golf digest online inc....golf market and the internet market that are the group’s main business...

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

Financial Results Briefing Material for the Fiscal Year Ended December 31, 2016 (18th Term)

Stock code: 3319

Golf Digest Online Inc.


The Company’s plans, projections, strategies, etc., stated in these materials are subject to potential risks and uncertainties excluding elements that have already been confirmed, and there is no guarantee on their contents.

Potential risks and uncertainties could include, but are not limited to, economic conditions mainly consisting of personal consumption trends, general trends in the golf market and the Internet market that are the Group’s main business domain, the status of market competition, and drastic technological innovations.

Please refrain from unauthorized reproduction of these materials and data.

Notes concerning these materials

pageCopyright(c) Golf Digest Online Inc. All Rights Reserved. 3

Full‐Year Financial Highlights for FY2016

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

Double‐digit YoY growth for the fourth consecutive year in operating profit, ordinary profit, and profit attributable to owners of parent

Double‐digit YoY growth for the fourth consecutive year in operating profit, ordinary profit, and profit attributable to owners of parent

A 107% growth in net sales YoYA 107% growth in net sales YoY

Success in measures to strengthen services for smartphonesSuccess in measures to strengthen services for smartphones

Enhancement of return to shareholdersEnhancement of return to shareholders

Full‐Year Financial Highlights for FY2016

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Full‐Year Consolidated Business Results for FY2016

5Copyright(c) Golf Digest Online Inc. All Rights Reserved.

(単位：百万円)

Gross profit and all profit items grew significantlyAll business segments contributed to profits by providing high value‐added services

前年比

18,046 19,309 ＋1,262(107%)

7,372 8,012 ＋640(109%)

6,939 6,939 ＋1,267(122.3%)

828 1,073 ＋244(130%)

430 611 ＋180(142%)

1,458 1,494 ＋36(102%)

当期純利益

EBITDA

売上総利益

販管費

営業利益

売　上　高

2015年 2016年

Net sales

Operating profit

SG&A expenses

Gross profit

2015 2016YoY

(¥ Million)

Profit attributable to owners of

parent

18,046

7,372

6,543

828

430

1,458

19,309

8,012

6,939

1,073

611

1,577

+1,262(107%)+640(109%)

+395(106%)

+244(130%)+180(142%)

+119(108%)

19,309

8,012

6,939

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Completion of depreciation of systems investment carried out in 2011Expenditures to strengthen and expand business and the business base

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2015 2016

Operating profit828

Operating profit1,073

Golf Course Business

Retail Business

+640Increase in gross profit

SG&A Expenses


Reinforcement and expansion of business +461 Strengthening of existing business

Enhancement of services for smartphonesEnhancement of customer service

New businesses and overseas businesses

Enhancement of business base +155 Reinforcement of IT infrastructure Expansion of head office and business

offices

Completion of depreciation

(221)

(¥ Million)

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Group‐wide efforts to strengthen services for smartphones bore fruitGoing forward, service enhancement will continue to be a top priority

Success in Measures to Strengthen Services for Smartphones

Copyright(c) Golf Digest Online Inc. All Rights Reserved. 7

201553%

201658%

Approx. 1.4 million downloads

Up 123% YoY

Total app downloads

Ratio of visitors via smartphone

Customer referrals to golf courses via smartphone

Orders received via smartphone

Up 115% YoY

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To increase opportunities for shareholder returns, we have implemented interim dividends (¥3.0 per share) for the first timeWe plan to implement a year‐end dividend of ¥4.0 per share

Enhanced Return to Shareholders

Interim Dividend Year‐end Dividend Total

2014 ¥0.0 ¥2.5 ¥2.5

2015 ¥0.0 ¥5.5 ¥5.5

2016 ¥3.0 ¥4.0(Planned)

¥7.0(Planned)


Implementation of shareholder benefitsWe distribute coupons usable in GDO Golf Shops and reserving GDO golf courses twice a year to shareholders, in order for them to learn about and experience first‐handedly the services that GDO provides


Highlights by Segment

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Results by Segment


Net Sales Gross Profit

(¥ Million)

(¥ Million) (¥ Million)

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Double‐digit growth in gross profit in Retail Business and Golf Course Business

通期前年比通期前年比通期前年比通期前年同期比

売上高 13,367 107% 5,105 108% 810 100% 19,309 107%売上総利益 3,175 111% 4,227 110% 599 97% 8,012 109%売上総利益率 23.8% ＋ 0.7ｐ 82.8% ＋ 1.1ｐ 73.9% △ 2.2p 41.5% ＋ 0.6ｐ

リテールビジネスゴルフ場ビジネスメディアビジネス合　計

Net sales

Gross profit

Gross profit margin

Retail Business

Full‐year YoY


Full‐year YoY

Media Business

Full‐year YoY

Total

Full‐year YoY

107%13,3673,175 111%23.8% +0.7p

108%5,1054,227 110%82.8% +1.1p

100%810599 97%

73.9% ‐2.2p

107%19,3098,012 109%41.5% +0.6p

Retail Business


Media Business

20,000

15,000

10,000

5,000

0

20,000

15,000

10,000

5,000

02014 2015 2016 2014 2015 2016

796

4,107

11,035

16,030

812

4,715

12,449

18,046

810

5,105

13,367

19,309

614

3,490

2,354

6,502

618

3,850

2,873

7,372

599

4,227

3,175

8,012

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顧客数手数料単価キャンセル率

顧客数購入単価

Analysis of Growth Factors

In the Retail Business, product unit prices increased YoY due to reinforcement of sales of golf clubs and other products


In the Golf Course Business, although fee unit prices slightly declined YoY due to an increase in weekday players and an increase (deterioration) in cancellation rate from the impact of inclement weather, the number of customers was up YoY

* Full‐year, YoY

11

* Full‐year, YoY

Number of customers Purchase price

Number of customers Fee unit price Cancellation rate

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Golf equipment sales for the full‐year grew at a rate surpassing that of the marketNumber of purchasers buying via smartphone increased significantlyWe continued to concentrate efforts on enhancing and improving services for smartphones

2015: ¥12.44 billionYoY: 113%

2014: ¥11.03 billionYoY: 114%

2016: ¥13.36 billionYoY: 107%


YoY comparison of order amountNet sales

* Golf equipment market (golf clubs, balls, accessories): “Year‐on‐year comparison of market scale estimated based on sales results of major retail stores handling golf equipment nationwide” calculated by GfK Lifestyle Tracking Japan

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Retail Business

Jan2015

Apr Jul Oct Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Market

Jan2016

150%

125%

100%

75%

50%

GDO

118%

112%

96%

100%

93%94%

107%

118%125%

112% 115%

85%

109%

77%

111%

91%95%

119%

109%

100%

102%

98%

96%

113%

109%105%

109%114%

101%

96%

87%

99%

91%

89%

86%

76%

101%

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Growth in number of customer referrals surpassed that of the market throughout the year thanks to a product mix that meets the needs of golfers including early reservation discounts and other offeringsIncrease in number of visitors via smartphone

13

2015: ¥4.71 billionYoY: 115%

2014: ¥4.10 billionYoY: 120%

2016: ¥5.10 billionYoY: 108%

YoY comparison of customer referrals to golf coursesNet sales

Copyright(c) Golf Digest Online Inc. All Rights Reserved.* GDO: YoY comparison of number of customer referrals to golf courses * Market: Ministry of Economy, Trade and Industry, “Survey of Selected Service Industries,” * Comparison of eight prefectures’ total (Hokkaido, Miyagi, Tokyo,

Aichi, Osaka, Hiroshima, Kagawa, Fukuoka)


Jan2015

Apr Jul Oct Jan2016

Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Market

150%

125%

100%

75%

50%

GDO

93%

135%

103%

100%

100%97%

98%

113%

98%

104%

102%

127%

119% 115% 117%115%

108%108%

117%116%112%

96%

130%

100%

98%95% 94%

115%120%

105% 102%

101%

84%

91%

98%

105%

96%

114%

Jan2015

Apr Jul Oct Jan2016

Feb Mar Apr May Jun Jul Aug Sept Oct

96%

Approx. 50%

2016 Approx. 70%

In addition to golf‐related advertisements, orders for non‐golf advertisements such as for automobiles, beverages and finance were firm, and net sales were flat YoY

Ratio of news page views (PVs) from smartphones surged as a result of strengthening measures for news app downloads

Net sales

2016: ¥0.81 billionYoY: 100%

2015: ¥0.81 billionYoY: 102%

2014: ¥0.79 billionYoY: 86%


Ratio of news PVs from smartphones

Media Business


Initiatives in FY2016

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Thorough Reinforcement of Existing Services


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+83

Brand Stores

Brands Offered

Increase in newly acquired brandsBegan offering 83 newly acquired brands333 brands offered as of end of December 2016

GDO Golf Shops: Demonstrating “Overwhelming Product Lineup”


Category of newly acquired brands

GolfSportsapparel

Apparel

Others

+2

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Golf Course Reservations: Reservation Options Expanded and Enhanced!


+80

+13Courses with

systems

18

+8Overseas Golf CoursesUnder Partnerships

Courses OfferingHOT PRICE

Increase of overseas golf courses under partnerships

Added 8 courses

Increase of golf courses offering “HOT PRICE”

Added 80 courses

Increase in golf courses to which systems are provided

Yardage and Webpack introduced at 13 additional courses

Amazing prices with advance purchase! Golf coupons sold at bargain prices.


Feb. Established “Ginza ANNEX studios,” the second studio in GinzaAug. Established Yokohama Sakuragicho studios, the first in Kanagawa

Oriented towards interactive services such as club fitting that go along with product sales Creating a total experience store not limited to golf lessons

Acceleration of the Establishment of Lesson Service Studios

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Awarded Top Prize in the Sports Division of the “LINE MEDIA AWARD 2016”


Awarded for highest user satisfaction in the sports category among 116 media that distribute original news digests through official LINE accountsEnhanced quality and volume of contents as a portal for attracting customers to all services

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Development of New Services


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KIDS GOLF Becomes a Subsidiary


KIDS GOLF Inc., operator of a golf school for children, was made a subsidiary of GDOPlanning to develop various services that will add younger players to the target demographic for GDO services, and enable three generations of a family to enjoy golf together

Applications/inquiries One‐round trial lesson

Driving range trial lesson

Philosophy of KIDS GOLF Lesson Programs Lesson Environment Fees Instructor Profiles Student Achievements

Information for Schools

Play Golf as a Family

page

Collaboration with Hoshino Resorts “KAI”

23

Planning to hold the “Onsen Golf Debut @ Hoshino Resorts KAI Ito X GDO,” a golf starter tour for students at Ito Hotsprings in conjunction with the “RYOKAN CAMP” tour for young people organized by Hoshino Resorts “KAI”Development of new golf tour products, initiatives aimed at cultivating new demographic of golfers


page

Launch of Cooperation with JTB

24

Launch of cooperation with JTB Corp. (JTB) on services for overseas golfersCreation of operations framework and establishment of dedicated website for golf tours aimed at overseas golfers together with JTB

http://www.jtb‐golf.com/


page

Overseas Business Development


Capital and operation tie‐up with U.S. company GolfTECDispatched 1 director to strengthen partnershipA partnership that lays the foundation for overseas development, alongside strengthening lesson services in Japan


Investment in GolfTEC, U.S.

page

Initiatives in Asia (Thailand)


Operation tie‐up with Win Win Capital Company Limited, based in the Kingdom of ThailandPlanning to develop golf course software business in Thailand as one of our business developments overseasProactive implementation of initiatives in Asia, including Taiwan

page

Social Contribution Activities


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Connecting the World with Golf

GDO’s “Golf Garden Project” launched in AprilWhen you play golf using the “GDO Score Management” app, a donation of ¥10 per birdie will be made to support agriculture in developing countries


No. of gardens created/Approx. 53(as of Jan. 2017)

Setup of Golf Gardens

¥10 donated per birdie

¥150,000 = 1 gardenThe better you are at golf, the

more gardens created in developing countries

You only have to record your score on the “GDO Score Management” app!

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

Total contribution/Approx. ¥8 million

Total no. of birdies/Approx. 800 thousand


Outlook for FY2017

page

Aim to increase the market share of the Internet and GDO by thoroughly pursuing growth in existing businesses

Promote the development of new businesses and overseas businesses with a view to realizing the mid‐term business plan, and aim for a new stage of growth beyond traditional frameworks

Performance Outlook for FY2017Theme for the fiscal year ending December 31, 2017:

“Adventure” as in FY2016

31


前年比

＋2,990(115%)

＋126(112%)

＋110(110%)

＋188(131%)

2016年度実績

営業利益 1,073 1,200

売上高 19,309 22,300

当期純利益 611 800

経常利益 1,089 1,200

1株当たり配当金７円00銭

2017年度見通し

９円00銭＋２円

(¥ Million)

FY2016Actual

FY2017Outlook YoY

Net sales

Operating profitOrdinary profit

Profit attributable to owners of parent

19,309

1,073

1,089

611

¥7.00Dividends per share ¥9.00

22,3001,2001,200800

+ ¥2

+ 2,990

+ 126

+ 110

+ 188

(115%)

(112%)

(110%)

(131%)

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Largest demographic of golfers is in the seniorsThe only major sport that can be enjoyed across three generations = GolfSpending by seniors on grandchildren is said to amount to ¥3.8 trillionIncreasing use of the Internet and smartphones by golfers

GDO’s Growth Potential in the Golf Market


Internet (smartphones)Consumption across three generations

Keywords for GDO’s strategy to expand market share

Distribution of golfing population by age Ratio of households owning information and communication terminals

PC

Smartphone

Tablet

75 and up

65 ‐ 74

55 ‐ 64

45 ‐ 54

35 ‐ 44

25 ‐ 34

15 ‐ 24

golf digest online inc....golf market and the internet market that are the group’s main business...

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