Integrated Report | 2021
USEN-NEXT HOLDINGS Co., Ltd.
Brighten the
future
USEN-NEXT HOLDINGS is engaged in the swift and accurate execution of Group management strategies focused on achieving sustainable improvement in both the growth potential and earnings power of its businesses, to this end taking full advantage of each Group company's strengths to realize synergies. These strengths include stable customer bases, multifaceted sales channels, robust follow-up maintenance service structures, a solid network infrastructure, and a rich lineup of video, music, and other content along with a diverse portfolio of human resources as well as the capability to create new services.
- Looking ahead, we will continue striving to improve our value as a corporate group needed by society and deserving of its ongoing expectations.
Dialogue with
Stakeholders
The Company is engaged in the easy-to-understand, timely and fair disclosure of corporate information to a broad range of stakeholders.
• In addition to featuring services provided by each business segment as described in this publication, the | ||
USEN-NEXTHOLDINGS Integrated Report, and other materials, we strive to enhance the content of informa- | ||
Customers and | tion disclosure via the swift issuance of news releases on new businesses and services. | |
business partners | • Not only do we engage in robust customer communications in the course of direct sales, inside sales, and | |
other sales activities, we also work to secure as many contact points as possible with customers and business | ||
partners via the utilization of a robust follow-up maintenance structure backed by our in-house resources. | ||
• We hold periodic financial results briefings that can be viewed online, with the Representative | ||
Director directly explaining such items as overall operating results, the business environment, the | ||
content of management strategies, and progress under the business plan. | ||
Shareholders and | • To ensure vigorous dialogue, we engage in individual meetings with institutional investors | |
investors | and analysts. |
• We participate in various IR conferences and seminars sponsored by securities firms.
• We endeavor to enhance the content of IR-related information disclosure by, for example, additionally disclosing our policies for dividends and other shareholder distributions as well as shareholder benefit programs.
This publication is the first edition of the USEN-NEXTHOLDINGS Integrated Report and is aimed at facilitating stakeholders' deeper understanding of the Group's management endeavors, which center on the sustainable creation of corporate value and other corporate activities in general. In the course of compiling this report, we strove to identify and present information of particular concern to investors and to introduce the Group's vision, initiatives undertaken by each business segment, and the current status of business operations. This report also features articles summarizing such matters as our foundations for value creation supporting the aforementioned endeavors in order to communicate an overview of the Group. Going forward, we will continue working to improve the quality of this report by reflecting opinions voiced by stakeholders in future editions.
Reference Guidelines | The International Integrated Reporting Framework published by the International Integrated Reporting Council (IIRC) | |||
Editorial Policy | ||||
Scope of Reporting | Period: The fiscal year ended August 31, 2021 (September 1, 2020 to August 31, 2021; however, the report includes some | |||
articles on activities undertaken in September 2021 and later) | ||||
Scope: USEN-NEXT HOLDINGS Co., Ltd. and its subsidiaries and affiliates | ||||
Disclaimer on | This report includes opinions, forecasts, and other statements that are based on management's judgment at the time of its | |||
Forward-looking | preparation and therefore involve risk factors and other uncertainties. Accordingly, the Company makes no promises or | |||
Statements | guarantees regarding the accuracy or integrity of information herein. Readers are advised to note that actual results may | |||
vary significantly from these forward-looking statements due to various material factors. | ||||
For Inquiries | USEN-NEXT HOLDINGS Co., Ltd. | Meguro Central Square, 3-1-1, Kamiosaki, Shinagawa-ku, Tokyo | ||
TEL: +81-3-6823-7015 |
Other | • We disclose recruitment information though "GATE," a website targeting job seekers, including potential |
university graduates and businesspeople looking for new opportunities. Moreover, we maintain the "Inside | |
stakeholders | the GATE" webpage featuring in-depth articles that showcase our corporate culture and initiatives via inter- |
views with employees. |
A Message from the CEO . . . . . . . . . . . . . . . . . . . . . . | . | .2 | ||
Value Creation Story | ||||
Corporate History . . . . . . . . . . . . . . . . . . . . . . . . . . | . | 4 | ||
Value Creation Process . . . . . . . . . . . . . . . . . . . . . . . . | . | 6 | ||
The USEN-NEXT Group's Sustainability Initiatives and Growth Strategies | ||||
Toward the Sustainable Creation of Corporate Value (Materiality) . . . . . | . | 8 | ||
Business Overview . . . . . . . . . . . . . . . . . . . . . . . . . | . | .9 | ||
Contents | The New Medium-term Business Plan "Road to 2025" . . . . . . . . . . | 14 | ||
Foundations Supporting Sustainable Growth | ||||
Human Resource Strategies . . . . . . . . . . . . . . . . . . . . . . 16 | ||||
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . 18 | ||||
Members of the Board of Directors and Audit & Supervisory Board . . . . | 20 | |||
Data Section | ||||
Financial and Non-financial Highlights . . . . . . . . . . . . . . . . . | 22 | |||
Financial Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . | . | 24 | ||
Seven-year Summary of Key Financial Data (consolidated basis) . . . . . | . 26 | |||
Corporate Profile . . . . . . . . . . . . . . . . . . . . . . . . . . | . | 28 |
USEN-NEXT HOLDINGS | 1 | Integrated Report 2021 |
Yasuhide Uno
Representative Director, President & CEO USEN-NEXT HOLDINGS Co., Ltd.
A Message from the CEO
Brighten the future
Review of Operating Results for the Fiscal Year
Ended August 31, 2021
In the fiscal year ended August 31, 2021, the COVID-19 pandemic exerted a lingering and significant impact on restaurants and retail stores, which represent our main customer base, as well as on other commercial facilities, SMEs, hotels, and medical institutions. Against this difficult backdrop, the USEN-NEXT Group has nevertheless been able to take full advantage of the increased organizational strength deriving from the management integration, meeting customer needs for non face-to- face and contactless business solutions, work-at-home and remote work systems, and other items. At the same time, the Group has helped its customers promote DX by focusing on providing IoT services for shops. Through these strategies, the Group has successfully seized opportunities arising from an evolving business environment and recorded solid operating results, with the Content Distribution business, which is positioned as a high-growth business, achieving a particularly noteworthy increase in profit. Specifically, net sales increased 7.8% from the previous fiscal year to ¥208,351 million, while operating income rose 43.4% to ¥15,608 million. Moreover, profit attributable to owners of parent grew 63.9% to ¥8,044 million. We have thus registered record-high sales and profit.
Although growth in stay-at-home demand is often cited as the key factor supporting our achievement in the Content Distribution business, we believe that, strictly speaking, the effect of such demand has not been the most significant factor when it comes to direct impact on our operating results for the fiscal year under review. In truth, we have been able to maintain ongoing business growth without experiencing a recoil after a considerable increase in the number of subscribers at the first announcement of the state of emergency declaration. This, we believe, suggests that on-demand content distribution services evolved into something truly essential to consumers in step with changes in lifestyle norms, gaining "citizenship" among other staples of daily life. Although our business environment is engulfed by the extremely intensive competition attendant to a growing market, our services currently constitute a cluster of top contenders.
We also think that our on-demand content distribution services possess considerable growth potential, considering the current ratio of subscribers to the total number of households nationwide. With this in mind, we aim to increase our market share on the back of market ex- pansion. To this end, we need to implement a differentiation strategy as we must pit our offerings against those of other top providers, including foreign-capital competitors with extremely strong original content creation capabilities. In this light, however, we boast an unparalleled, comprehensive lineup of video content encompassing domestic and overseas programs. Furthermore, we are striving to upgrade this lineup into a multifunctional content portfolio that offers users not only video content but a range of manga, novels, magazines, and other e-books. In addition, we are focusing on enhancing live-streaming content and are poised to win new customers by delivering music, combat sports, and other unique programs.
Realizing Outstanding Organizational Strength amid the Pandemic
We believe that the Group's organizational strength has supported its ongoing growth amid the pandemic in two ways.
First, our corporate culture is deeply rooted in our experience of overcoming one crisis after another. Because of this, each employee has a resilient mindset that prompts them to pull together and prevail in the face of adversity.
Second, the Group underwent a reorganization on December 1, 2017 to establish a new management structure, with USEN-NEXT HOLDINGS becoming a holding company. In line with this move, each business segment was assigned to a Group company. The new structure quickly came into its own, realizing its functions to the fullest and enabling these companies to better utilize resources available within the Group even as they focused on pursuing operations targeting their respective customer segments. This has, in turn, enhanced our overall organizational strength. We consider this structure to be a major factor contributing to our increased ability to flexibly align each business with its external environment. For example, despite fallout from the pandem- ic, we have been better positioned than ever to firmly accelerate measures to expand the Content Distribution and Communications businesses in a way that accurately adapts to changes in the business environment. We have also been able to maintain the revenue bases of Store Services- and Business Systems-related operations by paying close attention to the environments surrounding our customers and striking a balance between "offensive" and "defensive" measures.
On the other hand, our efforts to create and expand new businesses are lagging and need to gain an additional momentum.
We are currently pursuing a vision of "becoming a ¥1 trillion corporate group with 100 presidents at 100 operating companies." This vision does not mean that a simple increase in the number of Group companies is all we need. Rather, the most imminent issue is how to nurture each business into a major earnings pillar. Unless we succeed in this en- deavor, it is highly unlikely we will develop high-caliber business leaders capable of navigating our operations into the next generation.
When it comes to nurturing a major business, we deem it extremely important to begin by supporting tangible success, even if at first it seems small. Also, once a high-growth business emerges from among a throng of new businesses under development, we can expect, with a certain degree of probability, to see another follow suit. Our aim is to trigger just that kind of a "chain reaction." Accordingly, we strive to nurture as many seeds of successful businesses as possible as we seek to establish a framework in which the constant creation of new businesses is fueled by such chain reactions.
From the aspect of human resource development, we launched a president candidate discovery program titled "CEO's GATE" to internally solicit applications from individuals who aspire to handle in-house entrepreneurship. This program has drawn approximately 1,000 entries, and around 10 people have been selected as candidates. Having also invited external human resources to participate in the program, we are currently building up a structure for nurturing corporate managers.
Facilitating the Adoption of Freer Workstyles to Achieve a Drastic Improvement in Productivity
Since June 2018, well before the COVID-19 pandemic, the USEN-NEXT Group has promoted a human resource management project titled "Work Style Innovation." Breaking free of conventional concepts of work styles, we are advocating for a freer approach with work styles that suit the needs of individual employees. For example, we have entirely renovated our office spaces by introducing location-free work platforms in addition to enabling the use of flextime without core time and allowing employees to work remotely. These measures were coupled with management
messages aimed at strongly encouraging efforts to improve productivity. Thanks to these initiatives, we have not only overcome challenges arising from the urgent need to introduce COVID-19 countermeasures without a decline in productivity; we have achieved net sales 1.9 times higher than the levels recorded three years ago, even though the number of employees has not changed substantially (then 4,073 and now 4,692). Previously, common wisdom presumed that an increase in sales must entail an increase in headcount. However, we have shifted our mindset and begun to pursue a policy of raising sales without inflating the size of our workforce. In doing so, we focused on helping each employee embrace new ways of thinking and raise their awareness. This was how we drastically improved productivity per employee. Looking ahead, we intend to roll out best practices achieved by sales units in terms of the technology-driven enhancement of operational efficiency to all other business units throughout the Group, including those charged with back-office operations.
The USEN-NEXT Group's Reason for Being
As expressed in our corporate slogan, "Brighten the future," we believe that a corporation is worthy of existing only if it is genuinely needed by society. This has long been a closely-held belief among us, well before businesses' roles in addressing social issues and their reasons for being became subject of public attention. In addition, we have constantly challenged ourselves to act as an agent of change supporting the betterment of society through the businesses we handle. Our focus has always been on navigating the overall direction of our businesses accordingly.
If we were to liken business endeavors to climbing a mountain, achieving record-high net sales and market capitalization can be likened to conquering Everest, the world's highest mountain whose summit has been targeted by numerous alpinists and reached by many throughout the history. Similarly, there have been many corporate leaders who accomplished new heights in operating results. However, we also know that a dozen other formidable peaks are still left uncon- quered. Like ambitious alpinists, we aim to remain a pioneer in terms of blazing a new path in uncharted areas.
In 2000, we became the first in the world to introduce an optical fiber internet service for business. The release of this service was backed by our strong belief that people would sooner or later be enabled to work without commuting. Of course, we knew that whether people embraced remote working-like we have seen today-or not, was a matter to be left to their decisions based on prevailing circumstances. At the same time, we recognized that our role in society was to innovate infrastructure capable of offering workstyle choices and to develop robust services supporting such choices.
This approach remains unchanged. We now aim to become a "social DX company" that offers futuristic solutions to the people of today as we strive to help create a society in which everyone is empowered to efficiently select and enjoy various goods and content via the digital transformation of social infrastructure as whole. To this end, we will pay close attention to consumers' value systems, especially the prevailing attitudes of young people, and remain sensitive to every possible change that could lead to new business opportunities.
Lastly, we are confident that each business handled by the Group has potential for growth in many directions. On the other hand, as we operate in highly competitive business fields, we must remain vigilant and watch out for our rivals who may, at any time, make a big leap forward and leave us behind. Moreover, from the global perspective, domestic business corporations are, in general, deemed to lag far behind competitors overseas. We are therefore acutely aware of the need to secure a robust market share in Japan while maintaining our competitiveness against global peers. Accordingly, we will strive to further raise profitability and enhance our financial position as well as organizational strengths, with all Group members working as one to steadily take a step forward toward the top of an as yet unconquered summit.
Supporting Foundations Sustainability Group's NEXT-USEN The Growth Sustainable Strategies Growth and InitiativesStory Creation ValueCEO the from Message A
Section Data
USEN-NEXT HOLDINGS | 2 | Integrated Report 2021 | USEN-NEXT HOLDINGS | 3 | Integrated Report 2021 |
Value Creation Story
Corporate History
Brighten the future | the from Message A |
CEO |
The USEN-NEXT Group was founded by the now deceased Mototada Uno, who initiated a wired music broadcasting service in 1961 as a private business. He conceived the idea of distributing music content to commercial facilities via coaxial cables after observing shop staff having to manually flip the record on the record player to keep the background music going. His initial business thus helped eliminate the need for this cumbersome procedure well before hassle-free alternatives to record players became widespread. Today, the Group boasts a solid customer base, having secured music distribution service contracts with a total of approximately 700,000 stores nationwide, a number unmatched by any domestic peer.
The Group also became the first in the world to introduce a high-speed, optical fiber internet service for business use in 2001 and in 2007 led the way with the launch of an on-demand video distribution service for personal use. Since the dawn of the internet society and in step with its advance, the Group has expanded the scope of services it offers. Moreover, the Group provides a variety of products and services to store facilities, SOHO and other small businesses, small- and medium-size enterprises (SMEs) and individual users, in an effort to help promote digital transformation (DX).
Under the brand slogan, "Brighten the future," the USEN-NEXT Group underwent management integration in 2017 and is working assiduously to achieve further growth.
1961 | 2006 |
Founded as a cable-based music distribution business | Made ALMEX INC. a wholly owned subsidiary via stock swap |
(currently the Store Service business): | (currently the Business Systems business) |
1998 | 2007 |
Yasuhide Uno assumed the office of | Initiated Gyao Next (currently U-NEXT), a video distribution service that |
Representative Director and President | enables users to enjoy a broad range of content on regular TV sets: |
Made a new start as the USEN-NEXT Group, with USEN-NEXT HOLDINGS Co., Ltd. serving as a holding company and overseeing 14 business companies under its umbrella
Content
Distribution
business
Sustainability Group's NEXT-USEN The Strategies Growth and InitiativesStory Creation Value
2001
2013
Foundations Sustainable
Listed in the NASDAQ Japan Index of the Osaka Stock Exchange
Introduced an optical fiber broadband internet service for businesses (currently the Communications business), the first service of this kind in the world
Listed in the JASDAQ section of the Tokyo Stock Exchange upon the merger of stock exchange market categories
2016Launched "USEN Denki" (currently the Energy business), an energy-sales business based on an alliance with the Tokyo Electric Power Company (TEPCO) Group
2017
U-NEXT underwent management integration with USEN and was rebranded USEN-NEXT HOLDINGS:
2020
Announced "USEN IoT PLATFORM," a concept aimed at providing comprehensive assistance to stores seeking to utilize IoT and pursue DX, transcending the conventional scope of music distribution-related services:
Store Services
business
Communications
business
A customer base
• consisting of more |
than 900,000 stores |
Robust network |
• infrastructure |
A rich lineup of video |
• and music content |
• In-depth insight |
Supporting Growth
Section Data
The USEN Broadcasting Center ("Request Center") | A video distribution service available via the use of | In conjunction with the change in its market listing, |
launched two-channel music broadcasting | a set top box, a device that attaches to a television | the Group carried out commemorative campaigns |
and other events |
Business Systems
business
into technologies |
Outstanding |
• capabilities to create |
new services |
2010 | 2014 |
Took over the U-NEXT content distribution service as well as a sales agent | Listed in the Mothers section of |
business involving an optical cable internet service for personal use and other | the Tokyo Stock Exchange |
services (currently the Content Distribution business and the Communications | 2015 |
business) from USEN via an absorption-type company split | |
Changed listing to the First Section of the | |
Tokyo Stock Exchange: |
Energy
business
A one-stop solution designed to help realize IoT-driven, "smart" store management
USEN-NEXT HOLDINGS | 4 | Integrated Report 2021 | USEN-NEXT HOLDINGS | 5 | Integrated Report 2021 |
Value Creation Story
Value Creation Process
The launch of a cable-based broadcasting service, which marks the Group's founding, turned an unconventional idea into something essential to daily life. Building on its early success, the USEN-NEXT Group developed one business after another, taking full advantage of its outstanding capabilities to create new services as well as its superior understanding of new technologies. Our business strengths are backed by a built-in framework derived from these endeavors that today enables us to address a range of social needs and issues in a comprehensive manner and obtain feedback from contact points with diverse customer groups.
Our Strengths to | Capital to Be Utilized | Value Creation Cycle |
Be Applied | ||
Stepping up Initiatives to Address SDGs through Our Business
• USEN CORPORATION was certified by the | • The "Hitosara" customer-attraction service for restaurants provided via a gourmet information | ||||||||||
Small and Medium Enterprise Agency as an | website run jointly by the NPO TABLE FOR TWO International and USEN CORPORATION, has | ||||||||||
"organization assisting management innova- | been donating ¥20 per reservation to the former since April 2013. This amount is equivalent to | ||||||||||
tion, etc." in recognition of its store | the price paid for a typical lunch provided to students by schools in developing nations. As of | ||||||||||
assistance business initiatives. | September 2021, the number of meals these donations made possible exceeded 287,000. | ||||||||||
Moreover, USEN CORPORATION was named a | |||||||||||
"Gold Partner" by the NPO in 2020. | |||||||||||
Value to Be Delivered
Story Creation ValueCEO the from Message A
A customer base
• consisting of more |
than 900,000 stores |
Manufacturing capital
- A music distribution network boasting the largest market share in Japan
- A video distribution network free of device-related constraints
- A product manufacturing supply chain encompassing regions in Japan and abroad
Human capital
Consolidated number
of employees:
5,000
Sales personnel:
2,000
Field engineers:
1,000
Content
Distribution
business
Sales proposals, web-based promotion
n | ||
a | ||
l | ||
P |
Store Services
business
D o
Signing of contracts, the initiation of use
Business Systems
business
Follow-up & |
maintenance |
Social value
Transform shops and venues in
which people gather and
update entire towns Increase the joy and
inspiration felt in the course
of daily life
Become a
"social DX company"
Supporting Foundations Sustainability Group's NEXT-USEN The Growth Sustainable Strategies Growth and Initiatives
Robust network |
• infrastructure |
A rich lineup of video |
• and music content |
In-depth insight |
• into technologies |
Outstanding |
• capabilities to create |
new services |
Middle- and back-office staff:
2,000
Social capital
Number of agents and
partner companies:
More than 10,000
Financial capital
Total assets:
¥140.0 billion
Total capital:
¥33.0 billion
Intellectual capital
Accumulated knowledge obtained over the course of more than 60 years
(Explicit and implicit
knowledge)
(As of August 31, 2021)
Communications | t |
business | c |
A | |
Acquisition of | |
feedback on unmet | |
needs and issues |
• Corporate governance
Brighten the
Four Priority | ||||||||||||||||||||
Environmental | Social | |||||||||||||||||||
Contribute to reduction in | Ensure mutual prosperity involving all stakehold- | |||||||||||||||||||
environmental burden and the creation | ers via the creation of a working environment in | |||||||||||||||||||
of a recycling-oriented society | which everyone can work with enjoyment | |||||||||||||||||||
h | C | ||
e | |||
c | |||
k |
Energy business
• Compliance
future
Materiality Issues
Governance | Business | ||||||||||||||||||||
Pursue sound and highly transparent | Make people happier, help their communities | ||||||||||||||||||||
management by constantly updating | flourish and strive for a better society via the use | ||||||||||||||||||||
our approach | of technology | ||||||||||||||||||||
Economic value
Medium-term business plan
"Road to 2025"
- Be a source of added value as a provider of digital transformation support for customers with the objective of functioning as a Social DX Company
- Use organic growth of current businesses to make the USEN-NEXT Group even more profitable
- Aim for even faster growth by using financial leverage for investments for M&A and other actions
- Execute a multifaceted financial strategy while maintaining financial discipline
- Distribute earnings to shareholders with stability and consistency
Section Data
USEN-NEXT HOLDINGS | 6 | Integrated Report 2021 | USEN-NEXT HOLDINGS | 7 | Integrated Report 2021 |
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
USEN NEXT HOLDINGS Co. Ltd. published this content on 01 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 February 2022 15:47:38 UTC.