Return of Hockey Helps Attenuate the Decline in La Cage aux Sports' Sales Recorded During the First Half of the Year

MONTREAL, April 18, 2013 /CNW Telbec/ - As was expected by the management of SPORTSCENE GROUP INC. ("Sportscene" or "the Company") (TSXV: SPS.A), the return of the National Hockey League's activities since late January 2013 has helped attenuate the decline in sales caused by the NHL lockout in the Company's results during the first half of fiscal 2013, which are being disclosed today.

Results for the 13 and 26-Week Periods Ended February 24, 2013

During the quarter ended February 24, 2013, La Cage aux Sports' total network sales⁽¹⁾ declined by 5.9% to stand at $26.6 million. They decreased by 7.5% for the first six months of the fiscal year, totalling $52.2 million. Hockey's return in late January 2013 and the contribution of the new Cages opened during the previous year partly offset the revenue shortfall attributable to the extended NHL lockout.

During the 13 and 26-week periods, Sportscene's revenues posted increases of 13.5% and 3.4% to reach $21.8 million and $44.3 million respectively. This performance is largely attributable to the acquisition, effective August 27, 2012, of a 50% interest in three Quartier DIX30 restaurants whose contribution to date has met management's expectations, and to increased sales of La Cage aux Sports branded frozen products in grocery stores.

For the 13-week period ended February 24, 2013, consolidated earnings before interest, amortization, other items and income taxes, or EBITDA⁽¹⁾, posted a slight decline of $0.1 million to stand at $2.1 million. EBITDA totalled $4.2 million for the 26-week period, down by $0.4 million from the previous year. These decreases are mostly attributable to a less favourable sporting environment than the previous year in the hockey and boxing fields.

Sportscene closed the second quarter with net earnings attributable to shareholders of $0.4 million or $0.11 per share (basic and diluted), compared with $0.6 million or $0.15 per share for the same quarter of the previous year. Year-to-date net earnings for the first six months of fiscal 2013 totalled $1.1 million or $0.26 per share, compared with $1.6 million or $0.39 per share last year.

These variations can be explained largely by the increase in amortization and financial expenses resulting from the expansion of the Company's operations in fiscal 2012 and since the beginning of fiscal 2013. It is to be noted however that the same expansion contributed to alleviate the impact of an unfavourable sporting environment on Sportscene's operating profitability.

Outlook

"While the first half of the year was quite difficult — although Sportscene continued to play its game well and remained profitable —, we look forward to the rest of fiscal 2013 with optimism," indicated Jean Bédard, President and Chief Executive Officer. "The excitement about hockey is as strong as ever among La Cage aux Sports customers and we expect the sports scene to be more active in the boxing and UFC fields as well. In particular, a major event will be held by our InterBox subsidiary during the third quarter: the Pascal-Bute boxing match on May 25^th. Considering such major events and the impact of the strategic investments made over the past year, we expect results for the third quarter of the current fiscal year will be superior to those of the same period last year."

Grant of stock options to officers and directors

On April 18, 2013, under the Class A share purchase option plan ("the Plan") in effect at Sportscene, the Board of Directors approved the grant of 47,000 stock options to officers and directors at an exercise price of $7.50 per share, all under the terms and conditions of the Plan. These options will vest at a rate of 50% after two years, 25% after three years and the remaining 25% after four years. They will expire if they are not exercised within five years as of the grant date.

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", 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 for its clientele. Sportscene also holds a 50% interest in three non-banner restaurants offering upscale foodservices in the Montreal area. In addition to its restaurant operations, the Company manages real estate holdings, including a sports complex and several buildings housing its restaurants. Furthermore, 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 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		26 weeks ended
		February 24,	February 26,	February 24,	February 26,
		2013	2012	2013	2012
		$	$	$	$
Revenues		21,849	19,243	44,305	42,850
Cost of sales		7,464	5,818	14,248	12,354
Gross margin		14,385	13,425	30,057	30,496
Selling and administrative expenses, excluding amortization		12,312	11,244	25,863	25,862
Earnings before interest, amortization and income taxes		2,073	2,181	4,194	4,634
Amortization		1,225	1,044	2,412	2,021
Operating earnings		848	1,137	1,782	2,613
Interests on long-term debt		190	143	369	271
Other interest expenses		39	37	99	60
Other losses (gains)		17	121	(156)	90
		246	301	312	421
Earnings before income tax		602	836	1,470	2,192
Income taxes		171	210	402	577
Net earnings and comprehensive income		431	626	1,068	1,615
Net earnings and comprehensive income attributable to:
The Company's shareholders		435	634	1,079	1,626
Non-controlling interests		(4)	(8)	(11)	(11)
Net earnings and comprehensive income		431	626	1,068	1,615
Earnings per share (in $):
	Basic	$0.11	$0.15	$0.26	$0.39
	Diluted	$0.11	$0.15	$0.26	$0.39
Weighted average number of outstanding Class A shares (in thousands):
	Basic	4,165	4,165	4,165	4,165
	Diluted	4,165	4,165	4,165	4,165

Interim Condensed Consolidated Statements of Financial Position (in thousands of Canadian dollars)
		As at February 24,	As at August 26,
		2013	2012
		(unaudited)	(audited)
		$	$
Assets
Current assets
	Cash and cash equivalents	8,800	10,729
	Accounts receivable	5,416	3,743
	Income tax receivable	227	89
	Inventories	1,765	1,697
	Prepaid expenses	559	459
	Current portion of notes receivable	86	284
Total current assets		16,853	17,001
Notes receivable		1,440	1,481
Property, plant and equipment		39,985	36,302
Intangible assets		828	828
Deferred tax asset		2,538	2,214
Goodwill		3,870	3,101
Total assets		65,514	60,927
Liabilities and shareholders' equity
Current liabilities
	Accounts payable and accrued liabilities	8,743	8,941
	Deferred revenues and credits	1,554	871
	Current portion of long-term debt	3,040	2,648
Total current liabilities		13,337	12,460
Long-term debt		17,182	14,554
Deferred revenues and credits		1,613	1,617
Deferred tax liability		1,088	1,088
Total liabilities		33,220	29,719
Shareholders' equity
	Share capital	3,551	3,551
	Stock-based compensation reserve	278	260
	Retained earnings	28,167	27,088
Shareholders' equity attributable to the Company's shareholders		31,996	30,899
Non-controlling interests		298	309
Total shareholders' equity		32,294	31,208
Total liabilities and shareholders' equity		65,514	60,927

Interim Condensed Consolidated Statements of Cash Flows (in thousands of Canadian dollars) (unaudited)
			13 weeks ended		26 weeks ended
			February 24,	February 26,	February 24,	February 26,
			2013	2012	2013	2012
			$	$	$	$
Operating activities
	Net earnings		431	626	1,068	1,615
	Adjustments to reconcile net earnings to cash flows from operating activities
		Loss on disposal of property, plant and equipment	29	85	49	115
		Gain on business combination achieved in stages	-	-	(193)	(3)
		Amortization of property, plant and equipment	1,207	1,023	2,375	1,976
		Amortization of intangible assets	18	21	37	45
		Stock-based compensation	9	11	18	16
		Financial expenses recognized in net earnings	229	180	468	331
		Interest paid	(226)	(178)	(461)	(333)
		Interest included in the cost of property, plant and equipment	-	5	-	16
		Income tax expenses recognized in net earnings	171	210	402	577
		Income tax paid	(192)	(290)	(793)	(1,115)
			1,676	1,693	2,970	3,240
	Net change in non-cash working capital items, net of acquisitions and disposals of subsidiaries and joint ventures		(711)	808	(1,306)	1,678
			965	2,501	1,664	4,918
Financing activities
	Increase of long-term debt		2,110	1,620	3,110	2,421
	Repayment of long-term debt		(961)	(495)	(1,808)	(1,006)
	Dividends paid to non-controlling interests		-	-	-	(35)
	Dividends on Class A shares		-	(1,250)	-	(1,250)
			1,149	(125)	1,302	130
Investing activities
	Acquisitions of subsidiaries and joint ventures, net of cash and cash equivalents acquired		-	(168)	(521)	(187)
	Change in notes receivable		(11)	(212)	(458)	(370)
	Acquisitions of property, plant and equipment		(2,176)	(1,959)	(3,899)	(4,097)
	Proceeds from disposals of property, plant and equipment		-	13	9	14
	Acquisitions of intangible assets		(26)	(5)	(26)	(223)
			(2,213)	(2,331)	(4,895)	(4,863)
(Decrease) increase in cash and cash equivalents			(99)	45	(1,929)	185
Cash and cash equivalents, beginning of period			8,899	9,593	10,729	9,453
Cash and cash equivalents, end of period			8,800	9,638	8,800	9,638

 

 

SOURCE: Sportscene Group Inc.

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