Table of Contents - 【GDO】ゴルフダイジェスト ... · 12/31/2018 · Sports, Inc....

○ Table of Contents

1. Overview of Results of Operations, Etc.………………………………………… 2

(1) Overview of Results of Operations for the Fiscal Year under Review…………………………………………… 2

(2) Overview of Financial Position for the Fiscal Year under Review……………………………………………… 3

(3) Overview of Cash Flows for the Fiscal Year under Review……………………………………………… 3

(4) Future Outlook…………………………………………………………………………… 4

2. Basic Views on Selection of Accounting Standards……………………………………………………… 5

3. Consolidated Financial Statements……………………………………………………………………… 6

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

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

Consolidated Statements of Income…………………………………………………………………………… 8

Consolidated Statements of Comprehensive Income………………………………………………………… 9

(3) Consolidated Statements of Changes in Net Assets………………………………………………… 10

(4) Consolidated Statements of Cash Flows……………………………………………………… 12

(5) Notes to the Consolidated Financial Statements………………………………………………… 14

(Notes on Going Concern Assumption)…………………………………………………… 14

(Notes to Consolidated Statements of Changes in Net Assets)………………………………………………… 14

(Corporate combination-related) ………………………………………………………………………… 15

(Segment Information, etc.)……………………………………………………………………… 18

(Per Share Information)………………………………………………………………………… 19

(Significant Subsequent Events)………………………………………………………………………… 19

2

1. Overview of Results of Operations, Etc.

(1) Overview of Results of Operations for the Fiscal Year under Review

During the fiscal year under review (January 1, 2018 to December 31, 2018), the business environment in Japan has shown a steady

improvement in the employment environment, while consumer spending indicates a seesaw struggle because of bad weather and a

slower rise in real income due to price rises. In the meantime, there is growing concern in the global economy that the US

administration’s protectionist policy may have a range of impacts, and a sense of uncertainty remains.

In the environment surrounding the Internet, smartphones, tablets and other mobile devices continue to spread, and the e-commerce

market, the advertising market for mobile devices, and various other internet related markets continue to grow. In addition, growing

attention is being paid to digital technologies such as IoT and AI, and IT is applied to broader business segments. There is growing

awareness in society that technology and business are inseparable. In the golf market, the wave of IT and digitalization is advancing,

and the demands of golfers are changing from day to day.

Under these circumstances, to enhance the overwhelming volume of information and service capabilities specializing in golf as an IT

service company dedicated to golf, Golf Digest Online Inc. (the “Company”) and its subsidiaries (collectively, the “Group”) have set

the specific theme of “golf x technology” and strengthened our service to propose a more comfortable, pleasant golf life.

In addition, during this fiscal year, by focusing on maximizing the value it provides and increasing the level of customer satisfaction,

the Group aims to increase net sales. With a view to continuing to extend its track record in the medium and long term, it aims to

embark on overseas businesses and new businesses, striving to expand them. In its overseas business, the Group additionally acquired

equity in GolfTEC Enterprises LLC (“US GOLFTEC”) in July 2018 to welcome it into the Group. US GOLFTEC is an operator of a

golf lesson chain that has the largest share in the US. It operates about 200 schools worldwide, mainly in the US, the largest golf

market in the world. (For details, see “Notice on Acquisition of Equity of GolfTEC Enterprises LLC (made into a subsidiary)” released

on June 1, 2018.)

Because the deemed acquisition date of US GOLFTEC is set as September 30, 2018, the performance of US GOLFTEC, including

statements of income, is included in the consolidated results from the current 4Q consolidated accounting period. In addition, GDO

Sports, Inc. (“GDO Sports”), the Group’s non-consolidated 100% subsidiary that was established in California, USA in March 2017,

was made into the Group’s consolidated subsidiary from the 3Q consolidated accounting period because its significance has increased.

The Group will continue to strengthen its collaboration with US GOLFTEC and GDO Sports from now on, accelerating its overseas

expansion.

As a result of these initiatives, the results for the fiscal year ended December 31, 2018 saw net sales of 26,739 million yen (up 23.9%

year on year) and gross profit of 10,475 million yen (up 18.4% year on year). The Group aggressively increased costs to enhance

services to increase sales and acquire customers. Expenses were incurred to embark on full-scale businesses overseas, including

making US GOLFTEC its subsidiary. As a result, the Group recorded operating profit of 804 million yen (down 33.7% year on year),

ordinary profit of 822 million yen (down 32.9% year on year) and profit attributable to owners of parent of 380 million yen (down

46.1% year on year).

The Group only had one business segment, the golf business, but under the policy of embarking on full-scale overseas businesses, the

Group classified the golf business into the Domestic and Overseas segments to disclose the results of each segment starting in this

consolidated accounting period.

The results of each main segment are as follows:

Domestic segment

In this consolidated accounting period, the domestic segment recorded net sales of 25,244 million yen (up 17.0% year on year).

Despite stormy weather and numerous disasters, favorable sales of the golf course booking service and the golf equipment sales

service made a significant contribution to the results, and this segment continued to register double-digit growth in net sales year on

year. On the other hand, because of the change in the sales ratio, the segment recorded operating profit of 1,387 million yen (up 3.8%

year on year).

Overseas segment

In this consolidated accounting period, the overseas segment recorded net sales of 1,494 million yen (-% year on year) and operating

loss of 582 million yen (operating loss of 122 million yen in the previous year). This segment mainly consists of the golf-related

businesses of consolidated subsidiaries based overseas centered on US GOLFTEC, an operator of the golf lesson service in the US and

five other countries. US GOLFTEC, including statements of income, is included in the consolidated results, starting in the current 4Q

consolidated accounting period. The Group will strengthen these overseas subsidiaries to develop a structure that will contribute

further to sales and profit.

3

(2) Overview of Financial Position for the Fiscal Year under Review

With regard to the financial position at the end of the fiscal year under review, total assets increased by 7,431 million yen

from the end of the previous fiscal year, to 18,236 million yen. In the status of assets, current assets increased by 1,828 million

yen from the end of the previous fiscal year, to 9,687 million yen. This is mainly attributable to an increase in accounts

receivable and products in line with the increased number of consolidated subsidiaries.

Non-current assets increased by 5,602 million yen from the end of the previous fiscal year, to 8,549 million yen. This is mainly

attributable to an increase in tangible non-current assets and the generation of goodwill in line with the increased number of

consolidated subsidiaries.

With regard to liabilities, current liabilities increased by 5,539 million yen from the end of the previous fiscal year, to 10,128

million yen.

This is mainly attributable to an increase in advance payments received and short-term loans in line with the increased number

of consolidated subsidiaries.

Non-current assets increased by 1,704 million yen from the end of the previous fiscal year, to 1,900 million yen.

This is mainly attributable to an increase in long-term loans.

Net assets increased by 187 million yen from the end of the previous fiscal year, to 6,207 million yen.

This is mainly attributable to the posting of profit attributable to owners of parent of 380 million yen.

(3) Overview of Cash Flows for the Fiscal Year under Review

Cash and cash equivalents (hereinafter “cash”) for the fiscal year ended December 31, 2018 increased by 167 million yen

compared to the previous fiscal year, to 1,700 million yen (up 10.9% compared to the end of the previous fiscal year).

The status of cash flows for the fiscal year ended December 31, 2017 and the contributing factors are as follows.

(Cash flows from operating activities)

Net cash provided by operating activities for the fiscal year ended December 31, 2018 amounted to 386 million yen (435

million yen provided in the previous fiscal year). This was mainly attributable to income before income taxes of 869 million

yen, non-cash items such as depreciation of 636 million yen and an increase in notes and accounts payable – trade of 170

million yen, exceeding an increase in notes and accounts receivable – trade of 145 million yen, an increase in inventories of

847 million yen and income taxes paid of 430 million yen.

(Cash flows from investing activities)

Net cash used in investing activities for the fiscal year ended December 31, 2018 amounted to 2,731 million yen (1,254

million yen used in the previous fiscal year). This is mainly attributable to payments of 1,961 million yen for the acquisition

of a subsidiary resulting in the change in the scope of consolidation, payments of 462 million yen for the acquisition of

tangible non-current assets, payments of 619 million yen for the acquisition of intangible assets, and income of 336 million

yen from the collection of loans receivable.

(Cash flows from financing activities)

Net cash provided by financing activities for the fiscal year ended December 31, 2018 amounted to 2441 million yen (845

million yen used in the previous fiscal year). This was mainly attributable to a net increase in short-term loans payable of

1,403 million yen, exceeding cash dividends paid of 164 million yen.

4

Trends of the Group’s cash flow indicators are as shown below.

Dec. 31, 2014 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2017 Dec. 31, 2018

Shareholders’ equity ratio (%) 30.3 53.2 62.2 55.7 34.0

Shareholders’ equity ratio based on market value (%)

81.9 161.1 184.0 179.3 70.9

Interest-bearing debts to cash flows (%)

227.0 54.5 1.3 219.6 1,004.5.7

Interest coverage ratio (times) 71.6 248.8 385.5 290.1 21.0

Shareholders’ equity ratio: Shareholders’ equity / Total assets

Shareholders’ equity ratio based on market value: Total market capitalization of shares / Total assets

Interest-bearing debts to cash flows: Interest-bearing debt / Cash flows

Interest coverage ratio: Cash flows / Interest paid

Notes: 1. Total market capitalization of shares is calculated based on the number of issued shares excluding treasury stock.

2. Cash flows represent operating cash flows.

3. Interest-bearing debt includes all liabilities recorded on the Balance Sheets for which interest is paid.

(4) Future Outlook

Regarding the future business environment, a moderate recovery is expected to continue following the revitalization of the

global economy. However, amid worldwide attention on trends in U.S. politics, economy and international relations, the

outlook is expected to remain uncertain due to concerns about their future impact on the Japanese economy.

The golf industry as a whole is expected to be revitalized because golf became an official sport at the Olympic Games in Rio

de Janeiro in 2016, and Tokyo will host the Olympic Games in 2020. In addition, since longer healthy life expectancy and

consumption across three generations are attracting attention, golf is expected to become widespread as a sport that can be

enjoyed by the three generation of parents, children and grandchildren.

As for the environment surrounding the Internet, the diversification of devices and the increase in and diversification of

linked equipment is expected to make further progress amid the ongoing spread of mobile devices. This, in turn, will create an

environment where users can shop anytime, anywhere, thereby further expanding the e-commerce market. In addition, such

diffusion and diversification of mobile devices is having an enormous impact on the field of advertising and publicity as well.

The harsh competitive environment is expected to continue calling for a swift response to changes.

The Group positioned the first year ended December 2016 as the first year for commencing the second business development

stage and announced the mid-term strategic plan with the fiscal year as the first year (three-year plan from the year ended

December 31, 2016 to the year ending December 31, 2018). This fiscal year is the final year of the mid-term strategic plan. At

the same time as achieving the steady growth of its existing business, the Group embarked on overseas businesses and new

businesses. In particular, in the overseas business, the Group initiated full-scale business development, including making US

GOLFTEC, the operator of the largest golf lesson chain in the US, into its subsidiary. Meanwhile, with regard to numerical

targets, the Group achieved more than a double-digit annual growth ratio of net sales and continued a dividend payout ratio of

20%, but failed to achieve in terms of operating profit. Based on the results of this mid-term strategic plan, and in addition,

while reconsidering the future management environment and the Group’s medium-/long-term growth in the future, the Group

formulated a new five-year mid-term strategic plan with the fiscal year ending December 2019 as the first year. The main aim

of the five-year strategic plan is to establish a human and physical base to make it possible to achieve the Group’s mission

“Golf Links the World,” while eying sustainable growth over the next 10 years. As the theme for achieving this, the Group

deepens its relationships with each of its existing customers (deepening customer relationships), and at the same time, it creates

an encounter with new customers (expansion of customer base). It its domestic business in Japan, the Group aims to improve

the efficiency of the overall operation and achieve an advantage of scale, and it positions the US as the main target in its

overseas business. The Group seeks to encourage its consolidated subsidiaries to contribute to the Group’s results at an earlier

stage and to build a management/administration system that enables aggressive global development in an efficient manner. In

addition, in its new business, the Group will build a new revenue model with the aim of contributing to its growth.

In light of these factors, regarding the full-year earnings forecast for the next fiscal year (January 1, 2019 to December 31,

2019), the Group forecasts net sales of 35,000 million yen (up 30.9% year on year), operating profit of 900 million yen (up

5

11.9% year on year), ordinary profit of 860 million yen (up 4.5% year on year), and profit attributable to owners of parent of

440 million yen (down 15.5% year on year).

2. Basic Views on Selection of Accounting Standards

In the near term, the Group will prepare its consolidated financial statements based on Japanese GAAP, taking into account

the comparability of periods of consolidated financial statements and the comparability of periods between companies. In terms

of the application of the International Financial Reporting Standards (IFRS) in the future, an appropriate response will be made

in consideration of the circumstances in Japan and overseas.

6

3. Consolidated Financial Statements

(1) Consolidated Balance Sheets

(Thousands of yen)

As of December 31, 2017 As of December 31, 2018

Assets

Current assets

Cash and deposits 1,533,834 1,700,950

Accounts receivable - trade 2,072,300 2,490,289

Merchandise 3,290,809 4,235,962

Work in process 1,415 24,115

Supplies 53,752 116,998

Deferred tax assets 107,126 125,932

Other 801,355 1,002,182

Allowance for doubtful accounts (1,083) (8,702)

Total current assets 7,859,511 9,687,729

Non-current assets

Property, plant and equipment

Buildings 850,147 2,363,391

Tools, furniture and fixtures 245,332 1,261,343

Leased assets 9,966 13,506

Construction in progress － 39,473

Accumulated depreciation (411,059) (1,440,301)

Total property, plant and equipment 694,386 2,237,413

Intangible assets

Goodwill 44,251 3,230,282

Software 1,075,492 1,247,867

Other 224,342 1,119,070

Total intangible assets 1,344,087 5,597,221

Investments and other assets

Investment securities 279,579 21,143

Deferred tax assets 15,250 49,994

Lease and guarantee deposits 473,849 535,087

Other 145,485 115,232

Allowance for doubtful accounts (6,575) (7,037)

Total investments and other assets 907,589 714,421

Total non-current assets 2,946,063 8,549,055

Total assets 10,805,575 18,236,785

7

(Thousands of yen)

As of December 31, 2017 As of December 31, 2018

Liabilities

Current liabilities

Accounts payable - trade 1,954,141 2,359,362

Short-term loans payable 950,000 2,435,430

Current portion of long-term loans payable － 666,800

Lease obligations 2,152 2,917

Accounts payable - other 520,308 905,012

Income taxes payable 325,908 305,792

Advances received 379,972 2,239,861

Provision for bonuses 56,293 60,514

Provision for point card certificates 169,157 224,042

Provision for shareholder benefit program 22,232 30,031

Asset retirement obligations 1,172 －

Other 208,497 899,174

Total current liabilities 4,589,836 10,128,939

Non-current liabilities

Long-term loans payable － 1,335,069

Lease obligations 3,320 4,035

Deferred tax liabilities － 246,971

Provision for directors’ retirement benefits 79,750 92,750

Asset retirement obligations 110,161 218,578

Other 2,993 2,993

Total non-current liabilities 196,224 1,900,398

Total liabilities 4,786,061 12,029,337

Net assets

Shareholders’ equity

Capital stock 1,458,953 1,458,953

Capital surplus 2,447,104 2,447,104

Retained earnings 2,105,885 2,300,888

Treasury stock (98) (245)

Total shareholders’ equity 6,011,844 6,206,700

Accumulated other comprehensive income

Valuation difference on available-for-sale securities

6,434 (2,519)

Foreign currency translation adjustment － 3,266

Total accumulated other comprehensive income 6,434 747

Subscription rights to shares 1,234 －

Total net assets 6,019,513 6,207,448

Total liabilities and net assets 10,805,575 18,236,785

8

(2) Consolidated Statements of Income and Comprehensive Income

Consolidated Statements of Income

(Thousands of yen)

For the fiscal year ended

December 31, 2017 For the fiscal year ended

December 31, 2018

Net sales 21,574,307 26,739,289

Cost of sales 12,724,379 16,264,191

Gross profit 8,849,927 10,475,098

Selling, general and administrative expenses 7,635,849 9,670,530

Operating profit 1,214,078 804,567

Non-operating income

Interest income 2,272 25,227

Dividend income 884 654

Real estate rent 12,060 13,593

Other 4,341 4,426

Total non-operating income 19,559 43,902

Non-operating expenses

Interest expenses 1,525 13,438

Loss on investments in investment securities 2,935 －

Foreign exchange losses 1,496 7,104

Loss on cancellation of investment securities － 2,599

Other 2,086 2,532

Total non-operating expenses 8,044 25,675

Ordinary profit 1,225,593 822,794

Extraordinary income

Gain on step acquisitions － 98,330

Gain on sales of investment securities 27 －

Gain on reversal of subscription rights to shares 17 1,234

Total extraordinary income 44 99,564

Extraordinary losses

Impairment loss 15,754 153,576

Loss on retirement of non-current assets 15,875 3,462

Loss on valuation of investment securities 49,968 －

Loss on compensation for damages 12,159 －

Other 4,394 －

Total extraordinary losses 98,153 157,038

Income before income taxes 1,127,485 765,320

Income taxes - current 399,534 411,118

Income taxes - deferred 20,849 (26,703)

Total income taxes 420,384 384,415

Net income 707,100 380,905

Profit attributable to owners of parent 707,100 380,905

9

Consolidated Statements of Comprehensive Income

(Thousands of yen)



December 31, 2018

Net income 707,100 380,905

Other comprehensive income

Valuation difference on available-for-sale securities (4,122) (8,953)

Foreign currency translation adjustment － 3,266

Total other comprehensive income (4,122) (5,686)

Comprehensive income 702,978 375,218

Comprehensive income attributable to

Comprehensive income attributable to owners of parent

702,978 375,218

10

(3) Consolidated Statements of Changes in Net Assets

For the fiscal year ended December 31, 2017(from January 1, 2017 to December 31, 2017)

(Thousands of yen)


Capital stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity

Balance at beginning of

current period 1,436,289 2,424,441 1,544,093 (9) 5,404,815

Changes of items during

period

Issuance of new shares

(exercise of subscription

rights to shares)

22,663 22,663 45,326

Dividends of surplus (145,309) (145,309)

Profit attributable to

owners of parent 707,100 707,100

Purchase of treasury stock (88) (88)

Change of scope of consolidation

－

Net changes of items

other than shareholders’

equity

－

Total changes of items

during period 22,663 22,663 561,791 (88) 607,029

Balance at end of current

period 1,458,953 2,447,104 2,105,885 (98) 6,011,844

(Thousands of yen)

Accumulated other comprehensive income Subscription rights to

shares Total net assets Valuation difference on

available-for-sale securities

Foreign currency translation adjustment

Total accumulated other

comprehensive income


current period 10,557 － 10,557 1,796 5,417,168


period

Issuance of new shares

(exercise of subscription

rights to shares)

45,326

Dividends of surplus (145,309)


owners of parent 707,100

Purchase of treasury stock (88)


－



equity

(4,112) － (4,122) (562) (4,684)


during period (4,112) － (4,122) (562) 602,344


period 6,434 － 6,434 1,234 6,019,513

11

For the fiscal year ended December 31, 2018 (from January 1, 2018 to December 31, 2018)

(Thousands of yen)


Capital stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity


current period 1,458,953 2,447,104 2,105,885 (98) 6,011,844


period

Dividends of surplus (164,464) (164,464)


owners of parent 380,905 380,905



(21,438) (21,438)



equity

－


during period －－ 195,002 (146) 194,855


period 1,458,953 2,447,104 2,300,888 (245) 6,206,700

(Thousands of yen)

Accumulated other comprehensive income

Subscription rights to

shares Total net assets Valuation difference on

available-for-sale

securities

Foreign currency translation adjustment

Total accumulated other

comprehensive income


current period 6,434 － 6,434 1,234 6,019,513


period

Dividends of surplus (164,464)


owners of parent 380,905

Purchase of treasury stock (146)


(21,438)



equity

(8,953) 3,266 (5,686) (1,234) (6,921)


during period (8,953) 3,268 (5,686) (1,234) 187,934


period (2,519) 3,268 747 － 6,207,448

12

(4) Consolidated Statements of Cash Flows

(Thousands of yen)

For the fiscal year ended December 31, 2017

For the fiscal year ended December 31, 2018

Cash flows from operating activities

Income before income taxes 1,127,485 765,320

Depreciation 418,551 634,793

Impairment loss 15,754 153,576

Amortization of goodwill 11,062 95,384

Increase (decrease) in provision for point card certificates

(27,398) 54,884

Increase (decrease) in allowance for doubtful accounts (2,796) (992)

Increase (decrease) in provision for bonuses (22,950) 4,221

Increase (decrease) in provision for directors’ retirement benefits

13,008 13,000

Increase (decrease) in provision for shareholder benefit program

9,295 7,799

Interest and dividend income (3,157) (25,881)

Interest expenses 1,525 13,438

Loss on retirement of property, plant and equipment 14,288 417

Loss on retirement of intangible assets 1,586 3,045

Loss (gain) on sales of property, plant and equipment 868 －

Loss (gain) on sales of investment securities (27) －

Loss on valuation of investment securities 49,968 －

Loss (gain) on step acquisitions － (98,330)

Decrease (increase) in notes and accounts receivable - trade

(356,301) (155,792)

Decrease (increase) in inventories (839,611) (847,364)

Decrease (increase) in long-term prepaid expenses (62,514) 34,246

Increase (decrease) in notes and accounts payable - trade

492,936 225,885

Decrease (increase) in other assets (153,408) (69,446)

Increase (decrease) in other liabilities 92,351 (84,293)

Other, net 22,368 141,715

Subtotal 802,886 865,626

Interest and dividend income received 894 28,392

Interest expenses paid (1,500) (21,078)

Income taxes paid (366,079) (430,506)

Payment of lease termination fee (1,037) －

Net cash provided by (used in) operating activities 435,164 442,433

Cash flows from investing activities

Purchase of property, plant and equipment (165,498) (462,677)

Proceeds from sales of property, plant and equipment 12 －

Purchase of intangible assets (683,904) (619,136)

Purchase of investment securities (27,530) －

Proceeds from sales of investment securities 121 －

Payments for loans receivable (336,129) (492)

Collection of loans receivable － 336,333

Collection of lease deposits 4,016 15,385

Payments for lease deposits (31,676) (31,321)

Purchase of shares of subsidiaries resulting in change in scope of consolidation

(15,000) －

Purchase of shares of subsidiaries resulting in change in scope of consolidation

－ (1,961,566)

Other, net 609 (8,075)

Net cash provided by (used in) investing activities (1,254,980) (2,731,551)

Cash flows from financing activities

Net increase (decrease) in short-term loans payable 950,000 608,186

Proceeds from long-term loans payable － 2,000,000

Repayments of long-term loans payable － (193)

Proceeds from issuance of shares resulting from exercise of subscription rights to shares

44,781 －

Repayments of lease obligations (4,723) (2,343)

Cash dividends paid (144,848) (164,449)

13

(Thousands of yen)



December 31, 2018


Net cash provided by (used in) financing activities 845,120 2,441,053

Effect of exchange rate change on cash and cash

equivalents － (4,758)

Net increase (decrease) in cash and cash equivalents 25,305 147,177

Cash and cash equivalents at beginning of year 1,508,529 1,533,834

Increase in cash and cash equivalents from newly

consolidated subsidiary － 19,939

Cash and cash equivalents at end of year 1,533,834 1,700,950

14

(5) Notes to the Consolidated Financial Statements

(Notes on Going Concern Assumption)

There is no relevant information.

(Notes to Consolidated Statements of Changes in Net Assets)


1. Matters related to class and total number of issued shares and class and number of treasury stock

Number of shares at beginning of period

(Shares)

Increase during period (Shares)

Decrease during period (Shares)

Number of shares at end of period (Shares)

Issued shares

Common stock (Note1)

18,053,400 220,600 － 18,274,000

Total 18,053,400 220,600 － 18,274,000

Treasury stock

Common stock (Note2)

43 88 － 131

Total 43 88 － 131

Notes: 1. An increase of 220,600 shares in common stock is due to the exercise of subscription rights to shares.

2. An increase of 88 shares in common stock for the number of treasury stock is due to the purchase of fractional shares.

2. Matters related to subscription rights to shares and treasury subscription rights to shares

Category

Details of

subscription rights to

shares

Class of shares

to be delivered

upon exercise of

subscription

rights to shares

Number of shares to be delivered upon exercise of subscription rights to shares (Shares) Balance at

end of

period

(Thousands of yen)

Number of

shares at

beginning of

period

Increase

during

period

Decrease

during

period

Number of

shares at end

of period

Submitting

company

(Parent

company)

Subscription rights to

shares as stock options －－－－－ 1,234

Total －－－－－ 1,234

3. Matters related to dividends

(1) Cash dividends paid

(Resolution) Class of

shares

Total cash

dividends

(Thousands of

yen)

Dividend

resource

Dividend per

share (Yen) Record date Effective date

Annual general meeting of shareholders held on March 30, 2017

Common

stock 72,213

Retained earnings

4.00 December 31, 2016 March 31, 2017

Meeting of the Board of Directors held on May 9, 2017

Common

stock 73,095

Retained earnings

4.00 June 30, 2017 August 24, 2017

(2) Dividends for which the record date falls in the current fiscal year, but the effective date falls in the following fiscal

year

(Resolution) Class of shares

Total cash

dividends (Thousands of

yen)

Dividend resource

Dividend per share (Yen)

Record date Effective date

Annual general

meeting of

shareholders to be held

on March 30, 2018

Common stock

91,369 Retained earnings

5.00 December 31, 2017 March 29, 2018

15


1. Matters related to class and total number of issued shares and class and number of treasury stock

Number of shares at beginning of period

(Shares)

Increase during period (Shares)

Decrease during period (Shares)

Number of shares at end of period (Shares)

Issued shares

Common stock 18,274,000 －－ 18,274,000

Total 18,274,000 －－ 18,274,000

Treasury stock

Common stock (Note) 131 119 － 250

Total 131 119 － 250

Note: An increase of 119 shares in common stock for the number of treasury stock is due to the purchase of fractional shares.

2. Matters related to dividends

(1) Cash dividends paid


Total cash


yen)

Dividend resource



Annual general meeting of shareholders held on March 28, 2018

Common stock


5.00 December 31, 2017 March 29, 2018

Meeting of the Board of Directors held on May 31, 2018

Common stock


4.00 June 30, 2018 August 24, 2018

(2) Dividends for which the record date falls in the current fiscal year, but the effective date falls in the following fiscal

year


Total cash


yen)

Dividend resource



Annual general meeting of shareholders to be held on March 27, 2019

Common stock


5.50 December 31, 2018 March 28, 2019

(Corporate combination-related)

（Corporate combination through acquisition）

1. Overview of corporate combination

（1）Name and business description of acquiring company

Name of acquiring company: GolfTEC Enterprises LLC

Business description: Golf lesson service business

（2）Reason for corporate combination

GolfTEC Enterprises LLC (head office in Denver, Colorado, USA) is the operator of “GOLFTEC,” a golf lesson chain with

about 200 golf schools worldwide, centered on the US, the largest golf market in the world. The Group decided to make

GolfTEC Enterprises LLC into its subsidiary to strengthen the business foundation of its overseas businesses, which the

Group positions as a top-priority strategy.

16

（3）Date of corporate combination

July 2, 2018 (date of share acquisition)

September 30, 2018 (date of deemed acquisition)

（4）Legal method of corporate combination

Acquisition of non-controlling interests

（5）Name of company after corporate combination

No change is made to the name of the company after the corporate combination.

（6）Acquired voting rights ratio

Voting rights ratio owned before acquisition: 8％

Voting rights ratio acquired additionally on the date of the corporate combination: 52％

Voting rights ratio after acquisition: 60％

（7）Main reason for making the decision to acquire the company

The Group acquired shares with cash as consideration.

2. Period of the results of the acquired company included in the consolidated financial statements

October 1, 2018-December 31, 2018

3. Breakdown of acquisition cost of acquired company and type of consideration

Market value of shares owned immediately before the additional acquisition on the date of the corporate combination: 2.8 million

US dollars (315,170 thousand yen)

Cash and deposits paid for additional acquisition: 17.7 million US dollars (1,969,203 thousand yen)

Acquisition cost: 20.6 million US dollars (2,284,373 thousand yen）

4. Content and amount of main acquisition-related cost

Advisory cost: 30,940 thousand yen

5. Acquisition cost of acquired company and difference between the total of the acquisition cost for each transaction for the

acquisition and the total of the acquisition cost

Marginal gain related to step-by-step acquisition: 98,330 thousand yen

6. Amount of goodwill generated, reason for generation, and method and period of depreciation

（1）Amount of goodwill generated

3,333,699 thousand yen

In the 3Q consolidated accounting period, based on reasonable information obtainable at the time of the creation of the

quarterly consolidated financial statements, the Group conducted tentative account procedures for the distribution of

acquisition cost, but it was settled in the 4Q consolidated accounting period.

（2）Reason for generation

Excess earning power expected from business development in the future

（3）Method and period of depreciation

Equal depreciation over 10 years

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7. Amount of assets received on the date of the corporate combination and amount and main content of liabilities received

Current assets 936,336 thousand yen

Non-current assets 1,441,439 thousand yen

Total assets 2,377,776 thousand yen

Current liabilities 3,213,389 thousand yen

Non-current liabilities 797,169 thousand yen

Total liabilities 4,010,559 thousand yen

8. Estimated amount and calculation method of the impact on the consolidated statements of income in the consolidated accounting

period on the assumption that the corporate combination is completed on the first day of the consolidated accounting period.

Net sales 5,161,467 thousand yen

Operating profit Down 376,745 thousand yen

（Calculation method of estimated amount）

The difference between information of net sales and profit/loss calculated on the assumption that the corporate combination is

completed on the first day of the consolidated accounting period and information of net sales and profit/loss in the consolidated

statements of income of the acquiring company is used as the estimated amount of the impact.

The details stated in this note have not undergone audit certification.

(Segment Information, etc. )

[Segment information]

1. Overview of reportable segments

The reported segment of the Group is one that is reviewed on a regular basis, for which separate financial statements for each unit of

the Group are available and the board of directors undertakes reviews on a regular basis to determine the distribution of management

resources and assess the results.

The Group is mainly an operator of golf-related businesses in Japan and overseas, and it formulates a comprehensive strategy under

the management system to supervise the domestic and overseas businesses, and to conduct business activities.

In the past, the Group was an operator of the golf business alone, mainly in Japan, and the segment information was described as a

single segment, but beginning in this consolidated accounting period, GDO Sports, Inc., whose importance increased in the fiscal year

under review, and GolfTEC Enterprises LLC, whose shares were additionally acquired as of July 2, 2018, are included in the scope of

consolidation. Accordingly, the Group classified the reported segment into the Domestic golf business for customers in Japan and the

Overseas golf business for customers overseas.

The main operations of each segment are as follows:

Domestic: four core operations in Japan including sales of golf equipment (new, used) on the Internet, golf course booking service,

golf media service, golf lesson service, and comprehensive business activities for golfers and golf courses.

Overseas: golf-related businesses centered on GolfTEC Enterprises LLC, a consolidated subsidiary’s golf lesson service in the US

and five other countries worldwide, and GDO Spors, Inc., another consolidated subsidiary’s import and sales of golf-related

products in the US and golf course booking service in Asia.

The segment information in the previous consolidated accounting period is created based on the new classification.

2. Calculation method of net sales, profit or loss, assets, liabilities, and other amount for each reported segment

The method of account procedures for the reported business segment complies with the accounting principles and procedures

adopted for the preparation of financial statements.

The profit of the reported segment is the figures on the basis of operating profit.

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3. Information on net sales and amount of profit or loss by each reported segment


Reported

segment

Adjustment

Amount booked in the consolidated

financial statements (Note) 1

Dom

estic

Over

seas

Total

Net sales

Net sales to external customers 21,574,307 － 21,574,307 － 21,574,307

Internal sales or transferred amount between segments －－－－－

Total 21,574,307 － 21,574,307 － 21,574,307

Segment profit or loss 1,336,831 (122,752) 1,214,078 － 1,214,078

Segment assets 10,722,355 83,219 10,805,575 － 10,805,575

Other －

Depreciation 413,439 5,112 418,551 － 418,551

Depreciation of goodwill 11,062 － 11,062 － 11,062

Impairment loss 15,754 － 15,754 － 15,754

(Note) 1. Segment profit is consistent with operating profit in the consolidated statements of income.

2. Segment loss is not stated because it is not distributed to the business segment.


Reported

segment

Adjustment

Amount booked in the consolidated

financial statements (Note) 1

Dom

estic

Over

seas

Total

Net sales

Net sales to external customers 25,244,705 1,494,584 26,739,289 ― 26,739,289

Internal sales or transferred amount between segments

― 37,088 37,088 (37,088) ―

Total 25,244,705 1,531,672 26,776,377 (37,088) 26,739,289

Segment profit or loss 1,387,059 (582,492) 804,567 ― 804,567

Segment assets 14,709,730 3,527,054 18,236,785 ― 18,236,785

Other

Depreciation 475,474 159,318 634,793 ― 634,793

Depreciation of goodwill 11,062 84,321 95,384 ― 95,384

Impairment loss 33,188 120,387 153,576 ― 153,576

(Note) 1. Segment profit is consistent with operating profit in the consolidated statements of income.

2. Segment loss is not stated because it is not distributed to the business segment.

3. Because the deemed date of acquisition of Golf TEC Enterprises LLC is set as September 30, the

statements of income between October 1 and December 31, 2018 are combined in this consolidated

accounting period.

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(Per Share Information)

(Yen)

For the fiscal year ended December 31,

2017 For the fiscal year ended December 31,

2018

Net assets per share 329.34 339.69

Net income per share 38.73 20.84

Diluted net income per share 38.69 20.84

Note: The basis for the calculation of net income per share and diluted net income per share is as follows.



December 31, 2018

Net income per share

Net income (Thousands of yen) 707,100 380,905

Amount not attributable to common shareholders (Thousands of yen)

－－

Net income relating to common stock (Thousands of yen) 707,100 380,905

Average number of shares during the period (Shares) 18,256,303 18,273,785

Diluted net income per share

Adjustment for net income (Thousands of yen) －－

Increase in the number of common stock (Shares) 19,204 1,656

(Subscription rights to shares included in the above (Shares))

(19,204) (1,656)

Overview of potential shares not included in the calculation of diluted net income per share due to lack of dilutive effect

－－

(Significant Subsequent Events)

There is no relevant information.

Table of Contents - 【GDO】ゴルフダイジェスト ... · 12/31/2018 · Sports, Inc....

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