Sportscene Group Inc. Posts A Good Financial Performance in the 3rd Quarter and Intensifies its Development Efforts - Declaration of a Second Dividend of $0.30 Per Share

MONTREAL, July 17, 2014 /CNW Telbec/ - SPORTSCENE GROUP INC. ("Sportscene" or "the Company") (TSXV: SPS.A) continued to improve its financial results in the third quarter ended May 25, 2014, which closed with net earnings of $1.4 million or $0.33 basic per share, up 17.2% over the corresponding period of 2013. The Company's revenues rose 17.4% to $20.2 million. La Cage aux Sports' total network sales (1) grew by 5.7% to reach $32.1 million, their highest level since 2008. The network's performance is attributable to the favourable sporting environment in the spring of 2014 and the contribution of the Boucherville Cage inaugurated in November 2013, which showcases La Cage aux Sports' renewed design.

"Our flagship Cage continues to meet our expectations and its success prompts us to accelerate the implementation of our new design network-wide. Two Cages were modernized in the second and third quarters of 2014, another will be converted during the fourth quarter, and we intend to convert at least one unit one per quarter over the next fiscal year," commented Jean Bédard, President and Chief Executive Officer of Sportscene Group.

For the 39-week period ended May 25, 2014, the La Cage aux Sports network posted a 5.3% growth in sales (1), which totalled $86.9 million, whereas Sportscene's revenues grew by 8.4% to $55.7 million. The Company achieved year-to-date net earnings of $3.0 million or $0.72 basic per share, up 34.3% over the previous year. Furthermore, the Company closed the period in solid financial health, posting a working capital of $4.2 million as at May 25, 2014, short-term available cash (2) of $7.8 million and a total net debt ratio (3) of 21%.

"We are satisfied with fiscal 2014 results so far, and thus confident Sportscene will close the year with a financial performance in line with our objectives," added Jean Bédard. In a longer-term perspective, Sportscene is currently working on various projects aimed at further consolidating its banner's competitive edge and its leadership in the entertainment-themed restaurant industry. Such projects include a menu overhaul and technological advances focused on enhancing the customer's experience.

Declaration of a Dividend of $0.30 Per Share

Considering the Company's positive outlook, good results and financial health, the Board of Directors has approved the payment of a second dividend for fiscal 2014, in the amount of $ 0.30 per share. This brings to $0.60 per share the total dividend for fiscal 2014. The new dividend will be paid on August 21, 2014 to shareholders of record as at July 31, 2014.

Profile

In business since 1984, Sportscene Group Inc. operates Quebec's leading chain of sports-themed resto-bars: La Cage aux Sports. This banner comprises 51 "Cages", 40 of which are wholly or jointly owned by the Company, and 11 are franchises. Enjoying a strong brand image, La Cage aux Sports' most distinctive feature is its "Sports, Gang, Fun" culture, showcased by an original decor, a festive ambience, the use of the latest telecommunications technologies and the organization of national and international-calibre sporting events.

(1) Total network sales are the aggregate sales achieved by all La Cage aux Sports franchised, joint venture and corporate restaurants.
(2) Short-term available cash includes cash and cash equivalents and investments, if any.
(3) The total net ratio corresponds to long-term debt including its current portion, net of short-term available cash, divided by invested capital, i.e. the total of total net debt and shareholders' equity.

For further information about results and changes in Sportscene Group's financial position, refer to the interim management's report and interim condensed consolidated financial statements and accompanying notes for the 13 and 39-week periods ended May 25, 2014, available on SEDAR.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Interim Condensed Consolidated Statements of Comprehensive Income

(in thousands of Canadian dollars, except for earnings per share and number of outstanding shares)
(unaudited)
  13 weeks ended  39 weeks ended

May 25,
2014 
May 26,
2013
May 25,
 2014 
May 26,
2013
  $ $ $ $
    (Restated)    (Restated)
         
Revenues  20,249 17,255 55,740 51,426
Cost of sales   6,218 4,958 17,294 15,790
Selling and administrative expenses, excluding amortization  11,352 9,955 32,140 29,775
Other losses (gains)  26 35  39 (126)
Earnings before financial expenses, amortization and income tax   2,653 2,307 6,267 5,987
         
Amortization  977 852 2,820 2,673
Financial expenses  159 147 435 474
Share of net earnings of joint ventures and associates  (321) (248)  (873) (197)
Earnings before income tax expenses  1,838 1,556 3,885 3,037
         
Income tax expenses  454 375 864 788
Net earnings and comprehensive income  1,384 1,181 3,021 2,249
         
Net earnings and comprehensive income attributable to:         
         
The Company's shareholders  1,369 1,169 2,998 2,247
Non-controlling interests  15 12  23  2
Net earnings and comprehensive income  1,384 1,181 3,021 2,249
         
Earnings per share (in $):        
  Basic  0.33 0.28 0.72 0.54
  Diluted  0.32 0.28  0.71 0.54
           
Weighted average number of outstanding        
  Class A shares (in thousands):        
  Basic  4,165 4,165 4,165  4,165
  Diluted  4,231  4,165 4,231 4,165

Interim Condensed Consolidated Statements of Financial Position

(in thousands of Canadian dollars)
(unaudited)
  May 25,
2014
 May 26,
2013
 August 25,
2013
 August 27,
2012
  $ $ $ $
Assets    (Restated) (Restated) (Restated)
         
Current assets        
  Cash and cash equivalents  7,836  8,371  7,825  9,308
  Accounts receivable  4,456  5,163  4,175  3,377
  Income tax receivable  294 301 423 309
  Inventories  1,970  1,475  1,486 1,394
  Prepaid expenses   794 528 401 302
  Current portion of notes receivable  - 83 22 282
Total current assets  15,350 15,921 14,332 14,972
         
Notes receivable  553 958 655 1,303
Property, plant and equipment  36,411 30,111 30,221 29,706
Intangible assets   730  656 647 698
Deferred tax asset   1,541 1,456 2,209 1,259
Investments in joint ventures and associates, accounted for using the equity method  6,246 6,514 6,585 5,119
Goodwill  2,792 2,770 2,792  2,406
Total assets  63,623 58,386 57,441 55,463
         
Liabilities and shareholders' equity        
         
Current liabilities        
  Accounts payable and accrued liabilities  7,419  7,689 6,816 7,957
  Income tax payable  364 169  80 176
  Deferred revenues and credits  1,100 1,821 1,292 818
  Current portion of long-term debt  2,241 2,181 2,109 1,904
Total current liabilities  11,124 11,860 10,297 10,855
           
Long-term debt  15,053 11,268 10,748 11,505
Deferred revenues and credits  1,139 1,331 1,273  1,490
Deferred tax liability  458 420 991 405
Total liabilities  27,774  24,879 23,309  24,255
         
Shareholders' equity        
         
  Share capital  3,551 3,551 3,551  3,551
  Stock-based compensation reserve  349 286 299  260
  Retained earnings  31,642 29,335 29,980  27,088
Shareholders' equity attributable to the Company's shareholders  35,542 33,172 33,830 30,899
Non-controlling interests  307  335 302 309
Total shareholders' equity  35,849 33,507  34,132 31,208
         
Total liabilities and shareholders' equity  63,623  58,386 57,441 55,463

Interim Condensed Consolidated Statements of Cash Flows

(in thousands of Canadian dollars)
(unaudited)
  13 weeks ended 39 weeks ended

May 25,
2014
   May 26,
   2013
 May 25,
 2014
  May 26,
  2013
  $    $ $ $
    (Restated)   (Restated)
         
Operating activities        
  Net earnings   1,384 1,181 3,021 2,249
    Adjustments to reconcile net earnings to cash flows from operating activities        
    Loss on disposal of property, plant and equipment    26 7 39 40
    Gain on business combination achieved in stages    -  (72)  -  (266)
    Loss on impairment of non current assets  - 100  - 100
    Amortization of property, plant and equipment   964 840 2,790 2,633
    Amortization of intangible assets    13  12  30  40
    Share of net earnings of joint ventures and associates (321)   (248) (873) (197)
    Dividends received from joint ventures and associates    300 100 720  131
    Stock-based compensation    19  8 50 26
    Financial expenses recognized in net earnings    159 147  435 474
    Financial expenses paid   (147)  (147)  (437) (479)
    Income tax expenses recognized in net earnings  454 375  864 788
    Income tax paid   (213) (197) (487) (946)
  2,638 2,106 6,152 4,593
  Net change in non-cash working capital items, net of acquisitions and disposals of subsidiaries  (1,034)  423  (522) (1,429)
  1,604  2,529 5,630  3,164
         
Financing activities        
  Increase of long-term debt    490  - 1,990 1,000
  Repayment of long-term debt   (657) (512)  (1,757) (1,452)
  Dividends paid to the Company's shareholders  - - (1,250) -
  Dividends paid to non-controlling interest   (5) -  (5) -
  Redemption of non-controlling interest  (5)  -  (5) -
  (177)  (512)  (1,027) (452)
         
Investing activities        
  Business combination and acquisition of assets, net of cash and cash equivalents acquired  -  (295)  (881)  (736)
  Investments in joint ventures and associates   181  -  181 (1,387)
  Change in notes receivable   37 (136)  39  (274)
  Acquisitions of property, plant and equipment   (447)  (391)  (3,922) (1,262)
  Proceeds from disposals of property, plant and equipment    4  2  9 10
  Acquisitions of intangible assets   - -  (18) -
  (225) (820)  (4,592) (3,649)
Increase (decrease) in cash and cash equivalents  1,202  1,197  11 (937)
Cash and cash equivalents, beginning of period   6,634 7,174  7,825 9,308
Cash and cash equivalents, end of period   7,836 8,371 7,836 8,371

 

 

 

 

SOURCE Sportscene Group Inc.

For further information:

Jean Bédard, Chairman of the Board, President and Chief Executive Officer
Josée Pépin, Vice-President, Finance
450-641-3011