Growth and Expansion for Sportscene Group and La Cage - Brasserie sportive in 2018

MONTREAL, Nov. 22, 2018 /CNW Telbec/ - Management of SPORTSCENE GROUP INC. ("Sportscene" or "the Company") (TSXV: SPS.A) is proud to disclose the financial results of another year of solid growth. The Company continues to reap the benefits of its strategy to optimize the La Cage banner, as evidenced by its growth in sales and profitability and its stronger financial position.

Financial results for the fiscal year and fourth quarter ended August 26, 2018

For fiscal year 2018, total sales ⁽¹⁾ of the La Cage – Brasserie sportive network were up 6.2% to $127.9 million. This increase is fully attributable to a 7% growth in average same-Cage sales ⁽²⁾, in line with the upward trend that has characterized the network's performance for more than two years.

Sportscene's consolidated revenues amounted to $104.0 million, up 9.4%. This increase stemmed from the restaurant operations, which represent nearly 95% of Sportscene's annual consolidated revenues. Consolidated adjusted EBITDA ⁽³⁾ increased by 31.2% to $11.1 million, reflecting the strong performance of the La Cage network. Net earnings more than doubled compared with the previous year, rising to $3.1 million or $0.72 per share (basic and diluted). Operating activities generated total cash flows of 9.5 million, which helped close the year with a solid working capital, available cash of $5.8 million and a debt ratio slightly lower than in 2017, despite investments of more than $8 million in new property, plant and equipment.

For the fourth quarter ended August 26, 2018, total sales ⁽¹⁾ of the La Cage – Brasserie sportive network grew by 4.5% to stand at $31.4 million. This increase is attributable to the growth in average same-Cage sales ⁽²⁾.  Sportscene's consolidated revenues increased by 6.8% over the same period in 2017 to reach $26.7 million. Consolidated adjusted EBITDA ⁽³⁾ were up 33.9% to $2.7 million. The Company ended the fourth quarter with net earnings of $0.3 million or $0.07 per share (basic and diluted), compared to a net loss of $35,000 in the same quarter last year. Let's remind that for the first time since the launch of the Company's repositioning program in 2014, the Board of Directors approved the payment of a $0.30 dividend in the fourth quarter of fiscal 2018, in light of the sustained growth in Sportscene's profitability, the strengthening of its financial position and its favourable growth prospects.

"Sportscene's good performance is mainly attributable to the successful actions implemented in recent years to reposition, optimize and modernize the banner. The network as a whole is more efficient and less exposed than formerly to both seasonal cycles and sporting events. Furthermore, restaurant traffic has been significantly enhanced by the overall improvement of the customer experience," said Jean Bédard, President and Chief Executive Officer.

2018 Key achievements

The modernization of the La Cage network required new investments of over $8 million. A new Cage was built, another moved and five outlets were renovated. By the end of the fiscal year, 28 of the 43 Cages featured the new interior design offering an upscale sports ambiance. The optimization of our food and beverage offering has continued, based on quality criteria applied without any compromise to all Cages, namely: fresh, locally sourced, quality ingredients prepared by kitchen staff who are better and better trained. In recent months, some draft beer, ciders and wines produced in Quebec were added to the offering. In 2018, the development of new technology platforms well suited to customers continued to progress, while the custom design of a mobile app for the Club Cage was completed. The app allows to more accurately address and monitor the consumption habits of customers, to whom more personalized and relevant promotions are currently offered. During the year, the Company also optimized its Académie Cage training program for all network chefs and sous-chefs, with the support of Institut de tourisme et d'hôtellerie du Québec, as well as its leadership programs for restaurant managers and other employees. The Académie Cage training program has proven to be a powerful tool to improve practices, satisfy customers and retain employees.

New developments in progress and outlook

In addition to the ongoing enhancement and optimization of its main banner, the Company's strategy includes the integration of other restaurant concepts and banners, alone or in partnership, combined with the expansion of its range of branded products sold in grocery stores. Sportscene plans to open other Asian cuisine restaurants under the PF Chang's banner, in addition to the two units it has acquired in recent years. In the summer of 2018, the Company entered into a partnership agreement to develop, through franchising, the L'Avenue banner, a high-end breakfast and brunch concept that is very complementary to its vision of a restaurant offering based on fresh and local products. A new L'Avenue restaurant recently opened in Boucherville. Finally, Sportscene plans to launch a new urban restaurant concept under the banner À Domicile, which will offer the 18- to 35-year-old consumer segment targeted quality fast food in friendly and modern entertainment areas.

"We believe the new developments undertaken in recent months will help maximize our distinctive strengths in our field of excellence, ambiance restaurants, and add value to the Company in the coming years. We are confident in Sportscene's future and will remain focused on growth and expansion." added Jean Bédard.

Profile

Sportscene Group is a pioneer and a leader in the ambience restaurant niche in Quebec, where it has operated a chain of resto-bars since 1984: La Cage – Brasserie sportive ("La Cage"). In addition to its sports-themed ambience, La Cage stands out for its fresh food offering, based on local procurement. Enjoying a strong brand image, La Cage comprises 43 units located across Quebec at the date hereof. The Cages offer complete foodservices and bar services in a sophisticated sports-inspired décor featuring the most advanced audio-visual technologies.

The following items are not performance measures consistent with International Financial Reporting Standards ("IFRS"):
(1)	Total network sales correspond to sales achieved by all La Cage restaurants, including corporate units, partnerships and franchises.
(2)	Average same-Cage sales isolate the impact of restaurant openings and closures to assess the actual trend in restaurant sales.
(3)	Consolidated adjusted EBITDA corresponds to "Earnings before financial expenses, amortization, net income of joint ventures and associates and income taxes", from which other losses (gains) are excluded, and to which the Company's share of earnings before financial expenses, amortization and income taxes of joint ventures and associates is added.
	For further information regarding the results and financial position of Sportscene Group Inc., refer to the management's report as well as the audited consolidated financial statements and accompanying notes for the fiscal year ended August 26, 2018, 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.

Reconciliation of Non-IFRS Financial Measures
	Fourth Quarter Ended		Fiscal Years Ended
	August 26, 2018	August 27, 2017	August 26, 2018	August 27, 2017
Restaurant revenues ^(4)	23,185	20,692	89,009	78,590
Food Concession revenues	(3,271)	(1,902)	(6,076)	(3,665)
Non-banner revenues	(1,669)	(1,596)	(6,549)	(5,841)
Revenue from franchises and joint ventures	13,181	12,888	51,544	51,396
Total network sales	31,426	30,082	127,928	120,480
Income before financial expenses, amortization, net income of joint ventures and associates and income taxes	1,976	1,777	9,269	7,705
Other losses (gains)	373	(4)	447	(121)
Adjusted EBITDA	2,349	1,773	9,716	7,584
Earnings before financial expenses, amortization and income taxes of joint ventures and associates ^(5)	355	247	1,393	885
Consolidated adjusted EBITDA	2,704	2,020	11,109	8,469

(4)	Restaurant revenue figures are disclosed in Note 7 "Revenues" accompanying the consolidated financial statements.
(5)	This information is presented in Note 18 "Investments in joint ventures and associates" accompanying the consolidated financial statements.

Consolidated statements of comprehensive income
for the years ended August 26, 2018 and August 27, 2017
(in thousands of Canadian dollars, except for earnings per share and number of outstanding shares)
		August 26, 2018	August 27, 2017
		$	$
Revenues		103,990	95,085
Cost of sales		32,710	30,924
Selling and administrative expenses, excluding amortization		61,564	56,577
Other losses (gains)		447	(121)
Earnings before financial expenses, amortization, net income of joint ventures and associates and income tax		9,269	7,705
Amortization		5,059	4,842
Financial expenses		914	800
Net income of joint ventures and associates		(704)	(161)
		5,269	5,481
Income before income tax expense		4,000	2,224
Income tax expense		941	766
Net and comprehensive income		3,059	1,458
Net and comprehensive income attributable to:
The Company's shareholders		3,068	1,519
Non-controlling interests		(9)	(61)
Net and comprehensive income		3,059	1,458
Earnings per share (in dollars):
	Basic	0.72	0.36
	Diluted	0.72	0.36
Weighted average number of outstanding Class A shares (in thousands):
	Basic	4,233	4,165
	Diluted	4,258	4,165

SOURCE Sportscene Group Inc.

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

Related Links

http://www.cage.ca