Good Start to Fiscal 2014 for Sportscene Group Inc.

MONTREAL, Jan. 16, 2014 /CNW Telbec/ - SPORTSCENE GROUP INC. ("Sportscene" or "the Company") (TSXV: SPS.A) today held its Annual Meeting of Shareholders in the brand new Cage aux Sports located next to its head office, in Boucherville. The inauguration of this new unit showcasing an entirely updated concept paves the way for the upgrading of La Cage aux Sports banner over the next years.

Operating Results and Highlights for the 13-Week Period Ended November 24, 2013

At the Meeting, President and Chief Executive Officer Jean Bédard disclosed enhanced results for the first quarter of fiscal 2014. Driven by a much more favourable sporting environment than last year, La Cage aux Sports' total network sales ⁽¹⁾ posted an 8.5% organic growth over the previous year, reaching $27.7 million. This contributed to raise Sportscene's revenues from restaurant operations, its core business, by 12.6% and this segment's EBITDA by 47.9%, reflecting a significant improvement in profit margins. At the consolidated level, considering that a sporting event had taken place last year, which did not occur this year, Sportscene's revenues were comparable to a year earlier, at $17.4 million. For their part, earnings before interest, amortization, other items and income taxes, or EBITDA, rose 14.6% to $2.0 million.

Therefore, Sportscene closed the quarter with net earnings attributable to shareholders of $787,000 or $0.19 per share, up 22% over the same quarter of the previous year. This performance is attributable to the solid growth in average same-Cage sales, coupled with the efforts made in recent quarters to optimize overall operating efficiency and profitability.

The salient event of the period was the November 8, 2013 inauguration of a corporate Cage in the head office building, which will be the flagship for the deployment of a completely upgraded La Cage aux Sports concept. "We are very proud of our new La Cage aux Sports concept and its unique features, which are unmatched in the industry. These include the largest television screen in Canada, a distinctive decor and a further differentiated restaurant offering. Through this major revamping of its banner, Sportscene is distancing itself even further from the competition and reaffirming its leadership in the Quebec entertainment-themed restaurant industry for the years to come," said Jean Bédard.

Declaration of a Dividend of $0.30 Per Share

Today, the Company's Board of Directors approved the payment of a dividend of $0.30 per Class A share, which will be paid on February 20, 2014 to shareholders of record as at January 30, 2014. Motivated by Sportscene's good financial performance and favourable outlook, this decision also reflects directors' and managers' confidence in the Company's future. The Board of Directors will continue to assess, on a timely basis, the relevance of paying dividends in the light of market conditions, the Company's financial position and working capital requirements, as well as the achievement of performance indicators in line with management's objectives.

Outlook

For the current fiscal year, in addition to the contribution of its new Cage, Sportscene's results should be positively impacted by a relatively favourable sporting environment, including the organization of two boxing matches in the second quarter, and the growing benefits arising from the various initiatives taken over the previous two years to strengthen the business models of the different operating units and enhance overall restaurant services.

"Over the longer term, the excitement created so far by our new concept, not only among our customers but also among our franchisees and Cage operator partners, should facilitate its progressive implementation network-wide.  We believe that it will contribute to drive Sportscene's business and financial success for the coming years. We will lean more than ever on the innovativeness and creativity that are key to the culture and mission of Sportscene Group and La Cage aux Sports, while remaining vigilant and maintaining our capacity to adapt," concluded the President.

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 52 "Cages", 41 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.

(1)	The following items are not performance measures consistent with IFRS. In Sportscene's consolidated financial statements, EBITDA corresponds to "Earnings before interest, amortization and income tax". Total network sales are the aggregate sales achieved by all La Cage aux Sports restaurants, including franchised, jointly-owned and corporate units.
(2)	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
		November 24,		November 25,
		2013		2012
		$		$
				(Restated)
Revenues		17,420		17,483
Cost of sales		4,932		5,120
Gross margin		12,488		12,363
Selling and administrative expenses, except amortization		10,538		10,662
Earnings before interest, amortization and income taxes		1,950		1,701
Amortization		903		907
Operating earnings		1,047		794
Interests on long-term debt		130		136
Other interest expenses		15		44
Other losses (gains)		4		(178)
Share of net result of joint ventures and associates		(132)		(58)
		17		(56)
Earnings before income tax expenses		1,030		850
Income tax expenses		241		213
Net earnings and comprehensive income		789		637
Net earnings and comprehensive income attributable to:
The Company's shareholders		787		644
Non-controlling interests		2		(7)
Net earnings and comprehensive income		789		637
Earnings per share (in $) :
	Basic	0.19		0.15
	Diluted	0.19		0.15
Weighted average number of outstanding Class A shares (in thousands):
	Basic	4,165		4,165
	Diluted	4,231		4,165

Interim Condensed Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
(unaudited)

		November 24,		November 25,		August 25,		August 27,
		2013		2012		2013		2012
		$		$		$		$
Assets				(Restated)		(Restated)		(Restated)
Current assets
	Cash and cash equivalents	7,478		7,447		7,825		9,308
	Accounts receivable	5,627		5,372		4,175		3,377
	Income tax receivable	385		377		423		309
	Stocks	1,529		1,405		1,486		1,394
	Prepaid expenses	1,030		507		401		302
	Current portion of notes receivable	6		69		22		282
Total current assets		16,055		15,177		14,332		14,972
Notes receivable		568		641		655		1,303
Property, plant and equipment		36,872		31,123		30,221		29,706
Intangible assets		748		681		647		698
Deferred tax asset		2,074		1,102		2,209		1,259
Investments in joint ventures and associates, accounted for using the equity method		6,207		6,361		6,585		5,164
Goodwill		2,792		2,792		2,792		2,406
Total assets		65,316		57,877		57,441		55,508
Liabilities and shareholders' equity
Current liabilities
	Accounts payable and accrued liabilities	8,583		8,396		6,816		7,957
	Income tax payable	24		4		80		176
	Deferred revenues and credits	1,627		1,458		1,292		818
	Current portion of long-term debt	2,452		2,112		2,109		1,904
Total current liabilities		12,686		11,970		10,297		10,855
Long-term debt		15,584		12,212		10,748		11,550
Deferred revenues and credits		1,216		1,436		1,273		1,490
Deferred tax liability		991		405		991		405
Total liabilities		30,477		26,023		23,309		24,300
Shareholders' equity
	Share capital	3,551		3,551		3,551		3,551
	Stock-based compensation reserve	311		269		299		260
	Retained earnings	30,681		27,732		29,980		27,088
Shareholders' equity attributable to the Company's shareholders		34,543		31,552		33,830		30,899
Non-controlling interests		296		302		302		309
Total shareholders' equity		34,839		31,854		34,132		31,208
Total liabilities and shareholders' equity		65,316		57,877		57,441		55,508

Interim Condensed Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)
(unaudited)

					13 weeks ended
			November 24,		November 25,
			2013		2012
			$		$
					(Restated)
Operating activities
	Net earnings		789		637
	Adjustments to reconcile net earnings to cash flows from operating activities
		Loss on disposal of property, plant and equipment	6		16
		Gain on business combination achieved in stages	-		(193)
		Amortization of property, plant and equipment	891		892
		Amortization of intangible assets	12		15
		Share of net results of joint ventures and associates	(132)		(58)
		Dividends received from joint ventures and associates	300		-
		Stock-based compensation	12		9
		Financial expenses recognized in net earnings	145		180
		Interest paid	(142)		(177)
		Income tax expenses recognized in net earnings	241		213
		Income tax paid	(300)		(581)
			1,822		953
	Net change in non-cash working capital items, net of acquisitions and disposals of subsidiaries		(631)		(924)
			1,191		29
Financing activities
	Increase of long-term debt		1,500		1,000
	Repayment of long-term debt		(516)		(467)
			984		533
Investing activities
	Business combination and asset acquisition, net of cash and cash equivalents acquired		(881)		(441)
	Investments in joint ventures and associates		-		(750)
	Change in notes receivable		(68)		(66)
	Acquisitions of property, plant and equipment		(1,560)		(1,174)
	Proceeds from disposals of property, plant and equipment		5		8
	Acquisitions of intangible assets		(18)		-
			(2,522)		(2,423)
Decrease in cash and cash equivalents			(347)		(1,861)
Cash and cash equivalents, beginning of period			7,825		9,308
Cash and cash equivalents, end of period			7,478		7,447

  

 

 

SOURCE: Sportscene Group Inc.

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