This content is a transcript of the audio from Sparks Group <8739>'s earnings conference for the second quarter of the fiscal year ending March 2025. Please refer to the company's website for the materials used in the actual conference.

CEO Message on Second Quarter Performance and Challenges in New Investment Areas

Hello everyone.

This is Shuhei Abe from Sparks.

In the second quarter of the fiscal year 2024, we were able to maintain the highest levels of entrusted assets balance and underlying revenue in history. It was a quarter where we were able to solidify the steady growth of our business foundation and materialize challenges in new areas.

The entrusted assets balance at the end of the second quarter increased by 0.6% compared to the previous period, reaching 1 trillion 901.1 billion yen.

Operating revenue increased by 9.9% to 87.16 billion yen compared to the same period last year, and operating profit increased by 3.6% to 36.6 billion yen, showing steady growth.

While entrusted assets balance, underlying revenue, and operating profit are steadily growing, market capitalization expansion and growth are also

As a manager, I am increasingly ashamed of being subordinate.

In order to meet the expectations of our shareholders, we will aim for further heights and make maximum efforts once again.

As a return of benefits to our shareholders, we announced the acquisition of treasury stocks with a limit of 0.3 billion yen and 0.21 million shares on October 31.

Furthermore, we have decided to simultaneously resolve the complete cancellation of the treasury stocks acquired this time.

In addition to stable dividends, we will strive for further enhancement of shareholder returns through the acquisition and cancellation of treasury stocks.

We aim to reach a custody asset balance of 3 trillion yen by March 2026 in order to realize the vision of becoming the most trusted and respected investment company in the world. To achieve this goal, we are focusing on four areas: Japanese stocks, OneAsia, physical assets, and private equity investments, and are also advancing into new areas.

We would like to report that we have started a luxury villa development project in the Niseko area of Hokkaido at the same time as this earnings announcement.

Sparks is involved in operating renewable energy generation businesses in Hokkaido.

We are conducting a demonstration project to build a hydrogen supply chain utilizing large-scale renewable energy in Tomakomai City.

In Hokkaido, we see great potential not only in renewable energy but also in the tourism industry. From the perspective of regional revitalization, we have been focusing on the Niseko area for several years.

The Niseko area is attracting high interest from around the world and is highly anticipated as one of the leading snow resorts globally. In this Niseko area, we have started a project to develop high-end villas as a new tourism infrastructure targeting affluent individuals from both domestic and international markets. Starting this project, we directly feel the increasing interest and expectations towards Hokkaido as a region, particularly towards Sparks.

Although the development project itself seems to be highly profitable, as an investment company, we aim to discover specific businesses and investment opportunities in Hokkaido starting from this project and communicate them globally.

As mentioned repeatedly, Hokkaido is a very attractive region. As reported in the Nikkei newspaper on October 30th, the economic ripple effect associated with the entry of Rapids is estimated to be as high as a total of 18.8 trillion yen. Hokkaido is perceived to have potential for development not only in semiconductors like Rapids but also in various fields such as tourism, energy, startups, and more.

Given its designation as an asset management special zone, we aim to realize unique investments that contribute to the overall development of the Hokkaido region.

Since its establishment, Sparks has materialized new investment challenges and has been growing.

We firmly believe that regional revitalization and development projects are new areas that promise our next growth.

We would like to express our gratitude once again to the many shareholders who have supported Sparks since its founding 35 years ago.

We will do our utmost to meet your expectations.

Thank you for listening.