BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE 1st QUARTER OF THE FISCAL YEAR ENDING MARCH 2019
This is an English translation of summarized consolidated financial results prepared for theconvenience of non-resident shareholders. Should there be any inconsistency between thetranslation and the official Japanese text, the latter shall prevail.
August 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: August 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 1st Quarter of the Fiscal Year Ending March 2019 (From April 1, 2018 to June 30, 2018)(1) Consolidated Operating Results (cumulative totals)(Percentages indicate changes compared with the 1st quarter of the previous fiscal year.)
Net Sales
Operating Income
Ordinary Income
Net Income
Millions of yen% Millions of yen% Millions of yen% Millions of yen%
Q1 of the year ending
6.5
298.0
March 2019
5,360
207
△41.4
216
△27.5
320
2.6
March 2018
5,034
353
△31.4
298
△40.3
80
△61.4
(Note) Comprehensive income: 1st quarter of the fiscal year ending March 2019: ¥333 million (△20.7%); 1st quarterof the fiscal year ending March 2018: ¥420 million (3.7%)
Net Income per
Share
Yen
23.49
8.16

Q1 of the year ending
March 2019
March 2018

Diluted Net Income
per ShareYen——(2) Consolidated Financial Position
Total Assets
Millions of yen

Net Assets

Ratio of Equity
CapitalMillions of yen%

Q1 of the year ending March 201925,354
18,497
72.9
Year ending March 201825,705
18,671
72.5(Reference) Equity capital: 1st quarter of fiscal year ending March 2019: ¥18,474 million; fiscal year ending March 2018:¥18,647 million
2. Dividends
1st Quarter(Record dates)yenInterim

Dividends per Share
3rd Quarter
Year-end

yen

yen

Total

yen

yen

Year ending March 2018
—
5.00
—
5.00
10.00
Year ending March 2019—Year ending March 2019 (Forecast)
5.00
—
5.00
10.00
(Notes) Forecasts for dividends have not been modified since the time of the most recently announced business forecast.
3. Forecast for the Consolidated Results for the Year Ending March 2019 （from April 1，2018 to March 31，2019）(Percentages indicate changes compared with the previous fiscal year and the previous interim result.)
Net Sales
Operating Income
Ordinary Income
Net Income
Net Income
per Share
Millions ofMillions ofMillions ofMillions of
%
%
%
%
Yen
yen

First half

10,100

Full year

20,000

yen

△5.6

100

△5.7

500

yen

yen

△89.0

20

△97.7

－

－

－

△55.8

350

△66.0

260

△48.5

19.06

(Note) Forecasts for Consolidated Results have not been modified since the time of the most recently announced business forecast.

※ 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, (3) Notes Concerning the Consolidated
Financial Statements (Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements” on page 8 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 fiscal years (including treasury shares):
The 1st quarter of the fiscal year ending March 2019: 13,831,091 shares
The fiscal year ending March 2018: 13,831,091 shares(ii) Treasury shares at the end of the fiscal years:
The 1st quarter of the fiscal year ending March 2019: 390,822 shares
The fiscal year ending March 2018: 70,041shares(iii) Average number of shares at the interim accounting period
The 1st quarter of the fiscal year ending March 2019: 13,635,147 shares
The 1st quarter of the fiscal year ending March 2018: 9,868,743 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 the Company’s control. For detailsof cautions, etc., employed in making performance forecasts and the assumptions underlying performance forecasts, please refer to“1. (3) Explanation Concerning Future Forecast Information on the Consolidated Financial Results, etc.” on page 3 of theaccompanying material.

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Contents
1. Qualitative Information Concerning the Settlement of Accounts for the 1st 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) ······(Additional Information) ······················································································(Segment Information) ·························································································

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1. Qualitative Information Concerning the Settlement of Accounts for the 1st Quarter(1) Explanation Concerning the Operating Results
In the domestic information communication field, the Internet penetration rate remained high at 80.5%
in 2017. Moreover, among individuals who utilize the Internet for personal use, those aged between 13
and 50 years accounted for over 95% of the total (*1). The Internet usage rate has reached extraordinarily
high levels for people in a wide range of age groups. Meanwhile, younger Japanese people are
increasingly turning away from television, and the ongoing transition to services in line with the shift tothe era of digitalization is expected to further accelerate in future as the Internet usage rate climbs
further and the use of smartphones continues to spread. Under these circumstances, it is becoming evenmore important for Faith Group to respond swiftly to user needs that are in keeping with the times.
(*1) Source: Ministry of Internal Affairs and Communications, 2018 Information Communication White Paper

Moreover, in the entertainment market, the global music market based on flat rate subscription services
grew by 8.1% to US$17.3 billion dollars (*2), marking the first time since 1999 that this market hasrecorded sales growth for three consecutive years. In the Japanese domestic music contents market, theproduction value of music software including music videos in 2017 decreased by 6% from the previous
year to ¥232 billion yen (*3). Although sales of packaged products continued to exhibit a declining trend,
fee-based music distribution sales increased by 8% year on year to ¥57,300 million and sales ofsubscription-type music distribution services leaped by 22% year on year. Meanwhile, the size of thelive entertainment market increased by 7.2% from the previous year to ¥332.4 billion, in line with an
expansion of “experiential” consumption (*4).
(*2) Source: IFPI Global Music Report 2018(*3) Source: Recording Industry Association of Japan (RIAJ), The Recording Industry in Japan 2017(*4) Source: All Japan Concert & Live Entertainment Promoters Conference (ACPC), 2017 Basic Research Report

In the current environment, the Faith Group is continuing to utilize the results of the efforts it has been
concentrating in digital content distribution ever since its establishment, and is forging ahead with its
Multi-Content and Multi-Device Strategy of creating environments in which people can enjoy a wide
diversity of contents whenever and wherever they choose. We are also strengthening the developmentof new services in response to the changing market environment such as platforms that collect andorganize the information flooding the Internet and providing it to users after increasing its added value.
Regarding the Group business performance for the first quarter of the consolidated fiscal year ending
March 2019, despite continued declines in sales of existing distribution services, which account for amajor share of overall sales, the Group’s companies launched a number of new services in accordancewith the market environment, and both the Label and Points Businesses performed strongly. As a resultof these factors, the Group’s net sales increased by 6.5% compared with the same period of previous
fiscal year to ¥5,360 million, operating income decreased by 41.4% year on year to ¥207 million, andordinary income decreased by 27.5% year on year to ¥216 million. Moreover, due to the posting of¥161 million in respect of extraordinary income from the sale of shares of a consolidated subsidiary, net
income attributable to the shareholders of the parent company increased by 298.0% to ¥320 million.
Information on each business segment is as follows.
Content BusinessIn the Content Business, the Faith Group is actively developing new products in response to the market
environment including the ongoing popularization of smartphones, changing music listening styles, etc.
In this business, we are proceeding with measures to enhance the added value of contents, such asfunctional improvement and linkage between various services, by verifying the results of service
contents and marketability, including with regard to existing businesses, while also moving ahead withplatformization in the interests of achieving greater income diversification.
We are actively developing FaRao PRO not only as a service providing business BGM but also for sales
activities focusing on expanding the functions necessary for store management, such as solutions andannouncement functions that propose store branding. In addition to conventional products using tablet
devices, we have also released an app-version service that offers users reduced initial costs. Moreover,based on our Japanese service, we have started FaRao PRO services in France and Indonesia, and forthe future we are aiming to create and activate new BGM markets both in Japan and overseas.

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In Fans’, our platform of services for artists based on the D2C (Direct To Consumer) business model,
which is expected to expand in future, 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. We are aiming to acquire new users and expand the membership base of Fans’ as aservice that allows more artists to deliver their works and materials in the manner the artists wish, andwe will endeavor to improve the quality of the service by pursuing enhanced usability.
As a result of the above developments, and taking into account a decrease in sales of carrier official site
services, delays in the launch of new businesses and the sale of shares in a consolidated subsidiary, anddespite the ongoing positive deployment of new services in line with the changing market environment,
the Content Business recorded net sales of ¥821 million, a decrease of 16.2% year on year, and an
operating loss of ¥85 million, compared with an operating loss of ¥33 million for the same period of theprevious fiscal year.
Point Service BusinessIn the Point Service Business, sales of new points issued by existing participating point card storesremained robust and the self-liquidation business (*5) also performed favorably. As a result, this businessrecorded net sales of ¥671 million, an increase of 12.5% year on year. Regarding operating income, due
to the impact of increased sales and cost reductions associated with office consolidation, etc., operating
income increased by 32.1% year on year to ¥35 million.
(*5) A campaign in which users can purchase various goods at a discount by saving points in the form of seals, etc.

Label Business
Amid the difficult environment facing the music and video-related industry in line with the continuing
decline of the music market, the Label Business proceeded with its strategy of strengthening new
future-oriented businesses in order to overcome the present situation in which it remains dependent onsales of package products for which the market remains sluggish.
This segment achieved strong sales revenue from animation-related titles released by DREAMUSIC Inc,and from animation titles and live artist performances by Nippon Columbia, Co., Ltd., resulting in a risein overall Label Business sales of 11.9% year on year to ¥3,868 million. However, regarding the profit
and loss situation, due mainly to declines in sales of high-margin products launched in previous years,
game titles, and revenue from sales of music licensing rights, this segment recorded an operating
income of ¥257 million, a year-on-year decrease of 28.4%.
*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
As of the end of the first quarter of the consolidated fiscal year ending March 2019 (June 30, 2018),
total assets decreased by ¥351 million compared to the end of the previous consolidated fiscal year to¥25,354 million. This result was mainly due to decreases in cash and deposits.
Total liabilities decreased by ¥177 million compared to the end of the previous consolidated fiscal yearto ¥6,856 million. This result was mainly due to decreases in income taxes payable and to therepayment of borrowings.
Net assets decreased by ¥173 million compared to the end of the previous consolidated fiscal year to¥18,497 million. This was mainly due to an increase in retained earnings due to the recording of net
income attributable to the shareholders of the parent company, and to an increase in treasury stock
resulting from the acquisition of treasury stock.
As a result of the above, the equity ratio increased by 0.4 percentage points to 72.9%.

(3) Explanation Concerning Future Forecast Information on the Consolidated Financial
Results
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.

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2. Consolidated Financial Statements and Important Explanatory Notes(1) Consolidated Balance Sheet
FY 2017(As of March 31, 2018)(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

4(Unit: thousands of yen)
1st Quarter of FY 2018

(As of June 30, 2018)13,460,309
2,162,275
229,555
516,373493,508
65,12426,944
464,629△27,249
17,391,471

12,448,832
2,333,618
229,130
533,532
501,557
73,91524,564815,305△18,856
16,941,601

2,773,635

2,825,709

1,648,115
678,348
2,326,463

1,621,154
639,076
2,260,231

2,617,499
174,258
812,042△389,935
3,213,864
8,313,963
25,705,435

2,587,071
176,286
972,068△408,844
3,326,581
8,412,522
25,354,124

929,526
576,039723
2,642,245
188,625
76,316
8,711
74,962
1,491,297
5,988,449

941,884
560,267723
2,779,683
88,637
40,638
8,294
98,967
1,403,563
5,922,661

237,215603,262723
159,31744,7581,045,276
7,033,725

168,862
579,40760
142,033
43,319933,6836,856,345

(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

5(Unit: thousands of yen)
1st Quarter of FY 2018

FY 2017(As of March 31, 2018)(As of June 30, 2018)

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

3,218,000
3,019,187
12,568,035△538,915
18,266,307

263,254△12,505

273,642△14,306△56,561△51,512

194,187
24,026
18,671,710
25,705,435

207,823
23,647
18,497,778
25,354,124

(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
Miscellaneous expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sale of shares of affiliates
Gain on sale of investment securities
Gain on change in equity
Gain on reversal of stock acquisition rights
Total extraordinary income
Extraordinary losses
Loss on disposal of fixed assets
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 or net loss attributable tonon-controlling interests (△ = net loss)
Current quarter net income attributable to shareholders of
the parent company

6

1st Quarter of FY 2017

1st Quarter of FY 2018

(April 1-June 30, 2017)
5,034,924
2,987,066
2,047,858
1,694,029
353,829(April 1-June 30, 2018)
5,360,908
3,453,870
1,907,038
1,699,575
207,462

426
2,831
11
3,855
446
4,263
11,83415
2,565
28
19,759354
4,322
27,0462,014
15,96848,552379
66,915
298,748

1,449
15,677－815
17,942
216,566－
32,8005,859
15,69154,350161,965－－－
161,965－－
353,098
36,804
9,081
307,212

9,035
9,035
369,496
73,288△23,804
320,012226,713△379

80,499320,391

(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

7

1st Quarter of FY 2017

1st Quarter of FY 2018

(April 1-June 30, 2017)
307,212(April 1-June 30, 2018)
320,012

111,466

10,388△1,467
3,638
113,636
420,849△1,800
5,048
13,636
333,649

193,602334,028

227,247△379

(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)
Not applicable(Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements)
Tax expenses for the Company and some 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 current consolidated financial year including the firstquarter, and then multiplying the amount of quarterly net income before tax deduction by the current
estimated effective tax rate.

(Additional Information)(Application of Partial Amendment to the Accounting Standard for Tax Effect Accounting)
The Company adopted the Accounting Standard for Tax Effect Accounting (ASBJ Statement No. 28,
February 16, 2018) and other accounting standards at the beginning of the first quarter of the current
consolidated fiscal year. Accordingly, deferred tax assets are now shown in the investment and otherassets category, while deferred tax liabilities are shown in the non-current liabilities category.

(Segment Information)
Ⅰ 1st quarter of the previous consolidated fiscal year/FY 2017 (April 1, 2017 through June 30, 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

980,080

596,300

3,458,543

5,034,924－

5,034,924

26,212－

2,008

28,220△28,220－

Total

1,006,292

596,300

3,460,551

5,063,145△28,220

5,034,924

Segment income orloss (△)△33,564

26,636

358,734

351,806

2,022

353,829

Notes: 1. The segment income adjustment amount of ¥2,022 thousand is calculated by eliminating intersegment transactions.
2. Segment income amounts are adjusted to 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.

8Ⅱ 1st quarter of the current consolidated fiscal year/FY 2018 (April 1, 2018 through June 30, 2018)

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 amount821,350

671,1223,868,435

5,360,908－

5,360,908

17,687481

75

18,243△18,243－

Total

839,037

671,6033,868,511

5,379,152△18,2435,360,908

Segment income orloss (△)△85,241

35,199257,028

206,986476

207,462

Notes: 1. The segment income adjustment amount of ¥476 thousand is calculated by eliminating intersegment transactions.
2. Segment income or loss amounts are adjusted to 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