BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE 3rd QUARTER OF THE FISCAL YEAR ENDING MARCH 2017
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.

February 14, 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: February 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 3rd Quarter of the Fiscal Year Ending March 2017
(From April 1, 2016 to December 31, 2016)(1) Consolidated Operating Results(Percentages indicate changes compared with the same quarter of the previous fiscal year.)

Net Sales

Operating Income

Q3 of the year ending

Millionsof yen%March 2017
March 2016

15,686
15,2972.5
8.0

Millionsof yenOrdinary Income

%

1,686
1,225

Millionsof yen

37.6
—

%

1,601
1,220

Net Income
Millionsof yen

31.2
—

%

625
584

7.0
—

(Note) Comprehensive income: 3rd quarter of the fiscal year ending March 2017: ¥1,388 million (54.4%); 3rd quarter of fiscal year ending
March 2016: ¥899 million (—%)

Net Income per
Share

Diluted Net
Income per Share

Yen
63.40
57.32

Yen
—
—

Q3 of the year ending
March 2017
March 2016

(2) Consolidated Financial Position
Total Assets

Ratio of Equity Capital

Net Assets Per Share

Millions of yen

Millions of yen%

Yen

25,93418,09162.2

1,634.44

24,712

16,82962.9

1,576.18

Q3 of the year ending
March 2017
Year ending March 2016

Net Assets(Reference) Equity capital: 3rd quarter of fiscal year ending March 2017: ¥16,130 million; fiscal year ending March 2016: ¥15,556 million

2. Dividends
Dividends per Share
(Record dates)

Year ending March 2016
Year ending March 2017

1st Quarter

yen
—
—

3rd Quarter

Interim

yen
5.00
5.00

Year ending March 2017
(Forecast)

yen
—
—

Year-end

yen
10.00

5.00

10.00

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

1

Total

yen
5.00

3. Forecast for the Consolidated Results for the Year Ending March 2017（from April 1，2016 to March 31，2017）(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%

20,700

2.7

1,600

4.3

1,470

△3.9

760

17.6

Net Income
per Share
Yen
77.01

(Note) Forecasts for dividends have 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 3rd quarter of the fiscal year ending March 2017: 11,960,000 shares
The fiscal year ending March 2016: 11,960,000 shares(ii) Treasury shares at the end of the fiscal years:
The 3rd quarter of the fiscal year ending March 2017: 2,091,130 shares
The fiscal year ending March 2016: 2,090,390 shares(iii) Average number of shares at the interim accounting period
The 3rd quarter of the fiscal year ending March 2017: 9,869,309 shares
The 3rd quarter of the fiscal year ending March 2016: 10,198,854 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.

2

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

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2
3
4

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

4
4
4
4

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
7
8
9
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1. Qualitative Information Concerning the Settlement of Accounts for the 3rd Quarter(1) Explanation Concerning the Operating Results
In the Japanese domestic information communication field, the number of Internet users is continuing torise against the backdrop of the growing popularity of ICT terminals such as smartphones and thefurther improvement and expansion of the Internet utilization environment. Moreover, in line with theincreasing availability of equipment compatible with virtual reality (VR) and augmented reality (AR),the creation of VR- and AR-compatible contents and platforms is proceeding apace and the Internet
service market is also expected to further expand in future.
In the music contents market, it is becoming commonplace for people to listen to music obtained via theInternet, and the environments in which people enjoy music are changing to encompass streaming anddistribution of VR- and AR-compatible music videos. From now on, it will become even more
important for the Faith Group to promptly provide services that match the tastes and lifestyles ofconsumers.
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-Device Strategy of creating environments in which people can enjoy a wide
diversity of contents whenever and wherever they choose. We are also strengthening the developmentof new services in response to the changing market environment such as platforms that collect andorganize the information flooding the Internet and then provide this to users after increasing its added
value. Moreover, in the Content Business, we are continuing to focus our energies on constructing
music service platforms and expanding and reinforcing our diverse music distribution businesses bymaking effective use of in-group business synergies.
Regarding the Faith Group’s business performance for the third quarter of the fiscal year ending March
2017, although the Content Business suffered declines in both revenue and profitability while the Point
Service Business experienced a rise in revenue and a decline in profitability, in the Columbia Businesssales of animation-related titles and game software and sales in Columbia’s artist management-related
business were promising. As a result, the Group’s net sales increased by 2.5% compared with the samequarter of the previous fiscal year to ¥15,686 million, operating income increased by 37.6% year on
year to ¥1,686 million, ordinary income increased by 31.2% year on year to ¥1,601 million, and net
income attributable to the shareholders of the parent company for the quarter under review increased by
7.0% year on year to ¥625 million.
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. We are proceeding with measures to enhance the added value of our contents,
such as functional improvement and linkage with other services, by verifying the results of service
contents and marketability, including with regard to existing businesses, while also proceeding withplatformization in the interests of achieving income diversification.
We are positively conducting our sales activities for FaRao PRO related not only to providing
commercial-use BGM but also to implementing functional expansion and improvements, such as shop
branding solutions and announcement functions, which are necessary for shop operations. Recently, for
Kawasaki Plaza—a brand store of Kawasaki Motors Corporation Japan—we produced and distributed
an original channel designed to enhance the effectiveness of store exhibitions by selecting music basedon an analysis of the emotions people feel when listening to music conducted using a technology basedon affective science and engineering. We are continuously attempting to provide further improved
services while introducing and expanding the use of FaRao PRO.
In addition, following the introduction of FaRao PRO in France, we have started the FaRao PRO
business in Indonesia after establishing PT. Faith Neo Indonesia as a local subsidiary based in thecapital of Jakarta. We are considering the global deployment of music content distribution and its

2

associated distribution system as one of the pillars the Faith Group’s future business growth, beginningwith in the rapidly growing Asian countries. In future, we will endeavor to develop new musicbusinesses overseas.
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 works andinformation, we are aiming to acquire new users an expanding membership, and we will endeavor to
improve the quality of the service by pursuing usability.
As a result of the above developments, and 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 ¥3,330 million (an decrease of 4.1% year onyear), and an operating loss of ¥9 million (compared with operating income of ¥137 million for theprevious fiscal year).
Point Service BusinessIn the Point Service Business, despite a delay in the start up of new business, sales of new points issued
by participating point card stores remained robust and the self liquidation business (*1) performed well,with the result that this business recorded net sales of ¥1,814 million, an increase of 3.1% year on year.
However, due to increases selling and general administration expenses in connection with investment intalented human resources, operating income decreased by 52.1% year on year to ¥74 million.
*1. A campaign in which users can purchase various goods at a discount by saving points in the form of seals, etc.

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.
Due mainly to higher sales of animation-related titles and game software titles and to an improved sales
performance in the artist management-related business, overall sales by the Columbia Business totaled¥10,541 million, an increase of 4.7% compared with the same quarter of the previous fiscal year. As forthe profit and loss situation, due to increased sales of high-margin products launched in previous years,
this business segment recorded an operating income for the first quarter under review of ¥1,620 million,
an increase of 74.8% year on year.
*The product and service names appearing in this document are trademarks or registered trademarks of each company
and each group.

(2) Explanation Concerning the Financial Position
Total assets as of December 31, 2016 increased by ¥1,221 million compared to the end of the previous
consolidated fiscal year (March 31, 2016) to ¥25,934 million. This result was mainly due to increases incash and deposits, and accounts and notes receivable.
Total liabilities decreased by ¥40 million compared to the end of the previous consolidated fiscal year to¥7,842 million. This result was mainly due to repayment of loans.
Total net assets increased by ¥1,262 million compared to the end of the previous consolidated fiscal
year to ¥18,091 million. This result was mainly due to the recording of a quarterly net income
attributable to the shareholders of the parent company and to the payment of dividends.

3(3) Explanation Concerning Future Forecast Information on the Consolidated Financial
Results, etc.
The Company has revised its previous performance forecast for the full financial year, which was issued
on November 7, 2016.
① Revised Consolidated Forecast for the Full Year Ending March 31, 2017
(April 1, 2016 ~ March 31, 2017)
Net income
Net sales

Operating

Ordinary

attributable toincomeincomeshareholders ofparent company

Previous forecast (A)Revised forecast (B)Difference (B - A)
Increase/decrease rate (%)

Net income pershare ofcommon stock(Millions of yen)

(Millions of yen)

(Millions of yen)

(Millions of yen)

(Yen)

20,00020,700
700

1,570
1,600
30

1,470
1,470
—

600
760
160

60.79
77.01

3.5

1.9

—

26.7

20,163

1,534

1,529

646

(Ref.) Actual results for theyear ending March 31, 2016

63,86

② Reason for Revision
Regarding the forecast of financial results for the full year, due to favorable sales of animation-related
titles in the Columbia Business’s Sales/Digital Distribution Business as well as to a robust performanceby the Point Service Business, the Faith Group’s overall net sales are expected to be higher than was
originally forecast.
Moreover, due to an anticipated gain on the sale of shares held by the Company and despite a scheduled
partial impairment of assets, the net income attributable to the shareholders of the parent company is
expected to exceed the previously announced forecast figure.

2. Summary Information(1) Changes in Major Subsidiaries during the 3rd Quarter
Not applicable(2) 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 3rdquarter 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)(Application of Practical Solution on a Change in Depreciation Method Due to Tax Reform 2016)
In accordance with the revision to the Corporation Tax Act of Japan, with effect from the beginning of
the first quarter of the current consolidated accounting year, the Company has applied the “Practical
Solution on a Change in Depreciation Method Due to Tax Reform 2016” (Accounting Standard Boardof Japan Practical Issues Task Force Solution No. 32, June 17, 2016). Accordingly, the Company haschanged the depreciation method for facilities attached to buildings and structures acquired on and after
April 1, 2016 from the declining-balance method to the straight-line method.
This change has no material impact on the Group’s retained earnings or profitability in the 3rd quarter ofthe current consolidated accounting year.

43. Consolidated Financial Statements(1) Consolidated Balance Sheet
FY 2015(As of March 31, 2016)(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)
3rd Quarter of FY 2016

(As of Dec. 31, 2016)

12,680,124
2,388,481
242,521508,709
202,043
47,624
7,492
12,341
920,570△52,908
16,957,000

14,146,281
2,551,171
231,509535,239
283,569
45,05240,6568,618
477,826△19,483
18,300,443

2,894,315

2,828,209

1,959,316
874,354
2,833,671

1,858,999
901,857
2,760,856

1,753,502
554,302△280,607
2,027,196
7,755,183
24,712,183

1,709,515
638,289△303,198
2,044,606
7,633,672
25,934,115

995,288686,120
16,1332,541,442
189,734
66,14733,874
92,333
1,627,967
6,249,041

1,312,801
686,120
9,067
2,668,083
263,368
41,97046,99275,1301,431,130
6,534,665

816,650
609,261
8,028
152,646
46,744
1,633,331
7,882,373

541,820546,9132,401
174,004
42,464
1,307,604
7,842,269

(Net assets)
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ 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
Holdings of non-controlling shareholders
Total net assets
Total liabilities and net assets

6(Unit: thousands of yen)
3rd Quarter of FY 2016

FY 2015(As of March 31, 2016)(As of Dec. 31, 2016)

3,218,000
3,707,197
11,480,657△3,038,502
15,367,352

3,218,000
3,707,686
12,007,705△3,039,386
15,894,005

198,282△8,446△928

251,998△14,575△1,315

188,908
42,7341,230,815
16,829,810
24,712,183

236,108
15,691
1,946,041
18,091,846
25,934,115

(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
Miscellaneous receipts
Total non-operating income
Non-operating expenses
Interest paid
Loss on investment partnership management
Investment loss on equity method
Foreign exchange loss
Miscellaneous expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of fixed assets
Gain on change in equity
Gain on step acquisitions
Gain on reversal of subscription rights to shares
OthersTotal extraordinary income
Extraordinary losses
Loss on disposal of fixed assets
Impairment loss
Loss on reevaluation of investment securities
Provision for copyright-related losses
OthersTotal extraordinary losses
Net income 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

7

3rd Quarter of FY 2015

3rd Quarter of FY 2016

(April 1-Dec. 31, 2015)15,297,589
9,145,486
6,152,102
4,926,507
1,225,594(April 1-Dec. 31, 2016)
15,686,616
9,250,790
6,435,825
4,749,698
1,686,127

2,687
5,473
107
10,84014,69333,803

660
5,137
25
23,598
8,052
37,475

11,053
3,162
22,151956
1,146
38,4701,220,927

9,073－
104,338719
8,111
122,243
1,601,359

990
36,22813,18615,8571,512
67,775－－－27,043－27,043

7,021
13,234
5,490
10,0004,140
39,886
1,248,816
239,192△293
1,009,917
425,360

5,398
－
－
－
500
5,898
1,622,503
279,171
2,578
1,340,754
715,012584,557

625,742(Consolidated Statement of Comprehensive Income)(Unit: thousands of yen)

Net income 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 non-controllinginterests

8

3rd Quarter of FY 2015

3rd Quarter of FY 2016

(April 1-Dec. 31, 2015)
1,009,917(April 1-Dec. 31, 2016)
1,340,754△74,653

54,689△14,018△21,864△110,535
899,381△5,804△758
48,126
1,388,880

484,151

672,941

415,229715,939

(3) Notes Concerning the Consolidated Financial Statements(Notes Concerning the Premise of a Going Concern)
Not applicable(Notes in the Case of Significant Changes in the Amount of Shareholders’ Equity)
Not applicable(Segment Information)
Ⅰ 3rd quarter of the previous consolidated fiscal year/FY 2015 (April 1, 2015 through Dec. 31, 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

3,471,830

1,759,508

10,066,249

15,297,589－

15,297,589

104,276

1,524

42,855

148,656△148,656－

Total

3,576,107

1,761,033

10,109,105

15,446,246△148,656

15,297,589

137,808

154,899926,608

1,219,317

6,277

1,225,594

Segment income

Notes: 1. The segment income adjustment amount of ¥6,277 thousand is calculated by eliminating intersegment transactions.
2. Segment income 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 3rd quarter of the current consolidated fiscal year/FY 2016 (April 1, 2016 through Dec. 31, 2016)

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

3,330,555

1,814,397

10,541,663

15,686,616－

15,686,616

84,634－32,861

117,496△117,496－

Total

3,415,190

1,814,397

10,574,525

15,804,112△117,496

15,686,616△9,67574,184

1,620,024

1,684,532

1,594

1,686,127

Segment income/loss(△)

Notes: 1. The segment income or loss adjustment amount of ¥1,594 thousand is calculated by eliminating intersegment transactions.
2. Segment income or 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