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RED DEER, AB, Aug. 13 /CNW/ - Gamehost Income Fund (the "Fund) (TSX.V: GH.UN)
The second quarter of our fiscal year is traditionally a soft one. Fevered activity during the first quarter leads into the arrival of spring breakup. This annual phenomenon has a dramatic effect on our operations, especially in the north. Road bans on local roadways, temporary layoffs in the oil patch and spring rains differ year to year only in their severity. We always wonder heading in to the second quarter if there is enough momentum to continue our unbroken string of revenue records. Spring breakup in 2007 was especially protracted. We are again pleased, however, to report favourable results for the second interim reporting period in 2007. Results for the six and three months ended June 30, 2007 (respectively the "Period" and "Quarter") are positive. No matter what the circumstances, it seems people just what to have fun!
Revenues for the Period and Quarter compared to corresponding time frames in 2006 are both 23% higher. Revenues increased by $5.3 million for the Period to $28.4 million from $23.1 million in 2006. Revenues for the Quarter increased by $2.7 million to $14.3 million compared to 2006 when revenues totaled $11.6 million. Quarterly revenues increased 2% over the $14.1 million recorded the previous quarter.
Total earnings before interest, taxes, depreciation and amortization ("EBITDA") for the Quarter and Period total $7.1 million and $14.1 million respectively. This compares to results over the same time frames in 2006 of $5.6 million and $11.1 for growth of 27% and 28% respectively.
Quarterly EBITDA margins fell slightly short of a key milestone mark of 50.0%. EBITDA margins for the Period totaled 49.6% compared to 48.1% in 2006, an improvement of 1.5%. We continue in our efforts to push overall EBITDA margins back towards the levels experienced prior to opening of the Deerfoot Joint Venture. The Deerfoot Joint Venture's large food operations, a high cost element of overall operations, coupled with the higher than average growth rate of the Deerfoot Joint Venture relative to the combined growth rate of the Fund's other properties makes growing overall Fund EBITDA % a challenge.
Interim Consolidated Statements of Operations
(Unaudited)
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six months ended three months ended
June 30 June 30
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2007 2006 2007 2006
Revenue
Hotel - rooming $ 4,281,505 $ 3,369,274 $ 2,044,209 $ 1,719,236
Table games 4,081,739 3,437,539 1,997,931 1,588,409
Slot machines 11,437,869 9,768,722 5,952,085 5,046,149
Food & beverage
services 6,098,721 4,590,985 3,019,690 2,257,906
Lease and rental 159,318 153,092 79,659 76,328
Other 2,369,121 1,815,933 1,251,424 935,957
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28,428,273 23,135,545 14,344,998 11,623,985
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Expenses
Cost of goods sold 2,017,179 1,727,413 1,001,412 833,678
Human resources 7,224,458 6,101,582 3,695,458 3,147,035
Marketing and
promotions 1,050,673 694,135 586,632 397,318
Operating 3,071,948 2,570,643 1,550,182 1,254,552
Corporate and general
administration 953,402 907,875 404,982 438,806
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14,317,660 12,001,648 7,238,666 6,071,389
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Earnings before
amortization, interest
and income allocation
to Class B Limited
Partners 14,110,613 11,133,897 7,106,332 5,552,596
Amortization 1,107,401 1,187,895 553,701 594,416
Interest charges 549,134 645,128 284,922 365,443
Income allocation to
Class B Limited
Partners 6,097,601 4,553,771 3,068,713 2,248,635
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Net income $ 6,356,477 $ 4,747,103 $ 3,198,996 $ 2,344,102
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Net income per unit,
weighted average and
fully diluted (x) $ 1.770 $ 1.322 $ 0.891 $ 0.653
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See accompanying notes to financial statements
(x) Based on Net income before Income allocation to Class B Limited
Partners against total units (all classes) issued and outstanding.
Our Service Plus property, as expected, experienced a reduction in occupancy during the Quarter. While we know additional room capacity that opened in the city during the Quarter has been a factor, there has also been a moderate slowdown in the energy industry. Occupancies are still very respectable and there has been no pressure on room rates. We are using the slowdown to complete needed refurbishment. The pull back in the energy sector together with a beleaguered forestry industry has had an impact on the Great Northern Casino as well. Both of these Grande Prairie properties are off the peak utilization rates we experienced in the preceding twelve months.
The expansion of Boomtown Casino in Ft. McMurray continues to gain traction. Announcements of new mega projects for the tar sands rich area will continue the growth potential of this facility for the foreseeable future. The Municipality of Wood Buffalo in which Ft. McMurray resides surprised us with the introduction of a non-smoking bylaw which quickly passed through the required three readings. As a result, smoking will not be allowed inside the Boomtown Casino effective September 1, 2007. Management has begun plans to provide for exterior smoking space for both staff and patrons. As for most jurisdictions that have already implemented such bylaws we are expecting a short lived moderate reduction in cash play.
Ticket In/Ticket Out ("TITO") conversion of all slot machines at the Deerfoot Joint Venture began mid July and is now complete. Floor staff is focusing their attention on introducing patrons to the new coinless technology to ensure a smooth transition. Many new games were introduced with the change over in machines. Initial observations indicate a high level of acceptance by patrons and staff. The Alberta Gaming and Liquor Commission set conversion dates for both Boomtown and Great Northern Casinos in October 2007 and March 2008 respectively. Ultimately we expect TITO to provide cost efficiencies and increase cash play.
Trustees of the Fund maintained regular monthly cash distributions throughout the Quarter at $0.20 per unit. Total distributions for the Period total $1.15 per unit and represent a payout ratio of distributable cash from operations of 65.4%. This compares with total distributions for the same period in 2006 of $0.81 per unit and a payout ratio of 80.8 %.
This press release may contain forward-looking statements. Forward-looking statements may contain words such as "anticipates", "believes", "could", "expects", "indicates", "plans" or other similar expressions that suggest future outcomes or events. Use of these statements reflect reasonable assumptions made on the basis of management's current beliefs with information known by management at the time of writing. Many factors could cause actual results to differ from the results discussed in forward-looking statements. Actual results may not be consistent with these forward-looking statements.
The Fund is an unincorporated open-ended limited purpose trust established under the laws of the Province of Alberta. The Fund's activities are currently confined to the Province of Alberta, Canada. Operations include the Boomtown Casino in Ft. McMurray, the Great Northern Casino, Service Plus Inns & Suites and a strip mall all located in Grande Prairie. The Fund is also a 40% joint venture partner in Deerfoot Inn & Casino Inc. in Calgary.
Consolidated interim financial statements and MD&A are available on the Fund's website at www.gamehost.ca or on SEDAR at www.sedar.com.