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

UNIRITA Inc.
3800 TSE JASDAQ

伪伪Initial consolidation of Beacon Information Technology
supported strong sales and profit growth in FY3/15,
ROE rose to 13.1%

10-Jul.-15

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

UNIRITA develops, sells and services package software for the operation of core commercial
computer systems for a broad range of industries, primarily finance and manufacturing. On
April 1, 2015, BSP merged with its consolidated subsidiary, Beacon Information Technology
Inc. (Beacon IT), and changed its name to UNIRITA. The goal of this merger was to improvethe company’s organization quickly by absorbing the data management capability of Beacon
IT and combining the management resources of that company and BSP, allowing UNIRITA torespond rapidly to a changing business environment. BSP had provided operations management
services to improve the productivity of customer companies through automation and othermeasures to increase efficiency. Beacon IT had supplied data management services to directly
increase corporate value. As a single company, these units should generate synergy to entera new growth stage.
In the fiscal year through March 2015, i.e., in FY3/15, the first year for business structurereforms, BSP increased its consolidated net sales by 69.4% YoY to \7,120 mn and its operating
income by 24.1% to \1,465 mn. The initial consolidation of Beacon IT was the main cause of thisgrowth, and both net sales and operating income reached record highs. However, consolidated
net sales fell short of the company’s initial forecast for two reasons: 1) in preparation forthe merger with Beacon IT, BSP built a synergy base early, and 2) the company provided
more labor-intensive technical support services to customer companies experiencing labor
shortages, which limited its product sales (licenses).
FY3/16 is the first year of the company’s second medium-term management plan. UNIRITA
has organized its products into three groups: 1) products that lift productivity support
business growth as sources of profit, while 2) products that expand markets and 3) original
SaaS products are to drive growth through business restructuring. During the second mediumterm management plan, the company intends to replace its technologies to concentrate its
management resources on growth areas. It also plans to invest heavily in product development.
Thus, for FY3/18, the final year of the second medium-term management plan, the company
targets consolidated net sales of \10,000 mn, for average annual growth of 12.8%, ordinary
income of \2,400 mn (ordinary income ratio of 24.0%), and an ROE of 14.9%.
For FY3/16, management projects a 6.7% YoY upturn in consolidated net sales to \7,600 mn
and a 2.3% rise in operating income to \1,500 mn. We find these forecasts, particularly the profit
forecast, to be readily achievable. Companies aim to increase their investment in information
technology to support their future growth. Thus, the company is likely to strengthen its
organization to promote business and realize synergy effects, e.g., through cross-selling, fromits reorganization. Furthermore, the company will fix the distortion of its sales structure in
FY3/15 due to a concentration on technical support services, which limited its sales growth.
We anticipate further progress in business restructuring and more positive impacts of synergy.

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

伪伪Check Point

UNIRITA Inc.

・ The company plans to invest profits from the cash cow Mainframe Business in otherbusinesses for growth・ The new medium-term management plan starts, ordinary income targeted by thecompany for FY3/18 is 50% higher than its FY3/15 ordinary income
・ The company is likely to raise its annual dividend each year to maintain a dividend
payout ratio of 30%, and it plans to offer other special benefits to shareholders

3800 TSE JASDAQ㻯㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻌㻺㼑㼠㻌㻿㼍㼘㼑㼟㻌㼍㼚㼐㻌㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㻵㼚㼏㼛㼙㼑㻘㻌㻲㼅㻟㻛㻝㻝–㻲㼅㻟㻛㻝㻢㻱

10-Jul.-15

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Important disclosuresand disclaimers appear
at the end of this document.

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FISCO Ltd. Analyst
Ikuo Shibata

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伪伪Business Overview
By merging Beacon IT, the company combined that company’s
data management services with its own operations management
services
UNIRITA develops, sells and services package software for controlling the operation of corecommercial computer systems for a diverse range of industries, including the financial andmanufacturing industries. It also applies its proprietary know-how to offer peripheral services,such as operational consulting and human resource development, and provides administration
services.
Products for mainframe computers, chiefly for financial institutions and large corporations,have been a stable, highly profitable, source of income since the company’s establishment. The
company achieved steady growth by contributing to the automation and enhanced efficiency ofIT systems operation, including job management and report management.
However, to prepare for growth in the medium-to-long term in light of rapid changes in its
operating environment, such as the shift to open architecture systems, downsizing, theproliferation of cloud computing, and the use of big data, the company initiated reforms to
its business structure. It planned to accelerate growth by developing business areas that
directly contribute to raising corporate value, supporting market expansion and improved
competitiveness, while continuing its traditional business of automating and otherwise
increasing the efficiency of operating IT systems, leading to greater productivity.

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

■Business■
Overview

As part of its business structure reforms, on April 1, 2015, BSP merged with its consolidated
subsidiary, Beacon IT, and changed its name to UNIRITA. The goals of this merger were to
combine the operations management capability of BSP and the data management capability of
Beacon IT, to realize synergies that would help it respond to a changing operational environment,
and to expedite business development.

UNIRITA Inc.
3800 TSE JASDAQ

10-Jul.-15

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

UNIRITA operates three main businesses, the Data Utilization Business, the Systems
Operations Business, and the Mainframe Business, and Other Businesses, with the Mainframe
Business contributing most of its operating income.
a) Data Utilization BusinessThis business was acquired through the consolidation of Beacon IT in January 2014 and ispoised to become a core business going forward. It develops and sells software for datautilization, including for increasing data processing speeds and strengthening operating
functions, and offers consulting services in relation to data utilization.
b) Systems Operations Business
The Systems Operation Business combines the Product Division, the Solutions Division, andthe BPO Operations Group.
The Product Division handles open architecture products to manage the operation of corecommercial computer systems. It develops, sells and supports proprietary software to automate
operations, handle reports, and manage IT services, and it handles some software products
made by other companies. Royalties on product usage rights (license fees) and maintenanceservice fees that are a fixed ratio of the product cost form the sources of income. In March
2013, BSP commenced the cloud computing service Be.Cloud, for which demand is growing.
The Solutions Division provides solution services, including systems development consulting
and human resource development, for IT services. It offers a membership-based “Sys-Doc”
service, through which it provides expert advice on IT systems operation via periodic client
visits, and it extends solution services, such as corporate value analysis, organizational reform,and human resource development, using the ASMO method for structuring operational units
that contribute to management.
The BPO Operations Group is an administrative service launched in October 2013 based on
the “operationless” concept of IT divisions contributing to corporate value creation, which wasintroduced by BSP. Specifically, it proposes ways to improve the operation of IT systems andsupports system development, systems migration, project management, and the structuring ofservice desks.
c) Mainframe Business
The Mainframe Business, part of the broader business of managing the operation of corecommercial computer systems, handles proprietary software for mainframe computers,
primarily for financial institutions and large corporations. From the year following the sale of amainframe product, the company receives a maintenance service fee from users, calculated
as a fixed ratio of the product cost. This has been the company’s flagship business since its
establishment and is a stable source of income.
d) Other Businesses
These are businesses acquired through the consolidation of the Beacon IT group. They comprisethe businesses of the Beacon IT group other than the Data Utilization Business, including
business continuity plan development, administration and maintenance support, as well asa SaaS product for HR outsourcing management. These other businesses are conducted byconsolidated group subsidiaries, including Aspex and Bitis, Inc.

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

■Business■
Overview

As of March 31, 2015, more than 800 companies had installed the company’s products.
Most of these were large corporations. The range of customer industries was wide, but the
manufacturing, retail and distribution, and finance and insurance industries accounted for highpercentages of total aggregate sales.

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UNIRITA Inc.
(¥mn)

3800 TSE JASDAQ㻹㼍㼕㼚㼒㼞㼍㼙㼑㻿㼥㼟㼠㼑㼙㼟㻌㻻㼜㼑㼞㼍㼠㼕㼛㼚㻰㼍㼠㼍㻌㼁㼠㼕㼘㼕㼦㼍㼠㼕㼛㼚㻻㼠㼔㼑㼞㻌㻮㼡㼟㼕㼚㼑㼟㼟㼑㼟

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10-Jul.-15

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Important disclosuresand disclaimers appear
at the end of this document.

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FISCO Ltd. Analyst
Ikuo Shibata

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㻺㼛㼠㼑㻦㻌㼀㼔㼑㻌㻹㼍㼕㼚㼒㼞㼍㼙㼑㻌㼍㼚㼐㻌㻿㼥㼟㼠㼑㼙㻌㻻㼜㼑㼞㼍㼠㼕㼛㼚㻌㼎㼡㼟㼕㼚㼑㼟㼟㼑㼟㻌㼣㼑㼞㼑㻌㼟㼑㼓㼞㼑㼓㼍㼠㼑㼐㻌㼒㼞㼛㼙㻌㻲㼅㻟㻛㻝㻞The company sells most of its products directly, but some of its report management products
are also sold by partner companies.
As of March 31, 2015, the company had six consolidated subsidiaries, including BSP Solutions
Incorporated, which operates the Solutions Division, now part of the Systems Operations
Business; BSP (Shanghai), Inc., which is the base for sales in China; Beacon IT and threesubsidiaries of Beacon IT, including Data Research Institute, Aspex, , and Bitis, Inc.

We encourage readers to review our complete legal statement on “Disclaimer” page.
4伪伪Corporate Characteristics
Investing profits from the cash cow Mainframe Business in otherbusinesses for growth

UNIRITA Inc.

UNIRITA’s corporate philosophy is “Using IT flexibly, we aim to contribute to the developmentof society and the creation of a better future.”

3800 TSE JASDAQUNIRITA has the following three distinguishing traits.

10-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ikuo Shibataa) An independent developer of proprietary software
UNIRITA’s products enable smooth system operation regardless of the scale of a computer,its manufacturer, or other such factors. Competing products do not allow the replacement of
hardware, so they are a hindrance to a company’s flexible development of a computer system.
Proposals by the company are valuable to customers because they concentrate on how muchthe company can contribute to the automation or efficiency improvement of operating IT
systems. The company’s long experience and knowhow in these endeavors are reflected in thedetail and advanced performance of its goods and services and in the precision of its proposals.
Other software developers often rely on agencies to implement their systems, but UNIRITA
sells its products directly, chiefly to financial institutions and large corporations, and installs
them. Furthermore, its products are often adopted as replacements during system updates.
These factors testify to the high quality of the company’s offerings. The company has been
hired to operate the SysAdmin’s Group, the largest network of system managers in Japan, withmore than 14,000 members and 139 endorsing companies. This demonstrates that UNIRITA isa driving force in this field.
b) Stable income from the Mainframe Business being invested in new growth areas
The Mainframe Business yielded an astoundingly high segment profit margin of 78.5% in FY3/15,
and the segment’s stable income has supported the company’s growth. We believe thisprofitability is made possible not only by customer confidence in the company’s products
and services, but also by high customer switching costs (the costs of replacing systems).
Although we are concerned about the gradual decline of sales in the Mainframe Business, weforesee continued high profits from the business, enabling the company to invest the profits in
new growth areas, such as cloud computing services and data utilization. This 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 also allow the company to expand into the business of
assisting customers to reallocate management resources, such as staff and budget, to create
more corporate value. The company’s new business structure should allow it to support boththe expansive and defensive aspects of customer businesses. Thus, the company will be able
to offer total proposals to improve the IT investment performance of its customers and solidify
its superiority in the software industry.

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

伪伪Business trends
Sales and profits grew strongly in FY3/15, and the ROE rose to
13.1%

UNIRITA Inc.
3800 TSE JASDAQ

10-Jul.-15

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

In FY3/15, consolidated net sales increased 69.4% YoY to \7,120 mn, operating income rose
24.1% to \1,465 mn, ordinary income grew 26.9% to \1,575 mn, and net income climbed 27.6% to\1,020 mn. Net sales were 5.1% lower than the company had forecast at the start of the fiscal
year, but operating income was 6.2% higher.
The addition of the Data Utilization Business and Other Businesses with the consolidationof Beacon IT contributed significantly to increased sales. Sales in the Systems Operations
Business grew only slightly because the business undertook more labor-intensive technicalsupport services, while sales in the Mainframe Business continued to decline as the market
for this business contracted. The main reason for net sales falling below the company’s initial
forecast is that product sales in both the Data Utilization Business and the Systems Operations
Business were lower than planned. Although sales in the Mainframe Business declined, thedecline appears to have been smaller than the company had expected, due to an increase inproduct sales, reflecting temporary demand.
The ratio of the cost of goods sold to sales rose to 22.8% in FY3/15 from 12.2% in FY3/14, for
two reasons: 1) the sales weighting of labor-intensive technical support services increased
YoY in both the Data Utilization Business and the System Operation Business; and, 2) withthe addition of the Data Utilization Business, the fees paid to license products made by othercompanies grew. In addition, the company bore additional costs for restructuring its businesses.
Therefore, its operating income margin decreased to 20.6% in FY3/15 from 28.1% in FY3/14.
Nonetheless, operating income surpassed the company’s forecast because product sales grewin the Mainframe Business, boosting profits in the business.
Looking at the balance sheet, total assets expanded 4.5% YoY to \11,926 mn at the end of
FY3/15, while net assets grew 9.2% to \9,337 mn, and the equity ratio rose to 69.2% from
64.5% at the end of FY3/14. With the accumulation of funds, the balance of cash and deposits
increased 5.4% YoY to \5,927 mn at the end of FY3/15. The company’s ROE climbed to 13.1%
at the end of FY3/15 from 11.1% a year earlier. Overall, the company maintained a healthyfinancial condition.
Operating results by segment were as follows.
The Data Utilization Business acquired with the consolidation of Beacon IT reported salesof \2,341 mn and segment operating income of \14 mn for FY3/15. It did not divulge its
results in FY3/14. Of its sales, \383 mn came from product sales, \874 mn from the provisionof technical support services, and \1,084 mn from maintenance fees. Product sales werelower than the business had expected because it provided more labor-intensive technicalsupport services than planned to customers short of staff, so it lacked people to sell products.
Furthermore, in preparation for the merger of Beacon IT and BSP, the business gave priority to
improving its profitability or market appeal than to sales growth. For example, it abolished someproducts made by other companies and amended the terms for licensing other such products.
In the System Operation Business, net sales increased 5.4% YoY in FY3/15 to \1,943 mn, but
the business suffered a segment loss of \447 mn, slightly smaller than the segment loss of\465 mn recorded in FY3/14. Product sales fell 28.9% to \370 mn, while revenue from technicalsupport services jumped 33.5% to \949 mn, and maintenance fees edged up 2.0% to \623 mn.
Revenue from technical support services was larger than projected, for the same reason that
it was larger in the Data Utilization Business, and its growth apparently had the same negative
impact on product sales and segment profits.

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

■Business■trendsUNIRITA Inc.
3800 TSE JASDAQ

10-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.

In the Mainframe Business, net sales dipped 1.8% YoY to \2,316 mn in FY3/15, but segment
operating income grew significantly by 7.2% to \1,819 mn. The sales decline reflected an ongoing
shrinkage of the market for mainframe services as open architecture systems proliferateand companies invest in smaller computers. However, the sales decline in this business was
smaller than it had expected because it received orders from financial services companies andinsurance companies to increase and improve their mainframe computer systems to handle
business continuity plans and from credit card companies to renovate their systems. Segment
profit exceeded business expectations.
Other Businesses added with the consolidation of Beacon IT recorded net sales of \518 mn andsegment operating income of \78 mn (no YoY comparison was disclosed). Demand for personnel
outsourcing expanded, prompting an increase in sales of products to improve administration atcompanies dispatching personnel on a contract basis. Furthermore, the number of customer
inquiries about software security tools to prevent the leakage of information increased.
Consolidated subsidiaries Aspex and Bitis, which operate these businesses, achieved notablesales and profit growth.
Business Trends

FISCO Ltd. Analyst
Ikuo Shibata

FY3/14

FY3/15% ofsales
Net sales
Data Utilization Business
Systems Operation Business
Mainframe Business
Other Businesses
COGS
SG&A
Operating income
Data Utilization Business
Systems Operation Business
Mainframe Business
Other Businesses
Ordinary income
Net income
Data Utilization Business
Products
Technical support
Maintenance fees
Systems Operation Business
Products
Technical support
Maintenance fees
Mainframe Business
Products
Technical support
Maintenance fees
Total assets
Net assets
Equity ratio
ROE

4,203
1,843
2,359
513
2,509
1,181
-465
1,697
-51
1,241
799

43.8%
56.1%
12.2%
59.7%
28.1%
-0
72%
29.5%
19.0%

% of
sales
7,120
2,341
1,943
2,316
518
1,625
4,028
1,465
14
-447
1,819
78
1,575
1,020

32.9%
27.3%
32.5%
7.3%
22.8%
56.6%
20.6%
0.6%
-23.0%
78.5%
15.1%
22.1%
14.3%

Nominal change
YoY%change
YoY
2,917
69.4%
2,341
100
5.4%
-43
-1.8%
518
1,112 216.8%
1,519
60.5%
284
24.0%
14
18
122
7.2%
129
334
26.9%
221
27.7%

-

383
874
1,084

-

-

521
711
610

370
949
623

-150
238
12

-28.9%
33.5%
2.0%

531
69
1,758

571
47
1,697

40
-22
-61

7.6%
-32.0%-3.5%

11,412
8,551
64.5%
11.1%

11,926
9,337
69.2%
13.1%

514
786
4.7%
2.0%

4.5%
9.2%
-

(Unit: ¥mn)
FY3/15 Company
forecasts
Result/forecast
% of
sales
7,500
1,380
1,460
890

18.4%
19.5%
11.9%

94.9%
106.2%
107.9%
114.6%

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

伪伪Second Medium-term Management Plan
Starting in FY3/16, the new plan targets ordinary profit growth of50%

UNIRITA Inc.
3800 TSE JASDAQ

10-Jul.-15

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

The company has promulgated its second medium-term management plan, which begins in
FY3/16. Companies are shifting their demands on their IT departments, requiring them tocontribute directly to raising their corporate values. To respond effectively to this shift, UNIRITA
intends to implement several changes over the next three years. It will invest aggressively in
new growth fields and assign more personnel to these businesses. It will replace obsolete
technology with new technology, nurture young businesses through in-house incubation, anduse M&A. Through these measures, the company aims to increase its consolidated net sales
by 12.8% per year, on average, to \10,000 mn, and its ordinary income ratio by 24.0% per year,
on average, to \2,400 mn. It also targets an ROE of 14.9% for FY3/18.
As its Mainframe Business is likely to continue to shrink, the company plans to promote thesale of products for use on open architectures to lead its growth. It also intends to increase thesales weight of new and growth businesses from 20% in FY3/15 to 48% in FY3/18.
To achieve the goals set in its new medium-term management plan, the company will implement
the following growth strategiesa) Strengthen product development
UNIRITA has organized its products into three groups: 1) products that lift productivity andsupport business growth as sources of profit, while the new businesses of 2) products that
expand markets and 3) original SaaS products, which are to drive growth through businessrestructuring. It will segregate its strategic investment in new businesses, growth businesses,
maintenance businesses, and businesses in decline. Over the next three years, the company
plans to invest 5–10% of its sales in the development of new products. Most of this investment
will be for the new businesses of proprietary SaaS products and business applications and forthe growth businesses of cloud computing, big data, business process management, mobile
communication services, and social network services. The company foresees growth of from
10% to more than 50% for both new businesses and growth businesses over the next three
years. The company will invest less in the maintenance businesses of automation, reportmanagement, and IT service management, for which it projects growth of 0–5%, and in theshrinking Mainframe Business and business in products made by other companies, for which it
forecasts contraction of up to 5%.
b) Renew IT technology
By updating its IT technology, the company should be able to energize its employees and takemeasures to expand the scope of proposals it can present. Specifically, each year, the company
intends to train 20–25% of its technicians to handle new technologies, such as social network
services, mobile communication services, big data analytics, cloud computing, networking,and security software, and transfer these personnel to new and growth businesses. Thus, by
FY3/18, the company aims to have 60% of its technicians placed in new or growth businesses,
up from 18% at the end of FY3/15.
c) Strategy for subsidiaries
UNIRITA believes that small organizations can respond to a changing operational environmentand satisfy customer needs faster than larger organizations, and thereby grow faster. Therefore,
it intends to start new businesses internally, develop its subsidiaries, train its personnel, andengage in M&A aggressively.

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

■Second■
Medium-term Management Plan

UNIRITA Inc.
3800 TSE JASDAQ

10-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.

Although the company remains dependent on its Mainframe Business for most of its profits,
we applaud it for planning to restructure its businesses over the next 3–5 years. We think thatthe company should rapidly build a new profit model while its Mainframe Business remains
lucrative. Although the Japanese market for mainframe business is shrinking, the company’s
strength in this business should enable the business to generate enough profits to support
overall profit growth for a few years. Hereafter, it will be important for the company to growfaster than the overall market for software development. To achieve that growth, the company
will have to strengthen its new and growth business areas. We believe that it will be vital for thecompany to expedite the integration of its new organization and the training and reassignmentof its staff so that it can develop new products for its new and growth businesses and realize
synergy effects between these businesses and its established businesses. A key to success islikely to be how the company uses its ample funds on hand to promote growth. We anticipate
that management will be able to build a framework (empowerment, incentives, mindsets, etc.)
to increase the speed and accuracy of business restructuring, as shown in its strategy for
subsidiaries, including effective M&A.

㻿㼑㼏㼛㼚㼐㻌㻹㼑㼐㼕㼡㼙㻙㼠㼑㼞㼙㻌㻹㼍㼚㼍㼓㼑㼙㼑㼚㼠㻌㻼㼘㼍㼚(¥mn)

FISCO Ltd. Analyst
Ikuo Shibata㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻻㼞㼐㼕㼚㼍㼞㼥㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕㻝㻞㻘㻜㻜㻜

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(¥mn)

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

伪伪Company forecasts for FY3/16
Following the merger, building a strong business base is the top
priority for FY3/16
For FY3/16, the first year of the new medium-term management plan, the company projects
a 6.7% YoY rise in consolidated net sales to \7,600 mn, a 2.3% increase in operating income
to \1,500 mn, a 0.3% upturn in ordinary income to \1,580 mn, and a 25.4% improvement in net
income to \1,280 mn.
The company does not divulge a breakdown of its sales and profit forecasts by business,but it foresees sales growth for all businesses except the Mainframe Business and modest
overall sales growth for the first year of its new medium-term management plan. Reflecting
planned investment in new businesses and cost increases stemming from the integration ofcompany systems and personnel departments, and from costs such as that for advertising thecompany’s name change, management projects a decline in the company’s operating income
margin to 19.7% in FY3/16 from 20.6% in FY3/15.

We encourage readers to review our complete legal statement on “Disclaimer” page.
9

■Company■
forecasts for FY3/16

We find the company’s FY3/16 forecasts, especially its profit forecasts, quite attainable.
Companies are investing more in IT to support future growth, while UNIRITA is buttressing its
business structure and achieving synergy effects, such as cross-selling to current customers,
following its reorganization. Furthermore, the company has remedied the increase in technicalsupport services that impaired its sales growth in FY3/15. We look for the continued emergenceof synergy effects and progress in business restructuring.

UNIRITA Inc.
Company forecasts for FY3/16

3800 TSE JASDAQ(Unit: ¥mn)
FY3/15Results

10-Jul.-15

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

Net sales
Data Utilization Business
Systems Operation Business
Mainframe Business
Other Businesses
COGS
SG&A
Operating income
Data Utilization Business
Systems Operation Business
Mainframe Business
Other Businesses
Ordinary income
Net income

7,120
2,341
1,943
2,316
518
1,625
4,028
1,465
14
-447
1,819
78
1,575
1,020

FY3/16Company% of sales% of sales
forecasts
7,600
32.9%
27.3%
32.5%
7.3%
22.8%
56.6%
20.6%
1,500
19.7%
0.2%
-6.3%
25.5%
0.1%
22.1%
1,580
20.8%
14.3%
1,280
16.8%

Nominalchange
YoY
480
35
5
260

% change
YoY
6.7%
2.3%
0.3%
25.4%

伪伪Corporate history and business performance
Pioneered software for mainframe computer systems, and in
2014, the company reorganized(1) Corporate History
The company was established as Three B, Inc. in 1982 in Tokyo’s Chuo Ward as a subsidiaryof Business Consultant, Inc., a provider of programs for HR and organizational development.
Business Consultant was the origin of Software AG of Far East, which changed its name to
Beacon IT in August 1996. Software AG of Far East had been selling A-Auto software for
automating the scheduling of complicated computer systems jobs and enhancing the efficiencyof IT systems administration in Japan, and it set up Three B, Inc. to sell this software in theU.S.
In 1987, Three B, Inc. changed its name to BSP. The turning point for BSP was when it
took over the systems management operations from Software AG of Far East in 1993 andcommenced full-scale operations as a specialist in systems administration software. After that,it strengthened its business base while benefiting from increased investment in IT systems inJapan and built a track record chiefly in software for mainframe computer systems, mainly for
financial institutions and large corporations.
In 2001, the company established BSP Solutions Inc. and commenced full-scale consulting
solutions operations. In 2006, it listed its shares 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.

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

■Corporate■
history and business performance

By consolidating Beacon IT in January 2014, BSP incorporated growth areas such as datautilization and began reforming its business structure.
In May 2014, BSP entered into a business alliance with Software AG, Inc. for handling productsin the big data and business process management areas, thereby paving the way for operational
expansion into the big data field.

UNIRITA Inc.
3800 TSE JASDAQ

10-Jul.-15

With the merger of Beacon IT on April 1, 2015, the company changed its name to UNIRITA
Incorporated. The new company name embodies the concept of aspiring to contribute to thedevelopment of customers and society with “unique ideas” to create corporate value and an“altruistic” spirit (rita is the Japanese word for altruism).

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

Source: Company materials

As dependence on software for mainframe computers has eased,
ROE has risen(2) Past business performance
The company’s sales declined YoY from FY3/09 to FY3/10 due to the impact of the collapseof Lehman Brothers and other factors, but from FY3/12 onward, during a shift to open
architecture systems, its sales have grown YoY, led by sales growth in the Product Division,
which is now part of the Systems Operations Business. Accompanying the initial consolidationof Beacon IT in FY3/15, the company’s business scope expanded significantly.
Despite a high degree of reliance on the mainframe business for profit, the company’s operating
income margin trended upward with improving profitability in the Product Division and reached28.1% in FY3/14. However, this margin fell YoY in FY3/15 because the company increased
its expenditures to cope with its business restructuring and undertook more, labor-intensive
technical support services.

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

■Corporate■
history and business performance

UNIRITA Inc.
3800 TSE JASDAQUNIRITA appears to have an extremely conservative financial strategy. Its equity ratio, which
is an indicator of financial stability, fell YoY in FY3/14 due to the consolidation of Beacon IT,
but it remains high, at 69.2% at the end of FY3/15. Its current ratio, an indicator of its ability
to meet short-term payments, is also high, at 450.9% at the end of FY3/15, reflecting its ample
balance of cash and cash equivalents. When the company must invest in new growth areas,
its financial strength is likely to underpin its growth. ROE, a measure of capital efficiency, has
improved in lock step with the rise in the company’s profit margins, reaching 13.1% at the endof FY3/15.

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10-Jul.-15

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Important disclosuresand disclaimers appear
at the end of this document.

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FISCO Ltd. Analyst
Ikuo Shibata

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

伪伪Industry Environment
A large market share in software for mainframe computersenables the company to receive survivor benefits
According to a survey by IDC Japan, the software market in Japan grew 8.0% YoY in 2013
to about ¥2,446.9 bn, spurred by the demand stemming from the demise of Windows XP.
Japan’s market for software to manage systems and networks, the type of software developed
by UNIRITA, grew 6.7% YoY to about \309.6 bn. The main reasons that Japan’s market
for software to manage systems and networks is growing include the revision of operation
processes to accommodate system upgrades and virtualization, and a growing market for job
management and automation software. The company expects these trends to persist over thenear term. However, the operating environment of the industry is changing due to advancesin IT technology, such as a shift from the conventional mainframe focus to open architecture
systems and an increase in the use of cloud services.
The main developers of software in Japan are vendors affiliated with large Japanese computermakers, such as Hitachi, Ltd. [6501], Fujitsu Ltd. [6702], and NEC Corporation [6701], andvendors affiliated with foreign computer makers, such as IBM Corporation and HewlettPackard Company. However, UNIRITA holds a large share of the Japanese market for software
for mainframe computers and is arguably positioned to receive survivor benefits. Furthermore,
there is no other listed software vendor specializing in IT systems operation in Japan. That is,there is no other listed company producing its own package software.

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

■Industry■
Environment

Recently, Japanese companies have tended to invest in IT areas that directly contribute tobusiness expansion, and IT utilization now focuses on such fields as big data, cloud computing,and security.

UNIRITA Inc.

伪伪Shareholder returns

3800 TSE JASDAQ

10-Jul.-15

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

Maintaining a dividend payout ratio of 30% and shareholder
incentives
UNIRITA’s shareholder return policy aims for a 30% consolidated dividend payout ratio. The
company paid an interim dividend of \17.5 and a year-end dividend of \22.5 per share for
FY3/15, which both included a \5 dividend to commemorate its merger. Thus, for all of FY3/15,
it paid a dividend of \40 per share, which was \10 per share more than the dividend paid for
FY3/14, after adjusting for a two-for-one share split made on January 1, 2015 to improve shareliquidity. The dividend payout ratio for FY3/15 was therefore 30%. For FY3/16, the company
plans to increase its full-year dividend to ¥45, with an interim dividend of \25, including another\5 to commemorate its merger, and a year-end dividend of \20. Based on the company’s EPS
forecast for FY3/16, the planned dividend would yield a dividend payout ratio of 29.4%. Over the
medium term, the company is likely to increase its dividend as earnings grow.
On May 8, 2014, BSP introduced a shareholder incentive scheme, targeting an increase in thenumber of its individual shareholders and enhanced liquidity. Under this scheme, all shareholders
as of March 31 each year will be presented with JCB gift cards corresponding to the number ofshares they hold. The first group of recipients was shareholders as of March 31, 2015.

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

Disclaimer
FISCO Ltd. (the terms "FISCO", "we", mean FISCO Ltd.) has legal agreements with the Tokyo
Stock Exchange, the Osaka Exchange,and Nikkei Inc. as to the usage of stock price and index
information. The trademark and value of the "JASDAQ INDEX" are the intellectual properties of
the TokyoStock Exchange, and therefore all rights to them belong to the Tokyo StockExchange.
This report is based on information that we believe to be reliable, but we do not confirm or
guarantee its accuracy, timeliness,or completeness, or the value of the securities issued bycompanies cited in this report. Regardless of purpose,investors should decide how to use thisreport and take full responsibility for such use. We shall not be liable for any result of its use.
We provide this report solely for the purpose of information, not to induce investment or any
other action.
This report was prepared at the request of its subject company using information provided
by the company in interviews, but the entire content of the report, including suppositions andconclusions, is the result of our analysis. The content of this report is based on information thatwas current at the time the report was produced, but this information and the content of thisreport are subject to change without prior notice.
All intellectual property rights to this report, including copyrights to its text and data, areheld exclusively by FISCO. Any alteration or processing of the report or duplications of thereport, without the express written consent of FISCO, is strictly prohibited. Any transmission,
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The final selection of investments and determination of appropriate prices for investment
transactions are decisions for the recipients of this report.
FISCO Ltd.