Gamehost Income Fund - Reports 2007 third quarter financial results



    RED DEER, AB, Nov. 28 /CNW/ - Gamehost Income Fund (the "Fund)
(TSX.V: GH.UN)
    We are pleased to present favourable results for the nine and three
months ended September 30, 2007 (respectively the "Period" and "Quarter"). Q3
2007 revenue's were just shy of our previous record quarterly revenue posting
in Q2 2007. Revenues for the Period total $42.7 million up 19.3% over the
$35.8 million posted in 2006. Revenues for the Quarter total $14.3 million up
12.7% over the $12.7 million posted in 2006. Revenues for the Quarter were
$14.28 million versus $14.35 million in Q2 2007.
    Earnings before interest, taxes, depreciation and amortization ("EBITDA")
for the Period total $21.0 million up 21.5% over the $17.3 million recorded in
2006. EBITDA for the Quarter total $6.9 million up 12.1% over the $6.2 million
recorded in 2006 but down 2.4% from the previous quarters $7.1 million.
    EBITDA margins for the Period of 49.3% compare to 48.4% in 2006, an
improvement of 0.9%. EBITDA margins for the Quarter of 48.5% compare to 48.8%
in 2006, a reduction of 0.3%. At this point in 2006 the Deerfoot Joint Venture
contributed 18.5% of total Fund Revenue. For the Period, the Deerfoot Joint
Venture's contribution to Fund revenue was 29.1% signaling the growth rate of
this property in relation to the balance of Fund properties. EBITDA margin %
at the Deerfoot Joint Venture also continues to improve. Our push is to get
the Fund to an overall 50% EBITDA.
    Depressed commodity prices for natural gas have created a general
slowdown in the natural gas sector which persists. Compounding this, Grande
Prairie had a wet summer hampering the energy industry from accessing drilling
sites. Grande Prairie is also heavily dependant on the forestry industry which
has been feeling the effects of the USA sub-prime mortgage meltdown as well as
the high Canadian dollar. In light of these conditions, we are pleased with
management's success at maintaining revenue. While revenues at Service Plus
Inns & Suites fell back to 2006 levels during the Quarter management has
retained more than their share of the reduced market. Occupancy is holding
above 80%. There has been no movement in the market area to reduce rates. The
Great Northern Casino experienced a down Quarter in gaming activity. We are
pleased with operational management's efforts to maintain revenue in light of
local economic conditions. Management has spent money in the right places in
order to maintain revenue and is now focused on cost reduction measures in
discretionary spending to maintain margins.
    Alberta's new Tobacco Reduction Act was passed November 14, 2007. A
province-wide smoking ban in all public places and workplaces will take effect
January 1, 2008. The Act will also prohibit smoking within a specified
distance from the windows, doorways and air intakes of public places to
protect indoor air quality. This will have an adverse impact on the Great
Northern Casino similar to that experienced in other jurisdictions.
Compensating for the smoking ban, Great Northern casino is scheduled for a
ticket in/ticket out ("TITO") conversion of the facilities slot machines in
spring of 2008. We know from experience that conversion to TITO has a positive
impact on cash play and corresponding operator margins.
    Revenues at Boomtown Casino were lower for the Quarter. Following growth
in July and August the effects of a September 1 smoking ban applied some
braking. The initial reduction to cash play on slot machines was 19% for
September. October saw a recovery of half of that reduction due to the
conversion to TITO technology which was completed in October. TITO to date is
credited with recovering 90% of the initial reduction in gaming activity due
to non-smoking. Ft. McMurray residents seem, quicker than most, resigning
themselves to a smoke free city. Ft. McMurray, in oil sands rich northern
Alberta is not affected by the pressures on the natural gas market. Instead
they are reaping the benefits of record high oil prices. The labour market
remains tight, but manageable.
    The Deerfoot Inn & Casino, a joint venture 40% owned by the Fund
continues to benefit from Calgary's reputation as one of the fastest growing
cities in Canada. Year over year Period growth in revenue and EBITDA totaled
42% and 92% respectively. The Deerfoot Joint Venture successfully completed a
conversion of slot equipment to TITO technology in July. Prior to conversion,
the property had experienced an average monthly growth rate of 3% in slot
play. In the first month following conversion slot play jumped to 10% showing
the immediate favourable impact to slot activity. Cost efficiencies associated
with TITO continue to accrue to the operation monthly. The Deerfoot Joint
Venture received an additional 22 slot machines during the Quarter.
    The new provincial smoking ban is simply an overlay of a City of Calgary
non-smoking bylaw that was also to come into effect January 1, 2008. Despite
the new smoking ban, management is very optimistic about the growth potential
at the Deerfoot Joint Venture. The property is situated in the fastest growing
quadrant of the city and close neighbor to large scale commercial/residential
development currently underway. The Quarry Park development includes
1.5 million square feet of suburban office space of which 350,000 square feet
is slated for May 2008 occupancy by an anchor tenant. The development also
includes 3,000 residential units and 200,000 square feet of retail. All in
all, this new development should be very positive in terms of increased
traffic through the Deerfoot Joint Venture.
    Recent announcements by the Provincial government regarding the review of
royalties paid by the energy industry will have some repercussions for the
provincial economy. Calgary is home to the corporate offices of Canada's
energy industry. Responses to the government's announcement are being debated
in their boardrooms. The impact of these responses, if any, on the Fund's
business will be monitored closely.
    Gamehost distributions are paid on or before the 15th of every month
following declaration. For each month during the Quarter the Fund declared
regular monthly cash distributions of $0.20 per unit. Total declared regular
monthly distributions for the Period were $1.75 per unit for a payout ratio of
distributable cash from operations of 69.3%. Over the same period in 2006,
declared regular monthly distributions totaled $1.26 per unit for a payout
ratio of 69.6%. The Fund has increased regular monthly distributions twice
since inception.
    On June 12, 2007, the Federal government's Bill C-52 passed into law. The
bill introduced taxes on income trusts effective in 2011. Management of the
Fund has been busy evaluating all possibilities in response to this bill.
Pursuing a path that targets the best interests of all unitholders will be at
the forefront of any actions recommended.
    We are an energy dependant society. Accordingly, the oil patch will
always attract headlines. Alberta's economy has diversified, however.
Demographics are shifting. Residents have more disposable income than ever
before in our history. Hospitality, entertainment, and gaming have become an
integral part of Albertan's lives. As we move through the fourth quarter we
see many reasons to be optimistic.

    
    Interim Consolidated Statements of Earnings and Comprehensive Income
    (Unaudited)
    -------------------------------------------------------------------------
                              nine months ended        three months ended
                                September 30              September 30
                          ------------------------- -------------------------
                              2007         2006         2007         2006
                          ------------------------- -------------------------
    Revenue
      Hotel - rooming     $ 6,549,214  $ 5,485,273  $ 2,267,709  $ 2,115,999
      Table games           6,009,878    5,094,701    1,928,139    1,657,162
      Slot machines        17,392,196   15,070,952    5,954,327    5,302,230
      Food & beverage
       services             8,939,773    7,066,459    2,841,052    2,475,474
      Lease and rental        238,977      236,847       79,659       83,755
      Other                 3,578,116    2,854,270    1,208,995    1,038,337
                          ------------------------- -------------------------
                           42,708,154   35,808,502   14,279,881   12,672,957
                          ------------------------- -------------------------
    Expenses
      Cost of goods sold    2,940,278    2,603,819      923,099      876,406
      Human resources      10,838,714    9,332,422    3,614,256    3,230,840
      Marketing and
       promotions           1,609,508    1,059,057      558,835      364,922
      Operating             4,749,883    4,121,521    1,677,935    1,550,878
      Corporate and
       general
       administration       1,526,540    1,371,308      573,138      463,433
                          ------------------------- -------------------------
                           21,664,923   18,488,127    7,347,263    6,486,479
                          ------------------------- -------------------------

    Earnings before
     the following:        21,043,231   17,320,375    6,932,618    6,186,478

    Amortization of
     property, plant
     and equipment          1,661,101    1,807,343      553,700      619,448
    Amortization of
     licenses               3,500,000            -    3,500,000            -

    Interest charges          832,365      947,815      283,231      302,687
                          ------------------------- -------------------------
    Earnings before
     income taxes          15,049,765   14,565,217    2,595,687    5,264,343

    Future income tax
     expense                2,336,319            -    2,336,319            -
                          ------------------------- -------------------------
    Net earnings before
     allocation to Class B
     Limited Partners      12,713,446   14,565,217      259,368    5,264,343
    Allocation to Class B
     Limited Partners       6,224,587    7,131,229      126,986    2,577,458
                          ------------------------- -------------------------
    Net earnings and
     comprehensive income $ 6,488,859  $ 7,433,988  $   132,382  $ 2,686,885
                          ------------------------- -------------------------
                          ------------------------- -------------------------
    Net earnings per
     unit, basic and
     fully diluted        $     1.807  $     2.070  $     0.037  $     0.748
                          ------------------------- -------------------------
                          ------------------------- -------------------------
    Units outstanding,
     basic and fully
     diluted                3,591,051    3,591,051    3,591,051    3,591,051

    See accompanying notes to financial statements
    

    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.
    Complete consolidated interim financial statements and MD&A for the nine
months ended September 30, 2007 will be available November 29, 2007 on the
company's website at www.gamehost.ca and on SEDAR at www.sedar.com.

    %SEDAR: 00019487E




For further information:

For further information: Investor Relations, P (403) 346-4545, F (403)
340-0683, E info@gamehost.ca

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