BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE 3rd 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.

February 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: February 14, 2019
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 2019
(From April 1, 2018 to December 31, 2018)(1) Consolidated Operating Results(Percentages indicate changes compared with the same quarter of the previous fiscal year.)

Net Sales

Q3 of the year ending

Millionsof yenMarch 2019
March 2018

15,796
16,344

Operating Income

%
△3.4
4.2

Millionsof yenOrdinary Income
Millionsof yen

%
△77.9
△21.7

292
1,319

%

△363
1,229

—
△23.2

Net Income
Millionsof yen

%
—
37.9

△307
862

(Note) Comprehensive income: 3rd quarter of the fiscal year ending March 2019: ¥△416 million (—%); 3rd quarter of fiscal year ending March
2018: ¥1,086 million (△21.8%)

Net Income per
Share

Diluted Net
Income per ShareYen△22.97
71.71

Yen
—
—

Q3 of the year ending
March 2019
March 2018

(2) Consolidated Financial Position
Total Assets

Q3 of the year ending
March 2019Year ending March 2018

Net Assets

Ratio of Equity CapitalMillions of yen

Millions of yen

23,741

17,418%72.3

25,705

18,671

72.5(Reference) Equity capital: 3rd quarter of fiscal year ending March 2019: ¥17,404 million; fiscal year ending March 2018: ¥18,647 million

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

yen
—
—

Year ending March 2018Year ending March 2019

3rd Quarter

Interim

yen
5.00
5.00

Year-end

yen——

Year ending March 2019
(Forecast)

Total

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 2019（from April 1，2018 to March 31，2019）(Percentages indicate changes compared with the previous fiscal year.)

Net Sales

Full year

Operating Income

Ordinary Income

Net Income
Attributable to theSHs of the Parent Co.

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

20,500

△3.3

620

△45.2

△61

—

△111

—

(Note) These figures have been modified since the time of the most recently announced business result forecast.

1

Net Income
per Share
Yen
△8.31

* 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 9 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 3rd 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 term:
The 3rd quarter of the fiscal year ending March 2019: 571,768 shares
The fiscal year ending March 2018:
70,041 shares(iii) Average number of shares during the interim accounting period:
The 3rd quarter of the fiscal year ending March 2019: 13,384,742 shares
The 3rd quarter of the fiscal year ending March 2018: 12,032,464 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. 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.

2

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.

2
2
3
4

2. Consolidated Financial Statements and Important Explanatory Notes ······································ 5(1) Consolidated Balance Sheet ··················································································· 5(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ········ 7(Consolidated Statement of Income) ·········································································· 7(Consolidated Statement of Comprehensive Income)······················································· 8(3) Notes Concerning the Consolidated Financial Statements ················································· 9(Note Concerning the Premise of a Going Concern) ························································ 9(Note in the Case of Significant Changes in the Amount of Shareholders’ Equity) ··················· 9(Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements) ····· 9(Additional Information) ······················································································ 9(Segment Information) ·························································································· 10

1. Qualitative Information Concerning the Settlement of Accounts for the 3rd Quarter(1) Explanation Concerning the Operating Results
In the domestic information communication field in 2017, the Internet penetration rate remained high at
80.5%. Moreover, among individuals who utilize the Internet for personal use, those between 13 and 50
years old accounted for over 95% of the total (*1). Among these users, the number of people who rely
exclusively on a smartphone to access the Internet has increased for all age groups, and the trend isparticularly pronounced among those in their 30s, where the rate of increase compared with the previous
year was 46% (*2). Meanwhile, younger Japanese people are increasingly turning away from television,and the ongoing transition to services in line with the shift to the era of digitalization is expected toaccelerate in future as the Internet usage rate climbs further and the use of smartphones continues tospread. Under these circumstances, it is becoming even more important for Faith to respond swiftly touser needs that are in keeping with the times.
*1. 2018 White Paper on Information and Communications in Japan,
compiled by the Ministry of Internal Affairs and Communications*2. Nielsen Digital Database 2018, compiled by Nielsen Digital Co., Ltd.

Moreover, in the entertainment market, the global music market centered on flat rate subscription services
grew by 8.1% to US$17.3 billion dollars (*3), marking the first time since 1999 that this market hasrecorded sales growth for three consecutive years. In the Japanese domestic music content market, theproduction value of music software including music videos in 2017 decreased by 6% from the previous
year to ¥232 billion yen (*4). Although sales of packaged products continued to exhibit a declining trend,
fee-based music distribution sales increased by 8% year on year to ¥57.3 billion and sales of subscriptiontype music distribution services leaped by 22% year on year. Meanwhile, the size of the live entertainment
market increased by 7.2% from the previous year to ¥332.4 billion, in line with an expansion of“experiential” consumption (*5).
(*3) Source: IFPI Global Music Report 2018(*4) Source: Recording Industry Association of Japan (RIAJ), The Recording Industry in Japan 2017(*5) Source: All Japan Concert & Live Entertainment Promoters Conference (ACPC), 2017 Basic Research Report

In the current environment, Faith is continuing to utilize the results of the efforts it has been pouring into
digital content distribution ever since its establishment, and is forging ahead with its Multi-Content andMulti-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 development of new services in
response to the changing market environment such as platforms that collect and organize the information
flooding the Internet and providing it 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 2019, in accordance with the decline in sales of existing distribution services, which
account for a major share of overall sales, net sales decreased by 3.4% compared with the same quarterof the previous fiscal year to ¥15,796 million, while due mainly to declining sales of high-margin products
launched in previous years and game titles in the Label Business, operating income decreased by 77.9%
year on year to ¥292 million. Meanwhile, due to the recording of a loss on equity method investment, theCompany recorded an ordinary loss of 363 million yen (compared with an ordinary income of ¥1,229
million for the same quarter of the previous fiscal year), and a net loss attributable to the parent company's
shareholders of 307 million yen (compared with a net income attributable to parent company shareholdersof 862 million yen for the same quarter of the previous fiscal year).
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 responseto the market environment which is characterized by the ongoing popularization of smartphones, andchanging music listening styles. In this business, we are proceeding with measures to enhance the added
value of contents including making functional improvements and building links between various services
by verifying the results of service contents and marketability, including with regard to our existing
businesses, while also moving ahead with platformization with a view to revenue source diversification.
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 and2announcement 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. We areaiming to acquire new users and expand the membership base of Fans’ as a service that allows more artists
to disseminate their works and information freely, and we will endeavor to improve the quality of theservice by pursuing enhanced usability.
*6. Abbreviation of “Direct to Consumer”—a business model for delivering
services and products planned and manufactured by Faith directly to users

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 consolidated subsidiaries, anddespite the ongoing positive deployment of new services in line with the changing market environment,
the Content Business recorded net sales of ¥2,533 million, a decrease of 20.1% year on year, and an
operating loss of ¥406 million (compared with an operating loss of ¥118 million for the same period of
the previous fiscal year).
Point Service BusinessIn the Point Service Business, sales of points issued by existing participating point card stores increased
2.2% compared with the same quarter of the previous fiscal year to ¥2,052 million, owing to steady growthof sales promotion measures. Meanwhile, operating income increased by 47.2% year on year to ¥89
million.
Label Business
Amid the difficult environment facing the music and video-related industry in line with the continuing
decrease of the music market, the Label Business proceeded with its strategy of strengthening new futureoriented businesses in order to overcome the present situation in which it remains dependent on sales 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 0.4% year on year to ¥11,209 million. However, 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 ¥606 million, a decrease of 55.8% fromthe same period of the previous fiscal year.
*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, 2018 decreased by ¥1,963 million compared to the end of the previous
consolidated fiscal year to ¥23,741 million. This result was due mainly to decreases in cash and deposits
and in investment securities.
Total liabilities decreased by ¥710 million compared to the end of the previous consolidated fiscal yearto ¥6,323 million. This result was due mainly to the repayment of loans.
Total net assets decreased by ¥1,253 million compared to the end of the previous consolidated fiscal
year to ¥17,418 million. This result was due mainly to the recording of a quarterly net loss attributable
to the shareholders of the parent company and to the acquisition of treasury stock
The equity ratio improved by 0.8 percentage points to 73.3%.

3

(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 fiscal year is unchanged fromthe forecast figures issued today.

42. Consolidated Financial Statements and Important Explanatory Notes(1) Consolidated Balance Sheet
FY 2017(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
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 2018

(December 31, 2018)13,460,309
2,162,275
229,555
516,373493,508
65,12426,944
464,629△27,249
17,391,471

12,175,825
2,026,918
229,491
502,038
359,600
69,097
67,836515,616△19,017
15,927,408

2,773,635

3,288,774

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

1,568,082
578,917
2,146,999

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

1,672,779
178,692
953,813△426,624
2,378,661
7,814,435
23,741,843

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

871,652
459,999723
2,691,471
96,12442,678
7,504
53,173
1,223,916
5,447,243

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

154,500
588,243180
90,88742,243876,055
6,323,299

FY 2017(March 31, 2018)(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

6(Unit: thousands of yen)
3rd Quarter of FY 2018

(December 31, 2018)

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

3,218,000
3,019,175
11,874,417△802,124
17,309,468

263,254△12,505△56,561

154,451△17,579△41,414

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

95,458
13,61817,418,544
23,741,843

(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
Loss on investment partnership management
Miscellaneous expenses
Total non-operating expenses
Ordinary income or ordinary loss (△ = loss)
Extraordinary income
Gain on sale of shares of affiliates
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
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 or net loss attributable to noncontrolling interests (△ = net loss)
Current quarter net income or net loss attributable toshareholders of the parent company (△ = net loss)

7

3rd Quarter of FY 2017

3rd Quarter of FY 2018

(April 1-Dec.31, 2017)16,344,272
9,959,356
6,384,916
5,065,128
1,319,787(April 1-Dec. 31, 2018)
15,796,138
10,295,357
5,500,781
5,208,595
292,186

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

168
4,237
94
19,759－16,862
41,122

6,398
69,71950,852－
1,018
127,989
1,229,729

1,854
692,609－
917
1,329
696,711△363,402－
116,982
5,859
15,691
754
139,287

161,965
69,052－－－231,018

6,617
23,421－30,0391,338,977
249,887
2,155
1,086,934
224,107

11,427－
15,00026,427△158,812
183,753△24,653△317,912△10,407862,826△307,504

(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

8

3rd Quarter of FY 2017

3rd Quarter of FY 2018

(April 1-Dec.31, 2017)
1,086,934(April 1-Dec. 31, 2018)△317,912△9,573△108,802△1,76010,915△419
1,086,515△5,074
15,147△98,729△416,641

862,191△406,233

224,323△10,407(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)
Based on a resolution of the Board of Directors Meeting held on May 14, 2018, the Company acquired
500,100 shares of treasury stock. As a result of this acquisition, during the consolidated cumulative 3rdquarter accounting period of the current fiscal year, the value of the treasury shares held by the Company
increased by ¥699,868 thousand, so that at the end of the 3rd quarter accounting period, the value oftreasury shares held amounted to ¥802,124 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 of quarterly
net income before tax deduction for the consolidated fiscal year including the current 3rd quarteraccounting period, and then multiplying the amount of quarterly net income before tax deduction by thecurrent estimated effective tax rate.

(Additional Information)(Adoption of the “Partial Amendments to the Accounting Standard for Tax Effect Accounting,” etc.)
The Company has adopted the “Partial Amendments to the Accounting Standard for Tax EffectAccounting” (ASBJ Statement No. 28, issued on February 16, 2018), etc. from the beginning of the 1stquarter accounting period of the consolidated fiscal year under review, with the result that deferred tax
assets are presented in the Investments and other assets category, and deferred tax liabilities are presented
in the Other fixed liabilities category.

9

(Segment Information)
Ⅰ 3rd quarter of the previous 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.
Ⅱ 3rd quarter of the current consolidated fiscal year/FY 2018 (April 1, 2018 through Dec. 31, 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 amount

2,533,526 2,052,755 11,209,856

Total

15,796,138－

15,796,138

2,203

60,688△60,688

－2,591,530 2,053,236 11,212,060

15,856,827△60,688

15,796,138

289,870

2,315

292,186

58,003

Segment income or △406,869
loss (△)

481

89,804606,935

Notes: 1. The segment income or loss ( △ ) adjustment amount of ¥2,315 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.

10