RED DEER, ALBERTA--(Marketwired - Aug. 11, 2015) - Gamehost Inc. (TSX:GH) -
Management and Directors of Gamehost Inc. (the "Company") are pleased to present results for the three months ended June 30, 2015 (the "Quarter") and six months ended June 30, 2015 (the "Period").
Challenging Times
Total operating revenues for the Quarter were down $1.7 million or 8.1% to $19.3 million from $21.0 million in the same quarter of 2014. Earnings before interest, taxes, depreciation and amortization ("EBITDA") that is attributable to shareholders of the Company ("EBITDA to Shareholders") was down $1.4 million or 15.1% to $7.9 million versus $9.3 in the same quarter one year earlier. EBITDA to Shareholders margin was lower by 360 basis points to 42.9% in year over year comparison. Net income to shareholders for the Quarter was lower by $2.2 million or 36.1% in year over year comparison. Net income includes a one-time adjustment to higher corporate tax rates in Alberta. Excluding the adjustment, net income was lower by $1.3 million or 21.3%. Planned refurbishment projects for both of the Company's hotel properties is reflected in the lower EBITDA to Shareholder figures. Year to date spending on these projects, a combination of $1.5 million in repair and maintenance expense compared to $0.4 million the previous year and $0.6 million in capital spending compared to $0.4 million the previous year, is largely complete at the end of the Quarter. Operationally, table revenue performance maintained flat to the prior year while slot and other revenue streams were down.
Diversity in Alberta
It may be all the same province, but there are distinctive differences in the three geographical centres in which we operate. Rarely do each of these regions benefit or suffer to the same degree by any one catalyst.
They don't call it Boomtown for nothing. Our casino in Fort McMurray has had two tough quarters of late. Tough is a relative term, of course. The property is coming off its biggest year ever in 2014, so anything short of further gains disappoints. We have relied significantly on the patronage of a transient and contractor workforce, but now have stepped up our game to draw more local patronage to our food and non-gaming entertainment offerings. A new Media wall is proving popular.
General activity in the Grande Prairie region continues to be robust on the back of major hydro and LNG projects in BC and further LNG projects in Alberta. Work on the region's new hospital continues next door to our properties. We remain optimistic that Grande Prairie will continue to offset some of the pressure on operations elsewhere in the province.
Although our Deerfoot property in Calgary is seeing some marginal downturn in activity, there continue to be many reasons to be optimistic. The area surrounding the Company's Deerfoot operation continues to grow on net migration to the city or from other parts of the city. The residential and commercial buildup in the area continues.
Financial Resources
The Company, in July, refinanced and renegotiated terms of three existing debt facilities. An additional $3.0 million was added to the Company's revolving line to meet AGLC working capital requirements and floor rates on these loans of 4.0% were removed effectively lowering interest rates to the lenders prime rate plus 1.0% or 3.7%. Loan amortizations were further extended to 2025. An additional $8.4 million was secured to meet potential funding requirements in the event remaining unconverted debentures needed to be paid out at their July 31, 2015 maturity date. Of the available new capital, $6.7 million was advanced to the Company's transfer agent based on unconverted debentures at the funding date. $5.5 million of the advanced funds are being returned as a result of last minute debenture conversions and will be used to reduce the outstanding balance of our revolving line. All of these actions enhance the Company's liquidity. At July 31, 2015, term debt totals $28.1 million including revolving debt. $10.0 million is available to be drawn on the company's revolver.
Listed Securities
Conversion rights on the Company's 6.25% subordinated convertible debentures were exercisable up to and including the maturity date of July 31, 2015. Of the original $55.0 million debenture issue, $54.2 million converted in orderly fashion over the term of the issue to 5.1 million common shares. $0.8 million matured and were paid out at July 31, 2015. This successful debenture issue provided secure semi-annual interest payments at a favourable rate over the time they were held, and also provided considerable upside with a conversion privilege to common shares at $10.65 per common share. The TSX delisted the debentures on the maturity date. Over the period the debentures were listed the company repurchased 1.5 million shares through normal course bid on the TSX. Shares outstanding total 24.7 million at the end of July 2015, a net increase of 3.6 million shares since Gamehost converted from an income trust to a corporation back in 2010.
Next Round
Many believe the sky in Alberta has fallen. History will show the province has been through numerous rounds of economic challenges, each time emerging resilient. In this latest round, foreign exchange is working in our favour to diminish the impact of low commodity prices. Furthermore, since the 2008 financial crisis, management has intentionally positioned the Company to sustain a disruptive economic event such as this. We are answering the bell this round with low levels of debt, a low cost operating structure and increased capital flexibility. This will serve us well as we work our way through to ensure your investment continues to be a solid performer.
Interim condensed consolidated statements of comprehensive income
| In Cdn dollars (millions except per share figures) |
(unaudited) |
|
(unaudited) |
|
| |
six months ended June 30 |
|
three months ended June 30 |
|
| |
2015 |
|
2014 |
|
2015 |
|
2014 |
|
| |
|
|
|
|
|
|
|
|
| Operating revenue |
$ 39.1 |
|
$ 41.6 |
|
$ 19.3 |
|
$ 21.0 |
|
| Cost of sales |
|
|
|
|
|
|
|
|
| |
Other |
(20.9 |
) |
(21.1 |
) |
(10.4 |
) |
(10.6 |
) |
| |
Depreciation |
(1.0 |
) |
(1.1 |
) |
(0.5 |
) |
(0.5 |
) |
| |
(21.9 |
) |
(22.2 |
) |
(10.9 |
) |
(11.1 |
) |
| Gross profit |
17.2 |
|
19.4 |
|
8.4 |
|
9.9 |
|
| |
|
|
|
|
|
|
|
|
| Other income |
0.1 |
|
0.1 |
|
0.1 |
|
0.1 |
|
| |
|
|
|
|
|
|
|
|
| Administrative expenses |
|
|
|
|
|
|
|
|
| |
Other |
(1.7 |
) |
(1.6 |
) |
(0.8 |
) |
(0.9 |
) |
| |
Depreciation |
(0.8 |
) |
(0.9 |
) |
(0.4 |
) |
(0.4 |
) |
| |
(2.5 |
) |
(2.5 |
) |
(1.2 |
) |
(1.3 |
) |
| Profit from operating activities |
14.8 |
|
17.0 |
|
7.3 |
|
8.7 |
|
| |
|
|
|
|
|
|
|
|
| Net finance costs |
(1.0 |
) |
(1.2 |
) |
(0.5 |
) |
(0.5 |
) |
| |
|
|
|
|
|
|
|
|
| Profit before income taxes |
13.8 |
|
15.8 |
|
6.8 |
|
8.2 |
|
| |
|
|
|
|
|
|
|
|
| Income tax expense |
(4.3 |
) |
(3.6 |
) |
(2.6 |
) |
(1.7 |
) |
| Profit |
9.5 |
|
12.2 |
|
4.2 |
|
6.5 |
|
| |
|
|
|
|
|
|
|
|
| Profit attributable to: |
|
|
|
|
|
|
|
|
| |
Shareholders of the Company |
8.9 |
|
11.5 |
|
3.9 |
|
6.1 |
|
| |
Non-controlling interest |
0.6 |
|
0.7 |
|
0.3 |
|
0.4 |
|
| |
9.5 |
|
12.2 |
|
4.2 |
|
6.5 |
|
| |
|
|
|
|
|
|
|
|
| Earnings per share |
|
|
|
|
|
|
|
|
| |
Basic |
$ 0.38 |
|
$ 0.49 |
|
$ 0.16 |
|
$ 0.26 |
|
| |
Fully diluted |
$ 0.38 |
|
$ 0.49 |
|
$ 0.16 |
|
$ 0.25 |
|
| |
|
|
|
|
|
|
|
|
| Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
| |
Basic |
23.7 |
|
23.5 |
|
23.8 |
|
23.5 |
|
| |
Fully diluted |
24.5 |
|
24.9 |
|
24.6 |
|
24.9 |
|
| |
|
|
|
|
|
|
|
|
| EBITDA to Shareholders |
$ 16.0 |
|
$ 18.1 |
|
$ 7.9 |
|
$ 9.3 |
|
| EBITDA to Shareholders % |
42.9 |
% |
45.7 |
% |
42.9 |
% |
46.5 |
% |
Gamehost has also declared a cash dividend for the month of August 2015 of $0.0733 per common share. The dividend will be paid on September 15, 2015 to shareholders of record on September 30, 2015. The ex-dividend date is September 28, 2015.
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 interim consolidated 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 2014 annual consolidated financial statements. Further, while the financial figures included in this interim results announcement have been computed in accordance with IFRS applicable to annual periods, this announcement does not contain sufficient information to constitute an interim financial report. The company will file an interim financial report for the interim period ended June 30, 2015. This report will be filed in its entirety, along with historical financial reports on the Company's website at www.gamehost.ca and on SEDAR at www.sedar.com along with the Company's other continuous disclosure documents, when they are available.
Gamehost common shares trade on the Toronto Stock Exchange (TSX) under the symbol GH.