2023/2024 INTERIM RESULTS HONMA GOLF LIMITED (6858.HK) NOV. 2023 H(O)WMA ONE OF THE MOST PRESTIGIOUS AND ICONIC BRANDS IN THE GOLF INDUSTRY
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01 HONMA 03 02 PERFORMANCE OVERVIEW 05 03 BUSINESS HIGHLIGHT 10 04   FINANCIAL REVIEW 22 05 APPENDIX 27 23/2024 INTERIM RESUL 02 2023/2024 INTERIM RESULTS HONMA 03 #1 PREMIUM GOLF BRAND FOUNDED IN 1959, JAPAN 65+ YEARS OF DEDICATIONS TOWARDS QUALITY AND CRAFTSMANSHIP THE ONLY VERTICALLY INTEGRATED GOLF COMPANY IN THE WORLD IN-HOUSE R&D AND CLUB MANUFACTURING 216 R&D personnel and skilled craftsmen operating out of 163,000 m² of manufacturing base in Sakata, Japan . Advanced design and sophisticated and manufacturing capacity, housed under one roof COMPREHENSIVE CLUB AND NON-CLUB PRODUCT PORTFOLIO Diversified range of premium golf products • Club portfolio focusing on super-premium and premium-performance consumer segments . Comprehensive range of non-club products including balls, apparels and accessories EXTENSIVE DTC + DISTRIBUTION NETWORK Presence in over 50 countries . Unique omni channel, 95 self-operated stores overlayed with 3,506 third party POS Fast growing E-commerce business in China, Japan and the US 3/2024 INTERIM RESUL 04 02 PERFORMANCE OVERVIEW 023/2024 INTERIM RESULT 05 In 1H FY2024, the golf industry witnessed increased market competitions and adjustments in participation and consumers' willingness to pay resulting from the global economic situations as well as slowdowns in certain parts of the world. Meanwhile, HONMA continued to drive efficiencies and implemented channel adjustment in multiple markets that effectively drove up sales from apparels and self-operated channels, at the same time achieved robust bottom line growth and net margin improvement despite the unfavorable market conditions, reconfirming the Group's strong management and business resilience under volatile economic environments.
3/2024 INTERIM RESUL 06
• IH FY24 NET SALES: JPY 13,195 MM / USD 93.9 MM, -11.6% YOY During 1H FY24, The Group's main markets recorded different sales momentum versus same period last year. • Sales from Japan rose by 5.6%, on the back of a strong rebound of demand from both local players and overseas travelers, fueled by potent product and marketing strategies. . China on the other hand showed a sales decline of 12.4% as China's economy and retail market experienced significant slowdowns. Sales from Korea also declined by 7.0%, reflecting the Group's decision to optimize its distribution network prior to its new products launch in 1Q 2024. NET SALES MIX BY MARKET % ■ Japan ■ Korea ■ China(Including Hong Kong and Macau) ■ Other Regions ■ North America ■ Europe NET SALES GROWTH BY MARKET Note (1) Sales from Other Regions dropped by 41.9%, mainly due to unfavourable local currency depreciation that led to weakened consumer purchasing interests and power Note (2) North America and Europe recorded decline in sales by 40.7% and 52.5%, respectively, due to continued negative impacts from last year’s adjustments in distribution networks; such adjustments aim to focus on  a smaller yet premier group of accounts 3/2024 INTERIM RESUL
Apparel sales momentum remained strong thanks to the successful product launches, as well as potent marketing and branding campaigns. . Sales decrease in golf clubs was mainly due to weak consumer sentiment in China. The new BERES 09 is planned to be launched globally in 1Q 2024. . Sales from golf balls remained relatively stable, albeit upward price adjustment in the face of continued currency pressure.
SALES MIX BY PRODUCT CATEGORIES
%
GOLF CLUBS
NET SALES -12.5% TO JPY 10,012 MILLION / USD71.2 MM GROSS MARGIN -0.5PP TO 59.3% •     mainly due to a decline in China's golf club sales of 26.3%
APPARELS
NET SALES +2.1% TO JPY 1,264 MILLION / USD9.0 MM GROSS MARGIN -2.0PP TO 28.2% apparel sales in China was up by 21.4% in spite of the weak consumer sentiments
GOLF BALLS
NET SALES -2.2% TO JPY 1,098 MILLION / USD7.8 MM GROSS MARGIN -2.9PP TO 29.0% •    mainly due to temporary sales adjustment following upward retail price adjustment to cope with Japanese Yen depreciation in Japan
ACCESSORIES
NET SALES -27.1% TO JPY 821 MILLION / USD5.8 MM GROSS MARGIN +6.8PP TO 32.4% primarily caused by constrained sales in Japan to protect margin 3/2024 INTERIM RESUL ■ Golf Balls ■ Accessories & Other Related PERFORMANCE OVERVIEW _BY CHANNEL_ IH FY24 NET SALES: JPY 13,195 MM / USD 93.9 MM, -11.6% YOY NET SALES MIX BY CHANNEL % ■ Distributors ■ DTC Channels DIRECT-TO-CONSUMER CHANNELS: Self-operated Stores + E-commerce NET SALES +13.2% TO JPY 5,171 MILLION / USD36.8 MM GROSS MARGIN +7.4PP TO 60.6% SELF-OPERATED STORES Net +5 new locations, mainly located on the prominent golf courses in China Sales from Japan +30.7%; sales from Mainland China +23.6% Continued optimization of store design, visual display and consumer experience . Operating in China, Japan and the US . Total net sales +19.0%; Robust sales growth in all 3 markets: China +18.4%, Japan +12.7%, US +36.6% 3rd PARTY RETAILERS AND WHOLSALERS NET SALES -22.5% TO JPY 8,024 MILLION / USD57.1 MM GROSS MARGIN -5.8PP TO 46.6% Net -211 POS, mainly in North America, resulting from the decision to focus on a smaller yet premier accounts Sales decreased primarily due to weakened economic environment in China and distribution model shift in multiple markets 3/2024 INTERIM RESUL 03 BUSINESS HIGHLIGHT 023/2024 INTERIM RESULT 10
The Group strategically focuses on the development of its home markets in Asia and exquisite trending products, while at the same time, continues to seek new possibilities by exploring and developing new categories and products to meet consumers' evolving needs.
THE THREE PILLARS OF THE HONMA GROWTH STRATEGY

GOLF CLUBS
. Combines top-notched Japanese craftsmanship with world standard innovative technologies . Strengthened focus on super premium and premium performance consumer segments • Enriched premium performance products targeting golfers with 8-20 handicaps •  Unique product offerings designed for social media savvy female golfers
NON-CLUB PRODUCTS
. Steady advancement of ball and accessory businesses in premium consumer segments • Nurturing apparel business in the fast growing home markets, aiming both golfers , as well as a wider spectrum of active and outdoor-inspired populations Continuously upgrading HONMA's retail presence with primer locations, new retail visual identity, experience design concept and consumer elements . . Further penetration into premium-performance segment by adding quality retailers and POS Continue investing into the brand's digital eco¬ system and HONMA’s private sphere, following fundamental change in consumer behavior and business environment post COVID-19
BRANDING AND CONSUMER ENGAGEMENT
Re-defining HONMA brand as a dynamic, relevant and global brand among younger and internet- savvy golfers. Offering 360 degree HONMA brand experience across all consumer touch points both offline and online, pursuing golfers in super-premium and premium-performance segments Rejuvenated TEAM HONMA with younger and uprising athletes, coaches and influencers to create a unique community culture Enhanced CRM system to better understand consumers and nurture loyalty Focused marketing and PR activities across all markets 3/2024 INTERIM RESULT 11 <A> CLUB PRODUCTS THAT BEST REPRESENT JAPANESE CRAFTSMANSHIP AND INNOVATIVE TECHNOLOGY A PRODUCT PORTFOLIO FOCUSING ON SUPER PREMIUM AND PREMIUM PERFORMANCE CONSUMERS SEGMENTS SUPER PREMIUM SEGMENT BERES PREMIUM PERFORMANCE SEGMENT T// WORLD IN CHINA Lady Go IN JAPAN OTHER CLUB PRODUCTS PUTTERS, COUNTRY SPECIFIC MODELS, SPECIAL EDITIONS 3/2024 INTERIM RESUL Beres NX Launched in Nov 2022 XP-2 Launched in Sep 2022 HANDICAP 8-20 BeZeal 3 Coming in Feb 2024 Beres 09 Coming in Mar 2024 12
A PRODUCT PORTFOLIO FOCUSING ON SUPER PREMIUM AND PREMIUM PERFORMANCE CONSUMERS SEGMENTS In 1H FY2024, golf club sales -12.5% to JPY 11,012 million, mainly because the two major club series BERES Aizu and TW757 are both phasing out after 2 years of sales; renewed models will be released in 2024; sales from China -26.3% due to weakened economic environment and consumer sentiment . Japan recorded decent club sales growth +20.1%, on the back of a full recovery in retail activities and consumer demands; cheaper Yen was also a stimulus to overseas travelers' interests of purchase; Country Specific Model sales +34.9% as more younger golfers value uniqueness Overall club gross margin remained at an industry-leading level of 59.3%, only slightly lower than 59.8% of last year PRODUCT LAUNGH Next generation of BERES to be released globally in early 2024 2-proned product approach designed for avid golfers with single and double handicaps respectively Next generation of Tour World to be released in summer 2024 BeZeal 3 to be released in early 2024 9.6% of club sales 1H FY24 sales -53.9% mainly due to distribution adjustment in Korea, North America and Europe Mainly Country Specific Models, special editions and putters . Country Specific Model for Korea released in 2H FY23 . HT08 for China released in Nov 2023 (2H FY24) SALES PERFORMANCE . 41.6% of club sales 1H FY24 sales -26.7%, mainly due to BERES Aizu phasing out and weak consumer sentiment in China ●    48.9% of club sales . . 1H FY24 Country Specific Models sales +34.9%, sales from Korea +108.7% All-time favorite to consumers who are looking for extinguished and exquisite cosmetics 3/2024 INTERIM RESUL
FOLLOWING UPWARD RETAIL PRICE ADJUSTMENT . Golf ball sales declined slightly by 2.2% YOY to JPY 1,097.9 million; gross margin -2.9PP to 29.0% • Sales from golf ball declined during the period mainly due to temporary negative impact following upward retail price adjustment, implemented to cope with Japanese Yen depreciation over the last few years • Gross profit margin decreased primarily due to continued raw material price pressure and unfavourable exchange rate movement PRODUCT PYRAMID D1, 2-LAYER BALL TW-X , 3-LAYER BALL BERES 5 STAR, 6-LAYER BALL JAPAN GOLF BALL SALES (FULL YEAR) JPY MM 2,439 3/2024 INTERIM RESUL TOTAL GOLF BALL SALES (FULL YEAR) JPY MM FY17 FY18 FY19 FY20 FY21 FY22 FY23 14
APPAREL SALES  +2.1% YOY TO JPY 1,264 MILLION GROSS MARGIN -2.0PP TO 28.2% Sales from China +21.4%; sales from Japan +15.7% 3 product lines catering to the distinctive requirements of golfers and outdoor enthusiasts in Asia, both on-course and off-course Quality retail footprints with optimized store operation, merchandise planning and upgraded display Continued investment into digital marketing and E- commerce capabilities on the back of one digital eco-system Crossover collections collaborating with trendy Japanese designer and iconic IP to drive brand awareness and appeal to the younger generation APPAREL COLLECTION CONSISTING OF 3 DISTINCTIVE PRODUCT LINES TARGETING PREMIUM PERFORMANCE AND FASHION ATHLETIC CONSUMER SEGMENTS
HQWA
PROFESSIONAL GOLF LINE
Tour-inspired professional golf wear featuring high-tech functional fabrics and 3D synchronized cutting 7475555
FASHION GOLF LINE
Tour-inspired professional golf wear featuring high-tech functional fabrics and 3D synchronized cutting
HONITIA
URBAN ATHLEISURE LINE
Trendy athleisure wear targeting and  outdoor  enthusiasts, active featuring fashionable and diverse designs and details . 23/2024 INTERIM RESULT ● 15

SELF-OWNED RETAIL CHANNELS
ACT AS BRAND EXPERIENCE HUBS ACROSS ALL MARKETS . Sales from self-owned channels +13.2% to JPY 5,171 million . Sales from Japan +30.7%; sales from China +23.6% • 95 self-owned stores, net increase by 5; newly opened 9 stores, all in China THIRD-PARTY RETAILERS AND WHOLESALERS CONTINUED TO DRIVE PENETRATION AND GAIN MIND SHARE Sales from third-party -22.5% Number of POS declined by 211 to 3,506, mainly in Korea and North America Sales decline was primarily due to sales decrease in China, partly due to the challenging macro environment and   partly due to a channel shift of its apparel business towards a focus on DTC model 23/2024 INTERIM RESUL . . • <E> FURTHER INVESTING INTO DIGITAL ECO-SYSTEM AND PRIVATE SPHERE TO DRIVE E-COMMERCE SUPPORTED BY UP-TO-DATE CONTENT MARKETING ON SOCIAL MEDIA AND CRM PLATFORMS E-COMMERCE SALES GREW BY 19.0% DRIVEN BY ACCELERATED INVESTMENT IN DIGITAL MARKETING WITH A FULL-CHANNEL APPROACH •     E-commerce platforms in major markets China: Tmall, JD, Wechat Store, Douyin, and DU (得物) . Japan & US: self-operated E-commerce site •     Actively pursuing an E-commerce growth strategy . Dedicated E-commerce team and marketing resources . Social media campaigns generating traffic to online stores •  Livestream (直播) sales campaign to attract internet- savvy consumers in China Search engine optimization and in store visual updates •    Full channel CRM system to upgrade loyalty program and improve consumer experiences US  E-COMMERCE SITE 3/2024 INTERIM RESUL 17 <F> RE-DEFINING HONMA: DYNAMIC, MODERN, GLOBAL TO DRIVE BRAND AWARENESS ACROSS ALL MARKETS DIGITALIZED CONTENT MARKETING THROUGH RELAUNCHED GLOBAL WEBSITE & SOCIAL MEDIA PLATFORMS RELEVANT TO EACH MARKET • Frequently rolling out digital marketing content on HONMA's global website as well as social platforms including Instagram, Facebook, Wechat, Weibo, etc •    Content collaboration with pros, influencers and celebrities both on tour and on digital platforms To convey consistent brand image and enhance brand awareness across all markets To recruit and engage with younger and internet-savvy consumer To generate traffic from digital platform to offline retail stores To own the entire consumer experience and data 3/2024 INTERIM RESUL . . . . <F> RE-DEFINING HONMA: DYNAMIC, MODERN, GLOBAL TO DRIVE BRAND AWARENESS ACROSS ALL MARKETS CUSTOMER EVENTS 1,757 EVENTS,  22,944 PARTICIPANTS • Customer events are important customer touch points for HONMA •  These events were mainly held on golf courses with dedicated fitters Integrated brand experience and retail activities targeting consumers in super premium and premium performance segments • Key to the continued enhancement of HONMA's brand and product awareness and consumer impression 023/2024 INTERIM RESULT . 19 <F> RE-DEFINING HONMA: DYNAMIC, MODERN, GLOBAL TO DRIVE BRAND AWARENESS ACROSS ALL MARKETS SPONSORING 8 PROFESSIONAL PLAYERS PLUS A WIDE NETWORK OF HONMA AMBASSADORS AND COACHES 7 JAPAN LADIES PROFESSIONAL GOLF 1 KOREA LADIES PROFESSIONAL GOLF (JLPGA)
. Renewed pro-sponsoring strategies to recruit additional young and uprising athletes in Asia with visible social media followings • To further enhance HONMA's tour presence in Asia with performance- driven audience, especially younger and avid golfers amid the promising trend of golf development in Asia TEAM HONMA IN MARKETING AND CUSTOMER ACTIVITIES TEAM HONMA WINNING CHAMPIONSHIP IN PROFESSIONAL TOURS 023/2024 INTERIM RESULT 20 <F> RE-DEFINING HONMA: DYNAMIC, MODERN, GLOBAL TO DRIVE BRAND AWARENESS ACROSS ALL MARKETS OTHER BRAND PR & MEDIA EXPOSURE . Actively reinforcing HONMA's brand image being premium, performance-driven, dynamic and modern through multiple media from golf magazines, TV channels, talk shows advertisement, etc. Honma's 757 VX 5-iron, and I ber youtube.com BERES Nx: Elevating the New Generation of Golfers // HONMA Golf 023/2024 INTERIM RESULT 21 FINANCIAL REVIEW 023/2024 INTERIM RESULT RESILIENT PERFORMANCE AND CONTINUOUS BOTTOM LINE GROWTH UNDER A CHALLENGING ENVIRONMENT THANKS TO STEADFAST EXECUTION OF GROWTH STRATEGIES NET PROFIT 1H FY2021 1H FY2022 1H FY2023 1H FY2024 ■■ ■■Net Profit —Net Profit Margin 23/2024 INTERIM RESUL EBITDA 23 CONTINUOUS OPEX OPTIMIZATION TO ENHANCE EFFICIENCY AS WELL AS TO MITIGATE THE NEGATIVE IMPACT FROM GLOBAL INFLATION SG&A EXPENSES BRIDGE JPY MM SG&A EXPENSES BREAKDOWN AS % OF SALES 3/2024 INTERIM RESUL 
マングラッ
かわり
■ Employee benefits ■ A&P Expenses 1H FY2024 ■ Other Selling Expenses ■ Administrative Expenses ■ Depreciation of right-of-use assets ■ Rental Fees 24 HEALTHY BALANCE SHEET AND STRONG OPERATING CASHFLOW TO ENSURE STEADY AND SUSTAINABLE GROWTH AMIDST UNCERTAIN MACRO ENVIRONMENT NET OPERATING CASH FLOW JPY MM INTEREST-BEARING LIABILITIES JPY MM -6.4% CASH ON HAND INTEREST-BEARING LIABILITIES / TOTAL EQUITY % 44.0% 1H FY2021 23/2024 INTERIM RESULT 25
RECEIVABLES TURNOVER DAYS (1) DAYS PAYABLES TURNOVER DAYS (1) DAYS INVENTORY TURNOVER DAYS  『 DAYS
■ Raw Materials ■ WIP ■ Finished Goods 68 1H FY2022
23/2024 INTERIM RESULT Note (1) Turnover days are calculated using the average of the opening and closing balance of the relevant periods 2023/2024 INTERIM RESULTS
APPENDIX 27
STEADY AND QUALITY GROWTH IN MULTIPLE PRODUCT CATEGORIES FOLLOWING FURTHER MARKET REOPENING ■ Japan ■ Korea ■ China(Including Hong Kong and Macau) ■ Other Regions ■ North America ■ Europe 8/2024 INTERIM RESUL NET SALES JPY MM 4,173 1H FY2023 1H FY2024
MARKET
•     2nd largest golf equipment market in the world •    Total golf product market size approximates to USD 1.7 billion in 2021 (1) • 2,200 golf facilities, representing half of the total facilities in Asia (1) • Around 8.5 million golf population (1) •    Hideki Matsuyama's win in the US Masters Championship in Apr 2021 is seen to be a boost for Japan's golf market 1H FY24 HALF YEAR PERFORMANCE HIGHLIGHT NET SALES +5.6% • Golf club sales +20.1% . Strong recovery in consumer sentiment following market reopening and coming back of overseas travelers •   Focused marketing campaigns and Pro-endorsement program targeting premium-performance consumer segment Note (1)   2021 Yano's White Paper on Golf Industry, Japan 28
ONGOING CHANNEL OPTIMIZATION AIMING TO FUEL THE UPCOMING PRODUCT LAUNCH IN SPRING 2024 % of Total Sales ■ Japan ■ Korea ■ China(Including Hong Kong and Macau) ■ Other Regions ■ North America ■ Europe
MARKET
•    Fast growing and under-penetrated market •  3rd largest golf equipment market in the world with USD 650 million equipment sales in 2018 (1) . 6.3 million of golf population, around 12% of total population in Korea ( 2 ) 1H FY24 HALF YEAR PERFORMANCE HIGHLIGHT NET SALES -7.0% . Sales decrease was mainly due to the Group's decision to implement channel adjustment prior to the new product launch in 2024 •    Nevertheless, the country specific club sales in Korea +108.7% as sales and marketing efforts invested in the latest generation of Kiwami series, a special BERES model that customized for Korea market and well- received by Korean golfers for years Note (1) Source : KGPA, Korea Golf Association 2017 (2) Source: World Bank, South Korea population in 2021 is 51,74 million 8/2024 INTERIM RESUL NET SALES JPY MM
MEANINGFUL 5.10 APPAREL AND E-COMMERCE GROWTH ALBEIT WEAKENED CONSUMER SENTIMENT ■ Japan ■ Korea ■ China(Including Hong Kong and Macau) ■ Other Regions ■ North America ■ Europe 1H FY2023   1H FY2024 1H FY2023      1H FY2024 Mainland China Hong Kong/ Macau
MARKET
. Dynamic market with an exciting uptrend in outdoor sports . Emerging and fast growing golf industry . 478 golf courses, expanding indoor facilities, around 1 million core golf population(1) . Solid and growing demand in active wear and fashion-athletic apparel 1H FY24 HALF YEAR PERFORMANCE HIGHLIGHT MAINLAND CHINA NET SALES -13.0% . Golf club sales -26.3% under the economic slowdown and weakened consumer sentiment Apparel sales +21.4% thanks to the enriched product lines designed for a wider range of target groups to include not only golf players but also the fast-growing urban outdoor lovers •    ‘Flagship Store Plan’ – iconic stores set up as brand showroom at prime locations in the first tier cities with upgraded visual display . Active digital marketing campaigns and E-commerce strategies Note (1) Source : Forward Golf White Paper Report 2020 3/2024 INTERIM RESUL NET SALES JPY MM
3,926

NEW MARKET NORTH AMERICA BUILDING A UNIQUE DIRECT-TO-CUSTOMER DISTRIBUTION MODEL TO CAPTURE SUPER PREMIUM AND PREMIUM PERFORMANCE SEGMENT % of Total Sales ■ Japan ■ Korea ■ China(Including Hong Kong and Macau) ■ Other Regions ■ North America ■ Europe NET SALES JPY MM 565
MARKET
•    Largest golf market in the world with 45% of the global golf economy( 1 ) . . 2018 golf equipment sales approximates to USD 4.3 billion by forecast ( 1 ) Around 24 million golf participants (1) •     Double-digit YOY increase in national rounds played and new participation at all time high after market re-opening in 2H FY21 1H FY24 HALF YEAR PERFORMANCE HIGHLIGHT NET SALES -40.7% • POS -110 to 235 in total . Sales decline following the ongoing adjustment in distribution network in the US; such adjustment aims to shift the focus of operation on  a smaller yet premier group of accounts Note (1) Source : World Golf Report 2021 8/2024 INTERIM RESUL 31
NEW MARKET EUROPE IMPROVED MARGIN FOLLOWING CHANNEL ADJUSTMENT % of Total Sales ■ Japan ■ Korea ■ China(Including Hong Kong and Macau) ■ Other Regions ■ North America ■ Europe 3/2024 INTERIM RESUL NET SALES JPY MM 1H FY2023 1H FY2024
MARKET
•    Mature but fragmented golf market . England, Austria, Germany, France and Sweden in total accounts for around 12% of the world's golf equipment sales, which approximates to USD 1 billion (1) 1H FY24 HALF YEAR PERFORMANCE HIGHLIGHT NET SALES -52.5% • POS +45 to 80 in total . Sales decline due to the negative impact from the change to the distribution model implemented last year . Number of POS came back to a well-shaped 80 with a smaller but premier group of retail partners to pursue both sturdy growth and profitability in the region Note (1) Source : KGPA, Korea Golf Association 2017
(1) Operating profit is derived from profit before tax by (i) subtracting other income and gains, (ii) adding other expenses, and (ii)adding RSU expenses. (2) Net operating profit is derived from net profit by (i) subtracting other income and gains, (ii) adding other expenses, (iii) adding RSU expenses and (iv) adding impact o 3/2024 INTERIM RESULT
23/2024 INTERIM RESULTS 34
23/2024 INTERIM RESULT HQWA For more inquiries Please contact ir@honma.hk