Second-Quarter Results - Sportscene Group Pursues its Repositioning and Further Improves its Performance

MONTREAL, April 14, 2016 /CNW Telbec/ - SPORTSCENE GROUP INC. ("Sportscene" or "the Company") (TSXV: SPS.A) today disclosed its financial results for the 13 and 26-week periods ended February 28, 2016. Since the beginning of the current fiscal year, and more particularly in the second quarter, the gains achieved thanks to the repositioning of the La Cage – Brasserie sportive banner ("La Cage") have helped offset the impact of a difficult business context as, in addition to the challenges imposed on the entire restaurant industry by the sluggish economy and sharply rising food prices, the La Cage network also has to contend with a less favourable sporting environment than last year.

For the 13-week period ended February 28, 2016, despite the fact that the network comprised two fewer units than in the same period a year earlier, La Cage's total network sales(1) remained stable compared with the second quarter of 2015, standing at $25.6 million, thanks to a slight increase in average same-Cage sales(2). Sportscene's management attributes the organic sales growth to the banner's major repositioning over the past quarters. Hence, not only does the Company continue to witness consumers' favourable response to La Cage's updated food offering, but its analysis of the trends in the various units' sales clearly indicates that the restaurants showcasing the new interior design are posting stronger growth than the network average. 

During the 13-week period, Sportscene's revenues grew by 10.8% to $21.8 million, whereas consolidated adjusted EBITDA(3) increased by 71.5% to $1.0 million, despite the amounts invested in the restaurants operating under another banner. Sportscene posted a net loss of $0.1 million or $0.01 per share (basic and diluted), compared with a net loss of $0.4 million or $0.09 per share (basic and diluted) for the same quarter of the previous year.

For the first six months of fiscal 2016, being the 26-week period ended February 28, 2016, La Cage's total network sales(1) grew by 1.4% to total $52.8 million, although the network comprised fewer Cages in operation than in the preceding year and dealt with a less favourable business context. Sportscene's consolidated revenues increased by 14.7% to $42.5 million. The Company recorded consolidated adjusted EBITDA(3) of $2.4 million, up 35.4% over the preceding year, despite. Consequently, Sportscene closed the first half of fiscal 2016 with net income of $0.1 million or $0.04 per share (basic and diluted), as opposed to a net loss of $0.4 million or $0.08 per share (basic and diluted) for the same period of the previous year. The Cage network's organic sales growth largely explains the improvement in results.

Outlook and Objectives

Sportscene is satisfied with the gradual improvement in its financial results, although these remain well below the true potential it expects to achieve in the near future thanks to the repositioning of the La Cage – Brasserie sportive banner, the success of which has met management's expectations so far.

As management has informed shareholders since the initial launch of the Company's repositioning strategy, Sportscene will reap the benefits thereof especially as of fiscal 2017, as it will furthermore enjoy the contribution of two new large-scale Cages to be inaugurated toward the end of the current fiscal year or the beginning of the next. The second half of fiscal 2016 will be dedicated to reinforcing the various elements of the strategic repositioning and pursuing the network's upgrade program, the gradual benefits of which should partly offset the effects of a less favourable sporting context than in 2015. In addition, now that the new menu has been successfully tested for a year, management will be able to fine-tune each feature to ensure that it brings a distinctive added value to La Cage customers and to Sportscene.

Profile

Sportscene Group is pioneer and a leader in the ambience restaurant niche in Quebec, where it has operated a chain of sports-themed resto-bars since 1984. Originally known as La Cage aux Sports, the chain's name was changed to La Cage – Brasserie sportive ("La Cage") in September 2015, to reflect its new Food, Beer, Sports positioning. Enjoying a strong brand image, the province-wide La Cage banner comprised 49 units at the date hereof. The Cages offer complete foodservices and bar services in a sophisticated sports-inspired décor featuring the most advanced audiovisual technologies.

 


The following items are not performance measures consistent with IFRS: 



(1)

Total network sales correspondent to sales achieved by all La Cage restaurants: franchisees, partnerships and corporate units.



(2)

Average same-Cage sales isolate the impact of restaurant openings and closures to assess the actual trend in restaurant sales.



(3)

In Sportscene's statement of comprehensive income, adjusted EBITDA corresponds to "Earnings before financial expenses, amortization, share of net earnings of joint ventures and associates and income taxes", from which other (gains) and losses are excluded.

 

Reconciliation of Non-IFRS Financial Measures

 

(in million of $)

13 Weeks Ended

26 Weeks Ended


February 28, 2016

March 1st, 2015

February 28, 2016

March 1st, 2015






Restaurant revenues,  excluding revenues from franchises and sales in grocery stores

15.5

13.1

31.1

26.5

Food concession revenues

(0.7)

-

(0.9)

-

Restaurants out of banner

(1.4)

-

(2.6)

-

Revenues from franchises and partnerships

12.2

12.6

25.2

25.5

Total network sales

25.6

25.7

52.8

52.0






Earning before financial expenses, amortization, share of net earnings of joint ventures and associates, and income taxes

1.0

0.8

2.5

2.0

Other (gain) losses

-

(0.2)

(0.1)

(0.2)

Adjusted EBITDA

1.0

0.6

2.4

1.8

 

For further information regarding the results and financial position of Sportscene Group Inc., refer to the management's report as well as the unaudited consolidated financial statements and accompanying notes for the 13 and 26-week periods ended February 28, 2016, 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 (Loss) Income

(in thousands of Canadian dollars, except for earnings per share and number of outstanding shares)

(unaudited)


13 weeks ended

26 weeks ended


February 28, 2016

 March 1, 2015

February 28, 2016

  March 1, 2015


$

$

$

$

Revenues (Note 5)

21,803

19,680

42,480

37,022

Cost of sales

6,533

7,301

13,493

12,934

Selling and administrative expenses,
excluding amortization (Note 6)

14,267

11,794

26,588

22,316

Other losses (gains) (Note 8)

3

(234)

(68)

(224)

Earnings before financial expenses, amortization, share of net (income) loss of joint ventures and associates and income tax

1,000

819

2,467

1,996






Amortization (Note 6)

1,126

985

2,231

1,966

Financial expenses (Note 7)

176

134

357

297

Share of net (income) loss of joint ventures
and associates (Note 10)

(119)

165

(166)

184

(Loss) income before income tax expenses

(183)

(465)

45

(451)






Income tax recovery

(97)

(71)

(49)

(62)

Net (loss) income and comprehensive (loss) income

(86)

(394)

94

(389)






Net (loss) income and comprehensive (loss) income attributable to:





The Company's shareholders

(53)

(361)

175

(336)

Non-controlling interests

(33)

(33)

(81)

(53)

Net (loss) income and comprehensive (loss) income

(86)

(394)

94

(389)






(Loss) earning per share (in $) (Note 9):






Basic

(0.01)

(0.09)

0.04

(0.08)


Diluted

(0.01)

(0.09)

0.04

(0.08)






Weighted average number of outstanding






Class A shares (in thousands) (Note 9):






Basic

4,165

4,165

4,165

4,165


Diluted

4,165

4,165

4,165

4,165

 

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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