Quarterly Report(55th Term 3rd Quarter)
Started April 1, 2021
Ended June 30, 2021

TKC Corporation
1758 Tsurutamachi, Utsunomiya-shi, Tochigi–1–

Table of Contents
Page[Front Cover]Section 1 [Information on the Company] ............................................................................................................................................... 4
Part 1[Overview of the Company] ................................................................................................................................................... 4

1[Key Financial Data] ............................................................................................................................................................... 4

2[Description of Business] ........................................................................................................................................................ 4

Part 2[Business Overview]............................................................................................................................................................... 5

1[Risk Factors].......................................................................................................................................................................... 5

2[Management Analysis of Consolidated Financial Conditions, Operating Results, and Cash Flows] .................................... 53[Material Agreements, etc.] .................................................................................................................................................. 13

Part 3[Information on the Company] ............................................................................................................................................. 14

1[Information on the Company’s Stock] ................................................................................................................................. 14(1) [Total number of shares, etc.] ...................................................................................................................................... 14(2) [Share subscription rights, etc.] ................................................................................................................................... 14(3) [Exercise of bonds with share subscription rights containing a clause for exercise price adjustment, etc.] ................. 14(4) [Changes in total number of issued shares, capital stock, etc.] .................................................................................... 14(5) [Major shareholders].................................................................................................................................................... 14(6) [Voting rights] ............................................................................................................................................................. 15

2[Officers]............................................................................................................................................................................... 15Part 4[Financial Information]......................................................................................................................................................... 16

1[Quarterly Consolidated Financial Statements]..................................................................................................................... 17(1) [Quarterly consolidated balance sheets]....................................................................................................................... 17(2) [Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income] ..... 19[Quarterly consolidated statements of income] ........................................................................................................ 19[Quarterly consolidated statements of comprehensive income] ............................................................................... 20

2[Other] .................................................................................................................................................................................. 24

Section 2 [Information on Guarantors, etc. of the Company] ............................................................................................................... 25[Quarterly Review Report] [Confirmation Letter]–2–

[Front Cover][Document filed]

Quarterly Report[Applicable law]

Article 24-4-7, Paragraph 1 of the Financial Instruments and Exchange Act of Japan[Filed with]

Director of Kanto Local Finance Bureau[Date filed]

August 12, 2021

[Quarterly accounting period]

55th Term 3rd Quarter (from April 1, 2021 to June 30, 2021)[Company name]

Kabushiki Kaisha TKC[Company name in English]

TKC Corporation[Title and name of representative]

Masanori Iizuka, Representative Director, President and Executive Officer[Address of head office]1758 Tsurutamachi, Utsunomiya-shi, Tochigi[Phone number]

028-648-2111[Contact person]

Kiyotsugu Nakanishi, Director & Executive Officer, Chief Director of Business
Administration[Contact address]

2-1 Ageba-cho, Shinjuku-ku, Tokyo[Phone number]

03-3235-5511[Contact person]

Kiyotsugu Nakanishi, Director & Executive Officer, Chief Director of Business
Administration[Place available for public inspection]

TKC Corporation, Tokyo Head Office(2-1 Ageba-cho, Shinjuku-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1 Nihonbashikabutocho, Chuo-ku, Tokyo)–3–

Section 1 [Information on the Company]
Part 1 [Overview of the Company]
1 [Key Financial Data]

Term & Period

54th Term
3rd quarter consolidated
cumulative period

55th Term
3rd quarter consolidated
cumulative period

Accounting period

Started October 1, 2019;
ended June 30, 2020

Started October 1, 2020; Started October 1, 2019;
ended June 30, 2021
ended September 30, 2020

54th Term

Net sales(millions of yen)

51,31049,587

67,814

Ordinary income(millions of yen)

10,245

11,808

11,685

6,792

7,961

7,821

6,298

8,881

7,501

Quarterly (current) net income
attributable to owners of(millions of yen)
parentQuarterly comprehensive
income or comprehensive(millions of yen)incomeNet assets(millions of yen)

75,87382,45877,075

Total assets(millions of yen)

93,622

100,106

97,671(yen)

129.23151.19148.81

(yen)

－

－

－

(%)

81.0

82.4

78.9

Term & Period

54th Term
3rd quarter consolidated
accounting period

55th Term
3rd quarter consolidated
accounting period

Accounting period

Started April 1, 2020;
ended June 30, 2020

Started April 1, 2021;
ended June 30, 2021

39.56

46.77

Quarterly (current) net income
per share
Quarterly (current) diluted net
income per share
Equity ratio

Quarterly net income per share(yen)(Notes) 1. Changes in key financial data, etc. of the Company are not stated here, as they are included in the Company’s quarterly
consolidated financial statements.
2. Net sales do not include consumption taxes (consumption tax and local consumption tax; hereinafter the same).
3. The Company maintains a Board Incentive Plan (BIP) Trust and records the stocks held by said Trust as treasury stocks.
Accordingly, for the purpose of calculating the quarterly (current) net income per share, they are included in the treasury
stocks to be deducted in calculating the average number of shares outstanding.
4. The quarterly (current) diluted net income per share is not stated as there were no dilutive shares.
5. The Company conducted a stock split of its common shares at a ratio of 1:2 as of April 1, 2021. The quarterly (current) net
income per share has been calculated assuming that the stock split was conducted at the beginning of the previous
consolidated fiscal year.
6. The reason for decrease in net sales compared to the previous fiscal year is because the Company started applying the
Accounting Standard for Revenue Recognition as of the beginning of fiscal year ending September 2021. For details, pleaserefer to Notes (Changes in Accounting Policies) on Page 21.

2 [Description of Business]
There are no significant changes in the description of business operated by the TKC Group (TKC Corporation and its affiliatedcompanies) for the current 3rd quarter consolidated cumulative period. There are no changes in the major affiliated companies.

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Part 2 [Business Overview]
1 [Risk Factors]
There are no risks pertaining to new business operations, etc. arisen during the current 3rd quarter consolidated cumulative period.
There are no significant changes in risks regarding business operations, etc. described in the Annual Securities Report of theprevious fiscal year.

2 [Management Analysis of Consolidated Financial Conditions, Operating Results, and Cash Flows]
I. Operating Results
The Japanese economy during the 3rd quarter consolidated cumulative period under review (hereinafter, “current 3rd Quarter”)
remained challenging due to the spread of novel coronavirus (hereinafter, “COVID-19”) variants, despite expectations for economic
recovery following the start of vaccinations.
In such economic climate, the Company continued on from the previous fiscal year with its policy to focus all its efforts on supporting
our customers, and worked to develop systems and provide services for them.
The Accounting Firm Business Division continued to support certified public tax accountants and certified public accountants thatare customers of TKC (hereinafter, “TKC Members”) in their efforts to provide assistance in financing and managerial advisory
services as escort supporters of SMEs.
The Local Governments Business Division began providing services in response to the release of the administrative circular“Implementation Outline of Establishing COVID-19 Vaccination Systems” on October 23, 2020 from the Ministry of Health, Labourand Welfare, including revision of the vaccination ledger system, rendering of services for the production of COVID-19 vaccination
coupon notices, and provision of vaccination reservation & registration systems, thereby supported local municipalities for theirmeasures against COVID-19.
As a result of these activities, the operating results for the current 3rd Quarter of the consolidated Group comprising of TKC
Corporation and its six consolidated subsidiaries recorded a net sales of 49,587 million yen (decreased 3.4% year-on-year), operating
income of 11,502 million yen (increased 15.3% year-on-year), ordinary income of 11,808 million yen (increased 15.3% year-onyear), and quarterly net income attributable to owners of parent of 7,961 million yen (increased 17.2% year-on-year).
The reason for decrease in net sales compared to the previous fiscal year is due to the Company’s decision on the early applicationof the Accounting Standard for Revenue Recognition (hereinafter, “Revenue Recognition Accounting Standard”), which will bemandatory for listed companies starting April 1, 2021. As a result of applying the Revenue Recognition Accounting Standard, net
sales decreased by 2,019 million yen compared to the amount recognized if said Standard had not been applied. The reason for theCompany’s early application of the Revenue Recognition Accounting Standard was in an aim to compile the know-how gained
through the application of said Standard and provide such know-how in its consulting services for listed companies.
Net sales for the current 3rd Quarter by business division are shown below.
1. Results of operation for the 3rd Quarter(1) Net sales of the Accounting Firm Business Division
Net sales of the Accounting Firm BD was 33,341 million yen (decreased 4.5% year-on-year); operating income was 9,050 million
yen (increased 4.6% year-on-year).
As a result of applying the Revenue Recognition Accounting Standard, net sales decreased by 1,850 million yen, while operating
income decreased by 141 million yen compared to the amounts if said Standard had not been applied. Breakdown of sales is asfollows:(i) Sales from computer services increased by 2.2% year-on-year. Medium-size companies are rapidly working towards digitaltransformation (DX), and in such climate, this was attributable to the continuing growth in number of implementations of the
FX4 Cloud Integrated Accounting Information System for mid-size companies, which enables the linking of sales management
systems, salary calculation systems and other business systems with accounting data, and the increase in the number of tax
accounting firms adopting the Office Management System (OMS Cloud) for Tax Accounting Firms and the OMS Mobile
which allows accounting firms to perform works using the OMS from home or outside their offices.
(ii) Software sales increased by 2.6% year-on-year. This is the result of increase in the number of users of financial accounting
systems, such as FX4 Cloud Integrated Accounting Information System for mid-size companies, that meet the requirements ofthe Electronic Books Maintenance Act of Japan, as well as strong growth in the number of users of our electronic tax filingsystem for corporations (ASP1000R) in response to the electronic filing of income taxes mandated to large enterprises with acapital of 100 million yen or greater starting April 2020.
As a result of applying the Revenue Recognition Accounting Standard, net sales decreased by 109 million yen compared to–5–the amount recognized if said Standard had not been applied. This was because the Company changed the method ofrecognizing the net sales of software which were conventionally recognized as lump sum upon shipment. For contracts thatare executed over a certain period of time, net sales are divided in proportion to the contract period and recognized on a monthly
basis.
(iii) Sales from consulting services increased 1.5% year-on-year. This was due to strong sales of the FX4 Cloud Integrated
Accounting Information System for mid-size companies, leading to increase in orders for system launch support services.
(iv) Hardware sales decreased by 18.5% year-on-year. This was due to customers having completed their first round of PC
replacements last year in response to the termination of Microsoft’s Windows 7 support in January 2020, and PC sales revertingback to the usual level.
(v) Sales from supplies decreased by 66.8% year-on-year. Sales from office equipment for remote works and infection prevention
supplies were strong, however, with the application of the Revenue Recognition Accounting Standard, many of transactionsof accounting slips and office equipment for accounting firms must be journalized as “agent transaction.” Starting this current
3rd quarter, the Company recognized the amount of net sales as transaction value less the purchase prices. As such, net sales
decreased by 1,546 million yen compared to the amount recognized if said Standard had not been applied.
(vi) The improvement in operating income year-on-year was a result of decrease in travel expenses by switching the style ofcustomer support and proposal activities to remote using the online meeting system, and decrease in costs related to hosting
seminars by changing our new customer acquisition activities from face-to-face seminars to webinars.
(2) Net sales of the Local Governments Business Division
Net sales of the Local Governments BD was 13,838 million yen (increased 0.5% year-on-year); operating income was 2,298
million yen (increased 1,193 million yen year-on-year).
As a result of applying the Revenue Recognition Accounting Standard, net sales decreased by 137 million yen, while operating
income increased by 60 million yen compared to the amounts if said Standard had not been applied. Breakdown of sales is asfollows:(i) Sales from computer services increased by 10.7% year-on-year. This was driven by increase in sales from the new customer
outsourcing services whose system was fully launched in FY2020, and increase in data center usage fees, and the winning ofcontracts for the production of vaccination coupon notices under the government’s project of Establishing COVID-19
Vaccination Systems.
(ii) Software sales decreased 13.2% year-on-year. This was due to decrease in temporary revenue in response to legal reforms
from the previous fiscal year, including sales from system revisions conducted in the previous fiscal year for the free preschool
education subsidy program in response to partial revisions to the Child and Childcare Support Act of Japan. As a result ofapplying the Revenue Recognition Accounting Standard, net sales decreased by 151 million yen compared to the amountrecognized if said Standard had not been applied.
(iii) Sales from consulting services increased 15.2% year-on-year. This was a result of increase in sales from system implementation
support, with the orders for new services such as the vaccination reservation & registration systems and My Number Card
Issuance Reservation & Management System. Also, as a result of implementing the accounting processing which is unique tothe first fiscal year of applying the Revenue Recognition Accounting Standard (recognizing the development costs prior to theprevious fiscal year as cumulative effect of changes in accounting principle), net sales increased by 26 million yen comparedto the amount recognized if said Standard had not been applied.
(iv) Hardware sales increased by 4.0% year-on-year. This was due to increase in renewal of servers and peripheral equipment bycustomers compared to the previous fiscal year.
(v) The increase in operating income year-on-year was a result of rendering of services for the production of COVID-19
vaccination coupon notices and provision of vaccination reservation & registration systems, and in addition, significant
decrease in travel expenses by switching the style of customer support and proposal activities to remote using the online
meeting system.
(3) Net sales of the Printing Business Division (Subsidiary: TLP Corporation)
Net sales of the Printing BD was 2,408 million yen (decreased 8.4% year-on-year); operating income was 147 million yen(decreased 36.0% year-on-year).
As a result of applying the Revenue Recognition Accounting Standard, net sales decreased by 32 million yen compared to theamount recognized if said Standard had not been applied. There were no impacts to the amount of operating income or loss.
Breakdown of sales is as follows:(i) Sales of data printing service-related products decreased by 1.0% year-on-year. This was due to suppressed orders for direct
mail and other productions for sales promotion from client companies due to impacts of the COVID-19 pandemic.
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(ii) Business form-related sales decreased by 4.5% year-on-year. This is due to decline in demands for business forms as a resultof digital transformation initiatives by client companies.
(iii) Sales of printing of commercial-use creative materials (catalogs, flyers, books, etc.) decreased by 15.9% year-on-year. Thiswas due to decrease in demands for printed materials and flyers for events from the cancellation/postponement of many events
impacted by the COVID-19 pandemic and switching to webinars.
2. Important matters with respect to the Company as a whole(1) Prevention of COVID-19 infection and actions for new working styles
As the outlook for the containment of COVID-19 pandemic is still unpredictable, the Company is taking the following infection
prevention measures and adaptation to new working styles in order to continue the provision of services to its customers:(i) To enable customers to continue using our cloud services, business form printing services, and help desk services, we havebeen continuing from the previous fiscal year to strengthen our business continuity measures (including prohibiting the entryof outside personnel at important offices and developing the infrastructure for remote access to the data center).
(ii) By introducing teleworking and staggered working hour programs, we have set our target for weekly attendance to less than
30% for areas subject to declaration of state of emergency. For other areas, our target for attendance is less than 70% per week
(and less than 40% for the development division). We also make it a general rule to conduct customer support and businessmeetings using the Web meeting systems.
(2) Acquisition of ISO/IEC20000
On June 7, 2021, the Company’s data center, TKC Internet Service Center (hereinafter, “TISC”) obtained the ISO/IEC 20000,
the international standards for IT service management system. This certifies that the operating platform of TKC cloud services
established inside TISC is managed and operated in compliance with the international standards for quality management, IT
service management, and information security. From this data center, we will continue to provide safe, secure, and convenient
cloud services in order to support the business operation of customers.
(3) Number of companies using the Company’s systems for the filing of corporate income tax returns exceeds 600,000
The Company began the offering of Japan’s first system to prepare corporate income tax returns (TPS1000) in 1981. Since then,the system underwent various upgrading to respond to the enforcement of the Consumption Tax Act of Japan in 1989 and legal
reforms such as mandatory electronic filing, as we continued to improve the system’s functionalities. Today, we offer the system
as Corporate Financial Reporting System (TPS1000), which incorporates the optimum work process for financial reporting
enabling companies to complete the entire process from financial settlements to electronic tax filing in a one-stop manner. In
2003 the Company also released the eConsoliTax consolidated tax payment system which complies with the consolidated taxation
system introduced in 2002, and the Electronic Tax Filing System for Corporations (ASP1000R) for listed companies in 2007
which allows the preparation and electronic filing of corporate income tax returns. These corporate income tax return preparation
systems are being highly rated by many TKC Member firms and listed companies, and the number of companies using theCompany’s systems for the filing of income tax returns exceeds 600,000 as of May 31, 2021. This means that one out of every
4.6 companies in Japan are using TKC’s corporate income tax return preparation systems.
3. Business activities and operating results of the Accounting Firm Business Division
The Accounting Firm BD operates in accordance with the business objectives set forth in the Articles of Incorporation (Article 2,
Paragraph 1: Management of electronic data processing centers to defend the business domain and maintain control over the fateof accounting firms) and works under close ties with the TKC National Federation (TKCNF), which consists of 11,400 certified
public tax accountants and certified public accountants (as of June 30, 2021) that are customers of TKC.
(1) Activities to achieve the strategic goals of the Accounting Firm Business Division(i) Support of SMEs affected by COVID-19 pandemic
In the current 3rd Quarter, the Company engaged in the following support activities under the policy to focus all its effort on
supporting TKC Members and their clients.
1) Provision of the latest information to TKC Members
To accurately and quickly convey information on SME support policies released by the national government and SME
support organizations to TKC Members, the Company provided the latest information on a daily basis on the exclusive
Intranet (ProFIT) for TKC Members. We began this activity on February 25, 2020 and posted a total of 243 entries as ofthe end of June 2021.

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2) Provision of TKC Monthly Indicators (Monthly BAST)In May 2021, the Company began the free offering of TKC Monthly Indicators (hereinafter, “Monthly BAST”). Monthly
BAST is a statistical summary unprecedented in Japan which contains the monthly settlement data of over 250,000
companies. The reliability of the monthly settlements contained is verified through the monthly field audits conducted by
TKC Members. Users can view the latest information on the shift of sales and loans, etc. of companies, on a nation-wide
scale or by prefecture, by annual revenue, or by industry. We expect that the Monthly BAST will be utilized by those incharge of supporting SMEs at financial institutions and administrative agencies, and economists analyzing the trends of
SMEs in determining measures to support SMEs going forward.
3) Offering of “COVID-19 management support information & emergency financial measures” corner
The Company developed a special website where TKC Members can check SME support policies offered by the national
governments, prefectural governments, as well as cities with a population of 40,000 or greater, and financial institutions
under the categories: Loans, Employment, Subsidies, and Taxation.
TKC Members are able to send out information on emergency financial measures widely across clients and other SMEs.
The website had 7,559 entries on support policies and has become the largest database dedicated to SME support policies
in Japan as of the end of June 2021.
The corner is updated twice a week to ensure that the latest information is available at all times.
4) Upgrading of a check function for clients requiring emergency support
The Company provided a check function for clients requiring emergency support on the Tax Accountants Office
Management system (OMS). This function can automatically evaluate the eligibility of each client in the form of a checklistof various governmental emergency economic policies and special loans by government-affiliated financial institutions.
Further in the current 3rd Quarter, we responded to the monthly subventions and worked rapidly to determine thequalifications of SMEs eligible for the Business Reestablishment Subsidy, and added a function to extract eligible clientswith a single click. Through these efforts, we are establishing a system to enable TKC Members to provide information totheir clients in a timely manner. We also develop and release on-demand training materials on these emergency economic
measures.
(ii) Sales activities to achieve TKCNF’s Strategic Targets 2020
TKCNF sets its 3-year activity policy from 2019 to 2021 and Strategic Targets 2020 based on the policy agenda in view of its
50th anniversary (in 2021). The content is as follows:[Activity policy to change society with the TKC brand]a. Promotion of Shomen-tempu (attachment of tax audit reports) by the TKC methodsb. Promotion of TKC Monitoring Information Servicec. Promotion of self-accounting by the TKC methods
In addition, the initiatives of TKCNF are beginning to draw the attention of many financial institutions. To take advantage ofthis opportunity to further enhance the managerial infrastructure of TKC Member firms, we launched the following measures:a. Understand and practice the Standards of Conduct for TKC Accountantsb.Increase the numbers of Field Auditors and Assistant Field Auditorsc. Enhance the managerial advisory services as a Certified Support Agency
The Company has been engaged in sales activities to achieve the Strategic Targets 2020 in collaboration with TKCNF.
1) Promotion of TKC Monitoring Information Service
TKC Monitoring Information Service is a free cloud-based service in which the TKC Members, upon request by the
management of their clients, provide to financial institutions such information as monthly trial balance sheets, financial
statements and tax returns prepared by TKC Member firms after monthly field audits and monthly settlements. Monthly
trial balance sheets will be made available immediately upon completion of the monthly settlement, and fiscal financial
settlements and tax returns are disclosed immediately after the client electronically files its financial documents to the tax
authorities.
While promoting the TKC Monitoring Information Service, the Company communicated to financial institutions that the–8–reliability of financial statements prepared by SMEs can be verified by the following three documents:a. Supporting documents submitted by TKC Members as provided for under Article 33-2 of the Certified Public Tax
Accountant Act of Japanb.Certificate of Bookkeeping Timeliness, with which TKC Corporation certifies the timeliness in the preparation of
accounting books as required under Article 432 of the Companies Act of Japan and the connection between the financial
statements and tax returns for the past three yearsc. The Chusho Kaikei Yoryo checklist developed by the Japan Federation of Certified Public Tax Accountants'
Associations and Japan Federation of Credit Guarantee Corporations
As a result of these activities, the number of financial institutions adopting this Service is increasing rapidly, adopted by
464 financial institutions including all local banks throughout Japan (64 institutions) as of June 30, 2021. Also, over
270,000 companies provided their financial statements to financial institutions as of June 30, 2021.
Going forward, financial institutions are expected to check the performance of borrowers on a regular basis and provide
management support. There is growing interest among financial institutions because the services to provide monthly trial
balance sheet under the TKC Monitoring Information Service enable clients of TKC Members to submit the results ofmonthly settlements electronically.
2) Promotion of self-accounting by the TKC methods (promotion of FX series)
Many SMEs are in need to plan for repaying the virtually interest-free, no-collateral loans from government-affiliated andprivate financial institutions. Recognizing these needs, during the current 3rd Quarter, we continued to provide support for
the utilization of functions for the management strategy level (budget registration, management by division, financing
results spreadsheet) incorporated in the FX series. In order for management to utilize these functions effectively, they needto enter the accounting transaction data in a timely and accurate manner, so the Company also provided support on
functions for daily task level, including support for the bank credit data receiving function to receive bank deposit
transaction data through online banking and generate journal entries automatically, and the linking of salary journal withthe strategic salary information system (PX2).
In addition, the FX Cloud series which was released on September 25, 2020 features enhanced functions to “strengthen
the company through accounting” and enhanced functions to support the field auditing by accounting firms. By offering
assistance to implement the FX Cloud series, the Company will work to support SMEs in strengthening their financial
management and capital procurement capabilities.
3) Supporting complete compliance with the Electronic Books Maintenance Act of JapanThe requirements of the Electronic Books Maintenance Act of Japan were eased in accordance with the outline of the
FY2021 tax reform approved by the cabinet on December 21, 2020. With this, there will be two types of electronic books(which are electromagnetic records of national tax-related books): (a) “superior electronic books” that contain the historyof additions, deletions and revisions to the accounting data (traceable) (electronic books that satisfy the requirements ofArticle 2 and Article 5 of the Ordinance for Enforcement of the revised Act); and (b) “other electronic books” that are
prepared using accounting software that do not keep record of such additions/deletions/revisions (electronic books thatsatisfy only the requirements of Article 2 of the Ordinance for Enforcement of the revised Act). This legal reform negates“the power of evidence” of the books, and the acceptance of such “other electronic books” implies that the government
has approved the use of accounting software that might enable falsification of books.
To counter this issue, the Company will support the implementation of the FX series for the preparation of “superior
electronic books” on a national level.
4) Soliciting new members (promotion of joining TKCNF)
TKCNF is engaged in a project to increase TKC membership to over 10,000 firms by the end of December 2021. The
Company is working closely with the New Members Service Committee of TKCNF in soliciting new members to achieve
this goal through activities such as hosting of webinars.
As a result of these activities, the number of TKC Member firms totaled approximately 9,800 accounting firms (11,400
accountants) as of June 30, 2021. The difference in numbers of firms and accountants are because some firms have multiple
accountants who are members.
(2) Activities to support the preparation of highly reliable financial statements based on timely and accurate bookkeeping(i) Support activities for diffusion of Chusho Kaikei Yoryo (Guidelines for SME accounting)
The TKCNF recommends the use of Basic Guidelines with Respect to the Accounting Procedures at Small- and Medium-sizedEnterprises (hereinafter, “Chusho Kaikei Yoryo” (Guidelines for SME Accounting)) formulated in February 2012 with which–9–SME clients should comply.
These Guidelines have been formulated based on the following principles: 1) accounting that helps to grasp the company's
business situation; 2) accounting that contributes to providing information to stakeholders (financial institutions, etc.); 3)
accounting that complies with the Ordinance on Company Accounting while achieving harmony between accounting andtaxation system; and 4) accounting that does not place excessive burden on SMEs.
In order to support the activities of the TKCNF towards the diffusion and utilization of the Guidelines, the Company continues
to promote the development of training materials and to strengthen collaboration with other organizations supporting SMEs.
(ii) Issuance of Certificate of Bookkeeping Timeliness
The Company utilizes the processing log data and historical time series data that are automatically logged at our data centerswhen TKC Members access our accounting system to issue a Certificate of Bookkeeping Timeliness free of charge. This
Certificate serves as reference for financial institutions and other third parties to objectively evaluate the business performanceof TKC Member firms.
This service was developed in an aim to improve reliability of financial statements and tax returns prepared by TKC Members
and to provide a passport for smooth financing to the clients of TKC Members. This utilizes the features of the Company's
financial accounting processing at TKC data centers, which prohibits any retroactive insertions, deletions and corrections topast data, and TKC Corporation proves, as a third party, that TKC Members have visited clients on a monthly basis to provide
guidance on accurate bookkeeping (monthly Field Audits), and that all work processes from monthly settlements to the final
settlement of accounts and electronic tax filings have been completed by a one-stop, full line process in a timely manner.
(3) Expansion into large-scale enterprise market
By utilizing the TKC systems, the Company contributes to the compliance and rationalization of tax and accounting operationsof large enterprises, mainly of listed companies, and are actively working to solicit these companies and their affiliates to becomeclients of TKC Members.
Starting April 2020, large enterprises with a capital of 100 million yen or greater are mandated to use electronic filing of income
tax, consumption tax, and local taxes. With this reform, large sized companies must file their income tax returns electronically,
as well as submit any attachments to tax returns (financial statements, statement classified by accounting items, etc.) in electronic
data form. To enable these companies to switch smoothly to the mandated electronic filing system, the Company worked withTKCNF’s Medium- and Large-sized Companies Support Council (1,513 members as of June 30, 2021) and released the
Guidebook on Complying with Mandatory Electronic Filing on the Company’s website and conducted activities to support usersof ASP1000R electronic tax filing system for corporations and the eConsoliTax consolidated tax payment system in the actual
implementation of electronic filing. As a result, the number of users of systems such as ASP1000R electronic tax filing systemfor corporations and the eConsoliTax consolidated tax payment system reached 7,436 companies as of June 30, 2021. This isequivalent to approximately 32% of the 23,000 some companies with a capital of 100 million yen or greater.
Also, as companies having business abroad are restricted from traveling overseas due to COVID-19 pandemic, they are facing
challenges in managing their foreign subsidiaries and ensuring governance. More and more companies facing such hardship are
implementing our OBMonitor overseas business monitoring system, as it is a cloud service that allows companies to check thefinancial data of their foreign subsidiaries from their offices in Japan. The number of users of the OBMonitor reached 1,100
companies, and is currently used in 37 countries around the world.
As a result of these activities, the number of corporate groups using the TKC Consolidated Group Solution counted approximately
4,632 corporate groups as of June 30, 2021. Our taxation-related information systems are adopted by 89% of the 100 largest
Japanese listed companies by sales amount. The market shares among Japanese listed companies reached 35%.
Based on the know-how gained through the early application of the Revenue Recognition Accounting Standard, the Company isconducting webinars to explain the practical measures in complying with said Standard and to introduce the case studies of early
application by the Company. To date, we have received over 4,250 requests to participate in the webinars.
(4) Expansion of markets for legal information database services(i) Increase of user base of TKC Law Library
Many customers of the TKC Law Library including law schools and law firms now operate online due to the COVID-19
pandemic. Because users are unable to conduct research at data rooms or libraries, the TKC Law Library which offers accessto laws and regulations, judicial precedents, bibliographic information references and also contents of specialized law
magazines, any time, from any place is now earning greater reputation. As a result, the numbers of users and contracts toaccess additional contents have grown.
Also, in June 2021, the Company launched a new optional service of the TKC Law Library called the Legal Book Searchwhich allows users to access PDF versions of specialized books on laws, accounting, tax accounting, and business
management. This service is a fixed rate service for attorneys to access the free book search functions and view the PDF– 10 –

versions on their tablets and PCs.
In the current 3rd Quarter, as a result of online promotional activities towards TCK Member firms, universities, law schools,
government offices, law firms, patent offices and corporate legal departments, the number of users exceeded 52,200 IDs andthe Library is used by over 23,000 institutions as of June 30, 2021.
(ii) Progress in the academic market
Due to the impacts of COVID-19, many universities continue to conduct hybrid-style classes combining face-to-face andonline lectures or full online classes after April 2021. Our systems, such as the TKC Educational and Research Support System
and TKC Law Library, can be accessed online and used anytime, anywhere. They contain a huge number of diverse contents
compared to those of other companies, and include various functions such as report generation, computing and testing. Thesefeatures are being reconsidered as tools to support online classes and learning for faculty and students. To date, the Company
conducts web meetings with various universities as needed, and continues to provide support in the development of online
learning environments tailored to meet the situation of each university.
Also, the online study tools (for civil service examination, practical business law examination, and jurisprudence examination)offered mainly to the faculty of law of universities have been adopted by 26 universities as of June 30, 2021. Currently, many
qualification examinations are adopting computer-based testing (CBT/IB method). We will promote the use of our online
testing functions and other effective online study tools to prepare for computer-based examinations among examination bodies
and applicants.
4. Business activities and operating results of the Local Governments Business Division
The Local Governments BD operates in accordance with the business objectives set forth in the Articles of Incorporation (Article
2, Paragraph 2: Management of electronic data processing centers to improve the administrative efficiency of local governments)and offers specialized information services in order to help promote the welfare of residents by improving administrative
efficiency.
(1) Development and provision of mission-critical system-related services
The Company provides TKC Government Cloud Service to municipalities (mainly for cities, wards, towns and villages). This isa cloud service that consists of the TASK Cloud Service which supports mission-critical functions and information services within
agencies, and the TASK Outsourcing Service which supports massive batch output and processing of tax papers and otherdocuments.
Our TASK Cloud Service is a single version package system operated at TKC data centers that is designed to allow shared use
by multiple institutions. It has been attracting attention as being an optimal system for a local government cloud system promotedby the government, and has been adopted by twelve groups for shared use.
The seven alliance partners across the country are also actively promoting our TASK Cloud Service. As a result, the TASK Cloud
Service has been adopted by more than 160 local municipalities as of June 30, 2021. In the current 3rd Quarter, we continued toundertake proposal activities to win new contracts, as well as supported smooth system transition of newly implementing
municipalities that completed a full-scale launch by March 2021 and those scheduled for a full-scale launch by January 2022. In
addition, we engaged in offering the latest information to enable customers to respond quickly and effectively to the project of
establishing COVID-19 vaccination systems, and provided services for the revision of the vaccination ledger system andlaunching of the COVID-19 vaccination reservation & registration system.
(2) Support for digitalization of administrative services
In an aim to contribute to promoting digital transformation of local governments, the Company provides administrative service
digitalization support solutions which support governments to achieve “no writing, no waiting, no visiting” administrative counter
services. In this 3rd Quarter, we enhanced the functionalities of the TASK Cloud Easy Counter Service System and TASK CloudMy Number Card Issuance Reservation and Management System, and also developed and completed the launch of the TASKCloud Smart Application System with the cooperation of Osaka city, Osaka Prefecture.
As a result of aggressive promotional activities of these services, the TASK Cloud Smart Application System has been adopted
by over 10 municipalities including government ordinance-designated cities such as Osaka, Kobe, and Sakai cities, the TASKCloud Easy Counter Service System is used by more than 20 municipalities, and the TASK Cloud My Number Card IssuanceReservation and Management System is adopted by over 60 municipalities.
(3) Support for digitization of local tax administrations
The Company is an authorized contractor of the Local Tax Agency, and provides a cloud-based service for the standard systems
such as inspection system for eLTAX (local tax portal system) offered by the Agency. We also develop and provide Data
Connection Services as our own functionality to connect the individual tax systems of each municipality. These services areproposed in collaboration with 50 partner companies with whom we have on-going alliance partner agreements. As a result, our
TASK Cloud Local Taxes Electronic Filing Support Service is currently used by approximately 780 agencies which account for– 11 –

more than 40% of all prefectures and local municipalities as of June 30, 2021.
In the current 3rd Quarter, we worked to enhance the functionalities of our proprietary data connection services, as well as engaged
in aggressive promotional activities and implementation support together with our partner companies.
(4) Response to standardized local public accounting
According to the report by the Study Group on the Promotion of Local Public Accounting (FY2019) released by the Ministry ofInternal Affairs and Communications in March 2020, it is believed that smooth implementation of the daily journalizing method
and reduction of checking tasks in year-end bulk journalizing can be achieved by implementing a local public accounting systemthat has an integrated financial accounting system, linking, in advance, the expenditure items with account headings, and by
establishing a system that can journalize and convert the budget items automatically upon budget execution. The report alsosuggests that “it may be possible to streamline the ledger registration tasks by linking and integrating the data in the public domain
ledger and data in the fixed assets ledger” and encourages municipalities to consider implementation of a local public accounting
system that has an integrated financial accounting system and adopt the daily journalizing method upon system updating.
The Company provides the TASK Cloud Public Accounting System, as local public accounting systems integrated with financial
accounting system which is compatible with the daily journalizing method encouraged by the Japanese government, and its related
systems TASK Cloud Non-current Assets Control System and TASK Cloud Consolidated Financial Statement Preparing System.
In the current 3rd Quarter, the Company engaged in enhancing the functions using the public accounting data from these local
public accounting systems, such as year-by-year comparison analysis and graph displays. It also received new orders from manyagencies including Sodegaura City, Chiba Prefecture and Kanuma City, Tochigi Prefecture, and provided support for the smoothsystem launch and operation. As a result, our local public accounting systems are adopted by more than 280 agencies as of June30, 2021.
(5) Research and development of next-generation products
In response to the lagging in digitization and moving online that became apparent from the spread of COVID-19, the Basic Policy
on Economic and Fiscal Management and Reform 2020 (Cabinet Decision of July 2020) positioned all-out promotion of a digital
government as top priority, and decided to speed up the implementation of digitization to “move as many administrative
procedures as possible online and make them ‘one stop and once only.’” On December 25, 2020, the Ministry of Internal Affairs
and Communications announced the Local Governments Digital Transformation (DX) Promotion Plan, and six legislative bills
on digital reform were adopted on May 12, 2021, mandating local governments to standardize and commonalize their information
systems by March 31, 2026.
To respond to the change in the environment surrounding our customers, the Company is working to accelerate the planning anddevelopment of new products as well as to strengthen customer support including the collection and communication of the latest
information.
During the current 3rd Quarter, we gathered and communicated information on the digitalization of administrative services andstandardization of operational systems, and conducted surveys, research and development on next-generation solutions throughexperimental projects with advanced organizations to support the post-COVID-19 “New Normal Lifestyle.”
5. Business activities and operating results of the Printing Business Division
The Group’s Printing BD operates with the main focus on data print services (hereinafter, “DPS”), business form printing, andprinting of commercial-use creative materials.
The DPS area continues to face failure to receive large projects from government offices, decline in contract prices due to lower
pricing, and decrease in demands for direct mail from private enterprises due to impacts of COVID-19 pandemic. Meanwhile,
thanks to orders related to COVID-19 vaccination coupons from municipalities, decrease in sales was kept to a small decrease.
Also, in view of the restart of economic activities, we approached private companies in an effort to win new contracts for direct
mails.
In the area of business form printing, sales decreased as a result of weak demands for business forms, less demands for business
forms at major accounts, and decline in use of business forms due to impacts of COVID-19 pandemic.
In the area of printing of commercial-use creative materials (catalogs, flyers, booklets, books, etc.), with the continuing
cancellation/postponement of events impacted by COVID-19 pandemic, more customers are shifting to web-based seminars andevents, and sales dropped due to decrease in orders for reference materials and flyers that used to be needed for such events.
II. Financial Conditions
Assets, liabilities and net assets at the end of the current 3rd quarter consolidated accounting period are stated below.
1. Assets– 12 –

Total assets as of the end of the current 3rd quarter consolidated accounting period amounted to 100,106 million yen, 2,435
million yen increase compared to 97,671 million yen as of the end of the previous consolidated fiscal year.
(1) Current assets
Current assets as of the end of the current 3rd quarter consolidated accounting period amounted to 36,571 million yen, a 727
million yen increase compared to 35,844 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to an increase of 567 million yen in Notes and accounts receivable.
(2) Non-current assets
Non-current assets as of the end of the current 3rd quarter consolidated accounting period amounted to 63,534 million yen, a
1,707 million yen increase compared to 61,826 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a 3,041 million yen increase in Investment securities, despite a 1,264 million yen decrease inDeferred tax assets included in Other of Investments and other assets.
2. Liabilities
Total liabilities as of the end of the current 3rd quarter consolidated accounting period amounted to 17,648 million yen, a 2,947
million yen decrease compared to 20,595 million yen as of the end of the previous consolidated fiscal year.
(1) Current liabilities
Current liabilities as of the end of the current 3rd quarter consolidated accounting period amounted to 12,318 million yen, a2,383 million yen decrease compared to 14,701 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a decrease of 2,201 million yen in Provision for bonuses.
(2) Non-current liabilities
Non-current liabilities as of the end of the current 3rd quarter consolidated accounting period amounted to 5,330 million yen, a
563 million yen decrease compared to 5,893 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a 290 million yen decrease in Provisions for stocks payment and a 253 million yen decrease inLong-term lease obligations (sublease) included in Other.
3. Net assets
Total net assets as of the end of the current 3rd quarter consolidated accounting period amounted to 82,458 million yen, a 5,382
million yen increase compared to 77,075 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to an increase of 4,152 million yen in Retained earnings and an increase of 791 million yen in
Valuation difference on available-for-sale securities.
Equity ratio as of the end of the current 3rd quarter consolidated accounting period was 82.4%, a 3.5 percentage point increase
compared to the ratio of 78.9% as of the end of the previous consolidated fiscal year.
III. Operational and Financial Challenges Facing the TKC Group
There are no significant changes in challenges faced by the TKC Group during the current 3rd quarter consolidated cumulative
period.
IV. Research and Development Activities
There were no research and development expenses spent by the TKC Group during the current 3rd quarter consolidated
cumulative period.
There are no significant changes in the status of research and development activities of the TKC Group during the current 3rdquarter consolidated cumulative period.

3 [Material Agreements, etc.]
There has been no decision or conclusion of material agreements, etc., during the current 3rd quarter consolidated accounting
period.

– 13 –

Part 3 [Information on the Company]
1 [Information on the Company’s Stock](1) [Total number of shares, etc.](i) [Total number of shares]
Class

Total number of shares authorized to be issued (shares)

Common stock

120,000,000

Total

120,000,000(Note) Based on the resolution of the Board of Directors meeting held on March 10, 2021, the Company made a partial amendment of
the Articles of Incorporation to conduct a stock split, effective as of April 1, 2021. As a result, the total number of authorizedshares of the Company was increased by 60,000,000 shares to 120,000,000 shares.
(ii) [Issued shares]

Class

Number of shares issued asof the end of 3rd quarteraccounting period (shares)(June 30, 2021)

Number of shares issued asof the filing date (shares)
August 12, 2021

Name of stock exchange
on which the Company islisted, or name of
Authorized Financial
Instruments Firms
Association

Description

Common stock

53,462,066

53,462,066

First Section of theTokyo Stock Exchange

Number of sharesconsisting a unit:
100 shares

Total

53,462,066

53,462,066－－(Note) Based on the resolution of the Board of Directors meeting held on March 10, 2021, the Company conducted a stock split of its
common shares at a ratio of 1:2, effective as of April 1, 2021. As a result, the total number of shares issued increased by
26,731,033 shares to 53,462,066 shares.
(2) [Share subscription rights, etc.](i) [Stock option scheme]
None to be disclosed.
(ii) [Other share subscription rights, etc.]
None to be disclosed.
(3) [Exercise of bonds with share subscription rights containing a clause for exercise price adjustment, etc.]
None to be disclosed.
(4) [Changes in total number of issued shares, capital stock, etc.]

Date

Increase or
decrease in total
number of issued
shares(shares)

Balance of total
number ofissued shares

26,731,033

53,462,066

April 1, 2021
(Note)(shares)

Increase or
decrease incapital stock

Balance ofcapital stock

Increase or
decrease incapital reserve

Balance ofcapital reserve(millions of yen) (millions of yen) (millions of yen) (millions of yen)
－

5,700

(Note) As a result of a stock split (1:2).
(5) [Major shareholders]
There is nothing applicable to be disclosed as the current quarter is the 3rd quarter accounting period.

– 14 –－

5,409

(6) [Voting rights]
The status of voting rights as of the end of the current 3rd quarter accounting period indicated hereunder are based on theshareholders registry as of the most recent record date (March 31, 2021) because the content of the shareholders registry as of theend of the current 3rd quarter cannot be confirmed.
(i) [Shares issued]
As of March 31, 2021
Classification

Number of shares (shares)

Number of voting rights (units)

Description

Shares without voting right

－

－

－

Shares with restricted voting right(treasury stock, etc.)

－

－

－

Shares with restricted voting right (others)

－

－

－

Shares with full voting right (treasury
stock, etc.)

Common stock

264,400－－

Shares with full voting right (others)

Common stock

26,397,700

263,977－

Shares less than one share unit

Common stock

68,933－－

Total number of shares issued

26,731,033－－

Total voting rights held by all
shareholders－

263,977－(Notes) 1. Shares with full voting right (others) includes 600 shares (6 units of voting rights) registered in the name of Japan Securities
Depository Center, Inc., and 111,500 shares (1,115 units of voting rights) owned by the BIP Trust.
2. The Company conducted a stock split of its common shares at a ratio of 1:2, effective as of April 1, 2021. The above numbersof shares and number of voting rights are figures prior to the stock split.
(ii) [Treasury stock, etc.]

Name of shareholder

TKC Corporation
Total

As of March 31, 2021
Percentage ofTotal shares held shares held to the(shares)
total number ofissued shares (%)

Number of shares
held under own
name (shares)

Number of shares
held under othernames (shares)

1758 Tsurutamachi,
Utsunomiya-shi,
Tochigi

264,400－

264,400

0.99－

264,400－

264,400

0.99

Address ofshareholder(Notes) 1. In addition to the above, the 111,500 shares owned by the BIP Trust are recorded as treasury stocks. The number of treasury
stocks owned by the BIP Trust as of the end of the current 3rd quarter accounting period was 109,900 shares (219,800 shares
after taking into consideration the stock split).
2. The Company conducted a stock split of its common shares at a ratio of 1:2, effective as of April 1, 2021. The above numbersof shares held are the numbers prior to the stock split.

2 [Officers]
There has been no change in the officers during the current quarter cumulative period since the date of submission of the Annual
Securities Report for the previous fiscal year.

– 15 –

Part 4 [Financial Information]
1. Method of Preparing Quarterly Consolidated Financial Statements
The quarterly consolidated financial statements of the Company have been prepared in accordance with the Ordinance on
Terminology, Forms, and Preparation Methods of Quarterly Consolidated Financial Statements (Cabinet Office Ordinance No.64
of 2007).

2. Auditing and Attestation
The quarterly consolidated financial statements of the Company for the 3rd quarter consolidated accounting period (from April 1,
2021 to June 30, 2021) and the 3rd quarter consolidated cumulative period (from October 1, 2020 to June 30, 2021) have been
audited by Ernst & Young ShinNihon LLC pursuant to the provision of Article 193-2, Paragraph 1 of the Financial Instruments
and Exchange Act of Japan.

– 16 –

1 [Quarterly Consolidated Financial Statements](1) [Quarterly consolidated balance sheets]
Previous consolidated fiscal year
(September 30, 2020)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable–trade
Inventories
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures (net amount)
Land
Other (net amount)
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term deposits
Guarantee deposits
Other
Total investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable–trade
Electronically recorded obligations–operating
Shore-term loans payable
Accounts payable–other
Income taxes payable
Provisions for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Retirement benefit liabilities
Provisions for stocks payment
Other
Total non-current liabilities
Total liabilities– 17 –(Unit: millions of yen)
Current 3rd quarter consolidated
accounting period(June 30, 2021)

26,769
7,014
723
1,357
(19)
35,844

26,178
7,581
468
2,359
(15)
36,571

8,182
6,911
2,699
17,794
3,120

7,831
6,911
2,742
17,486
3,358

16,282
14,6001,438
8,591
40,911
61,826
97,671

19,323
14,6001,434
7,330
42,68963,534
100,106

2,181
802
142
4,227
2,549
3,673
1,124
14,701

1,993
1,122
98
3,440
644
1,471
3,546
12,318

295
3,400
599
1,598
5,893
20,595

250
3,473
308
1,297
5,330
17,648

Previous consolidated fiscal year
(September 30, 2020)
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Accumulated remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets– 18 –(Unit: millions of yen)
Current 3rd quarter consolidated
accounting period(June 30, 2021)

5,700
6,588
68,533(1,660)79,161

5,700
6,588
72,685(1,351)
83,623(553)(1,532)(2,085)77,07597,671238(1,403)(1,164)82,458100,106

(2) [Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income][Quarterly consolidated statements of income][3rd quarter consolidated cumulative period]

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Insurance dividends income
Land and house rent received
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on sale of securities
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Other
Total extraordinary income
Extraordinary losses
Loss on sale of non-current assets
Loss on retirement of non-current assets
Loss on valuation of investment securities
Total extraordinary losses
Quarterly net income before taxes and adjustments
Income taxes–current
Income taxes–deferred
Total income taxes
Quarterly net income
Quarterly net loss attributable to non-controlling interests
Quarterly net profit attributable to owners of parent

Previous 3rd quarter consolidated
cumulative period(Started October 1, 2019;
ended June 30, 2020)
51,31017,222
34,08824,1109,977(Unit: millions of yen)
Current 3rd quarter consolidated
cumulative period(Started October 1, 2020;
ended June 30, 2021)
49,587
14,28835,29823,796
11,502

26
146
3
37
55
269

39
150
12
38
65
306

1
－
0
0
1
10,245000－011,808

1
－
－
1

1
8
0
10

－
21
－
21
10,225
2,729
723
3,453
6,771
(20)
6,792

22
15
89
126
11,692
2,700
1,030
3,730
7,961
－
7,961

– 19 –

[Quarterly consolidated statements of comprehensive income][3rd quarter consolidated cumulative period]

Quarterly net income
Other comprehensive income
Valuation difference on available-for-sale securities
Remeasurements of retirement benefits
Total other comprehensive income
Quarterly comprehensive income(Breakdown)
Quarterly comprehensive income attributable to owners ofparentQuarterly comprehensive income attributable to noncontrolling interests(Unit: millions of yen)Previous 3rd quarter consolidated Current 3rd quarter consolidated
cumulative period
cumulative period(Started October 1, 2019;(Started October 1, 2020;
ended June 30, 2020)
ended June 30, 2021)
6,771
7,961

– 20 –

(602)
128
(473)
6,298

791
128
920
8,881

6,320

8,881

(22)

－

[Notes to Financial Statements](Changes in Accounting Policies)
As it has become possible to apply the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 30, 2018)(hereinafter, “Revenue Recognition Accounting Standard”) and Implementation Guidance on Accounting Standard for Revenue
Recognition (ASBJ Guidance No. 30, March 30, 2018) from the beginning of a consolidated fiscal year commencing after April
1, 2018, the Company applies the Revenue Recognition Accounting Standard, etc. from the beginning of the 1st quarter
consolidated accounting period. Accordingly, we will recognize revenues at the time the controls over promised goods or services
are transferred to customers, in the amounts that we expect to receive in exchange for such goods or services.
Conventionally, we have been recognizing the total amounts of compensation received from customers as revenue for sometransactions, but going forward, for transactions in which the Group acts as agent in the provision of goods or services to customers,
we will recognize as revenues, the net amount after deducting the amounts we pay to suppliers from the amounts we receive from
customers.
In applying the Revenue Recognition Accounting Standard, etc., we have followed the transitional measures set forth in the notes
to Section 84 of the Revenue Recognition Accounting Standard. Therefore, we have adjusted the retained earnings at the beginningof the 1st quarter consolidated accounting period to include the cumulative effects of retroactive application of the new accounting
policy prior to the beginning of the said period, and applied the new accounting policy to the balance at the beginning of the said
period.
As a result, the amounts of cumulative effects are reflected in the net assets at the beginning of the 1st quarter consolidated
accounting period, and the beginning balance of retained earnings has decreased by 367 million yen.
Also, compared to the conventional method, net sales for the current 3rd quarter consolidated cumulative period decreased by
2,019 million yen, cost of sales decreased by 1,939 million yen, and the amounts of operating income, ordinary income, andquarterly net income before taxes and adjustments decreased by 80 million yen each.
(Additional Information)(Stock-based compensation plan for officers)
1. Outline of transaction
Based on the resolution of the Board of Directors’ Meeting held on October 31, 2018 followed by approval at the Ordinary General
Meeting of Shareholders held on December 21, 2018, the Company introduced a stock-based compensation plan called “BIP
Trust.” The objectives of the plan are to clarify the linkage between the Company’s shareholder value and the remuneration for
Directors, etc. and to motivate Directors, etc. to contribute more to enhancing the medium- to long-term corporate value by sharing
common interest with shareholders, including not only the merit derived from the rising share price, but also the risk associatedwith the decline in share price.
The proposal to change the stock-based compensation plan for Directors, etc. (excluding Directors not holding executive positions)and Full-time Auditors to performance-linked compensation has been deliberated by the Nomination and Compensation Advisory
Committee whose chairperson and half of the members are independent Outside Directors and outside experts, and approved at
the Ordinary General Meeting of Shareholders held on December 20, 2019.

2. Stocks of the Company remaining in trust
The stocks of the Company remaining in trust are recorded as treasury stock under net assets with the book values in the trust (notincluding expenses attributable thereto). The book value of said treasury stocks was 434 million yen for 219,800 shares as of theend of this current 3rd quarter consolidated accounting period.
(Note) The Company conducted a stock split of its common shares at a ratio of 1:2 as of April 1, 2021. The number of stocks has
been calculated assuming that the stock split was conducted at the beginning of the previous consolidated fiscal year.

(Application of tax effect accounting for the transition from the consolidated taxation system to Group tax sharing system)
Based on the treatment set forth under Item 3 of the Treatment of Tax Effect Accounting for the Transition from the Consolidated
Taxation System to the Group Tax Sharing System (Practical Solution No. 39, March 31, 2020), the Company and its consolidated
subsidiaries do not implement the provisions of Paragraph 44 of the Implementation Guidance on Accounting Standard for Tax
Effect Accounting (ASBJ Guidance No. 28, February 16, 2018) for items that were transitioned to the group tax sharing system
which was established in the Law for Partial Revisions to the Income Tax Act, etc. (Law No. 8 of 2020) and items that wererevised under the non-consolidated taxation system in line with the transition to the group tax sharing system. The amounts ofdeferred tax assets and deferred tax liabilities are based on the provisions of the Tax Act prior to revisions.

– 21 –

(Notes to the quarterly consolidated statements of cash flows)
The Company does not prepare the quarterly consolidated statements of cash flows for the current 3rd quarter consolidated
cumulative period. The depreciation (including amortization of intangible assets) for the current 3rd quarter consolidated
cumulative period is as follows:
Previous 3rd quarter consolidated
cumulative period(Started October 1, 2019;
ended June 30, 2020)
2,286 million yen

Depreciation

Current 3rd quarter consolidated
cumulative period(Started October 1, 2020;
ended June 30, 2021)
2,172 million yen(Notes to shareholders’ equity, etc.)
I. Previous 3rd quarter consolidated cumulative period (Started October 1, 2019; ended June 30, 2020)
Dividend payments
Resolution
December 20, 2019
Ordinary General
Meeting of
Shareholders
May 1, 2020
Meeting of theBoard of Directors

Total amount of
Dividend perClass of shares cash dividends
share (yen)(millions of yen)

Record date

Effective date

Source ofdividends

Common stock

1,456

55

September 30, 2019

December 23, 2019

Retainedearnings

Common stock

1,455

55

March 31, 2020

June 15, 2020

Retainedearnings(Notes) 1. The total amount of cash dividends determined by resolution of the Ordinary General Meeting of Shareholders on December
20, 2019 includes a cash dividend of 10 million yen to the stocks of the Company owned by the BIP Trust.
2. The total amount of cash dividends determined by resolution of the Board of Directors on May 1, 2020 includes a cash
dividend of 10 million yen to the stocks of the Company owned by the BIP Trust.
3. The Company conducted a stock split of its common shares at a ratio of 1:2 as of April 1, 2021. The dividend per shareshows the amount prior to the stock split.
II. Current 3rd quarter consolidated cumulative period (Started October 1, 2020; ended June 30, 2021)
Dividend payments
Resolution

Total amount of Dividend perClass of shares cash dividends share (yen)(millions of yen)

Record date

Effective date

Source ofdividends

December 18, 2020
Ordinary General
Meeting of
Shareholders

Common stock

1,720

65

September 30, 2020

December 21, 2020

Retainedearnings

May 7, 2021
Meeting of theBoard of Directors

Common stock

1,720

65

March 31, 2021

June 14, 2021

Retainedearnings(Notes) 1. The total amount of cash dividends determined by resolution of the Ordinary General Meeting of Shareholders on December
18, 2020 includes a cash dividend of 12 million yen to the stocks of the Company owned by the BIP Trust.
2. The total amount of cash dividends determined by resolution of the Board of Directors on May 7, 2021 includes a cash
dividend of 7 million yen to the stocks of the Company owned by the BIP Trust.
3. The Company conducted a stock split of its common shares at a ratio of 1:2 as of April 1, 2021. The dividend per shareshows the amount prior to the stock split.

– 22 –

(Segment information, etc.)[Segment information]
I.

Previous 3rd quarter consolidated cumulative period (Started October 1, 2019; ended June 30, 2020)
Information on net sales and profit or loss for each reportable segment(Unit: millions of yen)Amounts inquarterly
Adjustments
consolidated(Note 1)statements
of income(Note 2)

Reportable segment
Accounting
Firm BD

Local
Governmen
ts BD

Printing BD

34,917

13,763

2,629

51,310－51,310

6

0

1,763

1,770

(1,770)－Total

34,924

13,763

4,393

53,081(1,770)51,310

Segment profit

8,649

1,104

229

9,984

(6)

9,977

Total

Net sales(1) Sales to outside customers(2) Inter-segment sales ortransfers(Notes) 1. Adjustments of segment profit of -6 million yen include amounts for elimination of inter-segment transactions andadjustment of inventory assets.
2. Segment profit is adjusted with the operating profit presented in the quarterly consolidated statements of income.
II. Current 3rd quarter consolidated cumulative period (Started October 1, 2020; ended June 30, 2021)
1.Information on net sales and profit or loss for each reportable segment
Reportable segment(Unit: millions of yen)Amounts inquarterly
Adjustment
consolidatedsstatements of(Note 1)income(Note 2)

Accounting
Firm BD

Local
Governmen
ts BD

Printing BD

33,341

13,8382,408

49,587－49,587

4

0

1,698

1,702

(1,702)－

Total

33,345

13,8384,106

51,290(1,702)

49,587

Segment profit

9,050

2,298

147

11,495

6

11,502Total

Net sales(1) Sales to outside customers(2) Inter-segment sales ortransfers(Notes) 1. Adjustments of segment profit of 6 million yen include amounts for elimination of inter-segment transactions andfor adjustments of inventory assets, etc.
2. Segment profit is adjusted with the operating profit presented in the quarterly consolidated statements of income.
2.Changes, etc. to reportable segments
As stated in the (Changes in Accounting Policies), the Company applies the Revenue Recognition Accounting Standard, etc.
from the beginning of the 1st quarter consolidated accounting period, and changed its accounting processing methods onrevenue recognition. As such, the method of measurements of profit/loss of the reportable segments have been changed
accordingly.
As a result of these changes, compared to the conventional method, for the current 3rd quarter consolidated cumulative
period: for the Accounting Firm BD, net sales decreased by 1,850 million yen, and segment profit decreased by 141 million
yen; for the Local Governments BD, net sales decreased by 137 million yen, and segment profit increased by 60 million yen;and for the Printing BD, net sales decreased by 32 million yen.

– 23 –

(Earnings per share information)
The amount of quarterly net income per share and the basis for the calculation thereof are as follows:
Previous 3rd quarter consolidated
cumulative period(Started October 1, 2019;
ended June 30, 2020)

Current 3rd quarter consolidated
cumulative period(Started October 1, 2020;
ended June 30, 2021)

129.23 yen

151.19 yen

6,792

7,961

－

－

6,792

7,961

525,598

526,543

Quarterly net income per share(Basis for calculation)
Quarterly net income attributable to owners ofparent (millions of yen)Amount not attributable to common shareholders(millions of yen)
Quarterly net income from common stocks
attributable to owners of parent (millions of yen)
Average number of common stocks outstanding(hundreds of shares)(Notes) 1. The average number of stocks outstanding used in the calculation of earnings per share information has been determinedby including the stocks of the Company owned by the BIP Trust (which has been established with the introduction of the
BIP Trust plan) as deductible treasury stocks.
The average numbers of said treasury stocks outstanding deducted for the calculation of quarterly net income per share
were 380,386 shares for the previous 3rd quarter consolidated cumulative period, and 279,391 shares for the current 3rdquarter consolidated cumulative period.
2. The quarterly diluted net income per share is not stated as there were no dilutive shares.
3. The Company conducted a stock split of its common shares at a ratio of 1:2 as of April 1, 2021. The quarterly net income
per share has been calculated assuming that the stock split was conducted at the beginning of the previous consolidated
fiscal year.
(Material subsequent events)
None to be disclosed.

2 [Other]
The resolution regarding the current interim dividends was adopted at the Board of Directors’ meeting held on May 7, 2021, statedas follows.
(a) Total amount of cash dividends to be paid as interim dividends

1,720 million yen(b) Dividend per share

65.00 yen(c) Effective date for payment claim and commencement date for payment

June 14, 2021

(Notes) 1. Dividends are payable to the shareholders listed or recorded on the Register of Shareholders as of March 31, 2021.
2. Because the record date is March 31, 2021, the dividend per share shows the amount prior to the stock split
which was effected as of April 1, 2021.

– 24 –

Section 2 [Information on Guarantors, etc. of the Company]
None to be disclosed.

– 25 –

Quarterly Review Report of Independent Auditors
August 12, 2021

TKC Corporation
To: The Board of Directors
Ernst & Young ShinNihon LLC
Tokyo Office

Designated Limited
Liability Partner
Executing Partner

Certified Public
Kanji Tako
Accountant(seal)

Designated Limited
Liability Partner
Executing Partner

Certified Public
Toru Iizuka
Accountant(seal)

Auditor's Conclusion
Pursuant to the provision of Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act of Japan, we haveconducted a review of the quarterly consolidated financial statements of the consolidated fiscal year of the Company(started from October 1, 2020 and ending September 30, 2021) for the 3rd quarter consolidated accounting period (from
April 1, 2021 to June 30, 2021) and for the 3rd quarter consolidated cumulative period (from October 1, 2020 to June30, 2021) stated in [Financial Information], namely, the quarterly consolidated balance sheets, quarterly consolidated
statements of income, quarterly consolidated statements of comprehensive income, and notes.
Based on our quarterly review, nothing has come to our attention that causes us to believe that the quarterly consolidated
financial statements referred to above does not properly represent, in all material respects, the financial conditions of
TKC Corporation and its consolidated subsidiaries as of June 30, 2021 and their operating results for the 3rd quarter
consolidated cumulative period ending on the same date in accordance with accounting principles of quarterly
consolidated financial statements generally accepted in Japan.
Basis for Auditor's Conclusion
We conducted our quarterly review in accordance with quarterly review standards generally accepted in Japan. Our
responsibilities under those standards for quarterly reviews are further described in the Auditor’s Responsibilities for the
Quarterly Review of the Quarterly Consolidated Financial Statements section of our report. We are independent of theCompany and its consolidated subsidiaries in accordance with the ethical requirements that are relevant to our audit of
the financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that we have obtained evidences to support the basis for our conclusion.
Emphasis of Matter
As stated in the Notes (Changes in Accounting Policies), the Company applies the Accounting Standard for Revenue
Recognition (ASBJ Statement No. 29, March 30, 2018) and Implementation Guidance on Accounting Standard for
Revenue Recognition (ASBJ Guidance No. 30, March 30, 2018) from the 1st quarter consolidated accounting period.
Our opinion is not modified in respect of this matter.
Responsibilities of Management, Corporate Auditors and Board of Auditors for the Quarterly Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the quarterly consolidated financial statements inaccordance with principles setting forth the preparation and proper presentation of the quarterly consolidated financial
statements generally accepted in Japan. Responsibilities include those for designing and operating an internal control
system as the management deems necessary in order to prepare and properly present the quarterly consolidated financial
statements that are free from material misstatement due to fraud or error.
In preparing the quarterly consolidated financial statements, management is responsible for assessing the Group’s ability
to continue as a going concern and disclosing, as required by accounting principles of quarterly consolidated financial– 26 –

statements generally accepted in Japan, matters related to going concern.
Corporate auditors and the Board of Auditors are responsible for overseeing the Directors’ performance of their duties
including the design and implementation of the Group’s financial reporting process.
Auditor’s Responsibilities for the Quarterly Review of the Quarterly Consolidated Financial Statements
Our responsibility is to express, in the quarterly review report, an independent conclusion regarding the quarterly
consolidated financial statements based on our quarterly review.
As part of our audit in accordance with the quarterly review standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the quarterly review. We also:• Principally make inquiries to the management and persons responsible for financial and accounting matters, andperform analytical procedures and other quarterly review procedures. The quarterly review procedure is a limited
procedure compared to the procedure of auditing the annual financial statements performed in accordance withauditing standards generally accepted in Japan.
• If we determine that a material uncertainty exists related to events or conditions that may cast significant doubt on theGroup’s ability to continue as a going concern, conclude, based on the evidence obtained, whether anything has cometo our attention that causes us to believe that the quarterly consolidated financial statements are not properly presented
in accordance with accounting principles of quarterly consolidated financial statements generally accepted in Japan.
If we conclude that a material uncertainty exists on the Group’s ability to continue as a going concern, we are required
to draw attention in our quarterly review report to the related disclosures in the quarterly consolidated financial
statements or, if such disclosures are inadequate, to express a limited conclusion or negative conclusion on thequarterly consolidated financial statements. Our conclusions are based on the audit evidence obtained up to the dateof our quarterly review report. However, future events or conditions may cause the Group to cease to continue as agoing concern.
• Evaluate whether anything has come to our attention that causes us to believe that the presentation and disclosures in
the quarterly consolidated financial statements are not in accordance with accounting principles generally accepted inJapan; the overall presentation, structure and content of the quarterly consolidated financial statements, including thedisclosures; and whether anything has come to our attention that causes us to believe the quarterly consolidated
financial statements do not represent the underlying transactions and events in a matter that achieves fair presentation.
• Obtain evidence regarding the financial information of the Company and its consolidated subsidiaries to express an
opinion on the quarterly consolidated financial statements. We are responsible for the direction, supervision andperformance of the quarterly review of the quarterly consolidated financial statements. We remain solely responsible
for our audit opinion.
We communicate with corporate auditors and the Board of Auditors regarding the planned scope and timing of thequarterly review and significant findings therein.
We also provide corporate auditors and the Board of Auditors with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
Interest
Our firm and the executing partners have no interest in the Company or its consolidated subsidiaries which should be
disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
End of document(Notes) 1. The above is a digitized version of the original copy of the quarterly review report, the original of which isstored by TKC Corporation (the Company filing this quarterly report).
2. XBRL data is not included in the scope of this quarterly review.

– 27 –

[Front Cover][Document filed]

Confirmation Letter[Applicable law]

Article 24-4-8, Paragraph 1 of the Financial Instruments and Exchange Act of Japan[Filed with]

Director of Kanto Local Finance Bureau[Date filed]

August 12, 2021

[Company name]

Kabushiki Kaisha TKC[Company name in English]

TKC Corporation[Title and name of representative]

Masanori Iizuka, Representative Director, President and Executive Officer[Title and name of Chief Financial Officer]

Kiyotsugu Nakanishi, Director & Executive Officer, Chief Director of Business
Administration[Address of head office]1758 Tsurutamachi, Utsunomiya-shi, Tochigi[Place available for public inspection]

TKC Corporation, Tokyo Head Office(2-1 Ageba-cho, Shinjuku-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1 Nihonbashikabutocho, Chuo-ku, Tokyo)– 28 –

1 [Matters Related to Adequacy of Statements Contained in the Quarterly Report]
Masanori Iizuka, Representative Director, President and Executive Officer of the Company and Kiyotsugu Nakanishi, Chief
Financial Officer of the Company hereby confirm that the statements contained in the quarterly report for the 3rd quarter of the
55th term (started April 1, 2021; ended June 30, 2021) are adequate under the Financial Instruments and Exchange Act of Japan.

2 [Special Notes]
None to be disclosed.

– 29 –