Sportscene Continues to Drive the Expansion and Growth of La Cage aux Sports Network: Second-Quarter Sales Increase by Close to 13%



    
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    - Year-to-date network sales for the first six months of the year total
      $58.9 million, up 11.9% over the same period in 2006.

    - Sportscene achieves second-quarter net earnings of $1.2 million or
      $0.29 per share (basic and diluted).

    - Net earnings for the first half total $2.6 million or $0.62 per share
      ($0.61 diluted).
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    MONTREAL, April 13 /CNW Telbec/ - For SPORTSCENE GROUP INC. ("Sportscene"
or "the Company"; SPS.A/TSX Venture Exchange), operator of the LA CAGE AUX
SPORTS chain of resto-bars, the second quarter of fiscal 2007 yielded a
significant growth in total network sales, driven by further efforts to
promote and differentiate La Cage aux Sports' brand image and by the pursuit
of various expansion projects. For the 13 weeks ended February 25, 2007, La
Cage aux Sports' total network sales increased by 12.9% over the same quarter
a year earlier, to reach $29.6 million. Year-to-date sales for the first six
months of fiscal 2007 totalled $58.9 million, up 11.9% over the first half of
fiscal 2006. Sportscene Group's second-quarter net earnings grew slightly over
the previous year to stand at $1.2 million or $0.29 per share (basic and
diluted), which brings year-to-date net earnings for the first six months of
fiscal 2007 to $2.6 million or $0.62 per share ($0.61 diluted), up 4.2% over
$2.5 million or $0.60 per share (basic and diluted) for the first half of
fiscal 2006.
    Although largely attributable to the addition of three Cages since May
2006 and the period's other investments, the increase in total network sales
during the second quarter and since the beginning of fiscal 2007 also stemmed
from organic growth in average same-Cage sales. "This performance is
especially satisfactory given the fact that the prior year's sales had
benefited from the Winter Olympic Games. Moreover, our network continued to
post organic growth despite the implementation of the new legislation
prohibiting smoking in public places. In fact, according to the latest
statistics published by the Canadian Restaurant and Food Association for the
months of September, October, November and December 2006, it appears that the
organic performance of the La Cage aux Sports network during this period has
significantly exceeded the average performance of Quebec foodservices
companies operating in the same category," pointed out Jean Bédard, President
and Chief Executive Officer.

    Dynamic Marketing and Expansion Projects
    ----------------------------------------

    In order to partially mitigate the impact of the new non-smoking
legislation, Sportscene decided to extend its television advertising campaign
by a few weeks and to intensify its promotional strategies on both the
national and regional front. This strategy entailed significant additional
costs that slowed the Company's net earnings growth, but it yielded the
targeted results in terms of network performance, brand visibility and
increased market share. To promote the restaurants' goodwill and support their
organic sales growth, Sportscene also enhanced its brand differentiation
strategy by holding various special events in the second quarter, including
another boxing gala and the MexiCage(R) festival, while its Sportsmen in
Travel(R) entity organized a beach volleyball excursion in Cuba for 180 La
Cage aux Sports customers, accompanied by high-calibre athletes. Sportsmen in
Travel(R) also undertook to arrange group excursions to the NASCAR circuit in
order to further diversify its operations.
    Concurrently, the Company is pursuing its efforts and investments to
expand and constantly improve its restaurant chain, maintain its technological
advance and optimize its productivity and profitability. Today, most of the 46
Cages across Quebec have been fitted out with high-definition plasma screens,
and Sportscene has initiated another investment phase aimed primarily at
enhancing the outlets' interior layout to increase their productivity.
Expansion work is now under way at a Sherbrooke-based Cage operated as a joint
venture, which will substantially increase its floor space by the end of the
third quarter. In addition, the Company has signed an agreement for a site in
Rouyn-Noranda where its 47th Cage, a corporate outlet, will be built in the
fourth quarter of the current fiscal year. The opening of its 48th Cage is
scheduled for the first quarter of fiscal 2008. Finally, it should also be
mentioned that the four latest outlets in the La Cage aux Sports network,
opened over the past year, are progressing as planned and will reach their
optimal performance shortly.
    Jean Bédard said he is confident about the Company's financial
performance for fiscal 2007. "Although the Montreal Canadiens will not
participate in the hockey playoffs as was the case in the third quarter of
2006, we believe that our sales and profitability will continue to benefit,
between now and the end of fiscal 2007, from the growing contribution of the
new Cages, the positive impact of our various investments, the pursuit of a
dynamic differentiation strategy, and our sustained efforts to promote
operational excellence and the reinforcement of best management practices
throughout our organization," concluded the President.
    It should be noted that in February 2007, Sportscene Groupe was honoured
among "Canada's 50 Best Managed Companies" at a ceremony held in Toronto as
connection with this prestigious business award.

    Profile
    -------

    In business since 1984, Sportscene Group Inc. operates Quebec's leading
chain of sports-themed resto-bars: La Cage aux Sports. This chain comprises 46
"Cages", 31 of which are wholly or jointly owned by the Company, and 15 are
franchises. Enjoying a strong brand image, La Cage aux Sports serves some
seven million guests each year.
    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 including the broadcasting of sporting
events on giant screens, and the scheduling of a host of contests and special
events for customers. In support of its network expansion strategy and dynamic
promotion of the La Cage aux Sports trademark, Sportscene has developed
special skill in the construction, fitting-out and renovation of sites. The
Company is also involved in certain other complementary, sports-related
activities, such as the organization and closed-circuit broadcasting of
international-calibre boxing events, and the organization of group trips to
sports destinations.
    Employing a total of over 2,000 people throughout the network and at head
office, Sportscene has built La Cage aux Sports' business and financial
success on a three-tiered strategy: a foodservice quality comparable to the
best chains in its category, first-class marketing focused on dynamic
promotion of its trademark, and operational management practices that rank
among the most efficient in the industry.

    TSX Venture Exchange does not accept responsibility for the adequacy or
    accuracy of this release. This news release contains forward-looking
    statements that reflect the current outlook of the Company regarding the
    future. Such statements are subject to certain risks, uncertainties and
    assumptions. Actual results and events may vary significantly.

    
    Consolidated Statements of Earnings
    (amounts are expressed in thousands of dollars, except earnings per
    share) (unaudited)


                                  13 weeks ended:             26 weeks ended:
    -------------------------------------------------------------------------
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                       February 25,  February 26,  February 25,  February 26,
                              2007          2006          2007          2006
    -------------------------------------------------------------------------
                                 $             $             $             $
    Revenues                17,679        15,162        38,539        31,536
    Cost of products sold,
     selling, general and
     administrative
     expenses               15,127        12,724        33,123        26,565
    -------------------------------------------------------------------------
    Earnings before
     interest,
     amortization,
     other items and
     income taxes            2,552         2,438         5,416         4,971
    Interest on long-term
     debt                      101            84           214           166
    Other interest              37            19            71            35
    Amortization of
     capital assets            684           697         1,431         1,319
    Amortization of other
     assets                    130            36           232            67
    Gain on business
     disposals                   -             -           (78)         (100)
    -------------------------------------------------------------------------
    Earnings before
     income taxes            1,600         1,602         3,546         3,484
    Income taxes               384           395           975           987
    -------------------------------------------------------------------------
    Net earnings before
     non-controlling
     interest                1,216         1,207         2,571         2,497
    Non-controlling
     interest                   (5)            7            12            40
    -------------------------------------------------------------------------
    Net earnings for the
     period                  1,221         1,200         2,559         2,457
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per shares:
    - Basic                   0.29          0,29          0.62          0.60
    - Diluted                 0.29          0.29          0.61          0.60
    Weighted average
     number of Class A
     shares outstanding:
    - Basic                  4,149         4,076         4,149         4,076
    - Diluted                4,177         4,110         4,177         4,110
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    System-wide sales       29,553        26,175        58,931        52,675
    -------------------------------------------------------------------------
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    Consolidated Statements of Retained Earnings
    (amounts are expressed in thousands of dollars (unaudited)

                                  13 weeks ended:             26 weeks ended:
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                       February 25,  February 26,  February 25,  February 26,
                              2007          2006          2007          2006
    -------------------------------------------------------------------------
                                 $             $             $             $
    Retained earnings,
     beginning of the
     period                 17,899        15,023        16,561        13,766
    Net earnings for the
     period                  1,221         1,200         2,559         2,457
    -------------------------------------------------------------------------
    Less:
      Dividends on Class A
       shares                1,251           827         1,251           827
    -------------------------------------------------------------------------
    Retained earnings, end
     of period              17,869        15,396        17,869        15,396
    -------------------------------------------------------------------------
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    Consolidated Balance Sheets
    (amounts are expressed in thousands of dollars) (unaudited)

                                                         As at         As at
                                                   February 25,    August 27,
                                                          2007          2006
    -------------------------------------------------------------------------
                                                             $             $
    Assets
    Current assets:
      Cash and cash equivalents                          3,321         4,205
      Temporary investments                                 40         1,552
      Accounts receivable                                5,631         4,225
      Inventories                                        1,224         1,952
      Prepaid expenses receivable                        1,023           641
      Current portion of notes receivable                   58            83
    -------------------------------------------------------------------------
      Total current assets                              11,297        12,658

    Notes receivable                                       202           269
    Capital assets                                      22,346        21,297
    Other assets                                           211           266
    Future income taxes                                    587           587
    Goodwill                                             1,976         1,988
    -------------------------------------------------------------------------
    Total assets                                        36,619        37,065
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable and accrued liabilities           6,355         7,111
      Income taxes payable                                 348           669
      Future income taxes                                   95            95
      Deferred income and credits                          696         1,804
      Current portion of long-term debt                  1,415         1,460
    -------------------------------------------------------------------------
      Total current liabilities                          8,909        11,139

    Long-term debt                                       5,076         4,656
    Deferred income and credits                            957         1,101
    Future income taxes                                     90           113
    Non-controlling interest                               348           380

    Shareholders' equity:
      Share capital                                      3,251         2,995
      Contributed surplus                                  119           120
      Retained earnings                                 17,869        16,561
    -------------------------------------------------------------------------
    Total shareholders' equity                          21,239        19,676
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity          36,619        37,065
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Cash Flows
    (amounts are expressed in thousands of dollars) (unaudited)

                                  13 weeks ended:             26 weeks ended:
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                       February 25,  February 26,  February 25,  February 26,
                              2007          2006          2007          2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                 $             $             $             $
    Cash flows from
     operating activities:

      Net earnings           1,221         1,200         2,559         2,457
      Adjustments for:
        Gain on business
         disposals               -             -           (78)         (100)
        Amortization of
         capital assets        684           697         1,431         1,319
        Amortization of
         other assets          130            36           232            67
        Minority interest       (5)            7            12            40
        Compensation expense
         related to stock
         options                24            13            48            27
        Deferred taxes          10           (34)          (12)          (26)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                             2,064         1,919         4,192         3,784

      Net change in non-cash
       balances related to
       operations, net of
       acquisitions and
       business disposals   (1,244)         (836)       (3,518)         (990)
    -------------------------------------------------------------------------
                               820         1,083           674         2,794
    -------------------------------------------------------------------------

    Cash flows from
     financing activities:

      Proceeds from the
       issue of long-term
       debt                      -             -           983             -
      Repayment of
       long-term debt         (311)         (471)         (577)         (594)
      Issue of common
       shares                  200           400           200           400
      Dividends on Class A
       shares               (1,251)         (827)       (1,251)         (827)
      Dividends paid to
       non-controlling
       interest                (15)            -           (26)           (8)
    -------------------------------------------------------------------------
                            (1,377)         (898)         (671)       (1,029)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash flows from
     investing activities:

      Disposal
       (acquisition)
       of temporary
       investments             (40)          721         1,512          (279)
      Additions to capital
       assets                 (409)       (2,121)       (2,451)       (3,214)
      Increase in other
       assets                   (6)          (29)         (177)          (33)
      Proceeds from
       business disposals,
       net of cash disposed     30           218           105           234
      Proceeds from
       disposal of capital
       assets                   10             -            25             -
      Business
       acquisitions, net
       of cash acquired          -             -             -          (218)
      Change in notes
       receivable               31           (48)           99           (80)
    -------------------------------------------------------------------------
                              (384)       (1,259)         (887)       (3,590)
    -------------------------------------------------------------------------

    Decrease in cash
     and cash
     equivalents during
     the period               (941)       (1,074)         (884)       (1,825)
    -------------------------------------------------------------------------
    Cash and cash
     equivalents,
     beginning
     of the period           4,262         4,377         4,205         5,128
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end of
     the period              3,321         3,303         3,321         3,303
    -------------------------------------------------------------------------
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For further information:

For further information: Jean Bédard, Chairman of the Board, President
and Chief Executive Officer; Gilles Lacombe, Vice-President, Finance and
Administration, (450) 641-3011; Source: Sportscene Group Inc.


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