Avant : Notice of 27th Annual General Shareholders’ Meeting

This document is an unofficial translation of the Notice of 27th Annual General Shareholders' Meeting and is provided for your convenience only, without any warranty as to its accuracy or as to the completeness of the information. The Japanese original version of the document is the sole official version.

Notice of 27th Annual

General Shareholders' Meeting

Date/time

September 27, 2023 (Wednesday) at 10:00AM (Doors open at 9:30AM)

Location

1-3-2, Otemachi, Chiyoda-ku, Tokyo

Keidanren Hall, 2F, Keidanren Kaikan (Please refer to the venue guide at the end.)

Matters to be resolved

Proposal1: Appropriation of surplus

Proposal2: Election of four directors (except directors who are audit committee members)

Proposal3: Revision of performance-based share compensation plan for directors (except for directors who are audit committee members as well as for outside directors)

"Matters on corporate officers," "Officers' compensation plan" and "Compliance and risk management" in the 27th business report contains content highly relevant to the documents for reference for the shareholders' meeting listed in the electronically provided matters; therefore, the order of listing was rearranged.

AVANT GROUP CORPORATION Securities Code: 3836

Dear Shareholders,

Thank you for your patronage and support to the businesses of our group.

We made a fresh start under the new name "AVANT GROUP CORPORATION" by restructuring our business in October 2022. Through this restructuring, we started the new midterm management plan "BE GLOBAL 2028" from July 2023 under the strategic initiative to become a "software company useful to improve corporate value." The business strategy was synchronized with the group strategy, aiming at becoming a world-class software company.

"BE GLOBAL 2028" adopts a "software-driven strategy" as the common strategy for the group. With software to create value for all businesses as the starting point, we enhance the ability to contribute to customers as well as service productivity to invest the resulting profits into human resources development and R&D. As a product of these activities, we accomplish the spiral of value creation to continually improve corporate value of our group.

A company is an organization where many people gather and contribute to society through its corporate value. Our group is aiming to contribute to society through organizational growth with a wide variety of members.

It is my sincere hope for you to look forward to the future progress and growth of "AVANT GROUP CORPORATION." I appreciate your continued support and patronage.

Tetsuji Morikawa

President and Representative Director

Group CEO

AVANT GROUP CORPORATION

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Philosophy of AVANT GROUP

Our group works together and aims to accomplish the mission since incorporation: "spreading accountability," based on the corporate philosophy of "creating a company that will last for 100 years." Our target is to "BE GLOBAL." We will evolve into a world-class software company and widely contribute to the development of society and economy.

VISION

BE GLOBAL

- A World-class software company -

MATERIALITY

To be a software company that increases corporate value

MISSION

Spreading Accountability

Software-driven strategy

- Turning management information into a map of the future -

STRATEGY

PHILOSOPHY

Creation of a 100-year Company

- A company where everyone is passionate about value creation -

OPEN

VALUE

STRETCH

Values that support our corporate philosophy

In 2021, our group defined the strategic materiality to accomplish our vision as "to be a software company that increases corporate value." It points to two things: we contribute to "improvement of corporate value" through DX of management and we are a "software company" in the core of business model. This strategic materiality was created in the course of implementing our midterm management plan "BE GLOBAL 2023," which remains to be the direction to follow in the new midterm management plan "BE GLOBAL 2028."

Certain things were identified during the process to plan for "BE GLOBAL 2028," including stipulation of strategy to achieve the vision to be the "software-driven strategy."

"Software-driven strategy" is a concept to manage all corporate businesses with software as the starting point. We measure the effectiveness of each software by visualizing respective growth and profitability to understand which software is actually contributing to customers at what level and to promote more strategic activities.

By promoting these strategic activities, we will achieve the vision to "become a world-class software company" through accumulation and utilization of intellectual properties to enhance the ability to contribute to customers.

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Midterm management plan for the AVANT GROUP

Reflection of our midterm management plan "BE GLOBAL 2023"

In September 2018, our group established the midterm management plan "BE GLOBAL 2023" over the five years ending in FY23 (June 2023 period) to aim at "becoming a world-class software company."

We successfully accomplished both the operational KPI and financial KPI and doubled the sales and operating profit in the midterm plan. We were not able to accomplish the strategic KPI as the goal to convert the business model; however, the share sales increased from 4 billion yen in FY18 to 7.6 billion yen in FY23.

				FY18 results				FY23 goal		FY23 results
		Sales (100 million yen)
Operational
KPI		Operating profit (100
		million yen)
		Stock sales ratio (%)
Strategic KPI
		Sales growth ratio +						40≦
		operating profit ratio
		ROE (%)
							20≦
Financial KPI
		Dividend (yen)						15≦

• Average for FY19 - FY23; FY23 results: 18.3%

Regarding the goal in the strategic KPI, we changed our policy in the third year of the previous midterm plan, based on which we engaged in activities.

We initially expected to use M&A for conversion of the business model to measure the progress with the strategic KPI; however, changed our policy to a plan that assumes organic growth rather than relying on M&A after experiencing multiple cases with risks exceeding the allowable limit due to the steep price increase, insufficient management ability, etc.

During the time of this policy change, we made a statement to "become a software company useful to improve corporate value" as the strategic initiative and also restructured our business.

In business restructuring, we optimized allocation of each business company in the respective market to achieve strategic initiative and created a midterm plan based on this new role sharing by business companies to produce the new midterm plan "BE GLOBAL 2028."

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Goals of the new midterm management plan "BE GLOBAL 2028"

The midterm management plan "BE GLOBAL 2028" aims at realizing a spiral of value creation by improving productivity from value creation resulting from software-driven strategy as the starting point. Improvement of productivity from value creation as measured by per-capita operating profit is reduced to compensation and invested into human resources to achieve value creation in people and goods. Not only service is provided but also software is created by people and goods; therefore, value creation in people and goods leads to continuous business growth resulting in creation of corporate value. Enhanced corporate value increases funding capacity as well as capacity available for business investment, resulting in improvement of productivity for value creation.

The direction aimed at by the spiral of such value creation is to "become a software company useful to improve corporate value" as the strategic initiative to be achieved.

Outlook of the new midterm management plan "BE GLOBAL 2028"

As a B-to-B software growth corporation, we aim at profit growth of triple net profit against double sales on the basis of 25% or more net profit growth rate CAGR (average annual growth rate). This profit growth requires either improvement of "productivity from sales" to increase per-capita sales or improvement of "productivity from invested costs" to reduce invested costs for the same sales. These types of productivity are collectively called "productivity from value creation."

We plan to increase the per-capita operating profit as the index to improve productivity from value creation to one-and-a-half times more in five years, and the gross profit from software to achieve progress of software-driven strategy to three times more in five years. Our group expects to be recognized as growth shares rather than aggressive growth shares in the stock market, raising ROE as the financial KPI and maintaining 20% on average. For stable shareholder return, we have a discipline of 7% DOE※ (dividend on equity ratio) on average.

	※DOE: Dividend on equity ratio
				FY23		FY28			Changes/Average
							in 5 years
	Sales			21.4 billion yen	40-45 billion yen		2x
	Operating profit			3.28 billion yen	9-11 billion yen		3x
	Operating profit rate		15.4%	20-24%		+5 - 9pts
	Net profit			2.09 billion yen	6-7 billion yen		3x/CAGR 25%
	Operating profit			2.4 million yen	3.5-4.3 million yen		1.5x
	per person
	Software gross profit			2.13 billion yen	6-6.5 billion yen		3.0x
	ROE		18.3%	20%≦		AVG 20%
	DOE		4.9%	8%≦		AVG 7%
	Dividend			15 yen	51 yen≦		3.4x

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