GREAT CANADIAN GAMING ANNOUNCES 2011 FIRST QUARTER RESULTS

RICHMOND, BC, May 12 /CNW/ - Great Canadian Gaming Corporation [TSX:GC] ("the Company") today announced its financial results for the three month period ("first quarter of 2011") ended March 31, 2011.

2011 FIRST QUARTER HIGHLIGHTS

(Amounts presented in $millions, except for per share information)

  • Revenue and EBITDA(1) both consistent with first quarter of 2010
  • Shareholders' net earnings increase 12% from first quarter of 2010 to $5.7 million
  • Announces acquisition of Chilliwack Bingo Association for $10.0 million plus contingent trailing payments

        First Quarter
        2011   2010   % Chg
Revenues       $   92.0   $   93.0   (1%)
EBITDA (1)       $   31.5   $   31.4   0%
                 
EBITDA as a % of Revenues       34.2%   33.8%    
                 
Shareholders' net earnings (2)       $     5.7   $     5.1   12%
                 
Shareholders' net earnings per common share:                
Basic       $   0.07   $   0.06    
Diluted       $   0.07   $   0.06    
                 
Total assets       947.1   $ 963.3    
Long-term debt & Derivative liabilities, excluding current portion       $  390.9   $ 393.0    

(1) EBITDA is a non-IFRS measure and is defined in the Disclaimer section of this press release.
(2) Shareholders' net earnings increased by $0.6 in the first quarter of 2011 when compared to the first quarter of 2010.  This increase was primarily due to decreases in stock-based compensation, income taxes, and net interest and financing costs, which were partially offset by increased amortization.

For the first quarter of 2011, Great Canadian Gaming Corporation recorded revenues and EBITDA that were both relatively consistent with the first quarter of 2010. Revenues were $92.0 million, a $1.0 million decrease from the first quarter of 2010. EBITDA was $31.5 million, a $0.1 million increase from the first quarter of 2010.

The Company's revenues were impacted by revenue declines at both the Boulevard Casino ("Boulevard") and the BC Racinos. Boulevard's revenues decreased by $1.9 million. This decline can be attributed to disruption caused by construction on provincial highway enhancements adjacent to that facility. The BC Racinos' revenues decreased by $1.2 million, primarily due to the deconsolidation of TBC Teletheatre BC ("TBC") in April of 2010. These declines were partially offset by revenue growth at both the River Rock Casino Resort ("River Rock") and the Other BC Casinos. River Rock's revenues increased by $2.2 million, primarily due to a 13% improvement in table drop. The Other BC Casinos' revenues increased by $1.1 million, due to the installation of 100 slot machines at the Maple Ridge Community Gaming Centre in October of 2010.

The Company's EBITDA was impacted by the performance of both River Rock, where EBITDA increased by $1.2 million, and the Other BC Casinos, where EBITDA increased by $0.7 million. These improvements were substantially offset by declines at Boulevard, where EBITDA decreased by $1.7 million, and the Nova Scotia Casinos, where EBITDA decreased by $0.7 million.

EBITDA as a percentage of revenues for the first quarter of 2011 was 34.2%, a 0.4 percentage point increase from the first quarter of 2010.  This increase was primarily due to River Rock's performance, and was partially offset by the impact of Boulevard's revenue decline.

In March of 2011, the Company agreed to purchase the assets and undertaking of the Chilliwack Bingo Association ("CBA") for $10.0 million. The CBA operates Chilliwack Bingo, a bingo hall in Chilliwack, British Columbia, whose bingo operating services agreement is scheduled for renewal in May 2016. This leased facility generated the greatest bingo revenues in British Columbia during the 2009-2010 fiscal year, and recorded $0.9 million of EBITDA during the CBA's 2010-2011 fiscal year. The agreement between the Company and the CBA also includes potential additional future consideration over twenty years should the Company successfully develop this facility into a community gaming centre. In addition to Chilliwack Bingo, the CBA's assets include an approximately five acre site in Chilliwack, which the CBA purchased in 2008 for $6.5 million. The Company intends to use this site for the development of a community gaming centre. This acquisition remains subject to both the completion of a definitive purchase agreement and the receipt of required regulatory approvals.

"Great Canadian's financial results for the first quarter of 2011 parallel those witnessed throughout the majority of 2010," stated Ross J. McLeod, Great Canadian's Chairman and Chief Executive Officer. "While gaming volumes at the majority of our properties have stabilized, they remain at levels well below those witnessed prior to the economic collapse of 2009. Other properties, primarily Coquitlam's Boulevard Casino, continue to experience significant revenue pressure as a result of external factors. Declines at these properties have been substantially offset by two sources of growth. The first of these is the River Rock Casino Resort, which once again witnessed increases in its gaming volumes during the first quarter of 2011. The second source is our community gaming centres, which benefited from the introduction of slot machines at Maple Ridge in October of 2010.

"Given the inherent difficulty in addressing external challenges such as the construction at Boulevard, it seems pragmatic that Great Canadian has instead elected to focus upon continuing to improve these areas of growth. In November of 2010, we announced the development of a third hotel tower at River Rock. This tower, which will nearly double River Rock's hotel capacity, will both considerably enhance that facility's appeal for future visitors and augment its ability to serve as a conference and convention destination. Construction at River Rock has created minimal disruption for its patrons to date, and is on schedule to reach completion prior to the end of this year. I am confident that the addition of this third tower will contribute to further growth at our flagship facility.

"Like River Rock, Great Canadian's portfolio of community gaming centres have also proven themselves as a source of growth in this otherwise consistent environment. The October introduction of slot machines at Maple Ridge continues to produce significant increases in that facility's gaming revenues. The strength of this market served to influence our recent decision to purchase Chilliwack Bingo. Like Maple Ridge, this investment will provide Great Canadian with the opportunity to develop a community gaming centre in a growing and underserviced market.

Mr. McLeod concluded, "While the majority of our markets have yet to return to their historical levels, these recent investments in the development of our property portfolio represent another avenue of potential revenue growth. This growth will be a key factor in the improvement of stakeholder value over the course of 2011 as Great Canadian moves forward."

Great Canadian will host a conference call for investors and analysts today, May 12, 2011, at 2:00 PM Pacific Time to review the financial results for the period ended March 31, 2011. To participate in the conference call, please dial 647-427-7450, or toll free at 888-231-8191. Questions will be reserved for institutional investors and analysts. Interested parties may also access the call on the Internet at www.gcgaming.com; please allow 15 minutes to register and install any necessary software. A replay of the call will also be available at www.gcgaming.com.

ABOUT GREAT CANADIAN GAMING CORPORATION
Great Canadian Gaming Corporation is a multi-jurisdictional gaming and entertainment operator with operations in British Columbia, Ontario and Nova Scotia, and Washington State. The Company operates ten casinos, a thoroughbred racetrack that offers slot machines, three standardbred racetracks (two offer slot machines and one offers both slot machines and table games), two community gaming centres, a hotel and conference centre, two show theatres and various associated food and beverage and entertainment facilities. As of March 31, 2011, the Company had approximately 3,800 employees in Canada and 600 in Washington State. Further information is available on the Company's website, www.gcgaming.com.

Please refer to the Condensed Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") at www.gcgaming.com (available on May 12, 2011) or www.sedar.com (available on May 13, 2011) for detailed financial information and analysis.

The financial results on the following pages are unaudited and prepared by management. Expressed in millions of Canadian dollars, except for per share information.

GREAT CANADIAN GAMING CORPORATION
Consolidated Results of Operations
(Unaudited - Expressed in millions of Canadian dollars, except for per share information)

     
     
    First Quarter
    2011 2010 % Chg
Gaming revenues    $   67.5  $   66.5 2%
Facility Development Commission              7.5      7.2 4%
Hospitality and other revenues            15.7    15.9 (1%)
Racetrack revenues              4.6   6.2 (26%)
             95.3          95.8 (1%)
Less: Promotional allowances            (3.3)    (2.8) 18%
Revenues            92.0          93.0 (1%)
         
Human resources            37.4    37.6 (1%)
Property, marketing and administration            23.1    24.0 (4%)
             60.5          61.6 (2%)
         
EBITDA            31.5    31.4 0%
         
Human resources as a % of Revenues before Promotional allowances   39.2% 39.2%  
EBITDA as a % of Revenues    34.2% 33.8%  
         
Amortization            14.4          13.5  
Stock-based compensation              1.7   2.3  
Restructuring and other              0.3   0.1  
Interest and financing costs, net              6.7   7.0  
Other expenses                -     0.2  
Income taxes              2.7   3.2  
Shareholders' net earnings    $     5.7  $     5.1 12%
         
Shareholders' net earnings per common share:        
  Basic    $   0.07  $   0.06  
  Diluted    $   0.07  $   0.06  
         
Weighted average number of common shares (in thousands):        
  Basic        82,914      82,400  
  Diluted        84,613      84,376  

 

GREAT CANADIAN GAMING CORPORATION
Condensed Consolidated Statements of Financial Position
(Unaudited - Expressed in millions of Canadian dollars)

           
           
    March 31,   December 31,
    2011   2010
         
ASSETS      
         
CURRENT      
  Cash and cash equivalents  $             76.2    $             50.9
  Short-term investments                 35.1                   53.0
  Restricted cash                         4.0                           1.6
  Accounts receivable                         8.1                           9.3
  Prepaids, deposits and other assets                         6.5                           5.9
                        129.9                       120.7
Property, plant and equipment                     659.2                       663.0
Intangible assets                     125.7                       129.4
Goodwill                       23.2                         23.3
Deferred taxes                         7.6                           7.8
Other assets                         1.5                           2.0
     $           947.1    $           946.2
       
LIABILITIES      
         
CURRENT      
  Accounts payable and accrued liabilities  $             51.0    $             51.3
  Income taxes payable                           -                           5.4
    Other liabilities                         4.4                           4.1
                          55.4                         60.8
Long-term debt                     317.3                       325.8
Derivative liabilities                       73.6                         67.6
Deferred credits, provisions and other liabilities                        25.2                         25.9
Deferred taxes                       65.5                         65.0
                        537.0                       545.1
         
SHAREHOLDERS' EQUITY      
         
Share capital and contributed surplus                     357.1                       354.9
Accumulated other comprehensive loss                       (3.8)                         (4.9)
Retained earnings                       56.8                         51.1
                        410.1                       401.1
     $           947.1    $           946.2

 

DISCLAIMER

This news release contains certain "forward-looking information" or statements within the meaning of applicable securities legislation.  Forward-looking information is based on the Company's current expectations, estimates, projections and assumptions that were made by the Company in light of its historical trends and other factors.  All information or statements, other than statements of historical fact, are forward-looking information including statements that address expectations, estimates or projections about the future, the Company's strategy for growth, expected future expenditures, costs, operating and financial results and expected impact of future commitments.  Such forward-looking information is not a guarantee of future performance and may involve a number of risks and uncertainties.  Although forward-looking information is based on information and assumptions that the Company believes are current, reasonable and complete, they are subject to a number of factors that could cause actual results to vary materially from those expressed or implied by such forward-looking information. Such factors may include, but are not limited to: terms of operational service agreements with lottery corporations; changes to gaming laws that may impact our operational service agreements; pending, proposed or unanticipated regulatory or policy changes; impact of global liquidity and credit availability; adverse tourism trends and further decreases in levels of travel, leisure and consumer spending; competition from established competitors and new entrants in the gaming business; dependence on key personnel; the risk that systems, procedures and controls may not be adequate to support current and expanding operations; potential undisclosed liabilities and capital expenditures associated with acquisitions; negative connotations linked to the gaming industry; First Nations claims with respect to some Crown land on which we conduct our operations; future or current legal proceedings; construction disruptions; financial covenants associated with credit facilities and long-term debt; credit, liquidity and market risks associated with our financial instruments; interest and exchange rate fluctuations; non-realization of cost reductions and synergies; demand for new products and services; fluctuations in operating results; and economic uncertainty and financial market volatility. These factors and other risks and uncertainties are discussed in the Company's continuous disclosure documents filed with the Canadian securities regulatory authorities from time to time, including in the "Risk Factors" section of the Company's Annual Information Form for fiscal 2010, and as identified in the Company's disclosure record on SEDAR at www.sedar.com. The forward-looking information in documents incorporated by reference speak only as of the date of those documents. Readers are cautioned not to place undue reliance on the forward-looking information, as there can be no assurance that the plans, intentions, or expectations upon which they are based will occur. The Company undertakes no obligation to publicly revise forward-looking information to reflect subsequent events or circumstances except as required by law. The forward-looking information contained herein is made as of the date hereof and is expressly qualified in its entirety by cautionary statements in this news release.

The Company has included non-International Financial Reporting Standards ("non-IFRS") measures in this news release. EBITDA as defined by the Company means Earnings Before Interest and financing costs (net of interest income), Income Taxes, Depreciation and Amortization, stock-based compensation, restructuring and other costs, and non-controlling interests. EBITDA is derived from the consolidated statements of earnings, and can be computed as revenues less human resources expenses and property, marketing and administration expenses.

Readers are cautioned that these non-IFRS definitions are not recognized measures under International Financial Reporting Standards ("IFRS"), do not have standardized meanings prescribed by IFRS, and should not be construed to be alternatives to net earnings determined in accordance with IFRS or as indicators of performance or liquidity or cash flows. The Company's method of calculating these measures may differ from methods used by other entities and accordingly our measures may not be comparable to similarly titled measures used by other entities or in other jurisdictions. The Company uses these measures because it believes they provide useful information to both management and investors with respect to the operating and financial performance of the Company.

ON BEHALF OF

GREAT CANADIAN GAMING CORPORATION

"Original Signed By Rod Baker"

_____________________
Rod Baker
President

SOURCE Great Canadian Gaming Corporation

For further information:

GREAT CANADIAN GAMING CORPORATION [TSX:GC] 
Suite #350 - 13775 Commerce Parkway
Richmond, BC
V6V 2V4
(604) 303-1000
Website: www.gcgaming.com

For investor enquiries:
Mr. Nathan Sellyn
(604) 306-0015, nsellyn@gcgaming.com

For media enquiries:
Mr. Howard Blank
Vice-President, Communications, Entertainment & Responsible Gaming
(604) 512-6066


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