May 8, 2020
EPS Holdings, Inc. First Section, Tokyo Stock Exchange 4282 http://www.eps-holdings.co.jp Yan Hao, Chairman & CEO Kazuki Sekitani, Board Member, Vice President and Corporate Officer +81-3-5684-7873 May 15, 2020 June 8, 2020 Yes (for institutional investors and analysts)
1.
(1)
(¥ millions are rounded down) Consolidated Results for the First Six Months of F iscal 2020 (October 1, 2019 to March 31, 2020) Consolidated Operating Results
(2)   Consolidated Financial Position
The dividend forecast is to be determined. For details, please refer to "Notice of Revision to Earnings Forecast and Dividend Forecast" released today (May 8, 2020).

Forecast of Consolidated Results for Fiscal 2020 (October 1, 2019 to September 30, 2020)
3.
Regarding the consolidated earnings forecast, please refer to " Notice of Revision to Earnings Forecast and Dividend Forecast " released today (May 8, 2020).
*Notes
(1) Changes to important subsidiaries during the first six months changes in specified subsidiaries resulting in revised scope of 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: None b. Other changes: None c. Changes in accounting estimates: None d. Restatements: None (4) Number of shares issued (common stock) a. Number of shares issued at end of period (including treasury stock): b. Number of treasury stock at end of period: c. Average number of stock during the period:
Note: The number of treasury shares at end of period 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 forvard-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 these statements for various reasons.
Forward-looking statements contained in this document are based on a judgment of operating results for the six months ended March 31, 2020. In the six months ended March 31, 2020, the EPS Group posted consolidated net sales of ¥33,663 million, an increase of 0.5% year on year. This growth in sales was broadly in line with the forecast. Although shipments in the EKISHI (China) Business were affected by the temporary suspension of manufacturing lines stemming from China’s Revised Drug Administration Law and there was impact on the Global Research Business from the conclusion of a large-scale project in the previous fiscal year, the CSO Business was strong. Additionally, consolidated operating income declined 15.6% year on year to ¥2,684 million, but was significantly higher than the forecast. The decrease in income owes primarily to a decline in supply due to production line suspension in the EKISHI (China) Business and the conclusion of a highly profitable monitoring project and a large-scale clinical study in the previous fiscal year. Operational segments are outlined as follows. Segment Overview The Group primarily operates businesses in the following five segments (three domestic segments and two overseas segments).
Research Business on October 1, 2019. For the year-on-year comparisons above, consolidated figures for the six months ended March 31, 2019 have been reclassified into their business segments following the merger.
l) CRO Business
In 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 b. Clinical research services: EP- CRSU Co., Ltd. c. Pharmaceutical and medical IT services: EP-Techno Co., Ltd. Looking at performance in the CRO Business by service, net sales and operating income in contract-based services including clinical studies and PMS services met forecasts, reflecting solid progress on alliance contracts with business partners. In monitoring, sales and income declined, mainly owing to high-value projects wrapping up in the previous fiscal year as well as sluggish inquiries in the previous six months having an effect on the period under review. In clinical research services, results were largely in line with forecasts. Although net sales and income decreased year on year due to the conclusion of a large-scale clinical trial in the previous fiscal year, proactive acceptance of physician- led clinical trial orders resulted in good operating rates. In pharmaceutical and medical IT services, the Group is promoting digitization in the CRO business. Also, the Group is making headway with academic alliances but struggling with product sales. As a result, net sales were ¥15,595 million, an increase of ¥243 million, or 1.6%, year on year, and operating income was ¥2,438 million, a decrease of ¥397 million, or 14.0%, year on year.
2) SMO Business
The SMO Business is undertaken by EP-SOGO Co., Ltd. In this business, the Group is striving to fully deploy proposal-based sales activities targeting clinical trial sponsors, secure orders through alliance contracts, and concentrate resources on preferred facilities with good patient recruitment rates, among other things. At the same time, the Group is bolstering education focused on specialties such as cancer, mental illness, and dermatology while enhancing profitability and efficiency through appropriate placement of personnel such as clinical research coordinators (CRCs) and site management associates (SMAs), giving consideration to maintenance of internal frameworks and regionality. In CRC services, difficulty securing new orders and delayed progress on clinical trials due to COVID-19 impact led to net sales below the forecast, but cost controls and higher productivity resulted in income above the forecast. In addition, the Group launched a collaborative project between the CRO Business and the Global Research Business in the previous fiscal year, and is deploying a new business model with the aim of rapidly recruiting clinical trial participants and reducing clinical trial costs. Specifically, site data managers (SDMs) that have received training in CRO visit medical facilities and perform operations such as data entry to increase the time CRCs spend on patient recruitment, enhance efficiency, and so forth. As a result, net sales were ¥6,917 million, a decrease of ¥206 million, or 2.9%, year on year. The initiatives noted above are benefitting operating income, which rose ¥95 million, or 11.7%, year on year, to ¥911 million.
3) CSO Business
The CSO Business is undertaken by EP-PharmaLine Co., Ltd., EP-Force Co., Ltd., and ES-Link Co., Ltd. CMR (Contract Medical Representative) business performance was broadly in line with forecasts since the decline in demand for CMRs spurred by the pharmaceutical industry’s ongoing MR reductions in recent years wound down, the Group was able to increase CMR service personnel along with ith inquiries also on a recovery trajectory. The medical call center business, which handles call center operations for medical facilities, exceeded forecasts due partly to contracts for highly profitable spot projects. Academic materials production business performance surpassed forecasts as progress was made shifting from variable, volume-based charges to contracts with fixed monthly fees and earnings stabilized. In addition, the BPO business was broadly in line with forecasts. As a result, net sales were ¥5,663 million, an increase of ¥1,593 million, or 39.2%, year on year. The increase was mainly due to growth in the medical call center division. Operating income was ¥399 million, an increase of ¥230 million, or 136.7%, year on year.
4) Global Research Business
The Global Research Business comprises EPS International Holdings Co., Ltd. and its overseas group companies. This business, which encompasses the CRO business in China, is primarily carried out in the Asia-Pacific region. In the Asia-Pacific region, the Group continues to strengthen the business base and is focusing on orders for projects in each country. Further, the Group aims to bolster CRO business operations in China where inquiries are rising in tandem with market expansion. Orders from overseas for trials within Japan experienced a decrease in sales, owing to the conclusion of a large-scale project in the previous fiscal year, suspension of an existing project, and sluggish new orders. As a result, net sales were ¥1,889 million, a decrease of ¥498 million, or 20.9%, year on year. Operating income started to see the effects of business base improvement, and came to ¥99 million, an increase of ¥80 million, or 425%, year on year.
5) EKISHIN (China) Business
The EKISHIN (China) Business comprises the two regional holding companies EPS EKISHIN Co., Ltd. and EPS (China) Co., Ltd., and related overseas Group companies. In this business, under a solid capital and business partnership with SUZUKEN Co., Ltd., the Group provides product-related services centered on pharmaceuticals and medical devices, 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 product-related services, sales and profit declined in earnings-driving pharmaceutical manufacturing and sales. This owes to impact from sweeping inspections and examinations being carried out at existing manufacturers accompanying the announcement of revisions to China's Drug Administration Law in August 2019, as well as temporary suspension of manufacturing lines at a Group company in China. Although the affected manufacturing lines resumed operations in December 2019, logistics and sales operations were affected by COVID-19. Moreover, supply could continue to be affected moving ahead. In medical device sales, new business development advanced steadily and sales and profit grew. Additionally, product sales were firm in international trading business. As a result, net sales were ¥4,084 million, a decrease of ¥1,700 million, or 29.4%, year on year, and operating losses were ¥257 million (¥140 million in operating income posted in the same period of the previous fiscal year). (2) Explanation Concerning Forward-Looking Statements such as Consolidated Financial Forecasts Based on its recent performance, the Company has revised the earnings forecast for the fiscal year ending September 30, 2020 announced on November 7, 2019. For details, please refer to "Notice of Revision to Earnings Forecast and Dividend Forecast" released today (May 8, 2020).
(3) Risk Information Concerning COVID-19
The Group supports pharmaceutical development, mainly for pharmaceutical companies, and conducts clinical trials at medical facilities for new drug development. Clinical trials require the participation of subjects (patients). As a basic principle, the Group makes ensuring the safety of employees, clinical trial subjects, medical facility personnel, and clients a top priority in business operations. However, the Group believes there are risks such as those noted below of the current COVID-19 situation affecting its financial position, operating results, and other matters. Once it has recognized a risk, the Group’s policy is to work to avoid or mitigate the risk. However, the Group could be affected substantially by a variety of factors that could arise going forward. Forward-looking statements contained in this document are based on a judgment of operating results for the six months ended March 31, 2020. ① Risk of employees contracting COVID-19 Since much of the Group’s business entails direct work with medical institutions, we are exercising extreme care in taking steps to prevent employees from contracting COVID-19. However, in the event that it becomes difficult for a long period of time to continue operations, owing to events such as Group employees contracting the virus and an inability to secure alternative personnel, the Group’s financial position, operating results, and other matters could be affected. ② Risk of clients suspending or postponing development due to COVID-19 In the event that there is a prolonged situation wherein clients postpone or suspend activities such as clinical trials that are planned or underway with a view to preventing the spread of COVID-19, the Group's financial position, operating results, and other matters could be affected. ③  Risk of medical institutions becoming unable to conduct clinical trials and so forth due to COVID-19 In the event that medical facilities become unable to continue clinical trials for a long period of time due to the status of the COVID-19 outbreak, the Group’s financial position, operating results, and other matters could be affected.

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statements of Income

Quarterly Consolidated Comprehensive Income

(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 disposed of 1,400,000 treasury shares through a third-party allocation to Hongkong Tigermed Co., Limited on December 12, 2019 based on a resolution at the Board of Directors meeting held on October 29, 2019. In addition, the Company disposed of 35,463 treasury shares for restricted stock compensation on January 17, 2020 based on a resolution at the Board of Directors meeting held on December 20, 2019. Furthermore, the Company acquired 124,700 treasury shares on based on a resolution at the Board of Directors meeting held on February 1, 2019    and March 18, 2020. As a result, treasury shares decreased by ¥2,608 million during the six months ended March 31, 2020, to stand at ¥1,156 million as of March 31, 2020. (Segment Information) I. The First Six Months of Fiscal 2019 (October 1, 2018 to March 31, 2019) 1. Information Concerning Net Sales and Operating Income for Each Segment
corporate expenses not allocated to each reportable segment of ¥(849) 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 the Company by means of a stock exchange with the Company. As a result, the amount of goodwill in the CRO Business segment increased by ¥1,164 million.
II . The First Six Months of Fiscal 2020 (October 1, 2019 to March 31, 2020) 1. Information Concerning Net Sales and Operating Income for Each Segment Notes: 1. Adjustment of ¥(980) million for segment operating income includes inter-segment transactions of ¥8 million and corporate expenses not allocated to each reportable segment of ¥(988) million. The main corporate expenses comprise expenses related to the Company (the holding company). 2. EPS Associates Co., Ltd. and EPS International Holdings Co., Ltd. merged on October 1, 2019. EPS Associates Co., Ltd. was the surviving company in the merger by absorption upon which its name was changed to EPS International Holdings Co., Ltd. Accompanying this, it was moved from the CRO Business to the Global Research Business segment. Segment information for the six months ended March 31, 2019 is disclosed based on the reporting segments for the six months ended March 31, 2020.
3. Supplementary Information

amounts are included in new orders. 2. Figures represent sales prices. 3. The above figures do not include consumption taxes.