May 10, 2017

Consolidated Financial Results
for the Fiscal Year Ended March 31, 2017
(Japanese Accounting Standards)

Nitta Gelatin Inc.

Name of the Listed Company:
Listing:
Stock code:
URL:
Representative:
Contact Person:

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 of General Shareholders’ Meeting:June 27, 2017
Scheduled date to file Securities Report:
June 27, 2017
Scheduled date to commence dividend payments:
June 28, 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 fiscal year ended March 31, 2017(from April 1, 2016 to March 31, 2017)(1) Consolidated operating results(Percentages indicate year-on-year changes.)
Net sales

Operating income

Net income

Ordinary income

attributable to ownersof the parent

Fiscal year ended
March 31, 2017

Millions of yen

36,575

(0.8)

1,617

27.1

1,831

86.9

693

45.1

March 31, 2016

36,885

15.6

1,273

224.2

979

1.2

477

(21.7)%

Millions of yen% Millions of yen%

Millions of yen%

Note: Comprehensive income
For the year ended March 31, 2017: ¥1,105 million (-%)
For the year ended March 31, 2016: ¥(136 million) (-%)
Net income
per share

Fiscal year ended
March 31, 2017
March 31, 2016

Diluted net income Return on equity
per share
(ROE)

Yen

Yen

Ordinary income/ Total assets%

Operatingmargin

%

%

4.5
4.7
37.74
3.2
2.7
26.00
Reference : Equity in earnings of affiliates
For the year ended March 31, 2017: ¥148 million
For the year ended March 31, 2016: ¥29 million
Note: Diluted net income per share is not disclosed due to the absence of latent shares with dilution effect.

4.4
3.5

(2) Consolidated financial position
Total assets

As ofMarch 31, 2017
March 31, 2016

Net assets

Millions of yen

Millions of yen

40,41037,597

17,736
16,876

Reference: Equity
As of March 31, 2017:
As of March 31, 2016:¥15,727 million¥14,972 million

Equity ratio

Net assets per share
%

38.9
39.8

Yen

855.97814.90(3) Consolidated cash flows
Net cash provided byoperating activities

Fiscal year ended
March 31, 2017
March 31, 2016

Net cash provided by(used in) financing
activities

Net cash used ininvesting activities

Millions of yen

Millions of yen

1,910
2,385

(2,473)(1,860)Cash andcash equivalents
at end of year

Millions of yen

Millions of yen

601
(473)

2,550
2,536

2. Cash dividendsFirstquarter

Secondquarter

Third
quarter

Fiscalyear-end

AnnualTotal amountof dividends(annual)

Yen

Yen

Yen

Yen

Yen

Millions of yen

-

6.00

-

6.00

12.00

220

46.2

1.5

-

6.00

-

6.00

12.00

220

31.8

1.4

-

6.00

-

6.00

12.00

Cash dividends per share

Fiscal year ended
March 31, 2016
Fiscal year ended
March 31, 2017
Fiscal year ending
March 31, 2018
(Forecasts)

Payout ratio(consolidated)

Dividends on
net assets(consolidated)

%

%

22.0

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

Six months ending
September 30, 2017
Fiscal year ending
March 31, 2018

Millions ofyen%Millions ofyen

18,7005.3

65038,5005.3

1,600

Net income

Ordinary
incomeattributable to ownersof the parent

Net
incomeper share

Millions ofyen%Millions ofyen%(29.7)

650

(5.6)

400

(1.3)

21.77

(1.1)

1,600

(12.6)

1,000

44.2

54.43

%

Yen

Notes:(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in achange in the scope of consolidation): No
New:
None
Excluded: None
(2) 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 “(5)Notes to Consolidated Financial Statements in “3. Consolidated
Financial Statements” on page 18 of the Attachment to this report.
(3) Number of common shares issued
a. Total number of issued shares at the end of the period (including treasury stock)
As of March 31, 201718,373,974 shares
As of March 31, 2016
18,373,974 sharesb. Number of shares of treasury stock at the end of the period
As of March 31, 2017
162 shares
As of March 31, 2016
162 sharesc. Average number of shares
For the year ended March 31, 2017
For the year ended March 31, 2016

18,373,812 shares
18,373,812 shares

(Reference) Summary of non-consolidated operating results
1. Non-consolidated financial results for the fiscal year ended March 31, 2017(from April 1, 2016 to March 31, 2017)(1) Non-consolidated operating results(Percentages indicate year-on-year changes.)
Net sales

Operating income

Ordinary income

Net income

Fiscal year ended
March 31, 2017

Millions of yen

22,902

0.7

1,229

55.8

1,647

96.7

663

346.2

March 31, 2016

22,746

4.0

789

109.2

837

(31.0)

(269)

-

%

Net income
per share

Millions of yen%

Millions of yen%

Millions of yen%

Diluted net income
per share

Fiscal year ended
March 31, 2017

36.14

-

March 31, 2016(14.68)

-

Yen

Yen

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

(2) Non-consolidated financial position
Total assets

Net assets

Equity ratio

Net assets per share

As ofMarch 31, 2017

Millions of yen

28,231

14,23850.4

774.93

March 31, 2016

26,331

13,65451.9

743.17

Millions of yen%

Yen

Reference: Equity
As of March 31, 2017: ¥14,238 million
As of March 31, 2016: ¥13,654 million* This financial results report is out of scope of financial audit.
* 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 “(4) Outlook” under “1. Overview ofBusiness Results” on page 5 of the Attachment to this report.

Attachment Contents
1. Overview of Business Results ･････････････････････････････････････････････････････････ 2(1) Operating Results for the fiscal year ended March 31, 2017 ･･･････････････････････････････ 2(2) Financial Position ････････････････････････････････････････････････････････････････ 3(3) Cash Flows ･････････････････････････････････････････････････････････････････････ 4(4) Outlook ････････････････････････････････････････････････････････････････････････ 5(5) Basic Policies Concerning Management ･･････････････････････････････････････････････ 6
2. Basic Approach to Selection of Accounting Standard ･････････････････････････････････････ 8
3. Consolidated Financial Statements and Key Notes ･･･････････････････････････････････････ 9(1) Consolidated Balance Sheets･･････････････････････････････････････････････････････ 9(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income ･････････････････････････････････････････････････ 11
Consolidated Statements of Comprehensive Income ････････････････････････････････････ 12(3) Consolidated Statements of Changes in Net Assets ･････････････････････････････････････ 13(4) Consolidated Statements of Cash Flows ･････････････････････････････････････････････ 14(5) Notes to Consolidated Financial Statements ･･････････････････････････････････････････ 16(Note Concerning Going Concern Assumption) ･･･････････････････････････････････････ 17(Changes in Accounting Policies) ･･････････････････････････････････････････････････ 17(Segment Information) ･･･････････････････････････････････････････････････････････ 17(Per Share Information) ･･････････････････････････････････････････････････････････ 20(Subsequent Events) ･････････････････････････････････････････････････････････････ 20

11. Overview of Business Results(1) Operating Results for the fiscal year ended March 31, 2017
In the fiscal year ended March 31, 2017, global economies continued to recover gradually,
with the recovery highlighted by strong economic indicators in Europe, the U.S. and China.
The Japanese economy continued on a moderate recovery trend, supported by capital
expenditures and exports. However, the outlook remains uncertain, based in part on risk
factors such as the policies of the new U.S. administration and political conditions in Europe.
Under these conditions, the Nitta Gelatin Group adopted “New Vision, New Direction”
as its corporate slogan and formulated its medium-term management plan running throughthe fiscal year ending March 31, 2018. Guided by the plan, the Group worked to address thestrategic priorities: 1. Develop high-value-added products, 2. Ensure optimal production andoptimal sales, and 3. Strengthen global business foundations.
As a result, in the fiscal year ended March 2017, net sales declined 0.8% year on year to¥36,575 million and operating income increased 27.1% to ¥1,617 million. Ordinary income
rose 86.9% to ¥1,831 million, mainly due to foreign exchange gains. Net income attributableto owners of the parent increased 45.1% year on year to ¥693 million, reflecting ¥397 million
recorded for loss on retirement of noncurrent assets at overseas subsidiaries and so forth as
an extraordinary loss.
Segment business performance was as follows:(Collagen Material Business)
In the gelatin field, sales of gelatin for use in microwaveable delicatessen items increased inJapan atop growing demand for ready-made meals. Moreover, sales of gelatin for capsules
increased, underpinned by firm sales of health foods against the backdrop of rising healthconsciousness in step with Japan’s aging society. These positive factors led to increases inboth sales and profits in Japan. In North America, delays in the recovery of thegelatin-for-capsules market caused overall sales to falter, despite an increase in sales from
Vyse Gelatin, LLC, which was acquired to expand new sales channels in the gelatin-for-foodmarket.
In the collagen peptide field, sales for use in general food products increased. This sales
growth was supported by the fact that collagen peptide is able to add functional properties tobeverages, as well as snacks and other food products, without changing their flavor. However,demand from inbound tourists visiting Japan from abroad subsided, leading to a decline inoverall sales. Nitta Gelatin is participating in a demonstration trial for an innovative researchand development program of the Cabinet Office of Japan. Under this program, Nitta Gelatin
studied the connection between the consumption of collagen peptide and improvements inbrain function. As a result, the study suggested the potential for collagen peptide to improve
the quality of nerve fibers in the brain, thereby helping to improve neural signal transmission.
2This finding was announced in a news release.
In collagen casings, sales trended firmly in the U.S., leading to higher overall sales andimproved profits.
As a result, net sales in this segment declined 3.3% to ¥26,782 million, while segment
profit (operating income) increased 6.2% to ¥1,945 million.
(Formula Solution Business)
In food materials, sales and profits increased, mainly driven by higher sales of new gelling
agents for use in confectionary and desserts through consulting-based sales activities closely
attuned to customers.
In adhesives, sales declined year on year for bookbinding, but demand grew for hygiene
products, leading to higher overall sales. Profits improved due to cost-cutting efforts. In
high-performance gaskets, sales increased in line with a growing range of applications forthese products, including automotive electronic components and health and medical devices.
As a result, net sales in the segment were up 6.5% year on year to ¥9,792 million andsegment profit (operating income) increased 30.6% year on year to ¥1,061 million.

(2) Financial Position(Assets)
Total assets amounted to ¥40,410 million at March 31, 2017, ¥2,812 million higher than at
March 31, 2016. This was mainly attributable to increases in notes and accounts
receivable-trade, inventories such as raw materials and supplies, and goodwill.
(Liabilities)
Total liabilities stood at ¥22,674 million at March 31, 2017, ¥1,953 million higher than at
March 31, 2016. This was mainly attributable to increases in short-term loans payable,
long-term loans payable (including the current portion), accounts payable-other, and income
taxes payable.
(Net assets)
Net assets amounted to ¥17,736 million at March 31, 2017, ¥859 million higher than at
March 31, 2016. This was mainly attributable to increases in retained earnings andremeasurements of defined benefit plans.
As a result, the equity ratio stood at 38.9% at March 31, 2017, compared to 39.8% at
March 31, 2016.

3

(3) Cash Flows
Cash and cash equivalents (“cash”) as of March 31, 2017 was ¥2,550 million, up ¥13 million
from March 31, 2016.
Cash flows for each activity and reasons are as follows.
(Net cash provided by operating activities)
Operating activities provided net cash of ¥1,910 million. The main contributing factors wereincome before income taxes and minority interests of ¥1,427 million, depreciation andamortization of ¥1,486 million, notes and accounts receivable-trade of ¥1,480 million, andloss on retirement of noncurrent assets of ¥397 million.
(Net cash used in investing activities)
Investing activities used net cash of ¥2,473 million. The main uses of cash were ¥1,547
million for the purchase of property, plant and equipment, and ¥917 million for payment for
the transfer of business.
(Net cash provided by financing activities)
Financing activities provided net cash of ¥601 million. The main sources of cash were
proceeds from long-term loans payable of ¥2,665 million and net increase in short-term loans
payable of ¥677 million, which were partially offset by the repayment of long-term loans
payable of ¥2,402 million.
(Reference)
Trends in cash flow indicators are as shown below:
Fiscal year ended

Fiscal year ended

Fiscal year ended

Fiscal year ended

Fiscal year ended

March 31, 2013 March 31, 2014 March 31, 2015 March 31, 2016 March 31, 2017

Equity ratio (%)

38.0

43.4

45.0

39.8

38.9

Market value equity ratio
(%)

80.6

61.3

44.1

35.9

34.3

Interest-bearing debt tocash flow ratio (Years)

3.4(11.8)

4.5

4.4

5.9

Interest coverage ratio(Times)

13.8

(5.2)

13.6

7.6

8.1

Equity ratio: equity / total assets
Market value equity ratio: market capitalization / total assets
Interest-bearing debt to cash flow ratio: interest-bearing debt / cash flow
Interest coverage ratio: cash flow / paid interest
Notes: 1. All indicators are calculated using consolidated financial figures.
2. Market capitalization is calculated based on the number of issued shares, excluding4

treasury stock, as of the end of the fiscal year.
3. The figure used for cash flow is “net cash provided by operating activities” on the
consolidated statements of cash flows.
4. Interest-bearing debt includes all liabilities recorded on the consolidated balance
sheets on which interest was paid. Furthermore, regarding the paid interest, we use“interest expenses paid” recorded on the consolidated statements of cash flows.

(4) Outlook
The fiscal year ending March 31, 2018 will be a major milestone year marking the founding
centenary of Nitta Gelatin. Guided by its basic strategy of “Pursue Quality,” the Nitta GelatinGroup will enhance quality in all aspects of its business operations, including sales,
production, quality assurance, and research and development. In addition, the Group will
work to produce and sell products in optimal locations, along with cutting costs further,mainly by reducing the costs of raw materials and logistics.
In Japan, the Company foresees the continuation of a robust business trend in edible andpharmaceutical gelatin against the backdrop of an increase in demand for ready-made foodsuch as delicatessen items and boxed lunches, and heightened health consciousness.
Meanwhile, the Company is concerned about a possible rise in manufacturing costs driven
mainly by the yen’s appreciation and energy costs. In addition, the Company expects to facechallenging conditions in North America due to intensified competition. In contrast, theCompany is projecting growing demand in emerging countries in Asia for gelatin, collagen
peptide, and collagen casing. Eyeing this demand, the Company will work to expand sales
globally, centered on Asia.
With regard to capital investment, the Company will invest in projects that realize
products and services of high added value in Japan. Overseas, the Company will execute
investments aimed at increasing production capacity and enhancing productivity, as well as
addressing environmental conservation.
Based on the aforementioned assumptions, the Company’s consolidated business forecasts
for the fiscal year ending March 31, 2018 are as follows:(Millions of yen)

Forecasts

Year on year

Net sales

38,500+5.3%

Operating income

1,600

+1.1%

Ordinary income

1,600+12.6%Net profit attributable to ownersof the parent

1,000+44.2%

5

(5) Basic Policies Concerning Management
1) Basic Management Policies
At its heart, our management policy is to contribute to the creation of a prosperous society
for all humankind. The Group’s approach to achieve this is to make full use of collagenmaterials that have been utilized over the years and to add high market value to them for
return to society as products for the food, health and beauty and industrial markets. Ourpolicy also calls for management from a global perspective, as a Company working towards
the conservation of the Earth’s environment.
Corporate Philosophy
Based on a spirit of empathy and sincerity, we, the members of the Nitta Gelatin
Family, are dedicated to the development of our business and contributions to theglobal community.
We will lead prosperous and fulfilling lives through our competence and utmost efforts.
2) Target Management Indicators
From the viewpoint of improving both business growth and profitability, management
indicators important to the Nitta Gelatin Group are consolidated net sales, and consolidated
operating income. The Group aims to maximize earnings based on sustained business growthby providing products and services that satisfy customers' needs, and by continually reducing
cost and improving productivity to remain competitive as a manufacturer.
3) Medium- to Long-term Management Strategies and Issues Facing the Company
In Japan, business opportunities are emerging in the food market, driven, for example, byrising consumer needs for “convenient and instant” food products that can be consumed withvery little preparation, such as pouch-packaged delicatessen items, frozen food, andmicrowaveable food products. These customer needs reflect growing personal consumption
due to the increase in inbound travelers to Japan from abroad, and the increasing tendency to
eat alone, reflecting the greater participation of women in the workforce and the aging ofsociety. Overseas, the U.S. remains on a gradual recovery path, while emerging countries in
Asia offer prospects for further growth in the food and pharmaceutical markets, supported byhigh economic growth rates and population increases. The Company understands theimportance of executing business strategies tailored to trends in Japan and each of theseoverseas regions.
Recognizing this, Nitta Gelatin has formulated a new slogan, “New Vision, New
Direction.” Guided by its basic strategy of “Pursue Quality,” the Company will enhancequality in all aspects of its business operations, including sales, production, quality assurance,and research and development. Moreover, the Company will implement three strategic

6

priorities: 1. Develop high value-added products, 2. Ensure optimal production and optimal
sales, and 3. Strengthen global business foundations.
The outlook for the business environment is expected to remain uncertain, affected by
the yen’s depreciation and rising energy costs, and political conditions in the U.S. and Europe,among other factors. However, by steadily achieving the abovementioned strategic priorities,
Nitta Gelatin will maximize earnings and enhance its corporate value, with the aim of making
a sustainable contribution to society.
(Collagen Material Business)
In the gelatin field, Nitta Gelatin plans to strengthen its global competitiveness by further
reducing costs through increased production efficiency and a strengthened supply chain of
raw materials. In addition, the Company will sell the products of its Group companies ingrowing fields in the food market and optimal regions, such as areas close to production
regions, thereby increasing sales and profits. In collagen peptide, Nitta Gelatin will increase
sales for use in general food products and strive to increase consumers’ understanding ofcollagen peptide’s functional properties. Moreover, Nitta Gelatin will explore and develop
new functional properties, such as by studying the connection between the consumption ofcollagen peptide and improvement in brain function, with a view to developing highly
profitable new markets. In collagen casings, the Group intends to enhance its sales andearnings by increasing productivity at its manufacturing facilities in North America anddeveloping new customers. In the life science field, based on research and development
activities focused on materials for use in research and medicine, Nitta Gelatin will work topopularize the application of these materials in the field of regenerative medicine as it works
to nurture this field into a future core business.
(Formula Solution Business)
In the food material business, Nitta Gelatin will provide products that create new value forcustomers using cutting-edge application technologies, with the aim of further expanding
business. In the adhesives field, based on rising demand for disposable diapers overseas,
Nitta Gelatin expects demand for adhesives for use in hygiene products to continue to trend
firmly. In high-performance gaskets, the Company will pioneer new applications and develop
new products that accurately capture customer needs, with the aim of driving further sales
growth in Japan and the rest of Asia.
(New Vision)
In April 2017, the Nitta Gelatin Group formulated a new vision to mark its founding
centenary.

7

“To stay healthy and feeling young”
Nitta Gelatin group fulfills this desire of people worldwide through our relentless
pursuit of meeting collagen’s enormous potential.
1. We will provide products and services that meet our customers’ expectations ofcontinued 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 thatencourages facing and overcoming challenges.
To realize this vision, Nitta Gelatin reorganized the Company from a structure based onmaterials-based divisions to a function-based organization. Specifically, it abolished theGelatin Division, Peptide Division, Food Division and International Business Division, andestablished a Manufacturing Division and Research and Development Center. Together with
the Sales & Marketing Division and Adhesives Division, the new organization will have four
divisions. The new organization will formulate market-specific strategies, along with pushingahead with efforts to strengthen the Nitta Gelatin Group’s global management. The researchand development departments of each division will be integrated into the Research andDevelopment Center. The Research and Development Center will conduct research anddevelopment into products for the food market, health and beauty market, and biomaterials
market, and also conduct basic research into new businesses.
2. Basic Approach to Selection of Accounting Standard
The Nitta Gelatin Group plans to prepare its consolidated financial statements based onJapanese accounting standards in the near 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 Japanand abroad, 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
adoption of IFRS by its peer companies.

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

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Land
Lease assets
Accumulated depreciation
Lease assets, net
Construction in process
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Net defined benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

9

Fiscal 2015

Fiscal 2016

(As of March 31, 2016)(As of March 31, 2017)

2,688
7,375
5,262
1,429
2,275
182
447
(2)
19,657

2,662
8,923
5,043
1,168
2,997
180
738
(22)
21,686

10,267(5,855)
4,412
15,937(10,936)
5,000
2,542
1,188
(548)
640
957
1,362
(1,191)
171
13,724

10,204(5,864)
4,339
16,046(11,164)
4,882
2,547
1,152
(588)
564
1,366
1,390
(1,181)
209
13,910

357
357

454
405
859

2,919
136
189
421
191
(0)
3,858
17,94037,597

3,052
2
148
565
186
(0)
3,954
18,72440,410(Millions of yen)

Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Lease obligations
Accounts payable-other
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Lease obligations
Deferred tax liabilities
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 (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive loss
Non-controlling interests
Total net assets
Total liabilities and net assets

10

Fiscal 2015

Fiscal 2016

(As of March 31, 2016)(As of March 31, 2017)

4,252
2,186
2,215
230
1,261
145
213
569
11,076

4,347
2,866
2,432
230
1,711
509
259
679
13,037

5,380
469
769
2,938
85
9,644
20,720

5,425
388
890
2,851
80
9,636
22,674

3,144
2,966
9,569
(0)
15,6803,144
2,966
10,042(0)
16,153

1,024

1,107

(38)
466
(2,160)(707)
1,904
16,876
37,59743
331(1,907)(426)
2,009
17,736
40,410(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income(Millions of yen)

Net sales
Cost of sales
Gross profit on sales
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Rent income
Equity in earnings of affiliates
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Commissions paid
Other
Total non-operating expenses
Ordinary income
Extraordinary gains
Gain on sales of noncurrent asset
Gain on negative goodwill
Gain on change in equity
Total extraordinary gains
Extraordinary losses
Disposal costs for noncurrent assets
Loss on retirement of noncurrent assets
Loss on stepped acquisitions
Total extraordinary losses
Income before income taxes and minority interests
Income taxes
Income taxes-deferred
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent

11

Fiscal 2016

Fiscal 2017

(From April 1, 2015
to March 31, 2016)(From April 1, 2016
to March 31, 2017)36,88529,196
7,689
6,416
1,273

36,57528,158
8,416
6,798
1,617

27
29
44
29
69
202

17
31
41
148
214
58
511

315
151
13
14
495
979

234
30
33
298
1,831

67
502
157
727

-

45
620
666
1,040
425
3
428
612
134
477

5
397
403
1,427
644
16
661
766
73
693

Consolidated Statements of Comprehensive Income(Millions of yen)

Net income
Other comprehensive income (loss)
Valuation difference on other available-for-salesecurities
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Pension liability adjustment
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income (loss)
Total comprehensive income
Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

12

Fiscal 2016

Fiscal 2017

(From April 1, 2015
to March 31, 2016)(From April 1, 2016
to March 31, 2017)

612

766

(96)

82

(68)
(731)
(255)

113
(39)
259

402

(76)

(748)
(136)

339
1,105

(100)
(35)

975
130

(3) Consolidated Statements of Changes in Net Assets
Fiscal 2016 (From April 1, 2015 to March 31, 2016)(Millions of yen)
Shareholders’ equity

Balance at the beginning of fiscal year

Capital stock

Capital surplus

Retained earnings

3,144

2,966

9,312

Treasury stock

Total shareholders’equity(0)15,423

Changes during the fiscal year
Dividends from surplus
Net income attributable to ownersof the parent
Gain (loss) in non-controllinginterests due to increase inconsolidated subsidiaries
Net changes of items other thanshareholders’ equity

(220)

(220)

477

477
-

Total changes during fiscal year

-

-

257

-

257

Balance at the end of fiscal year

3,144

2,966

9,569

(0)

15,680

Other accumulated comprehensive income
Valuationdifference on
available-forsale securities

Balance at the beginning of fiscal year

1,121

Deferred gains
or losses onhedgesForeigncurrencytranslation
adjustment

Remeasurements ofdefined benefit
plans

Total otheraccumulatedcomprehensiv
e income

601(1,908)(152)

33

Noncontrollinginterests

Total net
assets102

15,373

Changes during the fiscal year
Dividends from surplus
Net income attributable to ownersof the parent
Gain (loss) in non-controllinginterests due to increase inconsolidated subsidiaries
Net changes of items other thanshareholders’ equity

(220)
477
1,848

1,848

(96)

(71)

(135)

(252)

(555)

(46)

(602)

Total changes during fiscal year

(96)

(71)

(135)

(252)

(555)

1,801

1,503

Balance at the end of fiscal year

1,024

(38)

466

(2,160)

(707)

1,904

16,876

13

Fiscal 2017 (From April 1, 2016 to March 31, 2017)(Millions of yen)
Shareholders’ equity

Balance at the beginning of fiscal year

Capital stock

Capital surplus

Retained earnings

3,144

2,966

9,659

Treasury stock

Total shareholders’equity(0)15,680Changes during the fiscal year
Dividends from surplus

(220)

(220)

Net income attributable to ownersof the parent

693

693

Gain (loss) in non-controllinginterests due to increase inconsolidated subsidiaries
Net changes of items other thanshareholders’ equity

-

-

472

-

472

Total changes during fiscal year

3,144

2,966

10,042(0)

16,153

Balance at the end of fiscal year

3,144

2,966

9,659

(0)

15,680

Other accumulated comprehensive income
Valuationdifference on
available-forsale securities

Balance at the beginning of fiscal year

1,024

Deferred gains
or losses onhedgesForeigncurrencytranslation
adjustment

Remeasurements ofdefined benefit
plans

Total otheraccumulatedcomprehensiv
e income

466(2,160)

(707)

(38)

Noncontrollinginterests

Total net
assets

1,904

16,876

Changes during the fiscal year
Dividends from surplus
Net income attributable to ownersof the parent
Gain (loss) in non-controllinginterests due to increase inconsolidated subsidiaries

(220)
693
82

81

(134)

252

281

104

386

82

81

(134)

252

281

104

859

Total changes during fiscal year

1,107

43

331

(1,907)

(426)

2,009

17,736

Balance at the end of fiscal year

1,024

(38)

466

(2,160)

(707)

1,904

16,876

Net changes of items other thanshareholders’ equity14(4) Consolidated Statements of Cash Flows(Millions of yen)

Cash flows from operating activities
Income before income taxes and minority
interests
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in provision for directors'
retirement benefits
Increase (decrease) in provision for bonuses
Decrease in allowance for doubtful accounts
Increase in net defined benefit liability
Interest and dividends income
Interest expenses
Foreign exchange losses (gains)
Equity in earnings of affiliates
Gain on sales of property, plant and equipment
Loss on retirement of noncurrent assets
Loss on change in equity
Gain on negative goodwill
Loss on stepped acquisitions
Decrease (increase) in notes and accounts
receivable-trade
Increase in inventories
Increase (decrease) in notes and accounts
payable-trade
Increase in accrued consumption taxes
Other, net
SubtotalInterest and dividends income received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Proceeds from the sale of property, plant andequipment
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from the sale of investment securities
Purchase of investment securities
Purchase of stocks of affiliates
Purchase of insurance funds
Payment for the transfer of business
Proceeds from surrender of insurance funds
Other, net
Net cash used in investing activities

15

Fiscal 2016

Fiscal 2017

(From April 1, 2015
to March 31, 2016)(From April 1, 2016
to March 31, 2017)

1,040

1,427

1,562

-

1,486
27

(38)

-

42
(0)
21
(57)
315
188
(29)
(67)
45
(157)
(502)
620

46
19
55
(48)
234
0
(148)
5
397
-

(479)

(1,480)

(109)

156

724

63

36
(103)
3,051
125
(315)
(476)
2,385

54
96
2,393
84
(234)
(333)
1,910

(148)
27

(85)
125

73

4

(1,548)
(17)
2
(6)
(222)
(2)
(17)
(1,860)(1,547)
(69)
0
(8)
(0)
(917)
20
6
(2,473)

(Millions of yen)

Cash flows from financing activities
Net increase (decrease) in short-term loans
payableProceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from sale-and-leaseback transactions
Repayments of lease obligations
Payments from non-controlling interests
Repayments to non-controlling interests
Cash dividends paid
Cash dividends paid to non-controlling interests
Net cash (used in) provided by financing
activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of the fiscal
year
Increase in cash and cash equivalents from newly
consolidated subsidiaries
Decrease in cash and cash equivalents fromexclusion of subsidiary from consolidation
Cash and cash equivalents at end of the fiscal year

16

Fiscal 2016

Fiscal 2017

(From April 1, 2015
to March 31, 2016)(From April 1, 2016
to March 31, 2017)

(544)

677

2,821
(2,502)
228
(254)
29
(21)
(220)
(10)

2,665
(2,402)
154
(248)
(220)
(25)

(473)

601

(103)

(24)

(51)

13

2,602

2,536

24

-

(38)

-

2,536

2,550

(5) Notes to Consolidated Financial Statements(Note Concerning Going Concern Assumption)
None.
(Changes in Accounting Policies)(Application of Practical Solution on a Change in Depreciation Method due to Tax Reform
2016)
Following the revision of the Corporation Tax Code, the Company applied “Practical
Solution on a Change in Depreciation Method due to Tax Reform 2016” (ASBJ Practical
Issues Task Force Report No. 32, June 17, 2016) from the fiscal year ended March 31, 2017.
Accordingly, the depreciation method for buildings acquired on or after April 1, 2016 will bechanged from the declining-balance method to the straight-line method.
The effect of this change on the Company’s consolidated profit and loss for the fiscal
year ended March 31, 2017 is negligible.
(Segment Information)a. Segment information
1. Overview of reporting segments
The Company’s reporting segments are the compositional units of the Company for which
separate financial information is available. They are periodically examined by the Board of
Directors for the purpose of deciding on allocation of management resources and evaluating
business results.
The Company formulates a comprehensive worldwide strategy for the products andservices it handles and conducts business activities based on operations that are divided alongproduct and service lines.
As a result, the Company is composed of product and service segments based on
business activity, with two reporting segments: “Collagen Material” and “Formula Solution.”
In Collagen Material Business, the Company manufactures gelatin, collagen peptide,collagen casings and other products.
In Formula Solution Business, the Company manufactures various food materials,
adhesives and other products.
2. Calculation methods for net sales, income and loss, assets and other items byreporting segment
The accounting methods used for the reported business segments are the same as theaccounting methods the Company applies for consolidated financial reporting purposes.
Segment income for reporting segments represents operating income.
Intersegment sales and transactions are based on prevailing market prices.

17

3. Information on net sales, income and loss, assets and other items by reporting
segment
Fiscal year ended March 31, 2016 (From April 1, 2015 to March 31, 2016)(Millions of yen)

Reporting segment

Net sales
Sales to third parties
Inter-segment sales andtransfers
Total
Segment income
Segment assets
Other items
Depreciation andamortization
Increase in property,
plant and equipment
and intangible assets*1

Amounts in the
consolidated
financialstatements*2

Collagenmaterial
business

Formulasolutionbusiness

Total

27,686

9,199

36,885-36,885

1,911

8

1,920

(1,920)-29,598
1,832
29,907

9,207
812
5,474

38,8052,645
35,381(1,920)(1,371)
2,216

36,885
1,273
37,597

1,420

100

1,520

42

1,562

1,362

37

1,399

62

1,462

Adjustments(Notes) 1. Adjustments are as follows:(1) Adjustment for segment income of (¥1,371) million comprises elimination ofintersegment transactions of ¥0 million and unallocated expenses of (¥1,372) million.
Unallocated expenses are mainly general and administrative expenses.
(2) Adjustment for segment assets of ¥2,216 million comprises elimination ofintersegment transactions of (¥718) million and unallocated assets of ¥2,934 million.
Major components of the unallocated assets are cash and deposits, property, plant andequipment, and investment securities.
2. Segment income is adjusted against the operating income recorded in the consolidated
income statement.
3. Segment liabilities have not been reported, as they are serviced periodically inconsolidation by the Company’s highest decision making authority.

18

Fiscal year ended March 31, 2017 (From April 1, 2016 to March 31, 2017)(Millions of yen)

Reporting segment

Net sales
Sales to third parties
Inter-segment sales andtransfers
Total
Segment income
Segment assets
Other items
Depreciation andamortization
Increase in property,
plant and equipment
and intangible assets

Adjustments*1

Amounts in the
consolidated
financialstatements*2

Collagenmaterial
business

Formulasolutionbusiness

Total

26,782

9,792

36,575-36,575

1,874

9

1,884

(1,884)-28,656
1,945
31,388

9,802
1,061
6,010

38,4593,006
37,399(1,884)(1,389)3,011

36,575
1,617
40,410

1,351

86

1,437

48

1,486

1,976

47

2,023

36

2,060

(Notes) 1. Adjustments are as follows:(1) Adjustment for segment income of (¥1,389) million comprises elimination ofintersegment transactions of ¥13 million and unallocated expenses of (¥1,402) million.
Unallocated expenses are mainly general and administrative expenses.
(2) Adjustment for segment assets of ¥3,011 million comprises elimination ofintersegment transactions of (¥714) million and unallocated assets of ¥3,726 million.
Major components of the unallocated assets are cash and deposits, property, plant andequipment, and investment securities.
2. Segment income is adjusted against the operating income recorded in the consolidated
income statement.
3. Segment liabilities have not been reported, as they are serviced periodically inconsolidation by the Company’s highest decision making authority.

19(Per Share Information)
Fiscal 2016

Fiscal 2017

(From April 1, 2015
to March 31, 2016)(From April 1, 2016
to March 31, 2017)

Net assets per share¥814.90¥855.97

Net income per share

26.00

37.74

Notes: 1. Diluted net income per share is not disclosed due to the absence of latent shares withdilution effect.
2. Basis for calculating per share data is shown below.
Fiscal 2016

Fiscal 2017

(From April 1, 2015
to March 31, 2016)(From April 1, 2016
to March 31, 2017)

Profit per share
Net income attributable to owners of the parent(Millions of yen)

477

693

Amounts not attributable to common shareholders(Millions of yen)--

Net income attributable to owners of the parent
related to common stock (Millions of yen)

477

693

Average number of common shares during theperiod (shares)

18,373,812

18,373,812(Subsequent Events)
No items to report20