Consolidated Financial Results for the three months ended June 30, 2024

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.

August 13, 2024

Consolidated Financial Results

for the Three Months Ended June 30, 2024

(Under IFRS)

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

1. Consolidated financial results for the three months ended June 30, 2024 (from April 1, 2024 to June 30, 2024)

2. Cash dividends

Note: Revisions to the forecast of cash dividends most recently announced: Yes

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1. Qualitative Information on Quarterly Financial Results

(1) Explanation of Operating Results

For the three months ended June 30, 2024 (the “current period”), the Japanese economy remained uncertain due to elevated material and commodity prices associated with lingering geopolitical risks as well as changes in monetary policies, although a gradual economic recovery was seen amid improvements in employment and income conditions.

The HIKARI TSUSHIN, INC. (“the Company”) and its subsidiaries (collectively “the Group”) leveraged its strength in sales to engage in businesses where we can expect stable long-term revenue such as electricity and gas, internet communication line services, water delivery, and insurance.

In addition, to realize a decarbonized society and achieve the SDGs (Sustainable Development Goals), we undertake specific measures and initiatives to fulfill our social responsibility. These initiatives include developing environmentally friendly electricity services that provide virtually renewable energy using Non-Fossil Certificates, preserving sustainable water resources, and reducing resources and waste.

As a result, revenue amounted to 146,154 million yen, up 4.3% year on year, for the three months ended June 30, 2024. Operating profit was 27,216 million yen, up 13.6 % year on year, profit before tax was 65,768 million yen, up 38.2% year on year, and profit attributable to owners of parent of 45,899 million yen, up 40.2% year on year. This was mainly attributable to an increase in recurring operating profit,* which will be a source of stable revenue in the future as the number of customer contracts for our products increases.

*Recuring operating profit refers to the profit excluding customer retention costs and service provision costs from revenue (basic subscription fees, usage fees, and insurance fees, etc.) which are paid every month by users once they subscribe to our services. Revenue may be received from telecommunications carriers or directly from users.

(Million yen unless otherwise stated)

The Group changed its reportable segments from the fiscal year ending March 31, 2025. Accordingly, for the year-on- year comparison, figures for the previous fiscal year have been reclassified into those for the new reportable segments.

Electricity and Gas segment

The Electricity and Gas segment mainly sells and provides gas and electricity to small-and-medium-sized enterprises (SMEs) and individual customers.

The segment recorded revenue of 51,281 million yen, up 18.9% year on year, and operating profit of 7,257 million yen, up 0.9% year on year for the current period. This was attributable to an increase in the number of customer contracts, offset by higher cost of sales as well as increased sales promotion expenses due to robust sales.

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Telecommunication segment

The Telecommunication segment mainly provides SMEs and individual customers with internet communication line services and associated services.

The segment recorded revenue of 29,704 million yen, down 2.7% year on year, and operating profit of 6,303 million yen, down 20.6% year on year for the current period, due to a decrease in the number of customer contracts in the internet communication line services.

Beverage segment

The Beverage segment primarily involves producing natural mineral water products and selling them to individual customers through home delivery.

The segment recorded revenue of 18,331 million yen, down 9.1% year on year, and operating profit of 2,371 million yen, up 85.8% year on year for the current period, as a result of the transfer of shares of some consolidated subsidiaries in the previous fiscal year.

Insurance segment

The Insurance segment mainly provides non-life insurance, life insurance, and warranty services to SMEs and individual customers.

The segment recorded revenue of 6,222 million yen, up 21.7% year on year, and operating profit of 2,018 million yen, up 60.8% year on year for the current period, thanks to an increase in recurring operating profit, which will be a source of stable revenue in the future due to the growth in the number of customer contracts.

Finance segment

The Finance segment mainly provides microfinance and other financial services to SMEs and individual customers.

The segment recorded revenue of 7,576 million yen, down 0.7% year on year, and operating profit of 4,713 million yen, up 33.4% year on year for the current period, due to factors such as the stabilization of the business environment.

Solution segment

The Solution segment mainly provides SMEs with industry-specific solution services through the provision of customer management system and settlement management system platforms and various other tools.

The segment recorded revenue of 7,024 million yen, down 1.1% year on year, and operating profit of 1,669 million yen, up 220.8% year on year for the current period, due to the progress in business structure optimization in the EPARK business.

Commission-based Sales segment

The Commission-based Sales segment mainly engages in commission-based sale of various products, such as products offered by telecommunications carriers and manufacturers, targeting SMEs and individual customers.

The segment recorded revenue of 26,013 million yen, down 1.7% year on year, and operating profit of 4,157 million yen, up 26.1% year on year for the current period, due to the transfer of shares of some consolidated subsidiaries.

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1. Explanation of Financial Position Assets, liabilities, and net assets

Assets were 2,173,486 million yen, up 94,529 million yen from March 31, 2024, due to the purchase of investment securities.

Liabilities were 1,289,680 million yen, up 29,973 million yen from March 31, 2024, due to the issuance of bonds. Equity was 883,806 million yen, up 64,556 million yen from March 31, 2024, due to an increase in retained earnings.

Cash flows

Net cash provided by operating activities was 16,063 million yen as a result of robust operating results for the three months ended June 30, 2024.

Net cash used in investment activities was 61,457 million yen due to the purchase of investment securities and other factors.

Net cash provided by financing activities was 35,486 million yen due to the issuance of bonds and other factors.

As a result, cash and cash equivalents at June 30, 2024 was 502,352 million yen.

1. Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information
   The financial results forecast for the fiscal year ending March 31, 2025 has not been revised from forecast in the

“Consolidated Financial Results for the Fiscal Year Ended March 31, 2024” announced on May 15, 2024.

The forward-looking information including earnings forecasts contained in this document are based on the judgement of the Company’s management, based on currently available information. Investors are therefore cautioned not to unduly rely on the forecasts provided.

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2. Condensed Quarterly Consolidated Financial Statements and Primary Notes

(1) Condensed Quarterly Consolidated Statements of Financial Position

The notes are an integral part of these condensed quarterly consolidated financial statements.

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The notes are an integral part of these condensed quarterly consolidated financial statements.

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1. Condensed Quarterly Consolidated Statements of Profit or Loss
   and Condensed Quarterly Consolidated Statements of Comprehensive Income

Condensed Quarterly Consolidated Statements of Profit or Loss

Three months ended June 30, 2023 and 2024

The notes are an integral part of these condensed quarterly consolidated financial statements.

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