Improved Results for Sportscene Group and La Cage aux Sports During Third Quarter

MONTREAL, July 18, 2013 /CNW Telbec/ - SPORTSCENE GROUP INC. ("Sportscene" or "the Company" SPS.A / TSX Venture Exchange) announces improved results for the third quarter of its 2013 fiscal year, which notably gave rise to a significant growth in La Cage aux Sports' total network sales and an increase in the Company's net earnings. The good third-quarter financial performance has thereby largely offset the decline sustained in the first half of the year due to the National Hockey League lockout.

Results for the 13 and 39-Week Periods Ended May 26, 2013

During the third quarter or 13-week period ended May 26, 2013, La Cage aux Sports' total network sales(1) reached $30.4 million, their highest quarterly level since 2010. Network sales posted an 8.5% increase over the same period in 2012, mainly as a result of the growth in average same-Cage sales attributable, in particular, to the return of hockey as of January 19, 2013. Year-to-date total network sales for the first nine months ended May 26, 2013 were slightly lower than during the same period of the previous year, amounting to $82.5 million.

Sportscene's third-quarter consolidated revenues increased by 4.4% to stand at $23.4 million. Revenues from the Company's core business, restaurant operations, grew by 17.2%, thanks mostly to the good performance of the La Cage aux Sports network, coupled with the 50% interest Sportscene acquired in the three non-banner restaurants at the beginning of the current fiscal year. For the nine-month period, Sportscene's revenues rose by 3.8% to total $67.7 million.

Consolidated earnings before interest, amortization, other items and income taxes, or EBITDA(1), increased by 11.7% to $3.0 million in the third quarter. For the first nine months of the current fiscal year, consolidated EBITDA amounted to $7.2 million, which is comparable to last year's.

Finally, Sportscene closed the third quarter with net earnings attributable to shareholders of $1.2 million or $0.28 per share (basic and diluted), up 7.6% over year-ago net earnings of $1.1 million or $0.26 per share (basic and diluted). Net earnings for the first nine months totalled $2.2 million or $0.54 per share (basic and diluted), compared with $2.7 million or $0.65 per share (basic and diluted) in the same period of 2012. This decline is largely attributable to the increase in amortization and financial expenses resulting from business acquisitions and purchases of property, plant and equipment effected in 2012 and 2013.

In terms of financial position, the Company remained in good health, posting available cash(1) of $10.3 million as at May 26, 2013, and a reasonable total net debt(1) ratio of 22.0%.

Management's Comments

"Considering that the last quarter is traditionally the year's slowest in terms of results, due to the seasonal cycle of Sportscene's business, our results for the first nine months provide a reliable, although partial, indicator of the Company's overall performance for fiscal 2013. Thus, Sportscene will have managed to increase its restaurant revenues and maintain an acceptable level of profitability despite a still challenging economic context for the Quebec restaurant industry, and the NHL lockout. Furthermore, Sportscene remains well positioned financially to drive its organic development and take advantage of expansion opportunities meeting its strategic objectives," indicated Jean Bédard, President and Chief Executive Officer of the Company.

Profile

In business since 1984, Sportscene Group Inc. operates Quebec's leading chain of sports-themed resto-bars: La Cage aux Sports. As of today, this banner comprises 52 "Cages", 41 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 hosting and organization of multiple contests and special events for its clientele. Sportscene also holds a 50% interest in three non-banner restaurants offering upscale foodservices in the Montreal area. In addition to its restaurant operations, the Company manages real estate holdings, including a sports complex and several buildings housing its restaurants. Furthermore, 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 items are not performance measures consistent with IFRS. In Sportscene's consolidated financial statements, EBITDA corresponds to "Earnings before interest, amortization and income tax". Total network sales are the aggregate sales achieved by all La Cage aux Sports restaurants, including franchised, jointly-owned and corporate units. Available cash consists of cash and cash equivalents as well as investments, if any. The total net indebtedness 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.

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 26, May 27, May 26, May 27,
  2013  2012  2013  2012
  $  $  $  $
Revenues   23,373 22,378  67,678  65,228
Cost of sales  6,922  6,775  21,170  19,129
Gross margin  16,451  15,603  46,508  46,099
Selling and administrative expenses, excluding amortization   13,407  12,879  39,270  38,741
Earnings before interest, amortization and income tax   3,044  2,724  7,238  7,358
Amortization   1,162 1,055  3,574  3,076
Operating earnings  1,882  1,669  3,664  4,282
Interests on long-term debt  175  148  544  419
Other interest expenses  46  39  145  99
Other losses (gains)  39 41  (117)  131
  260 228  572  649
Earnings before income tax  1,622  1,441  3,092  3,633
Income tax  441  364  843  941
Net earnings and comprehensive income  1,181  1,077  2,249  2,692
         
Net earnings and comprehensive income attributable to:        
         
The Company's shareholders  1,168 1,086  2,247  2,712
Non-controlling interests  13  (9)  2  (20)
Net earnings and comprehensive income  1,181 1,077  2,249  2,692
         
Earnings per share (in $):        
  Basic  0.28 0.26 0.54 0.65
  Diluted  0.28 0.26 0.54 0.65
Weighted average number of outstanding        
Class A shares (in thousands):        
  Basic  4,165 4,165 4,165 4,165
  Diluted  4,165 4,165 4,165 4,165

Interim Condensed Consolidated Statements of Financial Position
(in thousands of Canadian dollars)

     
  As at May 26, As at August 26,
  2013 2012
  (unaudited) (audited)
  $ $
Assets    
Current assets    
  Cash and cash equivalents   10,310 10,729
  Accounts receivable  5,713 3,743
  Income tax receivable  62 89
  Inventories   1,919 1,697
  Prepaid expenses   707 459
  Current portion of notes receivable   83 284
Total current assets  18,794 17,001
Notes receivable  1,381 1,481
Property, plant and equipment   40,002 36,302
Intangible assets   836 828
Deferred tax asset   2,513 2,214
Goodwill   3,870 3,101
Total assets  67,396 60,927
     
Liabilities and shareholders' equity    
Current liabilities    
  Accounts payable and accrued liabilities   9,644 8,941
  Deferred revenues and credits  1,861 871
  Current portion of long-term debt  3,075 2,648
Total current liabilities  14,580 12,460
Long-term debt   16,675 14,554
Deferred revenues and credits  1,546 1,617
Deferred tax liability  1,088 1,088
Total liabilities  33,889 29,719
     
Shareholders' equity    
  Share capital   3,551 3,551
  Stock-based compensation reserve  286 260
  Retained earnings  29,335 27,088
Shareholders' equity attributable to the Company's shareholders  33,172 30,899
Non-controlling interests  335 309
Total shareholders' equity  33,507 31,208
Total liabilities and shareholders' equity  67,396 60,927

Interim Condensed Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)

(unaudited)
  13 weeks ended  39 weeks ended
  May 26,  May 27,  May 26,  May 27,
  2013  2012  2013  2012
  $  $  $  $
Operating activities        
  Net earnings  1,181 1,077 2,249 2,692
  Adjustments to reconcile net earnings to cash flows from operating activities        
    Loss on disposal of property, plant and equipment  15 27 64 142
    (Gain) loss on business combination achieved in stages   (73) 22 (266) 19
    Loss of impairment of long lived assets  100 100 -
    Amortization of property, plant and equipment   1,146 1,033 3,521 3,009
    Amortization of intangible assets   16 22 53 67
    Stock-based compensation  8 11 26 27
    Financial expenses recognized in net earnings  221 187 689 518
    Interest paid  (217) (181) (678) (514)
    Interest included in the cost of property, plant and equipment  -  -  -  16
    Income tax expenses recognized in net earnings  441 364 843 941
    Income tax paid  (234) (266) (1,027) (1,381)
    2,604 2,296 5,574 5,536
  Net change in non-cash working capital items, net of acquisitions and disposals of subsidiaries and joint ventures   363 (1,012)  (943)  666
  2,967 1,284  4,631  6,202
Financing activities        
  Increase of long-term debt   119 1,338  3,229  3,759
  Repayment of long-term debt  (948)  (531)  (2,756)  (1,537)
  Dividends paid to non-controlling interests  -  -  (35)
  Dividends on Class A shares  -  -  -  (1,250)
    (829) 807  473  937
Investing activities        
  Acquisitions of subsidiaries and joint ventures, net of cash and cash equivalents acquired   (295) (607) (816) (794)
  Change in notes receivable  209 (287) (249) (657)
  Acquisitions of property, plant and equipment   (507) (1,464)  (4,406) (5,561)
  Proceeds from disposals of property, plant and equipment  - 23 9 37
  Acquisitions of intangible assets  (35) (4) (61) (227)
  (628) (2,339) (5,523) (7,202)
Increase (decrease) in cash and cash equivalents  1,510 (248) (419) (63)
Cash and cash equivalents, beginning of period  8,800 9,638 10,729 9,453
Cash and cash equivalents, end of period  10,310 9,390 10,310 9,390

 

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


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