

91.1%

106.9%

5 Sales rose by 11.2% from the previous year and exceeded estimates due mainly togrowth in the Domestic CRO business Operating income rose by a large margin from the previous year and exceeded
estimates due to contribution from the Domestic CRO business Ordinary income grew from the previous year, but booking of doubtful accountreserves as non-operating expense limited the amount by which it exceeded
estimates by only 2.2%
Copyright © 2014 EPS Group All rights reserved.

24th Segment Earnings Conditions
Net sales by Business Segment

DomesticBusiness

OverseasBusiness6（ UNIT:JPY MILLION ）23thAmount

Estimates

24thAmount

Ratio forEstimates(%)

Y o Y(%)

CRO

20,887

23,23324,190104.1%

115.8%

SMO

5,703

6,500

6,287

96.7%

110.2%

CSO

5,666

5,700

5,974

104.8%

105.4%

GR

1,769

2,500

2,192

87.7%

123.9%EKISHIN

3,109

3,600

3,507

97.4%

112.8%

Copyright © 2014 EPS Group All rights reserved.

24th Segment Earnings Conditions
Operating Income by Business Segment

Domestic
Business

Overseas
Business

7（ UNIT:JPY MILLION ）23thAmount

Estimates

24thAmountOperating
Income ratio

Ratio forEstimates(%)

Y o Y(%)

CRO

2,834

3,469

3,803

15.7%

109.6%

134.2%

SMO

400

900

900

14.3%

100.0%

224.8%

CSO

30972594.3%

267.0%

841.6%

GR-52-64-250---EKISHIN

270-51-117---

Copyright © 2014 EPS Group All rights reserved.

24th Earnings Conditions：Domestic CRO Business（ UNIT:JPY MILLION ）＜ Net sales ＞＜ Operating Income ＞
3,803

4,000

30,00025,000（ UNIT:JPY MILLION ）24,19020,887

3,500
3,000

20,0002,500

15,000

2,000

2,834
13.6%

15.7%

1,500

10,000

1,000

5,000

500

00

2013/92014/92013/92014/9Operating
営業利益
Income

8

20.0%
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Operating
営業利益率

Income ratio Monitoring services acted as a growth driver and sales grew favorably Both operating income and margin improved on the back of profitability
improvement measures for the data management operations
 EPS Associates Co., Ltd., which was acquired in 24th term, is expected tocontribute on a full scale basis from 25th term.
Copyright © 2014 EPS Group All rights reserved.

24th Earnings Conditions：Domestic SMO Business（ UNIT:JPY MILLION ）＜ Net sales ＞

7,000
6,000

5,703

6,287

5,000
4,000
3,000
2,000
1,00002013/92014/9＜ Operating Income ＞（ UNIT:JPY MILLION ）

1,000
900800700600500
4003002001000900

400

14.3%

7.0%

2013/92014/9Operating
営業利益
Income920.0%
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Operating
営業利益率

Income ratio Steady progress on large projects contributed to a year-on-year increase in sales.
However, the completion of large projects led to a slowing in growth toward theend of the term and to a shortfall of estimates.
 Reductions in cost of sales, SG&A expenses from expense restraint measuresand efficient staff hiring allowed profits to grow.
Copyright © 2014 EPS Group All rights reserved.

24th Earnings Conditions：Domestic CSO Business（ UNIT:JPY MILLION ）＜ Net sales ＞

300

7,000
6,000

＜ Operating Income ＞（ UNIT:JPY MILLION ）

5,666

5,974

250

5,000

200

4,000

150

3,000

259
4.3%

100

2,000
1,000

50

00

2013/92014/930
0.5%
2013/92014/9Operating
営業利益
Income

10

5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
Operating
営業利益率

Income ratio Growth trend of contracted MR services due to fortification of hiring andfacilitation of offices
 Favorable trend of medical related call center services
 PMS (Post Market Surveys) restructuring implemented to reduce costs, improve
operational efficiency
 Sales and profits grew by large margins

Copyright © 2014 EPS Group All rights reserved.

24th Earnings Conditions： GR Business（ UNIT:JPY MILLION ）＜ Net sales ＞＜ Operating Income ＞

0

2,500
2,000

（ UNIT:JPY MILLION ）2,192
1,769-50
-100

1,500

2013/92014/9-52-150

1,000-200

500

-250

0-250-300

2013/92014/9

 Sales grew strongly on back of aggressive marketing globally Operating loss expanded on inability to absorb higher costs due to foreignexchange fluctuation, and ex-GCRC’s shortfall of earnings estimates, which wasacquired in 23rd term.

11Copyright © 2014 EPS Group All rights reserved.

24th Earnings Conditions： EKSHIN Business（ UNIT:JPY MILLION ）＜ Net sales ＞

4,000
3,500

3,109

3,507

3,000
2,500
2,000
1,500
1,000
500
0

2013/92014/9＜ Operating Income ＞（ UNIT:JPY MILLION ）

300
250
200
150
100
50
0-50-100-150270

2013/92014/9-117

 Favorable trends for digital X-ray examination equipment, medical image film
and other medical equipment allowed sales to grow Cost restraint measures implemented, but loss incurred due to delay in somedevelopment rights lincense out

12Copyright © 2014 EPS Group All rights reserved.

24th Business Segment Orders（ UNIT:JPY MILLION ）Orders Received
Domestic CRO Business
Monitaring
Data Management
CRO Others
Domestic SMO Business
Domestic CSO Business
Global Research Business
EKISHIN Business
OthersTotal
13

25,413
13,492
9,509
2,410
6,530
6,563
2,898
3,429
1,489
46,323

Y o Y (%)

118.9%
118.3%
125.3%
101.2%
125.5%
111.0%
104.7%
117.0%116.5%
117.4%

Backlog

34,394
17,836
14,269
2,289
8,041
4,763
3,926
51
134
51,311Y o Y (%)

114.5%
115.0%
113.1%
119.7%
111.4%
115.9%
104.5%
84.3%
106.2%
113.2%

Favorable trends in monitoring services in the Domestic CRO business allowed orders and orderbacklog to rise by 18.9% and 14.5% year-on-year respectively
Fortification of the marketing structure including proposal based marketing allowed theDomestic SMO business orders to rise by a large margin of 25.5% year-on-year
Favorable trends in contract MR services and medical related call center services allowed theDomestic CSO business orders and order backlogs to rise by 11.0% and 15.9% year-on-year
respectively
GR business saw 4.7% and 4.5% year-on-year increases in orders and order backlogs respectively
EKISHIN business orders rose 17.0% year-on-year on back of favorable trends in the medical
equipment sales services
Copyright © 2014 EPS Group All rights reserved.

Contents

1. Financial Results Overview (24th Term)
2. Current Term Estimates (25th Term)
3. Future Business Strategy• Operational Structure(Transition to holding company structure, etc)
• Mid-term Targets

14Copyright © 2014 EPS Group All rights reserved.

25th Full Year Earnings Estimates (Consolidated)（ UNIT:JPY MILLION ）24th Results

25th Estimates

Y o Y(%)

Net sales

41,80044,120105.6%

Operating Income

4,491

4,625(%)(10.7%)(10.5%)

Ordinary Income

4,242

4,327(%)(10.1%)(9.8%)Net Income

1,828

1,937(%)(4.4%)(4.4%)

103.0%
102.0%
106.0%

 Sales expected to steadily expand
 Organization and strategy to be fortified in the current term, operating
income expected to gradually grow

15Copyright © 2014 EPS Group All rights reserved.

25th Full Year Earnings Estimates (Consolidated)（ UNIT:JPY MILLION ）CRO
DomesticBusinessSMO
CSO

OverseasBusiness

GREKISHIN

Net sales

Y o Y(%)

24,833
6,800
6,500
2,226
4,050

102.7%
108.2%
108.8%
101.6%
115.5%

Operating
IncomeOperating
Income ratio (%)

Y o Y(%)

4,612
950
350-500

18.6%

-

14.0%

105.4%

5.4%

136.2%----

Note: Operating income of the above mentioned business segments represent income before
allocation of expenses resulting from the transition to a holding company structure

16

 Sales and profits of the three Domestic business segments are expected
to grow. In particular, strong expansion is expected in the SMO and CSObusinesses.
 Focus upon profits (Reduce losses) in overseas business segments, withlarge improvement in loss of GR business, and EKISHIN expected toreach break even
Copyright © 2014 EPS Group All rights reserved.

Strategies in 25th Term (By Business Segment – Domestic)
DomesticCRO• Strict cost of sales control, business expansion based uponacquisition of new clients• Secure new resources, optimize system by reviewing andleveraging resources in Group-wide• Expand synergies derived from EPS Associates

DomesticSMO• Improve customer satisfaction through project progressmanagement• Expand facilities in the oncology area, cultivate CRCs
• Fortify unity of group operations through delisting,conversion to 100% owned subsidiary

Domestic
CSO• Fortify, introduce new services including a service that
integrates MRs and call centers• Aggressive market launch, deployment of highly uniqueservices to ensure high competitiveness17Copyright © 2014 EPS Group All rights reserved.

Strategies in 25th Term (By Business Segment – Overseas)
ＧＲ
Business• Acquisition, execution of new global clinical trials
Strengthen marketing in Japan, Asia, and Pacific regions
Leverage our regional coverage spanning over 10countries• Strengthen integrated operations of GR services throughimplementation of an intermediate holding company【The approxnumber of employees】（September 30,2014）10
Japan
EPS InternationalHoldings（ intermediate holdingcompany ）

18140

ＧＲ

Total 200

40

55

Northeastern
Asia

SoutheastAsia

U.S.A

OthersChina・Tiwan・Korea

ASEAN

India・ Australia

Copyright © 2014 EPS Group All rights reserved.

Strategies in 25th Term (By Business Segment – GR)
implementation of an intermediate holding company
ImagesEPS Holdings
intermediateholding company

EPS InternationalJapan
Overseas

EPSI（China）

EPSI
Singapore

EPS GR(GCRC)

EPSI
Korea

EPSI
TaiwanCentering on Asia

・・・ (tens of countries)

Implement integrated operations through an intermediate holding company forGR services, which many overseas subsidiaries provide.

19Copyright © 2014 EPS Group All rights reserved.

Strategies in 25th Term (By Business Segment – Overseas)
EKISHINBusiness• Expand medical equipment sales• Strengthen investment management through licensing outof pharmaceutical development rights• Develop non-clinical trial materials trading firm function• Strengthen integrated operations of EKISHN businessthrough an intermediate holding company

EPS EKISHIN Co.,Ltd.

Holding Company (Operational)

1）LSG Business
2）C&L Business3） Investment managementBusiness

20

EPS（China） Co.,Ltd.
Holding Company (No operations)

1）Medical Device Production &Sales Business
2） The Related Service Business

Copyright © 2014 EPS Group All rights reserved.

Contents

1. Financial Results Overview (24th Term)
2. Current Term Estimates (25th Term)3. Future Business Strategy• Operational Structure(Transition to holding company structure, etc)
• Mid-term Targets

21

Copyright © 2014 EPS Group All rights reserved.

EPS Group Management System
Transition to a holding company structure is expected to be implemented
on January 1, 2015

EPS Holdings
Business Segment
DomesticCRO

Domestic

Domestic

SMO

CSO

GR

EKISHINBPO

EP Biz（Shared Service）

22

Copyright © 2014 EPS Group All rights reserved.

Objective of Transition to A Holding Company Structure

1. Establish independent and autonomous
management structures for each businesssegment
2. Clarification and fortification of groupmanagement functions for the holdingcompany
3. Increase efficiency of administrative function
by EP Biz’s shared services
23

Copyright © 2014 EPS Group All rights reserved.

Contents

1. Financial Results Overview (24th Term)
2. Current Term Estimates (25th Term)
3. Future Business Strategy• Operational Structure(Transition to holding company structure, etc)
• Mid-term Targets

24

Copyright © 2014 EPS Group All rights reserved.

Mid-term Term Business Strategy<Goal Three Years Forward> Establish a business structure that can achieve sustained growth withinJapan Become an Asian and global CRO services provider originated in Japan Become a specialist health care trading firm connecting Japan to Chinaand South East Asia
<Various Business Segments: Themes of Our Mid-term Business Strategy> Domestic CRO:
Become unchallenged industry leader Domestic SMO:
Become unchallenged industry leader Domestic CSO:
Become the leading company with unique services
 Global Research: Become an Asian and global CRO services provider
originated in Japan EKISHIN:
Become a specialist health care trading firm connecting
Japan to China and South East Asia Overall Group:
Establish Group management, optimize administrativedivision25

Copyright © 2014 EPS Group All rights reserved.

Mid-term Numerical Targets:
Sales, Operating income (Consolidated)（ UNIT:JPY MILLION ）2015

Y o Y(%)

2016

Y o Y(%)

2017

Y o Y(%)

Net sales

44,120105.6%

47,500107.7%

52,500110.5%

Operating Income

4,625

Operating Income
ratio (%)

26(10.5%)

103.0%

5,500(11.6%)

118.9%

6,700(12.8%)

121.8%

Copyright © 2014 EPS Group All rights reserved.

Mid-term Numerical Targets:
Business segment sales（ UNIT:JPY MILLION ）Domestic
BusinessOverseas
Business27

2015

Y o Y(%)

2016

Y o Y(%)

2017

Y o Y(%)

CRO

24,833102.7%

27,000108.7%

29,700110.0%

SMO

6,800

108.2%

7,500

110.3%

8,300

110.7%

CSO

6,500

108.8%

7,200

110.8%

8,000

111.1%

GR

2,226

101.6%

2,400

107.8%

3,000

125.0%EKISHIN

4,050

115.5%

5,000

123.5%

7,000

140.0%

Copyright © 2014 EPS Group All rights reserved.

Sales Trend, Year-On-Year ChangeNet
売上高（ UNIT:JPY MILLION ）sales

60,000Previous
対前年比
year

30%

52,50050,00040,00030,00029,451 32,040

37,584

25%
20%
15%

20,00010%

10,0005%00%

2010/9 2011/92835,202

41,80044,12047,5002012/9 2013/9 2014/9 2015/9 2016/9 2017/9

Copyright © 2014 EPS Group All rights reserved.

Operating Income Trend, Operating Margin
Operating
営業利益（ UNIT:JPY MILLION ）IncomeIncome ratio

30%

8,000

6,700

7,000
6,000
5,000

Operating
営業利益率

4,415

4,803

5,500

5,174
4,491

4,000

25%
20%

4,625

15%

3,497

3,000

10%

2,000
5%

1,0000%02010/929

2011/92012/92013/92014/92015/92016/92017/9Copyright © 2014 EPS Group All rights reserved.

Ｔｈａｎｋ ｙｏｕ<Contact> E-Mail； ir@eps.co.jp

30

Copyright © 2014 EPS Group All rights reserved.