BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE 1st QUARTER OF THE FISCAL YEAR ENDING MARCH 2016
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 12, 2015
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, 2015
Starting Date of the Dividend Payment: 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 1st Quarter of the Fiscal Year Ending March 2016
(From April 1, 2015 to June 30, 2015)(1) Consolidated Operating Results(Percentages indicate changes compared with the 1st quarter of the previous fiscal year.)

Net Sales

Q1 of the year ending
March 2016
March 2015

Millionsof yenOperating Income

%

4,695
4,445

5.6
171.1

Millionsof yenOrdinary Income
Millionsof yen

%
—
—

164
(391)

%

Net Income
Millionsof yen

—
—

168
(386)

%
—
—

55
(293)

(Note) Comprehensive income: 1st quarter of the fiscal year ending March 2016: ¥58 million (—%); 1st quarter of the fiscal year ending
March 2015: -¥433 million (—%)

Net Income per
Share

Diluted Net
Income per Share

Yen
5.15
(25.77)Yen——

Q1 of the year ending
March 2016
March 2015

(2) Consolidated Financial Position
Total Assets

Ratio of Equity Capital

Net Assets Per Share

Millions of yen

Millions of yen%

Yen

24,483

17,51368.1

1,536.41

25,835

17,72365.5

1,540.23

Q1 of the year ending
March 2016
Year ending March 2015

Net Assets(Reference) Equity capital: 1st quarter of fiscal year ending March 2016: ¥16,679 million; fiscal year ending March 2015: ¥16,918 million

2. Dividends
Dividends per Share
(Record dates)

Year ending March 2015
Year ending March 2016
Year ending March 2016
(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 2016
（from April 1，2015 to March 31，2016）(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

9,000

(0.9)

(100)

—

(110)

—

(185)

—

(16.84)20,000

2.1

400

—

380

—

150

—

13.66

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

※ Notes(1) Changes in significant subsidiaries (accompanying changes in scope of consolidation): None
Newly added subsidiaries: 0 companies (subsidiary’s name:)Removed subsidiaries: 0 companies (subsidiary’s name:)(2) Adoption of simplified accounting practices or specific procedures in preparation of the quarterly
consolidated financial reports: Applicable* For details, please refer to “2. Summary Information, (2) Adoption of Simplified Accounting Methods in the

Preparation of Quarterly Financial Statements” on page 4 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
* For details, please refer to “2. Summary Information, (3) Changes in Accounting Principles, Procedures, andDisclosure Methods” on page 4 of the accompanying material.

(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 2016: 11,960,000 shares
The fiscal year ending March 2015: 11,960,000 shares(ii) Treasury shares at the end of the fiscal years:
The 1st quarter of the fiscal year ending March 2016: 1,103,930 shares
The fiscal year ending March 2015: 975,480 shares(iii) Average number of shares at the interim accounting period
The 1st quarter of the fiscal year ending March 2016: 10,856,263 shares
The 1st quarter of the fiscal year ending March 2015: 11,390,270 shares* Indication of auditing procedures implementation status
This financial results report is exempt from quarterly review procedures under Japan’s Financial Instruments and Exchange
Law. As of the time of disclosure of this report, the auditing procedure based on the Financial Instruments and Exchange Law
has not been completed.
* 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 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.

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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
4

2. Summary Information ······························································································(1) Changes in Major Subsidiaries During the 1st Quarter ·····················································(2) Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements ·········(3) Changes in Accounting Principles, Procedures, and Disclosure Methods ······························

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4
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3. Consolidated Financial Statements ···············································································(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) ···················(Segment Information) ·························································································

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7
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8
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1. Qualitative Information On 1st Quarter Consolidated Results(1) Explanation of Operating Results
With high-performance mobile devices such as smartphones and tablets becoming increasingly
widespread throughout the world in tandem with the development of the Internet infrastructure, in theJapanese domestic information communication field, the ratio of smartphone contracts currently
exceeds 60% of all contracts for mobile phone devices and the ongoing shift from feature phones tosmartphones is continuing apace. Meanwhile, between 2012 and 2014, the average daily Internet use
time from mobile devices increased by 34% compared to 50.5 minutes (*1).
(*1) From the Ministry of Internal Affairs and Communications (MIC Communications Usage Trend Survey 2014

In the music contents market as well, there have been changes in the market environment, the music
distribution system, and the content-using consciousness of listeners, an example being the growth ofsubscription-type music distribution services that allow subscribers to listen to as much music as they
like for a fixed monthly charge.
In future, a further switch to services that are in keeping with the digital era is expected against thebackground of the firm establishment of the Internet and the smartphone and the availability of higher
functionality. Accordingly, it is becoming even more important to promptly deploy services that matchthe changing environment and marketplace.
In the current environment, the Faith Group is continuing to utilize the results of the efforts it has beenpouring 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 awide diversity of contents whenever and wherever they choose. The Group is also working to develop
new services in response to the changing market environment such as the platforms that collect andorganize the information flooding the Internet and then provide this to users after increasing its added
value. Moreover, in the Contents Business, by making use of its inter-group business synergies, Faith iscontinuing to focus on constructing platforms for music services and expanding and strengthening themusic distribution business including subscription services.
Regarding the Faith Group business performance for the first quarter of the fiscal year ending March
2016, although sales of distribution services for feature phone use—the Group’s largest sales
category—continued to decrease, because sales of smartphone-use services expanded steadily and theCompany’s 100% consolidated subsidiary Nippon Columbia Co., Ltd. returned to profitability, net sales
increased by 5.6% compared with the same quarter of the previous fiscal year to ¥4,695 million while
the Group recorded an operating income of ¥164 million (compared with an operating loss of ¥391
million for the same quarter of the previous fiscal year), an ordinary income of ¥168 million (comparedwith an ordinary loss of ¥386 million for the same quarter of the previous fiscal year), and net income
attributable to the shareholders of the parent company for the first quarter under review of ¥55 million(compared with a net loss attributable to the shareholders of the parent company of ¥293 million for thesame period of previous fiscal year).
Information on each business segment is as follows.
Content BusinessIn the Content Business, the Faith Group is actively promoting new product development in response to
the market environment including the ongoing popularization of smartphones, changing lifestyles, etc.
We are also linking different services together and installing them onto platforms with a view toobtaining diversified earnings, performing validation of the results of service contents and marketability
including of our existing businesses, and promoting measures aimed at increasing added value such as
improving functions and combining services. These efforts are not limited to Japan but are also focusedon developing our business globally including in the Asian region where high rates of future growth are
expected. In this way, we are continuously striving to harness opportunities for new growth.
FaRao Pro is a store-use solution service for restaurants and retailers equipped with BGM functions inaddition to essential functions for in-store operations such as sales promotion. In partnership with sales

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agencies, we are currently attempting to expand this service’s scale of introduction through sales,
acoustic construction, and securing a maintenance network with a focus on as-yet undeveloped small
stores and shops in addition to chain stores. In future, in consideration of overseas development, we willcontinue to target the creation of new BGM markets both overseas and in Japan.
Fans’, a one-stop system that supports a full range of artist activities from fan club operation to sales of
e-tickets for live performances, etc., began full-scale operations in April 2015 as a music businessintegration platform that makes use of the Faith Group’s diverse music and artist-related service
functions. In future too, we plan to continue adding functions necessary for promoting exchanges
between artists and fans in order to further expand the number of users of this system.
In the education communication field, the Faith Group has worked on the development of a system thatcombines a contact notebook function for child-rearing facilities and parents or guardians together witha lost child prevention function. We will introduce this system on a trial basis at a child-rearing facility
as a service for watching children from a variety of angles in August 2015. A growing need exists for
smartphone-based services designed to support education and the introduction of such services is being
considered at both national and local government level. We are aiming to launch one such system atchild-rearing facilities nationwide on a gradual basis while making use of the Group’s rich store ofaccumulated contents digital distribution knowhow.
As a result of the above developments, taking into account the decline in sales of services to featurephone users and the ongoing positive deployment of new services in line with the changing market
environment, the Content Business recorded net sales of ¥1,125 million (an increase of 3.0% year onyear). Moreover, as a result of reductions in subcontracting costs and in advertising and promotional
expenses, operating income increased by ¥32 million year on year to ¥33 million (previous fiscal year
operating income: ¥0).
Point Service BusinessIn the Point Service Business, although there was an increase in the number of new points issued byparticipating stores, sales of eco-points decreased following the end of the government-administered
reconstruction support home appliance eco-point system. As a result, this business recorded net sales of¥571 million, a decrease of 2.4% compared with the same period of the previous fiscal year.
Furthermore, due to an decrease in the recovery of old points in accordance with the transfer to server
management-based operation and a revision of procurement costs, operating income for this businessincreased by 165.8% year on year to ¥53 million.
Columbia Business
Amid the severe environment facing the music and video-related industry in line with the continuing
shrinking of the music market, the Columbia 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 the performance of this business segment, due mainly to improved sales of animation-related
titles in the Sales/Digital Distribution Business and to a general increase in sales of products in the
Direct Sales Business, overall sales by the Columbia Business totaled ¥2,998 million, an increase of
8.4% compared with the same quarter of the previous fiscal year. As for the profit and loss situation,
due to the increase in sales together with a steep decline in overall fixed costs stemming from theimplementation of career change support measures, etc., for the purpose of organizational reform during
the previous fiscal year, this business segment recorded an operating income for the first quarter underreview of ¥71 million, an improvement of ¥485 million year on year (previous fiscal year operating
loss: ¥413 million).
*The product and service names appearing in this document are trademarks or registered trademarks of Faith, Inc. either
in Japan or in other countries.

(2) Explanation ofFinancial Position
Total assets as of June 30, 2015 decreased by ¥1,351 million compared to the end of the previous
consolidated fiscal year to ¥24,483 million. This result was mainly due to decreases in accounts andnotes receivable, commercial products and cash held in trust for the purpose of obtaining treasury stock.

3

Total liabilities decreased by ¥1,141 million compared to the end of the previous consolidated fiscal
year to ¥6,970 million. This result was mainly due to decreases in accounts and notes payable, accrued
expenses payable, and arrears.
Net assets decreased by ¥209 million compared to the end of the previous consolidated fiscal year to¥17,513 million. This was mainly due to an increase in treasury stock held.
As a result of the above, the equity ratio increased by 2.6 percentage points to 68.1%.

(3) Explanation of Consolidated earnings forecasts
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 15, 2015.

2. Summary Information(1) Transfer of Important Subsidiaries in the Quarterly Period under Review:Not applicable.

(2) Adoption of Special Accounting Methods forPreparation of 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.

(3) Changes in Accounting Principles, Procedures, and Disclosure Methods(Changes in Accounting Principles)
From the current first quarter term consolidated accounting term, we have applied the AccountingStandard for Business Combinations (Accounting Standards Board of Japan (ABSJ) Statement No. 21,
issued on September 13, 2013, hereinafter referred to as the Business Combinations AccountingStandard), the Accounting Standard for Consolidated Financial Statements (ABSJ Statement No. 22,
issued on September 13, 2013, hereinafter referred to as the Consolidated Accounting Standard), and the
Accounting Standard for Business Divestitures (ABSJ Statement No.7, September 13, 2013, hereinafterreferred to as the Business Divestitures Accounting Standard). Also, the balance due to changes in the
Company’s equity with respect to the subsidiaries continuing under the Company’s control is recorded
as a capital surplus, and the accounting method has been changed to recording this as expenses during
the consolidated accounting year in which acquisition-related costs arise. Moreover, for businesscombinations that take place after the beginning of the first quarter of the current consolidated
accounting year, the method has been changed to reflect the revision of the proportional amount of theacquisition cost according to the settlement of the provisional accounting treatment in the quarterly
consolidated financial statements for the consolidated quarterly accounting period to which the businesscombination date belongs. In addition, changes have been made in the method of presenting thequarterly net income, etc., and the method of presentation has been changed from “minority interests” to“non-controlling interests”. In order to reflect the said presentation changes, we have also revised the
Quarterly Consolidated Financial Statements and Consolidated Financial Statements accordingly.
Concerning the application of the Business Combinations Accounting Standard, etc. the Company isfollowing the transitional measures decided in the Business Combinations Accounting Standard Section
58-2 (4), the Consolidated Accounting Standard Section 44-5 (4), and the Business Divestitures
Accounting Standard Section 57-4 (4), and is applying them from the beginning of the first quarter ofthe current consolidated fiscal year and for the foreseeable future.
These changes will have no material impact on the Group’s retained earnings or profitability.

43. Consolidated First Quarter Financial Statements(1) Consolidated Balance Sheet
FY 2014(As of March 31, 2015)(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
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

5(Unit: thousands of yen)
1st Quarter of FY 2015

(As of June 30, 2015)

13,135,625
2,868,673
242,969
536,992
314,11474,82455,37821,503
986,469(49,909)18,186,640

12,978,016
2,059,633
243,164
378,193287,323
40,72356,283
18,693
800,444(55,005)
16,807,470

2,983,139

2,972,334

1,940,390
793,9112,734,302

1,914,598
795,4632,710,061

1,571,280
631,994(272,217)
1,931,057
7,648,498
25,835,139

1,661,490
623,285(290,911)
1,993,863
7,676,260
24,483,730

1,133,715
546,120
17,7302,431,769
124,473
64,30939,828160,593
1,967,451
6,485,992

913,361
551,120
17,7072,131,616
103,378
44,391
39,20287,4101,560,017
5,448,206

739,020645,695
23,793
182,465
35,003
1,625,977
8,111,969

688,240
616,171
19,339164,293
33,9701,522,014
6,970,221(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
Minority interests
Total net assets
Total liabilities and net assets

6(Unit: thousands of yen)
1st Quarter of FY 2015

FY 2014(As of March 31, 2015)(As of June 30, 2015)

3,218,000
3,708,355
10,938,929(1,254,787)
16,610,496

3,218,000
3,708,355
10,939,940(1,457,351)
16,408,943

215,116
5,399
87,627

195,131(8,620)83,912

308,143
58,591
745,938
17,723,169
25,835,139

270,423
48,427785,715
17,513,509
24,483,730

(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 or loss
Non-operating income
Interest income
Dividend income
Interest on securities
Gains on investment partnership management
Exchange gain
Miscellaneous receipts
Total non-operating income
Non-operating expenses
Interest paid
Investment loss on equity method
Losses on investment partnership management
Exchange loss
Miscellaneous expenses
Total non-operating expenses
Ordinary income or loss
Extraordinary income
Gains on reversal of subscription rights to shares
Gains on step acquisitions
OthersTotal extraordinary income
Extraordinary losses
Losses on disposal of fixed assets
OthersTotal extraordinary losses
Net income or net loss before income taxes
Corporate, local, and business taxes
Income taxes - deferred
Net income or loss for the current quarter
Net income or loss for the current quarter attributable tonon-controlling interests
Net income or loss for the current quarter attributable toshareholders of the parent company

7

1st Quarter of FY 2014

1st Quarter of FY 2015

(April 1-June 30, 2014)
4,445,100
2,828,565
1,616,535
2,007,871(391,336)(April 1-June 30, 2015)
4,695,909
2,855,367
1,840,541
1,675,544
164,997

2,346
4,058
35
－
－
4,893
11,334

1,413
1,977
34
3,327
158
5,499
12,410

2,489
959
2,240
557
412
6,659
(386,661)

3,959
4,259
－
－
882
9,101
168,306－－－－

10,164
13,186
1,370
24,721－－－(386,661)
89,479(799)(475,341)(181,869)

3,799
500
4,299
188,727
97,235(7,749)99,24143,308(293,471)

55,933

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

Net income or loss for the current quarter
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

8

1st Quarter of FY 2014

1st Quarter of FY 2015

(April 1-June 30, 2014)(475,341)(April 1-June 30, 2015)
99,241

15,616(19,776)(2,223)28,266
41,659(433,681)(14,078)(7,288)△41,142
58,099(265,016)

18,213(168,664)

39,885

(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(Segment Information)
Ⅰ 1st quarter of the previous consolidated fiscal year/FY 2014 (April 1, 2014 through June 30, 2014)

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

Point Service Columbia

Total

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

Net sales
Sales to externalcustomers
Intersegment sales
or transfer amount
Total
Segment income/loss

1,093,507

586,018

2,765,574

4,445,100－

4,445,100

32,0192

5,317

37,340(37,340)－

1,125,527

586,0212,770,892

4,482,440(37,340)

4,445,100

950

20,298(413,399)(392,150)

814(391,336)

Notes: 1. The segment loss adjustment amount of ¥814 thousand is calculated by eliminating intersegment transactions.
2. Segment income/loss is 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 2015 (April 1, 2015 through June 30, 2015)

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

Point Service Columbia

Total

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

Net sales
Sales to externalcustomers
Intersegment sales
or transfer amount
Total
Segment income/loss

1,125,972

571,8072,998,129

4,695,909－

4,695,909

49,264171

8,077

57,512(57,512)－1,175,236

571,978

3,006,207

4,753,422(57,512)

4,695,909

33,656

53,95971,705

159,321

5,675

164,997

Notes: 1. The segment loss adjustment amount of ¥5,675 thousand is calculated by eliminating intersegment transactions.
2. Segment income/loss is 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.

9