May 15, 2024

Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending June 30, 2024
(Nine Months Ended March 31, 2024) [IFRS]
Company name: Scala, Inc.
Listing: Tokyo Stock Exchange
Stock code:
4845
URL: https://scalagrp.jp/
Representative: Hideaki Nitta, Director, Representative Executive Officer & President
Contact:
Daisuke Jodai, General Manager of Accounting Department
Tel: +81-(0)3-6418-3960
Scheduled date of filing of Quarterly Report:
May 15, 2024–
Scheduled date of payment of dividend:
Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results meeting:None(All amounts are rounded down to the nearest million yen.)

1. Management Performance under IFRS and Non-GAAP Measures
Consolidated Results of Operations (July 1, 2023–March 31, 2024)(Percentages represent year-on-year changes.)
Revenue

Operating profit

Million yen% Million yen(IFRS)
8,376 (10.1)(915)
Nine months ended Mar. 31, 2024
Nine months ended Mar. 31, 2023
9,318
–
370
(Non-GAAP)
8,376 (10.1)(195)
Nine months ended Mar. 31, 2024
Nine months ended Mar. 31, 2023
9,318
–
374

Profit before tax

Profit attributableto owners of parent

Profit% Million yen% Million yen% Million yen

%

–
–

(936)
356

–
–

(1,629)220––(1,627)
230

–
–

–
–

(215)
360

–
–

(195)
223

–
–

(182)
223

–
–

IFRS

Non-GAAP

Basic earnings
per share

Diluted earnings
per share

Basic earnings
per share

Diluted earnings
per share

Yen

Yen

Yen

Yen

Nine months ended Mar. 31, 2024
(93.85)(93.85)(10.50)(10.50)Nine months ended Mar. 31, 2023
13.33
13.28
12.90
12.86
Notes: 1. Revenue, operating profit, and profit before tax for the nine months ended March 31, 2023 were reclassified bydeducting the amounts of those from discontinued operations from the amounts of those from continuing operations.
Because of this, these year-on-year changes are not presented.
For details of the discontinued operations, please refer to “2. Condensed Quarterly Consolidated Financial
Statements and Notes, (5) Notes to Condensed Quarterly Consolidated Financial Statements (Discontinued
Operations)” on page 17 of Attachments.
2. In non-GAAP measures, for adjustment, gains/losses on securities related to investment business were deductedfrom the line items below operating profit, and profit from discontinued operations was deducted from the line items
below profit.
3. In non-GAAP measures, in addition to the above Note 2, expenses related to office downsizing, impairment losses
on goodwill and other items, and reversal of deferred tax assets of 1,393 million yen were deducted from the line
items below operating profit for the nine months ended March 31, 2024.
4. For details of the non-GAAP measures, please refer to “1. Qualitative Information on Quarterly Consolidated
Financial Performance (1) Explanation of Results of Operations” on page 2 of Attachments.

2. Consolidated Financial Position under IFRS
Total assets

As of Mar. 31, 2024
As of Jun. 30, 2023

Total equity

Ratio of equity
Equity attributable
attributable toto owners of parent owners of parent tototal assets

Equity per share
attributable toowners of parent

Million yen

Million yen

Million yen%

Yen

15,732
18,316

5,762
8,089

5,528
7,832

35.1
42.8

318.68451.84

3. Dividends
1Q-endDividend per share
3Q-end2Q-endYen

Yen

Fiscal year ended Jun. 30, 2023–
18.50
Fiscal year ending Jun. 30, 2024–
18.75
Fiscal year ending Jun. 30, 2024
(forecasts)
Note: Revisions to the most recently announced dividend forecast: None

Year-end

Total

Yen

Yen

Yen

–
–

18.50

37.00

18.75

37.50

4. Consolidated Earnings Forecast for the Fiscal Year Ending June 30, 2024 under IFRS(July 1, 2023–June 30, 2024)(Percentages represent year-on-year changes.)
Revenue
Million yen

Operating profit% Million yen

Profit before tax% Million yen

BasicProfit attributable toearnings perowners of parent
share

Profit% Million yen%

Million yen

%

Yen

–
(1,100)–(1,100)–(2,700)–(2,700)–(155.73)
Full year
8,300
Notes: 1. Revisions to the most recently announced earnings forecast: None
2. The consolidated earnings forecast for the fiscal year ending June 30, 2024 is a forecast as of the filing date and issubject to change depending on the liquidation of several consolidated subsidiaries by the end of the fiscal year
under review.

* Notes(1) Changes in consolidated subsidiaries during the period (changes in specified subsidiaries resulting in changes
in the scope of consolidation): None
Newly added: –Excluded: –(2) Changes in accounting policies and accounting estimates
1) Changes in accounting policies required by IFRS:
2) Changes in accounting policies other than 1) above:

None
None

3) Changes in accounting estimates:

None(3) Number of shares issued (common shares)
1) Number of shares issued as of the end of the period (including treasury shares)
As of Mar. 31, 2024:
17,747,759 shares
As of Jun. 30, 2023:
2) Number of treasury shares as of the end of the period
As of Mar. 31, 2024:

400,008 shares

3) Average number of shares outstanding during the period
Nine months ended Mar. 31, 2024: 17,339,790 shares

As of Jun. 30, 2023:
Nine months ended Mar. 31, 2023:

17,734,259 shares
400,008 shares
17,322,565 shares• The current consolidated financial results are not subject to quarterly review by certified public accountants or auditing
firms.
• Explanation of appropriate use of earnings forecasts, and other special items
Cautionary statement with respect to forecasts
Forecasts of future performance in these materials are based on assumptions judged to be valid and information available
to Scala’s management at the time these materials were prepared, but are not promises by Scala regarding future performance.
Actual results may differ significantly from these forecasts for a number of reasons.
How to view supplementary materials for quarterly financial results
Supplementary materials for the quarterly financial results will be disclosed today (May 15, 2024) and available on the
Scala’s website.

Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24

Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance2(1) Explanation of Results of Operations

2(2) Explanation of Financial Position

6(3) Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements

6

2. Condensed Quarterly Consolidated Financial Statements and Notes

7(1) Condensed Quarterly Consolidated Statement of Financial Position

7(2) Condensed Quarterly Consolidated Statements of Income and Comprehensive Income

8

Condensed Quarterly Consolidated Statement of Income

8

Condensed Quarterly Consolidated Statement of Comprehensive Income

9(3) Condensed Quarterly Consolidated Statement of Changes in Equity

10(4) Condensed Quarterly Consolidated Statement of Cash Flows

12(5) Notes to Condensed Quarterly Consolidated Financial Statements

14

Going Concern Assumption

14

Notes to Condensed Quarterly Consolidated Financial Statements

14

Segment Information

15

Discontinued Operations

17

Material Subsequent Events

17

1

Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24

1. Qualitative Information on Quarterly Consolidated Financial Performance
Scala, Inc. (“Scala” or the “Company”) and its group companies (collectively the “Group”) have adopted
International Financial Reporting Standards (IFRS).
In addition to IFRS, the Group has adopted financial measures that can express its operating performance moreaccurately (the “non-GAAP measures”) and accordingly has disclosed its consolidated results of operations byapplying both IFRS and the non-GAAP measures.
In the fourth quarter of the fiscal year ended June 30, 2023, both Connect Agency, Inc. and J-Phoenix Research
Inc. were classified as discontinued operations.
Furthermore, in the third quarter of the fiscal year ending June 30, 2024, the transfer of all shares of FourHands,
Inc., a consolidated subsidiary, was completed and this company has been classified as discontinued operations.
Accordingly, revenue, operating profit, and profit before tax for the first nine months of the fiscal year ended June30, 2023 were reclassified by deducting the amounts of those from discontinued operations from the amounts of
those from continuing operations.
(1) Explanation of Results of Operations
During the first nine months of the fiscal year ending June 30, 2024 (the “period under review”), the Japanese
economy continued to show a gradual recovery with consumer spending and inbound tourism demand reviving
due to the ongoing normalization of economic activities following the easing of COVID-19 movement restrictions.
However, the economic outlook remains uncertain due to soaring crude oil and raw material prices caused bygeopolitical risks, price hikes driven by the ongoing depreciation of the yen, and other factors.
Under these circumstances, we focus on the growth not only of the Group, but also of our co-creation partners,
local communities, and countries by utilizing cutting-edge digital transformation (DX) technologies to reduce costs
and streamline operations to create new work styles. Along with that, we acknowledge that initiatives to promotepersonal growth of people who are involved in resolving social problems are attracting a lot of attention.
In such business environment, the Group has been undertaking business restructuring through the selection andconcentration of business along with cost reduction in order to significantly improve the Group's profitability,
especially in the DX business, which is our critical foundation, toward the fiscal year ending June 30, 2025 andbeyond.
The Group has also aimed to achieve its Vision: “Make the world where valuable things come springing up”
according to the Medium-Term Business Plan 2024–2026 announced in August 2023. In addition, we havecontinued to work hard to achieve the objectives stated in the Plan by providing services to companies and central
and local governments in Japan and overseas.
As a result, the Group reported revenue of 8,376 million yen (down 10.1% year on year) for the period underreview. This decrease was attributable to a temporary decrease in development projects, mainly in the DX Business,the end of the Go To Travel Campaign, and the scale-down of the government’s nationwide travel discount program,
although the EC Business continued steady growth.
On the profitability front, the Group reported operating loss of 915 million yen (compared with operating profit of
370 million yen a year earlier). This result can be explained mainly by a decrease in revenue in the DX Business,
as well as cancellation fees for office downsizing in connection with business restructuring and impairment losses
on property, plant and equipment, goodwill and other assets.
Loss before tax amounted to 936 million yen (compared with profit before tax of 356 million yen a year earlier).
As a result of recording a reversal of deferred tax assets, loss amounted to 1,629 million yen (compared with profitof 220 million yen a year earlier), and loss attributable to owners of parent amounted to 1,627 million yen(compared with profit attributable to owners of parent of 230 million yen a year earlier).

2

Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24(Reporting on a non-GAAP basis)
The non-GAAP measures are calculated by deducting non-recurring items and other adjustments, which areprescribed by the Group, from IFRS-based financial figures.
We believe that disclosure of the non-GAAP measures makes it easier for our stakeholders to make both crosssectional and time-series comparisons and can also provide useful information that helps them to understand theGroup’s underlying operating performance and its outlook.
Non-recurring items refer to one-off profits or losses that we believe should be excluded based on certain criteria
for the purpose of preparing the earnings forecast.
While the Group discloses the non-GAAP measures in reference to the rules set out by the U.S. Securities andExchange Commission, this does not mean the Group fully complies with these rules.
For adjustment, profit or loss on securities related to investment business were deducted from operating profit andthe line items below it, and profit from discontinued operations was deducted from profit and line items below it.
In addition to the above, expenses related to office downsizing, impairment losses on goodwill and other items,
and reversal of deferred tax assets of 1,393 million yen were deducted for the period under review.
The operating segment performance is as follows.
Segment revenue and operating profit are presented in accordance with IFRS.
Reportable segments have been reclassified since the first quarter of the fiscal year ending June 30, 2024.
Accordingly, figures a year earlier were reclassified in a new segment in the following year-on-year comparison.
For details of reportable segments, please refer to “2. Condensed Quarterly Consolidated Financial Statements andNotes (5) Notes to Condensed Quarterly Consolidated Financial Statements (Segment Information).”(i) DX Business
Scala Communications, Inc. experienced a decrease in revenue and profit. This was due to the impact of a reductionin the scale of projects for certain customers caused by changes in the situation in some industries with largetransaction amounts. Meanwhile, the acquisition of new customers is progressing, such as the accelerated orders
for U-Medical Support, a comprehensive medical support tool for cattle that we develop jointly with desamis Co.,
Ltd. and Mitsui Sumitomo Insurance Company, Limited.
EGG CO., LTD. saw revenue decrease due to the termination of the Go To Travel business and the downsizing of
the government’s nationwide travel discount program. On the other hand, the company has started delivery inDigital Garden City National Fund and is making progress in winning over new projects. It will continue to do so.

3

Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24

On the profitability front, the Group reported impairment losses on intangible assets and goodwill of 377 million
yen. This was because the current business environment caused the assets less profitable than initially expected as
the business progress fell behind the initial plan.
As a result of the above, while the DX Business as a whole accomplished a certain level of achievements in
implementing existing and new services, revenue and profit declined due to a reduction in the scale of projects,
the recording of impairment losses, and other factors.

Revenue
Before allocation of
Segment profit corporate expenses(IFRS)
After allocation of
corporate expenses
Before allocation of
Segment profit
corporate expenses(non-GAAP
After allocation of
measures)corporate expenses

First nine months
of FY6/23
5,699(Millions of yen, unless otherwise stated)
Year-on-year changeFirst nine months
of FY6/24
Amount%4,551(1,147) Down 20.1%

882

55

(826)

Down 93.7%

385

(436)

(822)

–

882

433

(449)

Down 50.9%

385

(59)

(444)

–

(ii) HR & Education BusinessIn the recruitment support services business, demand for graduate recruitment services remains strong. In particular,
the need for recruiting support services specializing in student athletes and female students remains high. In
addition, the need for companies to exhibit at recruitment events continued to exceed that of the same period of
the previous fiscal year.
Meanwhile, we have launched new businesses in the domain of mid-career job change support and career education
business for students. Due to the upfront investment in building the organization for these businesses, segment
profit increased slightly.
As a result of the above, both worker placement and recruitment events remained strong, and revenue and profit
increased compared to the same period of the previous fiscal year.

Segment profit(IFRS andnon-GAAP
measures)

Revenue
Before allocation of
corporate expenses
After allocation of
corporate expenses

First nine months
of FY6/23
959(Millions of yen, unless otherwise stated)
Year-on-year changeFirst nine months
of FY6/24
Amount
%1,029
70
Up 7.3%

242

206

(35)

Down 14.8%

207

171

(35)

Down 17.3%(iii) EC BusinessIn the EC business, despite a decline in revenue due to the end of the boom in some of the titles that had driven
sales growth in the previous fiscal year, other titles generally performed well, and revenue increased year on year.
Conversely, profits decreased year on year due to higher expenses for increased marketing of the website, which
was relaunched last September to increase the number of organic traffic.

Revenue
Segment profit Before allocation of
corporate expenses(IFRS andnon-GAAP
After allocation of
measures)corporate expenses

First nine months
of FY6/23
1,544(Millions of yen, unless otherwise stated)
Year-on-year changeFirst nine months
of FY6/24
Amount%1,679
135
Up 8.8%

259

250

(8)

Down 3.3%

212

203

(8)

Down 4.0%

4Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24(iv) Financial Related BusinessIn the Financial Related Business, revenue was almost flat year on year. However, profits were down year on year,
in part due to the upfront investments to strengthen marketing efforts, including website and landing page redesigns,
and develop new products.

Revenue
Segment profit Before allocation of
corporate expenses(IFRS andnon-GAAP
After allocation of
measures)corporate expenses

First nine months
of FY6/23
941(Millions of yen, unless otherwise stated)
Year-on-year changeFirst nine months
of FY6/24
Amount%912(29)
Down 3.1%

(94)

(135)

(40)

–

(121)

(162)

(40)

–

(v) Incubation Business
SOCIALX, INC. supports the creation of new businesses for addressing social problems in public-private cocreation through a variety of Gyaku Propo services. In the “Public-Private Co-Creation Acceleration Program(SOCIALX Acceleration),” the finalists for the first term have been selected and applications for the second term
have begun. In addition, it has been decided to expand the program to include the Okinawa General Bureau,
Cabinet Office and the Gunma Prefectural Government, thereby attracting more interest from financial institutions
and other organizations. Furthermore, the public-private co-creation human resources development program
developed together with Toyota City in August has since been expanded to Iwata City, Akashi City, and Ministryof the Environment (jointly with 14 municipalities in Gunma Prefecture). In addition, as part of the Tokyo
Metropolitan Government’s Open Innovation Platform, a project to promote collaboration, the training programs
will be implemented in various fields such as local governments across the country.
Continuing from the previous fiscal year, Gyaku Propo provided secretarial operations and accompanying supports
for business development to solve social issues for the Small and Medium Enterprise Agency’s program—Projectfor Business Introduction and Startup Promotion by Collaboration of Local Governments and Companies. We
continue taking on new challenges to establish co-creation economy, which is attracting attentions from the central
and local government and other organizations.
In overseas business development, we are working on “ASEAN-Japan Business Co-Creation” project involving
entrepreneurs and investors from around the world at three bases in Japan, Singapore, and Indonesia, focusing on
agriculture, healthcare, and education, which are essential to the country’s development. In agriculture, we haveworked extensively with Farm Management, a diverse group with varying expertise in different crops. To
accelerate the infrastructure of digital agricultural cooperatives, we entered into a business partnership with
Telkom Group, Indonesia’s largest state-owned telecommunications company, and agreed to pursue joint businessdevelopment in the agricultural sector. We have also developed services to build production record database andmodels that assess credit scores. As a pilot investor, we have invested in several projects. We plan to set up
agricultural funds together with outside investors.
In the healthcare field, we applied technology from an Indonesian Fintech startup to develop a system infrastructurein the town of Ikata, Ehime Prefecture. The system centralizes information on health management, care prevention,and shared meals through facial recognition of residents and can also be used for shopping. For local governments
struggling with rising social security costs in the face of declining birth rates, aging, and population decline, we
believe the system can be used to promote health and provide preventive care for residents in collaboration withvarious healthcare providers. Therefore, we plan to market the product externally as a Health Investment Platform
for local governments.
In education, we formed a capital and business alliance with Indonesian EdTech startup Binar Academy, which isengaged in DX talent development.
As a result of the expansion of these and other initiatives, revenues and profits were higher year on year.

5Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24

Revenue
Before allocation of
Segment profit corporate expenses(IFRS)
After allocation of
corporate expenses
Before allocation of
Segment profit
corporate expenses(non-GAAP
After allocation of
measures)corporate expenses

First nine months
of FY6/23
170(Millions of yen, unless otherwise stated)
Year-on-year changeFirst nine months
of FY6/24
Amount%21
Up 12.6%
191

(168)

(133)

35

–

(172)

(137)

35

–

(164)

(190)

(25)

–

(168)

(194)

(25)

–

(2) Explanation of Financial Position
AssetsTotal assets amounted to 15,732 million yen at the end of the period under review, a decrease of 2,584 million yen
over the end of the previous fiscal year. This was mainly attributable to decreases of 339 million yen in property,
plant and equipment, 1,325 million yen in right-of-use assets, 351million yen in goodwill, and 588 million yen indeferred tax assets, which were partially offset by an increase of 143 million yen in inventories.
Liabilities
Liabilities totaled 9,969 million yen, a decrease of 257 million yen over the end of the previous fiscal year. Thiswas mainly attributable to decreases of 246 million yen in lease liabilities (current) and 1,108 million yen in leaseliabilities (non-current), which were partially offset by an increase of 1,019 million yen in bonds and borrowings.
EquityEquity totaled 5,762 million yen, a decrease of 2,326 million yen over the end of the previous fiscal year. This was
mainly due to the recording of loss attributable to owners of parent of 1,627 million yen and a decrease of 645
million yen in retained earnings as a result of and the payment of dividends.
(3) Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements
The Group maintains its consolidated forecast for the fiscal year ending June 30, 2024 that was announced in the“Notice Concerning Revision to Full-year Consolidated Earnings Forecast, Recording of Impairment Losses andReversal of Deferred Tax Assets” on April 25, 2024.
The above are current forecast and are subject to change depending on the liquidation status of several consolidated
subsidiaries by the end of the fiscal year ending June 30, 2024.

6

Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24

2. Condensed Quarterly Consolidated Financial Statements and Notes(1) Condensed Quarterly Consolidated Statement of Financial Position
FY6/23(As of Jun. 30, 2023)
AssetsCurrent assets
Cash and cash equivalents
Trade and other receivables
Inventories
Reinsurance assets
Income taxes receivable
Other current assets
Assets held for sale
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Goodwill
Intangible assets
Other financial assets
Securities related to investment business
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
Liabilities and equity
Liabilities
Current liabilities
Trade and other payables
Bonds and borrowings
Lease liabilities
Income taxes payable
Insurance contract liabilities
Other current liabilities
Liabilities directly associated with assets
held for sale
Total current liabilities
Non-current liabilities
Bonds and borrowings
Lease liabilities
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EquityEquity attributable to owners of parent
Share capital
Capital surplus
Retained earnings
Treasury shares
Other components of equity
Total equity attributable to owners of parent
Non-controlling interests
Total equity
Total liabilities and equity

7(Thousands of yen)
Third quarter of FY6/24(As of Mar. 31, 2024)

7,740,400
1,384,649
322,902528,151
135,447
101,370
67,827
10,280,749

7,679,708
1,387,916
466,604
477,9624,506
465,799
10,482,497

541,7431,844,243
1,990,895
1,164,502
1,448,298
346,864
691,195
8,025
8,035,767
18,316,517

201,930
518,798
1,639,369
1,062,337
1,315,197
403,763
102,697
5,697
5,249,790
15,732,288

813,638
3,215,156
565,165
83,186
592,749
420,680

1,003,180
4,093,545
319,126

14,589–5,705,166

6,483,419

2,787,649
1,326,734
255,533
151,973
4,521,891
10,227,058

2,928,855
217,927
268,390
70,7393,485,913
9,969,332

1,787,880
986,384
5,162,735(299,966)
195,234
7,832,267
257,191
8,089,459
18,316,517

1,791,315
989,8192,889,552(299,966)
157,635
5,528,356
234,598
5,762,955
15,732,288––

588,459
479,107

Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24(2) Condensed Quarterly Consolidated Statements of Income and Comprehensive Income
Condensed Quarterly Consolidated Statement of Income
First nine months of FY6/23(Jul. 1, 2022–Mar. 31, 2023)(Thousands of yen)First nine months of FY6/24(Jul. 1, 2023–Mar. 31, 2024)

Continuing operations:
Revenue

9,318,700

8,376,950

Cost of sales(5,466,865)(4,872,282)

Gross profit

3,851,834

3,504,667

Selling, general and administrative expenses(3,499,841)(3,673,417)

Other income

37,335

10,479Other expenses
Operating profit (loss) before gains/losses on
securities related to investment business
Gains/losses on securities related to investment
business
Operating profit (loss)(15,290)(814,361)

374,039(972,632)(3,978)56,899370,061(915,733)

Finance income

25,29913,943Finance costs(39,046)(34,256)

Profit (loss) before tax

356,314(936,046)

Income tax expense(135,768)(614,446)

Profit (loss) from continuing operations

220,546(1,550,493)

316(79,306)

220,862(1,629,799)

Owners of parent

230,875(1,627,305)

Non-controlling interests(10,013)(2,493)

Profit (loss)

220,862(1,629,799)

Continuing operations

12.79(89.27)

Discontinued operations

0.54(4.57)

Total

13.33

(93.85)

Continuing operations

12.75(89.27)

Discontinued operations

0.54(4.57)

Total

13.28

(93.85)

Discontinued operations:
Profit (loss) from discontinued operations
Profit (loss)
Profit (loss) attributable to:Earnings (loss) per share:
Basic earnings (loss) per share (Yen)

Diluted earnings (loss) per share (Yen)8

Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24

Condensed Quarterly Consolidated Statement of Comprehensive Income

Profit (loss)

First nine months of FY6/23(Jul. 1, 2022–Mar. 31, 2023)
220,862

Other comprehensive income
Items that will not be reclassified to profit or
loss
Financial assets measured at fair value
through other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation offoreign operations
Other comprehensive income(Thousands of yen)First nine months of FY6/24(Jul. 1, 2023–Mar. 31, 2024)(1,629,799)

38,202(41,198)–

3,693

38,202(37,505)

259,065(1,667,304)

Owners of parent

269,078(1,664,810)

Non-controlling interests(10,013)(2,493)Comprehensive income

259,065(1,667,304)

Comprehensive income
Comprehensive income attributable to:9Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24(3) Condensed Quarterly Consolidated Statement of Changes in Equity
First nine months of FY6/23 (Jul. 1, 2022–Mar. 31, 2023)(Thousands of yen)
Equity attributable to owners of parent
Capitalsurplus

Share capital

Retainedearnings

TreasurysharesOther
componentsof equity

Total equity
attributableto owners ofparentBalance as of Jul. 1, 2022

1,778,718

965,568

6,016,133(174,187)

101,175

8,687,408

Profit (loss)
Total other comprehensive
incomeComprehensive income––

230,875––

230,875

–

–

–

–

38,202

38,202––230,875–

38,202

269,078

Dividends
Exercise of share acquisitionrightsShare-based paymenttransactions
Purchase of treasury shares
Changes in ownershipinterest in subsidiaries
Total transactions withownersBalance as of Mar. 31, 2023––

(634,821)––(634,821)

6,973

6,973

–

–

(191)

13,754

–

6,776

–

–

–

6,776

–

–

–

(125,779)–(125,779)

–

4,847

–

–

–

4,847

6,973

18,596(634,821)(125,779)(191)(735,222)

1,785,691

984,164

5,612,188(299,966)

139,186

8,221,264

Balance as of Jul. 1, 2022

Non-controllinginterests
318,844

Profit (loss)
Total other comprehensive
incomeComprehensive income
Dividends
Exercise of share acquisitionrightsShare-based paymenttransactions
Purchase of treasury shares
Changes in ownershipinterest in subsidiaries
Total transactions withownersBalance as of Mar. 31, 2023

Total equity
9,006,252(10,013)220,862–

38,202(10,013)

259,065–(634,821)–

13,754

–

6,776

–

(125,779)

8,750

13,5988,750(726,471)

317,5818,538,846

10

Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24

First nine months of FY6/24 (Jul. 1, 2023–Mar. 31, 2024)(Thousands of yen)
Equity attributable to owners of parent
CapitalsurplusRetainedearnings

TreasurysharesOther
componentsof equity

Total equity
attributableto owners ofparent

1,787,880

986,384

5,162,735(299,966)

195,234

7,832,267

Profit (loss)
Total other comprehensive
incomeComprehensive income––(1,627,305)––(1,627,305)

–

–

–

–

(37,505)(37,505)––(1,627,305)–(37,505)(1,664,810)

Dividends
Exercise of shareacquisition rights
Establishment ofsubsidiaries with noncontrolling interests
Changes due to loss ofcontrol of subsidiaries
Total transactions withownersBalance as of Mar. 31, 2024––

(645,877)––(645,877)

3,435

3,435

–

–

(94)

6,777

–

–

–

–

–

–

–

–

–

–

–

–

3,435

3,435

(645,877)–(94)(639,100)

1,791,315

989,8192,889,552(299,966)

157,635

5,528,356

Balance as of Jul. 1, 2023

Non-controllinginterests
257,191

Share capital
Balance as of Jul. 1, 2023

Total equity
8,089,459

Profit (loss)
Total other comprehensive
incomeComprehensive income(2,493)(1,629,799)–(37,505)(2,493)(1,667,304)

Dividends
Exercise of shareacquisition rights
Establishment ofsubsidiaries with noncontrolling interests
Changes due to loss ofcontrol of subsidiaries
Total transactions withownersBalance as of Mar. 31, 2024–

(645,877)

–

6,777

1,500

1,500

(21,598)(21,598)(20,098)(659,198)

234,598

5,762,955

11

Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24(4) Condensed Quarterly Consolidated Statement of Cash FlowsFirst nine months of FY6/23(Jul. 1, 2022–Mar. 31, 2023)(Thousands of yen)First nine months of FY6/24(Jul. 1, 2023–Mar. 31, 2024)

Profit (loss) before tax

356,314(936,046)

Profit (loss) before tax from discontinued operations(36,421)(76,940)

Depreciation and amortization

594,965

543,485–582,719

Loss on retirement of non-current assets
Loss (gain) on securities related to investment
business
Loss (gain) on sale of investment securities

12,112

5,891

3,978

(56,899)–

5,702

Finance income(24,331)(14,022)

Cash flows from operating activities

Impairment losses

Finance costs

34,596

31,188Decrease (increase) in trade and other receivables(374,357)(405,473)

Increase (decrease) in trade and other payables(73,926)

287,576

Decrease (increase) in inventories(68,075)(141,494)

Decrease (increase) in reinsurance assets(258,724)

50,188

Increase (decrease) in insurance contract liabilities

28,538(4,290)Other

168,670

82,271

Subtotal

363,338(46,144)

Interest and dividends received

13,51011,655Interest paid

(28,749)(27,413)

Income taxes refund (paid)(315,898)

36,24332,200(25,658)

Purchase of property, plant and equipment(82,182)(26,601)

Purchase of intangible assets(53,626)(52,887)

Purchase of investment securities

Net cash provided by (used in) operating activities
Cash flows from investing activities(20,000)(30,003)

Proceeds from sale of investment securities–

55,669Collection of loans receivable

–

2,700

(10,566)(13,227)

1,646

38,873–(28,005)(42,807)–

157,500–

Payments of leasehold and guarantee deposits
Proceeds from refund of leasehold and guarantee
deposits
Payments for sale of shares of subsidiaries resulting
in change in scope of consolidation
Purchase of investments accounted for using equity
methodProceeds from sale of securities related to investment
business
Other
Net cash provided by (used in) investing activities

12

788

(2,733)(49,249)(56,215)

Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24

First nine months of FY6/23(Jul. 1, 2022–Mar. 31, 2023)(Thousands of yen)First nine months of FY6/24(Jul. 1, 2023–Mar. 31, 2024)

Cash flows from financing activities
Net increase (decrease) in short-term borrowings

549,999

783,332

Proceeds from long-term borrowings

650,000

1,645,000

Repayments of long-term borrowings(1,186,221)(1,224,162)

Redemption of bonds(40,000)(190,000)

Repayments of lease liabilities(412,777)(367,221)

Proceeds from exercise of share acquisition rights

13,754

6,777

Purchase of treasury shares(125,779)–

Dividends paid
Purchase of shares of subsidiaries not resulting inchange in scope of consolidation
Proceeds from sale of shares of subsidiaries not
resulting in change in scope of consolidation
Other(630,004)(644,248)(2,002)–

15,600

–

–

(114)

Net cash provided by (used in) financing activities(1,167,430)

9,362(6,705)(3,532)(1,191,185)(76,044)

Effect of exchange rate changes on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period
9,625,387
7,740,400
Net increase (decrease) in cash and cash equivalents–
15,352
resulting from transfer to assets held for sale
Cash and cash equivalents at end of period
8,434,201
7,679,708
Note: Cash flows from continuing operations and cash flows from discontinued operations are included in the above table.
Cash flows from discontinued operations are described in Notes to Condensed Quarterly Consolidated Financial
Statements, Discontinued Operations.

13

Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24(5) Notes to Condensed Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Notes to Condensed Quarterly Consolidated Financial Statements
1. Reporting Entity
Scala, Inc. is a corporation located in Japan.
The registered address of its head office is disclosed on its corporate website (https://scalagrp.jp/).
Scala’s condensed quarterly consolidated financial statements for the nine months ended March 31, 2024
encompass Scala and its interests in Scala’s subsidiaries.
The Group aims to develop a “platform for human growth focusing on providing growth opportunities” and works
on the operations of DX Business, HR & Education Business, EC Business, Financial Related Business, andIncubation Business, mainly focusing on services supporting communication between companies and people.
For more information, please refer to “Segment Information, (1) Overview of reportable segments.”
2. Basis of Preparation(1) Compliance with IFRSThe Group’s condensed quarterly consolidated financial statements have been prepared in accordance with IAS 34
Interim Financial Reporting pursuant to the provisions of Article 93 of Regulation on the Terminology, Forms, andPreparation Methods of Quarterly Consolidated Financial Statements (Cabinet Office Order No. 64 of 2007)
because the Group qualifies as a “specified company complying with designated international accounting standards”
as stipulated in Article 1-2 of the said Order.
As the condensed quarterly consolidated financial statements for the period under review do not include all theinformation required in the consolidated financial statements for the fiscal year, they should be used in conjunction
with the consolidated financial statements for the previous fiscal year.
The condensed quarterly consolidated financial statements were approved by Scala’s Board of Directors on May
15, 2024.
(2) Functional currency and presentation currency
The Group’s condensed quarterly consolidated financial statements are presented in Japanese yen, which is Scala’sfunctional currency, and figures are rounded down to the nearest thousand yen.
3. Material Accounting Policy Information
The material accounting policies applied for the condensed quarterly consolidated financial statements for theperiod under review remain the same as significant accounting policies applied for the consolidated financial
statements for the previous fiscal year.
It is noted that income tax expense for the period under review is determined based on the estimated annual
effective tax rate.
4. Significant Accounting Estimates and Judgments Involving Estimates
The preparation of the condensed quarterly consolidated financial statements requires the management to makecertain judgments, estimates, and assumptions that affect the application of accounting policies and the amountsof assets, liabilities, revenues, and expenses. Actual results, however, could differ from these estimates.
These estimates and underlying assumptions are consistently reviewed. The effect of changes in accounting
estimates is recognized in the reporting period in which the changes are made and in any future reporting periods
affected.
The management has made estimates and judgments that have a material impact on the amounts reported in thecondensed quarterly consolidated financial statements for the period under review in the same way as it did in the
consolidated financial statements for the previous fiscal year.
14

Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24

Segment Information(1) Overview of reportable segments
The Group’s reportable segments are components of the Group for which financial information disaggregated bysimilarity of nature of services is available and are regularly reviewed to make decisions about allocations ofcorporate resources and assess their performance.
The businesses operated by Connect Agency, Inc. (DX Business), J-Phoenix Research Inc. (Incubation Business),
and Scala Works, Inc. and Four Hands, Inc. (HR & Education Business) have been classified as discontinued
operations and excluded from the segment information for the first nine months of the each of the fiscal years
ended June 30, 2023 and ending June 30, 2024, respectively.
l

l

l

l

l

The DX Business promotes digital transformation (DX) through IT, AI, and IoT and proactively facilitates
cooperation with different industries and partners who have expertise in relevant technology, with the primaryobjective of establishing new businesses and services, redefining existing businesses, and speeding up
regrowth to promote DX inside and outside Japan. This business provides SaaS/ASP services using IT (Web,phone, fax, SMS related technologies)/AI/IoT technologies to meet customer needs flexibly and quickly. It
also provides customer support consulting that serves as a one-stop source of solutions for a variety of issues
associated with call center operations.
The HR & Education Business offers recruiting support for new graduates and mid-career employees focusing
on physical education students and professional athletes, sports education, and operation of a professional
basketball team.
The EC Business operates Yuyu-Tei, a reuse EC site for buying and selling trading cards games (TCG) for
battle-type games, which also contains game walkthrough pages.
The Financial Related Business operates pet insurance “Insurance for Dogs and Cats” that covers medical
expenses incurred on treatment of sick or injured pets, such as visit, stay, or surgery at an animal hospital.
Medical expenses for pets are to be covered up to the amount limit or within a certain range.
The Incubation Business engages in M&A and alliance with other companies. It also provides support for
new business development working with private companies in coordination with governments andmunicipalities across the nation, and offers regional revitalization services through projects such as those forpromoting relocations to rural areas. In addition, it makes business investments on its own or throughinvestment partnerships, while continuing value increase and engagement activities on such investment.

(2) Changes in reportable segments
With the announcement of the Medium-term Business Plan on August 14, 2023, the Company has included theformer “Customer Support Business” in the “DX Business” segment effective from the first quarter of the current
fiscal year, taking into account the similarity of nature of services. In addition, to reflect the operating performanceof each reportable segment more appropriately, the method of presentation has been changed: revenue and expenses
in the back-office section of the filing company, which were previously allocated to the Incubation & Investment
Business, are presented as adjustments.
Accordingly, the reportable segments have been reorganized from the six segments of IT/AI/IoT/DX Business,
Customer Support Business, HR & Education Business, EC Business, Insurance Business, and Incubation &Investment Business to the five segments of DX Business, HR & Education Business, EC Business, Financial
Related Business, and Incubation Business to better represent the business activities.
Segment information for the first nine months of the previous fiscal year is presented based on the revised
segmentation.

15

Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24(3) Information related to revenue, profit or loss, and other items for each reportable segment
First nine months of FY6/23 (Jul. 1, 2022–Mar. 31, 2023)(Thousands of yen)Amounts shownon condensed
quarterly
Adjustments
consolidated(Note 1)
financialstatements(Note 2)

Reportable segment

Revenue
Sales to externalcustomers
Inter-segment
sales andtransfers
Total

DX BusinessHR &Education
Business

EC Business

Financial
RelatedBusiness

Incubation
Business

Subtotal

5,699,144

959,409

1,544,057

941,467

170,442

9,314,522

4,178

9,318,700

34,624

13,796––

11,18959,610(59,610)–

5,733,768

973,206

1,544,057

941,467

181,632

9,374,132(55,432)

9,318,700

Segment profit(loss)

385,356

207,375

212,065(121,318)(172,956)

510,522(140,461)

370,061

Finance income

–

–

–

–

–

–

–

25,299Finance costs

–

–

–

–

–

–

–

(39,046)

Profit (loss)
before tax

–

–

–

–

–

–

–

356,314

Notes: 1. The (140,461) thousand yen adjustment to segment profit includes the elimination of inter-segment transactions
and the corporate expenses that are not allocated to each reportable segment.
2. Segment profit (loss) is adjusted to be consistent with operating profit presented in the condensed quarterly
consolidated statement of income.
3. Corporate expenses are allocated to each reportable segment based on a rational basis.
4. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions withthird parties.
First nine months of FY6/24 (Jul. 1, 2023–Mar. 31, 2024)(Thousands of yen)
Reportable segment

Amounts shownon condensed
quarterly
Adjustments
consolidated(Note 1)
financialstatements(Note 2)DX BusinessHR &Education
Business

EC
Business

Financial
RelatedBusiness

Incubation
Business

Subtotal

4,551,437

1,029,654

1,679,418

912,125

191,8368,364,471

12,4788,376,950

12,65926,682––35,83775,179(75,179)–

Total

4,564,097

1,056,337

1,679,418

912,125

227,674

8,439,651(62,700)

8,376,950

Segment profit(loss)(436,851)

171,440

203,489(162,225)(137,735)(361,881)(553,852)(915,733)

Finance income

–

–

–

–

–

–

–

13,943Finance costs

–

–

–

–

–

–

–

(34,256)

Profit (loss)
before tax

–

–

–

–

–

–

–

(936,046)

Revenue
Sales toexternalcustomers
Inter-segment
sales andtransfers

Notes: 1. The (553,852) thousand yen adjustment to segment profit includes the elimination of inter-segment transactions
and the corporate expenses that are not allocated to each reportable segment.
2. Segment profit (loss) is adjusted to be consistent with operating profit presented in the condensed quarterly
consolidated statement of income.
3. Corporate expenses are allocated to each reportable segment based on a rational basis.
4. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions withthird parties.

16

Scala, Inc. (4845) Consolidated Financial Results for the Third Quarter of FY6/24

Discontinued Operations
The Company classified Scala Works, Inc., a consolidated subsidiary, as discontinued operations in the fiscal year
ended June 30, 2022. The liquidation of the company was completed in the third quarter of the fiscal year ended
June 30, 2023. The Company also classified Connect Agency, Inc. and J-Phoenix Research Inc., both consolidated
subsidiaries, as discontinued operations in the fourth quarter of the fiscal year ended June 30, 2023. The transfer
of all shares of Connect Agency, Inc. was completed in the fourth quarter of the fiscal year ended June 30, 2023
and J-Phoenix Research Inc. in the first quarter of the fiscal year ending June 30, 2024.
In the third quarter of the fiscal year ending June 30, 2024, the Company classified FourHands, Inc. as a
discontinued operation and completed the transfer of all shares.
Capital gains/losses from the transfer of the shares were recorded in profit (loss) from discontinued operations.
(1) Overview of share transfer
FourHands, Inc.
Name of the segment in which the above
company was included
Number of shares held before transfer
Number of shares transferred
Number of shares held after transfer

HR & Education Business
100 shares (Percentage of voting rights held: 100.0%)
100 shares
0 shares (Percentage of voting rights held: 0%)(2) Operating results of discontinued operations(Thousands of yen)First nine months of FY6/23(Jul. 1, 2022–Mar. 31, 2023)

First nine months of FY6/24(Jul. 1, 2023–Mar. 31, 2024)

Revenue

551,648

286,883

Expenses(588,070)(363,824)

Profit (loss) before tax from discontinued
operations(36,421)(76,940)

Income tax expense

36,738(2,365)316(79,306)

First nine months of FY6/23(Jul. 1, 2022–Mar. 31, 2023)

First nine months of FY6/24(Jul. 1, 2023–Mar. 31, 2024)

Cash flows from operating activities

36,606(25,342)

Cash flows from investing activities

700

41,091

Cash flows from financing activities

657

(579)

37,965

15,169Profit or loss from discontinued operations

Profit (loss) from discontinued operations(3) Cash flows from discontinued operations(Thousands of yen)

Cash flows from discontinued operations

Total

Material Subsequent Events
Not applicable.

This financial report is solely a translation of “Kessan Tanshin” (in Japanese, including attachments), which has been
prepared in accordance with International Financial Reporting Standards (IFRS), for the convenience of readers who prefer
an English translation.

17