May 10, 2018

Consolidated Financial Results
for the Fiscal Year Ended March 31, 2018
(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;
Responsible for Administration Department
Tel: +81-72-949-5381
Scheduled date of General Shareholders’ Meeting:June 27, 2018
Scheduled date to file Securities Report:
June 27, 2018
Scheduled date to commence dividend payments:
June 28, 2018
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, 2018(from April 1, 2017 to March 31, 2018)(1) Consolidated operating results(Percentages indicate year-on-year changes.)
Net sales

Fiscal year ended
March 31, 2018
March 31, 2017

Operating income

Millions of yen%

37,77736,575

Millions of yen

3.3
(0.8)

1,095
1,617

Net income
attributable to ownersof the parent

Ordinary income%

Millions of yen

1,009
1,831

(32.3)
27.1%

Millions of yen%(44.9)
86.9

(615)
693

45.1

Note: Comprehensive income
For the year ended March 31, 2018: ¥(291 million) (-%)
For the year ended March 31, 2017: ¥1,105 million (-%)
Net income
per share

Fiscal year ended
March 31, 2018
March 31, 2017

Diluted net income Return on equity
per share
(ROE)

Yen

Yen

Ordinary income/ Total assets%

Operatingmargin

%

%

(4.0)
2.6
(33.50)
4.5
4.7
37.74
Reference : Equity in earnings of affiliates
For the year ended March 31, 2018: ¥180 million
For the year ended March 31, 2017: ¥148 million
Note: Diluted net income per share is not disclosed due to the absence of latent shares with dilution effect.

2.9
4.4

(2) Consolidated financial position
Total assets

As ofMarch 31, 2018
March 31, 2017

Net assets

Millions of yen

Millions of yen

38,02540,41017,197
17,736

Reference: Equity
As of March 31, 2018:
As of March 31, 2017:¥15,189 million¥15,727 million

Equity ratio

Net assets per share
%

39.9
38.9

Yen

826.69855.97

(3) Consolidated cash flows
Net cash provided byoperating activities

Fiscal year ended
March 31, 2018
March 31, 2017

Net cash used ininvesting activities

Net cash provided by(used in) financing
activities

Millions of yen

Millions of yen

Millions of yen

1,419
1,910

(1,377)(2,473)(1,160)601

Cash andcash equivalents
at end of year
Millions of yen

1,538
2,550

2. Cash dividendsFirstquarter

Secondquarter

Third
quarter

Fiscalyear-end

AnnualTotal amountof dividends(annual)Millions of yen

Cash dividends per share

Payout ratio(consolidated)

Dividends on
net assets(consolidated)

%

%

Yen

Yen

Yen

Yen

Yen

Fiscal year ended
March 31, 2017

-

6.00

-

6.00

12.00

220

31.8

1.4

Fiscal year ended
March 31, 2018
Fiscal year ending
March 31, 2019
(Forecasts)

-

6.00

-

6.00

12.00

220

-

1.4

-

6.00

-

6.00

12.00

-

3. Consolidated financial forecasts for the fiscal year ending March 31, 2019(from April 1, 2018 to March 31, 2019)
At this time, it is impractical for the Company to disclose numerical financial forecasts due to thelarge number of uncertain factors that could affect business performance. The Company will announce
its consolidated financial forecasts when its business performance becomes reasonably predictable.
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: 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 “(5) Notes to Consolidated Financial Statements in “3. Consolidated
Financial Statements and Key Notes” on page 17 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, 2018
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 March 31, 2018
162 shares
As of March 31, 2017
162 sharesc. Average number of shares
For the year ended March 31, 2018
For the year ended March 31, 201718,373,812 shares
18,373,812 shares

(Reference) Summary of non-consolidated operating results
1. Non-consolidated financial results for the fiscal year ended March 31, 2018(from April 1, 2017 to March 31, 2018)(1) Non-consolidated operating results(Percentages indicate year-on-year changes.)
Net sales

Operating income

Ordinary income

Net income

Fiscal year ended
March 31, 2018

Millions of yen

23,2101.3

863(29.8)

1,039(36.9)(1,256)-

March 31, 2017

22,902

0.7

1,229

55.8

1,647

96.7

663

-

%

Net income
per share

Millions of yen%

Millions of yen%

Millions of yen%

Diluted net income
per share

Fiscal year ended
March 31, 2018(68.37)-

March 31, 2017

36.14

-

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, 2018

Millions of yen

26,307

12,92949.1

703.69March 31, 201728,231

14,23850.4

774.93

Millions of yen

Yen%

Reference: Equity
As of March 31, 2018: ¥12,929 million
As of March 31, 2017: ¥14,238 million* This financial report is not subject to audits 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 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, 2018 ················································· 2(2) Financial Position ································································································· 3(3) Cash Flows ········································································································· 4(4) Outlook ············································································································· 5(5) Basic Policies Concerning Management ········································································ 5
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 ········· 11
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 ·······································································15(5) Notes to Consolidated Financial Statements ··································································17(Note Concerning Going Concern Assumption) ······························································17(Changes in Presentation Basis) ················································································17(Changes in Accounting Estimates) ············································································17(Segment Information) ···························································································18(Per Share Information) ··························································································21(Subsequent Events) ·····························································································21

11. Overview of Business Results(1) Operating Results for the fiscal year ended March 31, 2018
In the fiscal year ended March 31, 2018, the global economy continued to recover gradually, with the
U.S. and Europe remaining on a course of economic recovery and China showing signs of an upturnin business conditions.
The Japanese economy continued on a moderate recovery trend, supported by steady growth inconsumer spending atop an improving employment environment and rising wages, along withimproved corporate earnings, mainly reflecting an increase in exports and firm growth in capital
expenditures against the backdrop of a recovery in overseas economies. The outlook remains
uncertain based in part on concerns about high resource prices and trade friction arising between the
U.S. and China.
The Nitta Gelatin Group celebrated its 100th anniversary in 2018. Aiming for further growth
going forward, the Nitta Gelatin Group formulated a vision at the beginning of the fiscal year ended
March 31, 2018.
Vision“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 of continued
improvement.
2. We will broaden the range of collagen applications through our ongoing efforts in R&D andproduction innovation.
3. We will pioneer and create new markets by fostering a corporate culture that encourages
facing and overcoming challenges.
Under this vision, the Nitta Gelatin Group focused on providing products that create new value,
and on research and development in the fields of health and beauty and regenerative medicine. It also
worked to strengthen its competitiveness on a global basis by exploring new manufacturing methods
and by ensuring optimal production and optimal sales.
As a result, in the fiscal year ended March 31, 2018, net sales increased 3.3% year on year to¥37,777 million. However, operating income decreased 32.3% to ¥1,095 million, mainly due to theincrease in raw material prices for gelatin and intensified market competition in North America.
Ordinary income declined 44.9% to ¥1,009 million, mainly due to the recording of foreign exchange
losses.
Moreover, the Company recorded a ¥965 million impairment loss on noncurrent assets of Nitta
Gelatin USA, Inc. and related items as an extraordinary loss. Consequently, the Company posted a net
loss attributable to owners of the parent of ¥615 million, compared to net income attributable to2

owners of the parent of ¥693 million in the fiscal year ended March 31, 2017.
Segment business performance was as follows:(Collagen Material Business)
In the gelatin field, sales of gelatin for use in microwaveable delicatessen items increased in Japan
atop growing demand for ready-made meals. This demand was fueled by consumer preferences for
single-serve food products and shorter and easier food preparation. Against the backdrop ofheightened health consciousness, net sales increased due to firm demand for health foods such as
dairy products and supplements. However, profits declined due to the impact of high raw material
prices. In North America, profits declined due to higher prices for pig skin and intensified market
competition. In India, the capacity utilization rate of a raw materials manufacturing facility
temporarily declined due to production disruptions. However, gelatin sales trended firmly, leading toan increase in profits.
In the collagen peptide field, the functional properties of collagen peptide have become widely
recognized in Japan. Sales in the supplement market remained firm and sales of proprietary products
for general consumers increased. In China, sales were favorable because of growing demand forbeauty supplements. Due to these and other factors, net sales in the collagen peptide field increased.
In the collagen casing field, overall sales declined despite firm sales in the U.S. However, profits
increased due to changes in customers based on profitability and improved productivity following the
installation of equipment and facilities.
As a result, net sales in this segment increased 4.1% to ¥27,870 million, while segment profit(operating income) decreased 23.7% to ¥1,483 million.
(Formula Solution Business)
In food materials, sales of stabilizers for processed meat products and other items were firm, whilesales of food materials for chilled desserts were mostly unchanged from the previous fiscal year.
Profits decreased due to the impact of rising raw materials prices.
In adhesives, sales remained level year on year, as increased sales of hygiene materials
outweighed decreased sales of adhesives for use in bookbinding. Profits improved due to cost-cutting
efforts.
As a result, net sales in the segment were up 1.2% year on year to ¥9,907 million and segment
profit (operating income) decreased 4.3% year on year to ¥1,016 million.

(2) Financial Position(Assets)
Total assets amounted to ¥38,025 million at March 31, 2018, ¥2,385 million lower than at March 31,
2017. This was mainly attributable to decreases in cash and deposits and noncurrent assets.

3

(Liabilities)
Total liabilities stood at ¥20,828 million at March 31, 2018, ¥1,846 million lower than at March 31,
2017. This was mainly attributable to decreases in short-term loans payable, long-term loans payable(including the current portion) and income taxes payable.
(Net assets)
Net assets amounted to ¥17,197 million at March 31, 2018, ¥538 million lower than at March 31,
2017. This was mainly attributable to a decrease in retained earnings.
As a result, the equity ratio stood at 39.9% at March 31, 2018 compared with 38.9% at March 31,
2017.

(3) Cash Flows
Cash and cash equivalents (“cash”) as of March 31, 2018 was ¥1,538 million, down ¥1,012 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 ¥1,419 million. The main contributing factors weredepreciation and amortization of ¥1,675 million, impairment loss of ¥862 million, and income taxes
paid of ¥871 million.
(Net cash used in investing activities)
Investing activities used net cash of ¥1,377 million. The main uses of cash were ¥1,347 million forthe purchase of property, plant and equipment.
(Net cash used in financing activities)
Financing activities used net cash of ¥1,160 million. The main uses of cash were repayment oflong-term loans payable of ¥2,586 million and repayments of lease obligations of ¥250 million,
which were partially offset by proceeds from long-term loans payable of ¥2,000 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, 2014

March 31, 2015

March 31, 2016

March 31, 2017

March 31, 2018

Equity ratio (%)

43.4

45.0

39.8

38.9

39.9

Market value equity ratio (%)

61.3

44.1

35.9

34.3

39.0

(11.8)

4.5

4.4

5.9

7.2

(5.2)

13.6

7.6

8.1

6.0

Interest-bearing debt to cash
flow ratio (Years)
Interest coverage ratio(Times)4

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, excluding 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 whichinterest was paid. Furthermore, regarding the paid interest, we use “interest expenses paid”
recorded on the consolidated statements of cash flows.

(4) Outlook(Outlook for Business Performance in the Fiscal Year Ending March 31, 2019)
The fiscal year ending March 31, 2019 will be a commemorative year that will mark the 100th
anniversary of the founding of Nitta Gelatin. In order to provide products and services that meet ourcustomers’ expectations and requests for continued improvement, the Company will continue topursue the enormous potential of collagen as a unique natural material. Moreover, the Company willdevelop products that take full advantage of its research accomplishments in the fields of collagenand collagen peptide. By doing so, the Company will help to fulfill the desire of its customers “To
stay healthy and feeling young,” as laid out in its vision.
In Japan, demand for collagen and collagen peptide for use in general food products and healthfood products is forecast to remain firm. However, rising raw material and energy costs, among otherissues, are causes for concern. In addition, the business environment in North America is expected tocome under pressure due to intensified competition. With demand increasing for food materials suchas gelling agents and collagen peptide for supplements in emerging countries in Asia, the Company
will strive to increase sales and enhance profits in the region.
With regard to capital investment, the Company will invest in expanding production facilities forhigh-value-added products and renewing energy-efficient equipment and facilities in Japan. Overseas,
the Company will execute investments aimed at equipment and facilities that enhance productivity as
well as measures to address environmental conservation.
At this time, it is impractical for the Company to disclose numerical financial forecasts due to thelarge number of uncertain factors that could affect business performance. The Company will
announce its consolidated financial forecasts when its business performance becomes reasonably
predictable.

(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 collagen materials that have5

been utilized over the years and to add high market value to them for return to society as products forthe food, health and beauty and medical markets. Our policy 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, arededicated to the development of our business and contributions to the global community. We
will lead prosperous and fulfilling lives through our competence and utmost efforts.
Vision“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 of continued
improvement.
2. We will broaden the range of collagen applications through our ongoing efforts in R&D andproduction innovation.
3. We will pioneer and create new markets by fostering a corporate culture that encourages
facing and overcoming challenges.
Aiming to realize this vision and further strengthen and expand its business foundations, the Groupwill implement the following three management policies:
a. Our three core areas will be food solutions, health support, and biomedical.

Food solutions

Health support

Biomedical

To realize “more delicious and easy” food solutions, we will provide solutions
that solve customers’ issues through applications development utilizing gelatin
and gelling agents, etc., and through our unique product development andformulation technologies.
We will respond to people’s needs to maintain their youth and beauty byresearch into the functional characteristics of collagen peptides and productdevelopment capabilities over many years to fulfill the desire for health ofpeople around the world.
In the cutting-edge medical field, where ambitious initiatives are being
undertaken to develop innovative medical technology, we will contribute to the
manufacture of regenerative medicine and biomaterial through the expansion ofsafe collagen and gelatin in the medical field for use in vivo.

b. We will globally optimize our production system in Japan, Asia, and North America in responseto an era of completely free trade.
We will need to address intensified competition from overseas manufacturers entering theJapanese market when tariffs are withdrawn through trade agreements such as the Trans-Pacific6Partnership (TPP) and Economic Partnership Agreements (EPAs). To do so, we will push ahead
with production innovation at each of the Group’s manufacturing facilities in order to enhance our
global competitiveness.
c. We will promote selection and concentration and create high-value added products and services
to recreate the company as a higher-profit enterprise.
We will recreate the company as a higher-profit enterprise by optimizing our product portfolio,
along with steadily pushing ahead with our business strategies in the core businesses laid out inour vision.

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 growth by providing products andservices that satisfy customers’ needs, and by continually reducing cost and improving productivity toremain competitive as a manufacturer.

3) Medium- to Long-term Management Strategies and Issues Facing the Company
In Japan, demand for ready-made meals has been expanding, fueled by consumer preferences for
single-serve food products and shorter and easier food preparation, as more women enter theworkforce and society ages. Growing demand for ready-made meals is leading to more and more
opportunities in the markets for ready-to-serve delicatessen items, and frozen foods. Additionally, inthe run-up to the Tokyo Olympics, the number of foreign tourists visiting Japan is expected toincrease further, leading to heightened market needs for products for commercial use in the hotel andrestaurant industries. Moreover, against the backdrop of a super-aged society, health consciousness isrising among consumers. Therefore, demand is expected to continue increasing for health foods andfoods with nutrient function claims.
Overseas, the U.S. remains on a course of gradual economic recovery, and emerging Asian
countries are experiencing high economic growth rates and improved income levels. As a result,business opportunities are increasing in the markets for general food products and health foods. The
Company understands the importance of executing business strategies according to the unique trends
and characteristics of each market in Japan, North America and Asia.
Meanwhile, trends in demand for livestock products and fluctuations in the harvest of raw
material crops will have an impact on the raw material prices for the Company’s products. By
developing new suppliers using the Group’s global information network the Company will strive toensure stable procurement of raw materials at appropriate prices.
The outlook for the business environment is expected to remain uncertain, based on the impactsof high resources prices and trade friction between the U.S. and China, among other factors. However,by steadily achieving the abovementioned strategic priorities, Nitta Gelatin will maximize earnings
7and enhance its corporate value, with the aim of making a sustainable contribution to society.
(Collagen Material Business)
In the gelatin field, the Company will make every effort to restore earnings in the North Americanbusiness by revising sales strategies and boosting production efficiency. In addition, the Group willconduct cost reductions and environment measures by making labor-saving investments at theGroup’s manufacturing facilities, thereby strengthening its global competitiveness. In the collagen
peptide field, the Group will advance measures at Nitta Gelatin USA, Inc. to ensure competivenessinto the future and will work to develop the market in North America, with a view to achieving
sustainable growth. Moreover, the Group will undertake further research in the functional propertiesof collagen peptide to pave the way for product development, with a view to developing highly
profitable new markets in Japan. In China, where demand is growing for beauty supplements, theGroup will endeavor to increase production and expand sales. In collagen casings, the Group intends
to enhance its sales and earnings by driving sales growth and increasing its productivity through the
installation of equipment and facilities in North America. In the life science field, Nitta Gelatin will
pursue research and development focused on medical materials that can be safely used in vivo, alongwith conducting activities to increase recognition in the pharmaceuticals and regenerative medicine
fields, with the aim of expanding business.
(Formula Solution Business)
In the food material business, Nitta Gelatin seeks to use its proprietary application technologies todevelop products for use in food and desserts that are not only delicious but also visually attractive as
it aims to increase sales. In addition, the Company will vigorously work to develop products forcommercial use that facilitate shorter and easier food preparation.
In the adhesives field, demand for adhesives for use in hygiene products is expected to continue
to trend firmly. In high-performance gaskets, new applications are growing, including automotive
electronic components and outdoor electrical facilities. Going forward, the Company will work todevelop new applications in Japan and Asia.

2. Basic Approach to Selection of Accounting Standard
The Nitta Gelatin Group plans to prepare its consolidated financial statements based on Japanese
accounting standards in the near future. This is in consideration of the need to ensure that theconsolidated financial statements can be readily compared between different periods and different
companies.
Looking ahead, considering its management policies and various conditions in Japan and abroad,
Nitta Gelatin plans to examine the adoption of International Financial Reporting Standards (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 2017

Fiscal 2018

(As of March 31, 2017)(As of March 31, 2018)

2,662
8,923
5,043
1,163
2,997
180
738
(22)
21,686

1,626
8,966
5,152
1,240
2,944
204
338
(11)
20,461

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
13,91010,045(6,423)
3,621
16,796(11,986)
4,809
2,537
1,179
(684)
495
572
1,455
(1,240)215
12,251

454
405
859

384
395
780

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

3,451
128
102
672
239
(63)
4,532
17,56438,025

(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 2017

Fiscal 2018

(As of March 31, 2017)(As of March 31, 2018)

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

4,159
2,504
2,497
196
1,730
95
249
623
12,056

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

4,684
345
950
2,709
81
8,771
20,8283,144
2,966
10,042(0)
16,153

3,144
2,966
9,206
(0)
15,317

1,107

1,331

43
331
(1,907)(426)
2,009
17,736
40,410(43)
142(1,558)(127)
2,008
17,19738,025

(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 losses
Provision of allowance for doubtful accounts
Disposal costs for noncurrent assets
Loss on retirement of noncurrent assets
Impairment loss
Total extraordinary losses
Income before provision of income taxes
Income taxes
Income taxes-deferred
Total income taxes
Net income (loss)
Net income attributable to non-controlling interests
Net income (loss) attributable to owners of the parent

11

Fiscal 2017

Fiscal 2018

(From April 1, 2016
to March 31, 2017)(From April 1, 2017
to March 31, 2018)36,57528,158
8,416
6,798
1,617

37,777
29,814
7,963
6,867
1,095

17
31
41
148
214
58
511

15
45
30
180
72
345

234
30
33
298
1,831

235
154
9
31
431
1,009

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

63
4
35
862
965
43
493
6
499
(456)
159
(615)

Consolidated Statements of Comprehensive Income(Millions of yen)

Net income (loss)
Other comprehensive income
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
Total comprehensive income
Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

12

Fiscal 2017

Fiscal 2018

(From April 1, 2016
to March 31, 2017)(From April 1, 2017
to March 31, 2018)

766

(456)

82

224

113
(39)
259

(126)
(298)
336

(76)

28

339
1,105

165
(291)

975
130

(317)
26

(3) Consolidated Statements of Changes in Net Assets
Fiscal 2017 (From April 1, 2016 to March 31, 2017)(Millions of yen)
Shareholders’ equity
Capital stock
Balance at the beginning of fiscal year

Capital surplus

3,144

2,966

Retained earnings

Treasury stock

9,569

Total shareholders’equity(0)15,680Changes during the fiscal year
Dividends from surplus
Net income attributable to ownersof the parent
Net changes of items other thanshareholders’ equity

(220)

(220)

693

693
-

Total changes during fiscal year

-

-

472

-

472

Balance at the end of fiscal year

3,144

2,966

10,042(0)

16,153

Noncontrollinginterests

Total
net assets

1,904

16,876

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities

Balance at the beginning of fiscal year

1,024

Deferred gains(losses) onhedgesForeigncurrencytranslation
adjustment

Remeasurements ofdefined benefit
plans

Total accumulated othercomprehensive
income466(2,160)

(707)

(38)

Changes during the fiscal year
Dividends from surplus
Net income attributable to ownersof the parent
Net changes of items other thanshareholders’ equity

(220)
693
82

81

(134)

252

281

104

386

Total changes during fiscal year

82

81

(134)

252

281

104

859

Balance at the end of fiscal year

1,107

43

331

(1,907)

(426)

2,009

17,736

13

Fiscal 2017 (From April 1, 2017 to March 31, 2018)(Millions of yen)
Shareholders’ equity
Capital stock
Balance at the beginning of fiscal year

Capital surplus

3,144

2,966

Retained earnings

Treasury stock

10,042

Total shareholders’equity(0)

16,153

Changes during the fiscal year
Dividends from surplus
Net income attributable to ownersof the parent
Net changes of items other thanshareholders’ equity

(220)

(220)

(615)

(615)
-

Total changes during fiscal year

-

-

(836)

-

836

Balance at the end of fiscal year

3,144

2,966

9,209

(0)

15,317

Noncontrollinginterests

Total
net assets

2,009

17,736

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities

Balance at the beginning of fiscal year

1,107

Deferred gains(losses) onhedgesForeigncurrencytranslation
adjustment

Remeasurements ofdefined benefit
plans

Total accumulated othercomprehensive
income331(1,907)(426)

43Changes during the fiscal year
Dividends from surplus
Net income (loss) attributable toowners of the parent
Net changes of items other thanshareholders’ equity

(220)
(615)
224

(86)

(189)

349

298

(0)

297

Total changes during fiscal year

224

(86)

(189)

349

298

(0)

(538)

Balance at the end of fiscal year

1,331

(43)

142

(1,558)

(127)

2,008

17,19714

(4) Consolidated Statements of Cash Flows(Millions of yen)

Cash flows from operating activities
Income before provision of income taxes
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in provision for bonuses
Increase in allowance for doubtful accounts
Increase in net defined benefit liability
Interest and dividends income
Interest expenses
Foreign exchange losses
Equity in earnings of affiliates
Loss on sales of property, plant and equipment
Loss on retirement of noncurrent assets
Impairment loss
Increase in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts
payable-trade
Increase (decrease) 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
Payment for the transfer of business
Other, net
Net cash used in investing activities

15

Fiscal 2017

Fiscal 2018

(From April 1, 2016
to March 31, 2017)(From April 1, 2017
to March 31, 2018)

1,427
1,486
27
46
19
55
(48)
234
0
(148)
5
397
(1,480)
156

43
1,675
47
(5)
53
49
(61)
235
7
(180)
4
35
862
(181)
(296)

63

(6)

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

(67)
131
2,346
179
(235)
(871)
1,419

(85)
125

(92)
111

4

1

(1,547)
(69)
0
(8)
(917)
25
(2,473)(1,347)
(35)
(7)
(8)
(1,377)

(Millions of yen)

Fiscal 2017

Fiscal 2018

(From April 1, 2016
to March 31, 2017)(From April 1, 2017
to March 31, 2018)

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

677

(236)

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

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

2,000
(2,586)
160
(250)
(220)
(27)

Net cash (used in) provided by financing activities

601(1,160)

(24)

106

13

(1,012)

2,536

2,550

2,550

1,538

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
Cash and cash equivalents at end of the fiscal year16

(5) Notes to Consolidated Financial Statements(Note Concerning Going Concern Assumption)
None.
(Changes in Presentation Basis)(Consolidated Statements of Cash Flows)
Purchase of insurance funds and proceeds from surrender of insurance funds were reported as
separate items under cash flows from investing activities in the fiscal year ended March 31, 2017;
however, since the materiality of these items have diminished, they have been included under other,net in cash flows from investing activities from the fiscal year ended March 31, 2018. To reflect thischange in presentation basis, the financial statements for the fiscal year ended March 31, 2017 havebeen restated.
As a result, the Company has restated the purchase of insurance funds of ¥0 million and proceedsfrom surrender of insurance funds of ¥20 million shown under cash flows from investing activities on
the consolidated statement of cash flows for the fiscal year ended March 31, 2017, as others, net.
(Changes in Accounting Estimates)(Change in the useful life)
The machinery and equipment owned by certain consolidated subsidiaries had been estimated to havea useful life of eight years for depreciation purposes, based on its usage status. In the fiscal year
ended March 31, 2018, the useful life has been revised based on the actual number of years of use andother factors in conjunction with the start of operation of new machinery and equipment, and it is
now clearly expected to be longer than the previous estimate. From the fiscal year ended March 31,
2018, the useful life has therefore been changed to 10 years.
As a result, for the fiscal year ended March 31, 2018, the amount of depreciation andamortization has declined by ¥47 million compared to the previous estimation method, and operating
income, ordinary income, and income before provision of income taxes have all increased by thesame amount.

17

(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 and services it
handles and conducts business activities based on operations that are divided along product andservice lines.
As a result, the Company is composed of product and service segments based on businessactivity, with two reporting segments: “Collagen Material” and “Formula Solution.”
In Collagen Material Business, the Company manufactures gelatin, collagen peptide, collagencasings and other products.
In Formula Solution Business, the Company manufactures various food materials, adhesives andother products.
2. Calculation methods for net sales, income and loss, assets and other items by reporting
segment
The accounting methods used for the reported business segments are the same as the accounting
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.

18

3. Information on net sales, income and loss, assets and other items by reporting segment
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 andintangible assets*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

Adjustments

Notes: 1. Adjustments are as follows:(1) Adjustment for segment income of (¥1,389) million comprises elimination of intersegment
transactions of ¥13 million and unallocated expenses of (¥1,402) million. Unallocatedexpenses are mainly general and administrative expenses.
(2) Adjustment for segment assets of ¥3,011 million comprises elimination of intersegment
transactions of (¥714) million and unallocated assets of ¥3,726 million. Major componentsof the unallocated assets are cash and deposits, property, plant and equipment, andinvestment 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 in consolidationby the Company’s highest decision making authority.

19

Fiscal year ended March 31, 2018 (From April 1, 2017 to March 31, 2018)(Millions of yen)

Reporting segment

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

Amounts in the
consolidated
financialstatements*2

Collagenmaterial
business

Formulasolutionbusiness

Total

27,8709,907

37,777-

37,777

1,999

6

2,005

(2,005)-29,8691,483
29,718

9,914
1,016
5,759

39,7832,500
35,478(2,005)(1,404)2,547

37,777
1,095
38,025

1,551

75

1,627

48

1,675

862

-

862

-

862

1,146

38

1,185

83

1,269

Adjustments

Notes: 1. Adjustments are as follows:(1) Adjustment for segment income of (¥1,404) million comprises elimination of intersegment
transactions of ¥6 million and unallocated expenses of (¥1,410) million. Unallocatedexpenses are mainly general and administrative expenses.
(2) Adjustment for segment assets of ¥2,547 million comprises elimination of intersegment
transactions of (¥752) million and unallocated assets of ¥3,299 million. Major componentsof the unallocated assets are cash and deposits, property, plant and equipment, andinvestment 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 in consolidationby the Company’s highest decision making authority.

20

(Per Share Information)

Net assets per share
Net income (loss) per share

Fiscal 2017

Fiscal 2018

(From April 1, 2016
to March 31, 2017)(From April 1, 2017
to March 31, 2018)¥855.97¥826.6937.74(33.50)Notes: 1. Diluted net income per share for fiscal 2017 is not disclosed due to the absence of latent shareswith dilution effect.
2. Diluted net income per share for fiscal 2018 is not disclosed due to the recording of a net loss per
share and the absence of latent shares with dilution effect.
3. Basis for calculating net income (loss) per share data is shown below.
Fiscal 2017

Fiscal 2018

(From April 1, 2016
to March 31, 2017)(From April 1, 2017
to March 31, 2018)

Net income (loss) per share
Net income (loss) attributable to owners of theparent (Millions of yen)
(Millions of yen)Amounts not attributable to common shareholders(Millions of yen)
Net income (loss) attributable to owners of theparent related to common stock (Millions of yen)
Average number of common shares during theperiod (shares)(Subsequent Events)
No items to report

21

693

(615)

-

-

693

(615)

18,373,812

18,373,812