BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE 1st QUARTER OF THE FISCAL YEAR ENDING MARCH 2018
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.

August 10, 2017
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, 2017
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 2018
(From April 1, 2017 to June 30, 2017)(1) Consolidated Operating Results (cumulative totals)(Percentages indicate changes compared with the 1st quarter of the previous fiscal year.)

Net Sales

Q1 of the year ending
March 2018
March 2017

Operating Income

Millionsof yen

%

5,034
4,908

Millionsof yen2.6
4.5

Ordinary Income
Millionsof yen

%
△31.4
212.7

353
515

298
500

%

Net Income
Millionsof yen

△40.3
197.3

80
208

%
△61.4
273.1

(Note) Comprehensive income: 1st quarter of the fiscal year ending March 2018: ¥420 million (3.7%); 1st quarter of the fiscal year ending
March 2017: ¥405 million (598.7%)

Net Income per
Share

Diluted Net
Income per Share

Yen
8.16
21.15

Yen
—
—

Q1 of the year ending
March 2018
March 2017(2) Consolidated Financial Position
Total Assets

Net Assets

Ratio of Equity CapitalMillions of yen

Millions of yen

26,02918,422%
62.1

26,95918,066

59.5

Q1 of the year ending
March 2018Year ending March 2017

(Reference) Equity capital: 1st quarter of fiscal year ending March 2018: ¥16,172 million; fiscal year ending March 2017: ¥16,052 million

2. Dividends
Dividends per Share
(Record dates)

Year ending March 2017
Year ending March 2018Year ending March 2018
(Forecast)

1st Quarter

yen
—
—

3rd Quarter

InterimYear-end

Total

yen
5.00

yen
—

yen
5.00

yen
10.00

5.00

—

5.00

10.00

(Notes) Forecasts for dividends have not been modified since the time of the most recently announced business forecast.

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3. Forecast for the Consolidated Results for the Year Ending March 2018（from April 1，2017 to March 31，2018）(Percentages indicate changes compared with the previous fiscal year and the previous interim result.)

Net Sales

First
half
(cumulative)
Full year

Operating Income

Ordinary Income

Net Income

Net Income
per Share

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

11,000

6.4

560

△50.4

510

△52.9

220

△49.3

17.77

22,100

6.3

1,310

△25.5

1,300

△15.5

800

39.9

61.41

(Note) Forecasts for dividends have been modified since the time of the most recently announced business forecast.
(Note) The net income per share figures quoted in the forecast of consolidated results for the fiscal year ending March 2018 are calculated
to include the increase in the number of shares resulting from the exchange of shares related to Nippon Columbia’s becoming awholly owned subsidiary of the Faith Group. Moreover, for information on the revision of the forecast of consolidated financial
results, please refer to the Notice Concerning the Revision of the Forecast of Financial Results issued today (August 10, 2017).

※ 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 (Changes in Accounting Principles, Procedures, and Disclosure
Methods)” on page 10 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 fiscal years (including treasury shares):
The 1st quarter of the fiscal year ending March 2018: 11,960,000 shares
The fiscal year ending March 2017: 11,960,000 shares(ii) Treasury shares at the end of the fiscal years:
The 1st quarter of the fiscal year ending March 2018: 2,091,310 shares
The fiscal year ending March 2017: 2,091,180 shares(iii) Average number of shares at the interim accounting period
The 1st quarter of the fiscal year ending March 2018: 9,868,743 shares
The 1st quarter of the fiscal year ending March 2017: 9,869,510 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. (3) Explanation Concerning Future Forecast Information on theConsolidated Financial Results, etc.” on page 5 of the accompanying 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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3
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2. Consolidated Financial Statements and Important Explanatory Notes ·······································(1) Consolidated Balance Sheet ···················································································(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ········(Consolidated Statement of Income) ··········································································(Consolidated Statement of Comprehensive Income) ·······················································(3) Notes Concerning the Consolidated Financial Statements ················································(Note Concerning the Premise of a Going Concern) ······················································(Note in the Case of Significant Changes in the Amount of Shareholders’ Equity) ···················(Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements ·······(Segment Information) ·························································································

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7
8
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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 ongoing diversification and popularization ofdevices such as smartphones, tablets and other multifunctional mobile terminals continues to advance.
Although the rate of growth of this market is modest in comparison with during the previous period of
rapid popularization, the smartphone shipment volume for the full 2016 fiscal year increased to morethan 30,130,000 exceeding 30 million units for the first time and surpassing the previous record set in
FY 2012 (*1). In keeping with the progressing switch from feature phones to smartphones, the demandfor changes in services will continue apace, and in future it will become increasingly important todevelop services that match consumer tastes and lifestyles and the changing marketplace even more
quickly than ever before.
(*1) MM Research Institute, Ltd.,
General Situation of Mobile Phone Shipments in Japan for the Full 2016 Fiscal Year (published May 18, 2017)

In this environment, the Faith Group is continuing to utilize the results of the efforts it has been pouring
into content digital distribution ever since its establishment, and is forging ahead with its Multi-Content
and Multi-Platform Strategy of creating an environment that allows people to enjoy a wide diversity ofcontents whenever and wherever they choose. We are also strengthening the development of newservices in response to the changing market environment such as platforms that collect and organize theinformation flooding the Internet and then providing this to users after increasing its added value.
Regarding the Faith Group business performance for the first quarter of the consolidated fiscal year
ending March 2018, net sales increased by 2.6% compared with the same quarter of the previous fiscal
year to ¥5,034 million while operating income decreased by 31.4% year on year to ¥353 million,
ordinary income increased by 40.3% to ¥298 million, and net income attributable to the shareholders of
the parent company decreased by 61.4% to ¥80 million.
Meanwhile, Faith, Inc. (hereinafter “the Company”) has gained ownership of all the shares of Nippon
Columbia Co., Ltd. by means of a share exchange that took place on August 1, 2017 following the
granting of approval of the share exchange contract by the annual general meetings of both companies,
which took place on June 29, 2017 in the case of the Company and on June 23, 2017 in the case of
Nippon Columbia. With this, Nippon Columbia Co., Ltd. has become a wholly owned subsidiary of theCompany, a development that will help to achieve greater organizational management flexibility,
facilitate the integration of the two companies’ business strategies, and lead to faster decision-making,as well as enabling more efficient use of their know-how, human resources and other resources. In
addition, it will strengthen their creative response in the face of the huge changes currently enveloping
the music industry. Through this integration, we will attempt to improve the corporate value of bothcompanies and of the entire Faith Group.
Information on each business segment is as follows.
Content BusinessIn the Content Business, the Faith Group is actively pursuing the development of new products in
response to the market environment including the ongoing popularization of smartphones, changing
music listening styles, etc. In this business, the Company is proceeding with measures to enhance theadded value of its contents, such as functional improvement and linkage between various services, etc.,
by verifying the results of service contents and marketability, including with regard to existing
businesses, while also moving ahead with platformization in the interests of achieving income
diversification.
We are actively developing our FaRao PRO business by pursuing the functional expansion necessary
for in-store operations such as signage and security camera functions, in addition to commercial-use
BGM and announcement functions using the Internet, and we are also making efforts to utilize FaRao
PRO in a variety of fields beyond commercial establishments. For example, at the International
Conference of Alzheimer’s Disease International 2017 held in Kyoto in April, we presented a case studyof the introduction of FaRao PRO at a medical institution in cooperation with the French city of Angers.
Moreover, based on our Japanese service, we have started FaRao PRO services in France and Indonesia,
and in future, we aim to create and activate new BGM markets both in Japan and overseas.

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In Fans’, our platform of services for artists, 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. As a service that allows more artists to freely send out their musical work andinformation, we are aiming to acquire new users an expand membership, and we will endeavor to
improve the quality of the service by pursuing usability.
As a result of the above developments, taking into account the ongoing positive deployment of newservices in line with the changing market environment and the decline in sales of services to featurephone users, the Content Business recorded net sales of ¥980 million, a decrease of 11.8% year on year,
and an operating loss of ¥33 million, compared with an operating loss of ¥30 million for the previous
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 （ *2 ） also performed favorably. As a result, thisbusiness recorded net sales of ¥596 million, an increase of 14.0% year on year. However, due to
expenses in connection with an office transfer, etc., operating income decreased by 32.2% year on yearto ¥26 million. (*2) 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 severe environment facing the music and video-related industry in line with the continuing
shrinkage of the music market, the Label Business proceeded with its strategy of strengthening new
future-oriented businesses in order to overcome the present situation in which it remains dependent onsales of package products for which the market remains sluggish.
Regarding this segment’s performance, sales of animation-related, J-Pop and education titles, which
contributed significantly to sales revenue in the previous fiscal year, recorded year-on-year declines.
However, the inclusion of record label company Dreamusic Inc. and a subsidiary of that company as
newly consolidated subsidiaries of the Faith Group boosted overall Label Business sales to ¥3,458
million, an increase of 5.6% compared with the same quarter of the previous fiscal year. As for the
profit and loss situation, due mainly to declining sales of high-margin products launched in previous
years, this segment recorded an operating income for the first quarter under review of ¥358 million, a
year-on-year decrease of 29.2%.
*Product and service names appearing in this document are trademarks or registered trademarks of Faith, Inc. either in Japan or in othercountries.

(2) Explanation Concerning the Financial Position
Total assets as of June 30, 2017 decreased by ¥929 million compared to the end of the previous
consolidated fiscal year to ¥26,029 million. This result was mainly due to decreases in cash and deposits,
trade notes and accounts receivable, and commercial products and to increases in products in progressand marketable securities.
Total liabilities decreased by ¥1,285 million compared to the end of the previous consolidated fiscal
year to ¥7,607 million. This result was mainly due to decreases in trade notes and accounts payable,
accrued expenses payable, loans payable, and in “others” in the current liabilities column.
Net assets increased by ¥356 million compared to the end of the previous consolidated fiscal year to¥18,422 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 non-controllinginterests.
As a result of the above, the equity ratio increased by 2.6 percentage points to 62.1%.

(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, for the current performance forecast for second quarter cumulative
accounting period and the full financial year please refer to the forecast issued today (August 10, 2017).

32. Consolidated Financial Statements and Important Explanatory Notes(1) Consolidated Balance Sheet
FY 2016(As of March 31, 2017)(Assets)
Current assets
Cash and deposits
Accounts and notes receivable
Marketable securities
Commercial products
Products in progress
Primary materials and inventory goods
Corporation tax refund receivable, etc.
Deferred tax assets
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
Deferred tax assets
OthersAllowance 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
OthersTotal current liabilities
Fixed liabilities
Long-term loans payable
Net defined retirement benefits
Lease obligations
Deferred tax liabilities
OthersTotal fixed liabilities
Total liabilities

4(Unit: thousands of yen)
1st Quarter of FY 2017

(As of June 30, 2017)14,268,853
2,659,104
230,572
561,536
356,686
49,98327,454
100,976
639,750△18,863
18,876,055

13,634,950
2,211,496
230,503490,636473,987
42,905
11,20591,002721,081△18,897
17,888,873

2,831,617

2,822,474

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

1,798,192
831,6122,629,804

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

2,248,098
26,208723,936△309,422
2,688,820
8,141,099
26,029,972

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

1,041,452
682,120
4,496
2,623,556
59,452
39,111
19,83285,086
1,731,215
6,286,323

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

452,500
580,290
1,265
243,224
43,723
1,321,005
7,607,328

(Net assets)
Shareholder's equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholder's equity
Other accumulated comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustments
Cumulative adjustment for retirement benefit
obligations
Total other accumulated comprehensive income
Stock acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

5(Unit: thousands of yen)
1st Quarter of FY 2017

FY 2016(As of March 31, 2017)(As of June 30, 2017)

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

3,218,000
3,705,680
11,961,226△3,039,610
15,845,296

267,014△11,513△41,119379,735△12,986△39,264

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

327,484－
2,249,862
18,422,643
26,029,972

(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
Loss on share exchange
Foreign exchange losses
Miscellaneous expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on change in equity
Gain on reversal of subscription rights to shares
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 attributable to non-controllinginterests
Current quarter net income attributable to shareholders of
the parent company

6

1st Quarter of FY 2016

1st Quarter of FY 2017

(April 1-June 30, 2016)
4,908,878
2,822,072
2,086,806
1,570,942
515,863(April 1-June 30, 2017)
5,034,924
2,987,066
2,047,858
1,694,029
353,829

286
2,834
7
4,195
－
3,723
11,047

426
2,831
11
3,855
446
4,263
11,834

3,556
18,582
－
2,818
1,505
26,462500,447

2,014
15,96848,552－379
66,915
298,748－－
12,36912,36932,8005,859
15,69154,3502,1812,181510,635
49,252
9,067
452,316
243,622－－353,098
36,804
9,081
307,212226,713

208,693

80,499(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 no-controllinginterests

7

1st Quarter of FY 2016

1st Quarter of FY 2017

(April 1-June 30, 2016)
452,316(April 1-June 30, 2017)
307,212△46,081

111,466△40△253△46,375
405,941△1,467
3,638
113,636
420,849

161,940

193,602244,000

227,247

(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 a portion of its consolidated subsidiaries are calculated by making areasonable estimate of the effective tax rate after applying tax effect accounting to the amount ofquarterly net income before tax deduction for the consolidated financial year including the current 1stquarter accounting period, and then multiplying the amount of quarterly net income before tax deduction
by the current estimated effective tax rate.

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(Segment Information)
Ⅰ 1st quarter of the previous consolidated fiscal year/FY 2016 (April 1, 2016 through June 30, 2016)

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

Point Service

Label

Total

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

Net sales
Sales to externalcustomers
Intersegment sales
or transfer amount

1,111,231

523,248

3,274,398

4,908,878－

4,908,878

21,471－

13,32434,795△34,795－

Total

1,132,702

523,248

3,287,723

4,943,674△34,795

4,908,878

Segment income orloss (△)△30,078

39,276506,357

515,554308

515,863

Notes: 1. The segment income adjustment amount of ¥308 thousand is calculated by eliminating intersegment transactions.
2. Segment income 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 1st quarter of the current 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 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.
3. Change of segment information name
Following the inclusion of Dreamusic Inc. and its subsidiaries as consolidated subsidiaries within
the Faith Group from the end of the previous consolidated fiscal year, these companies have been
merged with the former Columbia Business to create the Label Business. In accordance with thisdevelopment, in the above information for the quarter of the previous consolidated fiscal year, thename of the reportable segment in question has been changed from “Columbia” to “Label”.

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