Dunlop Sports Co. Ltd.

Earnings briefing for the year ended Dec. 2015 Feb. 12, 2016 (Friday)

2015 earnings results Group Overview

2013 ( consolidated Changes in 2014 (17 consolidated Changes in 2015 (17 consolidated 16 the number the number subsidiaries） of subsidiaries） of subsidiaries） subsidiaries subsidiaries Domestic sales Domestic sales subsidiaries 2 -１ subsidiary 1 Domestic sales Merged Dunlop Sports Merged Dunlop Sports subsidiary 1 Chubu Co. Ltd. with Dunlop Okinawa Co. Ltd. with Sports Marketing Co. Ltd. Dunlop Sports Marketing Co. Ltd.

Manufacturing Manufacturing Manufacturing Subsidiaries 2 Subsidiaries 2 Subsidiaries 2

Overseas sales Overseas sales Overseas sales ＋1 Subsidiaries 10 Subsidiaries 9 Subsidiaries 9 * Consolidated Sports (Thailand) Co., Ltd.

Service Service -１ Service course subsidiary 1 Golf course subsidiary 1 Golf course subsidiaries Wellness subsidiaries Wellness subsidiaries + 3 4 -１ 3 3 * Consolidated Dunlop Merged Dunlop Sports Plaza * Sold all shares of School Co.Ltd. with Dunlop Sports Bambi Kogen Kaihatsu * Turned Dunlop Sports Wellness Co. Ltd. Wellness and Dunlop Sports Plaza into subsidiaries <3>

Summary of Consolidated Financial Results Sales increased four years in a row Net income turned negative due to amortization of good will

２０１５ (Billion yen) y-o-y Announced Change y-o-y Jan.-Dec. Domestic market +2% ＋7.2 Domestic tennis equipment market +5% Sales 77.7 +0.4 78.1 (+10%) U.S. golf equipment market +2% Operating 1.5 -0.6 1.2 income +0.3 (%) (1.9%) ( -29%) (1.5%) ■y-o-y Sales rose as domestic golf sales Ordinary 1.8 -1.3 1.5 were strong, tennis sales were firm, income +0.3 and with the addition of the (%) (2.3%) ( -41%) (1.9%) wellness business acquired in the 4th quarter of 2014 to consolidated -3.6 -4.7 -3.8 earnings for the full year. Net income +0.2 (%) (-4.6%) (－) (-4.9%) Operating profit and ordinary profit declined as procurement costs *Amount less than 100 million yen rounded off and amount less than ± 50 million yen shown as zero increased due to the weaker yen. Dividend per share Total dividend Net income turned negative as the Interim yen Year ended 10 290 million “goodwill” of Cleveland Golf in the December 2015 Year-end － yen yen U.S. was amortized in full. <4> Recording a Special Loss

Net income turned negative due to recording the amortization of goodwill for Cleveland Golf (U.S.) as a special loss

Net income (loss) (Billion yen) Initially announced Revised forecast Actual for the Change Change (Feb. 10) (Dec. 10) fiscal year 0.7 -3.8 -4.5 -3.6 +0.2

[Background] ・Cleveland Golf (U.S.) earnings did not meet initial plans. ・The company’s profitability became an issue and its goodwill or excessive profitability recorded as an asset was amortized in full as lacking value.

Recorded the “amortization of goodwill” as a special loss -3.95 billion yen <5>

Sales by Product Category Sales rose with business and wellness business

2015 y-o-y Excluding (Billion yen) currency effect Jan.-Dec. Amount % Overseas Japan (ex. currency) +1.7 +5% +0.5 Golf clubs 36.3 Golf clubs +2.3 -1.8

Golf balls 14.9 +0.4 +3% -0.1 Golf balls +0.3 -0.4 Golf others -0.4 +0.2 Golf others 7.7 -0.1 -2% -0.2 Total +2.2 -2.0 Golf equipment 58.9 +2.0 +4% +0.2

Tennis equipment 6.5 +0.2 +3% +0.2 ■Golf clubs License revenue 0.4 -0.0 -2% -0.0 In Japan, XXIO performed strongly throughout the year. Outside Japan, Srixon and CG missed Sports equipment 65.9 +2.2 +3% +0.3 the target in North America and led to a decline in sales. Services 4.2 -0.3 -6% -0.3 ■Golf balls Wellness 8.0 +5.3 +194% +5.3 Strong in Japan but negative abroad mainly in North America. Total 78.1 +7.2 +10% +5.4 *Amount less than 100 million yen rounded off and amount less than ± 50 million yen shown as zero <6> Sales by Region Sales rose in Japan, Europe declined in North America, Asia

2015 y-o-y Excluding ■Japan (Billion yen) Jan.-Dec. change currency effect Domestic golf sales rose significantly while tennis sales were firm as well. Sales Japan 52.6 +7.2 +7.2 increased also with the addition of the wellness business to consolidated earnings. North America 7.5 -0.9 -1.7 ■North America XXIO sales were strong but Srixon Europe 5.2 +0.5 +0.2 and CG golf clubs as well as balls missed the target and sales declined. Asia 10.4 +0.5 -0.2 ■Asia South Korea and South East Asia were Australia strong but sales declined due to market South Africa 2.5 -0.1 -0.0 deterioration in China.

Overseas sales 25.6 -0.0 -1.9

Ratio of overseas [Exchange rate of major currency] sales 32.7% -3.3P -5.0P yen 2015 2014 Change Consolidated sales 78.1 +7.2 +5.4 $ 121.1 105.8 +15.3 *Amount less than 100 million yen rounded off and amount less than ± 50 million yen shown as zero

<7>

Operating Income Analysis Profit fell due to overseas sales decline and weaker yen

Sales vol. Material Cost Currency Other Product mix costs reduction exchange expenses 2014 2015 (Billion yen) Jan. – Dec. -0.2 +0.1 +0.2 -1.3 +0.6 Jan.-Dec.

-0.6 3.0

1.5

Golf clubs +0.02 Golf balls +0.04 Tennis balls +0.08

0 [Exchange rate of major currency] 2.1 yen 2015 2014 Change 1.5 $ 121.1 105.8 +15.3

<8> Status of Balance Sheet Interest-bearing debts increased 600 million yen, equity ratio decline 3.1P

(Billion yen) End of Dec. 2014 *Amount less than 100 million yen rounded off End of Dec. 2015

+0.1 -0.6 Current Liabilities Current Liabilities assets 26.1 assets 25.5 37.6 37.7

Fixed Net assets Fixed Net assets assets 39.1 assets 33.8 27.6 21.6

-6.0 -5.3

Total assets 65.2 Total assets 59.2 Capital to asset ratio 58.2% Capital to asset ratio 55.1% Interest-bearing debt 9.1 Interest-bearing debt 9.7

<9>

2016 full-year earnings forecast Consolidated Financial Results (forecast) Forecasting increase in sales and profit mainly with golf clubs

Announced ２０１５ y-o-y (Billion yen) (full-year) Jan.-Dec. y-o-y +0.4 Domestic golf equipment market -1% Sales 78.1 Domestic tennis equipment market +0% 78.5 (+1%) U.S. golf equipment market +1% Operating +0.5 1.5 income 2.0 (%) (2.5%) (+35%) (1.9%) Sales (billion yen) 80 Ordinary 2.0 +0.2 1.8 income 75 (%) (2.5%) (+11%) (2.3%) 70 1.1 +4.7 -3.6 Net income 65 (%) (1.4%) － (-4.6%)

*Amount less than 100 million yen rounded off and 60 amount less than ± 50 million yen shown as zero 55 Dividend per share Total dividend Interim yen Year ending Dec. 10 580 million 50 2016 (forecast) Year-end 10 yen yen 2009 2010 2011 2012 2013 2014 2015 2016

<11>

Sales by Product Category (forecast) Forecasting rise in sales mainly with golf clubs

y-o-y Excluding (Billion yen) 2016 currency effect Jan.-Dec. Amount % Overseas Japan (Ex. currency) Golf clubs 37.3 +1.1 +3% +1.4 Golf clubs +0.1 +1.2 Golf balls 15.0 +0.0 +0% +0.2 Golf balls -0.3 +0.5

Golf others Golf others 6.4 -1.3 -17% -1.3 -1.1 -0.2 Total -1.2 +1.5 Golf equipment 58.7 -0.1 -0% +0.3

Tennis equipment 6.6 +0.1 +2% +0.1 ■Golf clubs License revenue 0.6 +0.1 +28% +0.1 Anticipating sales to increase with XXIO, Srixon and CG mainly abroad Sports equipment 65.9 +0.1 +0% +0.6 ■Golf balls Anticipating sales to increase mainly in Europe Services 4.4 +0.1 +3% +0.1 and Australia Wellness 8.3 +0.3 +4% +0.3 ■Golf others Sales to decrease with transition to wear Total 78.5 +0.4 +1% +0.9 license business

*Amount less than 100 million yen rounded off and amount less than ± 50 million yen shown as zero

<12> Sales by Region (forecast) Sales to rise in North America and Europe, fall in Japan ■Japan 2016 y-o-y Excluding (Billion yen) Anticipating a rise in sales of golf clubs, tennis Jan.-Dec. change currency effect and wellness, despite the decline in sales due to the transition to wear license business. Japan 52.1 -0.5 -0.5 ■North America North America +0.6 +0.8 Anticipating a rise in sales of both golf clubs and 8.1 golf balls with enhancement of the sales structure. Europe 5.8 +0.6 +0.6 ■Europe Anticipating a rise in sales of both golf balls and +0.1 Asia 10.3 -0.0 golf clubs. Australia Expecting a rise in sales from Srixon golf clubs -0.3 -0.2 South Africa 2.2 especially the mainland. ■Asia Overseas sales 26.4 +0.8 +1.3 Although sales are expected to decline due to market deterioration in China, sales in Southeast Ratio of overseas 33.6% Asia and South Korea are expected to rise. sales +0.9P +1.3P [Exchange rate of major currency]

yen Consolidated 78.5 +0.4 +0.9 2016 2015 Change sales $ 120.0 121.1 -1.1 *Amount less than 100 million yen rounded off and amount less than ± 50 million yen shown as zero <13>

Operating Income Analysis (forecast) Anticipate profit increase from golf clubs

Sales vol. Material Cost Currency Other Product mix costs reduction exchange expenses 2015 2016 (Billion yen) Jan. – Dec. +1.0 +0.0 +0.1 -0.2 -0.4 Jan.-Dec. 3.0

2.5 +0.5

2.0

Golf clubs +0.03 1.5 Golf balls +0.01 Tennis balls +0.00

1.0

0.5 [Exchange rate of major currency] yen ２０１６ ２０１５ Change % USD 120.0 121.1 -1.1 -1% 1.5 KRW 0.1 0.107 -0.007 -7% 2.0 EUR 130.0 134.3 -4.3 -3%

*Amount less than 100 million yen rounded off and amount less than ± 50 million yen shown as zero <14> Notification of voluntary application of IFRS for FY 2016 year-end earnings

We plan to disclose our financial statements based on the International Financial Reporting Standard (IFRS) starting with the year-end earnings for 2016.

Earnings 1st Quarter 2nd Quarter 3rd Quarter period Year-end Disclosure Japan standard Japan standard Japan standard material IFRS * All disclosures will be made as consolidated earnings.

With the application of the IFRS, the accounting policy within the group will be standardized, and we can expect that the international comparability of the group companies’ financial information will be improved and that the group’s business management will be further enhanced.

<2016 Full-year consolidated earnings forecast> ＩＦＲＳ Japan standard (Billion yen) Difference (Tentative: Note) (Announced) Sales 78.2 78.5 -0.3 Operating +0.2 profit 2.2 2.0 Net profit 1.2 1.1 +0.1 Note: the figures are for reference calculated provisionally at this time. We plan to announce our earnings forecast based on IFRS at another time during fiscal year 2016. <15>

This document was prepared for the benefit of investors to contribute to their understanding of the current situation of Dunlop Sports Co. Ltd. The contents described in this document are prepared based on generally acknowledged economic/social conditions and certain assumptions determined reasonable by the company at the time of preparation of the material and are subject to change without advance notice due to factors including changes in the management environment. We kindly ask investors to make investments at their own discretion.

- Contact - Dunlop Sports Co. Ltd. Public Relations TEL： +81(0)78-265-3139 FAX： +81(0)78-265-3135 E-mail： [email protected] URL：http://www.dunlopsports.co.jp/