Flash Financial Report for Fiscal Year Ended March 31, 2025

May 8, 2025

Company name: Japan Communications Inc. Listing: Tokyo Stock Exchange

Securities code: 9424

URL: https://http://www.j-com.co.jp

Representative: Naohisa Fukuda, Representative Director-President Inquiries: Mitsuru Kodaira, Executive Officer and CFO

Telephone: +81-3-5776-1700

Scheduled date of ordinary general meeting of shareholders: June 25, 2025 Scheduled date to commence dividend payments: -

Scheduled date to file annual securities report: June 26, 2025

Preparation of supplementary material on financial results: Yes

Holding of financial results briefing: Yes (for institutional investors, securities analysts and the press)

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

1. Consolidated financial results for the fiscal year ended March 31, 2025 (from April 1, 2024 to March 31, 2025)

   Note: Comprehensive income For the fiscal year ended March 31, 2025:	¥781 million	[(40.1)%]
   For the fiscal year ended March 31, 2024:	¥1,304 million	[101.0%]

   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, 2025	9,238	24.8	962	(15.5)	1,000	(15.5)	849	(37.8)
      March 31, 2024	7,400	21.8	1,139	53.7	1,183	51.6	1,365	97.7

      	Basic earnings per share	Diluted earnings per share	Return on equity	Ratio of ordinary profit to total assets	Ratio of operating profit to net revenue
      Fiscal year ended	Yen	Yen	%	%	%
      March 31, 2025	5.12	-	26.3	17.0	10.4
      March 31, 2024	8.27	8.27	65.5	31.8	15.4

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

      For the fiscal year ended March 31, 2025: ¥16 million

      For the fiscal year ended March 31, 2024: ¥18 million

   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, 2025	7,340	3,870	50.4	22.31
      March 31, 2024	4,409	2,979	62.8	16.78

      Reference: Equity

      As of March 31, 2025: ¥3,702 million

      As of March 31, 2024: ¥2,768 million

   3. Consolidated cash flows

   	Cash flows from operating activities	Cash flows from investing activities	Cash flows from financing activities	Cash and cash equivalents at end of period
   Fiscal year ended	Millions of yen	Millions of yen	Millions of yen	Millions of yen
   March 31, 2025	930	(1,104)	1,957	4,300
   March 31, 2024	1,071	(213)	75	2,518

2. Cash dividends

   	Annual dividends per share					Total cash dividends (Total)	Payout ratio (Consolidated)	Ratio of dividends to net assets (Consolidated)
   	First quarter-end	Second quarter-end	Third quarter-end	Fiscal year-end	Total
   	Yen	Yen	Yen	Yen	Yen	Millions of yen	%	%
   Fiscal year ended March 31, 2024	-	0.00	-	0.00	0.00	-	-	-
   Fiscal year ended March 31, 2025	-	0.00	-	0.00	0.00	-	-	-
   Fiscal year ending March 31, 2026 (Forecast)		0.00		0.00	0.00		-

3. Overview and Management Policy for the fiscal year ending March 31, 2026

To achieve the mission of carrying bit in safety and security, the Company provides mobile telecommunications service and mobile solution service, and operates the business that provides telecommunications and authentication infrastructure whose identification and authenticity are secured by FPoS, the Company's patented technology (hereinafter referred to as the "FPoS business"). FPoS is a technology which was recognized by the Financial Services Agency as conducive to ensuring security and improving convenience of financial transactions. In the mobile telecommunications service, the Company agreed with NTT DOCOMO, INC. (hereinafter referred to "DOCOMO") about the interconnection with DOCOMO's voice and SMS network in February 2024 and the Company plans to provide new service based on the interconnection in May 2026. Herewith, the Company will be able to develop new business as Neo-Carrier and the Company assumes to provide 10 million mobile telecommunications lines in 2034. In the FPoS business, its technical security and institutional reliability owing to accreditation under the Electronic Signatures Act have been so evaluated that it is expected to grow in geometric progression and the Company assumes to provide 100 million electronic certificates in 2034. The Company assumes that these service and business will bring us domestic net revenue of 240 billion yen and profit after tax of 36 billion yen in 2034.

First, the Company will proceed to prepare for the interconnection with DOCOMO's voice and SMS network for the launch of new service in May 2026 and will make efforts to expand customer base through actions to increase awareness at the same time, and the Company will continue to make efforts to establish evaluation of FPoS and to expand cases using FPoS.

1. Significant changes in the scope of consolidation during the period: None

2. Changes in accounting policies, changes in accounting estimates, and restatement

   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: None

   4. Restatement: None

3. Number of issued shares (common shares)

   1. Total number of issued shares at the end of the period (including treasury shares)

      As of March 31, 2025	165,923,739 shares
      As of March 31, 2024	165,009,239 shares

   2. Number of treasury shares at the end of the period

      As of March 31, 2025	15,004 shares
      As of March 31, 2024	15,004 shares

   3. Average number of shares outstanding during the period

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, 2025	9,064	25.1	1,099	(15.0)	1,095	(12.9)	902	(35.5)
   March 31, 2024	7,247	24.7	1,294	54.6	1,257	50.6	1,398	95.0

   	Basic earnings per share	Diluted earnings per share
   Fiscal year ended	Yen	Yen
   March 31, 2025	5.45	-
   March 31, 2024	8.47	8.47

2. Non-consolidated financial position

Reference: Equity

As of March 31, 2025: ¥3,797 million

As of March 31, 2024: ¥2,784 million

• Financial results reports are exempt from audit conducted by certified public accountants or an audit firm.

• Proper use of earnings forecasts, and other special matters

A financial results meeting will be held on Friday, May 9, 2025 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.

1. Explanation on operating results for the year ended March 31, 2025

   1. Mobile Telecommunications Service (MVNO/MVNE business)

      Upon a ruling by the Minister of Internal Affairs and Communications in June 2020, since the Company launched the "Nihon Tsushin SIM" which provides flat-rate voice plans equivalent to those of major mobile phone operators in July 2020, the Company has continued to achieve growth both in the number of subscribed lines and quarterly revenue.

      As an awareness improvement measures to accelerate growth of "Nihon Tsushin SIM", the Company conducted first time TV commercials ("We cannot subtract any further. 290 yen" edition) and conducted the similar advertising on the Internet in the current fiscal year.

      Also, the Company increased the data amount of "Reasonable Minna-no Plan" and "Reasonable 30-GB Plan" with keeping their rate unchanged on September 30, 2024, to enhance competitiveness.

      These measures allow "Nihon Tsushin SIM" to be posted in a comparison website, SNS, etc. and its marketability and price competitiveness are highly valued.

      In addition, the voice service of the "Nihon Tsushin SIM" is not provided in prefix method, which has been adopted by many of MVNOs, and the Company provides services of comparable call quality as major mobile phone operators, though the price of the service is the lowest in Japanese mobile telecommunications industry.

      The Company considers the "communication quality," "billing plan" and "procedure and support" important and focuses on increasing customer satisfaction. And the Company was awarded the first prize of total satisfaction in the category of MVNO for the customer satisfaction survey on the mobile phone service for 2024, by J.D. Power Japan, Inc.

      Due to the awareness being improved and the products being evaluated, the revenue from "Nihon Tsushin SIM" has been growing steadily for both individual and corporate subscribers and has been driving the Company's growth.

      In addition, as the Company applied to DOCOMO for the interconnection with its voice and SMS network in June 2022 and agreed with DOCOMO about the interconnection in February 2024, the Company is aiming for starting new service based on the interconnection with DOCOMO's voice and SMS network in May 2026 (scheduled). The Company plans to make its voice core system virtualized on the private cloud to improve the flexibility of service and to reduce the construction cost. Now, the Company is in process of selecting solutions that composing the system, and the Company has entered into some contracts with ng-voice GmbH, a telecommunication software provider whose headquarter is in Hamburg, Germany, and other some overseas vendors.

   2. Mobile Solution (MSP business)

      In the telecommunications business through local mobile networks (local 4G/5G business) among the mobile solution (MSP business), the Company aims to build actual results in the U.S., where there are many advanced showcases, and leverage this experience to expand in Japan. The U.S. subsidiary of the Company operates a business that provides SIMs used for connections with local mobile networks in the U.S. market.

      As announced in December 2023, the Company's U.S. subsidiary, JCI US Inc. (hereinafter referred to as "JCI US"), entered a contract with the State of Utah in the U.S. to implement a statewide Citizens Broadband Radio Service (CBRS) (local 4G/5G) for an educational and telehealth network. It means that JCI US entered a contract with the State of Utah through the University of Utah and the Utah Education and Telehealth Network (hereinafter referred to as "UETN") to provide the Company's Secure LTE Network Gateway Platform (NGP) services in its first major commercial implementation. The local 4G/5G networks envisioned in this contract will replace and expand the service requirements of Wi-Fi and provide secure (private/closed) networks for the current and future users of high-speed broadband services implemented by the University of Utah and UETN. JCI US will provide all necessary SIMs and/or other Hardware Security Modules (HSM) to enhance connectivity to networks for the people of the State of Utah.

      Through the U.S. subsidiary, the Company is accumulating technologies and expertise on the telecommunications business through local mobile networks (local 4G/5G business), and by taking advantage of these technologies and expertise, the Company provides SIMs that can connect to local mobile

      1

      networks set up by Japanese partner and customer companies. The Company will continue to accumulate knowledge in Japan and the U.S. and will take advantage of this knowledge to develop case examples in the local 4G/5G business.

      In addition, the Company takes advantage of the technology and infrastructure of SIM authentication which the Company has developed in the U.S. to provide the new service based on the interconnection with DOCOMO's voice and SMS network.

   3. FPoS business

As digital transformation (DX) is underway in many areas of society and the economy, the importance of digital IDs is recognized again, and the Company is pushing forward with a business that will establish and provide digital IDs that can be used on smartphones using FPoS, which is the Company's patented technology and the technology being recognized by the Financial Services Agency as conducive to ensuring security and improving convenience of financial transactions. The authentication by FPoS is i) verification of a customer's identity by private key and electronic certificate, which are equipped with an IC chip in a customer's Individual Number Card, ii) generation of private key and issuance of electronic certificate by electronic certification authority, that is accredited under the Electronic Signatures Act, in Hardware Security Module (HSM) built in a customer's smartphone (iPhone and Android), and iii) guarantee of the identity (confirmation of the person's identity) and authenticity (confirmation that the person's intent is not falsified) of a customer by examining the combination of a public key contained in an electronic certificate and a private key.

That is to say, an Individual Number Card is a trust anker in the authentication by FPoS and FPoS has a high-level security equal to an Individual Number Card. While an Individual Number Card can be used as a digital ID in administrative procedures, FPoS can be used as a digital ID and authentication infrastructure in a wide range of areas including administrative procedures by local governments and business operators.

When a customer uses a service through applications on a smartphone, there is a problem that the customer could be impersonated and the customer's data (including personal information) could be falsified, however, if that service is secured by FPoS, the customer could not be impersonated and the data could not be falsified, because FPoS has a high-level security equal to an Individual Number Card. And there is also a problem that the customer cannot manage the business operators who have link to the customer's data (including personal information), however, if that service is secured by FPoS, the customer can confirm and manage the business operators who have link to the customer's data (including personal information) easily, because FPoS has a function of "Dynamic Opt-in" which displays the list of the business operators who have link to the customer's personal information and enables the customer to authorize or revoke the link to their personal information.

To demonstrate the above potential of FPoS, the Company cooperates with Mebuku Ground Inc., a private-public partnership company made up of Maebashi City, private-sector business enterprises and universities. Since October 2022, Mebuku Ground Inc. operates "Mebuku App" which issues "Mebuku ID," a digital ID using FPoS technology.

The "Mebuku ID" is not only far more secure than other IDs, but is also highly regarded by many local governments, companies, and organizations for its ability to link data across business operators, and for its "Dynamic Opt-in" function that provides information of which business operators or services are eligible to link the data.

In December 2023, "Mebuku Pay," Maebashi City's electronic local currency, was launched through "Mebuku ID" and "Mebuku App" (announced by Maebashi City and Mebuku Ground Inc. in September 2023). "Mebuku Pay" was designed and developed with the highest priority placed on giving back payment data to the local community by ensuring that it remains in the community and is utilized locally. The Company believes that "Mebuku ID" and "Mebuku Pay" can be an effective means to solve social issues, as they enable communities to reap the benefits of social and economic digitalization.

In addition, benefit money to support childbirth and nurturing in Maebashi City can be paid in "Mebuku Pay." This is achieved because of the high-level security of "Mebuku ID" and ability to link personal information safely and surely owing to a consent of the person by a function of "Dynamic Opt-in."

2