3836 TSE Prime
Avant Group Corporation
Financial Results Briefing
for the first quarter of Fiscal Year June 2024
October 31,2023
©AVANT GROUP CORPORATION. All Rights Reserved.
Executive Summary
- Summary of financial results for the first quarter of FY June 2024
- Net sales increased by 12.3% year-on-year to ¥ 5,646 million, as the significant growth of the Digital Transformation Promotion business contributed to the increase in sales.
- Operating profit increased by 10.8% year-on-year to ¥ 681 million, mainly due to a decrease in one-off costs incurred in the previous year as a result of the Group's reorganisation and the effect of increased revenues from the digital transformation promotion business, despite an increase in fixed personnel costs due to an increase in headcount and a continued high level of subcontract processing costs in response to an increase in orders.
- The previous method of classifying business segments was reviewed, the reportable segments were changed from "Group Governance Business", "Digital Transformation Promotion Business" and "Outsourcing Business" to, the new reportable segments are "Consolidated Financial Disclosure Business", "Digital Transformation Promotion Business" and "Management Solutions Business".
- Earnings and Dividend Forecasts
- No changes are made to the forecast for the current financial year, which is expected to achieve sales of ¥ 24,000 million and operating profit of ¥ 3,850 million.
- The year-end dividend per share for FY2024 is expected to be 19 yen per share, with the aim of achieving the 8% ratio of dividends to net assets, which is the target for the period of the new medium-term management plan.
- 'BE GLOBAL 2028' Actions to realise
- DIVA releases TRINITY BOARD (alpha version) to promote DX for Japanese boards of directors.
- DIVA and Ernst & Young ShinNihon LLC commercialise a jointly developed solution to improve efficiency in handling consolidated audits.
- AVANT updates its business management system AVANT Cruise. Standard package functionality for performance management
(budget, actual and forecast)
©AVANT GROUP CORPORATION. All Rights Reserved. | 2 |
【Reference】 Segment Reorganization
Before
After
Old Segments | Corporation |
ID
Group Governance
Former DIVA
Digital
TransformationZEAL
Promotion
Main Business
Disclosure Net
Consolidated
Accounts Software
Consolidated Accounts Consulting & Operations
Management Solutions
Business
(Software & consulting)
CPM*
BI&Data Platforms
Main BusinessCorporation
Disclosure Net | ID |
Consolidated
Accounts Software
DIVA
Outsourcing
Consolidated Accounts
Consulting & Operations
Management Solutions
BusinessAVANT (Software & consulting)
CPM
New Segments
Consolidated
Financial Disclosure
Business
Management
Solutions Business
OutsourcingFIERTEOutsourcing
※CPM:Corporate Performance Management
BI&Data Platforms | ZEAL |
Digital Transformation
Promotion Business
©AVANT GROUP CORPORATION. All Rights Reserved. | 3 |
【Reference】 New business segments
「Consolidated Financial Disclosure Business」
In addition to the development and maintenance of our own packaged software "DivaSystem" for consolidated management support and consolidated accounting, we also provide outsourcing of consolidated and non-consolidated financial statements using this software, supporting value creation through corporate information disclosure. As for our position within our group, we aim to establish a business model that combines the software business and outsourcing business.
The consolidated financial statement disclosure service also includes an information search service for disclosure documents provided by Internet Disclosure Co., Ltd. primarily for auditing firms.
「Digital Transformation Promotion Business」
Through consulting and system development, we provide AI and BI solutions that analyze, predict, and visualize data from a data platform that utilizes all kinds of data surrounding companies, and support companies in promoting digital transformation and data-driven management. From major cloud vendors to multi-cloud compatible software, you will learn about the latest information utilization methods and generation AI specializing in data utilization, as well as train engineers and develop your own data utilization platform products. We also aim to expand our group's products.
「Management Solutions Business」
Focusing on group management, consolidated accounting, and business management, we aim to visualize and maximize a company's "invisible value," and provide one-stop support from consulting to system planning, construction, implementation, operation, and maintenance. In addition to in-house development, it is also possible to develop in combination with software developed by other companies. In this segment, we will continue to create solutions that make the most of the group's assets and provide solutions that provide management information that will improve corporate value.
INDEX
Ⅰ . Summary of financial results for the first quarter of FY June 2024 Ⅱ. Earnings and Dividend Forecast
Ⅲ. 'BE GLOBAL 2028' Actions to realise
- Figures in this presentation are rounded down to the unit of display.
The information contained in this material regarding the business outlook and other forecasts and strategies etc. are forward-looking statements and are determined within the range that could normally be predicted based on the information reasonably available to the Company at the time of preparation of this material. Investors should be aware of the risks, however, that actual results may differ from the business prospects described in the material due to the occurrence of extraordinary circumstances that cannot usually be predicted or the occurrence of results that cannot usually be predicted. The Company will proactively disclose information that is considered material to investors, but investors should be advised not to make judgment based entirely on only the business prospects described in this material. This material should not be copied or transferred for any purpose without permission of the Company.
©AVANT GROUP CORPORATION. All Rights Reserved. | 5 |
I. Summary of financial results for the first quarter of FY June 2024
©AVANT GROUP CORPORATION. All Rights Reserved. | 6 |
Results Highlights
Net sales increased 12.3% year on year to 5,646 million yen, as the digital transformation promotion business contributed significantly to the increase in sales.
Fixed personnel costs increased due to an increase in the number of employees, and outsourcing costs remained at a high level due to an increase in orders. On the other hand, one-time expenses associated with group reorganization in the previous fiscal year decreased, and net sales of the digital transformation promotion business increased. As a result, sales amounted to 681 million yen (10.8% increase compared to the same period last year).
FY6/24 | YoY Variance | |||||||
Q1 | Yr earlier | % chg | ||||||
Net Sales | 5,646 | 5,025 | 12.3% | |||||
Cost of Sales | 3,273 | 2,776 | 17.9% | |||||
Gross Profit | 2,373 | 2,249 | 5.5% | |||||
GPM | 42.0% | 44.8% | ▲2.7pt | |||||
SG&A | 1,692 | 1,634 | 3.5% | |||||
Operating Income | 681 | 614 | 10.8% | |||||
OPM | 12.1% | 12.2% | ▲0.2pt | |||||
Net Income | 482 | 370 | 30.2% | |||||
NPM | 8.6% | 7.4% | 1.2pt | |||||
EBITDA | 798 | 709 | 12.5% | |||||
EBITDA margin | 14.1% | 14.1% | 0.0pt | |||||
©AVANT GROUP CORPORATION. All Rights Reserved. | 7 |
Progress to Full-Year Sales Targets
- FY6/24 Q1 cumulative sales reached 23.5% of the full-year plan, which is a high progress rate compared to the last 3 years.
FY24
FY23
FY22
FY21
FY20
0.0%
Q1
23.5%
23.5% | 25.7% | 26.4% | 24.4% |
21.6% | 25.1% | 26.9% | 26.3% |
22.2% | 24.9% | 26.3% | 26.6% |
23.7% | 25.6% | 25.8% | 24.9% | ||
20.0% | 40.0% | 60.0% | 80.0% | ||
Q1 | Q2 | Q3 | Q4 |
FY6/24
plan
¥24.0b
12.0%
¥21.4b
14.6%
¥18.7b
15.2%
¥16.2b
3.5%
¥15.6b
100.0%
©AVANT GROUP CORPORATION. All Rights Reserved. | 8 |
FY6/24 Q1 Operating Income Bridge (YoY)
- Although profits increased due to the effect of increased sales, the rate of increase in recruitment costs and IT costs due to business expansion exceeded the rate of increase in sales. Other expenses decreased due to a decrease in structural reform costs incurred in the previous fiscal year.
- Investment expenses to realize the software-driven strategy were approximately 100 million yen.
Higher GP from | |
(millions of yen) | sales growth |
Higher personnel
and recruiting
costs due to
increased hiring
and higher
compensation.
FY6/23 Q1
Operating
Income
©AVANT GROUP CORPORATION. All Rights Reserved.
Increase in | M3(Management Solutions Business) | 80M |
outsourcing costs | M2(Digital Transformation Promotion Business) | 13M |
to meet demand | M1(Consolidated Financial Disclosure Business) 10M |
including hiring | Other | |
gap. | Investment | |
expenses | ||
expenses |
Increase in IT expenses
due to organization
expansion and support
for cloud computing
+1.7b | +27.6% | ||
+0.6b | +10.8% | FY6/24 Q1 | FY6/24 Q1 |
Operating Income | |||
Operating | |||
(Before investment | Income | ||
expenses) | |||
9
Results by Business Segment
- Although sales increased in all segments, the digital transformation promotion business was the overall driver.
- Regarding operating income, profits increased in the digital transformation promotion business and consolidated financial results disclosure business, but profits decreased in the business management solutions business.
- Orders and order backlog increased year on year in all segments
(millions of yen)
FY6/24 | YoY Variance | ||||||||
Q1 | Yr earlier | % chg | |||||||
Net Sales | 1,747 | 1,631 | 7.1% | ||||||
Consolidated Financial | Operating Income | 364 | 358 | 1.7% | |||||
Disclosure | OPM | 20.8% | 22.0% | ▲1.1pt | |||||
Business | |||||||||
Orders | 1,821 | 1,697 | 7.3% | ||||||
Order Backlog | 4,023 | 3,482 | 15.5% | ||||||
Net Sales | 2,171 | 1,613 | 34.6% | ||||||
Digital Transformation | Operating Income | 348 | 196 | 76.9% | |||||
OPM | 16.0% | 12.2% | 3.8pt | ||||||
Promotion Business | |||||||||
Orders | 2,026 | 1,676 | 20.9% | ||||||
Order Backlog | 1,560 | 1,121 | 39.2% | ||||||
Net Sales | 1,863 | 1,851 | 0.6% | ||||||
Management Solutions | Operating Income | 148 | 309 | ▲52.0% | |||||
OPM | 8.0% | 16.7% | ▲8.7pt | ||||||
Business | |||||||||
Orders | 1,623 | 1,492 | 8.7% | ||||||
Order Backlog | 2,873 | 2,638 | 8.9% | ||||||
©AVANT GROUP CORPORATION. All Rights Reserved. | 10 |
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Disclaimer
Avant Corporation published this content on 31 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 October 2023 06:08:49 UTC.