February 29, 2024
To whom it may concern
Company Name: AVANT GROUP CORPORATIONName of Representative: Tetsuji Morikawa,President and Group CEO(Code: 3836, TSE Prime Market)
Inquiries: Naoyoshi Kasuga, Director and Group CFO(TEL: 03-6388-6739)

Measures to achieve cost of capital and share price conscious management.

We have analyzed and evaluated the current status of our measures to achieve cost of capital andstock price conscious management, and have updated our policy for future efforts toward
improvement from that disclosed on December 28, 2023, which is attached hereto.
Ends3836 TSE PrimeAvant Group Corporation

Measures to achieve cost of capital andshare price conscious management
February 29, 2024

This is an unofficial translation. In the event of any discrepancy between the original Japanese
text and this English translation, the Japanese text shall prevail.
©AVANT GROUP CORPORATION. All Rights Reserved.

Executive Summary
Stock price analysis is included in the regular agenda of the Avant Group Board of Directors and thefollowing topics are discussed on an ongoing basis.
◼ Current Assessment•Our ROE is hovering around 20%, which is well above our expected cost of equity range (around 7%)◼ Policies and Objectives•

For PER, the company aims to achieve a business model transformation and reach the 40x level, and for ROE, the company aims
to achieve a 20% average throughout the medium-term management plan period. This will bring PBR to the 8x level.

•We will transform our business model and plan to invest in growth to achieve high growth potential: increase the composition of
our SaaS-type business to achieve low volatility and high profit growth. Through optimization of capital allocation, the level ofshareholders' equity will also be optimized.

•Refine our own strategy and reduce the cost of equity through creative dialogue with meaningful institutional investors.

◼ Efforts and implementation period•

Refine the own strategy and reduce the cost of shareholders' equity through creative dialogue with investors. (Also implementedin FY23 + 1H FY24)•

To strengthen the overall moment of the value creation spiral by expanding the structure that enables all employees to enjoy theresults of the spiral from the creation of human capital value to the creation of corporate value, and to establish stockcompensation for employees, group executive officers, and group directors, respectively, starting in FY24. (The scheme will beintroduced from FY24 for employees, while others will be changed)©AVANT GROUP CORPORATION. All Rights Reserved.

2

Current Assessment©AVANT GROUP CORPORATION. All Rights Reserved.

3

Current Assessment ～ PBR ～◼ P/B ratio averaged 5.7x from FY6/2020 to the most recent 2Q FY6/2024, a level that suggests growthpotential is valued by investors.

Changes in PBR
10.009.00
8.00
7.00
6.00

Ave.

5.7

5.00
4.00
3.00
2.00
1.00
0.00
Q1

Q2

Q3

Q4

FY20/06©AVANT GROUP CORPORATION. All Rights Reserved.

Q1

Q2

Q3

FY21/06

Q4

Q1

Q2

Q3

FY22/06

Q4

Q1

Q2

Q3

FY23/06

Q4

Q1

Q2

FY24/06

4

Current Assessment ～ Cost of Capital Approach ～◼ We have no debt, so our cost of capital ≈ cost of equity, and we assume a range of 6.6-7.9

Risk-free rate

＋β×Risk premium

0.6～0.7%

1.0～1.26％

Set based on 10-year
JGB yield

2 Set from 2~5 years
x daily, weekly,monthly

Set from historicalstock market returns©AVANT GROUP CORPORATION. All Rights Reserved.

＝

Cost of equity

6.6～7.9％range

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Current Assessment ～ ROE ～◼ ROE has been averaging at 20%, which is well above our expected cost of equity range (around 7%)(millions of yen)

Net Asset

ROE ※14,000(%)

30%

12,00025%

20%

10,00020%
8,000

18.2% 15%
6,000
10%
4,000

6.6～7.9％
Cost of equity
capital2,000-5%

0%
Q1

Q2

Q3

FY06/20

Q4

Q1

Q2

Q3

FY06/21

Q4Q1Q2Q3

FY06/22

Q4Q1Q2Q3

FY06/23

Q4Q1Q2

FY06/24※Figures are calculated based on the past four quarters.
Effective from the beginning of the first quarter of FY6/22, the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020)and others have been applied.

©AVANT GROUP CORPORATION. All Rights Reserved.

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Current Assessment ～ PER ～◼ PER has been in the range of 20x to 40x, which is above the competitive level of the current businessmodel, but below that of SaaS companies that are consistently profitable.

◼ In its medium-term management plan, the company aims to change its business model and aims toachieve a PER above the level of SaaS companies.
Changes in PER
45

SaaS company level4035302520

Current competitor level

1510
50
Q1

Q2

Q3

Q4

FY20/06©AVANT GROUP CORPORATION. All Rights Reserved.

Q1

Q2

Q3

FY21/06

Q4

Q1

Q2

Q3

FY22/06

Q4

Q1

Q2

Q3

FY23/06

Q4

1Q

2Q

FY24/06

7

Policies and Objectives©AVANT GROUP CORPORATION. All Rights Reserved.

8

Overall Policies and Goals◼ As a discipline, the company aims to achieve an average ROE of 20% throughout themedium-term management plan period, and if PER reaches the 40% level due to the change
in business model, P/B ratio will be at the 8x level.
Improved
growthexpectations
PER

40x

Business modeltransformation
through growthinvestments

Reduction incost of equity
Capital Allocation
Optimization

PBR

Incentive structure
designed to increase
corporate value

Net Income
Growth8x
ROE

20%©AVANT GROUP CORPORATION. All Rights Reserved.

Shareholder'sequity
optimization

Creative dialogue
with investors

9Medium-term management plan BE GLOBAL 2028 (BG28) Outlook◼ As for ROE, the aim is to achieve an average of 20% throughout the medium-term planperiod.

©AVANT GROUP CORPORATION. All Rights Reserved.

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BG28 Focus Markets◼ Position self in management DX market for companies where enhancing corporate value is a serious issue
New segment
name

TAM (Total Addressable Market) andpositioning of each market
Know-howServiceHigh

M1

Investor Perspective Next
Generation Management
Information Platform Market

Deepen existingmarket

FY6/23¥6.7bnLatent SAM

New segment
nameM3Service Available Market

M2

M2

Capture growthmarket

Capture growth market

Consolidated
Financial Disclosure
Market¥112.3bn

M1）

Creation of newmarket

Low
High

Management DX market©AVANT GROUP CORPORATION. All Rights Reserved.

¥14.0
bn

OPM

Digital Transformation Promotion Business

FY6/23

FY6/28
CAGR

¥7.2
bn

New segment
nameM3
Realization risk

17.3％

17.8％

¥16.3bn

OPM

15.0％→19.9%

Client base
SoftwareDeepen existing
marketLow

FY6/28Creation of new market¥690bn-¥720bn（CAGR

19.5％→27.2%¥272bnBI, Data Infrastructure& DX Market

Consolidated FinancialDisclosure Business

FY23¥7.9bnManagement Solutions Business

CAGR

13.2％
OPM

FY28

¥14.7bn

16.7％→28.7%
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Business model transformation targeted by BG28
◼ We are aiming to change our business model by investing in growth and increase the composition of
our SaaS-type business, which consists mainly of recurring sales, to improve our PER.

M1
Deepen existing market

M2

Business Model

Current Status/
Issue Recognition

BPOSaaS• Comprised of outsourcing and software
businesses, the ratio of recurring sales ishigh and comparable to SaaS companies.
• The company has identified the difference ingross profit margins compared to SaaS
companies, which is a target for businessmodel change, as an issue.

SI• The company has achieved stable growth in a
growing market with strong demand in the SI
business specialising in data platforms and BI.
• The level of headcount growth is perceived as achallenge compared to companies that haveachieved the same level of headcount growth assales growth and whose growth potential is also
highly regarded by the market.

Capture growth market•

M3
Creation of new market©AVANT GROUP CORPORATION. All Rights Reserved.

SI＋Consulting↓Consulting
SaaS•

In the business management market, the company
handles not only its own products but also those ofother companies and has achieved growth mainly inthe flow business of SI+Consulting.
Compared with companies that have achieved a highlevel of growth in the recurring business, mainly insoftware, the company has identified lower sales
growth and a lower proportion of software sales as achallenge.

Growth Investment

New cross-selling products
AI-based research on models
for automating the financial
disclosure process
Establishment of recruitmentand training processes toachieve higher-than-planned
headcount growth

Development and market
success of own products as
growth drivers

12Capital Allocation◼ A total of JPY 20 billion will be invested in growth investments over the five-year period of
the mid-term plan to achieve the business model transformation.
Direction of primary growth investment.

1.0billion

Internal investment = Human capital investment•Implement R&D that contributes to the achievementof the business plan•

Development of functions with economies of scale.

growth Asset procurement investment
3.5 Business• Minority-financedbillion

0.5billion©AVANT GROUP CORPORATION. All Rights Reserved.

•Software purchase

Reserve funds• VC investment, etc.

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Efforts and implementation period©AVANT GROUP CORPORATION. All Rights Reserved.

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Major IR activities (FY6/2023 + 1H FY6/2024)◼ Targeting and conducting IR activities for creative dialogue
Number of financial
results briefings

3 times
Held for analysts in thefirst half and full year

Number of individual meetings
with institutional investors

Number of overseas
roadshow interviews

146 cases
Conduct individualinterviews online and inperson31 cases
Conducted in the U.S.,
Singapore, and Europe by GroupCEO and IR Office Manager

Targeting Concept• The main target will be foreign growth-styleinvestors. In addition, we will also interact
with GARP and hedge funds, taking into
account the diversity of their investment
perspectives.
• Local interviews will be set up, taking into
consideration the influence of each investor
in the U.S., Europe, and Hong
Kong/Singapore, respectively.
• In addition to on-site interviews, acombination of online interviews will beplanned.
©AVANT GROUP CORPORATION. All Rights Reserved.

Domestic and international classification /style of investors interviewed
OthersValue

Domestic
Overseas

Hedge
fundGrowthGARP15

Creative Dialog with Investors◼ We gain insights from our dialogue with investors and reflect them in our strategic considerations.
Institutional Investor Comments••••

Status of Response

I think an important part of the mid-term business plan is the M3 thatthe Business Management Solutions business faces. I would like tounderstand more about how the Avant Group's products work, theirstrengths and weaknesses, and the specific benefits of using theircustomers. I think such an explanation would tell more of the Avant
Group's growth story.

•We feel it is important to have a more focused dialogue with investors
about the drivers of Avant Group's growth, rather than projections offuture performance.
We wanted to better understand what leading indicators point to theprogress of growth.

•We believe that share buybacks are a rule that can send a message thatthe stock price is undervalued. If more share repurchases are made, webelieve the value of the transaction will increase. If we can show moreclearly how the cash is being used, taking this into account, I think themarket will change its perception and understand that management
resources are being directed toward growth.

•©AVANT GROUP CORPORATION. All Rights Reserved.

••

The situation of low resolution of specific solution images is once again
recognized, and is being studied and addressed internally.
Whenever concrete developments are made, they are disclosed asnecessary. At the Q2 FY6/2024 financial results meeting, a TRNITY
BOARD demonstration and an AVANT Cruise product description weregiven.
The Group Management Committee (a forum for discussion by GroupCxOs) and other groups are discussing and brushing up the drivers ofsales growth and margin improvement, and the critical success factor(CSF) that are highly important for achieving the mid-term plan.
Strengthening numerical control to withstand continuous disclosure.

Specify the capital allocation and present to investors the scale ofshareholder return through investment in growth and dividends. We willthen consider purchasing treasury stock from the market as appropriate,
not only as an additional return to shareholders, but also with thebenefit of being able to use it as incentive compensation for employees
or as a supplemental payment instrument in mergers and acquisitions.

16Intention to introduce an incentive structure with an eye to increasing corporate value◼ Strengthen the moment of the overall value creation spiral by expanding the structure that enables all employees
to enjoy the results of the spiral from human capital value creation to corporate value creation.

Conscious of increasing corporate
value Incentive Structure

Software driven strategy

Business
investment etc.

Corporatevaluecreation

Valuecreation
productivityenhancement

Enhanced compensation,
talent investment etc.

©AVANT GROUP CORPORATION. All Rights Reserved.

Strategic Materiality
Enhancedsustainabilityof value
creation

Becoming a Software
Company that Contributes
toEnhanching Corporate
Value

Humancapitalvaluecreation

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Incentive structure designed to increase corporate value◼ Provide equity compensation to all layers to raise awareness of the need to increase
corporate value.
Employees

Group Executive Officer,
Avant Group

Director, Avant GroupFY24～
Introduction

FY24～
Scheme Change

FY24～
Scheme Change

・Restricted stock grantequivalent to 50 thousandyen per person per year

・Restricted stock grants
of 15% of totalcompensation

・Equity grants of 35% of
total compensation＊Must be enrolled for 1 year(July-June)＊Must be enrolled for 1 year(Oct-Sep)

Installation
StatusStockCompensation
Details

Restricted for transfer upon retirement (resignation)©AVANT GROUP CORPORATION. All Rights Reserved.

1. avant group share price up ordown (50%)
2. relative TSR (50%)＊Both 1&2 shall be compared to the previous
year Achievement of the indicator of the Avant
Group stock price increase is a condition forpayment.

FY25Considering transitionto restricted stock

18