Golf Digest Online : Consolidated Financial Results for the Second Quarter Ended June 30, 2020

Consolidated Financial Results for the Second Quarter Ended June 30, 2020 (Japanese GAAP)

August 12, 2020

Listed company name: Golf Digest Online Inc.

Stock code:	3319 (URL:https://www.golfdigest.co.jp)	Shares listed: Tokyo Stock Exchange
Representative:	Nobuya Ishizaka, President and CEO
Contact:	Hiroshi Nishino, Executive Director and Chief Financial Officer Phone: [phone]

Scheduled filing date of quarterly report:	August 13, 2020
Scheduled commencement date of dividend payments:	―
Preparation of 2Q earnings presentation materials:	Yes
Holding of 2Q earnings announcement:	None
	(Amounts less than one million yen have been omitted.)

1. Results of the First Half ended June 30, 2020 (From January 1, 2020 to June 30, 2020)

(1) Consolidated results of operations:

(Percentage changes relative to previous corresponding period)

	Net sales		Operating profit	Ordinary profit		Profit attributable to owners
			of parent
	Million yen		%	Million yen	%	Million yen		%	Million yen		%
Six months ended June 30, 2020	15,026		-10.2	-445	－	-439		－	-610		－
Six months ended June 30, 2019	16,728		40.3	262	-18.3	256		-16.8	80		-41.4

Note: Comprehensive income	Three months ended June 30, 2020:		-651 million yen (－%)
	Three months ended June 30, 2019:		-4million yen (－%)
	Basic earnings	Diluted earnings
	per share	per share
	Yen		Yen
Six months ended Mar. 30, 2020	-33.40		－
Six months ended Mar. 30, 2019	4.40		－

(2) Consolidated financial position:

	Total assets	Net assets	Shareholders'	Net assets per share
	equity ratio
	Million yen	Million yen	%	Yen
As of June 30, 2020	18,386	5,563	30.3	304.45
As of Dec. 31, 2019	19,564	6,315	32.3	345.61

Reference: Shareholders' equity	As of June 30, 2020:	5,563 million yen
	As of Dec. 31, 2019:	6,315 million yen

2. Dividend payments

			Dividends per share
	First Quarter	Second Quarter	Third Quarter		Year-end	Total
	Yen	Yen	Yen		Yen	Yen
Year ended Dec. 31, 2019	－	4.00	－		5.50	9.50
Year ending Dec. 31, 2020	－	0.00
Year ending Dec. 31, 2020 (Forecast)			－		－	－

Note: Revisions to dividend forecast in the current quarter: None

The interim and year-end dividend forecasts for the fiscal year ending December 2020 have not yet been determined.

3. Consolidated Financial forecast for the year ending December 31, 2020 (From January 1, 2020 to December 31, 2020)

(Percentage changes relative to previous corresponding period)

Net sales

Operating profit

Ordinary profit

Profit attributable to

Basic earnings

owners of parent

per share

Full year

Million

yen

%

Million yen

%

Million yen

%

Million yen

%

Yen

－

－

－

－

－

－

－

－

－

Note: Revisions to forecast results of operations in the current quarter: None

Forecast for the second quarter consolidated cumulative period has not been made. The impact of the global spread of COVID-19 is extremely difficult to calculate at this time, so we will revise the earnings forecast announced on February 12, 2020 to undetermined temporarily. We will promptly announce the performance forecast when it becomes possible.

1

* Notes

1. Changes in significant subsidiaries during the period: None
2. Application of specific accounting methods in the preparation of quarterly financial statements: None
3. Changes in accounting policies, change in accounting estimates and restatements
4. 1. Changes in accounting policies pursuant to revision in accounting standards, etc.: None
   2. Changes in accounting policies other than those in "(i)" above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
5. Number of issued shares (common stock)

					(Unit: shares)
1)	Number of issued shares at end of period (including treasury	June 30, 2020:	18,274,000	Dec. 31, 2019:	18,274,000
	stock)
2)	Number of shares of treasury stock at end of period	June 30, 2020:	250	Dec. 31, 2019:	250
3)	Average number of shares during period (Quarterly aggregate)	June 30, 2020:	18,273,750	June 30, 2019:	18,273,750

• The quarterly consolidated financial results are exempt from the quarterly review by auditor.
• Summaries for relevant use of forecasts and other specific affairs

The forward-looking statements described in this document including results forecast, etc., are based on information currently available to Golf Digest Online Inc. and certain assumptions that are deemed to be reasonable as of the date of the release of this document. Golf Digest Online Inc. makes no warranty as to the achievability of the forecasts. For the basis of presumption of the results forecast, please refer to "Explanation of forward-looking information such as consolidated earnings forecast" in the attached document (Japanese only).

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○Table of Contents

１． Qualitative Information on Second Quarter Consolidated Result ………………………………4

（１）Overview of Operating Results	……………………………………………………………… 4
（２）Overview of Financial Position	……………………………………………………………… 4

（３）Overview of Consolidated Earnings Forecast ………………………………………………… 5

２．Condensed Consolidated Financial Statement and Notes …………………………………………6

（１）Consolidated Balance Sheets …………………………………………………………………6

（２）Consolidated Statements of Income and Comprehensive income………………………………8

（３）Consolidated Statements of Cash Flows …………………………………………………… 10

（４）Notes to Condensed Consolidated Financial Statements………………………………………11

（Going Concern Assumption ） ………………………………………………………………11

（Significant Changes in Shareholders' Equity） ………………………………………………11

（Segment Information） ………………………………………………………………………11

（Additional Information）………………………………………………………………………11

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１．Qualitative Information on Second Quarter Consolidated Results

（１）Overview of Operating Results

Looking at the economic environment in the first six months under review (January 1, 2020 to June 30, 2020), the world economy slowed, affected by persistent U.S.-China trade friction and the spread of the novel coronavirus disease ("COVID-19"). Under these circumstances, the outlook for the global economy became increasingly uncertain.

In the environment surrounding the Internet, markets such as those for e-commerce and various Internet-related services continued to expand. Meanwhile, digital technologies, notable examples of which are those for IoT and AI, continued to evolve, advancing digitization in numerous fields. Similarly, golfers' demands and preferences also continued to change constantly in the golf market.

In this environment, the Golf Digest Online Group (the "GDO Group") offered greater playing comfort and pleasure to golfers as a group of IT service providers specializing in golf, with overwhelming information content and the capacity to provide specialized golf services as its strengths. However, given the negative effects produced by COVID-19 in the period from mid-March, net sales for the GDO Group amounted to 15,026 million yen (down 10.2% year on year) in the six months under review (January 1, 2020 to June 30, 2020). In the same period, the Group posted an operating loss of 445 million yen (compared to an operating profit of 262 million yen posted in the first six months of the previous fiscal year), an ordinary loss of 439 million yen (compared to an ordinary profit of 256 million yen posted in the first six months of the previous fiscal year), and a loss attributable to owners of parent of 610 million yen (compared to a profit attributable to owners of parent of 80 million yen posted in the first six months of the previous fiscal year).

Results by major segment are as follows.

Domestic segment

The domestic segment posted net sales of 12,065 million yen in the first six months under review (down 7.7% year on year). Segment profit was 343 million yen (down 41.9% year on year).

Overseas segment

The overseas segment recorded net sales of 2,960 million yen in the first six months under review (down 18.9% year on year). The segment loss stood at 789 million yen (compared to segment loss of 329 million yen posted in the first six months of the previous fiscal year).

（２）Overview of Financial Position ⅰ． Assets, Liabilities and Net Assets

Total assets as of June 30, 2020 decreased 1,187 million yen from the end of the previous fiscal year, to 18,376 million yen. Liabilities totaled 12,813 million yen as of the same date, declining 435 million yen from the end of the previous fiscal year. Net assets as of the same date decreased 752 million yen from the end of the previous fiscal year, to 5,563 million yen.

Looking at the balances of accounts for main items, cash and deposits increased by 330 million yen, and short- term loans payable expanded by 1,107 million yen. Meanwhile, accounts payable - trade, merchandise and long- term loans payable decreased by 1,240 million yen, 858 million yen and 333 million yen, respectively. Retained earnings shrank by 710 million yen.

ⅱ． Cash Flows

Cash and cash equivalents ("cash") as of June 30, 2020 grew 330 million yen from the same date of the previous fiscal year, to 2,327 million yen. Cash flows in the first six months under review and the major factors behind them are as follows.

4

（Cash Flows from Operating Activities）

Cash flows from operating activities resulted in a cash inflow of 277 million yen in the first six months under review (compared to a cash inflow of 1,030 million yen posted in the same period of the previous fiscal year). This was mainly due to a cash increase, primarily attributable to depreciation of 599 million yen and a decrease of 845 million yen in inventories, in excess of a cash decrease due to factors, including a decline of 1,235 million yen in notes and accounts payable - trade.

（Cash Flows from Investing Activities）

Cash flows from investing activities resulted in a cash outflow of 629 million yen in the first six months under review (compared to a cash outflow of 829 million yen posted in the same period of the previous fiscal year). The cash outflow mainly consisted of 333 million yen used for the purchase of property, plant and equipment and 228 million yen disbursed for the purchase of intangible assets.

（Cash Flows from Financing Activities）

Cash flows from financing activities resulted in a cash inflow of 688 million yen in the first six months under review (compared to a cash outflow of 457 million yen posted in the same period of the previous fiscal year). This was mainly due to a net increase of 1,122 million yen in short-term loans payable, which more than offset 333 million yen used to repay long-term loans payable.

（３）Overview of Consolidated Earning Forecast

Regarding the GDO Group's consolidated business forecast, as the "Notice Concerning Revision of Consolidated Business Forecast and Dividend Forecast for the Fiscal Year Ending December 2020" announced on May 13, 2020 due to various environmental changes caused by the global expansion of COVID-19. It is difficult to calculate the business forecast. Therefore, we will continue to make an undecided decision, and will announce it as soon as it is possible to calculate the consolidated earnings forecast.

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２．Condensed Consolidated Financial Statement and Notes

（１）Quarterly Consolidated Balance Sheets

			(Thousands of yen)
		As of December 31, 2019	As of June 30, 2020
Assets
	Current assets
	Cash and deposit	1,996,536	2,327,177
	Accounts receivable‐trade	2,638,113	2,433,488
	Merchandise	4,692,342	3,834,143
	Work in process	1,509	333
	Supplies	151,319	161,394
	Other	1,241,294	1,006,396
	Allowance for doubtful accounts	-9,609	-10,395
	Total current assets	10,711,505	9,752,540
	Non-current assets
	Property, plant and equipment
	Buildings	2,801,278	3,038,810
	Others	1,636,469	1,671,513
	Accumulated Depreciation	-1,791,283	-2,008,726
	Total Property, plant and equipment	2,646,464	2,701,597
	Intangible assets
	Goodwill	3,010,992	2,845,090
	Others	2,279,134	2,174,828
	Total intangible assets	5,290,126	5,019,919
	Investment and other assets
	Other	923,207	909,916
	Allowance for doubtful accounts	-6,789	-7,000
	Total investments and other assets	916,417	902,916
	Total non-current assets	8,853,008	8,624,433
	Total assets	19,564,513	18,376,973
Liabilities
	Current liabilities
	Account payable-trade	2,714,606	1,473,620
	Short term loans payable	3,446,190	4,554,009
	Current portion of long-term loans payable	666,800	666,800
	Income taxes payable	294,996	194,410
	Deferred revenue	2,542,269	2,601,444
	Provision for bonuses	7,097	7,879
	Provision for point card certificates	230,952	220,196
	Provision for shareholder benefit program	26,786	23,036
	Other	2,083,872	2,183,373
	Total current liabilities	12,013,572	11,924,771
	Non-current liabilities
	Long term loans payable	666,947	333,000
	Provision for directors' retirement benefits	108,000	94,758
	Assets retirement obligations	251,533	269,741
	Other	208,902	191,214
	Total non-current liabilities	1,235,384	888,714
	Total liabilities	13,248,957	12,813,485

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(Thousands of yen)

As of December 31, 2019

As of June 30, 2020

Net assets

Shareholders' equity

Capital stock

Capital surplus

Retained earnings

Treasury stock

Total shareholders' equity

Accumulated other comprehensive income

Valuation difference on available-for-sale securities

Foreign currency translation adjustment

Total accumulated other comprehensive income

Total net assets

Total liabilities and net assets

1,458,953	1,458,953
2,447,104	2,447,104
2,443,351	1,732,438
-245	-245
6,349,164	5,638,251
-2,020
-2,277
-31,587	-72,486
-33,607	-74,764
6,315,556	5,563,487
19,564,513	18,376,973

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（２）Consolidated Statements of Income and Comprehensive income

Quarterly consolidated statement of income consolidated cumulative second quarter

		(Thousands of yen)
	First Half ended June 30,2019	First Half ended June 30,2020
	(From January 1, 2019	(From January 1, 2020
	to June 30, 2019)	to June 30, 2020)
Net sales	16,728,648	15,026,024
Cost of sales	10,183,473	9,548,281
Gross profit	6,545,174	5,477,743
Selling, general and administrative expenses	6,282,953	5,923,415
Operating profit (Loss)	262,220	445,672
Non-operating income
Interest income	45	5

Real estate rent

Surrender value of insurance policies Other

Total non-operating income

Non-operating expenses

Interest expenses

Other

Total non-operating expenses Ordinary profit (Loss)

Extraordinary losses

Loss on retirement of non-current assets

Total extraordinary losses Income before income taxes (Loss)

Income taxes -current

Income taxes -deferred

6,247	7,221
－	6,152
2,730	9,766
9,023	23,146
13,721	16,188
657	903
14,378	17,091
256,865	-439,617
10,267	2,461
10,267	2,461
246,598	-442,079
153,081	169,683
13,175	-1,356

Total income taxes	166,256	168,327
Net income (Loss)	80,341	-610,407
Profit attributable to owners of parents (Loss)	80,341	-610,407

8

Quarterly Consolidated Statement of Comprehensive Income

Consolidated cumulative second quarter

				(Thousands of yen)
			First Half ended June 30,2019	First Half ended June 30,2020
			(From January 1, 2019	(From January 1, 2020
			to June 30, 2019)	to June 30, 2020)
Net income		80,341	-610,407
Other comprehensive income
	Valuation difference on available-for-sale securities		-164	-257
	Foreign currency translation adjustment		-84,803	-40,899
	Total other comprehensive income		-84,967	-41,156
Comprehensive income		-4,626	-651,563
Comprehensive income attributable to
	Comprehensive income attributable to owners	of	-4,626	-651,563
	parents

9

（３）Consolidated Statements of Cash Flow

	(Thousands of yen)
First Half ended June 30,2020	First Half ended June30,2020
(From January 1, 2019	(From January 1, 2020
to June 30, 2019)	to June 30, 2020)

Cash flows from operating activities

Income before income taxes

Depreciation

Amortization of goodwill

Increase (decrease) in allowance for doubtful accounts

Increase (decrease) in provision for bonus

Increase (decrease)in provision for directors' retirement bonus

Increase (decrease)in provision for point card certificates

Increase (decrease) in provision for shareholder benefit program

Interest and dividend income

Interest expenses

Loss on retirement of noncurrent assets

Decrease (increase) in notes and accounts receivable - trade

Decrease (increase) in inventories

Increase (decrease) in notes and accounts payable - trade

Decrease (increase) in other assets

Increase (decrease) in other liabilities

Decrease (increase) in other investments

Other

Subtotal

Interest and dividend income received

Interest expenses paid

Income taxes paid

Net cash provided by (used in) operating activities

Cash flows from investing activities

Purchase of property, plant and equipment

Purchase of intangible assets

Payment for transfer of business

Payments for lease deposits

Other

Net cash provided by (used in) investing activities

Cash flows from financing activities

246,598	-442,079
554,234	599,553
169,967	171,342
1,862	1,124
-53,456	781
7,252	-13,242
844	-10,755
7,879
-3,749
-395	-237
13,721	16,188
10,267	2,461
-117,917	200,180
118,692	845,865
-234,390	-1,235,585
-1,122	245,240
641,748	177,462
-2,898	―
-47,350	8,014
1,315,537	562,565
395	237
-13,055	-19,083
-272,398	-266,517
1,030,478	277,201
-465,069	-333,821
-226,181	-228,023
-108,045	-64,368
-30,616	-3,256
-10	179
-829,921	-629,291

Net increase (decrease) in short-term loans payable	-20,717	1,122,253
Repayments of long-term loans payable	-334,327	-333,941
Repayments of lease obligations	-1,458	-1,102
Cash dividends paid	-100,605	-99,038
Net cash provided by (used in) financing activities	-457,108	688,170
Effect of exchange rate change on cash and cash	-4,358	-5,438
equivalents
Net increase (decrease) in cash and cash equivalents	-260,910	330,641
Cash and cash equivalents at beginning of year	1,700,950	1,996,536
Cash and cash equivalents at end of year	1,440,039	2,327,177

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（４）Notes to Condensed Consolidated Financial Statements

• Going Concern Assumption ） Not applicable.
• Significant Changes in Shareholders' Equity ） None
• Segment Information etc.）
• Segment Information 】
  Previous consolidated cumulative second quarter (From January 1, 2019 to June 30, 2019) １．The information about the amounts of the net sales, segment income or loss.

(Thousands of yen)

		Reported Segments		Adjustment	consolidated profit
				amounts	and loss statement
	Domestic	Oversease	Total	*１	*２
Net sales
Sales to external customers	13,077,765	3,650,883	16,728,648	―	16,728,648
Intra-segment sales or	―	47,115	47,115	-47,115	―
transfers
Total	13,077,765	3,697,998	16,775,763	-47,115	16,728,648
segment income or loss（-）	591,859	-329,638	262,220	―	262,220

*１．Adjustment of segment sales is elimination of intersegment transactions.

*２．Segment income or loss (-) are consistent with operating income in the consolidated profit and loss statement.

Consolidated cumulative second quarter (From January 1, 2020 to June 30, 2020)

１．The information about the amounts of the net sales, segment income or loss.

(Thousands of yen)

		Reported Segments		Adjustment	consolidated profit
				amounts	and loss statement
	Domestic	Oversease	Total	*１	*２
Net sales
Sales to external customers	12,065,951	2,960,072	15,026,024	―	15,026,024
Intra-segment sales or	―	6,971	6,971	-6,971	―
Total	12,065,951	2,967,043	15,032,995	15,026,024
transfers	-6,971
segment income or loss（-）	343,690	789,363	-445,672	―	-445,672
		△

*１．Adjustment of segment sales is elimination of intersegment transactions.

*２． Segment income or loss (-) are consistent with operating income in the consolidated profit and loss statement.

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