Results Briefing for the First Half of FY2019 (21St Term)

Golf Digest Online Inc. (GDO) www.golfdigest.co.jp

Results Briefing for the First Half of FY2019 (21st Term)

(Securities Code： 3319)

１．Financial Results for the First Half of FY2019 ２．Approach of First Half of FY2019

３．（Reference) Five Year Mid-Term Strategic Policy

４．（Reference）Golf Market Trends

５．（Reference）Corporate Profile

Financial中計振り返りと見えてきた課 Results for題 the First Half of FY2019 （January ～ June, 2019）

Results go as planned in both Domestic and Overseas businesses

Net Sales 16.7billion yen YoY ＋40％

（Domestic） 13.0billion yen YoY ＋10％

（Overseas） 3.6billion yen YoY ＋3.6billion yen

Overseas EBITDA is continue to be strong

EBITDA 986million yen YoY ＋77％

（Domestic） 844million yen YoY ＋15％

（Overseas） 141million yen YoY ＋319million yen

New business is progressing as expected

Off to the good start in Golf driving range business.

（ million yen ）

2017 2018 2019 FY2019 １H １H １H （Domestic）（Overseas） YOY Forecast （Domestic）（Overseas）

Net sales 9,645 11,926 16,728 13,077 3,650 ＋4,802 (140%) 35,000 27,700 7,300

Gross profit 4,025 4,569 6,545 ーー＋1,976 (143%) ーーー

SG&A 3,715 4,248 6,282 ーー＋2,034 (148%) ーーー

EBITDA 512 557 986 844 141 ＋429 (177%) 2,260 2,150 110

Operating profit 309 320 262 591 -329 -58 (82%) 900 1,575 -675

Ordinary profit 314 308 256 ーー -52 (83%) 860 ーー

Net income 160 137 80 ーー -57 (58%) 440 ーー

*Overseas segment is subject to consolidation from the third quarter of FY2018 (results of overseas subsidiaries are not included in the first half of FY2017 and the first half of FY2018).

Net sales by segment Net sales by service Double-digit growth in both domestic and overseas markets Sales achieved double-digit growth in all services ・Domestic：Sales remained strong in all services and ・Sales of golf equipment：Sales promotion maintained double-digit growth. contributed mainly on golf wear. ・Oversease：Sales of U.S. GOLFTEC remained ・Golf course booking：Thanks to good weather in Q1 stronger than planned. and Sales promotion measures contributed. ・Golf lessons：U.S. GOLFTEC was strong. 16,728 16,728 YOY +45％ YOY +40％ ■others （ million yen） 3,650 ■Overseas YOY +13％ ■Golf lessons ※□ Includes US GOLFTEC sales prior to YOY +13％ acquisition. Golf lessons ※□Includes US GOLFTEC sales prior to 13,077 acquisition 11,926 ■Domestic ■golf course booking YOY +10％ YOY +14％

■Sales of golf equipment YOY +8％

2018 1H 2019１H 2018１H 2019１H 6 ※U.S. GOLFTEC＝Abbreviation for GolfTEC Enterprises LLC, a subsidiary in which the Company holds 60% equity.

SG&A expenses remained almost as planned.

・Domestic： Use marketing expenses efficiently

・Overseas： Implemented marketing according to the four major golf tournaments. ※The PL consolidation of GDOS*, a subsidiary, began from the third quarter, and U.S. GOLFTEC began from the fourth quarter of the previous year, respectively. 6,282 38％（ million yen） Overseas ■Overseas SG&A YOY SG&A ・Amortization of goodwill 1,800 and intangible assets ＋1,706 □GOLFTEC SG&A expense before acquisition Ratio to net sales + 229 （+932） 49% Overseas SG&A

＋110 ■Other domestic SG&A Domestic Domestic SG&A SG&A 4,482 4,154 ＋65 ■Domestic marketing expense Ratio to net sales Ratio to net sales 34% 35%

＋152 ■Domestic personnel expenses

2018 1H 2019 1H

※GDOS＝*GDOS: Abbreviation for GDO Sports, Inc., a wholly-owned subsidiary of the Company

EBITDA(=Operating profit + Amortization of goodwill + Depreciation + Long- Operating profit term prepaid expenses）・Domestic：growth in sales by use SG&A expenses efficiently. ・Domestic：growth in sales by use SG&A expenses efficiently. (However, profit margin declined due to changes in the sales (However, profit margin declined due to changes in the sales breakdown.) breakdown.) ・Overseas：Amortization of goodwill and intangible assets ・Overseas：Started investing in new overseas business from the associated with the consolidated subsidiaries for 229 million yen. first half of 2018. U.S. GOLFTEC sales growth of 2019 contributed. 262 998 YOY -58 million yen （ million yen ） YOY +83％ 320 557 ■Domestic ■Domestic EBITDA 591 operating profit 844 YOY＋15％ YOY+16％ 510 735

-189 ■Overseas 141 ■Overseas EBITDA operating profit -329 YOY +319million yen YOY -139 million yen -80 -177

2018 1H 2019 1H 2018 1H 2019 1H

※Two US subsidiaries are not included ※Two US subsidiaries are not included in the first half of FY2018. in the first half of FY2018. Copyright(c) Golf Digest Online Inc. All Rights Reserved 8 Consolidated Balance Sheet

Total assets increased associated with the expansion of operations.

・Deferred revenue：Deferred revenue increased attributable to strong sales at U.S. GOLFTEC. ・Long term debt：Repayment as planned.

Total assets 18,236 Total assets 17,812

Current Current Current liabilities Current liabilities assets 10,128 assets 10,213 9,561 ------9,279 ------Deferred Deferred ------Cash △260 million yen revenue revenue Merchandise Merchandise 2,239 4,158 2,624 4,235 Deferred revenue ＋384 million yen Long term debt △334 million yen

Fixed liabilities Non- Fixed liabilities Non- 1,900 1,540 current current assets assets 8,674 Total net 8,533 Total net ------assets ------assets Goodwill 6,207 Goodwill 6,059 3,230 3,068

End of December 2018 End of June 2019

Proceeding according to plan ・In new golf clubs, the unit price decreased due to sales mainly of special items and old models, but implementation of long-term sale mainly on golf wear contributes to sales growth. Number of customers Unit purchase price

New Used Balls Apparel Accessories golf clubs golf clubs Year on year comparison of orders （Golf apparel）（Golf clubs） Release period of new models Warm winter

2018 2019 2018 2019 *Market…Golf equipment market (golf clubs, balls and accessories). “Year-on-year comparison of the market size estimated based on actual sales of real stores of major golf equipment dealers nationwide” calculated by GfK Lifestyle Tracking Japan KK

The number of golfers booked on GDO increased. ・The cancellation rate also declined as a result of less snowfalls and good weather. ・Several special plans and customer attraction by Score management app, e-mail etc. were effective.

Change in golfers booked on GDO（players)（YOY）

Number of customers

Unit fee price

Fall in cancellation

ー GDO（the number of golf course players who played golf by booking through the Company and Jalan Golf）ー Market（the number of golf course players in eight prefectures published by the Ministry of Economy, Trade and Industry） 2018 2019

※Market: Source: Ministry of Economy, Trade and Industry “Survey of Selected Service Industries.” Comparison of total golf course players of eight prefectures (Hokkaido, Miyagi, Tokyo, Aichi, Osaka, Hiroshima, Kagawa and Fukuoka) . 11 Copyright(c) Golf Digest Online Inc. All Rights Reserved 【Overseas】Overview of Business Performance of U.S. GOLFTEC

Performance remained stronger than planned ・Sales increased 13% year on year because, sales of lesson package and custom fitted clubs remained firm. ・Promoting the acquired franchised stores and Embarked on new store. ・Cash EBITDA* remained higher than planned and it will contribute to EBITDA after this July. ・As a result of adoption of new accounting standard (revenue recognition standard), sales changed from the ticket digestion standard to the proportional division of effective period of tickets.

33 ■Net sales （$’s in million） YOY +13％ 29

5 4.1 ■Cash EBITDA YOY +75％ 2.4 2.4 1.6 ■EBITDA YOY +45%

2018１H 2019 1H

※Cash EBITDA：It is EBITDA calculated at the time of cash acquisition, and it is a measure before accounting standard adjustment. 12 Copyright(c) Golf Digest Online Inc. All Rights Reserved 【Overseas】U.S. GOLFTEC

・New store openings and the acquisition of franchised stores made steady progress. End of June 2018： 195 centers Putter Lesson “TECPUTT™” Starts End of June 2019： 206 centers （Corporate centers＋14、FC -3）・Number of Unique students of GOLFTEC Lessons. YoY rate ＋8％

・Sales of custom fitted clubs grew As a result of the bankruptcy sharply after FY2017 of the mass retailer where the STARTING store opened, implemented DIRECTION the relocation and consolidation of the store.

SPEED CONTROL

AIM TEST

Expansion of the customer base

(Reach, region, the cultivation of golfers, the creation of opportunities to come in contact with golf)

Deepening of customer relationships

(Data, IoT, CRM, Technology)

TOPTRACER RANGE Introduced in domestic driving range. 2 centers in Kanto, 6 centers in Kansai areas.

・A new initiative aimed at stimulating demand for potential golfers and average golfers. ・Proposed as a new revenue source centered on IT infrastructure at golf driving range facilities. Aim to establish early business as GDO's new business. ・Realized through business alliance with TOPTRACER, a group company of TOPGOLF GROUP, a comprehensive golf entertainment company in the United States.

TOPTRACER RANGE is a・・・ Introduced at Yokohama Asahi Family Golf and Swing Himonya. Also start introducing at 6 centers in Kansai.

Player can check the replay of all shots with a monitor installed at a setup base. It provides data and entertainment which could not be experienced at a driving range before, such as virtual round, near pin, driving contest, simple trajectory measurement, analysis of trajectory and carry by the club number, and point game.

Holding of Snow Golf MUSIC＆GOLF 「MIYA ROCK」×GDO ・The event, launched in Hokkaido in 2016, extends the host area to Aomori, and the event enters its fourth year.

・In Bibai, a special heavy snowfall area, we had to close in the winter to the thaw. Such a golf course has become available for business year-round by this initiative.

・By proposing various ways of enjoying golf in cooperation with local governments, we contribute to regional revitalization and improve GDO awareness in the field. ・Participated in “MIYKO ISLAND ROCK FESTIVAL” a famous rock festival held in Miyakojima, focusing on artists from Okinawa.

Conducted “Beach Golf" as hitting the special golf ball towards to a target floating in the sea. Snow Golf is a・・・ To improve the image of golf with young Ｗinter sport concept with origins in France, be held at golf courses and people by spreading on SNS. The new ski resorts, which are closed by snowfall in winter. It is held regularly in Greenland, and a world convention is also held. strategy to create a new golfer. GDO is the first to be held in Japan using an actual golf course.

The domestic golf market is shrinking, but the Internet market is expanding. However, competition is intensifying. The golf market in the United States continues to boom, mainly among new golfers. In addition, the retail market of golf equipment is showing signs that experience sales will become prevalent.

Future: GDO’s Future: GDO’s Past trends Past trends predictions predictions Declining Declining Rate of birthrate and birthrate and Population Upward trend increase will aging aging fall gradually population population Increasing Continued Upward trend Downward golfers Golf population downward for the time trend enjoying golf trend being off course

Downward Increase for On-course

Number of rounds trend ceasing Remain flat the past two golf rounds to fall years in a row may flat

Upward trend Ratio of purchasers Golf equipment EC Expected Upward trend for the time being through EC to increase market From PC to Smartphone 35%

Golf course booking Upward trend Upward trend for the time being Unknown Unknown via the Internet From PC to Smartphone

 The period is set at 5 years. A period of about 5 years is necessary to develop strategies from a medium- to long-term perspective and achieve certain results to strengthen our long-term presence in the global market.

 Mid-term management plan based on the mid-term strategic policy is being prepared. It takes time to formulate a specific plan, as the GDO Group has reached a major threshold amid the situation where the business environment is changing every day in Japan and overseas.

 To continue to grow in the domestic market environment, certain investments are necessary. While the competitive environment is intensifying due to sluggish growth among the population and golfer population in Japan and new entries in the Internet environment, there is room for growth. To continue to grow, certain investments are necessary.

Domestic businesses

Achieve further growth in sales and profitability in a difficult environment.

New Overseas businesses businesses

Build a new earnings model. Achieve growth, taking advantage of economies of scale.

Expansion of the customer base

(Reach, region, the cultivation of golfers, the creation of opportunities to come in contact with golf)

Deepening of customer relationships

(Data, IoT, CRM, Technology)

（Reference） Golf Market Trends

America's golf market is the world's largest

USA 1st nd Japan 2

U.K. Golfers : 23.8 million people Golfers : 7.8 million people Golf courses :14,800 Golf courses : 2,270 Golfers : 3.9 million people Rounds : 475 million rounds Rounds : 90 million rounds Golf courses : 2,800 Golf equipment market : $2,078 million Golf equipment market : $3,585 million Golf equipment market : $440 million

China Korea Canada

Golfers : 0.6 million yen people Golfers : 2.9 million yen people Golfers : 5.5 million yen people Golf courses : 380 Golf courses :450 Golf courses : 2,300 Golf equipment market : $110 million Golf equipment market : $562 million Golf equipment market : $387 million

*Source: Yano Research Institute “2019 World Golf Market Report”

Booking on GDO is possible at around 90% of golf courses in Japan

Number of golf courses Changes in the number of golf courses in Japan around the world and the number of golf courses bookable on GDO Number of Golf course 1st USA 15,047courses

2nd Canada 2,295

3rd Japan 2,290

4th U.K 1,991 Over 2,000 5th Australia 1,591

*Prepared by GDO based on “Golf around the world 2017” *Source: “Changes in the Number of Golf Courses and Users based on Taxation Status of (Royal and Ancient Golf Club of Saint Andrews (R&A)). Golf Facility Taxes (November 2017)”(Nihon Gorufujo Keieisha Kyokai) 25 Copyright(c) Golf Digest Online Inc. All Rights Reserved Domestic Golf Market ／Total Number of Golf Course user

The total number of golf course users remains flat.

( million people)

※Source: “Changes in the Number of Golf Courses and Users based on Taxation Status of Golf Facility Taxes (November 2017)” (Nihon Gorufujo Keieisha Kyokai) 26 Copyright(c) Golf Digest Online Inc. All Rights Reserved Domestic Golf Market／Changes in playing cost and number of annual plays

Golf becomes more familiar due to lower green fees

Play fees （yen） Number of plays per golfer （times）

※*Source: Green fees are prepared by GDO based on net sales and total users in “Survey of Selected Service Industries” (Golf Courses) of the Ministry of Economy, Trade and Industry. Number of plays is based on “Leisure White Paper” (Japan Productivity Center). 27 Copyright(c) Golf Digest Online Inc. All Rights Reserved Domestic Golf Market ／Golf Retail

The golf equipment market is shrinking, but sales of GDO are increasing.

Changes in the golf equipment market in Japan and net Sales ranking of golf equipment sales of golf equipment of GDO retailers in Japan

The golf equipment market has an Company A Golf equipment 1st 80.8 billion yen market in Japan (sports volume retailer) overwhelming size comprising approx. 20% Net sales of golf (billion yen) of the sports equipment market equipment of GDO (billion yen) nd Company B 62.4 billion yen 2 (sports volume retailer)

rd Company C 19.5 billion yen 3 (golf volume retailer)

4th GDO 16.3 billion yen 16.3 th Company D 15.2 billion yen 5 (golf volume retailer)

Percentage of golf equipment market comprised of EC market

12.5％（2017） GDO is overwhelming No. 1 *Source: “Leisure White Paper” (Japan Productivity Center)

The golf population is on an upward trend, including “those who are interested in golf.” The number of rounds increased year on year in the most recent two years, while it fluctuates strongly.

( million people) Golf population Number of rounds (YoY)

2012 2013 2014 2015 2016 Those who are interested in golf 2012 2013 2014 2015 2016 Those who are very interested in golf Golfers *Source: NGF(National Golf Foundation)Member Resources

（Reference） Corporate Profile

C o m p a n y N a m e Golf Digest Online Inc. (GDO) URL：www.golfdigest.co.jp

President and CEO Nobuya Ishizaka

D a t e of May 1, 2000 Establishment Listed on the Tokyo Stock Exchange Mothers Market on April 1, 2004 Listed on the Second Section of the Tokyo Stock Exchange on May 1, 2015 Listed on the First Section of the Tokyo Stock Exchange on September 7, 2015 (Securities Code: 3319)

H e a d O f f i c e 2-10-2 Higashi-Gotanda, Shinagawa-ku, Tokyo

C a p i t a l 1,458 million yen

Employees （Consolidated) 1,181 *Including part-time employees

GDO G r o u p GDO GolfTEC Co., Ltd （100％） KIDS GOLF Inc. （100％） GDO Sports, Inc （100％） GolfTEC Enterprises LLC （60％） Acquired a 60% units on July 2, 2018

GDO Events Total Golf platform Golf media

Golf Golf lessons course Database Custom club booking fitting

Sales of Golf equipment Other offline Stores channels

Golfers in the World: Approx. 98 million people Online × Offline

（Domestic）（Overseas）

GOLFTEC by GDO Golf Garage GOLFTEC Online channel: Monthly average number of visitors* America, Canada, 5.28 million Mexico, Number of golfers Hong Kong, booked on GDO Singapore Number of golfers Competitions Thailand, booked on GDO /events hosted

Offline channel: Monthly average number of users Total app downloads Number of likes on Facebook Domestic and Overseas 650,000 2.41 million 1.35 million

(Results in FY2018) *Sum of monthly average numbers of Enjoy golf unique users of PCs and mobile devices

Approx.60% of golfers in Japan are GDO Club Members ( million people)

As of June 2019 3.9 million people

GDO users：Characterized by business influence and high purchasing power as an individual

■Gender ratio ■Age group Female 14％ Male 86％

86％ of users are males Average age 50, 40s～50s 50%

■Annual Income ■Average golf score

-Intermediate level with an average score in the 90 range 31％ -Many golfers aim to achieve the 80 range on a stable

■Occupation

-Company executives + Management level employees+ Self employed 30％ 10 Million or more 24%, 8 million or more 40% -Many users have business influence

 One of the world’s largest with the most extensive selection of goods Strengths of Differentiated information power GDO   Provision of high quality services

 Number of items dealt with GDO Golf Shop PC web site New items：Approx. 100,000 Used items：Approx. 40,000 Number of brands dealt with：Approx. 390 brands in Japan Smartphone and overseas Web sites

 Major services application Online sales of golf equipment Purchase/sales of used golf equipment (Online/offline: 5 Golf Garage stores in Kanto)

 Stores also opened on the following websites Yahoo! Shopping, Yahoo! Auction, Amazon.co.jp, Rakuten Ichiba, LOHACO, Wowma! Golf Garage Stores

 One of the largest and most extensive information volumes in Japan Strengths of GDO  Commercialization power taking potential demand in advance  Provision of high quality services

GDO Golf Course Bookings PC web site  Number of partner golf course 2,000 course or more（japan and Overseas） Smartphone （Overseas：Hawaii, Guam, American mainland, Web site Singapore, Thailand, Malaysia, Australia, etc.） Application  Major services ・Golf course booking ・GDO Premium Club ・Hosting of competitions and events ・Sales of web booking system for golf courses GDO Premium Club Hosting of competitions and events

 Overwhelming information volume and high-quality content Strengths of Distinctiveness and swiftness of news GDO   Response to diverse devices

GDO golf news PC web site  Viewer rate in the golf category Smartphone No.1 in Japan Web site Applications

 Major services Golf media（News, BRUDER, Club information） Internet advertising/ Marketing service Mobile services（Free/ pay per use service）

BRUDER GDO Credit card GDO credit card

 Differentiated lesson methods Strengths of  Provision of high quality services GOLFTEC  Realization of experience-based store

U.S. GOLFTEC The USA’s leading golf lesson chains  GOLFTEC lesson studio 5 countries（USA, Canada, Japan, China(Including Hong Kong), Singapore） 206 centers（Direct centers：111、FC：95） Center in Japan 『GOLFTEC by GDO』 12 centers Roppongi, Ebisu, Ginza ANNEX, Otemachi, Kanda. Ikebukuro, Shinjuku, Haneda airport, Yokohama Sakuragi-cho, Nagoya, Osaka Umeda, Club fitting services Fukuoka Tenjin （9 centers in Kanto + 1 center in Chubu＋1 center in Kansai ＋1 center in Kyushu）

 Major services Swing Evaluation One on One golf lessons Lesson approach that visualized improvement Club Fitting + Sales of custom golf club U.S. GOLFTEC Head office：Denver, Colorado, USA Established：1995 Remarks：Has a share of 25% or more of the golf lesson market in USA.

■ Consolidated Net Sales ■ Consolidated Gross Profit ＋24％（ million yen ）

＋12％＋7％（YOY） +13％（ million yen）

■ SG&A ■ Consolidated Operating Profit （ million yen）（ million yen ）

■ EBITDA ■ Consolidated ordinary income

（ million yen）（ million yen）

■ Profit Attributable to Owners of Parent ■ Net Income Per Share

（ million yen ）（yen）