Sportscene Group's Results for the Fiscal Year Ended August 28, 2011

The Company pursues the expansion of La Cage aux Sports network

MONTREAL, Nov. 17, 2011 /CNW Telbec/ - During the fiscal year ended August 28, 2011, SPORTSCENE GROUP INC. ("Sportscene", "Sportscene Group" or "the Company") (TSXV: SPS.A), which operates the La Cage aux Sports restaurant chain, continued to face a challenging competitive context and less favourable sports environment than in 2010, particularly on the hockey scene. Financially, however, these factors were largely offset by the execution of an $8.0 million investment program aimed at various expansion projects including: the opening of a corporate Cage that became the 50th outlet of La Cage aux Sports' network, the relocation and reopening of a joint venture Cage after a ten-month business interruption, the renovation of a number of Cages and the acquisition of a franchised Cage.

These initiatives contributed to raise Sportscene Group's revenues by 4.1% to $79.8 million over the last fiscal year, despite a 2.2% decline in total network sales(1), which amounted to $107.9 million. The Company recorded EBITDA(1) of $10.4 million, compared with $10.7 million the previous year, due primarily to a different revenue mix, lower average same-Cage sales and competitive pressures exerted on selling prices in the restaurant industry. Consequently, Sportscene closed fiscal 2011 with net earnings of $3.9 million or $0.93 per share, compared with $4.2 million or $1.01 per share in 2010.

The Company generated operating cash flows of over $7.5 million. In addition to financing part of the year's investment program and providing for the payment of dividends totalling $2.5 million or $0.60 per share, these funds contributed to maintain the Company's sound balance sheet, as notably highlighted by short-term available cash(1) of $9.5 million and a total net debt(1) to invested capital ratio of 11.3% as at August 28, 2011.

Results for the Fourth Quarter of Fiscal 2011
For the 13-week period ended August 28, 2011, Sportscene's results improved significantly over the same period of 2010, driven by the network expansion projects achieved in previous quarters and the introduction of various measures aimed at enhancing La Cage aux Sports' overall offering - in particular its menu and bar selection - in order to better meet consumers' evolving expectations and provide customers with increased added value. These initiatives were favourably received by customers. Consequently, La Cage aux Sports' total network sales (1) grew by 8.5% to $24.3 million. Sportscene's revenues amounted to $17.4 million, up by 15.2% over the same period of 2010. Quarterly consolidated EBITDA (1) posted a 33.0% increase to reach $1.8 million. Sportscene closed the quarter with net earnings of $372,000 or $0.09 per share (basic and diluted), compared with $63,000 or $0.02 per share (basic and diluted) for the same period of the previous year.

2012 Outlook and Objectives
In fiscal 2012, the Company will pursue the action plan implemented over the past year, the key objectives of which are the following:

(1)  Grow through expansion by building new Cages and developing complementary activities. Sportscene's capital expenditure budget for fiscal 2012 is in the same range as last year's program, and is earmarked primarily for the construction and renovation of Cages. Two new Cages were inaugurated in the first quarter of 2012, and another corporate Cage, the network's 53rd outlet, is expected to open before the end of fiscal 2012. Furthermore, Sportscene continues to fine-tune various alternative concepts for La Cage aux Sports' banner and to develop complementary activities, notably through InterBox and its sports complex.
(2)  Enhance La Cage aux Sports' overall offering to foster growth in same-Cage sales and maintain sound profit margins. In particular, La Cage aux Sports' menu and bar offering will continue to evolve in 2011-2012. The Company will also continue to leverage La Cage's "Sports, Gang, Fun" ambience by investing in new technologies, implementing original marketing approaches and fully capitalizing on sporting events.
(3)  Continue to focus on overall operating efficiency and profitability by implementing rigorous and constantly optimized management and control practices.

In light of the foregoing, management expects the Company to achieve growth in total network sales and to maintain its profitability and capacity to generate significant cash flows over the next year. "Sportscene Group's financial performance over the past few years attests to its ability to adapt to new spending trends and to evolve in a challenging business context in a disciplined, proactive and profitable manner. We are determined to meet the challenges and opportunities that will arise in the coming quarters with the same openness and creativity, in order to maximize benefits for our organization and shareholders," Jean Bédard added.

Profile
In business since 1984, Sportscene Group Inc. operates Quebec's leading chain of sports-themed resto-bars: La Cage aux Sports. As of November 17, 2011, this banner comprises 52 "Cages", 38 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 items 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) 
  13 weeks ended   52 weeks ended
 
 
August 28,
2011

August 29,
2010

August 28,
2011

August 29,
2010
  (unaudited)   (unaudited)   (audited)   (audited)
  $   $   $   $
               
Revenues 17,351   15,056   79,751   76,628
Cost of sales, selling, general and administrative expenses 15,504   13,667   69,383   65,918
Earnings before other items 1,847   1,389   10,368   10,710
               
Interest on long-term debt 122   92   403   366
Other interest 35   37   140   87
(Gain) foreign exchange loss (5)   10   79   17
Amortization of capital assets 1,002   873   3,800   3,658
Amortization of intangibles and other assets 32   48   123   279
Loss on disposal of assets 27   147   254   414
Impairment of goodwill 42   -   42   -
Loss on business disposals -   -   26   -
  1,255   1,207   4,867   4,821
Earnings before income taxes and non-controlling interest 592   182   5,501   5,889
Income taxes 224   167   1,650   1,780
Earnings before non-controlling interest 368   15   3,851   4,109
Non-controlling interest (4)   (48)   (27)   (110)
Net earnings and comprehensive income 372   63   3,878   4,219
               
Earnings per share:              
  Basic $0.09   $0.02   $0.93   $1.01
  Diluted $0.09   $0.02   $0.93   $1.01
               
Weighted average number of Class A shares outstanding (in thousands):  
 
 
 
  Basic 4,168   4,176   4,168   4,176
  Diluted 4,171   4,179   4,171   4,179
               
               
Consolidated statements of changes in shareholders' equity              
               
(amounts are expressed in thousands of dollars)              
  13 week ended   52 weeks ended
 
 
August 28,
2011
  August 29,
2010
  August 28,
2011
  August 29,
2010
  (unaudited)   (unaudited)   (audited)   (audited)
  $   $   $   $
Share capital, beginning of year 3,554   3,552   3,554   3,555
Redemption of shares (3)   -   (3)   (10)
Retraction of notes receivable -   2   -   9
Share capital, end of year 3,551   3,554   3,551   3,554
               
Contributed surplus, beginning of year 216   195   199   180
Stock-based compensation 6   5   23   20
  222   200   222   200
Less:              
  Excess of the purchase price over the carrying amount of the Class A shares redeemed -
1
-
1
Contributed surplus, end of year 222   199   222   199
               
Retained earnings, beginning of year 26,878   25,807   24,623   23,039
Net earnings 372   63   3,878   4,219
Refundable taxes recovered -   4   -   4
  27,250   25,874   28,501   27,262
Less:              
  Excess of the purchase price over the carrying amount of the Class A shares redeemed 31   -   31   134
  Dividends on Class A shares 1,250   1,251   2,501   2,505
Retained earnings, end of year 25,969   24,623   25,969   24,623
               
               
Consolidated balance sheets              
               
(amounts are expressed in thousands of dollars)              
(audited)              
  As at
August 28,
2011
  As at
August 29,
2010
       
  $   $        
               
Assets              
               
Current assets:              
  Cash and cash equivalents 8,547   7,586        
  Restricted cash -   141        
  Temporary investments  906   2,000        
  Accounts receivable 4,113   3,536        
  Inventories  1,998   1,291        
  Income taxes receivable -   28        
  Prepaid expenses 313   446        
  Current portion of notes receivable 37   75        
Total current assets  15,914   15,103        
               
Notes receivable 995   989        
Capital assets 33,052   28,773        
Intangibles and other assets  786   437        
Future income taxes  1,251   1,057        
Goodwill  2,851   2,332        
Total assets 54,849   48,691        
               
Liabilities and shareholders' equity              
               
Current liabilities:              
  Accounts payable and accrued liabilities 7,704   6,651        
  Income taxes payable 32   -        
  Future income taxes 107   91        
  Deferred income and credits 1,454   1,298        
  Current portion of long-term debt 1,953   1,471        
Total current liabilities 11,250   9,511        
               
Long-term debt  11,298   8,580        
Deferred income and credits 1,815   1,423        
Future income taxes 451   515        
Non-controlling interest 293   286        
Total liabilities 25,107   20,315        
               
Shareholders' equity              
               
Share capital  3,551   3,554        
Contributed surplus 222   199        
Retained earnings 25,969   24,623        
  29,742   28,376        
Total liabilities and shareholders' equity 54,849   48,691        
               
               
Consolidated statements of cash flows              
               
(amounts are expressed in thousands of dollars)               
  13 week ended   52 weeks ended
 
 
August 28,
2011

August 29,
2010

August 28,
2011

August 29,
2010
  (unaudited)   (unaudited)   (audited)   (audited)
  $   $   $   $
               
Cash flows from operating activities:              
               
  Net earnings 372   63   3,878   4,219
  Non-cash items:              
    Loss on business disposals -   -   26   -
    Loss on disposal of assets 27   147   254   414
    Impairment of goodwill 42   -   42   -
    Amortization of deferred financing costs 5   1   7   3
    Amortization of capital assets 1,002   873   3,800   3,658
    Amortization of intangibles and other assets 32   48   123   279
    Non-controlling interest (4)   (48)   (27)   (110)
    Stock-based compensation 6   5   23   20
    Future income taxes (55)   (124)   (269)   (164)
  1,427   965   7,857   8,319
  Change in non-cash operating items, net of acquisitions and business disposals (1,280)
(645)
(329)
(173)
  147   320   7,528   8,146
               
Cash flows from financing activities:              
               
  Proceeds from the issuance of long-term debt  810   -   2,345   177
  Repayment of long-term debt (436)   (1,504)   (1,577)   (3,279)
  Increase in deferred financing costs (43)   (1)   (43)   (3)
  Dividends on Class A shares (1,250)   (1,251)   (2,501)   (2,505)
  Dividends paid to non-controlling interest -   -   -   -29
  Redemption of Class A shares (34)   -   (34)   (145)
  Redemption of a subsidiary's equity shares held by non-controlling interest -
-
(5)
-
  Refundable taxes recovered -   4   -   4
  (953)   (2,752)   (1,815)   (5,780)
               
Cash flows from investing activities:              
               
  Acquisitions of businesses, net of cash and cash equivalents acquired  (822)   (6)   (815)   (209)
  Proceeds from business disposals, net of disposal of cash and cash equivalents -
-
345
3
  Change in restricted cash -   115   -   27
  Disposal (acquisition) of temporary investments 23   1,000   1,094   (2,000)
  Change in notes receivable 210   (212)   (9)   (56)
  Acquisitions of capital assets (960)   (850)   (5,180)   (1,666)
  Proceeds from disposals of capital assets 1   20   15   673
  Increase in intangibles and other assets (46)   -   (202)   (3)
  (1,594)   67   (4,752)   (3,231)
               
(Decrease) increase in cash and cash equivalents (2,400)   (2,365)   961   (865)
Cash and cash equivalents, beginning of period 10,947   9,951   7,586   8,451
Cash and cash equivalents, end of period 8,547   7,586   8,547   7,586

 

SOURCE SPORTSCENE GROUP INC.

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

Profil de l'entreprise

SPORTSCENE GROUP INC.

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