Gamehost Inc. (TSX:GH)
Management and Directors of Gamehost Inc. ("Gamehost", the
"Company", the "Corporation", "Our") are pleased to present results
for the nine months ended September 30, 2012 (the "Period") and
three months ended September 30, 2012 (the "Quarter").
Happy Dance
Total operating revenues for the Quarter grew by 6.6% to $18.8
million from $17.6 in the same quarter of 2011. Earnings before
interest, taxes, depreciation and amortization ("EBITDA") that is
attributable to owners of the Company ("EBITDA to Owners") grew by
$0.8 million or 10.6% to $8.3 million for the Quarter compared to
$7.5 million for the same quarter in 2011. EBITDA to Owners margin
percentage rose by 170 basis points to 46.5% from 44.8% in the
Quarter compared to one year earlier. Encompassing the summer
vacation season, Q3 is typically a softer quarter for Gamehost
compared to the prior Q2 with revenues lower on average by 5%. For
Q3 2012 this pattern resulted in a smaller decline of only 2%. Like
the good folk enjoying a night of merriment in one of our clubs,
we're doing our own version of dancing in the boardroom over these
results.
Hello, Our Name Is Gamehost And We're A Hoarder
Yes it's true. We are hoarding cash for the purposes of paying
taxes, reducing debt and repurchasing Company stock. While cash
balances are $0.5 million less than at the start of the year, we
have used surplus cash to repurchase $2.0 million in Company stock
or 164,400 shares, reduce our operating line to $nil from $4.0
million and reduce our term debt by a further $1.7 million. Cash
flows continue to exceed our earlier projections and a $3.0 million
increase to our operating line has been secured for added cushion.
We are on track to comfortably meet our estimated tax payment
obligations next year which include a balloon payment of $8.5
million for current year and deferred income taxes.
Risk And Reward
Holders of the Company's debentures continued to show appetite
for higher returns offered by Gamehost stock dividends despite the
added security offered by the debentures. During the Quarter, $4.8
million face value of debentures were presented for conversion to
0.5 million common shares leaving $33.5 million of the original
$55.0 million debenture issue outstanding at the end of the Period.
Since the beginning of the year $16.7 million in face value
debentures have been converted to 1.6 million common shares of
Gamehost.
Remembering Mr. Rogers
"Who are the people in your neighbourhood?" Our Calgary
neighbours are the residents and employees who live and work around
and in closest proximity to our southeast Deerfoot Inn &
Casino. Southeast Calgary continues to boast the fastest most
diversified growth in the city. The spin-offs of this growth
pattern have resulted in above average year over year revenue
growth at Deerfoot of 8.7% and a growing share of the total Calgary
casino market. Continuing on this note, we were excited to learn of
Imperial Oil's plans to relocate its Calgary headquarters to a
campus-style office complex in the southeast suburban office park
known as Quarry Park. While suburban office parks are not a new
thing, this marks the first time an industry oil giant has ventured
away from Calgary's downtown core. Imperial Oil's new offices will
be located a skip and a jump from our Deerfoot Inn & Casino and
will eventually house some 3,000 employees. This announcement is
bound to accelerate the residential growth in nearby communities.
Relocation for Imperial Oil employees will begin in mid-2014 and we
look forward to welcoming our new neighbours and their out-of-town
meeting guests to our hotel for years to come. Our northern casino
properties in Fort McMurray and Grande Prairie get to cast a wider
net over their neighbors. Operating with monopolistic or near
monopolistic conditions everyone in these two municipalities is our
neighbor when it comes to counting customers.
It was a great Quarter. Thank you for your unshaken faith in
management and your investment in Gamehost Inc.
Condensed consolidated interim statement of profit and
comprehensive income
In Canadian dollars (unaudited) (unaudited)
--------------------------------------------------------
nine months ended three months ended
September 30 September 30
--------------------------------------------------------
2012 2011 2012 2011
--------------------------------------------------------
Operating revenue $ 56,762,112 $ 53,031,656 $ 18,776,562 $ 17,612,172
Cost of sales
Other (28,338,764) (27,568,680) (9,381,135) (9,206,339)
Depreciation (1,617,599) (1,764,484) (545,389) (587,843)
--------------------------------------------------------
(29,956,363) (29,333,164) (9,926,524) (9,794,182)
--------------------------------------------------------
Gross profit 26,805,749 23,698,492 8,850,038 7,817,990
Other income 180,146 172,129 61,687 60,746
Administrative
expenses
Other (2,246,408) (2,209,055) (754,043) (635,289)
Depreciation (1,703,196) (1,980,908) (567,732) (653,771)
--------------------------------------------------------
(3,949,604) (4,189,963) (1,321,775) (1,289,060)
--------------------------------------------------------
Profit from
operating
activities 23,036,291 19,680,658 7,589,950 6,589,676
----------------------------------------------------------------------------
Finance income 66,002 60,650 19,733 21,269
Finance costs (3,121,638) (4,348,401) (1,351,692) (1,520,187)
--------------------------------------------------------
Net finance costs (3,055,636) (4,287,751) (1,331,959) (1,498,918)
--------------------------------------------------------
Profit before income
taxes 19,980,655 15,392,907 6,257,991 5,090,758
Income tax expense (4,421,821) (2,316,295) (2,051,708) (1,213,403)
--------------------------------------------------------
Profit and
comprehensive
income for the
period $ 15,558,834 $ 13,076,612 $ 4,206,283 $ 3,877,355
--------------------------------------------------------
Profit and
comprehensive
income attributable
to:
Owners of the
Company $ 14,545,111 $ 12,241,649 $ 3,860,961 $ 3,606,568
Non-controlling
interest 1,013,723 834,963 345,322 270,787
--------------------------------------------------------
Profit and
comprehensive
income for the
period $ 15,558,834 $ 13,076,612 $ 4,206,283 $ 3,877,355
--------------------------------------------------------
Earnings per share
Basic earnings per
share $ 0.670 $ 0.579 $ 0.174 $ 0.170
EBITDA to Owners $ 25,288,945 $ 22,519,250 $ 8,337,358 $ 7,537,605
EBITDA to Owners % 46.7% 44.4% 46.5% 44.8%
November Dividend
Gamehost has declared a cash dividend for the month of November
2012 of $0.0733 per common share. The dividend will be paid on
December 14, 2012 to shareholders of record on November 30, 2012.
The ex-dividend date is November 28, 2012.
This dividend is considered an "Eligible Dividend" and
therefore, eligible for the enhanced gross-up and dividend tax
credit available to shareholders.
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.
Gamehost is a corporation established under the laws of the
Province of Alberta. The Company's operations are all located in
the Province of Alberta, Canada. Operations of the Company include
the Boomtown Casino in Ft. McMurray, the Great Northern Casino,
Service Plus Inns & Suites hotel and a strip mall all located
in Grande Prairie. The Company also holds a 91% ownership position
in Deerfoot Inn & Casino Inc. in Calgary.
These unaudited interim financial results include the accounts
of Gamehost Inc. and its subsidiaries; however, they do not include
all disclosures normally provided in annual consolidated financial
statements and should be read in conjunction with the 2011 annual
consolidated financial statements. Further, while the financial
figures included in this preliminary interim results announcement
have been computed in accordance with IFRS applicable to interim
periods, this announcement does not contain sufficient information
to constitute an interim financial report as that term is defined
in International Accounting Standard ("IAS") 34, "Interim Financial
Reporting". The company has published and filed an interim
financial report that complies with IAS 34 for the interim period
ended September 30, 2012. This report, along with historical
financial reports can be found on the Company's website at
www.gamehost.ca and will be filed in its entirety along with the
Company's other continuous disclosure documents, when they are
available, on SEDAR at www.sedar.com.
Gamehost common shares and convertible debentures trade on the
Toronto Stock Exchange (TSX) under the symbols GH and GH.DB
respectively.
Contacts: Gamehost Inc. Craig M. Thomas (877) 703-4545 (403)
340-0683 (FAX) Gamehost Inc. Darcy J. Will (877) 703-4545 (403)
340-0683 (FAX)info@gamehost.ca
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