November 8, 2017

Consolidated Financial Results
for the Six Months Ended September 30, 2017
(Japanese Accounting Standards)
Name of the Listed Company:
Listing:
Stock code:
URL:
Representative:
Contact Person:

Nitta Gelatin Inc.

First Section of Tokyo Stock Exchange4977
http://www.nitta-gelatin.co.jp
Koichi Ogata, Representative Director and President
Toru Tamaoka, Director and Executive Officer;
General Manager of Administration Division
Tel: +81-72-949-5381
Scheduled date to file Quarterly Securities Report: November 10, 2017
Scheduled date to commence dividend payments: December 6, 2017
Supplementary explanatory materials prepared:
Yes
Explanatory meeting:Yes (For analysts and institutional investors)(Millions of yen with fractional amounts discarded, unless otherwise noted.)

1. Consolidated financial results for the six months ended September 30, 2017(from April 1, 2017 to September 30, 2017)(1) Consolidated operating results

Net sales
Six months ended
September 30, 2017
September 30, 2016

Operating income

Millions of yen%

Millions of yen

18,623
4.9
17,752(2.9)
Note: Comprehensive income
For the six months ended September 30, 2017:
For the six months ended September 30, 2016:

Net income
per share
Six months ended
September 30, 2017
September 30, 2016

(Percentages indicate year-on-year changes.)
Net income
attributable toOrdinary income
owners of the parent

530
924

%

Millions of yen%

Millions of yen

605
688

(12.1)
88.2

344
405

(42.6)
106.0¥676 million, (-%)¥(420) million, (-%)

Diluted net income
per share

Yen

Yen

18.74
22.05
Note: Diluted net income per share is not disclosed due to the absence of latent shares with dilution effect.

(2) Consolidated financial position
As of
September 30, 2017
March 31, 2017

Total assets

Net assets

Millions of yen

Millions of yen

40,80140,41018,31917,736

Reference: Equity
As of September 30, 2017:
As of March 31, 2017:¥16,368 million¥15,727 million

Equity ratio
%

40.1
38.9

%

(15.0)
175.5

2. Cash dividends
Cash dividends per shareFirst quarter

Second quarter

Yen

Third quarter

Yen

Fiscal year-end

Yen

Fiscal year ended March 31,
6.00
2017
Fiscal year ending March 31,
6.00
2018
Fiscal year ending March 31,2018 (Forecasts)
Note: Changes to most recent dividend forecasts: None

Annual

Yen

Yen

-

6.00

12.00

-

6.00

12.00

3. Consolidated financial forecasts for the fiscal year ending March 31, 2018(from April 1, 2017 to March 31, 2018)
OperatingincomeNet sales

Fiscal year ending
March 31, 2018

(Percentages indicate year-on-year changes.)
Net income
Net income
attributable toOrdinary income
owners of theper share
parentMillionsof yen%Millionsof yen%Millionsof yen%Millionsof yen%38,500

5.3

1,600

(1.1)

1,600

(12.6)

1,000

44.2

Yen

54.43

Note: Changes to most recent consolidated financial forecasts: None

Notes
(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in achange in the scope of consolidation): None
New:
None
Excluded:None(2) Adoption of special accounting methods for the preparation of quarterly consolidated financial
statements: No(3) Changes in accounting policies, changes in accounting estimates, and restatement of revisions
a. Changes in accounting policies due to revisions to accounting standards and other guidelines: No
b. Changes in accounting policies due to reasons other than a. above: No
c. Changes in accounting estimates: Yes
d. Restatement of revisions: No
Note: For details, please refer to “(4) Notes to Quarterly Consolidated Financial Statements(Changes in Accounting Estimates)” in “2. Quarterly Consolidated Financial Statements and
Key Notes” on page 10 of the Attachment to this report.
(4) Number of common shares issued
a. Total number of issued shares at the end of the period (including treasury stock)
As of September 30, 2017 18,373,974 shares
As of March 31, 201718,373,974 sharesb. Number of shares of treasury stock at the end of the period
As of September 30, 2017 162 shares
As of March 31, 2017
162 sharesc. Average number of shares
For the six months ended September 30, 2017
For the six months ended September 30, 2016

18,373,812 shares
18,373,812 shares* This report falls outside the scope of quarterly review procedures.
* Proper use of earnings forecasts, and other special matters
The forward-looking statements, including earnings forecasts, contained in these materials are based on
information currently available to the Company and on certain assumptions deemed to be reasonable. Thesestatements do not guarantee that the Company will achieve its earnings forecasts. In addition, actual businessand other results may differ substantially due to various factors. For details on the conditions assumed and thecautionary notes and items in the financial forecasts, please refer to “(3) Description of Consolidated Business
Forecasts and Other Forward-looking Information” in “1. Qualitative Information Concerning Quarterly
Financial Statements” on page 4 of the Attachment to this report.

Attachment Contents
1. Qualitative Information Concerning Quarterly Financial Statements ···································· 2(1) Description of Business Results ·················································································· 2(2) Description of Financial Position ················································································ 3(3) Description of Consolidated Business Forecasts and Other Forward-looking Information ·············· 4

2. Quarterly Consolidated Financial Statements and Key Notes ············································· 5(1) Consolidated Balance Sheets ····················································································· 5(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ········· 7
Consolidated Statements of Income(Six months ended September 30) ··············································································· 7
Consolidated Statements of Comprehensive Income(Six months ended September 30) ··············································································· 8(3) Consolidated Statements of Cash Flows ········································································ 9(4) Notes to Quarterly Consolidated Financial Statements ····················································· 10(Note Concerning Going Concern Assumption) ····························································· 10(Note Concerning Significant Changes in Shareholders’ Equity) ········································· 10(Changes in Accounting Estimates)············································································ 10(Segment Information) ···························································································1111. Qualitative Information Concerning Quarterly Financial Statements(1) Description of Business Results
In the first six months of the fiscal year ending March 31, 2018, global economies continued to
expand gradually, with steady economic expansion in the U.S. and stable economic growthmaintained in China. The Japanese economy continued on a moderate recovery trend, supported
by demand for semiconductors and expanding investment in automation, among other factors.
Under these conditions, as the Nitta Gelatin Group approaches its 100th founding
anniversary in 2018, it formulated a new corporate vision in April 2017.

New Vision“To stay healthy and feeling young”
Nitta Gelatin Group fulfills this desire of people worldwide through our relentless pursuit ofrealizing collagen’s enormous potential.
1. We will provide products and services that meet our customers’ expectations of continued
improvement.
2. We will broaden the range of collagen applications through our ongoing efforts in R&D
and production innovation.
3. We will pioneer and create new markets by fostering a corporate culture that encourages
facing and overcoming challenges.
Under this corporate vision, the Nitta Gelatin Group engaged proactively in proposal
activities for high value added products based on customer needs, while striving to bolster
recognition by holding the Life Science Biomaterial Research Workshop again following theprevious fiscal year.
As a result, in the first six months of the fiscal year ending March 31, 2018, net sales
increased 4.9% year on year to ¥18,623 million and operating income decreased 42.6% to ¥530
million. Ordinary income declined 12.1% to ¥605 million, cushioned by equity in earnings ofaffiliates, and net income attributable to owners of the parent decreased 15.0% to ¥344 million.
Segment business performance was as follows:(a) Collagen Material BusinessIn the gelatin field, in Japan sales of gelatin for use in delicatessen items sold in convenience
stores and gelatin for soft capsules used in supplements were firm. Overall sales increased, but
profits declined in North America, mainly reflecting an increase in raw material costs.
In the collagen peptide field, sales in the supplement market were firm thanks to a boost inrecognition of functionality.
Collagen casings saw profits recover, supported by solid sales in North America.
As a result, net sales in this segment increased 6.7% to ¥13,688 million, while segment profit(operating income) decreased 39.1% to ¥648 million.
2

(b) Formula Solution BusinessIn food materials, sales were level year on year overall. However, the Company’s product wasawarded by the media with the “hit commercial processed food product award.” The Company
will continue to focus on marketing and customer proposals for this product going forward.
In adhesives, an increase in sales for hygiene products and a decline in production costs
contributed to an overall increase in earnings. Sales of high-functional resins remained levelyear on year despite proactive sales promotion activities.
As a result, net sales in the segment were up 0.3% year on year to ¥4,935 million andsegment profit (operating income) increased 7.3% year on year to ¥564 million.

(2) Description of Financial Position(a) Assets, liabilities and net assets(Assets)
Total assets amounted to ¥40,801 million at September 30, 2017, ¥390 million higher than at
March 31, 2017. This was mainly attributable to increase in notes and accounts receivable-trade,inventories and investment securities.
(Liabilities)
Total liabilities stood at ¥22,482 million at September 30, 2017, ¥191 million lower than at
March 31, 2017. This was mainly attributable to decreases in income taxes payable andlong-term loans payable.
(Net assets)
Net assets amounted to ¥18,319 million at September 30, 2017, ¥582 million higher than at
March 31, 2017. This was mainly attributable to increases in retained earnings and valuationdifference on other available-for-sale securities.
As a result, the equity ratio stood at 40.1% at September 30, 2017, compared to 38.9% at
March 31, 2017.
(b) Cash flows
Cash and cash equivalents (“cash”) as of September 30, 2017 was ¥1,866 million, down ¥683
million from March 31, 2017.
Cash flows for each activity and reasons are as follows.
(Net cash provided by operating activities)
Operating activities provided net cash of ¥146 million, compared to ¥430 million provided in
the same period of the previous fiscal year. The main components were income before
provision of income taxes of ¥593 million, depreciation and amortization of ¥805 million,3

increase in inventories of ¥492 million, increase in notes and accounts receivable-trade of ¥320
million, and income taxes paid of ¥439 million.

(Net cash used in investing activities)
Investing activities used net cash of ¥857 million, compared to ¥1,668 million used in the same
period of the previous fiscal year. The main uses of cash were ¥845 million for the purchase ofproperty, plant and equipment.
(Net cash provided by financing activities)
Financing activities provided net cash of ¥3 million, compared to ¥372 million provided in thesame period of the previous fiscal year. The main sources of cash were proceeds fromlong-term loans payable of ¥1,200 million and net increase in short-term loans payable of ¥263
million, which were partially offset by the repayment of long-term loans payable of ¥1,281
million.

(3) Description of Consolidated Business Forecasts and Other Forward-looking
Information
The consolidated earnings forecast for the fiscal year ending March 31, 2018 is unchanged
from the consolidated earnings forecast announced on May 10, 2017 in the “Consolidated
Financial Results for the Fiscal Year Ended March 31, 2017.”
Actual business and other results may differ substantially from projections due to various
factors.

4

2. Quarterly Consolidated Financial Statements and Key Notes(1) Consolidated Balance Sheets(Millions of yen)

Fiscal 2017
(As of March 31, 2017)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

5

2Q Fiscal 2018
(As of September 30, 2017)

2,662
8,923
5,043
1,163
2,997
918
(22)
21,686

1,969
9,306
5,561
1,254
2,915
991
(12)
21,987

4,339
4,882
4,688
13,910

4,251
4,862
4,506
13,620

454
405
859

433
398
832

3,052
902
(0)
3,954
18,72440,410

3,433
927
(0)
4,360
18,81340,801

(Millions of yen)

Fiscal 2017
(As of March 31, 2017)
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Net defined benefit liability
Other
Total noncurrent liabilities
Total liabilities
Net Assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income (loss)
Valuation difference on other available-for-salesecurities
Deferred gains on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

6

2Q Fiscal 2018
(As of September 30, 2017)

4,347
2,866
2,432
509
259
2,622
13,037

4,354
3,157
2,508
346
226
2,292
12,885

5,425
2,851
1,359
9,636
22,674

5,269
2,901
1,425
9,596
22,482

3,144
2,966
10,042(0)
16,153

3,144
2,966
10,319(0)
16,430

1,107

1,369

43
331
(1,907)(426)
2,009
17,736
40,41010452(1,894)(62)
1,950
18,31940,801

(2) Consolidated Statements of Income and Consolidated Statements ofComprehensive Income
Consolidated Statements of Income(Six months ended September 30)(Millions of yen)

Six Months Ended
September 30, 2016
(From April 1, 2016
to September 30, 2016)
17,752
13,634

Net sales
Cost of sales

Six Months Ended
September 30, 2017
(From April 1, 2017
to September 30, 2017)18,62314,808Gross profit on sales

4,118

3,815

Selling, general and administrative expenses

3,194

3,285

Operating income

924

530

Non-operating income
Interest income
Dividend income
Foreign exchange gains
Equity in earnings of affiliates
Other

8
17
68
48

10
30
18
89
47

Total non-operating income

143

195

113
246
19

106

379

120

Ordinary income

688

605

Extraordinary losses
Disposal costs for noncurrent assets
Loss on retirement of noncurrent assets

7

1
10

7

12

Income before provision of income taxes

681

593

Income taxes

240

230

Net income

441

362

Net income attributable to non-controlling interests

36

18

Net income attributable to owners of the parent

405

344

Non-operating expenses
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses

Total extraordinary losses

7

-

14

Consolidated Statements of Comprehensive Income(Six months ended September 30)(Millions of yen)

Six Months Ended
September 30, 2016
(From April 1, 2016 to
September 30, 2016
441

Net income
Other comprehensive income (loss)
Valuation difference on other available-for-salesecurities
Deferred gains (losses) on hedges

Six Months Ended
September 30, 2017
(From April 1, 2017 to
September 30, 2017)
362

(123)

262

16

(67)

Foreign currency translation adjustments

(903)

119

Pension liability adjustment
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income

290

14

(141)

(14)

(862)

314

(420)

676

Owners of the parent

(314)

707

Non-controlling interests

(106)

(31)

Total comprehensive income (loss)
Comprehensive income (loss) attributable to:8(3) Consolidated Statements of Cash Flows(Millions of yen)

Six Months Ended
September 30, 2016
(From April 1, 2016
to September 30, 2016)
Cash flows from operating activities
Income before provision of income taxes
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in allowance for doubtful
accounts
Decrease in provision for houses
Increase in net defined benefit liability
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)
Equity in earnings of affiliates
Loss on sales of property, plant and equipment
Loss on retirement of noncurrent assets
Increase in notes and accounts receivable-trade
Increase in inventories
Increase (decrease) in notes and accounts
payable-trade
Decrease in accrued consumption taxes
Other, net

Six Months Ended
September 30, 2017
(From April 1, 2017
to September 30, 2017)

681
709
3

593
805
22

2

(9)

(37)
2
(26)
113
13
(68)

(34)
76
(40)
106
(0)
(89)
1
10
(320)

-

7
(105)
(533)

(492)

123

(4)

(22)
(232)

(72)
37

Subtotal

630

589

Interest and dividend income received
Interest paid
Income taxes paid

43
(113)
(129)
430

100
(104)
(439)
146

(20)
65
(820)

(105)
109
(845)
1
(12)
(4)
(0)

Net cash provided by operating activities
Cash flows from investing activities
Payment into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Purchase of insurance funds
Payment for the transfer of business
Proceeds from surrender of insurance funds
Payments of loans receivableCollection of loans receivable
Other, net

-

(13)
(3)
(0)
(897)
20
(0)
2
(0)

Net cash used in investing activities(1,668)

9

-

(0)
0
(0)
(857)

(Millions of yen)

Cash flows from financing activities
Net increase in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from sale-and-leaseback transactions
Repayments of lease obligations
Cash dividends paid
Cash dividends paid to non-controlling interests

Six Months Ended
September 30, 2016
(From April 1, 2016
to September 30, 2016)

Six Months Ended
September 30, 2017
(From April 1, 2017
to September 30, 2017)

216
1,500
(1,142)
60
(125)
(110)
(25)

263
1,200
(1,281)
84
(125)
(110)
(27)

372

3

Net cash provided by financing activities
Effect of exchange rate change on cash and cash
equivalents
Net decrease in cash and cash equivalents

152

23

(713)

(683)

Cash and cash equivalents, beginning of period

2,536

2,550

Cash and cash equivalents, end of period

1,823

1,866

(4) Notes to Quarterly Consolidated Financial Statements(Note Concerning Going Concern Assumption)
None(Note Concerning Significant Changes in Shareholders’ Equity)
None(Changes in Accounting Estimates)(Change in the useful life)
The machinery and equipment owned by certain consolidated subsidiaries had been
estimated to have a useful life of eight years for depreciation purposes, based on its usage
status. In the fiscal year ending March 31, 2018, the useful life has been revised based on theactual number of years of use and other factors in conjunction with plan to operate newmachinery and equipment, and is now clearly expected to be longer than the previous
estimate. From the first quarter of the fiscal year ending March 31, 2018, the useful life has
therefore been changed to 10 years.
As a result, for the first six months of the fiscal year ending March 31, 2018 the amountof depreciation and amortization has declined by ¥22 million compared to the previous
estimation method, and operating income, ordinary income, and income before provision ofincome taxes have all increased by the same amount.

10

(Segment Information)
I. Six months ended September 30, 2016 (From April 1, 2016 to September 30, 2016)
1. Information on net sales, income and loss by reporting segment(Millions of yen)
Reporting segment
Collagenmaterial
business
Net sales
Sales to third parties
Inter-segment sales andtransfers
Total
Segment income(Notes)Amounts in the
consolidated
income statement*2

Formulasolutionbusiness

Total

Adjustments*1

12,832

4,920

17,752－

17,752

893

4

898

(898)

－

13,725
1,066

4,925
526

18,651
1,592

(898)
(668)

17,752924

1. Adjustment for segment income of ¥(668) million comprises elimination ofintersegment transactions of ¥2 million and unallocated expenses of ¥(671) million.
2. Segment income is adjusted against the operating income recorded in the consolidated
income statement.

2. Information on impairment loss on noncurrent assets and goodwill by reporting segments(Significant changes in the amount of goodwill)In the Collagen Material Business segment, Vyse Gelatin, LLC was newly established, andthe new company took over a portion of the business of Vyse Gelatin Company, resulting in
the recording of goodwill.
The increase in goodwill due to these events was ¥379 million in the six months ended
September 30, 2016. The amount of goodwill is a provisional estimate, as the allocation of
the acquisition cost has not yet been completed.
II. Six months ended September 30, 2017 (From April 1, 2017 to September 30, 2017)
1. Information on net sales, income and loss by reporting segment(Millions of yen)

Reporting segment
Collagenmaterial
business
Net sales
Sales to third parties
Inter-segment sales andtransfers
Total
Segment income(Notes)Amounts in the
consolidated
income statement*2

Formulasolutionbusiness

Total

Adjustments*1

13,688

4,935

18,623－

18,623

837

4

841

(841)

－

14,526
648

4,939
564

19,465
1,213

(841)
(683)

18,623530

1. Adjustment for segment income of ¥(683) million comprises elimination ofintersegment transactions of ¥7 million and unallocated expenses of ¥(690) million.
2. Segment income is adjusted against the operating income recorded in the consolidated
income statement.

2. Information on impairment loss on noncurrent assets and goodwill by reporting segmentsNone11