Shareholding Structure - Kouunn Holdings Limited holds 234,227,100 shares, representing 38.67% of the total shares[2] - Huang Wenhuan holds 234,512,775 shares, representing 38.72% of the total shares[2] - Charoen Pokphand Group Company Limited holds 181,296,500 shares, representing 29.93% of the total shares[2] - Fosun International Limited holds 35,629,425 shares, representing 5.88% of the total shares[2] - As of September 30, 2024, the total number of issued shares is 605,642,500[9] Restricted Share Unit Plan - The company has a Restricted Share Unit Plan with 3,485,095 units available for grant as of September 30, 2024[12] - The Restricted Share Unit Plan was approved on October 20, 2015, and is valid for ten years[16] - The plan aims to attract and retain skilled personnel for future development and expansion[16] - As of September 30, 2024, there are 18,333,312 shares related to the Restricted Share Unit Plan[12] - The total number of restricted share units granted during the six-month period ending September 30, 2024, is 2,805,387[22] - The total number of restricted share units held by senior management and other executives is 2,291,016[22] - The number of restricted share units granted to the chairman and CEO, Liu Jianguo, is 285,675[22] - The number of restricted share units granted to executive director, Ito Yasuki, is 133,341[22] - The total number of restricted share units exercised during the period is 49,140[22] - The total number of restricted share units that have lapsed during the period is 2,756,247[22] Taxation - The company’s subsidiaries in the U.S. are subject to a federal corporate income tax rate of 21%[14] - The tax provision for the group's Chinese subsidiaries is calculated at a statutory rate of 25%[29] - The effective tax rate for the Hong Kong registered subsidiary is 16.5%, while the effective tax rate for the Japan registered subsidiary is 30.62% for the six months ending September 30, 2024[47] - The company reported a total tax expense of ¥(766,344,000) for the six months ended September 30, 2024, compared to a tax expense of ¥306,257,000 for the same period in 2023[138] Financial Performance - Revenue for the six months ended September 30, 2024, was ¥9,814,533 thousand, a decrease of 25.5% compared to ¥13,194,832 thousand for the same period in 2023[64] - Gross profit for the same period was ¥5,199,266 thousand, down from ¥6,876,979 thousand, reflecting a decline of 24.4%[64] - The company reported a loss before tax of ¥1,611,911 thousand, compared to a profit of ¥3,635,760 thousand in the previous year[64] - The net loss for the period was ¥845,567 thousand, a significant decrease from a profit of ¥3,329,503 thousand in the prior year[64] - Basic and diluted loss per share for the period was ¥(1.40), compared to earnings of ¥5.50 per share in the same period last year[64] - Other income for the six months was ¥56,889 thousand, a sharp decline from ¥2,019,415 thousand in the previous year[64] - Total comprehensive income for the period was ¥(527,267) thousand, compared to ¥2,813,588 thousand in the same period last year[68] Assets and Liabilities - Non-current assets increased to ¥9,642,883 thousand as of September 30, 2024, compared to ¥8,894,695 thousand on March 31, 2024, reflecting a growth of approximately 8.4%[69] - Current assets decreased to ¥30,469,246 thousand from ¥33,650,502 thousand, representing a decline of about 9.4%[69] - Total liabilities decreased from ¥11,682,684 thousand to ¥11,016,611 thousand, a reduction of approximately 5.7%[69] - The net value of current assets is ¥19,452,635 thousand, down from ¥21,967,818 thousand, indicating a decrease of around 11.5%[69] - The company's total equity as of September 30, 2024, is ¥27,236,649 thousand, down from ¥28,672,380 thousand, reflecting a decline of about 5.0%[76] Cash Flow - For the six months ended September 30, 2024, the company reported a cash flow from operating activities of 4,402,189 thousand yen, compared to 3,576,820 thousand yen for the same period in 2023, representing an increase of approximately 23.1%[84] - The net cash flow from investing activities was reported at (386,159) thousand yen for the six months ended September 30, 2024, compared to (196,923) thousand yen in the previous year, indicating a worsening of investment cash flow[88] - The company recorded a net increase in cash and cash equivalents of 2,104,283 thousand yen for the six months ended September 30, 2024, compared to an increase of 1,605,009 thousand yen in the same period of 2023[88] - As of September 30, 2024, the company's cash and cash equivalents totaled 18,054,555 thousand yen, up from 16,659,964 thousand yen at the end of September 2023[88] Revenue Breakdown - Revenue from product sales was ¥9,783,259, down from ¥13,103,514, indicating a decline of 25.5% year-over-year[113] - Revenue from services decreased significantly to ¥31,274 from ¥91,318, reflecting a decline of 65.7%[113] - The Japanese market generated ¥4,156,839 in revenue, slightly down from ¥4,172,787, a decrease of 0.4%[109] - Revenue from China (including Hong Kong and Macau) fell to ¥3,122,951 from ¥3,529,130, a decline of 11.5%[109] - Other regions contributed ¥1,172,714, up from ¥1,079,222, marking an increase of 8.6%[109] - North America saw revenue increase to ¥413,800 from ¥335,024, a growth of 23.4%[109] Operational Strategies - The company aims to enhance its market penetration in the ultra-high-end and super-performance consumer segments by streamlining its product strategy and updating its product lines[123] - The company is investing significantly in retail distribution networks and digital capabilities in Japan and China to provide a consistent and enhanced consumer experience[123] - The company plans to celebrate its 67th anniversary in 2025, emphasizing its commitment to brand revitalization and marketing efforts targeting younger golfers[123] - The company is focusing on enhancing its brand and product awareness among younger golf enthusiasts through digital ecosystem initiatives and advanced e-commerce functionalities[151] - The company continues to apply innovative patented technologies in the design and development of its golf clubs, targeting affluent and passionate golfers[152] Employee and Governance - Employee benefits expenditure for the six months ending September 30, 2024, amounted to ¥2,339.6 million[197] - The group employs 689 employees globally, with a majority based in Japan, and offers competitive compensation packages[197] - The company’s corporate governance practices are in compliance with the applicable code provisions, except for a deviation regarding the roles of the chairman and CEO[44] - The company’s audit committee consists of three independent non-executive directors, ensuring oversight of the financial reporting process[50] Market Challenges - Economic uncertainties and geopolitical tensions continue to pose operational challenges and business uncertainties for the group in the current fiscal year[200] - The group is restructuring its customer relationship management systems in key markets like Japan, China, and the USA to enhance online sales[193]

Financial Performance - The group's revenue decreased by 25.6% to ¥9,814.5 million (approximately $64.8 million) for the six months ending September 30, 2024, due to a continued downturn in the global economic outlook and weakened consumer confidence [2]. - Total revenue decreased by 25.6% from 13,194.8 million JPY for the six months ended September 30, 2023, to 9,814.5 million JPY for the six months ending September 30, 2024 [43]. - Total revenue decreased by 28.4% for the six months ending September 30, 2024, compared to the same period in 2023, amounting to ¥9,814.5 million [44]. - Revenue from golf clubs dropped by 33.3%, primarily due to declines in sales in Korea and China (including Hong Kong and Macau) [2]. - Revenue from golf balls decreased by 17.1% to ¥910.0 million, with a 21.2% decline in sales volume in Japan [49]. - Revenue from apparel increased by 6.1% to ¥1,340.6 million, despite weak consumer confidence in China [49]. - Revenue from accessories and other related products rose by 8.4% to ¥890.1 million, attributed to an improved product mix starting in Spring 2024 [50]. - Revenue from Japan slightly decreased by 0.4% to ¥4,156.8 million, with wholesale revenue down 7.6% [54]. - Revenue from South Korea plummeted by 82.6% to ¥686.8 million due to a reevaluation of the distribution network [54]. - Revenue from China (including Hong Kong and Macau) decreased by 11.5% to ¥3,122.9 million, impacted by ongoing economic pressures [54]. - Revenue from North America increased by 23.5% to ¥413.8 million, driven by improved distribution networks and new product launches [55]. - Revenue from Europe surged by 92.4% to ¥261.4 million, confirming the effectiveness of the shift to an indirect distribution model [55]. - Revenue from self-operated stores increased by 6.5% to ¥5,507.6 million for the six months ended September 30, 2024, compared to ¥5,170.6 million for the same period in 2023 [58]. - Revenue from third-party retailers and wholesalers decreased by 46.3% to ¥4,306.9 million for the six months ended September 30, 2024, down from ¥8,024.3 million in the previous year [58]. Profitability and Loss - The company recorded a pre-tax loss of ¥1,611.9 million (approximately $10.6 million), a decrease from ¥3,635.8 million in the same period last year [4]. - The net loss for the six months ended September 30, 2024, was 845.6 million yen, with a net loss margin of 8.6% [77]. - Operating loss for the six months ended September 30, 2024, was 351.5 million yen, compared to an operating profit of 1,690.0 million yen in the previous period [80]. - The gross profit margin increased by 0.9 percentage points to 53.0% for the six months ending September 30, 2024, attributed to improved price management and sustained growth in retail revenue [4]. - The gross profit decreased by 24.4% to ¥5,199.3 million for the six months ended September 30, 2024, compared to ¥6,877.0 million for the same period in 2023 [61]. - The gross margin improved to 53.0% for the six months ended September 30, 2024, up from 52.1% in the previous year despite a decrease in gross profit [61]. - Selling and distribution expenses increased to ¥4,643.4 million for the six months ended September 30, 2024, from ¥4,486.0 million in the previous year, with the percentage of revenue rising from 34.0% to 47.3% [68]. - Administrative expenses increased by 21.0% to ¥823.3 million for the six months ended September 30, 2024, compared to ¥680.4 million for the same period in 2023 [69]. Cash Flow and Financial Position - Operating cash flow remained positive at ¥4,024.4 million (approximately $26.6 million), compared to ¥3,251.3 million in the same period last year [4]. - The company had cash and cash equivalents of ¥18,054.6 million, primarily held in RMB, JPY, and USD [89]. - The total cash and cash equivalents at the end of the period were 18,054,555 thousand yen, up from 16,659,964 thousand yen, marking an increase of approximately 8.4% [128]. - The company’s interest-bearing bank loans amounted to ¥6,240.0 million, with actual interest rates ranging from 0.17% to 3.08% [90]. - The debt-to-equity ratio as of September 30, 2024, was 32.0%, a decrease from 34.1% on March 31, 2024 [92]. - The company has adopted a conservative financing and treasury policy to maintain optimal financial conditions and minimize financial risks [95]. - The company reported a net cash flow from investing activities of (386,159) thousand yen, compared to (196,923) thousand yen in the previous year, indicating a decline of approximately 96.1% [128]. - The financing activities resulted in a net cash outflow of (1,533,944) thousand yen, slightly higher than the outflow of (1,449,364) thousand yen in the prior year, reflecting an increase of about 5.8% [128]. Strategic Initiatives - The company is focusing on brand repositioning and enhancing communication with target consumers to attract younger golfers [11]. - Significant investments are being made in retail distribution networks and digital capabilities in Japan and China to provide a consistent consumer experience [8]. - The company aims to streamline its product strategy to enhance penetration in the ultra-high-end and ultra-performance consumer segments [9]. - The group is implementing a customer relationship management system and advanced e-commerce features to strengthen direct communication with consumers and boost sales [11]. - The company is focusing on the high-end and super-performance segments of the golf market, targeting affluent consumers willing to pay premium prices for unique golf clubs [18]. - The company is adjusting its growth strategy in North America and Europe, focusing on smaller, high-quality customer segments to strengthen its market presence [14]. - The company aims to recruit young golfers with significant social media presence to enhance brand image and attract a younger demographic [16]. - The company plans to launch new golf balls with proprietary patents to align with its brand positioning and consumer preferences [12]. - The company is developing a non-club product line to provide a comprehensive golf lifestyle experience, particularly in China [37]. Market and Operational Challenges - The group continues to face operational challenges and business uncertainties due to economic factors and geopolitical tensions [31]. - The company anticipates that the golf industry will face challenges due to oversupply, labor shortages, and rising material costs, but remains confident in its ability to navigate these issues [38]. - The company is leveraging advanced technology and traditional Japanese craftsmanship to design and manufacture aesthetically pleasing and high-performance golf clubs [18]. - The company has no significant contingent liabilities as of September 30, 2024 [94]. - The company has not reported any supplier financing arrangements, indicating no impact from recent accounting standard revisions on its financial statements [137]. Research and Development - Research and development expenses for the six months ended September 30, 2024, were 150.7 million JPY, up from 110.6 million JPY in the previous period, indicating a focus on product innovation [37]. - The company’s research and development costs for the six months ended September 30, 2024, were ¥150,745 thousand, compared to ¥110,637 thousand in the previous year [149]. Corporate Governance - The company has complied with all applicable corporate governance code provisions except for C.2.1, which states that the roles of the chairman and CEO should be separate [196]. - The audit committee, consisting of three independent non-executive directors, has reviewed the group's interim results for the six months ending September 30, 2024 [199]. - The interim results announcement will be published on the Hong Kong Stock Exchange and the company's website [200].

Financial Performance - For the fiscal year ending March 31, 2024, the company reported total revenue of ¥26,222.9 million, a decrease from ¥29,494.9 million in the previous year[19] - The net profit for the same period was ¥4,828.1 million, representing a 48.3% increase year-over-year from ¥3,255.6 million[19] - The operating cash flow for the fiscal year was ¥5,416.1 million, reflecting a growth of 47.3% compared to the previous year[19] - The gross profit margin for the fiscal year was 51.2%, slightly up from 50.8% in the previous year[31] - Total assets as of March 31, 2024, amounted to ¥42,545.2 million, an increase from ¥40,367.4 million in the previous year[32] - The total equity increased to ¥28,672.4 million from ¥26,030.9 million year-over-year[32] - Employee benefits expenses amounted to ¥4,492.0 million for the fiscal year ending March 31, 2024, reflecting the company's commitment to competitive compensation[87] - The company's total revenue decreased by 11.1% from ¥29,495.0 million for the year ended March 31, 2023, to ¥26,222.9 million for the year ending March 31, 2024[126] Sales and Revenue Breakdown - Golf clubs contributed 69.6% of the total revenue for the fiscal year ending March 31, 2024[69] - Revenue from Japan decreased by 4.7% to ¥9,363.1 million, primarily due to a 19.2% drop in wholesale revenue, while retail sales increased by 16.0%[135] - Revenue from China (including Hong Kong and Macau) fell by 3.7% to ¥7,508.5 million, attributed to a slowdown in the overall economy and retail market[136] - Revenue from Europe decreased by 18.3% to ¥361.8 million, reflecting a shift to an indirect distribution model[137] - Revenue from golf clubs dropped by 15.1% to ¥18,256.6 million, with sales in Japan, Korea, and China down by 4.5%, 12.5%, and 16.3% respectively[149] - Revenue from Korea decreased by 15.5% to ¥5,988.6 million, reflecting the optimization of the distribution network prior to new product launches[153] - Revenue from North America fell by 38.2% to ¥632.9 million, primarily due to ongoing negative impacts from last year's distribution network adjustments[154] - Revenue from other regions decreased by 28.7% to ¥2,367.9 million, mainly due to unfavorable currency depreciation and weakened purchasing power[155] - Revenue from self-operated stores was ¥10,952,237, accounting for 41.8% of total revenue, with a year-on-year increase of 7.2%[158] - Revenue from third-party retailers and wholesalers was ¥15,270,620, representing 58.2% of total revenue, showing a significant decline of 20.8%[158] Product Performance - Sales of the BeZEAL 3 product increased by 600% year-over-year, while the BERES series sales in Japan grew by 19.6%[20] - Revenue from golf balls slightly declined by 0.2% from ¥2,942.3 million to ¥2,936.3 million, primarily due to a 1.4% decrease in sales volume in Japan[130] - Apparel revenue grew by 4.9% year-on-year, with a remarkable 23.2% growth in mainland China[57] - Revenue from apparel increased by 4.9% from ¥3,009.1 million to ¥3,157.5 million, despite weak consumer confidence in China[132] Market Strategy and Growth - The company plans to continue enhancing its online presence and social media platforms to improve brand engagement and communication[5] - The company is investing in a digital ecosystem to enhance customer relationship management and e-commerce capabilities, aiming for a 360-degree brand experience[45] - The company continues to focus on the ultra-high-end and ultra-performance consumer segments, which are expected to drive future growth[42] - The company is restructuring its growth strategy in North America and Europe to target smaller, high-quality customer segments[70] - HONMA aims to strengthen its market share in the high-performance segment, particularly in Japan, Korea, and China, where significant growth potential remains[91] - The company plans to enhance its direct-to-consumer communication and sales strategy in North America and Europe, which together account for over 60% of the global golf market[93] - HONMA's marketing strategy focuses on transforming its image to appeal to younger, performance-oriented golfers, particularly through the new TOUR WORLD product lines[88] - The company is targeting the high-performance segment in North America with its TOUR WORLD product line to support growth strategies in that market[118] Brand Development and Consumer Engagement - The company has seen a continuous increase in membership numbers in China and Japan, enhancing customer relationship management systems[22] - The company launched products specifically designed for female golfers, including the 65th Anniversary Limited Series and BERES LADYGO[24] - The company sponsors TEAM HONMA, which includes six professional golfers, to enhance brand visibility and drive sales growth, particularly in Japan[50] - The company is focusing on enhancing consumer engagement and retail experience through digital capabilities and brand communication[36] - The company aims to attract younger, passionate golfers by recruiting social media-savvy athletes to strengthen brand repositioning[50] - The group hosted 3,564 customer events across major markets, primarily at golf courses, to enhance brand awareness[73] - The company is focused on enhancing brand exposure in Asia through collaborations with coaches and key opinion leaders[165] Operational Challenges and Sustainability - The company is facing challenges in the golf industry, including increased competition and supply chain issues due to labor shortages and rising raw material costs[95] - HONMA continues to monitor external challenges and will adjust its business strategies as necessary to mitigate risks while ensuring employee health and safety[96] - The company is committed to sustainable business development and creating long-term value for shareholders amid global economic uncertainties[121] - Water resource usage decreased by 5% compared to the previous year, with a density increase of 6.5%[188] Retail Expansion - The company opened 14 new stores in China, 1 in Japan, and 2 in other Asian regions, enhancing the retail experience with a unified brand image[49] - The company plans to continue expanding its self-operated stores, which numbered 95 in Asia as of March 31, 2024[80] - The company expanded its sales and distribution network, increasing the total number of stores from 90 to 95, with significant growth in China[105] - The total number of sales points in North America decreased to 344, with six new openings and seven closures during the year[163] - In Europe, the company reopened 94 new sales points, resulting in a network of 129 locations[163] - A strategic partnership with Itochu Corporation has been established to develop a clothing business, aiming to promote HONMA as a "golf lifestyle brand"[169] Innovation and Development - Research and development expenses for the fiscal years ending March 31, 2023, and March 31, 2024, were ¥199.7 million and ¥228.9 million, respectively, indicating a focus on product innovation[94] - The company is committed to applying innovative technologies and traditional Japanese craftsmanship in its product development[45] - The company aims to provide a comprehensive golf lifestyle experience by developing non-club product lines[169]

Financial Performance - For the fiscal year ending March 31, 2024, the company reported a 25.9% increase in profit before tax to 5,152.3 million JPY (approximately 35.9 million USD), up from 4,092.9 million JPY in the previous year[13]. - The company reported a net profit of ¥4,828,128 million for the fiscal year 2024, an increase of 48.3% from ¥3,255,605 million in the previous year[95]. - Total revenue decreased by 11.1% from ¥29,495.0 million for the fiscal year ending March 31, 2023, to ¥26,222.9 million for the fiscal year ending March 31, 2024[73]. - The operating profit margin decreased to 10.3% for the fiscal year 2024, down from 13.1% in the previous year, reflecting ongoing operational challenges[95]. - The company has seen a recovery in golfer participation and purchasing intent following the easing of COVID-19 restrictions, despite ongoing economic uncertainties[66]. Revenue Breakdown - Golf clubs accounted for 69.6% of the total revenue for the fiscal year ending March 31, 2024, highlighting the company's focus on this product line[24]. - Revenue from golf clubs fell by 15.1% from ¥21,512.9 million to ¥18,256.6 million, with sales in Japan, Korea, and China declining by 4.5%, 12.5%, and 16.3%, respectively[75]. - Revenue from apparel increased by 4.9% from ¥3,009.1 million to ¥3,157.5 million, despite weak consumer confidence in China[76]. - Revenue from accessories and other related products decreased by 7.8% to ¥1,872,368 million, mainly due to sales restrictions in Japan ahead of new product launches[101]. - Revenue from Japan decreased by 4.7% to ¥9,363,144 million, primarily due to a 19.2% drop in wholesale revenue, although retail sales increased by 16.0%[103]. Market Strategy - The company aims to redefine its brand to appeal to younger golfers, enhancing its online presence and communication strategies[23]. - The company plans to continue restructuring its distribution strategy in North America and Europe, focusing on smaller, high-quality customer segments[18]. - The company aims to enhance brand and product awareness through direct consumer communication and sales strategies across existing wholesale points and digital platforms[90]. - The company is committed to optimizing manufacturing processes and expanding production capacity in response to sales growth[61]. - The company plans to focus on sustainable growth in North America and Europe, which account for over 60.0% of the global golf market[90]. Investments and Acquisitions - The company has invested significantly in retail distribution networks and digital capabilities in Japan and China to enhance consumer experience[21]. - The company is focusing on potential strategic acquisitions, with 29.4% of the proceeds from the global offering earmarked for this purpose[184]. - The company has not yet committed to any acquisition targets, but is evaluating potential strategic acquisitions in the golf product industry[187]. - The company plans to utilize the remaining 0.2% of unutilized proceeds from the global offering for general corporate purposes[167]. Cash Flow and Financial Health - The company maintained a positive net operating cash flow of 5,416.1 million JPY (approximately 37.7 million USD) for the fiscal year ending March 31, 2024, compared to 3,675.9 million JPY (approximately 27.3 million USD) in the previous year[13]. - As of March 31, 2024, the company's cash and cash equivalents amounted to ¥16,617.1 million, primarily held in RMB, JPY, and USD[174]. - The company's interest-bearing bank borrowings were ¥6,990.0 million, with an effective interest rate ranging from 0.17% to 3.08%[175]. - The debt-to-equity ratio improved from 36.3% in 2023 to 34.1% in 2024[153]. - The company paid dividends totaling (1,851,458) thousand yen, down from (2,133,460) thousand yen in the previous year, suggesting a potential strategy to retain more earnings[196]. Operational Challenges - The company is facing challenges including increased competition, labor shortages, and rising raw material prices, which may impact future performance[92]. - Sales revenue from third-party retailers and wholesalers decreased by 20.8% from ¥19,278.0 million to ¥15,270.6 million, with a fixed exchange rate basis decline of 22.3%[108]. - The company has not made any significant investments, acquisitions, or sales during the year ended March 31, 2024[157]. - The company is enhancing its e-commerce capabilities and restructuring customer relationship management systems in key markets like Japan, China, and the U.S.[34]. - The company continues to evaluate existing sales channels and explore new ones to enhance its distribution network[59].

[Management Discussion and Analysis](index=4&type=section&id=管理層討論及分析) [Company Profile and Business Overview](index=5&type=section&id=本公司%2C公司主要業績及業務展望概覽) Honma Golf is a vertically integrated golf product company focused on brand repositioning, targeting younger golfers with 'Ultra-Premium' and 'Ultra-Performance' product lines, and expanding its digital ecosystem - The company is a vertically integrated golf company with strong in-house design, development, and manufacturing capabilities, boasting an extensive retail presence across Asia[155](index=155&type=chunk) - The company has launched multiple initiatives to rebrand, aiming to position HONMA as a vibrant, valuable, and international golf brand for digitally-savvy younger golfers[159](index=159&type=chunk)[175](index=175&type=chunk) - Product strategy is consolidated and simplified, focusing on two consumer segments: 'Ultra-Premium' with the BERES series and 'Ultra-Performance' with the TOUR WORLD series for performance-oriented passionate golfers[176](index=176&type=chunk)[189](index=189&type=chunk) - The company is revamping its Customer Relationship Management (CRM) systems and enhancing e-commerce capabilities in key markets to build an end-to-end digital ecosystem for a 360-degree brand experience[179](index=179&type=chunk)[196](index=196&type=chunk)[215](index=215&type=chunk) [Business Outlook](index=13&type=section&id=展望) The Group will continue its long-term growth strategy by strengthening its ultra-premium market leadership, expanding into the ultra-performance segment, developing non-club product lines, and pursuing sustainable growth in North America and Europe - A core strategy is to consolidate market share in domestic markets (Japan, Korea, China), particularly within the fast-growing 'Ultra-Performance' segment[202](index=202&type=chunk) - Plans include collaborating with Itochu Corporation to actively develop complementary non-club product lines like apparel, aiming to establish HONMA as a 'golf lifestyle brand'[204](index=204&type=chunk) - In North America and Europe, the focus will be on smaller, high-quality customer segments, combined with direct-to-consumer communication and sales strategies to achieve sustainable growth[249](index=249&type=chunk) - The company acknowledges multiple challenges in the golf industry, including global economic uncertainties, but is confident in mitigating adverse impacts and seizing opportunities to optimize operational efficiency for sustainable development[206](index=206&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk) [Financial Review](index=16&type=section&id=財務回顧) For the six months ended September 30, 2023, total revenue decreased by **11.6%** to **13,194.8 million JPY**, gross profit declined by **12.6%**, but net profit grew by **7.8%** to **3,329.5 million JPY** due to increased other income and reduced income tax expenses, with only Japan showing growth while self-operated stores performed strongly [Overall Financial Performance](index=16&type=section&id=財務回顧-綜合損益表) For the six months ended September 30, 2023, the Group's total revenue was **13,194.8 million JPY**, a **11.6%** decrease from **14,927.4 million JPY** in the prior year, with gross profit declining **12.6%** to **6,877.0 million JPY**, yet net profit increased **7.8%** to **3,329.5 million JPY** due to a **52.2%** reduction in income tax expense, resulting in basic earnings per share of **5.50 JPY** Consolidated Income Statement Summary (For the six months ended September 30) | Metric | 2023 (thousand JPY) | 2022 (thousand JPY) | YoY Change (%) | | :--- | :--- | :--- | :--- | | **Revenue** | 13,194,832 | 14,927,415 | (11.6)% | | **Gross Profit** | 6,876,979 | 7,866,314 | (12.6)% | | **Profit Before Tax** | 3,635,760 | 3,728,600 | (2.5)% | | **Net Profit** | 3,329,503 | 3,087,382 | 7.8% | | **Basic EPS (JPY)** | 5.50 | 5.10 | 7.8% | [Revenue by Product Category](index=18&type=section&id=按產品類別劃分的收益) Golf clubs remain the primary revenue source, accounting for **75.9%** of total revenue, despite a **12.5%** year-on-year decrease, while apparel was the only category to grow with a **2.1%** increase, and golf balls and accessories saw declines of **2.2%** and **27.1%** respectively Revenue by Product Category (For the six months ended September 30) | Product Category | 2023 Revenue (thousand JPY) | % of Total | YoY Change (%) | | :--- | :--- | :--- | :--- | | Golf Clubs | 10,011,857 | 75.9 | (12.5)% | | Golf Balls | 1,097,872 | 8.3 | (2.2)% | | Apparel | 1,263,961 | 9.6 | 2.1% | | Accessories & Others | 821,142 | 6.2 | (27.1)% | | **Total** | **13,194,832** | **100.0** | **(11.6)%** | - The decrease in golf club revenue was primarily due to a **26.3%** sales decline in the China market[7](index=7&type=chunk) - Revenue from accessories and other related products significantly decreased by **27.1%**, mainly due to sales limitations in Japan prior to new product launches to ensure profit margins[9](index=9&type=chunk) [Revenue by Geographical Region](index=19&type=section&id=按地理區域劃分的收益) Japan was the only region to achieve positive growth, with revenue increasing **5.6%** year-on-year, while Korea and China (including Hong Kong and Macau) saw declines of **7.0%** and **12.4%** respectively, and North America and Europe experienced the most significant drops of **40.7%** and **52.5%** due to distribution network adjustments and model shifts, with the three key domestic markets of Japan, Korea, and China collectively accounting for **88.3%** of total revenue Revenue by Geographical Region (For the six months ended September 30) | Geographical Region | 2023 Revenue (thousand JPY) | % of Total | YoY Change (%) | | :--- | :--- | :--- | :--- | | Japan | 4,172,787 | 31.6 | 5.6% | | Korea | 3,942,808 | 29.9 | (7.0)% | | China (incl. HK & Macau) | 3,529,130 | 26.7 | (12.4)% | | North America | 335,024 | 2.5 | (40.7)% | | Europe | 135,861 | 1.0 | (52.5)% | | Other Regions | 1,079,222 | 8.2 | (41.9)% | | **Total** | **13,194,832** | **100.0** | **(11.6)%** | - Japan market revenue grew by **5.6%**, benefiting from a strong rebound in consumer demand and ongoing marketing activities[13](index=13&type=chunk) - North America and Europe revenues significantly declined, primarily due to the ongoing impact of distribution network adjustments and changes in distribution models[14](index=14&type=chunk) [Revenue by Sales and Distribution Channel](index=21&type=section&id=按銷售及經銷渠道劃分的收益) Self-operated store channels performed strongly with a **13.2%** year-on-year revenue increase, primarily driven by robust retail sales recovery in Japan and China, whereas third-party retailer and wholesaler channels saw a significant **22.5%** decline, mainly impacted by China market challenges and European distribution model changes Revenue by Sales Channel (For the six months ended September 30) | Sales Channel | 2023 Revenue (thousand JPY) | % of Total | YoY Change (%) | | :--- | :--- | :--- | :--- | | Self-operated Stores | 5,170,582 | 39.2 | 13.2% | | Third-party Retailers & Wholesalers | 8,024,250 | 60.8 | (22.5)% | | **Total** | **13,194,832** | **100.0** | **(11.6)%** | - The growth in self-operated store revenue was primarily driven by strong retail sales recovery in Japan and China, which recorded increases of **30.7%** and **23.6%** respectively[17](index=17&type=chunk) [Cost of Sales and Gross Profit](index=22&type=section&id=銷售成本及毛利) Gross profit for the period was **6,877.0 million JPY**, a **12.6%** year-on-year decrease, with the overall gross profit margin slightly declining from **52.7%** to **52.1%**, while golf club gross margin slightly decreased to **59.3%**, golf ball gross margin fell to **29.0%** due to rising raw material costs, apparel gross margin decreased to **28.2%**, and accessories and other products' gross margin improved to **32.4%** due to product mix optimization - Total gross profit decreased by **12.6%** from **7,866.3 million JPY** to **6,877.0 million JPY**, with the gross profit margin slightly declining from **52.7%** to **52.1%**[58](index=58&type=chunk) Gross Profit and Gross Margin by Product Category (For the six months ended September 30) | Product Category | 2023 Gross Profit (thousand JPY) | 2023 Gross Margin (%) | 2022 Gross Margin (%) | | :--- | :--- | :--- | :--- | | Golf Clubs | 5,935,944 | 59.3 | 59.8 | | Golf Balls | 318,691 | 29.0 | 31.9 | | Apparel | 356,200 | 28.2 | 30.2 | | Accessories & Other Related Products | 266,144 | 32.4 | 25.6 | | **Total** | **6,876,979** | **52.1** | **52.7** | [Operating Expenses and Profit](index=24&type=section&id=經營開支及溢利) Sales and distribution expenses decreased by **8.0%** year-on-year to **4,486.0 million JPY**, though their percentage of revenue increased from **32.7%** to **34.0%**, while administrative expenses remained stable, other income and gains increased due to positive foreign exchange revaluation, and finance costs rose by **84.9%** due to higher borrowing costs, ultimately leading to a **7.8%** increase in net profit for the period to **3,329.5 million JPY** due to a significant **52.2%** reduction in income tax expense - Sales and distribution expenses decreased by **8.0%** year-on-year to **4,486.0 million JPY**[294](index=294&type=chunk) - Other income and gains increased to **2,019.4 million JPY**, primarily due to positive foreign exchange revaluation results[23](index=23&type=chunk) - Income tax expense decreased by **52.2%** from **641.2 million JPY** to **306.3 million JPY**, with the effective tax rate falling from **17.2%** to **8.4%**[272](index=272&type=chunk) - Net profit for the period was **3,329.5 million JPY**, representing a **7.8%** year-on-year increase[297](index=297&type=chunk)[118](index=118&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=流動資金及資本資源) The company demonstrates sound working capital management, with trade receivables turnover days decreasing from **54** to **49** days, while inventory turnover days increased to **320** days due to lower sales, and the debt-to-equity ratio improved from **36.3%** to **31.5%**, with approximately **4,972.2 million JPY** of global offering proceeds remaining unutilized at period-end, primarily earmarked for potential strategic acquisitions - Trade receivables and bills receivable turnover days decreased from **54** to **49** days, primarily due to enhanced collection efforts[35](index=35&type=chunk) - Inventory turnover days increased from **299** to **320** days, mainly due to a decline in sales over the past 12 months[279](index=279&type=chunk) - The debt-to-equity ratio decreased from **36.3%** as of March 31, 2023, to **31.5%** as of September 30, 2023[284](index=284&type=chunk) - As of September 30, 2023, the unutilized balance of global offering proceeds was approximately **4,972.2 million JPY**, with **29.4%** intended for potential strategic acquisitions[64](index=64&type=chunk)[288](index=288&type=chunk)[114](index=114&type=chunk) [Other Information](index=34&type=section&id=其他資料) [Directors' and Shareholders' Interests](index=34&type=section&id=董事及最高行政人員於股份%2C相關股份及債權證之權益及淡倉) This section details the interests of the company's directors, chief executives, and major shareholders in the company's shares as of September 30, 2023, with Chairman Mr. Liu Jianguo holding approximately **38.72%** interest, and other major shareholders including Charoen Pokphand Group (**29.93%**), Mr. Ma Jianrong (**7.76%**), Itochu Corporation (**6.32%**), and Fosun International-related entities (**5.88%**) Directors' and Chief Executives' Shareholding Interests | Name | Capacity/Nature of Interest | Number of Shares Held (L) | Approximate % of Interest (%) | | :--- | :--- | :--- | :--- | | Mr. Liu Jianguo | Founder and Sole Beneficiary of Trust/Interest in Controlled Corporation/Beneficial Owner | 234,512,775 | 38.72% | | Mr. Yasuki Ito | Beneficial Owner | 337,552 | 0.06% | | Mr. Zuo Jun | Beneficial Owner | 254,020 | 0.04% | Major Shareholders' Shareholding Interests | Shareholder Name | Nature of Interest | Number of Shares Held (L) | Approximate % of Interest (%) | | :--- | :--- | :--- | :--- | | Kouunn Holdings Limited | Beneficial Owner | 233,560,525 | 38.56% | | Charoen Pokphand Group Company Limited | Interest in Controlled Corporation | 181,296,500 | 29.93% | | Mr. Ma Jianrong | Interest in Controlled Corporation | 47,000,000 | 7.76% | | Itochu Corporation | Beneficial Owner | 38,284,000 | 6.32% | | Fosun International Limited | Interest in Controlled Corporation | 35,629,425 | 5.88% | [Share Award Schemes](index=37&type=section&id=受限制股份單位計劃及首次公開發售後購股權計劃) The company operates a 'Restricted Share Unit Scheme' and a 'Post-IPO Share Option Scheme' to incentivize and retain talent, with share movements but no new grants under the RSU scheme during the period, and no options granted under the Post-IPO Share Option Scheme since its inception, while an interim dividend of **1.5 JPY** per share has been declared for the six months ended September 30, 2023 - The company adopted the Restricted Share Unit (RSU) scheme in 2015, aiming to reward and incentivize directors, senior management, and employees[322](index=322&type=chunk) - The company adopted the Post-IPO Share Option Scheme in 2016 to incentivize eligible persons, with no options granted under the scheme as of September 30, 2023[79](index=79&type=chunk)[108](index=108&type=chunk) - The Board has declared an interim dividend of **1.5 JPY** per share for the six months ended September 30, 2023, totaling approximately **908.5 million JPY**, on November 24, 2023[469](index=469&type=chunk) [Corporate Governance](index=44&type=section&id=遵守企業管治守則) The company complied with all applicable code provisions of the Corporate Governance Code in Appendix 14 of the Listing Rules during the reporting period, with the sole deviation being the combined roles of Chairman and President (Chief Executive Officer) held by Mr. Liu Jianguo, an arrangement the Board believes facilitates effective group management and business development, and an Audit Committee has been established and reviewed this interim report - The company complies with the Corporate Governance Code, with one deviation: the roles of Chairman and President (Chief Executive Officer) are combined and held by Mr. Liu Jianguo[334](index=334&type=chunk)[84](index=84&type=chunk) - The Board believes that combining the roles of Chairman and President allows the Group to effectively plan and execute business decisions under strong and consistent leadership, benefiting management and business development[84](index=84&type=chunk) - The company has established an Audit Committee, comprising three independent non-executive directors, which has reviewed this interim results and report[86](index=86&type=chunk)[260](index=260&type=chunk) [Interim Condensed Consolidated Financial Statements](index=46&type=section&id=中期簡明綜合財務報表) [Review Report and Financial Statements](index=46&type=section&id=中期簡明綜合財務報表審閱報告) This section includes the review report by independent auditor Ernst & Young, along with the unaudited interim condensed consolidated income statement, statement of comprehensive income, statement of financial position, statement of changes in equity, and cash flow statement, with Ernst & Young concluding that nothing has come to their attention to suggest the interim financial information is not prepared in all material respects in accordance with International Accounting Standard 34 - Independent auditor Ernst & Young has reviewed the interim financial information and issued no audit opinion, concluding that nothing significant suggests non-compliance with International Accounting Standard 34[91](index=91&type=chunk)[117](index=117&type=chunk)[261](index=261&type=chunk) Interim Condensed Consolidated Income Statement (For the six months ended September 30) | Item | 2023 (thousand JPY) | 2022 (thousand JPY) | | :--- | :--- | :--- | | Revenue | 13,194,832 | 14,927,415 | | Gross Profit | 6,876,979 | 7,866,314 | | Profit Before Tax | 3,635,760 | 3,728,600 | | Profit for the Period | 3,329,503 | 3,087,382 | | Profit Attributable to Owners of the Parent Per Share (JPY) | 5.50 | 5.10 | Interim Condensed Consolidated Statement of Financial Position (Summary) | Item | September 30, 2023 (thousand JPY) | March 31, 2023 (thousand JPY) | | :--- | :--- | :--- | | Total Non-current Assets | 8,320,186 | 8,208,542 | | Total Current Assets | 33,543,335 | 32,158,818 | | Total Current Liabilities | 11,832,643 | 12,134,527 | | Total Non-current Liabilities | 2,094,826 | 2,201,905 | | **Net Assets** | **27,936,052** | **26,030,928** | Interim Condensed Consolidated Cash Flow Statement (Summary, For the six months ended September 30) | Item | 2023 (thousand JPY) | 2022 (thousand JPY) | | :--- | :--- | :--- | | Net Cash Flows from Operating Activities | 3,251,296 | 3,277,219 | | Net Cash Flows Used in Investing Activities | (196,923) | (228,919) | | Net Cash Flows Used in Financing Activities | (1,449,364) | (1,267,049) | | **Cash and Cash Equivalents at End of Period** | **16,659,964** | **17,038,061** | [Notes to the Financial Statements](index=57&type=section&id=中期簡明綜合財務資料附註) The notes to the financial statements provide detailed explanations and supplementary information on interim financial data, covering key matters such as basis of preparation, changes in accounting policies, operating segment information, revenue recognition, composition of costs and expenses, tax details, earnings per share calculation, asset and liability specifics (e.g., inventories, receivables, bank borrowings), dividend policy, and related party transactions [Basis of Preparation and Accounting Policies](index=57&type=section&id=編製基準及會計政策) This interim condensed consolidated financial information is prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', with accounting policies consistent with those used in the annual financial statements for the year ended March 31, 2023, and new and revised International Financial Reporting Standards effective during the period have been adopted without significant impact on the Group - The interim financial information is prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'[140](index=140&type=chunk) - Several new and revised International Financial Reporting Standards were adopted for the first time during the period, but they had no significant impact on the Group's interim condensed consolidated financial information[130](index=130&type=chunk)[425](index=425&type=chunk)[433](index=433&type=chunk) [Operating Segments and Revenue](index=59&type=section&id=經營分部資料) For management purposes, the Group has only one reportable operating segment: 'Manufacture and sale of golf-related products and provision of related services', with revenue primarily derived from golf-related product sales recognized at a point in time when goods are transferred, and the notes provide detailed revenue by geographical region, indicating approximately **3,512.8 million JPY** of revenue from a single customer during the period - The Group has only one reportable operating segment: the manufacture and sale of golf-related products and the provision of services related to such products[427](index=427&type=chunk) - For the six months ended September 30, 2023, approximately **3,512,852 thousand JPY** of revenue was generated from sales to a single customer[458](index=458&type=chunk) Revenue by Geographical Region (For the six months ended September 30) | Region | 2023 (thousand JPY) | 2022 (thousand JPY) | | :--- | :--- | :--- | | Japan | 4,172,787 | 3,951,625 | | Korea | 3,942,808 | 4,237,634 | | China (incl. HK & Macau) | 3,529,130 | 4,028,409 | | Other Regions Worldwide | 1,079,222 | 1,858,853 | | North America | 335,024 | 565,128 | | Europe | 135,861 | 285,766 | | **Total** | **13,194,832** | **14,927,415** | [Profit, Taxation, and Earnings Per Share](index=62&type=section&id=除稅前溢利) This section details the components of profit before tax, including various costs, expenses, and exchange gains, along with explanations of income tax rates and calculation methods across different jurisdictions (e.g., Japan, Hong Kong, Mainland China, USA), ultimately resulting in basic and diluted earnings per share of **5.50 JPY** Key Adjustments to Profit Before Tax (For the six months ended September 30) | Item | 2023 (thousand JPY) | 2022 (thousand JPY) | | :--- | :--- | :--- | | Cost of Inventories Sold | 6,273,022 | 7,017,994 | | Employee Benefit Expenses | 2,230,947 | 2,395,600 | | Net Exchange Gains | (1,912,301) | (1,624,510) | | Write-down of Inventories to Net Realizable Value | 702,101 | 770,562 | - The Group pays income tax in its major operating regions (Japan, Hong Kong, Mainland China, USA, Switzerland, etc.) at local statutory tax rates[371](index=371&type=chunk)[439](index=439&type=chunk)[464](index=464&type=chunk)[440](index=440&type=chunk)[465](index=465&type=chunk) - Basic and diluted earnings per share are calculated based on profit attributable to owners of the parent of **3,329,450 thousand JPY** and a weighted average of **605,643 thousand** ordinary shares outstanding, resulting in **5.50 JPY**[373](index=373&type=chunk)[374](index=374&type=chunk)[443](index=443&type=chunk) [Assets and Liabilities](index=66&type=section&id=存貨) The notes detail major asset and liability items, with total inventories at **11,196.7 million JPY** as of September 30, 2023, lower than the beginning of the period, trade receivables and bills receivable at **3,863.1 million JPY** primarily within one month aging, and total interest-bearing bank borrowings at **6,540.0 million JPY**, mostly unsecured loans due within one year, alongside actuarial valuations for employee defined benefit liabilities Inventory Details (thousand JPY) | Item | September 30, 2023 (thousand JPY) | March 31, 2023 (thousand JPY) | | :--- | :--- | :--- | | Raw Materials | 2,758,875 | 3,244,147 | | Work-in-progress | 1,134,280 | 1,547,032 | | Finished Goods | 10,559,390 | 10,634,117 | | Less: Provision | (3,255,810) | (3,127,965) | | **Total** | **11,196,735** | **12,297,331** | Interest-bearing Bank Borrowings (thousand JPY) | Term | September 30, 2023 (thousand JPY) | March 31, 2023 (thousand JPY) | | :--- | :--- | :--- | | Current (within one year) | 5,940,000 | 6,690,000 | | Non-current | 600,000 | 600,000 | | **Total** | **6,540,000** | **7,290,000** | - The credit period for trade receivables and bills receivable typically ranges from **30** to **90** days, with no significant concentration of credit risk[474](index=474&type=chunk) [Equity, Dividends, and Related Party Transactions](index=65&type=section&id=股息) This section covers share capital structure, dividend distribution, and related party transactions, including the Board's declaration of an interim dividend of **1.50 JPY** per ordinary share for the six months ended September 30, 2023, and disclosures on lease transactions with related parties (e.g., Shanghai Pentech Enterprise (Group) Co., Ltd.) and key management personnel compensation - The Board declared an interim dividend of **1.50 JPY** per ordinary share for the six months ended September 30, 2023, totaling approximately **908.5 million JPY**, on November 24, 2023[469](index=469&type=chunk) - During the period, total compensation paid to key management personnel was **71,171 thousand JPY**, a decrease from **100,480 thousand JPY** in the prior period[505](index=505&type=chunk) - The Group has related party transactions, primarily rental expenses, with Shanghai Pentech Enterprise (Group) Co., Ltd., a company controlled by a shareholder[392](index=392&type=chunk)[485](index=485&type=chunk)

Revenue Performance - Revenue from North America decreased by 40.7% to ¥335.0 million for the six months ended September 30, 2023, primarily due to ongoing adverse effects from last year's distribution network adjustments [3]. - Total revenue for the six months ended September 30, 2023, was ¥4,485,975 million, representing 100% of total revenue, compared to ¥4,874,327 million in the same period last year [11]. - The company's revenue from the Japanese market was 4,172,787 thousand yen for the six months ended September 30, 2023, up from 3,951,625 thousand yen in the same period of 2022, reflecting an increase of about 5.6% [44]. - The group's revenue decreased by 11.6% to ¥13,194.8 million (approximately $93.9 million) for the six months ended September 30, 2023, compared to the same period last year [181]. - Revenue from Japan and Hong Kong increased by 5.6%, while revenue from China (including Hong Kong and Macau) decreased by 12.4% due to a significant slowdown in the overall economy and retail market [181]. - Revenue from golf clubs declined by 12.5%, primarily due to a 26.3% drop in sales in China, while revenue from Japanese golf clubs increased by 20.1% [181]. Profitability and Financial Performance - The pre-tax profit for the six months ended September 30, 2023, was ¥3,635.8 million [16]. - The company reported a profit of 3,329,503 thousand yen for the six months ended September 30, 2023, compared to 3,087,382 thousand yen for the same period in 2022, representing an increase of approximately 7.9% [36]. - The total comprehensive income for the six months ended September 30, 2023, was 2,813,588 thousand yen, compared to 2,159,003 thousand yen for the same period in 2022, indicating an increase of approximately 30.3% [63]. - The total operating profit before tax for the six months ended September 30, 2023, was ¥3,635,760,000, slightly down from ¥3,728,600,000 in the same period of 2022, reflecting a decrease of about 2.5% [66]. - The income tax expense for the six months ended September 30, 2023, was ¥306,257 thousand, compared to ¥641,218 thousand for the same period in 2022, showing a decrease of approximately 52.3% [163]. Assets and Liabilities - The company's inventory as of September 30, 2023, totaled ¥11,196,735 million, compared to ¥12,297,331 million as of March 31, 2023 [24]. - Non-current liabilities totaled 2,094,826 thousand yen as of September 30, 2023, down from 2,201,905 thousand yen as of March 31, 2023, indicating a decrease of about 4.9% [37]. - The company's net asset value increased to 27,936,052 thousand yen as of September 30, 2023, compared to 26,030,928 thousand yen as of the same date in 2022, reflecting a growth of approximately 7.3% [37]. - The company's cash and cash equivalents increased to 16,659,964 thousand JPY as of September 30, 2023, compared to 14,084,777 thousand JPY as of March 31, 2023 [136]. - Trade receivables amounted to 3,431,403 thousand JPY as of September 30, 2023, down from 3,513,495 thousand JPY as of March 31, 2023 [136]. Investments and Capital Expenditures - The company did not undertake any significant investments, acquisitions, or disposals during the six months ended September 30, 2023, but will continue to seek new business development opportunities [29]. - Capital expenditures for the six months ended September 30, 2023, amounted to 251.3 million yen, primarily for the purchase of machinery and equipment [56]. - The company plans to use the remaining unutilized proceeds for general corporate purposes, with no significant plans for major capital asset investments or acquisitions [31]. Employee and Operational Metrics - The total employee benefits expense for the six months ended September 30, 2023, was ¥29,278,000, down from ¥32,933,000 in the same period of 2022, indicating a decrease of approximately 11.5% [96]. - The company's employee-defined benefit liabilities decreased to 145,845 thousand yen as of September 30, 2023, from 349,300 thousand yen as of March 31, 2023, showing a reduction of approximately 58.3% [37]. - The average duration of defined benefit obligations was 4.8 years as of September 30, 2023, down from 5.4 years as of March 31, 2023 [106]. Market Strategy and Brand Positioning - The company has invested significantly in retail distribution networks and digital capabilities in Japan and China to enhance consumer experience [178]. - The company is focusing on the ultra-high-end and super-performance consumer segments, updating its product strategy to include technologically advanced TOUR WORLD golf clubs [184]. - The company has restructured its global brand positioning and communication to appeal to younger golfers, resulting in increased digital engagement metrics [185]. - HONMA is restructuring its growth strategy in North America and Europe, focusing on smaller, high-quality customer segments to enhance financial conditions in these markets [188]. - The company aims to strengthen its market penetration by modernizing and refining its product offerings to attract today's golfers [184]. Customer Engagement and Marketing - HONMA hosted a total of 1,757 customer engagement events across major markets, primarily at golf courses, to improve brand and product awareness [190]. - The company recorded a continuous increase in website traffic, reflecting strong brand equity and consumer interest in the North American market [189]. - HONMA's digital marketing efforts, including social media remarketing and search engine marketing, have led to double-digit monthly growth in natural traffic and conversion rates [198]. Financial Health and Debt Management - The debt-to-equity ratio as of September 30, 2023, was 31.5%, down from 36.3% as of March 31, 2023 [27]. - The company's interest-bearing bank loans stood at 6,540.0 million yen as of September 30, 2023, with an effective interest rate ranging from 0.62% to 3.08% [55]. - The interest expense on bank loans rose to ¥78,048,000 for the six months ended September 30, 2023, compared to ¥40,055,000 in the previous year, marking an increase of approximately 94.6% [93].

Revenue and Profit Performance - Revenue for the fiscal year ending March 31, 2023, reached 29,494,999 thousand yen, a slight increase from the previous year's 28,971,099 thousand yen[17] - Gross profit margin for 2023 was 50.8%, down from 54.1% in 2022[17] - Operating profit for 2023 was 3,856,557 thousand yen, a decrease from 5,456,791 thousand yen in 2022[17] - Net profit attributable to the company's owners for 2023 was 3,255,488 thousand yen, compared to 6,191,197 thousand yen in 2022[17] - Revenue increased by 1.8% to 29,495.0 million yen (equivalent to 218.8 million USD) for the fiscal year ending March 31, 2023[107] - Pre-tax profit for the fiscal year ending March 31, 2023, was 4,092.9 million yen[126] - Pre-tax profit decreased by 45.9% to 4,092.9 million yen (equivalent to 30.4 million USD) compared to 7,560.3 million yen in the previous year[131] Regional Revenue Performance - Japan, the company's largest market, contributed 9,841.4 million yen in revenue, a 15.8% year-on-year increase[23] - Revenue from Korea and China increased by 3.8% and 2.0% respectively, despite challenges from COVID-19[23] - North America revenue grew by 3.2% year-on-year, driven by a strategic focus on high-quality customer segments[23] - Revenue from Japan, Korea, China, and North America grew by 15.6%, 3.8%, 2.0%, and 3.2% respectively, benefiting from strong consumer demand rebound and successful marketing activities[31] - North America revenue increased by 3.2% to 1,024.2 million JPY for the fiscal year ending March 31, 2023, but decreased by 11.0% on a constant currency basis[32] - Revenue growth was recorded in Japan (15.6%), Korea (3.8%), China (2.0%), and North America (3.2%) despite COVID-19 impacts[128] - Revenue from Japan and South Korea increased by 15.6% and 3.8% respectively, while China's growth rate was 2.0% due to COVID-19 disruptions, and Europe saw a sales decline of 68.2% due to a shift to an indirect distribution model[129] Product Sales Performance - Golf club sales increased by 3.3% for the fiscal year ending March 31, 2023, driven by the launch of BERES AIZU and TW757 products targeting the ultra-premium and high-performance consumer markets[25] - Apparel sales grew by 1.6% year-over-year, supported by increased investment in professional and fashion sport sub-lines[25] - Golf club revenue grew by 3.2%, while apparel revenue increased by 1.5%, but golf ball sales declined by 1.1% due to raw material supply challenges[108] Financial Position and Cash Flow - Total assets as of March 31, 2023, were 40,367,360 thousand yen, slightly down from 41,427,472 thousand yen in 2022[19] - Net current assets stood at 20,024,291 thousand yen, up from 19,763,221 thousand yen in 2022[19] - The company maintained strong operating cash flow, with net cash inflow of 3,682.9 million yen for the fiscal year[22] - Operating cash flow remained positive at 3,675.9 million yen (equivalent to 27.3 million USD) for the fiscal year ending March 31, 2023[110] - The company held cash and cash equivalents of JPY 14,084.8 million as of March 31, 2023, primarily in RMB, JPY, and USD, consisting mainly of cash on hand and demand deposits[196] Expenses and Costs - Gross profit decreased by 4.4% to 14,988.3 million JPY, with gross margin declining from 54.1% to 50.8%[38] - Apparel gross profit dropped by 44.8% to 802.9 million JPY, with gross margin falling from 49.1% to 26.7%, primarily due to supply chain disruptions in Japan and Korea[40] - Gross margin decreased by 3.3 percentage points to 50.8% due to rising raw material costs, currency pressures, and tighter inventory provisions[109] - Administrative expenses remained stable at 1,381.1 million yen for the fiscal year ending March 31, 2023[123] - Financing costs increased by 88.2% to 125.0 million yen due to higher Japanese borrowing rates[124] - Financing income rose by 25.0% to 13.5 million yen due to increased average bank deposit balances[125] Capital Expenditures and Investments - Capital expenditures for the fiscal year ending March 31, 2023, amounted to 663.5 million JPY, primarily allocated to purchasing factory machinery, office equipment, and leasehold improvements[55] - Potential strategic acquisitions accounted for 29.4% of the intended use of proceeds, with JPY 4,939 million utilized as of March 31, 2023[59] - Sales and marketing activities in North America, Europe, Japan, South Korea, and China (including Hong Kong and Macau) accounted for 15.1% of the intended use of proceeds, with JPY 2,536 million utilized[59] - Capital expenditures accounted for 13.0% of the intended use of proceeds, with JPY 2,184 million utilized[59] - Repayment of interest-bearing bank loans accounted for 17.3% of the intended use of proceeds, with JPY 2,906 million utilized and 0.2% remaining unused[59] - The unused balance of global offering proceeds as of March 31, 2023, was approximately JPY 4,942.2 million, held in reputable banks[61] - The company did not undertake any significant investments, acquisitions, or disposals during the fiscal year ending March 31, 2023, but continues to seek new business development opportunities[86] Debt and Financial Obligations - The company's interest-bearing bank loans as of March 31, 2023, amounted to JPY 7,290.0 million, with interest rates ranging from 0.17% to 3.08%[75] - The company's debt-to-equity ratio as of March 31, 2023, was 36.3%, down from 38.1% on March 31, 2022[76] - The company has fully repaid the interest-bearing bank loans intended to be repaid using the proceeds from the global offering, with the remaining unused balance of 0.2% to be evaluated for appropriate use based on business needs[89] Dividend and Shareholder Returns - The company proposed a final dividend of 1.5 yen per share for the fiscal year ending March 31, 2023, totaling approximately 908.5 million yen, representing 27.9% of the distributable profit for the year[90] - The company's dividend for the fiscal year ending March 31, 2023, is 3.0 yen per share, totaling 1,817.0 million yen, representing approximately 55.8% of the distributable profit[174] - The company's distributable reserves as of March 31, 2023, amounted to 10,006 million yen, down from 11,524 million yen the previous year[154] - The company will evaluate its dividend policy and distributions from time to time, with details provided in the "Corporate Governance Report - Dividend Policy" section of the annual report[200] Tax and Regulatory Compliance - Income tax expenses decreased by 38.8% from 1,369.1 million yen in the fiscal year ending March 31, 2022, to 837.3 million yen in the fiscal year ending March 31, 2023[94] - The company's effective tax rate increased from 18.1% in the fiscal year ending March 31, 2022, to 20.5% in the fiscal year ending March 31, 2023[94] - The company has not experienced any significant legal or regulatory violations in Japan, China, or South Korea during the fiscal year[161] Operational and Strategic Initiatives - The company typically launches new golf clubs, balls, and accessories every 24 months, with additional promotion of older generation products for 12 months[77] - The company plans to strengthen its leadership in the ultra-premium segment and expand into the high-performance consumer segment in Asia[113] - The company plans to focus on high-quality customer segments in North America and Europe, and leverage its R&D capabilities to develop products aligned with market trends[133] - The company's growth strategy focuses on expanding non-club businesses, such as golf balls, bags, gloves, and apparel[166] - The company closed 615 sales points in Europe, reducing the total number of sales points to 35, while opening 8 new sales points in North America, forming a network of 345 sales points[173] - The company aims to reduce emissions and waste through energy-efficient machinery, water-saving equipment, and promoting energy-saving awareness among employees[160] Supply Chain and Inventory Management - The company relies on strategic suppliers in Japan, Taiwan, China, Hong Kong, and the US, with OEM partnerships exceeding five years[135] - The company's inventory aging analysis is based on product launch dates rather than capitalization dates, with some inventory aged 2-3 years reflecting products launched 2-3 years prior to the fiscal year-end[195] - Trade receivables and bills turnover days decreased by 14 days from 68 days in FY2022 to 54 days in FY2023, primarily due to enhanced collection efforts in certain markets[187] - Trade payables and bills turnover days decreased by 11 days from 58 days in FY2022 to 47 days in FY2023, mainly due to reduced procurement caused by high inventory levels throughout the year[187] Corporate Governance and Social Responsibility - The company operates the largest number of self-operated stores among major golf product companies, equipped with golf simulators and specialized fitting centers[135] - The company donated products worth 1.96 million yen during the fiscal year ending March 31, 2023[179] - The company's restricted stock unit plan, effective for 10 years from October 20, 2015, has approximately 2 years and 7 months remaining as of March 31, 2023[183] - The company's pledged deposits increased by 8.89% from 4.75 million yen to 5.17 million yen due to exchange rate fluctuations[178]

Revenue Performance - The group's revenue increased by 1.8% to ¥29,495.0 million (approximately $218.8 million) for the year ended March 31, 2023, despite challenges in the Chinese market due to COVID-19 outbreaks[3]. - Revenue from Japan and Korea grew by 15.6% and 3.8% respectively, while revenue from China and North America recorded increases of 2.0% and 3.2%[9]. - The group's golf club revenue showed a solid growth of 3.2%, contributing 72.9% to total revenue, while apparel revenue increased by 1.5%[3][11]. - HONMA's revenue for the fiscal year ending March 31, 2023, was ¥29,494,999, representing a 1.8% increase from ¥28,971,099 in the previous year[63]. - Revenue from golf clubs rose by 3.2% from 20,843.1 million JPY to 21,512.9 million JPY, while revenue from golf balls decreased by 1.1% to 2,942.3 million JPY[81]. - Revenue from accessories and other related products decreased by 7.3% to 2,030.7 million JPY, primarily due to sales restrictions in Japan and decreased sales in Europe[67]. - Revenue from Japan increased by 15.6% to 9,821.6 million JPY, driven by a broad recovery in sales across all channels and product categories[86]. - Revenue from South Korea grew by 3.8% to 7,088.7 million JPY, attributed to increased participation in golf and successful new product launches[71]. - Revenue from North America increased by 3.2% to 1,024.2 million JPY, although it decreased by 11.0% on a constant currency basis[72]. - Revenue from Europe decreased significantly by 68.2% to 442.6 million JPY, reflecting a shift to an indirect distribution model[72]. - Revenue from China (including Hong Kong and Macau) rose by 2.0% to 7,795.3 million JPY, with a decrease of 6.9% on a constant currency basis due to COVID-19 outbreaks[84]. Profitability and Margins - The gross profit margin decreased by 3.3 percentage points to 50.8% due to rising raw material prices and tightening inventory policies[5]. - The group's operating profit before tax decreased by 45.9% to ¥4,092.9 million (approximately $30.4 million) compared to ¥7,560.3 million for the previous year[5]. - The gross profit for the same period was ¥14,988,255 thousand, down from ¥15,685,627 thousand, indicating a decrease of about 4.4%[190]. - The operating profit for the fiscal year was ¥4,092,869, a decrease of 45.9% compared to ¥7,560,291 in the previous year[63]. - The gross profit for golf balls decreased by 36.2% to ¥862.6 million, with a gross margin decline to 29.3% due to rising raw material costs[115]. - The gross profit for apparel dropped by 44.8% to ¥802.9 million, with a gross margin decrease to 26.7% attributed to supply chain issues[115]. - The company’s net profit for the year was ¥3,255,605 thousand, a significant decline from ¥6,191,188 thousand, reflecting a decrease of approximately 47.5%[190]. Cash Flow and Financial Position - The company maintained a positive net operating cash flow of ¥3,675.9 million (approximately $27.3 million) for the year[5]. - Cash and cash equivalents as of March 31, 2023, totaled ¥14,084.8 million, primarily held in RMB, JPY, and USD[144]. - The net cash flow from operating activities for the year was ¥3,675,866 thousand, down from ¥5,916,455 thousand in the prior year, indicating a decrease of about 37.5%[194]. - The company reported a net loss from the sale of right-of-use assets of ¥18,527 thousand, compared to a net gain of ¥40,263 thousand in the previous year, reflecting a significant change in asset management strategy[194]. - The debt-to-equity ratio as of March 31, 2023, was 36.3%, a decrease from 38.1% the previous year, indicating improved financial stability[178]. Strategic Initiatives and Market Positioning - The company continues to prioritize product development and has launched proprietary golf balls to meet brand positioning and user preferences[11]. - The company aims to redefine the HONMA brand as vibrant and globally recognized among young golfers through various global branding initiatives[14]. - HONMA held a total of 4,061 customer events across major markets during the year ending March 31, 2023[24]. - The company is focusing on enhancing its distribution strategy in North America and Europe to target key customer segments[21]. - The introduction of new products, such as the BERES AIZU and TW757, aims to penetrate the ultra-high-end and ultra-performance consumer markets[17]. - HONMA's investment in e-commerce and customer relationship management systems aims to provide a comprehensive brand experience and boost sales[19]. - The company has established five trial centers across Japan, China, and South Korea to meet the needs of passionate golfers[39]. - The company aims to enhance brand loyalty and recognition through new retail experiences and marketing strategies, particularly in Asia and North America[48]. - HONMA plans to expand its TOUR WORLD product family to capture a larger share of the high-performance segment in its domestic markets[48]. - The company is focusing on sustainable growth in North America and Europe, which together account for nearly 70% of the global golf market[48]. Operational Changes and Workforce - The company closed 615 sales points in Europe, reducing the total to 35, while opening eight new sales points in North America, resulting in a network of 345 points[12]. - As of March 31, 2023, the company operated 90 self-owned HONMA brand stores, all located in Asia, with plans to continuously update store design and consumer experience[30]. - The company employs 745 staff globally, primarily in Japan, and offers various training programs to ensure employee growth and retention of skilled artisans[33]. - The company has 3,717 sales points globally, including 1,304 large sports retail stores in Japan, and continuously evaluates and expands its sales and distribution network[41]. Dividends and Shareholder Returns - The proposed final dividend is ¥1.5 per share, totaling approximately ¥1,817.0 million, which represents 55.8% of the group's distributable profits for the year[5]. - Total dividends for the fiscal year will amount to ¥3.0 per share, totaling ¥1,817.0 million, representing approximately 55.8% of the distributable profits[93]. - The board proposed a final dividend of ¥1.5 per share, totaling approximately ¥908.5 million, which represents about 27.9% of the distributable profits for the fiscal year[93].

Revenue Growth - For the six months ended September 30, 2022, the company's revenue increased by 25.7% compared to the same period in 2021[7]. - Revenue from Japan increased by 3.4%, while Korea saw a significant growth of 97.1% year-on-year due to the rising number of golf participants and successful new product launches[7]. - Revenue from China, North America, and other regions recorded strong growth rates of 11.1%, 31.6%, and 41.2% respectively[7]. - Japan, Korea, and China contributed 81.9% of the company's total revenue[7]. - Total revenue increased by 25.7% from ¥11,871.9 million to ¥14,927.4 million for the six months ending September 30, 2022[37]. - Revenue from Japan increased by 3.4% to ¥3,951.6 million, while revenue from South Korea surged by 97.1% to ¥4,237.6 million[44]. - Revenue from China (including Hong Kong and Macau) rose by 11.1% to ¥4,028.4 million, although it decreased by 4.3% on a constant currency basis due to government lockdowns[44]. - North American revenue increased by 31.6% to ¥565.1 million, with a 9.9% increase on a constant currency basis[45]. - Revenue from self-operated stores was ¥4,566.9 million, a 29.9% increase from ¥3,516.1 million, driven by optimized retail operations[47]. - Revenue from third-party retailers and wholesalers rose by 24.0% to ¥10,360.5 million, attributed to strong demand[47]. Product Performance - Golf club sales increased by 31.2% for the six months ended September 30, 2022, demonstrating strong brand value and resilience since 1959[9]. - Revenue from the BERES and TOUR WORLD product families grew by 37.1% and 17.1% respectively compared to the same period last year[9]. - Golf clubs accounted for 76.6% of total revenue for the six months ended September 30, 2022, with Japan showing a robust growth of 20.3% year-on-year[10]. - The company aims to enrich its TOUR WORLD product family with technology-enhanced series and modern designs to attract contemporary golfers[6]. - The company has launched new product families, including the GS series and TW757 series, aimed at attracting younger, performance-focused golfers[24]. Market Strategy - The company is focusing on two market segments: ultra-high-end and ultra-performance, to simplify and strengthen its product portfolio[6]. - The company has redefined its brand to appeal to younger golfers, enhancing its global brand positioning and communication strategies[8]. - The company aims to enhance its growth strategy in North America and Europe, focusing on smaller, high-quality customer segments[11]. - The company is focusing on sustainable growth in North America and Europe, which account for nearly 70% of the global golf market, by targeting high-quality customer segments[27]. - The company has established a strategic partnership with Itochu Corporation to develop its apparel business, promoting HONMA as a "golf lifestyle brand" in Japan, China, and Korea[28]. Financial Performance - Operating profit increased by 37.5% from ¥1,590.3 million to ¥2,187.5 million[36]. - Net profit attributable to equity holders increased by 129.0% from ¥1,348.4 million to ¥3,087.4 million[36]. - Basic and diluted earnings per share rose by 128.7% from ¥2.23 to ¥5.10[36]. - Gross profit margin decreased from 55.3% to 52.7%, while total sales cost increased by 33.0%[36]. - The company attributes stable revenue growth to ongoing improvements in product development, merchandise planning, and retail operations[41]. Operational Efficiency - The company closed 378 sales points in Europe, reducing the total to 237, while opening eight new sales points in North America, resulting in a network of 345 locations[11]. - The average order value exceeded $1,000, indicating a positive trend in e-commerce activities[12]. - HONMA hosted 1,912 customer events during the six months ended September 30, 2022, enhancing brand and product awareness[14]. - The company continues to evaluate and expand its sales and distribution networks to adapt to local retail landscapes and consumer behaviors[20]. - The company has implemented a customer relationship management system with e-commerce functionalities to provide a comprehensive brand experience[8]. Challenges and Risks - The golf industry is expected to face challenges due to public health uncertainties and supply chain issues, but the company sees positive recovery trends as golf participation increases[29]. - The company is committed to optimizing operational efficiency and maintaining cash reserves to mitigate the impacts of global health challenges[29]. - The company will continue to monitor external challenges related to COVID-19 and adjust its business strategies accordingly to protect employee health and safety[30]. Shareholder Information - The company declared an interim dividend of ¥1.5 per share, totaling approximately ¥908.5 million, which represents 29.4% of the group's distributable profit for the six months ended September 30, 2022[83]. - Kouunn Holdings Limited holds 233,560,525 shares, representing 38.56% of the total shares[90]. - Huang Wenhuan holds 234,512,775 shares, representing 38.72% of the total shares[90]. - The total number of issued shares is 605,642,500[93]. - The company has not yet committed to any acquisition targets as of the reporting date, indicating a cautious approach to potential acquisitions in the golf product industry[82].

Financial Data and Key Metrics Changes - The company achieved a net sales of 14.9 billion JPY (approximately 110 million USD), a year-on-year increase of 25.7% [3] - Gross margin was 52.7%, slightly down by 2.6 percentage points compared to the previous year, but still maintained a high level [3] - Net profit surged by 129% to 3.1 billion JPY (approximately 23.2 million USD), with a net profit margin increasing by 9.3 percentage points to 20.7% [3] - Cash flow from operations was 3.3 billion JPY (approximately 24 million USD), a slight decrease of 11.5% year-on-year, but net cash increased significantly by 65.5% to 10 billion JPY (approximately 69.7 million USD) [3] Business Line Data and Key Metrics Changes - Sales from golf clubs increased by 31.2%, while accessories and other products saw a growth of 52.2% [5] - Sales from apparel and golf balls experienced slight declines of 1.7% and 2.7%, respectively, primarily due to strict pandemic control measures in various regions [5][14] - Golf clubs accounted for 76.7% of total sales, with apparel becoming the second-largest product category, contributing 8.3% to total sales [6] Market Data and Key Metrics Changes - Sales in South Korea grew by 97.1%, driven by an increase in golf participation and successful new product launches [4] - Sales from Japan increased by 3.4% following the lifting of pandemic restrictions, while sales from China, North America, and Southeast Asia grew by 11.1%, 31.6%, and 41.2%, respectively [4] - European sales declined by 46%, attributed to a strategic shift in the distribution model and cost optimization efforts [4][26] Company Strategy and Development Direction - The company is focused on a long-term growth strategy that emphasizes product, channel, and brand development [7] - The product strategy includes a full range of offerings in both golf clubs and non-club products, targeting ultra-luxury and high-performance segments [7][8] - The company is enhancing its e-commerce capabilities and investing in digital marketing to adapt to changing consumer behaviors post-pandemic [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges from supply chain disruptions and inflationary pressures but remains optimistic about achieving over 10% sales growth and maintaining a profit margin around 25% for the year [24][25] - The company plans to continue optimizing costs and enhancing cash flow while ensuring employee health and safety [23][30] Other Important Information - The company has a robust cash position and a healthy balance sheet, with a significant increase in cash and cash equivalents [21] - The company is committed to maintaining a strong presence in the Asian markets while adjusting its strategies in Europe and North America to focus on profitability [26] Q&A Session Summary Question: Does the management have guidance for full-year revenue and profit expectations? - The company has not provided specific guidance due to market uncertainties but anticipates over 10% sales growth and a profit margin around 25% [24] Question: What are the reasons for the decline in European market sales and the outlook for the second half? - The decline is attributed to strategic adjustments in distribution and a focus on Asian markets, with expectations for a narrowing of the sales decline in the second half [25][26] Question: Can you elaborate on the e-commerce strategy and future sales plans? - The company has established a strong e-commerce presence in China and is expanding its digital marketing efforts to enhance customer engagement [27] Question: Will there be a shift in focus towards self-operated stores over third-party retailers? - While self-operated stores are important, third-party channels still contribute significantly to sales, and the company aims to enhance customer experience across all channels [28] Question: How has the company addressed supply chain issues related to raw materials? - Supply chain challenges persist, particularly for golf ball materials, but overall supply chain conditions are improving [30] Question: What are the future revenue targets for club and non-club products? - The company expects the revenue share of non-club products to increase from 25% to potentially 40-50% in the coming years [31] Question: What growth rate is expected for the apparel business in the next few years? - The apparel segment is anticipated to grow at a compound annual growth rate of over 50% once pandemic-related restrictions ease [32] Question: How will inflation and currency fluctuations impact profit margins? - Inflation and currency fluctuations have affected margins, but the company is implementing price adjustments to mitigate these impacts [34]