MONTREAL, Jan. 17, 2013 /CNW Telbec/ - At the Annual General Meeting of Shareholders held this morning in Montreal, the management of SPORTSCENE GROUP INC. ("Sportscene" or "the Company") (TSXV: SPS.A), operator of LA CAGE AUX SPORTS resto-bar chain, announced new developments in addition to disclosing the financial results for the first quarter of fiscal 2013, i.e. the 13-week period ended November 25, 2012.
Results and for the First Quarter Ended November 25, 2012
Although the lockout in the National Hockey League had an adverse impact on the Cages' customer traffic, Sportscene Group nevertheless remained profitable thanks to the initiatives taken over the past year with respect to internal development and expansion. Total network sales(1) decreased by $2.5 million to $25.5 million.The revenue shortfall caused by the NHL lockout was somewhat alleviated by the improvements made in previous quarters to enhance La Cage aux Sports' overall offering. Sportscene's revenues were down by $1.1 million to $22.5 million, due primarily to a lower level of activity than the previous year on the hockey scene and for the InterBox subsidiary. However, restaurant revenues grew by $1.6 million, thanks largely to the proportionate consolidation of the results of three non-banner restaurants in which the Company acquired a 50% interest at the beginning of the first quarter, as described below, and the addition of new Cages over the past year.
Consolidated EBITDA(1) decreased by $0.3 million to $2.1 million due to the decline in other revenues and the lower average same-Cage sales resulting from the NHL lockout. Consequently, Sportscene closed the first quarter with net earnings attributable to shareholders of $0.6 million or $0.15 per share (basic and diluted), compared with $1.0 million or $0.24 per share for the corresponding period of the previous year.
Two Strategic Acquisitions and an Appointment
Effective August 27, 2012, being the first day of fiscal 2013, Sportscene acquired a 50% interest in three non-banner restaurants located in the Quartier Dix30 in Brossard, which offer high-quality foodservices. These are the La Tomate Blanche restaurant, specializing in fine Italian cuisine, the L'Aurochs steakhouse and the tapas restaurant Le Vestibule, signé L'Aurochs. "Our interest in these units brought an interesting contribution to Sportscene Group's consolidated results as of the first quarter. Strategically, this acquisition will help support our efforts to enhance the quality and variety of the menu offering along with the overall experience provided to La Cage aux Sports' customers," pointed out Jean Bédard, President and Chief Executive Officer of Sportscene Group.
On December 10, 2012, i.e. at the beginning of the second quarter, Sportscene Group and a partner jointly acquired the building housing the Company's head office in Boucherville. The building will shortly welcome a La Cage aux Sports restaurant that will serve as a flagship unit and ongoing development centre for La Cage's concept in the years to come. This development reflects the Company's will to fully develop the potential of the La Cage au Sports brand, which has dominated Quebec's sports-themed restaurant industry for close to 30 years.
Jean Bédard was also pleased to announce the appointment, effective January 28, 2013, of Josée Pépin as Vice-President, Finance of Sportscene Group Inc. After earning several years of experience with a major accounting firm, Ms. Pépin joined the Company in 2008 as Manager, Accounting and Disclosure, a position she has skillfully held up to now. In addition to her current responsibilities including financial reporting, she will take over as part of her new duties the management of the Company's financing and investment strategy in support of its development projects.
2013 Outlook
"Now that the NHL conflict has been resolved, we can look forward to an improvement in our financial performance in upcoming quarters, and turn to our growth and market leadership objectives with renewed confidence,' indicated Jean Bédard. The C.E.O explained that the expected increase in customer traffic throughout the La Cage aux Sports network generated by the resumption of the hockey season as of January 19 should allow to recover, in upcoming months, part of the revenue shortfall sustained in the first quarter and at the beginning of the second quarter. Other factors should sustain the Company's financial performance for the rest of fiscal 2013, of which: the contribution of the new Cages inaugurated in 2012, the acquisition of additional interests in a few Cages and three non-banner restaurants during the last fiscal year and at the beginning of the current fiscal year, and the improvements to La Cage aux Sports' menu offering. Sportscene has also initiated a new Kaizen-type optimization phase focusing on restaurant operations and service.
The Company's key objectives for the next quarters will be: (1) to consolidate its bases by optimizing its latest investments and overall profitability; (2) to fully develop the potential of La Cage aux Sports' brand through a combination of measures, including the systematic search for the best sites as well as the continuous and structured upgrading of La Cage aux Sports' concept; and (3) to systematically seek and develop other growth avenues compatible with its expertise and vision. The recent purchase of a 50% interest in three Quartier Dix30 restaurants reflects this line of action.
Management also wishes to point out that during the third quarter of fiscal 2012, due to the challenging business environment and in light of the investment strategy implemented by Sportscene Group, the Board of Directors decided to temporarily suspend the dividend payment practice carried out over the previous years. Consequently, no dividend has been declared since the beginning of fiscal 2013. In the future, the Board will continue to judge, on a timely basis, as to the relevance of paying dividends in light of market conditions, the Company's financial position and funding requirements, as well as the achievement of performance indicators consistent with management's objectives.
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 "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 25, | November 27, | ||
| 2012 | 2011 | ||
| $ | $ | ||
| Revenues | 22,456 | 23,607 | |
| Cost of sales | 6,784 | 6,536 | |
| Gross margin | 15,672 | 17,071 | |
| Selling and administrative expenses, except amortization | 13,551 | 14,618 | |
| Earnings before interest, amortization and income tax | 2,121 | 2,453 | |
| Amortization | 1,187 | 977 | |
| Operating earnings | 934 | 1,476 | |
| Interests on long-term debt | 179 | 128 | |
| Other interests expenses | 60 | 23 | |
| Other gains | (173) | (31) | |
| 66 | 120 | ||
| Earnings before income tax | 868 | 1,356 | |
| Income tax | 231 | 367 | |
| Net earnings and comprehensive income | 637 | 989 | |
| Net earnings and comprehensive income attributable to: | |||
| The Company's shareholders | 644 | 992 | |
| Non-controlling interests | (7) | (3) | |
| Net earnings and comprehensive income | 637 | 989 | |
| Earnings per share (in $): | |||
| Basic | 0.15 | 0.24 | |
| Diluted | 0.15 | 0.24 | |
| Weighted average number of outstanding Class A shares (in thousands): | |||
| Basic | 4,165 | 4,165 | |
| Diluted | 4,165 | 4,165 | |
Interim Condensed Consolidated Statements of Financial Position
| (in thousands of Canadian dollars) | |
||
| As at November 25, | As at August 26, | ||
| 2012 | 2012 | ||
| (unaudited) | (audited) | ||
| $ | $ | ||
| Assets | |||
| Current assets | |||
| Cash and cash equivalents | 8,899 | 10,729 | |
| Accounts receivable | 5,935 | 3,743 | |
| Income tax receivable | 327 | 89 | |
| Inventories | 1,812 | 1,697 | |
| Prepaid expenses | 726 | 459 | |
| Current portion of notes receivable | 70 | 284 | |
| Total current assets | 17,769 | 17,001 | |
| Notes receivable | 1,442 | 1,481 | |
| Property, plant and equipment | 39,046 | 36,302 | |
| Intangible assets | 819 | 828 | |
| Deferred tax asset | 2,423 | 2,214 | |
| Goodwill | 3,870 | 3,101 | |
| Total assets | 65,369 | 60,927 | |
| Liabilities and shareholders' equity | |||
| Current liabilities | |||
| Accounts payable and accrued liabilities | 10,186 | 8,941 | |
| Deferred revenues and credits | 1,490 | 871 | |
| Current portion of long-term debt | 2,997 | 2,648 | |
| Total current liabilities | 14,673 | 12,460 | |
| Long-term debt | 16,074 | 14,554 | |
| Deferred revenues and credits | 1,680 | 1,617 | |
| Deferred tax liability | 1,088 | 1,088 | |
| Total liabilities | 33,515 | 29,719 | |
| Shareholders' equity | |||
| Share capital | 3,551 | 3,551 | |
| Stock-based compensation reserve | 269 | 260 | |
| Retained earnings | 27,732 | 27,088 | |
| Shareholders' equity attributable to the Company's shareholders | 31,552 | 30,899 | |
| Non-controlling interests | 302 | 309 | |
| Total shareholders' equity | 31,854 | 31,208 | |
| Total liabilities and shareholders' equity | 65,369 | 60,927 | |
Interim Condensed Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)
| (unaudited) | ||||
| |
|
November 25, 2012 |
13 weeks ended November 27, 2011 |
|
| $ | $ | |||
| Operating activities: | ||||
| Net earnings | 637 | 989 | ||
| Adjustments to reconcile net earnings to cash flows from operating activities: | ||||
| Loss on disposal of property, plant and equipment | 20 | 30 | ||
| Gain on business combination achieved in stages | (193) | (3) | ||
| Amortization of property, plant and equipment | 1,168 | 953 | ||
| Amortization of intangible assets | 19 | 24 | ||
| Stock-based compensation | 9 | 5 | ||
| Financial expenses recognized in net earnings | 239 | 151 | ||
| Interest paid | (235) | (155) | ||
| Interest included in the cost of property, plant and equipment | - | 11 | ||
| Income tax expense recognized in net earnings | 231 | 367 | ||
| Income tax paid | (601) | (825) | ||
| 1,294 | 1,547 | |||
| Net change in non-cash working capital items, net of acquisitions and disposals of subsidiaries and joint ventures | (595) | 870 | ||
| 699 | 2,417 | |||
| Financing activities | ||||
| Increase of long-term debt | 1,000 | 801 | ||
| Repayment of long-term debt | (847) | (511) | ||
| Dividends paid to non-controlling interests | - | (35) | ||
| 153 | 255 | |||
| Investing activities | ||||
| Acquisitions of subsidiaries and joint ventures, net of cash and cash equivalents acquired | (521) | (19) | ||
| Change in notes receivable | (447) | (158) | ||
| Acquisitions of property, plant and equipment | (1,723) | (2,138) | ||
| Proceeds from disposals of property, plant and equipment | 9 | 1 | ||
| Acquisitions of intangible assets | - | (218) | ||
| (2,682) | (2,532) | |||
| (Decrease) increase in cash and cash equivalents | (1,830) | 140 | ||
| Cash and cash equivalents, beginning of period | 10,729 | 9,453 | ||
| Cash and cash equivalents, end of period | 8,899 | 9,593 | ||
SOURCE: Sportscene Group Inc.
Jean Bédard, Chairman of the Board, President and Chief Executive Officer
Josée Pépin, Manager, Accounting and Disclosure (Vice-President, Finance as of 01/28/13)
450-641-3011
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