Financial Results Briefing
for the Fiscal Year
ended June 30, 2020
This is an unofficial translation. In case of any difference in meaning between the original Japanese text and the English translation, Japanese text shall prevail
AVANT CORPORATION
(Code:3836 TSE1)
August 3, 2020
Contents
Ⅰ . Summary of financial results
for the fiscal year ended June 30, 2020 Ⅱ. Earnings and Dividend Forecast
*Figures in this material 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.
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 1 |
I. Summary of financial results
for the fiscal year ended June 30, 2020
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 2 |
Results Highlights
Improved results for the 5th consecutive year, net income setting new record
- The impact of COVID-19 can be seen in some orders towards the end of the fiscal year, but revenue exceeded expectations due to an additional order in a large-scale project in the consolidated accounting-related business.
- Operating income margin improved due to efforts to control fixed-expenses and absence of provision for loss on orders. Combined with a tax effects realized at the end of the fiscal year, net income increased 16.1% year on year.
(millions of yen) | ||||||
FY19/06 | FY20/06 | Year-on-Year | ||||
Variance | %CHG | |||||
Revenue | 14,077 | 15,691 | + 1,613 | + 11.5% | ||
Cost of Revenue | 7,779 | 8,525 | + 746 | + 9.6% | ||
SG&A expenses | 4,332 | 4,888 | + 556 | + 12.8% | ||
Operating Income | 1,966 | 2,277 | + 310 | + 15.8% | ||
OP Margin | 14.0% | 14.5% | - | + 0.5 point | ||
Ordinary Income | 1,972 | 2,280 | + 308 | + 15.6% | ||
Net Income | 1,317 | 1,529 | + 212 | + 16.1% | ||
EBITDA | 2,133 | 2,505 | + 371 | + 17.4% | ||
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 3 |
Results by Business Segment
- Revenues were driven by Business Intelligence business and Outsourcing business. The outsourcing business, which boasts a high proportion of recurrent revenue, expanded to 13% of consolidated revenues
- Consolidated accounting-related businesses drove growth in operating income represented by expenses reduction Initiatives in the second half.
(millions of yen) | |||||||
FY19/06 | FY20/06 | Year-on-Year | |||||
Variance | %CHG | ||||||
Revenue | 8,034 | 8,485 | + 451 | + 5.6% | |||
Consolidated | |||||||
Operating Income | 1,293 | 1,616 | + 323 | + 25.0% | |||
Accounting | |||||||
OP Margin | 16.1% | 19.1% | - | + 3.0 point | |||
Revenue | 4,990 | 5,767 | + 776 | + 15.6% | |||
Business | |||||||
Operating Income | 636 | 692 | + 55 | + 8.8% | |||
Intelligence | |||||||
OP Margin | 12.8% | 12.0% | - | 0.8 point | |||
Revenue | 1,629 | 2,062 | + 432 | + 26.5% | |||
Outsourcing | Operating Income | 318 | 364 | + 45 | + 14.4% | ||
OP Margin | 19.5% | 17.7% | - | 1.9 point | |||
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 4 |
Consolidated Accounting Business
Stable earnings, exceeding Company forecasts
- Additional orders in large-scale projects and new orders for legal consolidated accounting and profit management solutions also achieved higher sales, and the recurrent revenue ratio also increased
- Operating income margin improved by 3 percentage points due to a shift to highly profitable projects, control of fixed expenses, and absence of provision for loss on order received
- We delivered cloud-based Diva System LCA and other new solutions such as Compass that should contribute to the sophistication of group management of our clients
(millions of yen) | |||||
Consolidated | FY19/06 | FY20/06 | Year-on-Year | ||
Accounting | Variance | %CHG | |||
Revenue | 8,034 | 8,485 | + 451 | + 5.6% | |
Operating income | 1,293 | 1,616 | + 323 | + 25.0% | |
OP Margin | 16.1% | 19.1% | +3.0point | ||
New Orders | 7,774 | 8,313 | + 539 | + 6.9% | |
Outstanding Orders | 2,173 | 1,999 | 173 | 8.0% | |
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 5 |
Business Intelligence Business
Strong demand for DX confirmed, despite somewhat slower orders toward the end of the fiscal year
- Double-digitrevenues growth achieved on the back of strong investment demand for DX
- Operating income margin decreased slightly, as higher compensation levels and higher fixed expenses associated with opening of a new office were only partially offset by an increase in revenues
- As the business has high susceptibility to the economic environment, the order backlog fell by double digits. Recently inquiries are recovering, and new services based on proprietary IPs were launched.
(millions of yen) | ||||
Business | FY19/06 | FY20/06 | Year-on-Year | |
Intelligence | Variance | %CHG | ||
Revenue | 4,990 | 5,767 | + 776 | + 15.6% |
Operating income | 636 | 692 | + 55 | + 8.8% |
OP Margin | 12.8% | 12.0% | 0.8point | |
New Orders | 5,265 | 5,417 | + 151 | + 2.9% |
Outstanding Orders | 1,204 | 854 | 350 | 29.1% |
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 6 |
Outsourcing Business
Double-digit revenues and profit growth
- Steady growth of 20% in recurrent revenues due to steady new contracts in financial closing outsourcing and fund management solutions
- The operating income margin fell by about 2 points due to the increase in fixed expenses associated with the expansion of offices, as well as expenditures to improve the office environment to ensure the safety of employees.
- Concluded a partnership with Aptitude Software to diversify solutions
(millions of yen) | ||||
Outsourcing | FY19/06 | FY20/06 | Year-on-Year | |
Variance | %CHG | |||
Revenue | 1,629 | 2,062 | + 432 | + 26.5% |
Operating income | 318 | 364 | + 45 | + 14.4% |
OP Margin | 19.5% | 17.7% | 1.9point | |
New Orders | 1,807 | 2,160 | + 352 | + 19.5% |
Outstanding Orders | 852 | 950 | + 97 | + 11.4% |
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 7 |
Selected Quarterly Financial Data
- Operating margin in Q4 was 15.1%, a high level for the quarter
(Millions of Yen)
FY16/06 | FY17/06 | FY18/06 | FY19/06 | FY20/06 | ||||||||||||||||
1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | |
Revenue | 2,175 | 2,389 | 2,420 | 2,627 | 2,272 | 2,685 | 2,756 | 2,817 | 2,544 | 3,144 | 3,095 | 3,326 | 3,180 | 3,752 | 3,631 | 3,512 | 3,714 | 4,019 | 4,050 | 3,906 |
Cost of Revenue | 1,233 | 1,341 | 1,454 | 1,423 | 1,288 | 1,444 | 1,490 | 1,610 | 1,514 | 1,866 | 1,720 | 1,845 | 1,772 | 1,929 | 2,057 | 2,020 | 2,149 | 2,205 | 2,113 | 2,056 |
Gross Profit | 941 | 1,047 | 966 | 1,204 | 984 | 1,241 | 1,265 | 1,206 | 1,029 | 1,277 | 1,374 | 1,481 | 1,408 | 1,823 | 1,574 | 1,492 | 1,565 | 1,814 | 1,936 | 1,849 |
SG&A expenses | 744 | 822 | 698 | 784 | 703 | 930 | 847 | 910 | 781 | 865 | 898 | 986 | 1,027 | 1,188 | 982 | 1,133 | 1,050 | 1,239 | 1,338 | 1,260 |
Operating Income | 197 | 224 | 268 | 419 | 280 | 310 | 418 | 296 | 247 | 412 | 476 | 494 | 380 | 634 | 592 | 358 | 514 | 574 | 598 | 589 |
OP Margin | 9.1 | 9.4 | 11.1 | 16.0 | 12.4 | 11.6 | 15.2 | 10.5 | 9.7 | 13.1 | 15.4 | 14.9 | 12.0 | 16.9 | 16.3 | 10.2 | 13.8 | 14.3 | 14.8 | 15.1 |
Ordinary Income | 196 | 222 | 268 | 425 | 280 | 315 | 416 | 296 | 248 | 415 | 472 | 495 | 380 | 633 | 593 | 364 | 520 | 573 | 598 | 588 |
Net Income | 130 | 118 | 118 | 293 | 183 | -0 | 250 | 230 | 162 | 269 | 311 | 318 | 237 | 403 | 389 | 286 | 334 | 339 | 344 | 511 |
EBITDA | 251 | 283 | 328 | 483 | 341 | 370 | 481 | 359 | 300 | 436 | 514 | 534 | 417 | 673 | 634 | 408 | 557 | 621 | 658 | 668 |
EBITDA Margin (%) | 11.5 | 11.9 | 13.6 | 18.4 | 15.0 | 13.8 | 17.5 | 12.8 | 11.8 | 13.9 | 16.6 | 16.1 | 13.1 | 17.9 | 17.5 | 11.6 | 15.0 | 15.5 | 16.3 | 17.1 |
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 8 |
Quarterly Trends in Major KPIs
(millions of yen)
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1Q 2Q 3Q FY16/06
Revenue | Operating Income | OP Margin | |
25% |
20%
15.1%
15%
10%
5%
0%
4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q |
FY17/06 | FY18/06 | FY19/06 | FY20/06 |
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 9 |
Selected Quarterly Segment Data
(millions of yen)
FY June 2018 | FY June 2019 | FY June 2020 | ||||||||||||
1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | |||
Consolidated Accounting | 1,343 | 1,906 | 1,557 | 2,924 | 1,611 | 1,890 | 1,693 | 2,579 | 1,893 | 2,008 | 1,944 | 2,466 | ||
New | Business Intelligence | 998 | 1,030 | 1,118 | 1,073 | 1,235 | 1,223 | 1,439 | 1,365 | 1,565 | 1,347 | 1,191 | 1,313 | |
Outsourcing | 297 | 343 | 297 | 549 | 439 | 319 | 363 | 685 | 599 | 468 | 505 | 586 | ||
Orders | △ | △ | △ | △ | △ | △ | △ | △ | △ | △ | △ | △ | ||
(Elimination of inter-segment transaction) | 72 | 255 | 116 | 154 | 201 | 115 | 92 | 266 | 102 | 201 | 64 | 164 | ||
New Orders | 2,567 | 3,025 | 2,856 | 4,392 | 3,085 | 3,317 | 3,404 | 4,363 | 3,955 | 3,623 | 3,576 | 4,202 | ||
Consolidated Accounting | 1,913 | 1,876 | 1,576 | 2,433 | 2,261 | 1,927 | 1,611 | 2,173 | 2,143 | 1,910 | 1,689 | 1,999 | ||
Orders | Business Intelligence | 762 | 791 | 895 | 929 | 1,004 | 958 | 1,044 | 1,204 | 1,340 | 1,245 | 926 | 854 | |
Outstandin | Outsourcing | 515 | 524 | 474 | 675 | 734 | 650 | 597 | 852 | 948 | 928 | 891 | 950 | |
g | △ | △ | △ | △ | △ | △ | △ | △ | △ | △ | △ | △ | ||
(Elimination of inter-segment transaction) | 65 | 187 | 179 | 203 | 260 | 232 | 177 | 303 | 264 | 312 | 209 | 208 | ||
Orders Outstanding | 3,125 | 3,006 | 2,768 | 3,834 | 3,739 | 3,304 | 3,076 | 3,927 | 4,168 | 3,771 | 3,298 | 3,595 | ||
Consolidated Accounting | 1,392 | 1,942 | 1,857 | 2,068 | 1,783 | 2,225 | 2,008 | 2,017 | 1,922 | 2,242 | 2,165 | 2,154 | ||
Business Intelligence | 897 | 1,001 | 1,014 | 1,039 | 1,161 | 1,268 | 1,353 | 1,206 | 1,429 | 1,441 | 1,510 | 1,385 | ||
Revenue | Outsourcing | 282 | 334 | 347 | 349 | 380 | 402 | 416 | 430 | 504 | 489 | 541 | 527 | |
△ | △ | △ | △ | △ | △ | △ | △ | △ | △ | △ | △ | |||
(Intra-segment elimination) | ||||||||||||||
27 | 134 | 125 | 130 | 144 | 143 | 147 | 141 | 141 | 153 | 167 | 161 | |||
Revenue | 2,544 | 3,144 | 3,095 | 3,326 | 3,180 | 3,752 | 3,631 | 3,512 | 3,714 | 4,019 | 4,050 | 3,906 | ||
Consolidated Accounting | 145 | 220 | 265 | 398 | 244 | 362 | 346 | 339 | 330 | 379 | 378 | 528 | ||
Business Intelligence | 21 | 81 | 122 | 98 | 102 | 210 | 233 | 89 | 180 | 171 | 209 | 130 | ||
Operating | Outsourcing | △ | ||||||||||||
50 | 72 | 53 | 36 | 101 | 100 | 79 | 37 | 118 | 116 | 133 | 4 | |||
Income | △ | △ | △ | △ | △ | △ | △ | △ | △ | |||||
(Elimination of inter-segment transaction) | 29 | 37 | 34 | 39 | 68 | 39 | 67 | 106 | 114 | 93 | 122 | 65 | ||
Opertating Income | 247 | 412 | 476 | 494 | 380 | 634 | 592 | 358 | 514 | 574 | 598 | 589 | ||
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 10 |
Total Number of Group Employees
(person) | ||||||||||||||||||||
1,100 | 1,055 | |||||||||||||||||||
1,000 | 950 | 965 | 963 | |||||||||||||||||
938 | ||||||||||||||||||||
900 | 855 | 874 | ||||||||||||||||||
832 | ||||||||||||||||||||
806 | ||||||||||||||||||||
800 | ||||||||||||||||||||
755 | ||||||||||||||||||||
735 | 734 | |||||||||||||||||||
709 | ||||||||||||||||||||
700 | ||||||||||||||||||||
649 | ||||||||||||||||||||
615 | 627 | |||||||||||||||||||
603 | ||||||||||||||||||||
600 | 570 | |||||||||||||||||||
560 | 554 | |||||||||||||||||||
500 | ||||||||||||||||||||
400 | ||||||||||||||||||||
300 | ||||||||||||||||||||
200 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 |
FY16/06 | FY17/06 | FY18/06 | FY19/06 | FY20/06 |
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 11 |
Financial Condition& Cash Flows
Financial Status
Total Assets
11.7 billion yen
Cash Flows
(millions of yen)
Operating CF
Investment CF
Free CF
Financial CF
Jun 2020 | Equity Ratios | ||||||||||||
70 | (%) | ||||||||||||
Total Liabilities | 61.0 | ||||||||||||
4.5 | 60 | 52.9 | 54.4 | 56.6 | |||||||||
49.4 | |||||||||||||
billion yen | 50 | 53.3 | 44.4 | 48.2 | |||||||||
Net Assets | 40 | 47.7 | |||||||||||
43.7 | 39.3 | ||||||||||||
7.1 | 30 | FY10 | FY11 | FY12 | FY13 | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | FY20 | |
billion yen | |||||||||||||
Key Factors for change | (millions of yen) | ||||||||||||
FY19/06 | FY20/06 | ||||||||||||
1,320 | 1,890 | ||||||||||||
(455) | (420) |
864 1,470
- (294)
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 12 |
Return on Equity (ROE) trends
Our goal is to maintain over 20% on average in the mid- to long-term
- We aim to improve ROE, while maintaining the Group's management principles, by enhancing profitability further and managing assets more efficiently
(mi llions of yen) | Net Asset | ROE ※ (%) | |||||||||||||||||||||||||||||||
8,000 | 35% | ||||||||||||||||||||||||||||||||
7,000 | 30% | ||||||||||||||||||||||||||||||||
6,000 | 23.4% 25% | ||||||||||||||||||||||||||||||||
5,000 | 20% | ||||||||||||||||||||||||||||||||
4,000 | |||||||||||||||||||||||||||||||||
3,000 | 15% | ||||||||||||||||||||||||||||||||
2,000 | 10% | ||||||||||||||||||||||||||||||||
1,000 | 5% | ||||||||||||||||||||||||||||||||
- | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 0% | ||||||||
FY15/06 | FY16/06 | FY17/06 | FY18/06 | FY19/06 | FY20/06 |
※twelve month rolling
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 13 |
Ⅱ. Earnings and Dividend Forecast
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 14 |
Earnings forecast for the fiscal year ending June 30, 2020
We expect six consecutive years of growth in revenue and profit
- Both revenues and profits are expected to be at low levels in Q1, as economic activity stagnated around April and May due to the spread of COVID-19 and the accompanying announcement of the state of emergency.
- On the other hand, projects that were suspended or delayed at the time have gradually resumed and re-started as economic activities regain ground. The Group assumes that they will recover from the second quarter onward and expects both revenues and profit to increase slightly for the fiscal year.
(millions of yen) | |||||
2020 | 2021 | ||||
June | June | Variance | % CHG | ||
(Actual) | (Forecast) | ||||
Revenue | 15,691 | 16,110 | + 418 | + 2.7% | |
Operating | 2,277 | 2,330 | + 52 | + 2.3% | |
Income | |||||
OP Margin | 14.5% | 14.5% | ― | ― | |
Net Income | 1,529 | 1,561 | + 31 | + 2.0% | |
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 15 |
Dividend Forecasts
For fiscal year ending June 2021 we forecast 10 yen per share dividends
- In line with the policy of continuing to pay stable dividends, we expect to increase dividends for the six consecutive fiscal year
- The DOE in Fiscal Year 06/2020 was 5.2%, which is expected to reach a level significantly higher than the average of 2.9% of the company listed on the TSE (12 months)
(yen/share) | ||||||
10.0 | ||||||
9.0 | ||||||
7.5 | ||||||
6.0 | ||||||
4.0 | ||||||
2.25 | 2.75 | |||||
2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
(Adjusted for stock splits) | (Plan) (Forecast) |
<AVANT's shareholder return policy>
- Cash dividends are an important part of shareholder return policy
- AVANT plans to maintain sustainable growth in dividends, and rely on dividends on equities (DoE) rather than cash income which could fluctuate and unpredictable
- DoE ratios for AVANT should improve over time and always exceed average of all listed companies of Tokyo Stock Exchange
© 2020 AVANT CORPORATION. ALL RIGHTS RESERVED. | 16 |
17
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Avant Corporation published this content on 03 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 August 2020 04:01:16 UTC