2020 Year End Report

Credit Valley Golf and Country Club 2020 End of Year Report

From The Chief Operating Officer Jason Hanna, COO Welcome to the Credit Valley End of Year Report. At this point, with the golf season over it is a perfect time to outline some important topics from the 2020 season as well as share initiatives and assumptions as we prepare for 2021. Without any doubt, 2020 and our 2020 golf season were unprecedented and we were faced with challenges and o­ pportunities none of us would have ever considered under normal circumstances. On December 21, 2020 at 10:00 am, your Board of Directors will host a virtual Town Hall meeting to review key points from this report and answer any questions that you may have. What’s Inside 2020 Financials Financial Highlights Golf Operations Access to the Tee Report Member Round Statistics 2019 v 2020 Member Rounds Played 2020 Membership Report 2016-2020 Membership Trend Membership Wait List by Category 2021 Operating Budget Virtual Town Hall Meeting Greens December 21 at 10:00 am Food and Beverage Catering Please watch for future communications Clubhouse Operations r­egarding the details of the upcoming Virtual Conclusion Town Hall Meeting to be held on ­December 21 at 10:00 am. Capital Plan 2021 and Beyond 2020 Membership Fees Comparison 2020 Initiation Fees Comparison Capital Funds Our Challenge Our Solution Capital Cash Flow Details Projected Capital Expenditures Report Capital Cash Flow Model Irrigation System In Summary 2021 Total Annual Membership Costs by Category 2021 Membership Dues Schedule 2

2020 Financials Entering 2020, the Club had a responsible, realistic operating budget in place. As the global pandemic was declared, and all businesses were forced into lockdown, we immediately cut and reduced all non-essential operating expenses creating a worst-case scenario budget. This included significant layoffs and changes in purchasing habits. By rapidly implementing these measures, Management and the Board believed we were in a good position to limit financial losses and weather the unknowns that lay ahead. As we began to rebuild a modified budget to reflect golf in a COVID world, all expenses were designed to increase i­ncrementally with revenues. We believed that taking this approach would allow us to best control our expenses during such uncertain times. Since the inception of the Federal Government’s wage subsidy program (CEWS), we have been fortunate to qualify for monthly wage subsidies. Qualifying for this subsidy allowed the Club to provide expected levels of service where possible while following the protocols and guidelines set out by our government. The aforementioned measures have allowed the Club to generate a forecasted operating surplus for 2020. For the unaudited statement of operations as of November 30, 2020 as well as the balance sheet as of November 30, 2020, please login to the CV website and click on the GOVERNANCE tab. How Will Our Operating Surplus Be Handled? Since our operating loss in 2019, the Club has been carrying an operating deficit balance of $288,928, which was to be ­assessed to the membership this year. Instead of assessing the membership for this, a portion of the 2020 operating ­surplus will be used to eliminate this deficit. The remaining balance will be used to decrease the balance owing on our loan. Throughout the year, the available cash flow generated by our operating surplus has been used to manage interest on the loan. This, combined with lower interest rates has contributed to significantly decreased interest expenses for 2020, which will be reflected in much lower loan interest charges to members in 2021. As part of our CEWS application preparation process we consulted with our external auditors to confirm the accuracy of our figures and to confirm that we qualified for the government subsidy. 2020 Financial Highlights • Membership annual dues are $236,000 positive to adjusted COVID-19 budget • 89 new trial members with terms expiring on October 31, 2021 • COVID-19 related setup and supplies expenses are $56,200 to date • Total forecasted interest on loan for 2020 is $108,000 (down by 35% over 2019) Access to the Tee - 2021 and Beyond The unprecedented desire to play golf in 2020 applied pressure to our tee sheet like we have never seen before. In 2020 we played over 37,000 rounds of golf, compared to an average of approximately 28,000 in previous years. ­Throughout the season, the Golf Shop staff and members of the Golf Committee listened carefully to the concerns of the m­ embership and will be working hard over the off-season to recommend a number of initiatives to help alleviate the challenges we ex- perienced in 2020. 2021 initiatives under investigation 3 • Establishing the right mix of events while maintaining ‘clear space’ for member play on the golf calendar • Establishing a clear guest policy framework for the membership • Reducing the manipulation of the tee sheet with ‘name blockers’, changes, guests and TBAs • Looking comprehensively at membership classification tee access and making adjustments as needed • Balloting and lottery considerations • Reciprocal program

To help gain some perspective on the increased play in 2020 the following graphics help explain the year over year increase in play by category from 2019 – 2020. Key highlights: • Only once in the previous 10 years at the Club did we have a single month where our members played more than 5000 rounds (5011 – August 2017). • In 2020, we had three consecutive months where our members played more than 6000 rounds, and a fourth month where members played more than 5500 rounds. Comparing full seasons: • 2019 the course was open for 197 days with 23,695 member rounds played = 120.3 member rounds per day • 2020 the course was open for 191 days with 32,968 member rounds played = 172.6 member rounds per day • That is an increase of 43% per day in member rounds for the entire season. Increase in Member Rounds by Category 2019 2020 Increase FULL 10452 16395 5943 RESTRICTED 3897 6347 2450 5 DAY 1936 2601 665 INTER 2360 4788 2428 JUNIOR 717 1674 957 SPOUSAL 180 617 437 Rounds Played 2019 v 2020 SPOUSAL 2000 4000 6000 8000 10000 12000 14000 16000 18000 JUNIOR 2020 2019 INTER 5 DAY RESTRICTED FULL 0 4

2020 Membership Maintaining healthy membership numbers in all categories is crucial to the long-term health of the Club. At the onset of the pandemic, there was valid concern that we would be losing an unexpected number of members while being unable to attract new members. If this concern was realized, it would have had a devastating effect on the future success of our Club. Based on this concern, the 2020 trial program was modified to create a program commencing in 2020 with an expiry of ­October 31, 2021. Little did we know that 2020 would unfold as it did for the game of golf and private club life. With this in mind, to control the influx of trial members, categories began being capped in the early summer, with all categories capped and a waitlist started before the end of the summer. As we move forward, the Membership Committee will be closely ­evaluating our options with two equally important goals in mind. To not overload the current membership and to ensure a sufficient influx of members to maintain a healthy ­membership pipeline for years to come. The fact that we already have a waitlist of over 60 people puts us in a very desirable position to start this process. Please see below for our membership numbers as of November 30, 2020. Membership Trend Membership Category 2016 2017 2018 2019 2020 Dec Dec Dec Dec 30-Nov Full Golf 375 352 337 303 296 Total Full Trials 24 Full Total 7 17 18 7 Restricted Golf 320 Total Restricted Trials 382 369 355 310 112 Restricted Total 5-Day Golf 98 92 105 113 12 Total 5-Day Trials 124 5 Day Total 6 10 13 6 Intermediate Golf 71 Intermediate Total Trials 104 102 118 119 0 Intermediate Total Total of Four Main Categories 49 53 63 70 71 Spousal Golf 80 Spousal Trial Totals 2 4 11 0 53 Spousal Total 133 Junior 51 57 74 70 648 Total Golf Categories 10 46 59 76 84 6 35 22 55 11 16 48 81 81 131 95 712 618 609 678 594 0 10 14 10 28 1 3 2 28 11 17 12 53 57 45 49 699 677 740 655 Wait List by Category Full Golf 13 Restricted Golf 22 Intermediate Gold 2 Silver 12 Bronze 17 Spousal 2 Total 68 5

2021 Operating Budget Preparing the operating budget for 2021 has been a unique opportunity. We now find ourselves in the challenging position of planning to operate the Club with nearly all amenities available to the membership while working within the restrictions imposed by COVID (known and unknown), which ultimately have an impact on our revenue. Please see below for a detailed explanation of the operating assumptions for key departments in 2021. Greens Our golf course is our greatest asset. As we look ahead to golf in 2021, we are assuming that the golf course will be as busy as it was this year. The 2021 budget has been designed to maintain the golf course in tournament conditions at all times. It is important to note that in 2020, the greens department operated with three fewer staff, which was accommodated due to a later first tee starting time, allowing staff more time to set the course up each day. In an effort to increase access to the golf course in 2021, we will be returning to regular start times and will be staffing accordingly. Food and Beverage and Catering COVID has had the greatest impact on our Food and Beverage and Catering departments. The impacts of COVID have obviously affected our revenues, but more importantly, COVID has allowed us to look at portions of our business from a completely different perspective as well as listen to member feedback on how we have been able to enjoy utilizing spaces around the Club we may not normally have had access to. We will discuss F&B and Catering separately. Food and Beverage Since March, monthly minimum house charges have been eliminated for 2020. This was due to limited dining options. Since this time, the Club has implemented a robust take out program and options for dining at the Club. Monthly minimums play a key role in our economic model and will be reinstated effective January 1, 2021. The procedures for minimums will remain unchanged from previous years. As we have seen over the past eight months, government-imposed dining restrictions have had a dramatic impact on how we operate F&B at the Club. For 2021, we are assuming that many of these restrictions will remain in place. We must also be prepared for situations that may require further cutbacks to our operations. In this case, we must be able to adapt ­immediately to minimize financial losses. In order to achieve this, our Food and Beverage team will be operating quite differently than what we are used to. However, we will continue to provide world-class offerings and quality. Please be sure to keep an eye on member communications for details surrounding Food and Beverage operations. Catering Since the onset of the pandemic, our Catering business has been reduced to nearly zero. Due to decreased Catering, we have been able to enjoy areas of the Club (Ballroom and patio) that we would normally not have access to daily. It has also been noted that a more ‘private’ feel to the Club has existed in the absence of Catering. To better understand the future impact of operating Catering during the pandemic and beyond, a full financial review of over 250 events hosted at the Club in 2019 was completed. This was discussed at length with the Finance Committee and Board of Directors. Completing this review allowed us to determine what type of events generate significant profit for the Club and which events do not. Upon further review, we have been able to make dramatic changes to our Catering model at Credit Valley. Below is an outline of our new Catering strategies. Weddings Most weddings from 2020 have rescheduled to 2021. Based on COVID restrictions, we have revised our budgets to reflect what COVID wedding revenues will be. This theory has already been tested on the one COVID restricted wedding the Club hosted this year. 6

In 2022 and Beyond • The Club will only host weddings on Saturdays during the golf season. • The minimum required spending on weddings has been increased to better reflect our place in the market (high end). Non-Member Catering During the golf season (May – October), the following modifications have been made. • The Club will not host events before 5:00 pm on weekdays. • The Club will not host events on Wednesdays or Fridays. These restrictions will greatly reduce non-member activity at the Club. We believe this will enhance the member experience by creating the private club feel we all enjoyed this past year. Due to our extensive research and analysis into the profitability of Catering at the Club, forfeiting these events will have very little effect on our overall profits. There will be no restrictions on member catering. We believe that our new model will allow the Club to better focus on member catering events to produce the best experience possible. It is important to note, that the questions asked in the member survey as part of the strategic plan were generated by the research that allowed us to make the decisions that have led to our current direction. Furthermore, focusing on profit-centric events, increasing efficiencies and adjusting hours of operation during winter months has nearly eliminated the revenue impact from our new Catering model. Clubhouse Operations As mentioned above, we are expecting to operate all amenities in the Clubhouse next year within the guidelines provided by health authorities. The operating budget for Clubhouse operations is smaller than previous years due to the following factors. • Fewer cleaning staff needed to support reduced Catering events. • Decreased utility costs due to the replacement of nearly all of our rooftop heating and air-conditioning units with high-efficiency units. These new units require considerably less repair and thereby reduced maintenance costs. • Decreased utility costs due to the replacement of all Clubhouse lights to state-of-the-art LED technology. Traditionally we have taken care of our laundry needs in-house. This creates expenses related to staffing, equipment (­capital), utilities and materials (detergent, etc.). Starting in 2021, we will be utilizing a laundry service for the Club. This new approach will save both operating and capital funds as well as allowing our expenses to shift in line with our revenues as our business levels change throughout the year. Conclusion As you can see, the process of developing the 2021 operating budget has been a formidable challenge. However, COVID has presented us with some opportunities and different perspectives that we may have never evaluated under normal ­c­ircumstances. In summary, the 2021 operating budget assumes all amenities of the Club will be fully functional within the limits and g­ uidelines prescribed by health authorities. All sources of revenue have been evaluated closely and err on the side of ­caution to buffer the effects of COVID or poor weather conditions during the season. After careful consideration by the Finance Committee and the Board of Directors, there will be a 1.5% increase on annual dues. This increase is designed to offset the significant increase in our costs of doing business such as wages, food and raw materials. It is important to note that, as part of the budget process, we have increased the contingency line in our operating budget to accurately reflect unexpected expenses most commonly caused by adverse weather conditions. 7

Capital Plan - 2021 and Beyond Responsibly maintaining our capital assets is the cornerstone of running a successful, sustainable club. As you can imagine, a golf course that spans over 150 acres and a Clubhouse of over 40,000 square feet require a comprehensive strategy to track and predict capital spending in order to successfully plan for the future. Over the past year, Management, the Finance Committee and the Board of Directors have been working diligently to assess our capital assets and determine capital cash flow models based on forecasted replacement and maintenance schedules. The purpose of this section is to discuss our current capital model, the challenges we face and our plans to address them. To Be Discussed • How we raise capital funds • Our challenges • Our current debt facility • Long range plans for debt and capital spending Before we take a detailed look at our capital plan for the foreseeable future, we must take a look at our current structure for financing capital expenses. Annual Initiation Annual Capital Fees Capital Fees Fees All members pay an annual capital fee. The amount of the fee is a­ djusted based on your category. The goal of this annual fee is to raise $550,000 for capital expenses. This money is traditionally spent on items such as greens equipment, clubhouse repairs and repairs to golf course infrastructure to name a few. Initiation Fees Since the inception of our debt facility, all initiation fees have gone towards repaying the debt. Our initiation fee income varies from year to year depending on new member acquisition and payment plans. 2020 GTA Club Membership Fees $10,000 $8,950 $8,100 $8,141 $8,997 $7,194 $8,030 $8,000 $7,577 $6,000 $4,000 $2,000 $0 Annual Dues Senior 2020 2020 Capital Levy 8 2020 Annual Fees Dues plus Capital

2020 GTA Club Initiation Fees $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Lambton Toronto Mississaugua Oakdale Credit Valley Islington Entrance Fees Senior Entrance Fees Couple Did You Know? • Our current loan facility was activated in 2016 to finance the new maintenance facility, driving range, updated halfway house and golf course improvements such as the full bunker renovation. • The initial balance was $5,000,000. • The principle on the loan is to be paid down by initiation fees (goal was $500,000 annually). • The last major project financed by the loan was the inclinator rebuild ($250,000). • The interest on the loan is assessed to the membership annually. • Current interest rate is 2.70% (variable). • Projected end of year balance for 2020 is $3,186,502. • The capital fee billed to members has not been adjusted in 10 years. • As membership numbers evolved, we have no longer been collecting $550,000. The number has been closer to $530,000. To cover this shortfall the Club has been accessing funds from our loan facility. • Our recent capital forecasts have shown that we are raising less than half of the annual required capital funds. Our Challenge Simply put, we are not collecting enough money to cover the annual capital expenditures necessary to properly maintain our golf course and facilities. Each year we are drawing on our loan or deferring capital expenses to make ends meet. As assets and infrastructure age, our current model is no longer sustainable and we must develop a long-term capital plan for the foreseeable future. Our Solution The first step to determining our capital needs is to develop a long-term capital plan. As you may recall from previous c­ ommunications, the Club enlisted a third-party last year to perform a full audit on all Club buildings and related ­components. This process allowed us to develop a long range (10-15 year) forecast of capital expenses. 9

Extrapolating this data and comparing it to forecasted capital funds to be raised, the Club has been able to forecast an ­accurate trajectory for capital assessments for the foreseeable future. As a result of this detailed research, our capital fees will need to increase in line with forecasted expenses. Capital Cash Flow Details • Our capital cash flow model allocates a set loan repayment amount each year. If collected initiation fees exceed ­predicted capital expenses, the difference will go towards creating a capital reserve fund. • Predicted initiation fees to be collected is based on current payment plans and expected new members based on conservative historical numbers. • Capital fees will need to increase for the next three years before increases closer to typical annual inflation will be assumed. • 2021 – 16% increase • 2022 – 16% increase • 2023 – 16% increase • 2024 – onwards – 2.5% increase The Credit Valley Golf and Country Club Capital Cash Flow Projections For the Fiscal years ending Dec 31 Forecast Forecast Forecast 2021 2022 2023 Capital Inflows 638,000 740,000 858,000 Annual Capital Dues 289,559 424,281 464,187 Initiation Fees Total capital cash inflows 927,559 1,164,281 1,322,187 Capital Outflows -795,000 -615,000 -615,000 Annual Capital Expenditures -795,000 -615,000 -2,500,000 Irrigation system Total Capital Cash Outflows -3,115,000 Net capital in (out) flows 132,559 549,281 -1,792,813 Bank loan balance - January 1 -3,186,502 -3,053,943 -2,504,662 -3,053,943 -2,504,662 -4,297,475 Bank loan balance - December 31 10

• Abiding by this new capital schedule we will raise the capital funds required each year without having to further draw on our loan. This will allow the club to negotiate the best terms possible for the remaining balance of the loan and set an accurate repayment budget for the foreseeable future. Valley Irrigation System Replacement It is important that we do not lose sight of planning to replace our irrigation system in the valley. Separate from our analysis on forecasted capital expenses, we have worked with golf irrigation designers and contractors to develop a scope of work and budget estimate. This budget estimate is included in the capital schedule. Over the next year we will continue to do our due diligence on preparing for this significant project, all while communicating with the membership. In Summary In summary, we will be raising capital funds through the annual capital assessment and initiation fees. A portion of this ­combined income will go towards repaying our debt each year; the balance will be used for capital maintenance expenses. If the Club finds that more initiation fees than budgeted are collected, these funds will be used to build a reserve fund. (continued on page 12) Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2024 2025 2026 2027 2028 2029 2030 879,000 901,000 924,000 947,000 971,000 996,000 1,021,000 509,562 528,812 563,950 573,712 569,470 551,569 556,021 1,388,562 1,429,812 1,487,950 1,520,712 1,540,470 1,547,569 1,577,021 -615,000 -1,020,000 -1,020,000 -1,020,000 -1,020,000 -1,020,000 -1,020,000 -615,000 -1,020,000 -1,020,000 -1,020,000 -1,020,000 -1,020,000 -1,020,000 773,562 409,812 467,950 500,712 520,470 527,569 557,021 -4,297,475 -3,523,913 -3,114,101 -2,646,151 -2,145,439 -1,624,969 -1,097,400 -3,523,913 -3,114,101 -2,646,151 -2,145,439 -1,624,969 -1,097,400 -540,379 11

It is important to note that we currently do not have a reserve fund. In the event that we fall short of predicted initiation fees to be collected, we can draw from our reserve fund and/or adjust spending accordingly. Also keep in mind that the annual capital budget allows for a contingency. This amount has been calculated based on previous unexpected capital expenses due to unforeseen weather events. Moving forward, the timing on most capital expenses will be timed as late in the year as possible to allow for adjustments brought on by unforeseen circumstances earlier in the year. According to our By-Laws, our current capital annual spending limit is $550,000. In order to maintain our capital assets at the level that members have come to expect, the current capital assessment will have to be increased from the current $550,000 limit in order to keep up with capital spending as highlighted in the cash flow model. This will be evaluated by the Governance Committee and voted on at our next AGM. As it pertains to 2021 capital spending, the $550,000 limit will not be exceeded until any proposed change to the By-Laws has been voted on by the membership. Strategic Planning Update Many thanks to all of you who took the time to fill out the member survey in November. Thanks to your excellent level of participation, Global Golf is well into their process of analyzing results and collecting your comments in order to present to the Board. Please see below for an updated outline of the strategic planning process and timelines. • Strategic planning survey - Completed in November 2020 • Survey Report - Completed in December 2020 • Strategic planning report - Early 2021 Please stay tuned for further communications about our Strategic Process and the recommendations it will drive. In Conclusion The past year at Credit Valley has been exciting. Although COVID will factor into our business decisions for the next year and continue to surprise us at most turns, we hope that the content of this report provides the membership with a sense of security and optimism while we move ahead, capitalizing on unique opportunities while responsibly planning for our future. The Credit Valley Golf and Country Club 2021 Total Annual Membership Costs by Category Assumptions: Annual dues to increase by 1.5% 16% increase in capital maintenance fees (year 1 of 3) 2021 interest assessment based on projected total interest for 2020 and current membership demographics Membership Category Dues 2020 Total Dues 2021 Total Overall Interest Interest Increase $% Capital Assessment Capital Assessment 126 1.5% Full Golf 7,235 865 344 8,444 7,345 1,005 220 8,570 111 1.5% Restricted Golf 6,205 865 344 7,414 6,300 1,005 220 7,525 96 1.5% Five Day Golf 5,175 865 344 6,384 5,255 1,005 220 6,480 60 2.1% Spousal Golf 2,395 350 120 2,865 2,430 405 90 2,925 116 1.5% Intermediate - Gold 6,700 865 344 7,909 6,800 1,005 220 8,025 205 3.3% Intermediate - Silver 5,250 700 280 6,230 5,330 925 180 6,435 290 5.7% Intermediate - Bronze 4,375 525 210 5,110 4,440 825 135 5,400 90 3.3% Intermediate Golf - 20-24 2,275 350 90 2,715 2,310 405 90 2,805 130 3.2% Intermediate Golf - 25-29 3,350 525 140 4,015 3,400 610 135 4,145 155 2.8% Intermediate Golf - 30-34 4,575 700 210 5,485 4,645 815 180 5,640 170 2.5% Intermediate Golf - 35-39 5,785 865 280 6,930 5,875 1,005 220 7,100 50 2.9% Social 1,475 200 20 1,695 1,495 230 20 1,745 30 1.7% Golf Leave of Absence 1,475 200 70 1,745 1,495 230 50 1,775 12 1.3% Non-Resident Golf 800 100 38 938 810 115 25 950 12

2021 Annual Fees Schedule MEMBERSHIP CATEGORY Annual Dues 5 Instalments Annual Capital 5 Instalments Jan 1 to Dec 31 December - April Fee 2021 December - April Full Golf Corporate Golf 2021 2021 1005.00 2021 Restricted Golf 1005.00 Five Day Golf 7,345.00 1,469.00 1005.00 201.00 Spousal Golf 7,345.00 N/A 1005.00 N/A 6,300.00 405.00 Intermediate Golf 5,255.00 1,260.00 201.00 Gold 2,430.00 1,051.00 201.00 Silver 486.00 81.00 Bronze 6,800.00 1,360.00 1005.00 201.00 Young Junior Age 10-12/No HDCP 5,330.00 1,066.00 925.00 185.00 Junior/Young Junior with HDCP (Age 13-19) 4,440.00 888.00 825.00 165.00 Social (no health club) 660.00 N/A N/A N/A LOA (no health club) 1,220.00 N/A N/A N/A Non-Resident Social Health Club 1,495.00 N/A 230.00 N/A Locker Only Fee (Full $325, half $175) 1,495.00 N/A 230.00 N/A Driving Range Program 810.00 N/A 115.00 N/A Non Resident Golf 810.00 N/A 115.00 N/A Non Resident Spouse Golf 325.00 N/A 0.00 N/A LOA Retired Spouse/ Retired Spouse 560.00 N/A 60.00 N/A 810.00 N/A 115.00 N/A 810.00 N/A 115.00 N/A 1,495.00 N/A 230.00 N/A Annual dues and annual maintenance capital expenditure fees for the 2020 fiscal year for Full, Restricted, 5 Day, Spousal and I­ntermediate Members will be billed in five equal instalments beginning December 31, 020 (December 31, January 31, February 28, March 31 and April 30, 2021). All other c­ ategories will be billed in one instalment on December 31, 2020. Annual dues across all categories increased by approximately 1.5% over 2020 annual dues. Capital fees for Senior members have increased for the first time in 10 years. Intermediates who are still in previous categories based on their age, should contact the office for their 2021 annual dues and capital fees. These have been calculated based on a 1.5% increase in annual dues and an increase in capital fees to bring all Intermediates closer to the same capital fees paid by Senior golfing members. The 2020 interest assessment amount will be calculated following the completion of the audit for fiscal 2020. This amount will be added to one of the instalments in early 2021. 13