Note: This document has been translated from a part of 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 4, 2022

Consolidated Financial Results
for the Three Months Ended June 30, 2022
(Under Japanese GAAP)
Company name:
Japan Communications Inc.
Listing:
Tokyo Stock Exchange: Prime Market
Securities code:
9424
URL:
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 to file quarterly securities report:
August 5, 2022
Scheduled date to commence dividend payments:–
Preparation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results briefing:
Yes (for institutional investors, analysts andthe press)(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the three months ended June 30, 2022 (from April 1, 2022 to June 30,
2022)(1) Consolidated operating results (cumulative)
Net revenue
Three months ended(Percentages indicate year-on-year changes.)

Operating profit

Millions of yen%

Millions of yen%

June 30, 2022

1,353

28.1

158

556.2

June 30, 2021

1,056

39.8

24

–

Note: Comprehensive income

For the three months ended June 30, 2022:
For the three months ended June 30, 2021:

Basic earnings
per share
Three months ended

Profit attributable toowners of parent

Ordinary profit
Millions of yen

%

180

616.8

25

–

¥133 million¥25 million

Millions of yen

%

161

459.8

28

–

[425.2%][–%]

Diluted earnings
per share
Yen

Yen

June 30, 2022

0.98

0.97

June 30, 2021

0.17

0.17

(2) Consolidated financial position
Total assets
As ofMillions of yen

Net assets

Equity-to-asset ratio

Millions of yen

Net assets per share%

Yen

June 30, 2022

2,102

926

37.9

4.84

March 31, 2022

1,944

785

33.6

3.97

Reference:

EquityAs of June 30, 2022:
As of March 31, 2022:¥795 million¥652 million

2. Cash dividends
Annual dividends per shareFirst quarter-end
Yen

Fiscal year ended
March 31, 2022
Fiscal year ending
March 31, 2023
Fiscal year ending
March 31, 2023
(Forecast)–Second quarter-end

Third quarter-end

Yen

Yen

Fiscal year-end

Total

Yen

Yen

0.00

–

0.00

0.00

0.00

–

0.00

0.00

–

Note: Revisions to the forecast of cash dividends most recently announced: None

3. Overview and management policy for the fiscal year ending 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 threebusinesses: 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 theexperience 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 ofcommercial service of FPoS (expected within this fiscal year).

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change
in scope of consolidation): None
(2) Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements:
None(3) Changes in accounting policies, changes in accounting estimates, and restatement(i) Changes in accounting policies due to revisions to accounting standards and other regulations: None(ii) Changes in accounting policies due to other reasons: None(iii) Changes in accounting estimates: None(iv) Restatement: None
(4) Number of issued shares (common shares)(i)

Total number of issued shares at the end of the period (including treasury shares)
As of June 30, 2022

164,258,239 shares

As of March 31, 2022

164,258,239 shares(ii) Number of treasury shares at the end of the period
As of June 30, 2022

15,004 shares

As of March 31, 2022

15,004 shares(iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal
year)
Three months ended June 30, 2022

164,243,235 shares

Three months ended June 30, 2021

164,243,235 shares* Quarterly financial results reports are exempt from quarterly review 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 Friday, August 5, 2022 for institutional investors, analysts and thepress. The Company plans to post a video of this financial results meeting on its website promptly after the
meeting is held.

1. Qualitative Information on Results for the Three Months Ended June 30(1) Explanation on operating results
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 oftransferring (communicating) data safely, securely, and conveniently. Specifically, the Company is engaged inthree businesses: mobile communications business (SIM business), communications through local mobile
networks business (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 wellas to develop the local 4G/5G business and FPoS business to become the pillar of future earnings by investingin the two businesses.
(i) Mobile Communications Business (SIM business)
In July 2020, the Company launched the “Nihon Tsushin SIM,” which provides flat-rate voice plans
equivalent to that of major mobile operators, following the June 2020 ruling by the Minister for Internal
Affairs and Communications that set the prices of wholesale telecommunication services relating to voicecommunications services provided to the Company from NTT DOCOMO, INC. shall not exceed theamount of the appropriate costs under efficient management plus appropriate profit. The Company hastimely introduced new additional plans to “Nihon Tsushin SIM,” increasing net sales continuously.
Since April 2022, an eSIM that is embedded in a device like a smartphone can be selected for “Nihon
Tsushin SIM,” in addition to a conventional SIM card. An eSIM is a SIM by which subscriber identity
information (profiles) necessary for using telecommunication services can be remotely written to eSIM
embedded in devices such as iPhone and users can change mobile service operators without replacing
SIM cards, as was the case before.
The replacement cycle for smartphones has been prolonged as evolution of functions has reached a certain
level and more customers consider lowering communication expenses due to a hike in prices caused by
the Ukrainian situation. Amid these conditions, eSIMs are accepted by customers who want to use twolines on one smartphone and use two phone numbers separately for business and private purposes on one
smartphone.
In addition, the Company has requested NTT DOCOMO, INC. for an interconnection of voice networks
in June 2022 (announced on June 10, 2022). This request, which the Company had been considering forlong 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 voicecommunication networks through interconnection, aiming at a business model as a “Neo Carrier” that
ensures flexibility in both technology and price.
(ii) Local 4G/5G Business through Local Mobile Networks
A U.S. subsidiary of the Company operates a business that provides SIMs used for connections with local
mobile networks in the U.S. market. For connections with local mobile networks, it is necessary to write alarge amount of highly specialized information to SIMs. The Company provides SIMs that are able toconnect to local mobile networks set up by partner and customer companies by accumulating and utilizing
technologies and expertise in relevant fields through the U.S. subsidiary. By utilizing achievements in theleading U.S. market, the Company is planning similar initiatives for the local 4G/5G business in Japan.
(iii) Digital ID (FPoS) Business for Use on Smartphones
Under the “Vision for a Digital Garden City Nation” (vision to realize a comfortable life for everyone sothat they enjoy benefits from digitalization, leaving no one behind by solving regional issues throughdigital implementation) which was declared by the Japanese government in 2021, it was announced onJune 17, 2022 that project applications by Maebashi City, Ebetsu City (Hokkaido Prefecture), and Gunma
Prefecture were adopted. The project applications by these three local governments are each premised on
usage of the Maebashi ID (official name TBD), on which the Company is working on as the first case inthe FPoS business. Accordingly, the Company plans to provide FPoS based services in these three regions
during the current fiscal year. A Maebashi ID is understood as a platform on which both public services
such as administrative procedures and other private services can be used with a single ID using asmartphone and the Company will fully support implementation of this platform in these three regions
during the current fiscal year.
As a result of the above, the Group’s consolidated net revenue for the three months ended June 30, 2022 were1,353 million yen, an increase of 297 million yen (up 28.1%) compared to the three months ended June 30,
2021 (hereinafter referred to as the “same period of the previous year”). This was partially due to an increaseof revenue from initial fees relating to acquisition of new customers and monthly fees resulting from growthof the flat-rate or semi-flat rate voice services centered on “Nihon Tsushin SIM” in the MVNO Business (up16.7% from the same period of the previous year) and growth of the Enabler Business including voiceservices provided under partner brands (up 43.8% from the same period of the previous year).
Cost of revenue was 767 million yen, an increase of 128 million yen (up 20.2%) compared to the same periodof the previous year. While payment of wholesale voice costs of flat-rate or semi-flat rate voice services
increased along with an increase in users, mainly “Nihon Tsushin SIM” users, decreased inter-connection fees
per unit with data communication carriers reduced costs despite bandwidth acceleration measures with NTT
DOCOMO, INC. Thus, the cost ratio improved compared to the previous quarter and the gross profit margin
has improved.
As a result, gross profit amounted to 586 million yen, an increase of 168 million yen (up 40.3%) compared tothe same period of the previous year. Operating profit amounted to 158 million yen (24 million yen for thesame period of the previous year) and profit attributable to owners of parent amounted to 161 million yen (28million yen for the same period of the previous year).
Financial results by business are as follows
Net revenue

For three months
ended June 30, 2021

For three months
ended June 30, 2022

Year-on-year change(Millions of yen)
Year-on-year change(%)

MVNO Business

610

713

102

16.7

Enabler Business

445

640

195

43.8

1,056

1,353

297

28.1

Total

Revenue of 41 million yen (31 million yen in the same period of the previous year) from overseas operationsin the segment information are included in the Enabler Business.
(2) Explanation on financial position(i) Assets, liabilities and net assets
AssetsCurrent assets at the end of the current first quarter were 1,522 million yen, an increase of 111 million yen
compared to the end of the previous year. This was mainly due to increases of 80 million yen in accounts
receivable - trade and 27 million yen in merchandise. Non-current assets were 578 million yen, an increase of
46 million yen compared to the end of the previous year. This was mainly due to an increase of 38 million yen
in intangible assets.
As a result, total assets amounted to 2,102 million yen, an increase of 158 million yen compared to the end of
the previous year.
Liabilities
Current liabilities at the end of the current first quarter were 1,111 million yen, an increase of 5 million yen
compared to the end of the previous year. Non-current liabilities were 64 million yen, an increase of 11
million yen compared to the end of the previous year. This was due to an increase of 11 million yen in longterm unearned revenue.

As a result, liabilities amounted to 1,176 million yen, an increase of 17 million yen compared to the end of theprevious year.
Net assets
Net assets at the end of the current first quarter were 926 million yen, an increase of 141 million yen
compared to the end of the previous year.
As a result, the equity ratio was 37.9% (33.6% at the end of the previous year).
(ii) Status of cash flows
Cash and cash equivalents at the end of the three months ended June 30, 2022 were 929 million yen, almost
flat compared to the end of the previous year.
The status of cash flows and their factors during the three months ended June 30, 2022 are as follows.
Cash flows from operating activities
Net cash provided by operating activities totaled 38 million yen (an inflow of 134 million yen in the same
period of the previous year). This was mainly due to an increase in trade receivables of 75 million yen, adecrease in consumption taxes payable/consumption taxes refund receivable of 35 million yen, and income
taxes paid of 30 million yen despite recording of profit before income taxes of 180 million yen.
Cash flows from investing activities
Net cash used in investing activities totaled 41 million yen (an outflow of 132 million yen in the same periodof the previous year). This was mainly due to purchase of intangible assets of 31 million yen.
Cash flows from financing activities
There were no cash flows from financing activities (an inflow of 54 million yen in the same period of theprevious year).
(3) Explanation on future forecast information such as consolidated business forecast
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 oftransferring (communicating) data safely, securely, and conveniently. Specifically, the Company is engaged inthree businesses: mobile communications business (SIM business), communications business through local
mobile networks (local 4G/5G), as well as digital ID (FPoS: Fintech Platform over SIM) business for use on
smartphones.
The Company plans to build a stable revenue stream by continuing the evolution of the SIM business, as wellas to develop the local 4G/5G business and FPoS business to become the pillar of future earnings by investingin the two businesses.
In the local 4G/5G business, the Company aims to build advanced showcases in the U.S. and leverage theexperience 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, andconveniently 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 ofcommercial service of FPoS (expected within this fiscal year).

Quarterly consolidated financial statements
Quarterly consolidated balance sheets(Thousands of yen)
As of March 31, 2022
AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Merchandise
Supplies
Accounts receivable - other
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
VehiclesAccumulated depreciation
Vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Leased assets
Accumulated depreciation
Leased assets, net
Construction in progress
Total property, plant and equipment
Intangible assets
Patent right
Trademark right
Software
Software in progress
Total intangible assets
Investments and other assets
Investment securities
Leasehold and guarantee deposits
Other
Total investments and other assets
Total non-current assets
Deferred assets
Share issuance costs
Bond issuance costs
Total deferred assets
Total assets

As of June 30, 2022

928,688378,641
47,55271
576
57,440△2,692
1,410,277

929,050459,288
75,22160
190
61,752△3,388
1,522,175

84,111△83,292
818
7,027△4,881
2,145
795,689△766,969
28,719263,727△263,727－
90,093
121,777

85,207△84,403804
7,027△5,0601,966
828,788△800,582
28,206
263,727△263,727－
90,093
121,071

3,834
2,097
73,999125,984
205,916

4,839
3,523
95,227141,296244,886

63,281
140,335456
204,073
531,767

64,785
147,880
120
212,785578,743

376
1,937
2,313
1,944,359

159
1,409
1,569
2,102,487

(Thousands of yen)
As of March 31, 2022
Liabilities
Current liabilities
Accounts payable - trade
Accounts payable - other
Income taxes payable
Unearned revenue
Deposits received
Valuation Reserve For Inventory PurchaseCommitments
Other
Total current liabilities
Non-current liabilities
Long-term accounts payable - other
Long-term unearned revenue
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Foreign currency translation adjustment
Total accumulated other comprehensive
incomeShare acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

As of June 30, 2022

421,105
85,27062,055
117,785
27,918424,232
101,385
36,056
124,548
29,545

263,951

294,773

127,992
1,106,078

100,831
1,111,372

2,149
50,92053,0701,159,149

2,051
62,75464,806
1,176,178

4,528,440
2,977,376△6,977,888△2,192525,737

4,528,440
2,977,376△6,816,524△2,192
687,100

126,815

108,809126,815

108,809

67,86464,792785,210
1,944,359

75,26955,128926,308
2,102,487

Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income
Quarterly consolidated statements of income(Thousands of yen)Three months ended
June 30, 2021
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Share of profit of entities accounted forusing equity method
Foreign exchange gains
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Amortization of share issuance costs
Amortization of bond issuance costs
Foreign exchange losses
Miscellaneous losses
Total non-operating expenses
Ordinary profit
Profit before income taxes
Income taxes - current
Total income taxes
ProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent

Three months ended
June 30, 2022

1,056,460
638,440
418,020
393,880
24,1391,353,761
767,235
586,526
428,117
158,408

1,629

1,322

－
766
2,396

21,241
1,018
23,582

22
287
528
452
0
1,291
25,24425,244
1,022
1,022
24,221△4,603
28,824

253
216
528
－
36
1,035
180,955
180,955
29,25629,256
151,699△9,664
161,363

Quarterly consolidated statements of comprehensive income(Thousands of yen)Three months ended
June 30, 2021
ProfitOther comprehensive income
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to ownersof parent
Comprehensive income attributable to noncontrolling interests

Three months ended
June 30, 2022

24,221

151,699

1,235
1,235
25,457△18,005△18,005
133,693

30,060143,358△4,6039,664

Quarterly consolidated statement of cash flows(Thousands of yen)Three months ended
June 30, 2021
Cash flows from operating activities
Profit before income taxes
Depreciation
Interest expenses
Share of loss (profit) of entities accounted
for using equity method
Foreign exchange losses (gains)
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Decrease (increase) in accounts receivable other
Increase (decrease) in unearned revenue
Increase (decrease) in Long-term unearned
revenue
Increase/decrease in consumption taxes
payable/consumption taxes refund receivable
Other, net
SubtotalInterest paid
Income taxes paid
Net cash provided by (used in) operating
activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from refund of leasehold andguarantee deposits
Payments of leasehold and guarantee deposits
Other, net
Net cash provided by (used in) investing
activities
Cash flows from financing activities
Repayments of long-term borrowings
Proceeds from share issuance to noncontrolling shareholders
Net cash provided by (used in) financing
activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
periodCash and cash equivalents at end of period

Three months ended
June 30, 2022

25,2443,899
22

180,955
8,161
253△1,629△1,322

1,238△3,778△5,655
187,389△21,712△75,946△25,049
2,134

24

388

△5,812

3,567

5,283

5,573

△47,329△35,232△19,470
139,427△22△4,63027,577
69,348△34△30,428

134,775

38,885△66,337△65,932△6,080△31,862

－

73

△0
△91

△3,624－△132,361△41,493△5,400－60,000－54,600

－

△129

2,969

56,883362

1,025,466

928,688

1,082,350

929,050