Avant : Consolidated Summary Report under Japanese GAAP 1Q FY21/06

This is an unofficial translation. In case of any difference in meaning between the original Japanese text and the English translation, Japanese text shall prevail.

Consolidated Summary Report under Japanese GAAP for the first quarter of the fiscal year ending June 30, 2021

			October 30, 2020
Company Name:	AVANT CORPORATION		Stock exchange listings: Tokyo
Code Number:	3836		URL: https://www.avantcorp.com/
Representative:	(Title) President, Group CEO	(Name) Tetsuji Morikawa
For inquiry:	(Title) Director, Group CFO	(Name) Naoyoshi Kasuga	TEL: [phone]

Securities report issue date: November 12, 2020	Dividend payment date: -
Supplementary information for financial statements: Available
Explanatory meeting to be held: No

1. Consolidated results for the first quarter of the fiscal year ending June 30, 2021

(Millions of yen, rounded down to the nearest unit) (Percentages indicate year-on-year changes)

(1) Consolidated results of operations

				Revenue		EBITDA	Operating income	Ordinary income		Profit attributable to
						shareholders of parent
																company
First	quarter	of	the			%		%				%		%				%
fiscal year			3,601		(3.0)	537	(3.6)		478		(7.0)	482	(7.2)		303		(9.1)
ending June 30, 2021
ended June 30, 2020	3,714		16.8	557	33.5		514		35.3	520	36.6		334		40.7
Comprehensive income (loss) for the 1Q of the fiscal year ending June 30, 2021	338 million yen (-9.3%)	for the 1Q of the fiscal year ended June 2020	373 million yen (+47.6%)
				Net profit per	Diluted net
				share		profit per share
First	quarter	of	the			yen		yen
fiscal year
ending June 30, 2021			8.08		-
ended June 30, 2020			8.89		-

(Notes) EBITDA is derived by adding depreciation and amortization of goodwill to operating income.

The Company conducted a 2-for-1 common stock split on December 1, 2019. Net income per share is calculated as if this stock split had taken place at the beginning of the previous fiscal year.

(2) Consolidated financial condition

	Total Assets	Net Assets	Equity Ratios
As of	Unit: million yen	Unit: million yen	%
September 30, 2020	11,121	7,194	64.7
June 30, 2020	11,780	7,194	61.1

(Reference) Net assets attributable to the company's shareholders As of September 30, 2020 7,194 million yen As of June 30, 2020 7,194 million yen

2. Dividends on common stock

		Dividends per share
	1st	2nd	3rd	Fiscal	Annual
	quarter-end	quarter-end	quarter-endyear-end
Fiscal Year Ended	yen	yen	yen	yen	yen
June 30, 2020	-	0.00	-	9.00	9.00
June 30, 2021	-
June 30, 2021 (Forecast)		0.00	-	10.00	10.00

Revisions to the most recently announced dividend forecast: None

3. Consolidated earnings forecasts for the fiscal year ending June 30, 2021

(Percentages indicate year-on-year changes)

Profit attributable to

Net profit

Revenue

Operating income

Ordinary income

owners of parent

per share

company

Fiscal Year ending

Unit: million yen

%

Unit: million yen

%

Unit: million yen

%

Unit: million yen

%

yen

June 30, 2021

16,110

2.7

2,330

2.3

2,330

2.1

1,561

1.5

41.52

(Notes)

Revisions

to the most recently

announced

earnings forecast: None

Since the Company conducts annual business management, the consolidated financial forecast for the second quarter (cumulative total) is omitted.

Notes

1. Changes in significant subsidiaries during the period (changes in "Specified Subsidiaries" (Tokutei Kogaisha) accompanying changes in scope of consolidation): No

Newly added to the scope of consolidation: nil

Newly deleted from the scope of consolidation: nil

1. Application of accounting procedures specific to the preparation of quarterly consolidated financial statements: none
2. Changes in accounting policies, accounting estimates and correction of past errors:

1. Changes in accounting policies due to revision of accounting standards: No
2. Changes in accounting policies due to reasons other than item (i) above: No
3. Changes in accounting estimates: No
4. Correction of past errors: No

1. Number of shares outstanding (common stock)

1. Total shares outstanding including treasury stock
2. Shares of treasury stock held
3. Average outstanding shares

As of September 30, 2020	37,586,982 shares	As of June 30, 2020	37,586,982	shares
As of September 30, 2020	2,911 shares	As of June 30, 2020	2,911	shares
First quarter of the fiscal year	37,584,071 shares	First quarter of the fiscal year	37,567,346	shares
ending June 30, 2021	ended June 30, 2020

*This report is exempt from the audits of CPAs or Audit firms.

Forward-looking statements in this report, including earnings forecasts, are based on information currently available to the Company and on certain assumptions deemed to be reasonable. These statements are not promises by the Company regarding future performance.

Actual results may differ materially from the forecast depended on a range of factors. Please refer to "Earnings Forecasts" on page 8 for the assumptions for earnings forecasts and notes for using earnings forecasts.

The Company conducted a 2-for-1 common stock split on December 1, 2019. Net income per share is calculated as if this stock split had taken place at the beginning of the previous fiscal year.

Accompanying Materials - Table of Contents
1. Qualitative Information on Financial Results for the Current Quarter ....................................................	2
(1) Management's Discussion on Business Operations ..............................................................................	2
(2) Discussion on Financial Condition ..........................................................................................	6
(3) Earnings Forecasts .......................................................................................................	8
2. Unaudited Quarterly Consolidated Financial Statements and Notes..................................................................	9
(1) Quarterly Consolidated Balance Sheets..........................................................................................	9
(2) Quarterly Consolidated Statements of Income and Statements of Comprehensive Income.........................	11
Quarterly Consolidated Statements of Income .................................................................................	11
Quarterly Consolidated Statements of Comprehensive Income .........................................	12
(3) Quarterly Consolidated Statements of Cash Flows .....................................................................	13
(4) Notes to Quarterly Consolidated Financial Statements .....................................................................	14
(Notes on the Going Concern Assumption) ..............................................................................	14
(Notes on Substantial Changes in the Amount of Shareholders' Equity) ..................................	14
(Segment information) .............................................................................................	15

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1. Qualitative Information on Financial Results for the Current Quarter

(1) Management's Discussion on Business Operations

Consolidated financial results for the first quarter of the current fiscal year are as follows.

			(millions of yen, rounded down to the nearest unit)
		Fiscal Year ended June	Fiscal Year ending June	Year on Year Change
		30, 2020	30, 2021
		First quarter	First quarter	Amount	%
Revenue		3,714	3,601	(112)	(3.0)
Operating income		514	478	(36)	(7.0)
Ordinary income		520	482	(37)	(7.2)
Profit attributable to owners	of	334	303	(30)	(9.1)
parent company

At the end of the previous fiscal year, domestic companies began to postpone IT investment (frozen in some industries which underwent significant impacts) due to the spread of the new corona viral infectious diseases (COVID-19), and that began to affect orders received for the Group. As a result, we had a cautious outlook for the results particularly during the first half of the fiscal year under review.

Consolidated revenues decreased to 3,601 million yen (down 3.0% from the same quarter of the previous year) due to the impact of the decrease in revenues in the Consolidated Accounting-related Business segment and the Business Intelligence Business segment, but are within the scope of this forecast.

As for the increase in the ratio of recurrent revenue (such as software maintenance fees, etc.), which is one of the management targets in the Medium-Term Management Plan, the ratio increased to 38.6%, up 5.9 percentage points from the same quarter of the previous fiscal year. This was due to the growth in the Outsourcing Business segments, which has consistently maintained a recurrent revenue ratio of around 90%, and the improvement in the ratio in the Consolidated Accounting-Related Business segment and the Business Intelligence Business segment due to the increase in cloud sales and others. The total recurrent revenue was 14.3% higher than the same quarter of the previous year.

With regard to profits, while the Group focused on the improvement in profitability of projects through the increase in the ratio of in-house process and other factors including reduction in general expenses that have been promoted since the expansion of the COVID-19, the Group recognized a provision for bonuses, which was deferred in the same quarter of the previous year because Consolidated Accounting-related Business failed to meet the internal criteria for the payment of performance-based bonuses to officers and employees. As a result, operating income was 478 million yen (down 7.0% from the same quarter of the previous year), ordinary income was 482 million yen (down 7.2% from the same quarter of the previous year), and profit attributable to owners of parent was 303 million yen (down 9.1% from the same quarter of the previous year), all of which were lower than the same quarter of the previous year.

The status of each reportable segment is as follows.

(i) Revenues

				(millions of yen, rounded down to the nearest unit)
			Fiscal Year ended June	Fiscal Year ending June	Year on Year Change
			30, 2020	30, 2021
			First quarter	First quarter	Amount	%
Consolidated	Accounting-related	1,922	1,801	(121)	(6.3)
Businesses
Business Intelligence Business	1,429	1,382	(46)	(3.2)
Outsourcing Business		504	569	65	13.0
Elimination	of	inter-segment	(141)	(152)	(10)	-
transactions
Consolidated Rvenues		3,714	3,601	(112)	(3.0)

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