BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE 1ST QUARTER OF THE FISCAL YEAR ENDING MARCH 2009
August 12, 2008
Faith, Inc. (Stock code 4295, Listed on TSE 1st section)(URL http://www.faith.co.jp/)
Place of headquarters; Kyoto Pref.
Representative; Hajime Hirasawa, CEO/President
Contacts; Shigeyoshi Fujiwara, Exective Officer/General Manager, Investor & Public
Relations, Tel: +81-3-5776-6255
Date of Submission of Securities Report: August 14, 2008
Amounts are rounded down to the nearest JPY 1 million.

1. Results for the 1st quarter of the year ending March 2009
(April 1, 2008 through June 30, 2008)(1)

Consolidated financial results

Those figures in “%” show increased/decreased ratio compared with the previous 1st quarter of fiscal term

Net Sales
Q1 of the year
ending March2009
Q1 of the year
ended March2008

Operating Profit

Millions of yen%

12,07011,469Recurring Profit

of

%

―

210

32.8

561

Millionsyen

Net Profit per Share

%

―

148

60.3

406

of

%

―

146

―

59.9

971

―

Millionsyen

Diluted Net Profit per shareYen
123.45816.33Q1 of the year ending March 2009
Q1 of the year ended March 2008

Net ProfitofMillionsyen

Yen
122.31-(2) Consolidated financial position
Total Assets
Q1 of the year
ending March 2009
the year ended
March 2008

Net Assets

Ratio of Equity
CapitalNet Assets per Share

Millions of yen

Millions of yen

33,591

16,168%43.5

12,278Yen
81

36,174

16,54541.5

12,61200

Reference: Equity Capital: the 1st quarter of the fiscal year ending March 2009: 14,616 million yen/ the 1st quarter of the
fiscal year ended March 2008: 15,013 million yen.

1

2. Dividends
Dividends per share(Record dates)

1st QuarteryenYear Ended
March 2008
Year Ending
March 2009

3rd Quarter

Interim

-

50

yen
00

-

-

00

Year-end

yen
-

50

-

-

Total(Annual)

yen
00

100

yen
00

-

Year ending March
50 00
50
00
100
00
2009 (Forecast)
Note: Forecasts for dividends have not modified at the announcement of the financial statements for FY08 1Q.

3. Forecasts for the consolidated business results for the year ending March 2009
(from April 1, 2008 to March 31, 2009)
The figures in “%” show increased/decreased ratio compared with the previous fiscal year and the previous interim result.

Net SalesInterim
forecasts
2009
Year ending
March 2009

Operating Profit

Recurring Profit

Net Income

Net Income per
Share
Yen

Millions ofyen%Millionsof yen%Millions of yen%

Millionsof yen%25,700

9.6

400

△62.5

300

△66.1

40

△95.8

33

60

57,000

13.6

1,200

△47.1

1,000

△47.6

100

△81.4

84

00

Note: Forecasts for the consolidated business results have not modified at the announcement of the financial statements for
FY08 1Q.

4. Others(1) Changes in the significant subsidiaries (Accompanying changes in scope of the consolidation): None(2)

Adoption of simplified accounting practices or specific procedures in preparation of the quarterly
consolidated financial reports: Applicable* Note: For details, please see page.5 “Qualitative information and financial statements” 4. Others(2).

(3)

Changes in accounting policy, procedure, and presentation in preparation of the quarterly
consolidated financial reports (Described in the “Changes in preparing for consolidated financial
statements and summary of significant accounting polices”) : Applicable(3)-1. Changes accompanying revisions of accounting standards, etc.:Applicable(3)-2. Changes other than the above: Applicable(4)Outstanding shares (common shares)(4)-1. Outstanding shares at the end of the fiscal years (including treasury shares):

The 1st quarter of the fiscal year ending March 2009: 1,196,000 shares, the fiscal year ended March 2008:
1,196,000shares(4)-2. Treasury shares at the end of the fiscal years:

The 1st quarter of the fiscal year ending March 2009: 5,580 shares, the fiscal year ended March 2008: 5,580
shares(4)-3. Average number of shares at the interim accounting period
The 1st quarter of the fiscal year ending March 2009: 1,190,420 shares, the fiscal year ended March 2008:
1,190,420 shares*Note for utilizing business forecasts, and other special instruction(1) This document contains projections of our company’s future performance. These are estimates by the management ofFaith based on currently available information. There are potential risks and uncertainties that may affect the results. Pleasebe advised that actual performance may differ significantly from the forecast. Please refer to page. 5 “3. Qualitative
information regarding forecast of consolidated financial results” when utilize business forecasts.
(2) Effective from the fiscal year under review, new accounting standards (12th edition) and its implementation guidance (16thedition) have applied. The quarterly consolidated financial statement is based on the quarterly consolidated financial
standards.

2

[Qualitative information and financial statements]
1. Qualitative information regarding consolidated operating results
During the 1st quarter of the consolidated fiscal year ending March 2009, the digital content distribution
market expanded continuously driven by the increase of highly convenient information services withmobile phone.
Behind this growth, the percentage of users of third-generation (3G) mobile
communication system has exceeded 80% of whole of the mobile communication service users, and thecommercial services of the Next Generation Network (NGN) has started. These have made network
environment more diverse and more complex. At the same time, users' content needs have diversified
from high-quality and highly entertaining music, video, and online game, to lifestyle-related informationsuch as medical, beauty, and health.
In anticipation of these trends in the growing Japanese digital content distribution market, Faith Group has
actively taken part in creating a new content distribution structure through acquisitions and building
partnership with other leading companies.
During this fiscal period, the Group strived to promote diffusion of content distribution services using
NFRM™, Near Filed Rights Management®. NFRM™ is the proprietary personal authentication
technology utilizing mobile phone, which was commercialized during the previous fiscal year to achieve
the creation of new platform-agnostic, multi-content market. The group aims to realize the distribution ofwider range of contents in various forms, through any networks to any terminals. At the same time, theGroup took initiative to build and develop new platforms to stimulate new content needs, and otheractivities such as authentication, medical information, electronic payment, and electronic commerce in thegrowing content market. Furthermore, in the electronic money field, which is seeing increasing demand,
the amount of payments settled using WebMoney continued to grow substantially, with its strength
including high market shares in online game and other services, and the improvement of users’convenience.
As a result, consolidated net sales for the 1st quarter of FY2008 increased 5.2% year on year to ¥12,070
million. This increase was aided by continuous high growth in the electronic money business and steady
expansion of the content distribution business in Japan through aggressive strategies such as forming
partnerships with other leading companies. Operating profit was ¥210 million, down 62.5% year on year,
due to the upfront investments on the creation of new multi-content distribution markets on themulti-platforms and other factors. Recurring profit was ¥148 million, down 63.6% year on year becauseof the decrease in nonoperating losses such as the decrease in interest bearing debt. Net profit decreasedto ¥146 million, down 84.9% compared with the same period last year when the huge extraordinary profit
was posted due to the realignment of overseas business.
Information on each business segment is as follows:<Contents Business>
Faith Group strived to expand and enhance its operating base through activities such as building partnershipwith other leading companies during the period under review.
1) Following the launch of the commercial services of NFRM™ in June 2007, the Group promoted
prevalence of NFRM™ services by introducing the technologies in even wider ranges of devices andcontent. In April 2008, GIGA Networks, a consolidated subsidiary, launched a content distribution site
called "GIGA Miranca" with a lineup of over 1,000 titles. In May, the distribution of a drama series
produced for mobile phone titled "Koisuru Ketsuekigata,", love stories based on blood type, has started.
Another new distribution started in May is a series of entry films of Short Shorts Film Festival & Asia,
which is recognized by Academy Awards2) In June 2008, Medical Communication, Inc., a consolidated subsidiary, started a test service of "Pocket
Karte" in cooperation with Willcom and other companies. In response to the health care system reform
implemented by Health, Labour and Welfare Ministry of Japan in April 2008, Pocket Karte provides
individual medical check results in electronic form and an easy access to theses data.
3) In June 2008, "Eikyufumetsu Contents (Eternal Contents)" has expanded its service to PC alongside theexisting mobile phone distribution. Faith provides this content distribution service in cooperation with3

Credit Saison Co., Ltd. and users are able to earn eternal reward points by purchasing the service.
As a result, net sales in the content business totaled ¥3,090 million, down 25.8% year on year. This figure
resulted from a decline in revenues due to the sales of overseas content distribution businesses, despite
steady growth in the content distribution business in Japan led by the aggressive business expansion
through partnerships with other companies and other measures. Operating profit fell by 59.5% year on year,to ¥157 million, due to continued upfront investments on the planning and development of new
multi-content distribution services on the multi-platforms and the increase of production and procurement
costs of rich content for a wide range of information devices.

<Electronic Money Business>
According to the Information and Communications Statistics Database issued by Japanese Ministry ofInternal Affairs and Communications, the number of broadband subscribers in Japan reached more than
28.7 million at the end of March 2008. Demand for electronic money continued to increase for the purchaseof online game, the mainstay of the electronic money business, as well as mobile content and other digitalcontent such as music and video. Against the backdrop of growing demands, the volume of online payment
settled in the Faith Group's “WebMoney” continuously increased, since it provided secure and convenientsolutions.
The group implemented effectual measures to enhance convenience for users. In April 2008, the Groupstarted the sale of “WebMoney” through multi-functional copiers introduced to Seven-Eleven stores acrossJapan operated by a convenience store chain giant, Seven-Eleven Japan Co., Ltd. Furthermore in thesame month, WebMoney launched “Debit@”, direct debit transaction service, in cooperation with Suruga
Bank.
To expand the sales channels, in June 2008, it launched the service of “WebMoney Point Park” through a
joint effort with Adways Co., Ltd., an Internet advertising business. At “WebMoney Point Park”,
members are able to earn “WebMoney” free of charge by registering to adverting campaigns via website.
As a result, net sales in the electronic money business totaled ¥8,637 million, up 25.5% year on year, andoperating profit was ¥51 million, an increase of 65.9% year on year.

42. Qualitative information regarding consolidated financial positions
Total assets as of the end of the 1st quarter of FY2008 decreased by ¥2,582 million from the end of theprevious consolidated fiscal year to ¥33,591 million, due to the decrease in amortization of goodwill causedby write-off, and in trade notes and account receivable.
Net assets decreased by ¥376 million against the end of the preceding consolidated fiscal year to ¥16,168
million. Shareholders’ equity ratio advanced by 2.0 percent point from the end of March 2008 to 43.5%.

3. Qualitative information regarding forecast of consolidated financial results
Since operating results for the 1st quarter of FY2008 have advanced as planned compared with forecasts
released on May 14, 2008 in the BRIEF STATEMENT OF ANNUAL FINANCIAL RESULTS FOR THE
YEAR ENDED MARCH 2008 AND FORECASTS FOR THE YEAR ENDING MARCH 2009, theCompany has not revised forecasts for consolidated operating results for fiscal 2008.

4. Others(1) Changes in major subsidiaries during the 1st quarter of FY2008 (Changes in specific subsidiaries
causing change in the scope of consolidation): None
Changes in subsidiaries other than specific subsidiaries are as follows:
Exclusion: Faith Technologies S.A.S.
(2) Adoption of simplified methods in accounting methods(Simplified methods in accounting methods):None(Specific procedures in preparation of the quarterly consolidated financial reports)
Tax expenses are calculated by multiplying the amount of quarterly net profit before tax deduction and theestimated effective tax rates, which is estimated as an effective tax rates applied to the tax effect accounting,by the amount of consolidated net profit including the 1st quarter of the financial period and before tax
deduction.
(3) Changes in accounting policy, procedure, and presentation in preparation of the quarterly consolidated
financial reports(Described in the “Changes in preparing for consolidated financial statements and summary ofsignificant accounting polices”) : Applicable(3)-1. Effective from the fiscal year under review, new accounting standards (12th edition) and its
implementation guidance (16th edition) have applied. The quarterly consolidated financial statement isbased on the quarterly consolidated financial standards.

5

1. [Consolidated financial Results for the 1st quarter](1) Consolidated Balance Sheet for the 1st Quarter(Unit: thousands of yen)the 1st Quarter of FY2008(As of June 30, 2008)
Amount(Assets)
Current assets
Cash and deposits
Accounts and notes receivable
Marketable securities
Commercial products
Products in progress
Primary materials and inventory goods
Accrued refund income tax
Deferred tax assets
OthersAllowance 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
OthersAllowance for doubtful receivable
Total investments and other assets
Total fixed assets
Expenditure for stock delivering prescription
Total assets(Liabilities)
Current liabilities
Trade notes and Accounts payable
Short-term loans
Income taxes payable
Allowance for costs of card use
Allowance for points
Allowance for bonus payments
Provision for loss on liquidation of affiliatedcompanies
OthersTotal current liabilities
Fixed liabilities
Long-term liabilities
Deferred tax liabilities
Allowance for retirement benefits
Reserve for subsidiaries losses
OthersTotal fixed liabilities
Total liabilities

6

FY 2007(As of March 31, 2008)
Amount11,654,671
5,637,139
1,240,395
379,024
107,379
19,819453,487
734,903
1,095,575△290,065
21,023,329

13,424,006
6,861,259
250,227
202,489
269,123
17,113516,982
763,972
588,379△209,568
22,683,987

612,466

660,312

7,015,422
945,426
7,960,849

7,607,662
922,715
8,530,378

3,182,950
926,468△134,426
3,974,992
12,548,308
19,89033,591,527

3,490,977
920,572△134,516
4,277,033
13,467,724
22,56736,174,279

5,253,707
2,029,928
87,925
2,678,368
446,80753,806

5,922,813
2,529,928
136,2212,873,200
468,391
87,445319,333
1,299,452
12,169,328

1,973,507
13,991,508

4,075,990
455,070
53,651
669,348
5,254,060
17,423,388

4,083,472
522,858
49,229300,561
681,599
5,637,720
19,629,228

the 1st Quarter of FY2008(As of June 30, 2008)
Amount(Net assets)
Shareholder's equity
Common stock
Capital surplus
Retained earning
Treasury stock
Total shareholder's equity
Valuation and translation adjustments
Net unrealized gains on investment securities
Foreign currency translation adjustments
Total valuation and translation adjustments
Minority interests
Total net assets
Total liability and net assets

7

FY2007 (As of March 31, 2008)
Amount3,218,000
3,708,355
7,702,289△354,269
14,274,373

3,218,000
3,708,355
7,694,895△354,269
14,266,980

728,981△386,418
342,562
1,551,201
16,168,139
33,591,527

799,398△52,807746,591
1,531,478
16,545,050
36,174,279

(2) Consolidated Profit and Loss Statement for the 1st Quarter
1st quarter of this fiscal year (April 1, 2008 through June 30, 2008)(Thousands of yen)the 1st Quarter of FY2008(As of June 30, 2008)
12,070,204
9,442,678
2,627,526
2,417,024

Net sales
Cost of Sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating profit
Interest income
Dividend income
Interest securities.
Foreign exchange gain
Non-operating expense
Total non-operating profit
Non-operating expenses
1. Interest expense
2.Investment profit on equity method
3. Miscellaneous expense
Total non-operating expenses
Recurring profit
Extraordinary profit
Gain on disposal of investment securities
OthersTotal extraordinary profit
Extraordinary loss
Loss from investment securities valuation
OthersTotal extraordinary loss
Quarterly net profit before income taxes
Corporate, local, and business taxes
Income or Loss on minority shareholders
Quarterly net profit or loss

210,501
13,906
15,9301,690
26.176
6,944
64,648
22,10984,371
20,622
127,102148,047
141,606890
142,496
60,000718
61,718229,826
97,027△14,157
146,9568

(3) Consolidated Statements of Cash Flowsthe 1st Quarter of FY2008(April 1, 2008 through June 30, 2008)
Item
Cash flow from operating activities
Quarterly profit before income taxes and minority interests
Depreciation and amortization
Amortization of goodwill
Increase in allowance for doubtful accounts
Decrease in reserve for bonus
Decrease in allowance for cost of card use
Decrease in allowance for unexercised sales promotion points
Increase in allowance for retirement benefits
Interest and dividends income
Interest on securities
Interest expenses
Foreign exchange gains
Gains on sale of investment securities
Valuation loss on investment securities
Loss from investment in equity method
Decrease (increase) in accounts and notes receivable-trade
Decrease (increase) in inventories
Increase in accounts and notes payable-trade
Decrease (increase) in consumption taxes receivable
OthersSub-totalInterest and dividends received
Interest expenses paid
Income taxes paid
Cash flow from operating activities
Cash flow from investing activities
Expenditure for deposit of time deposits
Proceeds from withdrawal of time deposits
Expenditures for acquisition of tangible fixed assets
Expenditure for acquisition of software
Expenditure for acquisition of investment securities
Expenditure for loans receivable
OthersNet cash flow used in investing activities
Cash flow from financing activities
Net increase in short-term loans

Amount, thousand of yen
229,826
122,965584,159
3,088△33,639△194,832△21,584
4,421△29,837△1,69022,109△30,864△141,606
60,00084,371
1,128,431△8,495△672,423△109,663△349,048
645,686
91,046△1,202△127,708
607,822△500,000
1,830,000△84,556△331,106△105,000△261,649
3,505
551,193△500,000△7,482

Proceeds from long-term borrowing
69,452
Proceeds from payment from minorities
Payment of dividends
Expenditure for dividends to minorities
Net cash flow used in financing activities
Effect of exchange rate on cash and cash equivalents
Net increase in cash and cash equivalents
Decrease in cash and cash equivalents result from excluded subsidiaries fromconsolidation
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

9

△8,590△11,171△457,791△82,756
618,467△67,634
10,614,234
11,165,066

(4) Explanatory note regarding premise of a going concern
Not applicable(5) Segment Information
a. Business segment information
1st quarter of the fiscal year 2008 (April 1, 2008 through June 30, 2008)(Unit: thousands of yen)Content
Electronic
Other
Eliminations Consolidate
Total
distribution
Moneybusinesses/Corporatedservices
Net sales–
Sales to outside
3,090,059
8,637,946
342,198
12,070,204
12,070,204
customers––
Inter-group sales
53,605
1,742
55,348△55,348and transfers
Total
3,143,665
8,639,688
342,198
12,215,552
12,070,204△55,348
Operating profit
157,497
51,6605,576
214,734
210,501△4,232
Notes: 1.
Method of businesses segmentation: The Company and its group companies’ businesses are classified into
four segments based on the similarities of services and nature of businesses.
2.
Details of business segments

Business segment

Major business operations
Content distribution service using networks, anddevelopment and licensing of distribution platform
technologies, producing content creation
Issuance of electronic money and providing
electronic settlement platforms
Point service and other business

Contents businessElectronic Money business
Other businessesb. Geographical segment information
The 1st quarter of this fiscal year ending March 2009 (April 1, 2008 through June 30, 2008)
Geographical segment information is omitted since net sales in Japan dominated more than 90% of total
sales.

c. Overseas sales
The 1st quarter of this fiscal year (April 1, 2008 through June 30, 2008)
Sales result of overseas is omitted from segmental information since consolidated net sales of overseas
are less than 10% of total sales.

(6) Note for significant changes in amount of shareholders’ equity
Not applicable

10[Reference]

Consolidated financial Results for the 1st quarter of the previous fiscal year(1) <Summery> Consolidated profit and loss for the 1st quarter of previous fiscal year
(Thousands of yen)the 1st Quarter of FY2007(As of June 30, 2007)
11,469,500
8,180,413
3,289,087
2,727,849

I. Net sales
II. Cost of Sales
Gross profit
III.Selling, general and administrative expenses
Operating profit
IV. Non-operating profit
V. Non-operating expenses
Recurring profit
VI. Extraordinary profit
1.Gain on disposal of fixed assets
2.Gain on transfer of opration
3.Change of scope of equity method
Total extraordinary profit
VII. Extraordinary loss
1.Loss from investment securities valuation
2.Others
Total extraordinary loss

561,237
99,038253,336406,939
228,505
756,195
269,915
1,254,616
88,866
178
89,044
1,572,511
526,403
74,332
971,775

Quarterly net profit before income taxes
Corporate, local, and business taxes
Income or Loss on minority shareholders
Quarterly net profit or loss

(2) Segment Information
a. Business segment information
1st quarter of the previous fiscal year (April 1, 2008 through June 30, 2008)(Unit: thousands of yen)Content
Eliminations Consolidate
Electronic
Other
Total
distribution/CorporatedMoneybusinesses
services
Net sales–
11,469,500
Sales to outside
4,165,175
6,882,532
421,793 11,4469,500
customers––
Inter-group sales
42,950600
43,550△43,550
and transfers
Total
4,208,126
6883,132
421,793
11,513,051
11,469,500△43,550
Operating profit
389,237
151,365
24,555565,158
561,237△3,920b. Geographical segment information
The 1st quarter of the previous fiscal year (the 1st Quarter of FY2007)
Geographical segment information is omitted since net sales in Japan dominated more than 90% of total
sales.

c. Overseas sales
The 1st quarter of the previous fiscal year (the 1st Quarter of FY2007)
Sales result of overseas is omitted from segmental information since consolidated net sales of overseas
are less than 10% of total sales.

11