Quarterly Report(54th Term 2nd Quarter)
Started January 1, 2020
Ended March 31, 2020

TKC Corporation
1758 Tsurutamachi, Utsunomiya-shi, Tochigi– 1 –Table of Contents
Page[Front Cover]Section 1 [Information on the Company] .......................................................................................................................... 4
Part 1 [Overview of the Company] .............................................................................................................................. 4
1 [Key Financial Data] ......................................................................................................................................... 4
2 [Description of Business] .................................................................................................................................. 5
Part 2 [Business Overview] ......................................................................................................................................... 6
1 [Risk Factors] .................................................................................................................................................... 6
2 [Management Analysis of Consolidated Financial Conditions, Operating Results, and Cash Flows] .............. 6
3 [Material Agreements, etc.] ............................................................................................................................. 14
Part 3 [Information on the Company] ........................................................................................................................ 15
1 [Information on the Company’s Stock] ........................................................................................................... 15(1) [Total number of shares, etc.] .................................................................................................................. 15(2) [Share subscription rights, etc.] ............................................................................................................... 15(3) [Exercise of bonds with share subscription rights containing a clause for exercise price adjustment, etc.]
15(4) [Changes in total number of issued shares, capital stock, etc.] ................................................................ 15(5) [Major shareholders] ............................................................................................................................... 16(6) [Voting rights] ......................................................................................................................................... 17
2 [Officers] ......................................................................................................................................................... 17Part 4 [Financial Information] ................................................................................................................................... 18
1 [Quarterly Consolidated Financial Statements] ............................................................................................... 19(1) [Quarterly consolidated balance sheets] .................................................................................................. 19(2) [Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive
income] .................................................................................................................................................... 21[Quarterly consolidated statements of income] ....................................................................................... 21[Quarterly consolidated statements of comprehensive income] .............................................................. 22(3) [Quarterly consolidated statements of cash flows] .................................................................................. 23
2 [Other] ............................................................................................................................................................. 28
Section 2 [Information on Guarantors, etc. of the Company] .......................................................................................... 29[Quarterly Review Report] [Confirmation Letter]– 2 –[Front Cover][Document filed]

Quarterly Report[Applicable law]

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

Director of Kanto Local Finance Bureau[Date filed]February 6, 2020

[Quarterly accounting period]

54th Term 2nd Quarter (from January 1, 2020 to March 31, 2020)[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]

Hitoshi Iwata, Representative Director, Vice President and Executive
Officer[Contact address]

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

03-3235-5511[Contact person]

Hitoshi Iwata, Representative Director, Vice President and Executive
Officer[Place available for public inspection]

TKC Corporation, Tokyo Head Office(2-1 Ageba-cho, Shinjuku-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1 Nihonbashikabutocho, Chuo-ku, Tokyo)– 3 –Section 1 [Information on the Company]
Part 1 [Overview of the Company]
1 [Key Financial Data]
53rd Term
54th Term
2nd quarter consolidated 2nd quarter consolidated
53rd Term
cumulative period
cumulative period
Started October 1, 2018; Started October 1, 2019; Started October 1, 2018;
ended March 31, 2019 ended March 31, 2020 ended September 30, 2019

Term & Period
Accounting period
Net sales(millions of yen)

31,93635,137

66,120Ordinary income(millions of yen)

4,850

7,149

9,669

Quarterly (current) net
income attributable toowners of parent(millions of yen)

3,466

4,712

6,721

Quarterly comprehensive
income or comprehensive
income(millions of yen)

2,481

4,112

4,082

Net assets(millions of yen)

72,73075,144

73,121

Total assets(millions of yen)

91,023

95,412

96,989Quarterly (current) net
income per share(yen)

131.45179.32255.52

Quarterly (current) diluted
net income per share(yen)

130.92－255.01Equity ratio

(%)

78.3

78.8

73.8

Cash flows from operating
activities(millions of yen)

3,651

2,726

10,550Cash flows from investing
activities(millions of yen)

(1,932)(6,702)

411

Cash flows from financing
activities(millions of yen)

(2,123)(1,545)(3,792)

Balance of cash and cash
(millions of yen)equivalents at end of quarter

18,864

21,28926,810Term & Period

53rd Term
2nd quarter consolidated
accounting period

54th Term
2nd quarter consolidated
accounting period

Accounting period

Started October 1, 2019;
ended March 31, 2019

Started January 1, 2020;
ended March 31, 2020

Quarterly net income per share

(yen)

87.09

118.65(Notes) 1. Changes in key financial data, etc. of the Company are not stated here, as they are included in the Company’s quarterly
consolidated financial statements.
2. Net sales do not include consumption taxes (consumption tax and local consumption tax; hereinafter the same).
3. The Company introduced the Board Incentive Plan (BIP) Trust starting from the 2nd quarter consolidated accounting periodof the 53rd Term, and recorded the stocks held by said Trust as treasury stocks. Accordingly, for the purpose of calculating
the quarterly (current) net income per share for the 54th Term 2nd quarter consolidated cumulative period and for the 53rdTerm, they are included in the treasury stocks to be deducted in calculating the average number of shares outstanding.
4. The quarterly diluted net income per share for the current 2nd quarter consolidated cumulative period is not stated as there
were no dilutive shares.

– 4 –2 [Description of Business]
There are no significant changes in the description of business operated by the TKC Group (TKC Corporation and its affiliatedcompanies) for the current 2nd quarter consolidated cumulative period. There are no changes in the major affiliated companies.

– 5 –Part 2 [Business Overview]
1 [Risk Factors]
There are no risks pertaining to new business operations, etc. arisen during the current 2nd quarter consolidated cumulative period.
There are no significant changes in risks regarding business operations, etc. described in the annual securities report of the previous
fiscal year.

2 [Management Analysis of Consolidated Financial Conditions, Operating Results, and Cash Flows]
I. Operating Results
The operating results for the current 2nd quarter consolidated cumulative period (hereinafter, “the current 2nd quarter”) of theconsolidated Group comprising of TKC Corporation and its six consolidated subsidiaries, etc. recorded a net sales of 35,137 million
yen (increased 10.0% year-on-year), operating income of 6,991 million yen (increased 49.4% year-on-year), ordinary income of
7,149 million yen (increased 47.4% year-on-year), and quarterly net income attributable to owners of parent of 4,712 million yen(increased 36.0% year-on-year).
This was earned mainly by the Accounting Firm Business Division, attributable to factors such as increase in the number of users offinancial accounting systems that meet the requirements of the Electronic Books Maintenance Act of Japan, increase in the numberof users of ASP1000R electronic tax filing system for corporations in response to the electronic filing of income taxes now mandated
to large corporations, and the continuing demand for PC replacements in response to the termination of Windows 7 support. In
addition, as to the Local Governments Business Division, increase in sales from consulting services resulting from the completionof change-over of mission-critical systems for orders from new customers won during the previous fiscal year, and increase in sales
from service fees related to the common tax payment system for local taxes launched in October 2019 were also contributing factors.
The impacts of the novel coronavirus disease (COVID-19) on the business results in the current 2nd quarter was small, despite
decreases in sales from consulting services, selling expenses and meeting expenses due to cancellation of seminars, etc., and decreasein employees’ travel expenses.
Net sales for the current 2nd quarter by business division are shown below.
1. The business results of the Group for the 2nd quarter(1) Net sales of the Accounting Firm Business Division
Net sales of the Accounting Firm BD were 23,510 million yen (increased 6.3% year-on-year); operating income was 5,364 million
yen (increased 18.7% year-on-year). The breakdown is as follows:(i) Sales from computer services increased by 2.9% year-on-year. This was attributable to growth in number of users of the FX4Cloud Integrated Accounting Information System for mid-size companies, Office Management System (OMS Cloud) for Tax
Accounting Firms, and OMS Mobile which allows accounting firms to access and perform works using the OMS from outside
the office with a highly secure environment.
(ii) Software sales increased by 4.5% year-on-year. As stated above, this is the result of increase in the number of users of financial
accounting systems that meet the requirements of the Electronic Books Maintenance Act of Japan as well as increase in thenumber of users of our electronic tax filing system for corporations (ASP1000R) in response to the electronic filing of income
taxes now mandated to large corporations.
(iii) Hardware sales increased by 42.7% year-on-year. This was caused by continuing demands for PC replacements in response to
the termination of Windows 7 support by Microsoft in January 2020.
(2) Net sales of the Local Governments Business Division
Net sales of the Local Governments BD were 9,830 million yen (increased 23.7% year-on-year); operating income was 1,653
million yen (increased 1,534 million yen year-on-year). The major improvement in operating income year-on-year was due toincrease in software sales from system revision works in response to legal amendments, and decrease in hardware sales involving
purchases. The breakdown is as follows:(i) Sales from computer services increased by 17.7% year-on-year. This was driven by increase in data center usage fees for theuse of TASK Cloud Local Taxes Electronic Filing Support Service in response to the launch of the common tax payment system
for local taxes.
(ii) Software sales increased by 65.2% year-on-year. This was due to increase in sales from system revisions, etc. in response to
the free preschool education & nursing subsidy program.
(iii) Sales from consulting services decreased 2.9% year-on-year. This was attributable to decrease in revenue from equipment
installation services, etc. as a result of decrease in hardware sales, despite increased sales related to the change-over andimplementation of mission-critical systems for orders from new customer agencies won during the previous fiscal year.
– 6 –(iv) Hardware sales decreased by 30.4% year-on-year. This was due to the absence of the renewal of Basic Resident Registration
Network System-related devices during this quarter, for which orders concentrated during the 2nd quarter in the previous fiscal
year.
(3) Net sales of the Printing Business Division (Subsidiary: TLP Corporation)
Net sales of the Printing BD were 1,796 million yen (decreased 4.5% year-on-year); operating loss was 17 million yen (operating
income of 34 million yen in the 2nd quarter of the previous fiscal year). The breakdown is as follows:(i) Sales of products related to data printing service (DPS) increased by 3.0% year-on-year. While orders for direct mailproductions, etc. from private enterprises decreased, sales increased as a result of increase in orders for notice-related services
from municipalities, government authorities, extra-government organizations, etc.
(ii) Sales of printing of commercial arts (catalogs, flyers, books, etc.) decreased by 21.4% year-on-year due to decrease in orders.
2. Important matters with respect to the Company as a whole(1) Response to the novel coronavirus
In light of the spread of the novel coronavirus infections and the anticipated long-term impacts, the Company has adopted
preventive measures against the infectious disease within the Company, and in addition, provides the following initiatives tosupport our users, namely the accounting firms and their clients, and local governments in continuing their operations.
(i) Through the websites of TKC Member firms, we began a service to provide SMEs information on how to handle emergency
financing issues. This has enabled clients of accounting firms to check the support policies by the Japanese government andgovernment-affiliated financial institutions as well as support programs for emergency financing issues offered by prefectures,municipal governments and private financial institutions under the four categories of financing, employment, taxation, andsubsidies. (Started March 11, 2020)(ii) To help companies facing fund shortage due to the impacts of the spread of the novel coronavirus infections, we added afunction on the OMS Cloud for Accounting Firms that automatically determines which emergency financing policies could beapplied to their clients. (Started offering on April 15, 2020)(iii) For local governments, we leased out free of charge a set of equipment necessary for web meetings (LCD display, speaker
phone, web camera) to about 190 agencies that are users of our mission-critical operation systems, etc. so as to provide
continuous support even in a situation where our staff cannot visit. (The end of March 2020)(iv) We enhanced our cloud services, business form output services, and call center services through help desks, etc. for accounting
firms and local governments, strengthening our efforts for business continuity (dispersed processing and remote operation at
multiple sites) to enable customers to use our services with a sense of security. (April 2020)(v) As relief money, the Company donated 300 million yen, and Masaharu Iizuka, Chairman Emeritus, and Mrs. Runako Iizuka,
wife of the founder of the Company each donated 100 million yen as individuals to Tochigi prefecture to be used to preventthe collapse of the medical system due to the escalating novel coronavirus infections. (April 20, 2020)
The Company also donated a total of 169 million yen as relief money to our client agencies (130 municipalities) to be used tohelp prevent the collapse of the medical system. (April 30, 2020)(2) Establishment of a new organization within the Local Governments Business Division
As of April 1, 2020, the Company established a new organization dedicated to quality control (Quality Control Center), and began
implementing measures to improve and enhance quality on a continuous basis.
(3) Transfer of shares without charge by the Chairman Emeritus of the Company to TKC Members
In March 2020, Masaharu Iizuka, Chairman Emeritus, transferred, without charge, the common shares of the Company personallyowned by himself to 142 TKC Members who practice Shomen-tempu (attachment of tax audit reports) pursuant to Article 33-2of the Certified Public Tax Accountant Act of Japan.
This transfer without charge will be conducted for five years from March 2018 to March 2022, transferring up to one million
shares of the Company. TKC Members who promote Shomen-tempu are eligible, and the transfer without charge was made to a
total of 984 Members in the past three years.
Masaharu Iizuka, together with his brother late Kazuaki Iizuka (former vice president of the Company), had also transferred,without charge, a total of three million common shares of the Company owned in person to 6,657 TKC Members in 2006.
3. Business activities and operating results of the Accounting Firm Business Division
The Accounting Firm BD operates in accordance with the business objectives set forth in the Articles of Incorporation (Article 2,
Paragraph 1: Management of electronic data processing centers to defend the business domain and maintain control over the fate
– 7 –of accounting firms) and works under close ties with the TKC National Federation, which consists of 11,400 certified public tax
accountants and certified public accountants (as of March 31, 2020) that are customers of TKC (hereinafter, “TKC Members”).
TKCNF was established in 1971 and is engaged in various activities in an aim to realize the following six business objectives:
1) Realize tax justice;2) Conduct tax consultant business completely;3) Support SMEs for their prosperity and success;4) Enhance managerial infrastructure of TKC Member firms;
5) Make full use of TKC systems;
6) Promote mutual enlightenment, support and friendship.
(Note) For more information on the TKC National Federation, see the booklet "All About TKC National Federation" or visit the
TKC Group website (http://www.tkc.jp/).
(1) Activities of the TKC National Federation ("TKCNF")
TKCNF announced its 3-year activity policy from 2019 to 2021 and Strategic Targets 2020 based on the policy agenda in viewof its 50th anniversary (in 2021). The content is as follows:[Activity policy to change society with the TKC brand](i) Promote Shomen-tempu (attachment of tax audit reports) by the TKC methods (FY2020 year-end target: Corporate Shomentempu by 144,000 companies)(ii) Promote TKC Monitoring Information Service (FY2020 year-end target: 140,000 companies, 245,000 cases)(iii) Promote self-accounting practice by the TKC methods (FY2020 year-end target: 285,000 companies)
In addition, as the initiatives of TKCNF are beginning to draw the attention of many financial institutions, the following measures
have been launched to take advantage of this opportunity to further enhance the managerial infrastructure of TKC Member firms:(i) Understand and practice the Standards of Conduct for TKC Accountants(ii) Increase the numbers of Field Auditors and Assistant Field Auditors(iii) Enhance the managerial advisory services as a Certified Support Agency(2) Activities to achieve the strategic goals of the Accounting Firm Business Division
The Company operates to achieve the Strategic Targets 2020 in collaboration with TKCNF.
(i) Promotion of TKC Monitoring Information Service
TKC Monitoring Information Service is a free cloud-based service in which the TKC Member firms, upon request by the
management of their clients, provide to financial institutions such information as monthly trial balance sheets, annual financial
statements and tax returns prepared by TKC Member firms after monthly field audits and monthly settlements. Monthly trial
balance sheets will be made available immediately upon completion of the monthly settlement, and annual financial statements
and tax returns are disclosed immediately after the client electronically files its financial documents to the tax authorities.
While promoting the TKC Monitoring Information Service, we communicated to financial institutions that the reliability offinancial statements prepared by SMEs can be verified by the following three documents:
1) Supporting documents submitted by TKC Members as provided for under Article 33-2 of the Certified Public Tax
Accountant Act of Japan
2) 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 years3) The Chusho Kaikei Yoryo checklist developed by the Japan Federation of Certified Public Tax Accountants' Associations
and Japan Federation of Credit Guarantee Corporations
As a result of these activities, the number of financial institutions adopting this Service is increasing rapidly, adopted by 446
financial institutions including all local banks throughout Japan (64 institutions) as of March 31, 2020. Also, over 200,000
companies provided their financial statements, etc. to financial institutions in January 2020.

– 8 –(ii) Promotion of self-accounting by the TKC methods (promotion of FX series)
TKC has incorporated the 365 Days Variable Income Statement and other strategic functions in the FX series to assist thestrategic decision-making by the management of clients. In addition, in response to the advancement of ICT in recent years,
the Company has begun providing functions that enable management of clients to check its latest business results from a smart
phone any time and any place (Smart Business Results Verification Functions). In order for management to utilize thesefunctions, accounting personnel need to input the accounting transaction data in a timely and efficient manner, so the Company
develops and provides functions that can receive bank deposit transaction data through Internet banking and generate journal
entries automatically (Bank Credit Data Receiving Functions). Through these functions, the management of clients can checktheir latest business results whenever they please. However, the number of users were limited as it required additional
configuration to use these functions.
Meanwhile, SMEs will also be subject to the Revised Labor Standard Act from April 2020, and they are faced with the need toreform their working practices. In such environment, during the current 2nd quarter under review, the Company formulated apolicy to provide system utilization support to clients using the FX Series and began engaging in activities in which theemployees of the Company work together with TKC Member firms to provide generous support from system launch throughto utilization. Through such activities, the Company works to provide clients with an accounting environment using the latest
ICT to support the improvement of their productivity.
(iii) Supporting complete compliance with the Electronic Books Maintenance Act of Japan
Under the FY 2018 tax reform, provisions were added in which a tax benefit of 100,000 yen in special reduction for blue
income tax returns shall be offered if the declarer 1) is subject to the Electronic Books Maintenance Act of Japan forbookkeeping, or 2) files the income tax return electronically. This is a groundbreaking revision that offers favorable tax
treatment for business entities that keep the history of revisions and deletions to the book record, which serves as basis of tax
returns in accordance with the Electronic Books Maintenance Act of Japan. We anticipate that the same treatment will beapplied to the filing of corporate taxes in the future.
Also, last year the Company became the first among its competitors to acquire the certification under the Electronic Books
Software Legal Compliance Certification System by Japan Image and Information Management Association (JIIMA) for its
FX series and other systems. Through the promotion of the certified FX series, etc., we support complete compliance with theElectronic Books Maintenance Act of Japan.
(iv) Soliciting new members (promotion of joining TKCNF)
TKCNF is engaged in a project to increase TKC membership to over 10,000 firms by the end of September 2021. The Company
is working closely with the New Members Service Committee, etc. of TKCNF in soliciting new members to achieve the goal.
During the current 2nd quarter, we solicited new members through seminars held for non-members targeting medium- andlarge-sized firms as well as certified public tax accountants and certified public accountants who plan to begin private practice.
As a result of these activities, the number of TKC Members totaled approximately 9,700 accounting firms and 11,400
accountants as of March 31, 2020. The difference in numbers of firms and accountants are because some firms have multiple
accountants who are members.
(3) Activities to support the preparation of highly reliable financial statements based on timely and accurate bookkeeping(i) Support activities for diffusion of Chusho Kaikei Yoryo (Guidelines for SME accounting)
The TKCNF recommends the use of Basic Guidelines with Respect to the Accounting Procedures at Small- and Medium-sizedEnterprises (hereinafter, “Chusho Kaikei Yoryo” (Guidelines for SME Accounting)) formulated in February 2012 with which
SME clients should comply.
These Guidelines have been formulated based on the following principles: 1) accounting that helps to grasp the company's
business situation; 2) accounting that contributes to providing information to stakeholders (financial institutions etc.); 3)
accounting that complies with the Ordinance on Company Accounting while achieving harmony between accounting andtaxation system; and 4) accounting that does not place excessive burden on SMEs.
In order to support the activities of the TKCNF towards the diffusion and utilization of the Guidelines, the Company continues
to promote the development of training materials, etc. and to strengthen collaboration with other organizations supportingSMEs.
(ii) Issuance of Certificate of Bookkeeping Timeliness
The Company utilizes the processing log data and historical time series data that are automatically logged at the TKC Internet
Service Center when TKC Members access our accounting system to issue a Certificate of Bookkeeping Timeliness free ofcharge. This Certificate serves as reference for financial institutions and other third parties to objectively evaluate the businessperformance of TKC Member firms.
This service was developed in an aim to improve reliability of financial statements and tax returns prepared by TKC Members
and to provide a passport for smooth financing to the clients of TKC Members. This utilizes the features of the Company's
financial accounting processing at TKC data centers, which prohibits any retroactive insertions, deletions and corrections topast data, and TKC Corporation proves, as a third party, that TKC Members have visited clients on a monthly basis to provide– 9 –guidance on accurate bookkeeping (monthly Field Audits), and that all work processes from monthly settlements to the final
settlement of accounts and electronic tax filings have been completed by a one-stop, full line process in a timely manner.
(4) Expansion into large-scale enterprise market
By utilizing the TKC systems, the Company contributes to the compliance and rationalization of tax and accounting operationsof large enterprises, mainly of listed companies, and is actively working to solicit these companies and their affiliates to becomeclients of TKC Members.
As systems to supplement these activities, the Company provide the TKC Consolidated Group Solution package (which includes:
the eCA-DRIVER consolidated accounting system, the eConsoliTax consolidated tax payment system, the eTaxEffect tax effectaccounting system, the ASP1000R electronic tax filing system for corporations, the FX5 integrated accounting information system,
the e-TAX series electronic tax filing system, the FAManager non-current asset management system, the TDS documented
evidence storage service, the OBMonitor overseas business monitoring system, etc.).
Under the FY2018 tax reforms, large enterprises with a capital of 100 million yen or greater will be mandated to use electronic
filing of income tax, local taxes and consumption tax starting April 2020. With this reform, large sized companies must file theirincome tax returns electronically, as well as submit any attachments to tax returns (financial statements, statement classified byaccounting items, etc.) in electronic data form. According to statistics of the National Tax Agency, electronic filing of corporate
income tax was conducted by 2,268,473 companies in FY2018. While the percentage of companies using the electronic filingsystem was 84.3%, only 66.1% of large sized companies uses electronic tax filings. This means that many of the large enterprises
to which electronic filing will be mandated will be using the electronic filing system for the first time. To enable these companies
to switch smoothly to the mandated electronic filing system, the Company released the Guidebook on Complying with Mandatory
Electronic Filing on the Company’s website, held seminars, and offered opportunities to experience electronic tax filing incollaboration with TKCNF’s Medium- and Large-sized Companies Support Council (1,411 members as of March 31, 2020). We
also entered into alliance agreements with four ERP vendors, working on the development of systems linking to financial
statements data. As a result, the number of users of ASP1000R electronic tax filing system for corporations reached 3,170
companies as of March 31, 2020.
As a result of these activities, the number of corporate groups using the TKC Consolidated Group Solution counted approximately
4,000 corporate groups as of March 31, 2020. Our taxation-related information systems are adopted by 86% of the 100 largest
Japanese listed companies by sales amount. The market shares among Japanese listed companies reached 32%.
(5) Expansion of markets for legal information database services
The LEX/DB Internet legal information database, developed originally by the Company, maintains an archive of over 306,000
judicial precedents, decisions, etc. as of March 31, 2020, covering all legal fields from precedents set in the former Supreme Court
dating back to 1875 to those most recently published, being the largest database of its kind in Japan.
The TKC Law Library is a comprehensive legal information database which uses the LEX/DB Internet as its core content andcontains over 952,000 bibliographic information references with links to 60 of the legal information databases operated by 18
specialized legal publishers (including Gyosei Corporation, Nippon Hyoron-Sha Co., Ltd., Yuhikaku Publishing Co., Ltd.,
Chuokeizai-Sha, Inc., Hanrei Times Co., Ltd., and Japan Institute of Business Law) with total accessible number of information
now exceeding 2,640,000 items.
(i) Increase of user base of TKC Law Library
The Company engaged in sales promotions for the TKC Law Library, highlighting its usefulness in business operations andputting together judicial precedents, laws and regulations, bibliographic information references, and also contents of specialized
law magazines that are useful for business practices into customer-specific packages (Law Firm Package for law firms,
Corporate Legal Package for corporate legal departments).
In the current 2nd quarter, as a result of active promotional activities towards TKC Member firms, universities, law schools,
government offices, law firms, patent offices and corporate legal departments, the number of users exceeded 51,000 IDs andthe Library is used by over 22,000 institutions as of March 31, 2020.
(ii) Progress in the academic market
The Company proposes the implementation of system-based early learning support programs to 54 law schools using the TKC
Law School Educational and Research Support System and supports such schools in applying for the Public Support Programfor Law Schools Concerning the Revision of Budget Distribution initiative by the Ministry of Education, Culture, Sports,
Science and Technology. We also added services that correspond with the Legal Profession Course that universities will begin
offering in April 2020, which combines three years of undergraduate studies in law and two years of master’s course in law,enabling students to take the bar exam in 5 years.
Also, we conducted sales promotional activities for the Civil Service Examination Study Tool for undergraduates and concluded
contracts with 23 universities as of March 31, 2020. The Company will continue to expand the number of monitor user
universities and promote switching to full use.

– 10 –

4. Business Activities and Operating Results of the Local Governments Business Division
The Local Governments BD operates in accordance with the business objectives set forth in the Articles of Incorporation (Article
2 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.
(1) Development and provision of mission-critical system-related services
The Japanese government is accelerating its actions to promote the implementation of cloud systems, setting a target to haveapproximately 1,600 agencies using cloud (of which, approximately 1,100 agencies to be users of local government cloudsystems) by the end of FY2023.
The Company provides TKC Government Cloud Service to municipalities (mainly for cities, wards, towns and villages). This
Cloud Service consists of the TASK Cloud Service which supports mission-critical functions and information services within
agencies, and the TASK Outsourcing Service which supports massive batch output and processing of tax papers and otherdocuments.
In particular, the TASK Cloud Service is a common platform package system operated at TKC data centers that allows the shareduse of cloud across Japan, attracting attention as a local government cloud system promoted by the Ministry of Internal Affairs
and Communications and, as to mission-critical systems, adopted by nine groups nationwide for shared use.
In the current 2nd quarter, we supported agencies that newly implemented our services and are scheduled for a full-scale launch
after April 2020 in enabling smooth system transition, while enhancing the functions of various systems. In particular, for the
Welfare Consultation Support System, we promoted the development of new functions (scheduled to begin offering in April 2020)
to support streamlining of record preparation and smooth sharing of information between relevant parties based on the F-SOAIP
lifestyle support recording method(*).
As a result of aggressive promotional activities together with the seven partner companies across Japan with whom we have ongoing alliance partner agreements, our mission-critical systems are adopted by over 150 agencies nationwide as of March 31,
2020.
* About lifestyle support recording method F-SOAIP
F-SOAIP is a progress recording method developed for the purpose of creating a common language among the areas of welfare,nursing care, and health care. It can standardize terms/expressions to be used in recording necessary information in itemized
format, which is drawing attention because it allows users to record the progress of support in an efficient and accurate mannerand to facilitate sharing of information among relevant parties.
(2) Expansion of cloud services for residents
The service of Issuance of Certificates at Convenience Store, as an example of promoting the utilization of My Number Cards, isincreasing rapidly throughout the nation with more than 700 municipalities adopting the service for over 100 million users. In
response, the Company provides the TASK Cloud Convenience Store Certificate Issuing System as the system to realize thisservice. Also, the TASK Cloud Easy Counter Service System that uses the features of this System gains a good reputation, andthrough proposals to use these systems, the Company supports the enhancement of resident services and counter service reformsof municipalities.
In the current 2nd quarter, we supported the nine towns of the Kanagawa Prefecture Collective Business Partnership for
Information Systems in Municipalities (Administrator Yuji Yukawa, Mayor of Yamakita Town) in preparation for the sequential
launch and smooth system operation of the Convenience Store Certificate Issuing Service using the Company’s systems. We also
participated in the Demonstration Experiment for the Improvement of Counter Services Using ICT (Smart Counter Services)conducted by Nara City in Nara Prefecture, and engaged in the research and development of a new smart counter services system
around our Easy Counter Service System as core.
In addition, as a result of various functional enhancements and aggressive promotional activities, the Convenience Store
Certificate Issuing System is adopted by over 110 agencies nationwide including government ordinance-designated cities such as
Kobe and Kitakyushu, and the Easy Counter Service System is adopted by approximately 10 agencies as of March 31, 2020.
(3) Response to digitization of local tax administrations
The Company is an authorized contractor of the Local Tax Agency, and provides a cloud-based service for the standard systems
such as inspection system for eLTAX (local tax portal system) offered by the Agency. We also develop and provide Data
Connection Services as our own functionality to connect the individual tax systems with the Agency’s platform.
These services are proposed in collaboration with 50 partner companies nationwide with whom we have on-going alliance partner
agreements. As a result, our TASK Cloud Local Taxes Electronic Filing Support Service is currently used by more than 770
agencies which account for more than 40% of all prefectures and local municipalities as of March 31, 2020.
In the current 2nd quarter, we engaged in the enhancement and expansion of functionalities of related systems and active
promotional activities for data connection services.
– 11 –

(4) Response to standardized local public accounting
Municipalities are required to adopt the system of accrual basis accounting (double entry bookkeeping) to replace the current cash
basis accounting (single entry bookkeeping), and to prepare and disclose their financial documents, etc. as well as to utilize suchdata for administrative operations.
In order to support this, the Company provides the TASK Cloud Public Accounting System, which is compatible with the daily
journalizing method encouraged by the Japanese government, and its related systems TASK Cloud Non-current Assets Control
System and TASK Cloud Consolidated Financial Statement Preparing System.
In the current 2nd quarter, the Company provided support for the smooth system operation to 13 agencies of the 51 agencies (7cities, 26 towns, 4 villages, and 14 partial-affairs associations) that are members of the Kagoshima Prefecture Municipal
Association, Kumamoto Prefecture Municipal Association, Nagasaki Prefecture Municipal Administration Promotion Council,
and Kyoto Prefecture Municipal Information Promotion Counci, as well as to newly transitioning agencies. We also engaged in
the development and enhancement of various functions to support the visualization and utilization of local public accounting
information as well as in aggressive promotional activities. As a result, our public accounting systems are adopted by more than
250 agencies as of March 31, 2020.
(5) Response to digitalization of administrative services
In May 2019, the Law for Partial Revision to the Act on Use of Information and Communications Technology in Administrative
Procedure, etc. for the Improvement of Convenience of Related Parties Engaged in Administrative Procedure Using Information
and Communications Technology and for the Promotion of Simplifying and Streamlining Administrative Operations (Digital
Administrative Procedures Act) was enacted, which allows all administrative procedures in general to be conducted on-line. Also
under the Digital Government Implementation Plan that the Japanese cabinet approved in December 2019, some procedures that
local governments should prioritize in conducting on-line were indicated.
To respond to the change in the times and environment surrounding our customers, the Company is working to further accelerate
the planning and development of new products and services as well as to strengthen customer support including the collection
and communication of the latest information.
In the current 2nd quarter, we engaged in the verification of functions of the TASK Cloud My Number Card Issuance Reservationand Management System with the cooperation of two agencies and continued with the development in view of the service launch(scheduled in March 2020).
Furthermore, our sales, development and operation divisions collaborated under the leadership of the System Planning Department
in gathering and communicating information related to the digitalization of administrative services, as well as conducting surveys,
research and development of next generation solutions including the Smart Filing System (scheduled to be provided in summerof 2020) which support efforts of improving resident services and improving administrative efficiency and standardization underSociety 5.0.
5. Business Activities and Operating Results of the Printing Business Division
The Group’s Printing BD operates with the main focus on data print services (DPS) and business form printing.
In the area of DPS, despite decrease in orders for direct mail productions from private enterprises, sales increased year-on-year asa result of increase in orders for notice-related services from municipalities, government authorities, and extra-governmentorganizations.
In the area of business form printing, sales slightly decreased year-on-year due to ongoing decline in demands for business forms.
In the area of printing of commercial arts (catalogs, flyers, booklets, books, etc.), sales decreased year-on-year due to decrease indemands for paper media with the popularization and advancement of browsing, etc. of electronic data.
II. Financial Conditions
Assets, liabilities and net assets at the end of the current 2nd quarter consolidated accounting period are stated below.
1. Assets
Total assets as of the end of the current 2nd quarter consolidated accounting period amounted to 95,412 million yen, a 1,577
million yen decrease compared to 96,989 million yen as of the end of the previous consolidated fiscal year.
(1) Current assets
Current assets as of the end of the current 2nd quarter consolidated accounting period amounted to 36,121 million yen, a 4,952
million yen decrease compared to 41,073 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to 5,321 million yen decrease in cash and deposits, despite a 942 million yen increase in notes andaccounts receivable.
– 12 –

(2) Non-current assets
Non-current assets as of the end of the current 2nd quarter consolidated accounting period amounted to 59,291 million yen, a3,375 million yen increase compared to 55,915 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to 4,100 million yen increase in long-term deposits, despite a 460 million yen decrease in investment
securities and 317 million yen decrease in intangible assets.
2. Liabilities
Total liabilities as of the end of the current 2nd quarter consolidated accounting period amounted to 20,267 million yen, a 3,600
million yen decrease compared to 23,868 million yen as of the end of the previous consolidated fiscal year.
(1) Current liabilities
Current liabilities as of the end of the current 2nd quarter consolidated accounting period amounted to 13,828 million yen, a 2,449
million yen decrease compared to 16,278 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to decrease of 1,035 million yen in accounts payable, decrease of 680 million yen in consumption
tax payable included in accounts payable–other, and decrease of 619 million yen in provision for bonuses.
(2) Non-current liabilities
Non-current liabilities as of the end of the current 2nd quarter consolidated accounting period amounted to 6,439 million yen, a
1,151 million yen decrease compared to 7,590 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a decrease of 1,117 million yen in retirement benefit liabilities.
3. Net assets
Total net assets as of the end of the current 2nd quarter consolidated accounting period amounted to 75,144 million yen, a 2,023
million yen increase compared to 73,121 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a 3,256 million yen increase in retained earnings and a 877 million yen increase in capital surplus,
despite a 1,504 million yen decrease in non-controlling interests and a 664 million yen decrease in valuation difference on
available-for-sale securities.
Equity ratio as of the end of the current 2nd quarter consolidated accounting period was 78.8%, a 4.9 percentage point increase
compared to the ratio of 73.8% as of the end of the previous consolidated fiscal year.
III. Cash FlowsThe balance of cash and cash equivalents as of the end of the current 2nd quarter consolidated accounting period amounted to 21,289
million yen, a 5,521 million yen decrease compared to the end of the previous consolidated fiscal year.
The overview of cash flows for the current 2nd quarter consolidated accumulative period and major factors contributing to the results
are as follows:(1) Cash flows from operating activities
Cash flows from operating activities increased by 2,726 million yen (925 million yen decrease in revenue year-on-year). Major
factors include the recognition of 7,144 million yen in quarterly net income before taxes and adjustments, a decrease of 993
million yen in retirement benefit liabilities, and an increase of 1,565 million yen in notes and accounts receivable–trade.
(2) Cash flows from investing activities
Cash flows from investing activities decreased by 6,702 million yen (4,770 million yen increase in spending year-on-year). Major
factors include expenditure of 5,800 million yen into time deposits, revenue of 1,500 million yen from withdrawal of time deposits,
expenditure of 623 million yen for the acquisition of tangible fixed assets, expenditure of 507 million yen for the acquisition of
intangible fixed assets, and an expenditure of 593 million yen for the acquisition of shares of subsidiaries.
(3) Cash flows from financing activities
Cash flows from financing activities decreased by 1,545 million yen (577 million yen decrease in spending year-on-year). Major
factors include the payment of 1,452 million yen for year-end dividends as of the end of September 2019 (a dividend of 55 yen
per share).
IV. Operational and Financial Challenges Facing the TKC Group
There are no significant changes in challenges faced by the TKC Group during the current 2nd quarter consolidated cumulative
period.
– 13 –

V. Research and Development Activities
There were no research and development expenses spent by the TKC Group during the current 2nd quarter consolidated cumulative
period.
There are no significant changes in the status of research and development activities of the TKC Group during the current 2nd quarter
consolidated cumulative period.

3 [Material Agreements, etc.]
There has been no decision or conclusion of material agreements, etc., during the current 2nd quarter consolidated accounting
period.

– 14 –

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

Total number of shares authorized to be issued (shares)

Common stock

60,000,000

Total

60,000,000(ii) [Issued shares]
Class

Number of shares issued asof the end of 2nd quarteraccounting period (shares)(March 31, 2020)

Number of shares issued asof the filing date (shares)(May 7, 2020)

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

Description

Common stock

26,731,033

26,731,033

First Section of the Tokyo
Stock Exchange

Number of sharesconsisting a unit:
100 shares

Total

26,731,033

26,731,033－－(2) [Share subscription rights, etc.](i) [Stock option scheme]
None to be disclosed.
(ii) [Other share subscription rights, etc.]
None to be disclosed.
(3) [Exercise of bonds with share subscription rights containing a clause for exercise price adjustment, etc.]
None to be disclosed.
(4) [Changes in total number of issued shares, capital stock, etc.]

Date

From January 1, 2020
To March 31, 2020

Increase or
Balance of total
decrease in total number of
number ofissued sharesissued shares(shares)(shares)－

26,731,033

Increase or
decrease incapital stock

Balance ofcapital stock

Increase or
decrease incapital reserve

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

– 15 –

5,700

－

5,409

(5) [Major shareholders]Names of shareholders

Address

As of March 31, 2020
Percentage ofshares held to total
Number of shares
number of issued
heldshares (excluding(hundreds of shares)
treasury stock)(%)

Iizuka Takeshi ScholarshipFoundation

1758 Tsurutamachi, Utsunomiya-shi, Tochigi

37,53014.2

Daido Life Insurance Company

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

25,690

9.7

Sozeishiryokan (Institute of Tax
Research and Literature)

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

15,4655.8

TKC Employee Shareholding
Association

2-1 Ageba-cho, Shinjuku-ku, Tokyo

15,2425.8

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

12,543

4.7

50 Bank Street, Canary Wharf, London E14
5NT, UK(3-11-1 Nihonbashi, Chuo-ku, Tokyo)

10,823

4.1

Masaharu Iizuka

Utsunomiya-shi, Tochigi

8,598

3.2

Japan Trustee Services Bank, Ltd.
(Trust account)

1-8-11 Harumi, Chuo-ku, Tokyo

7,792

2.9

Tokio Marine & Nichido Fire
Insurance Co., Ltd.

1-2-1 Marunouchi, Chiyoda-ku, Tokyo

6,664

2.5

SSBTC CLIENT OMNIBUS
ACCOUNT(Standing proxy: The Hong Kong &Shanghai Banking Corporation,
Tokyo Branch)

One Lincoln Street, Boston, MA, USA 02111(3-11-1 Nihonbashi, Chuo-ku, Tokyo)

5,991

2.3

Total

－

146,340

55.3

The Master Trust Bank of Japan, Ltd.
(Trust account)
NORTHERN TRUST CO. (AVFC)
RE FIDELITY FUNDS(Standing proxy: The Hong Kong &Shanghai Banking Corporation)(Note) The 189,700 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.

– 16 –

(6) [Voting rights](i) [Shares issued]
As of March 31, 2020
Number of shares(shares)Classification

Number of voting rights(units)Description

Shares without voting right

－

－

－

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

－

－

－

Shares with restricted voting right (others)

－

－

－

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

Common stock

263,100－－

Shares with full voting right (others)

Common stock

26,396,900

263,969－

Shares less than one share unit

Common stock

71,033－－

26,731,033

－

－

－

263,969－

Total number of shares issued
Total voting rights held by all shareholders(Note) Shares with full voting right (others) includes 600 shares (6 units of voting rights) registered in the name of Japan Securities
Depository Center, Inc., and 189,700 shares (1,897 units of voting rights) owned by the BIP Trust.
(ii) [Treasury stock, etc.]
As of March 31, 2020
Percentage ofTotal shares held
shares held to the(shares)
total number ofissued shares (%)

Name of shareholder

Address ofshareholder

Number of shares
held under own
name (shares)

Number of shares
held under othernames (shares)

TKC Corporation

1758 Tsurutamachi,
Utsunomiya-shi,
Tochigi

263,100－

263,100

0.98－

263,100－

263,100

0.98

Total

(Note) In addition to the above, the 189,700 shares owned by the BIP Trust are recorded as treasury stocks in the quarterly consolidated
financial statements.

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

– 17 –

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

2. Auditing and Attestation
The quarterly consolidated financial statements of the Company for the 2nd quarter consolidated accounting period (from January
1, 2020 to March 31, 2020) and the 2nd quarter consolidated cumulative period (from October 1, 2019 to March 31, 2020) havebeen audited on a quarterly basis by Ernst & Young ShinNihon LLC pursuant to the provision of Article 193-2, Paragraph 1 of the
Financial Instruments and Exchange Act of Japan.

– 18 –

1 [Quarterly Consolidated Financial Statements](1) [Quarterly consolidated balance sheets](Unit: millions of yen)Previous consolidated fiscal year
(September 30, 2019)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable–trade
Inventories
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures (net amount)
Land
Other (net amount)
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term deposits
Guarantee deposits
Other
Total investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable–trade
Electronically recorded obligations–operating
Short-term loans payable
Accounts payable–other
Income taxes payable
Provisions for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Retirement benefit liabilities
Provisions for stocks payment
Other
Total non-current liabilities
Total liabilities– 19 –

Current 2nd quarter consolidated
accounting period(March 31, 2020)

29,8108,755*1,0901,459(41)
41,07324,489
9,697
*762
1,211
(40)
36,121

8,404
6,892
2,666
17,963
3,290

8,255
6,892
2,532
17,6792,973

15,527
9,500
1,339
8,294
34,661
55,91596,98915,066
13,6001,423
8,547
38,63859,291
95,412

3,602
916
142
3,924
2,450
3,600
1,640
16,278

2,567
907
212
2,542
2,485
2,980
2,133
13,828

438
4,764
562
1,825
7,590
23,868

366
3,647
586
1,838
6,439
20,267

(Unit: millions of yen)
Current 2nd quarter consolidated
Previous consolidated fiscal year
accounting period(September 30, 2019)(March 31, 2020)
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Accumulated remeasurements of defined benefit
plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets– 20 –

5,700
5,711
63,623(1,630)73,4045,700
6,588
66,880(1,658)77,510

(83)

(748)

(1,704)(1,618)(1,787)
1,504
73,121
96,989(2,366)－75,144
95,412

(2) [Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income][Quarterly consolidated statements of income][2nd quarter consolidated cumulative period](Unit: millions of yen)Previous 2nd quarter consolidated Current 2nd quarter consolidated
cumulative period
cumulative period(Started October 1, 2018;(Started October 1, 2019;
ended March 31, 2019)
ended March 31, 2020)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Insurance dividends income
Land and house rent received
Equity in earnings of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gains on sales of non-current assets
Gain on reversal of subscription rights to shares
Other
Total extraordinary income
Extraordinary losses
Loss on sale of non-current assets
Loss on retirement of non-current assets
Total extraordinary losses
Quarterly net income before taxes and adjustments
Income taxes–current
Income taxes–deferred
Total income taxes
Quarterly net income
Quarterly net profit (loss) attributable to non-controllinginterests
Quarterly profit (loss) attributable to owners of parent– 21 –

31,936
11,16020,776*16,098
4,678

35,137
12,19922,938*15,946
6,991

15
63
6
26
13
48
173

19
70
3
25
－
40
159

1
0
0
1
4,850

0
0
0
1
7,149

0
274
5
279

0
－
－
0

10
5
15
5,114
1,681
(46)
1,635
3,478

－
4
4
7,144
2,310
142
2,452
4,692

12

(20)

3,466

4,712

[Quarterly consolidated statements of comprehensive income][2nd quarter consolidated cumulative period](Unit: millions of yen)Previous 2nd quarter consolidated Current 2nd quarter consolidated
cumulative period
cumulative period(Started October 1, 2018;(Started October 1, 2019;
ended March 31, 2019)
ended March 31, 2020)
Quarterly net income
Other comprehensive income
Valuation difference on available-for-sale securities
Remeasurements of defined benefit plans
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Quarterly comprehensive income(Breakdown)
Quarterly comprehensive income attributable toowners of parent
Quarterly comprehensive income attributable to noncontrolling interests– 22 –

3,478

4,692

(996)
－

(666)
85

(0)

－

(997)
2,481

(580)
4,112

2,470

4,134

11

(22)

(3) [Quarterly consolidated statements of cash flows](Unit: millions of yen)Previous 2nd quarter consolidated Current 2nd quarter consolidated
cumulative period1
cumulative period(Started October 1, 2018;(Started October 1, 2019;
ended March 31, 2019)
ended March 31, 2020)
Cash flows from operating activities
Quarterly net income before taxes and adjustments
Depreciation
Loss (gain) on sale of non-current assets
Loss on retirement of non-current assets
Gain on reversal of subscription rights to shares
Increase (decrease) in provisions for stocks payment
Increase (decrease) in provisions for bonuses
Increase (decrease) in retirement benefit liabilities
Decrease (increase) in notes and accounts receivable–
trade
Decrease (increase) in other assets
Increase (decrease) in accounts payable–trade
Increase (decrease) in other liabilities
Other
SubtotalInterest and dividends received
Interest 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
Purchase of intangible assets
Purchase of investment securities
Proceeds from redemption of investment securities
Purchase of subsidiary stock
Other
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Repayment of long-term loans payable
Proceeds from disposal of treasury stock
Purchase of treasury stock
Payment of dividends
Payment of dividends to non-controlling interests
Other
Cash flows from financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of quarter
Cash and cash equivalents at end of quarter– 23 –

5,114
1,455
10
5
(274)
527
(423)
121

7,144
1,573
(0)
4
－
24
(619)
(993)

(987)

(1,565)

70
(102)
(402)
(42)
5,072
160
(1)
(1,579)3,651

487(1,039)
(65)
(75)
4,875
99
(0)
(2,247)2,726(2,000)
1,500
(977)
(506)
(0)
－
－
51
(1,932)(5,800)
1,500
(623)
(507)
(4,504)
4,000
(593)
(172)
(6,702)

70
(71)
753
(1,359)(1,448)(16)(51)(2,123)(403)
19,268*18,864

70
(71)
0
(31)
(1,452)(11)(50)(1,545)(5,521)
26,810*21,289

[Notes to Financial Statements](Additional Information)(Stock-based compensation plan for officers)
1. Outline of Transaction
Based on the resolution of the Board of Directors’ Meeting held on October 31, 2018 followed by approval at the Ordinary General
Meeting of Shareholders held on December 21, 2018, the Company introduced a stock-based compensation plan called “BIP Trust.”
The objectives of the plan are to clarify the linkage between the Company’s shareholder value and the remuneration for Directors,
etc. and to motivate Directors, etc. to contribute more to enhancing the medium- to long-term corporate value by sharing common
interest with shareholders, including not only the merit derived from the rising share price, but also the risk associated with the
decline in share price.
The proposal to change the stock-based compensation plan for Directors, etc. (excluding directors who do not concurrently serveas an executive officer) and Full-time Auditors to performance-linked compensation has been deliberated by the Nomination andCompensation Advisory Committee whose chairperson and half of the members are independent outside officers and outside
experts, and approved at the Ordinary General Meeting of Shareholders held on December 20, 2019.
2. Stocks of the Company remaining in trust
The stocks of the Company remaining in trust are recorded as treasury stock under Net Assets with the book values in the trust(not including expenses attributable thereto). The book value of said treasury stocks was 750 million yen for 189,700 shares as ofthe end of this current 2nd quarter consolidated accounting period.

– 24 –

(Notes to quarterly consolidated balance sheets)* Breakdown of inventories is as follows:
Previous consolidated fiscal year
(September 30, 2019)

Current 2nd quarter consolidated
accounting period(March 31, 2020)

Merchandise and finished goods
Work in progress

308 million yen
634 million yen

323 million yen
293 million yen

Raw materials and stored items

147 million yen

145 million yen(Notes to quarterly consolidated statements of income)* Major items included in selling, general and administrative expenses are as follows.
Previous 2nd quarter consolidated
Current 2nd quarter consolidated
cumulative period
cumulative period(Started October 1, 2018;(Started October 1, 2019;
ended March 31, 2019)
ended March 31, 2020)
Salaries

5,591

million yen

5,754

million yen

Provision for bonuses
Retirement benefit expenses

2,338
352

million yen
million yen

2,563
541

million yen
million yen

Provisions for stocks payment
Depreciation

527
343

million yen
million yen

27
315

million yen
million yen

1,116
－

million yen
million yen

1,131
0

million yen
million yen

Rent expenses
Research and development expenses(Notes to the quarterly consolidated statements of cash flows)* The relationship between the quarterly ending balance of cash and cash equivalents and account items stated in the quarterly
consolidated balance sheets is as stated below.
Previous 2nd quarter consolidated
cumulative period(Started October 1, 2018;
ended March 31, 2019)

Current 2nd quarter consolidated
cumulative period(Started October 1, 2019;
ended March 31, 2020)

Cash and deposits

21,864 million yen

24,489 million yen

Time deposits with deposit period
greater than three months(3,000 million yen)

(3,200 million yen)

Cash and cash equivalents

18,864 million yen

21,289 million yen– 25 –

(Notes to shareholders’ equity, etc.)
I. Previous 2nd quarter consolidated cumulative period (Started October 1, 2018; ended March 31, 2019)(1) Dividend payments
Resolution

Class of shares

Total amount ofcash dividends(millions of yen)

Dividend pershare (yen)December 21, 2018
Ordinary General
Meeting of
Shareholders

Common stock

1,450

55

Record date

Effective date

Source ofdividends

September 30, 2018

December 25, 2018

Retainedearnings(2) Of the dividends with record dates during the current 2nd quarter consolidated cumulative period, those with effective dates forthe dividends after the end of the current 2nd quarter consolidated accounting period
Resolution

Class of shares

Total amount ofcash dividends(millions of yen)

Dividend pershare (yen)May 8, 2019
Meeting of theBoard of Directors

Common stock

1,453

55

Record date

Effective date

Source ofdividends

March 31, 2019

June 10, 2019

Retainedearnings(Note) The total amount of cash dividends determined by resolution of the Board of Directors on May 8, 2019 includes a cash dividendof 10 million yen to the stocks of the Company owned by the BIP Trust.
II. Current 2nd quarter consolidated cumulative period (Started October 1, 2019; ended March 31, 2020)(1) Dividend payments
Resolution

Class of shares

Total amount ofcash dividends(millions of yen)

December 20, 2019
Ordinary General
Meeting of
Shareholders

Common stock

1,456

Dividend
per share(yen)
55

Record date

Effective date

Source ofdividends

September 30, 2019

December 23, 2019

Retainedearnings(Note) The total amount of cash dividends determined by resolution of the Ordinary General Meeting of Shareholders on December
20, 2019 includes a cash dividend of 10 million yen to the stocks of the Company owned by the BIP Trust.
(2) Of the dividends with record dates during the current 2nd quarter consolidated cumulative period, those with effective dates forthe dividends after the end of the current 2nd quarter consolidated accounting period
Resolution

Class of shares

Total amount ofcash dividends(millions of yen)

May 1, 2020
Meeting of theBoard of Directors

Common stock

1,455

Dividend
per share(yen)
55

Record date

Effective date

Source ofdividends

March 31, 2020

June 15, 2020

Retainedearnings(Note) The total amount of cash dividends determined by resolution of the Board of Directors on May 1, 2020 includes a cash dividendof 10 million yen to the stocks of the Company owned by the BIP Trust.

– 26 –

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

Previous 2nd quarter consolidated cumulative period (Started October 1, 2018; ended March 31, 2019)
Information on net sales and profit or loss for each reportable segment(Unit: millions of yen)Amounts inquarterly
Adjustments consolidated(Note 1)statements
of income(Note 2)

Reportable segment

Accounting
Firm BD

Local
Governments
BD

Printing BD

Total

22,107

7,948

1,880

31,936－

31,936

2

0

804

807

(807)

－

Total

22,109

7,948

2,685

32,743(807)

31,936

Segment profit

4,519

119

34

4,673

4

4,678

Net sales(1) Sales to outside customers(2) Inter-segment sales ortransfers(Notes) 1. Adjustments of segment profit of 4 million yen include amounts for elimination of inter-segment transactions andadjustment of inventory assets.
2. Segment profit is adjusted with the operating profit presented in the quarterly consolidated statements of income.
II. Current 2nd quarter consolidated cumulative period (Started October 1, 2019; ended March 31, 2020)
Information on net sales and profit or loss for each reportable segment(Unit: millions of yen)Amounts inquarterly
Adjustments consolidated(Note 1)statements
of income(Note 2)

Reportable segment

Accounting
Firm BD

Local
Governments
BD

Printing BD

Total

23,510

9,830

1,796

35,137－35,137

6

0

891

897

(897)

－

Total

23,516

9,830

2,688

36,034(897)

35,137

Segment profit (loss)

5,364

1,653

(17)

6,999

(8)

6,991

Net sales(1) Sales to outside customers(2) Inter-segment sales ortransfers(Notes) 1. Adjustments of segment profit (loss) of 8 million yen include amounts for elimination of inter-segment transactions
and adjustment of inventory assets.
2. Segment profit (loss) is adjusted with the operating profit presented in the quarterly consolidated statements of income.

– 27 –

(Earnings per share information)
The amount of quarterly net income per share and the basis for the calculation thereof as well as the amount of quarterly diluted
net income per share and the basis for the calculation thereof are as follows:
Previous 2nd quarter consolidated
Current 2nd quarter consolidated
cumulative period
cumulative period(Started October 1, 2018;(Started October 1, 2019;
ended March 31, 2019)
ended March 31, 2020)(1) Quarterly net income per share

131.45 yen

179.32 yen(Basis for calculation)
Quarterly net income attributable to owners ofparent(millions of yen)Amount not attributable to common shareholders(millions of yen)
Quarterly net income from common stocks
attributable to owners of parent (millions of yen)
Average number of common stocks outstanding(hundreds of shares)(2) Quarterly diluted net income per share

3,466

4,712

－

－

3,466

4,712

263,680

262,808130.92 yen

－

－

－

1,066

－

－

－

(Basis for calculation)
Adjustments to quarterly net income attributable toowners of parent(millions of yen)
Number of common stocks increased (hundreds ofshares)Outline of the diluted shares not included in thecalculation of quarterly diluted net income per share for
not having dilutive effect, but having significant
changes since the end of the previous consolidated
fiscal year

(Notes) 1. The average number of stocks outstanding used in the calculation of earnings per share information has been determined byincluding the stocks of the Company owned by the BIP Trust (which has been established with the introduction of the BIP
Trust plan) as deductible treasury stocks.
The average number of said treasury stocks outstanding deducted for the calculation of quarterly net income per share was
190,438 shares for the current 2nd quarter consolidated cumulative period.
2. The quarterly diluted net income per share for the current 2nd quarter consolidated cumulative period is not stated as there
were no dilutive shares.
(Material subsequent events)
None to be disclosed.

2 [Other]
The resolution regarding the current interim dividends was adopted at the Board of Directors’ meeting held on May 1, 2020, statedas follows.
(a) Total amount of cash dividends to be paid as interim dividends

1,455 million yen(b) Dividend per share

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

June 15, 2020

(Note) Dividends are payable to the shareholders listed or recorded on the Register of Shareholders as of March 31, 2020.

– 28 –

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

– 29 –

Quarterly Review Report of
Independent Auditors
May 7, 2020

TKC Corporation
To: The Board of Directors
Ernst & Young ShinNihon LLC
Designated
Limited Liability
Partner
Executing Partner

CertifiedPublicAccountant

Kanji Tako

(seal)

Designated
Limited Liability
Partner
Executing Partner

CertifiedPublicAccountant

Toru Iizuka(seal)

Pursuant to the provisions of Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act of Japan, we haveconducted a quarterly review of the quarterly consolidated financial statements of the consolidated fiscal year of theCompany (started from October 1, 2019 and ending September 30, 2020) for the 2nd quarter consolidated accounting
period (from January 1, 2020 to March 31, 2020) and for the 2nd quarter consolidated cumulative period(from October 1,
2019 to March 31, 2020) stated in [Financial Information] hereunder, which consists of the quarterly consolidated balance
sheet, quarterly consolidated statements of income, quarterly consolidated statements of comprehensive income, quarterly
consolidated statements of cash flows, and notes.
Management's Responsibility for the Quarterly Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the quarterly consolidated financial statements inaccordance with accounting principles of quarterly consolidated financial statements generally accepted in Japan.
Responsibilities include those for designing and operating an internal control system as the management deems necessary
in order to prepare and properly present the quarterly consolidated financial statements that are free from material
misstatement due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an independent conclusion regarding the quarterly consolidated financial statements basedon our quarterly review. We conducted our quarterly review in accordance with quarterly review standards generally
accepted in Japan.
A quarterly review consists principally of making inquiries, performing analytical procedures and other quarterly review
procedures of the management and persons responsible for financial and accounting matters. The quarterly review
procedure is a limited procedure compared to the audit procedure of annual financial statements performed in accordancewith auditing standards generally accepted in Japan.
We believe that we have obtained evidences to support the basis for our conclusion.
Auditor's Conclusion
Based on our quarterly review, nothing has come to our attention that causes us to believe that the quarterly consolidated
financial statements referred to above does not properly represent, in all material respects, the financial conditions of TKC
Corporation and its consolidated subsidiaries as of March 31, 2020 and their operating results and cash flows for the 2nd
quarter consolidated cumulative period ending on the same date in accordance with accounting principles of quarterly
consolidated financial statements generally accepted in Japan.
Interest
Our firm and the executing partners have no interest in the Company for which disclosure is required under the provisionsof the Certified Public Accountants Act of Japan.
End of document(Notes) 1. The above is a digitized version of the original copy of the quarterly review report, the original of which is stored by TKC
Corporation (the Company filing this quarterly report).
2. XBRL data is not included in the scope of this quarterly review.
– 30 –

[Front Cover][Document filed]

Confirmation letter[Applicable law]

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

Director of Kanto Local Finance Bureau[Date filed]

May 7, 2020

[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]

Hitoshi Iwata, Representative Director, Vice President and Executive Officer[Address of head office]1758 Tsurutamachi, Utsunomiya-shi, Tochigi[Place available for public inspection]

TKC Corporation, Tokyo Head Office(2-1 Ageba-cho, Shinjuku-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1 Nihonbashikabutocho, Chuo-ku, Tokyo)– 31 –

1 [Matters Related to Adequacy of Statements Contained in the Quarterly Report]
Masanori Iizuka, Representative Director, President and Executive Officer of the Company and Hitoshi Iwata, Chief
Financial Officer of the Company hereby confirm that the statements contained in the quarterly report of the Company
for the 2nd quarter of the 54th term (started January 1, 2020; ended March 31, 2020) are adequate under the Financial
Instruments and Exchange Act of Japan.

2 [Special Notes]
None to be disclosed.

– 32 –