BRIEF STATEMENT OF ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED
MARCH 2016 AND FORECASTS FOR THE 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.

May 13, 2016
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: +81-03-5464-7633
Date of General Meeting of Shareholders: June 29, 2016
Date of Submission of Annual Security Report: June 30, 2016
Starting Date of the Dividend Payment: June 30, 2016
Preparation of Supplementary Materials for Financial Results: Applicable
Information Meeting for Financial Results to be Held: Applicable (for Institutional Investors
and Analysts)
Amounts are rounded down to the nearest JPY 1 million.

1. Results for the Fiscal Year Ending March 2016 (From April 1, 2015 to March 31, 2016)(1) Consolidated Operating Results(Percentages indicate changes compared with the previous fiscal year.)

Net SalesYear ending
March 2016
March 2015

Operating Income

Millions of yen

%
2.9
209.1

20,163
19,597

Millions of yen

Ordinary Income
Millions of yen

%
—
—

1,534
△891

Net Income

%
—
—

1,529
△862

Millions of yen

646△3,340%——(Note) Comprehensive income: fiscal year ending March 2016: 1,063 million (—%); fiscal year ending March 2015: △¥3,981 million (—%)

Net Income per
Share

Year ending
March 2016
March 2015

Diluted Net
Income per Share

Return on Equity
CapitalOrdinary Incomeon Total Assets

Operating Income
on Net Sales

Yen
—
—

%
4.0
△17.7

%
6.1
△3.1

%
7.6
△4.6

Yen
63.86
△295.46(Reference) Equity in earnings of associated companies: fiscal year ending March 2016: △¥34 million;
fiscal year ending March 2015: △¥56 million(2) Consolidated Financial Position
Total Assets

Year ending
March 2016
March 2015

Net Assets

Millions of yen

Millions of yen

24,712
25,835

16,82917,723

Ratio of Equity Capital

Net Assets per Share

%
62.9
65.5

Yen
1,576.18
1,540.23(Reference) Equity capital: fiscal year ending March 2016: ¥15,556 million; fiscal year ending March 2015: ¥16,918 million(3) Consolidated Cash Flow Results
Cash
Flow
from
Operating Activities

Year ending
March 2016
March 2015

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

1,800
9

1,266
△1,456△1,497△634

10,9139,346

1

2. Dividends
Dividends per Share
(Record dates)

Year ending
March 2015
March 2016
March 2017
(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

%
—
15.7
65.8

113
104

%
0.6
0.6

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 and the previous interim result.)

Net Sales

First
half
(cumulative)
Full year

Operating Income

Ordinary Income

Net Income

Net Income
per Share

Millions ofyen%Millionsof yen%Millionsof yen%Millionsof yen

%

Yen

9,000

△7.3

△100

—

△110

—

△185

—

△18.7419,000

△5.8

500

△67.4

450

△70.6

150

△76.8

15.20

※ 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
* For details, please refer to “5. Consolidated Financial Statements, (5) A Notes Concerning the Consolidated Financial
Statements (Changes in Accounting Policy)” on page 19 of the accompanying material.

(3) Outstanding shares (common shares)(3)-1. Outstanding shares at the end of the fiscal years (including treasury stock):
The fiscal year ending March 2016: 11,960,000 shares
The fiscal year ending March 2015: 11,960,000 shares(3)-2. Treasury stock at the end of the fiscal year:
The fiscal year ending March 2016: 2,090,390 shares
The fiscal year ending March 2015: 975,480 shares(3)-3. Average number of shares at the accounting period
The fiscal year ending March 2016: 10,116,500 shares
The fiscal year ending March 2015: 11,305,901 shares

2

(Reference) Overview of Non-Consolidated Results
Results for the Fiscal Year Ending March 2016 (From April 1, 2015 to March 31, 2016)(1) Non-Consolidated Operating Results(Percentages indicate changes compared with the previous fiscal year.)

Net Sales

Operating Income

Year ending
March 2016

Millions of yen

%

3,125

28.4

March 2015

2,433

%

△7.2

Net Income

Millions of yen%

Millions of yen

%

△96

—

△47

—

906

—

△586

—

△444

—

△3,022—Net Income per ShareYear ending
March 2016
March 2015

Ordinary Income

Millions of yen

Diluted Net Income per
Share

Yen
89.64
△267.35

Yen——(2) Non-Consolidated Financial Position
Total Assets

Year ending
March 2016
March 2015
(Reference)

Net Assets

Ratio of Equity
CapitalNet Assets per Share

Millions of yen

Millions of yen%

Yen

15,42815,88914,274
15,272

92.5
96.1

1,446.27
1,390.38

Equity capital: fiscal year ending March 2016: ¥14,274 million; fiscal year ending March 2015: ¥15,272 million* Indication of auditing procedures implementation status
This financial results report is exempt from 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 notbeen 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. Analysis of Operating Results and Financial Position, (1) Analysis of Operating
Results” on page 2 of the accompanying material.
(To obtain supplemental documents relating to financial results)
Supplemental Materials for Financial Results were posted on the company website on May 25, 2016.

3

Accompanying Material Contents
1. Analysis of Operating Results and Financial Position………………………………………………… 2(1) Analysis of Operating Results…………………………………………………………………… 2(2) Analysis of Financial Position…………………………………………………………………… 4(3) Basic Policy on Profit Allocation and Current Term/Next Term Dividend Distribution………… 5
2. Overview of the Faith Group…………………………………………………………….…………. 5
3. Management Policies ………………………………………………………………………………… 6(1) The Faith Group’s Basic Management Policy…………………………………………………… 6(2) Medium- and Long-Term Management Strategy…………………………………….…………. 6(3) Challenges the Company Should Address ……………………………………………………… 6
4. Basic Philosophy on Selection of Accounting Standards…………………………………………… 7
5. Consolidated Financial Statements…………………………………………………………………… 8(1) Consolidated Balance Sheet…………………………………………………………………..... 8(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income … 10
(Consolidated Statement of Income) …………………………………………………………… 10(Consolidated Statement of Comprehensive Income) ………………………………………… 11(3) Consolidated Statement of Changes in Shareholders’ Equity………………………………… 12(4) Consolidated Statement of Cash Flows………………………………………………………
14(5) Notes Concerning the Consolidated Financial Statements……………………………………… 16(Notes Concerning the Premise of a Going Concern)…………………………………………… 16(Significant Matters That Constitute the Basis for Preparation of the Consolidated Financial
Statements)………….……….………….………….………….………….………….………… 16(Accounting Standards Issued But Not Yet Applied)…………………………………………… 18(Changes in Accounting Policy).………….………….……….………….………….………… 19(Consolidated Balance Sheet Related) ………………………………………………………… 20(Consolidated Statement of Income Related)…………………………………………………… 20(Consolidated Statement of Comprehensive Income Related) ………………………………… 22(Consolidated Statement of Changes in Shareholders’ Equity Related)………………………… 23(Consolidated Statement of Cash Flows Related) ……………………………………………… 25(Business Combination Related) ……………………………………………………………… 26(Segment Information, etc.) …………………………………………………………………… 27(Per Share Information)………………………………………………………………………… 30(Significant Subsequent Events) ……………………………………………………………… 31(Omission of Disclosure) ……………………………………………………………………… 31

1

1. Analysis of Operating Results and Financial Position(1) Analysis of Operating Results① Business Performance
Amid the increasing worldwide popularization of smartphones, tablets and other highly functional
mobile terminals that has accompanied the completion of the Internet environment, the mainstream
method of accessing the Internet has shifted from PC to smartphone, with the number of Internet users
in Japan accessing via a PC currently standing at 47,350,000, while the number accessing via asmartphone is over 50,000,000 (*1). Also, the smartphone penetration rate among ordinary households
in Japan has risen to 67.4% to exceed the feature phone penetration rate (64.3%) for the first time (*2),
and changes in services are required in line with this ongoing migration to smartphone use.
In the domestic music contents market, in keeping with the expansion of subscription-type music
distribution services that allow users to listen to as much music as they like for a fixed monthly charge,
overall sales in 2015 grew for the first time in three years, increasing by 1% year on year to ¥301,500
million (*3). In the copyright field, music copyright agency e-License merged in February 2016 withJapan Rights Clearance (JRC)—a music copyright management organization in which the Company
holds an equity stake—to form NexTone Inc., a new company that is responding flexibly to thechanging demands of music listeners by providing new music services tailored to meet their needs.
Moreover, in recent years, greater attention is being paid to the importance of protecting the rights todiverse forms of content such as, for example, legislation protecting the rights to music and novels
created by means of artificial intelligence (AI). In future too, against the backdrop of the increasing
Internet and smartphone penetration rates, the migration of users to services appropriate to the digitalera is expected to accelerate. Responding adeptly to the needs of these users in order to keep up withchanging demands over time is becoming increasingly important.
(*1) The Neilson Company, Digital Trends 2015(*2) The Cabinet Office, Economic and Social Research Institute (ESRI), Consumption Trend Survey(*3) The Recording Industry Association of Japan (RIAJ), The Recording Industry in Japan 2016

In this environment, the Faith Group is continuing to utilize the results of the efforts it has been pouring
into content digital distribution ever since its establishment, and is forging ahead with its Multi-Content
and Multi-Platform Strategy of creating an environment that allows people to enjoy a wide diversity ofcontents whenever and wherever they choose. We are also strengthening the development of newservices in response to the changing market environment such as platforms that collect and organize theinformation flooding the Internet and then providing this to users after increasing its added value.
The Group is proceeding with streamlining by deploying human resources flexibly, including throughoffice and management departmental integration at the Group level, in response to the needs of the work
progress situation, busy periods, etc. On July 1, 2015, the Business Development Department of Faith
Wonderworks, Inc., became a 100% subsidiary of the Company through a simple absorption-type split
in the interests of systemic improvement aimed at enhanced efficiency and competitiveness through the
integration and centralization of our production and development resources.
Regarding the Faith Group’s business performance for the full fiscal year ending March 2016, althoughsales of distribution services for feature phone use—the Group’s largest sales category—continued todecrease, as a consequence of launching new services in response to the environment and of the returnto profitability of the Company’s 100% consolidated subsidiary Nippon Columbia Co., Ltd., net sales
increased by 2.9% compared with the previous fiscal year to ¥20,163 million, while the Group recorded
an operating income of ¥1,534 million (compared with an operating loss of ¥891 million for theprevious fiscal year), an ordinary income of ¥1,529 million (compared with an ordinary loss of ¥862
million for the previous fiscal year), and a net income attributable to the shareholders of the parent
company for the fiscal year under review of ¥646 million (compared with a net loss attributable to theshareholders of the parent company of ¥3,340 million for the previous fiscal year).
Furthermore, from the start of the fiscal year under review, we have been applying the AccountingStandard for Business Combinations (ASBJ Statement No. 21 on September 13, 2013), under which“net income” is stated as “net income attributable to shareholders of the parent company”.
2Information on each business segment is as follows.
Content BusinessIn the Content Business, the Faith Group is actively pursuing the development of new services in
response to the market environment including the ongoing popularization of smartphones, changing
lifestyles, etc. We are continuously working to build up our music service platforms by utilizing
business synergies between the Group’s member companies such as by linking together the various
diversified profit-generating functions in the artist business, and we are proceeding with the creationand nurturing of businesses that possess structural strengths.
Equipped with functions that make it possible to provide services essential for artistic activities centeredon music artists, including official site construction, fan club operation, music distribution, etc., theplatform business Fans’, which integrates a variety of the Company’s services, began operating on a fullscale from the end of April 2015. In future too, we will promote the activities of various artists both inJapan and oversees and we will work to further expand the number of users by making efforts to offer awider range of functions and services.
FaRao PRO is a store-use solution service for restaurants and retailers equipped with BGM functions inaddition to essential functions for in-store operations such as sales promotion. In FaRao PRO, apartfrom strengthening the system of operations, acoustic construction, and maintenance in partnership withsales stores, we will attempt to expand the service’s users by targeting offices that are expecting to use it
for mental health purposes as well as for switchover demand from existing stores employing
professional BGM services. Also, we are moving forward with preparations for overseas development
based on current services in Japan and targeting the creation and activation of new BGM markets bothin Japan and overseas.
In keeping with above developments, despite the decline in sales of existing distribution services, as aresult of the ongoing positive deployment of new services in line with the changing market environment,
the Content Business recorded net sales of ¥4,549 million (compared with ¥4,550 million for theprevious fiscal year). Moreover, factoring in reductions in costs including subcontracting costs,
advertising and promotional expenses, and the loss recorded by the Company’s newly consolidated
subsidiary, the Content Business’s operating income decreased by 23.5% year on year to ¥128 million.
Point Service BusinessAlthough aided by an increase in the number of new points issued by existing participating stores, in thewake of the ending the government-administered eco-point system, the Point Service Business recorded
net sales of ¥2,306 million, a decrease of 6.0% compared with the previous fiscal year. However, due toa temporary decrease in the expense burden of recovering old points in accordance with the transfer toserver management-based operation during the previous fiscal year and other factors, operating income
for this business totaled ¥198 million, an increase of 662.1% year on year.
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 and concentrating its management assets into fields with future growthpotential in order to overcome the present situation in which it remains dependent on sales 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¥13,306 million, an increase of 5.7% compared with the previous fiscal year. Regarding the profit andloss situation, Columbia’s Direct Sales Business was buoyed by a general increase in sales, andparticularly by favorable sales of products utilizing high-margin sound sources. In addition, due to asteep decline in overall fixed costs stemming from the implementation of career change support
measures for the purpose of organizational reform during the previous fiscal year, this business segment
recorded an operating income for the fiscal year under review of ¥1,201 million (compared with anoperating loss for the previous fiscal year of ¥1,104 million).
*The product and service names appearing in this document are trademarks or registered trademarks of Faith Inc. either
in Japan or in other countries.

3② Business Performance Forecast
The Faith Group’s business performance forecasts for next consolidated fiscal year (FY 2016; ending
March 31, 2017) are as follows. In the Columbia Business, sales of animation-related products, whichhave been particularly strong during the fiscal year under review, are expected to decrease. Accordingly,
the Group is currently forecasting net sales of ¥19,000 million (down 5.8% year-on-year), an operating
income of ¥500 million (down 67.4% year-on-year), an ordinary income of ¥450 million (down 70.6%
year-on-year), and a net income of ¥150 million (down 76.8% year-on-year).
(Unit: millions of yen)

Year ending March Year ending March
2016 (Result) (a) 2017 (Forecast) (b)Net sales
20,16319,000Operating income
1,534
500
Ordinary income
1,529
450
Net income attributable to shareholders of the646
150
parent company

Change(b) - (a)△1,163△1,034△1,079△496(2) Analysis of Financial Position① Assets, Liabilities and Net Assets
Total assets as of the end of the consolidated fiscal year ended March 31, 2016 decreased by ¥1,122
million from the end of the previous consolidated fiscal year to ¥24,712 million. This result was mainly
due to decreases in cash and deposits, accounts and notes receivable, and inventory.
Total liabilities decreased by ¥229 million compared with the end of the previous consolidated fiscal
year to ¥7,882 million. This result was mainly due to decreases in trade notes and accounts payable, andaccounts payable-other.
Net assets decreased by ¥893 million compared with the end of the previous consolidated fiscal year to¥16,829 million. This was mainly the result of the acquisition of treasury stock, the payment ofdividends, etc., despite the recording of a net income attributable to shareholders of the parent company.
Moreover, the Faith Group’s capital adequacy ratio became 62.9%.
② Cash Flow
Cash and cash equivalents at the end of the consolidated fiscal year ended March 31, 2016 increased by¥1,567 million to ¥10,913 million, a 16.8% increase from the end of the previous consolidated 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 inflow of ¥1,800 million (compared with an inflowof ¥9 million during the previous consolidated fiscal year), due mainly to the addition of impairment
losses on goodwill of ¥144 million, depreciation and amortization expenses of ¥361 million, and income
tax and other payments of ¥284 million to the Group’s net income before taxes and other adjustments of¥1,513 million.
(Cash flow from investing activities)
Cash flow from investing activities amounted to an inflow of ¥1,266 million (compared with an outflow
of ¥1,456 during the previous consolidated fiscal year), due mainly to the posting of ¥4,017 million in
expenditure in respect of opening new term deposits, ¥329 million in expenditure to obtain software,¥167 million in expenditure to purchase shares in subsidiaries and affiliates, and ¥144 million in
expenditure for acquisition of subsidiary shares accompanying changes in the scope of consolidation,
despite receiving ¥6,043 million in income in proceeds from withdrawals of existing term deposits.
(Cash flow from financing activities)
Cash flow from financing activities amounted to an outflow of ¥1,497 million (an increase of 136.0%
4compared with the previous consolidated fiscal year), due mainly to ¥1,582 million in expenditure in
respect of acquisition of treasury stock, ¥342 million in expenditure in respect of repayment oflong-term loans, and ¥105 million in respect of dividend payments, etc., despite receiving income of¥500 million in proceeds from long-term loans payable.
(Reference) Movements in Cash Flow Associated Indicators
Capital-to-asset ratio (%)
Market value-based capital-to-asset ratio (%)
Ratio of interest on interest-bearing debt to cash flow (years)
Interest coverage ratio (multiple)

FY 2013
69.6
40.2
0.65
336.0

FY 201465.5
55.2
137.08
0.8

FY 2015
62.9
52.9
0.85
123.7

Capital-to-asset ratio: Equity capital/total assets
Market value-based capital-to-asset ratio: Market capitalization/total assets
Ratio of interest on interest-bearing debt to cash flow： interest-bearing debt/cash flow from operating
activities
Interest coverage ratio: Cash flow from operating activities/interest payments(Note 1) All the above ratios are calculated based on the consolidated financial figures.
(Note 2) Market capitalization is calculated based on the number of shares issued excluding treasury
stock.
(Note 3) Interest-bearing debt includes all debt on which interest is being paid among the liabilities
reported in the Consolidated Balance Sheet.
(Note 4) For cash flow from operating activities and interest payments, the figures for “cash flow fromoperating activities” and “interest amount paid” reported in the Consolidated Statement of
Cash Flows are used.

(3) Basic Policy on Profit Allocation and Current Term/Next Term Dividend Distribution
The Company continues 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
return of profit to shareholders to be an important management issue. For this reason, the Company willconsider payment of dividends, taking into account its operating results and financial position.
Based on its fundamental policy of paying continued stable dividends, the Company plans to pay a
dividend of ¥10 per share (including an interim dividend of ¥5) in the next fiscal year.

2. Overview of the Faith GroupThe Faith Group (the Company and its associated companies) consists of Faith, Inc. (the Company), 19
subsidiaries and 6 affiliates, and is engaged mainly in the Content Business, the Point Service Business,and the Columbia Business.
(1) Content BusinessIn order to promote its Multi-Content and Multi-Platform Strategy, the Faith Group is providing
one-stop solutions ranging from the construction of distribution systems and 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.
(2) Point Service Business
The Group is engaged in the Point Service Business, which is aimed at the retail industry.
Main company involved in this business: GoodyPoint Co., Ltd.
(3) Columbia Business
The Columbia Business encompasses the sound source, video, etc., planning, production and sales
business, the music rights acquisition and management business, the contracted production and sales
business, etc.
Main companies involved in this business: Nippon Columbia Co., Ltd., Columbia Marketing Co., Ltd.,and Columbia Songs, Inc.
5

[Business System Diagram]
The following diagram shows the Faith Group’s business system as described above.
Content Business
Content distribution service
provision==================>
Distribution platform
development
Content production services

The Company (Faith, Inc.)<Major related company>
Faith Wonderworks, Inc.

The FaithGroup(Faith Inc.
and its
group
companies)

Point Service Business

Point service provision===================><Major related company>
GoodyPoint Co., Ltd.

Our
customers
and clients

Production, advertising andsales of music and gamesoftware, etc., and music artist
management===================>

Columbia Business<Major related companies>
Nippon Columbia Co., Ltd.
Columbia Marketing Co., Ltd.
Columbia Songs, Inc.

3. Management Policies(1) The Faith Group's Basic Management Policy
The basic policy of Faith Group is to create schemes to distribute digital contents to users. In future as
well, the Group will attempt to accurately grasp changes in society and in people’s lifestyles, and create
diverse services that closely match the using environments of feature phone, smartphone, tablet, PC, andTV users. In addition, while producing and procuring contents suitable for these services, the Company
and its affiliated group companies will strive to develop the methods, technologies and know-how torealize these services and aim to become a higher value-added corporate group through business
partnerships with outside companies in addition to providing their own services independently.
(2) Medium- and Long-Term Management Strategy
The Faith Group will continue to construct new markets by creating a broad range of services that meetthe user demands of today and tomorrow. The Group will make efforts to actualize next-generation
services that are attractive to users, including the production and distribution of entertainment contentssuch as music, video and games, as well as various types of services utilizing information devices,
based on proposals for unique business solutions and through business partnerships with prominentcompanies in many fields. Moreover, in today’s increasingly diversified and complex market
environment, the Group is giving consideration to accurately grasping user needs, promoting its
Multi-Content and Multi-Platform Strategy, and improving its equity capital and profitability, which areoperating resources that are linked to increasing corporate value and shareholder profit. Accordingly,
the Group places emphasis on the equity capital ratio and the operating income as management indexes.
(3) Challenges the Faith Group Should Address
The domestic content industry is continuing to grow by making innovative use of technology andinformation transfer methods based on a succession of newly appearing ideas. Consequently, user needs
are becoming more diversified and complex at an accelerating pace, and a flood of various kinds ofcontents including free distribution items has been sweeping into the market. The Faith Group willcontinue its pursuit of intra-group synergies and conduct effective operations on a group-wide basis. At
the same time, with the aim of being able to provide excellent high-value-added contents in adiversifying usage environment and market to all users regardless of the type of network andinformation terminals they use, the Group intends to carry out the following measures.
6

① Content Business
The Faith Group will create new markets by developing distribution systems that bring benefits tocontent rights holders, distributors and users alike based on the technology and know-how accumulatedby the Group up to now as well as by providing its own business solutions through partnerships withprominent companies in a range of business fields. In order to realize this goal, the Group will makeevery effort to reinforce its in-house content production activities, while also engaging in production
tie-ups with content rights holders and attempting to expand its user reach in order to strengthen its
contact points with users.
Ever since its establishment, the Faith Group has endeavored to build up its content distribution
business by making use of various information devices as a major pillar of its business. From now on
too, the Group will continue to develop new service systems that are useful for content rights holders,
distributors and users, commercialize the necessary technology such as embedded terminal technology,
distribution system technology, etc., and construct new content distribution systems.
② Point Service Business
Up to now, point services have been centered on the retail industry, and in recent years there has been
an increase in partnerships encompassing the mutual use of points across multiple retail operations
while competition between point services has also been growing. In this situation, the Faith Group iscreating a new Point Service Business that includes O2O (Offline to Offline) services. To this end, theGroup recognizes the need to improve the level of satisfaction experienced by its point service
customers by reducing operational costs and improving convenience, and by enhancing its service
proposal power, etc. In addition, the Group will adopt a strategic approach in tackling the tasks it needs
to address.
③ Columbia Business
Regarding the Columbia Business, under circumstances in which the music and video-related industries
are facing a severe business environment, Nippon Columbia Co., Ltd.’s Sales/Digital Distribution
Business, which is mainly engaged in sales of products based on contents such as planned and produced
sound sources, video, etc., will increase its profitability through improved business efficiency byrounding out its artist lineup, nurturing hit artists and creating hit products, and by making use of its richcatalogue of sound sources and concentrating its management resources in order to expand into newfields in the entertainment business.
In the Direct Sales Business, which sells contents that make secondary use of in-house produced soundsources and images, in the special sales area, Nippon Columbia will continue to reinforce its
relationships with existing business partners while proceeding with the opening up of new sales
channels and new business partners. In addition, Nippon Columbia will endeavor to achieve multiple
business deployment of sound sources by improving its planned products including products for thesenior/baby boomer generation while making effective use of its rich store of contents.
In the mail order field, Nippon Columbia is developing its business efficiently using a “fulfillment
system” that conducts mail order operations such as “order receipt”, “payment acceptance” and“product delivery” consistently and efficiently. Moreover, by entering into business cooperation withother record companies in using this system, Nippon Columbia has successfully gained new sales
channels and obtained new income sources such as operation management fees, etc. In future too, inorder to expand business cooperation to more other companies in the same industry and also tocompanies in different business fields, Nippon Columbia will make approaches to the planning andproduction of CD and DVD products jointly with partner companies and to product planning ofhousehold items (such as lifestyle goods and daily sundries) that take customer needs into account.

4. 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.
7

5. Consolidated Financial Statements(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 refund receivable, etc.
Deferred tax assets
OthersAllowance 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
Lease assets
Accumulated depreciation
Lease assets (net base)Total tangible fixed assets
Intangible fixed assets
Software
Goodwill
Leased assets
OthersTotal intangible fixed assets
Investment and other assets
Investment securities
OthersAllowance for doubtful receivable
Total investments and other assets
Total fixed assets
Total assets

FY 2014(As of March 31, 2015)

FY 2015(As of March 31, 2016)

13,135,625
2,868,673
242,969
536,992
314,11474,82455,37821,503
986,469△49,90918,186,640

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

2,075,199△780,392
1,294,807
647,957△617,022
30,934
1,057,980△925,823
132,157
1,501,684
49,726△26,171
23,554
2,983,139

2,037,987△812,895
1,225,092
638,036△613,449
24,587
1,011,014△882,809
128,205
1,501,684
43,692△28,945
14,7462,894,315

499,691
1,940,390
15,165
279,055
2,734,302

507,103
1,959,316
6,659
360,591
2,833,671

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

8

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

(Unit: thousands of yen)

(Liabilities)
Current liabilities
Trade notes and accounts payable
Short-term loans
Lease obligations
Accounts payable-otherAccrued expenses payable
Income taxes payable
Reserve for bonuses
Provision for point card certificates
Reserve for sales returns
OthersTotal current liabilities
Fixed liabilities
Long-term liabilities
Net defined retirement liabilities
Lease obligations
Deferred tax liabilities
OthersTotal fixed liabilities
Total liabilities(Net assets)
Shareholder's equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholder's equity
Other accumulated comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustments
Accumulated adjustment amount concerning
retirement benefits
Total other accumulated comprehensive income
Stock acquisition rights
Minority interests
Total net assets
Total liabilities and net assets

9

FY 2014(As of March 31, 2015)

FY 2015(As of March 31, 2016)

1,133,715
546,120
17,7301,423,333
2,431,769
124,473
64,30939,828160,593544,117
6,485,992

995,288686,120
16,133
1,023,712
2,541,442
189,734
66,14733,874
92,333604,254
6,249,041

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

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

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

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

215,116
5,399

198,282△8,446

87,627△928

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

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

(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 (△)
Non-operating income
Interest income
Dividend income
Interest on securities
Foreign exchange gains
Gains on investment partnership management
Gains on liquidation of unpaid royalties
Miscellaneous receipts
Total non-operating Income
Non-operating expenses
Interest paid
Foreign exchange losses
Investment partnership losses
Equity method investment losses
Miscellaneous expenses
Total non-operating expenses
Ordinary income or ordinary losses (△)
Extraordinary income
Gains on disposal of fixed assets
Gains on changes in equity
Gains on step acquisitions
Gains on reversal of subscription rights to shares
OthersTotal extraordinary income
Extraordinary losses
Losses on disposal of fixed assets
Losses related to organizational reform
Impairment losses
Losses on valuation of investment securities
Impairment losses on goodwill
Losses on liquidation of overseas business
Share exchange losses
Copyright-related losses
OthersTotal extraordinary losses
Current term net income or net loss before taxes (△)
Corporate, local, and business taxes
Income taxes - deferred
Total corporate, local, and business taxes
Current term net income or net loss (△)
Current term net income or net loss attributable tonon-controlling interests (△)
Current term net income or net loss attributable toshareholders of the parent company (△)

FY 2014(April 1, 2014 ~March 31, 2015)※１ 19,597,063※１,※２,※３ 12,805,550
6,791,513※４ 7,683,493△891,979

FY 2015(April 1, 2015 ~March 31, 2016)※１ 20,163,527※１,※２,※３ 12,061,696
8,101,831※４ 6,567,355
1,534,475

9,993
6,101
144
3,430
22,66334,27024,264
100,868

3,957
5,473
128
－
13,615
15,657
17,70756,53911,482－2,240
56,364
1,436
71,523△862,635

14,5262,666
8,750
34,352
1,245
61,542
1,529,473

－
－
－
3,357
－
3,357
50,955434,052※８ 116,534
29,804※９ 2,062,591※10 143,034
－
－
5,000
2,841,972△3,701,250
181,197269,363
450,560△4,151,811
※６

※７

10

990
37,035
13,18615,857
1,487
68,557※５

21,641－※８ 21,740
5,490－－
21,01810,0004,798
84,689
1,513,341
310,759
2,908
313,667
1,199,673※６△811,331

553,669△3,340,479

646,004

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

Current term net income or net loss (△)
Other comprehensive income
Valuation difference on other available-for-salesecurities
Foreign currency translation adjustments
Adjustments for retirement benefit obligations
Total other comprehensive income
Comprehensive income(Details)
Comprehensive income attributable to shareholders of
the parent company
Comprehensive income attributable to non-controllinginterests

11

FY 2014(April 1, 2014 ~March 31, 2015)△4,151,811

FY 2015(April 1, 2015 ~March 31, 2016)
1,199,673△12,094△16,294

10,639171,949
170,494※ △3,981,317△13,725△106,319△136,339※ 1,063,333△3,259,736

526,768△721,580

536,564(3) Consolidated Statement of Changes in Shareholders’ Equity
FY 2014 (April 1, 2014 ~ March 31, 2015)(Unit: thousands of yen)
Shareholders' equity
Capital stock Capital surplus
Balance at beginning of period

3,218,000

3,708,355

14,393,333

Total
shareholders’equity20,565,008△754,679△113,901△113,901△3,340,479△3,340,479

Retainedearnings

Treasury stock

Changes of items during theaccounting period
Dividends paid
Changes in parent company equity
regarding transactions with
non-controlling interests
Net gain or loss attributable toshareholders of parent company△500,251△500,251

△23

143

120

Acquisition of treasury stock
Disposal of treasury stock
Net changes in non-equity items
during the accounting period
Total changes during the accounting
periodBalance at end of period－－△3,454,403△500,107△3,954,511

3,218,000

3,708,355

10,938,929△1,254,787

16,610,496

Accumulated other comprehensive income

Balance at beginning of period

Valuation
Total otherShare
difference
Foreign
Retirement
accumulated acquisition Minority
on othercurrency benefitInterests
comprehenrights
availabletranslation related
sive income
for-saleadjustments adjustments
securities
227,400
227,400
61,949 1,485,909－－

Total net
assets

22,340,267

Changes of items during theaccounting period△113,901

Dividends paid
Changes in parent company equity
regarding transactions with
non-controlling interests
Net gain or loss attributable toshareholders of parent company△3,340,479△500,251

Acquisition of treasury stock120

Disposal of treasury stock
Net changes in non-equity items
during the accounting period
Total changes during the accounting
period△12,284

5,399

87,62780,742△3,357 △739,970△12,284

5,399

87,62780,742△3,357 △739,970 △4,617,098

Balance at end of period

215,116

5,399

87,627308,143

58,591

12

745,938△662,587

17,723,169

FY 2015 (April 1, 2015 ~ March 31, 2016)(Unit: thousands of yen)
Shareholders' equity
Capital stock Capital surplus
Balance at beginning of period

3,218,000

3,708,355

10,938,929

Total
shareholders’equity16,610,496△1,254,787△104,273△104,273

Retainedearnings

Treasury stock

Changes of items during theaccounting period
Dividends paid
△1,157

Changes in parent company equity
regarding transactions with
non-controlling interests
Net gain or loss attributable toshareholders of parent company△1,157646,004△1,783,816△1,783,816

△2

101

98

Acquisition of treasury stock
Disposal of treasury stock
Net changes in non-equity items
during the accounting period
Total changes during the accounting
periodBalance at end of period

646,004－△1,157541,728△1,783,715△1,243,144

3,218,000

3,707,197

11,480,657△3,038,502

15,367,352

Accumulated other comprehensive income

Balance at beginning of period

Valuation
Total otherShare
difference
Foreign
Retirement
accumulated acquisition Minority
on othercurrency benefitInterests
comprehenrights
availabletranslation related
sive income
for-saleadjustments adjustments
securities
215,116
5,399
87,627308,143
58,591 745,938

Total net
assets17,723,169

Changes of items during theaccounting period△104,273

Dividends paid

△1,157

Changes in parent company equity
regarding transactions with
non-controlling interests
Net gain or loss attributable toshareholders of parent company

646,004△1,783,816

Acquisition of treasury stock98

Disposal of treasury stock
Net changes in non-equity items
during the accounting period
Total changes during the accounting
period△16,833△13,845△88,556△119,235 △15,857

484,877

349,784△16,833△13,845△88,556△119,235 △15,857

484,877△893,359

Balance at end of period

198,282△8,446△928

42,734 1,230,815

16,829,810

13

188,908

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

FY 2014(April 1, 2014 ~March 31, 2015)
Cash flow from operating activities
Income or loss before income taxes, etc.
Depreciation and amortization
Impairment losses
Amortization losses on goodwill
Impairment losses on goodwill
Increase/decrease in allowance for doubtful accounts (△ =decrease)
Increase/decrease in reserve for bonus (△ = decrease)
Increase/decrease in allowance for unexercised sales
promotion points (△ = decrease)
Increase/decrease in net defined retirement liabilities (△ =decrease)
Interest and dividends income
Interest on securities
Interest paid
Gain or loss on foreign exchange (△ = gain)
Gain or loss on equity method investments (△ = gain)
Gain or loss on investment partnership management (△ =gain)Gain or loss on valuation of investment securities (△ = gain)
Loss related to organizational reform
Loss on liquidation of overseas business
Gain or loss on sale of fixed assets (△ = gain)
Gain or loss on disposal of fixed assets (△ = gain)
Gain or loss on step acquisitions (△ = gain)
Gain or loss on change in equity (△ = gain)
Share exchange losses
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-totalInterest and dividends received
Interest paid
Income tax refunded
Income tax paid
Cash flow from operating activities

14

FY 2015(April 1, 2015 ~March 31, 2016)△3,701,250
368,188
116,534
266,192
2,062,591△49,953

1,513,341
361,663
21,740144,316－
11,351△6,094△151,681

974△5,953△178,465△70,414△16,094△144
11,482△12,554
56,364△20,423△9,431△128
14,526
1,868
34,352△4,86429,804434,052
143,034－
50,955－－－363,740
43,465△140,124△4,266

5,490
－
－
△990
21,641△13,186△37,035
21,018359,176
90,591△190,178△30,859

54,140383,386
102,879
7,730△11,604
68,384△157,712
9,678

157,796△366,021
2,030,786
13,287△14,564
55,951△284,589
1,800,872

(Unit: thousands of yen)

FY 2014(April 1, 2014 ~March 31, 2015)
Cash flow from investing activities
Expenditure for opening of term deposits
Income from withdrawal of term deposits
Expenditure for acquisition of tangible fixed assets
Expenditure for acquisition of software
Expenditure for acquisition of investment securities
Income from sale of investment securities
Expenditure for acquisition of shares of affiliates
Expenditure for acquisition of subsidiary shares accompanying
changes in the scope of consolidation
Income from acquisition of subsidiary shares accompanying
changes in the scope of consolidation
Expenditure for loans receivable
Income from collection of loans receivable
Expenditure for security deposits
Income from collection of security deposits
OthersNet cash flow from investing activities
Cash flow from financing activities
Net increase/decrease in short-term loans payable (△ =decrease)
Expenditure for repayment of lease obligations
Income from long-term loans payable
Expenditure for repayment of long-term borrowing
Increase/decrease in money held in trust for acquisition oftreasury stock (△ = increase)
Expenditure for acquisition of treasury stock
Income from sale of treasury stock
Payment of dividends
Payment of dividends to non-controlling interests
Expenditure for acquisition of subsidiary shares notaccompanying changes in the scope of consolidation
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

15

FY 2015(April 1, 2015 ~March 31, 2016)△5,034,975
4,036,105△101,100△373,592
－
6,783
△0
－

△4,017,682
6,043,035△83,324△329,055△61,360
15,476△167,100※２ △144,007

104,951

42,404△15,000
6,246
△956
3,494
△88,622△1,456,667△15,000
120△7,18545,039△54,958
1,266,402△270,000

60,000△53,457
1,000,000△456,780△201,673△17,229500,000△342,370－△500,251128△114,882△27,307－△1,582,108
101△105,021△65△11,100△10,396△634,620
12,554△2,069,055△131△1,497,925△1,8681,567,480※２※１

11,415,340
9,346,285※１

9,346,285
10,913,765

(5) Notes Concerning the Consolidated Financial Statements(Notes Concerning the Premise of a Going Concern)
Not applicable(Significant Matters That Constitute the Basis for Preparation of the Consolidated Financial
Statements)
1. Items Concerning the Scope of Consolidation(1) Number of consolidated subsidiaries
Previous fiscal year: 15 companies, current consolidated fiscal year: 16 companies
Names of major consolidated companies:• Faith Wonderworks, Inc.
• GoodyPoint Co., Ltd.
• Future RECORDS Inc.
• ENTERMEDIA INC.

• OK LIFE, Inc.
• Nippon Columbia Co., Ltd.
• Columbia Marketing Co., Ltd.
• Columbia Songs, Inc.
• GLOBAL PLUS, INC.
• Japan Music Network Inc.
Japan Music Network Inc., for which the Company newly acquired a controlling shareholding
during the current consolidated fiscal year, has been included within the scope of consolidation.
SLG, LLC, a subsidiary for which the Company has transferred its entire equity interest, has been
excluded from the scope of consolidation.

(2) Names of major non-consolidated subsidiaries, etc.
Name of major non-consolidated company:• Rightsscale USA, Inc.
(Reason for exclusion from scope of consolidation)
Because this non-consolidated subsidiary is a small company, the sum totals of it gross assets,
sales, and net income or loss (amount corresponding to equity), etc., do not have a significant
influence on the Consolidated Balance Sheet.
2. Items Concerning the Application of the Equity Method(1) Number of equity method affiliates
Previous fiscal year: 6 companies, current consolidated fiscal year: 5 companies
Names of major consolidated companies:• Lync-Entertainments• FlyingPenguins Inc.
• TOKYO SMARTCAST Inc.
TOKYO SMARTCAST Inc., for which the Company newly acquired a controlling shareholding
during the current consolidated fiscal year, has been included within the scope of application ofequity method accounting.
Japan Rights Clearance Inc. has been excluded from the scope of application of equity method
accounting due to a decrease in the equity ratio held by the Company resulting from this subsidiary’s
merger with e-License to form NexTone Inc.

(2) Non-consolidated companies to which the equity method is not applied (Rightsscale USA, Inc.
and others) an and affiliated company (Asian Entertainment and Communications Co., Ltd.) havebeen excluded from the scope of application of equity method accounting because, in view of
their net income or loss (amount corresponding to equity) and retained earnings (amountcorresponding to equity), etc., excluding them from the scope of application of equity method
accounting has only a minor influence on the Consolidated Balance Sheet and is of no overallsignificance.
3. Items Concerning the Accounting Periods of the Consolidated Subsidiaries
All the consolidated subsidiaries in the Faith Group have the same consolidated balance sheet
closing date.

16

4. Items Concerning the Accounting Standards(1) Significant evaluation standards and methods
1) Marketable securities
Other securities:—Available-for-sale securities with a fair market value
Stated at fair value based on market values applicable on the date of consolidated settlementof accounts (in which all differences between the carrying amounts and the fair values arereported as a separate component of net assets, while the cost of securities sold is calculatedby the moving average method)—Available-for-sale securities without a fair market value: stated at cost determined by themoving average method. For investment equities in investment partnerships, a method basedon the most recent balance sheet available at the balance sheet reporting date provided in thepartnership contract is employed, taking an amount equivalent to the equity value.
2) Inventories
The evaluation standard is the cost method employing the specific cost method (balance sheet
values calculated by devaluing the book values based on declining profitability).
a. Commercial products and merchandise: For the Company and some of its consolidated
subsidiaries, mainly stated under the gross average method; for the other consolidated
subsidiaries the first-in-first out method.
b. Products in progress: For some of the consolidated subsidiaries, stated under the specificidentification method; for the other consolidated subsidiaries, mainly stated under the grossaverage method.
c. Raw materials and supplies: Stated mainly under the gross average method.
(2) Significant depreciable assets and depreciation methods
1) Tangible fixed assets (excepts lease assets)
The declining balance method is mainly employed to calculated depreciation expenses forthese assets. (However, the company employs the straight-line method for buildings (apartfrom attached facilities) acquired since April 1, 1998.) The useful lifetimes of the main typesof tangible fixed assets are as follows.
Buildings and structures: 5 – 50 years
Machinery and delivery equipment: 2 – 12 years
Tools, devices and equipment: 2 – 15 years
2) Intangible fixed assets (excepts lease assets)
The straight-line method is employed. In the case of in-house-use software, this is based on
the useable period in-house (up to 5 years).
3) Lease assets
a. Lease assets pertaining to finance lease transactions involving the transfer of ownership
The straight-line method is employed. The useful lifetime of the main types of intangible
fixed assets is 5 years.
b. Lease assets pertaining to finance lease transactions not involving the transfer of ownership
The method to calculate depreciation for such assets is the straight-line method with theirresidual values being zero over their leased periods used as the number of years of useful life.
(3) Standards for recording significant allowances
1) Allowance for doubtful accounts
In order to prepare for losses due to doubtful accounts receivable, the estimated unrecoverable
amounts in consideration of the actual ratio of bad debts for general accounts receivable andindividual collectability for special bonds such as doubtful accounts receivable, etc., arerecorded.
2) Reserve for point card certificatesIn order to prepare for the cost burden of point utilization, for the balance of yet to beexchanged issued points, the required amount expected to be utilized in future is recorded
based on the point collection performance ratio.
3) Reserve for bonuses
In order to prepare for employee bonus payments, among the estimated future payment
amount, the Company and some of its consolidated subsidiaries record the current
consolidated fiscal year’s share of these expenses.

174) Reserve for losses due to sales returns
In order to prepare for future losses due to sales returns, anticipated losses accompanying
future returns of merchandise are recorded based on actual past return rates with respect tototal sales.
(4) Accounting Standard for Retirement Benefits
1) Method of attributing expected retirement benefits to periods
When calculating retirement benefit obligations, straight-line attribution is used to allocate
expected retirement benefit payments in the period until the end of the fiscal year.
2) Method of treating prior service liabilities and actuarial differences as expenses
Past service liabilities are amortized as incurred by the straight-line method over certain
periods (3 years), which are within the average remaining years of service of the employees at
the time the service cost is generated. Actuarial gains and losses are amortized on astraight-line basis over certain periods (5 years), which are within the average remaining yearsof service of the employees at the time the amounts are generated in each fiscal year, allocatedproportionately starting from the year following the respective fiscal year of occurrence.
3) Adoption of simplified method for smaller entities
The company and certain of its consolidated subsidiaries have adopted the simplified method
for calculating liabilities for retirement benefit and retirement benefit expenses, which
employs a method assuming the Company’s benefit obligation to be equal to the benefits
payable assuming the voluntary retirement of all employees at the fiscal year-end.
(5) Important standards for revenue and cost recognition
Standards for recording income and expenditure related to software production orders
a. Software produced to order for which certainty of achievement with respect to sections
progressing up to the end of the current consolidated fiscal year is recognized: Progress-based(rate of progress of the work estimated using the cost-to-cost method)b. Other software produced to order: Completed contract method(6) Standards for conversion of significant foreign currency-denominated assets and liabilities into
Japanese yen
Receivables and payables denominated in foreign currencies are processed through translation
into Japanese yen at the consolidated fiscal year-end spot exchange rates. Meanwhile, the assets
and liabilities of overseas subsidiaries are converted into yen based on the spot exchange rate on
the day of consolidated settlement of accounts, revenue and expenses are converted into yen
using the average market price during the period, and exchange differences are included in
Foreign currency translation adjustments under Net assets on the Consolidated Balance Sheet.
(7) Goodwill amortization method and amortization period
The amortization of goodwill is carried out using the straight-line method over a period of 5
years or 20 years. Also, regarding the balance between investment and capital (goodwill
equivalent amount) in the case of companies accounted for by the equity method, amortization isconducted over 5 years or less using the straight-line method. However, in cases where theamount of goodwill is insignificant, one-time amortization is conducted for the fiscal term inwhich the relevant account case occurred.
(8) Scope of cash and cash equivalents reported in the Statement of Cash Flows
This item consists of cash on hand, demand deposits and short-term investments that are highly
liquid, easily realizable, bearing only insignificant risk of changing in value, and with a maturity
date that comes within 3 months of the acquisition date.
(9) Other important items necessary to produce the Consolidated Financial Statements
1) Accounting method for consumption tax: The tax exclusion method is adopted for
consumption tax and local consumption tax. Nondeductible consumption tax is processed as
an expense for the current consolidated fiscal year.
2) Adoption of the consolidated tax payment system: Some of the Company’s consolidated
subsidiaries have adopted the consolidated tax payment system.

(Accounting Standards Issued But Not Yet Applied)• Implementation Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No. 26,
issued on March 28, 2016)(1) Overview
Regarding the treatment of the recoverability of deferred tax assets, when the accounting and auditing
treatment on tax-effect accounting of The Japanese Institute of Certified Public Accountants (thesection relating to accounting treatment) was transferred to the Accounting Standards Board of Japan,
18

a necessary review was conducted into certain of the classification requirements and treatments of therecorded amounts of deferred tax assets which resulted in the compilation of the Implementation
Guidance on Recoverability of Deferred Tax Assets. Among the practical guidelines examined, thereview was focused mainly on the guidance on recoverability of deferred tax assets prescribed in the
Audit Treatment of Judgments with Regard to Recoverability of Deferred Tax Assets (Report No. 66,
the Auditing Committee of the Japanese Institute of Certified Public Accountants). The review
basically followed a framework of treatment under which companies are classified into five categories
and deferred tax assets are estimated in accordance with the appropriate classification. This guidanceis intended for use when applying the Accounting Standards for Tax Effect Accounting (BusinessAccounting Council) in assessing the recoverability of deferred tax assets.
(Revision of classification requirements and treatment of deferred tax asset recording)(i) Treatment of companies that do not fulfill any of the requirements for classification from
Category 1 to Category 5.
(ii) Requirements for classification as Category 2 and Category 3(iii) Treatment of temporary differences in future temporary differences that cannot be scheduled forcompanies applicable to Category 2(iv) Treatment concerning the reasonable estimable period of temporary differences in future
pre-adjusted taxable income for companies applicable to Category 3(v) Treatment in cases where a company fulfilling the requirements of Category 4 is also applicable
to Category 2 or Category 3(2) Adoption dateThis accounting standard has been adopted from the start of the consolidated fiscal year
beginning April 1, 2016.
(3) Impact of adoption
As of the time of the preparation of these consolidated financial statements, the impact of the
adoption of the Implementation Guidance on Recoverability of Deferred Tax Assets is underevaluation.

(Changes in Accounting Policy)(Application of Accounting Standard for Business Combinations, etc.)
Starting in the first quarter of the current consolidated fiscal year, the Accounting Standard forBusiness Combinations (ASBJ Statement No. 21 on September 13, 2013; hereinafter referred toas the “Business Combinations Accounting Standard”), the Accounting Standard forConsolidated Financial Statements (ASBJ Statement No. 22 on September 13, 2013; hereinafterreferred to as the “Consolidated Accounting Standard”), the Accounting Standard for Business
Divestiture (ASBJ Statement No. 7 on September 13, 2013; hereinafter referred to as the“Business Divestiture Accounting Standard”), and other standards, Faith, Inc. (the “Company”)
changed accounting methods to those recording differences from fluctuations in equity that theCompany holds in subsidiaries, for which the Company continues to control as capital surplus,
and recording acquisition-related expenses as expenses for the consolidated fiscal year when therelevant expenses incur.
The Company also changed its accounting methods to those reflecting a review of the
distribution amount of acquisition costs following the finalization of provision accounting
treatment for business combinations that are carried out after the beginning of the first quarter ofthe consolidated fiscal year to quarterly consolidated financial statements for the consolidated
quarterly accounting period to which the business combination belongs. Moreover, thepresentation method of net income, etc., has been changed and the presentation of “minority
interests” has been changed to “non-controlling interests”. To reflect changes in the relevant
presentation, the Company has reclassified its consolidated financial statements for the previous
consolidated fiscal year.
The Company applies the Business Combinations Accounting Standard and other standards incompliance with the transitional handling as set forth in Paragraph 58-2 (4) of the Business
Combinations Accounting Standard, Paragraph 44-5 (4) of the Consolidated AccountingStandard, and Paragraph 57-4 (4) of the Business Divestiture Accounting Standard, and it hasapplied these standards from the beginning of the current consolidated fiscal year and willcontinue to apply them in the future.
In the Consolidated Statement of Cash Flows for the current consolidated fiscal year, cash flow
pertaining to the acquisition of subsidiary shares not accompanying changes in the scope of
consolidation is recorded in the “Cash flow from financing activities” segment, while cash flow
19

pertaining to expenditure for related to the acquisition of subsidiary shares accompanying
changes in the scope of consolidation is recorded in the “Cash flow from operating activities”
segment. The effects of this change on the Company’s income and net assets figures for thecurrent consolidated fiscal year are immaterial.

(Consolidated Balance Sheet Related)* The following were held by the Company’s non-consolidated subsidiaries and affiliates.
(Unit: thousands of yen)

Investment securities (shares)

FY 2014

FY 2015(As of March 31, 2015)
118,042(As of March 31, 2016)
184,518(Consolidated Statement of Income Related)*1 The following are included in net sales and cost of sales.
(Unit: thousands of yen)

Provision of reserve for returned goods
Provision of reversal of reserve for returned goods
Total

FY 2014(April 1, 2014 ~March 31, 2015)
152,223△140,520
11,703

FY 2015(April 1, 2015 ~March 31, 2016)
86,297△154,558△68,260*2 A write-down of book value as a result of decreased profitability and loss on valuation of
inventories included in the cost of sales were as follows.
(Unit: thousands of yen)

FY 2014(April 1, 2014 ~March 31, 2015)
5,638

Reduction in book value of inventories

FY 2015(April 1, 2015 ~March 31, 2016)
29,078*3 Total research and development costs included in cost of sales were as follows.
(Unit: thousands of yen)

FY 2014(April 1, 2014 ~March 31, 2015)
Research and development costs included in cost ofsales

FY 2015(April 1, 2015 ~March 31, 2016)

49,14649,361*4 In the breakdown of cost of sales and selling, general and administrative expenses, the main items
and amounts were as follows.
(Unit: thousands of yen)

FY 2014(April 1, 2014 ~March 31, 2015)
2,104,469
49,666
175,889
2,353,953△4,216

Salaries and allowances
Provision of allowance for bonuses
Retirement benefit expenses
Advertising expenses
Provision of allowance for doubtful accounts

FY 2015(April 1, 2015 ~March 31, 2016)
1,742,583
43,766
15,978
1,915,743
71,954*5 Details of gains on the disposal of fixed assets were as follows.
(Unit: thousands of yen)

FY 2014(April 1, 2014 ~March 31, 2015)

FY 2015(April 1, 2015 ~March 31, 2016)—

Machinery, equipment and vehicles

20

990

*6 Details of losses on the disposal of fixed assets were as follows.
(Unit: thousands of yen)

FY 2014(April 1, 2014 ~March 31, 2015)
5,543
1,081
129
38,752
4,448
50,955

Buildings and structures
Machinery and transportation equipment
Tools, devices and equipment
Software
Other intangible fixed assets
Total

FY 2015(April 1, 2015 ~March 31, 2016)
—
150
316
20,885
290
21,614*7 Losses related to organizational reform
Previous consolidated fiscal year/FY 2014 (April 1, 2014 ~ March 31, 2015)
The Company has decided to work on organizational reform with a view to future entry into and rapid
development of new fields of business by its consolidated subsidiary Nippon Columbia Co., Ltd.
Expenses already incurred and expected future expenses in accordance with the career change support
measures for organizational reform are recorded as losses related to organizational reform.

Current consolidated fiscal year/FY 2015 (April 1, 2015 ~ March 31, 2016)
Not applicable*8 Impairment losses
Previous consolidated fiscal year/FY 2014 (April 1, 2014 ~ March 31, 2015)
The Faith Group recorded impairment losses concerning the following asset groups.
Location
Segment
Type
Minato Ward, Tokyo
Content Business
SoftwareMinato Ward, Tokyo
Columbia Business
Other intangible fixed assets
In the impairment loss calculation, the Faith Group has made a grouping based on segments andregarding unutilized assets has made a judgment as to the impairment loss on each asset.
For the current consolidated fiscal year, in consideration of prospective future earnings and future
cash flow, the book value of unutilized assets is recorded as an impairment loss (¥116,534
thousand). The details are ¥106,534 thousand for software, and ¥10,000 thousand for otherintangible fixed assets (master use rights).
Moreover, in the calculation of recoverable value, the impairment loss is measured while making
the utility value zero.
Current consolidated fiscal year/FY 2015 (April 1 2015 ~ March 31, 2016)
The Faith Group recorded impairment losses concerning the following asset groups.
Location
Segment
Type
Minato Ward, Tokyo
Content Business
Software
Other intangible fixed assets
Minato Ward, Tokyo
Columbia Business
Buildings and structures
In the impairment loss calculation, the Faith Group has made a grouping based on segments andregarding unutilized assets has made a judgment as to the impairment loss on each asset.
For the current consolidated fiscal year, in consideration of prospective future earnings and future
cash flow, the book value of unutilized assets is recorded as an impairment loss (¥21,740
thousand). The details are ¥9,966 thousand for buildings and structures, ¥6,587 thousand forsoftware, and ¥5,187 thousand for other intangible fixed assets.
Moreover, in the calculation of recoverable value, the impairment loss is measured while making
the utility value zero.
*9 Impairment losses on goodwill
Previous consolidated fiscal year/FY 2014 (April 1, 2014 ~ March 31, 2015)
The Faith Group recorded the following impairment losses on goodwill.
Location
Segment
Type
Minato Ward, Tokyo
Content Business
Goodwill
Minato Ward, Tokyo
Columbia Business
Goodwill
21

With regard to the Company’s subsidiaries, as a result of reconsidering profitability and futurebusiness plans, within the unamortized balance, the Company has recorded impairment losses of¥2,062,591 thousand (Contents ¥245,140 thousand, Columbia ¥1,817,450 thousand).
Current consolidated fiscal year/FY 2015 (April 1 2015 ~ March 31, 2016)
Not applicable*10 Losses on liquidation of overseas business
Previous consolidated fiscal year/FY 2014 (April 1, 2014 ~ March 31, 2015)
In view of the severe business environment surrounding the music industry in recent years, inorder to concentrate its management resources into the Japanese domestic market, the Company
decided to transfer through sale the entire equity interest held by its wholly-owned US
consolidated subsidiary, resulting in the generation of losses that are recorded as losses onoverseas business liquidation.
Location
Segment
Type
U.S.A
Columbia Business
Other intangible fixed assets
Tools, devices and equipment
U.S.A.
Columbia Business
These losses on liquidation of an overseas business are inclusive of impairment losses. Because it
was decided to transfer the entire equity interest in this US consolidated subsidiary, independent
asset groups were established and grouped into the minimum-sized cash flow-producing units.
Based on the US Accounting Standard, concerning the other intangible fixed assets (master use
rights) ¥77,461 thousand, and tools, devices and equipment ¥960 thousand of the aforementioned
US consolidated subsidiary, for which the probability of the Company’s recuperating the bookvalue was judged to be low, the book value has been reduced to the net sale value. Moreover, theprojected sale value has been used in setting the net sale value.
Current consolidated fiscal year/FY 2015 (April 1 2015 ~ March 31, 2016)
Not applicable(Consolidated Statement of Comprehensive Income Related)*Reclassification adjustment amount and tax effect amount of other comprehensive income(Unit: thousands of yen)

FY 2014(April 1, 2014 ~March 31, 2015)
Valuation differences on other available-for-sale securities:
Amount accrued in the current term
Reclassification adjustment amount
Before tax effect adjustment
Tax effect amount
Total valuation difference on other available-for-sale securities
Foreign currency translation adjustments:
Amount accrued in the current term
Reclassification adjustment amount
Before tax effect adjustment
Tax effect amountForeign currency translation adjustment amount
Adjustments for retirement benefit obligations:
Amount accrued in the current term
Reclassification adjustment amount
Before tax effect adjustment
Tax effect amount
Retirement benefit obligation adjustment amount
Total other comprehensive income

22

FY 2015(April 1, 2015 ~March 31, 2016)△35,270
6△35,264
23,170△12,094△34,3143,175△31,139
14,844△16,294

10,639—10,639—10,639△13,725－△13,725－△13,725

34,381
137,568
171,949—
171,949
170,494△29,325△76,993△106,319－△106,319△136,339

(Consolidated Statements of Changes in Shareholders’ Equity Related)
Previous consolidated fiscal year/FY 2014 (April 1, 2014 ~ March 31, 2015)
1. Matters Related to Class and Total Numbers of Shares Issued and Shares of Treasury Stock
Start of current
consolidated fiscal
year

Increase during
current consolidated
fiscal year

Decrease during
current consolidated
fiscal year

End of current
consolidated
fiscal year

Number of shares issued
Common stock
1,196,000——
1,196,000
Total
1,196,000——
1,196,000
Treasury stock
Common stock569,670
405,920110
975,480
Total
569,670
405,920110
975,480(Notes)1. The increase of 405.920 shares in the total amount of treasury stock represents the increase of 404,200 shares dueto the stock split of ordinary shares plus the increase of 1,720 shares due to the acquisition of an odd lot.
2. The decrease of 110 shares in the total amount of treasury stock is due to the transfer of odd-lot shares in response
to purchase requests

2. Matters Related to Equity Warrants
Number of shares
Segment

Details

Class ofsharesStart ofcurrent
consolidated
fiscal year
1,000

End ofcurrent
Increase
Decreaseconsolidated
fiscal year
1,000
－
－

Balance at endof current
consolidated
fiscal year
(thousands ofyen)

Equity warrants as Common
1,1352006 stock options stock
Consolidated
Equity warrants as Common
50,5003,500
47,00043,040－subsidiaries
2007 stock options stock
Equity warrants as Common
28,50028,50014,415－－2009 stock options stock
80,0003,500
76,50058,591
Total－(Note) The decrease in the number of shares subject to equity warrant subscription rights as 2007 stock options is dueto the expiry of purchasing rights.

3. Matters Related to Dividend Distribution(1) Amounts of dividends paid
(Resolution)
General Meeting of
Shareholders heldon June 27, 2014
Board of Directors’Meeting held on
November 11, 2014

Class ofsharesCommonstock

Total amount of dividends(thousands of yen)
56,951Dividend pershare (yen)5Commonstock

56,9495

Record date

Effective date

March 31, 2014

June 30, 2014

September 30,
2014

December 10,
2014(2) Of dividends whose record date belongs to the current consolidated fiscal year, those whose
effective date of dividend falls on the following consolidated fiscal year
(Resolution)

Class ofsharesGeneral Meeting of
Shareholders heldon June 27, 2015

Commonstock

Total amountof dividends(thousands of yen)

54,92223

Source offunds fordividends
Retainedearnings

Dividend
per share(yen)
5

Record date

Effective date

March 31, 2015

June 29, 2015

Current consolidated fiscal year/FY 2015 (April 1 2015 ~ March 31, 2016)
1. Matters Related to Class and Total Numbers of Shares Issued and Shares of Treasury Stock
Start of current
consolidated fiscal
year

Increase during
current consolidated
fiscal year

Decrease during
current consolidated
fiscal year

End of current
consolidated
fiscal year

Number of shares issued
Common stock
1,196,000——
11,960,000
Total
1,196,000——
11,960,000
Treasury stock
Common stock
975,480
1,114,980
70
2,090,390
Total
975,480
1,114,980
70
2,090,390(Notes)1. The increase in the total amount of treasury stock represents the increase of 127,900 shares due to the purchase oftreasury stock with money held in trust approved by a resolution of the Board of Directors, the increase of985,650 shares in response to share purchase demands from dissenting shareholders, plus the increase of 430
shares due to the acquisition of an odd lot.
2. The decrease of 70 shares in the total amount of treasury stock is due to the transfer of odd-lot shares in response
to purchase requests.

2. Matters Related to Equity Warrants
Number of shares

Segment

Details

Class ofsharesStart ofcurrent
consolidat
ed fiscal
year
1,000

Balance at endof current
End ofconsolidated
current
fiscal year
Increase
Decreasecon(thousands ofsolidatedyen)fiscal year
1,000
1,135
－
－

Equity warrants as Common
2006 stock options stock
Consolidated
Equity warrants as Common
47,00016,50030,500－subsidiaries
2007 stock options stock
Equity warrants as Common
28,5004,000
24,500－2009 stock options stock
76,50020,50056,000Total－(Note) The decrease in the number of shares subject to equity warrant subscription rights as 2007 and 2009 stock
options is due to the expiry of purchasing rights.

29,206
12,392
42,734

3. Matters Related to Dividend Distribution(1) Amounts of dividends paid
(Resolution)

Class ofsharesGeneral Meeting of
Shareholders heldon June 26, 2015
Board of Directors’Meeting held on
November 12, 2015

Commonstock

Total amount ofdividends (thousands ofyen)
54,922

Dividend pershare (yen)49,350Commonstock

Record date

Effective date5

March 31, 2015

June 29, 20155

September 30,
2015

December 10,
2015(2) Of dividends whose record date belongs to the current consolidated fiscal year, those whose
effective date of dividend falls on the following consolidated fiscal year
(Resolution)

Class ofsharesGeneral Meeting of
Shareholders heldon June 29, 2016

Commonstock

Total amountof dividends(thousands of yen)

49,34824

Source offunds fordividends
Retainedearnings

Dividend
per share(yen)
5

Record date

Effective date

March 31, 2016

June 30, 2016

4. Changes in the Amount of Shareholders’ Equity(Concerning the acquisition of treasury stock based on a resolution at the Board of Directors
meeting)
Based on a resolution at the Board of Directors meeting held on December 5, 2014, the Company
proceeded to acquire shares of its own stock.
① Type of treasury stock acquired
The Company’s common stock② Total number of shares of acquired stock
127,900 shares③ Total stock acquisition price¥201,673,000④ Acquisition period
April 1, 2015 ~ April 30, 2015
⑤ Acquisition method
Market purchasing by means of the trust method(Concerning the acquisition of treasury stock from shareholders opposed to the absorption-type
corporate split involving a subsidiary)
Effective from July 1, 2015, the Company inherited the contents distribution platform
development and production business of its100% subsidiary Faith Wonderworks Ltd. by meansof the corporate split (absorption-type demerger) method. Regarding this absorption-type split, in
response to a share purchase request from a shareholder opposed to the split based on Article 797,
Paragraph 1 of the Companies Act, the Company carried out the treasury stock acquisition
procedure outlined below.
① Number of shareholders to which share purchase requests were made1
② Date of receipt of share purchase request
June 16, 2015
③ Number of shares for which purchase was requested
985,650 shares (equal to 8.24% of the Company’s total number of issued shares as March 31,
2015)④ Purchase price¥1,579,996,000 (price per share: ¥1,603)⑤ Purchase dateJuly 10, 2015
⑥ Acquisition method
Off-market trading(Consolidated Statement of Cash Flows Related)*1 The relation of the end-of-term balance of cash and cash equivalents and the amounts of the items
listed on the Consolidated Balance Sheet(Unit: thousands of yen)

Cash and deposit accounts
Securities accounts
Term deposits with deposit terms of over 3 months
Cash and cash equivalents

FY 2014(April 1, 2014 ~March 31, 2015)
13,135,625
242,969△4,032,309
9,346,285

FY 2015(April 1, 2015 ~March 31, 2016)
12,680,124
242,521△2,008,881
10,913,765*2 Breakdown of main assets and liabilities of companies that are newly consolidated subsidiaries of
the Faith Group due to acquisition of their shares
Previous consolidated fiscal year/FY 2014 (April 1, 2014 ~ March 31, 2015)(GLOBAL PLUS, INC.)
The following is a breakdown of the assets and liabilities of GLOBAL PLUS, INC. at the time ofits incorporation as a newly consolidated subsidy of the Faith Group by means of a shareacquisition, as well as the acquisition value of the company’s shares, and the income resulting
from the acquisition.
25

(Unit: thousands of yen)

Current assets
Fixed assets
Goodwill
Current liabilities
Fixed liabilities
Minority interests
Acquisition cost of shares in GLOBAL PLUS, INC.
Value of cash and cash equivalents of GLOBAL PLUS, INC.
Deduction: Income resulting from the acquisition (net amount)

219,0316,377
5,785△ 192,178△15,000△8,93615,080△120,031
104,951

Current consolidated fiscal year/FY 2015 (April 1 2015 ~ March 31, 2016)(Japan Music Network Inc.)
The following is a breakdown of the assets and liabilities of Japan Music Network Inc. at the timeof its incorporation as a newly consolidated subsidy of the Faith Group by means of a shareacquisition, as well as the acquisition value of the company’s shares, and the income resulting
from the acquisition.
(Unit: thousands of yen)

Current assets
Fixed assets
Current liabilities
Minority interests
Acquisition cost of shares in Japan Music Network Inc.
Value of cash and cash equivalents of Japan Music Network Inc.
Deduction: Income resulting from the acquisition (net amount)

47,383
139,336△5,887△25,833
155,000△10,992△144,007(Business Combination Related)
Current consolidated fiscal year/FY 2015 (April 1 2015 ~ March 31, 2016)
The Company acquired a controlling shareholding in Japan Music Network Inc.

(1) Overview of business combination① Name and business contents of acquired company
Name: Japan Music Network Inc.
Business contents:
Operation of music information site BARKS, etc.
② Main reason for proceeding with the business combination
The acquisition was conducted as part of the Company’s strategy of growth and expansion of
the Contents Business.
③ Date of business combination
October 6, 2015
Also, the Company is treating October 1, 2015 as the date on which it obtained control ofJapan Music Network Inc.

④ Legal form of business combination
Share acquisition with cash as consideration (tender offer)⑤ Name of company following acquisition
No change⑥ Percentage of voting rights acquired
85.7%⑦ Grounds for deciding to acquire company
The Company determined that cooperation between Japan Music Network Inc.’s Web MediaBusiness and the Faith Group’s Contents Business would be an appropriate means ofattempting to increase the Faith Group’s corporate value.
(2) Period of results of acquired company included in consolidated financial statements
The period from October 1, 2015 to March 31, 2016
(3) Acquisition cost of acquired company and breakdown of amount(Unit: thousands of yen)

Acquisition valueMarket price of common stock of Japan Music Network Inc.

Acquisition cost

155,000
155,00026

(4) Amount of goodwill, reason for recognition, and method and period of amortization
Not applicable(5) Amounts of assets acquired and liabilities assumed on date of business combination andbreakdown(Unit: thousands of yen)

Current assets
Fixed assets
Current liabilities

47,383
139,3365,887(6) Of the acquisition cost, amount allotted to intangible fixed assets apart from goodwill andsegment-classified amortization period
Not applicable(7) Estimated amount of effect on the Consolidated Statement of Income for the current consolidated
fiscal year under the assumption that the business unification was completed on the first day ofthe current consolidated fiscal year, and its calculation method
Not applicable(8) Details and amount of acquisition-related costs
This information has been omitted, as its impact on the Company’s business performance isimmaterial.

(Segment Information, etc.)[Segment Information]
1. Outline of reportable segments
The Company’s reportable segments provide separate financial information among its various
structural units and also serve as objects of study when the Board of Directors periodically decideon the allocation of business resources and make performance appraisals.
The Company and several of its subsidiaries are engaged in the Content Business, which provides
one-stop contents encompassing everything from planning and production of contents to designand construction of platforms and delivering these things to users. GoodyPoint Co., Ltd. isengaged in the Point Service Business, which provides points services. Nippon Columbia Co.,
Ltd. and its subsidiaries are engaged in the Columbia Business, which involves processing
planned and produced contents including sound sources, videos, etc., into various products andsale of these products.
Accordingly, the Faith Group categorizes the Content Business, the Point Service Business, andthe Columbia Business as its three reportable segments.
The Content Business involves contents delivery, delivery platform technology development,
contents production, etc.
The Point Service Business involves sales of point systems, planning of promotions,planning, production and sales of sales promotion tools, etc.
The Columbia Business involves the processing of planned and produced contents including
sound sources, videos, etc., into various products and the appropriate sale of these products.
2. Calculation method for sales, profit or loss, assets, liabilities and other items by reportablesegment
The accounting method for reportable business segments is largely the same as the method for
preparing 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.

27

3. Information on sales, profit or loss, assets, liabilities and other items by reportable segment
Previous consolidated fiscal year/FY 2014 (April 1, 2014 ~ March 31, 2015)(Unit: thousands of yen)Content

Reportable segment
Point
Columbia
Service

4,550,295

2,454,853

12,591,914

19,597,063－

19,597,063

157,113948

37,881

195,943△195,943－

4,707,408

2,455,802

12,629,796

19,793,006△195,943

19,597,063

168,112

26,093△1,104,790△910,585

18,605△891,979

15,217,471

751,391

9,926,875

25,895,737△60,598

25,835,139

Total

Adjustment
amount (1)Amountrecorded in
Consolidated
Financial
Statements (2)

Sales
Sales to externalcustomers
Inter-segment sales ortransfer amount
Total
Segment profit or loss(△)
Segment assets
Other items
Depreciation expenses△48
255,024
12,896
100,315368,236
368,188
Amortization of－－
64,903
201388266,192
266,192
goodwill
Investment in－－－
117,548
117,548
117,548
equity-method affiliates
Increase in tangible
and intangible fixed－
381,969
29,861
62,862474,693474,693
assets(Notes)1.The segment profit adjustment amount of ¥18,605 thousand and the depreciation expenses adjustment amountof △¥48 thousand for this consolidated fiscal year are calculated by eliminating intersegment transactions.
2.The segment assets adjustment amount eliminates intersegment transactions, etc.
3. Segment profit or loss is adjusted with operating loss in the consolidated financial statements.

Current consolidated fiscal year/FY 2015 (April 1 2015 ~ March 31, 2016)(Unit: thousands of yen)Content

Reportable segment
Point
Columbia
Service

Total

Adjustment
amount (1)Amountrecorded in
Consolidated
Financial
Statements (2)

Sales
Sales to external
4,549,915
2,306,938
13,306,673
20,163,527
20,163,527－
customers
Inter-segment sales or
135,170
2,224
36,441
173,836△173,836－transfer amount
Total
4,685,086
2,309,162
13,343,115
20,337,363
20,163,527△173,836
Segment profit
128,627
198,848
1,201,662
1,529,138
5,337
1,534,475
Segment assets
13,712,236
1,033,167
10,041,682
24,787,086
24,712,183△74,902
Other items
Depreciation expenses
238,331
14,111
109,268
361,711361,663△48
Amortization of42,198102,118
144,316
144,316－－
goodwill
Investment in
128,807
128,807
128,807－－－
equity-method affiliates
Increase in tangible
and intangible fixed
337,430
23,04451,905412,380
412,380－
assets(Notes)1. The segment profit adjustment amount of ¥5,337 thousand and the depreciation expenses adjustment amount of△¥48 thousand for this consolidated fiscal year are 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.

28

[Related Information]
Previous consolidated fiscal year/FY 2014 (April 1, 2014 ~ March 31, 2015)
1. Information by product and service
This information is omitted because similar information is disclosed in the segment information.
2. Information by region(1) Sales: Information on sales by region is omitted because the amount of sales to externalcustomers in Japan accounts for over 90% of the amount of sales reported on the consolidatedbalance sheet.
(2) Tangible fixed assets: Information on tangible fixed assets by region is omitted because theamount of fixed assets in Japan accounts for over 90% of the amount of fixed assets reported on
the consolidated balance sheet.
3. Information on major customers
Information on major customers is omitted because since there were no sales to a single externalcustomer accounting for 10% or more of net sales on the consolidated statement of income.
Current consolidated fiscal year/FY 2015 (April 1 2015 ~ March 31, 2016)
1. Information by product and service
This information is omitted because similar information is disclosed in the segment information.
2. Information by region(1) Sales: Information on sales by region is omitted because the amount of sales to externalcustomers in Japan accounts for over 90% of the amount of sales reported on the consolidatedbalance sheet.
(2) Tangible fixed assets: Information on tangible fixed assets by region is omitted because theamount of fixed assets in Japan accounts for over 90% of the amount of fixed assets reported on
the consolidated balance sheet.
3. Information on major customers
Information on major customers is omitted because since 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 by Reportable Segment]
Previous consolidated fiscal year/FY 2014 (April 1, 2014 ~ March 31, 2015)(Unit: thousands of yen)Content
Impairment
lossesPoint
ServiceColumbia－

10,000106,534

Total

Company-wide/
elimination

Total
－

116,534

116,534

Current consolidated fiscal year/FY 2015 (April 1 2015 ~ March 31, 2016)(Unit: thousands of yen)

Impairment
lossesContent

Point
ServiceColumbia

Total

Company-wide/
elimination

Total

11,774－

9,966

21,740－21,740[Information on Amortization of Goodwill and Unamortized Balance for Each Reportable Segment]
Previous consolidated fiscal year /FY 2014 (April 1, 2014 ~ March 31, 2015)(Unit: thousands of yen)

Year-endbalance

Content

Point
ServiceColumbia

Total

Company-wide/
elimination

Total

4,301

—

1,936,089

1,940,390—

1,940,390(Note)
The amount of amortization of goodwill is omitted because the same information is shown in [Segment
Information].

29Current consolidated fiscal year/FY 2015 (April 1 2015 ~ March 31, 2016)(Unit: thousands of yen)

Year-endbalance

Content

Point
ServiceColumbia

Total

Company-wide/
elimination

Total

125,126－

1,834,190

1,959,316－

1,959,316(Note)
The amount of amortization of goodwill is omitted because the same information is shown in [Segment
Information].

[Information on Gains on Negative Goodwill by Reportable Segment]
Previous consolidated fiscal year/FY 2014 (April 1, 2014 ~ March 31, 2015)
Not applicable
Current consolidated fiscal year/FY 2015 (April 1 2015 ~ March 31, 2016)
Not applicable(Per Share Information)(Unit: yen)

FY 2014 (April 1, 2014 ~ March 31, 2015)
Net assets per share
1,540.233
Net loss per share (△)△295.46

FY 2015 (April 1 2015 ~ March 31, 2016)
Net assets per share
1,576.18
Net income per share
63.86(Notes)1. The amount of net income per share fully diluted during the current consolidated fiscal year is not recorded
because there was a net loss per share and because there are no residual shares.
2. Information on net income per share after full dilution for the current consolidated fiscal year is omitted because
there are no residual shares with the potential to dilute stock value.
3. The basis of the calculation of net income or net loss (△) per share is as follows.
FY 2014(April 1, 2014 ~ March 31,
2015)
Net income or net loss (△) per share
Net income or net loss (△)(thousands of yen)Amount not attributable to ordinary
shareholders (thousands of yen)
Net income or net loss (△) applicable tocommon stock (thousands of yen)
Average number of shares outstanding
during the period (shares)
Overview of residual shares notincluded in the computation of diluted
net income per share since they have nopotential to dilute stock value

FY 2015(April 1 2015 ~ March 31, 2016)△3,340,479

646,004－－△3,340,479

646,004

11,305,901

10,116,500－－

4. The basis of the calculation of net assets per share is as follows.
FY 2014 (as of March 31, 2015) FY 2015 (as of March 31, 2016)
Total amount of net assets (thousands of
17,723,169
16,829,810
yen)Amount deducted from total amount of
804,529
1,273,549
net assets (thousands of yen)
(Minority interests)(745,938)(1,230,815)(Share warrants)(58,591)(42,734)
Year-end net assets applicable tocommon stock (thousands of yen)
Term-end number of shares of common
stock used in calculating net assets per
share (shares)

30

16,918,640

15,566,260

10,984,520

9,869,610

(Significant Subsequent Events)
Not applicable(Omission of Disclosure)
No notes are presented concerning information on lease transactions, financial instruments,
marketable securities, derivative transactions, retirement benefits, stock options, etc., tax
effective accounting, rental property and related parties because their amounts are considered too
small and insignificant for presentation in the Brief Statement of Financial Results.

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