Quarterly Report(53rd Term 2nd Quarter)
Started January 1, 2019
Ended March 31, 2019

TKC Corporation
1758 Tsurutamachi, Utsunomiya-shi, Tochigi－

1 －Table of Contents

Page[Front Cover] ............................................................................................................................................................................................. 3
Section 1
Part 1[Information on the Company] ........................................................................................................................................... 4[Overview of the Company] ............................................................................................................................................... 4

1
2[Key Financial Data] .......................................................................................................................................................... 4[Description of Business] ................................................................................................................................................... 5

Part 2
1[Business Overview] .......................................................................................................................................................... 6[Risk Factors] ..................................................................................................................................................................... 6

2
3[Management Analysis of Consolidated Financial Conditions, Operating Results, and Cash Flows] ................................ 6[Material Agreements, etc.] .............................................................................................................................................. 15Part 3
1[Information on the Company] ......................................................................................................................................... 16[Information on the Company’s Stock] ............................................................................................................................ 16(1) [Total number of shares, etc.]...................................................................................................................................... 16(2) [Share subscription rights, etc.]................................................................................................................................... 16(3) [Exercise of bonds with share subscription rights containing a clause for exercise price adjustment] ........................ 16(4) [Changes in total number of issued shares, capital stock, etc.] ................................................................................... 16(5) [Major shareholders] ................................................................................................................................................... 17(6) [Voting rights] ............................................................................................................................................................. 182Part 4[Officers] .......................................................................................................................................................................... 18[Financial Information] .................................................................................................................................................... 19

1[Quarterly Consolidated Financial Statements] ................................................................................................................ 20(1) [Quarterly consolidated balance sheets]...................................................................................................................... 20(2) [Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income] .... 22[Quarterly consolidated statements of income] ........................................................................................................... 22[Quarterly consolidated statements of comprehensive income] .................................................................................. 23(3) [Quarterly consolidated statements of cash flows] ...................................................................................................... 24

2
Section 2[Other] .............................................................................................................................................................................. 29[Information on Guarantors, etc. of the Company] ........................................................................................................... 30[Quarterly Audit Report] [Confirmation Letter]－2 －[Front Cover][Document filed][Applicable law]

Quarterly Report
Article 24-4-7, Paragraph 1 of the Financial Instruments and Exchange Act of Japan[Filed with][Date filed]Director of Kanto Local Finance Bureau
May 9, 2019

[Quarterly accounting period][Company name]53rd Term 2nd Quarter (from January 1, 2019 to March 31, 2019)
Kabushiki Kaisha TKC[Company name in English][Title and name of representative]

TKC Corporation
Kazuyuki Sumi, Representative Director, President and Executive Officer[Address of head office][Phone number]

1758 Tsurutamachi, Utsunomiya-shi, Tochigi
028-648-2111[Contact person][Contact address]

Hitoshi Iwata, Representative Director, Vice President and Executive Officer
2-1 Ageba-cho, Shinjuku-ku, Tokyo[Phone number][Contact person]

03-3235-5511
Hitoshi Iwata, Representative Director, Vice President and Executive Officer[Place available for public inspection]

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

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

Term & Period

Accounting period(millions of

Net salesyen)

52nd Term
2nd quarter consolidated

53rd Term
2nd quarter consolidated

cumulative period

cumulative period

Started October 1, 2017;

Started October 1, 2018;

Started October 1, 2017;

ended March 31, 2018

ended March 31, 2019

ended September 30, 2018

30,31931,936

61,621

Fiscal 52nd Term

Ordinary income(millions of
yen)

4,989

4,850

8,961

Quarterly (current) net income
attributable to owners of parent(millions of
yen)

3,298

3,466

6,158

Quarterly comprehensive income(millions of

3,380

2,481

6,517

70,73472,73072,550(millions ofyen)

86,20691,02390,202(yen)

125.05131.45233.46(yen)

124.51130.92232.41

(%)

80.1

78.3

78.6

2,658

3,651

8,810

or comprehensive income

yen)(millions of

Net assets

yen)

Total assets
Quarterly (current) net income per
share
Quarterly (current) diluted net
income per share
Equity ratio
Cash flows from operating
activities(millions ofyen)Cash flows from investing
activities(millions ofyen)(2,227)(1,932)(4,013)

Cash flows from financing
activities(millions ofyen)(1,646)(2,123)(2,567)

Cash and cash equivalents balance(millions of

15,822

18,864

19,26852nd Term

53rd Term

2nd quarter consolidated
accounting period

2nd quarter consolidated
accounting period

Started January 1, 2018;
ended March 31, 2018

Started January 1, 2019;
ended March 31, 2019

60.67

87.09

at end of quarteryen)

Term & Period

Accounting period

Quarterly net income per share(Notes) 1.

(yen)

Changes in key financial data, etc. of the Company are not stated here, as they are included in the Company’s quarterly2.

consolidated financial statements.
Net sales do not include consumption taxes (consumption tax and local consumption tax; hereinafter the same).

3.

The Company introduced the Board Incentive Plan (BIP) Trust starting this current 2nd quarter consolidated accounting－

4 －period, and recorded the stocks held by said Trust as treasury stocks. Accordingly, for the purpose of calculating thequarterly net income per share, they are included in the treasury stocks to be deducted in calculating the average numberof shares outstanding.

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

－

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

2 [Management Analysis of Consolidated Financial Conditions, Operating Results, and Cash Flows]
I. Operating Results
The operating results for the current 2nd quarter consolidated cumulative period (hereinafter, “the current 2nd quarter”) of theconsolidated Group comprising of TKC Corporation and its six consolidated subsidiaries recorded a net sales of 31,936 million
yen (increased 5.3% year-on-year), operating income of 4,678 million yen (decreased 4.0% year-on-year), ordinary income of
4,850 million yen (decreased 2.8% year-on-year), and net income attributable to owners of parent of 3,466 million yen (increased
5.1% year-on-year).
This was attributable to increase in sales from computer services and software sales earned by the Accounting Firm Business
Division due to increase in the number of users of financial accounting systems that meet the requirements of the Electronic Books
Maintenance Act of Japan as well as increase in the number of users of ASP1000R electronic tax filing system for corporations in
response to the electronic filing of income taxes now mandated to large corporations, and to increase in sales from computer
services earned by the Local Governments Business Division due to increase in number of organizations using our mission-criticalsystems.
The reason for lower operating income and ordinary income compared to the previous fiscal year is because of the absence in thecurrent 2nd quarter of extraordinary sales and cost of sales related to system revision works in response to the amendments to the
My Number and National Health Insurance systems by the Local Governments BD which were recorded in the 2nd quarter of theprevious fiscal year.
Net sales for the current 2nd quarter by business division are shown below.
1. Results of operation of the Group for the 2nd Quarter(1) Net sales of the Accounting Firm Business Division
Net sales of the Accounting Firm BD was 22,107 million yen (increased 3.5% year-on-year); operating income was 4,519
million yen (increased 6.0% year-on-year). The breakdown is as follows:(i) Sales from computer services increased by 4.1% year-on-year. This was attributable to the growth in number of users of thecloud service-based FX4 Cloud Integrated Accounting Information System for mid-sized companies and Office Management
System (OMS Cloud) for Tax Accounting Firms.
(ii) Software sales increased by 2.4% year-on-year. This is the result of increase in the number of users of financial accounting
systems that meet the requirements of the Electronic Books Maintenance Act of Japan as well as increase in the number ofusers of our electronic tax filing system for corporations (ASP1000R) in response to the electronic filing of income taxes
now mandated to large corporations.
(iii) Sales from consulting services decreased 4.0% year-on-year. This was due to decrease in revenues from client/server system
launch support services and hardware maintenance as a result of growth in the number of users of FX4 Cloud, OMS Cloudand other systems.
(iv) Hardware sales increased by 1.4% year-on-year. This was caused by increasing demands for PC replacements in response to
the termination of Windows 7 support in 2020.
－

6 －(2) Net sales of the Local Governments Business Division
Net sales of the Local Governments BD was 7,948 million yen (increased 12.1% year-on-year); operating income was 119
million yen (decreased 78.6% year-on-year). The breakdown is as follows:(i) Sales from computer services increased by 8.8% year-on-year. This was driven by the increased sales from outsourcing
services and the use of TKC data centers generated by new orders from mission-critical system users received in the 2nd
quarter of the previous fiscal year. Also, the increase in the number of users of LGWAN cloud services such as theConvenience Store Certificate Issuing System and the Taxation Document Image Management System contributed to thegrowth.
(ii) Software sales decreased 15.3% year-on-year. This was due to the absence in the current 2nd quarter of sales and cost of
sales from system revision works in response to amendments to the My Number, National Health Insurance and long-termcare insurance systems which existed in the 2nd quarter of the previous fiscal year.
(iii) Sales from consulting services increased 54.3% year-on-year. This was driven by increase of sales from orders for new
systems from mission-critical system users received during the 2nd quarter of the previous fiscal year.
(iv) Hardware sales increased by 139.8% year-on-year. This was due to increase in the sales of servers and network devices such
as Registration Network System-related devices.
(3) Net sales of the Printing Business Division (Subsidiary: TLP Corporation)
Net sales of the Printing BD was 1,880 million yen (increased 1.2% year-on-year); operating income was 34 million yen(decreased 26.2% year-on-year). The breakdown is as follows:(i) Sales of data printing service-related products increased by 6.7% year-on-year. This was due to winning more orders fromgovernment offices and greater orders for direct mail productions from other client companies.
(ii) Business form-related sales decreased by 8.2% year-on-year. This is due to ongoing decline in demands for business forms.
2. Important Matters with respect to the Company as a Whole(1) Acquisition of certification for electronic books software legal compliance
On March 29, 2019, the Company became the first among its competitors to acquire the certification under the Electronic Books
Software Legal Compliance Certification System by Japan Image and Information Management Association (JIIMA) for its
financial accounting systems (FX2, FX4 Cloud, e21-Meister, etc.) that are offered to the clients of accounting firms. The
Electronic Books Software Legal Compliance Certification System is a system under which JIIMA checks whether acommercial software for the bookkeeping and recording for national taxes complies with the requirements of the Electronic
Books Maintenance Act of Japan, and issues a certificate for those that meet the legal requirements.
Today, while many kinds of financial accounting systems are used by companies in Japan, only a few of them are in total
compliance with the Electronic Books Maintenance Act of Japan. The Company considers business entities as taxpayers, anddesigns its financial accounting systems to comply with the blue income tax return system based on either the Corporation Tax
Act or Income Tax Act of Japan. We anticipate that our systems will draw greater attention looking forward.
(2) Acquisition of patent for internal audit support functions of Overseas Business Monitor
On January 11, 2019, the Company acquired a patent (Patent No. 6463532) for the internal audit support functions of theOverseas Business Monitor (hereinafter, “OBM”).
OBM is a cloud-based service that enables parent companies in Japan to monitor the business results of the Japanese affiliated－

7 －companies operating abroad (overseas subsidiaries). When an overseas subsidiary extracts its accounting data from the local
accounting system and uploads it to the TKC Internet Service Center (TISC), the parent company in Japan can check thebusiness results of that overseas subsidiary based on a standardized account title system which are automatically translated fromthe local language into Japanese or English. Furthermore, the OBM is equipped with internal audit support functions that
automatically analyzes all accounting data and extracts transactions that appear to be mistaken or falsified. These functions were
granted a patent as an invention related to the “Internal Audit Support Device, Internal Audit Support Method, and Internal Audit
Support Program.”(3) Transfer of shares without charge by the Chairman Emeritus of the Company to TKC Members
In March 2019, Masaharu Iizuka, Chairman Emeritus, transferred without charge, the common shares of the Company owned byhimself to 222 TKC Members who practice Shomen-tempu (attachment of tax audit reports) pursuant to Article 33-2 of theCertified Public Tax Accountant Act of Japan. This transfer without charge will be conducted for five years from March 2018 toMarch 2022, transferring up to one million shares of the Company. TKC Members who practice Shomen-tempu are eligible, andthis was the second transfer since last year.
Masaharu Iizuka, together with his brother late Kazuaki Iizuka (former vice president of the Company), had also transferred atotal of three million shares of the Company owned in person to 6,657 TKC Members in 2006.
3. Business activities and operating results of the Accounting Firm Business Division
The Accounting Firm BD operates in accordance with the business objectives set forth in the Articles of Incorporation (Article 2,
Paragraph 1: Management of electronic data processing centers to defend the business domain and maintain control over the fateof accounting firms) and works under close ties with the TKC National Federation (Chairman Mr. Takashi Sakamoto), which
consists of 11,300 certified public tax accountants and certified public accountants (as of March 31, 2019) that are customers of
TKC (hereinafter, “TKC Members”).
(Note) For more information on the TKC National Federation, visit the TKC Group website (https://www.tkc.jp/).
(1) Activities of the TKC National Federation (“TKCNF”)
TKCNF announced its 3-year activity policy from 2019 to 2021 and strategic targets for FY2019 based on the policy agenda inview of its 50th anniversary (in 2021). The content is as follows:[Activity policy to change society with the TKC brand](i) Promote Shomen-tempu (attachment of tax audit reports) by the TKC methods (FY2019 target: Corporate Shomen-tempu by
134,000 companies)(ii) Promote TKC Monitoring Information Service (FY2019 target: 120,000 companies, 240,000 cases)(iii) Promote self-accounting practice by the TKC methods (FY2019 target: 277,000 companies)
In addition, as the initiatives of TKCNF continue to draw attention of many financial institutions, the following measures havebeen launched to further enhance the managerial infrastructure of TKC Member firms:(i) Understand and practice the Standards of Conduct for TKC Accountants(ii) Increase the numbers of Field Auditors and Assistant Field Auditors(iii) Enhance the managerial advisory services as a certified business innovation support agency(2) Activities to achieve the strategic goals of the Accounting Firm Business Division－

8 －Based on the activity policy of TKCNF, the Company operates to achieve its strategic targets for FY2019.
(i) Promotion of TKC Monitoring Information Service
During the current 2nd quarter under review, we established the promotion of TKC Monitoring Information Services as our
Accounting Firm BD’s most important strategic target, and worked towards diffusing the services to TKC Member firms andfinancial institutions. TKC Monitoring Information Service is a cloud-based service in which the TKC Members, uponrequest by the management of their clients, provide to financial institutions, free of charge, financial information such asmonthly trial balance sheets and financial statements prepared by TKC Member firms after monthly field audits and monthly
settlements. Monthly trial balance sheets will be made available immediately upon completion of the monthly settlement,
and fiscal financial settlements are disclosed immediately after the client electronically files its financial documents to thetax authorities.
During the current 2nd quarter, we communicated to financial institutions that the reliability of financial statements preparedby SMEs can be verified by the following three documents:
1) Supporting documents submitted by TKC Members as provided for under Article 33-2 of the Certified Public Tax
Accountant Act of Japan
2) Certificate of Bookkeeping Timeliness, with which TKC Corporation certifies the timeliness in the preparation of
accounting books as required under Article 432 of the Companies Act of Japan and one-stop, full line process offinancial statements and tax returns for corporate tax for the past three years (36 months)
3) The Chusho Kaikei Yoryo checklist developed by the Japan Federation of Certified Public Tax Accountants’
Associations and Japan Federation of Credit Guarantee Corporations
As a result of these activities, the number of financial institutions adopting this Service is increasing rapidly with more than
400 institutions throughout Japan as of March 31, 2019. Over 77,000 companies provided their financial information tofinancial institutions through this Service.
(ii) Promotion of self-accounting by the TKC methods (promotion of FX series)
During the current 2nd quarter under review, the Company provided TKC Member firms with seminars on practical issues
that require attention in applying the reduced tax rate upon the enactment of consumption tax changes under the 2016 tax
reform to be effected in October 2019, as well as support for each firm in setting and identifying targets for the promotion ofself-accounting and support for hosting self-accounting promotion meetings to determine specific action plans. As a result of
these activities, the number of FX series users exceeded 260,000 companies as of March 31, 2019.
(iii) Supporting complete compliance with the Electronic Books Maintenance Act of Japan
Under the FY 2018 tax reform, provisions were added in which a tax benefit of 100,000 yen in special reduction for blue
income tax returns shall be offered if the declarer 1) is subject to the Electronic Books Maintenance Act of Japan forbookkeeping, or 2) files the income tax return electronically. This is a groundbreaking revision that offers favorable tax
treatment for business entities that keep the history of additions, deletions and revision to the book record, which serves asbasis of tax returns in accordance with the Electronic Books Maintenance Act of Japan. We anticipate that the same
treatment will be applied to the filing of corporate taxes in the future.
Also, as stated above, our FX series and other systems acquired certification for electronic books software legal complianceby Japan Image and Information Management Association (JIIMA). Through the promotion of the certified FX series, etc.,
we support complete compliance with the Electronic Books Maintenance Act of Japan.
(iv) Soliciting new members (promotion of joining TKCNF)
TKCNF is engaged in a project to increase TKC membership to over 10,000 firms by the end of December 2020. The－

9 －Company is working closely with the New Members Service Committee of TKCNF in soliciting new members to achieve
this goal.
During the current 2nd quarter, we solicited new members through seminars held for non-members targeting medium- andlarge-sized firms as well as certified public tax accountants and certified public accountants who plan to begin private
practice.
As a result of these activities, the number of TKC Members totaled approximately 9,700 accounting firms and 11,300
accountants as of March 31, 2019. The difference in numbers of firms and accountants are because some firms have multiple
accountants who are members.
(3) Activities to support the preparation of highly reliable financial statements based on timely and accurate bookkeeping(i) Support activities for diffusion of Chusho Kaikei Yoryo (Guidelines for SME accounting)
The TKCNF recommends the use of Basic Guidelines with Respect to the Accounting Procedures at Small- and Mediumsized Enterprises (hereinafter, “Chusho Kaikei Yoryo” (Guidelines for SME Accounting)) formulated in February 2012 withwhich SME clients should comply. These Guidelines are based on the following principles: 1) accounting that helps to grasp
the company’s business situation; 2) accounting that contributes to providing information to stakeholders (financial
institutions, etc.); 3) accounting that complies with the Ordinance on Company Accounting while achieving harmony
between accounting and taxation system; and 4) accounting that does not place excessive burden on SMEs.
In order to support the activities of the TKCNF towards the diffusion and utilization of the Guidelines, the Company
continues to promote the development of training materials and to strengthen collaboration with other organizations
supporting SMEs.
(ii) Issuance of Certificate of Bookkeeping Timeliness
The Company utilizes the processing log data and time series data that are automatically logged at the TKC Internet Service
Center when TKC Members access our system to issue a Certificate of Bookkeeping Timeliness free of charge. This
Certificate serves as reference for financial institutions and other third parties to objectively evaluate the businessperformance of TKC Member firms.
This service was developed in an aim to improve reliability of financial statements and tax returns prepared by TKC
Members and to provide a passport for smooth financing to the clients of TKC Members. This utilizes the features of 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
settlements to the final settlement of accounts and electronic tax filings have been completed by a one-stop, full line process
in a timely manner.
(4) Expansion into large-scale enterprise market
By utilizing the TKC systems, the Company contributes to the rationalization of tax and accounting operations of large
enterprises, mainly of listed companies, and are actively working to solicit these companies and their affiliates to become clientsof TKC Members.
As systems to supplement these activities, the Company provide the TKC Consolidated Group Solution package (which
includes: the eCA-DRIVER consolidated accounting system, the eConsoliTax consolidated tax payment system, the eTaxEffecttax effect accounting system, the ASP1000R electronic tax filing system for corporations, the FX5 integrated accounting
information system, the e-TAX series electronic tax filing system, the FAManager non-current asset management system, theTDS documented evidence storage service, and the OBMonitor overseas business monitoring system, etc.).
In the current 2nd quarter, the Company held seminars in collaboration with the TKCNF’s Medium and Large-size Support－

10 －Research Committee (consisting of approximately 1,320 members as of March 31, 2019) and the TKCNF’s Overseas
Deployment Support Research Committee (consisting of approximately 630 members as of March 31, 2019), in order to enhance
the awareness and brand power of system offered by the Company. Seminars on responses to electronic filing mandated to large
enterprises with a capital of 100 million yen or greater under the FY2018 tax reforms, as well as on accounting standards withrespect to the recognition of revenue and how to deal with non-compliance risks of foreign subsidiaries were held to support thepromotional activities.
As a result of these activities, the number of corporate groups using the TKC Consolidated Group Solution counted
approximately 3,550 corporate groups as of March 31, 2019. Our taxation-related information systems are adopted by over 90%of the 100 largest Japanese listed companies by sales amount.
(5) Expansion of markets for legal information database services
The LEX/DB Internet legal information database, developed originally by the Company, maintains an archive of over 296,000
judicial precedents and decisions as of March 31, 2019, covering all legal fields from precedents, etc. set in the former Supreme
Court dating back to 1875 to those most recently published, being the largest database of its kind in Japan.
The TKC Law Library is a comprehensive legal information database which uses the LEX/DB Internet as its core content andcontains over 936,000 bibliographic information references with links to 57 of the legal information databases operated by 18
specialized legal publishers (including Gyosei Corporation, Nippon Hyoron-Sha Co., Ltd., Yuhikaku Publishing Co., Ltd.,
Chuokeizai-Sha Holdings, Inc., and Hanrei Times Holdings Co., Ltd.) with accessible number of information now exceeding
2,600,000 items.
(i) Increase of user base of TKC Law Library
The Company has continuously engaged in sales promotions for the TKC Law Library, highlighting its usefulness inbusiness operations and putting the contents that are useful for business practices into customer-specific packages (Law Firm
Package for law firms, Corporate Legal Package for corporate legal departments).
In the current 2nd quarter, as a result of active promotional activities towards TCK Member firms, universities, law schools,
government offices, law firms, patent offices and corporate legal departments, the number of users exceeded 50,000 IDs andthe Library is used by over 20,500 institutions as of March 31, 2019.
(ii) Promotion in the academic market
The Company proposes the implementation of system-based early learning support programs to 54 law schools using the
TKC Law School Educational and Research Support System and supports such schools in applying for the Public Support
Program for Law Schools Concerning the Revision of Budget Distribution initiative by the Ministry of Education, Culture,
Sports, Science and Technology.
Also, starting the current 2nd quarter, we made a full-scale launch of the promotional activities for Civil Service
Examination Study Tool for undergraduates and concluded contracts with 16 universities and trial use by 60 schools as ofMarch 31, 2019.
4. Business activities and operating results of the Local Governments Business Division
The Local Governments BD operates in accordance with the business objectives set forth in the Articles of Incorporation(Article 2 Item 2: “Management of electronic data processing centers to improve the administrative efficiency of local
governments”) and offers specialized information services in order to help promote the welfare of residents by improving
administrative efficiency.
(1) Development and provision of cloud services designed for local municipalities
The Company provides TKC Government Cloud Service to municipalities (mainly for cities, wards, towns and villages)－

11 －nationwide. This Cloud Service consists of the TASK Cloud Service which supports a range of services for residents, missioncritical functions and information services within agencies, and the TASK Outsourcing Service which supports massive batch
output and processing of tax papers and other documents.
In particular, the TASK Cloud Service is a common platform package system operated at TKC data centers and shared by all
municipalities across Japan, and is attracting attention from the perspective of policy for the promotion of local government
cloud systems by the Japanese government (the Ministry of Internal Affairs and Communications).
In the current 2nd quarter, we supported municipalities that newly implemented our services and are scheduled for a full-scalelaunch in the spring of 2019 in enabling smooth system transition, while enhancing the functions of existing systems, including
compliance with the change of the era name and revisions to the consumption tax law. As a result of the aggressive promotional
activities, our mission-critical systems are adopted by over 150 municipalities nationwide as of March 31, 2019.
(2) Expansion of cloud services for residents
To promote the utilization of My Number Cards, there has been an increase in the number of municipalities introducing or
considering adopting the services of Issuance of Certificates at Convenience Store.
In response, the Company provides the TASK Cloud Convenience Store Certificate Issuing System as the system to realize thisservice. The System has an extensive track record as the first cloud service for municipalities across Japan and has been adopted
in over 70 municipalities nationwide including government ordinance-designated cities such as Kobe and Kitakyushu as ofMarch 31, 2019.
In the current 2nd quarter, we worked to enhance and expand various functions, as well as provided the TASK Cloud Easy
Counter Service System to support the counter services within municipal offices using the features of our System, and conductedactive promotional activities.
(3) Support for cloud-based electronic filing of local taxes
The Company is an authorized contractor of the Council for the Digitization of Local Taxes (operation to be transferred to Local
Tax Agency as of April 1, 2019), and provides a cloud-based service for the standard system of the electronic filing of local taxes
and the electronic tax payment offered by the Council. We also develop and provide Data Connection Services as our ownfunctionality to connect the individual tax systems for inhabitant taxes, etc. of various municipalities with the Council’s platform.
These services are proposed in collaboration with 47 companies nationwide with whom we have on-going alliance partner
agreements. As a result, our core system TASK Cloud Local Taxes Electronic Filing Support Service is currently used by morethan 760 agencies which account for more than 40% of all municipalities as of March 31, 2019.
In the current 2nd quarter, we engaged in the enhancement of functionalities and active promotional activities for related services
such as data connection services in view of the common tax payment system for local taxes to be launched nationwide in
October 2019.
(4) Support for the development of standardized local public accounting
Municipalities are required to adopt the system of accrual basis accounting (double entry bookkeeping) to replace the current
cash basis accounting (single entry bookkeeping), and to prepare and disclose their financial documents as well as to utilize suchdata for administrative operations.
In order to support this, the Company provides the TASK Cloud Public Accounting System, which is compatible with the daily
journalizing method encouraged by the Japanese government, and its related systems TASK Cloud Non-current Assets Control
System and TASK Cloud Consolidated Financial Statement Preparing System.
In the current 2nd quarter, we engaged in the development and enhancement of various function to support the adoption ofstandardized disclosure formats (visualization and utilization of local public accounting) proposed by the Study Group on the－

12 －Promotion of Local Public Accounting of the Ministry of Internal Affairs and Communications that will enable comparison of
information over time and with other groups. As a result of our promotional activities for new customers, the System are used inover 190 organizations across Japan as of March 31, 2019.
(5) Compliance with other revised laws and systems
In March 2019, the Japanese cabinet approved the bill for Digital Administrative Procedures Act which allows administrative
procedures, in general to be conducted on-line, and submitted the bill to the ordinary session of the Diet. The bill is expected to
be enacted, possibly during the current Diet session, and municipalities throughout Japan will be required to provide various
administrative services as well as personal identification and payment of fees on-line in order to improve the convenience of theentire user base (government, citizens and businesses).
In light of these circumstances, we underwent major organizational reform as of October 1, 2018 including the new
establishment of the System Planning Department in order to further accelerate the planning and development of new products
and services as well as to strengthen customer support including the collection and communication of the latest information.
In the current 2nd quarter, our sales, development and operation divisions collaborated under the leadership of the System
Planning Department in gathering and communicating information related to digital governance, as well as conducting surveys,
research and development of next generation systems and services which utilize cutting-edge digital technology.
5. Business activities and operating results of the Printing Business Division
The Group’s Printing BD operates with the main focus on data print services (hereinafter, “DPS”) and business form printing.
Sales in the area of DPS increased year-on-year, due to increase in orders received for articles relating major government
contract projects and direct mail productions for private enterprises, despite decreasing factors from the absence of electionrelated spot orders this year.
In the area of business form printing, sales decreased year-on-year due to decline in demands for business forms.
II. Financial Conditions
Assets, liabilities and net assets at the end of the current 2nd quarter consolidated accounting period are stated below.
1. Assets
Total assets as of the end of the current 2nd quarter consolidated accounting period amounted to 91,023 million yen, an 821
million yen increase compared to 90,202 million yen as of the end of the previous consolidated fiscal year.
(1) Current assets
Current assets as of the end of the current 2nd quarter consolidated accounting period amounted to 32,179 million yen, a 431
million yen increase compared to 31,747 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to an increase of 683 million yen in Notes and Accounts Receivable - Trade and a 177 million yen
increase in Lease Investment Assets included in Other, despite a 403 million yen decrease in Cash and Deposits.
(2) Non-current assets
Non-current assets as of the end of the current 2nd quarter consolidated accounting period amounted to 58,844 million yen, a
390 million yen increase compared to 58,454 million yen as of the end of the previous consolidated fiscal year.
This was attributable to a 500 million yen increase in Long-term Time Deposits, a 312 million yen increase in Tools, Furniture &Fixtures included in Other (net amount) of Property, Plant & Equipment, a 237 million yen increase in Construction in Progress,－

13 －a 691 million yen increase in Long-term Lease Investment Assets included in Other of Investments and Other Assets, and a 485
million yen increase in Long-term Deferred Tax Assets despite a 1,502 million yen decrease in Investment Securities and a 317
million yen decrease in Intangible Assets.
2. Liabilities
Total liabilities as of the end of the current 2nd quarter consolidated accounting period amounted to 18,293 million yen, a 641
million yen increase compared to 17,651 million yen as of the end of the previous consolidated fiscal year.
(1) Current liabilities
Current liabilities as of the end of the current 2nd quarter consolidated accounting period amounted to 13,241 million yen, a 713
million yen decrease compared to 13,955 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a 463 million yen decrease in Accounts Payable - Other and a 423 million yen decrease in
Provisions for Bonuses.
(2) Non-current liabilities
Non-current liabilities as of the end of the current 2nd quarter consolidated accounting period amounted to 5,051 million yen, a
1,355 million yen increase compared to 3,696 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a 691 million yen increase in Long-term Lease Obligations (sublease) and a 527 million yen
increase in Provisions for Stocks Payment included in Other of Non-current liabilities.
3. Net assets
Total net assets as of the end of the current 2nd quarter consolidated accounting period amounted to 72,730 million yen, a 179
million yen increase compared to 72,550 million yen as of the end of the previous consolidated fiscal year.
This was attributable to a 2,015 million yen increase in Retained Earnings and a 228 million yen increase in Capital Surplus,
despite a 235 million yen decrease in Subscription Rights to Shares, a 995 million yen decrease in Valuation Difference on
Available-for-sale Securities, and a 827 million yen decrease in Purchase of Treasury Stock.
Equity ratio as of the end of the current 2nd quarter consolidated accounting period was 78.3%, a 0.2 percent point decrease
compared to the ratio of 78.6% as of the end of the previous consolidated fiscal year.
III. Cash Flows
The Balance of the cash and cash equivalents as of the end of the current 2nd quarter consolidated accounting period amounted to
18,864 million yen, a 403 million yen decrease compared to the end of the previous consolidated fiscal year.
The overview of cash flows for the current 2nd quarter consolidated accumulative period and major factors contributing to theresults are as follows:(1) Cash flows from operating activities
Cash flows from operating activities increased by 3,651 million yen (993 million yen increase in revenue compared to the samequarter of the previous year). Major factors include the posting of 5,114 million yen as quarterly net income before taxes andadjustments.
(2) Cash flows from investing activities
Cash flows from investing activities decreased by 1,932 million yen (295 million yen decrease in spending compared to the－

14 －same quarter of the previous year). Major factors include the payment of 977 million yen for the acquisition of tangible fixed
assets, and payment of 506 million yen for the acquisition of intangible fixed assets.
(3) Cash flows from financing activities
Cash flows from financing activities decreased by 2,123 million yen (477 million yen increase in spending compared to the samequarter of the previous year). Major factors include payment of 1,448 million yen for year-end dividends (dividend of 55 yen per
share) for the term ended September 2018, and payment of 1,359 million yen for the acquisition of treasury shares.
IV. Operational and Financial Challenges Facing the TKC Group
There are no significant changes in challenges faced by the TKC Group during the current 2nd quarter consolidated cumulative
period.
V. Research and Development Activities
There were no research and development expenses spent by the TKC Group during the current 2nd quarter consolidated
cumulative period.
There are no significant changes in the status of research and development activities of the TKC Group during the current 2ndquarter consolidated cumulative period.

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

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

Class

Total number of shares authorized to be issued (shares)

Common stock

60,000,000

Total

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

Number of shares issued as
Class

Number of shares issued asof the end of 2nd quarteraccounting period (shares)of the filing date (shares)(May 9, 2019)(March 31, 2019)

Common stock

26,731,033

Total

26,731,033

26,731,033

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

Description

Instruments Firms
Association
Number of sharesconsisting a unit:

First Section of the Tokyo
Stock Exchange

100 shares－

26,731,033－(2) [Share subscription rights, etc.](i) [Stock option scheme]
Not applicable.
(ii) [Other share subscription rights, etc.]
Not applicable.
(3) [Exercise of bonds with share subscription rights containing a clause for exercise price adjustment]
Not applicable.
(4) [Changes in total number of issued shares, capital stock, etc.]

Date

Increase or

Balance ofIncrease or

decrease intotal number

total number
of issued

decrease incapital stockof issued
sharesshares(millions of(shares)
From January 1, 2019
To March 31, 2019－

(shares)yen)－

26,731,033

－

16 －

Balance ofcapital stock(millions of
yen)
5,700

Increase or

Balance of

decrease incapital reserve

capital reserve(millions of(millions of

yen)

yen)
－

5,409

(5) [Major shareholders]
As of March 31, 2019
Number of shares
Names of shareholders

Address

Percentage ofshares held to total

heldnumber of issued(hundreds of shares) shares (excluding
treasury stock) (%)

Iizuka Takeshi ScholarshipFoundation
Daido Life Insurance Company
TKC Employee Shareholding
Association
Sozeishiryokan (Institute of Tax
Research and Literature)
The Master Trust Bank of Japan, Ltd.
(Trust account)
Masaharu Iizuka
Japan Trustee Services Bank, Ltd.
(Trust account)

1758 Tsurutamachi, Utsunomiya-shi, Tochigi

37,53014.2

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

25,690

9.7

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

15,7866.0

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

15,4655.9

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

10,560

4.0

Utsunomiya-shi, Tochigi

8,598

3.3

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

7,612

2.9

7,598

2.9

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

6,664

2.5

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

5,983

2.3

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

5,983

2.3

147,471

56.0

SSBTC CLIENT OMNIBUS
ACCOUNT(Standing proxy: The Hong Kongand Shanghai Banking Corporation,
Tokyo Branch)
Tokio Marine & Nichido Fire
Insurance Co., Ltd.
Aioi Nissay Dowa Insurance Co.,Ltd.
Sompo Japan Nipponkoa Insurance
Inc.
Total

One Lincoln Street, Boston, MA, USA 02111(3-11-1 Nihonbashi, Chuo-ku, Tokyo)－(Note) The 190,500 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.

－

17 －

(6) [Voting rights](i) [Issued shares]
As of March 31, 2019
Number of shares (shares)

Number of voting rights(units)Shares without voting right

－

－

－

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

－

－

－

Shares with restricted voting right (others)

－

－

－

313,800－－

26,380,200

263,802－

37,033－－

26,731,033

－

－

－

263,802－

Classification

Shares with full voting right (treasury stock,

Common

etc.)

stock

Shares with full voting right (others)

Commonstock
Commonstock

Shares less than one share unit
Total number of issued shares
Total voting rights held by all shareholders

Description(Note) “Shares with full voting right (others)” includes 600 shares (6 units of voting rights) registered in the name of Japan Securities
Depository Center, Inc., and 190,500 shares (1,905 units of voting rights) owned by the BIP Trust.
(ii) [Treasury stock, etc.]
As of March 31, 2019

Name of shareholder

TKC Corporation

Address ofshareholder
1758 Tsurutamachi,
Utsunomiya-shi,

Number of shares
held under own

Number of shares
held under othername (shares)

names (shares)

Total shares held
(shares)

Percentage ofshares held to thetotal number ofissued shares (%)

308,300－

308,300

1.15

4-8-8 Kudanminami,
Chiyoda-ku, Tokyo

5,500

－

5,500

0.02

－

313,800－

313,800

1.17

Tochigi
TKC Shuppan
Corporation
Total(Note) In addition to the above, the 190,500 shares owned by the BIP Trust are recorded as treasury stocks in the quarterly
consolidated financial statements.

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

－

18 －

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

2. Auditing and Attestation
The quarterly consolidated financial statements of the Company for the 2nd quarter consolidated accounting period (fromJanuary 1, 2019 to March 31, 2019) and the 2nd quarter consolidated cumulative period (from October 1, 2018 to March 31,2019) have been audited by Ernst & Young ShinNihon LLC pursuant to the provision of Article 193-2, Paragraph 1 of the
Financial Instruments and Exchange Act of Japan.

－

19 －

1 [Quarterly Consolidated Financial Statements](1) [Quarterly consolidated balance sheets](Unit: millions of yen)Previous consolidated fiscal year
(September 30, 2018)

Current 2nd quarter consolidated
accounting period(March 31, 2019)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade22,268
7,690

21,864
8,373

Inventories
Other

*619
1,204

*690
1,277

Allowance for doubtful accounts
Total current assets

(35)

(27)

31,74732,179Non-current assets
Property, plant and equipment
Buildings and structures (net amount)

7,991

7,963

Land
Other (net amount)

6,922
2,550

6,894
3,160

Total property, plant and equipment

17,46418,019Intangible assets
Investments and other assets

3,707

3,389

Investment securities
Long-term time deposits

24,0266,000

22,523
6,500

Guarantee deposits
Other

1,318
5,937

1,308
7,103

Total investments and other assets

37,28237,43558,454

58,84490,202

91,023

2,824

2,821

Electronically recorded obligations - operating
Shore-term loans payable

1,080
142

801
212

Accounts payable – other
Income taxes payable

3,661
1,689

3,198
1,809

Provisions for bonuses
Other

3,169
1,387

2,745
1,652

Total current liabilities

13,955

13,241

Non-current liabilities
Long-term loans payable

580

509

Retirement benefit liabilities
Provisions for stocks payment

2,036
－

2,158
527

Other

1,078

1,856

Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable-trade

Total non-current liabilities
Total liabilities

－

20 －

3,696

5,051

17,651

18,293

(Unit: millions of yen)Previous consolidated fiscal year
(September 30, 2018)

Current 2nd quarter consolidated
accounting period(March 31, 2019)

Net assets
Shareholders’ equity
Capital stock
Capital surplus

5,700
5,409

5,700
5,637

Retained earnings
Treasury stock

59,806(971)

61,821(1,799)Total shareholders’ equity

69,94471,359

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

917

(78)

Total accumulated other comprehensive income

917

(78)

Subscription rights to shares
Non-controlling interests

235
1,453

－
1,448

Total net assets

72,55072,73090,202

91,023

Total liabilities and net assets

－

21 －

(2) [Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income][Quarterly consolidated statements of income][2nd quarter consolidated cumulative period](Unit: millions of yen)Previous 2nd quarter consolidated

Current 2nd quarterly

cumulative period(Started October 1, 2017;consolidated cumulative period(Started October 1, 2018;

ended March 31, 2018)

ended March 31, 2019)

Net sales

30,31931,936

Cost of sales

10,26011,160Gross profit

20,058

20,776

Selling, general and administrative expenses*15,187*16,098

4,871

4,678

Operating income
Non-operating income
Interest income

16

15

Dividends income
Insurance dividends income

54
4

63
6

Land and house rent received
Equity in earnings of affiliates

22
5

26
13

Other

15

48

Total non-operating income

119

173

Interest expenses
Foreign exchange losses

1
0

1
0

Other

0

0

Total non-operating expenses

1

1

4,989

4,850

Gain on sales of non-current assets
Gain on reversal of subscription rights to shares

0
－

0
274

Other

－

5

Total extraordinary income

0279

Loss on sale of non-current assets
Loss on retirement of non-current assets－

Loss on valuation of investment securities

49

10
5
－

Total extraordinary loss

54

15

Quarterly net income before taxes and adjustments

4,935

5,114

Income taxes - current
Income taxes - deferred

1,748
(127)

1,681
(46)

Total income taxes

1,621

1,635

Quarterly net income

3,314

3,478

Quarterly net profit (loss) attributable to non-controllinginterests

15

12

Quarterly net profit (loss) attributable to owners of parent

3,298

3,466

Non-operating expenses

Ordinary income
Extraordinary income

Extraordinary loss
4

－

22 －

[Quarterly consolidated statements of comprehensive income][2nd quarter consolidated cumulative period](Unit: millions of yen)Previous 2nd quarter consolidated

Current 2nd quarterly

cumulative period(Started October 1, 2017;consolidated cumulative period(Started October 1, 2018;

ended March 31, 2018)

ended March 31, 2019)

Quarterly net income
Other comprehensive income
Valuation difference on available-for-sale securities

3,314

3,478

66

(996)

Share of other comprehensive income of entities
accounted for using equity method

0(0)Total other comprehensive income

66

(997)

3,380

2,481

3,359

2,470

20

11

Quarterly comprehensive income(Breakdown)
Quarterly comprehensive income attributable toowners of parent
Quarterly comprehensive income attributable to noncontrolling interests

－

23 －

(3) [Quarterly consolidated statements of cash flows](Unit: millions of yen)Previous 2nd quarter consolidated

Current 2nd quarterly

cumulative period(Started October 1, 2017;consolidated cumulative period(Started October 1, 2018;

ended March 31, 2018)

ended March 31, 2019)

Cash flows from operating activities
Quarterly net income before taxes and adjustments
Depreciation

4,935
1,285

5,114
1,455

Loss (gain) on sale of non-current assets
Loss on retirement of non-current assets(0)4Loss (gain) on valuation of investment securities
Gain on reversal of subscription rights to shares

49
－

10
5
－

－

Increase (decrease) in provisions for stocks payment
Increase (decrease) in provisions for bonuses
Increase (decrease) in retirement benefit liabilities
Decrease (increase) in notes and accounts receivabletrade
Decrease (increase) in other assets
Increase (decrease) in accounts payable-trade
Increase (decrease) in other liabilities

(274)

(120)

527
(423)

131

121

(2,050)

(987)

153

70

(16)
(592)

(102)
(402)

Other

91

(42)

Subtotal

3,871

5,072

Interest and dividends received

94

160

Interest paid
Income taxes paid

(1)
(1,306)(1)(1,579)Cash flows from operating activities

2,658

3,651

(1,500)(2,000)1,500(1,496)

1,500
(977)

Purchase of intangible assets
Purchase of investment securities

(658)
(0)

Purchase of investments in subsidiaries
Other

(25)
(47)

(506)
(0)
－

Cash flows from investing activities(2,227)

Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment

Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Repayment of long-term loans payable
Proceeds from sales of treasury stock
Purchase of treasury stock
Dividends paid
Dividends paid to minority shareholders
Other
Cash flows from financing activities
Increase (decrease) in cash and cash equivalents

51(1,932)

－

70

(35)
－

(71)
753

(1)
(1,553)(1,359)(1,448)

(10)
(44)

(16)
(51)

(1,646)(2,123)(1,216)(403)

Cash and cash equivalents at beginning of quarter

17,03919,268Cash and cash equivalents at end of quarter*15,822*18,864－

24 －[Notes to Financial Statements](Additional Information)(Stock-based compensation plan for officers)
The Company introduced a stock-based compensation plan for its Directors (excluding Outside Directors and expatriates),
Auditors (excluding Outside Auditors and expatriates), and Executive Officers (excluding expatriates; hereinafter referred tocollectively as “Directors, etc.”).
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 shareprice, but also the risk associated with the decline in share price.
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 thetrust (not including expenses attributable thereto). The book value of said treasury stocks was 753 million yen for 190,500
shares as of the end of this current 2nd quarter consolidated accounting period.

(Implementation of the “Partial Amendments to Accounting Standard for Tax Effect Accounting,” etc.)
The Company applies the partially amended Accounting Standard for Tax Effect Accounting (ASBJ Standard No. 28, February
16, 2018), etc. as of the beginning of the current 1st quarter consolidated accounting period. Accordingly, deferred tax assets areindicated under the investments and other assets category, and deferred tax liabilities are indicated under the non-current
liabilities category.

－

25 －

(Notes to the quarterly consolidated balance sheets)* Breakdown of inventory assets is as follows:

Previous consolidated fiscal year
(September 30, 2018)

Current 2nd quarter consolidated
accounting period(March 31, 2019)

Merchandise and finished goods

200 million yen

241 million yen

Work in progress
Raw materials and supplies

255 million yen
163 million yen

303 million yen
145 million yen(Notes to the quarterly consolidated statements of income)* Major items included in selling, general and administrative expenses are as follows:
Previous 2nd quarter consolidated

Current 2nd quarterly consolidated

cumulative period(Started October 1, 2017;

cumulative period(Started October 1, 2018;

ended March 31, 2018)

ended March 31, 2019)

Salaries

5,212 million yen

5,591 million yen

Provisions for bonuses
Retirement benefit expenses

2,459 million yen
334 million yen－ million yen

2,338 million yen
352 million yen

Provisions for stocks payment
Depreciation
Rent expenses
Research and development expenses

302 million yen

527 million yen
343 million yen

1,073 million yen
80 million yen

1,116 million yen－ million yen(Notes to the quarterly consolidated statements of cash flows)* The relationship between the quarterly ending balance of cash and cash equivalents and account items stated in the quarterly
consolidated balance sheets is stated as below.

Cash and deposits
Time deposits with deposit period

Previous 2nd quarter consolidated
cumulative period

Current 2nd quarterly consolidated
cumulative period(Started October 1, 2017;
ended March 31, 2018)(Started October 1, 2018;
ended March 31, 2019)18,822 million yen(3,000 million yen)

21,864 million yen(3,000 million yen)

15,822 million yen

18,864 million yen

greater than three months
Cash and cash equivalents

－

26 －

(Notes to shareholders’ equity, etc.)
I. Previous 2nd quarter consolidated cumulative period (started October 1, 2017; ended March 31, 2018)(1) Dividend payments

Resolution

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

Record date

Effective date

Source ofdividends

September 30, 2017

December 25, 2017

Retainedearnings

December 22, 2017
Ordinary General
Meeting ofCommon stock

1,582

60

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

Resolution
May 2, 2018
Meeting of the

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

1,319

50

Record date

Effective date

March 31, 2018

June 11, 2018

Board of Directors

Source ofdividends
Retainedearnings

II. Current 2nd quarter consolidated cumulative period (started October 1, 2018; ended March 31, 2019)(1) Dividend payments
Total amount of
Resolution
December 21, 2018
Ordinary General
Meeting of
Shareholders

Class of shares cash dividends(millions of yen)

Common stock

Dividend pershare (yen)

1,450

55

Record date

Effective date

September 30, 2018

December 25, 2018

Source ofdividends

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

Class of shares cash dividends(millions of yen)

Dividend pershare (yen)Record date

Effective date

March 31, 2019

June 10, 2019

May 8, 2019
Meeting of theBoard of Directors

Common stock

1,453

55

Source ofdividends
Retainedearnings(Note) The total amount of cash dividends determined by resolution of the Board of Directors on May 8, 2019 includes a cash
dividend of 10 million yen to the stocks of the Company owned by the BIP Trust.

－

27 －

(Segment information, etc.)[Segment information]
I. Previous 2nd quarter consolidated cumulative period (started October 1, 2017; ended March 31, 2018)
Information on net sales and profit or loss for each reportable segment(Unit: millions of yen)Amounts inquarterly

Reportable segment
Local
Governments

Accounting
Firm BD

Printing BD

Total

Adjustments(Note 1)

consolidated
statements
of income(Note 2)

BD

Net sales
21,369

7,091

1,858

30,319－30,319

2

－

759

761

(761)

－

Total

21,372

7,091

2,617

31,081(761)

30,319Segment profit

4,265

555

47

4,868

2

4,871

(1) Sales to outside customers(2) Inter-segment sales ortransfers(Notes) 1.
2.

Adjustments of segment profit of 2 million yen include amounts for elimination of inter-segment transactions and for
adjustments of inventory assets,etc.
Segment profit is adjusted with the operating profit presented in the Quarterly Consolidated Statements of Income.
II. Current 2nd quarter consolidated cumulative period (started October 1, 2018; ended March 31, 2019)
Information on net sales and profit or loss for each reportable segment(Unit: millions of yen)Amounts inquarterly

Reportable segment
Local

Accounting

consolidated
statements

Governments
BD

Printing BD

22,107

7,948

1,880

31,936－

31,936

2

0

804

807

(807)

－

Total

22,109

7,948

2,685

32,743(807)

31,936

Segment profit

4,519

119

34

4,673

4

4,678

Firm BD

Total

Adjustments(Note 1)of income(Note 2)

Net sales(1) Sales to outside customers(2) Inter-segment sales ortransfers(Notes) 1.
2.

Adjustments of segment profit of 4 million yen include amounts for elimination of inter-segment transactions and for
adjustments of inventory assets,etc.
Segment profit is adjusted with the operating profit presented in the Quarterly Consolidated Statements of Income.

－

28 －

(Earnings per share information)
The amount of quarterly net income per share and the basis for the calculation thereof as well as the amount of quarterly
diluted net income per share and the basis for the calculation thereof are as follows:
Previous 2nd quarter consolidated

Current 2nd quarterly consolidated

cumulative period(Started October 1, 2017;

cumulative period(Started October 1, 2018;

ended March 31, 2018)

ended March 31, 2019)(1) Quarterly net income per share

125.05 yen

131.45 yen

3,298

3,466

－

－

3,298

3,466

263,790

263,680

124.51 yen

130.92 yen

－

－

1,159

1,066

－

－

(Basis for calculation)
Quarterly net income attributable to owners ofparent(millions of yen)Amount not attributable to common shareholders(millions of yen)
Quarterly net income from common stocks
attributable to owners of parent(millions of yen)
Average number of common stocks outstanding(hundreds of shares)(2) Quarterly diluted net income per share(Basis for calculation)
Adjustments to quarterly net income attributable toowners of parent(millions of yen)
Number of common stocks increased (hundreds ofshares)Outline of the diluted shares not included in thecalculation of quarterly diluted net income per share for
not having dilutive effect, but having significant
changes since the end of the previous consolidated
fiscal year
(Note) The average number of stocks outstanding used in the calculation of earnings per share information has been determined byincluding the stocks of the Company owned by the BIP Trust (which has been established with the introduction of the BIP
Trust plan) as deductible treasury stocks.
The average number of said treasury stocks deducted for the calculation of quarterly net income per share was 33,494 sharesfor the current 2nd quarter consolidated cumulative period.
(Material subsequent events)
None to be disclosed.

2 [Other]
The resolution regarding the current interim dividends was adopted at the Board of Directors’ meeting held on May 8, 2019,stated as follows.
(a) Total amount of cash dividends to be paid as interim dividends

1,453 million yen(b) Dividend per share

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

June 10, 2019

(Note) Dividends are payable to the shareholders listed or recorded on the Register of Shareholders as of March 31, 2019.
－29 －Section 2 [Information on Guarantors, etc. of the Company]
None to be disclosed.

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30 －

Quarterly Review Report of
Independent Auditors
May 9, 2019

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

Certified Public
Kanji Tako
Accountant(seal)

Designated Limited Liability Partner,
Executing Partner

Certified Public
Yuichi Noda
Accountant(seal)

Pursuant to the provision of Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act of Japan, we have conducted areview of the quarterly consolidated financial statements of the consolidated fiscal year of the Company (started from October 1, 2018
and ending September 30, 2019 ) for the 2nd quarter consolidated accounting period (from January 1, 2019 to March 31, 2019) and forthe 2nd quarter consolidated cumulative period (October 1, 2018 to March 31, 2019) stated in [Financial Information], namely, thequarterly consolidated balance sheet, quarterly consolidated statements of income, quarterly consolidated statements of comprehensive
income, quarterly consolidated statements of cash flows and notes.
Management’s Responsibility for the Quarterly Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the quarterly consolidated financial statements in accordancewith principles setting forth the preparation and properly presentation of the quarterly consolidated financial statements generally
accepted in Japan. Responsibilities include those for designing and operating an internal control system as the management deems
necessary in order to prepare and properly present the quarterly consolidated financial statements that are free from material
misstatement due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an independent conclusion regarding the quarterly consolidated financial statements based on ourquarterly review. We conducted our quarterly review in accordance with quarterly review standards generally accepted in Japan.
A quarterly review consists principally of making inquiries, performing analytical procedures and other quarterly review procedures ofthe management and persons responsible for financial and accounting matters. The quarterly review procedure is a limited procedurecompared to the procedure of annual financial statements performed in accordance with auditing standards generally accepted in Japan.
We believe that we have obtained evidences to support the basis for our conclusion.
Auditor’s Conclusion
Based on our quarterly review, nothing has come to our attention that causes us to believe that TKC Corporation and its consolidated
subsidiaries’ financial conditions as of March 31, 2019 and operating results and cash flow for the 2nd quarter consolidated cumulative
period ending March 31, 2019 included in the quarterly consolidated financial statements referred to above have not been properly
presented, in all material respects, in accordance with accounting principles of quarterly consolidated financial statements generally
accepted in Japan.
Interest
Our firm and the executing partners have no interest in the Company for which disclosure is required under the provisions of theCertified Public Accountants Act of Japan.
End of document(Notes) 1. The above is a digitized version of the original copy of the quarterly audit report, the original of which is stored by TKC
Corporation (the Company filing this quarterly report).
2. XBRL data is not included in the scope of this quarterly review.
－

31 －[Front Cover][Document filed]

Confirmation letter[Applicable law]

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

Director of Kanto Local Finance Bureau[Date filed]

May 9, 2019

[Company name]

Kabushiki Kaisha TKC[Company name in English]

TKC Corporation[Title and name of representative]

Kazuyuki Sumi, Representative Director, President and Executive Officer[Title and name of Chief Financial Officer]

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

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

－

32 －

1 [Matters Related to Adequacy of Statements Contained in the Quarterly Report]
Kazuyuki Sumi, Representative Director, President and Executive Officer of the Company and Hitoshi Iwata, Chief Financial
Officer of the Company hereby confirm that the statements contained in the quarterly report for the 2nd quarter of the 53rd term(started January 1, 2019; ended March 31, 2019) are adequate under the Financial Instruments and Exchange Act of Japan.

2 [Special Notes]
None to be disclosed.

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33 －