Japan Communications : Flash Financial Report for Fiscal Year Ended March 31, 2023

June 28, 2023

-

June 29, 2023 Yes

Yes (for institutional investors, analysts and the press)

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

May 10, 2023

	Consolidated Financial Results
	for the Fiscal Year Ended March 31, 2023
	(Under Japanese GAAP)
Company name:	Japan Communications Inc.
Listing:	Tokyo Stock Exchange: Prime Market
Securities code:	9424
URL:	URL http://www.j-com.co.jp/
Representative:	Naohisa Fukuda, Representative Director-President
Inquiries:	Mitsuru Kodaira, Executive Officer and CFO
Telephone:	[phone]

Scheduled date of ordinary general meeting of shareholders:

Scheduled date to commence dividend payments:

Scheduled date to file annual securities report:

Preparation of supplementary material on financial results:

Holding of financial results briefing:

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the fiscal year ended March 31, 2023 (from April 1, 2022 to March 31, 2023)

(1) Consolidated operating results				(Percentages indicate year-on-year changes.)
	Net revenue		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
Fiscal year ended	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%
March 31, 2023	6,074		31.1	740	165.1	780	161.1	690	134.8
March 31, 2022	4,634		32.5	279	-	298	-	294	-
Note: Comprehensive income For the fiscal year ended March 31, 2023:	¥649 million	[154.9%]
	For the fiscal year ended March 31, 2022:	¥254 million	[-%]

	Basic earnings	Diluted earnings	Return on equity
	per share	per share
Fiscal year ended	Yen	Yen	%
March 31, 2023	4.19	4.15	67.2
March 31, 2022	1.79	1.77	64.2

Reference: Share of profit (loss) of entities accounted for using equity method

For the fiscal year ended March 31, 2023:	¥15 million
For the fiscal year ended March 31, 2022:	¥5 million

Ratio of ordinary

profit to total assets

%

31.3

15.7

Ratio of operating

profit to net revenue

%

12.2

6.0

(2) Consolidated financial position

	Total assets	Net assets	Equity-to-asset ratio	Net assets per share
As of	Millions of yen	Millions of yen	%	Yen
March 31, 2023	3,040	1,534	46.1	8.50
March 31, 2022	1,944	785	33.6	3.97
Reference: Equity
As of March 31, 2023:	¥1,402 million
As of March 31, 2022:	¥652 million

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(3) Consolidated cash flows

	Cash flows from	Cash flows from	Cash flows from	Cash and cash
	equivalents at end of
	operating activities	investing activities	financing activities
	period
Fiscal year ended	Millions of yen	Millions of yen	Millions of yen	Millions of yen
March 31, 2023	851	(200)	(1)	1,580
March 31, 2022	21	(271)	150	928

2. Cash dividends

		Annual dividends per share		Total cash		Ratio of
						Payout ratio	dividends to
	First	Second	Third	Fiscal		dividends
	Total	(Consolidated)	net assets
	quarter-end	quarter-end	quarter-end	year-end	(Total)
			(Consolidated)
	Yen	Yen	Yen	Yen	Yen	Millions of yen	%	%
Fiscal year ended	-	0.00	-	0.00	0.00	-	-	-
March 31, 2022
Fiscal year ended	-	0.00	-	0.00	0.00	-	-	-
March 31, 2023
Fiscal year ending
March 31, 2024	-	0.00	-	0.00	0.00		-
(Forecast)

3. Overview and management policy for the fiscal year ending March 31, 2024

Since its founding in 1996, the Company has propounded and implemented the MVNO business model, an innovative form of telecommunications business, having developed its business with the mission of transferring (communicating) data safely, securely, and conveniently. Specifically, the Company is engaged in three businesses: mobile communications business (SIM business), communications business through local mobile networks (local 4G/5G), and digital ID (FPoS: Fintech Platform over SIM) business for use on smartphones. The Company plans to build a stable income stream by continuing the evolution of the SIM business, as well as to develop the local 4G/5G business and FPoS business to become the pillar of future earnings by investing in the two businesses.

In the local 4G/5G business, the Company aims to build advanced showcases in the U.S. and leverage the experience to expand in Japan.

In the FPoS business, the Company has acquired certification under the Digital Signature Act for "my Digital Certificate" (the issuing entity is my FinTech Inc., a subsidiary of the Company.) based on its patented FPoS technology, and are working on its actual use as a digital ID that can be used safely, securely, and conveniently on smartphones.

With the surrounding situation above described, the management of the Company perceives a market capitalization of 500 billion yen as the growth business scale in three to five years from the launch of commercial service of FPoS (launched on October 21, 2022).

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* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
2. Changes in accounting policies, changes in accounting estimates, and restatement
3. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: None
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: Yes
   4. Restatement: None
4. Number of issued shares (common shares)
5. 1. Total number of issued shares at the end of the period (including treasury shares)

As of March 31, 2023	165,009,239 shares
As of March 31, 2022	164,258,239 shares

(ii) Number of treasury shares at the end of the period

As of March 31, 2023	15,004 shares
As of March 31, 2022	15,004 shares

(iii) Average number of shares outstanding during the period

Fiscal year ended March 31, 2023	164,714,410 shares
Fiscal year ended March 31, 2022	164,243,235 shares

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[Reference] Overview of non-consolidated financial results

1. Non-consolidated financial results for the fiscal year ended March 31, 2023 (from April 1, 2022 to March 31, 2023)

(1) Non-consolidated operating results				(Percentages indicate year-on-year changes.)
	Net revenue		Operating profit	Ordinary profit	Profit
Fiscal year ended	Millions of yen		%	Millions of yen		%	Millions of yen	%	Millions of yen	%
March 31, 2023	5,811		28.9	837		137.7	835	141.7	717	126.8
March 31, 2022	4,510		33.8	352		-	345	-	316	-
	Basic earnings	Diluted earnings
	per share		per share
Fiscal year ended			Yen			Yen
March 31, 2023			4.35			4.31
March 31, 2022			1.92			1.90
(2) Non-consolidated financial position
	Total assets		Net assets		Equity-to-asset ratio	Net assets per share
As of	Millions of yen	Millions of yen		%		Yen
March 31, 2023			3,203			1,462		42.7		8.28
March 31, 2022			2,118			645		27.3		3.51
Reference: Equity
As of March 31, 2023:		¥1,366 million
As of March 31, 2022:		¥577 million

• Financial results reports are exempt from audit conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters
  A financial results meeting will be held on Thursday, May 11, 2023 for institutional investors, analysts and the press. The Company plans to post a video of this financial results meeting on its website promptly after the meeting is held.

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1. Operating results and financial position

1. Operating results for the year ended March 31, 2023
   Since its founding in 1996, the Company has propounded and implemented the MVNO business model, an innovative form of telecommunications business, having developed its business with the mission of transferring (communicating) data safely, securely, and conveniently. Specifically, the Company is engaged in three businesses: mobile communications business (SIM business), communications business through local mobile networks (local 4G/5G), and digital ID (FPoS: Fintech Platform over SIM) business for use on smartphones.
   The Company plans to build a stable income stream by continuing the evolution of the SIM business, as well as to develop the local 4G/5G business and FPoS business to become the pillar of future earnings by investing in the two businesses.
2. 1. Mobile Communications Business (SIM business)
      In the MVNO business model that the Company has created, the Company has continued its efforts to ensure a fair competitive environment and has evolved them through repeated deregulation. In particular, a June 2020 ruling by the Minister of Internal Affairs and Communications, which determined that the wholesale telecommunications service charge for the voice call service provided by NTT DOCOMO, INC. to the Company shall not exceed the amount of the appropriate cost under efficient management plus appropriate profit, has been made significant contribution to the Company's earnings continuously. In July 2020, the Company launched the "Nihon Tsushin SIM," which provides flat-rate voice plans equivalent to that of major mobile phone operators, and the Company has been profitable for two consecutive periods since the prior fiscal year, with growth in both subscribed line and quarterly revenue.
      In order to keep the "Nihon Tsushin SIM" competitive, the Company has improved their product specifications timely, and in April 2022, the Company started supporting eSIM, which is embedded in devices such as smartphones, in advance of other MVNO operators (announced on April 6, 2022). An eSIM is a SIM on which subscriber identity information (profiles) necessary for using telecommunication services can be remotely written in eSIM-embedded devices such as smartphones so that customers can change mobile service operators without replacing SIM cards, as was the case before. This will enable customers to use multiple lines of different mobile operators and/or use separate phone numbers, such as for private and business purposes, on the same smartphone.
      In addition, by March of 2023, the Company has started an identification by the electronic certificates stored in "My Number Card" as an identification under the Act on Identification, etc. by Mobile Voice Communications Carriers of their Subscribers, etc. and for Prevention of Improper Use of Mobile Voice Communications Services. In this approach, an identification will be completed upon customer's reading their "My Number Card" with their smartphone and they can start using the service on the day of application, in case of that they choose eSIM. This will improve customer's convenience and will contribute to prevent improper use of mobile phones by strict identification.
      Revenue of "Nihon Tsushin SIM" are growing steadily for both individual and corporate subscribers, and with the increase in MNP port in from major mobile phone operators and major MVNOs. In addition, the number of subscribers for voice communication services under partner brands is also increasing steadily, and as a result, the SIM business have seen growth both in the MVNO Business and Enabler Business.
      In June 2022, the Company has requested NTT DOCOMO, INC. for an interconnection of voice communication networks (announced June 10, 2022). This request, which the Company had been considering for long time, was made as the Information and Communications Council of the Ministry of Internal Affairs and Communications presented a policy of allocating mobile numbers (090, etc.) to MVNOs in December 2021. The Company will secure a stable business foundation by procuring both data and voice communication networks through interconnection and aim to become a "Neo Carrier" who can provide comparable services as mobile operators without owning mobile base stations.

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