Company Research and Analysis Report
FISCO Ltd.
http://www.fisco.co.jp

BSP
3800 TSE JASDAQ* The company plans to change its nameto UNIRITA Incorporated on Wednesday,
April 1, 2015, after obtaining approval atan extraordinary meeting of shareholders
to be held on Friday, February 20, 2015.

15-Jan.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ikuo Shibata

伪伪Taking Changes in the External Environment as Positive
Opportunities and Starting Business Structure Reforms
BSP Incorporated [3800] focuses on development, sales and services for package operation
control software for backbone systems for a diverse range of industries, including the financial
and manufacturing industries. By contributing to the automation and improved efficiency of
its customers’ IT systems operation, it has realized steady sales growth and high profitability.
BSP has initiated reforms to its business structure by taking advantage of changes in theexternal environment to expand business. These changes include a shift in corporate IT
spending into areas that contribute directly to business operations, such as a move toward
open architecture in systems and downsizing. Its policy is to accelerate growth by expanding its
business domains into areas where expansion in demand is expected. One such move was theconsolidation of Beacon Information Technology Inc. (herein “Beacon IT”; an absorption-typemerger is planned for April 1, 2015), which is active in fields supporting strategic informationrelated systems, such as data utilization.
BSP’s 1H FY3/15 (April to September 2014) results showed a decline in profits despite amajor increase in sales, with net sales up 53.1% YoY to ¥3,489mn and operating income down
24.7% YoY to ¥611mn. Although the consolidation of Beacon IT contributed to an increase insales, an increase in upfront expenses related to business structure reforms and other factors
pushed profits lower. BSP has positioned FY3/15 as the initial year for its business structurereforms, and while business performance is expected to mark time temporarily, the company isprojecting increases in both sales and earnings for the full year, with net sales up 78.4% YoY to¥7,500mn, and operating income up 16.8% YoY to ¥1,380mn.
BSP’s progress in business structure reforms will bear watching from a medium-term
perspective, including strengthening of the business base through early integration of businessresources, consolidation of products and services in order to enhance profitability, and creationof Group synergy platforms.

伪伪Check Point
・A structure that can support both expansive and defensive aspects of customers’
businesses
・A large market share in mainframes enables the company to receive survivor benefits
・High possibility of dividend increases even in the medium term due to profit growth・Plan to change name to UNIRITA Incorporated with the merger of Beacon IT on April
1, 2015

We encourage readers to review our complete legal statement on “Disclaimer” page.
1

㻾㼑㼟㼡㼘㼠㼟㻌㼀㼞㼑㼚㼐㼟（¥mn）

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BSP

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3800 TSE JASDAQ㻡㻘㻜㻜㻜* The company plans to change its nameto UNIRITA Incorporated on Wednesday,
April 1, 2015, after obtaining approval atan extraordinary meeting of shareholders
to be held on Friday, February 20, 2015.

15-Jan.-15

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Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ikuo Shibata

伪伪Business Overview
New acquisition of a data utilization business with theconsolidation of Beacon IT
BSP Incorporated focuses on development, sales and services for operations control package
software for backbone systems for a diverse range of industries, including the financial andmanufacturing industries. In addition to peripheral activities such as operational consulting andhuman resource development, where it utilizes its proprietary know-how, BSP also provides
administration services.
Products aimed at mainframes chiefly for financial institutions and large scale corporations,have been a stable source of income since BSP’s establishment, and boast high profitability.
BSP has achieved steady growth by contributing to automation and enhanced efficiency incustomers’ IT operating systems, including job management and form control.
At the same time, BSP has initiated reforms to its business structure by taking advantage
of changes in the external (operating) environment to expand its business, such as shifts toopen architecture in systems, downsizing, the proliferation of cloud computing and the use of
big data. In addition to automation and enhancing efficiency in existing IT systems operation,
by expanding its business domains to areas that are able to contribute to corporate value
creation, BSP’s policy is to accelerate growth.
As part of its structural operational reforms, in January 2014 BSP consolidated Beacon IT (theparent company when BSP received business transfers and began full-scale activities in July1993) and its subsidiaries (BSP plans to conduct and absorption-type merger on April 1, 2015).
BSP has positioned FY3/15 as the first year for business structure reforms targeting growth,and while it expects business performance to mark time temporarily as a result, is proceeding
to merge its organization with Beacon IT and to build a platform for business synergies.
BSPs operations are divided into four business segments as follows. The composition of net
sales by segment reveals the Data Utilization Business, the Systems Operations Business, andthe Mainframe Business to be the main three pillars, with the Mainframe Business contributing
most of the operating income.

We encourage readers to review our complete legal statement on “Disclaimer” page.
2

■Business■
Overviewa) Data Utilization BusinessThis is a new business acquired through the consolidation of Beacon IT, and is poised to bea core business field going forward. It will undertake activities such as development and salesof software for data utilization, including increasing data processing speeds and strengthening
operating functions, as well as consulting in relation to data utilization.

BSP
3800 TSE JASDAQ* The company plans to change its nameto UNIRITA Incorporated on Wednesday,
April 1, 2015, after obtaining approval atan extraordinary meeting of shareholders
to be held on Friday, February 20, 2015.

15-Jan.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ikuo Shibatab) Systems Operations Business
The Systems Operation Business combines the previous Product Division, Solutions Division,
and BPO Operations Group.
In the products business, BSP handles open architecture products within operations control
for backbone systems. As well as undertaking development, sales and support services
for proprietary products in the three fields of operations automation, forms and IT service
management, BSP also handles certain products from other companies. Royalties on productusage rights (license fees) and maintenance services that are a fixed ratio of the product costform the sources of income. Also, in March 2013 BSP commenced the cloud service Be.Cloud,for which demand is growing.
In the solutions business, BSP provides solution services in the IT services domain (including
systems development consulting and human resource development), its membership systembased “Sys-Doc” service (providing expert advice on IT systems operation via periodic
client visits), and a service offering solutions utilizing the ASMO method aimed at developing
operations divisions that contribute to management (including corporate value analysis,organizational reform and human resource development), among other activities.
The BPO operations business is an administrative service launched in October 2013 based on
the “Operationless” concept of IT divisions contributing to corporate value creation, whichis advocated by BSP. Specifically, it undertakes support for activities from proposals forreforms in relation to IT system operation, system development, systems migration, project
management and establishing a service desk.
c) Mainframe BusinessWithin operations control for backbone systems, BSP supplies proprietary mainframe products
chiefly for financial institutions and large scale corporations. From the year following the saleof a mainframe product, BSP receives a maintenance service fee from users, calculated as afixed ratio of the product cost. This has been BSP’s flagship business since its establishment
and forms a stable source of income.
d) Other Business
These are also new businesses acquired through the consolidation of Beacon IT. They comprisethe businesses of Beacon IT other than those in (a) above, including business continuity plandevelopment, administration and maintenance support, as well as an SaaS product for HR
outsourcing management.
As of March 31, 2014, client numbers (the number of companies that have installed BSP
products) exceeded 800 companies, with a track record of numerous cases of installations bylarge scale corporations. The composition of net sales by industry type reveals applications
in a diverse range of industries, with high ratios for manufacturing, retail and distribution, andfinance and insurance.

We encourage readers to review our complete legal statement on “Disclaimer” page.
3

■Business■
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BSP

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3800 TSE JASDAQ㻲㼕㼚㼍㼚㼏㼑㻌㻒㻵㼚㼟㼡㼞㼍㼚㼏㼑* The company plans to change its nameto UNIRITA Incorporated on Wednesday,
April 1, 2015, after obtaining approval atan extraordinary meeting of shareholders
to be held on Friday, February 20, 2015.

㻝㻡㻑15-Jan.-15

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Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ikuo Shibata

Direct sales form the main sales channel, with some (forms etc.) via partners. There are sevenconsolidated subsidiaries, including BSP Solutions Incorporated, which operates the solution
business (currently part of the Systems Operations Business), BSP (Shanghai), Inc., (BSP
Shanghai), which is the base for sales in China, Beacon IT, which was consolidated in FY3/15,
and its subsidiaries (ASPEX, Bitis, Inc., and Data Research Institute), as of September 30, 2014.

伪伪Corporate Characteristics
A structure that can support both expansive and defensive
aspects of customers’ businesses
BSP’s corporate philosophy is “Using flexible IT, we aim to be a company that contributes thedevelopment of society and the creation of a better future.”
We may cite the following three distinguishing characteristics of BSP: a) it is an independent
software vendor specializing in IT systems operation, b) it invests from the stable mainframe
income source in the next growth areas, and c) through structural operational reforms
associated with the consolidation of Beacon IT, it has achieved a structure that allows it toprovide support for customers’ businesses in both the expansive and defensive aspects.
a) Independent software vendor specializing in IT systems operation
BSP’s products specialize in enabling smooth system operation without being restricted by thescale of a computer or manufacturer, or other such factors. Since products of manufacturersthat compete with BSP’s products do not allow the hardware component to be replacedby those of another manufacturer, there is a clear distinction for customers because thisbecomes a factor hindering flexible systems development. Further, because BSP’s provided
value is concentrated in its ability to contribute to automation and enhanced efficiency in IT
systems, the track record and know-how it has amassed specializing in this field are reflected
in a high degree of detail and performance in its products and services and precision in its
proposals. In system implementation, amidst a trend amongst many to outsource to agents, thefact that BSP’s products are provided through direct sales to chiefly financial institutions andlarge scale corporations, and that there are many cases where BSP systems are adopted as
replacements during system updates testifies to the high quality of the company’s offerings.
Further, SysAdmin’s Group, which BSP is contracted to operate, is one of the largest systemmanager networks in Japan, boasting over 13,000 members (and 138 endorsing companies) anddemonstrating that BSP is a driving force in this field.

We encourage readers to review our complete legal statement on “Disclaimer” page.
4

■Corporate■
Characteristics

BSP
3800 TSE JASDAQ* The company plans to change its nameto UNIRITA Incorporated on Wednesday,
April 1, 2015, after obtaining approval atan extraordinary meeting of shareholders
to be held on Friday, February 20, 2015.

15-Jan.-15b) Investment from the stable mainframe income source in the next growth areas
BSP’s Mainframe Business segment profitability is astoundingly high at 72.0% (FY3/14 actual
results), and the segment has supported BSP’s results as a stable source of income. We
believe this is made possible not only by customer confidence in BSP’s products and services,
but also by high customer switching costs (costs that arise due to replacing systems). Despite
concerns about mainframe business gradually shrinking, it is expected that for some time itwill fulfill the role of a cash cow, and we feel that for BSP, being able to earmark those funds
for investment in the next growth areas (e.g. cloud services, data utilization), is a significant
advantage.
c) A structure that can support both expansive and defensive aspects of customers businesses
The current business structure reforms will not only contribute to the automation and enhanced
efficiency of IT systems operation, but by expanding BSPs business domains to include areas
where customers will subsequently reallocate management resources (staffing, budget etc.,
i.e. areas that create corporate value), the reforms will enable more persuasive proposals anddevelopment of a diverse array of solutions, which we feel will establish BSP’s superiority.

Important disclosuresand disclaimers appear
at the end of this document.

伪伪Operating results trends
FISCO Ltd. Analyst
Ikuo Shibata

Despite a significant earnings boost due to the consolidation of
Beacon IT, the planned targets may be out of reach(1) Overview of 1H FY3/15 Financial Results
BSP’s financial results for 1H FY3/15 (April to September 2014) saw a decline in profit
despite a significant increase in sales. Net sales were \3,489mn, up 53.1% from the same
period of the previous fiscal year (Y-o-Y), operating income was \611mn, down 24.7% Y-o-Y,
ordinary income was \698mn, down 17.2% Y-o-Y, and net income was up 2.2%. The company
has achieved 91.3% of its initial target for 1H net sales, and 84.9% of its target for operating
income, showing somewhat delayed progress.
Looking at net sales by operating segment, the addition of the Data Utilization Business andOther Business with the consolidation of Beacon IT has contributed significantly to increased
sales. Meanwhile, the Systems Operations Business has grown slightly with the addition oftechnical support services, while the Mainframe Business saw sales decline as the market
contracted. The main reason for net sales falling below initial forecasts is lower than planned
product sales in both the Data Utilization Business and the Systems Operations Business.
Meanwhile, although the Mainframe Business saw sales decline, the amount of the decline
appears to have been held to less than expected due to the receipt of a large-scale order andother factors.
On the other hand, the main reasons for the cost of sales ratio being driven significantly higher
were an increase in technical support services in the Systems Operations Business and anincrease in license fee payments on other companies’ products due to the addition of the Data
Utilization Business. The SG&A expense ratio was also pushed up by an increase in expenses
with the consolidation of Beacon IT (\912mn), while the operating margin fell to 17.5% from
35.6% in 1H FY3/14. However, this represented a difference of only 1.3% compared to theprojected margin at the beginning of the year of 18.8%.
Operating results by segment were as follows.

We encourage readers to review our complete legal statement on “Disclaimer” page.
5

■Operating■
results trends

The Data Utilization Business, which was added with the consolidation of Beacon IT, recorded
net sales of \1,130mn and an operating loss of \84mn (no Y-o-Y comparison disclosed).
Although demand for investment in data utilization is expanding, sales were lower than both 1H
FY3/14 and the forecast due to partially modifying and eliminating supply of other companies’
products in the process of achieving early integration with Beacon IT. On the other hand,profitability appears to be improving.

BSP
3800 TSE JASDAQ* The company plans to change its nameto UNIRITA Incorporated on Wednesday,
April 1, 2015, after obtaining approval atan extraordinary meeting of shareholders
to be held on Friday, February 20, 2015.

15-Jan.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ikuo Shibata

The Systems Operations Business recorded an increase in sales with net sales of \917mn,
up 7.0% Y-o-Y, and operating loss of \296mn (compared to an operating loss of \231mn in
1H FY3/14). However, the new business started from 2H FY3/14, BPO operations, failed
to achieve profitability and expanded its losses. In the mainstay product business, technicalsupport services grew as customers struggled with staff shortages in their IT departments;
however, as customers’ investment amounts decreased due to a shift from a purchasing model
to a service-use model, a decline in large-scale transactions in product licensing sales becamea factor driving down profitability. Moreover, a larger than expected demand for technicalsupport services appears to have strained the company’s attention to product sales, which
also led to their decline.
The Mainframe Business recorded declines in both sales and profits. Net sales were \1,174mn,
down 17.4% Y-o-Y, and operating income was \927mn, down 14.2% Y-o-Y. Although thesector continues to contract in line with a widespread shift to open-architecture systems
and downsizing, the decline in segment performance has been less than anticipated due to anincrease in server upgrade projects in the financial industry, and in orders received from majorbanks for large-scale shared system use projects.
The Other Business was newly added with the consolidation of Beacon IT and recorded net
sales of \267mn and operating income of \64mn (no Y-o-Y comparison was disclosed). The HR
outsourcing market saw expanding demand, and demand for business process improvements
for HR outsourcing companies drove brisk product sales.
1H FY3/15 Results Overview
1H FY3/14

1H FY3/15%
Net sales
Data Utilization Business
Systems Operations Business
Mainframe Business
Other Business
COGs
SG&A
Operating income
Data Utilization Business
Systems Operations Business
Mainframe Business
Other Business
Ordinary income
Net income

2,279
857
1,421
224
1,242
812
-231
1,082
843
504

37.6%
62.4%
9.9%
54.5%
35.6%
76.1%
37.0%
22.1%

Change

%
3,489
1,130
917
1,174
267
834
2,042
611
-84
-296
927
64
698
515

32.4%
26.3%
33.6%
7.7%
23.9%
58.5%
17.5%
79.0%
20.0%
14.8%

YoY
1,210
1,130
59
-247
610
800
-200
-64
-154
101
-145
10

53.1%
7.0%
-17.4%
271.3%
64.4%-24.7%-14.2%-17.2%
2.2%(Unit: ¥mn)
1H FY3/15
Company Forecast
達成
%
率
3,820
91.3%
720 18.8% 84.9%
785 20.5% 88.9%
500 13.1% 103.0%

We encourage readers to review our complete legal statement on “Disclaimer” page.
6

■Operating■
results trends

FY3/15 positioned as the first year for business structure reforms(2) FY3/15 operating results outlook

BSP
3800 TSE JASDAQ* The company plans to change its nameto UNIRITA Incorporated on Wednesday,
April 1, 2015, after obtaining approval atan extraordinary meeting of shareholders
to be held on Friday, February 20, 2015.

15-Jan.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ikuo Shibata*	Business Process Management.
BPM involves comprehending
and analyzing the company-wide
flow of operations (businessprocesses) of a company thenusing information systems tocontinually manage, improve, andoptimize the flow.

BSP’s FY3/15 forecasts anticipate growth in both sales and earnings, and have been left
unchanged from the initial forecast with net sales up 78.4% Y-o-Y to ¥7,500mn, operating
income up 16.8% Y-o-Y to ¥1,380mn, ordinary income up 17.6% Y-o-Y to ¥1,460mn and net
income up 11.3% to ¥890mn.
The consolidation of Beacon IT has contributed to significantly to growth in net sales, whilefrom a profit perspective, BSP expects the operating margin to decline due to factors such as
Beacon IT’s low profitability, a decline in mainframe business, which is the main earner, andupfront costs associated with business structure reforms. BSP has positioned FY3/15 as thefirst year for business structure reforms and has planned for business performance to marktime temporarily.
Despite an apparent delay in progress in the 1H performance, BSP aims to reach its full-year
forecasts by realizing value creation from a medium-term perspective such as strengthening
its business base through early integration of its management base, consolidation of products
and services to strengthen profitability, and creation of a group synergy platform, as well as byprocess improvement and strengthening of new businesses.
In particular, by completing thorough revision of sales processes, BSP has recently improved
customer activity by approximately 30% (in terms of numbers of customer visits, proposals,etc.), while reducing the number of low-profitability projects has helped to improve profitability.
We believe this could enable the company to make up lost ground during 2H. Furthermore, inthe operation BPM business*, which is seeing expanding demand due to corporate globalizationand integration and reorganization, among other trends, BPS has increased orders by adding
eight highly experienced technicians, and this is also expected to contribute to earnings from
2H onwards.
FY3/15 Results Outlook(Unit: ¥mn)
FY3/14
Actual

FY3/15
Forecast%

Net sales
Data Utilization Business
Systems Operations Business
Mainframe Business
Other Business
COGs
SG&A
Operating income
Ordinary income
Net income

4,203
1,843
2,359
513
2,509
1,181
1,241
799

43.8%
56.1%
12.2%
59.7%
28.1%
29.5%
19.0%

Change
%

7,500
2,500
2,500
2,000
500
1,380
1,460
890

33.3%
33.3%
26.7%
6.7%
18.4%
19.5%
11.9%

3,296
2,500
657
-359
500
199
219
91

%
78.4%
35.6%
-15.2%
16.9%
17.6%
11.4%

We encourage readers to review our complete legal statement on “Disclaimer” page.
7

伪伪Corporate history and results performance
Built-up track record in backbone systems chiefly for financial
institutions and large scale corporations

BSP(1) Corporate History

3800 TSE JASDAQ

BSP’s former incarnation, Three B, Inc. was established in 1982 in Tokyo’s Chuo Ward asa subsidiary of Business Consultant, Inc. a provider of programs for HR and organizational
development. The origins of Business Consultant were in Software AG of Far East (currently
Beacon IT), which had been selling A-Auto (software for automating the scheduling ofcomplicated computer systems jobs and achieving enhanced efficiency in IT systems
administration) domestically, and sought to sell the software in the US market.

* The company plans to change its nameto UNIRITA Incorporated on Wednesday,
April 1, 2015, after obtaining approval atan extraordinary meeting of shareholders
to be held on Friday, February 20, 2015.

15-Jan.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ikuo Shibata

Subsequently, in 1987 the company changed its name to BSP. The turning point for BSP waswhen it took over the operations relating to systems management from Software AG of Far
East in 1993 and commenced full-scale operations as a specialist systems administration
software company. Following that, while steadily seeking to strengthen its operating platform
aided by the expansion in IT systems investment, it built-up a track record chiefly in backbone
systems (mainframes), including for financial institutions and large scale corporations.
In 2001, the company established BSP Solutions Inc. and commenced full-scale consulting
solutions operations. In 2006, it listed on the JASDAQ Securities Exchange (currently TSE
JASDAQ).
In 2008, the company expanded into China by establishing BSP Shanghai. In 2013, based on the“Operationless” concept, it commenced the Be.Cloud cloud service and administrative BPO
Operations Service.
In January 2014, by consolidating Beacon IT, BSP incorporated growth areas such as datautilization and initiated structural operational reforms. (BSP plans to conduct an absorptiontype merger with Beacon IT on April 1, 2015).
In May 2014, BSP entered into a business alliance with Software AG, Inc. for handling productsin the big data and business process management area, thereby paving the way for operational
expansion into the big data field.

We encourage readers to review our complete legal statement on “Disclaimer” page.
8

■Corporate■
history and results performance

BSP Corporate History Schematic (to Jan. 24, 2014)

Beacon Group
Established 1964 (Year 39 Showa Era)

Business Consultant

BSP

Spun-off 1970 (Year 45 Showa Era)

Lincrea (formerly Beacon Systems)

3800 TSE JASDAQ
Established1982 (Year 57 Showa Era)

* The company plans to change its nameto UNIRITA Incorporated on Wednesday,
April 1, 2015, after obtaining approval atan extraordinary meeting of shareholders
to be held on Friday, February 20, 2015.

Beacon Information
Technology

Three B

15-Jan.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ikuo Shibata

Spun-off 1976 (Year 51 Showa Era)

Changed company name1987 (Year 62 Showa Era)

BSP Group

Took over transport-related operations
1993 (Year 5 Heisei Era)

BSP
Source: Company materials

Conservative financial strategy ensures capacity to drive growthduring stages requiring investment(2) Previous results performance
Reviewing BSP’s results, despite sales showing a decline from FY3/09 to FY3/10 from theimpact of the Lehman Shock and other factors, from FY3/12 onwards amidst a shift to open
architecture systems, there is a pattern of growth in the product business (currently partof the Systems Operations Business) driving BSP’s sales growth, with continuing growth inunderlying earnings.
From a profit perspective, despite a continuing high degree of reliance on the mainframe
business, the operating margin is trending upward with improving profitability in the productbusiness, and reached 28.1% in FY3/14.
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We encourage readers to review our complete legal statement on “Disclaimer” page.
9

■Corporate■
history and results performance

BSP
3800 TSE JASDAQ* The company plans to change its nameto UNIRITA Incorporated on Wednesday,
April 1, 2015, after obtaining approval atan extraordinary meeting of shareholders
to be held on Friday, February 20, 2015.

Further, from a financial perspective BSP appears to have an extremely conservative financial
strategy. It has a high level of shareholders’ equity, which is an indicator of the stability of its
financial platform, and a high current ratio (420% as of the term-end FY3/14), which indicates
its ability to make short-term payments, reflecting its ample balance of cash and near cash
assets. However, at stages requiring investment in the next growth areas, the strength of thefinancial platform could also become the driving force for BSP’s growth. ROE, which indicates
capital efficiency, has improved in lock step with the rise in BSP’s operating margin, reachinga level exceeding 10% in FY3/14.
Moreover, the reason for the decline in the equity ratio in FY3/14 was that only the balance
sheet of Beacon IT was consolidated for that fiscal year, since its deemed acquisition date
was March 31, 2014.

15-Jan.-15

Shareholders’ Equity & ROE Trends㻾㻻㻱㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕

Shareholders’ Equity (left axis)

Important disclosuresand disclaimers appear
at the end of this document.

㻝㻜㻜㻚㻜㻑

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FISCO Ltd. Analyst
Ikuo Shibata

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㻲㼅㻟㻛㻝㻠

伪伪Industry Environment
A large market share in mainframes enables the company toreceive survivor benefits
According to a survey by IDC Japan, the domestic software market in 2013 was ¥2,398.8bn(+6.0% YoY), with the market in BSP’s field of “systems/network management software”
being in the order of ¥291.3bn. The main reasons that this market is growing include revisionof operation processes in line with system upgrades and virtualization and a growing market forjob management and automation software. It is thought that this trend will continue for the time
being. However, on the other hand, the industry is facing changes in the operating environment
due to advances in IT technology, such as a shift from the conventional mainframe focus toopen architecture systems, and an increase in the usage of cloud services.
The main players are centered on domestic manufacturer-related vendors (Hitachi, Ltd. [6501],
Fujitsu Ltd. [6702], NEC Corporation [6701], etc.), with foreign players such as IBM Corporationand Hewlett-Packard Company in the top tier. However, looking only at mainframe operations,
BSP has a large market share, and is arguably positioned to receive survivor benefits. Further,amongst listed companies there are no other software vendors specializing in IT systems
operation.

We encourage readers to review our complete legal statement on “Disclaimer” page.
10

■Industry■
Environment

Meanwhile, looking at the user side, there is a trend of allocating IT investment towards items
that can directly contribute to business expansion, with IT utilization focus areas such as big
data, cloud computing, and security becoming mainstream.

BSP伪伪Growth strategies and progress

3800 TSE JASDAQ* The company plans to change its nameto UNIRITA Incorporated on Wednesday,
April 1, 2015, after obtaining approval atan extraordinary meeting of shareholders
to be held on Friday, February 20, 2015.

15-Jan.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ikuo Shibata

Profits expected to fall below target despite higher-thanexpected net sales due to starting on business structure reforms(1) Mid-term Management Plan Progress
BSP has been proceeding with a Mid-term Management Plan that has FY3/15 as its final
fiscal year. BSP has promoted “Operationless 2.0” as a business concept that contributes
to operational reform through automation of customers’ IT departments and efficiency
enhancements, and has targeted FY3/15 net sales of ¥5,000mn and operating income of¥1,800mn (an operating margin of 36.0%). With the start of business structure reforms to
respond early to changes in the business environment, there is a strong probability that BSP will
exceed the Mid-term Management Plan significantly with contributions from the consolidationof Beacon IT. However, from a profit perspective results are forecast to fall below the plandue to delays in progress in the product business (currently part of the Systems Operations
Business) and Beacon IT’s low profit margins.

Increasing income sources and accelerating growth by expanding
business domains to high-value-added areas(2) Growth Strategies
As demands by management to IT departments become increasingly sophisticated, BSP’s
policy is to accelerate growth and expand sources of income, not only by automating IT systems
operation and promoting efficiency, but by also expanding its business domains to highvalue-added areas (areas that contribute to corporate value) where customers’ management
resources (budget, staff etc.) will then be reallocated.
As part of that, BSP consolidated Beacon IT, which possesses strengths including consultation
through data utilization and data modeling. Through the combination of BSP in the field of corebanking systems support and Beacon IT in the field of strategic (information) systems support,
BSP will approach both expansive and defensive aspects of customers’ business as business
opportunities, while achieving a balance in its business portfolio between stability and growth(investment and return). Further, the business alliance with Software AG, which is engaged in
global expansion, is paving the way to strengthening BSP’s ability to provide solutions in thefield of big data utilization, which is expected to expand going forward.

*	Business Contingency Plan. A setof predecided countermeasuresand action procedures designed
to minimize damage and loss inthe event of an unforeseeable
situation such as an incident,
accident, or disaster.

Based on its Group message of “Empower Your Business & Change Your Work Style(〜supporting reform in customers’ businesses work practices through flexible IT〜,” BSP has
initiated business structure reforms in the six business domains of data utilization, systems
operation, cloud services, BPO, BCP*, and consultative human resource development, and will
work on strengthening its operational base via the early integration of management resources
with Beacon IT in FY3/15. Further, going forward BSP’s policy is also to proactively promoteutilization of external resources, including by business alliances and M&As. BSP plans topublicly announce specific management targets in its next Mid-term Management Plan.

We encourage readers to review our complete legal statement on “Disclaimer” page.
11

■Growth■
strategies and progress

Furthermore, with the merger of Beacon IT on April 1, 2015, the company plans to change its
name to UNIRITA Incorporated. The new company name embodies the concept of aspiring tocontribute as a corporation to the development of customers and society with “unique ideas”
to create corporate value and an “altruistic” spirit (“rita” is the Japanese word for altruism).

お客さまの期待に応える６つの事業領域
Six Business Domains

BSP
3800 TSE JASDAQ* The company plans to change its nameto UNIRITA Incorporated on Wednesday,
April 1, 2015, after obtaining approval atan extraordinary meeting of shareholders
to be held on Friday, February 20, 2015.

Big Data Utilization(Internet of Things)↓
Strategy optimization

FISCO Ltd. Analyst
Ikuo Shibata

Systems
Operation

ConsultativeHR
Development

15-Jan.-15

Important disclosuresand disclaimers appear
at the end of this document.

Data
Utilization

Enhance Organizational
Capabilities↑
IT GovernanceSource: Company materials

Copyright (c) BSP Incorporated All rights reserved.

BCP

Optimization &Automation↓
Enhancing Degreeof Saturation

Cloud
Services

BPO

Agile management↑
Ecosystem

2

Reallocation of technology staff in strategic fields and promotionof three measures(3) Strategy progress
BSP is reallocating technology staff in strategic, future-oriented fields (expanding combined
technology staff allocation for BSP and Beacon IT from 4% to 18%), while working on thefollowing three measures as its management policy for FY3/15.

*	Run Book Automation. RBA is atechnology for realizing a system
for IT operational management
automation that incorporates
a linking function with various
existing IT operation management
tools.

a) Strengthen the business base by early integration of management resources
To reorganize and strengthen the cloud business, BSP integrated the organizations of bothcompanies and developed and launched the Be.Cloud service as a new product in July 2014.
The company also bolstered staff to strengthen its response in the core fields of the big data
and BPM markets, while conducting a marketing survey of Japanese corporations on productsin the data utilization field of Software AG, with whom BSP has a sales alliance. Meanwhile,
in existing businesses, the company made investments for the future, such as bolstering staff
for an RBA* technology survey as a system to ensure acceleration and automation of system
operation, and conducting development of free versions of its core product “A-AUTO” aiming
to expand the user base.
b) Consolidation of products and services to strengthen profitability
BSP improved and discarded some other-company products handled by Beacon IT from aperspective of marketability and profitability, while at the same time strengthening the accuracyof process management for each project.
c) Building a platform for Group synergies
BSP is developing cross-selling activities to uncover customer needs and integrating offices inorder to meld its people into a single team.

We encourage readers to review our complete legal statement on “Disclaimer” page.
12

■Growth■
strategies and progress

BSP
3800 TSE JASDAQ* The company plans to change its nameto UNIRITA Incorporated on Wednesday,
April 1, 2015, after obtaining approval atan extraordinary meeting of shareholders
to be held on Friday, February 20, 2015.

15-Jan.-15

Important disclosuresand disclaimers appear
at the end of this document.
*	
BSP plansconduct a twoFISCO
Ltd.toAnalyst
for-one stock split effective on
Ikuo
ShibataJanuary 1, 2015. The year-end
dividend taking the stock split
into account will be \17.5.

BSP and Beacon IT are both originally connected with the same sector, and have collaborated
together in the past. Their organizational integration is therefore expected to proceed relatively
smoothly. However, while we expect BSP to quickly realize cost-related synergies (lower Head
Office expenses from office integration, more efficient sales, etc.), the challenges going forward
will likely be how to realize value creation utilizing business synergies. In particular, the key tothe company’s growth will be in channeling the accumulated management resources from its
existing businesses, such as the cash earned in the Mainframe Business and its customer base,into the development of new businesses. From a medium-term perspective, the company’s
progress in its business structure reforms will be a focus.

伪伪Shareholder returns
High possibility of dividend increases even in the medium term
due to profit growth
BSP’s shareholder return policy aims for a 30% consolidated dividend payout ratio. The
company paid a full-year dividend of ¥60 for FY3/14 (¥30 mid-year, ¥30 year-end) for apayout ratio of 29.3%. The company is planning to increase the full-year dividend to ¥70 before
accounting for a planned stock split* in FY3/15 (¥35 mid-year, ¥35 year-end) for a payout
ratio of 30.1% against its forecast earnings. In the medium term also, we feel that the likelihoodof dividend increases in line with earnings growth is high.
Further, on May 8, 2014, BSP introduced a shareholder incentive scheme, targeting an increasein the number of its individual shareholders (and enhanced liquidity). All shareholders as ofMarch 31 each year will be presented with JCB gift cards corresponding to the amount ofshares they hold, with the first group of recipients being the shareholders as of March 31, 2015.

We encourage readers to review our complete legal statement on “Disclaimer” page.
13

Disclaimer
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