Gamehost Income Fund - Reports 2007 second quarter financial results



    RED DEER, AB, Aug. 13 /CNW/ - Gamehost Income Fund (the "Fund) (TSX.V:
GH.UN)
    The second quarter of our fiscal year is traditionally a soft one.
Fevered activity during the first quarter leads into the arrival of spring
breakup. This annual phenomenon has a dramatic effect on our operations,
especially in the north. Road bans on local roadways, temporary layoffs in the
oil patch and spring rains differ year to year only in their severity. We
always wonder heading in to the second quarter if there is enough momentum to
continue our unbroken string of revenue records. Spring breakup in 2007 was
especially protracted. We are again pleased, however, to report favourable
results for the second interim reporting period in 2007. Results for the six
and three months ended June 30, 2007 (respectively the "Period" and "Quarter")
are positive. No matter what the circumstances, it seems people just what to
have fun!
    Revenues for the Period and Quarter compared to corresponding time frames
in 2006 are both 23% higher. Revenues increased by $5.3 million for the Period
to $28.4 million from $23.1 million in 2006. Revenues for the Quarter
increased by $2.7 million to $14.3 million compared to 2006 when revenues
totaled $11.6 million. Quarterly revenues increased 2% over the $14.1 million
recorded the previous quarter.
    Total earnings before interest, taxes, depreciation and amortization
("EBITDA") for the Quarter and Period total $7.1 million and $14.1 million
respectively. This compares to results over the same time frames in 2006 of
$5.6 million and $11.1 for growth of 27% and 28% respectively.
    Quarterly EBITDA margins fell slightly short of a key milestone mark of
50.0%. EBITDA margins for the Period totaled 49.6% compared to 48.1% in 2006,
an improvement of 1.5%. We continue in our efforts to push overall EBITDA
margins back towards the levels experienced prior to opening of the Deerfoot
Joint Venture. The Deerfoot Joint Venture's large food operations, a high cost
element of overall operations, coupled with the higher than average growth
rate of the Deerfoot Joint Venture relative to the combined growth rate of the
Fund's other properties makes growing overall Fund EBITDA % a challenge.

    
    Interim Consolidated Statements of Operations
    (Unaudited)
    -------------------------------------------------------------------------
                                  six months ended        three months ended
                                           June 30                   June 30
                          ------------------------- -------------------------
                                 2007         2006         2007         2006
    Revenue
      Hotel - rooming     $ 4,281,505  $ 3,369,274  $ 2,044,209  $ 1,719,236
      Table games           4,081,739    3,437,539    1,997,931    1,588,409
      Slot machines        11,437,869    9,768,722    5,952,085    5,046,149
      Food & beverage
       services             6,098,721    4,590,985    3,019,690    2,257,906
      Lease and rental        159,318      153,092       79,659       76,328
      Other                 2,369,121    1,815,933    1,251,424      935,957
                          ------------------------- -------------------------
                           28,428,273   23,135,545   14,344,998   11,623,985
                          ------------------------- -------------------------
    Expenses
      Cost of goods sold    2,017,179    1,727,413    1,001,412      833,678
      Human resources       7,224,458    6,101,582    3,695,458    3,147,035
      Marketing and
       promotions           1,050,673      694,135      586,632      397,318
      Operating             3,071,948    2,570,643    1,550,182    1,254,552
      Corporate and general
       administration         953,402      907,875      404,982      438,806
                          ------------------------- -------------------------
                           14,317,660   12,001,648    7,238,666    6,071,389
                          ------------------------- -------------------------
    Earnings before
     amortization, interest
     and income allocation
     to Class B Limited
     Partners              14,110,613   11,133,897    7,106,332    5,552,596

    Amortization            1,107,401    1,187,895      553,701      594,416

    Interest charges          549,134      645,128      284,922      365,443

    Income allocation to
    Class B Limited
    Partners                6,097,601    4,553,771    3,068,713    2,248,635
                          ------------------------- -------------------------

    Net income            $ 6,356,477  $ 4,747,103  $ 3,198,996  $ 2,344,102
                          ------------------------- -------------------------

    Net income per unit,
     weighted average and
     fully diluted (*)    $     1.770  $     1.322  $     0.891  $     0.653
                          ------------------------- -------------------------

    See accompanying notes to financial statements

    (*) Based on Net income before Income allocation to Class B Limited
    Partners against total units (all classes) issued and outstanding.
    

    Our Service Plus property, as expected, experienced a reduction in
occupancy during the Quarter. While we know additional room capacity that
opened in the city during the Quarter has been a factor, there has also been a
moderate slowdown in the energy industry. Occupancies are still very
respectable and there has been no pressure on room rates. We are using the
slowdown to complete needed refurbishment. The pull back in the energy sector
together with a beleaguered forestry industry has had an impact on the Great
Northern Casino as well. Both of these Grande Prairie properties are off the
peak utilization rates we experienced in the preceding twelve months.
    The expansion of Boomtown Casino in Ft. McMurray continues to gain
traction. Announcements of new mega projects for the tar sands rich area will
continue the growth potential of this facility for the foreseeable future. The
Municipality of Wood Buffalo in which Ft. McMurray resides surprised us with
the introduction of a non-smoking bylaw which quickly passed through the
required three readings. As a result, smoking will not be allowed inside the
Boomtown Casino effective September 1, 2007. Management has begun plans to
provide for exterior smoking space for both staff and patrons. As for most
jurisdictions that have already implemented such bylaws we are expecting a
short lived moderate reduction in cash play.
    Ticket In/Ticket Out ("TITO") conversion of all slot machines at the
Deerfoot Joint Venture began mid July and is now complete. Floor staff is
focusing their attention on introducing patrons to the new coinless technology
to ensure a smooth transition. Many new games were introduced with the change
over in machines. Initial observations indicate a high level of acceptance by
patrons and staff. The Alberta Gaming and Liquor Commission set conversion
dates for both Boomtown and Great Northern Casinos in October 2007 and March
2008 respectively. Ultimately we expect TITO to provide cost efficiencies and
increase cash play.
    Trustees of the Fund maintained regular monthly cash distributions
throughout the Quarter at $0.20 per unit. Total distributions for the Period
total $1.15 per unit and represent a payout ratio of distributable cash from
operations of 65.4%. This compares with total distributions for the same
period in 2006 of $0.81 per unit and a payout ratio of 80.8 %.

    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.

    Consolidated interim financial statements and MD&A are available on the
Fund's website at www.gamehost.ca or on SEDAR at www.sedar.com.





For further information:

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

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