BRIEF STATEMENT OF ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED
MARCH 2013 AND FORECASTS FOR THE YEAR ENDING MARCH 2014
May 14, 2013
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 27, 2013
Date of Submission of Annual Security Report: June 28, 2013
Starting Date of the Dividend Payment: June 28, 2013
Preparation of Supplementary Materials for Quarterly Financial Results: Applicable
Information Meeting for Quarterly 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 2013 (From April 1, 2012 to March 31, 2013)(1) Consolidated Operating Results(Percentages indicate changes compared with the previous fiscal year.)

Net SalesYear ending
March 2013

Millions of yen

March 2012

Operating Profit
Millions of yen

6,732

%
△79.9

33,415△60.3

Recurring Profit
Millions of yen

1,013

%
△35.7

1,576

△26.0

Net Profit
Millions of yen

1,119

%
△36.4

1,111

%
△83.3

1,758

△20.5

6,665

464.0

(Note) Comprehensive income: fiscal year ending March 2013: ¥1,148 million (△83.5%); fiscal year ending March 2012: ¥6,949 million(319.7%)

Net Profit per
Share

Year ending
March 2013
March 2012

Diluted Net Profit
per Share

Return on Equity
CapitalRecurring Profit on
Total Assets

Operating Profit on
Net Sales

Yen—
5,803.03

%
5.5
41.0

%
4.9
6.3

%
15.1
4.7

Yen
969.54
5,805.70(Reference) Equity in earnings of associated companies: fiscal year ending March 2013: ¥52 million/fiscal year ending March 2012: ¥152
million(2) Consolidated Financial Position
Total Assets

Year ending
March 2013
March 2012

Net Assets

Millions of yen

Millions of yen

22,611
23,51820,552
19,618

Ratio of Equity Capital

Net Assets per Share

%
90.9
83.3

Yen
18,038.91
17,066.74(Reference) Equity capital: fiscal year ending March 2013: ¥20,552 million/fiscal year ending March 2012: ¥19,593 million(3) Cash Flow Results
Cash
Flow
from
Operating Activities

Year ending
March 2013
March 2012

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

△644
3,267

△1,569△4,117

△608
△507

6,125
8,961

1

2. Dividends
Dividends per Share
(Record dates)

Year ending
March 2013
March 2012
March 2014
(Forecast)

1st
Quarter
Yen

Interim―――

Total Dividend
Payment

Year-end

Yen

3rd
Quarter
Yen

Yen

Total
(Annual)
Yen

50.00
50.00
50.00

―
―
―

50.00
50.00
50.00

100.00100.00100.00

Dividend on Net
AssetsPayout Ratio(Consolidated)(Annual)(Consolidated)

%
1.7
10.3
57.0

Millions of yen

114
114

%
0.7
0.6

3. Forecast for the Consolidated Results for the Year Ending March 2014
（from April 1，2013 to March 31，2014）(Percentages indicate changes compared with the previous fiscal year and the previous interim result.)

Net Sales

First
half
(cumulative)
Full year

Operating Profit

Recurring Profit

Net Income

Net Income
per Share

Millions ofyen%Millionsof yen%Millionsof yen%Millionsof yen

%

Yen

3,100

△9.2

10

△98.2

△100

—

△150

—

△131.65

7,000

4.0

300

△70.4

250

△77.7

200

△82.0

175.54※ Notes(1) Changes in significant subsidiaries (accompanying changes in scope of consolidation): None
(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: Applicable(2)-4. Restatements: None
(Note) These items correspond to the Ordinance on Terminology, Forms, and Preparation Methods ofConsolidated Financial Statements, Article 14-7 (In cases where there are difficulties in distinguishingchanges in accounting policies from changes in accounting estimates). Regarding the details, pleaserefer to 4. Consolidated Financial Statements, (5) Notes Concerning the Consolidated Financial
Statements, (Segment Information, etc.) on page 20 of the accompanying material.
(3) Outstanding shares (common shares)(3)-1. Outstanding shares at the end of the fiscal years (including treasury shares):
The fiscal year ending March 2013: 1,196,000 shares
The fiscal year ending March 2012: 1,196,000 shares(3)-2. Treasury shares at the end of the fiscal year:
The fiscal year ending March 2013: 56,657 shares
The fiscal year ending March 2012: 47,950 shares(3)-3. Average number of shares at the interim accounting period
The fiscal year ending March 2012: 1,146,599 shares
The fiscal year ending March 2011: 1,148,050 shares

2

(Reference) Overview of Non-Consolidated Results
Results for the Fiscal Year Ending March 2013 (From April 1, 2012 to March 31, 2013)(1) Non-Consolidated Operating Results(Percentages indicate changes compared with the previous fiscal year.)

Net Sales

Operating Profit%

Recurring Profit

Millions of yen%

Millions of yen

25
50

Year ending
March 2013

Millions of yen

3,185

△15.2

△19

—

March 2012

3,755

△17.1

3

△99.0

Net Profit per ShareYear ending
March 2013
March 2012

Net Profit%

Millions of yen

%

△49.2

△136

—

△83.8

6,369

1,364.3

Diluted Net Profit per ShareYen△119.365,548,26

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

Year ending
March 2013
March 2012

Net Assets

Ratio of Equity
CapitalNet Assets per Share

Millions of yen

Millions of yen%

Yen

20,95323,22019,56019,858

93.4
85.5

17,168.47
17,297.30(Reference) Equity capital: fiscal year ending March 2013: ¥19,560 million/fiscal year ending March 2012: ¥19,858 million* Indication of auditing procedures implementation status
This financial results report is exempt from quarterly review procedures under Japan’s Financial Instruments and Exchange
Law. As of the time of disclosure of this report, the auditing procedure based on the Financial Instruments and Exchange Law
has not been completed.
* Statement regarding the proper use of financial forecasts and other special remarks(Notice regarding statements concerning the future)
Statements concerning the future, such as performance forecasts, etc., described in the present material are based on
information currently available to the Company and on certain assumptions judged as reasonable by the Company. The
Company’s actual performance may differ substantially from these forecasts as a result of various factors beyond theCompany’s control. For details of cautions, etc., employed in making performance forecasts and the assumptions underlying
performance forecasts, please refer to 1. (1) Analysis of Operating Results on page 2 of the accompanying material.
(To obtain supplemental documents relating to financial results)
Supplemental documents related to the Company’s quarterly and other financial results are posted on the company website.
(URL: http://www.faith-inc.com/ir/library.html )3

Accompanying Material Contents
1. Operating Results…………………………………………………………………………………… 2(1) Analysis of Operating Results………………………………………………………………… 2(2) Analysis of Financial Position………………………………………………………………… 4(3) Basic Policy Regarding 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 Business Strategy………………………………………….………. 6(3) Challenges the Company Should Address …………………………………………………… 7
4. 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(Changes in Accounting Policies that are Difficult to Distinguish from Changes in Accounting
Estimates)………………………………………………………………………………………… 18(Changes in Presentation Methods)……………………………………………………………… 18(Additional Information)………………………………………………………………………… 18(Consolidated Balance Sheet Related) …………………………………………………………… 18(Consolidated Statement of Income Related)……………………………………………………… 19(Consolidated Statement of Comprehensive Income Related) …………………………………… 20(Consolidated Statement of Changes in Shareholders’ Equity Related)……………………… 21(Consolidated Statement of Cash Flows Related) ……………………………………………… 22(Segment Information, etc.) ……………………………………………………………………… 22(Per Share Information)…………………………………………………………………………… 25(Significant Subsequent Events) ………………………………………………………………… 26(Omission of Disclosure) ………………………………………………………………………… 26

1

1. Operating Results(1) Analysis of Operating Results
In Japan, the number of individual mobile phone and smartphone subscriptions reached 136,810,000 (*1)
as of the end of March 2013, with smartphones accounting for 77.9% of the total. Moreover, theshipment volume of tablet devices during 2012 totaled 4,620,000 units, an increase of 91.3% comparedwith the previous year (*2). The market is expanding rapidly as low-priced tablet devices spread topersonal users, and the demand for such devices is expected to continue to remain robust in future.
(*1) Research by the Telecommunications Carriers Association, (*2) Research by IDC Japan

In the background of the ongoing popularization of smartphones and tablet devices are the increasing
diversification and complexity of communication platforms such as Twitter and Facebook, SNS (social
networking services) such as free communication/free mail (messenger), apps that cater to various
hobbies and preferences, and of various means of information distribution, as well as the demand for thecreation of new services and contents distribution systems to meet user needs.
In this market environment, based on its Multi-Content and Multi-Platform Strategy of creating anenvironment that allows people to enjoy a wide diversity of contents whenever and wherever theychoose, the Faith Group has been pouring its energies into creating high value-added contents andestablishing a new system for delivering these contents to users.
During the fiscal year under review, the Company expanded its services for smartphones and started up
a number of new services that hold out the promise of future growth, such as a new music distribution
service using streaming, etc.
In line with the disposal of the Company’s consolidated subsidiary WebMoney Corporation in July
2011, the Electronic Money Business is no longer included in the Faith Group’s consolidated financial
results, which now comprise the Content Business and the Points Business. Accordingly, net sales forthe fiscal year ending March 2012 decreased by 79.9% compared with the same term of the previous
fiscal year to ¥6,732 million. Regarding profitability, although the profit generated by the Electronic
Money Business in previous years is no longer included in the consolidated financial results, thanks tothe contribution made by of the entire Faith Group to reducing costs, operating profit decreased by
35.7% year on year to ¥1,013 million, and recurring profit decreased by 36.4% year on year to ¥1,119
million. Moreover, taking into account the Company’s booking of an extraordinary profit of ¥6,892
million from the sale of its shareholding in WebMoney Corporation during the previous fiscal year, theGroup recorded a net profit for the fiscal year under review of ¥1,111 million, an decrease of 83.3%
year on year.
In addition, the Faith conducted a stock repurchase as a means of returning a portion of its profit to theshareholders. Acting in the market through a trust bank, the Company purchased a total of 8,707 sharesof common stock (at a total cost of ¥99 million) on the Tokyo Stock Market between February 13 and19, 2013.
Information on each business segment is as follows. In addition, from the consolidated fiscal year underreview, changes have been made to the composition of the reported segments. Accordingly, regarding
year-on-year comparisons, figures for the same period of the previous fiscal year have been changed toreflect the new reported segments and allow comparisons with figures for the current fiscal year.
<Content Business>
In the ringtone melody field, which is included in the Content Business, in keeping with the shift in themobile phone market toward smartphones, the Faith Group has been seeking to expand its
smartphone-use services. However, the expansion of ringtone melody sales for smartphone-use services
during the fiscal year under review was even more modest than that for the overall market, with theresult that the Group’s sales in this business declined. Under these circumstances, in order to respond to
the successive appearance of new information devices and the ongoing diversification and segmentationof user needs, the Group continued its efforts to create a new framework for content distribution andconstruct a new business operations base.
In the music and video distribution field, the Group launched Japan’s first social music application,
2

viBirth App, a free-of-charge platform that gives artists and fans alike the opportunity to make use of awide range of functions including music purchasing, playback, video viewing, photo posting, Twitter
access, etc. The Group also started up FaRao TM, an internet-based radio service that provides musictailored to individual listeners’ tastes by automatically analyzing their favorite programs as well as
analyzing artist and music attributes classified under several hundred categories. In addition, the Grouplaunched FaRao TVTM, an application that makes viewing recommendations matching individual tastes
from a wide range of movie trailers and promotional videos and helps boost video awareness. The 25th
Tokyo International Film Festival employed FaRao TVTM as an authorized app.
In the app content field, gamebooks are fictional works in which readers can make choices that change
the way the story develops. During the consolidated fiscal year under review, the Faith Group launched
the world’s first gamebook app exclusive portal site iGameBook, and also released Japan’s premieradventure gamebook “Pictures at an Exhibition” in an English language version. Moreover, the Groupbegan marketing a series of intellectual training apps for infants and children called “Suku Suku
Rhythmic! Sawatte Asobo! Wonder Rhythm”, which allows children to play with the familiar melodies
of nursery rhymes, etc.
In order to improve the synergies between its member companies and develop new business models
based on original ideas, the Faith Group carried out investment in peripheral business during theconsolidated fiscal year under review. In addition to investing in Lync-Entertainments, which is
involved in artist discovery, cultivation and management, the Group acquired a 100% shareholding in
ENTERMEDIA INC., which produces and operates mobile phone and smartphone-use official fan club
websites for many major artists and talents together with an e-commerce business handling productsales of artist goods, CDs and DVDs, etc., and made this company into a consolidated subsidiary.
As a result of the above, the Group recorded net sales in the Content Business for the fiscal year ending
March 2013 of ¥5,303 million, a decrease of 16.8% compared with the previous fiscal year, in line withdeclining sales mainly in the ringtone business. Meanwhile, as a result of cost cutting in respect ofserver expenses, outsourcing costs, etc., operating profit decreased by 14.8% year on year to ¥843
million, while the profit margin improved by 0.4 points to 15.9%.
<Point Service Business>
In the Point Service Business, the issuing of points remained strong due to sales promotions by existing
member stores and to a rising demand for Reconstruction Assistance Housing Eco-Points, with theresult that this business recorded net sales of ¥1,429 million, an increase of 7.8% year on year, and an
operating profit of ¥169 million, an increase of 11.5% year on year.
The business performance forecasts for next fiscal year (FY2014) are as follows. As a consequence ofits purchase of a 100% shareholding in ENTERMEDIA INC., acquiring this company as a consolidated
subsidiary, etc., the Faith Group is currently forecasting net sales of ¥7,000 million (up 4%
year-on-year). Also, in accordance with the decline in income in the Content Business, the Group isforecasting an operating profit of ¥300 million (down 70.4% year-on-year), a recurring profit of ¥250
million (down 77.7% year-on-year), and a net profit of ¥200 million (down 82.0% compared with
FY2013).
(Unit: millions of yen)

Net sales
Operating profit
Recurring profit
Net profit

FY2012 (Result)
(a)
6,732
1,013
1,119
1,111

FY2013 (Forecast)
(b)
7,000
300
250
200

Change(b)-(a)
267
△713
△869
△911

Currently, in the Japanese content market, the PC, mobile phone and smartphone-use content market is
exhibiting favorable growth. In the content viewing environment, the progressive improvement of
information terminals such as PCs, mobile phones and smartphones is allowing people to enjoy a wider
variety of contents. On the other hand, with the appearance of a succession of new services that makeuse of these information terminals, the diversification and segmentation of both informationtransmission means and user needs are accelerating.
3

In this complex market environment, the Faith Group is proceeding with the development of its“multi-content & multi-platform strategy”, including by constructing new systems for distributing
guaranteed-quality contents. In addition, the Group is continuously promoting content production infields such as music and video, etc., in order to bolster its ability to rapidly launch excellent highvalue-added contents on the market, and Faith also is working to provide users with highly convenientservices including new services for users of smartphones in line with the accelerating popularity ofthese devices.
By contrast, from an early stage, the Group has considered that its business would naturally shift fromCD sales to artist-centered entertainment-related sales such as performance fees, merchandising fees,
live event income, the character goods business, etc. Based on this outlook, Faith is proceeding with theconstruction of new business models by setting out a New 360° Strategy to provide excellent contents
using a wide variety of methods. This approach is meeting with gradual success as systems fordelivering various kinds of copyrighted work via the internet are becoming better understood. In order
to embody the New 360° Strategy and globally develop each of these services beginning with FaRao TM,
the Group will actively pursue further preparatory investments including M&A activities.

(2) Analysis of Financial Position① Assets, Liabilities and Net Assets
Total assets as of the end of the consolidated fiscal year ended March 31, 2013 decreased by ¥907
million from the end of the previous consolidated fiscal year to ¥22,611 million. This result was mainly
due to a decrease in cash and deposits due to the payment of corporation tax, etc.
Total liabilities decreased by ¥1,841 million compared with the end of the previous consolidated fiscal
year to ¥2,058 million yen. This result was mainly due to a decrease in unpaid corporation tax, etc., andto a decrease in long-term debt in line with repayment.
.
Net assets increased by ¥933 million compared with the end of the previous consolidated fiscal year to¥20,552 million. This was mainly the result of an increase in retained earnings in line with the net profit
recorded for the current fiscal year, despite dividend payments and the acquisition of treasury stock.
With this, the Group’s capital adequacy ratio increased by 7.6 percentage points to 90.9%.
② Cash Flow
Cash and cash equivalents at the end of the consolidated fiscal year ended March 31, 2013 decreased by¥2,836 million (a 31.7% reduction) from the end of the previous consolidated fiscal year to ¥6,125
million.
Details of cash flow during this fiscal year and its main contributory factors were as follows:(Cash flow from operating activities)
Cash flow from operating activities amounted to an outflow of ¥644 million, compared with an inflowof ¥3,267 million during the previous fiscal year. This was due mainly to deductions in depreciation
expenses of ¥291 million and in trade receivables of ¥178 million from the Group’s net profit before
taxes and to other adjustments of ¥1,038 million, and also to the addition of ¥93 million in respect ofimpairment losses and the elimination of ¥2,067 million in respect of corporation tax payment.
(Cash flow from investing activities)
Cash flow from investing activities amounted to an outflow of ¥1,569 million (a decrease of 61.9%
compared with the previous fiscal year), due mainly to the posting of ¥6,392 million in expenditure in
respect of opening new term deposits, despite ¥5,190 million in income from withdrawals of existingterm deposits.
(Cash flow from financing activities)
Cash flow from financing activities amounted to an outflow of ¥608 million (an increase of 19.8%
compared with the previous fiscal year), due mainly to posting of ¥399 million in expenditure in respectof repayment of long-term debt and of ¥113 million in respect of dividend payments.
4

(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 2011
39.4
38.1
0.31

FY 2012
83.3
48.9
0.35

FY 2013
90.9
53.6
△1.18

148.9

202.1

△90.4

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 payment(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
shares.
(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 payment, 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 Appropriation of Profit and Dividend Payment
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 positions.
Based on its fundamental policy of paying continued stable dividends, the Company plans to pay
dividends of ¥100 per share, including interim dividends of ¥50, 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), 5
subsidiaries and 6 affiliates, and is engaged mainly in the Content Business and the Point Service
Business.
The Faith Group’s businesses and the relationship between the Company and the other group companies
with regard to business operations are as follows. In addition, the following business segments are thesame as the segments referred to in 4. Consolidated Financial Statements, (5) Notes Concerning theConsolidated Financial Statements, (Segment Information, etc.). The Group has changed its reportablesegment classification with effect from the fiscal year under review. The details are given in 4.
Consolidated Financial Statements, (5) Notes Concerning the Consolidated Financial Statements,(Segment Information, etc.) on page 18.

(1) Content BusinessIn the diversifying content market, the Group is promoting multi-platform-compatible multi-content
distribution to users regardless of the network or terminal device used with the aim of creating a newcontent distribution framework for the emerging new market. As a comprehensive service provider, theGroup is promoting one-stop solutions ranging from the construction of distribution systems andoperation of services for end-users to the planning and production of digital contents.
This business is conducted by Faith, Inc., Faith Wonderworks, Inc., and 9 other subsidiaries andaffiliates.
In addition, on April 1, 2013, the Company purchased a 100% shareholding in ENTERMEDIA INC.,
making this company a consolidated subsidiary.

5(2) Point Service Business
The Group is engaged in the Point Service Business, which conducted by GoodyPoint Inc. and aimed at
the retail industry.
[Business System Diagram]
The following diagram shows the Faith Group’s business system as described above.

The FaithGroup(Faith Inc.
and its
group
companies)

Content BusinessJapan
The Company (Faith, Inc.)
Faith Wonderworks, Inc.
Rightsscale, Inc.
Future RECORDS, Inc.
*4. ENTERMEDIA INC.
*2. Nippon Columbia Co., Ltd.
*2. Catch Media Japan, Inc.
*2. Japan Rights Clearance Inc.
*2. Lync-Entertainments*3. Plus 1 other company
Overseas

Content distribution service
provision==================>Development of content
platform technology
Content production services

Ourcustomers*1. Rightsscale USA, Inc.
*3. Plus 1 other company

Provision of point services===================>
Other BusinessJapan
Goody Point CO.,LTD(Notes)No mark: Consolidated subsidiaries*1:
Non-consolidated subsidiary to which the equity method is not applied*2:
Affiliates to which the equity method is applied*3:
Affiliates to which the equity method is not applied*4:
Newly consolidated subsidiary (acquired as of April 1, 2013)

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 usage environments of mobile phone, smartphone, PC and TV
users. In addition, while producing and procuring contents suitable for these services, the Company andits affiliated group companies will strive to develop the methods, technologies and know-how to realize
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 Business 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
6environment, the Group is giving consideration to accurately grasping user needs, promoting its“multi-content on multi-platform strategy” (for creating an environment in which people can enjoy awide variety of contents when and where they desire), and improving its equity capital and profitability,
which are operating resources that are linked to increasing corporate value and shareholder profit.
Accordingly, the Group places emphasis on the equity capital ratio and the operating profit as
management indexes.

(3) Challenges the Faith Group Should Address
The domestic mobile content industry is continuing to grow by making innovative use of technology
and information transfer methods based on a succession of newly appearing ideas. Consequently, userneeds are becoming more diversified and complex at an accelerating pace, and a flood of various kindsof contents including free distribution items has been sweeping into the market in response to theseevolving needs. Against this backdrop, the Faith Group will continue 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 toprovide excellent high-value-added contents in a diversifying usage environment and market to all users
regardless of the type of network and information terminals they use, the Group intends to carry out thefollowing measures.
① Content Business
A vigorous demand exists for the creation of new content services. To satisfy this demand, the FaithGroup will create new markets by developing distribution systems that bring benefits to content rights
holders, distributors and users alike based on the technology and know-how accumulated by the Groupup to now as well as on providing its own business solutions through partnerships with prominentcompanies in a range of business fields. In order to realize this goal, the Group will make every effort toreinforce 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.
Also, in line with the increasing diversification of the content-usage environment due to ongoing
technological renovation, the construction of new content distribution systems has become an ongoing
requirement. Against this background, ever since its establishment, the Faith Group has endeavored tobuild up its content distribution business by making use of various information devices as a major pillarof its business. In the future, the Group will develop new service systems that are useful for content
rights holders, distributors and users, and will commercialize the necessary technology such asembedded terminal technology, distribution system technology, etc.
② Point Service BusinessIn the Point Service Business in the retail industry, recent years have witnessed an increase inpartnerships encompassing the mutual use of points across multiple retail operations while competition
between point services has also been growing. The Faith Group recognizes the need to improve thelevel of satisfaction experienced by its point service member stores by reducing operational costs andimproving convenience for these customers, and by enhancing the proposal power of its CRM Solution
Service (making proposals for store strategies leading to an expansion of the store’s earnings based on
analysis of customer purchasing behavior), etc. In addition, the Group will adopt a strategic approach intackling the tasks it needs to address.

74. 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
Depreciation amount
Buildings and structures (net base)Machinery and delivery equipment
Depreciation amount
Machinery and delivery equipment (net base)Tools, devices and equipment
Depreciation amountTools, devices and equipment (net base)Land
Total tangible fixed assets
Intangible fixed assets
Goodwill
SoftwareLeased 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

FY2011

FY 2012(As of March 31, 2012)(As of March 31, 2013)

13,712,005
1,106,836
239,790
2,580
8,199
7,817
—
28,269260,218△29,816
15,335,901

12,076,535
930,681
540,780
4,464
5,633
7,004
696,298
224,075
117,874△21,627
14,581,719

1,519,215△176,203
1,343,011
24,095△18,299
5,795
835,959△677,874
158,084
1,500,895
3,007,786

1,525,948△257,859
1,268,089
15,222△11,699
3,522
829,738△731,848
97,8901,500,895
2,870,397

40,599319,356
20,25342,525
422,734

16,269282,269
15,913
19,621
334,074*84,644,916
121,294△13,734
4,752,477
8,182,998
23,518,900*

4,761,282
63,890△225
4,824,948
8,029,420
22,611,140

(Unit: thousands of yen)

(Liabilities)
Current liabilities
Trade notes and Accounts payable
Short-term loans
Lease obligations
Income taxes payable
Allowance for points
Allowance for bonus payments
OthersTotal current liabilities
Fixed liabilities
Long-term liabilities
Lease obligations
Deferred tax liabilities
Allowance for retirement benefits
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
Total other accumulated comprehensive income
Minority interests
Total net assets
Total liability and net assets

9

FY2011

FY 2012(As of March 31, 2012)(As of March 31, 2013)

187,933
399,984
4,308
1,424,393
208,142
73,566
610,316
2,908,644

203,006
409,884
4,453
145,492
175,091
73,914
411,137
1,422,978733,384
17,483
125,729
109,389
5,363
991,350
3,899,995

333,400
13,030156,077
127,394
5,755
635,657
2,058,636

3,218,000
3,708,355
13,106,638△651,377
19,381,616

3,218,000
3,708,355
14,103,509△751,372
20,278,491

227,124△15,270
211,853
25,435
19,618,905
23,518,900

283,308△9,296
274,012—
20,552,504
22,611,140

(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 profit
Non-operating profit
Interest income
Dividend income
Interest on securities
Exchange gain
Investment gain on equity method
Miscellaneous receipts
Total non-operating profit
Non-operating expenses
Interest paid
Exchange loss
Investment partnership losses
Miscellaneous expenses
Total non-operating expenses
Recurring profit
Extraordinary profit
Gain on disposal of fixed assets
Gain on disposal of investment securities
Gain on sale of shares of affiliated company
OthersTotal extraordinary profit
Extraordinary losses
Loss on disposal of fixed assets
Loss due to amortization
Loss on valuation of investment securities
Loss on sale of shares of affiliated company
Overseas tax practice-related loss
OthersTotal extraordinary losses
Net income before income taxes
Corporate, local, and business taxes
Income taxes - deferred
Total corporate, local, and business taxes
Net income before minority interests
Minority interests in income
Net profit for the current fiscal year

FY 2011

FY 2012(As of March 31, 2012)
33,415,989*2
27,290,091
6,125,898*1, *24,549,456
1,576,442(As of March 31, 2013)
6,732,576*2 *6
3,420,425
3,312,151*1, *2
2,298,665
1,013,458

26,635
5,560
13,826—
152,888
7,469
206,380

30,217
6,395
4,157
18,06952,114
7,121
118,075

16,204
1,967
5,000
1,012
24,184
1,758,637

7,119
—
3,809
1,464
12,392
1,119,168

*4
*5

10

—
28,795
6,899,538
77,865
7,006,199*3

23,48945,598936
79,565—
6,141
155,730
8,609,106
1,565,313
240,226
1,805,540
6,803,566
138,335
6,665,231

*4
*5

316
51,400——51,71623,85693,4282,573—
11,892351
132,102
1,038,782
158,665△206,124△47,458
1,086,240△25,435
1,111,676

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

Net income before minority interests
Other comprehensive income
Valuation difference on other available-for-salesecurities
Foreign currency translation adjustments
Total other comprehensive income
Comprehensive income(Details)
Comprehensive income attributable to shareholders of
the parent company
Comprehensive income attributable to minority
interests

11

FY 2011

FY 2012(As of March 31, 2012)
6,803,566(As of March 31, 2013)
1,086,240△40,691

55,623

186,227
145,535
6,949,102

6,535
62,159
1,148,399**

6,810,767

1,173,835

138,335△25,435

(3) Consolidated Statement of Changes in Shareholders’ Equity(Unit: thousands of yen)

Shareholders' equity
Common stock
Balance at the start of the accounting period
Changes of items during the accounting period
Total changes of items during the accounting period
Balance at the end of the accounting period
Capital surplus
Balance at the start of the accounting period
Changes of items during the accounting period
Total changes of items during the accounting period
Balance at the end of the accounting period
Retained earnings
Balance at the start of the accounting period
Changes of items during the accounting period
Cash dividend paid
Net gain or loss
Total changes of items during the accounting period
Balance at the end of the accounting period
Treasury stock
Balance at the start of the accounting period
Changes of items during the accounting period
Acquisition of treasury stock
Total changes of items during the accounting period
Balance at the end of the accounting period
Total shareholders' equity
Balance at the start of the accounting period
Changes of items during the accounting period
Cash dividend paid
Net gain or loss
Acquisition of treasury stock
Total changes of items during the accounting period
Balance at the end of the accounting period

12

FY2011(As of March 31, 2012)

FY2012(As of March 31, 2013)

3,218,000

3,218,000—
3,218,000—
3,218,000

3,708,355

3,708,355—
3,708,355—
3,708,355

6,556,212

13,106,638△114,805
6,665,231
6,550,426
13,106,638△114,805
1,111,676
996,871
14,103,509△651,377△651,377——△651,377△99,995△99,995△751,372

12,831,189

19,381,616△114,805
6,665,231—
6,550,426
19,381,616△114,805
1,111,676△99,995
896,875
20,278,491

(Unit: thousands of yen)

Accumulated other comprehensive income
Valuation difference on other available-for-sale securities
Balance at the start of the accounting period
Changes of items during the accounting period
Net changes of items other than shareholders' equity
Total changes of items during the accounting period
Balance at the end of the accounting period
Foreign currency translation adjustments
Balance at the start of the accounting period
Changes of items during the accounting period
Net changes of items other than shareholders' equity
Total changes of items during the accounting period
Balance at the end of the accounting period
Total accumulated other comprehensive income
Balance at the start of the accounting period
Changes of items during the accounting period
Net changes of items other than shareholders' equity
Total changes of items during the accounting period
Balance at the end of the accounting period
Minority interests
Balance at the start of the accounting period
Changes of items during the accounting period
Net changes of items other than shareholders' equity
Total changes of items during the accounting period
Balance at the end of the accounting period
Total net assets
Balance at the start of the accounting period
Changes of items during the accounting period
Cash dividend paid
Net gain or loss
Acquisition of treasury stock
Net changes of items other than shareholders' equity
Total changes of items during the accounting period
Balance at the end of the accounting period

13

FY2011(As of March 31, 2012)

FY2012(As of March 31, 2013)

268,011

227,124△40,887△40,887
227,124

56,18456,184283,308△201,693△15,270

186,422
186,422△15,270

5,974
5,974
△9,296

66,317

211,853

145,535
145,535
211,853

62,15962,159274,012

1,647,118

25,435△1,621,682△1,621,682
25,435△25,435△25,435—

14,544,625

19,618,905△114,805
6,665,231—△1,476,146
5,074,279
19,618,905△114,805
1,111,676△99,995
36,723
933,598
20,552,504

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

Cash flow from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Amortization of goodwill
Amortization loss on goodwill
Gain or loss on equity method investments (△ = gain)
Increase/decrease in allowance for doubtful accounts
Increase/decrease in reserve for bonus
Increase/decrease in allowance for utilized costs
Increase/decrease in allowance for unexercised sales
promotion points
Increase/decrease in allowance for retirement benefits
Interest and dividends income
Interest on securities
Interest paid
Gain or loss on foreign exchange (△ = gain)
Gain or loss on sale of investment securities (△ = gain)
Gain or loss on sale of shares in affiliates (△ = gain)
Gain or loss on valuation of investment securities (△ = gain)
Gain or loss on sale of fixed assets (△ = gain)
Gain or loss on disposal of fixed assets (△ = gain)
Increase/decrease in trade receivables (△ = increase)
Increase/decrease in inventory assets (△ = increase)
Increase/decrease in trade payables
Increase/decrease in consumption tax receivable (△ =increase)
Increase/decrease in consumption tax payable
OthersSub-totalInterest and dividends received
Interest paid
Income tax refunded
Income tax paid
Cash flow from operating activities

14

FY2011(As of March 31, 2012)

FY2012(As of March 31, 2013)

8,609,106
307,580
45,598
196,646△152,888△107,103△4,041
405,173

1,038,782
291,850
93,42824,330△52,114△8,248348—△22,837△33,050

17,565△32,196△13,826
15,297
1,532△28,795△6,819,973
936—
23,489△1,169,057△7,1152,577,833

18,004△36,613△4,157
7,119△14,648△51,400
—
2,573
△316
23,856
178,646
1,495
15,169—10,929△73,831△136,993
3,632,101
26,640△16,168
4,167△379,321
3,267,419

6,734△126,190
1,386,527
42,987△7,129541△2,067,534△644,607

(Unit: thousands of yen)

Cash flow from investing activities
Expenditure for opening of term deposits
Proceeds from withdrawal of term deposits
Expenditure for acquisition of marketable securities
Income from sale of marketable securities
Expenditure for acquisition of tangible fixed assets
Income from sale of tangible fixed assets
Expenditure for acquisition of software
Expenditure for acquisition of investment securities
Proceeds from sale of investment securities
Expenditure for acquisition of shares of affiliates
Proceeds from sale of shares of affiliates
Proceeds from sale of shares of subsidiaries in line withchanges in scope of consolidation
Proceeds from liquidation of subsidiaries
Expenditure for loans receivable
Proceeds from collection of loans receivable
Expenditure for security deposits
Proceeds from collection of security deposits
OthersNet cash flow from investing activities
Cash flow from financing activities
Net increase (decrease) in short-term loans payable
Expenditure for repayment of lease obligations
Expenditure for repayment of long-term borrowing
Proceeds from payment from minorities
Expenditure for acquisition of treasury stock
Payment of dividends
Dividends paid to minority interests
Net cash flow from financing activities
Effect of exchange rate on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Decrease in cash and cash equivalents resulting from exclusionof subsidiaries from consolidation
Cash and cash equivalents at end of year

15

FY2011(As of March 31, 2012)

FY2012(As of March 31, 2013)△8,740,000
4,670,000△199,590
300,000△333,957—△213,180△202,000
29,636△79,997
197,000△6,392,145
5,190,000——△39,289
71△176,866△286,637
61,400△4,900—*2*1414,654——△3,109120△21,108
8,834
54,856△4,117,841

28,318—3,705△315
40,1896,539△1,569,929—△992△399,984
33,000—△113,727△25,801△507,506△1,877△1,359,805
10,321,601

9,900△4,308△399,984—△99,995△113,804—△608,192
14,473△2,808,256
8,961,796—△28,338

8,961,796*1

6,125,200

(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: 5 companies, current fiscal year: 4 companies
Names of major consolidated companies:• Faith Wonderworks, Inc.
• Goody Point CO., LTD• Future RECORDS Inc.
In accordance with the completion of the liquidation of the Company’s subsidiary Sybase Inc. during
the previous fiscal year, this company has been removed 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 profit 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: 3 companies, current fiscal year: 4 companies
Names of major consolidated companies:• Nippon Columbia Co., Ltd.
• Catch Media Japan, Inc.
• Japan Rights Clearance Inc.
• Lync-Entertainments
Among the aforementioned companies, Lync-Entertainments, for which the Company newly
acquired a controlling shareholding during the current consolidated fiscal year, has been included
within the scope of application of equity method accounting.
(2) Non-consolidated companies to which the equity method is not applied (Rightsscale USA, Inc.) andaffiliated companies (Dragon Eye Inc. and others) have been excluded from the scope of applicationof equity method accounting because, in view of their net profit or loss (amount corresponding toequity) and retained earnings (amount corresponding to equity), etc., excluding them from the scopeof application of equity method accounting has only a minor influence on the Consolidated Balance
Sheet and is of no overall significance.
3. Items Concerning the Accounting Periods of the Consolidated Subsidiaries
Of the consolidated subsidiaries, GoodyPoint Corp. has a settlement date of February 28 as itsbalance sheet closing date. In producing the Consolidated Balance Sheet, each company’s balance
sheet as of their respective balance sheet closing dates is used. However, necessary adjustments forconsolidation are made concerning important transactions that occurred between February 28 and theconsolidated settlement date of March 31.
4. Items Concerning the Accounting Standards(1) Significant evaluation standards and methods
1) Marketable securities
a. Securities held to maturity: Stated under the amortized cost method (straight line method)b. 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 settlement of16

accounts (in which all differences between the carrying amounts and the fair values are reported
as a separate component of net assets, while the cost of securities sold is calculated by themoving average method)—Available-for-sale securities without a fair market value: stated at cost determined by the moving
average method. For investment equities in investment partnerships, a method based on the mostrecent balance sheet available at the balance sheet reporting date provided in the partnershipcontract is employed, taking an amount equivalent to the equity value.
2) Inventories
a. Commercial products and merchandise: Stated mainly under the cost method employing thespecific cost method (balance sheet values calculated by devaluing the book values based on
declining profitability).
b. Manufactured products and products in progress: Stated mainly under the cost method employing
the specific cost method (balance sheet values calculated by devaluing the book values based on
declining profitability). Regarding the acquisition cost of each product, amortization is conducted
as a lump sum at the time of obtaining revenue from the product.
(2) Significant depreciable assets and depreciation methods
1) Tangible fixed assets (excepts lease assets)
The declining balance method is employed to calculated depreciation expenses for these assets.
(However, the company employs the straight-line method for buildings (apart from attachedfacilities) acquired since April 1, 1998.) The useful lifetimes of the main types of 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 theuseable period in-house (up to 5 years).
3) Leased assets
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.
Among the financial lease transactions outside of transfer of ownership, in cases where the leasetransaction start date was on or before March 31, 2008, account processing is conducted inaccordance with the ordinary lease transaction method.
(3) Standards for recording significant allowances
1) Allowance for doubtful accounts
In order to prepare for losses due to doubtful accounts receivable, the Company and its
consolidated subsidiaries record the estimated unrecoverable amounts in consideration of theactual ratio of bad debts for general accounts receivable and individual collectability for special
bonds such as doubtful accounts receivable, etc.
2) Reserve for point card certificatesIn order to prepare for the cost burden of point utilization, for the balance of yet to be exchanged
issued points, the required amount expected to be utilized in future is recorded based on the pointcollection 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.
4) Reserve for retirement benefits
In order to prepare for employee retirement benefit payments, the Company and some of its
consolidated subsidiaries record an amount based on the retirement benefit obligations at the endof the current consolidated fiscal year. Because the Company and some of its consolidated
17

subsidiaries are classed as small businesses with less than 300 employees, a simple method basedon the Code of Practice Concerning Retirement Benefit Accounting (Interim Report) (Japan
Institute of Certified Public Accountants Report No. 13) is employed.
(4) 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(5) Standards for conversion of significant foreign currency-denominated assets and liabilities into
Japanese yen
Receivables and payables denominated in foreign currencies are processed by being translated
into Japanese yen at the consolidated fiscal year-end spot exchange rates.
(6) Goodwill amortization method and amortization period
The amortization of goodwill is carried out using the straight-line method over a period of 5
years. Also, regarding the balance between investment and capital (goodwill equivalent amount)in the case of companies accounted for by the equity method, amortization is conducted over 20
years using the straight-line method. However, in cases where the amount of goodwill isinsignificant, one-time amortization is conducted for the fiscal term in which the relevant accountcase occurred.
(7) 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.
(8) 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 and local consumption tax is
processed as an expense for the current consolidated fiscal year.

(Changes in Accounting Policies that are Difficult to Distinguish from Changes in Accounting
Estimates)
Following the revision of the Corporation Tax Act, from the current consolidated fiscal year, theCompany and its subsidiaries have changed their depreciation methods in accordance with therevised Corporation Tax Act for tangible fixed assets acquired after April 1, 2012. These changes
did not have a significant impact on the Group’s operating profit, recurring profit or net profit before
taxes and other adjustments for the consolidated fiscal year under review.
(Changes in Presentation Methods)
Not applicable(Additional Information)
Not applicable(Consolidated Balance Sheet Related)*The following were held by the Company’s non-consolidated subsidiaries and affiliates.
(Unit: thousands of yen)

Investment securities (shares)

18

FY 2011

FY 2012(As of March 31, 2012)
3,615,636(As of March 31, 2013)
3,679,186

(Consolidated Statement of Income Related)*1 In the breakdown of cost of sales and selling, general and administrative expenses, the following werethe main items and amounts.
(Unit: thousands of yen)

Executive compensation
Salaries and allowances
Provision of allowance for bonuses
Retirement benefit expenses
Commission paid
Advertising expenses
Provision of allowance for doubtful accounts
Amortization of goodwill

FY 2011

FY 2012(As of March 31, 2012)
168,092
744,345
54,34827,674
1,847,227
573,009
23,950196,646(As of March 31, 2013)
158,185
580,699
53,35024,406457,609362,940
2,576
24,330*2 The following were the total amount of research and development costs included in general andadministrative expenses and in current term manufacturing costs.
(Unit: thousands of yen)

FY 2011

FY 2012(As of March 31, 2012)
39,675(As of March 31, 2013)
41,813*3 The details of gains on the disposal of fixed assets were as follows.
(Unit: thousands of yen)

Machinery, equipment and vehicles

FY 2011

FY 2012(As of March 31, 2012)—(As of March 31, 2013)316*4 The details of losses on the disposal of fixed assets were as follows.
(Unit: thousands of yen)

Buildings and structures
Tools, devices and equipment
SoftwareTotal

FY 2011

FY 2012(As of March 31, 2012)
2,259
1,046
20,18323,489(As of March 31, 2013)
1,223
331
22,301
23,856*5 Impairment losses
The Faith Group recorded impairment losses concerning the following asset groups.
Previous consolidated fiscal year (FY 2011 ending March 31, 2012)
Location
Intended purpose
TypeKyoto City, Kyoto
Point management system
SoftwareIn the impairment loss calculation, the Faith Group conducts capital grouping in the smallest
possible units that generate a cash flow that is mostly independent of other assets or asset group cash
flows. In consideration of prospective future earnings and future cash flow, the book value of thepoint management-use system is recorded as an impairment loss of ¥45,598 thousand. Moreover, inthe calculation of recoverable value, the impairment loss is measured while making the utility value
zero.

19

Current consolidated fiscal year (FY 2012 ending March 31, 2013)
Location
Intended purpose
Type
Minato Ward, Tokyo
Content distribution system
Software, etc.
Minato Ward, Tokyo
Unutilized assets
Long-term prepaid expenses(including those which shall be
expenses within a year)
In the impairment loss calculation, the Faith Group conducts capital grouping in the smallest
possible units that generate a cash flow that is mostly independent of other assets or asset group cash
flows. For the current consolidated fiscal year, in consideration of prospective future earnings andfuture cash flow, the book value of the content distribution system is recorded as an impairment lossof ¥80,928 thousand. In addition, in consideration of prospective future earnings and future cash
flow, the book value of the unutilized assets is recorded as an impairment loss of ¥12,500 thousand.
Moreover, in the calculation of recoverable value, the impairment loss is measured while making theutility value zero.
*6 The term-end inventory amount is the amount remaining after a book value write-down inaccordance with a decline in earnings. The following inventory asset appraised losses were inincluded in the cost of sales.
(Unit: thousands of yen)

FY 2011

FY 2012(As of March 31, 2012)(As of March 31, 2013)—

640,000(Consolidated Statement of Comprehensive Income Related)*Reclassification adjustment amount and tax effect amount of other comprehensive income(Unit: thousands of yen)

FY 2011

FY 2012(As of March 31, 2012)(As of March 31, 2013)

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 otheravailable-for-sale securities
Share of comprehensive income of equity method affiliates:
Amount accrued in the current term
Total other comprehensive income△73,754△23,985△97,739
57,047△40,691

85,614—85,614△29,991

186,227
145,535

6,535
62,15955,623(Consolidated Statements of Changes in Shareholders’ Equity Related)
Previous consolidated fiscal year (FY 2011 ending March 31, 2012)
1. Matters Related to Class and Total Numbers of Shares Issued and Shares of Treasury Stock
Start of current
consolidated
fiscal year
Number of shares issued
Common stock
Total
Treasury shares
Common stock
Total

Increase during
current consolidated
fiscal year

Decrease during
current consolidated
fiscal year

1,196,000
1,196,000

—
—

—
—

1,196,000
1,196,000

47,950——47,95047,950——47,9502. Matters Related to Equity Warrants
Not applicable20

End of current
consolidated fiscal
year

3. Matters Related to Dividend Distribution(1) Amounts of dividends paid
(Resolution)
Board of Directors’
meeting held on
June 29, 2011
Board of Directors’
meeting held on
November 10, 2011

Class ofsharesCommonstock

Total amount ofdividends (million yen)
57,402

Dividend pershare (yen)50

Commonstock

57,40250

Record date

Effective date

March 31, 2011

June 30, 2011

September 30,
2011

December 12,
2011(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 ofsharesBoard of Directors’
meeting held on
June 28, 2012

Commonstock

Total amountof dividends(million yen)
57,402

Source offunds fordividends
Retainedearnings

Dividend
per share(yen)
50

Record date

Effective date

March 31, 2012

June 29, 2012

Current consolidated fiscal year (FY 2012 ending March 31, 2013)
1. Matters Related to Class and Total Numbers of Shares Issued and Shares of Treasury Stock
Start of current
consolidated
fiscal year
Number of shares issued
Common stock
Total
Treasury shares
Common stock
Total

Increase during
current consolidated
fiscal year

Decrease during
current consolidated
fiscal year

End of current
consolidated fiscal
year

1,196,000
1,196,000

—
—

—
—

1,196,000
1,196,000

47,95047,950

8,707
8,707

—
—

56,65756,5702. Matters Related to Equity Warrants
Not applicable
3. Matters Related to Dividend Distribution(1) Amounts of dividends paid
(Resolution)
Board of Directors’
meeting held on
June 28, 2012
Board of Directors’
meeting held on
November 13, 2012

Class ofsharesCommonstock

Total amount ofdividends (million yen)
57,402

Dividend pershare (yen)50

Commonstock

57,40250

Record date

Effective date

March 31, 2012

June 29, 2012

September 30,
2012

December 10,
2012(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 ofsharesBoard of Directors’
meeting held on
June 27, 2013

Commonstock

Total amountof dividends(million yen)
56,967

Source offunds fordividends
Retainedearnings

21

Dividend
per share(yen)
50

Record date

Effective date

March 31, 2013

June 28, 2013

(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
Securities other than cash equivalents
Cash and cash equivalents

FY 2011

FY 2012(As of March 31, 2012)
13,712,005
239,790△4,990,000—
8,961,796(As of March 31, 2013)12,076,535
540,780△6,192,145△299,970
6,125,200*2 Breakdown of main assets and liabilities of companies that are no longer consolidated subsidiaries of
the Faith Group as a result of the sale of their shares during the previous consolidated fiscal year
The following is a breakdown of the assets and liabilities of WebMoney Corporation at the time ofits sale, as a result of which it ceased to be a consolidated subsidiary of the Faith Group, the salevalue of the company’s shares, and the profit generated by the sale.
(Unit: thousands of yen)

Current assets
Fixed assets
Goodwill
Current liabilities
Minority interests
Unrealized profit adjustments
Profit from sales of stocks
Sale charges
Sale value of shares in WebMoney Corporation
Value of WebMoney Corporation’ cash and cash equivalents
Deduction: Income from the sale

17,842,694
3,247,749
188,116△17,815,860△1,761,715△5,492
6,892,538
207,943
8,795,973△8,381,318
414,654(Segment Information, etc.)
a. 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 decide on
the allocation of business resources and make performance appraisals.
The Faith Group conducts services centered on developing the Content Business, which provides
one-stop contents encompassing everything from planning and production of contents to design andconstruction of platforms and delivering these things to users, and the Point Service Business.
Accordingly, the Faith Group categorizes the Content Business and the Point Service Business as its
two reportable segments.
The Content Business involves contents delivery, delivery platform technology development,
contents production, etc.
The Point Service Business involves sales of point systems systems, planning of promotions,planning, production and sales of sales promotion tools, etc.
In addition, in line with the sale in July 2011 of the Company’s entire shareholding in WebMoney
Corporation, which was engaged in the Electronic Money Business, the company in question is nolonger a consolidated subsidiary of the Faith Group.
2. Calculation method for sales, profit or loss, assets, liabilities and other items by reportable segment
The accounting method for reportable business segments is largely the same as the method for
preparing consolidated financial statements.
For profit of reportable segments, the operating profit base figure is used. Inter-segment sales andtransfer amounts are decided in consideration of the market price and other factors.
Following the revision of the Corporation Tax Act, from the current consolidated fiscal year, theCompany and its consolidated subsidiaries have changed their depreciation methods in accordancewith the revised Corporation Tax Act for tangible fixed assets acquired after April 1, 2012. These22

changes did not have a significant impact on the profit figures for each segment for the consolidated
fiscal year under review.
3. Information on sales, profit or loss, assets, liabilities and other items by reportable segment
Previous consolidated fiscal year (FY 2011 ending March 31, 2012)

Sales
Sales to external customers
Inter-segment sales ortransfer amount
Total
Segment profit
Segment assets
Other items
Depreciation expenses
Amortization of goodwill
Investment inequity-method affiliates
Increase in tangible andintangible fixed assets(Unit: thousands of yen)Amount recorded in
Consolidated
Financial Statements(Note 2)

Content

Reportable segment
Electronic
Point
Money

6,372,121
60,94825,717,225
400

1,326,642—

33,415,989
61,348—△61,348

33,415,989—

6,433,070
990,493
23,270,446

25,717,625
430,774—

1,326,642
151,979
295,576

33,477,337
1,573,247
23,566,022△61,348
3,194△47,122

33,415,989
1,576,442
23,518,900

278,678
176,337
3,615,142

12,137
20,309—19,359——310,174
196,646
3,615,142△2,594——

307,580
196,646
3,615,142

523,538

23,599—547,138—

547,138

Adjustment
amount(Note 1)

Total

Note 1. The segment profit adjustment amount of 3,194 thousand yen and the depreciation expenses
adjustment amount of △2,594 thousand yen for this consolidated fiscal year are calculated byeliminating intersegment transactions.
Note 2. Segment profit is adjusted with operating profit in the consolidated financial statements.

Current consolidated fiscal year (FY 2012 ending March 31, 2013)
Content
Sales
Sales to external customers
Inter-segment sales ortransfer amount
Total
Segment profit
Segment assets
Other items
Depreciation expenses
Amortization of goodwill
Investment inequity-method affiliates
Increase in tangible andintangible fixed assets

Reportable segment
Point

Total

Adjustment amount(Note 1)

(Unit: thousands of yen)Amount recorded in
Consolidated
Financial Statements(Note 2)5,303,090
15,6981,429,486—

6,732,576
15,698—△15,698

6,732,576—

5,318,788
843,513
22,165,434

1,429,486
169,414466,678

6,748,275
1,012,927
22,632,113△15,698558△20,972

6,732,576
1,013,485
22,611,140

283,899
24,3303,678,692

7,998
—
—

291,898
24,3303,678,692△48——

291,850
24,3303,678,692

207,396

11,181

218,578△2,422

216,156

Note 1. The segment profit adjustment amount of 558 thousand yen, the depreciation expenses adjustment
amount of △48 thousand yen and the increase in tangible and intangible fixed assets amount of △2,422 thousand yen for this consolidated fiscal year are calculated by eliminating intersegment
transactions.
Note 2. Segment profit is adjusted with operating profit in the consolidated financial statements.

b. Related Information
I. Previous consolidated fiscal year (FY 2011 ending March 31, 2012)
1. Information by product and service
Information by product and service is omitted because similar information is disclosed in thesegment information.
2. Information by region(1) Sales: Information on sales by region is omitted because the amount of sales to external customers inJapan accounts for over 90% of the amount of sales reported on the consolidated balance sheet.
(2) Tangible fixed assets: Information on tangible fixed assets by region is omitted because the amountof fixed assets in Japan accounts for over 90% of the amount of fixed assets reported on the
consolidated balance sheet.
23

3. Information on major customers(Unit: thousands of yen)

Customer nameT-Gaia Corporation
Famina.com Co., Ltd.
Wellnet Corporation

Sales amount
13,689,100
5,724,979
4,018,117

Related segment nameElectronic Money BusinessElectronic Money BusinessElectronic Money Business

II. Current consolidated fiscal year (FY 2012 ending March 31, 2013)
1. Information by product and service
Information by product and service is omitted because similar information is disclosed in thesegment information.
2. Information by region(1) Sales: Information on sales by region is omitted because the amount of sales to external customers inJapan accounts for over 90% of the amount of sales reported on the consolidated balance sheet.
(2) Tangible fixed assets: Information on tangible fixed assets by region is omitted because the amountof 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(Unit: thousands of yen)

Customer name
NTT DoCoMo, Inc.
XING INC.
Kirindo Co., Ltd.

Sales amount
2,138,957
1,723,874
703,939

Related segment nameContent Business
Content Business
Point Service Businessc. Information on Impairment Losses on Fixed Assets by Reportable Segment
Previous consolidated fiscal year (FY 2011 ending March 31, 2012)(Unit: thousands of yen)Content
Impairment
loss—

Electronic
Money
—

Point
Service
54,647

Total
54,647Company-wide/
elimination△9,049Total
45,598Current consolidated fiscal year (FY 2012 ending March 31, 2013)(Unit: thousands of yen)Content
Impairment
loss

Point Service

93,428

Total—

Company-wide/
elimination
93,428

Total—

93,428d. Information on Amortization of Goodwill and Unamortized Balance for Each Reportable Segment
Previous consolidated fiscal year (FY 2011 ending March 31, 2012)(Unit: thousands of yen)Content
Current term
amortization
Year-endbalance

176,337

Electronic
Money
20,309Point
Service—

40,599

—

—

Total

Company-wide/
elimination

Total

196,646—

196,646

40,599—40,599Current consolidated fiscal year (FY 2012 ending March 31, 2013)(Unit: thousands of yen)Content
Current term
amortization
Year-endbalance

Point Service

Total

Company-wide/
elimination

Total

24,330—24,330—24,33016,269—16,269—16,26924

e. Information on Gains on Negative Goodwill by Reportable Segment
Previous consolidated fiscal year (FY 2011 ending March 31, 2012)
Not applicable
Current consolidated fiscal year (FY 2012 ending March 31, 2013)
Not applicable(Per Share Information)(Unit: yen)Previous consolidated fiscal year
Current consolidated fiscal year
(FY 2011 ending March 31, 2012)(FY 2012 ending March 31, 2013)
Net assets per share
17,066.74 Net assets per share
16,038.91
Net income per share
5,805.70 Net income per share
969.54
Net income per share fully diluted
5,803.03 Net income per share fully diluted—(Note 1) The amount of net income per share fully diluted during the current consolidated fiscal year is
not recorded because there are no dilutive shares at this time.
(Note 2) The basis of the calculation of net income per share and net income for share fully diluted is
as follows.
Previous consolidated fiscal year
Current consolidated fiscal year
(FY 2011 ending March 31, 2012)(FY 2012 ending March 31, 2013)
Net income per share
Net income (thousand yen)
6,665,231
1,111,676
Amount not attributable to——ordinary shareholders (thousand yen)
Net income applicable to6,665,231
1,111,676
common stock (thousand yen)
1,148,050
1,146,599
Average number of shares
outstanding during the period(shares)

Net income per share fully diluted(thousand yen)

Net income adjustment amount(Adjustment amount of diluted
shares in consolidated subsidiaries)
Increase in common stock (shares)
Summary of dilutive potential
shares that are not included in thecalculation of net income per shareafter adjustment of dilutive
potential shares because of no
dilution effect△3,065(△3,065)

—
(—)

—

—
Stock options on 1,099 sharesissued by Catch Media Japan, Inc,(an affiliate accounted for by theequity-method) based on the
resolution of the extraordinary
meeting of shareholders held on
February 22, 2013——————(Note 3) The basis of the calculation of net assets per share is as follows.
Previous consolidated fiscal year
Current consolidated fiscal year
(FY 2011 ending March 31, 2012)(FY 2012 ending March 31, 2013)
19,618,905
20,552,504
Total amount of net assets (thousandyen) (thousand yen)Amount deducted from total
amount of net assets (thousand yen)
(Minority interests)
Year-end net assets applicable tocommon stock (thousand yen)
Term-end number of shares ofcommon stock used in calculating
net assets per share (shares)

25

25,435—(25,435)
19,593,469(—)
20,552,504

1,148,050

1,139,343

(Significant Subsequent Events)
Acquisition of a Company by Means of a Stock Acquisition
After resolving to acquire a 100% stockholding in ENTERMEDIA INC., the Company successfullycompleted the acquisition of 100% of this company’s stock with effect from April 1, 2013.
(1) Outline of business combination
1) Name and business of acquired company
Company name:
ENTERMEDIA INC.
Business description: Mobile public fan club member business and product sales business
2) Reason for business combination
ENTERMEDIA INC. is engaged in the production and operation of mobile phone andsmartphone-use public fan club websites for many major artists and entertainment production
companies, and in the e-commerce business handling product sales of artist goods, CDs and DVDs,
etc. Based on its excellent partnerships with the artists and entertainment production companies
that are its customers, the fan club sites ENTERMEDIA operates currently boast over 200,000
members, and the scale of this business is expected to increase steadily in future.
In welcoming ENTERMEDIA into the Faith Group, the Company anticipates that the twocompanies will mutually develop each other’s customer bases, which can be expected to generate
numerous business synergies.
3) Date of business combination
April 1, 2013
4) Legal form of business combination
Stock acquisition
5) Company name after business combination
Unchanged6) Ratio of acquired voting rights
100%7) Main reason for deciding to acquire company’s stock
In order for the Company to obtain 100% of ENTERMEDIA’s voting rights through theacquisition of this company’s stock in exchange for cash(2) Cost of acquisition of acquired company and its breakdown(Unit: thousands of yen)Price of acquisition
Costs directly related to acquisition
Cost of acquisition

Cash and deposits
Due diligence costs, etc.

42,2501,000
43,250(3) Acquisition funding method
Lump sum payment from the Company’s own funds(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 andinsignificant for presentation in the Brief Statement of Financial Results.

26