23rd Interim Business Report. October 1, 2012 to March 31, 2013

Transcription

1 23rd Business Report October 1, 2012 to March 31, 2013

2 To Our Shareholders and Investors We are undergoing business restructuring in an attempt to strengthen our competitiveness. Yan Hao, Chairman and Representative Director of EPS Corporation Yan Hao was born in 1962 in Jiangsu Province, China. In 1979, he entered Tianjin University. In 1981, he attended the University of Yamanashi as a government-sponsored exchange student from China. He graduated from the Department of Computer Science and Engineering at the University of Yamanashi. After completing a master s program at the University of Yamanashi graduate school, he went on to specialize in medical statistics in a doctoral program at the University of Tokyo graduate school, pursuing research and the handling of clinical studies. In 1991, while studying at the University of Tokyo graduate school, he established a contract research organization, the present EPS Corporation, and became President and CEO. In October 2012, he became Chairman and CEO. In 2001, the company was listed on the JASDAQ market and in September 2006, it was listed on the First Section of the Tokyo Stock Exchange. Q1 Q1 Please provide a general overview of operating results for the second quarter and describe your earnings prospects for the full year. Among domestic businesses, while the mainstay CRO business produced good results, the SMO and CSO businesses stagnated. With regard to overseas businesses, in the global research business we established a CRO business company in the United States to expand business and strengthening systems, while in the China business we commenced sales of medical devices. These new undertakings contributed to a significant increase in revenues. Consequently, during the first half of the fiscal year consolidated net sales came to 18,237 million (up 5.2% year on year), operating income 1,741 million (down 36.7%), ordinary income 1,638 million (down 37.7%), and net income 671 million (down 43.2%). For the full year, we aim to achieve net sales of 38,521 million and operating income of 4,488 million. While net sales are expected to increase, operating income will decline due to advance investments in the SMO- and CSO-related businesses. We are determined to capitalize on these investments for growth in the next term. Q2 What policies and measures are in place for businesses in Japan? In Japan, we are engaged in the CRO, SMO and CSO businesses. In the domestic CRO business, we will promote further efficiencies and transform the business into a highly professional organization that proposes solutions. In the domestic SMO business, we will strengthen our systems and strive to expand our business by promoting 1

3 proposal-based marketing and enhancing our ability to win orders. At the same time, we will encourage third-party collaboration in an attempt to strengthen marketing capabilities. In the domestic CSO business, we will steadily meet customers growing needs to reduce costs by extending our scale of operations and enhancing functions. To achieve this goal, in October 2013 we will merge two group companies responsible for business operations. Q3 Please describe your policies and measures regarding overseas businesses. Overseas, we are engaged in the global research business and the China business. In the first, we will spin off our internal company into a separate company in July 2013 to strengthen systems further. This move will augment the integrated functions of the CRO and SMO operations overseas and enable us to respond to various customer needs. In the China business, we plan to spin off our Chinese Business Division into a separate company in July We will strengthen our partnership with EPS China Co., Ltd., construct systems to reinforce existing businesses and acquire new businesses. Through these measures, we will create valuable solutions and strive to enrich our one-stop solutions for pharmaceutical product development as a group. Outline of Business Restructuring Japan Establishment of New Company and Satellite Office in Yamanashi Prefecture EPS Yamanashi Co., Ltd. Representative... Representative Director and President: Kazunori Murakami Capital million Investment Ratio... EPS Corporation 90%, SYNC Information System Co., LTD. 10% Establishment... April 2013 Businesses... General data management functions for clinical trials relating to drugs and medical devices Statistical analysis for clinical trials relating to drugs and medical devices Start of Operations... July 1, 2013 (planned) Merger of CSO-Related Subsidiaries Merger Date... October 1st 2013 (planned) Merger Method... Pharma Network to be the surviving company (absorption-type merger) Name after Merger... EP Medinet Co., Ltd. (provisional name) Principal Officials... Director & Chairman: Shinro Tashiro Representative Director & President: Junichi Nishizuka Details... Details such as the merger ratio and the capital of the new company are to be determined Note: The two companies plan to merge on October 1, Overseas Separation of Operations into the Following Companies to Strengthen Systems EPS International Co., Ltd. (provisional name) Principal Officials... Director & Chairman: Yan Hao Representative Director & President: Dan Weng Businesses... Overseas CRO, SMO and related IT operations Ownership Ratio... EPS Corporation 100% Capital... To be determined Establishment... July 1, 2013 (planned) EPS China Corporation (provisional name) Representative... Representative Director & President: Yan Hao Businesses... Control, promotion and management of the Chinese operation, and promotion of sales in Japan Ownership Ratio... EPS Corporation 100% Capital... To be determined Establishment... July 1, 2013 (planned) Note: The new companies will be established in July

4 Financial Information Consolidated Balance Sheets (Thousands of yen) (Thousands of yen) September 30, 2012 March 31, 2013 September 30, 2012 March 31, 2013 ASSETS LIABILITIES CURRENT ASSETS Cash and time deposits Notes and accounts receivable Inventories and products Works in progress Others Allowance for doubtful accounts Total current assets FIXED ASSETS Tangible Assets Intangible Assets Investments and other assets ; Investment securities Deposits Others Total investments and other assets Total fixed assets TOTAL ASSETS 10,576,625 7,320, , ,388 1,728,188 (4,050) 20,543,338 1,881, , ,383 1,287,155 1,533,884 3,408,423 6,104,074 26,647,412 8,850,087 6,792, , ,442 2,204,604 (4,873) 19,256,567 2,326,835 1,414,030 1,413,969 1,311,014 1,584,335 4,309,319 8,050,185 27,306,752 CURRENT LIABILITIES Accounts payable Short-term debt Current portion of long-term debt Income taxes payable Provision for bonuses Provision for loss on order received Others Total current liabilities LONG-TERM LIABILITIES Long-term debt Provision for employees retirement benefits Provision for directors retirement benefits Asset retirement obligations Others Total long-term liabilities TOTAL LIABILITIES NET ASSETS Shareholders equity Common stock Additional paid-in capital Retained earnings Common stock for treasury Total shareholders equity Accumulated other comprehensive income (or loss) Unrealized gain (or loss) on available-for-sale securities Foreign currency translation adjustments Total accumulated other comprehensive income (or loss) Minority interests TOTAL NET ASSETS TOTAL LIABILITIES AND NET ASSETS 252,027 15, ,000 1,455,156 1,094, ,000 3,292,666 6,317, , , , ,805 61,355 1,893,822 8,211,071 1,875,251 1,826,300 12,401,651 (317,258) 15,785,945 (57,555) (120,366) (177,921) 2,828,317 18,436,341 26,647, , , , , ,633 16,000 3,078,190 6,314, , , , ,298 27,726 1,929,177 8,243,321 1,875,251 1,826,300 12,733,710 (317,258) 16,118,004 3, , ,416 2,348,010 19,063,431 27,306,752 Business Trends Net Sales (Millions of yen) Annual Operating Income (Millions of yen) Annual 21st Term 15,291 FY9/11 32,040 22nd Term 17,342 FY9/12 35,202 23rd Term FY9/13 (Forecasted) 18,237 38, ,000 20,000 30,000 40,000 21st Term FY9/11 22nd Term FY9/12 23rd Term FY9/13 (Forecasted) 1,987 1,741 2,750 4,803 4,488 5, ,000 2,000 3,000 4,000 5,000 6,000 3

5 Consolidated Statements of Income and Comprehensive Income (Thousands of yen) Consolidated Statements of Cash Flows (Thousands of yen) Second quarter, ended March 31, 2012 Second quarter ended March 31, 2013 Second quarter ended March 31, 2012 Second quarter ended March 31, 2013 NET SALES COST OF SALES 17,342,947 11,295,534 18,237,294 13,116,979 OPERATING ACTIVITIES 2,079, ,143 Gross profit 6,047,412 5,120,314 INVESTING ACTIVITIES (1,034,833) (2,525,565) SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Operating income Other income (expenses)-net Income before income taxes and minority interests INCOME TAXES Current Deferred Total 3,296,522 2,750,890 (114,683) 2,636,206 1,295,992 (49,112) 1,246,880 3,378,925 1,741,389 (287,820) 1,453, , , ,827 FINANCING ACTIVITIES EFFECT OF EXCHANGE DIFFERENCE ON CASH & CASH EQUIVALENTS NET INCREASE IN CASH AND CASH EQUIVALENTS BEGINNING OF BALANCE, CASH AND CASH EQUIVALENTS (719,172) 146, ,534 8,627, , ,399 (1,353,699) 10,663,816 Income before minority interests MINORITY INTERESTS 1,389, , ,741 (26,086) ENDING OF BALANCE, CASH AND CASH EQUIVALENTS 9,100,279 9,310,117 NET INCOME 1,182, ,828 Income before minority interests 1,389, ,741 OTHER COMPREHENSIVE INCOME 297, ,059 COMPREHENSIVE INCOME Comprehensive income attributable to : Parent shareholders Minority interests 1,687,315 1,471, ,516 1,505,801 1,447,166 58,634 Net Income (Millions of yen) Annual Net Income per Share (yen) Annual 21st Term FY9/11 22nd Term FY9/12 23rd Term FY9/13 (Forecasted) ,182 2,170 2,207 2, ,000 1,500 2,000 2,500 21st Term FY9/11 22nd Term FY9/12 23rd Term FY9/13 (Forecasted) 4,009 3,756 6,612 6,179 12,137 12, ,000 10,000 15,000 4

6 EPS Group Profile Providing a Full Range of Services in Pharmaceutical Product Development Established Representative Full-time employees (as March 31, 2013) EPS Corporation 1991 Yan Hao 1,613 CRO Contract Research Organization Support for research and development by pharmaceutical companies (including generic drug manufacturers) and medical device manufacturers Conduct of post-marketing surveillance Support for safety information management Pharmaceutical and medical IT service EPMate Co., Ltd. EMS Co., Ltd. LSG Corporation e-trial Co., Ltd. EPS Yamanashi Co., Ltd Yasuo Kiba Hiroaki Abe Takeshi Tadano Satoru Kono Kazunori Murakami Site Management Organization SMO Site operations support for clinical studies on drugs and medical devices and clinical research conducted by medical institutions Recruiting medical institutions to participate in clinical studies and support for review of institutions EP-Mint Co., Ltd Hidetaka Ando 716 CSO Contract Sales Organization Support for business operations of pharmaceutical companies Call center business Pharma Network Co., Ltd. Medical Line Co., Ltd Ezura Kataoka Junichi Nishizuka GR Global Research Support for global clinical trials EPS INTERNATIONAL Co., Ltd. EPS Global Research, Inc Yan Hao Dan Weng 2 China Innovative drug development Research and development of generic drugs Pharmaceutical and medical BPO services Selling of medical devices EPS China Co., Ltd. EPI (Suzhou) Co., Ltd Xia Xiang Ming Hao Yunshan

7 Stock Information Authorized Shares 648,000 Shareholder Breakdown Shares of Common Stock Issued Number of Shareholders 180,800 3,492 Other Japanese Corporations 28.58% 51,681 shares, 22 shareholders Foreign Shareholders 36.43% 65,877 shares, 132 shareholders Principal Shareholders Shareholder Shares Held Percentage of Total Y&G Limited 48, BBH FOR MATTHEWS ASIA DIVIDEND FUND Japan Trustee Services Bank, Ltd. (Trust Account) Sumitomo Life Insurance Company JP MORGAN CHASE BANK 14,592 6,659 5,400 5, Treasury Stock 1.09% 1,974 shares, 1 shareholder Securities Companies 1.43% 2,588 shares, 18 shareholders PLEASANT VALLEY JPM CHASE OMNIBUS US PENSION TREATY JASDEC ACCOUNT The Master Trust Bank of Japan, Ltd. (Trust Account) 4,976 4,844 3, Other Japanese Financial Institutions 15.66% 28,322 shares, 25 shareholders GOLDMAN, SACHS & CO. REG THE BANK OF NEW YORK,TREATY JASDEC ACCOUNT 3,533 3, Individuals / Others 16.79% 30,358 shares, 3,294 shareholders Members of the Board and Statutory Auditors (as March 31, 2013) Chairman & CEO President & COO Director Director Director Director Statutory auditor Statutory auditor Statutory auditor Yan Hao Shinrou Tashiro Shuzo Orihashi Kazuki Sekitani Yasuharu Tamai Yoshinori Ando Masaru Kuranaka Koichi Shibuya Haruo Funabashi 6

8 Company Profile Corporate Name : EPS Corporation Establishment : May 1991 Capital : million Main Services : CRO, SMO, CSO, Global Reseach and China business info@eps.co.jp URL : Locations : CenterOffice Tsuruya Bldg Shimomiyabicho, Shinjuku-ku, Tokyo TEL: Annex. 1 Sumitomo Fudosan Iidabashi Bldg. No Koraku, Bunkyo-ku, Tokyo Annex. 2 Iidabashi MF Bldg. 1-1 Shinogawamachi, Shinjuku-ku, Tokyo Annex. 3 Acropolis TOKYO Shinogawamachi, Shinjuku-ku, Tokyo Annex. 5 KDX Iidabashi Bldg Shimomiyabicho, Shinjuku-ku, Tokyo Osaka Branch Nissei Shin-osaka Bldg Miyahara, Yodogawa-ku, Osaka-shi, Osaka Nagoya Branch Horiuchi Bldg Meieki, Nakamura-ku, Nagoya-shi, Aichi Tsuruse Laboratory 2662 Tsuruma, Fujimi-shi, Saitama Forward-Looking Statements The items in this report include descriptions of future plans and forecasts. Actual performances may differ substantially due to various factors. MIX Paper from responsible sources The paper used in this pamphlet is produced from fiber sourced from well-managed forests and other forests where unacceptable sources have been excluded, as defined by the FSC. The printing processes that are used do not involve the output of wastewater.