Club Link Annual Report - 2010

15675 Dufferin Street,King City, Ontario,Canada L7B 1K5

Tel 905 841 3730Fax 905 841 1134

CLUBLINKENTERPRISESLIMITED

Your Passport tomore !

Clubhouse at Club Renaissance

ANNUAL REPORT 2010

Photo courtesy of The Greg Wilson Group

CONTENTS1 Financial Highlights2 Chairman’s Message4 ClubLink Establishes a Florida Region5 Heron Bay Golf Club – Florida6 ClubLink in Sun City Center – Florida8 Glendale Joins ClubLink

10 Your Passport to More Excitement at White Pass12 Map of Canadian Golf Club and Resort Locations13 Golf Club and Resort Property Listing14 Management’s Discussion and Analysis of Financial Condition and Results of Operations47 Management’s Responsibility for Financial Reporting47 Independent Auditor’s Report48 Consolidated Balance Sheets49 Consolidated Statements of Earnings and Comprehensive Earnings49 Consolidated Statements of Retained Earnings and Accumulated Other Comprehensive Loss50 Consolidated Statements of Cash Flows51 Notes to Consolidated Financial Statements73 Board of Directors, Senior Officers, Corporate Information and Location of Annual Meeting of Shareholders

ClubLink Enterprises Limited has a strategic objective tomaximize shareholder value over a five to ten year horizon,though the Company may monetize an investment when businessconditions present a suitable opportunity.

ClubLink is engaged in golf club and resort operations underthe trademark “ClubLink One Membership More Golf”. ClubLinkis Canada’s largest owner and operator of golf clubs with 48½,18-hole equivalent championship and six 18-hole equivalentacademy courses at 41 locations, primarily in Ontario, Quebecand Florida.

ClubLink is also engaged in rail, tourism and port operationsbased in Skagway, Alaska, which operates under the trade name“White Pass & Yukon Route.” The railway stretches approximately177 kilometres (110 miles) from Skagway, Alaska, through BritishColumbia to Whitehorse, Yukon. In addition, ClubLink operatesthree docks primarily for cruise ships.

BOARD OF DIRECTORS SENIOR OFFICERS

PATRICK S. BRIGHAM (b, c)

PAUL CAMPBELL (b, c)

DAVID A. KING (a)

JOHN LOKKER (a)

SAMUEL J.B. POLLOCK (a, b)

K. (RAI) SAHI

DONALD W. TURPLE (c)

JACK D. WINBERG (b, c)

(a) Audit Committee

(b) Corporate Governance and Compensation Committee

(c) Environmental, Health and Safety Committee

ClubLink Enterprises Limited

K. (RAI) SAHIChairman and Chief Executive Officer

ROBERT VISENTINChief Financial Officer

EUGENE N. HRETZAYVice President, General Counsel and SecretaryPresident, White Pass and Yukon Route

ROBERT WRIGHTVice President

Golf Club and Resort Operations

EDGE M. CARAVAGGIOVice President, Operations

SCOTT DAVIDSONVice President, Corporate Operations

CHARLES F. LORIMERVice President, Sales & Marketing

NEIL E. OSBORNEVice President, Clubhouse Operations

Rail, Tourism and Port Operations

MICHAEL D. BRANDTSenior Vice President, Planning & Administration

ED C. HANOUSEKSuperintendent, Rail Operations

Annual Meeting of ShareholdersAnnual Meeting of Shareholders of ClubLink EnterprisesLimited will be held at 11 a.m. on May 19, 2011 at King ValleyGolf Club, 15675 Dufferin Street, King City, Ontario, L7B 1K5.

CORPORATE INFORMATION

Executive Office15675 Dufferin StreetKing City, Ontario L7B 1K5Tel: (905) 841-3730Fax: (905) 841-1134

Websites:clublinkenterprises.ca/comclublink.ca/comwpyr.com

Investor RelationsContact: Robert VisentinTel: 905-841-5360Fax: 905-841-1134Email: [email protected]

BankersHSBC Bank CanadaWells Fargo Bank Alaska

AuditorsDeloitte & Touche LLP

Stock Exchange ListingsCommon shares: TSX: CLK

Transfer AgentCanadian Stock Transfer Company, Inc.

CLUBLINK ENTERPRISES LIMITED ANNUAL REPORT 2010

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FINANCIAL HIGHLIGHTS

The following table summarizes the consolidated financial results of the Company:

For the Years Ended December 31 2010 2009 2008 2007 (4) 2006 (4)

OPERATIONSOperating revenue ($000) 189,903 190,212 196,532 160,710 40,506

Net operating income ($000) (1) 49,858 51,437 55,035 50,595 18,589

Operating margin (%) (1) 26.3 27.0 28.0 31.5 45.9

Net membership fee income ($000) (1) 13,781 12,829 12,327 6,724 –

Earnings before other items, income taxes andnon-controlling interest ($000) (1) 63,639 64,266 67,362 57,319 18,589

Net earnings ($000) 11,842 11,155 6,125 8,869 18,071

Cash flow from operations ($000) (1) 36,299 27,912 35,516 40,873 25,332

OPERATING DATA

ClubLink One Membership More Golf

Championship rounds – Canada (2) 1,064,000 1,020,000 975,000 1,004,000 886,000

18-hole equivalent championship golf courses – Canada (2, 3) 40.5 40.5 38.5 38.5 35.0

Average number of championship roundsper 18-hole golf course – Canada (2, 3) 26,272 25,185 25,325 26,078 25,314

Championship rounds – U.S. (2) 58,000 11,000 13,000 14,000 13,000

18-hole equivalent championship golf courses – U.S. (2, 3) 7.0 1.0 1.0 1.0 1.0

White Pass & Yukon Route

Rail passengers 368,000 396,000 438,000 461,000 431,000Port passengers from cruise ships 697,000 781,000 779,000 820,000 760,000

MEMBERSHIP DATA

Sales and transfer fees ($000) 9,752 15,214 15,225 23,399 18,182

Sales (Members) 1,456 1,477 1,194 2,230 1,001

Resignations and terminations ($000) 4,726 4,595 3,685 2,893 2,624

Resignations and terminations (Members) 1,100 1,075 766 513 599

Golf Members at year end (Members) 18,917 17,049 16,647 16,219 14,502

Cash collected, net of origination costs ($000) 11,803 11,951 15,514 12,248 –Deferred membership fees at year end ($000) 57,356 59,334 60,212 57,025 –

FINANCIAL POSITION

Total assets ($000) 611,412 627,753 641,300 626,765 154,378

Total debt ($000) 359,813 375,702 388,692 380,371 21,706

Shareholders’ equity ($000) 155,797 154,560 109,625 104,188 112,407Total debt to shareholders’ equity ratio 2.31 2.43 3.55 3.65 0.19

PER COMMON SHARE DATA ($)

Basic and diluted earnings 0.42 0.44 0.27 0.39 0.79

Basic and diluted cash flow from operations (1) 1.30 1.11 1.55 1.79 1.10Eligible cash dividends 0.30 0.27 0.24 0.24 0.24

COMMON SHARE DATA (000)

Shares outstanding 27,903 28,057 22,909 22,739 22,939Weighted average shares outstanding 27,976 25,113 22,887 22,784 22,933

(1) Net operating income, operating margin, net membership fee income, earnings before other items, income taxes and non-controlling interest, cash flow from operations, and basicand diluted cash flow from operations per share are not recognized measures under Canadian generally accepted accounting principles (GAAP). Management believes that thesemeasures are useful supplemental information. Investors should be cautioned, however, that these measures should not be construed as an alternative to net earnings determinedin 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.ClubLink’s method of calculating these measures is consistent from year to year, but may be different than those used by other companies (see “Management’s Discussion andAnalysis of Financial Condition and Results of Operations”).

(2) Excluding academy courses.

(3) 18-hole equivalent championship golf courses operating during the year ended December 31, excluding Glendale Golf and Country Club (acquired December 2010).

(4) The 2007 results include the consolidation of ClubLink Corporation’s results for seven months. During 2006, the investment in ClubLink Corporation was accounted for as an equityinvestment. Operating and Membership data for ClubLink Corporation display 100% of the operating results, consolidation commenced in 2007.


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CHAIRMAN’S MESSAGE

Your Passport to

ClubLink ended the year at 18,917 golf members – up 1,868 golfmembers or 11% from 17,049 golf members at the end of 2009.Our golf membership has grown by almost five thousand members(or 34%) over the last five years.

K. (Rai) SahiChairman & ChiefExecutive Officer

2010 represented a year of opportunity. On September 3rd, ClubLink announced that it had entered the Florida marketplace bypurchasing eight 18-hole equivalent golf courses in Sun City Center, Florida. This acquisition was supplemented by the acquisitionof Heron Bay Golf Club near Fort Lauderdale on October 21st. These acquisitions created ClubLink’s first region outside of Canada.

Driven by a depressed Florida real estate market with plenty of opportunities and our desire to continually add value to our Canadiangolf memberships, these acquisitions represent the beginning of ClubLink’s presence and operating model in Florida.

We believe that the Florida golf market is a logical extension to our current Ontario/Quebec focus. Based on our members surveys, manyof our Canadian members travel to Florida on golf vacations, have winter homes in the state or will be purchasing a vacation home in thenear future. This will allow them to receive additional value from their current ClubLink membership.

Late in 2010, ClubLink acquired Glendale Golf and Country Club in Hamilton, Ontario. Glendale was founded in 1919and was one of the first private golf clubs in the Hamilton area. Glendale will provide a natural complement to nearby Heron Point GolfLinks in Ancaster.

ClubLink’s strong financial position has allowed this expansion. After spending $13 million on these acquisitions, we closed the year withliquidity of $41 million, virtually unchanged from the end of 2009. Our debt to equity ratio also declined from 2.43 in 2009 to 2.31in 2010.

We believe that our balance sheet has allowed us to continue to expand in a prudent manner.

ClubLink was able to realize strong growth in its golf club and resort operations segment during 2010. Net operating income increased8.2% to $35.2 million from $32.6 million in 2009. Even with the loss of a strong contribution from the 2009 RBC Canadian Open, hostedby Glen Abbey Golf Club, we were able to capitalize on the modest economic recovery from the 2009 recession which provided increasesin most operational metrics.

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Other operational highlights for thegolf club and resort operations in2010 included:

• The opening of a new $5 millionclubhouse at the 36 hole GreyHawkGolf Club at the beginning of the2010 golf season. This investmenthas enhanced the value of anOttawa area membership;

• The inaugural 2010 MontrealChampionship (Champions TourEvent) was successfully hosted atour Club de Golf Le Fontainebleau.Plans are already in place for thereturn of this event in 2011; and

• The conversion of the 18-holechampionship daily fee golf courseat Rolling Hills Golf Club into aHybrid-Silver Golf Club named“Bethesda Grange”.

Rail, tourism and port operations netoperating income decreased to $17.3million in 2010 from $20.6 millionin 2009.

The rail, tourism and port operationresults were impacted by two factors.Significantly fewer cruise ship visits toAlaska resulted in a decline in portpassengers to our docks in Skagway,Alaska and therefore a decline in ourrail passengers. Secondly, a strongerCanadian dollar resulted in a declineof $1.3 million in the segment’sCanadian dollar net operating income.

The decline in cruise ship visits was areaction to the State of Alaska HeadTax imposed on each cruise ship tourist.With the partial repeal of this tax in2010, we expect to see modestincreases in cruise ship visits startingin 2011. The arrival of Disney, Crystaland Oceania cruise lines to Alaska in2011 are exciting new additions to theAlaskan tourism market. These new2011 additions will offset previouslyannounced reductions of 6% over2010 sailings.

Helping to offset these factors wasan improved capture rate and loweroperating costs. The capture rate ofcruise passengers to rail passengersincreased to 43.2% from 40.8% in2009. A decline of 5.1% in US dollaroperating costs helped to offset theoperating revenue decrease in 2010.

Two repowered locomotives wereadded to the fleet in 2010 with anadditional two being added in theSpring of 2011 bringing the totalrepowered locomotives in our fleetto six. Repowered locomotives reducefuel emissions by 90% and are alsosignificantly more efficient – tworepowered locomotives do the samework as three older locomotives, withsignificant savings in fuel and repairsand maintenance costs.

Consolidated EBITDA for 2010declined 1.0% to $63.6 million from$64.3 million in 2009 due to thedecline in the net operating incomefrom rail, tourism and port operationsin US dollars and a stronger Canadiandollar. These declines were offset byimproved operating results from thegolf club and resort operations.

Decreases in other categories suchas amortization, interest and otherexpense helped to improve netearnings to $11.8 million in 2010from $11.2 million in 2009. Earningsper share declined to 42 cents from44 cents in 2010.

Effective strategy and prudentmanagement has resulted in a numberof positive metrics over the last threeyears. The business combination in2009 which privatized ClubLinkCorporation has been a majorcontributor to improving ourresults since the end of 2007:

• Net earnings increased 93%;

• EPS increased 56%;

• Cash dividends per shareincreased 25%; and

• Debt to equity ratio declined 37%.

Overall, 2010 was a year in whichwe were able to capitalize oncertain opportunities in the Floridamarketplace to add value to our golfmembers and to you, our shareholders.As we expand in this marketplace andour strategy takes hold, we expect tosee the results of this strategy helpdrive the above metrics even more.

In closing, I would like to thank allour employees for their dedicationincluding a special thank you to thoseinvolved with the integration of ourFlorida acquisitions and our directorsfor their counsel and experience duringthese exciting times.

K. (Rai) SahiChairman & ChiefExecutive Officer


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CLUBLINKESTABLISHESA FLORIDA REGION

In the fall of 2010, ClubLink established itsFlorida Region with the acquisition of fiveoperating 18-hole equivalent championshipgolf clubs and two academy golf clubs in SunCity Center, south of Tampa, and the 18-holeHeron Bay Golf Club in Coral Springs, adjacentto Fort Lauderdale.

The Florida Region represents an opportunityto establish a membership base underpinned byClubLink’s unique “one membership, more golf”business model which offers members reciprocalaccess to all of its golf clubs, as well ascapitalizing on the increasing number ofCanadians travelling to and buying secondhomes in Southern Florida.

To maximize this opportunity, our TravelLinkprogram was launched, which providesOntario/Quebec Region members with reciprocalaccess to ClubLink golf clubs in the Florida Region,and vice versa. The program offers a variety ofoptions, including one whereby members canjoin a “second home club” in another region,an attractive choice for Canadian snowbirds.

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FLORIDA

Your Passport to

ACADEMY CLUB

SILVER MEMBER CLUB

GOLD MEMBER CLUB

HYBRID-PLATINUM CLUB

Championship AcademyFlag # Golf Holes Golf Holes

FLORIDA GOLF CLUBSHybrid-Platinum1 Club Renaissance, Sun City Center 18 –2 Heron Bay Golf Club, Coral Springs 18 –Gold3 Scepter Golf Club, Sun City Center 18 –Silver4 Falcon Watch Golf Club, Sun City Center 27 –5 Sandpiper Golf Club, Sun City Center 27 –Academy6 Caloosa Greens Golf Club, Sun City Center – 187 Kings Point Golf Club, Sun City Center – 18

more golf !

TAMPA

SARASOTA

MIAMI

FORT LAUDERDALE

ORLANDO


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For six years (1997–2002), the PGA Tour’s Honda Classic called Heron Bay home, crowning champions StuartAppleby, Mark Calcavecchia, Vijay Singh, Dudley Hart, Jesper Parnevik and Matt Kuchar.

When the 7,268-yard course opened in 1996 as the TPC at Heron Bay, it was named one of America’s 10 best newpublic golf courses by Golf Digest. Golf Magazine ranks it one of the top 10 daily-fee courses in Florida. Designed by10-time PGA Tour winner Mark McCumber, it is home to the Heron Bay Golf Academy, an outstanding 40-acre practicefacility, and is the home course of the NHL’s Florida Panthers. Heron Bay also plays host to one of America’s oldest andmost prestigious amateur tournaments, the Dixie Amateur, whose fields have featured stars such as Tiger Woods andSergio Garcia.

Heron Bay Golf Club is adjacent to the Fort Lauderdale Marriott Coral Springs Hotel and Convention Center, providingan ideal venue for visiting golfers taking advantage of stay-and-play packages. ClubLink members receive preferredpricing when staying at the hotel.

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HERON BAY GOLF CLUB


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ClubLink’s initial foray into Florida was the acquisitionin September 2010 of the courses in Sun City Center,Florida approximately 50 kilometres (30 miles) southof Tampa. The operating championship golf clubs areClub Renaissance (18 holes), Sandpiper Golf Club (27holes), Scepter Golf Club (18 holes), and Falcon WatchGolf Club (27 holes). Two 18-hole academy (executive-length) clubs were also included: Kings Point Golf Cluband Caloosa Greens Golf Club. North Lakes Golf Club,which was closed in 2009, was also part of theportfolio, as was an undeveloped two-acre parcelof commercially zoned land.

The jewel in the Sun City Center crown is ClubRenaissance. The excellent 6,700-yard golf course,designed by Chip Powell in 2002, is complemented bya stunning 43,000 square-foot Mediterranean-inspiredclubhouse. Clubhouse amenities include a largeswimming pool and hot tub, full-service spa with fiveservice rooms, and a two-room wellness centre withthe latest in fitness equipment, personal training andexercise classes. There are two dining rooms, each of2,700 square feet, an 800 square-foot golf shop, andcovered patio.

Within the ClubLink family, Club Renaissance is a hybridgolf club, combining Platinum-level membership withpremium daily-fee golf.

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CLUBLINK IN SUN CITY CENTERScepter Golf Club, a Chip Powell design that openedin 2005, is 6,717 yards in length. It features numerouswater hazards, strong bunkering and pushed-up greensites with roll-off collars and swales that demandaccurate approach shots. Scepter is a Gold-levelmember club.

Sandpiper Golf Club is comprised of three nine-holecourses, each with a par of 36: The Lakes (3,258yards), the Oaks (3,154 yards) and the Palms (3,170yards). The original 18 holes, designed by MarkMahanna, were built in 1968. Renowned Floridaarchitect Ron Garl designed the third nine in 1985.

Garl designed all three nines at Falcon Watch: Sands(par 36, 3,210 yards), Cypress (par 36, 3,265 yards),and Challenge (par 36, 3,280 yards). They opened in1981, 1984, and 1988, respectively.

Both Sandpiper and Falcon Watch are ClubLinkSilver-level clubs.

ClubLink members visiting Sun City Center receivepreferred pricing on accommodations at the nearbyResort and Club at Little Harbor.

Photos courtesy of The Greg Wilson Group


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Photos courtesy of The Greg Wilson Group


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GLENDALE JOINS CLUBLINK

On December 15th, ClubLink announced it had acquiredGlendale Golf and Country Club in Hamilton, Ontario.Glendale became ClubLink’s 23rd golf club in the GreaterToronto Area, and brought the Company’s total golf clubportfolio to 48.5 18-hole equivalent championship coursesand six 18-hole equivalent academy courses.

Glendale, founded in 1919, was one of the first private clubsin the Hamilton area. More than 500 of the club’s originalmembers volunteered over several months to build the course,which has had a vigorous and entertaining history. Forexample, found on the property is Smugglers Cave, abrick-lined cavern purported to be used by rumrunnersduring Prohibition.

Glendale has been the site of many important amateur andprofessional tournaments, including the 2001 Canadian PGAWomen’s Championship won by Lorie Kane in brilliantfashion, as she shot a final-round 63, a competitive courserecord that still stands today.

At 6,321 yards, the par-72 Glendale courseis not overly long by modern standards but thetree-lined fairways and elevation changes makeit a challenging experience for golfers of allabilities. Several holes on the front nine wereredesigned in 2005 by well-known Canadianarchitect Ian Andrew.

The classic clubhouse is home to a 300-seatbanquet facility in addition to the usual amenitiesand a six-sheet curling rink built in 1960.

Within the ClubLink family, Glendale iscategorized as a Gold-level Member Club.

Photos courtesy of Brent Long


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Photos courtesy of Brent Long


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Three new high-end luxury cruise lines — Disney, Crystaland Oceania — will be coming to Alaska and Skagwayin 2011, adding nearly 54,000 passengers, offsettingpreviously announced reductions by Holland Americaand Princess.

Disney will dramatically change the demographics of themarket by bringing over 40,000 passengers — many ofthem children — to Skagway aboard the Disney Wonder.As a result, White Pass will develop new product offeringsand marketing materials that are family-centric, interactiveand educational.

One of the key programs will be the exclusive youthactivity car available as an upgrade for families. This isan enhanced round trip Summit Excursion. Once arrivedat the Summit, kids will be escorted to their exclusiveactivity car for the southbound journey of sing alongs,I-Spy, activities and stories of the Klondike Gold Rush.On their private car, they’ll be joined by an exclusiveRailroader Guide. Meanwhile, the rest of the familywill enjoy a champagne toast and receive a souvenirmedallion, to welcome them into the “White PassSummit Club”.

YOUR PASSPORT TOMORE EXCITEMENT AT WHITE PASS


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During the last week of April 2011, White Pass will hosta historic event: the clearing of the line with our historicrail equipment. Rotary Snowplow No. 1 built for WhitePass in 1898, by the Cooke Locomotive and MachineryCompany of Paterson, New Jersey, will head the RotaryFleet. Behind Rotary Snowplow No. 1 will be SteamEngine No. 73, a fully restored 1947 Baldwin 2-8-2Mikado Class steam locomotive joined by No. 69,a Baldwin 2-8-0 built for White Pass in 1907.

Media, railfans, and other guests will travel behindthe Rotary Fleet on a chase train consisting of diesellocomotives and comfortable, vintage passengercoaches. Throughout the adventure, passengers willhave the opportunity to disembark their train, wheresafety allows, to capture the Rotary Snowplow hard atwork, a view rarely seen by anyone but our locomotiveengineers and our maintenance-of-way workers. TheRotary Snowplow with its 10 huge blades pushes andclears heavy winter snow accumulations of up to 12 feetsending the snow flying out to the side of the tracks bycentrifugal force in spectacular fashion.

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DAILY FEE CLUB

RESORT

SILVER MEMBER OR HYBRID CLUB

GOLD MEMBER OR HYBRID CLUB

PLATINUM MEMBER CLUB

PRESTIGE MEMBER OR HYBRID CLUB

TORONTO LAKE ONTARIO

LAKE ERIE

LONDON

MONTREAL

MONT TREMBLANT

Q U E B E C

O N T A R I O

OTTAWA

PICKERING

HUNTSVILLE

GEORGIAN BAY

Map of Canadian Golf Club and Resort Locations


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Championship Academy Future Current SurplusGolf Holes Golf Holes Golf Holes Rooms Land in Acres

ONTARIO/QUEBEC REGION (see map on page 12)Prestige

1 Greystone Golf Club, Milton, Ontario 18 – – – –2 King Valley Golf Club, The Township of King, Ontario 18 – – – –3 RattleSnake Point Golf Club, Milton, Ontario 36 9 – – –

Hybrid – Prestige4 Glen Abbey Golf Club, Oakville 18 – – – –

Platinum5 Club de Golf Islesmere, Laval, Quebec (a) 27 – – – –6 Club de Golf Le Fontainebleau, Blainville, Quebec 18 – – – –7 DiamondBack Golf Club, Richmond Hill, Ontario 18 – – – –8 Eagle Creek Golf Club, Dunrobin, Ontario 18 – – – –9 Emerald Hills Golf Club, Whitchurch-Stouffville, Ontario 27 – – – –10 Glencairn Golf Club, Milton, Ontario 27 – – – –11 Grandview Golf Club, Huntsville, Ontario 18 – 18 – –12 Heron Point Golf Links, Ancaster, Ontario 18 – – – –13 Kanata Golf & Country Club, Kanata, Ontario 18 – – – –14 Le Maitre de Mont-Tremblant, Mont-Tremblant, Quebec 18 – – – –15 King’s Riding Golf Club, The Township of King, Ontario 18 – – – –16 Rocky Crest Golf Club, Mactier, Ontario 18 – 18 – –17 The Lake Joseph Club, Port Carling, Ontario 18 9 – – –18 Wyndance Golf Club, Uxbridge, Ontario 18 9 – – –

Gold19 Blue Springs Golf Club, Acton, Ontario 18 9 – – –20 Caledon Woods Golf Club, Bolton, Ontario 18 – – – –21 Cherry Downs Golf & Country Club, Pickering, Ontario 18 9 18 – –22 Club de Golf Hautes Plaines, Gatineau, Quebec 18 – – – –23 Club de Golf Val des Lacs, Ste. Sophie, Quebec 18 – – – –24 Eagle Ridge Golf Club, Georgetown, Ontario 18 – – – –25 Glendale Golf and Country Club, Hamilton, Ontario 18 – – – –26 Greenhills Golf Club, London, Ontario (a) 18 9 – – –27 GreyHawk Golf Club, Ottawa, Ontario 36 – – – –28 National Pines, Innisfil, Ontario (a) 18 – – – –29 Station Creek Golf Club, Whitchurch-Stouffville, Ontario 36 – – – –30 The Country Club, Woodbridge, Ontario (a) 36 9 – – –

Hybrid – Gold31 The Club at Bond Head (a) 36 – – – –

Hybrid – Silver32 Bethesda Grange, Whitchurch-Stouffville, Ontario 18 – – – –33 Highland Gate Golf Club, Aurora, Ontario 18 – – – –

Daily Fee34 Grandview Inn Course, Huntsville, Ontario – 9 – – –35 Rolling Hills Golf Club, Whitchurch-Stouffville, Ontario 36 – – – –

MUSKOKA, ONTARIO RESORTS36 Delta Grandview Resort, Huntsville, Ontario – – – 151 –37 The Lake Joseph Club, Port Carling, Ontario – – – 251 –38 Delta Rocky Crest Resort/Lakeside at Rocky Crest, Mactier (b) – – – 84 –39 Delta Sherwood Inn, Port Carling, Ontario – – – 49 –

OTHERLake Chesdin Golf Club, Richmond, Virginia 18 – 18 – –King Haven, The Township of King – – – – 278Harwood, Montreal – – 36 – –

FLORIDA REGION (see map on page 4)Hybrid – Platinum

1 Club Renaissance, Sun City Center, Florida 18 – – – –2 Heron Bay Golf Club, Coral Springs, Florida 18 – – – –

Gold3 Scepter Golf Club, Sun City Center, Florida 18 – – – –

Silver4 Falcon Watch Golf Club, Sun City Center, Florida 27 – – – –5 Sandpiper Golf Club, Sun City Center, Florida 27 – – – –

Other6 Caloosa Greens Golf Club, Sun City Center, Florida – 18 – – 27 Kings Point Golf Club, Sun City Center, Florida – 18 – – –North Lakes Golf Club, Sun City Center, Florida (c) – – 18 – –

Total 18-hole Equivalent Courses, Rooms, Acres 48.5 6.0 7.0 309 280Notes:

(a) Operated by ClubLink under long-term leases.

(b) Delta Rocky Crest Resort consists of 65 units and Lakeside at Rocky Crest consists of 19 units.

(c) North Lakes Golf Club was closed by the previous owner. Management is reviewing alternatives for this facility.

GOLF CLUB AND RESORT PROPERTY LISTING


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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS

This management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction withClubLink Enterprises Limited’s (“ClubLink” or the “Company”) audited consolidated financial statements and accompanying notes for theyear ended December 31, 2010. This MD&A has been prepared as at March 1, 2011 and all amounts are in Canadian dollars unless otherwiseindicated. In this document, unless otherwise indicated, all financial data are prepared in accordance with Canadian Generally AcceptedAccounting Principles (“GAAP”).

Forward-Looking Statements

This annual report contains certain forward-looking information and statements relating but not limited to, operations, anticipated orprospective financial performance, results of operations, business prospects and strategies of ClubLink. Forward-looking information typicallycontains statements with words such as “consider”, “anticipate”, “believe”, “expect”, “plan”, “intend”, “may”, “likely”, or similar wordssuggesting future outcomes or statements regarding an outlook, or other expectations, beliefs, plans, objectives, assumptions, intentions orstatements about future events or performance. Readers should be aware that these statements are subject to known and unknown risks,uncertainties and other factors that could cause actual results, performance or achievements of ClubLink to differ materially from thosesuggested by the forward-looking statements, some of which may be beyond the control of management.

Although ClubLink believes it has a reasonable basis for making the forecasts or projections included in this MD&A, readers are cautionednot to place undue reliance on such forward-looking information. By its nature, ClubLink’s forward-looking information involves numerousassumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts andother forward-looking statements will not occur. These factors include, but are not limited to, availability of credit, weather conditions, theeconomic environment, environmental regulation and competition.

The above list of important factors affecting forward-looking information is not exhaustive, and reference should be made to the other risksdiscussed in ClubLink’s filings with Canadian securities regulatory authorities. ClubLink undertakes no obligation, except as required by law,to update publicly or otherwise any forward-looking information, whether as a result of new information, future events or otherwise, or theabove list of factors affecting this information.

Business Strategy and Corporate Overview

The Company has a strategic objective to maximize shareholder value over a five to ten year horizon, though the Company may monetizean investment when business conditions present a suitable opportunity. The Company acquired its increasing share interest in ClubLinkCorporation from 2001 through July 2009 – with control being acquired and full consolidation commencing on June 1, 2007. ClubLinkCorporation became a wholly-owned subsidiary on July 28, 2009.

The privatization of ClubLink Corporation on July 28, 2009 has provided a stable environment to allow for continued growth and enhancedprofitability from golf club and resort operations. An experienced management team and a strategic focus which offers customers a widevariety of high quality facilities and flexible membership programs has resulted in ClubLink Corporation establishing itself as the golfindustry leader in Canada. Operating synergies and continued cost reduction through economies of scale will improve operating performanceand financial returns.

Management has been actively looking at acquisition opportunities in southern Florida. The Company made two acquisitions in late 2010.The first acquisition involved a portfolio of six 18-hole equivalent championship and two 18-hole academy golf courses in Sun City Center,Florida. The second investment was the purchase of Heron Bay Golf Club in the Fort Lauderdale area. These investments created ClubLink’sfirst region outside of Ontario and Quebec.

ClubLink’s continued investment in programs to build the core operating business at White Pass & Yukon Route (“White Pass”) has historicallybeen the Company’s key to profitability. As a standalone entity, White Pass has an experienced on-site management team and has been ableto generate growth in the passenger traffic and corresponding U.S. dollar revenue since acquisition in 1997. Significant initiatives in thisbusiness segment have included capitalizing on historical relationships with cruise lines, supporting investments to create one of the leadingport facilities in southeast Alaska, investing to repower our locomotive fleet to reduce environmental emissions and ongoing operating costsand continuing to offer Alaska’s premier shore excursion experience to the travelling public.

Overview of Business Segments

ClubLink operates in two distinct business segments: (a) golf club and resort operations and (b) rail, tourism and port operations. In addition,the corporate operations segment oversees the two business segments.

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Overview of Business Segments (cont’d)

The quarterly earnings performance of the Company reflects the highly seasonal nature of both business segments. The majority of operatingrevenue and net operating income from these businesses occur during the second and third quarters of the year. Accordingly, the quarterlyreported net earnings of the Company will fluctuate with those of the underlying business segments. This seasonality will be mitigatedsomewhat by ClubLink’s recent expansion into the Florida marketplace, as the primary golf season in Florida is from November to April.

Golf Club and Resort Operations Segment

ClubLink is engaged in golf club and resort operations under the trademark “ClubLink One Membership More Golf ”. ClubLink is Canada’slargest owner and operator of golf clubs with 48.5, 18-hole equivalent championship and six 18-hole equivalent academy courses, at 41locations primarily in Ontario, Quebec and Florida.

ClubLink’s golf clubs are strategically organized in clusters that are located in densely populated metropolitan areas and resort destinationsfrequented by those who live and work in these areas. By operating in these areas, ClubLink is able to offer golfers a wide variety of uniquemembership, corporate event and resort opportunities. ClubLink is also able to obtain the benefit of operating synergies to maximize revenueand achieve economies of scale to reduce costs.

Revenue at all golf club and resort properties is enhanced by cross-marketing, as the demographics of target markets for each are substantiallysimilar. Revenue is further improved by corporate golf events, business meetings and social events that utilize golf capacity and relatedfacilities at times that are not in high demand by ClubLink’s members.

Member and Hybrid Golf Club revenue is maximized by the sale of flexible personal and corporate memberships that offer reciprocalplaying privileges at ClubLink golf clubs and, on payment of an additional fee, inter-regional play within ClubLink and ClubCorp ofAmerica golf clubs. Daily fee golf club revenue is maximized through unique and innovative marketing programs. Resort revenue ismaximized by the integration of high quality golf facilities, which are recognized throughout the leisure industry as the key amenity forsuccessfully attracting corporate groups and leisure guests.

(a) Canada

ClubLink’s Ontario/Quebec Region is organized into two clusters: the major metropolitan areas of Southern Ontario and Muskoka,Ontario’s premier resort area, extending from London to Huntsville to Pickering, with a particularly strong presence in the Greater TorontoArea; and Quebec/Eastern Ontario, extending from the National Capital Region to Montreal, including Mont-Tremblant, Quebec’s premierresort area.

In 2011, ClubLink will operate 29 Ontario/Quebec Region Member Golf Clubs in three categories as follows:

Prestige: Greystone, King Valley, RattleSnake Point

Platinum: DiamondBack, Eagle Creek, Emerald Hills, Fontainebleau, Glencairn, Grandview, Heron Point, Islesmere,Kanata, King’s Riding, Lake Joseph, Le Maitre, Rocky Crest, Wyndance

Gold: Blue Springs, Caledon Woods, Cherry Downs, Country Club, Eagle Ridge, Glendale, Greenhills, GreyHawk,Hautes Plaines, National Pines, Station Creek, Val des Lacs

On December 15, 2010, ClubLink announced the acquisition of Glendale Golf and Country Club in Hamilton, Ontario. Glendale is the23rd golf club in the Greater Toronto Area. It was founded in 1919 and was one of the first private golf clubs in the Hamilton area. Glendalewill operate as a Gold Member Golf Club. ClubLink has committed to $1,500,000 in capital upgrades over three years for cart paths,bunkers, a practice facility and clubhouse improvements.

In 2011, ClubLink will operate four Ontario/Quebec Region Hybrid Golf Clubs in three categories as follows:

Hybrid – Prestige: Glen Abbey

Hybrid – Gold: The Club at Bond Head

Hybrid – Silver: Bethesda Grange, Highland Gate

Hybrid Golf Clubs are available for daily fee (public) play, reciprocal access by Members and provide a home club for Members withreciprocal access to the ClubLink system.

On June 10, 2010, ClubLink announced the conversion of the 18-hole championship daily fee golf course at Rolling Hills into a Hybrid –Silver Golf Club named Bethesda Grange. Golf course upgrades commenced in 2010, as part of this conversion, are expected to becompleted by the end of 2011.



16



Golf Club and Resort Operations Segment (cont’d)

(a) Canada (cont’d)

In 2011, ClubLink will operate two Ontario/Quebec Region Daily Fee Golf Clubs as follows:

Daily Fee: Grandview Inn, Rolling Hills

ClubLink owns sufficient land to develop an additional 18 holes at Cherry Downs Golf Club in Pickering, Grandview Golf Club in Muskokaand Rocky Crest Golf Club in Muskoka and sufficient land in the Greater Montreal Area to develop a 36-hole golf club.

In 2011, ClubLink will operate The Lake Joseph Club while Delta Hotels and Resort (“Delta”) will manage Delta Grandview Resort, DeltaRocky Crest Resort and Delta Sherwood Inn on ClubLink’s behalf.

The Lake Joseph Club and Delta Rocky Crest Resort operate seasonally from May to October. Delta Sherwood Inn has undergonerenovations after the resort was damaged by a fire and closed in September 2009 and was reopened in June 2010. Delta Grandview Resortoperates year round. Delta’s responsibilities include management of rooms, recreation programs and food and beverage outlets. This includesthe management of food and beverage operations at Rocky Crest and Grandview Golf Clubs, while ClubLink remains responsible formanagement of the golf operations at these properties.

Delta’s sales and marketing efforts for ClubLink’s Muskoka Resorts are focused on increasing corporate clientele through direct mail programs,telemarketing campaigns, e-commerce promotions and cross promotions to all ClubLink, ClubCorp, Toronto Board of Trade and DeltaPrivilege Members.

ClubLink’s remaining Muskoka land holdings, excluding golf course development sites, include zoned and serviced land that are capable ofsupporting a substantial number of resort rooms/villas, conference facilities and residential homes.

(b) United States

ClubLink’s golf clubs in the United States consist of a Florida Region and the Lake Chesdin Golf Club, located near Richmond, Virginia.The Florida Region includes six 18-hole equivalent championship and two 18-hole equivalent academy golf courses.

On September 3, 2010, ClubLink acquired eight 18-hole golf courses in Sun City Center, Florida for US $8,700,000. The operatingchampionship golf courses are Club Renaissance (18 holes), Sandpiper Golf Course (27 holes), Scepter Golf Club (18 holes), and Falcon WatchGolf Club (27 holes). Two 18-hole academy courses are also included: Kings Point Golf Club and Caloosa Greens Golf Club. North Lakes GolfClub, which was closed in 2009 and remains closed, is also part of the portfolio, as is an undeveloped two-acre parcel of commercially zonedland. The golf courses, about 50 kilometres (30 miles) south of Tampa, range from a full-service country club to academy courses.

On October 21, 2010, ClubLink acquired Heron Bay Golf Club in Coral Springs, Florida, 30 minutes from downtown Fort Lauderdale, forUS $2,900,000. From 1997 to 2002, Heron Bay hosted the PGA Tour’s Honda Classic, crowning champions Stuart Appleby, MarkCalcavecchia, Vijay Singh, Dudley Hart, Jesper Parnevik and Matt Kuchar.

For the 2011 operating season, ClubLink will operate five Florida Region Golf Clubs in three categories as follows:

Hybrid – Platinum: Club Renaissance, Heron Bay

Gold: Scepter

Silver: Falcon Watch, Sandpiper

These investments created ClubLink’s first region outside of Ontario and Quebec.

Under GAAP the results of the United States golf clubs are considered integrated and their monetary assets/liabilities and earnings aretranslated into Canadian currency using average exchange rates during the period. Non-monetary assets/liabilities are translated usinghistorical exchange rates. Changes in average exchange rates will impact the net earnings of the Company.

(c) TravelLink

The TravelLink program offers three levels that allow ClubLink members inter-regional access. The first level provides all ClubLink membersinter-regional access with preferred pricing. Levels 2 and 3 are optional and provide ClubLink members greater inter-regional access for fixedannual fees.



17



Rail, Tourism and Port Operations Segment

ClubLink is also engaged in rail, tourism and port operations based in Skagway, Alaska which operate under the trade name of “White Pass& Yukon Route”. This includes a tourist railway stretching approximately 177 kilometres (110 miles) from Skagway, Alaska through BritishColumbia to Whitehorse, Yukon. Presently, approximately 110 kilometres (67.5 miles) of the railway is in active service.

The railway was constructed by White Pass during the Klondike Gold Rush of 1898/1899 and completed in 1900. From 1900 until 1982,it was used for the carriage of general freight, ore concentrates, petroleum products and passengers. Railway operations were suspended in1982 when a major ore concentrate customer shut down its mine. The South Klondike Highway between Whitehorse and Skagway,subsequently constructed in 1985, transferred the transportation of ore concentrates from rail to road service. The railway reopened in 1988and has since been operating as a seasonal passenger tourism railway. ClubLink acquired White Pass in 1997.

White Pass operates three docks in Skagway, which provide four berths for cruise ships operating west coast schedules throughout the Mayto September tourist season. The largest of the three docks, with two berths, is owned while the two remaining docks are situated on stateand city property and operate under long-term tideland leases.

The primary market is the cruise industry, which recognizes Skagway as a marquee port for its Alaskan cruises. White Pass maintains asymbiotic relationship with the cruise lines – carrying almost half of all cruise passengers – making it Alaska’s premier shore excursion anda high volume, highly rated and profitable shore excursion for the cruise lines. The relationship is supported with an existing incentiveprogram and extensive cooperative pre-cruise and on-board promotion. White Pass also markets to motorcoach tour companies andindependent travellers who arrive via ferry and the South Klondike Highway.

Under GAAP, the results of White Pass are self-sustaining and its US operations are translated into Canadian currency using averageexchange rates during the period. Changes in average exchange rates will impact the net earnings of the Company.

Corporate Operations Segment

ClubLink’s objective at the corporate level is to identify opportunities to generate incremental returns and cash flow. Historically, the natureof these investments included debt and equity instruments in both public and private organizations. Currently, management is focused onimproving the returns of both operating business segments.

Business Combination

On July 28, 2009, the Company acquired the remaining 28.1% common share interest in ClubLink Corporation that it did not already own.

ClubLink issued 1.1 common shares for each common share of ClubLink Corporation acquired, resulting in the issuance of 5,164,015common shares of the Company. The ClubLink common shares issued were valued at $44,669,000, based on an independent third partyvaluation. In addition, the Company incurred $951,000 of transaction costs which have been included in the cost of the purchase. Theacquisition has been accounted for under the purchase method of accounting. Accordingly, the Company allocated the purchase price to theidentifiable assets and liabilities acquired based on their estimated fair values at the time of acquisition. The operations of ClubLinkCorporation have been included in the consolidated statements of earnings and comprehensive earnings and cash flows on a 100% basis sinceJuly 28, 2009.

As part of the accounting treatment for this transaction, the Company allocated the purchase price to the identifiable assets and liabilitiesof the acquisition which resulted in an increase to intangible assets of $14,857,000 and a decrease to capital assets in the amount of$14,700,000.

Selected Financial Information

The table below sets forth selected financial data relating to the Company’s fiscal years ended December 31, 2010, December 31, 2009 andDecember 31, 2008. This financial data is derived from the Company’s audited consolidated financial statements, which are prepared inaccordance with GAAP.

For the Years Ended December 31, % Change % Change(thousands of dollars, except per share amounts) 2010 2009 2008 2010/2009 2009/2008

CHAMPIONSHIP GOLF ROUNDS 1,122,000 1,031,000 988,000 8.8% 4.4%

RAIL PASSENGERS 368,000 396,000 438,000 -7.1% -9.6%

PORT PASSENGERS 697,000 781,000 779,000 -10.8% 0.3%

OPERATING REVENUE $ 189,903 $ 190,212 $ 196,532 -0.2% -3.2%COST OF SALES AND OPERATING EXPENSES 140,045 138,775 141,497 0.9% -1.9%

NET OPERATING INCOME 49,858 51,437 55,035 -3.1% -6.5%

Operating margin (%) 26.3% 27.0% 28.0% -2.6% -3.6%

Amortization of membership fees 15,292 14,784 13,965 3.4% 5.9%Direct costs of originating membership fees 1,511 1,955 1,638 -22.7% 19.4%

NET MEMBERSHIP FEE INCOME 13,781 12,829 12,327 7.4% 4.1%

Earnings before other items, income taxes andnon-controlling interest (EBITDA) 63,639 64,266 67,362 -1.0% -4.6%

Amortization of capital and intangible assets (20,789) (21,533) (20,774) -3.5% 3.7%

Land lease rent (5,285) (5,024) (4,182) 5.2% 20.1%

Interest, net (22,108) (23,397) (25,283) -5.5% -7.5%

Other income (expense) 344 (1,807) (292) N/A N/A

Current income taxes recovery (provision) 1,811 (5,313) (6,432) N/A N/A

Future income taxes recovery (provision) (5,770) 3,311 (3,276) N/A N/ANon-controlling interest – 652 (998) N/A N/A

NET EARNINGS $ 11,842 $ 11,155 $ 6,125 6.2% 82.1%

WEIGHTED AVERAGE SHARES OUTSTANDING (000) 27,976 25,113 22,887 11.4% 9.7%

BASIC AND DILUTED EARNINGS PER SHARE $ 0.42 $ 0.44 $ 0.27 -4.5% 63.0%

CASH FLOW FROM OPERATIONS $ 36,299 $ 27,912 $ 35,516 30.0% -21.4%

BASIC AND DILUTED CASH FLOW FROMOPERATIONS PER SHARE $ 1.30 $ 1.11 $ 1.55 17.1% -28.4%

TOTAL ASSETS $ 611,412 $ 627,753 $ 641,300 -2.6% -2.1%

TOTAL LIABILITIES $ 455,615 $ 473,193 $ 484,729 -3.7% -2.4%

ELIGIBLE CASH DIVIDENDS PER SHARE $ 0.30 $ 0.27 $ 0.24 11.1% 12.5%

Summary of Canadian/U.S. Exchange Rates Used for Translation Purposes

The following exchange rates translate one U.S. dollar into the Canadian dollar equivalent.

2010 2009 2008

Balance Sheet, at December 31 0.9946 1.0510 1.2217

Statement of Earnings, average for the years ended December 31 1.0299 1.1326 1.0678


18CLUBLINK ENTERPRISES LIMITED ANNUAL REPORT 2010


2010 Consolidated Operating Highlights

Consolidated operating revenue decreased 0.2% to $189,903,000 for the year ended December 31, 2010 from $190,212,000 in 2009 primarilydue to a decline in the rail, tourism and port operations revenue. The operating revenue from this segment has declined due to: (i) a 10.8%decline in port passengers; (ii) a 7.1% decline in rail passengers and (iii) a stronger Canadian dollar per US dollar (1.0299 compared to1.1326 in 2009). This decrease was offset by revenue generated by ClubLink’s expansion into the Florida golf marketplace and improvedCanadian golf club and resort operations. Consolidated operating revenue decreased 3.2% to $190,212,000 in 2009 from $196,532,000 in2008 due to a decline in golf club and resort operations revenue resulting from reduced discretionary spending during the 2009 recession.

Championship golf rounds increased 8.8% to 1,122,000 championship rounds from 1,031,000 championship rounds in 2009, including58,000 rounds from our US golf clubs, including the Florida golf clubs acquired late in 2010. This compares to 988,000 championshiprounds in 2008.

Port passengers from cruise ships decreased 10.8% to 697,000 from 781,000 in 2009. The decline in cruise ship visits was a reaction to thehead tax imposed by the State of Alaska. Port passengers in 2008 amounted to 779,000. Rail passengers declined 7.1% to 368,000 in 2010from 396,000 in 2009. The number of rail passengers decreased 9.6% to 396,000 in 2009 from 438,000 in 2008 due primarily to two separateinterruptions in rail service.

Consolidated cost of sales and operating expenses increased 0.9% to $140,045,000 in 2010 from $138,775,000 in 2009 due to additionaloperating costs incurred relating to the Company’s expansion into Florida offset by a stronger Canadian dollar used to convert costs fromrail, tourism and port operations. The cost of sales and operating expenses in 2008 amounted to $141,497,000.

Net membership fee income increased 7.4% to $13,781,000 from $12,829,000 in 2009 primarily due to a 2.1% increase in Canadianmembers and a 22.7% decrease in direct costs of originating membership fees. This compares to $12,327,000 in 2008.

Consolidated EBITDA decreased 1.0% for the year ended December 31, 2010 to $63,639,000 from $64,266,000 in 2009. This decrease isdue primarily to the decline in rail, tourism and port operations EBITDA and a stronger Canadian dollar. Consolidated EBITDA declinedfrom $67,362,000 in 2008 due to the decline in discretionary spending in golf club and resort operations during the 2009 recession.

Amortization of capital and intangible assets decreased 3.5% to $20,789,000 for the year ended December 31, 2010 from $21,533,000 in2009 and compares to $20,774,000 in 2008.

Land lease rent increased 5.2% to $5,285,000 for the year ended December 31, 2010 from $5,024,000 in 2009 due to a full year of rent forThe Club at Bond Head, which became a ClubLink property on April 7, 2009. Land lease rent for 2008 was $4,182,000.

Interest, net decreased 5.5% to $22,108,000 for the year ended December 31, 2010 from $23,397,000 in 2009. This reduction was causedby a 4.2% decline in debt levels, a stronger Canadian dollar and a lower average borrowing rate in 2010. Interest, net has decreased from$25,283,000 in 2008.

Other expense changed to income of $344,000 in 2010 from an expense of $1,807,000 in 2009 primarily due to costs incurred in 2009relating to the golf club and resort operations property tax appeal process. A total of $873,000 (2009 – nil) in business combination transactioncosts have been charged to other expense during the year in conjunction with the change in GAAP requiring business combination transactioncosts to be expensed.

The overall effective tax rate for 2010 was 25.1% as compared to 16.0% in 2009. This increase was due to a future income tax recovery of$3,483,000 from previous unrecognized operating losses in 2009. This compares to an effective tax rate of 57.7% in 2008 which was higherthan the statutory tax rate due to unrecognized operating losses in that year.

Consolidated net earnings increased to $11,842,000 for the year ended December 31, 2010 from $11,155,000 in 2009 primarily due to thedecline in interest, net and other expense and compares to $6,125,000 in 2008.

Weighted average shares for the year ending December 31, 2010 increased to 27,976,000 as compared to 25,113,000 in 2009 primarily dueto the 5,164,015 common shares issued by the Company on July 28, 2009 as part of the business combination with ClubLink Corporation.Weighted average shares for the year ending December 31, 2008 was 22,887,000.

Earnings per share decreased to 42 cents per share in 2010, compared to 44 cents per share in 2009 and 27 cents per share in 2008.





20


Results of Operations by Business Segment

The review of operations by business segment should be read in conjunction with the segmented information contained in note 17 of theaudited consolidated financial statements for the year ended December 31, 2010.

The following is a summary of the results of operations.For the Years Ended

December 31, December 31, %(thousands of dollars) 2010 2009 Change

Operating revenue by segment

Golf club and resort operations $ 153,366 $ 147,414 4.0%Rail, tourism and port operations 36,537 42,798 -14.6%

$ 189,903 $ 190,212 -0.2%

Net operating income by segment

Golf club and resort operations $ 35,247 $ 32,586 8.2%

Rail, tourism and port operations 17,270 20,577 -16.1%Corporate operations (2,659) (1,726) -54.1%

49,858 51,437 -3.1%

Net membership fee incomeGolf club and resort operations 13,781 12,829 7.4%

EBITDA $ 63,639 $ 64,266 -1.0%

Review of Golf Club and Resort Operations for the Year Ended December 31, 2010

On April 7, 2009, ClubLink entered into a long-term 21 golf-season lease for The Club at Bond Head. Bond Head, just west of Highway400, north of Toronto, consists of two superb 18-hole championship courses designed by the renowned architectural firm of Hurdzan Fry.Bond Head operated as a Premium Daily Fee facility in 2009. In June 2009, ClubLink announced that it was selling Gold Level Membershipsto Bond Head commencing in 2010 with interim playing privileges in 2009. In 2010, Bond Head operated as a Hybrid – Gold Golf Clubavailable for daily fee (public) play, reciprocal access by members and provided a home club for Bond Head members with reciprocal access.

ClubLink announced on September 3, 2010 that it had acquired eight 18-hole golf courses in Sun City Center, Florida for US $8,700,000. Theoperating championship golf courses are Club Renaissance (18 holes), Sandpiper Golf Course (27 holes), Scepter Golf Club (18 holes), andFalcon Watch Golf Club (27 holes). Two 18-hole academy courses are also included: Kings Point Golf Club and Caloosa Greens Golf Club. NorthLakes Golf Club, which was closed in 2009 and remains closed, is also part of the portfolio, as is an undeveloped two-acre parcel of commerciallyzoned land. The courses, about 50 kilometres (30 miles) south of Tampa, range from a full-service country club to academy courses.

ClubLink announced on October 21, 2010 that it had acquired Heron Bay Golf Club in Coral Springs, Florida, 30 minutes from downtownFort Lauderdale, for US $2,900,000. From 1997 to 2002, Heron Bay hosted the PGA Tour’s Honda Classic, crowning champions StuartAppleby, Mark Calcavecchia, Vijay Singh, Dudley Hart, Jesper Parnevik and Matt Kuchar.

The Sun City and Heron Bay acquisitions created ClubLink’s first region outside of Ontario and Quebec.

On December 15, 2010, ClubLink announced the acquisition of Glendale Golf and Country Club in Hamilton, Ontario. Glendale is the 23rd golfclub in the Greater Toronto Area. It was founded in 1919 and was one of the first private golf clubs in the Hamilton area. Glendale will operate as aGold Member Golf Club. ClubLink has committed to $1,500,000 in capital upgrades over 3 years for cart paths, bunkers, a practice facility andclubhouse improvements.

Summary of Golf Club and Resort OperationsFor the Years Ended


Operating revenue $ 153,366 $ 147,414 4.0%Operating costs (118,119) (114,828) 2.9%

Net operating income 35,247 32,586 8.2%

Operating margin % 23.0% 22.1% 4.1%

Amortization of membership fees 15,292 14,784 3.4%Direct costs of originating membership fees (1,511) (1,955) -22.7%

Net membership fee income 13,781 12,829 7.4%

EBITDA $ 49,028 $ 45,415 8.0%



21


Results of Operations by Business Segment (cont’d)

Review of Golf Club and Resort Operations for the Year Ended December 31, 2010 (cont’d)

Golf Club and Resort Operating Revenue

Golf club and resort operating revenue is recorded as follows:For the Years Ended


Annual dues $ 60,678 $ 57,710 5.1%

Corporate events, guest fees and cart rentals 36,050 35,262 2.2%

Food and beverage 42,370 40,167 5.5%

Resort rooms 3,260 3,361 -3.0%

Merchandise and other 11,008 10,914 0.9%

Total operating revenue $ 153,366 $ 147,414 4.0%

Championship golf rounds increased 8.8% to 1,122,000 championship rounds from 1,031,000 championship rounds in 2009, including58,000 championship rounds from our US golf clubs, including the Florida golf clubs acquired late in 2010.

Total operating revenue increased 4.0% to $153,366,000 from $147,414,000 in 2009 primarily due to operating revenue from the Floridagolf clubs acquired late in 2010. This resulted in increases in all areas with the exception of resort rooms.

Resort occupancy levels were 45.1% in 2010 compared to 44.2% in 2009 and operating revenue per available room increased to $159 from$142 in 2009. Resort room revenue declined 3.0% due to the closure of Delta Sherwood Inn from September 2009 to June 2010 as a resultof a fire.

Golf Club and Resort Operating Costs

Golf club and resort operating costs are recorded as follows:

For the Years Ended


Cost of sales $ 20,363 $ 20,266 0.5%

Labour 54,526 52,118 4.6%

Direct operating costs 20,555 19,312 6.4%

Insurance 1,859 1,331 39.7%

Utilities 7,367 6,908 6.6%

Property taxes 5,186 5,017 3.4%

Sales and marketing 2,361 2,075 13.8%

Administration and provincial capital taxes 5,902 7,801 -24.3%

Total operating costs $ 118,119 $ 114,828 2.9%

Gross margin on food and beverage sales was 68.1% in 2010 compared to 68.3% in 2009.

Gross margin on merchandise sales was 26.0% in 2010 compared to 22.3% in 2009. This increase is due to a change in mix of sales, focusingon higher margin items.

Increases in all operating cost categories are primarily due to the addition of the Florida golf clubs late in 2010.

Administration and provincial capital taxes have decreased 24.3% to $5,902,000 in 2010 from $7,801,000 in 2009 due to (a) a decline inadministrative costs from the business combination and privatization of ClubLink Corporation, (b) a decline in both Ontario and Quebeccapital tax rates and (c) the transfer of certain head office costs from golf club and resort operations to corporate operations.



22




Membership Fees

Total golf members increased 11.0% to 18,917 on December 31, 2010 from 17,049 on December 31, 2009 primarily due to the acquisitionof 1,512 Sun City Center, Florida members. New membership sales for the year ended December 31, 2010 decreased 34.3% to $8,278,000(1,456 members) from $12,602,000 (1,477 members) during the year ended December 31, 2009. Transfer and upgrade fees during 2010decreased to $1,474,000 from $2,612,000 in 2009. Resignations and terminations increased to $4,726,000 (1,100 members or 6.5% of golfmembers at December 31, 2009) in 2010 from $4,595,000 (1,075 members or 6.5% of golf members at December 31, 2008) in 2009.Membership fee instalments received in cash decreased 4.3% to $13,314,000 from $13,906,000 in 2009 as a number of membership contractshave been paid in full.

In recent years, ClubLink’s membership growth has been driven, in part, by: (a) long-term lease arrangements, (b) the addition of newproduct through the conversion of daily fee golf clubs into member or hybrid golf clubs, (c) the acquisition of operating golf course propertiesand (d) the development of greenfield sites into member golf clubs.

The opportunity to add new product through the conversion of daily fee golf clubs has diminished because ClubLink has only two remainingdaily fee golf clubs (Glen Abbey and Rolling Hills Golf Clubs) which may be converted if market demand warrants. ClubLink has sixadditional greenfield sites on which seven 18-championship hole equivalent golf courses could be built if demand warrants. The developmentof a greenfield site requires an investment of approximately $15 to $18 million to open, on a turn-key basis, an 18-championship hole golfclub for play including a clubhouse and furniture, fixtures and equipment where required. Management currently has no plans to proceedwith development at any of the properties within its budgeting horizons. Acquisitions, including long-term leasing opportunities, will beconsidered if the opportunity arises on terms acceptable to ClubLink.

In the absence of new product, management anticipates that membership sales will stabilize at between $9.5 and $12 million per year,comprised of sales to new members of between $8 and $9 million and transfer fees from existing members between $1.5 and $3 million.

Membership fees are amortized over the estimated weighted average remaining life of memberships purchased each year. This is determinedby subtracting the average age of members that joined in that year from 70 and dividing the result by 2. The amortization period is reviewedannually and any adjustments are made prospectively. Membership fee revenue recognized in 2010 increased 3.4% to $15,292,000 from$14,784,000 in 2009.

Details on amortization period in years, member resignations and amortization of membership fee revenue is broken down by member joinyear as follows:

Amortization Amortizationof of

Amortization Amortization Resignations Resignations Membership MembershipPeriod (yrs) Period (yrs) (Members) (Members) Fees ($000) Fees ($000) %

Member Join Year 2010 2009 2010 2009 2010 2009 change

1994–2001 4 5 258 305 $ 3,988 $ 3,884 2.7%

2002 5 6 94 78 2,609 2,595 0.5%

2003 7 8 56 70 1,222 1,215 0.6%

2004 8 9 48 67 1,162 1,166 -0.3%

2005 7 8 132 158 2,073 2,102 -1.4%

2006 10 11 49 52 883 887 -0.5%

2007 10 11 161 202 1,281 1,336 -4.1%

2008 12 13 99 143 723 770 -6.1%

2009 13 14 203 – 766 829 -7.6%2010 13 – – – 585 – N/A

1,100 1,075 $ 15,292 $ 14,784 3.4%



23




Membership Fees (cont’d)

The following is an age analysis of ClubLink’s golf members:2010 2009 % Change

Under 30 years 1,274 1,199 6.3%

31 – 40 years 1,534 1,706 -10.1%

41 – 50 years 4,858 5,099 -4.7%

51 – 60 years 5,629 5,386 4.5%

61 – 70 years 2,920 2,638 10.7%

71 and over 612 498 22.9%

Not available 578 523 10.5%

Canadian golf members 17,405 17,049 2.1%

Florida golf members 1,512 – n/a

Total golf members 18,917 17,049 11.0%

The average age of a Canadian golf member as at December 31, 2010 is 50.8 years as compared to 50.2 years as at December 31, 2009.

Direct Costs of Originating Membership Fees

Direct costs of originating membership fees decreased 22.7% to $1,511,000 from $1,955,000 in 2009 primarily due to no new majormembership marketing campaigns undertaken in 2010 and the completion of the successful Bond Head marketing campaign in 2009.

Review of Rail, Tourism and Port Operations for the Year Ended December 31, 2010

Summary of Rail, Tourism and Port OperationsFor the Years Ended

December 31, December 31, %2010 2009 Change

Operating revenue $ 35,313 $ 38,131 -7.4%

Operating costs 18,672 19,668 -5.1%

Net operating income (US dollars) 16,641 18,463 -9.9%

Exchange 629 2,114 -70.2%

Net operating income (Cdn dollars) $ 17,270 $ 20,577 -16.1%

Net operating income decreased to US $16,641,000 in 2010 from US $18,463,000 in 2009 due to the decline in rail and port passengers.

Rail, Tourism and Port Operating Revenue

Rail, tourism and port operating revenue is recorded as follows:For the Years Ended


Railroad $ 26,042 $ 27,981 -6.9%

Port 6,966 7,858 -11.4%

Gift shop and other 2,305 2,292 0.6%

Subtotal (US dollars) 35,313 38,131 -7.4%

Exchange 1,224 4,667 -73.8%

Total (Cdn dollars) $ 36,537 $ 42,798 -14.6%

The number of rail passengers has decreased 7.1% to 368,000 in 2010 as compared to 396,000 in 2009. The decline in rail passengers was less thanexpected due to an improved port passenger capture rate and the loss of rail passengers in 2009 relating to two separate interruptions in rail service.

The number of port passengers has decreased 10.8% to 697,000 in 2010 as compared to 781,000 in 2009. A 12% decline in each category wasexpected as a reaction by the cruise industry to the head tax imposed by the State of Alaska.



24



Review of Rail, Tourism and Port Operations for the Year Ended December 31, 2010 (cont’d)

Rail, Tourism and Port Operating Costs

Rail, tourism and port operating costs are recorded as follows:For the Years Ended


Rail shop and train maintenance $ 6,214 $ 6,616 -6.1%

Maintenance of way 2,570 2,548 0.9%

Passenger operations 1,519 1,623 -6.4%

Marketing 655 703 -6.8%

Property taxes 629 867 -27.5%

Administration 2,615 2,825 -7.4%

Insurance 1,624 1,628 -0.2%

Gift shop, port operations and other 2,846 2,858 -0.4%

Subtotal (US dollars) 18,672 19,668 -5.1%

Exchange 595 2,553 -76.7%

Total (Cdn dollars) $ 19,267 $ 22,221 -13.3%

Measures to contain operating costs and labour given the expected decline in port and rail passengers have resulted in a 5.1% decrease inUS dollar expenses. The locomotive repower program has also contributed to lower operating and maintenance costs.

Review of Corporate Operations and Unallocated Amounts for the Year Ended December 31, 2010

For the year ended December 31, 2010, the corporate operations incurred costs of $2,659,000 as compared to $1,726,000 in 2009. Thisincrease is primarily due to the transfer of certain head office costs to this segment from the golf club and resort operations segment.

Interest, net decreased 5.5% to $22,108,000 in 2010 from $23,397,000 in 2009 primarily due to a 4.2% decline in debt levels, a strongerCanadian dollar and a lower average borrowing rate in 2010.

Other expense changed to income of $344,000 in 2010 from an expense of $1,807,000 in 2009 primarily due to costs incurred in 2009relating to the golf club and resort operations property tax appeals process. A total of $873,000 (2009 – nil) in business combinationtransaction costs have been charged to other expense during the year in conjunction with the change in GAAP requiring the Company toexpense these costs.

The overall effective tax rate in 2010 was 25.1% compared to 16.0% in 2009 primarily due to the recognition of previous year’s operatinglosses in 2009.

Critical Accounting Estimates

The preparation of financial statements that conform with GAAP requires management to make estimates and assumptions that affect theamounts reported in the audited consolidated financial statements and accompanying notes. Actual results could differ substantially frommanagement’s estimates.

The most critical accounting estimate used by ClubLink is the weighted average remaining life of memberships sold by join year, which isused to recognize membership fee revenue. In conjunction with this calculation, for the year ended December 31, 2010, the estimatedweighted average remaining life of memberships purchased is as follows: between 1994 and 2001 – 4 years; 2002 – 5 years; 2003 – 7 years;2004 – 8 years; 2005 – 7 years; 2006 – 10 years; 2007 – 10 years; and 2008 – 12 years, 2009 – 13 years and 2010 – 13 years. Theseamortization periods should decline each year by one year as each group gets one year older, producing a relatively uniform revenue streamfrom membership fees over the average remaining life of memberships sold by join year. However, these average ages may not decline on aconsistent basis if a disproportionate amount of older or younger members decide to resign at any particular time. This could result in adeferral or acceleration of membership fee revenue, the amount of which would be dependant on the variability of the change in averageages. To date there have been no significant variances in the average ages.



25


Critical Accounting Estimates (cont’d)

Amortizable intangible assets consist of amounts expended on below market rent terms, brand and membership base. These assets areamortized based on estimates of their useful lives.

Operating capital assets are amortized over their useful lives on a straight-line basis. The Company assesses on an annual basis the usefullife of all capital assets which is used in the calculation of amortization expense. The useful lives assigned by type of capital asset are disclosedin note 2 to the audited consolidated financial statements. Due to the relatively large proportion of these assets to total assets, the selectionof the method of amortization and length of amortization period could have a material impact on amortization expense and net book valueof capital assets.

Capital assets, intangible assets and goodwill are reviewed for impairment whenever events or changes in the circumstances indicate that thecarrying amount of an asset may not be recoverable. Goodwill is also tested on an annual basis at the end of each fiscal year. Recoverabilityof assets to be held and used is measured by comparing the carrying amount of the assets to the anticipated future net cash flows. If suchassets are considered to be impaired, the impairment to be recognized is measured by the amount that the carrying amount of the assetexceeds the fair value of the asset.

ClubLink records income taxes using the liability method of accounting. Under this method, future income tax assets and liabilities aredetermined according to differences between the carrying amounts and tax bases of the assets and liabilities. Management uses judgmentand estimates in determining the appropriate rates and amounts to record for future taxes, giving consideration to timing and probability.Previously recorded tax assets and liabilities are remeasured using tax rates in effect when these differences are expected to reverse inaccordance with enacted laws or those substantively enacted as at the date of the financial statements.

Financial Condition

Assets

Consolidated assets at December 31, 2010 totalled $611,412,000 compared with $627,753,000 at December 31, 2009.

Capital assets employed in golf club and resort operations and rail, tourism and port operations account for all of the Company’s capitalassets. The book value of these capital assets was $468,771,000 and $72,264,000, respectively, at December 31, 2010 ($464,717,000 and$72,007,000, respectively, at December 31, 2009). The increase in the golf club and resort capital assets is due to the three acquisitions inthis segment during the year.

Liabilities

Total liabilities decreased to $455,615,000 at December 31, 2010 from $473,193,000 at December 31, 2009 primarily due to the amortizationpayments decreasing the Company’s secured debt.

Shareholders’ Equity

Consolidated shareholders’ equity at December 31, 2010 totalled $155,797,000 or $5.58 per share, compared to $154,560,000 or $5.51 pershare at December 31, 2009. The number of common shares outstanding decreased to 27,902,618 shares as at December 31, 2010 from28,057,479 as at December 31, 2009 primarily due to shares repurchased and cancelled.

The following is a summary of the common share activity:For the Years Ended

December 31, December 31,(number of shares) 2010 2009

Balance, beginning of year 28,057,479 22,909,437

Shares issued pursuant to dividend reinvestment plan 3,389 5,567

Shares issued as consideration for business combination with ClubLink Corporation – 5,164,015

Exercise of stock options – 3,000

Shares purchased and cancelled through normal course issuer bid program (64,200) (24,540)

Shares repurchased and cancelled (94,050) –

Balance, end of year 27,902,618 28,057,479



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Financial Condition (cont’d)

Shareholders’ Equity (cont’d)

During 2010, the Company continued its dividend program and paid a quarterly payment of 7.5 cents per share on March 31, June 30,September 15 and December 15, 2010.

The Company has recorded a loss in its accumulated other comprehensive loss account of $1,185,000 due to a change in the Canadian/U.S.exchange rate to 0.9946 at December 31, 2010 from 1.0510 at December 31, 2009. This exchange rate change reduces the Canadian dollarequivalent for each of the assets and liabilities within rail, tourism and port operations.

Liquidity and Capital Resources

ClubLink’s objective is to ensure that capital resources are readily available to meet obligations as they become due, to complete its approvedcapital expenditure program and to take advantage of attractive acquisitions as they arise. ClubLink’s capital availability and demonstratedability to execute transactions give it a competitive advantage in corporate development opportunities.

The analysis of ClubLink’s liquidity is as follows:As at December 31, 2010 As at December 31, 2009

(thousands of dollars) Maximum Available Maximum Available

Cash $ 1,447 $ 1,447 $ 10,670 $ 10,670

Revolving secured debt (rail) 9,946 4,388 7,883 –

Revolving secured debt (corporate) 50,000 5,217 49,800 27,791Related party debt facility 30,000 30,000 30,000 1,600

$ 91,393 $ 41,052 $ 98,353 $ 40,061

Funds will be used during 2011 for operating capital expenditures in both business segments, to fund development capital expenditures,including the locomotive repower program, to purchase additional securities pursuant to ClubLink’s normal course issuer bid program andto pay debt obligations as they become due.

Liquidity risk arises from general funding needs and in the management of assets, liabilities and optimal capital structure. ClubLink managesliquidity risk to maintain sufficient liquid financial resources to meet its commitments and obligations in the most cost-effective manner possible.

Based on ClubLink’s financial position at December 31, 2010, and projected future earnings, management expects to be able to fund itsworking capital requirements, and meet its other obligations including debt repayments.

Free cash flow from operating activities after operating capital asset expenditures, amortization payments of non-revolving secured debt,capital leases, net and dividends is calculated as follows:

For the Years Ended

December 31, December 31,(thousands of dollars) 2010 2009

Cash flow from operations $ 36,299 $ 27,912

Net change in working capital accounts (2,210) 3,329

Cash flow from operating activities 34,089 31,241

Operating capital asset expenditures (6,734) (5,333)

Principal amortization of non-revolving secured debt (14,581) (15,211)

Capital leases, net (3,187) 918

Free cash flow from operating activities before dividends 9,587 11,615

Common share dividends (8,394) (6,954)

Free cash flow from operating activities $ 1,193 $ 4,661



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Liquidity and Capital Resources (cont’d)

The following is an analysis of the Company’s net indebtedness and its characteristics on December 31, 2010 compared to December 31, 2009:

Average Average Average AverageInterest Interest Total Total Term to Term toRate Rate Indebtedness Indebtedness Maturity Maturity

(thousands of dollars) 2010 2009 2010 2009 (yrs) 2010 (yrs) 2009

Revolving secured debt (rail) 2.41% 5.00% $ 5,558 $ 7,883 0.50 0.50

Revolving secured debt (corporate) 3.34% 2.60% 42,942 19,054 1.42 1.42

Non-revolving secured debt 7.20% 7.24% 265,398 275,525 14.03 15.09

Term loan 3.26% 5.00% 36,090 31,828 9.67 4.17

Notes payable N/A 4.23% – 28,400 N/A N/ACapital lease obligations 5.92% 5.82% 9,825 13,012 2.01 1.62

Total indebtedness 6.24% 6.49% 359,813 375,702

Cash (1,447) (10,670)Note receivable from affiliated company – (5,000)

Net indebtedness $ 358,366 $ 360,032

ClubLink’s consolidated debt obligations include secured debt, term loan, notes payable, and capital lease obligations. The followingtable illustrates future maturities and amortization payments of consolidated debt obligations for the next five years and thereafter as atDecember 31, 2010:

Mortgage Mortgageand and Total

Revolving Term Loan Term Loan Total Capital Total(thousands of dollars) Maturities Amortization Maturities Debt Leases Obligations

2011 $ 5,558 $ 15,082 $ – $ 20,640 $ 4,199 $ 24,839

2012 42,942 15,989 547 59,478 2,775 62,253

2013 – 16,964 960 17,924 1,839 19,763

2014 – 18,011 520 18,531 627 19,158

2015 – 19,137 – 19,137 354 19,4912016 and thereafter – 205,491 8,787 214,278 31 214,309

$ 48,500 $ 290,674 $ 10,814 $ 349,988 $ 9,825 $ 359,813

ClubLink expects to meet its 2011 debt obligations by way of cash flow from operations, renewing facilities at maturity and using unutilizedlines of credit if necessary.

Golf and Resort Rail, Tourism and(thousands of dollars) Operations (Cdn) Port Operations (US)

2011 $ 4,678 $ 250

2012 4,760 218

2013 4,850 200

2014 4,943 192

2015 5,039 1882016 and thereafter 63,155 2,943

$ 87,425 $ 3,991



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A summarized statement of cash flows is as follows:For the Years Ended


Cash flow from operations $ 36,299 $ 27,912

Net change in working capital accounts (2,210) 3,329

Cash provided by operating activities 34,089 31,241

Capital asset expenditures (13,913) (16,895)

Business combinations (13,024) (951)

Mortgages and loans receivable 5,943 (3,228)

Revolving secured debt 21,563 (19,404)

Non-revolving secured debt advances, net of maturities 9,424 (1,654)

Non-revolving secured debt amortization payments (14,581) (15,211)

Notes payable (28,400) 28,400

Shares purchased for cancellation, net of issues (1,026) (102)

Dividends paid (8,394) (6,954)

Other (904) 1,876

Net decrease in cash during the year (9,223) (2,882)

Cash, beginning of year 10,670 13,552

Cash, end of year $ 1,447 $ 10,670

Operating Activities

Cash flow from operations increased 30.0% to $36,299,000 from $27,912,000 in 2009 due to a $7,124,000 decrease in current incometax expense.

Cash provided by operating activities has increased to $34,089,000 in 2010 from $31,241,000 in 2009.

Investing Activities

Cash used in investing activities increased to $21,258,000 from $18,737,000 in 2009 due to the business combination activity in 2011.

Capital asset expenditures are broken down as follows:For the Years Ended


Golf club and resort operations $ 3,711 $ 2,980

Rail, tourism and port operations (US dollars) 2,948 2,114

Exchange 75 239

Operating capital expenditures 6,734 5,333

Golf club and resort operations 1,461 8,190

Golf club and resort operations (US dollars) 660 –

Rail, tourism and port operations (US dollars) 4,953 3,028

Exchange 105 344

Development capital expenditures 7,179 11,562

Total capital asset expenditures $ 13,913 $ 16,895

Development capital for the rail, tourism and port operations represents the locomotive repower program. This involves the upgrade ofvarious locomotives to enable them to be compliant with environmental regulations and allow greater operating cost efficiencies. ClubLinkis committed to expenditures of US $557,000 (2009 – US $5,024,000) relating to the locomotive repower program which is expected to bepaid in 2011.



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Investing Activities (cont’d)

During 2010, ClubLink completed the acquisition of three new golf course properties for a total cost of $13,024,000. On September 3, 2010ClubLink acquired eight 18-hole golf courses located in Sun City Center, Florida for consideration of US $8,700,000 ($9,070,000 Cdn). OnOctober 21, 2010, ClubLink acquired Heron Bay Golf Club in Coral Springs, Florida for cash consideration of US $2,900,000(Cdn $2,983,000). On December 15, 2010, ClubLink acquired Glendale Golf and Country Club for $3,154,000 less mortgages assumed of$2,183,000 for a net cash outlay of $971,000.

The net collection of mortgages and loans receivable has generated proceeds of $5,943,000 in 2010 from an outflow of $3,228,000 in 2009due to the collection of $5,000,000 outstanding from Paros Enterprises Limited. Paros Enterprises Limited (“Paros”) is a privately ownedcompany whose sole shareholder is the Chairman and Chief Executive Officer of the Company and is also the controlling shareholder ofthe Company.

Financing Activities

Cash used in financing activities was $21,999,000 in 2010 compared to $14,986,000 in 2009.

On March 9, 2010, the $50,000,000 secured revolving operating line of credit of ClubLink Corporation ULC due June 9, 2011 was amendedto include the Company as a co-borrower. This facility is a revolving operating line of credit with a two year term and provisions for annualone year extensions. This facility was renewed to June 8, 2012.

During the first quarter of 2010, the Company repaid $28,400,000 in notes payable to Morguard Corporation (“Morguard”). The Chairmanand Chief Executive Officer of the Company is a significant shareholder of Morguard.

The rail, tourism and port operations US $7,500,000 secured revolving operating line of credit with a U.S. financial institution has beenrenewed to July 1, 2011 and increased to US $10,000,000. Effective July 1, 2010, the interest rate changed to LIBOR plus two hundred andfifteen basis points and the 5% interest rate floor was eliminated.

The rail, tourism and port operations term loan with a U.S. financial institution was refinanced during the year as follows:

New Term Loan Previous Term Loan

Amount Outstanding US $37,000,000 US $27,932,000

Maturity Date September 1, 2020 March 1, 2014

Interest Rate LIBOR plus 300 basis points. LIBOR plus 345 basis pointssubject to a 5.0% minimum floor.

Annual Principal Amortization US $2,856,000 US $3,528,000

The Company was approved by the Toronto Stock Exchange for a normal course issuer bid to purchase up to 1,402,752 of its common shareswhich expired on September 19, 2010. During the year ending December 31, 2010, the Company purchased for cancellation 55,500 commonshares for a total purchase price of $373,000 or $6.72 per common share, including commissions.

The Company was approved by the Toronto Stock Exchange for a normal course issuer bid to purchase up to 1,395,000 of its common shareswhich will expire on September 19, 2011. During the year ending December 31, 2010, the Company purchased for cancellation 8,700common shares for a total purchase price of $59,000 or $6.78 per common share, including commissions.

During the year, the Company continued with its dividend program, paying 7.5 cents per share on March 31, June 30, September 15 andDecember 15, 2010. Dividends paid during 2010 totaled $8,394,000 (2009 – $6,954,000).

ClubLink finances its operations and expansion through a combination of operating cash flows, revolving and non-revolving secured debt,notes payable and capital lease obligations. In the past, ClubLink has issued debt and shares to facilitate acquisitions and to provide workingcapital. Wherever possible, expansion activities are financed through secured debt with repayment obligations corresponding to the expectedcash flows.

The Company primarily uses credit facilities, along with funds generated from operating activities, to fund operational expenses, expansionand development capital spending, dividends and principal and interest payments on non-revolving secured debt.



30


Off-Balance Sheet Financing and Guarantees

ClubLink and its subsidiaries do not engage in off-balance sheet financing, except for the existence of operating leases, which are primarilyfor golf course leases and for the rental of tidelands in Skagway, Alaska.

From time to time, ClubLink enters into agreements to provide financial or performance assurances to third parties of which letters of creditof $1,841,000 (2009 – $2,955,000) and unsecured surety bonds of $1,601,000 (2009 – $1,632,000) were outstanding as at December 31, 2010.

In the normal course of operations, the Company executes agreements that provide for indemnification and guarantees to third parties intransactions such as business dispositions, business acquisitions, sales of assets, sales of services, securitization agreements and underwritingand agency agreements.

The Company has also agreed to indemnify its officers and directors and certain of its employees. The nature of substantially all of theindemnification undertakings prevents the Company from making a reasonable estimate of the maximum potential amount that could berequired to pay third parties as the agreements do not specify a maximum amount and the amounts are dependent upon the outcome of futurecontingent events, the nature and likelihood of which cannot be determined at this time. Historically, the Company has not made significantpayments nor does it expect to make any significant payments under such indemnification agreements.

Related Party Transactions

Refer to Note 16 in the audited consolidated financial statements for the year ending December 31, 2010 for a complete description of allrelated party transactions.

Environmental and Health and Safety Obligations

The Company’s operations and properties are subject to extensive federal, provincial, territorial, state, municipal and local environmentallaws and requirements in both Canada and the United States, relating to, among other things, air emissions, the management of contaminantsincluding hazardous materials and waste, discharges to waters and the remediation of environmental impacts. The Company believes it hasidentified and provided for expenditures relating to known environmental matters, including compliance issues and the assessment andremediation of the environmental condition of its properties, whether currently or previously owned, or other properties where it may haveenvironmental matters. The Company’s total costs and liabilities cannot be predicted with certainty due to, among other things, the variousissues described above, changing environmental laws, requirements and the potential necessity to conduct additional investigations.

ClubLink continually demonstrates its commitment to ensuring the health and safety of anyone affected by its operations and to responsiblymanage the impact of its operations on the environment. In implementing its policies, ClubLink provides the benefits of strong environment,health and safety (EH&S) management systems to a wide range of stakeholders in Canada and the United States. Stakeholders include allemployees and the communities where ClubLink operates, along with customers, investors, partners, and service providers. This commitmentextends throughout the entire Company at every level, starting with the Board of Directors.

The EH&S committee of the Corporation’s Board of Directors meets on a regular basis to review and oversee ClubLink’s policies andprograms as well as to review the EH&S performance of each business unit. The committee also oversees the Company’s compliance withapplicable EH&S laws and regulations and monitors trends, issues and events which could have a significant impact on the Company.

ClubLink continually monitors changes in both EH&S technologies and regulations both directly and through its involvement with variousindustry associations.

ClubLink believes that safe operations are essential for a productive and engaged workforce. ClubLink is committed to workplace incidentprevention and makes expenditures towards the necessary human and financial resources and site-specific systems to ensure compliancewith its health and safety policies. Any injuries that may occur are investigated to determine root cause and to establish and put in placenecessary controls, with the goal of preventing recurrence.

Financial Instruments

ClubLink has a number of financial instruments which are described in note 20 to the audited consolidated financial statements for the yearending December 31, 2010. These financial instruments do not include any hedging or complicated derivatives.

Risks associated with these financial instruments and information on their fair values are also disclosed in note 20.



31


Summary of Financial Results by Quarter

The table below sets forth selected financial data for the most recent eight quarters ending December 31, 2010. The financial data is derivedfrom the Company’s unaudited interim financial statements, which are prepared in accordance with GAAP as follows:

(thousands of dollars, 2010 2009

except per share amounts) Dec. 31 Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31

Total assets $ 611,412 $ 644,339 $ 648,042 $ 632,117 $ 627,753 $ 648,881 $ 655,073 $ 659,101

Operating revenue 29,687 86,727 57,321 16,168 24,681 90,378 59,024 16,129

Net operating income (loss) 1,230 33,030 14,537 1,061 850 36,604 14,180 (197)

Operating margin % 4.1% 38.1% 25.4% 6.6% 3.4% 40.5% 24.0% (1.2%)

Net membership fee income 3,631 3,354 3,287 3,509 3,652 3,085 2,841 3,251

EBITDA 4,861 36,384 17,824 4,570 4,502 39,689 17,021 3,054

Net earnings (loss) (3,662) 16,745 2,991 (4,232) (2,212) 17,001 1,951 (5,585)

Basic earnings (loss) per share (0.13) 0.59 0.11 (0.15) (0.08) 0.63 0.08 (0.24)

Cash flow from operations 4,528 23,807 9,310 (1,346) (1,827) 24,880 7,534 (2,675)

Cash flow from operations per share 0.17 0.85 0.33 (0.05) (0.07) 0.93 0.33 (0.12)

Eligible cash dividends per share 0.075 0.075 0.075 0.075 0.075 0.075 0.06 0.06

Selected Financial Information – Fourth Quarter 2010For the Fourth Quarter Ended

December 31, December 31, %(thousands of dollars except per share amounts) 2010 2009 Change

OPERATING REVENUE $ 29,687 $ 24,681 20.3%

COST OF SALES AND OPERATING EXPENSES 28,457 23,831 19.4%

NET OPERATING INCOME 1,230 850 44.7%

OPERATING MARGIN (%) 4.1% 3.4% 20.6%

AMORTIZATION OF MEMBERSHIP FEES 3,770 3,719 1.4%

DIRECT COSTS OF ORIGINATING MEMBERSHIP FEES 139 67 107.5%

NET MEMBERSHIP FEE INCOME 3,631 3,652 -0.6%

EARNINGS BEFORE OTHER ITEMS, INCOME TAXES ANDNON-CONTROLLING INTEREST (EBITDA) 4,861 4,502 8.0%

AMORTIZATION OF CAPITAL AND INTANGIBLE ASSETS (5,144) (5,633) -8.7%

LAND LEASE RENT (1,318) (1,327) -0.7%

INTEREST, NET (5,563) (5,857) -5.0%

OTHER INCOME (EXPENSE) 363 (1,513) N/A

CURRENT INCOME TAX RECOVERY 8,421 3,885 116.8%

FUTURE INCOME TAX RECOVERY (PROVISION) (5,282) 248 N/A

FUTURE INCOME TAX RECOVERY ON PRIOR YEAR OPERATING LOSSES – 3,483 –

NET LOSS $ (3,662) $ (2,212) 65.6%

WEIGHTED AVERAGE SHARES OUTSTANDING (000) 27,976 28,056 -0.3%

BASIC AND DILUTED LOSS PER SHARE $ (0.13) $ (0.08) 62.5%

CASH FLOW FROM OPERATIONS $ 4,528 $ (1,827) 347.8%

BASIC AND DILUTED CASH FLOW FROM OPERATIONS PER SHARE $ 0.17 $ (0.07) 342.9%

ELIGIBLE CASH DIVIDENDS PER SHARE $ 0.075 $ 0.075 0.0%

The following exchange rates translate one US dollar into the Canadian dollar equivalent.

2010 2009

Statement of earnings, average for the fourth quarter 1.0128 1.0563



32


Fourth Quarter 2010 Results (cont’d)

The majority of the revenue and EBITDA earned in the quarter ended December 31, 2010 relate to the golf club and resort operations ascertain golf courses remain open in the fall and annual dues revenue is recognized on a calendar year basis. Costs for the end of seasonmaintenance and operating expenses in all business areas also negatively impact EBITDA in the fourth quarter.

Net loss for the fourth quarter of 2010 was $3,662,000 as compared to a loss of $2,212,000 in 2009. This change was primarily due to therecognition of a future tax recovery on prior year operating losses in the amount of $3,483,000 in 2009.

Seasonality

The quarterly earnings performance of the Company reflects the highly seasonal nature of both business segments. The majority of revenueand earnings from these businesses occur during the second and third quarters of the year. Accordingly, the quarterly reported net earningsof the Company will fluctuate with those of the underlying business segments. This seasonality will be mitigated somewhat by the Floridaacquisitions in late 2010.

Risks and Uncertainties

ClubLink manages a number of risks in each of its business segments in order to achieve an acceptable level of risk without hindering itsability to maximize returns. Management has procedures to identify and manage significant operational and financial risks.

In addition to the risks described elsewhere in this MD&A, this section describes the principal risks that could have a material and adverseeffect on the Company’s financial condition, results of operations and cash flows, as well as cause actual results to differ materially fromexpectations expressed in or implied by forward-looking statements. The risks described below are not the only risks that could affect theCompany. Additional risks and uncertainties not currently known or that are currently deemed to be immaterial may also materially andadversely affect ClubLink’s financial condition, results of operations and cash flows.

Economic & Business Risk

A decline in the economic environment and its impact on disposable income in areas where ClubLink operates may have an adverse effecton operating revenue. The Company’s business segments are dependent upon discretionary spending by consumers and corporations whichin turn is impacted by general economic conditions.

An extended recession could materially affect both business segments’ revenue and financial performance as discretionary spending declines.

The ability to attract and retain golf members and the number of rounds played at member, hybrid and daily fee golf clubs have historicallybeen dependent upon (i) discretionary spending by consumers and corporations, which may be affected by general economic conditions inthe markets that the Company operates, and (ii) the popularity of golf as a leisure activity. There is no certainty that current levels ofparticipation will be sustained or increase in the future. A decrease in the overall number of golfers, their rates of participation and consumeror corporate spending on golf, individually or collectively, could have a material adverse effect on the Company’s business, financial conditionand results of operations. Given that a substantial portion of the Company’s golf activities are carried out in southern Ontario, the resultsof operations will depend heavily on the financial condition of this market.

A decline in the economic environment and its impact on disposable income in areas where ClubLink’s clusters are located may have anadverse effect on the Company’s golf club and resort operations revenue. The Company believes that revenue from member clubs wouldremain relatively constant since a member is committed to pay annual dues and consume a food and beverage minimum to maintain theirmembership. The Company believes that it would be unlikely that a significant number of members would forfeit their memberships afterthe payment of all or a substantial portion of a non-refundable membership fee. While the sale of new memberships may decline in suchcircumstances, almost all member golf clubs have a membership base that generates sufficient operating revenue to sustain profitableoperations at that property.

Corporate event bookings, which represent a material portion of the Company’s golf revenue, are susceptible to major changes in theeconomic environment.

The success of the rail, tourism and port operations are largely dependent upon the continued flow of cruise ship traffic along the westcoast of North America to Alaska. As experienced during 2010, these operations can be disrupted for reasons beyond the control ofmanagement, including new taxes, commercial and weather-related changes to cruise ship scheduling.

Economic Dependency

Rail, tourism and port operations are economically dependent upon the Alaska cruise line industry. For the year ended December 31, 2010,Carnival Cruises and its subsidiaries, Princess Cruises and Holland America Cruises, made up approximately 56.3% of operating revenue(2009 – 53.9%). The loss of this customer could have a material impact on the operations of the Company.



33


Risks and Uncertainties (cont’d)

Foreign Currency Risk

ClubLink operates both in Canada and the United States and reports its earnings in Canadian dollars. Fluctuations in exchange ratescould affect the cost of capital or the contribution from operations in the United States, and the value of the Company’s investments in theUnited States.

Availability of Credit/Liquidity

No assurance can be given that borrowings will be available to the Company or its subsidiaries to replace existing debt facilities on termsacceptable to the Company, if at all. Failure to renew or replace credit facilities as they mature would require ClubLink to obtain alternativesources of capital, which may include the sale of assets or the issuance of equity at prices that may be dilutive to current shareholders.

Renewal Risk

ClubLink is exposed to renewal risk on its maturing debt. A total of 83% of ClubLink’s consolidated debt is fully amortizing over theremaining term to maturity and 17% (December 31, 2009 – 11%) of ClubLink’s debt is subject to this risk.

Interest Rate Risk

ClubLink is exposed to market risk related to interest rate fluctuations. The majority of ClubLink’s consolidated debt has fixed interest ratesover its remaining term to maturity, and less than 24% (December 31, 2009 – 23%) of its debt is subject to this risk.

Risks Associated with Information Systems

Golf club and resort operations rely on information systems to obtain, rapidly process and analyze data to manage:

• its tee sheet and reservation system;• its member database;• the accurate billing of and collections from members;• the accurate accounting for and payment to vendors; and• the processing of financial data.

Rail, tourism and port operations rely on information systems to manage train scheduling, cruise ship booking, communications andaccounting data.

Results of operations from both business segments could be adversely affected if these systems are interrupted, damaged by unforeseenevents or fail for any extended period of time, including due to the action of third parties.

Competition

The competitive environment in both business segments is evolving. There have been significant additions to alternative products in the golfclub, resort and tourism sectors in Ontario. While the Company has certain competitive advantages which management believes will offset,in part, the impact of this increased competition, it has been affected by these developments.

Key Management

The Company’s success depends upon the continued contribution of key management, some of whom have unique talents and experienceand would be difficult to replace quickly. The loss or interruption of the services of a key executive could have a material adverse effect onour business during the transitional period that would be required to restructure the organization or for a successor to assume theresponsibilities of the key management position.

Litigation

The Company and certain of its subsidiaries are defendants in a number of legal actions. Although the outcome of these claims cannot bedetermined, in the opinion of management, the resolution of these matters is not expected to have a material adverse effect on the Company’sfinancial position or results of operations.

Regulatory Environment

ClubLink and its subsidiaries are subject to regulation by numerous agencies involving the serving of alcohol, operation of a golf course,operation of a railroad and adherence to environmental constraints. Changes in these regulations, and their application, can impact the costand efficiency of the affected business segment.



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Loss of Reputation

“ClubLink One Membership More Golf ” and “White Pass & Yukon Route” both currently enjoy recognizable brand names in their operatingmarkets. Damage to these brands could have a negative impact on the affairs of the Company. If the Company does not meet or exceedcustomer expectations, these brands could suffer. The Company endeavours to mitigate this risk, mainly by ongoing employee training anda company-wide focus on customer service excellence.

Environment

ClubLink’s golf courses are constructed and managed with a high level of environmental awareness. In addition, ClubLink’s turf managementteam is highly knowledgeable and receives extensive training regarding the proper use of pesticides and chemicals required to promotehealthy golf course conditions and compliance with applicable regulations. However, certain risks are associated with the use of thesematerials and the overall effect a golf course has on the surrounding habitat, including nearby waterways.

Rail, tourism and port operations are subject to extensive federal, provincial, territorial, state, municipal and local environmental laws andrequirements in both Canada and the U.S. relating to, among other things, air emissions, management of contaminants including hazardousmaterials and waste, discharges to waters and the remediation of environmental impacts (such as the contamination of soil and water,including groundwater). A risk of environmental liabilities is inherent in transportation operations, historic activities associated with suchoperations and the ownership, management or control of real estate.

The Company believes that it has adopted appropriate practices and procedures and maintains adequate insurance to address environmentalcontingencies. As part of our environmental policies, ClubLink monitors, controls and manages environmental issues by way of measuresfor waste prevention, minimization and recycling of any waste products. A committee of the Board of Directors has been established to ensureappropriate policies and standards are maintained for environmental stewardship.

Terrain

The rail, tourism and port operation segment operates in remote, rocky and mountainous terrain. While the Company maintains safeguards,operations may be adversely affected in the event of a rockslide, washout or accident.

Weather

Extraordinary weather conditions involving extended dry or wet periods or exceptional hot or cold temperatures could impact the conditionof golf courses and the demand for golf. Management believes that its geographically diverse operations may serve to reduce the impact ofsevere weather conditions.

The rail, tourism and port operations segment is dependant on its ability to operate its port and railroad. Severe weather and natural disasters,such as extreme cold or heat, flooding, snow, unusual high winds, stormy seas and earthquakes, can disrupt operations and service for theport and railroad and damage its infrastructure or properties.

Real Estate

ClubLink is subject to risks inherent in the acquisition, development, ownership and financing of real estate in general and the operations,rehabilitation and development of golf courses and recreational real estate in particular, such as the risk of depreciation in the value of landand federal, provincial and municipal governmental regulations, including environmental, sewer, water, zoning and similar regulations. It ispossible that enactment of new laws, changes in the interpretation or enforcement of applicable laws, rules and regulations or the decisionof any authority to change or refuse a change to current zoning classification may have an adverse effect on the value of these golf facilitiesand related real estate.

Unions and Collective Bargaining

During 2011, the Company anticipates collective bargaining sessions with all three unions representing the unionized employees of the rail,tourism and port operations segment.

In any set of labour negotiations, there can be no assurance that the negotiated compensation expenses or changes to operating efficiencywill be as planned and may result in unanticipated increased costs and/or reduced productivity. In addition, there can be no assurance thatreduced productivity and work disruptions will not occur during the course of collective bargaining prior to settlement.



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Exchange of Confidential Information

This risk involves the utilization of members’ confidential information, particularly in direct marketing. The potential dissemination of suchinformation to the wrong individuals could cause significant damage to our relationship with our members and customers and could resultin legal action. Various initiatives have been implemented which seek to minimize the possibility that this may occur.

ClubLink is also involved in payment card industry (PCI) compliance, a rigorous set of standards leveraging the latest security technology,such as encryption, to ensure the protection of customer credit card information. These capabilities are being introduced and implementedby ClubLink.

Income and CommodityTax Amounts

The operations of ClubLink are relatively complex and related tax interpretations, regulations and legislation that pertain to ClubLink’sactivities are subject to continual change. The Company collects and pays income and commodity taxes to various taxation authorities.

The audit and review activities of the Internal Revenue Service and Canada Revenue Agency and other jurisdictions’ tax authorities affectthe ultimate determination of the actual amounts of commodity taxes payable or receivable, future income tax liabilities and income taxexpense. Therefore, there can be no assurance that taxes will be payable as anticipated and/or that the amount and timing of receipt of useof the tax-related assets will be as currently expected.

Integration of Acquisitions

Integration activities include the review and alignment of accounting policies, employee transfers and moves, information systems,optimization of service offerings and establishment of control over new operations. Such activities may not be conducted efficiently andeffectively, negatively impacting service levels, competitive position and expected financial results.

ClubLink has a team that performs the integration function. This team applies an integration model, based on experiences from numerousprevious integrations, which enhances and accelerates the standardization of ClubLink’s business processes and strives to preserve the uniquequalities of acquired operations. The integration process begins with strategic, pre-closing analysis and planning, and continues after closingwith the execution of a plan. Integrated operations are re-evaluated and assessed regularly, based on timely feedback received from theintegration team.

Emerging Accounting Pronouncements

International Financial Reporting Standards

In 2005, Canada’s Accounting Standards Board announced that Canadian GAAP, as used by publicly accountable enterprises, would be fullyconverged with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board to becomplete by January 1, 2011. This section discusses the Company’s expectations regarding the changeover to IFRSs.

There can be no guarantee that the International Accounting Standards Board will not make further pronouncements, and that the CanadianAccounting Standards Board will also not adopt further pronouncements, before the consolidated financial statements as at December 31,2011, are prepared. Consequently, there can be no guarantee that the standards used to prepare information in this section will not differfrom those used to prepare the consolidated financial statements for the year ended December 31, 2011, and that the effects described andquantified below will not change.

Key IFRS dates:

January 1, 2010 (transition date): An opening consolidated balance sheet as of January 1, 2010 according to IFRSs has been prepared to facilitatethe changeover to IFRSs reporting in 2011. ClubLink reported its fiscal 2010 and comparative 2009 results according to Canadian GAAP.

January 1, 2011 (changeover date): The date after which ClubLink will prepare and report interim and annual 2011 financial statements with2010 comparatives according to IFRSs.

(a) Description of Phases and Plan

At this point in the IFRS conversion, management has completed the scoping and diagnostic and the impact analysis, evaluation and designphases (Phases 1 and 2, respectively). The Company is now at the implementation and review phase (Phase 3).



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Emerging Accounting Pronouncements (cont’d)

International Financial Reporting Standards (cont’d)

(a) Description of Phases and Plan (cont’d)

PHASE DESCRIPTION AND STATUS

This phase involves performing a high-level impact assessment to identify key areas that may beimpacted by the transition to IFRSs. As a result of these procedures, the potentially affected areas areranked as high, medium or low priority.

Based on the current state of IFRSs, this phase has been completed and management has identifiedcertain differences between GAAP and IFRSs that impact ClubLink’s financial results and/or theCompany’s efforts necessary to change over to IFRSs. The main differences identified to date can befound under section (d) accounting policy differences.

The International accounting Standards Board (“IASB”) has activities currently underway which maychange IFRSs. The Company will assess any such changes as they occur to determine their impact.

In this phase, each impact area identified from the scoping and diagnostic phase was addressed.This phase involves the specification of changes required to existing accounting policies, informationsystems, internal controls over financial reporting, disclosure controls and procedures, financialreporting and business processes together with an analysis of policy alternatives allowed under IFRSsand development of draft IFRS financial statement content. This phase has been completed.

This phase includes execution of changes identified in the impact analysis, evaluation and designphase. This also includes completing a formal authorization process to approve recommendedaccounting policy changes and training programs across the Company’s finance and other staff, asnecessary. It will culminate in the collection of financial information necessary to compile IFRS-compliant financial statements, embedding IFRSs in business processes, audit committee review andrecommendation for Board approval of IFRS financial statements.

Technical papers for the changeover to IFRSs have been prepared by management and are beingreviewed by the auditors.

IFRS 1 exemptions have been chosen.

IFRS accounting policy choices have been prepared and are being reviewed by the auditors and theaudit committee.

Transition and Changeover Date balance sheets have been prepared and disclosed in section (e).

IFRS note disclosure is being considered and any additional data sources needed are being organized.

This phase is substantially complete.

The Ontario Securities Commission has extended the quarterly filing deadline for Q1 2011 only to 75days from 45 days. ClubLink plans on filing its March 31, 2011 reports within 45 days.

Impact analysis,evaluation and design(Phase 2)

Implementation and review(Phase 3)

Scoping and diagnostic(Phase 1)



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(b) Status Update

As the conversion process is implemented, the Company will outline the milestones of the transition to IFRSs in its financial disclosures. Thefollowing table indicates the status of the conversion to IFRSs as at March 1, 2011:

Financial Information

Information Systemsand Processes

Internal Controls

Training andCommunication

Business

MAIN ACTIVITIES

Identify and analyze thedifferences between IFRSs andthe Company’s accountingpolicies.

Select from among the IFRSexemptions permitted inaccordance with IFRS 1.

Select from the IFRS accountingpolicy choices.

Prepare the transition datebalance sheet for January 1, 2010using IFRSs.

Develop a model for IFRSfinancial statements, includingnotes.

Evaluate the impact of thechanges to financial systems andprocesses for communicatinginformation and implement thechanges required.

Evaluate the impact of thechanges to internal controlson financial information andcontrols and procedures forcommunicating information andimplement the changes required.

Identify training needs andprovide training.

Communicate the progress of theconversion plan to shareholders.

Evaluate impact on theCompany’s contractualundertakings and keyperformance indicators (KPI’s)(compliance with restrictivefinancial clauses, compensationplans, etc.).

Make changes required tocontractual agreements andKPI’s as per evaluation.

SCHEDULE

Completed – see section (d)

Completed – see section (c)

Completed – see section (d)

Completed – see section (e)

Draft completed.

Completed, no significant ITchanges required.

Evaluation completed and nochanges were required to currentinternal controls or financialinformation and controls andprocedures.

Training sessions have beenheld with more scheduled in2011 as required.

Detailed information providedquarterly.

Completed – no materialchanges noted.

Completed – no materialchanges noted.

STATUS

Done

Done

Done

Done

In progress: draft statementformat and note disclosure arebeing prepared.

Done

Done

Training given to primary staffmembers involved in theconversion process.

Detailed information updatedeach quarter.

Done

Done



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(c) IFRS 1 Exemptions

Generally under IFRSs all standards are to be applied retrospectively upon transition. However there is some relief given to first-timeadopters and below is a list of significant IFRS 1 exemptions that the Company has taken on the transition date (January 1, 2010).

EXPECTED IMPACT ON FINANCIALSTATEMENTS AT THE TRANSITION

EXEMPTION DESCRIPTION DESCRIPTION AND DECISION DATE AND FUTURE ANNUAL IMPACT

Business Combinations The Company may elect to either restate all No impact at transition date or in the future.past business combinations in accordancewith IFRSs or to apply an elective exemptionfrom applying IFRSs to past business combinations.

The Company will use the IFRS 1 exemption inorder to not apply IFRSs to past businesscombinations.

Revaluation or Fair Value as The Company may elect to report property, Transition Date Impact:Deemed Cost for Property, plant and equipment in its transition date balance We expect property, plant and equipmentPlant and Equipment and sheet at a deemed cost instead of the actual cost and investment property values for the rail,Investment Property that would be determined under IFRSs. The tourism and port operations to be increased

deemed cost of an item may be either its fair by $48,342,000 on the transition date withvalue at the date of transition to IFRSs or an a corresponding increase of $19,086,000 toamount determined by a previous revaluation deferred tax liabilities.under Canadian GAAP. The exemption can beapplied on an asset-by-asset basis. Future Annual Impact:

Amortization expense is expected to beThe Company will use fair value as deemed approximately $2,146,000 higher in futurecost for the land, buildings, docks, and investment years due to this increase (based on averageproperty of the rail, tourism and port operations. 2010 exchange rates), with a correspondingAll other components of property, plant and decrease of $862,000 to deferred tax liabilities.equipment will be reported using historical cost.

Cumulative Translation On transition, cumulative translation gains or The value of the CTA account as at December 31,Account (CTA) losses in accumulated other comprehensive 2009 in the amount of $23,891,000 will be

income can be reclassified to retained earnings charged to retained earnings at the transition date.at the Company’s election. If not elected,all cumulative translation differences mustbe recalculated under IFRSs from inception.

The Company will reset the current CTA balanceto zero as at January 1, 2010 and move the balanceto retained earnings as per the election.



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(d) Accounting Policy Differences

The table below outlines the key IFRS accounting policies that are different from the current GAAP accounting policies and their expectedimpact on the transition date balance sheet and on the financial statements subsequent to January 1, 2010. The note disclosure associatedwith the items listed is not discussed in detail in this chart.

EXPECTED IMPACT ON FINANCIALSTATEMENTS AT THE TRANSITION

ACCOUNTING POLICY KEY DIFFERENCE IN ACCOUNTINGTREATMENT DATE AND FUTURE ANNUAL IMPACT

Business Combinations There are several differences in business Transition Date Balance Sheet:combinations under IFRSs vs. current GAAP. No impact expected as the Company isHowever, the new GAAP HB Section 1582 for taking IFRS 1 exemption above.business combinations effective for 2011 isconverged with IFRSs and ClubLink has adopted Future annual impact:this section prospectively starting in 2010. The Company will apply IFRS 3 to all future

business combinations.Key differences include• Transaction costs must be expensed• Non-controlling interest is to be measuredat fair value at date of acquisition.

Property Plant and IFRSs allows PP&E to be carried at amortized Transition Date Balance Sheet:Equipment (PP&E) cost or revalued cost. GAAP requires PP&E We expect a retrospective adjustment of

to be carried at amortized cost. The Company $621,000 for additional prior year amortizationwill use amortized cost under IFRSs. taken on the new depreciable asset classes

that resulted from componentization. TheIFRSs requires componentization for PP&E. corresponding decrease to deferred incomeAsset componentization involves breaking down tax liabilities was $159,000.an asset by identifying significant individualcomponents and separately depreciating thoseindividual components over their useful lives. Future annual impact:ClubLink plans to have two additional Amortization expense in future years is expectedamortization categories due to componentization. to be higher by approximately $584,000 due to

componentization. The corresponding decreaseThe new depreciable asset classes identified by to deferred income tax expense is expectedmanagement are (i) golf course bunkers to be $150,000.and (ii) thermal control for buildings.

Investment Property IFRSs defines investment property as property Transition Date Balance Sheet:(new financial statement held by the owner to earn rental income, capital No material impact expected.category under IFRSs) appreciation or both.

Future Annual Impact:IFRSs allows investment property to be accounted No material impact expected.for using amortized cost or fair value. GAAPrequires investment property to be carried atamortized cost. The Company will use amortizedcost under IFRS.

Impairment of Assets Impairment testing of assets under IFRSs is more Transition Date Balance Sheet:granular than GAAP. The concept of a “cash No impact expected.generating unit (CGU)” is a lower level ofaggregation than an “operating segment” under Management has identified breakdownGAAP. Goodwill is allocated to each CGU and of CGU’s.then tested for impairment.

Future Annual Impact:Main differences: Impact undeterminable at this point in time.a) test at each reporting period for indications

of impairment and then if indications existfull testing is done

b) intangible assets must be tested forimpairment annually

c) discounted cash flows are used to determinevalue in use

d) impairment loss (other than for goodwill) may bereversed in future periods if economic conditionsand future values support the change



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(d) Accounting Policy Differences (cont’d)EXPECTED IMPACT ON FINANCIALSTATEMENTS AT THE TRANSITION

ACCOUNTING POLICY KEY DIFFERENCE IN ACCOUNTINGTREATMENT DATE AND FUTURE ANNUAL IMPACT

Provisions and Contingent A provision is recognized when it is probable Transition Date Balance Sheet:Liabilities (more likely than not) that an outflow of resources No impact expected

will be required to settle the obligation. GAAPuses a higher threshold to recognize a provision. Future Annual Impact:

Impact undeterminable at this point in time.

Foreign Currency Translation Under IFRSs, the concept of an integrated or Transition Date Balance Sheet:self-sustaining foreign operation does not exist No impact expected.as it does under GAAP. Under GAAP, ClubLink’sUnited States golf club and resort operations are Future Annual Impact:considered to be integrated foreign operations An adjustment of $619,000 is expected to be maderesulting in historical foreign exchange rates used in 2010 as a result of a lower exchange rateto translate non-monetary assets and liabilities. at December 31, 2010 as compared to theUnder IFRSs, these operations will be translated exchange rates used for GAAP translationusing period-end exchange rates and any exchange during 2010. Future impact beyond 2011 isgains or losses will be included with other undeterminable at this point in time.comprehensive loss.

Income Taxes There are a number of minor differences in Transition Date Balance Sheet:the presentation and calculation of income taxes No impact expected other than the tax effectunder IFRSs. of other IFRS adjustments.

Future Annual Impact:Impact undeterminable at this time.

The above list and related comments should not be regarded as a complete list of changes that will result from conversion to IFRSs. It isintended to highlight those areas we believe to be most significant. Until we have prepared a full set of annual financial statements underIFRSs, management will not be able to determine or precisely quantify all of the impacts that will result from the conversion to IFRSs.

International Financial Reporting Standards that are mandatory at the transition and changeover date have been finalized, however, theIASB’s work plan currently has projects underway that are expected to result in new pronouncements that continue to evolve IFRSs. TheIASB is reviewing the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets, with the intention of replacing it with a newstandard in 2011. The IASB is also expected to review the IAS 12 standard for income taxes and develop proposals for changes. The existingIAS 12 standard is applicable to the Company’s conversion to IFRSs.

In June 2010, the IASB issued an exposure draft pertaining to revenue recognition as part of the joint revenue project with the US FinancialAccounting Standards Board (FASB). In August 2010, the IASB issued an exposure draft pertaining to leases as part of the joint leasing projectwith FASB. The leasing exposure draft proposes the elimination of the distinction between operating leases and finance leases and wouldintroduce a new model for lessees and lessors. If this exposure draft is introduced it will have a material impact on the Company’s balance sheet.

The Company continues to evaluate the possible effects of new standards and exposure drafts, and will monitor the near-term projects thatthe IASB initiates for income taxes and leases. The ultimate impacts cannot be determined at this time.



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(e) Expected Adjustments to Consolidated Financial Statements

While the adoption of IFRSs will not have an impact on our reported net cash flows, it will have an impact on the Company’s consolidatedbalance sheets, statements of earnings and comprehensive earnings.

The following tables show the adjustments that we expect to make to our consolidated balance sheet, statement of earnings and statementof equity. These adjustments are unaudited.

The opening IFRS balance sheet reflects the revaluation of certain rail, tourism and port operations capital assets and the adjustment toaccumulated depreciation as a result of componentization within capital assets.

Expected Adjustments to Consolidated Balance Sheet as of January 1, 2010 (transition date)

Compo- CumulativeFair Value nentization Translation

GAAP Adjustments Adjustments Loss Reset IFRS(thousands of dollars) (Audited) (Note 1) (Note 2) (Note 3) (Unaudited)

Assets

Current assets $ 28,516 $ – $ – $ – $ 28,516

Property, plant and equipment 523,770 46,650 (621) – 569,799

Investment property 12,954 1,692 – – 14,646Other non-current assets 62,513 – – – 62,513

Total assets $ 627,753 $ 48,342 $ (621) $ – $ 675,474

Liabilities

Current liabilities $ 80,276 $ – $ – $ – $ 80,276

Non-current liabilities – other 375,550 – – – 375,550Deferred tax liabilities 17,367 19,086 (159) – 36,294

Total liabilities 473,193 19,086 (159) – 492,120


Share capital 106,191 – – – 106,191

Contributed surplus 188 – – – 188

Retained earnings 72,072 29,256 (462) (23,891) 76,975Accumulated other comprehensive loss (23,891) – – 23,891 –

Total shareholders’ equity 154,560 29,256 (462) – 183,354

Total liabilities and equity $ 627,753 $ 48,342 $ (621) $ – $ 675,474

NOTE 1Fair value adjustments of rail, tourism and port operations land, buildings, docks and investment property, adjusted for amortization differences, if applicable. These assets are being reflectedat fair value as their deemed cost at transition date.

NOTE 2Additional depreciation as a result of componentization of golf course bunkers and thermal control for buildings

NOTE 3Reset of cumulative translation loss as allowed under IFRS 1



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(e) Expected Adjustments to Consolidated Financial Statements (cont’d)

Expected Adjustments to Consolidated Balance Sheet as of December 31, 2010 (changeover date)Foreign

ExchangeCompo- Cumulative Adjustment

Fair Value nentization Translation on IntegratedGAAP Adjustments Adjustments Loss Reset Operations IFRS

(thousands of dollars) (Audited) (Note 1) (Note 2) (Note 3) (Note 4) (Unaudited)

Assets

Current assets $ 11,731 $ – $ – $ – $ – $ 11,731

Property, plant and equipment 528,015 42,074 (1,205) – (576) 568,308

Investment property 13,020 1,585 – – – 14,605Other non-current assets 58,646 – – – (43) 58,603

Total assets $ 611,412 $ 43,659 $ (1,205) $ – $ (619) $ 653,247

Liabilities

Current liabilities $ 48,631 $ – $ – $ – $ – $ 48,631

Non-current liabilities – other 389,273 – – – – 389,273Deferred tax liabilities 17,711 17,230 (309) – – 34,632

Total liabilities 455,615 17,230 (309) – – 472,536


Share capital 105,613 – – – – 105,613

Retained earnings 75,260 27,972 (896) (23,891) – 78,445Accumulated other comprehensive loss (25,076) (1,543) – 23,891 (619) (3,347)

Total shareholders’ equity 155,797 26,429 (896) – (619) 180,711

Total liabilities and equity $ 611,412 $ 43,659 $ (1,205) $ – $ (619) $ 653,247

NOTE 1Fair value adjustments of rail, tourism and port operations land, buildings, docks and investment property, adjusted for amortization differences and foreign exchange, if applicable. These assetsare being reflected at fair value as their deemed cost at transition date.

NOTE 2Additional depreciation as a result of componentization of golf course bunkers and thermal control for buildings.

NOTE 3Reset of cumulative translation loss as allowed under IFRS 1.

NOTE 4Adjust foreign exchange on integrated non-monetary US assets of golf club and resort operations (Lake Chesdin and Florida properties).



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Reconcilation of shareholders’ equity as reported under GAAP and IFRSAccumulated

OtherCompre- Total

Note Share Contributed Retained hensive Shareholders’(thousands of dollars) Ref Capital Surplus Earnings Loss Equity

As reported under GAAP – Dec. 31, 2009 $ 106,191 $ 188 $ 72,072 $ (23,891) $ 154,560

IFRS differences increasing (decreasing) reportedamount under GAAP:

Fair value adjustmentsrail, tourism and port operations 1 – – 48,342 – 48,342

Componentization adjustments 2 – – (621) – (621)

Cumulative translation account reset 3 – – (23,891) 23,891 –Deferred income taxes on above adjustments 1, 2 – – (18,927) – (18,927)

As reported under IFRS January 1, 2010 (unaudited) 106,191 188 76,975 – 183,354

As reported GAAP amounts:

Purchase and cancellation of shares, net (578) (188) (260) – (1,026)

Dividends – – (8,394) – (8,394)

Earnings for the year under GAAP – – 11,842 – 11,842

Unrealized foreign exchange translation loss asreported under GAAP – – – (1,185) (1,185)

IFRS differences increasing (decreasing)reported amount under GAAP:

Amortization on fair value adjustments 1 – – (2,146) – (2,146)

Amortization on componentization adjustments 2 – – (584) – (584)

Unrealized foreign exchange translationloss on fair value adjustments 1 – – – (1,543) (1,543)

Unrealized foreign exchange translation losson integrated golf club and resort operations 4 – – – (619) (619)

Deferred income taxes on above adjustments 1, 2 – – 1,012 – 1,012

Under IFRS December 31, 2010 (unaudited) $ 105,613 $ – $ 78,445 $ (3,347) $ 180,711

NOTE 1Fair value adjustments of rail, tourism and port operations land, buildings, docks and investment property, adjusted for amortization differences, and foreign exchange, if applicable. These assetsare being reflected at fair value as their deemed cost at transition date.


NOTE 3Reset of cumulative translation loss as allowed under IFRS 1.




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Expected Adjustments to Consolidated Statement of Earnings and Comprehensive Earnings for the Year EndedDecember 31, 2010

ForeignAmortization Exchange

Amortization on Compo- Adjustmenton Fair Value nentization on Integrated

GAAP Adjustments Adjustments Operations IFRS(thousands of dollars, except per share amounts) (Audited) (Note 1) (Note 2) (Note 3) (Unaudited)

REVENUE

Operating revenue $ 189,903 $ – $ – $ – $ 189,903Amortization of membership fees 15,292 – – – 15,292

205,195 – – – 205,195

EXPENSES

Cost of sales 21,323 – – – 21,323

Operating expenses 118,722 – – – 118,722Direct costs of originating membership fees 1,511 – – – 1,511

141,556 – – – 141,556

Earnings before other items and income taxes 63,639 – – – 63,639

OTHER ITEMS

Amortization of capital assets 19,807 2,146 584 – 22,537

Amortization of intangible assets 982 – – – 982

Land lease rent 5,285 – – – 5,285

Interest, net 22,108 – – – 22,108Other income (344) – – – (344)

47,838 2,146 584 – 50,568

Earnings before income taxes 15,801 (2,146) (584) – 13,071

PROVISION FOR INCOME TAXES

Current (1,811) – – – (1,811)Deferred 5,770 (862) (150) – 4,758

3,959 (862) (150) – 2,947

Net earnings 11,842 (1,284) (434) – 10,124Unrealized foreign currency translation loss (1,185) (1,543) – (619) (3,347)

Total comprehensive earnings $ 10,657 $ (2,827) $ (434) $ (619) $ 6,777

Weighted averages shares outstanding 27,976,000 27,976,000

Earnings per share basic and diluted $ 0.42 $ (0.04) $ (0.02) $ – $ 0.36

NOTE 1Fair value adjustments of rail, tourism and port operations land, buildings, docks and investment property, adjusted for amortization differences, and foreign exchange, if applicable. These assetsare being reflected at fair value as their deemed cost at transition date.





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(f) Internal Controls over financial reporting

The conversion to IFRSs from GAAP impacts the way we present our financial results and the accompanying disclosures. We have evaluatedthe impact of the conversion on our financial reporting systems, processes and controls. No material changes have been made to our financialreporting systems, processes or internal controls.

Business Combinations and Consolidated Financial Statements

Effective January 1, 2010, the Company adopted the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 1582,Business Combinations, Section 1601, Consolidated Financial Statements and Section 1602, Non-controlling Interests. These Sectionsestablish principles and requirements of the acquisition method for business combinations and related disclosures and accounting for anon-controlling interest in a subsidiary in consolidated financial statements to a business combination. This includes the requirement forbusiness combination costs to be expensed as incurred, rather than being capitalized. These Sections were applied prospectively fromJanuary 1, 2010.

Non-GAAP Measures

The Company has prepared the financial information contained in this management discussion and analysis in accordance with GAAP.Reference is also made to net operating income, operating margin, net membership fee income, EBITDA, cash flow from operations, cashflow from operations per share and free cash flow. The calculations of these measures can be found embedded in the MD&A.

ClubLink uses these non-GAAP measures as a benchmark measurement of our own operating results and as a benchmark relative to ourcompetitors. The Company considers these non-GAAP measures to be a meaningful supplement to GAAP measures. The Company alsobelieves these non-GAAP measures are commonly used by securities analysts, investors and other interested parties to evaluate our financialperformance. While these non-GAAP measures have been disclosed herein to permit a more complete comparative analysis of the Company’soperating performance and debt servicing ability relative to other companies, readers are cautioned that these non-GAAP measures asreported by ClubLink may not be comparable in all instances to non-GAAP measures as reported by other companies.

EBITDA does not represent cash generated from operations as defined by GAAP and it is not necessarily indicative of cash available to fundcash needs. Furthermore, EBITDA does not reflect the impact of a number of items that affect our net earnings. EBITDA is not a measureof financial performance under GAAP, and should not be considered as an alternative to measures of performance under GAAP.

Disclosure Controls and Procedures

ClubLink’s Chairman and Chief Executive Officer and its Chief Financial Officer are responsible for establishing and maintaining theCompany’s disclosure controls and procedures. Our disclosure controls are designed to provide reasonable assurance that informationrequired to be disclosed by ClubLink is recorded, processed, summarized and reported within the time periods specified under Canadiansecurities laws, and include controls and procedures that are designed to ensure that information is accumulated and communicated tomanagement, including the Chairman and Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regardingrequired disclosure. The Chairman and Chief Executive Officer and the Chief Financial Officer, after evaluating the effectiveness of theCompany’s disclosure controls and procedures as at December 31, 2010, have concluded that the Company’s disclosure controls are adequateand effective to ensure that material information relating to the Company and its subsidiaries would have been known to them.

Management’s Report on Internal Controls Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting.

The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of recordsthat, in reasonable detail, accurately and fairly reflect the transactions and dispositions of ClubLink’s assets; (ii) provide reasonable assurancethat transactions are recorded appropriately to permit preparation of financial statements in accordance with generally accepted accountingprinciples, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors;and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assetsthat could have a material effect on the financial statements.

There were no changes in internal control over financial reporting that occurred during the Company’s most recent interim period thathave materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.



46


Outlook


On September 3, 2010, ClubLink announced that it had entered the Florida marketplace by purchasing eight 18-hole equivalent golf coursesin Sun City Center, Florida. This acquisition was supplemented by the Heron Bay acquisition on October 21, 2010 in Coral Springs, nearFort Lauderdale. ClubLink is pursuing other opportunities in the Southern Florida marketplace to supplement its initial acquisitions.

ClubLink entered the Florida market for the following reasons:

(a) The depressed golf market in Florida provides opportunities to implement ClubLink’s model of Regional reciprocal play to enhanceindividual club performance.

(b) Our member survey indicates Ontario and Quebec members through secondary home purchases and golf/sun vacations would beaccretive to the Florida Region’s performance.

(c) Management believes that establishing a Florida Region will be perceived as an added value, enhancing demand for new membershipsales in both the Ontario/Quebec and Florida Regions.


The cruise industry announced capacity reductions to the Alaska market in response to a head tax imposed by the State of Alaska on cruiseship passengers. At the beginning of 2010, the expected result was a 12% reduction in passengers to Skagway, Alaska in 2010 and a further6% in 2011. White Pass and other key Alaskan tourism businesses responded to this challenge by founding the Alaska Alliance for CruiseTravel (“AlaskaACT”), an Alaskan state-wide non-profit membership now comprising over 700 businesses and individuals that recognize thebenefit of cruise travel. AlaskaACT’s mandate is to create a positive business environment in Alaska for the cruise and tourism industries byworking with the Governor of Alaska and the cruise industry to reduce the cruise ship head tax and make the Alaskan cruise marketcompetitive again.

The Governor joined AlaskaACT’s trade mission to Cruise Shipping Miami in March 2010 and made a commitment to address the cruiseindustry issues. Significant progress was made in April, 2010 when the state Legislature passed the head tax reduction (from US$46.00 toUS$34.50 effective in October 2010) into law as well as allocating US$7,000,000 in additional funds to market cruising in Alaska.

These moves were hailed as a positive step by cruise industry executives which is expected to increase the number of cruise ships starting in2012. On October 14, 2010, Princess Cruises announced that they were adding a fourth ship to the Voyage of the Glaciers itinerary. It’sestimated that this ship will bring approximately 45,000 additional passengers to Skagway, Alaska during the 2012 season.

For 2011, three new high-end luxury cruise lines – Disney, Crystal and Oceania – are coming to Alaska, offsetting the previously announced6% reduction, creating a modest 0.8% expected increase in port passengers to Skagway, Alaska over 2010.

Corporate Operations

For 2011 and beyond, the Company believes it is well positioned to capitalize on its unique assets and their competitive strengths. TheCompany anticipates that opportunities will arise to add quality assets in this environment. With the strength of the existing brands,experienced management, and a focus on cost control, stable returns are expected. Both business segments are diligently controllingdiscretionary spending. Currency fluctuations may continue to impact reported results.

Additional Information

Additional information concerning the Company, as well as the Company’s Annual Information Form is available on SEDAR(www.sedar.com) and the investor relations section of the Company’s website (www.clublinkenterprises.ca).



47

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTINGAND INDEPENDENT AUDITOR’S REPORT

Management’s Responsibility for Financial Reporting

The consolidated financial statements and management’s discussion and analysis of operations contained in this annual report are theresponsibility of the Company’s management. To fulfill this responsibility, the Company maintains a system of internal controls to ensurethat its reporting practices and accounting and administrative procedures are appropriate and provide assurance that relevant and reliablefinancial information is produced. The consolidated financial statements have been prepared in conformity with Canadian generally acceptedaccounting principles and, where appropriate, reflect estimates based on management’s best judgment in the circumstances. The financialinformation presented throughout this annual report is consistent with the information contained in the consolidated financial statements.

Deloitte & Touche LLP, the independent auditors appointed by the shareholders in 2010, have audited the consolidated financial statementsin accordance with Canadian generally accepted auditing standards to enable them to express to the shareholders their opinion on theconsolidated financial statements. Their auditors’ report is set out below.

The consolidated financial statements have been further examined by the Board of Directors and by its Audit Committee, which meetsregularly with the auditors and management to review the activities of each. The Audit Committee, which is comprised of three independentdirectors, who are not officers of the Company, reports to the Board of Directors.

K. (Rai) Sahi Robert VisentinChairman and Chief Executive Officer Chief Financial Officer

March 1, 2011

Independent Auditor’s Report to the Shareholders of ClubLink Enterprises Limited

We have audited the accompanying consolidated financial statements of ClubLink Enterprises Limited, which comprise the consolidatedbalance sheets as at December 31, 2010 and December 31, 2009, and the consolidated statements of earnings and comprehensive earnings,retained earnings and accumulated other comprehensive loss and cash flows for the years then ended, and a summary of significantaccounting policies and the notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadiangenerally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation ofconsolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordancewith Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidatedfinancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriatein the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management,as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of ClubLink EnterprisesLimited as of December 31, 2010 and December 31, 2009 and the results of its operations and its cash flows for the years then ended inaccordance with Canadian generally accepted accounting principles.

Deloitte & Touche LLPChartered Accountants Licensed Public Accountants

Toronto, OntarioMarch 1, 2011 47



48

CONSOLIDATED BALANCE SHEETS

AS AT DECEMBER 31,

(in thousands of dollars) Notes 2010 2009

ASSETSCurrent

Cash $ 1,447 $ 10,670Accounts receivable 20 3,238 2,423Income taxes receivable 176 –Mortgages and loans receivable 4, 20 61 5,889Inventories and prepaid expenses 6,809 6,427Other assets – 3,107

11,731 28,516Mortgages and loans receivable 4, 20 5,744 5,859Other assets 1,517 1,252Capital assets 5 541,035 536,724Intangible assets 6 24,696 24,189Future income tax assets 11 – 4,524Goodwill 26,689 26,689

Total assets $ 611,412 $ 627,753

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent

Accounts payable and accrued liabilities 7 $ 17,755 $ 17,816Income taxes payable – 1,425Secured debt 8 20,640 23,008Capital lease obligations 9 4,199 4,745Notes payable 16 – 28,400Prepaid annual dues and deposits 6,037 4,882

48,631 80,276Secured debt 8 326,291 307,949Capital lease obligations 9 5,626 8,267Deferred membership fees 10 57,356 59,334Future income tax liabilities 11 17,711 17,367

455,615 473,193

Shareholders’ equityShare capital 12 105,613 106,191Contributed surplus 12 – 188Retained earnings and accumulated other comprehensive loss 50,184 48,181

Total shareholders’ equity 155,797 154,560

Total liabilities and shareholders’ equity $ 611,412 $ 627,753

See Accompanying Notes

On behalf of the Board of Directors

K. (Rai) Sahi John LokkerChairman and Chief Executive Officer Director



49

CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

FOR THE YEARS ENDED DECEMBER 31,

(in thousands of dollars, except per share amounts) Notes 2010 2009

REVENUE

Operating revenue $ 189,903 $ 190,212

Amortization of membership fees 10 15,292 14,784

205,195 204,996

EXPENSES

Cost of sales 21,323 21,258

Operating expenses 118,722 117,517

Direct costs of originating membership fees 1,511 1,955

141,556 140,730

Earnings before other items, income taxes and non-controlling interest 63,639 64,266

OTHER ITEMSAmortization of capital assets 19,807 20,852Amortization of intangible assets 982 681Land lease rent 5,285 5,024Interest, net 14 22,108 23,397Other expense (income) (344) 1,807

47,838 51,761

Earnings before income taxes and non-controlling interest 15,801 12,505

PROVISION FOR INCOME TAXES 11Current (1,811) 5,313Future 5,770 (3,311)

3,959 2,002

Earnings before non-controlling interest 11,842 10,503Non-controlling interest – (652)

Net earnings 11,842 11,155Unrealized foreign currency translation loss (1,185) (3,834)

Total comprehensive earnings $ 10,657 $ 7,321

Weighted average shares outstanding 27,976,000 25,113,000

Earnings per share basic and diluted $ 0.42 $ 0.44

CONSOLIDATED STATEMENTS OF RETAINED EARNINGSAND ACCUMULATED OTHER COMPREHENSIVE LOSS



RETAINED EARNINGSBalance, beginning of year $ 72,072 $ 67,871Net earnings 11,842 11,155Shares repurchased and cancelled 12 (260) –Dividends (8,394) (6,954)

Balance, end of year 75,260 72,072

ACCUMULATED OTHER COMPREHENSIVE LOSSBalance, beginning of year (23,891) (20,057)Unrealized foreign currency translation loss (1,185) (3,834)

Balance, end of year (25,076) (23,891)

Total retained earnings and accumulated other comprehensive loss $ 50,184 $ 48,181




50

CONSOLIDATED STATEMENTS OF CASH FLOWS



OPERATING ACTIVITIESNet earnings $ 11,842 $ 11,155Items not affecting cash:

Amortization of capital assets 19,807 20,852Amortization of intangible assets 982 681Amortization of deferred financing costs 14 762 496Future income taxes 5,770 (3,311)Amortization of membership fees 10 (15,292) (14,784)Discount on mortgage repayment – (205)Loss on sale of assets – 166Unrealized foreign exchange gain (886) (392)Non-controlling interest – (652)

Collection of membership fee installments 10 13,314 13,906

Cash flow from operations 36,299 27,912Net change in working capital accounts (2,210) 3,329

Cash provided by operating activities 34,089 31,241

INVESTING ACTIVITIESOperating capital asset expenditures (6,734) (5,333)Development capital asset expenditures (7,179) (11,562)Business combinations 3 (13,024) (951)Other long-term assets (264) 2,621Mortgages and loans receivable 5,943 (3,228)Acquisition of non-controlling interest – (284)

Cash used in investing activities (21,258) (18,737)

FINANCING ACTIVITIESIncome tax appeal payment refund 3,107 –Deferred financing costs (505) (425)Revolving secured debt 21,563 (19,404)Non-revolving secured debt – advances 38,447 17,500Non-revolving secured debt – maturities (29,023) (19,154)Non-revolving secured debt – amortization payments (14,581) (15,211)Capital lease obligations (3,187) 918Notes payable (28,400) 28,400Proceeds on issue of common shares 21 45Shares purchased for cancellation (1,047) (147)Dividends paid (8,394) (6,954)Dividends paid – non-controlling interest – (554)

Cash used in financing activities (21,999) (14,986)

Net effect of currency translation adjustment on cash (55) (400)

Net decrease in cash during the year (9,223) (2,882)Cash, beginning of year 10,670 13,552

Cash, end of year $ 1,447 $ 10,670




51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

1. Nature of Operations

ClubLink Enterprises Limited (the “Company” or “ClubLink”) was formed under the laws of Canada.

ClubLink is engaged in golf club and resort operations under the trademark “ClubLink One Membership More Golf ”. ClubLink isCanada’s largest owner and operator of golf clubs with 48½, eighteen-hole championship and six eighteen-hole academy courses at 41locations, primarily in Ontario, Quebec and Florida.

ClubLink is also engaged in rail, tourism and port operations based in Skagway, Alaska which operate under the trade name White Pass& Yukon Route (“White Pass”). The railway stretches approximately 177 kilometres (110 miles) from Skagway, Alaska to Whitehorse,Yukon. In addition, White Pass operates three docks, primarily for cruise ships. White Pass reports in U.S. dollars.

2. Significant Accounting Policies

(a) Summary of Significant Accounting Policies

The consolidated financial statements of ClubLink have been prepared in accordance with Canadian generally accepted accountingprinciples (“GAAP”). The significant accounting policies are summarized as follows:

Principles of consolidation

These consolidated financial statements include the accounts of ClubLink and its subsidiaries. All inter-company balances andtransactions have been eliminated.

Use of estimates

The preparation of these consolidated financial statements that conform with GAAP requires management to make estimates andassumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimatesinclude the weighted average remaining life of memberships sold each year which is used to amortize membership fee revenue, theallowance for future resignations and terminations, the useful lives and valuation of capital assets, intangible assets and goodwill andthe recoverability of mortgages and loans receivable. Actual results could differ substantially from these estimates.

Inventories

Inventories are stated at the lower of cost and net realizable value and consist of food, beverages and merchandise. Cost of sales in the golfclub and resort operations segment are determined on a weighted average basis whereas cost of sales in the rail, tourism and port operationssegment are determined on a first-in, first-out basis. Cost of sales represents the amount of inventories expensed during the year.

Capital assets

Golf club and resort operationsCapital assets include land and improvements thereto, buildings and related equipment. Operating capital assets are recorded at cost.Operating capital assets, including assets under capital lease, are amortized on a straight-line basis over their estimated useful lives as follows:

Buildings – 40 yearsRoads, cart paths and irrigation – 20 yearsEquipment – 5 to 10 years

Leased golf course land is amortized on a straight-line basis over the term of the lease.

Development capital assets include properties under construction or held for future development. ClubLink capitalizes all direct costsrelating to the development and construction of these properties. ClubLink also capitalizes interest and direct project development andmanagement costs to properties under construction.

Rail, tourism and port operationsCapital assets are amortized on a straight-line basis over their useful lives as follows:

Buildings, structures andland improvements – 30 to 60 yearsDocks – 40 yearsEquipment – 5 to 30 years

Materials and supplies related to the rail operations are recorded at cost, determined on a first-in, first-out basis, and are charged toexpense or added to the cost of property and equipment when used.

ClubLink reviews long-lived assets such as operating capital assets and development capital assets for impairment whenever events or changesin circumstances indicate that the carrying amount may not be recoverable. When indicators of impairment exist, and the carrying value isgreater than the net recoverable value, an impairment loss is recognized to the extent that the fair value is below the carrying value.



52



2. Significant Accounting Policies (cont’d)

(a) Summary of Significant Accounting Policies (cont’d)

Intangible assets

Intangible assets are accounted for at cost. They consist of ClubLink’s membership base, brand and below market rent terms and areamortized on a straight-line basis over periods of 15 to 40 years.

Goodwill

Goodwill represents the cost of acquired operating businesses in excess of the fair value of net identifiable assets acquired. Goodwill istested for impairment annually or when indicated by events or changes in circumstances by comparing the fair value of a particularreporting unit to its carrying value. When the carrying value exceeds its fair value, the fair value of the reporting unit’s goodwill iscompared with its carrying value to measure any impairment loss.

Future income taxes

The Company uses the liability method of accounting for future income taxes. Temporary differences arising from the differencebetween the tax base of an asset or liability and its carrying amount on the consolidated balance sheets are used to calculate futureincome tax liabilities or assets. Future income tax liabilities and assets are calculated using the substantively enacted tax rates and lawsthat are expected to be in effect in the periods that the temporary differences are expected to reverse. The effect of changes in tax ratesis included in earnings in the year which includes the substantive enactment.

Foreign currency translation

The operations of White Pass are self-sustaining. The accounts of White Pass are translated into Canadian dollars at the exchange ratein effect as at the balance sheet dates. Revenue and expenses are translated at the average rates of exchange during the year. Theresulting gains and losses are recorded as unrealized foreign currency translation gain (loss) in accumulated other comprehensive earningsin shareholders’ equity.

The golf club operations located in the United States are integrated. Monetary items are translated into Canadian dollars at the exchangerate in effect as at the balance sheet date. Non-monetary items are translated using their historical exchange rates. Revenue and expensesare translated at the average rates of exchange during the year.

Financial instruments

All financial instruments are classified into one of the following five categories: held-for-trading, held to maturity, loans and receivables,available for sale financial assets, or other financial liabilities. Initial and subsequent measurement and recognition of changes in thevalue of financial instruments depend on their initial classification.

(a) Held to maturity investments, loans and receivables, and other financial liabilities are initially measured at fair value andsubsequently measured at amortized cost. Amortization of premiums or discounts and transaction costs are amortized into netearnings, using the effective interest method.

(b) Available for sale financial assets are measured at fair value, with unrealized gains and losses recorded in accumulated othercomprehensive earnings until the asset is realized, at which time they will be recorded in net earnings.

(c) Held-for-trading financial instruments are measured at fair value. All gains and losses resulting from changes in fair value areincluded in net earnings in the period in which they arise.

The following is a summary of the accounting model the Company applies to each of its significant categories of financial instruments:

Balance Sheet Classification Financial Instrument Designation

Cash Held-for-tradingAccounts receivable Loans and receivablesMortgages and loans receivable Loans and receivablesLong-term investments Available for saleNotes payable Other financial liabilitiesAccounts payable and accrued liabilities Other financial liabilitiesSecured debt Other financial liabilities



53



2. Significant Accounting Policies (cont’d)

(a) Summary of Significant Accounting Policies (cont’d)

Financial instruments (cont’d)

Transaction costs related to the Company’s financial liabilities are netted against the related liability and are expensed using the effectiveinterest method.

Stock-based compensation

The fair value of stock options granted are recognized over the applicable stock option vesting period as compensation expense in thestatement of earnings. On exercise of stock options, the consideration received and the related accumulated contributed surplus amountsare credited to share capital.

Revenue recognition

Golf club and resort operations revenue includes annual dues (recognized on a calendar year basis as earned) and sales to members andcustomers of green fees, cart rentals, food and beverage, merchandise and room rentals which are all recognized when the service isprovided. Membership fee revenue is amortized on a straight-line basis over the estimated weighted average remaining life of amembership by year joined.

Rail, tourism and port operations revenue is recognized as earned when these services are provided.

Non-monetary transactions

The Company records non-monetary transactions at the fair value of the assets or services exchanged.

Earnings per share

Basic earnings per share is calculated by dividing earnings by the weighted average number of common shares outstanding during thereporting period. Diluted earnings per share is calculated using the treasury stock method. Under this method, proceeds that could beobtained upon exercise of options, if dilutive, are assumed to be used to purchase common shares at the average market price duringthe period.

Multi-employer pension plan

The rail, tourism and port operations participate in various multi-employer benefit plans, on a contributory and non-contributory basis,depending on the plan. Benefit costs are expensed based on an employee’s hours worked.

(b) Changes in Accounting Policy

Effective January 1, 2010, the Company adopted the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 1582,Business Combinations, Section 1601, Consolidated Financial Statements and Section 1602, Non-controlling Interests. These Sectionsestablish principles and requirements of the acquisition method for business combinations and related disclosures and accounting fora non-controlling interest in a subsidiary in consolidated financial statements to a business combination. This includes the requirementfor business combination costs to be expensed as incurred, rather than being capitalized. These Sections were applied prospectively fromJanuary 1, 2010.

International Financial Reporting Standards (“IFRS”)

In 2005, Canada’s Accounting Standards Board announced that Canadian GAAP, as used by publicly accountable enterprises, would be fullyconverged with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board to becomplete by January 1, 2011.

For ClubLink, the conversion to IFRS will be required for interim and annual financial statements for the year ending December 31,2011. IFRS uses a conceptual framework similar to Canadian GAAP, but there are significant differences in recognition, measurementand disclosures.

Please refer to the Emerging Accounting Pronouncements section in the 2010 MD&A for an analysis of this topic.



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3. Business Combinations

2010 Acquisitions

On September 3, 2010, ClubLink acquired certain assets and specified liabilities of eight 18-hole golf courses located in Sun CityCenter, Florida for cash consideration of US$8,700,000. On October 21, 2010, ClubLink acquired Heron Bay Golf Club (an 18-holefacility) in Coral Springs, Florida for cash consideration of US$2,900,000. These acquisitions are part of a strategy to extend theClubLink model to the Florida marketplace and management believes it will add value to our existing membership base.

On December 15, 2010, ClubLink announced the acquisition of Glendale Golf and Country Club in Hamilton, Ontario for $3,154,000less mortgages assumed of $2,183,000 for a net cash outlay of $971,000. This acquisition will complement ClubLink’s existing propertiesin the Greater Toronto Area cluster.

The operations of the acquisitions have been included in the Statement of Earnings from the date of acquisition and are summarized below:

(thousands of dollars)

Revenue $ 3,074

Operating expenses 3,282

Net operating loss (208)

Depreciation (142)

Business combination transaction costs (873)

Future income tax recovery 411

Net loss $ (812)

It is impractical to estimate the revenue and net earnings of the combined entity for the year as though the acquisition date for theacquisitions was January 1, 2010 as ClubLink does not have access to reliable historical information for the properties and such historicalinformation would not reflect the planned integration and management’s operational changes.

The following table summarizes the estimated fair value of the assets and liabilities acquired at the date of acquisition.

Sun Heron(thousands of dollars) City Bay Glendale Total

Land $ 3,663 $ 1,096 $ 1,640 $ 6,399

Buildings 2,110 654 500 3,264

Roads, cart paths and irrigation 1,500 1,050 100 2,650

Equipment 895 100 444 1,439

Membership base (intangible asset) 981 – 470 1,451

Liabilities assumed (449) – – (449)

Purchase price – base currency 8,700 2,900 3,154 14,754

Secured debt assumed – – (2,183) (2,183)

Exchange 370 83 – 453

Cash purchase price – Cdn dollars $ 9,070 $ 2,983 $ 971 $ 13,024



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3. Business Combinations (cont’d)

2009 Acquisition

ClubLink Corporation is a subsidiary of the Company. On July 28, 2009, the Company acquired the remaining 28.1% common shareinterest in ClubLink Corporation that it did not already own. The acquisition was effected through an amalgamation of a wholly-ownedsubsidiary of the Company and ClubLink Corporation.

ClubLink issued 1.1 common shares for each common share of ClubLink Corporation acquired, resulting in the issuance of 5,164,015common shares. The common shares issued were valued at $44,669,000, based on the independent third party valuation used tocommunicate with shareholders. In addition, the Company incurred $951,000 of business combination costs which have been includedin the cost of the purchase. The acquisition has been accounted for under the purchase method of accounting. Accordingly, the Companyallocated the purchase price to the identifiable assets and liabilities acquired based on their estimated fair values at the time of acquisition.The operations of ClubLink Corporation have been included in the consolidated statements of earnings and comprehensive earningsand cash flows on a 100% basis since July 28, 2009.

The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed at the date of acquisition whichhave been applied to ClubLink’s acquisition of 28.1% of ClubLink Corporation.

(thousands of dollars) July 28, 2009

Capital assets $ 134,276

Brand 11,240

Membership base 4,707

Other assets 13,646

Total assets acquired 163,869

Less: liabilities assumed

Long-term debt (78,826)

Capital lease obligations (4,167)

Deferred membership fees (16,755)

Future income tax liabilities (2,437)

Other liabilities (16,064)

Total purchase price $ 45,620

Consideration consisted of:

Business combination costs $ 951

Share capital 44,669

$ 45,620

The following is a summary of the fair value adjustments to various balance sheet line items as a result of this transaction.

(thousands of dollars) July 28, 2009

Assets

Cash (Business combination costs) $ (951)

Capital assets (14,700)

Intangible assets 14,857

$ (794)

Liabilities and shareholders’ equity

Non-controlling interest $ (45,463)

Share capital (note 12) 44,669

$ (794)



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4. Mortgages and Loans Receivable

Mortgages and loans receivable consist of the following:

(thousands of dollars) 2010 2009

Officer loans $ 4,426 $ 4,429

Vendor take-back mortgages and loans 1,379 1,559

Due from Paros Enterprises Limited (note 16) – 5,000

Other loans – 760

5,805 11,748

Less: current portion 61 5,889

$ 5,744 $ 5,859

The officer loans bear interest at a market rate determined by the Compensation Committee of the Board of Directors of the Companywhich is 2.25% per annum (2009 – 3.50%), have maturities from December 31, 2012 to January 29, 2019 and were incurred to purchasecommon shares of a subsidiary that have subsequently been exchanged for common shares of the Company. The Company has indicatedits intention to enforce the payment terms of these loans in the event of a decline in market value of the shares. The common sharesfinanced by these loans, which are being held by the Company as collateral, had a market value of $3,853,000 at December 31, 2010(2009 – $3,530,000).

The vendor take-back mortgages and loans have maturities from May 2012 to November 2014 and have an average fixed interest rateof 6.2% (2009 – 6.2%).

5. Capital Assets

Capital assets consist of the following:2010 2009

Accumulated Net Book Accumulated Net Book(thousands of dollars) Cost Amortization Value Cost Amortization Value


Golf course lands $ 261,332 $ – $ 261,332 $ 253,391 $ – $ 253,391

Leased lands 5,345 2,389 2,956 5,498 2,329 3,169

Buildings 150,499 40,718 109,781 146,654 36,872 109,782

Roads, cart paths and irrigation 86,230 36,781 49,449 83,398 32,526 50,872

Equipment 66,989 39,792 27,197 76,851 47,258 29,593Development assets 18,056 – 18,056 17,910 – 17,910

588,451 119,680 468,771 583,702 118,985 464,717


Land 1,002 – 1,002 1,058 – 1,058

Buildings, structures and land improvements 21,559 5,441 16,118 21,421 5,157 16,264

Docks 45,431 17,960 27,471 47,693 17,413 30,280Equipment 40,096 12,423 27,673 36,683 12,278 24,405

108,088 35,824 72,264 106,855 34,848 72,007

$ 696,539 $ 155,504 $ 541,035 $ 690,557 $ 153,833 $ 536,724



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5. Capital Assets (cont’d)

Interest of nil (2009 – $114,000) and direct project development and management costs in the amount of nil (2009 – $137,000) havebeen capitalized during the year to development assets.

Certain capital assets have been assigned as collateral for secured debt and capital lease obligations (notes 8 and 9).

ClubLink is committed to expenditures of US$557,000 (2009 – US$5,024,000) relating to the locomotive repower program which isexpected to be paid in 2011.

6. Intangible Assets

Intangible assets consist of the following:2010 2009

Accumulated Net Book Accumulated Net Book(thousands of dollars) Cost Amortization Value Cost Amortization Value

Membership base $ 11,676 $ 1,004 $ 10,672 $ 10,187 $ 644 $ 9,543

Brand 13,160 881 12,279 13,160 418 12,742Below market rent terms 2,359 614 1,745 2,359 455 1,904

$ 27,195 $ 2,499 $ 24,696 $ 25,706 $ 1,517 $ 24,189

7. Accounts Payable

Accounts payable consists of the following:


Trade payables $ 3,604 $ 3,284

Accrued payroll costs 3,399 3,038

Accrued land lease rent 3,784 3,227

Accrued interest 1,834 1,958

Development capital asset costs to complete 581 1,706

Accrued liabilities and other 4,553 4,603

$ 17,755 $ 17,816



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8. Secured Debt(thousands of dollars) 2010 2009

Revolving:

Secured revolving operating line of creditto a maximum of $10 million due July 1, 2011 (a) $ 5,558 $ 7,883

Secured revolving operating line of creditto a maximum of $50 million due June 8, 2012 (b)

Advances at prime plus 0.75% 2,942 5,554

Bankers acceptances’ plus 2.00% 40,000 13,500

48,500 26,937

Non-revolving:

Mortgages with blended fixed monthly payments of principal and interest

7.540% Mortgage due January 1, 2017 13,569 15,263

8.345% Mortgages due July 1, 2022 20,599 21,614

7.550% Mortgage due July 1, 2022 2,529 2,661

7.416% Mortgages due September 1, 2023 30,044 31,410



6.194% Mortgage due March 1, 2026 55,916 58,056

6.315% Mortgage due December 1, 2027 46,798 48,288

8.000% Mortgage due October 1, 2029(US $15,872,000; December 31, 2009 – US $16,221,000) 15,787 17,048

Other Mortgages due September 2012 to September 2019 2,183 –

265,398 275,525

Term Loan:

Term loan due September 1, 2020 (US $36,286,000; December 31, 2009 – Nil) (c) 36,090 –

Term loan due March 1, 2014 (Nil; December 31, 2009 – US $30,284,000) (d) – 31,828

36,090 31,828

Gross secured debt 349,988 334,290

Less: deferred financing costs 3,057 3,333

Net secured debt 346,931 330,957

Less: current portion 20,640 23,008

$ 326,291 $ 307,949

(a) The rail, tourism and port operations maintain a secured revolving operating line of credit with a US financial institution in the maximum amount of US$10,000,000 (December 31, 2009– US$7,500,000) which is payable on demand. The next renewal date is July 1, 2011. This loan bears interest at LIBOR plus 215 basis points or 2.41% (December 31, 2009 – 5.0%).

(b) This is a revolving operating line of credit with a two year term and provisions for annual one-year extensions. As at December 31, 2010 there are $1,841,000 (December 31, 2009 –$2,955,000) in letters of credit outstanding and there is availability of $5,217,000 (December 31, 2009 – $27,791,000) under this facility.

(c) The term loan is due to a US institution and is denominated in US dollars. It bears interest at LIBOR plus 300 basis points. The interest rate in effect at December 31, 2010 was 3.26%.It is repayable by fixed monthly principal payments in the amount of US$238,000 plus interest.

(d) The term loan was due to a US institution and was denominated in US dollars. It bears interest at LIBOR plus 345 basis points subject to a minimum floor of 5%. It was repayable byfixed monthly principal payments in the amount of US$294,020 plus interest. This facility is no longer available to be utilized as it was replaced by the term loan due September 1, 2020in note (c) above.



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8. Secured Debt (cont’d)

Secured debt is collateralized by certain operating capital assets.

Minimum principal debt repayments are as follows:

Mortgage andTerm Loan Mortgage and

Revolving Amortization Term Loan(thousands of dollars) Maturities Payments Maturities Total

2011 $ 5,558 $ 15,082 $ – $ 20,640

2012 42,942 15,989 547 59,478

2013 – 16,964 960 17,924

2014 – 18,011 520 18,531

2015 – 19,137 – 19,137

2016 and thereafter – 205,491 8,787 214,278

$ 48,500 $ 290,674 $ 10,814 $ 349,988

9. Capital Lease Obligations

Capital lease obligations consist of the following:


Total minimum lease payments $ 10,718 $ 14,298

Less: amount representing interest at average rate of 5.9% (2009 – 5.8%) 893 1,286

Capital lease obligations 9,825 13,012

Less: current portion 4,199 4,745

$ 5,626 $ 8,267

Future minimum lease payments are as follows:

Capital Total MinimumLease Lease

(thousands of dollars) Maturities Amortization Obligations Interest Payments

2011 $ 439 $ 3,760 $ 4,199 $ 471 $ 4,670

2012 117 2,658 2,775 243 3,018

2013 501 1,338 1,839 128 1,967

2014 – 627 627 39 666

2015 – 354 354 12 366

2016 – 31 31 – 31

$ 1,057 $ 8,768 $ 9,825 $ 893 $ 10,718

10. Deferred Membership Fees

Deferred membership fees consist of the following:


Unamortized membership fees (note 10A) $ 93,517 $ 103,303

Future membership fee instalments (note 10B) (36,161) (43,969)

Deferred membership fees $ 57,356 $ 59,334



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10. Deferred Membership Fees (cont’d)

(A) Changes in unamortized membership fees are as follows:


Balance, beginning of year $ 108,863 $ 113,028

Sales to new members 8,278 12,602

Transfer and upgrade fees from existing members 1,474 2,612

Resignations and terminations (4,726) (4,595)

Amortization of membership fees (15,292) (14,784)

Balance, end of year 98,597 108,863

Allowance for future resignations and terminations (5,080) (5,560)

Unamortized membership fees $ 93,517 $ 103,303

(B) Changes in future membership fee instalments and golf members are as follows:

2010 2009

Golf Golf(thousands of dollars) Members Amount Members Amount

Balance, beginning of year 17,049 $ 49,529 16,647 $ 52,816

Sales to new members 1,456 8,278 1,477 12,602

Acquisition of Florida golf members at Sun City Center 1,512 – – –

Transfer and upgrade fees from existing members – 1,474 – 2,612

Resignations and terminations (1,100) (4,726) (1,075) (4,595)

Instalments received in cash – (13,314) – (13,906)

Balance, end of year 18,917 41,241 17,049 49,529

Allowance for future resignations and terminations (5,080) (5,560)

Future membership fee instalments $ 36,161 $ 43,969

The following table estimates future cash flows and revenue recognition based on the collection of future membership fee instalmentsoutstanding on December 31, 2010, net of an allowance for resignations and terminations. The estimated collection of future membershipfee instalments, amortization of unamortized membership fees and the estimated deferred membership fees, assuming no furthermemberships are sold is as follows:

Estimatedcollection Estimated Estimatedof future amortization deferred

membership fee of unamortized membership fees(thousands of dollars) instalments membership fees at year-end

Balance, December 31, 2010 $ 57,356

2011 $ 7,278 $ 15,243 49,391

2012 6,205 15,242 40,354

2013 5,225 15,243 30,336

2014 4,341 11,262 23,415

2015 3,426 8,654 18,187

2016 and thereafter 9,686 27,873 –

$ 36,161 $ 93,517

Membership fees are amortized over the estimated weighted average remaining life of memberships purchased each year. This isdetermined by subtracting the average age of members that joined in that year from 70 and dividing the result by 2. The amortizationperiod is reviewed annually and any adjustments are made prospectively.



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11. Income Taxes

The provision for income taxes differs from the expected amount calculated by applying the Canadian combined federal and provincialcorporate income tax rates to earnings before income taxes. The major components of these differences are explained as follows:


Earnings before income taxes and non-controlling interest $ 15,801 $ 12,505

Expected corporate tax rate 31.00% 33.00%

Calculated income tax provision 4,898 4,127

Difference in statutory tax rates (549) 745

Permanent differences 133 271

Effect of foreign currency exchange on future income taxes (142) (395)

Previous losses recognized in current year – (3,483)

Change in future income tax rates – 388

Other (381) 349

$ 3,959 $ 2,002

At December 31, the components of the net future income tax assets are as follows:

Loss carry forwards and other $ – $ 12,603

Capital and intangible assets – (8,079)

Future income tax assets $ – $ 4,524

At December 31, the components of the net future income tax liabilities are as follows:

Capital and intangible assets $ 25,050 $ 17,367

Loss carry forwards and other (7,339) –

Future income tax liabilities $ 17,711 $ 17,367

As at December 31, 2010, ClubLink and its Canadian subsidiaries, have the following non-capital income tax losses available to reducefuture years’ income for income tax purposes, the benefit of which has been recognized.

(thousands of dollars) Amount Expiry Date

$ 2,207 2014

4,930 2015

20,283 2026

4,221 2027

6,511 2028

2,441 2029

3,510 2031

$ 44,103



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12. Share Capital and Contributed Surplus

(A) Authorized and issued share capital

Authorized

The authorized share capital consists of an unlimited number of common shares and preferred shares. As at December 31, 2010, nopreferred shares have been issued.

IssuedExcess

Charged toCommon Share Contributed Retained

(thousands of dollars) Shares Capital Surplus Earnings

Balance, December 31, 2008 22,909,437 $ 61,543 $ 268 $ –

Exercise of stock options 3,000 12 – –

Shares issued pursuant to dividend reinvestment plan 5,567 34 – –

Shares issued as consideration forbusiness combination (note 3) 5,164,015 44,669 – –

Shares purchased and cancelled through normal courseissuer bid which expired on September 19, 2009 (Note 12B) (24,540) (67) (80) –

Balance, December 31, 2009 28,057,479 106,191 188 –

Shares issued pursuant to dividend reinvestment plan 3,389 21 – –

Shares purchased and cancelled through normal courseissuer bid which expired on September 19, 2010 (Note 12B) (55,500) (210) (138) (25)

Shares purchased and cancelled through normal courseissuer bid which expires on September 19, 2011 (Note 12B) (8,700) (33) – (26)

Shares purchased and cancelled (Note 12B) (94,050) (356) (50) (209)

Charged to retained earnings – – – 260

Balance, December 31, 2010 27,902,618 $ 105,613 $ – $ –

(B) Shares repurchased and cancelled

The Company was approved by the Toronto Stock Exchange for a normal course issuer bid to purchase up to 1,146,304 of its commonshares which expired September 19, 2009. During the year ended December 31, 2009, the Company purchased for cancellation 24,540common shares for a total purchase price of $147,000 or $5.99 per common share, including commissions.

The Company was approved by the Toronto Stock Exchange for a normal course issuer bid to purchase up to 1,402,752 of its commonshares which expired on September 19, 2010. For the year ended December 31, 2010, the Company purchased for cancellation 55,500common shares for a total purchase price of $373,000 or $6.72 per common share, including commissions.

The Company has been approved by the Toronto Stock Exchange for a normal course issuer bid to purchase up to 1,395,000 of itscommon shares which will expire on September 19, 2011. For the year ended December 31, 2010, the Company purchased forcancellation 8,700 common shares for a total purchase price of $59,000 or $6.78 per common share, including commissions.

In 2010, the Company repurchased and cancelled 94,050 common shares for the purchase price of $615,000 as part of an exemptissuer bid purchase.

In recording the repurchase and cancellation of shares, share capital is reduced by the weighted average issue price of the outstandingcommon shares with the differential to the purchase price being credited or charged to contributed surplus. After contributed surplushas been reduced to nil, any differential is credited or charged to retained earnings.



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12. Share Capital and Contributed Surplus (cont’d)

(C) Stock options

The Company has a stock option plan open to directors, officers, full-time employees and consultants of the Company. Under this plan,the Company may grant total options to a maximum of 10% of the issued and outstanding common shares of the Company on a non-diluted basis. Under the plan, the exercise price equals the market price of the Company’s stock on the day prior to the date of grantand an option’s maximum term is ten years. Options generally vest over a four-year period.

A summary of the Company’s stock option plan is presented below:

2010 2009

Weighted WeightedAverage Average

Number of Exercise Number of ExerciseOptions Price Options Price

Outstanding and exercisable, beginning of year 474,150 $ 6.56 427,500 $ 6.76

Issued – – 130,900 6.20

Exercised – – (3,000) 4.00

Cancelled or expired (55,650) 6.90 (81,250) 7.12

Outstanding and exercisable, end of year 418,500 $ 6.51 474,150 $ 6.56

Available for grant, end of year 1,869,500 1,813,850

The stock options issued during 2009 were stock options issued to former stock option holders of ClubLink Corporation, which weretransferred to ClubLink Enterprises in conjunction with the privatization of ClubLink Corporation.

As at December 31, 2010, the outstanding and exercisable stock options have the following terms:

Options ExerciseOutstanding Price $ Expiry Date

62,500 4.06 2011

44,000 5.15 2011

11,000 6.05 2011

15,000 7.25 2011

11,000 7.00 2012

25,000 7.25 2013

250,000 7.25 2014

418,500 6.51

As at December 31, 2009, the outstanding and exercisable stock options had the following terms:

Options ExerciseOutstanding Price $ Expiry Date

1,100 6.00 2010

22,550 6.45 2010

22,000 7.25 2010

62,500 4.06 2011

44,000 5.15 2011

11,000 6.05 2011

11,000 7.00 2012

300,000 7.25 2014

474,150 6.56



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12. Share Capital and Contributed Surplus (cont’d)

(D) Earnings per share

The dilutive effect of outstanding stock options per share is based on the application of the treasury stock method. Under this method,the proceeds from the exercise of such securities are assumed to be used to purchase common shares of ClubLink. Based on this approach,the effect of stock options on the weighted average common shares on the years ended December 31, 2010 and 2009 are as follows:

(thousands of common shares) 2010 2009

Weighted average common shares outstanding – basic 27,976 25,113

Effect of stock options 33 26

Weighted average common shares outstanding – diluted 28,009 25,139

13. Employee Benefit Plans

The rail, tourism and port operations are required to participate in a multi-employer benefit plan sponsored by the Railroad RetirementBoard for employees in the United States. The Company contributed 19.75% (2009 – 19.75%) of eligible compensation for the yearended December 31, 2010. The amounts contributed to the plan by the Company for the years ended December 31, 2010 and 2009were US$1,073,000 and US$1,179,000, respectively.

The rail, tourism and port operations also participate in two benefit plans covering substantially all of its employees covered by collectivebargaining agreements. These plans are both contributory and non-contributory multi-employer plans. The plans provide health care andother welfare benefits during the employees’ working lives and, for a monthly premium, benefits after retirement. Amounts charged tobenefit costs and contributed to the plans for the years ended December 31, 2010 and 2009 totalled US$735,000 and US$794,000,respectively. The Company makes monthly contributions to the plans based on hours worked by employees.

14. Interest, net


Revolving secured debt $ 1,049 $ 668

Non-revolving secured debt 19,401 20,276

Term loan 1,428 1,636

Capital leases 680 770

Notes payable 199 819

Amortization of deferred financing costs 762 496

Other 20 143

23,539 24,808

Interest capitalized to properties under construction – (114)

Interest expense 23,539 24,694

Interest income (1,431) (1,297)

Interest, net $ 22,108 $ 23,397

15. Supplementary Cash Flow Information


Interest paid $ 22,749 $ 24,274

Income taxes paid – US Authority nil 3,195



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16. Related Party Transactions

The Company receives managerial and consulting services from Morguard Corporation (“Morguard”). The Chairman and ChiefExecutive Officer of the Company is a significant shareholder of Morguard. The Company paid a management fee of $240,000 forthe year ended December 31, 2010 (2009 – $240,000), under a contractual agreement which is included in operating expenses.

The Company has provided an unsecured revolving demand credit facility to Morguard in the amount of $30,000,000, with nofixed maturity date. The facility bears interest at ClubLink’s short-term borrowing rate plus 10 basis points. During the years endedDecember 31, 2010 and 2009 there were no advances or repayments under this facility.

Morguard has provided an unsecured revolving demand credit facility to ClubLink in the amount of $30,000,000 with no fixed maturitydate. This facility bears interest at Morguard’s short-term borrowing rate plus 10 basis points. The highest balance outstanding during2010 on this facility was $28,400,000 (2009 – $28,400,000). Interest incurred for the year ended December 31, 2010 amounted to$199,000 (2009 – $766,000). The amount outstanding on this facility as of December 31, 2010 is nil (2009 – $28,400,000).

Paros Enterprises Limited (“Paros”) is a privately owned company whose sole shareholder is the Chairman and Chief Executive Officerof the Company and is also the controlling shareholder of the Company.

The Company has provided an unsecured revolving demand credit facility to Paros in the amount of $5,000,000, with no fixed maturitydate. During the year ended December 31, 2009, $5,000,000 was advanced under this facility and was repaid during 2010. This facilitybears interest at prime plus 1%. Interest earned during the year ended December 31, 2010 amounts to $123,000 (2009 – $48,000).

Paros has provided an unsecured revolving demand credit facility to ClubLink in the amount of $5,000,000 with no fixedmaturity date. A maximum amount of nil (2009 – $3,341,000) was outstanding during 2010. There was a nil balance outstandingas of December 31, 2010 and December 31, 2009. This facility bears interest at prime plus 1%. Interest incurred for the year endedDecember 31, 2010 amounted to nil (2009 – $53,000).

As at December 31, 2010, $188,000 (2009 – $192,000) in vendor take-back mortgages was outstanding relating to sales of Lakeside atRocky Crest fractions to employees of ClubLink at a 6.84% (2009 – 6.84%) interest rate.

All related party transactions have been recorded at the exchange amounts.

17. Segmented Information

ClubLink’s reportable segments are strategic business units that offer different services and/or products. They are managed separatelybecause each segment requires different strategies and involves different aspects of management expertise.

The corporate operations include corporate office and other management and corporate investment operations.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Any inter-segment transfers are recorded at cost.

Geographical information is not separately presented due to the fact that the industry segments operate in separate and distinctgeographical segments on their own with the exception of the United States operations of the golf club and resort operations segmentwhich is not sufficiently material to be presented separately. All other golf club and resort operations are located in Ontario and Quebec.



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17. Segmented Information (cont’d)For the Year EndedDecember 31, 2010

Golf Club Rail, Tourismand Resort and Port Corporate

(thousands of dollars) Operations Operations Operations Total

Operating revenue $ 153,366 $ 36,537 $ – $ 189,903

Expenses 118,119 19,267 2,659 140,045

Net operating income (loss) 35,247 17,270 (2,659) 49,858

Net membership fee income 13,781 – – 13,781

EBITDA 49,028 17,270 (2,659) 63,639

Amortization (16,932) (3,857) – (20,789)

Land lease rent (5,285) – – (5,285)

Segment earnings (loss) before interest,other income and income taxes $ 26,811 $ 13,413 $ (2,659) 37,565

Interest, net (unallocated) (22,108)

Other income (unallocated) 344

Provision for income taxes (unallocated) (3,959)

Net earnings $ 11,842

Capital expenditures $ 5,832 $ 8,081 $ – $ 13,913

For the Year EndedDecember 31, 2009

Golf Club Rail, Tourismand Resort and Port Corporate

(thousands of dollars) Operations Operations Operations Total

Operating revenue $ 147,414 $ 42,798 $ – $ 190,212

Expenses 114,828 22,221 1,726 138,775

Net operating income (loss) 32,586 20,577 (1,726) 51,437

Net membership fee income 12,829 – – 12,829

EBITDA 45,415 20,577 (1,726) 64,266

Amortization (17,527) (4,006) – (21,533)

Land lease rent (5,024) – – (5,024)

Segment earnings (loss) before interest, other expense,income taxes and non-controlling interest $ 22,864 $ 16,571 $ (1,726) 37,709

Interest, net (unallocated) (23,397)

Other expense (unallocated) (1,807)

Provision for income taxes (unallocated) (2,002)

Non-controlling interest (unallocated) 652

Net earnings $ 11,155

Capital expenditures $ 11,170 $ 5,725 $ – $ 16,895



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17. Segmented Information (cont’d)December 31, 2010 December 31, 2009

Rail, Rail,Golf Club Tourism Golf Club Tourismand Resort and Port Corporate and Resort and Port Corporate

(thousands of dollars) Operations Operations Operations Total Operations Operations Operations Total

Segment capital assets $ 468,771 $ 72,264 $ – $ 541,035 $ 464,717 $ 72,007 $ – $ 536,724

Segment assets $ 534,464 $ 76,001 $ 947 $ 611,412 $ 531,803 $ 85,169 $ 10,781 $ 627,753

18. Operating Lease Commitments

Land Lease Rent

ClubLink is committed to the following minimum land lease rentals for the next five years and thereafter as follows:

Golf Club Rail, Tourismand Resort and Port

(thousands of dollars) Operations (CDN) Operations (US)

2011 $ 4,678 $ 250

2012 4,760 218

2013 4,850 200

2014 4,943 192

2015 5,039 188

2016 and thereafter 63,155 2,943

$ 87,425 $ 3,991

The above land lease arrangements for the golf club and resort operations are subject to standard lease termination clauses.

ClubLink has two non-cancellable leases for tidelands with the State of Alaska, dated June 1, 1996 and June 1, 2004, which expire in2051, and a non-cancellable lease for tidelands with the City of Skagway, which expires in 2023, with certain rights to renew.

Guarantees

In the normal course of operations, the Company executes agreements that provide for indemnification and guarantees to third partiesin transactions such as business dispositions, business acquisitions, sales of assets, sales of services, securitization agreements andunderwriting and agency agreements.

The Company has also agreed to indemnify its directors and certain of its officers and employees. The nature of substantially all of theindemnification undertakings prevents the Company from making a reasonable estimate of the maximum potential amount that couldbe required to pay third parties as the agreements do not specify a maximum amount and the amounts are dependent upon the outcomeof future contingent events, the nature and likelihood of which cannot be determined at this time.

19. Capital Management

ClubLink’s objective is to ensure that capital resources are readily available to meet obligations as they become due to complete itsapproved capital expenditure program and to take advantage of attractive acquisitions as these opportunities arise.

Certain secured debt obligations of the golf club and resort operations segment have restrictive covenants that require maintenance ofcertain financial ratios. These covenants include debt service ratios, debt to adjusted equity/asset ratios and a minimum total equityrequirement. For all of 2009 and 2010, the Company was in compliance with these debt covenants.

The rail, tourism and port operations segment also has certain restrictive covenants on its secured debt. These covenants include aminimum net worth ratio and a debt service ratio. White Pass was in compliance with its covenants for all of 2009 and 2010.

There were no changes in the Company’s approach to capital management during the year.



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19. Capital Management (cont’d)

ClubLink monitors capital on the basis of the net debt-to-adjusted equity ratio. This ratio is calculated as net debt divided by adjustedequity. Net debt is calculated as gross debt less cash and loan receivable from affiliated company. Adjusted equity is comprised of allcomponents of shareholders’ equity (i.e. share capital, contributed surplus, retained earnings and accumulated other comprehensive loss)and deferred membership fees, less a related statutory tax provision.

The Company sets its capital structure in proportion to risk. It manages its capital structure and makes adjustments to it in light ofchanges in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure,the Company may adjust the amount of dividends paid to shareholders, purchase and cancel shares pursuant to issuer bids, issue newshares, or sell assets to reduce debt.

When considering the declaration of dividends, the amount of free cash flow from operating activities is considered.

ClubLink’s objective is to maintain a net debt-to-adjusted equity ratio of less than 2.50, in order to maintain access to financing at areasonable cost. The net debt-to-adjusted equity ratios at December 31, 2010 and December 31, 2009 are as follows:


Revolving secured debt $ 48,500 $ 26,937

Non-revolving secured debt 265,398 275,525

Term loan 36,090 31,828

Capital lease obligations 9,825 13,012

Notes payable – 28,400

Loan receivable from affiliated company – (5,000)

Cash (1,447) (10,670)

Net debt (A) $ 358,366 $ 360,032

Share capital $ 105,613 $ 106,191

Contributed surplus – 188

Retained earnings and accumulated other comprehensive loss 50,184 48,181

Deferred membership fees 57,356 59,334

Less: tax provision at statutory income tax rates (25.64%; 2009 – 25.64%) (14,706) (15,213)

Adjusted equity (B) $ 198,447 $ 198,681

Net debt-to-adjusted equity ratio (A/B) 1.81 1.81

Both operating segments have revolving credit arrangements which are used to fund operations during the off season. This allows eachsegment the flexibility to manage its highly seasonal cash inflows and regular year round disbursements while providing appropriatereturns to the shareholder. Cash flows considered surplus to the long-term needs of the business segment are generally utilized incorporate operations.

ClubLink has the potential to access financing from related party companies such as Morguard and Paros, as needed.

ClubLink funds its quarterly dividend by way of cash flows received from its business segments.



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20. Financial Instruments and Risk Management

Categories of financial assets and liabilities

Pursuant to GAAP, financial instruments are classified into one of the following five categories: held-for-trading, held to maturityinvestments, loans and receivables, available-for-sale financial assets or other financial liabilities. The carrying values of the Company’sfinancial instruments on the consolidated balance sheets are classified into the following categories:


Held-for-trading (1) $ 1,447 $ 10,670

Loans and receivables (2) 9,043 14,171

Financial assets available-for-sale (3) 560 560

Other financial liabilities (4) 364,686 377,173

(1) Includes cash.

(2) Includes accounts receivable and mortgages and loans receivable.

(3) Includes other long-term investments included in other assets.

(4) Includes accounts payable and accrued liabilities, secured debt and notes payable.

A portion of the accounts receivable balance has been pledged in conjunction with the assignment of certain capital assets as collateralfor secured debt.

Fair values

The Company has determined, using considerable judgment, the estimated fair values of its financial instruments based on the valuationmethodologies which are described below. The fair values of ClubLink’s financial instruments approximate their carrying values forfinancial statement purposes.

The methods and assumptions used to estimate the fair value of each type of financial instrument are as follows:

The fair values of cash, accounts receivable, accounts payable and accrued liabilities, and revolving secured debt approximate theircarrying values given their short-term maturities.

The carrying value of mortgages and loans receivable was assumed to approximate fair value as they bear interest at current market rates.

The Company’s long-term portfolio investment is accounted for using the cost method which approximates its fair value.

The fair value of non-revolving secured debt was estimated based on the discounted cash flows of the debt at the Company’s estimatedincremental borrowing rates for debt of the same remaining maturities.

The carrying value of notes payable was assumed to approximate fair value as they incur interest at current market rates.

Financial instruments recorded at fair value on the consolidated balance sheet are classified using a fair value hierarchy that reflects thesignificance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1 – valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities.

Level 2 – valuation techniques based on inputs that are quoted prices of similar instruments in active markets; inputs other thanquoted prices used in a valuation model that are observable for that instrument; and inputs that are derived principally from orcorroborated by observable market data by correlation or other means.

Level 3 – valuation techniques with significant unobservable market inputs



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20. Financial Instruments and Risk Management (cont’d)

Fair values (cont’d)

Since the long-term investment relates to a private company, the valuation techniques for this investment are judgmental, usingunobservable market inputs. There have been no transfers in the year between levels.

Total financialassets/financial

liabilities atAs at December 31, 2010 Level 1 Level 2 Level 3 fair value

Financial assets

Cash $ 1,447 $ – $ – $ 1,447

Long-term investments – – 560 560

Total financial assets $ 1,447 $ – $ 560 $ 2,007

Financial liabilities – nil $ – $ – $ – $ –

Total financialassets/financial

liabilities atAs at December 31, 2009 Level 1 Level 2 Level 3 fair value

Financial assets

Cash $ 10,670 $ – $ – $ 10,670

Long-term investments – – 560 560

Total financial assets $ 10,670 $ – $ 560 $ 11,230

Financial liabilities – nil $ – $ – $ – $ –

Risks arising from financial instruments and risk management

The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange and interest rate risks), creditrisk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeksto minimize potential adverse effects on the Company’s financial performance.

Risk management is the responsibility of the corporate finance department whose function is to identify, evaluate and, where appropriate,hedge financial risks. The Company’s overall risk management program focuses on establishing policies to identify and analyze the risksfaced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk managementpolicies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company aimsto develop a disciplined control environment in which all employees understand their roles and obligations. Risks are monitored andare regularly discussed with the board of directors.

Foreign exchange risk

As discussed in note 1, the rail, tourism and port operations have a reporting currency in U.S. dollars. During 2010, the Company hasmade two golf club acquisitions in Florida. Therefore, fluctuations in the U.S. dollar exchange rate will impact the earnings of ClubLink.

For the year ended December 31, 2010, if the Canadian dollar had weakened (strengthened) 10% against the U.S. dollar, all othervariables held constant, the after tax earnings would have increased (declined) by $1,056,000 (2009 – $735,000).



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Interest rate risk

The following debt instruments have variable interest rates:


Revolving secured debt

(2010 – LIBOR plus 215 basis points or 2.41%; 2009 – US Prime plus 50 basis pointsor one month LIBOR plus 335 basis points, both subject to a minimum floor of 5.0%) $ 5,558 $ 7,883

Revolving secured debt

(BA’s plus 200 basis points; prime plus 75 basis points) 42,942 19,054

Term loan

2010 – LIBOR plus 300 basis points or 3.26%; 2009 – LIBOR plus 345 basispoints subject to a minimum floor of 5.0%) 36,090 31,828

Notes payable to related parties (Prime plus 210 basis points) – 28,400

$ 84,590 $ 87,165

For the year ended December 31, 2010, an increase (decrease) of 100 basis points of each the Canadian and U.S. prime would haveincreased (decreased) interest expense by $564,000 (December 31, 2009 – $294,000).

The objective of the Company’s interest rate management activities is to minimize the volatility of the Company’s earnings.

Credit risk

Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to trade accounts receivable andmortgages and loans receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets.

The objective of managing credit risk is to prevent losses in financial assets. It is ClubLink’s experience that the credit worthiness of itsmember accounts receivable balances is very good because it has the ability to suspend the playing and charging privileges of memberswho have overdue accounts in order to manage credit risk exposure to its members.

Further, the Company collects deposits on group functions such as corporate events, banquets and resort stays to help mitigate this risk.

The rail, tourism and port operations have historically had very few bad debts because of its strong relationships with the cruise linesand related travel groups.

The credit risk associated with mortgages and loans receivable is considered minimal as they are adequately secured. Collateral formortgages and loans receivable include a charge on the underlying asset for vendor take-back mortgages and loans and the underlyingsecurity for share purchase loans.

The carrying amount of accounts receivable is reduced through the use of an allowance account and the amount of the loss is recognizedin the statement of earnings within operating expenses. When a receivable balance is considered uncollectible, it is written off against theallowance for doubtful accounts receivable. Subsequent recoveries of amounts previously written off are credited to the allowance account.

The following table describes the changes in the allowance for doubtful accounts receivable:


Balance, beginning of year $ 425 $ 331

Increase in allowance through bad debt expense 178 166

Collection costs (15) (5)

Bad debt write-offs (161) (67)

Balance, end of year $ 427 $ 425



72




Credit risk (cont’d)

The following table sets forth details of the age of receivables that are not overdue as well as an analysis of overdue amounts and relatedallowance for doubtful accounts:


Accounts receivable

Current $ 2,445 $ 1,869

Past due for more than one day but not more than 60 days 569 416

Past due for more than 60 days 651 563

Less: allowance for doubtful accounts (427) (425)

Subtotal 3,238 2,423

Mortgages and loans receivable

Current 5,805 11,753

Past due – 31

Less: allowance for doubtful accounts – (36)

Subtotal 5,805 11,748

Total loans and receivables $ 9,043 $ 14,171

Liquidity risk

Liquidity risk arises through excess of financial obligations over available financial assets due at any point in time. The Company’s objectivein managing liquidity risk is to maintain sufficient readily available cash reserves in order to meet its liquidity requirements at any point intime. The Company achieves this by maintaining sufficient cash and through the availability of funding from committed credit facilities.

The Company and its subsidiaries are subject to risks associated with debt financing, including the possibility that existing mortgagesmay not be refinanced or may not be refinanced on as favourable terms or with interest rates as favourable as those of the existing debt.The Company and it subsidiaries mitigate these risks by its continued efforts to stagger and to extend the maturity profile of its secureddebt, enhance the value of its real estate properties and foster excellent relations with its lenders.

The Company believes that cash on hand, future free cash flows generated by operations and availability under its revolving operatinglines of credit will be adequate to meet its financial obligations.

The Company has financial liabilities with varying contractual maturity dates. Total financial liabilities at December 31, 2010 basedon contractual undiscounted payments are as follows:

2016 and(thousands of dollars) 2011 2012 2013 2014 2015 thereafter Total

Accounts payable and accrued liabilities $ 17,755 $ – $ – $ – $ – $ – $ 17,755

Revolving secured debt 5,558 42,942 – – – – 48,500

Non-revolving mortgages – principal 12,241 13,695 15,083 15,690 16,296 192,393 265,398

Non revolving mortgages – interest 18,639 17,714 16,681 15,598 14,435 73,669 156,736

Term loan – principal 2,841 2,841 2,841 2,841 2,841 21,885 36,090

Term loan – interest 1,140 1,046 953 860 766 2,446 7,211

Capital lease obligations – principal 4,199 2,775 1,839 627 354 31 9,825Capital lease obligations – interest 471 243 128 39 12 – 893

$ 62,844 $ 81,256 $ 37,525 $ 35,655 $ 34,704 $ 290,424 $ 542,408

21. Contingencies

From time to time, ClubLink and certain of its subsidiaries, employees, officers and/or directors are defendants in a number of legalactions arising in the ordinary course of operations. In the opinion of management, it is expected that the ultimate resolution of suchpending legal proceedings will not have a material effect on ClubLink’s consolidated financial position.


CONTENTS1 Financial Highlights2 Chairman’s Message4 ClubLink Establishes a Florida Region5 Heron Bay Golf Club – Florida6 ClubLink in Sun City Center – Florida8 Glendale Joins ClubLink

10 Your Passport to More Excitement at White Pass12 Map of Canadian Golf Club and Resort Locations13 Golf Club and Resort Property Listing14 Management’s Discussion and Analysis of Financial Condition and Results of Operations47 Management’s Responsibility for Financial Reporting47 Independent Auditor’s Report48 Consolidated Balance Sheets49 Consolidated Statements of Earnings and Comprehensive Earnings49 Consolidated Statements of Retained Earnings and Accumulated Other Comprehensive Loss50 Consolidated Statements of Cash Flows51 Notes to Consolidated Financial Statements73 Board of Directors, Senior Officers, Corporate Information and Location of Annual Meeting of Shareholders

ClubLink Enterprises Limited has a strategic objective tomaximize shareholder value over a five to ten year horizon,though the Company may monetize an investment when businessconditions present a suitable opportunity.

ClubLink is engaged in golf club and resort operations underthe trademark “ClubLink One Membership More Golf”. ClubLinkis Canada’s largest owner and operator of golf clubs with 48½,18-hole equivalent championship and six 18-hole equivalentacademy courses at 41 locations, primarily in Ontario, Quebecand Florida.

ClubLink is also engaged in rail, tourism and port operationsbased in Skagway, Alaska, which operates under the trade name“White Pass & Yukon Route.” The railway stretches approximately177 kilometres (110 miles) from Skagway, Alaska, through BritishColumbia to Whitehorse, Yukon. In addition, ClubLink operatesthree docks primarily for cruise ships.

BOARD OF DIRECTORS SENIOR OFFICERS

PATRICK S. BRIGHAM (b, c)

PAUL CAMPBELL (b, c)

DAVID A. KING (a)

JOHN LOKKER (a)

SAMUEL J.B. POLLOCK (a, b)

K. (RAI) SAHI

DONALD W. TURPLE (c)

JACK D. WINBERG (b, c)

(a) Audit Committee

(b) Corporate Governance and Compensation Committee

(c) Environmental, Health and Safety Committee

ClubLink Enterprises Limited

K. (RAI) SAHIChairman and Chief Executive Officer

ROBERT VISENTINChief Financial Officer

EUGENE N. HRETZAYVice President, General Counsel and SecretaryPresident, White Pass and Yukon Route

ROBERT WRIGHTVice President


EDGE M. CARAVAGGIOVice President, Operations

SCOTT DAVIDSONVice President, Corporate Operations

CHARLES F. LORIMERVice President, Sales & Marketing

NEIL E. OSBORNEVice President, Clubhouse Operations


MICHAEL D. BRANDTSenior Vice President, Planning & Administration

ED C. HANOUSEKSuperintendent, Rail Operations

Annual Meeting of ShareholdersAnnual Meeting of Shareholders of ClubLink EnterprisesLimited will be held at 11 a.m. on May 19, 2011 at King ValleyGolf Club, 15675 Dufferin Street, King City, Ontario, L7B 1K5.

CORPORATE INFORMATION

Executive Office15675 Dufferin StreetKing City, Ontario L7B 1K5Tel: (905) 841-3730Fax: (905) 841-1134

Websites:clublinkenterprises.ca/comclublink.ca/comwpyr.com

Investor RelationsContact: Robert VisentinTel: 905-841-5360Fax: 905-841-1134Email: [email protected]

BankersHSBC Bank CanadaWells Fargo Bank Alaska

AuditorsDeloitte & Touche LLP

Stock Exchange ListingsCommon shares: TSX: CLK

Transfer AgentCanadian Stock Transfer Company, Inc.


73

15675 Dufferin Street,King City, Ontario,Canada L7B 1K5

Tel 905 841 3730Fax 905 841 1134

CLUBLINKENTERPRISESLIMITED

Your Passport tomore !

Clubhouse at Club Renaissance

Photo courtesy of The Greg Wilson Group

Club Link Annual Report - 2010

Investor Relations

Transcript of Club Link Annual Report - 2010