Sportscene Group Announces Net Earnings of $1.4 Million for the Third Quarter of Fiscal 2011 and Declares a Dividend of $0.30 Per Share

MONTREAL, July 4, 2011 /CNW Telbec/ - SPORTSCENE GROUP INC. ("Sportscene", "Sportscene Group" or "the Company") (TSXV: SPS.A), which operates the La Cage aux Sports restaurant chain, announces financial results in line with management's expectations for the third quarter of fiscal 2011.

For the 13-week period ended May 29, 2011, the Company's revenues amounted to $21.9 million, posting a slight decline of 1.3% over the revenues of $22.2 million recorded during the same quarter of the previous year. However, La Cage aux Sports' total network sales⁽¹⁾ decreased by 7.6% to $29.3 million. This can be explained by a less favourable sports environment than last year.

Sportscene Group nevertheless maintained a solid quarterly performance, surpassing that of the previous two quarters of the current fiscal year. The Company achieved net earnings of $1.4 million or $0.33 per share (basic and diluted), compared with net earnings of $1.6 million or $0.38 per share in the same quarter of 2010, the highest ever achieved by the Company to this date. Operating earnings or EBITDA⁽¹⁾ amounted to $3.3 million compared with $3.5 million in 2010. Thus, the consolidated EBITDA margin as a percentage of revenues remained high, standing at 15.1% compared with 15.8% the previous year.

For the 39-week period ended May 29, 2011, Sportscene recorded year-to-date net earnings of $3.5 million or $0.84 per share (basic and diluted) on revenues of $62.4 million, compared with net earnings of $4.2 million or $0.99 per share on revenues of $61.6 million for the same period of 2010. Total network sales⁽¹⁾ declined by 5.0% to $83.6 million.

Sportscene Group continued to demonstrate a solid self-financing capacity, generating operating cash flows of $7.4 million during the first nine months of the current fiscal year. These funds contributed to further strengthen the financial position of the Company, which had short-term available cash⁽¹⁾ of $11.9 million as at May 29, 2011, and a total net debt⁽¹⁾ to invested capital ratio of only 3.4%.

Recent Events and Outlook

Among the major developments and investments during the third quarter, Sportscene Group carried on the renovation and technological upgrading of existing Cages, including the major renovation of another corporate Cage. In addition, in April 2011, the Company reopened the Old Montreal Cage, which had been closed during 10 months to be relocated. Furthermore, the Company recently undertook renovation work on its sports complex and plans to open two new Cages at the beginning of fiscal 2012.

"In light of La Cage aux Sports' recent performance, we are confident as to our financial results for the fourth quarter of fiscal 2011," indicated Jean Bédard, President and Chief Executive Officer of Sportscene Group. "We will benefit from the full contribution of the two Cages recently opened in the Montreal area. Also, we are carrying on our action plan aimed at renewing La Cage aux Sports' overall offering, including the launch of our new summer menu that has been well received by La Cage aux Sports' customers so far. Finally, certain complementary activities offering good profit potential will take place before the end of the current fiscal year, including a boxing event in Romania and our participation in organizing a world volleyball tournament."

Sportscene continues to focus on its growth strategy in order to alleviate the impact, on its results, of economic conditions that remain difficult for its business segment, and to pave the way for a new long-term development phase. This three-tiered strategy is centred on: (1) updating the overall offering of La Cage aux Sports banner; (2) opening new Cages, including two at the beginning of the next fiscal year; and (3) seeking other expansion projects compatible with management's vision.

Declaration of a Dividend of $0.30 Per Share

In light of the Company's financial results and healthy balance sheet, the Board of Directors has approved the payment of a second $0.30 per share dividend for fiscal 2011, bringing the total dividend for fiscal 2011 to $0.60 per share. This new dividend will be paid on August 15, 2011 to shareholders of record as at July 22, 2011.

Profile

In business since 1984, Sportscene Group Inc. operates Quebec's leading chain of sports-themed resto-bars: La Cage aux Sports. As of July 4, 2011, this banner comprises 50 "Cages", 36 of which are wholly or jointly owned by the Company, and 14 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 a host of contests and special events for customers. In addition, the Company manages real estate holdings, including a sports complex and several buildings housing La Cage aux Sports restaurants. Lastly, Sportscene has developed expertise in certain other complementary activities, such as the construction, fitting-out and renovation of Cages, technological development related to the expansion of the La Cage aux Sports network, as well as the organization of sports-related activities including international-calibre boxing events.

(1)

The following elements are not performance measures consistent with Canadian generally accepted accounting principles. In Sportscene's statement of earnings, EBITDA corresponds to "Earnings before other items". Total network sales are the aggregate sales achieved by all La Cage aux Sports restaurants, including franchised, jointly-owned and corporate outlets. Short-term available cash includes cash and cash equivalents, restricted cash and temporary investments. The total net debt consists of the long-term debt, including its current portion, net of the short-term available cash.

(2)

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.

Consolidated statements of earnings and comprehensive income

(amounts are expressed in thousands of dollars except for per-share amounts and number of shares) (unaudited)
	13 weeks ended			39 weeks ended
	May 29,	May 30,		May 29,	May 30,
	2011	2010		2011	2010
	$	$		$	$
Revenues	21,889	22,183		62,400	61,572
Cost of sales, selling, general and administrative expenses	18,576	18,672		53,879	52,252
Earnings before other items	3,313	3,511		8,521	9,320
Interest on long-term debt	103	90		281	274
Other interest expense	32	17		105	49
Foreign exchange loss (gain)	37	(8)		84	7
Amortization of capital assets	970	1,046		2,798	2,785
Amortization of intangibles and other assets	32	72		91	231
Loss on disposal of assets	168	115		227	267
Loss on business disposals	-	-		26	-
	1,342	1,332		3,612	3,613
Earnings before income taxes and non-controlling interest	1,971	2,179		4,909	5,707
Income taxes	562	596		1,426	1,613
Earnings before non-controlling interest	1,409	1,583		3,483	4,094
Non-controlling interest	(18)	(1)		23	61
Net earnings and comprehensive income	1,391	1,582		3,506	4,155
Earnings per share:
Basic	$0.33	$0.38		$0.84	$0.99
Diluted	$0.33	$0.38		$0.84	$0.99
Weighted average number of Class A shares outstanding (in thousands):
Basic	4,168	4,173		4,168	4,178
Diluted	4,172	4,176		4,172	4,181

Consolidated statements of changes in shareholders' equity

(amounts are expressed in thousands of dollars) (unaudited)
		13 weeks ended		39 weeks ended
		May 29,	May 30,	May 29,	May 30,
		2011	2010	2011	2010
		$	$	$	$
Share capital, beginning of period		3,554	3,559	3,554	3,555
Redemption of shares		-	(9)	-	(10)
Retraction of notes receivable		-	2	-	7
Share capital, end of period		3,554	3,552	3,554	3,552
Contributed surplus, beginning of period		210	190	199	180
Stock-based compensation		6	5	17	15
Contributed surplus, end of period		216	195	216	195
Retained earnings, beginning of period		25,487	24,287	24,623	22,989
Net earnings		1,391	1,582	3,506	4,155
Less:
Excess of the purchase price over the carrying
amount of the Class A shares redeemed		-	(114)	-	(135)
Dividends on Class A shares		-	-	(1,251)	(1,254)
Retained earnings, end of period		26,878	25,755	26,878	25,755

Consolidated balance sheets

(amounts are expressed in thousands of dollars)
	As at May 29,	As at August 29,
	2011	2010
	(unaudited)	(audited)
	$	$
Assets
Current assets:
Cash and cash equivalents	10,947	7,586
Restricted cash	-	141
Temporary investments	929	2,000
Accounts receivable	4,751	3,536
Inventories	1,456	1,291
Income taxes receivable	-	28
Prepaid expenses	417	446
Current portion of notes receivable	71	75
Total current assets	18,571	15,103
Notes receivable	1,179	989
Capital assets	32,400	28,773
Intangibles and other assets	778	437
Future income taxes	1,243	1,057
Goodwill	2,893	2,332
Total assets	57,064	48,691
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued liabilities	8,747	6,651
Income taxes payable	302	-
Future income taxes	91	91
Deferred income and credits	1,616	1,298
Current portion of long-term debt	1,819	1,471
Total current liabilities	12,575	9,511
Long-term debt	11,131	8,580
Deferred income and credits	1,898	1,423
Future income taxes	515	515
Non-controlling interest	297	286
Total liabilities	26,416	20,315
Shareholders' equity
Share capital	3,554	3,554
Contributed surplus	216	199
Retained earnings	26,878	24,623
	30,648	28,376
Total liabilities and shareholders' equity	57,064	48,691

Consolidated statements of cash flows

(amounts are expressed in thousands of dollars) (unaudited)
13 weeks ended			39 weeks ended
	May 29,	May 30,	May 29,	May 30,
	2011	2010	2011	2010
	$	$	$	$
Cash flows from operating activities:
Net earnings	1,391	1,582	3,506	4,155
Non-cash items:
Loss on business disposals	-	-	26	-
Loss on disposal of assets	168	115	227	267
Amortization of deferred financing costs	1	1	2	2
Amortization of capital assets	970	1,046	2,798	2,785
Amortization of intangibles and other assets	32	72	91	231
Non-controlling interest	18	1	(23)	(61)
Stock-based compensation	6	5	17	15
Future income taxes	(2)	(46)	(214)	(40)
	2,584	2,776	6,430	7,354
Net change in non-cash operating items,
net of acquisitions and business disposals	32	(654)	951	472
	2,616	2,122	7,381	7,826
Cash flows from financing activities:
Proceeds from the issuance of
long-term debt	1,385	-	1,535	177
Repayment of long-term debt	(366)	(460)	(1,141)	(1,775)
Increase in deferred financing costs	-	(1)	-	(3)
Redemption of Class A shares	-	(123)	-	(145)
Redemption of a subsidiary's equity shares
held by non-controlling interest	-	-	(5)	-
Dividends on Class A shares	-	-	(1,251)	(1,254)
Dividends paid to non-controlling interest	-	-	-	(30)
	1,019	(584)	(862)	(3,030)

Consolidated statements of cash flows

(amounts are expressed in thousands of dollars) (unaudited)
	13 weeks ended		39 weeks ended
	May 29,	May 30,	May 29,	May 30,
	2011	2010	2011	2010
	$	$	$	$
Cash flows from investing activities:
Acquisition of businesses, net of cash and cash equivalents acquired	107	-	7	(203)
Proceeds from business disposals,
net of disposal of cash and cash equivalents	-	-	345	3
Change in restricted cash	-	(240)	-	(88)
Change in temporary investments	1,112	-	1,071	(3,000)
Change in notes receivable	314	298	(219)	157
Acquisition of capital assets	(1,613)	(180)	(4,220)	(815)
Proceeds from disposal of capital assets	6	1	14	653
Increase in intangibles and other assets	(91)	(4)	(156)	(4)
	(165)	(125)	(3,158)	(3,297)
Increase in cash and cash equivalents	3,470	1,413	3,361	1,499
Cash and cash equivalents, beginning of period	7,477	8,537	7,586	8,451
Cash and cash equivalents, end of period	10,947	9,950	10,947	9,950

 

 

 

For further information:

Source:	Sportscene Group Inc.
Contact:	Jean Bédard, Chairman of the Board, President and Chief Executive Officer
	Josée Pépin, Manager, Accounting and Disclosure
	450-641-3011