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

Aravinda Galappatthige - Canaccord Genuity Kenric Tyghe - Raymond James Jeff Fan - Scotiabank Derek Lessard - TD Securities Adam Shine - NB Financial Drew McReynolds - RBC Capital Markets Rob Goff - Echelon Wealth Partners

Good morning. Before beginning the call, we would 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'll now turn the call over to our President and CEO, Ellis Jacob.

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

s fourth quarter and year-end 2017 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 a summary of our key accomplishments during the fourth quarter. I will also highlight some of the most anticipated films for the first half of 2018.

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 a question-and-answer period.

We experienced a strong fourth quarter in 2017 with all business units generating increased revenue versus the same quarter in the prior year. We continue to pursue our diversification strategy and this focus helped drive adjusted EBITDA and EPS growth.

Total revenue increased 10.6% to $426.3 million and adjusted EBITDA increased 19.1% to $79.6 million. All time quarterly records were achieved for food service and media revenue, as well as office per patron of $10.54, up 3% and concessions per patron of $6.29, up 9.4%.

Looking at the full-year, total revenue increased 5.2% to $1.6 billion, despite an attendance decrease. The attendance decline was a result of a weaker than expected film slate, especially during the second and third quarters, which significantly underperformed versus expectations.

This, coupled with incremental costs related to the startup and integration of our new businesses, resulted in adjusted EBITDA of $235.9 million, up close to 1% for the year. Gord will share the balance of our fourth year and full year results with you in a few moments.

Now, I would like to highlight some of our accomplishments during the fourth quarter. Beginning with film entertainment and content, the top five performing films for the quarter included Star Wars: The Last Jedi, Thor: Ragnarok, Justice League, Blade Runner 2049, and Jumanji, all of which were available in premium movie going experiences for our guests to enjoy.

Star Wars and The Last Jedi was the highest grossing film worldwide in 2017, generating 1.3 billion in box office revenue and although it performed stronger than Rogue One in 2016 it did not meet the success the Star Wars: The Force Awakens with generated $2.1 billion in 2015. In November, we announced a three-year sponsorship agreement that brings Sunday Night Football and the Super Bowl live to select Cineplex theaters across Canada.

Regular season and play-off games were broadcast live to 15 Cineplex VIP Cinemas throughout the year and then expanded to additional theatres across Canada for the Super Bowl. We were pleased with the results and look forward to enhancing the program further for 2018 and 2019.

We also continued the rollout of our recliner seating program converting to additional theatres during the quarter and bringing our total completed locations to 13 with a total of 130 auditoriums. Looking at our online initiatives, during the quarter, we made a number of improvements to the Cineplex Store including a new user interface and experience across both the website and multiple connected televisions and device apps.

We continue to see strong growth quarter-over-quarter in all of our Digital Commerce initiatives. Looking at Media, our media business reported record fourth quarter revenue due to a 17.2% increase in cinema media, and a 15.5% increase in Digital Place-Based Media.

Growth in Cineplex digital media in the fourth quarter was driven by a large-scale digital signage network deployment at more than 1000 citizens banked branches across the American Northeast. The installation was part of a branch of the future and required us to move quickly and deploy all 1000 branches in less than two months.

It was a tremendous accomplishment that was completed by year's end and I want to thank the team at CDM for their great work. Subsequent to quarter-end, we were also pleased to announce another agreement this one with Arcos Dorados, the largest independent McDonald’s franchise in the world.

CDM will deploy, maintain, operate, and support a network of digital menu boards at locations in Argentina, Brazil, and Uruguay with content being created in Portuguese and Spanish. This announcement illustrates CDM's ability to support top tier brands with multiple languages anywhere in the world.

Since its inception Cineplex Digital Media has been a strategic business for the company as it helps us to execute against our diversified business plan. Looking at amusement and leisure, during the quarter, we opened The Rec Room and Calgary at Deerfoot City, bringing our total Rec Room locations to four.

Our results during the fourth quarter were very strong. We continue to fine-tune the operations to increase efficiencies and achieve higher margins and we were pleased with a 20% store level margin in the fourth quarter.

The plan remains to open 10 to 15 locations over the next few years and we look forward to opening new locations at The Rec Room at Masonville Place in London in the second quarter and at Square One in Mississauga within the next 12 months. In October, we announced plans to launch a reinvented Playdium brand concept.

The smaller sized box will target teens and families versus The Rec Room's millennial target market and will roll out mid-size communities across Canada over the next few years. The first location is on track to open in Whitby, Ontario in 2019.

Player One Amusement Group also had a strong fourth quarter as we continue to integrate and gain efficiencies from our recent acquisitions. World Gaming hosted a number of video gaming tournaments online and in theatre during the quarter.

In December, registration opened for their third annual Call of Duty tournament, which is shaping up to be their largest Call of Duty tournament and could potentially be their largest overall world gaming tournament event ever hosted. The live national finals will take place at the Scotiabank Theater, Toronto in early March.

Also, during the quarter, Collegiate StarLeague representing over 1000 campuses across North America hosted a number of Collegiate events and tournaments, including Super Smash Bros, which is a series of crossover fighting games, featuring characters from the Nintendo Super Mario franchises. Membership in Canada's top entertainment loyalty program continue to grow as we added 200,000 members during the quarter, bringing our total to 8.9 million members as of December 31, 2017.

We now have over 10 years of data from our SCENE members, which is tremendously valuable and helps us to better communicate with our members and target messaging to drive behaviors. We know from experience that the real value for program is derived from the data, which enables us to analyze trends and predict behavior.

Our SCENE members are represented in approximately 45% of Canadian households with almost 25% of the population being a member. In October, we held our seventh annual Cineplex Community Day raising $325,000 for our national charity partner week.

Every year, thousands of our employees generously donate their time for a morning of free family friendly films, discounted food and beverage, and have a lot of fun supporting the communities where we operate. Cineplex has been a proud partner of WE since 2014.

Over the years our support has helped raise a significant amount of money that goes towards WE program that inspire Canadian youth across the country to discover their passions, develop their leadership skills, and become positive change makers in their communities. Now, let’s take a look at the film [ph] slate.

Overall, I am encouraged by the film schedule this year, especially in the second and third quarters. Opening last weekend was the highly anticipated Marvel's film Black Panther, which generated $242 million in North American Box Office revenue in just four days.

It was the highest gross in February film opening in history, and Cineplex's biggest opening in the first quarter ever. This past weekend was also our fourth largest opening weekend of all time.

Also, during the quarter, we hit another milestone with the film Padmaavat, which became our largest grossing Bollywood film of all time. These movies speak to the power of the theatrical moviegoing experience, which is unparallel compared to any other media.

As I have said before, when the movies are good, guests want to see them in the theatres so they can enjoy the exceptional entertainment experience that our theaters provide and enjoy the social aspects of a night-out that cannot be replicated at home. It is the perfect escape.

Looking ahead on March 2, we have the mystery thriller Red Sparrow, starring Jennifer Lawrence; and on March 9, A Wrinkle in Time comes to theaters, a film based on the bestselling children's books starring Oprah Winfrey and Reese Witherspoon. Next is the highly anticipated Steven Spielberg directed film about a virtual reality world where the program creator has hidden an Easter egg that unlocks his entire life’s fortune to one lucky player, Ready Player One opens March 30.

Moving to second quarter, we look forward to Marvel's Avengers, Infinity War; Deadpool 2, starring Ryan Reynolds; and the Star Wars Standalone Solo: A Star Wars story all opening in May. And the month of June doesn't appear to slow down with films like Ocean’s 8, a spin-off from the Ocean's 11 franchise, with an all-star female cast.

Pixar's The Incredibles 2 and Jurassic World: Fallen Kingdom all opening in the month. Looking to the second half of 2018, I am equally encouraged by the strong slate of films that to hit theatres.

In conclusion, I am very confident in the company we are building for the future. This is not just about looking at quarterly results, it is about focusing on delivering long-term value for our shareholders.

We have the seasoned management team in place and a strong strategic plan that we will continue to execute. Our plan was created to diversify the company by identifying new related businesses making us less reliant on the ups and downs of the box office.

As you saw with our fourth quarter results, we are now able to demonstrate the success of these start-up businesses in particular The Rec Room. In the months and years ahead, we will continue to be strategic, invest wisely and focus on growing the business for the future.

We have great assets with tremendous potential in our exhibition and content businesses, media and amusement, and leisure businesses. We also have one of Canada's top loyalty programs with SCENE and it’s close to 9 million members.

I am encouraged by what’s to come as we position Cineplex for continued success. With that, I’ll turn the call over to Gord.

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

For your reference of our financial statements and 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 revenue increased by 10.6% to $426.3 million, and adjusted EBITDA increased by 19.1% to $79.6 million.

Despite a 2.1% decline in theater attendance from a weaker film slate, we were reported record theater food service, and immediate revenues. These increases combined with a $15.6 million growth in amusement revenue, which was primarily a result of the acquisitions in the P1AG business and strong results reported by The Rec Room resulted in the EBITDA income.

Cineplex's fourth quarter box office revenue increased 0.9% to $185 million, compared to $183.4 million in the prior year. This was the result for BBP increase of 3%, which established an all-time quarterly record of $10.54, up from $10.23 in 2016.

The increase in BPP is primarily due in-part to price increases in selective markets as compared to 2016. Food service revenue increased 13.2% to $119.5 million.

Included in food service revenue is $9.2 million from The Rec Room. Excluding revenue from The Rec Room theaters food service revenue increased by 7.0% from the prior year, due to the 9.4% increase in session revenue per patron to an all-time quarterly record of $6.29, partially offset by the decrease in attendance.

The CPP growth was primarily a result of increased visitation, increased basket size, and expanded food offerings, including those available at Cineplex's VIP Cinemas and Outtakes locations. Total media revenue increased $8.8 million or 16.7% to $61.5 million for the quarter.

Cinema media revenue, which is primarily theatre-based increased 17.2%, due to higher cinema advertising. Digital place-based media revenue increased 15.5%, due to higher project installation revenue, compared to the prior year, primarily due to the installation of an advanced digital signage network in Citizens Bank branches during the quarter.

As a result, we increased our location count by 9.2% or 1079 new locations to a total of 12,926 locations. Amusement revenue increased $15.6 million or 46.1%, due primarily to two acquisitions in the United States made during the fourth quarter of 2016, and the acquisition on April 1, 2017 of Dandy Amusements International, Inc.

In addition, amusement revenue includes $6.8 million of amusement gaming and other revenue earned at The Rec Room. With respect to The Rec Room, we were pleased with the results for the quarter.

Reporting total revenue of $16.9 million and store level cash flow of $3.4 million, representing the store level margin of 20% with only one of the locations reaching its first full year of operations. Turning briefly, to our key expense line items.

Film cost for the quarter came in at 53.4% of box office revenue, as compared to 52.4%, reported in the prior year. The increase in the film cost percentage was primarily a result of the concentration in the box office results from a few titles during the period.

Cost of food service for Q4 2017, excluding the $2.6 million incurred at The Rec Room was 22%, as compared to 23.2% in the prior year. Cost of food service at The Rec Room was 28.4%, which is in-line with our expectations.

Other cost was $220.9 million, increased $22.9 million or 11.5%. Other costs include theater occupancy expenses, other operating expenses, and general and administrative expenses.

Theater occupancy expenses were $50.1 million for the quarter versus a prior-year actual of $49.6 million, primarily due to higher rent expenses compared to the prior year period. Other operating expenses were $155.1 million for the quarter versus a prior-year actual of $134.7 million, an increase of $20.4 million.

Major reasons for the increase include an increase of $9.6 million in amusement solutions expenses, primarily due to the two acquisitions completed during the fourth quarter of 2016 and one in the first quarter of 2017. An increase of $2.5 million of media costs, due to the increase in business volumes and increase of $7.9 in unit level operating costs related to the additional Rec Room locations, and an increase of $0.8 million in costs related to new businesses, including preopening costs for The Rec Room and integration costs incurred by P1AG.

These increases were offset by decreases in other cost, including $0.8 million decrease in payroll due to technology enhancements and enhanced labor scheduling. G&A expenses were $15.7 million for the quarter, which was $1.9 million higher than the prior year period, due to higher head office payroll expenses.

Net CapEx for the fourth quarter was $46.2 million, as compared to $26.6 million in the prior year. For the full-year, net CapEx amounted to approximately $167 million, which was over our original $150 million target, previously communicated, primarily due to some opportunities to expanding in amusement and leisure segment, including accelerated timing of new site construction, and new customer acquisition in the P1AG space.

We continue to estimate that our net CapEx for 2018 will be approximately $125 million and for 2018, and $150 million for 2019, reflecting in-part our first anticipated Topgolf location in 2019. As I also mentioned earlier, we have successfully focused on creating a diversified entertainment and media company for the future.

Our short-term results may be impacted by non-recurring start-up or integration cost as they have been in 2017. The benefits of these investments will be borne in future periods as these emerging businesses grow.

Similarly, to the way we are seeing The Rec Room margins improve as we gain operating history. We're prepared to diligently take these short-term expenses in anticipation of creating future value.

We are also prudently prepared to use both our operating cash flow and our credit facilities to invest in these new businesses. It is generally acceptable and efficient to use leverage from the value creation perspective to buy an existing business.

We like to think that we are judicially using leverage to build a business one unit at a time. We're prepared to enter periods of negative cash flow with the proviso that we are balancing investment opportunities with prudent leverage amounts.

While theater exhibition results for the year were not as strong as expected, as we rounded out the year, we are encouraged by positive results from other areas of the business, and our ongoing and continuing focus on cost management. We continue to remain comfortable with where Cineplex Inc.

is positioned today. We look forward to benefiting from future strong film products.

We are in the yearly execution phase of a number of diversification initiatives, and our balance sheet allows us to continue to invest in these growth initiatives to deliver future value for our shareholders. That concludes our remarks for this morning, and we'd now like to turn the call over to the conference operator for questions.

Good morning. Thanks for taking my question and congrats on the quarter.

I wanted to start with the digital signage business. Obviously, you're starting to sort of gain traction on the international side with the U.S.

Bank and the deal in Lat Am. Can you perhaps, Ellis, talked a little bit more broadly about, you know as you sales team sort of expands and looks for opportunities outside of Canada, a little bit more about the landscape internationally given the size of the opportunity that you see?

Aravinda, as we have mentioned, the focus of the business in the past number of years was really in North America. So, we're building a presence, open offices in the U.S.

and Citizens Bank, as an example, was one of the fruits of that labor. We will grow globally with our customers and I think the Arcos Dorados agreement is just an example of growing globally with one of our existing customers.

So, the initial focus is really on North America, but we will grow broadly with our customers.

Is there any comment you can make about the very large franchises, you are having discussions with, I mean is there a good sort of feedback from some of the large franchises you are talking to at all?

I would say, as we said before, is that, we have been - if you look at our business model we have had great success in the QSR space, and I would say that we’re continuing to work with some large grants and pilots and concepts with them and we are optimistic that we will have some positive news in the short term.

Okay. And just looking to CapEx Gord, obviously the 150 number that you talked about in 2019, does that assume in addition to a single location of the Topgolf, does that assume a sort of an increase in The Rec Room installation count as well or are there other components that is driving that and then connected to that with respect to 2018 is there more spend relating to the recliner program in 2018?

Yes, so Aravinda on the first half of your question is, yes, we have - as we are rolling at The Rec Room and the Playdium concept across Canada, you will see an accelerated growth program really commencing in 2019 and into the future. I would expect, and the numbers that I provided to you this morning for the 150 for 2019 that would include approximately five LBE concepts.

So, between Rec Room and Playdium and as I mentioned, one, the initial talk of like. So, as we look at the allocation of the capital between exhibition and amusement and leisure, you see that focus going more towards amusement and leisure.

With that said, there is a capital approval available for exhibition, which could include additional VIP sites and additional requirement programs to the extent that you see continued in ongoing opportunities for that.

Okay, thanks. And sorry, just on the 2018, you said there is additional allocation for recliner, right?

Yes, in the exhibition space, I mean we have a number of opportunities for various initiatives, including have recliners, VR pilots that are included in that $125 million number.

Okay great. Thanks.

And then last question with respect to cinema media, a good number obviously in Q4, can you just talk to some of the traction you are getting as you look to sort of lock in some of these longer term contracts, I know you had talked about success with a couple of key brands, but as that conversation continues and you look to kind of see more stable media revenues, I was wondering if there is any of feedback that you can share? Thanks.

Yes. We are pretty comfortable Aravinda with our media cinema business and as you know we have agreements with our Scotiabank partner and also with Coca-Cola, plus we continue to get longer term deals with some of the others that we are working with closely, and also spreading out the customer base, which is important to us going forward.

Okay, thank you. I’ll pass the line.

Thank you, good morning. Ellis, I wonder if we could perhaps quickly touch on the elephant in the theater.

There is a perceived risk that the release Windows are poised to fall off a cliff here versus just an acceleration of what is a very long-running trend, could you perhaps be do with respect to the broader exhibition group and then perhaps specifically Cineplex in Canada, what some of the barriers are or how we should be thinking about the risks around that release window given all of the streaming and related concerns that are wide on the entire group over the last period?

Look, what’s important at the end of the day is, we are in partnership with the studios and our relationship with them is very strong. And as I have said repeatedly, neither party wants to trade dimes for nickels, and we as the exhibitor are still the engine that drives the train.

And you know, you look at this past weekend with Black Panther and the numbers coming out of that movie, that’s all driving the future value of these assets and I don't think you are going to see a big shift in the actual change in the window itself. So, I don't think your statement about Windows falling off a cliff is going to happen.

Now we’ve talked about the possibility of doing something in the premium video on demand, but as you read, and I read an article in the Wall Street Journal where companies like Fox are basically waiting in the sidelines now, so we at Cineplex are well positioned for that, but I don't see it happening in as much of a hurry as we once thought was going to occur.

Alright, thank you for that Ellis. I would just switch gears to the media business quickly or rather the ad spend, how much of the ad spend in quarter was just sort of pure Star Wars Halo?

And how much of it was you have been able to help advertisers better target their ad spend because of all of your SCENE loyalty sort of inside analytics. I mean is this just Halo Impact or is this Halo plus be able to help advertisers be smarter about their spend?

Well it was a very strong Q4, and we always end up with the challenge in Q4 with the last 4 to 5 weeks of the year as to how many minutes of advertising will we have on the screen. So, it is really driven by the benefits of the holiday season by the product all of those contribute to the overall revenue on the cinema side of the business.

Great. I will leave it there.

Thanks very much.

Thanks.

Thanks, good morning. First question is on the CPP, really strong in the quarter accelerated from the last few quarters, wondering if you can help us, can give up the impact of the licensing and the liquor impact and perhaps in the quarter and also through 2018, you can maybe help us think about the number of theatres that you expect to expand licensing to help us think about the potential for this revenue line?

Sure. So, Jeff during the - through 2017, particularly in the last quarter there is limited impact, obviously there is positive impact, but the whole scheme of the overall concession revenue that I would say it’s limited impact.

As we kind of mentioned to investors from time-to-time is, we need to smart serve or train the team before we can deploy alcohol in the theater. So that’s an in process, so that has been occurring throughout the quarter and will continue to occur throughout 2018.

We expect to have approximately 30 additional locations added and licensed in 2018, and so given the success that you’ve seen in CPP in the fourth quarter, which as I mentioned, only include a small contribution from key additional license locations. As we look forward to 2018, we're very comfortable that when we look at the historical growth rates that what we have been able to drive in CPP is that we are very optimistic.

You know that we'll be at the upper end of those growth rates.

What do you think is happening in terms of consumer spending pattern, because a 9% increase is probably higher than what we have seen in a while if ever, so wondering what you think is happening with consumer spending?

I mean, one thing you do get is, when you have strong, certain types of strong people arriving earlier and making it an event and they want to spend, and they want to really enjoy the overall experience and food and beverages, in particular popcorn is part of that experience, but when we look at the fourth quarter, I would kind of characterize the growth that we saw in our bucket into kind of three core elements, one is in terms of visitation. So, the number of our guests that are actually coming and spending at the confession stand, and when I look at the overall CPP growth, approximately a third of that growth came from increases in visitation percentage statistics.

Another third came from average transaction sizes, which includes additional product offerings of which the license items will be a component of that, but as we have mentioned we are always looking to find out those products that consumers are looking to buy when they are experiencing a movie. So, a third of that came from increased basket size.

And the final third came from some fine tuning of the SCENE program and the discounts versus points offering that we are making at the - related to concession purchases.

Great. May be a good segue into my next question, probably for Ellis.

In terms of SCENE, you highlighted the vast amount of data that SCENE has collected over the last 10 years with the significant number of Canadian households in that population, what are your thoughts in terms of your ability to monetize, we’ve heard Gord talk a little bit about how that helps your concession, but beyond that, do you see a lot of opportunities in terms of monetizing that either within your own business, leveraging some of the technologies that are out there or even externally in terms of because of the vast amount of data that you have?

Yes. We are very, very happy with the data and we’ve got a whole data analytics team and from the perspective of Cineplex we continue to use this data to better drive our returns and all the way from movie performance to shift scheduling at the theatres to many different analytics that we are basically using.

So, it’s all about artificial intelligence and using the data in a smart way. In addition to that, I would just return from meetings with the studios about using us for you know what would be way beneficial instead of carpet bombing to market and movie, you can basically target market using our SCENE data.

So, there is a lot that we’ve done. We recently launched a new marketing automation platform, and also a way that we can drive behavior because we know pretty much all of what you are doing when you come to the theatre from what movie you see to what concession items you consume.

So, it’s very, very valuable from an overall perspective. And we will be looking into the future as to what we can do to continue to monetize it beyond just our theatrical business.

Okay. Thanks Ellis.

Thanks, and good morning guys. Congratulations.

I was just wondering maybe if you could add some insight into the 2% decline in attendance in Q4, and maybe more specifically how much of an impact is pricing and maybe the recliner installs having on that?

Derek it is Ellis and part of the reason for the decline has to do with our market share by areas and one of the areas where in Québec, we have our lowest percentage market share compared to the rest of the country. And are you had a movie called, Junior Majeur and Trip a Trois, which did - Junior did really well in the Province of Quebec, it was a French movie, another big reason was Blade Runner 2049, a Denis Villeneuve movie did extremely well in Québec compared to the other provinces driven by his reputation and his name.

So, that was part of the reason for the - when you look at the comparators, and secondly also there a couple of theatres that was in the middle of the recliner program. So, they weren't in full operation.

So that would be kind of the reasons that I see for the difference between us and the rest of the country.

Okay. I mean it’s been a couple of quarters I guess that you have mentioned that you are sort of under indexed in Québec, do you guys have any plans on building out more in the province?

The challenge for us is these movies come in waves and when I look at 2018 we have got a movie called La Bolduc, which is opening in April and then a couple of other movies, 1991 Le Triomphe de l'argent and [indiscernible]. So, there are movies, but I don't think 2018 is going to match 2017.

But it is hard to tell because you always get surprised when these films come out.

Okay. Fair enough.

And maybe I was just wondering if you could talk about how you guys are thinking about the dividend? I'm mean you have been playing out a little more you’re on-standard free cash flow for a while.

Just wondering how you're thinking about the dividend at this point?

Look. We’ve been a strong proponent of making sure our shareholders receive the dividend and we’ve done it since Inception in 2003 when we went public and we are one of the few public companies that pay monthly dividends and our focus is to continue to look at what the best and optimal dividend policy is.

Okay. And maybe just one last one for me.

Just looking at 2018, just what are you guys expecting from your eSports initiative, more specifically are the industry players getting any closer to figuring out the potential revenue model.

Derek, I mean I think the potential revenue model has been identified for a number of years and it’s primarily an advertising and sponsorship-based model. You know, all the projections for the past number of years haven't changed that much and roughly 70% of the revenue streams will come from advertising and sponsorship and the remainder from ticket sales and merchandise sales, and food and beverage at live events.

So, the business model hasn't really changed. What has evolved I would say over time is that the publishers with their IT are looking to extract value and play in the professional space.

So, you may have heard of act division of an example with their new title Overwatch, creating an Overwatch league of which there were routine fees to enter that league, in a very structured program where it is historically - there has been less structured to the global type professional program. Our focus has always been kind of on the path to the probe.

So, inspiring the aspiring gamer, and creating kind of feeder leagues and paths to the pro tournaments, whether it's the college league and the big presence we have in the college in the U.S. or Canadian Championship Series.

So, the revenue model hasn't really changed that much. I would say there has been some change at the pro level in terms of the entire ecosystem, and then as we look at driving revenue, I would say there is still - advertisers need to have a media budget dedicated to ease eSports, it is an emerging space, many brands don't have budgets allocated to eSports are considering how they want to play in the space and so budget is like we should see open up in the near future and then that will benefit everyone in the ecosystem.

Thanks for that Gord. That’s all from me.

Thanks a lot. Good morning.

Maybe we can just talk a little bit about the new line item included in The Rec Room, which was certainly helpful in terms of getting the margin at 20%, Gord, if you can just elaborate on sort of how we came about why we might not have seen it in prior quarters and also why no cost necessarily seemed to be attached to it, unless I am just misreading that last part? Thanks.

So, primarily as we get up to scale and the number of The Rec Room locations has given us an opportunity to take advantage of that scale and use The Rec Room venues as sources of other revenue and we will caption it as media and other and so primarily it includes some related sponsorship and some early day media components of brands looking to get presence within The Rec Room. So, as we scale up, we see other opportunities to kind of enhance and grow that revenue stream, but really until we got up to some level of mass.

We didn’t have the opportunity and obviously having fourth quarter with a number of locations, up and running and being a period where people expected high visitation, large number of locations became an opportunity for us. So, we will continue to look to take advantage of opportunities in non-food and beverage and non-amusement revenue streams in The Rec Room as we go forward.

Okay. And the costs or lack thereof or were they…

Primarily as I described kind of the elements, which is just kind of present, some brand presence to certain extent amongst other things, you know there is very limited cost against that.

Okay. And maybe if we can turn back to Cineplex digital media, obviously a big wait in Latin America announced earlier in January, couple of questions, I thought there might have been some initial work already being done on that mandate in the Q4 that might have otherwise boosted the results in the period, and then ultimately acknowledging that there were some timing issues between the course of 2017, particularly in the Q2 and Q3 where results for the segment where negative, can you just speak to the confidence I guess in getting back up to the usual, I don't know 25% to 35% top line growth range for that unit?

Thanks.

Yes. So, Adam, I would say that we have been, obviously, we pilot with our potential customers.

Sometimes that can take a long period of time, it can sometimes take in excess of a year. And sometimes there can be shorter periods, now there is typically some payments to us related to the pilots, but there is also significant investment from our perspective.

So, I would say, we are typically neutral or potentially we have negative EBITDA impact when we are looking and piloting with new customers and that’s what we’re prepared to invest in these potential future opportunities. As you mentioned, we talked about a financial customer rollout, and when you look at our - the verticals that we operate in, when we are working with QSR clients, we tend to be more subject with the franchisee relationship, so we have longer-term lumpier rollout scheduled regional and financial, typically quicker as Ellis mentioned, the one that we did was up and quicker than normal, but I think the one good thing is it is consecutive that we can roll out quickly on large-scale deployment that is required.

So, I think you're going to continue to see some ongoing kind of lumpiness as we go through, but obviously our growth rate has been higher this year as we look forward.

Okay. Great.

Thanks.

Thanks, very much. Good morning.

Couple of follow ups for me. Maybe first for you Gord, it's just to kind of follow-up on the previous question.

When you look at a film like Black Panther that performs with a relatively short lead time, just wondering the dynamics for Cineplex Media to monetize that versus everyone going into Q4, and the Christmas season knowing that a Star Wars film is being played, and obviously, spend gets allocated well in advance, can you just talk that dynamic?

Looking at that at that Drew, at the end of the day it all has to do with the upbeat potential of particular movies, and the desire of the advertisers to be in those particular quarters. Now, historically we’ve always had, people always sending more money in the fourth quarter, and not spending the same money in the second or third quarter when the film slate is sometime even stronger, but it’s driven by twofold.

One is, the movies that are there, and also the audiences and what the advertisers are trying to drive. And that’s usually heavily weighted towards the Christmas period, but believe me we're working hard with our clients to make sure they are aware of the quality of the product that’s there and the benefits they can see and you know with the automation that we’ve created with the data we have, we have been able to give them much, much better feedback.

Okay, that's great. And just on Topgolf, with respect to the roadmap, clearly in the 2019 guidance, I think you alluded to kind of one location.

Just can you give us an update to the extent you can on what that longer-term roadmap looks like at this point?

As I said, the first one we look to deploy to open in 2019. I would expect that you would probably see one a year in terms of rollout.

Okay. And in terms of total number still roughly one-half that of The Rec Room?

Yes.

Okay. And Gord, just rule of thumb, kind of roughly your per location CapEx, is that kind of double that of The Rec Room, I seem to recall?

Yes. That’s correct.

Okay. And just one last one from my end.

More of a cost efficiency question, when I look at Cineplex with all the different growth initiatives underway against the backdrop over the last decade of some pretty good box office tailwinds, should you go down a kind of lower growth box office environment? Just can you speak to some of the cost efficiencies or operating efficiencies that you think are still there to be realized?

Thank you.

Sure. I mean obviously you knew and you're specifically speaking about the exhibition side of the business, and look when you look at the components, there are two - two of our largest costs, film costs and confession cost are totally very well based on sales level.

When we look at payroll, which would be outside of the contractual commitments of our rent expense, but payroll is the next largest controllable cost. We do look to, and I think you have seen some of the impacts in the fourth quarter, as you have been able to take significant numbers of hours out of the system to date, using technology to enhance from a customer service initiative using mobile technology to better service our customers.

So, do look forward a number of, we look to use data to drive better forecasting, to drive better labor scheduling, and we see that as a huge opportunity for us. Obviously, to look at our poll of talent that exists out there and prove cost management, cost controls of the system.

But there is always focus and as we build The Rec Room business we’re also getting scale across when you think of the infrastructure, scale, across a number of businesses that can potentially give us some cost synergies also.

Okay. Thank you.

Thanks very much and good morning. First question would be on the recliners, recognizing that it is still early days, but could you address some of the list that you have seen within theaters where you have the recliners and what sort of payback expectations you might have or how they may have changed?

Yes, we are seeing a great lift with the recliners and also bought in the area of attendance and on the food side, and it’s benefiting us in both cases, but we have to also be very prudent in where we go with our recliner program because given our position in the marketplace, we have to make sure we have got the capacity as you lose a lot of seats moving forward when you move from the regular seats to the recliners. And all of the new theatres we are opening are going to be fully equipped with those recliners and with Enhanced VIP.

And in terms of, thank you, in terms of your pacing going forward the number of theatres we might look to see added every year or auditoriums, alternatively?

We are going to evaluate them as we move forward and see where things fall out because it depends on the actual marketplace, the theatres and what would make the best payback for us for the capital that we have ahead.

Thank you. And this question may be a little bit Ontario centric, but you had addressed technologies savings on labor, do you feel that the technology savings are sufficient to offset any cost push that you may see by virtue of increasing minimum wages?

Yes, we continue to look at ways to deal with the change and the hard part is, the continued increase, which was surprising is the fact that if we had a few years to do it would have been better, but we will hit with a 21% increase in a very short period of time, but we feel we have got programs in place to deal with the additional costs by using technology and other ways to offset that increase, but it is work for us moving forward.

Thank you very much.

Yes, sorry Ellis. I just wanted to come back to your dividend comment, and I don't know if I am quoting you properly, but you said there was a focus on updating a new dividend policy.

I am just wondering can you help me understand what you meant by that?

You've misinterpreted what I said, I said, we continue to review our dividend on an annual basis with the board. There is no change in the policy, as far as what you had heard.

Okay. So, you weren't implying a cut?

We are not deploying a cut and we're not saying that on this call, and I don't think you should make conclusions based on a decision that we have on an annual basis that we go to our board with.

Okay. Thank you.

Thank you for joining us this morning. We look forward to speaking with you on May 2 for our Q1 conference call and will see you at our Annual General Meeting on May 25.

Mark that in your calendars. Thanks very much.