Sportscene Group Announces Revenues of $18.9 million for the Second Quarter of Fiscal 2011

MONTREAL, April 8 /CNW Telbec/ - SPORTSCENE INC. ("Sportscene" or "the Company") (TSXV: SPS.A) has been operating in Quebec since 1984 a chain of entertainment-themed resto-bars built on sportsmanship, action and group entertainment: La Cage aux Sports.

Results for the 13 and 26-Week Periods Ended February 27, 2011
For the 13-week period ended February 27, 2011, Sportscene's revenues rose by 3.1% over the same quarter of the previous year, to reach $18.9 million. This growth came primarily from the contribution of the new corporate outlet opened on October 22, 2010 in Montreal and from an increase in sales of La Cage aux Sports branded frozen products in grocery stores. These two factors mitigated the adverse effect on the Company's revenues of the decline in the La Cage aux Sports' total network sales(1), which stood at $26.8 million.

Sportscene's operating income, or EBITDA(1), slightly decreased to stand at $2.4 million, due to the decrease in same-Cage sales and a different schedule with respect to the organization of boxing championships by the subsidiary Interbox. The same factors accounted for the decline in net earnings, which amounted to $0.9 million or $0.21 per share (basic and diluted) in the second quarter of fiscal 2011, compared with $1.1 million or $0.25 per share in the corresponding quarter of fiscal 2010.

For the 26-week period ended February 27, 2011, Sportscene recorded year-to-date net earnings of $2.1 million or $0.51 per share (basic and diluted) on revenues of $40,5 million, compared with net earnings of $2.6 million or $0.61 per share on revenues of $39.4 million in 2010. Total network sales(1) decreased by 3.5% to $54.3 million. Operating activities provided cash flows of $4.8 million, as a result of which the Company remains in an excellent financial position, with available short-term cash(1) of $9.5 million and a total net debt(1) ratio of only 4.1% as at February 27, 2011.

Recent Achievements and Ongoing Projects in the La Cage aux Sports Network
Since the beginning of fiscal 2011, Sportscene has carried on its growth strategy in order to mitigate the effect on its results of a still difficult business climate in its market segment and set the stage for its next long-term development phase. This strategy aims at three key objectives: (1) update the La Cage aux Sports banner's overall offering to restore its organic sales growth; (2) open new Cages; and (3) seek other expansion projects consistent with management's vision.

To that end, Sportscene is updating La Cage aux Sports' overall offering, in particular the "menu" component, to ensure that its food and drink selection, along with its quality/price value, meet consumers' expectations. In order to further build the La Cage aux Sports' "Sports, Gang, Fun" ambience, the Company continues to invest in new technologies, to put forward original marketing approaches, including increasing use of social networks, and to fully capitalize on sporting events.

As regards the expansion of the banner, in addition to the opening of the 50th Cage in October 2010, the Company will shortly reopen the Old Montreal Cage, closed in June 2010 to be relocated to a higher-quality site. During the fourth quarter, it will also undertake the fitting-out of a joint venture Cage and of a new corporate Cage within its St-Hilaire sports complex. Finally, Sportscene will acquire the ownership of a franchised Cage in the third quarter.

Outlook
"We look to Sportscene Group's future with optimism," indicated Jean Bédard, President and Chief Executive Officer of Sportscene Group. "For the second half of fiscal 2011, notably, we are confident that the ongoing implementation of our action plan will continue to alleviate the effects of a persisting sluggish economy on the Company's results. On the one hand, we intend to fully capitalize on the Montreal Canadiens' participation in the hockey playoffs, which normally has a significant positive impact on the Cages' third-quarter traffic. On the other hand, Sportscene's performance will benefit from our recent initiatives, including the full contribution of the 50th Cage opened in October 2010 and the reopening of the Old Montreal outlet in April 2011, the updating of La Cage aux Sports' overall offering and the organization of a boxing event."

Sportscene Group remains on the lookout for growth opportunities consistent with its vision and business model that could spearhead its growth and the creation of shareholder value.

Profile
In business since 1984, Sportscene Group Inc. operates Quebec's leading chain of sports-themed resto-bars: La Cage aux Sports. As of April 7, 2011, this banner comprises 50 "Cages", 35 of which are wholly or jointly owned by the Company, and 15 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 elements 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)
(unaudited)
 
  13 weeks ended  26 weeks ended
  February 27, February 28, February 27, February 28,
  2011 2010 2011 2010
  $ $ $ $
Revenues 18,857 18,296 40,511 39,389
Cost of sales, selling, general and administrative
expenses
16,490 15,770 35,303 33,580
Earnings before other items 2,367 2,526  5,208 5,809
Interest on long-term debt 96 93 178 184
Other interest expense 68 5  120 47
Amortization of capital assets  922 858 1,828 1,739
Amortization of intangibles and other assets 29 79 59 159
Loss on disposal of assets  32 79 59 152
Loss on business disposals - - 26 -
  1,147 1,114  2,270 2,281
Earnings before income taxes and non
controlling interest 1,220 1,412   2,938 3,528
Income taxes  356 406  864 1,017
Earnings before non-controlling interest  864 1,006 2,074 2,511
Non-controlling interest  7 44  41  62
Net earnings and comprehensive income 871 1,050 2,115 2,573
 
Earnings per share:
  Basic $0.21 $0.25  $0.51 $0.61
  Diluted  $0.21 $0.25  $0.51 $0.61
Weighted average number of Class A
shares outstanding (in thousands):
  Basic  4,168 4,180 4,168 4,180
  Diluted  4,173 4,182 4,173 4,182

 
Consolidated statements of changes in shareholders' equity
(amounts are expressed in thousands of dollars)
(unaudited)
 
  13 weeks ended   26 weeks ended
  February 27, February 28, February 27, February 28,
  2011 2010 2011 2010
  $ $  $  $
Share capital, beginning of period  3,554  3,557  3,554 3,555
Redemption of shares  -  (1)  -  (1)
Retraction of notes receivable  -  3  -  5
Share capital, end of period  3,554  3,559  3,554  3,559
Contributed surplus, beginning of period  204 186 199 180
Stock-based compensation  6 4  11  10
Contributed surplus, end of period  210 190 210 190
Retained earnings, beginning of period  25,867 24,512 24,623  22,989
Net earnings  871 1,050  2,115 2,573
Less:
  Excess of the purchase price over the carrying
amount of the Class A shares redeemed
 -  (21)  -  (21)
  Dividends on Class A shares  (1,251) (1,254)  (1,251)  (1,254)
Retained earnings, end of period  25,487  24,287  25,487 24,287


Consolidated balance sheets
(amounts are expressed in thousands of dollars)
 
  As at February 27,  As at August 29,
  2011 2010
  (unaudited)  (audited)
  $  $
Assets
Current assets:
  Cash and cash equivalents  7,477 7,586
  Restricted cash  - 141
  Temporary investments    2,041 2,000
  Accounts receivable  4,380 3,536
  Inventories  1,132 1,291
  Income taxes receivable  - 28
  Prepaid expenses  545 446
  Current portion of notes receivable  37 75
Total current assets   15,612 15,103
Notes receivable  1,527 989
Capital assets  30,816 28,773
Intangibles and other assets  568 437
Future income taxes  1,265 1,057
Goodwill  2,260 2,332
Total assets  52,048 48,691
Liabilities and shareholders' equity
Current liabilities:
  Accounts payable and accrued liabilities  7,999 6,651
  Income taxes payable  319  -
  Future income taxes  91  91
  Deferred income and credits  1,386 1,298
  Current portion of long-term debt  1,534  1,471
Total current liabilities  11,329 9,511
Long-term debt  9,236 8,580
Deferred income and credits  1,438 1,423
Future income taxes  515  515
Non-controlling interest  279 286
Total liabilities  22,797 20,315
Shareholders' equity
Share capital  3,554 3,554
Contributed surplus  210 199
Retained earnings  25,487 24,623
  29,251  28,376
Total liabilities and shareholders' equity  52,048 48,691


Consolidated statements of cash flows
(amounts are expressed in thousands of dollars)
(unaudited)
 
  13 weeks ended 26 weeks ended
  February 27, February 28, February 27, February 28,
  2011        2010             2011 2010
  $                    $ $              $
Cash flows from operating activities:
Net earnings  871 1,050  2,115 2,573
Non-cash items:
  Loss on disposal of assets  32 79  59 152
  Loss on business disposals  -  -  26 -
  Amortization of deferred financing costs  1  1  1 1
  Amortization of capital assets  922  858  1,828 1,739
  Amortization of intangibles and other assets  29 79  59 159
  Non-controlling interest  (7) (44)  (41) (62)
  Stock-based compensation  6 4  11 10
  Future income taxes  (100)  (52)  (212) 6
  1,754 1,975  3,846 4,578
Net change in non-cash operating items, net
of acquisitions and business disposals
 1,796 1,838  919 1,126
  3,550 3,813  4,765 5,704
Cash flows from financing activities:
  Proceeds from the issuance of long-term debt  -  177  150 177
  Repayment of long-term debt  (403) (851)  (775)  (1,315)
  Increase in deferred financing costs  -  -  - (2)
  Redemption of Class A shares  - (22)  -  (22)
  Dividends on Class A shares  (1,251) (1,254)  (1,251) (1,254)
  Dividends paid to non-controlling interest  - -  - (30)
  Redemption of shares of a subsidiary owned
by a non-controlling shareholder 
(5)  - (5)  -
  (1,659) (1,950)  (1,881) (2,446)

.

Consolidated statements of cash flows
(amounts are expressed in thousands of dollars)
(unaudited)
 
  13 weeks ended  26 weeks ended
  February 27, February 28,  February 27, February 28,
  2011  2010  2011 2010
  $ $ $ $
Cash flows from investing activities:
  Acquisition of businesses, net of cash and cash
equivalents acquired
 -   - (100)      (203)
  Proceeds from business disposals, net of disposal
of cash and cash equivalents
 -  -  345  3
  Change in restricted cash  -  87  -   152
  Change in temporary investments                               (41) (1,000)                  (41)     (3,000)
  Change in notes receivable                                        (437)  (81)             (533) (141)
  Acquisition of capital assets                                    (1,648) (468)              (2,607)   (635)
  Proceeds from disposal of capital assets                        3   650                 8    652
  Increase in intangibles and other assets                        (7) -                 (65)   -
                                                                              (2,130) (812)             (2,993)     (3,172)
Increase (decrease) in cash and cash equivalents           (239)  1,051                  (109)         86
Cash and cash equivalents, beginning of period  7,716  7,486            7,586   8,451
Cash and cash equivalents, end of period  7,477  8,537                7,477     8,537

 

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

 

Organization Profile

SPORTSCENE GROUP INC.

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