BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE FULL FISCAL YEAR ENDED MARCH 2018
This is an English translation of summarized consolidated financial results prepared
for the convenience of non-resident shareholders. Should there be any inconsistency
between the translation and the official Japanese text, the latter shall prevail.

May 14, 2018
Faith, Inc. (Stock code 4295, Listed on TSE 1st section)(URL http://www.faith.co.jp/)
Representative: Hajime Hirasawa, CEO/President
Contact: Jiro Saeki, CFO/Director Tel: +81-3-5464-7633
Date of General Meeting of Shareholders: June 28, 2018
Date of Submission of Annual Security Report: June 29, 2018
Starting Date of the Dividend Payment: June 29, 2018
Preparation of Supplementary Materials for Financial Results: Applicable/May 28, 2018
Information Meeting for Financial Results: Applicable/May 28, 2018 (for Institutional Investors and Analysts)
Amounts are rounded down to the nearest JPY 1 million.

1. Results for the Fiscal Year Ending March 2018 (From April 1, 2017 to March 31, 2018)(1) Consolidated Operating Results(Percentages indicate changes compared with the previous fiscal year.)

Net SalesYear ending
March 2018
March 2017

Operating Income

Millions of yen

Millions of yen

%
2.0
3.1

21,21020,795

1,130
1,757

Ordinary Income

%
△35.7
14.6

Millions of yen

1,029
1,539

Net Income
Millions of yen

%
△33.1
0.6

504
571

%
△11.8
△11.5

(Note) Comprehensive income: fiscal year ending March 2018: 696 million (△49.0%); fiscal year ending March 2017: 1,365 million (28.5%)

Net Income per
Share

Year ending
March 2018
March 2017

Diluted Net
Income per Share

Return on Equity
CapitalOrdinary Incomeon Total Assets

Operating Income
on Net Sales

Yen
—
—

%
2.9
3.6

%
3.9
6.0

%
5.3
8.5

Yen
40.48
57.95

(Reference) Equity in earnings of associated companies: fiscal year ending March 2018: △¥99 million;
fiscal year ending March 2017: △¥86 million(2) Consolidated Financial Position
Total Assets

Year ending
March 2018
March 2017

Net Assets

Millions of yen

Millions of yen

25,765
26,95918,671
18,066

Ratio of Equity Capital

Net Assets per Share

%
72.4
59.5

Yen
1,355.11
1,626.59(Reference) Equity capital: fiscal year ending March 2018: ¥18,647 million; fiscal year ending March 2017: ¥16,052 million(3) Consolidated Cash Flow Results
Cash
Flow
from
Operating Activities

Year ending
March 2018
March 2017

Cash Flow from
Investing Activities

Cash
Flow
from
Financing Activities

Cash and Cash
Equivalents at Year End

Millions of yen

Millions of yen

Millions of yen

Millions of yen

809
2,471

△1,070
839

△597
△512

12,91013,768

2. Dividends
Dividends per Share
(Record dates)

Year ending
March 2017
March 2018
March 2019
(Forecast)st

1
Quarter
Yen

―
―
―

rd

Yen

3
Quarter
Yen

5.00
5.00
5.00

―
―
―

Interim

Yen

Total(Annual)
Yen

5.00
5.00
5.00

10,00
10.00
10.00

Year-end

Total Dividend
Payment

Payout Ratio(Consolidated)(Annual)Millions of yen

98
137

Dividend on Net
Assets(Consolidated)

%
17.3
24.7
52.9

%
0.6
0.7

3. Forecast for the Consolidated Results for the Year Ending March 2019 （from April 1, 2018 to March 31, 2019）(Percentages indicate changes compared with the previous fiscal year and the previous interim result.)

Operating Income

Ordinary Income

Net Income
Attributable to the
Shareholders of the
Parent Company

Net Income
per Share

Millions ofyen%Millionsof yen%Millionsof yen%Millionsof yen%YenFirst half

10,100

△5.6

100

△89.0

20

△99.7

—

—

—

Full year

20,000

△5.7

500

△55.8

350

△66.0

260

△48.5

18.89

※ Notes(1) Changes in significant subsidiaries (accompanying changes in scope of consolidation): None
Newly added subsidiaries: 0 companies (subsidiary’s name:)Removed subsidiaries: 0 companies (subsidiary’s name:)(2) Changes in accounting policy, changes in accounting estimates, and restatements(2)-1. Changes accompanying revisions of accounting standards, etc.: None(2)-2. Changes other than the above: None(2)-3. Changes in accounting estimates: None(2)-4. Restatements: None
(3) Outstanding shares (common shares)(3)-1. Outstanding shares at the end of the fiscal years (including treasury stock):
The fiscal year ending March 2018: 13,831,091 shares
The fiscal year ending March 2017: 11,960,000 shares(3)-2. Treasury stock at the end of the fiscal year:
The fiscal year ending March 2018: 70,041 shares
The fiscal year ending March 2017: 2,091,180 shares(3)-3. Average number of shares during the accounting period
The fiscal year ending March 2018: 12,464,649 shares
The fiscal year ending March 2017: 9,869,195 shares(Note)The major changes, namely the increase of 1,871,091 shares in the number of outstanding shares (including treasury shares)
and the decrease of 2,021,139 shares in the number of treasury shares at the end of the of the fiscal year ending March 2018,
were due to the implementation of a share exchange with Nippon Columbia Co., Ltd. effective as of August 1, 2017.

(Reference) Overview of Non-Consolidated Results
Results for the Fiscal Year Ending March 2018 (From April 1, 2017 to March 31, 2018)(1) Non-Consolidated Operating Results(Percentages indicate changes compared with the previous fiscal year.)

Net Sales

Operating Income

Ordinary Income

Net Income

Year ending
March 2018

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen

%

2,338

△17.0

—

△568

—

2,817

△9.9

△111
278

—

March 2017

△97
3

—

△26

—

Net Income per ShareYear ending
March 2018
March 2017—

Diluted Net Income per ShareYen△45.59
△2.70

Yen
—
—

(2) Non-Consolidated Financial Position
Total Assets

Year ending
March 2018
March 2017
(Reference)

Net Assets

Ratio of Equity Capital

Net Assets per Share

Millions of yen

Millions of yen%

Yen

19.153
15,304

18,337
14,216

95.7
92.9

1,332.58
1,440.51

Equity capital: fiscal year ending March 2018: ¥18,337 million; fiscal year ending March 2017: ¥14,216 million

* This financial results report is exempt from financial audit procedures review.
* Statement regarding the proper use of financial forecasts and other special remarks (Notice regarding statements
concerning the future)
Statements concerning the future, such as performance forecasts, described in the present material are based on information
currently available to the Company and on certain assumptions judged as reasonable by the Company. The Company’s actual
performance may differ substantially from these forecasts as a result of various factors beyond the Company’s control. For
details of cautions, etc., employed in making performance forecasts and the assumptions underlying performance forecasts,
please refer to “1. Overview of Operating Results, (4) Future Outlook” of the accompanying material.
(To obtain supplemental documents relating to financial results)Supplemental Materials for Financial Results are posted on
the company website on May 28, 2018.

Accompanying Material Contents
1. Overview of Operating Results, etc.……………………………………………………………………2(1) Overview of Operating Results for the Current Term…………………………………………… 2(2) Overview of Financial Position for the Current Term …………………………………………… 4(3) Overview of Cash Flow for the Current Term …………………………………………………… 4(4) Future Outlook…………………………………………………………………………………… 4(5) Basic Policy on Profit Allocation and Current Term/Next Term Dividend Distribution………… 5
2. Basic Philosophy on Selection of Accounting Standards………………………………………………5
3. Consolidated Financial Statements and Main Explanatory Notes…………………………………… 6(1) Consolidated Balance Sheet…………………………………………………………………....… 6(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income …… 8
(Consolidated Statement of Income) …………………………………………………………… 8(Consolidated Statement of Comprehensive Income) …………………………………………… 9(3) Consolidated Statement of Changes in Shareholders’ Equity……………………………………10(4) Consolidated Statement of Cash Flows………………………………………………………… 12(5) Notes Concerning the Consolidated Financial Statements……………………………………… 14(Notes Concerning the Premise of a Going Concern)…………………………………………… 14(Segment Information, etc.) …………………………………………………………………… 14(Per Share Information)………………………………………………………………………… 17(Significant Subsequent Events) …………………………………………………………………17

1

1. Overview of Operating Results, etc(1) Overview of Operating Results for the Current Term
In the Japanese information and communications field, although the Internet usage rate is showing signsof leveling off at 83.5% (*1), it has been rising continuously for over a decade, while the proportion ofhouseholds possessing one or more smartphones also has increased to 71.8%. On the other hand, the TV
penetration rate for single-person households under 29 years old is 87.2%, which is 8 points lower thanthe overall diffusion rate of 95.2% for all households (*2). Also, statistics on daily TV usage time revealthat younger Japanese people are increasingly turning away from television, with those in their teens
and twenties devoting significantly less time to viewing than the average for all generations. The current
transition to services in line with the shift to the era of digitalization is expected to further accelerate as
the Internet usage rate climbs further and the use of smartphones continues to spread. Under thesecircumstances, it is becoming even more important for the Company to respond swiftly to the latest userneeds.
(*1) Source: Ministry of Internal Affairs and Communications, 2016 Communication Usage Trend Survey(*2) Source: Cabinet Office Consumer Confidence Survey, March 2018

Also, in the entertainment market, the global music market centered on flat rate subscription services
grew by 8.1% to US$17.3 billion dollars (*3), marking the first time since 1999 that this market hasrecorded sales growth for three consecutive years. In the Japanese domestic music contents market, theproduction value of music software including music videos in 2017 decreased by 6% from the previous
year to ¥232 billion yen (*4). Although sales of packaged products continued to exhibit a declining trend,
fee-based music distribution sales increased by 8% year on year to ¥57.3billion and sales ofsubscription-type music distribution services leaped by 22% year on year. Meanwhile, the size of thelive entertainment market increased by 7.2% from the previous year to ¥332.4 billion, thanks to an
expansion of consumption (*5).
(*3) Source: IFPI Global Music Report 2018(*4) Source: Recording Industry Association of Japan (RIAJ), The Recording Industry in Japan 2017(*5) Source: All Japan Concert & Live Entertainment Promoters Conference (ACPC), 2017 Basic Research Report

In the current environment, the Faith Group is continuing to utilize the results of the efforts it has beenpouring into digital content distribution ever since its establishment, and is forging ahead with its
Multi-Content and Multi-Device Strategy of creating environments in which people can enjoy a wide
diversity of contents whenever and wherever they choose. We are also strengthening the developmentof new services in response to the changing market environment such as platforms that collect andorganize the information flooding the Internet and then providing this to users after increasing its added
value.
Regarding the Faith Group’s performance during the consolidated fiscal year, despite continued
declines in sales of existing distribution services, which account for a major share of overall sales, we
introduced several new services in response to the changing market environment and we also newly
added the major music label DREAMUSIC Inc. as a consolidated subsidiary. As a result of these factors,
the Group’s net sales increased by 2.0% compared with the previous fiscal year to ¥21,210 million,
operating income decreased by 35.7% year on year to ¥1,130 million, ordinary income decreased by
33.1% year on year to ¥1,029 million, and net income attributable to the shareholders of the parent
company decreased by 11.8% year on year to ¥504 million.
Moreover, Faith, Inc. gained ownership of all the shares of Nippon Columbia Co., Ltd. by means of ashare exchange that was implemented on August 1, 2017 following the granting of approval of the shareexchange contract by the annual general meetings of both companies, which took place on June 29,2017 in the case of the Company and on June 23, 2017 in the case of Nippon Columbia Co., Ltd. With
this, we have facilitated the centralization of our business strategy, speeding up decision making,promoting the efficient utilization of both companies’ available resources including know-how andhuman resources, strengthening our creative response in the face of the huge changes currently
enveloping the music industry, and allowing us to strive to further improve our corporate value.

2

Information on each business segment is as follows.
Content BusinessIn the Content Business, the Faith Group is actively pursuing the development of new products in
response to the evolving market environment including the ongoing popularization of smartphones, andchanging music listening styles. In this business, we are proceeding with measures to enhance the added
value of our contents, such as functional improvement and linkage between various services, byverifying the results of service contents and marketability, including with regard to existing businesses,
while also moving ahead with platformization in the interests of achieving income source
diversification.
We are actively developing the FaRao PRO business by pursuing the functional expansion necessary forin-store operations such solutions that propose store branding and announcement functions in addition
to providing commercial-use BGM services. Based on our Japanese service we have also begun
providing FaRao PRO services in France and Indonesia, and in future we will endeavor to create andactivate new BGM markets both in Japan and overseas.
In the platform of services for artists Fans’, we are enhancing a number of functions essential to artists’musical activities such as official website construction, music and video distribution, sales of artist
goods, and fan club operation. By providing services that allow more artists to freely send out theirmusical work and information, we are aiming to acquire new users and to expand its membership, andwe are attempting to improve the service quality of Fans’ by pursuing greater usability.
As a result of the above factors, and taking into account the ongoing positive deployment of newservices in line with the changing market environment and the decline in sales of services to featurephone users, as well as delays in the launch of new businesses, the Content Business recorded net salesof ¥4,361 million (a decrease of 1.0% year on year), and an operating loss of ¥194 million (comparedwith operating loss of ¥56 million for the previous fiscal year).
Point Service BusinessIn the Point Service Business, sales of new points issued by participating point card stores remainedrobust and special measures including double point sales were conducted. In addition, the self
liquidation (*6) business remained strong, with the result that this business recorded net sales of ¥2,562
million, an increase of 6.2% year on year. Although costs increased in line with the expansion of
personnel and office facilities in connection with investment in talented human resources, as a result of
the increase in sales, operating income increased by 3.6% year on year to ¥89 million.
(*6) A campaign in which users can purchase various goods at a discount by saving points in the form of seals, etc.

Label Business
Amid the difficult environment facing the music and video-related industry in line with the continuing
decline of the music market, the Label Business proceeded with its strategy of strengthening new
future-oriented businesses in order to overcome the present situation in which it remains dependent onsales of package products for which the market remains sluggish.
Regarding this segment’s performance, the inclusion of record label company DREAMUSIC Inc. as
newly consolidated subsidiary of the Faith Group and strong sales of game titles by Nippon Columbia
Co., Ltd., helped to boost net sales to ¥14,286 million, an increase of 2.2% compared with the previous
fiscal year. On the profit and loss front, however, sales of J-Pop, educational and animation titles, all ofwhich made substantial contributions to sales in the previous fiscal year, recorded significant declines,
with the result that operating income decreased by 28.8% to 1,231 million yen.
*The product and service names appearing in this document are trademarks or registered trademarks of Faith Inc. either
in Japan or in other countries.

3(2) Overview of Financial Position for the Current Term
Total assets as of the end of the consolidated fiscal year ended March 31, 2018 decreased by ¥1,193
million compared with the end of the previous consolidated fiscal year to ¥25,765 million. This result
was mainly attributable to decreases in cash and deposits, and accounts and notes receivable.
Total liabilities decreased by ¥1,798 million compared with the end of the previous consolidated fiscal
year to ¥7,093 million. This result was mainly attributable to decreases in accounts and notes payable,
and accounts payable-other.
Net assets increased by ¥605 million compared with the end of the previous consolidated fiscal year to¥18,671 million. This result was mainly attributable to the share exchange between the company and its
consolidated subsidiary Nippon Columbia Co., Ltd. Moreover, the Faith Group’s equity capital ratio
became 72.4%.

(3) Overview of Cash Flow for the Current Term
Cash and cash equivalents at the end of the consolidated fiscal year ended March 31, 2018 decreased by¥858 million to ¥12,910 million, a decrease of 6.2% compared with the end of the previous consolidated
fiscal year.
Details of cash flow during the fiscal year under review and its main contributory factors were as
follows:(Cash flow from operating activities)
Cash flow from operating activities amounted to an inflow of ¥809 million (a decrease of 67.2%
compared with the previous consolidated fiscal year), attributable mainly to the addition of amortization
goodwill of ¥144 million, depreciation and amortization expenses of ¥358 million, a decrease inaccounts receivable of ¥587 million, a decrease in accounts payables of ¥401 million, and income tax
and other payments of ¥429 million to the Group’s net income before taxes and other adjustments of¥928 million.
(Cash flow from investing activities)
Cash flow from investing activities amounted to an outflow of ¥1,070 million (an inflow of ¥839
million for the previous consolidated fiscal year), attributable mainly to the expenditures of ¥550
million in respect of opening new term deposits, ¥509 million for the acquisition of shares of affiliatedcompany stock, ¥200 million to obtain softwares, and ¥94 million for the acquisition of investment
securities, despite receiving income of ¥500 million from the withdrawal of existing term deposits, ¥149
million from the sale of investment securities, and ¥40 million from the acquisition of shares of newly
consolidated subsidiaries.
(Cash flow from financing activities)
Cash flow from financing activities amounted to an outflow of ¥597 million (an outflow of an outflow
of ¥512 million for the previous consolidated fiscal year), due mainly to ¥418 million in expenditure in
respect of repayment of long-term loans, and ¥117 million in respect of dividend payments.

(4) Future Outlook
The Faith Group’s forecasts for next consolidated fiscal year (FY2018; ending March 31, 2019) are as
follows. Due to the impact of new business activity in the Content Business, the Group is currently
forecasting net sales of ¥20,000 million, an operating income of ¥500 million, an ordinary income of¥350 million, and a net income attributable to the shareholders of the parent company of ¥260 million.

4(5) Basic Policy on Profit Allocation and Current Term/Next Term Dividend Distribution
The Company continues its policy of giving priority to securing the funds necessary for strengthening
its business structure and making aggressive business investments. At the same time, it also recognizes
return of profit to shareholders to be an important management issue. For this reason, the Company willconsider payment of dividends, taking into account its operating results and financial position. Based on
its fundamental policy of paying continued stable dividends, the Company plans to pay a dividend of¥10 per share (including an interim dividend of ¥5) in the next fiscal year.

2. Basic Philosophy on Selection of Accounting Standards
For the present, the Faith Group is following a policy of producing its consolidated financial statements
under Japanese standards in the interest of maintaining comparability between the financial statementsof its constituent companies. Furthermore, concerning the future application of the International
Financial Reporting Standards (IFRS), we intend to respond appropriately based on the movements ofother companies.

53. Consolidated Financial Statements and Main Explanatory Notes(1) Consolidated Balance Sheet(Unit: thousands of yen)

(Assets)
Current assets
Cash and deposits
Accounts and notes receivable
Marketable securities
Commercial products
Products in progress
Primary materials and inventory goods
Corporation tax refund receivable, etc.
Deferred tax assets
Other current assets
Allowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Buildings and structures
Accumulated depreciation
Buildings and structures (net base)Machinery and delivery equipment
Accumulated depreciation
Machinery and delivery equipment (net base)Tools, devices and equipment
Accumulated depreciation
Tools, devices and equipment (net base)
Land
Lease assets
Accumulated depreciation
Lease assets (net base)Construction in progress
Total tangible fixed assets
Intangible fixed assets
Software
Goodwill
Other intangible fixed assets
Total intangible fixed assets
Investment and other assets
Investment securities
Deferred tax assets
Other investment and other assets
Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

6

FY 2016(As of March 31, 2017)

FY 2017(As of March 31, 2018)14,268,853
2,659,104
230,572
561,536
356,686
49,98327,454
100,976
639,750△18,863
18,876,055

13,460,309
2,162,275
229,555
516,373493,508
65,12426,944
189,170
464,629△27,249
17,580,642

2,042,346△881,524
1,160,821
620,000△600,020
19,9791,045,359△904,023
141,336
1,501,684
72,821△65,025
7,795－
2,831,617

2,044,824△932,609
1,112,214
626,278△605,840
20,4381,073,360△943,788
129,572
1,501,684
60,354△58,4281,926
7,800
2,773,635

441,953
1,833,611
413,624
2,689,188

365,435
1,648,115
312,9122,326,463

2,137,412
26,208718,609△319,539
2,562,690
8,083,496
26,959,552

2,617,499
45,342812,042△389,935
3,084,948
8,185,047
25,765,689

(Unit: thousands of yen)

(Liabilities)
Current liabilities
Accounts and notes payable
Short-term loans payable
Lease obligations
Accounts payable-otherAccrued expenses payable
Income taxes payable
Reserve for bonuses
Reserve for point card certificates
Reserve for sales returns
Other current liabilities
Total current liabilities
Fixed liabilities
Long-term loans payable
Net defined retirement liabilities
Lease obligations
Deferred tax liabilities
Other fixed liabilities
Total fixed liabilities
Total liabilities(Net assets)
Shareholder's equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholder's equity
Other accumulated comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustments
Cumulative adjustment amount for retirement benefit
obligations
Total other accumulated comprehensive income
Stock acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

7

FY 2016(As of March 31, 2017)

FY 2017(As of March 31, 2018)

1,233,646
852,119
6,582
1,447,152
2,756,629
327,800
78,30043,57096,748717,634
7,560,185

929,526
576,039723
1,001,461
2,642,245
188,625
76,316
8,711
74,962489,836
5,988,449

464,530
621,382
1,446
195,107
50,3201,332,787
8,892,972

237,215603,262723
219,571
44,7581,105,530
7,093,979

3,218,000
3,705,680
11,953,901△3,039,450
15,838,131

3,218,000
3,019,205
12,316,449△100,158
18,453,496

267,014△11,513△41,119

263,254△12,505△56,561214,381
15,691
1,998,376
18,066,579
26,959,552

194,187－
24,026
18,671,710
25,765,689

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income(Consolidated Statement of Income)(Unit: thousands of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Interest on securities
Gain on investment partnership management
Gain on liquidation of unpaid royalties
Miscellaneous receipts
Total non-operating Income
Non-operating expenses
Interest paid
Gain on foreign exchange loss
Loss on equity method investment
Cost of exchange from business combination
Miscellaneous expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sale of investment securities
Gain on change in equity
Gain on reversal of subscription rights to shares
Other extraordinary income
Total extraordinary income
Extraordinary losses
Loss on disposal of fixed assets
Impairment loss on goodwill
Impairment loss
Other extraordinary losses
Total extraordinary losses
Current term net income before taxes
Corporate, local, and business taxes
Income taxes - deferred
Total corporate, local, and business taxes
Current term net income
Current term net income attributable to non-controllinginterests
Current term net income attributable to shareholders of theparent company

8

FY 2016(April 1, 2016 ~March 31, 2017)
20,795,074
12,528,057
8,267,016
6,509,223
1,757,793

FY 2017(April 1, 2017 ~March 31, 2018)
21,210,070
13,212,739
7,997,331
6,866,577
1,130,753

1,311
5,137
36
23,921
22,68010,81663,903

1,406
5,253
60
26,487－31,19564,404

11,045
1,784
86,238
174,469
9,156
282,693
1,539,004

8,437
423
99,12750,852
6,382
165,224
1,029,933

224,236
19,84527,043－271,125

116,982
7,476
15,691
18,297
158,447

80,324－
9,919
10,140100,383
1,709,746
430,540△98,908
331,632
1,378,113
806,175

22,76484,283
145,164
7,313
259,526
928,854
292,448△81,130
211,317717,536
212,997

571,938

504,538(Consolidated Statement of Comprehensive Income)(Unit: thousands of yen)

Current term net income
Other comprehensive income
Valuation difference on other available-for-salesecurities
Foreign currency translation adjustments
Retirement benefit adjustments
Total other comprehensive income
Comprehensive income(Details)
Comprehensive income attributable to shareholders of
the parent company
Comprehensive income attributable to non-controllinginterests

9

FY 2016(April 1, 2016 ~March 31, 2017)
1,378,113

FY 2017(April 1, 2017 ~March 31, 2018)717,536

69,190△6,078△2,579△78,836△12,225
1,365,888△986△13,658△20,722
696,813597,411483,281

768,476

213,531(3) Consolidated Statement of Changes in Shareholders’ Equity
FY 2016 (April 1, 2016 ~ March 31, 2017)(Unit: thousands of yen)
Shareholders' equity
Capital stock Capital surplus
Balance at beginning of period

3,218,000

3,707,197

11,480,657

Total
shareholders’equity15,367,352△3,038,502△98,694△98,694

Retainedearnings

Treasury stock

Changes of items during theaccounting period
Dividends paid－

Increase through share exchange△1,517

Changes in parent company equity
regarding transactions with
non-controlling interests
Changes in the scope of
application of the equity method
Net gain or loss attributable toshareholders of parent company△1,517－
571,938

571,938△947

Acquisition of treasury stock△947－

Disposal of treasury stock
Net changes in non-equity items
during the accounting period
Total changes during the accounting
periodBalance at end of period－－△1,517473,243△947

470,778

3,218,000

3,705,680

11,953,901△3,039,450

15,838,131

Accumulated other comprehensive income

Balance at beginning of period

Valuation
Total otherShare
difference
Foreign
Retirement
accumulated acquisition Minority
on othercurrency benefitInterests
comprehenrights
availabletranslation related
sive income
for-saleadjustments adjustments
securities
198,282
188,908
42,734 1,230,815△8,446△928

Total net
assets

16,829,810

Changes of items during theaccounting period△98,694

Dividends paid－

Increase through share exchange△1,517

Changes in parent company equity
regarding transactions with
non-controlling interests
Changes in the scope of
application of the equity method
Net gain or loss attributable toshareholders of parent company－
571,938△947

Acquisition of treasury stock－

Disposal of treasury stock
Net changes in non-equity items
during the accounting period

68,731△3,067△40,191

25,473 △27,043

767,560

765,990

Total changes during the accounting
period68,731△3,067△40,191

25,473 △27,043

767,560

1,236,769

Balance at end of period

267,014△11,513△41,119

214,381

15,691 1,998,376

18,066,579

10

FY 2017 (April 1, 2017 ~ March 31, 2018)(Unit: thousands of yen)
Shareholders' equity
Capital stock Capital surplus
Balance at beginning of period

3,218,000

3,705,680

Retainedearnings

Total
shareholders’equityTreasury stock

11,953,901△3,039,450

15,838,131

Changes of items during theaccounting period△118,161

Dividends paid

△118,161△735,351

Increase through share exchange

2,948,339

2,212,988

48,876

Changes in parent company equity
regarding transactions with
non-controlling interests
Changes in the scope of
application of the equity method
Net gain or loss attributable toshareholders of parent company

48,876△23,830△23,830

504,538

504,538

Acquisition of treasury stock△9,209△9,209161

161

Disposal of treasury stock
Net changes in non-equity items
during the accounting period－△686,474

362,547

2,939,291

2,615,365

3,218,000

3,019,205

12,316,449△100,158

18,453,496

Total changes during the accounting
periodBalance at end of period

Accumulated other comprehensive income
Valuationdifferenceon otheravailablefor-salesecurities
Balance at beginning of period

267,014

Foreigncurrencytranslation
adjustments△11,513Retirement
benefitrelated
adjustments△41,119

Total otherShareaccumulated acquisition Minority
Interests
comprehenrights
sive income
214,381

15,691

1,998,376

Total net
assets

18,066,579

Changes of items during theaccounting period△118,161

Dividends paid
Increase through share exchange

2,212,988

Changes in parent company equity
regarding transactions with
non-controlling interests
Changes in the scope of
application of the equity method
Net gain or loss attributable toshareholders of parent company

48,876△23,830
504,538△9,209Acquisition of treasury stock

161

Disposal of treasury stock
Net changes in non-equity items
during the accounting period
Total changes during the accounting
period△3,759△992△15,441△20,194△15,691 △1,974,349△2,010,234△3,759△992△15,441△20,194△15,691 △1,974,349

605,130

Balance at end of period

263,254△12,505△56,561

194,187

11－

24,026

18,671,710

(4) Consolidated Statement of Cash Flows(Unit: thousands of yen)

FY 2016(April 1, 2016 ~March 31, 2017)
Cash flow from operating activities
Income or loss before income taxes, etc.
Depreciation expenses
Impairment loss
Amortization of goodwill
Impairment loss on goodwill
Increase/decrease in allowance for doubtful accounts (△ =decrease)
Increase/decrease in reserve for bonus (△ = decrease)
Increase/decrease in allowance for unexercised sales
promotion points (△ = decrease)
Increase/decrease in net defined retirement liabilities (△ =decrease)
Interest and dividend income
Interest on securities
Interest paid
Gain or loss on foreign exchange (△ = gain)
Gain or loss on equity method investment (△ = gain)
Gain or loss on investment partnership management (△ =gain)Gain or loss on sale of investment securities (△ = gain)
Gain or loss on disposal of fixed assets (△ = gain)
Gain or loss on change in equity (△ = gain)
Increase/decrease in trade receivables (△ = increase)
Increase/decrease in inventory assets (△ = increase)
Increase/decrease in trade payables (△ = decrease)
Increase/decrease in consumption tax receivable (△ =increase)
Increase/decrease in consumption tax payable (△ = decrease)
OthersSub-totalInterest and dividends received
Interest paid
Income tax refunded
Income tax paid
Cash flow from operating activities

12

FY 2017(April 1, 2017 ~March 31, 2018)

1,709,746
337,883
9,919
161,723－
1,560

928,854358,757
145,164
144,634
84,28378,401

12,153
9,695△1,983△34,859△65,704△46,332△6,449△36
11,045△1,46686,238△23,921△6,660
△60
8,437
192
99,127△26,487△224,236
80,324△19,845△66,043△99,130
480,61744,765△116,982
22,764△7,476587,198△106,799△401,785
21,087△131,408
504,658
2,812,087
6,691△11,110－△336,258
2,471,410△10,705△505,195
1,213,575
6,721△8,42927,454△429,433
809,888

(Unit: thousands of yen)

FY 2016(April 1, 2016 ~March 31, 2017)
Cash flow from investing activities
Expenditure for opening of term deposits
Income from withdrawal of term deposits
Expenditure for acquisition of marketable securities
Expenditure for acquisition of tangible fixed assets
Expenditure for acquisition of software
Expenditure for acquisition of investment securities
Expenditure for business transfer
Income from sale of investment securities
Expenditure for acquisition of shares of affiliates
Income from acquisition of subsidiary shares accompanying
changes in the scope of consolidation
Expenditure for loans receivable
Income from collection of loans receivable
Expenditure for security deposits
Income from collection of security deposits
OthersNet cash flow from investing activities
Cash flow from financing activities
Net increase/decrease in short-term loans payable (△ =decrease)
Expenditure for repayment of lease obligations
Expenditure for repayment of long-term borrowing
Expenditure for acquisition of treasury stock
Payment of dividends
Income from payments from non-controlling interests
Payment of dividends to non-controlling interests
Expenditure for acquisition of subsidiary shares notaccompanying changes in the scope of consolidation
Net cash flow from financing activities
Effect of exchange rate on cash and cash equivalents
Net increase/decrease in cash and cash equivalents (△ =decrease)
Cash and cash equivalents at the beginning of the year
Increase in cash and cash equivalents resulting from new
consolidation
Cash and cash equivalents at the end of the year

13

FY 2017(April 1, 2017 ~March 31, 2018)△500,000
2,008,881△230,000△43,256△269,781△403,900－
233,120△9,600188,255△550,006
500,000－△104,344△200,611△94,999△20,000
149,405△509,800
40,600△40,000
2,699△4,411
600△93,121
839,486－
37,391△11,612
11,219△317,517△1,070,275－△120,000△16,133△396,120△947△99,262－△26－△6,582△418,107△9,209△117,896
84,500－△10,267△512,490
1,466
2,799,872△597,562△599△858,550

10,913,765
55,216

13,768,853－

13,768,853

12,910,303

(5) Notes Concerning the Consolidated Financial Statements(Notes Concerning the Premise of a Going Concern)
Not applicable(Segment Information, etc.)[Segment Information]
1. Outline of reportable segments
The Company’s reportable segments provide separate financial information among its various
structural units and also serve as objects of study when the Board of Directors periodically decideon the allocation of business resources and make performance appraisals. The reportablesegments for the current consolidated fiscal year are the Content Business, the Point Service
Business, and the Label Business.
Content BusinessIn order to promote its Multi-Content and Multi-Platform Strategy, the Faith Group’s Content
Business is providing one-stop solutions ranging from the construction of distribution systems
and the operation of services for end-users to the planning and production of digital contents.
Main companies involved in this business: Faith, Inc. and Faith Wonderworks, Inc.
Point Service Business
The Faith Group is engaged in the Point Service Business, which is aimed at the retail industry.
Main company involved in this business: GoodyPoint Co., Ltd.
Label Business
The Label Business encompasses planning, production and sales of sound sources and videos,music rights acquisition and management, and contracted production and sales of sound source
and video products for other companies, etc.
Main companies involved in this business: Nippon Columbia Co., Ltd. and DREAMUSIC Inc.
2. Calculation method for sales, profit or loss, assets, liabilities and other items by reportablesegment
The accounting method for the reportable business segments is in accordance with the accounting
policies adopted for preparing the consolidated financial statements.
For the profit figures of the reportable segments, the operating income base figures are used.
Inter-segment sales and transfer amounts are decided in consideration of the market price andother factors.

14

3. Information on sales, profit or loss, assets, liabilities and other items by reportable segment
Previous consolidated fiscal year/FY 2016 (April 1, 2016 ~ March 31, 2017)(Unit: thousands of yen)Content

Reportable segment
Point
Label
Service

Total

Adjustment
amount(Notes
1 & 2)

Amountrecorded in
Consolidated
Financial
Statements(Note 3)

Sales
Sales to external
4,405,641
2,413,712
13,975,720
20,795,074
20,795,074－
customers
Inter-segment sales or
128,862
44,594
173,456－△173,456－
transfer amountTotal
4,534,503
2,413,712
14,020,315
20,968,531
20,795,074△173,456
Segment profit or loss
85,976
1,728,490
1,758,119
1,757,793△56,347△325(△)
Segment assets
13,836,432
1,057,691
12,107,564
27,001,688
26,959,552△42,136
Other items
Depreciation expenses
236,461
19,30582,427338,194
337,883△310
Amortization of
36,244125,479
161,723
161,723－－
goodwill
Investment in
38,6139,600
48,213
48,213－－equity-method affiliates
Increase in tangible and226,712
18,176
68,149313,038
313,038－
intangible fixed assets(Notes)1. The segment profit or loss adjustment amount of △¥325 thousand and the depreciation expenses adjustment
amount of △¥310 thousand for this consolidated fiscal year are calculated by eliminating intersegment
transactions.
2. The segment assets adjustment amount eliminates intersegment transactions, etc.
3. Segment profit is adjusted with operating income in the consolidated financial statements.

Current consolidated fiscal year/FY 2017 (April 1 2017 ~ March 31, 2018)(Unit: thousands of yen)Content

Reportable segment
Point
Label
Service

Total

Adjustment
amount(Notes
1 & 2)

Amountrecorded in
Consolidated
Financial
Statements(Note 3)

Sales
Sales to external
4,361,273
2,562,697
14,286,099
21,210,070
21,210,070－
customers
Inter-segment sales or105,110
1,169
9,660
115,940△115,940－
transfer amount
Total
4,466,383
2,563,867
14,295,760
21,326,011
21,210,070△115,940
Segment profit or loss
89,0691,231,542
1,126,309
4,444
1,130,753△194,301
Segment assets
12,672,466
1,133,009
11,973,765
25,779,241
25,765,689△13,552
Other items
Depreciation expenses
243,798
18,127
96,831
358,757
358,757－
Amortization of
34,749109,884
144,634
144,634－－
goodwill
Investment in
835,565
11,101
846,666
846,666－－
equity-method affiliates
Increase in tangible and124,027
11,928169,000
304,955
304,955－
intangible fixed assets(Notes)1. The segment profit or loss adjustment amount of ¥4,444 thousand is calculated by eliminating intersegment
transactions.
2. The segment assets adjustment amount eliminates intersegment transactions, etc.
3. Segment profit is adjusted with operating income in the consolidated financial statements.

15

[Related Information]
Previous consolidated fiscal year/FY 2016 (April 1, 2016 ~ March 31, 2017) and current
consolidated fiscal year/FY 2017 (April 1 2017 ~ March 31, 2018)
1. Information by product and service
This information is omitted because similar information is disclosed in the segment
information.
2. Information by region(1) Sales: Information on sales by region is omitted because the amount of sales to externalcustomers in Japan accounts for over 90% of the amount of sales reported on the
consolidated balance sheet.
(2) Tangible fixed assets: Information on tangible fixed assets by region is omitted because
the amount of fixed assets in Japan accounts for over 90% of the amount of fixed assets
reported on the consolidated balance sheet.
3. Information on major customers
Information on major customers is omitted because since there were no sales to a single
external customer accounting for 10% or more of net sales on the consolidated statement ofincome.
[Information on Impairment Losses on Fixed Assets for Each Reportable Segment]
Previous consolidated fiscal year/FY 2016 (April 1, 2016 ~ March 31, 2017)(Unit: thousands of yen)Content
Loss on impairment
Loss on goodwill
impairment

Point
Service

Label
－
－

9,919
－

－
－

Total

Elimination

Total
－
－

9,919
－

9,919
－

Current consolidated fiscal year/FY 2017 (April 1 2017 ~ March 31, 2018)(Unit: thousands of yen)Content
Loss on impairment
Loss on goodwill
impairment

Point
ServiceLabel－－

145,164
84,283－－

Total

Elimination

Total
－
－

145,164
84,283

145,164
84,283[Information on Amortization of Goodwill and Unamortized Balance for Each Reportable Segment]
Previous consolidated fiscal year /FY 2016 (April 1, 2016 ~ March 31, 2017)(Unit: thousands of yen)Content
Year-end balance

93,335

Point
Service
－

Label

Total

1,740,276

1,833,611

Elimination－

Total
1,833,611(Note)
The amount of amortization of goodwill is omitted because the same information is shown in [Segment
Information].

Current consolidated fiscal year/FY 2017 (April 1 2017 ~ March 31, 2018)(Unit: thousands of yen)Content
Year-end balance

17,724

Point
Service
－

Label

Total

1,630,391

1,648,115

Elimination－

Total
1,648,115(Note)
The amount of amortization of goodwill is omitted because the same information is shown in [Segment
Information].

[Information on Gains on Negative Goodwill by Reportable Segment]
Previous consolidated fiscal year/FY 2016 (April 1, 2016 ~ March 31, 2017) and current
consolidated fiscal year/FY 2017 (April 1 2017 ~ March 31, 2018)
Not applicable16(Per Share Information)(Unit: yen)

FY 2016 (April 1, 2016 ~ March 31, 2017)
Net assets per share
1,626.59
Net income per share
57.95

FY 2017 (April 1 2017 ~ March 31, 2018)
Net assets per share
1,355.11
Net income per share
40.48(Notes)1. The amount of net income per share fully diluted is not recorded because there are no residual shares.
2. The basis of the calculation of net income per share is as follows.
FY 2016
FY 2017(April 1, 2016 ~ March 31,(April 1 2017 ~ March 31,
2017)
2018)
Net income per share
Net income attributable to the shareholders
571,938
504,538of the parent company (thousands of yen)Amount not attributable to ordinary－－
shareholders (thousands of yen)
Net income applicable to common stock
571,938
504,538
attributable to the shareholders of the parent
company (thousands of yen)
Average number of shares outstanding during9,869,195
12,464,649
the period (shares)
3. The basis of the calculation of net assets per share is as follows.
End of FY 2016(as of March 31, 2017)
Total amount of net assets (thousands of yen)
18,066,579
Amount deducted from total amount of net
2,014,067
assets (thousands of yen)(Non-controlling interests)(1,998,376)(Share warrants)(15,691)
Year-end net assets applicable to common stock
16,052,512(thousands of yen)
Term-end number of shares of common stock
9,868,820
used in calculating net assets per share (shares)

End of FY 2017(as of March 31, 2018)
18,671,710
24,026(24,026)(－)
18,647,683
13,761,050(Significant Subsequent Events)[Transfer of Subsidiary Shares]
At a meeting of the Board of Directors held on April 24, 2018, the Company resolved to transfer all
shares held by ENTERMEDIA INC., a consolidated subsidiary of the Company, and the transfer
was completed on April 25, 2018. In accordance with this share transfer, the Company anticipates
the recording of a gain (extraordinary profit) on the sale of shares of an affiliated company of ¥161
million for the first quarter the fiscal year ending March 2019.

17