The Implementation of Sportscene's Strategic Plan Accelerates in the Second Quarter

MONTREAL, April 16, 2015 /CNW Telbec/ - SPORTSCENE GROUP INC. ("Sportscene" or "the Company") (TSXV: SPS.A) is pleased to announce that the implementation of its strategic plan aimed at positioning the Company for a new growth cycle is progressing in accordance with management's expectations. During the second quarter ended March 1st, 2015, in particular, the Company invested a large portion of the amounts and efforts needed to upgrade the La Cage aux Sports concept in order to enhance every aspect of the customer experience.

Achievements and Results for the 13 and 26-Week Periods Ended March 1st, 2015

A core feature of the banner's renewal, the higher quality of the food offering entails in-depth changes in procurement and kitchen processes, backed with intensive staff training activities, which is translating into substantial costs during the rollout period.

Consequently, Sportscene closed the second quarter, being the 13-week period ended March 1st, 2015, with a net loss attributable to shareholders of $361,000 or $0.09 per share. Management views this temporary set back in results as an investment that will enable the Company to reinforce the strategic positioning of the La Cage aux Sports network and give Sportscene access to a new cycle of growth and profitability over the medium and long term. During the same period, La Cage aux Sports' total network sales (1) posted a 5.0% decrease to stand at $25.8 million, due to the challenging economic context that has been affecting the Quebec restaurant industry for the past several quarters. Sportscene's management sees this situation as further motivation to accelerate the implementation of its positioning and growth strategy. Despite the decrease in network sales, the Company's revenues increased by 8.6% to stand at $19.7 million, thanks to activities other than the operation of the La Cage aux Sports network, namely the sale of La Cage aux Sports branded products in grocery stores, the organization of sporting events and the renovation of Cages. Finally, consolidated adjusted EBITDA (3) amounted to $0.6 million, compared with $1.7 million for the same quarter of the previous year, as a result of the costs incurred in connection with the implementation of the strategic plan coupled with the decline in average same-Cage sales (2).

For the 26-week period ended March 1st, 2015, Sportscene posted a net loss attributable to shareholders of $336,000 or $0.08 per share. Total network sales (1) decreased by 5.1% from the same period in 2014 to stand at $52.0 million. Conversely, Sportscene's revenues grew by 3.9% to total $37.0 million. Consolidated adjusted EBITDA (3) amounted to $1.8 million, compared with $3.6 million for the same period of the previous year, due to the aforementioned factors.

Sportscene continues to benefit from a sound financial position, posting short-term available cash (4) of $5.5 million and a total net debt ratio (5) of 20.2% as at March 1st, 2015.

Outlook

"Although most of the costs associated with the strategic plan implementation are behind us, further investments are to be expected over the next few months to fulfill the extensive transition we have undertaken in the best interests of Sportscene Group and its shareholders," indicated Jean Bédard, President and Chief Executive Officer of Sportscene.

"The Quebec restaurant industry currently faces major challenges that are prompting its players to reconsider their positioning and their business model. Once again, Sportscene is taking the lead in this transition, so as to avail itself of an enviable competitive position for the years to come. Over the next few months, we will focus on the following three major courses of action: (1) the gradual and targeted transformation of Cages according to the new design today showcased by seven of them, (2) the rollout of the new menu network-wide, with all the operational ramifications it entails, and (3) the profitable development of our related activities, in particular InterBox and the sale of La Cage aux Sports products in grocery stores."

Appointments

To support the efficient execution or its plan and ensure its future success, Sportscene Group has made the following appointments to its management team. Renowned chef Louis-François Marcotte has been appointed Vice-President, Restaurant Operations of Sportscene Group, which will benefit from his great expertise and his knowledge of the restaurant market. Furthermore, Pierre Duc recently joined Sportscene's team as Vice-President, Sales and Marketing. His solid sales and marketing experience will give the Company an edge in identifying and pursuing development projects for the La Cage aux Sports banner and Sportscene's other activities. Finally, François-Xavier Pilon, CPA, CA is appointed Interim Vice President Finance for the upcoming months, while Josée Pepin is on maternity leave.  Her return is scheduled for next fall.

Profile

In business since 1984, Sportscene Group Inc. operates Quebec's leading chain of sports-themed resto-bars: La Cage aux Sports. This banner comprises 51 "Cages", 40 of which are wholly or jointly owned by the Company, and 11 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 hosting and organization of multiple contests and special events.

The following items are not performance measures consistent with IFRS: 

(1)

Total network sales correspondent to sales achieved by all o La Cage aux Sports' 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 gains and losses on the disposal of property, plant and equipment are excluded

(4)

Short- term available cash includes cash and cash equivalents as well as investments, if any.

(5)

Total net debt consists of long-term debt including its current portion, net of short-term available cash.

For further information regarding the results and financial position of Sportscene Group Inc., refer to the interim management's report as well as the interim consolidated financial statements and accompanying notes for the 13 and 26-week periods ended March 1st, 2015, 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.

 

Interim Condensed Consolidated Statements of Comprehensive Income

(in thousands of Canadian dollars, except for earnings per share and number of outstanding shares) 

(unaudited)



13 weeks ended

26 weeks ended


March 1st, 

2015

February 23, 

2014

March 1st, 

2015

February 23,

2014


$

$

$

$






Revenues  

19,680

18,128

37,022

35,649

Cost of sales  

7,301

6,201

12,934

11,234

Selling and administrative expenses, excluding amortization  

11,794

10,250

22,316

20,788

(Gain) loss on disposal of property, plant and equipment 

(234)

7

(224)

13

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

819

1,670

1,996

3,614






Amortization 

985

940

1,966

1,843

Financial expenses  

134

133

297

276

Share of net earnings of joint ventures and associates 

165

(420)

184

(552)

Earnings before income tax expenses 

(465)

1,017

(451)

2,047






Income tax expenses 

(71)

169

(62)

410

Net earnings and comprehensive income  

(394)

848

(389)

1,637






Net earnings and comprehensive income attributable to: 










The Company's shareholders 

(361)

842

(336)

1,629

Non-controlling interests 

(33)

6

(53)

8

Net earnings and comprehensive income  

(394)

848

(389)

1,637






Earnings per share (in $):






Basic

(0.09)

0.20

(0.08)

0.39


Diluted 

(0.09)

0.20

(0.08)

0.39






Weighted average number of outstanding






Class A shares (in thousands):






Basic

4,165

4,165

4,165

4,165


Diluted

4,165

4,231

4,165

4,231

 

 

Interim Condensed Consolidated Statements of Financial Position

(in thousands of Canadian dollars) 

(unaudited)



March 1st,  

2015

August 31,

2014


$

$

Assets



Current assets




Cash and cash equivalents

5,548

8,528


Accounts receivable

4,015

3,722


Income tax receivable

498

568


Inventories

1,934

2,041


Prepaid expenses

537

336


Current portion of notes receivable

150

-

Total current assets

12,682

15,195




Notes receivable

1,964

1,514

Property, plant and equipment 

34,847

36,046

Intangible assets 

730

719

Deferred tax asset 

1,649

1,783

Investments in joint ventures and associates 

3,893

4,137

Goodwill

2,792

2,792

Total assets 

58,557

62,186







Liabilities and shareholders' equity






Current liabilities




Accounts payable and accrued liabilities

7,278

7,560


Income tax payable

99

216


Deferred revenues and credits

899

872


Current portion of long-term debt

2,058

2,052

Total current liabilities

10,334

10,700




Long-term debt

12,210

14,531

Deferred revenues and credits  

940

1,078

Deferred tax liability 

726

1,168

Total liabilities 

24,210

27,477




Shareholders' equity







Share capital

3,551

3,551


Stock-based compensation reserve

395

368


Retained earnings

30,170

30,506

Shareholders' equity attributable to the Company's shareholders

34,116

34,425

Non-controlling interests

231

284

Total shareholders' equity

34,347

34,709




Commitments, guarantees and contingencies






Total liabilities and shareholders' equity 

58,557

62,186

 

 

Interim Condensed Consolidated Statements of Cash Flows

(in thousands of Canadian dollars) 

(unaudited)



13 weeks ended

26 weeks ended


March 1st, 

2015

February 23,  

2014

March 1st,

2015

 February 23,

2014



$

$

$

$






Operating activities






Net earnings

(394)

848

(389)

1,637


Adjustments to reconcile net earnings to cash flows from operating activities







(Gain) Loss on disposal of property, plant and equipment

(234)

7

(224)

13



Amortization of property, plant and equipment

971

935

1,938

1,826



Amortization of intangible assets

14

5

28

17



Share of net earnings of joint ventures and associates

165

(420)

184

(552)



Dividends received from joint ventures and associates

-

120

125

420



Stock-based compensation

12

19

27

31



Financial expenses recognized in net earnings

134

133

297

276



Financial expenses paid

(131)

(150)

(288)

(290)



Income tax expenses recognized in net earnings

(71)

169

(62)

410



Income tax paid

(1)

26

(293)

(274)


465

1,692

1,343

3,514


Net change in non-cash working capital items, net of acquisitions and disposals of subsidiaries

(379)

1,143

(1,457)

512


86

2,835

(114)

4,026

Financing activities






Increase of long-term debt

-

-

800

1,500


Repayment of long-term debt

(991)

(584)

(3,124)

(1,100)


Dividends paid to the Company's shareholders

-

(1,250)

-

(1,250)


(991)

(1,834)

(2,324)

(850)

Investing activities






Business combination and acquisition of assets,net of cash and cash equivalents acquired

-

-

-

(881)


Investments in joint ventures and associates

-

-

(65)

-


Change in notes receivable

(507)

70

(600)

2


Acquisitions of property, plant and equipment

(582)

(1,915)

(1,233)

(3,475)


Proceeds from disposals of property, plant and equipment

1,387

-

1,395

5


Acquisitions of intangible assets

(14)

-

(39)

(18)


284

(1,845)

(542)

(4,367)

Decrease in cash and cash equivalents 

(621)

(844)

(2,980)

(1,191)

Cash and cash equivalents, beginning of period 

6,169

7,478

8,528

7,825

Cash and cash equivalents, end of period

5,548

6,634

5,548

6,634

 

SOURCE Sportscene Group Inc.

For further information: Jean Bédard, Chairman of the Board, President and Chief Executive Officer; François-Xavier Pilon, Interim Vice-President, Finance, 450-641-3011

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