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

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 third quarter of the fiscal year ending June 30, 2021

			May 7, 2021
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: May 13, 2021	Dividend payment date: -
Supplementary information for financial statements: Available
Explanatory meeting to be held: No

1. Consolidated results for the third 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

	Net sales	EBITDA	Operating income	Ordinary income	Profit attributable to
	shareholders of parent
											company
Third quarter of the			%		%			%		%			%
fiscal year	11,909		1.1	2,343	27.6		2,167	28.4	2,185	29.1	1,371		34.7
ending June 30, 2021
ended June 30, 2020	11,784		11.5	1,837	6.5		1,687	5.0	1,692	5.3	1,018		(1.2)
Comprehensive income (loss) for the 3Q of the fiscal year ending June 30, 2021	1,407 million yen (37.4%)	for the 3Q of the fiscal year ended June 2020	1,024 million yen (-1.8%)
	Net profit per	Diluted net
	share		profit per share
Third quarter of the			yen		yen
fiscal year
		36.48
ending June 30, 2021				-
ended June 30, 2020			27.09		-

(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	%
March 31, 2021	12,331	8,280	67.1
June 30, 2020	11,780	7,194	61.1

(Reference) Net assets attributable to the company's shareholders As of March 31, 2021 8,280 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	-	0.00	-
June 30, 2021 (Forecast)					10.00	10.00

Revisions to the most recently announced dividend forecast: No

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

(Percentages indicate year-on-year changes)

Profit attributable to

Net profit

Net sales

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

2,520

10.6

2,505

9.8

1,628

5.9

43.30

(Note)

Revisions

to the most recently

announced

earnings forecast: Yes

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)

(i) Total shares outstanding including treasury stock	As of March 31, 2021	37,603,203 shares	As of June 30, 2020	37,586,982	shares
(ii) Shares of treasury stock held
As of March 31, 2021	2,911 shares	As of June 30, 2020	2,911	shares
(iii) Average outstanding shares	Third quarter of the fiscal year	37,593,957 shares	Third quarter of the fiscal year	37,577,532	shares
ending June 30, 2021	ended June 30, 2020

(Note) The Company conducted a 2-for-1 common stock split on December 1, 2019. Number of shares are calculated as if this stock split had taken place at the beginning of the previous fiscal year.

*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 promised 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.

On October 16, 2020, the Company issued new shares as stock-based compensation with restrictions on transfer. Net income per share (forecast) is calculated based on the average number of shares outstanding during the period, which reflects the issuance of new shares.

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. Quarterly Consolidated Financial Statements and Notes..................................................................	9
(1) Quarterly Consolidated Balance Sheets..........................................................................................	9
(2) Quarterly Consolidated Statements of Income and Consolidated 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 .....................................................................	15
(Notes on the Going Concern Assumption) ..............................................................................	15
(Notes on Substantial Changes in the Amount of Shareholders' Equity) ..................................	15
(Segment information) .............................................................................................	16

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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 third 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
	Third quarter	Third quarter	Amount	%
Net sales	11,784	11,909	124	1.1
Operating income	1,687	2,167	479	28.4
Ordinary income	1,692	2,185	493	29.1
Profit attributable to owners of	1,018	1,371	353	34.7
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 third half of the fiscal year under review.

The environment surrounding our Group was initially within the scope of this outlook, but on the other hand, various changes in society are stimulating the need for "management and decision-making based on data." Needs for the Group products and services, while transforming into more sophisticated ones, are on a recovery trend.

While sales in Consolidated Accounting related Business decreased due in part to the impact of large-scale projects that had been the mainstay of the business until the previous fiscal year having passed their peak, the Business Intelligence Business has expanded its sales growth since the second quarter, and the Outsourcing Business continues to achieve double-digit growth. As a result of these factors, consolidated net sales have increased, albeit slightly to 11,909 million yen (up 1.1% from the same quarter of the previous year).

With regard to the recurring sales ratio (such as software maintenance fees, etc., which are continuously generated), which is one of the management targets in the Medium-Term Management Plan, it increased to 36.2%, up 3.4 percentage points from the same quarter of the previous fiscal year. This was due to the growth in the Outsourcing Business, which has consistently maintained a recurring sales ratio of around 90%, as well as the improvement in the ratio in the Consolidated Accounting related Business and the Business Intelligence Business due to the increase in cloud sales, etc. The total amount of recurring sales also increased by 14.1%.

With regard to profits, operating income was 2,167 million yen (up 28.4% from the same quarter of the previous year), ordinary income was 2,185 million yen (up 29.1%), and profit attributable to owners of parent was 1,371 million yen (up 34.7%), all of which were higher than the same quarter of the previous year, due to the effects of the improvement in profitability of projects through the increase in the ratio of in-house production and the reduction of non-urgent and non-urgent expenses that have been promoted since the spread of COVID-19, and through controlling some expenses such as transportation and utilities as we changed work styles.

The status of each reportable segment is as follows.

(i) Net sales

				(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
			Third quarter	Third quarter	Amount	%
Consolidated	Accounting-related	6,330	5,937	(393)	(6.2)
Businesses
Business Intelligence Business	4,381	4,613	231	5.3
Outsourcing Business		1,535	1,841	306	20.0
Elimination	of	inter-segment	(462)	(482)	(20)	－
transactions
Consolidated net sales		11,784	11,909	124	1.1

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(ii) Operating income

(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
		Third quarter	Third quarter	Amount	%
Consolidated	Accounting-related	1,088	1,374	286	26.3
Businesses
Business Intelligence Business	561	660	99	17.8
Outsourcing Business	368	460	91	24.9
Corporate Expenses and Elimination	(330)	(328)	1	－
of inter-segment transactions
Consolidated operating income	1,687	2,167	479	28.4

The Consolidated Accounting related Business was affected by the slowdown of IT investments by customers due to the spread of COVID-19 and the stagnation of economic activities due to the declaration of a state of emergency, especially in the first half of the fiscal year under review, as well as the impact of large-scale projects having passed their peak. As a result, net sales decreased to 5,937 million yen (down 6.2% from the same period of the previous year). On the other hand, operating income increased to 1,374 million yen (up 26.3% from the same quarter of the previous year) and the operating margin improved by 5.9 percentage points from the same quarter of the previous year as a result of efforts to improve the profitability of projects by increasing the ratio of in-house production and other measures, as well as promoting unnecessary cost reductions. In addition, due to an increase in cloud sales and maintenance support options, the recurring sales ratio has improved markedly from the previous consolidated fiscal year.

As for the Business Intelligence Business, we believe that the needs for this business will increase over the medium term, as it can make a particular contribution to the promotion of digital transformation in the management of domestic companies. This trend has already been seen in the third quarter of the fiscal year under review, with net sales of 4,613 million yen (up 5.3% year on year), accelerating the pace of increase from the second quarter. Operating income also increased to 660 million yen (up 17.8% from the same quarter of the previous year), despite the burden of fixed costs such as office-related expenses that we opened in the previous consolidated fiscal year, due to the impact of the increase in sales and the decrease in transportation costs caused by the change in work style under COVID-19.

In the Outsourcing Business, the market situation does not allow for optimism, as uncertainty due to the impact of the new coronavirus infection has led to a trend of greater caution in final decision making than in the past. However, as a result of our creative sales and proposal activities, we achieved double-digit increases in both sales and profit, with net sales of 1,841 million yen (up 20.0% year on year) and operating income of 460 million yen (up 24.9% year on year).

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