AI assistant
Gamehost Inc. — Interim / Quarterly Report 2021
Nov 10, 2021
46733_rns_2021-11-09_0d7868f9-bdac-4562-b892-b4f55517f1b7.pdf
Interim / Quarterly Report
Open in viewerOpens in your device viewer
==> picture [147 x 70] intentionally omitted <==
Condensed Interim Consolidated Financial Statements For the Nine and Three Months Ended September 30, 2021
These condensed interim consolidated financial statements have not been reviewed by the Company's auditor.
Gamehost Inc.
Condensed Interim Consolidated Statements of Profit and Comprehensive Profit
| In millions of Canadian dollars (Except per share figures) Notes Operating revenue Cost of sales Other Depreciation 8,9 |
Unaudited Unaudited |
|---|---|
| nine months ended September 30 three months ended September 30 |
|
| 2021 2020 2021 2020 |
|
| 19.7 $ 25.7 $ 15.7 $ 10.0 $ (12.8) (16.5) (7.7) (5.8) (2.1) (2.3) (0.7) (0.8) |
|
| (14.9) (18.8) (8.4) (6.6) |
|
| Gross profit Lease and other income 4 Administrative expenses Other Depreciation 8,9 |
4.8 6.9 7.3 3.4 3.9 2.0 1.2 1.6 (1.6) (1.7) (0.7) (0.6) (0.8) (0.9) (0.3) (0.3) |
| (2.4) (2.6) (1.0) (0.9) |
|
| Profit from operating activities Fair value adjustment Net finance costs |
6.3 6.3 7.5 4.1 - (0.6) - - (1.2) (1.1) (0.4) (0.4) |
| Profit before income taxes Income tax(expense) 5 |
5.1 4.6 7.1 3.7 (1.0) (0.8) (1.4) (0.6) |
| Profit and comprehensive profit | 4.1 $ 3.8 $ 5.7 $ 3.1 $ |
| Shareholders Non-controllinginterest Profit and comprehensive profit attributable to: |
3.8 $ 3.5 $ 5.3 $ 2.9 $ 0.3 0.3 0.4 0.2 |
| 4.1 $ 3.8 $ 5.7 $ 3.1 $ |
|
| Earnings per share 6 12 Basic and fully diluted Basic and fully diluted Weighted average number of common shares outstanding |
0.16 $ 0.15 $ 0.23 $ 0.12 $ 23.1 24.0 23.0 23.7 |
The accompanying notes are an integral part of the consolidated financial statements.
1
Gamehost Inc.
Condensed Interim Consolidated Statements of Financial Position
| In millions of Canadian dollars Notes Assets Current Cash Restricted cash Trade and other receivables 7 Inventories Prepaid expenses |
Unaudited Audited |
|---|---|
| September 30, 2021 December 31, 2020 |
|
| 20.4 $ 10.3 $ 0.9 0.9 1.5 2.1 0.5 0.5 0.8 0.5 |
|
| Property, plant and equipment 8 Right-of-use assets 9 a) Goodwill and intangible assets Investmentproperty 10 |
24.1 14.3 74.9 71.2 12.8 10.6 76.9 76.9 2.0 2.0 |
| 190.7 $ 175.0 $ |
|
| Liabilities Current Trade and other payables Loans and borrowings 11 Lease liabilities 9 b) Income tax payable 5 |
3.5 $ 2.4 $ 28.2 17.4 0.7 0.7 1.0 0.1 |
| Loans and borrowings 11 Lease liabilities 9 b) Deferred tax liabilities 5 |
33.4 20.6 22.5 23.4 12.4 10.1 8.1 8.1 |
| 76.4 62.2 |
|
| Equity 12 Share capital Deficit |
156.6 159.4 (49.5) (53.3) |
| Equity attributable to Shareholders Non-controlling interest |
107.1 106.1 7.2 6.7 |
| 114.3 112.8 |
|
| 190.7 $ 175.0 $ |
The accompanying notes are an integral part of the consolidated financial statements.
2
Gamehost Inc.
Condensed Interim Consolidated Statements of Changes in Equity
| In millions of Canadian dollars Notes |
Unaudited |
|---|---|
| Share capital Deficit Total Non- controlling interest Total equity |
|
| Dividends to shareholders of the Company Distributions to non-controlling interest Shares repurchased for cancellation Equity as at January 1, 2020 Profit and comprehensive profit |
164.3 $ (54.4) $ 109.9 $ 6.5 $ 116.4 $ - 3.5 3.5 0.3 3.8 - (4.2) (4.2) - (4.2) - - - (0.3) (0.3) (3.7) - (3.7) - (3.7) |
| Equity as at September 30, 2020 | 160.6 $ (55.1) $ 105.5 $ 6.5 $ 112.0 $ |
| 12 Shares repurchased for cancellation Equity as at January 1, 2021 Profit and comprehensive profit Contributions from non-controlling interest |
159.4 $ (53.3) $ 106.1 $ 6.7 $ 112.8 $ - 3.8 3.8 0.3 4.1 - - - 0.2 0.2 (2.8) - (2.8) - (2.8) |
| Equity as at September 30, 2021 | 156.6 $ (49.5) $ 107.1 $ 7.2 $ 114.3 **$ ** |
The accompanying notes are an integral part of the consolidated financial statements.
3
Gamehost Inc.
Condensed Interim Consolidated Statements of Cash Flows
| In millions of Canadian dollars Notes Adjustments for: Fair value adjustment Income tax expense 5 Operating activities Profit and comprehensive profit Depreciation of property, plant and equipment Finance costs Cash provided by (used in): |
Unaudited Unaudited |
|---|---|
| nine months ended September 30 three months ended September 30 |
|
| 2021 2020 2021 2020 |
|
| 4.1 $ 3.8 $ 5.7 $ 3.1 $ 2.9 3.2 1.0 1.1 1.3 1.2 0.5 0.4 - 0.6 - - 1.0 0.8 1.4 0.6 |
|
| Change in: Non-cash working capital: Trade and other receivables Inventories Prepaid expenses Trade and other payables Finance costs paid Income taxespaid |
9.3 9.6 8.6 5.2 0.5 0.3 (0.5) (0.8) - - - - (0.3) (0.2) (0.6) (0.3) 1.2 (0.6) 0.9 0.5 (1.3) (0.9) (0.5) (0.3) (0.1) (0.8) - - |
| Net cash provided by operating activities |
9.3 7.4 7.9 4.3 |
| 8 Investing activities Purchase of property, plant and equipment |
(5.9) (0.3) (2.3) (0.1) |
| Net cash used in investing activities | (5.9) (0.3) (2.3) (0.1) |
| Proceeds of loans and borrowings 11 Payments on loans and borrowings 11 Payments on lease liabilities 9 Dividends paid 12 Share repurchases 12 Financing activities Distributions to non-controlling interest Contributions from non-controlling interest |
10.8 8.3 1.0 1.9 (0.9) (4.8) (0.3) (0.2) (0.6) (0.7) (0.2) (0.2) 0.2 - 0.1 - - (0.3) - - - (5.6) - - (2.8) (3.7) (0.8) (2.3) |
| Net cash provided by (used in) financingactivities |
6.7 (6.8) (0.2) (0.8) |
| Opening cash Net increase in cash |
10.1 0.3 5.4 3.4 10.3 15.4 15.0 12.3 |
| Closing cash | 20.4 $ 15.7 $ 20.4 $ 15.7 $ |
The accompanying notes are an integral part of the consolidated financial statements.
4
Gamehost Inc Notes to the Condensed Interim Consolidated Financial Statements For the nine months ended September 30, 2021
(In millions of Canadian dollars, except share information)
1 REPORTING ENTITY
Gamehost Inc. (the “Company”) is a publicly listed company incorporated in Canada under the Business Corporations Act (Alberta). The Company's shares are listed on the Toronto Stock Exchange ("TSX") under the trading symbol "GH". The head office is located at 104 - 548 Laura Avenue, Red Deer Country, Alberta T4E 0A5. The registered office and location of records is located at 1400, 350 – 7th Avenue SW Calgary, Alberta T2P 3N9.
Gamehost Inc., its wholly owned subsidiary Gamehost Limited Partnership, and its 91% controlling interest in Deerfoot Inn & Casino Inc, collectively ("Gamehost") operates entirely in the province of Alberta. Operations include the Deerfoot Inn & Casino ("Deerfoot") in Calgary, Rivers Casino & Entertainment Center ("Rivers" formerly - Boomtown Casino) in Fort McMurray, the Great Northern Casino ("Great Northern"), Service Plus Inns & Suites (“Service Plus”), and Encore Suites by Service Plus Inns ("Encore") all located in Grande Prairie.
The Company is also the owner of an investment property located adjacent to its operating properties in Grande Prairie.
Gaming operations of the Company are controlled by Alberta Gaming, Liquor and Cannabis Commission ("AGLC"), including Company owned table games and government owned slot machines, video lottery terminals ("VLT"), electronic gaming tables ("EGT"), and lottery ticket kiosks. Hotel operations of the Company include full and limited service hotels, and banquet and convention services. Food, beverages and entertainment are offered at each of the Company’s casino locations.
2 BASIS OF PREPARATION
These Condensed Interim Consolidated Financial Statements, including comparatives, have been prepared in accordance with International Accounting Standards ("IAS") 34 Interim Financial Reporting. Certain information and disclosures normally provided in audited annual consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Financial Accounting Standards Board ("IASB") and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”) have been omitted or condensed. As such, these Condensed Interim Consolidated Financial Statements should be read in conjunction with the Gamehost Inc's Audited Consolidated Financial Statements for the year ended December 31, 2020 ("Annual Financial Statements").
These Condensed Interim Consolidated Financial Statements were approved and authorized for issue by the Board of Directors on November 9, 2021. The policies applied in preparation of these Condensed Interim Consolidated Financial Statements are consistent with those applied in the Company's Annual Financial Statements.
Certain prior year amounts pertaining to leases have been reclassified to conform with the presentation adopted in the Annual Financial Statements.
5
Gamehost Inc Notes to the Condensed Interim Consolidated Financial Statements For the nine months ended September 30, 2021
(In millions of Canadian dollars, except share information)
3 OPERATING SEGMENTS
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components. Operating results of each segment for which specific financial information is available are reviewed regularly by the Company’s Chief Operating Officer ("COO"), to make decisions about resources to be allocated to the segment and assess its performance.
Segment results that are reported to the COO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Company’s headquarters), and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the Year to acquire property, plant and equipment, and intangible assets other than goodwill.
The Company's reportable segments are strategic business units that offer different services. They are managed separately because of their unique operational and marketing requirements. Each segment complements the other segments. The Gaming segment includes three casinos offering slot machines, VLT's, lottery ticket kiosks and table games. The Hotel segment includes three hotels catering to mid-range clients. The Food and Beverage segment has operations that are located within the casinos and hotels as a complement to those segments.
| nine months ended September 30, 2021 | Gaming | Hotel | Food & | Corporate and | Corporate and | Total | ||||
|---|---|---|---|---|---|---|---|---|---|---|
| Beverage | Other1 | |||||||||
| Total revenues | $ | 14.0 | $ | 6.1 | $ | 3.3 | $ | 0.2 | $ | 23.6 |
| Profit (loss) before income taxes | $ | 6.4 | $ | 1.1 | $ | (0.1) | $ | (2.3) | $ | 5.1 |
| Segment assets | $ | 89.6 |
$ | 67.1 |
$ | 30.9 |
$ | 3.1 |
$ | 190.7 |
| Segment liabilities | $ | 30.3 |
$ | 25.3 |
$ | 11.4 |
$ | 9.5 |
$ | 76.4 |
| Capital expenditures | $ | 1.9 |
$ | - |
$ | 4.0 |
$ | - |
$ | 5.9 |
| nine months ended September 30, 2020 | Gaming | Hotel | Food & | Corporate and | Total | |||||
| Beverage | Other1 | |||||||||
| Total revenues | $ | 17.4 |
$ | 5.3 |
$ | 4.9 |
$ | 0.1 |
$ | 27.7 |
| Profit (loss) before income taxes | $ | 8.0 | $ | (0.4) | $ | 0.1 | $ | (3.1) | $ | 4.6 |
| Segment assets | $ | 76.8 |
$ | 68.8 |
$ | 24.1 |
$ | 3.1 |
$ | 172.8 |
| Segment liabilities | $ | 20.1 |
$ | 22.5 |
$ | 9.2 |
$ | 7.5 |
$ | 59.3 |
| Capital expenditures | $ | 0.2 |
$ | 0.1 |
$ | - |
$ | - |
$ | 0.3 |
1 Corporate and Other consists of revenues and expenses which are not allocated to operating segments and do not meet the definition of an operating segment on their own.
6
Notes to the Condensed Interim Consolidated Financial Statements For the nine months ended September 30, 2021
Gamehost Inc
(In millions of Canadian dollars, except share information)
4 LEASE AND OTHER INCOME
| Lease and other income 2021 2020 September 30 nine months ended |
2021 2020 three months ended September 30 |
|---|---|
| Gross revenue from investment property 0.1 0.1 Lease revenues 0.1 - Operating costs of investment property (0.1) (0.1) Other income 3.8 2.0 |
- - 0.1 - (0.1) - 1.2 1.6 |
| 3.9 2.0 |
1.2 1.6 |
Lease and other income is comprised of net profits from investment property leasing activities, lease income from food services operators at the Company's Great Northern and Rivers casinos, COVID-19 subsidies and other miscellaneous incomes. As lessor, the Company is responsible for all exterior or building shell maintenance and capital expenditures at the Company's investment property. The Company manages the operational costs including property tax, building insurance, repairs and maintenance and security of the property which costs are shared pro-rata by property tenants as common area costs. A lease at the Company's investment property, expired without renewal during the Period. The investment property is now vacant and the Company is considering its future highest and best use.
The Company received COVID-19 relief under the Canada Emergency Wage Subsidy (CEWS) program and the Canada Emergency Rent Subsidy (CERS) program. Tourism levy fees collected during the Period were retained as revenue under a relief program sponsored by the Government of Alberta ("GOA"). The Company's application for additional grants under the GOA Small and Medium Enterprize Relaunch Grant program (SMERG) was approved during the Quarter. All amounts received or accrued under all COVID-19 relief programs are recorded in other income. The duration of CEWS and CERS relief programs is uncertain beyond June 2021.
5 INCOME TAX
| nine months ended September 30 2021 |
2020 |
|---|---|
| Current tax expense Deferred tax expense (recovery) Origination and reversal of temporary differences 1.1 $ (0.1) |
(0.5) 1.3 $ |
| Income tax expense 1.0 $ |
0.8 $ |
Reconciliation of effective tax rate
Actual income tax expense differs from the expected income tax expense that would have been computed by applying the statutory income tax rate to profit before income taxes for the following reasons:
| nine months ended September 30 2021 |
2020 |
|---|---|
| Profit attributable to Shareholders before income taxe Combined federal and provincial statutory tax rate Expected income tax expense Adjustments in determining income tax expense Effect of changes in temporary differences (0.1) 1.1 4.8 $ 23.0% |
(0.2) 1.0 4.3 $ 24.0% |
| Income tax expense 1.0 $ |
0.8 $ |
Substantially enacted tax laws, as they relate to the Company's liability for current and deferred taxes, have been factored into the determination of reported taxes.
7
Gamehost Inc
Notes to the Condensed Interim Consolidated Financial Statements For the nine months ended September 30, 2021 (In millions of Canadian dollars, except share information)
5 INCOME TAX (Continued)
Recognized deferred tax assets and liabilities
The income tax effects of temporary differences that give rise to significant portions of the deferred tax liabilities are presented below:
| as at Assets Liabilities Net September 30, 2021 |
Assets Liabilities Net December 31, 2020 |
|---|---|
| Leased right-of-use assets 3.0 - 3.0 Intangible assets - (6.4) (6.4) Property, plant and equipment - (4.7) (4.7) |
2.5 - 2.5 - (6.4) (6.4) - (4.2) (4.2) |
| Deferred tax assets (liabilities) 3.0 (11.1) (8.1) |
2.5 (10.6) (8.1) |
6 Earnings per share
The calculation of basic earnings per share is based on the profit attributable to common shareholders and the weighted average number of common shares outstanding. The Company had no potentially dilutive common shares during the periods reported.
| 2021 2020 nine months ended September 30 |
2021 2020 three months ended September 30 |
|---|---|
| Profit and comprehensive profit attributable to shareholders 3.8 $ 3.5 $ |
5.3 $ 2.9 $ |
| Weighted average common shares outstanding 23.1 24.0 |
23.0 23.7 |
| Basic and fully diluted earnings per share 0.16 $ 0.15 $ |
0.23 $ 0.12 $ |
7 TRADE AND OTHER RECEIVABLES
| September 30, 2021 | December 31, 2020 |
|---|---|
| AGLC, ATM and statutory amounts Hotel guest accounts Other 0.8 0.3 0.4 |
0.5 0.3 1.3 |
| 1.5 | 2.1 |
AGLC and statutory amounts are expected to clear the month following. Hotel and guest accounts are monitored closely for changes in payment patterns and remain well within Company targets for days sales outstanding. No adjustments have been made to estimates for expected credit losses. Other includes various amounts receivable including COVID-19 relief program submissions.
8
Notes to the Condensed Interim Consolidated Financial Statements For the nine months ended September 30, 2021 (In millions of Canadian dollars, except share information)
Gamehost Inc
8 PROPERTY, PLANT AND EQUIPMENT
The carrying values of property, plant and equipment which comprise of owned assets that do not meet the definition of investment property are reconciled below:
| Land | Land | Buildings | Leaseholds | Leaseholds | Furniture and | Furniture and | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Improvement | equipment | |||||||||||
| Cost | ||||||||||||
| At January 1, 2020 | $ | 11.6 |
$ | 4.2 |
$ | 85.4 |
$ | 2.8 |
$ | 23.2 |
$ | 127.2 |
| Additions | - | - | 2.0 | - | 0.1 | 2.1 | ||||||
| At December 31, 2020 | $ | 11.6 |
$ | 4.2 |
$ | 87.4 |
$ | 2.8 |
$ | 23.3 |
$ | 129.3 |
| Additions | - | - | 5.8 | - | 0.1 | 5.9 | ||||||
| At September 30, 2021 | $ | 11.6 |
$ | 4.2 |
$ | 93.2 |
$ | 2.8 |
$ | 23.4 |
$ | 135.2 |
| Accumulated depreciation | ||||||||||||
| At January 1, 2020 | $ | - |
$ | 1.0 |
$ | 30.4 |
$ | 2.7 |
$ | 20.8 |
$ | 54.9 |
| Depreciation | - | 0.1 | 2.4 | - | 0.7 | 3.2 | ||||||
| At December 31, 2020 | $ | - |
$ | 1.1 |
$ | 32.8 |
$ | 2.7 |
$ | 21.5 |
$ | 58.1 |
| Depreciation | - | 0.1 | 1.7 | - | 0.4 | 2.2 | ||||||
| At September 30, 2021 | $ | - |
$ | 1.2 |
$ | 34.5 |
$ | 2.7 |
$ | 21.9 |
$ | 60.3 |
| Carrying value | ||||||||||||
| At December 31, 2020 | $ | 11.6 |
$ | 3.1 |
$ | 54.6 |
$ | 0.1 |
$ | 1.8 |
$ | 71.2 |
| At September 30, 2021 | $ | 11.6 |
$ | 3.0 |
$ | 58.7 |
$ | 0.1 |
$ | 1.5 |
$ | 74.9 |
Equipment provided by and owned by AGLC including slot, VLT, EGT, and lottery terminals are not included in property, plant and equipment.
The Company has two ongoing building expansion projects with expected completion costs totaling $8.8. $7.6 of the total project funding has been advanced to the general contractor at end of the Quarter. No amortization has been recorded on these amounts. The Company will receive $1.9 in tenant allowances on one project following completion to reduce total costs to a net $6.9 for both projects.
9
Gamehost Inc
Notes to the Condensed Interim Consolidated Financial Statements For the nine months ended September 30, 2021
(In millions of Canadian dollars, except share information)
9 LEASES
The Company's leases are comprised of predominantly a property lease for the Rivers Casino & Entertainment Centre and numerous pieces of small equipment throughout the Company, collectively known as right-of-use assets. The corresponding lease liabilities for right-of-use assets are subject to remeasurement for changes in future lease payments with corresponding adjustments made to the carrying value of the right-of-use asset.
Additional lease payments are recognized in profit (loss) and consist of short-term leases with durations of twelve months or less, and leases of low value consisting primarily of small equipment. Additional lease payments also include variable portions of property leases based on usage such as property tax and insurance portions of common area property costs.
a) Right-of-use assets
| a) Right-of-use assets | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Land | Land | Buildings | Leaseholds | Furniture | and | Total | |||||||
| Improvement | equipment | ||||||||||||
| Cost | |||||||||||||
| At January 1, 2020 | $ | - |
$ | - |
$ | 5.0 |
$ | - |
$ | 0.7 | $ | 5.7 | |
| Modifications and remeasurements | - | - | 6.8 | - | - | 6.8 | |||||||
| At December 31, 2020 | $ | - |
$ | - |
$ | 11.8 |
$ | - |
$ | 0.7 |
$ | 12.5 |
|
| Additions and disposals | - | - | 2.8 | - | 0.1 | 2.9 | |||||||
| At September 30, 2021 | $ | - |
$ | - |
$ | 14.6 |
$ | - |
$ | 0.8 |
$ | 15.4 |
|
| Accumulated depreciation and impairments | |||||||||||||
| At January 1, 2020 | $ | - |
$ | - |
$ | 0.8 |
$ | - |
$ | 0.2 | $ | 1.0 | |
| Depreciation expense | - | - | 0.7 | - | 0.2 | 0.9 | |||||||
| At December 31, 2020 | $ | - |
$ | - |
$ | 1.5 |
$ | - |
$ | 0.4 |
$ | 1.9 |
|
| Depreciation expense | - | - | 0.5 | - | 0.2 | 0.7 | |||||||
| Modifications and remeasurements | - | - | - | - | - | - | |||||||
| At September 30, 2021 | $ | - |
$ | - |
$ | 2.0 |
$ | - |
$ | 0.6 |
$ | 2.6 |
|
| Carrying value | |||||||||||||
| At December 31, 2020 | $ | - |
$ | - |
$ | 10.3 |
$ | - |
$ | 0.3 |
$ | 10.6 | |
| At September 30, 2021 | $ | - |
$ | - |
$ | 12.6 |
$ | - |
$ | 0.2 |
$ | 12.8 |
b) Lease liabilities
The following table reconciles the opening and ending balances of lease liabilities:
| Lease liabilities at January 1, 2020 | $ | 4.9 |
|---|---|---|
| Lease payments | (1.1) | |
| Interest accretion | 0.2 | |
| Lease modifications and remeasurements | 6.8 | |
| Current lease liabilities at December 31,2020 | (0.7) | |
| Non-current lease liabilities at December 31,2020 | $ | 10.1 |
| Lease liabilities at January 1, 2021 | $ | 10.8 |
| Lease payments | (0.9) | |
| Interest accretion | 0.3 | |
| Additions | 2.9 | |
| Current lease liabilities at September 30,2021 | (0.7) | |
| Non-current lease liabilities at September 30,2021 | $ | 12.4 |
10
Gamehost Inc
Notes to the Condensed Interim Consolidated Financial Statements For the nine months ended September 30, 2021 (In millions of Canadian dollars, except share information)
9 LEASES (Continued)
Lease payments were discounted using rates ranging from 5.0% to 3.5% from the origination of each lease.
The Company expects the following maturities of its undiscounted lease commitments:
| Lease liabilities contractual cash flows (undiscounted) September 30, 2021 |
December 31, 2020 |
|---|---|
| One year or less Two to five years More than five years 1.3 $ 4.3 11.5 |
1.5 $ 13.3 4.9 |
| 17.1 $ |
19.7 $ |
c) Lease payments recognized in profit and comprehensive profit
The following table summarizes the amounts recognized in profit and comprehensive profit for lease payments:
| September 30, 2021 | September 30, 2020 |
|---|---|
| Lessor activities Net (income) from lessor activities Lessee activities Interest accretion on lease liabilities Depreciation expense on right-of-use assets Variable and usage expenses related to right-of-use assets Expenses related to short-term leases 0.2 (0.1) $ 0.2 0.7 0.3 $ |
0.7 0.3 0.7 - $ 0.2 $ |
| Lease expense recognized in profit and comprehensive profit 1.3 $ |
1.9 $ |
10 INVESTMENT PROPERTY
| Investment property | Total | ||
|---|---|---|---|
| At January 1, 2020 | $ | 2.8 | |
| Fair value adjustment | (0.8) | ||
| At December 31, 2020 | $ | 2.0 |
|
| Fair value adjustment | - | ||
| At September 30, 2021 | $ | 2.0 |
The Company owns a commercial strip in Grande Prairie which it classifies as an investment property. The investment property has been vacant since March 31, 2021.
11
Gamehost Inc Notes to the Condensed Interim Consolidated Financial Statements For the nine months ended September 30, 2021 (In millions of Canadian dollars, except share information)
11 LOANS AND BORROWINGS
The Company has a 5 year term loan ("Term loan 1") secured by land and buildings. The rate on Term loan 1 is 3.50%. The Company is making blended monthly principal and interest payments on Term loan 1, amortized over 20 years and 3 months.
The Company has a 5 year term loan ("Term loan 2") secured by land and buildings. The rate on Term loan 2 is variable at the lenders prime rate, 2.45% at the end of the Period. The Company is making blended monthly principal and interest payments on Term loan 2, amortized over 10 years.
Deerfoot has a 5 year term loan secured by its land and buildings. The rate on the Deerfoot loan is 3.50%. Deerfoot is making blended monthly principal and interest payments on the loan, amortized over 20 years and 3 months.
The Company does not currently satisfy all covenants on it's revolving and term loans. The Company has assurances from its lender that no action is being contemplated. With provincial casinos now open, the Company anticipates cash flows that will satisfy all covenants on an annualized basis.
| Maturity September 30, 2021 |
December 31, 2020 |
|---|---|
| Credit facilities available at face value Revolving credit line 1-Dec-23 Term loan 1 1-Dec-23 Term loan 2 1-Dec-25 Deerfoot term loan 1-Dec-23 5.1 30.0 $ 4.7 13.9 |
5.0 14.4 5.2 30.0 $ |
| 53.7 $ |
54.6 $ |
| Carrying value of borrowed amounts Current liabilities Revolving credit line Term loan 1 Term loan 2 Deerfoot term loan 0.5 0.2 27.0 $ 0.5 |
16.2 $ 0.6 0.2 0.4 |
| Non-current liabilities Term loan 1 Term loan 2 Deerfoot term loan 4.2 4.9 13.4 28.2 |
13.8 4.6 5.0 17.4 |
| 22.5 | 23.4 |
| 50.7 $ |
40.8 $ |
| Revolving credit line Deerfoot term loan 3.50% 3.50% 2.45% (P +0.00%) 2.45% (P +0.00%) Term loan 1 Term loan 2 |
3.50% 2.45% (P +0.00%) 3.50% 2.45% (P +0.00%) |
1 Prime rate (P) at the end of the Quarter was 2.45%.
12
Gamehost Inc Notes to the Condensed Interim Consolidated Financial Statements For the nine months ended September 30, 2021 (In millions of Canadian dollars, except share information)
12 EQUITY
Common shares of the Company have no par value. The Company is authorized to issue an unlimited number of common shares without nominal or par value to which shares shall be attached the right to vote at any meeting of shareholders of the Company, receive any dividend declared by the Company, and receive the remaining property of the Company upon dissolution.
| Shares Amount September 30, 2021 nine months ended |
Shares Amount twelve months ended December 31, 2020 |
|---|---|
| Opening number of common shares 23.3 159.4 $ Common shares purchased for cancellation under normal course issuer bid (0.4) (2.8) |
24.3 164.3 $ (1.0) (4.9) |
| Ending number of common shares 22.9 156.6 $ |
23.3 159.4 $ |
| Weighted average number of common shares 2021 2020 nine months ended September 30 |
2021 2020 three months ended September 30 |
| Opening balance of common shares 23.3 24.3 Weighted average effect of common shares purchased for cancellation (0.2) (0.3) |
23.0 23.9 - (0.2) |
| Weighted average common shares outstanding 23.1 24.0 |
23.0 23.7 |
Normal course issuer bid(s)
On July 21, 2020 the Company commenced a normal course issuer bid (the "2020 Bid") to purchase for cancellation up to 1.5 million of its common shares. The 2020 Bid ended on July 20, 2021. During the Period, the Company purchased for cancellation 305,800 common shares under the 2020 Bid at prices averaging $7.32/common share not including commissions. A total of 917,865 common shares were purchased under the 2020 Bid at prices averaging $6.11/common share not including commissions.
On July 21, 2021 the Company commenced a normal course issuer bid (the "2021 Bid"). Pursuant to the 2021 Bid, Gamehost is authorized to purchase for cancellation up to a maximum of 1.2 million common shares, being equal to 5% of Gamehost's issued and outstanding common shares on July 7, 2021. Notwithstanding the foregoing, pursuant to the rules of the TSX, Gamehost may not purchase more than 1,144 common shares in any one day, such amount being equal to 25% of the average daily trading volume for the six months ended June 30, 2021. Common shares purchased under the 2021 Bid will be made in the open market through the facilities of the TSX and any other Canadian marketplaces at the prevailing market price of the shares on the TSX and any other Canadian marketplaces at the time of purchase. The 2021 Bid will terminate on July 20, 2022 or such earlier time as the 2021 Bid is completed or terminated at the option of the Company. During the Period, the Company purchased for cancellation 72,200 common shares under the 2021 Bid at prices averaging $7.92/common share not including commissions.
13
Gamehost Inc
Notes to the Condensed Interim Consolidated Financial Statements For the nine months ended September 30, 2021
(In millions of Canadian dollars, except share information)
| Dividends | Dividends |
|---|---|
| Dividends declared at Record Date 2021 |
2020 |
| per Share Dividends January - $ - $ February - - March - - April - - May - - June - - July - - August - - September - - |
per Share Dividends 0.0575 $ 1.4 $ 0.0575 1.4 0.0575 1.4 - - - - - - - - - - - - |
| - $ - $ |
0.1725 $ 4.2 $ |
The Company's board of directors temporarily suspended regular monthly dividends in response to the COVID-19 pandemic. The Company's board of directors reviews dividend policy at each regularly scheduled meeting.
13 RELATED PARTY TRANSACTIONS
Related party transactions are measured at the exchange amount, which is the amount agreed to by the Company and the related parties. Related party balances are unsecured and non-interest bearing, with no specific terms of repayment.
The Company had related party transactions with David Will and Darcy Will and/or companies owned or controlled by David Will and/or Darcy Will (collectively the “Wills”). The Wills are key management personnel, directors of the Company, and significant shareholders. Together, the Wills control 32.8% (32.1% - December 31, 2020) of the outstanding common shares of the Company at end of the Quarter.
-
The Company incurred $0.4 ($0.5 - 2020) in key management personnel compensation with the Wills for the Period which is included in administrative expenses. Compensation is in the form of short term employee benefits, director fees, management agreements, and a general partnership agreement. Management fees stipulated in management services agreements are based on a percentage of revenues and/or earnings before interest, taxes, depreciation and amortization. $0.1 ($0.1 - 2020) remains in accounts payable at the end of the Period.
-
A management services agreement between the Company and the Wills stipulates that the Wills are entitled to 1.5% of gross operating profit before interest, taxes, depreciation, amortization, and extraordinary items of the Company. These amounts are included in administrative expenses.
-
The management services company engaged to perform the services referred to above is also the general partner of Gamehost Limited Partnership. The partnership agreement stipulates that the general partner is entitled to 0.01% of all cash distributions of the partnership. These amounts are included in administrative expenses.
-
A management services agreement between Deerfoot and the Wills stipulates that the Wills are entitled to 1.5% of the gross revenues plus 2.0% of operational earnings before interest, taxes, depreciation, amortization, and extraordinary items of Deerfoot. These amounts are included in administrative expenses.
-
The Company advanced $5.5 ($1.7 – 2020) for construction projects at Deerfoot and Rivers Casino & Entertainment Centre during the Period which is included in property, plant and equipment. The Company has engaged DJ Will Construction Ltd, a company controlled by the Wills to act as general contractor for the projects.
The Company incurred $0.1 ($0.1 – 2020) in directors fees for the Period paid to other directors of the Company which is included in administrative expenses.
14
Gamehost Inc Notes to the Condensed Interim Consolidated Financial Statements For the nine months ended September 30, 2021 (In millions of Canadian dollars, except share information)
23 RELATED PARTY TRANSACTIONS (Continued)
The Company directly incurred $0.1 ($0.1 – 2020) of charter aircraft rental expenses during the Period with Noren Air Inc., a company controlled by the Company's COO. These costs are included in administrative expenses. Additional payments to Noren Air Inc of $0.1 ($nil - 2020) were made indirectly by the Company through its general contractor, DJ Will Construction Ltd.
The Company incurred $0.4 ($0.4 – 2020) during the Period in key management personnel compensation paid or accrued to other officers or companies controlled by other officers of the Company, which is included in administrative expenses. Included in these figures are monthly fees paid under an operational services agreement between the Company and the Company's COO for overseeing site operations of the Company.
14 COMMITMENTS
The Company has a 87.75% Contributing Interest Responsibility ("CIR") to Deerfoot for any capital funding requirements. Deerfoot is undertaking a 7,500 square foot expansion of its gaming and non-gaming amenities. At the end of the Quarter, Gamehost has paid 86.7% of its CIR to the expected total project cost of $3.9.
The Company has a commitment for a 6,350 square foot expansion of its non-gaming amenities at Rivers. At the end of the Quarter, Gamehost has paid 76.3% of the expected total project cost of $5.6. On completion of the project, the Company will receive a tenant inducement payment of $1.9.
The Company has various other contractual commitments. Future undiscounted minimum payments of these commitments are:
| Commitments | |
|---|---|
| Total More than fiveyears Two to fiveyears Oneyear or less |
|
| 0.1 0.1 - 0.2 |
15 SUBSEQUENT EVENTS
Normal Course Issuer Bid
In October 2021, the Company purchased for cancellation 215,400 common shares at prices averaging $7.98/common share plus commissions.
15