COMPANY RESEARCH AND ANALYSIS REPORT

USEN-NEXT HOLDINGS Co., Ltd.
9418
Tokyo Stock Exchange First Section

13-Dec.-2021
FISCO Ltd. Analyst

Kimiteru Miyata

FISCO Ltd.
https://www.fisco.co.jp

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Through the effects of the integration, achieved the targets in the medium-term management
plan three years ahead of schedule....... ......................................................................................................

01

2. Strengths of the Group as a whole include a deep customer base and sales capabilities,
such as for music distribution . . ...................................................................................................................

01

3. The excellent FY8/21 results will connect to the next profit structure and cash flows..................................

01

4. In FY8/22, operating profit is forecast to effectively increase by double digits, and will
formulate a new medium-term management plan. ......................................................................................

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

03

2. History................................................... ......................................................................................................

03

3. Business overview................................. ......................................................................................................

04■Financial results trends---------------------------------------------------------------------------------------------------------------------------------------- 09
1. FY8/21 results..............................................................................................................................................

09

2. FY8/21 results by segment..........................................................................................................................

10

3. Trends in cash flows.. ............................. ......................................................................................................

15

4. FY8/22 outlook...................................... ......................................................................................................

17■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 19
1. Dividend policy............................................................................................................................................

19

2. Shareholder benefit program.......................................................................................................................

20■Information security------------------------------------------------------------------------------------------------------------------------------------------------ 20

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/█ Summary
Expectations and possibilities have further widened following theexcellent FY8/21 results
1. Through the effects of the integration, achieved the targets in the medium-term management plan three
years ahead of schedule
USEN-NEXT HOLDINGS <9418> provides equipment and services needed in the operation of stores and facilities
with music distribution as the main area to commercial stores such as restaurants and retailers, and facilities suchas hotels, hospitals, and offices. The Company also provides “U-NEXT,” a flat-rate content distribution service forindividuals. USEN and U-NEXT reintegrated in December 2017. The reintegration aims to circulate funds from thelucrative music distribution business, which is a source of stable earnings, to promote growth in businesses with
substantial potential, such as the flat-rate content distribution service, and others. Another major objective is tocreate Group synergies by cross-selling mainstay products of Group companies by closely linking Group company
strengths, including the customer base and sales channels of each company. Even during the COVID-19 pandemic
in FY8/21, it can be said that the integration had major effects, including that the Company achieved the targets inthe medium-term management plan three years ahead of schedule.
2. Strengths of the Group as a whole include a deep customer base and sales capabilities, such as for music
distribution
The Company operates five businesses. In the store services business, it distributes music to commercial stores andretail facilities, manages music copyrights, and supplies all types of solution services related to store management,such as IoT products and peripheral services. In the communications business, the Company engages in sales
and services particularly with respect to ICT for corporate customers and optical line service for commercial stores.
The business systems business provides automated payment machines and front desk management systems tohotels and hospitals, among other users. The content distribution business distributes videos, e-books, and otherdigital content to individuals. In the energy business, the Company sells electricity and gas, which are products
supporting the store services business. Each respective business has its own strengths, including that the content
distribution business has the industry’s leading content lineup, while the strengths of the Group as a whole include
a deep customer base and sales capabilities, such as for music distribution.
3. The excellent FY8/21 results will connect to the next profit structure and cash flows
Despite the COVID-19 pandemic, the FY8/21 results were excellent, with net sales of ¥208,351mn (up 7.8% year
on year (YoY)) and operating profit of ¥15,608mn (up 43.4%). In particular, in the content distribution business,
the Company actively progressed various measures including enhancing the video and e-book product lineup andstrengthening services, and as a result, captured the greatly increased demand spurred-on by nesting (stay-at-home)demand and entered a fully-fledged growth phase. Also, even those businesses negatively impacted by COVID-19
utilized their strengths to implement measures tailored to customer needs and were able to minimize the negative
impact to the greatest possible extent. As a result, the Group’s customer assets are increasing significantly, and it
is considered that this will be the driver that boosts the Company’s earnings in the future. In conjunction with this,
EBITDA, which was already at a high level, is showing rapid growth, and is expected to lead to the expansion ofvarious initiatives such as investments, repayment of loans, and returns to shareholders.

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Summary

4. In FY8/22, operating profit is forecast to effectively increase by double digits, and will formulate a new
medium-term management plan
For the FY8/22 results, the Company is forecasting net sales of ¥220,000mn and operating profit of ¥17,000mn.
It has not published YoY comparisons, mainly due to the effects of adopting the Accounting Standard for Revenue
Recognition, etc., but effectively the forecast is for operating profit to increase by double digits. As the Group’s
management policies, it has set (1) Respond to the environmental changes in the with- and post-COVID-19 periods
and maintain the growth trend, (2) Formulate a new medium-term management plan to replace the previous medium-term management plan whose targets were achieved three years ahead of schedule and an integration report,and (3) Take on the challenge of achieving non-consecutive growth through strengthening human resources andM&A, for which it has previously been cautious. It would seem to be aiming for net sales of ¥1tn in the long term
through (3), but at the present time, it is thought to be aiming for steady short- to medium-term growth through (1)and (2). However, it is difficult to anticipate what conditions will be in the with- and post-COVID-19 periods, so theimpression is that the forecasts are somewhat conservative.
Key Points
Due to COVID-19, content distribution is rapidly growing, while store services are also leveraging their strengths
In FY8/21, operating profit increased significantly and the targets in the medium-term management plan wereachieved three years ahead of schedule• In FY8/22, operating profit is effectively forecast to increase by double digits, and will once again formulate amedium-term management plan••

Results trends
Net sales (left)（¥mn）

Operating profit (right)

250,000
208,351

220,000

193,192

200,000

15,608

107,932
100,000

25,00020,000175,769

150,000

50,000（¥mn）

17,00015,00010,00010,883
8,239

5,000

6,006

0

0
FY8/18FY8/19FY8/20FY8/21

FY8/22 (E)Note: FY8/18 was an eight-month fiscal year. For USEN, FY8/18 was a nine-month fiscal year from December to August. The
Accounting Standard for Revenue Recognition, etc. has been applied from FY8/22.
Source: Prepared by FISCO from the Company’s financial results

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/█ Company profile
Wants to continue to be a corporate group that meets the
expectations of and is needed by society
1. Company profile
The Company provides assistance tools, solutions, and other products and services needed to operate storesand facilities, particularly music distribution (its founding business), through Group companies under a holding
company format to restaurants, retailers, other commercial stores, and various facilities including hotels, hospitals
and offices. It also runs a service that distributes videos, e-books, and other digital content under a flat-rate program
to individuals. The Company creates synergies by engaging in cross-selling of Group company mainstay products.
This involves leveraging the respective strengths of such companies, particularly in terms of the customer baseconsisting of over 900,000commercial stores and other such enterprises, music and video content and membership,
expertise in assisting commercial stores, network infrastructure, and sales capabilities such as direct sales platforms,
telemarketing, and agency networks. It also promotes a dynamic growth strategy that incorporates next-generation
technologies such as 5G, IoT (Internet of Things), and AI (Artificial Intelligence). In this way, the Company is steadily
implementing its brand slogan of “Brighten the future,” which expresses its desire to continue to be a corporategroup that meets the expectations of and is needed by society by providing services necessary for society.

Based on the results of the integration, has entered a new businessstage
2. History
Mototada Uno founded USEN in 1961 as Osaka Yusen Broadcasting and subsequently built a wired broadcast
network nationwide. When Yasuhide Uno took over as President in 1998, he promoted store assistance services andbroadband services using the Company’s existing customer base and infrastructure, and pursued diversification anddigitalization, including video distribution, and other content provision services. U’s Broad Communications (now,U-NEXT), a broadband service provider, took over the paid TV video distribution service and sales agent businessfor optical lines for individuals and other communication lines and spun off from USEN in December 2010. However,
USEN and U-NEXT reintegrated in December 2017 with the aim of leveraging respective customer bases andother management resources. Using this reintegration as an opportunity, the Company is currently in the processof building a robust revenue base which has involved concentrating shared Group functions and promoting thecreation of synergies.
The novel coronavirus pandemic, which spread at the start of 2020, struck a huge blow to society and economies on
a global scale. It impacted many companies in Japan, and the Company’s customers, many of which are SMEs, andthe Company itself were no exception to this. In this environment, the Company’s strong sales capabilities becamea major place of refuge for SMEs in trouble. Also, it dispersed business risk from the effects of the portfolios within
the Group and within the businesses, by for instance in content distribution, a market which is rapidly expanding
spurred-on by nesting (stay-at-home) demand, it implemented proactive management so as not to miss the business
opportunity. As a result, profits grew significantly in FY8/21, and the targets in the medium-term management plan
were achieved three years ahead of schedule. This would seem to be a major result of the integration and it can besaid that the Company has entered a new business stage.

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Company profile

The content distribution business has started to grow rapidly, while
the other businesses are also leveraging their strengths
3. Business overview
The Company has five business segments: store services, communications, business systems, content distribution,and energy. It mainly consists of businesses that cater to companies and individual business owners and othersmaller commercial stores and supplies them to these customers through Group companies. The store services
business* provides music distribution services to commercial stores including restaurants, retail stores and various
facilities, engages in sales and installation of sound equipment, manages music copyrights, and provides store IoT
and other store operation solution services. The energy business sells these customers low-cost electricity and gas.
The business systems business provides automated payment machines and front desk management systems tohotels, hospitals, and other customers, and sells devices and provides maintenance services. The communications
business sells ICT products and services for corporate customers and optical line service for commercial stores.
In the content distribution business, it distributes digital content, such as videos and e-books, to individuals.
Furthermore, the Company is pursuing not only cross-sales and synergies among its business but also profitability
improvement in its various businesses by shifting from one-time profit at the time of the sale to recurring income
obtained through monthly usage fees.
*	Effective from FY8/21, the store services business has integrated the former media business, which offers “Hitosara”
gourmet food website and other services that use media to attract customers.

Business description of consolidated subsidiaries
Business

Operating company

Business description

Store services
business

USEN, CANSYSTEM, USEN Media, USEN FB Innovation,
USEN Techno-Service, USEN-NEXT Design, U’S MUSIC

Provides, sells, and implements store solutions including
for music distribution, and conducts a customer attraction
assistance business, a comprehensive assistance businessfor restaurants, call center outsourcing operations,management and development of music copyrights, etc.

Communications
business

USEN NETWORKS Co., Ltd., U-NEXT Co., Ltd., USENICT Solutions CORPORATION, USEN Smart WorksCORPORATION, USEN-NEXT LIVING PARTNERS Inc.,
U-MX co., LTD., Next Innovation Co., Ltd., Y.U-mobile Co.,
Ltd., and two other companies minimini-NEXT Corporation(equity-method affiliate)

A sales agency for broadband internet lines that proposesand sells office ICT environment builds, provides the “y.umobile” MVNO service, and provides and sells broadband
internet lines for individuals

Business systems
business

ALMEX INC.

Develops, manufactures, sells and maintains business
management systems and automated payment machines forhotels, hospitals, golf courses, etc.

Content distribution
business

U-NEXT, TACTProvision, operation, and sales of “U-NEXT” movies
distribution service to individuals

Energy business

USEN CORPORATION

As part of the lineup of services for business sites andcommercial facilities, sells energy-saving services, such as
for high and low voltage electric power and gas

USEN-NEXT Financial (equity-method affiliate)

Credit card business, comprehensive credit purchasearrangement, and personal credit purchase arrangementbusiness

13 other companies
Source: Prepared by FISCO from the Company’s convocation notice, website, and financial results

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Company profile(1) Store services business
The store services business provides solution services mainly related to the Group’s mainstay music distribution
business, which is the Company’s original business, and to store management. The Company has more than 50
years of history in the music distribution business, and it provides the “U MUSIC” service that broadcasts music
and information for stores and facilities throughout the country, ranging from specialist channels, such as for
J-POP and Western music, through to request channels. The majority of its customers are commercial stores,
and a particularly high percentage of them are restaurants, retailers, beauty salons, while there are also a wide
variety of chain stores, ranging from nationwide chains to community-based chains. The Company has around
10mn songs and AI can make playlists suited to any type of industry or business format. It also provides 1,000
types of store announcements for customers, employees, and others as part of the standard package. The Grouphandles everything ranging from installation and construction through to after-sales care, enlisting its greatest
business strength of a strong support network consisting of 170 locations nationwide as well as a workforce ofmore than 2,000 direct sales and installation professionals. In addition, when considering that for a monthly feeof ¥5,000, customers can eliminate tasks such as installing CD players, continuous software purchases and songselection, and dealing with troublesome copyrights, the cost performance is extremely high, which is the reason forthe service’s long-lasting popularity. As a result, it currently has 700,000 customers and boasts an overwhelming
share in the store and facility BGM market at more than 90%. The Company leverages this potent revenue baseto support the Group’s growth strategy with funding.
As services peripheral to the music distribution business, the Group provides various solution services for store
management, including products and services relating to stores, installation and construction of equipment andinteriors, music copyright management, support to acquire human resources, development support, building
business environments, and sales promotions. In recent years, companies in the retail and service industries havebeen rapidly shifting to IoT technologies and engaging in digital transformation (DX) initiatives amid a scenario
where use of wireless local area networks is becoming increasingly prevalent. However, as the hurdles for shifting
to IoT and DX are high for SMEs to introduce cutting-edge equipment and systems by themselves, the Company ismoving ahead on providing a one-stop service for them. The Company refers to this as its “USEN IoT PLATFORM
Vision,” which entails one-stop store support services combining products and services encompassing POS
cash register, AI camera, self-order, and cashless payment technologies around an axis of music distribution.
The effectiveness of this business has been confirmed during the COVID-19 pandemic, becoming one of thebusinesses driving the Company’s growth and boasting a customer base for store assistance services that has
increased rapidly, from around 100,000 in FY8/19 to around 200,000 at present. It is evolving and expanding the“USEN IoT PLATFORM” lineup on a daily basis, and most recently, it has launched items including “USEN My Menu
Premium/U Regi Ticket & Pay,” a ticket vending machine that can be used even as an order and self-payment
machine; “U AIR,” a Wi-Fi service for work that enables the internet to be used without requiring line construction;and “U MUSIC,” which enables the optimal BGM to be compiled for each store by AI through the integration ofdata on store BGM accumulated over many years. It is also developing services that connect these work devices
and its in-house wireless LAN resources to the latest technologies. In addition, from its abundant lineup, it isdeveloping “USEN Marutto Store DX,” a store DX package service, and progressing sales for new OPEN storesthat have a high set contract rate.

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Company profile

The “USEN IoT PLATFORM Vision”

Source: The Company’s results briefing materials(2) Communications business
The communications business conducts sales agency operations for broadband internet lines, proposes and sells
the building of office ICT (Information and Communication Technology) environments, provides the “y.u mobile”
MVNO service, and provides and sells broadband internet lines for individuals. For the building of ICT environments, it provides cloud services and mobile services, such as Google and Cybozu <4776>, and ICT products andsolution services linked to SaaS, including data center services. In the ICT industry, which is constantly changing
and developing, the strengths of this business are that it provides services to more than 40,000 companies andcontinues to grow stably from the wide breadth of its service lineup through a multi-vendor strategy, while alsooffering highly convenient direct sales through which it can respond to each customer’s needs relating to network
environments through a single customer desk. These initiatives have been highly evaluated and it seems they
have enabled this business to capture demand during the COVID-19 pandemic, such as relating to teleworking.
With regards to broadband internet lines as well, it is progressing the switch to its own optical lines that are highly
profitable from commission fees and aiming to expand recurring-income earnings. In addition, for commercial
stores, which are increasing as customers of the Group’s own lines, it is progressing up-selling of IoT/DX products.
(3) Business systems businessSubsidiary ALMEX INC. solely handles the business systems business. This business supplies automated payment
machines and lodging facility management systems to business hotels, city hotels, and leisure hotels, automatedpayment machines and automated patient check-in machines to general hospitals and other medical institutions,
automated payment machines and check-in machines to golf courses, and order terminals and operating systems
for restaurants, as well as labor-saving and other equipment to meet customers’ needs. It also sells orderingterminals and operating systems to restaurants. While automatic payment machines might be considered anarea for major electric equipment manufacturers, ALMEX holds the top market share, including shares of 85%
for leisure hotels, 65% for business hotels, 65% for large medical entities, and 70% for golf courses. As a fablessmanufacturer, it develops, sells, and provides maintenance for equipment and systems on its own, a strengththat makes it a unique presence within the Group. In addition, it is not only improving the efficiency of customers’
operations, such as through labor saving, it has also established a strong reputation for developing products thathave a perspective of convenience for facility users, which is a significant differentiating factor. This is leading to
the expansion of recurring-income earnings through optional software services.

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Company profile

Recently, in the “Sma-pa Series” of total solutions for medical institutions, “Sma-pa Myna Touch,” which was market launched in anticipation of the use of personal ID cards as insurance cards from October 2021, is acquiring an
excellent reputation. It is a card reader with facial recognition that supports the online confirmation of qualifications
and that is equipped with proprietary functions enabling the reading of various card-based certificates, such as
contactless frames and public-expense healthcare vouchers. For the Company, this product represents a toolfor developing business in the untapped market of small-to medium-scale clinics. This strong performance forhospitals is to a certain extent covering for the struggles of various hotels in the severe COVID-19 environment.
But even hotels have needs for further labor-saving, so needs for the Company’s devices remain as strong as ever.
“Sma-pa Myna Touch”

Contactless frames

Source: Reprinted from materials provided by the Company(4) Content distribution business
Through “U-NEXT,” the Company provides content distribution services to individuals. For a monthly fee, users canaccess content ranging from movie or TV videos to e-books and music via the internet on many types of devices,
including TVs, PCs, and smartphones. Its most prominent feature is an industry-leading content lineup (basedon a survey by GEM Partners in September 2020). The service offers more than 220,000 items with unlimited
viewing and fast distribution of the latest content. Furthermore, since the service includes approximately 700,000
e-books as well, users can access two types of content, “viewing” and “reading,” with just a single contract. Also,
the monthly fee of ¥2,189 (including tax) for the Company’s service may seem high at first, but it’s actually not that
expensive. After factoring in the provision of ¥1,200 worth of points each month, the real fee is only ¥989 (includingtax), and on top of that, a single account can be viewed by up to four people. Moreover, it is the only major
service provider to deliver adult content, the importance of which can be understood by the overwhelming victoryof TSUTAYA Co., Ltd. compared to US-based major Blockbuster LLC during the growth years of video rental.
Due to these clear differentiation factors, the business has started to rapidly grow in line with the market due
to nesting demand during the COVID-19 pandemic. In addition to the Company, the market shares of Amazon<AMZN> and Netflix <NFLX> are also growing rapidly as they are investing enormous sums of money into
producing original content, and it can be said that it will be difficult for other companies to compete with them tocontinue to provide video distribution services. In order to maintain its position, the Company has entered into a
series of major contracts with exclusive distribution rights with overseas content holders to enable it to compete
against Amazon Prime Video and Netflix. In addition, it is developing its “ONLY ON” strategy to strengthen theworks it exclusively distributes on the Can Only Watch on “U-NEXT” and All You Can Watch Only on “U-NEXT”
services, while in music distribution, it is also progressing an investigation for the fully fledged development of live
music distribution that utilizes its various relationships. That said, the video distribution market has already enteredan era in which users concurrently use multiple distribution services, and it appears that a pattern is emerging inwhich users enter into a contract with the Company, which has a competitive advantage in its span of content,
at the same time as entering into a contract with Netflix, whose strength is in original content.

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Company profile

Works through the “ONLY ON” strategy

Source: Reprinted from the Company’s press release(5) Energy businessIn the energy business, the Company engages in business launched to address the liberalization of electricity salesin Japan, which involves selling high-voltage and low-voltage electricity and city gas procured on a relative basis
from Tokyo Electric Power Company Holdings, Inc. <9501> (hereinafter, TEPCO), with which it has a businessalliance. It then sells such electricity and city gas to commercial stores and retail facilities located outside of the
TEPCO area. It also offers consulting services such as for energy savings. This service functions as a catalyst for
acquisition of new customers in the store services business and cross-selling. The distinguishing characteristicof this business is that the Company is able to consistently achieve positive spread, albeit at a low profit margin
given the resale nature of the business. Whereas the Company plans to expand its electricity and city gas sales
which are to serve as a “hook” offering going forward, it has found itself faced with intensifying competition against
regional power companies in various locations when it comes time for contract renewals. Given this situation,
the Company has embarked on sales initiatives involving low-voltage power within the TEPCO area, and has
accordingly been fortifying efforts in conjunction with TEPCO while also developing collaborative products where
the Company’s services for stores are combined with electric power.
(6) Other business (financial business)
Besides the five main businesses, the Company established USEN-NEXT Financial, a joint venture with Shinsei
Bank, Limited, and started offering financial services in August 2020. The services include business credit (installment credit and installment payments) for individual business owners and companies that have transactions with
the Company, including customers who are starting new businesses, and developing a business credit card service. Business credit is a service that can evenly distribute the financial burden for facilities and equipment needed
to start a business over installment payments. The business credit card can be used to pay for procurement andexpenses and improves the efficiency of spending management by consolidating expenses on the credit card.
These services are likely to greatly boost convenience for the Company’s customers. USEN-NEXT Financial iscurrently moving ahead on providing other products too, such as vendor leasing and lending.

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/█ Financial results trends
Spurred-on by COVID-19, each business is leveraging theirrespective strengths
1. FY8/21 results
In the FY8/21 results, net sales were ¥208,351mn (up 7.8% YoY), operating profit was ¥15,608mn (up 43.4%),
ordinary profit was ¥14,768mn (up 46.3%), and profit attributable to owners of parent was ¥8,044mn (up 63.9%),
so profits increased significantly. Compared to the initial forecasts, the results were above their respective forecasts,
net sales by ¥6,351mn, operating profit by ¥4,608mn, ordinary profit by ¥4,568mn, and profit attributable to ownersof parent by ¥3,044mn.
The COVID-19 pandemic has had both positive and negative effects for the Company. With market expansion
gaining momentum against the backdrop of the increase in nesting demand, the content distribution businesshas expanded its video and e-book product lineup and strengthened services. It has accelerated the expansionof business scale by progressing investment, including to acquire new customers and in sales promotions. For
customers in the restaurant, tourism, and accommodation industries that have been severely impacted by the
pandemic, it is leveraging Group synergies and providing timely assistance to improve efficiency through DX for store
management and administration. Also, for offices in which remote working is increasingly being used, it is building
ITC environments, offering assistance for new ways of working tailored to these ICT environments, and providing
products and services for hotels and hospitals that meet the societal needs of avoiding face-to-face encountersand direct contact. Through these efforts, it has been able to minimize the negative impact of the pandemic to theabsolute minimum.
Also, through these measures, the Group’s customer assets rapidly increased in FY8/21, from 864,000 to 912,000
for commercial stores, including store services; from 19,000 to 33,000 for SMEs, hotels and hospitals, such as ICT
and Myna Touch for corporations; and from 1.69mn to 2.65mn for individuals, including U-NEXT. So even during
the COVID-19 pandemic, the Company was able to achieve not only a major increase in profits, but also resultsthat were significantly higher than forecast. These customer assets are not temporary ones and it is consideredthat they will become the key factor boosting the Company’s consolidated earnings in the future. In conjunction
with this, EBITDA has also shown rapid growth from an already high level, against the backdrop of businesses withstable earnings and amortization of goodwill, and it is thought that this will lead to the expansion of initiatives suchas investments, repayment of loans, and returns to shareholders.
FY8/21 results(¥mn)
FY8/20FY8/21

Rate of change

Results% of net sales

Results% of net sales

Net sales

193,192

100.0%

208,351

100.0%

7.8%

Gross profit

76,58639.6%

81,579

39.2%

6.5%

SG&A expenses

65,70334.0%

65,971

31.7%

0.4%

Operating profit

10,883

5.6%

15,608

7.5%

43.4%

Ordinary profit

10,093

5.2%

14,768

7.1%

46.3%

Profit attributable toowners of parent

4,909

2.5%

8,044

3.9%

63.9%

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

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09 20

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Financial results trends

Content distribution is rapidly expanding and store services areleveraging their strengths
2. FY8/21 results by segment
In the FY8/21 results by business segment, the store services business saw net sales of ¥56,112mn (down 0.1%
YoY) and operating profit of ¥8,590mn (down 2.5%), the communications business saw net sales of ¥48,179mn (up9.5%) and operating profit of ¥4,534mn (up 12.4%), the business systems business saw net sales of ¥18,925mn(down 6.7%) and operating profit of ¥2,898mn (down 16.0%), the content distribution business saw net sales of¥59,956mn (up 30.7%) and operating profit of ¥5,731mn (up 667.7%), and the energy business saw net sales of¥27,926mn (down 5.2%) and operating profit of ¥354mn (up 258.6%). It appears that results varied depending on
the business, but when considering factors such as that the content business made a leap forward and that otherbusinesses were able to secure earnings of a certain level even in the severe COVID-19 environment, it can be said
that the inter-business synergies and management strategies were effective.
FY8/21 results by segment (before adjustment)(¥mn)[Net sales]

FY8/20Results

FY8/21% of net sales

Results% of net sales

Rate of changeStore services business

56,19029.1%

56,112

26.9%

Communications business

43,98422.8%

48,179

23.1%

9.5%

Business systems business

20,291

10.5%

18,925

9.1%

-6.7%

Content distribution business

45,863

23.7%

59,956

28.8%

30.7%

Energy business

29,453

15.2%

27,926

13.4%

-5.2%

Results

Profit ratio

Results

Profit ratio

Store services business

8,808

15.7%

8,590

15.3%

-2.5%

Communications business

4,034

9.2%

4,534

9.4%

12.4%

Business systems business

3,451

17.0%

2,898

15.3%

-16.0%

Content distribution business

746

1.6%

5,731

9.6%

667.7%

Energy business

98

0.3%

354

1.3%

258.6%[Operating profit]

FY8/20FY8/21-0.1%

Rate of change

Note: Store services business figures for 1H FY8/20 have been prepared by adding those of the former store services businesswith those of the former media business due to integration of the former media business into the store services business
effective from FY8/21.
Source: Prepared by FISCO from the Company’s financial results

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10 20

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Financial results trends(1) Store services businessAlongside the rapid spread of the novel coronavirus pandemic since November 2020, the declarations of a stateof emergency and the priority measures, such as to prevent the spread of infections, have been implemented
for long periods in regions throughout the country. Therefore, restaurants in particular have been required to act,
including reducing working hours and exhibiting self-restraint on providing alcoholic drinks, and their businessenvironments have continued to be severe. For these customers, the Company has been ascertaining their needs
and providing services with a sense of speed, and leveraging Group synergies to provide them with comprehensive
assistance. In conjunction with this, it has worked to increase sales including of “USEN Marutto Store DX,” a totally
digitized service to meet all the work needs of stores; “U Regi,” a Cloud POS register service; “U Pay,” a payment
service; “U AIR,” a work-use Wi-Fi service that does not require line construction; and “U MUSIC,” which uses
AI to compile the optimum BGM. Also, for businesses that handle food such as restaurants, it has developed“Store HACCP,” which makes it easier to carry out food hygiene management and store records in accordancewith the revised Food Sanitation Act. These services promote improved efficiency, labor saving, and contactless
operations for all types of work in customers’ operations, from the front office to the back office, and they canbe said to be essential DX in both the with- and post-COVID-19 periods. In July 2021, the subsidiary USEN was
certified by the Small and Medium Enterprise Agency as an Assistance Institution for Management Innovation,etc., and going forward, this is likely to further increase the trust placed in and the name recognition of USEN’s
store assistance services.
In 3Q FY8/20, when the first declaration of a state of emergency was issued, the number of customers cancelling
contracts temporarily increased and the net number of contracts declined. But by 4Q FY8/20, the net number ofcontracts had quickly returned to an upward trend and since then, the increase in the number of contracts has
accelerated and by 4Q FY8/21, it had exceeded the number prior to COVID-19 and reached 912,000 contracts.
Looking within the number of contracts, the net number of music distribution contracts continues to remainunchanged, but the number of contracts for other services to stores is increasing. This means that the bundle
rate (the number of contracts per store) is rising and that net sales per store will be increased by leveraging thecustomer base for store distribution services, which accounts for a high share, and it can be said that these trends
were in line with the Company’s objectives at the time of the integration. In FY8/21, the former media business was
integrated into this business, and it is being conducted mainly consisting of the “Hitosara” and “Tabelog” customer
attraction assistance services for restaurants, and therefore severe conditions are continuing. But in this situation,
the Company has strengthened new assistance for restaurants, including enabling reservations for “Hitosara”
alliance restaurants to be made from Instagram and support movies via digital OOH (advertising media using
digital signage) to major cities nationwide. This business’s operating profit declined slightly, but the factors behind
this included upfront investment, including in the POS register with no initial costs campaign towards the period
end, online promotions, and a sales assistance fund. On the point that the upfront investment will lead to policies
in the next period, earnings in this business can be evaluated as trending extremely firmly when considering thatamong the many struggling restaurants, there are some that have been able to secure a certain level of profits.

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11 20

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Financial results trends

Store services business – Number of contracts per quarter

Note: Other services to stores is the total of communication lines, POS cash register services, Wi-Fi services, IP camera
services, app creation services, and gourmet food website services. In the event of one customer having contracts for
multiple services, each service counts as one.
Source: The Company’s results briefing materials(2) Communications businessThis is inherently a strong business, while sometime its services are proposed as a one-stop service together
with BGM services. It has been able to smoothly capture needs for ICT environments that have further increased
due to COVID-19, including for building excellent office environments, and for network-related, cloud, and data
center services. It can be said to be a business in which the effects of COVID-19 have been comparatively positive,
including thanks to the expansion of teleworking demand and the increasing use of online meetings. So even in
the current situation, sales are steadily growing, including of ICT products and services for corporations for which
the business scope has been expanded to educational facilities and public organizations, and of “USEN Hikari
plus,” which is the Company’s own optical lines for commercial stores for which it is progressing the shift fromone-shot line commission fees to running-income-type monthly fees. In profits, on the one hand, line commission
fees decreased as the Company strengthened sales of its own optical lines, but ICT for corporations grew andthe amortization of goodwill (¥300mn in 1H FY8/21) was completed, so it was able to secure an increase inoperating profit.
Trends in quarterly results of ICT for corporations and theCompany’s own optical lines for commercial storesSource: The Company’s results briefing materials

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12 20

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Financial results trends(3) Business systems business
Hotels provide the majority of sales in this business, but the sharp decline of inbound demand and the effectsof the self-restraint on going out due to COVID-19 have continued for one and a half years since 2H FY8/20.
In particular, at business hotels, mainly in the Tokyo metropolitan area, occupancy rates have declined greatly,such as due to the decrease in business trips, and the Company’s business activities have also been affected.
However, this situation is further spurring-on labor saving and needs for labor saving in hotels, and based on this,it has become essential for hotels, golf courses, and other venues to continuously provide hospitality services
that solve the new problems of avoiding face-to-face encounters and direct contact. Therefore, the Company
has actively progressed sales with an eye to both the with- and post-COVID-19 periods, including releasing the“IoT Terminal” service to realize smart hotel rooms through DX with the hotel room’s TV as the starting point, and“Stay Concierge,” which is a DX app to expand contactless points of contact between a hotel and its guests.
Conversely, at hospitals, alongside the market launch of next-generation kiosks that are equipped with facialrecognition and insurance card confirmation functions that use AI, the Company has market launched a payment
machine for clinics. It has previously delivered machines mainly to conventional, comprehensive hospitals, but
this release enables it to approach small-scale hospitals such as general and dental clinics, and the numberof machines delivered has steadily increased. Moreover, the My Number personal ID cards for (online) identity
verification being progressed by the Ministry of Health, Labour and Welfare began fully fledged operations from
October 2021. The Company’s “Sma-pa Myna Touch” was selected as one of the recommended devices for this,so this business has been actively conducting sales in every direction, not only to comprehensive hospitals, butalso to small-scale hospitals and dispensing pharmacies. For restaurants with strong needs for labor saving, it hasdeveloped a personal order system that enables customers to create an original menu for their orders by selecting
their favorite ingredients and preferred quantity, and a completely unmanned accounting payment system that is
linked to an automatic payment machine. The major hotels have been struggling, so sales and profits declined
as sales to hospitals, golf courses, and other sites could not cover for this decline. However, looking toward thepost-COVID-19 period, upfront investment in hotels is recovering alongside quarterly improvements in results. In
the 4Q, sales of “Sma-pa Myna Touch” increased significantly to ¥1.1bn, but as its gross profit is relatively low,
the operating profit margin, which had continuously improved up to that time, temporarily declined.
Business systems business – Quarterly financial results

Source: The Company’s results briefing materials

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13 20

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Financial results trends(4) Content distribution businessIn a situation of the spread of smartphones and the market entries of major foreign companies, synergies haveappeared from the increase in nesting demand due to COVID-19, and the video distribution services market
is rapidly expanding. In this extremely beneficial situation, the Company has continuously expanded content,
enhanced the user experience, improved name recognition, and developed the market. For the expansion ofcontent, in additional to its conventional “coverage strategy” of increasing the number of works covered to an
overwhelming number, it is also distributing through unlimited viewing services the popular titles of HBO, the US
satellite and cable broadcasting company that is part of the Warner Bros. Group, and of HBO Max, a fixed-fee
video distribution service. Moreover, it has also started to develop the “ONLY ON” strategy to strengthen the
distribution of works that can only be viewed on “U-NEXT.” To enhance the user experience, various manufacturing
companies are equipping the remote controls they provide with sales of new TVs with the “U-NEXT button.” Also,
to develop the market, the Company is collaborating with Kansai Electric Power <9503> and has progressed thedevelopment of new channels, including starting to provide to households “withU-NEXT Denki” and “withU-NEXT
Denki (Gas set),” which offer a new fee menu combining “U-NEXT” and electricity sales. As a result, the number ofsubscribers (people with contracts) continued to increase greatly, up 18.1% YoY, and sales also grew significantly.
In profits, the growth of the number of subscribes exceed the critical point and operating profit increased by seventimes as a result. Going forward, alongside this increase in the number of subscribers, profits will enter a phase of
growing more than sales. However, it would appear that upfront investment will be essential in order to survive theintensifying competition, and reflecting this, the Company invested in content and promotional costs in the 4Q.
Content distribution business – Quarterly financial results

Source: The Company’s results briefing materials(5) Energy business
Following the outbreak of the novel coronavirus pandemic, economic activities contracted due to the declarationsof states of emergency and the priority measures to prevent infections. Therefore, the situation is that the amountof electricity consumed by the customers, of stores and commercial facilities, has not yet fully recovered. The
business environment is particularly severe for high-voltage customers due to the intensification of competition
and the relative decline in price competitiveness because of the intensifying competition. However, against the
backdrop of new initiatives, such as to develop production in collaboration with TEPCO, this business achieved
an increase in profits even as sales declined and achieved profitability on a quarterly basis.

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14 20

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Financial results trends

Energy business – Quarterly financial results

Source: The Company’s results briefing materials

Investments and an improved BS through profit growth, and has
room to return profits to shareholders
3. Trends in cash flows
Since the past, the Company has emphasized EBITDA (= operating profit + depreciation + amortization of goodwill),
which shows the ability to generate cash, as an indicator. This is because the scale of profits initially after the
integration was small compared to currently and the goodwill generated by the integration was a heavy burden on
the balance sheet, so it was in response to the markets that viewed the Company’s profitability and stability withconcern. In other words, it is thought it was necessary for the markets to understand that, in the context of thedepreciation and amortization without funding costs and its businesses that stably generate earnings such as themusic distribution business, its ability to generate cash was not unstable, and to understand its strategy of allocating
this cash into investment in growth businesses, like the content distribution business. In fact, as the Company’s
ability to generate cash is stable, a virtuous circle has been created in which the integration smoothly generated
synergies and therefore profits started to grow immediately after the integration, and goodwill and interest-bearing
debt are steadily decreasing and the balance sheet is improving. As a result, not only have the Company’s growthpotential and profitability improved, the equity ratio, which is an indicator of stability, and ROA, which indicates theefficiency of capital, have also both improved.

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15 20

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Financial results trends

In this situation, in the two fiscal years of FY8/20 and FY8/21, profits increased rapidly and EBITDA was also seen
to grow. The factors behind this were not only the previously described temporary ones during the COVID-19
pandemic, but can also be said to be the result of the integration’s synergies and the growth strategy. Therefore,
it is thought that the virtuous circle for cash will further accelerate in the future. In this case, the Company will also
have room to expand the scope for using this cash. Cash is generally used for investments, returns to shareholders,internal reserves, and to repay borrowing. Among these uses, internal reserves increase liquidity, so it would notseem necessary to accumulate them in a panic. Also, as the repayment of interest-bearing debt is on schedule,
while the Company will repay it early if it can, for this as well it is not thought necessary to increase repayments
in a panic. For investments, through investment in the growth businesses, particularly in the content distribution
business whose market is expanding due to COVID-19, the Company wants to accelerate investment in content that
advances differentiation. For M&A also, for which it became cautious for a time after the integration, it seems that it
intends to become more proactive. Fore returns to shareholders, the Company’s policy is to continuously increase
the dividend alongside raising the dividend payout ratio to a range of 10% to 30%, and it would seem to have ample
cash to secure significant funds for this. Through these positive cash developments since the integration, it is likelythat the markets’ trust in and expectations for the Company’s business management will grow more and more.

Trends in EBITDA, the equity ratio, and ROA
Depreciation + Amortization of goodwill (left)
Operating profit (left)
Equity ratio (right)
Return on Assets (ROA) (right)（¥mn）
25,00020,00015,00010,000

18.6%
14.9%
7,012

11.9%

4.7%

4.8%

5,867

6,006

FY12/17

FY8/18

7.9%

5.8%
8,239

8,769

20.0%
15.0%

11.0%

9.6%

5,000

（%）
25.0%

8,621

9,234

6,773

23.6%

10.0%
15,608

10,883

5.0%

0

0.0%

FY8/19FY8/20FY8/21

Note 1: FY8/18 was an eight-month fiscal year. For USEN, FY8/18 was a nine-month fiscal year from December to August.
Note 2: EBITDA = operating profit + depreciation + amortization of goodwill
Source: Prepared by FISCO from the Company’s financial results

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16 20

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Financial results trends

In FY8/22, results will grow and will formulate a new medium-term
management plan
4. FY8/22 outlook
For the FY8/22 results, the Company is forecasting net sales of ¥220,000mn (up 5.6% YoY), operating profitof ¥17,000mn (up 8.9%), ordinary profit of ¥16,000mn (up 8.3%), and profit attributable to owners of parentof ¥8,500mn (up 5.7%). However, the expected effects of adopting from FY8/22 the Accounting Standard for
Revenue Recognizing (ASBJ Statement No.29), are to decrease net sales by ¥2,300mn and operating profit by¥300mn, including from the effects on sales of the customer-attraction media of other companies in the store
services business and the provision of SaaS services in the communications business. In other words, in actuality
the forecasts are for net sales of ¥222,300mn (up 6.7% YoY) and operating profit of ¥17,300mn (up 10.8%) for a
double-digit increase in profits. The Company has not published YoY comparisons due to the lack of accounting
continuity in the consolidated results, but at FISCO, for ease of understanding we have presented reference values
through a simple comparison of the new and former values.
FY8/22 outlook(¥mn)
FY8/21

FY8/22 (E)% of net sales

Rate of change

Results% of net sales

AmountNet sales

208,351

100.0%

220,000

100.0%

5.6%

Gross profit

81,579

39.2%

-

-

-

SG&A expenses

65,971

31.7%

-

-

-

Operating profit

15,6087.5%

17,0007.7%

8.9%

Ordinary profit

14,7687.1%

16,000

7.3%

8.3%

Profit attributable to owners of parent

8,044

3.9%

8,500

3.9%

5.7%

Note: The Company adopted the Accounting Standard for Revenue Recognizing from October 2021. The YoY comparisons arereference values prepared by FISCO through a simple comparison of the new and former values.
Source: Prepared by FISCO from the Company’s financial results

For the Group’s FY8/22 management policies, it has set (1) Respond to the environmental changes in the
with- and post-COVID-19 periods and maintain the growth trend, (2) Formulate a new medium-term management
plan to replace the previous medium-term management plan whose targets were achieved three years ahead ofschedule and an integration report, and (3) Take on the challenge of achieving non-consecutive growth throughstrengthening human resources and M&A, for which it has previously been cautious. For (1), it is considered that
it will maintain the growth trend by continuing with a balance strategy of attack and defense through appropriate
business portfolio management and by adapting its existing businesses to environmental changes. For (2) it plans
to formulate a new medium-term management plan and an integration report and announce them in February2022, which is thought will lead to the promotion of sustainable management. The Company has already achieved
the targets in the former medium-term management plan “NEXT for 2024” of operating profit of ¥10bn in FY8/22
two years ahead of schedule and operating profit of ¥13bn in FY8/24 three years ahead of schedule. For (3),up to the present time it has strengthened the existing businesses, including by expanding market shares andimproving productivity, and it has successfully launched new businesses in areas peripheral to the existing
businesses, such as financing for small-scale businesses and a business for clinics. Going forward, it will recruit
first-class and diverse human resources through “CEO’s GATE,” the President’s talent discovery program, andby strengthening internal resources, to solidify the business foundation. It will also add momentum to growth
by become more proactive for M&A, for which it has previously been cautious, targeting candidates for whichsynergies can be expected with the existing businesses. So it seems it is taking on the challenge of achieving
non-continuous growth toward net sales of ¥1tn.

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17 20

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Financial results trends

For the FY8/22 results by segment, for the store services business, the forecasts are for net sales of ¥56,000mn(down 0.2% YoY) and operating profit of ¥8,600mn (up 0.1%); for the communications business, net sales of¥50,000mn (up 3.8%) and operating profit of ¥5,100mn (up 12.5%); for the business systems business, net salesof ¥20,500mn (up 8.3%) and operating profit of ¥3,100mn (up 7.0%); for the content distribution business, net salesof ¥67,000mn (up 11.7%) and operating profit of ¥6,900mn (up 20.4%); and for the energy business, net sales of¥30,000mn (up 7.4%) and operating profit of ¥400mn (up 13.0%). In the store services business, both sales andprofits will be negatively affected by the new standard for recognizing revenue, but profits are still forecast to increase
while capturing DX demand, such as from commercial stores. The communications business and content distribution
business are expected to drive the growth of the Group as a whole through their stable profit growth. The marketsof the business systems business and the energy business had become slightly distorted due to COVID-19, butthey are expected to normalize so the forecasts are for higher sales and profits. We are starting to see the impact of
COVID-19 on the markets settling down, and in FY8/22, there are expected to be rebounds to both its positive andnegative effects seen up to the previous period. However, it is extremely difficult to anticipate what these impacts
will be, so at FISCO, our impression is that these forecasts are somewhat conservative as a whole.
Segment outlook for FY8/22 (before adjustment)(¥mn)[Net sales]

FY8/21Results

FY8/22 (E)% of net sales

Amount% of net sales

Rate of changeStore services business

56,11226.9%

56,000

25.5%

-0.2%

Communications business

48,17923.1%

50,000

22.7%

3.8%

Business systems business

18,925

9.1%

20,500

9.3%

8.3%

Content distribution business

59,95628.8%

67,000

30.5%

11.7%

Energy business

27,92613.4%

30,000

13.6%

7.4%

Results

Profit ratio

AmountProfit ratio

Store services business

8,590

15.3%

8,600

15.4%

0.1%

Communications business

4,534

9.4%

5,100

10.2%

12.5%

Business systems business

2,898

15.3%

3,100

15.1%

7.0%

Content distribution business

5,731

9.6%

6,900

10.3%

20.4%

354

1.3%

400

1.3%

13.0%

[Operating profit]

Energy business

FY8/21

FY8/22 (E)Rate of change

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

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18 20

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/█ Shareholder return policy
Policy is to continuously increase the dividend, targeting a dividend
payout ratio from 10% to 30%
1. Dividend policy
With regard to dividends, the Company has a fundamental policy of allocating surplus funds once a year at period-end based on results assessed comprehensively in terms of the financial position, profit situation, new investment
plans, and other factors, and the general meeting of shareholders is the decision-making body for the payment ofdividends from retained earnings. The Company views return of earnings to shareholders as a key corporate policy
and paid an ¥13.5 period-end dividend in FY8/21 as the result of an overall assessment of results and other factors
in accordance with the fundamental policy. It plans to pay ¥15.0 per share as the FY8/22 annual dividend. The
Company is aiming for a 10-30% dividend payout ratio in the medium-term and its policy is to continue increasing
the dividend.

Trends in dividend per share and payout ratio

Dividend per share (left)

（¥）
20.0

Payout ratio (right)$LPLQJ IRUFRQWLQXHGGLYLGHQGLQFUHDVHVDQG
DGLYLGHQGSD\RXWUDWLR
15.0

15.0

（%）
30.0

25.0

13.5
20.0

10.0

8.0

15.0
10.1

10.6
10.0

5.0

5.0

9.8
5.0
4.9

0.0

0.0
FY8/19FY8/20FY8/21

FY8/22 (E)Source: Prepared by FISCO from the Company’s financial results

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19 20

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

USEN-NEXT HOLDINGS Co., Ltd.

13-Dec.-2021

9418 Tokyo Stock Exchange First Section

https://usen-next.co.jp/ir/

Shareholder return policy

Shareholder benefits include the “U-NEXT” content distribution
service and the “Premium Benefit Club”
2. Shareholder benefit program
The Company offers a shareholder benefit program to show appreciation to shareholders for their support, deepen
shareholders’ understanding of business content by using Group services, and enhance investment appeal of its
shares and encourage long-term ownership. Under the current benefits package, shareholders are eligible for boththe “U-NEXT” content distribution service and the “Premium Benefit Club.” With respect to the “U-NEXT” content
distribution service, shareholders with holdings of 100 shares to 999 shares are to receive 90 days of free service
use along with ¥1,000 worth of points, and shareholders whose holdings amount to 1,000 shares or more are toreceive one year of free service use and ¥1,800 worth of points each month.
The “Premium Benefit Club” allocates shareholder benefit points based on the number of shares owned to shareholders who own 500 or more shares. Members can exchange the points for over 2,000 hospitality products including
food, electronic products, gifts, travel or experience services at the “USEN-NEXT HOLDINGS Premium Benefit Club”
site exclusively for shareholders. The shareholder benefit points have been established in detail according to thenumber of shares held, and if the shares are held for at least one year, the number of points is increased to 1.1 times
the number in the first year. Shareholders who qualify for shareholder benefits are those own five unit (500 shares)
or more of the shares based on listing or registration in the shareholder ledger on the final day of February eachyear. The points are scheduled to be awarded in early April every year. To be awarded points, shareholders mustregister and file an application via the “USEN-NEXT HOLDINGS Premium Benefit Club” website set up especially forthe shareholder benefits program. Points awarded are valid for up to two years given that they can be carried overto the subsequent fiscal year. Shareholders may exchange their benefit points for “WILLsCoin” shareholder benefit
coins. The coins may then be exchanged for hospitality products on the “Premium Benefit Club Portal” membershipwebsite for individual investors.

█ Information security
Reducing security risk for the Group as a whole
The Company is strengthening personal information protection capabilities and continues to implement educational programs. However, it cannot give a guarantee of complete protection and there is always risk of personal
information leaks due to improper access from an external source, system trouble, insider crime, human mistakes,
and management mistakes at outsourcing and service provision partners. Given these challenges, the Company
manages the information system at a data center, employs a firewall, and continually assesses vulnerability in web
applications as a more proactive information security effort. The Company allocates notebook PCs and smartphones
to individuals as part of work-style reforms. It uses notebook PCs installed with a security chip (TPM), while its
smartphones use mobile device management (MDM). Moreover, in order to provide services that can be used safely
and securely, the Group as a whole is reducing security risk by establishing “Usirt,” centered on the Company, andimplementing external audits in a planned manner.

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

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Disclaimer
FISCO Ltd. (“FISCO”) offer stock price and index information for use under the approval of theTokyo Stock Exchange, the Osaka Stock Exchange and Nikkei Inc.
This report is provided solely for the purpose of offering information, and is not a solicitationof investment nor any other act or action.
FISCO prepared and published this report based on information which it considered reliable;
however, FISCO does not warrant the accuracy, completeness, fitness nor reliability of thecontents of this report or the said information.
The issuers’ securities, currencies, commodities, securities and other financial instruments
mentioned in this report may increase or decrease in value or lose their value due to influence
from corporate activities, economic policies, world affairs and other factors. This report does
not make any promises regarding any future outcomes. If you use this report or any information
mentioned herein, regardless of the purpose therefor, such use shall be made based on yourjudgment and responsibility, and FISCO shall not be liable for any damage incurred by you asa result of such use, irrespective of the reason.
This report has been prepared at the request of the company subject hereto based on theprovision of information by such company through telephone interviews and the like. However,
the hypotheses, conclusions and all other contents contained herein are based on analysis
by FISCO. The contents of this report are as of the time of the preparation hereof, and are
subject to change without notice. FISCO is not obligated to update this report.
The intellectual property rights, including the copyrights to the main text hereof, the data
and the like, belong to FISCO, and any revision, reprocessing, reproduction, transmission,
distribution or the like of this report and any duplicate hereof without the permission of FISCO
is strictly prohibited.
FISCO and its affiliated companies, as well as the directors, officers and employees thereof,
may currently or in the future trade or hold the financial instruments or the securities of issuersthat are mentioned in this report.
Please use the information in this report upon accepting the above points.

◾ 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