Pat Marshall - Vice President of Communications and Investor Relations Ellis Jacob - President and Chief Executive Officer Gord Nelson - Chief Financial Officer

Adam Shine - National Bank Financial Derek Lessard - TD Securities Aravinda Galappatthige - Canaccord Genuity Kenric Tyghe - Raymond James Tim Casey - BMO Ben Mogil - Stifel Jeff Fan - Scotia Bank

Good morning. Before beginning the call, we’d like to remind you that certain statements being made are forward-looking and subject to various risks and uncertainties.

Such forward-looking statements are based on management's beliefs and assumptions regarding the information currently available. Actual results could differ materially from those expressed in the forward-looking statements.

Factors that could cause results to vary include among other things adverse factors generally encountered in the film exhibition industry, risks associated with national and world events, discovery of undisclosed material liabilities and general economic conditions. I'd now like to turn the call over to Ellis Jacob, President and CEO.

Thank you, Pat. Good morning and welcome to Cineplex Inc.’

s fourth quarter and year-end 2016 conference call. We are glad you could join us today.

I will begin by providing a brief overview of our top line results as well as the summary of our key accomplishments during the fourth quarter. I will also highlight some of the most anticipated films for the first half of 2017.

At the conclusion of my remarks, our Chief Financial Officer, Gord Nelson, will provide an overview of our financials. As always, once Gord has concluded his remarks, we will hold the question-and-answer period.

Total revenue for 2016 increased 7.8% to $1.5 billion despite a decrease in attendance of 3.2% compared to 2015 which featured five of the top 11 grossing films of all time. This increase was primarily due to our newly acquired businesses and ongoing efforts to diversify our sources of revenue.

Our film entertainment results in the fourth quarter were impacted by a 12% decrease in attendance largely driven by the tough comparative in 2015 where the top four movies in our circuit delivered $98 million in box office compared to $73 million in 2016. In addition, in the fourth quarter of 2016, there were a number of films released in North America that over indexed in the U.S.

including Tyler Perry's Boo! Almost Christmas, Kevin Hart: What Now, and Birth of a Nation which collectively grossed $145 million in the U.S.

market and only $1.8 million in the Canadian market. This resulted in the large difference between our results when compared to our North American peers.

This phenomena happens in certain quarters negatively impacting our box office results. Gord will share the balance of our fourth quarter and full year results with you in a few moments.

Now I would like to highlight our key accomplishments during the fourth quarter. Beginning with theatre exhibition, top performing films during the period included Rogue One: A Star Wars Story, Doctor Strange, Fantastic Beasts and Where to Find Them, Moana and Trolls all of which were available in premium movie-going experiences for our guests to enjoy.

We opened Canada's first 4DX auditorium at Cinemas Yonge-Dundas and VIP which features specially designed motion seats and environmental effects that work and sync with the action on the screen. During the quarter, we continue to expand our D-BOX presence and installed D-BOX motion seats in 9 theatre auditoriums bringing our total to 77 across the circuit at year-end.

We also announced plans to install recliner seating in six theatres across Canada with an additional seven locations added subsequent to quarter end. Construction is already underway and expected to be completed by the summer.

Guests continue to seek our premium movie-going experiences at our theaters. As a result, the percentage of box office revenue from premium experiences was 48% for the quarter, an all-time fourth quarter record driven mainly by the strength of 3D product, a 46.1% on a full year basis.

Within our theatre exhibition business, we achieved record fourth quarter results for BPP of $9.90, an increase of 2.8% and CPP of $5.75, an increase of 3% compared to the prior year period. Looking at media, our media business is comprised of two areas now referred to as cinema media and digital place-based media.

While cinema media revenue decreased 12% for the quarter, it finished with 0.9% increase for the full year. Digital place-based media experienced 19.1% increase in revenue for the quarter and 39% increase for the year largely due to an expanded client base.

In November, we were very pleased to announce an agreement with Ivanhoé Cambridge to install, maintain and operate a leading-edge digital display network at 21 Ivanhoé Cambridge shopping centers across Canada. The roll out of these digital displays has already begun and will result in increased advertising and service revenue once the network is fully installed and operational by the end of this year.

On Monday, we announced an agreement with Morguard Investments LP to create, maintain and operate a network of nearly 175 digital displays at 21 Morguard managed shopping centers in BC, Alberta, Saskatchewan, Manitoba, Ontario and Quebec. With the addition of Ivanhoé Cambridge, Oxford Properties, Morguard and other mall developers, Cineplex now impacts approximately 50% of all mall traffic in Canada.

Since its inception, digital place-based media has been a strategic business for Cineplex and we believe it is well positioned for continued significant growth throughout North America and beyond. In amusement and leisure, in the fourth quarter, we acquired a SAW LLC, leading provider of coin-operated rides, amusement and redemption games as well as bulk-vending equipment to hundreds of shopping centers, restaurant locations and big box retailers.

We also completed the previously announced acquisition of Tricorp Amusements Inc., a leading provider of interactive video redemption and amusement game services in the United States. Then in November, we rebranded Cineplex Starburst Inc.

to Player One Amusement Group unifying all of the Cineplex owned and operated amusement companies including CSI, Brady Starburst, Premier Amusements, Tricorp and SAW under a single brand. Player One Amusement Group is one of the largest distributors and operators of amusement games and vending equipment in North America.

The Rec Room experienced its first full quarter of operation and exceeded our expectation. We continue to move forward with plans to open 10 to 15 locations in the next few years and add subsequent to quarter end announced plans for two new locations, one in the iconic West Edmonton Mall in Alberta to open in the summer of 2017 and the other in London, Ontario opening in 2018.

Construction also continues at the Toronto Roundhouse and Calgary locations which are expected to open this spring and fall respectively. Subsequent to quarter end, Cineplex and WorldGaming announced the first tournament of 2017 as part of the Cineplex WorldGaming Championship Series protected by PlayStation which will see teams of four from across Canada competing in Call of Duty Infinite Warfare for over $65,000 in cash prizes.

Teams qualified for the tournament through online qualifiers listed on worldgaming.com or at one of our regional qualifier events held in theaters. Teams will go on to compete in online playoffs where the top eight teams from across Canada will meet in Toronto for the national finals to be held at Scotiabank Theatre Toronto on March 26.

Moving to SCENE, we were very pleased to reach our 8 millionth member in November marking another important milestone. We added 800,000 members in 2016 reaching a total of 8.1 million members at December 31, 2016.

SCENE provides us with great connectivity to all of our guests helping us to better understand and communicate with them as we become the entertainment destination for Canadians. We look forward to seeing this program continue to grow and evolve in the future.

We were pleased to be recognized as one of Canadian Business magazine's 25 best brands in Canada for 2017. As well, Strategy Magazine named Cineplex as one of their top picks for 2016 brand of the year.

We are proud to be recognized as one of Canada's top brands as it reflects all of the great work that our employees have done to build the Cineplex brand and the company. Now let's take a look at the film slate for the first half of 2017.

Looking ahead to what’s in store this quarter, last Friday, Fifty Shades Darker, the sequel to 2015 Fifty Shades of Grey hit theaters generating $46.8 million in box office revenue. Also opening this past weekend was The Lego Batman Movie, which generated $55.6 million in box office revenue.

And John Wick: Chapter 2, which did $30 million in box office revenue in North America surpassing initial estimates. On March 3, X-Men fans rejoice with the release of Logan.

Then on March 10, we have the action adventure film Kong: Skull Island with Tom Hiddleston, Samuel Jackson, John Goodman and Brie Larson. Next is the highly anticipated Beauty and the Beast remake starring Emma Watson as Belle, which opens on March 17.

Moving on to the second quarter, we look forward to the 8th installment from The Fast and the Furious franchise with The Fate of the Furious opening April 3. The Marvel sequel Guardians of the Galaxy Vol.

2 hits theaters on May 5. In Quebec, the highly anticipated sequel to Bon Cop, Bad Cop, which is the all-time highest grossing Canadian movie to play in Canada, opens May 12.

And Johnny Depp returns as Captain Jack Sparrow in Pirates of the Caribbean: Dead Men Tell No Tales, which opens on May 26. Then in June, the next installment in the DC Universe brings Wonder Woman to the big screen.

The following week, Tom Cruise and Russell Crowe star in The Mummy. Ending the month, children everywhere as well as a few adults will rejoice with the return of the third installment of the highly successful Despicable Me film.

Even though our results in 2016 were negatively impacted by the film slate, we are very encouraged by the direction of our diversification strategy and where Cineplex has leveraged its assets and human capital for the future. This strategy will help us to offset the variations in box office as a result of content fluctuation from the studios.

Before I turn the call over to Gord, I would like to take a moment to congratulate Pat Marshall on her Lifetime Achievement Award from IR Magazine. Over the course of her career, Pat has made significant contributions to the investor relations industry and I would like to thank her for the great work that she does.

Now I will turn the call over to Gord.

Thanks, Ellis, and congratulations Pat. I am pleased to present the fourth quarter financial results for Cineplex Inc.

For your further reference, our financial statements and an MD&A have been filed on SEDAR this morning, and are also available on our Investor Relations website at cineplex.com. For the fourth quarter, total revenues decreased by 5.4% to $385.4 million and adjusted EBITDA decreased by 21.5% to $66.8 million.

The results for the quarter were negatively impacted by a 12% in attendance due to weak film product as compared to the record fourth quarter in the prior year and expenses arising from Cineplex’s diversification into emerging businesses. Cineplex’s fourth quarter box office revenue decreased 9.6% to $177.5 million compared to $196.3 million in the prior year as a result of an attendance decrease of 12% partially offset by BPP increase of 2.8% to an all-time quarterly record $9.90 from $9.63 in 2015.

The. The increase in BPP is due to an increase in the premium product percentage in the fourth quarter increasing to 48% of box office revenue in 2016 from 46.8% in 2015.

The impact of premium price product on the average ticket price was $1.34 for this quarter that compared to $1.22 in the prior year. This was primarily due to the success of 3D product with all of the top five films in 2016 being released in 3D as compared to three films in the prior year.

Food service revenue decreased 7.3% to $105.5 million as a result of the lower attendance partially offset by a 3% increase in concession revenue per patron to $5.75, an all-time quarterly record. Included in food service revenue is $2.4 million from The Rec Room.

The CPP growth was primarily a result of increased visitation and expanded food offerings including those available at Cineplex’s VIP cinemas and Outtakes location. Total media revenue decreased $2.6 million or 4.6% to $52.7 million for the quarter.

Cinema media revenue, which is primarily theater-based, decreased 12%. Digital place-based media revenue increased 19.1% due to increased project revenue for recently announced new clients including A&W and American Dairy Queen, and growth in existing and new business opportunities, including advertising revenue from the TimsTV network deployment and the Oxford Properties Group digital installations.

Other revenue includes an increase in revenue from our amusement solutions business of $7.9 million or 37.2% due primarily to two key acquisitions in the United States made during the quarter. In addition, other revenue includes $2.2 million of amusement gaming and other revenue earned at The Rec Room.

In total, The Rec Room generated approximately $4.6 million in total revenue during its first full quarter of operations. Turning briefly to our key expense line items, film cost for the quarter came in at 54.1% of box office revenue as compared to 53.6% reported in the prior year.

The increase in the film cost percentage is the result of the continued concentration of box office revenue from a select number of titles during the quarter. Cost of food service for Q4 2016 excluding the $0.9 million incurred at The Rec Room was 23.2% as compared to 21.8% in the prior year as a result of the mix of food offerings including those that are VIP cinemas.

Other costs of $198.1 million increased $5.7 million or 3%. Other costs include theater occupancy expenses, other operating expenses and general and administrative expenses.

Theater occupancy expenses were $49.6 million for the quarter versus a prior year actual of $50.5 million. Other operating expenses were $134.7 million for the quarter versus a prior year actual of $123.3 million, an increase of $11.4 million.

Major reasons for the increase include an increase of $7.7 million in amusement solutions expenses primarily due to the two acquisitions completed during the quarter. An increase of $1.6 million through the impact of new and acquired theaters and that of disposed theaters, high media expenses of $2.4 million due to higher digital place-based media business volumes, $3 million in unit level operating cost related to The Rec Room and cost related to new businesses including the world gaming network and The Rec Room.

These increases were offset by decreases in other costs including a decrease in same store theater payroll of $3.2 million due to decreased attendance levels. G&A expenses were $13.8 million for the quarter, which was $4.7 million lower than the prior year primarily due to lower LTIP expenses.

Interest expense of $4.5 million was $0.8 million lower than the prior year amount of $5.3 million contributing to the decrease was a $1.6 million decrease in non-cash interests mainly as a result of the full accretion of EK3 earn-out amount in 2015 offset by a higher cash interest mainly due to higher average borrowings. The company recorded tax expense of $10.9 million during the fourth quarter of 2016 comprised substantially of current tax expense.

Our blended federal and provincial statutory tax rate currently is 26.8%. Net CapEx for the fourth quarter was $26.6 million as compared to $22.3 million in the prior year.

Net CapEx for the year was $99.3 million, which was in line with our previous target. We continue to estimate that our net CapEx will be approximately $125 million for 2017 and this includes approximately $25 million related to our recliner program.

While box office results for the fourth quarter were softer than expected and greatly affected our overall results for the quarter, we are optimistic about the 2017 film slate. We continue to remain comfortable with where Cineplex Inc.

is positioned today. Our strong balance sheet and low leverage ratio allows us to continue to invest in future growth opportunities for the company and benefit from future strong film product.

That concludes our remarks from this morning and we’d now like to turn the call over to the conference operator for questions.

Thanks a lot. Good morning.

And, I guess, congrats to Pat. In terms of some of what we've been hearing Ellis, I might as well ask the question we’ve been asked, so I will put on this call, talk regarding the windowing probably not much progress of late per se, but anything you can add to the discussion heading into what might be something more concrete coming out of maybe CinemaCon later in March?

Adam, as you are aware, we have a great relationship with our studio partners, we are always very innovative when we come to doing things. Last year, we’re one of the few exhibitors that did a test with Paramount on different window where we shared the revenue and discussions continue to take place, but again I think this is more discussions between us and exhibitors and the studios.

And the bottom line is the studios or ourselves are not looking to trade dimes for nickels in a business that's a $50 billion business worldwide. So there's really nothing new to report at this stage and when there is we will definitely make it public.

Is it fair if I can push you a little bit further, initial commentary, in the fall winter last year seem to be a bit more broad based, but I think some of the commentary from last week from the studios seem to be a bit more focused critically narrow on the drama genre in particular, is that a fair assessment of where the focus is really?

Not really, I don't think that – that’s not what I read from the comments from the studios.

Okay, fair enough. And then let me ask a question to Gord.

In terms of the P1AG margins, we saw these drop down to maybe 8% to 8.5% range in the Q4, that’s after rise in the Q3. We’ve seen obviously some M&A in the period, maybe there's a degree of seasonality or any other issues you can talk to and maybe also focus on where you might see these margins heading forward deeper into 2017?

Thanks.

Yeah, thanks, Adam. So we’re – absolutely and a portion of the P1AG business with cinema customers, being a significant client base, the overall results are somewhat impacted by overall attendance volumes year-over-year.

In addition what you would have seen in the fourth quarter is some integration expected obviously, there's some expenses related to the rebranding of the business of the P1AG, so certain unusual items also occurring during that quarter. As you look forward and I know when you look at the margins, you tend to exclude our theater gaming business from those margins and that's why you're coming up with these sort of lower numbers than we would characterize the overall business is coming in at.

But as we move forward, the mix of route versus distribution, so distribution is the sale of amusement gaming equipment, which impacts the overall margins. So as we add route businesses through the acquisitions of Tricorp and SAW, you'll see those margins increase into the next year.

Okay, great. Thanks for that color.

Thank you.

Yeah, thanks. Maybe this one is for Ellis and congratulations Pat as well.

Obviously, you guys are doing a pretty good job at diversifying of the buying away from the box office. I was just wondering what your view is on getting into production and the distribution of content similar to Netflix, do you see an opportunity here?

Derek, we look at all opportunities, but again we have to be careful as to where we take our organization and we are definitely not going to be doing major productions. If there are opportunities that come about with – in Canada or doing some partnerships with other distribution companies, we will look at it.

But as far as major productions that’s not something that we are going to be focused in.

Okay. And maybe one for Gord.

Can you tell us what the expected revenue contribution is from the Morguard Investment contract and maybe just an update on the digital media pipeline?

Sure. And we would typically don't comment on specific contractual relationships, I think, what we have said historically is that we look to invest in 2017 about $10 million in digital media installations, which I think are going to be hybrid or advertising revenue shared businesses.

So – and that we’ve typically expected about 30% returns on those investments and at run rates sort of 30% EBITDA margin. So, I’m not going to comment on the specific agreement, but in totality that's where we would expect to be on some of our new installations.

And that – may be just a comment on the pipeline.

Sure. With respect to the pipeline is from the more traditional signage digital place-based business.

As we've mentioned before, we’ve been very encouraged by the opportunities that we're seeing based on our presence in the U. S.

We have made some announcement throughout 2016 and I can say we continue to remain optimistic and are in sort of pilot type situations with a number of other potential customers.

Okay. Thanks for that.

Thanks, Derek.

Good morning. Thanks for taking my questions and congrats Pat.

I wanted to spend a bit of time on the digital signage business, the place-based media. You had very good growth through the year, every quarter, and 30-plus-% growth for the year.

As you think about sort of the consistency signings that you’ve been getting and your entry into the U.S., can you perhaps give me a sense of sort of what the market opportunity is, number one? And secondly, the level of competition, I mean, as you look around despite being a fairly attractive space, you don't see too many significant players in this area.

I was wondering, Ellis, if you had any thoughts on that as well?

So, I will let Gord start with the first part and then I will take the second part.

Look at – Aravinda, I think, when we look at the solution that we provide to our potential customers, we're supplying and we always describe it as a sort of kind of four key elements. We provide a technology solution through the licensing of our product, our proprietary product.

We provide a network operation solution, so we will manage these mission critical signage installations in locations across North America or globally. We provide a creative services solution for our customers that we create contents – the compelling contents that changes customer behavior and improves the brand's presence within their physical location.

And then lastly, if a customer wants an advertising solution, we will also provide an advertising solution to that. So there are very few players and we're probably one of the only players in the space that provide all those four elements, which makes us an attractive solution for customers and I believe that is why you're gaining traction in the marketplace.

There are other competitors out there in the space that – they are technology based solution providers that don't provide the other elements and there are advertising solution based providers, again, that don’t provide some of the other kind of elements that we provide. So with respect to the marketplace, we do have a bit of a unique position and I believe that’s contributing to the success that we are seeing in a number of these announcements over the last couple – the last year.

Yeah, Aravinda, I think Gord has summed it up nicely and I think really what it does for us is we’re a one-stop shop for individuals looking to get into that space. And that's the advantage that we have over competitors.

Thanks, Ellis. And just a quick second question on the cost side.

Obviously, I know film cost was discussed in the previous calls as well, but we continue to see that sort of tick up from sort of the 52% level that we saw a couple years ago towards 54% and now I think closing in on 55%. I know that obviously the film slate and the combination plays a big role, but is there anything other than that, is there any update on that front that could perhaps structurally readjust that film cost rate on a go-forward basis?

Aravinda, it’s really driven by the number of films and how they gross in the marketplace and what we’re seeing recently and as you've noticed is, most of the box office is coming form of very few films out there and what we need is more singles and doubles and films like Lion, La La Land, all of those kinds of movies help us and when you've got the big blockbusters, you end up with the higher film rental because it's very concentrated. So that's the situation where it’s hard to predict and it really depends on the types of movies that are released in each individual quarter.

So that could vary from quarter to quarter.

Great. Thank you.

I will pass the line.

Thank you and good morning. Ellis, just a quick one for you.

With respect to the attendance numbers, how much of an impact did – in terms of Star Wars, how much of an impact did people going previously to see the Star Wars maybe two or three times in Force Awakens versus perhaps on the once or twice to Rouge One [indiscernible] numbers in this quarter?

Interesting. The difference actually, yes, this one did not perform to the same level as the previous Star Wars, but one of the things in the fourth quarter is in 2015 the kinds were off school for two weeks in December and in 2016 one week fell in December and the second week fell in January.

And that actually had an impact on our fourth quarter because of the shift with the holidays over the Christmas season. And in the case off the movie itself basically we also had Specter in 2015, which was a Bond film and we over indexed with those movies in Canada, which helped us in 2015, which we didn't have in 2016.

And that movie was the second highest grossing movie after Star Wars in 2015 for the fourth quarter.

Thank you. And then maybe one for Gord.

Gord, are you able to provide any insight on the impact if any of that small price increase you put through on the base ticket prices, I know it went through [ph] pretty modest, and I think went into effect early in October, what impact if any of that had on attendance sort of the trends in culture and how we should think about the impact that had on business in this quarter? and how we should think about the impact that had on the business in this quarter?

Yes. I think the two biggest impacts in terms of the overall BPP were one, the shift in the product of play during the quarter and primarily the percentage of premium box office.

So when you're looking at the overall trends, I think those are some of the more dominating effects and that price increase had on the BPP during the fourth quarter.

Thanks very much. I’ll leave with that.

Thanks. Good morning.

Two for me, could you talk a little bit about your in-theatre media sales? There was a pretty sharp decline and I thought your revenue strategy there was last year to attendance.

So could just maybe refresh us on how we should think about revenue monetization in theatre? And Gord, you mentioned on the digital placement strategy that you see more optimistic on the U.S.

Have you dedicated more sales resources to the U.S. because I thought there was just one sales office?

Could you talk a little bit about how you’re executing and what is making you more opportunistic down there? Thanks.

I’ll talk about the first part, let Gord deal with the future in the U.S. So on the cinema advertising itself, we were really looking at a tough comp when you compared us from 2015 to 2016 because 2015 was up over 30% when you compared it to 2014.

So the fourth quarter in 2015 was a massive quarter and we also had a number of key categories of customers that delayed some of their campaigns which had an impact on us in 2016. But we still are quite optimistic about the business, we feel confident about 2017 and as you saw, for the full year, we did go up albeit a small amount but it was an increase from the prior year.

And that we feel will be - the media business will continue to increase as we continue to ramp through 2017.

Ellis, is it fair to say there is a less direct relationship though to attendance and in-theatre advertising sales than what is obviously completely direct on concession and box.

Yes, that's true but we also have to remember when advertisers see big movies that are planned to come out, they tend to want to advertise with those movies. So when we had Star Wars last year and Spectre and all of those movies, they were more keen to put their ads in front of those movies.

How do you feel about this year's slate with respect to advertising specifically?

Look there's a lot of temples and I think in 2017, the fourth quarter looks really, really strong and even when you look at the summer, you’ve got starting with all - from starting next week and moving forward there is lot of big films like you've got the Logan which is the XXX and then you’ve got Kong, you got Beauty and the Beast, you've got The Fate of the Furious which is the eighth film in that franchise and it’s done extremely well, you’ve got Guardians of the Galaxy, Wonder Woman, there is Spider-Man, there is Transformers, Despicable Me, Pirate so I think there's a lot of strong films out there.

And Tim, with respect to the question on the digital sale and the sales infrastructure, we have definitely bulked up our business development teams. We’ve integrated our two existing operations in Canada so we've been able to create a larger infrastructure to support any sales initiatives going forward also with the large team that represents us from a technology perspective, to a creative perspective, to an advertising perspective when we go and meet with clients.

So we’ve definitely made our sales process and business development process a larger resource for us and a more efficient resource, and that’s allowed us to have this continued success in the U.S. I will just remind you too is our focus is typically on larger customers where it’s mission critical installations and so our focus is on a smaller but larger customer base than someone who operates couple restaurants or [indiscernible].

Thank you.

Hi, good morning and thanks for taking my question. In terms of the concentration, I don’t know if you disclosed, what was the 20 top five concentration as a percentage of box office in 4Q 2016 versus 2015.

It was higher in 2015 than 2016. I don’t have the percentages in front of me but when I had made the comment I said that $98 million of box office was from 2015 and comparatively it was $73 million in 2016.

Got it, okay. On the landlord contribution, a bit of an increase this year – sorry in ‘16 in terms of how much landlord was contributing for some of the CapEx that you're spending?

The U.S. exhibitor cinema leans really extensively on the landlords, others of them have really not.

Philosophically how much do you want to lean on landlords with the offset of course being least extensions and higher rents and curious your view on how much you need to lean on them given your lower leverage ratio than some of your U.S. peers.

Yes, Ben, I think you want to have the right balance between risk and reward and with the landlord money it always comes at a cost and cost is your future rent stream. So I think there are some of our other exhibitor peers who have similar types of target plus where you look at 20% return on new theatre investment but also maintain a 20% EBITDA margin.

And I would say that’s similar to a strategy that we would look at as we look to landlord financing.

And then on following up on Tim's question about the in-theatre advertising, any concern that you're getting from advertisers not so much on theater attendance, trends which obviously vary quarter-to-quarter but any concerns that the sort of amount of captive time the users are spending looking at ads opposed to looking at their phones et cetera and also the advent of online reserve seating where customers can come in a lot closer to the ShowTime and don't have to watch as much advertising. Any concerns that you’re hearing from them on those fronts?

Not anything of significance, Ben, and I think there was a great article yesterday which talked about the recall on cinema advertising compared to the Super Bowl and what a difference and the amount of penetration and the benefit for the advertisers from using cinema advertising.

Okay, that's great and Pat, congratulations.

Thanks.

Thank you.

Thanks and good morning. Couple of quick ones.

One, on the digital media, in 2016 if we look at quarter-to-quarter, we've seen a nice sequential increase of a couple of million dollars each year, Q4 was flat versus Q3. So wondering if you can help us think about the growth rate going into 2017 considering new contracts, backlog, pipeline et cetera?

And then the second question is regarding the Rec Room. I know it's early and I know it's still only one location but can you talk about the success you've had in the fourth quarter with the Edmonton location.

And I guess whether there's been a slowdown or seasonality impact into early Q1 that you're seeing or has the attendance and traffic been still pretty strong.

So, Jeff, I’ll take the first half of the question which is on the revenue stream and projections for the digital signage business. The one thing that creates a little bit of lumpiness in the overall quarterly allocations is the amount of project and installation revenue that occurs in a quarter.

Last Q4 was particularly heavy and that's why we've been running at about a 30% rate for three quarters and it was down to an overall increase of about 19% in the fourth quarter. So as I looked forward and given that we’ve mentioned previously that a number of the customers that we've recently announced tend to deploy over a number couple of years is that the growth rate that you’ve seen in 2016, I would expect would continue on into 2017 as they continue those planned rollouts and expansions and we have similar levels of mix of increasing recurring revenue streams and project revenues.

And on the Rec Room, Jeff, as we mentioned earlier, we are very, very happy with the performance in the quarter. We saw significant revenue both in the food and gaming area.

In total, they were close to $5 million of total revenue. And that was even without some of our features like virtual reality weren't open for the whole quarter.

And guests seem to be loving all the options that we offer them and that results in repeat businesses. As far as seasonality, I think one of the problem is on the weekends we have line ups to get in and with the cold weather in Edmonton it kind of makes it a little bit more difficult.

But we'll see once the patio opens for the first time later towards the summer what the impact is going to be and how this location continues to grow. And we are very excited with the one in Toronto which is at the Roundhouse which is open towards the middle of the year.

Okay. Thanks guys.

Thank you.

Thank you so much for joining us this morning. We look forward to seeing you at our Annual General Meeting on May 17.

Please mark your calendars. Thank you.