Avant : Consolidated Summary Report under Japanese GAAP for the Fiscal Year ended June 30, 2023

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

Consolidated Summary Report under Japanese GAAP for the fiscal year ended June 30, 2023

			August 4, 2023
Company Name:	AVANT GROUP CORPORATION	Stock exchange listings: Tokyo
Code Number:	3836		URL: https://www.avantgroup.com/
Representative:	(Title) President, Group CEO	(Name) Tetsuji Morikawa
For inquiry:	(Title) Director, Group CFO	(Name) Naoyoshi Kasuga	TEL: [phone]

Annual General Meeting of Shareholders date: September 27, 2023	Dividend payment date: September 28, 2023
Securities report issue date: September 25, 2023
Supplementary information for financial statements: Available
Explanatory meeting to be held: Yes (for analysts)
										(Millions of yen, rounded down to the nearest unit)
1. Consolidated Financial Results for the Fiscal Year Ended June 30, 2023
(1) Consolidated results of operations							(Percentages indicate year-on-year changes)
	Net sales			EBITDA*		Operating profit	Ordinary profit	Profit attributable to
				owners of parent
Fiscal Year			%				%			%		%		%
ended June 30, 2023	21,424		14.5		3,737		4.3	3,289		1.3	3,265	9.3	2,094	2.4
ended June 30, 2022	18,703		-		3,582		-	3,247		-	2,988	-	2,045	-

Comprehensive income (loss) for the fiscal year ended June 30, 2023 2,187 million yen [3.2%] for the fiscal year ended June 30, 2022 2,117 million yen [-%]

	Net profit per	Diluted net	Ratio of net profit to	Ratio of ordinary	Ratio of operating
	share	profit per share	shareholders' equity	profit to total assets	profit to net sales
Fiscal Year	yen	yen	%	%	%
ended June 30, 2023	55.65	-	18.3	18.5	15.4
ended June 30, 2022	54.37	-	21.1	19.6	17.4

(Reference) Share in profit of associated company for the fiscal year ended June 30, 2023: - million yen for the fiscal year ended June 30, 2022: (269) million yen (Notes) EBITDA is derived by adding depreciation and amortization of goodwill to operating income.

The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the fiscal year ended June 30, 2022, and the figures for the fiscal year ended June 30, 2022 are after the application of the said accounting standard, etc., so the percentage change from the same quarter of the previous year is not stated.

(2) Consolidated financial condition

		Total assets		Net assets		Equity ratio		Net assets per share
As of											%		yen
June 30, 2023		18,705		12,328			65.9		327.51
June 30, 2022		16,617		10,597			63.8		281.68
(Reference) Net assets attributable to the company's shareholders	As of June 30, 2023 12,328 million yen		As of June 30, 2022	10,597 million yen
(3) Consolidated cash flows
		Cash flows from operating	Cash flows from investing	Cash flows from financing	Cash and cash equivalent
			activities		activities			activities		at the end of the year
Fiscal Year
ended June 30, 2023		2,175		(795)			(507)			10,881
ended June 30, 2022		3,026		(398)			(433)			10,002
2. Dividends on Common Shares
				Dividends per share				Total			Dividend	Dividend on
		1st		2nd		3rd		Fiscal		Annual		Dividends		payout ratio	net assets ratio
	quarter-end	quarter-end	quarter-end		year-end			(Annual)		(Consolidated)	(Consolidated)
Fiscal Year Ended		yen		yen		yen		yen			yen		million yen			%	%
June 30, 2022		-		0.00		-		13.00		13.00		489			23.9	5.0
June 30, 2023		-		0.00		-		15.00		15.00		564			27.0	4.9
June 30, 2024		-		0.00		-		19.00		19.00					-
(Forecast)

(Note) Breakdown of year-end dividend for the fiscal year ended June 30, 2022: ordinary dividend: 12.00 yen and commemorative dividend of 1.00 yen (25th anniversary of the Company's founding)

3. Consolidated Earnings Forecasts for the Fiscal Year Ending June 30, 2024

(Percentages indicate year-on-year changes)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Net profit
		owners of parent	per share
Fiscal Year	million yen		%	million yen	%	million yen	%	million yen	%	yen
ending June 30, 2024	24,000		12.0	3,850	17.0	3,850	17.9	2,500	19.4	66.43

(Note) Since the Company manages its operations on an annual basis, the consolidated earnings forecasts for the second quarter (cumulative) is not provided. For details, please refer to "1. Qualitative Information on Financial Results (4) Earnings Forecasts" on page 8 of the attached document.

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. Changes in accounting policies, accounting estimates and restatement:

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

(Note) For details, please refer to "3. Consolidated Financial Statements (5) Notes to Consolidated Financial Statements (Note on Change in Accounting Policies)" on page 17 of the attached document.

1. Number of issued shares (common shares)

1. Total number of issued shares including treasury shares
2. Number of treasury shares held
3. Average number of shares

As of June 30, 2023	37,645,851shares	As of June 30, 2022	37,625,501	shares
As of June 30, 2023	2,998	shares	As of June 30, 2022	2,998	shares
Fiscal Year	37,636,218	shares	Fiscal Year	37,614,361	shares
ended June 30, 2023	ended June 30, 2022

• This report is exempt from the audits of CPAs or Audit firms.
• Explanation of the appropriate use of earnings forecasts and other special notes

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 depending on a range of factors. Please refer to "1. Qualitative Information on Financial Results (4) Earnings Forecasts" on page 8 of the attached document for the assumptions for earnings forecasts and notes for using earnings forecasts.

Accompanying Materials - Table of Contents
1. Qualitative Information on Financial Results	2
(1)	Management's Discussion on Business Operations for the Fiscal Year under Review	2
(2)	Discussion on Financial Position for the Fiscal Year under Review	6
(3)	Discussion on Cash Flow for the Fiscal Year under Review	6

1. 1. Earnings Forecasts ………………………....................................................................................................... 8
2. Basic Approach to the Selection of Accounting Standards …………….................................................................. 8
3. Consolidated Financial Statements and Notes ………………………................................................................... 9
4. 1. Consolidated Balance Sheets ………………….......................................................................................... 9

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

11

1. Consolidated Statements of Changes in Net Assets …………....................................................................... 13
2. Consolidated Statements of Cash Flows ……………………..................................................................... 15
3. Notes to Consolidated Financial Statements …………………..................................................................... 17 (Note on the Going Concern Assumption) ………….............................................................................. 17

(Note on Change in Accounting Policies)	17
(Additional Information) ………	17
(Revenue Recognition) …………............................................................................................................ 18
(Segment Information) ……………………............................................................................................. 19
(Per Share Information) …………........................................................................................................... 22
(Subsequent Events) ……………	23

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1. Qualitative Information on Financial Results

(1) Management's Discussion on Business Operations for the Fiscal Year under Review

Consolidated financial results for the fiscal year under review are as follows.

		(Millions of yen, rounded down to the nearest unit)
	Fiscal Year ended June	Fiscal Year ended June	Year-on-Year Change
	30, 2022	30, 2023	Amount	%
Net sales	18,703	21,424	2,721	14.5
Operating profit	3,247	3,289	42	1.3
Ordinary profit	2,988	3,265	277	9.3
Profit attributable to owners of	2,045	2,094	49	2.4
parent

Consolidated net sales for the fiscal year under review were 21,424 million yen (up 14.5% year-on-year) as a result of steady growth in all three businesses: Group Governance, Digital Transformation, and Outsourcing, as we proactively responded to growing investment needs among Japanese companies, our customers, to maintain and strengthen competitiveness by "upgrading corporate management and activities using data and digital technology," which is becoming a mid- to long-term trend.

As for the improvement of the ratio of recurring sales (sales that occur on an ongoing basis, such as software maintenance fees), which is one of the management targets in the medium-term management plan, the Outsourcing Business, where the recurring sales ratio is constantly maintained at around 90%, showed a high growth rate, resulting in an increase in the sales composition ratio for the entire Group. The other two businesses also showed improvements in the ratio of recurring sales. As a result, the ratio of recurring sales was 35.3%, up 0.7% from the same period of the previous year. Also, total recurring sales continued to grow steadily, increasing 16.9% year-on-year.

As for profits, in addition to increases in fixed personnel expenses due to improved compensation and an increase in headcount following reinforced recruitment efforts to strengthen competitiveness for the purpose of securing human resources, due to the group reorganization, there were also rebranding expenses, and costs due to product rationalization and improvement of development environment at the operating companies. There was also an increase in outsourced processing expenses in response to increased demand from customers. Affected by these and other factors, we recorded operating profit of 3,289 million yen (up 1.3% year-on-year), ordinary profit of 3,265 million yen (up 9.3% year-on-year), and profit attributable to owners of parent of 2,094 million yen (up 2.4% year-on-year).

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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 ended June	Year-on-Year Change
			30, 2022	30, 2023	Amount	%
Group Governance Business	9,372	10,033	660	7.0
Digital Transformation Business	7,015	8,381	1,366	19.5
Outsourcing Business		3,044	3,755	711	23.4
Elimination	of	inter-segment	(729)	(746)	(16)	-
transactions
Consolidated Net sales	18,703	21,424	2,721	14.5

(ii) Operating profit

		(Millions of yen, rounded down to the nearest unit)
	Fiscal Year ended June	Fiscal Year ended June	Year-on-Year Change
	30, 2022	30, 2023	Amount	%
Group Governance Business	2,060	1,709	(350)	(17.0)
Digital Transformation Business	1,244	1,521	277	22.3
Outsourcing Business	661	824	163	24.7
Corporate Expenses and Elimination	(718)	(766)	(47)	-
of inter-segment transactions
Consolidated operating profit	3,247	3,289	42	1.3

In the Group Governance Business, net sales increased to 10,033 million yen, up 7.0% year-on-year. While growth in solutions that contribute to group management information control was a factor in the increase in sales, sales increased at a limited level due to restrictions posed on sales activities as a result of an organization restructuring. Aside from an increase in outsourced processing expenses to meet rising demand, expenses increased for product rationalization and development environment improvement that were conducted simultaneously with the reorganization, resulting in a year-on-year decline in profit margins and a decrease in the amount of profit. As a result, operating profit decreased to 1,709 million yen (down 17.0% year-on-year).

In the Digital Transformation Business, the need among customers to utilize data for decision making related to management and business promotion continues to accelerate and has shifted to a focus on the provision of cloud data platforms and ever-larger projects. On the other hand, the business intelligence-related development, the traditional core of the business, was also strong, resulting in an increase in net sales to 8,381 million yen (up 19.5% year-on- year). Although personnel expenses increased due to higher compensation levels intended to strengthen competitiveness by securing staff, this was offset by the effect of higher sales, and operating profit was 1,521 million yen (up 22.3% year-on-year), significantly higher than the previous consolidated fiscal year.

In the Outsourcing Business, while continuing to maintain high net sales growth rates, recurring sales continued to build steadily, resulting in net sales increasing to 3,755 million yen (up 23.4% year-on-year). In terms of profitability, there were factors that increased costs, such as the promotion of personnel hiring and increased office space to achieve sustainable growth in the future, but operating profit increased due to the sales growth. As a result, operating profit increased to 824 million yen (up 24.7% year-on-year).

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