7-6 -15 Ginza, Chuo-ku, Tokyo 104 - 8208, Japan
Phone: +81-3-5568-0305 Fax: + 81-3-5568 - 0441

https://www.noevirholdings.co.jp/english/

ANNUALREPORT
2020
Year ended September 30, 2020

Printed in Japan using environment-friendly ink and paper.

Business Model

Fiscal 2020 Sales by Segment

Segment Information

Cosmetics

Pharmaceuticals & Health Food

74.7%
The Group develops, produces and sells a
versatile collection of products under wellregarded brand names, including Noevir
high-performance functional face-to-facechannel skincare products; various popular
products for the self-selection cosmetics
market, including the Nameraka Honpo
skincare brand and excel makeup brand;
and the NOV hypoallergenic brand. The
Group also undertakes the contract
manufacturing of cosmetics.

Channels• Face-to-face Sales• Drugstores• Specialty Goods Stores• GMS (General MerchandiseStores)• Supermarkets• Online Stores• Noevir’s Own Retail Stores• Convenience Stores• Contract Manufacturing

21.8%

3.5%

The Group develops, produces and sells suchflagship items as the long-selling Nanten Nodo
Ame cough drop brand, the Min Min Da Ha
functional drink brand lineup and other OTC
pharmaceuticals, including cold remedies anddigestive aids, as well as nutritional supplements,
health food and other products featuring highquality natural ingredients.

Channels

Other

The Other segment encompasses
apparel and aircraft sales andleasing.

Channels

Cosmetics principally
represented by prestige products
sold through face-to-facesales channels• Approximately 1,900 NOEVIRBeauty Studios operate in regions
around the country, while Noevir’s
own retail stores cover mainly
metropolitan areas• These sales outlets engage inface-to-face sales employing
consulting to both propose skincare
products and provide facials• Our high-end skincare products
have garnered a solid reputation
due to their superior anti-aging andskin-brightening functionalities

Pharmaceuticals& Health Food

%

21.8

¥1,825 million%¥11,273 million• Face-to-face Sales• Face-to-face Sales• Convenience Stores• Drugstores• GMS (General Merchandise Stores)• Supermarkets• Online Stores• Contract Manufacturing

Luxury Line
Face-to-face Channel Cosmetics

3.5

Other

Cosmetics

74.7%¥38,742 million

Standard LineA Unique Approach to R&D and
Robust Manufacturing Systems
Capable of Achieving bothHigh Quality andEnvironmental Friendliness• Expanding the scope of R&D and applying our
expertise in botanical research, a field in which
we have been engaged since our founding,as well as brain science, genetics andneuroscience to deliver a constant stream ofunique products, with the Noevir Group
Research Laboratory serving as a core facility• Stepping up joint research with external businesscorporations as well as governmental andacademic institutions• Implementing thoroughgoing quality control
while operating environment-friendly
manufacturing systems

Self-selection Cosmetics
Cosmetics principally
represented by affordably priced products
sold through general retailers• Sold mainly through drugstores, specialty goods
stores and general merchandise stores• Boasting a robust sales structure backed
by storefront promotional campaigns
as well as advertising utilizingSNSs and other media• Product planning capabilities that help
create trendsetting items and uniqueofferings aimed at addressing
specialized customer needs

OEM(Original Equipment
Manufacturing)
The contract
manufacturing ofcosmetics and quasidrugs on an OEM
basis, utilizing theGroup’s know-how
in both fields

Overseasbusiness
Sales of face-to-facechannel cosmetics
and self-selection
cosmetics in nine
regions overseas:• China• Taiwan• South Korea• Hong Kong
• Singapore• Thailand• The United States• Canada• Russia

ANNUAL REPORT 20201

Medium-Term Management Plan

History of the Noevir Group

Medium-term Management Plan Concept:

Realizing steady corporate growthby securing sustainability
in every Group business segment
The Noevir Group is striving to best accommodate ever changing and increasingly diverse market needs. To this end, in addition
to executing the following five policies, we have positioned net sales, operating income and return on equity (ROE) as key
management indicators, thereby maximizing our corporate value and enhancing profitability.

1.

Noevir Co., Ltd.

Pursue innovationand continuous profit
generation in thedomestic market

5.

Promote a management
approach that is responsive
to changes in thebusiness environment

1964

J.H. Okura & Co., Ltd. established, initiating the import and sale of aircraft parts, medical equipment and commodities

2.

1971

J.H. Okura & Co., Ltd. reorganized as a limited liability company,
initiating the import and sale of natural cosmetics incorporating herbal extracts

Enhanceour brand value

1978

Company name changed to Noevir Co., Ltd. and the full-scale manufacture and marketing of cosmetics in Japan initiated1979

Noevir, Inc. (now Noevir U.S.A., Inc.) established in the United States

1985

Nov Co., Ltd. established1986

Sana Co., Ltd. established

1988

Noevir stock registered on the over-the-counter (OTC) market of the Japan Securities Dealers Association

1991

Noevir U.S.A., Inc. made Noevir Canada, Inc. its subsidiary

1993

Noevir International Corporation (now Noevir Aviation, Inc.) established in the United States

1994

Noevir Co., Ltd. made Japan Air Trust Co., Ltd. (now Noevir Aviation Co., Ltd.) its subsidiary, entering the aviation transport business

1996

Noevir Co., Ltd. made Noevir Taiwan, Inc. its subsidiary

Five policies

4.

Strengthen ourcompetitiveness by steppingup the diversification of
our R&D, production
and logistics systems

3.
Accelerate efforts todiversify human resourcesand our corporate structure

Bonanza Co., Ltd. established, initiating the OEM of cosmetics

2001

Noevir Holding of America, Inc. established in the United States, making Noevir Aviation, Inc., Noevir U.S.A., Inc.
and Noevir Canada, Inc. its subsidiaries

2002

Noevir Co., Ltd. made TOKIWA Pharmaceutical Co., Ltd. its subsidiary, entering the pharmaceutical business

2004
2005

Consolidated Earnings
Forecasts for Fiscal 2021

¥52,500 million
Operating income ¥9,000 million

Net Sales

2007
2011

2012

ANNUAL REPORT 2020

Noevir stock listed on the JASDAQ Securities Exchange
Noevir Europe s.r.l. established in San Marino
Shanghai Noevir Co., Ltd. established as a joint venture
Noevir stock listed on the Second Section of the Tokyo Stock Exchange
Noevir Holdings Co., Ltd. established, with Noevir Co., Ltd. delisting its stock and becoming the former’s subsidiary

Noevir Holdings Co., Ltd.
2011

2

TOKIWA Pharmaceutical Co., Ltd. merged with Nov Co., Ltd. and Sana Co., Ltd.

Noevir Holdings Co., Ltd. established, listing its stock on the Second Section of the Tokyo Stock Exchange
Acquired equity in three subsidiaries (TOKIWA Pharmaceutical Co., Ltd., Bonanza Co., Ltd. and Noevir Aviation Co., Ltd.) of Noevir Co., Ltd.
Noevir Holdings Co., Ltd. listed on the First Section of the Tokyo Stock Exchange

ANNUAL REPORT 20203

Management Report

Maintaining Our Strong Focus on R&D,
We Are Accurately Accommodating Evolving Market Needs
The Noevir Group has strengths in diverse product spectrums, including prestige face-to-face channel cosmetics available
primarily through face-to-face sales and affordable self-selection cosmetics sold through retailers. Our highly functional
products created through extensive R&D targeting both these fields boast significant market presence in Japan.
In the course of our medium-term management plan, we focused on innovation in the domestic market. To better embody
the plan’s concept of “Realizing steady corporate growth by securing sustainability in every Group business segment,” we haveendeavored to strengthen our competitiveness, to this end enhancing our brand value, developing our organizational structure
and pursuing R&D. In these ways, we have striven to secure sustainable sources of profit.

The Operating Environment andFiscal 2020 Business Results
Fiscal 2020 began with the Japanese economy registering gradual
recovery, mainly due to further improvement in corporate earnings
and employment. The emergence of the novel coronavirus (COVID-19)
pandemic, however, caused stagnation and economic trends tobecome even more uncertain. Although the Group anticipates adiverse range of latent consumer demand in the domestic andoverseas cosmetics markets, its operating results have been impacted
by the October 2019 enforcement of the consumption tax hikes andthe fallout from the COVID-19 pandemic.
Against this backdrop, the Noevir Group took full advantage offindings from its cutting-edge R&D activities to upgrade existing lines
and launch and maintain a stream of new products. At the same time,
the Group promoted the ongoing development of a sales structure capableof adapting to a business environment influenced by the COVID-19
pandemic. As a result, consolidated net sales came to ¥51,841 million,
while operating income totaled ¥8,060 million. Net income attributableto owners of the parent amounted to ¥5,618 million. The Group has thus
recorded decreases in both revenues and profit. On the other hand, theoperating income margin was 15.5%. Albeit down 4.7 percentage points
compared with the previous fiscal year, this figure still represents anindustry high and is attributable to our continued and stringent efforts
to streamline selling, general and administrative (SG&A) expenses.

Demonstrating beauty tips as part of an online training session
for sales representatives

4

ANNUAL REPORT 2020

Our Fiscal 2020 Initiatives
Our medium-term management plan, aimed at helping us realize
more profitable business management, places ongoing emphasis on
the efficient utilization of management resources and sets forth
initiatives for earning customer loyalty.
In fiscal 2020, however, our Cosmetics business saw decreases inboth revenues and profit. Primary negative factors affecting sales offace-to-face channel cosmetics included a recoil from the vigorous
consumption seen prior to the October 2019 consumption tax hikes.
Furthermore, in the face of the COVID-19 pandemic, the temporary
suspension of marketing activities that involve in-person counselingalso contributed to the decrease in sales. However, the release of two
functional beauty serums, namely, Noevir NEUROGIC SERUM and
Noevir WATERY OIL SERUM, in December 2019 and June 2020,
respectively, contributed to sales as they garnered favorable customer
reviews. The strong showings of these products are indicative of
the robust expectations of our existing customers with regard to
the Noevir brand line of functional beauty serums, which has been
constantly upgraded and successfully won the solid trust of users.
Sales of self-selection cosmetics have been similarly affected by
the stagnant market environment, with sales of the excel makeup line
declining due to the temporary operational suspension of specialty
goods stores and an overall decrease in makeup demand that reflects
the widespread use of face masks. On the other hand, sales of NOV
hypoallergenic cosmetics remained firm. This was attributable to
growing customer appreciation for the NOV brand’s functional focus
on accommodating the needs of those with sensitive skin, especially as
the new practice of constantly wearing a mask has led to an increasein skin problems. Amid these circumstances, however, sales of the
OEM-based contract manufacturing of cosmetics were strong.
The Pharmaceuticals & Health Food business saw decreases inrevenues and profit. Although sales of nutritional supplements were
firm, sales of mainstay functional drinks—popular among event
attendees looking for an energy boost—were sluggish mainly
because of the cancelation of events due to the COVID-19 pandemic.
The Other business segment, which encompasses apparel- andaircraft-related operations, recorded decreases in revenues and profit.
However, the overall segment results remained on a profitable track.

Future Outlook
In the Cosmetics business, we will promote face-to-face channel cosmetics by increasing customer
contact points. To this end, we will continue to focus on taking advantage of face-to-face sales,
our mainstay sales method, at NOEVIR Beauty Studios and retail stores operated by Noevir Co., Ltd.
while employing e-commerce and online counseling sales. Updating our educational structure,
we will also hold online briefings for sales representatives to instill the knowledge of new products
while providing them with online makeup training sessions. In addition, we are facilitating theproactive utilization of web-based ordering systems. Moreover, in December 2020 we released
Noevir WRINKLE SERUM, a medicated beauty serum capable of improving wrinkles, the first of its
kind created by Noevir Co., Ltd. This full-scale entry into the field of wrinkle improvement serums,
one of the major anti-aging solution categories, is a remarkable accomplishment.
In self-selection cosmetics, we will continue with the timely provision of products that
accurately meet needs of customers amid drastic changes in their lifestyle norms.
Along with the strengthening of our sales structure via the endeavors described above,
we will maintain our ongoing focus on the development of new products with the aim of
improving profitability.
Taking these factors into account, our consolidated performance forecasts for fiscal 2021
(from October 1, 2020 to September 30, 2021) comprise net sales of ¥52,500 million, operating
income of ¥9,000 million and net income attributable to owners of the parent of ¥6,300 million.

Store display of the excel makeup line

Our Policy regarding Shareholder Returns

Noevir
WATERY OIL SERUM

We have positioned the return of profit to our shareholders as an important management issue.
Accordingly, we strive to act on our basic policy of ensuring stable shareholder returns in a waythat gives due consideration to the latest trends in the Group’s operating results. As for full-year
cash dividends for fiscal 2020, we decided to pay out ¥205 per share, an increase from ¥200 per
share paid as full-year cash dividends for fiscal 2019, as we retain sufficient cash and deposits
despite the decreases in revenues and profit. It is also our ninth consecutive annual increase individends. Reflecting this move, our dividend payout ratio came to 124.6%. For fiscal 2021,
we plan to pay ¥205 per share.
Striving to contribute to health and beauty, the Noevir Group has long been helping people
maintain and improve their quality of life through its business operations. Thanks to thisdedication, the Group has won the trust of society. Looking ahead, we will continue to enhance
our corporate value while boosting our ability to quickly and flexibly accommodate market
changes and diversifying needs.

ANNUAL REPORT 20205

Face-to-face Channel Cosmetics

Noevir SPECIALE skincare line

Noevir 505 skincare line

Noevir 99 Plus skincare line

Product Strategy

Sales Strategy

Our face-to-face channel cosmetics brand portfolio consists mainlyof prestige skincare products, which boast strengths as anti-aging
and skin brightening solutions and provide users with a superior
skincare experience, as well as beauty serums and other functional
cosmetics, the lineups of which are periodically expanded andrenewed to reflect our latest R&D accomplishments.
In fiscal 2020, we released Noevir NEUROGIC SERUM, which
incorporates two types of unique ingredients supporting beauty,
and Noevir WATERY OIL SERUM, an oil-based serum focused on
utilizing the beneficial effect of proteoglycans. These two anti-aging
serums have been created through the application of our expertisein botany and dermatology, fields in which we rigorously pursue
R&D. We also enhanced the lineup of our flagship series via therelease of Noevir 99 Plus Medicated Enrich Skin Conditioner.
Thanks to its ability to condition the skin, this product garneredsupport among the growing number of customers who, in the faceof the COVID-19 pandemic, embraced wearing a mask as a new
daily habit and subsequently found that their skin had become
more susceptible to irritation.
Aiming to enrich our face-to-face channel cosmetics brands, weare fully leveraging our distinctive strengths in R&D, thereby maintaining
a constant stream of new products with superior functionality.

The Noevir Group markets its face-to-face channel cosmetics brands
mainly through face-to-face sales channels backed by beauty studios
while also offering them through retail stores operated by Noevir
Co., Ltd. In addition, the Group has enhanced its sales capabilities byintroducing an in-house system that certifies those NOEVIR Beauty
Studios that demonstrate service quality and techniques that meetstrict standards. As of September 30, 2020, approximately 1,900
salons have been certified. With the aim of maintaining robust
customer communications despite the effects of the COVID-19
pandemic, we have also introduced alternative counseling methods,
including online counseling.
The network of retail stores operated by Noevir Co., Ltd. service
major cities across Japan, securing contact points with potential
customers and enhancing brand recognition. In addition, in 2020,
Noevir Co., Ltd. opened NOEVIR SALON DE SPECIALE IKEBUKURO,
bringing the total number of these outlets to 10.
In addition, we strive to accommodate diversifying consumer
needs by enhancing the content of services offered via NOEVIR Style,an online shopping website aimed at winning loyal customers.
We also provide NOEVIR Support, an online outlet specializing in
supporting our sales representatives.

Main Brands• Noevir SPECIALE• Noevir 99 Plus
• Noevir 505• Noevir 105• Noevir 80 pure
• Noevir EXTRA• Noevir TOUT BLANC• Noevir BIOSIGN

NoevirNEUROGIC SERUM

6

ANNUAL REPORT 2020

ANNUAL REPORT 20207

Self-Selection Cosmetics, Pharmaceuticals & Health Food

Product Strategy

Sales Strategy

With regard to self-selection cosmetics targeting the general retailmarket, Nameraka Honpo—our mainstay brand of affordable skincare
products—is the market leader* in terms of soymilk-based skincare
products, while the hypoallergenic NOV brand enjoys considerable
market share in Japan. We have been enriching these two brands,
both of which boast lines with distinctive functional features, andsteadily expanded our customer base.
In addition, the Noevir Group’s unique product planning
strategies have helped the popular excel brand makeup line garner asolid reputation among consumers in Japan and other Asian countries,
and the line’s large number of loyal customers cover a broad age range.
At the same time, our Pharmaceuticals & Health Food segmentprovides an array of unique products, including the long-selling
Nanten Nodo Ame cough drops, Min Min Da Ha functional drinks and
GRONVITER nutritional drinks.

As for the marketing channels for self-selection cosmetics, the Grouputilizes such general retailers as general merchandise stores, drugstores andspecialty goods stores. With regard to pharmaceuticals, the Group markets
a variety of products, including functional drinks and cough drops,
through such outlets as drugstores and convenience stores in addition
to employing face-to-face sales channels to secure contracted households
and companies to which products are delivered on regular basis.
Amid the COVID-19 pandemic, which makes it difficult to carry out
storefront promotional campaigns, we have been employing SNSs
to implement ongoing sales promotion initiatives for the Nameraka
Honpo skincare brand and the excel makeup brand. At the same time,
we aim to boost sales of NOV brand hypoallergenic cosmetics bystepping up collaboration with medical institutions. These initiatives
are designed to communicate product information in a way thatevokes a sense of intimacy and trust.
In addition, the Group undertakes the contract manufacturingof cosmetics and quasi-drugs on an OEM basis.

* Based on the storefront sales of self-selection skincare products incorporating
soymilk ingredients calculated from POS data gleaned by five retailers
throughout 2019

Nameraka Honpo skincare brand lineup

Main Brands• Nameraka Honpo• excel• Pore Putty• New Born
• NOV• Nanten Nodo Ame• Min Min Da Ha• GRONVITER• VITAC

Livestreaming of a 2020
presentation event thatunveiled a new productin the excel line via
Instagram Live

Nameraka Honpo skincare brand lineup

excel brand makeup lineup

Pore Putty makeup brand lineup

New Born makeup brand lineup

NOV brand lineup

Nanten Nodo Ame cough drop brand lineup

Min Min Da Ha functional drink brand lineup
GRONVITER nutritional drink brand

NOV hypoallergenic
cosmetics displayed
at a retail store in Taiwan

8

ANNUAL REPORT 2020

ANNUAL REPORT 20209

Research and Development, Quality Assurance

Corporate Governance1. Fundamental Concepts of Corporate GovernanceResearch and Development
With the Noevir Group Research Laboratory in Shiga Prefectureserving as the core, our robust network of R&D facilities includes the
Suzuka Alpine Plants Research Center, Minami Daito Island Marine
Research Center and Hokkaido Shokanbetsu Mountain Pilot Farm.
These facilities engage in basic research on such subjects as nativeplants that thrive in extreme climates.
In addition, we have long been focused on creating synergies byengaging in external collaboration with a range of partners and by
rallying the Group’s R&D resources, including those of Noevir Co., Ltd.
and TOKIWA Pharmaceutical Co., Ltd. Since 2016, we have been helping
the University of Tokyo’s Department of Immunology provide an endowed
course on osteoimmunology. We are thus addressing immunology, amajor subject drawing researchers’ attention in the pharmaceutical field.
Striving to swiftly accommodate evolving consumer mindsets
and needs influenced by the fallout from the COVID-19 pandemic,
we will promote R&D activities aimed at exploring new possibilities
of cosmetics, harnessing their potential to enhance customers’
quality of life (QOL).

Quality Assurance

The Mie Factory

10

ANNUAL REPORT 2020

Type of governance model

A company with auditors

Number of directors (of whom, outside directors)

8 (3)Number of Audit & Supervisory Board members (of whom, outside members)

3 (2)Number of independent directors and Audit & Supervisory Board members(within outside directors and outside Audit & Supervisory Board members)

5 (3:2)

Directors’ term

One year

Frequency of Board of Directors’ meetings

Monthly (plus extraordinary meetings convened on an as-needed basis)

Number of Board of Directors’ meetings held during fiscal 2020

12

The establishment of an internal audit department

Yes

Adoption of an executive officer system

Yes

Advisory body supporting president’s decision making

Group Executive Council

Remuneration systems for directors and Audit & Supervisory Board members

Directors: Determined based on individual contributions to annual operating results
Audit & Supervisory Board members: Determined based on comprehensive assessments
of individuals’ auditing skills and track records

Accounting auditor

Deloitte Touche Tohmatsu LLC

Systems for supporting outside directors and outside Audit & Supervisory Board members

Persons in charge of support are appointed from the Legal Affairs Department

3. Fundamental Concepts of Internal Control System
To ensure the appropriate and sound execution of its Group operations,Noevir Holdings undertakes the storage, management and streamliningof information associated with the execution of directors’ duties while
endeavoring to maintain clarity in its risk management structure aswell as to strengthen and promote its compliance structure under the
Corporate Governance Policy and the Noevir Group Code of Conduct.

With the aim of securing a structure for reporting to the Audit &Supervisory Board and conducting effective audits and reliable financial
reporting, Noevir Holdings continues to further enhance its internal
control and compliance systems in order to ensure strict adherence tolaws, regulations and its articles of incorporation.

4. Corporate Governance Organizational Structure
General Meeting of Shareholders
Appoint/Dismiss

Oversight
Confirm
ReportAudit & Supervisory Board:
Audit & Supervisory Board Member,
Outside Audit & Supervisory Board Members
Confirm

Audit

Noevir Holdings Board of Directors:
Directors and Outside Directors

Supervision

Accounting audit

Appoint/
Dismiss

President and CEO
ReportConfirm

Internal Audit Department

Internal audit
ReportManagement guidance/
Approval for important matters
Internal Audit

Thorough supervisionand compliancewith policies

Group Executive Council

Nomination andCompensation
Consult/ Advisory Committee
AdviseDecide/Approve

Legal Counsel

The Noevir Group Research Laboratory

The Noevir Group provides high-quality products capable of satisfying
stringent safety standards designed to live up to customer expectations.
The Shiga Factory has established a management system in conformity
with the technical requirements stipulated in Good Manufacturing
Practice (GMP) guidelines for the manufacture and quality control ofcosmetics alongside its in-house manufacturing management system
encompassing all its production lines. Moreover, this factory has
acquired certification for compliance with ISO 22716: Cosmetics—
Good Manufacturing Practices (GMP)—Guidelines on Good
Manufacturing Practices.
The Mie Factory, meanwhile, is certified by Mie Prefecture as a food
manufacturing facility satisfying Hazard Analysis and Critical Control
Point (HACCP) standards for voluntary hygiene management, while
maintaining compliance with Standards for Manufacturing Control
and Quality Control for Drugs and Quasi-drugs (pharmaceutical GMP
based on a ministerial ordinance). Having put in place ever moresophisticated quality assurance systems, this factory is engaged in the
production of such offerings as energy drinks and other health foods.

To deepen the understanding of its stakeholders and ensure theirappropriate evaluation, Noevir Holdings Co., Ltd. voluntarily andconsistently discloses important information pertaining to the Groupin a fair, timely and appropriate manner. To disseminate investor
relations (IR) information, Noevir Holdings established a dedicateddivision, appointed a director to be in charge of IR, and regularly holds
briefings for analysts and institutional investors in addition to updating
IR information posted on its website.

2. Corporate Governance Structure Overview

Independent Auditor

Continually striving to expand the scope of its R&D activities, the Noevir Group has built a wealth of expertise in brain science,
genetics and neuroscience in addition to its strengths in botanical research—a field in which it has been engaged since its
founding. Moreover, the Group is rallying its overall strengths to take on the challenge of entering new R&D fields as it strives toenhance the market competitiveness of its products. Also, we are actively engaged in collaboration with universities, medical
institutions and other external research organizations with the aim of creating unique products that are insulated from pricecompetition.

To realize the ongoing enhancement of corporate value and maintainthe trust of all of its stakeholders, including shareholders, the Noevir Grouphas positioned corporate governance as a key management issue.
Accordingly, the Group has developed a robust management structure
while strengthening auditing functions to ensure strict compliancewith laws, regulations and corporate ethics as well as its articles ofincorporation. Moreover, the Group has set up internal control andrisk management systems, both of which are constantly upgraded.

Decide/Approve

Noevir Holdings’ divisions

ReportingOperating Companies

ANNUAL REPORT 202011

Corporate Social Responsibility

Management’s Discussion and Analysis

Basic Philosophy

Overview

Working toward the realization of high quality of life for all stakeholders, the Noevir Group is engaged in the creation of beautyand health. In addition to pursuing further business growth, we have clearly defined the responsibilities we are called on to
fulfill as a good corporate citizen and are implementing proactive initiatives aimed at contributing to sound social development
under five themes: customers and business partners; shareholders; employees; society; and the environment.

Ongoing Fundraising
via Noevir Green Charity

Noevir’s
Work Style Reform Initiatives

Since 2010, Noevir Co., Ltd. has been engaged in an ongoing fundraising
campaign via Noevir Green Charity, setting aside a portion of proceedsfrom designated items sold during biannual skincare product fairs for
donation to the Manaslu fund. Headed by alpinist Ken Noguchi, this fundaims to raise money for school construction at the foot of the Himalayas
and for the provision of other support of the region’s children. As we arein full agreement with Mr. Noguchi’s aspiration to support education andthereby help local communities thrive, we will encourage a growing numberof Group members to take part in social contribution activities of this kind.

Businesses today are facing growing calls to gear up efforts to promote
work style reforms due to the COVID-19 pandemic. Since April 2015,
the Noevir Group has been pushing ahead with the diversification of
employee work styles by, for example, furnishing employees with mobile
phones and laptops that allow them to work remotely as well as byintroducing a location-free office platform and a work-at-home scheme.
In fiscal 2020, we expanded the scope of employees eligible to choose
unconventional work styles, with the aim of helping them fully realize
individual competencies even as they work with confidence and strike abalance between their job and family duties or other private activities.
Also, we strive to ensure that the career development paths of all
individuals in our workforce are unconstrained by such events aschildbirth, child rearing or nursing care. We encourage employees tofully utilize annual paid leave while endeavoring to minimize overtime.
Moreover, we have implemented various initiatives, including enhancing
childcare leave plans. In addition, we have formulated concrete actionplans and set numerical targets with an eye to pushing forward
initiatives that support women aiming for career success.
Furthermore, we provide assistance to support employees’ healthpromotion efforts, taking a management approach that places greatemphasis on ensuring employee health.
As of September 30, 2020, the number of Noevir Group employees
totaled 1,507. At 707 to 800, the male to female composition suggeststhat women are proactively serving as key players. In addition, of the
393 Group employees in team leader or other supervisory positions 100,or 25.4%, are women. Moreover, of the 206 managerial employees inassistant manager or higher positions, 46, or 22.3%, are women.
As such, the Group is striving to promote gender equality in termsof weight of tasks and responsibilities assigned to employees while
ensuring equal opportunities for career development.

Social contribution activity
undertaken at the foot of
the Himalayas(©KEN NOGUCHI OFFICE)

Initiatives Undertakenby the Noevir Green Foundation
The Noevir Green Foundation hosts environmental classes for children,
addressing various topics related to the mountains, the sea, the sky andislands with the hope of inspiring them about what they can do topreserve the environment and empowering them to someday become
advocates for a better future. In May 2020, after the emergence of the
COVID-19 pandemic, we initiated the live streaming of web-basedclasses via our official YouTube channel, offering ongoing learning
opportunities to young people.
To celebrate the seventh anniversary of the foundation’s establishment,
we also held a photo exhibition in autumn 2020. The exhibition focusedon the dynamic performances of the junior athletes who have been themain beneficiaries of the foundation’s subsidy program and was successful
in raising said program’s public recognition. Looking ahead, we willcontinue to extend a broad range of assistance via the foundation tobring vitality to sports activities while helping children enjoy robust learning
opportunities and otherwise supporting their sound upbringing.

A photo exhibition held byNoevir Green Foundation
to celebrate its seventh
anniversary

12

ANNUAL REPORT 2020

Fiscal 2020 (October 1, 2019 to September 30, 2020) began with theJapanese economy registering a modest but steady recovery, mainly
due to further improvements in corporate earnings and employment.
The emergence of the COVID-19 pandemic, however, caused
stagnation and economic trends became increasingly uncertain.
Against this backdrop, the Company worked to realize the concept
of its medium-term management plan: “Realizing steady corporate
growth by securing sustainability in every Group business segment.”
As a result, net sales for the fiscal year ended September 30, 2020
came to ¥51,841 million. The cost of sales amounted to ¥18,760 million
and as a percentage of net sales was 36.2%. Selling, general andadministrative (SG&A) expenses were ¥25,020 million and as apercentage of net sales came to 48.3%.
Operating income was ¥8,060 million, and net income
attributable to owners of the parent came to ¥5,618 million.
Although the outlook is expected to remain unclear as the extent
of the impact of the COVID-19 pandemic is still uncertain, the Company’s
consolidated forecasts for the fiscal year ending September 30, 2021
include net sales of ¥52,500 million, operating income of ¥9,000 million,
ordinary income of ¥9,200 million, and net income attributable toowners of the parent of ¥6,300 million.

Segment Information

Cosmetics

Pharmaceuticals & Health Food

The Group develops, produces and sells a versatile collection of
products under well-regarded brand names, including Noevir highperformance functional face-to-face channel skincare products;­various popular products for the self-selection cosmetics market,
including the Nameraka Honpo skincare brand and excel makeup
brand; and the NOV brand. The Group also undertakes the contract­manufacturing of ­cosmetics.

The Group develops, produces and sells such flagship items as thelong-selling Nanten Nodo Ame cough drop brand, functional drinks,
such as the Min Min Da Ha functional drink brand lineup, and other
OTC pharmaceuticals, including cold remedies and digestive aids, aswell as nutritional supplements, health food and other products­featuring high-quality natural ingredients.

Fiscal 2020 Results

Despite sluggish sales of its mainstay functional and nutritional drinks,
the Pharmaceuticals & Health Food segment saw strong sales of­nutritional supplements.
As a result, segment sales came to ¥11,273 million, while segment
income was ¥1,261 million.

Overview

Sales of face-to-face channel cosmetics and self-selection cosmetics
were sluggish due to the impact of the October 2019 enforcement ofconsumption tax hikes and the COVID-19 pandemic.
As a result, the Cosmetics segment saw decreases in both revenues
and profit, with segment sales and income totaling ¥38,742 millionand ¥9,505 million, respectively.

Overview

Fiscal 2020 Results

Other
Overview

The Other segment encompasses apparel and aircraft sales and leasing.

Fiscal 2020 Results
Sales in the apparel-related business and the aviation-related businesswere sluggish. As a result, sales in the Other segment came to ¥1,825
million, while segment income came to ¥10 million.

Assets, Liabilities and Net Assets
Total assets at the fiscal 2020 year-end stood at ¥80,052 million, adecrease of ¥3,277 million from the previous fiscal year-end. This result
was mainly due to decreases of ¥1,598 million in notes and accounts
receivable and ¥1,283 million in cash and cash equivalents.
Total liabilities came to ¥27,809 million, a decrease of ¥2,574
million from the previous fiscal year-end. This result was mainly due todecreases of ¥1,040 million in income tax payable, ¥566 million in otheraccounts payable, and ¥556 million in notes and accounts payable.
Net assets came to ¥52,243 million, a decrease of ¥703 million fromthe previous fiscal year-end. This was primarily attributable to decreases
in retained earnings of ¥1,213 million, reflecting the payment of ¥6,831
million in year-end dividends for the previous fiscal year, and net
income attributable to owners of the parent totaling ¥5,618 million.
As a result, the equity ratio stood at 64.9%, up 1.7 percentage
points from the previous fiscal year-end, and net assets per share stoodat ¥1,521.77, a decrease of ¥21.95.

Cash Flows
Cash and cash equivalents on a consolidated basis as of September 30,
2020 stood at ¥29,199 million, a decrease of ¥1,249 million comparedwith the ¥30,448 million at the previous fiscal year-end.
Net cash provided by operating activities amounted to ¥7,312
million. The main item increasing cash was the posting of ¥8,233
million in income before income taxes.
Net cash used in investing activities came to ¥1,615 million.
The principal cash outflow was ¥1,635 million for the purchase ofproperty, plant and equipment.
Net cash used in financing activities came to ¥6,962 million.
This was mainly due to the payment of ¥6,827 million in dividends.

ANNUAL REPORT 202013

Five-Year Summary

Financial Highlights(Millions of yen)
Fiscal Year
Period/Item

2016

2017

2018

2019

2020

October 1, 2015–
September 30, 2016

October 1, 2016–
September 30, 2017

October 1, 2017–
September 30, 2018

October 1, 2018–
September 30, 2019

October 1, 2019–
September 30, 2020

Net Sales

Operating Income / Operating Income Margin(¥ million)
60,00051,180Net sales
Operating income¥  51,180
7,706¥   54,473
9,986¥   57,828
11,343¥  59,252
11,992¥  51,841

54,47357,828(¥ million)
20,00059,252

51,841

7,077

7,842

7,226

5,618

Total assets

89,70993,56782,80983,33080,052

Net assets

55,90859,36551,99852,94652,243

Capital expenditures

2,506

1,497

1,375

1,994

1,456

Depreciation

1,654

1,845

1,850

1,808

1,668

R&D expenses*

1,185

1,134

1,046

1,097

1,065

Cash dividends per share (yen)¥  120.00¥  150.00¥  180.00¥  200.00¥  205.00

Earnings per share, basic (yen)¥  142.44¥   199.64¥   228.56¥  211.57¥  164.48

Net assets per share (BPS) (yen)¥1,573.50¥1,669.18¥1,517.61¥1,543.72¥1,521.77

ROE (%)

9.2%

12.3%

14.1%

13.8%

10.7%

Equity ratio (%)

62.2%

63.2%

62.6%

63.3%

64.9%

1,609

1,560

1,531

1,530

1,507

¥  36,031¥  39,197¥  42,616¥  45,175¥  38,742

9,537

11,002

12,155

13,183

9,505

9,986

10,00011,34320.2

11,992

15.5

12

5,000

15,0006

00

FY2016FY2017FY2018FY20190

FY2016FY2020

18

8,060

7,706

FY2017FY2018FY2019FY2020Operating income
Operating income margin

Net sales

Number of employees (consolidated)

19.6

15.1
30,000

5,049

18.3

15,00045,0008,060

Net income attributable to owners of the parent

(%)
24

ROE

Equity / Equity Ratio

15

14.1
12.3

10

(%)
80

(¥ million)
100,000(%)
20

75,000

13.8

10.7

9.2

50,00062.2

63.2

55,78359,175

62.6

63.3

51,83652,72864.9
60

51,97840

Cosmetics
Net sales
Segment income

50FY2017FY2018FY2019Segment income

13,243

13,48813,19912,036

11,273

170

745

1,309

1,312

1,261

1,905

1,788

2,013

2,041

1,825

(63)

128

135

70

10

FY2016FY2020ROE

Net sales

00FY2016

Pharmaceuticals & Health Food20

25,000FY2017FY2018FY2019FY2020EquityEquity ratio

Other
Net sales
Segment income

Earnings per Share, Basic

Cash Dividends per Share / Payout Ratio
(¥)
400

(¥)
300

* The total of R&D expenses recorded as part of SG&A expenses and those recorded as part of production costs during the fiscal year under review.

228.56225

199.64
150

124.6

320

211.57164.48142.44120.000FY2016
Earnings per share, basic

14

ANNUAL REPORT 2020

FY2017FY2018FY2019FY2020

75.1

240

160
75

100

94.5
84.2

150.0078.8
180.00200.00(%)
125

205.00

75
50

80

25

0

0

FY2016FY2017FY2018FY2019FY2020Cash dividends per share
Payout ratio

ANNUAL REPORT 202015

Principal Consolidated Subsidiaries (As of September 30, 2020)

Board of Directors and Auditors (As of December 4, 2020)

Issued Share Capital(millions of yen,
except as otherwise stated)

Direct or Indirect
Ownership by theCompany (percent)6-13-1 Minatojima-nakamachi
Chuo-ku
Kobe 650-8521
Japan¥7,319100.00

6-13-1 Minatojima-nakamachi
Chuo-ku
Kobe 650-8521
Japan¥4,301TOKIWA
Pharmaceutical Co., Ltd.

¥98

TOKIWA Medical Service
Co., Ltd.

6-13-1 Minatojima-nakamachi
Chuo-ku
Kobe 650-8521
Japan

Name

Location

Noevir Co., Ltd.

100.00100.00

Production and sale of cosmetics,
toiletries and food products as well aspurchase and sale of makeup items
and apparel
Production and sale of cosmetics,
toiletries and food products as well aspurchase and sale of makeup items/
Production and sale of over-the-counter(OTC) pharmaceuticals and quasi-drugs
Sale of cosmetics, toiletries and foodproducts as well as purchase and sale of
makeup items/Production and sale ofover-the-counter (OTC) pharmaceuticals
and quasi-drugs¥10

Bonanza Co., Ltd.

6-13-1 Minatojima-nakamachi
Chuo-ku
Kobe 650-8521
Japan

Noevir Aviation Co., Ltd.

2-12 Yao Airport
Yao, Osaka 581-0043
Japan

¥35

100.00

Air transportation and provision ofcharter flights, ground handling services
and hangar rental

Nihon Flight Safety
Co., Ltd.

Tokyo Heliport
4-7-44 Shinkiba, Koto-ku
Tokyo 136-0082
Japan

¥100

100.00

Provision of aircraft flight training

Noevir Holdingof America, Inc.

1095 Main Street
Irvine, California 92614
U.S.A.

US$7,250 thousand

100.00Holding company for two U.S.
subsidiaries and one Canadian subsidiary

Noevir U.S.A., Inc.

1095 Main Street
Irvine, California 92614
U.S.A.

US$5,900 thousand

Noevir Canada, Inc.

7360 River Road, RichmondBritish Columbia V6X 1X6
Canada

C$1,131 thousand

Noevir Aviation, Inc.

200 West Grand Avenue
Montvale, New Jersey 07645
U.S.A.

US$1,350 thousand

8th Fl.-2, No. 111 Songjiang
Road, Zhongshan District
Taipei City 10486
Taiwan

NT$31,000 thousand

Noevir Taiwan, Inc.

5,000 thousand
Chinese yuan

Shanghai Noevir Co., Ltd.

Room 605, HongwellInternational Plaza A
No.1600, Zhongshan West Rd.
Xuhui District, Shanghai 200235
China
Via Tre Settembre, 99 (3°-#116)
47891 Dogana
Republic of San Marino

26,000 euro

Noevir Europe s.r.l.

100.00Principal Business100.00100.00100.00100.00

Production and sale of cosmetics andtoiletries as well as purchase and sale of
makeup items

Sale of cosmetics, makeup products,
toiletries and food products

Sale of cosmetics, makeup products,
toiletries and food products

Purchase and sale of aircraft and vessels
as well as aviation-related operations

Sale of cosmetics, makeup products,
toiletries and food products

Chairman and Representative Director
Hiroshi Okura
President and CEO
Takashi Okura

Sanae Tanaka

Representative of Sanae Tanaka Law OfficeOutside director of PILOT CORPORATION
Outside director of Shochiku Co., Ltd.
Outside director of Kintetsu World Express, Inc.

Directors
Ikkou Yoshida
Yasuo Kaiden
Masataka Nakano

Maho Kinami

Representative of Kinami Law OfficeOutside director of Advanex Inc.

Emima Abe

Attorney-at-law, Max General Law Firm

Outside Directors
Sanae Tanaka*
Maho Kinami*
Emima Abe*
Audit & Supervisory Board Member
Masayuki Hamaguchi
Outside Audit & Supervisory Board Members
Kazuya Sugimoto**
Ryo Tsuchida**

100.00

Sale of cosmetics, makeup products
and toiletries as well as procurement
and sale of sales promotion goods for
the Noevir Group

Profiles of Outside Audit & Supervisory Board Members
Kazuya Sugimoto

Representative of Sugimoto CPA Office

Ryo Tsuchida

Professor of Sophia Law School
Attorney-at-law, Frontier Law Firm
Outside director of UPR Corp.

* Independent directors** Independent Audit & Supervisory Board members

Investor Information (As of September 30, 2020)
Name
Noevir Holdings Co., Ltd.

Major Shareholders
Percentage
Number ofof Total
Shares Held
Shares lssued(thousands)(percent)

Date of Establishment
March 22, 2011
(Noevir Co., Ltd. was founded in April 1964.)

Name

NII Co., Ltd.

12,382

36.25

Paid-in Capital¥7,319 million

Takashi Okura

3,699

10.83

Hiroshi Okura

1,000

2.93

Sumitomo Mitsui Banking Corporation

900

2.63

SMBC Nikko Securities Inc.

889

2.60

The Master Trust Bank of Japan, Ltd.
(Trust Account)

773

2.26

NORTHERN TRUST CO. (AVFC)
RE IEDU UCITS CLIENTSNON TREATY ACCOUNT 15. 315 PCT

535

1.57

Noevir Holdings Employees
Shareholdings Scheme

400

1.17

Custody Bank of Japan, Ltd.
(Trust Account)

390

1.14

JAPAN POST INSURANCE Co., Ltd.

371

1.09

Headquarters• Kobe6-13-1 Minatojima-nakamachi, Chuo-ku
Kobe 650-8521, Japan• Tokyo
7-6-15 Ginza, Chuo-ku
Tokyo 104-8208, Japan
Stock Listing
Tokyo Stock Exchange, First Section (Ticker: 4928)

50.00

Profiles of Outside Directors

Transfer Agent and Registrar
Sumitomo Mitsui Trust Bank, Limited
1-4-1 Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan

Market research in Europe

Note: The shareholding ratio is calculated excluding treasury stock(104 shares) and is rounded off to two decimal places.

Forward-Looking Statements
Statements in this annual report with respect to Noevir Holdings’ plans, strategies, projected financial results and beliefs as well as other statements that are nothistorical facts are forward-looking statements based on information currently available, and such statements involve risks and uncertainties that could cause
actual results to differ substantially from expectations.

16

ANNUAL REPORT 2020

ANNUAL REPORT 202017