Sportscene Group Achieves a Solid Third-Quarter Performance and Declares a
Second Dividend of $0.30 Per Share for Fiscal 2010


    
    - The Company realizes record quarterly net earnings of $1.6 million or
      $0.38 per share.
    - Net earnings for the first nine months of fiscal 2010 total
      $4.2 million or $0.99 per share, up 5.8% over the previous year.
    - La Cage aux Sports' total network sales post a 5.0% organic growth in
      the third quarter.
    
</pre>
<p/>
<p><span class="xn-location">MONTREAL</span>, <span class="xn-chron">July 8</span> /CNW Telbec/ - Management of SPORTSCENE GROUP INC. ("Sportscene" or "the Company"; SPS.A / TSX Venture Exchange), operator of the LA CAGE AUX SPORTS chain of resto-bars, is pleased to announce a growth in its financial results for the 13-week period ended <span class="xn-chron">May 30, 2010</span> compared with the same period of 2009. Net earnings rose by 28.4%, from <span class="xn-money">$1.2 million</span> or <span class="xn-money">$0.29</span> per share (basic and diluted) in the third quarter of the previous year to <span class="xn-money">$1.6 million</span> or <span class="xn-money">$0.38</span> per share (basic and diluted) this year, the highest level ever recorded by the Company. This performance can be explained by a combination of factors, including: organic growth in La Cage aux Sports' total network sales stemming from a favourable sports environment, increased profit margins in most of the Company's spheres of activity and lower financial expenses. La Cage aux Sports' total network sales amounted to <span class="xn-money">$31.7 million</span> compared with <span class="xn-money">$30.2 million</span> in 2009. This 5.0% exclusively organic increase is largely attributable to the exciting atmosphere surrounding the <span class="xn-location">Montreal</span> Canadiens' participation in the Stanley Cup playoffs - especially the semi-finals - whose effect on the Cages' traffic across <span class="xn-location">Quebec</span> offset the sluggish economy that continues to affect the restaurant industry. In addition, Sportscene held two major boxing events during the quarter which, combined with the Cages' good performance, contributed to raise the Company's revenues by 7.8% to <span class="xn-money">$22.2 million</span>. Finally, EBITDA(1) (earnings before interest, amortization, other items and income taxes) increased by 16.2% to <span class="xn-money">$3.5 million</span>. The EBITDA margin thereby improved from 14.7% in the third quarter of 2009 to 15.8% this year, this performance being due primarily to the restaurant segment and the organization of sporting events.</p>
<p>The solid third-quarter performance almost eliminated, and even reversed, the declines in the Company's results posted during the first two quarters of fiscal 2010 due to the economic context. For the 39-week period ended <span class="xn-chron">May 30, 2010</span>, although total network sales and Sportscene's revenues were down slightly compared with the same period in 2009, year-to-date net earnings grew by 5.8% to <span class="xn-money">$4.2 million</span> or <span class="xn-money">$0.99</span> per share (basic and diluted), compared with <span class="xn-money">$3.9 million</span> or <span class="xn-money">$0.94</span> (basic and diluted) in the same period of 2009. EBITDA increased by 2.1% to <span class="xn-money">$9.3 million</span>, whereas the EBITDA margin improved from 14.4% in 2009 to 15.1% in 2010. Furthermore, operating activities provided cash flows of <span class="xn-money">$7.8 million</span> during the first nine months of fiscal 2010. Consequently, Sportscene closed the period with short-term available cash of <span class="xn-money">$13.0 million</span>, which represents a <span class="xn-money">$1.7 million</span> surplus over the Company's total debt of <span class="xn-money">$11.3 million</span>.</p>
<p/>
<pre>
    
    Declaration of a Dividend of $0.30 Per Share
    --------------------------------------------
    
</pre>
<p/>
<p>In light of the Company's solid financial results and healthy balance sheet, the Board of Directors has declared a second <span class="xn-money">$0.30</span> per-share dividend for fiscal 2010. This brings the total dividend for fiscal 2010 to <span class="xn-money">$0.60</span> per share, being the same amount as the previous three years. The new dividend will be paid on <span class="xn-chron">August 13, 2010</span> to shareholders of record as at <span class="xn-chron">July 23, 2010</span>.</p>
<p/>
<pre>
    
    2011 Outlook: Return to Expansion Mode
    --------------------------------------
    
</pre>
<p/>
<p>Sportscene's management believes that the economic recovery that is gradually materializing should start to have a positive effect on the restaurant industry toward the end of 2010. Thus, it expects that Sportscene's financial performance for the fourth quarter of the current fiscal year will be comparable to the same quarter a year earlier. Sportscene should therefore close fiscal 2010 with comparable results to fiscal 2009. "Hence, we will have achieved the key objectives stated at the beginning of the year, which were to maintain or improve our profit margins, foster the organic growth of La Cage aux Sports' total network sales and safeguard Sportscene's financial health," indicated Jean Bédard, President and Chief Executive Officer of Sportscene Group.</p>
<p>"Over the last two fiscal years, we have responded to the challenges of the economic slowdown by intensifying our initiatives aimed at the continuous optimization of our profitability and operational excellence in every aspect of our business. Although we have also temporarily reduced our capital expenditures, we did not neglect our infrastructures which were carefully maintained in order to preserve their quality and our technological lead. Along with a solid balance sheet and a network in perfect condition, all these efforts have provided the Company with a better aligned and performing organization and an operational structure capable of generating more profits with the same sales dollar, as attested to by our recent results. Now that the economy is showing signs of a recovery, we intend to capitalize on our recent achievements to resume our expansion projects and the growth of our banner as of fiscal 2011. Among such projects, we have initiated the construction work on the network's 50th Cage: a large-sized outlet strategically located in the East End of <span class="xn-location">Montreal</span>, which will open to the public at the end of the first quarter of fiscal 2011. We are also preparing to set up a foodservices concession inside a sports complex in Boisbriand," concluded the President.</p>
<p/>
<pre>
    
    Profile
    -------
    
</pre>
<p/>
<p>In business since 1984, Sportscene Group Inc. operates Quebec's leading chain of sports-themed resto-bars: La Cage aux Sports. As of <span class="xn-chron">May 30, 2010</span>, the chain comprised 49 "Cages", 34 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 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 world class boxing events.</p>
<p/>
<pre>
    
    (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      39 weeks ended
                                        May 30,   May 31,   May 30,   May 31,
                                          2010      2009      2010      2009
                                               (restated)          (restated)
    -------------------------------------------------------------------------
                                             $         $         $         $

    Revenues                            22,183    20,586    61,572    63,478
    Cost of sales, selling, general
     and administrative expenses        18,672    17,564    52,252    54,347
    -------------------------------------------------------------------------
    Earnings before other items          3,511     3,022     9,320     9,131
    -------------------------------------------------------------------------

    Interest on long-term debt              90       146       274       406
    Other interest expense                   8        58        54       165
    Amortization of deferred
     financing costs                         1         -         2         2
    Amortization of capital assets       1,046       893     2,785     2,612
    Amortization of intangibles and
     other assets                           72       119       231       379
    Loss on disposal of assets             115        58       267        80
    Gain on business disposals               -       (10)        -       (10)
    -------------------------------------------------------------------------
                                         1,332     1,264     3,613     3,634
    -------------------------------------------------------------------------
    Earnings before income taxes and
     non-controlling interest            2,179     1,758     5,707     5,497
    Income taxes                           596       529     1,613     1,594
    -------------------------------------------------------------------------
    Earnings before non-controlling
     interest                            1,583     1,229     4,094     3,903
    Non-controlling interest                (1)        3        61        26
    -------------------------------------------------------------------------
    Net earnings and comprehensive
     income                              1,582     1,232     4,155     3,929
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share:
      Basic                              $0.38     $0.29     $0.99     $0.94
      Diluted                            $0.38     $0.29     $0.99     $0.94

    Weighted average number of
     Class A shares outstanding
     (in thousands):
      Basic                              4,173     4,178     4,178     4,182
      Diluted                            4,176     4,178     4,181     4,182
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated statements of variations in shareholders' equity

    (amounts are expressed in thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                          13 weeks ended      39 weeks ended
                                        May 30,   May 31,   May 30,   May 31,
                                          2010      2009      2010      2009
                                               (restated)          (restated)
    -------------------------------------------------------------------------
                                             $         $         $         $

    Share capital, beginning of period   3,559     3,480     3,555     3,499
    Issuance of stock                        -        14         -        14
    Redemption of stock                     (9)        -       (10)      (23)
    Retraction of notes receivable           2        49         7        53
    -------------------------------------------------------------------------
    Share capital, end of period         3,552     3,543     3,552     3,543
    -------------------------------------------------------------------------

    Contributed surplus, beginning of
     period                                190       181       180       171
    Stock-based compensation                 5         6        15        17
    Less:
      Excess of the purchase price
       over the carrying amount of
       the Class A shares redeemed           -         -         -        (1)
    -------------------------------------------------------------------------
    Contributed surplus, end of period     195       187       195       187
    -------------------------------------------------------------------------

    Retained earnings, beginning of
     period
    As previously reported              24,287    22,561    23,096    21,452
    Adjustment related to the adoption
     of a new accounting policy              -      (123)     (107)     (128)
    -------------------------------------------------------------------------
    Restated balance                    24,287    22,438    22,989    21,324

    Net earnings                         1,582     1,232     4,155     3,929
    Less:
      Excess of the purchase price
       over the carrying amount of
       the Class A shares redeemed        (114)        -      (135)     (330)
      Dividends on Class A shares            -         -    (1,254)   (1,253)
    -------------------------------------------------------------------------
    Retained earnings, end of period    25,755    23,670    25,755    23,670
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated balance sheets

    (amounts are expressed in thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                           As at       As at
                                                          May 30   August 30,
                                                            2010        2009
                                                                   (restated)
    -------------------------------------------------------------------------
                                                               $           $
    Assets

    Current assets:
    Cash and cash equivalents                              9,950       8,451
    Restricted cash                                           80         168
    Temporary investments                                  3,000           -
    Accounts receivable                                    4,387       3,064
    Inventories                                            1,439         970
    Prepaid expenses                                         520         533
    Current portion of notes receivable                       74          34
    -------------------------------------------------------------------------
      Total current assets                                19,450      13,220

    Notes receivable                                         825         954
    Capital assets                                        28,631      31,038
    Intangibles and other assets                             487         714
    Future income taxes                                      887         844
    Goodwill                                               2,327       2,224
    -------------------------------------------------------------------------
    Total assets                                          52,607      48,994
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity

    Current liabilities:
    Accounts payable and accrued liabilities               7,736       6,292
    Income taxes payable                                     166         564
    Future income taxes                                      115         115
    Deferred income and credits                            1,528         805
    Current portion of long-term debt                      1,878       1,838
    -------------------------------------------------------------------------
      Total current liabilities                           11,423       9,614

    Long-term debt                                         9,407      10,845
    Deferred income and credits                            1,444         889
    Future income taxes                                      496         496
    Non-controlling interest                                 335         426
    -------------------------------------------------------------------------
    Total liabilities                                     23,105      22,270

    Shareholders' equity:
    Share capital                                          3,552       3,555
    Contributed surplus                                      195         180
    Retained earnings                                     25,755      22,989
    -------------------------------------------------------------------------
                                                          29,502      26,724
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity            52,607      48,994
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated statements of cash flows

    (amounts are expressed in thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                          13 weeks ended      39 weeks ended
                                        May 30,   May 31,   May 30,   May 31,
                                          2010      2009      2010      2009
                                               (restated)          (restated)
    -------------------------------------------------------------------------
                                             $         $         $         $

    Cash flows from operating
     activities:
      Net earnings                       1,582     1,232     4,155     3,929
      Non-cash items:
        Gain on business disposals           -       (10)        -       (10)
        Loss on disposal of assets         115        58       267        80
        Amortization of deferred
         financing costs                     1         -         2         2
        Amortization of capital assets   1,046       893     2,785     2,612
        Amortization of intangibles
         and other assets                   72       119       231       379
        Non-controlling interest             1        (3)      (61)      (26)
        Stock-based compensation             5         6        15        17
        Future income taxes                (46)     (188)      (40)     (280)
    -------------------------------------------------------------------------
                                         2,776     2,107     7,354     6,703

      Net change in non-cash balance
       related to operations, net of
       business acquisitions and
       disposals                          (654)     (130)      472    (2,191)
    -------------------------------------------------------------------------
                                         2,122     1,977     7,826     4,512
    -------------------------------------------------------------------------

    Cash flows from financing
     activities:
      Proceeds from issuance of
       long-term debt                        -         -       177     2,318
      Repayment of long-term debt         (460)     (446)   (1,775)   (1,763)
      Deferred financing costs              (1)       (1)       (3)       (9)
      Proceeds from issuance of
       Class A shares                        -        14         -        14
      Redemption of Class A shares        (123)        -      (145)     (354)
      Dividends on Class A shares            -         -    (1,254)   (1,253)
      Dividends paid to non-controlling
       interest                              -         -       (30)        -
    -------------------------------------------------------------------------
                                          (584)     (433)   (3,030)   (1,047)
    -------------------------------------------------------------------------


    Consolidated statements of cash flows

    (amounts are expressed in thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                          13 weeks ended      39 weeks ended
                                        May 30,   May 31,   May 30,   May 31,
                                          2010      2009      2010      2009
                                               (restated)          (restated)
    -------------------------------------------------------------------------
                                             $         $         $         $
    Cash flows from investing
     activities:
      Acquisition of businesses, net
       of cash and cash equivalents
       acquired                              -       (33)     (203)     (575)
      Proceeds from business
       disposals, net of cash and
       cash equivalents disposed             -        22         3        22
      Change in restricted cash           (240)      (53)      (88)      173
      Change in temporary investments        -         -    (3,000)      100
      Change in notes receivable           298      (101)      157        60
      Additions to capital assets         (180)     (293)     (815)   (3,044)
      Proceeds from disposal of
       capital assets                        1        53       653        60
      Increase in intangibles and
       other assets                         (4)        -        (4)      (72)
    -------------------------------------------------------------------------
                                          (125)     (405)   (3,297)   (3,276)
    -------------------------------------------------------------------------

    Net increase in cash and cash
     equivalents                         1,413     1,139     1,499       189
    Cash and cash equivalents,
     beginning of period                 8,537     5,917     8,451     6,867
    -------------------------------------------------------------------------
    Cash and cash equivalents, end
     of period                           9,950     7,056     9,950     7,056
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

For further information: For further information: Jean Bédard, Chairman of the Board, President and Chief Executive Officer; Josée Pépin, Manager, Accounting and Disclosure, (450) 641-3011; Source: Sportscene Group Inc.


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890