Consolidated Results for the First Three Quarters of...

January 13, 2011Unihair Co., Ltd.

Consolidated Results for the First Three Quarters of Fiscal 2011, ended November 30, 2010

This handout contains forward-looking statements that are based on management’s estimates, assumptions and projections at the time of presentation.

A number of factors could cause actual results to differ materially from expectations. Amounts less than a full unit are omitted, and percentages are rounded to one decimal place.

Progress on Medium-term Management Plan

Medium-term Management Plan Roadmap: All Domestic Operations

1

Fiscal 2011 Fiscal 2012 Fiscal 2013

Bring faltering performance to an end and return to profitability through the merger of Aderans, Fontaine into Aderans Holdings.

Boost productivity through personnel reassignments.

Promote business improvement to raise productivity and enhance efficiency.

Selectively invest in promising areas of the domestic women’s market as well as new marketing channels to attract more interest from women.

Apply a scrap-and-build approach to salons, depending on performance contributions, and foster higher profitability.

Key actions are described on the following page.

All Domestic Operations

• Executed three-company merger designed to eliminate duplicate functions, accelerate decision-making processes and make the structure of executive responsibility more transparent.

• Changed company name to Unihair Co., Ltd.• Relocated head office—in May—to facilitate the creation of a global headquarters and make three-company merger

as effective as possible.

Medium-term Management Plan Roadmap: All Domestic Operations

Three-Company Integration

Sales Recovery

Improved Efficiency

• Prepared the organization/human resources structure for the three-company merger.• Closed the Niigata office.

• Seeking stronger business structure to underpin recovery in sales. Established Sales Coordination Division. • Integrated organization/human resources at Fontaine and Aderans by shifting them to the Eastern Japan Sales Division and Western Japan Sales Division, respectively. • Promoting conversion of salons to Fontaine Couture format, remodeling existing salons and maintaining scrap-and-build process to create an efficient, streamlined salon network.

Cost-Reduction Projects

• Working to eliminate excess and cut back-office costs through three-company integration.• Trimming costs through head office relocation, along with reassignment of personnel from back-office divisions to

marketing divisions.• Enhancing efficiency and cutting costs by establishing optimal structure for production and distribution.• Reducing costs through centralized purchasing system.• Integrating and improving IT systems.

Actions Launched and/or Completed during First Three Quarters of Fiscal 2011

2


Halt the dwindling number of clients by promoting products and services at flat rates.

Expand client base in the medium term through flat rate options and maintain stable profits.

Explore the potential of total hair services highlighting Bosley’s hair-transplant techniques and develop this business.

Promote business by reinforcing joint activities with affiliated clinics.

Aderans and Bosley (Men’s market)

• Reinforced measures to correct deviation from established in-house practices for sales to repeat clients.

• Worked to improve customer service.

Rekindled demand from

one-time clients

Expanded domestic client

base

• Executed new advertising campaigns to improve the Aderans brand image.• Presented clear pricing with flat-fee Aderans Hair Club.• Launched new products: Aderans Premium Club and Aderans Gold• Trade-in Campaign

Actions during First Three Quarters

Medium-term Management Plan Roadmap: Aderans

3


Enrich product selection to facilitate access to range of wigs, from ready-made to custom-made, throughout the salon network.

Execute effective advertising campaigns to improve the Fontaine brand image and have it permeate the market.

Enrich product lineup based on market needs.

Fontaine (Women’s market)

• Number of Fontaine Couture-converted salons: 54 salons added during first three quarters for a total of 72 salons, as of November 30, 2010.

Enhanced visibility of Fontaine brand


Significantly expanded number of Fontaine Couture salons

• Continuous advertising on television to boost Fontaine profile.• FONTAINE flagship salon opened in Ginza, Tokyo, on November 25.

Expanded depth of demand(Age range: 60s to 80s)

Medium-term Management Plan Roadmap: Fontaine

4

Introduced a new wig • Launched new ready-made wig, Ready-made fluffy

• Ran television commercials highlighting the appealing features of Fontaine wigs.

• Held try-on events.

Medium-term Management Plan Roadmap: Fontaine

FONTAINE flagship salon featuring ladies’ wigs opened in Ginza, Tokyo, on November 25

Floor Space 411.64 m2 (First floor: 193.13 m2 , second floor: 218.51 m2 )

Number of Staff 18

Main Products Custom-made and ready-made wigsMore than 270 styles available.

Facilities Three wig setting rooms, two counseling rooms, one scalpcareroom, and four VIP rooms

Price Range ¥1,890 (Poste (postiches, or small hairpieces) and ready-made wigs) ~ ¥1.26 million (Fontaine Premium and custom-made wigs) *Prices include tax

Main Target Women, primarily those 50 and older, who see wigs as a fashion accessory to have fun with. Women, local or just visiting, who like shopping in Ginza.

5


Boost sales to beauty and hairdressing salons.

Boost sales of ladies’ wigs for medical use.

Boost sales to girls—‘tweens and teenagers—and women in their 20s, who are particularly fashion-conscious.

New Businesses

• Assigned staff with business expansion in mind.

• Trained people to take charge of projects.

• Expanded Loves Change salon network.


Medium-term Management Plan Roadmap: New Businesses

6

Medium-term Management Plan Roadmap: Overseas OperationsFiscal 2011 Fiscal 2012 Fiscal 2013

Promote fashion wig retailing operations.

Market research

Europe

North America

Improve profitability through consolidation of U.S. companies under one roof and through organizational restructuring.June

Integrate brands.

Promote one-stop solutions hinging on the Bosley brand.

Explore potential of business presence in South America.

Start business activitiesin South America.

Prepare to establish European headquarters.

Establish European headquarters, which will centralize functions and strengthen marketing capabilities.

Undertake market research and prepare for the start

of Bosley business.Launch activities in key markets, starting with Sweden.

Integrate brands and products.

Promote fashion wig retailing operations.

Consider entry into markets where the Group has yet to establish a presence.

Gradually begin operations in other countries with demand potential.

Worldwide Draft market entry strategy for ARI’s hair-regeneration technique

Men

Women

Men

Women

7Key actions are described on the following page.

• Integrated hair-transplant business (under Bosley Inc.) and wig business (under Aderans Hair Goods, Inc.)

• Undertook brand integration/elimination and centralization of logistics operations.

• Aderans Research Institute completed first protocol of Phase 2 FDA (U.S. Federal Drug Administration) clinical trials. Delivering solid results.

Medium-term Management Plan Roadmap: Overseas Operations

Actions during First Three Quarters of Fiscal 2011

North America

Europe

• Implemented incentive scheme to encourage growth.• Held first global conference on supply chain management and information technology

on August 2 and 3 at Tokyo head office as part of preparations to integrate European operations according to function.

• Undertook market survey on Bosley business and began looking at expansion into uncharted areas.

8



The Rest of Asia

China

July onward

Prepare for the start of services. Begin services.

Execute thorough review of business to bring swift return to profitability.

Explore possibility of turning Bosley into a viable business in South Korea.

Explore potential of Bosley business in China.

Withdraw from markets where the potential for a return to profitability is unlikely.

September

Promote fashion wig retailing operations in Taiwan and Singapore.

Prepare for and establish Chinese headquarters.

Raise the curtain on the ladies’ fashion wig business with the opening of a flagship salon.

Men

Women

Men

Women

Expand sales through aggressive salon development (more than 90 locations over he next three years).

9Key actions are described on the following page.


Actions during First Three Quarters of Fiscal 2011

China

The Rest of Asia

• Recruited team of professionals for business in China and established headquarters structure.• Formed business alliance for Bosley business with Huashan Hospital Jingan Branch, attached

to Fudan University.• Opened FONTAINE flagship ladies’ wig salon in Shanghai, China, on September 28.• Opened two locations of Loves Change ladies’ wig salons in Shanghai, China, on December

20.

• Men’s custom-made wig business shrinking while ladies’ fashion wig business expanding, especially in Singapore and Taiwan.

• Poorly performing salons in Thailand, Malaysia and South Korea were closed.

10

OPA salon Yuyuan salon

Consolidated Results(March 1, 2010 to November 30, 2010)

Consolidated Results for First Three Quarters of Fiscal 2011

Fiscal 2010First Three Quarters


YOY change

(¥)

YOYchange

(%)

Net sales 43,533 35,005 -8,528 -19.6

Cost of sales 9,943 7,090 -2,844 -28.6

Gross profit 33,599 27,915 -5,684 -16.9

SGA expenses 35,342 34,062 -1,280 -3.6

Operating loss -1,742 -6,147 -4,405

Operating income ratio - - -

Ordinary loss -1,738 -6,297 -4,559

Extraordinary loss -1,201 -5,205 -4,004Income before income taxes -2,938 -11,502 -8,564

Income taxes 2,315 6,223 3,908

Net loss -5,240 -17,725 -12,485

Capital expenditures 1,590 1,516 -74

Depreciation/Amortization 1,768 1,463 -305

EBITDA 26 -4,684 -4,710

Cash balance 11,208 11,907 699

（Millions of yen, %）

11

Consolidated Results for Third Quarter of Fiscal 2011

Fiscal 2010Third Quarter

Fiscal 2011Third Quarter

YOY change (¥)

YOYchange (%)

Net sales 13,129 11,344 -1,785 -13.6%

Cost of sales 3,272 2,035 -1,237 -37.8%

Gross profit 9,856 9,308 -548 -5.6%

SGA expenses 11,412 10,939 -473 -4.1%

Operating loss -1,555 -1,630 -76

Operating income ratio - -

Ordinary loss -1,648 -1,603 44

Net loss -1,627 -12,262 -10,636

（Millions of yen, %）

12

13,129

11,344

-92 -805

-136

43,533

35,005

-1,747

-2,309

-2,422

-2,050

Businesses from which the Group has withdrawn

Operations in North America

Three-Quarter Status• The decrease in sales reflects efforts to correct a deviation from established in-house practices for sales to repeat clients and the absence of contributions from businesses from which the Group withdrew.• The drop in sales began showing sign of ending, mainly due to enhanced brand image, new product releases, and rapid conversion to Fontaine Couture salon format.

Sales to women

Year-on-Year (First Three Quarters)

13

Consolidated Net Sales for First Three Quarters of Fiscal 2011

（Millions of yen）（Millions of yen）

Fiscal 2010Third Quarter Only




Impact of efforts to prevent sales outside established parameters (rough estimate)

Year-on-Year (Third Quarter Only)

Businesses from which the Group has withdrawn

Operations in North America

Sales to women


-752

600

-1,555-1,631

-675

-6,147

-1,742

-1,047

-1,640

-1,847

120

Gross profit on sales outside established sales practices

Year-on-Year (First Three Quarters)

During First Three Quarters (March 1 to November 30) • Lower income due to emphasis on adherence to established sales practices and lack of sales from businesses from which the Group withdrew.• Lower SGA expenses lightened the weight of the operating loss.

In Third Quarter Only (September 1 to November 30) • The operating loss is showing signs of reversing.

SGA expenses in businesses from which the Group has withdrawn

Lower gross profit

14






Consolidated Operating Loss for First Three Quarters of Fiscal 2011

Year-on-Year (Third Quarter Only)

Decrease in sales to women

Decrease in sales from other businesses

Lower SGA expenses

212 162

1,892

216

-39-77

2,042

729

7,545

556

197-117

-1,309

6,490


Business Results (Aderans) for First Three Quarters of Fiscal 2011

Year-on-Year Sales (First Three Quarters)

During First Three Quarters• Efforts to prevent sales outside established parameters led to lower sales. • Customer transactions down, owing to increase in Aderans Hair Club contracts.

In Third Quarter Only• Department store corners and directly operated salons, mainly those

specializing in ready-made wigs, secured higher sales on the switch to Fontaine Couture format.

• Steady increase in sales to repeat customers.

Repeat ClientsNew Clients

15






Decrease in sales to new clients

Increase in sales to repeat clients

Three-Quarter Status: Marketing strategies took hold, brand image improved, and sales to new and repeat customers are showing signs of recovery.

Year-on-Year Sales (Third Quarter Only)

8,274

7,047

2,2042,104


Decrease in sales to new clients

Increase in sales to repeat clients

96

139

143

186

177

247

206

222

230

229

208

171

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

Key Business Indicators (Aderans)

Number of Aderans Hair Club Contracts（Year-on-year change (%))

Television commercials prompted an increase in the number of contracts for the flat-rate Aderans Hair Club.

16

13,121

5,088

9,709

362

-2,412-1,000

5,450

3,560

1,852

3,238

201186-523

2,039


Decrease in sales of custom-made wigs at Fontaine salons

Increase in sales of ready-made wigs for department stores and directly operated salons

During First Three Quarters• Impact of efforts to prevent sales outside established parameters (rough estimate)

streamlined sales.• Sales of custom-made wigs declined. (Sales to new clients down ¥1.8 billion, and

to repeat clients, down ¥600 million)• Sizzling hot days led to fewer sales in the summer.

Decrease in sales of custom-made wigs for new clients

In Third Quarter Only• Department store corners and directly operated salons, mainly those

specializing in ready-made wigs, secured higher sales on the switch to Fontaine Couture format.

• Steady increase in sales to repeat customers.

Ready-madeCustom-made

17






Business Results (Fontaine) for First Three Quarters of Fiscal 2011

Increase in sales of ready-made wigs

Increase in sales of custom-made wigs for repeat clients

Three-Quarter Status: Sales showing signs of bottoming out, as marketing strategies take hold, brand recognition climbs higher, Fontaine Fluffy attracts more attention, more Fontaine Couture salons are open, and telephone inquiries are rising.

Year-on-Year Sales (First Three Quarters) Year-on-Year Sales (Third Quarter Only)

5,413 5,27718,209

15,159

Key Business Indicators (Fontaine)

18

Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.Aggregate number of salons converted to

Fontaine Couture format20 24 24 26 30 37 46 62 72 78

Year-on-Year Change (%) in Sales through Department Stores/Directly Operated Salons and Fontaine Couture Salons

Update on Sales at Fontaine Couture-Converted Salons

• Steady expansion in sales at Fontaine Couture salons substantiated by 119% jump in December 2010 over corresponding month a year earlier.

• Sales at salons other than Fontaine Couture locations also increased, up 110% year-on-year as of December 2010.

5,693

2,005

5,751

362-1,130

-429

750



1,882

620

1,886

134-130

-620

MHR Bosley

19




Business Results (Bosley) for First Three Quarters of Fiscal 2011


During First Three Quarters• Closure of some MHR sales offices, due to merger, led to lower revenues.• Bosley increased revenues.

Three-Quarter Status: Earnings significantly improved by merger and reduced SGA expenses.

In Third Quarter Only• Bosley steadily expanded revenues.

7,698

6,501 2,502

Closure of some MHR

sales offices

Bosleyincreased revenues

Bosleyincreased revenues

Closure of some MHR sales offices

Yen appreciation

erodes converted amount.

Yen appreciation

erodes converted amount.

-302

1

133

MHR Bosley

20




Fiscal 2011First Three Quarters Fiscal 2011

Third Quarter Only

Business Results (Bosley) for First Three Quarters of Fiscal 2011

During First Three Quarters

• Rebounded into the operating black, thanks to merger and successful review of SGA expenses.

In Third Quarter Only• Higher revenues underpinned favorable operating income.

Year-on-Year Operating Income (First Three Quarters)

Year-on-Year Operating Income(Third Quarter Only)

3

84

71

588

836

752

64

531

-28

-120

218

2,008

2,5132,372

221

1,881

-115

-381

Asia North America Europe

21






Business Results (Overseas Wig Business) for First Three Quarters of Fiscal 2011


During First Three Quarters• Favorable developments in all markets.

4,7404,474

1,495Yen appreciation erodes converted amount.North America -125Europe -256

North America -2Europe +115Asia+3

1,347Yen appreciation erodes converted amount.North America -37Europe -83

North America -20Europe -1Asia-7

• Domestic sales (Aderans and Fontaine) on a recovery trend, compared with corresponding period a year ago. • Monthly performance in Japan in December was in the black.

Full-year forecast

Current status

• Aderans sales will be slightly lower than the target announced on October 14, 2010.

• The Fontaine salon business, which hinges on custom-made wigs, appears to be on an uptrend, thanks to television commercials highlighting product features and an increase in try-on events, but sales are now expected to fall below the original target. The revised target is based on third-quarter results.

• The Fontaine department store and directly operated salon business, which focus on ready-made wigs, delivered a 10%-plus year-on-year improvement in sales, thanks to conversion to the Fontaine Couture format, the debut of Ready-made Fluffy, and television commercials encouraging a salon visit. But sales are not projected to reach the level previously announced, prompting this downward revision.

Original Target and Revised Target

Aderans Fontaine

Net Sales

Other domestic operations

22

（Millions of yen）

Fiscal 2011(Original Target announced on October 14, 2010)

Fiscal 2011(Revised Target)

37,535 33,000

-169-3,297

-1,067

Difference between Targets Announced October 15 and Subsequent Revisions

23

-4,533

-1,067

-1,542

-1,755

-335

-1,420

-3,297

-21

-148

-169

Difference between Forecasts

(B-A)

7,141

16,950

11,240

5,710

24,091

9,754

905

10,659

Fiscal 2010Second Half

(Actual)(C)

33,00037,533Total Domestic Sales

2,6003,667Other domestic operations

4597,6009,142Department stores and directly operated salons

-3,75013,20014,955Sub Total

-1,6409,6009,935Repeat clients

-2,1103,6005,020New clients

-3,29120,80024,097Fontaine

-8548,9008,921Repeat clients

-205700848New clients

-1,0599,6009,769Aderans

Second-Half Revised Forecast

(B)

Second-Half Forecast

(Announced October 14, 2010)

(A)

Difference(B-C)

Fiscal 2011

Fiscal 2011 Full-Year Consolidated Performance Forecast

Fiscal 2011（Reference）

Fiscal 2010(Actual)

Revised Full-Year Forecast

Original Targets

(Announced June 10, 2010)

Difference

Revised Targets (Disclosed October 14,

2010)

Difference

Net sales 47,800 56,000 -8,200 52,300 -4,500 57,355

Cost of sales 10,000 11,000 -1,000 10,500 -500 12,867

Gross profit 37,800 45,000 -7,200 41,800 -4,000 44,488

SGA expenses 44,600 47,900 -3,300 45,700 -1,100 49,753

Operating loss -6,800 -2,900 -3,900 -3,900 -2,900 -5,264

Ordinary loss -6,900 -2,700 -4,200 -4,000 -2,900 -5,351

Extraordinary loss -6,700 -4,600 -2,100 -3,300 -3,400 -4,258

Income before income taxes -13,600 -7,300 -6,300 -7,300 -6,300 -9,609

Income taxes 6,200 -2,400 8,600 -2,400 8,600 250

Net loss -19,800 -4,900 -14,900 -4,900 -14,900 -9,851

EBITDA -4,509 -107 -4,365 -1,476 -2,987 -2,884

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（Millions of yen）

Unihair Stock Price Movement

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

Mar-09

Apr-09

May-09

Jun-09

Jul-09

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Oct-09

Nov-09

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Jan-10

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Dec-10

Yen

40th General Meeting of Shareholders (Current director system begins)

Announced treasury stock purchase. Announced DIO management reforms.

Tadao Otsukibecomes president of Aderans Holdings.

41st General Meeting of Shareholders

Unihair is born.

Revised performance and dividend forecasts.

Announced basic agreement on business alliance in hair transplant business in China.

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Announcement of medium-term management plan

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