Gamehost Income Fund - Reports 2008 Second Quarter Financial Results



    RED DEER, AB, Aug. 14 /CNW/ - Gamehost Income Fund (the "Fund) (TSX.V:
GH.UN)
    Management and Trustees of Gamehost Income Fund (the "Fund") are pleased
to report results for the three months ended June 30, 2008 (the "Quarter").
Results for the Quarter were mixed. Quarter over quarter growth was provided
by eleven operating days of the new Stampede Casino, otherwise revenues were
lower year over year. The gaming and hospitality industries are working their
way through changes in the general business environment. Non-smoking
legislation enforced as of January 1, 2008, a tempering of the hot Alberta
energy sector and inflationary factors have combined to create a few pot holes
that need to be negotiated.
    Revenues for the Quarter totaled $13.5 million down 5.6% from the
$14.3 million posted in Q2 2007 but up 1.6% from the previous quarter when
revenue totaled $13.3 million. Earnings before interest, taxes, depreciation
and amortization ("EBITDA") for the Quarter totaled $6.3 million down 11.0%
from $7.1 million recorded in Q2 2007 and flat to the previous quarter. EBITDA
margins for the Quarter fell to 46.7% off 2.9% from the near record 49.5% a
year earlier and off 0.6% from 47.2% in the previous quarter. These results
include the Fund's participating share of eleven days of operations from the
new Stampede Casino and all pre-opening costs for the new property.
    The Fund's regular monthly distributions were increased by 10% during the
Quarter. The Fund made consistent payments at the higher rate of $0.0733 per
unit throughout the Quarter. Investors should be confident in the
sustainability of this higher rate especially as the new Stampede Casino
achieves profitability.
    The new Stampede Casino had a smooth opening on June 19, 2008 and then
fifteen days to 'warm up' before the ten day Calgary Exhibition & Stampede.
Early results are favourable. It will take a number of months before we
understand what a normal month at the facility looks like. Similar to our
experience opening the Deerfoot Inn & Casino we will continue to adjust our
marketing efforts and product offering to appeal to what is quite clearly a
different customer base within the same city. The addition of a 20% stake in
the Stampede Joint Venture will help put the Fund back onto the revenue growth
path we are accustomed to. We are excited about this new property and its
potential. Immediately next door to the new Stampede Casino, the Exhibition is
nearing completion of an expansion to its trade and convention space and talks
continue on the timing for development of a hotel adjacent to the new Stampede
Casino.
    Quarterly results were mixed at the rest of the Fund's properties. With
the exception of Fort McMurray, a general trend is emerging consistent with
signals in the broader Canadian economy. Customers are scaling back on
discretionary expenditures. Gloomy media coverage on the state of local and
world economies and talk of inflation is hard to tune out. This message gets
reinforced every time Albertans fill up their vehicles. Alberta is not immune
from the inflationary factors impacting other economic areas of the country.
We see this in stays at our northern hotel, gaming traffic through our casinos
and spending at our food and beverage outlets.
    Grande Prairie has been the hardest hit. The city and surrounding areas
have a large dependence on the forestry and forest products industry which is
suffering from the collapse of the USA home building industry. Oil and
predominantly natural gas also play a major role in the lives of consumers in
the region. Uncertainty in this sector caused by volatile commodity prices and
the recent review of royalties paid to energy producers, have slowed the
sectors activities in the region significantly. Sentiments in the energy
industry have turned more optimistic of late with improvements to the price of
natural gas. Activity is picking up and is expected to continue to do so into
the last half of the year.
    The Deerfoot hotel in is a bright spot in the Calgary market. Occupancies
and revenues continue to grow. Spending at the Deerfoot on food and beverage
service is flat year over year. Gaming activities at the property have
suffered from the general cautionary spending described earlier, but also from
the opening of a First Nations casino on the western edge of the city. While
we generally view the recent conversion to non-smoking as a non-issue at this
point, it does factor into the equation in Calgary because smoking is still
allowed on First Nations reserves. As a member of the Casino Operators
Association of Alberta we are pursuing remedies to what we view as an unlevel
playing field.
    The commitment to world scale projects in the oil sands provides the
Fort McMurray area with stability difficult to locate elsewhere in today's
economic environment. Planned and ongoing projects in the area are measured in
decades and billions of dollars. Our Boomtown casino quickly dispensed with
any fallout from a switch to non-smoking and returned to the growth curve just
two quarters following its implementation. Revenue and EBITDA records were set
yet again for the property during this most recent Quarter.
    In April 2008 the Fund's units were split three for one in anticipation
of a graduation from the Toronto Stock Exchange Venture Exchange ("TSX-V").
The first day of trading for units of the Fund on the larger Toronto Stock
Exchange ("TSX") was May 16, 2008. We expect these moves to be advantageous
for our investors in improved liquidity and greater exposure of the Fund in
the market.
    There are future benefits to the new economic reality we are operating
in. Instead of our former preoccupation with growth we have taken a hard look
at expenses and have discovered efficiencies sustainable even into the next
growth phase. We want to take this opportunity to thank our property
management for their commitment to this exercise. We can be optimistic about
the last half of the year as a result.

    
    Interim Consolidated Statements of Earnings and Comprehensive Income
    (unaudited)
    -------------------------------------------------------------------------
                               six months ended        three months ended
                                   June 30                   June 30
                              2008         2007         2008         2007
    -------------------------------------------------------------------------
    Revenue
      Hotel - rooming     $ 4,059,708  $ 4,281,505  $ 1,989,333  $ 2,044,209
      Table games           3,760,591    4,081,739    1,850,307    1,997,931
      Slot machines        10,720,768   11,437,869    5,537,314    5,952,085
      Food & beverage
       services             5,797,491    6,098,721    2,901,747    3,019,690
      Lease and rental        163,705      159,318       79,545       79,659
      Other                 2,375,516    2,369,121    1,186,528    1,251,424
                          ------------------------- -------------------------
                           26,877,779   28,428,273   13,544,774   14,344,998
                          ------------------------- -------------------------
    Expenses
      Cost of goods sold    1,832,194    2,017,179      919,424    1,001,412
      Human resources       6,980,980    7,224,458    3,510,031    3,695,458
      Marketing and
       promotions           1,224,584    1,050,673      672,529      586,632
      Operating             3,160,904    3,071,948    1,637,533    1,550,182
      Corporate and general
       administration       1,055,198      953,402      481,121      404,982
                          ------------------------- -------------------------
                           14,253,860   14,317,660    7,220,638    7,238,666
                          ------------------------- -------------------------

    Earnings before the
     following:            12,623,919   14,110,613    6,324,136    7,106,332

      Interest charges        661,521      549,134      358,025      284,922

      Future income taxes     (97,224)           -     (121,091)           -

      Amortization of
       property, plant and
       equipment            1,002,452    1,107,401      500,994      553,701

      Earnings allocation
       to minority
       interest             5,413,665    6,097,601    2,735,045    3,068,713
                          ------------------------- -------------------------

    Net earnings and
     comprehensive income $ 5,643,505  $ 6,356,477  $ 2,851,163  $ 3,198,996
                          ------------------------- -------------------------

    Earnings per unit,
     basic and fully
     diluted              $     0.524  $     0.590  $     0.265  $     0.297
                          ------------------------- -------------------------
                          ------------------------- -------------------------
    

    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 June 30, 2008 will be available August 14, 2008 on the company's
website at www.gamehost.ca and on SEDAR at www.sedar.com.

    %SEDAR: 00019487E




For further information:

For further information: Craig M. Thomas or, Darcy J. Will, P (403)
346-4545, F (403) 340-0683, E info@gamehost.ca

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GAMEHOST INCOME FUND

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