BRIEF STATEMENT OF ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED
MARCH 2017 AND FORECASTS FOR THE YEAR ENDING 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 12, 2017
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: +81-03-5464-7633
Date of General Meeting of Shareholders: June 29, 2017
Date of Submission of Annual Security Report: June 30, 2017
Starting Date of the Dividend Payment: June 30, 2017
Preparation of Supplementary Materials for Financial Results: Applicable/May 25, 2017
Information Meeting for Financial Results to be Held: Applicable/May 25, 2017 (forInstitutional Investors and Analysts)
Amounts are rounded down to the nearest JPY 1 million.

1. Results for the Fiscal Year Ending March 2017 (From April 1, 2016 to March 31, 2017)(1) Consolidated Operating Results(Percentages indicate changes compared with the previous fiscal year.)

Net SalesYear ending
March 2017
March 2016

Operating Income

Millions of yen

%
3.1
2.9

20,795
20,163

Millions of yen

Ordinary Income
Millions of yen

%
14.6
—

1,757
1,534

Net Income
Millions of yen

%
0.6
—

1,539
1,529

571
646

%
△11.5
—

(Note) Comprehensive income: fiscal year ending March 2017: 1,365 million (28.5%); fiscal year ending March 2016: ¥1,063 million (—%)

Net Income per
Share

Year ending
March 2017
March 2016

Diluted Net
Income per Share

Return on Equity
CapitalOrdinary Incomeon Total Assets

Operating Income
on Net Sales

Yen
—
—

%
3.6
4.0

%
6.0
6.1

%
8.5
7.6

Yen
57.95
63.86

(Reference) Equity in earnings of associated companies: fiscal year ending March 2017: △¥86 million;
fiscal year ending March 2016: △¥34 million(2) Consolidated Financial Position
Total Assets

Year ending
March 2017
March 2016

Net Assets

Millions of yen

Millions of yen

26,95924,712

18,066
16,829Ratio of Equity Capital

Net Assets per Share

%
59.5
62.9

Yen
1,626.59
1,576.18(Reference) Equity capital: fiscal year ending March 2017: ¥16,052 million; fiscal year ending March 2016: ¥15,556 million(3) Consolidated Cash Flow Results
Cash
Flow
from
Operating Activities

Year ending
March 2017
March 2016

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

2,471
1,800

839
1,266

△512
△1,497

13,768
10,9131

2. Dividends
Dividends per Share
(Record dates)

Year ending
March 2016
March 2017
March 2018
(Forecast)

1st
Quarter
Yen

InterimYear-end

Yen

3rd
Quarter
Yen

Yen

Total
(Annual)
Yen

―
―
―

5.00
5.00
5.00

―
―
―

5.00
5.00
5.00

10,00
10.00
10.00

Total Dividend
Payment

Payout Ratio

Dividend on Net
Assets(Consolidated)(Annual)(Consolidated)

Millions of yen

%
15.7
17.3
24.9

98
98

%
0.6
0.6

3. Forecast for the Consolidated Results for the Year Ending March 2018（from April 1, 2017 to March 31, 2018）(Percentages indicate changes compared with the previous fiscal year and the previous interim result.)

Net Sales

First
half
(cumulative)
Full year

Operating Income

Ordinary Income

Net Income

Net Income
per Share

Millions ofyen%Millionsof yen%Millionsof yen%Millionsof yen%Yen

10,130

△2.0

100

△91.1

70

△93.5

△90

—

△8.06

21,200

1.9

850

△51.6

860

△44.1

500

△12.4

40.10

※ 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.: Applicable(2)-2. Changes other than the above: None(2)-3. Changes in accounting estimates: None(2)-4. Restatements: None
* For details, please refer to “3. Consolidated Financial Statements, (5) A Notes Concerning the Consolidated Financial
Statements (Changes in Accounting Policy)” on page 14 of the accompanying material.

5):(3) Outstanding shares (common shares)(3)-1. Outstanding shares at the end of the fiscal years (including treasury stock):
The fiscal year ending March 2017: 11,960,000 shares
The fiscal year ending March 2016: 11,960,000 shares(3)-2. Treasury stock at the end of the fiscal year:
The fiscal year ending March 2017: 2,091,180 shares
The fiscal year ending March 2016: 2,090,390 shares(3)-3. Average number of shares during the accounting period
The fiscal year ending March 2017: 9,869,195 shares
The fiscal year ending March 2016: 10,116,500 shares

2

(Reference) Overview of Non-Consolidated Results
Results for the Fiscal Year Ending March 2017 (From April 1, 2016 to March 31, 2017)(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 2017

Millions of yen%

Millions of yen%

Millions of yen

%

2,817

—

278

—

March 2016

3,125

△9.9
28.4

3
△96

—

△47

—

Net Income per ShareYear ending
March 2017
March 2016

Millions of yen

%

△26
906

—
—

Diluted Net Income per
Share

Yen
△2.70
89.64

Yen
—
—

(2) Non-Consolidated Financial Position
Total Assets

Year ending
March 2017
March 2016
(Reference)

Net Assets

Ratio of Equity
CapitalNet Assets per Share

Millions of yen

Millions of yen%

Yen

15,304
15,428

14,216
14,27492.9
92.5

1,440.51
1,446.27

Equity capital: fiscal year ending March 2017: ¥14,216 million; fiscal year ending March 2016: ¥14,274 million* This financial statement is exempt from audit/review procedures required under Japan’s Financial Instruments andExchange Law.
* 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, etc., 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 theCompany’s control. For details of cautions, etc., employed in making performance forecasts and the assumptions underlying
performance forecasts, please refer to “1. Analysis of Operating Results and Financial Position, (1) Analysis of Operating
Results” on page 2 of the accompanying material.
(To obtain supplemental documents relating to financial results)
Supplemental Materials for Financial Results were posted on the company website on May 25, 2017.

3

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………… 4
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(Changes in Accounting Policy).………….………….……….………….………………………14(Additional Information) …………………………………………………………………………14(Segment Information, etc.) …………………………………………………………………… 15(Per Share Information)………………………………………………………………………… 19(Significant Subsequent Events) …………………………………………………………………19

1

1. Overview of Operating Results, etc(1) Overview of Operating Results for the Current Term
In the Japanese information and communications field, the popularization of smartphones, tablets andother highly functional mobile terminals is steadily progressing while the number of feature phone users
is in declining year by year. The average number of users accessing the Internet from a smartphone
during the three months from October to December 2016 increased by 13% compared with the same
period during the previous year to 58,970 thousand (*1) and this ongoing migration to smartphone use
is fueling a continuous demand for changes in services.
In the domestic music contents market, sales of music software in 2016 were nearly flat, recording aslight decline to ¥298,500 million. Moreover, fee-based music distribution sales increased by 12%
year-on-year to ¥52,900 million (*2), while sales of subscription-type music distribution services thatallow users to listen to as much music as they like for a fixed monthly charge overtook sales of single
track downloads for the first time. As the environments in which people enjoy music continue to change,
it is becoming increasingly important to promptly provide music services that match the preferences andlifestyles of consumers.
(*1) The Neilson Company, Digital Trends 2016(*2) The Recording Industry Association of Japan (RIAJ), The Recording Industry in Japan 2017

In this challenging business environment, the Faith Group is continuing to utilize the results of theefforts it has been pouring into content digital distribution ever since its establishment, and is forging
ahead with its Multi-Content and Multi-Platform Strategy of creating environments that allow people toenjoy a wide diversity of contents whenever and wherever they choose. We are also strengthening thedevelopment of new services in response to the changing market environment such as platforms thatcollect and organize the information flooding the Internet and then providing this to users after
increasing its added value.
With effect from March 1, 2017, the Company acquired a majority interest in Dreamusic Inc. andconsequently welcomed Dreamusic as a new member of the Faith Group. Founded in 2001, Dreamusic
is a major Japanese record label and a member of the Recording Industry Association of Japan (RIAJ)
that boasts an impressive line-up of well-known J-Pop performers including Yuzo Kayama, Ryoko
Moriyama, Risa Ono, Funky Monkey Babys and Ayaka Hirahara. In addition, Dreamusic manages the
anime label Feel Mee, a distributor of such popular anime series as The New Prince of Tennis that haveamassed the support of numerous fans. We expect Dreamusic’s entry into the Faith Group to generatesynergies on the various businesses in which Faith engages including the artist-use platform business aswell as artist nurturing and development, music production, advertising and sales.
Regarding the Faith Group’s performance during the consolidated fiscal year under review, althoughsales in our established distribution services, which account for a major share of overall sales, continued
to decrease, we introduced several new services in response to the changing market environment, andthe performance of our consolidated subsidiary Nippon Columbia Co., Ltd. was favorable. As a result of
these factors, the Group’s net sales increased by 3.1% compared with the previous fiscal year to¥20,795 million, operating income increased by 14.6% year on year to ¥1,757 million, ordinary income
increased by 0.6% year on year to ¥1,539 million, and net income attributable to the shareholders of theparent company for the fiscal year under review decreased by 11.5% year on year to ¥571 million.
Moreover, on March 28, 2017, the Boards of Directors of the Company and of Nippon Columbia Co.,
Ltd. resolved that the two companies would conduct an exchange of shares, which would result in the
Company becoming the wholly owning parent company and Nippon Columbia becoming a wholly
owned subsidiary of the Company, and the two companies concluded a share exchange contract to thiseffect. The share exchange is scheduled to take place following the approval by resolutions of theOrdinary General Meetings of Shareholders of both companies, which will be held by the Company on
June 29, 2017 and by Nippon Columbia and on June 23, 2017. By making Nippon Columbia a wholly
owned subsidiary, the Company will be able to further reinforce the Faith Group’s creativity in responseto the changes in the music industry, and in addition to increasing Nippon Columbia’s corporate value,
the exchange of shares will be highly beneficial in improving the overall corporate value of the FaithGroup.
2

Information on each business segment is as follows. Also, in accordance with the inclusion ofDreamusic Inc. as a consolidated subsidiary within the Faith Group, from the consolidated fiscal year
under review there has been a change in the name of the reportable segments, with “the Columbia
Business” replaced by “the Label Business” which includes both Nippon Columbia and Dreamusic.
Content BusinessIn the Content Business, the Faith Group is actively pursuing the development of new products in
response to the market environment including the ongoing popularization of smartphones and evolving
music listening styles. We are proceeding with measures to enhance the added value of our contents,
such as functional improvement and linkage with other services, by verifying the results of service
contents and marketability, including with regard to existing businesses, while also proceeding withplatformization in the interests of achieving income diversification.
With FaRao PRO, Faith is positively conducting sales activities related not only to providing
commercial-use BGM but also to implementing functional expansion and improvements, such as shop
branding solutions and announcement functions, which are essential to shop operations. Based on theservice in Japan, we have started up FaRao PRO services in France and Indonesia. In the future, we areaiming to create and activate new BGM markets both in Japan and overseas.
In Fans’, our platform of services for artists, we are enhancing the functions essential to artists’ musicalactivities such as official website construction, music and video distribution, sales of artist goods, andfan club operation. As a service that allows more artists to freely send out their musical work andinformation, we are aiming to acquire new users an expand membership, and we will endeavor to
improve the quality of the service by pursuing usability.
As a result of the above developments, 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, the Content Business recorded net sales of ¥4,405 million (an decrease of 3.2% year onyear), and an operating loss of ¥56 million (compared with operating income of ¥128 million for theprevious fiscal year).
Point Service BusinessIn the Point Service Business, despite a delay in the start up of new business, sales of new points issued
by participating point card stores remained robust and the self liquidation (*3) business performed well,with the result that this business recorded net sales of ¥2,413 million, an increase of 4.6% year on year.
However, due to increases selling and general administration expenses in connection with investment intalented human resources, operating income decreased by 56.8% year on year to ¥85 million.
(*3) 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 severe environment facing the music and video-related industry in line with the continuing
shrinking of the music market, the Faith Group is developing the Label Business and proceeding toinvest its management resources intensively in fields of growth based on the awareness of the urgent
necessity to realize structural reforms and strengthen new future-oriented businesses in order toovercome the present situation in which we remain dependent on sales of package products for which
the market remains sluggish.
Regarding the Label Business’s sales performance, due mainly to higher sales of Nippon Columbia Co.,
Ltd’s animation-related titles and game software titles and to an improved sales performance in theartist management-related business, overall sales in this segment totaled ¥13,975 million, an increase of
5.0% compared with the previous fiscal year. On the profit and loss front, due to increased sales ofhigh-margin products launched in previous years, this segment recorded an operating income for the
fiscal year under review of ¥1,728 million, an increase of 43.8% year on year.
*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, 2017 increased by ¥2,247
million from the end of the previous consolidated fiscal year to ¥26,959 million. This result was mainly
attributable to increases in cash and deposits, trade notes and accounts receivable, and inventory.
Total liabilities increased by ¥1,010 million compared with the end of the previous consolidated fiscal
year to ¥8,892 million. This result was mainly attributable to increases in trade notes and accounts
payable, and accounts payable-other.
Net assets increased by ¥1,236 million compared with the end of the previous consolidated fiscal year to¥18,066 million. This result was mainly attributable to the recording of net income attributable toshareholders of the parent company. Moreover, the Faith Group’s capital adequacy ratio became 59.5%.

(3) Overview of Cash Flow for the Current Term
Cash and cash equivalents at the end of the consolidated fiscal year ended March 31, 2017 increased by¥2,885 million to ¥13,768 million, an increase of 26.2% 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 ¥2,471 million (an increase of 32.7%
compared with the previous consolidated fiscal year), attributable mainly to the addition of amortizationof negative goodwill of ¥161 million, depreciation and amortization expenses of ¥337 million, an
increase in trade payables of ¥480 million, and income tax and other payments of ¥336 million to theGroup’s net income before taxes and other adjustments of ¥1,709 million.
(Cash flow from investing activities)
Cash flow from investing activities amounted to an inflow of ¥839 million (a decrease of 33.7%
compared with the previous consolidated fiscal year), attributable mainly to the posting of expenditure¥500 million in respect of opening new term deposits, ¥269 million to obtain software, ¥403 million forpurchasing investment securities, and ¥230 million for purchasing marketable securities, despite
receiving ¥2,008 million in proceeds from the withdrawal of existing term deposits, ¥233 million inincome from the sale of investments in securities, and ¥188 million in income through the acquisition ofsubsidiary shares accompanying changes in the scope of consolidation.
(Cash flow from financing activities)
Cash flow from financing activities amounted to an outflow of ¥512 million (a decrease of 65.8%
compared with the previous consolidated fiscal year), due mainly to ¥396 million in expenditure in
respect of repayment of long-term loans, and ¥99 million in respect of dividend payments, etc.

(4) Future Outlook
The Faith Group’s business performance forecasts for next consolidated fiscal year (FY 2017; ending
March 31, 2018) are as follows. Despite the contribution of higher net sales by the newly consolidated
subsidiary, sales of animation-related products, which were strong during the fiscal year under review,are expected to decrease. Accordingly, the Group is currently forecasting net sales of ¥21,200 million,
an operating income of ¥850 million, an ordinary income of ¥860 million, and a net income attributable
to the shareholders of the parent company of ¥500 million.
(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.
4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, etc.

5

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

(Assets)
Current assets
Cash and deposits
Trade notes and accounts receivable
Marketable securities
Commercial products
Products in progress
Primary materials and inventory goods
Corporation tax refund receivable, etc.
Deferred tax assets
OthersAllowance 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)Total tangible fixed assets
Intangible fixed assets
Software
Goodwill
Leased assets
OthersTotal intangible fixed assets
Investment and other assets
Investment securities
Deferred tax assets
OthersAllowance for doubtful receivable
Total investments and other assets
Total fixed assets
Total assets

6

FY 2015(As of March 31, 2016)

FY 2016(As of March 31, 2017)12,680,124
2,388,481
242,521508,709
202,043
47,624
7,492
12,341
920,570△52,908
16,957,000

14,268,853
2,659,104
230,572
561,536
356,686
49,98327,454
100,976
639,750△18,863
18,876,055

2,037,987△812,895
1,225,092
638,036△613,449
24,587
1,011,014△882,809
128,205
1,501,684
43,692△28,945
14,7462,894,315

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

507,103
1,959,316
6,659
360,591
2,833,671

441,953
1,833,611
424
413,200
2,689,188

1,753,502
3,898
550,403△280,607
2,027,196
7,755,183
24,712,183

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

(Unit: thousands of yen)

(Liabilities)
Current liabilities
Trade notes and accounts payable
Short-term loans
Lease obligations
Accounts payable-otherAccrued expenses payable
Income taxes payable
Reserve for bonuses
Provision for point card certificates
Reserve for sales returns
OthersTotal current liabilities
Fixed liabilities
Long-term liabilities
Net defined retirement liabilities
Lease obligations
Deferred tax liabilities
OthersTotal 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
Accumulated adjustment amount pertaining toretirement benefits
Total other accumulated comprehensive income
Stock acquisition rights
Minority interests
Total net assets
Total liabilities and net assets

7

FY 2015(As of March 31, 2016)

FY 2016(As of March 31, 2017)995,288686,120
16,133
1,023,712
2,541,442
189,734
66,14733,874
92,333604,254
6,249,041

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

816,650
609,261
8,028
152,646
46,744
1,633,331
7,882,373

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

3,218,000
3,707,197
11,480,657△3,038,502
15,367,352

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

198,282△8,446△928

267,014△11,513△41,119

188,908
42,7341,230,815
16,829,810
24,712,183

214,381
15,691
1,998,376
18,066,579
26,959,552

(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 investment in partnership
Loss on equity method investments
Replacement cost in a business combination
Miscellaneous expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on disposal of fixed assets
Gain on changes in equity
Gain on step acquisitions
Gains on reversal of subscription rights to shares
OthersTotal extraordinary income
Extraordinary losses
Loss on disposal of fixed assets
Loss on impairment
Loss on valuation of investment securities
Loss on share exchange
Copyright-related loss
OthersTotal 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 2015(April 1, 2015 ~March 31, 2016)
20,163,527
12,061,696
8,101,831
6,567,355
1,534,475

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

3,957
5,473
128
13,615
15,657
17,70756,539

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

14,5262,666
8,750
34,352－
1,245
61,542
1,529,473

11,045
1,784－
86,238
174,469
9,156
282,693
1,539,004－
990
37,035
13,18615,857
1,487
68,557224,236－
19,845－27,043－271,125

21,641
21,7405,490
21,01810,0004,798
84,689
1,513,341
310,759
2,908
313,667
1,199,673
553,669

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

646,004

571,938(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
Adjustments for retirement benefit obligations
Total other comprehensive income
Comprehensive income(Details)
Comprehensive income attributable to shareholders of
the parent company
Comprehensive income attributable to non-controllinginterests

9

FY 2015(April 1, 2015 ~March 31, 2016)
1,199,673

FY 2016(April 1, 2016 ~March 31, 2017)
1,378,113△16,294

69,190△13,725△106,319△136,339
1,063,333△2,579△78,836△12,225
1,365,888

526,768

597,411536,564

768,476

(3) Consolidated Statement of Changes in Shareholders’ Equity
FY 2015 (April 1, 2015 ~ March 31, 2016)(Unit: thousands of yen)
Shareholders' equity
Capital stock Capital surplus
Balance at beginning of period

3,218,000

3,708,355

10,938,929

Total
shareholders’equity16,610,496△1,254,787△104,273△104,273

Retainedearnings

Treasury stock

Changes of items during theaccounting period
Dividends paid
△1,157

Changes in parent company equity
regarding transactions with
non-controlling interests
Net gain or loss attributable toshareholders of parent company△1,157646,004△1,783,816△1,783,816

△2

101

98

Acquisition of treasury stock
Disposal of treasury stock
Net changes in non-equity items
during the accounting period
Total changes during the accounting
periodBalance at end of period

646,004－△1,157541,728△1,783,715△1,243,144

3,218,000

3,707,197

11,480,657△3,038,502

15,367,352

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
215,116
5,399
87,627308,143
58,591 745,938

Total net
assets17,723,169

Changes of items during theaccounting period△104,273

Dividends paid

△1,157

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

646,004△1,783,816

Acquisition of treasury stock98

Disposal of treasury stock
Net changes in non-equity items
during the accounting period
Total changes during the accounting
period△16,833△13,845△88,556△119,235 △15,857

484,877

349,784△16,833△13,845△88,556△119,235 △15,857

484,877△893,359

Balance at end of period

198,282△8,446△928

42,734 1,230,815

16,829,810

10

188,908

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
△1,517

Changes in parent company equity
regarding transactions with
non-controlling interests
Net gain or loss attributable toshareholders of parent company△1,517

571,938

571,938

Acquisition of treasury stock

△947

△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
Dividends paid

△98,694

Changes in parent company equity
regarding transactions with
non-controlling interests
Net gain or loss attributable toshareholders of parent company△1,517

571,938△947

Acquisition of treasury stock
Disposal of treasury stock
Net changes in non-equity items
during the accounting period
Total changes during the accounting
period68,731△3,067△40,191

25,473 △27,043

767,560

765,990

68,731△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

11

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

FY 2015(April 1, 2015 ~March 31, 2016)
Cash flow from operating activities
Income or loss before income taxes, etc.
Depreciation expenses
Loss on ipairment loss
Amortization losses 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 dividends income
Interest on securities
Interest paid
Gain or loss on foreign exchange (△ = gain)
Gain or loss on equity method investments (△ = gain)
Gain or loss on investment partnership management (△ =gain)Gain or loss on valuation of investment securities (△ = gain)
Gain or loss on sale of fixed assets (△ = gain)
Gain or loss on sale of investment securities (△ = gain)
Gain or loss on disposal of fixed assets (△ = gain)
Gain or loss on step acquisitions (△ = gain)
Gain or loss on change in equity (△ = gain)
Gain or loss on share exchange (△ = 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 2016(April 1, 2016 ~March 31, 2017)

1,513,341
361,663
21,740144,316
11,351

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

974△5,953

12,153
9,695△70,414△65,704△9,431△128
14,526
1,868
34,352△4,864△6,449△36
11,045△1,46686,238△23,921

5,490
△990
－
21,641△13,186△37,035
21,018359,176
90,591△190,178△30,859－－△224,236
80,324－△19,845－△66,043△99,130
480,61744,765

157,796△366,021
2,030,786
13,287△14,564
55,951△284,589
1,800,872△131,408
504,658
2,812,087
6,691△11,110－△336,258
2,471,410

(Unit: thousands of yen)

FY 2015(April 1, 2015 ~March 31, 2016)
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
Income from sale of investment securities
Expenditure for acquisition of shares of affiliates
Expenditure for acquisition of subsidiary shares accompanying
changes in the scope of consolidation
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
Income from long-term loans payable
Expenditure for repayment of long-term borrowing
Expenditure for acquisition of treasury stock
Income from sale of treasury stock
Payment of dividends
Payment of dividends to non-controlling interests
Expenditure for acquisition of subsidiary shares notaccompanying changes in the scope of consolidation
OthersNet 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 2016(April 1, 2016 ~March 31, 2017)△4,017,682
6,043,035△500,000
2,008,881－△83,324△329,055△61,360
15,476△230,000△43,256△269,781△403,900
233,120△167,100△144,007△9,600－42,404

188,255△15,000
120△40,000
2,699△7,18545,039△4,411600△54,958
1,266,402△93,121
839,486

60,000－△17,229500,000△105,021△65△11,100△16,133－△396,120△947－△99,262△26－△131△1,497,925△1,8681,567,480－△512,490
1,466
2,799,872

9,346,285

10,913,765－

55,216

10,913,765

13,768,853△342,370△1,582,108
101

(5) Notes Concerning the Consolidated Financial Statements(Notes Concerning the Premise of a Going Concern)
Not applicable(Changes in Accounting Policy)(Application of Practical Solution on a Change in Depreciation Method due to Tax Reform 2016)
In accordance with the revision of the Corporation Tax Act, the Company adopted the Practical
Solution on a Change in Depreciation Method due to Tax Reform 2016 (ASBJ PITF No. 32
issued June 17, 2016) from the first quarter of the fiscal year under review. The straight-line
method has been used for the depreciation of the facilities attached to buildings and structuresacquired on or after April 1, 2016 instead of the declining-balance method, which had been usedprior to this date.
The effects of this change on the Company’s income and net assets figures for the current
consolidated fiscal year are immaterial.
(Additional Information)
Current consolidated fiscal year/FY 2016 (April 1 2016 ~ March 31, 2017)(Conclusion of a Share Exchange Agreement)
Faith, Inc. (hereinafter referred to as “the Company”) and Nippon Columbia Co., Ltd.
(hereinafter referred to as “Nippon Columbia”) announced on March 28, 2017 that Faith had
decided to make Nippon Columbia its wholly-owned subsidiary by means of a share exchange(hereinafter referred to as “the Share Exchange”) that would leave Faith as the wholly-owningparent company and Nippon Columbia as a wholly-owned subsidiary of the Company, and thetwo companies concluded a share exchange agreement (hereinafter referred to as “the Share
Exchange Agreement”) on the same day.
(1) Purpose of the Share Exchange Agreement
Under circumstances in which the business environment is changing rapidly, the Company andNippon Columbia are aiming to make optimum use of both companies’ technological and humanresources by unifying their operations in both capital and business terms. As a result of the Share
Exchange, we will be able to make necessary investments for introducing appropriate new
business methods whenever the opportunity arises on both the user side and the content
production side including for artists, etc. Through this, we will strive to create even more newservices and new markets and to further improve the corporate values of both companies.
(2) Summary of the Share Exchange① Schedule of the Share Exchange
Conclusion of the Share Exchange Agreement (both companies)

March 28, 2017

Date of General Meeting of Shareholders to approve the Share June 23, 2017 (planned)
Exchange Agreement (Nippon Columbia)
Date of General Meeting of Shareholders to approve the Share June 29, 2017 (planned)
Exchange Agreement (the Company)
Final trading date (Nippon Columbia)
July 26, 2017 (planned)
Delisting date (Nippon Columbia)

July 27, 2017 (planned)

Scheduled share exchange execution date (effective date)August 1, 2017 (planned)② Details of the Allotment related to the Share Exchange
The Company (wholly owning Nippon Columbia (whollyparent company)
owned subsidiary)
Share Exchange Ratio of the allotment1
0.59
of shares pertaining to the Share
Exchange
Number of shares to be delivered upon Shares of the Company’s common stock: 3,900,834 shares
the Share Exchange(planned)
14

(Note 1) Share allotment ratio pertaining to the Share Exchange
0.59 shares of the Company’s stock will be allotted and delivered for each share of Nippon Columbia’s stock.
However, in accordance with the Share Exchange Agreement, the Share Exchange Ratio may be revised upon
consultation of Both Companies in the event of a significant change in the conditions on which the calculation isbased.
(Note 2) Number of shares to be delivered through the Share Exchange
Upon the Share Exchange, the Company will deliver to Nippon Columbia shareholders (excluding the Company
itself) prior to the time at which it acquires all of the outstanding Nippon Columbia shares (excluding those
Nippon Columbia shares already in the Company’s possession) shares of the Company’s stock equivalent in
number to 0.59 times the total number of shares of Nippon Columbia stock held by each Nippon Columbia
shareholder in exchange for their shares of Nippon Columbia stock.

③ Basis for calculating details of the allotment of shares pertaining to the Share Exchange
In order to ensure fairness and adequacy in calculating the Share Exchange Ratio for the Share
Exchange, the Company appointed Nomura Securities Co., Ltd. as its third-party appraiser andAnderson Mori & Tomotsune as is legal advisor, while Nippon Columbia appointed Plutus
Consulting Co., Ltd. as its third-party appraiser and Iwata Godo as its legal advisor.
Nomura Securities Co., Ltd. conducted analyses of the Company and Nippon Columbia using thecomparable companies analysis method and the DCF analysis method, and then calculated theShare Exchange Ratio by comprehensively taking into account the results of these analyses.
Plutus Consulting Co., Ltd. conducted analyses of the Company and Nippon Columbia using the
average market share price method in addition to the comparable company analysis method andthe DCF method, and then calculated the Share Exchange Ratio by comprehensively taking into
account the results of these analyses.
The Share Exchange Ratio for the Share Exchange was agreed and determined by the two parties
through mutual discussion based on the calculation results of the Share Exchange Ratio renderedby each of the third-party evaluation institutions and taking into consideration the advice of bothparties’ legal advisors.
④ Measures to avoid any conflict of interest
In order to prevent this Share Exchange from being conducted under conditions that are
disadvantageous to Nippon Columbia’s minority shareholders, Nippon Columbia set up athird-party committee composed of knowledgeable outsiders independent of both the Company
and of Nippon Columbia, and consulted them on the issue of whether or not Nippon Columbia’s
response to the Share Exchange proposal was disadvantageous to its minority shareholders. The
Company received a report of the committee’s findings in which the committee states thatpremised upon the explanation concerning procedural measures put in place to avoid conflicts ofinterest and upon study materials such as the calculation results, etc., the committee recognizes
that the Share Exchange is not disadvantageous to the interests of minority shareholders of
Nippon Columbia.

(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.
In accordance with the Company’s acquisition of a majority interest in Dreamusic Inc. in March
2017, from the consolidated fiscal year under review Dreamusic and its subsidiaries are included
among the Company’s consolidated subsidiaries and the “the Columbia Business” has been
replaced by “the Label Business” as a reportable segment. Moreover, the name of this segment
has been changed in the same way for the previous consolidated fiscal year.
Following this change, the Faith Group categorizes the Content Business, the Point Service
Business, and the Label Business as its three reportable segments.
Content BusinessIn order to promote its Multi-Content and Multi-Platform Strategy, the Faith Group is providing
one-stop solutions ranging from the construction of distribution systems and 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.
15

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 reportable business segments is largely the same as the method for
preparing 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.
3. Information on sales, profit or loss, assets, liabilities and other items by reportable segment
Previous consolidated fiscal year/FY 2015 (April 1, 2015 ~ March 31, 2016)(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
4,549,915
2,306,938
13,306,673
20,163,527
20,163,527－
customers
Inter-segment sales or
135,170
2,224
36,441
173,836△173,836－transfer amount
Total
4,685,086
2,309,162
13,343,115
20,337,363
20,163,527△173,836
Segment profit or loss
128,627
198,848
1,201,662
1,529,138
5,337
1,534,475(△)
Segment assets
13,712,236
1,033,167
10,041,682
24,787,086
24,712,183△74,902
Other items
Depreciation expenses
238,331
14,111
109,268
361,711361,663△48
Amortization of42,198102,118
144,316
144,316－－
goodwill
Investment in
128,807
128,807
128,807－－－
equity-method affiliates
Increase in tangible
337,430
23,04451,905412,380
412,380－and intangible fixed
assets(Notes)1. The segment profit adjustment amount of ¥5,337 thousand and the depreciation expenses adjustment amount of△¥48 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.

16Current 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
226,712
18,176
68,149313,038
313,038－
and 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.

17

[Related Information]
Previous consolidated fiscal year/FY 2015 (April 1, 2015 ~ March 31, 2016) and current
consolidated fiscal year/FY 2016 (April 1 2016 ~ March 31, 2017)
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 2015 (April 1, 2015 ~ March 31, 2016)(Unit: thousands of yen)Content
Loss onimpairment

11,774

Point
Service
－

Label
9,966

Total
21,740Company-wide/
elimination－

Total
21,740Current consolidated fiscal year/FY 2016 (April 1 2016 ~ March 31, 2017)(Unit: thousands of yen)Content
Loss onimpairment

9,919

Point
Service
－

Label
－

Total
9,919

Company-wide/
elimination
－

Total
9,919

[Information on Amortization of Goodwill and Unamortized Balance for Each Reportable Segment]
Previous consolidated fiscal year /FY 2015 (April 1, 2015 ~ March 31, 2016)(Unit: thousands of yen)Content
Year-endbalance

125,126

Point
Service－Label
1,834,190

Total
1,959,316

Company-wide/
elimination－

Total
1,959,316(Note)
The amount of amortization of goodwill is omitted because the same information is shown in [Segment
Information].

Current consolidated fiscal year/FY 2016 (April 1 2016 ~ March 31, 2017)(Unit: thousands of yen)Content
Year-endbalance

93,335

Point
Service－Label
1,740,276

Total
1,833,611

Company-wide/
elimination－

Total
1,833,611(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 2015 (April 1, 2015 ~ March 31, 2016) and current
consolidated fiscal year/FY 2016 (April 1 2016 ~ March 31, 2017)
Not applicable18(Per Share Information)(Unit: yen)

FY 2015 (April 1, 2015 ~ March 31, 2016)
Net assets per share
1,576.18
Net income per share
63.86

FY 2016 (April 1 2016 ~ March 31, 2017)
Net assets per share
1,626.59
Net income per share
57.95(Notes)1. The amount of net income per share fully diluted during the current consolidated fiscal year is not recorded
because there are no residual shares.
2. The basis of the calculation of net income per share is as follows.
FY 2015
FY 2016(April 1, 2015 ~ March 31,(April 1 2016 ~ March 31,
2016)
2017)
Net income per share
Net income attributable to the shareholders
646,004
571,938of the parent company (thousands of yen)Amount not attributable to ordinary－－
shareholders (thousands of yen)
Net income applicable to common stock
646,004
571,938
attributable to the shareholders of the parent
company (thousands of yen)
Average number of shares outstanding during
10,116,500
9,869,195
the period (shares)
3. The basis of the calculation of net assets per share is as follows.
End of FY 2015(as of March 31, 2016)
Total amount of net assets (thousands of yen)
16,829,810
Amount deducted from total amount of net
1,273,549
assets (thousands of yen)(Non-controlling interests)(1,230,815)(Share warrants)(42,734)
Year-end net assets applicable to common stock
15,556,260(thousands of yen)
Term-end number of shares of common stock
9,869,610
used in calculating net assets per share (shares)(Significant Subsequent Events)
Not applicable19

End of FY 2016(as of March 31, 2017)18,066,579
2,014,067(1,998,376)(15,691)
16,052,512
9,868,820