Sportscene Group Improves its Profit Margins and Closes the First Quarter
with Net Earnings of $1.5 Million or $0.36 Per Share


    
    - The Company achieves a 15.6% EBITDA(1) margin as a percentage of
      revenues compared with14.2% for the first quarter of the previous year,
      while the net margin rises from 6.5% to 7.2%;
    - Sportscene further solidifies its balance sheet, benefiting from
      available cash of $9.6 million and low indebtedness as at November 29,
      2009;
    - The Board of Directors declares a dividend of $0.30 per share.
    
</pre>
<p/>
<p><location>MONTREAL</location>, <chron>Jan. 15</chron> /CNW Telbec/ - During the Annual Shareholders' Meeting held this morning in <location>Montreal</location>, SPORTSCENE GROUP INC. ("Sportscene" or "the Company"; SPS.A/TSX Venture Exchange), operator of the LA CAGE AUX SPORTS chain of resto-bars, disclosed its financial results for the first quarter of the fiscal year. For the 13-week period ended <chron>November 29, 2009</chron>, Sportscene improved its profit margins and further strengthened its balance sheet, despite a decline in La Cage aux Sports' total network sales and corporate revenues caused by an economic context that remains challenging for the restaurant industry.</p>
<p>For the first quarter of fiscal 2010, Sportscene recorded operating income, or consolidated EBITDA(1), of <money>$3.3 million</money> on revenues of <money>$21.1 million</money>, compared with consolidated EBITDA of <money>$3.2 million</money> on revenues of <money>$22.9 million</money> for the same period of the previous year. The EBITDA margin as a percentage of revenues thus rose to 15.6%, compared with 14.2% for the first quarter of fiscal 2009. The EBITDA margin for the first quarter of fiscal 2010 also compares favourably with the 14.7% margin posted during the first quarter of fiscal 2008.</p>
<p>Despite the revenue decline attributable to the economic context, Sportscene Group closed the first quarter with net earnings of <money>$1.5 million</money> or <money>$0.36</money> per share, up slightly over the corresponding periods of the two previous years. The net profit margin as a percentage of revenues therefore stood at 7.2%, compared with 6.5% last year.</p>
<p>La Cage aux Sports' total network sales declined by 3.6% to <money>$28.6 million</money> due mainly to the economic context. However, the decrease in average same-Cage sales was partly offset by the additional contribution of the 49th Cage opened in <chron>December 2008</chron>, the Cage expansions carried out last year, and the Company's success in taking advantage of a relatively dynamic sports agenda, including two boxing championships (of which a major championship in November), the Grey Cup and the beginning of the 2009-2010 hockey season.</p>
<p>"Sportscene's results for the first quarter of fiscal 2010 attest to the effectiveness of the strategy we have put forward since the beginning of the economic slowdown, in order to preserve our key assets and optimize our operating profitability," indicated President and Chief Executive Officer Jean Bédard. "Sportscene's enhanced profitability is attributable to a combination of actions aimed at optimizing our operational and administrative processes and keeping tight control over our costs, cash flows and investments in light of the current economic context. This cautious approach notably contributed to further improve Sportscene's financial position during the first quarter, as a result of which the Company posted available short-term cash of <money>$9.6 million</money> and a total net debt ratio of only 9.1% as at <chron>November 29</chron>, 2009."</p>
<p/>
<pre>
    
    Outlook
    -------
    
</pre>
<p/>
<p>"Between now and the end of fiscal 2010, Sportscene will continue to defend its positions while preparing for the next offensive," said Jean Bédard. "While the economy is showing initial signs of improvement, our positive first-quarter results allow us to look forward to another good financial year for Sportscene Group in 2010. In the interest of our shareholders, however, we prefer to remain prudent given the current context. Therefore, our game plan for the current year will be similar to the one carried out during the previous year, as we will continue to focus on the following elements: showcasing La Cage aux Sports' "classics", which are sure values for customers, taking full advantage of the 2009-2010 sports schedule, fostering targeted innovation, developing our internal expertise with respect to technologies and event organization, optimizing our profitability and return on investments, and maintaining a solid financial position. Concurrently, we are setting the stage for the next economic recovery by drawing up various growth scenarios aimed at leveraging the La Cage aux Sports brand, expanding our operations and creating additional sources of profit."</p>
<p/>
<pre>
    
    Declaration of a Dividend of $0.30 Per Share
    --------------------------------------------
    
</pre>
<p/>
<p>This morning, in light of the Company's satisfactory performance and outlook, Sportscene Group's Board of Directors declared a dividend of <money>$0.30</money> per share on Class A voting shares, which will be paid on <chron>February 19, 2010</chron> to shareholders of record as at <chron>January 29, 2010</chron>. In keeping with previous years, the Board will decide during the year regarding the payment of a second dividend in <chron>August 2010</chron>.</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 <chron>November 29, 2009</chron>, 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 international-calibre boxing events, and group trips to sports destinations.</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
                                                   November 29,  November 30,
                                                          2009          2008
                                                                   (restated)
    -------------------------------------------------------------------------
                                                             $             $

    Revenues                                            21,093        22,920
    Cost of sales, selling, general and
     administrative expenses                            17,810        19,671
    -------------------------------------------------------------------------
    Earnings before other items                          3,283         3,249
    -------------------------------------------------------------------------
    Interest on long-term debt                              91           131
    Other interest expense                                  42            48
    Amortization of capital assets                         881           840
    Amortization of intangibles and other assets            80           139
    Loss on disposal of assets                              73             4
    -------------------------------------------------------------------------
                                                         1,167         1,162
    -------------------------------------------------------------------------
    Earnings before income taxes and non-controlling
     interest                                            2,116         2,087
    Income taxes                                           611           616
    -------------------------------------------------------------------------
    Earnings before non-controlling interest             1,505         1,471
    Non-controlling interest                               (18)          (15)
    -------------------------------------------------------------------------
    Net earnings and comprehensive income                1,523         1,486
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share:
      Basic                                              $0.36         $0.35
      Diluted                                            $0.36         $0.35
    Weighted average number of Class A shares
     outstanding (in thousands):
      Basic                                              4,180         4,191
      Diluted                                            4,181         4,191
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated statements of variations in shareholders' equity
    (amounts are expressed in thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                          13 weeks ended
                                                   November 29,  November 30,
                                                          2009          2008
                                                                   (restated)
    -------------------------------------------------------------------------
                                                             $             $

    Share capital, beginning of period                   3,555         3,499
    Redemption of stock                                      -           (23)
    Retraction of notes receivable                           2             2
    -------------------------------------------------------------------------
    Share capital, end of period                         3,557         3,478
    -------------------------------------------------------------------------

    Contributed surplus, beginning of period               180           171
    Stock-based compensation                                 6             6
    -------------------------------------------------------------------------
                                                           186           177
    Less:
      Excess of the purchase price over the carrying
       amount of the Class A shares redeemed                 -            (1)
    -------------------------------------------------------------------------
    Contributed surplus, end of period                     186           176
    -------------------------------------------------------------------------

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

    Net earnings                                         1,523         1,486

    Less:
      Excess of the purchase price over the carrying
       amount of the Class A shares redeemed                 -          (329)
    -------------------------------------------------------------------------
    Retained earnings, end of period                    24,512        22,481
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated balance sheets
    (amounts are expressed in thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                   November 29,    August 30,
                                                          2009          2009
                                                                   (restated)
    -------------------------------------------------------------------------
                                                             $             $
    Assets
    Current assets:
      Cash and cash equivalents                          7,486         8,451
      Restricted cash                                      103           168
      Temporary investment                               2,000             -
      Accounts receivable                                7,200         3,064
      Inventories                                        1,060           970
      Prepaid expenses                                     526           533
      Building held for sale                               639             -
      Current portion of notes receivable                   38            34
    -------------------------------------------------------------------------
      Total current assets                              19,052        13,220

    Notes receivable                                       899           954
    Capital assets                                      30,309        31,038
    Intangibles and other assets                           634           714
    Future income taxes                                    789           844
    Goodwill                                             2,327         2,224
    -------------------------------------------------------------------------
    Total assets                                        54,010        48,994
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity

    Current liabilities:
      Accounts payable and accrued liabilities           9,714         6,292
      Income taxes payable                                 245           564
      Future income taxes                                  115           115
      Deferred income and credits                        1,293           805
      Current portion of long-term debt                  2,239         1,838
    -------------------------------------------------------------------------
      Total current liabilities                         13,606         9,614

    Long-term debt                                      10,180        10,845
    Deferred income and credits                          1,095           889
    Future income taxes                                    496           496
    Non-controlling interest                               378           426
    -------------------------------------------------------------------------
    Total liabilities                                   25,755        22,270

    Shareholders' equity:
      Share capital                                      3,557         3,555
      Contributed surplus                                  186           180
      Retained earnings                                 24,512        22,989
    -------------------------------------------------------------------------
                                                        28,255        26,724
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity          54,010        48,994
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated statements of cash flows
    (amounts are expressed in thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                          13 weeks ended
                                                   November 29,  November 30,
                                                          2009          2008
                                                                   (restated)
    -------------------------------------------------------------------------
                                                             $             $
    Cash flows from operating activities:
      Net earnings                                       1,523         1,486
        Non cash items:
          Loss on disposal of assets                        73             4
          Amortization of capital assets                   881           840
          Amortization of intangibles and other assets      80           139
          Non-controlling interest                         (18)          (15)
          Stock-based compensation                           6             6
          Future income taxes                               58            18
    -------------------------------------------------------------------------
                                                         2,603         2,478
    Net change in non-cash balances related to
     operations, net of acquisitions and business
     disposals                                            (712)       (2,909)
    -------------------------------------------------------------------------
                                                         1,891          (431)
    -------------------------------------------------------------------------

    Cash flows from financing activities:
      Proceeds from issuance of long-term debt               -           740
      Repayment of long-term debt                         (464)         (892)
      Increase in deferred financing costs                  (2)            -
      Dividends paid to non-controlling interest           (30)            -
      Redemption of Class A shares                           -          (353)
    -------------------------------------------------------------------------
                                                          (496)         (505)
    -------------------------------------------------------------------------

    Cash flows from investing activities:
      Acquisition of businesses, net of cash and
       cash equivalents acquired                          (203)         (538)
      Proceeds from business disposals, net of cash
       and cash equivalents disposed                         3             -
      Change in restricted cash                             65            43
      Change in temporary investments                   (2,000)          100
      Change in notes receivable                           (60)          (10)
      Additions to capital assets                         (167)       (1,059)
      Proceeds from disposal of capital assets               2             -
      Increase in intangibles and other assets               -           (72)
    -------------------------------------------------------------------------
                                                        (2,360)       (1,536)
    -------------------------------------------------------------------------

    Decrease in cash and cash equivalents                 (965)       (2,472)
    Cash and cash equivalents, beginning of period       8,451         6,867
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period             7,486         4,395
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

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


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