RED DEER, AB, May 14 /CNW/ - Gamehost Income Fund (the "Fund") (TSX: GH.UN) Management and Trustees of Gamehost Income Fund present results of the Fund for the three months ended March 31, 2009 (the "Quarter").
The last six months, have been clouded with an economic storm of epic proportions. Global economies have been sinking and the race for life preservers has been fast and furious. The Fund has been navigating the storm surge remarkably well. Revenues for the Quarter totaled $13.8 million up 3.9% from $13.3 million in Q1 2008. We entered the Quarter with our eyes wide open, prepared for the typical post Christmas slowdown that would be further hampered by looming layoffs and consumer pessimism. Accordingly, we began targeted marketing campaigns and value added promotions for our customers. As a result, Quarterly revenues posted only a slight decrease from the Christmas season of Q4 2008, down 3.2% from $14.3 million.
Growing revenues is a real challenge in these times, so our growth strategy is now a cost efficiency strategy. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the Quarter were flat when compared to Q1 2008, totaling $6.3 million, and were up from $6.1 million in Q4 2008, an improvement of 3.3%. Year over year EBITDA margins were down marginally by 1.4% to 45.8%. On a monthly basis EBITDA margins have been steadily improving from a low point in Q4 2008 of 42.6% increasing 3.2% during the Quarter. As the Stampede Joint Venture matures, greater efficiencies are achieved every month and management remains diligent in monitoring discretionary spending at all operations.
Until this economic storm passes, the Fund is concentrating on maintaining revenue strongholds. Management has a proven track record in producing growth, and we haven't forgotten this. It is now a game of inches, and we are patiently making gains on a very muddy field. Competition brings out the best and we are confident that our facilities are just that. The Quarter has posted encouraging increases in table drop in both of our Calgary operations as well as in Ft. McMurray, and we don't intend to give up any ground.
Our Ft. McMurray property, Boomtown Casino, has faced some challenges with announced deferrals of some major oil sands projects in the area. However, recent sharp declines in steel, gas and labour prices should improve investment returns for large scale projects. Stabilizing commodity prices are encouraging as well.
Difficulties in the Grande Prairie region continue. The forestry sector continues to suffer the effects of a fall out in construction activity. The provincial royalty review hit the natural gas industry when they were already suffering from low commodity prices, but with the provincial government's announcement in March of $1.5 billion in drilling incentives, we may see some recovery. On a positive note, 2009 has shown a moderate improvement from a bottom reached in 2008. The management of Great Northern Casino has also made significant progress in trimming operating costs. Our Service Plus hotel in Grande Prairie has shown remarkable resilience. However, we expect to experience additional pressure this year as the rooming market suffers further reductions in demand.
Calgary faces similar economic issues as our other properties, perhaps on a broader scale. Competition is fierce, as there are fewer gaming dollars to spread around. We have been pleased to see gains in table drop figures, illustrating that our renewed focus on VIP players is succeeding. The Stampede Joint Venture is showing improvements, albeit these battles are hard won. New joint marketing programs have benefited both properties. Upcoming periods should bring additional cost savings on the operating side.
We are likely in for a period of prolonged economic stagnation. The long term benefits of our cost efficiency strategy are significant. The Fund historically produced some of the best profit margins in the gaming sector, and when we rise up from this recession, we will be lean and mean. Strap in and join us for the ride, it may be a little bumpy on the way, but it will be worth it.
Interim Consolidated Statements of Earnings and Comprehensive Income
(unaudited)
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three months ended March 31
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2009 2008
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Revenue
Hotel - rooming $ 2,013,076 $ 2,070,375
Table games 2,593,210 1,910,284
Slot machines 5,020,009 5,183,454
Food and beverage services 3,060,750 2,895,744
Lease and rental 89,120 84,160
Other 1,069,682 1,188,988
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13,845,847 13,333,005
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Expenses
Cost of goods sold 940,439 912,770
Human resources 3,685,283 3,470,949
Marketing and promotions 640,980 552,055
Operating 1,730,678 1,523,371
Corporate and general administration 508,047 574,077
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7,505,427 7,033,222
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Earnings before the following: 6,340,420 6,299,783
Interest charges 305,061 303,496
Future income taxes (recoveries) (30,754) 23,867
Unrealized loss on fair valuation of
financial assets and liabilities 1,107 -
Amortization of property, plant and equipment 639,559 501,458
Earnings allocation to minority interest 2,656,336 2,678,620
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Net earnings and comprehensive income $ 2,769,111 $ 2,792,342
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Earnings per unit, basic and fully diluted $ 0.257 $ 0.259
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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 the Deerfoot Inn & Casino in Calgary and a 20% joint venture partner in the new Stampede Casino in Calgary.
Complete consolidated interim financial statements and MD&A for the three months ended March 31, 2009 will be available following the close of trading on May 14, 2009 on the company's website at www.gamehost.ca and thereafter on SEDAR at www.sedar.com.
%SEDAR: 00019487E