Sportscene Group Maintains its Performance in the Second Quarter of Fiscal
2010


    
    - The Company achieves quarterly net earnings of $1.1 million or $0.25
      per share;
    - Net earnings for the first six months of fiscal 2010 total $2.6 million
      or $0.61 per share;
    - As at February 28, 2010, Sportscene posts cash and cash equivalents of
      $11.6 million and a total net debt of $0.2 million.
    
</pre>
<p/>
<p><span class="xn-location">MONTREAL</span>, <span class="xn-chron">April 8</span> /CNW Telbec/ - In the second quarter of fiscal 2010, SPORTSCENE GROUP INC. ("Sportscene" or "the Company"; SPS.A/TSX Venture Exchange), operator of the LA CAGE AUX SPORTS chain of resto-bars, continued to attenuate the effects of a challenging economic context through proactive and responsible management of its operations. During the 13-week period ended <span class="xn-chron">February 28, 2010</span>, the Company posted net earnings of <span class="xn-money">$1.1 million</span> or <span class="xn-money">$0.25</span> per share (basic and diluted), compared with <span class="xn-money">$1.2 million</span> or <span class="xn-money">$0.29</span> per share (basic and diluted) in the same quarter of fiscal 2009. Management deems this result satisfactory considering the economic uncertainty that continues to affect consumer spending and, as a result, the customer traffic of La Cage aux Sports' network whose total sales declined by 7.8% to stand at <span class="xn-money">$27.6 million</span>. For their part, the Company's revenues decreased by 8.4% to <span class="xn-money">$18.3 million</span> due largely to the fact that the Company did not carry out any significant Cages construction or renovation work during the second quarter of the current fiscal year, whereas it had finalized the construction of a new franchised Cage in the same period of 2009. However, restaurant revenues remained stable. Operating income, or EBITDA(1), amounted to <span class="xn-money">$2.5 million</span>, compared with <span class="xn-money">$2.9 million</span> the previous year. This decrease is attributable to two main factors: (1) a lesser volume of activity than the previous year with respect to construction work and the organization of sports trips, while the Company nonetheless continued to assume the fixed costs related to these activities; and (2) the recognition, during the second quarter of the previous year, of non-recurring revenues as part of the renewal of some Cage franchise contracts, which were directly reflected in EBITDA.</p>
<p>During the six-month period ended <span class="xn-chron">February 28, 2010</span>, Sportscene Group posted net earnings of <span class="xn-money">$2.6 million</span> or <span class="xn-money">$0.61</span> per share (basic and diluted) on revenues of <span class="xn-money">$39.4 million</span>, compared with net earnings of <span class="xn-money">$2.7 million</span> or <span class="xn-money">$0.64</span> per share (basic and diluted) on revenues of <span class="xn-money">$42.9 million</span> in the first half of the previous year. Consequently, the net profit margin as a percentage of revenues stood at 6.5% in 2010, versus 6.3% in 2009. Sportscene recorded EBITDA of <span class="xn-money">$5.8 million</span>, down from <span class="xn-money">$6.1 million</span> in 2009. However, the EBITDA margin improved from 14.2% last year to 14.7% this year. This performance is primarily attributable to the fact that restaurant operations posted a comparable operating profitability to 2009 despite a 5.7% decrease in La Cage aux Sports' total network sales, which amounted to <span class="xn-money">$56.2 million</span> compared with <span class="xn-money">$59.6 million</span> the previous year.</p>
<p>President and Chief Executive Officer Jean Bédard indicated that most of the network's sales decrease is attributable to the economic climate. "Overall, the La Cage aux Sports banner has succeeded so far in weathering the economic slowdown and defending its competitive position through targeted and effective marketing initiatives. In addition, despite a decrease in Sportscene's revenues, the efforts made since the beginning of the recession to further focus on value-added activities and optimize operations enabled us to maintain preserve the profitability of La Cage aux Sports' network and Sportscene Group as a whole."</p>
<p>Since the beginning of fiscal 2010, besides preserving its profit margins, Sportscene has respected its commitment to safeguard its financial health by maintaining its significant self-financing capacity and through rigorous management of its treasury and capital structure. In fact, operating activities for the first six months of the current fiscal year provided cash flows of <span class="xn-money">$5.7 million</span>. Thus, as at <span class="xn-chron">February 28, 2010</span>, Sportscene had short-term available cash of <span class="xn-money">$11.6 million</span> and total debt of <span class="xn-money">$11.8 million</span>, representing a total net debt of only <span class="xn-money">$0.2 million</span>. At the beginning of the third quarter, the Company used some of its available cash to repay the <span class="xn-money">$1.2 million</span> balance on its revolving credit.</p>
<p/>
<pre>
    
    Outlook
    -------
    
</pre>
<p/>
<p>Sportscene's management expects that it will take another few months for the effects of the gradual economic recovery to truly reflect on the restaurant industry. In the meantime, Sportscene will continue to concentrate its efforts on strengthening La Cage aux Sports' network and enhancing its profile, while also optimizing all its operating, marketing and investment activities. The Company will closely monitor its asset base, operations and management practices according to the value they bring to its customers and shareholders. In doing so, Sportscene will seek to fully capitalize on the favourable sports environment currently prevailing in <span class="xn-location">Quebec</span> in order to increase the Cages' customer traffic.</p>
<p>"Bringing La Cage aux Sports back into growth mode will be our primary objective and challenge in the year ahead. To that end, we are currently working on certain expansion projects for fiscal 2011, including the introduction of alternative foodservices concepts. Considering the many initiatives taken over the past 18 months to generate more profits with the same sales dollar, La Cage aux Sports' and Sportscene Group's return to growth, once it materializes, should have a significant leverage effect on the Company's profitability and capacity to generate shareholder value," concluded Jean Bédard.</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">February 28, 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 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          26 weeks ended
                                February       March    February       March
                                28, 2010     1, 2009    28, 2010     1, 2009
                                           (restated)              (restated)
    -------------------------------------------------------------------------
                                       $           $           $           $

    Revenues                      18,296      19,972      39,389      42,892
    Cost of sales, selling,
     general and
     administrative expenses      15,770      17,112      33,580      36,783
    -------------------------------------------------------------------------
    Earnings before other
     items                         2,526       2,860       5,809       6,109
    -------------------------------------------------------------------------
    Interest on long-term debt        93         129         184         260
    Other interest expense             4          59          46         107
    Amortization of deferred
     financing costs                   1           2           1           2
    Amortization of capital
     assets                          858         879       1,739       1,719
    Amortization of intangibles
     and other assets                 79         121         159         260
    Loss on disposal of assets        79          18         152          22
    -------------------------------------------------------------------------
                                   1,114       1,208       2,281       2,370
    -------------------------------------------------------------------------
    Earnings before income
     taxes and non-controlling
     interest                      1,412       1,652       3,528       3,739
    Income taxes                     406         449       1,017       1,065
    -------------------------------------------------------------------------
    Earnings before non-
     controlling interest          1,006       1,203       2,511       2,674
    Non-controlling interest          44           8          62          23
    -------------------------------------------------------------------------
    Net earnings and
     comprehensive income          1,050       1,211       2,573       2,697
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share:
      Basic                   $     0.25  $     0.29  $     0.61  $     0.64
      Diluted                 $     0.25  $     0.29  $     0.61  $     0.64
    Weighted average number
     of Class A shares
     outstanding (in
     thousands):
      Basic                        4,180       4,178       4,180       4,184
      Diluted                      4,182       4,178       4,182       4,184
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated statements of variations in shareholders' equity

    (amounts are expressed in thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                      13 weeks ended          26 weeks ended
                                February       March    February       March
                                28, 2010     1, 2009    28, 2010     1, 2009
                                           (restated)              (restated)
    -------------------------------------------------------------------------
                                       $           $           $           $

    Share capital, beginning
     of period                     3,557       3,478       3,555       3,499
    Redemption of stock               (1)          -          (1)        (23)
    Retraction of notes
     receivable                        3           2           5           4
    -------------------------------------------------------------------------
    Share capital, end of
     period                        3,559       3,480       3,559       3,480
    -------------------------------------------------------------------------
    Contributed surplus,
     beginning of period             186         176         180         171
    Stock-based compensation           4           5          10          11
    -------------------------------------------------------------------------
                                     190         181         190         182
    Less:
      Excess of the purchase
       price over the carrying
       amount of the Class A
       shares redeemed                 -           -           -          (1)
    -------------------------------------------------------------------------
    Contributed surplus, end
     of period                       190         181         190         181
    -------------------------------------------------------------------------

    Retained earnings, beginning
     of period
    As previously reported        24,512      22,603      23,096      21,452
    Adjustment related to the
     adoption of a new
     accounting policy                 -        (122)       (107)       (128)
    -------------------------------------------------------------------------
    Restated balance              24,512      22,481      22,989      21,324

    Net earnings                   1,050       1,211       2,573       2,697

    Less:
      Excess of the purchase
       price over the carrying
       amount of the Class A
       shares redeemed               (21)         (1)        (21)       (330)
      Dividends on Class A
       shares                     (1,254)     (1,253)     (1,254)     (1,253)
    -------------------------------------------------------------------------
    Retained earnings, end
     of period                    24,287      22,438      24,287      22,438
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated balance sheets

    (amounts are expressed in thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                         As at         As at
                                                   February 28,    August 30,
                                                          2010          2009
                                                                   (restated)
    -------------------------------------------------------------------------
                                                             $             $
    Assets

    Current assets:
    Cash and cash equivalents                            8,537         8,451
    Restricted cash                                         16           168
    Temporary investments                                3,000             -
    Accounts receivable                                  3,668         3,064
    Inventories                                            979           970
    Prepaid expenses                                       630           533
    Current portion of notes receivable                     76            34
    -------------------------------------------------------------------------
      Total current assets                              16,906        13,220

    Notes receivable                                       943           954
    Capital assets                                      29,593        31,038
    Intangibles and other assets                           555           714
    Future income taxes                                    841           844
    Goodwill                                             2,327         2,224
    -------------------------------------------------------------------------
    Total assets                                        51,165        48,994
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity

    Current liabilities:
    Accounts payable and accrued liabilities             7,514         6,292
    Income taxes payable                                    65           564
    Future income taxes                                    115           115
    Deferred income and credits                          1,368           805
    Current portion of long-term debt                    1,886         1,838
    -------------------------------------------------------------------------
      Total current liabilities                         10,948         9,614

    Long-term debt                                       9,859        10,845
    Deferred income and credits                          1,492           889
    Future income taxes                                    496           496
    Non-controlling interest                               334           426
    -------------------------------------------------------------------------
    Total liabilities                                   23,129        22,270

    Shareholders' equity:
    Share capital                                        3,559         3,555
    Contributed surplus                                    190           180
    Retained earnings                                   24,287        22,989
    -------------------------------------------------------------------------
                                                        28,036        26,724
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity          51,165        48,994
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated statements of cash flows

    (amounts are expressed in thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                      13 weeks ended          26 weeks ended
                                February       March    February       March
                                28, 2010     1, 2009    28, 2010     1, 2009
                                           (restated)              (restated)
    -------------------------------------------------------------------------
                                       $           $           $           $
    Cash flows from operating
     activities:
      Net earnings                 1,050       1,211       2,573       2,697
      Non-cash items:
        Loss on disposal of
         assets                       79          18         152          22
        Amortization of
         deferred financing
         costs                         1           2           1           2
        Amortization of
         capital assets              858         879       1,739       1,719
        Amortization of
         intangibles and
         other assets                 79         121         159         260
        Non-controlling
         interest                    (44)         (8)        (62)        (23)
        Stock-based
         compensation                  4           5          10          11
        Future income taxes          (52)       (109)          6         (91)
    -------------------------------------------------------------------------
                                   1,975       2,119       4,578       4,597
    Net change in non-cash
     balance related to
     operations, net of
     business acquisitions
     and disposals                 1,838         848       1,126      (2,061)
    -------------------------------------------------------------------------
                                   3,813       2,967       5,704       2,536
    -------------------------------------------------------------------------

    Cash flows from financing
     activities:
      Proceeds from issuance
       of long-term debt             177       1,578         177       2,318
      Repayment of long-term
       debt                         (851)       (425)     (1,315)     (1,317)
      Deferred financing
       costs                           -          (8)         (2)         (8)
      Redemption of Class A
       shares                        (22)         (1)        (22)       (354)
      Dividends on Class A
       shares                     (1,254)     (1,253)     (1,254)     (1,253)
      Dividends paid to
       non-controlling
       interest                        -           -         (30)          -
    -------------------------------------------------------------------------
                                  (1,950)       (109)     (2,446)       (614)
    -------------------------------------------------------------------------


    Consolidated statements of cash flows

    (amounts are expressed in thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                      13 weeks ended          26 weeks ended
                                February       March    February       March
                                28, 2010     1, 2009    28, 2010     1, 2009
                                           (restated)              (restated)
    -------------------------------------------------------------------------
                                       $           $           $           $

    Cash flows from investing
     activities:
      Acquisition of
       businesses, net of
       cash and cash
       equivalents acquired            -          (4)       (203)       (542)
      Proceeds from business
       disposals, net of cash
       and cash equivalents
       disposed                        -           -           3           -
      Change in restricted
       cash                           87         183         152         226
      Change in temporary
       investments                (1,000)          -      (3,000)        100
      Change in notes
       receivable                    (81)        170        (141)        160
      Additions to capital
       assets                       (468)     (1,692)       (635)     (2,751)
      Proceeds from disposal
       of capital assets             650           7         652           7
      Increase in intangibles
       and other assets                -           -           -         (72)
    -------------------------------------------------------------------------
                                    (812)     (1,336)     (3,172)     (2,872)
    -------------------------------------------------------------------------

    Net increase (decrease)
     in cash and cash
     equivalents                   1,051       1,522          86        (950)
    Cash and cash equivalents,
     beginning of period           7,486       4,395       8,451       6,867
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                 8,537       5,917       8,537       5,917
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

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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