BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE FULL FISCAL YEAR ENDED 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.

May 13, 2022
Faith, Inc. (Stock code 4295, Listed on TSE 1st section)(URL http://www.faith.co.jp/)
Representative: Hajime Hirasawa, CEO/President
Contact: Chikayo Suzuki, CFO/Executive Officer
Tel: +81-3-6855-7811
Date of General Meeting of Shareholders: June 24, 2022
Date of Submission of Annual Security Report: June 27, 2022
Starting Date of the Dividend Payment: June 27, 2022
Preparation of Supplementary Materials for Financial Results: Applicable/May 31, 2022
Information Meeting for Financial Results to be Held: Applicable/May 30, 2022 (forInstitutional Investors and Analysts)
Amounts are rounded down to the nearest JPY 1 million.

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

Net SalesYear ending
March 2022
March 2021

Millions of yen

Operating Income

%
△23.4
△0.5

15,311
19,911Millions of yen

%
－
98.2

△92
763

Ordinary Income

Millions of yen

136
821

Net Income Attributable
to the Shareholders of the
Parent Company
Millions of yen

%
△83.3
74.2

%
－
－

△333
△26

(Note) Comprehensive income: fiscal year ending March 2022: △537 million (—%); fiscal year ending March 2021: 1,314 million (—%)

Net Income per
Share

Year ending
March 2022
March 2021

Diluted Net
Income per Share

Return on Equity
CapitalOrdinary Incomeon Total Assets

Operating Income
on Net Sales

Yen
—
—

%
△1.9
△0.2

%
0.5
3.2

%
△0.6
3.8

Yen
△26.41△2.09(Reference) Equity in earnings of associated companies: fiscal year ending March 2022: ¥33 million;
fiscal year ending March 2021: ¥4 million(2) Consolidated Financial Position
Total Assets

Year ending
March 2022
March 2021

Net Assets

Millions of yen

Millions of yen

25,291
26,702

17,117
17,627

Ratio of Equity Capital

Net Assets per Share

%
67.7
66.0

Yen
1,355.09
1,395.33(Reference) Equity capital: fiscal year ending March 2022: ¥17,117 million; fiscal year ending March 2021: ¥17,627 million(3) Consolidated Cash Flow Results
Cash Flow fromOperating Activities

Year ending
March 2022
March 2021

Cash Flow from
Investing Activities

Cash Flow from
Financing Activities

Cash and Cash
Equivalents at Year End

Millions of yen

Millions of yen

Millions of yen

Millions of yen

△104
1,243

△970
△673

△387
△200

11,484
12,9461

2. Dividends
Dividends per Share
(Record dates)

Year ending
March 2021
March 2022
March 2023
(Forecast)

1st
Quarter
Yen

InterimYear-end

Yen

3rd
Quarter
Yen

Yen

Total
(Annual)
Yen

—
—
—

5.00
5.00
5.00

—
—
—

5.00
5.00
5.00

10,00
10.00
10.00

Total Dividend
Payment

Payout Ratio

Dividend on Net
Assets(Consolidated)(Annual)(Consolidated)

Millions of yen

%
—
—
—

128
128

%
0.7
0.7

3. Forecast for the Consolidated Results for the Year Ending March 2023
（from April 1, 2022 to March 31, 2023）(Percentages show changes from the previous year for full-year figures and from the same quarter of the previous year for quarterly figures.)

Net Sales

Full year

Operating Income

Ordinary Income

Net Income
Attributable to the
Shareholders of the
Parent Company

Net Income
per Share

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

17,000

11.0

350

－

345

152.0

295

－

24.55

※ 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) Changes in accounting policy, changes in accounting estimates, and restatements(2)-1. Changes accompanying revisions of accounting standards, etc.: Applicable(2)-2. Changes other than the above: None(2)-3. Changes in accounting estimates: None(2)-4. Restatements: None

(3) Outstanding shares (common shares)(3)-1. Outstanding shares at the end of the fiscal years (including treasury stock):
The fiscal year ending March 2022: 13,831,091 shares
The fiscal year ending March 2021: 13,831,091 shares(3)-2. Treasury stock at the end of the fiscal year:
The fiscal year ending March 2022: 1,198,938 shares
The fiscal year ending March 2021: 1,197,855 shares(3)-3. Average number of shares during the accounting period
The fiscal year ending March 2022: 12,632,559 shares
The fiscal year ending March 2021: 12,629,621 shares(Note)The number of shares of treasury stock at the end of the fiscal year includes those shares (257,200 shares for the fiscal year
ending March 2022, 257,200 shares for the fiscal year ending March 2021) contributed as trust assets of theperformance-linked stock compensation plan. In addition, these shares are included in the shares of treasury stock deductedin calculating the average number of shares during the accounting period (257,200 shares for the fiscal year ending March
2022, 261,483 shares for the fiscal year ending March 2021).

2

(Reference) Overview of Non-Consolidated Results
Results for the Fiscal Year Ending March 2022 (From April 1, 2021 to March 31, 2022)(1) Non-Consolidated Operating Results(Percentages indicate changes compared with the previous fiscal year.)

Net Sales

Operating Income

Ordinary Income

Net Income

Year ending
March 2022

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen

%

1,969

△11.5

△513

－

△421

－

△436

－

March 2021

2,227

3.4

△380

－

△230

－

△566

－

Net Income per ShareYear ending
March 2022
March 2021

Diluted Net Income per ShareYen△34.55△44.82Yen——(2) Non-Consolidated Financial Position
Total Assets

Year ending
March 2022
March 2021

Net Assets

Ratio of Equity Capital

Net Assets per Share

Millions of yen

Millions of yen%

Yen

18,94619,80915,992
16,73784.4
84.5

1,266.02
1,324.90(Reference) Equity capital: fiscal year ending March 2022: 15,992 million; fiscal year ending March 2021: ¥16,737 million* 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. Overview of Operating Results, etc., (4) Future Outlook” on page 5 of theaccompanying material.
(To obtain supplemental documents relating to financial results)
Supplemental Materials for Financial Results are posted on the company website on May 31, 2022.

3

Accompanying Material Contents
1. Overview of Operating Results, etc.……………………………………………………………………2(1) Overview of Operating Results for the Current Term…………………………………………… 2(2) Overview of Financial Position for the Current Term …………………………………………… 5(3) Overview of Cash Flow for the Current Term …………………………………………………… 5(4) Future Outlook…………………………………………………………………………………… 5(5) Basic Policy on Profit Allocation and Current Term/Next Term Dividend Distribution………… 6(6) Business Risks …………………………………………………………………………………… 6
2. Basic Philosophy on Selection of Accounting Standards………………………………………………93. Consolidated Financial Statements and Main Explanatory Notes…………………………………… 10(1) Consolidated Balance Sheet…………………………………………………………………....…10(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income … 12
(Consolidated Statement of Income) …………………………………………………………… 12(Consolidated Statement of Comprehensive Income) ………………………………………… 13(3) Consolidated Statement of Changes in Shareholders’ Equity……………………………………14(4) Consolidated Statement of Cash Flows………………………………………………………… 15(5) Notes Concerning the Consolidated Financial Statements……………………………………… 18(Notes Concerning the Premise of a Going Concern) ……………………………………………18(Changes in Accounting Policy) ………………………………………………………………....18(Segment Information, etc.) …………………………………………………………………… 19(Per Share Information) ………………………………………………………………………… 22(Significant Subsequent Events) …………………………………………………………………22

1

1. Overview of Operating Results, etc(1) Overview of Operating Results for the Current Term
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%,
greatly exceeding the 70.1% of households owning one or more personal computers (*1). In addition,
while the movement away from television has continued since the year 2000, mainly centered on theyoung, advertising expenses for the Internet in Japan increased by 21.4% in 2021 from the previous yearto ¥2,705.2 billion, exceeding the combined advertising expenses for the four largest mass media sectors(newspapers, magazines, radio, and television) of ¥2,453.8 billion for the first time (*2). This trend isalso evident worldwide, where global spending on digital advertising reached approximately ¥40 trillion(US$355.7 billion) in 2021, an increase of 29.1% from the previous year, with spending on digitaladvertising exceeding 50% of total spending on advertising for the first time (*3).
*1. Source: Ministry of Internal Affairs and Communications, 2020 Telecommunications Usage Trend Survey Results*2. Source: Dentsu Inc., 2021 Advertising Expenditures in Japan*3. Source: Dentsu Group Inc., Global Ad Spend Forecasts (2021-2024)

In the entertainment market in 2021, sales in the global music market centered on streaming services
grew by 18.5% year over year to approximately ¥3,367 billion (US$25.9 billion), marking its seventh
consecutive year of growth and recording its highest sales total since the beginning of this century (*4).
In Japan, the production value of music software including music videos was almost unchanged fromthe previous year at ¥193.6 billion, and while sales of packaged products continued to decline, paid
music distribution sales increased by 14% to ¥89.5 billion. In the paid music distribution sales category,subscription audio streaming increased by 26% year over year to ¥74.4 billion, accounting for 83% of
total paid music distribution sales (*5).
However, the impact of the novel coronavirus infection forced the postponement or cancellation ofmajor events and live concerts, causing the live entertainment market in 2020 to shrink by 82.4% fromthe previous year to 110.6 billion yen (*6). 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 streamed, the scale of the pay-per-view online live performance market in 2020 isestimated to have reached ¥44.8 billion (*7). In 2021, music events at real venues began to resume inaccordance with the infection prevention guidelines based on the Japanese government's basic response
policy, and the total number of live performances held between January and June of that year was
216.2% higher than for the same period of 2020 and 64.0% higher than for the same period of 2019 (*8).
*4. Source: IFPI, Global Music Report 2022
*5. Source: Recording Industry Association of Japan (RIAJ), The Recording Industry in Japan 2022
*6. Source: PIA Research Institute, Japanese Live Entertainment Market Size Preliminary Report (published May 13, 2021)*7. Source: PIA Research Institute, Japanese Online Live Entertainment Market Survey*8. Source: All Japan Concert and Live Entertainment Promoters Conference (A.C.P.C.), Basic Survey, 2021, 1st Half

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 thediversification of media such as streaming, user upload content (UUC) that allows general users toeasily transmit information to society, and social media, with the result that all kinds of activities in themusic 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 newservices in response to the changing market environment, which includes platforms that collect andorganize the information flooding the Internet and provide this to users after increasing its added value.
In June 2020, Faith released Thumva, a new live streaming platform, as an Internet viewing service thatprovides a novel kind of live experience. In addition to group viewing and comment posting, it also
includes a gifting function for artists, allowing users to share a sense of excitement and unity as if they2

were attending a live performance without actually being at the venue. A diverse lineup of live
performances by numerous artists and online experiential attractions have already been made available
on Thumva, and we are planning to continue live streaming with an even broader variety of lineups in
future. Since the launch of the service, about 340 performances have been distributed and the number ofregistered members has grown to over 170,000 (as of March 2022).
Utilizing the resources of Thumva, we launched Thumva BIZ in July 2021 as a new online service forstores that allows customers who wish to make inquiries or consult online to begin business negotiations
with a single click. We are proposing an online store-style service that meets the needs of the digitaltransformation era, and companies in various industries have already introduced this service. In
September 2021, we entered into a business partnership with Nippon Travel Agency, Inc., with a viewto marketing our services. Through that company’s nationwide sales network, we are planning toprovide Thumva BIZ and a number of other Faith Group services in future. Moreover, in February 2022,
we began providing the service to HIS, thereby revamping that company’s online consultation service.
Thumva BIZ will continue to expand its sales channels as a new DX service for stores in a variety offields, particularly in face-to-face customer service industries.
One of Tokyo’s largest music lounges, the Faith-operated PLUSTOKYO, is continuing to operate while
taking necessary measures in accordance with the Tokyo Metropolitan Government’s guidelines forpreventing the spread of COVID-19, including the declaration of a state of emergency with regard to
COVID-19 infections, priority measures to help limit the further spread of the disease, and measures toprevent its reemergence. As a new initiative, we have organized limited-time menus and exhibition
projects in collaboration with artists and creators of anime works. In addition, from April 2022, the 12F
main floor and the rooftop floor resumed operations in tandem, offering a fusion of art, food, andentertainment elements centered on music. We will continue to place the highest priority on preventing
the spread of infections and ensuring safety, and we will continue to operate PLUSTOKYOKO
carefully in accordance with administrative policies and action plans.
In the Label Business, we welcomed Mr. Tatsumi Yoda (President and CEO of GAGA Corporation,
Chairman of T.Y. Limited), who has been making innovative and significant contributions to the music
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., whichbecame a wholly owned subsidiary of 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 ourmain office functions, which were previously dispersed throughout the company, into the Minami
Aoyama Office, which has been completely renovated. In anticipation of changes in behavioral patterns
and the establishment of new values, we are committed to realizing diverse and efficient new ways ofworking based on the concept of “activity-based working” (*9). In the future, we will continue topromote our business activities with the aim of improving management efficiency and profitability.
*9. A way of working that allows individuals to choose their workspace and style according to their work contents.

Regarding the Faith Group’s business performance for the fiscal year ended March 2022, as a result ofyear over year decreases in merchandise sales in the Point Service Business and in sales in the LabelBusiness, the Group reported a 23.4% decrease in net sales to ¥15,311 million, an operating loss of ¥92
million (compared with an operating income of ¥763 million yen for the previous fiscal year), and an
83.3% decrease in ordinary income to ¥136 million. As a result, the Group posted a net loss attributableto owners of the parent company of ¥333 million (compared to a net loss attributable to shareholders of
the parent company of ¥26 million for the fiscal previous 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 fiscal year ended March 2022.
In accordance with this change, compared with the previous accounting method, during the current
fiscal year net sales decreased by ¥3,409 million, operating losses decreased by ¥3 million, ordinary
income increased by ¥3 million, and income before income taxes and minority interests increased by ¥3
million. For details, please refer to “3. Consolidated Financial Statements and Important Explanatory
Notes, (5) Notes Concerning the Consolidated Financial Statements (Changes in Accounting Policy)”
on page 18.
3

Information on each business segment is as follows.
Content BusinessIn the Content Business, as sales in the existing distribution business continue to decline, the FaithGroup will redouble its efforts to invest in new growth areas, including new product development andthe interlinking and platforming of various services to capture diversified profit-earning opportunities.
We are actively developing sales activities for FaRao PRO, focusing not only on providing BGM forcommercial use, but also on expanding the functions necessary for store operation, such as solutions forstore branding and announcement functions. In the future, our objective will continue to be the creation
and revitalization of new BGM markets.
In Fans’, our platform of services for artists based on the D2C (*10) 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 artists’ 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 creators send out by strengthening ties via SNS. In addition, by offering a service thatallows more artists to freely disseminate their work and information, we are aiming to acquire andexpand the number of users and improve the quality of the service by pursuing enhanced convenience.
*10. 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 fiscal year ended March 2022, due to a decrease insales of carrier official website services and self-restraint of store operations in accordance withgovernment recommended measures against the spread of COVID-19, the Content Business recorded
net sales of ¥2,255 million (a decrease of 23.0% year over year), and an operating loss of ¥641 million(compared with an operating loss of ¥599 million for the previous fiscal year).
The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) andother relevant standards have been applied from the beginning of the fiscal year ended March 2022. In
accordance with this change, compared with the previous accounting method, net sales in this segment
decreased by ¥554 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
from planning 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 83.4% year over year to ¥579 million and operating
income decreased by 56.2% year over year to ¥141 million.
The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) andother relevant standards have been applied from the beginning of the fiscal year ended March 2022. In
accordance with this change, compared with the previous accounting method, net sales in this segment
decreased by ¥1,867 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.
Regarding the performance of this segment, mainly due mainly to lower sales of animation titles andlower royalties from the use of high-profit-margin sound sources by Nippon Columbia Co., Ltd., net
4

sales decreased by 8.1% year over year to ¥12,476 million, and operating income decreased by 60.7%
year over year to ¥407 million.
The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) andother relevant standards have been applied from the beginning of the fiscal year ended March 2022. In
accordance with this change, compared with the previous accounting method, net sales in this segment
decreased by ¥987 million and operating income increased by ¥3 million.
*Product and service names appearing in this document are trademarks or registered trademarks of Faith, Inc. either in Japan or in othercountries.

(2) Overview of Financial Position for the Current Term
Total assets as of the end of the consolidated fiscal year ended March 31, 2022 decreased by ¥1,410
million from the end of the previous fiscal year to ¥25,291 million, a year-on-year decrease of 5.3%.
This result was mainly attributable to decreases in cash and deposits and investment and other assets.
Total liabilities decreased by ¥900 million compared with the end of the previous fiscal year to ¥8,174
million, a year-on-year decrease of 9.9%. This result was mainly attributable to decreases in asset
retirement obligations and deferred tax liabilities.
Net assets decreased by ¥509 million compared with the end of the previous fiscal year to ¥17,117
million, a year-on-year decrease of 2.9%. This result was mainly attributable to outgoings for thepayment of dividends and to a net loss attributable to shareholders of the parent company. The equity
ratio became 67.7%.

(3) Overview of Cash Flow for the Current Term
Cash and cash equivalents at the end of the consolidated fiscal year ended March 31, 2022 decreased by¥1,462 million to ¥11,484 million, a decrease of 11.3% compared with the end of the previous fiscal
year.
Details of cash flow during the fiscal year under review and its main contributory factors were as
follows:(Cash flow from operating activities)
Cash flow from operating activities amounted to an outflow of ¥104 million (compared with an inflowof ¥1,243 million for the previous fiscal year), attributable mainly to an income before income taxes andminority interests of ¥8 million, expenditure of ¥198 million in respect of depreciation and amortization,
expenditure of ¥124 million in respect of amortization of goodwill, and expenditure of ¥620 million in
respect of income taxes paid income taxes paid, etc.
(Cash flow from investing activities)
Cash flow from investing activities amounted to an outflow of ¥970 million (compared with an outflow
of ¥673 million for the previous fiscal year), attributable mainly to expenditure of ¥637 million in
respect of the acquisition of tangible fixed assets, expenditure of ¥154 million in respect of theacquisition of software, and expenditure of ¥157 million for the acquisition of shares of affiliates, etc.
(Cash flow from financing activities)
Cash flow from financing activities amounted to an outflow of ¥387 million (compared with an outflow
of ¥200 million for the previous fiscal year), due mainly to expenditure of ¥258 million in respect of
repayment of long-term loans and expenditure of ¥128 million in respect of dividend payments, etc.

(4) Future Outlook
The Faith Group’s business performance forecasts for next consolidated fiscal year (FY 2022; ending
March 31, 2023) are for net sales of ¥17,000 million, operating income of ¥350 million, ordinary
income of ¥345 million, and net income attributable to the shareholders of the parent company of ¥295
million.
The Faith Group is anticipating changes in behavioral patterns fostered by the prolongation of the
COVID-19 pandemic and the establishment of new values after the pandemic ends. In addition, we willsecure funds with a view to swiftly make strategic and flexible investments in the entertainment5

industry and respond quickly and flexibly to changes in the business environment.

(5) Basic Policy on Profit Allocation and Current Term/Next Term Dividend Distribution
Faith Inc. will continue its policy of giving priority to securing the funds necessary for strengthening its
business structure and making aggressive business investments. At the same time, it also recognizes thereturn of profits to shareholders to be an important management task. For this reason, the Company willconsider the payment of dividends, taking into account its operating results and financial position while
keeping in mind the above-described situation.
As initially announced, the Company is planning to pay a dividend of ¥10 per share for the current
fiscal year (including an interim dividend of ¥5 that has already been paid), based on the decision of theBoard of Directors to continue to make flexible payments to shareholders regardless of the timing of theannual general meeting of shareholders. For the next fiscal year, based on its fundamental policy of
paying continuous stable dividends, the Company is planning to pay a dividend of ¥10 per share(including an interim dividend of ¥5).

(6) Business Risks
1) Risks related to business content
Content Business(a) Business environment
The Faith Group develops new markets by creating services that users want to use based on original
business solution proposals and develops content services and wide-ranging enterprise support services
through tie-ups with leading companies in various fields such as content providers. Competition isintense in the content business that the Group and its collaborating content providers are striving todevelop, and it is possible that the number of new entrants in this business will continue to increase in
future. If unit prices of content decrease due to price competition, etc., if the content services of theGroup and its collaborating content providers fail to meet the needs of users, or if the number of users
decreases, then there is a possibility that sales will not expand.
In some cases, the Group may provide server construction and operation services in order to meet theneeds of content provider customers. In so doing, the Group makes every effort to prevent operational
management failures, and even in the unlikely event of such a failure occurring, we take emergency
measures and have a system in place that allows us to restore operation quickly by remote control.
However, in the case that unavoidable failures occur due to natural disasters, etc., which make it
difficult to provide services for an extended period, this may adversely affect the Group’s performance.
(b) Quality control
The Faith Group makes every effort to ensure quality control by operating a thorough system supported
by technological development. However, even after the customer company's acceptance inspection, if
deficiencies, discrepancies or defects are found in the Group's technology, in the case that a user suffersa loss as a consequence of using a product or service that employs the Group’s technology, this may
adversely affect the Group’s current or future business performance.
(c) Legal regulations
Increasing damage caused by illegal acquisition and modification of data on the Internet and by leakageof personal information has led to the development of legal regulations in Japan as elsewhere. The FaithGroup’s operations are related to the business of distributing content via the Internet, so in the case thatlaws and regulations or voluntary restraints between businesses are established in this field, or if theapplication of laws and regulations becomes clear, there is a possibility that the Group’s businessdevelopment will be restricted and that costs may be incurred with regard to the implementation ofcountermeasures.
Point Service Business
The Faith Group sells points to participating point member stores, and in order to prepare for the costburden of using points, with regard to the balance of unexchanged points among issued points, therequired amount that is expected to be used in future is estimated and recorded as a provision based on
6the past point collection rate. However, if points are exchanged in excess of the estimated amount, thismay adversely affect the Group’s business performance.
Label Business(a) Economic situation and market environment
The Faith Group's main businesses, including the sale and distribution of music and video titles such as
CDs and DVDs, and the Sales/Digital Distribution Business, are affected by the economic conditions in
the regions and countries where these products are sold. Many of the Group's products are notnecessarily indispensable for consumers, and their sales are strongly influenced by market trends,
consumer preferences and consumption behavior. For this reason, if the demand for the products ofmusic and video-related industry in general declines due to a recession or reduced consumer spending,the Group's business performance and financial condition may be adversely affected. An increase inillegal copying and downloading is considered to be one of the factors causing the current decline insales of music and video-related titles and the contraction in the overall scale of the music andvideo-related industry. Competition in the music and video-related industry is intensifying in thisshrinking market, and this has a significant effect on the Group's sales and profitability. Digital music
distribution has become popular in recent years, and the Group is focusing its efforts on this field aswell. However, the expansion of this market may have a negative impact on sales of the Group’s
conventional products such as music CDs. Due to the recent revision of the Japanese Copyright Act,
downloading of illegal copies is now prohibited, and consequently it is expected that the number ofillegal downloads will decrease, but illegal downloads from illegal distribution sites still appear to be ata high level, which is likely to adversely affect the Group’s sales. Moreover, in the music market, pricecompetition is intensifying, as can be seen in the release of low-priced CDs, which may adversely affect
the Group’s business performance and financial condition.
(b) Music works and artists
Most of the revenue generated by the Faith Group’s business depends on the creation of hits by popularartists, and the stability and growth of the Group’s management derives from the creation of artists andmusic works that are expected to become hits. The Group will continue to discover and develop new
artists who will be accepted by consumers, but since the creation of hit titles involves complex and
uncertain factors such as consumer preferences and trends, lack of success at producing hits may
adversely affect the Group’s business performance and financial condition.
(c) Performance plan
The Faith Group's sales and profitability rest on a low proportion of fixed and continuous income, andare strongly influenced by the sales situation of individual music titles. Since the sales situation changes
due to a number of factors such as the trends of the times and consumer preferences, sales may fall
below the forecast levels predicted from past results so that the targets specified in the initial
performance plan may not be achieved. In addition, the production of music CDs and other products
may be postponed or canceled due to factors involving artists, production, and manufacturing and sales
outsourcing, which may cause the Group’s performance to fall below the level specified in the initial
performance plan. For this reason, it is difficult to predict business performance elements such as sales
forecasts, and a decline in profit for a specific quarter may change the business performance plan andaffect the business performance. In the manufacturing and sales contract business, depending on thecircumstances of individual business partners, the subcontractor may be changed from the Group toanother subcontractor, which may be a factor in driving the Group’s actual business performance below
level specified in the initial performance plan.
(d) Retail price maintenance system and return prevention measures
Under the Antimonopoly Act, copyrighted works such as music CDs, newspapers, books, etc. may belegally resold under a resale price maintenance system (resale system). Although there is no guaranteethat the system will last forever, the Japan Fair Trade Commission has announced it’s view that it isreasonable to leave the system in place for the foreseeable future. Moreover, in recent years, thecopyright law has been revised to protect the interests of copyright holders of music CDs produced
locally under license agreements for the purpose of selling them in Asia at low cost. A so-called return
prevention measure has been introduced to prohibit the import of commercial records produced for the
purpose of distribution overseas under certain conditions. If in the future, the Antitrust Law or
Copyright Act is reviewed, there is a possibility that the Faith Group’s sales may be reduced.
7

(e) Returns
Due to the resale system for products such as music CDs, retailers cannot set the selling price freely.
Instead, there is a business practice under which retailers can return products within a certain range. For
this reason, some products that do not sell well may be returned in the future. The Faith group properly
prepares a reserve for return adjustments based on past returns and other provisions, and is preparing forthis eventuality, but if more returns occur due to unexpectedly poor sales, etc., there is a possibility that
the Group’s business performance may be adversely affected by a decrease in sales and profit.
2) Intellectual property rights
The Faith Group has filed patent applications and trademark applications related to its technology, and
the Group intends to continue making similar promotion efforts in future. With respect to intellectual
property rights such as patent rights, trademark rights, copyright (“intellectual property rights”), theGroup is strengthening its efforts to protect these rights and to prevent infringements. However, it isdifficult to predict how the intellectual property rights of third parties will be applied to the Group’sbusiness. For example, in the future, if a patent right related to the Group’s business model or to related
technology is established by a third party, or if a patent right not recognized by the Group is established,
there is a possibility that the Group may be required to compensate the patent holder for damages
related to the infringement of the said patent right, or it may become impossible for the Group tocontinue to conduct all or part of the business related to the patent. In addition, even if the patent holder
allows the use to continue, payment of a license fee may be obligated, and in such a case, this may
adversely affect the Group’s performance.
Among the intellectual property rights owned by the Group, rights such as copyrights and neighboringrights represent one of the strengths of the Group’s business. However, there is a possibility that third
parties may infringe on the rights regarding songs sold by the Group or for which the Group holds rights
or that the Group may unintentionally infringe the rights of third parties. Such copyright infringements
may adversely affect the Group’s business performance and financial condition.
3) Leakage of personal information
Regarding the protection of personal information, the Faith Group has established a personal
information protection policy for the purpose of completing the internal system and instilling anawareness of compliance among its employees, as well as exercising the utmost caution in conducting
internal education and implementing security measures for information systems. However, if personal
information is leaked for some reason, it may damage the Group’s social credibility and adversely affectits business performance and financial condition.
4) Disposal of businesses
The Group conducts business reviews as appropriate, which may result in losses if it decides to sell or
dispose of related assets. On the other hand, the Group actively considers business tie-ups with othercompanies, and there is a possibility that such business tie-ups may adversely affect the Group’sbusiness performance and financial condition.
5) Pension system
The Group has established a defined benefit corporate pension plan for beneficiaries and a pension planfor employees that combine a lump-sum retirement allowance plan with a defined contribution pension
plan. In future, if pension asset management yields decline or if the actuarial assumptions or theassumptions used to calculate retirement benefit obligations are changed, retirement benefit obligations
and retirement benefit expenses may increase, which could adversely affect the Group’s businessperformance and financial condition.
6) Influence of COVID-19 infection
In keeping with the Japanese Government’s request for stores to practice self-restraint in retail
operations and for individuals to refrain going out unnecessarily in order to limit the spread of the novel
coronavirus (COVID-19) infection, it is expected that personal consumption will remain sluggish andstore visits will decline, and that depending on the progress of the situation, the call to refrain from retail
activities and the closing of store facilities may be prolonged. This may affect the Group’s businessperformance. In addition, if COVID-19 infections occur affecting the Group’s head office, businessoffices, store facilities, artists, production, manufacturing and sales consignees, etc., there is a8possibility that this may hinder the Group’s business activities and affect its business performance andfinancial condition.

2. Basic Philosophy on Selection of Accounting Standards
For the present, the Faith Group is following a policy of producing its consolidated financial statements
under Japanese standards in the interest of maintaining comparability between the financial statementsof its constituent companies. Furthermore, concerning the future application of the International
Financial Reporting Standards (IFRS), we intend to respond appropriately based on the movements ofother companies, etc.

9

3. Consolidated Financial Statements and Main Explanatory Notes(1) Consolidated Balance Sheet(Unit: thousands of yen)

(Assets)
Current assets
Cash and deposits
Accounts and notes receivable
Marketable securities
Commercial products
Products in progress
Primary materials and inventory goods
Corporation tax refunds receivable, etc.
Contract assets
Other current assets
Allowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Buildings and structures
Accumulated depreciation
Buildings and structures (net base)Machinery and delivery equipment
Accumulated depreciation
Machinery and delivery equipment (net base)Tools, devices and equipment
Accumulated depreciation
Tools, devices and equipment (net base)Land
Construction in progress
Total tangible fixed assets
Intangible fixed assets
Software
Goodwill
Other intangible fixed assets
Total intangible fixed assets
Investment and other assets
Investment securities
Deferred tax assets
Other investment and other assets
Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

10

FY 2020(As of March 31, 2021)

FY 2021(As of March 31, 2022)

12,997,014
2,018,712
229,796366,536
491,10958,592
71,062－519,948△18,669
16,734,103

11,536,650
2,046,903
224,003
336,103499,421104,241
141,976370
639,337△18,325
15,510,681

2,154,482△906,742
1,247,739
612,271△568,857
43,413
991,444△894,614
96,8291,558,120－
2,946,103

2,160,563△823,266
1,337,297
613,451△573,884
39,567
1,003,309△922,471
80,837
1,558,120
438,3133,454,136

144,550
1,395,695
213,226
1,753,472

118,913
1,270,938
267,486
1,657,338

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

3,528,354
705,202
1,071,430△635,348
4,669,638
9,781,112
25,291,794

(Unit: thousands of yen)

(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 point card certificates
Reserve for sales returns
Contract liabilities
Asset retirement obligations
Other current liabilities
Total current liabilities
Fixed liabilities
Long-term loans payable
Net defined retirement liabilities
Reserve for stock benefits for directors
Asset retirement obligations
Deferred tax liabilities
Other fixed liabilities
Total fixed liabilities
Total liabilities(Net assets)
Shareholder's equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholder's equity
Other accumulated comprehensive income
Valuation difference on marketable securities
Foreign currency translation adjustments
Accumulated adjustment for retirement benefits
Total other accumulated comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

11

FY 2020(As of March 31, 2021)

FY 2021(As of March 31, 2022)

964,025
340,000
258,700
741,426
2,796,448
371,157
352,424251
55,441－
146,892
1,140,484
7,167,251

1,401,065
340,000
217,700
678,160
2,888,759
119,451
238,261－－
49,569－689,1096,622,077

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

162,150
542,544
39,691
39,283765,118
3,191
1,551,979
8,174,057

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

3,218,000
2,840,498
10,393,392△1,122,330
15,329,560

1,987,860△30,807
34,7191,991,773－
17,627,646
26,702,542

1,740,714△8,881
56,343
1,788,177－
17,117,737
25,291,794

(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 operating loss (△ = loss)
Non-operating income
Interest income
Dividend income
Interest on marketable securities
Gain on foreign exchange
Gain on equity method investment
Gain on investment partnership management
Subsidy income
Miscellaneous receipts
Total non-operating Income
Non-operating expenses
Interest paid
Loss on valuation of investment securities
Loss on investment partnership management
Miscellaneous expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sale of fixed assets
Gain on sale of investment securities
Total extraordinary income
Extraordinary losses
Loss on disposal of fixed assets
Loss on liquidation of subsidiaries
Loss on valuation of investment securities
Loss on sale of investment securities
Office relocation expenses
Impairment losses
Total extraordinary losses
Current term net income before taxes
Corporate, local, and business taxes
Income taxes - deferred
Total corporate, local, and business taxes
Current term net income net income or net loss (△ = net
loss)
Current term net income or net loss attributable tonon-controlling interests (△ = net loss)
Current term net income or net loss attributable toshareholders of the parent company (△ = net loss)

12

FY 2020(April 1, 2020 ~March 31, 2021)
19,991,491
12,611,702
7,379,788
6,616,353
763,435

FY 2021(April 1, 2021 ~March 31, 2022)
15,311,830
9,495,071
5,816,758
5,908,760△92,001

278
3,922
15
759
4,458
181,822
46,63434,516272,408

125
4,259
11
568
33,407
153,510
234,878
16,987443,749

5,530
1,131
202,951
4,425
214,038
821,804

4,419
6,586
201,816
1,997
214,820
136,927

3,909
－
3,909

141
34,11434,25558,516－
26,757
4,931
135,768
137,369
363,342462,371
571,052△82,255
488,79742
29,756104,940－－
28,336
163,075
8,106
235,436
106,323
341,759△26,425△333,652－－△26,425△333,652

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

FY 2020(April 1, 2020 ~March 31, 2021)
Current term net income net income or net loss (△ = net
loss)
Other comprehensive income
Valuation difference on other marketable securities
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

13

FY 2021(April 1, 2021 ~March 31, 2022)△26,425△333,652

1,250,623△9,781
99,834
1,340,676
1,314,251△247,145
21,925
21,624△203,595△537,248

1,314,251△537,248－－

(3) Consolidated Statement of Changes in Shareholders’ Equity
FY 2020 (April 1, 2020 ~ March 31, 2021)(Unit: thousands of yen)
Shareholders’ equity
Capital stock Capital surplus
Balance at beginning of period
Cumulative effects of changes inaccounting policies
Balance at beginning of period
reflecting change in accounting policy

Retainedearnings

Treasury stock

Total shareholders’equity3,218,000

2,840,095

10,854,165△1,124,344

15,787,916

3,218,000

2,840,095

10,854,165△1,124,344

15,787,916

Changes of items during period
Dividend of surplus△128,914△128,914

Net gain or net loss (△) attributable
to shareholders of parent company△26,425△26,425

Acquisition of treasury stock
Disposal of treasury stock572△1,137△1,137

3,862

4,434

Increase/decrease in equity resulting
from acquisition of shares of
consolidated subsidiaries
Changes in non-equity items during
period (net amount)
Total changes during period
Balance at end of period－

572△155,340

2,725△152,043

3,218,000

2,840,667

10,698,825△1,121,619

15,635,873

Accumulated other comprehensive income

Balance at beginning of period
Cumulative effects of changes inaccounting policies
Balance at beginning of period
reflecting change in accounting
policyValuation
Foreigndifference
currency
on othertranslation
marketableadjustments
securities

Retirement
benefitrelated
adjustments

Total otheraccumulatedcomprehensive income

Minority
Interests

737,236△21,026△65,114651,096－

16,439,012

737,236△21,026△65,114651,096－

16,439,012

Total net
assetsChanges of items during period
Dividend of surplus△128,914

Net gain or net loss (△) attributable
to shareholders of parent company△26,425

Acquisition of treasury stock△1,137

Disposal of treasury stock
Increase/decrease in equity resulting
from acquisition of shares of
consolidated subsidiaries
Changes in non-equity items during
period (net amount)

4,434

1,250,623△9,781

99,834

1,340,676

Total changes during period

1,250,623△9,781

99,834

1,340,676－

1,188,633

Balance at end of period

1,987,860△30,807

34,7191,991,773－

17,627,646

14

1,340,676

FY 2021 (April 1, 2021 ~ March 31, 2022)(Unit: thousands of yen)
Shareholders' equity
Capital stock Capital surplus
Balance at beginning of period
Cumulative effects of changes inaccounting policies
Balance at beginning of period
reflecting change in accounting policy

3,218,000

2,840,667

Retainedearnings
10,698,825

Treasury stock

Total shareholders’equity△1,121,619

15,635,873

157,121
3,218,000

2,840,667

10,855,946

157,121△1,121,619

15,792,994

Changes of items during period
Dividend of surplus△128,900△128,900

Net gain or net loss (△) attributable
to shareholders of parent company△333,652△333,652

Acquisition of treasury stock
Disposal of treasury stock△90

Increase/decrease in equity resulting
from acquisition of shares of
consolidated subsidiaries

△78

△838

△838

126

36
△78

Changes in non-equity items during
period (net amount)
Total changes during period
Balance at end of period

－

△168

△462,553△711△463,433

3,218,000

2,840,498

10,393,392△1,122,330

15,329,560

Accumulated other comprehensive income

Balance at beginning of period
Cumulative effects of changes inaccounting policies
Balance at beginning of period
reflecting change in accounting
policyValuation
Foreigndifference
currency
on othertranslation
marketableadjustments
securities

Retirement
benefitrelated
adjustments

Total otheraccumulatedcomprehensive income

Minority
Interests△30,807

34,7191,991,773－

1,987,860

Total net
assets17,627,646
157,121

1,987,860△30,807

34,7191,991,773－

17,784,767

Changes of items during period
Dividend of surplus△128,900

Net gain or net loss (△) attributable
to shareholders of parent company△333,652△838

Acquisition of treasury stock
Disposal of treasury stock
Increase/decrease in equity resulting
from acquisition of shares of
consolidated subsidiaries
Changes in non-equity items during
period (net amount)

36△78△247,145

21,925

21,624△203,595

Total changes during period△247,145

21,925

21,624△203,595－△667,029

Balance at end of period

1,740,714△8,881

56,343

1,788,177－

17,117,737

15△203,595

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

FY 2020(April 1, 2020 ~March 31, 2021)
Cash flow from operating activities
Income or loss (△) before income taxes, etc.
Depreciation expenses
Impairment losses
Gain or loss on liquidation of subsidiaries (△ = gain)
Amortization of goodwill
Increase/decrease in allowance for doubtful accounts (△ =decrease)
Increase/decrease in reserve for bonuses (△ = decrease)
Increase/decrease in allowance for unexercised sales
promotion points (△ = decrease)
Increase/decrease in net defined retirement liabilities (△ =decrease)
Increase/decrease in for stock benefits for directors (△ =decrease)
Interest and dividend income
Interest on marketable securities
Gain or loss on valuation of marketable securities (△ = gain)
Interest paid
Subsidy 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 sale of investment securities (△ = gain)
Gain or loss on evaluation 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)
Increase/decrease in consumption tax receivable (△ =increase)
Increase/decrease in consumption tax payable (△ = decrease)
OthersSub-total
Subsidy income received
Interest and dividends received
Interest paid
Income tax refunded
Income tax paid
Net cash flow from operating activities

16

FY 2021(April 1, 2021 ~March 31, 2022)

462,371369,913
137,369－
124,757

8,106
198,744
28,33629,756
124,757

62,396

49,661

4,999△114,162

△112

△251

△75,231△34,377

16,728

6,561△4,201
△15
1,131
5,530
△46,634△387△4,458△4,385
△11
6,586
4,419
△234,878－△33,40721,12848,306

4,931
26,75758,516△58,645
185,317△71,621△34,114104,940
42△164,168△23,896
437,039△39,436△87,162

135,786
367,254
1,684,143
46,634
4,201△5,272
68,295△554,940
1,243,063△140,395
34,730210,778
234,878
4,386△4,67771,062△620,494△104,067

(Unit: thousands of yen)

FY 2020(April 1, 2020 ~March 31, 2021)
Cash flow from investing activities
Expenditure for payments into term deposits
Expenditure for acquisition of tangible fixed assets
Income from sale of tangible fixed assets
Expenditure for retirement of tangible fixed assets
Expenditure for acquisition of software
Expenditure for acquisition of shares of affiliates
Expenditure for acquisition of investment securities
Income from sale of investment securities
Income from share of profits from investment partnerships
Income from collection of loans receivable
Expenditure for security deposits
Income from collection of security deposits
Expenditure for fulfillment of asset retirement obligations
OthersNet cash flow from investing activities
Cash flow from financing activities
Expenditure for repayment of long-term borrowing
Income from 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 the beginning of the year
Cash and cash equivalents at the end of the year

17

FY 2021(April 1, 2021 ~March 31, 2022)－△438,063
3,909△41,279△110,816－△100,999
9,253
76,899
270
△438
104
－
△72,772△673,934△2,000△637,747
141－△154,466△157,405△40,000
40,30768,362－△9,000190,469△146,724△122,457△970,521△271,700
200,000△1,137
618△128,171－△200,390△7,578△258,700－△838
36△128,195△78△387,775－

361,160△1,462,364

12,585,834
12,946,994

12,946,994
11,484,630

(5) Notes Concerning the Consolidated Financial Statements(Notes Concerning the Premise of a Going Concern)
Not applicable(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 otherrelated standards from the beginning of the first quarter of the current fiscal year. Based on thisstandard, revenue the Company expects to receive in exchange for the provision of goods andservices 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
recognized when points were issued to customers and cost of sales was recognized when the points
were used, since these transactions correspond to repurchase agreements with a right of return, theCompany 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 frommusic users, etc., was previously recognized as revenue, but since the Company conducts thesetransactions as an agent, the Company now recognizes revenue as the net amount received frommusic users, etc., minus the amount paid to copyright holders. Moreover, in the past, revenue frommusic licensing fees for karaoke music in the Label Business was recognized on a one-time basis,but as a result of examining the identification and satisfaction of performance obligations, theCompany now recognizes revenue over a certain period of time. Furthermore, for sales with a rightof return in the Label Business, the total amount of consideration was previously recognized asrevenue at the time of sale, and an adjustment allowance for sales returns was recorded based onrecords of previous sales returns, but the Company now recognizes revenue as the total amount ofconsideration excluding the amount of consideration for merchandise that is expected to be returned.
With regard to the Accounting Standard for Revenue Recognition, in accordance with the transitional
treatment stipulated in the provisions of Paragraph 84 of the Accounting Standard for Revenue
Recognition, the cumulative effect of retrospectively applying the new accounting policy prior to thebeginning of the first 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 beginning balance of the current fiscal year.
As a result, for the current consolidated fiscal year, net sales decreased by ¥3,409,871 thousand, costof sales decreased by ¥3,079,316 thousand, selling, general and administrative expenses decreasedby ¥333,566 thousand, the operating loss decreased by ¥3,011 thousand, ordinary income increasedby ¥3,011 thousand, and net income before income taxes and minority interests increased by ¥3,011
thousand. In addition, the balance of retained earnings at the beginning of 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 theprevious 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 84 of the Accounting Standard for
Revenue Recognition, information disaggregating revenue from contracts with customers for theprevious fiscal year is not presented.
(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 first quarter of the current fiscal year, and in accordance with the transitional
treatment stipulated in Paragraph 19 of the Accounting Standard for Fair Value Measurement andParagraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July18

4, 2019), the new accounting policy stipulated by the Accounting Standard for Fair Value
Measurements will be applied in the future. This change has no impact on the Company’s
consolidated financial results.

(Segment Information, etc.)[Segment Information]
1. Outline of reportable segments
The Company’s reportable segments provide financial information separated according to its
various structural units and are also subject to periodic review when the Board of Directors
decides on the allocation of business resources and makes performance appraisals. The FaithGroup’s main businesses are the Content Business, the Point Service Business, and the LabelBusiness.
Content BusinessIn order to promote its Multi-Content and Multi-Platform Strategy, the Faith Group’s Content
Business is providing one-stop solutions ranging from the construction of distribution systems
and the operation of services for end-users to the planning and production of digital contents.
Main companies involved in this business: Faith, Inc. and Faith Wonderworks, Inc.
Point Service Business
The Faith Group is engaged in the Point Service Business, which is aimed at the retail industry.
Main company involved in this business: GoodyPoint Co., Ltd.
Label Business
The Label Business encompasses planning, production and sales of sound sources and videos,music rights acquisition and management, and contracted production and sales of sound source
and video products for other companies, etc.
Main companies involved in this business: Nippon Columbia Co., Ltd. and DREAMUSIC Inc.
2. Calculation method for sales, profit or loss, assets, liabilities and other items by reportablesegment
The accounting method for the reportable business segments is in accordance with the accounting
policies adopted for preparing the consolidated financial statements.
For the profit figures of the reportable segments, the operating income base figures are used.
Inter-segment sales and transfer amounts are decided in consideration of the market price andother factors.

19

3.

Information on sales, profit or loss, assets, liabilities and other items by reportable segment
Previous consolidated fiscal year/FY 2020 (April 1, 2020 ~ March 31, 2021)
Content

Reportable segment
Point
Label
Service

Total(Unit: thousands of yen)Amountrecorded in
Consolidated
Financial
Statements

Adjustment
amount(Notes1, 2 & 4)(Note 3)
Sales
Sales to external customers
2,929,600
3,488,147
13,573,742
19,991,491
19,991,491－
Inter-segment sales or
192,330276
22,395215,002△215,002－
transfer amountTotal
3,121,930
3,488,424
13,596,138
20,206,493
19,991,491△215,002
323,554
1,037,495
761,626
1,808
763,435
Segment profit or loss (△)△599,423
Segment assets
12,461,013
1,474,861
13,940,816
27,876,692 △1,174,149
26,702,542
Other items
Depreciation expenses
114,186
15,525
241,479
371,190369,913△1,277
Amortization of goodwill
4,000
120,757
124,757
124,757－－
Investment in equity-method
51,646
91,523
143,170
143,170－－
affiliates
Increase in tangible and464,546
6,912
77,421
548,880
548,880－
intangible fixed assets(Notes)1. The segment profit or loss adjustment amount of ¥1,808 thousand is calculated by eliminating intersegment
transactions.
2. The segment assets adjustment amount eliminates intersegment transactions, etc.
3. Segment profit is adjusted with operating income in the consolidated financial statements.
4. The adjustment amount for depreciation expenses represents the elimination of inter-segment transactions.

Current consolidated fiscal year/FY 2021 (April 1 2021 ~ March 31, 2022)
Content

Reportable segment
Point
Label
Service

Total(Unit: thousands of yen)Amountrecorded in
Consolidated
Financial
Statements

Adjustment
amount(Notes1, 2 & 4)(Note 3)
Sales
Revenue from contracts with
2,255,012
579,882
12,476,935
15,311,830
15,311,830－
customers
Sales to external customers
2,255,012
579,882
12,476,935
15,311,830
15,311,830－
Inter-segment sales or
346,551
13,13728,057387,746△387,746－transfer amountTotal
2,601,563
593,020
12,504,993
15,699,577
15,311,830△387,746
141,851
407,221259
Segment profit or loss (△)△641,333△92,261△92,001
Segment assets
11,428,289
1,392,098
13,674,242
26,494,630 △1,202,835
25,291,794
Other items
Depreciation expenses
97,377
15,54385,824
198,744
198,744－
Amortization of goodwill
4,000
120,757
124,757
124,757－－
Investment in equity-method
243,289
90,693
333,982
333,982－－
affiliates
Increase/decrease in tangible
680,609
7,763
107,969
796,342792,214△4,128and intangible fixed assets(Notes)1. The segment profit or loss adjustment amount of ¥1,364 thousand is calculated by eliminating intersegment
transactions.
2. The segment assets adjustment amount eliminates intersegment transactions, etc.
3. Segment profit is adjusted with operating income in the consolidated financial statements.
4. The adjustment amount for the increase/decrease in tangible and intangible fixed assets represents theelimination of inter-segment transactions.

20

4. Matters related to changes in reportable segments, etc.
As described in the “Changes in Accounting Policies” section above, the Accounting Standard for
Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and other related standards havebeen applied from the beginning of the beginning of the current fiscal year, with the result thatthe 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 current fiscal year, compared with the previous method, in theContent Business net sales decreased by ¥554,913 thousand and in the Point Service Businessnet sales decreased by ¥1,867,016 thousand, but in both cases, there was no impact on segment
income or loss, while in the Label Business net sales decreased by ¥987,941 thousand andsegment income increased by ¥3,011 thousand.
[Related Information]
Previous consolidated fiscal year/FY 2020 (April 1, 2020 ~ March 31, 2021) and current
consolidated fiscal year/FY 2021 (April 1 2021 ~ March 31, 2022)
1. Information by product and service
This information is omitted because similar information appears in [segment information].
2. Information by region(1) Sales: Information on sales by region is omitted because sales to external customers inJapan account for over 90% of the net sales amount reported on the consolidated statementof income.
(2) Tangible fixed assets: Information on tangible fixed assets by region is omitted because
the amount of tangible fixed assets in Japan accounts for over 90% of the amount oftangible fixed assets reported on the consolidated balance sheet.
3. Information on major customers
Information on major customers is omitted because there were no sales to a single externalcustomer accounting for 10% or more of net sales on the consolidated statement of income.
[Information on Impairment Losses on Fixed Assets for Each Reportable Segment]
Previous consolidated fiscal year/FY 2020 (April 1, 2020 ~ March 31, 2021)(Unit: thousands of yen)Content
Impairment losses

Point
ServiceLabel－

137,369－

Total
137,369

Company-wide/
elimination－

Total
137,369

Current consolidated fiscal year/FY 2021 (April 1 2021 ~ March 31, 2022)(Unit: thousands of yen)Content
Impairment losses

Point
ServiceLabel－

28,336－

Total
28,336Company-wide/
elimination－

Total
28,336[Information on Amortization of Goodwill and Unamortized Balance for Each Reportable Segment]
Previous consolidated fiscal year /FY 2020 (April 1, 2020 ~ March 31, 2021)(Unit: thousands of yen)Content
Year-end balance

5,000

Point
Service
－

Label

Total

1,390,695

1,395,695

Company-wide/
elimination－

Total
1,395,695(Note) Information on amortization of goodwill is omitted as this information appears in [Segment Information].

Current consolidated fiscal year/FY 2021 (April 1 2021 ~ March 31, 2022)(Unit: thousands of yen)Content
Year-end balance

1,000

Point
Service
－

Label

Total

1,269,938

1,270,938

Company-wide/
elimination－

Total
1,270,938(Note) The amount of amortization of goodwill is omitted as this information appears in [Segment Information].

21

[Information on Gains on Negative Goodwill by Reportable Segment]
Previous consolidated fiscal year/FY 2020 (April 1, 2020 ~ March 31, 2021) and current
consolidated fiscal year/FY 2021 (April 1 2021 ~ March 31, 2022)
Not applicable(Per Share Information)(Unit: yen)

FY 2020 (April 1, 2020 ~ March 31, 2021)
Net assets per share
1,395.33
Net loss (△) per share△2.09

FY 2021 (April 1 2021 ~ March 31, 2022)
Net assets per share
1,355.09
Net loss (△) per share△26.41(Notes)1. The amount of net income per share fully diluted during the current fiscal year and diluted net income per sharefor the previous fiscal year are not recorded because there are no residual shares subject to a dilution effect.
2. The basis of the calculation of net loss per share is as follows.
FY 2020
FY 2021(April 1, 2020 ~ March 31,(April 1 2021 ~ March 31,
2021)
2022)

Net loss (△) per share
Net loss (△) attributable to the shareholdersof the parent company (thousands of yen)Amount not attributable to ordinary
shareholders (thousands of yen)
Net loss (△) pertaining to common stock
attributable to the shareholders of the parent
company (thousands of yen)
Average number of shares outstanding during
the period (shares)△26,425△333,652－－△26,425△333,652

12,629,621

12,632,559(Note) The Company's shares contributed as trust assets for the performance-linked stock compensation plan are included in theamount of treasury stock deducted in the calculation of the average number of shares during the period for the purposeof calculating the net loss per share (261,483 shares for the previous fiscal year ending March 2021, and 257,200 sharesfor the current fiscal year ending March 2022).

3. The basis of the calculation of net assets per share is as follows.
End of FY 2020(as of March 31, 2021)

Total amount of net assets (thousands of yen)Amount deducted from total amount of net
assets (thousands of yen)
(Of which, non-controlling interests(thousands of yen))
Year-end net assets pertaining to common
stock (thousands of yen)
Year-end number of shares of common stock
used in calculating net assets per share(shares)(Significant Subsequent Events)
Not applicable22

End of FY 2021
(as of March 31, 2022)

17,627,646

17,117,737

－

－

(－)

(－)

17,627,646

17,117,737

12,633,236

12,632,153