During Fiscal Year 2009, Despite Challenging Business Conditions, Sportscene
Maintains its Operating Profitability Compared with the Previous Year and
Further Improves its Financial Position


    
    - 3.2% growth in revenues;
    - Slight increase in consolidated EBITDA(1);
    - Net earnings of $4.5 million or $1.07 per share ($4.9 million or $1.19
      per share excluding non-recurring items).
    
</pre>
<p/>
<p><location>MONTREAL</location>, <chron>Nov. 19</chron> /CNW Telbec/ - During the fiscal year ended <chron>August 30, 2009</chron>, SPORTSCENE GROUP INC. ("Sportscene" or "the Company"; SPS.A/TSX Venture Exchange), operator of the LA CAGE AUX SPORTS chain of resto-bars, managed to mitigate the impact of a challenging business environment on its results, primarily through stronger focus on initiatives yielding greater added value, the ongoing optimization of its operational and administrative processes and the development of its related activities.</p>
<p>The Company's annual consolidated revenues amounted to <money>$81.3 million</money>, up from <money>$78.7 million</money> the previous year. This 3.2% growth is attributable to the increased contribution of activities other than restaurant operations, mainly the organization of world boxing championships, the operation of the sports complex acquired in <chron>March 2008</chron>, and the construction or renovation of franchised and joint venture Cages. However, restaurant revenues declined by 6.0% to <money>$66.7 million</money>, as a result of the economic slowdown that affected consumers' habits, along with a less favourable sports environment than the previous year. For the same reasons, La Cage aux Sports' total network sales decreased by 5.6% to <money>$114.7 million</money>, compared with <money>$121.5 million</money> the previous year. In addition to a more difficult business environment, the decline in total network sales can be explained by the fact that fiscal 2008 included one more week than fiscal 2009. Notwithstanding this additional week in 2008, total network sales posted a 4.1% decline.</p>
<p>Despite the additional week in fiscal 2008, consolidated EBITDA (earnings before amortization, interest and income taxes(1)) amounted to <money>$11.5 million</money> for fiscal 2009, compared with <money>$11.4 million</money> in 2008, as a result primarily of the increased contribution of activities other than restaurant operations. Regarding restaurant operations, the unfavourable impact of the organic decrease in La Cage aux Sports' total network sales was mitigated, among other factors, by the improvement in operating practices - especially kitchen processes - and the non-recurrence of certain costs recorded in 2008. Consequently, although the restaurant segment's EBITDA declined in dollars, its EBITDA margin as a percentage of revenues improved from 15.7% in 2008 to 15.9% in 2009. For the Company overall, however, the consolidated EBITDA margin decreased from 14.5% to 14.1%, due mainly to the smaller proportion of restaurant revenues in the consolidated revenue mix.</p>
<p>During fiscal 2009, Sportscene recorded non-recurring net losses totalling close to <money>$0.7 million</money>, of which a <money>$0.1 million</money> net loss on the disposal of capital assets in connection with the renovation of Cages, a <money>$0.2 million</money> impairment of long-term assets recognized in the fourth quarter, and a <money>$0.4 million</money> write-off (also recognized in the fourth quarter) of the goodwill of the division specializing in on-site foodservices and beer sales at events, following Sportscene's decision to discontinue part of its operations in order to focus on larger, more profitable events. In 2008, conversely, the Company had recorded net non-recurring gains of <money>$0.2 million</money> on the disposal of interests in some Cages.</p>
<p>Earnings before income taxes and non-controlling interest, or "EBT", amounted to <money>$6.1 million</money> in 2009, compared with <money>$7.0 million</money> in 2008. Excluding the non-recurring gains and losses recorded during the two comparative fiscal years, which translated into a net unfavourable variation of <money>$0.9 million</money> in 2009 results, EBT posted a slight decline of 1.3%, to stand at <money>$6.7 million</money> in 2009 compared with <money>$6.8 million</money> in 2008.</p>
<p>Sportscene closed fiscal 2009 with net earnings of <money>$4,481,000</money> or <money>$1.07</money> per share (basic and diluted), compared with net earnings of <money>$5,011,000</money> or <money>$1.20</money> per share (<money>$1.19</money> diluted) the previous year. For information purposes, excluding non-recurring gains and losses for the two comparative fiscal years, net of related taxes, net earnings would have amounted to <money>$4,959,000</money> or <money>$1.19</money> per share in 2009, compared with <money>$4,880,000</money> or <money>$1.16</money> per share in 2008. Thus, Sportscene maintained and even slightly increased its operating profitability despite the economic slowdown that prevailed throughout fiscal 2009, and although 2009 included one less week of operation than 2008.</p>
<p/>
<pre>
    
    Results for the Fourth Quarter Ended August 30, 2009
    ----------------------------------------------------
    
</pre>
<p/>
<p>Sportscene's revenues decreased by 12.5% to <money>$17.8 million</money>, due largely to the fact that the fourth quarter of 2008 comprised 14 weeks compared with 13 in 2009, This mostly affected restaurant revenues, which also continued to suffer from the organic decrease in La Cage aux Sports' total network sales caused by the prevailing economic context. Total network sales amounted to <money>$24.8 million</money>, down 9.8% from the same quarter of 2008 (3.1% decrease excluding the additional week in 2008). Despite the revenue shortfall attributable to the 14th week in the fourth quarter of 2008, consolidated EBITDA increased slightly to stand at <money>$2.3 million</money>, whereas the EBITDA margin improved from 11.5% in 2008 to 13.2% in 2009. This improvement is primarily attributable to the restaurant segment, whose EBITDA margin increased from 11.6% in the fourth quarter of 2008 to 15.1% 2009, due to two main factors: (1) the recognition of restructuring costs of <money>$0.2 million</money> in the last quarter of 2008, as part of the reorganization of the Company's operations to further focus its efforts and resources toward the development of the La Cage aux Sports banner, while ensuring a more targeted and productive management of its complementary activities; and (2) the productivity and efficiency gains achieved as part of the global optimization of operating practices, especially kitchen practices, which mitigated the impact of the organic decrease in total network sales on the restaurant segment's profitability.</p>
<p>Sportscene closed the fourth quarter with net earnings of <money>$564,000</money> or <money>$0.14</money> per share (basic and diluted), compared with net earnings of <money>$772,000</money> or <money>$0.18</money> per share (basic and diluted) in the same quarter of 2008. For information purposes, excluding non-recurring gains and losses for the two comparative quarters (in the amount of <money>$0.6 million</money> in 2009 and immaterial in 2008), net of related taxes, net earnings would have amounted to <money>$882,000</money> or <money>$0.21</money> per share in the fourth quarter of 2009, compared with <money>$725,000</money> or <money>$0.17</money> per share in the quarter of 2008.</p>
<p/>
<pre>
    
    Balance Sheet Reinforcement
    ---------------------------
    
</pre>
<p/>
<p>Cash flows from operating activities amounted to <money>$8.7 million</money> during fiscal 2009. Combined with the tightening of its cash management in light of the economic context, these contributed to raise cash and cash equivalents to <money>$8.5 million</money> as at <chron>August 30, 2009</chron>. At the same date, working capital reached <money>$3.6 million</money> for a current ratio of 1.38:1, compared with <money>$2.3 million</money> and a 1.18:1 ratio as at <chron>August 31, 2008</chron>. Also accounting for the increase in shareholders' equity, the total net debt to total invested capital ratio further improved, from 14.0% as at <chron>August 31, 2008</chron> to 13.2% as at <chron>August 30, 2009</chron>. Sportscene therefore remains in a solid financial position, not only to continue weathering the current economic context, but also to pursue targeted investments in the quality of its infrastructures and the upgrading of its technological platform.</p>
<p/>
<pre>
    
    Outlook
    -------
    
</pre>
<p/>
<p>"Although an improvement in economic conditions can be expected in upcoming quarters, our business context remains challenging for the moment. However, we believe that Sportscene Group is well equipped to continue weathering the economic uncertainty still prevailing," said Jean Bédard, President and Chief Executive Officer of Sportscene Group. "For fiscal 2010, we will pursue a similar action plan as in 2009 which enabled us - during the worst of the economic slowdown - to deliver operating profits (excluding non-recurring items) comparable to those of the previous year and to close fiscal 2009 with an even stronger financial position. Our actions will continue to focus on the following key objectives: (1) maintain our profit margins through the ongoing optimization of our operational and administrative processes and a constant focus on the creation of added value for our customers and shareholders; (2) foster the organic growth of La Cage aux Sports' total network sales, through the quality of our marketing programs showcasing La Cage's "Sports, gang, fun" ambience and the consolidation of our leadership in multimedia technologies; and (3) preserve Sportscene's financial health by maintaining the Company's significant self-financing capacity through operating cash flows, rigorous cash management and effective coaching provided to network operators," concluded the President.</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. The chain comprises, at the date thereof, 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)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                   13 weeks   14 weeks   52 weeks   53 weeks
                                         Ended                 Ended
                                  August 30  August 31  August 30  August 31
                                       2009       2008       2009       2008
    -------------------------------------------------------------------------
                                 (unaudited)(unaudited)  (audited)  (audited)
                                          $          $          $          $

    Revenues                         17,792     20,341     81,270     78,745
    Cost of sales, selling,
     general and administrative
     expenses                        15,446     18,011     69,782     67,313
    -------------------------------------------------------------------------
    Earnings before other items       2,346      2,330     11,488     11,432
    -------------------------------------------------------------------------

    Interest on long-term debt          104        192        510        575
    Other interest expense               45         48        210        178
    Amortization of deferred
     financing costs                      1          -          3          -
    Amortization of capital assets      854        882      3,466      3,255
    Amortization of intangibles
     and other assets                   170        229        570        607
    Loss on disposal of assets           39         36        119         66
    Impairment of long-lived assets     153          -        153          -
    Write-off of goodwill               394          -        394          -
    Gain on business disposals            -          -        (10)      (246)
    -------------------------------------------------------------------------
                                      1,760      1,387      5,415      4,435
    -------------------------------------------------------------------------
    Earnings before income taxes
     and non-controlling interest       586        943      6,073      6,997
    Income taxes                         47        201      1,644      1,999
    -------------------------------------------------------------------------
    Earnings before non-controlling
     interest                           539        742      4,429      4,998
    Non-controlling interest            (25)       (30)       (52)       (13)
    -------------------------------------------------------------------------
    Net earnings and comprehensive
     income                             564        772      4,481      5,011
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share:
      Basic                           $0.14      $0.18      $1.07      $1.20
      Diluted                         $0.14      $0.18      $1.07      $1.19

    Weighted average number of
     Class A shares outstanding
     (in thousands):
      Basic                           4,180      4,205      4,182      4,193
      Diluted                         4,183      4,213      4,185      4,200
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated statements of variations in shareholders' equity
    (amounts are expressed in thousands of dollars)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                   13 weeks   14 weeks   52 weeks   53 weeks
                                         Ended                 Ended
                                  August 30  August 31  August 30  August 31
                                       2009       2008       2009       2008
    -------------------------------------------------------------------------
                                 (unaudited)(unaudited)  (audited)  (audited)
                                          $          $          $          $

    Share capital, beginning
     of period                        3,543      3,498      3,499      3,255
    Issuance of stock                     -          -         14        182
    Redemption of stock                   -          -        (23)         -
    Transfer from contributed
     surplus                             10          -         10         45
    Retraction of notes receivable        2          1         55         17
    -------------------------------------------------------------------------
    Share capital, end of period      3,555      3,499      3,555      3,499
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Contributed surplus, beginning
     of period                          187        157        171        166
    Stock-based compensation              3         14         20         50
    -------------------------------------------------------------------------
                                        190        171        191        216
    Less:
      Excess of the purchase price
       over the carrying amount of
       the Class A shares redeemed        -          -          1          -
      Transfer to share capital          10          -         10         45
    -------------------------------------------------------------------------
    Contributed surplus, end of
     period                             180        171        180        171
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Retained earnings, beginning
     of period                       23,786     21,941     21,452     18,964
    Net earnings                        564        772      4,481      5,011
    -------------------------------------------------------------------------
                                     24,350     22,713     25,933     23,975
    Less:
      Excess of the purchase price
       over the carrying amount of
       the Class A shares redeemed        -          -        330          -
      Dividends on Class A shares     1,254      1,261      2,507      2,523
    -------------------------------------------------------------------------
    Retained earnings, end of
     period                          23,096     21,452     23,096     21,452
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated balance sheets
    (amounts are expressed in thousands of dollars)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                             2009       2008
    -------------------------------------------------------------------------
                                                         (audited)  (audited)
                                                                $          $
    Assets
    Current assets:
      Cash and cash equivalents                             8,451      6,867
      Restricted cash                                         168        260
      Temporary investment                                      -        100
      Accounts receivable                                   3,064      5,169
      Inventories                                             970      1,766
      Prepaid expenses                                        533        679
      Current portion of notes receivable                      34         36
    -------------------------------------------------------------------------
      Total current assets                                 13,220     14,877

    Notes receivable                                          954        959
    Capital assets                                         31,038     29,265
    Intangibles and other assets                              796      1,381
    Future income taxes                                       869        380
    Goodwill                                                2,224      2,363
    -------------------------------------------------------------------------
    Total assets                                           49,101     49,225
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities :
      Accounts payable and accrued liabilities              6,292      9,337
      Income taxes payable                                    564         29
      Future income taxes                                     115        116
      Deferred income and credits                             805      1,307
      Current portion of long-term debt                     1,838      1,791
    -------------------------------------------------------------------------
      Total current liabilities                             9,614     12,580

    Long-term debt                                         10,845      9,510
    Deferred income and credits                               889        927
    Future income taxes                                       496        569
    Non-controlling interest                                  426        517
    -------------------------------------------------------------------------
    Total liabilities                                      22,270     24,103

    Shareholders' equity:
      Share capital                                         3,555      3,499
      Contributed surplus                                     180        171
      Retained earnings                                    23,096     21,452
    -------------------------------------------------------------------------
                                                           26,831     25,122
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity             49,101     49,225


    Consolidated statements of cash flows
    (amounts are expressed in thousands of dollars)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                   13 weeks   14 weeks   52 weeks   53 weeks
                                         Ended                 Ended
                                  August 30  August 31  August 30  August 31
                                       2009       2008       2009       2008
    -------------------------------------------------------------------------
                                 (unaudited)(unaudited)  (audited)  (audited)
                                          $          $          $          $
    Cash flows from operating
     activities:

    Net earnings                        564        772      4,481      5,011
      Non-cash items:
        Gain on business disposals        -          -        (10)      (246)
        Loss on disposal of assets       39         36        119         66
        Write-off of goodwill           394          -        394          -
        Impairment of notes
         receivable                      57          -         57          -
        Impairment of intangibles
         and other assets                96          -         96          -
        Amortization of deferred
         financing costs                  1          -          3          -
        Amortization of capital
         assets                         854        882      3,466      3,255
        Amortization of intangibles
         and other assets               170        229        570        607
        Non-controlling interest        (25)       (26)       (52)       (13)
        Stock-based compensation          3         14         20         50
        Future income taxes            (318)       130       (594)        53
    -------------------------------------------------------------------------
                                      1,835      2,037      8,550      8,783
    Net change in non-cash balances
     related to operations, net of
     acquisitions and business
     disposals                        2,337      1,890        146      2,020
    -------------------------------------------------------------------------
                                      4,172      3,927      8,696     10,803
    Cash flows from financing
     activities:

    Proceeds from issuance of
     long-term debt                     169        485      2,487      2,549
    Repayment of long-term debt        (500)      (475)    (2,263)    (1,484)
    Increase in deferred financing
     costs                                -          -        (12)         -
    Dividends on Class A shares      (1,254)    (1,261)    (2,507)    (2,523)
    Dividends paid to
     non-controlling interest             -        (15)         -        (15)
    Proceeds from issuance of
     Class A shares                       -          -         14        182
    Redemption of Class A shares          -          -       (354)         -
    Redemption of a subsidiary's
     equity shares held by
     non-controlling interest           (10)         -        (10)         -
    Proceeds from issuance of
     equity shares of a subsidiary
     to non-controlling interest          -          -          -        174
    -------------------------------------------------------------------------
                                     (1,595)    (1,266)    (2,645)    (1,117)
    Cash flows from investing
     activities:

      Acquisition of businesses,
       net of cash and cash
       equivalents acquired             (40)         -       (615)    (2,049)
      Proceeds from business
       disposals, net of cash
       and cash equivalents
       disposed                           -          -         22        187
      Change in restricted cash         (82)      (104)        91          7
      Disposal (acquisition) on
       temporary investments              -          -        100        (60)
      Issuance of notes receivable      (54)      (441)      (432)      (585)
      Retraction of notes
       receivable                         -          -        438        166
      Acquisitions of capital
       assets                        (1,008)    (1,585)    (4,052)    (3,206)
      Proceeds from disposal of
       capital assets                     2         47         62         70
      Increase in intangibles and
       other assets                       -       (211)       (81)      (498)
    -------------------------------------------------------------------------
                                     (1,182)    (2,294)    (4,467)    (5,968)

    Net increase in cash and
     cash equivalents                 1,395        367      1,584      3,718
    Cash and cash equivalents,
     beginning of period              7,056      6,500      6,867      3,149
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                    8,451      6,867      8,451      6,867
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

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


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