Sportscene Group Achieves a Second-Quarter Performance Comparable to the Previous Year Despite the Economic Slowdown



    
    - Quarterly net earnings of $1.2 million or $0.29 per share, compared
      with $1.2 million and $0.30 per share in the second quarter of 2008;
    - Year-to-date net earnings of $2.7 million or $0.64 for the first six
      months;
    - 11.3% and 14.9% increases in second-quarter and first-half revenues,
      which amount to $20.0 million and $42.9 million respectively;
    - Second-quarter operating cash flows of $3.0 million.
    

    MONTREAL, April 9 /CNW Telbec/ - Keeping pace with the first quarter of
fiscal 2009, SPORTSCENE GROUP INC. ("Sportscene" or "the Company"; SPS.A/TSX
Venture Exchange), operator of the LA CAGE AUX SPORTS chain of resto-bars, was
able to maintain its second-quarter net earnings at a level comparable to the
same period of the previous fiscal year, despite the economic downturn
currently affecting the restaurant industry. During the 13-week period ended
March 1, 2009, the Company achieved net earnings of $1.2 million or $0.29 per
share (basic and diluted), compared with $1.2 million and $0.30 per share
(basic and diluted) in 2008. This result brings year-to-date net earnings for
the 26-week period ended March 1, 2009 to $2.7 million or $0.64 per share
(basic and diluted), compared with $2.7 million or $0.65 per share (basic and
diluted) in the same period last year.
    "This performance, which we deem very satisfactory considering the
economic climate, is partly attributable to the March 2008 acquisition of a
sports complex and to stronger activity than last year in the area of Cage
construction and renovation," indicated Jean Bédard, President and Chief
Executive Officer. The increased contribution of activities other than
restaurant operations gave rise to a 11.3% and 14.9% growth in Sportscene's
second-quarter and first-half revenues, which totalled $20.0 million and $42.9
million respectively. The same factor also contributed to a 2.1% and 7.4%
increase in consolidated EBITDA(1), which amounted to $2.9 million and $6.1
million respectively for the reporting periods. However, as was expected by
management, the more challenging business environment for restaurant
operations has been exerting some pressure on the operating profit margin as a
percentage of revenues since the beginning of the fiscal year. La Cage aux
Sports' total network sales posted slight declines of 0.4% and 1.0% for the 13
and 26-week periods, to stand at $30.0 million and $59.6 million respectively,
despite the addition of three Cages over the past year.

    Action Plan Yielding Positive Results
    -------------------------------------

    Consistent with the action plan adopted at the beginning of the year,
Sportscene has decided to focus its efforts this year on ensuring its overall
operating efficiency, preserving the health of its balance sheet and
reassessing all its activities and initiatives to focus exclusively on those
that bring tangible added value to the Company's customers and results. For
instance, Sportscene has improved its menu offering and further concentrated
its advertising and promotional activities. In addition, it has intensified
the coaching and monitoring of its network operators, accelerated the
implementation of the Kaizen kitchen optimization program - now in effect in
two-thirds of the Cage network - and launched a Kaizen-type pilot project in
regard to customer service. The Company is also rigorously managing its
investment budget, earmarked this year for the rollout of the new Cage
interior design - thus far implemented in five Cages - the upgrading of its
technological platform and the renovation of its sports complex.
    Finally, Sportscene reinforced its cash management, which notably
contributed to generate operating cash flows of $3.0 million in the second
quarter alone. As at March 1, 2009, the Company thus had available cash and
cash equivalents of $6.0 million while its working capital had further
increased over the end of the last fiscal year. In addition, its total debt to
invested capital ratio stood at less than 21%.
    "Despite a challenging economic environment, Sportscene therefore remains
in excellent financial health while continuing to stand apart as one of the
most efficient and profitable operators in its industry, thanks to our network
operators' contribution and employees' commitment to achieving our objectives
of responsible management, quality of service and operational excellence,"
concluded Jean Bédard.

    Profile
    -------

    In business since 1984, Sportscene Group Inc. operates Quebec's leading
chain of sports-themed resto-bars: La Cage aux Sports. The chain comprises 49
"Cages", 33 of which are wholly or jointly owned by the Company, and 16 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 high-definition 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 also provides on-site catering services at
sporting and popular events. In addition, the Company manages real estate
holdings, including a sports centre 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 Sport network, as well as the organization of sports-related
activities, such as international-calibre boxing events, and group trips to
sports destinations.

    
    (1) EBITDA is not a measure consistent with Canadian generally accepted
        accounting principles. Sportscene uses this measure because it
        enables management to assess the Company's operational performance
        and it is a widely accepted financial indicator of a company's
        ability to service and incur debt. In Sportscene's statement of
        earnings, EBITDA corresponds to "Earnings before other items".
    (2) 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 and comprehensive income

    (amounts are expressed in thousands of dollars except for per-share
     amounts and number of shares)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                    13 weeks ended            26 weeks ended
                              March 1, February 24,     March 1, February 24,
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
                                    $            $            $            $

    Revenue                    19,972       17,937       42,892       37,317
    Cost of sales, selling,
     general and administra-
     tive expenses             17,104       15,128       36,773       31,621
    -------------------------------------------------------------------------
    Earnings before other
     items                      2,868        2,809        6,119        5,696
    -------------------------------------------------------------------------

    Interest on long-term debt    129          133          260          247
    Other interest expense         59           34          107           76
    Amortization of deferred
     financing costs                2            -            2            -
    Amortization of capital
     assets                       879          794        1,719        1,555
    Amortization of intangibles
     and other assets             128          119          274          241
    Loss on disposal of assets     18            4           22           21
    Gain on business disposals      -            -            -         (246)
    -------------------------------------------------------------------------
                                1,215        1,084        2,384        1,894
    -------------------------------------------------------------------------
    Earnings before income
     taxes and non-controlling
     interest                   1,653        1,725        3,735        3,802
    Income taxes                  449          490        1,066        1,077
    -------------------------------------------------------------------------
    Earnings before
     non-controlling
     interest                   1,204        1,235        2,669        2,725
    Non-controlling interest        8            2           23           (6)
    -------------------------------------------------------------------------
    Net earnings and
     comprehensive income       1,212        1,237        2,692        2,719
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share:
      Basic                     $0.29        $0.30        $0.64        $0.65
      Diluted                   $0.29        $0.30        $0.64        $0.65

    Weighted average number
     of Class A shares
     outstanding (in
     thousands):
      Basic                     4,178        4,179        4,184        4,179
      Diluted                   4,178        4,185        4,184        4,185


    Consolidated statements of variations in shareholders' equity

    (amounts are expressed in thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                    13 weeks ended            26 weeks ended
                              March 1, February 24,     March 1, February 24,
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
                                    $            $            $            $

    Share capital,
     beginning of period        3,478        3,264        3,499        3,255
    Issuance of stock               -          182            -          182
    Redemption of stock             -            -          (23)           -
    Transfer from contributed
     surplus                        -           45            -           45
    Retraction of notes
     receivable                     2            3            4           12
    -------------------------------------------------------------------------
    Share capital, end of
     period                     3,480        3,494        3,480        3,494
    -------------------------------------------------------------------------

    Contributed surplus,
     beginning of period          176          174          171          166
    Stock-based compensation        5           14           11           22
    Less:
      Excess of the purchase
       price over the carrying
       amount of the Class A
       shares redeemed              -            -           (1)           -
      Transfer to share capital     -          (45)           -          (45)
    -------------------------------------------------------------------------
    Contributed surplus, end
     of period                    181          143          181          143
    -------------------------------------------------------------------------

    Retained earnings,
     beginning of
     period                    22,603       20,446       21,452       18,964
    Net earnings                1,212        1,237        2,692        2,719
    Less:
      Excess of the
       purchase price
       over the carrying
       amount of the
       Class A shares
       redeemed                    (1)           -         (330)           -
      Dividends on Class
       A shares                (1,253)      (1,262)      (1,253)      (1,262)
    -------------------------------------------------------------------------
    Retained earnings,
     end of period             22,561       20,421       22,561       20,421
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated balance sheets

    (amounts are expressed in thousands of dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                              As at March 1, As at August 31,
                                                       2009             2008
    -------------------------------------------------------------------------
                                                 (unaudited)        (audited)
                                                          $                $

    Assets

    Current assets:
      Cash and cash equivalents                       5,917            6,867
      Restricted cash                                    34              260
      Temporary investment                                -              100
      Accounts receivable                             4,351            5,169
      Inventories                                     1,197            1,766
      Prepaid expenses                                  886              679
      Current portion of notes receivable                38               36
    -------------------------------------------------------------------------
      Total current assets                           12,423           14,877

    Notes receivable                                    801              959
    Capital assets                                   31,433           29,265
    Intangibles and other assets                      1,186            1,381
    Future income taxes                                 380              380
    Goodwill                                          2,604            2,363
    -------------------------------------------------------------------------
    Total assets                                     48,827           49,225
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity

    Current liabilities:
      Accounts payable and accrued liabilities        6,248            9,337
      Income taxes payable                              394               29
      Future income taxes                               116              116
      Deferred income and credits                     1,239            1,307
      Current portion of long-term debt               1,874            1,791
    -------------------------------------------------------------------------
      Total current liabilities                       9,871           12,580

    Long-term debt                                   10,873            9,510
    Deferred income and credits                         863              927
    Future income taxes                                 504              569
    Non-controlling interest                            494              517
    -------------------------------------------------------------------------
    Total liabilities                                22,605           24,103

    Shareholders' equity:
      Share capital                                   3,480            3,499
      Contributed surplus                               181              171
      Retained earnings                              22,561           21,452
    -------------------------------------------------------------------------
                                                     26,222           25,122
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity       48,827           49,225
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated statements of cash flows

    (amounts are expressed in thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                    13 weeks ended            26 weeks ended
                              March 1, February 24,     March 1, February 24,
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
                                    $            $            $            $
    Cash flows from
     operating activities:
      Net earnings              1,212        1,237        2,692        2,719
      Non-cash items:
        Gain on business
         disposals                  -            -            -         (246)
        Loss on disposal
         of assets                 18            4           22           21
        Amortization of
         deferred financing
         costs                      2            -            2            -
        Amortization of
         capital assets           879          794        1,719        1,555
        Amortization of
         intangibles and
         other assets             128          119          274          241
        Non-controlling
         interest                  (8)          (2)         (23)           6
        Stock-based
         compensation               5           14           11           22
        Future income taxes      (109)        (134)         (90)         (72)
    -------------------------------------------------------------------------
                                2,127        2,032        4,607        4,246
      Net change in non-cash
       balance related to
       operations, net of
       business acquisitions
       and disposals              848       (1,376)      (2,061)      (2,028)
    -------------------------------------------------------------------------
                                2,975          656        2,546        2,218
    -------------------------------------------------------------------------

    Cash flows financing
     activities:
      Net change in bank
       loan                         -          408            -          408
      Proceeds from issuance
       of long-term debt        1,578          900        2,318        1,020
      Repayment of long-term
       debt                      (425)        (333)      (1,317)        (714)
      Deferred financing
       costs                      (11)           -          (11)           -
      Proceeds from issuance
       of Class A shares            -          182            -          182
      Redemption of Class A
       shares                      (1)           -         (354)           -
      Dividends on Class A
       shares                  (1,253)      (1,262)      (1,253)      (1,262)
      Proceeds from issuance
       of equity shares of
       a subsidiary to
       non-controlling
       interest                     -            -            -          174
    -------------------------------------------------------------------------
                                 (112)        (105)        (617)        (192)
    -------------------------------------------------------------------------

    Cash flows from investing
     activities:
      Acquisition of
       businesses, net
       of cash and cash
       equivalents acquired        (4)        (357)        (542)        (357)
      Proceeds from business
       disposals, net of cash
       and cash equivalents
       disposed                     -            -            -          187
      Change in restricted
       cash                       183           84          226          212
      Disposal of temporary
       investments                  -            -          100           40
      Change in notes
       receivable                 170            6          160           24
      Additions to capital
       assets                  (1,692)        (364)      (2,751)      (2,092)
      Proceeds from disposal
       of capital assets            7            5            7           17
      Increase in intangibles
       and other assets            (5)         (63)         (79)        (217)
    -------------------------------------------------------------------------
                               (1,341)        (689)      (2,879)      (2,186)
    -------------------------------------------------------------------------

    Net increase (decrease)
     in cash and cash
     equivalents                1,522         (138)        (950)        (160)
    Cash and cash
     equivalents,
     beginning of period        4,395        3,127        6,867        3,149
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end of
     period                     5,917        2,989        5,917        2,989
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

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


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