A N N U A L R E P O R T 2 0 0 9Year ended September 20, 2009

On September 21, 2009, Noevir Co., Ltd. appointed

Hiroshi Okura to the position of Chairman and Representative

Director and Takashi Okura to the position of President and

Representative Director. Under its new management, Noevir

will continue to address business issues with the aim of

achieving the targets of its medium-term management plan.

F I N A N C I A L H I G H L I G H T SNoevir Co., Ltd. and Subsidiaries

Years ended September 20, 2009 and 2008

C O N T E N T S

A Discussion with Top Management 1

Noevir Group Business Activities 4

New Products for the Year 5

Noevir Product Strategy 6

Noevir Sales Strategy 8

Tokiwa Pharmaceutical 10

Research and Development 12

Manufacturing Systems 13

Corporate Governance 14

Corporate Social Responsibility 15

Financial Section 16

Principal Consolidated Subsidiaries 38

Board of Directors/Investor Information 39

Millions of yen

2009 2008

FOR THE YEAR:

Net sales ¥ 55,227 ¥ 58,669

Operating income 3,539 4,043

Net income 2,152 2,937

AT YEAR-END:

Total assets 89,308 95,818

Total equity 51,903 51,600

Yen

PER SHARE:

Basic EPS ¥ 52.07 ¥ 71.94

Total equity 1,255.50 1,247.93

Cash dividends applicable to the year 36.00 36.00

P R O F I L E

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A D I S C U S S I O N W I T H T O P M A N A G E M E N T

Q1.Mr. Chairman, could we begin with your views on the Noevir Group’s distinctive features and the operating environment it faces?

Chairman: The mainstay of the Noevir Group is its

cosmetics business—ranging from excellent prestige

skincare products, available primarily through direct sales, to

retail products popular with the young adult segment. In the

skincare fi eld, Noevir’s forte, we earn high praise for our R&D

expertise in deriving effective ingredients from natural

sources. This, together with the synergetic effects gained

from the pharmaceutical business of Noevir’s subsidiary

Tokiwa Pharmaceutical Co., Ltd., enables us to consistently

provide highly functional products. Nonetheless, despite the

exacting market environment surrounding our linchpin of

direct sales, Noevir is working to reinforce its sales structure

with its own complementary systems.

Under the new president, the Noevir Group is embarking

on the building of a new management platform. We will

continue to faithfully follow our guiding principle, to which

we have adhered since our founding year, of “Noevir, where

beauty is science” as we engage in the creation of health

and beauty.

Q2.President Okura, what is your evaluation of Noevir’s performance in fi scal 2009?

President: In fi scal 2009, we continued to work toward

targets set out in our medium-term management plan

based on stable growth, namely, enhancing our sales

abilities, increasing our market competitiveness, maintaining

a strong fi nancial position and reinforcing our internal

control structure. However, on the back of a prolonged

decline in consumer confi dence, Noevir recorded decreased

revenue and profi t in its cosmetic business, which accounts

for over 60% of net sales. As a result, we recorded declines in

revenue and profi t.

Given our sluggish business in the domestic cosmetics

market, refl ecting the worldwide economic recession, we

revised our medium-term management plan. This revision

includes postponing the fi nal year of the management plan

from fi scal 2011 to fi scal 2012 and changing from an

operating income margin target to an ordinary income

margin fi gure of 10%.*

Q3.Could you please provide us with a progress report on the enhancement of sales abilities as targeted in the medium-term management plan?

President: At present, we are rebuilding our sales

structure by reviewing business operations based on the

current medium-term management plan ending fi scal 2012.

The mainstay of the Group profi t is direct face-to-face

marketing by our sales representatives in the cosmetic

business. Therefore, with the aim of improving overall

performance, we have placed top priority on strengthening

our sales abilities by restructuring and reinforcing our sales

forces. In particular, such efforts include an increase in the

number of sales representatives and the enhancement of

sales representatives’ customer service skills and knowledge

of Noevir products so that each representative garners more

sales and profi t. With this in mind, Noevir strived to further

* Ordinary income, a specifi c item based on Japanese Accounting Standards,

is calculated by adding extraordinary income to ordinary income (loss) and

deducting extraordinary expenses.

Noevir 505 combines herbal extracts to provide luxurious anti-aging

skincare.

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enhance the seminars it holds while promoting better

communication between sales representatives and

headquarters so that headquarters can provide needed

support and help to address the issues that sales

representatives may face. Furthermore, we make every

effort to invigorate sales activities by providing diverse

support, including improvements to the Noevir Support

ordering system to boost convenience.

At the same time we are in the midst of developing a

business model that will improve on the synergistic effects

of face-to-face selling in order to meet changing market

needs. As part of such efforts, we established the online and

mail order service Noevir Style as well as shops where

customers can have hands-on experience of our products.

Such services and shops can help acquire new customers,

supporting face-to-face selling and raising our brand

awareness. During the fi scal year under review, we opened

new shops in Tokyo and Miyazaki. Both Noevir Style and the

shops enjoyed healthy business in the year under review,

helping to increase the number of customers.

Q4.Could you please tell us about the progress made in increasing market competitiveness as targeted in the medium-term management plan?

President: I believe Noevir’s market competitiveness is

underpinned by its product quality. As a leading natural

cosmetics company adhering to the guiding principle of

“Noevir, where beauty is science,” we are continuously

introducing innovative market-leading products. We

undertake our initiatives as a corporate group that can

leverage the synergetic effects of cosmetic and

pharmaceutical businesses in basic research for “beauty and

health,” making no distinction between cosmetics and

pharmaceuticals or inner beauty and outward appearance.

These efforts are backed by our unique R&D structure and

extensive knowledge developed through collaborative

research with academic institutions and comprehensive

anti-aging research that extends to the neurological fi eld.

Q5.Now, how is Noevir working to maintain a strong fi nancial position and reinforce its internal control structure in line with the medium-term management plan?

President: We are making Groupwide efforts to reinforce

our fi nancial position with the aim of achieving an ordinary

income margin of 10% in fi scal 2012, one of the targets of

our medium-term management plan. To this end, we will

continue to promote the streamlining of business

operations and improvement of the earnings structure

while reducing interest-bearing debt and effi ciently

allocating management resources.

In addition, corporate governance and transparency will

continue to be strongly regarded as management issues of

utmost importance. Noevir will strive to raise the level of

internal control, making as-needed improvements to its

internal control system while improving business processes

and educating its employees.

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Q6.What is the outlook for fi scal 2010?

President: For fi scal 2010, we are anticipating a further

decline in revenues, mainly due to stagnant recovery in

sales of medium-priced cosmetics. On the earnings front,

however, we are expecting an increase in profi t due to the

ongoing improvement in selling, general and administrative

expenses.

In the mainstay cosmetics business, Noevir’s principal

strength, namely the prestige cosmetics market, is facing the

need to restructure. Given this, we will introduce a new

business model and concentrate funds in our prestige

cosmetics products in pursuit of expanded market share. For

products offered through retailers and medical institutions,

we will target the next generation of consumers, reinforcing

marketing activities with the aim of cultivating new

customers. Through these endeavors, we will counter the

currently sluggish medium-priced product market. In the

health food business, we will focus on expanding the market

share of our fl agship functional drinks. In the pharmaceutical

business, we will continue to implement profi t-oriented

management based on the thorough streamlining of

operations to improve our profi t and loss status as early as

possible.

Q7. Finally, Mr. Chairman, please may we have a few words for Noevir’s stakeholders?

Chairman: The Noevir Group is characterized by unique

R&D capabilities in the natural cosmetics fi eld, competitive

product planning ability throughout its business segments

and excellent management mobility enabling prompt

response to market changes and needs. At the moment, we

are carefully watching market trends and rebuilding our

business model for a new growth era. Noevir will strive to

fulfi ll its corporate social responsibility as a company that

offers health and beauty, while making ongoing efforts to

enhance its corporate value.

Hiroshi Okura, Chairman and Representative Director

Takashi Okura, President and Representative Director

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N O E V I R G R O U P B U S I N E S S A C T I V I T I E S

Segment Activities Main Products Channels

DirectSales

MailOrder

ShopsVarietyStores

Super-markets

Drug-stores

Conve-nienceStores

Contract Manufac-

turing

Cosmetics Noevir BrandNoevir Brand: A wide range of

products, from high-

performance functional

skincare items, to makeup, hair

care products and toiletries.

Noevir 99 skincare line

Noevir 505 skincare line

Noevir Speciale line

Noevir Blancnew Reset W

Noevir 5 LX makeup line

Noevir NATURALCODE

makeup lines

� � �

OthersA versatile collection of well-

regarded brands, including

Sana’s popular skincare,

makeup and body care

products; dermatologist-

recommended Nov cosmetics

for sensitive skin; and

consolidated subsidiary

Bonanza’s contract

manufacturing of cosmetics.

Sana Nameraka Honpo line

Sana Maikohan makeup line

Sana Excel makeup line

Sana Esteny a care

NOV 3 skincare line

NOV Oligomarine line

ACT-NOV a line� � � � � �

Pharmaceuticals Tokiwa BrandTokiwa Brand: An abundant

lineup of OTC pharmaceuticals,

from medicine kits to cold

remedies, cough drops and

medicinal drinks.

Medicine kits

Nanten Nodo Ame cough

drops

Gronviter Delux K � � � � � �

Health Food Noevir BrandMainly nutritional supplements

with high-quality natural

ingredients as well as health

food products, such as sea salt

and teas.

Noevir Cordyceps Sinensis N

Noevir Agaricus Hyper

Noevir L-C-Q10 2

Noevir Aminoglycine � �

Tokiwa BrandHighly competitive functional

drinks, such as the Min Min Da

Ha lineup, and supplements for

health and beauty.

Min Min Da Ha energy drink

Vita C energy drink

� � � � � �

Other Noevir BrandApparel for both women and

men. Noevir’s subsidiary in

North America sells and leases

aircraft.

Air Talk

Air Talk Homme

MLLE

MLLE Suite Model

Dramatic Rose� �

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Cosmetics

N E W P R O D U C T S F O R T H E Y E A R

Health Food

Noevir Brand

Noevir Cordyceps Sinensis N

Containing an extract of Cordycep sinensis from Tibet, this nutritional

supplement boasts improved absorbency thanks to Noevir’s innovative

extraction technology.

Others

Sana Nameraka Honpo

( “Hari-Tsuya” line/

Moisturizing lotion and cream

in the skin-brightening line)

A skincare line incorporating

Coenzyme Q10 that promotes

fi rmness and a glowing look.

The arbutin-enriched

brightening line has introduced

a rich new moisturizing skin

lotion and cream.

ACT-NOV a Line

Leveraging know-how

cultivated through

clinical testing conducted

in cooperation with

dermatologists, a new

lineup of functional anti-

acne cosmetics has been

added to the ACT-NOV a line.

Éclat de Fleurs

Containing the essences of

fi ve fl owers combined with

an oil, this beauty serum

leaves the skin feeling

supple and prepared for the

application and further

absorption of skincare

products.

FACECONSCIOUS

A beauty serum that

promotes a fi rmer look for

skin prone to sagging

through the incorporation of

a new Noevir discovery, she-

oak (Casuarina stricta)

extract.

Noevir Gomore Gel

A hair-nourishing product

containing effective

ingredients in a non-drip

gel form that is suited for

application on the scalp

where hair is thinning and

at the hairline.

NATURALCODE

Premium makeup lines with

the theme of the natural

beauty of women

Noevir Brand

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N O E V I R P R O D U C T S T R A T E G Y

Noevir’s Strength Is Underpinned by Highly Functional Products Made from Natural Ingredients

Left: Éclat de Fleurs was developed through the study of the face-smoothing mechanism of liquid oil

Right: FACECONSCIOUS blends effective ingredients discovered through the study of ways to improve skin quality and combat aging

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Based on its guiding principle of “Noevir, where beauty is science,” Noevir’s products

encompass skincare items, nutritional supplements and toiletries that leverage the

Company’s know-how in cosmetics development. Focusing on high-end items, such as

prestige skincare products and functional products that showcase its R&D prowess, Noevir

also concentrates on research and planning aimed at enhancing the quality of life and

differentiating itself from other companies.

Product Strategy

In pursuit of top-quality, highly functional skincare products,

Noevir specializes in products with uniquely positioned

properties, such as anti-aging, skin-brightening and

comfortable application. Raising the bar with regard to quality,

the Noevir 505 and Speciale prestige skincare lines saw

increased sales despite stagnant domestic market conditions.

This proves customers’ strong trust in the Noevir brand amid

intensifying competition in the natural cosmetics industry.

Noevir also strives to introduce a few functional cosmetics per

year to revitalize its brands. Furthermore, Noevir offers lineups

of nutritional supplements, toiletries and apparel that promote

inward and outward beauty.

Meeting segmented market needs, Noevir is developing

proprietary products by pursuing synergies with its subsidiary

Tokiwa Pharmaceutical Co., Ltd. and joint research with

educational institutions.

Major Activities in Fiscal 2009

In the cosmetics business, Noevir released two functional anti-

aging cosmetics aimed at gaining market share: Éclat de Fleurs

is a beauty serum formulated with the essences of fi ve fl owers

and an oil that promotes the absorption of skincare products

and makes the skin feel supple. A beauty serum that provides a

feeling of lifting and tightening to the skin FACECONSCIOUS

drew public attention due to the use of a renowned actress for

product promotion. Furthermore, Noevir introduced a hair-

nourishing product, Noevir Gomore Gel, and NATURALCODE

makeup lines that furnish items offering women natural beauty

options. In the health food business, Noevir proactively

launched various types of nutritional supplements, such as

Noevir Cordyceps Sinensis N; INNERBIO-FOMULA2, a blend of

lactobacillus and bifi dus; and AMINOGLYCINE, a supplement

with a soothing effect.

The NATURALCODE makeup lines enhances women’s natural beauty

Noevir’s representative 505 prestige skincare line

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N O E V I R S A L E S S T R A T E G Y

Establishing a New Structure and Raising Awareness

Noevir’s Beauty Planners number 180,000 nationwide

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Operating fundamentally as a direct sales company, Noevir focuses mainly on face-to-

face selling backed by individual counseling by sales representatives. With the aim of

invigorating the sales force in order to secure sustainable sales growth, Noevir is building

diverse support systems focusing on the promotion of better communication. Furthermore,

Noevir is pursuing new businesses, including online and mail order services, to meet market

needs and acquire new customers.

Strengthening the Sales Force

Noevir has adopted several systems that support sales

representatives’ activities. One, Noevir Support was introduced

to enhance sales representatives’ operational effi ciency by

enabling them to submit orders directly to headquarters. The

Company is currently promoting the more widespread use of

this system among its sales representatives. In addition, we

have opened shops in Sapporo, Kanazawa, Nagoya, Tokyo and

Miyazaki that serve as channels between local customers and

Noevir sales representatives. At these shops, consumers can

freely try Noevir products and enjoy such services as facial

massage. Furthermore, Noevir has given its sales

representatives, who directly interface with customers, the new

title “Beauty Planner” and offers technical training and advice

regarding store refurbishment and managerial challenges so

that each representative can look forward to a lifelong career

while enjoying a fl exible working environment. Such support is

offered with a view to developing a sense of professionalism

through stronger collaboration with headquarters as well as to

boost sales representatives’ morale and foster pride in working

with Noevir while improving their knowledge and counseling

capabilities.

Diversifying Sales Strengths

In addition to invigorating the sales force, Noevir focuses on

winning new customers.

To demonstrate the qualities of the Noevir brand to the

customer category that does not shop via direct sales, Noevir is

expanding membership in Noevir Style, its online and mail

order service. In the Tokyo, Nagoya and Osaka metropolitan

areas, Noevir corporate staff members visit companies to hold

in-house makeup and color coordination seminars for female

employees in order to promote the Noevir brand by directly

introducing its products to consumers. Information acquired

through these activities is stored in the database and leveraged

to streamline the entire business operation from product

development to marketing and sales.

Noevir aims to enhance business performance by focusing

on the two key issues of increasing revenues through the

invigoration of its sales representatives and winning new

customers by applying the headquarters’ new business models.

Shops Direct Ordering SystemOnl ine and Mai l Order

Direct Sales

Support Structure

A Noevir Shop was opened in Miyazaki in September 2009

Five shops in major cities Noevir SupportNoevir Sty le

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T O K I W A P H A R M A C E U T I C A L

Unique Products and Brand Strategy

Tokiwa products and a Tokiwa offi ce—Realizing the fusion of cosmetics and pharmaceuticals

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Providing pharmaceuticals, cosmetics, drinks and nutritional supplements, Tokiwa

Pharmaceutical brings a synergistic effect between the two business categories of health

and beauty, contributing 43% of the Noevir Group’s consolidated net sales. The Tokiwa

brand boasts a strong presence in the general retail market with unique lineups and means

of advertising.

Dedication to Uniqueness

Tokiwa products have gained recognition in the general retail

industry thanks to the company’s unique, eye-catching

product planning, naming and promotion activities. The core

cosmetics brand, Sana Nameraka Honpo Soymilk Isofl avone

skincare line, has been further enhanced and continues to

thrive as a major hit in the face of ever-intensifying

competition among low-priced products, with cumulative

sales totaling over 30 million units as of October 2009. As part

of a promotional campaign for both the Sana Nameraka Honpo

Soymilk Isofl avone line and the functional drink

Min Min Da Ha, Tokiwa Pharmaceutical utilized the world’s

largest airship, the Zeppelin NT (New Technology), and held a

photography contest, drawing public attention. Furthermore,

Tokiwa changed its advertising strategy for the long-selling

pharmaceutical product Nanten Nodo Ame cough drops and

succeeded in attracting younger-generation consumers.

Tokiwa Pharmaceutical has a broad sales channel covering

medical institutions, drug stores, convenience stores and

online shops and pursues defi ned-target marketing activities

by brand based on specifi c concepts.

Major Activities in Fiscal 2009

In cosmetics, new brightening products were launched to

expand the mainstay Sana Nameraka Honpo Soymilk Isofl avone

skincare and Excel makeup brand lineups. In addition, we

expanded the ACT-NOV a line by leveraging acne study-based

know-how cultivated through research related to our NOV

hypoallergenic cosmetic brand, which is recommended by

more than 80% of Japan’s dermatologists.

Furthermore, to handle all our marketing activities Tokiwa

Pharmaceutical established Aoyama Creative Center, which

focuses on the natural interactions of people. In Aoyama

Creative Center, Tokiwa Pharmaceutical has integrated all

activities, including product planning, advertising and

promotion, for effi cient business operations while utilizing the

facility as a place to enhance communication with mass media,

other companies and business partners.

Aoyama Creative Center

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R E S E A R C H A N D D E V E L O P M E N T

R&D Characteristics and Structure

Noevir engages in comprehensive R&D encompassing basic

research aimed at the discovery of active ingredients through

the in-house cultivation of plants and effi cient product

development. Our closely connected research network links

our 11 research centers in Japan—including the Shiga

Research Center with its own herb garden, which focuses on

formulating cosmetics, and the Kobe Research Center, which

undertakes beauty science research and specializes in the

development of new active ingredients for cosmetics and

nutritional supplements—and the New Jersey R&D Center in

the United States. In addition, Noevir conducts joint research

with a number of universities and is moving forward with

medicinal plant research as well as research into the medical

treatment of neurological symptoms.

Within this structure, Noevir engages in thorough botanical

research based on its guiding principle “Noevir, where beauty

is science” and has to date analyzed approximately 2,300 types

of plant life. Leveraging active ingredients developed through

this research, Noevir formulates functional cosmetics with

effective anti-aging and skin brightening properties.

Furthermore, synergies with Group company Tokiwa

Pharmaceutical have leveraged the company’s expertise in

pharmaceuticals for the development of cosmetics and have

spurred aggressive efforts in the nutritional supplement fi eld.

R&D Activities in Fiscal 2009

During fi scal 2009, Noevir implemented the following basic

research in its cosmetics business.

• During research into the pliancy of the skin’s horny cell layer

aimed at realizing an ideal skin that is soft and smooth to the

touch, Noevir discovered that certain blends of oils of

different effi cacy have a greater softening effect on the

intercellular lipid layer than others. Based on this discovery,

Noevir introduced Éclat de Fleur oil-based beauty serum.

• Noevir discovered that the level of tyrosine-rich acidic matrix

protein (TRAMP), a factor that is considered to be important

for the fi rmness and elasticity of the skin, declines with age

and exposure to ultraviolet rays. In addition, Noevir

discovered that an extract of the ancient plant she-oak can

facilitate TRAMP generation. These results were applied in the

development of FACECONSCIOUS beauty serum.

• To help prevent sagging skin, which is Noevir’s big challenge

in the development of anti-aging products, the Company

introduced a new evaluation method that involves

measuring the shape and degree of distortion when facial

skin is subjected to vibration in addition to the regularly used

evaluation method that takes into account skin elasticity and

the thickness of subcutaneous fat. Evaluation results will be

applied to the future development of functional cosmetics.

The Shiga Research Center focuses on cosmetics formulation.

The researcher who demonstrated the effectiveness of she-oak extract

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Pharmaceutical research is conducted at the Tokiwa R&D Center.

M A N U F A C T U R I N G S Y S T E M S

The Noevir Group produces a wide range of products, from

cosmetics to quasi-drugs, pharmaceuticals, nutritional

supplements and health food. To ensure the stable provision of

these products, state-of-the-art manufacturing systems are in

place with process-wide quality assurance thoroughly

implemented from raw material procurement to

manufacturing and shipment.

Noevir has two main manufacturing facilities. The Shiga

Factory, which is a government-approved, quasi-drug

manufacturing facility, handles approximately 80% of total

cosmetics manufacturing and is ISO 9001 certifi ed for quality

assurance. Here, all processes—again from raw material

procurement and mixing to manufacturing and shipment—are

monitored by a Computer Integrated Manufacturing (CIM)

system. This system features a real-time link to computer

systems used by sales divisions to achieve rapid, systematic

mass production. In addition, the Shiga Factory is making all-

out efforts to both reduce its water usage and prevent water

pollution while minimizing the amount of waste produced

and improving recycling rates. Furthermore, the Shiga Factory

formed an energy saving project team to conduct a status

review of electricity and fuel usage to help combat global

warming. A recipient of the Prime Minister’s Award for its

afforestation campaign, the Shiga Factory is ISO 14001 certifi ed

for environmental management.

The Mie Factory handles most of Tokiwa Pharmaceutical’s

manufacturing, which meets the Good Manufacturing Practice

(GMP) standards for manufacturing and quality control of

pharmaceutical and quasi-drug products set by the Japanese

Ministry of Health, Labour and Welfare. Under these standards,

this factory manufactures pharmaceuticals and health food

products, mainly energy drinks. The synergy effect from Noevir

Groupwide business operations enabled the December 2009

launch of a new beauty collagen drink COLLAGEN C

manufactured at this factory.

Realizing that the critical factor underpinning the Noevir

Group’s brand value is the trust that consumers place in our

product quality, we will continue to enhance our

manufacturing facilities and management.

Tokiwa’s R&D Activities in Fiscal 2009

Concentrating on joint research with various academic

institutions, Tokiwa announced the following research results

in fi scal 2009.

• Based on joint research with the Laboratory of Pharmacology,

Faculty of Pharmacy, Musashino University, regarding effi cacy

and safety of nandina fruit extract, a pharmaceutical

substance used in Nanten Nodo Ame cough drops, Tokiwa

Pharmaceutical discovered the mechanism of smooth

tracheal dilatation triggered by nandina fruit extract.

• In joint research with the Faculty of Medicine, Shimane

University, Tokiwa Pharmaceutical engaged in the

development of a new measurement method for determining

the severity of atopic dermatitis. This new measurement

method enables the evaluation of the degree of localized

progress of the disease and effect of external medication.

Thorough quality control is carried out

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C O R P O R A T E G O V E R N A N C E

While serving to maximize corporate value, Noevir places great emphasis on maintaining

the trust of all its stakeholders. Having made effective corporate governance a top

management priority, Noevir has put in place the necessary management structure and

audit controls. Through internal controls and risk management, Noevir works to ensure

strict adherence to legal requirements, its articles of incorporation and the highest level

of ethical corporate behavior.

Organizational Structure

Noevir’s board of directors consists of six members. Meetings

are held on a monthly basis, with extraordinary meetings

convened as necessary. With a view to strengthening

corporate governance, the board of directors performs duties

that maintain the effectiveness of the internal control system

and has established a framework whereby the entire Company

strictly adheres to legal requirements and the articles of

incorporation. Noevir has adopted a corporate auditor system,

with a board of corporate auditors comprising one standing

corporate auditor and two outside corporate auditors. In

addition, Noevir has established an Internal Audit Department,

made up of six full-time staff members, that conducts regular

audits across all divisions and reports directly to the President

and Representative Director. The corporate auditors, the

Internal Audit Department and an independent auditor attend

board of corporate auditors’ meetings. This facilitates mutual

cooperation and enables a three-way audit control system that

effectively executes its duties. Furthermore, Noevir resolved to

adopt an executive offi cer system at its shareholders’ meeting

held on December 8, 2009, with the aim of reinforcing the

board of directors’ decision-making and auditing functions,

clarifying members’ responsibilities and accelerating business

execution while strengthening the corporate governance

structure amid a diversifying management environment.

As part of the emphasis placed on maintaining the trust of

its stakeholders, Noevir discloses important management and

fi nancial-related information pertaining to the Group in a

timely and appropriate manner, thus ensuring management

transparency. To disseminate investor relations (IR) information,

Noevir established a dedicated department, created the

position of IR director and assigned staff responsible for IR-

related activities. Noevir regularly holds briefi ngs for analysts

and institutional investors and conducts briefi ngs for overseas

investors in London.

Internal Control System Strengthening

To ensure the appropriate and sound execution of its

business operations, Noevir endeavors to maintain corporate

governance that strictly adheres to legal requirements and its

articles of incorporation. Noevir undertakes the storage and

management of information associated with directors’ duties,

the execution of which is thoroughly streamlined. Noevir works

to maintain clarity in its risk management structure as well as

to strengthen and promote its compliance structure under the

Noevir Group Strategy and the Noevir Code of Conduct. By

securing a structure for reporting to an independent board of

auditors and conducting effective audits, Noevir continues to

further enhance its internal control system.

General Meeting of Shareholders

Board of Corporate Auditors: Standing Corporate Auditor,

Outside AuditorsBoard of Directors: Directors

Business Execution Meeting

Internal Audit Department

All Departments

Ind

epen

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t Au

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or

Leg

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Decide/Approve

Appoint/DismissAppoint/Dismiss

Appoint/Dismiss

Accounting Audit

AuditOversight

Report

Report

Report

Confirm

Decide/Approve

SuperviseReport

Propose

Propose

Internal Audit

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15C O R P O R A T E S O C I A L R E S P O N S I B I L I T Y

Basic Philosophy and Activities

In addition to supporting consumers’ health and lifestyles

through its products, Noevir recognizes CSR as an important

management goal. As a pioneer in natural cosmetics, the

Noevir Group has continuously carried out activities that

contribute to environmental protection. At its main

manufacturing facility, the Shiga Factory, Noevir established an

environmental policy with the aim of achieving harmony with

the local environment. In its striving toward this goal, Noevir is

working to prevent global warming, to promote the reduction

and appropriate control of waste and to ensure thorough

water quality control that takes into consideration the possible

impact on nearby Lake Biwa. These efforts and the afforestation

of 61% of the factory site have enabled the Shiga Factory to

acquire ISO 14001 environmental management certifi cation.

Furthermore, Noevir is making every effort to consolidate the

spirit of cooperation with local communities by offering local

residents tours of the Shiga Factory, the chance of on-site work

experience, makeup lessons and social events. Also, the

Company has entered into an agreement with Shiga municipal

government with regard to the utilization of Noevir’s two

helicopters in times of disaster for the transport of medical

staff, pharmaceuticals and relief supplies.

Corporate Governance Organizational Structure

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M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S

Overview

In fi scal 2009, ended September 30, 2009, the Noevir Group

recorded decreased revenues and earnings on the back of

signifi cant economic deterioration that lasted throughout the

period under review. Refl ecting this situation, net sales

dropped 5.9%, or ¥3,442 million, year on year to ¥55,227

million.

The core cosmetics business, which made up 66.7% of the

Group’s net sales, was affected by weak personal consumption

brought about by the harsh economic environment.

Remaining robust during the fi scal year under review were

sales of the Tokiwa brand of cosmetics offered at drugstores

and such medical institutions as dermatology clinics. In

contrast, mid-priced cosmetics, including the Noevir 99

skincare line offered mainly via direct sales, saw sluggish

performances . In addition, aircraft sales and leasing activity in

North America plummeted due to the worldwide recession.

For the third consecutive year, Noevir recorded a decrease

in terms of cost of sales, which fell ¥1,616 million year on year

to ¥19,084 million. Cost of sales as a percentage of net sales

improved 0.7 of a percentage point to 34.6% due to the

proportion of net sales derived from the cosmetics business

exceeding that from Noevir’s aviation business, which has the

higher cost percentage of the two businesses. Selling, general

and administrative (SG&A) expenses fell ¥1,322 million from the

previous fi scal year to ¥32,604 million. This was attributable to

three factors: more effective sales promotions; a decrease in

the IT system architecture fees paid to system engineers

brought about by the completion of system-related

investment; and the absence, in the fi scal year under review, of

the amortization of goodwill for Tokiwa Pharmaceutical Co.,

Ltd., which was fi rst included in Noevir’s scope of consolidation

as a wholly owned subsidiary in August 2002. However, the

ratio of SG&A expenses to net sales increased 1.2 percentage

points to 59.0% due to the decrease in net sales. As a result,

operating income declined ¥504 million, or 12.5%, to ¥3,539

million. Net income dropped ¥785 million, or 26.7%, to ¥2,152

million due in part to such extraordinary losses as a ¥365

million devaluation loss on inventories that refl ected changes

in accounting standards.

Assets, Liabilities and Equity

Total assets at the fi scal year-end were down ¥6,510 million

year on year to ¥89,308 million. This was attributable mainly to

decreases in inventories, property, plant and equipment, and

long-term deposits of ¥1,207 million, ¥877 million and ¥3,000

million, respectively.

The decrease in fi xed assets is in keeping with Noevir’s

strategy of divesting itself of underperforming assets. Total

current assets declined ¥1,281 million to ¥60,115 million, while

fi xed assets fell ¥5,229 million to ¥29,193 million.

0

10,000

20,000

40,000

60,000

0

5

10

30,000

50,000

(¥ million)

Net sales

Operating income

Operating income margin

(%)

56,503

3,171

5.6

59,345

3,858

6.5

59,352

3,869

6.5

58,669

4,043

6.9

55,227

3,539

6.4

2005 2006 2007 2008 2009

Net Sales/Operating Income/Operating Income Margin Net Income/Earnings per Share, Basic

0

1,000

3,000

4,000

0

50

100

2,000

(¥ million)

Net income

Earnings per share

(¥)

1,336

37.57

1,507

42.08

2,018

56.33

2,937

71.94

2,152

52.07

2005 2006 2007 2008 2009

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Total liabilities at the fi scal year-end were ¥37,405 million,

a decrease of ¥6,813 million. Total current liabilities dropped

¥7,047 million to ¥12,234 million mainly due to the absence

of ¥6,760 million in unsecured zero coupon yen convertible

bonds. Long-term liabilities rose ¥234 million to ¥25,171

million.

Total equity at the end of fi scal 2009 was ¥51,903 million,

an increase of ¥303 million year on year. This was primarily

attributable to an increase of ¥664 million in retained earnings.

Cash Flows

Cash and cash equivalents, end of year, totaled ¥35,580 million,

down ¥334 million from the previous fi scal year-end. This

reduction was caused by cash infl ows from operating and

investing activities falling below cash outfl ows from fi nancing

activities.

Net cash provided by operating activities was ¥5,972

million, a decrease of ¥1,013 million compared with the

previous fi scal year. Major contributory factors included income

before income taxes and minority interests of ¥3,491 million

and depreciation totaling ¥2,099 million.

Net cash provided by investing activities totaled ¥2,057

million, an improvement of ¥2,071 million year on year.

Principal factors included a ¥3,000 million infl ow due to a

decrease in time deposits, an ¥887 million outfl ow to cover

purchases of property, plant and equipment, and a ¥166

million outfl ow consisting of other asset purchases.

Net cash used in fi nancing activities amounted to ¥8,244

million, an increase of ¥1,647 million from the previous fi scal

year. This was mainly attributable to ¥6,760 million in payments

for redemption of convertible bonds.

Years ended September 20 Millions of yen

2004 2005 2006 2007 2008 2009

Net sales ¥ 59,129 ¥ 56,503 ¥ 59,345 ¥ 59,352 ¥ 58,669 ¥ 55,227

Operating income 5,592 3,171 3,858 3,869 4,043 3,539

Net income 3,373 1,336 1,507 2,018 2,937 2,152

Total assets 106,732 104,463 101,508 99,787 95,818 89,308

Shareholders’ equity / total equity* 41,949 43,186 43,341 44,223 51,600 51,903

Capital expenditures 2,075 2,807 1,467 2,094 2,726 1,277

Depreciation 1,899 1,739 1,678 1,493 2,064 2,099

R&D costs 1,229 1,229 1,334 1,640 1,659 1,487

Cash dividends per share (yen) 30.00 30.00 30.00 36.00 36.00 36.00

Earnings per share, basic (yen) 96.28 37.57 42.08 56.33 71.94 52.07

Shareholders’ equity / equity* per share (yen) 1,184.10 1,205.53 1,209.41 1,232.78 1,247.93 1,255.50

ROE (%) 8.3 3.1 3.5 4.6 6.1 4.2

ROA (%) 3.2 1.3 1.5 2.0 3.0 2.3

Equity ratio (%) 39.3 41.3 42.7 44.3 53.9 58.1

Number of employees (consolidated) 2,445 2,544 2,461 2,370 2,333 2,336

* Due to changes in accounting standards, shareholders’ equity is now presented as equity, and certain items which were previously presented as liabilities are now

components of equity. Please see Note 2. j. for details.

Six-Year Summary

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Millions of yen

2007 2008 2009

Cosmetics

Net sales ¥37,982 ¥38,513 ¥36,825

Operating income 6,282 6,399 5,524

Operating income margin (%) 16.5 16.6 15.0

Pharmaceuticals

Net sales 7,624 6,809 6,939

Operating loss (496) (571) (511)

Operating income margin (%) (6.5) (8.4) (7.4)

Health Food

Net sales 9,227 8,507 8,553

Operating (loss) income (315) 212 580

Operating income margin (%) (3.4) 2.5 6.8

Other

Net sales 4,519 4,840 2,910

Operating income (loss) 137 149 (12)

Operating income margin (%) 3.0 3.1 (0.4)

Sales by Segment

S E G M E N T I N F O R M A T I O N

1) Cosmetics

Noevir Brand

The domestic prestige cosmetics market is passing through

a restructuring phase, prompting Noevir to continue

reviewing its business models and organization in pursuit

of enhanced market share.

In the fl agship prestige skincare products business, sales

of the Noevir 505 and Noevir Speciale skincare lines grew in

fi scal 2009. In functional cosmetics products, Noevir

launched Éclat de Fleurs beauty oil in December 2008 and

FACECONSCIOUS anti-aging serum in June 2009,

contributing to the Company’s revenue and profi t increases.

Despite these endeavors, weak sales of the mid-priced

Noevir 99 skincare line affected the entire cosmetics

segment.

In other efforts, Noevir shops were opened in Tokyo’s

Omotesando district and Miyazaki City, Miyazaki Prefecture,

in December 2008 and September 2009, respectively.

Noevir aims to use its shops to improve operational

effi ciency through better communication with consumers

and to attract new customers.

Other Brands

With regard to the Sana brand, Tokiwa enjoyed ongoing sales

growth in its mainstay Sana Nameraka Honpo Soymilk Isofl avone

skincare line. Sales of hypoallergenic NOV brand cosmetics

were strong thanks to the market penetration of the

ACT-NOV a anti-acne line launched in September 2008 as

Cosmetics Pharmaceuticals

0

10,000

20,000

30,000

40,000

0

5

10

15

20

0

2,000

4,000

6,000

8,000

(¥ million) (¥ million) (%)

2007 2008 2009 2007 2008 2009Net sales Operating income

Operating income margin

Total¥55,227 million

Cosmetics

67%¥36,825 million

Pharmaceuticals

13%¥6,939 million

Health Food

15%¥8,553 million

Other

5%¥2,910 million

0

2,000

4,000

6,000

8,000

10,000

-10

-8

-6

-4

-2

0

-1,000

-600

-800

-400

-200

0

(¥ million) (¥ million) (%)

2007 2008 2009 2007 2008 2009Net sales Operating income

Operating income margin

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well as healthy in-store sales. Furthermore, new items

introduced in the Excel and SUPER QUICK makeup lines

contributed to the sales growth.

Accounting for these factors, cosmetic segment sales

declined 4.4% year on year to ¥36,825 million, while

operating income fell 13.7% to ¥5,524 million.

2) Pharmaceuticals

During the fi scal year under review, such energy drinks as

Vita C Royal 3000 and New Gronviter D continued to record

robust sales. In addition, the amortization of goodwill for

this segment was absent in fi scal 2009. These factors

contributed to a revenue increase and a slight improvement

in operating loss. On the other hand, the deposit system

market saw ongoing contraction. Nevertheless, given the

social value of this business, we will continue to engage in

deposit sales to meet minor demand from local

communities and households.

As a result, pharmaceutical segment sales rose 1.9%

from the previous fi scal year to ¥6,939 million. The operating

loss was ¥511 million, in comparison with an operating loss

of ¥571 million in the previous fi scal year.

3) Health Food

Noevir Brand

Amid contraction in the domestic health food market,

Noevir brand nutritional supplements enjoyed sales growth.

Contributing to this result were: Noevir Cordyceps Sinensis N,

which was upgraded and reintroduced in December 2008;

INNERBIO-FOMULA2, which blends lactobacillus with

bifi dus, also introduced in December 2008; and

AMINOGLYCINE supplement, a blend of fi ve types of amino

acids that was launched in June 2009.

Other Brands

Available at the vast majority of convenience stores in

Japan, Tokiwa’s Min Min Da Ha and Kyo Kyo Da Ha functional

drinks continued to record brisk sales, claiming a larger

share of the market. On the other hand, sales of nutritional

supplements declined due to the market contraction.

Consequently, health food segment sales edged up

0.5% to ¥8,553 million, with operating income jumping

173.6% to ¥580 million.

4) Other

The North American aviation business suffered a substantial

drop in sales and profi t amid the worldwide recession.

As a result, sales in this segment fell 39.9% to ¥2,910

million. The operating loss was ¥12 million, representing a

turnaround from operating income of ¥149 million in the

previous fi scal year.

Health Food Other

0

4,000

2,000

6,000

8,000

10,000

-4

0

-2

2

4

6

8

-400

0

-200

200

400

600

800

(¥ million) (¥ million) (%)

2007 2008 2009 2007 2008 2009Net sales Operating income

Operating income margin

0

1,000

2,000

3,000

4,000

5,000

-1

0

1

2

3

4

5

-30

0

30

90

60

120

150

(¥ million) (¥ million) (%)

2007 2008 2009 2007 2008 2009Net sales Operating income

Operating income margin

C o n s o l i d a t e d B a l a n c e S h e e t sNoevir Co., Ltd. and Subsidiaries

20th September, 2009 and 2008

Millions of YenThousands of U.S. Dollars

(Note 1)

ASSETS 2009 2008 2009

CURRENT ASSETS:

Cash and cash equivalents ¥35,580 ¥35,914 $390,989

Receivables:

Trade notes 3,182 3,414 34,967

Trade accounts 8,311 8,241 91,330

Other 2,118 2,291 23,275

Allowance for doubtful receivables (89) (73) (979)

Inventories (Note 4) 8,801 10,008 96,714

Deferred tax assets (Note 9) 1,678 886 18,440

Prepaid expenses and other current assets 534 715 5,868

Total current assets 60,115 61,396 660,604

PROPERTY, PLANT AND EQUIPMENT (Note 5):

Land 14,330 14,439 157,473

Buildings and structures 21,049 21,035 231,308

Machinery and equipment 5,378 5,229 59,099

Furniture and fi xtures 6,692 6,581 73,538

Lease assets 8 — 88

Construction in progress 20 19 220

Total 47,477 47,303 521,726

Accumulated depreciation (24,608) (23,557) (270,418)

Net property, plant and equipment 22,869 23,746 251,308

INVESTMENTS AND OTHER ASSETS:

Investment securities (Note 3) 549 807 6,033

Goodwill 9 38 99

Software 1,746 1,927 19,187

Rental deposits 995 1,240 10,934

Deferred tax assets (Note 9) 2,292 2,710 25,187

Long-term deposits — 3,000 —

Other assets (Note 6) 733 954 8,055

Total investments and other assets 6,324 10,676 69,495

TOTAL ¥89,308 ¥95,818 $981,407

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Millions of YenThousands of U.S. Dollars

(Note 1)

LIABILITIES AND EQUITY 2009 2008 2009

CURRENT LIABILITIES:

Current portion of long-term debt (Note 6) ¥ 14 ¥ 6,760 $ 154

Payables:

Trade notes 366 301 4,022

Trade accounts 4,552 5,377 50,022

Other 4,141 3,688 45,505

Income taxes payable 642 762 7,056

Liability for product returns 1,361 1,503 14,956

Accrued expenses 529 481 5,813

Other current liabilities 629 409 6,912

Total current liabilities 12,234 19,281 134,440

LONG-TERM LIABILITIES:

Long-term debt (Note 6) 6 12 66

Liability for retirement benefi ts (Note 7) 5,050 5,043 55,495

Long-term guarantee deposits received 19,703 19,875 216,516

Other long-term liabilities 412 7 4,527

Total long-term liabilities 25,171 24,937 276,604

COMMITMENTS AND CONTINGENT LIABILITIES

(Notes 11 and 12)

EQUITY (Notes 6, 8 and 14):

Common stock, authorised, 145,000 thousand shares; issued,

41,337 thousand shares in 2009 and 2008 7,319 7,319 80,429

Capital surplus—Additional paid-in capital 6,809 6,809 74,824

Retained earnings 38,228 37,564 420,088

Net unrealised gain (loss) on available-for-sale securities (88) 92 (967)

Foreign currency translation adjustments (366) (195) (4,022)

Treasury stock—at cost: 14,627 shares in 2009 and

14,587 shares in 2008 (21) (21) (231)

Total 51,881 51,568 570,121

Minority interests 22 32 242

Total equity 51,903 51,600 570,363

TOTAL ¥89,308 ¥95,818 $981,407

See notes to consolidated fi nancial statements.

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C o n s o l i d a t e d S t a t e m e n t s o f I n c o m eNoevir Co., Ltd. and Subsidiaries

Years Ended 20th September, 2009 and 2008

Millions of YenThousands of U.S. Dollars

(Note 1)

2009 2008 2009

NET SALES ¥55,227 ¥58,669 $606,890

COST OF SALES (Note 10) 19,084 20,700 209,714

Gross profi t 36,143 37,969 397,176

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 10) 32,604 33,926 358,286

Operating income 3,539 4,043 38,890

OTHER INCOME (EXPENSES):

Interest and dividend income 86 175 945

Interest expense (1) (72) (11)

Gain on sales of memberships 98 — 1,077

Gain on sales of property, plant and equipment 36 624 396

Loss on disposal of property, plant and equipment (77) (60) (846)

Reversal of allowance for doubtful receivables 32 155 351

Devaluation loss on inventories (365) — (4,011)

Impairment loss on fi xed assets (Note 5) (106) (63) (1,165)

Other—net 249 539 2,736

Other income (expenses)—net (48) 1,298 (528)

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS 3,491 5,341 38,362

INCOME TAXES (Note 9):

Current 1,635 1,347 17,967

Deferred (289) 1,067 (3,176)

Total income taxes 1,346 2,414 14,791

MINORITY INTERESTS IN NET INCOME (7) (10) (77)

NET INCOME ¥ 2,152 ¥ 2,937 $ 23,648

Yen U.S. Dollars

PER SHARE OF COMMON STOCK (Notes 2. p, 13 and 14):

Basic net income ¥52.07 ¥71.94 $0.57

Diluted net income — 62.67 —

Cash dividends applicable to the year 36.00 36.00 0.40

See notes to consolidated fi nancial statements.

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C o n s o l i d a t e d S t a t e m e n t s o f C h a n g e s i n E q u i t yNoevir Co., Ltd. and Subsidiaries

Years Ended 20th September, 2009 and 2008

Thousands Millions of Yen

Outstanding Number of Shares of Common

StockCommon

Stock

Capital Surplus

Additional Paid-in Capital

Retained Earnings

Net Unrealised

Gain (Loss) on Available-for-sale Securities

Foreign Currency

Translation Adjustments

Treasury Stock Total

Minority Interests

TotalEquity

BALANCE, 21ST SEPTEMBER, 2007 35,823 ¥4,284 ¥3,774 ¥35,917 ¥226 ¥ (18) ¥(21) ¥44,162 ¥61 ¥44,223

Net income 2,937 2,937 2,937

Cash dividends, ¥36.00 per share (1,290) (1,290) (1,290)

Issuance of common stock 5,500 3,035 3,035 6,070 6,070

Net change in the year (134) (177) (311) (29) (340)

BALANCE, 20TH SEPTEMBER, 2008 41,323 7,319 6,809 37,564 92 (195) (21) 51,568 32 51,600

Net income 2,152 2,152 2,152

Cash dividends, ¥36.00 per share (1,488) (1,488) (1,488)

Repurchase of treasury stock (0) (0) (0) (0)

Net change in the year (180) (171) (351) (10) (361)

BALANCE, 20TH SEPTEMBER, 2009 41,323 ¥7,319 ¥6,809 ¥38,228 ¥ (88) ¥(366) ¥(21) ¥51,881 ¥22 ¥51,903

Thousands of U.S. Dollars (Note 1)

Common Stock

Capital Surplus

Additional Paid-in Capital

Retained Earnings

Net Unrealised

Gain (Loss) on Available-for-sale Securities

Foreign Currency

Translation Adjustments

Treasury Stock Total

Minority Interests

TotalEquity

BALANCE, 20TH SEPTEMBER, 2008 $80,429 $74,824 $412,791 $1,011 $(2,143) $(231) $566,681 $352 $567,033

Net income 23,648 23,648 23,648

Cash dividends, $0.40 per share (16,351) (16,351) (16,351)

Repurchase of treasury stock (0) (0) (0)

Net change in the year (1,978) (1,879) (3,857) (110) (3,967)

BALANCE, 20TH SEPTEMBER, 2009 $80,429 $74,824 $420,088 $ (967) $(4,022) $(231) $570,121 $242 $570,363

See notes to consolidated fi nancial statements.

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C o n s o l i d a t e d S t a t e m e n t s o f C a s h F l o w sNoevir Co., Ltd. and Subsidiaries

Years Ended 20th September, 2009 and 2008

Millions of YenThousands of U.S. Dollars

(Note 1)

2009 2008 2009

OPERATING ACTIVITIES:

Income before income taxes and minority interests ¥ 3,491 ¥ 5,341 $ 38,362

Adjustments for:

Income taxes—paid (1,771) (729) (19,462)

Depreciation 2,099 2,064 23,066

Amortisation of goodwill 29 601 319

Reversal of doubtful receivables (42) (199) (462)

Gain on sales of property, plant and equipment (36) (624) (396)

Loss on disposal of property, plant and equipment 77 60 846

Provision for (reversal of) retirement benefi ts 7 (4) 77

Impairment loss on fi xed assets (Note 5) 106 63 1,165

Changes in assets and liabilities:

Decrease in trade receivables 124 1,225 1,363

Decrease in inventories 1,112 181 12,220

Increase (decrease) in trade payable (694) 189 (7,626)

Increase (decrease) in long-term guarantee deposits received (171) 23 (1,879)

Other—net 1,641 (1,206) 18,033

Total adjustments 2,481 1,644 27,264

Net cash provided by operating activities 5,972 6,985 65,626

INVESTING ACTIVITIES:

Decrease in time deposits (exceeding 3 months) 3,000 — 32,967

Proceeds from sales of property, plant and equipment 108 2,442 1,186

Purchases of property, plant and equipment (887) (1,355) (9,747)

Proceeds from sales of marketable and investment securities 2 17 22

Purchases of marketable and investment securities (12) (3) (132)

Increase in other assets (154) (1,115) (1,692)

Net cash provided by (used in) investing activities 2,057 (14) 22,604

FINANCING ACTIVITIES:

Repayments of long-term debt — (9,350) —

Proceeds from share issuance of common stock — 6,039 —

Payments for redemption of convertible bond (6,760) (1,997) (74,286)

Repurchase of treasury stock (0) — (0)

Dividends paid (1,484) (1,289) (16,307)

Net cash used in fi nancing activities (8,244) (6,597) (90,593)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

AND CASH EQUIVALENTS(119) (118) (1,307)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (334) 256 (3,670)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 35,914 35,658 394,659

CASH AND CASH EQUIVALENTS, END OF YEAR ¥35,580 ¥35,914 $390,989

See notes to consolidated fi nancial statements.

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N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t sNoevir Co., Ltd. and Subsidiaries

Years Ended 20th September, 2009 and 2008

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS

The accompanying consolidated fi nancial statements have been prepared in accordance with the provisions set forth in the

Japanese Financial Instruments and Exchange Act and its related accounting regulations, and in conformity with accounting principles

generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements

of International Financial Reporting Standards.

In preparing these consolidated fi nancial statements, certain reclassifi cations and rearrangements have been made to the

consolidated fi nancial statements issued domestically in order to present them in a form which is more familiar to readers outside

Japan. In addition, certain reclassifi cations have been made in the 2008 consolidated fi nancial statements to conform to the

classifi cations used in 2009.

The consolidated fi nancial statements are stated in Japanese yen, the currency of the country in which Noevir Co., Ltd. (the

“Company”) is incorporated and operates. The translation of Japanese yen amounts into U.S. dollar amounts is included solely for the

convenience of readers outside Japan and has been made at the rate of ¥91 to $1, the approximate rate of exchange at 20th

September, 2009. Such translation should not be construed as representation that the Japanese yen amounts could be converted

into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Consolidation — The accompanying consolidated fi nancial statements include the accounts of the Company and its 13

subsidiaries (together, the “Group”).

Under the control or infl uence concept, those companies in which the Company, directly or indirectly, is able to exercise control over

operations are fully consolidated, and those companies over which the Group has the ability to exercise signifi cant infl uence are

accounted for by the equity method.

The excess of the purchase price over the fair value of the net assets of the acquired subsidiaries (“goodwill”) is amortised using the

straight-line method over 5 years.

All signifi cant intercompany balances and transactions have been eliminated in consolidation. All material unrealised profi t included

in assets resulting from transactions within the Group is eliminated.

b. Unifi cation of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements — In May

2006, the Accounting Standards Board of Japan (the “ASBJ”) issued ASBJ Practical issues Task Force (PITF) No. 18, “Practical Solution

on Unifi cation of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements”. PITF No. 18

prescribes: (1) the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and

events under similar circumstances should in principle be unifi ed for the preparation of the consolidated fi nancial statements, (2)

fi nancial statements prepared by foreign subsidiaries in accordance with either International Financial Reporting Standards or the

generally accepted accounting principles in the United States of America tentatively may be used for the consolidation process, (3)

however, the following items should be adjusted in the consolidation process so that net income is accounted for in accordance

with Japanese GAAP unless they are not material: 1) amortisation of goodwill; 2) scheduled amortisation of actuarial gain or loss of

pensions that has been directly recorded in the equity; 3) expensing capitalised development costs of R&D; 4) cancellation of the fair

value model accounting for property, plant, and equipment and investment properties and incorporation of the cost model

accounting; 5) recording the prior years’ effects of changes in accounting policies in the income statement where retrospective

adjustments to fi nancial statements have been incorporated; and 6) exclusion of minority interests from net income, if contained.

PITF No. 18 was effective for fi scal years beginning on or after 1st April, 2008, with early adoption permitted.

The Company applied this accounting standard effective 21st September, 2008. The adoption had no effect on earnings for the year

ended 20th September, 2009.

c. Cash Equivalents — Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to

insignifi cant risk of changes in value. Cash equivalents include time deposits and certifi cate of deposits, which mature or become

due within three months of the date of acquisition.

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d. Inventories — Prior to 1st April, 2008, inventories were stated at cost, determined by the average method. In July 2006, the ASBJ

issued ASBJ Statement No. 9, “Accounting Standard for Measurement of Inventories“. This standard requires that inventories held for

sale in the ordinary course of business be measured at the lower of cost or net selling value, which is defi ned as the selling price less

additional estimated manufacturing costs and estimated direct selling expenses. The replacement cost may be used in place of the

net selling value, if appropriate. The standard was effective for fi scal years beginning on or after 1st April, 2008 with early adoption

permitted.

The Company and its domestic subsidiaries applied this new accounting standard for measurement of inventories effective 21st

September, 2008, while inventories of foreign subsidiaries are stated at lower of cost, determined principally by the fi rst-in, fi rst-out

method, or market. The effect of this change was to decrease operating income by ¥86 million ($945 thousand) and income before

income taxes and minority interests by ¥451 million ($4,956 thousand).

e. Marketable and Investment Securities — All of the Group’s marketable securities are classifi ed as available-for-sale securities

and are reported at fair value, with unrealised gains and losses, net of applicable taxes, reported as a separate component of equity.

The cost of securities sold is determined based on the moving-average cost method.

Non-marketable available-for-sale securities are stated at cost determined by the moving-average method.

For other than temporary declines in fair value, individual available-for-sale securities are reduced to net realisable value by a charge

to income.

f. Property, Plant and Equipment — Property, plant and equipment are stated at cost. Depreciation of property, plant and

equipment of the Company and its domestic subsidiaries is computed substantially by the declining-balance method at rates based

on the estimated useful lives of the assets, while the straight-line method is applied to all property, plant and equipment of foreign

subsidiaries. The range of useful lives is principally from 6 to 50 years for buildings and structures, from 2 to 8 years for machinery and

equipment, and from 2 to 20 years for furniture and fi xtures.

The useful lives for lease assets are the terms of the respective leases.

g. Long-Lived Assets — The Group reviews its long-lived assets for impairment whenever events or changes in circumstance

indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognised if the

carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash fl ows expected to result from the

continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by

which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash fl ows from

the continued use and eventual disposition of the asset or the net selling price at disposition.

h. Liability for Product Returns — The liability for product returns is stated at an amount considered to be appropriate based on

the Group’s past loss experience from product returns.

i. Retirement Benefi ts — The Company and its domestic subsidiaries have non-contributory funded pension plans and unfunded

retirement benefi t plans for employees which cover approximately 20% and 80%, respectively, of their benefi ts.

Effective December 2008, the Company and its certain domestic subsidiary terminated their retirement benefi ts plan for all directors

and corporate auditors. The outstanding balance of retirement benefi ts to directors and corporate auditors of ¥401 million ($4,407

thousand) was reclassifi ed to other long-term liabilities in the year ended 20th September, 2009.

j. Revenue Recognition — The Group recognises revenue upon shipment of products. Revenue of certain cosmetic products is

recognised when they have been delivered from sales agents to customers, including sales representatives.

k. Research and Development Costs — Research and development costs are charged to income as incurred.

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l. Leases — In March 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease Transactions,” which revised

the previous accounting standard for lease transactions issued in June 1993. The revised accounting standard for lease transactions

is effective for fi scal years beginning on or after 1st April, 2008 with early adoption permitted for fi scal years beginning on or after

1st April, 2007.

Under the previous accounting standard, fi nance leases that deem to transfer ownership of the leased property to the lessee were to

be capitalised. However, other fi nance leases were permitted to be accounted for as operating lease transactions if certain “as if

capitalised” information is disclosed in the notes to the lessee’s fi nancial statements. The revised accounting standard requires that

all fi nance lease transactions should be capitalised to recognise lease assets and lease obligations in the balance sheet. In addition,

the accounting standard permits leases which existed at the transition date and do not transfer ownership of the leased property to

the lessee to be accounted for as operating lease transactions.

The Company applied the revised accounting standard effective 21st September, 2008. In addition, the Company accounted for

leases which existed at the transition date and do not transfer ownership of the leased property to the lessee as operating lease

transactions.

The effect of this change had no impact on the consolidated statement of income for the year ended 20th September, 2009.

All other leases are accounted for as operating leases.

m. Income Taxes — The provision for income taxes is computed based on the pretax income included in the consolidated

statements of income. The asset and liability approach is used to recognise deferred tax assets and liabilities for the expected future

tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes

are measured by applying currently enacted tax laws to the temporary differences.

n. Foreign Currency Transactions — All assets and liabilities denominated in foreign currencies are translated into Japanese yen at

the current exchange rates at the balance sheet date. Revenue and expense items denominated in foreign currencies are translated

at the historical exchange rates. The foreign exchange gains and losses from translation are recognised in the consolidated income

statement to the extent that they are not hedged by forward exchange contracts.

o. Foreign Currency Financial Statements — The balance sheet accounts of the foreign subsidiaries are translated into Japanese

yen at the current exchange rates as of the balance sheet dates except for equity, which is translated at the historical exchange rates.

Differences arising from such translation are shown as “Foreign currency translation adjustments” in a separate component of equity.

Revenue and expense accounts of the foreign subsidiaries are translated into Japanese yen at the annual average exchange rates.

p. Per Share Information — Basic net income per share is computed by dividing net income available to common shareholders by

the weighted-average number of common shares outstanding for the period, retroactively adjusted for stock splits.

Diluted net income per share refl ects the potential dilution that could occur if securities were exercised or converted into common

stock. Diluted net income per share of common stock assumes full conversion of the outstanding convertible bonds at the

beginning of the year (or at the time of issuance) with an applicable adjustment for related interest expense, net of tax.

Diluted net income per share is not disclosed because there are no dilutive securities at 20th September, 2009.

Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to the

respective years including dividends to be paid after the end of the year.

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q. New Accounting Pronouncements

Asset Retirement Obligations

On 31st March, 2008, the ASBJ published a new accounting standard for asset retirement obligations, ASBJ Statement No. 18

“Accounting Standard for Asset Retirement Obligations” and ASBJ Guidance No. 21 “Guidance on Accounting Standard for Asset

Retirement Obligations”. Under this accounting standard, an asset retirement obligation is defi ned as a legal obligation imposed

either by law or contract that results from the acquisition, construction, development and the normal operation of a tangible fi xed

asset and is associated with the retirement of such tangible fi xed asset. The asset retirement obligation is recognised as the sum of

the discounted cash fl ows required for the future asset retirement and is recorded in the period in which the obligation is incurred if

a reasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot be made in the period the

asset retirement obligation is incurred, the liability should be recognised when a reasonable estimate of asset retirement obligation

can be made. Upon initial recognition of a liability for an asset retirement obligation, an asset retirement cost is capitalised by

increasing the carrying amount of the related fi xed asset by the amount of the liability. The asset retirement cost is subsequently

allocated to expense through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its present

value each period. Any subsequent revisions to the timing or the amount of the original estimate of undiscounted cash fl ows are

refl ected as an increase or a decrease in the carrying amount of the liability and the capitalised amount of the related asset

retirement cost. The standard is effective for fi scal years beginning on or after 1st April, 2010 with early adoption permitted for fi scal

years beginning on or before 31st March, 2010.

3. MARKETABLE AND INVESTMENT SECURITIES

Marketable and investment securities as of 20th September, 2009 and 2008 consisted of the following:

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009

Non-current:

Marketable equity securities ¥521 ¥779 $5,725

Trust fund investments and other 20 20 220

Investments in affi liated companies 8 8 88

Total ¥549 ¥807 $6,033

The carrying amounts and aggregate fair values of marketable and investment securities as of 20th September, 2009 and 2008 were

as follows:

Millions of Yen

2009

CostUnrealised

GainsUnrealised

LossesFair

Value

Securities classifi ed as:

Available-for-sale—Equity securities ¥666 ¥62 ¥(207) ¥521

Millions of Yen

2008

CostUnrealised

GainsUnrealised

LossesFair

Value

Securities classifi ed as:

Available-for-sale—Equity securities ¥656 ¥168 ¥(45) ¥779

Thousands of U.S. Dollars

2009

CostUnrealised

GainsUnrealised

LossesFair

Value

Securities classifi ed as:

Available-for-sale—Equity securities $7,319 $681 $(2,275) $5,725

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Available-for-sale securities whose fair value is not readily determinable as of 20th September, 2009 and 2008 were as follows:

Carrying Amount

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009

Available-for-sale:

Equity securities ¥20 ¥20 $220

Proceeds from sales of available-for-sale securities for the years ended 20th September, 2009 and 2008 were ¥2 million

($22 thousand) and ¥17 million, respectively. Gross realised gains on these sales, computed on the moving-average cost basis, were

¥0 million ($0 thousand) and ¥0 million, respectively, for the years ended 20th September, 2009 and 2008.

4. INVENTORIES

Inventories at 20th September, 2009 and 2008 consisted of the following:

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009

Merchandise ¥4,163 ¥ 4,300 $45,747

Finished products 2,729 3,385 29,989

Semi-fi nished products 23 11 253

Work in process 297 279 3,264

Raw materials and supplies 1,589 2,033 17,461

Total ¥8,801 ¥10,008 $96,714

5. LONG-LIVED ASSETS

The Group reviewed its long-lived assets for impairment as of the years ended 20th September, 2009 and 2008.

As a result, for the year ended 20th September, 2009, the Group recognised an impairment loss of ¥106 million ($1,165 thousand) as

other expenses for certain business properties in the Hokkaido Prefecture, Miyagi Prefecture and Okinawa Prefecture due to

continuous operating losses of those units and the carrying amounts of those assets were written down to the recoverable amounts

for the year ended 20th September, 2009. The recoverable amounts of those assets were measured at their value in use (the discount

rate used for computation of present value of future cash fl ows was 1.5%) or their net selling price at disposition.

For the year ended 20th September, 2008, the Group recognised an impairment loss of ¥63 million as other expenses for certain idle

assets in the Osaka Prefecture due to substantial declines in the fair market value and the carrying amounts of those assets were

written down to the recoverable amounts for the year ended 20th September, 2008. The recoverable amounts of those assets were

measured by their net selling price at disposition.

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009

Land ¥ 86 ¥44 $ 945

Buildings and structures 19 19 209

Furniture and fi xtures 1 0 11

Total ¥106 ¥63 $1,165

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6. LONG-TERM DEBT

Long-term debt at 20th September, 2009 and 2008 consisted of the following:

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009

Unsecured zero coupon yen convertible bonds, due 2009 ¥6,760

Loans from bank and other fi nancial institutions,

due 2009 without interest:

Collateralised ¥12 12 $132

Obligations under fi nance leases 8 — 88

Total 20 6,772 220

Less current portion (14) (6,760) (154)

Long-term debt, less current portion ¥ 6 ¥ 12 $ 66

Unsecured zero coupon yen convertible bonds, due 2009 were matured on 6th February, 2009.

Annual maturities of long-term debt at 20th September, 2009 were as follows:

Year Ending 20th September Millions of Yen Thousands of U.S. Dollars

2010 ¥14 $154

2011 2 22

2012 2 22

2013 2 22

2014 0 0

Total ¥20 $220

The carrying amounts of assets pledged as collateral for the above collateralised long-term debt at 20th September, 2009 were

as follows:

Millions of Yen Thousands of U.S. Dollars

Investments and other assets—Other assets ¥13 $143

7. RETIREMENT AND PENSION PLANS

The Company and its certain domestic subsidiaries have severance payment plans for employees.

Under most circumstances, employees terminating their employment are entitled to retirement benefi ts determined based on the

rate of pay at the time of termination, years of service and certain other factors. Such retirement benefi ts are made in the form of a

lump-sum severance payment from the Group and annuity payments from a trustee. Employees are entitled to larger payments if

the termination is involuntary, by retirement at the mandatory retirement age, by death, or by voluntary retirement at certain specifi c

ages prior to the mandatory retirement age.

As discussed in Note 2. i, the Company and its domestic subsidiary terminated their retirement benefi ts plan for all directors and

corporate auditors and the outstanding balance of retirement benefi ts to directors and corporate auditors of ¥401 million

($4,407 thousand) was reclassifi ed to other long-term liabilities in the year ended 20th September, 2009.

The liability for retirement benefi ts at 20th September, 2008 included retirement benefi ts for directors and corporate auditors of

¥404 million.

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The liability for employees’ retirement benefi ts at 20th September, 2009 and 2008 consisted of the following:

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009

Projected benefi t obligation ¥10,395 ¥10,015 $114,231

Fair value of plan assets (4,288) (4,603) (47,121)

Unrecognised actuarial loss (1,057) (773) (11,615)

Net liability ¥ 5,050 ¥ 4,639 $ 55,495

The components of net periodic benefi t costs for the years ended 20th September, 2009 and 2008 are as follows:

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009

Service cost ¥576 ¥595 $6,329

Interest cost 200 196 2,198

Expected return on plan assets (110) (171) (1,209)

Recognised actuarial loss 212 128 2,330

Net periodic benefi t costs ¥878 ¥748 $9,648

Assumptions used for the years ended 20th September, 2009 and 2008 are set forth as follows:

2009 2008

Discount rate 2.00% 2.00%

Expected rate of return on plan assets 2.35% 3.50%

Recognition period of actuarial gain/loss 5 years—10 years 5 years—10 years

8. EQUITY

Since 1st May, 2006, Japanese companies have been subject to the Companies Act of Japan (the “Companies Act”).

The signifi cant provisions in the Companies Act that affect fi nancial and accounting matters are summarised below:

(a) Dividends

Under the Companies Act, companies can pay dividends at any time during the fi scal year in addition to the year-end dividend upon

resolution at the shareholders meeting. For companies that meet certain criteria such as: (1) having the Board of Directors, (2) having

independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one

year rather than two years of normal term by its articles of incorporation, the Board of Directors may declare dividends (except for

dividends in kind) at any time during the fi scal year if the company has prescribed so in its articles of incorporation. The company

meets all the above criteria.

The Companies Act permits companies to distribute dividends-in-kind (non-cash-assets) to shareholders subject to a certain

limitation and additional requirements.

Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation

of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase

of treasury stock. The limitation is defi ned as the amount available for distribution to the shareholders, but the amount of net assets

after dividends must be maintained at no less than ¥3 million.

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(b) Increases/decreases and transfer of common stock, reserve and surplus

The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of

retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon

the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of the

common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without

limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and

retained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.

(c) Treasury stock and treasury stock acquisition rights

The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the

Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders

which is determined by specifi c formula.

Under the Companies Act, stock acquisition rights, are presented as a separate component of equity.

The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such

treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

9. INCOME TAXES

The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted

in a normal effective statutory tax rate of approximately 40.6% for the years ended 20th September, 2009 and 2008.

The tax effects of signifi cant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at

20th September, 2009 and 2008 are as follows:

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009

Deferred tax assets:

Inventories ¥ 682 ¥ 250 $ 7,495

Investment securities 81 123 890

Property, plant and equipment 334 345 3,670

Employees’ retirement benefi ts 2,050 2,047 22,527

Tax loss carryforwards 24 579 264

Other 1,403 951 15,418

Less valuation allowance (374) (441) (4,110)

Total ¥4,200 ¥3,854 $46,154

Deferred tax liabilities:

Property, plant and equipment ¥ 225 ¥ 226 $ 2,472

Unrealised gain on available-for-sale securities 0 28 0

Other 5 4 55

Total ¥ 230 ¥ 258 $ 2,527

Net deferred tax assets ¥3,970 ¥3,596 $43,627

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A reconciliation between the normal effective statutory tax rate and the actual effective tax rates refl ected in the accompanying

consolidated statements of income for the years ended 20th September, 2009 and 2008 is as follows:

2009 2008

Normal effective statutory tax rate 40.6% 40.6%

Expenses not deductible for income tax purposes 8.0 4.6

Taxation of accumulated earnings 0.8 —

Amortisation of goodwill 0.0 4.4

Valuation allowance (1.9) (4.3)

Per capita levy 2.7 1.8

Tax effects for unrealised gain on inventories (8.0) —

Tax credits (4.8) (1.8)

Other—net 1.2 (0.1)

Actual effective tax rates 38.6% 45.2%

At 20th September, 2009, certain subsidiaries have tax loss carryforwards aggregating approximately ¥64 million ($703 thousand)

which are available to be offset against taxable income of such subsidiaries in future years. These tax loss carryforwards, if not utilised,

will expire as follows:

Year Ending 20th September Millions of Yen Thousands of U.S. Dollars

2010 ¥— $ —

2011 — —

2012 — —

2013 — —

2014 and thereafter 64 703

Total ¥64 $703

10. RESEARCH AND DEVELOPMENT COSTS

Research and development costs charged to income were ¥1,487 million ($16,341 thousand) and ¥1,659 million for the years ended

20th September, 2009 and 2008, respectively.

11. LEASES

The Group leases certain machinery, offi ce space and other assets.

Total lease payments under fi nance leases not deemed to transfer ownership of the leased property to the lessee for the years ended

20th September, 2009 and 2008 were ¥95 million ($1,044 thousand) and ¥112 million, respectively.

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As discussed in Note 2. l, the Group accounts for leases which existed at the transition date and do not transfer ownership of the

leased property to the lessee as operating lease transactions. Pro forma information of such leases existing at the transition date,

such as acquisition cost, accumulated depreciation, obligations under fi nance leases, depreciation expense and interest expense, on

an “as if capitalised” basis for the years ended 20th September, 2009 and 2008 was as follows:

Millions of Yen

2009 2008

Machinery and

Equipment

Furnitureand

Fixtures Total

Machinery and

Equipment

Furnitureand

Fixtures Software Total

Acquisition cost ¥428 ¥87 ¥515 ¥486 ¥129 ¥4 ¥619

Accumulated depreciation 341 54 395 326 82 4 412

Net leased property ¥ 87 ¥33 ¥120 ¥160 ¥ 47 ¥0 ¥207

Thousands of U.S. Dollars

2009

Machinery and

Equipment

Furnitureand

Fixtures Total

Acquisition cost $4,703 $956 $5,659

Accumulated depreciation 3,747 593 4,340

Net leased property $ 956 $363 $1,309

Obligations under fi nance leases:

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009

Due with in one year ¥ 71 ¥101 $ 780

Due after one year 60 141 659

Total ¥131 ¥242 $1,439

Depreciation expense and interest expense under fi nance leases:

Millions of Yen Thousands of U.S. Dollars

2009 2008 2009

Depreciation expense ¥83 ¥107 $ 912

Interest expense 8 12 88

Total ¥91 ¥119 $1,000

Depreciation expense and interest expense, which are not refl ected in the accompanying consolidated statements of income, are

computed by the straight-line method and the interest method, respectively.

12. CONTINGENT LIABILITIES

At 20th September, 2009, the Group had the following contingent liabilities:

Millions of Yen Thousands of U.S. Dollars

Guarantees of bank loans of certain affi liates and customers ¥98 $1,077

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13. NET INCOME PER SHARE

Reconciliation of the difference between basic and diluted net income per share (“EPS”) for the year ended 20th September, 2008 is as

follows:

Millions of Yen Thousands of Shares Yen

Net IncomeWeighted Average

SharesEPS

For the year ended 20th September, 2008:

Basic EPS:

Net income available to common shareholders ¥2,937 40,827 ¥71.94

Effect of dilutive securities:

Convertible bonds 1 6,049

Diluted EPS:

Net income for computation ¥2,938 46,876 ¥62.67

There is no dilutive securities at 20th September, 2009.

14. SUBSEQUENT EVENTS

a. Appropriations of Retained Earnings

The following appropriation of retained earnings at 20th September, 2009 was approved at the Board of Directors held on 10th

November, 2009:

Millions of Yen Thousands of U.S. Dollars

Year-end cash dividends, ¥36 ($0.40) per share ¥1,488 $16,351

15. SEGMENT INFORMATION

(1) Industry Segments

Information about industry segments for the years ended 20th September, 2009 and 2008 is as follows:

a. Sales and Operating Income

Millions of Yen

2009

Cosmetics Pharmaceuticals Health Foods OtherEliminations/

Corporate Consolidated

Sales to customers ¥36,825 ¥6,939 ¥8,553 ¥2,910 ¥ — ¥55,227

Intersegment sales — — — 140 (140) —

Total sales 36,825 6,939 8,553 3,050 (140) 55,227

Operating expenses 31,301 7,450 7,973 3,062 1,902 51,688

Operating income (loss) ¥ 5,524 ¥ (511) ¥ 580 ¥ (12) ¥(2,042) ¥ 3,539

b. Total Assets, Depreciation, Impairment Loss on Fixed Assets and Capital Expenditures

Millions of Yen

2009

Cosmetics Pharmaceuticals Health Foods OtherEliminations/

Corporate Consolidated

Total assets ¥51,031 ¥12,295 ¥12,221 ¥2,515 ¥11,246 ¥89,308

Depreciation 1,060 216 207 43 573 2,099

Impairment loss on fi xed assets 15 61 30 0 — 106

Capital expenditures 802 265 182 9 19 1,277

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a. Sales and Operating Income

Thousands of U.S. Dollars

2009

Cosmetics Pharmaceuticals Health Foods OtherEliminations/

Corporate Consolidated

Sales to customers $404,670 $76,253 $93,989 $31,978 $ — $606,890

Intersegment sales — — — 1,539 (1,539) —

Total sales 404,670 76,253 93,989 33,517 (1,539) 606,890

Operating expenses 343,967 81,868 87,615 33,649 20,901 568,000

Operating income (loss) $ 60,703 $ (5,615) $ 6,374 $ (132) $(22,440) $ 38,890

b. Total Assets, Depreciation, Impairment Loss on Fixed Assets and Capital Expenditures

Thousands of U.S. Dollars

2009

Cosmetics Pharmaceuticals Health Foods OtherEliminations/

Corporate Consolidated

Total assets $560,780 $135,110 $134,297 $27,637 $123,583 $981,407

Depreciation 11,648 2,374 2,275 472 6,297 23,066

Impairment loss on fi xed assets 165 670 330 0 — 1,165

Capital expenditures 8,813 2,912 2,000 99 209 14,033

a. Sales and Operating Income

Millions of Yen

2008

Cosmetics Pharmaceuticals Health Foods OtherEliminations/

Corporate Consolidated

Sales to customers ¥38,513 ¥6,809 ¥8,507 ¥4,840 ¥ — ¥58,669

Intersegment sales — — — 151 (151) —

Total sales 38,513 6,809 8,507 4,991 (151) 58,669

Operating expenses 32,114 7,380 8,295 4,842 1,995 54,626

Operating income (loss) ¥ 6,399 ¥ (571) ¥ 212 ¥ 149 ¥(2,146) ¥ 4,043

b. Total Assets, Depreciation, Impairment Loss on Fixed Assets and Capital Expenditures

Millions of Yen

2008

Cosmetics Pharmaceuticals Health Foods OtherEliminations/

Corporate Consolidated

Total assets ¥55,375 ¥11,892 ¥12,595 ¥2,597 ¥13,359 ¥95,818

Depreciation 1,018 203 213 42 588 2,064

Impairment loss on fi xed assets 9 34 20 0 — 63

Capital expenditures 1,543 197 215 13 758 2,726

Note: 1) As discussed in Note 2.d, effective 21st September, 2008, the Group applied ASBJ Statement No. 9, “Accounting Standard for measurement of

Inventories.” The effect of this change was to decrease operating income of Cosmetics by ¥70 million ($769 thousand) and operating income of Health

Foods by ¥6 million ($66 thousand), and to increase operating loss of Pharmaceuticals by ¥7 million ($77 thousand) and operating loss of Other by ¥3

million ($33 thousand) for the year ended 20th September, 2009.

(2) Geographical Segments

Under Japanese accounting regulations, the Group is not required to disclose geographical segment information because sales and

total assets in Japan represented more than 90% of those of the Group for the periods presented herein.

(3) Sales to Foreign Customers

Under Japanese accounting regulations, the Group is not required to disclose sales to foreign customers information because sales

to foreign customers represented less than 10% of those of the Group for the periods presented herein.

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P R I N C I P A L C O N S O L I D A T E D S U B S I D I A R I E S(As of September 20, 2009)

Name Location

Issued Share Capital

(millions of yen,

except as

otherwise stated)

Direct or Indirect

Ownership by

the Company

(percent) Principal Business

Tokiwa Pharmaceutical

Co., Ltd.

3-5-12 Azuchi-machi

Chuo-ku, Osaka 541-0052

Japan

¥4,301 100.00% Manufacture and sale of

pharmaceuticals, cosmetics

and health food products

Bonanza Co., Ltd. 6-13-1 Minatojima-nakamachi

Chuo-ku, Kobe 650-8521

Japan

¥10 100.00 Contract manufacturing

and sales

Noevir Tourist Co., Ltd. 3-5-12 Azuchi-machi

Chuo-ku, Osaka 541-0052

Japan

¥100 100.00 General travel services

Noevir Aviation Co., Ltd. 2-12 Yao Airport

Yao, Osaka 581-0043

Japan

¥35 100.00 Air transportation business

Noevir Holding of

America, Inc.

1095 Southeast Main Street

Irvine, California 92614

U.S.A.

US$7,250

thousand

100.00 North American operations

Noevir U.S.A., Inc. 1095 Southeast Main Street

Irvine, California 92614

U.S.A.

US$5,900

thousand

100.00 Sale of cosmetics and

nutritional supplements

Noevir Canada, Inc. 7360 River Road, Richmond

British Columbia V6X 1X6

Canada

C$1,132

thousand

100.00 Sale of cosmetics and

nutritional supplements

Noevir Aviation, Inc. 200 West Grand Avenue

Montvale, New Jersey 07645

U.S.A.

US$1,350

thousand

100.00 Sale and lease of aircraft

Noevir Taiwan, Inc. 8th Fl.-2, No.111 Songjiang

Road, Jhongshan District

Taipei City 10486

Taiwan

NT$31,000

thousand

96.77 Sale of cosmetics and

nutritional supplements

Shanghai Noevir Co., Ltd. Room 2206, Feidiao

International Plaza

No. 1065A Zhaojiabang Road

Shanghai China

5,000

thousand

Chinese yuan

50.00 Sale of cosmetics and

promotional products

Noevir Shanghai, Inc. Room 802, No. 6 Jilong Road

Waigaoqiao Free Trade Zone

Pudong New Area, Shanghai

China

3,311

thousand

Chinese yuan

100.00 Sale of promotional products

Noevir Europe s.r.l. Via Tre Settembre, 99 (5°-#183)

47891 Dogana

Repubblica di San Marino

26,000

euro

100.00 Market research in Europe

Tokiwa Medical Service

Co., Ltd.

3-12-23 Kitahorie

Nishi-ku, Osaka 550-0014

Japan

¥98 100.00 Deposit sales of cosmetics,

pharmaceuticals and foods

B O A R D O F D I R E C T O R S(As of February 3, 2010)

Chairman

(Representative Director)

Hiroshi Okura

President

(Representative Director)

Takashi Okura

Managing Director

Masashi Akagawa

Directors

Yasuo Kaiden

Takashi Takehara

Ikkou Yoshida

Standing Corporate Auditor

Yoshiharu Hayashi

Outside Corporate Auditors

Masakazu Ueda

Kazuhiro Kida

I N V E S T O R I N F O R M A T I O N(As of September 20, 2009)

Date of Establishment:

April 1964

Paid-in Capital:

¥7,319 million

Headquarters:

� Ginza

7-6-15 Ginza, Chuo-ku

Tokyo 104-8208, Japan

Phone: +81-3-5568-0305

Fax: +81-3-5568-0441

http://www.noevir.co.jp

� Kobe

6-13-1 Minatojima-nakamachi

Chuo-ku, Kobe 650-8521, Japan

Securities Traded:

Tokyo Stock Exchange 2nd Section

Administrator of Shareholders’ Register:

The Chuo Mitsui Trust and Banking Co., Ltd.

3-33-1 Shiba, Minato-ku, Tokyo 105-8574, Japan

Major Shareholders

Name

Number ofShares Held(thousands)

Percentage of Total Shares Issued

(percent)

NII Co., Ltd.* 6,972 16.86%

Hiroshi Okura 4,739 11.46

Okura Kohsan, Ltd.* 4,491 10.86

Takashi Okura 3,699 8.94

Hisashi Okura 3,699 8.94

Noevir Employees Shareholding Scheme 1,225 2.96

Sumitomo Mitsui Banking Corporation 900 2.17

Mizuho Bank, Ltd. 600 1.45

The Bank of Tokyo-Mitsubishi UFJ, Ltd. 300 0.72

Sumitomo Life Insurance Company 300 0.72

Nihon Kolmar Co., Ltd. 300 0.72

Total 27,226 65.86

* Wholly owned by the Okura family.

Forward-Looking Statements

Statements in this annual report with respect to Noevir’s plans, strategies, projected fi nancial results, and beliefs as well as other statements that

are not historical facts, are forward-looking statements based on information currently available, and such statements involve risks and uncertain-

ties that could cause actual results to differ substantially from expectations.

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Noevir Co., Ltd.7-6-15 Ginza, Chuo-ku

Tokyo 104-8208

Japan

Phone: +81-3-5568-0305 Fax: +81-3-5568-0441

http://www.noevir.co.jp Printed in Japan using environment-friendly ink and paper.