COMPANY RESEARCH AND ANALYSIS REPORTScala, Inc.
4845
Tokyo Stock Exchange First Section

9-Oct.-2018
FISCO Ltd. Analyst

Yuzuru SatoFISCO Ltd.
http://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Sales and profits increased in FY6/18 based on non-GAAP standards........................................................

01

2. Forecasts double-digit increases in sales and profits for FY6/19. ................................................................

01

3. Synergies with Leoconnect are expected....................................................................................................

02

4. Will continue to increase dividends, assuming earnings growth. .................................................................

02■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. History................................................... ......................................................................................................

03

2. Business description. . ..................................................................................................................................

04

3. The Company’s strengths...................... ......................................................................................................

07■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 08
1. Summary of FY6/18 results. . ........................................................................................................................

08

2. Trends by business segment. . ......................................................................................................................

09

3. Financial condition and business indicators.................................................................................................

12■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 14
1. Outlook for FY6/19.. .....................................................................................................................................

14

2. Outlook by business segment. . ....................................................................................................................

14■Future direction----------------------------------------------------------------------------------------------------------------------------------------------------------- 16■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 18■Information security measure------------------------------------------------------------------------------------------------------------------------ 18

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/██Summary
Earnings to continue to increase from the growth of SaaS/ASP
services in the CRM area and the effects of M&A
Scala, Inc. <4845> (hereafter, also “the Company”) is a leading provider of website search services, FAQ services,and other services for corporate websites. It continues to develop its businesses and achieve sustainable growth,
centered on SaaS/ASP* services, which are a business model with recurring income. It also actively conducts M&A
to expand its business area, and in July 2016 it made a subsidiary of Softbrain Co., Ltd. <4779> (percentage ofvoting rights: 50.23%), which is a major sales support software company. It also made subsidiaries of plube Co., Ltd.
(ownership ratio: 100%), an EC website management company, in August 2017, and of Leoconnect, Inc. (ownership
ratio: 66.0%), which carries out customer support consulting via call centers operated by the HIKARI TSUSHIN
INC. <9435> Group, in March 2018. The Company has adopted International Financial Reporting Standards (IFRS)
accounting.
*	Service that supplies application software functionality to customers over a network

1. Sales and profits increased in FY6/18 based on non-GAAP standards
In the FY6/18 consolidated results based on non-GAAP standards that exclude temporary earnings, sales andprofits increased by double digits, with sales revenue growing 20.3% year on year (YoY) to ¥12,829mn and operating
profit rising 11.3% to ¥1,546mn. In the SaaS/ASP business, the Company made progress in cross sales to existingcustomers and the acquisition of new customers, mainly for the mainstay services, and sales revenue increased
11.9% to ¥3,141mn and operating profit rose 41.2% (non-GAAP standard) to ¥559mn, which drove the results as awhole. Profits declined slightly for Softbrain’s business, including due to the impact of a delay in projects for e-SalesManager. But at plube, which was newly made a subsidiary, sales revenue was ¥547mn because of the strong salesof trading cards, while Leoconnect recorded net sales of ¥856mn and operating profit of ¥7mn, and these results
were also factors behind the higher sales and profits.
2. Forecasts double-digit increases in sales and profits for FY6/19
The outlook for the FY6/19 results is for the double-digit increases in sales and profits to continue, with sales
revenue to rise 20.4% YoY to ¥15,450mn and operating profit to grow 18.3% to ¥1,830mn. The SaaS/ASP businesswill continue to achieve high growth from the strengthening of the corporate CRM department and the increased
investment in IT to improve operational efficiency, while Softbrain’s results are expected to be double-digit increases
in sales and profits. Leoconnect’s full fiscal year contribution to results will also be a factor behind the higher sales
and profits.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/

Summary

3. Synergies with Leoconnect are expected
In terms of developments in the future, the focus will be on synergies with Leoconnect. This is because while
Leoconnect previously only carried out a management consulting business for the customer support centers of the
HIKARI TSUSHIN Group and its operating margin was low, at around 1%, its sales are expected to increase andprofitability improve through synergies with the Company. It is considered that in the future, it will be possible toraise its operating margin to a level of around 10%. Since FY6/19, the Company has been sequentially introducing
telephone-related services, such as IVR (interactive voice response) services, to the customer support centers towhich Leoconnect provides consulting (24 centers nationwide), and the strategy is to improve productivity (reduce
the number of responses by operators) at the same time as developing new customers and thereby increase
earnings. It will strengthen services for foreigners from who demand is rising, such as due to the increase in thenumber of overseas visitors to Japan, through a collaboration with Inbound Tech Inc. Specifically, it is planning toprovide FAQ translation services and multilingual support services, which are expected to contribute to earnings
in the future.
4. Will continue to increase dividends, assuming earnings growth
The Company’s basic dividend policy is to stably and continuously pay dividends while retaining the internal reserves
necessary to strengthen its financial structure and to develop its businesses in the future. In FY6/19, it plans to
pay a dividend per share of ¥24, up ¥4 YoY, for the 10th consecutive fiscal year of higher dividends. It also aims tocontinue to increase the dividend in the future alongside the growth in earnings.
Key Points
Double-digit increases in sales and profits in the SaaS/ASP business due to the rise in sales per customer fromcross sales and the growth in IoT- and big data-related sales• The outlook is for double-digit increases in sales and profits in FY6/19 also, mainly from the SaaS/ASP business• Aiming for double-digit growth while working to expand services in the CRM area•㻾㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻿㼍㼘㼑㼟㻌㼞㼑㼢㼑㼚㼡㼑㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕㻞㻜㻘㻜㻜㻜

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Source: Prepared by FISCO from the Company’s financial results

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/██Company profile
The corporate cloud service in the CRM field is its core businessand it is expanding business scale through an M&A strategy
1. History
The Company was founded in December 1991 with an initial start as a sales distributor of database systems. It
realized significant growth in 1999 by inheriting support services, including customers, for the Model 204* mainframe
database management system license from Mitsui Knowledge Industry Co., Ltd. In May 2001, it was listed on the
Osaka Securities Exchange’s NASDAQ Japan Market (now the TSE’s JASDAQ) and it is currently listed on the TSEFirst Section.
*	Developed by US-based Computer Corporation of America and Sirius Software (now, Rocket Software). Major customers
were large companies in Japan like as Bank of Japan <8301> and Tokyo Electric Power Company Holdings, Inc. <9501>.
Demand for it ceased due to changes in the market environment, and the service was ended in the fall of 2016.

The Company determined that it needed to change its business structure to continue growing amid the migration of
corporate information systems from mainframes to small-scale open servers, and it started expanding its businessthrough M&As utilizing funds obtained from its IPO. It began with the purchase of PatentManager, a patent management software business from Interscience in 2003, and then acquired Dbecs Co., Ltd. with the aim of entering theCRM field, Vodamedia Inc. with the goal of entering the IVR field, the news distribution service provider NewsWatch
Inc., the website developer TriAx Corp., and other firms in the Internet domain as subsidiaries one after another. The
Company is steadily expanding its SaaS/ASP business, which is a business model with recurring income, as its core
operations and bolstering its recruitment of system engineers to enhance its own service development capabilities.
Recently, the Company made subsidiaries of Softbrain (ownership ratio based on voting rights as of the end ofJune 2018: 50.23%), a major sales support software company, in July 2016; plube (ownership ratio: 100.0%), an
EC website management company that conducts trading of battle game trading cards, in August 2017 in order toenter the EC business; and Leoconnect (ownership ratio: 66.0%), which uses 24 call centers to provide customer
support consulting for the brands and products of the HIKARI TSUSHIN Group, in March 2018.
To conduct more flexible management, the Company switched to a holding company organization in 2004 andcurrently has 10 consolidated subsidiaries. In FY6/16, it changed its accounting standards to IFRS to disclose its
results.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/

Company profile

History
Date
December 1991
January 1999

Major event
Founded Database Communications (now, Scala, Inc.)
Formed sales distribution contracts for the Japanese market with US-based Computer Corporation of America and Sirius andstarted Model 204 support

May 2001

Listed on the Osaka Securities Exchange’s NASDAQ Japan market (now, TSE JASDAQ (Standard))

April 2003

Acquired Interscience’s patent management software (product name: PatentManager) with the aim of entering the intellectual
property system field

October 2003
April 2004
September 2004
June 2006
November 2010

Acquired Dbecs Co., Ltd. as a subsidiary to enter the CRM field
Acquired Vodamedia Inc. as a subsidiary with the aim of entering the IVR (interactive voice response) field
Renamed as Fusion Partners Co. in the transition to a holding company structure and established Database Communications(now, Scala Services Inc.) as a new company and transferred its businessMerged subsidiaries Vodamedia and Dbecs and changed the company name to Digi-Ana Communications Inc. (now, Scala
Communications Inc.)
Acquired NewsWatch Inc. as a subsidiary

April 2012

Merged subsidiaries Digi-Ana Communications and NewsWatch (now, Scala Communications Inc.)

May 2014

Listing transferred to the TSE Second Section

December 2014

Shares elevated to the TSE First Section

November 2015

Acquired TriAx Corp. as a subsidiary

January 2016
July 2016

Renamed subsidiary Database Communications as PAREL, Inc.
Acquired Softbrain Co., Ltd. as a subsidiary

December 2016

Changed trade name to Scala, Inc.

December 2016

Merged the subsidiaries Digi-Ana Communications and TriAx Corp. and changed the trade name to Scala Communications Inc.

August 2017

Acquired plube Co., Ltd. as a subsidiary

March 2018

Acquired Leoconnect, Inc. as a subsidiary

Source: Prepared by FISCO from the Company’s website

Main affiliates
Consolidated subsidiary

Ownership ratio(%)

Main business

Scala Communications Inc.

100.0

SaaS/ASP services and software development, sales, and maintenance

Scala Services Inc.

100.0

Solution services for business processes relating to communication between corporations andindividuals

plube Co., Ltd.

100.0

EC site management

Softbrain Co., Ltd.

50.2

Development, sales, and consulting service to support the introduction of sales support software

Leoconnect, Inc.

66.0

Customer support consulting relating to call center management

Source: Prepared by FISCO from the Company's business briefing materials

Holds the leading share in the domestic market, including for i-search(an internal website search service) and i-ask (an FAQ service)
2. Business description
The Company divides and discloses information on its businesses into its 4 mainstay businesses: The SaaS/ASP
business, which provides IT services that contribute to improving operational efficiency in the corporate CRM area;
the Softbrain Group’s SFA business (the e-Sales Manager-related business); the field marketing business; andLeoconnect’s customer support business, and also the other businesses (Softbrain’s systems development andpublishing business and plube’s EC business). In FY6/18, the percentages of total sales by business were 24.5%
from the SaaS/ASP business, 32.6% from the SFA business, 26.7% from the field marketing business, 6.7% fromthe customer support business, and 9.5% from the other businesses. In the percentages of segment profit to total
profit, the SaaS/ASP business provided 36.2%, the SFA business 42.0%, and the field marketing business 17.0%,
so these 3 business provided approximately 95% of the total.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/

Company profile㻯㼛㼙㼜㼛㼟㼕㼠㼕㼛㼚㻌㼎㼥㻌㼟㼑㼓㼙㼑㼚㼠㻌㻔㻲㼅㻢㻛㻝㻤㻕㻿㼍㼍㻿㻛㻭㻿㻼
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Source: Prepared by FISCO from the Company's financial results and results briefing materials

(1) SaaS/ASP business
The Company provides SaaS/ASP services as its core business. The main services are the i-search website searchservice, i-ask FAQ service, IVR service, and news distribution service.
The i-search service was launched in 2007, and it currently holds the leading market share at around 15% withmore than 360 customers, particularly large enterprises. While the Company has over 10 competitors, its i-searchservice offers better visibility by displaying images in search results and provides effective guidance to users. The
average usage fee per month is ¥100,000-150,000.
The Company launched the i-ask service around 2008 and it is used by about 160 companies, mainly in thefinancial and insurance industries. This service lets users resolve issues on their own by listing frequently asked
questions and related answers on their corporate sites. It helps to lower costs by reducing accesses to call centersand can improve customer satisfaction. The Company holds a roughly 15% market share, ranked second after
OKWAVE <3808>. The average usage fee per month is ¥200,000-300,000.
IVR is a system for voice-based automated responses at corporate phone help desks, and the Company’s service
stands out for being provided in the SaaS format. Companies previously incurred large investment costs for IVR,
including the need to install a PBX (private branch exchange) system. However, the SaaS format enables them toaccess the service inexpensively and use it during limited periods, such as campaigns.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/

Company profile

Other than these businesses, the Company also provides various other services, including a news distribution
service for corporations, and a service for the planning, development, production, maintenance, and managementof websites according to customer needs, and one of its features is that it has a rich service lineup and it does
not rely upon a specific service. It also develops systems and provides services related to IoT and big data as
customized development projects. Examples of this are Smiling Road, a safe-driving assistance service (forcorporations)*1 sold by Sompo Japan Nipponkoa Insurance, and Portable Smiling Road, a smartphone app (forindividuals)*2. In these services, big data, such as driving-related data sent from the users’ dashboard cameras,
is received by the server of Scala Communications and is operated and managed by the web system developedby the Company.
*1	A service that contributes to the promotion of continuous safe driving and accident prevention. It does so by using a
website or smartphone app to provide various functions to facilitate safe driving, for example, processing of driving datacollected from dashboard cameras utilizing IoT technologies, providing safe diving analysis for drivers and administrators,
granting points to drivers rated highly in the driving evaluation system, and enabling them to apply for prizes.
*2	A service that contributes to the promotion of safe driving and accident prevention. It does so by using a smartphone app
to provide various functions for “peace of mind,” reporting accidents with a single push of a button should the driver bein an accident, and for “safety,” being useful for accident prevention including through driving analysis and the provisionof information in real time, and GPS for “convenience.”

Service content
Type

Product name

Description

i-search

Site internal search engine

i-linkcheck

Link-loss detection system

i-print

Site print service

i-linkplus

Related link display servicei-ask

FAQ system

i-catalog

Product site management system

i-learninge-learning service

i-flow

Progress management and approval system

LaCoonWeb system building platform

i-entry

Comprehensive questionnaire CRM service

dbecs

High-performance web mailer

i-assist

Web chatbot system

i-livechat

Web chat system

i-giftDigital gift service

Telephone-system service

SaaS-type IVR

24-hour, 365-day automated voice response

News distribution service

Corporate news

Monitoring important business information

PatentManager6

Latest patent management system

GripManager

Contract operations management system

Site operations business

FresheyeSearch portal site

IoT, Big Data

Safe driving analysis

Processing and management of Big Data

SFA service

e-Sales Manager

SFA/CRM software

Field marketing business

Field activities, market research, etc. Market research, store field activities

EC

Online card shop

Operations for the online buying and selling of trading cards and related products

Customer support businessContact centers

Customer support consulting

Site assistance service

CMS service

CRM service

Data management

Source: Prepared by FISCO from the Company’s business briefing materials(2) Softbrain Group’s businesses
The Softbrain Group’s businesses can be divided into the SFA business, field marketing business, and otherbusinesses. The SFA business is mainly the development and sales of e-Sales Manager, which is SFA/CRM
software, but also includes a consulting service to solve sales issues, skills training, and a service to support the
introduction of smart devices into companies. e-Sales Manager has an excellent reputation as being No. 1 forusability. It is the industry-leading product from domestic SFA vendors, and has been introduced by a total ofmore than 4,500 companies.
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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/

Company profile

The field marketing business is mainly for consumer goods manufacturers, and involves conducting field activities,
market research, and other activities in stores utilizing registered staff, who are mainly housewives aged in their
30s to 50s. As of the end of June 2018, the Company has approximately 84,000 registered staff nationwide whocover more than 160,000 stores, including convenience stores and drugstores, and it is deploying this businesson the largest scale within Japan. It is also developing businesses for the dispatch and referral of retailer quality
counselors who conduct field activities.
The systems development business and publishing business are included in the other businesses segment. But
they are small scale in terms sales and profits, and their impact on earnings is negligible.
(3) Customer support businessThis is the business of Leoconnect, which was made a subsidiary in March 2018. It provides consulting services
for the management of the inbound call centers (24 centers nationwide), from accepting enquiries about customer
companies’ services and products through to the follow-ups after the responses. Previously, its customers werethe members of the HIKARI TSUSHIN Group. But on joining the Company’s Group, it has strengthened its IT
services and is aiming to develop from providing conventional, problem solving-type call centers to proposal-type,inbound call centers, while at the same time its policy is to develop new customers from outside of the HIKARITSUSHIN Group.
(4) Other businesses
The other businesses include Softbrain’s systems development business and the publishing business. They
also include plube’s EC business, which manages “yuyu-tei,” an EC website to buy and sell battle-type tradingcards. The site has a high name recognition in the game industry and is influential to the extent that it is used asa reference indicator for the pricing of used cards, and many of the purchases on it are made by overseas users.

Aims to differentiate itself from competitors by increasing
convenience through developments from the customer’s perspective
and providing a rich service menu
3. The Company’s strengths
One of the Company’s strengths in the SaaS/ASP business is that it develops services from the customer’s perspective. It handles most of its business as direct sales and 80% of sales revenue is from direct salesforces. It improves
service functions and develops new services by listening closely to customer needs and feeding this informationback to its development team, and its development policy is to meet 100% of customer requests. The Company
developed its core i-search and i-ask services thanks to this approach of meeting customer requests and its services
are characterized specially by their ease of use, and this has also enabled it to make smooth progress in expanding
sales to new customers.
Another strength is that its extensive lineup of services developed in this manner differentiates it from its competitors.
While many competitors offer SaaS/ASP services for corporate websites, most of these companies only supply
standalone services and few can provide multiple services as the Company does. The ability to propose multiple
services enables it to meet diverse customer needs, and this cross-selling helps to raise the average price per
customer and customer satisfaction. It has a track record of transactions with over 1,000 companies, including
400 listed companies.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.

9-Oct.-2018

4845 Tokyo Stock Exchange First Section

https://scalagrp.jp/en/ir/

Company profile

The features of the SaaS/ASP business are that monthly billing revenue accounts for approximately 70% of sales
revenue and its recurring income business model, in which monthly revenue is accumulated in accordance with thenumber of service contracts. The Company’s basic policy is to avoid usage-based billing as much as possible andto provide services only from fixed monthly billing. Also, the main services are maintaining a high level of profitability,with the gross profit margins at around 80% (the margin is lower for the news distribution service, at around 70%,
because of the costs of purchasing content). A reason for this is that the Company initially develops services
customized to customer needs, and then develops them horizontally as general services, which enables it to keep
development costs down.

██Results trends
Double-digit increases in sales and profits in FY6/18 based on nonGAAP standards
1. Summary of FY6/18 results
For the FY6/18 consolidated results according to non-GAAP standards that exclude temporary earnings and costs,
sales and profits increased by double digits, with sales revenue rising 20.3% to ¥12,829mn, operating profit climbing
11.3% to 1,546mn, pretax profit growing 11.1% to ¥1,535mn, and net income attributable to owners of the parent
increasing 28.0% to ¥707mn. Results in Softbrain’s SFA business were slightly less than forecast due to the effectsof the delay in the occurrence of projects and upfront investment, but they steadily grew for the other businesses.
Within them, sales and profits increased by double digits for the mainstay SaaS/ASP business, which drove theresults as a whole.
Looking at the effects of the M&A, plube, which was made a subsidiary in August 2017, recorded sales revenue of¥547mn, while Leoconnect, which was made a subsidiary in March 2018, achieved sales revenue of ¥856mn andoperating profit of ¥7mn, and both contributed to the higher sales and profits. The IFRS results for FY6/17 included¥2,633mn as a gain on the staged acquisition of Softbrain shares* at the operating profit stage.
*	T he gain on the difference between the market value of the relevant subsidiary at the time it entered the scope of
consolidation and the acquisition cost of the shares

FY6/18 consolidated results
(¥mn)
IFRS
FY6/17

Non-GAAP
FY6/18

FY6/17

FY6/18Results

Results

YoY

Results

Company
targetResults

YoY

Sales revenue

10,663

12,82920.3%

10,663

12,90012,829

20.3%

-0.5%

Cost of sales

6,184

7,744

25.2%

-

-

-

-

-

SG&A expenses

3,372

3,531

4.7%

-

-

-

-

-

Other earnings and costs

2,630

-5

-

-

-

-

-

-

Operating profit

3,736

1,546

-58.6%

1,389

1,600

1,546

11.3%

-3.3%

Pretax profit

3,728

1,535

-58.8%

1,381

1,600

1,535

11.1%

-4.0%

Net income attributable toowners of the parent

2,987

707

-76.3%

552

680

707

28.0%

4.0%

vs target* Non-GAAP indicators are reference indicators for judging the constant management performance of a company using values from which
nonrecurring income and expenses items and other adjustment items have been excluded.
Source: Prepared by FISCO from the Company's financial results

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/

Results trends

Double-digit increases in sales and profits in the SaaS/ASP businessdue to the rise in sales per customer from cross sales and thegrowth in IoT- and big data-related sales
2. Trends by business segment(1) SaaS/ASP businessIn the SaaS/ASP business, sales revenue increased 11.9% YoY to ¥3,141mn and non-GAAP standard operating
profit rose 41.2% to ¥559mn. Looking by type of sales revenue, monthly and usage-based billing revenue steadily
grew, up 9.5% to ¥2,201mn, due to the progress made in spreading cross sales among existing customers and inacquiring new customers. One-time sales revenue also increased for the first time in 2 fiscal periods, up 17.8% to¥939mn. This was from the contribution of orders for development projects to add to and enhance the functions
relating to the safe driving support services for individuals provided by Sompo Japan Nipponkoa Insurance.
By service, sales revenue increased for the mainstay services, up 11.8% YoY to ¥457mn for i-search and up 26.3%
to ¥450mn for i-ask, and both performed strongly. Also, in the i series, the new i-gift service (a store visit-type product exchange digital gift service)*1 was newly introduced by five companies, including SAISON AUTOMOBILE AND
FIRE INSURANCE COMPANY, LIMITED, while i-assist (a web chatbot system)* 2 was introduced by 3 companies,
such as The Shizuoka Bank, Ltd. <8355>, and the Company is steadily accumulating results for new services.
*1	i-gift is a digital gift service in which companies conducting sales promotion campaigns for new products or gifts cansend customers an SMS or email (electronic message with an ID, such as a QR code) that can be presented at stores toreceive a product. As the billing system is a combination of usage-based billing according to the number of IDs issued
and fixed monthly billing, the greater the number of IDs issued, the more the Company’s sales revenue will increase.
*2	i-assist is a chatbot system that utilizes AI. Its monthly usage fees start from ¥200,000.

Sales revenue for IoT- and big data-related increased greatly, up 44.5% to ¥487mn. This was mainly due to thedevelopment of a big data processing and management system relating to Driving!*, which is Sompo Japan
Nipponkoa Insurance’s safe driving support service, and also the recording of monthly operations and management revenue following the start of this service from January 2018. Other than this, sales were strong fortelephone system service, including IVR, increasing 3.8% to ¥273mn, and for the news distribution service, rising
2.2% to ¥430mn.
*	It is a service that fully supports a safe and secure car life by providing security when driving through the installation of a
dedicated dashboard camera with communication functions equipped with the Safe Driving Support Function. After driving,
the Safe Driving Diagnosis and Visual Function Training features allow users to self-maintain driving skills. Also, should an
accident occur, the service provides an Accident Report Function and Accident Scene Emergency Assistance Service.

Looking at the factors causing operating profit to change, the cost-increase factors were that outsourcing costsrose ¥110mn and personnel costs climbed ¥60mn. But these increases were covered by the effects of the higher
sales, mainly of the i series, so the operating margin rose from 14.1% in FY6/17 to 17.8%.

We encourage readers to review our complete legal statement on “Disclaimer” page.

09 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/

Results trends㻿㼍㼍㻿㻛㻭㻿㻼㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼞㼑㼟㼡㼘㼠㼟㻿㼍㼘㼑㼟㻌㻔㼙㼛㼚㼠㼔㼘㼥㻛㼡㼟㼍㼓㼑㻙㼎㼍㼟㼑㼐㻕㻌㻔㼘㼑㼒㼠㻕㻿㼍㼘㼑㼟㻌㻔㼛㼚㼑㻙㼠㼕㼙㼑㻕㻌㻔㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕

㻔¥㼙㼚㻕
㻟㻘㻞㻜㻜
㻞㻘㻤㻜㻜

㻔¥㼙㼚㻕
㻤㻜㻜
㻣㻜㻜

㻥㻟㻥
㻣㻥㻣

㻞㻘㻠㻜㻜
㻞㻘㻜㻜㻜

㻢㻜㻜

㻡㻡㻥

㻡㻜㻜

㻟㻥㻢

㻝㻘㻢㻜㻜

㻠㻜㻜

㻝㻘㻞㻜㻜

㻟㻜㻜

㻞㻘㻞㻜㻝
㻞㻘㻜㻝㻜

㻤㻜㻜

㻞㻜㻜

㻠㻜㻜

㻝㻜㻜

㻜

㻜
㻲㼅㻢㻛㻝㻣

㻲㼅㻢㻛㻝㻤

Source: Prepared by FISCO from the Company’s results briefing materials

Sales by service(¥mn)
FY6/17

FY6/18YoY

i-search

409

457

11.8%

i-ask

356

450

26.3%

i-entry

104

101

-2.8%

Web services

426

467

9.5%

Services related to IoT/big data

337

487

44.5%

Telephone system service

263

273

3.8%

News distribution service

421

430

2.2%

Other

488

473

-3.1%

Total

2,807

3,141

11.9%

Source: Prepared by FISCO from the Company’s results briefing materials(2) SFA businessIn the SFA business, sales revenue increased 7.4% YoY to ¥4,190mn, while operating profit decreased 17.1%
to ¥649mn. Sales of e-Sales Manager, which is sales support software that contributes to improving productivity
in sales departments, trended steadily, particularly for the cloud type. But the reason why profits declined wasthat costs increased, such as personnel costs and relocation-related costs, including to more actively invest in
human resources toward realizing growth and to move the head office. It was the only business that failed toachieve the Company forecasts, but this was mainly because of the occurrence of delay in two comparatively
large-scale, on-premise projects for e-Sales Manager, and also the pushing forward of the investment in humanresources (the recruitment target for 2018 was achieved in half a year), and at the present time, orders received
continue to trend steadily.

We encourage readers to review our complete legal statement on “Disclaimer” page.

10 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/

Results trends㻿㻲㻭㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼞㼑㼟㼡㼘㼠㼟㻌㻔¥㼙㼚㻕㻿㼍㼘㼑㼟㻌㼞㼑㼢㼑㼚㼡㼑㻌㻔㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕

㻡㻘㻜㻜㻜

㻔¥㼙㼚㻕
㻝㻘㻜㻜㻜

㻣㻤㻟
㻠㻘㻜㻜㻜

㻤㻜㻜
㻢㻠㻥

㻟㻘㻜㻜㻜

㻞㻘㻜㻜㻜

㻢㻜㻜
㻠㻘㻝㻥㻜

㻟㻘㻥㻜㻝

㻝㻘㻜㻜㻜

㻠㻜㻜

㻞㻜㻜

㻜

㻜
㻲㼅㻢㻛㻝㻣

㻲㼅㻢㻛㻝㻤

Source: Prepared by FISCO from the Company's results briefing materials(3) Field marketing businessIn the field marketing business, sales revenue increased 7.0% YoY to ¥3,423mn and operating profit rose 16.5% to¥262mn. Results slumped in 1H of the fiscal period due to the decline in orders for spot projects. But on entering
2018, the Company made progress in acquiring new customers through the effects of the review of the salesorganization and making independent a special department for acquiring new customers. As a result, orders for
short-term spot projects rapidly recovered and doubled compared to in the same period in the previous fiscal
year. In addition, lump-sum contracts for field activities from the main existing customers steadily increased, andtherefore sales and profits rose for the full fiscal year.

㻲㼕㼑㼘㼐㻌㼙㼍㼞㼗㼑㼠㼕㼚㼓㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼞㼑㼟㼡㼘㼠㼟㻔¥㼙㼚㻕㻿㼍㼘㼑㼟㻌㼞㼑㼢㼑㼚㼡㼑㻌㻔㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕

㻠㻘㻜㻜㻜

㻔¥㼙㼚㻕
㻠㻜㻜

㻟㻘㻜㻜㻜

㻞㻢㻞

㻟㻜㻜

㻞㻞㻡
㻞㻘㻜㻜㻜

㻞㻜㻜
㻟㻘㻟㻤㻟

㻟㻘㻝㻥㻤
㻝㻘㻜㻜㻜

㻝㻜㻜

㻜

㻜
㻲㼅㻢㻛㻝㻣

㻲㼅㻢㻛㻝㻤

Source: Prepared by FISCO from the Company's results briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

11 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/

Results trends(4) Customer support business
Leoconnect, which conducts a customer support consulting business to provide a one-stop service to solve
various problems within call center management, entered the scope of consolidation from March 2018. Therefore,
it recorded four months’ worth of results, of sales revenue of ¥856mn and operating profit of ¥7mn.
(5) Other businesses
In the other businesses, sales revenue increased 60.9% YoY to ¥1,217mn and operating profit was ¥67mn(compared to a loss of ¥16mn in the previous fiscal year). Looking at the breakdown of sales revenue, in thesystems development business, it declined 25.9% to ¥369mn alongside the reduction in the scale of existing
projects, but in the publishing business, it increased 16.5% to ¥300mn due to the recovery of book sales.
In the EC business of plube, which entered the scope of consolidation from August 2017, sales revenue was¥547mn due to the strong sales of battle game trading cards.

Other businesses’ results㻔¥㼙㼚㻕㻿㼍㼘㼑㼟㻌㻔㼜㼘㼡㼎㼑㻕㻌㻔㼘㼑㼒㼠㻕㻿㼍㼘㼑㼟㻌㻔㼟㼥㼟㼠㼑㼙㼟㻌㼐㼑㼢㼑㼘㼛㼜㼙㼑㼚㼠㻌㼍㼚㼐㻌㼜㼡㼎㼘㼕㼟㼔㼕㼚㼓㻌㻕㻌㻔㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕

㻝㻘㻢㻜㻜

㻔¥㼙㼚㻕
㻝㻜㻜

㻢㻣

㻝㻘㻞㻜㻜

㻡㻜
㻡㻠㻣

㻤㻜㻜

㻙㻝㻢

㻠㻜㻜

㻣㻡㻢

㻢㻢㻥

㻲㼅㻢㻛㻝㻣

㻲㼅㻢㻛㻝㻤

㻜

㻜

㻙㻡㻜

㻙㻝㻜㻜

Source: Prepared by FISCO from the Company's results briefing materials

Equity ratio of 39.7%, sustained financial soundness
3. Financial condition and business indicators
Looking at the financial condition at the end of FY6/18, total assets were up ¥1,291mn on the end of the previous
fiscal year to ¥16,233mn. The main change factors were that in current assets, there were increases in operatingreceivables and other receivables of ¥1,005mn and in inventories of ¥79mn. In non-current assets, goodwill rose
¥103mn and other long-term financial assets increased ¥166mn.
Total liabilities increased ¥566mn from the end of the previous fiscal year to ¥7,587mn. The main factors were that
operating debt and other payables increased ¥353mn and income taxes payable increased ¥43mn. Total equity
increased ¥725mn from the end of the previous fiscal year to ¥8,645mn, with the main factors being the recordingof net income attributable to owners of the parent of ¥707mn, net income attributable to non-controlling interestsof ¥354mn, and dividend payments of ¥320mn.

We encourage readers to review our complete legal statement on “Disclaimer” page.

12 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/

Results trends

Looking at the business indicators, the equity ratio was basically unchanged, declining slightly from 40.1% at theend of the previous fiscal year to 39.7%, while the interest-bearing debt ratio fell from 79.7% to 74.3%. This was
mainly because while interest-bearing debt was at about the same level as at the end of the previous fiscal year,
shareholders’ equity increased. While there is room for the equity ratio to improve even further, net cash (cash anddeposits – interest-bearing debt) is being kept at the equilibrium level, so it can be judged that the Company is maintaining a sound financial condition. However, goodwill accounts for approximately 36% (¥5,787mn) of total assets,
and it is necessary to be aware that there is the risk that its financial condition could worsen should the earningsof Softbrain, which provides the majority of this goodwill, deteriorate due to it requiring impairment treatment. But
Softbrain’s results are trending stably, and at FISCO, we think the possibility of this risk materializing is extremely
low. The Company has expressed its intention to gradually reduce the level of interest-bearing debt in the future.
Statement of consolidated financial position and business indicators(¥mn)
End-FY6/16
Current assets(Cash and cash equivalents)
Non-current assets

End-FY6/17

End-FY6/18

Change

5,470

7,167

8,120

5,060

4,999

4,950

953
-48

4,160

7,774

8,112

338

(Goodwill)

477

5,684

5,787

103

Total assets

9,631

14,941

16,233

1,291

Total liabilities

5,720

7,021

7,587

566

3,300

4,768

4,793

25

3,910

7,919

8,645

725

-

1,934

2,196

261

Equity ratio (shareholders’ equity ÷ total assets)

40.6%

40.1%

39.7%

Interest-bearing debt ratio (interest-bearing debt ÷ shareholders’ equity)

84.4%

79.7%

74.3%

ROE

28.1%

60.4%

11.4%

ROA

18.2%

30.4%

9.9%

Operating margin

22.9%

35.0%

12.1%

(Interest-bearing debt)
Total equity(attributable to non-controlling interests)
Indicators(Stability)(Profitability)

Note: Based on IFRS
Source: Prepared by FISCO from the Company's financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

13 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/██Outlook
Outlook is for the double-digit increases in sales and profits tocontinue in FY6/19, mainly from the SaaS/ASP business1. Outlook for FY6/19
The outlook for FY6/19 is for the double-digit increases in sales and profits to continue, with sales revenue to rise
20.4% YoY to ¥15,450mn, operating profit to grow 18.3% to ¥1,830mn, pretax profit to climb 18.5% to ¥1,820mn,
and net income attributable to owners of the parent to increase 16.0% to ¥820mn. The SaaS/ASP business andthe field marketing business are expected to grow, while the SFA business is set to return to a growth track, withsales and profits to increase by double digits. Leoconnect’s recording of results for the full fiscal year will also
contribute to sales revenue. In 1H, the Company will conduct upfront investment in development costs and to invest
in human resources, so the profit-increase rate will slow down to single digit. But from 2H onwards, the forecast isfor the profit-increase rate to rise, including due to the effects of the higher sales and the improved profitability of
Leoconnect.
Outlook for FY6/19 consolidated earnings(¥mn)
FY6/18Full year

FY6/19YoY*

1H forecast

YoY

Full-year
forecast

YoY

Sales revenue

12,829

20.3%

7,480

27.8%

15,45020.4%

Operating profit

1,546

11.3%

860

4.6%

1,830

18.3%

Pretax profit

1,535

11.1%

850

4.2%

1,820

18.5%

707

28.0%

390

4.8%

820

16.0%

Net income attributable toowners of the parent
Earnings per share (¥)

41.88

23.10

48.50

* Comparisons with non-GAAP indicators
Source: Prepared by FISCO from the Company’s financial results

Synergies expected with the SaaS/ASP business and the customer
support business2. Outlook by business segment(1) SaaS/ASP business
The outlook for the SaaS/ASP business is for sales and profits to increase by around 15% YoY. The Company willcontinue to work on acquiring cross sales for the i series and new customers, aiming to accumulate monthly-billing
earnings. One-time sales are also expected to increase from the contribution to sales of new development projects.

We encourage readers to review our complete legal statement on “Disclaimer” page.

14 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/

Outlook

For the i series, a major cosmetics company and major non-life insurance company have decided to introduce
i-livechat (a web chat system)*, and in addition, a major cosmetics company and a major financial company
have decided to newly introduce i-assist. Including the new introductions of i-gift that were decided in FY6/18,
the outlook is that these new services will contribute greatly to sales. Particularly for i-livechat and i-assist, it ispossible to re-use the knowledge database of i-ask, which is the Company’s mainstay service, so it is proposing
cross sales to customers using this service, which is leading to contracts. For i-livechat, its policy is to strengthen
sales through a cooperating service with LINE Customer Connect.
*	i-livechat is a web chat service that enables site operators, such as in a customer support center, to guide users in solving
problems they may face and addressing their questions or concerns through real-time chat. By linking and checking
users’ i-search and i-ask history, site operators are able to respond while confirming content on the chat response screen.
i-livechat is a service that contributes to improving customer satisfaction. It is anticipated that it will be introduced mainly
at corporate call centers, with an expected minimum monthly usage fee from ¥200,000.

Other than the above, higher sales are expected to continue in FY6/19 for Sompo Japan Nipponkoa Insurance,
for which in the previous fiscal year, sales revenue of approximately ¥600mn was recorded. This is because theCompany plans to record sales from development projects for insurance sales systems other than for vehicles.
(2) SFA business
The outlook for the SFA business is also for sales and profits to increase by around 15% YoY. As Softbrain’s
fiscal year ends in December, in terms of Softbrain’s results that correspond to the Company’s accounting period(FY6/19), 2H of FY12/18 and 1H of FY12/19 will be reflected in the Company’s results. On provisionally calculating
the growth rate of the sum of Softbrain’s FY12/18 2H forecasts and 50% of the FY12/19 forecasts announced in
the medium-term management plan, sales revenue will increase 23% YoY and operating profit will rise 46%. There
are slight differences, because the two companies’ accounting standards are different. But if Softbrain proceeds
as planned, it is possible that they will be factor behind results exceeding the forecasts.
Sales of Softbrain’s e-Sales Manager are expected to continue to grow. Currently, in order to expand its customer
groups, it has introduced e-Sales Manager Remix MS, which is a self-serve version that is intended for SMEs. It
is also developing industry-specific products, and these products are expected to contribute to earnings from
FY12/19 onwards.
(3) Field marketing businessIn the field marketing business, sales and profits are expected to grow by around 5% YoY. If provisionally calculated
in the same way, based on Softbrain’s forecasts, sales revenue will increase 1% and operating profit 3%. These areless than the Company forecasts, but this is because the FY12/18 1H results were increases in sales and profitsthat exceeded the Company forecasts. As orders have been trending steadily since July, at FISCO we think it isfully possible that it will achieve higher sales and profits of around 5%.
(4) Customer support businessIn the customer support business, sales revenue of ¥2bn is expected. As the amount in FY6/18 was ¥856mn for
4 months, on simply multiplying this amount by 3, the total for the full fiscal year becomes around ¥2.5bn. But
in order to improve the profitability of Leoconnect, the Company plans to acquire customers from outside of the
HIKARI TSUSHIN Group. Toward, this, it is aiming to reduce the number of telephone inquiries at call centers andestablish a structure to accept new customers. As the solution for this, it is proposing introducing the Company’s
IVR service into each call center, and it is also proposing the introduction of i-ask on the websites of its customers,
which are the HIKARI TSUSHIN Group companies. While other companies’ systems have already been introduced
into Leoconnect’s call centers, the Company’s IVR is superior in terms of performance and costs, so the plan is
to sequentially replace the other systems with it.

We encourage readers to review our complete legal statement on “Disclaimer” page.

15 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/

Outlook

Therefore, it is anticipated that the growth in sales revenue will slow due to the temporary fall in the number of
telephone inquiries. However, the plan is to allocate the surplus capacity created from the fall in the number of
telephone inquiries to new customers from outside of the HIKARI TSUSHIN Group, and if it is able to smoothly
acquire new customers, this can be expected to have a positive effect on earnings. Moreover, the number of
introductions of IVR and i-ask will rise, which will also be a factor for sales and profits to increase in the SaaS/ASP business.
Other than these, as new services, the Company will start providing multilingual call center services for foreigners
and a service to translate FAQ pages. For the multilingual call centers, it has entered into a business alliance with
Inbound Tech, which has a leading track record in Japan in this field, and the Company will utilize its resources
to provide high-quality services. It is said that the number of annual overseas visitors to Japan will exceed 30
million in 2018, and this number is expected to rise even higher toward the Tokyo Olympics in 2020. Therefore, it
is forecast that needs of companies for such services will also increase in the future. The service to translate FAQ
will be in the SaaS/ASP business area, and the Company’s strategy is to ascertain market changes in advanceto quickly capture potential demand.
In the customer support business, the industry average operating margin is around 10%, so the aim at the present
time is to improve profitability up to this level by acquiring new customers in the future. Also, through making
Leoconnect a subsidiary, it has become possible to ascertain quickly and in more detail the needs of call center
worksites, and synergies can be expected going forward in terms of the development of SaaS/ASP services.
(5) Other businesses
In the other businesses, even within Softbrain, the systems development business and publishing business are
not considered to be businesses to be actively expanded, and their results are expected to remain at the samelevel as in the previous fiscal year. On the other hand, the outlook for the EC business in FY6/19 is for higher sales
and profits from the strong sales of battle-type trading cards.

██Future direction
Aiming for double-digit growth while working to enhance services in
the CRM area
In terms of its direction for the future, the Company plans to develop a wide range of businesses in the CRM area,
which supports communication between corporations and individuals, with the aim of providing the necessary
information and goods on the correct timing based on IT services. In addition to the sustainable and stable growthof the existing SaaS/ASP business, its plan is to target double-digit growth by enhancing the synergies with thecustomer support business acquired through M&A.

We encourage readers to review our complete legal statement on “Disclaimer” page.

16 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.
4845 Tokyo Stock Exchange First Section

9-Oct.-2018https://scalagrp.jp/en/ir/

Future direction

In the last two years, the Company has successively and quickly conducted three M&A to acquire Softbrain, plube,
and Leoconnect. It is prioritizing the early realization of synergies through collaborating with Leoconnect. Therefore, it
seems it will temporarily take a break from conducting M&A, but it is thought that they continue to be one important
growth strategy. The targets for the M&A and business alliances can be summarized into the following four typesof companies: 1) companies with the expertise and technologies to develop new services, 2) companies with alarge customer base that will lead to expansions in market share for the Company’s existing services, 3) companies
that will enhance the Company’s service lineup and that have expertise and technologies it does not possess andwill contribute to the evolution of its existing services and improved competitiveness, and 4) companies with many
excellent engineers who will strengthen the Company’s development capabilities.
Future direction
The Company will develop a wide range of businesses with the aim of providing the necessary information and goodson the correct timing, based on IT services that support communication between corporations and individuals.

Corporations and individuals
Discovery of corporations and individuals seeking people,
goods, and information

Searching
and finding

Questionsand inquiries

Guidance andrecommendations

Applications
and purchasesCompiling
and analyzing

Deliveryi-searchi-catalog
i-linkplus
FresheyeNews distribution
servicei-ask
i-entrydbecs
i-livechat
Chatbot

IVR
i-shopnavi
i-livechat
Chatbot

IVR
i-entry
Campaign reception
EC siteIoT
Processing big datai-giftEC site shipping
agencyContact
centerd center

Proposal-type inboun
Leoconnect

Discovery of valuable people, goods, and information

People, goods, and information

Source: The Company's results briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

17 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Scala, Inc.

9-Oct.-2018

4845 Tokyo Stock Exchange First Section

https://scalagrp.jp/en/ir/██Shareholder return policy
Plans to increase the FY6/19 dividend per share by ¥4 YoY to ¥24, forthe 10th consecutive fiscal year of higher dividends
The Company’s basic policy on returning profits to shareholders is to stably and continuously pay a dividend while
also retaining the internal reserves necessary to strengthen its financial structure and develop its businesses in
the future. The standard for the consolidated dividend payout ratio is around 50%, and in FY6/19, the Company
plans to increase the dividend per share by ¥4.0 YoY to ¥24.0 (dividend payout ratio, 49.5%). This will be the 10thconsecutive fiscal year of higher dividends, and it is also expected to continue to increase the dividend in the future,
if earnings continue to grow.

㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻔¥㻕㻰㼕㼢㼕㼐㼑㼚㼐

㻟㻜㻚㻜㻯㼛㼙㼙㼑㼙㼛㼞㼍㼠㼕㼢㼑㻌㼐㼕㼢㼕㼐㼑㼚㼐
㻞㻠㻚㻜㻌

㻞㻡㻚㻜
㻞㻜㻚㻜㻌

㻝㻤㻚㻜㻌

㻞㻜㻚㻜

㻝㻡㻚㻜
㻝㻜㻚㻜

㻝㻠㻚㻜㻌
㻝㻞㻚㻜㻌

㻞㻠㻚㻜

㻞㻚㻜
㻝㻤㻚㻜

㻞㻜㻚㻜

㻝㻠㻚㻜
㻡㻚㻜

㻝㻜㻚㻜

㻜㻚㻜
㻲㼅㻢㻛㻝㻡

㻲㼅㻢㻛㻝㻢

㻲㼅㻢㻛㻝㻣

㻲㼅㻢㻛㻝㻤

㻲㼅㻢㻛㻝㻥㻌㻱

Source: Prepared by FISCO from the Company's financial results██Information security measure
The Company’s mainstay business is SaaS/ASP services that utilize the Internet, so information security is one of its
most important management issues. In terms of specific measures, all Group companies have been and continue
to work to acquire ISO/IEC27001 certification, which is the international standard for information security, and to
implement information security measures incorporating a global-standard third-party perspective. They also strive
to thoroughly manage the information assets owned by the Group based on an internal management system. Theyuse in-house servers and some private clouds for the information system, while also constructing backup systems.

We encourage readers to review our complete legal statement on “Disclaimer” page.

18 18

Disclaimer
FISCO Ltd. (the terms “FISCO”, “we”, mean FISCO Ltd.) has legal agreements with theTokyo Stock Exchange, the Osaka Exchange,and Nikkei Inc. as to the usage of stock priceand index information. The trademark and value of the “JASDAQ INDEX” are the intellectual
properties of the Tokyo Stock Exchange, and therefore all rights to them belong to the Tokyo
Stock Exchange.
This report is based on information that we believe to be reliable, but we do not confirm or
guarantee its accuracy, timeliness,or completeness, or the value of the securities issued bycompanies cited in this report. Regardless of purpose,investors should decide how to use
this report and take full responsibility for such use. We shall not be liable for any result of its
use. We provide this report solely for the purpose of information, not to induce investment or
any other action.
This report was prepared at the request of its subject company using information provided
by the company in interviews, but the entire content of the report, including suppositions andconclusions, is the result of our analysis. The content of this report is based on informationthat was current at the time the report was produced, but this information and the content of
this report are subject to change without prior notice.
All intellectual property rights to this report, including copyrights to its text and data, areheld exclusively by FISCO. Any alteration or processing of the report or duplications of thereport, without the express written consent of FISCO, is strictly prohibited. Any transmission,
reproduction, distribution or transfer of the report or its duplications is also strictly prohibited.
The final selection of investments and determination of appropriate prices for investment
transactions are decisions for the recipients of this report.
FISCO Ltd.