BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE 2nd QUARTER OF THE FISCAL YEAR ENDING MARCH 2019
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.

November 13, 2018
Faith, Inc.
(Stock code 4295, Listed on TSE 1st section)(URL http://www.faith.co.jp/)
Representative: Hajime Hirasawa, CEO/President
Contact: Jiro Saeki, CFO/Director
Tel: +81-3-5464-7633
Securities Report Submission: Nov. 14, 2018
Starting Date of the Dividend Payment: Dec. 11, 2018
Preparation of Supplementary Materials for Quarterly Financial Results: Applicable
Information Meeting for Quarterly Financial Results to be Held: None
Amounts are rounded down to the nearest JPY 1 million.

1. Results for the 2nd Quarter of the Fiscal Year Ending March 2019
(From April 1, 2018 to September 30, 2018)(1) Consolidated Operating Results(Percentages indicate changes compared with the same quarter of the previous fiscal year.)

Net Sales

Q2 of the year ending

Millionsof yenMarch 2019
March 2018

10,60010,703Operating Income%

Millionsof yen△1.0
3.5

Ordinary Income%

Millionsof yen

△75.9
△19.6

218
907

%

Net Income
Millionsof yen

△77.2
△21.3

194
852

%

213
560

△62.0
29.1

(Note) Comprehensive income: 2nd quarter of the fiscal year ending March 2019: ¥195 million (△76.0%); 2nd quarter of fiscal year ending
March 2018: ¥818 million (△9.3%)

Net Income per
Share

Diluted Net
Income per Share

Yen
15.84
50.18

Yen
—
—

Q2 of the year ending
March 2019
March 2018

(2) Consolidated Financial Position
Total Assets

Net Assets

Ratio of Equity CapitalMillions of yen

Millions of yen

24,74918,097%73.0

25,705

18,67172.5

Q2 of the year ending
March 2019Year ending March 2018

(Reference) Equity capital: 2nd quarter of fiscal year ending March 2019: ¥18,072 million; fiscal year ending March 2018: ¥18,647 million

2. Dividends
Dividends per Share
1st Quarter(Record dates)

yen
—
—

Year ending March 2018Year ending March 2019

3rd Quarter

Interim

yen
5.00
5.00

Year ending March 2019
(Forecast)Year-end

Total

yen
—

yen
5.00

yen
10.00

—

5.00

10.00

(Note) These figures have not been modified since the time of the most recently announced dividend forecast.

3. Forecast for the Consolidated Results for the Year Ending March 2019（from April 1，2018 to March 31，2019）(Percentages indicate changes compared with the previous fiscal year.)

Net Sales

Full year

Operating Income

Ordinary Income

Net Income
Attributable to the
Shareholders of the
Parent Company

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

20,500

△3.3

620

△45.2

525

△49.0

475

△5.9

(Note) These figures have not been modified since the time of the most recently announced business result forecast.

1

Net Income
per Share
Yen
35.57

* Notes(1) Changes in significant subsidiaries (accompanying changes in scope of consolidation): None
Newly added subsidiaries: 0 companies (subsidiary’s name: - )Removed subsidiaries: 0 companies (subsidiary’s name: - )(2) Adoption of simplified accounting practices or specific procedures in preparation of the quarterly
consolidated financial reports: Applicable* For details, please refer to “2. Consolidated Financial Statements and Important Explanatory Notes, (4) Notes

Concerning the Consolidated Financial Statements (Adoption of Simplified Methods in the Preparation of theQuarterly Financial Statements)” on page 11 of the accompanying material.

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

Restatements: None

(4) Outstanding shares (common shares)(i) Outstanding shares at the end of the term (including treasury shares):
The 2nd quarter of the fiscal year ending March 2019: 13,831,091 shares
The fiscal year ending March 2018: 13,831,091 shares(ii) Treasury shares at the end of the term:
The 2nd quarter of the fiscal year ending March 2019: 571,513 shares
The fiscal year ending March 2018: 70,041 shares(iii) Average number of shares during the interim accounting period:
The 2nd quarter of the fiscal year ending March 2019: 13,447,409 shares
The 2nd quarter of the fiscal year ending March 2018: 11,167,503 shares* 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 for the 2nd Quarter,(3) Explanation Concerning Future Forecast Information on the Consolidated Financial Results, etc.” on page 3 of theaccompanying material.
(To obtain supplemental documents relating to financial results)
Supplemental materials related to the Company’s quarterly and other financial results are posted on the company website.

2

Contents
1. Qualitative Information Concerning the Settlement of Accounts for the 2nd 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
3
4

2. Consolidated Financial Statements and Important Explanatory Notes ······································ 5(1) Consolidated Balance Sheet ··················································································· 5(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ········ 7(Consolidated Statement of Income) ·········································································· 7(Consolidated Statement of Comprehensive Income)······················································· 8(3) Consolidated Statement of Cash Flows ······································································· 9(4) Notes Concerning the Consolidated Financial Statements ················································· 11(Note Concerning the Premise of a Going Concern) ························································ 11(Note in the Case of Significant Changes in the Amount of Shareholders’ Equity) ··················· 11(Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements) ····· 11(Additional Information) ······················································································ 11(Segment Information) ························································································· 12

1. Qualitative Information Concerning the Settlement of Accounts for the 2nd Quarter(1) Explanation Concerning the Operating Results
In the domestic information communication field in 2017, the Internet penetration rate remained high at
80.5%. Moreover, among individuals who utilize the Internet for personal use, those between 13 and 50
years old accounted for over 95% of the total (*1). Among these users, the number of people who rely
exclusively on a smartphone to access the Internet has increased for all age groups, and the trend isparticularly pronounced among those in their 30s, where the rate of increase compared with the previous
year was 46% (*2). Meanwhile, younger Japanese people are increasingly turning away from television,and the ongoing transition to services in line with the shift to the era of digitalization is expected toaccelerate in future as the Internet usage rate climbs further and the use of smartphones continues tospread. Under these circumstances, it is becoming even more important for Faith to respond swiftly touser needs that are in keeping with the times.
*1. 2018 White Paper on Information and Communications in Japan,
compiled by the Ministry of Internal Affairs and Communications*2. Nielsen Digital Database 2018, compiled by Nielsen Digital Co., Ltd.

Moreover, in the entertainment market, the global music market centered on flat rate subscription services
grew by 8.1% to US$17.3 billion dollars (*3), marking the first time since 1999 that this market hasrecorded sales growth for three consecutive years. In the Japanese domestic music content market, theproduction value of music software including music videos in 2017 decreased by 6% from the previous
year to ¥232 billion yen (*4). Although sales of packaged products continued to exhibit a declining trend,
fee-based music distribution sales increased by 8% year on year to ¥57.3 billion and sales of subscriptiontype music distribution services leaped by 22% year on year. Meanwhile, the size of the live entertainment
market increased by 7.2% from the previous year to ¥332.4 billion, in line with an expansion of“experiential” consumption (*5).
(*3) Source: IFPI Global Music Report 2018(*4) Source: Recording Industry Association of Japan (RIAJ), The Recording Industry in Japan 2017(*5) Source: All Japan Concert & Live Entertainment Promoters Conference (ACPC), 2017 Basic Research Report

In the current environment, Faith 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 andMulti-Device Strategy of creating environments in which people can enjoy a wide diversity of contents
whenever and wherever they choose. We are also strengthening the development of new services in
response to the changing market environment such as platforms that collect and organize the information
flooding the Internet and providing it to users after increasing its added value.
Regarding the Faith Group’s business performance for the second quarter of the consolidated fiscal year
ending March 2019, in accordance with the decline in sales of existing distribution services, which
account for a major share of overall sales, net sales decreased by 1.0% compared with the same quarterof the previous fiscal year to ¥10.6 billion, while due mainly to declining sales of high-margin products
launched in previous years and game titles in the Label Business, operating income decreased by 75.9%
year on year to ¥218 million, ordinary income decreased by 77.2% to ¥194 million, and net income
attributable to the shareholders of the parent company decreased by 62.0% to ¥213 million.
Information on each business segment is as follows.
Content BusinessIn the Content Business, the Faith Group is actively pursuing the development of new products in responseto the market environment including the ongoing popularization of smartphones, changing music listeningstyles. In this business segment the Company is proceeding with measures to enhance the value of its
contents, improving the functionality of each service as well as increasing the connectivity between them.
We aim to do so through verifying the results of service contents and marketability, while continuing towith platformization in the interests of achieving income diversification.

We are actively promoting FaRao PRO not only as a BGM service providing solution for store owners,
but as a set of store management solutions which includes store branding solutions and store
announcement functions. In addition to conventional products using tablet devices, we have also
released an app-version service that offers users reduced initial costs and we are working to strengthen2

retail store sales through collaboration with the Point Service Business. Moreover, based on our Japaneseservice, we have started FaRao PRO services in France and Indonesia, and for the future we are aiming
to create and activate new BGM markets both in Japan and overseas.
In Fans’, our platform of services for artists based on the D2C (Direct To Consumer) business model,
which is expected to expand 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. We are aiming to acquire new users and expand the membership base of Fan’s as a service thatallows more artists to disseminate their works and information freely, and we will endeavor to improve
the quality of the service by pursuing enhanced usability.
As a result of the above developments, and taking into account a decrease in sales of carrier official site
services, delays in the launch of new businesses and the sale of shares in consolidated subsidiaries, anddespite the ongoing positive deployment of new services in line with the changing market environment,
the Content Business recorded net sales of ¥1,627 million, a decrease of 19.6% year on year, and an
operating loss of ¥248 million, compared with an operating loss of ¥58 million for the same period of theprevious fiscal year.
Point Service BusinessIn the Point Service Business, sales of new points issued by existing participating point card storesremained robust due to an increase in the number of users. In addition, the self-liquidation business (*6)
also performed favorably. As a result, this business recorded net sales of ¥1,335 million, an increase of
10.0% year on year. Regarding operating income, due to the impact of increased sales and cost reductions
associated with office consolidation, etc., operating income increased by 63.8% year on year to ¥52
million.
(*6) A campaign in which users can purchase various goods at a discount by saving points in the form of seals, etc.

Label Business
Amid the difficult environment facing the music and video-related industry in line with the continuing
decrease of the Japanese music market, the Label Business proceeded with its strategy of strengthening
new future-oriented businesses in order to overcome the present situation in which it remains dependent
on sales of package products for which the market remains sluggish.
This segment achieved strong sales revenue from animation-related titles released by DREAMUSIC Inc,and from animation titles and live artist performances by Nippon Columbia, Co., Ltd., resulting in a risein overall Label Business sales of 2.3% year on year to ¥7,637 million. However, due mainly to declines
in sales of high-margin products released in previous years, game titles, and revenue from sales of music
licensing rights, this segment recorded an operating income of ¥414 million, a decrease of 55.5% fromthe same period of the previous fiscal year.
*Product and service names appearing in this document are trademarks or registered trademarks of Faith, Inc. either in Japan or in othercountries.

(2) Explanation Concerning the Financial Position(Analysis of Financial Position)
Total assets as of September 30, 2018 decreased by ¥956 million compared to the end of the previous
consolidated fiscal year to ¥24,749 million. This result was due mainly to decreases in cash anddeposits.
Total liabilities decreased by ¥381 million compared to the end of the previous consolidated fiscal yearto ¥6,652 million. This result was due mainly to the repayment of loans.
Total net assets decreased by ¥574 million compared to the end of the previous consolidated fiscal yearto ¥18,097 million. This was due mainly to the recording of a quarterly net income attributable to theshareholders of the parent company and to a decrease in assets due to the acquisition of treasury stock.
As a result of the above, the equity ratio improved by 0.5 percentage points to 73.0%.

3(Cash Flow Situation)
Cash and cash equivalents for the consolidated cumulative 2nd quarter of the current fiscal year decreasedby ¥567 million from the end of the previous consolidated fiscal year to ¥12,342 million. Details of cash
flow for the consolidated cumulative 2nd quarter and its contributory factors are as follows:(Cash flow from operating activities)
Cash flow from operating activities amounted to an inflow of ¥156 million (compared with an outflow of¥296 million for the same period of the previous fiscal year), due mainly to the recording of ¥332 million
in respect of income before income taxes and minority interests, ¥134 million in respect of depreciation
costs, ¥161 million in respect of a gain on the sale of shares of affiliates, ¥262 million in respect of anincrease in accounts receivable, ¥133 million in respect of a decrease in inventories, and ¥118 million in
respect of payment of corporation tax.
(Cash flow from investing activities)
Cash flow from investing activities amounted to an inflow of ¥177 million yen (compared with an outflow
of ¥190 million for the same period of the previous fiscal year), due mainly to the recording of income of¥500 million in respect of reimbursement of fixed-term deposits, expenditure of ¥427 million in respectof expenditure to acquire tangible fixed assets, income of ¥179 million in respect of proceeds from thesale of shares of subsidiaries in line with a change in the scope of consolidation, and expenditure of ¥120
million in respect of making security deposits,.
(Cash flow from financing activities)
Cash flow from financing activities amounted to an outflow of ¥897 million (compared with an outflow
of ¥342 million yen for the same period of the previous fiscal year), due mainly to expenditure of ¥127
million in respect of repayment of long-term loans, ¥701 million yen in respect of purchases of treasury
stock, and ¥68 million yen in respect of payment of dividends.

(3) Explanation Concerning Future Forecast Information on the Consolidated Financial
Results.
Performance forecasts are made based on information currently available to the Company, but there is apossibility that the actual performance figures will differ significantly from the forecast figures due to avariety of factors. In addition, the current performance forecast for the full financial year is unchanged
from the forecast issued on October 30, 2018.

4

2. Consolidated Financial Statements and Important Explanatory Notes(1) Consolidated Balance Sheet
FY 2017(As of March 31, 2018)(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.
Other current assets
Allowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Intangible fixed assets
Goodwill
OthersTotal intangible fixed assets
Investment and other assets
Investment securities
Deferred tax assets
Other intangible fixed assets
Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets(Liabilities)
Current liabilities
Accounts and notes payable
Short-term loans payable
Lease obligations
Accrued expenses payable
Income taxes payable
Reserve for bonuses
Reserve for point card certificates
Reserve for sales returns
Other current liabilities
Total current liabilities
Fixed liabilities
Long-term loans payable
Net defined retirement benefits
Lease obligations
Deferred tax liabilities
Other fixed liabilities
Total fixed liabilities
Total liabilities

5(Unit: thousands of yen)
2nd Quarter of FY 2018

(As of Sept. 30, 2018)13,460,309
2,162,275
229,555
516,373493,508
65,12426,944
464,629△27,249
17,391,471

12,392,454
2,220,201
227,731515,399
333,931
79,9894,707
510,580△19,216
16,265,780

2,773,635

3,119,137

1,648,115
678,348
2,326,463

1,594,660
603,897
2,198,558

2,617,499
174,258
812,042△389,935
3,213,864
8,313,963
25,705,435

2,465,616
179,037
928,675△407,460
3,165,869
8,483,565
24,749,345

929,526
576,039723
2,642,245
188,625
76,316
8,711
74,962
1,491,297
5,988,449

746,466
554,999723
2,826,820
172,652
88,036
8,047
72,514
1,297,290
5,767,553

237,215603,262723
159,31744,7581,045,276
7,033,725

131,050
582,543361
127,873
42,805
884,635
6,652,188

(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
Cumulative adjustment for retirement benefit
obligations
Total other accumulated comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

6(Unit: thousands of yen)
2nd Quarter of FY 2018

FY 2017(As of March 31, 2018)(As of Sept. 30, 2018)

3,218,000
3,019,205
12,316,449△100,158
18,453,496

3,218,000
3,019,175
12,460,717△801,809
17,896,084

263,254△12,505

240,477△17,603△56,561△46,462

194,187
24,026
18,671,710
25,705,435

176,410
24,662
18,097,156
24,749,345

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

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Interest on securities
Gain on investment partnership management
Foreign exchange gains
Miscellaneous receipts
Total non-operating income
Non-operating expenses
Interest paid
Loss on equity method investment
Cost of exchange from business combination
Loss on investment partnership management
Miscellaneous expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sale of shares of affiliates
Gain on sales of investment securities
Gain on change in equity
Gain on reversal of subscription rights to shares
Total extraordinary income
Extraordinary losses
Loss on disposal of fixed assets
Impairment loss on goodwill
Loss on valuation of investment securities
Total extraordinary losses
Net income or net loss before income taxes
Corporate, local, and business taxes
Income taxes - deferred
Current quarter net income
Current quarter net income attributable to non-controllinginterests
Current quarter net income attributable to shareholders of
the parent company

7

2nd Quarter of FY 2017

2nd Quarter of FY 2018

(April 1-Sept.30, 2017)
10,703,830
6,299,575
4,404,254
3,496,835
907,418(April 1-Sept. 30, 2018)
10,600,700
6,945,378
3,655,321
3,436,394
218,927

869
2,831
25
15,367817
9,928
29,839

100
2,564
59
19,759740
13,00736,232

4,245
28,50150,852－825
84,425
852,832

3,216
53,522－917
3,156
60,813
194,346－
112,927
5,859
15,691
134,477

161,965－－－
161,965－
23,421－
23,421
963,888
169,849
8,018
786,020

9,119－
15,00024,119332,191
144,487△26,004
213,709

225,582635

560,437

213,073

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

Current quarter net income
Other comprehensive income
Valuation difference on other available-for-salesecurities
Foreign currency translation adjustments
Retirement benefit adjustments
Total other comprehensive income
Comprehensive income(Details)
Comprehensive income attributable to shareholders of
the parent company
Comprehensive income attributable to non-controllinginterests

8

2nd Quarter of FY 2017

2nd Quarter of FY 2018

(April 1-Sept. 30, 2017)
786,020(April 1-Sept. 30, 2018)
213,709

25,157△22,777△425
7,276
32,008818,028△5,098
10,098△17,776
195,932

591,912

195,296

226,116635

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

Cash flow from operating activities
Gain before income taxes and other adjustments
Depreciation and amortization
Amortization of goodwill
Impairment loss on goodwill
Increase/decrease in allowance for doubtful accounts (△ =decrease)
Increase/decrease in reserve for bonuses (△ = decrease)
Increase/decrease in reserve for point card certificates (△ =decrease)
Increase/decrease in liabilities for retirement benefits (△ =decrease)
Interest and dividends income
Interest on securities
Interest paid
Gain or loss on foreign exchange (△ = gain)
Investment gain or loss on equity method (△ = gain)
Gain or loss on investment partnership management (△ =gain)Gain or loss on change in equity (△ = gain)
Gain or loss on sale of shares of affiliates (△ = gain)
Gain or loss on sale of investment securities (△ = gain)
Gain or loss on valuation of investment securities (△ = gain)
Gain or loss on disposal of fixed assets (△ = gain)
Increase/decrease in trade receivables (△ = increase)
Increase/decrease in inventory assets (△ = increase)
Increase/decrease in trade payables (△ = decrease)
OthersSub-totalInterest and dividends received
Interest paid
Income tax refunded
Income tax paid
Cash flow from operating activities

9

2nd Quarter of FY 2017
(April 1-Sept. 30, 2017)

2nd Quarter of FY 2018
(April 1-Sept. 30, 2018)

963,888
167,057
71,83823,421

332,191
134,363
53,121－

18,555

9,585

832

11,719△43,570△663△44,274△20,718△3,700
△25
4,245
△982
28,501△2,665△59
3,216△1,08653,522△15,367△18,841△5,859－△112,927－－△306,116△143,626△209,588△396,382△4,0803,725△4,25027,454△319,211△296,363－△161,965－
15,0009,119△262,254
133,232△124,941
93,541
255,418
2,743△3,222
19,999△118,797
156,141

(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 tangible fixed assets
Expenditure for acquisition of software
Expenditure for transfer of business
Expenditure for acquisition of investment securities
Proceeds from sale of investment securities
Proceeds from distribution of profits from investment
partnerships
Expenditure for acquisition of shares of affiliates
Proceeds from acquisition of subsidiary shares accompanying
changes in the scope of consolidation
Proceeds from sale of subsidiary shares accompanying
changes in the scope of consolidation
Expenditure for payments of loans receivable
Proceeds from collection of loans receivable
Expenditure for guaranteeing 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 (△ =decrease)
Expenditure for repayment of financing and lease obligations
Expenditure for repayment of long-term borrowing
Expenditure for acquisition of treasury stock
Proceeds from sale of treasury stock
Payment of dividends
Proceeds from stock issuance to non-controlling interests
Net cash flow from financing activities
Effect of exchange rate on cash and cash equivalents
Net increase/decrease in cash and cash equivalents (△ =decrease)
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of the quarter10

2nd Quarter of FY 2017
(April 1-Sept. 30, 2017)

2nd Quarter of FY 2018
(April 1-Sept. 30, 2018)△530,000
500,000△73,312△87,735△20,000△49,999
121,967－
500,000△427,315△43,369－－－

15,14759,610△27,196－

40,600－－179,613－
37,391△140
20△117,236△190,494△1,138－△120,000
1,389
28,294177,084△100,000－△3,900△207,799△6,010－△49,300
24,500△342,510
739△361△127,204△701,838
158△68,534－△897,781△3,299△828,629△567,854

13,768,853
12,940,223

12,910,303
12,342,448

(4) 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)
Based on a resolution of the Board of Directors Meeting held on May 14, 2018, the Company acquired
500,100 shares of treasury stock. As a result of this acquisition, during the consolidated cumulative 2nd
quarter accounting period of the current fiscal year, the value of the treasury shares held by the Company
increased by ¥699,868 thousand, so that at the end of the 2nd quarter accounting period, the value oftreasury shares held amounted to ¥801,809 thousand.

(Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements)
Tax expenses for the Company and a portion of its consolidated subsidiaries are calculated by making areasonable estimate of the effective tax rate after applying tax effect accounting to the amount of quarterly
net income before tax deduction for the consolidated financial year under review including the current
2nd quarter accounting period, and then multiplying the amount of quarterly net income before tax
deduction by the current estimated effective tax rate.

(Additional Information)(Adoption of the “Partial Amendments to the Accounting Standard for Tax Effect Accounting,” etc.)
The Company has adopted the “Partial Amendments to the Accounting Standard for Tax EffectAccounting” (ASBJ Statement No. 28, issued on February 16, 2018), etc. from the beginning of the 1stquarter accounting period of the consolidated financial year under review, with the result that deferred tax
assets are presented in the Investments and other assets category, and deferred tax liabilities are presented
in the Other fixed liabilities category.

11

(Segment Information)
Ⅰ 2nd quarter of the previous consolidated fiscal year/FY 2017 (April 1, 2017 through Sept. 30, 2017)

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

2,025,499

1,214,125

7,464,205

10,703,830－

10,703,830

72,958－

4,898

77,857△77,857－

Total

2,098,458

1,214,125

7,469,103

10,781,687△77,857

10,703,830

Segment income orloss (△)△58,424

31,800931,975

905,352

2,066

907,418

Net sales
Sales to externalcustomers
Intersegment sales
or transfer amountNotes: 1. The segment income or loss ( △ ) adjustment amount of ¥2,066 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.
Ⅱ 2nd quarter of the current consolidated fiscal year/FY 2018 (April 1, 2018 through Sept. 30, 2018)

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

1,627,737

1,335,707

7,637,254

10,600,700－

10,600,700

40,666481

1,583

42,730△42,730－

Total

1,668,403

1,336,188

7,638,838

10,643,431△42,730

10,600,700

Segment income orloss (△)△248,416

52,085414,413

218,082

844

218,927

Net sales
Sales to externalcustomers
Intersegment sales
or transfer amountNotes: 1. The segment income or loss (△) adjustment amount of ¥844 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.

12