Annual Securities Report(Report based on Article 24, Paragraph 1 of the
Financial Instruments and Exchange Act of Japan)
Fiscal year
Started October 1, 2021
(56th Term)
Ended September 30, 2022

TKC Corporation
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] ............................................................................................................................................................. 10
4 [Information on Affiliates] ........................................................................................................................................................... 13
5 [Employees].................................................................................................................................................................................. 14
Part 2 [Business Overview] ................................................................................................................................................................. 15
1 [Management Policy, Business Environment and Challenges Faced by the Company] ............................................................... 15
2 [Risk Factors] ............................................................................................................................................................................... 20
3 [Management Analysis of Consolidated Financial Conditions, Operating Results, and Cash Flows] .......................................... 22
4 [Material Agreements, etc.] .......................................................................................................................................................... 33
5 [Research and Development Activities] ....................................................................................................................................... 33
Part 3 [Property, Plant and Equipment] ............................................................................................................................................... 34
1 [Summary of Capital Investments] ............................................................................................................................................... 34
2 [Major Property, Plant and Equipment] ........................................................................................................................................ 34
3 [Plans for Capital Investments, Disposals of Property, Plant and Equipment] ............................................................................. 36
Part 4 [Information on the Company].................................................................................................................................................. 37
1 [Information on the Company’s Stock] ........................................................................................................................................ 37(1) [Total Number of Shares, etc.] ............................................................................................................................................... 37(2) [Share Subscription Rights, etc.] ............................................................................................................................................ 37(3) [Exercise of Bonds with Share Subscription Rights Containing a Clause for Exercise Price Adjustment, etc.] .................... 37(4) [Changes in Total Number of Issued Shares, Capital Stock, etc.] .......................................................................................... 37(5) [Shareholders Composition] .................................................................................................................................................. 38(6) [Major Shareholders] ............................................................................................................................................................. 38(7) [Status of Voting Rights] ....................................................................................................................................................... 39(8) [Information on Employee Stock Ownership Plan] ............................................................................................................... 40
2 [Acquisition, etc. of Treasury Stocks] .......................................................................................................................................... 42
3 [Dividend Policy] ......................................................................................................................................................................... 43
4 [Corporate Governance] ............................................................................................................................................................... 44(1) [Overview of Corporate Governance] .................................................................................................................................... 44(2) [Officers]................................................................................................................................................................................ 57(3) [Audits] .................................................................................................................................................................................. 63(4) [Officers’ Compensation, etc.] ............................................................................................................................................... 67(5) [Status of Shareholdings] ....................................................................................................................................................... 70
Part 5 [Financial Information] ............................................................................................................................................................. 73
1. [Consolidated Financial Statements] ........................................................................................................................................... 74(1) [Consolidated Financial Statements]...................................................................................................................................... 74(2) [Other] ................................................................................................................................................................................. 114
2 [Non-Consolidated Financial Statements, etc.]........................................................................................................................... 115(1) [Non-Consolidated Financial Statements]............................................................................................................................ 115(2) [Major Assets and Liabilities] .............................................................................................................................................. 128(3) [Other] ................................................................................................................................................................................. 128
Part 6 [Stock-related Administration of the Company] ..................................................................................................................... 129
Part 7 [Reference Information on the Company] ............................................................................................................................... 130
1 [Information on the Parent Company] ........................................................................................................................................ 130
2 [Other Reference Information] ................................................................................................................................................... 130
Section 2 [Information on Guarantors, etc. of the Company] ................................................................................................................ 131[Audit Report] [Confirmation Letter] [Internal Control Report]- 2 -[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 19, 2022

[Fiscal year]

56th term (from October 1, 2021 to September 30, 2022)[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 Ageba-cho, 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 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](1) Consolidated Financial Data, etc.
Fiscal year

52nd Term

Year end

53rd Term

54th Term

55th Term

56th Term

September 2018 September 2019 September 2020 September 2021 September 2022

Net sales(million yen)

61,621

66,12067,814

66,221

67,838

Ordinary income(million yen)

8,961

9,669

11,685

12,673

13,677(million yen)

6,158

6,721

7,821

8,686

9,317

Comprehensive income(million yen)

6,517

4,082

7,501

9,839

8,902

Net assets(million yen)

72,55073,121

77,07583,41687,325

Total assets(million yen)

90,202

96,98997,671

103,406

109,225

Net assets per share(yen)

1,343.16

1,362.39

1,466.56

1,582.45

1,665.68

Net income per share(yen)

116.73127.76148.81164.93177.62

Diluted net income per share(yen)

116.20127.50－－－Equity ratio

(%)

78.6

73.8

78.9

80.7

80.0

Return on equity (ROE)

(%)

8.9

9.4

10.5

10.8

10.9

Price earnings ratio (PER)(times)

20.4

18.3

22.9

21.3

19.3

Cash flows from operating
activities(million yen)

8,810

10,55010,56910,55013,050(million yen)

(4,013)411(10,124)(7,201)(4,342)(million yen)

(2,567)(3,792)(3,786)(3,691)(5,214)

Cash and cash equivalents at
end of year

(million yen)

19,26826,81023,46923,126

26,620No. of employees(No. of people)

2,625

2,701

2,770

2,851

2,880

Net income attributable toowners of parent

Cash flows from investing
activities
Cash flows from financing
activities(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 52nd 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

52nd Term

Year end

53rd Term

54th Term

55th Term

56th Term

September 2018 September 2019 September 2020 September 2021 September 2022

Net sales(million yen)

56,76960,897

63,07061,637

63,570Ordinary income(million yen)

8,577

8,972

11,107

12,064

13,290Net income(million yen)

5,959

6,262

7,472

8,293

9,076

Capital stock(million yen)

5,700

5,700

5,700

5,700

5,700

Total number of shares issued(hundred shares)

267,310

267,310

267,310534,620534,620

Net assets(million yen)

68,86370,622

74,71480,491

83,993

Total assets(million yen)

82,737

88,192

89,767

95,264

100,776(yen)

1,300.74

1,343.47

1,421.63

1,526.97

1,602.11

105.00110.00120.00104.5078.00(50.00)(55.00)(55.00)(65.00)(36.00)Net assets per share
Dividend per share(Of the above, interim dividends(yen)

per share)
Net income per share(yen)

112.96119.04142.18157.46173.04

Diluted net income per share(yen)

112.45118.79－－－Equity ratio

(%)

82.9

80.1

83.2

84.5

83.3

Return on equity (ROE)

(%)

8.9

9.0

10.3

10.7

11.0

Price earnings ratio (PER)(times)

21.0

19.7

23.9

22.3

19.8

Dividend payout ratio

(%)

46.48

46.20

42.20

45.70

45.10

(No. of people)

2,225

2,288

2,312

2,398

2,408

Total shareholder return

(%)

140.9

141.9

207.1

217.7

217.2

(Benchmark index: TOPIX total
return index)(%)(110.8)(99.3)(104.2)(132.9)(123.4)

Stock price—high

(yen)

4,875

5,030

7,270

3,910
(7,840)3,645

Stock price—low

(yen)

3,305

3,350

3,820

No. of employees

3,175(6,190)2,911(Notes) 1. Dividends per share include special dividends of 7 yen for the 55th Term and 6 yen for the 56th 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
dividend of 39.50 yen per share after said stock split. If the stock split were taken into consideration, the interim dividendof 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
income per share, and diluted net income per share have been calculated assuming that the stock split was conducted at
the beginning of the 52nd 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.

- 5 -6. The highest and lowest stock prices are based on the market prices on the First Section of the Tokyo Stock Exchange. The
highest and lowest stock prices after April 4, 2022 are based on the market prices on the Prime Market of the Tokyo Stock
Exchange.
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 parenthesis show the highest andlowest stock prices before the stock split.

- 6 -2 [History]
Date

Company History

October 1966

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.
Established Kabushiki Kaisha Tochigi-ken Keisan Center.

August 1971
September 1972

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

November 1973

Established TKC Kyushu Keisan Center Co., Ltd. (a subsidiary, changed name to TKC Kyushu Youhin

and absorbed into the Company in January 2000]
Center Co., Ltd. in July 1987, and to TKC Kyushu Supply Center Co., Ltd. in December 1993). [Merged
and absorbed into the Company in January 2000]
August 1975

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

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
in May 2011]

April 1985

Opened TKC Okinawa Information Service Center and deployed information service centers nationwide.

August 1985

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.

- 7 -

Date

Company History

March 1990

Integrated the information processing service divisions of TKC Tokyo Second Information Center, TKC
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.

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

April 2004
June 2005
December 2008

connection qualification test.
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”).

- 8 -

Date

Company History

September 2010

Opened Innovation & Technology Center (I&TC).

September 2015
October 2015

Acquired 100% ownership of SKYCOM Corporation as wholly-owned subsidiary.
Became the first company in Japan to obtain third party accreditation for ISO/IEC 27018:2014, “Code ofApril 2016

practice for protection of personally identifiable information (PII) in public cloud acting as PII processors”(October 12).

October 2017
March 2018

Opened System Engineering Center (SEC).
Established TKC Customer Support Service Co., Ltd. (currently a consolidated subsidiary).

October 2018
March 2019

Completed the construction of TKC Customer Support Service building.
Tokyo Line Printer Company changed the company name to TLP Corporation.

September 2019

Became the first company to acquire certification under the Electronic Books Software Legal Compliance
Certification System by Japan Image and Information Management Association (JIIMA) for its financial

September 2019
March 2020accounting systems that are offered to the clients of accounting firms.
Acquired 100% ownership of TKC Shuppan Corporation as wholly-owned subsidiary.

April 2022

Established a voluntary Nomination and Compensation Advisory Committee.
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.

- 9 -3 [Description of Business]
The TKC Group (TKC Corporation and affiliated companies) consists of the Company, six 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 provisionofsoftware 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
specialized staff

servicesby(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- 10 -

(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

Consolidated Information Center(ii) Computer services by the TKC

services, and sales of office equipment to local governments (local municipalities,etc.).

Internet Service Center (TISC)

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 provisionofsoftware to be installed on system
devices for information service
applications(ii) Systems consulting

servicesbyspecialized 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

brochures, etc.

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

- 11 -

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

Law schools, etc.

Medium- &large-sized companies

Clients

Clients ofaccounting firms

Accounting firms

Local governments(municipalities, etc.)

General companies

Non-consolidated
subsidiary
TKC Financial
Guarantee Co., Ltd.

Sales ofofficesupplies
for TKC
computerbased
accounting
systems

Sales ofmonthlymagazines

Software andconsulting
services, etc.

Help desk
services

Information
processing services

TKC

Accounting Firm Business Division

Purchasing of
supplies for TKC
computer-based
accounting
systems

Purchasing ofmonthlymagazines, etc.

Outsourcing ofdevelopment &maintenance ofwebsiteservices

Consolidated
subsidiary:

Equity method
affiliated company:

TKC Shuppan
Corporation

iMobile Inc.

Outsourcing ofhelp desk
services

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

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

- 12 -

Sales of officeequipment

Data printing
services

Local
Governments
Business Division

Printing Business
Division

Outsourcing ofsystems
development &maintenanceConsolidated
subsidiary:
SKYCOM
Corporation

Purchasing ofprintedcontinuous
business forms
for TKC PC
systems

Consolidated
subsidiary:
TLP Corporation

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

Address

Capital stock(million yen)

Principal line ofbusiness

Percentage of voting
rights held(%)

Relationship
Purchasing of printed

TLP Corporation

Itabashi-ku,
TokyoPrinting business,
manufacture and100

sales of continuous
business forms forcontinuous business
forms for PCs;
100.0

PCs

held concurrently: yes
Funding: no
Security, maintenance& repairs, packaging

Security,
TKC Security Services
Co., Ltd.

Utsunomiya-shi,
Tochigi

10

maintenance &repairs, and cleaninglease of office spaces.
Executive positions

100.0

servicesand shipping services.
Executive positions
held concurrently: yes
Funding: no
Outsourcing of

SKYCOM
Corporation

TKC Customer
Support Service Co.,Ltd.

Chiyoda-ku,
Tokyo

Kanuma-shi,
Tochigi

100

Development andsales of systems

100.0

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

25

Help desk services

100.0

Executive positions
held concurrently: yes
Funding: no

TKC Shuppan

Shinjuku-ku,

Corporation

Tokyo

Purchasing of monthly
magazines, etc.

Production of83

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
Percentage of voting
Capital stock
Principal line ofName
Addressrights held
Relationship(million yen)business(%)
Outsourcing ofiMobile Inc.

Shibuya-ku,
Tokyodevelopment andmaintenance ofDevelopment and100

maintenance ofwebsite services

30.0

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

- 13 -

5 [Employees](1) Consolidated Basis
As of September 30, 2022
Name of segment

Number of employees

Accounting Firm business

1,632

Local Governments business

625

Printing business

205

Corporate (shared)

418
Total

2,880

(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, 2022
Number of employees

Average age (years)

Average years of service (years)

Average annual salary (yen)

40.0

16.8

7,691,749

2,408

Name of segment

Number of employees

Accounting Firm business

1,531

Local Governments business

625

Corporate (shared)

252
Total

2,408

(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.

- 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
1. Management policy, management strategy
The Company is 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
These business objectives have 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.
2. Business environment
The Japanese economy has been seeing various challenges such as fragmented supply chain, dramatic falling of the yen, andsoaring prices of resources due to Russia’s aggression against Ukraine, while impacts of the novel coronavirus disease (COVID19) pandemic were more moderate. Despite signs of recovery in the current economic environment, the future outlook remains
unclear due to these impacts.
In such situations, the Japanese government has been continuing to offer booster vaccinations and taking various measures tosupport the people and SMEs towards resuming the socio-economic activities. The Group carried out its business in an aim tocontribute to our clients as well as to the local communities and society by quickly complying with such social environment andgovernmental initiatives through the development of compatible systems and provision of services.
Revisions to the laws and advancements in ICT have significant impacts on the products and services that the Group offers. Legalrevisions include the Revised Electronic Books Maintenance Act enforced on January 2022, the Group Tax Sharing System whichbecame applicable starting April 2022, and the new consumption tax invoicing system to be implemented in October 2023. In
addition, the national and local governments are promoting digital transformation, standardization and common use of the local
governments’ information systems, and implementation of Gov-Cloud, all of which need to be addressed.
Advancements in ICT include evolutions in cloud computing technologies, FinTech, and 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 andservices offered by the Group.
3. Priority business and financial issues
1) Providing systems in complete compliance with laws and regulations
The Group provides support for the operation of accounting firms and local governments by achieving complete compliancewith relevant laws and regulations and offering systems developed based upon the latest ICT. As such, the Group will continue
to enhance system developments that will enable us to promptly respond to revisions to such laws and regulations.
2) Establishing the Group governance system
The Company will establish an internal controls system in compliance with the requirements of the Companies Act as well as
the Financial Instruments and Exchange Act of Japan, and compile the Company’s management philosophy, various board
structures and corporate rules and regulations in a systematic manner to improve the Group governance system.
In particular, the Group established and operates a Group governance system in response to the Practical Guidelines for Group
Governance System formulated by the Ministry of Economy, Trade and Industry (METI) in June 2019.
3) Fostering an organizational culture that bolsters job satisfaction
The Group will work to develop a workplace that respects individuals and team work, support efforts to develop the capabilities
of employees necessary to deliver value to our customers in accordance with the Company’s Management Principles, andfoster an organizational culture that bolsters job satisfaction.
4) Ensuring business continuity
The Group will strengthen and expand existing services to ensure the continuity or early recovery of the business operationsof all of our customers in the event of large-scale natural disaster, pandemics, and other unforeseen circumstances.
5) Rapid response to system failure
In the rare event that the Company’s system fails, the Group will identify the users impacted by system failure to notify themof the nature of the failure and countermeasures, and strive to establish a system to provide rapid support for recovery under
the policy of “100% customer relief.”
6) Efforts toward information security- 15 -

The Group always provides various information services for accounting firms and their clients and local governments throughthe use of latest ICT. Ensuring information security is our highest priority and also a social responsibility in conducting ourbusiness activities.
It is with this awareness that the Company acquired third party accreditations including the ISO/IEC 27001 Information
Security Management Systems certification and the JIS Q 15001 Personal Information Protection Management Systems(PrivacyMark) in order to develop a technical environment that enables our customers to use our cloud services with a peaceof mind.
In addition, the TKC Internet Service Center (TISC) acquired the following certifications: ISO/IEC 27018, code of practicefor protection of personally identifiable data in the public cloud on October 12, 2015; ISO/IEC27017, code of practice for
information security controls for cloud services on June 19, 2017; and ISO/IEC20000, the international standard for IT service
management system on June 7, 2021. The Company will continue to strive to develop environments where customers can use
cloud services safely, securely and conveniently.
(2) Management Policy, Business Environment and Challenges Faced by the Accounting Firm Business Division
1. 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 the fateof 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 (11,500 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 and managerial
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.
2. Business environment
According to the Outline of Filing of Corporate Income Tax Returns (Taxation) published in October 2022 by the National Tax
Agency, the percentage of companies recording profit in FY2021 was 35.7%. Although this was an increase of 0.7 percent points
over the previous fiscal year, it shows that approximately 65% are still recording losses.
Moreover, due to the sharp fall in yen, rise in raw material prices, 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 56% 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
will be enforced on October 1, 2023. In response, all business operators will be required to take actions for the preservation ofdata 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.
3. 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 other companies
by appealing the advantages of our systems.

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a. The strengths of the Company’s systems lie in the one-stop, full line of tax affairs and accounting. We have the capability tomaintain complete compliance with laws, regulations and accounting standards in our financial accounting systems and toprovide 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 are not mere offering systems and services. Our systems
come with the meticulous support, from implementation to operation, by TKC Members that have extensive experience intax- and accounting-related practices, to enable clients to perform legitimate and appropriate tax 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, and carry out self-accounting promotion activities, taking advantage of thestrengths of systems that prevent any retroactive insertions, deletions and corrections which may lead to falsification of
accounting data.
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 in cooperation
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 and streamlining
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 to further increase the convenience of users.
Through such efforts, we aim to differentiate the TKC Law Library from the services offered by competitors in order to further
increase the use by law firms.
(3) Management Policy, Business Environment and Challenges Faced by the Local Governments Business Division
1. 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.
2. 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,- 17 -

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 otherindustries 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.
3. Priority business and financial issues
As corporate effort to achieve digital transformation of local governments and to support sustainable reform of administrative andfinancial services, the Local Governments BD considers it a vital business challenge to provide support for the enhancement ofservices for residents and reduction of costs through improving the administrative efficiency of local governments, which are to beachieved 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) Enhancement of customer support around the TASK Cloud Service and standardization of mission-critical systems
a. We will enhance and expand our mission-critical operation systems to deliver the most suitable work process for municipalities,
and further improve our support for existing customers and defend the market.
b. To respond to the standardization & common use of local government information systems to be implemented by end of March
2026, we began to develop systems that are fully compliant with the standard specifications designed by the national
government, and to prepare for migrating to Gov-Cloud.
c. Two of the clients of the Company (Misato Town and Kawajima Town, Saitama Pref.) were selected for the Government Cloud
Predecessor Project procured by the national government (Digital Agency). The Company is engaged in this Project asapplication vendors for both towns. In this Project, we will mainly conduct verifications on the system migration to GovCloud, functions and behavior of the systems after migrating, information securities, usage costs, etc.
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, wewill collaborate with leading partners to further enhance and expand the system functionalities to achieve digitalization of theadministrative counter services which combine the TASK Cloud Smart Application System and the TASK Cloud Easy Counter
Service System.
3) Support for digitalization of local tax administrations
a. As an authorized contractor of the Local Tax Agency, and a provider of tax information systems, the Company will further
expand related service offerings and enhance the functionalities to help streamline and promote tax administrations.
b. We will begin supporting the implementation of additional tax items for the local tax common tax payment system which will
begin in April 2023.
4) Dissemination and promotion of TASK Cloud Public Accounting Systema. We will disseminate and promote the next-generation version of the TASK Cloud Public Accounting System which we beganoffering in October 2021.
b. We will help the municipalities achieve sustainable financial management through accurate visualization of financial status,and support digital transformation of internal administrative tasks through electronic payments and linking to electronic
invoicing.
5) Research and development of next-generation productsa. We will engage in the R&D of system compatibility and original high value-added services and functions to be incorporated
as standard specifications in 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 thedigitalization 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)
1. 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 rapid flow for the government to go digital in this information-intensive society. To respondto 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. As a good partner to our clients, we will strive to further
improve corporate value through the development of a communication environment utilizing digital technologies and printed- 18 -

materials.
2. Business environment
With the expansion of the Internet environment and due to impacts of the COVID-19 pandemics, people have adjusted their lives
to new lifestyles and new work/business styles. Under the government’s digital reform initiatives, digitalization of administrative
services, regulatory reform, wide use of the My Number card, digitalization of education, and revision of the Electronic Books
Maintenance Act are in progress. The market is seeing creation of new businesses prompted by such unprecedented changes inthe environment and shifts in sense of values. As to our key products, data print services (DPS) and business process outsourcing(BPO), we strive to provide products and services that meet these changes.
While demands for business forms continue to decline over time, we will work to reduce costs and expand our shares within themarket through streamlining of production environment, elimination and consolidation of facilities, and increase in production
efficiency. In an aim to offer environment-conscious customers with environmentally friendly paper products, TLP Corporation,
the Group’s 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 forestsand other 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 demonstrate thatthey are environmentally responsible. We will utilize this certification to support our customers achieve their sustainable
development goals.
3. Priority business and financial issues
The Group’s Printing BD implements the following actions to increase sales mainly from data print services (DPS) and businessprocess outsourcing (BPO).
1) We will provide greater added-values to our products and services by combining our analog and digital printing technologies,
thereby contribute 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 these needs
and contribute to streamlining the customers’ business operations through efforts including maintaining high quality,
minimizing costs, and reducing information security risks.
4) We will improve quality and enhance quality and production capabilities by further strengthening the production environmentof the dedicated DSP plant.
5) We will strive to improve and maintain consistent quality, and enhance our quality inspections of each process for all products
to prevent quality defects.
6) We will carry out digital transformation (DX) and automation of processes throughout the Company to boost productivity andoperational quality of all business segments.
7) 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 to ensure
strict management of My Number.
8) 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.

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2 [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 are based on the Group’s decision made as of the end of the current consolidated fiscal year
(September 30, 2022).
(1) 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.
(2) Decline in Value of Fixed Assets
The Accounting Standard for the Impairment of Fixed Assets has been applicable 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.
(3) 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 provision of raw materials and to maintain optimal pricing. However, there areconcerns 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 event the
procurement of raw materials becomes extremely difficult, or when purchase prices rise significantly.
(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) 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 to maintainand continue its business operations in the event of emergencies. However, as we cannot prevent all unexpected disruptions, wetake the following measures for early detection and recovery, and to minimize the impacts to our customers’ business operations;
1. Strengthen our verification process upon providing the programs;
2. Strengthen our BCP in the event of unplanned disruptions;
3. Reduce time needed for recovery;
4. Third party assessment and verification of the effectiveness of measures.
(6) Protection of Personal Information
The Group is entrusted with a large amount of information on companies and individuals held by our customers (accounting
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 informationin relation to ISMS and public cloud services, and ISO/IEC27017 certification for information security controls for cloud services
and other third party accreditations. However, the potential for such information leaking due to unforeseen circumstances cannot
be eliminated completely, 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 and operating results of the Group.

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(7) 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.

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3 [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
1. Operating Results across the GroupThe 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 and supporting theimplementation of cloud-based accounting systems as detailed below.
The Local Governments BD quickly provided services in response to the release of the administrative circular “Printing and Mailingof Vaccination Vouchers, etc. for COVID-19 Vaccine Booster Shots (3rd Dose)” on October 20, 2021 from the Ministry of Health,Labour and Welfare, including services for the production of COVID-19 vaccination vouchers and provision of vaccination
reservation & registration systems, thereby supporting customer local municipalities in their COVID-19 vaccination projects. It
also supported local governments in achieving digital transformation of counter services by providing administrative service
digitalization support services.
As a result of these activities, during the fiscal year under review, the consolidated Group comprising of TKC Corporation and its
six consolidated subsidiaries recorded a net sales of 67,838 million yen (increased 2.4% year-on-year), operating income of 13,351
million yen (increased 8.4% year-on-year), ordinary income of 13,677 million yen (increased 7.9% year-on-year), and net income
attributable to owners of parent of 9,317 million yen (increased 7.3% year-on-year).
Net sales for the current fiscal year by business division are shown below.
2. Business activities and operating results of the Accounting Firm Business Division
1) Business activities of the Accounting Firm BD
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 (TKCNF), which consists of 11,500
certified public tax accountants and certified public accountants (as of September 30, 2022) that are customers of TKC.
[Activities to achieve “positive balance” and “proper filing”]
New activity policy of TKCNF and sales activities to achieve targets
a. New activity policy of TKCNF
TKCNF has set a new activity policy for the next three years: “TKC accountants challenging the future—push through fieldauditing and support companies in achieving positive balance and proper filing!” It also set the following three targets toachieve this policy.
i) Massively expand superior electronic books—
Promotion of self-accounting by the TKC methodsii) Become guardians of tax justice—
Promotion of Shomen-tempu (attachment of tax audit reports) by the TKC methodsiii) Support the achievement of positive balance and foster good-standing companies—
Promotion of field auditing and managerial advisory services
TKCNF has taken oath to society that it will contribute to the achievement of positive balance of companies through thepractice of field auditing and legal compliance. To support TKCNF in achieving these three targets, the Company will engage
in sales activities focusing around the promotion of self-accounting by the TKC methods.
b. Initiatives towards fostering good-standing companies
The TKC Group established the following five criteria as indicators that SMEs should aim for:- Practice of Shomen-tempu (attachment of tax audit reports)- 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 2022 TKC Management Indicators(BAST), which contains financial statements data of more than 240,0000 companies. By supporting to increase the number ofcompanies that implement compliance and work towards high value-added management, under the guidance of TKC
Members, we will make appeal to society that “TKC Members are escort runners working to foster good-standing companies
in the community.”c. Promotion of use of the 365 Days Floating Income Statement
TKC’s self-accounting system (FX series) includes the 365 Days Floating Income Statement to support the decision-making- 22 -

of management. Unlike ordinary income statements, the 365 Days Floating Income Statement allows users to check theirvariable costs and fixed costs separately. Corporate managers using the FX series can keep track of the marginal profit (grossrevenue) in managing their business. The Company engages in activities to make management aware that the 365 Days
Floating Income Statement is an indispensable tool.
In September 2022, a story of a corporate manager who used the 365 Days Floating Income Statement and improved
performance was covered in a TV program (A Document—Strategic Manager, BS11). This documentary program is madeavailable to the public from our website. Going forward, we will continue to carry out similar PR activities.
d. Promotion of self-accounting by the TKC methods (promotion of FX series)
Many SMEs must plan for repaying the virtually interest-free, collateral-free loans (zero-zero loans) implemented during the
COVID-19 pandemic. 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, and annual forecast management) . In order for management to utilize these functions effectively, they need toenter the accounting transaction data in a timely and accurate manner, so the Company also provided support on functions fordaily task level, including support for the bank credit data receiving function to receive bank deposit transaction data throughonline banking and generate journal entries automatically, and the linking of salary journal with the strategic salary information
system (PX2).
We also found that the management of companies using our cloud-based financial accounting system FX Cloud series tends
to access the system quite frequently by themselves to check their company’s performance. That is the advantage of cloud,allowing users to check the business results any time and any place. By offering assistance to implement the FX Cloud series,
the Company will work to support SMEs in achieving “positive balance and proper filing.” As a result of these activities, theFX series has been implemented by approximately 299,000 companies as of September 30, 2022.
e. Supporting complete compliance with the Electronic Books Maintenance Act of JapanThe requirements for the retention of electronic books have been eased in the Revised Electronic Books Maintenance Act
enacted as of January 1, 2022. With this, there will be a distinction among electronic books (which are electromagnetic records
of national tax-related books): (a) “superior electronic books” that contain the history of additions, deletions and revisions to
the accounting data (traceable) (electronic books that satisfy the requirements of Article 2 and Article 5 of the Ordinance for
Enforcement of the revised Act); and (b) “other electronic books” that are prepared using accounting software that do not keep
record of such additions/deletions/revisions (electronic books that satisfy only the requirements of Article 2 of the Ordinancefor Enforcement of the revised Act). This legal reform negates “the power of evidence” of the books, and the acceptance ofsuch “other electronic books” implies that the government has approved the use of accounting software that might enablefalsification of books. To address this issue, the Company promotes the use of the FX series for the preparation of “superior
electronic books” on a national level. In addition, electronic retention of electromagnetic transaction data will be mandated
under the Revised Electronic Books Maintenance Act. While recording in paper form will be accepted up to December 2023,
all business operators must comply with the obligation by then. We are providing support for the use of the FX series, whichis equipped with a standard function to enable electronic storage of transaction data in electromagnetic form.
f. Supporting complete compliance with the new consumption tax invoicing system
A new consumption tax invoicing system will be implemented on October 1, 2023. Business entities subject to consumption
tax must prepare for the new invoicing system by the time the system comes into effect, including application for registration
as qualified invoice issuer, preparation for issuing qualified invoices, and gaining knowledge on bookkeeping from qualified
invoices.
To enable accounting firms to provide smooth support to their clients, the Company is developing on-demand seminars,
offering briefing materials, and planning other supports. In addition, we began offering a new function to enable clients tosearch their Business Operator Registration Number (a number that is assigned to each qualified invoice issuer once theApplication for Registration as Qualified Invoice Issuer has been submitted to the tax office and accepted) from the National
Tax Agency’s qualified invoice issuer disclosure website, and register all relevant information in the OMS Cloud’s Client
Basic Information Database (CDB) at once. It also includes a function to cross-check the names of the business contacts in
the Business Contact Master registered in the FX series against the names in NTA’s qualified invoice issuer disclosure website,
and to register and update their Business Operator Registration Numbers. This will enable FX series user companies todetermine whether the counterpart of each certain business transaction is a qualified invoice issuer, thereby ensuring accurate
calculation of consumption taxes. We have also completed designing new journal entry screens and new taxation categories
that are in compliance with the consumption tax invoicing system, and are informing TKC members of these updates todevelop a sense of security and reliability.
Of note, the Company was certified as the first Peppol (Pan European Public Procurement Online) service provider in Japanon August 19, 2022 by the Japan Peppol Authority (Digital Agency) and OpenPeppol (association in Belgium responsible for- 23 -

the development and management of Peppol specifications). TKC’s self-accounting system will utilize this framework, andwill be enhanced to enable the issuance and receipt of Peppol-compliant e-Invoices as a standard feature.
g. Promotion of TKC Monitoring Information Service
TKC Monitoring Information Service is a free cloud-based service in which the TKC Members, upon request by the
management of their clients, provide to financial institutions such information as monthly trial balance sheets, financial
statements and tax returns prepared by TKC Member firms after monthly field audits and monthly settlements. Monthly trial
balance sheets will be made available immediately upon completion of the monthly settlement, and financial statements andtax returns are disclosed immediately after the client electronically files its financial documents to the tax authorities.
While promoting the TKC Monitoring Information Service, the Company communicated to financial institutions that thereliability of financial statements prepared by SMEs can be verified by the following three documents: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 is adopted by 478 financial institutions including all local
banks throughout Japan (64 institutions) as of September 30, 2022. In addition, 38 credit guarantee corporations, which isequivalent to 74.5% of all the credit guarantee corporations in Japan (51 organizations) use this Service. As a result, the numberof cases that used this Service exceeded 310,000 cases.
The TKC Monitoring Information Service can swiftly provide financial institutions with monthly trial balance sheets, financial
statements, and tax returns of SMEs that TKC Members have verified in terms of legality, accuracy and timeliness throughmonthly field audits. While the issue of excessive debt of SMEs is gradually surfacing amidst the pandemic, our TKC
Monitoring Information Service is gaining high acclaims from financial institutions and credit guarantee corporations that are
striving to support the businesses of SMEs. This service is expected to serve as a bridge between financial institutions and
TKC Members in their efforts to support the businesses of SMEs as escort runners.
h. Soliciting new members (promotion of joining TKCNF)
TKCNF continues to engage in a project to increase TKC membership to exceed 10,000 firms. To achieve this goal, theCompany worked closely with the New Members Service Committee and other members of TKCNF in activities such asactive hosting of webinars.
As a result of these activities, the number of TKC Member firms totaled approximately 9,900 accounting firms (11,500
accountants) as of September 30 2022. The difference in numbers of firms and accountants are because some firms havemultiple accountants who are members.
[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)
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
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 the TKCNF towards the diffusion and utilization of the Guidelines, the Company continues
to promote the development of training materials and to strengthen collaboration with other organizations supporting SMEs.
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 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 theCompany's financial accounting processing at TKC data centers, which prohibits any retroactive insertions, deletions andcorrections to past data, and TKC Corporation proves, as a third party, that TKC Members have visited clients on a monthly
basis to provide guidance on accurate bookkeeping (monthly Field Audits), and that all work processes from monthly- 24 -

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. For private businesses who will be using the TKC systems for accounting and tax return process startingin January 2022 and receive issuance of Certificate of Bookkeeping Timeliness, we have enhanced the functions to enable
them to submit their blue returns and other documents to financial institutions through the TKC Monitoring Information
Service. We will continue to support private businesses in strengthening their collaboration with financial institutions.
[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.
a. Responding to the Group Tax Sharing System
The consolidated taxation system has been reformed for the fiscal year starting after April 1, 2022, and the new group tax
sharing system is now applicable. The parent company and each subsidiary of the corporate group subject to the group tax
sharing system must file their corporate income tax returns electronically.
The Company has been providing aggressive support to large enterprises with a capital of 100 million yen or greater incomplying with the new obligation to use electronic tax filing. Also, based on the expertise accumulated to date, the Company
the developed the “Group Tax Sharing System (e-TAX Group Sharing)” which complies with the group tax sharing system,
and began offering in August. We are working closely with TKCNF’s Medium- and Large-sized Companies Support Council(1,545 members as of the end of September 2022) in providing support to ensure smooth transition of companies that choose
to apply the group tax sharing system. Through such activities, approximately 40% of the 21,000 some companies with acapital 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, 2022.

- 25 -

b. Responding to the Revised Electronic Books Maintenance Act and Consumption Tax Invoicing System
The requirements for retention of electronic books have been eased in the Revised Electronic Books Maintenance Act of Japan
enacted as of January 2022, and at the same time, electronic retention of electromagnetic transaction data has been mandated(with safe harbor rules until end of December 2023).
Moreover, as the consumption tax invoicing system will be implemented in October 2023, the formulation of standard
specifications of digital invoices and initiatives to promote the system are currently underway. To provide support forcompliance with these legal reforms, we hosted the “Seminar for Compliance with the Invoicing System for Medium- andLarge-sized Companies.” Approximately 3,600 participants signed up for the seminar.
Also, starting in January 2022, we started offering the “Invoice Manager” service in compliance with the Revised Electronic
Books Maintenance Act, which has been adopted by 350 medium- and large-sized companies as of September 30, 2022.
c. Support for managing the performance of foreign subsidiaries
Japanese companies having business overseas are seeing various challenges such as increased business fluctuation risks due
to COVID-19 travel restrictions to overseas offices, soaring prices of resources due to the crisis in Ukraine, fragmented supply
chain, etc.
More and more companies facing such hardship are implementing our OBMonitor overseas business monitoring system, as it
is a cloud service that allows companies to check the financial data of their foreign subsidiaries from their offices in Japan.
Today, OBMonitor is adopted by more than 1,200 companies and used in 38 countries around the world. We also have businessmatching agreements with financial institutions to provide support for their customers having business abroad. Our system is
proposed and adopted in order to support companies in discovering and diverting errors and frauds in the business performance
control and accounting processing. We have already entered into business matching agreements with nine financial institutions
nationwide, and plan to continue expanding our partnership with other financial institutions.
d. Expansion of shares in the large-scale enterprise market and increase of client base of TKC Members
As a result of these activities, the number of corporate groups using the TKC Consolidated Group Solution counted
approximately 5,000 corporate groups as of September 30, 2022. Also, 91% of the 100 largest Japanese listed companies bysales amounts now use our systems. With this, our market share among Japanese listed companies reached 42%.
[Expansion of markets for legal information database services]a. Increase of user base of TKC Law Library
To enhance user experience of legal research in TKC Law Library, we are working to expand the basic services of the library
containing judicial precedents, etc. and related contents from specialized law magazines, etc. We are also promoting the useof our packaging services of the law library which include contents customized for law firms and for corporate legal
departments. Due to the pandemic, working online has become a common practice today, and using these package services isnow becoming the mainstream instead of conducting legal research at data rooms or libraries. In such situation, the TKC Law
Library which offers access to laws and regulations, judicial precedents, bibliographic information references and also articles
in major specialized law magazines, any time, from any place is now earning greater reputation, and as a result, the numbersof users and contracts to access additional contents continue to grow. Also, in June 2021, the Company launched an optional
service of the TKC Law Library called the Legal Book Search which allows users to access PDF versions of books on
specialized fields including laws, accounting, tax accounting, business management, etc. This service is a fixed rate service
for attorneys and others to access the free book search functions and view (for fee) the PDF versions on their tablets and PCs.
As we continue to add more content including new books, and the number of accessible publications exceeded 990 books asof the end of September 2022.
In the current fiscal year, as a result of online promotional activities towards TKC Member firms, universities, law schools,
government offices, law firms, patent offices and corporate legal departments, the number of users exceeded 57,000 IDs andthe Library is used by over 25,000 institutions as of September 30, 2022.
b. Progress in the academic market
Due to the pandemic, many universities and law schools now conduct hybrid-style classes combining face-to-face and online
lectures. Our systems, such as the TKC Educational and Research Support System and TKC Law Library, can be accessed
online and used anytime, anywhere. They contain a huge number of diverse contents compared to those of other companies,
and include various functions such as report submission, online exercises and testing. These features are being recognizedagain as tools to support online classes and learning for faculty and students, and are helping universities in creating their
online learning environment.
Also, the online study tools (for civil service examination, practical business law examination, jurisprudence examination,etc.) offered to the faculty of law of universities have been adopted by 27 universities as of September 30, 2022. Currently,
many qualification examinations are adopting computer-based testing (CBT/IBT method). We will promote the use of ouronline testing functions and other effective online study tools to prepare for computer-based examinations among examination
bodies and applicants.

- 26 -

2) Analysis of Accounting Firm BD’s operating results
Net sales of the Accounting Firm BD were 46,465 million yen (increased 2.3% year-on-year); operating income was 11,286
million yen (increased 6.8% year-on-year). Breakdown of sales is as follows:a. Sales from computer services increased by 2.8% 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, which enables theaccounting of journal entries from sales management systems, salary calculation systems and other business systems inconnection with accounting data, as medium-size companies are rapidly working towards digital transformation (DX). In
addition, the increase in the number of accounting firms adopting 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 theiroffices also contributed to increase in sales.
b. Software sales increased by 2.9% year-on-year. This was attributable to increase in clients who began using the FX Cloud
Series for the first time to comply with the Revised Electronic Books Maintenance Act of Japan enacted as of January 1, 2022.
The FX Cloud Series meet the legal requirements of “superior electronic books” and come equipped with documented
evidence storage functions as standard feature.
c. Sales from consulting services increased 2.4% year-on-year. This was due to strong sales of the FX4 Cloud, leading to increasein orders for system launch support services.
d. Hardware sales increased by 7.9% year-on-year. This was mainly attributable to the funding that also covers the purchase of
hardware under this year’s Subsidy Program for Introducing IT to Businesses for Productivity Improvement in Services, etc.
(“Subsidies for Introduction of IT”), and increase in customers replacing their PCs with new Windows 11 models.
e. Sales from supplies increased by 1.0% year-on-year. With the progress of digitalization, demands for paper accounting supplies
and consumables have declined, but the strong sales of office equipment to support remote works and digitalization, as well
as books on electronic trading and the new invoicing system for late FY2023 contributed to the increase.
f. Improvement in operating income year-on-year was a result of increase in sales of computer services and software with higher
profit margins, while sales of office supplies with lower profit margins decreased from the previous year.
3. 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.
The Company provides TKC Government Cloud Service to municipalities. This is a cloud service that consists of the TASKCloud Service and the TASK Outsourcing Service. The TASK Cloud Service consists of: “mission-critical system-related
services” to manage the Basic Resident Registers and tax affairs information, “internal information system-related services”
including financial accounting (public accounting) and payroll calculations, and “administrative service digitalization support
services” for online application of administrative procedures. The Service has been adopted by more than 1,100 municipalities(prefectures, cities, wards, towns, villages, etc.) as of the end of September 2022.
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 shared use
by multiple institutions. Service fees are charged in the form of fixed rate subscription fee, which also include one regularupgrade per year.
The TASK Outsourcing Service is offered to client municipalities of our mission-critical system-related services and supports
massive batch output forms such as tax papers and entry tickets for elections. In the current fiscal year, we provided theseclient municipalities with aggressive support for their vaccination projects by promptly offering systems for the COVID-19
Vaccine Booster Shots (3rd Dose). Acknowledged for these benefits, our mission-critical system-related services have been
adopted by approximately 170 local municipalities as of the end of September 2022.
b. Support for digitalization and online provision of administrative services (administrative procedures)
In an aim to contribute to promoting digital transformation of local governments, the Company provides administrative service
digitalization support services which support governments to achieve “no visiting, no waiting, no writing” administrative
counter services.
In the current fiscal year, we greatly enhanced the functionalities of the TASK Cloud Smart Application System, the TASKCloud Easy Counter Service System, and the TASK Cloud My Number Card Issuance Reservation and Management System.
As a result of proposing the utilization of these services, the TASK Cloud Smart Application System has been adopted byapproximately 30 agencies including government ordinance-designated cities such as Osaka and Yokohama cities, the TASKCloud Easy Counter Service System is used by nearly 40 agencies, and the TASK Cloud My Number Card IssuanceReservation and Management System is adopted by approximately 140 agencies as of the end of the fiscal year under review.

- 27 -

c. Support for digitalization of local tax administrations
The Company is an authorized contractor of the Local Tax Agency, and provides a cloud-based service for the standard systems
such as inspection system for eLTAX (local tax portal system) offered by the Agency. We also develop and provide Data
Connection Services as our own functionality to connect the individual tax systems of each ward and municipality.
These services are proposed in collaboration with 50 partner companies with whom we have on-going alliance partner
agreements. As a result, our TASK Cloud Local Taxes Electronic Filing Support Service is currently used by approximately
790 agencies which account for more than 40% of all prefectures and local municipalities as of September 30, 2022.
In the current fiscal year, we have been working together with our partner companies to support the system implementation of
the additional tax items for the local tax common tax payment system which will begin in April 2023.
d. Development and provision of financial accounting system that is fully compliant with the legal local public accounting system
The Company provides the TASK Cloud Public Accounting System, which is compatible with the financial statements
generation functions and daily journalizing method based on a unified standards formulated by the Ministry of Internal Affairs
and Communications, and its related systems TASK Cloud Non-current Assets Control System and TASK Cloud Consolidated
Financial Statements Generation System.
In the current fiscal year, we released the next-generation version of our public accounting system with enhanced functions to
support “sustainable financial management through accurate visualization of financial status” and “digital transformation ofinternal administrative tasks by electronic payments and linking to electronic invoicing.”
As a result, the TASK Cloud Public Accounting System is adopted by approximately 300 agencies as of the end of September
2022.
e. Research and development of next-generation products
On October 7, 2022, the Basic Policy on the Standardization of Local Government Information Systems was approved by thecabinet. Local governments are required to migrate their mission-critical operation systems (20 operations) to applications(standard spec-compliant systems) that comply with the standardized criteria residing on Gov-Cloud by the end of FY2025.
To respond to changes in the environment surrounding local governments, the Company set up a new Local Government DX
Promotion Headquarters as of November 1, 2021, and is working to strengthen customer support including the collection andcommunication of the latest information on the standardization of local government information systems.
In the current fiscal year, a joint proposal of clients of the Company (Misato Town and Kawajima Town, Saitama Pref.) was
selected for the Government Cloud Predecessor Project procured by the Digital Agency of Japan. The Company worked on
the Project with both towns as application vendor. Also, to support the “digitalization of administrative services” as set out inthe Local Governments Digital Transformation (DX) Promotion Plan (Version 2) announced by the Ministry of Internal Affairs
and Communications on September 2, 2022, we continue to engage in the research, studies, and development of nextgeneration solutions through joint demonstration projects, etc. with leading partners.
2) Analysis of Local Governments BD’s operating results
Net sales of the Local Governments BD were 18,228 million yen (increased 3.0% year-on-year); operating income was 1,922
million yen (increased 12.7% year-on-year). Breakdown of sales is as follows:a. Sales from computer services increased by 8.3% 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, new contracts for printing of vouchers, etc., for
COVID-19 vaccine booster shots (3rd dose), and contracts for production of entry tickets, etc., for the election of members ofthe House of Representatives.
b. Software sales decreased by 1.8% year-on-year. This was due to decrease year-on-year in temporary sales in response to system
reforms recorded in the previous fiscal year, including sales from vaccination projects (1st and 2nd doses) and sales fromsystem revision in response to the amended Digital Administrative Procedures Act. Meanwhile, because we charge our service
fees in the form of fixed rate subscription fee depending on the scale of the municipality, the software usage fees are steadily
growing in association with the growth in number of clients.
c. Sales from consulting services decreased by 36.2% year-on-year. This is because the fees for the change-over of municipalities’intermediate servers & platforms recorded in the previous fiscal year were not generated this fiscal year.
d. Hardware sales increased by 14.3% year-on-year. This was driven by concentrated orders including implementation of
hardware devices along with the renewal of mission-critical system devices, implementation of network devices for relocation
to new municipal buildings and relocation of hardware devices.
e. Improvement in operating income year-on-year was attributable, for example, to increase in sales of computer services for theformal system launch of new clients.
4. Business activities and operating results of the Printing Business Division
1) Business activities of the Printing Business BD
The Group’s Printing BD operates with the main focus on data print services (hereinafter, “DPS”), business form printing, and- 28 -

printing of commercial-use creative materials.
In the area of DPS, net sales increased compared to the previous year thanks to orders from local municipalities for the printingof entry tickets for the elections of members of the Lower House and members of the Upper House, vaccination vouchers under
their COVID-19 vaccination projects, and notices for special cash payments for households exempted from inhabitant tax, andorders for various tax form projects. In addition, we saw recovery in demands for printing of direct mails and notices at privatecompanies, and were able to receive orders. The Printing BD also improved productivity and profit margins by promoting inhouse manufacturing of direct mails for private companies through the installation of new facilities.
In the area of business form printing, net sales decreased year-on-year as a result of declining use of business forms and slips as
more businesses are going paperless.
In the area of commercial-use creative materials (catalogs, books, etc.), net sales increased year-on-year thanks to orders for the
printing of books and other materials explaining the new system under the Revised Electronic Books Maintenance Act, measures
for the new consumption tax invoicing system, and the FY2022 tax system revisions.
In an aim to offer environment-conscious customers with environmentally friendly paper products, TLP Corporation, the Group’s
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 complying with this system,
we can display the FSC certification mark on our paper products and support our customers in their environment-friendly
initiatives.
2) Analysis of Printing Business BD’s operating results
Net sales of the Printing BD were 3,145 million yen (increased 1.3% year-on-year); operating income was 144 million yen(increased 105 million yen year-on-year). Breakdown of sales is as follows:a. Sales of data printing service-related products increased by 3.6% year-on-year. This was due to winning of contracts for the
printing of entry tickets for the elections of members of the Lower House in October 2021 and members of the Upper Housein July 2022, vouchers for COVID-19 vaccination by local municipalities, notices for special cash payments for households
exempted from inhabitant tax, and Notice on 2021 Income Tax Report postcards. In addition, we saw gradual recovery indemands for printing of direct mails and notices at private companies which had decreased due to the COVID-19 pandemic.
b. Business form-related sales decreased by 1.4% year-on-year. This is due to decline in demands for various slips and otherbusiness forms as more client companies are going paperless.
c. Sales of printing of commercial-use creative materials (catalogs, books, etc.) increased by 9.9% year-on-year. This was due towinning many new contracts for the printing of books and other materials illustrating the Revised Electronic Books
Maintenance Act, new consumption tax invoicing system, and FY2022 tax reforms.
d. The increase in operating income year-on-year was a result of increase in sales of DPS-related products with higher profit
margins, and the promotion of in-house manufacturing of direct mails for private companies through the installation of new
facilities.
5. Important matters with respect to the Company as a whole
1) Disclosure of Sustainability Policy
With our transfer to the Prime Market in response to TSE’s market restructuring, and as our action to comply with the revised
Corporate Governance Code, the Company formulated its Sustainability Policy and published its past ESG achievements in the
Company’s website (https://www.tkc.jp/sustainability/).
2) Prevention of COVID-19 infection and actions for new working styles
As the outlook for the containment of COVID-19 pandemic is still unpredictable, the Company continues to take the following
infection prevention measures and adapt to new working styles in order to continue the provision of services to its customers:a. To enable customers to continue using our cloud services, business form printing services, and help desk services, we arecontinuing to strengthen our business continuity measures (including prohibiting the entry of outside personnel at important
offices and developing the infrastructure for remote access to the data center).
b. The Company enforces teleworking and staggered working hour programs. We make positive use of the Web meeting systems
for customer support and business meetings.
3) Selected as Peppol service provider by the Digital Agency
The Company was certified as Peppol (Pan European Public Procurement Online) service provider in Japan on August 19, 2022
by the Japan Peppol Authority (Digital Agency) and OpenPeppol (association in Belgium responsible for the development andmanagement of Peppol specifications).
4) Acquisition of patents for functions to be incorporated in systems
The Company acquired the following two patents:- 29 -

a. Field auditing functions to be incorporated in FX Cloud Series. (Acquired on January 20, 2022; Patent No. 7012895)
b. Internal audit support functions for Overseas Business Monitor (OBMonitor). (Acquired on April 1, 2022; Patent No. 7052135)
5) TKC Customer Support Service Co., Ltd. (TCSS) rated “3 Star” in HDI Benchmarking
On February 16, 2022, TKC Customer Support Service Co., Ltd. (TCSS; fully owned subsidiary of the Company), which
specializes in offering call center services, became the first company in the package software industry to be awarded the highest“3 Star” rating in the “quality ranking” benchmark by HDI-Japan.
6. 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 109,225 million yen, a 5,819 million yen increase
compared to 103,406 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 40,715 million yen, a 4,607 million yen increase
from 36,107 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a 3,493 million yen increase in cash and deposits and a 962 million yen increase in accounts
receivable—trade.
b. Non-current assets
Non-current assets as of the end of the current consolidated fiscal year amounted to 68,510 million yen, a 1,211 million yen
increase compared to 67,298 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a 1,100 million yen increase in long-term deposits, 642 million yen increase in software in
progress, and 418 million yen increase in software, despite a 957 million yen decrease in investment securities.
2) Liabilities
Total liabilities as of the end of the current consolidated fiscal year amounted to 21,899 million yen, a 1,909 million yen increase
compared to 19,990 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 17,679 million yen, a 2,958 million yen
increase from 14,721 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a 956 million yen increase in income taxes payable, 880 million yen increase in provisions forbonuses, 571 million yen increase in accounts payable—trade, and 400 million yen increase in accounts payable—other.
b. Non-current liabilities
Non-current liabilities as of the end of the current consolidated fiscal year amounted to 4,219 million yen, a 1,048 million yen
decrease from 5,268 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to 747 million yen decrease in retirement benefit liabilities and 212 million yen decrease in leaseobligations.
3) Net assets
Total net assets as of the end of the current consolidated fiscal year amounted to 87,325 million yen, a 3,909 million yen increase
compared to 83,416 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to an increase of 5,331 million yen in retained earnings, despite decrease in net assets as a resultof a 1,007 million yen increase in treasury stocks.
Capital-to-asset ratio as of the end of the current consolidated fiscal year was 80.0%, a 0.7 point decrease compared to the ratioof 80.7% as of the end of the previous consolidated fiscal year.
7. 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 3,493 million yen fromthe end of the previous consolidated fiscal year amounting to 26,620 million yen. The overview of cash flows for the current 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 13,050 million yen (2,500 million yen increase in revenue year-on-year). Major
factors include the recognition of 13,650 million yen under net income before taxes and adjustments and 3,050 million yen under
depreciation, and payment of 4,063 million yen for income taxes.
2) Cash flows from investing activities
Cash flows from investing activities decreased by 4,342 million yen (2,858 million yen decrease in spending year-on-year).
Major factors include expenditure of 4,400 million yen into time deposits, revenue of 3,300 million yen from withdrawal of time
deposits, expenditure of 2,573 million yen for the acquisition of intangible fixed assets.
3) Cash flows from financing activities- 30 -Cash flows from investment activities decreased by 5,214 million yen (1,523 million yen increase in spending year-on-year).
Major factors include expenditure of 1,035 million yen for the purchase of treasury stock, and payment of 3,979 million yen for
year-end dividends as of the end of September 2021 (dividend of 39.5 yen per share) and interim dividends for the term ended
September 2022 (dividend of 36 yen per share).
Trends in cash flow indicators of the Group are as shown below:
FY ended September 2019

FY ended September 2020

FY ended September 2021

FY ended September 2022

Equity ratio (%)

73.8

78.9

80.7

80.0

Ratio of equity at market
value (%)

126.8

183.2

179.2

164.6

Debt redemption (years)

0.1

0.1

0.1

0.1

Interest coverage ratio (x)4,566.9

6,492.7

27,055.7

8,627.1

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
1. Production
None to be disclosed.
2. Orders received
None to be disclosed.
3. 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

46,465

102.3

Local Governments business

18,228103.0

Printing business

3,145

101.3

67,838

102.4

Total
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 touse estimates and assumptions within these accounting policies, and such estimates and assumptions are reflected in the figuresof assets and liabilities, revenue and expenses. While management conducts assessments on these estimates on an on-going 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 havematerial 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 2 [Risk Factors].
(iii) Analysis and discussions on the Group’s cash flows, capital resources and liquidity of funds- 31 -

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 cash-on-hand tomaintain 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 respondquickly to the changing market environment and achieve competitive advantage to lead our customers’ business to success.
(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 asimportant 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 the amountof sales. Marginal profit will vary depending on product mix. Total marginal profit ratio means the ratio of the amount of thismarginal 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 2.4% (an increase of 4.7
points year-on-year), and consolidated return on equity was 10.9% (an increase of 0.1 points year-on-year).
The non-consolidated equity ratio was 83.3% (a decrease of 1.2 points year-on-year), non-consolidated recurring profit margin
was 20.9% (an increase of 1.3 points year-on-year), and non-consolidated total marginal profit ratio was 78.9% (a decrease of 0.1
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.

- 32 -

4 [Material Agreements, etc.]
Not applicable.

5 [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.

- 33 -

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 4,662 million yen were made in the current consolidated
fiscal year.
(1) Accounting Firm Business
Capital investment of 2,816 million yen was made for reinforcement of the common cloud infrastructure to enhance thecloud environment for the Company’s systems, and in the development of software for sale.
(2) Local Governments Business
Capital investment of 1,504 million yen was made for the development of software to provide services over the cloudsystem.
(3) Printing Business
Capital investment of 342 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, 2022
Book values (million yen)
Name of office(Address)

Name ofsegment

Facilities

Buildings&
structures

Machinery,equipment& vehicles

Land(Area inm2)

Tools,
furniture &fixtures

Other

Total

No. ofemployees(No. ofpeople)

1,362

4,586

13,794

1,328

Accounting
Firmbusiness
Local
Governments
business

Development
facilities
Information
communication
servicefacilities
Information
processing
facilities

5,137

13

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

Accounting
Firmbusiness
Local
Governments
business

Office facilities

93

－

－

51

－

144

414

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

Accounting
Firmbusiness

Information
processing
facilities

201

－

2,224
(1,447.44)

33

－

2,459

22

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

Accounting
Firmbusiness

Information
processing
facilities

63

－

196
(3,017.47)

20

0

281

18

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

Accounting
Firmbusiness

Information
processing
facilities

443

－

286
(1,808.03)

21

0

752

40

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

Accounting
Firmbusiness

Information
processing
facilities
Office facilities

11

－

－

20

－

32

10

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

Accounting
Firmbusiness

Information
processing
facilities

142

－

203
(2,341.48)

17

0

364

11

TKC Tochigi Head Office
TKC Systems Development
Research Center
TKC Internet Service Center
TKC Tochigi Consolidated
Information Center(Utsunomiya-shi, Tochigi,etc.)*1, *2- 34 -

2,694(29,365.21)

As of September 30, 2022
Book values (million yen)
Name of office(Address)

Name ofsegment

Facilities

Accounting
Firmbusiness

No. ofemployees(No. ofpeople)Buildings&
structures

Machinery,equipment& vehicles

Land(Area inm2)

Tools,
furniture &fixtures

Other

Total

Information
processing
facilities
Office facilities

34

－

－

22

0

57

33

Accounting
Firmbusiness

Information
processing
facilities
Office facilities

4

－

－

27

0

32

20

Accounting
Firmbusiness

Information
processing
facilities
Office facilities

3

－

－

4

0

7

9

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

Accounting
Firmbusiness
Local
Governments
business

Office facilities

19

－

147
(1,120.00)

1

0

169

23

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

Accounting
Firmbusiness

Office facilities

19

－

2

0

218

7

Dormitories, company housing(Utsunomiya-shi, Tochigi)

Accounting
Firmbusiness
Local
Governments
business

Welfarefacilities

208

－

10

－

610

－

TKC Hokkaido Consolidated
Information Center
TKC Hokkaido SCG Service
Center(Chuo-ku, Sapporo-shi,
Hokkaido)
TKC Tohoku Consolidated
Information Center
TKC Tohoku SCG Service
Center(Aoba-ku, Sendai-shi, Miyagi)
TKC Okinawa Consolidated
Information Center
TKC Okinawa SCG Service
Center(Naha-shi, Okinawa)197(814.00)

391(5,326.69)(2) Domestic subsidiaries
As of September 30, 2022
Book values (million yen)Company
nameName of office(Address)

Name ofsegment

TLP
Corporation

Hanyu Plant(Hanyu-shi,
Saitama)Printing
business

TLP
Corporation

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

No. ofemployees(No. ofpeople)Buildings&
structures

Machinery,equipment& vehicles

Land(Area inm2)

Tools,
furniture &fixtures

Other

Total

Printing
facilities

53

289

145
(7,275.17)

6

22

517

77

Printing
facilities

915

140

132
(9,768.00)

33

287

1,509

59

Facilities(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 1,260 million yen for leased buildings and 40 million yen for leased tools, furniture & fixtures, which areleased to our subsidiary TKC Customer Support Service Co., Ltd.
4. Major leased facilities and equipment other than those described above are as follows.
(The Company)
Annual office rent

734 million yen- 35 -

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, 2022), except for routine updates of facilities and equipment and disposals and/or sales related thereto.

- 36 -

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]

Class

Name of stock
Number of shares issued as
exchange on which the
Number of shares issued asof the end of current fiscal
Company is listed, orof the filing date (shares)
year (shares)
name of Authorized(December 19, 2022)(September 30, 2022)
Financial Instruments
Firms Association

Common stock

53,462,066

53,462,066

Prime Market of theTokyo Stock Exchange

Total

53,462,066

53,462,066－

Description

Number of sharesconstituting a unit: 100
shares－(2) [Share Subscription Rights, etc.](i) [Stock option scheme]
Not applicable.
(ii) [Rights plan]
Not applicable.
(iii) [Other share subscription rights, etc.]
Not applicable.

(3) [Exercise of Bonds with Share Subscription Rights Containing a Clause for Exercise Price Adjustment, etc.]
Not applicable.

(4) [Changes in Total Number of Issued Shares, Capital Stock, etc.]
Increase or
Balance ofIncrease or
decrease intotal number ofdecrease inDate
total number ofissued shares
capital stock
issued shares(shares)(million yen)(shares)
April 1, 2021
26,731,033
53,462,066－(Note)(Note) As a result of a stock split (1:2).

- 37 -

Balance ofcapital stock(million yen)

Increase or
decrease incapital reserve(million yen)

Balance ofcapital reserve(million yen)

5,700

－

5,409

(5) [Shareholders Composition]
As of September 30, 2022
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

－

24

22

143

144

2

8,174

8,509

－

Number ofshares held
(share units)－

176,123

2,365

129,597

82,717

4

143,049

533,855

76,566Percentage ofshares held
(%)

－

33.0

0.4

24.3

15.5

0.0

26.8

100.0

－

Classification

Other
corporatebodiesOther
individuals

Total(Notes) 1. Of the 829,472 shares held as treasury stock, 8,294 share units are included in “Other individuals” and 72 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]
As of September 30, 2022

Names of shareholder

Address

Number of shares held
(hundred shares)

Percentage ofshares held to total
number of issued
shares (excluding
treasury stock) (%)

Iizuka Takeshi ScholarshipFoundation

1758 Tsurutamachi, Utsunomiya-shi, Tochigi

75,17014.3

Daido Life Insurance Company

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

51,3809.8

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

50,106

9.5

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

30,930

5.9

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

29,181

5.5

One Lincoln Street, Boston, MA 02111 USA(Standing proxy: The Hong Kong &(3-11-1 Nihonbashi, Chuo-ku, Tokyo)
Shanghai Banking Corporation)

25,936

4.9

Masaharu Iizuka

Utsunomiya-shi, Tochigi

14,6262.8

1-8-12 Harumi, Chuo-ku, Tokyo

13,5822.6

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

13,3282.5

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

11,966

2.3

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

11,9662.3

328,175

62.3

The Master Trust Bank of Japan,
Ltd. (Trust account)Sozeishiryokan (Institute of Tax
Research and Literature)
TKC Employee Shareholding
Association
SSBTC Client Omnibus AccountCustody Bank of Japan, Ltd. (Trustaccount)
Tokio Marine & Nichido Fire
Insurance Co., Ltd.
Aioi Nissay Dowa Insurance Co.,Ltd.
Sompo Japan Insurance Inc.
Total

－

(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.

- 38 -

(7) [Status of Voting Rights](i) [Shares issued]
As of September 30, 2022
Classification

Number of shares (shares)

Number of voting rights(units)

－

－

－

－

－

－

－

－

－

829,400－－

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

52,556,100

525,561－

Shares less than one share unit

Commonstock

76,566－－53,462,066

－

－

－

525,561－

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

Name ofshareholder

TKC Corporation

Address of shareholder
1758 Tsurutamachi,
Utsunomiya-shi,

As of September 30, 2022
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)

829,400－

829,400

1.55

829,400－

829,400

1.55

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.

- 39 -

(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 andthe remuneration for directors (excluding outside directors and expatriates), executive officers (excluding expatriates), andauditors (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 withthe decline in share price. The introduction of the Plan was approved by resolution at the 52nd Ordinary General Meetingof 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 andthe fiscal year ending September 30, 2021 (“Initial Trust Period”). Since the trust period was to expire on February 28,
2022, the Company resolved at the Board of Directors Meeting held on February 10, 2022 to extend the trust period forthree years and to 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 theperformance-linked 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 toconvert and dispose the Company’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 amount not exceeding 977 million yen in total will be included in the Initial Trust Period as the amount formeasures to be taken 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 forthree 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 Meeting of Shareholders held on December 21, 2018. No additional contribution was made upon continuationof 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 Corporation

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

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)- 40 -

Holder of vested rights

TKC Corporation

Residual property

The residual property that the Company (as holder of vested rights) may
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- 41 -

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]
Not applicable.
(2) [Acquisition of treasury stocks based on resolution of the Board of Directors]
Classification

Number of shares (shares)

Resolution at the Board of Directors meeting(November 9, 2021)

Total amount (yen)300,000

1,033,500,000

Treasury stocks acquired prior to the current fiscal year－－

Treasury stocks acquired during the current fiscal year

300,000

1,033,500,000－－

Percentage of unexercised acquisition as of the last dateof the current fiscal year (%)－－

Treasury stocks acquired during the current period

－

－

－

－

(Acquisition period: November 10, 2021)

Total number and value of remaining shares subject toresolution

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)

Total amount (yen)Treasury stocks acquired during the current fiscal year463

1,548,350

Treasury stocks acquired during the current period

179

660,435(Note) Treasury stocks acquired during the current period do not include shares constituting less than one unit purchased during theperiod from December 1, 2022 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 canceled

－

－

－

－

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

－

－

－

－

126

268,023－－

829,472－

829,651－solicited

Other treasury stocks (sold due to demand for sales offractional 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, 2022 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.

- 42 -

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.
The basic policy of the Company is to pay out dividends that exceed the industry average in accordance with the medium-term
management plan set forth by the Board of Directors while continuing to maintain optimal profit each fiscal year in order to meetthe expectation of our shareholders. With the rapid advancement of ICT (information and communication technology) and majorchanges in social systems, it is essential to make advance 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 whileremaining 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 36 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 36 yen per share and a special dividend of 6 yen per share as
announced on November 9, 2022.
(3) Dividends per share for the current fiscal year shall be 78 yen, which is the sum of an interim dividend of 36 yen per share anda year-end dividend of 42 yen per share.
As a result, the annual payout ratio came to 45.1%.
Date of Resolution

Total amount of cash
dividends(million yen)

Dividend per share
(yen)

1,894

36.00

2,210

42.00

May 10, 2022
Meeting of the Board of Directors
December 16, 2022
Ordinary General Meeting of Shareholders- 43 -

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) oradministrative laws (Local Autonomy Act or the Local Public Service Act) to follow much stricter levels of compliance than otherbusiness 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 fullcompliance 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 ownersof the Group, our shareholders.
Through such corporate governance process, we aim to improve the transparency of our decision-making and business processes,
implement effective risk management measures, undertake information disclosure and accountability in a timely manner to continueenhancing our corporate values.

- 44 -

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 month andattended 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 accountability of theBoard 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:
Hideki Tomonaga (Outside Auditor)
Member:Misao Taguchi (Outside expert)
Member:Yoshimasa Oshida (Outside expert)
Member:Masaharu Iizuka (In-house expert)
Member:Masanori Iizuka (Director)
Member:Satoshi Hitaka (Director)- 45 -

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:

General Meeting of Shareholders
Election/Dismissal

Reports

Election /Dismissal

Election/Dismissal

Reports

Nomination&
Compensati
onAdvisory
Committee

Consultation

Board of Directors

Board ofAuditors

9 Directors(including 3 Outside Directors)

Audit

4 AuditorsCollaboration

Accounting
Auditors(including 2
Outside Auditors)

Replies
7 members
Appointment/Dis
missal/Supervision

Reports

Reports

Setting the Agenda for
Appointment/Dismissal/
Refusal of Reappointment

Reports
Representative
Directors

Operation
Improvement
Committees

InstructionsReports

Internal Audit
Dept.

Instructions,Supervision

Audit

38 Executive Officers

Instructions, Orders

Business Divisions, Group Companies- 46 -

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 the propernessof 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 and exercise their voting rights on
all matters to be deliberated based on their conscience and responsibility. Directors must give a true account of theexecution of their duties, speak frankly of any anticipated strategic risks and operational risks, and give the opportunity
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.

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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.
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 planat the meetings of the Board of Directors:- 48 -

(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;(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:- 49 -

(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(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 current profits
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.

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(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.
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.

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(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
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 andcurrent profits 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.

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(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 dedicatedemployees.
(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.

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(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 matterspertaining 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 Meeting- 54 -

of 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(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
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.
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- 55 -

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.

- 56 -

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

Name

Date of BirthRepresentative Director
President and Executive Officer Masanori Iizuka
Director of Accounting Firm BD

March 12, 1975

Representative Director
Senior Managing Executive
Officer
Director of Local Governments
BD

January 19, 1971

Satoshi Hitaka

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
April 2014
Director, Managing Executive Officer,
Chief of Sales Headquarters, Accounting (Note 6)
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
January 2012 Director, Executive Officer, Chief ofCloud Business Promotion(Note 6)
Headquarters, Local Governments BD
December 2018 Director, Managing Executive Officer,
Chief of Sales Headquarters, Local
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
(hundredsof shares)

162

53

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)- 57 -(Note 6)159

Position and Title

Name

Date of Birth

Brief biography
April 1979

Director
Managing Executive Officer
Chief of Business Administration
Headquarters

Director
Managing Executive Officer
Chief of Systems Planning
Headquarters, Systems
Development Research Center,Accounting Firm BD

Kiyotsugu
Nakanishi

Yoshihisa Ito

August 27, 1956

April 2, 1967

Number ofTerm of shares held
office (hundreds ofshares)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.
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(Note 6)

December 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 6)
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

60

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)
October 2001 Registered as attorney

366－(Note 6)－

October 2001
Director

Junko Iijima

August 3, 1967

Joined Tokyo Toranomon Law Office(current position)
October 2019 Chairperson of the Nomination andCompensation Advisory Committee of
the Company (current position)
December 2019 Director of the Company (current
position)(Note 6)

- 58 -

Position and Title

Director

Name

Nobuhiko Kouga

Date of Birth

January 25, 1964

Brief biography

Term ofofficeFebruary 1996 Registered as certified tax accountant
February 1996 Started business as certified tax
accountant(Note 6)
April 2019
Representative Partner of Accounting
Firm Top Management (current position)
December 2020 Director of the Company (current
position)
August 1985 Registered as certified public accountant

Number ofshares held
(hundreds ofshares)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 6)116

(Note 5)

201

Joined the Company
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(Note 7)
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)

66

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

Tsuneo Miyashita

May 28, 1949

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
August 2012

Auditor (Full-time)

Yasuo Igarashi

January 4, 1967

April 1982

Joined Tokyo Regional Taxation Bureau

July 2006

Resigned from National Tax College

August 2006

Registered as certified tax accountant

March 2007
Auditor

Hideki Tomonaga February 15, 1956

Representative Director, Taxation
Institute of Japan (current position)
December 2018 Representative Partner, Tomonaga
Hideki Licensed Tax Accountant Office(current position)
December 2019 Auditor of the Company (current
position)－(Note 5)22

March 1989
March 1989
AuditorTomoyasu
Hamamura

February 12, 1958

Registered as certified tax accountant
Started business as certified tax
accountant
February 2007 Representative Partner of Hamamura
Accounting Office (current position)
December 2020 Auditor of the Company (current
position)(Note 4)

Total

1,217

(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 Hideki Tomonaga and Tomoyasu Hamamura are Outside Auditors.

- 59 -

4. Four years from the close of the Ordinary General Meeting of Shareholders held December 20, 2019.
5. Four years from the close of the Ordinary General Meeting of Shareholders held December 18, 2020.
6. Two 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 16, 2022.

- 60 -

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 theCompany’s Accounting Firm Business could benefit from his extensive experience andinsights in the management of accounting firms. As chairperson of the TKCNF New
Members Service Committee, he is expected to contribute to the sustainable growth of theCompany 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.
Mr. Kouga 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.
Mr. Kato 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.

- 61 -

Category

Auditor

Auditor

Name

Functions, roles and appointment

Hideki Tomonaga

Mr. Tomonaga is a representative partner of a certified public tax accounting firmTomonaga Hideki Licensed Tax Accountant Office, and has extensive experience as a tax
specialist on consolidated taxation system, corporate reorganization taxation system andinternational trade. He has been providing appropriate guidance and audits from his
professional perspective in ensuring tax compliance of the Company, and therefore, hasbeen reappointed as Outside Auditor.
While Tomonaga Hideki Licensed Tax Accountant Office is engaged in a business
relationship with the Company, transactions are based on the same terms and conditions
as with other third parties. Therefore, it is not likely that any conflict of interest shall occur
between Mr. Tomonaga and general shareholders, and the Company deems that this would
not affect the independence of Mr. Tomonaga.
Mr. Tomonaga has no special interest in the Company. The number of shares of theCompany held is as indicated in the “Number of shares held” column under 1. List of
Officers.

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.
Mr. Hamamura has no special interest in the Company. The number of shares of theCompany 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 attends 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.

- 62 -

(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 andimpartially without 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 our clients, and thirdly the Company through strict compliance. That is why our Directors and employees have acorrect understanding on the standards that they need to abide by in the process of fulfilling their basic responsibilities andperforming 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 Hideki
Tomonaga and Tomoyasu Hamamura 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 andbroad 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:
Name

Number of days attended/numberof meetings held (Note 1)

Attendance rate
(Note 1)

Tsuneo Miyashita

7/7

100%

Masaaki Arino (Note 2)

3/3

100%

Hideki Tomonaga

7/7

100%

Tomoyasu Hamamura
7/7100%(Note 1) Based on the number of days held the during his/her term office in the current fiscal year.
(Note 2) Retired from office on December 17, 2021.
(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
Department holds monthly meetings with the Auditors and quarterly meetings with the accounting auditor, to report on the- 63 -

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.

- 64 -

(iii) Accounting audits
1) Name of audit firm
Ernst & Young ShinNihon LLC
2) Continuous audit period
39 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 of Misuzu Audit
Corporation, the Company has entered into an audit agreement with Ernst & Young ShinNihon LLC since 2007 (Shin Nihon
LLC at the time). However, the certified public accountant who was providing the audit services to the Company alsotransferred to Ernst & Young ShinNihon LLC (Shin Nihon LLC at the time) and continued to provide audit services to theCompany. As such, it could be deemed that the same auditing firm has been providing audit services to the Company on acontinuous basis, and therefore, the audit period of the auditing firm prior to the transfer of said certified public accountant isalso added and included.
3) Certified public accountants that executed the accounting audit
Shigeyuki Honda, Toru Iizuka
4) Number of assistants assisting auditing:
The number of assistants assisting the accounting audit of the Company was 4 certified public accountants and 10 other personnel.
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 the Companies
Act. In such event, an Auditor selected by the Board of Auditors shall report the dismissal of the accounting auditor and thereason 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 shallpresent 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 a result ofassessment, 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

Current consolidated fiscal year

Compensation for audit
and attestation services(million yen)
49

Compensation for nonaudit services (million
yen)
10Compensation for audit
and attestation services(million yen)
46

Compensation for nonaudit services (million
yen)
12

Consolidated
subsidiaries

－

－

－

－

Total

49

10

46

12

The Company(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.

- 65 -

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

Current consolidated fiscal year

Classification

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

The Company

－

－

－

Compensation for nonaudit services(million yen)
13

Consolidated
subsidiaries

－

－

－

－

Total

－

－

－

13

(Note) The Company pays 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 manhour, and reviewed the appropriateness of the amount of compensation in comparison to the conventional amounts and planned
amounts. As a result, it has determined that the decision by the Board of Directors with respect to the compensation for theaccounting auditor is appropriate, and has given consent in accordance with Article 339 Paragraph 1 of the Companies Act ofJapan.
5) Other important fees under the audit and attestation services
Not applicable.

- 66 -

(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 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.
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
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- 67 -

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)*1: Trust average stock acquisition price is the average stock acquisition price of the Company’s stock acquired by theTrust in establishing the stock-based compensation program (BIP Trust).

- 68 -

*2: Marginal profit is the amount derived by deducting the costs that change in proportion to sales (variable costs) fromthe amount 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 103.1%. Year-on-year ratio of
ordinary income was 110.2%.
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
Stock-based
officers
compensation (BIP
Trust)

Monetary
compensation

176

163

12

5

Auditors (excluding Outside
Auditors)

23

23

－

2

Outside Directors

28

28

－

3

Outside Auditors

19

19

－

2

Directors)(Notes) 1. As of the end of the fiscal year under review, the Company has eight Directors (of which, three are Outside Directors)
and three Auditors (of which, two are Outside Auditors). The difference in the number of eligible Directors andAuditors is because the above number includes one Auditor who resigned and retired from office as of the close of
the Ordinary General Meeting of Shareholders for the 55th Term held on December 17, 2021.
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
the 52nd 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).

- 69 -

(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
Total amount recorded in
Number of securities
balance sheets(Stock name)(million yen)
Unlisted stock
Securities other thanunlisted stock

7

112

4

4,039

(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)

Reasons for increase in number of shares

Unlisted stock

－

－

－

Securities other thanunlisted stock

－

－

－

(Securities that decreased in number of shares in the current fiscal year)
Total amount sold by
Number of securities
decrease in number of shares(Stock name)(million yen)
Unlisted stock－－

Securities other thanunlisted stock－－- 70 -

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 Purpose of holding, quantitative effect of Holding of the(shares)(shares)holding, reason for increase in number ofCompany’s
sharessharesAmount recorded in Amount recorded inbalance sheet
balance sheet(million yen)(million yen)
To maintain and strengthen thepartnership for the purpose of supporting
1,780,000
1,780,000
the prosperity and success of SMEs.
Figures on the effect of holding are not

T&D Holdings, Inc.

disclosed as they contain business secretsof said company. However, the Company
2,433

2,757

assesses whether the benefits and risks
from the holding cover the costs ofcapital, quantitatively on a regular basis.

- 71 -Yes

Current fiscal year
Stock name

Previous fiscal year

Number of shares
Number of shares Purpose of holding, quantitative effect of Holding of the(shares)(shares)holding, reason for increase in number ofCompany’s
sharessharesAmount recorded in Amount recorded inbalance sheet
balance sheet(million yen)(million yen)
To maintain and strengthen the long2,322,180

2,322,180

Mitsubishi UFJ

term, stable business relationship.
Figures on the effect of holding are notdisclosed as they contain business secretsof said company. However, the Company

Financial Group,
Inc.
1,512

1,527

Yes

assesses whether the benefits and risks
from the holding cover the costs ofcapital, quantitatively on a regular basis.
To maintain and strengthen the long-

275,400

275,400

Mebuki Financial
Group, Inc.

term, stable business relationship.
Figures on the effect of holding are notdisclosed as they contain business secretsof said company. However, the Company

77

67

Yes

assesses whether the benefits and risks
from the holding cover the costs ofcapital, quantitatively on a regular basis.

17,00017,000

Nippon Paper
Industries Co., Ltd.
1520(iii) Equity securities held for the pure investment
Not applicable.

- 72 -

To maintain and strengthen the longterm, stable business partnership.
Figures on the effect of holding are notdisclosed as they contain business secretsof said company. However, the Company
assesses whether the benefits and risks
from the holding cover the costs ofcapital, quantitatively on a regular basis.

Yes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 Finance No. 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 "Ordinance on
Financial Statements").
Further, as the Company is a Specified Company Submitting Financial Statements, we have prepared the financial statements inaccordance 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, 2021 to September 30, 2022) and financial
statements for the fiscal year (from October 1, 2021 to September 30, 2022) 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, in orderto understand the contents of accounting standards correctly and to develop a system that would enable us to appropriately respondto changes in accounting standards, we maintain membership of the Financial Accounting Standards Foundation and attend seminars
held by the Accounting Standards Board of Japan.

- 73 -

1. [Consolidated Financial Statements](1) [Consolidated Financial Statements]
1) [Consolidated Balance Sheet](Unit: million yen)Previous consolidated fiscal year Current consolidated fiscal year
(September 30, 2021)(September 30, 2022)
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 deposits
Guarantee deposits
Long-term lease investment assets
Other
Total investments and other assets
Total non-current assets
Total assets- 74 -

26,426
54
6,919
525
384
222
51
138
1,399
(14)
36,10729,920
47
7,881
391
362
278
69
146
1,630
(12)
40,715

7,855

7,651

611

501

2,050
6,802
220
*117,540

1,820
6,802
376
*117,153

2,654
924
25
3,605

3,073
1,567
25
4,666

*219,705*218,748

120
7,209
16,600
1,440
539
537
46,152
67,298103,406

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

(Unit: million yen)Previous consolidated fiscal year Current consolidated fiscal year
(September 30, 2021)(September 30, 2022)
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 obligations
Provisions for stocks payment
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
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets- 75 -

2,402
834
80
468
1,786
2,211
780
673
4,073
141
1,269
14,721

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

214
694
3,554
307
498
5,268
19,990

142
481
2,806
306
482
4,219
21,8995,700
6,589
73,411(1,352)
84,3485,700
6,589
78,743(2,359)88,672449(1,382)(932)
83,416
103,406(138)(1,207)(1,346)87,325109,225

2) [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, 2020;(Started October 1, 2021;
ended September 30, 2021)
ended September 30, 2022)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends 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
Surcharges
Penalties
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Other
Total extraordinary income
Extraordinary losses
Loss on sale of non-current assets
Loss on retirement of non-current assets
Loss on valuation of investment securities
Total extraordinary losses
Net income before taxes and adjustments
Income taxes–current
Income taxes–deferred
Total income taxes
Net income
Net income attributable to owners of parent- 76 -

66,221

67,838*119,319*119,909

46,90247,929*234,587*234,578

12,314

13,351

51
150
51
13
－
92
359

70
176
47
9
3
98
407

0
0
－
－
0
0
12,673

1
－
20
58
1
80
13,677

*3111

*33

9
121

－
3

*422

*40

*523

*530

89
134
12,660
4,156
(183)
3,973
8,686
8,686

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

[Consolidated Statements of Comprehensive Income](Unit: million yen)Previous consolidated fiscal year Current consolidated fiscal year
(Started October 1, 2020;(Started October 1, 2021;
ended September 30, 2021)
ended September 30, 2022)
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- 77 -

8,686

9,317

1,002
150
*11,153
9,839

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

9,839

8,902

3) [Consolidated Statement of Changes in Net Assets]
Previous consolidated fiscal year (Started October 1, 2020; ended September 30, 2021)(Unit: million yen)
Shareholders’ equity
Capital stock
Balance at beginning of year
Cumulative effects of changes
in accounting policies
Restated balance reflectingchanges in accounting policies

Capital surplus

5,700

Retained earnings

6,588

68,533

Total shareholders’equityTreasury stock(1,660)

(367)
5,700

6,588

68,165

79,161(367)(1,660)78,793

Changes during fiscal year
Dividends of surplus(3,440)(3,440)Net income attributable toowners of parent

8,686

8,686

Acquisition of treasury stock
Disposal of treasury stock

0

(6)

(6)

315

315

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

－

0

5,246

308

5,555

5,700

6,589

73,411(1,352)

84,348

Accumulated other comprehensive income

Balance at beginning of year
Cumulative effects of changes
in accounting policies
Restated balance reflectingchanges in accounting policies

Valuation difference
on available-for-salesecurities

Remeasurements ofdefined benefit plans

Total accumulated
other comprehensive
income(553)(1,532)(2,085)

Total net assets

77,075
(367)

(553)

(1,532)(2,085)76,707

Changes during fiscal year
Dividends of surplus(3,440)Net income attributable toowners of parent

8,686

Acquisition of treasury stock(6)

Disposal of treasury stock

315

Changes in items other thanequity (net)

1,002

150

1,153

1,153

Total changes during fiscal year

1,002

150

1,153

6,708

449

(1,382)(932)

83,416

Balance at end of year

- 78 -

Current 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
Valuation difference
on available-for-salesecurities
Balance at beginning of year449

Remeasurements ofdefined benefit plans

Total accumulated
other comprehensive
income(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- 79 -

4) [Consolidated Statements of Cash Flows](Unit: million yen)Previous consolidated fiscal year Current consolidated fiscal year
(Started October 1, 2020;(Started October 1, 2021;
ended September 30, 2021)
ended September 30, 2022)
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 valuation of investment securities
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 payments
Other proceeds
Cash Flows from Investing Activities- 80 -

12,660
2,945
(5)
400

13,650
3,050
(1)
880

33

(76)

367
－
(291)
(201)
0
－
－
－
23
(89)
89

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

159

(1,180)

31
(679)
131
(283)
(739)
281
14,832234(0)－－(4,516)
10,550

(82)
84
462
642
39
60
16,888
283
(1)
(20)
(35)
(4,063)
13,050(5,300)3,300(1,420)201(1,887)(4,118)
13
2,000
(47)
44
12
(0)
－
(7,201)(4,400)
3,300
(760)
6
(2,573)(2,015)
1
2,100
(59)
14
43
－
0
(4,342)

(Unit: million yen)Previous consolidated fiscal year Current consolidated fiscal year
(Started October 1, 2020;(Started October 1, 2021;
ended September 30, 2021)
ended September 30, 2022)
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
Cash dividends paid
Cash Flows from Financing Activities
Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year

(142)
(91)
(6)
0
(3,449)(3,691)(342)
23,469*123,126- 81 -(80)(118)(1,035)0(3,979)(5,214)
3,493
23,126*126,620

[Notes to the Consolidated 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
Non-consolidated subsidiaries (1 company):
TKC Financial Guarantee Co., Ltd.
(Reason for excluding the company from the consolidated group)
TKC Financial Guarantee Co., Ltd. is excluded from the consolidated group because it does not have any material impact
on the consolidated financial statements of the Company in terms of total assets, net sales, net income (amount inproportion to equity held) or retained earnings (amount in proportion to equity held), nor does it have material importanceas a whole.
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.
Non-consolidated subsidiaries not under the equity method: (1 company)
TKC Financial Guarantee Co., Ltd.
(Reason for excluding the company from the scope of application of the equity method)
TKC Financial Guarantee Co., Ltd. is excluded from the scope of application of the equity method because such exclusion
has little impact on the consolidated financial statements of the Company in terms of net income (amount in proportion
to equity held) or retained earnings (amount in proportion to equity held), and does not have material importance as awhole.
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)b. 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)- 82 -

(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(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 accordance withthe 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.
(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.

- 83 -

(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 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.
(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 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 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
is the 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.
(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, 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.
(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 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
is the 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.

- 84 -

(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 consolidated taxation system
The consolidated taxation system is applied.
(ii) Application of tax effect accounting for the transition from the consolidated taxation system to Group Tax Sharing
SystemThe Company and its consolidated subsidiaries will be transitioning from the consolidated taxation system to GroupTax Sharing System starting from the next consolidated fiscal year. Provided, based on the treatment set forth under
Item 3 of the Treatment of Tax Effect Accounting for the Transition from the Consolidated Taxation System to GroupTax Sharing System (Practical Solution No. 39, March 31, 2020), the Company do not implement the provisions ofParagraph 44 of the Implementation Guidance on Accounting Standard for Tax Effect Accounting (ASBJ Guidance
No. 28, February 16, 2018) for items that were transitioned to the group tax sharing system which was established in
the Law for Partial Revisions to the Income Tax Act, etc. (Law No. 8 of 2020) and items that were revised under the
non-consolidated taxation system in line with the transition to the group tax sharing system. The amounts of deferred
tax assets and deferred tax liabilities are based on the provisions of the Tax Act prior to revisions.
Starting from the beginning of the next consolidated fiscal year, the Company plans to apply the Practical Solution
on the Accounting and Disclosure Under the Group Tax Sharing System (Practical Solution No. 42, August 12, 2021),
which stipulated the accounting method and disclosure of corporate income tax, national local corporate tax, and tax
effect accounting when applying the group tax sharing system.

- 85 -

(Changes in Accounting Policies)(Application of Accounting Standard for Fair Value Measurement, etc.)
The Company has decided to apply the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4,2019) (hereinafter, “Fair Value Measurement Accounting Standard”) etc., from the beginning of the current consolidated fiscal
year. Further, in accordance with the transitional measures set forth in Section 19 of said Fair Value Measurement AccountingStandard and Section 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019), theCompany will apply the new accounting policies under the Fair Value Measurement Accounting Standard, etc. in the future.
There are no impacts on the consolidated financial statements.
Also, we have decided to provide notes on breakdown by level of fair value of financial instruments, etc. in the notes on
Financial Instruments. Provided, in accordance with Paragraph 7-4 of the Implementation Guidance on Disclosures about Fair
Value of Financial Instruments (ASBJ Guidance No. 19, July 4, 2019), those pertaining to the previous consolidated fiscal
year are not stated.
(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

351

243

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 of costs
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, thencalculate 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.

- 86 -

(Accounting Standards Not Yet Applied)
Not applicable.
(Changes in Method of Presentation)(Application of Accounting Standards for Revenue Recognition, etc.)
The Company applies the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020)(hereinafter, “Revenue Recognition Accounting Standard”) etc. from the beginning of the current consolidated fiscal year.
As a result of applying the Revenue Recognition Accounting Standard, “Notes and accounts receivable–trade” under “Current
assets” in the consolidated balance sheets for the previous consolidated fiscal year has been included and presented as
independent items “Notes receivable–trade” and “Accounts receivable–trade,” and “Contract assets” that was included in“Other” is presented as an independent item, starting from the current consolidated fiscal year. Also, “Contract liabilities” thatwas included in “Other” under “Current liabilities” is presented as an independent item.
Note that, in accordance with the transitional measures set forth in Section 89-4 of the Revenue Recognition AccountingStandard, the notes on “Revenue Recognition” for the previous consolidated fiscal year are not stated.
(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 plancalled “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 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 the members are independent Outside Directors and outside
experts, and approved at the Ordinary General Meeting of Shareholders held on December 20, 2019.
2. Stocks of the Company remaining in trust
The stocks of the Company remaining in trust are recorded as treasury stock under net assets with the book values in the trust(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.

- 87 -

(Notes to Consolidated Balance Sheets)*1. Accumulated depreciation of property, plant and equipment
Previous consolidated fiscal year
(September 30, 2021)

Current consolidated fiscal year
(September 30, 2022)

23,055 million yen

23,482 million yen*2. Items pertaining to non-consolidated subsidiaries and affiliated companies are as follows:
Previous consolidated fiscal year
(September 30, 2021)
Investment securities (shares)

Current consolidated fiscal year
(September 30, 2022)

100 million yen

103 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, 2020;
ended September 30, 2021)

Current consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

33 million yen(76) million yen*2. Major items included in selling, general and administrative expenses are as follows:
Previous consolidated fiscal year
(Started October 1, 2020;
ended September 30, 2021)

Current consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Salaries

11,958 million yen

11,855 million yen

Provision for bonuses
Retirement benefit expenses

3,357
957

3,902
1,024

Provisions for stocks payment
Depreciation

24
723

26
700

2,444

2,541

Rent expenses*3. Breakdown of gains on sales of non-current assets is as follows:
Previous consolidated fiscal year
(Started October 1, 2020;
ended September 30, 2021)Land

109 million yen

Current consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Machinery, equipment & vehicles
Tools, furniture & fixtures0
1－ million yen
1
0

Other

－

1

111

3

Total

*4. Breakdown of loss on sale of non-current assets is as follows:
Previous consolidated fiscal year
(Started October 1, 2020;
ended September 30, 2021)
22 million yen

Current consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Buildings & structures
Tools, furniture & fixtures

－

－
0

Total

22

0

- 88 -

million yen

*5. Breakdown of loss on retirement of non-current assets is as follows:
Previous consolidated fiscal year
(Started October 1, 2020;
ended September 30, 2021)

Current consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Buildings & structures

12 million yen

1 million yen

Machinery, equipment & vehicles
Tools, furniture & fixtures

0
9

0
7

Intangible assets
Other (Investments and other assets)

0
0

20
0

23

30

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, 2020;
ended September 30, 2021)
Valuation difference on available-for-sale securities:
Increase/decrease during the fiscal year

1,425 million yen

Reclassification adjustments

Current consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)(845) million yen

8－

Amount before tax

1,434

(845)

Tax effect

(431)

256

Valuation difference on available-for-sale securities

1,002

(588)

(33)
247

－
250

Amount before tax

214

250

Tax effect

(63)

(76)

Remeasurements of defined benefit plans

150

174

Total other comprehensive income

1,153

(414)

Remeasurements of defined benefit plans, net of tax:
Increase/decrease during the fiscal year
Reclassification adjustments- 89 -

(Notes to Consolidated Statements of Changes in Equity)
Previous consolidated fiscal year (Started October 1, 2020; ended September 30, 2021)
1. Types and numbers of issued stocks and treasury stocks
Number of shares at
Increase in number of
beginning of current
shares during current
consolidated FY
consolidated FY(hundreds of shares)(hundreds of shares)

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

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

Issued shares
Common stockTotal

267,310

267,310－534,620

267,310

267,310－534,620

4,533

3,771

815

7,489

4,533

3,771

815

7,489

Treasury stock
Common stock
Total(Notes) 1. The Company conducted a stock split of its common shares at a ratio of 1:2 as of April 1, 2021.
2. The 267,310 hundred share increase in issued common shares is the increase as a result of the stock split.
3. The 3,771 hundred share increase in common treasury stock resulted from 3,759 hundred shares from the stock split, and 12
hundred shares from purchase of fractional unit shares (7 hundred shares prior to the stock split, 4 hundred shares after thestock split).
4. The 815 hundred share decrease in common treasury stock resulted from sales of 1 hundred shares of fractional unit shares(after the stock split), and payment of 814 hundred shares under the BIP Trust (782 hundred shares prior to the stock split,
32 hundred shares after the stock split).
5. The number of treasury stock at the end of the current consolidated fiscal year includes the 2,198 hundred shares of treasury
stock of the Company held by the BIP Trust.
2. Subscription rights to shares and treasury subscription rights to shares
Not applicable.
3. Dividends(1) Dividend payments
Resolution

Type of shares

Total amount of cash
dividends(million yen)

Dividend per share(yen)

Common stock

1,720

Common stock

1,720

Record date

Effective date

65.00

September 30, 2020

December 21, 2020

65.00

March 31, 2021

June 14, 2021

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

- 90 -

(2) Of the dividends with record dates during this consolidated fiscal year, those with effective dates in the following
consolidated fiscal year
Total amount of
Dividend per
Source of
Resolution
Type of shares cash dividends
share (yen)Record date
Effective datedividends(million yen)
December 17, 2021
Ordinary General
Meeting ofCommon stock

2,090

Retainedearnings

39.50

September 30, 2021

December 20, 2021

Shareholders(Note) 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.

- 91 -

Current 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
Increase in number of
Decrease in number of
beginning of current
shares during current
shares during current
consolidated FY
consolidated FY
consolidated FY(hundreds of shares)(hundreds of shares)(hundreds of shares)

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

Issued shares
Common stockTotal

534,620－－534,620534,620－－534,620

7,489

3,004

139

10,354

7,489

3,004

139

10,354

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
Not applicable.
3. Dividends(1) Dividend payments
Resolution
December 17, 2021
Ordinary General
Meeting of
Shareholders
May 10, 2022
Meeting of theType of shares

Total amount of cash
dividends(million 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

Board 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
Total amount of
Dividend per
Source of
Resolution
Type of shares cash dividends
share (yen)Record date
Effective datedividends(million yen)
December 16, 2022
Ordinary General
Meeting ofCommon stock

2,210

Retainedearnings

42.00

September 30, 2022

December 19, 2022

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 -

(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, 2020;
ended September 30, 2021)

Current consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

26,426 million yen

29,920 million yen

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

23,126

26,620Cash and deposits(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, 2021)

Current consolidated fiscal year
(September 30, 2022)

Within one year

235

291

Over 1 year

393

483

628

775

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, 2021)

Current consolidated fiscal year
(September 30, 2022)

Current assets

384

362

Investments and other assets

539

198

(2) Lease obligations(Unit: million yen)Previous consolidated fiscal year
(September 30, 2021)

Current consolidated fiscal year
(September 30, 2022)

Current liabilities

384

362

Non-current liabilities

539

198

- 93 -

(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
and financial 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, 2021)
Book value inconsolidated balance
sheets(million yen)

Fair value (million yen)

Differences (million yen)

6,959

6,959

－

(2) Investment securities

19,491

19,491－(3) Long-term deposits

16,60016,533(66)

43,051

42,984(66)(1) Accounts payable–trade

2,402

2,402

－

(2) Accounts payable–other

1,786

1,786

－

4,188

4,188

－

(1) Notes and accounts receivable–trade

6,973

Allowance for doubtful accounts(14)

Total assets

Total liabilities(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.
2. For notes and accounts receivable—trade, the corresponding allowances for doubtful accounts are deducted.
3. The fair values of the following financial instruments are deemed to be extremely difficult to measure since quoted
market values are not available and future cash flows cannot be reliably estimated, and thus are not included in "(2)Investment securities.” The book values of said financial instruments in the consolidated balance sheets are as follows:- 94 -

(Unit: million yen)Classification

Previous consolidated fiscal year
(September 30, 2021)

Other securities (unlisted equity securities)

113

Stocks of subsidiaries and affiliates

100

Total

213

Current consolidated fiscal year (September 30, 2022)
Book value inconsolidated balance
sheets (million yen)

Fair value (million yen)

Differences (million yen)

(1) Investment securities

18,531

18,5320(2) Long-term deposits

17,70017,303(396)

36,23135,835(396)

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

Current consolidated fiscal year
(September 30, 2022)

Other securities (unlisted equity securities)

112

Stocks of subsidiaries and affiliates

103

Total

216

- 95 -

3. Redemption scheduled for monetary claims and securities with maturity dates subsequent to the consolidated settlement datePrevious consolidated fiscal year (September 30, 2021)
Within 1 year
(million yen)Over 1 year andwithin 5 years(million yen)Over 5 years andwithin 10 years(million yen)Over 10 years(million yen)

Cash and deposits

26,422－－－

Notes and accounts receivable–trade

6,973

－

－

－

Corporate bonds

－

2,100

4,900

8,000

Long-term deposits

－

6,000

10,600－Total

33,395

8,100

15,5008,000

Over 1 year andwithin 5 years(million yen)Over 5 years andwithin 10 years(million yen)Over 10 years(million yen)

29,915

－

－

－

47

－

－

－

7,881

－

－

－

－

900

－

－

－

500

4,500

9,000

Long-term deposits

－

6,000

11,700－Total

37,844

7,400

16,2009,000

Investment securities

Current consolidated fiscal year (September 30, 2022)
Within 1 year
(million yen)
Cash and deposits
Notes receivable–trade
Accounts receivable–trade
Investment securities
Held-to-maturity securities
Corporate bonds
Other securities with maturity
Corporate bonds- 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 otherthan 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 the lowest
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
Current 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(2) Financial instruments other than financial instruments recorded at fair value in the consolidated balance sheets
Current 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
Long-term deposits
Total assets(Note)

－

900

－

900

－

17,303－

17,303－

18,203－

18,203

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 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.

- 97 -

(Securities)
1. Held-to-maturity securities
Previous consolidated fiscal year (September 30, 2021)
Not applicable.
Current consolidated fiscal year (September 30, 2022)
Class
Securities for which the fairvalues exceed the amounts
in the consolidated balance
sheetsSecurities for which the fairvalues do not exceed theamounts in the
consolidated balance sheets

Book value inconsolidated balance
sheets (millions of yen)

Fair value(million yen)

Differences(million yen)

Corporate bonds

900

900

0

Subtotal

900

900

0

Corporate bonds

－

－

－

Subtotal

－

－

－

900

900

0

Total

2. Other securities
Previous consolidated fiscal year (September 30, 2021)
Book value inClassconsolidated balance
sheets (millions of yen)
Securities for which theamounts in the
consolidated balance sheets
exceeds the original
purchase value(1) Stocks

Securities for which theamounts in the
consolidated balance sheets
do not exceed the original
purchase value(1) Stocks

Original purchasevalue (millions of yen)

Differences(million yen)

4,476

3,545

931

1,101

1,100

0

5,577

4,646

931

68

96

(27)

13,845

14,068(223)

13,913

14,165(251)

19,491

18,811680(2) Bonds
Corporate
bonds
Subtotal(2) Bonds
Corporate
bonds
Subtotal

Total(Note) Unlisted shares (113 million yen in the consolidated balance sheets) are not included under the table "Other securities" above
since quoted market value is not available and the fair value is deemed to be extremely difficult to measure.
Current consolidated fiscal year (September 30, 2022)
Class
Securities for which theamounts in the
consolidated balance sheets
exceeds the original
purchase value(1) Stocks

Securities for which theamounts in the
consolidated balance sheets
do not exceed the original
purchase value(1) Stocks

Book value inconsolidated balance
sheets (millions of yen)

Original purchasevalue (millions of yen)

4,126

3,547

578

－

－

－

4,126

3,547

578

77

95

(17)

13,427

14,153(725)

13,505

14,248(743)

17,631

17,796(165)

Differences(million yen)

(2) Bonds
Corporate
bonds
Subtotal(2) Bonds
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.

- 98 -

3. Other securities sold
Previous consolidated fiscal year (Started October 1, 2020; ended September 30, 2021)
Total gain from sales
Class
Price sold (million yen)(million yen)
(1) Stocks
138(2) Bonds
Corporate bonds－－
Subtotal
13
8

Total loss from sales(million yen)－－－

Current consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)
Not applicable.
4. Securities for which impairment loss are recognized
For the previous consolidated fiscal year, the Group recorded an impairment loss of 89 million yen on securities (89 million yen on
shares of other securities).
In recording the impairment loss, if the market value at year-end has dropped by 50% or more compared to the original purchasevalue, the entire amount has been recorded as impairment loss; if the market value has dropped about 30-50%, the amount deemednecessary considering the recoverability has been recorded as impairment loss.
(Derivatives)
1. Derivative transactions for which hedge accounting is not applied
Not applicable.
2. Derivative transactions for which hedge accounting is applied
Not applicable.

- 99 -

(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 period ofservice. 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 Current consolidated fiscal year
(Started October 1, 2020;(Started October 1, 2021;
ended September 30, 2021)
ended September 30, 2022)
Retirement benefit obligations at beginning of year
8,511 million yen
8,702 million yen
Service costs
445
428
Interest costs－－
Actuarial differences
33
87
Retirement benefits paid
(324)
(271)
Amount of past service costs accrued
36－
Balance of retirement benefit obligations at end of
8,702
8,947
year
(Note) Past service costs were accrued as a result of amendments to the retirement benefit rules made by some of theconsolidated subsidiaries during the previous consolidated fiscal year.
(2) Adjustment of balance of pension assets at the beginning and end of fiscal years
Previous consolidated fiscal year
(Started October 1, 2020;
ended September 30, 2021)

Current consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

5,110 million yen
－
37
－
－
5,148

5,148 million yen
－
(7)
1,000
－
6,140

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, 2021)

Current consolidated fiscal year
(September 30, 2022)

7,984 million yen(5,148)2,835
718

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

3,554

2,806

3,554

2,806

3,554

2,806

Contributory retirement benefit obligations
Pension assets
Non-contributory retirement benefit obligations
Net obligations and assets in the consolidated balance
sheetsRetirement benefit obligations
Net obligations and assets in the consolidated balance
sheets- 100 -

(4) Retirement benefit expenses and breakdown
Previous consolidated fiscal year
(Started October 1, 2020;
ended September 30, 2021)

Current consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

445 million yen
－
－
(4)
250

428 million yen
－
－
95
250

692

774

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, 2020;
ended September 30, 2021)

Current consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

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, 2021)

Current consolidated fiscal year
(September 30, 2022)(1,990) million yen(1,990)(1,739) million yen(1,739)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, 2021)

Current consolidated fiscal year
(September 30, 2022)

Bonds
79％
80％
Cash and deposits
21
20
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 long-term rateof return on pension assets.
(8) Basis for actuarial calculations
Basis for major actuarial calculations
Previous consolidated fiscal year
(September 30, 2021)

Current consolidated fiscal year
(September 30, 2022)

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 291
million yen for the previous consolidated fiscal year, and 298 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 135 million yen in the previous consolidated fiscal year and
138 million yen in the current consolidated fiscal year.

- 101 -

(1) Reserve fund for multiemployer pension planPrevious consolidated fiscal year
(March 31, 2021)

Current consolidated fiscal year
(March 31, 2022)

262,373 million yen

273,942 million yen

206,858

221,054

55,51552,887Pension assets
Actuarial liabilities based on pension plan financecalculation
Differences(2) Coverage ratio of the Group in the multiemployer pension planPrevious consolidated fiscal year: 2.28% (Started April 1, 2020; ended March 31, 2021)
Current consolidated fiscal year: 2.33% (Started April 1, 2021; ended March 31, 2022)(3) Supplementary information
The ratio in (2) above does not match the actual self-pay ratio of the Company.
(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 obligations
Retirement benefit trust
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, 2021)

Current consolidated
fiscal year
(September 30, 2022)

2,794 million yen
1,258
501
1,570
608
22
138
188

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

188

229

119
115
93
－
443
8,042
(582)
7,460

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

3

2

36

37

201
9
251
7,209

26
9
75
8,032

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, 2021)(September 30, 2022)
Statutory income tax rate
30.5％
30.5％
(Adjusted)
Inhabitant tax on per capita basis
0.6
0.5Entertainment expenses, etc. not deductible for tax
0.1
0.8
purposes
Other
0.2
(0.1)
Income tax rate after applying tax effect accounting
31.4
31.7

- 102 -

(Asset Retirement Obligations)
Previous consolidated fiscal year (ended September 30, 2021) and current consolidated fiscal year (ended September 30,
2022)
Information has been omitted as it was immaterial.

- 103 -

(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 goods and services:
Current consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)(Unit: million yen)
Reportable segments
Accounting Firmbusiness

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

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.
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- 104 -

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 current consolidated fiscal year, revenue included in the opening balanceof contract liabilities is 673 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 2,903 million yen. For such remaining performance obligations, the Group expects to recognize revenue generally
within five years after the closing date.

- 105 -

(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.

- 106 -

3. Information on net sales, profit or loss, assets, and other items by reportable segments
Previous consolidated fiscal year (Started October 1, 2020; ended September 30, 2021)
Reportable segments(Unit: million yen)Amounts in
Adjustment consolidatedsfinancial(Note 1)statements(Note 2)

Accounting
Firmbusiness

Local
Governments
BD

Printing
business

45,412

17,704

3,105

66,221－

66,221

8

0

2,073

2,082

(2,082)－45,42017,704

5,178

68,304(2,082)

66,221

Segment profit

10,5631,705

39

12,307

6

12,314

Segment assets

29,065

9,595

5,676

44,33759,068103,406

1,533

1,047

364

2,946

(0)

2,945

100

－

－

100

－

100

2,213

1,186

336

3,735

(0)

3,735

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 6 million yen include 6 million yen for elimination of inter-segment transactions and2 million yen for adjustments of inventory assets.
(2) Adjustments of segment assets of 59,068 million yen include 60,047 million yen of corporate assets that are notallocated to specific reportable segments, and -979 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, tangible fixed assets and intangible fixed assets include long-term prepaid expenses anddepreciation of such expenses.

- 107 -

Current consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)(Unit: million yen)Amounts in
Adjustment consolidatedsfinancial(Note 1)statements(Note 2)

Reportable segments
Accounting
Firmbusiness

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, tangible fixed assets and intangible fixed assets include long-term prepaid expenses anddepreciation of such expenses.

- 108 -

[Related information]
Previous consolidated fiscal year (Started October 1, 2020; ended September 30, 2021)
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, 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.

[Information on impairment losses of fixed assets by reportable segments]
Previous consolidated fiscal year (Started October 1, 2020; ended September 30, 2021)
Not applicable.
Current consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)
Not applicable.
[Information on amortization of goodwill and balance of goodwill by reportable segments]
Previous consolidated fiscal year (Started October 1, 2020; ended September 30, 2021)
Not applicable.
Current consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)
Not applicable.
[Information on gain on negative goodwill by reportable segments]
Previous consolidated fiscal year (Started October 1, 2020; ended September 30, 2021)
Not applicable.
Current consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)
Not applicable.

- 109 -

[Related Parties Information]
1 Related Parties Transactions(1) Transactions between the Company and related parties
Previous consolidated fiscal year (Started October 1, 2020; ended September 30, 2021)(i) Non-consolidated subsidiaries and affiliated companies of the Company
Class

Company nameor name ofindividual

AffiliatediMobile Inc.
company

Address

Capital or
Holding (held)
Business orinvestments
voting rights
occupation(million yen)ratio (%)

Relationship withrelated party

Details oftransaction

Information
provision
services

Outsourcing ofdevelopment andmaintenance ofwebsite services.

Recovery offunds(Note)
Receiving ofinterests(Note)

Shibuya-ku,
Tokyo

100

(Holding)
Direct (30.0)

Transaction
amount(million yen)

12
3

Item

Loans
receivables

Year-endbalance(millionyen)

163(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)Compani Certified
public tax
es inaccounting
Miyaginowhichfirm Ofujiku, Sendaiofficers
shi, Miyagi
and near Accounting
relatives Office(Note 3)
holdmajority
Accounting
votingFirm Top
Kushiro-shi,rightsManagement Hokkaido(Note 4)
Hamamura
Accounting
Utsunomiya
Office-shi, Tochigi(Note 5)

Capital or
Holding (held)
Business orinvestments
voting rights
occupation(million yen)ratio (%)

4

Certifiedpublictax
accounti
ng firm

9

Certifiedpublictax
accounti
ng firm

93

Certifiedpublictax
accounti
ng firm
Certifiedpublictax
accounti
ng firm

Relationship withrelated party

Details oftransaction

Transaction
amount(million yen)

Item

Year-endbalance(millionyen)－

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

Accounts
24 receivable–
trade

2

－

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

Accounts
14 receivable–
trade

1

Accounts
18 receivable–
trade

2

Accounts
11 receivable–
trade

1

－

－

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

(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.
6. Consumption taxes are not included in the transaction amounts. Consumption taxes are included in the year-end balance.

- 110 -

Current consolidated fiscal year (Started October 1, 2021; ended September 30, 2022)(i) Non-consolidated subsidiaries and affiliated companies of the Company
Class

Company nameor name ofindividual

AffiliatediMobile Inc.
company

Address

Capital or
Holding (held)
Business orinvestments
voting rights
occupation(million yen)ratio (%)

Relationship withrelated party

Details oftransaction

Information
provision
services

Outsourcing ofdevelopment andmaintenance ofwebsite services.

Recovery offunds(Note)
Receiving ofinterests(Note)

Shibuya-ku,
Tokyo

100

(Holding)
Direct (30.0)

Transaction
amount(million yen)

43
2

Item

Loans
receivables

Year-endbalance(millionyen)

120(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 or
Holding (held)
Business orinvestments
voting rights
occupation(million yen)ratio (%)

Certifiedpublic tax
accounting
Yokohamafirm Oshidashi,
Accounting
Kanagawa
Office(Note 2)Compani Certified
public tax
es inaccounting
Miyaginowhichfirm Ofujiku, Sendaiofficers
shi, Miyagi
and near Accounting
relatives Office(Note 3)
holdmajority
Accounting
votingFirm Top
Kushiro-shi,rightsManagement Hokkaido(Note 4)
Hamamura
Accounting
Utsunomiya
Office-shi, Tochigi(Note 5)

4

Certifiedpublictax
accounti
ng firm

9

Certifiedpublictax
accounti
ng firm

93

Certifiedpublictax
accounti
ng firm
Certifiedpublictax
accounti
ng firm

Relationship withrelated party

Details oftransaction

Transaction
amount(million yen)

Item

Year-endbalance(millionyen)－

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

Accounts
24 receivable–
trade

2

－

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

Accounts
26 receivable–
trade

1

Accounts
11 receivable–
trade

4

Accounts
16 receivable–
trade

1

－

－

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

(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.
(2) Transactions between consolidated subsidiaries of the Company and related parties
Not applicable.

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
Not applicable.

- 111 -

(Earnings Per Share Information)
Previous consolidated fiscal year
(Started October 1, 2020;
ended September 30, 2021)

Current consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Net assets per share

1,582.45 yen

1,665.68 yen

Net income per share

164.93 yen

177.62 yen(Notes) 1. The diluted net income per share is not stated as there were no dilutive shares.
2. 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 andnet income per share have been calculated assuming that said stock split was conducted at the beginning of the previous
consolidated fiscal year.
3. The basis for the calculation of net income per share is as follows:
Previous consolidated fiscal year
(Started October 1, 2020;
ended September 30, 2021)

Current consolidated fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Net income per share
Net income attributable to owners of parent(millions of yen)Amount not attributable to common shareholders(millions of yen)
Net income from common stocks attributable toowners of parent (millions of yen)
Average number of common stocks outstanding(hundreds of shares)(Note)

8,686

9,317

－

－

8,686

9,317

526,691

524,527

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 numbers of said treasury stocks outstanding deducted for the calculation of net income per share were 264,371
shares for the previous consolidated fiscal year, and 212,918 shares for the current consolidated fiscal year.
(Material Subsequent Events)
Not applicable.

- 112 -

5) [Supplementary Schedules][Schedule – Corporate Bonds]
Not applicable.
[Schedule – Borrowings]
Classification

Balance at beginning Balance at end ofof yearyear(million yen)(million yen)

Average interest
rate
(%)

Terms of repayment

Short-term loans payable

－

－

－

－

Current portion of long-term loans payable

80

71

0.59

－

Current portion of lease obligations

468

492

－

－

Long-term loans payable (excluding
current portion)

214

142

0.59

October 10, 2022 September 10, 2025

694

481

－

6

1

－

1,464

1,190

Lease obligations (excluding current
portion)October 9, 2022 September 22, 2027

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
Due after 2 years but
Due after 3 years but
within 2 years
within 3 years
within 4 years(million yen)(million yen)(million yen)

Due after 4 years but
within 5 years(million yen)

Long-term loans payable

71

71

－

－

Lease obligations

247

117

57

50

Other interest-bearing
debts

－

－

－

－

[Schedule – Asset Retirement Obligations]
Information has been omitted as it was immaterial.

- 113 -

(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)

15,292

33,76850,34067,838

Quarterly (current FY) net
income before income taxes

3,241

8,431

11,91913,650

2,228

5,816

8,125

9,317

42.41

110.82154.88177.62(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)

1st quarter2nd quarter
42.41

68.44

- 114 -

3rd quarter
44.04

4th quarter
22.73

2 [Non-Consolidated Financial Statements, etc.](1) [Non-Consolidated Financial Statements](i) [Balance Sheets](Unit: million yen)Previous fiscal year
(September 30, 2021)
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 deposits
Guarantee deposits
Long-term lease investment assets
Other
Total investments and other assets
Total non-current assets
Total assets- 115 -

Current fiscal year
(September 30, 2022)

21,881

25,071*16,304*17,338

511
384
77
0
100
715
*1192
*1585
(13)
30,739

391
362
110
0
96
818
*1160
*1741
(11)
35,080

6,567
173
19
1,974
6,525
15,259

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

2,599
915
22
0
3,537

3,020
1,565
22
0
4,608

19,331
1,389
0
*1120
472
5,967
16,5001,345
539
60
45,72764,525
95,264

18,380
1,389
0
*165
393
6,809
17,5001,391
198
58
46,186
65,696
100,776

(Unit: million yen)Previous fiscal year
(September 30, 2021)
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
Other
Total current liabilities
Non-current liabilities
Lease obligations
Provisions for retirement benefits
Provisions for stocks payment
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, 2022)*12,251- 116 -

*12,847384

362*11,686*11,804

2,169
56
684
673
594
343
3,660
141
*17
0
12,654

3,132
57
732
1,104
392
347
4,430
65
*1223
－
15,500

539
878
307
392
2,118
14,772

198
382
306
394
1,282
16,783

5,700

5,700

5,409
302
5,711

5,409
302
5,712

688

688

63,057
6,263
70,009(1,352)80,06967,157
7,255
75,101(2,359)84,153422
422
80,491
95,264(160)(160)
83,993
100,776

(ii) [Statement of Income](Unit: million yen)Previous fiscal year
(Started October 1, 2020;
ended September 30, 2021)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends 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 sales of non-current assets
Other
Total extraordinary income
Extraordinary losses
Loss on sale of non-current assets
Loss on retirement of non-current assets
Loss on valuation of investment securities
Total extraordinary losses
Net income before taxes
Income taxes–current
Income taxes–deferred
Total income taxes
Net income- 117 -

Current fiscal year
(Started October 1, 2021;
ended September 30, 2022)*161,637*163,570*116,993*117,788

44,644*1, *232,943
11,700*1, *232,895

45,781
12,886

*150

*169

*1155

*1190

*1156

*1158

13
*191
468

*178

104
0
104
12,064103
0
103
13,290

111
9
121

1
－
1

22
22
89
133
12,051
3,917
(158)
3,758
8,293

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

9
507

[Report on cost of sales](a) Cost of sales on information processing, software and consulting services
55th Term(Started October 1, 2020;
ended September 30, 2021)
Classification

Note

II Labor costs

Ratio
(%)

Amount (million yen)

I Materials costs*156th Term(Started October 1, 2021;
ended September 30, 2022)
Ratio
(%)

Amount (million yen)

4,386

31.8

4,555

30.2

2,669

19.4

3,475

23.0

7,057

46.8

15,089100.0

III Expenses
1. Computer rental expenses

402

405

2. Maintenance contracts

1,288

1,276

3. Depreciation

649

690

4. Repairs and maintenanceexpenses592

686

5. Supplies expenses

1,356

1,101

6. Other

2,433

Total expenses

6,723

48.8

13,779100.0

Works in progress andinventories at beginning ofyear
Transfers from other accounts

*2

Total

1

0

1,206

1,294

14,987

16,384

0

0

1,512

2,446

13,475

13,936

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

Cost of sales on information
processing, software andconsulting services

2,896(Notes) 1. Labor costs include the following provisions. Figures in (parentheses) denote amounts for the previous fiscal year.
Provision for bonuses: 905 million yen (629 million yen)
Retirement benefit expenses: 128 million yen (110 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
55th Term(Started October 1, 2020;
ended September 30, 2021)
Classification

Note

Ratio
(%)

Amount (million yen)

I Inventories at beginning of year

56th Term(Started October 1, 2021;
ended September 30, 2022)
Ratio
(%)

Amount (million yen)

57

1.6

77

2.0

II Purchases

3,537

98.4

3,884

98.0

Total

3,595

100.0

3,962

100.0

III Inventories at end of year

77

110

Cost of sales on officeequipment and supplies

3,518

3,851

- 118 -

(iii) [Statement of Changes in Equity]
Previous fiscal year (Started October 1, 2020; ended September 30, 2021)(Unit: million yen)
Shareholders’ equity
Capital surplus
Capital stock

Balance at
beginning of year

Retained earnings
Other retained earnings

Legal capitalsurplus

Other capitalsurplus

Total capitalsurplus

Legal retained
earnings

5,409

302

5,711

688

65,523

(367)

(367)

58,757

5,710

65,1564,300(4,300)－

Dividends ofsurplus(3,440)(3,440)Net income

8,293

8,293

5,700

5,409

302

5,711

688

General reserve

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

－

4,300

552

4,852

5,700

5,409

302

5,711

688

63,057

6,263

70,009

Shareholders’ equity

Balance at
beginning of year
Cumulative effects
of changes inaccounting policies
Restated balance
reflecting changes inaccounting policies
Changes during
fiscal year

0

Treasury stock

Total
shareholders’equity(1,660)75,274

Valuation and translation
adjustments
Valuation
Total valuation Total net assets
difference onand translation
available-foradjustments
sale securities
(560)

(560)

(367)
(1,660)General reserve

74,90774,714
(367)

(560)

(560)

74,347－－

Dividends ofsurplus(3,440)(3,440)Net income

8,293

8,293

(6)

(6)

(6)

315

315

315

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

58,757

Total retained
earnings

6,077

Cumulative effects
of changes inaccounting policies
Restated balance
reflecting changes inaccounting policies
Changes during
fiscal year

5,700

Retained
General reserve earnings brought
forward

982

982

982

308

5,161

982

982

6,143

(1,352)80,069422

422

80,491- 119 -

Current 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

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

General reserve

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

Total
shareholders’equity(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 -

[Notes to the Consolidated 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
Past service costs are recognized as expenses for a certain years (10 years) within the average remaining years of- 121 -

service 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.

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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.
5. Other important matters regarding the preparation of financial statements(1) Application of the consolidated taxation system
The consolidated taxation system is applied.
(2) Application of tax effect accounting for the transition from the consolidated taxation system to Group Tax Sharing
SystemThe Company will be transitioning from the consolidated taxation system to Group Tax Sharing System starting fromthe next fiscal year. Provided, based on the treatment set forth under Item 3 of the Treatment of Tax Effect Accounting
for the Transition from the Consolidated Taxation System to Group Tax Sharing System (Practical Solution No. 39,
March 31, 2020), the Company do not implement the provisions of Paragraph 44 of the Implementation Guidance on
Accounting Standard for Tax Effect Accounting (ASBJ Guidance No. 28, February 16, 2018) for items that were

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transitioned to the group tax sharing system which was established in the Law for Partial Revisions to the Income
Tax Act, etc. (Law No. 8 of 2020) and items that were revised under the non-consolidated taxation system in line withthe transition to the group tax sharing system. The amounts of deferred tax assets and deferred tax liabilities are basedon the provisions of the Tax Act prior to revisions.
Starting from the beginning of the next fiscal year, the Company plans to apply the Practical Solution on the
Accounting and Disclosure Under the Group Tax Sharing System (Practical Solution No. 42, August 12, 2021), which
stipulated the accounting method and disclosure of corporate income tax, national local corporate tax, and tax effectaccounting when applying the group tax sharing system.

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(Changes in Accounting Policies)(Application of Accounting Standard for Fair Value Measurement, etc.)
The Company has decided to apply the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4,2019) (hereinafter, “Fair Value Measurement Accounting Standard”) etc., from the beginning of the current fiscal year. Further,in accordance with the transitional measures set forth in Section 19 of said Fair Value Measurement Accounting Standard andSection 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019), the Company will
apply the new accounting policies under the Fair Value Measurement Accounting Standard, etc. in the future. There are no
impacts on the financial statements.
(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.
(Changes in Method of Presentation)(Application of Accounting Standards for Revenue Recognition, etc.)
The Company applies the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020)(hereinafter, “Revenue Recognition Accounting Standard”) etc. from the beginning of the current fiscal year.
As a result of applying the Revenue Recognition Accounting Standard, etc., “Contract assets” which was included in “Other”
under “Current assets,” and “Contract liabilities” which was included in “Other” under “Current liabilities” in the balance
sheets for the previous fiscal year, are presented as independent items from the current fiscal year.
(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.

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(Notes to Balance Sheets)*1. Monetary claims and monetary liabilities on affiliated companies
Previous fiscal year
(September 30, 2021)
Short-term monetary claims on affiliatedCurrent fiscal year
(September 30, 2022)

225 million yen

278 million yen

120

65

445

430

Previous fiscal year
(Started October 1, 2020;
ended September 30, 2021)

Current fiscal year
(Started October 1, 2021;
ended September 30, 2022)

48 million yen

76 million yen

companies
Long-term monetary claims on affiliatedcompanies
Short-term monetary liabilities on affiliatedcompanies(Notes to Statement of Income)*1. Volume of transactions with affiliated companies

Volume of trading transactions
Net sales
Purchases
Operating expenses
Volume of non-operating transactions

3,006
2,491

3,203
2,530

136

125

*2. The approximate percentages of expenses under selling expenses were 48.1% for the previous fiscal year
and 47.5% for the current fiscal year; percentages of expenses under general and administrative expenses
were 51.9% and 52.5%, respectively.
Major items included in selling, general and administrative expenses are as follows.
Previous fiscal year
(Started October 1, 2020;
ended September 30, 2021)

Current fiscal year
(Started October 1, 2021;
ended September 30, 2022)

Salaries

10,227 million yen

10,101 million yen

Provision for bonuses
Retirement benefit expenses

3,030
868

3,524
937

Provisions for stocks payment
Depreciation

24
607

26
589

2,286

2,382

Rent expenses- 126 -

(Securities)
Stocks of subsidiaries and affiliates (the amounts in the previous fiscal year’s balance sheets were 1,389 million yen forstocks of subsidiaries and 0 million yen for stocks of affiliates; the amounts in the current fiscal year’s balance sheets are
1,389 million yen for stocks of subsidiaries and 0 million yen for stocks of affiliates) are not presented here since they areshares that do not have a market value.
(Tax Effect Accounting)
1. Major factors of deferred tax assets and deferred tax liabilities
Previous fiscal year
(September 30, 2021)
Deferred tax assets
Software development costs
Provisions for bonuses
Provisions for retirement benefits
Retirement benefit trust
Accrued business tax
Loss on valuation of investment securities
Legal welfare expenses corresponding to provisions
for bonuses
Asset retirement obligations
Impairment losses
Provisions for stocks payment
Other
Subtotal
Valuation allowance
Total 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

2,581 million yen
1,116
267
1,570
127
227

Current fiscal year
(September 30, 2022)
2,730 million yen
1,351
116
1,872
174
229

167

202

106
112
93
375

106
112
93
428

6,745
(576)

7,418
(578)

6,168

6,839

171

－

29

30

201

30

5,967

6,809

2. Major items causing difference between statutory income tax rate and effective income tax rate after applying tax effectaccounting
Previous fiscal year
(September 30, 2021)
Statutory income tax rate
(Adjusted)
Inhabitant tax on per capita basis
Entertainment expenses, etc. not deductible for tax
purposesDividends received, etc. to be excluded from grossrevenue
Other
Income tax rate after applying tax effect accounting

Current fiscal year
(September 30, 2022)

30.5％

30.5％

0.6

0.5

0.1

0.8

(0.1)

(0.1)

0.1

(0.1)

31.2

31.6

(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)
Not applicable.

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

Decrease incurrent year

Depreciation in current
year

Buildings

6,567

271

1

387

6,449

11,576Structures

173

6

－

17

162

543

Vehicles

19

－

－

6

13

40

Tools, furniture & fixtures

1,974

560

7

776

1,750

5,504

Land

6,525

－

－

－

6,525

－

15,259

838

9

1,188

14,90017,664

2,599

1,890

18

1,450

3,020

2,803

Software in progress

915

1,553

903

－

1,565

－

Telephone subscription
rights

22

－

－

－

22

－

Other

0

－

－

0

0

0

3,537

3,444

922

1,450

4,608

2,803

Classific
ation

Prope
rty,
plant
and
equip
ment

Type of asset

Total property, plants &equipment
SoftwareIntangible
assets(Unit: million yen)
Balance at
Accumulatedend ofdepreciationyear

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

Acquisition of UPS facilities at TISC

199 million yen

Tools, furniture &Acquisition of servers, etc. for eLTAX data sharing systeminfrastructure

185 million yen

Acquisition of network devices at TISC

87 million yen

Acquisition of servers, etc. for TASK Outsourcing

87 million yen

Additional storage for cloud shared infrastructure

73 million yen

Development costs of software for internal use

942 million yen

Development costs of software for sale

854 million yen

Acquisition of software purchased from outside

72 million yen

Removal of software purchased from outside

18million yen

fixtures

Software(Amounts of decrease)
Software[Schedule – Provisions](Unit: million yen)
Balance at beginningof yearIncrease in current
year

Decrease in current
year

Allowance for doubtful accounts

13

11

13

11

Provisions for bonuses

3,660

4,430

3,660

4,430

141

56

133

65

307

26

27

306

Item

Provisions for loss on construction
contracts
Provisions for stocks payment(2) [Major Assets and Liabilities]
This item is omitted as information has been disclosed in the consolidated financial statements.
(3) [Other]
Not applicable.

- 128 -

Balance at end of year

Part 6 [Stock-related Administration of the Company]
Fiscal year

From October 1 to September 30

Ordinary General Meeting of
Shareholders

December

Record date

September 30

Record dates for dividends ofsurplus

September 30
March 31

Number of shares in one unit

100 shares

Buyback or sale of shares less than
one unit(Special account)Place of handling

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――――――
By means of electronic public notice. However, in the event that electronic notice is

Method of giving public notice

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/

Shareholder privileges

Not applicable.

(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.

- 129 -

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 (55th Term) (started October 1, 2020; ended September 30, 2021), filed to the Director-General of the Kanto Local
Finance Bureau, Japan, on December 20, 2021
(2) Correction Reports for the Annual Securities Reports, Appendices, and Confirmation Letters
Submitted to the Director-General of the Kanto Local Finance Bureau, Japan, on December 27, 2021
Correction Reports for the Annual Securities Reports for the Fiscal Year (55th Term) (started October 1, 2020; ended September
30, 2021), Appendices and Confirmation Letter thereto.
(3) Internal Control Report and AppendicesSubmitted to the Director-General of the Kanto Local Finance Bureau, Japan, on December 20, 2021
(4) ) Correction Reports for the Internal Control Report
Fiscal year (55th Term) (started October 1, 2020; ended September 30, 2021), submitted to the Director-General of the Kanto
Local Finance Bureau, Japan, on December 27, 2021
(5) Quarterly Securities Reports and Confirmation LettersFirst quarter of 56th Term (started October 1, 2021; ended December 31, 2021), filed to the Director-General of the Kanto Local
Finance Bureau, Japan, on February 14, 2022.
Second quarter of 56th Term (started January 1, 2022; ended March 31, 2022), filed to the Director-General of the Kanto Local
Finance Bureau, Japan, on May 11, 2022.
Third quarter of 56th Term (started April 1, 2022; ended June 30, 2022), filed to the Director-General of the Kanto Local Finance
Bureau, Japan, on August 12, 2022.
(6) Extraordinary Reports
Submitted to the Director-General of the Kanto Local Finance Bureau, Japan, on December 20, 2021
Submitted to the Director-General of the Kanto Local Finance Bureau, Japan, on December 19, 2022
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.

- 130 -

Section 2 [Information on Guarantors, etc. of the Company]
Not applicable.

- 131 -

Independent Auditors’ Audit Report and Internal Control Audit Report

December 19, 2022

To: The Board of Directors, TKC Corporation

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, 2021 and ended September 30, 2022.
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, 2022, 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.

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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 adequacy of the cut-off of sales from said software
Consolidated Financial Statements], the Company and its for sale and made-to-order software of the software sales underconsolidated subsidiaries recognized software sales of 5,958 the Local Governments BD, we mainly implemented themillion yen under the Local Governments BD segment. Of 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 internal controls related to the approval of the contract terms upon
Statements) 4. Accounting Policies (5) Standards for recognizing acceptance of orders for software, screening of software
significant revenues and expenses. Sales are recognized at a production, approval at the time of shipment and acceptancecertain point in time or over a certain period depending on the inspection, 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 adequacy of cut-off of sales
the sales was based on customer inspection, revenues from some ・We conducted sampling of sales of those for-sale and made-toof the made-to-order software that were not inspected in the order software recorded in the current consolidated fiscal year,
current consolidated fiscal year were realized over a certain period and cross-checked with the inspection completion notices that are
depending on the progress of satisfaction of obligations.
the basis for recording sales and the dates and amounts of sales in
Sales from the above for-sale and made-to-order software include the accounting system.
customization and production, etc. of specialized software for ・We evaluated the adequacy of the actual cost incurred and total
local governments provided based on customer request. Also, estimated cost that are the basis for determining the level of
because of the long lead time from order to delivery and the large progress for such made-to-order software whose revenue isscale of these projects, sales from each contract tend to be large recognized over a certain period depending on the progress ofand long. Therefore, there is significant impact on net sales when satisfaction of performance obligations.
the Company records in advance, the sales of software which is ・We examined the journal entries to be recorded in the following
scheduled to be inspected in the following consolidated fiscal year consolidated fiscal year and verified whether there are material
or beyond.
cancellations of sales of those for-sale and made-to-order
In addition, management may be under excessive pressure to software.
achieve performance target, and as such, for transactions that arescheduled to be inspected in the following consolidated fiscal year
or beyond, there is a risk of recording the sales in advance in thecurrent consolidated fiscal year.
As such, the software sales by the Local Governments BD, theadequacy of cut-off of sales of such for-sale and made-to-ordersoftware is of particular materiality in our audit of theconsolidated financial statements of the current consolidated
fiscal year, and we believe that it is a key audit matter.
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,
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.

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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 properly 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 toprepare 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, whether 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 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, whether 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.

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[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, 2022 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, 2022 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, and 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 or its engagement partners have no interest in the Company or its consolidated subsidiaries which should be disclosed pursuant
to the provisions of the Certified Public Accountants Act of Japan.
End of document(Notes) 1. The 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.

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Independent Auditors’ Audit Report

December 19, 2022

To: The Board of Directors, TKC Corporation

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 56th fiscal year started
October 1, 2021 and ended September 30, 2022.
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, 2022, 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.
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 (Cut-off of sales from software for sale and made-to-ordersoftware 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 properly 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, whether 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 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 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 to continue 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.

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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
Public Accountants Act of Japan.
End of document(Notes) 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.

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[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 19, 2022

[Company name]

TKC Corporation[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 Ageba-cho, 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, and Kiyotsugu Nakanishi, Chief Financial Officer of
TKC Corporation (the "Company"), are responsible for designing and operating effective internal control over financial reportingof the Company, and have designed and operated internal control over financial reporting in accordance with the basic 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, 2022, 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 and processes
concerning businesses or operations dealing with high-risk transactions, as business processes that may have material impacts onfinancial 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]
Not applicable.

5 [Special Notes]
Not applicable.

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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 19, 2022

[Company name]

TKC Corporation[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 Ageba-cho, 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 56th fiscal
year (started October 1, 2021; ended September 30, 2022) are adequate under the Financial Instruments and Exchange Act of Japan.

2 [Special Notes]
None to be disclosed.

- 142 -