BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE 3rd QUARTER OF THE FISCAL YEAR ENDING MARCH 2018
This is an English translation of summarized consolidated financial results prepared for the convenienceof non-resident shareholders. Should there be any inconsistency between the translation and the official
Japanese text, the latter shall prevail.
February 13, 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 Submission of Securities Report: February 14, 2018
Starting Date of the Dividend Payment: —Preparation of Supplementary Materials for Quarterly Financial Results: None
Information Meeting for Quarterly Financial Results to be Held: None
Amounts are rounded down to the nearest JPY 1 million.

1. Results for the 3rd Quarter of the Fiscal Year Ending March 2018 (From April 1, 2017 to December 31, 2017)(1) Consolidated Operating Results(Percentages indicate changes compared with the same quarter of the previous fiscal year.)Q3 of the year ending
March 2018
March 2017

Net Sales
Million%s of yen
16,344
4.2
15,686
2.5

Operating Income
Million%s of yen
1,319
△21.7
1,686
37.6

Ordinary Income
Million%s of yen
1,229
△23.2
1,601
31.2

Net Income
Million%s of yen
862
37.9
625
7.0

(Note) Comprehensive income: 3rd quarter of the fiscal year ending March 2018: ¥1,086 million (△21.8%);
3rd quarter of fiscal year ending March 2017: ¥1,388 million (54.4%)

Net Income perShare
Q3 of the year ending
March 2018
March 2017

Diluted Net
Income per
Share
Yen
—
—

Yen
71.71
63.40

(2) Consolidated Financial Position
Total Assets

Q3 of the year ending
March 2018Year ending March 2017

Net Assets

Ratio of Equity
CapitalMillions of yen
26,260Millions of yen
19,061%
72.5

26,95918,066

59.5(Reference) Equity capital: 3rd quarter of fiscal year ending March 2018: ¥19,026 million; fiscal year ending March 2017: ¥16,052 million

2. Dividends
st(Record dates)

1 Quarteryen——Year ending March 2017
Year ending March 2018Year ending March 2018
(Forecast)Interim
yen
5.00
5.00

Dividends per Share
3rd Quarter
Year-end
yen
yen
—
5.00
—
5.00

Total
yen
10.00
10.00

(Note) These figures have not been modified since the time of the most recently announced dividend forecast.

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.)

Net Sales

Full year

Operating Income

Ordinary Income

Net Income
Attributable to the
Shareholders of the
Parent Company

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

22,100

6.3

1,310

△25.5

1,300

△15.5

800

39.9

(Note) These figures have not been modified since the time of the most recently announced business result forecast.

1

Net Income
per Share
Yen
64.18

* Notes(1) Changes in significant subsidiaries (accompanying changes in scope of consolidation): None
Newly added subsidiaries: 0 companies
Removed subsidiaries: 0 companies(2) Adoption of simplified accounting practices or specific procedures in preparation of the quarterly consolidated financial
reports: Applicable* For details, please refer to “2. Consolidated Financial Statements and Important Explanatory Notes, (3) Notes Concerning the Consolidated

Financial Statements (Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements)” on page 9 of theaccompanying material.

(3) Changes in accounting policy, changes in accounting estimates, and restatements(i)
Changes accompanying revisions of accounting standards, etc.: None(ii) Changes other than the above: None(iii) Changes in accounting estimates: None(iv)

Restatements: None

(4) Outstanding shares (common shares)(i) Outstanding shares at the end of the term (including treasury shares):
The 3rd quarter of the fiscal year ending March 2018: 13,831,091 shares
The fiscal year ending March 2017: 11,960,000 shares(ii) Treasury shares at the end of the term:
The 3rd quarter of the fiscal year ending March 2018: 69,332 shares
The fiscal year ending March 2017: 2,091,180 shares(iii) Average number of shares during the interim accounting period:
The 3rd quarter of the fiscal year ending March 2018: 12,032,464 shares
The 3rd quarter of the fiscal year ending March 2017: 9,869,309 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
1,124,149 shares in the number of treasury shares at the end of the 3rd quarter of the fiscal year ending March 2018, were due to theimplementation of a share exchange with Nippon Columbia Co., Ltd. effective as of August 1, 2017.

* This financial results report is exempt from quarterly review procedures.
* 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 the Company’s control. For details of cautions, etc., employed in making
performance forecasts and the assumptions underlying performance forecasts, please refer to “1. Qualitative Information Concerning the
Settlement of Accounts for the 3rd Quarter, (3) Explanation Concerning Future Forecast Information on the Consolidated Financial Results, etc.”
on page 4 of the accompanying material.
(To obtain supplemental documents relating to financial results)
Supplemental materials related to the Company’s quarterly and other financial results are posted on the company website.

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Contents
1. Qualitative Information Concerning the Settlement of Accounts for the 3rd Quarter ····················(1) Explanation Concerning the Operating Results ····························································(2) Explanation Concerning the Financial Position ····························································(3) Explanation Concerning Future Forecast Information on the Consolidated Financial Results, etc.

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2. Consolidated Financial Statements and Important Explanatory Notes ······································(1) Consolidated Balance Sheet ···················································································(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ········(Consolidated Statement of Income) ··········································································(Consolidated Statement of Comprehensive Income)·······················································(3) Notes Concerning the Consolidated Financial Statements ·················································(Note Concerning the Premise of a Going Concern) ························································(Note in the Case of Significant Changes in the Amount of Shareholders’ Equity) ···················(Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements) ·····(Segment Information) ·························································································

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1. Qualitative Information Concerning the Settlement of Accounts for the 3rd Quarter(1) Explanation Concerning the Operating Results
In the Japanese domestic information communication field, the popularization of smartphones is
continuing to advance together with the increasing diversification of devices. In the first half of FY2017,
smartphone shipments increased by 12.9% compared with the first half of the previous year to
13,730,000 units (*1). Moreover, the number of users accessing the Internet from a smartphoneincreased by 11% during the same period to 61,930,000 people, exceeding the number who accessed theInternet from a PC during the peak year of 2011 for the first time (*2). Against the backdrop of therising Internet utilization rate and the increasing diffusion of smartphone ownership, the switchover toservices designed for the digital era is expected to further accelerate. Accordingly, it is becoming
increasingly important for service providers to respond swiftly to the needs of users in keeping with thetimes.
*1. Mobile-phone shipments in the Japanese domestic market in the 1st half of FY 2017, compiled by MM Research Institute*2. Digital Trends 2017 First Half, compiled by the Nielson Company

In the current environment, the Faith Group is continuing to utilize the results of the efforts it has beenpouring into content digital 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 business performance for the third quarter of the consolidated fiscal year
ending March 2018, net sales increased by 4.2% compared with the same quarter of the previous fiscal
year to ¥16,344 million, operating income decreased by 21.7% year on year to ¥1,319 million, ordinary
income decreased by 23.2% to ¥1,229 million, and net income attributable to the shareholders of theparent company increased by 37.9% to ¥862 million.
Moreover, Faith, Inc. (hereinafter “the Company”) gained ownership of all the shares of Nippon
Columbia Co., Ltd. by means of a share exchange that was implemented on August 1, 2017 following
the granting of approval of the share exchange contract by the annual general meetings of bothcompanies, which took place on June 29, 2017 in the case of the Company and on June 23, 2017 in thecase of Nippon Columbia Co., Ltd. With this, we have facilitated the centralization of our businessstrategy, speeding up decision making, promoting the efficient utilization of both companies’ available
resources including know-how and human resources, strengthening our creative response in the face ofthe huge changes currently enveloping the music industry, and allowing us to strive to further improve
our corporate value.
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 market environment including the ongoing popularization of smartphones, changing
music listening styles. In this business, the Company is proceeding with measures to enhance the added
value of its 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 our FaRao PRO business by pursuing the functional expansion necessary
for in-store operations such signage and security camera functions, in addition to commercial-use BGM
and announcement functions using the Internet. For instance, we have begun providing FaRao PRO
services in France and Indonesia based on our Japanese service, and we are also promoting new
developments such as the collective introduction of FaRao PRO at the facilities of an Indonesian hotel
chain. In future, we will endeavor 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’ musical2

activities such as official website construction, music and video distribution, sales of artist goods, andfan club operation. In providing a service that allows more artists to freely send out their musical work
and information, we are aiming to acquire new users an expand membership, and we will endeavor to
improve the quality of the Fans’ service by pursuing usability.
As a result of the above developments, taking into account the ongoing positive deployment of newservices in keeping with the changing market environment and the decline in sales of services to featurephone users, the Content Business recorded net sales of ¥3,171 million, a decrease of 4.8% year on year,
and an operating loss of ¥118 million, compared with an operating loss of ¥9 million for same period of
the previous fiscal year.
Point Service BusinessIn the Point Service Business, sales of points issued by existing participating point card stores remainedrobust, thanks in part to measures such as double point sales. In addition, the self-liquidation business(*3) performed well, with the result that this business recorded net sales of ¥2,009 million, an increaseof 10.7% year on year. However, as a result of increased costs in line with an expansion of personnel
and office facilities in connection with investment in talented human resources, operating income
decreased by 17.8% year on year to ¥61 million.
*3. A campaign in which users can purchase various goods at a discount by saving points in the form of seals.

Label Business
Amid the severe environment facing the music and video-related industry in line with the continuing
shrinkage 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, sales of J-Pop and education titles, which contributed
significantly to sales revenue in the previous fiscal year, recorded year-on-year declines, while
animation and game titles performed favorably. Moreover, the inclusion of record label company
Dreamusic Inc. as newly consolidated subsidiary of the Faith Group boosted overall Label Businesssales. As a result, net sales reported in this segment were ¥11,163 million, an increase of 5.9%
compared with the same period of the previous fiscal year, and operating income was ¥1,374 million, a
year-on-year decrease of 15.2%.
*Product and service names appearing in this document are trademarks or registered trademarks of Faith, Inc. either in Japan or in othercountries.

(2) Explanation Concerning the Financial Position
Total assets as of December 31, 2017 decreased by ¥699 million compared to the end of the previous
consolidated fiscal year to ¥26,260 million. This result was due mainly to decreases in cash and deposits
and in accounts and notes receivable.
Total liabilities decreased by ¥1,693 million compared to the end of the previous consolidated fiscal
year to ¥7,199 million. This result was due mainly a decrease in accounts and notes payable and to therepayment of loans.
Total net assets increased by ¥994 million compared to the end of the previous consolidated fiscal yearto ¥19,061 million. This was due mainly to the recording of a quarterly net income attributable to theshareholders of the parent company and to a decrease in treasury stock, etc.
As a result of the above, the equity ratio improved by 13.0 percentage points to 72.5%.

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(3) Explanation Concerning Future Forecast Information on the Consolidated Financial
Results, etc.
Performance forecasts are made based on information currently available to the Company, but there is apossibility that the actual performance figures will differ significantly from the forecast figures due to avariety of factors. In addition, regarding the current performance forecast for the consolidated full
financial year, although operating income and net income attributable to shareholders of the parent
company for the third quarter has already exceeded the full-year performance forecast values, during thefourth quarter we expect to incur game product production costs and advertising expenses in the LabelBusiness. Accordingly, the full-year forecast remains unchanged from the forecast issued on October 31,
2017.

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2. Consolidated Financial Statements and Important Explanatory Notes(1) Consolidated Balance Sheet
FY 2016(March 31, 2017)(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
Intangible fixed assets
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(Liabilities)
Current liabilities
Accounts and notes payable
Short-term loans payable
Lease obligations
Accrued 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 benefits
Lease obligations
Deferred tax liabilities
Other fixed liabilities
Total fixed liabilities
Total liabilities

5(Unit: thousands of yen)
3rd Quarter of FY 2017

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

13,501,723
2,481,049
230,433
494,896477,961
65,73321,80996,123590,676△19,787
17,940,618

2,831,617

2,777,688

1,833,611
855,577
2,689,188

1,745,375
788,6422,534,017

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

2,583,613
26,215756,165△357,875
3,008,119
8,319,825
26,260,444

1,233,646
852,119
6,582
2,756,629
327,800
78,30043,57096,7482,164,786
7,560,185

983,871
661,819
1,885
2,596,323
235,999
37,695
9,353
86,212
1,480,704
6,093,865

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

297,346
573,401
904
188,675
45,241
1,105,568
7,199,433

FY 2016(March 31, 2017)(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 for retirement benefit
obligations
Total other accumulated comprehensive income
Stock acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

6(Unit: thousands of yen)
3rd Quarter of FY 2017

(December 31, 2017)

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

3,218,000
3,019,222
12,674,778△99,272
18,812,728

267,014△11,513△41,119

259,014△13,280△31,987

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

213,747－
34,53419,061,010
26,260,444

(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
Foreign exchange gains
Miscellaneous receipts
Total non-operating income
Non-operating expenses
Interest paid
Loss on equity method investment
Cost of exchange from business combination
Foreign exchange losses
Miscellaneous expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales 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
Other extraordinary losses
Total extraordinary losses
Net income or net loss before income taxes
Corporate, local, and business taxes
Income taxes - deferred
Current quarter net income
Current quarter net income attributable to non-controllinginterests
Current quarter net income attributable to shareholders of
the parent company

7

3rd Quarter of FY 2016

3rd Quarter of FY 2017

(April 1-Dec.31, 2016)
15,686,616
9,250,790
6,435,825
4,749,698
1,686,127(April 1-Dec. 31, 2017)16,344,272
9,959,356
6,384,916
5,065,128
1,319,787

660
5,137
25
23,598－
8,052
37,475

1,070
4,503
40
15,367958
15,98937,931

9,073
104,338－719
8,111
122,243
1,601,359

6,398
69,71950,852－
1,018
127,989
1,229,729－－
27,043－27,043116,982
5,859
15,691
754
139,287

5,398
－
500
5,898
1,622,503
279,171
2,578
1,340,754
715,012

6,617
23,421－30,0391,338,977
249,887
2,155
1,086,934
224,107625,742862,826

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

Current quarter 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

8

3rd Quarter of FY 2016

3rd Quarter of FY 2017

(April 1-Dec.31, 2016)
1,340,754(April 1-Dec. 31, 2017)
1,086,934

54,689△9,573△5,804△758
48,126
1,388,880△1,76010,915△419
1,086,515

672,941

862,191

715,939

224,323

(3) Notes Concerning the Consolidated Financial Statements(Note Concerning the Premise of a Going Concern)
Not applicable(Note in the Case of Significant Changes in the Amount of Shareholders’ Equity)
Effective as of August 1, 2017, the Company implemented a share exchange for the purpose of
converting its consolidated subsidiary Nippon Columbia Co., Ltd. into a wholly owned subsidiary with
the Company as the wholly owning parent company. Primarily as a result of this share exchange, during
the consolidated cumulative 3rd quarter accounting period of the current fiscal year, the Company’s
capital surplus declined by ¥686,457 thousand and the value of treasury shares held declined by¥2,940,178 thousand, so that at the end of the current 3rd quarter accounting period, the capital surplus
was ¥3,019,222 thousand and the value of treasury shares held was ¥99,272 thousand.

(Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements)
Tax expenses for the Company and a portion of its consolidated subsidiaries are calculated by making areasonable estimate of the effective tax rate after applying tax effect accounting to the amount ofquarterly net income before tax deduction for the consolidated financial year including the current 3rdquarter accounting period, and then multiplying the amount of quarterly net income before tax deduction
by the current estimated effective tax rate.

(Segment Information)
Ⅰ 3rd quarter of the previous consolidated fiscal year/FY 2016 (April 1, 2016 through Dec. 31, 2016)

1. Information on sales and profit or loss by reportable segment(Unit: thousands of yen)Content

Point Service

Label

Total

Amount recorded in
Adjustment
Consolidated Financial
amount (Note 1) Statements (Note 2)

Net sales
Sales to externalcustomers
Intersegment sales
or transfer amount

3,330,555

1,814,397

10,541,663

15,686,616－

15,686,616

84,634－32,861

117,496△117,496－

Total

3,415,190

1,814,397

10,574,525

15,804,112△117,496

15,686,616

Segment income orloss (△)△9,67574,184

1,620,024

1,684,532

1,594

1,686,127

Notes: 1. The segment income or loss (△) adjustment amount of ¥1,594 thousand is calculated by eliminating intersegment
transactions.
2. Segment income or loss amounts are adjusted with operating income in the quarterly consolidated profit and loss statement.

2. Information regarding impairment loss on fixed assets or goodwill by segment reported
This information is omitted since there is no critical impairment loss on fixed assets or significant
change in amount of goodwill.

9Ⅱ 3rd quarter of the current consolidated fiscal year/FY 2017 (April 1, 2017 through Dec. 31, 2017)

1. Information on sales and profit or loss by reportable segment(Unit: thousands of yen)Content

Point Service

Label

Total

Amount recorded in
Adjustment
Consolidated Financial
amount (Note 1) Statements (Note 2)

Net sales
Sales to externalcustomers
Intersegment sales
or transfer amount

3,171,650

2,009,106

11,163,515

16,344,272－

16,344,272

78,160－7,979

86,139△86,139－

Total

3,249,810

2,009,106

11,171,495

16,430,412△86,139

16,344,272

Segment income orloss (△)△118,866

61,012

1,374,094

1,316,241

3,546

1,319,787

Notes: 1. The segment income or loss (△) adjustment amount of ¥3,546 thousand is calculated by eliminating intersegment
transactions.
2. Segment income or loss amounts are adjusted with operating income in the quarterly consolidated profit and loss statement.

2. Information regarding impairment loss on fixed assets or goodwill by segment reported
This information is omitted since there is no critical impairment loss on fixed assets or significant
change in amount of goodwill.

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