ANNUALREPORT

2018

Year ended September 30, 2018

Segment Information

Segment Information

Cosmetics

Sales in the Cosmetics Business by Sales Route

73.7%

The Group develops, produces and sells a
versatile collection of products under wellregarded brand names, including Noevir highperformance functional face-to-face channel
skincare products; various popular products forthe self-selection cosmetics market, including
the Nameraka Honpo skincare brand and excel
makeup brand; and NOV hypoallergenic
brand. The Group also undertakes the contract
manufacturing of cosmetics.
Channels• Face-to-face Sales• Drugstores• Specialty Goods
Stores• GMS (General
Merchandise Stores)• Supermarkets

Business Model• Online Stores• Noevir’s Own RetailStores• Convenience Stores• Contract
Manufacturing

Pharmaceuticals &Health Food

22.8%

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 lineups and other OTC
pharmaceuticals, including cold remedies anddigestive aids, as well as nutritional
supplements, health food and other products
featuring high-quality natural ingredients.

Face-to-faceChannelCosmetics Brands

Cosmetics principally represented by prestige
products sold through face-to-face sales channels
 pproximately 1,900 Noevir Beauty Studios operate in regions aroundA
the country, while Noevir’s own retail stores cover mainly
metropolitan areas

Face-to-face Channel Cosmetics

 hese sales outlets engage in face-to-face sales employing consultingT
to both propose skincare products and provide facials

Cosmetics principally represented by prestige products
sold through such face-to-face sales channels as beauty
studios and Noevir’s own retail stores ur high-end skincare products have garnered a solid reputation dueOto their superior anti-aging and skin-brightening functionalities

Fiscal 2018 Sales by Segment

Other

3.5%

A Unique Approach to R&D and
Robust Manufacturing Systems Capable of Achieving
both High Quality and Environmental Friendliness¥2,013 million

Pharmaceuticals& Health Food

Cosmetics• Expanding the scope of R&D and applying our expertise in botanical research, a field in which
we have been engaged in since our founding, as well as brain science, genetics andneuroscience to deliver a constant stream of unique products, with the Noevir Group ResearchLaboratory serving as a core facility

73.7%• Stepping up joint research with external business corporations as well as governmental andacademic institutions

22.8%¥13,199 million¥42,616 million• Implementing thoroughgoing quality control while operating environment-friendly
manufacturing systems

Channels• Face-to-face Sales• Convenience Stores• Drugstores• GMS (General
Merchandise Stores)

Other• Supermarkets• Online Stores• Contract
Manufacturing

3.5%

Self-selection Cosmetics
Cosmetics principally represented by affordable
products sold through general retailers

The Other segment encompasses apparel andaircraft sales and leasing.

Overseas business

Channels

Sales of face-to-face channel cosmetics and self-selection cosmetics innine regions overseas:
China, Taiwan, South Korea, Hong Kong, Singapore, Thailand,
the United States, Canada and Russia• Face-to-face Sales

OEM (Original Equipment Manufacturing)
The contract manufacturing of cosmetics and quasi-drugs on an OEM
basis, utilizing the Group’s know-how in both fields

Self-selection
Cosmetics Brands

Cosmetics principally represented by affordably
priced products sold through general retailers
 old mainly through drugstores, specialty goods stores and generalSmerchandise stores oasting a robust sales structure backed by storefront promotionalB
campaigns as well as advertising utilizing SNSs and other media
 roduct planning capabilities that help create trendsetting items andPunique offerings aimed at addressing specialized customer needs

ANNUAL REPORT 20181

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”
Having established a medium-term management plan with its final year set at fiscal 2021, the Noevir
Group is striving to best accommodate ever changing and increasingly diverse market needs. In addition
to executing the following five policies aimed at steadily achieving the objectives of the plan, we havepositioned net sales, operating income and return on equity (ROE) as key management indicators, thereby
maximizing our corporate value and enhancing profitability.

1993

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

1994

Noevir Co., Ltd. made Japan Air Trust Co., Ltd. (nowNoevir Aviation Co., Ltd.) its subsidiary, entering theaviation transport business

1996

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

2001

Bonanza Co., Ltd. established, initiating the OEM ofcosmetics
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

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

Five policies

1. Pursue innovation and continuous
profit generation in Japan1964

3. Diversify and globalize humanresources and our corporate
structure
4. Strengthen our manufacturing
competitivenessJ.H. Okura & Co., Ltd. reorganized as a limited
liability company, initiating the import and sale ofnatural cosmetics incorporating herbal extracts

1978

5. Promote a management approachthat is responsive to changes in thebusiness environment

Company name changed to Noevir Co., Ltd. andthe full-scale manufacture and marketing ofcosmetics in Japan initiated1979

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

Numerical Achievements and Targets

2

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

1971

Fiscal 2018
results

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 subsidiary2005

Noevir Europe s.r.l. established in San Marino

2007

Shanghai Noevir Co., Ltd. established as a joint
ventureNoevir stock listed on the Second Section of the Tokyo
Stock Exchange

2011

Fiscal 2019

Fiscal 2020

Fiscal 2021

¥57,828¥59,500¥61,000¥62,000

Operating income

11,343

11,70012,00012,500ROE (%)

14.1%

15%

15%

15%

Noevir Holdings Co., Ltd. established, with Noevir Co.,
Ltd. delisting its stock and becoming the former’s
subsidiary

Noevir Holdings Co., Ltd.

2011

Noevir Holdings Co., Ltd. established, listing its stockon 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.

(Millions of yen)

Net sales

ANNUAL REPORT 2018

Noevir stock listed on the JASDAQ Securities Exchange

Noevir Co., Ltd.

2. Enhance our brand value anddevelop new markets in countries
worldwide

2012

Noevir Holdings Co., Ltd. listed on the First Section of
the Tokyo Stock Exchange

ANNUAL REPORT 20183

Management Report

We have steadily expanded our customer base thanks to productsthat have garnered a solid reputation.
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 line with our medium-term management plan, we focused on innovation in the domestic
market in fiscal 2018. Thus far, we have succeeded in realizing higher profitability by taking a thoroughgoingapproach to enhancing the efficiency of selling, general and administrative (SG&A) expenses as well as advertisingand promotional costs. Consequently, our fiscal 2018 operating income and net income attributable to owners of
the parent reached record highs for a fourth consecutive fiscal year. In terms of these two items and ROE, anotherimportant management indicator, our consolidated operating results were in excess of performance forecasts atthe beginning of the fiscal year.

The Operating Environment and Fiscal 2018 Business Results
During fiscal 2018, the Japanese economy continued to registera modest but steady recovery, mainly due to further
improvements in corporate earnings and the employment
situation. However, future economic trends remained uncertain
due to fluctuating foreign exchange rates and increasing
volatility in economies overseas, among other factors.
Nevertheless, demand in the domestic cosmetics market isbecoming ever stronger thanks to a number of positive factors,
such as growing beauty awareness among the general public
and burgeoning inbound market demand due to an increase in
the number of foreign tourists as well as an ongoing trend

toward hassle-free skincare solutions.
Against this backdrop, the Noevir Group strove to satisfy
market needs by delivering highly functional products created via
cutting-edge R&D activities. In these ways, we have achieved
steady growth in the cosmetics market despite the increasing
diversification of latent needs among consumers. As a result,consolidated net sales came to ¥57,828 million, while operating
income totaled ¥11,343 million. Net income attributable toowners of the parent amounted to ¥7,842 million. The
operating income margin was 19.6%, up 1.3 percentage points
compared with the previous fiscal year.

Our Fiscal 2018 Initiatives
Our medium-term management plan,
aimed at helping us realize more
profitable business management, places
ongoing emphasis on the efficientutilization of management resources andsets forth initiatives for earning customer
loyalty. To better embody our mediumterm management plan concept of“Realizing steady corporate growth bysecuring sustainability in every Groupbusiness segment,” in November 2018
we revised said plan, resetting the clock
for the plan’s final year to fiscal 2021, bywhich we expect to see even more robust
growth in business performance. Pleaserefer to page 2 for details regarding ourmanagement targets.
In fiscal 2018, our Cosmetics businessachieved increases in both revenues andprofit. With regard to faceto-face channel cosmetics,
sales of prestige skincare
lines were firm. Moreover,
we have released NOEVIREnrich 55, a new antiaging serum andNOEVIR AQUATURE,
a beauty serum withsuperior capabilities toenhance the skin’s
moisture retention. We
A sales representative recommending a
NOV brand product to a dermatologist
have thus diversified our
lineup of beauty serums, aproduct category that enjoys a strong market. These efforts, inturn, helped us achieve profit growth.
At the same time, we enjoyed an increase in revenues fromself-selection cosmetics. This was mainly attributable to the successof initiatives to raise the number of domestic distribution outlets

handling Nameraka Honpo, our mainstay skincare brand, and theexcel brand makeup line; efforts to secure an even broader
customer base; and strong showings from the hypoallergenic
NOV brand skincare line thanks to its enhanced lineup. Also
contributing to sales growth were increases in the number ofoverseas distribution outlets for the Nameraka Honpo skincare
brand in China, Hong Kong, Taiwan and elsewhere in Asia.
Profit in the Pharmaceuticals & Health Food business rosesignificantly thanks to the efficient management of SG&A
expenses. We also secured profit in areas covered by the Other
business segment, which encompasses apparel- and aircraftrelated operations.

Product planning meeting

Future Outlook
In the Cosmetics business, consumer expectations for highly
functional cosmetics are growing due to R&D advances affecting
efficacy and user experience. With this in mind, we will continue topromote face-to-face channel cosmetics with strong profitability,
thereby seizing opportunities arising from future growth in market
demand. In particular, we have positioned beauty serums as amainstay product category and intend to develop a constantstream of products offering anti-aging functions and capable ofproviding users with a superior skincare experience. By doing so,
we will expand our customer base for the various skincare lines.
In addition, we will improve the service quality and sales
capabilities of Noevir Beauty Studios, our primary points of contact
with customers, in order to attract additions to and nurture ourexisting loyal customer base. To increase sales of self-selection
cosmetics, we will endeavor to capture an even broader range ofcustomers by introducing new products in the mainstay Nameraka
Honpo, excel and hypoallergenic NOV brand lineups. We will also
focus on storefront promotional activities aimed at evoking a sense of
intimacy and communicating the quality of our products to shoppers
in an effort to draw in and win over a diverse range of customers.

At the same time, we will work to enhance the profitabilityof our Pharmaceuticals & Health Food business. Specifically, we
will restructure our functional drink business to strengthen its
brand capabilities while stepping up cost control.
Taking these factors
into account, ourconsolidated performance
forecasts for fiscal 2019(from October 1, 2018 toSeptember 30, 2019)
comprise net sales of¥59,500 million,
operating income of¥11,700 million and net
income attributable toowners of the parent of¥8,000 million.
A display at an overseas sales outlet
carrying the excel brand makeup line

Our Policy regarding Shareholder Returns
We have positioned the return of profit to our shareholders as
an important management issue. In line with our basic policy of
ensuring stable shareholder returns, in November 2017 we
executed the cancellation of treasury stock following the
repurchase of shares. As for full-year cash dividends for fiscal
2018, we decided to pay out ¥180 per share. Not only is thisamount ¥30 higher than the dividend forecast made at the
beginning of the year, it is our seventh consecutive annual

increase in dividends. For fiscal 2019, we plan to pay ¥180 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 whileboosting our ability to quickly and flexibly accommodate market
changes and diversifying needs.

Noevir Enrich 55
4

ANNUAL REPORT 2018

ANNUAL REPORT 2018

5

Face-to-face Channel Cosmetics

Main Brands• Noevir SPECIALE• Noevir 99 Plus
• Noevir 505• NOEVIR 105

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 2018, we released NOEVIR Enrich 55, an anti-aging
serum created through the application of expertise in botanicalresearch and the latest findings from dermatology research
associated with mechanisms that create collagen in the skin—anarea where our knowledge is deep and longstanding. We also
released NOEVIR AQUATURE, a beauty serum with superior
capabilities to enhance the skin’s moisture retention thanks to thesuccess of our research into the generation of the intercellular lipid
ceramide.
Moreover, we introduced the first makeup items (lip, eye andcheek colors) in NOEVIR SPECIALE, a selection of the mostprestigiously ranked skincare products in the NOEVIR lineup.
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 bybeauty studios while also offering them through Noevir’s own retailstores. 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, choosing from among beauty studios. As of
September 30, 2018, approximately 1,900 salons have beencertified. Meanwhile, Noevir operates a network of its own retailstores that encompasses nine outlets in major cities across Japan.
Serving as contact points with potential customers, these storesstrive to help enhance customer understanding of the importanceof consulting, stimulate purchasing and promote brandrecognition.

• NOEVIR 80 pure
• NOEVIR EXTRA• Noevir TOUT BLANC• Noevir BIOSIGN
Noevir SPECIALE skincare line

6

ANNUAL REPORT 2018

Noevir 505 skincare line

Noevir 99 Plus skincare line

Noevir AQUATUREANNUAL REPORT 20187

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, bothof which boast lines with distinctive functional features, and steadily
expanded our customer base.
In addition, the Noevir Group’s unique product planning strategies
have helped the popular excel brand makeup line garner a solid
reputation among consumers in Japan and other Asian countries, andthe 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 and Min Min Da Ha functional drinks.

As for the marketing channels for self-selection cosmetics, theGroup utilizes such general retailers as general merchandise stores,
drugstores and specialty goods stores. With regard topharmaceuticals, 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 andcompanies to which products are delivered on regular basis.
Looking to enhance brand recognition and an understandingof our products among the general public, we are engaged inongoing sales promotion initiatives via social networking services(SNSs). In particular, we are working to capture new customers for

the Nameraka Honpo skincare brand and the excel
brand via storefront promotional campaigns aimed
at making a lasting impression. At the same time,
we aim to boost sales of NOV brand hypoallergenic
cosmetics by stepping up collaboration with medical
institutions. These initiatives are designed tocommunicate product information in a way thatevokes a sense of intimacy and trust.
In addition, the Group undertakes the contract
manufacturing of cosmetics and quasi-drugs on an
OEM basis.

Main Brands• Nameraka Honpo• excel• Pore Putty• New Born
• NOV• Nanten Nodo Ame• Min Min Da Ha• Gronvita• Vita C

Nameraka Honpo skincare brand displayed at a retailstore in China* Based on the storefront sales of self-selection skincare products incorporating soymilk
ingredients calculated from POS data gleaned by five retailers from January to June 2018

Nameraka Honpo skincare brand lineup

excel brand makeup lineup

Nameraka Honpo skincare brand lineup

Pore Putty makeup brand lineup

New Born makeup brand lineup

NOV hypoallergenic
cosmetics displayed at
a retail store in Taiwan

NOV brand lineup
8

ANNUAL REPORT 2018

Nanten Nodo Ame cough drop brand lineup

Min Min Da Ha functional drink brand lineup

ANNUAL REPORT 20189

Research and Development, Quality Assurance

Corporate GovernanceContinually 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 toits strengths in botanical research—a field in which it has been engaged in since its
founding. Moreover, the Group is rallying its overall strengths to take on thechallenge of entering new R&D fields as it strives to enhance the market
competitiveness of its products. Also, we are actively engaged in collaboration with
universities, medical institutions and other external research organizations with theaim of creating unique products that are insulated from price competition.

Research and Development

To realize the ongoing enhancement of corporate value andmaintain the trust of all of its stakeholders, including shareholders,the Noevir Group has positioned corporate governance as a key
management issue. Accordingly, the Group has developed a robust
management structure while strengthening auditing functions toensure strict compliance with laws, regulations and corporate ethics
as well as its articles of incorporation. Moreover, the Group has set
up internal control and risk management systems, both of which areconstantly upgraded.

To deepen the understanding of its stakeholders and ensure theirappropriate evaluation, Noevir Holdings voluntarily and consistently
discloses important information pertaining to the Group in a fair,timely and appropriate manner. To disseminate investor relations (IR)information, Noevir Holdings established a dedicated division,
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

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 2018, we released the Vie deLight brand skincare line in the
United States. Designed for vegans,* this line boasts plant-basedskincare products that do not use animal-derived ingredients and aremade without animal testing. The Noevir Group is thus developing
new products in a way that respects diverse consumer lifestyles anda broad range of value systems.
*Vegans are vegetarians who completely reject the consumption of any animal food,including eggs and dairy products. Adopted not only for the sake of avoiding cruelty,
the practice of veganism is also driven by an awareness of the individual’s
responsibility to help preserve the global environment.

Type of governance model

A company with auditors

Number of directors (of whom,
outside directors)

8 (3)Number of corporate auditors (ofwhom, outside corporate auditors)

3 (2)Number of independent directors andcorporate auditors (within outside
directors and corporate auditors)

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 201712

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 corporate auditors

Directors: Performance-based
remuneration system
Corporate auditors: Fixed
remuneration

Accounting auditor

Deloitte Touche Tohmatsu LLC

Systems for supporting outside
directors and corporate auditors

Persons in charge of support are
appointed from Corporate Affairs
Department

Vie deLight skincare line

3. Fundamental Concepts of Internal Control System

Quality Assurance
The Noevir Group provides high-quality products capable ofsatisfying stringent safety standards designed to live up to
customer expectations. The Shiga Factory has established amanagement system in conformity with the technical requirements
stipulated in Good Manufacturing Practice (GMP) guidelines forthe manufacture and quality control of cosmetics 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.

1. Fundamental Concepts of Corporate Governance

The Mie Factory, meanwhile, was certified by Mie Prefecture inAugust 2018 as a food manufacturing facility satisfying Hazard
Analysis and Critical Control Point (HACCP) standards for voluntary
hygiene management, while maintaining compliance withStandards for Manufacturing Control and Quality Control for
Drugs and Quasi-drugs (pharmaceutical GMP based on aministerial ordinance). Having put in place ever more sophisticatedquality assurance systems, this factory is engaged in the productionof such offerings as energy drinks and other health food.

To ensure the appropriate and sound execution of its Group
operations, Noevir Holdings undertakes the storage, management
and streamlining of information associated with the execution of
directors’ duties while endeavoring to maintain clarity in its risk
management structure as well 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 a board of auditors and conducting
effective audits and reliable financial reporting, Noevir Holdings
continues to further enhance its internal control and compliancesystems in order to ensure strict adherence to laws, regulations andits articles of incorporation.

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

Oversight
ReportBoard of Corporate Auditors:
Standing Corporate Auditor, Outside Auditors

Audit

Noevir Holdings Board of Directors:
Directors and Outside Directors
Supervision Appoint/Dismiss

Confirm

President and CEO

Accounting audit

Internal Audit Department

Management guidance/
Approval for important matters
Internal Audit

10

ANNUAL REPORT 2018

The Mie Factory

Decide/Approve

Decide/Approve
Internal audit
ReportThe Noevir Group Research Laboratory

Group Executive Council

ReportConfirm

Thorough supervision andcompliance with policies

Legal Counsel

Independent Auditor

Confirm

Noevir Holdings’ divisions

ReportingOperating Companies

ANNUAL REPORT 201811

Corporate Social Responsibility

Management’s Discussion and Analysis

Basic Philosophy
Working toward the realization of high quality of life for all stakeholders, theNoevir Group is engaged in the creation of beauty and health. In addition to
pursuing further business growth, we have clearly defined the responsibilities weare 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 theenvironment.

Noevir Green Charity Begins to Operate in U.S.A

Noevir Green Foundation Celebrates the 5th Anniversary

Since 2010, Noevir Co., Ltd. has been engaged in an ongoing fundraising campaign via Noevir Green Charity, setting aside a portion ofproceeds from designated items sold during biannual skincare
product fairs for donation to the Manaslu fund. Headed by alpinist
Ken Noguchi, this fund aims to raise money for school construction
at the foot of the Himalayas and for the provision of other supportof the region’s children. In 2018, we included a skincare set soldunder the Vie deLight brand, a new skincare line released by Noevir
U.S.A., Inc. specifically for vegans and marketed only in the UnitedStates, into the lineup
of designated items
mentioned above.
Looking ahead, we
will encourage agrowing number ofGroup members totake part in various
Social contribution activity undertaken at the foot of social contribution
activities.
the Himalayas

In 2018, the Noevir Green
Foundation, a public interest
incorporated foundation,celebrated the fifth anniversaryof its establishment. The
foundation helps nurture
young athletes aspiring to takeFemale fencer Sera Azuma (right), apart in international
beneficiary of the foundation’s fiscal 2017
tournaments, including the
Olympic and Paralympic games, subsidy program
while providing assistance to support the physically and emotionallysound upbringing of youth. To this end, the foundation offers
subsidies to beneficiaries chosen via an open application process.
Also, the foundation holds unique environmental educational classes
for children—the future leaders of global natural environment
preservation and protection efforts—in addition to promoting
environmental preservation initiatives undertaken as part of projects
aimed at reconstructing areas affected by the Great Hanshin-Awaji
Earthquake Disaster. Going forward, we will remain committed toassisting children in the pursuit of their dreams and ambitions.

Noevir’s Work Style Reform Initiatives

Overview
During fiscal 2018 (October 1, 2017 to September 30, 2018), theJapanese economy continued to register a modest but steadyrecovery, mainly due to further improvements in corporate earnings
and the employment situation. However, future economic trends
remained uncertain due to fluctuating foreign exchange rates andincreasing volatility in economies overseas, among other factors.
Against this backdrop, the Company worked to realize theconcept of its medium-term management plan: “Realizing steadycorporate growth by securing sustainability in every Group businesssegment.”
In particular, the Group’s Cosmetics segment secured profit
growth backed by strong sales thanks to the success of its efforts tocapture a diverse range of latent consumer demand.
As a result, net sales for the fiscal year ended September 30, 2018
came to ¥57,828 million. The cost of sales amounted to ¥20,588
million, and as a percentage of net sales was 35.6%. Selling, generaland administrative (SG&A) expenses were ¥25,896 million and as apercentage of net sales came to 44.8%. Accordingly, the ratio of costof sales to net sales deteriorated year on year by 1.3 percentage
points, while the ratio of SG&A expenses to net sales improved by 2.5
percentage points.
Operating income was ¥11,343 million, and net income
attributable to owners of the parent came to ¥7,842 million. Bothoperating income and net income attributable to owners of theparent were record highs.

Segment Information
Cosmetics
Overview
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 the excel brand;
and NOV brand. The Group also undertakes the contract
manufacturing of cosmetics.

The Noevir Group constantly endeavors to enable all of its
employees to strike an optimal balance between their work andfamily duties or other private activities while helping them fully
realize their potential as individuals. In particular, we strive to ensurethat the career development paths of all individuals in our workforce
are unconstrained by such events as childbirth, child rearing or
nursing care. We encourage employees to fully utilize annual paid
leave while striving to minimize overtime. Moreover, we have
implemented various initiatives, including letting eligible personnel
work at locations other than the office via a telecommuting system,
enhancing childcare leave plans, allowing those engaged in childrearing or nursing care to shorten their working hours andintroducing nursing care leave plans. In addition, we haveformulated concrete action plans and set numerical targets with aneye to pushing forward
initiatives that support women
aiming for career success.
Furthermore, we began toprovide assistance toemployees’ health promotion
efforts, taking a management
approach that places evengreater emphasis on ensuring
employee health.

Proportion of Male and Female Employees
in the Noevir Group

Proportion of Male and Female Managers
in the Noevir Group

Pharmaceuticals & Health Food

Female25.3%

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 products
featuring high-quality natural ingredients.

Female49.4%

headcount756

headcount
775

Male
50.6%

Sales of face-to-face channel cosmetics were solid due to strong
showings of newly released beauty serums and prestige skincare lines.
In self-selection cosmetics, sales of new and existing lines of skincare
products, makeup, and color cosmetics grew steadily.
As a result, the Cosmetics segment saw growth in both revenues
and profit, with segment sales and income totaling ¥42,616 millionand ¥12,155 million, respectively.

Overview

headcount91
headcount
268

Fiscal 2018 Results

Male
74.7%

Fiscal 2018 Results
In the Pharmaceuticals & Health Food segment, the Group took athoroughgoing approach to enhancing the efficiency of SG&A
expenses with the aim of securing greater profit.
As a result, although segment sales slightly decreased year on yearto ¥13,199 million, segment income rose significantly to ¥1,309
million.

Other
Overview
The Other segment encompasses apparel and aircraft sales andleasing.

Fiscal 2018 Results
Sales in the apparel-related business and the aviation-related businessperformed strongly. As a result, sales in the Other segment came to¥2,013 million, while segment income came to ¥135 million.

Assets, Liabilities and Net Assets
Total assets at the fiscal 2018 year-end stood at ¥82,817 million, adecrease of ¥10,750 million from the previous fiscal year-end. Thiswas mainly due to a decrease in cash and cash equivalents of ¥11,649
million.
Total liabilities came to ¥30,818 million, a decrease of ¥3,383
million from the previous fiscal year-end. This was mainly due to adecrease in notes and accounts payable of ¥2,860 million.
Net assets came to ¥51,998 million, a decrease of ¥7,366 million
from the previous fiscal year-end. This was primarily attributable to adecrease in retained earnings of ¥7,446 million, reflecting thecancellation of treasury stock of ¥9,971 million and the payment of¥5,317 million in dividends for the previous fiscal year-end as well as
the recording of net income attributable to owners of the parent
totaling ¥7,842 million.
As a result, the equity ratio stood at 62.6%, down 0.7 of apercentage point from the previous fiscal year-end, and net assets per
share stood at ¥1,517.61, a decrease of ¥151.57.

Cash Flows
Cash and cash equivalents on a consolidated basis as of September 30,
2018 stood at ¥28,701 million, a decrease of ¥11,648 million comparedwith the ¥40,350 million at the previous fiscal year-end.
Net cash provided by operating activities amounted to ¥4,965
million. The main item increasing cash was the posting of ¥11,604
million in income before income taxes. The main items decreasing cash
were income tax paid of ¥4,024 million and decrease in trade payablesof ¥2,857 million.
Net cash used in investing activities came to ¥1,119 million. The
principal cash outflow was ¥1,261 million for the purchase of property,
plant and equipment.
Net cash used in financing activities came to ¥15,503 million. Thiswas mainly due to the purchase of treasury stock of ¥9,971 million andthe payment of ¥5,315 million in dividends.

(As of September 30, 2018)12

ANNUAL REPORT 2018

ANNUAL REPORT 201813

Five-Year Summary

Financial Highlights(Millions of yen)

Net Sales

Operating Income / Operating Income Margin

Fiscal Year

2014

2015

2016

2017

2018

Period/Item

October 1, 2013–
September 30,
2014

October 1, 2014–
September 30,
2015

October 1, 2015–
September 30,
2016

October 1, 2016September 30,
2017

October 1, 2017September 30,
2018(¥ million)
60,000(¥ million)
12,000(%)
60

Net sales¥  48,253¥  49,387¥  51,180¥  54,473¥  57,828

50,00010,00050

Operating income

7,064

7,588

7,706

9,986

11,34340,0008,000

40

Net income

4,349

4,890

5,049*

7,077*

7,842*

30,0006,000

30

Total assets

88,05887,34889,70993,567

82,81720,0004,000

20

Net assets

56,01854,59855,90859,36551,99810,0002,000

10Capital expenditures

2,989

3,225

2,506

1,497

1,375

0

Depreciation

1,021

1,237

1,654

1,845

1,850

R&D expenses**

1,044

1,106

1,185

1,134

1,046

Cash dividends per share (yen)¥   60.00¥  100.00¥  120.00¥  150.00¥  180.00

Earnings per share, basic (yen)¥  116.16¥  136.79¥  142.44¥  199.64¥  228.56

Net assets per share (BPS) (yen)¥1,494.14¥1,536.84¥1,573.50¥1,669.18¥1,517.61

ROE (%)

8.0%

8.9%

9.2%

12.3%

14.1%

Equity ratio (%)

63.5%

62.4%

62.2%

63.2%

62.6%

Number of employees (consolidated)

1,641

1,674

1,609

1,531

1,560

Cosmetics
Net sales
Segment income

Segment income

FY2015FY2016FY2017FY201848,25349,38751,18054,47357,828¥  32,100¥  34,013¥  36,031¥  39,197¥  42,616

8,413

8,705

9,537

11,002

12,155FY2015FY2016FY2017FY2018Operatingincome

7,064

7,588

7,706

9,986

11,343Operating income
margin

14.6

15.4

15.1

18.3

19.6

Equity / Equity Ratio(%)
20(¥ million)
70,000(%)
70

60,00060

50,00050

40,00040

30,00030

20,00020

10,000

10

15

5

0

14,067

13,456

13,243

13,48813,199

674

1,012

170

745

1,309

ROE

FY2015FY2016FY2017FY2018

8.0

8.9

9.2

12.3

14.1

EquityEquity ratio

2,085

1,918

1,905

1,788

2,013

Segment income

(158)

(241)

(63)

128

135

* Net income attributable to owners of the parent** 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.

00

FY2014Other
Net sales

0

FY2014ROE

10Pharmaceuticals & Health Food
Net sales

Net sales

0

FY2014FY2014FY2015FY2016FY2017FY201855,94454,48355,78359,17551,836

63.5

62.4

62.2

63.2

62.6

Cash Dividends per Share / Payout Ratio

Earnings per Share, Basic
(¥)
250

(¥)
180

(%)
90

200

150

75

120

60

90

45

60

30

30

15

150
100
50
0

14

ANNUAL REPORT 2018

0

FY2014FY2015FY2016FY2017FY2018

Earnings per share,
116.16basic

136.79142.44

199.64228.560

FY2014FY2015FY2016FY2017FY2018Cash dividends
per share

60.00

100.00120.00150.00180.00

Payout ratio

51.7

73.1

84.2

75.1

78.8

ANNUAL REPORT 201815

Principal Consolidated Subsidiaries (As of September 30, 2018)

Board of Directors and Auditors (As of December 7, 2018)
Chairman and
Representative Director
Hiroshi Okura

Name

Noevir Co., Ltd.

Location

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

TOKIWA Pharmaceutical Co., 3-5-12 Azuchi-machi
Chuo-ku, Osaka 541-0052
Ltd.

Issued Share Capital Direct or Indirect(millions of yen,
Ownership byexcept as
the Company
otherwise stated)(percent)

President and CEO
Principal Business¥7,319100.00

Production and sale of cosmetics,
toiletries and food products aswell as purchase and sale of
makeup items and apparel¥4,301100.00

Production and sale of cosmetics,
toiletries and food products as wellas purchase and sale of makeup
items/Production and sale of overthe-counter (OTC) pharmaceuticals
and quasi-drugs

Japan

Takashi Okura

Directors

Standing Corporate Auditor

Ikkou Yoshida
Yasuo Kaiden
Masataka Nakano

Masashi Akagawa

Outside Corporate Auditors
Kazuya Sugimoto**
Tsuchida Ryo**

Outside Directors
Sanae Tanaka*
Maho Kinami*
Emima Abe*

* Independent directors** Independent corporate auditors

Profiles of Outside Directors

Profiles of Outside Corporate Auditors

Sanae Tanaka

Kazuya Sugimoto Representative of Sugimoto CPA Office

Representative of Sanae Tanaka Law OfficeVice chairperson of TV Asahi Corporation Program Assessment Council
Outside director of PILOT CORPORATION
Outside director of Shochiku Co., Ltd.
Outside director of Kintetsu World Express, Inc.

Bonanza Co., Ltd.

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

¥10

100.00

Production and sale of cosmetics
and toiletries as well as purchaseand sale of makeup items

TOKIWA Medical Service
Co., Ltd.

3-5-12 Azuchi-machi
Chuo-ku, Osaka 541-0052
Japan

¥98

100.00

Sale of cosmetics, toiletries andfood products as well as purchaseand sale of makeup items/
Production and sale of over-thecounter (OTC) pharmaceuticals
and quasi-drugs

Noevir Aviation Co., Ltd.

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

¥35

100.00

Air transportation business

Investor Information (As of September 30, 2018)

Noevir Holding of 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 Canadiansubsidiary

Name

Stock Listing

Noevir Holdings Co., Ltd.

Tokyo Stock Exchange, First Section (Ticker: 4928)

Noevir U.S.A., Inc.

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

US$5,900
thousand

100.00

Sale of cosmetics, makeup
products, toiletries and foodproducts

Date of Establishment

Transfer Agent and Registrar

7360 River Road, RichmondBritish Columbia V6X 1X6
Canada

C$1,131
thousand

100.00March 22, 2011
(Noevir Co., Ltd. was founded in April 1964.)

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

Paid-in Capital

Major Shareholders

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

NT$31,000
thousand

100.00Noevir Canada, Inc.

Noevir Taiwan, Inc.

Shanghai Noevir
Co., Ltd.

Noevir Aviation, Inc.

Noevir Europe s.r.l.

Room 605, HongwellInternational Plaza A
No.1600, Zhongshan West Rd,
Xuhui District, Shanghai 200235
China

5,000
thousand
Chinese yuan

50.00

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

US$1,350
thousand

100.00Via Tre Settembre, 99 (3°-#116)
47891 Dogana
Republic of San Marino

26,000euro

100.00

Sale of cosmetics, makeup
products, toiletries and foodproducts
Sale of cosmetics, makeup
products, toiletries and foodproducts
Sale of cosmetics, makeup products
and toiletries as well as procurement
and sale of sales promotion goods
for the Noevir Group
Purchase and sale of aircraft andvessels as well as aviation-related
operations

Maho Kinami

Representative of Kinami Law Office

Emima Abe

Attorney-at-law, Max General Law Firm

Tsuchida Ryo

Attorney-at-law, Frontier Law Firm
Professor of Law, Senshu University
Outside Corporate Auditor of Resona Bank, Ltd.
Outside director of UPR Corp.

¥7,319 million
Name

Number of
Shares Held(thousands)

Percentage ofTotal Shares lssued(percent)

HeadquartersNII Co., Ltd.

7,972

23.34

• Kobe6-13-1 Minatojima-nakamachi
Chuo-ku, Kobe 650-8521, Japan

Hiroshi Okura

5,410

15.84

Takashi Okura

3,699

10.83

Sumitomo Mitsui Banking Corporation

900

2.63

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

867

2.54

Japan Trustee Services Bank, Ltd. (Trust Account)

540

1.58

NORTHERN TRUST CO. (AVFC)
RE IEDU UCITS CLIENTS NON LENDING 15 PCT
TREATY ACCOUNT

428

1.26

Noevir Holdings Employees Shareholdings Scheme

408

1.20

Japan Trustee Services Bank, Ltd. (Trust Account 9)

362

1.06

BNP PARIBAS SECURITIES SERVICES LUXEMBOURG/JASDEC SECURITIES/UCITS ASSETS

342

1.00

• Tokyo
7-6-15 Ginza, Chuo-ku
Tokyo 104-8208, Japan

Market research in Europe*The shareholding ratio 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 statementsthat are not historical facts are forward-looking statements based on information currently available, and such statements involve risks anduncertainties that could cause actual results to differ substantially from expectations.

16

ANNUAL REPORT 2018

ANNUAL REPORT 201817

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/

Printed in Japan using environment-friendly ink and paper.