Toward the Next Mid-Term Management Plan

The fiscal year ending June 30, 2023 is the final year of the "BE GLOBAL 2023" medium-term management plan, but as explained in the timely disclosure of June 22, 2022, the transformation of the business model, one of the three pillars of the "BE GLOBAL 2023" plan, has not produced significant results. The stock sales ratio, which was set as a progress indicator, remained at 34.6% in the fiscal year ending June 30, 2022, making it difficult for the company to reach its target of 70%.

 

For this reason, we began formulating the next medium-term management plan as early as the second half of 2021, and together with the Group Management Strategy Executive Team, we started by reconfirming the Group's management philosophy, discussed what the Group should do to realize the vision, and summarized this as the Avant Group's materiality "Become a software company that helps increase corporate This was summarized as the Avant Group's Materiality, "Become a software company that helps enhance corporate value (Ref.1). Through discussions among the group management strategy executive team and the board of directors regarding specific measures to realize this materiality, we have come to the conclusion that it would be effective to accelerate the growth of existing businesses and create new growth businesses through a reorganized organization.

 

Throughout the fiscal year ending June 30, 2023, the companies will prepare to start the next medium-term management plan in a direction that has become even clearer under the new structure. Specifically, in existing businesses, we will promote the development of an environment to accelerate the shift to cloud computing, including the liquidation of low-profit products and projects. In addition, we will actively recruit to develop products that will become future killer applications and to strengthen our implementation-based consulting business to be promoted during the new medium-term management plan period. Furthermore, as we will develop activities to improve the market recognition of the Avant Group and individual operating companies, we expect to remain in the upfront investment phase to achieve sustainable high growth from the fiscal year ending June 30, 2023 through the first half of the next mid-term management plan period. On the other hand, the market environment surrounding each company is very favorable. Under the new organization, we will improve profitability by increasing sales per existing customer and developing new customers through strengthening existing products, developing new products, and providing new solutions. As a result, we aim to achieve a compound annual growth rate (CAGR) of more than 20% in net sales during the next mid-term management plan period (period ending June 30, 2023 to June 30, 2028), and in the second half of the mid-term management plan, we aim to achieve a combined EBITDA margin (Growth and In the second half of the medium-term management plan, we aim to achieve a growth and profit point (GPP) of 40 points or more. We aim to maintain an average ROE of over 20% and gradually increase DOE from the current 5% level to 8% as a return to shareholders.