August 4, 2023
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)

Notice of Formulation of Medium Term Management Plan "BE GLOBAL 2028"

AVANT GROUP has formulated "BE GLOBAL 2028," a five-year medium term management planthat commences in the fiscal year ending June 2024, of which details are described as follows:
In the previous five-year medium term management plan which has just been completed in thefiscal year ending June 2023, the Group achieved its sales, operating income, ROE and dividend pershare targets, with sales growing 1.8x and operating income doubling during the plan. However, wefailed to achieve our strategic KPIs of a recurring sales ratio of 70% and Gross Profit Point(*) of 40%,
both of which were to demonstrate the intended transformation of the Group’s business model. In
response to the challenges, in the third year of the previous medium term management plan, wechanged course and through these activities defined our strategic materiality as "becoming asoftware company that contributes to enhancing corporate value".
(*) A sum of sales growth rate and operating margin
To realize this materiality, our new medium-term management plan "BE GLOBAL 2028" targets avalue creation spiral in which we use software to enhance our ability to contribute to our customers
and increase our productivity and use the increased profits to invest in human resources and develop
new products, and through these processes enhance our corporate value.

Outlook of "BE GLOBAL 2028"
FY6/23

FY6/285yr chg/avg

Net Sales¥21.4bn¥40-45bn

2xOperating Income (OI)

¥3.28bn¥9-11bn

3x

OPM

15.4%

20-24%+5-9pts

Net Income¥2.09bn¥6-7bn3x/CAGR 25%

OI/person¥2.40mn¥3.5-4.3mn

1.5xSoftware Gross Profit¥2.13bn¥6-6.5bn

3.0x

ROE

18.3%

20% or more

Avg 20%DOE

4.9%

8% or more

Avg 7%

Dividend¥15¥51 or more

3.4x

Attachment
Medium Term Management Plan (FY6/24-FY6/28) BE GLOBAL 2028
Ends

3836 TSE Prime

AVANT GROUP CORPORATION

Medium Term Management Plan
(FY6/24-FY6/28)

BE GLOBAL 2028
August 4, 2023

©AVANT GROUP CORPORATION. All Rights Reserved.

Review of Medium Term Management Plan BE GLOBAL 2023

©AVANT GROUP CORPORATION. All Rights Reserved.

2

Review of Medium Term Management Plan BE GLOBAL 23• Both operational and financial KPIs were achieved, with both net sales and operating
income nearly doubling during the medium term plan period.
• However, the business model transformation targeted in the strategic KPIs was notachieved.
FY6/18
FY6/23
FY6/23Operational
KPI

Strategic
KPI

ResultTargetResultNet Sales (¥bn)

12.1

18～22

21.4

Operating
Income (¥bn)

1.6

3.1～3.8

3.2

Recurring Sales
Ratio (%)

33

70

35

Sales Growth + OPM(points)

28.5

40 or more

29.9

ROE (%)

24.5

Dividend (¥)

12

Financial
KPI

20 or
more
15 or
more

22.2*
15

Achieved both net sales and operating income
medium term targets, with net sales growing
1.8x, and operating income 2x during the plan.
Recurring sales grew from ¥4.0bn in FY6/18 to¥7.6b in FY6/23, but the recurring sales ratio
failed to grow, and the business model was nottransformed.
Achieved medium term targets for both ROE anddividend.

* FY6/19-FY6/23 average, new revenue recognition standard applied from FY6/22. FY6/23 actual 18.3%.
©AVANT GROUP CORPORATION. All Rights Reserved.

3

Review of Medium Term Management Plan BE GLOBAL 23• In the third year of the medium term plan policy changes were made for issues withstrategic KPIs, and based on these changes initiatives were implemented.

FY6/19-6/20

M&A efforts•

Initiatives
andReflections•

FY6/21
CoursechangeInitial aim of business
transformation through M&A
rather than organic growth butchanged course after several deals
that exceeded acceptable risks
due to soaring prices andinsufficient management
capabilities.
Reverted to plan based on organic
growth©AVANT GROUP CORPORATION. All Rights Reserved.

FY6/22

Defining materiality

FY6/23Business reorganization and new
medium term plan•

Identified materiality throughcreative dialogue with investors
and management, defined as“Becoming a Software Company
that Contributes to Enhancing
Corporate Value”•

To realize materiality of being No. 1 ineach market where it contributes, break
down the markets where Avant Group
contributes, and including a rebranding,
optimize the allocation of operatingcompanies.

•

The objective is not only for eachgroup company to operateautonomously, but to enhance theability to grow and develop as agroup.

•

Medium term plan formulated based ondivision of roles after the reorganization.

4

Next Medium Term Management Plan BE GLOBAL 2028
(BG28)©AVANT GROUP CORPORATION. All Rights Reserved.

5

Avant Group Philosophy©AVANT GROUP CORPORATION. All Rights Reserved.

6

Value Creation Spiral Targeted in BG28•

Realize the strategic materiality of "Becoming a Software Company that Contributes to Enhancing
Corporate Value" through a value creation spiral starting from the improvement of value creation
productivity (measured by operating profit per employee) brought about by the software-driven
strategy that leads to the creation of human capital value and corporate value

Software driven strategy

Business
investment etc
Corporatevalue
creationValuecreation
productivity
enhancement

Enhanced compensation,
talent investment etc©AVANT GROUP CORPORATION. All Rights Reserved.

Strategic Materiality
Enhancedsustainabilityof valuecreation

Becoming a Software
Company that Contributes toEnhancing Corporate Value

Human
capital value
creation7

BG28 Focus Markets• Positioning in the management digital transformation (DX) market for companies whereenhancing corporate value is a serious issue.

Total Addressable Market (TAM）of each market
BI, Data Infrastructure & DX Market

Consolidated
Financial Disclosure
MarketInvestor Perspective Next
Generation Management
Information Platform Market

Client base¥112.3bn Software

M1

Deepen existing
market

ＤＩＶＡ・IＤ¥272bnKnow how
Service¥690bn-¥720bn

M3

M2

Creation of new market

Capture growth market

ＡＶＡＮＴ

ＺＥＡＬ

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

8

Deepen Existing Market: M1 Consolidated Financial Disclosure Market(DIVA & ID)• Targeting 5-year CAGR of 17.3% in the consolidated financial disclosure market, which has
a market size of over ¥40bn.

Total Addressable Market¥112.3bn
Service Available Market¥41.3bn
FY6/28: ¥14bn
CAGR 17.3%

New segment name

Consolidated
Financial Disclosure
Business

Share of Market

FY6/23: ¥6.7bn©AVANT GROUP CORPORATION. All Rights Reserved.

9Capture Growth Market: M2 BI, Data Infrastructure & DX Market• Targeting 5-year CAGR of 17.8% in the BI, data infrastructure and DX market, which has amarket size of over ¥40bn.

Total Addressable Market¥720bnService Available Market¥43.4bn
FY6/28: ¥16.3bn
CAGR 17.8%

New segment name

DigitalTransformation
Promotion Business

Share of market

FY6/23: ¥7.2bn©AVANT GROUP CORPORATION. All Rights Reserved.

10

Creation of New Market: M3 Investor Perspective Next Generation
Management Information Platform Market (AVANT)• Targeting 5-year CAGR of 13.2% in the next generation management platform market,
which has a market size of just under ¥50bn.
Total Addressable Market¥272bnService Available Market¥47.1bn

New segment nameManagement
Solutions Business

FY6/28: ¥14.7b
CAGR 13.2%

Share of Market

FY6/23: ¥7.9bn©AVANT GROUP CORPORATION. All Rights Reserved.

11

BG28 Outlook• As a B2B software growth company, grow the business by increasing value creation
productivity, tripling net income on a doubling of sales, for a net income CAGR of at least25%.
FY6/23

FY6/24

FY6/285yr chg/avg

Net Sales¥21.4bn¥24bn¥40-45bn

2xOperating Income (OI)

¥3.28bn¥3.85bn¥9-11bn

3x

OPM

15.4%

16.0%

20-24%+5-9pts

Net Income¥2.09bn¥2.5bn¥6-7bn3x/CAGR 25%

OI/person¥2.4mn¥2.4mn¥3.5-4.3mn

1.5xSoftware Gross Profit¥2.13bn¥2.17bn¥6.0-6.5bn

3.0x

ROE

18.3%

19.3%

20% or more

Avg 20%

DOE

4.9%

5.3%

8% or more

Avg 7%

Dividend¥15¥19¥51 or more

3.4x

©AVANT GROUP CORPORATION. All Rights Reserved.

12

Software Driven Strategy Concept• Realize strategic materiality through a software driven strategy that uses software as thebasis for everything, starting with the business portfolio and human capital portfolio.
Software Driven Strategy
Business PortfolioHigh

Human Capital Portfolio
Other
co.
SW X

SW
D

Other
co.
SW Z

Additional
management
resources
SW C

他社
SW Y

Impression

Business
SW G
continuity
feasibility study
SW F

SearchSWfor
Agrowth driver orcash cow

Low
Low

Profitability©AVANT GROUP CORPORATION. All Rights Reserved.

High

Business scale

GrowthProfitability
SW E
monitoring

Large

SW B

Shift to software
Other
co.
and accumulate
SW X
knowledge via
use of elitetalentSW F
Developyoung
SW A
employees, passon knowledge

SW B

Other
co.
SW Y

Impression

Test next
generationSWof
E
leaders with
SW G
develop/withdraw
SWD
challenge
Small
Low

他社
SW Z

SW C

Utilize external
resources

Knowledge
accumulation

High

13

Software Driven Strategy Benefits and Value Creation Productivity
Enhancement• 3 benefits of software driven strategy (1. Greater sales portion from high margin software, 2.
enhanced software margins and 3. higher service profit margins) enhance value creation
productivity and drive profit growth.
Software Driven Strategy Benefits
FY6/23

Value Creation Productivity Enhancement
Sales productivity
enhancement

FY6/28©AVANT GROUP CORPORATION. All Rights Reserved.

Service

SoftwareSales weight

Profitability

Service

SoftwareProfitability

Value creation
productivity
enhancement③②

Net sales
Employees

Operating income

Cost productivity
enhancement

Employees

Operating income
Net sales

Sales weight①＝1－CoGS ratio－SG&A ratio
14

Software Driven Strategy (Strategy by Type)• Achieve profit growth through software-specific strategies
5yr
CAGR

Net Sales by Software

Strategy

SWD*2 Strategy Benefits
1. Softwaresales ratio(¥mn)

50,000
DIVA LCA
related business

-

✓

✓

24%

• Business expansion driven by sales
growth of in-house products, also
improving software profit margins.

✓

✓

-

36%

• Achieve software business growth with
DIVA TMS*1 and ZEAL-IP, improve
software profit margin through businessexpansion.

✓

✓

-

-

-

✓

12%

40,00030,000

AVANT Cruise& otherbusiness

20,000

Other software
business

10,000External
softwarebusiness0
FY6/23• Outsourcing as growth driver, utilize
software in outsourcing to improve profit
margins. Also improve software margin
by reviewing product lineup.

2. Software 3. Service
profit margin profit margin17%• Improve profit margin on services byutilizing other companies' software inline with trends, improving unit sales
price and project productivity.

FY6/28※1 TMS: Treasury management system©AVANT GROUP CORPORATION. All Rights Reserved.

※2 SWD: Software driven

15[Reference] Main In-house Software
Top domestic share for consolidated accounting and consolidated
settlement systems

DIVA
LCA
relatedStrengthening governance and automating consolidated accounts settlementby visualizing detailed data of group companies.
Application for group budget management, forecast management, etc.
Integrated financial and non-financial management platform to enhance
corporate value

AVANT
Cruise& other

Consolidated cost and multi-axis revenue management system that
supports earning power
Business Management BI for immediate use of management information ofyour and other companies
Group management dashboard for strategy and scenario development©AVANT GROUP CORPORATION. All Rights Reserved.

16

Initiatives for Value Creation Productivity Enhancement• In addition to the measures implemented by each operating company, establish a new
Materiality Initiative Office to promote the enhancement of value creation productivity
throughout the Group, and implement the Group's strategic investments.
Group-wide Initiatives
1. Software procurement
2. R&D to utilize generative AI, etc

Establishment ofMateriality Initiative
OfficeValue Creation
Productivity
Enhancement

3. Strengthening cyber security＋
Initiatives in Operating Companies’ Business Plans
DIVA 1: Expanding share in consolidated
accounting outsourcing market

DIVA 2: Transfer outsourcing
know-how to software

ZEAL 1: Maximize client base in
DX Promotion Business

ZEAL 2: ZEAL – IP creationand development

AVANT 1: Penetration of coreproduct AVANT Cruise

AVANT 2: Expansion ofdevelopment/human capital structure©AVANT GROUP CORPORATION. All Rights Reserved.

17

Capital Allocation• Assuming ¥20bn for growth investments and ¥5bn for shareholder returns (dividends) overthe 5-year period of the medium-term management plan.
Sources(procurement)(¥mn)

FY6/24-FY6/26
portion

Surplus
cash

7,250

Working
capital

3,550
FY6/23 cash andequivalents(F):Forecast©AVANT GROUP CORPORATION. All Rights Reserved.

From FY6/27

Uses

5-year total

Working
capital5-year total
FCF(F)

M&A
Minority
Shareholder FY6/28 cash and(incl.
purchaseofsourceinvestment, R&D
returns
equivalents (F)code)

Growth investments
18

Investment Phases• First 2-3 years will be an exploratory phase, aiming to realize results in 4th year and beyond
FY6/24

FY6/25

FY6/26

Exploratory Phase: ¥5bn•

1. Software
procurement•

2. R&D to utilize
generative AI, etc
3. Strengthening
cyber security

Build cooperative relationships through minority investmentsin overseas SaaS vendors and software development
companies to increase the number of software products
handled by the company and expand the network to enhance
the company's own development capabilities.
Main objective is not to acquire software, but to build a
network with a wide range of options.

FY6/27

FY6/28Implementation Phase: ¥14.7bn•

Sourcing using the network establishedduring the exploratory phase, executing
source code purchases and M&A.

•

Linking the results of R&D activities toimproved delivery cost productivity•

Conduct research and development activities to increase theproductivity of service delivery costs•

Continue to accumulate know-how and invest in equipment to help clients continue their operations©AVANT GROUP CORPORATION. All Rights Reserved.

19

Toward the Realization of a Value Creation Spiral• Strengthening the spiral of human talent value creation to corporate value creation bymaking all employees shareholders

To a Company where all Employees are Shareholders

Grant equity compensation to all employees who belonged
to the company for a full fiscal year at the end of each fiscal
year in order to raise awareness of the need to enhance
AVANT GROUP’s corporate value(About ¥0.5bn over 5 years)

Software driven strategy

Business
investment etc

Valuecreation
productivity
enhancement

Enhanced compensation,
talent investment etc©AVANT GROUP CORPORATION. All Rights Reserved.

Corporatevalue
creation

Enhancedsustainability ofvalue creation

Strategic Materiality
Becoming a Software
Company that Contributes toEnhancing Corporate Value

Human
capital value
creation20

Cautionary Statement Concerning Forward-Looking Statements
The information in this document regarding business forecasts and other future projections and strategies isbased on judgments made by the Company based on information reasonably available to it at the time thisdocument was prepared and within the scope of what is normally expected. However, actual results may differ
materially from those discussed in the forward-looking statements due to the occurrence of extraordinary
circumstances or unforeseeable results that could not be foreseen in the normal course of events. While weendeavor to actively disclose information that we believe is important to investors, we urge you not to baseyour decisions solely on the earnings forecasts contained in this document. Please do not reproduce ortransmit this material for any purpose without permission.

■Contact

Avant Group Corporation, IR Office
ir@avantgroup.com©AVANT GROUP CORPORATION. All Rights Reserved.

21