Cineplex Inc. Investor Information Table of Contents
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2017 Cineplex Inc. Investor Information Table of Contents Chair of the Board of Directors' Letter to Shareholders ...................................................................................... 2 BOARD OF DIRECTORS INVESTOR RELATIONS Chief Executive Officer's Letter to Shareholders ................................................................................................ 3 Jordan Banks (4) Pat Marshall Management’s Discussion and Analysis .......................................................................................................... 9 Corporate Director Vice President Overview of Cineplex .................................................................................................................................... 9 Toronto, ON Communications and Investor Relations Investor Line: 416 323 6648 Business Strategy ......................................................................................................................................... 16 Robert Bruce (5) Email: [email protected] Cineplex’s Businesses .................................................................................................................................. 17 Chief Executive Officer and Founding Partner Address: Cineplex Inc. Mobile Klinik 1303 Yonge Street Overview of Operations ............................................................................................................................... 24 Toronto, ON Toronto, ON M4T 2Y9 Results of Operations ................................................................................................................................... 28 STOCK EXCHANGE LISTING Balance Sheets ............................................................................................................................................. 41 Joan Dea (4) Corporate Director The Toronto Stock Exchange Liquidity and Capital Resources 4 .................................................................................................................. 3 Ross, CA CGX Adjusted Free Cash Flow and Dividends ..................................................................................................... 47 Janice Fukakusa (3) AUDITORS Share Activity ............................................................................................................................................... 49 Corporate Director PricewaterhouseCoopers LLP Seasonality and Quarterly Results ............................................................................................................... 51 Toronto, ON Toronto, ON Related Party Transactions ........................................................................................................................... 54 Ian Greenberg (1) (4) TRANSFER AGENT Significant Accounting Judgments and Estimation Uncertainties ................................................................ 54 Corporate Director Accounting Policies ..................................................................................................................................... 55 Montreal, QC AST Trust Company (Canada) Toronto, ON Risks and Uncertainties................................................................................................................................ 56 Donna Hayes (5) 416 682 3860 Controls and Procedures .............................................................................................................................. 64 Corporate Director 800 387 0825 Toronto, ON Email: [email protected] Outlook ........................................................................................................................................................ 64 www.astfinancial.com/ca-en Non-GAAP Measures ......................................................................................... .......................................... 68 Ellis Jacob, C.M. President and Chief Executive Officer ANNUAL MEETING Financial Statements and Notes ..................................................................................................................... 72 Cineplex Inc. Friday May 25, 2018 Management’s Report to Shareholders ..........................................................................................................72 Toronto, ON 10:30AM EDT Independent Auditor’s Report ....................................................................................................................... 73 Cineplex Cinemas Yonge-Dundas and VIP Sarabjit (Sabi) Marwah (4) 10 Dundas Street East Consolidated Balance Sheets ........................................................................................................................ 75 Corporate Director Toronto, ON Consolidated Statements of Operations ........................................................................................................ 77 Toronto, ON Consolidated Statements of Comprehensive Income .................................................................................... 78 Nadir Mohamed (2) Consolidated Statements of Changes in Equity ... .......................................................................................... 79 Corporate Director Toronto, ON Consolidated Statements of Cash Flows ....................................................................................................... 80 Notes to Consolidated Financial Statements................................................................................................. 81 Edward Sonshine, O.ONT. QC (5) Chief Executive Officer Investor Information .................................................................................................................................... 130 RioCan Real Estate Investment Trust Toronto, ON (1) Chair of the Board of Directors of Cineplex Inc. (2) Chair of the Compensation, Nominating and Corporate Governance Committee (3) Chair of the Audit Committee (4) Member of the Compensation, Nominating and Corporate Governance Committee (5) Member of the Audit Committee CineplexCineplex Inc. Inc. Letter from the Chairman Dear fellow shareholders, I am proud of all that Cineplex has accomplished during this past year. The team reported strong results in many key performance metrics despite a challenging year at the box office. With our diversification efforts, we have continued to expand our core strengths into other entertainment and media offerings and are confident for the future. Diversified strategic plan One of the board’s major responsibilities is to oversee the strategic direction of the company. The board has worked closely with senior management throughout the year to provide oversight and stewardship. We believe the diversified business plan that management has created is the right way to create sustainable growth and build Cineplex into a leading entertainment and media company in the future. We are confident that the foundation that has been laid will benefit the business, shareholders, customers and guests for years to come. Commitment to good governance As your board, we are committed to promoting outstanding corporate governance and adhering to the highest business standards. That commitment extends throughout the company’s entire senior management team. We regularly meet with the CEO, COO and CFO at every Board Meeting in addition to separate strategy and corporate governance meetings. We review succession planning to ensure there is depth of management and the right people are in place to lead the company in the future and to execute its diversification strategy. Strength of the board We are proud to be one of the founding members of the 30% club, advocating that 30% of board seats are filled by women. Cineplex has met that standard for a number of years, in addition to supporting cultural diversification among our board. Remaining a diversified board with varied skills and experience is key to ensuring we have great bench strength to support Cineplex’s future strategic goals. As such, we welcomed two new board members this year—Janice Fukakusa, retired CAO and CFO of Royal Bank of Canada and Nadir Mohamed, former CEO of Rogers Communications. We also said farewell and thank you to two long-standing retiring members, Bob Steacy and Anthony Munk. Together with Ellis Jacob, I am committed to working with this extraordinary board to continue to move this company forward in 2018 and beyond. On behalf of the entire board, I would like to thank the management team and all of Cineplex’s 13,000 employees across North America for their passion and hard work. Thank you to our shareholders and guests for their continued support and commitment to Cineplex and thank you to my fellow board members for their insight and guidance throughout the year. I hope you are as encouraged as I am for what the future holds for Cineplex. Sincerely yours, Ian Greenberg Chair of the Board, Cineplex Inc. CINEPLEX INC. 2017 ANNUAL REPORT LETTER TO SHAREHOLDERS 2 CineplexCineplex Inc. Inc. Letter from the CEO Dear fellow shareholders, Looking back at 2017, we have accomplished a great deal. We continued to pursue our diversification strategy, remaining focused on driving value within our new and existing businesses, continued to leverage synergies within the Cineplex ecosystem and identified new opportunities for revenue growth through innovation and acquisitions. Total revenue increased 5.2% to $1.6 billion despite an attendance decrease of 5.6% which was a result of a weaker than expected film slate. The attendance decline,