Sportscene Group's Fiscal 2016: Improved Profitability for the La Cage - Brasserie Sportive Network

MONTREAL, Nov. 24, 2016 /CNW Telbec/ - Management of SPORTSCENE GROUP INC. ("Sportscene" or "the Company"; SPS.A / TSX Venture Exchange) is pleased to announce that the Company's achievements for the fiscal year ended August 28, 2016 and the trend in the La Cage – Brasserie sportive network's sales met its objectives and attest to the fact that the banner's repositioning has started to generate the expected benefits. This repositioning plan comprised three major elements: implementing a new interior Cage design and renewing the Cages' food offering along with the banner's brand image. 

Among the actions taken in 2016, four more Cages were completely renovated according to the new design and a fifth was rebuilt on a better site.  At the beginning of fiscal 2017, a brand new Cage was inaugurated in the prestigious Quartier des Spectacles in downtown Montreal. Conversely, toward the end of the year, the Company launched a network optimization initiative to ensure that its efforts and financial resources are channeled toward markets offering the highest growth potential. In the fourth quarter of the last fiscal year, this led to the closing of four Cages that did not meet management's profitability standards and did not have enough growth potential.

Renewed Organic Sales Growth and Improved Profitability for the Cage Network

For the fiscal year 2016, total network sales(1) of La Cage – Brasserie Sportive increased by 3.9% to $106.8 million, despite a smaller number of Cages in operation compared with 2015. Thus, the sales growth is attributable to a 6.2% increase in average same-Cage sales(2).

Management attributes the network's performance to the recent repositioning of the banner, which is having a very positive impact on customer traffic and network sales, especially for the Cages featuring the new design. In addition, the enhancement of La Cage's food offering helps gradually reduce its dependence on the sports calendar and thereby offsets the seasonal cycle of operations.

Sportscene's Financial Results for the Fiscal Year and Quarter Ended August 28, 2016

For the fiscal year ended August 28, 2016, Sportscene's consolidated revenues grew by 8.5% to $84.6 millions, due to the good performance of the "Restaurant" segment, which generated 92% of total revenues. The growth posted by the Company's core business was mainly driven by the aforementioned 6.2% growth in average same-Cage sales(2), coupled with the acquisition of two other-banner restaurants at the end of fiscal 2015.

Thanks primarily to the general improvement in the Cage network's profitability, Sportscene's adjusted EBIDTA(3) rose by 21.5% to $4.1 million, despite the non-recurring costs incurred in connection with the opening and closing of Cages and the amounts invested to turn around the non-banner restaurants' profitability. The network's profitability notably benefitted from the increase in average same-Cage sales(2)  and the diminishing impact of sporting events and seasonal fluctuations on the operational management of the Cage network. The Cages featuring the new design, in particular, posted above-average performances.

Consequently, the Company closed fiscal 2016 with a net loss attributable to shareholders of $0.8 million or $0.15 per share (basic and diluted), compared to a net loss of $2.2 million or $0.53 per share in 2015.

During the fourth quarter, la Cage network's total sales(1) amounted to $26.5 million, posting a 20.8% increase essentially attributable to the growth in average same-Cage sales(2). Sportscene's revenues increased by 15.4% to stand at $22.2 million, due to a 24.9% growth in restaurant revenues. The consolidated adjusted EBITDA(3) increased from $0.2 million in 2015 to $0.5 million in 2016, thanks to the rise in average same-Cage sales(2), which more than offset the effect of certain non-recurring expenses related to the optimization of the La Cage network.  Sportscene closed the fourth quarter of fiscal 2016 with a net loss attributable to shareholders of $0.5 million or $0.11 per share (basic and diluted), compared to a net loss of $2.1 million or $0.50 per share (basic and diluted) during the same quarter in 2015.

Favourable Outlook for Fiscal 2017

"We are entering fiscal 2017 with a more competitive market position, increasingly profitable restaurants and a stronger network across the board. We can therefore expect an increase in network sales in the coming quarters," said Sportscene's C.E.O. Jean Bédard. 

To strengthen its new business model and maximize the benefits thereof, the Company will focus its efforts on the following main strategic targets in upcoming quarters:

  • Employee engagement through the implementation of training and professional development programs tailor-made for La Cage and the development of new management and guidance tools for Cage operators;
  • Technological innovation; and
  • The ongoing optimization of the La Cage network, including the opening of a few Cages in upcoming quarters and the modernization of a certain number of existing Cages.

In light of the success met by the renovated Cages that today boast the new interior design, Sportscene has decided to step up the network's modernization, which prompted it to undertake an extensive review of its investment program and financing strategies. This review is still underway.  Following the banner's repositioning and the changes brought to the network in the fourth quarter, management believes the current structure of the La Cage network, its health and, most importantly, its growth potential today represent a solid base to support the Company's development and modernization strategy going forward.

Profile

Sportscene Group is a pioneer and a leader in the ambience restaurant niche in Quebec, where it has operated a chain of sports-themed resto-bars since 1984: La Cage – Brasserie sportive ("La Cage"). Enjoying a strong brand image, La Cage comprised 46 units located across Quebec at the date hereof. The Cages offer complete foodservices and bar services in a sophisticated sports-inspired décor featuring the most advanced audio-visual technologies.

The following items are not performance measures consistent with International Financial Reporting Standards ("IFRS"):

(1)

Total network sales correspond to sales achieved by all La Cage restaurants: franchisees, partnerships and corporate units.

(2)

Average same-Cage sales isolate the impact of restaurant openings and closures to assess the actual trend in restaurant sales.

(3)

In Sportscene's statement of comprehensive income, adjusted EBITDA corresponds to "Earnings before financial expenses, amortization, share of net earnings of joint ventures and associates and income taxes", from which other (gains) losses are excluded.

For further information regarding the results and financial position of Sportscene Group Inc., refer to the management's report as well as the consolidated financial statements and accompanying notes for the fiscal year ended August 28, 2016, available on SEDAR.

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.

 

Reconciliation of Non-IFRS Financial Measures 




(in million of $)

13 Weeks Ended

52 Weeks Ended


August 28,
2016

August 30,
2015

August 28,
2016

August 30,
 2015

Restaurant revenues,  excluding revenues from
franchises and sales in grocery stores

17.6

13.8

65.4

54.9

Food concession revenues

(1.8)

(1.6)

(3.3)

(1.8)

Restaurants out of banner

(1.4)

(0.1)

(5.4)

(0.1)

Revenues from franchises and partnerships

12.1

9.9

50.1

49.7

Total network sales

26.5

22.0

106.8

102.7






Earning before financial expenses,
amortization, share of net earnings of joint
ventures and associates, and income taxes

0.6

(1.5)

4.2

1.9

Other (gain) losses

(0.1)

1.7

(0.1)

1.5

Adjusted EBITDA

0.5

0.2

4.1

3.4

 

Consolidated Statements of Comprehensive Income
for the years ended August 28, 2016 and August 30, 2015
(in thousands of Canadian dollars, except for earnings per share and number of outstanding shares)








August 28, 2016

August 30, 2015


$

$




Revenues

84,551

77,922

Cost of sales

26,882

25,905

Selling and administrative expenses, excluding amortization

53,535

48,622

Other (gains) losses

(90)

1,474

Earnings before financial expenses, amortization, share of net
loss of joint ventures and associates and income tax

4,224

1,921




Amortization

4,387

4,094

Financial expenses

715

614

Share of net loss of joint ventures and associates

78

376


5,180

5,084




Loss before income tax expenses

(956)

(3,163)

Income tax recovery

(205)

(800)

Net loss and comprehensive loss

(751)

(2,363)




Net loss and comprehensive loss attributable to:






The Company's shareholders

(622)

(2,227)

Non-controlling interests

(129)

(136)

Net loss and comprehensive loss

(751)

(2,363)




Loss per share (in dollars):




Basic

(0.15)

(0.53)


Diluted 

(0.15)

(0.53)




Weighted average number of outstanding Class A shares



(in thousands):




Basic

4,165

4,165


Diluted

4,165

4,165

 

SOURCE Sportscene Group Inc.

For further information: Jean Bédard, Chairman of the Board, President and Chief Executive Officer; Josée Pépin, Vice-President, Finance, 450-641-3011

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