November 6, 2014

Consolidated Financial Results
for the Six Months Ended September 30, 2014
(Japanese Accounting Standards)
Name of the Listed Company: Nitta Gelatin Inc.
Listing:First Section of Tokyo Stock Exchange
Stock code:
4977
URL:
http://www.nitta-gelatin.co.jp
Representative:
Norimichi Soga, Representative Director and President
Contact Person:
Tsuneo Sasaki, Director and Senior Managing Executive Officer;
General Manager of the General Administration Division
Tel: +81-72-949-5381
Scheduled date to file Quarterly Securities Report: November 10, 2014
Scheduled date to commence dividend payments: December 5, 2014
Supplementary explanatory materials prepared:
Yes
Explanatory meeting:Yes (For analysts and institutional investors)(Millions of yen with fractional amounts discarded, unless otherwise noted.)

1. Consolidated financial results for the six months ended September 30, 2014
(from April 1, 2014 to September 30, 2014)(1) Consolidated operating results(Percentages indicate year-on-year changes.)

Net sales
Six months ended
September 30, 2014
September 30, 2013

Operating income

Millions of yen%

Millions of yen

16,146
16,035

0.7
14.3

270
545

Ordinary income

Net income% Millions of yen%

Millions of yen

%

533
630

(15.4)(32.8)

372
460(19.2)(34.3)(50.4)(38.9)

Note: Comprehensive income
For the six months ended September 30, 2014: ¥875 million (26.0%)
For the six months ended September 30, 2013: ¥695 million (61.5%)

Net income
per share
Six months ended
September 30, 2014
September 30, 2013

Yen

Diluted net income
per share
Yen

20.27
－
27.34
－
Note: Diluted net income per share is not disclosed due to the absence of latent shares with dilution effect.

(2) Consolidated financial position
As of
September 30, 2014
March 31, 2014

Total assets

Net assets

Millions of yen

Millions of yen%

32,716
31,38914,82813,78145.0
43.4

Reference: Equity
As of September 30, 2014:
As of March 31, 2014:

Equity ratio¥14,709 million¥13,636 million

2. Cash dividends
Cash dividends per shareFirst quarter

Second quarter

Third quarter

Fiscal year-end

Yen

Yen

Yen

Yen

Yen

–

6.00

–

6.00

12.00

–

6.00
–

6.00

12.00

Fiscal year ended March
31, 2014
Fiscal year ending March
31, 2015
Fiscal year ending March
31, 2015 (Forecasts)

AnnualNote: Changes to most recent dividend forecasts: None

3. Consolidated financial forecasts for the fiscal year ending March 31, 2015
(from April 1, 2014 to March 31, 2015)
Net sales

Fiscal year ending
March 31, 2015

(Percentages indicate year-on-year changes.)
Ordinary
Net income
Net income
incomeper share

OperatingincomeMillionsof yen%Millionsof yen%Millionsof yen%Millionsof yen%Yen

32,400(1.3)

600(37.2)

700(37.2)

500(24.9)

27.21

Note: Changes to most recent consolidated financial forecasts: Yes
For details on the revision of consolidated business forecasts, please refer to the press release entitled Notice Concerning
Difference in Consolidated Business Forecasts and Results for the Six Months Ended September 30, 2014 and Revision ofConsolidated Business Forecasts for the Fiscal Year Ending March 31, 2015 (dated November 6, 2014).

Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in achange in the scope of consolidation): None
New: None
Excluded: None
(2) Adoption of special accounting methods for the preparation of quarterly consolidated financial
statements: No(3) Changes in accounting policies, changes in accounting estimates, and restatement of revisions
a. Changes in accounting policies due to revisions to accounting standards and other guidelines: 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 “(3) Changes in Accounting Policies and Estimates, and Restatementof Revisions” in “2. Matters Concerning Summary Information (Notes)” on page 5 of the
Attachment Contents to this report.

(4) Number of common shares issued
a. Total number of issued shares at the end of the period (including treasury stock)
As of September 30, 2014
18,373,974 shares
As of March 31, 2014
18,373,974 sharesb. Number of shares of treasury stock at the end of the period
As of September 30, 2014
162 shares
As of March 31, 2014
162 sharesc. Average number of shares
For the six months ended September 30, 2014
For the six months ended September 30, 2013

18,373,812 shares
16,856,740 shares* Disclosure of status of quarterly review procedure
This report falls outside the scope of quarterly review procedures as laid out in the Financial Instruments
and Exchange Act. As of the time of the release of this report, the review of the financial statements, etc.,
outlined in the Act had not yet been concluded.
* 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.
These statements do not guarantee that the Company will achieve its earnings forecasts. In addition,
actual business and other results may differ substantially due to various factors. For details on theconditions assumed and the cautionary notes and items in the financial forecasts, please refer to “(3)Description of Consolidated Business Forecasts and Other Forward-looking Information” in “1.
Qualitative Information Concerning Quarterly Financial Statements” on page 4 of the Attachment
Contents to this report.

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

2. Matters Concerning Summary Information (Notes)･･････････････････････････････････････ 5(1) Significant Changes in Subsidiaries During the Quarterly Period Under Review･･････････････ 5(2) Application of Special Accounting Methods in the Preparation of Quarterly Consolidated Financial
Statements･････････････････････････････････････････････････････････････････････ 5(3) Changes in Accounting Policies and Estimates, and Restatement of Revisions････････････････ 5

3. Quarterly Consolidated Financial Statements･･･････････････････････････････････････････ 7(1) Consolidated Balance Sheets ･･････････････････････････････････････････････････････ 7(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ･･･ 9
Consolidated Statements of Income
Second quarter consolidated cumulative accounting period･･･････････････････････････････ 9
Consolidated Statements of Comprehensive Income
Second quarter consolidated cumulative accounting period･･････････････････････････････ 10(3) Consolidated Statements of Cash Flows ････････････････････････････････････････････ 11(4) Notes to Quarterly Consolidated Financial Statements･･････････････････････････････････ 13(Note Concerning Going Concern Assumption) ･･････････････････････････････････････ 13(Note Concerning Significant Changes in Shareholders’ Equity)･･････････････････････････ 13(Segment Information)･･･････････････････････････････････････････････････････････ 13

1

1. Qualitative Information Concerning Quarterly Financial Statements(1) Description of Business Results
In the first six months of the year ending March 31, 2015, the outlook for the global
economy remained uncertain, despite a gradual recovery, especially in the U.S.
economy. This outlook mainly reflected slowdowns in emerging economies such as
China and Southeast Asian nations. Meanwhile, the Japanese economy followed amoderate recovery path, despite signs of a downturn in demand following a rush topurchase ahead of the consumption tax hike in April 2014, and sluggish consumption
due to unseasonable summer weather.
Amid these circumstances, business conditions were extremely challenging for the
Nitta Gelatin Group, for this meant increased overseas prices of raw materials, whileenergy costs rose in Japan and the cost of import procurements remained high due to the
yen's depreciation.
As a result, in the first six months of the fiscal year ending March 31, 2015, net sales
increased 0.7% year on year to ¥16,146 million. Due to delays in revising sales prices in
the Japanese market and reduced sales prices for certain products in overseas markets,
operating income fell 50.4% to ¥270 million.
Ordinary income was down 15.4% to ¥533 million, cushioned by foreign exchange
gains accompanying the yen’s ongoing depreciation, and net income decreased 19.2%
to ¥372 million.
Segment business performance was as follows:(a) Collagen Material BusinessIn the gelatin field, sales of edible gelatin increased in Japan, but earnings decreased due
to delays in revising sales prices. In North America, the reduced demand accompanying
the slack capsule market was covered by edible gelatin sales, but earnings decreased due
to higher raw material prices for pig skin. Consequently, gelatin sales increased, butearnings declined.
Collagen peptide sales in Japan stagnated in the wake of a rush in demand ahead of
the consumption tax hike in April 2014. Although sales were strong in the Asian market,
collagen peptide sales overall decreased.
Collagen casing sales and earnings increased, due to strong sales in North America.
As a result, net sales in the segment were up 4.5% year on year to ¥11,253 million
2and segment profit (operating income) was down 10.8% to ¥594 million.
(b) Formula Solution Business
Sales of food materials decreased on lackluster trends in ingredients for confectionary
and desserts, and for ham and sausages, due to reduced demand accompanying theconsumption tax hike in April 2014.
In adhesives, sales of hot-melt adhesives decreased due to the impact of theunseasonable summer weather. Sales of sealants (high-performance gaskets) also
decreased because although they are starting to be adopted, their full adoption will takesome time.
As a result, net sales in the segment were down 7.2% year on year to ¥4,892 million.
Segment profit (operating income) was down 30.5% to ¥383 million.

(2) Description of Financial Position(a) Assets, liabilities and net assets(Assets)
Total assets amounted to ¥32,716 million at September 30, 2014, ¥1,327 million higher
than at March 31, 2014. This was mainly attributable to a ¥690 million increase ininventories including merchandise and finished goods, and a ¥1,481 million increase inproperty, plant and equipment in line with the renewal of an adhesives office and alaboratory, and the construction of a collagen peptide plant at Nitta Gelatin USA, Inc.
These increases were partly offset by a ¥561 million decrease in cash and deposits and a¥784 million decrease in notes and accounts receivable-trade owing to the securitizationof receivables.
(Liabilities)
Total liabilities stood at ¥17,888 million at September 30, 2014, ¥279 million higher
than at March 31, 2014. This was due mainly to a ¥78 million increase in short-termloans payable and a ¥446 million increase in long-term loans payable (current portion
included). These increases were partly offset by a ¥76 million decrease in notes andaccounts payable-trade and a net defined benefit liability marked down by ¥176 million.
(Net assets)
Net assets increased ¥1,047 million to ¥14,828 million. This was mainly attributable to3

a ¥561 million increase in retained earnings, a ¥207 million increase in valuationdifference on other available-for-sale securities, and an increase of ¥311 million inforeign currency translation adjustments.
As a result, the equity ratio stood at 45.0% as of September 30, 2014, compared to43.4% at March 31, 2014.
(b) Cash flows
Cash and cash equivalents (“cash”) as of September 30, 2014 were ¥1,844 million,
down ¥561 million from as of March 31, 2014.
Cash flows for each activity and reasons are as follows.
(Net cash provided by operating activities)
Operating activities provided net cash of ¥672 million, compared to ¥910 million usedin the same period in the previous fiscal year. The main contributing factors wereincome before income taxes of ¥514 million and a decrease of ¥938 million in accounts
receivable-trade. The main component of cash used was an increase of ¥576 million ininventories.
(Net cash used in investing activities)
Investing activities used net cash of ¥1,460 million, compared to ¥1,381 million used in
the same period in the previous fiscal year. The main use of cash was ¥1,432 million forthe purchase of property, plant and equipment.
(Net cash provided by financing activities)
Financing activities provided net cash of ¥197 million, compared to ¥2,645 million
provided in the same period in the previous fiscal year. The main contributor to cash
was proceeds from long-term debt of ¥1,407 million. The main use of cash was ¥1,058
million in repayment of long-term loans payable.

(3) Description of Consolidated Business Forecasts and Other Forwardlooking Information
In light of recent performance trends, the Group has revised its consolidated business
forecasts for the fiscal year ending March 31, 2015, which were announced in the4

“Consolidated Financial Results for the Fiscal Year Ended March 31, 2014 (Japanese
Accounting Standards)” on May 9, 2014.
For details, please refer to the press release entitled Notice Concerning Difference inConsolidated Business Forecasts and Results for the Six Months Ended September 30,
2014 and Revision of Consolidated Business Forecasts for the Fiscal Year Ending
March 31, 2015 (dated November 6, 2014).
Actual business and other results may differ substantially from projections due tovarious factors.

2. Matters Concerning Summary Information (Notes)(1) Significant Changes in Subsidiaries During the Quarterly Period Under
Review
None(2) Application of Special Accounting Methods in the Preparation of
Quarterly Consolidated Financial Statements
None(3) Changes in Accounting Policies and Estimates, and Restatement ofRevisions(Changes in Accounting Policies)(Application of Accounting Standard for Retirement Benefits, etc.)
With regard to Accounting Standard for Retirement Benefits (Accounting Standards
Board of Japan (ASBJ) Statement No. 26, May 17, 2012; the “Retirement Benefit
Accounting Standard”) and Guidance on Accounting Standard for Retirement Benefits(ASBJ Guidance No. 25, May 17, 2012; the “Retirement Benefit Accounting
Guidance”), the Company has adopted the stipulations of the body text of Article 35 of
the Retirement Benefit Accounting Standard and the body text of Article 67 of the
Retirement Benefit Accounting Guidance from the first quarter ended June 30, 2014. As
a result, the Company revised its calculation method of retirement benefit obligations
and service costs, and changed its method for attributing estimated retirement benefits
to accounting periods from the straight-line method to the benefit formula method. At
the same time, the method for determining the discount rate was changed to apply asingle weighted-average discount rate reflecting the estimated period of benefit
5

payments and amounts to be paid in each period. Formerly, this discount rate was basedon a close approximation of the number of years the Company's employees had on
average until retirement.
In accordance with the transitional treatment stipulated by Article 37 of the
Retirement Benefit Accounting Standard, as of April 1, 2014, the amounts that
correspond to the effect of the change in the calculation method of retirement benefit
obligations and service costs were added to, or deducted from, the starting balance ofretained earnings for the six months ended September 30, 2014.
As a result, the Company marked up the starting balance of net defined benefit assetby ¥225 million (included in “other” under investments and other assets), marked down
net defined benefit liability by ¥238 million, and marked up retained earnings by ¥299
million, in the six months ended September 30, 2014.
This change will have only a negligible impact on operating income, ordinary
income and income before income taxes and minority interests for the first half of theyear ending March 31, 2015.

6

3. Quarterly Consolidated Financial Statements(1) Consolidated Balance Sheets(Thousands of yen)

Fiscal 2014
(As of March 31, 2014)

2Q Fiscal 2015
(As of September 30, 2014)

2,426,006
8,164,776
4,732,050
1,089,542
1,820,812
465,533(13,339)
18,685,381

1,864,603
7,380,185
5,221,894
1,220,632
1,890,018
583,587(14,487)
18,146,434

2,815,141
2,139,301
3,849,844
8,804,286

3,400,688
2,167,727
4,717,782
10,286,198

50,79550,79558,952
58,952

3,075,772
775,527(2,111)
3,849,189
12,704,270
31,389,652

3,438,599
788,702(2,101)4,225,200
14,570,350
32,716,785

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
Other, net
Total property, plant and equipment
Intangible assets
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets7

(Thousands of yen)

Fiscal 2014
(As of March 31, 2014)

2Q Fiscal 2015
(As of September 30, 2014)

4,255,505
1,121,491
1,932,912
147,730
177,916
2,444,825
10,080,381

4,178,947
1,199,792
2,021,261
130,824
167,2392,512,922
10,210,988

4,415,868
37,072
2,524,417
550,869
7,528,227
17,608,608

4,773,666
37,8972,348,123
517,484
7,677,171
17,888,159

3,144,929
2,966,442
8,623,463(68)
14,734,766

3,144,929
2,966,442
9,184,813(68)
15,296,116

622,837

830,228(5,110)(187,061)

32,453
124,695(1,528,458)(1,573,516)(1,097,792)(586,138)

144,069
13,781,043
31,389,652

118,647
14,828,626
32,716,785

Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Provision for directors' retirement benefits
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 otheravailable-for-sale securities
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive
income (loss)
Minority interests
Total net assets
Total liabilities and net assets8(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive
IncomeConsolidated Statements of Income(Second quarter consolidated cumulative accounting period)(Thousands of yen)

2Q Fiscal 2014
(From April 1, 2013
to September 30, 2013)16,035,202
12,835,048

2Q Fiscal 2015
(From April 1, 2014
to September 30, 2014)16,146,308
13,135,791

Gross profit on sales

3,200,154

3,010,517

Selling, general and administrative expenses

2,655,139

2,740,365

Operating income

545,014270,151

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

4,236
10,826
66,292
73,13541,063301
13,379224,208
58,61447,527

Total non-operating income

195,555

344,032

74,114
23,385
12,66071,448110,160

80,594

Ordinary income

630,409533,589

Extraordinary income
Guarantees received

87,288－87,288－12,99812,99818,621
18,621

704,699

514,967

248,809455,890(5,025)
460,915

148,480
366,487(6,032)
372,520

Net sales
Cost of sales

Non-operating expenses
Interest expenses
Public offering expenses
Other
Total non-operating expenses

Total extraordinary income
Extraordinary losses
Loss on retirement of noncurrent assets
Total extraordinary losses
Income before income taxes and minority
interests
Income taxes
Income before minority interests
Minority interests in income (loss)
Net income

9

－
9,146

Consolidated Statements of Comprehensive Income(Second quarter consolidated cumulative accounting period)(Thousands of yen)

Income before minority interests

2Q Fiscal 2014
(From April 1, 2013
to September 30, 2013)
455,890

2Q Fiscal 2015
(From April 1, 2014
to September 30, 2014)
366,487

129,260

207,483(20,682)

32,390219,473304,021(9,480)－－(44,925)(79,369)

10,154

239,201
695,091

509,125875,612

689,057
6,034

884,174(8,561)Other comprehensive income (loss)
Valuation difference on otheravailable-for-sale securities
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Pension liability adjustment of foreignsubsidiaries
Remeasurements of defined benefit plans, netof taxShare of other comprehensive gain (loss) of
associates accounted for using equity method
Total other comprehensive income (loss)
Total comprehensive income
Comprehensive income attributable to:
Owners of the parent
Minority interests10(3) Consolidated Statements of Cash Flows(Thousands of yen)

2Q Fiscal 2014
(From April 1, 2013
to September 30, 2013)

2Q Fiscal 2015
(From April 1, 2014
to September 30, 2014)

704,699

514,967

428,581

469,040(54)557(62,788)(12,191)

Decrease in provision for retirement benefits
Increase in provision for directors' retirement
benefits
Increase in net defined benefit liability(24,739)

－

825

825

－

15,897

Interest and dividends income(15,063)(13,681)Interest expenses

74,11471,448Foreign exchange gains(21,886)(130,535)

Equity in earnings of affiliates(73,135)(58,614)

Loss on retirement of noncurrent assets
Decrease (increase) in notes and accounts
receivable-trade
Increase in inventories(Decrease) increase in notes and accounts
payable-trade
Increase (decrease) in accrued consumption
taxes
Other, net

12,99818,621(1,389,305)

938,924(229,535)(576,442)

177,038(189,720)(66,723)

39,633(314,673)(205,693)(799,649)

883,037

Interest and dividends income received

84,04354,481

Interest expenses paid

(74,771)(68,508)

Income taxes paid

(120,406)(196,214)

Net cash provided by operating activities(910,784)

672,795

Cash flows from operating activities
Income before income taxes and minority
interests
Depreciation and amortization
Increase (decrease) in allowance for doubtful
accounts
Decrease in provision for bonuses

Subtotal11

(Thousands of yen)

2Q Fiscal 2014
(From April 1, 2013
to September 30, 2013)

2Q Fiscal 2015
(From April 1, 2014
to September 30, 2014)

Payments into time deposits(20,000)(20,000)

Proceeds from withdrawal of time deposits

20,00020,000Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of stocks of affiliates
Purchase of insurance funds
Proceeds from cancellation of insurance funds
Payments of loans receivableCollection of loans receivable
Other, net(1,248,221)(2,388)(3,593)
5,362(142,136)(4,566)
15,599(120)
2,157(3,881)(1,432,484)(13,189)(3,591)

Net cash used in investing activities(1,381,789)(1,460,294)

497,539251,849(1,197,368)(200,000)
3,135,616
392,335(102,539)(126,159)(5,880)2,645,393

13,3281,407,000(1,058,691)

44,08528,648396,905(561,402)

2,258,659

2,406,006

2,655,565

1,844,603

Cash flows from investing activities

Cash flows from financing activities
Net increase in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Redemption of bonds
Proceeds from issuance of common stock
Proceeds from sale-and-leaseback transactions
Repayments of lease obligations
Cash dividends paid
Cash dividends paid to minority shareholders
Net cash provided by financing activities
Effect of exchange rate change on cash and cash
equivalents
Net (decrease) increase in cash and cash
equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period

12－－(2,501)－－
2,032(10,560)－－
80,991(118,078)(110,242)(16,860)
197,448

(4) Notes to Quarterly Consolidated Financial Statements(Note Concerning Going Concern Assumption)
None(Note Concerning Significant Changes in Shareholders’ Equity)
None(Segment Information)
I. First half of the fiscal year ended March 31, 2014 (From April 1, 2013 to September
30, 2013)
1. Information on net sales, income and loss by reporting segment
Reporting segment

Net sales
Sales to third parties
Inter-segment sales
and transfers
Total
Segment income(Thousands of yen)Amounts intheAdjustments*1 consolidated
financialstatements*2

Collagenmaterial
business

Formulasolutionbusiness

Total

10,763,955

5,271,246

16,035,202－

16,035,202

679,876－

679,876(679,876)－

11,443,831
666,336

5,271,246
551,352

16,715,078
1,217,688(679,876)(672,674)

16,035,202
545,014(Notes) 1. Adjustment for segment income of -¥672,674 thousand comprises
elimination of intersegment transactions of ¥1,526 thousand and unallocatedexpenses of ¥674,200 thousand.
2. Segment income is adjusted against the operating income recorded in the
consolidated income statement.
2. Information on impairment loss on noncurrent assets and goodwill by reporting
segments
No items to report13II. First half of the fiscal year ending March 31, 2015 (From April 1, 2014 to September
30, 2014)
1. Information on net sales, income and loss by reporting segment
Reporting segment

Net sales
Sales to third parties
Inter-segment sales
and transfers
Total
Segment income(Thousands of yen)Amounts intheAdjustments*1 consolidated
financialstatements*2

Collagenmaterial
business

Formulasolutionbusiness

Total

11,253,381

4,892,927

16,146,308－

16,146,308

686,952－

686,952(686,952)－

11,940,333
594,499

4,892,927
383,151

16,833,260
977,651(686,952)(707,499)

16,146,308
270,151(Notes) 1. Adjustment for segment income of -¥707,499 thousand comprises
elimination of intersegment transactions of ¥866 thousand and unallocatedexpenses of ¥708,366 thousand.
2. Segment income is adjusted against the operating income recorded in the
consolidated income statement.
2. Information on impairment loss on noncurrent assets and goodwill by reporting
segments
No items to report14