SCALA,INC.
INTEGRATED REPORT2023

To ideal company the world needs

CONTENTS

Message from Representative

03

Corporate Philosophy and Management Philosophy

05

Medium-term Goals

06

Management Team

13

Strategy and Business Portfolio

14

Consolidated Financial Data

15

S C A L A , I N C .

Business Overview by Segment
1 - IT/AI/IoT/DX

17

3 - HR & Education

21

5 - Insurance

25

ESG/SDGs Initiatives

29

Diversity Promotion Initiatives

32

Company Profile and Stock Information

33

2 - Customer Support

20

4 - EC24

6 - Incubation & Investment

26

SCALA, INC. INTEGRATED REPORT 2023

03

Message from Representative

Message from Representative
Society as a whole is becoming increasingly unpredictable, as the future outlook is
uncertain, change is rapid and complex, and conventional norms are no longer applicable.
At the same time, domestic economic growth is stagnating, and many social issues remainunresolved.
In terms of business, this situation establishes the environment and foundation for creating
new and innovative services and systems that can flexibly respond to rapid market changes
and customers’ needs. However, to solve increasingly complex social problems and lead toeconomic development, it is necessary to understand the current situation and causes,
discuss solutions without preconceived ideas through co-creation among the people,
companies, and local governments involved, and make decisions and take actions flexibly.
Social problems, by their very nature, have no single solution, and because they arecomplex and interconnected, there is the possibility of creating positive side effects even in
the process of solving them. We believe that by fostering co-creation on this premise,people, companies, regions, and countries can grow together. Therefore, we are building
co-creation relationships with our partners to create real solutions, and using them asmodels to create an environment where success stories can be created simultaneously
everywhere.
We will use our accumulated technology and experience as a means to solve problems. In
the short, medium and long term, we will see every connection that arises in our businessactivities as an opportunity for co-creation, and will create a new future of continuous
growth. We will use these activities to sustainably increase our value and meet the
expectations of all our stakeholders.
Scala, Inc.

Director, Representative Executive Officer & President

Norikatsu Nagino

SCALA, INC. INTEGRATED REPORT 2023

04

SCALA,INC.INTEGRATED REPORT 2023

05

Corporate Philosophy and Management Philosophy

Corporate Philosophy

Management Philosophy

Demonstrate ethical values

VISION

Fulfill social responsibility

MI SSION

I n a l l c o r p o r a t e a c t i v i t i e s , w e a c t w i t h s o c i a l a n d e t h i c a l r e fl e c t i o n
and discernment.

Recognizing the social nature of a company and responding to thedemands of various stakeholders, we contribute to the maintenanceand development of society.

Prosper forever

The goal is to grow long-term and steady growth that will contributeto the future of Japan in 10 years and 50 years from now.

Our Goal

Role to be played

VALUE
Values & Action Guidelines

Contribute to thehappiness and prosperityof all humanity
Become the ideal
company for the world
Provide unlimited
possibilities for those
who continue tochallenge everything

SCALA,INC.INTEGRATED REPORT 2023

06

Medium-term Goals

Medium- to Long-term Strategy

Medium Term Business Plan

Provide services with a focus on offering opportunities that lead to the growth of people as the core of
the social values created by our group.

Focus on building a foundation for solid growth fromFY2024 to FY2026.

Implement mechanisms and measures to maximize
the potential of human resources within our group,
considering human capital management.
Become a platform for human growth, circulate management resources and knowledge, and achieve bothsocial and corporate value.

Priority Strategies
Focused business domain

Focus on businesses related to human growth
inside and outside our group.

Business alliance structure

Create a cyclical structure of 1) turning social
issues into projects, 2) co-creating with individual
businesses and partners within our group, and 3)
attracting human resources, partners, and newsocial issues that share the realized value.

Strengthen business
management infrastructure

Quantitative targets
for FY2026

Strengthening profitability, establishing a shared
sector, systems for stimulating human resources,and deepening monitoring.
Revenue

Operating Profit￥15.5 billion￥2 billion

Medium Term Business Plan 2024-2026
https://scalagrp.jp/pdf/en/ir/library/a_report/midtermplan_20230814_en.pdf

SCALA,INC.INTEGRATED REPORT 2023

07

Medium-term Goals

Background of Medium- and Long-term Strategy
The world is in the unpredictable era of VUCA (an acronym that stands for Volatility, Uncertainty, Complexity and Ambiguity). In Japan, there are issues suchas the declining birthrate and aging population, and the review of the state of education. In addition, the social environment is becoming increasingly
uncertain and complex, as shown by the growing importance of human capital management in improving sustainable corporate value.
We believe that what is expected in such an environment is people who can proactively grasp the issues and survive in the present.

International Affairs
and World Economy

Japan's Growth Challenge

Approach to Human CapitalEntering the era
where the future isunpredictable

Low birthrate, aging
population, andeducation review

Growing importanceof human capitalmanagement forsustainable value
creation

SCALA,INC.INTEGRATED REPORT 2023

08

Medium-term Goals

Against this backdrop, Scala Group has announced in its medium- to long-term strategy to become the platform for human growth
focused on offering growth opportunities.
We aim to realize both social and corporate values by continuing to offer opportunities to fulfill the three elements of growth
opportunities that Scala Group considers – “expanding possibilities”, “mental and physical wellness”, and “environmental sufficiency” through Scala Group, the platform for human growth.

Medium- and Long-term Strategy

Become the platform for human growth, focused on offering opportunities for growth.
Continue to offer opportunities through Scala Group, the platform for human growth, focusing
on "growth opportunities" that enable better decision making and choice of actions.

Growth opportunities Scala considers
Expanding Possibilities
There may be more
possibilities than you think.

Provide awareness that expands
curiosity and possibilities throughout
life.

Mental and PhysicalWellness

Environmental
Sufficiency

Important to balance physicaland mental health.

Not everyone can take on a challenge.
Need a sense of security and support.

Provide means for physical andmental health to engage powerfully
with possibilities.

Provide security, trust, environment,
and opportunities to support decision
makingSCALA,INC.INTEGRATED REPORT 2023

09

Medium-term Goals

Medium Term Business Plan
In order to realize the provision of new value, ScalaGroup has set the basic policy of the Medium TermBusiness Plan 2024-2026 as the establishment of
the platform for human growth.
In order to realize the Scala Group's VISION, “Makethe world where valuable things come springing
up”, we have established VISION2030, “Realize asociety where people can always and forever live
their lives as they are”. In the Medium TermBusiness Plan, we will focus on building afoundation for solid growth and aim to realize
VISION2030.
The specific priority strategies and goals are torevise the values and strengthen profitability. Byr e d e fi n i n g o u r u n i q u e v a l u e , s t r e n g t h e n i n g t h ebusiness management infrastructure, andachieving revenue of 15.5 billion yen and operating
profit of 2 billion yen, we will establish a foundation
for growth after 2026 and ensure the contribution
to society through the platform for human growththat is the new value we provide.

Outline of Medium Term Business Plan 2024-2026
Basic Policy

Create a place that fosters human growth

Priority
Strategies/Goals

Review our strengths and strengthen profitability

Qualitative

Quantitative

Review our strengths
Strengthen our business management
infrastructure
Revenue: 15.5 billion yen
Operating profit: 2.0 billion yen

SCALA,INC.INTEGRATED REPORT 2023

10Medium-term Goals

Unique Value
Scala Group defines the platform as a place where interaction is created to solve social problems.
We will provide suitable services to solve social issues with our unique value of the platforms that continue to learn through organic linkages among the threelayers of meta, co-creation, and infrastructure with different values, and the creation of value beyond the framework through co-creation with partners whoshare the Scala Group's VISION.

Unique Value

Platforms (PFs) that continuously learn and evolve,and value creation
by partners

Scala Group’s PF
Meta PF
Sourcesof Value

Co-creation PF

LinkageFoundation PF
Provide suitable services to solve social
issues through organic linkages among PFs
in response to the content of the issues.

Social Issues
Learning
Opportunities
Circulate
Knowledge

Partners

Within thecompany

Outside thecompany

Domestic

Overseas

People who share the Scala Group’s
visionCo-creation with partners to create value
beyond the frameworkPFs and people continue to learn and evolve, adding to our unique value.

SCALA,INC.INTEGRATED REPORT 2023

11

Medium-term Goals

Platform for Human Growth
The platform for human growth, which focuses onproviding growth opportunities as stated in themedium- to long-term strategy, will create growth
opportunity-related services in response to thethree elements of growth opportunities that weo ff e r : “ e x p a n d i n g p o s s i b i l i t i e s , ” “ m e n t a l a n dphysical wellness,” and “environmental
sufficiency,” utilizing the knowledge of a wide
range of businesses and partners.
For "expanding possibilities," we offer liberal arts
which provides awareness that expands curiosityand possibilities throughout life.
F o r “ m e n t a l a n d p h y s i c a l w e l l n e s s , ” w e o ff e rwellness which provides the means for physicaland mental health to engage powerfully withpossibilities.
F o r “ e n v i r o n m e n t a l s u ffi c i e n c y , ” w e o ff e rempowerment which provides security, trust,environment, and opportunities to support
decision-making.
We define the direction of services to provide foreach element of growth opportunities, and havealready released several services to create theimpact of growth opportunities.

Scala Group’s PF
Meta PF

A place to create joint projects.

Starting point for people outside
the company facing issues andScala Group.

Co-creation PF

Create the most suitable place forissues and solve them throughco-creation.

Growth Opportunities
that We Offer
Liberal Arts

Wellness

Empowerment

ExpandingPossibilities

Mental andPhysicalWellness

Environmental
Sufficiency

Provide awarenessthat expands curiosityand possibilities
throughout life.

HR & Education
Business

Foundation PF

Encourage the value contribution
from other places.
Solve issues through individual
projects.

(HR & Education)

Provide the meansfor physical andmental health toengage powerfully
with possibilities.

DX Business(IT/AI/IoT/DX)

Provide security,
trust, environment,
and opportunities tosupport decision
making.

Financial-related
Business(Insurance)

EC
Business(EC)

Data Linkage Infrastructure（DX Business and EC Business）

Partners' Knowledge

SCALA,INC.INTEGRATED REPORT 2023

12

Medium-term Goals

Cycle of Values
The Scala Group's goal is to realize our VISION,“Make the world where valuable things comespringing up”.
As a place where interaction is created to solve
social problems, Scala Group will be the platform
with high unique value, and realize continuoussocial contribution through the cycle of value
where interaction is created between people andissues brought by society, and the created value
is returned to society.
In the process of the cycle of values, solved
issues and successes of human resources
involved in the issues are the stimulus to attract
new issues and co-creation partners to ScalaGroup, and increase the unique value of theplatform and contribution to society.
By permanently turning these cycles of value
through Scala Group, the platform for human
growth, we will further ensure our VISION, “Makethe world where valuable things come springing
up”.

Unknown
co-creation
partners

The success of ScalaGroup attracts people whohave never been involved
with Scala Group before.

Polished diverse
workforcePFs attract people and issues

ScalaGroup’sPF

Issues

New issues arise as aresult of closed issues
and projects.

Createdbusinesses

Return to society

Solved problems

SCALA,INC.INTEGRATED REPORT 2023

13Management Team

BOARD of DIRECTORSThe management team consists of a diverse group of members with awealth of experience, a high level of insight and expertise. (As of September 2023)

Director
Representative Executive
Officer & President

Director
Executive Officer

Director
Executive Officer

Seiichi Kiyomi

Norikatsu Nagino

Hideaki Nitta

Doctor of Engineering
Member of the Nominations
and Remuneration Committee

Independent Outside Director

Independent Outside Director

Shoichi Watanabe

Masatoshi Kushizaki

Independent Outside Director

Outside Director

Attorney
Member of the Nomination,
Remuneration and
Audit Committee

Attorney

Takuto Kawanishi

ADVISOR

Sakka Kobayashi

Takeo Aida

Chairperson of
Audit Committee

Independent Outside Director

Independent Outside Director

Certified Public Accountant
Member of Audit Committee

Member of Audit Committee

Executive Officer

Executive Officer

Satoshi Ugajin

Attorney
Chairperson of theNominations andRemunerationCommittee

Director

Takuto Suzuki

Akihiro Yuki

Yusuke Nakamura

We appoint advisors with extensive experience and expertise in areas such as corporate management, investment and incubation, newbusiness development, and overseas business.
AdvisorMasataka Ueda

Advisor

Minoru Moriya

AdvisorHiroshi Omata

SCALA,INC.INTEGRATED REPORT 2023

14

Strategy and Business Portfolio

Strategy and Business Portfolio
To en ri ch society and improve people's lives, Scala iscommitted to solving social and individual issues throughboth DX and investment.
We create and support businesses that lead to solutions
by flexibly combining our strengths in DX with our trackrecord in IT/AI/IoT solutions, direct and indirect
investments, and investments that include humanresource collaboration to suit local conditions.
We will co-create with our stakeholders, such ascompanies and government agencies that share this idea
and approach, and deliver significant value to society andindividuals that Scala could not achieve alone.
We work on a wide range of businesses in Japan andoverseas through our subsidiaries in six segments:
IT/AI/IoT/DX, Customer Support, HR & Education, EC,
Insurance, and Incubation and Investment.

Value for society

Value for individuals

Enriching society

Making people’s lives better● Government services, regional revitalization● Industry creation, increasing sophistication, etc.

Redefine the way of public-private co-creation
Build corporate, regional and national growth models

Solving issues throughDX using IT/AI/IoT

Provide digital solutions● IT/AI/IoT/DX Business

Onsite application anddeployment● Human resources, education, sports● Healthcare, insurance, etc.

Contribute to people’s safety, security, and growth
Redefine the state of education

Scala’s foundation

Investments forsolving issues
Direct andindirect investments
Develop new business
Build human networks● Customer Support Business● EC Business● HR & Education Business● Insurance Business● Incubation & Investment Business

Redefine how digital technology is used andhow people and businesses interact.

Create mechanisms for new business creation

SCALA,INC.INTEGRATED REPORT 2023

15

Consolidated Financial Data

Consolidated Financial Data
Revenue for the fiscal year ended June 30, 2023 was 12,644 million yen, up 32.1% year
on year. In terms of profitability, operating profit was 259 million yen due to an increase inprofit from the EC Business and the HR & Education Business, with continued strong
demand for active recruitment, and an increase in profit from the Incubation & Investment
Business due to an improvement in profitability and a reduction in costs, while continuing
to invest aggressively in the development of various new businesses, such as intensive
sales activities to support corporate value creation leading to major DX projects, creationof new services related to regional revitalization, and organizational improvements topromote international business.

278

1,245

（2.2%）（9.9%）

2,138（16.9%）

Revenue

12,644

6,073

Component Ratio （48.0%）(million yen)

1,704

12,644 million yen
259 million yen（13.5%）+32.1%￥9.6 billion￥12.6 billion

1,204（9.5%）
IT/AI/IoT/DX

Customer Support
HR & Education
EC

Insurance

Incubation & Investment

SCALA,INC.INTEGRATED REPORT 2023

16

Business Overview by Segment

BUS I NESSOVE RV I E W
BY SEGMEN T

1 IT/AI/IoT/DX
2 Customer Support
3 HR & Education
4 EC
5 Insurance
6 Incubation & Investment

SCALA,INC.INTEGRATED REPORT 2023

17

1

Business Overview by Segment

IT/AI/IoT/DX➀ SaaS/ASP services

We offer a wide range of SaaS/ASP services, including solutions that
support omnichannel communication between businesses andpeople to deliver the right information and goods at the right timeand in the right form. In particular, we are working on the
introduction of “i-ask”, one of our main services, as well as web
services and other services, the functional expansion of introduced
services, and the development of related systems. Our features
include the adaptability and technical ability to customize products,
a track record of more than 1,000 clients, and a full support systemprovided by our development staff after product implementation.
In addition, for the digitalization of local governments, we areplanning and developing a facility reservation service linked to the
My Number Card, an individual number card with an IC chip in
co-creation with xID Inc. and promoting it as a starting point for the
expansion of communication services for residents.

Product Lineup
Information
SearchContents
Management

Contents
Distribution

Receptions
自動 音 声 応 答サービス

Campaign Website
Development
News Distribution
ServiceInquiry
Management

MembershipManagement

Data
Management

Facility
Reservation

Web チ ャ ット シ ス テ ム

W e b チャットボットシス テム

Operating company

Scala Communications, Inc.

SCALA,INC.INTEGRATED REPORT 2023

18

Business Overview by Segment➁ Co-creation projects

To realize a smart healthcare platform, we are considering full
deployment in 2024 in collaboration with Otsuka PharmaceuticalCo., Ltd. and Sompo Japan Insurance Inc. In addition, we have jointly
developed with Elite Genomics Co., Ltd. “eG Plus”, a system forutilizing data from genomic test results, and provide this service. We
have also developed "U-Medical Support," a medical support system
for the livestock industry, collaboration with Desamis Co., Ltd. and
Mitsui Sumitomo Insurance Company, Limited, and provide thisservice with functions such as remote medical examination,
electronic medical records, and medical records management.
Furthermore, we are promoting a co-creation project with JTB Corp.
on measures to stimulate tourism demand. We are also developing apet health management application.
Vet.

➂ Planning, development, and sales of acloud activity management toolW e d e s i g n , d e v e l o p , a n d s e l l “ R e t o o l ” , a p r o d u c t i o n e ffi c i e n c ymanagement tool that automatically visualizes a company's internal
activities (operations × results). “Retool" enables data-driven
business management. It enables automatic visualization of internal
activities through automatic data collection and organization,
leading to maximization of productivity and improvement of thetarget achievement rate, as well as reform of work styles,
compliance with overtime regulations, and remote quantitative
management for remote work.

FarmerFarmerVet.

API Integration

U-medical
supportRemote medical
examination
Electronic medical
recordVet.

Electronic
instructions
Cattle behavior is monitored in real timeand behaviorrecords are digitized!

(Eating, Drinking, Ruminating,Moving, Lying down
and Standing up)

Operating company

Scala Communications, Inc.
EGG CO., LTD.

Farmer

Early detectionof disease!
Operating company

Retool, Inc.

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Business Overview by Segment➃ Promoting DX for regional revitalization
In alliance with local governments facing many problems such as
declining population and aging society, we are promoting DX for
local governments to solve these problems. We have one of thelargest market shares for a donation deduction management systemthat reduces administrative work for the Furusato tax payment
system, and we are developing and providing a system related tocare prevention projects (flail prevention) that utilizes this pipeline.
We also develop and provide other systems to support thesecretariat of tourism projects and tourism strategy support
systems using tourism big data. In addition, we are developing aservice that allows users to easily reserve facilities such as
gymnasiums managed by local governments using a My Number
Card and a smartphone, and plan to launch this service during thecurrent fiscal year.

Facility reservation system with
My Number Card verification

Improve the convenience of resident services
and make facility management online.

First in Japan!*
Facility reservation systemwith My Number Card
verification

This reservation system allows users to confirm
their identity with a smartphone using their My
Number Card. This system reduces the need forreception, payment, key delivery and othercounter operations.

Contact us

Operating company

EGG CO., LTD.
Scala Communications, Inc.

Furusato
ChoiceCompatible
with otherportal sites

Credit card payments
are automaticallyallocated

Settled donor

Donation
information is
寄付情報はシステムへ
automatically imported
自動取り込みだから
into
the system, so no
何もしなくてもOK！
need
to do anything!
EGG’s Furusato
Tax Payment
SystemRequired documents
can be prepared
immediately

Frailty CheckApp

Donors before settlement

Representative Director of Scala Communications
Representative Director of EGG

Hideaki Nitta

This business is the foundation for thevarious businesses of the Scala Group. We
aim to develop and provide services forco-creating and solving social issues byleveraging our solid relationships with a wide
range of clients, including private companies,
local governments, and public agencies.
Through digital technology, we promote thegrowth of individuals and organizations, andcreate a system that enables businesses tosolve social issues to develop society.

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Business Overview by Segment

2

Customer Support

Providing one-stop service from design todevelopment and operation of customer
support operations

We provide a one-stop service for the design, development, andoperation of various customer support operations, including callcenter, outbound sales, and back-office operations. We not only
support call center operations, but also incorporate customer
feedback into the needs to improve convenience, productivity, andfunctionality for our customers.

President and Representative Director of Leoconnect
President and Representative Director of Scala Service
List Management

Prospect Pop-up

Operating company

Prospect Management

Flexible Access and Editing
Authority

Leoconnect, Inc.
Scala Service, Inc.

Skip Function

Seiichi Kiyomi

Click to Call (customized)

Mainly at our BPO center in Shibuya-ku,
Tokyo, and our contact center in Naha City,
Okinawa, we provide a variety of customer
services that utilize the Scala Group's IT
technologies and support multiple channels,
including the Web, telephone, chat tools, etc.
As a bridge between companies and users,
we will contribute to the development andsuccess of various services created by ScalaGroup.

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Business Overview by Segment

3

HR & Education➀ Recruitment support for athletic students
We provide support for new graduate and mid-career employment,
specializing in high-potential athletics students with significant
recruiting needs, as well as support for the planning and operationof related events such as joint corporate information sessions andcareer seminars. As conventional recruiting procedures continue tochange, we are considering ways to develop recruiting services withhigher added value for both applicants and employers.

Operating company

Athlete Planning, Inc.
Representative Director of Athlete Planning➁ Recruitment support specifically forfemale students

In response to the recent trend of promoting women's participationin the workplace, companies have been making efforts to recruit anddevelop female human resources. As a recruiting support businessspecializing in female students, “Woman Career”, we hold jointcompany information sessions for female students and introduce
them to human resources.

Operating company

Athlete Planning, Inc.

Yusuke Nakamura

We provide two services: support for recruiting
athletic students and female students. In theathletic recruiting business, we have been
providing recruiting support for students involvedin club activities for about 25 years and are aleading company in this field. Currently, we haveapproximately 22,000 students registeredannually, hold about 80 to 90 joint company
information sessions per year, and support around
650 students in job placement annually. In termsof recruiting female students, we provide a service
called “Woman Career”, which includes jointcompany information sessions and job placement
services specialized for female students. In the
future, we will continue to strengthen our
workforce and expand our business areas, while
striving to enter the education and training andmid-career recruitment field (job change support)
as new businesses.
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Business Overview by Segment➂ Early childhood education

We are committed to creating childcare facilities and community
development projects that respond to social changes and the needsof the times by utilizing the diverse characteristics of thecommunity and its residents. We operate a wide range ofeducational facilities and services, including an internationalpreschool that uses English as the primary language and promotes
life skills, an after-school childcare service that focuses on learningand experiences to enhance non-cognitive skills, a small preschoolthat focuses on nutrition education, and an after-school daycare
service that provides therapeutic education through a unique
physical activity program. In addition, we believe that childcare
facilities are an important component of community development,
and we are actively involved in community development activities
not only through the operation of facilities, but also through deep
cooperation with local communities and businesses.

Implementing relationshipsthat make the most of diversity as a newform of education in society

Representative Director of FourHands

Masahiro Atsumi

Operating company

FourHands, Inc.

I have always believed that a good town is built
when childcare is at the heart of the community. I
also believe that through the children, places will
be connected and a new community will beformed. The community becomes more active as
it involves the surrounding generations. When thegeneration of parents surrounding their children is
energetic, the community becomes even morevibrant. The birthrate has been declining for a longtime, and it is important to encourage people tohave children, but first, our town must be a place
where people want to raise their children. Our
mission is to create a vibrant community throughchildcare, and a town that is comfortable to live inand lively.

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Business Overview by Segment➃ Sports education

We offer sports education programs for children, including a soccer
school “Beaut,” a baseball school “Fine’z,” a basketball school“Dankerz,” and a Ballschule school. Our sports education business is
unique in that we emphasize not only the growth of athletic ability
through sports, but also the growth of the mind. We are also
engaged in a wide range of sports school-related businesses,
including franchise businesses to expand Ballschule nationwide, theoperation of a baseball club specializing in skill improvement using aformer professional athlete, and consulting services for theestablishment and operation of sports schools. In addition, we also
provide instructor staffing services and plan and operate sporting
events.

➄ Sports DX

We have a professional basketball team “Saitama Broncos” that isrooted in the local community and belongs to the B3 League of theprofessional basketball league. A notable feature is our cooperation
with the government. We have signed cooperation agreements withmany cities, towns, and villages in Saitama Prefecture and work
closely with the local community. In addition, we are actively
involved in a wide range of educational initiatives, such as thepromotion of sports culture in cooperation with education
authorities and elementary schools, the reform of junior high school
club activities, second careers for athletes, and the use of DX to
attract fans of professional sports teams and expand their services.

Operating company

Representative Director of Sports Stories

Katsuyuki Kotake

We are engaged in developing businesses related
to education and sports. Our main business is theoperation of sports schools that aim to cultivate
children's non-cognitive skills, mainly througheducation. We have 70 schools in the Kanto
region with 1,500 members. In addition, we arepromoting co-creation with Saitama Broncos tostrengthen, educate, and promote the U-18 andunder categories. In particular, the expansion of
the basketball school for younger children has
shown positive results, including a 100-foldincrease in membership in one year.

Sports Stories, Inc.

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Business Overview by Segment

4EC

Operating a trading card e-commerce site

We operate a re-use e-commerce site for competitive trading card
games (TCG), such as Pokemon cards and Yu-Gi-Oh OCG, withfunctions of purchase and sale, as well as a strategy informationsite. One of our unique features is that we have three functions:purchase, sales, and strategy, and we develop each of these systems
i n - h o u s e , i n c l u d i n g f u l fi l l m e n t o p e r a t i o n s , f r o m s c r a t c h w i t hflexibility and scalability.
As a major online retailer in the TCG industry, we will continue toimprove our services.

Operating company

Scala PLAYce, Inc.

President and Representative Director of Scala PLAYce

Takuto Suzuki

We operate the e-commerce site based on
the business concept of “Stimulatingc u r i o s i t y f o r a l l u s e r s ” . I n t h i s fi s c a l y e a r ,sales, gross profit, and operating profit weresignificantly higher than the previous year
due to the success of our focus on Google
and Criteo data field advertisements, while
continuing to strengthen SEO. In addition to
the iOS application, an Android application
was released this fiscal year, and the numberof users is steadily increasing. Furthermore,in order to pursue a comfortable purchasing and buying experience, the main
website was fully redesigned. The new site introduces a framework based on
system scalability and maintenance environment. We are also developing apassword-less login solution with robust security and an image recognition
solution using the deep learning model to dramatically improve the productivityof logistics center operations. Advanced image recognition can drastically
improve the productivity of many operations, such as card identification andscratch detection in purchase assessments, picking support in shipping
operations, and confirmation of shipped items.
We will continue to aggressively pursue the introduction of the cutting-edge
technology and strive to provide a comfortable UI/UX experience.

SCALA,INC.INTEGRATED REPORT 2023

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Business Overview by Segment

5

Insurance

Insurance

We provide peace of mind to all pet owners who truly care for their
beloved dogs and cats by offering “Insurance for Dogs and Cats,” apet insurance policy that provides generous coverage with no daily
payment limit or limit on the number of times the policy can be used,
as long as it is within the maximum annual coverage amount. The
insurance covers up to 90% of medical treatment costs and can becontinued for a lifetime, minimizing the financial burden on pet
owners and protecting the health of their beloved pets. Thesefeatures help pet owners to choose the best medical treatment
without worrying about the cost in case of a sudden accident or
illness. We will continue to make efforts to provide services thatbring reliability and assurance to realize a happy coexistence
between pets and their owners.

Representative Director of
Nihon Pet Small-amount Short-term Insurance

Hideto Yamazaki

We are the first financial function of Scala Group
to operate a small-amount, short-term insurance
business for pets, mainly cats and dogs, andcurrently offer several products for approximately
30,000 pet owners nationwide.
In the future, we plan to develop a risk transfer
service for various clients of Scala Group.

Operating company

Nihon Pet Small-amount Short-term Insurance Company

SCALA,INC.INTEGRATED REPORT 2023

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Business Overview by Segment

6

Incubation & Investment➀ Investment and engagement

We are engaged in M&A and other investments, including the operation of SCSV-1 Investment Limited Partnership, a value co-creation engagement fund thatinvests in companies that solve social problems through business. Our strength is that we are not limited to M&A and investment, but also link them to co-creationand collaboration. When we find room for synergies after evaluating investments, we promote co-creation and collaboration through business. We approach
approximately 300 companies per year, covering a wide range of growth and maturity stages from listed companies to start-ups.

Operating company

SCL Capital LLC
SCSV-1 Investment Limited Partnership➁ M&A Support

We provide a co-creation type of M&A advisory business that combines our past M&A experience with our know-how in DX. We also provide “Specially Appointed
Task Force for M&A,” an M&A facilitation service that provides hands-on support from M&A strategy planning to closing and PMI as a company's in-house team.

Operating company

Scala, Inc.

➂ Web3 BusinessIn response to the rapid expansion of NFT-related services in the sports industry, the use of Web3 in local governments, and other trends, we believe that Web3
will create value in many of the Scala Group's business areas, and we are promoting the development of Web3 business. As a new business in the Web3 field, we
have launched “Fanique,” a new type of fan club service that combines NFT and fan club functions. We are providing NFT memberships to the Saitama Broncos, aprofessional basketball team, as our first user.

Operating company

Scala Partners, Inc.

SCALA,INC.INTEGRATED REPORT 2023

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Business Overview by Segment➃ Public-private collaboration platform
for solving social issues

Gyaku Propo Lab brings together local leaders, ministry officials,
and businesses to create a casual exchange of ideas.

We provide “Gyaku Propo”, a co-creation service in which companies
present social issues of interest and in response, local governments propose
plans and ideas for solving these issues. By reversing the conventional
process of publicly solicited proposals, companies can find municipalities
that are proactive about innovation, and municipalities can find companies
with a co-creation mindset to formulate high-quality projects while
matching the perspective of the two parties. By combining the
problem-solving capabilities of companies with the social issues faced by
local governments, we aim to solve social issues and create new businesses
more quickly than with the conventional public call for proposals.
Gyaku Propo Series Lineup
Gyaku Propo
Concierge

Companies

3

Joint businessdevelopment

Gyaku Propo
Tour

1

Application
4

Horizontal
expansion

Gyaku Propo
Learning

2

Proposal2

Proposal2

ProposalGyaku Propo
Lob

Gyaku Propo
Voice

Operating company

SOCIALX, Inc.

Virtual public-private collaboration
section for municipalities.
Supports cooperation with companies
based on the social issues of local
governments.
Tours to study social issues.
Workshops with local governments,and exchanges with local companies.

Training programs for social humanresources and new businesses thatsolve social issues.

Incubation center connecting
companies and local governments,
located in Toranomon Hills "ARCH".
A communication site where social
issues translated from a businessperspective are posted and companies
and local governments can interact
toward co-creation.

Representative Director of
SOCIALX

Yukiyasu Isaji
Hirotaka Ito

As a social startup that balances business and social benefits, we are developing new
businesses that solve social issues as a companion to both the public and private sectors
by developing various public-private co-creation “Gyaku Propo” services, driven by thegovernment's new capitalism policy. Following our first year in business, we have received
another large order from the Small and Medium Enterprise Agency, and we are also
working as business development mentors for 900 people from about 120 large
companies at ARCH, which is operated by Mori Building Co. in Toranomon Hills.In
addition, the project that originated from “Gyaku Propo” won the Best Good Design Awardof the Manifesto Awards.
SCALA,INC.INTEGRATED REPORT 2023

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Business Overview by Segment➄ Support for rural migration and workcation
As an initiative to promote regional revitalization, we are engaged ina workcation business that aims to create a high-quality relational
population. Through the operation of our corporate workcation
service, we are promoting a new way of working that is
location-independent, suitable for the post COVID-19 era, andsupporting companies that need to enhance their organizational
strength even in a remote environment. We are actively building
co-creation relationships with partner companies and local
governments in order to increase the number of local fans and to
improve the way companies work in the future.

Location

Connection

Views,Buildings,
Community

Business Manager of
Co-creation Division of Scala Partners

Able toconcentrate
on work
Find yourfavorite place

Operating company

Scala Partners, Inc.

Work

Kenichi Hattori

We are engaged in the workcation business forcompanies. We operate “Komforta Workation,” aworkcation service that carefully selects the best
facilities for corporate use, and currently has morethan 150 facilities listed and over 3,000 corporate
members.
In addition, through collaboration with universities
and other organizations, we demonstrate how
workcations affect employee and organizational
engagement, and provide feedback to companies
to support their human capital management
initiatives through location-independent work
styles.

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ESG/SDGs Initiatives

ESG/SDGs Initiatives
To realize Scala's corporate and management philosophy andsustainable growth, as well as to contribute to a sustainable society,
we focus on ESG and SDGs initiatives.

SCALA GROUP

Environment
SCALA GROUP

Initiatives for Environment

Protecting environmentand solving environmental
problems
Saving energy
Reducing environmental
impactSupport for TCFDSCALA,INC.INTEGRATED REPORT 2023

30

ESG/SDGs Initiatives

SocialSCALA GROUP

Initiatives for Society

Promoting diversity

Femaleemployees ▶

Diversifying nationalities

43.7%

Femalemanagers ▶

19.8%

Femaleexecutives ▶

6.5%

Nationalities
of employees ▶

Support for people
with disabilities
Practicing humancapital management
Promoting seniorhuman resources
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ESG/SDGs Initiatives

Governance
SCALA GROUP

Initiatives for Corporate GovernanceCommunication withinvestors
Board oversight andmonitoring
Nomination andremunerationcommittees
Maintenance of related
rules and regulations
Assessment of board
effectiveness

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Initiatives to Promote Diversity

Initiatives to Promote Diversity
Initiative and commitment by
top management

Diversity promotion initiatives, including support for women's
participation in the workplace, are essential for strengthening ourcompetitiveness and achieving sustainability as a company. We are
implementing diversity promotion initiatives based on the initiativeand commitment of top management

Monitoring

As part of monitoring by the board of directors and the management
committee, we receive reports on the progress of diversity-related
initiatives and issues every quarter and discuss them.

Diversity Promotion Committee

The Diversity Promotion Committee is a meeting organization that
regularly brings together the president, management, department
heads, and other relevant people within the company to discuss
diversity policies and actions. The committee promotes various
diversity-related activities.

D i v e r s i t yDiversity Policies

Fostering an environmentand corporate culture

Promoting advancementof human resources

We foster an environmentand corporate culture where
every employee understands
the importance of diversity
and a diverse workforce canperform well.

We promote the recruitment,
training, and promotion ofdiverse human resources
regardless of gender, race,
religion, age, sexual orientation,
disability, nationality, and otherattributes.

Supporting career andskills development

Enhancing support
for work-life balance

We support skill development
so that employees canmaximize their skills andindividuality.

We enhance support forwork-life balance so that
employees can work in ad i v e r s e a n d fl e x i b l eenvironment.

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Company Profile and Stock Information

Company Profile and Stock Information (As of June 30, 2023)
Company Profile
Established
Capital

Employees

Representative
Group Companies
Outstanding shares
Share trading unit
Shareholders

Stock exchange
Stock code

Fiscal year end

General meeting of shareholders

Shareholder register administrator
Accounting auditor
Tel

Headquarters
WebsiteDecember 11, 1991

Major Shareholders

Norikatsu Nagino,

Director, Representative Executive Officer & President

Number of consolidated subsidiaries: 20
Number of equity method affiliates: 2
17,734,259
100

15,183

Tokyo Stock Exchange, Prime Market
4845

June 30

September

Sumitomo Mitsui Trust Bank, Limited
Grant Thornton Taiyo LLC
03-6418-3960

2-21-1, Shibuya, Shibuya-ku, Tokyo
https://scalagrp.jp/en

2: We hold 400,008 shares of treasury stock but are excluded
from the list of major shareholders below.

Name

Number ofsharesShareholding
ratio(%)

1 The Master Trust Bank of Japan, Ltd. (Trust Account)

2,199,300

12.69

2 Quest Co., Ltd.

600,000

3.46

3 Custody Bank of Japan, Ltd. (Trust Account)571,500

3.30

4 IC CO., LTD.

500,000

2.88

5 Scala Employees’Stockholding

359,200

2.08

6 Norikatu Nagino

344,200

1.99

7 THE BANK OF NEW YORK 133969

248,400

1.43

8 Osamu Miyashita

245,000

1.41

9 JPMorgan Securities Japan Co., Ltd.

202,130

1.17

10 Hideki Shimazu

200,000

1.16

5,469,730

31.57%

1,787 million yen

648 (consolidated)

Note 1: Shareholding ratio is calculated excluding treasury stock.

total

SCALA,INC.INTEGRATED REPORT 2023

SCALA GROUP
IT/AI/IoT/DX Business

Scala Communications, Inc.
Scala Service, Inc.
readytowork Co., Ltd.
Retool, Inc.
Social Studio Inc.
EGG CO., LTD.

Customer Support
Business

Scala Service, Inc.
Leoconnect, Inc.

HR & Education Business Athlete Planning, Inc.

FourHands, Inc.
Sports Stories, Inc.
Broncos20 Co., Ltd.

EC Business

Scala PLAYce, Inc.

Insurance BusinessNihon Pet Small-amount
Short-term Insurance Company

Incubation & Investment
Business

Scala, Inc
Scala Partners, Inc.
SCL Capital LLC
SCSV-1 Investment Limited Partnership
SOCIALX, Inc.

INTEGRATED REPORT 2023

To ideal company the world needs