November 8, 2019

Consolidated Financial Results
for the Six Months Ended September 30, 2019
(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
Norifumi Nagaoka, Director and Executive Officer;
General Manager of General Management Division
Tel: +81-72-949-5381
Scheduled date to file Quarterly Securities Report: November 11, 2019
Scheduled date to commence dividend payments: December 6, 2019
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, 2019(from April 1, 2019 to September 30, 2019)(1) Consolidated operating results(Percentages indicate year-on-year changes.)
Net sales
Six months ended
September 30, 2019
September 30, 2018

Millions of yen%

Operating income

Ordinary income

Net income
attributable toowners of the parent

Millions of yen

Millions of yen%

Millions of yen

981
595

64.8
(1.7)

654
1,271

18,627
3.4
18,010(3.3)
Note: Comprehensive income
For the six months ended September 30, 2019:
For the six months ended September 30, 2018:

Net income
per share
Six months ended
September 30, 2019
September 30, 2018

%

845
428

97.2
(19.1)¥355 million ((76.0)%)¥1,482 million (119.1%)

Diluted net income
per share

Yen

Yen

35.63
69.23
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, 2019
March 31, 2019

Total assets

Net assets

Millions of yen

Millions of yen

37,27737,715

17,862
17,708Reference: Equity
As of September 30, 2019:
As of March 31, 2019:¥16,010 million¥15,843 million

Equity ratio
%

43.0
42.0

%

(48.5)
269.5

2. Cash dividends
Cash dividends per shareFirst quarter

Second quarter

Yen

Third quarter

Yen

Fiscal year-end

Yen

Fiscal year ended
6.00
March 31, 2019
Fiscal year ending
6.00
March 31, 2020
Fiscal year ending
March 31, 2020 (Forecasts)
Note: Changes to most recent dividend forecasts: None

Annual

Yen

Yen

-

10.00

16.00

-

6.00

12.00

3. Consolidated financial forecasts for the fiscal year ending March 31, 2020
(from April 1, 2019 to March 31, 2020)(Percentages indicate year-on-year changes.)
OperatingincomeNet sales

Fiscal year ending
March 31, 2020

Ordinary income

Net income
attributable toowners of theparent

Net income
per share

Millionsof yen%Millionsof yen%Millionsof yen%Millionsof yen%38,200

4.8

1,400

55.9

1,300

56.9

800

(19.1)

Yen

43.54

Note: Changes to most recent consolidated financial forecasts: None

Notes
(1) Changes in significant subsidiaries during the quarterly period (changes in specified subsidiaries
resulting in a change 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: Yes
b. Changes in accounting policies due to reasons other than a. above: No
c. Changes in accounting estimates: No
d. Restatement of revisions: No
Note: For details, please refer to “(4) Notes to Quarterly Consolidated Financial Statements (Changes in Accounting
Policies) in “3. Quarterly Consolidated Financial Statements and Key Notes” on page 13 of the Attachment to thisreport.

(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, 2019 18,373,974 shares
As of March 31, 201918,373,974 sharesb. Number of shares of treasury stock at the end of the period
As of September 30, 2019 163 shares
As of March 31, 2019163 sharesc. Average number of shares
For the six months ended September 30, 2019
For the six months ended September 30, 2018

18,373,811 shares
18,373,812 shares* This financial report falls outside the scope of quarterly review procedures by Certified Public
Accountants or the independent auditor.
* 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 business andother 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 5 of the Attachment to this report.
Other
The Company passed a resolution at its Board of Directors’ meeting held on November 8, 2018 to approve amerger between the Company’s consolidated subsidiary, Nitta Gelatin India Ltd., and the latter’s subsidiary Reva
Proteins Ltd., and the two companies have merged effective from April 1, 2017. The merger reference date is set
retrospectively as the beginning of the fiscal year in which the merger application was filed, in accordance withthe merger system in India. Accordingly, consolidated financial results for the six months ended September 30,
2018 have been retrospectively adjusted to reflect this merger.

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 ·············· 5

2. Basic Approach to Selection of Accounting Standard························································· 6

3. Quarterly Consolidated Financial Statements and Key Notes ·············································· 7(1) Consolidated Balance Sheets ····················································································· 7(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ········· 9Consolidated Statements of Income(Six months ended September 30) ··············································································· 9Consolidated Statements of Comprehensive Income(Six months ended September 30) ············································································· 10(3) Consolidated Statements of Cash Flows ·······································································11(4) Notes to Quarterly Consolidated Financial Statements ····················································· 13(Note Concerning Going Concern Assumption) ····························································· 13(Note Concerning Significant Changes in Shareholders’ Equity) ········································· 13(Changes in Accounting Policies) ············································································ 13(Additional Information) ························································································ 13(Segment Information) ························································································· 14

11. Qualitative Information Concerning Quarterly Financial Statements
In the six months ended September 30, 2019, retrospective accounting treatment has been
applied as described below, and analysis and comparison with the previous fiscal year are
based on figures that reflect this retrospective accounting treatment.
The Company passed a resolution at its Board of Directors’ meeting held on November 8,2018 to approve a merger between the Company’s consolidated subsidiary, Nitta Gelatin India
Ltd., and the latter’s subsidiary Reva Proteins Ltd., and the two companies have merged
effective from April 1, 2017.
The merger reference date is set retrospectively as the beginning of the fiscal year in which
the merger application was filed, in accordance with the merger system in India.

(1) Description of Business Results
In the first six months ended September 30, 2019, the global economy gave rise to evenstronger concerns about a possible slowdown due to factors such as economic deceleration in
Europe and China, as well as the U.S. manufacturing sector entering a slowdown phase. The
Japanese economy remained on a gradual recovery path, mainly supported by improving
employment and income levels. However, the outlook has become increasingly uncertain basedin part on the impact of U.S.-China trade tensions and consumption trends following a
consumption tax rate hike.
Guided by the following management policies under the Medium-Term Management Planrunning through the fiscal year ending March 31, 2021, the Nitta Gelatin Group actively worked
on research and development of high-value-added products, sales of new products anddevelopment of new markets in its three core areas.
1. Our three core areas will be food solutions, health support, and biomedical.
2. We will globally optimize our production system in Japan, Asia, and North America in
response to an era of completely free trade.
3. We will promote selection and concentration and create high-value-added products andservices to recreate the Company as a higher-profit enterprise.
The Group strove to enhance productivity and reduce costs at each of its manufacturing sites.
Looking at initiatives in core areas, in health support, the Group conducted sales promotions for
new products for the sports nutrition market and implemented programs to raise awareness ofcollagen peptide’s functionality and benefits in the Asian region. In food solutions, the Groupfocused on finding new customers in the food applications sector.
As a result, for the first six months ended September 30, 2019, net sales increased 3.4% year
on year to ¥18,627 million and operating income rose 97.2% to ¥845 million. These results
were supported by firm demand. Ordinary income increased 64.8% to ¥981 million, mainly due
to the recording of equity in earnings of affiliates, while net income attributable to owners of the2parent decreased 48.5% to ¥654 million.
The Nitta Gelatin Group’s collagen business has become the Company’s only reporting
segment, but an overview of the performance of each sales category is as follows:(Food solutions)
In Japan, sales for use in gummy candy rose atop solid sales of new products by customers.
Sales of delicatessen items for convenience stores increased against the backdrop of heightened
demand for ready-made meals among double-income households and the elderly. In products
for the HoReCa market, the launch of new products was a main contributor to sales.
Overseas, sales for use in gummy candy and other applications rose in the North American
region. Meanwhile, sales of collagen casings for snack sausage applications declined due tointensified competition.
As a result, overall sales in the food solutions category decreased 1.4% year on year to¥7,701 million.
(Health support)
In Japan, sales of collagen peptide products for beauty supplement applications increased,
supported by firm sales of the relaunched products of main customers.
Overseas, the North American region saw firm sales for capsules for health foods, as well as
growth in the collagen peptide market for beauty applications. In India, net sales increased as
demand for capsules for pharmaceutical and health food applications was solid.
As a result, overall sales in the health support category increased 19.3% year on year to¥7,959 million.
(Specialties)
In adhesives, overall sales decreased 15.9% year on year to ¥2,966 million, influenced bydeclining sales in adhesives for hygiene products and a sales price change accompanying acompany split.

(2) Description of Financial Position(a) Assets, liabilities and net assets(Assets)
Total assets amounted to ¥37,277 million at September 30, 2019, ¥438 million lower than at
March 31, 2019. This was mainly attributable to decreases in notes and accounts
receivable—trade of ¥414 million and property, plant and equipment of ¥469 million. These
decreases were partly offset by an increase in merchandise and finished goods of ¥697 million.

3

(Liabilities)
Total liabilities stood at ¥19,414 million at September 30, 2019, ¥592 million lower than at
March 31, 2019. This was mainly attributable to decreases in short-term loans payable of ¥259
million and long-term loans payable of ¥140 million.
(Net assets)
Net assets amounted to ¥17,862 million at September 30, 2019, ¥153 million higher than at
March 31, 2019. This was mainly due to increases in retained earnings of ¥467 million andremeasurements of defined benefit plans of ¥110 million. These increases were partly offset bydecreases in valuation difference on other available-for-sale securities of ¥195 million andforeign currency translation adjustments of ¥203 million.
As a result, the equity ratio stood at 43.0% at September 30, 2019 compared with 42.0% at
March 31, 2019.
(b) Cash flows
Cash and cash equivalents (“cash”) as of September 30, 2019 was ¥1,971 million, down ¥80
million from March 31, 2019.
Cash flows for each activity and reasons are as follows.
(Net cash provided by operating activities)
Operating activities provided net cash of ¥1,022 million, compared to ¥123 million provided in
the same period of the previous fiscal year. The main components were income before
provision of income taxes of ¥976 million, depreciation and amortization of ¥755 million, andincrease in inventories of ¥871 million.
(Net cash used by investing activities)
Investing activities used net cash of ¥539 million, compared to ¥263 million provided in thesame period of the previous fiscal year. The main use of cash was ¥534 million for purchase ofproperty, plant and equipment.
(Net cash used in financing activities)
Financing activities used net cash of ¥538 million, compared to ¥547 million used in the same
period of the previous fiscal year. The main components were proceeds from long-term loans
payable of ¥1,200 million, repayment of long-term loans payable of ¥1,313 million, cash
dividends paid of ¥183 million and net decrease in short-term loans payable of ¥172 million.

4(3) Description of Consolidated Business Forecasts and Other Forward-looking
Information
The consolidated financial forecasts for the fiscal year ending March 31, 2020 have not beenrevised from the consolidated financial forecasts announced on May 14, 2019 in the“Consolidated Financial Results for the Fiscal Year Ended March 31, 2019 (Japanese
Accounting Standards).”
Actual business and other results may differ substantially from projections due to various
factors.

5

2. Basic Approach to Selection of Accounting Standard
The Nitta Gelatin Group plans to prepare its consolidated financial statements based onJapanese accounting standards for the foreseeable future. This is in consideration of the need toensure that the consolidated financial statements can be readily compared between different
periods and different companies.
Looking ahead, considering its management policies and various conditions in Japan andabroad, Nitta Gelatin plans to examine the adoption of International Financial ReportingStandards (IFRS). In doing so, the Company will take into account trends such as the adoptionof IFRS by its peer companies in Japan.

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

Fiscal 2019
(As of March 31, 2019)
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

7

2Q Fiscal 2020
(As of September 30, 2019)

2,092
8,589
5,884
1,350
2,911
558
(9)
21,378

2,010
8,174
6,582
1,505
2,799
494
(11)
21,554

3,788
4,648
3,113
11,551

3,611
4,274
3,196
11,081

353
231
585

320
214
535

3,260
1,134
(193)
4,200
16,33737,715

3,087
1,206
(189)
4,104
15,72237,277

(Millions of yen)

Fiscal 2019
(As of March 31, 2019)
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 losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income(loss)
Non-controlling interests
Total net assets
Total liabilities and net assets

8

2Q Fiscal 2020
(As of September 30, 2019)

4,794
2,657
2,386
237
205
2,278
12,559

4,781
2,397
2,383
160
151
2,231
12,106

4,000
2,731
714
7,447
20,007

3,860
2,753
694
7,307
19,414

3,144
2,966
10,155(0)
16,266

3,144
2,966
10,622(0)
16,734

1,274

1,078

(8)
174
(1,863)(19)(29)(1,753)

(423)

(723)

1,865
17,70837,715

1,852
17,86237,277

(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, 2018
(From April 1, 2018
to September 30, 2018)
18,01014,223

Net sales
Cost of sales

Six Months Ended
September 30, 2019
(From April 1, 2019
to September 30, 2019)18,627
14,766Gross profit on sales

3,786

3,861

Selling, general and administrative expenses

3,357

3,015

Operating income

428

845

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

3
20
149
81
50

1
23
16
128
66

Total non-operating income

305

237

121
17

92
9

Non-operating expenses
Interest expenses
Other

138

102

Ordinary income

595

981

Extraordinary gains
Gain on sales of noncurrent assets
Transfer gain on business divestiture
Gain on change in equity

79
655
416

0
－
－

1,151

0

0
139

－
4

Total non-operating expenses

Total extraordinary gains
Extraordinary losses
Disposal costs for noncurrent assets
Loss on retirement of noncurrent assets
Total extraordinary losses

140

4
976

Income taxes

1,606
322

Net income

1,284

747

Income before provision of income taxes

Net income attributable to non-controlling interests
Net income attributable to owners of the parent

9

229

12

92

1,271

654

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

Six Months Ended
September 30, 2018
(From April 1, 2018 toSeptember 30, 2018
1,284

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

Six Months Ended
September 30, 2019
(From April 1, 2019 to
September 30, 2019)
747

149

(195)

16

(20)

Foreign currency translation adjustments

104

(269)

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

(39)

111

(33)

(17)

197

(391)

1,482

355

1,551

354

(69)

1

Total comprehensive income
Comprehensive income attributable to:
Owners of the parent
Non-controlling interests10(3) Consolidated Statements of Cash Flows(Millions of yen)

Six Months Ended
September 30, 2018
(From April 1, 2018
to September 30, 2018)

Six Months Ended
September 30, 2019
(From April 1, 2019
to September 30, 2019)

1,606
768
23
2
(56)
(29)
(24)
121
(133)
(81)
(78)
139
(655)
－
(416)

976
755
23
3
(52)
34
(25)
92
61
(128)
(0)
4
－
(2)
－

(75)

305

(667)

(871)

(35)

209

(115)
(74)

126
(147)

Subtotal

216

1,365

Interest and dividend income received
Interest paid
Income taxes paid
Net cash provided by operating activities

152
(121)
(123)

25
(84)
(284)

123

1,022

(76)
67
(814)
472
(8)
(4)
0
887
(180)
(80)
263

(17)
20
(534)
0
(7)
(4)
3
－
－
1
(539)

Cash flows from operating activities
Income before provision of income taxes
Depreciation and amortization
Amortization of goodwill
Increase in allowance for doubtful accounts
Decrease in provision for bonuses(Decrease) increase in net defined benefit liability
Interest and dividend income
Interest expenses
Foreign exchange (gains) losses
Equity in earnings of affiliates
Gain on sales of property, plant and equipment
Loss on retirement of noncurrent assets
Transfer gain on business divestiture
Gain on sales of investment securities
Gain on change in equity
Increase (decrease) in notes and accounts
receivable—trade
Increase in inventories
Decrease (increase) in notes and accounts
payable—trade
Decrease (increase) in accrued consumption taxes
Other, net

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
Proceeds from the sale of investment securities
Proceeds from business divestiture
Payment of expenses related to business divesture
Other, net
Net cash provided by (used in) investing activities

11

(Millions of yen)

Six Months Ended
September 30, 2018
(From April 1, 2018
to September 30, 2018)

Six Months Ended
September 30, 2019
(From April 1, 2019
to September 30, 2019)

(378)
1,244
(1,194)
34
(117)
(110)
(0)
(25)

(172)
1,200
(1,313)
66
(120)
(183)
－
(14)

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

(547)

(538)

(4)

(25)

(164)

(80)

Cash and cash equivalents, beginning of period

1,538

2,051

Cash and cash equivalents, end of period

1,373

1,971

Cash flows from financing activities
Net decrease 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
Purchase of treasury stock
Cash dividends paid to non-controlling interests12(4) Notes to Quarterly Consolidated Financial Statements(Note Concerning Going Concern Assumption)
None(Note Concerning Significant Changes in Shareholders’ Equity)
None(Changes in Accounting Policies)(Application of IFRS 16 Leases)
The Nitta Gelatin Group has adopted IFRS 16 “Leases” for all overseas subsidiaries except
those in the U.S. from the beginning of the first quarter ended June 30, 2019. As atransitional measure upon the adoption of IFRS 16, the Group applies the standard, which
recognizes the cumulative effect at the date of initial adoption.
As a result, the consolidated balance sheets for the first six months ended September 30,
2019 show increases of ¥78 million in “Other” under property, plant and equipment, ¥21
million in “Other” under current liabilities, and ¥57 million in “Other” under noncurrent
liabilities.
The effect of this change on the Company’s consolidated profit and loss for the first six
months ended September 30, 2019 is negligible.
(Proposed Amendments to Practical Solution on Unification of Accounting Policies Applied
to Foreign Subsidiaries, etc. for Consolidated Financial Statements)
The Group has adopted the revised PITF No.18 Practical Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries, etc. for Consolidated Financial
Statements (revised June 28, 2019) and PITF No.24 Practical Solution on Unification of
Accounting Policies Applied to Associates Accounted for Using the Equity Method (revised
September 14, 2018) from the beginning of the first quarter ended June 30, 2019. The effectof adopting these revised practical solutions on the Consolidated Financial Statements is
negligible.
(Additional Information)(Application of the Equity Method to an Affiliate)
Guangdong Baiwei Bio Material Co., Ltd., the Company’s equity-method affiliate, acquired
all shares of Guangdong Mingyang Gelatin Co., Ltd. on September 2, 2019.
Moreover, a Director of the Company has been appointed as Chairman of Guangdong
Mingyang Gelatin Co., Ltd., and Nitta Gelatin has transferred important technology to thiscompany. Accordingly, Guangdong Mingyang Gelatin Co., Ltd. has been included in the
Company’s scope of application of the equity method.
(Segment Information)13

Six months ended September 30, 2018 (From April 1, 2018 to September 30, 2018)
The Nitta Gelatin Group’s collagen business has become the Company’s only reporting
segment, so information is omitted.
Six months ended September 30, 2019 (From April 1, 2019 to September 30, 2019)
The Nitta Gelatin Group’s collagen business has become the Company’s only reporting
segment, so information is omitted.

14