2006 INTERIM BUSINESS REPORT
Oct.01, 2005 ~ March 31, 2006

- 1 -

CONTENTS
I.

Overview of Our Group................................3

II.

Management Policy......................................5

III.

Business Performanceand Financial Position....8IV.

EPS Group....................................................15V.

Financial Highlights....................................18

VI.

Company Profile...........................................24

- 2 -

I.

Overview of Our Group
Details of Our Group’s Businesses
Our group companies (excluding the All Right Group)
provide various servicesto companies involved withpharmaceutical and medical product development.
The pharmaceutical companies spend an exhaustive
amount of time and money on research anddevelopment for “new drugs”. All “new drugs” must
undergo clinical testing under the supervision of
medical institutions before they can be approved for
public use.Therefore new drugs must undergo
testing by a third party medical institution on test
subjects under informed consent agreements.

President and CEO
Yan Hao

As of March 31, 2006, the EPS Group consisted of our company, 14 consolidated
subsidiaries, and 3 affiliates held under the equity accounting method and we
provide various services in the three main business areas of CRO (Contract
Research Organization), SMO (Site Management Organization), and preclinical testing.
Our company EPS participates in the CRO business, performing clinical testing(including Post-Marketing Study), and various specialized services such as
clinical testing operations and management for pharmaceutical and othercompanies. We provide clinical test planning documentation and case reportform making support, patient registration, testing project management, data
management, data analysis, monitoring, clinical study report providing, drug
approval applications and other related services. Additionally we provide
management system development for all of these various services.
At the same time, the All Right Group performs software development
outsourcing services.
We also have two subsidiaries that focus their business resources upon
specialized areas: EP Medical Co., Ltd., which provides MR dispatch services,and EP-Mint Co., Ltd., which provides personnel dispatch services to thepharmaceutical companies (dispatched type CRO services) (chart 1, note 2).

- 3 -In March 2006 we established E-Trial Co., Ltd. to provide system development
and support services which leverage EDC systems for global clinical testing
services.
Our consolidated subsidiaries EP-Mint Co., Ltd. and Nihon SMO Co., Ltd.
provide various services in the SMO business realm. These subsidiaries
maintain agreements with various medical institutions, which perform clinicaltesting, to provide them with CRC dispatch, clinical testing administrative
functions, and other specialized services in the area of the SMO business.
The LSG Group performs pre-clinical testing related services, providing
pharmaceutical companies with various safety testing research materials andanimals to support their pre-clinical testing functions.

- 4 -

II.

Management Policy(1) Basic Management Policy
At the core of our basic management policy, our Group maintains the goal ofproviding various services that satisfy the needs of our customers and help themto find resolutions to contradictory propositions which comply with laws, and are
efficient and high in quality.
In the future, we will exert every effort to expand the scope of our business basedon these management principles, while at the same time maintaining ourposition as the industry leader, and fulfilling our social responsibility. We will
also strive to fortify our compliance structure and live up to our name, “Ever
Progressing System.”(2) Our Basic Policy Regarding Distribution of Profits
We seek to strengthen our corporate structure by improving our earnings
generating capability, while at the same time maintaining a fair profit
distribution policy to our shareholders. With regards to distribution of profits,
we seek to strike a balance between the need to establish a solid financial
foundation to be able to quickly respond to rapidly changing market conditions
and the desire to maintain a stable level of profit distribution. Therefore wehave established a target dividend payout ratio of 30%.
Moreover even after the implementation of the new corporate law we expect tocontinue to pay dividends at both the end of the interim and full year periods.

(3) Our Policy Regarding Reductions in the Minimum Share
Trading Lot
We may consider offering stock splits depending upon the trading of our shares.

(4) Our Management Targets
We maintain the following intermediate-term management targets.
Target attainment period:
Fiscal Year September 2008
Consolidated sales target:
Approximately ¥26.0 billion
Ordinary income margin target:
Approximately 13%
In order to achieve the targets outlined above, we will implement the various
management strategies outlined below.

- 5 -(5) Intermediate to Long-Term Management Strategy
Our Group maintains the CRO, SMO and pre-clinical testing businesses at thecore of our operations. In addition to these core businesses in Japan, we will
also promote the personnel dispatch, and drug and medical information systemdevelopment businesses, and we will expand our operating territory bypromoting the CRO and software development businesses in the Chinese, South
East Asian, and Oceania markets. We also seek to extract synergies between
these various services to grow our business a step further. More specifically wewill implement the strategies outlined below.

(5)-1) Further Strengthen Our CRO BusinessIn response to the growing outsourcing needs related to drug development, we will fortify
our planning and drug approval functions in addition to our clinical testing operation
capabilities.
Additionally we seek to maintain our position as the leading company within the industry
by offering effective total support services to not only medical doctors involved with thedrug development, but also to medical equipment and the special health use food
manufacturers.

(5)-2) Promotion of Our SMO Business
While the clinical testing support services provided to medical institutions is already
rapidly expanding, even further growth is expected in the near future.

Consequently wehave been strengthening the internal structure of EP-Mint Co., Ltd. since its merger totake full advantage of the merger to expand this business, and to become one of the top
three companies within the industry.

(5)-3)

Overseas Business Expansion

In order to be able to respond to international simultaneous development amidst thegrowing trend of ICH*, we continue to explore the possibilities of our overseas businessexpansion. As part of our overseas business strategy, we have formed a joint marketing
agreement of the exception of South Africa with Charles River Laboratories Inc.
(Massachusetts, United States) which is developing the CRO business and pre-clinicaltesting services on a global scale in all overseas markets.
We also signed a business agreement with FHI Inc. of the United States, which is aprovider of various CRO services, to help fortify our own service line-up in our marketing
functions in China, South East Asia and Oceania so that we can pursue synergies with theJapanese market.

- 6 -(5)-4) Entering the New Drug Development BusinessIn the new drug development business area, we have made the strategic decision to seek
the cooperation of bio-venture and other partners to form joint ventures, and to provide
consulting and CRO related services in this area rather than trying to develop the market
on our own.
With regards to China, our local subsidiary will seek to obtain local approval for various
medical products licensed to us from drug manufactures in the United States, Europe andJapan.

(5)-5) Fortification of Our Group
Currently our company and its 14 subsidiaries, which comprise the EPS Group, provide
various services to the medical product development industry.
To ensure the smooth expansion in the breadth of our business, securing high quality staff,
training them, and deploying them effectively is crucial. Furthermore we seek to pursue
various synergies that exist within our group and to fortify it through M&A and new
business planning activities.

(Note) ICH is an acronym for the “International Conference on Harmonization of TechnicalRequirements for Registration of Pharmaceuticals for Human Use.” This Conference
maintains a goal of standardizing the various documentation and procedures required
for new drug approval in the United States, Europe and Japan to help eliminate
unnecessary duplication of clinical and laboratory testing while securing the safety andeffectiveness of drugs.

(6) Key Topics
Amidst the growing trends of outsourcing of various tasks, and of globalizationof our clients’ operations, our Group seeks to raise our overall service quality
levels through the fortification of our QC and QA divisions, the strict abidance
and adherence to standardized guidelines, and the training and education of
our staff designed to raise their skill levels.
At the same time, we will seek to establish an efficient and well definedstructure to manage the business processes of projects, ranging from order todelivery, in order to be able to maintain our leading position despite theincreasingly fierce pricing competition within the industry.

(7)

Basic Policy Regarding Relationships with Our Parent
Company
We are not a subsidiary or affiliate and therefore do not have a parent company.

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III

Business Performance and Financial Position

1. Business Performance(1) Review of the Current Term
During the current fiscal year, the Japanese economｙ continued to grow on
support of strong exports, higher corporate profits, brisk consumption anddespite various uncertainties such as higher oil prices and overseas economy.
Against this backdrop, and despite a slight slowing in our markets we serve, wewere able to see continued growth in the CRO business, which is serviced
primarily by our company, and the SMO business, which is serviced primarily by
our subsidiary EP-Mint, as well as in our pre-clinical testing business.
EPS operates primarily in the CRO business realm.
With regards to our monitoring services, the clinical testing and planning
division, which performs clinical testing in the developmental and post market
stages, saw favorable trends in its existing project implementation, new projectacquisition, anti-cancer, diabetes and central nervous system related drug
testing businesses. Also during the current term, the early start of new projects
contributed to an increase in our capacity utilization rates.
With regards to our registration, and clinical information processing divisionalso saw continued expansion in its project progress management, data
management, and data analysis services. During the term under review, wewere able to achieve higher capacity utilization rates due to increases in thenumber of both existing and new projects.
In the area of medical equipment development, medical writing, and safety
information services we were able to increase both our orders and sales despitedifficult market conditions.
Additionally we have established a clinical research promotion center to develop
new clients and applications, and we have fortified our planning and proposal
functions to help develop new services.
Looking at our company, both sales and ordinary income of our clinical planning
development and clinical information processing divisions grew from theprevious interim term. However the disappearance of extraordinary profits
arising from the liquidation of investment securities during the previous interim
term contributed to a decline in net income.
With regards to our consolidated subsidiaries, our overseas subsidiaries EPS
China and EPS Singapore have been performing their own original way to- 8 -capture orders from new clients.
At the same time, EP Medical Co., Ltd. will now focus specifically upon the MR
dispatch services (CSO) from this term and has already been successful insecuring some large-scale orders. However EP Medical is suffering from frontloading of costs associated with the acquisition of personnel to help fuel the
future growth in this business.
Additionally in the area of our personnel dispatched to pharmaceuticalcompanies (dispatched CRO), EP Mate Co., Ltd., which was established in
October 2005 as a 100% owned subsidiary specifically targeting this business, began
full-scale operations from February 2006.
With regards to our system development services, our consolidated subsidiaries
All Right Software Inc. and its Chinese consolidated subsidiary All Right
Software Inc. (basede in Beijing)seek to promote their businesses by leveraging
the Chinese IT technicians to develop new clients.
Furthermore in December 2005 we established EPLUS Co.,Ltd.(consolidated
subsidiary, capitalized at US$300,000, 60% of voting rights owned by EPS, 40%
owned by Sosei Co., Ltd.) to expand the new drug development business in China
and preparations to start operations.
Consequently in our CRO business consolidated sales grew by 22.3% year-overyear to ¥5,023 million and consolidated operating income by 83.6% year-overyear to ¥614 million during the interim term.
EP-Mint Co., Ltd. and Japan SMO Co., Ltd. are primarily responsible for
performing services in the SMO business.
In addition to efforts to fortify the internal structure since its merger, EP-Mint
has formed relationships with regional medical institutions to promote both the
CRC services and the support services for clinical testing administrative
functions. Despite our efforts, earnings in this area were negatively impacted
by relatively weak orders and low capacity utilization rates.
At the same time Japan SMO, which is primarily responsible for the site support
services business, like EP Mint also suffered from weak order flow and saw anoperating loss.
Consequently while consolidated sales rose by 32.9% year-over-year to ¥1,455
million during the interim term, we saw an operating loss of ¥15 million, which
compares with an operating income of ¥24 million during the interim term last
year.

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LSG group is responsible for our pre-clinical testing business.
LSG saw a decrease in income due to restructuring in our overseas partners(contructed pre-clinical lab) and despite our efforts to expand sales of new
products as well as contracts with new overseas partners.
Therefore our pre-clinical testing sales fell by 9.9% year-over-year to ¥654
million and our operating income decreased by 42.8% year-over-year to ¥53
million during the interim term.
Moreover, Sogo Medi-Plus Co., Ltd. (affiliate held under equity accounting
method, capitalized at ¥30 million, EP-Mint owns 40% voting rights, and Sogo
Clinical Pharmacology Co., Ltd. owns 60%), which was established in October
2005, provides dispatched CRC services and began contributing to our earnings
at the non-operating level from the current term.
The business segments mentioned above include transactions within our Group
companies, so after excluding these inter-segment transactions our total
consolidated net sales, operating income, and ordinary income rose by 20.3%
year-over-year to ¥7,110 million, 43.5% to ¥655 million, and 40.0% year-overyear to ¥657 million during the interim term.
But at the same time
consolidated net income declined by 7.3% year-over-year to ¥333 million during
the interim term.

(2)

Earnings Projections for the Current Full Fiscal Year
We anticipate the Japanese economy to continue to trend strongly, however there
are numerous uncertainties on the horizon including higher oil prices, conditions
in overseas economies, and volatility in the domestic stock market, JPY exchangerate.
Our company seeks to achieve our earnings projections in the current year
through the mainly promoting of both the clinical information division, which
includes data management, data analysis, registration and project progress
management, medical writing, and safety information services and the clinicalplanning and development division, which includes monitoring, and medical
device product development services.
Furthermore we will also promote
information capturing and order activities in our planning promotion division,
overseas clinical testing related services in our overseas division, and new
business proposal and other services of our clinical research promotion center.

- 10 -

With regards to our consolidated subsidiaries, E-Trial Co., Ltd., which wasestablished in March 2006 for the purpose of performing global clinical testing forpharmaceutical companies based primarily on EDC, will begin full-scale operationin the second half of the year, and will leverage the synergies which exist between
the various overseas companies within our Group.
In overseas markets, EPS China Co., Ltd., which performs various CRO related
services, actively seeks out new clinical testing orders in China. And in Taiwan,
Hong Kong and South East Asia, EPS Singapore cultivates orders from newclients for clinical testing. Additionally EPLUS Co., Ltd.is working with ourpartner Sosei Co., Ltd. to quickly locate potential new drug development work andto establish a structure that will enable us to provide services for new drug
development in those markets.
EP Medical Co., Ltd. is responsible for the MR dispatch and CSO businesses andfocuses upon providing highly specialized services to acquire new orders. And
EP Mate Co., Ltd. performs dispatched type CRO services and focuses its efforts
upon expanding new staff dispatch business for pharmaceutical companies.
All Right Software Inc., which provides software development services using
Chinese IT technicians, is pursuing new orders for software development fromclients in the communications, finance, network related industries. All Right
Software’s Chinese subsidiary also focuses its efforts upon developing newclients as well as generating more business from existing clients.
EP-Mint Co., Ltd., which is responsible for our SMO business, suffered fromweak orders during the first half, but will focus its efforts upon making up forthese weak orders by delay of securing new personnel and reducing costs during
the second half.
Additionally LSG Corporation, which performs pre-clinical testing services,formed agreements with NewLab BioQuality AG (Germany) and MPI Research(United States) in February 2006 to become domestic agent of overseas preclinical testing services for domestic clients. Consequently LSG group will
expand its business of providing laboratory test animals, mouse cages, special
animal foods, and other products and services in the growth areas of the preclinical testing market.

- 11 -

The culmination of our efforts mentioned above is reflected below in our earnings
projections for the full fiscal year to September 2006. These figures wereoriginally announced on April 26, 2006 and represent revisions from our initialbudget announced on November 11, 2005.

(Non-consolidated)

Units:
Sales

FY9/05 Results
FY9/06 Projections
Change% Change

Ordinary
income

7,896
9,369
1,473
18.7%

Net income

1,221
1,390
169
13.8%

813
806
△7
△0.9%

Dividend per share (JPY)Interim
1,000
1,000

(Consolidated)Year end
1,700
2,000

Total
2,700
3,000

Units: Yen million
Sales

FY9/05 Results
FY9/06 Projections
Change% Change

Yen million

13,004
15,784
2,780
21.4%

Ordinary income
1,811
1,968
157
8.7%

2.

Financial Position(1)

Changes in Our Assets, Liabilities, and Equity

Net income
1,126
984
△142
△12.6%We describe changes in our financial position during the interim term from theend of the previous fiscal year below.
During the interim term, our consolidated current assets increased by ¥2,319
million to ¥8,810 million due to a ¥2,784 million rise in cash and equivalents,
which was due in part to assumption of new long term debt and the issuance of abond, a ¥109 million increase in inventories, despite a ¥582 million decrease innotes and accouts receivables. Our fixed assets rose by ¥203 million due
primarily to a ¥52 million increase in tangible fixed assets, and acquisition of
investment securities which showed a net increase of ¥132 million.
Consequently our total consolidated assets at the end of the interim term rose by¥2,522 million to ¥12,068 million from the end of the previous fiscal year end.
With regards to liabilities, current liabilities declined by ¥143 million due to a¥320 million reduction in income taxes payable which offset a ¥125 million
increase in the portion of long-term debt coming due within a year. Fixed- 12 -

liabilities rose by ¥2,484 million due mainly to the issuance of a bond and theassumption of long-term debt. Consequently total consolidated liabilities grewby ¥2,340 million from the end of the previous fiscal year to ¥5,049 million by
the end of the interim term.
With regards to shareholdes’ equity, money raised from the issuance of newshares was distributed to both capital and additional paid-in capital reservesand caused each account to rise by ¥50 and ¥49 million respectively. Retained
earnings grew by ¥185 million, and unrealized gain on available-for-salesecurities declined by ¥157 million. Consequently shareholders‘ equity at theend of the interim term grew by ¥150 million from the end of the previous fiscal
year to ¥6,150 million.

(2)

Consolidated Cash Flow Conditions
At the end of the interim term, consolidated cash and cash equivalents rose by¥2,784 million from the end of the previous fiscal year to ¥4,730 million on theback of cash inflow of ¥668 million and ¥2,656 million from operating andfinancing activities respectively, which more than offset a ¥555 million outflow ofcash from investing activities.

(Cash Flow from Operating Activities)
Cash flow derived from operating activities grew by ¥960 million from the end of
the previous interim term to ¥668 million at the end of the interim. The main
sources for this cash inflow include ¥627 million in income before income taxes(a decline of ¥216 million from the previous interim term ), which reflects a
decline due to ¥497 million in extraordinary profits derived from the liquidationof investment securities in the previous interim term, an inflow resulting from adecline in accounts receivables of ¥587 million (a ¥785 million increase from theprevious interim term), a ¥15 million decline in advance payment received (a¥104 million increase from the previous interim term), and ¥581 million
payment of income taxes (an increase of ¥86 million from the previous interimterm).
(Cash Flow from Investing Activities)
We saw a net outflow of cash from our investing activities of ¥555 million during
the interim term, which represents an increase in the outflow of ¥630 million
from the previous interim term. The main factors behind this cash outflow- 13 -

include a ¥92 million payment for the acquisition of tangible fixed assets (a ¥42
million increase from the previous interim term), a ¥416 million payment toacquire investment securities (a ¥215 million rise from the previous interimterm), and the decline of ¥374 million inflow resulting from the liquidation of
investment securities during the interim term of the last fiscal year.

(Cash Flow from Financing Activities)
We saw a cash inflow from our financing activities increase by ¥3,058 million
from the previous interim term to ¥2,656 million. The main reasons for thisincrease were the inflows of ¥1,997 million and ¥1,042 million from the issuanceof a bond and the assumption of long term debt respectively.
Trends in Our Cash Flow Related Indexes
FY9/02Equity Ratio
Public stock market value ratio

FY9/03

FY9/04

FY9/05

FY9/06
Interim

62.3%

65.8%

63.6%

347.3%

156.2%

380.7%

0.0

0.2

0.1

―

0.7

651.9

67.0

205.4

―

71.7

Debt redemption period (years)
Interest coverage ratio (times)

62.9%

51.0%

292.8%

288.9%

Equity ratio: Shareholder’s equity / total assets
Public stock market value ratio: Public stock market value / total assets
Debt redemption period:

Interest bearing liabilities / Operating cash flow

Interest coverage: Operating cash flow / Interest payments*

All indexes are based on consolidated financial data*

Public stock market value is calculated by the closing share price multiplized with the number ofoutstanding shares at the end of the interim term (excluding treasury stock)*

Operating cash flow is based on consolidated cash flow from operating activities at the end of the interim
term. Interest bearing liabilities include all liabilities on the consolidated balance sheet at the end of theinterim term upon which interest is paid.

Interest payments are based on interest payments taken fromthe consolidated cash flow statement at the end of the interim term.
*

Debt redemption period uses operating cash flow at the end of the interim term multiplied by two times torepresent the full year figure.

- 14 -IV

EPS Group

Providing Full-service Support for Drug Development Outsourcing
As the core of the EPS Group’s CRO business, we provide a wide range of services
supporting pharmaceutical companies’ drug development process, including SMO
operations, personnel dispatch, and non-clinical trial operations (including various
services outsourced from pharmaceutical companies in the stages prior to clinical
trials). As part of our full-service support business, our Group also provides services
ranging from planning to new medical applications. Additionally, as our medium-term
management objectives, we aim to expand overseas, build new businesses, and raise
the quality and efficiency of our operations while at the same time growing ourexisting businesses.

- 15 -

Providing system development and support services which leverage EDC systems for
global clinical testing services.
Offices: Tokyo
URL: http://www.e-trial.co.jp

Providing CRO services for clinical trials in China.
Offices: Shanghai, Beijing
URL: http://www.epscn.com(The Clinical Service Provider)
The base for our provision of CRO services in South East Asia.
Office: Singapore(Medical Staffing Service)
Providing DM operations, monitoring, and staff dispatch services.
Office: Tokyo
URL:http://www.epmate.co.jp/(Site Management Organization)
Providing support services for clinical trials performed by medical institutions and
SMO business.
Offices: Tokyo, Tohoku and Hokkaido (Sapporo, Morioka, Sendai, Koriyama), Chubu(Nagoya), Kansai (Osaka, Kobe), Chugoku (Hiroshima), Kyushu (Fukuoka, Miyazaki,
Okinawa)
URL: http://www.epmint.co.jp/- 16 -

(Contruct Sales Organization)
Providing MR dispatch, training, and other related services.
Offices: Tokyo, Osaka
URL: http://www.epmedical.co.jp

Outsourcing of pre-clinical testimg operations and related materials sales, andimport/export.
Offices: Tokyo, Chicago (US), Makati (Philippines)
URL: http://www.lsg.co.jp

Providing software development and consulting services performed by Chinese IT staff.
Offices: Tokyo, Beijing
URL: http://allrightsoft.co.jp/- 17 -

V Financial Highlights
1. INFORMATION OF EPS Co,Ltd & CONSOLIDATED SUBSIDIARIES 2006.03(2005.10.1-2006.3.31)(UNAUDITED)(1) CONSOLIDATED OPERATING RESULTS( UNIT:JPY MILLION )Net sales
Mar-06Mar-05
Sep-05

7,110 (20.3%)
5,910 (14.0%)
13,004 (19.0%)

Net Income per Share(yen)
3,877.21
Mar-06
4,164.93
Mar-05
13,070.99
Sep-05

Operating Income

Ordinary Income

655 (43.5%)456 (△17.1%)
1,793 (27.1%)

Net Income

657 (40.0%)469 (△17.5%)
1,811 (23.6%)

333 (△7.3%)
359 (27.8%)
1,126 (47.0%)

Net Income per
Share,diluted (yen)3,798.85
4,164.79-

Notes:
1. Average number of shares issued and outstanding during the period :Mar-0686,052 shares
Mar-0586,409 shares
Sep-0586,204 shares
2. Percentages for net sales, operating income, ordinary income, and net income indicate growthratio to previous year

(2) CONSOLIDATED FINANCIAL INFORMATION

Mar-06Mar-05
Sep-05

Total Assets

Stockholders' Equity

12,068
8,304
9,545

6,150
5,335
6,000

Notes : 1.Total shares issued and outstanding as of :Mar-0686,308 shares
Sep-0586,000 shares
2.Common stock for treasury as of :Mar-061,001 shares
Sep-051,000 shares

Stockholders'Equity ratio (%)
51.0
64.2
62.9

( UNIT:JPY MILLION )Stockholders' Equity
per share (yen)71,266.53
62,042.00
69,772.18

Mar-0586,000sharesMar-05

1,000

shares(3) CONSOLIDATED CASH FLOW INFORMATION( UNIT:JPY MILLION )Mar-06Mar-05
Sep-05

Net cash provided by(used in)operating activities
668
△ 291
△ 290

Net cash provided by(used in)investing activities
△ 555
75
138

Net cash provided by(used in)financing activities
2,656
△ 401
△ 751

Ending balance of cash
and cash equivalents
4,730
1,771
1,946

(4) CONSOLIDATED SUBSIDIARIES
Consolidated subsidiaries :Affiliated companies by equity accounting method :14 companies
3 companies

2. INFORMATION OF CONSOLIDATED BUDGET 2006.09 (2005.10.1-2006.9.30)( UNIT:JPY MILLION )Sep-06

Sales

Ordinary Income

Net Income

15,784

1,968

984

Budgeted net income per share :Note:

11,410.29 yen

Above figures may differ from actual results as uncertain various factors may affect future earnings.

- 18 -

1. INFORMATION OF NON-CONSOLIDATED 2006.03 (2005.10.1-2006.3.31)(UNAUDITED)(1) OPERATING RESULTS( UNIT:JPY MILLION )Net sales
Mar-06Mar-05
Sep-05

4,353 (21.7%)
3,577 (9.7%)
7,896-

Operating Income

Ordinary Income

591(91.8%)
308 (△26.5%)
1,142-

Net Income

638 (77.1%)
360 (△21.4%)
1,221-

367 (12.6%)
326 (26.7%)
813-

Net Income per Share(yen)
4,268.94
Mar-06
3,774.90
Mar-059,433.09
Sep-05
Notes:
1. Average number of shares issued and outstanding during the period :Mar-0686,052 shares
Mar-0586,409 shares
Sep-0586,204 shares
2. Percentages for net sales, operating income, ordinary income, and net income indicate growthratio to previous year(2) OVERALL SITUATION OF DIVIDEND DISTRIBUTION

Mar-06Mar-05
Sep-05( UNIT:JPY )Cash Dividends per share
Interim DividendYear end Dividend
per shareper share
1,000
1,000
2,700

(3) FINANCIAL INFORMATION

Mar-06Mar-05
Sep-05

Total Assets

Stockholders' Equity

9,769
6,592
7,088

5,483
4,978
5,320

Notes : 1.Total shares issued and outstanding as of :Mar-0686,308 shares
Sep-0586,000 shares
2.Common stock for treasury as of :Mar-061,001 shares
Sep-051,000 shares

Stockholders'Equity ratio (%)
56.1
75.5
75.1

( UNIT:JPY MILLION )Stockholders' Equity
per share (yen)63,536.89
57,894.02
61,865.47

Mar-0586,000sharesMar-05

1,000

shares2. INFORMATION OF NON-CONSOLIDATED BUDGET 2006.09 (2005.10.1-2006.9.30)( UNIT:JPY MILLION )Sales

Ordinary Income

Net Income

Sep-06

9,369

1,390

806

Sep-06

Annual Dividend
per share
3,000Interim Dividend
per share
1,000

Budgeted net income per share :Note:( UNIT:JPY )Year end Dividend
per share
2,000

9,344.00 yen

Above figures may differ from actual results as uncertain various factors may affect future earnings.

- 19 -

CONSOLIDATED BALANCE SHEETSMARCH 31 2005, 2006 AND SEPTEMBER 30, 2005
(UNAUDITED)(IN THOUSANDS,JPY)ASSETS
CURRENT ASSETS
Cash and cash equivalents
Notes and accounts receivable
Inventories
OthersAllowance for doubtful accounts
Total current assets

MARCH 31.2005

MARCH 31.2006

SEPTEMBER 30.2005

1,771,463
2,853,987
173,824
660,709△ 1,337
5,458,647

4,730,917
3,113,088
328,241
639,491△ 878
8,810,860

1,946,862
3,695,254
218,801
632,030△ 1,237
6,491,710

220,727
65,465

304,836
105,776

251,874
107,090

Time deposits and banking arrangements

1,296,093
579,960
500,000

1,490,347
604,498
500,000

1,358,169
641,653
500,000

other than cash equivalents
OthersTotal investments and other assets

184,027
2,560,080

251,8092,846,656

195,1132,694,936

Total fixed assets

2,846,273

3,257,269

3,053,902

TOTAL ASSETS

8,304,920

12,068,130

9,545,612

LIABILITIESCURRENT LIABILITIES
Accounts payable
Current portion of long-term debt
Income taxes payable
Provision for bonuses
OthersTotal current liabilities

252,701
25,000447,449
341,073
961,837
2,028,061

153,684
212,100
288,503
388,667
1,016,096
2,059,052

157,906
86,824
608,911
370,813
978,387
2,202,842

192,733
125,326
186,849
504,9092,532,971

1,900,000
726,600
214,623
125,260
24,1622,990,646
5,049,699

205,545
122,335
178,293
506,174
2,709,017

436,336

867,560

836,187

1,325,250
1,275,300
2,655,744
425,833

1,375,250
1,325,299
3,521,850
208,979

1,325,250
1,275,300
3,336,628
366,394△ 25,264△ 321,251

41,166△ 321,674

18,085△ 321,251

5,335,612

6,150,871

6,000,407

8,304,920

12,068,130

9,545,612

FIXED ASSETS
Tangible Assets
Intangible Assets
Investments and other assets ;Investment securities
Deposits

LONG-TERM LIABILITIESBond with warrantLong-term debt
Provision for employee's retirement benefits
Provision for director's retirement benefits

OthersTotal long-term liabilities
TOTAL LIABILITIESMINORITY INTERESTSSHAREHOLDERS' EQUITY
Common stock
Additional paid-in capital
Retained earnings
Unrealized gain on
available-for-sale securities
Foreign currency translation adjustments

Common stock for treasury
TOTAL SHAREHOLDERS' EQUITYTOTAL LIABILITIES, MINORITY INTERESTSAND SHAREHOLDERS' EQUITY- 20 -

CONSOLIDATED STATEMENTS OF INCOME
FOR SIX MONTHS ENDED MARCH 31, 2006, 2005 AND THE YEAR ENDED SEPTEMBER 30, 2005
(UNAUDITED)(IN THOUSANDS,JPY)

SIX MONTHS ENDED

SIX MONTHS ENDEDYEAR ENDED

MARCH 31.2005

MARCH 31.2006

SEPTEMBER 30.2005

NET SALES

5,910,285

7,110,205

13,004,141

COST OF SALES

4,434,385

5,273,492

9,155,319

Gross profit

1,475,899

1,836,712

3,848,821

1,019,017

1,181,201

2,054,850

456,882

655,510

1,793,970

Interest income

9,553

12,743

20,134SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Operating income
OTHER INCOME (EXPENSES)Interest expenses△ 535△ 9,329△ 2,890

Gain on cancellation of life insurance

6,928

5,231

12,327

Service fee income

1,687

1,578

4,410

Payment to the Association for employment of persons with disabilities△ 1,100△ 1,550△ 4,200

Foreign exchange loss

△ 2,891△ 4,181△ 16,032

Expense for treasury stock acquisition△ 2,159-△ 2,159-△ 4,888-

Equity in losses of associated companies
Bond issuance cost
Amortization of consolidated adjustment accountGain on sales of property and equipment
Gain on sale of investments in securities-△ 2,256-△ 56,032-△ 56,032

1,034

284

1,075

497,083-

606,114

Loss on sales and disposal of property and equipment△ 23,957△ 8,030△ 27,265

Provision for allowance for directors retirement benefits△ 11,275-△ 11,275

Office removal expenses of consolidated subsidiary△ 25,556-△ 25,556

Loss on devaluation of investments in securities-△ 13,723-

Impairment loss-

△ 3,635--△ 3,014-△ 5,325

3,110△ 55,719

Other income (expenses)-net

387,452△ 27,661

442,929

Income before income taxes and minority interests

844,334

627,850

2,236,900

438,646

274,520

907,384

Loss on lease cancellation
Other- net

INCOME TAXES
Current
Deferred

5,629

1,216

106,069

444,275

275,736

1,013,454

MINORITY INTERESTS

40,171

18,472

96,673NET INCOME

359,887

333,641

1,126,771

Total- 21 -

CONSOLIDATED STATEMENTS OF CASH FLOWSFOR SIX MONTHS ENDED MARCH 31 2006, 2005 AND THE YEAR ENDED SEPTEMBER 30 2005

(UNAUDITED)(IN THOUSANDS,JPY)
SIX MONTHS ENDED

SIX MONTHS ENDEDYEAR ENDED

MARCH 31.2005

MARCH 31.2006

SEPTEMBER 30.2005

OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes and minority interests to
net cash provided by operating activities:
Depreciation and amortization
Impairment loss
Amortization of consolidated adjustment account
Increase in provision for bonuses（△Decrease)
Increase in allowance for retirement benefits for employees
Increase in allowance for retirement benefits for directors
Interest and dividends income
Interest expense
Gain on sale of investments in securities
Loss on devaluation of investments in securities
Changes in operating assets and liabilities:
Decrease in accounts receivable-trade（△Increase)
Increase in inventories
Decrease in accounts payable -trade
Decrease in advance received
Increase in other current liabilities（△Decrease)
Others , Net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
INVESTING ACTIVITIES:
Proceeds from sales of investments securities
Proceeds from loan collections
Disbursements for purchase of tangible fixed assets
Disbursements for purchase of intangible fixed assets
Disbursements for loans
Payment for purchase of investments securities
Payment for deposit for rent office and others
Others , Net
Net cash provided by (used in) investing activities
FINANCING ACTIVITIES:
Proceeds from borrowing short-term debt
Proceeds from borrowing long-term debt
Proceeds from issuance of bonds
Proceeds from issuance of common stock to minority stock holders
Disbursements for repayments of short-term debt
Disbursement for repayment of finance leases
Disbursements for repayment of long-term debt
Disbursement for acquisition of treasury stock
Dividends paid
Dividends paid for minority stock holders
Others , Net
Net cash provided by (used in) financing activities
EFFECT OF EXCHANGE DIFFERENCE ON CASH & CASH EQUIVALENTS
NET INCREASE (△DECREASE) IN CASH AND CASH EQUIVALENTS
BEGINNING OF BALANCE,CASH AND CASH EQUIVALENTS
INCREASE IN CASH AND CASH EQUIVALENTS BY MERGER OF CONSOLIDATED SUBSIDIARYENDING OF BALANCE,CASH AND CASH EQUIVALENTS- 22 -

844,334

627,850

2,236,900

33,16260,474△ 3,864
17,496
10,491△ 9,553535△ 497,083-

50,256
3,635
17,3949,078
2,924△ 12,743
9,329
13,72371,087
63,79425,00730,3087,500△ 20,134
2,890△ 606,114-△ 198,072△ 18,941△ 2,224△ 119,963△ 23,421
100,442
193,8129,123△ 535△ 494,327△ 291,927

587,205△ 96,319△ 5,640△ 15,828
37,465
18,567
1,246,900
12,163△ 9,329△ 581,090
668,643△ 891,401△ 52,292△ 97,806△ 158,291△ 210,802
112,932
513,577
17,774△ 2,890△ 818,838△ 290,377

374,000
142,512△ 50,161△ 8,983△ 107,833△ 201,223△ 73,604
933
75,6399,151△ 92,982△ 4,098△ 35,240△ 416,890△ 19,104
3,843△ 555,321

702,161
151,835△ 102,425△ 11,659△ 110,943△ 389,623△ 114,557
13,867
138,654

120,000
33,000△ 120,000△ 13,200△ 323,410△ 85,869△ 12,475△ 401,955△ 4,518△ 622,762
2,394,225
1,771,463

1,042,000
1,997,743
14,055△ 42,901△ 190,124△ 145,152△ 18,794△ 423
2,656,403
14,3302,784,055
1,946,862
4,730,917

520,000
33,000△ 520,000△ 277,264△ 323,410△ 171,155△ 12,475△ 751,304
9,791△ 893,236
2,394,225
445,873
1,946,862

STATEMENT OF ORDER ENTRY AND SALES BY ITEMS(UNAUDITED)(1) RESULT OF ORDER ENTRY
2006.03<2005.10.1-2006.3.31>(JPY thousand )DIVISIONAMOUNT OF
ORDER ENTRY

year-to-yearcomparison (%)

ORDER BACKLOG

CRO
Data Management
Monitoring

2,072,988
106.4
2,646,117
100.5
System Development
1,235,324
127.1
TOTAL OF CRO
5,954,429
107.2
1,561,749
170.6
SMO
647,563
91.3
Preclinical Service
TOTAL
8,163,742
113.8* These figures are expressed by sales price.
* These above figures do not include the consumption tax.

year-to-yearcomparison (%)

4,127,700
6,929,792
543,712
11,601,204
1,652,160
162,889
13,416,255

119.4
108.5
163.2
114.0
130.5
78.8
115.2

(2) RESULT OF SALESDIVISION

2006.03<2005.10.12006.3.31>(JPY thousand )CRO
Data Management
Monitoring
System Development

TOTAL OF CRO
SMO
Preclinical Service
TOTAL

1,744,280
2,260,526
1,004,617
5,009,424
1,448,159
652,621
7,110,205

year-to-yearcomparison (%)

120.2
134.0
105.3
122.4
132.5
90.0
120.3

INDUSTRY SEGMENT(UNAUDITED)2005 (2004.10.1-2005.3.31)
SALES
Sales to customers
Intersegment sales

Total
Operating expenses
Operating income

CRO

SMO

4,092,532
16,065
4,108,598
3,773,828
334,769

1,093,005
2,320
1,095,325
1,070,581
24,743

CRO

SMO

5,009,424
13,637
5,023,061
4,408,352
614,709

1,448,159
7,078
1,455,237
1,470,996(15,758)

CRO

SMO

9,038,313
34,3889,072,702
7,768,857
1,303,844

2,588,444
8,628
2,597,072
2,330,694
266,378

Preclinical Service

724,747
2,070
726,817
632,803
94,013

Total
5,910,285
20,4555,930,741
5,477,214
453,526

2006 (2005.10.1-2006.3.31)
SALES
Sales to customers
Intersegment sales

Total
Operating expenses
Operating income

Preclinical Service

652,6212,070
654,691
600,90753,783

Total
7,110,205
22,785
7,132,990
6,480,256
652,734

2005 (2004.10.1-2005.9.30)
SALES
Sales to customers
Intersegment sales

Total
Operating expenses
Operating income

Preclinical Service

1,377,383
4,140
1,381,523
1,164,199
217,324- 23 -

Total
13,004,141
47,157
13,051,298
11,263,751
1,787,546(Unit: JPY THOUSAND)
Eliminations/Corporate
Consolidation−(20,455)(20,455)(23,811)3,355

5,910,285−
5,910,285
5,453,403
456,882(Unit: JPY THOUSAND)
Eliminations/Corporate
Consolidation−(22,785)(22,785)(25,561)
2,776

7,110,205−
7,110,205
6,454,694
655,510(Unit: JPY THOUSAND)
Eliminations/Corporate
Consolidation−(47,157)(47,157)(53,580)
6,423

13,004,141−
13,004,141
11,210,170
1,793,970

VI Company Profile
Corporate Name:
President & CEO:Establishment:
Capital:Main Services:
E-Mail:URL:EPS Co., Ltd.
Yan Hao
May 1991¥ 1375.25 Million
CRO business and System Development
info@eps.co.jp
http//:www.eps.co.jp

Locations(Center Office)Tsuruya Bldg.,2-23 Shimomiyabicho, Shinjuku-ku, Tokyo
1620822
Tel:+81-3-5684-7801(Annex.1)
2-3-19 Koraku, Bunkyo-ku, Tokyo
1120004
TEL. ＋81-3-5684-7797(Annex.2)
K.I.S Iidabashi Bldg., 2-3-28 Koraku, Bunkyo-ku Tokyo
1120004
TEL. ＋81-3-5804-7369(Osaka Branch)
Nissei Shin-osaka Bldg., 3-4-30 Miyahara, Yodogawa-ku, Osaka
5320003
TEL. ＋81-6-4807-7107(Nagoya Branch)Horiuchi Bldg., 3-25-9 Meieki, Nakamura-ku, Nagoya4500002
TEL. ＋81-52-581-8887- 24 -

Members of the Board and Statutory Auditors(As of March 31, 2006)
President & CEO

Mr. Yan Hao

Executive Directors

Mr. Koichi Jingu
Mr. Tatsuhiko Ichiki

Directors

Mr. Tomohiro Tominaga
Mr. Yasuharu Tamai
Mr. Akihiro Shimosaka

Statutory Auditors

Mr. Kozo Okunaga
Mr. Junichi Ishikawa
Mr. Toru Ebihara
Mr. Koichi Shibuya

Current Situation of Shares(As of March 31, 2006)
Authorized stocks
Share of common stock issued
Number of stockholders

324,000
87,3095,547- 25 -

Principal Shareholders
Shareholder
Yan Hao
Y&G Limited
Goldman Sachs International
Sumitomo Life Insurance Mutual Co
BNY for GCM Client Accounts (E) ISG
Japan Trustee Service, T.
Northern Trust Co AVFC Re Northern Trust Guernsey
Irish Clients
Tokyo Marin & Nichido Fire Insurance Co., Ltd.
United Nations. For the U.N.J.S.P.F., a U.N.Organ.
Small Cap Yen
Xu PingShare
held17,645
16,958
3,221
2,700
2,407
2,158
1,778

Percentage of
total
20.2%
19.4%
3.7%
3.1%
2.8%
2.5%
2.0%

1,620
1,316

1.9%
1.5%

1,274

1.5%

Classification of Shareholders
Japan Securities Depository Center, Inc(Nominal shareholder)
0.0%
4 shares
Common stock
for treasury
1.1%
1,001 shares
Securities company
1.6%
1,368 shares
18 persons

Other resident
companies
20.0%
17,476 shares
39 persons
Personal/Others
53.2%
46,429 shares
5,445 persons

Finance institution
9.8%
8,592 shares
12 persons
Nonresident
14.3%
12,439 shares
33 persons- 26 -

Guide of stockYear end
Annual general stockholders
meeting
The date stockholders are
decided to
be entitled to obtain dividends
Official bulletin
Transfer agent

End of September
Within December
Annual dividend (End of September)Interim dividend (End of March)
http://www.eps.co.jp/
The Chuo Mitsui Trust and Banking
Company, Limited

For more information, please contact:
Office of the President
EPS Co., Ltd.
Tel +81-3-5684-7826
Fax +81-3-5804-0361
E-mail: ir@eps.co.jp- 27 -