Sportscene Group Improves its Profit Margins and Closes the First Quarter
with Net Earnings of $1.5 Million or $0.36 Per Share
- The Company achieves a 15.6% EBITDA(1) margin as a percentage of revenues compared with14.2% for the first quarter of the previous year, while the net margin rises from 6.5% to 7.2%; - Sportscene further solidifies its balance sheet, benefiting from available cash of $9.6 million and low indebtedness as at November 29, 2009; - The Board of Directors declares a dividend of $0.30 per share. </pre> <p/> <p><location>MONTREAL</location>, <chron>Jan. 15</chron> /CNW Telbec/ - During the Annual Shareholders' Meeting held this morning in <location>Montreal</location>, SPORTSCENE GROUP INC. ("Sportscene" or "the Company"; SPS.A/TSX Venture Exchange), operator of the LA CAGE AUX SPORTS chain of resto-bars, disclosed its financial results for the first quarter of the fiscal year. For the 13-week period ended <chron>November 29, 2009</chron>, Sportscene improved its profit margins and further strengthened its balance sheet, despite a decline in La Cage aux Sports' total network sales and corporate revenues caused by an economic context that remains challenging for the restaurant industry.</p> <p>For the first quarter of fiscal 2010, Sportscene recorded operating income, or consolidated EBITDA(1), of <money>$3.3 million</money> on revenues of <money>$21.1 million</money>, compared with consolidated EBITDA of <money>$3.2 million</money> on revenues of <money>$22.9 million</money> for the same period of the previous year. The EBITDA margin as a percentage of revenues thus rose to 15.6%, compared with 14.2% for the first quarter of fiscal 2009. The EBITDA margin for the first quarter of fiscal 2010 also compares favourably with the 14.7% margin posted during the first quarter of fiscal 2008.</p> <p>Despite the revenue decline attributable to the economic context, Sportscene Group closed the first quarter with net earnings of <money>$1.5 million</money> or <money>$0.36</money> per share, up slightly over the corresponding periods of the two previous years. The net profit margin as a percentage of revenues therefore stood at 7.2%, compared with 6.5% last year.</p> <p>La Cage aux Sports' total network sales declined by 3.6% to <money>$28.6 million</money> due mainly to the economic context. However, the decrease in average same-Cage sales was partly offset by the additional contribution of the 49th Cage opened in <chron>December 2008</chron>, the Cage expansions carried out last year, and the Company's success in taking advantage of a relatively dynamic sports agenda, including two boxing championships (of which a major championship in November), the Grey Cup and the beginning of the 2009-2010 hockey season.</p> <p>"Sportscene's results for the first quarter of fiscal 2010 attest to the effectiveness of the strategy we have put forward since the beginning of the economic slowdown, in order to preserve our key assets and optimize our operating profitability," indicated President and Chief Executive Officer Jean Bédard. "Sportscene's enhanced profitability is attributable to a combination of actions aimed at optimizing our operational and administrative processes and keeping tight control over our costs, cash flows and investments in light of the current economic context. This cautious approach notably contributed to further improve Sportscene's financial position during the first quarter, as a result of which the Company posted available short-term cash of <money>$9.6 million</money> and a total net debt ratio of only 9.1% as at <chron>November 29</chron>, 2009."</p> <p/> <pre> Outlook ------- </pre> <p/> <p>"Between now and the end of fiscal 2010, Sportscene will continue to defend its positions while preparing for the next offensive," said Jean Bédard. "While the economy is showing initial signs of improvement, our positive first-quarter results allow us to look forward to another good financial year for Sportscene Group in 2010. In the interest of our shareholders, however, we prefer to remain prudent given the current context. Therefore, our game plan for the current year will be similar to the one carried out during the previous year, as we will continue to focus on the following elements: showcasing La Cage aux Sports' "classics", which are sure values for customers, taking full advantage of the 2009-2010 sports schedule, fostering targeted innovation, developing our internal expertise with respect to technologies and event organization, optimizing our profitability and return on investments, and maintaining a solid financial position. Concurrently, we are setting the stage for the next economic recovery by drawing up various growth scenarios aimed at leveraging the La Cage aux Sports brand, expanding our operations and creating additional sources of profit."</p> <p/> <pre> Declaration of a Dividend of $0.30 Per Share -------------------------------------------- </pre> <p/> <p>This morning, in light of the Company's satisfactory performance and outlook, Sportscene Group's Board of Directors declared a dividend of <money>$0.30</money> per share on Class A voting shares, which will be paid on <chron>February 19, 2010</chron> to shareholders of record as at <chron>January 29, 2010</chron>. In keeping with previous years, the Board will decide during the year regarding the payment of a second dividend in <chron>August 2010</chron>.</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 <chron>November 29, 2009</chron>, 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 November 29, November 30, 2009 2008 (restated) ------------------------------------------------------------------------- $ $ Revenues 21,093 22,920 Cost of sales, selling, general and administrative expenses 17,810 19,671 ------------------------------------------------------------------------- Earnings before other items 3,283 3,249 ------------------------------------------------------------------------- Interest on long-term debt 91 131 Other interest expense 42 48 Amortization of capital assets 881 840 Amortization of intangibles and other assets 80 139 Loss on disposal of assets 73 4 ------------------------------------------------------------------------- 1,167 1,162 ------------------------------------------------------------------------- Earnings before income taxes and non-controlling interest 2,116 2,087 Income taxes 611 616 ------------------------------------------------------------------------- Earnings before non-controlling interest 1,505 1,471 Non-controlling interest (18) (15) ------------------------------------------------------------------------- Net earnings and comprehensive income 1,523 1,486 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings per share: Basic $0.36 $0.35 Diluted $0.36 $0.35 Weighted average number of Class A shares outstanding (in thousands): Basic 4,180 4,191 Diluted 4,181 4,191 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated statements of variations in shareholders' equity (amounts are expressed in thousands of dollars) (unaudited) ------------------------------------------------------------------------- ------------------------------------------------------------------------- 13 weeks ended November 29, November 30, 2009 2008 (restated) ------------------------------------------------------------------------- $ $ Share capital, beginning of period 3,555 3,499 Redemption of stock - (23) Retraction of notes receivable 2 2 ------------------------------------------------------------------------- Share capital, end of period 3,557 3,478 ------------------------------------------------------------------------- Contributed surplus, beginning of period 180 171 Stock-based compensation 6 6 ------------------------------------------------------------------------- 186 177 Less: Excess of the purchase price over the carrying amount of the Class A shares redeemed - (1) ------------------------------------------------------------------------- Contributed surplus, end of period 186 176 ------------------------------------------------------------------------- Retained earnings, beginning of period As previously reported 23,096 21,452 Adjustment related to the adoption of a new accounting policy (107) (128) ------------------------------------------------------------------------- Restated balance 22,989 21,324 Net earnings 1,523 1,486 Less: Excess of the purchase price over the carrying amount of the Class A shares redeemed - (329) ------------------------------------------------------------------------- Retained earnings, end of period 24,512 22,481 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated balance sheets (amounts are expressed in thousands of dollars) (unaudited) ------------------------------------------------------------------------- ------------------------------------------------------------------------- November 29, August 30, 2009 2009 (restated) ------------------------------------------------------------------------- $ $ Assets Current assets: Cash and cash equivalents 7,486 8,451 Restricted cash 103 168 Temporary investment 2,000 - Accounts receivable 7,200 3,064 Inventories 1,060 970 Prepaid expenses 526 533 Building held for sale 639 - Current portion of notes receivable 38 34 ------------------------------------------------------------------------- Total current assets 19,052 13,220 Notes receivable 899 954 Capital assets 30,309 31,038 Intangibles and other assets 634 714 Future income taxes 789 844 Goodwill 2,327 2,224 ------------------------------------------------------------------------- Total assets 54,010 48,994 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and shareholders' equity Current liabilities: Accounts payable and accrued liabilities 9,714 6,292 Income taxes payable 245 564 Future income taxes 115 115 Deferred income and credits 1,293 805 Current portion of long-term debt 2,239 1,838 ------------------------------------------------------------------------- Total current liabilities 13,606 9,614 Long-term debt 10,180 10,845 Deferred income and credits 1,095 889 Future income taxes 496 496 Non-controlling interest 378 426 ------------------------------------------------------------------------- Total liabilities 25,755 22,270 Shareholders' equity: Share capital 3,557 3,555 Contributed surplus 186 180 Retained earnings 24,512 22,989 ------------------------------------------------------------------------- 28,255 26,724 ------------------------------------------------------------------------- Total liabilities and shareholders' equity 54,010 48,994 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated statements of cash flows (amounts are expressed in thousands of dollars) (unaudited) ------------------------------------------------------------------------- ------------------------------------------------------------------------- 13 weeks ended November 29, November 30, 2009 2008 (restated) ------------------------------------------------------------------------- $ $ Cash flows from operating activities: Net earnings 1,523 1,486 Non cash items: Loss on disposal of assets 73 4 Amortization of capital assets 881 840 Amortization of intangibles and other assets 80 139 Non-controlling interest (18) (15) Stock-based compensation 6 6 Future income taxes 58 18 ------------------------------------------------------------------------- 2,603 2,478 Net change in non-cash balances related to operations, net of acquisitions and business disposals (712) (2,909) ------------------------------------------------------------------------- 1,891 (431) ------------------------------------------------------------------------- Cash flows from financing activities: Proceeds from issuance of long-term debt - 740 Repayment of long-term debt (464) (892) Increase in deferred financing costs (2) - Dividends paid to non-controlling interest (30) - Redemption of Class A shares - (353) ------------------------------------------------------------------------- (496) (505) ------------------------------------------------------------------------- Cash flows from investing activities: Acquisition of businesses, net of cash and cash equivalents acquired (203) (538) Proceeds from business disposals, net of cash and cash equivalents disposed 3 - Change in restricted cash 65 43 Change in temporary investments (2,000) 100 Change in notes receivable (60) (10) Additions to capital assets (167) (1,059) Proceeds from disposal of capital assets 2 - Increase in intangibles and other assets - (72) ------------------------------------------------------------------------- (2,360) (1,536) ------------------------------------------------------------------------- Decrease in cash and cash equivalents (965) (2,472) Cash and cash equivalents, beginning of period 8,451 6,867 ------------------------------------------------------------------------- Cash and cash equivalents, end of period 7,486 4,395 ------------------------------------------------------------------------- -------------------------------------------------------------------------
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.
Share this article