EPS : Consolidated Earnings Report for the First Nine Months of Fiscal 2017(451KB)

Consolidated Earnings Report for the First Nine Months of Fiscal 2017 [Japanese GAAP] August 1, 2017

Company Name: EPS Holdings, Inc.

Stock Listing: First Section, Tokyo Stock Exchange

Code Number: 4282

URL: http://www.eps-holdings.co.jp

Representative Director: Yan Hao, Chairman & CEO

Inquiries: Shuzo Orihashi, Director, Executive Corporate Officer

Tel: [phone]

Filing of Quarterly Securities Report: August 14, 2017

Scheduled Payment of Dividends: －

Supplementary explanatory materials prepared: None Explanatory meeting: None

(¥ millions are rounded down)

1. Consolidated Results for the Third Quarter of Fiscal 2017 (October 1, 2016 to June 30, 2017)

2. Consolidated Operating Results (¥ millions; percentage figures represent year-on-year changes)

   First Nine Months	Net sales	Operating income	Recurring profit	Profit attributable to owners of parent
   Fiscal 2017	44,637 16.9%	6,312 27.4%	6,513 25.9%	3,529 11.7%
   Fiscal 2016	38,187 17.0%	4,953 37.7%	5,174 39.6%	3,158 100.6%

   Note: Comprehensive income: June 30, 2017: ¥4,782 million (139.6%), June 30, 2016: ¥1,995 million (- 14.3%)

   First Nine Months	Earnings per share (¥)	Net income per share (diluted) (¥)
   Fiscal 2017	76.57	－
   Fiscal 2016	74.46	－

3. Consolidated Financial Position (¥ millions)

4. Total assets	Net assets	Equity ratio (%)
   June 30, 2017	59,766	43,312	67.3
   September 30, 2016	52,530	34,364	64.3

   Note: Equity: June 30, 2017: ¥40,245million, September 30, 2016: ¥33,801 million

5. Dividends

6. Dividend per share (¥)
   First Quarter	Second Quarter	Third Quarter	Year End	Full Year
   Fiscal 2016	－	10.00	－	15.00	25.00
   Fiscal 2017	－	10.00	－
   Fiscal 2017 (forecast)	12.00	－

   Notes: 1. Revisions to recent dividend forecasts: None

   2. Components of the fiscal 2016 interim dividend: Ordinary dividend of ¥8 per share and commemorative dividend of ¥2 per share (commemorative dividend to mark the 25th anniversary of the Company's founding)

   Components of the fiscal 2016 year-end dividend: Ordinary dividend of 10 yen per share and special dividend of 5 yen per share

   3. Forecast of Consolidated Results for Fiscal 2017 (October 1, 2016 to September 30, 2017)

   (¥ millions; percentage figures represent year-on-year changes)

   Net sales	Operating income	Recurring profit	Profit attributable to owners of parent
   Full year	58,000 10.1%	6,500 4.4%	6,500 (1.4)%	3,500 (11.7)%

   Note: Revisions to recent consolidated results forecasts: None

   *Notes

7. Changes to important subsidiaries during the first six months changes in specified subsidiaries resulting in revised scope of consolidation): Yes

   Newly included: 1 company (Name) Shanghai Hua Xin High Biotechnology Co., Ltd. Excluded: - companies (Name)

8. Application of special accounting methods in the preparation of quarterly consolidated financial statements: None

9. Changes in accounting principles, accounting estimates and restatements

   ①Changes in accounting policies in conjunction with revisions to accounting standards: None

   ②Other changes: None

   ③Changes in accounting estimates: None

   ④Restatements: None

10. Number of shares issued (common stock)

Fiscal 2017, 3Q end	46,311,389	Fiscal 2016 end	46,311,389
Fiscal 2017, 3Q end	207,722	Fiscal 2016 end	1,703,017
Fiscal 2017, 3Q	46,092,005	Fiscal 2016, 3Q	42,419,603

①Number of shares issued at end of period (including treasury stock):

②Number of treasury stock at end of period:

③Average number of stock during the period:

Note:

The total number of treasury shares included shares held by the employees' shareholding trust, specifically 136,600 shares as of September 30, 2016 and 69,300 shares as of June 30, 2017.

• This financial report is outside the scope of the quarterly audit review.

• Explanation concerning the appropriate use of financial forecasts and other notable matters.

Earnings forecasts and other forward-looking statements in this report are based on data currently available to management and certain assumptions that management believes are reasonable. Actual results may differ materially from these statements for various reasons.

Table of Contents of Supplementary Materials

……

……

…

1. Qualitative Information Concerning Quarterly Financial Statements and Other Matters………………………….……… 2

2. Explanation Regarding Consolidated Operating Results……………………………………………………………… 2

3. Explanation Concerning Forward-Looking Statements such as Consolidated Financial Forecasts…………………… 3

4. Quarterly Consolidated Financial Statements……………………………………………………………………………… 4

5. Quarterly Consolidated Balance Sheets…………………………………………………………………..…………… 4

6. Quarterly Consolidated Statements of Income and Comprehensive Income……………………………………… 6

   Quarterly Consolidated Statements of Income

   (The nine months ended June 30, 2017)……………………………………..……………………………………. 6 Quarterly Consolidated Comprehensive Income

   (The nine months ended June 30, 2017) ……………………………………………………………………… 7

7. Notes Concerning Quarterly Consolidated Financial Statements

8. (Notes Concerning the Going Concern Assumption) ………………………………………………………………. 8 (Note Concerning Significant Changes in the Amount of Shareholders' Equity) …………………………..……… 8

   (Adoption of Special Accounting Treatment for the Preparation of Quarterly Consolidated Financial Statements) 8

   (Changes in Accounting Policies and Changes in and Restatements of Accounting Estimates) ………..………… 8

   (Segment Information) ……………………………………………………………………………………………… 8

   3. Supplementary Information ……………………………………………………………………………………………… 10

   (1) Orders Received ……………………………………………………………………………………………………… 10

   1

   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, 2017

   (¥ millions)

   The First Nine Months of Fiscal 2016		The First Nine Months of Fiscal 2017		Change
   Amount	%	Amount	%	Amount	%
   Net sales	38,187	100	44,637	100	6,449	16.9
   Operating income	4,953	13.0	6,312	14.1	1,359	27.4
   Recurring profit	5,174	13.5	6,513	14.6	1,339	25.9
   Profit attributable to owners of parent	3,158	8.3	3,529	7.9	370	11.7

   In the nine months ended June 30, 2017, the EPS Group as a whole posted consolidated net sales of ¥44,637 million, an increase of 16.9% year on year, mainly driven by higher sales across all businesses. Operating income rose by 27.4% year on year to ¥6,312 million, the highest ever for a nine-month period, mainly reflecting firm performance trends across all businesses except for the Global Research Business.

   Operational segment are outlined as follows. Segment Information

   The Group primarily operates businesses in the following five segments (three domestic segments and two overseas

   segments).

   (¥ millions)

   The First Nine Months of fiscal 2016	The First Nine Months of fiscal 2017	Change
   Domestic Business	CRO	Net sales Operating income	20,357 4,836	21,637 5,082	1,279 246
   	SMO	Net sales Operating income	7,891 440	10,581 1,495	2,689 1,054
   	CSO	Net sales Operating income	5,450 231	6,304 448	854 217
   Overseas Business	Global Research	Net sales Operating loss (income)	2,954 247	3,495 (317)	541 (564)
   	EKISHIN (China) Business	Net sales Operating income (loss)	2,793 (71)	4,600 288	1,806 359

   1) CRO Business

   In the CRO Business, the Group conducts operations based on the following structure:

9. Contract-based clinical study and post-marketing surveillance (PMS) services: EPS Corporation and EPS Associates Co., Ltd.

10. On-site CRO services: EPMate Co., Ltd.

11. Pharmaceutical and medical IT services: e-Trial Co., Ltd.

12. Clinical research services: EP- CRSU Co., Ltd. (EPI Japan Co., Ltd. and J-CRSU Co., Ltd. merged on April 1, 2017).

Looking at performance by service, in clinical study services, net sales and operating income were largely in line with forecasts, supported mainly by measures to strengthen management and promote the integration of internal management systems. In PMS and related services, net sales and operating income both surpassed forecasts as a result of measures to strengthen the organizational structure and rigorously enforce cost controls.

In on-site CRO services, net sales were below plan due to delays in securing resources, while operating income was largely in line with plan. In pharmaceutical and medical IT services, net sales and operating income both surpassed forecasts.

In clinical research services, net sales and operating income both increased year on year due to favorable progress on contract-based projects.

As a result, in the CRO Business, net sales were ¥21,637 million, an increase of 6.3% year on year, and operating income was ¥5,082 million, an increase of 5.1% year on year.