Annual Securities Report(Report based on Article 24, Paragraph 1 of the
Financial Instruments and Exchange Act of Japan)
Fiscal year
Started October 1, 2022
(57th Term)
ended September 30, 2023

Kabushiki Kaisha TKC
1758 Tsurutamachi, Utsunomiya-shi, Tochigi(E04807)
This report (from the Cover onward) is a print out of the English translation of the (electronic) disclosure document filed with EDINET.

- 1 -Contents
Page[Front Cover]Section 1 [Information on the Company] ........................................................................ 4
Part 1 [Overview of the Company] ........................................................................... 4
1 [Key Financial Data] .................................................................................. 4
2 [History] ............................................................................................ 7
3 [Description of Business] ............................................................................... 9
4 [Information on Affiliates] ............................................................................. 12
5 [Employees] ........................................................................................ 13
Part 2 [Business Overview] ................................................................................ 15
1 [Management Policy, Business Environment and Challenges Faced by the Company] ............................... 15
2 [Approach and Initiatives Concerning Sustainability] ........................................................ 20
3 [Risk Factors] ....................................................................................... 24
4 [Management Analysis of Consolidated Financial Conditions, Operating Results, and Cash Flows] .................... 26
5 [Material Agreements, etc.] ............................................................................ 37
6 [Research and Development Activities] ................................................................... 37
Part 3 [Property, Plant and Equipment] ....................................................................... 38
1 [Summary of Capital Investments] ....................................................................... 38
2 [Major Property, Plant and Equipment] ................................................................... 38
3 [Plans for Capital Investments, Disposals of Property, Plant and Equipment] ...................................... 40
Part 4 [Information on the Company] ........................................................................ 41
1 [Information on the Company’s Stock] ................................................................... 41(1) [Total number of shares, etc.] ....................................................................... 41(2) [Share subscription rights, etc.] ...................................................................... 41(3) [Exercise of bonds with share subscription rights containing a clause for exercise price adjustment, etc.] ............. 41(4) [Changes in total number of issued shares, capital stock, etc.] .............................................. 41(5) [Shareholders Composition] ........................................................................ 42(6) [Major Shareholders] .............................................................................. 42(7) [Status of Voting Rights] ........................................................................... 43(8) [Information on Employee Stock Ownership Plan] ....................................................... 43
2 [Acquisition, etc. of Treasury Stocks] .................................................................... 45
3 [Dividend Policy] .................................................................................... 46
4 [Corporate Governance] ............................................................................... 47(1) [Overview of Corporate Governance] ................................................................. 47(2) [Officers] ....................................................................................... 61(3) [Audits] ........................................................................................ 67(4) [Officers’ Compensation, etc.] ....................................................................... 71(5) [Status of Shareholdings] ........................................................................... 74
Part 5 [Financial Information] .............................................................................. 76
1. [Consolidated Financial Statements] ..................................................................... 77(1) [Consolidated Financial Statements] .................................................................. 77(2) [Other] ........................................................................................ 115
2 [Non-Consolidated Financial Statements, etc.]............................................................. 116(1) [Non-Consolidated Financial Statements] ............................................................. 116(2) [Major Assets and Liabilities] ...................................................................... 127(3) [Other] ........................................................................................ 127
Part 6 [Stock-related Administration of the Company] .......................................................... 128
Part 7 [Reference Information on the Company] ............................................................... 129
1 [Information on the Parent Company] ................................................................... 129
2 [Other Reference Information] ......................................................................... 129
Section 2 [Information on Guarantors, etc., of the Company] ....................................................... 130[Audit Report] [Confirmation Letter] [Internal Control Report]- 2 -[Front Cover][Document filed]Annual Securities Report[Applicable law]

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

Director of Kanto Local Finance Bureau[Date filed]December 18, 2023

[Fiscal year]

57th term (from October 1, 2022 to September 30, 2023)[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, Managing Executive Officer, Chief of the Business
Administration Headquarters[Contact address]

2-1 Agebacho, Shinjuku-ku, Tokyo[Phone number]

03-3235-5511[Contact person]

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

TKC Corporation, Tokyo Head Office(2-1 Agebacho, 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](1) Consolidated Financial Data, etc.
Fiscal year

53rd Term

Year endyen)

Ordinary income
Net income attributable toowners of parent
Comprehensive income(millions ofyen)(millions ofyen)(millions ofyen)(millions of

Net assets

yen)

Total assets

55th Term

56th Term

57th Term

September 2019 September 2020 September 2021 September 2022 September 2023
(millions of

Net sales

54th Term(millions ofyen)

66,12067,814

66,221

67,83871,915

9,669

11,685

12,673

13,677

14,772

6,721

7,821

8,686

9,317

10,826

4,082

7,501

9,839

8,902

13,21073,121

77,07583,41687,32595,30896,98997,671

103,406

109,225

116,356

Net assets per share(yen)

1,362.39

1,466.56

1,582.45

1,665.68

1,827.70

Net income per share(yen)

127.76148.81164.93177.62206.54

Diluted net income per share(yen)

127.50－－－－Equity ratio

(%)

73.8

78.9

80.7

80.0

81.9

Return on equity (ROE)

(%)

9.4

10.5

10.8

10.9

11.9

Price earnings ratio (PER)(times)

18.3

22.9

21.3

19.3

17.6

Cash flows from operating
activities(millions of

10,55010,56910,55013,05013,067

Cash flows from investing(millions of

411(10,124)(7,201)(4,342)(5,861)(3,792)(3,786)(3,691)(5,214)(5,571)

26,81023,46923,126

26,62028,793

2,701

2,770

2,851

2,880

2,895

activities

yen)
yen)

Cash flows from financing
activities(millions ofyen)Cash and cash equivalents at
end of year
No. of employees(millions ofyen)(No. of people)(Notes) 1. The Company introduced the Board Incentive Plan (BIP) Trust starting from the 2nd quarter consolidated accounting
period of the 53rd Term, and recorded the stocks held by said Trust as treasury stocks. Accordingly, for the purpose of
calculating the net income per share, they are included in the treasury stocks to be deducted in calculating the average
number of shares outstanding.
2. Diluted net income per share is not stated from the 54th term and beyond 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. Net assets per share, net
income per share, and diluted net income per share have been calculated assuming that the stock split was conducted at
the beginning of the 53rd Term.
4. The reason for decrease in net sales in the 55th Term compared to the 54th Term is because the Company started early
application of the Accounting Standard for Revenue Recognition, etc. from the beginning of the 55th Term.

- 4 -(2) Financial Data, etc. of the Company
Fiscal year

53rd Term

Year endyen)

Ordinary income
Net income
Capital stock
Total number of shares issued(millions ofyen)(millions ofyen)(millions ofyen)(hundredshares)(millions of

Net assets

yen)

Total assets
Net assets per share

55th Term

56th Term

57th Term

September 2019 September 2020 September 2021 September 2022 September 2023
(millions of

Net sales

54th Term(millions of
yen)

(yen)

Dividend per share

60,897

63,07061,637

63,57067,660

8,972

11,107

12,064

13,29014,057

6,262

7,472

8,293

9,076

10,334

5,700

5,700

5,700

5,700

5,700

267,310

267,310534,620534,620531,664

70,622

74,71480,491

83,99391,28888,192

89,767

95,264

100,776

107,401

1,343.47

1,421.63

1,526.97

1,602.11

1,750.60

110.00120.00104.50

78.00

90.00

(55.00)(55.00)(65.00)(36.00)(39.00)(Of the above, interim dividends
per share)(yen)

Net income per share(yen)

119.04142.18157.46173.04

197.15

Diluted net income per share(yen)

118.79－－－－Equity ratio

(%)

80.1

83.2

84.5

83.3

85.0

Return on equity (ROE)

(%)

9.0

10.3

10.7

11.0

11.8

Price earnings ratio (PER)(times)

19.7

23.9

22.3

19.8

18.5

Dividend payout ratio

(%)

46.20

42.20

45.70

45.10

45.70

(No. of people)

2,288

2,312

2,398

2,408

2,409

Total shareholder return

(%)

100.7

148.1

155.7

155.4

168.0

(Benchmark index: TOPIX total
return index)(%)(89.6)(94.0)(119.9)(111.3)(144.5)

Stock price—high

(yen)

5,030

7,270

3,645

3,970

Stock price—low

(yen)

3,350

3,820

2,911

3,375

No. of employees

3,910(7,840)3,175(6,190)(Notes) 1. Dividends per share include special dividends of 7 yen for the 55th Term, 6 yen for the 56th Term and 12 yen for the 57th
Term.
The Company conducted a stock split of its common shares at a ratio of 1:2 as of April 1, 2021. Dividend of 104.50 yen per
share for the 55th Term is the sum of an interim dividend of 65 yen per share prior to this stock split, and a year-end dividendof 39.50 yen per share after said stock split. If the stock split were taken into consideration, the interim dividend of 65.00
yen would have been 32.50 yen, and the total annual dividends per share would have been 72 yen.
2. The Company introduced the Board Incentive Plan (BIP) Trust starting from the 2nd quarter accounting period of the 53rdTerm, and recorded the stocks held by said Trust as treasury stocks. Accordingly, for the purpose of calculating the net
income per share, they are included in the treasury stocks to be deducted in calculating the average number of shares
outstanding.
3. Diluted net income per share is not stated from the 54th term and beyond as there were no dilutive shares.
4. The Company conducted a stock split of its common shares at a ratio of 1:2 as of April 1, 2021. Net assets per share, net- 5 -income per share, and diluted net income per share have been calculated assuming that the stock split was conducted at the
beginning of the 53rd Term.
Total shareholder return has been calculated taking into consideration said stock split.
5. The reason for decrease in net sales in the 55th Term compared to the 54th Term is because the Company started early
application of the Accounting Standard for Revenue Recognition, etc. from the beginning of the 55th Term.
6. The highest and lowest stock prices have been in the Tokyo Stock Exchange Prime Market since April 4, 2022 and were in
the First Section of the Tokyo Stock Exchange before that.
The Company conducted a stock split of its common shares at a ratio of 1:2 as of April 1, 2021. The stock prices for the
55th Term show the highest and lowest stock prices after the stock split; the figures in (parentheses) show the highest andlowest stock prices before the stock split.

- 6 -2 [History]
Date
October 1966

Company History
The Company was established in Utsunomiya-shi, Tochigi Prefecture on October 22, 1966 as a dataprocessing center to defend the business domains and maintain control over the fate of accounting firms,
and to improve the administrative efficiency of local governments.

August 1971
September 1972

Established Kabushiki Kaisha Tochigi-ken Keisan Center.
Established TKC Tokyo Keisan Center and deployed data processing centers nationwide.
Established TKC Tokyo Youhin Center Co., Ltd. (a subsidiary, changed name to TKC Tokyo Supply Center
Co., Ltd. in December 1993). [Merged and absorbed into the Company in January 2000]
Established TKC Osaka Keisan Center Co., Ltd. (a subsidiary, changed name to TKC Osaka Youhin Center
Co., Ltd. in July 1987, and to TKC Osaka Supply Center Co., Ltd. in December 1993).
[Merged and absorbed into the Company in January 2000]
Established TKC Okayama Keisan Center Co., Ltd. (changed name to TKC Chushikoku Youhin Center
Co., Ltd. in July 1987, and to TKC Chushikoku Supply Center Co., Ltd. in December 1993).
(Subsidiary) [Merged and absorbed into the Company in January 2000]

November 1972

Changed corporate name to Kabushiki Kaisha TKC.
Established TKC Tohoku Keisan Center Co., Ltd. (a subsidiary, changed name to TKC Tohoku Youhin
Center Co., Ltd. in July 1987, and to TKC Tohoku Supply Center Co., Ltd. in December 1993). [Merged
and absorbed into the Company in January 2000]

December 1972

Established TKC Nagoya Keisan Center Co., Ltd. (a subsidiary, changed name to TKC Chubu Youhin
Center Co., Ltd. in July 1987, and to TKC Chubu Supply Center Co., Ltd. in December 1993). [Merged
and absorbed into the Company in January 2000]

November 1973

Established TKC Kyushu Keisan Center Co., Ltd. (a subsidiary, changed name to TKC Kyushu Youhin
Center Co., Ltd. in July 1987, and to TKC Kyushu Supply Center Co., Ltd. in December 1993). [Merged

August 1975

Established Tokyo Line Printer Company (currently a consolidated subsidiary).

and absorbed into the Company in January 2000]
February 1976

Established TKC Saitama Keisan Center Co., Ltd. (a subsidiary, changed name to TKC Kanshin Youhin
Center Co., Ltd. in July 1987, and to TKC Kanshin Supply Center Co., Ltd. in December 1993). [Merged
and absorbed into the Company in January 2000]

January 1978

Opened TKC Systems Development Research Center.

October 1982

Established TKC Security Services Co., Ltd. (currently a consolidated subsidiary).

October 1984

Opened TKC Tax Research Center.

February 1985

Established TKC Management Consulting Co., Ltd. (a subsidiary). [Merged and absorbed into the Company

April 1985

in May 2011]
Opened TKC Okinawa Information Service Center and started deploying information service centers

August 1985

nationwide.
Opened OA Technology Development Center.

December 1986

Changed corporate name in the Articles of Incorporation to Kabushiki Kaisha TKC (TKC Corporation).

June 1987

Changed names of Keisan Centers to Information Centers.

July 1987

Listed on the Second Section of the Tokyo Stock Exchange.

September 1987

Opened TASK Technology Development Center.
Integrated the information processing service divisions of TKC Tokyo Second Information Center, TKC

March 1990

Shinjuku-Minami Information Center and TKC Ikebukuro Information Center to form TKC Tokyo
Consolidated Information Center.

April 1990

Established TKC Corporation Strategic Management Research Center. [Merged and absorbed into theCompany in October 2000]

June 1991

Opened TKC Data Entry Center.

January 1992

Opened TKC Precedent Retrieval Service Center.

November 1992

Integrated the information processing service divisions of TKC Osaka Information Center, TKC Kyoto
Information Center and TKC Hyogo Information Center to form TKC Kansai Consolidated Information
Center.

February 1994

Opened Systems Development Center.

- 7 -

Date

Company History

March 1996

Listed on the First Section of the Tokyo Stock Exchange.

January 1998

Integrated the information processing service divisions of TKC Nagoya Information Center, TKC Shizuoka
Information Center and TKC Nagano Information Center to form TKC Chubu Consolidated Information
Center.

June 1998

Opened New Systems Development Center.

June 1999

Acquired shares in SKYCOM Corporation (currently a consolidated subsidiary).

July 1999

The systems development division obtained ISO9001 quality management systems certification.

March 2001

Integrated the information processing service division of TKC Kyushu Information Center, TKC
Kumamoto Information Center and TKC Kagoshima Information Center to form TKC Kyushu
Consolidated Information Center.

November 2002

Changed the company name in the company registry to TKC Corporation to match the corporate name in
the Articles of Incorporation.

March 2003

Tokyo Line Printer Company obtained “PrivacyMark” accreditation from the Japan Information Processing
Development Center (JIPDEC).

July 2003

Integrated the information processing service divisions of TKC Okayama Information Center, TKC
Hiroshima Information Center and TKC Shikoku Information Center to form TKC Chushikoku
Consolidated Information Center.

October 2003

Reorganized the information processing service divisions of TKC Hokkaido Information Center, TKC
Tohoku Information Center, TKC Tochigi Information Center, and TKC Okinawa Information Center into
TKC Consolidated Information Center, and their SCG departments into TKCSCG Service Center.
Changed the name of TKC Information Service Center (Accounting Firm business) to TKCSCG Service
Center.
Opened TKC Internet Service Center (TISC).
Became the first private company to pass the LGWAN (Local Government Wide Area Network) - ASP
connection qualification test.

April 2004
June 2005
December 2008

Obtained PrivacyMark accreditation from JIPDEC (Local Governments BD).
Obtained PrivacyMark accreditation from JIPDEC (company-wide).
Obtained a report on the effectiveness of the implementation and operation of internal controls related to
ASP services prepared by Ernst & Young ShinNihon LLC based on JICPA Auditing Standards Committee
Report 18, “Assessment of Control Risks relating to an Entity using Service Organizations” (currently,
Auditing and Assurance Practice Committee Practical Guideline No. 86, “Assurance Reports on Controls
at a Service Organization”).

September 2010
September 2015

Opened Innovation & Technology Center (I&TC).
Acquired 100% ownership of SKYCOM Corporation as wholly-owned subsidiary.

October 2015

Became the first company in Japan to obtain third party accreditation for ISO/IEC 27018:2014, “Code ofpractice for protection of personally identifiable information (PII) in public cloud acting as PII processors”

April 2016
October 2017

(October 12).
Opened System Engineering Center (SEC).

March 2018
October 2018

Established TKC Customer Support Service Co., Ltd. (currently a consolidated subsidiary).
Completed the construction of TKC Customer Support Service building.

March 2019

Tokyo Line Printer Company changed the company name to TLP Corporation.
Became the first company to acquire certification under the Electronic Books Software Legal Compliance

September 2019
September 2019

Certification System by Japan Image and Information Management Association (JIIMA) for its financial
accounting systems that are offered to the clients of accounting firms.

March 2020
April 2022

Acquired 100% ownership of TKC Shuppan Corporation as wholly-owned subsidiary.
Established a voluntary Nomination and Compensation Advisory Committee.

August 2022

Acquired 100% ownership of TLP Corporation as wholly-owned subsidiary.
Transferred from the First Section of the Tokyo Stock Exchange to the Prime Market in response to TSE’s
market restructuring.
Selected as “Peppol service provider” by the Digital Agency- 8 -3 [Description of Business]
The TKC Group (TKC Corporation and affiliated companies) consists of the Company, five subsidiaries and one affiliated company.
The Group is engaged in business activities including accounting firm business (information processing services, software andconsulting services, and sales of office equipment and supplies), local governments business (information processing services,
software and consulting services, and sales of office equipment), and printing business.
The positioning of each company in each business segment is as follows.
Note that the three business divisions below are the same as the categories in the segment information set forth in the Notes toConsolidated Financial Statements under Part 5 Financial Information, 1. Consolidated Financial Statements, (1) Consolidated
Financial Statements.
(1) Accounting Firm Business
Key services/products

Positioning of the Company and affiliated companies

1. Information processing services(i) Computer services by the TKC(Services and sales)
1. The Company provides information processing services, software and consulting

Consolidated Information Center(ii) Computer services by the TKC

services, and sales of office equipment and office supplies for computer-based
accounting to customers including accounting firms and their clients.

Internet Service Center (TISC)

2. TKC Customer Support Service Co., Ltd., a subsidiary of the Company, offers help
desk services to accounting firms and their clients, and for medium and large-size

2. Software and consulting services(i) Development and provision ofsoftware to be installed on system
devices for information service
applications

companies.
(Manufacturing and production)
1. TLP Corporation, a subsidiary of the Company, offers printed continuous business
forms for TKC’s computer-based accounting for information processing service
applications, and manufacturing of office supplies for use with TKC’s computerbased accounting systems.
2. SKYCOM Corporation, a subsidiary of the Company, is engaged in thedevelopment and sales of software.
3. TKC Shuppan Corporation, a subsidiary of the Company, publishes books andmonthly magazines on business management, taxing and accounting to provide
useful business information to TKC member accounting firms and their clients.
4. iMobile Inc., an affiliated company, is engaged in the development andmaintenance of website services.

(ii) Systems consulting services byspecialized staff(Others)
TKC Security Services Co., Ltd., a subsidiary of the Company, provides security,
maintenance and repair services for buildings owned by the Company.

3. Sales of office equipment
Sales of system devices for information
service applications
4. Sales of supplies
Sales of office supplies for computerbased accounting- 9 -(2) Local Governments Business
Key services/products

Positioning of the Company and affiliated companies

1. Information processing services(i) Computer services by the TKC(Services and sales)
1. The Company provides information processing services, software and consulting

Internet Service Center (TISC)

services, and sales of office equipment to local governments (local municipalities,etc.).
2. TKC Customer Support Service Co., Ltd., a subsidiary of the Company, offers help
desk services to local governments (local municipalities, etc.).
(Manufacturing)
1. TLP Corporation, a subsidiary of the Company, offers printed continuous business
forms for TKC PC system for information processing service applications.
2. SKYCOM Corporation, a subsidiary of the Company, is engaged in thedevelopment and sales of software.

2. Software and consulting services(i) Development and provision ofsoftware to be installed on system
devices for information service
applications(ii) Systems consulting services byspecialized staff
3. Sales of office equipment
Sales of system devices for information
service applications(3) Printing Business
Key products

Positioning of the Company and affiliated companies

Continuous business forms for PCs,
general office forms, data printing services,(Manufacturing and sales)
TLP Corporation, a subsidiary of the Company, is engaged in the manufacturing andbrochures, etc.

sales of continuous business forms for PCs and general office forms, and data
printing services (DPS).

- 10 -

A structural diagram of the Group’s business activities is as follows:

Information
processing services

TKC

Accounting Firm Business Division

Purchasing of
supplies for TKC
computer-based
accounting
systems

Purchasing ofmonthlymagazines, etc.

Consolidated
subsidiary:
TKC Shuppan
Corporation

iMobile Inc.

Local governments(municipalities, etc.)

General companies

Sales of officeequipment

Data printing
services

Local Governments
Business Division

Printing Business
Division

Software andconsulting
services, etc.

Help desk
services

Outsourcing ofdevelopment &maintenance ofwebsiteservices

Equity method
affiliated company:

TKCNF partnercompanies

Sales ofofficesupplies for Sales of
TKC
monthly
computermagazines
basedaccounting
systems

Law schools, etc.

Medium- & largesized companies

Clients

Clients ofaccounting firms

Accounting firms

Outsourcing ofhelp desk
services

Consolidated
subsidiary:
TKC Customer
Support Service
Co., Ltd.

Accounting Firm
Business Division
Consolidated
subsidiary:
TKC Security Services
Co., Ltd.

- 11 -

Outsourcing ofsystems
development &maintenance

Purchasing ofprintedcontinuous
business forms
for TKC PC
systems

Consolidated
subsidiary:

Consolidated
subsidiary:

SKYCOM
Corporation

TLP Corporation

4 [Information on Affiliates](1) Consolidated Subsidiaries
Name

Address

Capital stock
Percentage of voting(millions of Principal line of businessrights held
yen)
(%)

Relationship
Purchasing of printed
continuous business
forms for PCs;

Data printing services,
TLP Corporation

Itabashi-ku,
Tokyo

100

business form
planning, printing, and

100.0

sales

lease of office spaces.
Executive positions
held concurrently: yes
Funding: no
Security, maintenance

TKC Security Services

Utsunomiya-shi,Co., Ltd.

Tochigi

10

Security, maintenance& repairs, and cleaning

100.0

services& repairs, packaging
and shipping services.
Executive positions
held concurrently: yes
Funding: no
Outsourcing of systems

SKYCOM

Chiyoda-ku,

Corporation

Tokyo

100

Development and salesof systems

100.0

development.
Executive positions
held concurrently: yes
Funding: no
Outsourcing of help

TKC Customer
Support Service Co.,Ltd.

TKC Shuppan
Corporation

Kanuma-shi,
Tochigi

Shinjuku-ku,
Tokyo

25

Help desk services

100.0

desk services
Executive positions
held concurrently: yes
Funding: no83

Production of monthly
magazines, etc.

Purchasing of monthly
magazines, etc.
100.0

Executive positions
held concurrently: yes
Funding: no(Notes) 1. TLP Corporation is a specified subsidiary.
2. None of the companies currently submit Securities Registration Statements or Annual Securities Reports.
(2) Equity Method Affiliated Companies
Name

Address

Capital stock
Percentage of voting(millions of Principal line of businessrights held
yen)
(%)

Relationship
Outsourcing ofdevelopment &iMobile Inc.

Shibuya-ku,
Tokyo

100

Development andmaintenance of website
services

30.0

maintenance of website
services
Executive positions
held concurrently: yes
Funding: yes(Note) None of the companies currently submit Securities Registration Statements or Annual Securities Reports.

- 12 -

5 [Employees](1) Consolidated Basis
As of September 30, 2023
Name of segment

Number of employees

Accounting Firm Business

1,628

Local Governments Business

648

Printing Business

207

Corporate (shared)

412
Total

2,895

(Notes) 1. Number of employees represents the number of working persons.
2. Number of employees listed under Corporate (shared) belongs to the management division.
(2) Status of the Company
As of September 30, 2023
Number of employees

Average age (years)

Average years of service (years)

Average annual salary (yen)

2,409

40.2

17.0

8,157,980

Name of segment

Number of employees

Accounting Firm Business

1,522

Local Governments Business

648

Corporate (shared)

239
Total

2,409

(Notes) 1. Number of employees represents the number of working persons.
2. Average annual salary includes bonuses and extra wages.
3. Number of employees listed under Corporate (shared) belongs to the management division.
(3) Status of Labor Unions
There are no labor unions.
(4) Percentage of female workers in managerial positions, percentage of male workers taking childcare leave, and the difference
between the wages of male and female workers(i) The Company
Current fiscal year
Difference between the wages of male and female
Percentage of female

Percentage of maleworkers in managerial
positions (%)

workers taking
childcare leave (%)(Note 1)

(Note 2)
5.1

52.7

workers (%)(Notes) 1.

Supplementary

Workers in

Part-time and

All workers

regularemployment

fixed-term
workers

67.2

71.5

33.0

information(Note 3)(Notes) 1. Calculated based on the provisions of the Act on the Promotion of Women's Active Engagement in Professional Life(Act No. 64 of 2015).
2. This is a calculation of the percentage taking childcare leave, etc. in the Ordinance for Enforcement of the Act onChildcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family
Members (Ordinance of the Ministry of Labor No. 25 of 1991), Article 71-4, Item 1 based on the provisions of the Act
on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other
Family Members (Act No. 76 of 1991).

- 13 -

3. About the difference between the wages of men and women
We have established no differences between men and women in the systems for grades, evaluations, compensation orin the operation of those systems. Nonetheless, differences in wages are occurring due to the following background.
〇 Workers in regular employment
The difference between the wages of men and women among workers in regular employment is caused by the factthat there are fewer female employees than male employees in high-ranking jobs (grades) with a high base yearlysalary. The difference between the wages of men and women at the same job ranking (grade) is 80.7% to 106.3%,
so there is not a large difference. Going forward we will continue initiatives to promote the active engagement of
women, encourage the promotion of female employees to high-ranking jobs, and aim to reduce the difference inwages.
〇 Part-time and fixed-term workers
The Company counts elderly people reemployed after retirement and part timers in the same category, men accountfor a larger percentage of elderly people reemployed after retirement and women account for a larger percentage ofpart timers, so the difference in wages becomes larger. The difference in wages between men and women among theelderly people who are reemployed is 90.1% and the difference in wages between men and women among parttimers is 101.0%, so there is not a large difference.
(ii) Consolidated subsidiaries
The provisions of the Act on the Promotion of Women's Active Engagement in Professional Life (Act No. 64 of 2015) andthe Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other
Family Members (Act No. 76 of 1991) do not apply to the consolidated subsidiaries of TKC, so they are not disclosing thepercentage of female workers in managerial positions, the percentage of male workers taking childcare leave, and difference
between the wages of male and female workers. Note that the consolidated subsidiaries of TKC are as stated in “4 [Information
on Affiliates (1) Consolidated Subsidiaries.

- 14 -

Part 2 [Business Overview]
1 [Management Policy, Business Environment and Challenges Faced by the Company](1) Management Policy, Business Environment and Challenges Faced by the Company(i) Management policy, management strategy
The Company has managed to achieve the following two business objectives as set forth in our Articles of Incorporation (Article2) under the company motto of “Jiri Rita (“self-interest is in the realization of other's interest”) and management principle of“Contribution to our Customers.”
1) Management of electronic data processing centers to defend the business domain and maintain control over the fate ofaccounting firms
2) Management of electronic data processing centers to improve the administrative efficiency of local governments
This basic policy has been inscribed in our Articles of Incorporation since the incorporation of the Company (October 22, 1966).
With the expansion of our business scope, other business objectives have been added to the Articles, although they merely
supplement these two business objectives and our basic policy for management has never changed.
(ii) Business environment
The Japanese economy continued to gradually recover as COVID-19 was downgraded to a Class 5 infectious disease, thegovernment provided assistance, and economic and social activities returned to normal. On the other hand, countries across theworld are turning to tight monetary policy, raw material prices are on the rise, and the repayment of zero/zero loans is making
financing increasingly difficult for small- and medium-sized enterprises (SMEs), all of which indicate that the future of theeconomy remains uncertain.
The Group has continued to develop systems and provide services that promptly cater to such changes in the social environmentand government initiatives while carrying out business operations that contribute to our customers as well as local communities
and society.
Revisions to the laws and advancements in ICT have significant impacts on the products and services that the Group offers. Legalrevisions include the new consumption tax invoicing system which commenced in October 2023 and the mandatory electronicpreservation of electronic transaction data under the Revised Electronic Books Maintenance Act which will become necessary
from January 2024 with the ending of the safe harbor rules. In addition, the national and local governments are promoting digitaltransformation, standardization and common use of the local governments’ information systems, and implementation of GovCloud, all of which need to be addressed. Advancements in ICT include technological innovations in cloud computing, FinTech,and generative AI, to name a few.
We believe it is critical to become responsive to these changes in the environment and reflect such knowledge in the products
and services offered by the Group.
(iii) Priority business and financial issues
1) Creation of innovation for further “Contribution to our Customers”
The environment surrounding the accounting firms and local governments which are the customers of TKC is changing
greatly, so the enhancement of productivity and streamlining of operations through the promotion of digitalization are urgent
tasks. TKC supports the operations of its customers by incorporating the latest ICT to provide systems with greater addedvalue, while fully complying with laws and regulations. For that purpose it will continue endeavoring to strengthen its
systems development structure going forward.
2) Human resources development and research and development for the utilization of AI
TKC believes that the utilization of AI is essential for supporting our customers going forward. For that reason, from January2022 we commenced training to develop 120 “AI Planners” with the objective of the development of human resources who
can plan and promote the utilization of AI.
Moreover, TKC has launched the use of TKC AI Assistant, the in-house AI chat service developed based on an extensive
language model from AIAzure OpenAI Service. The Company aims to improve employee efficiency and productivity byactively using TKC AI Assistant not only for system development, but for internal administrative work and on-the-groundsales tasks.
These kinds of initiatives will lead to the creation of products and services utilizing AI in the future.
3) Protection of the global environment and operation of “safe, secure and convenient” data centers
We consider environmental conservation activities to be a social responsibility of a company, and believe it is indispensable
to the realization of a sustainable society; accordingly, we are actively tackling CO2 reduction based on the Basic
Environmental Policy we announced in 2007. Going forward we will continue to contribute to local communities based on
our Sustainability Policy.
Furthermore, TKC provides cloud services using our own data centers to customers with over 800,000 instances of use,

- 15 -

including accounting firms, SMEs, large-sized companies, local governments, financial institutions, universities, law firms,
etc. In order to store our customers’ valuable data and support their business activities in our data centers which bring together
the know-how we have cultivated over 50 years, we are endeavoring to operate robust and secure data centers, implement
BCP measures, and ensure information security.
The Company will continue to work to develop environments where customers can use cloud services safely, securely andconveniently.
(2) Management Policy, Business Environment and Challenges Faced by the Accounting Firm Business Division(i) Management policy, management strategy
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 thefate of accounting firms) and works under close ties with the TKC National Federation, which consists of certified public tax
accountants and certified public accountants that are customers of TKC (11,400 members).
TKCNF announced its 3-year activity policy from 2022 to 2024 as follows:“TKC accountants challenging the future—push through field auditing and support companies in achieving positive balance andproper filing! ”
1) Massively expand superior electronic books—Promotion of self-accounting by the TKC methods
2) Become guardians of tax justice—Promotion of Shomen-tempu (attachment of tax audit reports) by the TKC methods3) Support the achievement of positive balance and foster good-standing companies—Promotion of field auditing andmanagerial advisory services
Based on the activity policy of TKCNF, the Company conducts activities to achieve the strategic targets for FY2024.
In addition, the Company supports the expansion of clients of TKC Members by providing tax and accounting systems for listedcompanies and other large enterprises in close collaboration with, for example, the TKCNF's Medium and Large-size Support
Research Committee and the Overseas Deployment Support Research Committee.
(ii) Business environment
According to the Outline of Filing of Corporate Income Tax Returns (Taxation) published in November 2023 by the National Tax
Agency, the percentage of companies recording profit in FY2022 was 36.2%. Although this was an increase of 0.5 percent points
over the previous fiscal year, it shows that approximately 64% are still recording losses.
Moreover, due to the rise in raw material prices due to growing geopolitical risks, and the start of repayment of COVID-19
emergency loans, etc. SMEs are still exposed to risks of financial difficulties and losses. While many SMEs are in such
impenetrable fog, they face a big challenge of securing the necessary profit.
In such climate, TKC Member firms, in an aim to achieve positive balance and proper filing, conducted monthly field audits andmonthly settlements, offered managerial advisory services, and undertook activities to “strengthen the company throughaccounting.” We also provided various support services, including the calculation of profits and sales revenues needed for loan
repayment and development of business plans. As a result of these activities, nearly 53% of the clients of TKC Member firms
have achieved surplus, and there are rising expectations from SMEs and financial institutions nationwide towards the effective
instructions provided by TKC Member firms.
The Revised Electronic Books Maintenance Act has been enforced on January 1, 2022, and the Revised Consumption Tax Act
has been enforced on October 1, 2023. In response, all business operators are being required to take actions for the preservationof data in the form of electromagnetic records and qualified invoice system. The Company considers such legal and social system
reforms as an opportunity to expand the client base of TKC Members.
(iii) Priority business and financial issues
The Accounting Firm BD aims to help TKC Members firms to increase their contribution to society and to achieve success intheir operation. To this end, we offer full support for the following activities under the guidance of TKCNF.
1) Increase system competitivenessWe will take the following actions to increase competitiveness of its systems and differentiate ourselves from othercompanies by appealing the advantages of our systems.
a. The strengths of the Company’s systems lie in the one-stop, full line of tax affairs and accounting. We have the capability
to maintain complete compliance with laws, regulations and accounting standards in our financial accounting systems andto provide a one-stop, full line of accounting, tax affairs and electronic tax filing with fully compatible links to related tax
information systems. Looking ahead, the Company will continue to respond promptly and accurately to revisions oflaws/regulations and system modifications.
b. The most important feature of the Company’s systems is that they come with the meticulous support, from implementation
to operation, by TKC Members that have extensive experience in tax- and accounting-related practices, to enable clients- 16 -

to perform legitimate and appropriate taxation and accounting.
The Company will strengthen its support for such TKC Members to assist them in adding greater value to their services.
2) Activities to promote the use of self-accounting
In order to support TKCNF achieve their strategic targets, the Company will enhance and expand functions that support
corporate executives' quick decision-making in the FX Cloud, and carry out self-accounting promotion activities, taking
advantage of the strengths of systems that prevent any retroactive insertions, deletions and corrections which may lead tofalsification of accounting data.
Furthermore, going forward we will aim to disseminate Peppol invoices (e-invoices) by expanding the use of the FX Cloudand Invoice Manager.
3) Support to achieve “Over 10,000 TKC Member Firms”
To achieve TKCNF’s target of achieving over 10,000 TKC Member firms, the Company will solicit membership incooperation with TKC Members and contribute to the achievement of TKCNF’s strategic target.
4) Enhance and expand the TKC Consolidated Group Solution
In collaboration with the Medium- and Large-sized Companies Support and Overseas Business Support Councils of TKCNF,
the Company utilizes the TKC Consolidated Group Solution to support large-sized companies in rationalizing andstreamlining such operations as taxation, accounting, and management of overseas subsidiaries.
5) Increase of user base of TKC Law Library
The Company will enhance the functions and contents of LEX/DB Internet, Publishers’ Database, Legal Book Search andother contents constituting the TKC Law Library and advance the utilization of generative AI. At the same time we will
enhance the convenience of users by providing API services, etc. linked to the “legal tech services” of other companies.
Through such efforts, we aim to differentiate the TKC Law Library from the services offered by competitors in order tofurther increase its use by law firms, etc.
(3) Management Policy, Business Environment and Challenges Faced by the Local Governments Business Division(i) Management policy, management strategy
The Local Governments BD operates in accordance with the business objectives set forth in the Articles of Incorporation (Article
2 Item 2: "Management of electronic data processing centers to improve the administrative efficiency of local governments") andoffers specialized information services in order to help promote the welfare of residents by improving administrative efficiency.
Also, as a medium- to long-term business vision, the Company established a policy to “contribute to the prosperity anddevelopment of local communities by improving administrative efficiency, enhancing resident services and reducing
administrative costs through optimal use of TKC systems, and is now in the process of executing the strategies to that end.
(ii) Business environment
Informatization of local governments (municipalities, in particular) is at a major turning point. Against the backdrop of labor
shortages due to declining birthrate/aging population and depopulation in local communities, municipalities are facing animportant managerial issue of transitioning to a “Smart Municipality (digital society)” that could provide administrative services
in a sustainable manner with half the number of staff. In particular, the COVID-19 pandemic brought light to the social issue ofdelay in digitalization of administrative services, which caused local governments to further accelerate their efforts. The national
government formulated the Basic Act on the Formulation of a Digital Society (Cabinet Decision of Dec. 25, 2020), highlightingthat the roles of local municipalities (cities, wards, towns, and villages) which take on administrative services close to residents
are crucial in achieving a digital society. It calls for all municipalities to keep pace in implementing the following measures inaccordance with the Local Governments Digital Transformation (DX) Promotion Plan (Ministry of Internal Affairs andCommunications, revision of Sep. 2, 2022):
1) Standardization and common use of municipal information systems
2) Promotion of My Number Cards
3) Switching to online administrative services
4) Promotion of use of AI/RPA
5) Promotion of teleworking
6) Ensuring security measures
Moreover, while governments and municipalities face increasingly serious financial conditions, local governments are expected
to establish “sustainable administrative operations” in order to provide administrative services in a consistent, sustainable,
efficient, and effective manner. To this end, local municipalities are facing the urgent need to update and disclose financial
documents appropriately, visualize their financial conditions accurately, and aggressively utilize the information obtained fromthose financial documents in the assessment of projects and top decision-making.
Meanwhile, looking toward the market trends of business vendors supplying for local governments, new players from other- 17 -

industries and startups are entering the field of digitalization of administrative services one after another. Trends show that the
local governments market is now increasingly competitive and the world has shifted to a harsh place where only those system
suppliers who have the ability to respond flexibly and quickly to the changing business environment could survive.
(iii) Priority business and financial issues
As corporate effort to achieve smart digital transformation of administrative services and to support sustainable reform ofadministrative and financial services, the Local Governments BD considers it a vital business challenge to provide support for
the enhancement of services for residents and reduction of costs through improving the administrative efficiency of local
governments, which are to be achieved through the development and provision of innovative products and services that leverage
the latest in ICT, and will implement the following five priority activities to this end.
1) Response to the standardization of mission-critical systems
a. To respond to the standardization & common use of local government information systems to be implemented by end of
March 2026, we are advancing the development of systems that are fully compliant with the standard specifications
designed by the national government, and preparations for migrating to Gov-Cloud.
b. Gov-Cloud is a platform for the use of cloud services common to the government which has been prepared by the national
government (the Digital Agency). In TKC, the systems run and operated in the TISC will be run and operated after being
migrated to this platform.
2) Support for digitalization and online provision of administrative services (administrative procedures)
Digitalization of administrative services is an urgent topic to be addressed by local municipalities. To support these efforts,
we will collaborate with leading partners to further enhance and expand the system functionalities to achieve digitalizationof the administrative counter services which combine the TASK Cloud Smart Application System and the TASK Cloud Easy
Counter Service System.
3) Support for the digitalization of local tax administrative procedures
As an authorized contractor of the Local Tax Agency, and a provider of tax information systems, the Company will further
expand and enhance the functionalities of related services which help streamline and tax administrations, and will
disseminate and promote them.
4) Support for the digitalization of city hall administration
We will work to disseminate and promote the next-generation version of our TASK Cloud Public Accounting System, andsupport the digitalization of the internal administration of municipalities.
5) Research and development of next-generation productsa. We will engage in the R&D of original high value-added services and functions to be incorporated after standardizationof the mission-critical systems.
b. Through joint demonstration projects, etc. with leading partners, we will engage in the R&D of new solutions to support
the digitalization of administrative services, such as to go online and make them one stop and once only.
(4) Management Policy, Economic Environment, and Challenges Faced by the Printing Business Division (Subsidiary: TLP
Corporation)(i) Management policy, management strategy
The Printing BD operates under the management policy to contribute to the communication and marketing of client companies
and their customers by utilizing digital technologies and providing products and services that meet the changing needs. The
COVID-19 pandemic has created a flow toward the promotion of rapid digitalization in this information-intensive society. To
respond to the changes in social environment and values of clients, the Printing BD works to develop products and services
utilizing our production technologies, to improve quality, and to add greater value. Moreover, as a good partner to our clients, wewill strive to further improve corporate value through the development of a communication environment utilizing digitaltechnologies and printed materials.
(ii) Business environment
The environment surrounding the Printing Business has changed, including the digitalization and regulatory reform ofadministrative services, the dissemination of My Number Cards, the digitalization of education, the commencement of theconsumption tax invoicing system, and revision of the Act on Book and Record Keeping through Electronic Methods. With our
key products of data printing services (DPS) and business process outsourcing (BPO), we strive to provide products and services
that meet the needs of these “new lifestyles” and “new business styles.”Furthermore, while demands for business forms continue to decline over time, we will work to reduce costs and expand ourshares within the market through streamlining of production environment, elimination and consolidation of facilities, and increasein production efficiency.
In an aim to offer environment-conscious customers with environmentally friendly paper products, TLP Corporation, the Group’s- 18 -

printing business division, acquired the FSC® Chain of Custody (CoC) certification (FSC-C182216) as of October 3, 2022.
Under this certification system, companies are required to use materials from responsibly managed FSC certified forests andother responsible suppliers, and to have responsible management and printing process in place. By maintaining and managing
this system, we can display the FSC certification mark on our paper products, which will allow our customers to demonstratethat they are environmentally responsible. We will utilize this certification to support our customers achieve their sustainable
development goals.
(iii) Priority business and financial issues
The Group’s Printing BD implements the following actions to increase sales mainly from data printing services (DPS) andbusiness process outsourcing (BPO).
1) We will provide greater added-values to our products and services by combining our analog and digital printing technologies,
thereby contributing to direct communication efforts of our customers.
2) We will continue to develop new technologies to respond to customer needs and to enable unique proposal-oriented sales
activities by differentiating ourselves from competitors.
3) Customers have expanded the scope of outsourcing services as a result of COVID-19 pandemics. We will cater to theseneeds and contribute to streamlining the customers’ business operations through efforts including maintaining high quality,
minimizing costs, and reducing information security risks.
4) We will aim to build optimal outsourcing services to meet the needs of local government information systems standardizationby the end of FY2025.
5) We will improve quality and enhance quality and production capabilities by further strengthening the production
environment of the dedicated DPS plant.
6) We will strive to improve and maintain consistent quality, and enhance our quality inspections of each process for all products
to prevent quality defects.
7) We will carry out digital transformation (DX) and automation of processes throughout the Company to boost productivity
and operational quality of all business segments.
8) In order to win trust from customers and business partners, and to stay on the front line of the government-initiated promotionof My Number Cards, we will further strengthen our information security systems based on Privacy Mark and ISMS toensure strict management of My Number.
9) As ISO14001 certified, environmentally-friendly company, we will reduce wasted paper and further put our efforts into
reducing energy consumption through increased productivity and efficiency.

- 19 -

2 [Approach and Initiatives Concerning Sustainability]
The Group’s approach and initiatives concerning sustainability are as follows.
Statements with regard to the future in this text are based on the Group’s decision made as of the end of the current consolidated
fiscal year.
(1) Governance and risk management concerning all aspects of sustainability(i) Sustainability Policy
The Group has created its Sustainability Policy for the purpose of sustained growth and enhancing the medium- to longterm corporate value.
Sustainability Policy
The TKC Group consistently works on “Contribution to our Customers” and contributes to local communities based on thefounding principles of TKC, and fulfils its public mission and social responsibilities with the aim of realizing a sustainable
society.
1. Develop products and provide services that achieve “Contribution to our Customers” (Contribution)
For the prosperity of our customers, we will seek conditions for the business of our customers, develop systems to strengthen
these conditions, and offer our utmost support for their implementation. Our joy is to contribute to our customers.
2. Practice compliance (Compliance)
Since our founding, we have adopted the so-called “management based on rules.” All officers and employees are required
to comply with laws and other social norms, and we strive to meet the expectations of our stakeholders (customers,
shareholders, business partners, etc.).
3. Ensuring information security (Information security)
We offer various information-related services through the most appropriate use of the latest information and communication
technologies (ICT) on a constant basis to accounting firms and their clients and local governments. We recognize that
ensuring information security is a priority in conducting our business activities, and we consider it our social responsibility.
4. Maintaining and promoting fair and free competition (Fair Trade)
We promote responsible procurement with the goal of resolving various social issues that reside in supply chains. In
addition, by carrying out appropriate transactions under fair and free competition, we seek to strengthen relationships oftrust with our business partners. We also take a firm stand against all antisocial forces or groups that threaten public orderand safety.
5. Protecting the global environment (Environment) and preparing for natural disasters (BCP)
We consider environmental conservation to be a social responsibility, and believe it is indispensable to the realization of asustainable society; accordingly, we actively promote the environmental conservation activities based on the Basic
Environmental Policy we announced in 2007.
So that we can continue to provide cloud services even in times of various natural disasters, we ensure that all our data
centers meet the requirements of Tier 3 or higher as stipulated by the Japan Data Center Council’s Data Center Facility
Standard, and thereby operate robust and secure data center management and BCP measures.
6. Respect for human rights (Social)
We strive to understand various international norms related to human rights; we respect fundamental human rights,
individuality, privacy, and various value systems, and we also work to provide safe and comfortable work environments,
and to improve employee satisfaction. In addition, we will not engage in any act that violates human rights, such as the useof discriminatory language or behavior in relation to human rights, religion, gender, nationality, mental or physical disability,
age, or sexual preference, nor violence, sexual harassment, or power harassment.
We will take appropriate action if any violation of human rights is identified. We also require our business partners, etc. toact in a way that demonstrates respect for human rights, protects the environment, and complies with laws and regulations,etc.
7. Strengthening corporate governance (Governance)
We will maintain and strengthen effective governance systems to realize our sustainability policy as outlined above.
Established December 17, 2021
Revised March 14, 2023

- 20 -

(ii) Governance
The Group has established a Risk Management Committee with the Representative Director and Senior Managing Director
as the chairperson and the chairperson of the Operation Improvement Committee (the body which assists the compliancemanagement and improvement of operational efficiency, etc. which the directors are expected to promote), etc. as members.
The Risk Management Committee identifies and evaluates all kinds of risks, including risks related to sustainability, narrows
them down to the risks which should be responded to with priority, and monitors the progress of initiatives concerning said
risks. The content of its deliberations is reported to the Board of Directors regularly, and the Board of Directors manages andsupervises the content of said reports.
(iii) Risk management
The Operation Improvement Committee, etc. considers specific responses and takes action regarding all kinds of risks
identified and evaluated by the Risk Management Committee. The Risk Management Committee continuously monitors thestatus of the initiatives in the Operation Improvement Committee, etc.
<Diagram of the Governance and Risk Management Structure>
Meeting of the Board of Directors
Reports
Risk Management Committee
Monitoring
Operation Improvement Committees, etc.
Sustainability Promotion Committee

Information Security Subcommittee

Personnel & Salary Systems Improvement
Committee

Tokyo Head Office Operation Improvement
Committee

Municipality Sales Division Operation
Improvement Committee

Municipality Systems Development & Operations
Division Operation Improvement Committee

Supplier Business Operation Improvement
Committee

Consolidated Information Centers Operation
Improvement Committee

SCC Service Centers Operation Improvement
Committee

Systems Development Research Center Operation
Improvement Committee(2) Climate change
The Group has stipulated a Basic Environmental Policy to continuously tackle environmental conservation activities, andthrough the above (1) (ii) Governance and (iii) Risk Management, we are carrying out the identification, evaluation, andmanagement of climate change risks.
As a result, at the current time we do not evaluate that the risks and earning opportunities due to climate change are having asignificant impact on the business activities of the Group. For this reason, we have not stipulated a specific “strategy” or“indicators and targets.”
For global warming prevention, an international initiative, TKC is carrying out capital investments in the data centers with thefocus on the reduction of power consumption, and is striving to reduce greenhouse gas emissions. In the offices, we are raising
the employees’ awareness of energy conservation and power saving, and in order to present specific behavior we are creating
posters and posting them in the offices, meeting rooms, toilets, etc.
Furthermore, we are striving to reduce the paper resources and plastic provided to our customers by converting the systems
manuals to electronic versions, distributing our programs online, etc.
Please see the TKC website for the specific content of the initiatives and our achievements in reducing the amount of greenhousegas emissions (https://www.tkc.jp/sustainability/e1).

- 21 -

(3) Human capital and diversity
Although TKC is taking specific initiatives with respect to its “strategy” and “indicators and targets” concerning human capitaland diversity, they are not initiatives at all of the group companies, so statements concerning the consolidated group are difficult.
For this reason, the following “strategy” and “indicators and targets” are stated concerning the Company.
(i) Strategy
1) Human resources development policy
Since its founding, TKC has been developing its management with “Jiri Rita” ("self-interest is in the realization of others'interest") as its company motto and “Contribution to our Customers” as its management principle. In order to support thesuccess of the businesses of our customers, TKC is continuing to support the willingness to learn of our employees and todevelop our human resources. Furthermore, we are striving to ensure diversity by hiring human resources who can realize“Contribution to our Customers” from a variety of perspectives. The main initiatives are as follows:<Initiatives to support the acquisition of basic and specialist knowledge>
TKC has many customers who have specialist knowledge while on the other hand employees with diverse backgrounds join
the company. For this reason, we are offering opportunities for the acquisition of basic knowledge and specialist knowledge
which are long-term and have enhanced content. We offer basic training for new employees, employees in their fifth year
at the company, etc. and have established systems to support the acquisition of specialist knowledge, such as the in-house
qualification systems established for each job type, a system offering financial incentives for gaining public qualifications,etc.
<Initiatives to support the acquisition of skills for each role>
In order to encourage employees to continually enhance their skills without being satisfied with the roles assigned to themby the company, we continue to provide training for newly-appointed managers and other roles. Furthermore, we regularly
hold study sessions for employees who have subordinates and have established opportunities for them to enhance their skills
concerning “evaluation” and “organization development.”<Initiatives to develop human resources>
In order to support the achievement of the targets set by each employee, we place importance on establishing opportunities
for 1-on-1s and all types of interviews. In order to enhance the quantity and quality of dialogues, we are implementing acurriculum for all of the employees which aims to enhance their interview skills, etc. Furthermore, we regularly hold study
sessions on the web for all of the employees with the objective of the penetration and continuation of this curriculum. These
study sessions also serve as opportunities to build in-house connections across job type, place of work, years of service, etc.
Furthermore, we are encouraging reading, the foundation of self-learning, by establishing the Individual Book Purchase
Support System and Reading Order System under which TKC supports the cost of books purchased by individual
employees.
2) In-house environmental development policy
In the foreword of the rules of employment, TKC states that it will aim to be first class in the world with respect to the threepoints of the level of customer services (customer satisfaction), share in the market, and treatment of employees. Whenattempting these achievements, we are developing the in-house environment based on the belief that it is important for eachand every one of the employees to be both physically and mentally healthy, and continue exercising their expertise with astrong sense of mission.
The main initiatives are as follows:<Initiatives to support the discovery and solution of health issues>
We are working to encourage our employees to receive regular medical examinations (including retests) and stress checks.
The tested items in the regular medical examinations and the employees required to receive them are more extensive than
the standards stipulated in the Industrial Safety and Health Act. Furthermore, we have introduced health management
systems and have strengthened our health management structure, including health guidance for employees, by appointing
industrial physicians to all of the offices.
<Initiatives for health maintenance and enhancement>
We are working on questionnaire surveys, etc. for reducing the smoking rate among employees, utilization of healthinsurance societies (seminars, use of exercise facilities), and improvement of the workplace environment.
<Initiatives concerning the promotion of the active engagement of women>
We are working on the development of an environment enabling the active engagement of women, by expanding theoccupational fields of the female employees, developing work-life balance support systems concerning childcare, nursing
care, etc., installing nurseries inside the company, etc.
(ii) Indicators and targets
TKC is using the following indicators regarding the human resources development policy and in-house environmental- 22 -

development policy stated above. The targets concerning said indicators (for the fiscal year ending September 2028) and ourachievements in the current fiscal year are as follows. The indicators and targets are stated regarding the Company.
Indicators

Targets

Human resources development policy

Achievements(Current fiscal year)

－

－

100%

80.9%

100%

57.2%

80%

95.1%

80%

87.8%

The percentage of employees (in their fourth year or more at thecompany) who have passed the level 2 official business skill test
in bookkeeping (Note 1)
The percentage of employees in development positions (in theirfourth year or more at the company) who have passed theFundamental Information Technology Engineer Examination(Note 2)
Percentage of employees participating in skills training sessions
for each role
Percentage of employees participating in study sessions for
employees with responsibilities
In-house environmental development policy
Percentage of employees receiving regular medical examinations
Percentage responding to the stress checks
Certification as a Health & Productivity Management
Outstanding Organization

－

－

100%

100%

100%

98.5%

Certification(Continued)

Certification(Notes) 1. Calculated from the number of employees who have level 2 or level 1 of the official business skill test in
bookkeeping, the tax accountant examination (bookkeeping, financial statement accounting), or qualifications as acertified public tax accountant or certified public accountant (in the case that an employee holds multiple
qualifications they are counted only once) .
2. Calculated from the number of employees who have the qualifications of Fundamental Information Technology
Engineer Examination or the Information Technology Engineer Examination (in the case that an employee holds
multiple qualifications they are counted only once).

- 23 -

3 [Risk Factors]
Major risks pertaining to the business operations of the Company and the Group, in reference to the sections Business Overview
and Financial Information in this Annual Securities Reports, that we consider are worth informing our investors are described
below. It is also our policy to be forthcoming in disclosing information on other risk factors that may be deemed material toinvestors.
The Company is aware of the possibility that these risks may occur and strives to prevent them in advance or respond promptly
should they occur. However, we feel it necessary that investment decisions concerning the Company securities should be madeafter thorough review in light of this section and also in reference to the contents of this entire report. Note that this section does
not cover all risk factors related to investment in the Company securities.
Statements with regard to the future in this section are based on the Group’s decision made as of the end of the current consolidated
fiscal year (September 30, 2023).
(1) About Changes in the Business Environment
In the business division for accounting firms, there is a possibility that the market will contract due to the lack of successors foraccounting firms and the difficulty of hiring accounting firm staff arising from the impact of the falling birthrate and aging
population, and due to the closing down, bankruptcy, etc. of their clients in the tough management environment.
Furthermore, in the business division for local governments, there is a possibility that profitability will decrease as a consequenceof the intensification of the competitive environment, the increasing burden of systems development, etc. due to the Gov-Cloudand systems standardization being advanced by the government.
Taking into account these kinds of situations, the Group is further strengthening its in-house organizational structure, orienting
itself toward outstanding marketing and innovation, and working on developing systems which strongly support the businessesof our customers and supporting the implementation of them.
(2) Fluctuations in Raw Material Procurement Costs for Printing BD
Direct purchasing of base paper from paper manufacturers accounts for the bulk of raw material procurement by the Printing
BD, and the division strives to ensure the stable procurement of raw materials and to maintain optimal pricing. However, there
are concerns for possible imbalance in demand and supply due to oil price increases and tightening of supply and demand ininternational markets. Should such circumstances prevail, the Group will aim to respond through price negotiations with its
customers. However, such circumstances may still affect the financial standing and operating results of the Group in the eventthe procurement of raw materials becomes extremely difficult, or when purchase prices rise significantly.
(3) Stable Operation of Cloud Services
The Company is taking various measures to enable customers (including accounting firms and their clients, medium- and largesized companies, and local governments) to use its cloud services in a safe and secure ICT environment, and to be able tomaintain and continue its business operations in the event of emergencies. However, as we cannot prevent all large-scaledisasters and unexpected disruptions, we take the following measures for early detection and recovery, and to minimize theimpacts on our customers’ business operations;(i) Strengthen our verification process upon providing the programs;(ii) Strengthen our BCP in the event of disasters and unplanned disruptions;(iii) Reduce time needed for recovery;(iv) Third party assessment and verification of the effectiveness of measures.
(4) Fluctuations in Energy Prices
Because the data centers operated by the Company use a lot of electricity, we bear risks from fluctuating energy prices. We areworking to eliminate these risks by taking energy-saving measures to reduce costs. However, further rise in energy prices, etc.
may impact the operating results and cash flows.
(5) Retirement Benefit Obligations
Retirement benefit obligations and related costs for employees of the Group are recognized based on certain assumptions (baserates) used in actuarial discount rate calculations. Fluctuation in these base rates may affect the financial standing and operating
results of the Group. While the Group implements measures to minimize the effects of such fluctuation, for example, moving
parts of the retirement plan to a defined contribution pension management scheme, the impact of these changes cannot becompletely eliminated. Base rate changes may affect the financial standing and operating results of the Group.
(6) Decline in Value of Fixed Assets
The Company has applied the Accounting Standard for the Impairment of Fixed Assets since FY2006 in accordance with the
Financial Instruments and Exchange Act of Japan. The application of fixed asset impairment accounting may affect the financial
standing and operating results of the Group.
(7) About Information Security
The Group is entrusted with a large amount of information on companies and individuals held by our customers (accounting- 24 -

firms, local governments) as well as internal information for the execution of its business.
In order to ensure that such information is managed properly, the Company will review its policies and procedures related to
information management on an on-going basis, and educate its directors and employees, disseminate the importance of
information management and implement system-based information security measures. The Company also strengthens its
information protection management systems by obtaining third party accreditations such as ISO/IEC27001 Information Security
Management System (ISMS) and JIS Q 15001 Personal Information Protection Management Systems (Privacy Mark). TKCInternet Service Center also acquired ISO/IEC27018 certification, a standard specializing in the protecting of personal
information in relation to ISMS and public cloud services, ISO/IEC27017 certification for information security controls forcloud services and other third party accreditations. However, the potential for such information leaking due to unforeseen
circumstances cannot be eliminated completely, and such an event could have negative impacts on the Company’s social
standing and may require enormous costs in response or reduce the brand value which could affect the financial standing andoperating results of the Group.
(8) Contentious Cases
While there are no contentious cases that could affect the financial standing and operating results of the Group, such contentious
cases could occur in the future.

- 25 -

4 [Management Analysis of Consolidated Financial Conditions, Operating Results, and Cash Flows](1) Analysis of the Group’s Consolidated Operating Results for the Current Consolidated Fiscal Year(i) Operating Results across the Group
During the current consolidated fiscal year (October 1, 2022 to September 30, 2023, hereinafter the “current fiscal year”), theJapanese economy continued to gradually recover as COVID-19 was downgraded to a Class 5 infectious disease, thegovernment provided assistance, and economic and social activities returned to normal. On the other hand, countries acrossthe world are turning to tight monetary policy, raw material prices are on the rise, and the repayment of zero/zero loans ismaking financing increasingly difficult for small- and medium-sized enterprises (SMEs), all of which indicate that the futureof the economy remains uncertain.
The Group has continued to develop systems and provide services that promptly cater to such changes in the social
environment and government initiatives while carrying out business operations that contribute to our customers as well as
local communities and society.
The Accounting Firm BD supports certified public tax accountants and certified public accountants that are customers of
TKC (hereinafter, “TKC Members”) in enabling them to provide their clients with accounting, taxation, and financing support
as escort supporters of SMEs. We also support SMEs in achieving profitable results and proper filing by providing andsupporting the implementation of cloud-based accounting systems as detailed below.
The Local Governments Business Division rolled out support to customer municipalities to enable them to smoothly respondto the expansion of the tax items for the common local tax payment system (the payment of local taxes using standardized
local tax QR codes).
As a result of these activities, during the fiscal year under review, the consolidated Group comprising of TKC Corporationand its six consolidated subsidiaries recorded net sales of 71,915 million yen (increased 6.0% year-on-year), operating incomeof 14,338 million yen (increased 7.4% year-on-year), ordinary income of 14,772 million yen (increased 8.0% year-on-year),and net income attributable to owners of parent of 10,826 million yen (increased 16.2% year-on-year).
Net sales for the current fiscal year by business division are shown below.
(ii) Business activities and operating results of the Accounting Firm Business Division
1) Business activities of the Accounting Firm BD
The Accounting Firm BD operates for the achievement of “positive balance and proper filing” in accordance with thebusiness objectives set forth in the Articles of Incorporation (Article 2, Paragraph 1: “Management of electronic dataprocessing centers to defend the business domain and maintain control over the fate of accounting firms”) and works inclose collaboration with the TKC National Federation (TKCNF), which consists of 11,400 TKC Members (as of September
30, 2023).
The TKCNF has set the activity policy and targets for the three years from 2022 as follows.
“TKC accountants challenging the future—push through field auditing and support companies in achieving positive balanceand proper filing! ”a) Massively expand superior electronic books—Promotion of self-accounting by the TKC methodsb) Become guardians of tax justice—Promotion of Shomen-tempu (attachment of tax audit reports) by the TKC methodsc) Support the achievement of positive balance and foster good-standing companies—Promotion of field auditing andmanagerial advisory services
To support the activities of TKCNF and the achievement of their targets, the Company will engage in sales activities focusedon the promotion of self-accounting by the TKC method.
[Activities to achieve “positive balance” and “proper filing”]
a. Initiatives towards fostering good-standing companies
TKC Group has established the following six criteria as indicators that SMEs should aim to achieve:- Self-accounting by the TKC method used to implement monthly settlements- Practice of shomen-tempu (attachment of tax audit reports) in accordance with Article 33-2, paragraph (1) of the Certified
Public Tax Accountants Act of Japan- Compliance with “Chusho Kaikei Yoryo” (Guidelines for SME Accounting)- Increase of marginal income for two consecutive fiscal years- Equity ratio of 30% or greater- Positive net income before taxes
Companies that satisfy these criteria are defined as “BAST good-standing company” in the 2023 TKC Management
Indicators (BAST), which contains financial statements data of more than 250,000 companies. TKC Members are working
on the implementation of monthly field audits and support for the establishment of a system for monthly settlements in- 26 -

order to increase the number of BAST good-standing companies. TKC is supporting these kinds of activities, and is broadly
promoting to society the fact that “TKC Members are escort runners working to foster good-standing companies in thecommunity.”b. Promotion of use of the 365 Days Floating Income Statement
TKC’s self-accounting system (FX series) includes features that support monthly settlements and the 365 Days Floating
Income Statement, which supports decision-making by management. The 365 Days Floating Income Statement is different
from the income statement in the system accounting and can confirm the operating results divided into the categories ofvariable costs and fixed costs, so corporate executives using the FX Series become able to tackle their management with anawareness of marginal income (net sales - variable costs). The Company is engaged in activities that seek to raise awarenessthat the 365 Days Floating Income Statement is an indispensable tool for management.
Note that a documentary program (“Strategic Management: A Documentary”/BS11) introducing examples of executives
themselves growing their companies by utilizing the 365 Days Floating Income Statement and implementing monthly
settlements was broadcast on television, and public relations activities were actively developed.
c. Promotion of self-accounting by the TKC methods (promotion of FX series)
With the start of repayment of the virtually interest-free/unsecured loans (“zero/zero loans”) extended during the COVID19 pandemic, as well as inflation and soaring fuel costs, SMEs are currently facing a challenging business environment. To
this end, we provided support for the utilization of functions incorporated in the FX series for the management strategy
level (the 365 Days Floating Income Statement, budget entry, management by division, financing results spreadsheet, andannual forecast management) . Moreover, in order for management to utilize these features effectively, it is necessary forthem to enter accounting transaction data in a timely and accurate manner and establish a system for monthly settlements.
Therefore, the Company has also provided support for the utilization of the daily-task-level, including a feature for receivingbank credit data, through which bank deposit transaction data can be received via online banking and journal entries
generated automatically, as well as a feature for the integration of salary journals with the strategic salary information system(PX2).
As a result of these activities, approximately 310,000 companies were using the FX series as of September 30, 2023.
Through the implementation of the FX series, the Company will continue working to support SMEs in establishing a system
for monthly settlements and achieving positive balance and proper filing.
d. Supporting complete compliance with the Revised Act on Book and Record Keeping through Electronic Methods
Under the Revised Act on Book and Record Keeping through Electronic Methods effective from January 1, 2022, there will
be a distinction among electronic books (i.e., electromagnetic records of national tax-related books): (i) “superior electronic
books” that contain the history of additions, deletions, and revisions made to the accounting data (traceable) (electronic
books that satisfy the requirements of both Article 2 and Article 5 of the Ordinance for Enforcement of the revised Act);and (ii) “other electronic books” that are prepared using accounting software that does not keep records of such
additions/deletions/revisions (electronic books that satisfy only the requirements of Article 2 of the Ordinance for
Enforcement of the revised Act). This legal reform also negates the “power of evidence” of the books, and the acceptanceof such accounting software implies that the government has approved the falsification of books. To address this issue, theCompany is promoting the use of the FX series for the preparation of “superior electronic books” on a national level. In
addition, electronic retention of electronic transaction data will be mandated under the Revised Act on Book and Record
Keeping through Electronic Methods. We will also continue to support the use of the documentary proof storage feature of
the FX series so that all businesses can support electronic transactions.
e. Supporting complete compliance with the new consumption tax invoicing system
TKC systems are designed not just to issue invoices as required by the consumption tax invoicing system, but to perform
accounting processing that fully conforms to the Revised Consumption Tax Act, as stated in the “Three key points” below.
[Three key points]- Whether a supplier is a qualified invoice issuer among business contacts is automatically identified by the name.
(There is no need to enter a 13-digit registration number for each supplier)- The applicability of transitional measures or special provisions is automatically checked, and a list of journal entries thatshould be corrected is displayed.
(This allows the user to identify the entries to which transitional measures apply, along with entries to which transitional
measures have been applied by mistake.)- All forms are managed in one process, from accounting records to a consumption tax return.
(Full conformance to the principle-based treatment stated in Supplementary Provisions 22 (1) (i) and 23 (1) (i) of the 2018
order for amendment)
To present these key points, the Company held the “Workshop to Prepare for the Upcoming Invoicing System” for TKC- 27 -

members starting from April 2023. The Company was privileged to host more than 5,000 firms and 17,000 participants in
200 venues across Japan. These workshops were an opportunity to deepen understanding of the conformity of TKC’s
financial accounting systems to the consumption tax invoicing system. Moreover in June 2023 the Company completed
conformity with the invoicing system of TKC Systems, and it is providing support so that the system conformity of theclients proceeds without confusion.
Note that TKC was certified as the first Peppol service provider in Japan on August 19, 2022 by the Digital Agency, theJapan Peppol authority, and OpenPeppol, the association responsible for the management of Peppol (headquarters:
Belgium). TKC’s self-accounting system is enhancing its features to allow the issuance and receipt of Peppol-compliant einvoices in a standardized manner.
f. Promotion of TKC Monitoring Information Service
TKC Monitoring Information Service is a free cloud-based service that allows TKC Members, upon the request of the
management of their clients, to disclose to financial institutions information such as monthly trial balance sheets, financial
statements, and tax returns prepared by TKC member firms after monthly field audits and monthly settlements.
The Company communicates to financial institutions that the reliability of financial statements prepared by SMEs can beverified using the following three sets of documents sent by the TKC Monitoring Information Service:i) Supporting documents submitted by TKC Members as provided for under Article 33-2 of the Certified Public Tax
Accountant Act of Japanii) 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 yearsiii) 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, TKC Monitoring Information Service has been adopted by 485 financial institutions as of
September 30, 2023, surpassing 330,000 instances of use.
As a tool which can confirm the three requirements presented in the Guidelines on Management Guarantees (distinguishingand separating relationships with corporations and individuals, strengthening of the financial foundation, and ensuring thetransparency of management through accurate ascertainment of the financial position and timely and appropriate
information disclosure), the TKC Monitoring Information Service is highly evaluated by financial institutions and credit
guarantee corporations offering management support to SMEs. It is expected to serve as a bridge between financial
institutions and TKC Members in their efforts to play the role of escort supporters of SMEs.
g. Soliciting new members (promotion of joining TKCNF)
TKCNF has set a goal of having over 1,000 firms join the federation as new TKC Members over the three-year period from2022 to 2024. To achieve this goal, the Company has engaged in efforts to strengthen its collaboration with the TKCNFNew Members Service Committee. At the same time, the Company has strengthened its support system to facilitate effective
utilization of TKC Systems, including the Office Management System (OMS Cloud) for Tax Accounting Firms, foraccounting firms that recently joined TKCNF.
[Activities to “support the preparation of highly reliable financial statements based on timely and accurate
bookkeeping”]
a. Support activities for diffusion of Chusho Kaikei Yoryo (Guidelines for SME accounting)
TKCNF recommends the use of the “Basic Guidelines with Respect to Accounting Procedures at Small- and Medium-sizedEnterprises” (hereinafter, “Chusho Kaikei Yoryo” (Guidelines for SME Accounting)) formulated in February 2012, withwhich SMEs should comply.
These Guidelines have been formulated based on the following principles: i) accounting that helps to grasp the company's
business situation; ii) accounting that contributes to providing information to stakeholders (financial institutions, etc.); iii)
accounting that complies with the Ordinance on Company Accounting while achieving harmony between accounting andtaxation system; and iv) accounting that does not place excessive burden on SMEs.
In order to support the activities of TKCNF aimed at the adoption and utilization of these Guidelines, the Company continues
to develop training materials and collaborate with other organizations supporting SMEs.
b. 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, etc. to objectively evaluate the business performance of TKC
Member firms. This service was developed with the aim of improving the reliability of financial statements and tax returns
prepared by TKC Members and facilitating smooth financing for the clients of TKC Members. By utilizing a feature of the- 28 -

Company's financial/accounting processing operations at TKC data centers that prohibits any retroactive insertions,deletions, or corrections to past data, the Company can prove, as a third party, that TKC Members have visited clients on amonthly basis to provide guidance on accurate bookkeeping (monthly field audits), and that all work processes frommonthly settlements to the final settlement of accounts and electronic tax filings have been completed in a comprehensive
and timely manner.
[Expansion into large-scale enterprise market]
The Company contributes to the compliance and rationalization of tax and accounting operations at large enterprises throughthe use of TKC systems, especially at listed companies, and is actively working to solicit these companies and their affiliates
to become clients of TKC Members.
a. Response to e-invoices
TKC is working on the dissemination of systems compatible with e-invoices. The Company worked with the Digital Agency
as a managing corporation for the E-Invoice Promotion Association (EIPA) and participated in the Digital and Tech
Exhibition at the G7 Digital and Tech Ministers’ Meeting in Takasaki, Gunma held in April 2023. At the exhibition, theCompany displayed Invoice Manager that enables transmission and reception of e-invoices (Peppol invoices).
Furthermore, in August 2023 TKC was installed as representative managing corporation of the EIPA, and together withapproximately 200 association member companies, primarily system vendors, we are working on activities to disseminate
e-invoices. In the “Future of Companies College 2023” held in September 2023, as the representative managing corporationof the E-Invoice Promotion Association, TKC gave a lecture about the details of e-invoices together with the Reduced
Consumption Tax Rate and Invoice System Support Office in the National Tax Agency.
Note that the Company has also switched invoices it issues (sales invoices) in principle to Peppol invoices since October
2023. In advance of this, we advanced preparations by giving guidance to the user companies using TKC Systems to theeffect that we would issue our invoices using Peppol invoices and regarding the specific use procedures, etc. From January2023 we commenced tests of the sending and receiving of Peppol invoices using Invoice Manager, and at the end of
September of the same year we had sent invoices using Peppol invoices to approximately 90 user companies. The Company
will continue to actively promote the use of e-invoices going forward.
b. Expansion of market share among large-scale enterprises and support for expanding the client base of TKC Members
The consolidated taxation system has been reformed for the fiscal year starting after April 1, 2022, and the new Group Tax
Sharing System has been commenced. TKC has confirmed that we were able to smoothly complete the electronic tax filingin all of the user companies in the first fiscal year after commencement of the Group Tax Sharing System by fully supporting
their tax filing operations through the use of the Group Tax Sharing System (e-TAX Group Sharing). Due to that we wereable to obtain a high evaluation from the user companies.
As a result of such activities, approximately 40% of the 20,800 some companies with a capital of 100 million yen or greater
now use our ASP1000R electronic tax filing system for corporations, the eConsoliTax consolidated tax payment system,and the Group Tax Sharing System (e-TAX Group Sharing) as of September 30, 2023.
At the same time, the number of corporate groups using the TKC Consolidated Group Solution totaled approximately 5,450
corporate groups as of September 30, 2023. Currently, its market share in the listed companies of Japan has reached 43%,
and 93 companies out of the 100 companies with the top net sales among the listed companies of Japan (93%) are using thesystems of TKC. Going forward, we will continue to aim for further dissemination and expansion of the systems.
[Expansion of markets for legal information database services]a. Increase of user base of TKC Law Library
The Company offers TKC Law Library as a standard service for legal research. The Library provides access to judicial
precedents, laws, documents, etc., as its basic services, and boasts collections of law journals, law books, and related sourcesof supplementary information. With the industry’s largest archive (more than 337,000 judicial precedents), TKC Law
Library serves as one of Japan’s major legal databases. The Company is promoting the use of our packaging service thatgathers such content into collections that cater to law firms and corporate legal departments. Since November 2022, wehave been periodically sending out email magazines containing the latest information including recommended articles toour customers and we have established a system that offers direct access to the service. As a result of these activities, there
has been a transition from paper-based research that makes use of reference rooms and libraries to online research, which
has led to a greater number of customers adopting our packaging service. TKC Law Library has been rated highly as the
only legal research service that encompasses comprehensive law-related information by providing access to information on
judicial precedents, laws, and documents, as well as major law journals and specialized books, leading to a steady rise in
the number of subscriptions.
For the period under review, as a result of promotional efforts aimed at TKC member firms, universities, law schools,
government offices, law firms, patent offices, corporate legal departments, as well as overseas research institutions and- 29 -

universities, 59,000 IDs in over 26,000 institutions were using the Library as of September 30, 2023.
b. Progress in the academic market
Many universities and law schools are promoting the digital transformation of their learning environment to allow for online
access to materials and research. More than 140 universities have signed a contract in FY2023 to adopt our TKC Educational
and Research Support System and TKC Law Library, which are rated highly by faculty members and students because they
can be used online anytime, anywhere, and contain a diverse variety of content that surpasses that of other companies. They
are also equipped with various features such as report submission, online exercises, tests, and other components that supportclasses and self-study. They have thus contributed to the development of the learning environment in universities by serving
as part of the online system infrastructure that supports classes and learning.
c. Learning support for students preparing for the bar exam
For law school students, graduates, individuals who have passed the preliminary exam, who aim to sit for the bar exam, we
support their preparation for the bar exam by providing a learning environment equipped with a system that contains practicequestions for the bar exam and by conducting the TKC Standardized Nationwide Mock Exam. This year, there were 4,165
bar exam applicants and the TKC Standardized Nationwide Mock Exam had 2,598 examinees (62.4%), which was a record
high. This also meant that we had more than five times the numbers of mock test takers offered by our competitors for six
consecutive years, and that we offer the industry’s top-ranked standardized mock test. Going forward, in order to increase
the number of test takers, we will advance preparations to gradually offer examination paper input, digital correction, etc.
for the transition to the CBT exam in 2026 announced by the Ministry of Justice.
2) Analysis of Accounting Firm BD’s operating results
Net sales of the Accounting Firm BD were 48,749 million yen (increased 4.9% year on year); operating income was 11,139
million yen (decreased 1.3% year on year). Breakdown of key sales is as follows:a. Sales from computer services increased by 3.5% year-on-year. This was attributable to the growth in number of
implementations of the FX4 Cloud Integrated Accounting Information System for mid-size companies, as medium-size
companies are rapidly working towards digital transformation (DX). In addition, the adoption of the Office Management
System (OMS Cloud) for Tax Accounting Firms and the OMS Mobile which allows them to work remotely using the OMS
from home or outside their offices proceeded, and the amount of data preserved in data centers increased, which also
contributed to increase in sales.
b. Software sales increased by 5.3% year-on-year. This was attributable to increase in clients who began using the FX Cloud
Series with enhanced qualified invoice issuer check functions and documented evidence storage functions for the first time
to comply with the consumption tax invoicing system and the Revised Act on Book and Record Keeping through Electronic
Methods.
c. Sales from consulting services increased 5.5% year-on-year. This was due to strong sales of the FX4 Cloud, leading toincrease in the number of implementations of the system launch support services.
d. Hardware sales increased by 2.5% year-on-year. This was mainly due to the costs for the purchase of hardware starting to
be covered by funding under the Subsidy Program for Introducing IT to Businesses for Productivity Improvement in
Services, etc. (“Subsidies for Introduction of IT”) of the Small and Medium Enterprise Agency, new purchases of computersand scanners increasing as a consequence of the expiration on December 31, 2023 of safe harbor rules concerning electronictransaction data under the Revised Act on Book and Record Keeping through Electronic Methods, and the rise in the sales
unit price of IT devices.
e. Sales from supplies decreased by 0.4% year-on-year. This was mainly due to the decrease in demand for printing-related
consumables with the progress of digitalization, despite the strong sales of office equipment to support remote works anddigitalization as well as books on the consumption tax invoicing system and the Revised Act on Book and Record Keeping
through Electronic Methods.
f. Note that operating income decreased compared to the previous fiscal year because from July 2023 onward we actively held
seminars and provided a full range of tools in order to support conformity with the consumption tax invoicing system andthe Revised Act on Book and Record Keeping through Electronic Methods, and therefore sales promotion costs increased,etc.
(iii) Business activities and operating results of the Local Governments Business Division
1) Business activities of the Local Governments BD
The Local Governments BD operates in accordance with the business objectives set forth in the Articles of Incorporation(Article 2 Item 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.

- 30 -

The Company provides the TKC Government Cloud Service to municipalities. This is a cloud service that consists of the
TASK Cloud Service and the TASK Outsourcing Service. The TASK Cloud Service consists of mission-critical systemrelated services for managing Basic Resident Registers and tax affairs information, internal information system-related
services that include financial accounting (public accounting) and payroll calculations, and support services for thedigitalization of administrative services that include online applications for administrative procedures. The Service has been
adopted by more than 1,140 municipalities (prefectures, cities, wards, towns, villages, etc.) as of September 30, 2023.
a. Development and provision of mission-critical system-related services
Our TASK Cloud Service is a single-version package system operated at our data centers that is designed to allow sharedusage by multiple institutions. Service fees are charged in the form of a subscription fee, which also includes one regularupgrade per year. The TASK Outsourcing Service supports massive batch printing forms such as tax papers and entry tickets
for elections. In the current period under review, we provided these municipalities with aggressive support for theirvaccination programs by promptly carrying out contracts for the printing of vouchers, etc., for COVID-19 vaccine booster
shots (vaccinations commenced in spring 2023 and fall 2023). In recognition of this, our mission-critical system-related
services have been adopted by approximately 170 local municipalities as of September 30, 2023.
b. Support for digitalization and online provision of administrative services (administrative procedures)
The Company provides support services for the digitalization of administrative services to achieve digital counter services
with the “3 No’s (no visiting, no waiting, and no writing).” During the period under review, we have greatly enhanced thefunctionalities of the TASK Cloud Smart Application System, the TASK Cloud Easy Counter Service System, and the TASKCloud My Number Card Issuance Reservation and Management System. As a result of this, the TASK Cloud Smart
Application System has been adopted by at least 50 agencies, including government ordinance-designated cities such as
Osaka and Yokohama, while the TASK Cloud Easy Counter Service System and the TASK Cloud My Number Card
Issuance Reservation and Management System have been adopted by at least 100 and 160 agencies, respectively, as of
September 30, 2023.
c. Support for digitalization of local tax administrations
As an authorized contractor of the Local Tax Agency, the Company provides cloud-based services for standard systems
such as the inspection system eLTAX (local tax portal system) offered by the Agency. We also develop and provide a Data
Integration Service as our proprietary feature to integrate these systems with the individual tax systems of various
municipalities.
In promoting these services, we have jointly developed proposals with approximately 50 partner companies with which wehave ongoing alliance partner agreements. As a result, our TASK Cloud Local Taxes Electronic Filing Support Service iscurrently used by approximately 790 agencies, which account for more than 40% of all prefectures and local municipalities,
as of September 30, 2023.
In the current period under review, we also worked to support the implementation of systems accompanying the additionaltax items for the common local tax payment system that was launched in April 2023.
d. Development and provision of financial accounting system that is fully compliant with the local public accounting system
The Company provides the TASK Cloud Public Accounting System, which is compatible with the daily journalizing method
and the financial statement generation features based on the standardized criteria formulated by the Ministry of Internal
Affairs and Communications, as well as its related systems TASK Cloud Non-current Assets Control System and TASKCloud Consolidated Financial Statement Generation System.
During the period under review, we launched the next-generation version of our public accounting system with enhanced
features that support sustainable financial management through the visualization of financial status and the digitaltransformation of internal administrative tasks through electronic payments and integration with electronic invoicing. As aresult, the TASK Cloud Public Accounting System has been adopted by at least 320 agencies as of September 30, 2023.
Furthermore, as a consequence of the commencement of the consumption tax invoicing system from October 2023, weshared know-how with the Accounting Firm Business Division, installed functions in the systems and provided support ofmunicipalities, etc. for the transition. Going forward, we will work to support e-invoices for the further streamlining of theoperations of our customers.
e. Research and development of next-generation products
In October 2022, the Basic Policy on the Standardization of Local Government Information Systems was approved by the
Cabinet. This requires municipalities to migrate their mission-critical operational systems (20 operations) to applications(standard spec-compliant systems) built on Gov-Cloud that comply with the standardization criteria by the end of FY2025.
To respond to changes in the environment surrounding local governments, the Company has organized Local Government
Digital Transformation Promotion Seminars designed for municipalities and is working to strengthen customer support
through the collection and dissemination of the latest information on the standardization of local government information- 31 -

systems.
In addition, Misato Town in Saitama Prefecture launched the operation of its mission-critical operational system on October
31, 2022, as part of the Gov-Cloud Preliminary Project, in which the Company is involved as a partner developer(application developer). This was followed by Kawajima Town’s launch of its system in December. These were the firstcases in Japan of operating on Gov-Cloud, and we aim to harness the knowledge gained from this preliminary project tocomplete the migration of all customers to systems that are compliant with the standard specifications and operation of the
Gov-Cloud by the target deadline stipulated by the Government (March 31, 2026).
2) Analysis of Local Governments BD’s operating results
Net sales of the Local Governments BD were 20,357 million yen (increased 11.7% year on year); operating income was
3,059 million yen (increased 59.2% year on year). Breakdown of key sales is as follows:a. Sales from computer services increased by 7.2% year-on-year. This was driven by increase in data center usage fees by new
clients whose systems ordered in the previous fiscal year were fully launched, and continued new contracts for printing ofvouchers, etc., for COVID-19 vaccine booster shots (vaccinations commenced in spring 2023 and fall 2023).
b. Software sales increased by 5.8% year-on-year. This was due to the additional tax items for the common local tax payment
system and the increase in software usage fees as a consequence of the systems of new customers contracted by the previous
fiscal year commencing full-scale operations, etc. Note that the software usage fees of the Company are in the form of fixed
rate subscription fee depending on the scale of the municipality, so they are steadily growing in association with the growthin number of clients.
c. Sales from consulting services increased 146.0% year-on-year. This was due to the one-stop service for completing moving
in/out procedures, which was commenced when the Basic Resident Register Act was partially amended, the expansion of
the tax items for the common local tax payment system (the payment of local taxes using standardized local tax QR codes),and the support the Company provided for the introduction of systems for the government-related digital services that were
outsourced thereto as a new project.
d. Hardware sales increased by 5.4% year-on-year. This was due to the fact that the introduction of network devices inmunicipalities intensified as a consequence of their responses to the local government information security measures led by
the Ministry of Internal Affairs and Communications.
e. Note that operating income increased compared to the previous fiscal year due to the fact that we recorded the standard
spec-compliant systems, etc. currently under development as assets, etc.
(iv) Business activities and operating results of the Printing Business Division
1) Business activities of the Printing Business BD
TLP Corporation (hereinafter, “TLP”), which is responsible for the Group’s Printing Business, operates with a primary
focus on the DPS business, business form printing, and the printing of commercial-use creative materials.
The DPS business received orders for the COVID-19 vouchers, notification operations related to the emergency support
benefits to address rising prices, etc. of the customer municipalities of TKC’s TASK Outsourcing Service and the customer
municipalities of the Printing Business Division, and supported their administrative services. Meanwhile, with respect toprivate companies, it continued the proposal of outsourcing (BPO) with the objectives of rationalizing the creation of direct
mails (hereinafter, “DMs”) and mainly notification-related operations of general administration, accounting, and personnel
departments. In particular, in the creation of DMs, we are working to increase the value offered to customers who use theCompany’s services, including the measurement of DMs’ effects using the QR code printed on the DM.
In the business form printing field, the use of business forms and slips is decreasing due to the increasing adoption of
paperless methods, but cases in which companies use handwritten slips are strongly rooted and the form printing
technologies we have cultivated to date are highly evaluated, resulting in the receipt of orders.
In the commercial-use creative materials field (catalogs, books, etc.), we are continuing support to provide in a timely
manner the products which satisfy the timing and content required by the client companies, for example, printing operations
for the anniversary events of client companies, revised editions of specialist books due to legal revisions, etc. Furthermore,
the holding of face-to-face seminars, etc. is increasing in number and the number of requests for the creation of distributed
materials is also increasing. And, in the creation of these materials, cases in which we receive orders for the entire processfrom creation of the design to the printing are also increasing.
Furthermore, TLP acquired the FSC® certification (CoC certification/FSC-C182216) on October 3, 2022. Against the
backdrop of an increasing number of environmentally conscious customers, we have steadily increased the use of FSCcertified paper. We have also begun producing and selling paper files as an environmentally friendly alternative to clear
files. We seek to cater to the needs of customers who are environmentally conscious through the development andproduction of these environmentally friendly products.

- 32 -

Note that a lawsuit claiming compensation for damages dated October 3, 2023 has been filed against TLP by the Japan
Pension Service on the grounds that damages remain which are still not covered by the penalties already collected due tothe bid rigging which was subject to the cease and desist order against TLP by the Japan Fair Trade Commission based on
the Antimonopoly Act, and the case is currently in litigation.
2) Analysis of Printing Business BD’s operating results
Net sales of the Printing BD were 2,808 million yen (decreased 10.7% year-on-year); operating income was 127 million
yen (decreased 11.8% year-on-year). Breakdown of key sales is as follows:a. Sales of products related to the data printing service (hereinafter, “DPS”) decreased by 12.2% year on year. This was dueto the fact that in the current fiscal year there were no large projects for which the Company received an order by tendersuch as the printing operations for the entry tickets for the House of Representatives elections in October 2021 and the “final
tax filing notification postcards” by the National Tax Agency we received the order for in the previous fiscal year.
b. Business form-related sales increased by 8.6% year on year. This was driven by an increase in slip printing orders received
from client companies that the Company had newly acquired in the previous fiscal year.
c. Sales of printing of commercial-use creative materials (catalogs, books, etc.) increased by 9.8% year-on-year. This was dueto the fact that we received orders for books explaining the consumption tax invoicing system and printing operations forthe anniversary commemoration projects of client companies, and the fact that orders for the creation of distributed materials
increased due to the increase in the holding of face-to-face seminars, etc.
d. Note that operating income decreased compared to the previous fiscal year because net sales of the highly profitable DPSrelated products decreased and outsourcing processing costs increased as a consequence of the addition of QR codes to local
tax payment forms.
(v) Important matters with respect to the Company as a whole
1) First launch of operation in Japan as part of the Gov-Cloud Preliminary Project
Misato Town in Saitama Prefecture launched the operation of its mission-critical business system on October 31, 2022, aspart of the Gov-Cloud Preliminary Project, in which the Company is involved as a partner developer (application developer).
This was followed by Kawajima Town’s launch of its system in December of the same year. These were the first cases inJapan of operating on Gov-Cloud, and we will aim to harness the knowledge gained from this preliminary project tocomplete the migration of all customers to systems that are compliant with the standard specifications and operation of the
Gov-Cloud by the target deadline stipulated by the Government (end of FY2025).
2) Commencement of the sending and receiving of Peppol invoices (e-invoices)
A trial has been implemented on sending and receiving Peppol invoices (e-invoices) based on the international standard
specification Peppol in the more than 90 user companies of Invoice Manager, the cloud-based system of the Company. In
the future, the Company plans to utilize Peppol invoices in its billing operations as a consequence of the commencement ofoperation of the invoicing system in October 2023, and to accumulate expertise and share it with user companies, thereby
supporting the digitalization of billing operations and manpower reduction for accounting operations.
3) The number of users of the FX Series which conforms with the consumption tax invoicing system and the Revised Act onBook and Record Keeping through Electronic Methods has surpassed 310,000 companies
In June 2023, the FX Cloud Series completed conformity with the consumption tax invoicing system and Revised Act onBook and Record Keeping through Electronic Methods. The FX Cloud Series, which combines accounting and sales
management functions, has adopted subscription-type usage fees, so it can respond to all types of legal system revisions
without adding new costs. These points have been highly evaluated and as a result the number of companies using the FX
Series surpassed 310,000 in September 2023.
4) Commencement of the use of AI chat services
TKC has launched the internal use of TKC AI Assistant, the AI chat service that TKC has developed based on an extensive
language model from Azure OpenAI Service. The Company actively uses TKC AI Assistant not only for systemdevelopment, but for internal administrative work and on-the-ground sales tasks in order to improve employee efficiency
and productivity.
5) Implementation of a wage rise of a total amount of 5%
TKC has set the target of a labor share ratio (the ratio of personnel expenses with respect to the marginal income which is
obtained by subtracting the necessary costs from the net sales) of 50%. Due to this, we are able to increase the per capita
personnel expenses in proportion to the operating results of the company every year. In recent years, electricity bills and theprices of commodities have continued to rise due to the impact of the rising cost of resources, so from April 2023 we
implemented a total increase in the base wage of 5%.
6) TKC Customer Support Service Co., Ltd. (TCSS) rated “3 Star” for two consecutive years in HDI Benchmarking- 33 -

TCSS is a fully owned subsidiary of the Company that specializes in offering call center services. On March 8, 2023, TCSS
was awarded the highest “3 Star” rating by HDI-Japan in its quality ranking benchmark for the phone support services
provided. This marks the second consecutive year following 2022 that TCSS has received the highest rating.
(vi) Analysis of the Group’s consolidated financial conditions for the current consolidated fiscal year
1) Assets
Total assets as of the end of the current consolidated fiscal year amounted to 116,356 million yen, a 7,130 million yen
increase compared to 109,225 million yen as of the end of the previous consolidated fiscal year.
a. Current assets
Current assets as of the end of the current consolidated fiscal year amounted to 43,173 million yen, a 2,458 million yen
increase from 40,715 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to an increase of 2,173 million yen in cash and deposits.
b. Non-current assets
Non-current assets as of the end of the current consolidated fiscal year amounted to 73,182 million yen, a 4,672 million yen
increase compared to 68,510 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a 3,302 million yen increase in investment securities, 1,246 million yen increase in softwarein progress, and 1,000 million yen increase in long-term time deposits, despite a 649 million yen decrease in deferred tax
assets.
2) Liabilities
Total liabilities as of the end of the current consolidated fiscal year amounted to 21,047 million yen, a 851 million yen
decrease compared to 21,899 million yen as of the end of the previous consolidated fiscal year.
a. Current liabilities
Current liabilities as of the end of the current consolidated fiscal year amounted to 16,797 million yen, a 881 million yen
decrease from 17,679 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a decrease of 729 million yen in income taxes payable.
b. Non-current liabilities
Non-current liabilities as of the end of the current consolidated fiscal year amounted to 4,249 million yen, a 29 million yen
increase from 4,219 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a 150 million yen increase in retirement benefit obligations, despite a 90 million yen decreasein lease obligations.
3) Net assets
Total net assets as of the end of the current consolidated fiscal year amounted to 95,308 million yen, a 7,982 million yen
increase compared to 87,325 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to an increase of 6,146 million yen in retained earnings and an increase of 2,209 million yen
in valuation difference on available-for-sale securities.
Capital-to-asset ratio as of the end of the current consolidated fiscal year was 81.9%, a 2.0 point increase compared to theratio of 80.0% as of the end of the previous consolidated fiscal year.
(vii) Analysis of the Group’s cash flows for the current consolidated fiscal year
The balance of cash and cash equivalents as of the end of the current consolidated fiscal year increased by 2,173 million yen
from the end of the previous consolidated fiscal year amounting to 28,793 million yen. The overview of cash flows for thecurrent fiscal year and major factors contributing to the results are as follows:
1) Cash flows from operating activities
Cash flows from operating activities increased by 13,067 million yen (16 million yen increase in revenue year-on-year).
Major factors include the recognition of 15,135 million yen under net income before taxes and adjustments and 3,533
million yen under depreciation, and payment of 5,424 million yen for income taxes.
2) Cash flows from investing activities
Cash flows from investing activities decreased by 5,861 million yen (1,518 million yen increase in spending year-on-year).
Major factors include expenditure of 4,300 million yen into time deposits, revenue of 3,300 million yen from withdrawalof time deposits, expenditure of 1,671 million yen for purchase of property, plant, and equipment, and expenditure of 3,119
million yen for the acquisition of intangible assets.
3) Cash flows from financing activities
Cash flows from financing activities decreased by 5,571 million yen (357 million yen increase in spending year-on-year).
Major factors include expenditure of 1,090 million yen for the purchase of treasury stock, and payment of 4,260 million
yen for year-end dividends as of the end of September 2022 (dividend of 42 yen per share) and interim dividends for the- 34 -

term ended September 2023 (dividend of 39 yen per share).
Trends in cash flow indicators of the Group are as shown below:
FY ended September 2020

FY ended September 2021

FY ended September 2022

FY ended September 2023

78.9

80.7

80.0

81.9

183.2

179.2

164.6

163.1

Equity ratio (%)
Ratio of equity at market
value (%)
Debt redemption (years)

0.1

0.1

0.1

0.1

Interest coverage ratio (x)6,492.7

27,055.7

8,627.1

11,323.4

Equity ratio = Total equity ÷ Total assets x 100
Ratio of equity at market value = Market cap ÷ Total assets x 100
Years of debt redemption = Interest-bearing debts ÷ Operating cash flows
Interest coverage ratio = Operating cash flows ÷ Interest expense(Notes) 1. Each indicator is calculated based on consolidated financial figures.
2. Market capitalization is calculated by multiplying the closing share price as of the end of the fiscal year by the numberof outstanding shares at the end of the fiscal year (after deducting treasury stocks).
(2) Production, Orders Received and Sales(i) Production
None to be disclosed.
(ii) Orders received
None to be disclosed.
(iii) Sales results
Sales results by segment for the current consolidated fiscal year were as follows:
Name of segment

Amount (million yen)

Year-on-year rate (%)

Accounting Firm Business

48,749104.9

Local Governments Business

20,357

111.7

Printing Business

2,808

89.3

71,915

106.0

Total
(Note) Transactions between segments have been offset.

(3) Analysis and Discussions on Operating Results, etc. from Management’s Perspective(i) Significant accounting estimates and assumptions used in said estimates
The Group’s consolidated financial statements have been prepared in accordance with accounting standards that are generally
accepted as fair and appropriate in Japan. In preparing the consolidated financial statements, certain parts require management
to use estimates and assumptions within these accounting policies, and such estimates and assumptions are reflected in the
figures of assets and liabilities, revenue and expenses. While management conducts assessments on these estimates on an ongoing basis and makes revisions as necessary based on changes in conditions, there are uncertainties in the estimates that
could cause actual results to differ from such estimates.
Of the significant accounting estimates and assumptions used in said estimates of the Group, those estimates used that may
have material impacts on the Group’s consolidated financial statements are described in the Notes to Consolidated Financial
Statements (Significant Accounting Estimates) under Part 5 [Financial Information] 1. Consolidated Financial Statements,(1) Consolidated Financial Statements.
(ii) Factors having material impacts on the Group’s operating results
Refer to 3 [Risk Factors].
(iii) Analysis and discussions on the Group’s cash flows, capital resources and liquidity of funds
In strengthening the Group’s management to achieve sustainable growth of its corporate value, the Group makes it a basic
policy to fund its business operation primarily by its own capital. Under this policy, we believe that we hold adequate cashon-hand to maintain our business operation and to ensure a sufficient level of liquidity.
With the rapid advancement of information and communication technology (ICT) and major changes in social systems, we
strive to make advance investments in research and development efforts and to actively pursue other capital investments to
respond quickly to the changing market environment and achieve competitive advantage to lead our customers’ business to
success.

- 35 -

(iv) Objective indicators to measure the status of achievement of the Group’s management policy, management strategy, andmanagement goals
The Company maintains the principle of attributing the source of dividend for each fiscal year to the profit earned in the same
fiscal year, on the premise of a company as going concern. Based on this policy, we establish and manage the following items
as important management indicators:
1) Management indicators based on consolidated figures
a. Year-on-year sales ratio: 3% or greaterb. Return on equity: 8% or greater
2) Management indicators based on non-consolidated figures
a. Equity ratio: greater than 80%
b. Recurring profit margin: 8% or greaterc. Total marginal profit ratio: 60% or greater* Marginal profit is the amount derived by deducting the costs that change in proportion to sales (variable costs) from theamount of sales. Marginal profit will vary depending on product mix. Total marginal profit ratio means the ratio of theamount of this marginal profit in relation to the amount of sales.
In such situation, the consolidated year-on-year sales ratio of the current fiscal year under review was 6.0% (an increase of
3.6 points year-on-year), and consolidated return on equity was 11.9% (an increase of 1.0 points year-on-year).
The non-consolidated equity ratio was 85.0% (an increase of 1.7 points year-on-year), non-consolidated recurring profit
margin was 20.8% (a decrease of 0.1 points year-on-year), and non-consolidated total marginal profit ratio was 78.7% (adecrease of 0.2 points year-on-year).
In order to maintain the high level of performance, we will work to improve the Company’s earnings structure and capitalefficiency.

- 36 -

5 [Material Agreements, etc.]
None to be disclosed.

6 [Research and Development Activities]
There were no research and development expenses spent by the TKC Group during the current consolidated fiscal year.
There are no significant changes in the status of research and development activities of the TKC Group during the current
consolidated fiscal year.

- 37 -

Part 3 [Property, Plant and Equipment]
1 [Summary of Capital Investments]
The Group (the Company and its consolidated subsidiaries) makes capital investments on an ongoing basis in both softwaredevelopment and information processing services.
Capital investments (including intangible assets and adjustments) of 6,002 million yen were made in the current consolidated
fiscal year.
(1) Accounting Firm Business
Capital investment of 2,914 million yen was made for reinforcement of the common cloud infrastructure to enhance the cloudenvironment for the Company’s systems, and in the development of software for sale.
(2) Local Governments Business
Capital investment of 2,784 million yen was made for replacement of the eLTAX Service operating equipment and for thedevelopment of software to provide services over the cloud system.
(3) Printing Business
Capital investment of 302 million yen was made for the installation of inkjet printers (lease assets).

2 [Major Property, Plant and Equipment](1) The Company
As of September 30, 2023
Book values (million yen)
Name of office(Address)

Name ofsegment

Facilities

Land(Area inm2)

Tools,
furniture&
fixtures

Other

Total

No. ofemployees(No. ofpeople)8

2,807(31,056.13)

1,640

5,731

15,257

1,287

Buildings&
structures

Machinery,equipment& vehicles

5,069

TKC Tochigi Head Office
TKC Systems Development
Research Center
TKC Internet Service Center
TKC Tochigi Consolidated
Information Center(Utsunomiya-shi, Tochigi,etc.)*1, *2

Accounting
Firm
Business
Local
Governments
Business

Development
facilities
Information
communication
servicefacilities
Information
processing
facilities

TKC Tokyo Head Office
TKC Systems Development
Research Center Tokyo Branch(Shinjuku-ku, Tokyo)

Accounting
Firm
Business
Local
Governments
Business

Office facilities

88

－

－

82

－

171

356

TKC Tokyo Consolidated
Information Center(Nerima-ku, Tokyo)

Accounting
Firm
Business

Information
processing
facilities

193

－

2,224
(1,447.44)

16

－

2,433

18

TKC Chubu Consolidated
Information Center(Kasugai-shi, Aichi)

Accounting
Firm
Business

Information
processing
facilities

59

－

196
(3,017.47)

9

0

265

17

TKC Kansai Consolidated
Information Center(Ibaraki-shi, Osaka)

Accounting
Firm
Business

Information
processing
facilities

431

－

286
(1,808.03)

12

0

731

36

TKC Chushikoku Consolidated
Information Center
TKC Chushikoku Control
Center(Kita-ku, Okayama-shi,
Okayama)

Accounting
Firm
Business

Information
processing
facilities
Office facilities

10

－

－

11

－

21

9

TKC Kyushu Consolidated
Information Center(Koga-shi, Fukuoka)

Accounting
Firm
Business

Information
processing
facilities

136

－

203
(2,341.48)

8

0

348

10

- 38 -

As of September 30, 2023
Book values (million yen)

No. ofemployees(No. ofpeople)Name of office(Address)

Name ofsegment

Facilities

TKC Hokkaido Consolidated
Information Center
TKC Hokkaido SCG Service
Center(Chuo-ku, Sapporo-shi,
Hokkaido)

Accounting
Firm
Business

Information
processing
facilities
Office facilities

32

－

－

15

0

47

33

TKC Tohoku Consolidated
Information Center
TKC Tohoku SCG Service
Center(Aoba-ku, Sendai-shi, Miyagi)

Accounting
Firm
Business

Information
processing
facilities
Office facilities

4

－

－

15

0

19

18

TKC Okinawa SCG Service
Center(Naha-shi, Okinawa)

Accounting
Firm
Business

Office facilities

13

－

－

3

0

17

6

TKC Ibaraki SCG Service
CenterTKC Ibaraki Sales Section(Tsukuba-shi, Ibaraki)

Accounting
Firm
Business
Local
Governments
Business

Office facilities

18

－

147
(1,120.00)

1

0

167

23

TKC Yamaguchi SCG Service
Center(Yamaguchi-shi, Yamaguchi)

Accounting
Firm
Business

Office facilities

18

－

197
(814.00)

1

0

217

6

Dormitories, company housing(Utsunomiya-shi, Tochigi)

Accounting
Firm
Business
Local
Governments
Business

Welfarefacilities

197

－

391
(5,326.69)

8

－

597

－

Buildings &structures

Machinery,
Tools,
Land
equipment
furniture
2(Area in m )& vehicles& fixtures

Other

Total

(2) Domestic subsidiaries
As of September 30, 2023
Book values (million yen)Company
nameName of office(Address)

Name ofsegment

TLP
Corporation

Hanyu Plant(Hanyu-shi,
Saitama)Printing
Business

Printing
facilities

46

242

145
(7,275.17)

TLP
Corporation

DPS Solutions
Center(Hanyu-shi,
Saitama)Printing
Business

Printing
facilities

849

150

132
(9,768.00)

Facilities

Machinery,
Buildings &equipment
structures& vehicles

Other

Total

No. ofemployees(No. ofpeople)

10

22

466

79

26

355

1,514

61

Tools,
Land
furniture(Area in m2)& fixtures(Notes) 1. The status of equipment and facilities held by consolidated companies other than those described above is small in scaleand has been omitted.
2. The “Other” field under book value represents leased assets and software (including work in progress).
3. *1 includes some of the welfare facilities.
*2 includes 1,187 million yen for leased buildings and 27 million yen for leased tools, furniture & fixtures, which are leased
to our subsidiary TKC Customer Support Service Co., Ltd.

- 39 -

4. Major leased facilities and equipment other than those described above are as follows.
(The Company)
Annual office rent

730 million yen

3 [Plans for Capital Investments, Disposals of Property, Plant and Equipment]
Capital investments of the Group are planned based on comprehensive review of economic forecast, industry trends, investment
efficiencies and other factors.
While, in principle, capital projects are formulated individually by each consolidated company, the Company takes initiative inmaking Group-wide adjustments.
There are no plans for the establishment or disposal of major facilities and equipment as of the end of the current consolidated fiscal
year (September 30, 2023), except for routine updates of facilities and equipment and disposals and/or sales related thereto.

- 40 -

Part 4 [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(ii) [Issued shares]
As of the end of the fiscal
year
Class

Number of shares (shares)

Number of shares (shares)(December 18, 2023)(September 30, 2023)
Common stock

As of the date filed

53,166,466

Total

Tokyo Stock Exchange
Prime Market

53,166,466

53,166,466

Name of stock
exchange on which theCompany is listed, orname of Authorized
Financial Instruments
Firms Association

53,166,466

Description

Number of sharesconstituting a unit:
100 shares－－(2) [Share subscription rights, etc.](i) [Stock option scheme]
None to be disclosed.
(ii) [Rights plan]
None to be disclosed.
(iii) [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.]
Increase or
Increase or
Balance of total
decrease in total
decrease in
number ofDatenumber ofcapital stock
issued sharesissued shares(millions of(shares)(shares)yen)
April 1, 2021
26,731,033
53,462,066－(Note 1)
September 29, 2023
(Note 2)(295,600)

53,166,466－(Notes) 1. As a result of a stock split (1:2).
2. As a result of retirement of treasury stock.

- 41 -

Balance ofcapital stock(millions ofyen)

Increase or
decrease incapital reserve(millions ofyen)

Balance ofcapital reserve(millions of
yen)

5,700

－

5,409

5,700

－

5,409

(5) [Shareholders Composition]
As of September 30, 2023
Status of shares (100 shares in one unit of shares)
Foreign corporate bodies,
etc.
NonIndividuals
individuals

Number ofshares lessthan oneunit(shares)

Government&
municipalities

Financial
institutions

Financial
instruments
business
operators

Number ofshareholders

－

25

23

154

159

3

8,264

8,628

－

Number ofshares held
(share units)－

168,432

4,075

130,683

84,14914

143,584

530,937

72,766Percentage ofshares held
(%)

－

31.7

0.8

24.6

15.8

0.0

27.0

100.0

－

Classification

Other
corporatebodiesOther
individuals

Total(Notes) 1. Of the 813,768 shares held as treasury stock, 8,137 share units are included in “Other individuals” and 68 shares areincluded in “Number of shares less than one unit.”
2. Of the shares registered under the name of Japan Securities Depository Center, Inc., 13 units are included in “Other
corporate bodies” and 74 shares are included in “Number of shares less than one unit.”
3. The “Financial Institutions” column includes 2,060 units of the Company’s stocks owned by the BIP Trust.
(6) [Major Shareholders]Name of shareholder

Address

As of September 30, 2023
Percentage ofshares held to the
Number of shares held
total number of(hundred shares)
issued shares(excluding treasury
stock) (%)

Iizuka Takeshi ScholarshipFoundation

1758 Tsurutamachi, Utsunomiya-shi, Tochigi

75,17014.4

Daido Life Insurance Company

1-2-1 Edobori, Nishi-ku, Osaka-shi, Osaka

51,3809.8

2-11-3 Hamamatsucho, Minato-ku, Tokyo

43,5908.3

3-45-13 Minamidai, Nakano-ku, Tokyo

30,930

5.9

2-1 Agebacho, Shinjuku-ku, Tokyo

29,066

5.6(Standing proxy: The Hong Kong & BOSTON, MASSACHUSETTS USA 02111
Shanghai Banking Corporation)(3-11-1 Nihonbashi, Chuo-ku, Tokyo)

22,887

4.4

Masaharu Iizuka

Utsunomiya-shi, Tochigi

14,6262.8

2-6-4 Otemachi, Chiyoda-ku, Tokyo

13,3282.5

P.O. BOX 351 BOSTON MASSACHUSETTS
02101 USA12,512

2.4

1-28-1 Ebisu, Shibuya-ku, Tokyo

11,966

2.3

1-26-1 Nishishinjuku, Shinjuku-ku, Tokyo

11,9662.3

317,424

60.6

The Master Trust Bank of Japan,
Ltd. (Trust account)Sozeishiryokan (The Institute ofTax Research and Literature)
TKC Employee Shareholding
Association
SSBTC Client Omnibus Account

Tokio Marine & Nichido Fire
Insurance Co., Ltd.
State Street Bank and Trust
Company 505025(Standing proxy: Mizuho Bank,
Ltd.)
Aioi Nissay Dowa Insurance Co.,Ltd.
Sompo Japan Insurance Inc.
Total

ONE CONGRESS STREET, SUITE 1,(2-15-1 Konan, Minato-ku, Tokyo)－(Note) The 206,000 shares of the Company held by the BIP Trust are not included in the treasury stocks to be deducted in calculating
the percentage of shares held to the total number of issued shares.

- 42 -

(7) [Status of Voting Rights](i) [Shares issued]
As of September 30, 2023
Classification

Number of shares (shares)

Number of voting rights(units)

－

－

－

－

－

－

－

－

－

813,700－－

Shares without voting right
Shares with restricted voting right (treasury
stock, etc.)
Shares with restricted voting right (others)

Description

Shares with full voting right (treasury stock,

Common

etc.)

stock

Shares with full voting right (others)

Commonstock

52,280,000

522,800－

Shares less than one share unit

Commonstock

72,766－－53,166,466

－

－

－

522,800－

Total number of shares issued
Total voting rights held by all shareholders(Note) Shares with full voting right (others) include 1,300 shares (13 units of voting rights) registered in the name of the Japan
Securities Depository Center, Inc., and 206,000 shares (2,060 units of voting rights) held by the BIP Trust.
(ii) [Treasury stock, etc.]

Name ofshareholder
Kabushiki Kaisha
TKC

Address of shareholder
1758 Tsurutamachi,
Utsunomiya-shi,

As of September 30, 2023
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)

813,700－

813,700

1.53

813,700－

813,700

1.53

Tochigi
Total－(Note) In addition to the above, the 206,000 shares owned by the BIP Trust are recorded as treasury stocks in the consolidated
financial statements.
(8) [Information on Employee Stock Ownership Plan]
The Company introduced this Plan with the objectives to clarify the linkage between the Company’s shareholder value and the
remuneration for directors (excluding outside directors and expatriates), executive officers (excluding expatriates), and auditors(excluding outside directors and expatriates) (hereinafter referred to collectively as “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 associated with the decline in share price. The
introduction of the Plan was approved by resolution at the 52nd Ordinary General Meeting of Shareholders held on December
21, 2018.
The trust period of the Plan was established for three fiscal years between the fiscal year ending September 30, 2019 and thefiscal year ending September 30, 2021 (“Initial Trust Period”). Since the trust period was to expire on February 28, 2022, theCompany resolved at the Board of Directors Meeting held on February 10, 2022 to extend the trust period for three years andto continue the Plan.
(i) Description of the Plan
The Plan uses a structure called Board Incentive Plant trust (hereinafter “BIP Trust”). The Plan is similar to the performancelinked share compensation (Performance Share) and share compensation with transfer restriction (Restricted Stock) in the US
and Europe, and delivers and provides the Company’s shares and cash equivalent to the amount to convert and dispose theCompany’s shares (collectively, “the Company’s Shares, etc.”) to Directors, etc.
(ii) Total number of shares subject to delivery and provision to eligible Directors, etc.
1) The Company has contributed a total amount not exceeding 1,549 million yen to the Trust for the Initial Trust Period. An- 43 -

amount not exceeding 977 million yen in total will be included in the Initial Trust Period as the amount for measures to betaken for the transition from the stock-based compensation stock option scheme.
2) The Company resolved at the Board of Directors Meeting held on February 10, 2022 to extend the Trust Period for three
years and to continue the Plan. However, the total amounts to be contributed by the Company shall not exceed 500 million
yen for directors and executive officers and 72 million yen for auditors, as resolved at the 52nd Ordinary General Meetingof Shareholders held on December 21, 2018. No additional contribution was made upon continuation of the Plan.
Overview of Trust Agreement
Category of trust

Money trust other than a specific individually operated money trust (third
party benefit trust)Objective of trust

To provide incentive for Directors, etc.

Assignor

TKC

Trustee

Mitsubishi UFJ Trust and Banking Corporation(Joint trustee: The Master Trust Bank of Japan, Ltd.)

Beneficiaries

Directors, etc., who satisfy the beneficiary conditions

Trust administrator

A third party professional expert having no interest in the Company

Date of trust agreement

February 26, 2019
February 26, 2019 to February 28, 2022

Trust period(extended until February 28, 2025 based on changes to the Trust Agreement on February 14,2022)

Start of plan

March 1, 2019

Exercising of voting
rights

Not to be exercised

Type of shares to beacquired
Maximum amount oftrust fundAcquisition of shares
Holder of vested rights

Common stock of the Company
Directors and executive officers: 500 million yen (including trust fees andexpenses)Auditors: 72 million yen (same as above)
To be acquired in the stock market or from the Company (disposal oftreasury stock)
TKC
The residual property that the Company (as holder of vested rights) may

Residual property

receive shall be within the amount of trust expense reserve, which is the trust
fund less the fund for share acquisition.

(iii) Persons eligible for the delivery and provision of the Company’s shares
Directors, etc., who satisfy the beneficiary conditions- 44 -

2 [Acquisition, etc. of Treasury Stocks][Class of shares] Acquisition of common stocks under Article 155, Item 3 and Article 155, Item 7 of the Companies Act of Japan(1) [Acquisition of treasury stocks based on resolution at the General Meeting of Shareholders]None to be disclosed.
(2) [Acquisition of treasury stocks based on resolution of the Board of Directors]
Classification

Number of shares (shares)

Total amount (yen)Resolution at the Board of Directors meeting(September 8, 2023)(Acquisition period: September 11, 2023)

600,000

2,181,000,000

Treasury stocks acquired prior to the current fiscal year－－

Treasury stocks acquired during the current fiscal year

295,600

1,074,506,000

Total number and value of remaining shares subject toresolution

304,400

1,106,494,000

50.7

50.7

－

－

50.7

50.7

Percentage of unexercised acquisition as of the last dateof the current fiscal year (%)
Treasury stocks acquired during the current period
Percentage of unexercised acquisition as of the date offiling (%)(3) [Acquisitions of treasury stocks not based on resolutions of General Meeting of Shareholders or Board of Directors]
Classification

Number of shares (shares)

Treasury stocks acquired during the current fiscal year
Treasury stocks acquired during the current period

Total amount (yen)

4,306

15,352,410

128

453,940(Note) Treasury stocks acquired during the current period do not include shares constituting less than one unit purchased during theperiod from December 1, 2023 to the date on which this Annual Securities Report was filed.
(4) [Disposition and holding of acquired treasury stock]
Current fiscal year
Classification

Number ofshares(shares)Acquired treasury stocks for which subscribers were

Current period for acquisition

Total amountdisposed(yen)

Number ofshares(shares)

Total amountdisposed
(yen)

－

－

－

－

Acquired treasury stocks retired

295,600

798,034,276－－

Acquired treasury stocks transferred due to merger,
share exchange, subscription, or company split

19,98047,136,816

－

－

30

70,77950

134,990813,768－

813,846－

solicited

Other(sold due to demand for sales of fractional unit shares)
Number of treasury stocks held

(Notes) 1. The disposition and holding of treasury stocks acquired during the current period do not include shares transferred throughthe exercise of subscription rights to shares, shares obtained through the purchase of shares constituting less than one unit,
and shares sold through demand for sales during the period from December 1, 2023 up to the date on which this Annual
Securities Report was filed.
2. The number of treasury stocks held does not include the 206,000 shares of the Company’s stocks owned by the BIP Trust.

- 45 -

3 [Dividend Policy]
The basic policy of the Company is to pay two annual dividends of retained earnings, an interim dividend and a year-end dividend.
Year-end dividends are resolved at the General Meeting of Shareholders and interim dividends by resolution of the Board of
Directors.
The Company further provides in its Articles of Incorporation that interim dividends as set forth in Article 454 Item 5 of theCompanies Act of Japan as of March 31 every year may be paid by resolution of the Board of Directors.
TKC’s dividend policy consists of the basic policy of maintaining a dividend payout ratio (non-consolidated) of about 50% while
continuing to maintain optimal profit in each fiscal year in order to meet the expectations of our shareholders. With the rapid
advancement of ICT (information and communication technology) and major changes in social systems, it is essential to makeadvance investments in research and development efforts and to actively pursue other capital investments to enhance customer
support to accounting firms and local governments and lead them to success while remaining competitive in the marketplace.
Thus, dividends to be paid to shareholders are determined by taking into full consideration such factors as the Company’s financial
standing, operating results and payout ratios as we seek to maintain a balance between strengthening our capital base to provide
adequate funding in R&D and making funds available for stable dividend payouts over the long-term.
(1) An interim dividend of 39 yen per share has been paid after the resolution of the Board of Directors.
(2) The year-end dividend shall consist of an ordinary dividend of 39 yen per share and a special dividend of 12 yen per share as
announced on November 14, 2023.
(3) Dividends per share for the current fiscal year shall be 90 yen, which is the sum of an interim dividend of 39 yen per share anda year-end dividend of 51 yen per share.
As a result, the annual payout ratio (non-consolidated) came to 45.7%.

Date of Resolution

Total amount of cash
dividends(millions of yen)

Dividend per share
(yen)

2,052

39.00

2,669

51.00

May 12, 2023
Meeting of the Boardof Directors
December 15, 2023
Ordinary General
Meeting of
Shareholders- 46 -

4 [Corporate Governance](1) [Overview of Corporate Governance]
I. Basic Approach to Corporate GovernanceThe core of the Group, TKC Corporation, was established on October 22, 1966, listing the following two business objective in
Article 2 of the Articles of Incorporation:
1. Management of electronic data processing centers to defend the business domain and maintain control over the fate ofaccounting firms
2. Management of electronic data processing centers to improve the administrative efficiency of local governments
While other business objectives were later added as business operations expanded, our management policy of focusing our target
on accounting firms and local governments and specializing in the field of ICT (information and communication technology) to
guide our customers’ business to success remains unchanged, and this has led the Group to occupy a unique position in Japan’s
IT industries.
The Group (excluding the Printing BD) has a unique customer base – the Accounting Firm BD serves certified public tax
accountants, certified public accountants, tax accounting firms and audit corporations while the Local Governments BD provides
services to prefectural and municipal offices and affiliated public service corporations. As such, from a compliance perspective,
our customers are required by vocation-based laws (Certified Public Tax Accountant Act or Certified Public Accountants Act)or administrative laws (Local Autonomy Act or the Local Public Service Act) to follow much stricter levels of compliance thanother business categories in performing their business activities.
Thus, it is our utmost priority to ensure that all software products and services designed, produced and sold by the Group are in
full compliance with the laws and regulations pertaining to our customer’s business, and the Group strives diligently to ensure
total compliance in managing each Group companies as well as the Group as a whole in order to earn the trust of such customers.
As such, the Group understands corporate governance as follows:
1. In order to achieve the business objectives of the Company in compliance with the laws and regulations, the Articles ofIncorporation and the resolutions of the General Meetings of Shareholders,
2. the Group shall formulate strategic medium-term management plans and foster competent human resources that will enable
us to develop and supply software products and services that can drive our customers' business to success,3. strive to earn the gratitude, trust, and hopefully the respect of our customers,
4. and as a result, secure good operating results and sound financial standing so that we can return the fruits to the original
owners of the Group, our shareholders.
Through such corporate governance process, we aim to improve the transparency of our decision-making and businessprocesses, implement effective risk management measures, undertake information disclosure and accountability in a timely
manner to continue enhancing our corporate values.

- 47 -

Ⅱ. Overview of the Corporate Governance System and Reasons for Selecting the Current System
1. Overview of the corporate governance system(1) Board of Directors
The Representative Director & President chairs the meetings of the Board of Directors, which are held at least once a monthand attended by other Directors where they share information and make decisions in a prompt manner.
The Board of Directors currently consists of nine members and, with the exception of three Outside Directors, each Director
represents a business unit as executive officer in charge and participates in deliberations and express their opinions. The
Company adopts an executive officer system since December 22, 2006.
The members of the Board of Directors are the nine Directors, whose names are listed in (2) [Officers] 1. List of Officers.
(2) Board of Auditors
The Board of Auditors provides advice and suggestions to ensure the legality, appropriateness, and validity of the decisionmaking processes and resolutions by the Board of Directors.
The members of the Board of Auditors are the four Auditors, whose names are listed in (2) [Officers] 1. List of Officers. The
Board of Auditors is chaired by a Corporate Auditor (full-time).
(3) Nomination and Compensation Advisory Committee
At the Meeting of the Board of Directors held on September 10, 2019, the Company resolved to establish a Nomination andCompensation Advisory Committee as a voluntary advisory body to the Board of Directors.
The chairperson and majority of the committee members are independent Outside Directors and outside experts, and functioning
as an advisory body to the Board of Directors, the Committee was established in an aim to further enhance the corporate
governance system by ensuring that independent Outside Directors etc. are given the opportunity to engage in and provide
advice on the decision-making of the following matters, thereby strengthening the independence, objectivity, and accountabilityof the Board of Directors;(i) Policy and procedure for the nomination of candidates for Directors and executive officers holding executive position;(ii) Appointment and dismissal of Directors and executive officers holding executive position;(iii) Policy for the determination of compensations for Directors and executive officers holding executive position;(iv) Policy for the determination of individual compensations for Directors and executive officers holding executive position;(v) Individual compensations for Directors and executive officers holding executive position;(vi) Appointment and dismissal of representative directors and auditors of subsidiaries and their individual compensations;(vii) Other matters that the Board of Directors deem necessary in relation to any of the above items.
The names of the members of the Nomination and Compensation Advisory Committee are as follows:<List of members>
Chairperson: Junko Iijima (Outside Director)
Member:Tomoyasu Hamamura (Outside Auditor)
Member:Misao Taguchi (Outside expert)
Member:Yoshimasa Oshida (Outside expert)
Member:Masanori Iizuka (Director)
Member:Satoshi Hitaka (Director)- 48 -

2. Reasons for selecting the current corporate governance system
The Company implements an auditor system and also appoints Outside Directors. Outside Directors are appointed and installedfrom the perspective of improving the transparency of the Board of Directors and enhancing its supervisory functions. This
ensures the legality, appropriateness, and validity of the decision-making processes and resolutions by the Board of Directors.
Outside Auditors primarily give advice and make suggestions in order to ensure the legality, appropriateness, and validity of thedecision-making processes and resolutions by the Board of Directors by expressing their opinions on compliance issues andwhether the resolutions of the Board of Directors are in violation of laws and regulations.
We also have three Outside Directors and two Outside Auditors, a total of five members who meet the requirements of
independent directors/auditors and are notified to the Tokyo Stock Exchange.
Through the implementation of these measures the Company ensures objectivity and neutrality of the supervision over the
management of the Company.
Therefore, we feel that the functions to supervise the management activities are in place, which enables us to institute a highly
efficient, highly transparent management system that the Company aims for.
A schematic diagram of the Company’s business execution and management oversight is shown below:

Corporate Governance System
General Meeting of Shareholders
Reports

Election/Dismissal

Election/
Dismissal

Election/
Dismissal

Reports
Consultation

Nomination&
Compensation
Advisory
Committee

Meeting of theBoard of Directors

Board ofAuditors

9 Directors(including 3 Outside Directors)

Audit

4 Auditors

Collabo-rationAccounting
Auditors(including 2

Replies

Outside Auditors)

6 members

Appointment/Dismissal/
Supervision

Reports

Reports

Setting the Agenda for
Appointment/Dismissal/
Refusal of Reappointment

Reports

Representative
Directors

Instructions
Reports

Internal Audit
Dept.

Instructions,Supervision

Audit

39 Executive Officers
Instructions, Orders
Business Divisions, Group Companies- 49 -

Operation
Improvement
Committees

Repo
Reports

Requests

3. Other matters concerning corporate governance(1) Outline of resolutions on the development of systems to ensure the appropriateness of operations
The Company establishes a basic policy by resolution of the Board of Directors concerning “the development of systems
necessary to ensure that the execution of duties by directors complies with laws and regulations and the articles of incorporation,and other systems prescribed by the applicable Ordinance of the Ministry of Justice as systems necessary to ensure theproperness of operations of a Stock Company” as stipulated in Article 362, Paragraph 5 of the Companies Act of Japan. The
outline is described below:[1] Basic policy concerning the development of systems necessary to ensure that the execution of duties by directors
complies with laws and regulations and the Articles of Incorporation(in relation to the first half of Article 362, Paragraph 4, Item (vi) of the Companies Act)
1. Directors must comply with all laws and regulations, the Articles of Incorporation, and the Resolutions of General
Meetings of Shareholders (hereafter “laws and regulations”), keep in mind at all times that the business objectives of theCompany are as set forth in Article 2 of our Articles of Incorporation, namely the “management of electronic dataprocessing centers to defend the business domains and maintain control over the fate of accounting firms,” and the“management of electronic data processing centers to improve the administrative efficiency of local governments,” andperform their duties to achieve these objectives.
2. Directors must perform their duties based on the Company’s Rules on Administrative Authority and Dividing Duties of
Directors established by the Board of Directors, and cooperate with other Directors in improving corporate performance.
3. In the event a Director finds that his/her decision (including approvals given to proposals made by subordinates) may bein violation of the laws and regulations, he/she must, without delay, consult with the Director in charge of legal affairs
and act based on said Director’s decision to prevent the occurrence of any illegal conduct. If such matter is of significant
importance, the Director in charge of legal affairs shall immediately report to the Representative Director and President(hereafter, the “President”), and Full-time Corporate Auditors and outside company attorneys and receive their guidanceas well as report the particulars to the Board of Directors.
4. In the event a Director finds that an act or a plan of another Director or an employee may be in violation of the laws andregulations, he/she must, without delay, give warning to such Director or employee as joint bearer of managerial
responsibilities.
If such matter is of significant importance, said Director must immediately report to the President and receive guidance.
5. Prior to attending any meetings of the Board of Directors, Directors must review the matters to be deliberated, reported
and/or discussed at the next meeting of the Board of Directors (hereinafter, “matters to be deliberated”) to make sure that
there are no omissions in view of the scope of matters to be deliberated under the regulations concerning the Duties(Articles 362) and Authority (Articles 363) of Directors as stipulated in the Companies Act and the Company’s Rules on
the Board of Directors. If there are other matters to be deliberated, they must be brought to the Director(s) in charge ofthe meetings of the Board of Directors without delay.
6. Directors must attend the meetings of the Board of Directors and voice their opinions freely and exercise their voting
rights on all matters to be deliberated based on their conscience and responsibility. Directors must give a true account of
the execution of their duties, speak frankly of any anticipated strategic risks and operational risks, and give theopportunity and time for the Board of Directors to review countermeasures for such issues in advance.
7. The entire process of deliberations, etc. at the meetings of the Board of Directors shall be recorded in accordance with
the Company’s Rules on Management of Information Concerning the Decision-making Process of the Board of Directors.
The recordings must be kept in the form of electromagnetic records as specified in Article 371 of the Companies Act
along with any materials used for explanations and the minutes of meeting of the Board of Directors.
8. Directors must attend the General Meeting of Shareholders, and provide answers in a sincere manner to any questions
pertaining to the execution of their duties when asked by shareholders and instructed by the Chairman to provide suchanswers.
9. Upon deliberations at the meetings of the Board of Directors, the Chairman of the Board of Directors must seek theopinions of Auditors in attendance as to whether any resolution may be in violation of laws and regulations. In the event
an Auditor finds in the course of sitting in the meetings of the Board of Directors, that any resolution may be in violationof the laws and regulations, he/she must, without delay, give warning to the Chairman of the Board.
10. As the highest authority of the Company, Directors are obliged to be acutely aware of the social responsibilities of theCompany under the principles set forth in the “TKC Charter of Corporate Code 2006,” work to improve their charactersand insight at all times, strictly observe all laws and regulations and company rules, eliminate ego and put aside personalaffairs, exhibit discerning judgments to achieve business objectives, take lead in setting good examples, and strive togain utmost trust of employees under their charge.

- 50 -

11. It is the basic policy of the Company to have no involvement with antisocial forces, bodies and individuals, and to notcomply with unjust and unlawful requests. The Company shall develop and disseminate this policy among all Directors
and employees, and shall establish systems to share all pertinent information within the TKC Group and to develop
appropriate countermeasures. Further, the Company shall collaborate closely with the police and other external expert
organizations, and with legal advisors and company attorneys.
[2] Basic policy concerning the development of systems ensuring the appropriateness of the Company’s operations(in relation to the latter half of Article 362 Paragraph 4, Item (vi) of the Companies Act)
1. Development of systems for the storage and management of information relating to the execution of Directors’ duties of
the Company(in relation to Article 100, Paragraph 1, Item 1 of the Ordinance for Enforcement of the Companies Act)
(1) Of the information relating to the execution of duties by Directors (hereafter, “information on Directors’ duty”),
information pertaining to the minutes of General Meetings of Shareholders shall be stored and managed in accordancewith the Company’s Rules on Management of Information Concerning the Minutes of General Meetings of Shareholders.
(2) Of the information on Directors’ duty, information pertaining to deliberations, etc. at the meetings of the Board of
Directors shall be stored and managed in accordance with the Company’s Rules on Management of Information
Concerning Decision-making Processes of the Board of Directors as described in [1] 7. above.
(3) Of the information on Directors’ duty, information submitted to or received from government authorities and information
sent to or received from outside parties in relation to legal affairs shall be stored and managed based on the Company’s
Rules on Management of Information Concerning Legal Affairs.
(4) Information on Directors’ duty not included above shall be divided into the following three categories and stored andmanaged based on the Company’s Rules on Management of Information Concerning the Daily Operations of Directors:(i) of the meetings called by a Director (excluding the General Meetings of Shareholders and meetings of the Board of
Directors), minutes and relevant documents of meetings in which matters that may have significant impact on the
Company’s performance are deliberated, and meeting in which matters directly related to the interest of specificcustomers, clients or employees are deliberated;(ii) written applications for approval and relevant documents settled by the Directors based on the Company’s Rules
Concerning Requests for Decisions;(iii) other important information pertaining to the execution of duties by Directors.
(5) All information on Directors’ duty set forth in the preceding four items shall be stored in a database so that their presenceor absence and contents are immediately searchable. The operating status of said database shall be verified and rules
shall be revised as necessary and reported to the Board of Directors.
2. Regulations and other systems for the management of risks of losses to the Company(in relation to the provisions of Article 100 Paragraph 1 Item 2 of the Ordinance for Enforcement of the Companies
Act)
2-1. Regulations for the management of strategic risks(1) Strategic risks are risks related to business opportunities that arise out of uncertainties of strategic managerial decisionmaking. In light of the current situation of the Company, the objective of managing such strategic risks shall be limited
for the time being to “preventing the loss of business opportunities” and to “appointment of Directors” to be submitted
to the General Meetings of Shareholders.
(2) In order to prevent the loss of business opportunities, all Directors must actively gather information and retain
unrelenting spirit of inquiry to capture business opportunities that contribute to our customers’ success ahead of others,
exhibit outstanding intuition to make the best of such business opportunities, and develop timely and optimal schematicplans and propose the execution to the President.
(3) Upon receiving such proposals from Directors (including employees) as set forth above, the President must evaluate thecontents from the following perspectives, and if it is determined that a proposal should be executed, he/she shall reportto the Board of Directors and cause for the Director (including employees) in charge to announce an implementation
plan at the meetings of the Board of Directors:(i) Conformances with the management philosophy of the Company;(ii) Compliances;(iii) Expected degree of contributions to customers' business;(iv) Anticipated feedback from customers;(v) Technical feasibilities;(vi) Funds and costs necessary;- 51 -

(vii) Other matters, such as principle of good faith with business partners.
(4) When submitting proposals on the appointment of Directors to the General Meeting of Shareholders, it shall be madein accordance with the Company’s Rules on the Nomination and Compensation Advisory Committee.
Proposals shall be deliberated and decided at the Nomination and Compensation Advisory Committee chaired by anindependent Outside Director, etc. based on the standards for the appointment and dismissal of directors, which shall bereported to the Board of Directors.
The Board of Directors shall deliberate and decide on the matters reported by the Nomination and Compensation
Advisory Committee.
2-2. Regulations for the management of operational risks
2-2-1. Regulations for the management of operational risks that may occur across all divisions(1) Operational risks are risks related to the performance of business activities that arise out of uncertainties of performanceof appropriate and efficient operations. These risks shall be divided and controlled under the following two categories:(i) risks that may occur across all divisions (hereinafter, “common risks”);(ii) risks that may occur in specific divisions (hereinafter, “division-specific risks”).
This section provides for regulations for the management of common risks.
(2) The Board of Directors shall elect a Director in charge of risk management, who shall be in charge of investigating andidentifying the following common risks from among all employees of the Company:(i) Risks that have high degree of urgency;(ii) Risks associated with compliance;(iii) Risks associated with confidentiality obligations of the Company;(iv) Risks associated with the preservation of assets and accounting;(v) Risks associated with the preparation of regulations and manuals for operation of business;(vi) Risks associated with the workplace environment and labor management;(vii) Other risks deemed necessary.
(3) In the event the Director in charge finds, as a result of the inspections in the preceding paragraph, that there are measures
to completely eliminate any of the common risks, he/she shall promptly report such findings to the President and discuss
the actions to be taken.
(4) The Director in charge shall sort and classify unresolved risks and formulate a basic policy on how to handle such risks,and submit it to the Board of Directors as Regulations for the Prevention of Operational Risks (hereinafter referred to as“Regulations” in this section) for approval by the Board of Directors. The approved Regulations shall be announced anddistributed to all employees as guidelines from the President.
(5) In the event a major risk becomes apparent, the Director in charge shall immediately take actions to prevent andminimize the spread of damages in accordance with the Regulations.
(6) The Director in charge shall, within one month of completing the actions in the preceding item, investigate the truecause of the risk and formulate measures to prevent recurrence, and report to the Board of Directors within two months
and undertake any revisions to the Regulations.
(7) All heads of business units shall verify the compliance with the Regulations within their own business units either on adaily or regular basis in accordance with the Regulations and report to the Director in charge.
(8) The Director in charge shall submit to the President applications for special award money to those uncovering majorcommon risks that were previously unnoticed or those proposing effective measures to prevent recurrence of apparent
risks.
2-2-2. Regulations for the management of operational risks that may occur in specific divisions(1) Division-specific risks include cases in which division-specific operational risks need to be controlled and cases inwhich highly advanced, specialized knowledge is required to control certain common risks. The following committees(including committees to be newly established) shall be in charge of controlling risks involving multiple divisions, andthe relevant division shall be responsible for controlling any risk involving that single division:(i) Systems Development Research Center Operation Improvement Committee(ii) Municipality Systems Development & Operations Division Operation Improvement Committee(iii) Consolidated Information Centers Operation Improvement Committee(iv) SCG Service Centers Operation Improvement Committee(v) Municipality Sales Division Operation Improvement Committee(vi) Supplier Business Operation Improvement Committee(vii) Tokyo Head Office Operation Improvement Committee- 52 -

(viii) Personnel & Salary Systems Improvement Committee(ix) Risk Management Committee(x) Other committees that the Board of Directors deems necessary to establish.
(2) The committees listed in the preceding item shall serve as assisting body to the President or the Director in charge ofthe division, the executive officer heading each committee with a fixed number of committee members as determined by
the Board of Directors. The Director in charge or the head of committee shall attend the meeting of the Board of Directors
and report on the matters to be reported by the committee, and may request deliberations as necessary by the Board of
Directors.
(3) Division-specific risks involving an individual committee or a specific division shall be controlled in the same manneras controlling common risks as prescribed in 2-2-1. Division-specific risks shall be identified by each committee andreported to the Board of Directors.
2-2-3 Regulations for the management of hazards and other risks(1) In the event of large-scale earthquakes, flood damages, fire and other disasters, or long power outage, water stoppage,the disconnection of communication lines and other circumstances that may cause substantial damage, the Company will
immediately set up an emergency response headquarter headed by the President, and form an information communicationteam responsible for contacting customers, employees and their families, shareholders, clients and external press, and an
external advisory team including the company attorneys and to establish a system to respond promptly, prevent andminimize the spread of damages.
(2) In the event of any matters that may be in violation of the laws and regulations, the Business Administration
Headquarters under the responsibility of the Director in charge of legal affairs shall become the supervising division totake actions.
Any legal compliance issue of significant importance shall be consulted with outside attorneys as external legal advisors.

3 Systems to ensure the efficient execution of Directors’ duties of the Company(in relation to the provisions of Article 100 Paragraph 1 Item 3 of the Ordinance for Enforcement of the Companies
Act)(1) The Company holds regular meetings of the Board of Directors generally on the 10th day of every month, as well as ad
hoc meetings when necessary. The date and time of meetings of the Board of Directors called for the disclosure offinancial statements or in relation to the General Meetings of Shareholders shall be planned at least six months in advance.
(2) At the meetings of the Board of Directors held at the end of each fiscal year, a management policy for the upcoming
fiscal year formulated in light of the management philosophy of the Company and a medium-term management plan
covering the next three years starting from the upcoming fiscal year shall be submitted by the President, and the Boardof Directors shall deliberate upon their strategic rationalities in accordance with the Company’s Rules on the Board of
Directors.
(3) At the meetings of the Board of Directors held on the second month of each new fiscal year, the Targeted Profit andLoss Statements for the entire company and each business unit for the new fiscal year, and a proposed List of Dividing
Duties of Directors and Strategic Goals shall be submitted by the President, and the Board of Directors shall deliberate
upon their feasibilities in accordance with the Company’s Rules on the Board of Directors.
(4) At the monthly regular meetings of the Board of Directors, the targeted and actual P/L statements for the entire company
and each business unit as of the end of the previous month shall be reported, and the Board of Directors shall analyze thedifferences in target and actual results, and discuss actions to be taken to achieve the targeted sales and ordinary income
for the fiscal year.
(5) In executing his/her daily duties, the President shall inspect the details of individual projects planned by the Directors
in charge of each business unit, coordinate to maximize the effect of the projects in light of the current management
policy, and approve the use of president’s strategic reserve funds to the extent approved by the Board of Director.
(6) In executing his/her daily duties, Directors in charge of each business unit shall provide instructions to the executive
officers and managers under his/her immediate control to ensure that they have correct awareness of the fiscal
management policy and strategic goals for their division and that the PDCA cycle is thoroughly implemented to achievethese goals, and shall monitor the progress and achievements of the entire division at all times and strive to achieve thesales and ordinary income goals for the fiscal year.
(7) In managing the business unit under his/her charge, Directors in charge of each business unit shall strive to reduce
unnecessary expenses, improve work quality and productivity, and keep the workplace organized, and must exhibit
leadership to create a workplace environment in which all employees are safe and comfortable, inspired and satisfied.

- 53 -

4. Systems to ensure that performance of duties by employees of the Company is in conformance with laws and regulations
and the Articles of Incorporation(in relation to the provisions of Article 100 Paragraph 1 Item 4 of the Ordinance for Enforcement of the Companies
Act)(1) In order to ensure compliance with laws and regulations by employees, the Internal Audit Department under the directcontrol of the President shall prepare drafts of Compliance Regulations and Compliance Manual based on guidance
provided by Auditors and outside company attorneys and, upon obtaining the approval of the Board of Directors as totheir contents, distribute them to all employees as guidelines from the President.
(2) Regular training sessions for all employees of the Company aiming at further understanding on the Compliance
Regulations and Compliance Manual as set forth above shall be conducted in accordance with the plans of the Internal
Audit Department.
(3) When performing an internal audit on internal business units, the Internal Audit Department must always inspect theawareness on Compliance Regulations and implementation of Compliance Manual among employees of the business
unit being audited, and submit an Internal Audit Report to the President within one week after the completion of theaudit.
(4) Directors in charge of each division shall appoint a compliance manager within each business unit in accordance with
the Compliance Regulations, and conduct training on the Compliance Manual for employees within the business unit ina timely and appropriate manner.
(5) In order to prevent the leaking of customer information and other confidential information, the body text and attachedfiles of all electronic mails sent from internal PCs to outside the company shall be stored for a certain period of time.
(6) In preparation for the unlikely event that a Company employee violates any laws or regulations, the Company shallestablish a system whereby the Internal Audit Department or the employee that first learns of such information gives
emergency notification to the President or the Director in charge of legal affairs informing them of the facts and otherrelevant information.
5. Other systems to ensure the appropriateness of operations of the Group consisting of the Company and its subsidiaries(in relation to the provisions of Article 100 Paragraph 1 Item 5 of the Ordinance for Enforcement of the Companies
Act)(1) Systems concerning reports to the Company on matters pertaining to the execution of duties by directors, executive
officers, employees executing operations, persons performing the duties under Article 598, Paragraph 1 of the Companies
Act, and those equivalent (hereinafter "Directors, etc." in items (2) and (3) below) of the Company’s subsidiaries (inrelation to Article 100, Paragraph 1, Item 5(a) of the Ordinance for Enforcement of the Companies Act)(i) In order for the Company to perform quarterly audits on the presence or absence of risk information pertaining to its
subsidiary companies and affiliated companies (hereinafter, "Subsidiaries"), the Company shall conclude an internal
audit agreement with its Subsidiaries and the Internal Audit Department shall conduct audits.
(ii) The Internal Audit Department shall establish a system whereby, upon identifying any incidents that may causesignificant loss to the Subsidiaries, the President and the heads of relevant business divisions are immediately notifiedof the risks causing such incident, the degree of loss expected and impacts on the Company.
(iii) The Internal Audit Department shall thoroughly exchange information with the Subsidiaries’ divisions in charge ofinternal audits on a regular basis to prevent any inappropriate transactions (including using corporate expenses forprivate entertainment purposes) or inappropriate accounting between the Company and Subsidiaries.
(iv) The Company shall assign Directors or employees of Deputy Manager or higher to the Subsidiaries to serve as
Directors in order to communicate the management policy and requests of the Company in writing to the Subsidiaries’
Board of Directors. The Company shall request the presidents of the subsidiaries to submit monthly reports on thelatest business results, business forecast and risk management issues.
(2) Regulations and other systems for the management of risks of loss for the Subsidiaries(in relation to Article 100, Paragraph 1, Item 5(b) of the Ordinance for Enforcement of the Companies Act)
Efforts shall be made to raise awareness on risks which may impact the Company’s operation, and to promote early
discovery, preventive measures, and prompt and appropriate responses in the event of an emergency in accordance withthe separate Compliance Regulations, Compliance Manual and other internal rules.
(3) Systems to ensure the efficient execution of Directors’ duties of Subsidiaries(in relation to Article 100, Paragraph 1, Item 5(c) of the Ordinance for Enforcement of the Companies Act)(i) The Board of Directors of Subsidiaries (referred to as “Board of Directors” in this section) shall hold regular meetingsof the Board of Directors generally on a given day of every month, as well as ad hoc meetings when necessary. The- 54 -

date and time of meetings of the Board of Directors called for the approval of financial statements or in relation to theGeneral Meetings of Shareholders shall be planned at least six months in advance.
(ii) At the meetings of the Board of Directors held at the end of each fiscal year, a management policy for the upcoming
fiscal year formulated in light of the Management Philosophy of the Subsidiaries and a Medium-Term Management
Plan covering the next three years starting from the upcoming fiscal year shall be submitted by the president of theSubsidiaries (referred to as “President” in this section and the next section), and the Board of Directors shall deliberate
upon their strategic rationalities in accordance with the Company’s Rules on the Board of Directors.
(iii) At the meetings of the Board of Directors held on the second month of each new fiscal year, the Targeted Profit andLoss Statements for the entire company and each business unit for the new fiscal year, and a proposed List of Dividing
Duties of Directors and Strategic Goals shall be submitted by the President, and the Board of Directors shall deliberate
upon their feasibilities in accordance with the Company’s Rules on the Board of Directors.
(iv) At the monthly regular meetings of the Board of Directors, the targeted and actual P/L statements for the entire
company and each business unit as of the end of the previous month shall be reported, and the Board of Directors shallanalyze the differences in target and actual results, and discuss actions to be taken to achieve the targeted sales andordinary income for the fiscal year.
(v) In executing his/her daily duties, the President shall inspect the details of individual projects planned by the Directors
in charge of each business unit and coordinate to maximize the effect the projects in light of the current management
policy.
(vi) In executing his/her daily duties, Directors in charge of each business unit shall provide instructions to the executive
officers and managers under his/her immediate control to ensure that they have correct awareness of the fiscal
management policy and strategic goals for their division and that the PDCA cycle is thoroughly implemented toachieve these goals, and shall monitor the progress and achievements of the entire division at all times and strive toachieve the sales and ordinary income goals for the fiscal year.
(vii) In managing the business unit under his/her charge, Directors in charge of each business unit shall strive to reduce
unnecessary expenses, improve work quality and productivity, and keep the workplace organized, and must exhibit
leadership to create a workplace environment in which all employees are safe and comfortable, inspired and satisfied.
(4) Systems to ensure that performance of duties by Directors and employees of the Subsidiaries is in conformance withlaws and regulations and the Articles of Incorporation(in relation to Article 100, Paragraph 1, Item 5(d) of the Ordinance for Enforcement of the Companies Act)(i) In order to ensure compliance with laws and regulations by the directors and employees of the Subsidiaries (referred
to as "Directors and employees" in this section), the division in charge of internal audit under the direct control of the
President shall develop Compliance Regulations and Compliance Manual based on guidance provided by Auditorsand outside company attorneys.
(ii) Regular training sessions for all Directors and employees aiming at further understanding on the Compliance
Regulations and Compliance Manual as set forth above shall be conducted in accordance with the plans of the divisionin charge of internal audit.
(iii) When performing an internal audit on internal business units, the division in charge of internal audit must always
inspect the awareness on Compliance Regulations and implementation of Compliance Manual among employees ofthe business unit being audited, and submit an Internal Audit Report to the President within one week after thecompletion of the audit.
(iv) Directors in charge of each division shall appoint a compliance manager within each business unit in accordancewith the Compliance Regulations, and conduct training on the Compliance Manual for employees within the business
unit in a timely and appropriate manner.
(v) In order to prevent the leaking of customer information and other confidential information, the body text and attachedfiles of all electronic mails sent from internal PCs to outside the company shall be stored for a certain period of time.
(vi) In preparation for the unlikely event that a Director or employee violates any laws or regulations, Subsidiaries shallestablish a system whereby the division in charge of internal audit or the Director or employee that first learns of suchinformation gives emergency notification to the President informing him/her of the facts and other relevant
information.
6. Assignment of employees to assist the duties of Corporate Auditors(in relation to the provisions of Article 100 Paragraph 3 Item 1 of the Ordinance for Enforcement of the Companies
Act)(1) The Company shall establish an Auditor Office to assist the duties of the Auditors and assign one or more dedicated- 55 -

employees.
(2) In determining the specific details pertaining to the preceding item, the Company shall respect the opinions of the Board
of Auditors and take into full consideration the opinions of the Director in charge of human resources and other relevant
personnel.
7. Independence of employees assisting duties of Corporate Auditors from Directors(in relation to the provisions of Article 100 Paragraph 3 Item 2 of the Ordinance for Enforcement of the Companies
Act)(1) The appointment, transfer, personnel evaluation and disciplinary punishment of employees assisting the duties of
Auditors shall be subject to prior consent of the Board of Auditors.
(2) Employees assisting the duties of Auditors shall not hold concurrent posts that involve the execution of the Company’sbusiness, and shall perform their duties under the direct command of the Board of Auditors, and their performance shallbe evaluated by the Board of Auditors.
(3) Business units executing the Company’s business shall cooperate with employees assisting the duties of Auditors andallow attendance of such employees at the necessary meetings for them to conduct necessary investigations and gather
necessary information.
8. Ensuring effectiveness of directions to employees assisting duties of Corporate Auditors(in relation to the provisions of Article 100 Paragraph 3 Item 3 of the Ordinance for Enforcement of the Companies
Act)
Employees assisting the duties of Auditors shall report to Auditors as appropriate on the status of duties performed inaccordance with the directions and commands given by Auditors.
9-1. The systems listed below and other systems for reporting to Corporate Auditors(in relation to the provisions of Article 100 Paragraph 3 Item 4 of the Ordinance for Enforcement of the Companies
Act)(1) Systems for reporting to Corporate Auditors by the Company’s Directors, accounting advisors and employees(in relation to Article 100, Paragraph 3, Item 4(a) of the Ordinance for Enforcement of the Companies Act of Japan)(i) All Directors and employees of the Company shall promptly submit the necessary reports and information requested
by Auditors as established by the Board of Auditors.
(ii) The reports and information to be submitted as set forth in the preceding item shall mainly include the following:
1) Status of activities of business units involved in the risk management of the Company;
2) Status of activities pertaining to audits of the Subsidiaries of the Company and internal audits;
3) Important accounting policies and accounting standards of the Company and any changes thereto;4) Contents of announcements and important disclosure documents on the Company’s latest business results andearnings forecasts announcements on both non-consolidated and consolidated basis;
5) Circulation of internal approval documents and meeting minutes requested by Auditors.
(iii) In the event a Director or employee learns of any fact of violations of laws and regulations or any fact that could
cause significant damage to the Company, such Director or employee shall immediately report matters pertaining tosuch fact to Auditors.
(iv) Auditors shall attend all the meetings of the Board of Directors and other important meetings, and are expected tovoice their opinions freely without being requested to do so by the chairman or caller of such meetings.
(2) Systems for reporting to Corporate Auditors of the Company by the Subsidiaries’ directors, accounting advisors,
auditors, executive officers, employees executing operations, persons performing the duties under Article 598, Paragraph
1 of the Companies Act and other persons equivalent to the above, employees or any persons receiving reports from theabove(in relation to Article 100, Paragraph 3, Item 4(b) of the Ordinance for Enforcement of the Companies Act)(i) All directors, auditors and employees of Subsidiaries shall promptly submit the necessary reports and information
requested by each Corporate Auditor of the Company as established by the Board of Auditors of the Company.
(ii) The reports and information to be submitted as set forth in the preceding item shall mainly include the following:
1) Status of activities of business units involved in the risk management of the Subsidiaries;2) Status of activities pertaining to the audits by auditors of the Subsidiaries;3) Important accounting policies and accounting standards of the Subsidiaries and any changes thereto;4) Circulation of internal approval documents and meeting minutes of the Subsidiaries requested by Auditors.
(iii) In the event a director, auditor or employee learns of any fact of violations of laws and regulations or any fact that
could cause significant damage to the Company, such director, auditor or employee shall immediately report matters- 56 -

pertaining to such fact to the Auditors of the Company.
(iv) The Company’s Auditors shall attend all the meetings of the Board of Directors and other important meetings of
Subsidiaries, and are expected to voice their opinions freely without being requested to do so by the chairman or callerof such meetings.
9-2. Systems to ensure that persons making reports as stated in the preceding item do not receive disadvantageous treatment
for providing such reports(in relation to the provisions of Article 100 Paragraph 3 Item 5 of the Ordinance for Enforcement of the Companies
Act)
The Company and Subsidiaries must not treat any persons making reports stated in the preceding item in a
disadvantageous manner due to grounds of providing such reports to the Board of Auditors of the Company.
9-3. Policy on the procedures on prepayment or reimbursement of expenses arising from the execution of duties ofCorporate Auditors and the processing of expenses or debts arising from the performance of other duties(in relation to the provisions of Article 100 Paragraph 3 Item 6 of the Ordinance for Enforcement of the Companies
Act)
The Company shall secure sufficient amounts to cover for the procedures on prepayment or reimbursement of expenses
arising from the execution of duties of Auditors and for the processing of expenses or debts arising from the performanceof other duties so as to allow Auditors to sufficiently achieve the execution of the Auditors’ duties.
(1) Ordinary auditing expenses shall be budgeted in the current fiscal year based on the business plan of the Company andthe audit plan of the Board of Auditors.
(2) Other emergency auditing expenses and contingency auditing expenses shall be estimated in advance by the Board ofAuditors and establish a policy on such expenses. The Board of Directors shall execute the measures under said
determined policy as notified by the Board of Auditors after deliberation and review of such measures in light of thestatus of execution of the budget for the fiscal year.
10. Other systems to ensure that audits by the Corporate Auditors’ are implemented effectively(in relation to the provisions of Article 100 Paragraph 3 Item 7 of the Ordinance for Enforcement of the Companies
Act)(1) Auditors shall receive advanced explanations on the annual internal auditing plan to be performed by the Internal Audit
Department and express their opinions to the President if they deem that the plan needs to be corrected or changed, and
the President must respect such opinions.
(2) Auditors shall receive reports, as appropriate, on the status of implementation of internal audits, and express theiropinions to the President if they deem necessary that additional audits be implemented or operation improvement
measures be developed. The President must respect such opinions.
(3) Auditors shall receive advance explanations on the accounting audit plans from accounting auditors, and reports on
auditing methods and audit results whenever accounting audits on quarterly settlements and audits on full year
settlements are performed, and exchange opinions.
(4) For the purpose of increasing the effectiveness of the Company’s auditing system by achieving coordination between
the Company’s auditing system and the risk management system, the Company shall establish an Audit System
Improvement Committee headed by the Director in charge of legal affairs and consisting of the head of the Internal Audit
Department and deputy managers or higher nominated by said Director and Auditors. The Committee is expected toprepare reports on the auditing systems that should be created by the Company in the future, and to submit such reports
to the Board of Directors.
(2) Number of Directors
The Articles of Incorporation stipulate that the Company may have a maximum of 15 Directors.
(3) Criteria for the election or dismissal of Directors
The Articles of Incorporation stipulate that Directors shall be elected by a majority vote of shareholders at the General Meetingof Shareholders with the attendance of at least one-third of shareholders that can exercise voting rights, and that election of
Directors shall not to be based on cumulative voting.
The Articles of Incorporation further stipulate that Directors shall be dismissed by a vote of two-thirds or more of shareholders
at the meeting with the attendance of at least half of the shareholders that can exercise voting rights.
(4) Exemption from liability for Directors and Auditors
In order to limit the responsibilities of Directors and Auditors to a reasonable extent in performing their duties, the Company
stipulates in its Articles of Incorporation that the Company may, by resolution of the Board of Directors, exempt Directors- 57 -

(including former Directors) and Auditors (including former Auditors) from liabilities to the extent allowed by law in accordancewith Article 426 Paragraph 1 of the Companies Act.
(5) Outline of Limited Liability Agreement
The Company concludes agreements with Outside Directors and Outside Auditors in accordance with the provisions of Article
427, Paragraph 1 of the Companies Act, limiting their liabilities to the amounts set forth by law if they are without knowledge
and not grossly negligent with regard to their responsibilities set forth in Article 423, Paragraph 1.
(6) Interim dividends
In order to maintain flexible redistribution of profits to shareholders, the Company stipulates in its Articles of Incorporation that
the Company may, by resolution of the Board of Directors, pay interim dividends as of March 31 every year pursuant to theprovisions of Article 454, Item 5 of the Companies Act.
(7) Acquisition of treasury stock
In order to allow for flexible implementation of capital policies on improving capital efficiency and shareholder interest, theCompany stipulates in its Articles of Incorporation that treasury stock may be acquired by resolution of the Board of Directors
pursuant to the provisions of Article 165, Paragraph 2 of the Companies Act.
(8) Special resolutions of the General Meeting of Shareholders
The Company stipulates in its Articles of Incorporation that special resolutions of the General Meetings of Shareholders as
specified in Article 309, Paragraph 2 of the Companies Act shall be passed by a vote of two-thirds or more of shareholders at
meetings with the attendance of at least one-third of the shareholders that can exercise voting rights. This has been establishedto ensure smooth handling of special resolutions at General Meetings of Shareholders by easing the quorum for special
resolutions by General Meetings of Shareholders.
(9) Collaboration with outside experts
The Company consults with company attorneys concerning important legal issues and compliance-related matters, and conducts
reviews as necessary. The Company consults with the Accounting Auditors and reviews important accounting issues from time
to time in addition to the regular accounting audits, and holds discussions promptly after quarterly and annual financial
settlements.
(10) Basic policy on the control of the Company
The Company has no particular policy on matters concerning the persons controlling the decisions on the financial and business
policies of the Company. A schematic diagram of the Company’s internal control system is shown under 2. Reasons for Selecting
the Current Corporate Governance System.
(11) Status of activities of the Board of Directors and the Nomination and Compensation Advisory Committee(i) Status of activities of the Board of Directors in the current fiscal year
Position

Name

Number of times attended

Representative Director &President

Masanori Iizuka

Representative Directors

Satoshi Hitaka

14 times/14 times

Director

Ikuo Kawahashi

14 times/14 times

Director

Kiyotsugu Nakanishi

14 times/14 times

Director

Yoshihisa Ito (Note 1)

10 times/10 times

DirectorTakeshi Kawamoto (Note 1)

10 times/10 times

Outside Directors

Yoshimasa Oshida (Note 2)

3 times/3 times

Outside Directors

Junko Iijima

14 times/14 times

Outside Directors

Nobuhiko Kouga

14 times/14 times

Outside Directors

Keiichiro Kato (Note 1)

10 times/10 times

14 times/14 times(Notes) 1. Director Yoshihisa Ito, Director Takeshi Kawamoto and Outside Director Keiichiro Kato were appointed in the
Ordinary General Meeting of Shareholders for the 56th Term held on December 16, 2022 and they were installedon the same date.
Ten meetings of the Board of Directors were held in the period from December 16, 2022, the installation date, toSeptember 30, 2023.
2. Outside Director Yoshimasa Oshida retired from office on the same date due to the expiration of his term of office
as of the Ordinary General Meeting of Shareholders for the 56th Term held on December 16, 2022.
The specific content for consideration in the Board of Directors in the current fiscal year, based on the related laws andregulations and TKC’s Articles of Incorporation and the Company’s Rules on the Board of Directors, was mainly deliberations- 58 -

and resolutions regarding important matters pertaining to the management of the Group, such as the General Meeting of
Shareholders, settlements and finance, capital investments, the organization, personnel and officer compensation, revision of
the internal rules, etc. Furthermore, the Board of Directors received reports regarding the progress of the medium-term
management plan, the operating results and operations execution status, the management status of the subsidiaries, etc.
(ii) Status of activities of the Nomination & Compensation Advisory Committee in the current fiscal year
Members

Name

Chairperson (Outside Director)

Junko Iijima

Number of times attended
3 times/3 times

Member (Outside Auditor)

Hideki Tomonaga

3 times/3 times

Member (Outside expert)

Misao Taguchi

3 times/3 times

Member (Outside expert)

Yoshimasa Oshida

3 times/3 times

Member (expert)

Masaharu Iizuka

3 times/3 times

Member (Director)

Masanori Iizuka

3 times/3 times

Member (Director)

Satoshi Hitaka

3 times/3 times

The specific content for consideration in the Nomination and Compensation Advisory Committee in the current fiscal year
was mainly deliberations on the appointment and dismissal of Directors and executive officers holding executive position,individual compensations of Directors and executive officers holding executive position, appointment and dismissal of
representative directors and auditors of the subsidiaries, etc. and it reported the results of those deliberations to the Board of
Directors.

- 59 -

III. Basic Approach and Countermeasures to Eliminate Anti-social Forces
1. Basic approach to eliminate anti-social forces
The basic policy of the Company is to have absolutely no engagement with anti-social forces under "Strict Implementation ofCompliance Management" as stated in the TKC Charter of Corporate Code. The Company fully disseminates that it will maintaina resolute, organization-wide response against any and all unreasonable demands and approaches from anti-social forces andbodies.
2. Countermeasures to eliminate anti-social forces(1) Establishment of a Response Control Division and appointment of managers
The Company has established a division to control responses to anti-social forces (the Response Control Division) and appointed
managers in charge of preventing unreasonable demands within its Tochigi and Tokyo Head Offices.
The Company has also established a system for immediate reporting and consultation with the Response Control Division onmatters concerning unreasonable demands, organized violence, and criminal acts by anti-social forces.
(2) Coordination with external expert organizations
The Company maintains close ties with external expert organizations, for example, by taking part in liaison groups organized by
the police and receiving guidance on how to deal with anti-social forces.
(3) Collecting and managing information on anti-social forces
The Response Control Division coordinates with experts and the police in sharing the latest information pertaining to anti-social
forces and using such information to give warning to the employees within the Company.
(4) Preparation of response manuals
The Company has prepared training materials on compliance-related case studies including topics on how to deal with anti-social
forces, which are distributed and used in compliance training sessions.
(5) Training activities
The Company promotes activities to prevent damages from anti-social forces before they occur by sharing information on antisocial forces within the Company and conducting compliance training sessions with the Company and at Group companies.

- 60 -

(2) [Officers]
1. List of Officers
12 male and 1 female (percentage of female directors: 7.7%)
Position and Title

Name

Date of Birth

Brief biography

Term ofofficeApril 2002
Joined the Company
December 2010 Director, Executive Officer, in charge ofCorporate Information Systems Sales
Headquarters and Chief of G Project
Promotion Headquarters, Accounting
Firm BD
October 2012 Director, Executive Officer, Chief ofCorporate Information Systems Sales
Headquarters, Accounting Firm BD
December 2012 Director, Managing Executive Officer,
Chief of Corporate Information Systems
Sales Headquarters, Accounting Firm
BD
Representative Directors
April 2014
Director, Managing Executive Officer,
President and Executive Officer Masanori Iizuka March 12, 1975
Chief of Sales Headquarters, Accounting (Note 4)
Firm BD
Director of Accounting Firm BD
October 2016 Representative Director, Senior
Managing Executive Officer, Chief ofSales Headquarters, Head of Accounting
Firm BD
October 2018 Representative Director, Senior
Managing Executive Officer, Head of
Accounting Firm BD
December 2019 Representative Director, President andExecutive Officer, Head of Accounting
Firm BD (current position)
December 2019 Representative Director and President,
TKC Customer Support Service Co.,
Ltd. (current position)
April 2003
Joined the Company
December 2010 Executive Officer, General Manager of
ASP Service Promotion Dept., Sales
Planning Headquarters, Local
Governments BD
December 2011 Director, Executive Officer, in charge of
New Business Strategy Headquarters,
Local Governments BD
Representative Directors
January 2012 Director, Executive Officer, Chief ofSenior Managing Executive
Cloud Business Promotion
Officer
Satoshi Hitaka January 19, 1971
(Note 4)
Headquarters, Local Governments BD
December 2018 Director, Managing Executive Officer,
Director of Local Governments
Chief of Sales Headquarters, Local
BD
Governments BD
December 2020 Representative Director, Senior
Managing Executive Officer, Head ofLocal Governments BD (current
position)
December 2020 Representative Director and President,
TKC Security Services Co., Ltd. (current
position)
April 1977
Joined the Company

Number ofshares held
(hundreds ofshares)178

59

December 2006 Executive Officer, Systems
Development Headquarters, Local
Governments BD
January 2008 Executive Officer, Chief of Internal
Control Center
Director
Senior Managing Executive
Officer
In charge of SKYCOM
Corporation

Ikuo Kawahashi February 26, 1955

December 2013 Representative Director and Vice
President, SKYCOM Corporation
December 2014 Representative Director and President,
SKYCOM Corporation (current
position)
December 2019 Senior Managing Executive Officer ofDecember 2020 the Company
Director, Senior Managing Executive
Officer of the Company, in charge of
SKYCOM Corporation (current
position)- 61 -(Note 4)165

Position and Title

Name

Date of Birth

Brief biography
April 1979

Director
Managing Executive Officer
Chief of Business Administration
Headquarters

Director
Managing Executive Officer
Accounting Firm Business
Division
Systems Development ResearchCenterChief of Systems Planning
Headquarters

Kiyotsugu
Nakanishi

Yoshihisa Ito

Number ofshares held
(hundreds ofshares)(Note 4)

398

Joined the Company

December 2008 Executive Officer, General Manager ofGeneral Affairs Dept.
December 2009 General Manager of General Affairs
Dept.
January 2015 General Manager of Internal Audit Dept.
August 27, 1956
December 2018 Full-time Auditor of the Company
December 2020 Director, Executive Officer, Chief ofBusiness Administration Headquarters
December 2021 Director, Managing Executive Officer,
Chief of Business Administration
Headquarters (current position)
April 1990
Joined the Company

April 2, 1967

Term ofofficeDecember 2007 Executive Officer, Chief of Users
Interface Design Headquarters, Systems
Development Research Center
October 2010 Executive Officer, Chief of Sales
Planning Headquarters, Accounting Firm
BD
December 2013 Director, Executive Officer, Chief ofSales Planning Headquarters,
Accounting Firm BD
April 2014
Director, Executive Officer, Chief ofSales Planning Headquarters,
Accounting Firm BD
December 2016 Executive Officer, Chief of Tax
Information Systems Design Center,
Systems Development Research Center,Accounting Firm BD(Note 4)January 2018 Executive Officer, Chief of User
Interface Design Headquarters, Systems
Development Research Center,Accounting Firm BD
December 2019 Managing Executive Officer, Chief ofUser Interface Design Headquarters,
Systems Development Research Center,Accounting Firm BD
October 2020 Managing Executive Officer, Chief ofTax Information Systems Design Center,
Systems Development Research Center,Accounting Firm BD
December 2022 Director, Managing Executive Officer,
Chief of Systems Planning
Headquarters, Systems Development
Research Center, Accounting Firm BD(current position)
April 1994
Joined the Company
April 2018

Director
Executive Officer
Chief of Systems Development
Headquarters, Local Governments
BD

Takeshi
Kawamoto

August 23, 1969

Chief of Technology Infrastructure
Development Center, Local
Governments BD
December 2019 Executive Officer, Chief of Technology
Infrastructure Development Center,
Local Governments BD
December 2020 Executive Officer, Chief of Systems
Development Headquarters, Local
Governments BD
December 2021 Chief of Systems Development
Headquarters, Local Governments BD
December 2022 Director, Executive Officer, Chief ofSystems Development Headquarters,
Local Governments BD (current
position)69- 62 -(Note 4)24

Position and Title

Name

Date of Birth

Brief biography
October 2001

Term ofofficeNumber ofshares held
(hundreds ofshares)Registered as attorney

October 2001

Director

Director

Joined Tokyo Toranomon Law Office(current position)
October 2019 Chairperson of the Nomination andJunko Iijima
August 3, 1967
(Note 4)Compensation Advisory Committee of
the Company (current position)
December 2019 Director of the Company (current
position)
February 1996 Registered as certified tax accountant
February 1996 Started business as certified tax
accountant
Nobuhiko Kouga January 25, 1964 April 2019
Representative Partner of Accounting(Note 4)
Firm Top Management (current position)
December 2020 Director of the Company (current
position)
August 1985 Registered as certified public accountant-

10

February 1987 Registered as certified tax accountant
Director

Keiichiro Kato

July 30, 1957

February 1987 Started business as certified tax
accountant
January 2003 Representative Partner, Kato Accounting
Office (current position)
December 2022 Director of the Company (current
position)
March 1975
Joined the Company(Note 4)116

(Note 5)
December 2016 Full-time Auditor of the Company(current position)
Auditor, TKC Security Services Co.,
Ltd. (current position)
October 2017 Auditor, TKC Customer Support Service
Co., Ltd. (current position)
April 1989
Joined the Company
August 2012 Executive Officer, Chief of AccountInformation Systems Development
Center, Systems Development ResearchCenter, Accounting Firm BD
December 2016 Director, Executive Officer, General
Manager of Sales Planning Dept., Sales
Headquarters, Accounting Firm BD
Yasuo Igarashi January 4, 1967
(Note 6)
December 2017 Director, Managing Executive Officer,
General Manager of Sales Planning
Dept., Accounting Firm BD
January 2018 Director, Managing Executive Officer,
Chief of Systems Development ResearchCenter, Accounting Firm BD
December 2022 Full-time Auditor of the Company(current position)
March 1989
Registered as certified tax accountant
March 1989
Started business as certified tax
accountant
Tomoyasu
February 12, 1958 February 2007 Representative Partner of Hamamura(Note 5)
Hamamura
Accounting Office (current position)
December 2020 Auditor of the Company (current
position)

204

December 2006 Executive Officer, General Manager of
TKCNF Research Committee Support
Dept.
October 2010 General Manager of Chairman’s Office
Auditor (Full-time)

Auditor (Full-time)

AuditorTsuneo Miyashita

May 28, 1949

- 63 -

68

22

Position and Title

Name

Brief biography

Term ofofficeNumber ofshares held
(hundreds ofshares)Joined Osaka Office of Aoyama Audit
Corporation
October 1989 Joined Mikio Taenaka Certified Public
Accountant Office
June 1995
Outside Audit & Supervisory Board
Member, Nishimoto Trading Co.
(currently CANON MEDTECH
SUPPLY CORPORATION)
January 2006 Director, Shigeki Taenaka Certified
Public Accountant Office (current
position)
June 2009
External Audit & Supervisory Board
Member, Japan System Techniques Co.,
Ltd. (current position)
January 2018 Outside Audit & Supervisory Board
Member, DENKYOSHA CO., LTD.
(currently Denkyo Group Holdings Co.,
Ltd.) (current position)
June 2019
Outside Audit & Supervisory Board
Member, DAIBIRU CORPORATION
January 2022 Representative Partner of Taenaka
Accounting Firm (current position)
December 2023 Auditor of the Company (current
position)(Note 7)16

Date of BirthAugust 1985

Auditor

Shigeki Taenaka

September 10,
1961

Total

(Notes) 1. Director Satoshi Hitaka is the spouse of the elder sister of Masanori Iizuka, Representative Director, President, andExecutive Officer.
2. Directors Junko Iijima, Nobuhiko Kouga, and Keiichiro Kato are Outside Directors.
3. Auditors Tomoyasu Hamamura and Shigeki Taenaka are Outside Auditors.
4. Two years from the close of the Ordinary General Meeting of Shareholders held December 16, 2022.
5. Four years from the close of the Ordinary General Meeting of Shareholders held December 18, 2020.
6. Four years from the close of the Ordinary General Meeting of Shareholders held December 16, 2022.
7. Four years from the close of the Ordinary General Meeting of Shareholders held December 15, 2023.

- 64 -

1,335

2. Procedures and policy on the nomination of Directors(1) For the appointment and dismissal of Directors, the Board of Directors shall consult with the Nomination and Compensation
Advisory Committee, and respecting the report from said Committee, prepare the original proposals to be submitted for resolution
at the General Meeting of Shareholders.
(2) The Nomination and Compensation Advisory Committee shall nominate a candidate for a new Director who satisfies one of thefollowing qualifications:(i) a person who is an Executive Officer or of higher rank, who has engaged in the timely development of new products or new
services (emergence of innovation) or, as person in charge of such marketing strategy, led such projects to success in line withthe business objectives of the Company while anticipating the rapidly moving trends of a digital society, thereby winning alarge number of clients, etc., improving the social reputation of the Company, and contributing notably to the sustainablegrowth of the Company.
(ii) a person who is an Executive Officer or of higher rank, who has eliminated unreasonableness, waste, and inconsistency
within his/her business division in compliance with the laws, developed a business plan to achieve increased income andincreased profit on an ongoing basis, improve the treatment of employees, and implement risk measures, and in executing
such plan, contributed notably to improving the medium- and long-term corporate value through aggressive information
sharing and provision of opinions to the Director in charge.
3. Outside Officers
Category

Director

Director

Director

Name

Functions, roles and appointment

Junko Iijima

As a certified attorney, Ms. Iijima possesses expertise and extensive experience, and, inparticular, deep insight into corporate governance. As chairperson of the Company’s
Nomination and Compensation Advisory Committee established on October 10, 2019, shedisplayed strong leadership in deliberating and designing the policies and procedures forthe appointment and dismissal of Directors, etc., and the officers’ compensation plan inaccordance with the principles of the corporate governance code. She is expected tocontribute to the sustainable growth and medium- to long-term improvement in thecorporate value of the Company through enhanced corporate governance, and to provide
valuable input from the perspective of a female. She is also expected to enhance thedecision-making and supervisory functions of the Board of Directors, and therefore, she
has been reappointed as Outside Director.
Ms. Iijima has no special interest in the Company. The number of shares of the Company
held is as indicated in the “Number of shares held” column under 1. List of Officers.

Nobuhiko Kouga

Mr. Kouga is a representative partner of Accounting Firm Top Management, and he utilizes
his extensive experience and insights in the management of accounting firms in the
management of the Company’s Accounting Firm Business. As chairperson of the TKCNFNew Members Service Committee, he is expected to contribute to the sustainable growthof the Company and improvement of corporate value over the medium-term by providing
advice on follow-up activities for new member tax accountants and certified public
accountants and activities to increase TKC Members. Therefore, he has been reappointed
as Outside Director.
Ms. Iijima has no special interest in the Company. The number of shares of the Company
held is as indicated in the “Number of shares held” column under 1. List of Officers.

Keiichiro Kato

Mr. Kato is a representative partner of Kato Accounting Office, and possesses extensive
experience and insights in the management of accounting firms. He also serves as Vice
Chairman of the TKCNF and chairs the Executive Committee and the Board of
Chairpersons, contributing to the realization of the business objectives of TKCNF. With
these experiences, he is expected to contribute to the sustainable growth and medium-term
improvement in the corporate value of the Company, and is also expected to enhance thedecision-making and supervisory functions of the Board of Directors. Therefore, he has
been appointed as Outside Director.
Ms. Iijima has no special interest in the Company. The number of shares of the Company
held is as indicated in the “Number of shares held” column under 1. List of Officers.

- 65 -

Category

Auditor

Auditor

Name

Functions,

roles

and

appointment

Tomoyasu
Hamamura

Mr. Hamamura is a representative partner of Hamamura Accounting Office, and has mademajor contributions in the development of local economies through corporate management
as certified public tax accountant, auditor, and accounting advisors to many businesses in
Utsunomiya City, Tochigi Prefecture. Based on such experience and deep insight in the
Company and the industry, he is expected to provide advice and proposals to ensure thelegality, adequacy and appropriateness of the decision-making and resolutions of theBoard of Directors. He is also expected to strengthen the supervisory functions of theBoard of Directors, and therefore, has been appointed as Outside Auditor.
Ms. Iijima has no special interest in the Company. The number of shares of the Company
held is as indicated in the “Number of shares held” column under 1. List of Officers.

Shigeki Taenaka

Mr. Taenaka is a representative partner of Taenaka Accounting Firm, and has experience
as an Outside Auditor in listed companies. Based on such experience and deep insight in
the Company and the industry, he is expected to provide advice and proposals to ensure
the legality, adequacy and appropriateness of the decision-making and resolutions of theBoard of Directors. He is also expected to strengthen the supervisory functions of theBoard of Directors, and therefore, has been appointed as Outside Auditor.
Ms. Iijima has no special interest in the Company. The number of shares of the Company
held is as indicated in the “Number of shares held” column under 1. List of Officers.

4. Support systems for Outside Directors and Outside Auditors(1) The Company appoints the Chief of Business Administration Headquarters as a point of liaison to provide assistance to Outside
Directors and Outside Auditors. The Chief of Business Administration Headquarters notifies in advance the Outside Directors
and Outside Auditors of the schedule of each meeting of the Board of Directors or meeting of the Board of Auditors and send
any related materials thereto, and if necessary, provides explanations in advance on such materials.
(2) Outside Directors attend any major meetings of the TKCNF, the customer organization of the Accounting Firm BD.
(3) Once a month, Outside Auditors review the approval request documents, accounting books and major evidence documents, andreceive reports from the heads of departments and exchange opinions.
(4) Compensations for Auditors shall be determined each January upon discussion among Auditors based on the business results
for the preceding fiscal year.
5. Standards concerning the independence of Outside Directors and Outside Auditors of the Company(1) A person who is currently not, or has not been for the past ten years, an executive member of the Company or the Company’s
subsidiaries;(2) A person for which the Company is currently not, or was recently not, an important trade partner or its executing member, or an
important trade partner of the Company or its executing member;(3) A person for which the Company is currently not, or was recently not, a consultant, accounting specialist, or legal specialist
receiving large sums of money or other assets other than officers’ compensation from the Company;(4) A person who is currently not, or has not recently been, a near relative of an executive member of the Company or the Company’s
subsidiaries, or a near relative of any of the persons falling under items (2) or (3);(5) Any other person whose independence is clear of doubt in executing the duties of an Outside Director.

- 66 -

(3) [Audits]
Since its founding in 1966, the Company has adopted the so-called “management based on rules.” All directors and employees
were required to ensure compliance, and any illegal act or violation of internal rules have been dealt with strictly and impartiallywithout exceptions, even if the motivation was for the interest of the Company or for the customers, shareholders, business
partners or employees. The main objective of this “management based on rules” is to firstly protect our employees, secondly ourclients, and thirdly the Company through strict compliance. That is why our Directors and employees have a correctunderstanding on the standards that they need to abide by in the process of fulfilling their basic responsibilities and performing
their day-to-day work, and strive to act according to these standards.
(i) Audits by Auditors
The Company has four Auditors, consisting of two Standing Auditors and two Outside Auditors. Outside Auditors Tomoyasu
Hamamura and Shigeki Taenaka are certified tax accountants who have considerable expertise in the areas of finance, accounting,and tax accounting.
Full-time Auditor Tsuneo Miyashita has served as head of Business Administration in charge of general affairs, accounting andfinancing and have considerable expertise on financing, accounting and tax affairs.
Full-time Auditor Yasuo Igarashi has served as head of Systems Development, and has extensive business experience and broad
expertise on systems development of the Company.
Auditors shall attend the meetings of the Board of Directors and other important management meetings in accordance with theCode of Kansayaku Auditing Standards. They shall strive to oversee the material decision-making process and execution ofbusiness, and receive reports from the accounting auditors, Directors and employees to form their audit opinions throughdeliberation.
The attendance of each Auditor to the meetings of the Board of Auditors is shown below:
Number of days attended/numberof meetings held (Note 1)

Attendance
rate (Note 1)

Tsuneo Miyashita

5/5

100%

Yasuo Igarashi (Note 2)

4/4

100%

Hideki Tomonaga (Note 3)

5/5

100%

Name

Tomoyasu Hamamura
5/5100%(Note 1) Based on the number of days held during his/her term in office in the current fiscal year.
(Note 2) Installed in office on December 16, 2022.
(Note 3) Retired from office on December 15, 2023.
(ii) Internal audits
1) Organization, personnel and procedures of internal audits
Internal audits of the Company are conducted based on the Resolution on Internal Control, Operational Risk Management
Regulations, Internal Audit Regulations, and Regulations for the Management of Affiliates. Internal audits are aimed toestablish an appropriate internal control system covering the entire TKC Group, and conducted from a standpoint independent
from the line of business execution in order to determine the effectiveness.
The Internal Audit Department is an organization independent of other divisions of the Company and operates under the directcontrol of the President. There are five internal auditors in the Internal Audit Department, of which two hold the qualificationof Certified Internal Auditors, the only globally recognized certification for internal auditors.
In June every year, the Company conducts a risk survey for all of its employees. Based on the assessment of this survey andrisk-related information of affiliates, the Internal Audit Department formulates the annual internal auditing plan, taking into
consideration any special assignments from the Board or Directors and results of deliberation with the Auditors. The audit planis reported to the Board of Directors after approval by the President. Prior to conducting the audit, the internal auditors will
undertake preliminary surveys and develop individual audit plans. After obtaining approval from the head of the Internal Audit
Department, the internal auditors will notify the divisions to be audited. Site visits are conducted by several internal auditors.
Within one week from the completion of the audit, the head of the Internal Audit Department shall prepare and submit anInternal Audit Report to the President. Based on the approved Internal Audit Report, the President will order the heads of audited
divisions to take actions and report on any matters that need to be improved.
In addition, the head of the Internal Audit Department will provide copies of the Internal Audit Report to the Directors in chargeof each division and Auditors. Directors in charge of each division shall control any division-specific operational risks.
2) Coordination among internal audits, audits by Auditors, and accounting audits, and the relationship between these audits andthe internal control division
The head of the Internal Audit Department must ensure an appropriate scope of audits and shall consider coordinating with the
Auditors and accounting auditors in order to minimize the redundancy of tasks. To this end, the head of the Internal Audit- 67 -

Department holds meetings with the Auditors and the accounting auditor, to report on the status of the internal control system
and results of internal audits as requested and to exchange opinions.
The Auditors receive reports on the implementation and operation of internal controls of the TKC Group by the Internal Audit
Department, reports on the progress of the internal audit plans, and reports on the results of assessment of internal control overfinancial reporting.
The Company has an audit agreement with the accounting auditor, and receives audit of the financial statements and internal
control audit over financial reporting from the firm. In that process, the Internal Audit Department provides necessary
information to the accounting auditor.
While the Auditors, accounting auditor, and internal auditors each have their own objectives of audits, standpoints of theauditing body, and duties, during the current fiscal year under review, they worked to strengthen the coordination andinformation sharing between the three different audits (audits by Auditors, audits by the accounting auditor, and internal audits),
to improve the effectiveness and efficiency of each audit, and to maintain and improve the governance of the TKC group bycomplementing each other.

- 68 -

(iii) Accounting audits
1) Name of audit firm
Ernst & Young ShinNihon LLC
2) Continuous audit period
40 years(Note) The Company had an audit agreement with Misuzu Audit Corporation (Chuo Audit Corporation at the time) from 1983
to 2007 (including the period from July 1, 2006 to August 31, 2006 when the Company temporarily appointed an
accounting auditor instead of Misuzu Audit Corporation (Chuo Audit Corporation at the time)). Upon dissolution ofMisuzu Audit Corporation, the Company has entered into an audit agreement with Ernst & Young ShinNihon LLC since2007 (Shin Nihon LLC at the time). However, the certified public accountant who was providing the audit services to theCompany also transferred to Ernst & Young ShinNihon LLC (Shin Nihon LLC at the time) and continued to provide audit
services to the Company. As such, it could be deemed that the same auditing firm has been providing audit services to theCompany on a continuous basis, and therefore, the audit period of the auditing firm prior to the transfer of said certified
public accountant is also added and included.
3) Certified public accountants that executed the accounting audit
Shigeyuki Honda and Toru Iizuka
4) Number of assistants assisting auditing:
The number of assistants assisting the accounting audit of the Company was 3 certified public accountants and 13 otherpersonnel.
5) Policy and reasons for appointing the audit firm
It is the policy of the Company for the Board of Auditors to dismiss accounting auditors, with the consent of all Auditors,
should it be deemed that said accounting auditor falls under any of the items prescribed in Article 340 Paragraph 1 of theCompanies Act. In such event, an Auditor selected by the Board of Auditors shall report the dismissal of the accounting auditor
and the reason for dismissal at the first General Meeting of Shareholders convened following the dismissal.
If there is something which prevents the accounting auditor’s execution of his/her duties, the Board of Auditors, as necessary,
shall develop a proposal on the dismissal or refusal of reappointment of said accounting auditor, and the Board of Directors
shall present such proposal for resolution at the General Meeting of Shareholders.
6) Assessment of Accounting Auditors by Auditors and Board of Auditors
Based on the Practical Guidelines on the Assessment of Accounting Auditors and the Formulation of Selection Standards
issued by the Japan Audit & Supervisory Board Members Association, the Board of Auditors assessed the auditing activities
of Ernst & Young ShinNihon LLC during the past year, including such items as the quality control system of the auditing firm,
auditing team, audit fees, communication with Auditors, etc., relationship with management, and non-compliance risks. As aresult of assessment, the Board of Auditors has determined that it is appropriate to reappoint said auditing firm as accounting
auditor.
(iv) Content of audit fees
1) Content of compensation to certified public accountants, etc. engaged in audits
Previous consolidated fiscal year
Classification

The Company
Consolidated
subsidiary:
Total

Current consolidated fiscal year

Compensation for audit
and attestation services(million yen)
46

Compensation for nonaudit services (million
yen)
12Compensation for audit
and attestation services(million yen)
46

Compensation for nonaudit services (million
yen)
11

－

－

－

－

46

12

46

11

(Note) The Company pays certified public accountants engaged in audits compensation for assurance services for internal
controls pertaining to the Company’s ASP service based on the Auditing and Assurance Practice Committee Practical
Guideline No. 3402 "Assurance Reports on Controls at a Service Organization (Japanese Institute of Certified Public
Accountants dated August 1, 2019)" covering services other than the services prescribed in Article 2 Paragraph 1 of theCertified Public Accountants Act.

- 69 -

2) Compensation to parties who belong to the same network as the certified public accountants, etc. engaged in audits (Ernst &Young) (excluding 1) above)
Previous consolidated fiscal year
Classification

Compensation for audit
and attestation services(million yen)

The Company

Current consolidated fiscal year
Compensation for audit
and attestation services(million yen)Compensation for nonaudit services (million
yen)－Compensation for nonaudit services (million
yen)
13

－

－

Consolidated
subsidiary:

－

－

－

－

Total

－

13

－

－

(Note) In the previous consolidated fiscal year, the Company paid EY Strategy and Consulting Co., Ltd., a party who belongs to
the same network as the certified public accountants, etc. engaged in audits, compensation, etc. for the services to assist
the development of declaration documents under the Information system Security Management and Assessment Program(ISMAP).
3) Policy for determining audit fees
Audit fees are determined with the consent of the Board of Auditors, taking into account such factors as scale and businesscharacteristics of the Company and number of days of auditing works performed.
4) Reasons for Board of Auditors giving consent to the audit fees to the accounting auditor
The Board of Auditors has checked the audit plan, content of audit, man-hours required for the audit, and the unit price per
man-hour, and reviewed the appropriateness of the amount of compensation in comparison to the conventional amounts andplanned amounts. As a result, it has determined that the decision by the Board of Directors with respect to the compensation
for the accounting auditor is appropriate, and has given consent in accordance with Article 339 Paragraph 1 of the Companies
Act of Japan.
5) Other important fees under the audit and attestation services
None to be disclosed.

- 70 -

(4) [Officers’ Compensation, etc.]
The Company resolved the policy on determining the individual compensations for officers of the Company at the meeting of
the Board of Directors held on May 10, 2021. The Board of Directors also confirmed that, with respect to the individualcompensations for officers for the current fiscal year, the method for determining the details of compensations, etc. and thedetails of the determined compensations were in compliance with said policy and reflected the matters reported by the
Nomination and Compensation Advisory Committee, and determined that they are in compliance with said policy.
The details of the policy on determining the individual compensations for officers are as follows:
1. Policy on determining the amount of officers’ compensation and/or calculation method(1) Officers’ compensation system
Officers’ compensation consists of monetary compensation and stock-based compensation (BIP Trust).
(2) Maximum amounts of Officers’ compensation
The amount of compensation for officers of the Company was established by resolution of the 43rd Ordinary General Meetingof Shareholders convened on December 22, 2009, at an annual monetary amount of up to 480 million yen for Directors’compensation and up to 80 million yen for Auditors’ compensation. Separate from these maximum amounts of compensation,
Directors (excluding outside directors and expatriates), executive officers (excluding expatriates) are entitled to a stock-based
compensation plan (BIP Trust) established by resolution of the 52nd Ordinary General Meeting of Shareholders convened on
December 21, 2018, at an amount of up to 500 million yen for Directors and executive officers for three fiscal years.
Also, the total amount of compensation to be paid in each fiscal year is within the maximum amounts of Officers’ compensation
as determined by resolution of the General Meeting of Shareholders in accordance with Article 361 and Article 387 of theCompanies Act of Japan, and within 1% of the total amount of marginal profit of the entire company achieved in the previous
fiscal year.
Here, Officers’ compensation shall mean monetary compensation and stock-based compensation for Directors, monetarycompensation for Auditors, and the portion of stock-based compensation of the executive officers’ allowance for executive
officers who are not Directors.
(Note) The Company resolved at the Board of Directors Meeting held on February 10, 2022 to extend the trust period for three
years and to continue stock-based compensation (BIP Trust).
(3) Policy on determining the amount of Officers’ compensation(i) Policy on determining the compensation for Directors also serving as executive officers
1) The amounts of compensation may be increased if both of the following two conditions are met:a) On a non-consolidated, year-on-year basis, net sales, marginal profits and ordinary income of the entire Company
increased by over 3%.
However, directors with a division under their jurisdiction shall read “the entire Company” as “division under theirjurisdiction.”b) On closing an equity ratio of 83% or greater has been achieved.
Provided, in calculating the equity ratio, the effects of valuation difference on the available-for-sale securities that areheld as cross-shareholdings are to be excluded.
In addition to the above, if, for reasons such as merging/absorbing affiliated companies, the amount of assets, liabilities,
and net assets temporarily fluctuate significantly, such effects are also to be excluded.
Moreover, if the accounting standards applied to the year-to-year comparison of net sales, marginal profits and ordinary
income of the entire Company have been changed, such effects are to be excluded only for the first fiscal year in whichsuch new accounting standards are applied.
2) The amounts of compensation for Directors who are executive officers shall be determined at the meeting of the Boardof Directors, by assessing the achievement of business results of divisions in charge by referencing the year-on-year
marginal profits as indicator. If the accounting standards applied to the year-to-year comparison of marginal profits havebeen changed, such effects are to be excluded only for the first fiscal year in which such new accounting standards areapplied.
3) In addition to item 2) above, if an officer is reappointed, the Board may also take into consideration the number of years
holding executive positions based on his/her contribution to items 1) and 2) above.
4) If the divisions in charge have failed to achieve target performance for two consecutive fiscal years, the amounts ofcompensation for the next fiscal year shall be decreased.
The amounts of compensation may also be reduced in the event he/she causes a material accident or major loss.
(ii) Policy on determining the compensation for Directors not holding executive positions
1) Directors who do not serve as executive officers shall be excluded from performance assessments.
2) If the Company makes a request to any of the Directors who do not hold executive positions to perform matters beyond- 71 -

the normal responsibilities of an outside Directors, it shall pay an advisory fee based on a separately entered agreement
in compliance with the independence standards (compensation other than Officers’ compensation must be less than 10
million yen per year).
(iii) Policy on determining the compensation for Auditors
1) Auditors shall be excluded from performance assessments, and shall be eligible for monetary compensation only.
2) If the Company makes a request to any of the Auditors to perform matters beyond the normal responsibilities of an outside
Auditor, it shall pay an advisory fee based on a separately entered agreement in compliance with the independence
standards (compensation other than Officers’ compensation must be less than 10 million yen per year).
(iv) Basic policy on compensation for executive officers who are not Directors
1) An executive officer who is not a Director shall be paid an executive officer’s allowance in addition to employee’ssalaries.
2) Executive officers’ allowance shall consist of monetary compensation and stock-based compensation.
3) Executive officers’ allowance shall be determined at the meeting of the Board of Directors, taking into consideration thefollowing four points and assessing the business results.
a) Achievement of business results of divisions in charge;b) Individual accomplishments in marketing or innovation;c) Expertness of duties and individual contribution in improving the division’s business results;d) Executive position held and number of years holding such position.
If the division in charge continues to be unsuccessful in achieving the goals for two consecutive fiscal years, or causesa material accident or major loss, the Company may suspend the payment of executive officers’ allowance in the middle
of a fiscal year.
(4) Method of determining the amount of Officers’ compensation
The Company determines the amounts of Directors’ compensation at the meeting of the Board of Directors by respecting theresults of the reports from the Nomination and Compensation Advisory Committee, chaired by an Independent Outside Officer
and the majority of which consists of Outside Officers. Compensation for Auditors is determined by consultation among
Auditors within the maximum amount approved at the General Meeting of Shareholders. The Nomination and Compensation
Advisory Committee deliberates on the following matters and reports to the Board of Directors:(i) Policy and procedure for the nomination of candidates for Directors and executive officers holding executive position;(ii) Appointment and dismissal of Directors and executive officers holding executive position;(iii) Policy for the determination of compensations for Directors and executive officers holding executive position;(iv) Policy for the determination of individual compensations for Directors and executive officers holding executive
positions;(v) Individual compensations for Directors and executive officers holding executive position;(vi) Appointment and dismissal of representative directors and auditors of subsidiaries and their individual compensations;(vii) Other matters that the Board of Directors deem necessary in relation to any of the above items.
(5) Partial changes to the stock-based compensation plan using a trust
At the 53rd Ordinary General Meeting of Shareholders held on December 20, 2019, the proposal to change the stock-based
compensation (BIP Trust) from the conventional system of granting points based on executive positions held, to a performancelinked system was approved.
Under the new system, points will be granted to each individual within the range of 0% to 120% of the basic number of issued
shares depending on the year-on-year ratio of the company-wide performance goals (marginal profits and ordinary income)for a given period of each fiscal year during the trust period, provided, during the fiscal year ended September 30 of the same
year, (1) the sales and ordinary income of the entire Company both increase, and (2) the non-consolidated equity ratio exceeds
80%.
Based on the advice of the Board of Auditors, the Company has resolved at the regular meeting of the Board of Directors heldin January 2020 not to grant points to Auditors. For the fiscal year under review, the Company has calculated the amounts ofstock-based compensation in accordance with the revised system.
The maximum number of total points granted to Directors, etc. in a single fiscal year shall remain unchanged at 34,000 points
as approved at the 52nd Ordinary General Meeting of Shareholders held on December 21, 2018.
(6) Calculation method
Points = (monthly amount of officers’ compensation ÷ trust average stock acquisition price × 50% × year-on-year ratio of
marginal profits) ＋ (monthly amount of officers’ compensation ÷ trust average acquisition stock price × 50% × year-on-year
ratio of ordinary income)- 72 -

*1: Trust average stock acquisition price is the average stock acquisition price of the Company’s stock acquired by the Trustin establishing the stock-based compensation program (BIP Trust).
*2: Marginal profit is the amount derived by deducting the costs that change in proportion to sales (variable costs) from theamount of sales. Marginal profit will vary depending on product mix. The Company considers the marginal profit ratio
as an important financial indicator, and sets the target at 60%.
*3: The year-on-year ratios of marginal profits and ordinary income fluctuate between the range of 0% to 120%.
*4: Year-on-year ratio of marginal profits for the current fiscal year under review was 106.2%. Year-on-year ratio of ordinary
income was 105.8%.
2. Total amount of compensation, total by type, and number of eligible officers, by officer category
Officer category
Directors (excluding Outside

Total amount of
remuneration(million yen)

Total compensation by type (million yen)
Number of eligible officers
Stock-based(No. of people)
compensation (BIP
Trust)

Monetary
compensation

198

183

15

7

Auditors (excluding Outside
Auditors)

30

30

－

2

Outside Directors

28

28

－

4

Outside Auditors

19

19

－

2

Directors)(Notes) 1. As of the end of the fiscal year under review, the Company has nine Directors (of which, three are Outside Directors)
and four Auditors (of which, two are Outside Auditors). The difference in the number of eligible Directors andAuditors is because the above number includes one Director and one Outside Director who retired from office as of
the close of the Ordinary General Meeting of Shareholders for the 56th Term held on December 16, 2022.
2. The maximum amount of Officers’ compensation was resolved at 480 million yen per year at the 43rd Ordinary
General Meeting of Shareholders convened on December 22, 2009. The Directors’ compensation is performancelinked and determined within the above maximum amount. The number of Directors as of the end of said General
Meeting of Shareholders was twelve (of which, one was an Outside Director). Separate from the above, the maximum
amount of the stock-based compensation plan (BIP Trust) for three fiscal years was resolved at 500 million yen at the52nd Ordinary General Meeting of Shareholders held on December 21, 2018. The number of Directors (excluding
Outside Directors) as of the end of said General Meeting of Shareholders was eight.
In the Initial Trust Period, in addition to the maximum amounts set forth above, an amount not exceeding 970 million
yen in total has also been resolved to be used as funds to acquire the Company’s stock to be granted as points to
Directors, etc. (including Directors, etc. who have retired from office and became employees after the grant of stock
options) as measures to be taken for the transition from the stock-based compensation stock option scheme.
The Company resolved at the Board of Directors Meeting held on February 10, 2022 to extend the trust period forthree years and to continue stock-based compensation (BIP Trust).

- 73 -

(5) [Status of Shareholdings](i) Standards and approach to the classification of equity securities
The Company classifies its equity securities as those held for the purpose of pure investments, which are held for the purposeof gaining profits mainly by fluctuation in share values or by receipt of dividends, and those held for purposes other than pureinvestments (hereinafter “cross-shareholdings”). The Company make it a general rule not to hold equity securities for the
purpose of pure investments.
As of the end of the fiscal year under review, the Company does not hold equity securities for the purpose of pure investments.
(ii) Equity securities held for purposes other than pure investments
1) Policy on cross-shareholding and methods to assess its rationality, and results of assessment of the appropriateness of eachholding by Directors, etc.
a) Policy on cross-shareholdings
The purposes of cross-shareholding of share of other listed companies are to maintain and strengthen long-term, stablebusiness relationships, or to maintain and strengthen business partnerships.
b) Methods to assess the rationality of cross-shareholding, and results of assessment of the appropriateness of each holding
by Directors, etc.
The Boards of Directors of the Company and its Group companies annually assess the major cross-shareholdings taking
into consideration the returns and risks and examining the medium- to long-term economic rationality and future prospects.
As a result of such assessment, any cross-shareholdings that do not necessarily have significance shall be reduced throughdialogue and negotiation with such business partners.
2) Number of securities and amounts recorded in the balance sheets
Number of securities(Stock name)

Total amount recorded inbalance sheets(million yen)

Unlisted stock

7

112

Securities other thanunlisted stock

3

7,456

(Securities that increased in number of shares in the current fiscal year)
Total amount acquired byNumber of securities
increase in number of shares(Stock name)(million yen)
Unlisted stock
Securities other thanunlisted stock

－

－

1

2

Securities other thanunlisted stock－
Because of receipt as a consequence of(Securities that decreased in number of shares in the current fiscal year)
Total amount sold by decrease in
Number of securities
number of shares(Stock name)(million yen)
Unlisted stock

Reasons for increase in number of shares

－

－

1

15

- 74 -

the merger and absorption of TKC
Financial Guarantee Co., Ltd.

3) Numbers of securities and amounts recorded in the balance sheet for equity holdings for specific purpose and deemed equity
holdings
Specified investment securities
Current fiscal year
Stock name

Previous fiscal year

Number of shares
Number of shares(shares)(shares)Amount recorded in Amount recorded inbalance sheet
balance sheet(millions of yen)(millions of yen)

1,781,600

1,780,000

Holding of
Purpose of holding, overview of businessthealliances, etc., quantitative effect of holding,Company’s
reason for increase in number of sharessharesRegarding the shares of this company, 1,600
share were transferred to TKC as aconsequence of the merger and absorption
dated April 1, 2023. To maintain andstrengthen the partnership for the purpose of
supporting the prosperity and success of

T&D Holdings, Inc.

SMEs.
Figures on the effect of holding are not
4,396

2,433

Yes

disclosed as they contain business secrets ofsaid company. However, the Company
assesses whether the benefits and risks fromthe holding cover the costs of capital,
quantitatively on a regular basis.
To maintain and strengthen the long-term,

2,322,180

2,322,180

Mitsubishi UFJ
Financial Group,

stable business relationship.
Figures on the effect of holding are notdisclosed as they contain business secrets ofsaid company. However, the Company

Inc.
2,945

1,512

Yes

assesses whether the benefits and risks fromthe holding cover the costs of capital,
quantitatively on a regular basis.

275,400

275,400

To maintain and strengthen the long-term,
stable business relationship.
Figures on the effect of holding are notdisclosed as they contain business secrets of

Mebuki Financial
Group, Inc.
113

77

said company. However, the Company
assesses whether the benefits and risks fromYes

the holding cover the costs of capital,
quantitatively on a regular basis.
We verified whether or not it was suitable to－

17,000

Nippon Paper
Industries Co., Ltd.

hold the shares in the Board of Directors
based on our business relationships,
comparison of the benefits and the costs ofcapital as a consequence of holding them,－15(iii) Equity securities held for the pure investment
None to be disclosed.

- 75 -

etc. and as a result we decided on a sellpolicy and sold them in November 2022.

No

Part 5 [Financial Information]
1. Method of Preparing Consolidated Financial Statements and Financial Statements(1) The consolidated financial statements of the Company have been prepared in accordance with the Ordinance on the
Terminology, Forms, and Preparation Methods of Consolidated Financial Statements (Ordinance of the Ministry of FinanceNo. 28 of 1976; hereinafter, the "Ordinance on Consolidated Financial Statements").
(2) The financial statements of the Company have been prepared in accordance with the Ordinance on the Terminology, Forms, andPreparation Methods of Financial Statements (Ordinance of the Ministry of Finance No. 59 of 1963; hereinafter, the "Ordinanceon Financial Statements").
Further, as the Company is a Specified Company Submitting Financial Statements, we have prepared the financial statementsin accordance with the provisions of Article 127 of the Ordinance on Financial Statements.

2. Auditing and Attestation
The consolidated financial statements for the consolidated fiscal year (from October 1, 2022 to September 30, 2023) and financial
statements for the fiscal year (from October 1, 2022 to September 30, 2023) have been audited by Ernst & Young ShinNihon LLC
pursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act of Japan.

3. Special Efforts to Ensure the Appropriateness of its Consolidated Financial Statements
The Company makes exceptional efforts to ensure the appropriateness of our consolidated financial statements. Specifically, inorder to understand the contents of accounting standards correctly and to develop a system that would enable us to appropriately
respond to changes in accounting standards, we maintain membership of the Financial Accounting Standards Foundation and attend
seminars held by the Accounting Standards Board of Japan.

- 76 -

1. [Consolidated Financial Statements](1) [Consolidated Financial Statements](i) [Consolidated Balance Sheet](Unit: million yen)Previous consolidated fiscal year Current consolidated fiscal year
(September 30, 2022)
September 30, 2023
AssetsCurrent assets
Cash and deposits
Notes receivable–trade
Accounts receivable–trade
Contract assets
Lease investment assets
Merchandise and finished goods
Work in progress
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant, and equipment
Buildings and structures (net amount)
Machinery, equipment and vehicles (netamount)Tools, furniture & fixtures (net amount)Land
Lease assets (net amount)
Total property, plant, and equipment
Intangible assets
Software
Software in progress
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Long-term time deposits
Guarantee deposits
Long-term lease investment assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets- 77 -

29,920
47
7,881
391
362
278
69
146
1,630
(12)
40,71532,093
50
8,332
301
154
246
41
137
1,835
(19)
43,173

7,651

7,491

501

445

1,820
6,802
376
*1 17,153

2,023
6,915
432
*1 17,308

3,073
1,567
25
4,666

2,973
2,813
25
5,813

*2 18,748*2 22,050

65
8,032
17,700
1,486
198
458
－
46,68968,510109,225

19
7,383
18,700
1,452
44
423
(12)
50,06173,182
116,356

(Unit: million yen)Previous consolidated fiscal year Current consolidated fiscal year
(September 30, 2022)
September 30, 2023
Liabilities
Current liabilities
Accounts payable–trade
Electronically recorded obligations–operating
Current portion of long-term loans payable
Lease obligations
Accounts payable–other
Income taxes payable
Accrued consumption taxes
Contract liabilities
Provisions for bonuses
Provisions for loss on construction contracts
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Retirement benefit liabilities
Provisions for stocks payment(5) Provisions for loss on guarantees
Other
Total non-current liabilities
Total liabilities
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- 78 -

2,973
799
71
492
2,187
3,167
819
1,104
4,953
65
1,044
17,679

2,698
780
71
283
2,387
2,437
771
1,210
4,810
14
1,332
16,797

142
481
2,806
306
－
482
4,219
21,899

71
391
2,956
341
3
484
4,249
21,0475,700
6,589
78,743(2,359)88,6725,700
6,286
84,890(2,604)
94,271

(138)

2,070

(1,207)(1,033)(1,346)87,325109,225

1,036
95,308116,356

(ii) [Consolidated Statements of Income and Comprehensive Income][Consolidated Statements of Income](Unit: million yen)Previous consolidated fiscal year Current consolidated fiscal year
(Started October 1, 2021;(Started October 1, 2022;
ended September 30, 2022)
ended September 30, 2023)
Net sales
Cost of sales
Gross profit
Selling, general, and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Land and house rent received
Subsidy income
Equity in earnings of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on sale of securities
Treasury stock acquisition expenses
Provisions for allowance for loss on guarantees
Surcharges
Penalties
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sale of non-current assets
Gain on extinguishment of tie-in shares
Other
Total extraordinary income
Extraordinary loss
Loss on sale of non-current assets
Loss on retirement of non-current assets
Total extraordinary loss
Net income before taxes and adjustments
Income taxes–current
Income taxes–deferred
Total income taxes
Net income
Net income attributable to owners of parent

67,83871,915*1 19,909*1 21,474

47,92950,440*2 34,578*2 36,102

13,351

14,338

70
176
47
9
3
98
407

66
195
40
10
55
67
436

1
－
0
－
20
58
0
80
13,677

1
0
0
0
－
－
0
2
14,772

*3 3

*3 1
365
15
382

－
－
3

- 79 -

*4 0

－

*5 30

*5 19

30
13,650
4,976
(643)
4,332
9,317
9,317

19
15,135
4,707
(399)
4,308
10,826
10,826

[Consolidated Statements of Comprehensive Income](Unit: million yen)Previous consolidated fiscal year Current consolidated fiscal year
(Started October 1, 2021;(Started October 1, 2022;
ended September 30, 2022)
ended September 30, 2023)
Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners of theparent- 80 -

9,317

10,826(588)
174*1 (414)
8,902

2,209
174
*1 2,383
13,2108,902

13,210(iii) [Consolidated Statement of Changes in Net Assets]
Previous consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)(Unit: million yen)
Shareholders’ equity
Capital stock
Balance at beginning of year

Capital surplus

5,700

Retained earnings

6,589

73,411

Total shareholders’equityTreasury stock(1,352)

84,348Changes during fiscal year
Dividends of surplus(3,985)(3,985)

Net income attributable toowners of parent

9,317

9,317

Acquisition of treasury stock
Disposal of treasury stock(1,035)(1,035)27

27

0Changes in items other thanequity (net)Total changes during fiscal year
Balance at end of year

－

0

5,331

(1,007)

4,324

5,700

6,589

78,743(2,359)88,672

Accumulated other comprehensive income

Balance at beginning of year

Valuation difference
on available-for-salesecurities

Accumulated
remeasurements ofdefined benefit plans

Total accumulated
other comprehensive
income449(1,382)(932)

Total net assets

83,416

Changes during fiscal year
Dividends of surplus(3,985)

Net income attributable toowners of parent

9,317

Acquisition of treasury stock(1,035)

Disposal of treasury stock

27

Changes in items other thanequity (net)

(588)

174

(414)

(414)

Total changes during fiscal year

(588)

174

(414)

3,909

Balance at end of year(138)

(1,207)(1,346)87,325- 81 -

Current consolidated fiscal year (Started October 1, 2022; ended September 30, 2023)(Unit: million yen)
Shareholders’ equity
Capital stock
Balance at beginning of year

Capital surplus

5,700

Retained earnings

6,589

78,743

Total shareholders’equityTreasury stock(2,359)88,672

Changes during fiscal year
Dividends of surplus(4,263)(4,263)

Net income attributable toowners of parent

10,826

10,826

Acquisition of treasury stock
Disposal of treasury stock0

Retirement of treasury stock(381)

Increase due to merger(416)(1,089)(1,089)

0

0

798

－

47

125

78

Changes in items other thanequity (net)Total changes during fiscal year
Balance at end of year

－

(302)

6,146

(244)

5,599

5,700

6,286

84,890(2,604)

94,271

Accumulated other comprehensive income

Balance at beginning of year

Valuation difference
on available-for-salesecurities

Accumulated
remeasurements ofdefined benefit plans

Total accumulated
other comprehensive
income(138)(1,207)(1,346)

Total net assets

87,325

Changes during fiscal year
Dividends of surplus(4,263)

Net income attributable toowners of parent

10,826

Acquisition of treasury stock(1,089)

Disposal of treasury stock0

Retirement of treasury stock－

Increase due to merger

125

Changes in items other thanequity (net)

2,209

174

2,383

2,383

Total changes during fiscal year

2,209

174

2,383

7,982

Balance at end of year

2,070

(1,033)

1,036

95,308- 82 -

(iv) [Consolidated Statements of Cash Flows](Unit: million yen)Previous consolidated fiscal year Current consolidated fiscal year
(Started October 1, 2021;(Started October 1, 2022;
ended September 30, 2022)
ended September 30, 2023)
Cash flows from operating activities
Net income before taxes and adjustments
Depreciation
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provisions for bonuses
Increase (decrease) in provisions for loss on
construction contracts
Increase (decrease) in retirement benefit liabilities
Contribution of securities to retirement benefit trust
Increase (decrease) in provisions for stocks payment
Interest and dividends income
Interest expenses
Surcharges
Penalties
Equity in losses (earnings) of affiliates
Loss on retirement of non-current assets
Loss (gain) on sale of non-current assets
Loss (gain) on extinguishment of tie-in shares
Decrease (increase) in notes and accounts receivable–
trade
Decrease (increase) in inventories
Decrease (increase) in other assets
Increase (decrease) in accounts payable–trade
Increase (decrease) in other liabilities
Increase (decrease) in accrued consumption taxes
Other
SubtotalInterest and dividends received
Interest paid
Surcharges paid
Penalties paid
Income taxes paid
Cash flows from operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant, and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from redemption of investment securities
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Collection of loans receivables
Other proceeds
Cash flows from investing activities- 83 -

13,650
3,050
(1)
880

15,135
3,533
19
(143)

(76)

(51)

503
(1,000)
(1)
(246)
1
20
58
(3)
30
(2)
－

401
－
35
(262)
1
－
－
(55)
19
(1)
(365)

(1,180)

(566)

(82)
84
462
642
39
60
16,888
283
(1)
(20)
(35)
(4,063)
13,050

69
46
(382)
857
(48)
(17)
18,224
280
(1)
－
(11)
(5,424)
13,067(4,400)
3,300
(760)
6
(2,573)(2,015)
1
2,100
(59)
14
43
0
(4,342)(4,300)3,300(1,671)
1(3,119)(1,501)
38
1,300
(11)
45
57
－
(5,861)

(Unit: million yen)Previous consolidated fiscal year Current consolidated fiscal year
(Started October 1, 2021;(Started October 1, 2022;
ended September 30, 2022)
ended September 30, 2023)
Cash flows from financing activities
Repayment of long-term loans payable
Repayment of lease obligations
Purchase of treasury stock
Proceeds from disposal of treasury stock
Payment of dividends
Cash flows from financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents resulting frommerger with unconsolidated subsidiaries
Cash and cash equivalents at end of year

- 84 -(80)(118)(1,035)0(3,979)(5,214)
3,493
23,126(71)(149)(1,090)0(4,260)(5,571)
1,634
26,620－538*1 26,620*1 28,793

[Notes to Financial Statements](Basis of Presenting the Consolidated Financial Statements)
1. Scope of Consolidation
Consolidated subsidiaries (5 companies):
TLP Corporation
TKC Security Services Co., Ltd.
SKYCOM Corporation
TKC Customer Support Service Co., Ltd.
TKC Shuppan Corporation
Note that TKC Financial Guarantee Co., Ltd. was dissolved in the current consolidated fiscal year due to a merger andabsorption with TKC as the surviving company.
2. Scope of Application of the Equity Method
Affiliated companies under the equity method: (1 company)iMobile Inc.
Because the fiscal year-end of iMobile Inc. is March 31, a provisional settlement of accounts similar to a final settlement
has been performed as of the closing date of the consolidated financial statements.
Note that TKC Financial Guarantee Co., Ltd. was dissolved in the current consolidated fiscal year due to a merger andabsorption with TKC as the surviving company.
3. Fiscal Year-ends of Consolidated Subsidiaries
The closing dates of all consolidated subsidiaries are the same as the closing date of the consolidated financial statements.
4. Accounting Policies(1) Valuation standards and methods for major assets(i) Marketable and investment securities
1) Held-to-maturity securities
Amortized cost method
2) Available-for-sale securities
a. Securities other than shares that do not have a market value
Fair value method based on the quoted market price as of the fiscal year-end (related valuation differences are
directly charged or credited to the shareholders’ equity, and cost of securities sold is calculated by the moving
average method)a. Shares that do not have a market value
Moving average cost method(ii) Inventories
1) Merchandise, raw materials
Cost method based on first-in, first-out method (with balance sheet values reflecting write downs for decreased
profitability)
2) Finished goods
Cost method based mainly on cost percentage method (with balance sheet values reflecting write downs for
decreased profitability)
3) Work in progress
Cost method based on specific identification method (with balance sheet values reflecting write downs for
decreased profitability)4) Supplies
Last purchase cost method (with balance sheet values reflecting write downs for decreased profitability)(2) Depreciation of major depreciable assets(i) Property, plant and equipment (excluding lease assets)
Calculated based on declining balance method.
Provided, buildings acquired after April 1, 1998 (excluding accompanying facilities), and accompanying facilities
and structures acquired after April 1, 2016 are calculated based on straight-line method.
Primary useful lives are as follows:
Buildings & structures
Machinery, equipment & vehicles

10 to 50 years
4 to 10 years

Tools, furniture & fixtures

2 to 20 years- 85 -

(ii) Intangible assets (excluding lease assets)
1) Software
a. Software for sale
Software for sale is amortized and stated at the higher of amortization based on estimated sales volume in the
future, and amortization at a constant periodic rate based on remaining effective life (within 3 years).
b. Software for internal use
Amortized using straight-line method with an estimated in-house useful life of five years.
2) Other intangible assets
Amortized using the straight-line method.
(iii) Leased assets
Leased assets relating to finance lease transactions that do not involve transfer of ownership
Amortized using the straight-line method with useful lives equal to lease terms and residual values at zero.
(3) Standards for recognizing significant provisions(i) Allowance for doubtful accounts
In setting aside provisions for possible losses due to uncollectable receivables, provisions are recognized at theamounts calculated based on the historical rate of credit loss with respect to normal receivables, and at the amounts
determined in consideration of collectability of individual receivables with respect to doubtful accounts and certain
other receivables.
(ii) Provisions for bonuses
Provisions for bonuses are recognized based on the estimated amounts of payment.
(iii) Provisions for stocks payment
In setting aside provisions for payment of the Company’s shares to Directors, etc., provisions are recognized at
estimated amounts of stocks payment determined based on the points allocated to Directors, etc. in accordancewith the rules on issuance of shares under the Board Incentive Plan (BIP) Trust.
(iv) Provisions for loss on construction contracts
In setting aside provisions for future losses related to construction contracts, provisions are recognized at estimatedamounts of losses for works in progress as at the end of the current consolidated fiscal year, if it is likely that the
total amount of costs will exceed the total amount of revenues, and further if such amounts can be reasonably
estimated.
(v) Provisions for loss on guarantees
In order to prepare for losses due to guarantees, etc., we record estimated amount of losses that will be incurred,taking into consideration the financial situation of the guaranteed parties.
(4) Accounting procedure for retirement benefits(i) Method of attributing expected benefits to dateIn calculating retirement benefit obligations, expected benefits are attributed to the period up until the end of thecurrent consolidated fiscal year based on benefit formula standards.
(ii) Recognizing actuarial differences as expenses and past service costs
Past service costs are recognized as expenses for a certain years (10 years) within the average remaining years ofservice of employees in which they occur using the straight-line method.
Actuarial differences are recognized as expenses for the consolidated fiscal year in which they occur.
(iii) Unrecognized past service costs
Unrecognized past service costs are recognized on a tax-adjusted basis at the amount of remeasurements ofretirement benefit plans under accumulated other comprehensive income in net assets.
(5) Standards for recognizing significant revenues and expenses
The Group mainly provides information processing services, software and consulting services, and sales of officesupplies and equipment. Each are recognized in the following manner. These revenues are recognized at the amountsof compensation that are received from clients based on contracts. However, if there are rebates or return of items,
etc., these amounts are deducted from the amounts recognized.
(i) Provision of information processing services
For provision of information processing services, calculation and storage of data and provision of business form
printing services under contracts with customers are identified as performance obligations.
For provision of information processing services, revenue is recognized at a certain time the performanceobligations are satisfied. Performance obligations are deemed satisfied, for example, when the customer inspects
and accepts the products, or when the effect of contract becomes final and binding.

- 86 -

(ii) Provision of software
For provision of software, provision of software for sale or for rent, and provision of made-to-order software are
identified as performance obligations.
Of the performance obligations of provision of software, in case the system has a validity period, the performanceobligations are satisfied with the passing of the validity period. Therefore, in this case, revenue is recognizedthroughout said validity period.
For made-to-order software, satisfaction of performance obligations is determined based on the progress ofdevelopment. As such, in case where the contract price or total amount of costs required through completion canbe estimated reliably, revenue is recognized over a certain period depending on the progress of satisfaction of
performance obligations. Provided, in case where the contract price or total amount of costs required throughcompletion cannot be estimated reliably, then revenue is recognized within the costs actually incurred (costrecovery method).
For performance obligations other than those described above, revenue is recognized at a certain point in time when
the performance obligations are satisfied. Performance obligations are deemed satisfied, for example, when thecustomer inspects and accepts the software, or on the date of commencement of use as set forth in the contracts.
For some transactions, the Group’s performance obligation is to make arrangements to cause another party toprovide the products. The Group is determined to be the agent of such transactions. In such transactions as an agent,
revenue is the net amount calculated as the amount of compensation to be received from the customer, less theamount to be paid to said other party acting as principal.
(iii) Provision of consulting services
For the provision of consulting services, support services for the implementation of software, and help desk
services, etc. are identified as performance obligations.
For help desk services, the Group assumes the obligations to provide services throughout the period set forth in thecontracts. In this case, the performance obligations are satisfied with the passing of the contract period. Therefore,
in this case, revenue is recognized throughout said contract period. For performance obligations other than thosedescribed above, revenue is recognized at a certain point in time when the performance obligations are satisfied.
Performance obligations are deemed satisfied, for example, at the time the provision of services is completed.
(iv) Sales of office equipment and supplies
For sales of office equipment and supplies, sales of computer accounting goods and office equipment are identified
as performance obligations.
For sales of office equipment and supplies, revenue is recognized at a certain point in time when the performanceobligations are satisfied. Performance obligations are deemed satisfied, for example, when the customer inspects
and accepts the products, or when the products are shipped out.
For some transactions, the Group’s performance obligation is to make arrangements to cause another party toprovide the products. The Group is determined to be the agent of such transactions. In such transactions as an agent,
revenue is the net amount calculated as the amount of compensation to be received from the customer, less theamount to be paid to said other party acting as principal.
(6) Scope of funds covered by the consolidated statements of cash flows
The scope of funds (cash and cash equivalents) covered by the consolidated statements of cash flows includes:(i) Cash on hand(ii) Demand deposits(iii) Short-term investments that mature within three months and are easily convertible to cash and bear very little
value fluctuation risk.
(7) Other important matters regarding the preparation of consolidated financial statements(i) Application of the Group Tax Sharing System
The Group Tax Sharing System is applied.

- 87 -

(Significant Accounting Estimates)
1. Revenue recognition of made-to-order software(1) Amounts stated in the consolidated financial statements for the fiscal year under review:(Unit: million yen)Previous consolidated fiscal year

Current consolidated fiscal year

243

157

Net sales(2) Information on the nature of significant accounting estimates related to the identified items(i) Calculation method
For net sales, in case where the contract price or total amount of costs required through completion for made-to-ordersoftware can be estimated reliably, then revenue is recognized over a certain period depending on the progress ofsatisfaction of the measured performance obligations. Provided, in case where the contract price or total amount ofcosts required through completion cannot be estimated reliably, then revenue is recognized within the expenses
incurred.
(ii) Key assumptions
In estimating the total amount of costs, we first make sure that the schedule, development workload, and number ofdevelopment personnel assigned to each made-to-order software development project are adequate and appropriate,
then calculate the cost by multiplying the development man-hours by man-hour unit price for each contracted project.
In estimating the total amount of costs, we revise our estimations by conducting regular monitoring of the estimateddevelopment workload and actual man-hours for development projects.
(iii) Impact on next fiscal year’s consolidated financial statements
The Company considers the total amount of project costs revised based on the latest information including comparisonof estimated costs and actual costs, and progress of the project at the time appropriate. However, in the event that theactual costs deviate from our estimations due to changes in future conditions, the estimates may impact the amount ofrevenue that the Group recognizes.
(Accounting Standards Not Yet Applied)(Accounting Standard for Current Income Taxes, etc.)• Accounting Standard for Current Income Taxes (ASBJ Statement No. 27, October 28, 2022, Accounting Standards Board ofJapan (ASBJ))• Accounting Standard for Presentation of Comprehensive Income (ASBJ Statement No. 25, October 28, 2022, AccountingStandards Board of Japan (ASBJ))• Guidance on Accounting Standard for Tax Effect Accounting (ASBJ Guidance No. 28, October 28, 2022, AccountingStandards Board of Japan (ASBJ))(1) Overview
In February 2018 the Partial Amendments to Accounting Standard for Tax Effect Accounting (ASBJ Statement No. 28), etc.
(hereinafter “ASBJ Statement No. 28, etc.”) were issued and the transfer of the Practical Guidance concerning tax effectaccounting in the Japanese Institute of Certified Public Accountants to the Accounting Standards Board of Japan (ASBJ) wascompleted, but in the process of the deliberations it was decided to consider the following two points for discussion again
after the issuance of ASBJ Statement No. 28, etc. and these points were deliberated on and issued.
• Recording categories of tax expenses (taxation on other comprehensive income)• The tax effect pertaining to the sale of the shares of subsidiaries, etc. (the shares of subsidiaries or the shares of affiliatedcompanies) in the case that the group income tax system has been applied(2) Planned date of application
We plan to apply the accounting standards, etc. from the beginning of the fiscal year ending September 2025.
(3) The impact of the application of these accounting standards, etc.
The amount of the impact on the consolidated financial statements due to application of the Accounting Standard for Current
Income Taxes, etc. is being evaluated at the current time.

- 88 -

(Changes in Method of Presentation)(Consolidated Statements of Income)The “Treasury stock acquisition expenses” included in “Other” under “Non-operating expenses” in the previous consolidated
fiscal year exceeded ten-hundredth of the total amount of non-operating expenses, so they are presented as an independent
item from the current consolidated fiscal year. To reflect this change in method of presentation, the consolidated financial
statements for the previous consolidated fiscal year have been reclassified.
As a result, the 1 million yen presented in “Other” under “Non-operating expenses” in the Consolidated Statements of Income
for the previous consolidated fiscal year has been reclassified as “Treasury stock acquisition expenses” of 0 million yen and“Other” of 0 million yen.
(Additional Information)(Stock-based compensation plan for officers)
1. Outline of transaction
Based on a resolution at the Meeting of the Board of Directors held on October 31, 2018, which was approved at the Ordinary
General Meeting of Shareholders held on December 21, 2018, the Company introduced a stock-based compensation plancalled the “BIP Trust.” The objectives of the plan are to clarify the correlation between the Company’s shareholder value andthe remuneration for Directors, etc., and to motivate Directors, etc., to contribute more to enhancing our medium- to long-term
corporate value by sharing a common interest with shareholders, including not only the benefits of rising share prices but also
the risks associated with declining share prices.
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 andCompensation Advisory Committee, whose chairperson and half of whose members are independent Outside Directors andoutside experts, and it was 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(not including expenses attributable thereto). The book value of said treasury stocks was 407 million yen for 206,000 shares
as of the end of the current consolidated fiscal year.

- 89 -

(Notes to Consolidated Balance Sheets)*1 Accumulated depreciation of property, plant and equipment
Previous consolidated fiscal year
(September 30, 2022)

Current consolidated fiscal year
(September 30, 2023)

23,482 million yen

24,548 million yen*2 Items pertaining to non-consolidated subsidiaries and affiliated companies are as follows:
Previous consolidated fiscal year
(September 30, 2022)
Investment securities (shares)

Current consolidated fiscal year
(September 30, 2023)

103 million yen

59 million yen(Notes to Consolidated Statements of Income)*1 Provisions for loss on construction contracts included in Cost of sales are as follows:
Previous consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Current consolidated fiscal year
(Started October 1, 2022;
ended September 30, 2023)(76) million yen(51) million yen*2 Major items included in selling, general and administrative expenses are as follows:
Previous consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Current consolidated fiscal year
(Started October 1, 2022;
ended September 30, 2023)

Salaries

11,855 million yen

12,113 million yen

Provisions for bonuses
Retirement benefit expenses

3,902
1,024

3,674
1,102

Provisions for stocks payment
Depreciation

26
700

35
648

2,541

2,513

Rent expenses*3. Breakdown of gains on sales of non-current assets is as follows:
Previous consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Current consolidated fiscal year
(Started October 1, 2022;
ended September 30, 2023)

Machinery, equipment & vehicles

1 million yen

0 million yen

Tools, furniture & fixtures
Other

0
1

0
0

Total

3

1

*4. Breakdown of loss on sale of non-current assets is as follows:
Previous consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)
Tools, furniture & fixtures0- 90 -

Current consolidated fiscal year
(Started October 1, 2022;
ended September 30, 2023)－

*5 Breakdown of loss on retirement of non-current assets is as follows:
Previous consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Current consolidated fiscal year
(Started October 1, 2022;
ended September 30, 2023)

Buildings & structures

1 million yen

3 million yen

Machinery, equipment & vehicles
Tools, furniture & fixtures

0
7

0
3

Intangible assets
Other (Investments and other assets)

20
0

13

30

19

Total

－

(Notes to Consolidated Statements of Comprehensive Income)*1 Reclassification adjustments and tax expense or benefits on other comprehensive income
Previous consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)
Valuation difference on available-for-sale securities:
Increase/decrease during the fiscal year(845) million yen

Reclassification adjustments

Current consolidated fiscal year
(Started October 1, 2022;
ended September 30, 2023)
3,165 million yen－

15

Amount before tax

(845)

3,180

Tax effect

256

(971)

Valuation difference on available-for-sale securities

(588)

2,209

－
250

－
250

Amount before tax

250

250

Tax effect

(76)

(76)

Remeasurements of defined benefit plans

174

174

Total other comprehensive income

(414)

2,383

Remeasurements of defined benefit plans, net of tax:
Increase/decrease during the fiscal year
Reclassification adjustments- 91 -

(Notes to Consolidated Statements of Changes in Equity)
Previous consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)
1. Types and numbers of issued stocks and treasury stocks
Number of shares at
beginning of current
consolidated FY(hundreds of shares)

Increase in number ofshares during current
consolidated FY(hundreds of shares)

Decrease in number ofshares during current
consolidated FY(hundreds of shares)

Number of shares at
end of current
consolidated FY(hundreds of shares)

534,620－－534,620534,620－－534,620

7,489

3,004

139

10,354

7,489

3,004

139

10,354

Issued shares
Common stock
Total
Treasury stock
Common stock
Total(Notes) 1. The 3,004 hundred share increase in common treasury stock resulted from 3,000 hundred shares through acquisition oftreasury stock based on resolution of the Board of Directors, and 4 hundred shares from purchase of fractional unit shares.
2. The 139 hundred share decrease in common treasury stock resulted from sales of 1 hundred fractional unit shares, andpayment of 138 hundred shares under the BIP Trust.
3. The number of treasury stock at the end of the current consolidated fiscal year includes the 2,060 hundred shares of treasury
stock of the Company held by the BIP Trust.
2. Subscription rights to shares and treasury subscription rights to shares
None to be disclosed.
3. Dividends(1) Dividend payments
Resolution
December 17, 2021
Ordinary General
Meeting of
Shareholders

Class of shares

Total amount of cash
dividends(millions of yen)

Dividend per share(yen)

Common stock

2,090

Common stock

1,894

Record date

Effective date

39.50

September 30, 2021

December 20, 2021

36.00

March 31, 2022

June 13, 2022

May 10, 2022
Meeting of theBoard of Directors(Notes) 1. The total amount of cash dividends determined by resolution of the Ordinary General Meeting of Shareholders on December
17, 2021 includes a cash dividend of 8 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 10, 2022 includes a cash
dividend of 7 million yen to the stocks of the Company owned by the BIP Trust.
(2) Of the dividends with record dates during this consolidated fiscal year, those with effective dates in the following
consolidated fiscal year
Resolution

Total amount ofClass of shares cash dividends(millions of yen)

Source ofdividends

Dividend pershare (yen)Common stock

Retainedearnings

42.00

Record date

Effective date

September 30, 2022

December 19, 2022

December 16, 2022
Ordinary General
Meeting of

2,210

Shareholders(Note) The total amount of cash dividends determined by resolution of the Ordinary General Meeting of Shareholders on December
16, 2022 includes a cash dividend of 8 million yen to the stocks of the Company owned by the BIP Trust.

- 92 -

Current consolidated fiscal year (Started October 1, 2022; ended September 30, 2023)
1. Types and numbers of issued stocks and treasury stocks
Number of shares at
beginning of current
consolidated FY(hundreds of shares)

Increase in number ofshares during current
consolidated FY(hundreds of shares)

Decrease in number ofshares during current
consolidated FY(hundreds of shares)

Number of shares at
end of current
consolidated FY(hundreds of shares)

534,620－

2,956

531,664

534,620－

2,956

531,664

10,354

2,999

3,156

10,197

10,354

2,999

3,156

10,197

Issued shares
Common stock
Total
Treasury stock
Common stock
Total(Notes) 1. The 2,956 hundred share decrease in issued common shares is due to the retirement of treasury stock.
2. The 2,999 hundred share increase in common treasury stock resulted from 2,956 hundred shares through acquisition oftreasury stock based on resolution of the Board of Directors, and 43 hundred shares from purchase of fractional unit shares.
3. The 3,156 hundred share decrease in common treasury stock resulted from retirement of treasury stock of 2,956 hundred
shares, allotment issuance of 199 hundred shares arising from merging/absorbing, and sales of 0 hundred fractional unit
shares.
4. The number of treasury stock at the end of the current consolidated fiscal year includes the 2,060 hundred shares of treasury
stock of the Company held by the BIP Trust.
2. Subscription rights to shares and treasury subscription rights to shares
None to be disclosed.
3. Dividends(1) Dividend payments
Resolution

Class of shares

Total amount of cash
dividends(millions of yen)

Dividend per share(yen)

Common stock

2,210

Common stock

2,052

Record date

Effective date

42.00

September 30, 2022

December 19, 2022

39.00

March 31, 2023

June 12, 2023

December 16, 2022
Ordinary General
Meeting of
Shareholders
May 12, 2023
Meeting of theBoard of Directors(Notes) 1. The total amount of cash dividends determined by resolution of the Ordinary General Meeting of Shareholders on
December 16, 2022 includes a cash dividend of 8 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 12, 2023 includes a cash
dividend of 8 million yen to the stocks of the Company owned by the BIP Trust.
(2) Of the dividends with record dates during this consolidated fiscal year, those with effective dates in the following
consolidated fiscal year
Resolution
December 15, 2023
Ordinary General
Meeting of
Shareholders

Total amount ofClass of shares cash dividends(millions of yen)

Common stock

2,669

Source ofdividends

Retainedearnings

Dividend pershare (yen)51.00

Record date

Effective date

September 30, 2023

December 18, 2023

(Note) The total amount of cash dividends determined by resolution of the Ordinary General Meeting of Shareholders on December
15, 2023 includes a cash dividend of 10 million yen to the stocks of the Company owned by the BIP Trust.

- 93 -

(Notes to Consolidated Statements of Cash Flows)*1 Relationship between the ending balance of cash and cash equivalents and account items stated in the consolidatedbalance sheets
Previous consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Current consolidated fiscal year
(Started October 1, 2022;
ended September 30, 2023)

29,920 million yen

32,093 million yen

Cash and deposits
Time deposits with deposit period longer than three months(3,300)(3,300)Cash and cash equivalents

26,62028,793(Lease Transactions)1. Finance lease transactions (Lessee)
Finance lease transactions that do not involve transfer of ownership(i) Description of lease assets
Property, plant, and equipment
Mainly include machinery and equipment, tools, furniture and fixtures.
(ii) Depreciation of lease assets
Lease assets are amortized in accordance with the basis of presenting the consolidated financial statements as
described in 4. Accounting Policies, (2) Depreciation of major depreciable assets.
2. Operating lease transactions (Lessee)
Unexpired lease payments for non-cancellable operating lease transactions(Unit: million yen)Previous consolidated fiscal year
(September 30, 2022)

Current consolidated fiscal year
(September 30, 2023)

Within one year

291

285

Over 1 year

483

515

775

800

Total

3. Amounts of sublease transactions that are recorded in the consolidated balance sheets in amounts before deduction ofinterests(1) Lease investment assets(Unit: million yen)Previous consolidated fiscal year
(September 30, 2022)

Current consolidated fiscal year
(September 30, 2023)

Current assets

362

154

Investments and other assets

198

44

(2) Lease obligations(Unit: million yen)Previous consolidated fiscal year
(September 30, 2022)

Current consolidated fiscal year
(September 30, 2023)

Current liabilities

362

154

Non-current liabilities

198

44

- 94 -

(Financial Instruments)
1. Status of financial instruments(1) Policy for the handling of financial instruments
The Group manages its funds in the form of low risk, highly safe financial assets such as bank deposits and bonds. It
is the policy of the Group not to enter into derivative transactions for speculative trading purposes.
(2) Description of financial instruments, risks and risk management policies
Notes and accounts receivable resulting from operating activities of the Company are exposed to credit risk of thecustomers. To reduce credit risk, the Company manages such risk as appropriate based on payment terms and credit
ratings of customers in accordance with internal credit management regulations.
Investment securities are exposed to market fluctuation risk, and the Company periodically checks the fair values andfinancial conditions of issuing bodies and conducts reviews of its holdings of those other than held-to-maturity
securities on an ongoing basis.
Long-term deposits include deposits with special provisions concerning early termination (callable certificates ofdeposit).
The majority of trade payables and accounts payable resulting from operating activities are due within three months.
(3) Supplementary information on fair value of financial instruments
Since certain assumptions that contain fluctuation factors were used in estimating the fair value of financial
instruments, results may fluctuate when a different set of assumptions is used.
2. Fair value of financial instruments
The book value in consolidated balance sheets, fair value and differences are as follows. Note that shares that do not havea market value are not included (see Note 2).
Previous consolidated fiscal year (September 30, 2022)
Amount recorded inconsolidated balance sheet(millions of yen)

Fair value(millions of yen)

Differences(millions of yen)

(1) Investment securities

18,531

18,5320(2) Long-term deposits

17,70017,303(396)

36,23135,835(396)

Total assets

Current consolidated fiscal year (September 30, 2023)
Amount recorded inconsolidated balance sheet(millions of yen)

Fair value(millions of yen)

Differences(millions of yen)

(1) Investment securities

21,87821,8801(2) Long-term deposits

18,70018,132(567)

40,57840,012(565)

Total assets(Notes) 1. For cash and deposits, the fair value is omitted because they are cash, and because of the short maturity the fair value
approximates the book value. Similarly, for notes receivable—trade, accounts receivable—trade, accounts payable—trade,
and accounts payable–other, the fair values are omitted as the fair values approximate the book values due to the shortmaturity of these instruments.
2. Note that shares that do not have a market value are not included in (1) Investment securities. The book values of said
financial instruments in the consolidated balance sheets are as follows:(Unit: million yen)Classification

Previous consolidated fiscal year
(September 30, 2022)

Current consolidated fiscal year
(September 30, 2023)

Other securities (unlisted equity securities)

112

112

Stocks of subsidiaries and affiliates

103

59

216

171

Total

- 95 -

3. Redemption scheduled for monetary claims and securities with maturity dates subsequent to the consolidated settlement
date
Previous consolidated fiscal year (September 30, 2022)
Within 1 year
(millions of yen)Over 1 year
Within 5 years(millions of yen)Over 5 years
Within 10 years(millions of yen)Over 10 years(millions of yen)

29,915

－

－

－

47

－

－

－

7,881

－

－

－

－

900

－

－

Corporate bonds

－

500

4,500

9,000

Long-term time deposits

－

6,000

11,700－37,844

7,400

16,2009,000

Within 1 year
(millions of yen)Over 1 year
Within 5 years(millions of yen)Over 5 years
Within 10 years(millions of yen)Over 10 years(millions of yen)

32,081

－

－

－

50

－

－

－

8,332

－

－

－

－

1,500

－

－

Corporate bonds

－

500

4,100

9,000

Long-term time deposits

－

7,000

11,700－40,4649,000

15,8009,000

Cash and deposits
Notes receivable–trade
Accounts receivable–trade
Investment securities
Held-to-maturity securities
Corporate bonds
Other securities with maturity

Total

Current consolidated fiscal year (September 30, 2023)

Cash and deposits
Notes receivable–trade
Accounts receivable–trade
Investment securities
Held-to-maturity securities
Corporate bonds
Other securities with maturity

Total- 96 -

4. Breakdown by level of fair value of financial instruments, etc.
Fair values of financial instruments are classified into the following three levels in accordance with the observability andmateriality of inputs for fair value measurement.
Level 1 fair value
Of the observable inputs for fair value measurement, fair value measured by using quoted prices for assets or liabilities
that are subject to the fair value measurement concerned which are formed in active markets
Level 2 fair value
Of the observable inputs for fair value measurement, fair value measured by using inputs for fair value measurement
other than Level 1 inputs
Level 3 fair value
Fair value measured by using unobservable inputs for fair value measurement
If multiple inputs that have a material impact on fair value measurement are used, the fair value is classified into thelowest priority level in fair value measurement of the levels to which each input belongs.
(1) Financial instruments recorded at fair value in the consolidated balance sheets
Previous consolidated fiscal year (September 30, 2022)
Fair value (million yen)Classification
Level 1

Level 2

Level 3

Total

Investment securities
Other securities
Stocks

4,204

－

－

4,204

－

13,427－

13,427

4,204

13,427－

17,631

Corporate bonds
Total assets

Current consolidated fiscal year (September 30, 2023)
Fair value (million yen)Classification
Level 1

Level 2

Level 3

Total

Investment securities
Other securities
StocksCorporate bonds
Total assets

7,649

－

－

7,649

－

12,729－12,7297,649

12,729－20,378- 97 -

(2) Financial instruments other than financial instruments recorded at fair value in the consolidated balance sheets
Previous consolidated fiscal year (September 30, 2022)
Fair value (million yen)Classification
Level 1

Level 2

Level 3

Total

Investment securities
Held-to-maturity securities
Corporate bonds

－

900

－

900

Long-term time deposits－

17,303－

17,303－

18,203－

18,203

Total assets

Current consolidated fiscal year (September 30, 2023)
Fair value (million yen)Classification
Level 1

Level 2

Level 3

Total

Investment securities
Held-to-maturity securities
Corporate bonds

－

1,501

－

1,501

Long-term time deposits－

18,132－

18,132－

19,634－

19,634

Total assets(Note) Explanation of valuation technique used to measure fair value and inputs for fair value measurement
Investment securities
The fair value of listed equity securities is based on quoted market prices on the stock exchange and fair value of corporate
bonds is based on the market prices quoted on the stock exchange or provided by financial institutions. As listed equity
securities are traded in active markets, their fair values are classified as Level 1 fair value. Meanwhile, as corporate bonds
held by the Company are infrequently traded in markets and cannot be regarded as quoted prices in active markets, theirfair values are classified as Level 2 fair value.
Long-term time deposits
The fair values of long-term deposits are estimated based on the present values discounted using the interest rate applicable
to new deposits in the total amount of principal and interest, and on the fair market values provided by financial institutions
for the derivative portions. Therefore, their fair values are classified as Level 2 fair value.

- 98 -

(Securities)
1. Held-to-maturity securities
Previous consolidated fiscal year (September 30, 2022)
Book value inClassconsolidated balance
sheets (millions of yen)
Securities for which the fair
Corporate bonds
900
values exceed the amounts
in the consolidated balance

Fair value(millions of yen)

Differences(millions of yen)

9000Subtotal

900

900

0

Securities for which the fairvalues do not exceed the

Corporate bonds

－

－

－

amounts in the
consolidated balance sheets

Subtotal

－

－

－

900

900

0

sheets

Total
Current consolidated fiscal year (September 30, 2023)
Class

Book value inconsolidated balance
sheets (millions of yen)

Fair value(millions of yen)

Differences(millions of yen)

Securities for which the fairvalues exceed the amounts

Corporate bonds

1,500

1,501

1

in the consolidated balance
sheetsSubtotal

1,500

1,501

1

Securities for which the fairvalues do not exceed the

Corporate bonds

－

－

－

amounts in the
consolidated balance sheets

Subtotal

－

－

－

1,500

1,501

1

Total

2. Other securities
Previous consolidated fiscal year (September 30, 2022)
Book value inClassconsolidated balance
sheets (millions of yen)
(1) Stocks

Securities for which theamounts in theOriginal purchasevalue (millions of yen)

Differences(millions of yen)

4,126

3,547

578

－

－

－

4,126

3,547

578

77

95

(17)

Corporatebonds

13,427

14,153(725)

Subtotal

13,505

14,248(743)

17,631

17,796(165)(2) Bonds

consolidated balance sheets
exceeds the original

Corporate

purchase value

Subtotal

bonds

Securities for which the(1) Stocks

amounts in the
consolidated balance sheets(2) Bonds

do not exceed the original
purchase value
Total(Note) Unlisted shares (112 million yen in the consolidated balance sheets) are not included under the table “Other securities” above
since they are shares that do not have a market value.

- 99 -

Current consolidated fiscal year (September 30, 2023)
Book value inClassconsolidated balance
sheets (millions of yen)
(1) Stocks

Securities for which theamounts in theOriginal purchasevalue (millions of yen)

Differences(millions of yen)

7,655

3,631

4,024

(2) Bonds

consolidated balance sheets
exceeds the original

Corporate
bonds

－

－

－

purchase value

Subtotal

7,655

3,631

4,024

－

－

－

12,72913,739(1,009)12,72913,739(1,009)20,385

17,3703,015

Securities for which the(1) Stocks

amounts in the
consolidated balance sheets(2) Bonds

do not exceed the original
purchase value

Corporate
bonds
Subtotal

Total(Note) Unlisted shares (112 million yen in the consolidated balance sheets) are not included under the table “Other securities” above
since they are shares that do not have a market value.
3. Other securities sold
Previous consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)
None to be disclosed.
Current consolidated fiscal year (Started October 1, 2022; ended September 30, 2023)
Total gain from sales
Class
Price sold (millions of yen)(millions of yen)
(1) Stocks
38(2) Bonds
Corporate bonds－
Subtotal38
4. Securities for which impairment loss are recognizedNone to be disclosed.
(Derivatives)
1. Derivative transactions for which hedge accounting is not applied
None to be disclosed.
2. Derivative transactions for which hedge accounting is applied
None to be disclosed.

- 100 -

Total loss from sales(millions of yen)
15

－

－
15

－
－

(Retirement Benefits)
1. Overview of the retirement benefit system in use
The Company and its four consolidated subsidiaries have contributory and non-contributory defined benefit retirement plans(retirement lump-sum plan) and a defined contribution pension plan to cover retirement benefits to employees.
Under the retirement lump-sum plan, the Company pays a lump-sum retirement benefit based on employees’ salary and periodof service. The Company establishes a retirement benefit trust for the retirement lump-sum plan.
Although the Company is a member of a multiemployer pension plan called the Japan Computer Information Service
Employees’ Pension Fund, the portion of pension assets that the Company contributes is recognized similar to the defined
benefit plan because the amount cannot be reasonably calculated.
2. Defined benefit retirement plan
(1) Adjustment of balance of retirement benefit obligations at the beginning and end of fiscal years
Previous consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Current consolidated fiscal year
(Started October 1, 2022;
ended September 30, 2023)

8,702 million yen
428
－
87
(271)

8,947 million yen
450
－
130
(442)

8,947

9,085

Retirement benefit obligations at beginning of year
Service costs
Interest costs
Actuarial differences
Retirement benefits paid
Balance of retirement benefit obligations at end ofyear(2) Adjustment of balance of pension assets at the beginning and end of fiscal years
Previous consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Current consolidated fiscal year
(Started October 1, 2022;
ended September 30, 2023)

5,148 million yen
－
(7)
1,000
－
6,140

6,140 million yen
－
(11)
－
－
6,129

Balance of pension assets at beginning of year
Expected returns
Actuarial differences
Contributions by employer
Retirement benefits paid
Balance of pension assets at end of year

(3) Adjustment of balance of retirement benefit obligations and pension assets at the end of the fiscal years, and net retirement
benefit obligations and assets recognized in the consolidated balance sheets
Previous consolidated fiscal year
(September 30, 2022)

Current consolidated fiscal year
(September 30, 2023)

8,233 million yen(6,140)2,092
713

8,441 million yen(6,129)
2,311
644

2,806

2,956

2,806

2,956

2,806

2,956

Contributory retirement benefit obligations
Pension assets
Non-contributory retirement benefit obligations
Net obligations and assets in the consolidated balance
sheetsRetirement benefit liabilities
Net obligations and assets in the consolidated balance
sheets- 101 -

(4) Retirement benefit expenses and breakdown
Previous consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Current consolidated fiscal year
(Started October 1, 2022;
ended September 30, 2023)

428 million yen
－
－
95
250

450 million yen
－
－
142
250

774

843

Service costs
Interest costs
Expected returns
Amount of actuarial differences treated as expenses
Amount of past service costs treated as expenses
Retirement benefit expenses under the defined
retirement benefit plan(5) Remeasurements of retirement benefits
Items that were recorded under remeasurements of defined benefit plans (before tax) are as follows:
Previous consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Current consolidated fiscal year
(Started October 1, 2022;
ended September 30, 2023)

250 million yen
250

250 million yen
250

Past service costs
Total(6) Accumulated remeasurements of retirement benefits
Items that were recorded under remeasurements of defined benefit plans (before tax) are as follows:
Previous consolidated fiscal year
(September 30, 2022)

Current consolidated fiscal year
(September 30, 2023)(1,739) million yen(1,739)(1,488) million yen(1,488)Unrecognized past service costs
Total(7) Pension assets(i) Major pension assets
The percentages of each major classification in comparison to the amount of total pension assets are as follows:
Previous consolidated fiscal year
(September 30, 2022)

Current consolidated fiscal year
(September 30, 2023)

Bonds
80%
72%
Cash and deposits
20
28
Other
－
－
Total
100
100
(Note) All pension assets are the retirement benefit trust established for the Company’s defined retirement benefit plan.
(ii) Basis for expected long-term rate of return on pension assets
The Company has a basic policy to cover the trust expenses with operation profit and does not have an expected longterm rate of return on pension assets.
(8) Basis for actuarial calculations
Basis for major actuarial calculations
Previous consolidated fiscal year
(September 30, 2022)

Current consolidated fiscal year
(September 30, 2023)

0.00%
－%
1.00 - 1.64%

0.00%
－%
1.00 - 1.64%

Discount rate
Expected long-term rate of return
Expected increase in salary

3. Defined contribution plan
The amount of necessary contributions to the defined contribution plan of the Company and its consolidated subsidiaries
was 298 million yen for the previous consolidated fiscal year, and 306 million yen for the current consolidated fiscal year.
4. Multiemployer pension plan
The amounts of necessary contributions to the corporate pension fund plan under the multiemployer pension plan, which arerecognized in the same manner as the defined contribution plan, were 138 million yen in the previous consolidated fiscal
year and 139 million yen in the current consolidated fiscal year.

- 102 -

(1) Reserve fund for multiemployer pension planPrevious consolidated fiscal year
(March 31, 2022)
Pension assets
Actuarial liabilities based on pension plan financecalculation
Differences

273,942 million yen

268,557 million yen

221,054

216,477

52,88752,079(2) Coverage ratio of the Group in the multiemployer pension planPrevious consolidated fiscal year: 2.33% (Started April 1, 2021; ended March 31, 2022)
Current consolidated fiscal year: 2.33% (Started April 1, 2022; ended March 31, 2023)(3) Supplementary information
The ratio in (2) above does not match the actual self-pay ratio of the Company.

- 103 -

Current consolidated fiscal year
(March 31, 2023)

(Tax Effect Accounting)
1. Major factors of deferred tax assets and deferred tax liabilities

Deferred tax assets
Software development costs
Provisions for bonuses
Retirement benefit liabilities
Retirement benefit trust
Accumulated remeasurements of defined benefit plans
Retirement bonuses for directors payable
Accrued business tax
Loss on valuation of investment securities
Legal welfare expenses corresponding to provisions forbonuses
Asset retirement obligations
Impairment losses
Provisions for stocks payment
Valuation difference on available-for-sale securities
Other
Subtotal
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Business tax refund
Retirement expenses corresponding to asset retirement
obligations
Valuation difference on available-for-sale securities
Other
Total deferred tax liabilities
Net deferred tax assets

Previous consolidated
fiscal year
(September 30, 2022)

Current consolidated
fiscal year
(September 30, 2023)

2,956 million yen
1,531
352
1,872
531
17
183
190

3,275 million yen
1,487
472
1,869
455
12
159
175

229

226

119
115
93
81
415
8,691
(582)
8,108

120
113
104
－
441
8,914
(567)
8,346

2

2

37

34

26
9
75
8,032

916
9
963
7,383

2. Major items causing significant difference between statutory income tax rate and effective income tax rate after
applying tax effect accounting
Previous consolidated
Current consolidated
fiscal year
fiscal year
(September 30, 2022)(September 30, 2023)
Statutory income tax rate
30.5%
30.5%
(Adjusted)
Inhabitant tax on per capita basis
0.5
0.5Entertainment expenses, etc. not deductible for tax
0.8
0.3
purposesTax deductions under the tax system to encourage wage
(1.7)
－
rises
Other
(0.1)
(1.1)
Income tax rate after applying tax effect accounting
31.7
28.5
3. Accounting processing of income taxes and local corporate taxes, and the accounting processing of the tax effectaccounting concerning these taxes
The Company and its consolidated subsidiaries have been applying the Group Tax Sharing System since the current
consolidated fiscal year. Furthermore, the Company and its consolidated subsidiaries have been carrying out accounting
processing of income taxes and local corporate taxes, and the accounting processing of the tax effect accounting
concerning these taxes in accordance with the “Practical Solution on Accounting and Disclosure Under the Group Tax
Sharing System” (ABSJ Practical Solution No. 42, issued August 12, 2021).
(Asset Retirement Obligations)
Previous consolidated fiscal year (ended September 30, 2022) and current consolidated fiscal year (ended September 30,
2023)
Information has been omitted as it was immaterial.

- 104 -

(Revenue recognition)
1. Information on disaggregation of revenue from contracts with customers
Net sales of the Company are primarily revenue recognized from contracts with customers. The Company’s reportablesegments can be disaggregated into the following categories of goods and services:
Previous consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)(Unit: million yen)
Reportable segment
Accounting Firm
Business

Total

Local
Governments
Business

Printing Business

Revenue from computer services

16,001

8,848－

24,850Software sales

18,325

5,958－

24,284

Revenue from consulting

7,017

678

－

7,695

Office equipment sales

4,125

2,742

－

6,868

Accounting supplies sales

995

－

－

995

Revenue from printing-related services

－

－

3,145

3,145

46,465

18,2283,145

67,838

Sales to outside customers

Current consolidated fiscal year (Started October 1, 2022; ended September 30, 2023)(Unit: million yen)
Reportable segment
Accounting Firm
Business

Total

Local
Governments
Business

Printing Business

Revenue from computer services

16,5639,490－

26,053

Software sales

19,494

6,306－

25,801

Revenue from consulting

7,394

1,668

－

9,062

Office equipment sales

4,228

2,891

－

7,120

Accounting supplies sales

1,068

－

－

1,068

－

－

2,808

2,808

48,74920,357

2,808

71,915

Revenue from printing-related services
Sales to outside customers

2. Information that forms the basis for understanding revenue from contracts with customers
The Group mainly provides information processing services, software and consulting services, and sales of office supplies
and equipment. Each are recognized in the following manner.
These revenues are recognized at the amounts of compensation that are received from clients based on contracts. However,if there are rebates (rebates of sales) based on numerical criteria in contracts, or return of items, etc., these amounts are
deducted from the amounts recognized. The ordinary payment terms are generally within two months from the time of
invoice issued at the satisfaction of performance obligations or the date of the contract, etc.
(1) Provision of information processing services
For provision of information processing services, calculation and storage of data and provision of business form printing
services under contracts with customers are identified as performance obligations.
For provision of information processing services, revenue is recognized at a certain time the performance obligations are
satisfied. Performance obligations are deemed satisfied, for example, when the customer inspects and accepts the
products, or when the effect of contract becomes final and binding.
(2) Provision of software
For provision of software, provision of software for sale or for rent, and provision of made-to-order software are
identified as performance obligations.

- 105 -

Of the performance obligations of provision of software, in case the system has a validity period, the performanceobligations are satisfied with the passing of the validity period. Therefore, in this case, revenue is recognized throughout
said validity period.
For made-to-order software, satisfaction of performance obligations is determined based on the progress of development.
As such, in case where the contract price or total amount of costs required through completion can be estimated reliably,revenue is recognized over a certain period depending on the progress of satisfaction of performance obligations.
Provided, in case where the contract price or total amount of costs required through completion cannot be estimatedreliably, then revenue is recognized within the costs actually incurred (cost recovery method).
For performance obligations other than those described above, revenue is recognized at a certain point in time when theperformance obligations are satisfied. Performance obligations are deemed satisfied, for example, when the customer
inspects and accepts the software, or on the date of commencement of use as set forth in the contracts.
For some transactions, the Group’s performance obligation is to make arrangements to cause another party to provide
the products. The Group is determined to be the agent of such transactions. In such transactions as an agent, revenue isthe net amount calculated as the amount of compensation to be received from the customer, less the amount to be paid
to said other party acting as principal.
(3) Provision of consulting services
For the provision of consulting services, support services for the implementation of software, and help desk services, etc.
are identified as performance obligations.
For help desk services, the Group assumes the obligations to provide services throughout the period set forth in thecontracts. In this case, the performance obligations are satisfied with the passing of the contract period. Therefore, in thiscase, revenue is recognized throughout said contract period. For performance obligations other than those describedabove, revenue is recognized at a certain point in time when the performance obligations are satisfied. Performanceobligations are deemed satisfied, for example, at the time the provision of services is completed.
(4) Sales of office equipment and supplies
For sales of office equipment and supplies, sales of computer accounting goods and office equipment are identified as
performance obligations.
For sales of office equipment and supplies, revenue is recognized at a certain point in time when the performanceobligations are satisfied. Performance obligations are deemed satisfied, for example, when the customer inspects andaccepts the products, or when the products are shipped out.
For some transactions, the Group’s performance obligation is to make arrangements to cause another party to provide
the products. The Group is determined to be the agent of such transactions. In such transactions as an agent, revenue isthe net amount calculated as the amount of compensation to be received from the customer, less the amount to be paid
to said other party acting as principal.
3. Information on relation between satisfaction of performance obligations under contracts with customers and cash flows
arising from such contracts, and amounts and timing of revenue from contracts with customers that existed at the end of thecurrent consolidated fiscal year that are expected to be recognized in and after the next consolidated fiscal year
(1) Balance of contract assets and contract liabilities, etc.
Contract assets are the Group’s rights to consideration that the Group is entitled to receive in exchange for the goods orservices that the Group has transferred to customers. Contract assets are reclassified as accounts receivables when therights to payment become unconditional. Accounts receivables are received within the terms stipulated under eachcontract.
Contract liabilities are the obligations of the Company and its consolidated subsidiaries to transfer goods or services tocustomers for which the Group has received consideration or which have become due for receiving consideration from
customers. These are received generally within two months from the date of the contract or within the terms stipulated
under each contract, regardless of the satisfaction of performance obligations. Contract liabilities will be reversed uponrecognition of revenue.
Of the amount of revenue recognized during the previous consolidated fiscal year, revenue included in the opening
balance of contract liabilities is 673 million yen. Furthermore, of the amount of revenue recognized during the current
consolidated fiscal year, revenue included in the opening balance of contract liabilities is 896 million yen.
(2) Transaction price allocated to remaining performance obligations
The total amount of transaction price allocated to remaining performance obligations for the current consolidated fiscal
year is 2,976 million yen. For such remaining performance obligations, the Group expects to recognize revenue generally
within five years after the closing date.

- 106 -

(Segment Information, etc.)[Segment Information]
1. Overview of reportable segments
The Group’s reportable segments are components of the Group for which separate financial information is available andwhich are subject to regular review by management for the purpose of determining the allocation of managerial resourcesand evaluating business performance.
The Group has three reportable segments for each of its business divisions: the Accounting Firm Business Division, theLocal Governments Business Division, and Printing Business Division.
Major services and products of each reportable segment are as follows:[Accounting Firm BD] (Providing services & products to accounting firms and their clients)
Information processing service, software and consulting service, sales of office equipment and supplies.
[Local Governments BD] (Providing services & products to local governments (municipalities, etc.))
Information processing service, software and consulting service, sales of office equipment.
[Printing BD]
Continuous business forms for PCs, general office forms, data printing services, etc.
2. Methods of calculating net sales, profit or loss, assets and other items by reportable segments
Accounting methods for reported business segments are largely consistent with the methods described in the “Basis of
Presenting the Consolidated Financial Statements” section.
Profits by reportable segments are figures of operating income of the segments.
Inter-segment sales and transfers are based on prevailing market values.

- 107 -

3. Information on net sales, profit or loss, assets, and other items by reportable segments
Previous consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)(Unit: million yen)Amounts inconsolidated
Adjustments
financial(Note 1)statements(Note 2)

Reportable segment
Accounting
Firm
Business

Local
Governments
BD

Printing
Business

46,465

18,2283,145

67,838－67,838

5

0

2,229

2,235

(2,235)－46,471

18,228

5,375

70,074(2,235)67,838Segment profit

11,286

1,922

144

13,353(1)

13,351

Segment assets

30,766

10,176

5,994

46,93762,288109,225

1,616

1,066

369

3,052

(1)

3,050

3

－

－

3

－

3

2,816

1,504

342

4,662

－

4,662

Total

Net sales
Sales to outside customers
Inter-segment sales or transfers
Total

Other items
Depreciation (Note 3)
Investments in affiliatedcompany under the equity
methodIncrease in property, plant andequipment and intangible assets(Note 3)(Notes) 1. Adjustments are as follows:(1) Adjustments of segment profit of -1 million yen include 5 million yen for elimination of inter-segment transactions and-8 million yen for adjustments of inventory assets.
(2) Adjustments of segment assets of 62,288 million yen include 63,323 million yen of corporate assets that are notallocated to specific reportable segments, and -1,034 million yen for elimination of inter-segment transactions.
Corporate assets are primarily surplus funds of the parent company (cash and cash equivalents), and long-term
investment funds (investment securities).
(3) Adjustments of depreciation of -1 million yen represent unrealized profits.
2. Segment profit is adjusted with the operating profit presented in the Consolidated Statements of Income.
3. Increases in depreciation, property, plant and equipment and intangible assets include long-term prepaid expenses anddepreciation of such expenses.

- 108 -

Current consolidated fiscal year (Started October 1, 2022; ended September 30, 2023)(Unit: million yen)Amounts inconsolidated
Adjustments
financial(Note 1)statements(Note 2)

Reportable segment
Accounting
Firm
Business

Local
Governments
BD

Printing
Business

48,74920,357

2,808

71,915－71,915

7

0

2,463

2,471

(2,471)－

48,757

20,357

5,272

74,386(2,471)

71,915

Segment profit

11,1393,059

127

14,326

11

14,338Segment assets

29,876

12,162

5,941

47,97968,377116,356

2,059

1,091

383

3,534

(0)

3,533

59

－

－

59

－

59

2,914

2,784

302

6,002

－

6,002

Total

Net sales
Sales to outside customers
Inter-segment sales or transfers
Total

Other items
Depreciation (Note 3)
Investments in affiliatedcompany under the equity
methodIncrease in property, plant andequipment and intangible assets(Note 3)(Notes) 1. Adjustments are as follows:(1) Adjustments of segment profit of 11 million yen include 6 million yen for elimination of inter-segment transactions and4 million yen for adjustments of inventory assets.
(2) Adjustments of segment assets of 68,377 million yen include 69,439 million yen of corporate assets that are notallocated to specific reportable segments, and -1,061 million yen for elimination of inter-segment transactions.
Corporate assets are primarily surplus funds of the parent company (cash and cash equivalents), and long-term
investment funds (investment securities).
(3) Adjustments of depreciation of -0 million yen represent unrealized profits.
2. Segment profit is adjusted with the operating profit presented in the Consolidated Statements of Income.
3. Increases in depreciation, property, plant and equipment and intangible assets include long-term prepaid expenses anddepreciation of such expenses.

- 109 -

[Related information]
Previous consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)
1. Information by product and service
Information is omitted since the same information is disclosed under the segment information.
2. Information by geographic area
(1) Net sales
Information is omitted since more than 90% of sales in the Consolidated Statements of Income are sales to outside
customers in Japan.
(2) Property, plant & equipment
Information is omitted since the Company has no property, plant and equipment in regions outside Japan.
3. Information by major customer
Information is omitted since there are no sales to external customers that account for 10% or more of the sales in theConsolidated Statements of Income.
Current consolidated fiscal year (Started October 1, 2022; ended September 30, 2023)
1. Information by product and service
Information is omitted since the same information is disclosed under the segment information.
2. Information by geographic area
(1) Net sales
Information is omitted since more than 90% of sales in the Consolidated Statements of Income are sales to outside
customers in Japan.
(2) Property, plant & equipment
Information is omitted since the Company has no property, plant and equipment in regions outside Japan.
3. Information by major customer
Information is omitted since there are no sales to external customers that account for 10% or more of the sales in theConsolidated Statements of Income.
[Information on impairment losses of fixed assets by reportable segments]
Previous consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)
None to be disclosed.
Current consolidated fiscal year (Started October 1, 2022; ended September 30, 2023)
None to be disclosed.
[Information on amortization of goodwill and balance of goodwill by reportable segments]
Previous consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)
None to be disclosed.
Current consolidated fiscal year (Started October 1, 2022; ended September 30, 2023)
None to be disclosed.
[Information on gain on negative goodwill by reportable segments]
Previous consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)
None to be disclosed.
Current consolidated fiscal year (Started October 1, 2022; ended September 30, 2023)
None to be disclosed.

- 110 -

[Related Parties Information]
1 Related Parties Transactions(1) Transactions between the Company and related parties
Previous consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)(i) Non-consolidated subsidiaries and affiliated companies of the Company

Class

Affiliatedcompany

Company nameor name ofindividual

AddressiMobile Inc.

Shibuya-ku,
Tokyo

Capital orinvestments Business or(millionsoccupationof yen)Holding(held)
votingrights ratio(%)

Relationshipwith related
party

Outsourcing ofInformation(Holding)
development &100 provision
Direct (30.0) maintenance ofservices
website services

Details oftransaction
Recovery offunds (Note)
Receiving ofinterests(Note)

Transaction
amountItem

Year-endbalance(millionsof yen)Loans
receivables

120(millionsof yen)432(Note) Terms of transaction or policies on determining the terms of transaction
The interest rates for the loans are determined in a reasonable manner based on the market interest rates.
(ii) Officers and major shareholders (individuals only) of the Company

Class

Company nameor name ofindividual

Address

Certifiedpublic tax
accounting
Yokohamafirm Oshidashi,
Accounting
Kanagawa
Office(Note 2)
CertifiedCompanies
public tax
in whichaccounting
Miyaginoofficers andfirm Ofujiku, Sendainear
Accounting
shi, Miyagi
relatives
Officehold(Note 3)majority
votingAccounting
rightsFirm Top
Kushiro-shi,
Management Hokkaido(Note 4)
Hamamura
Accounting
Utsunomiya
Office-shi, Tochigi(Note 5)

Capital orinvestments Business or(millionsoccupationof yen)Holding(held)
votingrights ratio(%)

Relationshipwith related
party

Details oftransaction－

Rendering of
information
processing
services, etc.

Rendering of
information
processing
services, etc.
(Note 1)

Accounts
24 receivable–trade2－

Rendering of
information
processing
services, etc.

Rendering of
information
processing
services, etc.
(Note 1)

Accounts
26 receivable–trade1

Accounts
11 receivable–trade4

Accounts
16 receivable–trade1

4

Certifiedpublic tax
accounting
firm

9

Certifiedpublic tax
accounting
firm

9

Certifiedpublic tax
accounting
firm

－

3

Certifiedpublic tax
accounting
firm－

Rendering of
information
processing
services, etc.
Rendering of
information
processing
services, etc.

Rendering of
information
processing
services, etc.
(Note 1)
Rendering of
information
processing
services, etc.
(Note 1)

Transaction
amount(millions of
yen)

Item

Year-endbalance(millionsof yen)(Notes) 1. Terms of transaction or policies on determining the terms of transaction
Terms of transaction for the rendering of information processing services, etc. are similar to the terms between othercounterparts.
2. The company was co-founded by Mr. Yoshimasa Oshida, Director of the Company.
3. The company was co-founded with a near relative of Mr. Kazuyuki Sumi, Advisor (former Director) of the Company.
4. The company was co-founded by Mr. Nobuhiko Kouga, Director of the Company.
5. The company was co-founded by Mr. Tomoyasu Hamamura, Auditor of the Company.

- 111 -

Current consolidated fiscal year (Started October 1, 2022; ended September 30, 2023)(i) Non-consolidated subsidiaries and affiliated companies of the Company
Class

Affiliatedcompany

Company nameor name ofindividual

AddressiMobile Inc.

Shibuya-ku,
Tokyo

Capital orinvestments Business or(millionsoccupationof yen)Holding(held)
votingrights ratio(%)

Relationshipwith related
party

Outsourcing ofInformation(Holding)
development &100 provision
Direct (30.0) maintenance ofservices
website services

Details oftransaction
Recovery offunds (Note)
Receiving ofinterests (Note)

Transaction
amount(millions of
yen)
55
1

Item

Loans
receivables

Year-endbalance(millionsof yen)65(Note) Terms of transaction or policies on determining the terms of transaction
The interest rates for the loans are determined in a reasonable manner based on the market interest rates.
(ii) Officers and major shareholders (individuals only) of the Company

Class

Company nameor name ofindividual

Address

Capital orBusiness orinvestments
occupation(million yen)

Certifiedpublic tax
accounting
Sapporofirm Katoshi,
Accounting
Hokkaido
Office(Note 2)
CertifiedCompanies
public tax
in whichaccounting
Miyaginoofficers andfirm Ofujiku, Sendainear
Accounting
shi, Miyagi
relatives
Officehold(Note 3)majority
votingAccounting
rightsFirm Top
Kushiro-shi,
Management Hokkaido(Note 4)
Hamamura
Accounting
Utsunomiya
Office-shi, Tochigi(Note 5)

Holding(held)
votingrights ratio(%)

Relationshipwith related
party

Details oftransaction－

Rendering of
information
processing
services, etc.

Rendering of
information
processing
services, etc.
(Note 1)

Accounts
19 receivable–trade3－

Rendering of
information
processing
services, etc.

Rendering of
information
processing
services, etc.
(Note 1)

Accounts
19 receivable–trade2

Accounts
30 receivable–trade2

Accounts
18 receivable–trade1

6Certifiedpublic tax
accounting
firm

9

Certifiedpublic tax
accounting
firm

9

Certifiedpublic tax
accounting
firm－

Rendering of
information
processing
services, etc.

3

Certifiedpublic tax
accounting
firm－

Rendering of
information
processing
services, etc.

Rendering of
information
processing
services, etc.
(Note 1)
Rendering of
information
processing
services, etc.
(Note 1)

Transaction
amount(millions of
yen)

Item

Year-endbalance(millionsof yen)(Notes) 1. Terms of transaction or policies on determining the terms of transaction
Terms of transaction for the rendering of information processing services, etc. are similar to the terms between othercounterparts.
2. The company was co-founded by Mr. Keiichiro Kato, Director of the Company.
3. The company was co-founded with a near relative of Mr. Kazuyuki Sumi, Advisor (former Director) of the Company.
4. The company was co-founded by Mr. Nobuhiko Kouga, Director of the Company.
5. The company was co-founded by Mr. Tomoyasu Hamamura, Auditor of the Company.
(2) Transactions between consolidated subsidiaries of the Company and related parties
None to be disclosed.

2 Notes on the Parent Company and Important Affiliated Companies(1) Information on the parent company
None to be disclosed.
(2) Summary of financial information of important affiliated companies
None to be disclosed.

- 112 -

(Earnings Per Share Information)
Previous consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Current consolidated fiscal year
(Started October 1, 2022;
ended September 30, 2023)

Net assets per share

1,665.68 yen

1,827.70 yen

Net income per share

177.62 yen

206.54 yen(Notes) 1. The diluted net income per share is not stated as there were no dilutive shares.
2. The number of treasury stocks at end of year and the average number of stocks outstanding used in the calculation of theearnings per share information has been determined by including the stocks of the Company held by the BIP Trust (which
was established with the introduction of the BIP Trust plan) as deductible treasury stocks.
The number of said treasury stocks at end of year deducted for the calculation of net assets per share was 206,000 shares forthe previous consolidated fiscal year, and 206,000 shares for the current consolidated fiscal year.
The average numbers of said treasury stocks outstanding deducted for the calculation of net income per share were 212,918
shares for the previous consolidated fiscal year, and 206,000 shares for the current consolidated fiscal year.
3. The basis for the calculation of net income per share is as follows:
Previous consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Current consolidated fiscal year
(Started October 1, 2022;
ended September 30, 2023)

Net income per share
Net income attributable to owners of parent

9,317

10,826－－

Net income from common stocks attributable toowners of parent (millions of yen)

9,317

10,826

Average number of common stocks outstanding(hundreds of shares)

524,527

524,174(millions of yen)Amount not attributable to common shareholders(millions of yen)(Material subsequent events)
None to be disclosed.

- 113 -

(v) [Supplementary Schedules][Schedule – Corporate Bonds]
None to be disclosed.
[Schedule – Borrowings]
Balance at
beginning of year
(millions of yen)

Balance at end ofyear(millions of yen)

Average interest
rate
(%)

Short-term loans payable

－

－

－

－

Current portion of long-term loans payable

71

71

0.59

－

Current portion of lease obligations

492

283

－

－

Long-term loans payable (excluding
current portion)

142

71

0.59

October 5, 2023 September 10, 2025

481

391

－

1

－

－

1,190

817

Classification

Lease obligations (excluding current
portion)Terms of repayment

October 9, 2023 February 22, 2029

Other interest-bearing debts
Accounts payable–installment purchases
Total

－

－
－

(Notes) 1. The weighted average interest rates applicable to the year-end balance of borrowings are indicated for average interest rates.
2. The average interest rate for lease obligations is not included because the amount of lease obligations in the consolidatedbalance sheets represents the total amount of lease payment before deducting interest.
3. Repayments of long-term loans, lease obligations (excluding current portion) and other interest-bearing debts (excluding
current portion) scheduled within 5 years from the consolidated settlement date are as follows.
Due after 1 year but
within 2 years(millions of yen)

Due after 2 years but
within 3 years(millions of yen)

Due after 3 years but
within 4 years(millions of yen)

Due after 4 years but
within 5 years(millions of yen)

Long-term loans payable

71

－

－

－

Lease obligations

154

94

87

42

－

－

－

－

Other interest-bearing
debts[Schedule – Asset Retirement Obligations]
Information has been omitted as it was immaterial.

- 114 -

(2) [Other]
Quarterly financial information for the current consolidated fiscal year
(Cumulative period)First 3 months

First 6 months

First 9 months

Current consolidated
fiscal year

Net sales (million yen)

16,90836,05053,862

71,915

Quarterly (current FY) net
income before income taxes

4,169

8,849

13,972

15,135

2,890

6,134

9,755

10,82655.12

117.01186.06206.54(million yen)
Quarterly (current FY) net
income attributable to owners ofparent (million yen)
Quarterly (current FY) net
income per share (yen)(Accounting period)
Quarterly net income per share(yen)First 3 months

First 6 months

55.12

61.89

- 115 -First 9 months
69.04

4th quarter
20.45

2 [Non-Consolidated Financial Statements, etc.](1) [Non-Consolidated Financial Statements](i) [Balance Sheets](Unit: million yen)Previous fiscal year
(September 30, 2022)
AssetsCurrent assets
Cash and deposits
Accounts receivable–trade
Contract assets
Lease investment assets
MerchandiseWork in progress
Raw materials and supplies
Prepaid expenses
Accounts receivable–other
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant, and equipment
Buildings
Structures
VehiclesTools, furniture & fixtures
Land
Total property, plant, and equipment
Intangible assets
Software
Software in progress
Telephone subscription rights
Other
Total intangible assets
Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates
Investments in capital
Long-term loans receivable
Long-term prepaid expenses
Deferred tax assets
Long-term time deposits
Guarantee deposits
Long-term lease investment assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets- 116 -

Current fiscal year
September 30, 2023

25,071

27,032*1 7,338*1 7,525

391
362
110
0
96
818
*1 160*1 741(11)
35,080

301
154
66
0
101
925
*1 23
*1 809(18)
36,922

6,449
162
13
1,750
6,525
14,900

6,372
156
8
1,961
6,637
15,136

3,020
1,565
22
0
4,608

2,941
2,789
22
0
5,754

18,380
1,389
0
*1 65
393
6,809
17,500
1,391
198
58
－
46,186
65,696
100,776

21,700
1,289
0
*1 19
310
6,271
18,500
1,357
44
107
(12)
49,58770,478
107,401

(Unit: million yen)Previous fiscal year
(September 30, 2022)
Liabilities
Current liabilities
Accounts payable–trade
Lease obligations
Accounts payable–other
Income taxes payable
Accrued business office taxes
Accrued consumption taxes
Contract liabilities
Advances received
Deposits received
Provisions for bonuses
Provisions for loss on construction contracts
Accounts payable–facilities
Total current liabilities
Non-current liabilities
Lease obligations
Provisions for retirement benefits
Provisions for stocks payment(5) Provisions for loss on guarantees
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Total capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
General reserve
Retained earnings brought forward
Total retained earnings
Treasury stock
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

Current fiscal year
September 30, 2023

*1 2,847- 117 -

*1 2,682

362

154*1 1,804*1 2,100

3,132
57
732
1,104
392
347
4,430
65
*1 223
15,500

2,307
59
637
1,210
514
443
4,280
14
*1 60
14,464

198
382
306
－
394
1,282
16,783

44
849
341
3
409
1,648
16,113

5,700

5,700

5,409
302
5,712

5,409
－
5,409

688

688

67,157
7,255
75,101(2,359)84,15372,157
7,909
80,755(2,604)89,260(160)(160)
83,993
100,776

2,027
2,027
91,288
107,401

(ii) [Statement of Income](Unit: million yen)Previous fiscal year
(Started October 1, 2021;
ended September 30, 2022)
Net sales
Cost of sales
Gross profit
Selling, general, and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Land and house rent received
Subsidy income
Other
Total non-operating income
Non-operating expenses
Cost of lease revenue
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sale of non-current assets
Gain on extinguishment of tie-in shares
Other
Total extraordinary income
Extraordinary loss
Loss on sale of non-current assets
Loss on retirement of non-current assets
Total extraordinary loss
Net income before taxes
Income taxes–current
Income taxes–deferred
Total income taxes
Net income- 118 -

Current fiscal year
(Started October 1, 2022;
ended September 30, 2023)*1 63,570*1 67,660*1 17,788*1 19,422

45,781*1, *2 32,895
12,886*1, *2 34,556

48,238
13,681

*1 69

*1 66

*1 190*1 190*1 158*1 156

9
*1 78
507

*1 57

103
0
103
13,290103
1104
14,057

1
－
－
1

0
365
0
366

0
28
28
13,264
4,775
(587)
4,187
9,076

－
10
10
14,413
4,501
(422)
4,078
10,33410480[Report on cost of sales](a) Cost of sales on information processing, software and consulting services
56th Term(Started October 1, 2021;
ended September 30, 2022)
Classification

Note

II Labor costs

Ratio
(%)

Amount (million yen)

I Materials costs*1

57th Term(Started October 1, 2022;
ended September 30, 2023)
Ratio
(%)

Amount (million yen)

4,555

30.2

4,846

29.4

3,475

23.0

3,466

21.0

8,180

49.6

16,494

100.0

III Expenses
1. Computer rental expenses

405

514

2. Maintenance contracts

1,276

1,314

3. Depreciation

690

686

4. Repairs and maintenanceexpenses

686

665

5. Supplies expenses

1,101

1,005

6. Other

2,896

Total expenses

7,057

46.8

15,089100.0

Works in progress andinventories at beginning ofyear
Transfers from other accounts

*2

Total

0

0

1,294

1,818

16,384

18,313

0

0

2,446

3,039

13,936

15,273

Works in progress andinventories at end of year
Transfers to other accounts*3

Cost of sales on information
processing, software andconsulting services

3,994(Notes) 1. Labor costs include the following provisions. Figures in (parentheses) denote amounts for the previous fiscal year.
Provision for bonuses: 1,010 million yen (905 million yen)
Retirement benefit expenses: 131 million yen (128 million yen)
2. Transfers from other accounts represent the transfer of depreciation of software.
3. Transfers to other accounts represent the transfer of software development costs into software and software in progress
accounts.
4. Costs are determined using job order costing by project.
(b) Cost of sales on office equipment and supplies
56th Term(Started October 1, 2021;
ended September 30, 2022)
Classification

Note

Ratio
(%)

Amount (million yen)

I Inventories at beginning of year

57th Term(Started October 1, 2022;
ended September 30, 2023)
Ratio
(%)

Amount (million yen)

77

2.0

110

2.6

II Purchases

3,884

98.0

4,104

97.4

Total

3,962

100.0

4,215

100.0

III Inventories at end of year

110

66

Cost of sales on officeequipment and supplies

3,851

4,148

- 119 -

(iii) [Statement of Changes in Equity]
Previous fiscal year (Started October 1, 2021 ended September 30, 2022)(Unit: million yen)
Shareholders’ equity
Capital surplus
Capital stock

Balance at
beginning of year
Changes during
fiscal year
General reserve

Retained earnings
Other retained earnings

Legal capitalsurplus

Other capitalsurplus

Total capitalsurplus

Legal retained
earnings

5,409

302

5,711

688

5,700

Retained
General reserve earnings brought
forward

Total retained
earnings

63,057

6,263

70,0094,100(4,100)－

Dividends ofsurplus(3,985)(3,985)

Net income

9,076

9,076

Acquisition oftreasury stock
Disposal oftreasury stock
Changes in items
other than equity(net)
Total changes during
fiscal year
Balance at end of
year

0

－

－

0

0

－

4,100

991

5,091

5,700

5,409

302

5,712

688

67,157

7,255

75,101

Shareholders’ equity

Balance at
beginning of year
Changes during
fiscal year

0

Treasury stock

Shareholders’equityTotal(1,352)80,069General reserve

Valuation and translation
adjustments
Valuation
Total valuation Total net assets
difference onand translation
available-foradjustments
sale securities
422

422

80,491－－Dividends ofsurplus(3,985)(3,985)

Net income

9,076

9,076

(1,035)(1,035)(1,035)

27

27

27

Acquisition oftreasury stock
Disposal oftreasury stock
Changes in items
other than equity(net)
Total changes during
fiscal year
Balance at end of
year

(582)

(582)

(582)

(1,007)

4,083

(582)

(582)

3,501

(2,359)84,153

(160)

(160)

83,993- 120 -

Current fiscal year (Started October 1, 2022 ended September 30, 2023)(Unit: million yen)
Shareholders’ equity
Capital surplus
Capital stock

Balance at
beginning of year
Changes during
fiscal year

Retained earnings
Other retained earnings

Legal capitalsurplus

Other capitalsurplus

Total capitalsurplus

Legal retained
earnings

5,409

302

5,712

688

5,700

Retained
General reserve earnings brought
forward

Total retained
earnings

67,157

7,255

75,101

5,000(5,000)－

Dividends ofsurplus(4,263)(4,263)

Net income

10,334

10,334

(416)

(416)

General reserve

Acquisition oftreasury stock
Disposal oftreasury stock
Retirement oftreasury stock
Increase due tomergerChanges in items
other than equity(net)
Total changes during
fiscal year
Balance at end of
year

0

(381)

(381)

78

78

－

－

(302)

(302)

－

5,000

654

5,654

5,700

5,409

－

5,409

688

72,157

7,909

80,755

Shareholders’ equity

Balance at
beginning of year
Changes during
fiscal year

0

Treasury stock

Shareholders’equityTotal(2,359)84,153General reserve

Valuation and translation
adjustments
Valuation
Total valuation Total net assets
difference onand translation
available-foradjustments
sale securities
(160)

(160)

83,993－－

Dividends ofsurplus(4,263)(4,263)

Net income

10,334

10,334(1,089)(1,089)(1,089)

0

0

0

798

－

－

47

125

125

Acquisition oftreasury stock
Disposal oftreasury stock
Retirement oftreasury stock
Increase due tomergerChanges in items
other than equity(net)
Total changes during
fiscal year
Balance at end of
year

2,187

2,187

2,187

(244)

5,107

2,187

2,187

7,294

(2,604)89,260

2,027

2,027

91,288- 121 -

[Notes to Financial Statements](Principal Accounting Policies)
1. Standards and methods used for the valuation of assets(1) Standards and methods used for the valuation of securities(i) Stocks of subsidiaries and affiliates
Moving average cost method(ii) Held-to-maturity securities
Amortized cost method(iii) Other securities
1) Securities other than shares that do not have a market value
Fair value method based on the quoted market price as of the fiscal year-end (related valuation differences are
directly charged or credited to the shareholders’ equity, and cost of securities sold is calculated by the moving
average method)2) Shares that do not have a market value
Moving average cost method(2) Standards and methods used for the valuation of inventory assets(i) Merchandise, raw materials
Cost method based on first-in, first-out method (with balance sheet values reflecting write downs for decreased
profitability)(ii) Work in progress
Cost method based on specific identification method (with balance sheet values reflecting write downs for
decreased profitability)(iii) Supplies
Last purchase cost method (with balance sheet values reflecting write downs for decreased profitability)
2. Depreciation of non-current assets(1) Tangible fixed assets
Declining balance method
Provided, buildings acquired after April 1, 1998 (excluding accompanying facilities), and accompanying facilities
and structures acquired after April 1, 2016 are calculated based on straight-line method.
(2) Intangible fixed assets(i) Software
1) Software for sale
Software for sale is amortized and stated at the higher of amortization based on estimated sales volume in the
future, and amortization at a constant periodic rate based on remaining effective life (within 3 years).
2) Software for internal use
Straight-line method with an estimated in-house useful life of five years(ii) Other intangible fixed assets
Straight-line method
3. Accounting standards for provisions(1) Allowance for doubtful accounts
In setting aside provisions for possible losses due to uncollectable receivables, provisions are recognized at theamounts calculated based on the historical rate of credit loss with respect to normal receivables, and at the amounts
determined in consideration of collectability of individual receivables with respect to doubtful accounts and certain
other receivables.
(2) Provisions for bonuses
Provisions for bonuses are recognized based on the estimated amounts of payment.
(3) Provisions for stocks payment
In setting aside provisions for payment of the Company’s shares to Directors, etc., provisions are recognized at
estimated amounts of stocks payment determined based on the points allocated to Directors, etc. in accordance withthe rules on issuance of shares under the Board Incentive Plan (BIP) Trust.
(4) Provisions for retirement benefits
In setting aside allowances for employees’ retirement benefits, retirement benefit obligations and expected pension
assets payable as of the end of the current fiscal year are recognized.
(i) Method of attributing expected benefits to dateIn calculating retirement benefit obligations, expected benefits are attributed to the period up until the end of the
fiscal year based on benefit formula standards.
(ii) Recognizing actuarial differences as expenses and past service costs- 122 -

Past service costs are recognized as expenses for a certain years (10 years) within the average remaining years ofservice of employees in which they occur using the straight-line method.
Actuarial differences are recognized as expense for the fiscal year in which they occur.
(5) Provisions for loss on construction contracts
In setting aside provisions for future losses related to construction contracts, provisions are recognized at estimatedamounts of losses for works in progress as at the end of the current fiscal year, if it is likely that the total amount ofcosts will exceed the total amount of revenues, and further if such amounts can be reasonably estimated.
(6) Provisions for loss on guarantees
In order to prepare for losses due to guarantees, etc., we record estimated amount of losses that will be incurred,taking into consideration the financial situation of the guaranteed parties.
4. Accounting standards for revenues and expenses
The Company mainly provides information processing services, software and consulting services, and sales of officesupplies and equipment. Each are recognized in the following manner. These revenues are recognized at the amounts ofcompensation that are received from clients based on contracts. However, if there are rebates or return of items, etc.,
these amounts are deducted from the amounts recognized.
(1) Provision of information processing services
For provision of information processing services, calculation and storage of data and provision of business form
printing services under contracts with customers are identified as performance obligations.
For provision of information processing services, revenue is recognized at a certain time the performance obligations
are satisfied. Performance obligations are deemed satisfied, for example, when the customer inspects and accepts the
products, or when the effect of contract becomes final and binding.
(2) Provision of software
For provision of software, provision of software for sale or for rent, and provision of made-to-order software are
identified as performance obligations.
Of the performance obligations of provision of software, in case the system has a validity period, the performanceobligations are satisfied with the passing of the validity period. Therefore, in this case, revenue is recognizedthroughout said validity period.
For made-to-order software, satisfaction of performance obligations is determined based on the progress ofdevelopment. As such, in case where the contract price or total amount of costs required through completion can be
estimated reliably, revenue is recognized over a certain period depending on the progress of satisfaction of
performance obligations. Provided, in case where the contract price or total amount of costs required throughcompletion cannot be estimated reliably, then revenue is recognized within the costs actually incurred (cost recovery
method).
For performance obligations other than those described above, revenue is recognized at a certain point in time when
the performance obligations are satisfied. Performance obligations are deemed satisfied, for example, when thecustomer inspects and accepts the software, or on the date of commencement of use as set forth in the contracts.
For some transactions, the Company’s performance obligation is to make arrangements to cause another party toprovide the products. The Company is determined to be the agent of such transactions. In such transactions as anagent, revenue is the net amount calculated as the amount of compensation to be received from the customer, less theamount to be paid to said other party acting as principal.
(3) Provision of consulting services
For the provision of consulting services, support services for the implementation of software, and help desk services,
etc. are identified as performance obligations.
For help desk services, the Group assumes the obligations to provide services throughout the period set forth in thecontracts. In this case, the performance obligations are satisfied with the passing of the contract period. Therefore, inthis case, revenue is recognized throughout said contract period. For performance obligations other than thosedescribed above, revenue is recognized at a certain point in time when the performance obligations are satisfied.
Performance obligations are deemed satisfied, for example, at the time the provision of services is completed.
(4) Sales of office equipment and supplies
For sales of office equipment and supplies, sales of computer accounting goods and office equipment are identified
as performance obligations.
For sales of office equipment and supplies, revenue is recognized at a certain point in time when the performanceobligations are satisfied. Performance obligations are deemed satisfied, for example, when the customer inspects andaccepts the products, or when the products are shipped out.
For some transactions, the Company’s performance obligation is to make arrangements to cause another party toprovide the products. The Company is determined to be the agent of such transactions. In such transactions as anagent, revenue is the net amount calculated as the amount of compensation to be received from the customer, less theamount to be paid to said other party acting as principal.

- 123 -

5. Other important matters regarding the preparation of financial statements(1) Application of the Group Tax Sharing System
The Group Tax Sharing System is applied.

- 124 -

(Significant Accounting Estimates)
Information is omitted since the content is the same as the statement set forth in the “Significant Accounting Estimates” in theNotes to Consolidated Financial Statements under 1. Consolidated Financial Statements, (1) Consolidated Financial
Statements.
(Additional Information)
Information is omitted since the content is the same as the statement set forth in the “Additional Information” in the Notes toConsolidated Financial Statements under 1. Consolidated Financial Statements, (1) Consolidated Financial Statements.
(Notes to Balance Sheets)*1 Monetary claims and monetary liabilities on affiliated companies
Previous fiscal year
(September 30, 2022)

Current fiscal year
(September 30, 2023)

Short-term monetary claims on affiliatedcompanies

278 million yen

86 million yen

Long-term monetary claims on affiliatedcompanies

65

5

Short-term monetary liabilities on affiliatedcompanies

430

481

(Notes to Statement of Income)*1. Volume of transactions with affiliated companies
Previous fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Current fiscal year
(Started October 1, 2022;
ended September 30, 2023)

Volume of trading transactions
Net sales

76 million yen

Purchases
Operating expenses
Volume of non-operating transactions

47 million yen

3,203
2,530

3,309
2,774

125

126

*2 The approximate percentages of expenses under selling expenses were 47.5% for the previous fiscal year and46.6% for the current fiscal year; percentages of expenses under general and administrative expenses were
52.5% and 53.4%, respectively.
Major items included in selling, general and administrative expenses are as follows.
Previous fiscal year
(Started October 1, 2021;
ended September 30, 2022)
Salaries
Provisions for bonuses

10,101 million yen
3,524

Retirement benefit expenses
Provisions for stocks payment
Depreciation
Rent expenses

Current fiscal year
(Started October 1, 2022;
ended September 30, 2023)
10,272 million yen
3,269

937
26

1,009
35

589
2,382

542
2,357

(Securities)
Stocks of subsidiaries and affiliates (the amounts in the previous fiscal year’s balance sheets were 1,389 million yen for stocks
of subsidiaries and 0 million yen for stocks of affiliates; the amounts in the current fiscal year’s balance sheets are 1,289
million yen for stocks of subsidiaries and 0 million yen for stocks of affiliates) are not presented here since they are sharesthat do not have a market value.

- 125 -(Tax Effect Accounting)
1. Major factors of deferred tax assets and deferred tax liabilities
Previous fiscal year
(September 30, 2022)

Current fiscal year
(September 30, 2023)

Software development costs
Provisions for bonuses

2,730 million yen
1,351

3,047 million yen
1,305

Provisions for retirement benefits
Retirement benefit trust

116
1,872

258
1,869

Accrued business tax
Loss on valuation of investment securities

174
229

147
214

Legal welfare expenses corresponding to provisions forbonuses

202

199

Asset retirement obligations
Impairment losses

106
112

107
112

Provisions for stocks payment
Other

93
428

104
374

Subtotal
Valuation allowance

7,418
(578)

7,741
(563)

Total deferred tax assets

6,839

7,178

－

878

30

28

30

906

6,809

6,271

Deferred tax assets

Deferred tax liabilities
Valuation difference on available-for-sale securities
Retirement expenses corresponding to asset retirement
obligations
Total deferred tax liabilities
Net deferred tax assets

2. Major items causing difference between statutory income tax rate and effective income tax rate after applying tax effectaccounting
Previous fiscal year
(September 30, 2022)

Current fiscal year
(September 30, 2023)

30.5%

30.5%

Inhabitant tax on per capita basis
Entertainment expenses, etc. not deductible for tax purposes

0.5
0.8

0.5
0.3

Dividends received, etc. to be excluded from gross revenue
Tax deductions under the tax system to encourage wage rises

(0.1)

(0.1)
(1.8)

Statutory income tax rate
(Adjusted)

Other
Income tax rate after applying tax effect accounting

－
(0.1)
31.6

(1.1)
28.3

3. Accounting processing of income taxes and local corporate taxes, and the accounting processing of the tax effectaccounting concerning these taxes
The Company has been applying the Group Tax Sharing System since the current fiscal year. Furthermore, the Company
and its consolidated subsidiaries have been carrying out accounting processing of income taxes and local corporate taxes,
and the accounting processing of the tax effect accounting concerning these taxes in accordance with the “Practical
Solution on Accounting and Disclosure Under the Group Tax Sharing System” (ABSJ Practical Solution No. 42, issued
August 12, 2021).
(Revenue recognition)
Information is omitted since the content is the same as the statement set forth in the “Revenue Recognition” in the Notes toConsolidated Financial Statements under 1. Consolidated Financial Statements, (1) Consolidated Financial Statements.
(Material subsequent events)
None to be disclosed.

- 126 -

(iv) [Supplementary Schedules][Schedule – Tangible Fixed Assets, etc. ](Unit: million yen)
Balance at
beginningof yearIncrease incurrent year

Decrease incurrent year

Depreciationin current
year

Balance at
end of year

Accumulated
depreciation

Buildings

6,449

338

2

413

6,372

11,977Structures

162

11

－

17

156

560

Property,

Vehicles

13

－

0

4

8

43

plant, andequipment

Tools, furniture & fixtures

1,750

941

2

728

1,961

6,100

Land

6,525

112

－

－

6,637

－

14,900

1,404

4

1,163

15,136

18,682

Software

3,020

1,872

－

1,951

2,941

2,865

Software in progress

1,565

2,383

1,159

－

2,789

－

Telephone subscription
rights

22

－

－

－

22

－

Other

0

0

－

0

0

0

4,608

4,256

1,159

1,951

5,754

2,865

Type of asset

Classification

Total property, plants& equipment

Intangible
assetsTotal intangible assets(Note) Major increase/decrease during the current fiscal year were attributable to the following:(Amounts of increase)
Buildings

Acquisition of TISC PAC Dehumidifiers

Tools, furniture &Acquisition of storage for cloud shared infrastructure

151 million yen
382 million yen

fixtures
Acquisition of equipment for eLTAX national tax-integrated
storage, etc.
Software257 million yen

Acquisition of eLTAX inspection systems equipment

67 million yen

Development costs of software for sale

556 million yen

Development costs of software for internal use

1,266 million yen

Acquisition of software purchased from outside

12 million yen[Schedule – Provisions](Unit: million yen)
Balance at beginningof yearIncrease in current
year

Decrease in current
year

Allowance for doubtful accounts

11

31

11

31

Provisions for bonuses

4,430

4,280

4,430

4,280

65

14

65

14

Provisions for stocks payment

306

35

－

341

Provisions for loss on guarantees

－

3

－

3

Item

Provisions for loss on construction
contracts(2) [Major Assets and Liabilities]
This item is omitted as information has been disclosed in the consolidated financial statements.
(3) [Other]
None to be disclosed.

- 127 -

Balance at end of year

Part 6 [Stock-related Administration of the Company]
Fiscal year
Ordinary General Meeting of
Shareholders

From October 1 to September 30
December

Record date

September 30

Record dates for dividends of

September 30

surplus

March 31

Number of shares in one unit

100 shares

Buyback or sale of shares less than
one unit
Place of handling(Special account)
1-4-5 Marunouchi, Chiyoda-ku, Tokyo
Mitsubishi UFJ Trust and Banking Corporation, Stock Transfer Agency Division

Administrator of shareholder

1-4-5 Marunouchi, Chiyoda-ku, Tokyo

registry

Mitsubishi UFJ Trust and Banking Corporation

Forwarding office――――――

Handling charges for buyback orsale――――――

Method of giving public notice

Shareholder privileges

By means of electronic public notice. However, in the event that electronic notice is
not possible due to incidents or other unavoidable circumstances, public notices will
be posted in the Nihon Keizai Shimbun.
TKC’s website for public notices: https://www.tkc.jp/
None to be disclosed.

(Note) In accordance with the provisions of TKC Corporation’s Articles of Incorporation, holders of shares less than one unit shallhave no rights other than: rights listed in the items of Article 189, Paragraph 2 of the Companies Act of Japan; rights to receive
allotment of shares for subscription and subscription rights to shares based on the number of shares they hold; and rights torequest the sale of shares less than one unit.

- 128 -

Part 7 [Reference Information on the Company]
1 [Information on the Parent Company]
TKC Corporation does not have a parent company as defined in Article 24-7, Paragraph 1 of the Financial Instruments andExchange Act of Japan.

2 [Other Reference Information]
TKC Corporation has filed the following documents, originally written in Japanese, between the beginning of the current fiscal
year and the filing date of this Annual Securities Report.
(1) Annual Securities Report, Appendices and Confirmation Letter
Fiscal year (56th Term) (started October 1, 2021; ended September 30, 2022), submitted to the Director-General of the Kanto
Local Finance Bureau, Japan, on December 19, 2022
(2) Internal Control Report and AppendicesSubmitted to the Director-General of the Kanto Local Finance Bureau, Japan, on December 19, 2022
(3) Quarterly Securities Reports and Confirmation LettersFirst quarter of 57th Term (started October 1, 2022; ended December 31, 2022), filed to the Director-General of the Kanto Local
Finance Bureau, Japan, on February 13, 2023.
Second quarter of 57th Term (started January 1, 2023; ended March 31, 2023), filed to the Director-General of the Kanto Local
Finance Bureau, Japan, on May 15, 2023.
Third quarter of 57th Term (started April 1, 2023; ended June 30, 2023), filed to the Director-General of the Kanto Local Finance
Bureau, Japan, on August 14, 2023.
(4) Extraordinary Reports
Submitted to the Director-General of the Kanto Local Finance Bureau, Japan, on December 19, 2022
Submitted to the Director-General of the Kanto Local Finance Bureau, Japan, on December 18, 2023
Extraordinary Report based on Article 19, Paragraph 2, Item 9-2 (Results of Exercise of Voting Rights at General Meeting of
Shareholders) of the Cabinet Office Ordinance on Disclosure of Corporate Information, etc.
(5) Report on repurchase
Reporting period (started September 1, 2023; ended September 30, 2023), filed to the Director-General of the Kanto Local
Finance Bureau, Japan, on October 13, 2023.

- 129 -

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

- 130 -

Independent Auditors’ Audit Report and Internal Control Audit Report

December 18, 2023

Kabushiki Kaisha TKC
To: The Board of Directors
Ernst & Young ShinNihon LLC
Tokyo Office
Designated Limited
Liability Partner
Engagement Partner

Certified Public
Shigeyuki Honda
Accountant

Designated Limited
Liability Partner
Engagement Partner

Certified Public
Toru Iizuka
Accountant[Audit of Financial Statements]
OpinionPursuant to Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act, we have audited the consolidated financial
statements presented in the Financial Information section, which comprise the consolidated balance sheets, the consolidated statementof income, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated
statement of cash flows, basis of presenting the consolidated financial statements, other notes and the consolidated supplementaryschedules of TKC Corporation applicable to the consolidated fiscal year started October 1, 2022 and ended September 30, 2023.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
TKC Corporation and its consolidated subsidiaries as of September 30, 2023, and their financial performance and its cash flows for the
consolidated fiscal year then ended in conformity with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We
are independent of the Company and its consolidated subsidiaries in accordance with the code of professional ethics in Japan, and wehave fulfilled our other ethical responsibilities as the auditors. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Key Audit Matters
Key Audit Matters (KAM) are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current consolidated fiscal year. These matters were addressed in the context of our audit of the consolidated
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

- 131 -

Existence and cut-off of sales from software for sale and made-to-order software of Local Governments BD
Details of key audit matters and reason for determination thereof

How we addressed the matter in our audit

As stated in the (Revenue Recognition) in the [Notes to To examine the existence and the adequacy of cut-off of sales
Consolidated Financial Statements], the Company and its from said software for sale and made-to-order software of theconsolidated subsidiaries recognized software sales of 6,306 software sales under the Local Governments BD, we mainly
million yen under the Local Governments BD segment. Of the implemented the following audit procedures:software sales, the performance obligations included in thecontracts are identified for the major software for sale and made- (1) Evaluation of internal control
to-order software as stated in Notes to the Consolidated Financial • We assessed the status of development and implementation ofStatements, (Basis of Presenting the Consolidated Financial
Statements) 4. Accounting Policies (5) Standards for recognizing

internal controls related to the approval of the contract terms
upon acceptance of orders for software, screening of software

significant revenues and expenses. Sales are recognized at a
certain point in time or over a certain period depending on the

production, approval at the time of shipment and acceptanceinspection, and approval of calculation of level of progress.

different types of satisfaction of performance obligations. At theend of the current consolidated fiscal year, while the majority of (2) Determination of existence and adequacy of cut-off of sales
the sales was based on customer inspection, revenues from some (i) In order to verify the existence of the sales from said softwareof the made-to-order software that were not inspected in thefor sale and made-to-order software recorded in the current
current consolidated fiscal year were realized over a certain perioddepending on the progress of satisfaction of obligations.

consolidated fiscal year, we implemented the following
procedures.

Sales from the above for-sale and made-to-order software include • We reviewed the written contracts, etc. for transactions extracted
customization and production, etc. of specialized software forusing sampling and verified that the net sales matched the
local governments provided based on customer request. Also,
contract amounts and recording times.
because of the long lead time from order to delivery and the large • We reviewed the Accounts Receivable Summary Table as of thescale of these projects, sales from each contract tend to be large
and long.

fiscal year-end and verified whether or not there were any
important accounts receivable-trade which were unrecovered

Management may be under excessive pressure to achieve
beyond a normal recovery period.
performance targets and the intangibility of for-sale and made-to- (ii) In order to verify the adequacy of the cut-off of the sales fromorder software makes it difficult to physically ascertain the actual
state of transactions or when the services are completed;said software for sale and made-to-order software recorded in
the current consolidated fiscal year, we verified for thetherefore, there is a risk that management will record fictitious
sales in order to achieve performance targets and a risk that theytransactions extracted using sampling that the inspection
completion notices that were the basis for recording sales

will bring forward the recording of transactions to undergo
matched the sales recording times.
acceptance inspections in the following consolidated fiscal year (iii) We evaluated the adequacy of the actual cost incurred andor later to present them as sales in the current consolidated fiscal
year.

total estimated cost that were the basis for determining the levelof progress for such made-to-order software whose revenue wasAs such, of the software sales by the Local Governments BD, wedetermined that the existence and the adequacy of cut-off of sales

recognized over a certain period depending on the progress ofsatisfaction of performance obligations.

of such for-sale and made-to-order software were of particular (iv) We examined the journal entries to be recorded in themateriality in our audit of the consolidated financial statements offollowing consolidated fiscal year and verified whether there
the current consolidated fiscal year, and that it was a key audit
matter.

were material cancellations of sales of such for-sale and madeto-order software.
(v) We cross-checked the inspection completion notices that were
the basis for recording sales against the dates and amounts ofsales in the sales management systems and accounting systems.

Other Information
The other information comprises the information included in the Annual Securities Report, but does not include the consolidated
financial statements, non-consolidated financial statements, and our auditors’ reports thereon. Management is responsible for the
preparation and presentation of such other information. In addition, corporate auditors and the Board of Auditors are responsible foroverseeing the execution of duties by Directors in designing and implementing the reporting process for the other information.
Our opinion on the consolidated financial statements does not cover the other information and, accordingly, we do not express an audit
opinion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information, and in doing so,- 132 -

consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtainedin the audit. The auditor is also required to remain alert for indications that, other than such material inconsistencies, the other information
appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.

- 133 -

Responsibilities of Management, Corporate Auditors and Board of Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance withprinciples setting forth the preparation and proper presentation of these 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 consolidated financial statements that are free from material misstatement due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going
concern and disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted inJapan.
Corporate auditors and the Board of Auditors are responsible for overseeing the execution of duties by Directors in designing andimplementing the financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our responsibility is to express an opinion on the consolidated financial statements in our auditors’ report from an independent standpoint
based on our audit by obtaining reasonable assurance about whether the consolidated financial statements as a whole are free frommaterial misstatement, either due to fraud or error. Misstatements can arise from fraud or error and are considered material if, individuallyor in the aggregate, they could reasonably be expected to influence the decision-making of users of the consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we perform the following by exercisingprofessional judgment and maintaining professional skepticism throughout the audit.
• We identify and assess the risks of material misstatement of the financial statements, either due to fraud or error, and then design
and perform audit procedures responsive to those risks. The procedures selected and applied depend on the auditors’ judgment.
Further, we obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
• In making those risk assessments, we consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, while the purpose of the audit of the consolidated financial statements is not expressing an opinion
on the effectiveness of the internal control.
• We evaluate the appropriateness of accounting policies and their method of application adopted by management, as well as thereasonableness of accounting estimates made by management and adequacy of related notes thereto.
• We conclude on the appropriateness of management’s use of the going concern basis of accounting to prepare the consolidated
financial statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the going concern basis of accounting. If we conclude that such material uncertainty exists, we are
required to draw attention in our auditors’ report to the related notes in the consolidated financial statements or, if such notes onmaterial uncertainty are inadequate, to express a qualified opinion with an exceptive item on the consolidated financial statements.
Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
• We evaluate whether the overall presentation, structure, and content of the consolidated financial statements, including the related
notes thereto, are in accordance with accounting principles generally accepted in Japan, and whether the consolidated financial
statements and notes thereto represent the underlying transactions and events in a manner that achieves fair presentation.
• We obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its consolidated
subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision andperformance of the audit on the 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 the audit, significant
audit findings including any significant deficiencies in internal control that we identify during our audit, and any other matters requiredby the auditing standards.
We also provide corporate auditors and the Board of Auditors with a statement that we have complied with regulations on professional
ethics in Japan regarding independence, and communicate with them all matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards to eliminate or mitigate factors that may hinder our independence.
Out of the matters we discuss with the corporate auditors and the Board of Auditors, we determine those matters that we judge as beingof most significance in our audit of the consolidated financial statements for the current consolidated fiscal year to be key audit matters,
and present those matters in our auditors’ report. However, we do not describe these matters in our auditors’ report in cases where thedisclosure of such matters is prohibited by laws, regulations, etc., or in extremely limited circumstances where we determine that suchmatters should not be reported because disadvantages of doing so would reasonably be expected to outweigh the public interests.

- 134 -

[Audit of Internal Control]
OpinionPursuant to Article 193-2, Paragraph 2 of the Financial Instruments and Exchange Act, we have audited the Internal Control Report asof September 30, 2023 of TKC Corporation.
In our opinion, the Internal Control Report referred to above, which represents that the internal control over financial reporting of TKC
Corporation as of September 30, 2023 is effective, presents fairly, in all material respects, the result of the management’s assessment oninternal control over financial reporting in conformity with the assessment standards for internal control over financial reporting
generally accepted in Japan.
Basis for Opinion
We conducted our internal control audit in accordance with auditing standards for internal control over financial reporting generally
accepted in Japan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of theInternal Control Report section of our report. We are independent of the Company and its consolidated subsidiaries in accordance withthe code of professional ethics in Japan, and we have fulfilled our other ethical responsibilities as the auditors. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and Corporate Auditors and the Board of Auditors for the Internal Control ReportManagement is responsible for designing and operating internal control over financial reporting, and for the preparation and fairpresentation of the Internal Control Report in accordance with assessment standards for internal control over financial reporting generally
accepted in Japan.
Corporate auditors and the Board of Auditors are responsible for overseeing and verifying the design and operation of internal control
over financial reporting.
Internal control over financial reporting may not fully prevent or detect misstatements.
Auditor’s Responsibilities for the Audit of the Internal Control Report
Our responsibility is to express an opinion on the Internal Control Report in our internal control audit report from an independent
standpoint based on our internal control audit by obtaining reasonable assurance about whether the Internal Control Report is free frommaterial misstatement.
As part of our audit in accordance with auditing standards for internal control over financial reporting generally accepted in Japan, we
performed the following by exercising professional judgment and maintaining professional skepticism throughout the audit.
• We perform audit procedures to obtain audit evidence regarding the results of the assessments of internal control over financial
reporting in the Internal Control Report. The procedures selected and applied depend on the auditor’s judgment based on thesignificance of effect on the reliability of financial reporting.
• We evaluate the overall presentation of the Internal Control Report, including disclosures on scope, procedures and conclusions ofmanagement’s assessment of internal control over financial reporting.
• We obtain sufficient and appropriate audit evidence regarding the results of the assessment of internal control over financial reportingin the Internal Control Report. We are responsible for the direction, supervision and performance of the audit of the Internal Control
Report. We remain solely responsible for our audit opinion.
We communicate with corporate auditors and the Board of Auditors regarding, among other matters, the planned scope and timing of
the internal control audit, the results of the internal control audit, significant deficiencies in internal control that we identified whichshould be disclosed, the result of their remediation, and any other matters required by the auditing standards for internal control.
We also provide corporate auditors and the Board of Auditors with a statement that we have complied with regulations on professional
ethics in Japan regarding independence, and communicate with them all matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards to eliminate or mitigate factors that may hinder our independence.
Conflicts of Interest
Our firm and its engagement partners have no interest in the Company or its consolidated subsidiaries that should be disclosed pursuant
to the provisions of the Certified Public Accountants Act of Japan.
End of document(*) 1. The original copy of the above Audit Report is held by TKC Corporation (the Company filing this Annual Securities Report).
2. XBRL data is not included in the scope of audit.

- 135 -

Independent Auditors’ Audit Report

December 18, 2023

Kabushiki Kaisha TKC
To: The Board of Directors
Ernst & Young ShinNihon LLC
Tokyo Office
Designated Limited
Liability Partner
Engagement Partner

Certified Public
Shigeyuki Honda
Accountant

Designated Limited
Liability Partner
Engagement Partner

Certified Public
Toru Iizuka
Accountant

OpinionPursuant to Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act, we have audited the financial statements presented
in the Financial Information section, which comprise the balance sheet, the statement of income, the statement of changes in equity, theimportant accounting policies, other notes and the supplementary schedules of TKC Corporation applicable to the 57th fiscal year started
October 1, 2022 and ended September 30, 2023.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of TKC Corporation
as of September 30, 2023, and its financial performance for the fiscal year then ended in conformity with accounting principles generally
accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independentof the Company in accordance with the code of professional ethics in Japan, and we have fulfilled our other ethical responsibilities asauditors. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key Audit Matters (KAM) are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current fiscal year. These matters were addressed in the context of our audit of the financial statements as a whole, andin forming our opinion thereon, and we do not provide a separate opinion on these matters.
Existence and cut-off of sales from software for sale and made-to-order software of Local Governments BD
Details are omitted since the content is the same as the Key Audit Matters (existence and cut-off of sales from software for sale andmade-to-order software of Local Governments BD) stated in the Audit Report on the consolidated financial statements.
Other Information
The other information comprises the information included in the Annual Securities Report, but does not include the consolidated
financial statements, non-consolidated financial statements, and our auditors’ reports thereon. Management is responsible for the
preparation and presentation of such other information. In addition, corporate auditors and the Board of Auditors are responsible foroverseeing the execution of duties by Directors in designing and implementing the reporting process for the other information.
Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information, and in doing so, consider- 136 -

whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit. The auditor
is also required to remain alert for indications that, other than such material inconsistencies, the other information appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.
Responsibilities of Management, Corporate Auditors and Board of Auditors for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with principles setting
forth the preparation and proper presentation of these financial statements generally accepted in Japan. Responsibilities include thosefor designing and operating an internal control system as the management deems necessary in order to prepare and properly present thefinancial statements that are free from material misstatement due to fraud or error.
In preparing the financial statements, management is responsible for assessing whether it is appropriate to prepare the financial
statements on the going concern basis of accounting and disclosing, as applicable, matters related to going concern in accordance withaccounting principles generally accepted in Japan.
Corporate auditors and the Board of Auditors are responsible for overseeing the execution of duties by Directors in designing andimplementing the financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our responsibility is to express an opinion on the financial statements in our auditors’ report from an independent standpoint based on
our audit by obtaining reasonable assurance about whether the financial statements as a whole are free from material misstatement,
either due to fraud or error. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the decision-making of users of the financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we perform the following by exercisingprofessional judgment and maintaining professional skepticism throughout the audit.
• We identify and assess the risks of material misstatement of the financial statements, either due to fraud or error, and then design
and perform audit procedures responsive to those risks. The procedures selected and applied depend on the auditors’ judgment.
Further, we obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
• In making those risk assessments, we consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, while the purpose of the audit of the financial statements is not expressing an opinion on theeffectiveness of the internal control.
• We evaluate the appropriateness of accounting policies and their method of application adopted by management, as well as thereasonableness of accounting estimates made by management and adequacy of related notes thereto.
• We conclude on the appropriateness of management’s use of the going concern basis of accounting to prepare the financial statements
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the going concern basis of accounting. If we conclude that such material uncertainty exists, we are required to
draw attention in our auditors’ report to the related notes in the financial statements or, if such notes on material uncertainty are
inadequate, to express a qualified opinion with an exceptive item on the financial statements. Our conclusions are based on the audit
evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease tocontinue as a going concern.
• We evaluate whether the overall presentation, structure, and content of the financial statements, including the related notes thereto,are in accordance with accounting principles generally accepted in Japan, and whether the financial statements and notes thereto
represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with corporate auditors and the Board of Auditors regarding the planned scope and timing of the audit, significant
audit findings including any significant deficiencies in internal control that we identify during our audit, and any other matters requiredby the auditing standards.
We also provide corporate auditors and the Board of Auditors with a statement that we have complied with regulations on professional
ethics in Japan regarding independence, and communicate with them all matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards to eliminate or mitigate factors that may hinder our independence.
Out of the matters we discuss with the corporate auditors and the Board of Auditors, we determine those matters that we judge as beingof most significance in our audit of the financial statements for the current fiscal year to be key audit matters, and present those mattersin our auditors’ report. However, we do not describe these matters in our auditors’ report in cases where the disclosure of such mattersis prohibited by laws, regulations, etc., or in extremely limited circumstances where we determine that such matters should not bereported because disadvantages of doing so would reasonably be expected to outweigh the public interests.
Conflicts of Interest
Our firm or its engagement partners have no interest in the Company which should be disclosed pursuant to the provisions of the Certified- 137 -

Public Accountants Act of Japan.
End of document(*) 1. The original copy of the above Audit Report is held by TKC Corporation (the Company filing this Annual Securities Report).
2. XBRL data is not included in the scope of audit.

- 138 -

[Front Cover][Document filed]Internal Control Report[Applicable law]

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

Director of Kanto Local Finance Bureau[Date filed]December 18, 2023

[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, Managing Executive Officer, Chief of the Business
Administration Headquarters[Address of head office]1758 Tsurutamachi, Utsunomiya-shi, Tochigi[Place available for public inspection]

TKC Corporation, Tokyo Head Office(2-1 Agebacho, Shinjuku-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1 Nihonbashikabutocho, Chuo-ku, Tokyo)- 139 -

1 [Matters concerning the basic framework for internal control over financial reporting]Masanori Iizuka, Representative Director, President and Executive Officer of the Company, and Kiyotsugu Nakanishi, Chief
Financial Officer of TKC Corporation (the "Company"), are responsible for designing and operating effective internal control overfinancial reporting of the Company, and have designed and operated internal control over financial reporting in accordance with thebasic framework for internal control set forth in "Establishing the Standards and Practice Standards for Management Assessment
and Audit Concerning Internal Control Over Financial Reporting (Council Opinions)" released by the Business Accounting Council.
Internal control, by nature, may not function effectively due to errors in judgment or negligence of those implementing internal
control, or may not respond to unanticipated changes in internal and external environments. Therefore, there is a possibility thatmisstatements may not be completely prevented or detected by internal control over financial reporting.

2 [Matters concerning the scope of assessment, assessment date and assessment procedures]
Assessment of internal control over financial reporting was performed as of September 30, 2023, which is the end of this fiscal year,in accordance with assessment standards for internal control over financial reporting generally accepted in Japan.
In conducting this assessment, we first assessed internal controls which may have material impact on the entire financial reportingon a consolidated basis (entity-level controls), and based on the results of such assessment, we selected the business processes to beassessed. In the process-level assessment, we analyzed the selected business processes, identified key controls that may have material
impact on the reliability of the financial reporting, and assessed the design and operation of these key controls to determine theeffectiveness of our internal controls.
We determined the required scope of assessment of internal control over financial reporting for the Company as well as its
consolidated subsidiaries and equity-method affiliated companies based on the materiality that may affect the reliability of theCompany’s financial reporting. The materiality that may affect the reliability of financial reporting was determined by taking into
account the materiality of quantitative and qualitative impacts on financial reporting. Based on the results of assessment of entitylevel controls conducted for the Company and one of its consolidated subsidiaries, we reasonably determined the scope of assessmentof internal controls over business processes. The four other consolidated subsidiaries and one equity-method affiliated company
determined to have insignificant quantitative and qualitative influence on the reliability of financial reporting were not included in
the scope of assessment of entity-level controls.
For the purpose of determining the scope of assessment of internal control over business processes, we selected locations andbusiness units to be tested based on the fiscal year’s net sales in order of size (after elimination of transactions between consolidated
companies) and added up their net sales. As a result, the Company, whose net sales accounted for almost two-thirds of the Group’s
consolidated net sales, was selected as "Significant Business Location.” For the selected Significant Business Location, we included
as items of assessment, business processes that lead to sales, accounts receivable, purchases and inventories that may have material
impact on the business objectives of the entity. Further, when including business locations other than the selected Significant
Business Location in the scope of assessment, we also individually included as items of assessment, certain business processes
having greater likelihood of material misstatements, processes having significant accounts involving estimates and forecasts andprocesses concerning businesses or operations dealing with high-risk transactions, as business processes that may have material
impacts on financial reporting.

3 [Matters concerning the results of assessment]
As a result of the above assessments, the Company determined that the internal control over financial reporting was effective as ofthe last day of the fiscal year.

4 [Supplementary Information]
None to be disclosed.

5 [Special Notes]
None to be disclosed.

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[Front Cover][Document filed]

Confirmation Letter[Applicable law]

Article 24-4-2, Paragraph 1 of the Financial Instruments and Exchange Act of Japan[Filed with]

Director of Kanto Local Finance Bureau[Date filed]December 18, 2023

[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, Managing Executive Officer, Chief of the Business
Administration Headquarters[Address of head office]1758 Tsurutamachi, Utsunomiya-shi, Tochigi[Place available for public inspection]

TKC Corporation, Tokyo Head Office(2-1 Agebacho, Shinjuku-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1 Nihonbashikabutocho, Chuo-ku, Tokyo)- 141 -

1 [Matters Related to Adequacy of Statements Contained in the Annual Securities 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 Annual Securities Report for the 57th fiscal
year (started October 1, 2022; ended September 30, 2023) are adequate under the Financial Instruments and Exchange Act of Japan.

2 [Special Notes]
None to be disclosed.

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