Sportscene Group Achieves a Solid Third-Quarter Performance and Declares a
Second Dividend of $0.30 Per Share for Fiscal 2010
- The Company realizes record quarterly net earnings of $1.6 million or
$0.38 per share.
- Net earnings for the first nine months of fiscal 2010 total
$4.2 million or $0.99 per share, up 5.8% over the previous year.
- La Cage aux Sports' total network sales post a 5.0% organic growth in
the third quarter.
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<p/>
<p><span class="xn-location">MONTREAL</span>, <span class="xn-chron">July 8</span> /CNW Telbec/ - Management of SPORTSCENE GROUP INC. ("Sportscene" or "the Company"; SPS.A / TSX Venture Exchange), operator of the LA CAGE AUX SPORTS chain of resto-bars, is pleased to announce a growth in its financial results for the 13-week period ended <span class="xn-chron">May 30, 2010</span> compared with the same period of 2009. Net earnings rose by 28.4%, from <span class="xn-money">$1.2 million</span> or <span class="xn-money">$0.29</span> per share (basic and diluted) in the third quarter of the previous year to <span class="xn-money">$1.6 million</span> or <span class="xn-money">$0.38</span> per share (basic and diluted) this year, the highest level ever recorded by the Company. This performance can be explained by a combination of factors, including: organic growth in La Cage aux Sports' total network sales stemming from a favourable sports environment, increased profit margins in most of the Company's spheres of activity and lower financial expenses. La Cage aux Sports' total network sales amounted to <span class="xn-money">$31.7 million</span> compared with <span class="xn-money">$30.2 million</span> in 2009. This 5.0% exclusively organic increase is largely attributable to the exciting atmosphere surrounding the <span class="xn-location">Montreal</span> Canadiens' participation in the Stanley Cup playoffs - especially the semi-finals - whose effect on the Cages' traffic across <span class="xn-location">Quebec</span> offset the sluggish economy that continues to affect the restaurant industry. In addition, Sportscene held two major boxing events during the quarter which, combined with the Cages' good performance, contributed to raise the Company's revenues by 7.8% to <span class="xn-money">$22.2 million</span>. Finally, EBITDA(1) (earnings before interest, amortization, other items and income taxes) increased by 16.2% to <span class="xn-money">$3.5 million</span>. The EBITDA margin thereby improved from 14.7% in the third quarter of 2009 to 15.8% this year, this performance being due primarily to the restaurant segment and the organization of sporting events.</p>
<p>The solid third-quarter performance almost eliminated, and even reversed, the declines in the Company's results posted during the first two quarters of fiscal 2010 due to the economic context. For the 39-week period ended <span class="xn-chron">May 30, 2010</span>, although total network sales and Sportscene's revenues were down slightly compared with the same period in 2009, year-to-date net earnings grew by 5.8% to <span class="xn-money">$4.2 million</span> or <span class="xn-money">$0.99</span> per share (basic and diluted), compared with <span class="xn-money">$3.9 million</span> or <span class="xn-money">$0.94</span> (basic and diluted) in the same period of 2009. EBITDA increased by 2.1% to <span class="xn-money">$9.3 million</span>, whereas the EBITDA margin improved from 14.4% in 2009 to 15.1% in 2010. Furthermore, operating activities provided cash flows of <span class="xn-money">$7.8 million</span> during the first nine months of fiscal 2010. Consequently, Sportscene closed the period with short-term available cash of <span class="xn-money">$13.0 million</span>, which represents a <span class="xn-money">$1.7 million</span> surplus over the Company's total debt of <span class="xn-money">$11.3 million</span>.</p>
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Declaration of a Dividend of $0.30 Per Share
--------------------------------------------
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<p>In light of the Company's solid financial results and healthy balance sheet, the Board of Directors has declared a second <span class="xn-money">$0.30</span> per-share dividend for fiscal 2010. This brings the total dividend for fiscal 2010 to <span class="xn-money">$0.60</span> per share, being the same amount as the previous three years. The new dividend will be paid on <span class="xn-chron">August 13, 2010</span> to shareholders of record as at <span class="xn-chron">July 23, 2010</span>.</p>
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2011 Outlook: Return to Expansion Mode
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<p>Sportscene's management believes that the economic recovery that is gradually materializing should start to have a positive effect on the restaurant industry toward the end of 2010. Thus, it expects that Sportscene's financial performance for the fourth quarter of the current fiscal year will be comparable to the same quarter a year earlier. Sportscene should therefore close fiscal 2010 with comparable results to fiscal 2009. "Hence, we will have achieved the key objectives stated at the beginning of the year, which were to maintain or improve our profit margins, foster the organic growth of La Cage aux Sports' total network sales and safeguard Sportscene's financial health," indicated Jean Bédard, President and Chief Executive Officer of Sportscene Group.</p>
<p>"Over the last two fiscal years, we have responded to the challenges of the economic slowdown by intensifying our initiatives aimed at the continuous optimization of our profitability and operational excellence in every aspect of our business. Although we have also temporarily reduced our capital expenditures, we did not neglect our infrastructures which were carefully maintained in order to preserve their quality and our technological lead. Along with a solid balance sheet and a network in perfect condition, all these efforts have provided the Company with a better aligned and performing organization and an operational structure capable of generating more profits with the same sales dollar, as attested to by our recent results. Now that the economy is showing signs of a recovery, we intend to capitalize on our recent achievements to resume our expansion projects and the growth of our banner as of fiscal 2011. Among such projects, we have initiated the construction work on the network's 50th Cage: a large-sized outlet strategically located in the East End of <span class="xn-location">Montreal</span>, which will open to the public at the end of the first quarter of fiscal 2011. We are also preparing to set up a foodservices concession inside a sports complex in Boisbriand," concluded the President.</p>
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Profile
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<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">May 30, 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 world class boxing events.</p>
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(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 39 weeks ended
May 30, May 31, May 30, May 31,
2010 2009 2010 2009
(restated) (restated)
-------------------------------------------------------------------------
$ $ $ $
Revenues 22,183 20,586 61,572 63,478
Cost of sales, selling, general
and administrative expenses 18,672 17,564 52,252 54,347
-------------------------------------------------------------------------
Earnings before other items 3,511 3,022 9,320 9,131
-------------------------------------------------------------------------
Interest on long-term debt 90 146 274 406
Other interest expense 8 58 54 165
Amortization of deferred
financing costs 1 - 2 2
Amortization of capital assets 1,046 893 2,785 2,612
Amortization of intangibles and
other assets 72 119 231 379
Loss on disposal of assets 115 58 267 80
Gain on business disposals - (10) - (10)
-------------------------------------------------------------------------
1,332 1,264 3,613 3,634
-------------------------------------------------------------------------
Earnings before income taxes and
non-controlling interest 2,179 1,758 5,707 5,497
Income taxes 596 529 1,613 1,594
-------------------------------------------------------------------------
Earnings before non-controlling
interest 1,583 1,229 4,094 3,903
Non-controlling interest (1) 3 61 26
-------------------------------------------------------------------------
Net earnings and comprehensive
income 1,582 1,232 4,155 3,929
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per share:
Basic $0.38 $0.29 $0.99 $0.94
Diluted $0.38 $0.29 $0.99 $0.94
Weighted average number of
Class A shares outstanding
(in thousands):
Basic 4,173 4,178 4,178 4,182
Diluted 4,176 4,178 4,181 4,182
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Consolidated statements of variations in shareholders' equity
(amounts are expressed in thousands of dollars)
(unaudited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
13 weeks ended 39 weeks ended
May 30, May 31, May 30, May 31,
2010 2009 2010 2009
(restated) (restated)
-------------------------------------------------------------------------
$ $ $ $
Share capital, beginning of period 3,559 3,480 3,555 3,499
Issuance of stock - 14 - 14
Redemption of stock (9) - (10) (23)
Retraction of notes receivable 2 49 7 53
-------------------------------------------------------------------------
Share capital, end of period 3,552 3,543 3,552 3,543
-------------------------------------------------------------------------
Contributed surplus, beginning of
period 190 181 180 171
Stock-based compensation 5 6 15 17
Less:
Excess of the purchase price
over the carrying amount of
the Class A shares redeemed - - - (1)
-------------------------------------------------------------------------
Contributed surplus, end of period 195 187 195 187
-------------------------------------------------------------------------
Retained earnings, beginning of
period
As previously reported 24,287 22,561 23,096 21,452
Adjustment related to the adoption
of a new accounting policy - (123) (107) (128)
-------------------------------------------------------------------------
Restated balance 24,287 22,438 22,989 21,324
Net earnings 1,582 1,232 4,155 3,929
Less:
Excess of the purchase price
over the carrying amount of
the Class A shares redeemed (114) - (135) (330)
Dividends on Class A shares - - (1,254) (1,253)
-------------------------------------------------------------------------
Retained earnings, end of period 25,755 23,670 25,755 23,670
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-------------------------------------------------------------------------
Consolidated balance sheets
(amounts are expressed in thousands of dollars)
(unaudited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
As at As at
May 30 August 30,
2010 2009
(restated)
-------------------------------------------------------------------------
$ $
Assets
Current assets:
Cash and cash equivalents 9,950 8,451
Restricted cash 80 168
Temporary investments 3,000 -
Accounts receivable 4,387 3,064
Inventories 1,439 970
Prepaid expenses 520 533
Current portion of notes receivable 74 34
-------------------------------------------------------------------------
Total current assets 19,450 13,220
Notes receivable 825 954
Capital assets 28,631 31,038
Intangibles and other assets 487 714
Future income taxes 887 844
Goodwill 2,327 2,224
-------------------------------------------------------------------------
Total assets 52,607 48,994
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued liabilities 7,736 6,292
Income taxes payable 166 564
Future income taxes 115 115
Deferred income and credits 1,528 805
Current portion of long-term debt 1,878 1,838
-------------------------------------------------------------------------
Total current liabilities 11,423 9,614
Long-term debt 9,407 10,845
Deferred income and credits 1,444 889
Future income taxes 496 496
Non-controlling interest 335 426
-------------------------------------------------------------------------
Total liabilities 23,105 22,270
Shareholders' equity:
Share capital 3,552 3,555
Contributed surplus 195 180
Retained earnings 25,755 22,989
-------------------------------------------------------------------------
29,502 26,724
-------------------------------------------------------------------------
Total liabilities and shareholders' equity 52,607 48,994
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consolidated statements of cash flows
(amounts are expressed in thousands of dollars)
(unaudited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
13 weeks ended 39 weeks ended
May 30, May 31, May 30, May 31,
2010 2009 2010 2009
(restated) (restated)
-------------------------------------------------------------------------
$ $ $ $
Cash flows from operating
activities:
Net earnings 1,582 1,232 4,155 3,929
Non-cash items:
Gain on business disposals - (10) - (10)
Loss on disposal of assets 115 58 267 80
Amortization of deferred
financing costs 1 - 2 2
Amortization of capital assets 1,046 893 2,785 2,612
Amortization of intangibles
and other assets 72 119 231 379
Non-controlling interest 1 (3) (61) (26)
Stock-based compensation 5 6 15 17
Future income taxes (46) (188) (40) (280)
-------------------------------------------------------------------------
2,776 2,107 7,354 6,703
Net change in non-cash balance
related to operations, net of
business acquisitions and
disposals (654) (130) 472 (2,191)
-------------------------------------------------------------------------
2,122 1,977 7,826 4,512
-------------------------------------------------------------------------
Cash flows from financing
activities:
Proceeds from issuance of
long-term debt - - 177 2,318
Repayment of long-term debt (460) (446) (1,775) (1,763)
Deferred financing costs (1) (1) (3) (9)
Proceeds from issuance of
Class A shares - 14 - 14
Redemption of Class A shares (123) - (145) (354)
Dividends on Class A shares - - (1,254) (1,253)
Dividends paid to non-controlling
interest - - (30) -
-------------------------------------------------------------------------
(584) (433) (3,030) (1,047)
-------------------------------------------------------------------------
Consolidated statements of cash flows
(amounts are expressed in thousands of dollars)
(unaudited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
13 weeks ended 39 weeks ended
May 30, May 31, May 30, May 31,
2010 2009 2010 2009
(restated) (restated)
-------------------------------------------------------------------------
$ $ $ $
Cash flows from investing
activities:
Acquisition of businesses, net
of cash and cash equivalents
acquired - (33) (203) (575)
Proceeds from business
disposals, net of cash and
cash equivalents disposed - 22 3 22
Change in restricted cash (240) (53) (88) 173
Change in temporary investments - - (3,000) 100
Change in notes receivable 298 (101) 157 60
Additions to capital assets (180) (293) (815) (3,044)
Proceeds from disposal of
capital assets 1 53 653 60
Increase in intangibles and
other assets (4) - (4) (72)
-------------------------------------------------------------------------
(125) (405) (3,297) (3,276)
-------------------------------------------------------------------------
Net increase in cash and cash
equivalents 1,413 1,139 1,499 189
Cash and cash equivalents,
beginning of period 8,537 5,917 8,451 6,867
-------------------------------------------------------------------------
Cash and cash equivalents, end
of period 9,950 7,056 9,950 7,056
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For further information: Jean Bédard, Chairman of the Board, President and Chief Executive Officer; Josée Pépin, Manager, Accounting and Disclosure, (450) 641-3011; Source: Sportscene Group Inc.
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