BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE 2nd QUARTER OF THE FISCAL YEAR ENDING MARCH 2022
This is an English translation of summarized consolidated financial results prepared
for the convenience of non-resident shareholders. Should there be any inconsistency
between the translation and the official Japanese text, the latter shall prevail.

November 12, 2021
Faith, Inc. (Stock code 4295, Listed on TSE 1st section)(URL https://www.faith.co.jp/)
Representative: Hajime Hirasawa, CEO/President
Contact: Chikayo Suzuki, CFO/Executive Officer
Tel: +81-3-6855-7811
Date of Submission of Securities Report: November 12, 2021
Starting Date of the Dividend Payment: December 9, 2021
Preparation of Supplementary Materials for Quarterly Financial Results: Applicable
Information Meeting for Quarterly Financial Results to be Held: None
Amounts are rounded down to the nearest JPY 1 million.

1. Results for the 2nd Quarter of the Fiscal Year Ending March 2022
(From April 1, 2021 to September 30, 2021)(1) Consolidated Operating Results(Percentages indicate changes compared with the same quarter of the previous fiscal year.)

Net Sales

Q2 of the year ending

Millionsof yenMarch 2022
March 2021

7,212
10,000Operating Income%

Millionsof yen△27.9△1.8

Ordinary Income

%
△82.5
65.0

96
552

Millionsof yen

%
△64.9
74.1

234
667

Net Income
Millionsof yen

53
315

%
△83.2
－

(Note) Comprehensive income: 2nd quarter of the fiscal year ending March 2022: △¥78 million (—%); 2nd quarter of fiscal year ending
March 2021: ¥1,362 million (—%)

Net Income per
Share

Diluted Net
Income per Share

Yen
4.20
25.00

Yen
—
—

Q2 of the year ending
March 2022
March 2021

(2) Consolidated Financial Position
Total Assets

Net Assets

Ratio of Equity CapitalMillions of yen

Millions of yen

25,814

17,641%
68.3

26,702

17,62766.0

Q2 of the year ending
March 2022
Year ending March 2021

(Reference) Equity capital: 2nd quarter of fiscal year ending March 2022: ¥17,641 million; fiscal year ending March 2021: ¥17,627 million

2. Dividends
Dividends per Share
(Record dates)

Year ending March 2021
Year ending March 2022

1st Quarter

Yen
—
—

3rd Quarter

Interim

Yen
5.00
5.00

Year ending March 2022
(Forecast)Year-end

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.

1

Total

Yen
—

3. Forecast for the Consolidated Results for the Year Ending March 2022
（from April 1，2021 to March 31，2022）(Percentages indicate changes compared with the previous fiscal year.)

Net Sales

Full year

Operating Income

Ordinary Income

Net Income
Attributable to the
Shareholders of the
Parent Company

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

18,000

△10.0

550

△28.0

500

△39.2

100

－

Net Income
per Share
Yen
7.91(Note) These figures have not been modified since the time of the most recently announced business result 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, (4) Notes

Concerning the Consolidated Financial Statements (Adoption of Simplified Methods in the Preparation of theQuarterly Financial Statements)” on page 12 of the accompanying material.

(3) Changes in accounting policy, changes in accounting estimates, and restatements(i)
Changes accompanying revisions of accounting standards, etc.: Applicable(ii) Changes other than the above: None(iii) Changes in accounting estimates: None(iv) Restatements: None
(4) Outstanding shares (common shares)(i) Outstanding shares at the end of the term (including treasury shares):
The 2nd quarter of the fiscal year ending March 2022: 13,831,091 shares
The fiscal year ending March 2021: 13,831,091 shares(ii) Treasury shares at the end of the term:
The 2nd quarter of the fiscal year ending March 2022: 1,198,549 shares
The fiscal year ending March 2021: 1,197,855 shares(iii) Average number of shares during the interim accounting period:
The 2nd quarter of the fiscal year ending March 2022: 12,632,813 shares
The 2nd quarter of the fiscal year ending March 2021: 12,628,981 shares(Note) The number of shares of treasury stock at the end of the period includes the Company's sharescontributed as trust assets in the performance-based stock compensation plan (2nd quarter of fiscal year
ending March 2022: 257,200 shares, fiscal year ending March 2021: 257,200 shares).
Moreover, such shares are also included in the treasury shares that are deducted in calculating the average
number of shares during the period (the 2nd quarter of the fiscal year ending March 2022: 257,200 shares,
the 2nd quarter of the fiscal year ending March 2021: 262,500 shares).
* This financial results report is exempt from quarterly review procedures.
* Statement regarding the proper use of financial forecasts and other special remarks(Notice regarding statements concerning the future)
Statements concerning the future, such as performance forecasts, etc., described in the present material are based on
information currently available to the Company and on certain assumptions judged as reasonable by the Company. The
Company’s actual performance may differ substantially from these forecasts as a result of various factors beyond theCompany’s control. For details of cautions, etc., employed in making performance forecasts and the assumptions underlying
performance forecasts, please refer to “1. Qualitative Information Concerning the Settlement of Accounts for the 2nd Quarter,(3) Explanation Concerning Future Forecast Information on the Consolidated Financial Results, etc.” on page 5 of theaccompanying material .
(To obtain supplemental documents relating to financial results)
Supplemental information on the Company’s quarterly financial results will be posted on the company website on November
30, 2021.

2

Accompanying Material — Contents
1. Qualitative Information Concerning the Settlement of Accounts for the 2nd Quarter ···················(1) Explanation Concerning the Operating Results ··························································(2) Explanation Concerning the Financial Position ··························································(3) Explanation Concerning Future Forecast Information on the Consolidated Financial Results, etc. ··

2
2
5
5

2. Consolidated Financial Statements and Important Explanatory Notes ···································· 6(1) Consolidated Balance Sheet ················································································· 6(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ······· 8(Consolidated Statement of Income) ········································································ 8(Consolidated Statement of Comprehensive Income) ····················································· 9(3) Consolidated Statement of Cash Flows ····································································· 10(4) Notes Concerning the Consolidated Financial Statements················································ 12(Note Concerning the Premise of a Going Concern) ······················································ 12(Note in the Case of Significant Changes in the Amount of Shareholders’ Equity) ·················· 12(Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements) ········ 12(Changes in Accounting Policy) ··········································································· 12(Segment Information) ······················································································ 13

1.
Qualitative Information Concerning the Settlement of Accounts for the 2nd
Quarter(1) Explanation Concerning the Operating Results
In the Japanese information and communications field in 2020, the Internet penetration rate remained
high at 83.4%, while the percentage of households owning one or more smartphones increased to 86.8%,
far exceeding the 70.1% of households owning one or more personal computers (*1). In addition, while themovement away from television has continued since the year 2000, mainly centered on younger people,
advertising expenses for the Internet in Japan increased by 5.9% in 2020 from the previous year to ¥2,229
billion, exceeding advertising expenses for television of ¥1,655.9 billion for the second consecutive year(*2)
. This trend is also evident worldwide, with global spending on digital advertising expected to reachapproximately ¥34 trillion ($311 billion) in 2021, an increase of 15.6% from the previous year (*3).
*1. Source: Ministry of Internal Affairs and Communications, 2020 Telecommunications Usage Trend Survey Results*2. Source: Dentsu Inc., 2020 Advertising Expenditures in Japan*3. Source: Dentsu Inc., Global Ad Spend Forecasts (2020-2022)

In the entertainment market in 2020, sales in the global music market centered on streaming services grewby 7.4% year over year to approximately ¥2,332.8 billion (US$21.6 billion), marking its sixth consecutive
year of growth (*4). In Japan, the production value of music software including music videos decreased by
15% year over year to ¥194.4 billion, and sales of packaged products continued to decline, but sales ofpaid music distribution increased by 11% to ¥78.3 billion. In the paid music distribution sales category,subscription audio streaming increased by 27% year over year to ¥58.9 billion, accounting for 75% of
total paid music distribution sales (*5). Conversely, large-scale events and live concerts have been
postponed and canceled due to the spread of COVID-19, and the live entertainment market in 2020 shrankby 82.4% compared to the previous year to ¥110.6 billion (*6). In 2021, music events at real venues are
beginning to resume in accordance with the guidelines for infection prevention measures based on thegovernment's basic response policy. Meanwhile, new ways of enjoying live entertainment are taking root,with many artists offering “hybrid performances” in which a limited audience is allowed into the venue
and the performance is also distributed online. With live performances in front of various audience sizes
being distributed, the scale of the digital live performance market reached ¥14 billion in 2020, and it isprojected to expand rapidly to about ¥100 billion by 2024 (*7).
*4. Source: IFPI, Global Music Report 2021
*5. Source: Recording Industry Association of Japan (RIAJ), The Recording Industry in Japan 2020
*6. Source: PIA Research Institute, Japanese Live Entertainment Market Size Preliminary Report (published May 13, 2021)*7. Source: CyberZ Co., Ltd., Domestic Digital Live Entertainment Market Trend Survey

Founded in 1992, Faith was the first company in the world to commercialize ringtones, and has steadilygrown centered on the music distribution business and in step with the spread of mobile phones. However,the spread of smartphones in today’s music market has been accompanied by the diversification of media
such as streaming, user upload content (UUC) that allows general users to easily transmit information tosociety, and social media, with the result that all kinds of activities in the music industry are changing,including content distribution methods, consumption styles and content production methods.
In this environment, the Faith Group 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
and Multi-Device Strategy of creating environments in which people can enjoy a wide diversity ofcontents whenever and wherever they choose. We are also strengthening the development of new services
in response to the changing market environment, which includes platforms that collect and organize theinformation flooding the Internet and provide this to users after increasing its added value.
In June 2020, Faith launched a new service called Thumva, which is an innovative live performance
distribution platform. As an Internet-based viewing service that provides a new kind of live experience,
Thumya makes possible group viewing and commenting, includes a gifting function for artists, and allows
the audience to share in the uplifting and unifying feeling of taking part in a live performance without
actually being at the venue. A considerable number of artists have already performed live streaming on
Thumva without a live audience, and we are planning to continue live streaming with a variety of lineups
in future. Since the launch of the service, about 280 performances have been distributed and the numberof registered members has grown to over 150,000 (as of September 2021).
Utilizing the resources of Thumva, we launched Thumva BIZ in July 2021 as a new online service forstores that allows customers who wish to inquire or consult via the Web to begin business negotiations

2with a single click. We are proposing an online store-style service that meets the requirements of thedigital transformation era, and companies in various industries have already introduced this service. In
September, we entered into a business partnership with Nippon Travel Agency, Co.,Ltd.., with a view tomarketing our services. Through that company’s nationwide sales network, we are planning to provide
Thumva BIZ and a number of other Faith Group services in future.
One of Tokyo’s largest music lounges PLUSTOKYO, which is operated by Faith, has continued tooperate while taking necessary measures in accordance with the Tokyo Metropolitan Government’s
guidelines for preventing the spread of infection, including the declaration of a state of emergency for
COVID-19 infections, priority measures to prevent the spread of the disease, and recurrence prevention
measures. As a new initiative, we have organized limited-time menus and exhibition projects incollaboration with artists and creators of anime works. We will continue to place the highest priority on
preventing the spread of infection and ensuring safety, and we will continue to operate carefully inaccordance with administrative policies and action plans.
In the Label Business, we are welcoming Mr. Tatsumi Yoda (President and CEO of GAGA Corporation,
Chairman of T.Y. Limited, Inc.), who has been making innovative and significant contributions to themusic and film industries for many years, as our Chief Advisor for Label Management from December
2021. Mr. Yoda will continue to serve as Chief Advisor to the Board of Directors of Dreamusic Inc.,
which became a wholly owned subsidiary the Faith Group on September 30, 2021, and he will also
contribute to the further strengthening of the Label Business.
The Faith Group has established a regular teleworking system. In addition, we have consolidated our main
office functions, which were previously dispersed throughout the company, into the Minami Aoyama
Office, which has been completely renovated. In the future, we will promote business activities aimed at
improving the Group’s management efficiency and profitability, and we will realize diverse and efficient
new ways of working based on the concept of “activity-based working” (*8) while paying attention tochanges in behavioral patterns and the establishment of new values.
*8. A way of working that allows individuals to choose their workspace and style according to their work.

The Faith Group’s business performance for the second quarter of the consolidated fiscal year ending
March 2022 was negatively affected by a year-over-year decrease in product sales in the Points Service
Business and also by a decrease in sales in the Label Business. As a result, the Group reported net salesof ¥7,212 million (a decrease of 27.9% compared with the same period of the previous fiscal year),
operating income of ¥96 million (a decrease of 82.5% year over year, ordinary income of ¥234 million (adecrease of 64.9% year over year), and net income attributable to the shareholders of the parent companyof ¥53 million (a decrease of 83.2% year over year).
The Faith Group has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29,
March 31, 2020) and other related standards from the beginning of the first quarter consolidated
accounting period. In accordance with this change, compared with the previous accounting method, net
sales for the first half of the current fiscal year decreased by ¥1,487 million, and operating income,ordinary income and net income before income taxes and minority interests each increased by ¥82 million.
For details, please refer to “2. Consolidated Financial Statements and Important Explanatory Notes, (3)Notes Concerning the Consolidated Financial Statements (Changes in Accounting Policy)” on page 10.
Information on each business segment is as follows.
Content BusinessIn the Content Business, as sales in the existing distribution business are continuing to decline, the FaithGroup will continue to invest in new growth fields in addition to developing new products by interlinking
various services and creating platforms to capture diversifying profit opportunities.
We are actively developing FaRao PRO not only as a service providing business BGM but also for sales
activities focused on expanding the functions necessary for store management, such as solutions andannouncement functions that make store-branding proposals. In addition to conventional products using
tablet devices, we have also released an app-version service that offers reduced initial costs and we areworking to strengthen retail store sales through collaboration with the Point Service Business. Moreover,in the future, we will continue working to create and revitalize the new BGM market.

3

In Fans’, our platform of services for artists based on the D2C (*9) business model, which is expected to
expand further 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 have introduced a system that allows fans to contribute to the creation of a community by spreading
the information that creators send out by strengthening ties via SNS. In addition, by offering a service thatallows more artists to freely disseminate their works and information, we aim to acquire and expand thenumber of users and improve the quality of the service by pursuing enhanced convenience.
*9. Abbreviation of “Direct to Consumer”—a business model for delivering services and products planned and manufactured by Faith directly to users

Regarding the performance of this segment for the second quarter of the current fiscal year, due to adecrease in carrier official website service sales and self-restraint measures such as shortened store hours
as a countermeasure against the spread of COVID-19, the Content Business recorded net sales of ¥1,121
million (a decrease of 23.4% year over year), and an operating loss of ¥262 million (compared with anoperating loss of ¥284 million for the same period of the previous fiscal year).
The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and otherrelevant standards have been applied from the beginning of the first quarter of the current fiscal year. In
accordance with this change, compared with the previous accounting method, net sales in this segment
decreased by ¥243 million. However, the application of the accounting standard had no impact on theoperating loss.
Point Service BusinessIn the Point Service Business, in addition to providing point issue services to retail stores, we offer total
support for point issue data acquisition, analysis and sales promotion utilization as a series of cycles fromplanning to operation, and we provide outsourcing services that maximize retail sales promotion
efficiency.
Regarding the performance of this segment, due to a decrease in sales of goods and issuance of points atexisting member stores, net sales decreased by 83.8% year over year to ¥284 million and operating income
decreased by 58.1% year over year to ¥73 million.
The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and otherrelevant standards have been applied from the beginning of the first quarter of the current fiscal year. In
accordance with this change, compared with the previous accounting method, net sales in this segment
decreased by ¥934 million. However, the application of the accounting standard had no impact on
operating income.
Label BusinessIn the Label Business, under the severe environment facing the music and video-related industry in linewith changes the music market, we are strengthening new businesses with an eye on the future in orderto overcome the present situation in which this segment remains dependent on sales of package products.
If we are to continue to play a major role in the music industry and increase our profitability in future, in
addition to focusing on creating hits, management, and investing in the live performance business, we
believe it will be necessary to introduce services that anticipate the ever-changing market environment.
Regarding the performance of this segment, due mainly to lower sales of animation titles by Nippon
Columbia Co., Ltd., net sales in this segment decreased by 14.4% year over year to ¥5,806 million, andoperating income decreased by 56.9% year over year to ¥284 million.
The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and otherrelevant standards have been applied from the beginning of the first quarter of the current fiscal year. In
accordance with this change, compared with the previous accounting method, net sales in this segment
decreased by ¥308 million and operating income increased by ¥82 million.
*Product and service names appearing in this document are trademarks or registered trademarks of Faith, Inc. either in Japan or in othercountries.

(2) Explanation Concerning the Financial Position(Analysis of Financial Position)4

As of the end of the second quarter of the current consolidated fiscal year ending March 2022 (September
30, 2021), total assets decreased by ¥888 million compared to the end of the previous consolidated fiscal
year to ¥25,814 million. This result was mainly due to a decrease in notes and accounts receivable of ¥295
million and a decrease in investment securities of ¥260 million.
Total liabilities decreased by ¥901 million compared to the end of the previous consolidated fiscal yearto ¥8,172 million. This result was mainly due to a decrease of ¥195 million in accrued corporate taxes, adecrease of ¥146 million in asset retirement obligations (current liabilities), a decrease of ¥71 million indeferred tax liabilities, a decrease of ¥120 million in long-term debt and a decrease in current liabilitiesof ¥225 million.
Net assets increased by ¥13 million compared to the end of the previous consolidated fiscal year to¥17,641 million. This was mainly due to an increase in retained earnings of ¥145 million and a decreasein valuation difference on other securities of ¥163 million yen due to the application of the AccountingStandard for Revenue Recognition.
As a result of the above, the equity ratio increased by 2.4 percentage points to 68.3%.
(Cash Flow Situation)
The balance of cash and cash equivalents at the end of the second quarter of the current consolidated fiscal
year was ¥12,777 million, a decrease of ¥556 million from the end of the previous consolidated fiscal
year. Details of cash flow for the consolidated cumulative second quarter and its contributory factors are
as follows:(Cash Flow from Operating Activities)
Cash flow from operating activities amounted to an inflow of ¥127 million (compared with an inflow of¥934 million for the same period of the previous fiscal year), due mainly to the recording of ¥211 million
in respect of net income before income taxes and other adjustments, ¥98 million in respect of depreciation
expenses, ¥99 million in respect of an decrease in the reserve for bonuses, ¥304 million in respect of adecrease in trade receivables, ¥24 million in respect of a decrease in trade payables, and ¥363 million in
respect of payment of income taxes, etc.
(Cash Flow from Investing Activities)
Cash flow from investing activities amounted to an outflow of ¥103 million (compared with an inflow of¥27 million for the same period of the previous fiscal year), due mainly to the recording of ¥88 million in
respect of expenditure for the acquisition of tangible fixed assets, ¥69 million in respect of expenditure
for the acquisition of software, and ¥40 million in respect of income from the sale of investment securities,
etc.
(Cash Flow from Financing Activities)
Cash flow from financing activities amounted to an outflow of ¥194 million (compared with an outflow
of ¥211 million for the same period of the previous fiscal year), due mainly to the recording of ¥129
million in respect of repayment of long-term borrowing and ¥64 million in respect of expenditure fordividend payments.

(3) Explanation Concerning Future Forecast Information on the Consolidated Financial
Results, etc.
Performance forecasts are made based on information currently available to the Company, but there is apossibility that the actual performance figures will differ significantly from the forecast figures due to avariety of factors. In addition, the current performance forecast for the full financial year is unchanged
from the forecast issued on May 13, 2021.

52. Consolidated Financial Statements and Important Explanatory Notes(1) Consolidated Balance Sheet
FY 2020(As of March 31, 2021)(Assets)
Current assets
Cash and deposits
Accounts and notes receivable
Marketable securities
Commercial products
Products in progress
Primary materials and inventory goods
Contract assets
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 investment and other assets
Total fixed assets
Total assets(Liabilities)
Current liabilities
Accounts and notes payable
Short-term loans payable
Current portion of long-term debt
Accounts payable-otherAccrued expenses payable
Income taxes payable
Reserve for bonuses
Reserve for sales returns
Contract liabilities
Asset retirement obligations
Other current liabilities
Total current liabilities
Fixed liabilities
Long-term loans payable
Net defined retirement benefits
Reserve for stock benefits for directors
Asset retirement obligations
Deferred tax liabilities
Other fixed liabilities
Total fixed liabilities
Total liabilities

6(Unit: thousands of yen)
2nd Quarter of FY 2021

(As of Sept. 30, 2021)

12,997,014
2,018,712
229,796366,536
491,10958,592－
71,062519,948△18,669
16,734,103

12,827,752
1,723,637
229,462
353,190481,791
70,991350
0632,334△18,850
16,300,659

2,946,103

2,952,891

1,395,695
357,776
1,753,472

1,333,317
385,966
1,719,283

3,898,711
846,890
1,108,603△585,342
5,268,863
9,968,439
26,702,542

3,637,914
809,128
1,005,104△610,905
4,841,242
9,513,417
25,814,076

964,025
340,000
258,700
741,426
2,796,448
371,157
352,424
55,441－
146,892
1,140,736
7,167,251

939,521340,000
249,500
597,951
2,967,013
175,202
252,749－
32,110－914,659
6,468,707

379,850
576,92233,12939,233874,056
4,453
1,907,645
9,074,896

259,700
563,215
36,41039,233
802,196
3,459
1,704,215
8,172,922

FY 2020(As of March 31, 2021)(Net assets)
Shareholder's equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholder's equity
Other accumulated comprehensive income
Valuation difference on other available-for-salesecurities
Foreign currency translation adjustments
Cumulative adjustment for retirement benefit obligations
Total other accumulated comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

7(Unit: thousands of yen)
2nd Quarter of FY 2021

(As of Sept. 30, 2021)

3,218,000
2,840,667
10,698,825△1,121,619
15,635,873

3,218,000
2,840,498
10,844,558△1,122,071
15,780,985

1,987,860

1,824,003△30,807
34,7191,991,773－
17,627,646
26,702,542△8,86945,033
1,860,168－
17,641,154
25,814,076

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

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Interest on securities
Gain on equity method investment
Gain on investment partnership management
Gain on valuation of investment securities
Gain on foreign exchange
Subsidy income
Miscellaneous receipts
Total non-operating income
Non-operating expenses
Interest paid
Loss on investment partnership management
Loss on valuation of investment securities
Loss on foreign exchange
Miscellaneous expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sale of investment securities
Gain on sale of fixed assets
Total extraordinary income
Extraordinary losses
Loss on disposal of fixed assets
Loss on liquidation of subsidiaries
Loss on sale of investment securities
Loss on valuation of investment securities
Total extraordinary losses
Net income or net loss before income taxes
Corporate, local, and business taxes
Income taxes - deferred
Current quarter net income attributable to non-controllinginterests
Current quarter net income or net loss attributable toshareholders of the parent company

8

2nd Quarter of FY 2020

2nd Quarter of FY 2021

(April 1-Sept.30, 2020)
10,000,737
6,286,940
3,713,796
3,161,335
552,461(April 1-Sept. 30, 2021)
7,212,575
4,292,650
2,919,924
2,823,196
96,728148
3,053
838,03178,0101,114－
31,66422,872
174,903

592,586
529,198
116,576－83
54,00015,253
217,7633,094
50,282－289
6,059
59,726
667,638

2,362
76,524372－
664
79,923
234,568－－－

34,114141
34,255672－
4,931
26,75732,360635,277
280,980
38,534
315,76242
29,756－27,21457,013211,810
155,758
2,988
53,064

315,762

53,064

(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

9

2nd Quarter of FY 2020

2nd Quarter of FY 2021

(April 1-Sept. 30, 2020)
315,762(April 1-Sept. 30, 2021)
53,064

1,028,159△163,856△923
19,3581,046,594
1,362,356

21,937
10,314△131,604△78,540

1,362,356△78,540－－

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

Cash flow from operating activities
Income before income taxes and other adjustments)
Depreciation expenses
Amortization of goodwill
Increase/decrease in allowance for doubtful accounts (△ =decrease)
Increase/decrease in reserve for bonuses (△ = decrease)
Increase/decrease in reserve for point card certificates (△ =decrease)
Increase/decrease in liabilities for retirement benefits (△ =decrease)
Increase/decrease in reserve for stock benefits for directors (△= decrease)
Interest and dividend income
Gain or loss on valuation of securities (△ = gain)
Interest on securities
Interest paid
Grant income
Gain or loss on foreign exchange (△ = gain)
Gain or loss on equity method investment (△ = gain)
Gain or loss on investment partnership management (△ =gain)Gain or loss on liquidation of subsidiaries (△ = gain)
Gain or loss on sale of investment securities (△ = gain)
Gain or loss on valuation of investment securities (△ = gain)
Gain or loss on disposal of fixed assets (△ = gain)
Increase/decrease in trade receivables (△ = increase)
Increase/decrease in inventory assets (△ = increase)
Increase/decrease in trade payables (△ = decrease)
OthersSub-total
Subsidy income received
Interest and dividends received
Interest paid
Income tax refunded
Income tax paid
Cash flow from operating activities

10

2nd Quarter of FY 2020
(April 1-Sept. 30, 2020)

2nd Quarter of FY 2021
(April 1-Sept. 30, 2021)

635,277
109,936
62,37825,670211,810
98,69762,37825,744

172,27011△99,675
74△18,701△13,706

6,839

3,280

△3,201△1,114△8
3,094△31,66446△38,031△27,727△2,645372△52,362△54,000△14△29,198△40,051－
4,931
26,757672
569,359
190,600△372,834△181,154
1,133,406
5,204
2,652
△3,094
68,295△271,813
934,650

29,756△34,114
27,21442
304,004
9,916△24,504△111,757
365,981
54,0002,459△2,411
71,062△363,205
127,887

(Unit: thousands of yen)

Cash flow from investing activities
Expenditure for acquisition of tangible fixed assets
Income from sale of tangible fixed assets
Expenditure for acquisition of software
Expenditure for acquisition of investment securities
Income from sale of investment securities
Income from distribution of profits from investment
partnerships
Income from collection of loans receivable
Income from collection of security deposits
Expenditure for fulfilling asset retirement obligations
OthersNet cash flow from investing activities
Cash flow from financing activities
Expenditure for repayment of long-term borrowing
Expenditure for acquisition of treasury stock
Income from disposal of treasury stock
Payment of dividends
OthersNet cash flow from financing activities
Effect of exchange rate on cash and cash equivalents
Net increase/decrease in cash and cash equivalents (△ =decrease)
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of the quarter11

2nd Quarter of FY 2020
(April 1-Sept. 30, 2020)

2nd Quarter of FY 2021
(April 1-Sept. 30, 2021)△18,425－△35,982△25,000－
76,899△88,214141△69,291△10,000
40,30768,362180
4－30,28827,964－
190,452△146,892△87,946△103,081△147,350△495
35△64,142－△211,951△2,654
748,008△129,350△578
36△64,111△78△194,081
14△169,261

12,585,834
13,333,843

12,946,994
12,777,733

(4) Notes Concerning the Consolidated Financial Statements(Note Concerning the Premise of a Going Concern)
Not applicable(Note in the Case of Significant Changes in the Amount of Shareholders’ Equity)
Not applicable(Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements)
Tax expenses for the Company and a portion of its consolidated subsidiaries are calculated by multiplying
the amount of net income before income taxes by the estimated effective tax rate, which is reasonably
estimated by applying tax effect accounting to estimated income before income taxes for the current
consolidated fiscal year including the second quarter under review.
(Changes in Accounting Policy)(Application of Accounting Standard for Revenue Recognition)
The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29,
March 31, 2020, hereinafter the “Accounting Standard for Revenue Recognition”) and other related
standards from the beginning of the first quarter of the current fiscal year. Based on this standard, revenue
the Company expects to receive in exchange for the provision of goods and services is recognized when
the control of the goods and services is transferred to customers.
As a result of this change, in the Point Service Business, in which revenue was previously recognizedwhen points were issued to customers and cost of sales was recognized when the points were used, sincethese transactions correspond to repurchase agreements with a right of return, the Company now
recognizes revenue on a net basis. In addition, regarding the distribution of royalties to copyright holders,mainly in the Label Business, the total amount of consideration received from music users, etc., waspreviously recognized as revenue, but since the Company conducts these transactions as an agent, theCompany now recognizes revenue as the net amount received from music users, etc., minus the amount
paid to copyright holders. Moreover, in the past, revenue from music licensing fees for karaoke music in
the Label Business was recognized on a one-time basis, but as a result of examining the identification andsatisfaction of performance obligations, the Company now recognizes revenue over a certain period oftime. Furthermore, for sales with a right of return in the Label Business, the total amount of consideration
was previously recognized as revenue at the time of sale, and an adjustment allowance for sales returns
was recorded based on records of previous sales returns, but the Company now recognizes revenue as thetotal amount of consideration excluding the amount of consideration for merchandise that is expected tobe returned.
With regard to the Accounting Standard for Revenue Recognition, in accordance with the transitional
treatment stipulated in the provisions of Article 84 of the Accounting Standard for Revenue Recognition,
the cumulative effect of retrospectively applying the new accounting policy prior to the beginning of thefirst quarter of the current fiscal year was added to or deducted from retained earnings at the beginning of
the first quarter of the current fiscal year, and the new accounting policy was applied from the beginningbalance of the current fiscal year.
As a result, for the current consolidated cumulative second quarter, net sales decreased by ¥1,487,010
thousand, cost of sales decreased by ¥1,397,692 thousand, selling, general and administrative expenses
decreased by ¥171,753 thousand, and operating income, ordinary income and net income before income
taxes each increased by ¥82,434 thousand. In addition, the balance of retained earnings at the beginningof the period increased by ¥157,121 thousand.
Due to the application of the Accounting Standard for Revenue Recognition, the provision for sales
returns, which was presented under the current liabilities in the consolidated balance sheets in the previous
fiscal year, is included in the other current liabilities from the first quarter of the current fiscal year. In
accordance with the transitional treatment prescribed in Paragraph 89-2 of the Accounting Standard for
Revenue Recognition, no reclassification has been made to the previous fiscal year’s consolidated
financial statements to conform to the new presentation. Furthermore, in accordance with the transitional
treatment prescribed in Paragraph 28-15 of the Accounting Standard for Quarterly Financial Reporting(ASBJ Statement No. 12, March 31, 2020), the Company has not presented the disaggregation of revenue

12from contracts with customers for the first quarter of the previous fiscal year.
(Application of Accounting Standard for Fair Value Measurement)
The Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019, hereinafter
the “Accounting Standard for Fair Value Measurement”) has been applied from the beginning of the firstquarter of the current fiscal year, and in accordance with the transitional treatment stipulated in article 19of the Accounting Standard for Fair Value Measurement and Article 44-2 of the Accounting Standard for
Financial Instruments (ASBJ Statement No. 10, July 4, 2019), the new accounting policy stipulated by
the Accounting Standard for Fair Value Measurements will be applied in the future. This change had no
impact on the quarterly consolidated financial statements for the first quarter of the fiscal year underreview.

(Segment Information)
Ⅰ 2nd quarter of the previous consolidated fiscal year/FY 2020 (April 1, 2020 through Sept. 30, 2020)
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 ortransfer amount
Total

1,465,013

1,753,302

6,782,421

10,000,737－

10,000,737

107,16892

10,563

117,824△117,824－

1,572,181

1,753,395

6,792,984

10,118,561△117,824

10,000,737

Segment income or loss △284,807
174,339
660,907550,439
2,022
552,461(△)
Notes: 1. The segment income or loss adjustment amount of ¥2,022 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 2nd quarter of the current consolidated fiscal year/FY 2021 (April 1, 2021 through Sept. 30, 2021)
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
Revenue from contracts 1,121,759
with customers
Sales
toexternal 1,121,759
customers
Intersegment sales or
169,887transfer amountTotal
1,291,646

284,375

5,806,440

7,212,575－

7,212,575

284,375

5,806,440

7,212,575－

7,212,575

85

12,976

182,949△182,949－

284,4615,819,416

7,395,524△182,949

7,212,575

Segment income or loss (△) △262,158

73,136

284,727

95,705

1,022

96,728Notes: 1. The segment income or loss adjustment amount of ¥1,022 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.

13

3. Matters related to changes in reportable segments, etc.
As described in the aforementioned “Changes in Accounting Policies” section, the AccountingStandard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and other related
standards have been applied from the beginning of the first quarter of the current fiscal year, with theresult that the accounting method for revenue recognition and the method for calculating the income
or loss in each business segment have been modified.
As a result of this change, for the first quarter of the current fiscal year, compared with the previous
method, in the Content Business net sales decreased by ¥243,733 thousand and in the Point Service
Business net sales decreased by ¥934,585 thousand, but in both cases there was no impact on segment
income or loss, while in the Label Business net sales decreased by ¥308,692 thousand and segment
income increased by ¥82,434 thousand

14

15