Interim report
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This translation is to be used solely as a reference and the consolidated financial statements in this release are unaudited. Financial Statements Summary for the Year ended March 31, 2025 [IFRS] May 14, 2025 Company name: KDDI CORPORATION URL https://www.kddi.com Stock listing: Tokyo Stock Exchange - Prime Market Code number: 9433 Representative: Hiromichi Matsuda, President and Chief Executive Officer Date of general shareholders’ meeting (as planned): Jun 18, 2025 Dividend payment date (as planned): Jun 19, 2025 Annual securities report filing date (as planned): Jun 13, 2025 Supplemental materials of annual results: Yes Convening briefing of annual results: Yes (for institutional investors and analysts) (1) Consolidated Operating Results (Percentage represents comparison to previous fiscal year) Operating Revenue Operating Income Profit for the period before income tax Profit for the period Profit for the Period attributable to owners of the parent Total comprehensive income for the period % % % % % % Year ended March 31, 2025 5,917,953 2.8 1,118,674 16.3 1,104,625 11.3 766,107 16.8 685,677 7.5 697,324 (3.0) Year ended March 31, 2024 5,754,047 1.5 961,584 (10.7) 992,725 (8.0) 656,104 (11.3) 637,874 (6.1) 719,172 (3.8) Basic earnings per share Diluted earnings per share Ratio of net income to equity attributable to owners of the parent Ratio of income before income tax to total assets Ratio of operating income to net sales Yen Yen % % % Year ended March 31, 2025 169.33 169.28 13.2 7.1 18.9 Year ended March 31, 2024 150.63 150.59 12.3 7.6 16.7 Reference: Equity in net income (losses) of affiliates Year ended March 31, 2025 : 27,501 million yen Year ended March 31, 2024 : 9,945 million yen Total Assets Total Equity Equity attributable to owners of the parent Ratio of equity attributable to owners of the parent to total assets Equity per share attributable to owners of the parent % Yen As of March 31, 2025 16,876,219 5,650,572 5,128,072 30.4 1,288.96 As of March 31, 2024 14,146,060 5,797,226 5,253,362 37.1 1,261.46 Cash Flows from Operating Activities Cash Flows from Investing Activities Cash Flows from Financing Activities Cash and Cash Equivalents Year ended March 31, 2025 1,249,042 (1,180,103) (33,555) 921,175 Year ended March 31, 2024 1,706,498 (832,433) (476,477) 887,207 (monetary amounts rounded to the nearest million) (yen in millions, unless otherwise stated) 1. Consolidated Financial Results for the Year ended March 31, 2025 (April 1, 2024 - March 31, 2025) Note: The Company conducted a two-for-one stock split on April 1, 2025. Basic earnings per share and diluted earnings per share are calculated as if the stock split had been conducted at the beginning of the previous fiscal year. (2) Consolidated Financial Positions Note: The Company conducted a two-for-one stock split on April 1, 2025. Equity attributable to owners of the parent is calculated as if the stock split had been conducted at the beginning of the previous fiscal year. (3) Consolidated Cash Flows
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Dividends per Share Total Dividends for the Year Payout Ratio Ratio of dividend to equity attributable to owners of the parent 1st Quarter End 2nd Quarter End 3rd Quarter End Fiscal Year End Total Yen Yen Yen Yen Yen % % Year ended March 31, 2024 － 70.00 － 70.00 140.00 292,284 46.5 5.7 Year ended March 31, 2025 － 70.00 － 75.00 145.00 290,296 42.8 5.7 Year ending March 31, 2026 (forecast) － 40.00 － 40.00 80.00 41.2 (Percentage represents comparison to previous fiscal year) Operating Revenue Operating Income Profit for the Period attributable to owners of the parent Basic earnings per share % % % Yen Entire Fiscal Year 6,330,000 7.0 1,178,000 5.3 748,000 9.1 194.38 1) Changes in accounting policies required under IFRSs: None 2) Other changes in accounting policies: None 3) Changes in accounting estimates: None 1) Number of shares outstanding (inclusive of treasury stock) As of March 31, 2025 4,383,692,832 As of March 31, 2024 4,605,424,616 2) Number of treasury stock As of March 31, 2025 405,237,732 As of March 31, 2024 440,916,320 3) Number of weighted average common stock outstanding (cumulative for all quarters) For the year ended March 31, 2025 4,049,338,721 For the year ended March 31, 2024 4,234,640,545 2. Dividends Note: The Company conducted a two-for-one stock split on April 1, 2025. For the fiscal years ended March 31, 2024 and 2025, the actual pre-stock split dividend figures are presented. For the fiscal year ending March 31, 2026 forecast, the post-stock split figures are presented. 3. Consolidated Financial Forecast for the Year ending March 31, 2026 (April 1, 2025 - March 31, 2026) Note: The Company conducted a two-for-one stock split on April 1, 2025. The impact of the stock split is taken into account for basic earnings under the consolidated financial results forecast for the year ending March 31, 2026. Notes (1) Significant changes in the scope of consolidation during the fiscal year ended March 31, 2025: Yes Addition: 1 LAC Co., Ltd. Exclusion: None (2) Changes in accounting policies, accounting estimates (3) Numbers of Outstanding Shares (Common Stock) Note: The 1,875,394 shares as of March 31, 2025 and the 2,148,038 shares as of March 31, 2024 of KDDI stock owned by the executive compensation BIP Trust account are included in the total number of treasury stock. Note: The Company conducted a two-for-one stock split on April 1, 2025. The number of shares outstanding, number of treasury stock, and number of weighted average common stock outstanding are calculated as if the stock split had been conducted at the beginning of the previous fiscal year. The financial results briefings are not subject to audit by certified public accountants or an auditing corporation. Explanation for appropriate use of forecasts and other notes 1. The forward-looking statements such as operational forecasts contained in this summary are based on the information currently available to KDDI and certain assumptions that are regarded as legitimate. Actual results may differ significantly from these forecasts due to various factors. Please refer to P.14 “1. Overview of Operating Results and Financial Position (4) Outlook for the Year ending March 31, 2026” under [the Attachment] for the assumptions used and other notes. 2. On May 14, 2025, KDDI will hold a financial result briefing for the institutional investors and analysts. Presentation materials will be webcasted on the same time as the release of this earnings report, and the live presentation and Q&A summary will be also posted on our website immediately after the commencement of the financial result briefing. In addition to the above, KDDI holds the briefing and the presentations on our business for the individual investors timely. For the schedule and details, please check our website.
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1. Overview of Operating Results and Financial Position ……………………………………………………………………… 2 (1) Overview of Consolidated Operating Results …………………………………………………………………………… 2 (2) Overview of Consolidated Financial Position …………………………………………………………………………… 12 (3) Overview of Consolidated Cash Flows ………………………………………………………………………………… 13 (4) Outlook for the Year ending March 31, 2026 …………………………………………………………………………… 14 (5) Profit Distribution ……………………………………………………………………………………………………… 14 (6) Business Risks …………………………………………………………………………………………………………… 15 2. The Status of the Group ……………………………………………………………………………………………………… 16 3. Basic Perspective on Selection of Accounting Standards …………………………………………………………………… 18 4. Consolidated Financial Statements and Notes ……………………………………………………………………………… 19 (1) Consolidated Statement of Financial Position …………………………………………………………………………… 19 (2) Consolidated Statement of Income ……………………………………………………………………………………… 21 (3) Consolidated Statement of Comprehensive Income …………………………………………………………………… 22 (4) Consolidated Statement of Changes in Equity …………………………………………………………………………… 23 (5) Consolidated Statement of Cash Flows ………………………………………………………………………………… 24 (6) Going Concern Assumption ……………………………………………………………………………………………… 26 (7) Notes to Consolidated Financial Statements …………………………………………………………………………… 26 1. Reporting Entity ………………………………………………………………………………………………………… 26 2. Basis of Preparation …………………………………………………………………………………………………… 26 3. Material Accounting Policies ………………………………………………………………………………………… 30 4. Segment Information …………………………………………………………………………………………………… 43 5. Per Share Information ………………………………………………………………………………………………… 45 6. Significant Subsequent Events ………………………………………………………………………………………… 46 [the Attachment] Index of the Attachment - 1 -
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1. Overview of Operating Results and Financial Position (1) Overview of Consolidated Operating Results 1) Results Overview Industry Trends and KDDI’s Position With communication technologies being integrated into everything and playing an increasingly important role in modern society, we are entering an era in which a new type of value is being created across all of society, including in industry and people’s everyday life. In addition, Japan can expect to see a transformation in the structure of industry with the progression of efforts to realize a sustainable society through improvements in productivity and decarbonization. In May 2024, the Company updated its business strategy, naming it the Satellite Growth Strategy, in response to rapid environmental changes sweeping through society, including the advance of digital social infrastructure driven by data and generative AI. Under the updated business strategy, we will strive to achieve “KDDI VISION 2030: Creating a society where everyone can realize their dreams by evolving the ‘power to connect.’” Going forward, the Company will maintain its mission of connecting and protecting lives, connecting day-to-day lives, and connecting hearts and minds. We continue aiming to enhance corporate value and promote the sustainable growth of society by fulfilling our important social role and delivering thrilling customer experiences that exceed expectations. Under the Satellite Growth Strategy, we are accelerating the evolution of the “power to connect” by creating new value with all our partners, centering our efforts in the core businesses on promoting the practical application of generative AI and the implementation of data-driven practices based on high-quality and highly reliable 5G telecommunications. Regarding the practical application of generative AI, we are striving to create value by leveraging the Group’s computational infrastructure and network resources while collaborating with a startup that boasts Japan’s best R&D capabilities for large language models (LLMs). In addition to pursuing collaboration in core business areas, we will focus on the three fields of digital transformation (DX), finance, and energy as business fields that drive the Company’s growth (Orbit 1 ). We will continue accelerating growth mainly by working hard to maximize synergy with the telecommunications business and collaborating with partners. In the DX field in particular, we launched WAKONX in May 2024 as a new business platform for this era of AI-integration. WAKONX is accelerating the business growth of Japanese companies and the resolution of social and industrial issues by providing one-stop services encompassing AI, databases, networks, operations, and maintenance, all of which are indispensable to accelerating DX in society. In addition, as for business fields in which we are striving to achieve new growth (Orbit 2), we established the five fields of mobility, space, healthcare, Web3 and metaverse, and sports and entertainment. We aim to further expand business by leveraging the Company’s strengths of telecommunications and new technologies while striving to transform customer lifestyles through partnerships. Furthermore, the Company aims to create a society where everyone can realize their dreams as “the company the customer can feel closest to” by promoting future-oriented initiatives with the themes of “To Global,” “With Life,” and “For Future” in tandem with the Satellite Growth Strategy. - 2 -
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In addition, the Company concluded a capital and business alliance agreement with Lawson, Inc. and Mitsubishi Corporation (MC) in February 2024 to forcefully promote the Satellite Growth Strategy in real consumer life situations. In August 2024, following the Company's acquisition of Lawson’s shares, Lawson transitioned to a joint management structure with MC and the Company each holding 50% of the shares. Aiming to transform Lawson into the convenience store of the future, the three companies utilize AI and DX technologies and the business foundations of MC and the Company to promote the expansion of Real × Tech Convenience. They also collaborate with local municipalities with the aim of solving social issues faced by communities and work on further enhancing the role of Lawson stores as local relaxation stations. Furthermore, in TAKANAWA GATEWAY CITY, which is where the Company will relocate its headquarters, we will open Lawson convenience stores as experimental labs for various retail tech with the aim of realizing the transformation of these outlets into the convenience stores of the future. Going forward, we aim to reflect the results of pilot tests in Takanawa as we expand Real × Tech Convenience to other stores. Continuing to work together to transform Lawson into the convenience store of the future, we will promote the expansion and stimulation of the Ponta economic zone and the enhancement of marketing by utilizing the data gathered. The Company has announced “realizing carbon neutrality” as one of its material issues and is proactively undertaking initiatives aimed at achieving this goal. Regarding the realization of carbon neutrality, which is one of the Company’s material issues, we formulated new targets in May 2024 and aim to achieve net-zero CO2 emissions throughout the supply chain, including Scope 3 emissions, by FY2040. To achieve this target, we aim to achieve net-zero CO2 emissions throughout the entire Group by FY2030 and actively promote a shift toward renewable energy and greater power efficiency for our mobile phone base stations and telecommunications equipment. To continue sustainably growing amid a rapidly changing business environment, we need to promote innovation and transform into a company that puts human resources first, encouraging advanced autonomy and growth among employees and organizations. In promoting innovation, we will continue conducting R&D for advanced technologies focused on Beyond 5G and 6G while promoting collaboration with external partners and open innovation through alliances with industry, academia, and government. Moreover, we will keep collaborating with competitors, for example, sharing 5G equipment with SoftBank Corp., with the aim of making Japan more resilient and competitive on the world stage. Regarding our transformation into a company that puts human resources first, we evolved our three pillars, namely: engraining the new personnel system, developing professional human resources through the KDDI Version Job Style Personnel System, and enhancing employee engagement. We are promoting the transformation of workstyles and initiatives to further support employee career-building and growth. We will also continue working to strengthen our risk management and information security systems and promote unified group management through the synergistic effect of the KDDI Philosophy, which serves as a common policy and code of conduct for - 3 -
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both management and employees, and a corporate governance system that respects human rights and ensures transparency and fairness. - 4 -
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(yen in millions) Years Ended March 31, 2024 March 31, 2025 Change Percentage Change Operating revenue 5,754,047 5,917,953 163,906 2.8% Cost of sales 3,323,514 3,409,577 86,063 2.6% Gross profit 2,430,533 2,508,376 77,843 3.2% Selling, general and administrative expenses 1,503,680 1,426,974 (76,707) (5.1)% Other income (expense), net 24,786 9,770 (15,016) (60.6)% Share of profit (loss) of investments accounted for using the equity method 9,945 27,501 17,556 176.5% Operating income 961,584 1,118,674 157,090 16.3% Finance income (cost), net 11,652 (19,513) (31,165) － Other non-operating profit (loss), net 19,490 5,464 (14,026) (72.0)% Profit for the period before income tax 992,725 1,104,625 111,899 11.3% Income tax 336,621 338,517 1,896 0.6% Profit for the period 656,104 766,107 110,003 16.8% Attributable to owners of the parent 637,874 685,677 47,803 7.5% Attributable to non-controlling interests 18,230 80,430 62,200 341.2% Financial Results For the year ended March 31, 2025 In the fiscal year ended March 31, 2025, we have reassessed certain operating segments of the Company, consolidated subsidiaries, and affiliated companies based on organizational changes. Accordingly, the segment information for the fiscal year ended March 31, 2024 is presented based on the segment classification after this change. During the fiscal year ended March 31, 2025, operating revenue increased by 2.8% year on year to ¥5,917,953 million mainly due to an increase in revenue from mobile handset sales and the finance business as well as an increase in revenue attributable to an expansion in growth fields comprising IoT-related services, data centers, digital BPO, despite decreases in energy business revenue due to the impact of changing certain transactions of subsidiaries from gross accounting to net accounting for an alteration in distribution channels and decreases in roaming revenue. Operating income increased by 16.3% year on year to ¥1,118,674 million mainly due to a loss allowance for a portion of the lease receivables from KDDI Summit Global Myanmar Co., Ltd. (KSGM) in previous year, an increase in net energy business profit, share of profit of investments accounted for using the equity method by the Company's acquisition of Lawson's shares, and revenue attributable to an expansion in growth fields as well as an increase in communication ARPU income. Profit for the period attributable to owners of the parent increased by 7.5% year on year to ¥685,677million. - 5 -
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2) Results by Business Segment Personal Services The Personal Services segment provides services to individual customers. In Japan, we aim to provide new added value and experience value by expanding 5G telecommunication services and other services such as finance, energy, and LX(Life Transformation) in a coordinated manner through our multi-brands “au,” “UQ mobile,” and “povo,” and are also working with local partners to eliminate the digital divide and achieve sustainable regional co- creation. Overseas, we are leveraging our business know-how cultivated in Japan to provide telecommunication services and financial and entertainment services such as video and games to individual customers in Myanmar, Mongolia, and other Asian regions. In addition, we are working to enhance the convenience of telecommunication services for customers going overseas from Japan and customers visiting Japan from overseas. Highlights ・ We provide pricing plans that meet the needs of every customer through three brands. In December 2024 we began offering the “Smart Phone Start Support Discount.” A great deal for families who sign on to the “au Money Activity Plan+” (or “au Money Activity Plan”), the discount offers family members aged 22 years or younger 30 GB for ¥0 for up to six months. As for customer support, in March 2024, we were the first major domestic company*1 to use generative AI by utilizing chatbots provided by au to respond to some inquiries. In March 2025, we introduced the online “au Support AI Advisor,” which combines generative AI and a digital human.*2 Going forward, we will use AI to swiftly resolve inquiries in a stress-free way and take measures that lead to greater efficiency in terms of operational and administrative costs. Through UQ mobile, in response to the need for medium-range data volume in the market, from November 2024, we began providing the “Comi Comi Plan+,” which increased the data volume of the existing “Comi Comi Plan” from 20GB to 30GB at the same price (33GB per month with the 10% additional data bonus *3), and the “UQ Parent-Child Support Discount,” which provides a better deal to customers 18 years old or younger who are covered by the aforementioned plan along with their families. In February 2025, we launched the 5G-ready smartphone, Raku Raku Smartphone Lite, with easy to read text and easy to understand operations. Going forward, we will continue striving to further enhance our competitive advantage. Through povo, we offer services that customers can choose from to fit their usage style. In February 2025, we launched the data e-sim Giga Charge Card at Lawsons, and many customers are using this service introduced as a first step in a collaboration between mobile companies and convenience stores. We are promoting collaboration with partners who use “povo SDK,” which enables service operators to incorporate povo’s telecommunication services into their own services. In December 2024, we began working with AbemaTV, Inc and the joint venture company DMM.com. Going forward, we will collaborate with various partners to develop a business model that embeds data in partner services in an ongoing effort to enhance the experience value of customers. ・ Regarding our efforts to enhance telecommunications quality, in February 2025, in the large land area group category at Opensignal’s Global Mobile Network Experience Awards 2025, we won the global first place in three out of six categories for telecommunications experience analysis. We received the global first place in the reliable experience category, which comprehensively evaluates connectivity to the network, as well as the audio app experience category and the game experience category, which rate user experiences with regard to mobile voice apps and mobile games. We received global fifth place in the video experience category, which evaluates user experience for videos, such as quality and loading times. We recieved high evaluations globally.*4 The Company has proactively established service areas in high traffic areas, such as train lines and commercial areas, to connect customers as they go about day-to-day life. In addition, to connect customers on their more extraordinary days, we push the boundaries of telecommunication by using mobile base stations and Starlink to provide connection during outdoor events and in mountainous areas, where laying optical cables is difficult. In April 2025, we began providing “au Starlink Direct,” which connects smartphones with Starlink satellites for direct telecommunications and enables the sending and receiving of text messages even outside service areas as long as the user in a spot where they can see the sky. Through these efforts, we will continue striving to provide experience value with the “No. 1 connection experience.” ・ Regarding Ponta Pass, which transformed from au Smart Pass Premium in October 2024, in addition to the existing awards, we offer two new services: Weekly LAWSON, which provides coupons worth up to ¥600 a month that cover both free and discounted items at Lawson, and Ponta Pass Boost, which provides a maximum of four times (2%) the normal Ponta Point awards (0.5%) when paying with au PAY at Lawson. In October 2024 and January 2025, we held the Agesugi Challenge - 6 -
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campaigns, in which we provide additional awards on top of those for Ponta Pass. In this and other ways, we will continue to further expand and invigorate the Ponta economic zone and evolve services that make Lawson and various other stores a better deal as well as more enjoyable. In addition, in March 2025, we renewed TELASA, significantly enhanced the original drama and variety show content on TV Asahi, and added new theater bonuses that can be used at Lawson United Cinemas, United Cinemas, and Cineplexes across Japan (with some exceptions). In the same month, we formed a partnership with JCOM Co., Ltd. to enable access to the video streaming services J:COM STREAM and TELASA at no additional cost. Moving ahead, we will continue striving to ensure we can provide customers with new, richer viewing experiences. ・ The financial business steadily expanded its operations, with checking accounts at au Jibun Bank reaching 6.7 million in March 2025 and memberships of au PAY Card exceeding 10.20 million. In November 2024, we concluded an agreement with the Mitsubishi UFJ Financial Group, Inc. regarding focus areas and the structure of our collaboration to advance to a new stage with the purpose of more nimbly executing strategies and accelerating decision making. As a part of this agreement, au Financial Holdings Corp. made au Jibun Bank a wholly owned subsidiary, and transferred all of its shares in au Kabucom Securities Co., Ltd. (currently Mitsubishi UFJ eSmart Securities Co., Ltd.) to MUFG Bank. In addition, in March 2025, we updated the au Jibun Bank App, which allows customers to use their My Number cards to open accounts as soon as the same day as they apply for said accounts. Though these improvements, we are striving to further enhance convenience for customers. In February 2025, au Financial Services Co., Ltd. began providing “au PAY Atobarai,” which can be used following a rapid screening that may be completed in as little as five minutes. In addition, au Payment Co., Ltd. launched life insurance agency services in January 2025 and non-life insurance agency, financial product brokerage, and bank agency services in March. The company was also designated a fund transfer agent that provides digital payments for wages (wage payment through fund transfers to the accounts of fund transfer agents). Going forward, we will continue to realize connective finances that make finances more personal for all people while working closely with customers to effect fun changes in their lives by creating connections between telecommunications and financial services. ・ In the energy business, from July 2024, we have been installing solar panels and storage batteries with no initial or monthly costs for customers living in Tokyo Prefecture (excluding outlying islands) and began providing the Home Power Plant Service, which offers a discount for those using self-generated electricity. In addition, in May 2024, we concluded a comprehensive collaboration agreement with Kawashima Town in Saitama Prefecture and Kyocera Communication Systems Co., Ltd. related to expanding the introduction of renewable energy and realizing sustainable communities. In November 2024, Gunma Prefecture and the Company concluded a basic agreement related to installing solar power stations at assets owned by the prefecture. We began building large energy storage facilities within the KDDI Oyama Network Center in January 2025 with the aim of launching an energy storage business with au Renewable Energy as its main operator. We will continue promoting efforts to encourage the use of renewable energy, create a sustainable society, conserve the environment, and solve local issues. ・ In Mongolia, the consolidated subsidiary MobiCom Corporation LLC is maintaining the position as No. 1 in domestic market share,*5 and the business is progressing smoothly. In the fiscal year under review, the Smart Usage initiative, a smart phone class launched in fiscal 2023 that supports secure and safe internet use among elementary, middle, and high school students, expanded to all areas of the country. In addition, in the fourth stage of the Smart Education Project, ongoing since 2021, the company provides equal education opportunities to children by setting up digital classrooms, including online environments and digital blackboards, in a total of six schools in the capital Ulaanbaatar and rural areas. In Myanmar, KDDI Summit Global Myanmar Co., Ltd. provides support for the telecommunication business operations of Myanma Posts & Telecommunications (MPT). Our hearts go out to all the people who have been directly impacted or displaced by the earthquake that hit the country in March 2025. In addition, we are striving to maintain the telecommunication services that are indispensable to the citizens’ lives while being careful to protect the safety of relevant parties and carefully monitoring local conditions. *1. As of February 29, 2024. First used in the field of customer support to respond to customer inquiries regarding procedures and how to use products and services. KDDI conducted its own research of Nikkei 225 companies regarding whether they offer chat bots for customers and whether they have generative AI. *2. This is a general term for technology that creates or uses 3D models that have the appearance and traits reminiscent of human beings. We can provide a - 7 -
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human touch in various use cases by using the latest technology automatically, such as communication and emotional expressions. *3. Reception period: November 12, 2024 - end date undetermined. If it comes to an end, we will provide separate notification. *4. In February 27, 2025, in Opensignal’s Global Mobile Network Experience Awards 2025, telecommunications operators are evaluated in the categories of large land area and small land area. The large land area group comprises telecommunications operators in a country or region covering a land area of 200,000 km2 or more. The small land area group comprises telecommunications operators in a country or region covering a land area less than 200,000 km2. KDDI’s global award wins are based in the large land area group. *5. As of December 31, 2024. Source: GSMA Intelligence - 8 -
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(yen in millions) Years Ended March 31, 2024 March 31, 2025 Change Percentage Change Operating Revenue 4,747,034 4,795,618 48,584 1.0% Operating Income 737,260 877,144 139,885 19.0% Operating performance in the Personal Services segment for the fiscal year ended March 31, 2025 is described below. Results For the year ended March 31, 2025 During the fiscal year ended March 31, 2025, operating revenue increased by 1.0% year on year to ¥4,795,618 million mainly due to an increase in revenue from handset sales and the finance business, although decrease in revenue from the energy business due to a change in the commercial distribution of some subsidiary transactions from gross to net accounting. Operating income increased by 19.0% year on year to ¥877,144 million mainly due to a loss allowance for a portion of the lease receivables from KDDI Summit Global Myanmar Co., Ltd. (KSGM) in previous year, an increase in, net energy business profit and share of profit of investments accounted for using the equity method by the Company's acquisition of Lawson's shares as well as an increase in communication ARPU income. - 9 -
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(yen in millions) Years Ended March 31, 2024 March 31, 2025 Change Percentage Change Operating Revenue 1,289,552 1,399,787 110,235 8.5% Operating Income 216,952 233,048 16,096 7.4% Business Services The Business Services segment mainly provides a wide range of corporate customers in Japan and overseas with a variety of solutions encompassing smartphones and other devices, network and cloud services, and Telehouse brand data center services. In addition to this, we established the new business platform WAKONX for the AI era. We are working to solve industry- specific problems faced by corporate customers and contributing to customers’ business growth and social issue solutions. We continue to provide global one-stop solutions that contribute to the development and expansion of our customers’ businesses through IoT and DX centered on 5G communications in collaboration with our partners. Highlights ・ In May 2024, under the KDDI BUSINESS corporate business brand, we launched the new WAKONX business brand for the AI era. WAKONX is a brand born from the concept of accelerating the digitalization of Japan with the aim of realizing “KDDI VISION 2030: Creating a society where everyone can realize their dreams by evolving the ‘power to connect.’” Through co-creation with partner companies, we will build platforms for each industry and turn them into services. In August 2024, we began providing KDDI Retail Data Consulting, a store development solution service for the retail industry, under the name WAKONX Retail. In August 2024, Tsubakimoto Chain Co. and Nexa Ware, a joint venture with KDDI, began providing Nexa Warehouse-Optimizer, a data analysis service for logistics warehouses, as assets of WAKONX Logistics for the logistics industry. In March 2025, we began providing WAKONX SmartCity to realize smart cities using community data and au data, and this service was adopted by TAKANAWA GATEWAY CITY, which opened in March 2025. Going forward, through WAKONX, we will continue contributing to social issue solutions and the business growth of corporate customers. ・ In January 2025, we completed a tender offer for the common shares of LAC Co., Ltd., which is a leading cybersecurity company, making it a consolidated subsidiary. In recent years, the importance of cybersecurity has grown along with the times, which has seen such changes as the proliferation of generative AI, IoT, and cloud services as well as the rapid adoption of telework. By consolidating management resources, including the Company’s network services, and LAC’s wealth of knowledge related to cybersecurity, the Company is building systems that can provide optimal solutions to customers. In addition, we intend to further enhance the sophistication of cybersecurity services and help strengthen and develop Japan’s overall cybersecurity. ・ In January 2025, we launched ConnectIN, which incorporates and unifies IoT telecommunications into products and services. This service is for manufacturers looking to incorporate telecommunication functions into their products and operates under a business model that does not charge separate KDDI telecommunications fees to the purchasers of said products, as fees for set periods are already incorporated into the product prices. KDDI provides the necessary handling, management, and operation of telecommunication lines, construction of databases, and development of systems in return for a share of the revenue generated by each item sold. The business model thus obviates the necessity for manufacturers to make any upfront investments. In addition, customers who purchase these products are able to experience new value-added services, such as content automatically update, as telecommunication functions are incorporated into each product. Going forward, through IoT, the Company will provide connected services to various manufacturers and support the DX of corporate customers. Going forward, we will continue to expand our business with the aim of being customers’ true first choice of business partner and helping develop and expand the business of corporate customers. Operating performance in the Business Services segment for the fiscal year ended March 31, 2025, is described below. Results For the year ended March 31, 2025 - 10 -
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During the fiscal year ended March 31, 2025, operating revenue increased by 8.5% year on year to ¥1,399,787 million mainly due to an increase in revenue attributable to an expansion in growth fields comprising IoT-related services, data centers, digital BPO, and other similar businesses. Operating income increased by 7.4% year on year to ¥233,048 million mainly due to an increase in operating revenue. - 11 -
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(yen in millions) March 31, 2024 March 31, 2025 Change Total assets 14,146,060 16,876,219 2,730,159 Total liabilities 8,348,833 11,225,648 2,876,814 Total equity 5,797,226 5,650,572 (146,655) Equity attributable to owners of the parent 5,253,362 5,128,072 (125,290) Ratio of equity attributable to owners of the parent to total assets 37.1% 30.4% (6.8)% Equity attributable to owners of the parent per share 1,261.46 1,288.96 27.50 Interest-bearing debt 2,394,403 4,437,562 2,043,159 (2) Overview of Consolidated Financial Position *The company implemented a stock split at a ratio of 2-for-1, effective April 1, 2025. Assuming this stock split occurred at the beginning of the prior consolidated fiscal year, we have calculated the net income attributable to owners of the parent per share accordingly. (Assets) Total assets increased by ¥2,730,159 million year on year to ¥16,876,219 million as of March 31, 2025 mainly due to an increase in loans for financial business and investments accounted for using the equity method despite a decrease in right-of-use assets and other assets. (Liabilities) Total liabilities increased by ¥2,876,814 million year on year to ¥11,225,648 million as of March 31, 2025 mainly due to an increase in deposits for financial business and borrowings and bonds payable despite a decrease in call money and other liabilities. (Equity) Total equity amounted to ¥5,650,572 million mainly due to decrease in equity attributable to owners of the parent from the previous fiscal year-end. As a result, ratio of equity attributable to owners of the parent to total assets decreased from 37.1% as of March 31, 2024 to 30.4% as of March 31, 2025. - 12 -
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(yen in millions) Years Ended March 31, 2024 March 31, 2025 Change Net cash provided by (used in) operating activities 1,706,498 1,249,042 (457,456) Net cash provided by (used in) investing activities (832,433) (1,180,103) (347,670) Free cash flows*¹ 874,065 68,939 (805,126) Net cash provided by (used in) financing activities (476,477) (33,555) 442,922 Effect of exchange rate changes on cash and cash equivalents 9,367 (1,415) (10,783) Net increase (decrease) in cash and cash equivalents 406,955 33,969 (372,986) Cash and cash equivalents at the beginning of the period 480,252 887,207 406,955 Cash and cash equivalents at the end of the period 887,207 921,175 33,969 (3) Overview of Consolidated Cash Flows *1. Free cash flows are calculated as the sum of “net cash provided by (used in) operating activities” and “net cash provided by (used in) investing activities.” Net cash provided by operating activities decreased by ¥457,456 million year on year to ¥1,249,042 million mainly due to a decrease in income in a rate of increase in deposits in the financial business in despite of increase in loans for financial business. Net cash used in investing activities increased by ¥347,670 million year on year to ¥1,180,103 million mainly due to an increase in expenditures for the acquisition of shares in affiliated companies such as Lawson, Inc. Net cash used in financing activities decreased by ¥442,922 million year on year to ¥33,555 million mainly due to the increase in revenue from bond issuance and long-term borrowings, etc. Reflecting these factors and a decrease of ¥1,415 million in the effect of exchange rate changes on cash and cash equivalents, the total amount of cash and cash equivalents as of March 31, 2025, increased by ¥33,969 million from March 31, 2024 to ¥921,175 million. - 13 -
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(yen in millions) Years Ended March 31, 2021 March 31, 2022 March 31, 2023 March 31, 2024 March 31, 2025 Ratio of equity attributable to owners of the parent to total assets (%) 45.2% 45.0% 43.0% 37.1% 30.4% Interest coverage ratio (times) 230.4 226.0 159.4 200.2 83.4 Net interest-bearing liabilities/EBITDA ratio (times) 0.5 0.4 0.7 0.9 1.9 (Reference) Cash Flows related indicators Notes ・ Ratio of equity attributable to owners of the parent to total assets: Equity attributable to owners of the parent / Total assets ・ Interest coverage ratio: Cash flows / Interest payments ・ Net interest-bearing liabilities/EBITDA ratio: Net interest-bearing liabilities / EBITDA * Cash flows from operating activities in consolidated statement of cash flows are used for operating cash flows. * Amount of interest expenses paid in consolidated statement of cash flows is used for interest payments. * Figures for net interest-bearing debt are interest-bearing debt less cash and cash equivalents that are recognized in the consolidated statement of financial position. * IFRS 17 "Insurance Contracts" has been adopted from this fiscal year, and accordingly the figures have been calculated retroactively to apply the accounting standard for the fiscal year ended March 31, 2023. (4) Outlook for the Year ending March 31, 2026 Amid drastic changes in the business environment, such as instability in global affairs and diversifying customer needs, we are working to construct high-quality 5G networks, promote generative AI and data-driven technologies, achieve sustainable growth in ARPU income, achieve growth in focus fields (DX, finance, and energy), and reform our cost structure. Net sales are expected to increase year-on-year to ¥6,330,000 million. Operating income and net income attributable to owners of the parent are expected to increase to ¥1,178,000 million and ¥748,000 million, respectively. The KDDI group aims to achieve our financial forecast for the fiscal year ending March 31, 2026, through steady implementation of our medium-term management strategy (promotion of the satellite growth strategy and strengthening of our management base). If changes in circumstances necessitate a revision of the earnings forecast, we will promptly disclose the revised forecast. (5) Profit Distribution Regarding the return of profits to shareholders as one of the priorities of its business management, the KDDI group has a basic policy of continuing to pay stable dividends while maintaining financial soundness. Under the medium-term management plan ended March 31, 2026, the KDDI group’s policy is to maintain a consolidated payout ratio of more than 40%, while taking into account investment for sustainable growth. Regarding dividend payments for the year ended March 31, 2025, the KDDI Group has already paid an interim cash dividend of ¥70.00 per share. We are grateful to all our shareholders and in thanks for their ongoing support of our business expansion and other efforts to enhance future performance, for the year-end cash dividend, we plan to pay ¥75.00 per share, an increase of ¥5.00 from the previous fiscal year. As a result, planned total dividends for the year are ¥145.00 per share, for a consolidated payout ratio of 42.8%. For the year ending March 31, 2026, the KDDI Group plans to pay out an interim cash dividend of ¥40.00 per share and a year- end cash dividend of ¥40.00 per share. As a result, total dividends for the year of ¥80.00 per share and a consolidated payout ratio of 41.2% are planned. Note: Regarding the execution of a stock split The figures presented for the next fiscal year’s dividends reflect a two-for-one stock split on April 1, 2025. - 14 -
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(6) Business Risks As of the submission date of the consolidated financial statements, KDDI considers it a following business risk that must be changed in business risks described in its Annual Securities Report, which was released in the previous fiscal year. In addition, forward-looking statements included in the following discussion are based on the KDDI Group’s judgments at the date of submission of the consolidated financial statements as of and for the year ended March 31, 2025. The item numbers under the following headings correspond to those in “Section One, Corporate Data, Section Two, Business Status, 3. Business Risks” in the previous fiscal year’s Annual Securities Report. We have omitted some parts where there were no changes in the relevant matter. (i) Competition with other businesses and technologies, and rapid changes in market and business environments Increase in procurement costs due to rising labor costs, construction costs, and prices within Japan. Surge in costs such as device prices resulting from increased tariffs imposed by the United States. - 15 -
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Principal services In Japan, we aim to provide new added value and experience value by expanding 5G telecommunication services and other services such as finance, energy, and LX in a coordinated manner through our multi-brands “au,” “UQ mobile,” and “povo,” and are working with local partners to eliminate the digital divide and achieve regional co-creation. Overseas, we are leveraging our business know-how cultivated in Japan to provide telecommunication services and financial and entertainment services such as video and games to customers in Myanmar, Mongolia, and other Asian regions. In addition, we are working hard to enhance the convenience of telecommunication services for customers traveling abroad from Japan as well as customers coming to Japan from abroad.. 〔The parent〕 KDDI CORPORATION Major subsidiaries and affiliates 〔Consolidated subsidiaries〕 OKINAWA CELLULAR TELEPHONE COMPANY, JCOM., Ltd., UQ Communications Inc., BIGLOBE Inc., AEON Holdings Corporation of Japan, Chubu Telecommunications Co., INC., au Financial Holdings Corporation, Jupiter Shop Channel Co., Ltd., au Energy Holdings Corporation, KDDI Summit Global Myanmar Co., Ltd., MobiCom Corporation LLC 〔Equity-method affiliates〕 KKCompany Technologies Inc., 〔Jointly controlled companies in Equity-method affiliates〕 Lawson, Inc. Principal services The Business Services mainly provide a wide range of corporate customers in Japan and overseas with a variety of solutions encompassing smartphones and other devices, network and cloud services, and Telehouse brand data center services. In addition to this, we established the new business platform WAKONX for the AI era. We are working to solve industry-specific problems faced by corporate customers and contributing to customers’ business growth and social issue solutions. We continue to provide global one-stop solutions that contribute to the development and expansion of our customers’ businesses through IoT, DX, generative AI, and other technology centered on 5G communications in collaboration with our partners. 〔The parent〕 KDDI CORPORATION Major subsidiaries and affiliates 〔Consolidated subsidiaries〕 OKINAWA CELLULAR TELEPHONE COMPANY, JCOM., Ltd., Chubu Telecommunications Co., INC., KDDI MATOMETE OFFICE CORPORATION, Altius Link, Inc., au Energy Holdings Corporation, Wire and Wireless Co., Ltd., LAC Co., Ltd., KDDI Digital Divergence Holdings Corporation, KDDI America, Inc., KDDI Europe Limited., KDDI China Corporation, KDDI Asia Pacific Pte Ltd, TELEHOUSE International Corporation of America, TELEHOUSE International Corporation of Europe Ltd., Telehouse Canada, Inc. 2. The Status of the Group The KDDI Group comprises KDDI, 189 consolidated subsidiaries (Japan: 129 companies, Overseas: 60 companies), and 47 equity- method affiliates (Japan: 38 companies, Overseas: 9 companies). The KDDI Group’s main business lines are “Personal” and “Business.” The status of KDDI, consolidated subsidiaries and equity-method affiliates within the Companies business and their relationships with segments are as shown below. Personal Business - 16 -
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Principal services Other Services mainly provide Network facilities operation and maintenance, ICT research, development and others. 〔The parent〕 KDDI CORPORATION Major subsidiaries and affiliates 〔Consolidated subsidiaries〕 KDDI Engineering Corporation, KDDI Research, Inc., KDDI Cableships & Subsea Engineering Inc., Japan Telecommunication Engineering Service Co., Ltd., Supership Inc. 〔Equity-method affiliates〕 Kyocera Communication Systems Co., Ltd., Kakaku.com, Inc. Others - 17 -
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3. Basic Perspective on Selection of Accounting Standards The KDDI Group has adopted IFRS from the year ending March 31, 2016 to facilitate international comparisons of its financial information and enhance disclosure, thereby making the information it supplies more useful to domestic and overseas investors, as well as its various other stakeholders. - 18 -
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(yen in millions) March 31, 2024 March 31, 2025 ASSETS Non-current assets: Property, plant and equipment 2,786,933 2,878,516 Right-of-use assets 425,173 416,862 Goodwill 568,134 595,829 Intangible assets 1,062,683 1,076,984 Investments accounted for using the equity method 301,037 731,949 Long-term loans for financial business 3,200,059 4,734,825 Securities for financial business 413,767 442,499 Other long-term financial assets 391,453 405,161 Retirement benefit assets 5,096 6,179 Deferred tax assets 17,948 25,106 Contract costs 685,310 716,415 Other non-current assets 36,678 43,118 Total non-current assets 9,894,271 12,073,443 Current assets: Inventories 91,290 132,743 Trade and other receivables 2,702,152 3,040,998 Short-term loans for financial business 367,593 412,619 Call loans 28,237 101,516 Other short-term financial assets 30,662 30,467 Income tax receivables 2,384 373 Other current assets 142,263 162,885 Cash and cash equivalents 887,207 921,175 Total current assets 4,251,789 4,802,776 Total assets 14,146,060 16,876,219 4. Consolidated Financial Statements and Notes (1) Consolidated Statement of Financial Position - 19 -
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(yen in millions) March 31, 2024 March 31, 2025 LIABILITIES AND EQUITY Liabilities Non-current liabilities: Borrowings and bonds payable 1,577,370 2,297,564 Long-term deposits for financial business 112,730 155,913 Lease liabilities 292,003 292,893 Other long-term financial liabilities 10,166 20,864 Retirement benefit liabilities 11,801 11,191 Deferred tax liabilities 235,723 244,156 Provisions 47,800 39,856 Contract liabilities 81,674 87,463 Other non-current liabilities 11,804 15,417 Total non-current liabilities 2,381,071 3,165,318 Current liabilities: Borrowings and bonds payable 407,013 1,734,528 Trade and other payables 899,125 996,315 Short-term deposits for financial business 3,713,407 4,407,474 Call money 37,972 879 Cash collateral received for securities lent 263,157 256,679 Lease liabilities 118,016 112,577 Other short-term financial liabilities 7,762 1,625 Income taxes payables 161,152 167,755 Provisions 21,953 40,887 Contract liabilities 84,947 93,864 Other current liabilities 253,257 247,747 Total current liabilities 5,967,762 8,060,329 Total liabilities 8,348,833 11,225,648 Equity Equity attributable to owners of the parent Common stock 141,852 141,852 Capital surplus 310,587 259,047 Treasury stock (845,093) (819,072) Retained earnings 5,522,578 5,495,689 Accumulated other comprehensive income 123,438 50,556 Total equity attributable to owners of the parent 5,253,362 5,128,072 Non-controlling interests 543,864 522,500 Total equity 5,797,226 5,650,572 Total liabilities and equity 14,146,060 16,876,219 - 20 -
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(yen in millions) Years Ended March 31, 2024 March 31, 2025 Operating revenue 5,754,047 5,917,953 Cost of sales 3,323,514 3,409,577 Gross profit 2,430,533 2,508,376 Selling, general and administrative expenses 1,503,680 1,426,974 Other income 32,951 12,763 Other expense 8,165 2,993 Share of profit (loss) of investments accounted for using the equity method 9,945 27,501 Operating income 961,584 1,118,674 Finance income 21,866 10,112 Finance cost 10,215 29,625 Other non-operating profit (loss) 19,490 5,464 Profit for the period before income tax 992,725 1,104,625 Income tax 336,621 338,517 Profit for the period 656,104 766,107 Profit for the period attributable to: Owners of the parent 637,874 685,677 Non-controlling interests 18,230 80,430 Profit for the period 656,104 766,107 Earnings per share attributable to owners of the parent Basic earnings per share (yen) 150.63 169.33 Diluted earnings per share (yen) 150.59 169.28 (2) Consolidated Statement of Income Note: The Company conducted a two-for-one stock split on April 1, 2025. Basic earnings per share and diluted earnings per share are calculated as if the stock split had been conducted at the beginning of the previous fiscal year. - 21 -
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(yen in millions) Years Ended March 31, 2024 March 31, 2025 Profit for the period 656,104 766,107 Other comprehensive income Items that will not be transferred subsequently to profit or loss Remeasurements of defined benefit pension plans (40,934) (798) Changes measured in fair value of financial assets through other comprehensive income 60,123 (55,763) Share of other comprehensive income of investments accounted for using the equity method (406) 1,139 Total 18,783 (55,422) Items that may be subsequently reclassified to profit or loss Changes in fair value of cash flow hedge 2,266 (1,017) Translation differences on foreign operations 42,036 (13,147) Share of other comprehensive income of investments accounted for using the equity method (17) 803 Total 44,284 (13,361) Total other comprehensive income 63,068 (68,783) Total comprehensive income for the period 719,172 697,324 Total comprehensive income for the period attributable to: Owners of the parent 690,726 612,577 Non-controlling interests 28,446 84,747 Total 719,172 697,324 (3) Consolidated Statement of Comprehensive Income Items in the statement above are presented net of tax. - 22 -
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(yen in millions) Equity attributable to owners of the parent Common stock Capital surplus Treasury stock Retained earnings Accumulated other comprehensive income Total Non- controlling interests Total equity Balance at April 1, 2023 141,852 279,371 (545,833) 5,220,504 32,394 5,128,288 542,370 5,670,659 Comprehensive income Profit for the period － － － 637,874 － 637,874 18,230 656,104 Other comprehensive income － － － － 52,852 52,852 10,216 63,068 Total comprehensive income － － － 637,874 52,852 690,726 28,446 719,172 Transactions with owners and other transactions Cash dividends － － － (297,607) － (297,607) (71,450) (369,057) Transfer from accumulated other comprehensive income to retained earnings － － － (38,192) 38,192 － － － Purchase and disposal of treasury stock － (66) (300,000) － － (300,066) － (300,066) Changes due to business combination － 46,544 － － － 46,544 30,333 76,877 Changes in ownership interests in subsidiaries － (15,098) － － － (15,098) 14,055 (1,043) Other － (164) 739 － － 575 110 685 Total transactions with owners and other transactions － 31,216 (299,261) (335,799) 38,192 (565,652) (26,953) (592,605) Balance at March 31, 2024 141,852 310,587 (845,093) 5,522,578 123,438 5,253,362 543,864 5,797,226 (yen in millions) Equity attributable to owners of the parent Common stock Capital surplus Treasury stock Retained earnings Accumulated other comprehensive income Total Non- controlling interests Total equity Balance at April 1, 2024 141,852 310,587 (845,093) 5,522,578 123,438 5,253,362 543,864 5,797,226 Comprehensive income Profit for the period － － － 685,677 － 685,677 80,430 766,107 Other comprehensive income － － － － (73,100) (73,100) 4,317 (68,783) Total comprehensive income － － － 685,677 (73,100) 612,577 84,747 697,324 Transactions with owners and other transactions Cash dividends － － － (286,908) － (286,908) (55,262) (342,169) Transfer from accumulated other comprehensive income to retained earnings － － － (217) 217 － － － Purchase and disposal of treasury stock － (166) (400,001) － － (400,167) － (400,167) Retirement of treasury stock － (425,672) 425,672 － － － － － Transfer from retained earnings to capital surplus － 425,672 － (425,672) － － － － Changes due to business combination － 613 － － － 613 5,510 6,123 Changes in ownership interests in subsidiaries － (52,259) － － － (52,259) (56,501) (108,760) Other － 272 351 231 － 853 142 995 Total transactions with owners and other transactions － (51,540) 26,022 (712,566) 217 (737,868) (106,111) (843,979) Balance at March 31, 2025 141,852 259,047 (819,072) 5,495,689 50,556 5,128,072 522,500 5,650,572 (4) Consolidated Statement of Changes in Equity For the year ended March 31, 2024 For the year ended March 31, 2025 - 23 -
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(yen in millions) Years Ended March 31, 2024 March 31, 2025 Cash flows from operating activities Profit for the period before income tax 992,725 1,104,625 Depreciation and amortization 687,349 686,788 Impairment losses 9,607 3,790 Loss allowance 100,067 (106,457) Share of (profit) loss of investments accounted for using the equity method (9,945) (27,501) Loss (gain) on sales of non-current assets (579) 134 Interest and dividend income (8,075) (9,269) Interest expenses 8,813 17,726 (Increase) decrease in trade and other receivables (243,859) (247,172) Increase (decrease) in trade and other payables 78,290 94,060 (Increase) decrease in loans for financial business (1,223,112) (1,579,797) Increase (decrease) in deposits for financial business 1,108,586 737,249 Increase (decrease) in borrowings for financial business 410,000 1,100,000 (Increase) decrease in Call loans 25,707 (73,279) Increase (decrease) in Call money 37,972 (37,093) Increase (decrease) in cash collateral received for securities lent 19,046 (6,478) (Increase) decrease in inventories 7,635 (36,441) (Increase) decrease in retirement benefit assets 57,815 (1,083) Increase (decrease) in retirement benefit liabilities (733) (605) Other (81,572) (65,621) Cash generated from operations 1,975,739 1,553,576 Interest and dividends received 11,903 16,036 Interest paid (8,526) (14,985) Income tax paid (274,993) (308,263) Income tax refund 2,376 2,678 Net cash provided by (used in) operating activities 1,706,498 1,249,042 (5) Consolidated Statement of Cash Flows - 24 -
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(yen in millions) Years Ended March 31, 2024 March 31, 2025 Cash flows from investing activities Purchases of property, plant and equipment (523,940) (400,947) Proceeds from sales of property, plant and equipment 413 548 Purchases of intangible assets (225,590) (281,984) Purchases of securities for financial business (368,055) (95,622) Proceeds from sales and redemption of securities for financial business 324,702 83,256 Purchases of other financial assets (60,854) (41,812) Proceeds from sales and redemption of other financial assets 8,317 12,295 Payments for acquisition of subsidiaries (6,659) (27,416) Proceeds from acquisition of subsidiaries 27,450 4,069 Purchases of stocks of affiliates (1,848) (498,898) Proceeds from sales of stocks of subsidiaries and affiliates 3,481 92,655 Other (9,849) (26,247) Net cash provided by (used in) investing activities (832,433) (1,180,103) Cash flows from financing activities Net increase (decrease) of short-term borrowings 123,626 183,031 Proceeds from issuance of bonds and long-term borrowings 416,000 982,500 Payments from redemption of bonds and repayments of long-term borrowings (219,020) (213,698) Repayments of lease obligations (128,974) (135,072) Payments from purchase of subsidiaries’ equity from non-controlling interests (4,741) (101,072) Proceeds from stock issuance to non-controlling interests 16,938 3 Repayments to non-controlling interests (11,434) (7,091) Payments from purchase of treasury stock (300,000) (400,001) Proceeds from sale of treasury stock 0 － Cash dividends paid (297,575) (286,885) Cash dividends paid to non-controlling interests (71,297) (55,268) Other (1) (2) Net cash provided by (used in) financing activities (476,477) (33,555) Effect of exchange rate changes on cash and cash equivalents 9,367 (1,415) Net increase (decrease) in cash and cash equivalents 406,955 33,969 Cash and cash equivalents at the beginning of the period 480,252 887,207 Cash and cash equivalents at the end of the period 887,207 921,175 - 25 -
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(6) Going Concern Assumption None (7) Notes to Consolidated Financial Statements 1. Reporting Entity KDDI CORPORATION (“the Company”) was established as a limited company in accordance with Japanese Company Act. The location of the Company is Japan and the registered address of its headquarter is 2-3-2, Nishishinjuku, Shinjuku-ku, Tokyo, Japan. The Company’s consolidated financial statements as of and for the year ended March 31, 2025 comprise the Company and its consolidated subsidiaries (“the Group”) and the Group’s interests in associates and joint ventures. The Company is the ultimate parent company of the Group. The Group’s major business and activities are “Personal Services” and “Business Services.” For the details, please refer to “(1) Outline of reportable segments” of “4. Segment Information.” 2. Basis of Preparation (1) Compliance of consolidated financial statements with IFRSs The Group’s consolidated financial statements have been prepared in accordance with IFRSs as prescribed in Article 312 of Ordinance on Consolidated Financial Statements as they satisfy the requirement of a “specific company” set forth in Article 1-2 of Ordinance on Consolidated Financial Statements. (2) Basis of measurement The Group’s consolidated financial statements have been prepared under the historical cost basis except for the following significant items on the consolidated statement of financial position: ・ Derivative assets and derivative liabilities (measured at fair value) ・ Financial assets or financial liabilities at fair value through profit or loss ・ Financial assets at fair value through other comprehensive income ・ Assets and liabilities related to defined benefit plan (measured at the present value of the defined benefit obligations, net of the fair value of the plan asset) (3) Presentation currency and unit of currency The Group’s consolidated financial statements are presented in Japanese yen, which is the currency of the primary economic environment of the Company’s business activities (“functional currency”), and are rounded to the nearest million yen. - 26 -
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(4) Use of estimates and judgements The preparation of consolidated financial statements in accordance with IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. The estimates and assumptions are based on the management’s best judgments, through their evaluation of various factors that were considered reasonable as of the period-end, based on historical experience and by collecting available information. By the nature of the estimates or assumptions, however, actual results may differ from those estimates and assumptions. The estimates and assumptions are reviewed on an ongoing basis. The effect of adjusting accounting estimates is recognized in the fiscal year in which the estimates are adjusted and in the subsequent fiscal years. Estimates that may have a risk of significant adjustment of carrying amounts of assets and/or liabilities in the subsequent fiscal years and the underlying assumptions are as follows: ⅰ. Estimates of useful lives and residual values of property, plant and equipment, intangible assets and right-of-use assets Property, plant and equipment is depreciated primarily using the straight-line method, based on the estimated useful life that reflects the period in which the asset’s future economic benefits are expected to be consumed. The depreciation charge for the period could increase if an item of property, plant and equipment becomes obsolete or repurposed in the future and the estimated useful life becomes shorter. Intangible asset with a finite useful life is amortized on a straight-line basis in principle to reflect the pattern in which the asset’s future economic benefits are expected to be consumed by the Group. Estimated useful life of the customer relationships acquired in a business combination is determined based on the cancellation rate. The intangible assets related to the customer relationships are amortized over the useful life. Should actual sales volumes fail to meet initial projected volumes due to changes in the business environment etc., or should actual useful life in the future be less than the original estimate, there is a risk that amortization expenses for the reporting period may increase. The content related to estimates of useful lives and residual values of property, plant and equipment, intangible assets and right-of-use assets are described in “3. Material Accounting Policies (5) Property, plant and equipment, (7) Intangible assets and (8) Lease.” ⅱ. Impairment of property, plant and equipment, intangible assets including goodwill and right-of-use assets The Group conducts impairment tests to property, plant and equipment, intangible assets including goodwill and right- of-use assets. Calculations of recoverable amounts used in impairment tests are based on assumptions set using such factors as an asset’s useful life, future cash flows, pre-tax discount rates and long-term growth rates. These assumptions are based on the best estimates and judgments made by management. However, these assumptions may be affected by changes in uncertain future economic conditions, which may have a material impact on the consolidated financial statements in future periods. The method for calculating recoverable amounts is described in “3. Material Accounting Policies (9) Impairment of property, plant and equipment, goodwill, intangible assets and right-of-use assets.” ⅲ. Evaluation of inventories Inventories are measured at historical cost. However, when the net realizable value (“NRV”) at the reporting date falls below the cost, inventories are subsequently measured based on NRV, with the difference in value between the cost and NRV, booked as cost of sales. Slow-moving inventories and those outside the normal operating cycle are calculated at NRV that reflects future demand and market trends. The Group may experience substantial losses in cases where NRV drops as a result of deterioration in the market environment against the forecast. The content and amount related to evaluation of inventories are described in “3. Material Accounting Policies (15) Inventories.” ⅳ. Recoverability of deferred tax assets In recognizing deferred tax assets, when judging the possibility of the future taxable income, the Group estimates the timing and amount of future taxable income based on the business plan. The timing when taxable income arises and the amount of such income may be affected by changes in uncertain future economic conditions. If there are differences between the actual amounts and estimated amounts, this may have a material impact on the consolidated financial statements in future periods. The content and amount related to deferred tax assets are described in “3. Material Accounting Policies (24) Income taxes.” - 27 -
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ⅴ. Measurement of defined benefit obligations The Group has in place various post-retirement benefit plans, including defined benefits plans. The present value of defined benefit obligations on each of these plans and the service costs are calculated based on actuarial assumptions. These actuarial assumptions require estimates and judgments on variables, such as discount rates. The Group obtains advice from external pension actuaries with respect to the appropriateness of these actuarial assumptions including these variables. The actuarial assumptions are determined based on the best estimates and judgments made by management. However, there is the possibility that these assumptions may be affected by changes in uncertain future economic conditions, or by the publication or the amendment of related laws, which may have a material impact on the consolidated financial statements in future periods. These actuarial assumptions are described in “3. Material Accounting Policies (16) Employee benefits.” ⅵ. Collectability of trade and other receivables The Group has estimated the collectability of trade and other receivables based on the credit risk. Fluctuations in credit risk of customer receivables may have a significant effect on the amounts recognized the allowance for receivables on the consolidated financial statements in future periods. The content and amount related to collectability of trade and other receivables are described in “3. Material Accounting Policies (12) Impairment of financial assets.” During the previous fiscal year, the Group estimated the expected credit losses over the life of lease receivables from Myanma Posts & Telecommunications (MPT) held by consolidated subsidiary KDDI Summit Global Myanmar Co., Ltd. (KSGM), and recognized a loss allowance for a portion of those lease receivables. At the close of the fiscal year under review, the Company revised its contract with MPT, which concerns support for telecommunications business operations, and changed the payment terms for lease receivables from MPT. These changes to the contract payment terms include the derecognition of financial assets that are not credit-impaired of ¥112,211 million, and the recognition of credit-impaired financial assets purchased or composited worth ¥19,967 million as new financial assets. For these new lease receivables, the cumulative change to the expected credit losses for the full period since the initial recognition of the lease receivables will be recognized as a provision for losses for the lease receivables for each fiscal year. In addition, the change in expected credit losses for the entire period is recognized in profit or loss. The primary assumption in estimating the life of expected credit losses is dollar convertibility. A change in these assumptions could have a substantial effect on the amortization cost of the lease receivables. ⅶ. Valuation technique of financial assets at fair value without quoted prices in active markets. The Group has used valuation techniques to utilize the inputs unobservable in the market when assessing the fair value of certain financial instruments. Unobservable input may be affected by changes in uncertain future economic conditions, which may have a material impact on the consolidated financial statements in future periods if it becomes necessary to review. The content and amount related to fair value of financial assets are described in “3. Material Accounting Policies (11) Financial instruments and (13) Derivatives and hedge accounting.” ⅷ. Provisions The Group recognizes provisions, including asset retirement obligations and provisions for point program, in the consolidated statement of financial position. These provisions are recognized based on the best estimates of the expenditures required to settle the obligations, taking into account risks and uncertainty related to the obligations as of the current year end date. Expenditures necessary for settling the obligations are calculated by taking all possible future results into account; however, they may be affected by unexpected events or changes in conditions which may have a material impact on the Group’s consolidated financial statements in future periods. The nature and amount of recognized provisions are stated in “3. Material Accounting Policies (17) Provisions.” - 28 -
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Standard The title of Standard Mandatory adoption (from the fiscal year beginning) To be adopted by the Group from Outline of new standards and amendments IFRS 18 Presentation and Disclosure in Financial Statements January 1, 2027 fiscal year ending March 31, 2027 The new standard that replaces IAS 1 on Presentation of Financial Statements and Disclosure in the current accounting standards (5) Application of new standards and interpretations The Group does not have significant standards and interpretations applied from the fiscal year ended March 31, 2025. (6) Standards not yet adopted The following is a list of newly established or revised standards and interpretations that have been disclosed prior to the approval date of the consolidated financial statements, but have not been early adopted by the Group. The impact on the consolidated financial statements of the Group is currently under evaluation. - 29 -
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3. Material Accounting Policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the reporting periods presented, unless otherwise stated. (1) Basis of consolidation i. Subsidiaries (a) Consolidation of subsidiaries Subsidiaries are all entities over which the Group has control. An entity is consolidated as the Group controls it when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date when control is obtained and deconsolidated from the date when control is lost. Intragroup balances and transactions, and unrealized gain or loss arising from intragroup transactions are eliminated in preparation of the consolidated financial statements. The accounting policies of subsidiaries have been changed to conform to the Group’s accounting policies, when necessary. (b) Changes in ownership interest in a subsidiary that do not result in a change of control Transactions with non-controlling interests that do not result in loss of control are accounted for by the Group as equity transactions. The difference between fair value of any consideration paid and the proportion acquired of the carrying amount of the subsidiary’s net assets is recorded in equity. Gains or losses on disposals to non-controlling interests without losing control are also recorded in equity. (c) Disposal of a subsidiary When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value on the date when control is lost, with the changes in the carrying amount recognized in profit or loss. The fair value will be the initial carrying amount when the retained interests are subsequently accounted for as associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss. (d) Unification of reporting period The consolidated financial statements include the financial statements of subsidiaries whose closing dates are different from that of the Company. For the preparation of the consolidated financial statements, such subsidiaries prepare financial statements based on the provisional accounts as of the Company's closing date. ii. Associates Associates are entities over which the Group does not have control but has significant influence over the financial and operating policies through participation in the decision-making of those policies. Investments in associates are accounted for using the equity method of accounting. Under the equity method, investment in an associate is initially recorded at cost and its amount is adjusted to recognize the Group’s share of the profit or loss and other comprehensive income of the associate from the date on which it has significant influence until the date when it ceases to have the significant influence is lost. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amount previously recognized in other comprehensive income is reclassified to profit or loss, where appropriate. When the Company’s share of losses in an associate equals or exceeds its carrying amount of interest in the associate, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. The Group’s investment in associates includes goodwill recognized on acquisition. Accordingly, goodwill is not recognized and not tested for impairment separately. Gross amount of investments in associates is tested for impairment as a single asset. Specifically, the Group evaluates whether there is objective evidence which indicates that the investment may be impaired or not on a quarterly basis. When objective evidence that the investments in associates are impaired exists, those investments are tested for impairment. - 30 -
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Unrealized gains or losses on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. The accounting policies of associates have been changed to conform to the Group’s accounting policies, when necessary. iii. Joint arrangements The Group enters into joint arrangements when the Group has joint control of a business or entity. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when the decisions about the relevant activities that significantly affect the returns of the arrangement require the unanimous consent of the parties sharing control. For the purpose of accounting, joint arrangements are classified as either joint operations or joint ventures. A joint operation is a joint agreement whereby parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. When a joint arrangement is classified as a joint operation, the Group’s share of the assets, liabilities, revenue and expenses in relation to the arrangement are recorded directly in the financial statements. On the other hand, when a joint arrangement is classified as a joint venture, net assets related to the arrangement are recorded in the financial statements using the equity method. (2) Business combination The Group accounts for business combinations by applying the acquisition method. Consideration transferred to acquire subsidiaries is the fair values of the assets transferred, the liabilities incurred by former owners of the acquiree and the equity interests issued by the Group. Consideration transferred also includes fair values of any assets or liabilities resulting from a contingent consideration arrangement. Each identifiable asset acquired, liability and contingent liability assumed in a business combination is generally measured at its acquisition-date fair value. Non-controlling interests are identified separately from those of the Group and are measured as the non-controlling shareholders’ proportionate share of the acquiree’s identifiable net assets. For each acquisition, the Group recognizes the acquiree’s non-controlling interests either at fair value or as the non-controlling interest’s proportionate share of the amount recognized for acquiree’s identifiable net assets. Acquisition-related costs, including finder’s fees, legal, due-diligence and other professional fees, are charged to expense when incurred. Where the aggregate amount of consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree exceeds the fair value of the identifiable net assets acquired, such excess is recorded as goodwill. Where the aggregate amount of consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of the acquirer’s previously held equity interest in the acquire is less than the fair value of acquired subsidiary’s net assets, such difference is recognized directly in profit or loss as a bargain purchase. If the initial accounting for a business combination is not complete by the end of the reporting period in which the business combination occurs, the Group recognizes in its financial statements provisional amounts for the items for which the accounting is incomplete. Subsequently, the Group retrospectively adjusts the provisional amounts recognized on the date when control is obtained as measurement period adjustments to reflect new information obtained about facts and circumstances that existed as of the date when control is obtained and, if known, would have affected the amounts recognized for the business combination. However, the measurement period shall not exceed one year from the date when control is obtained. (3) Segment information Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision- maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments. The board of directors that makes strategic decisions has been identified by the Group as the chief operating decision-maker. (4) Foreign currency translation i. Functional currency and presentation currency Foreign currency transactions of each group company have been translated into their functional currencies at the exchange rate prevailing at the dates of transactions upon preparation of their financial statements. The consolidated financial statements of the Group are presented in Japanese yen, which is the functional currency of the Company. - 31 -
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ii. Foreign currency transactions Foreign currency transactions are translated at the spot exchange rate of the date of transaction or the rate that approximates such exchange rate. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing at the fiscal year end date. Non-monetary items at fair value denominated in foreign currencies are translated at an exchange rate as of the date when their fair values are measured. Exchange differences arising from the translation and settlement of monetary assets and liabilities denominated in foreign currencies are recognized as profit or loss. However, exchange differences arising from the translation of equity instruments measured through other comprehensive income and qualifying cash flow hedges are recognized as other comprehensive income. iii. Foreign operations For the purpose of the presentation of the consolidated financial statements, the assets and liabilities of the Group’s foreign operations, including goodwill, identified assets and liabilities, and their fair value adjustments resulting from the acquisition of the foreign operations, are translated into presentation currency at the exchange rate prevailing at the fiscal year end date. Income and expenses of foreign operations are translated into Japanese yen, the presentation currency, at the average exchange rate for the period, unless the exchange rates fluctuate significantly during the period. Exchange differences arising from translation of foreign operations’ financial statements are recognized as other comprehensive income. In cases of disposition of whole interests of foreign operations, and certain interests involving loss of control or significant influence, exchange differences are accounted for as profit or loss on disposal of foreign operations. (5) Property, plant and equipment i. Recognition and measurement Property, plant, and equipment of the Group is measured on a historical cost basis and carried at its cost less accumulated depreciation and impairment losses. The acquisition cost includes costs directly attributable to the acquisition of the asset and the initial estimated costs related to disassembly, retirement and site restoration, as well as borrowing costs eligible for capitalization. In cases where components of property, plant, and equipment have different useful lives, each component is recorded as a separate property, plant, and equipment item. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are recognized as expenses during the financial period in which they are incurred. ii. Depreciation and useful lives Property, plant and equipment is depreciated mainly using the straight-line method over the estimated useful lives of each component. The depreciable amount is calculated as the cost of an asset less its residual value. Land and construction in progress are not depreciated. In cases where components of property, plant and equipment have different useful lives, each component is recorded as a separate property, plant and equipment item. The estimated useful lives of major components of property, plant and equipment are as follows: Communication equipment Machinery 9－15 years Antenna equipment 10－42 years Toll and local line equipment 6－27 years Other equipment 9－27 years Buildings and structures 10－38 years Others 5－22 years The depreciation methods, estimated useful lives and residual values are reviewed at the end of each reporting period, and if there are any changes made, those changes are applied prospectively as a change in an accounting estimate. - 32 -
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iii. Derecognition Property, plant, and equipment is derecognized on disposal. The profit or loss arising from the derecognition of an item of property, plant and equipment is included in profit or loss when the item is derecognized. (6) Goodwill Goodwill is the excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets of the acquiree on the date of acquisition. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortized. Instead, it is tested for impairment annually and if events or changes in circumstances indicate a potential impairment. For the impairment, please refer to “(9) Impairment of property, plant and equipment, goodwill, intangible assets and right-of-use assets.” (7) Intangible assets i. Recognition and measurement The Group applies the cost method in measuring intangible assets, excluding goodwill. Those assets are carried at its cost less accumulated amortization and impairment losses. Intangible assets acquired separately are measured at cost at initial recognition. Intangible assets acquired in a business combination are recognized separately from goodwill and are measured at fair value at the acquisition date when such assets meet the definition of intangible asset and are identifiable, and their fair values can be measured reliably. Expenditure on research activities to obtain new science technology or technical knowledge and understanding is recognized as an expense when it is incurred. Expenditure on development is recognized as intangible asset in the case where the expenditure is able to be measured reliably, product or production process has commercial and technical feasibility, the expenditure probably generates future economic benefits, the Group has intention to complete the development and use or sell the asset, and has enough resources for their activities. In other cases, the expenditure is recognized as expense when it is incurred. ii. Depreciation and useful lives Intangible assets are amortized using the straight-line method over their estimated useful lives. Estimated useful lives of major components of intangible assets are as follows. Intangible assets with indefinite useful lives are not amortized. Software 5－10 years Customer relationships 4－30 years Assets related to program supply 22 years Spectrum migration cost 9－17 years Others 5－20 years The amortization methods, estimated useful lives are reviewed at the end of each reporting period, and if there are any changes made, those changes are applied prospectively as a change in an accounting estimate. (8) Lease At the inception of the lease, our group determines whether the lease includes a lease or lease. Whether or not the contract includes a lease is determined based on whether or not the right to control the use of the identified asset is transferred to the consideration and exchange for a certain period of time. When a lease or lease is included, the lease asset is initially recognized at the amount calculated by adding or subtracting the initial direct cost to the initial use of the lease liability. Lease liabilities are initially recognized at the present value of lease payments that are not paid at the inception of the lease. Right-of-use assets are depreciated using the straight-line method over the period from the inception of the lease to the end of the useful life of the assets or the end of the lease term, whichever is earlier. Lease liabilities are subsequently measured at an amount that reflects the interest rate on the lease liability, the lease payments made and, where applicable, the review of the lease liability or any change in the terms of the lease. - 33 -
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(9) Impairment of property, plant and equipment, goodwill, intangible assets and right-of-use assets At the end of each reporting period, the Group determines whether there is any indication that carrying amounts of property, plant and equipment, identifiable intangible assets and right-of-use assets may be impaired. If any indication exists, the recoverable amount of the asset or the cash-generating unit to which the asset belongs is estimated. For goodwill and intangible assets with indefinite useful lives, the impairment test is undertaken annually or more frequently if events or circumstances indicate that they might be impaired. A cash-generating unit is the smallest group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount is the higher of fair value less costs of disposal or value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects the time value of money and the risks specific to the asset. When the impairment test shows that the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit or group of units, and then to the other assets of the unit or group of units pro rata on the basis of the carrying amount of each asset in the unit or group of units. Any impairment loss for goodwill is recognized in profit or loss and is not reversed in subsequent periods. For assets other than goodwill, the Group determines at the end of each reporting period whether there is any indication that an impairment loss recognized in prior years has decreased or extinguished. An impairment loss is reversed when there is an indication that the impairment loss may be reversed and there has been a change in the estimates used to determine an asset’s recoverable amount. When an impairment loss recognized is reversed, carrying amount of the asset or cash-generating unit is increased to its updated estimated recoverable amount. A reversal of an impairment loss is recognized, to the extent the increased carrying amount does not exceed the lower of the recoverable amount or the carrying amount (net of depreciation and amortization) that would have been determined had no impairment loss been recognized. A reversal of an impairment loss is recognized as other income. (10) Non-current assets held for sale or disposal group An asset or group of assets of which the carrying amount is expected to be recovered primarily through a sales transaction rather than through continuing use is classified into “Assets held for sale.” To qualify for classification as “non-current assets held for sale”, the sale of a non-current asset must be highly probable and it must be available for immediate sale in its present condition. Also, management must be committed to a plan to sell the asset in which the sale is to be completed within one year from the date of classification When the Group is committed to a sale plan involving loss of control of a subsidiary, and the criteria set out above are met, all assets and liabilities of the subsidiary are classified as held for sale, regardless of whether the Group will retain a non- controlling interest in its former subsidiary after the sale Assets held for sale is measured at the lower of its “carrying amount” and “fair value less cost to sell.” Property, plant and equipment and intangible assets classified as “assets held for sale” are not depreciated or amortized. (11) Financial instruments i. Financial assets (a) Recognition and measurement of financial assets The Group recognizes a financial asset when it becomes a party to the contractual provisions of the instrument. The Group initially recognizes trade and other receivables on the date of transaction. At initial recognition, the Group measures a financial asset at its fair value plus, in the case of financial asset not measured at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction cost of a financial asset measured at fair value through profit or loss is recognized as profit or loss. (b) Classification of non-derivative financial assets Classification and measurement model of non-derivative financial assets are summarized as follows. The Group classifies financial assets at initial recognition as financial assets measured at amortized cost, equity instruments measured at fair value through other comprehensive income or financial assets measured at fair value through profit or loss. (i) Financial assets measured at amortized cost A financial asset that meets both the following condition is classified as a financial asset measured at amortized cost. ・ The financial asset is held within the Group’s business model whose objective is to hold assets in order to collect contractual cash flows. - 34 -
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・ The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. A financial asset measured at amortized cost is initially recognized at fair value plus transaction cost directly attributable to the asset. After initial recognition, carrying amount of the financial asset measured at amortized cost is determined using the effective interest method, net of impairment loss, if necessary. (ii) Equity instruments measured at fair value through other comprehensive income The Group makes an irrevocable election to recognize changes in fair value of investments in equity instruments through other comprehensive income, not through profit or loss. A gain or loss from fair value changes will be shown in other comprehensive income and will not be reclassified subsequently to profit or loss. An equity instrument measured at fair value through other comprehensive income is recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, the asset is measured at fair value with changes in fair value included as “financial asset at fair value through other comprehensive income” in other comprehensive income. Accumulated gains or losses recognized through other comprehensive income are directly transferred to retained earnings when equity instrument is derecognized or its fair value substantially decreased. Dividends are recognized in profit or loss. (iii) Debt instruments measured at fair value through other comprehensive income If financial assets meet the following conditions, they are categorized as debt instruments measured at fair value through other comprehensive income. If the assets are owned for the purposes of both sale and recovery of cash flow in line with an agreement for the financial assets in the Group’s business model If the assets generate cash flows from only the payment of interest related to principal and principal balance on the dates specified by the agreement conditions Debt instruments measured at fair value through other comprehensive income are initially recognized at fair value (including directly attributable transaction expenses). After initial recognition, they are measured at fair value, and the change in fair value is classified to other comprehensive income as “financial assets measured at fair value through other comprehensive income.” If recognition is suspended, the cumulative amount of profit or loss recognized through other comprehensive income is reclassified as net income or loss. (iv) Financial assets measured at fair value through profit or loss When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as “at fair value through profit or loss” and measured at fair value with changes in fair value recognized in profit or loss. A financial asset measured at fair value through profit or loss is recognized initially at fair value and its transaction cost is recognized in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognized in profit or loss. The Group does not designate any debt instrument as at fair value through profit or loss to remove or significantly reduce an accounting mismatch. (c) Derecognition of financial assets The Group derecognizes its financial asset if the contractual rights to the cash flows from the investment expire, or the Group transfers substantially all the risks and rewards of ownership of the financial asset. Any interests in transferred financial assets that are created or continuously retained by the Group are recognized as a separate asset or liability. ⅱ. Non-derivative financial liabilities (a) Recognition and measurement of financial liabilities The Group recognizes financial debt when the Group becomes a party to the contractual provisions of the instruments. The measurement of financial debt is explained in (b) Classification of financial liabilities. (b) Classification of financial liabilities Financial liabilities measured at amortized cost A financial liability other than those measured at fair value through profit or loss is classified as a financial liability - 35 -
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measured at amortized cost. A financial liability at amortized cost is initially measured at fair value less transaction cost directly attributable to the issuance of the financial liability. After initial recognition, the financial liability is measured at amortized cost based on the effective interest rate method. (c) Derecognition of financial liabilities The Group derecognizes a financial liability when the financial liability is distinguished, i.e. when the contractual obligation is discharged or cancelled or expired. iii. Presentation of financial assets and liabilities Financial assets and liabilities are offset and the net amount is presented in the consolidated statement of financial position only when the Group currently has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. (12) Impairment of financial assets The Group measures the provision for doubtful receivables (non-trade receivables) of financial assets for which credit risk has not significantly increased at an amount equivalent to the 12-month expected credit loss when there is no significant increase in the credit risk since initial recognition. When there is a significant increase in credit risk since initial recognition, the Group measures the provision for doubtful receivables of financial assets for which credit risk has significantly increased at an amount equivalent to the expected credit losses for such remaining life of the financial assets. Whether credit risk is significantly increased or not is determined based on the changes in default risk. To determine if there is a change in default risk, following factors are considered. However, the Group always measures provision for trade receivables which do not include any material financial component at an amount equal to lifetime expected credit losses. ■ External credit rating of the financial asset ■ Downgrade of internal credit rating ■ Operating results, such as decrease in sales, decrease in working capital, asset deterioration and increase in leverage ■ Reduced financial support from the parent company or associated companies ■ Delinquencies (Overdue information) Expected credit losses are measured based on the discounted present value of the differences between the contractual cash flows and the cash flows expected to be received. (13) Derivatives and hedge accounting Derivatives are initially recognized at fair value as on the date on which the derivative contracts are entered into. After initial recognition, derivatives are remeasured at fair value at the end of each reporting period. The Group utilizes derivatives consisting of exchange contracts, foreign exchange swaps and interest swaps to reduce foreign currency risk and interest rate risk etc. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates derivatives as cash flow hedges (hedges to the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction) and as fair value hedges (hedges of exposure of changes in fair value that is attributable to particular risks relating to unrecognized firm commitment). At the inception of the transaction, the Group documents the relationship between the hedging instrument and the hedged item, along with their risk management objectives and strategies to conduct various hedge transactions. At the inception of the hedge and on an ongoing basis, the Group assess whether the derivative used in hedging transaction is highly effective in offsetting changes in cash flows of the hedged item. Specially, when the Group assesses whether the hedge relationship is effective, the Group assess whether all of the following requirements are met: (i) There is an economic relationship between the hedged item and the hedging instrument (ii) The effect of credit risk does not dominate the value changes that result from that economic relationship; (iii) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. Hedge effectiveness is assessed on an ongoing basis and about whether the hedging criteria described above are met. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is - 36 -
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recognized in other comprehensive income. The ineffective portion is recognized in profit or loss. Cumulative profit or loss recognized through other comprehensive income is transferred to profit or loss on the same period that the cash flows of hedged items affects profit or loss. If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective for that designated hedging relationship remains the same, an entity should adjust the hedge ratio of the hedging relationship so that it meets the qualifying criteria again (rebalancing). After rebalancing, in cases where no longer meet the requirements of hedge accounting or hedging instruments are expired, sold, terminated or exercised, hedge accounting will be discontinued. The Group will begin amortizing the fair value of the hedging instruments from the time that hedging accounting is suspended. In the case that the hedge accounting is discontinued, the cumulative profit or loss on the hedging instrument that has been recognized in other comprehensive income when the hedge was effective will remain in other comprehensive income until the forecast transaction occurs. When forecast transactions are no longer expected to arise, accumulated amount of profits or losses recorded in equity is transferred to profit or loss. Aggregated fair values of hedging instrument derivatives whose maturities are over 12 months are classified as non-current assets or liabilities, and those whose maturities are less than 12 months are classified as current assets or liabilities. (14) Cash and cash equivalents In the consolidated statement of cash flows, cash and cash equivalents consist of cash, demand deposits and short-term investments with maturities of three months or less that are readily convertible to cash and subject to insignificant risk of change in value and bank overdrafts. In the consolidated statement of financial position, bank overdrafts are shown within in current liabilities. (15) Inventories Inventories mainly consist of mobile handsets and materials / work in progress related to construction. Inventories are measured at the lower of cost and net realizable value. The cost is generally calculated using the moving average method and comprise all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realizable value represents the estimated selling price in the ordinary course of business less any estimated cost to sell. (16) Employee benefits i. Post-employment benefits The Group has adopted a defined benefit plan and a defined contribution plan as post-employment benefit plans for its employees. (a) Defined benefit plans The asset or liability recognized on the consolidated statement of financial position in relation to the defined benefit pension plans (defined benefit asset or liability) is the present value of the defined benefit obligation less fair value of the plan assets. This figure is recognized by adjusting the amount related to the maximum asset value as needed with consideration given to the usable economic benefits. The defined benefit obligation is determined annually by independent actuaries using the projected unit credit method. The discount rates are on the basis of the market yields of high-quality corporate bonds at the end of the reporting period, that are denominated in the currency in which the benefit will be paid, which is corresponding to estimated timing and amount of future benefits are to be paid. Defined benefit cost includes service cost, net interest on the net defined benefit liability (asset), and remeasurements of the net defined benefit liability (asset). Service cost and net interest are recognized in profit or loss. Net interest is determined using the discount rate described above. The remeasurements comprise actuarial gains and losses and the return on plan assets (excluding amounts included in net interest). Actuarial gains and losses are recognized immediately in other comprehensive income when incurred, and past service costs are recognized as profit or loss. The Group recognizes remeasurements of all the net defined benefit liability (asset) resulting from its defined benefit plans in other comprehensive income and reclassifies them immediately to retained earnings. (b) Defined contribution plans Contribution to the defined contribution plans are recognized as expenses for the period over which employees provide services. - 37 -
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In addition, certain subsidiaries of the Group participate in multi-employer pension plans, and recognize the payments made during the fiscal year as profit or loss and contribution payable as a liability. ii. Short-term employee benefits Short-term employee benefits are measured at the amounts expected to be paid when the liabilities are settled and recognized as an expense. Bonus and paid annual leave accruals are recognized as a liability in the amount estimated to be paid under these plans, when the Group has legal or constructive obligations to pay them and reliable estimates of the obligation can be made. (17) Provisions Provisions are recognized when the Group has legal or constructive obligations as a result of past events, it is probable that outflows of economic benefits will be required to settle the obligations, and reliable estimates of the obligation can be made. To determine the amount of a provision, the estimated future cash flows are discounted using a pretax discount rate that reflects the time value of money and the risks specific to the liability where necessary. Unwinding of the discount over time is recognized in finance cost. (18) Share-based payment i. Stock options The Group has equity-settled stock option plans as incentive plans for its directors and employees. Stock options are measured at fair value at the grant date, which is calculated using the Black-Scholes or other models. The fair value of stock options at the grant date is recognized as an expense over the vesting period, based on the estimated number of stock options that are expected to vest, with corresponding amount recognized as increase in equity. ii. Executive compensation BIP trust and stock-granting ESOP trust The Group has introduced the executive compensation BIP (Board Incentive Plan) trust and a stock-granting ESOP (Employee Stock Ownership Plan) trust. These plans are accounted for as equity-settled share based payment and the shares of the Company held by the trust are included in treasury stock. The fair value of the shares of the Group at the grant date is recognized as expenses over the period from the grant date to the vesting date, with a corresponding increase in capital surplus. The fair value of the shares of the Group granted is determined by adjusting the market value, taking into account the expected dividend yield of the shares. (19) Equity i. Common stock Common stocks are classified as equity. Proceeds from the Company’s issuance of common stocks are included in common stock and capital surplus and its direct issue costs are deducted from capital surplus. ii. Treasury stock When the Group acquires treasury stocks, the consideration paid, net of direct transaction costs and tax, is recognized as a deduction from equity. When the Group sells treasury stocks, differences between the carrying amount and the consideration received upon sale are recognized as capital surplus. (20) Revenue i. Mobile telecommunications services The Group generates revenue mainly from its mobile telecommunications services (including UQ mobile and MVNO services) and sale of mobile handsets. The Group enters into mobile telecommunications service agreements directly with customers or indirectly through distributors, and sells mobile handsets to its distributors. Revenue from the mobile telecommunications services primarily consists of basic monthly charges and communication fees (“the mobile telecommunication service fees”), and commission fees such as activation fees. Revenue from the mobile telecommunication service fees and commission fees are recognized on a flat-rate basis and on a measured-rate basis when the services are provided to the customers, which is when the service is provided to the customer in accordance with contract and the performance obligation is fulfilled. Discounts of communication charges are deducted from the mobile telecommunications service fees on a monthly basis. Furthermore, the consideration for transactions related to revenue from mobile telecommunications services is received within approximately one month of the billing date. - 38 -
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Revenue from the sale of mobile handsets comprises proceeds from the sale of mobile handsets and accessories to customers or distributors. The business flows of the above transactions consist of “indirect sales,” wherein the Company sells mobile handsets to distributors and enters into communications service contracts with customers through those distributors, and “direct sales,” wherein the Company and certain subsidiaries of the Company sell mobile handsets to customers and enter into communications service contracts directly with the customers. Revenue in each case is recognized as described below. Revenue from the sale of mobile handsets is received within approximately one month following the sale to the distributor or other vendor. 1) Indirect sales As the distributor has the primary obligation and inventory risk for the mobile handsets, the Group sells to the distributors, the Group considers distributors as the principals in each transaction. Revenue from the sale of mobile handsets is recognized when mobile handsets are delivered to distributors, which is when control over the mobile handsets is transferred to the distributor and the performance obligation is fulfilled. Certain commission fees paid to distributors are deducted from revenue from the sale of mobile handsets. 2) Direct sales In direct sales transactions, revenue from the sale of mobile handsets and revenue from service fees, including mobile telecommunications service fees, are considered to be bundled. Therefore, contracts that are concluded for a bundled transaction are treated as a single contract for accounting purposes. The total amount of the transaction allocated to revenue from the sale of mobile handsets and mobile telecommunications service fees is based on the proportion of each component’s independent sales value. The amount allocated to mobile handset sales is recognized as revenue at the time of sale, which is when the performance obligation is determined to have been fulfilled. The amount allocated to mobile telecommunications service fees is recognized as revenue when the service is provided to the customer, which is when the performance obligation is determined to have been fulfilled. In both direct and indirect sales, activation fees and handset model exchange fees are deferred as contract liabilities upon entering into the contract. They are not recognized as a separate performance obligation, but combined with mobile telecommunications services. They are recognized as revenue over the period when material renewal options exist. The consideration of these transactions is received in advance, when the contract is signed. Points granted to customers through the customer loyalty program are allocated to transaction prices based on the independent sales values of benefits to be exchanged based on the estimated point utilization rate, which reflects points that will expire due to future cancellation or other factors. The points are recognized as revenue when the customers utilize those points and take control of the goods or services, which is when the performance obligation is considered fulfilled. ii. Fixed-line telecommunications services (including the CATV business) Revenue from fixed-line telecommunications services primarily consists of revenues from voice communications, data transmission, FTTH services, CATV services and related installation fees. The above revenue, excluding installation fee revenue, is recognized when the service is provided, which is when the service is provided to the customer in accordance with contact and the performance obligation is fulfilled. Installation fee revenue is recognized over the estimated average contract period based on the percentage remaining. The consideration for these transactions is received within approximately one month of the billing date. iii. Value-added services Revenue from content services mainly comprises revenue from information fees, revenue from commission on transfer of receivables, revenue through advertising businesses, agency fees on content services, and revenue from the energy business, etc. Revenue from information fees comprises the revenue from membership fees for the content provided to customers on websites that the Group operates or that the Group jointly operates with other entities and the performance obligation is fulfilled over the period in which the service is provided. Revenue from commission on transfer of receivables comprises the revenue from fees for transferring the receivables of content providers from customers as the agent of content - 39 -
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providers together with the telecommunication fees and the performance obligation is fulfilled when the receivables was transferred from content providers to the Group. Electric power revenue comprises the revenue generated from electric power retail services and the performance obligation is fulfilled when the Group provides the services. These revenues are recognized over the period in which the service is provided based on the nature of each contract since the performance obligations identified based on the contract with customer are fulfilled over time or when the Group provides the service. The Group may act as an agent in a transaction. To report revenue from such transactions, the Group determines whether it should present the gross amount of the consideration received from customers, or the net amount of the consideration received from customers less payments paid to a third party. The Group evaluates whether the Group has the primary obligation for providing the goods and services under the arrangement or contract, the inventory risk, latitude in establishing prices, and the credit risk. However, the presentation being on a gross basis or a net basis does not affect profit for the year. The Group considers itself an agent for commission on transfer of receivables, advertisement services and certain content services described above because it earns only commission income based on pre-determined rates, does not have the authority to set prices and solely provides a platform for its customers to perform content-related services. The Group thus does not control the service before control is transferred to the customer. Therefore, revenue from these services is presented on a net basis. The consideration for these transactions is received within approximately one to three months after the performance obligation has been fulfilled. iv. Solution services Revenue from solution services primarily consists of revenues from equipment sales, engineering and management services (“the solution service income”). The solution service income is recognized based on the consideration received from the customers when the goods or the services are provided to the customers and the performance obligation is fulfilled. Payment for any performance obligation is received within approximately one month of the billing date. v. Global services Global services mainly comprise solution services, data center services and mobile telephone services. Revenue from data center services comprise the service charges the Group receives for using space, electricity, networks or other amenities at its self-operated data centers in locations around the world. In general, contracts cover more than one year, and revenue is recognized for the period over which the services are provided. The consideration for these transactions is billed before the performance obligation is fulfilled and is received within approximately one month of billing. Revenue from mobile telephone services comprises revenue from mobile handsets and mobile telecommunication services. Revenue from the sale of mobile handsets is recognized at the time of sale of the handsets, when the performance obligation is determined to have been fulfilled. Revenue from mobile telecommunication services is recognized at the time the services are provided to the customer, when the performance obligation is determined to have been fulfilled. (21) Finance income and costs Finance income mainly comprises interest income, dividend income, exchange gains and changes in fair value of financial assets at fair value through profit or loss. Interest income is recognized using the effective interest method. Dividend income is recognized when the right to receive payment (shareholders’ right) is established. Finance costs mainly comprise interest expense, exchange losses and changes in fair value of financial assets at fair value through profit or loss. Interest expense is recognized using the effective interest method. (22) Other non-operating profit and loss Other non-operating profit and loss includes gain and loss on investment activities. Specifically, gain and loss on step acquisitions, gain and loss on sales of stocks of subsidiaries and associates and gain and loss on deemed disposal are included. (23) Borrowing costs Borrowing costs directly attributable to the acquisition and construction of a qualifying asset, which takes a substantial period of time before it is ready for its intended use or sale, are capitalized as part of the cost of such asset. All other - 40 -
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borrowing costs are recognized as expenses in the period they incurred. (24) Income taxes Income taxes are composed of current and deferred taxes and recognized in profit or loss, except for taxes related to items that are recognized directly in equity or in other comprehensive income. Current tax is measured at the amount expected to be paid to or recovered from the taxation authorities on the current year’s taxable income, plus adjustments to the amount paid in prior years. To determine the current tax amount, the Group uses the tax rates and tax laws that have been enacted or substantively enacted by the end of the fiscal year in the countries in which the Group operates and earns taxable income or losses. Deferred tax assets and liabilities are, using asset and liability method, recognized on temporary differences between the carrying amounts of assets and liabilities on the consolidated financial statements and their tax basis, and tax loss carryforwards and tax credits. However, no deferred tax assets and liabilities are recognized on following temporary differences: ■ Taxable temporary differences arising from the initial recognition of goodwill; ■ Temporary differences arising from the initial recognition of assets and liabilities from transactions (excluding business combination transactions) not generating taxable or deductible temporary differences at the time of transaction and not affecting accounting income (loss) or taxable income (loss); and ■ Taxable temporary differences associated with investments in subsidiaries and associates, where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognized on all deductible temporary differences, unused tax loss carryforwards and tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences etc. can be utilized. Deferred tax liabilities are recognized on taxable temporary differences. Carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to realize all or part of the benefit of the deferred tax assets. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the temporary differences will reverse, based on tax laws that have been enacted or substantively enacted by the end of reporting period. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and income taxes are levied by the same taxation authority on the same taxable entity. The Company and some domestic subsidiaries have adopted the Group tax sharing system for the accounting procedures used in the preparation and presentation of financial statements. In line with the temporary relief provisions as laid out in the Income Taxes (Revised) section of the International Accounting Standard 12, the Company is utilizing the amended exemption to recognize and disclose information about deferred income tax assets and liabilities under the Pillar Two model rules. (25) Dividends For the purpose of the consolidated financial statements, dividends to owners of the parent company are recognized as a liability for the period over which the dividends are approved by the owners of the parent company. (26) Earnings per share The Group discloses basic and diluted earnings per share (attributable to owners of the parent) related to common stock. Basic earnings per share is calculated by dividing profit for the year attributable to common stockholders of the parent by the weighted average number of common stocks outstanding during the reporting period, adjusted for the number of treasury stocks acquired. For the purpose of calculating diluted earnings per share, net profit attributable to owners of the parent and the weighted average number of common stocks outstanding, adjusted for the number of treasury stocks, are further adjusted based on the assumption that all dilutive potential common stocks are fully converted. Potential common stocks of the Company are related to BIP trust. (27) Insurance contracts The Group categorizes contracts that have significant insurance risks as insurance contracts under IFRS 17. The Group applies an insurance fee distribution approach to insurance contracts issued by and reinsurance contracts held by the non-life insurance business. The Group applies a general measurement model for insurance contracts issued by and reinsurance contracts held by the life - 41 -
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insurance business. Regarding insurance finance income or costs, the amount calculated by regimentally allocating the total value of expected finance income or costs over the insurance contract group’s remaining period is included in net income, and the difference between the contract group’s book value and the amount measured when applying regimental allocation is recorded as other comprehensive income. - 42 -
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4. Segment Information (1) Outline of reportable segments The reportable segments of the Group are units of the Group of which separate financial information is available, and which are periodically monitored for the board of directors to determine the allocation of the business resources and evaluate the performance results. The Group has the two reportable segments of Personal Services and Business Services as well as operating segments. The Personal Services segment provides services to individual customers. In Japan, we aim to provide new added value and experience value by expanding 5G telecommunication services and other services such as finance, energy, and LX (Life Transformation) in a coordinated manner through our multi-brands “au,” “UQ mobile,” and “povo,” and are also working with local partners to eliminate the digital divide and achieve sustainable regional co-creation. Overseas, we are leveraging our business know-how cultivated in Japan to provide telecommunication services and financial and entertainment services such as video and games to individual customers in Myanmar, Mongolia, and other Asian regions.In addition, we are working hard to enhance the convenience of telecommunication services for customers traveling abroad from Japan as well as customers coming to Japan from abroad. The Business Services segment mainly provides a wide range of corporate customers in Japan and overseas with a variety of solutions encompassing smartphones and other devices, network and cloud services, and Telehouse brand data center services. In addition to this, we established the new business platform WAKONX for the AI era. We are working to solve industry- specific problems faced by corporate customers and contributing to customers’ business growth and social issue solutions. We continue to provide global one-stop solutions that contribute to the development and expansion of our customers’ businesses through IoT and DX centered on 5G communications in collaboration with our partners. In the fiscal year ended March 31, 2025, we have reassessed certain operating segments of the company, consolidated subsidiaries, and associated companies based on organizational changes. Accordingly, the segment information for the fiscal year ended March 31, 2024 is presented based on the segment classification after this change. (2) Calculation method of revenue, income or loss, assets and other items by reportable segment Accounting treatment of reported business segments is consistent with “3. Material Accounting Policies.” Income of the reportable segments is based on the operating income. Inter segment transaction price is determined by taking into consideration the price by arm’s length transactions or gross costs after price negotiation. Assets and liabilities are not allocated to reportable segments. - 43 -
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(yen in millions) Reportable segments Other*¹ Total Adjustment*² Amounts on the consolidated financial statements Personal Business Sub-total Revenue Revenue from external customers 4,675,624 1,053,559 5,729,183 24,864 5,754,047 － 5,754,047 Inter-segment revenue or transfers 71,410 235,992 307,403 93,433 400,835 (400,835) － Total 4,747,034 1,289,552 6,036,586 118,296 6,154,882 (400,835) 5,754,047 Segment income 737,260 216,952 954,211 8,573 962,785 (1,201) 961,584 Finance income (cost), net 11,652 Other non-operating profit (loss), net 19,490 Profit for the period before income tax 992,725 Other items Depreciation and amortization 586,237 99,423 685,660 4,565 690,224 (4,372) 685,852 Impairment loss 9,301 284 9,585 23 9,607 － 9,607 Share of profit (loss) of investment accounted for using the equity method 4,723 (56) 4,667 5,278 9,945 － 9,945 (yen in millions) Reportable segments Other*¹ Total Adjustment*² Amounts on the consolidated financial statementsPersonal Business Sub-total Revenue Revenue from external customers 4,733,192 1,160,933 5,894,125 23,828 5,917,953 － 5,917,953 Inter-segment revenue or transfers 62,426 238,854 301,280 99,552 400,832 (400,832) － Total 4,795,618 1,399,787 6,195,405 123,380 6,318,785 (400,832) 5,917,953 Segment income 877,144 233,048 1,110,192 10,029 1,120,221 (1,547) 1,118,674 Finance income (cost), net (19,513) Other non-operating profit (loss), net 5,464 Profit for the period before income tax 1,104,625 Other items Depreciation and amortization 579,462 105,610 685,072 4,655 689,727 (4,727) 685,000 Impairment loss 2,225 1,076 3,301 489 3,790 － 3,790 Share of profit (loss) of investment accounted for using the equity method 22,637 486 23,123 4,378 27,501 － 27,501 (3) Information related to the amount of revenue, income or loss and other items by reportable segment The Group’s segment information is as follows: For the year ended March 31, 2024 For the year ended March 31, 2025 *1. “Other” is a segment not included in reportable segments, and includes construction and maintenance of facilities, and research and development of leading-edge technology. *2. Adjustment of segment income shows the elimination of inter-segment transactions. - 44 -
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Years Ended March 31, 2024 March 31, 2025 Profit for the year attributable to owners of the parent (yen in millions) 637,874 685,677 Number of weighted average common stocks outstanding (shares in thousands) 4,234,641 4,049,339 Basic earnings per share (yen) 150.63 169.33 (yen in millions) Years Ended March 31, 2024 March 31, 2025 Profit for the year attributable to owners of the parent 637,874 685,677 Adjustment of profit － － Profit used in calculation of diluted earnings per share 637,874 685,677 (shares in thousands) Years Ended March 31, 2024 March 31, 2025 Number of weighted average common stocks outstanding 4,234,641 4,049,339 Effect of dilutive potential common stocks BIP trust 1,164 1,218 Number of diluted weighted average common stocks during the year 4,235,805 4,050,557 Years Ended March 31, 2024 March 31, 2025 Diluted earnings per share (yen) 150.59 169.28 5. Per Share Information (1) Basic earnings per share Basic earnings per share and its calculation basis are as follows: (2) Diluted earnings per share Diluted earnings per share and its calculation basis are as follows: *1. In the calculation of basic earnings per share and diluted earnings per share, the Company’s stocks owned by the executive compensation BIP trust is included in treasury stock. Therefore, the number of those stocks is deducted in calculating the number of common stocks outstanding at the end of the year and weighted average common stocks outstanding during the year. *2. The Company conducted a two-for-one stock split on April 1, 2025. The number of weighted average common stock outstanding and number of diluted weighted average common stock during the year are calculated as if the stock split had been conducted at the beginning of the previous fiscal year. - 45 -
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Total number of shares issued before the stock split 2,191,846,416 Increase in the number of shares due to the stock split 2,191,846,416 Total number of shares issued after the stock split 4,383,692,832 Total number of issuable shares after the stock split 8,400,000,000 Public notice of the record date Friday, March 14, 2025 Record date Monday, March 31, 2025 Effective date Tuesday, April 1, 2025 Current Articles of Incorporation Proposed Change Article 6 (total number of issuable shares) The number of total issuable shares of the Company is 4,200,000,000. Article 6 (total number of issuable shares) The number of total issuable shares of the Company is 8,400,000,000. 6. Significant Subsequent Events Stock Split KDDI’s Board of Directors met on November 1, 2024 and resolved to conduct a stock split and to amend part of the Articles of Incorporation following the stock split. 1.Stock Split (1) Purpose of the Stock Split The Company recognizes returning profit to shareholders as a key matter for management and has striven to enhance shareholder returns in part by maintaining stable dividends while also dynamically conducting share buybacks that take into consideration investments in sustainable growth. As a result, KDDI shareholders currently encompass a wide range of generations. However, due to the new NISA system (tax-exempt, small-figure investment system) coming into effect in 2024, as part of long-term asset formation, we expect the expansion in investors to continue going forward. In light of these conditions, we will reduce the size of our investment unit to make it easier and more attractive to invest in KDDI’s stock. We also plan to conduct a stock split with the aim of further expanding the pool of investors who support the Company’s sustainable growth. (2) Overview of the Stock Split A. Method of the Split Effective March 31, 2025, the Company will conduct a two-for-one stock split of the common shares held by shareholders recorded in the shareholder registry at the end of day on the effective date. B. Increase in the Number of Shares Due to the Split (3) Schedule of the Stock Split 2. Effects on the Per-Share Information Effects on per-share information is described in Note 5, "Per-Share Information." 3. Change to Part of the Articles of Incorporation (1) Reason for the Change Following this stock split, based on the rules laid out in Article 184, Paragraph 2 of the Companies Act, on April 1, 2025 the Company will change the total number of issuable shares as stated in Article 6 of KDDI’s Articles of Incorporation. (2) Content of the Change The content of the change is as follows. (3) Schedule Effective date of the change to the Articles of Incorporation: April 1, 2025 (Tuesday) 4. Others - 46 -
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(1) Change to the amount of shareholders’ capital When the stock split is conducted, there will be no change in the amount of shareholders’ capital. (2) Dividends Because the effective date of the stock split is April 1, 2025, the year-end dividend for the fiscal year ending March 2025, for which the base date is March 31, 2025, will be paid for the total number of shares before the stock split. Elimination of Treasury Shares At its meeting held on May 14, 2025, the Board of Directors resolved to eliminate treasury shares based on the rules outlined in Article 178 of the Companies Act and carried out this elimination. Details are as follows. 1. Type of shares eliminated: KDDI common stock 2. Number of shares eliminated: 195,845,358 (Percentage of total issued shares before the elimination: 4.47%) 3. Elimination date: May 22, 2025 Note: With this elimination, the number of treasury shares held by KDDI total 5.00% of all issued shares. Number of total issued shares after the elimination: 4,187,847,474 Number of treasury shares after the elimination: 209,392,374 These figures include the 1,875,394 KDDI shares held by the board member compensation BIP trust. This excludes requests for the purchase or additional purchase of fractional shares that occurred on or after April 1, 2025. Repurchase of Treasury Shares, Tender Offer of Treasury Shares and Market Purchases of Treasury Shares At the board of directors’ meeting held on May 14, 2025, the Company resolved to conduct a repurchase of treasury shares, and, as a specific method of repurchasing the treasury shares pursuant to the provisions of Article 156, Paragraph 1 of the Companies Act as applied mutatis mutandis pursuant to the provisions of Article 165, Paragraph 3 of the Companies Act and the Company’s articles of incorporation, the Company resolved to conduct a tender offer of treasury shares(the “Tender Offer”). (1) Objective of the Tender Offer The Company was informed by KYOCERA Corporation (“KYOCERA”) on February 3, 2025, and by Toyota Motor Corporation (“Toyota Motor”) on February 14, 2025, that they intended to sell a portion of the Company’s ordinary shares that they currently hold. As a result of deliberations, and in light of the number of shares held by KYOCERA and Toyota Motors the Company concluded that it would be appropriate to repurchase shares in order to further strengthen shareholder returns, and among them, to repurchase 108,365,800 shares from KYOCERA and 43,346,300 shares from Toyota Motors. In addition, regarding the number of share certificates planned for purchase in the Tender Offer, the maximum number has been set at 151,712,100 shares, which is the total number of shares to be tendered by KYOCERA and Toyota Motors in the Tendor Offer. Considering the above, at the board of directors’ meeting held on May 14, 2025, the Company resolved to repurchase treasury shares and, as a specific method of repurchasing treasury shares, to conduct the Tender Offer and to conduct market purchases on Tokyo Stock Exchange within the total acquisition cost obtained by subtracting the total acquisition cost of the Company’s ordinary shares acquired by the Tender Offer from the upper limit of the total acquisition cost (400 billion yen) for the share repurchase based on the BOD Resolution of May 14, 2025. (2) Details of the resolution of the board of directors on the acquisition of treasury shares 1) Type of share certificates: the Company’s ordinary shares 2) Number of share certificates planned for acquisition: 196,000,000 Shares（upper limit） 3) Total acquisition cost: 400 billion yen（upper limit） 4) Acquisition period: From May 15, 2025 to December 23, 2025 (3) Tender Offer outline 1) Type of share certificates: the Company’s ordinary shares 2) Number of share certificates planned for purchase: 151,712,100 Shares（upper limit） - 47 -
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3) Tender Offer Price: 2,307 yen per 1 (one ) ordinary share 4) Total Acquisition Cost: 350 billion yen（upper limit） 5) Period of the Tender Offer: From May 15, 2025 to June 11, 2025 6) Publication date for commencing the Tender Offer: May 15, 2025 7) Commencement Date of Settlement: July 3, 2025 (4) Market Purchases outline 1) Type of share certificates: the Company’s ordinary shares 2) Total Acquisition Cost: the cost obtained by subtracting the total acquisition cost of the Company’s ordinary shares acquired by the Tender Offer from 400 billion yen (upper limit) 3) Acquisition period: From July 4, 2025 to December 23, 2025 - 48 -