full-year results briefing for the fiscal year ended

Full-Year Results Briefing for the Fiscal Year Ended December 31, 2017 (19th Term)

(Securities Code: 3319)

Copyright(c) Golf Digest Online Inc. All Rights Reserved

Golf Digest Online Inc.

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Plans, forecasts and strategies, etc. of the Company contained in

this material include potential risks and uncertainties, except for

elements that have already been fixed, and do not guarantee their

contents.

Potential risks and uncertainties include, but are not limited to,

economic conditions centered on consumer spending trends, trends

in the golf market, which is the main business domain of the GDO

Group, and the overall Internet market, competition in the market

and the rapid innovation of technologies, etc.

The unauthorized copying of this material and the data therein is

not permitted.

Note to this material

Copyright(c) Golf Digest Online Inc. All Rights Reserved 2

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Full-Year Highlights of FY2017


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Full-Year Highlights of FY2017


Net sales and gross profit showed double-digit growth from the previous year. Business performance recovered and improved sharply in the second half.

Focused on the cultivation of loyal customers. Promoted the reciprocal use of services.

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Made investments for future growth, including the cloud IT infrastructure, the strengthening of existing services and the development of new services.

Net sales and net income fell short of their forecasts.

2017

YoY

Net sales 19,309 21,574 ＋2,265

(112%)

Gross profit 8,012 8,849 ＋837

(110%)

Selling, general and

administrative expenses

6,939 7,635 ＋696 (110%)

Operating profit 1,073 1,214 ＋141

(113%)

Ordinary profit 1,089 1,225 ＋136

(113%)

Profit attributable to owners of parent 611 707 ＋95

(116%)

EBITDA 1,577 1,645 ＋67 (104%)

Consolidated Financial Results for FY2017


* EBITDA＝Ordinary profit + Depreciation + Amortization of goodwill + Interest expenses + Long-term prepaid expenses

(Million yen)

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Net sales and profits at all levels achieved double-digit growth from the previous year (operating profit showed double-digit growth for the fifth consecutive year).

Advance investment for future growth was made as planned.

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Gross profit

Changes in Net Sales and Gross Profit in FY2017


(Billion yen)

Net sales

YoY

123%

YoY

112%

2016 2017

5.0

0.0

The membership system was renewed in June, and marketing measures to encourage the use of multiple services were successful.

In 4Q, in particular, net sales increased 23% and gross profit increased 12% year on year.

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New membership system: “GDO Yard Program”

Promoted the reciprocal use and repeated use of services by integrating special benefit grant systems for the sales of golf equipment and the golf course booking service.

Focused on Activation of Customers and Cultivation of Loyal Customers


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The number of users for the reciprocal use of services increased after the launch of the GDO Yard Program.

Initiatives to Promote Reciprocal Use of Services were Successful


YoY change in the number of users for the reciprocal use of services

Use only the golf course booking service → Start to use the sales of golf equipment

Number of users Up 30% year on year

Launch of the new membership system

50%

Use only the sales of golf equipment →

Start to use the golf course booking service

Number of users Up 20% year on year

100%

Number of active users

Up 10% year on year

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First half: Cloud IT infrastructure and opening of new stores of GOLFTEC by GDO,etc.

Second half: Measures to promote the reciprocal use of services and the enhancement of customer communication

(Enhancement of customer support and promotion of application downloads)

FY2016 FY2017

(Million yen)

Operating profit 1,073

Gross profit ＋837

Changes in SG&A Expenses

Enhancement of business +278 Measures to promote the reciprocal use

of services Enhancement of customer communication Enhancement of services for smartphones

and social media Copyright(c) Golf Digest Online Inc. All Rights Reserved

Enhancement of business base +274 Cloud IT infrastructure Expansion of head office

and stores

Labor cost +144 Enhancement of sales

to golf course Increase in coaches at

GOLFTEC

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Sales of new golf clubs, which had continued to fare poorly since the previous year, remained firm from the second half.

Sales of apparel, accessories and used equipment of popular brands continued to be strong.

Focused on the provision of high value-added products, including sales of customized golf clubs.

Sales of Golf Equipment


YoY comparison of amount of orders received

*Golf equipment market (golf clubs, balls, accessories): “Year-on-year changes in the market size estimated based on actual sales of actual stores of major dealers dealing with major golf equipment nationwide” calculated by GfK LifeStyle Tracking Japan. 10

* The graphs do not include the amount of orders received for apparel.

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KPI Analysis for the Full Year


Inflow from the golf course booking service increased, and the

number of users grew.

Sales of new golf clubs performed well throughout the second half.

In sales of apparel and accessories, brands we began handling from the fiscal year under review became major products and raised the level of business performance.

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Number of customers

Unit purchase price

New golf clubs Used golf clubs Balls Apparel Accessories

* All arrows indicate year-on-year changes.

*Sales by category. Accessories include gloves, shoes and small items such as markers.

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Early bookings of golf rounds continued to be strong.

The number of visitors increased due to stronger exposure through Internet advertising and the promotion of bookings via smartphone applications.

Collaboration with Jalan Golf began in earnest in October.

Golf Course Booking Service Remained Firm

Changes in the number of golfers booked on GDO (YoY)

* GDO indicates YoY changes in the number of golfers booked on GDO. * Market data: Ministry of Economy, Trade and Industry “Survey of Selected Service Industries” * Comparison of the total of eight prefectures (Hokkaido, Miyagi, Tokyo, Aichi, Osaka, Hiroshima, Kagawa and Fukuoka) Copyright(c) Golf Digest Online Inc. All Rights Reserved 12

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Number of customers

Unit fee price Cancellation rate

KPI Analysis


The number of visitors increased thanks to the success of SEO measures by refurbishing the Web page, in addition to effective exposure to Internet advertising (listing, display, etc.).

The preparation of abundant booking plans to cater to the needs of customers, in addition to measures for the reciprocal use of services, contributed to the increase in the number of users.

The unit fee price remained flat from the previous year, and the cancellation rate rose slightly due to poor weather in early autumn.

* All arrows indicate year-on-year changes.

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Initiatives in FY2017


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Four Services of GDO


Enhancement of services based on the policy of Kyakushin = “putting the customer first”

Comprehensive pursuit of golf x technology

Four services of GDO that are a hybrid of online & offline and specialize in the golf category.

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+ 60

New brands handled

Kyakushin Sales of Golf Equipment

Golf Sports apparel

Apparel


Wider selection of goods

The number of new brands handled, including popular brands that become the mainstay of sales 60

Total number of brands handled:about 340

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Expansion of sales channels

GDO GOLF SHOP was opened on LOHACO, an Internet shopping service operated by ASKUL.

Enhancement of mobile-friendliness

The GDO GOLF SHOP smartphone application was released.

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Enhancement of booking quota

Play information (time frame, plans) on partner golf courses of both companies (about 1,600 courses) was shared.

17 Copyright(c) Golf Digest Online Inc. All Rights Reserved

Kyakushin Golf Course Booking Service

Expansion of added value for golf courses

Management man-hours of golf courses were reduced by managing the booking quota using a common platform provided by GDO.

Strengthening of collaboration with Jalan Golf

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Promotion of use of IT at golf courses

The number of golf courses introducing the IT system increased.

Total number of courses introducing Yardage and WebPack: about 280

Provision of extensive plans

Design of plans that appeal to golfers, such as early booking and last-minute booking.

Increase in the number of courses accepting HOT PRICE Total number of courses accepting it: about 790

＋64

＋25

Courses introducing IT system

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Courses accepting HOT PRICE


Kyakushin Golf Course Booking Service

page Copyright(c) Golf Digest Online Inc. All Rights Reserved

Strengthened the attraction for customers by increasing news distribution and enhancing its content.

Dedicated channel opened on Smart News, a news browsing application.

BRUDER, a golf style class magazine and a medium transmitting diverse golf-related information, was launched.

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Kyakushin Golf Media Service

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Kyakushin Golf Lessons and Custom Club Fitting


Nationwide promotion of new store openings

Establishment of a new retail model

Aiming to create a comprehensive experience-based store beyond golf lesson services by strengthening services for Custom club fitting

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Shinjuku Store opened in March (8th store in the Kanto area)

Osaka Umeda Store opened in May (first store in the Kansai area)

Nagoya Store opened in February 2018 (first store in the Chubu area)

Increasing the convenience of golf lessons with IT technology.

Dedicated application for the golf lesson services released. Booking of lessons by smartphone and checking of one’s swing by video anytime, anywhere.

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Making Golf More Comfortable with Golf x Technology


Golf bag storage and delivery service launched in collaboration with DUFL Japan.

Distribution of GDO news using chatbot(*)by Facebook Messenger launched.

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* Chatbot is derived from the combination of “chat” and “robot,” and

it is an automatic conversation program using artificial intelligence.

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Making Golf More Comfortable with Golf x Technology


Sales of ARCCOS, an IT product, commenced.

ARCCOS Caddie, the first AI platform in the golf industry, offers strategies for capturing golf courses by tracking all shots and statistically analyzing round data with a smartphone application.

Its application to golf lessons of GOLFTEC by GDO and club fitting is also to be developed.

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Making Golf More Comfortable by Golf x Technology

GDO’s official account was established on WeChat, China’s largest social media service.

Information on golf courses in Japan and videos on how to use them will be delivered. It will be possible to book golf courses in Japan from China.


The most popular cashless settlement service in China has been introduced for golf course bookings via WeChat.

It will support the comfortable golf tourism of golfers visiting Japan.

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Activation of Golf and Regional Revitalization through Golf


GDO hosted the 4th speed golf competition(*) in September, and a total of 86 people participated.

Speed golf gained exposure in multiple media, as scenes from the competition were broadcast on BS Fuji and it was introduced on terrestrial TV programs.

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Winter golf achieved the Sports Culture Tourism Award.

It won the prize in the Challenge category of the Sports Culture Tourism Award 2017, a collaboration project of the Japan Sports Agency, the Agency for Cultural Affairs and the Japan Tourism Agency.

*A competition to hole out from

18 holes or 9 holes with as few

shots and as quickly as

possible using 7 golf clubs or

fewer.

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Activation of Golf and Regional Revitalization through Golf


Enjoyable golf for three generations of the family.

Golf lesson services collaboration between KIDS GOLF Inc., a company that was made a subsidiary last year and operates golf schools for juniors, and GOLFTECH.

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Many events to expand the ways of playing, activate golf and revitalize the regions were held, in addition to holding festivals on golf courses.

Number of events held

6

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Initiatives for Inbound and Outbound Tourism


Initiatives in Thailand

Provided a golf course booking service via the Internet in Thailand in cooperation with local business partners.

A local site was launched that enables bookings from overseas, in addition to bookings in Japan.

The number of bookable courses is expanding.

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Thailand

13 courses

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Golf Links the World

GDO Score Management http://lesson.golfdigest.co.jp/score/opening/ Golf Garden Project http://company.golfdigest.co.jp/ir/policies/csr/

GDO Golf Garden Project (ongoing since 2016)

If you play golf using the GDO Score Management application, you will donate ¥10 per birdie to agricultural support programs in developing countries.

A project to donate ¥10 per purchase of 1 point at GDO ORIGINAL, a GDO original brand, is implemented for a limited time only.

Total number of birdies: 1.94 million!! Cumulative total of donation money:¥19.41 million Number of gardens to which a donation has been made: 129 (as of January 2018)


http://lesson.golfdigest.co.jp/score/opening/

http://company.golfdigest.co.jp/ir/policies/csr/

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Paid interim dividends (¥4.0 per share).

Plan to pay year-end dividends of ¥5.0 per share.

Implementation of Measures for Shareholder Returns

Interim dividends Year-end dividends

Annual dividends

2015 ¥0.0 ¥5.5 ¥5.5

2016 ¥3.0 ¥4.0 ¥7.0

2017 ¥4.0

¥5.0 (Planned)

¥9.0 (Planned)

The shareholder benefit program continues to be implemented.

Coupons that can be used for shopping at GDO GOLF SHOP and booking GDO golf courses are distributed to shareholders to enable them to use and get to know the services of GDO (twice a year).


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Outlook for FY2018


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Business Policy for FY2018


“Challenge”

Take on the challenge of maximizing the value we provide seriously.

Take on the challenge of

increasing the level of customer satisfaction without compromise.

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Business Policy for FY2018


Sales growth

Maximizing the value we provide

Increasing the level of customer satisfaction

Kyakushin = Policy of “putting the customer first” Pursuing the services truly demanded by customers.

Aims to achieve the industry’s No.1 position in terms of the value we provide and the

level of customer satisfaction in all services, and to maximize sales as a result!

Also enhancing investments for medium- to long-term growth

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Take on the challenge of maximizing the value we provide seriously

Take on the challenge of increasing the level of customer satisfaction without compromise

Earnings Forecast for FY2018

Theme for FY2018: “Challenge”

(Million yen)


Sales growth

YoY

+3,425 (116%)

+135 (111%)

+124 (110%)

+142 (120%)

Forecast for FY2018

¥9. 50 ¥+0.5 Dividend per

share ¥9. 00

Profit attributable to owners of parent 707 850

Ordinary profit 1,225 1,350

Operating profit 1,214 1,350

Net sales 21,574 25,000

Results in FY2017

full-year results briefing for the fiscal year ended

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