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

22-Apr.-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

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

01

2. Outlook for FY6/22.. .....................................................................................................................................

01

3. Mid-term management plan and growth initiatives. .....................................................................................

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

03

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

06

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

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

11

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

13

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

17■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 18
1. M&A initiatives....................................... ......................................................................................................

18

2. Outlook for FY6/22.. .....................................................................................................................................

20

3. Mid-term management plan. . .......................................................................................................................

23■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 25■Information security measure ---------------------------------------------------------------------------------------------------------------------- 25* This is an English translation of a report issued on March 29, 2022.

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

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/█ Summary
Aims to accelerate growth by positioning public-private co-creationand healthcare as priority fields and actively investing in them
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. In FY6/21, it reorganized its business segments
into the five businesses of the IT/AI/IoT/DX Business, Customer Support Business, HR & Education Business, EC
Business, and Incubation & 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. It plans to move to the Prime Market of the Tokyo
Stock Exchange (TSE) in line with the TSE’s transition to new market segments in April 2022.
1. Overview of 1H FY6/22 results
In 1H FY6/22 in the ongoing businesses*, revenue decreased 0.4% compared to in the same period in the previous
fiscal year (year on year (YoY)) to ¥4,268mn, and operating loss was ¥79mn (compared with operating profit of¥25mn in the same period of the previous fiscal year). Revenue grew in the IT/AI/IoT/DX Business, HR & Education
Business, EC Business, and Incubation & Investment Business, but fell in the Customer Support Business such that
overall revenue declined slightly. On the profit front, HR & Education Business turned to profit and the EC Businessrecorded sharp profit growth. However, profit declined in the IT/AI/IoT/DX Business as the Company continued toproactively invest, including in new businesses, and focused on sales activities to tie value creation management
support to large-scale DX projects, and the Incubation & Investment Business posted a loss due partly to upfront
investments.
*	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, and revenue and operating profit show amounts
based on ongoing businesses and exclude discontinued businesses.

2. Outlook for FY6/22
The Company changed its outlook for FY6/22 to undetermined from its initial forecast in ranges. This is because it
intends to make Nihon Pet Small-amount Short-term Insurance Company a subsidiary in February 2022 following
the acquisition of its shares after obtaining approval from the relevant authorities, and expects it to take a reasonableamount of time to change the applicable accounting standards to the International Financial Reporting Standards.
In existing businesses, the Company expects generally solid performance in all segments except for the Customer
Support Business.

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01 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Summary

In 2022, the Company announced it will acquire all of the shares in EGG CO., LTD., which has top market share insystems for local governments for the “Furusato Nozei” taxation system, and Nihon Pet Small-amount Short-term
Insurance Company, which offers pet insurance, and make them subsidiaries. EGG is a pioneer that developed thefirst core system on the part of local governments accompanying the start of the “Furusato Nozei” taxation system inJapan, and boasts top market share. The Company looks to utilize EGG’s robust network to propose things like DX
support solutions and public-private co-creation projects, and tie that to IT/AI/IoT/DX Business growth. In addition,
EGG’s subsidiary COLUMBUS CO., LTD. is helping to extend healthy life expectancy and reduce the social security
costs of local governments by developing an early detection system for frailty* in seniors. The system has progressedwith demonstration experiments at several local governments, and future business development in the healthcare
field is expected. Meanwhile, Nihon Pet Small-amount Short-term Insurance Company provides small-amountshort-term “Inu to neko no hoken (insurance for dogs and cats).” By making it a subsidiary, the Company plans on
expansion from pet insurance into diverse insurance areas, and is considering applying data and risk analysis utilizing
AI to optimal risk transfer technology, and developing it as a business assisting companies, local governments, andothers in transferring the risks they face. For the latest fiscal year, the two companies’ combined revenue was about¥3.5bn and operating profit was roughly ¥0.2bn.
*	A status between human health and a need for care, with declines in physical and/or cognitive functions.

3. Mid-term management plan and growth initiatives
The mid-term management plan COMMIT5000 calls for advancement of three businesses—the value creation
support business, IT/AI/IoT-related business, and social issue-solving business. It targets revenue of ¥500bn andoperating profit of ¥50bn in FY6/30 (and revenue of ¥100bn and operating profit of ¥10bn in FY6/25). The plan aims
to accelerate growth, positioning the public-private co-creation and healthcare as particular areas of focus. In the
public-private co-creation domain, inquiries about the “Gyaku Propo” (reverse public offering proposal)* public-private
co-creation matching platform released in 2020 are increasing as are cases of its introduction, and the Company
aims to expand business further through collaboration with its capital alliance partner xID Inc. and subsidiary EGG.
As for the healthcare domain, the Company is considering providing new services based on the healthcare DX
platform concept, and future growth is likely.
*	“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 1H FY6/22, revenue was on par with the same period of the previous fiscal year, and the Company continued
to proactively invest in new businesses• The Company executed two M&As, looking to accelerate growth from FY6/23• The Company’s mid-term management plan targets revenue of ¥500bn and operating profit of ¥50bn in FY6/30•

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

02 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Summary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(¥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)

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Note: FY6/21 results are figures for ongoing businesses excluding SOFTBRAIN and its subsidiaries.
FY6/22 results forecasts are undecided.
Source: Prepared by FISCO from the Company’s financial results█ Company profile
With IT/AI/IoT as its core technologies, is integrating its consulting
capabilities, including for value creation management support
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.

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

03 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Company profile

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. Looking at developments over the
past few years, in 2017 the Company made plube Co., Ltd. (ownership ratio: 100.0%, currently Scala PLAYce, Inc.),an EC website management company, a subsidiary in order to enter the EC Business. In 2018, the Company madeLeoconnect, Inc. (ownership ratio: 66.0%), which provides customer support consulting for the brands and productsof the HIKARI TSUSHIN <9435> Group, a subsidiary, and also made Connect Agency, Inc. (ownership ratio: 51.0%),
which provides a cloud PBX service to companies and call centers making outbound calls for such customers as the
HIKARI TSUSHIN Group, a subsidiary. Also, in 2018, as part of the preparations toward strengthening development
capabilities and deploying the overseas business, subsidiary Scala Next Inc. established a Mandalay branch in
Myanmar to act as a base for offshore development and has started to recruit local engineers.
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, which provides HR & Education Business, in April 2020. The Company is also intensifying
efforts toward growth, such as by actively making capital and business alliances. In November 2020, the Company
sold its shares in SOFTBRAIN, a major sales support software group that was made a subsidiary in July 2016, toan investment fund, and removed from the scope of consolidation.
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.

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

04 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-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.

September 2021

Made a subsidiary of readytowork Co., Ltd.

November 2021

Established SOCIALX, INC.

March 2022

Made a subsidiary of EGG CO., LTD.

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

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

05 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Company profile

Engaged in five business segments: the IT/AI/IoT/DX Business,
Customer Support Business, HR & Education Business, EC
Business, and Incubation & Investment Business
2. Business description
Reorganized business segments into five segments—IT/AI/IoT/DX Business, Customer Support Business, HR &Education Business, EC Business, Incubation & Investment Business—and discloses information on them.
On looking at the Group companies responsible for each business segment, the IT/AI/IoT/DX Business is comprisedof seven 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 the above, Leoconnect, Inc. is engaged in the Customer Support Business, while the three companiesof Athlete Planning, Inc., Sports Stories, Inc. and FourHands, Inc. comprise the HR & Education Business. The EC
Business is conducted by Scala PLAYce, Inc., while the Incubation & Investment Business are conducted by Scala
Partners, Inc., J-Phoenix Research, Inc., SCL Capital LLC, and the SCSV-1 Investment Limited Partnership. The
Group also includes the Company itself as the holding company.
Subsidiaries by business segment and business content
Businesssegment

IT/AI/IoT/DX
Business

Customer
Support Business
HR & Education
Business
EC BusinessSubsidiary

Main business

Scala Communications, Inc.

100.0

Scala Service, Inc.

100.0

Scala Next Inc.

100.0

readytowork Co., Ltd.

100.0

Connect Agency, Inc.

51.0

Cloud-based PBX services

Retool, Inc.

66.0

Planning, development, and sales of cloud activity management tools

Social Studio Inc.

51.0

Promotion of DX and SDGs to the national and local governments(joint venture with Branding Technology Inc.)

Leoconnect, Inc.

66.0

Customer support consulting (call center operations, etc.)

Athlete Planning, Inc.

100.0

HR recruiting (new graduate recruiting, mid-career recruiting) support, etc.

Sports Stories, Inc.

80.0

Exercise education, sports school operation, etc.

FourHands, Inc.

100.0

Infant education, community development support, etc.

Scala PLAYce, Inc.

100.0

Management of an EC site for the buying and selling of battle-type trading cards

Scala, Inc.

Incubation &Investment
Business

Ownership
ratio (%)-

Provision of SaaS/ASP services
Development of SaaS/ASP services, offshore development

Group head office, holding company functions, investment business

Scala Partners, Inc.

100.0

Innovation, incubation, investment

J-Phoenix Research Inc.

100.0

Value creation management support(creation of analyst and integrated reports, fund management support)

SCL Capital LLC

100.0

Investment fund management

SCSV-1 Investment Limited Partnership

71.4

Investment fund

SOCIALX, INC.

75.0

Planning and operation of the Gyaku Propo public-private co-creation platform

Note: As of the end of December 2021
Source: Prepared by FISCO from the Company’s securities reports and results briefing materials

Looking at the composition of sales by business segment in 1H FY6/22, the IT/AI/IoT/DX Business provided 45.6%,
Customer Support Business 16.4%, HR & Education Business 16.5%, EC Business 19.1%, and Incubation &Investment Business 2.3%, making the IT/AI/IoT/DX Business the mainstay business.

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

06 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Company profile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㻝㻴㻌㻲㼅㻢㻛㻞㻞㻕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 㻞㻚㻟㻑㻱㻯㻌㻮㼡㼟㼕㼚㼑㼟㼟㻝㻥㻚㻝㻑㻵㼀㻛㻭㻵㻛㻵㼛㼀㻛㻰㼄㻌㻮㼡㼟㼕㼚㼑㼟㼟
㻠㻡㻚㻢㻑㻴㻾㻌㻒㻌㻱㼐㼡㼏㼍㼠㼕㼛㼚㻌㻮㼡㼟㼕㼚㼑㼟㼟
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
㻝㻢㻚㻠㻑Source: Prepared by FISCO from the Company’s financial
 results(1) IT/AI/IoT/DX Business
The IT/AI/IoT/DX Business includes various types of ASP services such as i-search, a search service that is usedin companies’ websites, and i-ask, an FAQ service. They also include IVR, an interactive voice response system,
and a news distribution service. In addition, these services can be divided into those provided for a monthly fee(some usage-based billing) under a recurring income-type business model, and custom projects where systems
are developed according to customer needs.
The i-search service was launched in 2007, and currently has the leading market share at about 15% withmore than 450 customers, particularly large enterprises. While many companies have entered this market, theCompany’s service has been highly evaluated by customers for its convenience, including that users can be
accurately guided to the target page using thumbnails displayed in search results. The average usage fee permonth is ¥100,000 to ¥150,000.
The Company launched the i-ask service around 2008 which is used by more than 250 companies, mainly in thefinancial and insurance industries. This service enables users to resolve issues on their own by listing frequently
asked questions and related answers on corporate sites. It helps to lower costs by reducing inquiries to callcenters and can improve customer satisfaction. The Company holds a roughly 15% market share, ranked second
after OKWAVE, Inc. <3808>. The average usage fee per month is ¥200,000 to ¥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. Therefore, IVR is steadily
introduced by many companies as a service that is highly convenient.

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07 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Company profile

Other than these businesses, various other services are offered, including a news distribution service for corporations and a service for planning, development, production, maintenance, and management of websites according
to customer needs, and thus the Company features a rich service lineup and does not rely on a specific service.
They also include services such as the cloud PBX service provided by Connect Agency and the Retool cloud
activity management tool provided by Retool.
It also develops systems and provides services related to IoT and big data as customized development projects,
and has started system developments through public-private co-creation and other projects. Examples of thisare Smiling Road, a safe-driving assistance service (for corporations)*1 sold by Sompo Japan Insurance Inc., andPortable Smiling Road, a smartphone app (for individuals)* 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 developed by 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 driving 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 provides “peace of mind” functions such as reporting accidents with the single push of a button in the eventthat the driver has an accident, “safety” functions useful for accident prevention such as driving analysis and provisionof information in real time, and “comfortability” functions such as GPS, being a service contributing to the promotion ofsafe driving and accident prevention, all using a smartphone app.

Description of the IT/AI/IoT/DX Business services
Type
Information searches

Content management

Content delivery

Various types of reception

Inquiry management
Member 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-flow

CMS service

Hosting services

Hosting services

i-print

Web page printing system

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

i-point

Point systems compatible with EC sites

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

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

08 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Company profile(2) Customer Support Business
The Customer Support Business conducted by Leoconnect provides consulting operations for the managementof inbound call centers (20 bases nationwide), ranging from receiving inquiries about customer companies’
services and products to follow-up after the response, and its main customers include the HIKARI TSUSHINGroup and its agencies. In addition to launching products such as i-livechat, i-assist, and IVR at each call center,
the Company is aiming to improve call center productivity by introducing C7, a core system developed by Scala
Communications that reflects customer needs (launched in November 2019). Going forward, the Company’s
strategy is to build its own call center and acquire customers outside the HIKARI TSUSHIN Group, and thereby
work to improve profitability.
(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. However,amid the COVID-19 pandemic it has been difficult to hold joint briefing meetings in person, so the Company has
been holding 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.
(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, and so
it is known as the industry’s No. 1 EC shop. Many of the purchases on the site are made by overseas users, andstarting in FY6/20, users will be able to purchase from overseas users as well.
(5) 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. Furthermore, it involves the SCSV-1 Investment Limited Partnership, the value co-creation engagement
fund operated by SCL Capital LLC, and improving the value related to its investments, etc.

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

09 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Company profile

The value co-creation engagement fund invests in listed companies with market capitalization up to ¥10.0bn forwhich ROIC of at least 15% is expected. The amount invested per company is in the ¥100-¥150mn range, andafter making an investment the shares are sold at the stage when the corporate value has reached the expectedlevel. The proceeds from the sale are then used to acquire shares in the next portfolio company. As for investment
projects through 1H FY6/22, the fund has invested in ARCHITECTS STUDIO JAPAN, INC.<6085>, Cookbiz Co.,
Ltd.<6558>, and Astena Holdings Co., Ltd.<8095>.

Aims to differentiate itself from competitors by increasing
convenience through developments from the customer’s perspective
and providing a rich service lineup
3. The Company’s strengths
One of the Company’s strengths in its core IT/AI/IoT/DX Business is that it develops services from the customer’s
perspective. Direct sales account for 80% of revenue from monthly billing-based services such as the i-series. The
Company improves service functions and develops new services by listening closely to customer needs and feeding
this information back to its development team. Its development policy of meeting 100% of customer requests is
facilitating products with excellent usability and smooth expansion of sales to new customers.
Another strength is that the extensive lineup of services differentiates it from its competitors. The ability to propose
multiple services in packages enables the Company to satisfy diverse customer needs, and this cross-selling helps toraise the average price per customer, boost customer satisfaction, and prevent cancellations. The i-series has been
introduced at over 1,000 companies, including 400 listed companies, and its cancellation rate is low at under 7%.
The features of the IT/AI/IoT/DX Business revenue structure are that monthly billing revenue accounts for approximately 60% of revenue, and it has a recurring income-type business model in which monthly revenue builds up inaccordance with the accumulation of service contracts. The Company’s basic policy is to avoid usage-based billingas much as possible and to provide services only from fixed monthly billing (With usage-based billing included, thisbusiness accounts for just over 70% of revenue). Also, the main services are maintaining high gross profit margins
at around 80%. A reason for this is that the Company develops services customized to customer needs, and thendevelops them horizontally as general services, which enables it to keep development costs down as a result.
In the Company, these strengths are ascertained as three capabilities: “the capability to determine real issues”(accurately understanding customer needs in direct sales), “the capability to discover the hidden value of resources”(focusing only on functions that meet needs and developments that create and customize the value of IT resources),and “the capability to maximize value by proposing and executing the optimal combination of issues and resources”(optimization, including of the cloud environment, and dispatching project managers as necessary who will contributeto maximizing the satisfaction of stakeholders). Its strategy is to further strengthen these three capabilities, and as
the value co-creation platform, to realize high growth through developing businesses over a wide range of fields
including not only companies but local governments and overseas markets as well.

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

10 25

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

Scala, Inc.

22-Apr.-2022

4845 Tokyo Stock Exchange Prime Market

https://scalagrp.jp/en/ir/█ Results trends
1H FY6/22 results on par with levels in the same period of theprevious fiscal year, partly since the Company focused on
developing new services
1. Overview of 1H FY6/22 results
In the 1H FY6/22 consolidated results (ongoing business basis), revenue declined 0.4% YoY to ¥4,268mn, operating
loss amounted to ¥79mn (compared with profit of ¥25mn in the same period of the previous fiscal year), loss before
tax amounted to ¥88mn (compared with profit of ¥7mn a year earlier), and loss attributable to owners of parent
amounted to ¥72mn (profit of ¥137mn a year earlier).
1H FY6/22 consolidated results (IFRS)(¥mn)
1H FY6/21

1H FY6/22

Resultsvs. revenue

Resultsvs. revenue

Revenue

4,285

-

4,268

-

YoY
-0.4%

Cost of sales

2,543

59.3%

2,377

55.7%

-6.5%

SG&A expenses

1,776

41.4%

1,897

44.5%

6.8%

Other income/expenses

75

1.8%

-2

-0.1%

-

Operating profit

25

0.6%

-79

-1.9%

-

Profit before tax

7

0.2%

-88

-2.1%

-

Profit from discontinued operations

278

6.5%

-

-

-

Profit attributable to owners of parent

137

3.2%

-72

-1.7%

-

Note: 1H FY6/21 results are results for ongoing businesses and exclude SOFTBRAIN and its subsidiaries
Source: Prepared by FISCO from the Company’s financial results

Despite higher revenue in the IT/AI/IoT/DX Business, HR & Education Business, EC Business, and Incubation &Investment Business, overall revenue declined slightly due to lower revenue in the Customer Support Business.
As for profit, the HR & Education Business turned to profit and the EC Business recorded sharp profit growth.
However, there was negative impact from lower profit in the IT/AI/IoT/DX Business and wider losses in the Incubation& Investment Business due mainly to upfront investments and recognition of a loss on valuation of investment
securities. Operating profit under non-GAAP measures (excluding items from operating profit and the items below itsuch one-time costs as loss on valuation of investment securities, M&A-related expenses, and costs accompanying
the transfer of subsidiary) came to ¥63mn compared with ¥84mn in the same period of the previous fiscal year.

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

11 25

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

Scala, Inc.

22-Apr.-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㻝㻴㻌㻲㼅㻢㻛㻞㻝㻝㻴㻌㻲㼅㻢㻛㻞㻞

(¥mn)

㻞㻘㻡㻜㻜
㻞㻘㻜㻜㻜

㻝㻘㻥㻟㻟 㻝㻘㻥㻠㻡

㻝㻘㻡㻜㻜
㻝㻘㻜㻟㻤
㻝㻘㻜㻜㻜

㻣㻜㻜

㻣㻜㻢

㻢㻡㻣

㻤㻝㻡
㻢㻞㻜

㻡㻜㻜
㻟㻢

㻥㻥

㻜
㻵㼀㻛㻭㻵㻛㻵㼛㼀㻛㻰㼄㻮㼡㼟㼕㼚㼑㼟㼟

㻯㼡㼟㼠㼛㼙㼑㼞㻌㻿㼡㼜㼜㼛㼞㼠 㻴㻾㻌㻒㻌㻱㼐㼡㼏㼍㼠㼕㼛㼚㻮㼡㼟㼕㼚㼑㼟㼟
㻮㼡㼟㼕㼚㼑㼟㼟

㻱㻯㻌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㻝㻴㻌㻲㼅㻢㻛㻞㻝

(¥mn)
㻠㻜㻜

㻝㻴㻌㻲㼅㻢㻛㻞㻞

㻟㻜㻡
㻞㻜㻝

㻞㻜㻜

㻤㻥

㻣㻢

㻝㻞㻜

㻠
㻜
㻙㻝㻡
㻙㻞㻜㻜

㻙㻝㻞㻤

㻙㻝㻟㻝

㻙㻠㻜㻜
㻙㻠㻣㻠

㻙㻢㻜㻜

㻵㼀㻛㻭㻵㻛㻵㼛㼀㻛㻰㼄㻮㼡㼟㼕㼚㼑㼟㼟

㻯㼡㼟㼠㼛㼙㼑㼞㻌㻿㼡㼜㼜㼛㼞㼠 㻴㻾㻌㻒㻌㻱㼐㼡㼏㼍㼠㼕㼛㼚㻮㼡㼟㼕㼚㼑㼟㼟
㻮㼡㼟㼕㼚㼑㼟㼟

㻱㻯㻌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

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

12 25

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

Scala, Inc.

22-Apr.-2022

4845 Tokyo Stock Exchange Prime Market

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 0.6% YoY to ¥1,945mn, while operating profit decreased 33.9%
to ¥201mn resulting in increased revenue and decreased profits. However, the segment’s operating profit before
allocation of corporate expenses (non-GAAP, same hereafter) rose 17.8% YoY to ¥499mn. The pace of new
customer acquisitions slowed for mainstay i-series services because the Company focused on winning orders
for large-scale projects, including by planning and developing new services to promote DX by companies andlocal governments, which led to sluggish growth in revenue. Looking at revenue by type, monthly billing revenue
declined 3.1% YoY, but revenue from usage-based billing rose 2.9%, and revenue from contracted systemdevelopment projects, which is recorded in temporary revenue, increased 12.0%. The growth in revenue fromcontracted system development projects reflects the recording of revenue in 2Q from the “Real Estate Trust DX
Platform” co-created with Shinoken Group <8909>. The Company plans to continue with additional developmentof the platform in 3Q onward for online disclosure statements and digitized sale and purchase contracts.

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)
㻝㻘㻞㻜㻜

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㻝㻘㻝㻢㻝㻌
㻝㻘㻜㻡㻟㻌㻥 㻣 㻡㻌㻟㻤㻞㻤 㻣 㻣㻌㻞㻣㻣㻝㻥㻡㻝㻞㻠㻝㻘㻜㻢㻤㻌

㻝㻘㻜㻟㻜㻌

㻝㻘㻜㻞㻝㻌

㻝㻘㻜㻠㻤㻌

㻞㻡㻞

㻞㻟㻜

㻞㻤㻜

㻞㻡㻞

㻝㻤㻣

㻝㻟㻡

㻝㻠㻥

㻝㻞㻝

㻝㻞㻞

㻝㻞㻤

㻝㻡㻝

㻝㻡㻢

㻝㻡㻞

㻝㻟㻤

㻝㻠㻥

㻢㻠㻞

㻢㻠㻜

㻢㻠㻢

㻢㻠㻤

㻢㻠㻝

㻢㻞㻤

㻢㻞㻟

㻢㻞㻡

㻢㻝㻠

㻢㻝㻢

㻝㻘㻜㻞㻟㻌㻝㻘㻜㻜㻜㻤㻜㻜㻥 㻡 㻣㻌

㻟㻜㻠

㻢㻜㻜

㻠㻜㻜
㻞㻜㻜

㻞㻠㻟

㻜
㻝㻽

㻞㻥㻝

㻝㻣㻤
㻞㻽

㻝㻠㻜
㻟㻽

㻝㻞㻥
㻠㻽

㻝㻡㻝

㻝㻡㻡

㻝㻽

㻞㻽

㻲㼅㻢㻛㻞㻜㻡㻟㻝㻡㻥㻟㻽㻲㼅㻢㻛㻞㻝

㻠㻽㻝㻠㻤㻝㻽

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.

13 25

㻞㻽

㻲㼅㻢㻛㻞㻞

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Results trends

Main new customers for IT/AI/IoT/DX Business services (For 1H FY6/22)
Type

Product

Description

Customers

Information searches

i-search

Internal search engine for websites

transcosmos inc., NYK CRUISES CO., LTD., SBI Neotrade Securities
Co., Ltd.

Content managementi-ask

FAQ management system

USEN NETWORKS Co., Ltd., AVAL DATA CORPORATION, DENTSU
TEC INC., NTT DATA CUSTOMER SERVICE Corporation

i-assist

Web chatbot system

DNP Communication Design Co., Ltd., JTRIP Co., Ltd.

i-dentify

Identity authentication service using
incoming telephone calls

COLON Company Limited

Inquiries management

Source: Prepared by FISCO from the Company’s financial results and press releases(2) Customer Support BusinessIn the Customer Support Business, revenue decreased 32.5% YoY to ¥700mn, operating loss was ¥15mn (profitof ¥4mn in the previous fiscal year), and operating loss before allocation of corporate expenses was ¥13mn(profit of ¥26mn in the previous fiscal year). Momentum did not recover for conventional call center operations forsales of new products of companies in the HIKARI TSUSHIN Group, and conditions remained tough. However,
the Company has been working to strengthen its organizational structure and sales activities since 1Q to flexibly
address the diversification of post-pandemic needs. While upfront expenses are arising in connection with bolstering of the organizational structure, customer support services are taking shape with synergies being generated
with co-creation business via the insourcing of previously outsourced support projects.

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)

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)

㻝㻠㻌

㻣㻜㻜

㻝㻡
㻥㻌

㻥㻌

㻢㻜㻜
㻡㻜㻜

㻟㻌

㻞㻌

㻡

㻙㻞㻌

㻠㻜㻜
㻟㻜㻜

㻝㻜

㻢㻌

㻡㻠㻥

㻡㻡㻠

㻡㻣㻣

㻜
㻙㻣㻌

㻡㻤㻝

㻡㻠㻢

㻠㻥㻞

㻞㻜㻜

㻠㻝㻜

㻙㻡

㻙㻥㻌
㻟㻤㻥

㻟㻡㻥

㻟㻠㻝

㻝㻜㻜

㻙㻝㻜
㻙㻝㻡

㻙㻝㻥㻌 㻙㻞㻜

㻜
㻝㻽

㻞㻽

㻟㻽

㻠㻽

㻝㻽

㻞㻽

㻲㼅㻢㻛㻞㻜

㻟㻽㻠㻽㻲㼅㻢㻛㻞㻝

㻝㻽㻞㻽㻲㼅㻢㻛㻞㻞

Source: Prepared by FISCO from the Company’s financial results and results briefing materials(3) HR & Education Business
The HR & Education Business turned to profit, with revenue increasing 7.5% YoY to ¥706mn, operating profit of¥89mn (loss of ¥131mn in the previous fiscal year), and operating profit before allocation of corporate expensesof ¥124mn (loss of ¥49mn in the previous fiscal year). In the HR business, the Company focused on providing
services and strengthening support frameworks for new graduates since interest in hiring is recovering, mainly atlarge companies, and revenue increased as a result. In the education business, the Company concentrated on
recruiting students for the UK Academy for school children that opened in FY6/21 as well as implemented flexible
measures during the COVID-19 pandemic, and revenue was on par with the previous fiscal year as a result.

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

14 25

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

Scala, Inc.

22-Apr.-2022

4845 Tokyo Stock Exchange Prime Market

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

㻞㻜㻜

㻝㻜㻟

㻥㻢

㻢㻤

㻠㻜㻜

㻝㻜㻜

㻙㻣
㻟㻜㻜

㻜

㻙㻡㻠

㻙㻤㻝

㻞㻜㻜

㻟㻤㻡

㻙㻝㻜㻜

㻟㻥㻥

㻟㻢㻟

㻟㻟㻟

㻟㻜㻣

㻞㻣㻞
㻝㻜㻜

㻙㻞㻜㻜

㻝㻤㻜
㻙㻞㻟㻠

㻜
㻠㻽

㻝㻽

㻙㻟㻜㻜

㻞㻽

㻲㼅㻢㻛㻞㻜㻟㻽㻠㻽㻝㻽㻲㼅㻢㻛㻞㻝

㻞㻽㻲㼅㻢㻛㻞㻞

Source: Prepared by FISCO from the Company’s financial results and results briefing materials(4) EC Business
The EC Business posted record-high profit, with revenue increasing 31.4% YoY to ¥815mn, operating profit
rising 56.2% to ¥120mn, and operating profit before allocation of corporate expenses increasing 48.7% to¥141mn. Amid ongoing online trading needs supported by stay-at-home demand during the COVID-19 pandemic,
stepped-up SEO and other digital marketing was successful, and the sale held at the end of 2021 was highly
rated. In addition, user numbers steadily grew for the iOS app released at the end of FY6/21.

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

㻢㻜
㻢㻜

㻠㻢

㻟㻜㻜

㻠㻡
㻞㻤

㻞㻜㻜
㻝㻜㻜

㻞㻡㻝

㻟㻜

㻞㻣
㻞㻞

㻝㻤
㻞㻢㻝

㻞㻟㻣

㻞㻟㻣

㻞㻽

㻟㻽

㻟㻝

㻟㻜㻤

㻟㻝㻞

㻟㻡㻟

㻟㻟㻤

㻟㻥㻢

㻠㻝㻥

㻟㻜
㻝㻡

㻜

㻜
㻝㻽

㻠㻽

㻝㻽

㻞㻽

㻲㼅㻢㻛㻞㻜

㻟㻽㻠㻽㻲㼅㻢㻛㻞㻝

㻝㻽㻞㻽㻲㼅㻢㻛㻞㻞

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.

15 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Results trends(5) Incubation & Investment BusinessIn the Incubation & Investment Business, revenue grew 174.5% YoY to ¥99mn, operating loss was ¥474mn (loss of¥128mn in the same period of the previous fiscal year), and operating loss before allocation of corporate expenses
was ¥164mn (loss of ¥28mn). Solid expansion of Gyaku Propo contributed to the revenue growth. Turning to the
profit front, the segment losses owe chiefly to various advisory fees accompanying business investments, a risein upfront costs such as for development and personnel expenses with an eye to future growth, and a decline
in the share prices of the listed companies in which SCSV-1 Investment Limited Partnership has been investing.
However, the majority of the expenses mentioned above are temporary.

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)
㻙㻞㻝㻌

㻝㻜㻜

㻜

㻙㻡㻢㻌
㻙㻤㻝㻌

(¥mn)

㻙㻠㻌
㻙㻣㻞㻌

㻙㻤㻥㻌

㻙㻝㻞㻠㻌

㻣㻡

㻙㻝㻜㻜
㻙㻝㻤㻣㻌

㻙㻞㻜㻜㻌

㻡㻜

㻙㻞㻜㻜
㻣㻡

㻞㻡

㻙㻞㻣㻠㻌
㻙㻟㻜㻜

㻠㻥

㻞

㻞㻞

㻝㻜

㻞㻢

㻞㻝

㻞㻽

㻟㻽

㻞㻣

㻞㻠

㻜

㻙㻠㻜㻜
㻝㻽

㻞㻽

㻟㻽

㻲㼅㻢㻛㻞㻜㻠㻽㻝㻽㻠㻽㻲㼅㻢㻛㻞㻝

㻝㻽㻞㻽㻲㼅㻢㻛㻞㻞

Source: Prepared by FISCO from the Company’s financial
 results and results briefing materials
Scala Partners’ workation service* also contributed. In addition, the Company worked to provide IR support,
including via mid-term management plan establishment, promote digital transformation, and otherwise raise thevalue of ARCHITECTS STUDIO JAPAN, INC. and Cookbiz Co., Ltd., in which the SCSV-1 Investment Limited
Partnership invested by subscribing to a third-party allotment.
*	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.

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16 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Results trends

With the Gyaku Propo public-private co-creation matching platform service, the Company set up 12 projects
and developed and provided new services related to them such as “Kids Café Encouraging Wi-Fi” and “&e”
co-created automobile insurance. Gyaku Propo is a service private-sector companies, such as large or start-up
companies, can use when they want to speedily implement measures, such as ascertaining demand trends andverifying 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 abudget, 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 whileshouldering 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 matched local
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 system using
the My Number Card. The Company previously jointly operated Gyaku Propo with Public dots & Company. In
September 2021, however, the Company decided to run the business independently and established SOCIALX,
INC. as the operating company.
Gyaku Propo’s main projects
Stage

Project/new service description

Development/service
achieved

Development/provisionprojects underway

Participating partner

Kids Café DX

Hirakata City × WirelessGate Inc.

DX for child care support businesses

Ikoma City × WirelessGate Inc.

Established a nighttime emergency transport model for nursing care facilities Kitakyushu City × DoctorMate Inc.
Appointment system for vaccinations, etc.

Hino Town, Shiga Prefecture × Scala, Inc.

Realizing a safer transportation environment and society

E.design Insurance Co., Ltd.

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

KIMURA UNITY CO.,LTD.

Digitalize notifications to residents

Toppan Inc.

Source:Prepared by FISCO from the Company’s mid-term management plan

Plans to use cash on hand for growth investments and shareholder
returns
3. Financial condition and business indicators
Looking at the financial condition at the end of 1H FY6/22, total assets were down ¥367mn compared to the end of
the previous fiscal year to ¥19,962mn. In current assets, cash and cash equivalents increased ¥1,185mn, whereas
other current assets decreased. In non-current assets, right-of-use assets decreased ¥227mn, and securities related
to investment business declined ¥37mn.
Total liabilities were up ¥56mn compared to the end of the previous fiscal year to ¥9,915mn, mainly owing to ¥340mn
increase in interest-bearing debt. Total equity decreased ¥423mn to ¥10,047mn, primarily due to the recording of¥72mn loss attributable to owners of parent and ¥316mn decline in retained earnings due to dividend payments.

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17 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Results trends

Looking at management indicators, the ratio of equity attributable to owners of parent declined slightly from 50.0%
at the end of the previous fiscal year to 48.9%, while the interest-bearing debt ratio increased from 58.8% to64.7%. However, net cash (cash and cash equivalents - interest-bearing debt) increased ¥844mn from the endof the previous fiscal year to a record-high level of ¥4,680mn. The significant amount of net cash indicates a highdegree of financial soundness. The Company plans to use cash on hand for business investments, M&A, and otherinvestments in growth, as well as proactive shareholder returns.
Consolidated statement of financial position (IFRS)(¥mn)
FY6/19FY6/20FY6/21

1H FY6/22

Change10,165

11,78012,991

12,796-194(Cash and cash equivalents)

6,393

7,822

9,809

10,995

1,185(Trade and other receivables)

3,251

3,456

1,412

1,423

10

8,529

13,132

7,338

7,165

-172

Current assets

Non-current assets(Goodwill)

6,192

7,086

1,949

2,033

84

Total assets

18,69424,912

20,33019,962-367

Total liabilities

9,086

14,569

9,859

9,915

56

5,978

8,632

5,973

6,314

340

(Interest-bearing debt)

9,608

10,343

10,47010,047-423(Equity attributable to owners of parent)

7,010

7,402

10,162

9,753

-409

(Non-controlling interests)

2,597

2,940

308

294

-14

Total equity

Indicators(Stability)
Equity attributable to owners of parent ratio

37.5%

29.7%

50.0%

48.9%

-1.1ptInterest-bearing debt ratio

85.3%

116.6%

58.8%

64.7%

6.0pt

Source: Prepared by FISCO from the Company’s financial results█ Outlook
Execution of two M&As to accelerate growth from FY6/23
1. M&A initiatives
In 2022, the Company announced it will acquire all of the shares in EGG CO., LTD., which has top market share insystems for local governments for the “Furusato Nozei” taxation system, and Nihon Pet Small-amount Short-term
Insurance Company, which offers pet insurance, and make them subsidiaries. At FISCO, we expect this to further
expand the Company’s business opportunities and contribute to faster growth in FY6/23 onward. An overview of
the two companies’ businesses and the objective for making them subsidiaries are described below.
(1) EGG
EGG CO., LTD. became a subsidiary at the end of February 2022. The system development company is headquartered in Tottori Prefecture. It is a pioneer that developed the first core system on the part of local governments
in Japan accompanying the start of the “Furusato Nozei” taxation system. It has top share in that market, with
about 680 or a third of local governments in Japan having introduced its “Furusato Nozei” systems. The Company
looks to utilize EGG’s robust network to propose things like DX support solutions and public-private co-creation
projects, and tie that to IT/AI/IoT/DX Business growth.

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18 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

OutlookIn addition, EGG’s subsidiary COLUMBUS CO., LTD. is helping to extend healthy life expectancy and reduce thesocial security costs of local governments by developing an early detection system for frailty in seniors. Recently,
the system has been undergoing demonstration experiments at several local governments in Tottori Prefecture,mainly in Yonago City, and could proceed to full-fledged deployment if benefits from its introduction can be
confirmed. In regions where the population is aging, providing a frailty countermeasure package is likely to easethe strain of local government finances. The business model entails contracts with local governments, which pay
fees for using the system. Since the Company aims to build a healthcare DX platform, this service could become
one of its service offerings.
EGG’s FY9/21 sales were ¥1,714mn and operating profit was ¥170mn. Including its three subsidiaries,
COLUMBUS CO., LTD., Biz Support Co., Ltd., and EGG RESEARCH INSTITUTE G.K., bring sales to about¥190mn and operating profit to roughly ¥20mn. EGG’s sales increased sharply in FY9/21 because it received anorder for system development for the Japanese government’s Go To Travel campaign.
Results for EGG and its subsidiaries(¥mn)
EGG CO., LTD.

COLUMBUS CO., LTD.

Biz Support Co., Ltd.

EGG RESEARCHINSTITUTE G.K.

FY9/20FY9/21

FY9/20FY9/21

FY9/20FY9/21

FY9/20FY9/21

Sales

752

1,714

41

53

49

113

9

30

Operating profit

145

170

0

1

-9

18

4

6

Ordinary profit

162

186

2

1

-5

18

4

6

Net profit

35

117

1

2

24

15

4

5

Business description

System development, etc.

Medical-related softwaredevelopment and sale

BPO business

Big data analysis, etc.

Note: 100% of shares acquired on February 28, 2022; acquisition price: ¥928mn; advisory fees, etc.: ¥78mn
Source: Prepared by FISCO from the Company’s press release(2) Nihon Pet Small-amount Short-term Insurance
In February 2022, the Company announced it will make Nihon Pet Small-amount Short-term Insurance Company
a subsidiary.* Nihon Pet Small-amount Short-term Insurance Company provides the small-amount short-term“Inu to neko no hoken (insurance for dogs and cats).” It offers unique insurance products, including those with a
90% rate of reimbursement for covered expenses, and has extensive knowledge related to insurance. By making
Nihon Pet Small-amount Short-term Insurance Company a subsidiary, the Company plans to expand into diverse
insurance areas from pet insurance to personal insurance, financial areas, and so forth. Additionally, the Company
is considering applying data and risk analysis utilizing AI to optimal risk transfer technology, and developing it as abusiness assisting companies, local governments, and others in transferring the risks they face. Nihon Pet Smallamount Short-term Insurance Company’s FY3/21 ordinary income was ¥1,773mn and ordinary profit was ¥46mn.
*	To become a subsidiary subject to approval of the relevant authorities.

Nihon Pet Small-amount Short-term Insurance Company’s results(¥mn)
FY3/19FY3/20FY3/21

Ordinary income

983

1,229

1,773

Ordinary profit

-65

-27

46

Profit

-66

-26

40

Net assets

29

43

93

Total assets

356

495

676

Note: Stock acquisition price of ¥400mn, advisory fees, etc. of ¥24mn
Source: Prepared by FISCO from the Company’s press releaseWe encourage readers to review our complete legal statement on “Disclaimer” page.

19 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

OutlookCompany’s FY6/22 forecast is undetermined, but it expects solid
performance in existing businesses, mainly IT/AI/IoT/DX Business2. Outlook for FY6/22
The Company changed its outlook for FY6/22 to undetermined from its initial forecast in ranges. This is because
it intends to make a subsidiary of Nihon Pet Small-amount Short-term Insurance Company, which it acquired in
February 2022, following the acquisition of its shares after obtaining approval from the relevant authorities, andexpects it to take a reasonable amount of time to change the accounting standards to IFRS. However, the Company
seems to plan to release its full-year forecast along with 3Q FY6/22 results if it receives approval by that time. In
existing businesses, the Company expects generally solid performance in 2H FY6/22 for all segments except for
the Customer Support Business.
The plans for initiatives in each business segment going forward are as follows.
(1) IT/AI/IoT/DX BusinessIn the IT/AI/IoT/DX Business, the Company is aiming for double-digit annualized growth with new services andacquiring new contracts stemming from other businesses to increase recurring revenue, as well as by capturing
large projects in contracted development and by acquiring projects that will lead to new businesses. Looking at the
number of contracts by service for FY6/22, the Company expects the number of contracts for the i-series, which
accounts for approximately 70% of revenue, to increase 6.2% YoY to 2,550 contracts. Meanwhile, the Company
expects enterprise contracts (custom projects) which are somewhat high in unit price to increase 15.2% to 190
contracts, and co-creation projects and other large projects to increase 29.6% to 35 projects.
In co-creation projects, there is the ongoing safe driving assistance project for Sompo Japan Insurance and the“Real Estate Trust DX Platform” developed jointly with Shinoken Group. In addition, the Company is advancing
development of “U-medical support,” the first veterinary medical care support system in the livestock industry,
as a co-creation project with Mitsui Sumitomo Insurance Co., Ltd. and desamis Co., Ltd. By working with
U-motion®, a system to monitor cattle behavior developed by Desamis, U-medical support aims to digitally assist
communication pertaining to the medical treatment of livestock. The Company plans to release the service around
April 2022. Scala Communications, Inc. engages in project management, service development, sales, operations,and database analysis. In addition to system development fees, the company receives fixed percentage fees
based on monthly usage.
In terms of progress as of 1H FY6/22, co-creation projects were on track but the i-series was a bit behind plan.
The Company aims to catch up in 2H and meet its targets.
Number of contracts by service(Unit: Number of contracts)
FY6/22

FY6/25Price

Cancellation
rate

FY6/21Results

1H FY6/22
Results

Forecast

YoY

Forecast

vs. FY6/21

i-series

Approx. ¥100,000/month

Under 7%

2,401

2,430

2,550

6.2%

3,000

24.9%

Enterprise

Approx. ¥300,000/month

Under 2%

165

170

190

15.2%

250

51.5%

Co-creation

Over ¥2 million/month

0%

27

31

35

29.6%

100

270.4%

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

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

20 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Outlook(2) Customer Support BusinessIn the Customer Support Business, the Company will work to increase added value to its services in the customer
support domain. Specifically, the Company will strive to enhance convenience and improve productivity, and aim
to grow the business scale and improve profitability by reducing low-profit projects and building high profit margin
call centers and combining it with the Group’s products and services. Additionally, the Company will contributeto co-creation business growth by designing in an integrated fashion and building an operational organizationalframework in the customer support areas of co-creation business.
Looking at the number of call center seats, while the number of call center seats for handling traditional consulting
will decline from 300 seats in FY6/21 to 200 seats in FY6/22 and 100 seats in FY6/25, the in-house call center
that the Company will newly launch will be expanded from 50 seats in FY6/22 to 500 seats in FY6/25. As a result,
the Company aims to increase the total number of seats from 300 in FY6/21 to 600 seats in FY6/25, and aims
to increase the number of contracts from 250 to 500.
A point to note is that operations have started at the in-house call center specializing in customer support services,with its total number of seats coming to eight in 1H FY6/22. The Company will continue to review projects withlow profitability, targeting a turn to profit from FY6/23.
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

FY6/22

FY6/21Results

1H FY6/22
Results

Forecast

300

293

200

0

8

250

253

FY6/25
YoY

i-series

vs. FY6/21-33.3%

100-66.7%

50

-

500

-

300

20.0%

500

100.0%

Source: Prepared by FISCO from the Company’s results briefing materials(3) HR & Education BusinessAmong the HR & Education Business, in the HR business the Company will work to increase the number ofregistered job seekers by new graduate recruiting and human resources referral service. The Company plans
for the number of new graduates of physical education schools to increase from 17,000 in FY6/21 to 18,000 in
FY6/22, for the number of new female graduates to increase from 13,000 to 14,000 students, and for the numberof job seekers via human resources referral to increase from 7,000 to 8,000 people. The Company will work
to increase the number of people registered by getting more placement requests from companies with strong
brand power. Also, the number of hiring-related events, which was struggling due to the COVID-19 pandemic,
is expected to recover from 72 in FY6/21 to 80 in FY6/22 while continuing to hold online events. In fact, revenue
from hiring-related events has recovered to the scale prior to the COVID-19 pandemic, and revenue and profits
are both outpacing targets in FY6/22.
Through these initiatives, the Company expects growth to continue in the HR business which the Company has
been focusing on since 2H FY6/21, and forecasts higher revenue and a turn to positive operating profit in FY6/22.
Heading towards FY6/25, the Company plans to focus on increasing the number of people registered among new
female graduates and job seekers through personnel referrals. Meanwhile, the Company expects stable growthin physical education students due to the fact that the registration rate is already at a high level.

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21 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Outlook

Number of registered job seekers and number of hiring-related events held
FY6/21Results

1H FY6/22
Results

FY6/22
Forecast

FY6/25YoY

Forecast

vs. FY6/21

Number of registered job seekers (newgraduates of physical education schools)

17,00016,00018,0005.9%

21,00023.5%

Number of registered job seekers (new female
graduates)

13,0007,000

14,0007.7%

22,00069.2%

Number of registered job seekers(human resources referral)

7,000

Being prepared(pre-season)

8,000

14.3%

14,000100.0%

72

35

80

11.1%

110

52.8%

Number of hiring-related events held

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

Meanwhile, in the education business, the Company will expand the business scale and increase the stability ofearnings by not only operating its own day care centers and preschools, but also by leveraging its know-how
to operate day care centers and preschools for customers on a contract basis. For the daycare centers andpreschools that it operates itself, the Company increased the number of facilities from six facilities in FY6/21 toseven facilities in FY6/22, and had been planning to operate one more facility under contract, but due to theimpact of COVID-19, the outlook is that this will now be shifted to FY6/23. In addition, the Company plans toadvance educational content development, sales, and licensing. Its strategy is to steadily expand the scale of thebusiness, while partnering with regional co-creation-related services.
Number of daycare centers and preschools operated by the Company and number of facilities operated on acontract basis
FY6/22

FY6/21Results

1H FY6/22
Results

Forecast

Number of daycare centers and preschools
operated by the Company

6

6

7

Number of facilities operated on a contract basis

0

0

1

FY6/25YoY

Forecast

vs. FY6/21

16.7%

8

33.3%

-

5

-

Source: Prepared by FISCO from the Company’s results briefing materials(4) EC BusinessIn the EC Business, the Company expects both revenue and profits to grow by double digits again in FY6/22.
The Company will work to increase the number of members and the number of cards sold through ongoing
improvements to the EC site “Yuyu-Tei” and by bolstering digital marketing. Also, the Company will improve
profitability by improving fulfillment operations. In terms of the number of members, the Company aims to increase
membership from 140,000 people in FY6/21 to 180,000 people in FY6/22, and then to 230,000 people in FY6/25,
as the Company strives for additional growth as Japan’s largest trading card game EC shop.
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.
As for points of interest, the Company has embarked on a full-scale revamp of the EC site Card Shop – Yuyu-Tei,with the aim of increasing the number of members and purchases and sales, and will strengthen digital marketing.
It is also working on developing an Android app since the iOS app is doing well. It looks to make back-end
operations more efficient and increase profitability by using an AI image processing system to automate work
such as pricing and identifying cards.

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22 25

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

Scala, Inc.

22-Apr.-2022

4845 Tokyo Stock Exchange Prime Market

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

Outlook

Number of members of EC site Card Shop – Yuyu-Tei

Members

FY6/22

FY6/25

FY6/21Results

1H FY6/22
Results

Forecast

YoY

Forecast

vs. FY6/21

140,000

172,000

180,000

28.6%

230,000

64.3%

Source: Prepared by FISCO from the Company’s results briefing materials(5) Incubation & Investment Business
J-Phoenix Research is approaching around 200 companies per year on an ongoing basis, and the Company will
work to acquire value creation management support projects and DX support projects, as well as carry out M&A
and capital and business tie-ups. It also plans to go beyond M&A and investment, forming links to co-creationand cooperation.
Meanwhile, there is an extremely high level of interest in Gyaku Propo among companies engaging in new businessdevelopment and local governments, and the Company expects to obtain more projects. In FY6/22, the Company
plans to expand these projects and becomes profitable as well as obtain contracted system development projects
stemming from matchings. Further, the Company aims to accumulate cases of public-private co-creation bypromoting matching, and work on developing new services that convert social issues into data. In FY6/21, there
were two projects for Gyaku Propo that led to matching contracts, and the Company aims to increase this to 15
projects in FY6/22 and 30 projects in FY6/25. Likewise, the Company expects the number of contracted systemdevelopment projects stemming from matchings to increase from 1 project in FY6/21 to 30 projects in FY6/25.
Track record of matching through Gyaku Propo and forecast
FY6/22

FY6/21Results

1H FY6/22
Results

Forecast

Number of matches

2 projects

2 projects

15 projects

Number of matched local public entities (total)

4 entities

3 entities

Development projects stemming from matching

1 project

2 projects

FY6/25YoY

Forecast

vs. FY6/21

7.5x

30 projects

15x

15 entities

3.8x

100 entities

25x

3 projects

3x

30 projects

30x

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

In the mid-term management plan, targeting revenue of ¥500bn andoperating profit of ¥50bn in FY6/30
3. 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/
DX-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.

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

23 25

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

Scala, Inc.
4845 Tokyo Stock Exchange Prime Market

22-Apr.-2022
https://scalagrp.jp/en/ir/

Outlook

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 to help make government services
more sophisticated, and introduced workation and other initiatives to help revitalize regional areas and encourage
population inflows to them.
As 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 a healthcare
DX platform. It is currently at the demonstration experiment stage, and plans to provide service moving forward. Bybringing together each company’s resources in advancing the project and collecting personal health records (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.
Healthcare DX platform concept

Source: Reprinted from the Company’s mid-term management plan

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

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

Scala, Inc.

22-Apr.-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 13th consecutive period in FY6/22
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 develop its businesses in the future, and theCompany aims to continually increase dividends under this policy. For FY6/22, the Company expects to increase
the dividend ¥2.0 YoY to ¥36.0 per share, which will mark the 13th consecutive period it has increased the dividend.
With respect to the Tokyo Stock Exchange’s new market segments, which will go into effect from April 2022, theCompany has chosen to switch to the Prime Market in order to realize its mid-term management plan and meet thehigh expectations and demands of the capital market. In addition, in order to strengthen its governance system,
the Company is transitioning from a company with audit and supervisory board members to a company with anominating committee, etc.

㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑
(¥)

㻠㻜㻚㻜

㻟㻜㻚㻜

㻞㻜㻚㻜

㻝㻜㻚㻜

㻞㻜㻚㻜㻌

㻟㻠㻚㻜㻌

㻟㻢㻚㻜㻌

㻲㼅㻢㻛㻞㻝

㻲㼅㻢㻛㻞㻞㻌㻱

㻞㻤㻚㻜㻌

㻞㻠㻚㻜㻌

㻜㻚㻜
㻲㼅㻢㻛㻝㻤

㻲㼅㻢㻛㻝㻥

㻲㼅㻢㻛㻞㻜

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 ofits most important management issues. In terms of specific measures, all Group companies have obtained and willcontinue to maintain 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.

25 25

Disclaimer
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◾ For inquiry, please contact: ◾

FISCO Ltd.
5-13-3 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (IR Consulting Business Division)
Email: support@fisco.co.jp