April 20, 2007 ADERANS CO., LTD.

Consolidated

(Unaudited) 1

April 20, 2007 ADERANS CO., LTD.

Consolidated Financial Statements (Unaudited) for the Fiscal Year Ended February 28, 2007

(Translated from the Japanese original) Corporate information Code: 8170 Listing: Tokyo Stock Exchange, Osaka Securities Exchanges (URL http://aderans.co.jp) Head Office: Metropolis of Tokyo Representative: Katsuji Tokumaru President and Representative Director Contact: Michiyoshi Takahashi General Manager, Investor Relations Div. Telephone: 81-3-3350-3268 Date of Board Meeting for Settlement of Accounts: April 20, 2007 Applicability of U.S. GAAP: Not applicable 1. Consolidated Results for Fiscal 2007 (from March 1, 2006 to February 28, 2007) (1) Consolidated results Millions of yen (amounts rounded down) Fiscal 2007 Fiscal 2006 YOY change % YOY change %Net sales 73.498 1.1 72.690 2.9Operating income 8,212 (20.4) 10,319 21.9Recurring profit 8,815 (20.3) 11,061 26.3Net income 6,091 (0.9) 6,149 ―

Net income per share (yen) 156.26 150.51 Diluted Net Income per share 155.25 149.51 Return on shareholders’ equity (%) 8.6 9.0 Recurring profit to assets (%) 9.8 13.0 Recurring profit to sales (%) 12.0 15.2 (Notes) 1) Equity in earnings or losses of affiliates: ― million yen (Fiscal 2007) ― million yen (Fiscal 2006) 2) Average number of outstanding shares during the fiscal year (consolidated): 38,984,056 shares (Fiscal 2007) 39,992,395 shares (Fiscal 2006) 3) Changes to accounting methods: none

4) Percentage shown in rows for net sales, operating income, recurring profit and net income are year-on-year changes.

(2) Consolidated financial position Millions of yen Fiscal 2007 Fiscal 2006 Total assets 91,658 87,490 Shareholders’ equity 73,021 69,239 Shareholders’ equity ratio (%) 79.3 79.1 Shareholders’ equity per share (yen) 1,877.95 1,760.45 (Note) Number of outstanding shares at fiscal year-end (consolidated): 38,712,367 shares (Fiscal 2007) 39,256,791 shares (Fiscal 2006)

Consolidated

(Unaudited) 2

(3) Consolidated cash flows Millions of yen Fiscal 2007 Fiscal 2006 Cash flow from operating activities 5,073 10,399 Cash flow used in investing activities 258 (2,532) Cash flow used in financing activities (4,090) (5,545) Cash and cash equivalents at fiscal year-end 17,956 15,896 (4) Scope of consolidation and application of the equity method Consolidated subsidiaries 30Non-consolidated subsidiaries accounted for using the equity method ―

Affiliates accounted for using the equity method ―

(5) Changes in the scope of consolidation and the application of the equity method Consolidated subsidiaries (added) 4 (excluded) 1Companies under the equity method (added) ―

(excluded) ―

2. Anticipated Consolidated Results for Fiscal 2008 (March 1, 2007 to February 29, 2008)

Millions of yen 6 months ending 12 months ending August 31, 2006 February 28, 2007 Net sales 37,600 77,800 Recurring profit 1,900 7,700 Net income 500 3,600 cf. Anticipated net income per share (12 months): 92.99 yen (Note) The figures in the table above are estimates based on management’s assumptions and beliefs in light of information available

as of the date on which these performance-related figures were disclosed. Please understand that actual results may differ substantially from estimates due to factors unforeseen at this time.

Consolidated

(Unaudited) 3

1. Aderans Co., Ltd. and its Subsidiaries (The Aderans Group) The Aderans Group consists of Aderans Co., Ltd. and its 41 subsidiaries (30 consolidated and 11 non-consolidated subsidiaries) and one affiliated company. The Group is engaged in hair-related businesses, including the manufacturing and sales of wigs, beauty, hairdressing and hair-care services, hair-transplant services, and related businesses. The organization and major activity Group companies, including Aderans Co., Ltd. are as follow: Business Segment Major Business Major Companies in the Group

- Sales of custom-made wigs, beauty, hairdressing and hair-care services. Aderans Co., Ltd. (reporting company for the consolidated financial statements)

Japan

- Sales of ready-made wigs FONTAINE Co., Ltd. Beauty and hairdressing services Samson Co., Ltd.

- Manufacturing of wigs Aderans Thai Ltd. World Quality Co., Ltd. Aderans Philippines, Inc.

Asia (excluding Japan)

- Sales of custom-made wigs, beauty, hairdressing and hair-care services Aderans Inc. (Taiwan)

- Sales of ready-made wigs General Wig Manufacturers, Inc. Rene of Paris

- Hair-transplant services Bosley, Inc.

North America

- Research and development on hair-regeneration treatments

Aderans Research Institute, Inc.

Hair-related businesses

- - - - -

Manufacturing and sales of wigs Beauty, hairdressing and hair-care

services Sales of cosmetics and non-medical

products Hair-transplant services Research and development on

hair-regeneration treatments

Europe - Sales of ready-made wigs Camaflex S.A.S. Trend Hair Supplies Co., Ltd. Carl M Lundh AB

- Advertising and golf course management ADN Co., Ltd.

Japan

- Holding company Hair Trust Holdings Co., Ltd.

Other businesses - - - -

Advertising Golf course management Real estate agency Holding company operation

Overseas - Holding company Aderans Holding Co., Inc. Aderans Europe B.V.

Non-consolidated subsidiaries and affiliated company -11 non-consolidated subsidiaries, one affiliated company

Consolidated

(Unaudited) 4

The above-named companies in the ADERANS Group are shown in the following diagram:

Notes: consolidated subsidiaries flow of products (wigs)

Aderans Co., Ltd. (reporting company for the consolidated financial

statements)

Sales of wigs (22 companies）

[Japan] FONTAINE Co., Ltd.

[U.S.A.] General Wig Manufacturers Inc. and four others

[France] Camaflex S.A.S., and one other

[Germany] Creation de Paris Camaflex Vertriebs G..m.b.H. and one other

[The Netherlands] D. Van Nooijen B.V.

[Belgium] Camaflex S.A.

[U.K.] Trend Hair Supplies Co., Ltd. and one other

[Thailand] Aderans Siam Co., Ltd. [Republic of Korea] Aderans Korea Inc. [Singapore] Aderans Singapore Pte, Ltd. [China] Aderans (Shanghai) Co., Ltd., and one other [Malaysia] Aderans Malaysia Sdn Bhd

[Taiwan] Aderans Inc. (Taiwan)

Manufacturing of wigs (Four companies)

[Thailand] Aderans Thai Ltd.

[Thailand] World Quality Co., Ltd.

[The Philippines] Aderans Philippines, Inc.

(One other non-consolidated subsidiary)

Hair-transplant related (Two companies)

[U.S.A.] Bosley, Inc.

(One other consolidated subsidiary)

Aderans Research Institute, Inc. <Hair-related business>

[Japan] ADN Co., Ltd. (Advertising agency and golf course management)

[Japan] Hair Trust Holdings Co., Ltd. (Holding company)

(One other consolidated subsidiary and two other non-consolidated subsidiaries)

<Other businesses>

[U.S.A.] Aderans Research Institute, Inc

<Hair-related businesses>

U.S.A., Europe Asia Fontaine Co. Ltd.

[Sweden.] Carl M Lundh AB

Research and development on hair-regeneration treatments

[France] Gesmofra S.A.S.

[The Netherlands] Aderans Europe B.V.

[U.S.A.] Aderans Holding Co., Inc.

Holding company

[Japan] Samson Co., Ltd., and one other.

(Two other non-consolidated subsidiary and one affiliated company)

Beauty and hair-dressing services (Five companies)

Consolidated

(Unaudited) 5

2. Aderans Co., Ltd., and its Subsidiaries (The Aderans Group)

(1) Management policy of the Aderans Group

The Aderans Group offers a comprehensive range of products and services, from wigs to hairdressing, haircare and hair transplants, to successfully address whatever concerns people may have about their hair. As a global group of companies involved in all manner of hair-related businesses, we pursue activities from a client-oriented perspective and strive to achieve a higher level of satisfaction from clients, shareholders and employees. Our efforts are guided by a mission statement emphasizing our development into a trustworthy organization with products and services in constant demand from clients and society as a whole. Indeed, we seek to epitomize the “good company” ideal.

(2) Basic policy on distributing profit

One of Aderans’ top management priorities is the return of profits to shareholders. Our primary objective is, of course, to maintain stable dividends, but the basic idea is to raise the payout ratio and to return profits to shareholders through treasury stock buybacks. Our targets are a payout ratio of at least 30% and a shareholder return ratio of at least 50%, based on consolidated net income. However, if no large applications of funds are required in the two terms ending February 2007 and February 2008, then, notwithstanding our position regarding retained earnings, we intend to apply all of consolidated net income to the shareholder return ratio.

(3) Medium- to long-term business strategies

Based on the medium term management plan of Aderans Group, from March 2005 to February 2008, we tackle business strategies aimed at achieving the numerical targets. We cast our strategy spotlight on four tasks.

(i) Enhance advertising aimed at men in the domestic market and cultivate fresh demand, specifically through the introduction of new products and services and through collaboration with businesses in related fields.

(ii) Energize demand for ladies’ custom-made wigs by elevating recognition of Aderans’ two brands, Eve and Sifore, and reinforce sales of ready-made wigs by utilizing the joint sales structure created with Fontaine Co., Ltd., and by fostering wider demand for that company’s fashion wigs among women of all ages, from young to middle-aged and older.

(iii) Build a new sales network and carve out wider market access not only through the development of new-concept salons but through tie-ups with ordinary distributors as well.

(iv) Reinforce overseas operations by expanding the market shares of each subsidiary and by improving respective profitability, and hone a sharper marketing edge for the Group by acquiring existing retailing outlets or establishing a presence from scratch in promising markets where Aderans has not yet made a direct investment.

(4) Corporate Matters to Address

Fiscal 2007, ended February 28, 2007, was the second year of our medium-term management plan, and through it we achieved a certain degree of success in expanding overseas market shares and in reinforcing profit bases in each market. At home, however, the situation was much different, with market conditions characterized by intense competition. Concerted efforts to cultivate domestic demand and capture the interest of new clients with new products and new services failed to deliver anticipated results. We will now turn our attention toward measures aimed at reinforcing our overseas business foundation and enhancing profitability to secure higher earnings. We will also review our advertising strategy, with a focus on reinvigorating demand in the domestic market, and introduce products and services that distinguish us from our rivals. We will utilize Group strengths to fortify our position in the women’s market and promote capital and operational alliances with beauty and hair-dressing salon chains outside the Group umbrella. Through these efforts, we will ensure the new phase of corporate growth. The companies in the Aderans Group will tackle prevailing challenges and strive as a cohesive unit to realize the goals of the medium-term management plan.

Consolidated

(Unaudited) 6

(5) Business targets As benchmarks of medium- to long-term management efficiency, we seek to maintain a ratio of at least 20% on recurring profit to sales, on a consolidated basis, to represent groupwide operating performance, as well as a return on equity of at least 10%, also on a consolidated basis, which represents the impact of efforts to elevate capital efficiency.

Consolidated

(Unaudited) 7

3. Business Results and Financial Position (1) Business results for fiscal 2007 (i) Consolidated performance

In fiscal 2007, the domestic economy presented indications of gradual recovery, supported by high corporate earnings and a rally in consumer spending, thanks to a better employment environment. In the United States, the economy slipped into an adjustment phase, precipitated by a stall in housing investment, but consumer spending remained brisk and business conditions held firm. In Europe, healthier employment conditions encouraged steady consumer spending. In areas of the domestic hair industry where the Aderans Group is active, competition between markets intensified. In the men’s market, demand was in slow growth because years of falling birthrates have led to fewer potential clients in the Group’s target age groups. Meanwhile, the women’s market is being transformed by diversifying client preferences. Overseas, subsidiaries involved in the wig business successfully cultivated demand by concentrating on the introduction of new products tailored to each geographical segment. In the hair-transplant business, better surgical techniques and an advertising strategy well matched to client concerns helped draw greater interest in this medical response to hair loss. Against this business backdrop, the Aderans Group turned in a subdued performance. On a consolidated basis, net sales edged up 1.1% year-on-year, to ¥73.4 billion, operating income tumbled 20.4%, to ¥8.2 billion, and recurring profit fell a near-similar 20.3%, to ¥8.8 billion. The Group showed net income of ¥6.0 billion, slipping just 0.9% from fiscal 2006. Based on basic policy on distributing profit, the year-end dividend will go up ¥28.00 per share, to ¥50.00 per share. Results by geographical segment are as follows:

<Japan> Demand for custom-made wigs — our mainstay product group — was lackluster, with sales shrinking 4.2%, to ¥30.1 billion, despite concerted efforts to encourage interest from men and women. In March 2006, we launched new products featuring Aderans Vital Hair for men, and for women, we debuted Eve Fine. We also aired television commercials with different personalities than in the past. While we were able to boost sales to existing clients, we were not as fortunate in attracting new clients, and this situation pulled overall results down. Sales of ready-made wigs improved 3.0%, to ¥10.1 billion, thanks to the availability of new products, the success of demonstration sales, and the opening of more salons. Sales of other hair-related products dropped 7.1%, to ¥4.5 billion. Service revenues inched down 2.0%, to ¥9.3 billion, as fierce competition for the attention of young men eroded revenue from services to promote healthy hair growth. Revenue from other business climbed 7.6%, to ¥543 million, while intersegment sales fell 14.8%, to ¥52 million. Consequently, aggregate net sales from operations in Japan decreased 2.7% year on year, to ¥54.7 billion, and operating income retreated 22.2%, to ¥9.9 billion. <Asia, excluding Japan> In Taiwan, concerted efforts to establish an operating foundation based on a medium- to long-term growth perspective restricted the application of funds directed toward promotional activities. Reduced visibility led to somewhat sluggish sales, but Aderans Inc. (Taiwan) was able to shrink its operating loss. At Aderans Thai., Ltd., a production facility that supplies wigs and hair replacement products to members of the Aderans Group, saw operating income falter, owing to lackluster internal sales.

A breakdown of regional performance by product category reveals that sales of custom-made wigs declined 5.0%, to ¥235 million, while sales of ready-made wigs dropped 16.7%, to ¥69 million, and sales of other hair-related products dropped 21.4%, to ¥57 million. Service revenues jumped 19.4%, to ¥108 million, and intersegment sales grew 4.0%, to ¥4.6 billion. As a result, aggregate net sales from operations in Asia, excluding Japan, improved 3.1% year on year, to ¥5.0 billion. Operating income faltered, down 27.2%, to ¥728 million. <North America> In the wig business, sales of ready-made wigs rose 5.4%, to ¥3.0 billion. Subsidiaries in this segment worked to elicit demand with new products and were generally rewarded as sales of high-value-added items expanded nicely and more than offset

Consolidated

(Unaudited) 8

reduced earnings caused by a withdrawal from unprofitable businesses. Favorable conditions also benefited sales of custom-made wigs, which climbed 6.8%, to ¥399 million. In the hair transplant business, service revenues jumped 16.6%, to ¥10.5 billion, reflecting the eye-catching power of new television commercials, the application of database marketing, and the draw of improved surgical techniques. Sales of other hair-related products soared 72.1%, to ¥587 million, while intersegment sales skyrocketed 77.1%, to ¥1.6 billion. All told, aggregate net sales from North American operations expanded 19.6%, to ¥16.2 billion, and the operating loss of fiscal 2006 -- ¥75 million -- was replaced by operating income of ¥528 million. <Europe> In markets, particularly Sweden, England and the Netherlands, where the Aderans Group already enjoys a high profile, sales of high-value-added Group-made products showed brisk improvement. Sales of custom-made wigs rose 13.4%, to ¥599 million Sales of ready-made wigs grew 9.5%, to ¥2.3 billion. Sales of other hair-related products climbed 20.6%, to ¥663 million, and service revenues surged 49.1%, to ¥142 million. Consequently, aggregate net sales from operations in Europe sales increased 13.1%, to ¥3.7 billion. Operating income jumped 31.3%, to ¥286 million, reflecting higher net sales and improved profitability. (ii) Outlook for Fiscal 2008

On a consolidated basis, the fiscal year ending February 29, 2008, will probably deliver mixed results. Net sales should maintain upward movement, reaching ¥77.8 billion, up 5.9%, but recurring profit may only amount to ¥7.7 billion, down 12.6%, and net income could drop to ¥3.6 billion, down 40.9%.

(2) Financial Position

As of February 28, 2007, consolidated cash and cash equivalents stood at ¥17.9 billion, up ¥2.0 billion or 13.0% from a year earlier. The status of cash flows from operating activities, investing activities and financing activities and the reasons for changes in respective status are presented below. Net cash provided by operating activities reached ¥5.0 billion, down ¥5.3 billion, or 51.2%. This change reflects ¥7.8 billion in income before income taxes and minority interests and ¥2.1 billion in depreciation and amortization on the assets side, and ¥4.4 billion in payment of income taxes on the liabilities side. Net cash provided by investing activities amounted to ¥258 million, a turnaround from ¥2.5 billion used in investing activities in fiscal 2006. Key components of this change included outflow of ¥5.9 billion to buy marketable securities, ¥2.4 billion to acquire property, plant and equipment, and ¥2.6 billion to purchase investment securities, and inflow of ¥8.9 billion in proceeds from sales of marketable securities. Net cash used in financing activities came to ¥4.0 billion, down ¥1.4 billion, or 26.2%. This decrease represents the application of ¥1.8 billion to pay dividends and ¥3.1 billion to acquire treasury stock and the receipt of ¥1.1 billion in proceeds from the sale of treasury stock.

Ratios for cash flow analysis are as follows:

Fiscal 2005 Fiscal 2006 Fiscal 2007 Shareholders’ equity ratio（％） 81.2 79.1 79.3 Shareholders’ equity ratio （％）(market value basis)

120.2 144.5 128.8

Debt redemption period（year）－－ 0.4 Interest coverage ratio(times） 715 945 175 （Notes）Above ratios are calculated based on consolidated figures as follows: ・Shareholders’ equity ratio: Shareholders’ equity／Total assets

・Shareholders’ equity ratio (market value basis)：Aggregate market price of stocks／Total assets Aggregate market price of stocks are calculated using Closing stock price at fiscal year-end × Number of outstanding shares at fiscal year-end (after deduction of treasury stocks)

Consolidated

(Unaudited) 9

・Debt redemption period：Interest-bearing debt／Operations cash flows Interest-bearing debt indicates amounts of liabilities with interest paid on balance sheets. Operating cash flows indicates figures on Consolidated statements of cash flows. ・Interest coverage ratio：Operating cash flows／Interest paid Interest paid indicates figures on Consolidated statements of cash flows.

(3) Business Risks

Reliance on overseas production and certain products 1) Aderans’ principal wig production facilities are located overseas, in Thailand and the Philippines. If the

production capabilities of these facilities were reduced due to fire, natural disaster, labor unrest or some other obstacle to normal operations, or if a change in the political or economic environment in the aforementioned countries hampered the supply of products or access to necessary materials, Aderans would have difficulty procuring alternative products since the Group’s wigs and hair-replacement products require the Company’s proprietary know-how in the production process. Therefore, the inability to make and/or distribute and export wigs and hair-replacement products could have a serious impact on Aderans’ fiscal results.

2) If competitors were to develop and bring to market such products as revolutionary topical hair-growth agents and oral remedies, or develop and commercialize medical techniques superior to prevailing hair-transplant procedures, the impact on Aderans’ fiscal results would be considerable. R&D

Aderans’ R&D activities are currently focused on the pursuit of hair-regeneration technology, but the Company cannot guarantee that efforts to develop such technology will be successful, nor that such efforts, even if successful, will generate profits in short term. In addition, it is difficult to predict with accuracy at the present time what the scale of demand might be for hair-regeneration technology, should such methods be marketable at some point in the future. Information Management

Aderans is engaged in businesses for ordinary citizens, who have concerns about their hair. If information about clients were to leak outside of the Company’s system, the disclosure could cause considerable psychological or emotional anguish to the named clients and could significantly impact the Company’s business activities. Maintaining Talent

The business activities of Aderans are subject to laws and regulations pertaining to barber and hairdressing business, and 60% of the Company’s employees are licensed barbers and beauticians. If the Company is unable to retain qualified barbers and beauticians at its salons, the resulting shortage of essential personnel could adversely affect the Company’s ability to provide services.

Forward-looking statements The above statements contains forward-looking statements that are based on management’s estimates, assumptions and projections at current fiscal year-end, February 28, 2007.

Consolidated

(Unaudited) 10

4. State of Sales (Sales Results) Millions of yen

Fiscal 2007 Fiscal 2006 (from March 1, 2006 to February 28, 2007)

(from March 1, 2005 to February 28, 2006) Product Category

Amount Composition (%)


YoY Change

(%)

Custom-made wigs 31,374 42.7 32,624 44.9 (3.8) Ready-made wigs 15,605 21.2 14,963 20.6 4.3 Other merchandise 5,811 7.9 5,812 8.0 (0.0) Service revenue 20,162 27.5 18,784 25.8 7.3

Hair-related business

Total 72,955 99.3 72,185 99.3 1.1 Other operations 543 0.7 505 0.7 7.5 Grand Total 73,498 100 72,690 100 1.1 (Notes) 1) Above amounts do not include consumption tax.

Consolidated

(Unaudited) 11

5. Consolidated Financial Statements

(1) Consolidated Balance Sheets Millions of yen

Fiscal 2007 (as of February 28, 2007)




Change

Assets Current assets 35,985 39.2 35,257 40.3 728 Cash and deposits 14,525 14,238 287 Notes and accounts receivable - trade 5,565 5,167 398 Marketable securities 7,700 9,306 (1,606) Inventories 4,364 4,046 318 Deferred tax assets 1,159 1,262 (103) Other current assets 2,790 1,332 1,458 Allowance for doubtful accounts (121) (96) (25) Fixed assets 55,672 60.7 52,233 59.7 3,439 Tangible fixed assets 28,144 30.7 26,902 30.7 1,242 Buildings and structures 13,550 13,137 413 Land 11,902 11,611 291 Other tangible fixed assets 2,691 2,152 539 Intangible fixed assets 6,552 7.1 5,478 6.3 1,074 Goodwill 121 111 10 Consolidation difference 2,627 2,784 (157) Other intangible fixed assets 3,804 2,582 1,222 Investments and other fixed assets 20,975 22.9 19,852 22.7 1,123 Investment securities 9,816 10,053 (237) Guarantee deposits 3,917 3,752 165 Deferred tax assets 3,126 2,712 414 Other fixed assets 4,746 3,407 1,339 Allowance for doubtful accounts (630) (74) (556)

Total assets 91,658 100.0 87,490 100.0 4,168

Consolidated

(Unaudited) 12

Millions of yen



Amount (%) Amount (%)

Chnage

Liabilities Current liabilities 11,281 12.3 12,546 14.4 (1,265) Notes and accounts payable - trade 1,632 1,408 224 Accrued corporate and other

taxes 843 3,246 (2,403)

Deferred tax liabilities 6 4 2 Allowance for employees’ bonus

Allowance for directors’ bonus

1,395111

1,422―

(27)111

Warranty reserve 150 137 13 Allowance for returned goods 110 97 13 Advances received 2,697 3,093 (396) Other current liabilities 4,332 3,135 1,197 Long term liabilities

Bonds Long-term debt

7,355190

1,067

8.0 5,606―

―

6.4 1,749190

1,067 Employees’ severance and

retirement benefits 3,529 3,552 (23)

Allowance for retirement gratuities to Ofiicers Deferred tax liability

953

32

813

19

140

13 Other long-term liabilities 1,581 1,220 361

Total liabilities 18,636 20.3 18,153 20.8 483Shareholders’ equity Shareholders’ equity Common stock Capital surplus Earned surplus Treasury stock Other comprehensive income Unrealized gains (losses) on Investment securities Foreign currency translation

adjustments Stock acquisition rights

Minority Interests

72,08612,94413,15755,042(9,057)

613602

10

0321

78.6

0.7

0.00.4

―

―

―

―

―

―

―

―

―

―

―

―

― ―

―

―

―

―

―

―

―

―

―

―

72,08612,94413,15755,042(9,057)

613602

10

0321

Total shareholders’ equity 73,021 79.7 ― ― ― 73,021

Total liabilities, minority interests and shareholders’ equity

91,658 100.0 ― ― ― 91,658

Consolidated

(Unaudited) 13

Shareholders’ Equity Common stock ― ― ― 12,944 14.8 (12,944) Capital surplus ― ― ― 13,157 15.0 (13,157) Earned surplus ― ― ― 51,206 58.5 (51,206) Unrealized gains (losses) on

investment securities ― ― ― 626 0.7 626

Foreign currency translation adjustments

― ― ― (1,379) (1.6) 1,379

Treasury stock ― ― ― (7,314) (8.3) 7,314Total shareholders’ equity ― ― ― 69,239 79.1 (69,239)

Total liabilities, minority interests and shareholders' equity

― ― ― 87,490 100.0 (87,490)

Consolidated

(Unaudited) 14

(2) Consolidated Statements of Income Millions of yen

Fiscal 2007 (from March 1 2006

to February 28, 2007)




Change

Net sales 73,498 100.0 72,690 100.0 808 Cost of sales 13,726 18.7 12,690 17.5 1,036 Gross profit 59,772 81.3 60,000 82.5 (228) Selling, general and administrative expanses 51,560 70.1 49,680 68.3 1,880 Operating income 8,212 11.2 10,319 14.2 (2,107) Non-operating income 1,010 1.4 1,150 1.6 (140) Interest received 297 170 121 Dividends received 20 10 10 Rent on real estates 370 347 23 Gains on sales of investment securities

Foreign exchange income ―

32

4325

(4) (293)

Other non-operating income 296 291 5 Non-operating expenses 406 0.6 408 0.6 (2) Interest paid 29 11 18 Rent on real estates 216 219 (3) Loss on disposal of inventory

Allowance for doubtful account Loss on valuation of inventory assets

60―

34

5861―

2 (61)

34 Other non-operating expenses 65 57 8 Recurring profit 8,815 12.0 11,061 15.2 (2,246) Extraordinary income 38 0.0 120 0.2 (82) Gains on sale of fixed assets 21 80 (59) Proceeds from liquidation of affiliates

Gains on reversal of allowance for doubtful accounts

Gain from prior-term adjustment Others

―

―

88

308

―

―

(30) (8)

8 8

Extraordinary expenses Losses on prior year account

974―

1.3

292103

0.4

682 (103)

Losses on sale of fixed assets 44 15 29 Losses on disposal of fixed assets 58 162 (104) Unrealized loss on investment securities

Transfer to allowance for doubtful accounts Other extraordinary expenses

141552178

―

―

10

141 552 168

Income before income taxes 7,878 10.7 10,889 15.0 (3,011) Corporate, inhabitant and business taxes 2,040 2.7 5,152 7.1 (3,112) Adjustments to corporate and other taxes (152) (0.2) (412) (0.6) 260 Minority interests 101 0.1 ― ― 101

Net income 6,091 8.3 6,149 8.5 (58)

Consolidated

(Unaudited) 15

(3) Consolidated Statements of Changes in Shareholders’ Equity

For current fiscal year ended February 28, 2007 (March 1, 2006 to February 28, 2007) Millions of yen

Shareholders’ Equity

Common Stock Capital Surplus Retained Earnings

Treasury Stock Total Shareholders’

Equity 12,944 13,157 51,206 (7,314) 69,992Balance, at February

28, 2006 Changes during fiscal 2007 Dividends from

surplus Bonuses to directors

(1,831)(130)

(1,831)(130)

Net income Purchases of treasury stock Disposal of treasury stock Net changes of items other than shareholders’ equity during firscal year

6,091

(294)

(3,118)

1,375

6,091(3,118)

1,081

Total of items during fiscal year

－－ 3,836 (1,742) 2,094

Balance, at February 28, 2007

12,944 13,157 55,042 (9,057) 72,086

Consolidated

(Unaudited) 16

Millions of yen

Unrealized Gain (Loss) on Securities and Foreign Currency Translation Adjustments

Unrealized gain (loss) on other securities

Translation adjustments

Net change

Stock acquisition rights

Minority Interests

Total Net Assets

626 (1,379) (753) － 97 69,337Balance, at February 28, 2006 Changes during fiscal 2007 Dividends from surplus

Bonuses to directors

(1,831)

(130)Net income Purchases of treasury stock Disposal of treasury stock

6,091

(3,118)

1,081

Net changes of items other than shareholders’ equity during fiscal year

(23) 1,389 1,366 － 224 1,591

Total of items during fiscal year

(23) 1,389 1,366 0 224 3,684


602 10 613 0 321 73,021

Consolidated

(Unaudited) 17

(4) Consolidated Statements of Surplus Millions of yen



Amount Capital surplus Capital surplus at the beginning of fiscal year 13,157 Capital surplus at fiscal year-end 13,157 Earned surplus Earned surplus at the beginning of fiscal year 46,905 Increase in earned surplus Net income 6,149 Decrease in earned surplus Cash dividends 1,647

Loss on disposal of treasury stock 201 Earned surplus at fiscal year-end 51,206

Consolidated

(Unaudited) 18

(5) Consolidated Statements of Cash Flows Millions of yen





Amount Amount

Change

Cash flows from operating activities Income before income taxes 7,878 10,889 (3,011) Depreciation and amortization 2,150 2,082 68 Loss on retirement f fixed assets 175 264 (89) Amortization of consolidation difference 595 631 (36) Change in allowance for employees’ bonuses

Change in allowance for directors’ bonuses (28) 111

139 －

(167) 111

Increase in employees’ severance and retirement benefits

Loss on valuation of investment securities

(93)

141

184

－

(277)

141 Interest and dividends received (311) (180) 131 Interest paid 29 11 18 Change in notes and accounts receivable (268) (235) (33) Increase in inventories (100) (21) (79) Change in notes and accounts payable 124 60 64 Change in guarantee deposits 85 53 32 Bonuses to officers (130) ― (130) Other (1,074) (449) (625) Sub total 9,284 13,431 4,147 Proceeds from interest and dividend income 309 188 121 Payment of interest (29) (11) (18) Payment of income taxes (4,491) (3,209) (1,282) Net cash provided by operating activities 5,073 10,399 (5,326) Cash flows from investing activities Payment for purchase of time deposit 2,981 131 2,850 Payment for purchase of marketable securities (5,991) (11,995) 6,004 Proceeds from sales of marketable securities 8,907 18,692 (9,785) Payment for purchase of property, plant and equipment (2,473) (2,017) (456) Payment for purchase of intangible fixed assets (1,361) (475) (886) Payment for purchase of investment securities (2,667) (7,283) 4,616 Proceeds from sales of investment securities

Payment for purchase of subsidiaries’ stock due to change of scope of condition

605 (27)

1,056 (665)

(451) 638

Other 286 25 261 Net cash used in investment activities 258 (2,532) 2,790

Consolidated

(Unaudited) 19

Fiscal 2007

(from March 1 2006 to February 28, 2007)



Amount Amount

Change

Cash flows from financing activities Payment to acquire treasury stock (3,118) (4,977) 1,859 Proceed from sales of treasury stock 1,081 1,080 1 Cash dividends paid

Others (1,831)

(222) (1,648) (183)

(222) Net cash used in financing activities (4,090) (5,545) 1,455 Effects of exchange rate on cash and cash equivalents 768 219 549 Net increase in cash and cash equivalents 2,010 2,540 (530) Cash and cash equivalents at the beginning of fiscal year

15,896 13,356 2,540

Cash and cash equivalents of newly consolidated subsidiaries at the beginning of fiscal year

50 ― 50

Cash and cash equivalents at the fiscal year-end 17,956 15,896 2,060

Consolidated

(Unaudited) 20

Basis for Preparation of Consolidated Financial Statements 1. Scope of consolidation

(i) There are 30 consolidated subsidiaries in the Aderans Group. Major consolidated subsidiaries are listed below. FONTAINE Co., Ltd. ADN Co., Ltd. Aderans Holding Co., Inc. (overseas subsidiary) Aderans Europe B.V. (overseas subsidiary) Aderans Thai Ltd. (overseas subsidiary)

In fiscal 2007, a newly established subsidiary, Hair Trust Holdings, Co., Ltd., and three merged subsidiaries, Best Move Co., Ltd., Samson Co., Ltd., and Nodin, Co., Ltd., brought into the scope of consolidation. And ADE Co., Ltd. was excluded consolidated subsidiary due to its liquidation.

(ii) There are no important non-consolidated subsidiaries.

The effects of non-consolidated subsidiaries’ accounts on consolidated results would be negligible, hence their result excluded from the scope of consolidation.

2. Application of equity method

The equity method has not been adopted for non-consolidated subsidiaries, as their effects on the consolidated financial statements would be negligible.

3. Fiscal terms of consolidated subsidiaries

Of consolidated subsidiaries, ADN Co., Ltd., Hair Trust Holdings, Co., Ltd., Samson Co.,Ltd., and Nodin, Co.,Ltd., and the 25 overseas subsidiaries close their fiscal years on December 31. However, the gaps between the fiscal year ends of each company do not exceed a period of three months. For this reason, in preparing its consolidated financial statements, the Company has used their financial data as of December 31. Major translations that occurred from their fiscal year-end, Dec., 31, to the consolidated fiscal year-end, February 28, have been reconciled appropriately in the consolidated accounts.

4. Accounting Principles and Methods

1. Principles and methods of valuation of important assets ① Securities

Bonds to be held until maturity: Amortized cost method (straight line method) Stocks of subsidiaries: Cost recorded using the moving-average method Other securities: Securities quoted on exchanges: Market value method based on market value at fiscal year end.

Appraisal differences are dealt with by means of the direct capital influx method, with cost of securities sold calculated with the moving average method.

Securities not quoted on exchanges: Cost recorded using the moving average method

② Inventories Goods and products: With respect to the reporting company, custom-made wigs are accounted for by

the unit cost method, ready-made wigs by the weighted average cost method, and other goods and products by the last invoice method. At domestic consolidated subsidiaries, the moving average cost method is most commonly used. Overseas consolidated subsidiaries use either the first-in first-out (FIFO) cost method or the moving-average cost method.

Raw materials and work in process: Consolidated subsidiaries use either the first-in first-out cost method or the moving-average cost method.

Supplies: The unit cost method is applied to supply materials, with other supplies mainly being accounted for with the last invoice cost method. However, overseas consolidated subsidiaries use the first-in first-out cost method.

Consolidated

(Unaudited) 21

2. Depreciation of important fixed assets Tangible fixed assets: These assets are primarily accounted for with the declining-balance method,

although buildings (excluding annexes) acquired since April 1, 1998, are accounted for with the straight-line depreciation method. The straight-line method is also applied to certain domestic consolidated subsidiaries. The tangible fixed assets of overseas consolidated subsidiaries are primarily accounted for with the straight-line method.

Estimated useful life of principal items are as follows: Buildings and structures: 13-47 years Intangible fixed assets: The straight-line method is applied. Software for in-house use is accounted for with the straight-line method over the

estimated useful life (five years). Long-term prepaid expenses: Equal depreciation

3. Standards for important allowances ① Allowance for doubtful accounts:

To prepare against credit losses, Aderans makes additions to this allowance on the basis of loan loss ratios for standard loans, and on an individual basis for loans considered unlikely to be repaid in full. For overseas consolidated subsidiaries, the estimated uncollectable amount for individual accounts is added.

② Allowance for bonus to employees: To prepare for bonus payments to employees, the reporting company and its domestic consolidated subsidiaries make additions to the allowance in accordance with the estimated amounts payable.

③ Allowance for bonus to directors: To prepare for bonus payments to directors, the reporting company and consolidated subsidiary, Fontaine Co., Ltd., make additions to the allowance in accordance with the estimated amounts payable.

④ Allowance for product warranties: To prepare for expenses arising from free warranties on goods and products sold, the consolidated financial statements reporting company adds an appropriate amount based on past experience.

⑤ Allowance for returned goods: Consolidated subsidiary FONTAINE Co., Ltd., makes provisions in order to account for losses due to returns of sold products. Amounts of the allowance for returned goods are calculated by multiplying the average returned goods ratios of the current period and previous fiscal year by the gross profit margin of the current period, and adding this total to the balance of accounts receivable.

⑥ Retirement benefits allowance — employees The Company, its domestic consolidated subsidiaries and some of its overseas subsidiaries have recorded retirement benefits based on projected benefit obligations and plan assets at the balance sheet date as a reserve for retirement benefits for employees. Past service debt is expensed in the consolidated accounting period in which it occurs by the straight-line method within a fixed period (five years) for the estimated average remaining life of service by employees. Actuarial difference is expensed in the consolidated accounting period following that in which it occurs by the straight-line method within a fixed period (five years) for the estimated average remaining life of service by employees.

⑦ Severance and retirement benefits allowance — directors The Company and two consolidated subsidiaries — Fontaine, and Samson — used to record severance and retirement benefits based on an internal rule to cover payments to directors and accrue the full amount at the balance sheet date. This bonus structure was abandoned in prior period and replaced with a severance and retirement benefits allowance, which is the projected amount that will be paid at the time of retirement to directors who held positions when the previous bonus system was in force.

Consolidated

(Unaudited) 22

4. Translation of assets and liabilities denominated in foreign currencies into yen Assets and liabilities denominated in foreign currencies are converted into yen at the rates of exchange in effect at the end of the consolidated period, with translation differences treated as gains or losses. The assets and liabilities of overseas consolidated subsidiaries are also converted into yen at the rates of exchange in effect at the end of the current fiscal year. Income, losses, and expenses are converted into yen using average exchange rates over the period in question, and translation differences are recorded in the shareholders’ equity section of the balance sheets under foreign currency translation adjustments.

5. Accounting methods pertaining to important lease transactions

Aderans accounts for finance lease transactions using the same method as ordinary rent transactions, except for those transactions where ownership of the leased property is considered to be transferred to the lessee.

6. Consumption and other taxes

Aderans applies the tax-exclusion accounting method to national and local consumption taxes. 5. Valuation of assets and liabilities of consolidated subsidiaries

The assets and liabilities of the consolidated subsidiaries are valued using the full mark-to-market method.

6. Amortization of consolidation difference Consolidation difference is amortized equally over either 5 years or 10 years starting from its accrual. In the event that the accrued amount is insignificant, it is accounted for as profit or loss at the time of accrual.

7. Standards for items of the appropriation of retained earnings The consolidated statements of surplus are prepared based on the appropriation of retained earnings of the companies under consolidation that was finalized during Fiscal 2004.

8. Scope of funds in the consolidated statements of cash flows Funds (cash and cash equivalents) in the consolidated statements of cash flows comprise cash in hand, demand deposits that can be withdrawn at any time, and short-term investments that are highly liquid, easily convertible into cash, have little risk of fluctuation in value, and that mature within three months or less of the date of acquisition.

［Changes in Significant Items Regarding the Preparation of Consolidated Financial Statements］（Accounting standard for directors’ bonuses）

From the fiscal year-ended February 28, 2007, the Company has adopted accounting policies, in accordance with Guidance No. 4, “Accounting Standard for Directors’ Bonuses” issued by the Accounting Standards Board on November 29, 2005. At the result, operating income, recurring profit, and income before income taxes decreased ¥111 million, respectively, from the previous fiscal year.

Please see “Segment Information: 2 Geographical segments” page about the impact of the change on performance by region. （Accounting standard for presentation of net assets on consolidated balance sheets） From this fiscal year ended Feburuary 28, 2007, Aderans has revised its presentation of shareholders’ equity, in accordance with

Report No. 5, “Accounting Standard for Presentation of Net Assets on the Balance Sheet,” issued by the Accounting Standards Board (ASB) on December 9, 2005, and Guidance No. 8, “Guidance on Accounting Standard for Presentation of Net Assets on the Balance Sheet,” also issued by ASB on the same date. The amount corresponding to shareholders’ equity under the previous accounting treatment is ¥72,699 million. In accordance with revised rules for consolidated financial statements, Aderans has prepared financial statements for the fiscal

year ended February 28, 2007, in line with post-revision rules for such reporting. .

Consolidated

(Unaudited) 23

Notes [Consolidated Balance Sheets] Millions of yen Fiscal 2007 Fiscal 2006 1. Accumulated depreciation of tangible fixed assets 23,694 21,864 2. Major items of interests in non-consolidated subsidiarie Investment securities (shares)

Investments and other assets 349 ―

305 294

3.

Pledged assets Pledged assets

Buildings ¥69 million (book value)

Land ¥459million (book value)

Total ¥551million(book value)

Correlative debts

Othera(current liabilities)

¥141million

Long-term loan payable

¥342 million

Total ¥483 million

4. Contingent liabilities Debt guarantee of consolidated

subsidiaries and others which are

guarantee for borrowed money (not for

consolidated subsidiaries) from a financial

institution are as follows:

Central Academy Co., Ltd.

¥93million

5. Number of shares outstanding of the Company 41,713,388 shares 6. Number of the Company’s shares held by consolidated companies 2,456,597shares

Consolidated

(Unaudited) 24

[Consolidated Statements of Income] Millions of yen Fiscal 2007 Fiscal 2006 1. Cost of sales includes amounts related to allowances

Transfer to allowance for product warranties Transfer from allowance for returned goods

150 12

137

1 2. Major items and amounts under selling, general and administrative

expenses

Advertising expenses 12,660 12,199 Salaries and wages 15,345 14,290 Addition to allowance for bonus to employees 1,384 1,728 Severance and retirement benefit expenses 380 406 Addition to allowance for retirement gratuities to directors － 233 Depreciation expenses 1,779 1,773 Amortization of consolidation difference 625 662 3. Research and development costs included in

selling, general and administrative expenses 1,557 977

4. Gain on sales of fixed assets Sales of land mainly Sales of land and buildings mainly

5. Loss on sales of fixed assets Sales of land and buildings mainly

Sales of land and buildings

6. Loss on retirement of fixed assets Retirement of buildings and structures mainly

Retirement of buildings and structures mainly

Regarding Consolidated Statements of Changes in Shareholders’ Equity For fiscal 2007 ended February 28, 2007 1. Types of Stock and Number of Shares

Number of Shares at February 28, 2006

Increase in Number of Shares during

fiscal 2007

Decrease in Number of Shares during

fiscal 2007

Number of Shares at February 28,

2007

Common stock (shares) 41,713,388 －－ 41,713,388

2．Types of Treasury Stock and Number of Shares


2006

Increase in Number of Shares during

fiscal 2007

Decrease in Number of Shares during fiscal 2007


2007

Common stock (shares) 2,456,597 1,002,678 458,254 3,001,021

Notes: 1. The increase in number of shares comes from 2,678 shares added through the buyback of shares less than one tangen unit and

from 1,000,000 shares added through a buyback approved by a Board of Directors’ resolution on July 13, 2006. 2. The decrease in number of shares comes from 457,200 shares dropped through the exercise of stock options and 1,054 shares

dropped through requests to add onto shares less than one tangen unit.

Consolidated

(Unaudited) 25

3. Stock acquisition rights as stock options Number of shares targeted

Composition Type of stock

targeted

At February 28, 2006

Increase during

fiscal 2007

Decrease during

fiscal 2007

At February 28, 2007

Balance February 28,

2007 (Millions of

yen) Stock

acquisition rights in 2003

Common stock

295,000 － 268,800 26,200 －

Stock acquisition

rights in 2004

Common stock

671,000 － 211,800 459,200 －Submitting company

Stock acquisition

rights in 2005

Common stock

706,100 － 49,400 656,700 －

Subsidiaries ― ― ― ― ― ― 0

Total 1,672,100 － 530,000 1,142,100 －

Note: The decrease during the interim period ended August 31, 2006, reflects exercise or invalidation of subscription rights.

4. Dividends (1) Dividend paid

Resolution Type of stock Total Dividends Dividend per Share

Record Date Effective Date

General shareholders’ meeting on

May 25, 2006

Common stock

¥863 million

¥22

February 28, 2006 May 26, 2006

Board of Directors meeting at October 12,

2006

Common stock

¥967million

¥25

August 31, 2006

November 15,

2006

(2) The effective date for dividends with a record date of fiscal 2007 ended February 28, 2007, shall be a date after the close of books for

said consolidated period.

Resolution Type of Stock

Total Dividends

Source of Dividends

Dividend per share

Record Date Effective Date

General shareholders’ meeting on

May 24, 2007

Common stock

¥1,935 million

Earned surplus

¥50

February 28, 2007 May 25, 2007

Consolidated

(Unaudited) 26

[Consolidated Statements of Cash Flows] 1. Cash and cash equivalents at fiscal year-end, and the related amounts on Consolidated balance sheets: Millions of yen Fiscal 2007 Fiscal 2006 Cash and deposits 14,525 14,238 Money management funds and others included under marketable

securities 3,504 4,501

Time deposits with maturities over three months (73) (2,843) Cash and cash equivalents 17,956 15,896 2. Assets and liability of newly consolidated subsidiaries through acquisition of shares:

Fiscal 2007 (Millions of yen) Fiscal 2006 (Millions of yen) With the acquisition of their shares, Best Move Co., Ltd. was newly consolidated. Details of the assets and liabilities of the company when the consolidation started and the relation between the amount of acquisition of its shares and the payment (net) for the acquisition is as follows:

With the acquisition of their shares, Carl M Lundh was newly consolidated. Details of the assets and liabilities of the company when the consolidation started and the relation between the amount of acquisition of its shares and the payment (net) for the acquisition is as follows:

Current assets 32 Current assets 185 Fixed assets 0 Fixed assets 22 Consolidation difference 17 Consolidation difference 602 Current liabilities (12) Current liabilities (107)

Acquisition amount of the shares 38 Fixed liabilities (10)

Cash and cash equivalents of the acquired companies (11) Acquisition amount of the shares

692

Net: payment for the acquisition 27 Cash and cash equivalents of the acquired companies

(26)

Net: payment for the acquisition

665

Consolidated

(Unaudited) 27

[Lease transaction] Content of the half-year report is omitted to accommodate disclosure through EDINET. [Marketable Securities] 1. Marketable debt securities being held to maturity Millions of yen Fiscal 2007 Fiscal 2006 Amount posted on

the Consolidated

Balance Sheets

Fair Value

Difference Amount posted on the

Consolidated Balance Sheets

Fair Value

Difference

With fair value more than the balance sheet amount

Corporate bonds －－－ 1,400 1,400 0 Sub-total －－－ 1,400 1,400 0

With fair value not more than the balance sheet amount

Corporate bonds 8,501 8,423 (77) 9,606 9,528 (77) Sub-total 8,501 8,423 (77) 9,606 9,528 (77)

Total 8,501 8,423 （77） 11,006 10,929 （77） 2. Other marketable securities quoted on exchanges Millions of yen Fiscal 2007 Fiscal 2006 Acquisition

cost Amount

posted on theConsolidated

Balance Sheets

Difference Acquisition cost

Amount posted on theConsolidated

Balance Sheets

Difference

With fair value more than the balance sheet amount

Share equities 1,254 2,376 1,122 1,453 2,509 1,055 Sub-total 1,254 2,376 1,122 1,453 2,509 1,055

With fair value not more than the balance sheet amount

Share equities 700 594 (105) ― ― ― Sub-total 700 594 (105) ― ― ―

Total 1,955 2,971 1,016 1,453 2,509 1,055 3. Other marketable securities sold out during fiscal year Million of yen Fiscal 2007 Fiscal 2006 Amount sold ― 5 Gains on sale ― 4 Losses from sale ― ―

Consolidated

(Unaudited) 28

4. Major marketable securities not evaluated at fair value Millions of yen Fiscal 2007 Fiscal 2006 Amounts posted on the

Consolidated Balance Sheets

Amounts posted on the Consolidated Balance

Sheets (1) Bonds and debentures being held to maturity i) Commercial papers

3,995 3,998

(2) Other marketable securities i) Money management funds

1,505 193

1,502 ―

5. Expected redemption amount of marketable securities with maturities and held-to-maturity bonds Fiscal 2007 Millions of yen

Within 1 year From 1 to 5 years From 5 to 10 years Over 10 years Bonds and debentures

Corporate bonds 2,200 3,800 2,000 501 Commercial papers 3,995 ― ― ―

Total 6,195 3,800 2,000 501 Fiscal 2006 Millions of yen

Within 1 year From 1 to 5 years From 5 to 10 years Over 10 years Bonds and debentures

Corporate bonds 3,805 4,700 2,000 501 Commercial papers 3,998 ― ― ―

Total 7,803 4,700 2,000 501 [Derivative Transactions] Content of the half-year report is omitted to accommodate disclosure through EDINET. [Retirement Benefits] 1. Outline of the adopted plans for retirement benefits

The reporting company and FONTAINE Co., Ltd. have retirement lump sums and tax-qualified pension plans as defined benefit pension plans. ADN Co., Ltd., and Samson Co., Ltd., have a retirement lump sum. Some of the overseas consolidated subsidiaries have defined contribution pension plans and retirement lump sums.

2. Projected retirement benefit obligation Millions of yen



(1) Projected retirement benefit obligation (5,423) (5,198) (2) Pension assets 2,549 2,251 (3) (4)

Unfunded retirement benefit obligation (1) + (2) Unrealized obligation for past employment

(2,873) (333)

(2,946) (445)

(5) Unrecognized actuarial differences (321) (160) (6) Employees’ severance and retirement benefits (3) + (4)+(5) (3,529) (3,552)

Consolidated

(Unaudited) 29

3. Severance and retirement benefit expenses Millions of yen




to February 28, 2006) (1) Service cost 364 330 (2) Interest cost 100 112 (3) (4)

Expected return on plan asserts Amortization of unrealized past service obligation

(22) (111)

(21) (111)

(5) Expensed amount of actuarial differences 49 96 Total 380 406 4. Calculations relating to projected retirement benefit obligation Millions of yen




to February 29, 2006) (1) Discount rate 2.00% 2.00% (2) Expected rate of return on plan assets 1.00% 1.00% (3) (4)

Attribution method of expected amount of retirement benefits Amortization of prior service obligation

Years-of-service approach 5 years

(The numerical difference will be booked as costs, within a set time period of less than the average remaining working period at the time when the difference was recorded)

Years-of-service approach 5 years

(The numerical difference will be booked as costs, within a set time period of less than the average remaining working period at the time when the difference was recorded)

(5) Expensing period of actuarial differences 5 years

(The numerical difference will be booked as costs from the next consolidated fiscal year, within a set time period of less than the average remaining working period at the time when the difference was recorded)

5 years (The numerical difference will be booked as costs from the next consolidated fiscal year, within a set time period of less than the average remaining working period at the time when the difference was recorded)

Consolidated

(Unaudited) 30

[Tax Allocation] 1. Major factors for the accrual of deferred tax assets and deferred tax liabilities Millions of yen



Deferred tax assets Unrealized profits on inventories 163 173 Excess of provision for employees’ severance

and retirement benefits 1,395 1,342

Excess of allowance for retirement gratuities to officers 386 331 Enterprise tax payable ― 245 Excess of provision for allowance for employees’ bonus 565 573 Excess of warranty reserve 61 55 Excess of allowance for returned goods 45 39 Excess of depreciation 591 493 Unrealized loss on golf club memberships 124 126 Accumulated impairment losses 1,005 489 Unrealized loss on land ― 714 Carry forward of deficit 784 1,258 Others 577 891 Sub-total – deferred tax assets 5,701 6,736 Valuation allowance (1,360) (2,661) Total – deferred tax assets 4,332 4,074 Deferred tax liabilities Reserve for compressed entries 12 17 Others 81 106 Total – deferred tax liabilities 94 123

Net deferred tax assets 4,246 3,951

Net deferred tax assets are included in the following items of the consolidated balance sheets: Current assets ― deferred tax assets 1,159 1,262 Fixed assets ― deferred tax assets 3,126 2,712 Current liabilities ― deferred tax liabilities

Fixed liabilities ― deferred tax liabilities 6

32 4

19 2. Major factors for the difference between the statutory tax rate and the effective income tax rate after tax allocation (%)



Statutory tax rate 40.7 (Adjustments)

Permanently non-deductible expenses – entertainment and social expenses, etc.

Inhabitant tax per capita Change in allowance for deferred tax assets Loss on devaluation of stocks of affiliates Others

40.7

0.5 1.9

(9.9) (11.1)

1.9

0.4 1.3 ― ― 1.1

Effective income tax rate after tax allocation 24.0 43.5

Consolidated

(Unaudited) 31

[Segment Information] 1. Business segments

Fiscal 2007 (from March 1, 2006 to February 28, 2007) Information by business segment is omitted as the share of “Hair-related business” in the total sales, operating income, and assets of all the segments exceeds 90% respectively.

Fiscal 2006 (from March 1, 2005 to February 28, 2006)

Information by business segment is omitted as the share of “Hair-related business” in the total sales, operating income, and assets of all the segments exceeds 90% respectively.

2. Geographical segments

Fiscal 2007 (from March 1, 2006 to February 28, 2007) Millions of yen Japan Asia North America Europe Total Eliminations ConsolidatedI. Sales and operating profits and losses

Sales External customers 54,707 471 14,573 3,746 73,498 ― 73,498 Inter-segment 52 4,611 1,688 0 6,352 (6,352) ― Total 54,760 5,083 16,261 3,746 79,851 (6,352) 73,498 Operating expenses 44,820 4,355 15,733 3,459 68,368 (3,081) 65,286 Operating profit 9,939 728 528 286 11,483 (3,271) 8,212 II. Total assets 51,913 8,197 7,361 3,959 71,701 19,956 91,658

Fiscal 2006 (from March 1, 2005 to February 28, 2006) Millions of yen Japan Asia North America Europe Total Eliminations ConsolidatedI. Sales and operating profits and losses

Sales External customers 56,241 495 12,641 3,311 72,690 ― 72,690 Inter-segment 61 4,433 953 0 5,449 (5,449) ― Total 56.303 4,929 13,595 3,312 78,140 (5,449) 72,690 Operating expenses 43,534 3,929 13,671 3,094 64,229 (1,858) 62,370 Operating profit (loss) 12,768 1,000 (75) 218 13,911 (3,591) 10,319 II. Total assets 54,404 7,210 5,793 3,278 70,687 16,802 87,490 (Notes) 1. Countries and/or regions are classified by geographical proximity. 2. Major countries and areas classified in the regions other than Japan: (i) Asia -------------------- Thailand, Philippines, Taiwan

(ii) North America ------- United States (iii) Europe ---------------- France, Germany, The Netherlands, Belgium, United Kingdom, Sweden 3. Operating expenses under “Elimination” included unallocable expenses, which primarily consist of costs relating to the administrative

division, including the general affairs division of the parent company and to the assets of the entire company as follows: Year ended February 28, 2007: ¥3,302 million, Year ended February 28, 2006: ¥3,474 million

4. Total assets under “Elimination” included the assets of the entire company, which primarily consist of surplus funds managed by the parent company (cash and time deposits), funds for long-term investment (investment securities), and assets related to the administrative divisions as follows; Year ended February 28, 2007: ¥26,855 million, Year ended February 28, 2006: ¥26,855 million 5. As described in Changes in Significant Items Regarding the Preparation of Consolidated Financial Statements, the Company has adopted accounting policies, in accordance with Guidance No. 4, “Accounting Standard for Directors’ Bonuses” issued by the Accounting Standards Board on November 29, 2005. Due to this change, operating expenses decreased ¥111 million, and operating profit decreased same amounts at the current fiscal year.

Consolidated

(Unaudited) 32

3. Overseas sales Fiscal 2007 (from March 1, 2006 to February 28, 2007)

Millions of yen Asia North America Europe Other regions Total

1. Overseas sales 448 14,421 3,916 107 18,895 2. Consolidated net sales ― ― ― ― 73,498 3. Share of overseas sales 0.6% 19.6% 5.3% 0.2% 25.7%

Fiscal 2006 (from March 1, 2005 to February 28, 2006) Millions of yen Asia North America Europe Other regions Total

1. Overseas sales 438 12,409 3,539 80 16,468 2. Consolidated net sales ― ― ― ― 72,690 3. Share of overseas sales 0.6% 17.1% 4.9% 0.1% 22.7% (Notes) 1. Countries and/or regions are classified by geographical proximity. 2. Major countries and areas classified in the regions other than Japan: (i) Asia -------------------- Thailand, Philippines, Taiwan, Korea, Singapore

(ii) North America ------- United States (iii) Europe ---------------- France, Germany, The Netherlands, Belgium, United Kingdom, Sweden (iv) Other regions --------- Australia, Central & South America

3. Overseas sales are sales of the reporting company and its consolidated subsidiaries in the countries and areas outside of Japan.

[Related Party Transactions] Fisccal 2007

There is nothing to be accounted for.

Fiscal 2006

Transactions related to the directors and major shareholders

(Note) 1. Transactions executed by Okio Akitsu as representative director of third party, Kowa Shoji KK. The rent shall be decided every two years taking the current fix rate of vicinity into consideration. Transactions executed by Okio Akutsu, who retired from the position of auditor at fiscal year-end, are indicated as aggregate amounts during current fiscal year and the balance at fiscal year-end. 2. Amounts excluded consumption tax and other tax, while the balance at fiscal year-end included consumption tax.

Relation Name Domici

le

Capi

tal

Occupation Voting right

ratio Concurren

tly holding

post

Busi

ness

Transaction Amounts Account Balance at

fiscal

year-end

Directors

and/or

Propinquity

Okio

Akutsu

― ― Aderans’ auditor

and Representative

director and

president of Kowa

Shoji KK

Direct 0.1

Indirect 0.0

― ― Rent

received

from Kowa

Shoji KK

(Note1)

2 Accrued

revenue

Income in

advance

0

0

Terms of transactions and way of determination of transactions

Consolidated

(Unaudited) 33

Per Share Data Fiscal 2007 Fiscal 2006 Net assets ¥1,877.95 ¥1,760.45 Net income ¥156.26 ¥150.51 Fully diluted earnings ¥155.25 ¥149.51

Note: Basic criteria for calculation

1．Shareholders’ equity per share Fiscal 2007 Fiscal 2006 Total shareholders’ equity ¥73,021 million －

Amounts deducted from total shareholders’ equity (Stock acquisition rights)

¥321 million(¥0 million) －

（Minority interests） (¥321 million) －

Shareholders’ equity for common stock ¥72,699 million －

Number of shares issued 41,713,388 shares －

Common shares held as treasury stock 3,001,021 shares －

Number of common shares used in the ca1culation of shareholders’ equity per share 38,712,367 shares －

2．Net income and fully diluted net income per share Foiscal 2007 Fiscal 2006

Net income ¥6,091 million ¥6,149 million

－ ¥130 millionAmount not attributed to common stock (portion of bonuses to directors through profit distribution) － ¥130 million

Net income for common stock ¥6,091 million ¥6,019 millionAverage number of shares of common stock for the period 38,984,056 shares 39,992,395 shares

Increase in number of shares of common stock （subscription rights）

253,180 shares

(253,180 shares)

268,860 shares

(268,860 shares)Detail of potential common stock excluded for the calculation of the diluted net income per share because of no dilution effect

― ―

============================================================

(END)

Non-consolidated

(Unaudited) 34

April 20, 2007 ADERANS CO., LTD.

Summary of Non-consolidated Financial Statements for the fiscal year ended February 28, 2007

(Translated from the Japanese original)

Corporate information Code: 8170 Listing: Tokyo Stock Exchange, Osaka Securities Exchanges (URL http://aderans.co.jp) Head Office: Metropolis of Tokyo Representative: Katsuji Tokumaru President and Representative Director Contact: Michiyoshi Takahashi General Manager, Investor Relations Div. Telephone: 81-3-3350-3268 System of interim dividend: adopted Unit stock (tangen kabu) system: adopted (100 shares per unit) Date of Board Meeting for Settlement of Accounts: April 20, 2007 Date of the Ordinary General Meeting of Shareholders: May 24, 2007 Payment Date of Cash Dividends: May 25, 2007 1. Operating results for Fiscal 2006 (from March 1, 2005 to February 28, 2006) (1) Operating results Millions of yen (Rounded down) Fiscal 2007 Fiscal 2006 YoY change, % YoY change, %Net sales 42,645 (5.2) 44,990 0.2Operating income 5,251 (30.8) 7,594 14.7Recurring profit 8,041 (22.0) 10,314 10.6Net income 5,598 (16.5) 6,700 ―

Net income per share (yen) 143.61 164.74 Net income per share / diluted 142.68 163.64 Return on shareholders’ equity (%) 8.7 10.7 Recurring profit to assets (%) 10.6 13.8 Recurring profit to sales (%) 18.9 22.9 (Notes) 1) Average number of outstanding shares during the fiscal year: 38,984,056 shares (Fiscal 2007) 39,992,395 shares (Fiscal 2006) 2) Changes to accounting methods: none

3) Percentile figures represented in rows of net sales, operating income, recurring profit and net income are year-on-year changes.

(2) Financial position Millions of yen Fiscal 2007 Fiscal 2006 Total assets 75,384 76,526 Shareholders’ equity 65,192 63,594 Shareholders’ equity ratio (%) 86.5 83.1 Shareholders’ equity ratio per share (yen) 1,684.02 1,617.11 (Notes) Number of outstanding shares at fiscal year-end: 38,712,367 shares (Fiscal 2007) 39,256,791 shares (Fiscal 2006) Number of treasury stock at fiscal year-end: 3,001,021 shares (Fiscal 2007) 2,456,597 shares (Fiscal 2006)

Non-consolidated

(Unaudited) 35

2. Forecast operating results for Fiscal 2008 (from March 1, 2007 to February 28, 2008) Millions of yen

6 months ending 12 months ending August 31, 2007 February 28, 2008 Net sales 21,400 43,500 Recurring profit 3,600 7,000 Net income 2,700 4,600 cf. Forecast net income per share (12 months): 118.83 yen 3. Payment of dividends Fiscal 2008

(expected) Fiscal 2007 Fiscal 2006

Annual dividends per share ¥80.00 ¥75.00 ¥44.00 Interim dividends ¥30.00 ¥25.00 ¥22.00 Year-end dividends ¥50.00 ¥50.00 ¥22.00

Total dividends for the year (millions of yen) 2,903 1,744 Payout ratio 51.9% 26.0% Dividends-on-equity 4.5% 2.7% (Note) Forecast figures quoted above presuppose an estimation, based on the information available as of the date of announcement

of this material. Please acknowledge in advance that actual results may differ from the forecast figures due to certain unforeseen factors.

Non-consolidated

(Unaudited) 36

1. Non-consolidated Financial Statements

(1) Non-consolidated Balance Sheets Millions of yen





Change

Assets Current assets 16,884 22.4 17,777 23.2 (893) Cash and cash equivalents 2,817 3,216 (399) Notes receivable 655 662 (7) Accounts receivable – trade 1,788 1,798 (10) Marketable securities 7,700 9,306 (1,606) Merchandise 849 820 29 Store 455 404 51 Prepaid expenses 287 311 (24) Deferred tax assets

Accrued refunded tax 474

1,436 735

―

(261) 1,436

Others 417 521 (104) Fixed assets 58,500 77.6 58,749 76.8 (249) Tangible fixed assets 22,922 30.4 23,612 30.9 (690) Buildings 10,823 11,247 (424) Structures 202 231 (29) Machinery 10 12 (2) Vehicle 29 9 20 Equipment 720 790 (70) Land 11,127 11,321 (194) Construction in process

Intangible fixed assets Goodwill

62,473

4

4.8

―

2,473 ―

3.2

6

4 Patent right 2 3 (1) Leasehold 1,812 1,812 ― Trade name 12 14 (2) Software 119 147 (28) Software in progress

Others 1,546

152 ―

494 1,546

(342) Investments and other fixed assets 31,928 42.4 32,662 42.7 (734) Time deposit 2,000 2,000 ― Investment securities 9,354 9,635 (281) Investments in affiliates 11,218 10,721 497 Equity funds

Investment in affiliates 23

294 23

243 0

51 Long-term loans to affiliates 5,046 4,877 169 Long-term prepaid expenses 232 36 196 Deferred tax assets 2,242 2,238 4 Guarantee deposits

Others 2,503

808 2,565

877 (62)

(69) Allowance for loss on investment to affiliates (686) ― (686) Allowance for doubtful accounts (1,109) (557) (552)

Total assets 75,384 100.0 76,526 100.0 (1,142)

Non-consolidated

(Unaudited) 37

Millions of yen

FY2007 FY2006 Change Amount (%) Amount (%)

Liabilities Current liabilities 6,292 8.3 8,880 11.6 (2,588) Notes and accounts payable – trade

未払い金未払い費用

2381,567

324

2851,333

325

(47)234(1)

Accrued corporate and other taxes 未払い消費税等

―

1122,343

240 (2,343)

(128) Advances received

預かり金前受け収益

2,6856523

3,0716917

(386)(4)

6 Allowance for employees’ bonus 1,015 1,046 (31) Allowance for directors’ bonus

Warranty reserve 98

150―

137 98

13 Other current liabilities 10 10 0 Fixed liabilities 3,899 5.2 4,050 5.3 (151) Allowance for employees’ severance

and retirement benefits 2,823 2,989 (161)

Allowance for retirement gratuities to officers

683 683 ―

Other fixed assets 388 377 11Total liabilities 10,192 13.5 12,931 16.9 (2,739)

Shareholders’ equity Shareholders’ equity Common stock Capital surplus Additional paid-in capital Earned surplus Earned reserve Other reserve Deferred capital gain on sales of buildings General reserves Retained earnings

brought forward Treasury stock Other comprehensive income Unrealized gains on investment securities

64,624 12,944

13,157 13,157

47,628 1,02246,606

13

25,00021,593

(9,105)568568

86.517.217.4

63.2

(12.1)0.8

―

―

―

―

―

―

―

―

―

―

―

―

―

― ― ―

―

― ― ―

64,62412,94413,15713,15747,6281,022

46.60613

25,00021,593

(9,105)568568

Total liabilities, minority interests and shareholders’ equity

65,192 86.5 ― ― 65,192

Minority Interests 75,384 100.0 ― ― 75,384

Non-consolidated

(Unaudited) 38

Shareholders’ Equity Common stock ― ― 12,944 16.9 (12,944) Capital surplus ― ― 13,157 17.2 (13,157) Additional paid-in capital ― 13,157 (13,157) Earned surplus ― ― 44,267 57.8 (44,267) Earned reserve ― 1,022 (1,022) Voluntary reserve

Reserve for deferred income tax buildings Other reserve

―

15

25,000

(15)

(25,000) Unappropriated retained earnings ― 18,230 (18,230) Unrealized gains(loss) on investment

securities ― ― 589 0.8 (589)

Treasury Stock ― ― (7,363) (9.6) 7,363Total shareholders’ equity ― ― 63,594 83.1 (63,594)

Total liabilities and shareholders' equity ― ― 76,526 100.0 (76,526)

Non-consolidated

(Unaudited) 39

(2) Non-consolidated Statements of Income Millions of yen

Fiscal 2007 (from March 1 2006 to February 28, 2007




Change

Net sales 42,645 100.0 44,990 100.0 (2,345) Cost of sales 7,570 17.8 7,602 16.9 (32) Gross profit 35,075 82.2 37,388 83.1 (2,313) Selling, general and administrative expanses 29,823 69.9 29,793 66.2 30 Operating income 5,251 12.3 7,594 16.9 (2,343) Non-operating income 3,067 7.2 3,004 6.6 63 Interest received 188 187 1 Interest on securities received 83 63 20 Dividends received 2,248 1,943 305 Rent on real estates 364 334 30 Others 181 477 (296) Non-operating expenses 277 0.6 285 0.6 (8) Rent on real estates 246 255 (9) Others 30 30 0 Recurring profit 8,041 18.9 10,314 22.9 (2,273) Extraordinary income

Gain on sales of fixed assets 5816

0.1 35―

0.1 23 16

Gains on reversal of allowance for doubtful accounts Proceeds from liquidation of affiliates

―

42

5

30

(5)

12 Extraordinary expenses 1,386 3.3 66 0.1 1,320 Losses on sales of fixed assets 41 12 29 Losses on retirement of fixed assets 4 54 (50) Unrealized loss on investment in affiliates

Transfer to allowance for loss on investment to affiliates

53686

―

―

53 686

Allowance for doubtful account 600 ― 600 Income before income taxes 6,713 15.7 10,283 22.9 (3,570) Corporate, inhabitant and business taxes 843 2.0 4,046 9.0 (3,203) Adjustments to corporate and other taxes 271 0.6 (464 (1.0 667 Net income 5,598 13.1 6,700 14.9 (1,035) Unappropriated retained earnings brought

forward from the previous fiscal year 12,611

Loss on disposal of treasury stock 201 Interim dividends 880 Unappropriated retained earnings for

the fiscal year 18,230

Non-consolidated

(Unaudited) 40

(3) Consolidated Statements of Changes in Shareholders’Equity

For first half of fiscal year ended February 28, 2007 (March 1, 2006 to February 28, 2007))

Millions of yen


Capital Surplus

Retained Earnings

Other Earned Surplus Item

Common Stock

Additional Paid-in Capital

Retained Earnings Building

Reduction Reserve

Special Reserve

Earned Surplus Carried Forward


12,944 13,157 1,022 15 25,000 18,230

Changes during fiscal 2007

Dividends from surplus

(1,831)

Bonuses to directors (112)Reversal from reserve for buildings (1) 1

Net income 5,598Purchases of treasury stock

Disposal of treasury stock (294)

Net changes in items other than shareholders’ equity during first half

Total of items during fiscal 2007

－－－ (1) － 3,362

Balance, at eFebruary 28, 2007

12,944 13,157 1,022 13 25,000 21,593

Non-consolidated

(Unaudited) 41

Millions of yen


Unrealized Gain on Securities and Foreign Currency Translation

Adjustments

Treasury stocks Total shareholders’

equity

Net unrealized gain on other

securities

Total valuation and translation

adjustments

Total Net Assets


(7,363) 63,005 589 589 63,594

Changes during fiscal 2007

Dividends from surplus

(1,831) (1,831)

Bonuses to directors (112) (112)Reversal from reserve for buildings －－

Net income 5,598 5,598Purchases of treasury stock

(3,118) (3,113) (3,118)

Disposal of treasury stock

1,357 1,081 1,081

Net changes in items other than shareholders’ equity during fiscal 2007

－－ (20) (20) (20)

Total of items during fiscal 2007

(1,742) 1,618 (20) (20) 1,597


(9,105) 64,624 568 568 65,192

Non-consolidated

(Unaudited) 42

(4) Proposed Appropriation of Retained Earnings Millions of yen

Fiscal 2006 (from March 1 2005 to February 28, 2006

Amount Unappropriated retained earnings for the fiscal year 18,230 Reversal of voluntary reserve 1 Reversal of reserve for deferred income tax on buildings 1

Amount to be appropriated 975 Cash dividends 863 Bonus to officers 112 [bonuses to statutory auditors] (3)

Unappropriated retained earnings carried forward to the next fiscal year 17,255 (Notes)

1. The above date (May 25, 2006) indicates the date of approval at general meeting of shareholders. 2. Reversal of reserve for deferred income tax on buildings is the amount equivalent to the excess of depreciation based on the Special Taxation Measures Law.

Non-consolidated

(Unaudited) 43

Significant Accounting Standards 1. Valuation standards and methods of marketable securities

Shares of subsidiaries: Cost determined by the moving-average method Held-to-maturity securities: Amortized cost method (straight-line method) Other marketable securities:

Securities quoted on exchanges: Fair value based on the quoted market price as of the fiscal year-end (The related unrealized gains or losses are reported as a separate component of

shareholders’ equity; cost of securities sold is determined by the moving average method.)

Securities not quoted on exchanges: Cost determined by the moving average method 2. Valuation standards of inventories

Goods and products: Wigs (custom-made): Cost on the basis of the specific identification method Wigs (ready-made): Cost on the basis of periodic average method other goods: Cost on the basis of last invoice method

Supplies: Supply materials: Cost on the basis of the specific identification method Other supplies: Cost on the basis of last invoice method

3. Depreciation method of fixed assets

Tangible fixed assets: Declining balance method. For buildings (excluding building fixtures) acquired after April 1, 1998, straight-line method applies.

Main useful lives are as follows: Buildings: 13 to 47 years Structures: 7 to 20 years Equipments: 5 to 8 years Intangible fixed assets: Straight-line method. Software for own use is depreciated by the straight-line method over the

estimated useful lives (5 years). Long-term prepaid expenses: Equal-installment depreciation

4. Standards for translation of foreign currency assets and liabilities

Pecuniary claims and obligations denominated in foreign currencies are translated into Japanese yen at the spot rates at the fiscal year-end and the translation differences are treated as profits or losses.

5. Standards for allowances

(i) Allowance for doubtful accounts: To prepare against credit losses, allowance for doubtful accounts are stated at an amount considered appropriate based on the company’s past credit loss experience for ordinary receivables. For receivables such as those threatened with bankruptcy, allowance is provided for the estimated amount of uncollectable receivables by examining collectible amounts individually.

(ii)Allowance for employees’ bonuses: To prepare for bonus payments to employees, allowance is provided in accordance with the estimated amounts payable.

(iii)Allowance for directors’ bonus To prepare for bonus payments to directors, allowance is provided in accordance with the estimated amounts payable.

(iv)Warranty reserve: An estimated necessary amount is provided based upon prior actual experience of repairs, in order to prepare against repair expenses arising from free warranties on the goods sold.

Non-consolidated

(Unaudited) 44

(v)Employees’ severance and retirement benefits: To prepare for retirement benefits to employees, allowance is provided based on the estimated amounts of projected retirement benefit obligation and pension assets at fiscal year-end. Actuarial difference is and treated as expenses by the straight-line method over a certain number of years within the period of average remaining years of service of employees at the time of accrual (5 years) and accounted for starting in the following fiscal year.

(vi)Allowance for retirement gratuities to officers: Necessary amounts payable at fiscal year-end as retirement gratuities to officers are provided in accordance with the established standards of the company.

(vii)Allowance for loss on investment to affiliates

To prepare for loss on investment to affiliated companies, allowance is provided in accordance with the estimated loss amounts, based on the company’s financial condition.

6. Finance leases Finance leases which do not transfer ownership to lessees are accounted for in the same manner as operating leases under accounting principles generally accepted in Japan.

7. Consumption and other taxes Consumption taxes and local taxes are accounted for by the tax-excluded method.

［Change of Accounting Policies］（Accounting standard for directors’ bonuses）

From the fiscal year-ended February 28, 2007, the Company has adopted accounting policies, in accordance with Guidance No. 4, “Accounting Standard for Directors’ Bonuses” issued by the Accounting Standards Board on November 29, 2005. At the result, operating income, recurring profit, and income before income taxes decreased ¥98 million, respectively, from the previous fiscal year.

（Accounting standard for presentation of net assets on consolidated balance sheets） From the interim period ended August 31, 2006, Aderans has revised its presentation of shareholders’ equity, in accordance with

Report No. 5, “Accounting Standard for Presentation of Net Assets on the Balance Sheet,” issued by the Accounting Standards Board (ASB) on December 9, 2005, and Guidance No. 8, “Guidance on Accounting Standard for Presentation of Net Assets on the Balance Sheet,” also issued by ASB on the same date. The amount corresponding to shareholders’ equity under the previous accounting treatment is ¥65,192 million. In accordance with revised rules for consolidated financial statements, Aderans has prepared financial statements for the fiscal

year ended February 28, 2007, in line with post-revision rules for such reporting. . ［Change of Indication］ “Software in progress”, which was included in “Other” on intangible fixed assets at previous fiscal year, was indicated on

balance sheets from the current fiscal year, because the amounts of software in progress exceeded 10% of total assets. Figures of “Software in progress”, included in “Other” at previous fiscal year, amounted to ¥343 million.

Non-consolidated

(Unaudited) 45

Notes [Balance Sheets] Millions of yen Fiscal 2007 Fiscal 2006 1. Notes on affiliated companies

Major amounts for affiliated companies included in categories other than those presented are provided below. Accounts receivable Other current assets Accounts payable Accrued expenses

21 140 70

744

9 263 69

675 2. Accumulated depreciation of tangible fixed assets 17,466 16,973 3. Total number of shares authorized to be issued by the company ― 138,000,000 shares Total number of issued shares 41,713,388 shares 4. Dividend limitation ― Net assets were rising

¥589 million through the application of current price. This amount was restricted to appropriate for dividend as per the stipulation in Article 124-3 of implementation rules for the Commercial Code.

[Statements of Income] Millions of yen Fiscal 2007 Fiscal 2006 1. Major items and amounts of selling, general and administrative expenses Advertising expenses 8,927 8,976 Salary and wages 6,355 6,325 Addition to allowance for bonus to employees 1,015 1,046 Severance and retirement benefit expenses 244 392 Addition to allowance for retirement gratuities to directors ― 208 Depreciation expenses 1,281 1,333 Rents

Provision of allowance for directors’ bouns 2,479

98 2,596

― 2. Research and development costs included in

selling, general and administrative expenses 1,692 1,044

3. 4. 5.

Loss on sales of fixed assets Composition of loss on sales of fixed assets Losses on retirement of fixed assets

Sales of land Mainly the sales of land and building Retirement of air-conditioning equipments

Mainly the sales of land and building because of removal of salons Mainly the disposal of buildings following store closure

Non-consolidated

(Unaudited) 46

6. Major transactions with affiliates

Fiscal 2007

Fiscal 2006 Purchase amounts

Advertising expenses 1,693 8,104

1,621 8,373

Dividends received 2,229 1,933 Interest received 159 158 [Regarding Consolidated Statements of Changes in Shareholders’ Equity] For the fiscal year ended February 28, 2007 Types of Treasury Stock and Number of Shares

Number of Shares at

February 28, 2006

Increase in Number of

Shares during fiscal 2007

Decrease in Number of

Shares during fiscal 2007

Number of Shares at

February 28, 2007

Common stock（shares） 2,456,597 1,002,678 458,254 3,001,021 Notes: 1. The increase in number of shares comes from 2,678 shares added through the buyback of shares less than one tangen

unit and from 1,000,000 shares added through a buyback approved by a Board of Directors’ resolution on July 13, 2006.

2. The decrease in number of shares comes from 457,200 shares dropped through the exercise of stock options and 1,054 shares dropped through requests to add onto shares less than one tangen unit.

[Leases] Content of the half-year report is omitted to accommodate disclosure through EDINET.

[Marketable Securities] There are no marketable stocks of subsidiaries and affiliates.

(Millions of yen)

Non-consolidated

(Unaudited) 47

[Tax Allocation] 1. Major factors for the accrual of deferred tax assets and deferred tax liabilities Millions of yen



Deferred tax assets Unrealized loss on investment in affiliates 4,231 5,084 Excess of provision for employees’ severance

and retirement benefits 1,151 1,153

Excess of provision for allowance for employees’ bonus 413 425 Deferred research and development expenses 101 617 Excess of allowance for retirement gratuities to officers 278 278 Excess amounts of transfer to allowance for loss on

investment to affiliates Excess of allowance for doubtful account

279

451

―

226 Excess of depreciation 218 202 Accumulated impairment losses 63 70 Unrealized loss on golf club memberships 87 87 Enterprise tax payable ― 197 Deferred unrealized loss of inventories 15 41 Deferred exchange loss 61 55 Others 87 32 Sub-total deferred tax assets 7,439 8,472 Valuation reserve (4,264) (5,084) Total deferred tax assets 3,174 3,387 Deferred tax liabilities Reserve for deferred income tax on buildings (9) (9) Unrealized loss on marketable securities

Others (390)

58 (404)

Total deferred tax liabilities (457) (413) Net deferred tax assets 2,717 2,973 2. Major factors for the difference between the statutory tax rate and the effective income tax rate after tax allocation (%)



Statutory effective tax rate (Adjustments) Permanently nondeductible expenses, such as entertainmentPermanently nontaxable income, such as dividends receivedPer-capita inhabitants’ taxes Indirect foreign tax Loss on devaluation of stocks of affiliates Experiment and research expenses Others

Corporate tax burden after application of tax-effect accounting

40.7 1.0

(11.1) 1.9

(2.2) (13.0) (2.1) 1.4

16.6

40.7 0.3

(6.4) 1.3

(0.7) ― ― (0.4)

34.8

Non-consolidated

(Unaudited) 48

Per Share Data Fiscal 2007 Fiscal 2006 Net assets ¥1,684.02 ¥1,617.11 Net income (loss) ¥143.61 ¥164.74 Fully diluted earnings ¥142.68 ¥163.64

Note: The basic data for calculating net income (loss) per share is presented below.

1. Shareholders’ equity per share Fiscal 2007 Fiscal 2006

Shareholders’ equity for common stock ¥65,192 million －

Number of shares issued 41,713,388 shares －

Common shares held as treasury stock 3,001,021 shares －

Number of common shares used in the ca1culation of shareholders’ equity per share 38,712,367 shares －

2. Net income and fully diluted net income per share Fiscal 2007 Fiscal 2006 Net income (loss) presented on consolidated Statements of Income

¥5,598 million ¥6,700 million

Net income (loss) on common stock ¥5,598 million ¥6,588 million Significant amount not associated with shareholders of common stock: Directors’ bonuses from retained earnings

― ¥122 million

Amounts not associated with shareholders of common stock

― ¥122 million

Weighted number of common shares outstanding for the year

38,984,056 39,992,395

Significant item in the increase of common stock used to calculate fully diluted earnings per share: Subscription rights

253,180 268,860

Increase in common stock 253,180 268,860 Summary of latent shares not included in the calculation of fully diluted earnings per share due to lack of dilution effect

－－

============================================================ (END)

April 20, 2007 ADERANS CO., LTD.

Documents