Sportscene Group Inc. Achieves a Good Performance For its Fiscal Year 2013, Including a Significant Increase in its Profitability During the Last Six Months

MONTREAL, Nov. 14, 2013 /CNW Telbec/ - During the fiscal year ended August 25, 2013, SPORTSCENE GROUP INC. ("Sportscene" or "the Company") (TSXV: SPS.A) maintained a good financial performance despite a challenging economic and sporting environment, marked by the weak job market, the National Hockey League lockout during the first semester and the postponement of a major boxing match for reasons beyond the Company's control.

La Cage aux Sports' total network sales⁽¹⁾ amounted to $107.1 million, compared with $110.3 million in fiscal 2012. This slight 3.0% decline is due primarily to the closure of a franchised Cage at the beginning of fiscal 2013, since average same-Cage sales⁽¹⁾ showed little variation over the previous year. For their part, Sportscene's revenues grew by 4.5% to $88.1 million. The Company delivered earnings before interest, amortization, other items and income taxes, or EBITDA⁽¹⁾ comparable to the previous year's, in the amount of $9.3 million. Sportscene closed fiscal 2013 with net earnings attributable to shareholders of $2.9 million or $0.69 per share (basic and diluted), compared with $3.3 million or $0.78 per share in 2012. This decline is mainly attributable to higher amortization and financial expenses, due to the investments allocated over the past two years to expand its operational base.

"We deem the results of the past fiscal year more than acceptable, considering that the NHL lockout affected our core operations throughout most of the first semester," said President and Chief Executive Officer Jean Bédard. For information purposes, The C.E.O. specified that results for the last six months of fiscal 2013 showed a distinct improvement over the previous year in all performance measures, including an 8.2% growth in EBITDA⁽¹⁾ and an 11.6% increase in net earnings attributable to shareholders.

"This performance is a consequence of the many initiatives put forward to optimize our operations. Across the Company, our operators and marketing team pooled all their energy and resourcefulness to promote customer traffic and maximize profitability. At the corporate level, we strengthened our management team, continued to fine-tune the business models of our various operational units, and further improved foodservices in order to enhance both customer perception and profit margins. All these initiatives should enable us to maintain a good performance in upcoming quarters. In addition, the Company remains in solid financial health, with available cash⁽¹⁾ of $9.6 million as at August 25, 2013 and a debt ratio of 21.5%. Sportscene is therefore well positioned financially to support its organic development and take advantage of expansion opportunities consistent with its strategic objectives."

Results for the Fourth Quarter Ended August 25, 2013

For the 13-week period ended August 25, 2013, net earnings attributable to shareholders were superior to those of the previous year, amounting to $0.6 million or $0.15 per share, compared with $0.5 million or $0.13 per share for the same quarter in 2012. Revenues grew by 7.0% to $20.4 million, whereas EBITDA⁽¹⁾ slightly increased to stand at $2.1 million. For their part, La Cage aux Sports' total network sales⁽¹⁾ decreased by 5.6% to $24.5 million, due mainly to the closure of the franchised Cage.

Outlook

Sportscene's management looks forward to the next fiscal year with cautious optimism. On the one hand, the economic context and job market have shown no significant improvement over the past year and remain a concern for the Quebec restaurant industry. On the other hand however, the sporting environment is much more favourable than it was last year. The hockey season notably got off to a positive start and the major boxing match that had to be postponed last spring will likely be held in January 2014, not to mention the Winter Olympics. In addition, Sportscene will benefit from the contribution of a new corporate Cage opened in Boucherville on November 8, 2013, the inauguration of which paves the way for the implementation of La Cage aux Sports' updated concept, which was notably developed for the new generation of consumers. Besides its spectacular and innovative features in terms of technologies and ambience — the main drivers of La Cage aux Sports' differentiation strategy — this flagship Cage introduces other novelties as regards foodservices, customer service and working methods. In upcoming quarters, the Company will undertake to gradually roll out this concept across the La Cage aux Sports network.

Grant of New Share Options

Under the Class A share purchase option plan (the "Plan") in effect at Sportscene, the Board of Directors today approved the grant of 71,000 Class A share options in favour of some managers and directors at an exercise price of $8.25 per share, all according to the terms and conditions provided for in the Plan. These options will be vested 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 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 taxes". 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 isolate the impact of restaurant openings and closures in order to assess the actual trend in in restaurant sales. Available cash includes cash and cash equivalents as well as investments, if any.

(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 years ended August 25, 2013 and August 26, 2012
(in thousands of Canadian dollars, except for earnings per share and number of outstanding shares)
			2013	2012
			$	$
Revenues			88,080	84,295
Cost of sales			26,585	24,778
Gross margin			61,495	59,517
Selling and administrative expenses, excluding amortization			52,157	50,128
Earnings before interest, amortization and income taxes			9,338	9,389
Amortization			4,762	4,149
Operating earnings			4,576	5,240
Interest on long-term debt			729	576
Other interest expenses			171	117
Other (gains) losses			(56)	138
Earnings before income tax expenses			3,732	4,409
Income tax expenses			871	1,187
Net earnings and comprehensive income			2,861	3,222
Net earnings and comprehensive income attributable to:
The Company's shareholders			2,892	3,256
Non-controlling interests			(31)	(34)
Net earnings and comprehensive income			2,861	3,222
Earnings per share (in $):
	Basic		0.69	0.78
	Diluted		0.69	0.78
Weighted-average number of outstanding Class A shares (in thousands):
	Basic		4,165	4,165
	Diluted		4,165	4,165
Consolidated statements of financial position
as at August 25, 2013 and August 26, 2012
(in thousands of Canadian dollars)
			August 25,	August 26,
			2013	2012
			$	$
Assets
Current assets
	Cash and cash equivalents		9,564	10,729
	Accounts receivable		4,772	3,743
	Income tax receivable		438	331
	Inventories		1,906	1,697
	Prepaid expenses		578	459
	Current portion of notes receivable		22	284
Total current assets			17,280	17,243
Notes receivable			1,373	1,481
Property, plant and equipment			39,754	36,302
Intangible assets			821	828
Deferred tax asset			2,512	2,214
Goodwill			3,843	3,101
Total assets			65,583	61,169
Liabilities and shareholders' equity
Current liabilities
	Accounts payable and accrued liabilities		8,450	8,941
	Income tax payable		159	242
	Deferred revenues and credits		1,353	871
	Current portion of long-term debt		3,010	2,648
Total current liabilities			12,972	12,702
Long-term debt			15,920	14,554
Deferred revenues and credits			1,472	1,617
Deferred tax liability			1,087	1,088
Total liabilities			31,451	29,961
Shareholders' equity
	Share capital		3,551	3,551
	Stock-based compensation reserve		299	260
	Retained earnings		29,980	27,088
Shareholders' equity attributable to the Company's shareholders			33,830	30,899
Non-controlling interests			302	309
Total shareholders' equity			34,132	31,208
Total liabilities and shareholders' equity			65,583	61,169
Consolidated statements of cash flows
for the years ended August 25, 2013 and August 26, 2012
(in thousands of Canadian dollars)
			2013	2012
			$	$
Operating activities
	Net earnings and comprehensive income		2,861	3,222
	Adjustments to reconcile net earnings to cash flows from operating activities:
		Loss on disposal of property, plant and equipment	79	137
		Loss on impairment of non-current assets	162	-
		(Gain) loss on business combination	(277)	19
		Amortization of deferred financing costs	14	10
		Amortization of property, plant and equipment	4,690	4,062
		Amortization of intangible assets	72	87
		Stock-based compensation	39	38
		Financial expenses recognized in net earnings	900	693
		Interest paid	(886)	(683)
		Interest included in the cost of property, plant and equipment	-	20
		Income tax expenses recognized in net earnings	871	1,187
		Income tax paid	(1,230)	(1,476)
			7,295	7,316
	Net change in non-cash working capital items, net of acquisitions and disposals of subsidiaries and joint ventures		(1,798)	1,684
			5,497	9,000
Financing activities
	Increase of long-term debt		3,243	5,444
	Repayment of long-term debt		(3,185)	(2,587)
	Increase in deferred financing costs		(12)	(21)
	Dividends on Class A shares		-	(1,250)
	Dividends paid to non-controlling shareholders		-	(35)
			46	1,551
Investing activities
	Acquisitions of subsidiaries and joint ventures, net of cash and cash equivalents acquired		(807)	(1,044)
	Issuance of notes receivable		(944)	(1,080)
	Retraction of notes receivable		248	245
	Acquisitions of property, plant and equipment		(5,165)	(7,411)
	Proceeds from disposals of property, plant and equipment		10	38
	Acquisitions of intangible assets		(50)	(23)
			(6,708)	(9,275)
(Decrease) increase in cash and cash equivalents			(1,165)	1,276
Cash and cash equivalents, beginning of year			10,729	9,453
Cash and cash equivalents, end of year			9,564	10,729

 

 

 

SOURCE: Sportscene Group Inc.

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