Consolidated Earnings Report for the First Nine Months of Fiscal 2019
[Japanese GAAP]
August 1, 2019
Company Name:
Stock Listing:Code Number:
URL:
Representative Director:
Inquiries:
Tel:
Filing of Quarterly Securities Report:
Scheduled Payment of Dividends:
Supplementary explanatory materials prepared:
Explanatory meeting:

EPS Holdings, Inc.
First Section, Tokyo Stock Exchange4282
http://www.eps-holdings.co.jp
Yan Hao, Chairman & CEO
Kazuki Sekitani, Director, Managing Corporate Officer+81-3-5684-7873
August 13, 2019
－
None
None

(¥ millions are rounded down)
1. Consolidated Results for the First Nine Months of Fiscal 2019 (October 1, 2018 to June 30, 2019)(1) Consolidated Operating Results(¥ millions; percentage figures represent year-on-year changes)
Profit attributable toFirst Nine Months
Net sales
Operating income
Recurring profit
owners of parent
Fiscal 201950,1553.5%
3,836 (30.1)%
3,896(31.3)%
2,053(40.5)%
Fiscal 2018
48,462
8.6%
5,488 (13.1)%
5,667(13.0)%
3,447(2.3)%
Note: Comprehensive income: June 30, 2019: ¥2,322 million [(35.7)%], June 30, 2018: ¥3,613 million [24.5%]
First Nine Months
Fiscal 2019
Fiscal 2018

Earnings
per share (¥)
45.61
74.88

Net income
per share (diluted) (¥)－－(2) Consolidated Financial Position(¥ millions)
Equity ratio
Total assets
Net assets(%)
June 30, 2019
65,517
46,12865.4
September 30, 2018
65,40546,743
66.6
Notes: 1. Equity: June 30, 2019: ¥42,817 million, September 30, 2018: ¥43,534 million
2. The Company has adopted “Partial Amendments to Accounting Standard for Tax Effect Accounting, etc.”(Accounting Standards Board of Japan (ASBJ) Statement No. 28, February 16, 2018) from the beginning of thethree months ended December 31, 2018. Accordingly, the Company has retroactively applied these amendments tototal assets and the equity ratio for the fiscal year ended September 2018.
2.

Dividends

Dividend per share (¥)
Second Quarter
Third Quarter
Year End
Fiscal 2018
－
12.00
－
17.00
Fiscal 2019－
13.00
Fiscal 2019 (forecast)－
15.00
Notes: 1. Revisions to recent dividend forecasts: None
2. The year-end dividend for fiscal 2018 includes a special dividend of 4 yen per share.
First Quarter

3. Forecast of Consolidated Results for Fiscal 2019 (October 1, 2018 to September 30, 2019)

Full Year
29.00
28.00

(¥ millions; percentage figures represent year-on-year changes)
Profit attributable toProfitNet sales
Operating income
Recurring profit
owners of parent
per share (¥)
Full year
68,100 3.5%
5,700 20.8%
5,800 (22.0) %3,000 31.6%
66.65
Note: Revisions to recent consolidated results forecasts: Yes

*Notes(1) Changes to important subsidiaries during the first nine months changes in specified subsidiaries resulting in revised scopeof consolidation: None
(2) Application of special accounting methods in the preparation of quarterly consolidated financial statements: None
(3) Changes in accounting principles, accounting estimates and restatements
a. Changes in accounting policies in conjunction with revisions to accounting standards: Noneb. Other changes: Nonec. Changes in accounting estimates: None
d. Restatements: None
(4) Number of shares issued (common stock)a. Number of shares issued at end of
Fiscal 2019, 3Q end
period (including treasury stock):

46,311,389 Fiscal 2018 end

46,311,389

b. Number of treasury stock at end of
Fiscal 2019, 3Q end
period:1,970,940 Fiscal 2018 end

1,049,754

c. Average number of stock during the
Fiscal 2019, 3Q
period:45,011,032 Fiscal 2018, 3Q

46,046,404

Note: The number of treasury shares at end of period (Fiscal 2019, 3Q end) includes 93,090 shares of the Company held by
EPS EKISHIN Co., Ltd.
* This financial report is outside the scope of the quarterly audit reviews performed by certified public accountants or
auditing firms.
* Explanation concerning the appropriate use of financial forecasts and other notable matters.
Earnings forecasts and other forward-looking statements in this report are based on data currently available to management
and certain assumptions that management believes are reasonable. Actual results may differ materially from thesestatements for various reasons.
Please see “(2) Explanation Concerning Forward-Looking Statements such as Consolidated Financial Forecasts" under "1.
Qualitative Information Concerning Quarterly Financial Statements and Other Matters” on page 4 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. Qualitative Information Concerning Quarterly Financial Statements and Other Matters………………………….………
(1) Explanation Regarding Consolidated Operating Results………………………………………………………………
(2) Explanation Concerning Forward-Looking Statements such as Consolidated Financial Forecasts……………………

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2. Quarterly Consolidated Financial Statements………………………………………………………………………………
(1) Quarterly Consolidated Balance Sheets…………………………………………………………………..……………
(2) Quarterly Consolidated Statements of Income and Comprehensive Income……………………………………………
Quarterly Consolidated Statements of Income(The nine months ended June 30, 2018)……………………………………..…………………………………….
Quarterly Consolidated Comprehensive Income(The nine months ended June 30, 2018) ……………………………………………………………………………

557(3) Notes Concerning Quarterly Consolidated Financial Statements………………………………………………………
(Notes Concerning the Going Concern Assumption) ……………………………………………………………….
(Note Concerning Significant Changes in the Amount of Shareholders’ Equity) …………………………..………
(Segment Information) ………………………………………………………………………………………………

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1. Qualitative Information Concerning Quarterly Financial Statements and Other Matters(1) Explanation Regarding Consolidated Operating Results
Overview of Operating Results for the Nine Months Ended June 30, 2019
The First Nine Months of
Fiscal 2018
Amount%The First Nine Months of
Fiscal 2019
Amount%(¥ millions)
ChangeAmount%Net sales

48,462100.0

50,155

100.0

1,693

3.5

Operating income

5,488

11.3

3,836

7.6

(1,652)(30.1)

Recurring profit

5,667

11.7

3,896

7.8

(1,771)(31.3)

Profit attributable toowners of parent

3,447

7.1

2,053

4.1

(1,394)(40.5)

Forward-looking statements contained in this document are based on a judgment of operating results for the nine months
ended June 30, 2019.
In the nine months ended June 30, 2019, the EPS Group posted consolidated net sales of ¥50,155 million, an increase of
3.5% year on year. The overall increase in net sales was mainly due to a positive contribution to sales from AC MEDICAL
INC., which became a consolidated subsidiary, and steady sales increases in segments other than the CRO Business andGlobal Research Business. This increase in sales was partially offset by the impacts of sluggish growth in newly awarded
projects, which reflected intensified competition with global CROs, the loss of large projects, and the cancellation of clinical
trials in operation.
Consolidated operating income declined by 30.1% year on year to ¥3,836 million. This overall decline was due to a decreasein capacity utilization rates, mainly reflecting impacts such as the loss of large projects in the CRO Business and Global
Research business, and the cancellation of clinical trials in operation. This compares with a high profit margin recorded in thenine months ended June 30, 2018 owing to favorable progress on projects in the CRO Business. The decline in consolidated
operating income was partially offset by solid performances in the SMO Business and EKISHIN (China) Business in the ninemonths ended June 30, 2019.
Profit attributable to owners of parent decreased by 40.5% to ¥2,053 million. This decrease reflected an increase in profit
attributable to non-controlling interests in the EKISHIN (China) Business, in addition to the decrease in consolidated
operating income.
Operational segment are outlined as follows.
Segment Overview
The Group primarily operates businesses in the following five segments (three domestic segments and two overseas
segments).
(¥ millions)
The First Nine
The First Nine
Months of fiscal
Months of fiscal
Change2018
2019
Net sales
22,76922,943
174
CRO
Operating income
5,115
3,505
(1,610)
Domestic
Net sales
10,464
10,616151
SMO
Operating income
738
1,062
324
Business
Net sales
5,859
6,696
836
CSO
Operating income
297
285
(12)
Overseas
Business

GlobalResearch

Net sales
Operating income (loss)

3,686
111

2,904
(116)

(782)
(228)

EKISHIN(China)Business

Net sales
Operating income

8,091
66

8,986
319

895
253

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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 Corporation1, EPS Associates Co.,
Ltd., and AC MEDICAL INC. 1
b. Clinical research services: EP- CRSU Co., Ltd.
c. Pharmaceutical and medical IT services: EP-Techno Co., Ltd. 2
Looking at performance in the CRO Business by service, in clinical study services, net sales and operating income were both
below forecasts, due to the impact of cancellations and delays of clinical trials and related issues, as well as the lack ofgrowth in newly awarded projects for monitoring services. In PMS and related services, net sales and operating income wereboth higher than forecast, as projects currently under way performed steadily.
In clinical research services, although orders for new projects fell short of expectations, higher-than-forecast results in thefirst half of the fiscal year contributed to net sales in line with forecast. Operating income was higher than forecast. In
pharmaceutical and medical IT services, net sales and operating income were both slightly below forecast due to thepostponement of the start of a new project to the fourth quarter.
In the CRO Business, as a result of the acquisition of AC MEDICAL INC., the Group can expect to fortify its data science
platform, which is a core competence of AC MEDICAL INC., along with further enhancing high-quality services and supply
capabilities.
As a result, net sales were ¥22,943 million, an increase of ¥174 million, or 0.8%, year on year. Net sales were supported
partly by a positive contribution to sales from the acquisition of AC MEDICAL INC., despite weak sales from monitoring
services. The underperformance against forecasts in clinical study services had a large impact on operating income.
Consequently, operating income decreased by ¥1,610 million, or 31.5%, to ¥3,505 million.
2) SMO Business
The SMO Business is undertaken by EP-SOGO Co., Ltd.
In this business, the Group worked to enhance business performance by bolstering the sales structure through such means as
strengthening the project management system and fully expanding proposal-based sales activities. Efforts were also made toenhance the quality control system.
As a result, in the SMO Business, net sales rose ¥151 million, or 1.4%, to ¥10,616 million. Operating income was ¥1,062
million, an increase of ¥324 million, or 43.9%, year on year. This increase was mainly due to cost-cutting measures including
appropriate personnel placements.
3) CSO Business
The CSO Business is undertaken by EP-PharmaLine Co., Ltd., AC MEDICAL INC., and ES-Link Co., Ltd.
CMR (Contract Medical Representative) services for pharmaceuticals, as well as the academic materials production and BPO
businesses, trended favorably. The medical contact center business performed largely in line with forecasts.
ES-Link Co., Ltd., a joint venture between the Group and SUZUKEN Co., Ltd., seeks to strengthen sales of new services
through the fusion of marketing specialists (MS) and call centers with BPO. The joint venture is focusing on winning projects
based on inquiries received from customers.
Moreover, in March 2019, the Group integrated the CMR (Contract Medical Representative) services for pharmaceuticals(the UPSHE business) of AC MEDICAL INC. into the Group’s CSO Business. With this step, the Group will deliver highquality services by leveraging the abundant human resources of AC MEDICAL INC.
As a result, with a positive contribution from the acquisition of AC MEDICAL INC., net sales were ¥6,696 million, an
increase of ¥836 million, or 14.3%, year on year, and operating income was ¥285 million, a decrease of ¥12 million, or 4.1%,
year on year.

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On February 28, 2019, the Company acquired all of the issued shares of AC MEDICAL INC., and incorporated each of its businesses
into the CRO segment and CSO segment. In addition, on April 1, 2019, EPS Corporation absorbed EPMate Co., Ltd. through a merger.

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2

On April 1, 2019, e-Trial Co., Ltd.

absorbed All Right Technology Inc. through a merger, and was renamed as EP-Techno Co., Ltd.

4) Global Research Business
The Global Research Business comprises EPS International Holdings Co., Ltd. and its overseas group companies. Thisbusiness, which encompasses the CRO business in China, is primarily carried out in the Asia-Pacific region.
In the Asia-Pacific region, the Group has been focusing on winning new projects while laying solid business foundations in
the region. However, net sales and operating income both were below forecasts, partly due to sluggish growth in newly
awarded projects, which reflected intensified competition with global CROs. The Group has formed a strategic partnershipwith George Clinical Pty Ltd of Australia and is working to strengthen its sales platform in the Asia-Pacific region.
Concurrently, the Group is aiming for stable business performance by bolstering its quality control system and enhancing the
CRO business platform in China.
As a result, net sales were ¥2,904 million, a decrease of ¥782 million, or 21.2%, year on year. Due partly to the impact ofintegrating into this segment the CRO business and related services in China that had been conducted by the EKISHIN(China) Business in the previous year, the Group recorded an operating loss of ¥116 million, compared to operating incomeof ¥111 million in the same period of the previous fiscal year.
5) EKISHIN (China) Business
The EKISHIN (China) Business is undertaken by the two regional holding companies EPS EKISHIN Co., Ltd. and EPS(China) Co., Ltd., and related Group companies in China.
In this business, under a solid capital and business partnership with SUZUKEN Co., Ltd., the Group provides four types ofservices, specifically product-related services centered on pharmaceuticals and medical devices, investment-related services,international trading-related services and peripheral support services. The Group is working to further expand earnings as a
specialist trading company in the healthcare industry linking Japan and China.
In the product-related services, the Group made steady progress with the continuous development of existing markets andcultivation of new regional markets. Notably, the pharmaceutical manufacturing and marketing business contributed
positively to increased earnings.
As a result, net sales were ¥8,986 million, up ¥895 million, or 11.1%, year on year, and operating income was ¥319 million,
an increase of ¥253 million, or 380.9%, from the same period of the previous fiscal year.
(2) Explanation Concerning Forward-Looking Statements such as Consolidated Financial Forecasts
In light of recent business performance, the Group has revised its consolidated financial forecasts announced in the financial
report for the fiscal year ended September 30, 2018 issued on November 7, 2018. For details, please see the press release
titled “Revision of Financial Forecasts” issued today (August 1, 2019).

42. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets

AssetsCurrent assets:
Cash and time deposits
Notes and accounts receivable - tradeMarketable securities
Merchandise and finished goods
Work in process
Other current assets
Less: Allowance for doubtful accounts
Total current assets
Fixed assets:
Property, plant and equipment
Intangible fixed assets:
Goodwill
Other intangible fixed assets
Total intangible fixed assets
Investments and other assets:
Investment securities
Lease and guarantee deposits
Other investments and other assets
Less: Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

As of September 30, 2018
(Previous Fiscal Year-End)5(¥ millions)
As of June 30, 2019(End of the First Nine Months)

17,857
15,746
1,357
849
1,473
3,094
(51)
40,326

16,431
14,894
2,135
847
2,031
4,007
(52)
40,295

4,892

5,153

6,629
773
7,402

7,058
935
7,994

5,999
1,867
5,815
(898)
12,78425,07865,405

5,581
2,045
5,070
(622)
12,07425,22265,517(¥ millions)

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

As of September 30, 2018
(Previous Fiscal Year-End)As of June 30, 2019(End of the First Nine Months)

456
65
602
1,251
2,732
242
9,237
14,587

583
1,065
633
341
1,664
201
11,021
15,511

918

536

453

388

1,428
556
716
4,073
18,661

1,444
608
899
3,878
19,3893,888
13,601
26,347(2,167)
41,6703,888
13,69027,048(3,764)40,862

1,012
861
(9)
1,864
3,209
46,74365,405

1,319
644
(8)
1,954
3,311
46,12865,517

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(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statements of Income(The nine months ended June 30, 2019)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income:Interest income
Dividend income
Gain on insurance cancellation
Other non-operating income
Total non-operating income
Non-operating expenses:
Interest expenses
Foreign exchange losses
Other non-operating expenses
Total non-operating expenses
Recurring profit
Extraordinary gains:
Gain on sales of investment securities
Gain on step acquisitions
Total extraordinary gains
Extraordinary losses:
Loss on transition of retirement benefit plans
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

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First Nine Months of
Fiscal 2018
(October 1, 2017
to June 30, 2018)
48,462
31,182
17,279
11,7905,488(¥ millions)First Nine Months of
Fiscal 2019
(October 1, 2018
to June 30, 2019)50,15532,55917,596
13,759
3,836

35
52
46
154
289

74
55
82
63
276

14
77
19
110
5,667

11
169
35
216
3,896

-

274
198
472

5,667
1,435
631
2,067
3,600
152
3,447

84
84
4,283
1,150
739
1,889
2,394
341
2,053

Quarterly Consolidated Comprehensive Income(The nine months ended June 30, 2019)

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

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First Nine Months of
Fiscal 2018
(October 1, 2017
to June 30, 2018)
3,600(¥ millions)First Nine Months of
Fiscal 2019
(October 1, 2018
to June 30, 2019)
2,394

279
(210)
(56)

306
(382)
0

0

2

12
3,613

(72)
2,322

3,502

2,143

110

178

(3) Notes Concerning Quarterly Consolidated Financial Statements(Notes Concerning the Going Concern Assumption)
None(Note Concerning Significant Changes in the Amount of Shareholders’ Equity)
The Company implemented a share exchange of 642,000 shares of treasury stock for the shareholders of All Right
Technology Inc. to convert All Right Technology Inc. (currently EP-Techno Co., Ltd.) into a wholly owned subsidiary of theCompany on the effective date of November 1, 2018.
The Company acquired 1,469,800 of its own shares in accordance with resolutions of the Board of Directors passed on
March 27, 2018 and February 1, 2019.
As a result, treasury shares increased by ¥1,597 million during the nine months ended June 30, 2019, to stand at ¥3,764
million as of June 30, 2019.

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(Segment Information)【Segment Information】
I. The First Nine Months of Fiscal 2018 (October 1, 2017 to June 30, 2018)
1. Information Concerning Net Sales and Operating Income for Each Segment

CRO

SMO

CSO

GlobalResearch
Business

EKISHIN(China)Business

Others(¥ millions)
Total

Adjustment(Note 1)

Amountrecorded onquarterly
consolidated
financialstatements

Net sales
Sales to outside
20,469 10,416
5,785
3,675
7,949
166
48,462―
48,462
customers
Inter-segment
sales and
2,300
48
74
11
142
1,067
3,645
(3,645)―transfers
Total
22,76910,464
5,859
3,686
8,091
1,234
52,108(3,645)48,462
Segment
5,115
738
297
111
66
59
6,388
(899)
5,488
operating income
Notes: Eliminations/Corporate for operating income of ¥(899) million includes intersegment transactions of ¥35 million andnon-attributable corporate expenses not distributed to each segment of ¥(935) million. The main corporate expenses
comprise expenses related to the Company (the holding company).
II. The First Nine Months of Fiscal 2019 (October 1, 2018 to June 30, 2019)
1. Information Concerning Net Sales and Operating Income for Each Segment(¥ millions)
CRO

SMO

CSO

GlobalResearch
Business

EKISHIN(China)Business

Others

Total

Adjustment(Note)

Amountrecorded onquarterly
consolidated
financialstatements

Net sales
Sales to outside 20,967
10,577
6,609
2,864
8,957
179
50,155―50,155
customers
Inter-segment
1,976
39
86
39
29
1,386
3,556
(3,556)―sales andtransfers
Total
22,943
10,616
6,696
2,904
8,986
1,565
53,712(3,556)50,155
Segment
3,505
1,062
285
(116)
319
51
5,108
(1,272)
3,836
operating income
Note: Eliminations/Corporate for operating income of ¥(1,272) million includes intersegment transactions of ¥18 million
and non-attributable corporate expenses not distributed to each segment of ¥(1,290) million. The main corporate
expenses comprise expenses related to the Company (the holding company).

2. Information Concerning Impairment Loss on Fixed Assets or Goodwill in Each Reportable Segment
In the three months ended December 31, 2018, All Right Technology Inc. became a wholly owned subsidiary of theCompany by means of a stock exchange with the Company. As a result, the amount of goodwill in the CRO Businesssegment increased by ¥1,164 million. On April 1, 2019, e-Trial Co., Ltd. absorbed All Right Technology Inc.
through a merger, and was renamed as EP-Techno Co., Ltd.

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