AVANT : Integrated Report 2022

AVANT GROUP CORPORATION

https://www.avantgroup.com/en

A V A N T G R O U P I N T E G R A T E D R E P O R T 2 0 2 2

C REATIVE DIALOG 2 0 2 2

A V A N T G R O U P I N T E G R A T E D R E P O R T

Becoming a Software Company

that Contributes to Enhancing

Corporate Value

In late 2021, the Avant Group identified the ultimate materiality that should be addressed to realize the "BE GLOBAL" vision. In 2022, the Group took the following actions to achieve this materiality.

ACTIONS

0 1	The business	Maximizing the Group's potential to
reorganization	contribute to customers
02	The upgrading of	Change to formulate and implement Group
strategies from a medium- to long-term
group management
perspective
	Visualization of	To achieve our shared objective, implement
03	"all-member management," where each com-
the corporate value
pany, division and employee has indicators
mechanism
		they should focus on

Along with the reorganization of the operating companies, the holding company was renamed to Avant Group Corporation and the brand was renewed. The new logo, which consists of 100 squares, expresses our management philosophy of "Creating a 100-year Company."

As we enter the second stage of "Spreading Accountability," the Avant Group will continue to change in its pursuit of contributing to the enhancement of our customers' corporate value.

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A V A N T G R O U P I N T E G R A T E D R E P O R T

CRE AT I V E DI A LOG 2 0 2 2

C O N T E N T S

04

Group  CEO Message

14

Contribution to Enhancing

Corporate Value

14

MANGA

Internal Logic vs. External Perceptions

32

"DX for Management" Realized by the Avant Group

36

Group Growth Strategy

52

Corporate Governance

52

DIALOG

Corporate Governance System for

Creating a 100-Year Company

57

Corporate Governance

68

Leadership

70

Sustainability

78

Forward-Looking Statements The earnings forecasts and other forward-looking statements and strategies contained in this document are based on information that is reasonably available to the Company at the time of preparation of this document and are based on judgments made within the normally predictable range. However, there is a risk that results may differ from the forecast presented in this document due to the occurrence of extraordinary events or results that are not normally predictable.

02

36

Business Restructuring

38

DIALOG

Future Vision of the New Avant Group

44

DIALOG

To Link the Awareness of Each Group Employee

to Corporate Value

50

Capital Policy

AVANT GROUP  INTEGRATED REPORT 2022

Medium-Term Management Plan

78

BE GLOBAL 2023

84

Financial and Non-Financial Highlights

86

Financial Data / Non-Financial Data

90

History

92

Corporate Philosophy / About Us / Stock Information

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Please look forward to the fresh start of the Avant Group,

as we become a software company

that contributes to our customers enhancing their corporate value.

T E T S U J I M O R I K A W A

Representative Director, President, and Group CEO

On September 29, 2022, we held a meeting of all employees of the Avant Group. Ahead of the forthcoming reorganization of the Group on October 1, it was only held in-person, as we wanted to directly convey the purpose of the reorganization.

 As soon as I was on the stage, all over my body I felt the intense power of the assembled members. The five senses that had been corroded by regular online meetings were activated in an instant. "Ah, I am working for the people who are gathered here," I thought to myself. This may also be "creative dialog." Passion is the starting point of value creation.

 In the previous Integrated Report, we focused on the concept of "corporate value," and as the

first action of the Avant Group, we defined the materiality of "becoming a software company that contributes to the enhancement of corporate value." Although we have a vision and a mission, we are faced with the fact that it is difficult to realize them, and we set it as our first step toward solving that problem.

 Setting this materiality prompted a variety of actions. This time, I would like to touch on three of these topics: the business reorganization on October 1, 2022, the upgrading of group man- agement, and visualization of the corporate value mechanism.

G R O U P  C E O

M E S SAG E

04

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Group Philosophy, Materiality, and Strategy

VISION

BE GLOBAL

-AWorld-class Software Company-

Materiality

MISSION

Spreading Accountability

-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

Avant Group Materiality to realize the vision

Becoming a software company that contributes to

enhancing corporate value

Vision to be realized through medium-term plans and strategies

Two Hurdles

Becoming a software companythat contributes to enhancing corporate value

Our core business model	What we contribute to through DX
	of management

Reorganization to Realize Materiality

This reorganization of the Group is the first step toward realizing the strategic materiality established in 2021 of "becoming a software company that contributes to the enhancement of corporate value." We have set two hurdles to clear to realize the vision through the mission.

 These two hurdles are not easy to overcome. The history of the Avant Group illustrates this difficulty. The dream we have had since our founding, "It can even be in any niche area. We will create a software company that will create a global de facto standard," is still alive today with the vision of BE GLOBAL. But the actual activity may seem to be moving away from the vision.  On the left and right of the horizontal axis are the service business and the software business, and on the vertical axis is the level of value-added productivity. Our goal is to expand and replicate businesses on the upper right. However, the realistic process starts at the bottom left, which fosters ideas for the software business. In fact, DIVA's consolidated accounting system grew out of its consulting business. The resulting software business falls under the right middle section. (Figure A)

Value-added productivity: High

Software

Services

Product

SI/Consulting

Value-added productivity: Low

(Figure A)

G R O U P  C E O M E S SAG E

 The standardization of software limits operations and functions. The trade-off between freedom and efficiency is unavoidable. Therefore, when we try to respond to the individual needs of our customers, it is easy for our business to expand to the lower left, and our business has actually become like that. On the other hand, the new software business didn't really take off due to the lack of opportunity experiences to grasp serious issues and combine them with technologies. (Figure B)

Value-added productivity: High

Software

Services

Product

SI/Consulting

Value-added productivity: Low

(Figure B)

 To solve this problem, we entered the software-based business process outsourcing (BPO) business. This is because we have the opportunity experiences from the business pane and accumulated know-how necessary for the growth of software. By launching a new business model similar to contemporary SaaS for software -based BPO, we aim to expand our software business beyond system integration (SI).

 As another business environment creation measure, businesses on the lower left are also included in the Group. Our goal is to enhance our ability to explore new software businesses by leveraging our project opportunity experience

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