Hikari Tsushin : Financial results briefing material for the 2nd quarter of the term ending March 2024

Financial Results

For the six months ended September 30, 2023

November 13, 2023

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Highlights

1. Overall Performance

Mainly due to the Electricity Business recovery, recurring profits and operating profits, excluding onetime gains and losses, rose by 46% and 92%, respectively.

Quarterly profit attributable to the parent company's owners mainly increased due to foreign exchange gains.

1. Insights through Segments

The Electricity Business continues to perform well. Significant increase in profits, rise in the number of acquisitions, and a decrease in the churn rate.

Other businesses are also progressing mostly as planned from the beginning of the period.

1. Shareholder Return

1. Decided on dividend increase. Increased the initial forecast for the second quarter dividend by 2 yen, and the full-year dividend forecast by 6 yen.
2. Resolved share repurchase for 5 billion yen (0.78% of issued shares).

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Performance

（Billions JPY）
FY2022	FY2023		FY2024	YoY
	H1	H1		H1
Revenue	271.3	310.0			296.4	(4％)
Operating Profit	49.0	46.1			48.4	+5％
Quarterly Net Income	40.2	59.8		Record-	61.7	+3％
(Quarterly net income attributable
	high
to owners of parent)
Recurring Profit	66.7	52.21		Record-	77.6	+48％
	high
Number of In-House	595	605			612	+1％
Products Acquired
(Thousand Units)
(Reference) Subsidiary acquisition costs	(19.3)	(27.1)			(29.1)	+7％
excluding one-time gains and losses
(Reference) Operating profit excluding	44.5	25.1			48.4	+92％
one-time gains and losses

• One-timegains and losses mainly indicate gains and losses on acquisition of or loss of control of subsidiaries, gains and losses on business transfers, gains and losses on sale of fixed assets and impairment losses.

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Significant Profit Increase Mainly in Electricity Business

（Billions JPY）

• Recurring Profit

YoY+48％、+25.3billion yen

• Operating Profit

YoY+5％、+2.3 billion yen

• Operating profit excluding one-time gains and losses

YoY+92％、+23.3 billion yen

66.7

52.2

77.6

Excluding electricity business

49.0	48.4
	46.1
	Excluding
	electricity
	business

					484.
44.5
			Excluding
				Excluding
				electricity
				electricity
		251.		business
			business

Electricity

business

22/3 23/3 24/3

FY2022上期 FY2023上期 FY2024上期

H1 H1 H1

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					Electricity
					business
22/3			24/3
	2Q		2Q		2Q
FY2022	FY2023		FY2024
	H1		1H		H1

			Electricity
			Electricity
			business
			business
FY2022	FY2023	FY2024
H1	H1	H1	3

Electricity Business : Major indicators

■ JEPX quarterly average of spot market	■ Churn rate Decrease
system price

(yen/kWh)	25
23	23
16	19
	15

12

7	8	9

22/3

22/3

22/3

22/3

23/3

23/3

23/3

23/3

24/3

24/3

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

• Operating Profit

Significant H1 YoY profit increase

22/3	22/3	23/3	23/3	24/3
H1	H2	H1	H2	H1

22/3	22/3	22/3	22/3	23/3	23/3	23/3	23/3	24/3	24/3
Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2

• Number of Acquisitions

H1 YoY +13%
22/3	22/3	23/3	23/3	24/3
H1	H2	H1	H2	H1
				4

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Financial Results by Segment

（Billions JPY）

Revenue decreased but profits increased

Revenue and profits

increased

Revenue and profits

decreased

Corporate Service

	FY2022	FY2023			FY2024
	H1	H1			H1
Revenue	128.3	151.2		132.7
					a
Recurring	31.1	17.1		36.1
Profit
				b
Operating	22.3	5.8		21.6
Profit
				b

Individual Customer

Service

FY2022	FY2023	FY2024
H1	H1	H1

70.5	97.3	111.6
			a, c
23.4	23.5	34.1
			b, c
17.1	14.6	21.5
			b

Commission-based

Sales

FY2022	FY2023		FY2024
H1	H1		H1
73.3	62.7		53.4
12.1	11.5		7.3
10.7	27.2		7.1
	d

Main reasons for change

1. decline in electricity transaction prices, (b) application of the electricity new plan,

1. acquisition of the Electricity Business, (d) off-balancing of insurance sales agency business.

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Outlook for main in-house products

Operating profit year-on-year change

	Unchanged
				FY2024(E)	FY2025(E)
	Internet connection	Corporate Service	Profit	crease	Profit increase
	(Expe	bottom
	line		in	half)
			Corporate Service/
	Electricity	Individual Customer	Large	increase	Profit increase
			Service
	Industry-specific	Corporate Service	Profit	crease	Profit increase
	IT Solutions
	Insurance	Individual Customer	Profit	crease	Profit increase
	Service
	Water delivery	Individual Customer	Profit	crease	Profit increase
	Service

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Non-Operating Profit

Foreign exchange gains: current H1 24.4 billion yen, previous H1 19.7 billion yen.

(Billions JPY)

	FY2022	FY2023		FY2024
	H1	H1		H1
Operating Profit	49.0	46.1			48.4
Financial revenue + Financial expenses	3.0	26.4			32.0
Share of loss (profit) of entities accounted	8.4	9.6			5.5
for using equity method
Other non-operating expenses (income)	0.2	0.0			1.1
Quarterly profit (loss) before	60.8	82.2		Record-	87.2
income taxes		high
Corporate income tax expenses	(17.5)	(22.3)			(24.6)
Non-controlling interests	(2.9)	(0.1)			(0.7)
Quarterly net income attributable	40.2	59.8		Record-	61.7
to owners of parent		high

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Steady Performance

(Billions JPY)

	FY2024 H1	FY2024(E)
	Actual Results	Forecast	Progress Rate
Revenue	296.4	625.0	47％
Operating Profit	48.4	93.0	52％
Quarterly net income
and net income	61.7	76.0	81％
attributable to owners
of parent

Forecast for net income attributable to parent is kept unchanged in preparation

for foreign exchange fluctuations.

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Consolidated Cash Flows

(Billions JPY)
	FY2022	FY2023		FY2024
	H1	H1		H1
Cash Flow from	+27.2	+2.4		+71.6
Operating Activities
Cash Flow from	(55.8)	(33.8)		(29.5)
Investing Activities
Excluding trading in	(7.1)	+18.1		(11.0)
investment securities
Free Cash Flow	(28.6)	(31.4)		+42.1
Excluding trading in	+20.1	+20.6		+60.6
investment securities
Cash Flow from	+0.8	+76.7		(3.7)
Financial Activities

Main factors for the increase in operating cash flow

1. Improvement in working capital due to fluctuations in electricity transaction prices, among other factors, 2) increase in operating profit excluding one-time gains and losses, 3) increase in received interest and dividends.

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