FY3/19 2Q Consolidated Financial Statements[J-GAAP]

November 12, 2018
Company name: Matsuda Sangyo Co., Ltd.
Exchanges listed on:
Tokyo Stock Exchange (First Section)
Company code:7456
URL:
http://www.matsuda-sangyo.co.jp
Representative:
Yoshiaki Matsuda, President and Representative Director
Inquiries:
Atsushi Kinoshita, Director in Charge of IR
TEL: +81-3-5381-0728
Filing date of quarterly report:
November 14, 2018
Date to start dividends distribution:
December 5, 2018
Supplementary quarterly materials prepared:
Yes
Quarterly results information meeting held:
Yes (for institutional investors and analysts)(Figures are rounded down to the nearest million yen)

1. FY3/19 2Q consolidated results (April 1, 2018 – September 30, 2018)(1) Consolidated results
Net sales(millions of yen)

FY3/19 2Q

102,721

FY3/18 2Q

94,282(Note) Comprehensive income:Operating income(%) (millions of yen)

(Percentages are year-on-year changes)(%) (millions of yen)

9.0

2,505

13.7

19.3

2,203

77.0

FY3/19 2Q: ¥1,459 million (-8.2%)

Earnings per share

Profit attributable toowners of parent

Ordinary income(%) (millions of yen)

(%)

2,722

12.3

1,856

13.1

2,422

69.7

1,641

69.4

FY3/18 2Q: ¥1,590 million (+1,979.3%)

Diluted earnings per share(yen)(yen)

FY3/19 2Q

70.49

－

FY3/18 2Q

62.34

－

(2) Consolidated financial position
Total assets

Net assets(millions of yen)(millions of yen)(%)

77,32757,73874.6

56,64870.5

End-FY3/19 2Q
End-FY3/18

80,261(Reference) Shareholders’ equity:

Shareholders’ equity ratio

End-FY3/19 2Q: ¥57,683 million

End-FY3/18: ¥56,592 million

Note: Effective from the first quarter of the current fiscal year, the Company has applied “Partial Amendments to AccountingStandard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16, 2018). The changes have been retroactively applied
to amounts for the fiscal year ended March 31, 2018.

2. Dividends
1Q
FY3/18－

FY3/19

－

(yen)

2Q

(yen)

14.00
15.00

FY3/19 (Projections)

Annual dividends
3Q

4Q

(yen)

Annual(yen)

(yen)

－

14.00

28.00

－

15.00

30.00

(Note) Revisions to the most recently announced projections of dividends: No

3. Consolidated earnings projections for FY3/19 (April 1, 2018 – March 31, 2019)(Percentages are year-on-year changes)

Net sales(millions of yen)

FY3/19200,000

Operating income

Ordinary income

Profit attributable to Earnings perowners of parentshare(%) (millions of yen)(%) (millions of yen)(%) (millions of yen)

(%)

(yen)

5.2

2.5

1.1

1.2

132.91

5,000

5,200(Note) Revisions to the most recently announced projections of consolidated earnings: No

3,500

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries in accordance withchanges in the scope of consolidation): No(2) Application of special accounting treatment in preparing the quarterly consolidated financial statements: No(3) Changes in accounting policies, changes in accounting estimates and restatement of revisions
1) Changes in accounting policies with revision of accounting standards: No
2) Changes in accounting policies other than the above:No3) Changes in accounting estimates:
No4) Restatement of revisions:No(4) Number of issued shares (common shares)
1) Number of issued shares(including treasury shares)
2) Number of treasury shares
3) Average number of shares
during the period

End-FY3/19 2Q

28,908,581 shares End-FY3/18

28,908,581 shares

End-FY3/19 2Q

2,575,665 shares End-FY3/18

2,575,524 shares

FY3/19 2Q

26,332,956 shares FY3/18 2Q

26,333,427 shares* These quarterly financial statements are outside the scope of audit procedures conducted by certified public
accountants and the independent auditor.
*Notes on appropriate use of earnings projections and other special remarks
Earnings projections and other forward-looking statements in this document are based on reasonable assumptions andinformation available to the Company at the time of release. Actual results may differ materially from forward-looking statements
due to a number of factors. For more information about earnings projections assumptions and notes regarding the use ofearnings projections, please refer to “1. Qualitative information on consolidated results during the period, (3) Qualitative
information on consolidated earnings projections” on page 3 of the attached documents.

Contents of Attached Document
1. Qualitative information on consolidated results during the period .................................................. 2(1) Qualitative information on consolidated results ............................................................................................. 2(2) Qualitative information on consolidated financial position............................................................................ 2(3) Qualitative information on consolidated earnings projections ...................................................................... 3

2. Quarterly consolidated financial statements and related notes ........................................................ 4(1) Quarterly consolidated balance sheets ............................................................................................................ 4(2) Quarterly consolidated statements of income and comprehensive income................................................. 6(3) Quarterly consolidated statements of cash flows ........................................................................................... 8(4) Notes on quarterly consolidated financial statements ................................................................................. 10(Notes on premise of a going concern) ................................................................................................................ 10(Notes on significant changes in the amount of shareholders’ equity) ................................................................. 10(Additional information) ........................................................................................................................................ 10(Segment Information, etc.) ...................................................................................................................................111

1. Qualitative information on consolidated results during the period(1) Qualitative information on consolidated results
In the first six months of the fiscal year ending March 31, 2019, the Japanese economy continued to recover at amoderate pace, supported by improving corporate earnings and employment conditions. However, the outlook
remained unclear due to risks to the global economy from trade issues and uncertainty in overseas economies.
Against this backdrop, the Matsuda Sangyo Group’s precious metals business segment stepped up marketing
activities and actively used production sites in Japan and overseas to secure precious metals materials, boostsales of products such as precious metal chemical products and expand its industrial waste treatment outsourcing
business. The food business segment worked hard to develop and provide products that address customer needs
and actively implemented marketing activities, which included expanding the use of overseas business, as well as
domestic business sites, in order to increase sales volume.
As a result of the above, for the first six months of the fiscal year ending March 31, 2019, consolidated net sales
were ¥102,721 million (up 9.0% year on year), operating income was ¥2,505 million (up 13.7% year on year),ordinary income was ¥2,722 million (up 12.3% year on year), and profit attributable to owners of parent was ¥1,856
million (up 13.1% year on year).
Performance in the Matsuda Sangyo Group’s business segments was as follows.
Precious metals business segment
In the precious metals business segment, production at key customers in the electronics sector remained firm
overall, despite some signs of slowing momentum in electronic parts and devices. Against this backdrop, theGroup’s precious metals business segment increased the volume of precious metal recycling, boosted sales
volume for precious metal products and increased the amount of industrial waste treatment. That supported highersales overall compared with the same period of the previous fiscal year, despite a decline in sales prices for
precious metal products.
As a result, net sales for the precious metals business segment totaled ¥66,266 million (up 10.1% year on year),and operating income was ¥1,625 million (up 16.9% year on year).
Food business segment
In the food business segment, production activity at key customers in the food processing sector increased
gradually, despite weakness in consumer spending in Japan. Production activity was mainly supported by strong
demand for processed food products and moves into overseas markets. In this environment, the Group’s foodbusiness segment reported higher sales compared with the same period of the previous fiscal year, supported byan increase in sales volume for seafood products and livestock products and by rising sales prices for seafoodproducts.
As a result, net sales for the food business segment were ¥36,498 million (up 6.9% year on year), and operating
income was ¥880 million (up 8.3% year on year).

(2) Qualitative information on consolidated financial position(1) Assets, liabilities and net assets
Total assets
Total assets as of the end of the first six months were ¥77,327 million, a decrease of ¥2,933 million from theprevious fiscal year end. This mainly reflected decreases in notes and accounts receivable – trade and inventories.
Liabilities
Total liabilities as of the end of the first six months were ¥19,589 million, a decrease of ¥4,023 million from theprevious fiscal year end. This mainly reflected decreases in loans.
Net assets
Net assets as of the end of the first six months were ¥57,738 million, an increase of ¥1,090 million from theprevious fiscal year end. This mainly reflected an increase in retained earnings, which exceeded year-end cash
dividends paid.

2(2) Cash flows status
As of the end of the first six months under review, the balance of cash and cash equivalents (hereafter, “cash”)
stood at ¥8,418 million, an increase of ¥846 million from the previous fiscal year end.
Cash flows from operating activities
Operating activities provided net cash of ¥5,713 million. This mainly reflected the difference between cash provided
from profit before income taxes, decrease in notes and accounts receivable – trade and decrease in inventories on
the one hand, and cash used for income taxes paid on the other. Compared with the same period in the previous
fiscal year, when operating activities provided net cash of ¥7 million, cash from operating activities increased by¥5,705 million.
Cash flows from investing activities
Investing activities used net cash of ¥556 million. This was mainly due to the purchase of property, plant andequipment, such as factory equipment and vehicles. Compared with the same period in the previous fiscal year,
when investing activities used net cash of ¥1,076 million, cash used by investing activities decreased by ¥520
million.
Cash flows from financing activities
Financing activities used net cash of ¥4,226 million. This mainly reflected decreases in loans. Compared with thesame period in the previous fiscal year, when financing activities provided net cash of ¥2,131 million, cash fromfinancing activities decreased by ¥6,357 million.

(3) Qualitative information on consolidated earnings projections
We have made no change to our consolidated earnings projections announced on May 11, 2018.

3

2. Quarterly consolidated financial statements and related notes(1) Quarterly consolidated balance sheets(millions of yen)
End-FY3/19 2Q(As of September 30, 2018)

End-FY3/18(As of March 31, 2018)
AssetsCurrent assets
Cash and deposits

7,571

8,418

Notes and accounts receivable – trade

22,502

21,442Merchandise and finished goods

16,77814,603Work in process

393

478

Raw materials and supplies

6,531

6,425

Others

3,584

3,046

(0)

(1)

57,362

54,413

Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures

9,201

9,183

Accumulated depreciation(4,875)(5,003)

Buildings and structures, net

4,325

4,179

Machinery, equipment and vehicles

8,383

8,484

Accumulated depreciation(6,740)(6,929)Machinery, equipment and vehicles, net

1,643

1,555

8,925

8,902

849

1,049

Accumulated depreciation

(284)

(374)

Leased assets, net

564

674

Construction in progress

199

281

Land
Leased assets

Others

1,135

1,317

Accumulated depreciation

(927)

(955)

Others, net

208

362

15,867

15,956

Others774

712

Total intangible assets

774

712

Investment securities

4,575

4,575

Deferred tax assets

72

81

Total property, plant and equipment
Intangible assets

Investments and other assets

Others

1,673

1,604

Allowance for doubtful accounts

(64)

(16)

Total investments and other assets

6,256

6,244

Total non-current assets

22,89822,914

Total assets

80,261

77,327

4

(millions of yen)
End-FY3/19 2Q(As of September 30, 2018)

End-FY3/18(As of March 31, 2018)
Liabilities
Current liabilities
Accounts payable – trade

7,626

6,958

Short-term loans payable

7,402

1,165

Current portion of long-term loans payable

1,063

1,249

Lease obligations

206

241

Income taxes payable

1,155

897

Provision for bonuses

763

890

Others

3,104

3,600

Total current liabilities

21,321

15,003Long-term loans payable

535

2,851

Lease obligations

456

514

Provision for directors’ retirement benefits
Provision for executive officers’ retirement
benefits
Net defined benefit liability

604

593

23

25

224

235

Deferred tax liabilities

333

305

Others

115

59

2,291

4,585

23,613

19,589Common stock

3,559

3,559

Capital surplus

4,008

4,008

Retained earnings

50,23851,725

Treasury shares(3,010)(3,010)Total shareholders’ equity

54,79556,283

Valuation difference on available-for-salesecurities

630

575

Deferred gains or losses on hedges

121

33

Non-current liabilities

Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity

Accumulated other comprehensive income

Foreign currency translation adjustment

1,101837

Remeasurements of defined benefit plans

(56)

(47)

1,796

1,399

55

55

56,64857,73880,261

77,327

Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets5(2) Quarterly consolidated statements of income and comprehensive income[Quarterly consolidated statements of income](millions of yen)
FY3/18 2Q(April 1, 2017 –September 30, 2017)

FY3/19 2Q(April 1, 2018 –September 30, 2018)

Net sales

94,282

102,721

Cost of sales

85,41092,920Gross profit

8,871

9,801

Selling, general, and administrative expenses

6,668

7,295

Operating income

2,203

2,505

Interest income

44

Dividend income

1516-

12248

160

Purchase discounts

76

Foreign exchange gains

Non-operating income

Gain on sales of investment securities
Share of profit of entities accounted for using
equity method-30

Others2232

Total non-operating income

298

263

Interest expenses

2328

Foreign exchange losses

29-

Loss on valuation of investment securities17-Others

819

Total non-operating expenses

7947

Ordinary income

2,422

2,722

Profit before income taxes

2,422

2,722

Non-operating expenses

Income taxes – current

836

839

Income taxes – deferred(65)17Total income taxes

770

856

1,652

1,865

10

8

1,641

1,856

ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

6

[Quarterly consolidated statements of comprehensive income](millions of yen)
FY3/18 2Q(April 1, 2017 –September 30, 2017)
ProfitFY3/19 2Q(April 1, 2018 –September 30, 2018)

1,652

1,865

Valuation difference on available-for-salesecurities

10(54)

Deferred gains or losses on hedges

Other comprehensive income

(47)

(93)

Foreign currency translation adjustments

3(264)

Remeasurements of defined benefit plans

86(37)

1

Share of other comprehensive income (loss) ofentities accounted for using equity method
Total other comprehensive income (loss)

(62)

(405)

1,590

1,459

Comprehensive income attributable to ownersof parent

1,577

1,459

Comprehensive income attributable to noncontrolling interests

120Comprehensive income
Comprehensive income attributable to7

(3) Quarterly consolidated statements of cash flows(millions of yen)
FY3/18 2Q(April 1, 2017 –September 30,2017)

FY3/19 2Q(April 1, 2018 –September 30,2018)

Cash flows from operating activities
Profit before income taxes

2,422

2,722

Depreciation

685

647

Increase (decrease) in allowance for doubtful accounts

(4)

(46)

Increase (decrease) in provision for bonuses

134

127

Increase (decrease) in net defined benefit liability

1922

Increase (decrease) in provision for directors’ retirement benefits

19(30)

Increase (decrease) in provision for executive officers’ retirement
benefits3(0)Interest and dividend income

(19)

(21)

Interest expenses

23

28(248)(160)(3,234)988

Decrease (increase) in inventories

470

2,140

Increase (decrease) in accounts payable – trade

(47)

(618)

Others97930

Subtotal

321

6,728

Interest and dividend income received

171

103

Interest paid

(23)

(27)

Income taxes paid

(462)

(1,091)

7

5,713

Share of (profit) loss of entities accounted for using equity method
Decrease (increase) in notes and accounts receivable – trade

Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment(1,111)(542)

Purchase of intangible assets

(28)

(31)

Purchase of investment securities

(5)

(5)

-18

69

4

(1,076)(556)

Proceeds from sales of investment securities
OthersNet cash provided by (used in) investing activities8

(millions of yen)
FY3/18 2Q(April 1, 2017 –September 30,2017)

FY3/19 2Q(April 1, 2018 –September 30,2018)

Cash flows from financing activities
Net increase (decrease) in short-term loans payable

3,142(6,244)

Proceeds from long-term loans payable-3,000

Repayments of long-term loans payable

(568)

(497)

(0)

(0)

Cash dividends paid

(368)

(368)

Others

(73)

(114)

2,131

(4,226)

Purchase of treasury shares

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents

6(84)Net increase (decrease) in cash and cash equivalents

1,069

846

Cash and cash equivalents at beginning of period

6,784

7,571

Cash and cash equivalents at end of period

7,853

8,418

9

(4) Notes on quarterly consolidated financial statements(Notes on premise of a going concern)
There is nothing to report.

(Notes on significant changes in the amount of shareholders’ equity)
There is nothing to report.

(Additional information)(Application of “Partial Amendments to Accounting Standard for Tax Effect Accounting”)
Effective from the first quarter of the current fiscal year, the Company has applied “Partial Amendments toAccounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16, 2018). As a result, theCompany now classifies deferred tax assets as investments and other assets, and deferred tax liabilities as noncurrent liabilities. Figures for the previous fiscal year in the consolidated financial statements have been reclassified
to reflect these changes.

10(Segment Information, etc.)
I. FY3/18 2Q (April 1, 2017 – September 30, 2017)
1. Sales and profits or losses by reportable segments(millions of yen)Amountrecorded onquarterly
consolidated
statements ofincomeReportable Segments
Precious
metalsbusinesssegment

Food businesssegment

Adjustments
Note 1TotalNote 2Net sales(1) Net sales to externalparties(2) Intersegment sales
and transfers
Total
Segment income(Notes)60,18034,101

94,282-

94,282-29

29(29)-

60,18034,131

94,312(29)

94,282

1,390

813

2,203-

2,203

1. Adjustments correspond to the elimination of transactions and transfers between segments.
2.Total segment income matches operating income recorded on the quarterly consolidated statements
of income.

II. FY3/19 2Q (April 1, 2018 – September 30, 2018)
1. Sales and profits or losses by reportable segments(millions of yen)Amountrecorded onquarterly
consolidated
statements ofincome

Reportable Segments
Preciousmetals
businesssegment

Food businesssegment

Adjustments
Note 1

Total

Note 2

Net sales(1) Net sales to externalparties(2) Intersegment sales
and transfers
Total
Segment income

66,26636,454

102,721-102,721-43

43(43)-

66,26636,498102,765(43)

102,721

1,625

880

2,505-

2,505(Notes) 1. Adjustments correspond to the elimination of transactions and transfers between segments.
2. Total segment income matches operating income recorded on the quarterly consolidated statements
of income.

11