ClubLink Corporation

ClubLink Corporation

March 01, 2005 13:06 ET

ClubLink Announces Year End Results and Dividend Increase


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: CLUBLINK CORPORATION

TSX SYMBOL: LNK

MARCH 1, 2005 - 13:06 ET

ClubLink Announces Year End Results and Dividend
Increase

KING CITY, ONTARIO--(CCNMatthews - March 1, 2005) - ClubLink Corporation
(TSX:LNK) announced operating results for the fourth quarter and year
ended December 31, 2004. For the year ended December 31, 2004, operating
revenue increased 10.1% to $121,860,000 from $110,729,000 in 2003, and
net operating income increased 21.2% to $28,603,000 from $23,599,000 in
2003. Net membership fee income increased 17.5% to $6,201,000 from
$5,278,000. Net loss increased to $2,288,000 from $811,000 in 2003. Loss
per share for the year ended December 31, 2004 increased to 13 cents
from 4 cents in 2003. Cash flow from operations per share was $1.21
compared to $1.24 in 2003.



For the 3 Months Ended For the Year Ended
December 31, December 31, December 31, December 31,
Financial 2004 2003(1) 2004 2003(1)
Highlights

Operations
Operating revenue
($000) 20,957 18,395 121,860 110,729
Net operating
income ($000)(2) 1,646 1,020 28,603 23,599
Operating
margin (%)(2) 7.9 5.5 23.5 21.3

Net membership
fee income
($000)(2) 1,530 1,541 6,201 5,278

EBITDA ($000)(2) 3,176 2,561 34,804 28,877

Net loss ($000) (4,389) (4,322) (2,288) (811)

Cash flow
(deficiency)
from operations
($000)(2) (797) 551 21,092 22,792

Membership Data
Sales and transfer
fees ($000) 2,996 2,205 19,787 24,223
Sales (Golf
Members) 179 108 1,296 1,543
Resignations and
terminations
($000) 1,097 721 2,609 2,293
Resignations and
terminations
(Golf Members) 174 99 371 310
Cash collected, net
of origination
costs ($000) 2,444 2,570 14,867 14,694
Deferred membership
fees, net
(at end of period)
($000) 30,664 21,998
Golf members
(at end of period) 11,889 10,964

Per Common Share Data ($)
Loss per share (0.25) (0.23) (0.13) (0.04)
Cash flow (deficiency)
from operations
per share(2) (0.04) 0.04 1.21 1.24
Dividends per share 0.035 0.03 0.14 0.12
Net book value per
share (at end
of period)(2) 10.40 10.56

Common Share Data
Common shares
outstanding
(at end of period) 17,176 17,905
Weighted average
common shares
outstanding 17,396 18,444



2004 Operating Highlights

Operating revenue increased 10.1% to $121,860,000 from $110,729,000 in
2003, primarily due to a 14.5% increase in annual dues revenue and
ancillary spending from the 925 members that joined during the year.

Operating expenses and cost of goods sold increased 8.4% to $81,733,000
in 2004 from $75,389,000 in 2003 due in part, to the addition of
National Pines Golf Club, Glencairn Golf Club and the Talon course at
GreyHawk Golf Club which all opened for play during 2004 and increases
in non-discretionary expenses such as insurance - 14%, utilities - 10%
and property taxes - 14%.

Sales and marketing expenses increased 10.8% to $3,366,000 in 2004 from
$3,038,000 in 2003. The increase in 2004 was due to the sponsorship
costs incurred in connection with hosting the 100th Anniversary of the
Bell Canadian Open in September 2004 at Glen Abbey Golf Club and the
TELUS Skins Game in July 2004 at Fontainebleau Golf Club.

General and administrative expenses and provincial capital taxes
decreased 6.3% to $8,158,000 in 2004 from $8,703,000 in 2003. The
decrease in 2004 is principally due to the retirement of Bruce Simmonds,
ClubLink's Chief Executive Officer, in January 2004 and the charging of
his retirement arrangements to other expense.

Net operating income increased 21.2% to $28,603,000 in 2004 from
$23,599,000 in 2003. The operating margin increased to 23.5% in 2004
from 21.3% in 2003. The increase in net operating income in 2004 was
driven by the 8.4% increase in golf members, the successful opening of
Glencairn Golf Club, National Pines Golf Club and the Talon course at
GreyHawk Golf Club, the 100th Anniversary of the Bell Canadian Open held
in September 2004 at Glen Abbey and the Telus Skins Game in July 2004 at
Fontainebleau.

Total Golf Members increased 8.4% to 11,889 on December 31, 2004 from
10,964 on December 31, 2003. Membership sales decreased to $16,304,000
(1,296 members) from $16,738,000 (1,543 members) in 2003. The average
price of a new membership was $12,580 compared to $10,848 in 2003.
Transfer fees generated by existing members declined to $3,483,000 from
$7,485,000 in 2003 primarily due to ClubLink's successful 10th
anniversary transfer program held in 2003. Resignations and terminations
increased to $2,609,000 (371 members) from $2,293,000 (310 members) in
2003. Installments received in cash increased to $16,534,000 from
$15,997,000.

Net membership fee income increased 17.5% to $6,201,000 in 2004 from
$5,278,000 in 2003 due to the 925 additional members that joined during
the year.

Earnings before interest, taxes, amortization and other increased 20.5%
to $34,804,000 from $28,877,000 in 2003.

Loss per share in 2004 increased to 13 cents per share from 4 cents per
share in 2003 primarily due to the charge of $2,600,000 to other expense
relating to Mr. Simmonds' retirement arrangements.

Changes in Accounting Policy

(a) Convertible Debentures

The Canadian Institute of Chartered Accountants (the "CICA") has amended
the standard on presentation of financial instruments. The amendment
requires obligations that can be settled by delivery of a number of the
issuers' own equity instruments, where the number depends on the amount
of the obligations, to be presented as liabilities. The amendment is
effective for years beginning on or after November 1, 2004, with earlier
adoption encouraged. ClubLink has adopted this change for 2004.

(b) Direct Costs of Originating Membership fees

As part of new guidance established by the CICA on the accounting for
advertising costs, as contained in CICA Emerging Issues Abstract No. 141
- Revenue Recognition. ClubLink has changed on a retroactive basis, its
accounting policy to expense all direct costs of originating membership
fees. This accounting policy change is retroactive to 2002. Since 2002,
these costs were deferred to match them against the recognition of
deferred membership fee revenue.

The combined impact of these accounting policy changes has been to
decrease 2003 earnings per share by 6 cents to a loss of 4 cents.
Earnings per share for the nine months ended September 26, 2004 declined
5 cents to 12 cents as a consequence of these changes. These changes had
no impact on cash flow from operations per share in these periods.

Dividend

The Board of Directors has declared a dividend of 4 cents per common
share payable April 15, 2005 to shareholders of record on March 31,
2005. This represents a 14.3% increase in the annual dividend.

Normal Course Issuer Bids

On January 27, 2005, ClubLink announced a normal course issuer bid,
expiring on January 26, 2006 to purchase up to 858,700 common shares of
ClubLink. As of March 1, 2005, ClubLink has not repurchased any common
shares for cancellation under this bid. The number of common shares
issued and outstanding is 17,175,789.

On September 20, 2004, ClubLink announced a normal course issuer bid,
expiring on September 21, 2005 to purchase up to $7,139,000 principal
amount of its 6% convertible unsecured subordinated debentures. As of
March 1, 2005, ClubLink has not repurchased any convertible debentures
for cancellation under this bid. The principal amount of convertible
debentures outstanding is $75,184,000.

ClubLink is Canada's largest owner, operator and developer of golf clubs.

(1) Prior year amounts have been restated to give effect to the changes
in accounting policy for convertible debentures and direct costs of
originating membership fees.

(2) Net operating income, operating margin, net membership fee income,
earnings before interest, taxes, amortization and other, cash flow
(deficiency) from operations, cash flow (deficiency) from operations per
share and net book value per share are not recognized measures under
Canadian generally accepted accounting principles (GAAP). Management
believes that these measures are useful supplemental information.
Investors should be cautioned, however, that these measures should not
be construed as an alternative to net income (loss) determined in
accordance with GAAP as an indicator of the Company's performance or to
cash flows from operating, investing and financing activities, as a
measure of liquidity and cash flows. The Company's method of calculating
these measures is consistent from year to year, but may be different
than those used by other companies.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    ClubLink Corporation
    Mr. Robert Visentin
    Chief Financial Officer
    (905) 841-5360
    rvisentin@clublink.ca
    or
    ClubLink Corporation
    Mr. Robert Poile
    President & CEO
    (905) 841-3730
    rpoile@clublink.ca
    or
    ClubLink Corporation
    15675 Dufferin Street
    King City, Ontario L7B 1K5
    www.clublink.ca