Supplementary Explanation Materials

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1 Supplementary Explanation Materials Golf Digest Online Inc. (TSE Stock Code :3319) URL:

2 Notes concerning these materials 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. Because no consolidated financial statements were prepared in FY2013, non-consolidated performance is stated in these materials as the business results for FY2013. Please refrain from unauthorized reproduction of these materials and data. 2

3 Outline 3

4 Corporate Profile Company Name: Golf Digest Online Inc. (GDO) URL: History: Incorporated on May 1 st, 2000 Listed on Mothers, TSE on April 1 st, 2004 Listed on 2 nd Section, TSE on May 1 st, 2015 Listed on 1 st Section, TSE on September 07 th, 2015 (TSE Stock Code :3319) President & CEO: Located: Amount of capital: Number of Employees (Consolidated): Nobuya Ishizaka Higashi-gotanda, Shinagawa-ku, Tokyo, Japan 1,458 million yen 534 (including part-time employees) (as of June 30, 2017) 4

5 GDO Group Business scheme Specialized in golf category / Hybrid of online & offline GDO Tricycle Business Model Online Offline Events Golf Media training centers Database Tee Time booking Retail Other channels Shops 5

6 Full support of ecosystem for golfers Golfers in Japan: approx. 5.5 million Online channel monthly visitors 5,380,000(116% of 2015) PC + smart phone unique visitors/month GolfTEC by GDO members: 6,000/month Golf Garage Store visitors: 30,000/month Golfers booked on GDO 460,000/month Tournament/Events Participants: 1,000/month DL applications approx.1,670,000 (as of June 30, 2017) Facebook like approx.109,000 (as of June 30, 2017) Physical channel monthly users 470,000(107% of 2015) Enjoy GOLF ( in 2016) 6

7 (millions of persons) GDO Club Members GDO Club Members: 60% of golfers in Japan 3.17 million as of June 30,

Average golf score -Intermediate (average in 90s) : 34% -Core members are aiming for constant : score at 80s

8 User Profile GDO users main profile : Possesses influence over business and high purchasing power as an individual. Gender Age Group (As of June 30, 2017) Annual Income Male : 86% Average age 46 Over 75% members in 30s thru 50s Average golf score -Intermediate (average in 90s) : 34% -Core members are aiming for constant : score at 80s Occupation -Company executives/managers, self-employed : 35% Over 10.0 million : 24% Over 8.0 million : 40% -Many influencers in business 8

9 Environment surrounding GDO 9

Golf course booking: Available at GDO to book 90% of golf courses in Japan Number of golf courses: total number in Japan vs available at GDO Number of golf courses Number of golf courses in the world

10 Golf course booking: Available at GDO to book 90% of golf courses in Japan Number of golf courses: total number in Japan vs available at GDO Number of golf courses Number of golf courses in the world No. 1 USA 15,047 No. 2 Canada 2,295 No. 3 Japan 2,290 Source: Golf around the world 2017 (by Royal and Ancient Golf Club of Saint Andrews/R&A) Source: transition of golf courses/users through taxation of golf facility tax (in Oct., 2016) (by Nihon Golf Keieisha Kyokai) 10

Golf course booking Total golf course visitors (millions of persons) Share of golf course visitors booked through GDO in total golf course visitors in Japan in 2003 0.6% in 2015 5.

11 Golf course booking Total golf course visitors (millions of persons) Share of golf course visitors booked through GDO in total golf course visitors in Japan in % in % Number of visitors : Total visitors in Japan vs Visitor through GDO Visitors booked through GDO (millions of persons) Source: transition of golf courses/users through taxation of golf facility tax (in Oct.,2016) (by Nihon Golf Keieisha Kyokai) 11

12 The lower golf fee, the more familiar to golf Correlation of golf fee and play frequency golf fee (yen) frequency source: golf fee frequency Specific service business category survey(golf) by METI (sales and No. of golf course visitors) Leisure White Paper (by Japan Productivity Center) 12

Golf retail: Golf Equipment market ( in billions) Share of domestic golf EC market in domestic golf retail market in 2003 1.8% in 2015 12.

13 Golf retail: Golf Equipment market ( in billions) Share of domestic golf EC market in domestic golf retail market in % in % Sales : Domestic golf equipment market vs GDO retail GDO Retail sales ( in billions) No.1 No.2 Sales ranking domestic golf retail market A company (Mass retailer) B company (Mass retailer) ( in billions) No.3 C company (Mass retailer) 20.0 Golf equipment market has certain large share of 20% among sporting goods market in Japan. No.4 D company (Mass retailer) 16.0 No.5 GDO 13.3 Source: Leisure White Paper 2016 (by Japan Productivity Center) GDO Sales in 2003 is the amount of half year (Jan.-Jun.) Golf EC market Sales No.1 (except: brick and mortar stores) data: Estimation by 2016 Golf Industry White Paper (by Yano Research Institute) and company s securities report of each company 13

14 Main service 14

brands (domestic & overseas) Main Services Online sales of golf equipment Purchase and sales of used golf equipment

15 Sales of golf equipment GDO s Strengths Overwhelming product lineup which no one can beat Differentiated information capability Providing high quality of service Number of Products New : 100,000 items, Used : 30,000 items Brands : 320 brands (domestic & overseas) Main Services Online sales of golf equipment Purchase and sales of used golf equipment (Online/physical : Golf Garage 5 store locations in Tokyo) Other Yahoo! Shopping Yahoo! Auctions Amazon.co.jp Rakuten Ichiba 15

16 Sales of Golf Equipment Golf Equipment sales to total sales approx. 70% In 2016 Gross profit of Golf Equipment to total gross profit approx.35% In 2016 YoY comparison of order amount * 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 16

Golf Course Booking GDO s Strengths Overwhelming amount of

needs Providing high quality of service Number of partnering golf

Golf course reservation (via online & phone & app.

17 Golf Course Booking GDO s Strengths Overwhelming amount of information New product commercialization anticipating potential needs Providing high quality of service Number of partnering golf courses Over 2,000 golf courses (including overseas) Main Services Golf course reservation (via online & phone & app.) GDO Premium Club Organizing tournaments/events Providing online reservation system for golf courses 17

Revenue Models of Golf Course booking Golf Course Booking Services Fees per player number of players Provide golf course Booking services Golf course

18 Revenue Models of Golf Course booking Golf Course Booking Services Fees per player number of players Provide golf course Booking services Golf course booking Golf fee Partnering golf courses Golfers System Sales for Golf Courses Payments Partnering golf courses Provide systems Provide ASP Services 18

Golf Course Booking Service Golf Course Booking sales to total sales approx.

equipment market (golf clubs, balls, accessories): Year-on-year comparison

19 Golf Course Booking Service Golf Course Booking sales to total sales approx.25% In 2016 Gross profit of Golf Course Booking to total gross profit approx.55% In 2016 YoY comparison of customer referrals to golf courses * 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 19

contents Providing high quality of service

service (Free/Pay-per-use service) GDO Cards

20 Golf Media GDO s Strengths Overwhelming amount of information and high quality of contents Providing high quality of service Supporting a wide variety of devices Viewer ratings in golf category No. 1 in Japan Main Services Golf media (News, GDO GOLF Style, Club information) Advertisements/Marketing service Mobile service (Free/Pay-per-use service) GDO Cards Strategic Alliance Partners PGA tour (USA), European tour, Asian tour, Golf Digest Magazine (USA) 20

Broadening the Base of Golfers GolfTEC by GDO GDO s Strengths Differentiated lesson method Providing

GOLFTEC by GDO Introducing systems and know-how through alliance with GolfTEC, No.

Studios Roppongi, Ebisu, Ginza, Kanda, Ikebukuro, Ginza ANNEX, Yokohama Sakuragicho, Shinjuku, Osaka

evaluation Absolute private lessons GDO s custom club fitting GDO s custom club fitting Service Lesson

21 Broadening the Base of Golfers GolfTEC by GDO GDO s Strengths Differentiated lesson method Providing high quality of service Creating a total Experience Store not limited to golf lessons Studios of GOLFTEC by GDO Introducing systems and know-how through alliance with GolfTEC, No. 1 golf lesson chain in the U.S. Studios Roppongi, Ebisu, Ginza, Kanda, Ikebukuro, Ginza ANNEX, Yokohama Sakuragicho, Shinjuku, Osaka Umeda ( GolfTEC by GDO studios : 9 locations in Kanto region & Kansai region) Main Services Swing evaluation Absolute private lessons GDO s custom club fitting GDO s custom club fitting Service Lesson approach visualizing improvement GOLFTEC - Headquarters : Denver, Colorado - History : since Location : more than 175 studios in the U.S., Canada and Korea - Over 25% share in Golf lesson market in the U.S. 21

22 Mid-term Plans 22

FY2015: The Final Year of the Mid-term Business Plan (2013-2015) Mid-term business plan (2013-2015) Focus on core and regain higher growth Invest in the future Transferred to First Section of TSE on

23 FY2015: The Final Year of the Mid-term Business Plan ( ) Mid-term business plan ( ) Focus on core and regain higher growth Invest in the future Transferred to First Section of TSE on Sept Establishing the GDO Tri-business Model Complete redesign of IT and management platforms Established in May 2000 Listed on TSE Mothers in Apr Changed the fiscal year end Net sales Operating profit Jul. to Dec. 23

Achievement of Targets of the Mid-term Business Plan (2013-2015) Focus on core and regain growth - Rebuild core as golf specialty player - Strengthen management resources and capabilities -

24 Achievement of Targets of the Mid-term Business Plan ( ) Focus on core and regain growth - Rebuild core as golf specialty player - Strengthen management resources and capabilities - Strengthen balance sheet and bottom line 13.5 billion to 14.0 billion 14.0 billion Record sales and profits Grew core audience Listed on first section of TSE More than 120% of billion (129% compared to 2013) Net sales Operating profit 0.05 billion to 0.2 billion 0.29 billion More than 0.8 billion 0.82 billion * Results for 2013 are non-consolidated 24

growth Acceleration of growth New businesses Leveraging customer

25 Mid-term business plan New startup phase GDO NEXT from Scratch Existing business Further strengthen our core services Acceleration of growth Acceleration of growth New businesses Leveraging customer assets in combination with alliances Overseas businesses Targeting Asia and the US 25

26 Mid-term business plan Strengthen existing businesses Sustainable growth 0.23 billion raised during listing on First Section of TSE Fully leveraging sound balance sheet New businesses Overseas businesses Aggressive activities aimed at improving corporate value over the mid to long term 26

27 Mid-term Business Plan ( ) What is GDO NEXT from Scratch GDO NEXT = Start of second startup phase for GDO from Scratch = Start from zero base, as well as similar to a scratch handicap golfer, but in GDO s case, leveraging an entire organization of golf business professionals Net sales: Double digit annual average growth rate Operating profit: Over 2.0 billion in 2018 Dividend payout ratio: 20% per annum 27

Mid-term Business Plan (2016-2018) financials Double

28 Mid-term Business Plan ( ) financials Double digit annual average growth rate Net sales 18.0 billion 19.6 billion to 20.3 billion Over 2.0 billion Operating profit 0.82 billion 0.9 billion to 1.05 billion 28

29 Performance Outlook for FY2016 Theme for the fiscal year ending December 31, 2017: Adventure Thoroughly pursue growth in existing business Take one step beyond traditional frameworks for further growth of the mid-term business plan = Adventure Profit attributable to owners of parent FY2016 Actual FY2017 Outlook Net Sales 19,309 22,300 Operating profit 1,073 1,200 Ordinary profit 1,089 1, YoY +2,990 (115%) +126 (112%) +110 (110%) +188 (131%) ( Million) Dividends per share

30 Shareholder Returns 30

31 Dividend Policy Basic Policy of Distribution of Profits To proactively return profits to shareholders while giving consideration to the balance between business performance and internal reserves. Dividends Dividends for FY per share Dividends outlook for FY per share (Interim dividend of 4.0 and year-end dividend of 5.0) 31

32 Financial Information 32

33 Financial Highlights : Consolidated Net Sales ( Million) *Results for 2013 are non-consolidated 33

34 Financial Highlights : Consolidated Gross Profit ( Million) *Results for 2013 are non-consolidated 34

35 Financial Highlights : SG&A Expenses ( Million) *Results for 2013 are non-consolidated 35

36 Financial Highlights : Consolidated Operating Profit ( Million) *Results for 2013 are non-consolidated 36

37 Financial Highlights : Profit attributable to owners of parent ( Million) *Results for 2013 are non-consolidated 37

Financial Highlights : Net Income per Share ( ) *The Company carried out a stock split, at a ratio of 100 shares per share on July 1, 2013.

38 Financial Highlights : Net Income per Share ( ) *The Company carried out a stock split, at a ratio of 100 shares per share on July 1, Net income (loss) per share is calculated upon the assumption that the stock split had been carried out at the beginning of FY2011. *Results for 2013 are non-consolidated 38

Supplementary Explanation Materials

Supplementary Explanation Materials Golf Digest Online Inc. (TSE Securities code: 3319) URL:www.golfdigest.co.jp Notes concerning these materials The Company s plans, projections, strategies, etc., stated