BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE 1st QUARTER OF THE FISCAL YEAR ENDING MARCH 2022
This is an English translation of summarized consolidated financial results prepared
for the convenience of non-resident shareholders. Should there be any inconsistency
between the translation and the official Japanese text, the latter shall prevail.

August 13, 2021
Faith, Inc. (Stock code 4295, Listed on TSE 1st section)(URL http://www.faith.co.jp/)
Representative: Hajime Hirasawa, CEO/President
Contact: Chikayo Suzuki, CFO/Executive Officer
Tel: +81-3-6855-7811
Date of Submission of Securities Report: August 13, 2021
Starting Date of the Dividend Payment: Preparation of Supplementary Materials for Quarterly Financial Results: None
Information Meeting for Quarterly Financial Results to be Held: None
Amounts are rounded down to the nearest JPY 1 million.

1. Results for the 1st Quarter of the Fiscal Year Ending March 2022
(From April 1, 2021 to June 30, 2021)(1) Consolidated Operating Results (cumulative totals)(Percentages indicate changes compared with the 1st quarter of the previous fiscal year.)

Net Sales

Q1 of the year ending
March 2022
March 2021

Millionsof yenOperating Income%

Millionsof yen

△36.2
16.7

3,404
5,332

Ordinary Income
Millionsof yen

%

△5
545

－
－

85
624

%

Net Income
Millionsof yen

△86.2
－

△1
374

%
－
－

(Note) Comprehensive income: 1st quarter of the fiscal year ending March 2022: ¥240 million (△76.5%); 1st quarter of the fiscal year
ending March 2021: ¥1,023 million (—%)

Net Income per Share

Q1 of the year ending
March 2022
March 2021

Diluted Net Income per Share

Yen
△0.14
29.63

Yen
—
—

(Note) The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and other related standards have been
applied from beginning of the first quarter of the current consolidated fiscal year. For details, please refer to “2. Consolidated
Financial Statements and Important Explanatory Notes, (3) Notes Concerning the Consolidated Financial Statements (Changes in
Accounting Policy)” on page 10 of the accompanying material.

(2) Consolidated Financial Position
Total Assets

Ratio of Equity CapitalMillions of yen

26,16817,960%68.6

26,702

17,62766.0

Q1 of the year ending
March 2022
Year ending March 2021
(Note)Net Assets

Millions of yen

The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and other related standards havebeen applied from the beginning of the first quarter of the current consolidated fiscal year, and the figures stated for the firstquarter of the fiscal year ending March 31, 2022 represent the figures after the application of these standards.

2. Dividends
Dividends per Share
(Record dates)

Year ending March 2021
Year ending March 2022
Year ending March 2022
(Forecast)

1st Quarter

yen
—
—

Interim3rd Quarter

Year-end

Total

yen
5.00

yen
—

yen
5.00

yen
10.00

5.00

—

5.00

10.00

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

3. Forecast for the Consolidated Results for the Year Ending March 2022
（from April 1，2021 to March 31，2022）(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

8,500

△15.0

200

△63.8

198

△70.3

40

△87.3

3.16

18,000

△10.0

550

△28.0

500

△39.2

100

－

7.91

(Note) Forecasts for dividends have been modified since the time of the most recently announced business forecast.

※ Notes(1) Changes in significant subsidiaries (accompanying changes in scope of consolidation): None
Newly added subsidiaries: 0 companies (subsidiary’s name:)Removed subsidiaries: 0 companies (subsidiary’s name:)(2) Adoption of simplified accounting practices or specific procedures in preparation of the quarterly
consolidated financial reports: Applicable(Note)For details, please refer to “2. Consolidated Financial Statements and Important Explanatory Notes, (3) Notes Concerning
the Consolidated Financial Statements (Adoption of Simplified Methods in the Preparation of the Quarterly Financial
Statements)” on page 10 of the accompanying material.

(3) Changes in accounting policy, changes in accounting estimates, and restatements(i)
Changes accompanying revisions of accounting standards, etc.: Applicable(ii) Changes other than the above: None(iii) Changes in accounting estimates: None(iv)

Restatements: None

(Note) For details, please refer to “2. Consolidated Financial Statements and Important Explanatory Notes, (3) Notes Concerning theConsolidated Financial Statements (Changes in Accounting Policy)” on page 10 of the accompanying material.

(4) Outstanding shares (common shares)(i) Outstanding shares at the end of the fiscal years (including treasury shares):
The 1st quarter of the fiscal year ending March 2022: 13,831,091 shares
The fiscal year ending March 2021: 13,831,091 shares(ii) Treasury shares at the end of the fiscal years:
The 1st quarter of the fiscal year ending March 2022: 1,198,287 shares
The fiscal year ending March 2021: 1,197,855 shares(iii) Average number of shares at the interim accounting period
The 1st quarter of the fiscal year ending March 2022: 12,632,953 shares
The 1st quarter of the fiscal year ending March 2021: 12,629,112 shares(Note) The number of shares of treasury stock at the end of the fiscal year includes those shares (257,200 shares in Q1 of the fiscal
year ending March 2022, 257,200 shares in the fiscal year ending March 2021) contributed as trust assets of theperformance-linked stock compensation plan. In addition, these shares are included in the shares of treasury stock deducted in
calculating the average number of shares during the accounting period (257,200 shares in Q1 of the fiscal year ending March
2022, 262,500 shares in Q1 of the fiscal year ending March 2021).

* This financial results report is exempt from quarterly review procedures.
* Statement regarding the proper use of financial forecasts and other special remarks(Notice regarding statements concerning the future)
Statements concerning the future, such as performance forecasts, etc., described in the present material are based on
information currently available to the Company and on certain assumptions judged as reasonable by the Company. The
Company’s actual performance may differ substantially from these forecasts as a result of various factors beyond theCompany’s control. For details of cautions, etc., employed in making performance forecasts and the assumptions
underlying performance forecasts, please refer to “1. Qualitative Information Concerning the Settlement of Accounts forthe 1st Quarter, (3) Explanation Concerning Future Forecast Information on the Consolidated Financial Results, etc.” onpage 5 of the accompanying material.

2

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

2
2
5
5

2. Consolidated Financial Statements and Important Explanatory Notes ······································· 6(1) Consolidated Balance Sheet ··················································································· 6(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ········ 8(Consolidated Statement of Income) ·········································································· 8(Consolidated Statement of Comprehensive Income)······················································· 9(3) Notes Concerning the Consolidated Financial Statements ················································ 10(Note Concerning the Premise of a Going Concern) ······················································ 10(Note in the Case of Significant Changes in the Amount of Shareholders’ Equity) ··················· 10(Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements) ······ 10(Changes in Accounting Policy) ·············································································· 10(Segment Information) ······················································································· 11

1. Qualitative Information Concerning the Settlement of Accounts for the 1st Quarter(1) Explanation Concerning the Operating Results
In the Japanese information and communications field in 2020, the Internet penetration rate remained
high at 83.4%, while the percentage of households owning one or more smartphones increased to 86.8%,
far exceeding the 70.1% of households owning one or more personal computers (*1). In addition, while
the movement away from television has continued since the year 2000, mainly centered on younger
people, advertising expenses for the Internet in Japan increased by 5.9% in 2020 from the previous yearto ¥2,229 billion, exceeding advertising expenses for television of ¥1,655.9 billion for the second
consecutive year (*2). This trend is also evident worldwide, with global spending on digital advertising
expected to reach approximately ¥34 trillion ($311 billion) in 2021, an increase of 15.6% from theprevious year (*3).
*1. Source: Ministry of Internal Affairs and Communications, 2020 Telecommunications Usage Trend Survey Results*2. Source: Dentsu Inc., 2020 Advertising Expenditures in Japan*3. Source: Dentsu Inc., Global Ad Spend Forecasts (2020-2022)

In the entertainment market in 2020, sales in the global music market centered on streaming services
grew by 7.4% year over year to approximately ¥2,332.8 billion (US$21.6 billion), marking its sixth
consecutive year of sales growth (*4). Meanwhile in Japan, the production value of music software
including music videos decreased by 15% year over year to ¥194.4 billion, and sales of packaged
products continued to decline, but sales of fee-based music distribution increased by 11% to ¥78.3
billion. In the paid music distribution sales category, subscription audio streaming increased by 27%
year over year to ¥58.9 billion, accounting for 75% of total paid music distribution sales (*5). Conversely,
large-scale events and live concerts have been postponed and canceled due to the spread of COVID-19,
and the size of the live entertainment market in 2020 decreased by 82.4% compared to the previous yearto ¥110.6 billion (*6). Meanwhile, new ways of enjoying live entertainment are taking root, such as“non-audience live streaming” in which live performances are transmitted over the Internet with noaudience at the venue, and “hybrid performances”, in which a limited number of audience members areallowed into the venue and the performance is also distributed. With live performances in front ofvarious audience sizes being distributed, the scale of the digital live performance market reached ¥14
billion in 2020, and it is projected to expand rapidly to about ¥100 billion by 2024 (*7).
*4. Source: IFPI, Global Music Report 2021
*5. Source: Recording Industry Association of Japan (RIAJ), The Recording Industry in Japan 2020
*6. Source: PIA Research Institute, Japanese Live Entertainment Market Size Preliminary Report (published May 13, 2021)*7. Source: CyberZ Co., Ltd., Domestic Digital Live Entertainment Market Trend Survey

Founded in 1992, Faith was the first company in the world to commercialize ringtones, and has steadilygrown centered on the music distribution business and in step with the spread of mobile phones.
However, the spread of smartphones in today’s music market has been accompanied by thediversification of media such as streaming, user upload content (UUC) that allows general users toeasily transmit information to society, and social media, with the result that all kinds of activities in themusic industry are changing, including content distribution methods, consumption styles and content
production methods.
In this environment, the Faith Group is continuing to utilize the results of the efforts it has been pouring
into digital content distribution ever since its establishment, and is forging ahead with its Multi-Content
and Multi-Device Strategy of creating environments in which people can enjoy a wide diversity ofcontents whenever and wherever they choose. We are also strengthening the development of newservices in response to the changing market environment, which includes platforms that collect andorganize the information flooding the Internet and provide this to users after increasing its added value.
In June 2020, Faith launched a new service called Thumva, which is an innovative live performance
distribution platform with a variety of additional features. As an Internet-based viewing service thatprovides a new kind of live experience, Thumya makes possible group viewing and commenting,includes a gifting function for artists, and allows the audience to share in the uplifting and unifying
feeling of taking part in a live performance without actually being at the venue. A considerable numberof artists have already performed “live” on Thumva without a live audience, and we are planning tocontinue live broadcasting with a variety of lineups in future. Since the launch of the service, about 240
performances have been distributed and the number of registered members has grown to over 150,000(as of June 2021).

2

Utilizing the resources of Thumva, we launched Thumva BIZ in July 2021 as a new online service forstores that allows customers who wish to inquire or consult via the Web to begin business negotiations
with just one click. Companies in a variety of industries have already adopted Thumya BIZ, which
represents our proposal for an online store style that meets the requirements of the digital transformationera.
Due to the spread of COVID-19, Tokyo’s largest music lounge PLUSTOKYO, which is operated by
Faith, has continued to operate in compliance with the government’s state of emergency declaration andpriority measures to prevent the spread of the infection, and is taking necessary measures in accordancewith the Tokyo Metropolitan Government's Tokyo Disease Control Measures Guidelines for Businesses.
As a new initiative, we are collaborating with artists to offer menus and exhibition projects for a limited
period (July-August). We will continue to place the highest priority on preventing the spread of
infection and ensuring safety, and we will continue to operate carefully in accordance withadministrative policies and action plans.
The Faith Group introduced a full-scale teleworking system from October 1, 2020. In addition, we haveconsolidated our main office functions, which were previously dispersed throughout the company, into
the Minami Aoyama Office, which has been completely renovated. In the future, we will promotebusiness activities aimed at improving the Group’s management efficiency and profitability, and we willrealize diverse and efficient new ways of working based on the concept of “activity-based working” (*8)
while paying attention to changes in behavioral patterns and the establishment of new values.
*8. A way of working that allows individuals to choose their workspace and style according to their work.

Regarding the Faith Group’s business performance for the first quarter of the consolidated fiscal year
ending March 2022, sales of goods in the Points Service Business and sales in the Label Business bothexperienced year-over-year declines. As a result, the Group reported net sales of ¥3,404 million (adecrease of 36.2% compared with the same period of the previous fiscal year), an operating loss of ¥5
million (compared with operating income of ¥545 million for the same period of the previous year),ordinary income of ¥85 million (a decrease of 86.2% compared with the same period of the previous
fiscal year), and a net loss attributable to the shareholders of the parent company of ¥1 million(compared to a net income attributable to the shareholders of the parent company of ¥374 million forthe same period of the previous year).
The Faith Group has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No.
29, March 31, 2020) and other related standards from the beginning of the current first quarter. In
accordance with this change, compared with the previous accounting method, net sales for the current
first quarter decreased by ¥788 million, the operating loss decreased by ¥18 million, and ordinary
income and net income before income taxes and minority interests each increased by ¥18 million. For
details, please refer to “2. Consolidated Financial Statements and Important Explanatory Notes, (3)Notes Concerning the Consolidated Financial Statements (Changes in Accounting Policy)” on page 10.
Information on each business segment is as follows.
Content BusinessIn the Content Business, as sales in the existing distribution business are continuing to decline, the FaithGroup will continue to invest in new growth fields in addition to developing new products byinterlinking various services and creating platforms to capture diversifying profit opportunities.
We are actively developing FaRao PRO not only as a service providing business BGM but also for sales
activities focused on expanding the functions necessary for store management, such as solutions andannouncement functions that make store-branding proposals. In addition to conventional products using
tablet devices, we have also released an app-version service that offers reduced initial costs and we areworking to strengthen retail store sales through collaboration with the Point Service Business. Moreover,in the future, we will continue working to create and revitalize the new BGM market.
In Fans’, our platform of services for artists based on the D2C (*9) business model, which is expected to
expand further in future, we are enhancing the functions essential to artists’ musical activities such as
official website construction, music and video distribution, sales of artist goods, and fan club operation.

3

We are also working to further expand the functions of Fans’, as with the introduction in June 2019 of asystem that contributes to the creation of communities by spreading information sent out by creators
through strengthened SNS cooperation. We are aiming to acquire new users and expand themembership base of Fans’ as a service that allows more artists to disseminate their works andinformation freely, and we will strive to improve the service quality by pursuing enhanced convenience.
*9. Abbreviation of “Direct to Consumer”—a business model for delivering services and products planned and manufactured by Faith directly to users

Regarding the performance of this segment for the first quarter of the current fiscal year, due to adecrease in carrier official website service sales and the shortened store hours as a countermeasureagainst the spread of COVID-19, the Content Business recorded net sales of ¥576 million (a decrease of
22.4% year over year), and an operating loss of ¥136 million (a decrease of 6.0% year over year).
The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) andother relevant standards have been applied from the beginning of the first quarter of the current fiscal
year. In accordance with this change, compared with the previous accounting method, net sales in thissegment decreased by ¥120 million. However, the application of the accounting standard had no impact
on the operating loss.
Point Service BusinessIn the Point Service Business, in addition to providing point issue services to retail stores, we offer total
support for point issue data acquisition, analysis and sales promotion utilization as a series of cycles
from planning to operation, and we provide outsourcing services that maximize retail sales promotion
efficiency.
Regarding the performance of this segment, due to a decrease in sales of goods and issuance of points atexisting member stores, net sales decreased by 85.8% year over year to ¥149 million and operating
income decreased by 58.9% year over year to ¥48 million.
The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) andother relevant standards have been applied from the beginning of the first quarter of the current fiscal
year. In accordance with this change, compared with the previous accounting method, net sales in thissegment decreased by ¥478 million. However, the application of the accounting standard had no impact
on operating income.
Label BusinessIn the Label Business, under the severe environment facing the music and video-related industry in linewith changes the music market, we are strengthening new businesses with an eye on the future in orderto overcome the present situation in which this segment remains dependent on sales of package products.
If we are to continue to play a major role in the music industry and increase our profitability in future, in
addition to focusing on creating hits, management, and investing in the live performance business, we
believe it will be necessary to introduce services that anticipate the ever-changing market environment.
Due mainly to lower sales of animation and game titles by Nippon Columbia Co., Ltd., net sales in thissegment decreased by 24.3% year over year to ¥2,678 million, and operating income decreased by
87.5% year over year to ¥81 million.
The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) andother relevant standards have been applied from the beginning of the first quarter of the current fiscal
year. In accordance with this change, compared with the previous accounting method, net sales in thissegment decreased by ¥189 million and operating income increased by ¥18 million.
*Product and service names appearing in this document are trademarks or registered trademarks of Faith, Inc. either in Japan or in othercountries.

4(2) Explanation Concerning the Financial Position
Total assets as of the end of the first quarter of the consolidated fiscal year ending March 2022 (June 30,2021) decreased by ¥533 million compared to the end of the previous consolidated fiscal year to¥26,168 million. This result was mainly attributable to a decrease of ¥717 million in cash and deposits,
an increase of ¥125 million in accounts and notes receivable, an increase of ¥326 million in investment
securities, a decrease of ¥59 million in deferred tax assets, and a decrease of ¥164 million in
investments and other assets.
Total liabilities decreased by ¥866 million compared to the end of the previous consolidated fiscal yearto ¥8,208 million. This result was mainly due to a decrease of ¥59 million in accounts and notes payable,
a decrease of ¥139 million in accounts payable-other, a decrease of ¥326 in income taxes payable, adecrease of ¥210 million in the reserve for bonuses, and a decrease of ¥146 million yen in asset
retirement obligations.
Net assets increased by ¥332 million compared to the end of the previous consolidated fiscal year to¥17,960 million. This was mainly due to the recording of a quarterly loss attributable to the shareholdersof the parent company and to an increase in the valuation difference on marketable securities.
In addition, the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31,2020) and other relevant standards have been applied from the beginning of the first quarter of thecurrent fiscal year. In accordance with this change, the balance of retained earnings at the beginning of
the period increased by ¥157 million.
For details, please refer to “2. Consolidated Financial Statements and Important Explanatory Notes, (3)Notes Concerning the Consolidated Financial Statements (Changes in Accounting Policy)” on page 10.
As a result of the above, the equity ratio increased by 2.6 percentage points to 68.8%.

(3) Explanation Concerning Future Forecast Information on the Consolidated Financial
Results, etc.
There is no change in the forecast of consolidated financial results for the current fiscal year from theforecast announced on May 13, 2021. Although performance forecasts are based on information
available to the Company at the time of preparation, they include factors that are highly uncertain, suchas the impact of COVID-19, and there is a possibility that the actual performance figures will differ
significantly from the forecast figures due to a variety of factors.

5

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

(Assets)
Current assets
Cash and deposits
Accounts and notes receivable
Marketable securities
Commercial products
Products in progress
Primary materials and inventory goods
Contract assets
Corporation tax refund receivable, etc.
Other current assets
Allowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Intangible fixed assets
Goodwill
Other intangible fixed assets
Total intangible fixed assets
Investment and other assets
Investment securities
Deferred tax assets
Other investment and other assets
Allowance for doubtful accounts
Total investment and other assets
Total fixed assets
Total assets(Liabilities)
Current liabilities
Accounts and notes payable
Short-term loans payable
Current portion of long-term debt
Accounts payable-otherAccrued expenses payable
Income taxes payable
Reserve for bonuses
Reserve for sales returns
Contract liabilities
Asset retirement obligations
Other current liabilities
Total current liabilities
Fixed liabilities
Long-term loans payable
Net defined retirement benefits
Reserve for stock benefits for directors
Asset retirement obligations
Deferred tax liabilities
Other fixed liabilities
Total fixed liabilities
Total liabilities

6

FY 2020(As of March 31, 2021)

1st Quarter of FY 2021
(As of June 30, 2021)

12,997,014
2,018,712
229,796366,536
491,10958,592－
71,062519,948△18,669
16,734,103

12,279,567
2,144,639
229,956
308,794
490,899
83,143240
70,922516,507△19,028
16,105,642

2,946,103

2,965,469

1,395,695
357,776
1,753,472

1,364,506
372,155
1,736,662

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

4,225,624
786,937
944,077△595,783
5,360,857
10,062,989
26,168,631

964,025
340,000
258,700
741,426
2,796,448
371,157
352,424
55,441－
146,892
1,140,736
7,167,251904,844
340,000
257,900
602,3482,854,088
44,554
141,693－
56,475－
1,046,130
6,248,035

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

315,975
589,651
34,77039,233976,908
3,619
1,960,157
8,208,193

(Net assets)
Shareholder's equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholder's equity
Other accumulated comprehensive income
Valuation difference on other available-for-salesecurities
Foreign currency translation adjustments
Cumulative adjustment for retirement benefit obligations
Total other accumulated comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

7(Unit: thousands of yen)
1st Quarter of FY 2021

FY 2020(As of March 31, 2021)(As of June 30, 2021)

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

3,218,000
2,840,667
10,789,640△1,121,975
15,726,332

1,987,860

2,221,703△30,807
34,7191,991,773－
17,627,646
26,702,542△8,884
21,2862,234,105－
17,960,438
26,168,631

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

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income or operating loss (△ = loss)
Non-operating income
Interest income
Dividend income
Interest on securities
Gain on investment partnership management
Gain on equity method investment
Gain on valuation of investment securities
Subsidy income
Miscellaneous receipts
Total non-operating income
Non-operating expenses
Interest paid
Loss on investment partnership management
Loss on foreign exchange
Miscellaneous expenses
Total non-operating expenses
Ordinary income
Extraordinary losses
Loss on valuation of investment securities
Loss on liquidation of subsidiaries
Total extraordinary losses
Current quarter net income before taxes
Corporate, local, and business taxes
Income taxes - deferred
Current quarter net income or net loss (△ = net loss)
Current quarter net income or net loss attributable toshareholders of the parent company (△ = net loss)

8

1st Quarter of FY 2020

1st Quarter of FY 2021

(April 1-June 30, 2020)
5,332,543
3,244,374
2,088,169
1,542,743
545,425(April 1-June 30, 2021)
3,404,496
2,008,734
1,395,761
1,401,108△5,346

5,263
3,053
5
72,787
27,970230－
14,488
123,799

02,090
282,872
12,736200
24,051
9,224
131,179

1,755
34,252
312
8,169
44,490624,735

1,247
38,0182662
39,93085,901－－－
624,735
176,491
74,001
374,242374,242

7,791
21,597
29,38856,51333,36225,005△1,854△1,854

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

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

9

1st Quarter of FY 2020

1st Quarter of FY 2021

(April 1-June 30, 2020)
374,242(April 1-June 30, 2021)△1,854

648,098

233,843△8,6489,679
649,128
1,023,371

21,922△13,433
242,332
240,478

1,023,371

240,478－－

(3) Notes Concerning the Consolidated Financial Statements(Note Concerning the Premise of a Going Concern)
Not applicable(Note in the Case of Significant Changes in the Amount of Shareholders’ Equity)
Not applicable(Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements)
Tax expenses for the Company and a portion of its consolidated subsidiaries are calculated bymultiplying the amount of net income before income taxes by the estimated effective tax rate, which isreasonably estimated by applying tax effect accounting to estimated income before income taxes for thecurrent consolidated fiscal year including the first quarter under review.
(Changes in Accounting Policy)(Application of Accounting Standard for Revenue Recognition)
The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29,
March 31, 2020, hereinafter the “Accounting Standard for Revenue Recognition”) and other related
standards from the beginning of the first quarter of the current fiscal year. Based on this standard,
revenue the Company expects to receive in exchange for the provision of goods and services isrecognized when the control of the goods and services is transferred to customers.
As a result of this change, in the Point Service Business, in which revenue was previously recognizedwhen points were issued to customers and cost of sales was recognized when the points were used, sincethese transactions correspond to repurchase agreements with a right of return, the Company now
recognizes revenue on a net basis. In addition, regarding the distribution of royalties to copyrightholders, mainly in the Label Business, the total amount of consideration received from music users, etc.
was previously recognized as revenue, but since the Company conducts these transactions as an agent,
the Company now recognizes revenue as the net amount received from music users, etc., minus theamount paid to copyright holders. Moreover, in the past, revenue from music licensing fees for karaokemusic in the Label Business was recognized on a one-time basis, but as a result of examining theidentification and satisfaction of performance obligations, the Company now recognizes revenue over acertain period of time. Furthermore, for sales with a right of return in the Label Business, the total
amount of consideration was previously recognized as revenue at the time of sale, and an adjustment
allowance for sales returns was recorded based on records of previous sales returns, but the Company
now recognizes revenue as the total amount of consideration excluding the amount of consideration formerchandise that is expected to be returned.
With regard to the Accounting Standard for Revenue Recognition, in accordance with the transitional
treatment stipulated in the provisions of article 84 of the Accounting Standard for Revenue Recognition,
the cumulative effect of retrospectively applying the new accounting policy prior to the beginning of thefirst quarter of the current fiscal year was added to or deducted from retained earnings at the beginningof the first quarter of the current fiscal year, and the new accounting policy was applied from the
beginning balance of the current fiscal year.
As a result, for the first quarter of the current consolidated cumulative period, net sales decreased by¥788,841 thousand, cost of sales decreased by ¥726,494 thousand, selling, general and administrative
expenses decreased by ¥80,885 thousand, the operating loss decreased by ¥18,538 thousand, andordinary income and net income before income taxes each increased by ¥18,538 thousand. In addition,
the balance of retained earnings at the beginning of the period increased by ¥157,121 thousand.
Due to the application of the Accounting Standard for Revenue Recognition, the provision for sales
returns, which was presented under the current liabilities in the consolidated balance sheets in theprevious fiscal year, is included in the other current liabilities from the first quarter of the current fiscal
year. In accordance with the transitional treatment prescribed in Paragraph 89-2 of the AccountingStandard for Revenue Recognition, no reclassification has been made to the previous fiscal year’s
consolidated financial statements to conform to the new presentation. Furthermore, in accordance withthe transitional treatment prescribed in Paragraph 28-15 of the Accounting Standard for Quarterly
Financial Reporting (ASBJ Statement No. 12, March 31, 2020), the Company has not presented the10disaggregation of revenue from contracts with customers for the first quarter of the previous fiscal year.
(Application of Accounting Standard for Fair Value Measurement)
The Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019,
hereinafter the “Accounting Standard for Fair Value Measurement”) has been applied from the
beginning of the first quarter of the current fiscal year, and in accordance with the transitional treatment
stipulated in article 19 of the Accounting Standard for Fair Value Measurement and Article 44-2 of the
Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019), the new
accounting policy stipulated by the Accounting Standard for Fair Value Measurements will be applied in
the future. This change had no impact on the quarterly consolidated financial statements for the firstquarter of the fiscal year under review.

(Segment Information)
Ⅰ 1st quarter of the previous consolidated fiscal year/FY 2020 (April 1, 2020 through June 30, 2020)

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

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

Point Service

Label

Total

743,045

1,052,263

3,537,234

5,332,543－

5,332,543

60,52450

775

61,350△61,350－

803,569

1,052,313

3,538,009

5,393,893△61,350

5,332,543

Net sales
Sales to externalcustomers
Intersegment sales ortransfer amount
Total

Segment income or loss
△144,858
118,402571,190544,734
691
545,425(△)
Notes: 1. The segment income or loss adjustment amount of ¥691 thousand is calculated by eliminating intersegment transactions.
2. Segment income amounts are adjusted with operating income in the quarterly consolidated profit and loss statement.

2. Information regarding impairment loss on fixed assets or goodwill by segment reported
This information is omitted since there is no critical impairment loss on fixed assets or significant
change in amount of goodwill.
Ⅱ 1st quarter of the current consolidated fiscal year/FY 2021 (April 1, 2021 through June 30, 2021)

1. Information on sales and profit or loss by reportable segment(Unit: thousands of yen)Amount recorded in
Adjustment
Consolidated Financial
amount (Note 1) Statements (Note 2)Content Point Service

Label

Total

576,443

149,737

2,678,315

3,404,496－

3,404,496

576,443

149,737

2,678,315

3,404,496－

3,404,496

78,04742

6,680

84,770△84,770－

654,490

149,780

2,684,995

3,489,267△84,770

3,404,496

Segment income or loss (△) △136,154

48,723

81,578△5,852506△5,346

Net sales
Revenue from contracts
with customers
Sales
toexternalcustomers
Intersegment sales ortransfer amount
Total

Notes: 1. The segment income or loss adjustment amount of ¥506 thousand is calculated by eliminating intersegment transactions.
2. Segment income or loss amounts are adjusted with operating income in the quarterly consolidated profit and loss statement.

2. Information regarding impairment loss on fixed assets or goodwill by segment reported
This information is omitted since there is no critical impairment loss on fixed assets or significant
change in amount of goodwill.

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3. Matters related to changes in reportable segments, etc.
As described in the aforementioned “Changes in Accounting Policies” section, the AccountingStandard for Revenue Recognition and other related standards have been applied from the
beginning of the first quarter of the current fiscal year, with the result that the accounting method
for revenue recognition and the method for calculating the income or loss in each business segment
have been modified.
As a result of this change, for the first quarter of the current fiscal year, compared with the previous
method, in the Content Business net sales decreased by ¥120,585 thousand and in the Point Service
Business net sales decreased by ¥478,641 thousand, but in both cases there was no impact on
segment income or loss, while in the Label Business net sales decreased by ¥189,614 thousand andsegment income increased by ¥18,538 thousand.

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