BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE 2nd QUARTER OF THE FISCAL YEAR ENDING MARCH 2020
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.

November 13, 2019
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: November 14, 2019
Starting Date of the Dividend Payment: December 10, 2019
Preparation of Supplementary Materials for Quarterly Financial Results: Applicable
Information Meeting for Quarterly Financial Results to be Held: None
Amounts are rounded down to the nearest JPY 1 million.

1. Results for the 2nd Quarter of the Fiscal Year Ending March 2020
(From April 1, 2019 to September 30, 2019)(1) Consolidated Operating Results(% indicate changes compared with the same quarter of the previous fiscal year.)

Net Sales

Q2 of the year ending

Millionsof yenMarch 2020
March 201910,184
10,600Operating Income%

Millionsof yen△3.9△1.0

Ordinary Income

%

334
218

Millionsof yen

52.9
△75.9

%

383
194

97.3
△77.2

Net Income
Millionsof yen

%

△373
213

－
△62.0

(Note) Comprehensive income: 2nd quarter of the fiscal year ending March 2020: △¥219 million (—%); 2nd quarter of fiscal year ending
March 2019: ¥195 million (△76.0%)

Net Income per
Share

Diluted Net
Income per ShareYen△28.16
15.84

Yen
—
—

Q2 of the year ending
March 2020
March 2019(2) Consolidated Financial Position
Total Assets

Net Assets

Ratio of Equity CapitalMillions of yen

Millions of yen

25,117

17,192%
68.4

24,343

17,52072.0

Q2 of the year ending
March 2020
Year ending March 2019

(Reference) Equity capital: 2nd quarter of fiscal year ending March 2020: ¥17,192 million; fiscal year ending March 2019: ¥17,520 million

2. Dividends
Dividends per Share
1st Quarter(Record dates)

yen
—
—

Year ending March 2019Year ending March 2020

3rd Quarter

Interim

yen
5.00
5.00

Year ending March 2020
(Forecast)Year-end

Total

yen
—

yen
5.00

yen
10.00

—

5.00

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 2020
（from April 1，2019 to March 31，2020）(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%

20,000

△4.6

300

107.9

300

－

△450

－

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

1

Net Income
per Share

Yen△34.02

* 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) 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, (4) Notes

Concerning the Consolidated Financial Statements (Adoption of Simplified Methods in the Preparation of theQuarterly Financial Statements)” on page 12 of the accompanying 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 2nd quarter of the fiscal year ending March 2020: 13,831,091 shares
The fiscal year ending March 2019: 13,831,091 shares(ii) Treasury shares at the end of the term:
The 2nd quarter of the fiscal year ending March 2020: 628,164 shares
The fiscal year ending March 2019: 572,000 shares(iii) Average number of shares during the interim accounting period:
The 2nd quarter of the fiscal year ending March 2020: 13,2439,524 shares
The 2nd quarter of the fiscal year ending March 2019: 13,447,409 shares(Note) The number of shares of treasury stock at the end of the period includes the Company's shares contributed
as trust assets in the performance-based stock compensation plan (2nd quarter of fiscal year ending March 2020:
262,500 shares, fiscal year ending March 2019: – shares).
Moreover, such shares are also included in the treasury shares that are deducted in calculating the average numberof shares during the period (the 2nd quarter of the fiscal year ending March 2020: 43,750 shares, the 2nd quarterof the fiscal year ending March 2019: – shares).
* 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 theCompany’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 2nd Quarter,(3) Explanation Concerning Future Forecast Information on the Consolidated Financial Results, etc.” on page 3 of theaccompanying 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.

2

Contents
1. Qualitative Information Concerning the Settlement of Accounts for the 2nd 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.

2
2
4
5

2. Consolidated Financial Statements and Important 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)······················································· 8(3) Consolidated Statement of Cash Flows ······································································· 10(4) Notes Concerning the Consolidated Financial Statements ················································· 12(Note Concerning the Premise of a Going Concern) ························································ 12(Note in the Case of Significant Changes in the Amount of Shareholders’ Equity) ··················· 12(Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements) ····· 12(Segment Information) ························································································· 13

11. Qualitative Information Concerning the Settlement of Accounts for the 2nd Quarter(1) Explanation Concerning the Operating Results
In the Japanese information and communications field in 2018, the Internet penetration rate remained
high at 79.8%, and the percentage of households owning one or more smartphones reached 79.2%,
exceeding the percentage of households that own personal computers. (*1) Meanwhile, since 2000, themovement away from television has been progressing centered mainly on the younger generation, whilein 2018, the Internet usage rate exceeded the TV viewing rate on weekdays and holidays for the first time.
(*2)
Furthermore, the usage rate of personal social networking services now exceeds 60%. The ongoingtransition to services in line with the digital era is expected to accelerate in future as the Internet usage
rate climbs further and smartphone ownership continues to spread. Under these circumstances, it is
becoming even more important for Faith to respond swiftly to user needs that are in keeping with thetimes.
*1. Source: Ministry of Internal Affairs and Communications,
Survey Results of 2018 Communication Usage Trend Survey*2. Source: Ministry of Internal Affairs and Communications,
FY2018 Survey Report on Survey on Time Spent for Information and Communication Media and Information Behaviors

Also, in the entertainment market, sales in the global music market centered on streaming services grewby 10% year-on-year to US$19 billion (*3), increasing for the fourth consecutive year and recording theirhighest annual sales growth since 1996. In Japan as well, the production value of music software includingmusic videos increased by 4% from the previous year to ¥240.3 billion (*4), with sales increasing for the
first time in three years. Although sales of packaged products continued to decline, fee-based music
distribution sales increased by 13% year-on-year to ¥64.5 billion with sales of streaming services inparticular leaping by 33% year-on-year to exceed download sales for the first time. Meanwhile, the sizeof the live entertainment market increased by 4% from the previous year to ¥344.8 billion, driven by an
expansion of “experience” consumption (*5).
*3. Source: IFPI Global Music Report 2019*4. Source: Recording Industry Association of Japan (RIAJ),
The Recording Industry in Japan 2018
*5. Source: All Japan Concert & Live Entertainment Promoters Conference (ACPC),
2018 Basic Research Report

Founded in 1992, Faith, Inc. was the first company in the world to commercialize ringtones, and has
steadily grown focusing on the music distribution business together with the spread of mobile phones. In
the current music market, amid the growing popularity of smartphones, streaming media, user upload
content (UUC) that allows general users to easily send out information to society, and media
diversification such as social media, all kinds of activities in the music industry have been changing,including musical styles and content production methods.
Given this 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 MultiContent and Multi-Device Strategy of creating environments in which people can enjoy a wide diversityof contents whenever and wherever they choose. We are also strengthening the development of newservices in response to the changing market environment, which includes platforms that collect andorganize the information flooding the Internet and then providing this to users after increasing its added
value.
With the number of tourists visiting Japan continuing to increase steadily, in anticipation of the expansionof the Japanese nighttime economy, Faith opened Tokyo's largest music lounge PLUSTOKYO in Ginza,
Tokyo in November 2018 and followed this in June 2019 with the opening of an entertainment facility
named CROKET MIMIC TOKYO in Roppongi, Tokyo that specializes in on impersonation
performances. As illustrated by these examples, for new markets that are expected to expand in future,
Faith will propose new lifestyles in the form of spaces that combine the elements of art, food andentertainment with a focus on music.
On October 8, 2019, Faith agreed to acquire all the shares of KSR Corporation, thereby welcoming thatcompany into the Faith Group. KSR was founded in 2000 and is a domestic music label. Musician Shinji
Nira (also known as Wakadanna), a member of the Japanese reggae group Shonan no Kaze, serves on the2board of directors. In addition to producing wide-ranging artists with a strong focus on dance and hip-hop
music, KSR is developing a variety of businesses in the entertainment field including music production,
promotion, and event development. From now on, KSR will work to achieve synergies with the FaithGroup's artist platform business as well as in the artist development and music production.
Regarding the Faith Group business performance for the second quarter of the consolidated fiscal year
ending March 2020, revenue from existing distribution services, which account for a major share ofoverall sales, continued to decline, and although revenue from new businesses in the Content Businesssegment made a contribution, the Label Business recorded a year-on-year decrease in sales. As a result of
these factors, the Group reported a decrease in net sales of 3.9% compared with the same period ofprevious fiscal year to ¥10,184 million. On the profit side, the Group’s operating profit increased by
52.9% year-on-year to ¥334 million driven by improved profitability of the Label Business, and ordinary
profit increased by 97.3% year-on-year to ¥383 million. Moreover, due to the recording of a valuation
loss of ¥549 million on securities, the Group recorded a net loss attributable to the shareholders of theparent company of ¥373 million (compared with a net income attributable to shareholders of the parent
company of ¥213 million for the same period of the previous fiscal year).
Information on each business segment is as follows.
Content BusinessIn the Content Business, while sales in the existing distribution business continue to decline, the FaithGroup is actively promoting business development in Asian countries and other countries where highgrowth rates are expected. In addition, we are interlinking and platforming various services in an effort
to develop new products and services and grasp diversified revenue opportunities, and we will continue
to invest in growth areas in future.
We are actively developing FaRao PRO not only as a service providing business BGM but also for sales
activities focused on expanding the functions necessary for store management, such as solutions andannouncement functions that make store-branding proposals. In addition to conventional products using
tablet devices, we have also released an app-version service that offers users reduced initial costs and weare working to strengthen retail store sales through collaboration with the Point Service Business.
Moreover, based on our Japanese service, we have started FaRao PRO services in Indonesia, and for the
future we are aiming to create and activate new BGM markets both in Japan and overseas.
In Fans’, our platform of services for artists based on the D2C (*6) business model, which is expected to
expand in future, we are enhancing the functions essential to artists’ musical activities such as official
website construction, music and video distribution, sales of artist goods, and fan club operation. In June
2019, we began working to further expand the functions of Fans’ such as introducing a system that
contributes to the creation of communities by spreading information transmitted by creators throughstrengthened cooperation with SNS. We are also aiming to acquire new users and expand the membershipbase of Fans’ as a service that allows more artists to disseminate their works and information freely, andwe will endeavor to improve the quality of the service by pursuing enhanced convenience.
*6. Abbreviation of “Direct to Consumer”—a business model for delivering
services and products planned and manufactured by Faith directly to users

Regarding the performance of this segment, buoyed by the contribution of sales in new businesses, theContent Business recorded net sales of ¥1,855 million (an increase of 14.0% year-on-year). However,
due to a decrease in carrier official website service sales and delays in the progress of new businessventures, this segment recorded an operating loss of ¥315 million (compared with an operating loss of¥248 million for the same period of the previous fiscal year).
Point Service BusinessIn the Point Service Business, in addition to providing point issue services to retail stores, we offer total
support for point issue data acquisition, analysis and sales promotion utilization as a series of cycles fromplanning to operation, and we provide outsourcing services that maximize retail sales promotion
efficiency.

3Regarding the performance of this segment, the issue of points at existing member stores remained steadyin line with the deployment of sales promotion measures. In addition, sales of solution tools for storesincreased, with the result that net sales increased by 7.3% year-on-year to ¥1,433 million while operating
income increased by 44.2% year-on-year to ¥75 million.
Label Business
Amid the difficult environment facing the music and video-related industry in line with the continuing
decrease of package products in the music industry, the Label Business is proceeding with its strategy ofstrengthening new future-oriented businesses in order to overcome the present situation in which it
remains dependent on package product sales.
In this segment, sales of animation-related titles released by DREAMUSIC Inc. and sales of live artist
performances, animation titles and game titles released by Nippon Columbia, Co., Ltd. decreased
compared with the same period of the previous fiscal year, resulting in a decline in sales of 9.7% yearon-year to ¥6,895 million. However, due to strong sales of live performances by Columbia artists and thesteady sales of products using sound sources, operating income increased by 38.3% year on year to ¥572
million.
*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(Analysis of Financial Position)
As of the end of the second quarter of the current consolidated fiscal year ending March 2020 (June 30,2019), total assets increased by ¥774 million compared to the end of the previous consolidated fiscal yearto ¥25,117 million. This result was mainly due to an increase in cash and deposits.
Total liabilities increased by ¥1,102 million compared to the end of the previous consolidated fiscal yearto ¥7,925 million. This result was mainly due a to an increase of ¥135 million in short-term loans payable,
an increase of ¥493 million in long-term loans payable, and an increase of ¥223 million in other fixedliabilities.
Net assets decreased by ¥327 million compared to the end of the previous consolidated fiscal year to¥17,192 million. This was mainly due to the recording of net loss attributable to the shareholders of theparent company and to a decrease in the capital surplus.
As a result of the above, the equity ratio decreased by 3.5 percentage points to 68.4%.
(Cash Flow Situation)
The balance of cash and cash equivalents at the end of the second quarter of the current consolidated fiscal
year was ¥13,298 million, an increase of ¥1,198 million from the end of the previous consolidated fiscal
year. Details of cash flow for the consolidated cumulative 2nd quarter and its contributory factors are as
follows:(Cash flow from operating activities)
Cash flow from operating activities amounted to an inflow of ¥1,093 million (compared with an inflowof ¥156 million for the same period of the previous fiscal year), due mainly to the recording of ¥166
million in respect of a net loss before income taxes and other adjustments, ¥156 million in respect ofdepreciation expenses, ¥549 million in respect of a loss on valuation of investment securities, ¥588 million
in respect of a decrease in trade receivables, ¥120 million in respect of an increase in inventory assets,and ¥210 million in respect of income tax refunded, etc.
(Cash flow from investing activities)
Cash flow from investing activities amounted to an outflow of ¥404 million (compared with an inflow of¥177 million for the same period of the previous fiscal year), due mainly to the recording of ¥59 million
in respect of expenditure for the acquisition of tangible fixed assets, ¥70 million in respect of expenditure
for the acquisition of software, and ¥280 million in respect of expenditure for the acquisition of investment
securities, etc.

4(Cash flow from financing activities)
Cash flow from financing activities amounted to an inflow of ¥519 million (compared with an outflow of¥897 million for the same period of the previous fiscal year), due mainly to income from long-termborrowing.

(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, the current performance forecast for the full financial year is unchanged
from the forecast issued on November 8, 2019.

5

2. Consolidated Financial Statements and Important Explanatory Notes(1) Consolidated Balance Sheet
FY 2018(As of March 31, 2019)(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.
Other current assets
Allowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Intangible fixed assets
Goodwill
OthersTotal intangible fixed assets
Investment and other assets
Investment securities
Deferred tax assets
Other intangible fixed 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

6(Unit: thousands of yen)
2nd Quarter of FY 2019

(As of Sept. 30, 2019)12,150,463
2,063,965
232,066
484,367
394,308
61,544
212,102534,205△19,401
16,113,621

13,348,899
1,896,285
234,729
479,812529,61450,995
1,097
509,744△19,384
17,031,794

3,257,801

3,218,733

1,541,584
556,635
2,098,219

1,488,588
515,348
2,003,937

1,957,225
454,354942,793△480,799
2,873,573
8,229,594
24,343,216

1,945,587
454,465
968,930△505,774
2,863,209
8,085,880
25,117,674

905,762
509,950662
2,749,170
116,814
79,633374
62,356
1,516,430
5,941,156906,627
644,950301
2,924,230
238,371
82,984
720
38,037
1,422,535
6,258,759

63,000632,53860
139,595
46,577881,771
6,822,927

556,500
639,91760
200,452
269,634
1,666,564
7,925,324

(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
Non-controlling interests
Total net assets
Total liabilities and net assets

7(Unit: thousands of yen)
2nd Quarter of FY 2019

FY 2018(As of March 31, 2019)(As of Sept. 30, 2019)

3,218,000
3,019,175
11,872,088△802,315
17,306,948

3,218,000
2,840,095
11,432,732△665,847
16,824,980

307,035△10,936△82,758

456,747△21,356△68,021

213,340－
17,520,288
24,343,216

367,368－
17,192,349
25,117,674

(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 equity method investment
Gain on investment partnership management
Gain on valuation of investment securities
Gain on foreign exchange
Miscellaneous receipts
Total non-operating income
Non-operating expenses
Interest paid
Loss on equity method investment
Loss on investment partnership management
Loss on valuation of investment securities
Loss on foreign exchange
Miscellaneous expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sale of shares of affiliates
Total extraordinary income
Extraordinary losses
Loss on disposal of fixed assets
Loss on valuation of investment securities
Total extraordinary losses
Net income or net loss before income taxes (△ = net loss)
Corporate, local, and business taxes
Income taxes – deferred
Current quarter net income or net loss (△ = net loss)
Current quarter net income attributable to non-controllinginterests
Current quarter net income or net loss attributable toshareholders of the parent company (△ = net loss)

8

2nd Quarter of FY 2018

2nd Quarter of FY 2019

(April 1-Sept.30, 2018)
10,600,700
6,945,378
3,655,321
3,436,394
218,927(April 1-Sept. 30, 2019)10,184,452
6,313,497
3,870,954
3,536,220
334,734

100
2,564
59
－
19,759－740
13,00736,232

149
3,005
73
24,14041,014
3,177
－
6,938
78,4993,216
53,522
917
2,378
－
777
60,813
194,346

2,979
－
9,556
432
9,866
7,011
29,845383,388

161,965
161,965－－

9,119
15,00024,119332,191
144,487△26,004
213,709102
549,999
550,102△166,713
211,488△5,088△373,114

635－

213,073△373,114

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

Current quarter net income or net loss (△ = net loss)
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

2nd Quarter of FY 2018

2nd Quarter of FY 2019

(April 1-Sept. 30, 2018)
213,709(April 1-Sept. 30, 2019)△373,114△22,777

149,711△5,098
10,098△17,776
195,932△10,420
14,737
154,028△219,085

195,296△219,085

635－

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

Cash flow from operating activities
Gain or loss before income taxes and other adjustments (△ =loss)
Depreciation expenses
Amortization of goodwill
Increase/decrease in allowance for doubtful accounts (△ =decrease)
Increase/decrease in reserve for bonuses (△ = decrease)
Increase/decrease in reserve for point card certificates (△ =decrease)
Increase/decrease in liabilities for retirement benefits (△ =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 shares of affiliates (△ = gain)
Gain or loss on valuation of investment securities (△ = gain)
Gain or loss on disposal of fixed assets (△ = gain)
Increase/decrease in trade receivables (△ = increase)
Increase/decrease in inventory assets (△ = increase)
Increase/decrease in trade payables (△ = decrease)
OthersSub-totalInterest and dividends received
Interest paid
Income tax refunded
Income tax paid
Cash flow from operating activities

10

2nd Quarter of FY 2018
(April 1-Sept. 30, 2018)

2nd Quarter of FY 2019
(April 1-Sept. 30, 2019)

332,191△166,713

134,363
53,121
9,585

156,036
52,94924,957

11,719
△663

3,351
345

△20,718

7,378△2,665△59
3,216△1,08653,522△18,841△3,154
△73
2,979
1,104
△24,140△31,458△161,965
15,0009,119△262,254
133,232△124,941
93,541
255,418
2,743△3,222
19,999△118,797
156,141－
549,999
12
588,080△120,201
3,881△95,287
950,048
3,228△2,575
210,963△68,094
1,093,570

(Unit: thousands of yen)

Cash flow from investing activities
Income from withdrawal of term deposits
Expenditure for acquisition of tangible fixed assets
Expenditure for acquisition of software
Expenditure for acquisition of investment securities
Income from distribution of profits from investment
partnerships
Income from sale of subsidiary shares accompanying changes
in the scope of consolidation
Expenditure for payments of loans receivable
Income from collection of loans receivable
Expenditure for guaranteeing 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 financing and lease obligations
Expenditure for repayment of long-term borrowing
Income from long-term borrowing
Expenditure for acquisition of treasury stock
Income from sale of treasury stock
Payment of dividends
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 beginning of year
Cash and cash equivalents at end of the quarter11

2nd Quarter of FY 2018
(April 1-Sept. 30, 2018)

2nd Quarter of FY 2019
(April 1-Sept. 30, 2019)

500,000△427,315△43,369－
59,610－△59,509△70,383△280,000
2,418

179,613－△1,138－△120,000
1,389
28,294177,084

－
265
－
37
3,030
△404,141－

112,600△361△127,204－△701,838
158△68,534△897,781△3,299△567,854△361△108,999
624,900△231,611
189,000△66,032
519,493△10,486
1,198,436

12,910,303
12,342,448

12,100,452
13,298,888

(4) 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)
Not applicable(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 of quarterly
net income before tax deduction for the current consolidated financial year including the second quarter,and then multiplying the amount of quarterly net income before tax deduction by the current estimatedeffective tax rate.

12

(Segment Information)
Ⅰ 2nd quarter of the previous consolidated fiscal year/FY 2018 (April 1, 2018 through Sept. 30, 2018)

1. Information on sales and profit or loss by reportable segment(Unit: thousands of yen)Amount recorded in
Adjustment
Consolidated Financial
amount (Note 1) Statements (Note 2)Content

Point Service

Label

Total

1,627,737

1,335,707

7,637,254

10,600,700－

10,600,700

40,666481

1,583

42,730△42,730－

Total

1,668,403

1,336,188

7,638,838

10,643,431△42,730

10,600,700

Segment income orloss (△)△248,416

52,085414,413

218,082

844

218,927

Net sales
Sales to externalcustomers
Intersegment sales
or transfer amountNotes: 1. The segment income or loss (△) adjustment amount of ¥844 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.
Ⅱ 2nd quarter of the current consolidated fiscal year/FY 2019 (April 1, 2019 through Sept. 30, 2019)

1. Information on sales and profit or loss by reportable segment(Unit: thousands of yen)Amount recorded in
Adjustment
Consolidated Financial
amount (Note 1) Statements (Note 2)Content

Point Service

Label

Total

1,855,128

1,433,580

6,895,743

10,184,452－

10,184,452

57,41997

3,940

61,457△61,457－

Total

1,912,547

1,433,678

6,899,683

10,245,910△61,457

10,184,452

Segment income orloss (△)△315,979

75,099572,952

332,072

2,662

334,734

Net sales
Sales to externalcustomers
Intersegment sales
or transfer amountNotes: 1. The segment income or loss ( △ ) adjustment amount of ¥2,662 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.

13