SECOND QUARTER 2020 – CONSOLIDATED OPERATING HIGHLIGHTS
The outbreak of the novel strain of coronavirus, specifically identified as “COVID-19”, has resulted in governments worldwide enacting emergency measures to contain the spread of the virus which have lead to prolonged voluntary or mandatory building closures, business closures, government restrictions on travel and gatherings, quarantines, self-isolation and physical distancing. As a result, the Company closed all golf clubs in order to adhere to these restrictions and ensure the health and wellbeing of members and staff alike. This has and will continue to impact revenue streams such as corporate events, banquets, weddings and food and beverage. As government closure orders were lifted, Ontario courses were re-opened on May 16th, 2020 and Quebec courses were re-opened on May 20th, 2020, but social distancing requirements continue to prohibit certain revenue streams such as corporate events, banquets, weddings, meetings and other large gatherings. All Florida courses were re-opened by May 2nd. The Company will continue to adhere to guidance provided by governments and regulatory authorities. As required by IFRS, ClubLink recognizes its annual dues revenue on a straight-line basis throughout the year based on when its properties are open and services are provided. As a result of COVID-19, annual dues revenue was not recognized during course closures. Canadian annual dues revenue decreased 35.6% to $8,063,000 for the three-month period ended June 30, 2020 from $12,525,000 in 2019. The adjustment made based on course closures will be recognized into revenue throughout the remainder of the year on a straight-line basis. Consolidated operating revenue decreased 53.0% to $21,696,000 for the three-month period ended June 30, 2020 from $46,202,000 in 2019 due to the decline in revenue from the closure of golf properties. This decline is due in part to the aforementioned annual dues revenue recognition adjustment, along with streams of revenue that have been lost due to regulations surrounding COVID-19. Group business has been minimal, including corporate events, weddings, banquets or resort stays, as social distancing measures remain in place. Direct operating expenses decreased 48.2% to $21,163,000 for the three-month period ended June 30, 2020 from $40,854,000 in 2019 due to the fact that our golf clubs were closed for a portion of the second quarter and certain revenue streams were reduced. Cost saving measures have been enacted in order to help offset the revenue declines. Labour and employee benefits for the Canadian golf operations have decreased 49.0% to $9,951,000 for the three months ended June 30, 2020 from $18,818,000 in 2019. Net operating income for the Canadian golf club operations segment decreased to $1,790,000 for the three-month period ended June 30, 2020 from income of $6,324,000 in 2019 due to the impact of COVID-19 on the recognition of annual dues revenue. This non-cash adjustment delayed recognition of revenue of $3,947,000 for the three-month period ended June 30, 2020.
