COMPANY RESEARCH AND ANALYSIS REPORTScala, Inc.
4845
Tokyo Stock Exchange Prime Market

18-Oct.-2022
FISCO Ltd. Analyst

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

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Overview of FY6/22 results.................... ......................................................................................................

01

2. Outlook for FY6/23.. .....................................................................................................................................

01

3. Progress of the Mid-term management plan. ...............................................................................................

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

03

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

05

3. Management mission...................................................................................................................................

09■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 11
1. Overview of FY6/22 results..........................................................................................................................

11

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

13

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

17■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 19
1. Outlook for FY6/23.. .....................................................................................................................................

19

2. Status of progress of the Mid-term management plan. ................................................................................

25■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/■ Summary
Aims to dramatic growth with the business to solve social issues as
the seed for growth, based on DX
Scala, Inc. <4845> (hereafter, “the Company”) is a holding company that aims to create value and solve social
problems through its portfolio focused on the IT/AI/IoT/DX Business, and it is working to expand its businessareas and to create synergies through an M&A strategy. The Company operates the six businesses of the IT/AI/
IoT/DX Business, Customer Support Business, HR & Education Business, EC Business, Insurance Business, andIncubation & Investment Business. It is working to achieve the results target (revenue of ¥500bn in FY6/30) set out
in COMMIT5000, its mid-term management plan. The Company moved its listing to the Tokyo Stock Exchange(TSE) Prime Market in line with the TSE’s transition to new market segments in April 2022.
1. Overview of FY6/22 results
In FY6/22 in the ongoing businesses*, revenue increased 15.0% compared to in the same period in the previous
fiscal year (year on year (YoY)) to ¥10,015mn, and operating loss was ¥393mn (compared with operating profit of¥413mn in the same period of the previous fiscal year). Revenue increased as the EC Business performed welland also from the contributions of the subsidiaries acquired during the period (EGG CO., LTD. and Nihon Pet
Small-amount Short-term Insurance Company). Conversely, profits decreased, with the main factors being therecording of an impairment loss on goodwill (¥424mn), mainly because of a review of the business plans of someconsolidated subsidiaries, and in the Incubation & Investment Business, increases in upfront costs and M&A-related
costs. When based on the non-GAAP indicator that excludes temporary costs, operating profit decreased 78.9%
to ¥99mn and profits were secured.
*	Following the sale of shares of consolidated subsidiary SOFTBRAIN Co., Ltd. in November 2020, the businesses of thiscompany and its subsidiaries were classified as discontinued businesses. Also, following the decision to discontinue anddissolve Scala Works Inc., in June 2022, the businesses of this company were classified as discontinued businesses.
Therefore, revenue and operating profit show amounts based on ongoing businesses and exclude discontinued businesses.

2. Outlook for FY6/23
The outlook for FY6/23 is for revenue to increase 29.8% YoY to ¥13,000mn and operating profit of ¥1,000mn (aloss of ¥393mn in the previous period). Revenue is forecast to increase due to the full fiscal year contributions of theresults of EGG and Nihon Pet Small-amount Short-term Insurance Company, and also because of the increases inrevenue in the other existing businesses. In profits, the temporary costs recorded in the previous period will not berecorded in this period, while also the plan is for the higher profits in the IT/AI/IoT/DX Business, the HR & Education
Business, and the EC Business to contribute. The Insurance Business has entered the scope of consolidation asa loss-making business, but the amount of its operating loss has been reduced by measures to improve work
efficiency, including a review of the earnings structure and introductions of systems, and the aim is for it to become
profitable on a monthly basis during FY6/24.

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01 27

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

Scala, Inc.

18-Oct.-2022

4845 Tokyo Stock Exchange Prime Market

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

Summary

3. Progress of the Mid-term management plan
The mid-term management plan COMMIT5000 calls for advancement of the value creation support business, IT/AI/
IoT-related business, and social issue-solving business. It targets revenue of ¥500bn and operating profit of ¥50bn
in FY6/30 (and revenue of ¥100bn and operating profit of ¥10bn in FY6/25). The plan positions the public-private
co-creation and healthcare as particular areas of focus. In FY6/22, the Company created new businesses andco-creation projects through the Gyaku Propo (reverse public fundraising proposals)* public sector-private sector
matching platform, and it worked on building a growth model. In FY6/23, the outcomes of these initiatives are starting
to be realized in terms of results. For the future, the Company has set a strategy of accelerating growth through neworders for co-creation projects and also through the horizontal development of the co-creation projects it has worked
on so far. If it makes steady progress with these initiatives, earnings are also expected to enter a high-growth stage.
*	“Gyaku Propo” is a co-creation service where companies indicate what social issues are interesting to them and local
governments propose ideas and plans for solving issues, and therefore a framework that reverses the conventional process
for public offering proposals and bidding.

Key Points
In FY6/22, although the EC Business continued to perform well, posted an operating loss due to the increase
in upfront investment costs and the recording of temporary costs• In FY6/23, revenue will increase by double digits, including from the effects of M&A, and earnings will enter ahigh-growth stage• Has planted the seeds for growth toward achieving the mid-term management targets, and going forward, isaiming to accelerate earnings growth while developing•㻾㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻾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(¥mn)
㻞㻜㻘㻜㻜㻜

(¥mn)
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Note: FY6/21 results are figures for ongoing businesses excluding SOFTBRAIN and its subsidiaries. The FY6/22 results are figures for the ongoing businesses excluding SOFTBRAIN,
its subsidiaries, and Scala Works
Source: Prepared by FISCO from the Company's financial results

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/■ Company profile
An IT development and services company that is expanding its
business areas through M&A and continuing to grow
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.
*	Database management system (DBMS) that was developed by US-based Computer Corporation of America and Sirius
Software (now, Rocket Software). Customers were large companies in Japan such as the Bank of Japan <8301> andTokyo 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.

In 2000, the Company determined that it needed to change its business structure to continue growing amid themigration of corporate information systems from mainframes to distributed processing (client/servers), and it started
expanding its business through M&A utilizing funds obtained from its IPO in 2001. It developed widely its own SaaS/ASP services and realized steady results growth through its recurring-income earnings model, and as a result, its
share listing was designated to the Tokyo Stock Exchange (TSE) 1st Section in 2014.
As measures toward building a value co-creation platform under mid-term management plan COMMIT5000 startingin 2019, the Company established Scala Partners, Inc. in July of the same year, and then made wholly owned
subsidiaries of J-Phoenix Research Inc., which provides management consulting and IR support, in October and
Grit Group Holdings Co., Ltd., which provides HR & Education Business, in April 2020. More recently, the Company
made subsidiaries of EGG, an IT system developer, in February 2022, and then Nihon Pet Small-amount Short-term
Insurance Company, which offers small-amount short-term insurance, in April 2022.
To conduct more flexible management, the Company switched to a holding company organization in 2004, and in
FY6/16, it changed its accounting standards to IFRS to disclose its results. The Company moved its listing to the
TSE Prime Market in line with the TSE’s transition to new market segments in April 2022.

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03 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://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

October 2018

Acquired Connect Agency Inc. as a subsidiary

November 2018

Established Scala Next, Inc.

December 2018

Established the Scala Next, Inc., Mandalay branch (Myanmar)

July 2019
October 2019
November 2019

Established Scala Partners Inc.
Made a subsidiary of J-Phoenix Research Inc.
Established SCL Capital LLC.

April 2020

Made a subsidiary of Grit Group Holdings Co., Ltd.

June 2020

Invested in MyanCare, a health-tech company in Myanmar that provides remote medical services

August 2020

Established Scala Ace Co., Ltd. as a joint venture with ACE Data Systems Ltd., a major IT company in Myanmar (ownership ratio:
35%)

September 2020

Established Social Studio Inc. as a joint venture with Branding Technology Inc. in order to promote DX to the national and local
governments (ownership ratio: 51%)

November 2020

Developed the reverse public offering proposal service called “Gyaku Propo” specializing in SDGs for companies’ new businessdevelopment

March 2021

Excluded SOFTBRAIN Co., Ltd. from the scope of consolidation due to the transfer its shares

June 2021

Established Scala Truva, Inc.

August 2021

Made a subsidiary of readytowork Co., Ltd.

November 2021

Established SOCIALX, INC.

February 2022

Made a subsidiary of EGG CO., LTD.

April 2022

Moved its listing to the TSE Prime Market in line with the TSE’s transition to new market segments
Acquired Nihon Pet Small-amount Short-term Insurance Company

Source: Prepared by FISCO from the Company’s website and press releases

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04 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

Company profile

Engaged in six business segments: the IT/AI/IoT/DX Business,
Customer Support Business, HR & Education Business, EC
Business, Insurance Business, and Incubation & Investment
Business
2. Business description
The Company reorganized its business segments into six segments—IT/AI/IoT/DX Business, Customer Support
Business, HR & Education Business, EC Business, Insurance Business, and Incubation & Investment Business—anddiscloses information on them.
On looking at the Group companies responsible for each business segment, the IT/AI/IoT/DX Business is comprisedof eight companies, centered on Scala Communications, Inc. Of these, Retool, Inc. plans, develops and sells cloud
activity management tools that visualize the various processes in corporate activities, however, its track record of
introductions is still small and its effects on results is negligible. Also, Social Studio Inc. is a subsidiary establishedin September 2020 as a joint venture with Branding Technology Inc. <7067> in order to support the promotion of
DX and SDGs to the national and local governments. In addition to above, EGG, which became a subsidiary at theend of February 2022, is a pioneer that developed the first core system on the part of local governments in Japanaccompanying the start of the “Furusato Nozei” taxation system, and its strengths include its network of many local
governments (it has a track record of installing the system to more than 680 or a third of local governments in Japan).
Leoconnect, Inc., which became a subsidiary in 2018, is engaged in the Customer Support Business, while four
companies in total, of the three companies* of Athlete Planning, Inc., which became a subsidiary in 2020, Sports
Stories, Inc., and FourHands, Inc., and also Broncos20 Co., Ltd. that was made a subsidiary by Sports Stories inMarch 2022, comprise the HR & Education Business. The EC Business is conducted by Scala PLAYce, Inc., whichbecame a subsidiary in 2017, while the Insurance Business is conducted by Nihon Pet Small-amount Short-term
Insurance Company, which became a subsidiary in April 2022. Moreover, the Incubation & Investment Businessare conducted by Scala Partners, Inc., J-Phoenix Research, Inc., SOCIALX.INC, SCL Capital LLC, and the SCSV-1
Investment Limited Partnership. The Group also includes the Company itself as the holding company.
*	These three companies were placed under the umbrella of Grit Group Holdings Co., Ltd. that was made a subsidiary of
the Company in April 2020. But currently they are the Company’s subsidiaries, while Scala Works Inc. was liquidated at
the end of June 2022.

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

Scala, Inc.

18-Oct.-2022

4845 Tokyo Stock Exchange Prime Market

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

Company profile

Subsidiaries by business segment and business content
Business segment
IT/AI/IoT/DX BusinessSubsidiary
Scala Communications, Inc.
Scala Service, Inc.
Scala Next Inc.
readytowork Co., Ltd.
Connect Agency, Inc.
Retool, Inc.
Social Studio Inc.

Main business
Provision of SaaS/ASP services
Development of SaaS/ASP services, offshore development
Cloud-based PBX services
Planning, development, and sales of cloud activity management tools
Promotion of DX and SDGs to the national and local governments(joint venture with Branding Technology Inc.)
Systems development, maintenance, and network construction
Customer support consulting (call center operations, etc.)

EGG CO., LTD.
Leoconnect, Inc.

Customer Support
Business
HR & Education
Business

EC BusinessInsurance Business

Athlete Planning, Inc.
Sports Stories, Inc.
FourHands, Inc.
Broncos20 Co., Ltd.
Scala PLAYce, Inc.
Nihon Pet Small-amount Short-term
Insurance Company
Scala, Inc.
Scala Partners, Inc.
J-Phoenix Research Inc.

HR recruiting (new graduate recruiting, mid-career recruiting) support, etc.
Exercise education, sports school operation, etc.
Infant education, community development support, etc.
Basketball club team management
Management of an EC site for the buying and selling of battle-type trading cards
Small-amount short-term insuranceGroup head office, holding company functions, investment business
Innovation, incubation, investment
Value creation management support(creation of analyst and integrated reports, fund management support)
SOCIALX, INC.
Planning and operation of the Gyaku Propo public-private co-creation platform
SCL Capital LLC
Investment fund management
SCSV-1 Investment Limited Partnership Investment fundNote: As of the end of June 2022
Source: Prepared by FISCO from the Company's results briefing materials
Incubation & Investment
Business

Looking at the composition of sales by business segment in FY6/22, the IT/AI/IoT/DX Business provided 48.7%,
Customer Support Business 13.6%, HR & Education Business 14.7%, EC Business 16.5%, Insurance Business
4.5%, and Incubation & Investment Business 2.1%, making the IT/AI/IoT/DX Business the mainstay business.

㻯㼛㼙㼜㼛㼟㼕㼠㼕㼛㼚㻌㼎㼥㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼟㼑㼓㼙㼑㼚㼠㻌㻔㻲㼅㻢㻛㻞㻞㻕
㻞㻚㻝㻑
㻠㻚㻡㻑

㻵㼀㻛㻭㻵㻛㻵㼛㼀㻛㻰㼄㻝㻢㻚㻡㻑㻯㼡㼟㼠㼛㼙㼑㼞㻌㻿㼡㼜㼜㼛㼞㼠㻌㻮㼡㼟㼕㼚㼑㼟㼟㻴㻾㻌㻒㻌㻱㼐㼡㼏㼍㼠㼕㼛㼚㻌㻮㼡㼟㼕㼚㼑㼟㼟㻠㻤㻚㻣㻑㻱㻯㻌㻮㼡㼟㼕㼚㼑㼟㼟㻵㼚㼟㼡㼞㼍㼚㼏㼑㻌㻮㼡㼟㼕㼚㼑㼟㼟㻝㻠㻚㻣㻑㻵㼚㼏㼡㼎㼍㼠㼕㼛㼚㻌㻒㻌㻵㼚㼢㼑㼟㼠㼙㼑㼚㼠㻌㻮㼡㼟㼕㼚㼑㼟㼟㻝㻟㻚㻢㻑

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

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06 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

Company profile(1) IT/AI/IoT/DX Business
The IT/AI/IoT/DX Business develops and provides various types of services, including SaaS/ASP services (i-series),
such as inquires via the Internet and telephone, information searches, and applications, and it is working on
increasing profitability and stability through a recurring-income business model. It is also using as a hook its
approaches made through easy-to-understand SaaS/ASP services and the Scala Group’s other business, and it
is progressing initiatives that will lead to orders for new development projects.
As a part of this series of initiatives, it is progressing DX that uses IT/AI/IoT (with a strong awareness of transformation in particular), and in order to accelerate the creation of new businesses and new services and to redefine
its existing business, it is actively progressing collaborations with partners that are experts in related technologies
in various industries. For example, for the planning and development of new services to respond to COVID-19
and to progress DX, and for introductions of the main services, it is implementing DX policies focused on regional
local governments and the finance industry, conducting demonstration experiments for next-generation digital
healthcare services through co-creation with a pharmaceutical company and a non-life insurance company, andprogressing initiatives to create services.
In co-creation projects, the Group is jointly developing new businesses for social issues and providing systems
to solve these problems.
Going forward, the Company’s strategy is to accelerate growth by participating in many co-creation development
projects that will lead to solutions for social issues, while for SaaS/ASP services as well, cases of it providing
these services as one development project menu are forecast to increase. The fees for SaaS/ASP services arearound ¥100,000 per month, but in the case of co-creation projects, fees are more than ¥2mn per month and it
becomes a large-scale, recurring-income business. The lead time from the order to the start of service provision
is becoming longer, but it is considered that operating efficiency is improving.
Description of the IT/AI/IoT/DX Business services
Type
Information searches
Content management

Content delivery

Various types of reception

Inquiry management
Data management
IoT, big data

Product name

Description

i-search

Internal search engine for websites

i-ask

FAQ system

i-catalog

Product site management system

i-linkcheck

Link check services

i-linkplus

Service for displaying links to related pages

i-giftDigital gift service

FresheyeTM

Search portal site

Corporate news services

News distribution service for corporations

SaaS-type IVR

24-hour, 365-day automated voice response

i-shopnavi

Store reservation support system

Campaign website construction

Campaign website construction and reception

i-assist

Web chatbot system

i-livechat

Web chat system

PatentManager6

Latest patent management system

GripManager

Contract operations management system

Safe driving analysis

Processing and management of big data

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

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

Company profile(2) Customer Support Business
The Customer Support Business, which is conducted by Leoconnect, provides consulting services for the management of inbound call centers, from the receipt of inquiries about customer companies’ services and products
through to the follow-up after responding to inquiries, and its main customers include the HIKARI TSUSHIN<9435> Group and its agencies. It is progressing introductions of services such as i-livechat, i-assist, and IVR into
call centers, while in addition, it is aiming to improve the productivity of call centers by introducing the C7 coresystem, which was developed by Scala Communications reflecting customers’ needs (launched in November2019). Also, the Company is aiming to improve profitability by constructing its own call centers and acquiring
customers from outside of the HIKARI TSUSHIN Group.
(3) HR & Education BusinessIn the HR & Education Business, 65% of sales come from the HR business and 35% of sales come fromthe education business. In the HR business, Athlete Planning provides services including a comprehensive
employment support system for physical education students, a job hunt support service specifically for female
students, and a second career support service for professional athletes. Currently, the source of earnings is fromthe planning and management of corporate joint briefing meetings to recruit new graduates. This service starts
selling exhibition booths to companies in June every year for events scheduled to be held from December toMarch of the following year, presenting a seasonal factor for results with earnings concentrated in 3Q. There isalso the situation of the novel coronavirus pandemic (hereafter, COVID-19) and in response to this, the Group is
working to hold recruitment events online.
In the education business, FourHands provides educational services with high added value targeting infants toelementary school students. Its services include the Minna no Hoikuen nursery schools, Universal Kids international
combination day care centers and preschool, UK Academy for cultivating an international sensibility among
schoolchildren, and Largo KIDS day services, such as after-school activities specializing in exercise. Also, Sports
Stories provides sports classes, including the Fine’z baseball schools for children, the BEAUT soccer school, theDunkers basketball schools and Ballschule schools. A feature of these businesses is that they emphasize not
only athletic ability, but also growth of noncognitive skills. Broncos20, which was made a subsidiary by Sports
Stories in March 2022, manages THE SAITAMA BRONCOS, which belong to the third division of the B.LEAGUE
professional basketball league. It has continuously conducted profitable management, and in the future, it will
work on new businesses that utilize the Group’s resources, including managing fan club websites and dispatchingcoaches for club activities in schools.
(4) EC BusinessIn the EC Business, Scala PLAYce buys and sells trading cards for battle-type games, and operates Card Shop
- Yuyu-Tei, a reuse EC site with the functions of a capture site. The site has high name recognition in the gaming
industry and is influential to the extent that it is used as a reference indicator for the pricing of used cards, andso it is known as the industry’s No. 1 EC shop. From FY6/20, it also started purchases from overseas users andthere are many purchases made by overseas users.
(5) Insurance Business
The Insurance Business is conducted by Nihon Pet Small-amount Short-term Insurance Company, which wasmade a subsidiary in April 2022. It provides the Inu to Neko no Hoken (Insurance for Dogs and Cats) insurance
for pets, and the features of its unique insurance products include a 90% reimbursement rate. For the future,
it plans to expand its business from pet insurance into various other insurance areas, such as insurance forindividuals and in the financial area. It is also considering developing a business to support the transfer of risksfacing companies, local governments and others by data analysis and risk analysis that use AI, adopted as an
optimal risk transfer technology.

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

Company profile(6) Incubation & Investment Business
The Incubation & Investment Business consists of business investment conducted by the Company and regional
revitalization-related services in collaboration with local governments. It also includes engagement in value creation
management support by J-Phoenix Research, new business development by Scala Partners, and regional revitalization-related services centered on the management of the KomfortaWorkation website to introduce workation
facilities. In addition, it includes the Gyaku Propo public sector-private sector co-creation platform provided by
SOCIALX; investments by SCSV1 Investment Limited Partnership, which is a value co-creation engagement fundmanaged by SCL Capital; and improvements in value relating to other investments.
The companies targeted for investment by the value co-creation engagement fund are listed companies witha market capitalization of up to ¥10.0bn for which ROIC of at least 15% is expected. The amount invested percompany is in the ¥100-¥150mn range, and after making an investment, the shares are sold at the stage when
the company’s enterprise value has reached the expected level. The proceeds from that sale are then used toacquire shares in the next company targeted for investment.

Aims to extreme social contribution by providing value for “society”
and “the lives of individuals” based on DX
3. Management mission
The Company’s management mission is to aim for extreme social contribution by strengthening its three capabilities,
which are “the capability to determine real issues” (accurately understanding customer needs in direct sales), “thecapability to discover the hidden value of resources” (focusing only on functions that meet needs and developmentsthat create and customize the value of IT resources), and “the capability to maximize value by proposing andexecuting the optimal combination of issues and resources” (optimization, including of the cloud environment, anddispatching project managers as necessary who will contribute to maximizing the satisfaction of stakeholders), andthereby provide value for “society” and for “the lives of individuals” as a value co-creation platform.
The Group maximizes the value derived from its ability to solve problems based on DX by using IT/AI/IoT, including
through direct business investment, indirect investment through funds, and building human networks, and it isproviding services that eliminate the issues facing society and that make people’s lives better. It is accumulating trustfrom society and individuals through this track record of initiatives and thereby creating competitive advantages,
and it is aiming to circulate value and to achieve dramatic growth.

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

09 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

Company profile

Providing value for society and for the lives of individuals based on DX

Source: The Company's results briefing materials

Creating competitive advantages by accumulating trust

Source: The Company's results briefing materials

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

10 27

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

Scala, Inc.

18-Oct.-2022

4845 Tokyo Stock Exchange Prime Market

https://scalagrp.jp/en/ir/■ Results trends
In FY6/22, although the EC Business continued to perform well,posted an operating loss due to the increase in upfront investment
costs and the recording of temporary costs
1. Overview of FY6/22 results
In the FY6/22 consolidated results (ongoing business basis), revenue increased 15.0% YoY to ¥10,015mn, operating
loss amounted to ¥393mn (compared with profit of ¥413mn in the same period of the previous fiscal year), loss
before tax amounted to ¥411mn (compared with profit of ¥381mn a year earlier), and loss attributable to owners ofparent amounted to ¥523mn (profit of ¥3,065mn a year earlier).
FY6/22 consolidated results (IFRS)(¥mn)
FY6/21Results

FY6/22vs. revenue

Company
forecast

Resultsvs. revenue

YoY

Revenue

8,712

-

9,900

10,015-

15.0%

Cost of sales

5,072

58.2%

-

5,873

58.6%

15.8%

SG&A expenses

3,316

38.1%

-

4,125

41.2%

24.4%

Other income/expenses

85

-

-

-341

-

-

Gain/loss on securities related toinvestment business

4

-

-

-68

-

-

Operating profit

413

4.7%

0

-393

-3.9%

-

Profit before tax

381

4.4%

0

-411

-4.1%

-

3,065

35.2%

0

-523

-5.2%

-

Profit attributable to owners of parent

Note: the values are based on the ongoing businesses excluding SOFTBRAIN, its subsidiaries, and Scala Works. Also, in FY6/21, profit attributable toowners of parent includes the gain on sale of SOFTBRAIN.
The FY6/22 Company forecasts are the values announced in May 2022
Source: Prepared by FISCO from the Company's financial results

Revenue trended basically in line with the Company forecast and increased. This was because the EC Businessperformed well and also as revenue increased in the IT/AI/IoT/DX Business, including from the contribution of EGG
that was made a subsidiary in February 2022. In addition, the Insurance Business was newly added following Nihon
Pet Small-amount Short-term Insurance Company being made a subsidiary in April of the same year, and this andother factors covered for the decline in revenue in the Customer Support Business.
Conversely, for operating profit, although profits increased in the EC Business and the HR & Education Business,
operating profit still declined, with the main factors being the increases in upfront costs and M&A-related costs in the
IT/AI/IoT/DX Business and the Incubation & Investment Business, the recording of an impairment loss on goodwill of¥424mn* mainly due to a review of the business plans of Connect Agency Inc. and Four Hands Inc., and a recordingof a loss of ¥68mn relating to investment business negotiable securities. When based on the non-GAAP indicatorthat excludes temporary costs such as the impairment loss, the loss relating to investment business negotiablesecurities, and M&A-related costs, operating profit decreased 78.9% to YoY ¥99mn and profits were secured.
*	W ithin the impairment loss, the impairment of goodwill was ¥252mn for Connect Agency and ¥105mn for FourHands.

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

11 27

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

Scala, Inc.

18-Oct.-2022

4845 Tokyo Stock Exchange Prime Market

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

Results trends㻾㼑㼢㼑㼚㼡㼑㻌㼎㼥㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼟㼑㼓㼙㼑㼚㼠㻲㼅㻢㻛㻞㻝

㻲㼅㻢㻛㻞㻞

㻝㻘㻟㻟㻝 㻝㻘㻠㻢㻤

㻝㻘㻟㻝㻝

(¥mn)
㻢㻘㻜㻜㻜
㻠㻘㻤㻣㻡

㻡㻘㻜㻜㻜
㻠㻘㻝㻠㻢
㻠㻘㻜㻜㻜
㻟㻘㻜㻜㻜

㻝㻘㻤㻟㻣

㻞㻘㻜㻜㻜

㻝㻘㻟㻡㻣

㻝㻘㻢㻡㻠

㻝㻘㻜㻜㻜

㻠㻡㻞

㻤㻠

㻞㻜㻢

㻜
㻵㼀㻛㻭㻵㻛㻵㼛㼀㻛㻰㼄㻮㼡㼟㼕㼚㼑㼟㼟

㻯㼡㼟㼠㼛㼙㼑㼞
㻿㼡㼜㼜㼛㼞㼠
㻮㼡㼟㼕㼚㼑㼟㼟

㻴㻾㻌㻒㻱㼐㼡㼏㼍㼠㼕㼛㼚㻮㼡㼟㼕㼚㼑㼟㼟

㻱㻯㻌㻮㼡㼟㼕㼚㼑㼟㼟㻵㼚㼟㼡㼞㼍㼚㼏㼑㻮㼡㼟㼕㼚㼑㼟㼟

㻵㼚㼏㼡㼎㼍㼠㼕㼛㼚㻌㻒㻵㼚㼢㼑㼟㼠㼙㼑㼚㼠㻮㼡㼟㼕㼚㼑㼟㼟

Source: Prepared by FISCO from the Company's financial
 results㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㼎㼥㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼟㼑㼓㼙㼑㼚㼠㻲㼅㻢㻛㻞㻝

(¥mn)
㻝㻘㻜㻜㻜

㻡㻜㻜

㻲㼅㻢㻛㻞㻞

㻣㻡㻢

㻞㻟㻢
㻝㻜

㻢㻝

㻝㻢㻞

㻞㻟㻥

㻜
㻙㻞㻤

㻙㻝㻞 㻙㻟㻝㻙㻡㻜㻜㻙㻟㻤㻣㻙㻝㻘㻜㻜㻜

㻵㼀㻛㻭㻵㻛㻵㼛㼀㻛㻰㼄㻮㼡㼟㼕㼚㼑㼟㼟

㻯㼡㼟㼠㼛㼙㼑㼞
㻿㼡㼜㼜㼛㼞㼠
㻮㼡㼟㼕㼚㼑㼟㼟

㻴㻾㻌㻒㻱㼐㼡㼏㼍㼠㼕㼛㼚㻮㼡㼟㼕㼚㼑㼟㼟

㻱㻯㻌㻮㼡㼟㼕㼚㼑㼟㼟㻵㼚㼟㼡㼞㼍㼚㼏㼑㻮㼡㼟㼕㼚㼑㼟㼟

㻙㻤㻢㻢㻵㼚㼏㼡㼎㼍㼠㼕㼛㼚㻌㻒㻵㼚㼢㼑㼟㼠㼙㼑㼚㼠㻮㼡㼟㼕㼚㼑㼟㼟

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

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

12 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

Results trends

Strong performance in the EC Business with double-digit increases
in both revenue and profits. Profit declined in the mainstay IT/AI/IoT/
DX Business due to upfront investments, but rose before allocationof corporate expenses
2. Trends by business segment(1) IT/AI/IoT/DX BusinessIn the IT/AI/IoT/DX Business, revenue increased 17.6% YoY to ¥4,875mn and operating profit decreased 68.8%
to ¥236mn. But when based on the non-GAAP indictor, operating profit before the allocation of Company-wide
costs increased 4.0% to ¥1,084mn. Looking by type of revenue, revenue from monthly billing increased 2.1%
YoY to ¥2,571mn, revenue from usage-based billing rose 52.1% to ¥893mn, and temporary revenue, such as
from contracted development projects, grew 35.5% to ¥1,411mn. As the Group focused on acquiring orders forlarge-scale, co-creation projects, such as for the planning and development of new services toward promoting
DX for companies and for regional local governments, the pace of acquiring new customers for the mainstay
i-series services slowed down, which caused the revenue growth to be sluggish. But conversely, due to EGG
being made a subsidiary, revenue from usage-based billing and temporary revenue both grew significantly. Looking
on a fiscal quarterly basis, from the 3Q to the 4Q, revenue from usage-based billing increased ¥234mn andtemporary revenue increased ¥119mn, but it seems that the majority of this was from the contribution of EGG.
EGG records revenue from monthly billing as well, and this was also the reason for the growth of revenue frommonthly billing in the 4Q.

㻮㼞㼑㼍㼗㼐㼛㼣㼚㻌㼛㼒㻌㼞㼑㼢㼑㼚㼡㼑㻌㼍㼚㼐㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㼕㼚㻌㼠㼔㼑㻌㻵㼀㻛㻭㻵㻛㻵㼛㼀㻛㻰㼄㻌㻮㼡㼟㼕㼚㼑㼟㼟㻌㻔㼝㼡㼍㼞㼠㼑㼞㼘㼥㻕㻹㼛㼚㼠㼔㼘㼥㻌㼎㼕㼘㼘㼕㼚㼓㻌㼞㼑㼢㼑㼚㼡㼑㼀㼑㼙㼜㼛㼞㼍㼞㼥㻌㼞㼑㼢㼑㼚㼡㼑(¥mn)

㼁㼟㼍㼓㼑㻙㼎㼍㼟㼑㼐㻌㼎㼕㼘㼘㼕㼚㼓㻌㼞㼑㼢㼑㼚㼡㼑㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻞㻘㻜㻜㻜㻝㻘㻢㻣㻞㻌
㻝㻘㻡㻜㻜㻝㻘㻝㻢㻝㻌㻝㻘㻜㻜㻜㻥 㻡 㻣㻌㻥 㻣 㻡㻌

㻝㻤㻣
㻝㻞㻤

㻝㻥㻡
㻝㻡㻝

㻢㻠㻝
㻝㻡㻝

㻟㻤㻞

㻤 㻣 㻣㻌

㻝㻡㻢

㻞㻣㻣
㻝㻡㻞

㻢㻞㻤

㻢㻞㻟

㻢㻞㻡

㻢㻝㻠

㻝㻡㻠

㻞㻥㻞

㻝㻡㻥

㻡㻟

㻡㻜㻜
㻜

㻝㻘㻞㻡㻤㻌
㻝㻘㻜㻢㻤㻌

㻝㻘㻜㻡㻟㻌
㻝㻞㻠
㻝㻟㻤

㻙㻡㻜㻜
㻝㻽

㻞㻽

㻟㻽

㻠㻽

㻝㻽

㻲㼅㻢㻛㻞㻝

㻠㻟㻞

㻟㻜㻠
㻝㻠㻥

㻝㻤㻢

㻢㻝㻢

㻢㻟㻥

㻝㻤㻠
㻝㻠㻤
㻵㼚㼏㼘㼡㼐㼑㼟㻌㼍㼚㻌㼕㼙㼜㼍㼕㼞㼙㼑㼚㼠㻌loss of ¥252mn
㻞㻽

㻟㻽

㻡㻡㻝
㻠㻞㻜

㻣㻜㻞

㻙㻝㻠㻥
㻠㻽

㻲㼅㻢㻛㻞㻞

Source: Prepared by FISCO from the Company's results
 briefing materials
As a co-creation project, the Real Estate Trust DX Platform, which is a joint development with the Shinoken Group<8909>, recorded sales in the 2Q, and this was a factor behind the increase in revenue. This platform is a hybrid
type real estate trading electronic platform that enables the selection of an entity-type book naming method andan observer-type book naming method, and it is first mechanism in the industry to use a digital ID solution (xID)that links to the My Number card as a personal authentication system. Going forward also, it plans to continue
developments of additional functions, while it also has in its sights horizontal development to other real estatebusiness operators.
We encourage readers to review our complete legal statement on “Disclaimer” page.

13 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

Results trends

In addition, as a co-creation project, the Company has started a collaboration with a major pharmaceuticalcompany and a major non-life-insurance company in order to build the Smart Healthcare Platform, and they aredeveloping healthcare services that will support companies’ health management. For U-Medical Support, which it
is working on as livestock DX, it is developing functions relating to remote medical treatment and the EG Genome(provisional name), which is an app to utilize dairy cow genome test results data, and it appears to have set adate for its release. For livestock DX, the Company is splitting the joint development costs with its collaboration
partners of desamis Co., Ltd. and Mitsui Sumitomo Insurance Company, Limited, and although sales will berecorded, they will have hardly any effect on profits, and it is a scheme that generates earnings from the sharingof monthly usage fees from users (livestock farmers, veterinarians, etc.).
In profits, operating profit before the allocation of Company-wide costs increased ¥42mn YoY, but it appears
that EGG’s contribution was around ¥10mn (including acquisition costs). In addition, the effects of the higher
revenue absorbed the increases in costs, such as the new project development costs, so an increase in profits
was secured.
(2) Customer Support businessIn the Customer Support Business, revenue decreased 26.1% YoY to ¥1,357mn, the operating loss was ¥31mn(a loss of ¥12mn in the previous period), and the operating loss before the allocation of Company-wide expenses
was ¥28mn (profit of ¥32mn). In the conventional call center work for the HIKARI TSUSHIN Group, which provides
the majority of revenue, it seems that there are signs of improvement in the downward trend in call center needs
that has continued during the COVID-19 pandemic, while there have also been inquiries for several new call center
projects, and progress is being made in acquiring projects for which work will start from FY6/23. In profits as well,
the Group is working to improve the profit margin, including by improving costs through transferring projects to
the Okinawa call center and measures that utilize RPA to improve the efficiency of various BPO work.

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼝㼡㼍㼞㼠㼑㼞㼘㼥㻌㼞㼑㼟㼡㼘㼠㼟㻌㼕㼚㻌㼠㼔㼑㻌㻯㼡㼟㼠㼛㼙㼑㼞㻌㻿㼡㼜㼜㼛㼞㼠㻌㻮㼡㼟㼕㼚㼑㼟㼟㻾㼑㼢㼑㼚㼡㼑㻌㻔㼘㼑㼒㼠㻕

(¥mn)
㻢㻜㻜

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕

㻝㻜

㻢㻌
㻟㻌

㻡㻜㻜

㻡

㻙㻞㻌

㻠㻜㻜

㻟㻜㻜

(¥mn)

㻙㻠㻌
㻙㻣㻌
㻡㻠㻢

㻠㻝㻜

㻞㻜㻜

㻙㻡

㻙㻥㻌

㻠㻥㻞

㻟㻤㻥

㻟㻡㻥

㻙㻝㻞㻌
㻟㻠㻝
㻟㻟㻜

㻝㻜㻜
㻜

㻝㻽

㻞㻽

㻟㻽

㻠㻽

㻝㻽

㻲㼅㻢㻛㻞㻝

㻙㻝㻤㻌
㻞㻽

㻙㻝㻜
㻟㻞㻣
㻙㻝㻡
㻙㻞㻜

㻟㻽

㻠㻽

㻲㼅㻢㻛㻞㻞

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



㻜



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

14 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

Results trends(3) HR & Education BusinessIn the HR & Education Business, revenue increased 10.2% YoY to ¥1,468mn, operating profit rose 472.4% to¥61mn, and operating profit before the allocation of Company-wide costs grew 31.6% to ¥227mn. Revenue andprofits increased significantly due to the recovery of the human resources business, which had slumped in theprevious period due to COVID-19. The main factors were that the Company strengthened the support structure
for newly graduating students, while the number of recruitment-related events held also increased by 9 YoY to
81 events, recovering to the same level as before COVID-19. As a result, both revenue and operating profit set
new record highs in this business.
In the education business, the Company is focusing on securing children for the UK Academy day care centersand preschools, which it started operating from the previous period, while it has also flexibly implemented measures for COVID-19, including holding various events at nursery schools and other locations. In addition, theGroup is managing a pro basketball team and investigating a sports and government-related business through acollaboration between the national and local governments.

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼝㼡㼍㼞㼠㼑㼞㼘㼥㻌㼞㼑㼟㼡㼘㼠㼟㻌㼕㼚㻌㼠㼔㼑㻌㻴㻾㻌㻒㻌㻱㼐㼡㼏㼍㼠㼕㼛㼚㻌㻮㼡㼟㼕㼚㼑㼟㼟㻾㼑㼢㼑㼚㼡㼑㻌㻔㼘㼑㼒㼠㻕

(¥mn)
㻡㻜㻜

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕

(¥mn)
㻞㻜㻜

㻝㻡㻞
㻝㻜㻝

㻠㻜㻜

㻝㻜㻜

㻡㻡
㻝㻟

㻙㻢

㻙㻝㻜
㻟㻜㻜
㻞㻜㻜

㻟㻤㻜

㻞㻢㻠

㻟㻥㻡

㻟㻡㻣

㻟㻞㻥

㻟㻤㻢

㻙㻠㻢

㻜

㻟㻤㻠

㻙㻝㻜㻜

㻟㻜㻞

㻝㻜㻜

㻙㻞㻜㻜
㻙㻝㻤㻢

㻜

㻙㻟㻜㻜
㻝㻽

㻞㻽

㻟㻽

㻠㻽

㻝㻽

㻲㼅㻢㻛㻞㻝㻞㻽㻟㻽㻠㻽㻲㼅㻢㻛㻞㻞

Source: Prepared by FISCO from the Company's results briefing materials(4) EC businessIn the EC Business, revenue increased 26.1% YoY to ¥1,654mn, operating profit rose 47.0% to ¥239mn, andoperating profit before the allocation of Company-wide costs grew 40.4% to ¥281mn. So this business continued
to achieve double-digit increases in revenue and profits and the results were new record highs. During the COVID19 pandemic, there continue to be needs for the online buying and selling of trading cards, and furthermore theinitiatives for digital marketing, such as SEO, were successful. Also, the number of users of the iOS app released
at the end of the previous period is steadily increasing, while the number of members of the Card Shop - Yuyu-Tei
e-commerce website increased by 34.3% on the end of the previous period to 188,000 people, which also
contributed to the higher earnings.

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

15 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

Results trends㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼝㼡㼍㼞㼠㼑㼞㼘㼥㻌㼞㼑㼟㼡㼘㼠㼟㻌㼕㼚㻌㼠㼔㼑㻌㻱㻯㻌㻮㼡㼟㼕㼚㼑㼟㼟㻾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

(¥mn)

(¥mn)

㻡㻜㻜

㻣㻡
㻡㻥

㻡㻡

㻠㻜㻜

㻢㻟

㻢㻝
㻡㻢

㻢㻜

㻠㻢
㻟㻜㻜

㻠㻡
㻟㻝

㻟㻜
㻞㻜㻜
㻟㻜㻤

㻟㻝㻞

㻟㻡㻟

㻟㻟㻤

㻟㻥㻢

㻠㻝㻥

㻟㻥㻤

㻠㻠㻝

㻝㻜㻜

㻟㻜
㻝㻡

㻜

㻜
㻝㻽

㻞㻽

㻟㻽

㻠㻽

㻝㻽

㻲㼅㻢㻛㻞㻝㻞㻽㻟㻽㻠㻽㻲㼅㻢㻛㻞㻞

Source: Prepared by FISCO from the Company's results
 briefing materials(5) Insurance BusinessIn the Insurance Business, revenue was ¥452mn and the operating loss was ¥28mn. Against the backdrop of
the expansion of pet-related industries, the number of pet insurance contracts steadily increased and insurance
revenue trended upward compared to in the previous year. But in profits, despite the increase in contracts due tothe rise in the number of consultations at medical facilities because of pet diseases and injuries and the spiking
prices of medical costs, a loss was recorded, including due to the acquisition costs.
(6) Incubation and Investment businessIn the Incubation & Investment Business, revenue grew 143.7% YoY to ¥206mn, operating loss was ¥866mn(loss of ¥387mn in the same period of the previous fiscal year), and operating loss before allocation of corporate
expenses was ¥353mn (loss of ¥138mn). Revenue increased due to the steady growth of Gyaku Propo andalso from the growth of the workation service*. But profits decreased, with the main factors including increases
in development costs for growth and upfront costs, such as personnel costs, the increases in various advisory
costs alongside the business investments, and the decline in the share prices of the listed companies that the
SCSV1 Investment Limited Partnership has invested in. However, the majority of these costs are temporary ones.
*	A service to provide experiences that connect regions and people through preferred worksites and new work, which mainly
entails managing the KomfortaWorkation website that introduces workation facilities.

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

16 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

Results trends㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼝㼡㼍㼞㼠㼑㼞㼘㼥㻌㼞㼑㼟㼡㼘㼠㼟㻌㼕㼚㻌㼠㼔㼑㻌㻵㼚㼏㼡㼎㼍㼠㼕㼛㼚㻌㻒㻌㻵㼚㼢㼑㼟㼠㼙㼑㼚㼠㻌㻮㼡㼟㼕㼚㼑㼟㼟㻾㼑㼢㼑㼚㼡㼑㻌㻔㼘㼑㼒㼠㻕(¥mn)

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕

(¥mn)

㻝㻜㻜

㻝㻜㻜
㻙㻠㻌

㻤㻜
㻢㻜

㻜

㻙㻣㻞㻌
㻙㻝㻞㻠㻌

㻙㻝㻜㻜
㻙㻝㻤㻣㻌

㻠㻜

㻙㻞㻜㻜㻌
㻣㻡

㻙㻞㻜㻝㻌

㻜

㻞㻝

㻞㻽

㻟㻽

㻝㻜
㻝㻽

㻙㻞㻜㻜

㻢㻥

㻙㻞㻣㻠㻌

㻞㻜

㻞㻢

㻙㻝㻥㻝㻌

㻟㻤

㻞㻣

㻙㻟㻜㻜

㻞㻠
㻙㻠㻜㻜

㻠㻽

㻝㻽

㻲㼅㻢㻛㻞㻝㻞㻽㻟㻽㻠㻽㻲㼅㻢㻛㻞㻞

Source: Prepared by FISCO from the Company's results briefing materialsThe number of completed Gyaku Propo matching contracts increased by 4 YoY to 6 contracts, and the numberof outsourced development projects as a result of matching rose by 2 to 3 projects, and the Group is steadily
accumulating a track record in this area. Gyaku Propo is a service private-sector companies, such as large orstart-up companies, can use when they want to speedily implement measures, such as ascertaining demand
trends and verifying hypotheses, for a new business that solves social issues. In a conventional public offering
proposal, a company aiming to win a project produces and submits a project plan to a soliciting local government
with a budget, and a third party evaluates and selects a winner. Conversely, in Gyaku Propo, a company openly
solicits local governments who may want to participate in the theme for solving social issues that the company
plans while shouldering the costs itself. Local governments can participate by preparing and submitting proposal
documents, such as demonstration experiments, in accordance with the theme. As multiple local governments
may be selected, companies can also conduct many demonstration experiments. Budgets for the projects will be
paid to selected local governments by companies participating in the public offering in the form of “donations.”
While the Company receives little revenue directly from Gyaku Propo, it has received orders for system development projects utilizing Gyaku Propo, and has positioned it as a tool for expanding public-private co-creating
projects because it also increases opportunities for receiving orders for projects such as DX support matchedlocal governments. In fact, thanks to matchings through Gyaku Propo, the Company received orders from Hino
Town in Shiga Prefecture to develop a COVID-19 vaccination appointment system and an appointment systemusing the My Number Card.

Has an abundance of cash on hand and is highly financially sound
3. Financial condition and business indicators
Looking at the financial condition at the end of FY6/22, total assets were up ¥486mn compared to the end of theprevious fiscal year to ¥20,816mn. In current assets, following the start of the Insurance Business, re-insurance
assets of ¥363mn were recorded, but cash and cash equivalents decreased ¥184mn, while other current assets
also decreased. In non-current assets, due to the implementation of the M&A, there were increases of goodwill of¥406mn, intangible assets of ¥1,043mn, and investment business negotiable securities of ¥263mn.

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

17 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

Results trends

Total liabilities increased ¥1,951mn on the end of the previous period to ¥11,810mn. Interest-bearing debt increased¥977mn, while insurance contract liabilities of ¥644mn were recorded following the start of the Insurance Business.
Total equity decreased ¥1,464mn to ¥9,006mn, with the main factors including the recording of a loss attributableto owners of parent of ¥523mn, a decline in retained earnings of ¥634mn due to the payment of dividends, and¥174mn to acquire treasury shares.
Looking at the management indicators, the ratio of equity attributable to owners of parent declined from 50.0% at
the end of the previous fiscal year to 41.7%, while the interest-bearing debt ratio increased from 58.8% to 80.0%.
So it appears that the Company’s financial constitution worsened slightly, but the main factor behind this was theincrease in upfront costs to actively conduct M&A, which is in line with the initial strategy (aiming for high growthby allocating the funds from the sale of SOFTBRAIN shares to M&A and growth investment). The Company still has
an abundance of net cash (cash and cash equivalents - interest-bearing debt) of ¥2,674mn, so it can be judged tobe highly financially sound. On entering 2022, it has conducted 2 M&A and for the time being its policy is to focus
on PMI (the integration process after an M&A). At FISCO, we think that it will now take a break on conducting new
M&A following these acquisitions.
Consolidated statement of financial position (IFRS)(¥mn)
Current assets(Cash and cash equivalents)
Non-current assets

FY6/19FY6/20FY6/21

FY6/22

Change10,165

11,78012,991

12,030

-960

6,393

7,822

9,809

9,625

-184

8,529

13,132

7,338

8,786

1,447
406

(Goodwill)

6,192

7,086

1,949

2,356

Total assets

18,69424,912

20,33020,816486

Total liabilities

9,086

14,5699,859

11,810

1,951

5,978

8,632

5,973

6,951

977

9,608

10,343

10,4709,006-1,464(Equity attributable to owners of parent)

7,010

7,402

10,162

8,687-1,475(Non-controlling interests)

2,597

2,940

308

318

10

(Interest-bearing debt)
Total equity

Indicators(Stability)
Equity attributable to owners of parent ratio

37.5%

29.7%

50.0%

41.7%

-8.3ptInterest-bearing debt ratio

85.3%

116.6%

58.8%

80.0%

21.2pt

ROE

14.1%

4.5%

34.9%

-5.5%

-40.4pt

ROA

12.2%

0.9%

1.7%

-2.0%

-3.7ptOperating profit margin

12.6%

3.0%

4.7%

-3.9%

-8.6pt(profitability)

Note: the profitability indicators from FY6/20 onwards are based on the ongoing businesses
Source: Prepared by FISCO from the Company's financial results

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

18 27

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

Scala, Inc.

18-Oct.-2022

4845 Tokyo Stock Exchange Prime Market

https://scalagrp.jp/en/ir/■ Outlook
In FY6/23, revenue is set to grow by double digits, including from theeffects of the M&A, and earnings will enter a high-growth stage
1. Outlook for FY6/23
The outlook for the FY6/23 results is for revenue to increase 29.8% YoY to ¥13,000mn, operating profit of ¥1,000mn(a loss of ¥393mn in the previous period), profit before tax of ¥970mn (a loss of ¥411mn), and profit attributable toowners of parent of ¥650mn (a loss of ¥523mn). Revenue is forecast to increase from the full fiscal year contributionsof the results of EGG and Nihon Pet Small-amount Short-term Insurance Company, and also from the increases inrevenue in the other existing businesses. In profits, the temporary costs recorded in the previous period will not berecorded in this period, while the plan is for the IT/AI/IoT/DX Business, the HR & Education Business, and the EC
Business to contribute to the higher profits.
FY6/23 consolidated results forecast (IFRS)(¥mn)
FY6/22
Results

FY6/23vs. revenue

Company
forecast

Changevs. revenue

AmountRatio

10,015-13,000

2,984

29.8%

Operating profit

-393

-3.9%

1,000

7.7%

1,393

-

Profit before tax

-411

-4.1%

970

7.5%

1,381

-

Profit attributable to owners of parent

-523

-5.2%

650

5.0%

1,173

-

Revenue-29.66

Basic earnings per share (¥)

38.56

Source: Prepared by FISCO from the Company's financial results㻾㼑㼢㼑㼚㼡㼑㻌㼎㼥㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼟㼑㼓㼙㼑㼚㼠㻲㼅㻢㻛㻞㻞

㻲㼅㻢㻛㻞㻟㻌㻱

㻝㻘㻠㻢㻤 㻝㻘㻢㻡㻜

㻝㻘㻢㻡㻠

(¥mn)
㻣㻘㻜㻜㻜

㻢㻘㻝㻜㻜

㻢㻘㻜㻜㻜
㻡㻘㻜㻜㻜

㻠㻘㻤㻣㻡

㻠㻘㻜㻜㻜
㻟㻘㻜㻜㻜
㻞㻘㻜㻜㻜

㻝㻘㻟㻡㻣 㻝㻘㻠㻡㻜

㻝㻘㻥㻜㻜

㻝㻘㻜㻜㻜

㻝㻘㻟㻡㻜
㻠㻡㻞

㻞㻜㻢

㻡㻡㻜

㻜
㻵㼀㻛㻭㻵㻛㻵㼛㼀㻛㻰㼄㻮㼡㼟㼕㼚㼑㼟㼟

㻯㼡㼟㼠㼛㼙㼑㼞
㻿㼡㼜㼜㼛㼞㼠
㻮㼡㼟㼕㼚㼑㼟㼟

㻴㻾㻌㻒㻱㼐㼡㼏㼍㼠㼕㼛㼚㻮㼡㼟㼕㼚㼑㼟㼟

㻱㻯㻌㻮㼡㼟㼕㼚㼑㼟㼟㻵㼚㼟㼡㼞㼍㼚㼏㼑㻮㼡㼟㼕㼚㼑㼟㼟

㻵㼚㼏㼡㼎㼍㼠㼕㼛㼚㻌㻒㻵㼚㼢㼑㼟㼠㼙㼑㼚㼠㻮㼡㼟㼕㼚㼑㼟㼟

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

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

19 27

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

Scala, Inc.

18-Oct.-2022

4845 Tokyo Stock Exchange Prime Market

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

Outlook㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㼎㼥㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼟㼑㼓㼙㼑㼚㼠㻲㼅㻢㻛㻞㻞

㻲㼅㻢㻛㻞㻟㻌㻱

(¥mn)

㻥㻜㻜㻌

㻝㻘㻜㻜㻜

㻡㻜㻜

㻞㻟㻢
㻢㻝

㻜㻌

㻝㻤㻜㻌

㻞㻟㻥 㻞㻣㻜㻌

㻜
㻙㻞㻤

㻙㻟㻝

㻙㻝㻠㻜㻌

㻙㻞㻝㻜㻌

㻙㻡㻜㻜

㻙㻝㻘㻜㻜㻜
㻵㼀㻛㻭㻵㻛㻵㼛㼀㻛㻰㼄㻮㼡㼟㼕㼚㼑㼟㼟

㻯㼡㼟㼠㼛㼙㼑㼞
㻿㼡㼜㼜㼛㼞㼠
㻮㼡㼟㼕㼚㼑㼟㼟

㻴㻾㻌㻒㻱㼐㼡㼏㼍㼠㼕㼛㼚㻮㼡㼟㼕㼚㼑㼟㼟

㻱㻯㻌㻮㼡㼟㼕㼚㼑㼟㼟㻵㼚㼟㼡㼞㼍㼚㼏㼑㻮㼡㼟㼕㼚㼑㼟㼟

㻙㻤㻢㻢㻵㼚㼏㼡㼎㼍㼠㼕㼛㼚㻌㻒㻵㼚㼢㼑㼟㼠㼙㼑㼚㼠㻮㼡㼟㼕㼚㼑㼟㼟

Source: Prepared by FISCO from the Company's financial
 results and results briefing materials(1) IT/AI/IoT/DX BusinessIn the IT/AI/IoT/DX Business, the forecasts are for revenue to increase 25.1% YoY to ¥6,100mn and operating
profit to rise 281.1% to ¥900mn. Revenue is expected to increase by double digits from the full fiscal year
contribution of the results of EGG, and also due to other factors, including the recording of multiple co-creation
projects under development since the previous period and the increase in the number of contracts for ASP
services, such as the i-series. In FY9/21, which is immediately before EGG was acquired, it recorded net sales of¥1,714mn and operating profit of ¥170mn, so its earnings are expected to be close to these levels.
Looking at the number of contracts by service in FY6/23, for the mainstay i-series, it is forecast to increase by
2.1% YoY to 2,550 contracts; for enterprise projects (customized projects) that have a somewhat high unit price,
to increase by 2.7% to 190 projects; and for large-scale projects such as co-creation projects, to increase by 6.1%
to 35 projects. As previously explained, in co-creation projects, revenue is forecast to be recorded for projects
including the project to develop additional functions for the Shinoken Group’s Real Estate Trust DX platform, theproject for the livestock DX platform and app, and a systems development project for credit companies. Toward
FY6/25, the Company is targeting high growth by focusing on acquiring contracts for co-creation projects.
Number of contracts by service(Unit: Number of contracts)
FY6/23Price

Cancellation
rate

FY6/21Results

FY6/22
Results

Forecast

i-series

Approx. ¥100,000/month

Under 7%

2,401

2,498

2,550

2.1%

3,000

Enterprise

Approx. ¥300,000/month

Under 2%

165

185

190

2.7%

250

Co-creation

Over ¥2mn/month

0%

27

33

35

6.1%

100

YoY

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

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

20 27

FY6/25
Forecast

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

Outlook

Topics include a frailty* early detection system that EGG is working on in the healthcare area. It is a cloudservice for the early detection of frailty by using a PC or smartphone to answer simple questions. Alongside theprogression of the super-aging society, it will support “the extension of healthy life expectancy” and the “reductionof social security expenses” for local governments through preventative nursing care. In July 2022, the Company
started a demonstration experiment in Motomiya City, Fukushima Prefecture, while it seems there have also beeninquiries for demonstration experiments from other local governments. If its preventative nursing care effects
are confirmed from the results of these experiments, it may progress to the stage of fully fledged introductions.
The contracting parties will be local governments and the business model is receiving system-usage fees. The
healthcare area is one of the Company’s focus fields, so it may provide this system as one service menu.
*	A status between human health and a need for care, with declines in physical and/or cognitive functions.

(2) Customer Support BusinessIn the Customer Support Business, the forecasts are for revenue to increase 6.8% YoY to ¥1,450mn and operating
profit of ¥0mn (a loss of ¥31mn in the previous period). In addition to acquiring new customers, the plan is tostrengthen capacity in order to meet the demand by building a structure to conduct call center work at home by
July 2022 and increasing the number of call center seats at the Company’s own center in Okinawa. In co-creation
projects, synergies can be expected, such as collective designs in the customer support field and the constructionof operable organizational structures.
Looking at the number of call center seats, the plan is on the one hand to reduce the number of call center seatsthat have been the conventional consultation target by 14.7% YoY to 250 seats, but on the other hand to increase
the number of in-house call center seats by 4.3 times to 60 seats, with the aim of increasing the total number ofcontracts by 16.7% YoY to 300 contracts. Toward FY6/25, the strategy is to raise-up the profit margin by further
increasing the in-house call center ratio alongside the growth in the number of contracts.
Number of call center seats and contracts

Number of call center seats for consulting
Number of in-house call center seats
Number of customer support contracts acquired

FY6/23

FY6/21Results

FY6/22
Results

Forecast

300

293

250

-14.7%

100

0

14

60

328.6%

500

250

257

300

16.7%

500

YoY

FY6/25
Forecast

Source: Prepared by FISCO from the Company's results briefing materials(3) HR & Education BusinessIn the HR & Education Business, the forecasts are for revenue to increase 12.4% YoY to ¥1,650mn and operating
profit to rise 191.7% to ¥180mn. Within this business, in the human resources business, revenue and profits are
forecast to increase from the continued growth in revenue from recruitment-related events for new graduates andalso the progress made in the investigation for the launch of a new business to strengthen in the area of referrals
for mid-career-hire human resources. The number of registered job seekers is a KPI, and the forecasts are for
new graduates of physical education schools to be unchanged YoY at 18,000 people, new female graduates toincrease 15.1% to 16,000 people, and the number of registered job seekers to increase 16.9% to 9,000 people.
Also, toward FY6/25, the Company’s policy is to focus on increasing the number of registration of new female
graduates and job seekers through human resources referrals. Conversely, for physical education schools, theregistration rate is already at a high level, so stable growth is expected.

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

21 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

Outlook

Number of registered job seekers and number of hiring-related events held
FY6/23

FY6/21Results

FY6/22
Results

Forecast

Number of registered job seekers (new graduates of physical education schools)

17,00018,000

Number of registered job seekers (new female graduates)

13,00013,900

Number of registered job seekers (human resources referral)

7,000
72

Number of hiring-related events held

YoY

FY6/25
Forecast

18,0000.0%

21,00016,00015.1%

22,000

7,700

9,000

16.9%

14,000

81

84

3.7%

110

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

In the education business, the plan for September 2022 is for 1 Universal Kids nursery school and 2 facilities
operated on a contract basis (of which, 1 in Thailand). This business will also develop and sell online educational
content, conduct licensing, and open school facilities specializing in the English language. In the sports area as
well, Broncos20 plans to progress the launch of a new business.
Number of daycare centers and preschools operated by the Company and number of facilities operated on acontract basis
FY6/23

FY6/21Results

FY6/22
Results

Forecast

YoY

FY6/25
Forecast

Number of daycare centers and preschools operated by the Company

6

7

8

Increase of 1

8

Number of facilities operated on a contract basis

0

0

2

Increase of 2

5

Source: Prepared by FISCO from the Company's results briefing materials(4) EC BusinessIn the EC Business, the forecasts are for the double-digit increases in revenue and profits to continue, with revenue
to rise 14.8% YoY to ¥1,900mn and operating profit to grow 12.9% to ¥270mn. As a new initiative, the Company isdeveloping a password-less login solution that is enhanced with strong security and an app for Android devices. It
is also conducting a test toward the fully fledged introduction of an image recognition function that utilizes a deeplearning technology, which will lead to improved productivity of purchase assessments and shipping processing.
Through these initiatives, it is aiming to increase the number of members and improve profitability. It intends toincrease the number of members from 188,000 people in FY6/22 to 250,000 people in FY6/23 and to 400,000
people in FY6/25, and it is aiming for further growth as the largest EC shop for trading card games.
Number of members of EC site Card Shop - Yuyu-Tei

Members

FY6/23

FY6/21Results

FY6/22
Results

Forecast

YoY

FY6/25
Forecast

140,000

188,000

250,000

33.0%

400,000

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

The Company is also considering opening physical stores targeting business scale expansion. Because physicalstores will be able to purchase trading cards directly from manufacturers, the Company expects that this will
enhance the product lineup and increase sales opportunities. For the future, the Company is also looking into thepossibility of producing card games related to the Group’s educational content.

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

22 27

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

Scala, Inc.

18-Oct.-2022

4845 Tokyo Stock Exchange Prime Market

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

Outlook(5) Insurance BusinessIn the Insurance Business, the forecasts are for revenue to increase 198.4% YoY to ¥1,350mn and an operating
loss of ¥140mn (a loss of ¥28mn in the previous period). Revenue will increase YoY due to the contributions overthe full fiscal year, while against the backdrop of the increase in the number of contracts, the outlook is also forrevenue to increase compared to in the same period in the previous fiscal year. The operating loss is forecast tocontract compared to in the same period in the previous fiscal year. Initiatives such as the introduction of a system
to improve management efficiency will lead to improved productivity, and the plan is for this business to become
profitable on a monthly basis during FY6/24.
(6) Incubation & Investment BusinessIn the Incubation & Investment Business, the forecasts are for revenue to increase 166.1% YoY to ¥550mn andan operating loss of ¥210mn (a loss of ¥866mn in the previous period). For revenue, contributions are expectedfrom the revenue of Gyaku Propo and the newly launched services derived from Gyaku Propo (Concierge, Tour,and Learning), while in addition a new service that utilizes the Company’s expertise in M&A is also expected tocontribute. In profits, the loss will continue, but upfront costs will decline and the temporary costs will end, so theamount of the loss is forecast to contract.
Since the launch of the Gyaku Propo service in November 2020, due the improvement in its name awareness,
the number of companies conducting public fund raising and the number of participating local governments havebeen steadily increasing. In FY6/23, the forecasts are for the number of completed matching contracts to increaseby 9 YoY to 15 contracts, and for the number of contracted projects as a result of the matching to be unchanged
YoY at around 3 contracts. Projects in which the Group collaborates with companies and local governments towork on solving social issues are expected to increase in the future as well, so the Company is aiming to further
strengthen Gyaku Propo as a matching platform, to increase the number of completed matching contracts to 30
and the number of contracted projects as a result of matching to 30 in FY6/25, and the number of regional public
entities conducting matching to 100 entities (total number).
Track record of matching through Gyaku Propo and forecast
FY6/23

FY6/21Results

FY6/22
Results

Forecast

Number of matches

2 projects

6 projects

15 projects

An increase of 930 projects

Number of matched local public entities (total)

4 entities

5 entities

15 entities

An increase of 10 entities

100 entities

Development projects stemming from matching

1 project

3 projects

3 projects

Unchanged YoY

30 projects

YoY

FY6/25
Forecast

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

Gyaku Propo’s main projects
Companies conducting publicfund raising

Local governments

Project

WirelessGate Inc.

Hirakata City

Progressing DX for the matching of Kids Café and food donations

WirelessGate Inc.

Ikoma City

Promoting DX for a child-raising support business

DoctorMate Inc.

Kitakyusyu City

Established a nighttime emergency transport model for nursing care facilities

E.design Insurance Co., Ltd.

Kobe City, Iwata City, Hirakata City

Building a new value creation mechanism “to realize a safer traffic
environment and society”

SOCIALX, INC.

Hino Town, Shiga Prefecture

Appointment system for vaccinations, etc.

Souple social experiment unit

Toyota City, Hirakata City

Solving “local traffic issues” through entertainment and design

KIMURA UNITY CO., LTD.

Hirakata City

Enhancing operations to help mitigate damage in the event of a disaster

Source: Prepared by FISCO from Gyaku Propo website

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

23 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

OutlookAs a recent topic, in April 2022 the Company launched Gyaku Propo Concierge as a service derived from Gyaku
Propo. For public sector-private sector collaborations, the responsible concierge will listen to the problems
facing local governments and guide them to resolve their problems by connecting them with information oncompanies that are actively working to solve problems*. Compared to when local governments themselves set
up an organization, such as a public sector-private sector collaboration division, it can cut costs from 1/20 to
1/50. It has already started to create a track record in this area, including that in July 2022, Iwata City, Shizuoka
Prefecture, outsourced to it coordination work for the Iwata City Metropolitan Area Collaboration project.
*	Two of the representative directors of SOCIALX work as mentors at the Toranomon Hills Incubation Center ARCH, andthey communicate information to the new business development departments of the 100 large companies that gather at
the center, providing real connections to companies, such as on project design.

Also, Gyaku Propo Learning, which was launched in May 2022, is a corporate training service to learn expertisein order to use and promote the new method of “public sector-private sector co-creation” for the social issue
solutions-type new business development that companies are working on. There has been requests from customer
companies involved with Gyaku Propo so far, that “We want to conduct training widely not only for the persons
in charge, but also for the management team and the planning department,” and this service is in responseto this request. Gyaku Propo Tour, which was launched in June of the same year, is a service for social issue
solving-type new business development in response to requests from companies that have held discussions withlocal governments familiar with social issues and that want to apply “our company’s strengths” to social issues,and to increase the degree of image resolution while observing actual sites. It is also in response to requests
from local governments, of “We want to be introduced to companies who can find issues and appeal points that
we are not aware of” and “We want to solve social issues with the help of companies.” By participating in Gyaku
Propo Tour, the aims are to achieve co-creation with local governments from the planning stage and to performthe subsequent stages up to the demonstration experiment quickly and smoothly.
As an M&A support service, in June 2022 the Company started a co-creation M&A advisory business. There aremany companies that want to progress an M&A strategy but that do not have expertise in M&A in-house to beable to conduct one. For these companies, the Group is not merely an intermediary but also provides support
for M&A from the standpoint of being an advisor and a co-creation partner. It is an advisory service in which thefees are completely success-based, and there are cases of joint-investment based on the co-creation philosophy,
support for the construction of equity stories through IR consulting, and funding support through companies’ own
management funds, and in such ways the Group is providing various services tailored to meet customer needs.
Moreover, in July 2022, the Company launched the “Specially Appointed Task Force for M&A,” which is a practicalsupport-type M&A promotion service. For companies that do not have in-house members with an abundanceof experience or who are very busy with other work so have no time to take part in M&A work, the Company
dispatches a specialist M&A team comprised of members with an abundance of experience in M&A who provide
support from strategy planning through to closing and PMI. It can be said to be an M&A-related BPO service.
It seems there have been many inquiries for it from medium-sized companies and venture companies, and it
is expected to contribute to revenue in the future. The Company’s M&A business department currently has astructure of 7 or 8 employees and it is anticipated that it will strengthen this structure while observing conditions.

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

24 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

OutlookSpecially Appointed Task Force for M&A

Source: The Company's results briefing materials

Has planted the seeds for growth toward achieving the mid-term
management targets, and going forward, is aiming to accelerateearnings growth while developing
2. Status of progress of the Mid-term management plan
In the Company’s COMMIT5000 mid-term management plan running up to 2030 which it announced in August
2019, the basic policy is to utilize the Company’s strengths, which are its three capabilities of “ability to determine
real issues” (the value creation support business), “ability to discover the hidden value of resources,” (the IT/AI/
IoT-related business), and “ability to maximize value by proposing and executing the optimal combination of issues
and resources,” (the social issue-solving business), and the strategy is to aim for mid- to long-term growth while
linking these capabilities together. In terms of numerical targets, the Company projects revenue of ¥100bn andoperating profit of ¥10bn for FY6/25, while it projects revenue of ¥500bn and operating profit of ¥50bn in FY6/30.
The Company’s aim is to grow and deepen existing businesses through its growth model of working with joint-development partners to build “models” for “value creation management support + DX support” and then horizontallydeveloping this model. In addition, the Company’s strategy is to accelerate growth by proactively advancing M&A
as well as new business development. In addition, growth factors will be the acquisitions of capital gains from theinvestment fund and the accumulation of recurring-type income from building IT systems for the companies it invests
in and the provision of various services.
The Company is positioning the provision of services to local governments lagging behind in DX as a growth field,
and plans to accumulate orders while building a network through Gyaku Propo. The Company has deployed thedigital ID solutions using My Number Card that it is advancing jointly with xID Inc. to help make government services
more sophisticated, and introduced workation and other initiatives to help revitalize regional areas and encourage
population inflows to them.

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

25 27

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

18-Oct.-2022
https://scalagrp.jp/en/ir/

OutlookAs a new initiative, the Company is working on developing new healthcare services through joint planning andco-creation with a pharmaceutical company and a non-life insurance company, with the aim of building the Smart
Healthcare Platform. It is currently at the demonstration experiment stage, and plans to provide service moving
forward. By bringing together each company’s resources in advancing the project and collecting personal healthrecords (PHRs), the Company’s goal is to establish a value-generating platform for developing and providing optimal
personalized healthcare services that is not tied to a particular industry.
COVID-19 has also had an impact, and although the progress made up to FY6/22 was slower than initially planned,
the Company has planted the seeds for new socially significant businesses. From FY6/23 onwards, in addition
to the Company’s strengths, it will provide the necessary resources, and moreover Group synergies will lead tothe maximization of effects. It reviews the order of priority of the businesses at any time to achieve growth in themedium- to long-term. It is aiming to achieve the targets in the mid-term management plan by expanding the new
business areas and by rapid management decision making on selection and concentration.
In FY6/23, revenue is forecast to grow considerably from the full fiscal year contributions of the subsidiaries acquiredin the previous period, while revenue is expected to increase in the existing businesses as well. The plan is for theeffects of the creation of new businesses and co-creation projects through Gyaku Propo, the business partnerships,
the M&A, and other initiatives to become apparent in the results. In the future, in addition to new orders of co-creation
projects, the strategy is to accelerate growth through the horizontal development of the co-creation projects it has
worked on so far. If it makes steady progress with these initiatives, earnings are expected to enter a high-growthstage.

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26 27

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

Scala, Inc.

18-Oct.-2022

4845 Tokyo Stock Exchange Prime Market

https://scalagrp.jp/en/ir/■ Shareholder return policy
Proactive about returns to shareholders, and planning to pay higher
dividends for the 14th consecutive period in FY6/23
The Company’s basic shareholder return policy is to stably and continuously pay dividends while also securing theinternal reserves necessary to strengthen its financial structure and to develop its businesses in the future, and itaims to continually increase dividends under this policy. Even though it recorded a loss in FY6/22, in considerationof returning profits from past investments and growth in the future, it increased the dividend per share by ¥2.0 YoY
to ¥36.0, the 13th consecutive period it has increased the dividend. For FY6/23 as well, it plans to increase thedividend by ¥1.0 to ¥37.0 (for a dividend payout ratio of 96.0%). In the medium term, its policy is to increase profitsand seemingly to keep the dividend payout ratio at a level below 50%, while continuing to increase the dividend.
The Company has also been acquiring treasury shares in order to improve capital efficiency and so that it can
implement a flexible capital policy in response to its business environment. From May to August 2022, it acquired
400,000 shares (2.26% of the total number of issued shares (excluding treasury shares)) for around ¥300mn.

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

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

27 27

Disclaimer
FISCO Ltd. (“FISCO”) offer stock price and index information for use under the approval of theTokyo Stock Exchange, the Osaka Stock Exchange and Nikkei Inc.
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FISCO prepared and published this report based on information which it considered reliable;
however, FISCO does not warrant the accuracy, completeness, fitness nor reliability of thecontents of this report or the said information.
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mentioned in this report may increase or decrease in value or lose their value due to influence
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This report has been prepared at the request of the company subject hereto based on theprovision of information by such company through telephone interviews and the like. However,
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Please use the information in this report upon accepting the above points.

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FISCO Ltd.
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