This content is transcribed from the audio of Sparks Group ＜8739＞'s financial results briefing for the 1st quarter of the fiscal year ending 2025/3. Please see the company's website for the materials used in the actual briefing session.

(CEO's message on the first quarter results)

Hello everyone.

This is Abe Shuhei from Sparks.

Looking back now, it's just around this time that I started walking with Sparks. It was founded in 1989/7, and this year marks its 35th anniversary.

Looking back over the past 35 years, we at Sparks have faced a number of difficulties, and the situation 35 years ago was very different compared to today. In particular, after the burst of the bubble, the Japanese economy stalled due to deflation.

At last, time has passed, and Japan has transitioned from deflation to inflation, and I strongly feel that we are entering a new era. I think the Japanese economy will be as normal as any other country.

For me, normal means rising prices and growth. This has unfortunately not been the case for the past 35 years.

Amidst these historic changes, we have completed the first quarter of 2024. Depositary assets increased 4.7% compared to the end of the previous fiscal year, and operating income also increased 13.8% and 6.2%, respectively, compared to the same period last year.

Meanwhile, quarterly net profit decreased by -44.5%.

You may be surprised about this decline, but it is due to the fact that a temporary special profit of 1.1 billion yen was recorded due to the sale of one of our investment securities held last year, and this is because there was no current fiscal year.

However, I would like to emphasize here that the driving force behind our growth is strong, with basic earnings rising 17.8% from the previous fiscal year. In fact, our basic profitability is at a record high.

Despite such performance, our stock price still lags behind. We understand the frustration of our shareholders, and at the same time, we understand that steady growth alone is not satisfactory to all shareholders, nor is it exciting.

I am aiming for a further leap forward in order to meet the expectations of our shareholders with the strength and profitability that Sparx continues to grow.

At the beginning, 35 years ago, there were almost no independent Japanese stock management companies like SPARX in Japan. Over time, Sparks has transformed into a stronger and more stable business model.

Currently, Sparks has 4 main business pillars.

From these four, I would like to talk about our Japanese stocks and the pillars of our renewable energy business.

Regarding Japanese stocks, about 2 years ago, I decided to start a new Japanese value creation strategy. It was around the time that Japan had entered a new era, and signs that Japanese stocks had become absolutely undervalued were visible.

Under such circumstances, there are excellent managers, and even among companies that are doing very good business, there are also people who don't understand this new business environment.

I believe that these excellent managers can do even more wonderful things if they understand the importance of capital efficiency and shareholder returns. Therefore, we meet these managers in person, have repeated dialogues, discuss the need to improve ROE and shareholder value, and engage.

As for renewable energy, we started our business from scratch. Currently, it has grown to the fourth largest scale in terms of domestic power generation.

For example, I am convinced that demand for green energy will continue to increase, not to mention to support hydrogen production and to support the power of data centers.

In fact, Sparks is doing it with its own resources to advance projects in these areas.

I will continue to do my best to aim for further growth by utilizing Sparks' strengths.

We are aiming for 3 trillion yen with AUM by 2026. I hope that by achieving this goal, Sparks will hit a new high profit and that our stock price will also rise.

Our many shareholders have trusted and supported Sparks over a long period of time.

I want to give back to everyone in the form of a high return on their investment in Sparks.

For high returns, we are considering not only capital gains, but also stable dividend increases over a long period of time and improvements in ROE (return on equity) through share buybacks.

I believe Sparks has a strong platform to achieve these, and I would like to commit here to improving and maximizing corporate value to investors.

I hope you will continue to walk with us at Sparks in an exciting way.

Thank you very much for your kind attention.