Increased Fourth-Quarter Results for Sportscene Group

MONTREAL, Nov. 22, 2012 /CNW Telbec/ - SPORTSCENE GROUP INC. ("Sportscene" or "the Company") (TSXV: SPS.A), operator of La Cage aux Sports resto-bar chain, grew both its sales and profitability during the fourth quarter ended August 26, 2012, compared with the same period in 2011. For this 13-week period, La Cage aux Sports' total network sales⁽¹⁾ rose 7.0% to $26.0 million. This growth is largely attributable to the addition of new Cages, of which three were built in the first semester of fiscal 2012 and a fourth at the very end of the fiscal year. Moreover, the network posted a 4.0% increase in average same-Cage sales⁽¹⁾, stemming from the numerous measures implemented during fiscal 2012 to enhance the menu offering, coupled with the promotional campaigns conducted in the summer of 2012 to foster the network's customer traffic. For the same reasons, Sportscene's consolidated revenues grew by 6.6% to $19.1 million, whereas consolidated EBITDA⁽¹⁾ rose 12.5% to $2.0 million. Thus, the EBITDA margin as a percentage of revenues increased from 10.1% in the fourth quarter of 2011 to 10.7% in the fourth quarter of 2012. Sportscene's quarterly net earnings attributable to shareholders amounted to $0.5 million or $0.13 per share (basic and diluted), compared with $0.4 million or $0.09 per share for the same quarter of the previous year.

Financial Results for the Fiscal Year Ended August 26, 2012

During the fiscal year ended August 26, 2012, La Cage aux Sports' total network sales⁽¹⁾ grew by 2.3% to $110.3 million. The expansion of La Cage aux Sports' banner more than compensated for the 3.1% decline in average same-Cage sales⁽¹⁾ attributable to a generally more difficult business context than the previous year. Sportscene's revenues increased by 5.0% to $84.3 million. However, consolidated EBITDA⁽¹⁾ decreased by $0.9 million to $9.4 million, whereas the consolidated EBITDA margin as a percentage of revenues slipped from 12.8% to 11.1%. These declines are attributable, notably, attributable to the decrease in average same-Cage sales, the non-recurring costs associated with the opening of new Cages, and the organization of two boxing events during fiscal 2012, as opposed to three in 2011.

Sportscene closed fiscal 2012 with net earnings attributable to shareholders of $3.3 million or $0.78 per share (basic and diluted), compared with $4.0 million or $0.96 per share for the previous year. Besides the decline in consolidated EBITDA, this decrease can be explained by a $0.6 million increase in total amortization and financial expenses resulting mostly from La Cage aux Sports' network expansion.

"We believe Sportscene Group has done well in the last fiscal year, given the particularly challenging context we were faced with in regard to both our competitive and sporting environment," said Jean Bédard, President and Chief Executive Officer of Sportscene Group. "Not only did the Company deliver a satisfactory performance, but it further expanded its presence in Quebec. Moreover, Sportscene continued to generate substantial operating cash flows of $9.0 million. These funds covered part of the $8.5 million investments made in fiscal 2012 and the payment to shareholders of a $0.30 per-share dividend, while also contributing to sustain the Company's healthy financial position."

As at August 26, 2012, Sportscene posted short-term available cash (cash and cash equivalents) of $10.7 million and a total net debt to total invested capital ratio of 17.2%.

Fiscal 2013 Outlook

The new fiscal year began on a positive note as Sportscene Group acquired an additional 50% interest in a Cage formerly operated as a joint venture and a 50% stake in three non-banner restaurants located in the Montreal area. "In addition to bringing an accretive contribution to Sportscene Group's results, this latest acquisition offers interesting synergy potential. It will notably support our efforts to enhance the quality and variety of La Cage aux Sports' menu as well as the overall experience offered to La Cage customers," pointed out Jean Bédard.

"Despite the uncertainty that continues to prevail in regard to the 2012-2013 hockey season, we are still confident as to fiscal 2013, considering the investments and initiatives carried out over the past two years to expand and modernize our operational base, improve profitability and enhance the overall offering to our target customers. After two years of significant investments, our efforts in upcoming quarters will mostly focus on consolidating our recent achievements and optimizing the various programs introduced over the past year. This year, we will notably launch another phase of the Kaizen overall business optimization and cost-reduction program, which will focus primarily on kitchen operations and customer service," 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. As of today, this banner comprises 52 "Cages", 40 of which are wholly or jointly owned by the Company, and 12 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 for its clientele. In addition, the Company manages real estate holdings, including a sports complex 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 Sports network, as well as the organization of sports-related activities including international-calibre boxing events.

(1)

The following items are not performance measures consistent with IFRS. In Sportscene's financial statements, EBITDA corresponds to "Operating earnings", to which the amortization expense is added Total network sales are the aggregate sales achieved by all La Cage aux Sports restaurants, including franchised, jointly-owned and corporate units. Average same-Cage sales are used to isolate the effect of restaurant openings and closures in order to assess the actual trend in restaurant sales.

(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.

Consolidated Statements of Comprehensive Income
for the periods ended August 26, 2012 and August 28, 2011

(in thousands of Canadian dollars, except number of outstanding shares)
		13 weeks ended		52 weeks ended
		August 26, 2012	August 28,  2011	August 26,  2012	August 28,  2011
		$	$	$	$
Revenues		19,067	17,894	84,295	80,250
Cost of sales		5,649	5,532	24,778	24,476
Gross margin		13,418	12,362	59,517	55,774
Selling and administrative expenses		12,460	11,554	54,277	49,249
Operating earnings		958	808	5,240	6,525
Interest on long-term debt		157	122	576	403
Other interest expenses		18	17	117	96
Other losses		7	22	138	359
Earnings before income tax		776	647	4,409	5,667
Income tax		246	259	1,187	1,699
Net earnings and comprehensive income		530	388	3,222	3,968
Net earnings and comprehensive income attributable to:
The Company's shareholders		544	411	3,256	4,014
Non-controlling interests		(14)	(23)	(34)	(46)
Net earnings and comprehensive income		530	388	3,222	3,968
Earnings per share (in $):
	Basic	0.13	0.09	0.78	0.96
	Diluted	0.13	0.09	0.78	0.96
Weighted average number of outstanding Class A shares (in thousands):
	Basic	4,165	4,168	4,165	4,168
	Diluted	4,165	4,171	4,165	4,171

Condensed Consolidated Statements of Changes in Shareholders' Equity
for the years ended August 26, 2012 and August 28, 2011

(in thousands of Canadian dollars, except number of outstanding shares)
		Shareholders' Equity attributable to the Company's shareholders
		Number of shares	Share  capital	Stock-based compensation  reserve	Retained earnings	Total	Non- controlling interests	Total Shareholders' equity
		(in thousands)	$	$	$	$	$	$
Balance on August 30, 2010		4,168	3,554	199	23,684	27,437	286	27,723
	Net earnings and comprehensive income	-	-	-	4,014	4,014	(46)	3,968
	Stock-based compensation	-	-	23	-	23	-	23
	Redemption of shares	(3)	(3)	-	(31)	(34)	-	(34)
	Dividends paid to the company's shareholders	-	-	-	(2,501)	(2,501)	-	(2,501)
	Capital transactions with non-controlling interests	-	-	-	(84)	(84)	58	(26)
	Redemption of shares of a subsidiary owned by a non-controlling shareholders	-	-	-	-	-	(5)	(5)
Balance on August 28, 2011		4,165	3,551	222	25,082	28,855	293	29,148
	Net earnings and comprehensive income	-	-	-	3,256	3,256	(34)	3,222
	Stock-based compensation	-	-	38	-	38	-	38
	Dividends paid to the company's shareholders	-	-	-	(1,250)	(1,250)	-	(1,250)
	Fair value of non-controlling interest at the business combination date	-	-	-	-	-	85	85
	Dividends paid to non-controlling interests	-	-	-	-	-	(35)	(35)
Balance on August 28, 2012		4,165	3,551	260	27,088	30,899	309	31,208

Consolidated Statements of Financial Position
as at August 26, 2012, August 28, 2011 and August 30, 2010

(in thousands of Canadian dollars)
		August 26 2012	August 28, 2011	August 30, 2010
		$	$	$
Assets
Current assets
	Cash and cash equivalents	10,729	9,453	7,727
	Investments	-	-	2,000
	Accounts receivable	3,743	4,498	3,658
	Income tax receivable	89	-	28
	Inventories	1,697	1,349	1,141
	Prepaid expenses	459	313	446
	Current portion of notes receivable	284	37	75
Total current assets		17,001	15,650	15,075
Notes receivable		1,481	893	989
Property, plant and equipment		36,302	31,762	27,317
Intangible assets		828	758	429
Deferred tax asset		2,214	1,487	1,356
Goodwill		3,101	2,821	2,333
Total assets		60,927	53,371	47,499
Liabilities and shareholders' equity
Current liabilities
	Accounts payable and accrued liabilities	8,941	7,704	6,651
	Income tax payable	-	32	-
	Deferred revenues and credits	871	1,150	1,230
	Current portion of long-term debt	2,648	1,953	1,471
Total current liabilities		12,460	10,839	9,352
Long-term debt		14,554	11,196	8,580
Deferred revenues and credits		1,617	1,630	1,238
Deferred tax liability		1,088	558	606
Total liabilities		29,719	24,223	19,776
Shareholders' equity
	Share capital	3,551	3,551	3,554
	Stock-based compensation reserve	260	222	199
	Retained earnings	27,088	25,082	23,684
Shareholders' equity attributable to the Company's shareholders		30,899	28,855	27,437
Non-controlling interests		309	293	286
Total shareholders' equity		31,208	29,148	27,723
Total liabilities and shareholders' equity		60,927	53,371	47,499

Consolidated Statements of Cash Flows
for the years ended August 26, 2012 and August 28, 2011

(in thousands of Canadian dollars)
			2012	2011
			$	$
Operating activities
	Net earnings		3,222	3,968
	Adjustments to reconcile net earnings to cash flows from operating activities:
		Loss on disposal of property, plant and equipment	137	254
		Loss on disposal of interests in joint ventures	-	26
		Loss on business combination achieved in stages	19	-
		Amortization of deferred financing costs	10	7
		Amortization of property, plant and equipment	4,062	3,654
		Amortization of intangible assets	87	117
		Stock-based compensation	38	23
		Financial expenses recognized in net earnings	693	499
		Interest paid	(683)	(501)
		Interest included in the cost of property, plant and equipment	20	44
		Income tax expenses recognized in net earnings	1,187	1,699
		Income tax paid	(1,476)	(1,857)
			7,316	7,933
	Net change in non-cash working capital items, net of acquisitions and disposals of subsidiaries and joint ventures		1,684	(391)
			9,000	7,542
Financing activities
	Increase of long-term debt		5,444	2,345
	Repayment of long-term debt		(2,587)	(1,577)
	Increase in deferred financing costs		(21)	(43)
	Dividends on Class A shares		(1,250)	(2,501)
	Dividends paid to non-controlling interests		(35)	-
	Redemption of Class A shares		-	(34)
	Redemption of shares of a subsidiary owned by a non-controlling shareholder		-	(5)
			1,551	(1,815)
Investing activities:
	Acquisitions of subsidiaries and joint ventures, net of cash and cash equivalents acquired		(1,044)	(736)
	Proceeds from disposals of joint ventures, net of disposal of cash and cash equivalents		-	204
	Issuance of notes receivable		(1,080)	(1,139)
	Retraction of notes receivable		245	1,130
	Retraction of investments		-	2,000
	Acquisitions of property, plant and equipment		(7,411)	(5,224)
	Proceeds from disposals of property, plant and equipment		38	15
	Acquisitions of intangible assets		(23)	(251)
			(9,275)	(4,001)
Increase in cash and cash equivalents			1,276	1,726
Cash and cash equivalents, beginning of the period			9,453	7,727
Cash and cash equivalents, end of period			10,729	9,453

 

SOURCE: SPORTSCENE GROUP INC.

Source: Sportscene Group Inc.
Contact:  
Jean Bédard, Chairman of the Board, President and Chief Executive Officer
Josée Pépin, Manager, Accounting and Disclosure
450-641-3011