2024
ANNUAL REPORT
Table of Contents
Chair of the Board of Directors' Letter to Shareholders
1
Chief Executive Officer's Letter to Shareholders
3
Management’s Discussion and Analysis
5
Overview of Cineplex
6
Business Strategy
12
Cineplex’s Businesses
14
Overview of Operations
20
Results of Operations
24
Balance Sheets
41
Liquidity and Capital Resources
43
Adjusted Free Cash Flow and Dividends
51
Share Activity
52
Seasonality and Quarterly Results
55
Related Party Transactions
58
Material Accounting Judgments and Estimation Uncertainties
58
Accounting Policies
59
Risks and Uncertainties
60
Controls and Procedures
69
Outlook
70
Non-GAAP and Other Financial Measures
72
Financial Statements and Notes
79
Management’s Report to Shareholders
79
Independent Auditor’s Report
80
Consolidated Balance Sheets
85
Consolidated Statements of Operations
87
Consolidated Statements of Comprehensive Income (Loss)
88
Consolidated Statements of Changes in Equity
89
Consolidated Statements of Cash Flows
90
Notes to Consolidated Financial Statements
92
Investor Information
154
Letter from the Chair of the Board
Dear fellow shareholders,
It is my pleasure to write to you as Chair of the Board of Directors of Cineplex Inc. I am honoured to lead this
dedicated group of Directors and be part of an organization that I strongly support.
Despite the ongoing impact of the now-resolved writers’ and actors’
strikes, which especially limited content supply in the first half of
2024, Cineplex achieved promising financial results in the latter half of
the year. We took decisive financial, strategic and corporate actions to
improve Cineplex’s financial flexibility and ensure its continued
success. The team successfully closed the sale of P1AG, completed our
comprehensive refinancing plan, and implemented a Normal Course
Issuer Bid (“NCIB”), all of which demonstrate our continued
commitment to our shareholders and our focus on ensuring the long-
term growth and success of Cineplex.
Positioning Ourselves for Growth
During the past year, we completed several meaningful endeavours
that will position us for further growth. We opened a new theatre and
three new LBE locations in key markets across Canada, while
continuing to expand our media businesses to strengthen our position
as a leading advertising solution in the industry. Our teams continued
to maintain focus on improving operational efficiencies across the
businesses and ensuring a disciplined capital allocation strategy during
the short-term content supply disruption. Looking ahead to the latter
part of 2025, we anticipate a year of growth, driven by the return of a
diverse slate of films that resonate with a wide range of audiences.
Strength of the Board
The strength of our Board is essential to delivering excellent corporate governance. Throughout the year, the Board
worked closely with senior management to focus on shareholder value and ensure that Cineplex’s strategy continues
to foster growth and innovation. In addition, our ongoing executive succession planning initiatives ensure a robust
management pipeline for navigating future challenges and opportunities.
A diverse Board with a broad range of skills and experiences is crucial to supporting Cineplex's strategic objectives.
Our commitment to inclusion and diversity within Cineplex is well reflected in our Board. Currently, four female
members constitute 44% of the Directors or 50% of the independent Directors, while four members of
underrepresented communities make up 44% of the Directors.
Path Forward: A Promising Future
We remain confident in the long-term success of the theatrical exhibition industry. With the impact of the
Hollywood writers’ and actors’ strikes diminishing, we anticipate an improved volume of film product and the
continued resilience of the exhibition business. Our robust outlook for the remainder of 2025 reflects our focus on
operational efficiency, disciplined capital allocation and continued growth of our businesses.
Your Board remains focused on addressing our stock performance and charting a course toward shareholder returns,
profitability, and sustainable growth.
On behalf of the entire Board, I would like to extend a heartfelt thank you to Joan Dea, who, after years of dedicated
service, has decided not to seek re-election. Throughout her tenure, Joan has been a steadfast leader, providing
invaluable strategic insight, guidance, and unwavering commitment to the company’s success. As we move forward,
we are pleased to nominate Rania Llewellyn, a seasoned financial executive with nearly three decades of banking
experience, including as President & CEO of Laurentian Bank. Her proven leadership in driving growth, enhancing
customer experience, and fostering diversity will be invaluable as we continue to advance our strategic priorities.
Cineplex Inc.
Letter to Shareholders
CINEPLEX INC. 2024 ANNUAL REPORT
LETTER TO SHAREHOLDERS
1
I would like to thank our management team and all our employees for their passion, hard work and dedication to
delivering the best experience for our customers. Thank you to our shareholders for their continued support and
confidence in the Cineplex team as we solidify our position of being Canada’s number one entertainment
destination. Your confidence in our vision and leadership is deeply appreciated, and we are fully committed to
delivering results that reflect the trust you have placed in us.
Sincerely yours,
Phyllis Yaffe
Chair of the Board, Cineplex Inc.
boardchair@cineplex.com
Cineplex Inc.
Letter to Shareholders
CINEPLEX INC. 2024 ANNUAL REPORT
LETTER TO SHAREHOLDERS
2
Letter from the CEO
Dear fellow shareholders,
I am proud of what Cineplex has accomplished over the past year, showing great resilience through the challenges
that affected the exhibition industry. We remain steadfast in our commitment to delivering exceptional experiences
to our guests across Canada. Our ability to strategically adapt and innovate has reinforced our position as one of
North America’s premier entertainment and media companies.
Box Office & Film Slate Strength
The 2024 box office continued to highlight what a diversified film slate can offer with numerous record-breaking
films throughout the year. Moviegoers were drawn to animated family favourites, blockbuster action films, and
musicals. The year featured Inside Out 2, the highest-grossing animated film of all time; Deadpool & Wolverine, the
highest-grossing R-rated film of all time; and Wicked, the highest-grossing Broadway adaptation film of all time, in
addition to many other successes.
Our commitment to international cinema has proven to be a significant
strength, allowing us to counteract film slate disruptions while catering to
Canada’s diverse audiences. By offering a rich selection of global content,
we continue to attract a broader moviegoing audience and drive sustained
engagement. We have maintained our leadership position in international
cinema with international titles accounting for 10.2% of our 2024 box
office revenue - significantly outperforming the North American market
average of 3.7%.
Financial Performance
While the Hollywood writers' and actors' strikes affected film supply,
pushing several major titles beyond 2024 and contributing to annual
declines in revenue and adjusted EBITDAaL, we saw significant
momentum in the latter half of the year. This is demonstrated by 94% of
2024’s adjusted EBITDAaL being generated in the second half of the year.
Our guests continue to demonstrate the enduring appeal and impact of the
theatrical experience. We established an all-time box office per patron
(“BPP”) record of $13.09 and an all-time concession per patron (“CPP”)
record of $9.47 in 2024, and generated 42% of our box office revenues
from premium formats. These results clearly demonstrate that we are well-
positioned for financial success with a steady supply of content.
Strategic Growth
We made significant strides in expanding our entertainment and digital out of home footprints. We opened three
new Location-Based Entertainment (“LBE”) venues in Q4 2024, increasing our location count to 16 and
strengthening our leadership position as an entertainment destination for Canadians. The newly opened LBE
locations on Granville Street in downtown Vancouver, at Fairview Mall in Toronto, and at the Royalmount district
of Montreal alongside a new 5 screen premium theatre, are strategically positioned in high-traffic areas.
We also expanded our digital media signage network through new partnerships with Cadillac Fairview and Cominar.
Cineplex’s coverage now includes 95 malls, including 9 of the top 10 busiest, in Canada. The addition of these two
networks contributed to a remarkable 44.3% growth in digital placed-based media revenue. Our recent Lumen study
proved that cinema advertising is unmatched in capturing audience attention. Our impressive cinema media revenue
per patron (“CMPP”) of $1.84, and 10.2% growth over the prior year, underscores the confidence advertisers have in
the value we deliver. With a diverse portfolio of assets and accreditation with the Canadian Out-of-Home Marketing
and Measurement Bureau and its inaugural mall measurement methodology, Cineplex has secured its position as a
leading media provider in Canada.
Cineplex Inc.
Letter to Shareholders
CINEPLEX INC. 2024 ANNUAL REPORT
LETTER TO SHAREHOLDERS
3
Through our robust data models, CineClub loyalty program, 15 million Scene+ members, and our digital channels,
we can drive increased attendance and guest engagement. Our approach to personalization and targeted marketing
continues to attract new visitors, re-engage past customers, and strengthen consumer loyalty.
Optimizing Our Balance Sheet
In 2024, Cineplex completed several initiatives targeted at returning value to shareholders. The sale of Player One
Amusement Group Inc. for gross proceeds of $155M provided us with the financial flexibility to execute our
comprehensive refinancing plan, which included extending debt maturities, removing covenant restrictions, and
reducing potential dilution from convertible debentures. Furthermore, our enthusiasm for the future of this business
was highlighted as we commenced a Normal Course Issuer Bid (“NCIB”), reinforcing our focus to deliver
shareholder returns.
The Path Forward
As we enter 2025, we remain encouraged by the momentum in our business. While the first quarter reflects some
lingering effects of the Hollywood strikes, we anticipate a significant ramp-up in box office performance beginning
in Q2, driven by a strong film slate and an increasing number of wide releases. 2025 projects to have approximately
110 to 115 wide releases, up from 95 in 2024. We remain confident that our data-driven strategies will continue to
maximize shareholder value, and that 2025 will be another transformative year as we reinforce our position as one of
North America’s leading entertainment and media companies.
I am deeply grateful to the incredible Cineplex team for their unwavering dedication to creating outstanding
experiences for our guests and clients. I also extend my sincere appreciation to our Board of Directors, valued
customers, partners, guests, and investors for their continued support. Together we have navigated various
challenges and positioned Cineplex for an exciting and promising future.
Sincerely,
Ellis Jacob
President and CEO, Cineplex Inc.
Cineplex Inc.
Letter to Shareholders
CINEPLEX INC. 2024 ANNUAL REPORT
LETTER TO SHAREHOLDERS
4
MANAGEMENT’S DISCUSSION AND ANALYSIS
February 10, 2025
The following management’s discussion and analysis (“MD&A”) of Cineplex Inc.’s (“Cineplex”) financial
condition and results of operations should be read together with the consolidated financial statements and related
notes (see Section 1, Overview of Cineplex). These financial statements, presented in Canadian dollars, were
prepared in accordance with Canadian generally accepted accounting principles (“GAAP”), defined as
International Financial Reporting Standards (“IFRS”) as set out in the Handbook of the Canadian Institute of
Chartered Professional Accountants.
Unless otherwise specified, all information in this MD&A is as of December 31, 2024 and all amounts are in
Canadian dollars.
Non-GAAP and Other Financial Measures
Cineplex reports on certain non-GAAP measures, non-GAAP ratios, supplementary financial measures and total
segments measures that are used by management to evaluate Cineplex’s performance. In addition, non-GAAP
measures are used in measuring compliance with debt covenants. Non-GAAP measures do not have standardized
meaning under GAAP and may not be comparable to similar measures provided by other issuers. Cineplex includes
these measures because management believes that they assist investors in assessing financial performance. The
definition, calculation and reconciliation of non-GAAP measures are provided in Section 17, Non-GAAP and other
financial measures.
Forward-Looking Statements
Certain information included in this MD&A contains forward-looking statements within the meaning of applicable
securities laws. These forward-looking statements include, among others, statements with respect to Cineplex’s
objectives and goals, and the strategies to achieve such objectives and goals, as well as statements with respect to
Cineplex’s beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words “may”, “will”,
“could”, “should”, “would”, “suspect”, “outlook”, “believe”, “plan”, “anticipate”, “estimate”, “expect”,
“intend”, “forecast”, “objective” and “continue” (or the negatives thereof), and words and expressions of similar
import, are intended to identify forward-looking statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, including those described
in Cineplex’s Annual Information Form (“AIF”), and in this MD&A. These risks and uncertainties, both general
and specific, give rise to the possibility that predictions, forecasts, projections and other forward-looking statements
will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and
actual results may differ materially from those expressed or implied in such statements. Cineplex cautions readers
not to place undue reliance on these statements as a number of important factors, many of which are beyond
Cineplex’s control, could cause actual results to differ materially from the beliefs, plans, objectives, expectations,
anticipations, estimates and intentions expressed in such forward-looking statements, including: Cineplex’s
expectations with respect to liquidity and capital expenditures; its ability to meet its ongoing capital, operating and
other obligations, and anticipated needs for, and sources of, funds; Cineplex’s ability to execute cost-cutting and
revenue enhancement initiatives; the ongoing recovery of Cineplex’s business and the movie exhibition industry
from the effects of the COVID-19 pandemic and the writers’ and actors’ guilds strike; competition from alternative
forms of entertainment and content delivery via streaming and other formats; information concerning future
purchases of Common Shares under Cineplex’s normal course issuer bid (NCIB); and risks generally encountered
in the relevant industry, competition, customer, legal, taxation and accounting matters.
The foregoing list of factors that may affect future results is not exhaustive. When reviewing Cineplex’s forward-
looking statements, readers should carefully consider the foregoing factors and other uncertainties and potential
events. Additional information about factors that may cause actual results to differ materially from expectations and
about material factors or assumptions applied in making forward-looking statements may be found in the “Risks and
Uncertainties” section of this MD&A.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
5
Cineplex does not undertake to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by applicable Canadian securities law. Additionally,
Cineplex undertakes no obligation to comment on analyses, expectations or statements made by third parties in
respect of Cineplex, its financial or operating results or its securities. All forward-looking statements in this MD&A
are made as of the date hereof and are qualified by these cautionary statements. Additional information, including
Cineplex’s AIF, can be found on SEDAR+ at www.sedarplus.ca.
1. OVERVIEW OF CINEPLEX
Cineplex (TSX:CGX) is a top-tier Canadian brand that operates in the Film Entertainment and Content, Amusement
and Leisure, and Media sectors. Cineplex offers a unique escape from the everyday to millions of guests through its
circuit of 172 movie theatres and location-based entertainment venues. In addition to being Canada’s largest and
most innovative film exhibitor, the company operates Canada’s favourite destination for ‘Eats &
Entertainment’ (The Rec Room), complexes specially designed for teens and families (Playdium), and an
entertainment concept that brings movies, amusement gaming, dining, and live performances together under one
roof (Cineplex Junxion). It also operates successful businesses in cinema media (Cineplex Media), digital place-
based media (Cineplex Digital Media or CDM), alternative programming (Cineplex Events) and motion picture
distribution (Cineplex Pictures). Providing even more value for its guests, Cineplex is a partner in Scene+, Canada’s
largest entertainment and lifestyle loyalty program.
Proudly recognized as having one of the country's Most Admired Corporate Cultures, Cineplex employs over 10,000
people in its offices and venues across Canada.
As of December 31, 2024, Cineplex owned, leased or had a joint venture interest in 1,617 screens in 156 theatres
from coast to coast as well as 16 location-based entertainment venues in seven provinces.
Cineplex
Theatre locations and screens at December 31, 2024
Province
Locations (i)
Screens
UltraAVX
IMAX
Screens (ii)
VIP
Auditoriums
D-BOX
Auditoriums
Recliner
Auditoriums
Other
Screens (iii)
Ontario
66
710
42
14
48
48
115
14
Quebec
18
225
10
3
9
8
22
4
British Columbia
25
236
15
5
20
15
43
4
Alberta
18
195
19
3
16
17
93
7
Nova Scotia
9
80
1
1
—
2
—
1
Saskatchewan
6
54
4
—
3
3
16
1
Manitoba
5
49
3
1
3
4
16
1
New Brunswick
5
41
2
1
—
2
10
—
Newfoundland &
Labrador
2
14
—
1
—
1
—
—
Prince Edward Island
2
13
—
—
—
1
—
—
TOTALS
156
1,617
96
29
99
101
315
32
Percentage of screens
6 %
2 %
6 %
6 %
19 %
2 %
(i) Includes Junxion theatres in Manitoba and Ontario.
(ii) All IMAX screens are 3D enabled. Total 3D screens including IMAX screens are 827 screens or 51% of the circuit.
(iii) Other screens includes 7 4DX screens, 5 Cineplex Clubhouse screens and 20 ScreenX screens.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
6
Cineplex - Theatres, screens and premium offerings in the last eight quarters
2024
2023
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Theatres
156
155
156
158
158
158
158
157
Screens
1,617
1,612
1,618
1,631
1,631
1,631
1,631
1,625
UltraAVX Screens
96
97
97
98
97
97
96
95
IMAX Screens
29
27
27
26
26
25
25
25
VIP Auditoriums
99
99
99
99
99
99
99
99
D-BOX Auditoriums
101
102
102
102
102
102
101
100
Recliner Auditoriums
315
309
306
302
299
295
292
283
Other Screens
32
30
29
29
29
27
27
27
Cineplex - LBE - at December 31, 2024 and 2023
2024
2023
Province
The Rec Room
Playdium
The Rec Room
Playdium
Ontario
4
3
4
2
Quebec
1
—
—
—
Alberta
3
—
3
—
Manitoba
1
—
1
—
Newfoundland & Labrador
1
—
1
—
British Columbia
2
—
1
—
Nova Scotia
—
1
—
1
TOTALS
12
4
10
3
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
7
Sale of Player One Amusement Group
On November 22, 2023, Cineplex Entertainment Limited Partnership (“CELP”) announced that it had entered into a
definitive share purchase agreement to sell 100% of the issued and outstanding shares of Player One Amusement
Group Inc. (“P1AG”) for cash proceeds of $155.0 million, subject to customary post-closing adjustments (the “Sale
Transaction”). The Sale Transaction closed on February 1, 2024. On closing of the Sale Transaction, P1AG and
CELP entered into a long-term agreement under which P1AG will continue to supply and service amusement games
in Cineplex’s theatres and location-based entertainment venues. The proceeds from the Sale Transaction were used
to repay bank debt. In connection with the sale of P1AG, Cineplex recognized total net income, net of taxes, from
discontinued operations of $68.0 million. That income included a material gain of $67.2 million, net of income
taxes.
In accordance with IFRS 5, Non-current assets held for sale and discontinued operations, the balance sheet
discloses separately the assets and liabilities of P1AG at December 31, 2023, and discontinued operations are
excluded from the results of continuing operations and are presented as a single amount as after tax profit or loss
from discontinued operations in the consolidated statement of operations. The results of discontinued operations
(P1AG) have been excluded from prior period figures as applicable per IFRS 5 to conform to current period
presentation (see Section 13, Accounting policies). Other than where disclosed, discussions of results and Non-
GAAP financial measures, including EBITDA, adjusted EBITDA and adjusted EBITDAaL, in this MD&A are of
continuing operations.
P1AG continues to be a key supplier to Cineplex’s exhibition and LBE businesses and Cineplex does not anticipate
changes to its amusement revenue generating activities and margins, or operating costs, or general and
administrative costs as a result of the sale of P1AG.
Competition Tribunal Administrative Monetary Penalty
On September 23, 2024, the Competition Tribunal ordered Cineplex to pay an administrative monetary penalty and
costs of $39.2 million. The amount is presented separately on the statement of operations and balance sheet.
On October 23, 2024, Cineplex filed its Notice of Appeal with the Federal Court of Appeal and, with the
Competition Bureau’s consent, was granted a stay regarding payment of the administrative monetary penalty,
pending the Federal Court of Appeal’s decision.
The order and Cineplex’s response are discussed in more detail in Section 14, Risks and uncertainties.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
8
1.2 FINANCIAL HIGHLIGHTS
Financial highlights
Fourth Quarter
Full Year
(in thousands of dollars, except theatre attendance in
thousands of patrons and per share and per patron
amounts)
2024
2023
Change
(ii)
2024
2023
Change
(ii)
Total revenues
$ 362,743
$ 315,078
15.1 % $ 1,330,438
$ 1,388,894
-4.2 %
Theatre attendance
11,141
9,599
16.1 %
42,946
47,862
-10.3 %
Net income (loss) from continuing operations
$
3,332
$ (12,102)
NM $ (105,684)
$ 138,051
NM
Net income from discontinued operations, including gain
on disposition
$
—
$
3,148
-100.0 % $
68,003
$
29,113
133.6 %
Net income (loss) (iii)
$
3,332
$
(8,954)
NM $ (37,681)
$ 167,164
NM
Net income (loss) as a percentage of sales from
continuing operations (iii)
0.9 %
-3.8 %
4.7 %
-7.9 %
9.9 %
-17.8 %
Cash provided by continuing operating activities
$ 105,754
$
83,385
26.8 % $ 159,079
$ 196,094
-18.9 %
Box office revenues per patron (“BPP”) (iv)
$
13.26
$
12.90
2.8 % $
13.09
$
12.53
4.5 %
Concession revenues per patron (“CPP”) (iv)
$
9.41
$
9.28
1.4 % $
9.47
$
8.90
6.4 %
Adjusted EBITDA (v)
$
84,749
$
65,902
28.6 % $ 263,925
$ 322,962
-18.3 %
Adjusted EBITDAaL (v)
$
40,275
$
24,178
66.6 % $
93,267
$ 157,363
-40.7 %
Adjusted EBITDAaL from discontinued operations (v)
$
—
$
5,352
-100.0 % $
508
$
35,732
-98.6 %
Adjusted EBITDAaL including discontinued operations
(v)
$
40,275
$
29,530
36.4 % $
93,775
$ 193,095
-51.4 %
Adjusted EBITDAaL margin from continuing operations
(vi)
11.1 %
7.7 %
3.4 %
7.0 %
11.3 %
-4.3 %
Adjusted free cash flow (v)
$
20,267
$
(1,047)
NM $
(7,150)
$
83,691
NM
Adjusted free cash flow per share (vi)
$
0.320
$
(0.016)
NM $
(0.112)
$
1.320
NM
Earnings (loss) per share from continuing operations -
basic (iii)
$
0.05
$
(0.19)
NM $
(1.66)
$
2.18
NM
Earnings per share from discontinued operations - basic
$
—
$
0.05
-100.0 % $
1.07
$
0.46
132.6 %
Earnings (loss) per share - basic (iii)
$
0.05
$
(0.14)
NM $
(0.59)
$
2.64
NM
Earnings (loss) per share from continuing operations -
diluted (iii)
$
0.05
$
(0.19)
NM $
(1.66)
$
1.80
NM
Earnings per share from discontinued operations - diluted
$
—
$
0.05
-100.0 % $
1.07
$
0.32
234.4 %
Earnings (loss) per share - diluted (iii)
$
0.05
$
(0.14)
NM $
(0.59)
$
2.12
NM
(i) The results of discontinued operations from P1AG have been excluded from prior period figures as applicable per IFRS 5 to conform to the
current period presentation. All amounts are from continuing operations unless otherwise noted. See Section 13, Accounting policies.
(ii) Throughout this MD&A, changes in percentage amounts are calculated as 2024 value less 2023 value.
(iii) 2024 includes the loss on the 2024 Refinancing (described in Section 7.4, Long-term debt) of $nil during the fourth quarter and $56.0
million for full year, and expenses related to other transactions or litigation outside the normal course of business in the amount of $nil during
the fourth quarter (2023 - $0.6 million) and $2.5 million (2023 - $3.4 million) for full year. The full year also includes the $39.2 million
provision for the Competition Tribunal’s administrative monetary penalty.
(iv) Represents a supplementary financial measure. See Section 17, Non-GAAP and other financial measures.
(v) Represents a non-GAAP financial measure. See Section 17, Non-GAAP and other financial measures.
(vi) Represents a non-GAAP ratio. See Section 17, Non-GAAP and other financial measures.
Total revenues for the fourth quarter of 2024 increased by 15.1%, or $47.7 million to $362.7 million as compared to
Cineplex’s fourth quarter revenues in 2023.
Adjusted EBITDAaL for the fourth quarter of 2024 was $40.3 million, an increase of 66.6% as compared to the
prior year, primarily due to higher theatre attendance.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
9
1.3 KEY DEVELOPMENTS IN 2024
The following describes certain key business initiatives undertaken and results achieved during 2024 in each of
Cineplex’s core business areas:
FILM ENTERTAINMENT AND CONTENT
Theatre Exhibition
•
Reported annual box office revenues of $562.2 million, a decrease of $37.8 million or 6.3% from $599.9
million, due to a 10.3% decrease in theatre attendance as a result of the disruption of the 2024 release
schedule from the writers’ and actors’ strikes in 2023.
•
Reported an annual record BPP of $13.09, an increase of $0.56 or 4.5% compared to the prior year of
$12.53.
•
Opened Cinéma Cineplex Royalmount, in Ville Mont-Royal, Quebec on November 25, 2024, a five screen
theatre featuring recliner seating and laser projection.
•
Closed three locations at the end of their lease terms as part of Cineplex’s portfolio optimization and
rationalization strategy.
•
Enhanced the theatre circuit with the addition of four IMAX screens, one UltraAVX screen, three ScreenX
auditoriums, and installed laser projectors at 31 auditoriums across Canada.
•
The CineClub subscription program reached over 180,000 members, providing members with benefits
accessible across Cineplex’s businesses nationwide including Cineplex theatres and LBE venues.
Theatre Food Service
•
Reported annual theatre food service revenues of $406.8 million, a decrease of $19.1 million or 4.5%
compared to the prior year, primarily due to a 10.3% decrease in theatre attendance.
•
Reported annual record CPP of $9.47, an increase of $0.6 or 6.4% compared to the prior year, primarily
due to an increase in average spend.
•
Completed the national rollout of mobile food and beverage ordering across the entire theatre circuit,
allowing guests to pre-order prior to the beginning of the movie.
•
Signed an agreement with DoorDash and launched nationally to provide additional home delivery services.
•
Introduced the nationwide refill program in the fourth quarter of 2024, allowing customers to upgrade to a
large popcorn or fountain drink and receive one eligible same day refill during the same visit.
Alternative Programming and Distribution
•
As part of the theatrical distribution partnership with Lionsgate, Cineplex Pictures (Cineplex’s distribution
business) distributed The Strangers: Chapter 1, Imaginary, and Borderlands, as well as The Boy and the
Heron from GKIDS and My Hero Academia: You’re Next from Emic Media in 2024.
•
Continued a leadership position in alternative programming, with 10.2% of 2024 box office revenues
coming from international films, compared to those films having a 3.7% North-American share. Strong
performing titles, Jatt & Juliet 3 (Punjabi), Mittran Da Chaleya Truck Ni (Punjabi), and Ardaas Sarbat De
Bhalle Di (Punjabi) of which Cineplex represented over 75% of total North American box office.
•
Event Cinema programming consisted of a variety of successful initiatives through 2024 including Terrifier
3, Coraline, Queen Rock Montreal, and ICC Men’s T20 Cricket World Cup 2024.
Digital Commerce
•
Closed an agreement for the sale of Cineplex Store for nominal proceeds on January 1, 2025. The Cineplex
Store will maintain its existing name and branding in market for a transition period of up to one year.
•
Curated Cineplex Store collections for Black History Month, Asian History Month, National Indigenous
Peoples Day, Pride Month, and National Day for Truth and Reconciliation to highlight diverse experiences,
cultures and artistic expressions.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
10
MEDIA
•
Reported annual media revenues of $134.8 million, an increase of $16.2 million or 13.6% compared to the
prior year.
Cinema Media
•
Reported annual cinema media revenues of $79.1 million, a decrease of $0.9 million or 1.1% over the prior
year.
•
Reported an annual cinema media per patron (CMPP) of $1.84, an increase of $0.17 or 10.2% over the
prior year (see Section 17, Non-GAAP and other financial measures).
•
Continued to leverage expertise in data and analytics to drive revenues.
•
In March of 2024, Cineplex Media released the results of its proprietary Canadian Cinema Attention
Results from Lumen, a well-known and respected global research company. These results far outperform
any other video media option in the marketplace, and highlight the strength of the Cinema advertising
channel.
•
Cineplex Media’s mall network, featuring over 750 screens across 95 shopping destinations, has been
officially accredited by the Canadian Out-of-Home Marketing and Measurement Bureau (“COMMB”),
establishing Cineplex’s advanced mall audience measurement methodology as the new COMMB standard
creating a new standard within the digital out of home (“DOOH”) space.
Digital Place-Based Media
•
Reported annual revenues of $55.7 million, an increase of $17.1 million or 44.3% over the prior year,
primarily due to an agreement with Cadillac Fairview that began in the first quarter.
•
Annual non-project revenues accounted for $37.4 million, an increase of $10.5 million or 39.3%, compared
to the prior year of $26.8 million, which primarily consists of media advertising, sales of software and IT
support.
•
In 2024, developed, installed, and maintained state-of-the-art digital signage network in five Cominar
managed shopping centres across Quebec, and managed directory and media assets at 14 Cadillac Fairview
properties across Canada.
LOCATION-BASED ENTERTAINMENT
•
Reported annual revenues of $128.6 million, a decrease of $3.8 million or 2.8% compared to the prior year.
•
Reported annual adjusted store level EBITDAaL of $30.0 million, a decrease of $8.0 million or 21.0%
compared to the prior year due to higher operating costs including payroll, and occupancy costs.
•
Opened the first Rec Room in Quebec, The Rec Room Royalmount, on November 25, 2024, The Rec Room
Granville, in Vancouver, British Columbia on December 12, 2024 and Playdium Fairview, in Toronto,
Ontario on December 19, 2024.
•
Enhanced the location-based entertainment circuit at The Rec Room South Edmonton, in Edmonton,
Alberta, with attraction upgrades of spark bowling, and augmented reality axe throwing and darts.
LOYALTY
•
Membership in the Scene+ loyalty program was over 15 million members as at December 31, 2024.
CORPORATE
•
On February 1, 2024, Cineplex completed the sale of 100% of the issued and outstanding shares of P1AG
for a purchase price of $155.0 million in cash, subject to customary post-closing adjustments. In connection
with the sale of P1AG, Cineplex recognized a material gain of $67.3 million during the first quarter.
•
On March 4, 2024, Cineplex completed a comprehensive refinancing plan (the “2024 Refinancing”), see
Section 7.4, Long-term debt.
•
Recognized a $39.2 million provision related to the Competition Tribunal’s administrative monetary
penalty. Cineplex denies the allegations, and is appealing both the finding and penalty.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
11
•
Cineplex repurchased for cancellation 620,275 common shares of Cineplex (“Common Shares”) at an
average price of $10.70 per Common Share under its previously announced normal course issuer bid (the
“NCIB”).
•
Celebrated Community Day on September 14, 2024 with a morning of free, family-friendly movies, free
gaming at XSCAPE Play card locations, and free non-redemption gaming at LBE venues, with select
discounted concessions, where one dollar from every concession order of select items, and food and
beverage orders were donated to BGC Canada.
•
Commemorated National Day for Truth and Reconciliation on September 30, 2024 by raising awareness,
honouring Indigenous communities through pre-show content, and donating to Tipi of Hope Foundation.
2. CINEPLEX’S BUSINESS AND STRATEGY
Cineplex’s mission statement is “Passionately delivering exceptional experiences.” All of its efforts are focused on
this mission and it is Cineplex’s goal to consistently provide guests and customers with exceptional experiences.
Cineplex’s current operations are primarily conducted in three main areas: film entertainment and content, media,
and amusement and leisure including location-based entertainment, all supported by the Scene+ loyalty program.
Cineplex’s key strategic areas of focus include:
•
Continuing to enhance and expand Cineplex’s presence as an entertainment destination for Canadians;
•
Capitalizing on core media strengths and infrastructure to provide continued growth for Cineplex’s media
businesses both inside and outside theatres;
•
Developing and scaling amusement and leisure concepts by extending existing capabilities and
infrastructure;
•
Driving value within businesses by leveraging opportunities to optimize value, realize synergies,
implement customer-centric technology and leverage big data across Cineplex ecosystems; and
•
Pursuing opportunities that capitalize on Cineplex’s core strengths.
Cineplex uses the Scene+ loyalty program and database as a strategic asset to link these areas of focus and drive
customer acquisition and spending across all lines of business.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
12
Diversified Entertainment and Media Company
Key elements of this strategy include going beyond movies to reach customers in new ways and maximizing
revenue per patron. Cineplex has implemented in-theatre initiatives to improve the overall entertainment experience,
including increased premium offerings, enhanced in-theatre services, alternative pricing strategies, continued
development of the Scene+ loyalty and CineClub subscription programs, and initiatives in theatre food service such
as optimizing and adding product offerings and improving service execution. The ultimate goal of these in-theatre
customer service initiatives is to maximize revenue per patron and increase the frequency of movie-going at
Cineplex’s theatres.
While box office revenues (which include alternative programming) typically account for the largest portion of
Cineplex’s revenues, Cineplex has diversified its revenue streams through cinema media, digital place-based media,
location-based entertainment, promotions and other revenue streams.
Net income (loss) (millions) (i)
$(588.0)
$(237.4)
$(9.7)
$138.1
$(105.7)
2020
2021
2022
2023
2024
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
13
Net income (loss) as a % of sales (i)
(164.1)%
(42.7)%
(0.9)%
9.9%
(7.9)%
2020
2021
2022
2023
2024
Adjusted EBITDAaL
(millions) (i) (ii)
$(171.2)
$(93.0)
$54.2
$157.4
$93.3
2020
2021
2022
2023
2024
Adjusted EBITDAaL Margin
(i) (ii)
(47.8)%
(16.7)%
4.9%
11.3%
7.0%
2020
2021
2022
2023
2024
(i)
The results of discontinued operations have been excluded from prior period figures as applicable per IFRS 5 to conform to current
period presentation.
(ii)
2024 includes expenses related to the Cineworld transaction and other transactions or litigation outside the normal course of business
in the amount of $2.5 million (2023 - $3.4 million).
3. CINEPLEX’S BUSINESSES
Cineplex’s operations are primarily conducted in three main areas: film entertainment and content, media, and
location-based entertainment, all supported by the Scene+ loyalty program.
FILM ENTERTAINMENT AND CONTENT
Theatre Exhibition
Theatrical exhibition is Cineplex’s core business. Box office revenues are highly dependent on the marketability,
quality and appeal of the film product released by the major motion picture studios.
The motion picture industry consists of three principal activities: production, distribution and exhibition. Production
involves the development, financing and creation of feature-length motion pictures. Distribution involves the
promotion and exploitation of motion pictures in a variety of different channels. Theatrical exhibition continues to
be a key channel for new motion picture releases and is Cineplex’s core business function.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
14
Source: Movie Theatre Association of Canada ("MTAC")
Canadian Industry Box Office
(in millions)
$235.0
$345.0
$674.0
$898.0
$847.0
2020
2021
2022
2023
2024
Cineplex believes that the following are important factors in the film exhibition industry in Canada:
•
Importance of theatrical success in establishing movie brands and subsequent movies. Theatrical exhibition
is the initial and most important channel for new motion picture releases. Cineplex’s ability to operate
successfully depends upon the availability, diversity and appeal of filmed content, the ability of Cineplex to
license films and the performance of these films in Cineplex’s markets. Cineplex primarily licenses first-
run films, the success of which is dependent upon their quality, as well as on the marketing efforts of film
studios and distributors. While studios have experimented with different release strategies through
secondary channels such as streaming, initial theatrical releases continue to be the most important channel
for film success as evidenced by the successful box office releases of Wicked, Moana 2, Deadpool &
Wolverine, Inside Out 2, and Dune: Part Two. Cineplex is able to diversify its content offering through the
evolving theatrical exhibition landscape with the entrance of streamers like Apple and Amazon opting for
initial theatrical releases for films such as Argyle, The Instigators, Fancy Dance, I am Celine, Challengers,
and Red One. In spite of changing release models, Cineplex remains confident that traditional studios will
continue to commit a significant number of films to an exclusive theatrical window, in addition to an
increase in theatrical film product released by streaming companies.
•
Continued supply of successful films. Studios are increasingly producing film franchises, such as the Marvel
& DC universes, Fast & Furious and Avatar among others. Additionally, new franchises continue to be
developed. When the first film in a franchise is successful, subsequent films in the franchise benefit from
existing public awareness and anticipation. The result is that such features typically attract large audiences
and generate strong box office revenues. The success of a broader range of film genres also benefits film
exhibitors. In 2025, the studios are currently planning to release a strong slate of films, including Dogman,
Captain America: Brave New World, Snow White, A Working Man, A Minecraft Movie, Thunderbolts*,
Mission: Impossible – The Final Reckoning, Lilo & Stitch, Karate Kid: Legends, Ballerina, Elio, How to
Train Your Dragon, 28 Years Later, F1, M3GAN 2.0, Jurassic World Rebirth, Superman: Legacy, The
Fantastic Four: First Steps, The Bad Guys 2, Saw XI, Michael, Tron: Ares, The Black Phone 2, The
Running Man, Wicked: For Good, Zootopia 2, Five Nights at Freddy’s 2, and Avatar: Fire and Ash.
•
Convenient and affordable form of out-of-home entertainment. Cineplex’s BPP was $13.09 and $12.53 in
2024 and 2023, respectively. Excluding the impact of Cineplex’s premium-priced product, BPP was $11.28
and $10.91 in 2024 and 2023, respectively. The movie-going experience continues to provide value and
compares favourably to alternative forms of out-of-home entertainment in Canada such as professional
sporting events or live theatre, and with Cineplex, Scene+ members enjoy the ability to earn points towards
Cineplex products as well as discounts and special offers. CineClub members also have benefits accessible
across Cineplex’s businesses nationwide including Cineplex theatres and LBE venues.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
15
•
Providing a variety of premium and enhanced guest theatre experiences. Premium priced theatre offerings
include 3D, 4DX, UltraAVX, VIP, IMAX, D-BOX, ScreenX and Cineplex Clubhouse. BPP for premium-
priced product was $17.36 in 2024, and accounted for 41.6% of total box office revenues in 2024. Recent
enhancements to, and offerings at, the current circuit include the addition of five all-recliner seating
auditoriums, including one auditorium with D-BOX seating at the new theatre Cinéma Cineplex
Royalmount, which opened on November 25, 2024. The theatre circuit was also enhanced with four IMAX
screens at Cineplex Cinemas Yonge-Eglinton and VIP, Cineplex Odeon South Edmonton Cinemas,
Scotiabank Theatre Vancouver and Cineplex Cinemas Dieppe, three ScreenX auditoriums at Cineplex
Cinemas Scarborough, Scotiabank Theatre Chinook and Cineplex Cinemas Coquitlam and VIP, one
UltraAVX screen at Scotiabank Theatre Saskatoon and VIP, and lastly, a retrofit of all-recliner seating at
ten auditoriums, at Cineplex Cinemas Fredericton.
Box Office Revenues
(millions)
$132.8
$236.3
$461.3
$599.9
$562.2
2020
2021
2022
2023
2024
Box Office Revenue per
Patron
$10.17
$11.77
$12.12
$12.53
$13.09
2020
2021
2022
2023
2024
Cineplex’s leading market position enables it to
effectively manage film, food service and other theatre-
level costs, thereby maximizing operating efficiencies.
Cineplex seeks to achieve incremental operating savings
through best practices, operational efficiencies and
negotiating improved supplier contracts. In addition,
Cineplex continues to evaluate its existing theatre
portfolio on an ongoing basis.
Theatre Attendance (millions)
13.1
20.1
38.0
47.9
42.9
2020
2021
2022
2023
2024
Cineplex’s theatres are also ideal locations for meetings and corporate events. Organizations, particularly
corporations with offices across the country, can use Cineplex’s theatres and digital technology for annual meetings,
product launches and employee or customer events, producing revenue streams independent of film exhibition.
Cineplex opened a premium theatre, Cinéma Cineplex Royalmount, in Ville Mont-Royal, Quebec on November 25,
2024. The premium theatre with recliner seating is adjacent to The Rec Room Royalmount to create the ultimate one-
stop entertainment destination with over 50,000 square feet of excitement all under one roof.
Theatre Food Service
Cineplex’s theatre food service business offers guests a range of food choices to enhance their theatre experience
while generating strong profit margins for the company. Cineplex’s theatres feature its internally developed brands:
Outtakes and Melt. In certain Cineplex theatres, food offerings are also enhanced with third party brands such as
Starbucks.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
16
Cineplex continually focuses on process improvements designed to increase the speed of service at the concession
counter in addition to optimizing the retail branded outlets available at Cineplex’s theatres. Each of the wide range
of menu items available at Outtakes locations, expanded liquor service available in theatres, partnerships with Uber
Eats, Skip The Dishes, and DoorDash as well as the expanded menu and the licensed lounge service available at VIP
Cinemas are designed to reach a wider market and to increase both purchase incidence and transaction value. Digital
menu boards installed across the circuit offer flexibility in menu offerings to guests which contribute to an improved
guest experience while also creating additional revenue opportunities. During 2024, Cineplex completed the national
rollout of mobile food and beverage ordering, across the entire theatre circuit, allowing guests to pre-order prior to
the beginning of the movie providing greater purchase flexibility.
Theatre Food Service
Revenues (millions)
$99.6
$172.3
$341.7
$434.4
$414.6
2020
2021
2022
2023
2024
Concession Revenue per
Patron
$6.99
$7.93
$8.72
$8.90
$9.47
2020
2021
2022
2023
2024
Alternative Programming
Alternative programming includes Cineplex’s international film programming as well as content offered under its
Event Cinema brand offerings, including The Metropolitan Opera, sporting events, concerts and dedicated event
screens. International film programming includes Bollywood content as well as Cantonese, Hindi, Punjabi,
Mandarin, Korean and Filipino language films, amongst others, in select theatres across the country based on local
demographics. Alternative programming attracts a more diverse audience, expanding Cineplex’s demographic reach
and enhancing revenues, and delivered 11% of Cineplex’s annual box office revenues during 2024, compared to
10% in the prior year.
The success of Cineplex’s alternative programming events has led to offerings including major concert events from
K-Pop sensations (I am Still and Seventeen Tour Follow Again to Cinemas), André Rieu (The Power of Love and
Gold & Silver), the anime hit Look Back, and Queen Rock Montreal presented exclusively in IMAX. Cineplex offers
the Classic Film Series and Family Favourites programming during non-peak hours to enhance theatre utilization
rates. As additional content becomes available, Cineplex will continue to expand its alternative programming
offerings.
Cineplex Pictures focuses on the acquisition of feature film rights for both theatrical release and in home viewing in
Canada. In addition to Lionsgate’s releases, Cineplex Pictures distributed films including Academy Award winner,
The Boy and the Heron and My Hero Academia: You’re Next. Upcoming films that will be distributed as part of the
distribution partnership with Lionsgate include: Flight Risk and The Unbreakable Boy.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
17
Digital Commerce
Cineplex’s digital products consist of cineplex.com, and the Cineplex mobile app. Cineplex has developed
cineplex.com into one of the leading entertainment sites in Canada, a destination of choice for Canadians seeking
movie entertainment information on the internet. The website offers movie information, show-times and the ability
to buy tickets online, entertainment news and box office reports as well as advertising and digital commerce
opportunities. To complement cineplex.com, the Cineplex mobile app is available as a free download for a wide
variety of devices, providing guests with the ability to find show-times, buy tickets as well as find information
relating to the latest movie choices and movie-related entertainment content in addition to providing mobile food
and beverage ordering.
On January 1, 2025, Cineplex closed an agreement for the sale of Cineplex Store for nominal proceeds. Cineplex
will provide transition services for up to one year. The Cineplex Store will maintain its existing name and branding
in market for the transition period and will be rebranded to a new name in late 2025 at which time the transition
services will end.
MEDIA
Cineplex’s media businesses cover two major categories: cinema media, which incorporates advertising mediums
related to theatre exhibition, and digital place-based media which provides digital signage solutions.
Media Revenues
(millions)
$65.4
$65.3
$111.7
$118.7
$134.8
2020
2021
2022
2023
2024
Cinema Media
Cinema media incorporates advertising mediums related to theatre exhibition. Cineplex’s media advertising
arrangements are impacted by theatre attendance levels which drive impressions and ultimately impact media
revenue generated by Cineplex. Cinema advertising stands out as the ultimate attention leader, with 100% of
audiences viewing ads on the big screen, an average of 80% active attention across all demographics and ad lengths,
and attention scores 2-5X higher than linear and connected TV, and up to 9X higher than digital video channels
based off the Lumen study released in March 2024.
Cineplex’s core cinema media offerings include:
•
Show-time advertising, which runs just prior to the movie trailers in a darkened auditorium with limited
distractions;
•
Pre-show advertising, featured on the big screen as guests settle in to enjoy their movie night, in the period
prior to Show-time;
•
Digital lobby advertising and digital poster cases located in high traffic areas featuring big, bold digital
signage;
•
Online and mobile advertising sales through cineplex.com and the Cineplex mobile app;
•
Leveraging expertise in data and analytics to drive revenues; and
•
Providing sales for CDM DOOH networks.
Cineplex’s theatres also provide opportunities for advertisers’ special media placements (including floor and door
coverings, window clings, standees, banners, samplings, activations and lobby domination setups).
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
18
In addition to these individual offerings, Cineplex offers integrated solutions that can cross over some or all of the
above-mentioned platforms. Advertisers can utilize these forms of media individually or take advantage of an
integrated advertising program spanning multiple platforms. In partnership with its digital commerce platforms,
Cineplex offers online media packages that include page dominations, page skins, pre-roll and post-roll advertising;
all with geo-targeting capabilities.
Cineplex also generates revenues from the sale of sponsorships and advertising at LBE venues.
Digital Place-Based Media
Cineplex Digital Media (“CDM”) is an end-to-end digital experience business that offers digital signage solutions
and in-store retail media networks for leading brands in shopping centres, restaurants, retailers, and entertainment
destinations. CDM embraces its unique connection with Cineplex Media to focus on media-led networks, such as its
mall networks, and retail media networks, to further monetize these networks and offer new value and business
models to clients. Cineplex’s advanced mall audience measurement methodology has been accredited by the
Canadian Out-of-Home Marketing and Measurement Bureau (“COMMB”), establishing a new industry standard
within the digital out of home (“DOOH”) space.
CDM continues to focus on providing its clients with end-to-end solutions for leading brands in shopping centres,
retailers, financial institutions and restaurants, utilizing a host of technical solutions and services that optimize
digital signage to deliver the right content, to the right audience at the right time. CDM operates Canada’s largest
digital out of home (DOOH) shopping media network (in public spaces such as shopping malls and office towers)
with the recent addition of Cominar to develop, install and maintain a state-of-the-art digital signage network in five
Cominar managed shopping centres across Quebec.
Cineplex Digital Media’s project management, system design, network operations, and creative services teams,
combined with the support of Cineplex’s Media sales team have Cineplex well positioned to expand its media reach
throughout its current infrastructure as well as in numerous place-based advertising locations across the country.
Cineplex believes that the strength of its digital place-based media assets make it a leader in the indoor digital
signage industry and provide a platform for significant growth throughout North America.
LOCATION-BASED ENTERTAINMENT
Location-based Entertainment
Cineplex operates LBE establishments under the brand names The Rec Room and Playdium.
The Rec Room is a social entertainment destination targeting millennials featuring a wide range of entertainment
options including simulation, redemption, video, recreational gaming, attractions, and a live entertainment venue for
watching a wide range of entertainment programming. These entertainment options are complemented with an
upscale casual dining environment, featuring an open kitchen and contemporary menu, as well as a larger bar with a
wide range of digital monitors and a large screen for watching sporting and other major events.
The Rec Room earns revenues from food and beverage service, from amusement, gaming and leisure attraction play,
and from ticket sales for events held within the destination. Cineplex has twelve locations of The Rec Room.
Playdium targets families and teens in mid-sized communities across Canada. Cineplex has four locations of
Playdium.
Cineplex opened three new LBE locations in 2024, The Rec Room Royalmount in Mont-Royal, Quebec, The Rec
Room Granville in Vancouver, British Columbia, and Playdium Fairview in Toronto, Ontario.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
19
In-Theatre Gaming
Cineplex’s in-theatre gaming business features Cineplex’s 47 XSCAPE Entertainment Centres as well as arcade
games in select Cineplex theatres, LBE venues and Junxion locations, with all of the games supplied by P1AG.
LOYALTY
As co-owners of the Scene+ loyalty program, Cineplex, Scotiabank and Empire Company Limited bring together the
full benefits of SCENE with Scotia Rewards and Empire’s family of brands. The Scene+ loyalty program also
provides Cineplex with significant data and a more comprehensive understanding of the demographics and
behaviours of its audience.
Scene+ is a customer loyalty program designed to offer members discounts and the opportunity to earn and redeem
points. Scene+ members can earn and redeem points for purchases at Cineplex’s theatres, at its location-based
entertainment establishments, as well as at locations operated by select program partners, including Home
Hardware. Scene+ members can also earn and redeem points at a wide variety of popular retailers, including
Empire’s family of brands and redeem points as statement credits on certain Scotiabank products, as well as book
flexible travel.
The Scene+ loyalty program has been well received as evidenced by the strong membership, high engagement and
satisfaction levels of its program members. Management believes Scene+ will drive further growth and engagement,
expanding the membership base by providing members with more reward options and ways to earn and redeem
points. Through Scene+, Cineplex has gained a more thorough understanding of its customers, driven increased
customer frequency, increased overall customer spending across its businesses and provides Cineplex with the
targeted ability to communicate directly and regularly with customers. With the growth in the Scene+ membership
base, Cineplex is able to gain access to new customers and expand its base and penetration rates through targeted
offers by Scene+.
The Scene+ customer database has allowed Cineplex to segment the member population and provide special offers
to Cineplex’s guests, implement targeted marketing programs and deliver tailored messages to subsets of the
membership base, providing members with relevant information and offers which in turn drive increased frequency
and spend. Cineplex continues to influence consumer behavior through the use of Scene+ points and experience
upgrades for Scene+ members through its initiatives as well as in partnership with movie studios.
Cineplex has gained tremendous insight into customer behavior with over 18 years of data collected. Cineplex will
continue to focus on leveraging this data through marketing automation to drive customer behavior as well as
accelerating the adoption of artificial intelligence and machine learning for more robust consumer insights. Scene+
will continue to build its strategic marketing partnerships with participating partners across Canada, providing
promotions and offerings.
4. OVERVIEW OF OPERATIONS
Revenues
Cineplex generates revenues primarily from box office and food service sales. These revenues are affected primarily
by theatre attendance levels and by changes in BPP and CPP. Box office revenue represented 42.3% of revenue in
the 2024.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
20
The following table presents the revenue mix for comparative periods:
Revenue mix % by period
2024
2023
2022
2021
2020
(Section 1)
(Section 1)
(Section 1)
Box office
42.3 %
43.2 %
41.9 %
42.5 %
37.0 %
Food service
34.7 %
34.8 %
34.6 %
33.6 %
30.2 %
Media
10.1 %
8.5 %
10.1 %
11.8 %
18.4 %
Amusement
7.0 %
6.9 %
7.3 %
6.1 %
5.0 %
Other
5.9 %
6.6 %
6.1 %
6.0 %
9.4 %
Total
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
Cineplex has three reportable segments, film entertainment and content, media, and location-based entertainment.
The reportable segments are business units offering differing products and services and are managed separately due
to their distinct natures and are based on the information used by Cineplex’s chief operating decision makers.
Revenue mix % by period
Full Year
2024
2023
Film Entertainment and Content
80.3 %
82.0 %
Media
10.1 %
8.5 %
LBE
9.6 %
9.5 %
Total
100.0 %
100.0 %
A key component of Cineplex’s business strategy is to position itself as the leading exhibitor in the Canadian market
by providing customers with an exceptional entertainment experience. Cineplex’s share of the Canadian theatre
exhibition market based on Canadian industry box office revenues was approximately 74% for both the quarter and
for the year ended December 31, 2024.
The commercial appeal of the films and alternative content released during a given period, and the success of
marketing as well as promotion for those films by film studios, distributors and content providers all drive theatre
attendance. BPP is affected by the mix of film and alternative content product that appeals to certain audiences (such
as children or seniors who pay lower ticket prices), ticket prices during a given period and the appeal of available
premium priced product that increases BPP. While BPP is impacted by CineClub, the Cineplex Tuesdays program
and the Scene+ loyalty program, these value offering programs are designed to increase theatre attendance frequency
at Cineplex’s theatres. Cineplex’s main focus is to drive incremental visits to theatres, to employ a ticket price
strategy which takes into account the local demographics at each theatre and to maximize BPP through premium
offerings.
Food service revenues are comprised primarily of concession revenues, arising from food and beverage sales at
theatre locations including the Junxion concept, and LBE venues including The Rec Room and Playdium. In
addition, food service revenues include home delivery services by Uber Eats, Skip the Dishes and DoorDash. CPP
represents theatre food service revenues divided by theatre attendance, and is impacted by the theatre food service
product mix, theatre food service prices, film genre, promotions, discounts for CineClub members, and the Scene+
loyalty program. CPP can fluctuate from quarter to quarter depending on the genre of film product playing. Cineplex
believes the Scene+ and CineClub programs drive incremental purchase incidence, increasing overall revenues.
Cineplex focuses primarily on growing CPP by optimizing the product offerings, improving operational excellence,
improving the guest experience with enhancements to the Cineplex Mobile App and providing greater flexibility
with online food and beverage ordering, and strategic pricing to increase purchase incidence and transaction value.
Food service revenues from LBE include food and beverage revenues from the various bars and restaurants located
throughout the venues.
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Management’s Discussion and Analysis
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MANAGEMENT’S DISCUSSION & ANALYSIS
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Media revenues include both cinema media (Cineplex Media) and digital place-based media (CDM) revenues.
Cineplex Media generates revenues primarily from selling pre-show and show-time advertising in Cineplex’s
theatres. Cineplex’s media advertising arrangements are impacted by theatre attendance levels which drive
impressions and ultimately impact media revenue generated by Cineplex. Additionally, Cineplex Media sells media
placements throughout Cineplex’s circuit including digital poster cases, as well as sponsorship and advertising in
LBE venues. Cineplex Media also sells digital advertising for cineplex.com, the Cineplex mobile app and on third
party networks operated by CDM. CDM designs, installs, maintains and operates digital signage networks in four
verticals including DOOH in public spaces such as shopping malls and office towers, quick service restaurants,
financial institutions and retailers. CDM advertising revenue is impacted by mall attendance which affect
impressions and revenue generated.
Amusement revenues include revenues generated at LBE venues as well as XSCAPE Entertainment Centres and
game rooms in theatres.
Cineplex generates other revenues from the online booking fees, promotional activities, screenings, private parties,
corporate events and breakage on gift card sales and prepaid products.
Cost of Sales and Expenses
Film cost represents the film rental fees paid to distributors for films exhibited in Cineplex’s theatres. Film costs are
calculated as a percentage of box office revenue and are dependent on various factors including the performance of
the film. Film costs are accrued on the related box office receipts at either mutually agreed-upon terms established
prior to the opening of a film, or estimated terms where a mutually agreed settlement is reached upon conclusion of
a film’s run, depending upon the film licensing arrangement. There can be significant variances in film cost
percentage between quarters due to, among other things, the concentration of box office revenues amongst the top
films in the period with stronger performing films typically having a higher film cost percentage.
Cost of food service represents the cost of concession items and other theatre food service items sold, and varies
with changes in concession and other theatre food service revenues as well as the quantity and mix of concession
and other food service offerings sold. Cost of food and beverages sold at LBE is also included in cost of food
service.
Depreciation - right-of-use assets, represents the depreciation of Cineplex’s right-of-use assets related to leases.
Depreciation is calculated on a straight-line basis from the date of commencement of the lease to the earlier of the
end of the useful life of the asset or the end of the lease term.
Depreciation and amortization - other, represents the depreciation and amortization of Cineplex’s property,
equipment and leaseholds, as well as certain of its intangible assets. Depreciation and amortization are calculated on
a straight-line basis over the useful lives of the assets.
(Gain) loss on disposal of assets represents the gain recognized on assets or components of assets that were sold or
otherwise disposed.
Other costs are comprised of theatre occupancy expenses, other operating expenses and general and administrative
expenses. These categories are described below.
Theatre occupancy expenses include lease related expenses, percentage rent, property related taxes, business related
taxes and insurance and exclude cash rent accounted for as obligations or interest under IFRS 16, Leases.
Other operating expenses consist of fixed and variable expenses, with the largest component being theatre salaries
and wages. Although theatre salaries and wages include a fixed cost component, these expenses vary in relation to
revenues as theatre staffing levels are adjusted to handle fluctuations in theatre attendance. Other components of this
category include cleaning, marketing which includes the cost of Scene+ points issued, advertising, media, LBE,
loyalty, digital commerce, supplies and services, utilities and maintenance. To the extent these costs are variable,
they can be managed with changes in business volumes.
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Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
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General and administrative expenses are primarily costs associated with managing Cineplex’s business, including
film buying, marketing and promotions, operations and theatre food service management, accounting and financial
reporting, legal, treasury, design and construction, real estate development, communications and investor relations,
digital and technology and administration. Included in these costs are payroll (including Cineplex’s Omnibus
Incentive Plan costs), occupancy costs related to Cineplex’s corporate offices, professional fees (such as public
accountant and legal fees) and travel and related costs. Cineplex maintains general and administrative staffing and
associated costs at a level that it deems appropriate to manage and support the size and nature of its theatre and LBE
portfolio and its business activities.
Accounting for Joint Arrangements
The financial statements incorporate the operating results of joint arrangements in which Cineplex has an interest
using either the equity accounting method (for joint ventures and associates) or recognizing Cineplex’s share of the
assets, liabilities, revenues and expenses in Cineplex’s consolidated results (for joint operations).
Under IFRS 11, Cineplex’s 33.3% interest in Scene+ and 50% share of one IMAX auditorium in Ontario are
classified as joint ventures or associates. Through equity accounting, Cineplex’s share of the results of operations for
these joint ventures and associates are reported as a single item in the statements of operations, ‘Share of income of
joint ventures and associates’. Theatre attendance for the IMAX auditorium held in a joint venture is not reported in
Cineplex’s consolidated theatre attendance as the line-by-line results of the joint venture are not included in the
relevant lines in the statement of operations.
In addition to the joint ventures which are equity accounted, Cineplex consolidates its 50% share of assets,
liabilities, revenues and expenses of its joint operation which recognizes the revenues and costs of redemptions of
points issued prior to the launch of Scene+.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
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5. RESULTS OF OPERATIONS
Other than where disclosed, discussions of results and Non-GAAP financial measures, including EBITDA, adjusted
EBITDA and adjusted EBITDAaL, in this MD&A are of continuing operations.
5.1 SELECTED FINANCIAL DATA
The following table presents summarized financial data for Cineplex for the three most recently completed financial
years (expressed in thousands of dollars except shares outstanding, per share data and per patron data, unless
otherwise noted):
Year ended
December 31,
2024
Year ended
December 31,
2023
Year ended
December 31,
2022
(Section 1) (vi)
Box office revenues
$
562,151
$
599,903
$
461,272
Food service revenues
462,052
483,149
381,386
Media revenues
134,831
118,655
111,728
Amusement revenues
92,691
96,507
80,920
Other revenues
78,713
90,680
67,575
Total revenues
1,330,438
1,388,894
1,102,881
Select Expenses
Film cost
303,926
323,412
238,897
Cost of food service
108,126
113,987
87,702
Depreciation - right-of-use assets
94,160
87,657
93,512
Depreciation and amortization - other assets
83,789
88,881
89,466
(Gain) Loss on disposal of assets
(7,652)
2,910
(57,748)
Other costs including employee benefits (a)
652,928
624,771
553,583
(Reversal) impairment of long-lived assets
—
—
(19,880)
Net (loss) income from continuing operations
(105,684)
138,051
(9,679)
Net income from discontinued operations, including gain on disposition (vi)
68,003
29,113
9,792
Net (loss) income (v)
(37,681)
167,164
113
Adjusted EBITDA (i)
$
263,925
$
322,962
$
220,168
Adjusted EBITDAaL (i)
$
93,267
$
157,363
$
54,201
Adjusted EBITDAaL from discontinued operations (i)
$
508
$
35,732
$
27,471
Adjusted EBITDAaL including discontinued operations (i)
$
93,775
$
193,095
$
81,672
(a) Other costs include:
Theatre occupancy expenses
72,171
71,557
62,378
Other operating expenses including employee benefits
501,560
482,112
426,743
General and administrative expenses including employee benefits (v)
79,197
71,102
64,462
Total other costs including employee benefits
$
652,928
$
624,771
$
553,583
(Loss) earnings per share from continuing operations - basic (v)
$
(1.66) $
2.18
$
(0.15)
Earnings per share from discontinued operations - basic
$
1.07
$
0.46
$
0.15
(Loss) earnings per share - basic (v)
$
(0.59) $
2.64
$
—
(Loss) earnings per share from continuing operations - diluted (v)
$
(1.66) $
1.80
$
(0.15)
Earnings per share from discontinued operations - diluted
$
1.07
$
0.32
$
0.15
(Loss) earnings per share - diluted (v)
$
(0.59) $
2.12
$
—
Total assets
$
2,287,317
$
2,271,492
$
2,150,454
Long-term debt (iv)
$
736,468
$
817,439
$
824,888
Average shares outstanding at period end
63,585,187
63,401,529
63,359,240
Adjusted free cash flow per share (ii)
$
(0.112) $
1.320
$
(0.213)
Box office revenue per patron (iii)
$
13.09
$
12.53
$
12.12
Concession revenue per patron (iii)
$
9.47
$
8.90
$
8.72
Film cost as a percentage of box office revenues
54.1 %
53.9 %
51.8 %
Theatre attendance (in thousands of patrons) (iii)
42,946
47,862
38,045
Theatre locations (at period end)
156
158
158
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Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
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Theatre screens (at period end)
1,617
1,631
1,637
(i) Represents a non-GAAP financial measure. See Section 17, Non-GAAP and other financial measures.
(ii) Represents a non-GAAP ratio. See Section 17, Non-GAAP and other financial measures.
(iii) Represents a supplementary financial measure. See Section 17, Non-GAAP and other financial measures.
(iv) Represents the principal component as presented on the financial statements net of any equity component and unamortized costs of long-
term debt, Convertible Debentures, and Notes Payable. Excludes share-based compensation, lease obligations, fair value of interest rate swap
agreements, post-employment benefit obligations and other liabilities.
(v) 2024 includes the loss on the 2024 Refinancing of $56.0 million for full year, and expenses related to other transactions or litigation outside
the normal course of business in the amount of $2.5 million (2023 - $3.4 million) for full year. The full year also includes the $39.2 million
provision for the Competition Tribunal’s administrative monetary penalty.
(vi) The results of discontinued operations (P1AG) have been excluded from prior period figures as applicable per IFRS 5 to conform to current
period presentation. All amounts are from continuing operations unless noted. See Section 13, Accounting policies.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
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5.2 OPERATING RESULTS FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2024
Total revenues
Total revenues for the three months ended December 31, 2024 increased $47.7 million or 15.1% to $362.7 million as
compared to the prior year. Total revenues for the year ended December 31, 2024 decreased $58.5 million or 4.2%
to $1.3 billion as compared to the prior year. A discussion of the factors affecting the changes in box office, food
service, media, amusement and other revenues for the period is provided below.
Non-GAAP and other financial measures discussed throughout this MD&A, including adjusted EBITDA, adjusted
EBITDAaL, adjusted store level EBITDAaL, adjusted EBITDAaL margin, adjusted store level EBITDAaL margin,
adjusted free cash flow, theatre attendance, BPP, premium priced product, same theatre metrics, CPP, film cost
percentage, food service cost percentage and concession margin per patron are defined and discussed in Section 17,
Non-GAAP and other financial measures.
Box office revenues
The following table highlights the movement in box office revenues, theatre attendance and BPP for the quarter and
full year (in thousands of dollars, except theatre attendance reported in thousands of patrons and per patron amounts,
unless otherwise noted):
Box office revenues
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Box office revenues
$ 147,728
$ 123,841
19.3 % $ 562,151
$ 599,903
-6.3 %
Theatre attendance (i)
11,141
9,599
16.1 %
42,946
47,862
-10.3 %
Box office revenue per patron (i)
$
13.26
$
12.90
2.8 % $
13.09
$
12.53
4.5 %
BPP excluding premium priced product (i)
$
11.50
$
11.36
1.2 % $
11.28
$
10.91
3.4 %
Same theatre box office revenues (i)
$ 147,457
$ 123,430
19.5 % $ 555,580
$ 594,283
-6.5 %
Same theatre attendance (i)
11,118
9,561
16.3 %
42,457
47,395
-10.4 %
% Total box from premium priced product (i)
41.4 %
36.3 %
5.1 %
41.6 %
41.4 %
0.2 %
(i) Represents a supplementary financial measure. See Section 17, Non-GAAP and other financial measures.
Box office continuity
Fourth Quarter
Full Year
Box Office
Theatre
Attendance
Box Office
Theatre
Attendance
2023 as reported
$
123,841
9,599 $
599,903
47,862
Same theatre attendance change
20,104
1,558
(61,924)
(4,939)
Impact of same theatre BPP change
3,924
—
23,221
—
New and acquired theatres (i)
271
22
2,498
171
Disposed and closed theatres (i)
(412)
(38)
(1,547)
(148)
2024 as reported
$
147,728
11,141 $
562,151
42,946
(i) See Section 17, Non-GAAP and other financial measures. Represents theatres opened, acquired, disposed or closed subsequent to the start of
the prior year comparative period and is used to report on Cineplex’s supplementary financial measures.
Fourth Quarter 2024 Top Cineplex Films
3D
% Box Fourth Quarter 2023 Top Cineplex Films
3D
% Box
1 Wicked
a
14.3 % 1 TAYLOR SWIFT | THE ERAS TOUR
9.6 %
2 Moana 2
a
13.9 % 2 The Hunger Games: The Ballad of Songbirds and
Snakes
9.4 %
3 Gladiator II
7.8 % 3 Five Nights at Freddy’s
7.1 %
4 Venom: The Last Dance
a
6.6 % 4 Wonka
6.5 %
5 The Wild Robot
a
6.2 % 5 Animal
4.5 %
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
26
Full Year 2024 Top Cineplex Films
3D
% Box Full Year 2023 Top Cineplex Films
3D
% Box
1 Deadpool & Wolverine
a
8.6 % 1 Barbie
8.1 %
2 Inside Out 2
a
6.7 % 2 The Super Mario Bros. Movie
a
6.6 %
3 Dune: Part Two
4.8 % 3 Oppenheimer
4.9 %
4 Despicable Me 4
a
4.2 % 4 Avatar: The Way of Water
a
4.6 %
5 Wicked
a
3.8 % 5 Spider-Man: Across The Spider-Verse
4.0 %
The following table compares 2024 monthly box office revenues to 2019 and 2023 monthly box office revenues:
Month
2019 Box office (i)
2023 Box office (i)
2024 Box office (i) 2024 as a percentage of 2019 2024 as a percentage of 2023
January
$52,034
$45,744
$37,620
72%
82%
February
$41,892
$36,950
$28,222
67%
76%
March
$62,571
$40,644
$59,219
95%
146%
April
$63,759
$61,278
$29,183
46%
48%
May
$68,697
$47,514
$33,936
49%
71%
June
$56,918
$55,701
$51,359
90%
92%
July
$76,935
$86,388
$72,468
94%
84%
August
$56,537
$67,592
$67,198
119%
99%
September
$44,393
$34,253
$35,218
79%
103%
October
$54,528
$37,354
$34,031
62%
91%
November
$52,314
$34,640
$48,918
94%
141%
December
$74,946
$51,847
$64,778
86%
125%
$705,524
$599,905
$562,150
80%
94%
(i) Amounts are in thousands of dollars.
Fourth Quarter
Box office revenues increased by $23.9 million or 19.3% to $147.7 million, compared to $123.8 million recorded in
the prior year. This increase was primarily due to a 1.5 million or 16.1% increase in theatre attendance to 11.1
million. The fourth quarter box office revenues included the highly successful films Wicked, which achieved the
highest grossing movie based on a Broadway musical at the North American box office, and Moana 2, which had
the highest five day opening of all time, surpassing The Super Mario Bros. Movie at the North American box office.
BPP for the three months ended December 31, 2024 was $13.26, representing a fourth quarter and all-time quarterly
record, and an increase of $0.36 or 2.8% from $12.90 reported in the prior year. The increase in BPP is primarily
due to inflationary and strategic pricing initiatives, and from premium priced products. Premium priced products
increased to 41.4% of the total box office during the fourth quarter, compared to 36.3% in the prior year as the
highly successful films, Wicked, and Moana 2 drove guests to premium experiences, particularly 3D content,
compared to the prior year, where none of the top five films were released with 3D offerings.
Full Year
For the full year period, box office revenues decreased $37.8 million to $562.2 million, compared to $599.9 million
recorded in the prior year period. This decrease was primarily due to a 4.9 million or 10.3% decrease in theatre
attendance from 47.9 million to 42.9 million, partially as a result of marketing and production delays related to the
impact of the writers’ and actors’ strikes in the first half of 2024. The following films were all originally scheduled
to be released in 2024 and were moved to 2025 and beyond: Elio, Snow White, Mickey 17, Spider-Man: Beyond the
Spider-Verse, Captain America: Brave New World, Ballerina, Mission: Impossible - The Final Reckoning,
Thunderbolts*, Dog Man, Saw XI, The Amateur, The Fantastic Four: First Steps, Karate Kid: Legends and Avatar:
Fire and Ash. The prior year also included strong titles including Avatar: The Way of Water, one of Cineplex’s
highest grossing titles ever and the ‘Barbenheimer’ phenomenon.
Cineplex’s BPP for the period ended December 31, 2024 was $13.09, which increased $0.56 or 4.5% from $12.53
reported in the prior year period. This increase was due to inflationary and strategic pricing initiatives. Cineplex’s
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
27
main focus is to drive incremental visits to theatres, and employ a ticket price strategy which takes into account the
local demographics at each theatre while maximizing BPP through premium offerings.
Food service revenues
The following table highlights the movement in food service revenues, theatre attendance and CPP for the quarter
and full year (in thousands of dollars, except theatre attendance and same store attendance reported in thousands of
patrons and per patron amounts):
Food service revenues
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Food service - theatres
$
104,866 $
89,101
17.7 % $
406,784 $
425,865
-4.5 %
Food delivery - theatres
1,998
2,060
-3.0 %
7,802
8,568
-8.9 %
Food service - LBE
13,445
13,292
1.2 %
47,466
48,716
-2.6 %
Total food service revenues
$
120,309 $
104,453
15.2 % $
462,052 $
483,149
-4.4 %
Theatre attendance (i)
11,141
9,599
16.1 %
42,946
47,862
-10.3 %
CPP (i) (ii)
$
9.41 $
9.28
1.4 % $
9.47 $
8.90
6.4 %
Same theatre food service revenues (i)
$
104,687 $
88,705
18.0 % $
401,934 $
421,325
-4.6 %
Same theatre attendance (i)
11,118
9,561
16.3 %
42,457
47,395
-10.4 %
(i) Represents a supplementary financial measure. See Section 17, Non-GAAP and other financial measures.
(ii) Food service revenue from LBE and delivery is not included in the CPP calculation.
Theatre food service revenue continuity
Fourth Quarter
Full Year
Theatre Food
Service
Theatre
Attendance
Theatre Food
Service
Theatre
Attendance
2023 as reported
$
89,101
9,599 $
425,865
47,862
Same theatre attendance change
14,447
1,558
(43,903)
(4,939)
Impact of same theatre CPP change
1,534
—
24,511
—
New and acquired theatres (i)
180
22
1,703
171
Disposed and closed theatres (i)
(396)
(38)
(1,392)
(148)
2024 as reported
$
104,866
11,141 $
406,784
42,946
(i) Represents theatres opened, acquired, disposed or closed subsequent to the start of the prior year comparative period and is used to report on
Cineplex’s supplementary financial measures. See Section 17, Non-GAAP and other financial measures
Food service revenues are comprised primarily of concession revenues, which includes food service sales at theatre
locations, and through delivery services including Uber Eats, Skip the Dishes, and DoorDash. Food service revenues
also include food and beverage sales at The Rec Room and Playdium.
Fourth Quarter
Food service revenues increased by $15.9 million or 15.2% to $120.3 million during the fourth quarter, compared to
$104.5 million recorded in the prior year. Theatre food service revenues increased by $15.8 million or 17.7% to
$104.9 million as compared to the prior year. The increase in theatre food service revenue was primarily due to a
16.1% increase in theatre attendance. During the fourth quarter, CPP increased by $0.13 or 1.4% from the prior year,
from $9.28 to a fourth quarter record of $9.41, primarily due to inflationary price increases resulting in higher
average guest spend compared to the prior year.
Full Year
For the full year period, food service revenues decreased by $21.1 million or 4.4% from $483.1 million to $462.1
million, primarily due to a $19.1 million decrease in theatre food service revenues. The decrease in theatre food
service revenues is primarily due to a decrease in theatre attendance which decreased by 4.9 million to 42.9 million.
Cineplex’s CPP during the full year period was $9.47, which increased by $0.57 or 6.4%. LBE food service revenue
also decreased $1.3 million from $48.7 million to $47.5 million.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
28
Media revenues
The following table highlights the movement in media revenues for the quarter and full year (in thousands of
dollars):
Media revenues
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Cinema media
$
30,077 $
28,466
5.7 % $
79,149 $
80,057
-1.1 %
Digital place-based media
21,847
12,836
70.2 %
55,682
38,598
44.3 %
Total media revenues
$
51,924 $
41,302
25.7 % $
134,831 $
118,655
13.6 %
Theatre attendance (i)
11,141
9,599
16.1 %
42,946
47,862
-10.3 %
Cinema media per patron (CMPP) (i)
$
2.70 $
2.97
-9.1 % $
1.84 $
1.67
10.2 %
(i) Represents a supplementary financial measure. See Section 17, Non-GAAP and other financial measures.
Fourth Quarter
Total media revenues increased by $10.6 million or 25.7% to $51.9 million during the fourth quarter, compared to
$41.3 million recorded in the prior year. The increase during the fourth quarter was primarily due to the $9.0 million
or 70.2% increase in digital place-based media revenues, including digital out of home (“DOOH”) media revenue
primarily related to an agreement with Cadillac Fairview that began in the first quarter. The digital place-based
media revenues increase is also attributed to growth in digital services due to the higher number of active networks,
and incremental creative project revenue. Cinema Media revenues increased by $1.6 million or 5.7% during the
fourth quarter due primarily to the increase in theatre attendance levels. Cinema media per patron (CMPP) decreased
by $0.27 or 9.1% to $2.70, compared to $2.97 recorded in the prior year as theatre attendance increased 16.1%
compared to cinema media revenue increase of 5.7%.
Full Year
For the full year period, total media revenues increased $16.2 million or 13.6% to $134.8 million. Digital placed-
based media revenues increased by $17.1 million or 44.3% for the full year period compared to the prior year period
as a result of digital advertising on DOOH networks and higher project installation revenues. Cineplex’s cinema
media decreased by $0.9 million as arrangements are impacted by theatre attendance levels which drive impressions
and ultimately impact media revenue generated by Cineplex. Cinema media per patron (CMPP) increased by $0.17
or 10.2% to $1.84, compared to $1.67 recorded in the prior year.
The following table shows a breakdown of the nature of digital place-based media revenues for the quarter and full
year (in thousands of dollars):
Digital place-based media revenues
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Project revenues (i)
$
6,252 $
2,941
112.6 % $
18,328 $
11,774
55.7 %
Other revenues (ii)
15,595
9,895
57.6 %
37,354
26,824
39.3 %
Total digital place-based media revenues
$
21,847 $
12,836
70.2 % $
55,682 $
38,598
44.3 %
(i) Project revenues include hardware sales and professional services.
(ii) Other revenues include sales of software and its support as well as media advertising.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
29
Amusement revenues
The following table highlights the movement in amusement revenues for the quarter and full year (in thousands of
dollars):
Amusement revenues
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Amusement revenue - LBE
$
18,828 $
19,027
-1.0 % $
77,824 $
80,300
-3.1 %
Amusement revenue - exhibition (i)
3,620
3,475
4.2 %
14,867
16,207
-8.3 %
Total amusement revenues from continuing operations
$
22,448 $
22,502
-0.2 % $
92,691 $
96,507
-4.0 %
(i) Cineplex receives a venue revenue share on games revenues earned at in-theatre game rooms and XSCAPE Entertainment Centres.
Amusement - Cineplex exhibition reports the total of this venue revenue share which is consistent with the historical presentation of
Cineplex’s amusement revenues.
Fourth Quarter and Full Year
Compared to the prior year, amusement revenues decreased by $0.1 million or 0.2% during the fourth quarter, to
$22.4 million primarily due to lower LBE revenue.. For the full year period, amusement revenues decreased $3.8
million or 4.0% to $92.7 million, also primarily due to lower exhibition attendance and LBE revenue. Following the
sale of P1AG, Cineplex continues to receive a venue revenue share on games revenues earned at in-theatre gaming
centres, under the same terms as the prior agreement.
The following table presents the LBE adjusted store level EBITDAaL for the quarter and full year (in thousands of
dollars):
LBE Summary
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Food service revenues
$ 13,445
$ 13,292
1.2 % $ 47,466
$ 48,716
-2.6 %
Amusement revenues
18,828
19,027
-1.0 %
77,824
80,300
-3.1 %
Media and other revenues
1,358
1,674
-18.9 %
3,325
3,362
-1.1 %
Total revenues
$ 33,631
$ 33,993
-1.1 % $ 128,615
$ 132,378
-2.8 %
Cost of food service
3,667
3,472
5.6 %
13,117
13,559
-3.3 %
Operating expenses before adjustments (i)
18,973
18,233
4.1 %
74,110
69,903
6.0 %
Cash rent related to lease obligations (ii)
3,067
2,748
11.6 %
11,413
10,968
4.1 %
Total expenses
$ 25,707
$ 24,453
5.1 % $ 98,640
$ 94,430
4.5 %
Adjusted store level EBITDAaL (iii)
$
7,924
$
9,540
-16.9 % $ 29,975
$ 37,948
-21.0 %
Adjusted store level EBITDAaL Margin (iv)
23.6 %
28.1 %
-4.5 %
23.3 %
28.7 %
-5.4 %
(i) Includes operating costs of LBE. Pre-opening costs relating to LBE and overhead relating to management of LBE portfolio are not included
as they are non-recurring costs.
(ii) Cash rent that has been reallocated to offset the lease obligations.
(iii) Represents a non-GAAP financial measure. See Section 17, Non-GAAP and other financial measures.
(iv) Represents a non-GAAP ratio. See Section 17, Non-GAAP and other financial measures.
Fourth Quarter
During the fourth quarter, revenues decreased by $0.4 million or 1.1% from the prior year to $33.6 million. The
decrease in revenue during the fourth quarter is primarily due to a decrease in media, and ticketed events.
Adjusted store level EBITDAaL during the fourth quarter was $7.9 million, and adjusted store level EBITDAaL
margin was 23.6%. The decrease in adjusted store level EBITDAaL and decrease in adjusted store level EBITDAaL
margin are primarily attributed to an increase in payroll (related to the minimum wage increases in several
provinces), and occupancy expenses.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
30
Full Year
For the full year period, revenues decreased by $3.8 million or 2.8% from the prior year. The decrease in revenue
during the full year period was primarily due to weather-related guest behaviours, lower groups and events
bookings, and the timing of the opening of the three new LBE locations.
Adjusted store level EBITDAaL for the full year period was $30.0 million and adjusted store level EBITDAaL
margin during the full year period was 23.3%. The decrease in adjusted store level EBITDAaL is consistent with the
decrease in revenues and the decrease in adjusted store level EBITDAaL margin are due to higher operating costs
including payroll, and occupancy costs.
Other revenues
The following table highlights the other revenues which includes revenues from online booking fees, Cineplex
Pictures distribution, the Cineplex Store, promotional activities, screenings, private parties, corporate events,
breakage on gift card sales and revenues from management fees for the quarter and full year (in thousands of
dollars):
Other revenues
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Online Booking Fees
$
5,864 $
5,152
13.8 % $
22,184 $
27,283
-18.7 %
Other Revenues
14,470
17,828
-18.8 %
56,529
63,397
-10.8 %
Total other revenues
$
20,334 $
22,980
-11.5 % $
78,713 $
90,680
-13.2 %
Fourth Quarter and Full Year
The quarterly decrease is primarily due to the decrease in distribution revenue this quarter compared to the release of
The Hunger Games: The Ballad of Songbirds and Snakes, and The Boy and the Heron included in the prior year.
The full year period decrease is primarily due to the decrease in online booking fee revenue related to lower
attendance compared to the prior year, lower distribution revenue with the release of John Wick 4 included in the
prior year, and lower venue rentals and breakage related to gift cards and coupons.
The manner in which Cineplex displayed the online booking fee was contested by the Competition Bureau - not
Cineplex’s right to charge the online booking fee itself. Cineplex will continue to charge the online booking fee.
Film cost
The following table highlights the movement in film cost and the film cost percentage for the quarter and the full
year (in thousands of dollars, except film cost percentage):
Film cost
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Film cost
$
78,628
$
65,357
20.3 % $ 303,926
$ 323,412
-6.0 %
Film cost percentage (i)
53.2 %
52.8 %
0.4 %
54.1 %
53.9 %
0.2 %
(i) Represents a supplementary financial measure. See Section 17, Non-GAAP and other financial measures.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
31
Fourth Quarter and Full Year
Film cost varies primarily with box office revenues and can vary from quarter to quarter usually based on the
relative strength of the titles exhibited during the period, impacted by film cost terms which vary by title and
distributor.
The higher film cost during the fourth quarter and the full year, over the prior year, is due to the top films in the
current period having higher settlement rates compared to the prior year.
Cost of food service
The following table highlights the movement in cost of food service and food service cost as a percentage of food
service revenues (“concession cost percentage”) for both theatres and LBE for the quarter and full year (in thousands
of dollars, except percentages and margins per patron):
Cost of food service
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Cost of food service - theatre
$
23,421
$
22,314
5.0 % $
95,009
$ 100,428
-5.4 %
Cost of food service - LBE
3,667
3,472
5.6 %
13,117
13,559
-3.3 %
Total cost of food service
$
27,088
$
25,786
5.0 % $ 108,126
$ 113,987
-5.1 %
Theatre concession cost percentage (i)
21.9 %
24.5 %
-2.6 %
22.9 %
23.1 %
-0.2 %
LBE food cost percentage (i)
27.3 %
26.1 %
1.2 %
27.6 %
27.8 %
-0.2 %
Theatre concession margin per patron (i)
$
7.35
$
7.01
4.9 % $
7.30
$
6.84
6.7 %
(i) Represents a supplementary financial measure. See Section 17, Non-GAAP and other financial measures.
Fourth Quarter and Full Year
Cost of food service at the theatres varies primarily with theatre attendance, the cost of food and materials purchased
as well as the quantity and mix of offerings sold. Cost of food service at LBE venues varies primarily with the
volume of guests who visit the location as well as the quantity and mix between food and beverage items sold.
The increase in theatre concession cost and LBE food costs is positively correlated to the increase in food service
revenues recognized during the quarter compared to the prior year. For the full year period, LBE food costs
decreased marginally and the theatre concession cost decrease is positively correlated to the decrease in food service
revenues.
Depreciation and amortization
The following table highlights the movement in depreciation and amortization expenses during the quarter and full
year (in thousands of dollars):
Depreciation and amortization expenses
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Depreciation of property, equipment and leaseholds
$
17,979 $
19,463
-7.6 % $
73,653 $
79,246
-7.1 %
Amortization of intangible assets and other
2,460
2,356
4.4 %
10,136
9,635
5.2 %
Sub-total - depreciation and amortization - other assets
$
20,439 $
21,819
-6.3 % $
83,789 $
88,881
-5.7 %
Depreciation - right-of-use assets
22,467
22,259
0.9 %
94,160
87,657
7.4 %
Total depreciation and amortization from continuing
operations
$
42,906 $
44,078
-2.7 % $
177,949 $
176,538
0.8 %
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
32
Fourth Quarter and Full Year
Depreciation of property, equipment and leaseholds decreased by $1.5 million, or 7.6% during the quarter and $5.6
million or 7.1% for the full year compared to the prior year period due to fully depreciated assets.
Amortization of intangible assets remained flat during the quarter and full year compared to the prior year.
Depreciation of right-of-use assets increased by $0.2 million or 0.9% during the quarter and $6.5 million or 7.4% for
the full year compared to the prior year. The increase was primarily due to the addition of right-of-use assets
associated with Cadillac Fairview in conjunction with the digital out-of-home agreement at the beginning of 2024.
Impairment of long-lived assets
Cineplex generally performs its annual test for impairment of goodwill and indefinite-lived intangible assets in the
fourth quarter, in accordance with the policy described in its annual consolidated financial statements. Assessment
of impairment for long-lived assets, including property, equipment, leaseholds, right-of-use assets, intangible assets
and goodwill is performed more frequently as specific events or circumstances dictate triggering events and changes
in circumstances indicate that the carrying amount of the asset group may not be fully recoverable. In addition, for
assets other than goodwill and indefinite-lived intangible assets, indicators are assessed considering whether an
impairment loss previously recognized may no longer exist or may have decreased.
Cineplex completed impairment testing for goodwill and indefinite-lived intangible assets in the fourth quarter and
concluded no impairment exists. Based on Cineplex’s assessment for long-lived assets, no indicators of impairment
or reversals were present and therefore no impairment testing was performed in the current period. No reversals or
impairments of long-lived assets were recognized during the period ended December 31, 2024 and 2023.
Loss (gain) on disposal of assets
The following table shows the movement in the loss (gain) on disposal of assets during the quarter and full year (in
thousands of dollars):
Loss (gain) on disposal of assets
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Loss (gain) on disposal of assets
$
218 $
1,553
-86.0 % $
(7,652) $
2,910
NM
Fourth Quarter and Full Year
The change in the loss on disposal of assets recognized during the quarter is due to nominal activity on the disposal
of Cineplex’s assets. For the full year period, Cineplex sold underutilized land adjacent to a theatre for cash proceeds
of $11.9 million, resulting in a gain of $8.7 million.
Other costs
Other costs include three main sub-categories of expenses: theatre occupancy expenses, which capture associated
occupancy costs for Cineplex’s theatre operations; other operating expenses, which include the costs related to
running Cineplex’s film entertainment and content, media, and LBE businesses; and general and administrative
expenses, which includes costs related to managing Cineplex’s operations, including head office expenses. Please
see the discussions below for more details on these categories.
The following table highlights the movement in other costs for the quarter and full year (in thousands of dollars):
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
33
Other costs including employee benefits
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Theatre occupancy expenses
$
16,136 $
16,592
-2.7 % $
72,171 $
71,557
0.9 %
Other operating expenses
134,450
121,810
10.4 %
501,560
482,112
4.0 %
General and administrative expenses
19,162
17,992
6.5 %
79,197
71,102
11.4 %
Total other costs
$
169,748 $
156,394
8.5 % $
652,928 $
624,771
4.5 %
Theatre occupancy expenses
The following table highlights the movement in theatre occupancy expenses for the quarter and full year (in
thousands of dollars):
Theatre occupancy expenses
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Cash rent paid/payable (i)
$
36,638 $
36,976
-0.9 % $
147,530 $
148,930
-0.9 %
Other occupancy
17,472
17,122
2.0 %
73,245
72,038
1.7 %
Retroactive adjustments (ii)
(1,063)
(911)
16.7 %
(1,590)
(2,025)
-21.5 %
Total theatre occupancy including cash lease payments
$
53,047 $
53,187
-0.3 % $
219,185 $
218,943
0.1 %
IFRS 16 adjustment (iii)
(36,911)
(36,595)
0.9 %
(147,014)
(147,386)
-0.3 %
Theatre occupancy as reported
$
16,136 $
16,592
-2.7 % $
72,171 $
71,557
0.9 %
(i) Represents the cash payments for theatre rent paid or payable during the quarter.
(ii)Retroactive adjustments include amounts related to both theatre rent and other theatre occupancy costs including real estate taxes, business
taxes and common area maintenance. They are isolated here to illustrate Cineplex’s theatre rent and other theatre occupancy costs excluding
these retroactive items.
(iii) Cash rent paid/payable related to lease obligations.
Theatre occupancy continuity
Fourth Quarter
Full Year
Occupancy
Occupancy
2023 as reported
$
16,592 $
71,557
Impact of new and acquired theatres
62
548
Impact of disposed theatres
(273)
(870)
Same store rent change (i)
(167)
(1,061)
Retroactive adjustments
(151)
435
Decrease in subsidies
—
(39)
Other
389
1,229
Impact of IFRS 16:
Cash rent related to lease obligations
(316)
372
2024 as reported
$
16,136 $
72,171
(i) Represents a supplementary financial measure. See Section 17, Non-GAAP and other financial measures.
Fourth Quarter and Full Year
Theatre occupancy expenses remained flat during the fourth quarter and the full year period compared to the prior
year. Cash rent paid/payable related to lease obligations decreased 0.9% during the fourth quarter and 0.9% for the
full year period.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
34
Other operating expenses
The following table highlights the movement in other operating expenses during the quarter and full year (in
thousands of dollars):
Other operating expenses
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Theatre payroll
$
41,960 $
36,997
13.4 % $
161,035 $
157,954
2.0 %
Theatre operating expenses
30,973
28,932
7.1 %
122,069
117,877
3.6 %
Media
22,101
13,678
61.6 %
68,654
51,767
32.6 %
LBE operating expenses (i)
22,040
20,982
5.0 %
85,523
80,872
5.8 %
LBE pre-opening (ii)
2,840
—
NM
3,523
—
NM
Redemption cost of legacy loyalty points
1,248
2,577
-51.6 %
6,432
16,773
-61.7 %
Marketing
3,831
4,157
-7.8 %
11,363
11,224
1.2 %
Scene+ point issuance
6,290
5,023
25.2 %
24,688
25,130
-1.8 %
Other (ii)
9,741
13,610
-28.4 %
39,596
36,401
8.8 %
Other operating expenses including cash lease payments
$
141,024 $
125,956
12.0 % $
522,883 $
497,998
5.0 %
IFRS 16 adjustment (iii)
(6,574)
(4,146)
58.6 %
(21,323)
(15,886)
34.2 %
Total other operating expenses from continuing operations
$
134,450 $
121,810
10.4 % $
501,560 $
482,112
4.0 %
(i) Includes operating costs of LBE locations. Overhead relating to management of LBE portfolio are included in the ‘Other’ line.
(ii) Other category includes direct costs of Cineplex Pictures, Cineplex Store and overhead costs related to LBE and other Cineplex internal
departments.
(iii) Cash rent paid/payable related to lease obligations of the LBE and digital place-based media businesses.
Other operating expenses continuity
Fourth Quarter
Full Year
2023 as reported/revised
$
121,810 $
482,112
Impact of new and acquired theatres
151
1,454
Impact of disposed theatres
(391)
(1,138)
Same theatre payroll change (i)
5,049
3,097
Same theatre operating expenses change (i)
1,484
3,913
Media operating expenses change
8,423
16,887
LBE operating expenses change
1,058
4,651
LBE pre-opening change
2,840
3,523
Redemption cost of legacy loyalty points
(1,329)
(10,341)
Marketing change
(326)
139
Scene+ point issuance change
1,267
(442)
Other
(3,158)
3,142
Impact of IFRS 16:
Cash rent related to lease obligations
$
(2,428) $
(5,437)
2024 as reported
$
134,450 $
501,560
(i) See Section 17, Non-GAAP and other financial measures. These are measures included as part of Cineplex’s supplementary financial
measure calculations.
Fourth Quarter
Other operating expenses increased by $12.6 million or 10.4% during the fourth quarter compared to the prior year.
The increase in theatre payroll expenses is correlated to the increase in attendance and related box office and theatre
food service revenues, as well as minimum wage increases across several provinces compared to the prior year.
Media operating expenses increased $8.4 million primarily due to an increase in venue rental share expenses
resulting from higher revenues, and LBE expenses increased due to pre-opening expenses of three new locations that
opened in the fourth quarter. Cineplex also recognized a $0.3 million or 7.8% decrease in marketing expenses, a
$1.3 million decrease in redemption costs of legacy loyalty points outstanding before the launch of the Scene+
program, and $1.3 million or 25.2% increase in marketing expenses relating to the cost of issuance of Scene+ points
due to higher box office and food service sales.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
35
Full Year
For the full year period, the overall increase in other operating expenses of $19.4 million, was primarily due to
Media operating expenses increase of $16.9 million due to an increase in revenues, $3.2 million of higher other
operating expenses, a $4.7 million increase in LBE other operating expenses compared to the prior year due to
higher payroll (increase in minimum wage across several provinces) and occupancy costs, an increase of $3.5
million in pre-opening expenses for three new locations that opened in the fourth quarter, a $3.1 million increase in
theatre payroll due to minimum wage increases across several provinces, offset by a $10.3 million decrease in
SCENE operating costs, and a $0.4 million decrease in marketing expenses relating to the issuance of Scene+
points. .
General and administrative expenses
The following table highlights the movement in general and administrative (“G&A”) expenses during the quarter
and full year, including share-based compensation costs, and G&A net of these costs (in thousands of dollars):
G&A expenses
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
G&A excluding the following items
$
16,239 $
17,241
-5.8 % $
66,867 $
62,097
7.7 %
Restructuring
58
253
-77.1 %
708
1,635
-56.7 %
Transaction / Litigation costs
19
563
-96.6 %
2,498
3,377
-26.0 %
Long term incentive plan (LTIP) (i)
3,039
203
NM
9,924
5,038
97.0 %
Option plan
386
316
22.2 %
1,529
1,289
18.6 %
G&A expenses including cash lease payments
$
19,741 $
18,576
6.3 % $
81,526 $
73,436
11.0 %
IFRS 16 adjustment (ii)
(579)
(584)
-0.9 %
(2,329)
(2,334)
-0.2 %
G&A expenses as reported
$
19,162 $
17,992
6.5 % $
79,197 $
71,102
11.4 %
(i) LTIP includes the expense for RSUs and PSUs, as well as the expense for the executive and Board deferred share unit plans.
(ii) Cash rent paid/payable included as part of lease obligations.
Fourth Quarter
G&A expenses increased by $1.2 million or 6.5% during the fourth quarter compared to the prior year. The increase
is primarily due to a higher LTIP costs from an increase in Cineplex’s Common Share price. Cineplex incurred $nil
(2023 - $0.6 million) of expenses related to litigation and other transactions outside the normal course of business
during the fourth quarter.
Full Year
G&A expenses for the full year period increased $8.1 million or 11.4% compared to the prior year. The increase is
primarily due to higher LTIP costs from an increase in Cineplex’s Common Share price, higher professional fees,
software due to continued migration to cloud software as a service, and payroll costs.
Share of (income) loss of joint ventures and associates
Cineplex’s joint ventures and associates include its 33.3% interest in Scene+ (2023 - 33.3%) and 50% interest in one
IMAX screen in Ontario (2023 - 50%).
The following table highlights the components of share of (income) loss of joint ventures and associates during the
quarter and full year (in thousands of dollars):
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
36
Share of loss (income) of joint ventures and associates
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Share of loss of Scene+
$
2,852 $
1,855
53.7 % $
2,658 $
4,688
-43.3 %
Share of (income) loss of other joint ventures and associates
(82)
1
NM
(238)
(165)
44.2 %
Total (income) loss of joint ventures and associates
$
2,770 $
1,856
49.2 % $
2,420 $
4,523
-46.5 %
Fourth Quarter and Full Year
Cineplex’s (income) loss from its joint ventures and associates consisted primarily of $2.9 million of loss related to
Scene+ during the fourth quarter and $2.7 million of loss during the full year period.
Interest expense
The following table highlights the movement in interest expense during the quarter and full year (in thousands of
dollars):
Interest expense
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Interest expense on long-term debt
$
15,701 $
15,098
4.0 % $
60,859 $
59,331
2.6 %
Lease interest expense (i)
18,124
17,004
6.6 %
71,708
66,058
8.6 %
Financing fees
—
654
-100.0 %
823
1,060
-22.4 %
Sub-total - cash interest expense from continuing operations
$
33,825 $
32,756
3.3 % $
133,390 $
126,449
5.5 %
Deferred financing fee accretion and other non-cash interest
330
461
-28.4 %
1,858
601
209.2 %
Accretion expense on Convertible Debentures and Notes
Payable
1,753
5,604
-68.7 %
10,527
21,551
-51.2 %
Interest rate swap - non-cash
—
4,302
-100.0 %
(1,020)
6,337
NM
Sub-total - non-cash interest expense from continuing
operations
2,083
10,367
-79.9 %
11,365
28,489
-60.1 %
Total interest expense from continuing operations
$
35,908 $
43,123
-16.7 % $
144,755 $
154,938
-6.6 %
Total cash interest paid from continuing operations
$
17,223 $
29,527
-41.7 % $
122,020 $
124,321
-1.9 %
(i) Represents total cash interest paid and accrued cash interest related to lease obligations.
Lease interest expense breakdown
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Cash interest paid - lease obligation
$
18,130 $
17,006
6.6 % $
71,713 $
66,457
7.9 %
Change in accrued interest - lease obligation
(6)
(2)
200.0 %
(5)
(399)
-98.7 %
Total lease interest expense from continuing operations
$
18,124 $
17,004
6.6 % $
71,708 $
66,058
8.6 %
Fourth Quarter
Total interest expense decreased by $7.2 million or 16.7% for the quarter when compared to the prior year primarily
due to lower accretion expense on the Convertible Debentures and Notes Payable, and the settlement of the interest
rate swap in the first quarter. The timing and amount of cash interest payments has changed with the 2024
Comprehensive Refinancing.
Full Year
For the full year period, interest expense decreased $10.2 million compared to the prior year period primarily due to
lower accretion expense relating to the 2024 Comprehensive Refinancing, and the gain on settlement of the interest
rate swap in the first quarter for $1.0 million.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
37
Interest income
The following table highlights interest income received during the quarter and full year (in thousands of dollars):
Interest income
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Interest income
$
164 $
156
5.1 % $
1,356 $
897
51.2 %
Foreign exchange
The following table highlights the movement in foreign exchange during the quarter and full year (in thousands of
dollars):
Foreign exchange
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Foreign exchange (gain) loss from continuing operations
$
(140) $
95
NM $
(269) $
834
NM
Fourth Quarter
The movement in the foreign exchange during the quarter was due to the change in the CAD/USD foreign exchange
month end rate from 1.3499 at September 30, 2024 to 1.4389 at December 31, 2024.
Full Year
For the year ended December 31, 2024, the movement in foreign exchange was due to the change in the CAD/USD
foreign exchange month end rate from 1.3226 at December 31, 2023 to 1.4389 at December 31, 2024.
Change in fair value of financial instruments
The following table highlights the movement in change in fair value of financial instruments during the quarter and
full year (in thousands of dollars):
Change in fair value of financial instruments
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Loss (income) on financial instruments recorded at fair
value and loss on extinguishment of debt
$
2,610 $
(4,480)
NM $
46,598 $
(2,610)
NM
Fourth Quarter and Full Year
The change in the loss in the fair value of financial instruments recognized during the fourth quarter is due the
change in fair value of the prepayment derivative related to the 2024 Notes (as defined in Section 7.4, Long-term
debt). The change in the loss in the fair value of financial instruments recognized during the year to date period is
due to adjustments related to the loss on the 2024 Refinancing and the revaluation of Cineplex’s call option relating
to the 2021 Notes (as defined in Section 7.4, Long-term debt) and the 2024 Notes, as applicable (Section 7.4, Long-
term debt) during the current period.
(Income) loss on financial instruments recorded at fair
value
Three months ended December 31,
2024
Year ended December 31, 2024
Bank fees and other fees
$
— $
2,027
Loss on settlement of notes
—
14,165
Loss on settlement of debentures
—
39,764
Loss on 2024 Refinancing
—
55,956
Remeasurement of financial instruments recognized in profit
or loss
2,610
(9,358)
Loss on financial instruments recorded at fair value
$
2,610 $
46,598
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
38
Income taxes
The following table highlights the movement in current and deferred income tax recovery during the quarter and full
year (in thousands of dollars):
Income taxes
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Current income tax expense (recovery)
$
13 $
—
NM $
(2,721) $
(839)
224.3 %
Deferred income recovery
(174)
(6,426)
-97.3 %
(27,797)
(146,724)
-81.1 %
Provision for income taxes
$
(161) $
(6,426)
-97.5 % $
(30,518) $ (147,563)
-79.3 %
Fourth Quarter and Full Year
At December 31, 2020 the recoverability of the net deferred income tax assets was uncertain and accordingly the net
deferred tax assets were derecognized. During the second quarter of 2023, Cineplex assessed the recoverability of
net deferred income tax assets and determined that the expected return to profitability provided a reasonable
expectation that previously derecognized net deferred income tax assets will be utilized to offset future periods of
taxable income, resulting in income tax recovery of approximately $150.2 million relating to continuing operations.
The provision for income taxes in the fourth quarter reflects impact of timing differences for tax as compared to
accounting. Cineplex will utilize a portion of its net operating losses against the taxable gain from the sale of P1AG,
which resulted in no taxes payable resulting from the disposition.
Cineplex’s combined statutory income tax rate at December 31, 2024 was 26.3% (2023 - 26.3%). The provision for
the Competition Tribunal’s administrative monetary penalty is not deductible for income tax purposes.
By Notice of Reassessment (“NOR”) dated January 22, 2019, the Canada Revenue Agency (“CRA”), disallowed the
deduction of $26.6 million of losses of AMC Ventures Inc. (“AMC”) that Cineplex had obtained on the acquisition
of AMC in 2012. The disallowance of the losses, which offset taxable income generated in 2014, increased taxes
and interest payable by approximately $8.6 million, 50% of which was required to be paid immediately (interest
continues to accrue on the unpaid amount). Cineplex disagrees with the CRA’s position, and has filed an appeal to
the Tax Court of Canada in respect of the NOR. On June 28, 2021, Cineplex received a response from the Attorney
General of Canada representing the CRA confirming its position with respect to the disallowance of the losses. The
appeal is currently proceeding through the pre-trial steps and Cineplex believes that it should prevail in defending its
original filing position, although no assurance can be given in this regard as the appeal process proceeds.
Non-capital losses available for carry-forward as at December 31, 2024 and expire as follows (in thousands of
dollars):
2027
$2,292
2028
7,530
2029
5,122
2030
2,184
2032
254
2034
1,947
2035
2,770
2036
2,749
2038
3,110
2041
233,534
2042
113,237
2043
4,243
2044
21,228
$
400,200
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
39
5.3 NET INCOME (LOSS), EBITDA AND ADJUSTED EBITDAaL (see Section 17, Non-GAAP and other
financial measures)
The following table presents net income (loss), EBITDA, adjusted EBITDA and adjusted EBITDAaL for the year
ended December 31, 2024 as compared to the prior year (expressed in thousands of dollars, except adjusted
EBITDAaL margin):
NET INCOME (LOSS), EBITDA AND ADJUSTED
EBITDAaL
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Net income (loss) from continuing operations (i)
$
3,332
$ (12,102)
NM $ (105,684)
$ 138,051
NM
Net income from discontinued operations, including gain on
disposition
$
—
$
3,148
-100.0 % $ 68,003
$ 29,113
133.6 %
Net income (loss) (i)
$
3,332
$ (8,954)
NM $ (37,681)
$ 167,164
NM
Net income (loss) as a percentage of sales from continuing
operations
0.9 %
-3.8 %
4.7 %
-7.9 %
9.9 %
-17.8 %
EBITDA
$ 81,821
$ 68,517
19.4 % $ 185,146
$ 321,067
-42.3 %
Adjusted EBITDA
$ 84,749
$ 65,902
28.6 % $ 263,925
$ 322,962
-18.3 %
Adjusted EBITDAaL
$ 40,275
$ 24,178
66.6 % $ 93,267
$ 157,363
-40.7 %
Adjusted EBITDAaL from discontinued operations
$
—
$
5,352
-100.0 % $
508
$ 35,732
-98.6 %
Adjusted EBITDAaL including discontinued operations
$ 40,275
$ 29,530
36.4 % $ 93,775
$ 193,095
-51.4 %
Adjusted EBITDAaL margin from continuing operations
11.1 %
7.7 %
3.4 %
7.0 %
11.3 %
-4.3 %
(i) 2024 includes the loss on the 2024 Refinancing of $nil during the fourth quarter and $56.0 million for full year, and expenses related to other
transactions or litigation outside the normal course of business in the amount of $nil during the fourth quarter (2023 - $0.6 million) and $2.5
million (2023 - $3.4 million) for full year. The full year also includes the $39.2 million provision for the Competition Tribunal’s administrative
monetary penalty.
Fourth Quarter
Net income from continuing operations for the fourth quarter of 2024 was $3.3 million, compared to net loss from
continuing operations of $12.1 million in the prior year. The increase in net income (loss) is primarily due to higher
attendance and exhibition revenues compared to the prior year.
Adjusted EBITDAaL from continuing operations for the fourth quarter of 2024 was $40.3 million compared to
$24.2 million in the prior year. The increase is primarily due to higher exhibition attendance.
Full Year
Net loss from continuing operations for the year ended December 31, 2024 was $105.7 million compared to net
income from continuing operations of $138.1 million in the prior year period. The movement in net income (loss)
was primarily a result of lower exhibition attendance in 2024, the deferred tax expense benefit recognized in 2023,
the loss on the 2024 Refinancing, as well as the provision for the Competition Tribunal’s administrative monetary
penalty.
Adjusted EBITDAaL from continuing operations for the year ended December 31, 2024 was $93.3 million
compared to $157.4 million in the prior year period. The decrease was primarily due to lower exhibition attendance.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
40
6. BALANCE SHEETS
The following sets out significant changes to Cineplex’s consolidated balance sheets during the year ended
December 31, 2024 as compared to December 31, 2023 (in thousands of dollars):
December 31, 2024
December 31, 2023
Change ($)
Change (%)
Assets
Current assets
Cash and cash equivalents
$
83,871 $
36,666 $
47,205
128.7 %
Trade and other receivables
116,533
97,689
18,844
19.3 %
Income taxes receivable
5,529
2,766
2,763
99.9 %
Inventories
20,724
17,624
3,100
17.6 %
Prepaid expenses and other current assets
11,003
11,481
(478)
-4.2 %
Fair value of interest rate swap agreements
—
3,217
(3,217)
-100.0 %
Assets held for sale (i)
—
93,322
(93,322)
-100.0 %
237,660
262,765
(25,105)
-9.6 %
Non-current assets
Property, equipment and leaseholds
399,115
394,382
4,733
1.2 %
Right-of-use assets
773,372
754,793
18,579
2.5 %
Deferred income taxes
149,547
146,784
2,763
1.9 %
Fair value of interest rate swap agreements
—
1,109
(1,109)
-100.0 %
Interests in joint ventures
6,771
4,896
1,875
38.3 %
Intangible assets
81,132
80,873
259
0.3 %
Goodwill
620,300
620,300
—
— %
Derivative financial instrument
19,420
5,590
13,830
247.4 %
$
2,287,317 $
2,271,492 $
15,825
0.7 %
Liabilities
Current liabilities
Accounts payable and accrued liabilities
$
236,612 $
172,482 $
64,130
37.2 %
Provision for Competition Tribunal administrative
monetary penalty
39,215
—
39,215
NM
Income taxes payable
92
173
(81)
-46.8 %
Deferred revenue and other
189,989
197,329
(7,340)
-3.7 %
Lease obligations
88,669
85,030
3,639
4.3 %
Liabilities related to assets held for sale (i)
—
27,241
(27,241)
-100.0 %
554,577
482,255
72,322
15.0 %
Non-current liabilities
Share-based compensation
12,689
4,470
8,219
183.9 %
Long-term debt
736,468
817,439
(80,971)
-9.9 %
Lease obligations
1,010,505
993,404
17,101
1.7 %
Post-employment benefit obligations
6,889
7,114
(225)
-3.2 %
Other liabilities
5,889
6,245
(356)
-5.7 %
2,327,017
2,310,927
16,090
0.7 %
Shareholders’ deficit
Total shareholders’ deficit
(39,700)
(39,435)
(265)
0.7 %
$
2,287,317 $
2,271,492 $
15,825
0.7 %
(i) See Section 13, Accounting policies for discontinued operations.
Cash and cash equivalents. Cash and cash equivalents includes operations petty cash and outstanding deposits and
fluctuates with business activities.
Trade and other receivables. The increase in trade and other receivables is primarily due to the collection of trade
receivables from the sale of gift cards, vouchers and media sales from the 2024 holiday period. December represents
the highest volume month for gift card and voucher sales.
Income taxes receivable. The increase in income taxes receivable is primarily due to timing of installments and
estimated taxable income.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
41
Inventories. The increase in inventories is primarily due to concession inventories. The overall movement remains
fairly consistent with the prior period.
Prepaid expenses and other current assets. The decrease in prepaid expenses and other current assets is primarily
due to prepayments for insurance and the 2024 technology service contracts extending into the next period.
Assets held for sale. P1AG was classified as a discontinued operation in accordance with the application of IFRS 5,
Non-current assets held for sale and discontinued operations, as at December 31, 2023. The sale of P1AG was
completed on February 1, 2024.
Property, equipment and leaseholds. The increase in property, equipment and leaseholds is due to amortization
expense ($73.7 million) and asset dispositions ($4.3 million) in excess of additions to new build and other capital
expenditures ($82.7 million) and maintenance capital expenditures ($13.6 million).
Right-of-use assets. The increase in right-of-use assets is due to lease additions, extensions and modifications
($112.7 million), offset by amortization expense of $94.2 million.
Deferred income taxes. The increase in net deferred income taxes is primarily due to lower taxable income that
was partially offset by the use of non-capital losses to shield the taxable capital gain from the sale of P1AG, and the
deferred tax liabilities associated with the financing arrangements.
Interests in joint ventures. The increase in interest in joint ventures is primarily due to $4.5 million of capital
contributions made to Cineplex’s investment in Scene+, net of $2.4 million losses in 2024.
Intangible assets. The increase in intangible assets is due to the capitalization of software development costs ($7.8
million), offset by amortization expense ($7.7 million).
Goodwill. There was no change in goodwill for the quarter.
Derivative financial instrument. The increase in derivative financial instrument reflects the $5.6 million
derecognition of the derivative associated with the 2021 Notes, and the recognition of $10.1 million fair value
derivative related to the 2024 Notes prepayment option. The derivative value increased $9.4 million to $19.4 million
at December 31, 2024
Accounts payable and accrued expenses. The increase in accounts payable and accrued expenses is primarily due
to timing of the settlement of year end liabilities.
Share-based compensation. The increase in share-based compensation is primarily due to members of Cineplex’s
board of directors electing to receive payment in deferred equity units, and the impact of the increase in the
Common Share price, which was $12.20 per share at December 31, 2024 as compared to $8.37 at December 31,
2023 (see Section 9, Share activity). Additionally, 2024 PSU and RSU grants will be cash settled and included as
part of this liability.
Income taxes payable. The decrease in income taxes payable is immaterial for this quarter.
Deferred revenue and other. The decrease in deferred revenue is primarily due to the redemption and associated
breakage of gift cards and vouchers in excess of current period sales.
Lease obligations. The increase in lease obligations is primarily due to $117.9 million new, extended and modified
leases which is partially offset by $170.5 million payment of lease obligations.
Liabilities related to assets held for sale. P1AG was classified as a discontinued operation in accordance with the
application of IFRS 5, Non-current assets held for sale and discontinued operations, as at December 31, 2023. The
sale of P1AG was completed on February 1, 2024.
Fair value of interest rate swap agreements. Represented the fair values of Cineplex’s interest rate swap
agreements (see Section 7.4, Long-term debt). The final interest rate swap with a notional value of $150.0 million
and a maturity date of November 13, 2025 was wound up during the first quarter for a gain of $1.0 million.
Long-term debt. Long-term debt consists of the Credit Facility (nil drawn at December 31, 2024), Convertible
Debentures and 2024 Notes (each as described in Section 7.4, Long-term debt). The decrease in long-term debt
reflects use of the proceeds of the sale of P1AG to repay a portion of the prior credit facility and the impact of the
2024 Refinancing (Section 7.4, Long-term debt).
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
42
7. LIQUIDITY AND CAPITAL RESOURCES
7.1 OPERATING ACTIVITIES
Cash flow is generated primarily from film entertainment (the sale of admission tickets and food service sales),
media sales and services, location-based entertainment revenues (amusement and food service sales) and other
revenues. Generally, this provides Cineplex with positive working capital, since certain cash revenues are normally
collected in advance of the payment of certain expenses. Box office revenues are directly related to the success and
appeal of the film product produced and distributed by the studios. The following table highlights the movements in
cash from operating activities for the three months and year ended December 31, 2024 and 2023 (in thousands of
dollars):
Cash flows provided by (used in) operating activities
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Net income (loss) from continuing operations
$
3,332 $
(12,102) $
15,434 $ (105,684) $
138,051 $ (243,735)
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization of other assets (i)
20,439
21,819
(1,380)
83,789
88,881
(5,092)
Depreciation of right-of-use assets
22,467
22,257
210
94,160
87,657
6,503
Unrealized foreign exchange
—
(124)
124
—
(124)
124
Interest rate swap agreements - non-cash interest
—
4,302
(4,302)
(1,020)
6,337
(7,357)
Accretion of Convertible Debentures and notes payable
1,753
5,604
(3,851)
10,527
21,551
(11,024)
Other non-cash interest (ii)
330
461
(131)
1,858
601
1,257
Loss (gain) on disposal of assets
218
1,552
(1,334)
(7,652)
2,910
(10,562)
Deferred income taxes
(174)
(6,426)
6,252
(27,797)
(146,724)
118,927
Non-cash share-based compensation
975
782
193
4,283
6,229
(1,946)
Loss (gain) on fair value of financial instruments and
extinguishment of debt
2,610
(4,480)
7,090
46,598
(2,610)
49,208
Financing fees
—
—
—
(17,871)
—
(17,871)
Net change in interests in joint ventures and associates
2,852
2,588
264
2,658
4,687
(2,029)
Net cash received from unwinding swap
—
—
—
4,583
—
4,583
Provision for Competition Tribunal's administrative
monetary penalty
—
—
—
39,215
—
39,215
Changes in operating assets and liabilities
50,952
47,152
3,800
31,432
(11,352)
42,784
Net cash provided by operating activities from
continuing operations
$
105,754 $
83,385 $
22,369 $
159,079 $
196,094 $ (37,015)
(i) Includes depreciation of property, equipment and leaseholds and amortization of intangible assets.
(ii) Includes accretion of asset retirement obligations and non-cash interest costs on lease obligations.
Fourth Quarter and Full Year
Cash provided by operating activities during the fourth quarter of 2024 was $105.8 million compared to $83.4
million in the prior year. The increase is primarily due to higher revenues and the timing of settlement of operating
assets and liabilities in the period, particularly accounts receivable, accounts payable and deferred revenue.
For the year ended December 31, 2024, cash provided by operating activities was $159.1 million compared to
$196.1 million in the prior year. The decrease is primarily due to lower revenues and the timing of settlement of
operating assets and liabilities in the period, particularly accounts receivable, accounts payable and deferred revenue.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
43
7.2 INVESTING ACTIVITIES
The following table highlights the movements in cash used in investing activities for the three months and year
ended December 31, 2024 and 2023 (in thousands of dollars):
Cash flows used in investing activities
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Proceeds from disposal of assets, including asset related
insurance recoveries
$
200 $
(5) $
205 $
12,892 $
1 $
12,891
Purchases of property, equipment and leaseholds
(22,786)
(18,590)
(4,196)
(72,014)
(52,478)
(19,536)
Intangible assets additions
(2,736)
(2,716)
(20)
(10,343)
(10,974)
631
Tenant inducements
1,193
2,715
(1,522)
5,642
10,010
(4,368)
Investment in joint ventures and associates
—
(735)
735
(4,533)
(8,934)
4,401
Net cash used in investing activities from continuing
operations
$
(24,129) $
(19,331) $
(4,798) $
(68,356) $
(62,375) $
(5,981)
Fourth Quarter and Full Year
Cash used in investing activities during the fourth quarter of 2024 was $24.1 million, as compared to $19.3 million
in the prior year. Cash used in investing activities during year ended December 31, 2024 was $68.4 million, as
compared to $62.4 million in the prior year. The increase is primarily due to higher purchases of equipment and
leaseholds with three location based entertainment venues and one theatre that opened in the fourth quarter of 2024,
net of proceeds from disposal of capital assets.
Cineplex’s continues to focus on managing capital expenditures and believes that it has adequate liquidity to fund
operations in the regions in which Cineplex operates. Components of capital expenditures include (in thousands of
dollars):
Capital expenditures
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Gross capital expenditures
$
22,786 $
18,590 $
4,196 $
72,014 $
52,478 $
19,536
Less: tenant inducements
(1,193)
(2,715)
1,522
(5,642)
(10,010)
4,368
Net capital expenditures
$
21,593 $
15,875 $
5,718 $
66,372 $
42,468 $
23,904
Net capital expenditures consists of:
Growth and acquisition capital expenditures (i)
$
20,415 $
9,719 $
10,696 $
56,145 $
20,976 $
35,169
Tenant inducements
(1,193)
(2,715)
1,522
(5,642)
(10,010)
4,368
Media growth capital expenditures
17
361
(344)
51
694
(643)
Premium formats (ii)
4,560
4,985
(425)
12,897
10,778
2,119
Maintenance capital expenditures
6,386
10,375
(3,989)
13,558
19,503
(5,945)
Other (iii)
(8,592)
(6,850)
(1,742)
(10,637)
527
(11,164)
$
21,593 $
15,875 $
5,718 $
66,372 $
42,468 $
23,904
(i) Growth and acquisition capital expenditures include expenditures on the construction of new Exhibition and LBE locations.
(ii) Premium formats include capital expenditures for recliner seating, IMAX, UltraAVX, 3D, 4DX and ScreenX.
(iii) Primary component of Other is the impact of the timing of cash payments relating to the purchases of property, equipment and leaseholds.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
44
7.3 FINANCING ACTIVITIES
The following table highlights the movements in cash from financing activities for the three months and year ended
December 31, 2024 and 2023 (in thousands of dollars):
Cash flows used in financing activities
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Repayments under credit facility, net
$
— $
(3,000) $
3,000
(298,000)
(29,000) $ (269,000)
Repayments of lease obligations - principal
(25,127)
(24,135)
(992)
(98,132)
(100,334)
2,202
Financing fees
—
(655)
655
—
(1,061)
1,061
Issuance of 2024 Notes payable
—
—
—
575,000
—
575,000
Common Shares repurchased and cancelled
(4,595)
—
(4,595)
(6,636)
—
(6,636)
Settlement of former Notes payable
—
—
—
(254,688)
— (254,688)
Settlement of Convertible Debentures
—
—
—
(102,350)
— (102,350)
Net cash used in financing activities from continuing
operations
$
(29,722) $
(27,790) $
(1,932) $ (184,806) $ (130,395) $ (54,411)
Fourth Quarter and Full Year
Cash flows used in financing activities were $29.7 million during the fourth quarter of 2024, as compared to cash
flows used in financing activities of $27.8 million in the prior year, with $4.6 million used to repurchase for
cancellation Common Shares under the NCIB in 2024, and $3.0 million of repayments on the former credit facility
in 2023.
Cash flows used in financing activities were $184.8 million during the year ended December 31, 2024, as compared
to cash flows used in financing activities of $130.4 million in the prior year. The movement was primarily due to the
full redemption of the $250 million notes with interest at 7.5% notes, due February 26, 2026 (the “2021 Notes”);
partial redemption of the Convertible Debentures; repayment in full and termination of the Eighth Amended and
Restated Credit Agreement; and the repurchase for cancellation of Common Shares under the NCIB. The debt
repayments were funded by the proceeds from the sale of P1AG and the 2024 Notes Offering. Refer to Section 7.4,
Long-term debt.
Normal Course Issuer Bid (NCIB)
On August 22, 2024, the Toronto Stock Exchange (the “TSX”) accepted Cineplex’s notice of intention to commence
the NCIB. Under the NCIB, Cineplex proposes to purchase, as opportunities arise from time to time, up to 6,318,345
Common Shares, or approximately 10% of its public float of 63,183,455 Common Shares issued and outstanding as
of August 20, 2024. Purchases under the NCIB will be made through the facilities of the TSX or through alternative
Canadian trading systems and in accordance with applicable regulatory requirements at a price per Common Share
equal to the market price at the time of acquisition.
Cineplex was permitted to begin purchasing Common Shares under the NCIB on or about August 26, 2024 and the
bid will terminate on August 25, 2025 or such earlier time as Cineplex completes its purchases pursuant to the bid or
provides notice of termination. Any Common Shares purchased under the NCIB will be cancelled upon their
purchase. Cineplex intends to fund the purchases out of its available cash.
In connection with the NCIB, Cineplex has established an automatic share purchase plan (the “Plan”), effective
August 26, 2024, with its designated broker that contains specified parameters regarding how its Common Shares
may be purchased under the NCIB during times when the Cineplex would ordinarily not be permitted to purchase
Common Shares due to regulatory restrictions or self-imposed blackout periods. Cineplex may elect to suspend or
discontinue its NCIB in accordance with certain conditions set forth in the Plan.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
45
Cineplex commenced the NCIB because the board of directors believes that the market price of the Common Shares
does not reflect Cineplex’s intrinsic value and the repurchase of Common Shares would be in the best interests of
Cineplex and its shareholders, and would represent an attractive and appropriate use of available funds. Decisions
regarding the amount and timing of future purchases of Common Shares will be based on market conditions, share
price and other factors.
7.4 LONG-TERM DEBT
Long-term debt consists of the following as at December 31, 2024 and December 31, 2023:
December 31, 2024
December 31, 2023
Book Value
Face Value
Book Value
Face Value
Credit Facilities
$
— $
—
$
298,000 $
298,000
Convertible Debentures - 7.75% due
March 1, 2030
161,468
216,250
—
—
Notes payable - 7.625% due March 31,
2029
575,000
575,000
—
—
Convertible Debentures - 5.75% due
September 30, 2025
—
—
272,469
316,250
Notes payable - 7.5% due February 26,
2026
—
—
246,970
250,000
Total
$
736,468 $
791,250
$
817,439 $
864,250
(i) Book value represents the carrying value of the debt component, which is the initial fair value of the instrument, plus cumulative accretion.
2024 Refinancing
On March 4, 2024, Cineplex completed a comprehensive refinancing plan (the “2024 Refinancing”) the 2024
Refinancing. The 2024 Refinancing resulted in cash fees of $21.5 million and loss on fair value of financial
instruments of $56.0 million.
Credit facilities
2024 Credit Facility
On March 4, 2024, Cineplex entered into a new credit agreement with a syndicate of banks led by Scotiabank (the
“2024 Credit Agreement”), terminating and replacing the Eighth Amended and Restated Credit Agreement in its
entirety. The 2024 Credit Agreement provides for a new $100 million “covenant-lite” revolving credit facility with a
maturity date of March 4, 2027 (the “2024 Credit Facility”).
At Cineplex’s election, borrowings under the 2024 Credit Agreement will bear interest at a floating rate based on the
Canadian dollar prime rate, U.S. Base Rate, SOFR (Secured Overnight Financing Rate) or CORRA (Canadian
Overnight Repo Rate Average) plus, in each case, an applicable margin to those rates. Borrowings are available in
either Canadian or US dollars.
The 2024 Credit Agreement does not contain financial maintenance covenants, unless borrowings utilized under the
agreement (including issued letters of credit) exceed 40% (the “Utilization Threshold”) of the total available credit
facility measured as at the end of a fiscal quarter of Cineplex. In the event that Utilization Threshold is exceeded,
Cineplex will be required to maintain a Total Leverage Ratio of not greater than 4.75 to 1 thereafter until the
borrowings drop below 40% utilization.
As a so-called “covenant-lite” credit facility, as long as the Utilization Threshold has not been exceeded, the 2024
Credit Agreement does not restrict the discretion of Cineplex’s management with respect to matters such as the
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
46
payment of dividends or making certain other payments, making investments, loans and guarantees and otherwise
being able to sell or dispose of assets. Cineplex’s ability to take such actions when the Utilization Threshold has
been exceeded require that Cineplex’s Total Leverage Ratio be less than 4.25 to 1.00, on a pro forma basis after
giving effect to such payment or transaction.
The obligations under the 2024 Credit Agreement are guaranteed jointly and severally, by Cineplex and each direct
or indirect restricted subsidiary of Cineplex , other than certain excluded immaterial subsidiaries.
This summary of the 2024 Credit Facility is qualified in its entirety by reference to the provisions of the Credit
Agreement which contains a complete statement of those terms and conditions, and was filed on SEDAR+ on March
4, 2024.
The 2024 Credit Facility is drawn upon and repaid on a regular basis and as such is presented on a net basis in the
Statement of Cash flows.
Available
Drawn
Reserved
Remaining
Revolving Facility
$
100.0 $
— $
8.0 $
92.0
At December 31, 2024, Cineplex was subject to a margin of 3.25% (2023 - 1.75%) on the prime rate and margin of
4.25% (2023 - 2.75% on bankers’ acceptances) on the CORRA advances and SOFR advances, plus a 0.25% (2023 -
0.25%) per annum fee for letters of credit issued. Cineplex pays a commitment fee on the daily unadvanced portion
of the 2024 Credit Agreement, which will vary based on the Total Leverage Ratio and was 0.85% at December 31,
2024 (2023 - 0.6875%).
Convertible debentures
Cineplex’s 7.75% convertible unsecured subordinated debentures are due March 1, 2030 (the “Convertible
Debentures”), with interest paid semi-annually on March 1 and September 1.
The Convertible Debentures are not redeemable by Cineplex prior to March 1, 2027. On or after March 1, 2027 and
prior to March 1, 2029, Cineplex may, at its option, redeem the Convertible Debentures in whole or in part from
time to time provided that the volume weighted average trading price of the share on the TSX during the 20
consecutive trading days ending on the fifth trading day preceding the date on which the notice of redemption is
given is not less than 125% of the conversion price. On or after March 1, 2029, the Convertible Debentures may be
redeemed in whole or in part from time to time at the option of Cineplex at a price equal to their principal amount
plus accrued and unpaid interest. Redemption may be in the form of cash or in the form of shares, at the option of
Cineplex.
At the holder’s option, the Convertible Debentures may be converted into shares at a conversion price of $10.29 per
share at any time prior to the close of business on the earlier of: (i) five business days prior to the Maturity Date, and
(ii) if called for redemption, five business days immediately preceding the dated fixed for redemption of the
Convertible Debentures, at a conversion price to be determined at the time of pricing. Holders who convert their
Convertible Debentures into shares will receive accrued and unpaid interest for the period from the date of the latest
interest payment date to the date of conversion. Conversion of outstanding Convertible Debentures will result in the
issuance of shares from treasury.
The foregoing is a summary of the key terms of the Convertible Debentures. This summary is qualified in its entirety
by reference to the provisions of the Convertible Debentures trust indenture which contains a complete statement of
those terms and conditions. The trust indenture for the Convertible Debentures and the Supplemental Indenture were
filed on SEDAR+ on July 15, 2020 and March 4, 2024, respectively.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
47
The fair value of the liability component of the Convertible Debentures was assessed at inception based on an
estimated market discount rate of 14.88% , and will be accreted to the full face value of $216.3 million over the term
of the Convertible Debentures. The residual value of $54.3 million ($70.2 million net of $15.9 million deferred
income taxes) was allocated to the equity component less the pro-rata portion of transaction costs as prescribed by
IFRS 9, Financial instruments and IAS 32, Financial instruments: Presentation.
The Unaccreted deferred financing fees and discount as at December 31, 2024 related to the 7.75% Convertible
Debentures due March 1, 2030 is $54.8 million.
Cineplex recorded cash interest expense on the Convertible Debentures during the quarter and year to date period of
$4.2 million (2023 - $4.6 million) and $16.8 million (2023 - $18.2 million), respectively. Cineplex recorded
accretion expense during the quarter and year to date period of $1.8 million (2023 - $5.3 million) and $10.1 million
(2023 - $20.4 million), respectively, both of which are included as part of the interest expense in the consolidated
statement of operations.
As at December 31, 2024, Cineplex has $216.25 million principal amount of Convertible Debentures outstanding.
Notes Payable
The 2021 Notes and the 2024 Notes (together, the “Notes Payable”) (as applicable) payable are as follows:
December 31, 2024
December 31, 2023
Face value of Notes Payable (i)
$
575,000
$
250,000
Unaccreted deferred financing fees and discount (ii)
—
(3,030)
Notes payable
$
575,000
$
246,970
(i) See descriptions of the 2021 Notes and the 2024 Notes below.
(ii) No accretion of the 2024 Notes is required as the notes were initially recognized at face value. The underwriter’s fees and financial asset
derivative being had equal values of $10.1 million.
Cineplex recorded cash interest expense on the Notes Payable during the quarter and year to date period of $11.0
million (2023 - $4.7 million) and $39.4 million (2023 - $18.8 million), respectively. Cineplex recorded accretion
expense during the quarter and year to date period of $0.0 (2023 - $0.3 million) and $0.4 million (2023 - $1.2
million), respectively, both of which are included as part of interest expense in the consolidated statement of
operations. As at December 31, 2024, Cineplex has $575.0 million principal amount of 2024 Notes outstanding.
Cineplex’s derivative financial instrument on the outstanding 2021 Notes and 2024 Notes, as applicable, relates to
the early prepayment option that fluctuates in value based on market interest rates. The fair value of the embedded
derivative was determined using an option pricing model with observable market inputs and are consistent with
accepted methods for valuing financial instruments. Cineplex has estimated the fair value of this embedded
derivative at $19.4 million as at December 31, 2024 (2023 - $5.6 million) which is presented on the consolidated
balance sheets as a derivative financial instrument.
2024 Notes
On March 4, 2024, in connection with the 2024 Refinancing, Cineplex closed a private placement offering of $575.0
million aggregate principal amount of 7.625% senior secured notes due March 31, 2029 (the “2024 Notes”). The
2024 Notes were issued pursuant to an indenture entered into among Cineplex and TSX Trust Company, as trustee
and collateral agent, dated March 4, 2024 (the “2024 Notes Indenture”). Interest is paid semi-annually on March 31
and July 31.
The 2024 Notes contain a number of prepayment options, and Cineplex recognized a fair value derivative asset of
$10.1 million on issuance. Issuance costs of $10.1 million resulted in the 2024 Notes being presented at face value
on the balance sheet, and no non-cash interest will be recognized.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
48
The 2024 Notes are fully and unconditionally guaranteed, jointly and severally, by Cineplex and each direct or
indirect restricted subsidiary of Cineplex that is a borrower or guarantees the obligations of Cineplex or any other
borrower under the 2024 Credit Facility.
At any time from and after January 31, 2026, Cineplex may, at its option, redeem the 2024 Notes, in whole or in
part, at the redemption prices set forth in the 2024 Notes Indenture, plus accrued and unpaid interest thereon to, but
excluding, the applicable redemption date. In addition, at any time prior to January 31, 2026, Cineplex may, at its
option, on one or more occasions, redeem up to 40% of the aggregate principal amount of the 2024 Notes at a
redemption price equal to 107.625% of the aggregate principal amount thereof redeemed plus accrued and unpaid
interest thereon to, but excluding, the applicable redemption date, with the net cash proceeds of one or more equity
offerings; provided that (a) the aggregate principal amount of the 2024 Notes outstanding immediately after the
occurrence of each such redemption is equal to not less than 60% of the original aggregate principal amount of the
2024 Notes; and (b) each such redemption occurs within 90 days of the date of closing of each such equity offering.
If Cineplex sells certain assets without applying the proceeds in a permitted manner within 365 days of receipt
thereof, Cineplex must make an offer to each holder of 2024 Notes to purchase all or a portion of its Notes at 100%
of the aggregate principal amount of the 2024 Notes so repurchased plus accrued and unpaid interest to, but not
including, the date of repurchase. If Cineplex undergoes certain change of control events, Cineplex must make an
offer to repurchase the 2024 Notes at a purchase price equal to 101% of the aggregate principal amount of the 2024
Notes so repurchased plus accrued and unpaid interest to, but not including, the date of repurchase.
If Cineplex, any guarantor or other payor is required to withhold or deduct any amount for or on account of taxes
from any payment made under or with respect to the 2024 Notes or any guarantee, as the case may be, Cineplex,
such guarantor or other payor, as applicable, will pay (together with such payment) such additional amounts as may
be necessary so that the net amount received by each holder or beneficial owner of a 2024 Note after such
withholding or deduction (including any such withholding or deduction from such additional amounts) will not be
less than the amount the holder or beneficial owner would have received if such taxes had not been withheld or
deducted (subject to certain exceptions).
In addition to the restrictions on asset sales and change of control events described above, the 2024 Notes Indenture
contains covenants that restrict, among other things, Cineplex’s ability to incur liens other than permitted liens,
make restricted payments, incur certain indebtedness and enter into certain transactions with affiliates, in each case,
subject to certain conditions.
The 2024 Notes Indenture contains customary events of default substantially similar to those set out in the trust
indenture governing the 2021 Notes, and as more specifically set out in the 2024 Notes Indenture. Upon the
occurrence of an event of default under the 2024 Notes Indenture, the trustee thereunder, acting on the instruction of
the requisite majority of holders of the 2024 Notes, and subject to the Intercreditor Agreement, would be entitled to
accelerate all amounts outstanding under the 2024 Notes and, upon such acceleration, to instruct the collateral agent
under the Intercreditor Agreement to enforce the security granted to the lenders by Cineplex and the guarantors.
Following repayment of the lenders under the 2024 Credit Facility and any other priority lien obligations under the
Intercreditor Agreement, the holders of the 2024 Notes would then be repaid from the proceeds of such security,
using all available assets. Only after such repayment and the payment of any other secured and unsecured creditors
would the holders of Common Shares receive any proceeds from the liquidation of Cineplex’s assets.
The foregoing is a summary of the key terms of the 2024 Notes. This summary is qualified in its entirety by
reference to the provisions of the 2024 Notes Indenture which contains a complete statement of those terms and
conditions. The 2024 Notes Indenture was filed on SEDAR+ on March 4, 2024.
Security and Ranking
The obligations under both the 2024 Credit Facility and the 2024 Notes are secured by charges granted in favour of
TSX Trust Company, as collateral agent, over substantially all of the personal and real property owned by Cineplex
its subsidiaries that are guarantors of such debt, other than certain excluded immaterial subsidiaries. The priorities of
the liens securing the obligations under the 2024 Credit Agreement and the 2024 Notes are governed by the terms of
a collateral agent and intercreditor agreement (the “Intercreditor Agreement”). Pursuant to the Intercreditor
Agreement and the security granted in connection therewith: (i) the 2024 Notes rank effectively junior, to the extent
of the value of the collateral, to Cineplex’s and the guarantor’s obligations under the 2024 Credit Agreement and
any other priority lien debt set out therein; (ii) rank pari passu in right of payment with all existing and future senior
indebtedness of Cineplex and the guarantors and senior in right of payment to any future subordinated indebtedness
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
49
of Cineplex and the guarantors; (iii) rank effectively senior to any existing and future unsecured obligations of
Cineplex and the guarantors to the extent of the value of the collateral securing the 2024 Notes (subject to the prior
payment of any priority lien debt including under the 2024 Credit Agreement); and (iv) are structurally subordinated
to all existing and future indebtedness, claims of holders of preferred stock and other liabilities of subsidiaries of
Cineplex that do not guarantee the 2024 Notes.
7.5 FUTURE OBLIGATIONS
At December 31, 2024, Cineplex had the following contractual or other commitments authorized by the Board
(expressed in thousands of dollars):
Payments due by period
Contractual obligations
Total
Within 1 year
2-3 years
4-5 years
After 5 years
Accounts payable and accrued liabilities
$
236,612
236,612
—
—
—
Equipment obligations
249
156
93
—
—
Deferred consideration - AMC
3,134
—
3,134
—
—
Convertible debentures
216,250
—
—
—
216,250
Convertible debentures interest
86,552
16,759
33,519
33,565
2,709
Notes payable
575,000
—
—
575,000
—
Notes payable interest
186,307
43,844
87,688
54,775
—
Total contractual obligations
$
1,304,104 $
297,371 $
124,434 $
663,340 $
218,959
The following table discloses the undiscounted cash flow for lease obligations as of December 31, 2024:
Less than one year
$
174,535
One to five years
668,592
More than five years
688,770
Total undiscounted lease obligations
$
1,531,897
Cineplex has aggregate gross capital commitments of $12.5 million ($10.4 million net of tenant inducements)
related to the completion of construction of one location-based entertainment location and other premium
experiences.
Management will continue to assess its future capital spending taking into consideration its legal commitments, and
requirements of the business on a short and long-term basis and believes that it has adequate liquidity to fund
operations.
Cineplex conducts a significant part of its operations in leased premises. Cineplex’s leases generally provide for
minimum rent and a number of the leases also include percentage rent based primarily upon sales volume.
Cineplex’s leases may also include escalation clauses, guarantees and certain other restrictions, and generally require
it to pay a portion of the real estate taxes and other property operating expenses. Initial lease terms generally range
from 15 to 20 years and contain various renewal options, generally in intervals of five to ten years.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
50
8. ADJUSTED FREE CASH FLOW AND DIVIDENDS (see Section 17, Non-GAAP and other financial
measures)
8.1 ADJUSTED FREE CASH FLOW
The following table illustrates adjusted free cash flow per share for the three months and year ended December 31,
2024 and 2023 and measures relevant to the discussion of adjusted free cash flow per share (expressed in thousands
of dollars except shares outstanding):
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Cash flows provided by operating activities from continuing
operations
$
105,754 $
83,385
26.8 % $
159,079 $
196,094
-18.9 %
Net income (loss) from continuing operations (ii)
$
3,332 $
(12,102)
NM $ (105,684) $
138,051
NM
Standardized free cash flow (i)
$
83,168 $
64,790
28.4 % $
99,957 $
143,617
-30.4 %
Adjusted free cash flow (i)
$
20,267 $
(1,047)
NM $
(7,150) $
83,691
NM
Average number of shares outstanding
63,324,212 63,477,036
-0.2 % 63,585,187 63,401,529
0.3 %
Adjusted free cash flow per share (i)
$
0.320 $
(0.016)
NM $
(0.112) $
1.320
NM
(i) Represents a non-GAAP financial measure. See Section 17, Non-GAAP and other financial measures.
(ii) 2024 includes the loss on the 2024 Refinancing of $nil during the fourth quarter and $56.0 million for full year, and expenses related to
other transactions or litigation outside the normal course of business in the amount of $nil during the fourth quarter (2023 - $0.6 million) and
$2.5 million (2023 - $3.4 million) for full year. The full year includes the $39.2 million provision for the Competition Tribunal’s
administrative monetary penalty.
Adjusted free cash flow per share increased during the fourth quarter due to working capital movements.
8.2 DIVIDENDS
Cineplex’s dividend policy is subject to the discretion of the Board and may vary depending on, among other things,
Cineplex’s results of operations, cash requirements, financial condition, contractual restrictions, business
opportunities, provisions of applicable law and other factors that the Board may deem relevant. Cineplex does not
expect to return to paying dividends until liquidity has improved and a target leverage ratio of 2.5x to 3.0x is
achieved. Cineplex hereby currently designates all dividends paid or deemed to be paid as “eligible dividends” for
purposes of subsection 89(14) of the Income Tax Act (Canada), and similar provincial and territorial legislation,
unless indicated otherwise. Cineplex has not paid any dividends after the dividend that was paid on February 28,
2020.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
51
9. SHARE ACTIVITY
Share capital balances at December 31, 2024 and 2023 and transactions during the periods are as follows: (expressed
in thousands of dollars except share amounts):
Shares
Amount
Number of Common Shares
issued and outstanding
Share capital
Balance - December 31, 2023
63,684,281 $
856,696
Issuance of shares on exercise of options
50,863
491
Issuance of shares on settlement of RSU/PSU units
308,141
4,960
Shares repurchased and cancelled under the normal course issuer bid
(620,275)
(8,480)
Balance - December 31, 2024
63,423,010 $
853,667
Shares
Amount
Number of Common Shares
issued and outstanding
Share capital
Balance - December 31, 2022
63,375,400 $
852,697
Issuance of shares on exercise of options
1,566
44
Issuance of shares on settlement of RSU/PSU units
307,315
3,955
Balance - December 31, 2023
63,684,281 $
856,696
Omnibus Incentive Plan
On November 12, 2020, Cineplex’s board of directors approved an Omnibus Incentive Plan (the “Incentive Plan”).
This plan supersedes the former incentive plans (collectively, the “Legacy Plan”) that included Options,
Performance Share Units (“PSUs”) and Restricted Share Units (“RSUs”). All employees and consultants are eligible
to participate in the Incentive Plan. The Incentive Plan consists of stock options, RSUs and PSUs. Awards of RSUs
and PSUs granted during a service year will be subject to a service period as determined by management at the time
of issuance. The aggregate number of Common Shares that may be issued under the Incentive Plan is 3,170,875
provided that no more than 387,989 Common Shares may be issued in aggregate pursuant to the settlement of RSUs
and PSUs. Common Shares underlying options that were issued under the Legacy Plan and are subsequently
cancelled will be available to be issued under the Incentive Plan. The base share equivalents granted as RSU and
PSU awards attract compounding notional dividends at the same rate as outstanding shares, which are notionally re-
invested as additional base share equivalents. PSU and RSU awards may be settled in Common Shares issued from
treasury, cash, or a mix of Common Shares and cash, at Cineplex’s option at the time of settlement. Awards
outstanding under prior plans shall remain in full force and effect under the prior plans according to their respective
terms. Under the prior plans, the effects of changes in estimates of performance results are recognized in the year of
change. As at December 31, 2024, 510,419 (2023 - 787,113) Common Shares are available to be issued under the
Incentive Plan.
Stock Options
Stock options issued under the Incentive Plan will be administered by Cineplex’s board of directors which will
establish the exercise price at the time each option is granted, which in all cases will not be less than the market price
on the grant date. All of the options must be exercised over specified periods not to exceed ten years from the date
granted. Options issued under the Incentive Plan may be exercised for cash or on a cashless basis, both of which
result in the issuance of Common Shares from treasury. Options granted will be accounted for as equity-settled.
Cineplex recognized employee benefits expense of $1.5 million with respect to options during the year ended
December 31, 2024 (2023 - $1.3 million). The intrinsic value of vested share options at December 31, 2024 is $2.5
million based on the closing price of $12.20 per share.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
52
A summary of option activities for the year ended December 31, 2024 and 2023 is as follows:
2024
2023
Weighted
average
remaining
contractual life
(years)
Number of
underlying
shares
Weighted
average
exercise price
Number of
underlying
shares
Weighted
average
exercise price
Options outstanding - January 1
6.71
2,360,605 $
16.51
2,102,818
18.90
Granted
641,553
8.03
461,786
8.71
Exercised
(157,460)
8.31
(13,877)
8.25
Forfeited
(108,829)
16.37
(190,122)
24.65
Options outstanding – December 31
6.54
2,735,869 $
15.00
2,360,605 $
16.51
Options vested and exercisable
1,597,348
1,485,796
Upon cashless exercises, the options exercised in excess of Common Shares issued are cancelled and returned to the
pool available for future grants. At December 31, 2024, 813,258 options (2023 - 1,239,385) are available for grant.
RSU and PSU awards
PSU share
equivalents
granted
RSU share
equivalents
granted
PSU share
equivalents
minimum payout
PSU share
equivalents
maximum payout
2024 LTIP awards granted in Q1 2024
381,265
541,347
—
762,530
2023 LTIP awards granted in Q1 2023
307,551
477,254
—
615,102
2022 LTIP awards granted in Q1 2022
177,973
284,661
—
355,946
The RSU and PSU awards issued will vest in the third quarter of 2026. The RSU and PSU awards granted in 2022
and 2023 will be equity settled. The unvested value of the awards is reflected in contributed surplus.
RSU
During the first quarter of 2024, Cineplex issued 541,347 cash settled RSUs with a fair value $8.03 per unit (total
fair value of $4,347 on issuance) and 381,265 cash settled PSUs with a fair value of $8.03 per unit (total fair value
of $3,062 on issuance). The fair value was initially assessed based on Cineplex’s closing Common Share price on
the grant date, and fluctuates with the Common Share price at each balance sheet date. The value of the award is
reflected in non-current share-based compensation liability on the balance sheet.
A summary of RSU activities during the years ended December 31, 2024 and 2023 is as follows:
2024
2023
RSUs outstanding, January 1
709,517
565,278
Granted
541,347
477,254
Settled
(265,967)
(250,563)
Forfeited
(265,967)
(82,452)
RSUs outstanding, December 31
718,930
709,517
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Management’s Discussion and Analysis
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PSU
During the first quarter of 2024, Cineplex issued 381,265 equity settled PSUs with a fair value of $8.03 per unit
(total fair value of $3.1 million on issuance). The fair value was assessed based on Cineplex’s closing Common
Share price on the grant date. The PSU awards issued will vest in the fourth quarter of 2026. Compensation expense
is recorded based on the number of units expected to vest, the current market price of Cineplex’s Common Shares,
and the application of a performance multiplier that ranges from a minimum of zero to a maximum of two.
Performance multipliers are developed based on Total Shareholder Return percentile rank relative to a select peer
group and composite group. Participants will receive one fully paid Common Share issued from treasury that can
vary depending on the achievement of established performance targets. Performance conditions are reflected in
Cineplex’s estimate of the grant-date fair value for equity instruments granted.
A summary of PSU activities during the years ended December 31, 2024 and 2023 is as follows:
2024
2023
PSUs outstanding, January 1
468,885
331,532
Granted
381,265
307,551
Settled
(104,471)
(96,018)
Forfeited
(72,277)
(74,180)
PSUs outstanding, December 31
673,402
468,885
Incentive Plan costs are estimated at the grant date based on expected performance results then accrued and
recognized on a graded basis over the vesting period. Forfeitures are estimated to be nominal, based on historical
forfeiture rates. Cineplex recognized compensation expense of $7.4 million for the year ended December 31, 2024
(2023 - $4.9 million) under the Incentive Plan relating to RSU and PSU awards. At December 31, 2024, $4.7 million
(2023 - $0) was included in share-based compensation liability and $3.2 million in contributed surplus (2023 - $5.4
million).
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Management’s Discussion and Analysis
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Deferred equity units
Members of Cineplex’s board of directors and certain officers of Cineplex may elect to defer a portion of their
compensation in the form of deferred equity units. Cineplex recognized compensation expense of $2.5 million for
the year ended December 31, 2024 (2023 - $0.1 million) associated with the deferred equity units. At December 31,
2024, $8.0 million (2023 - $4.5 million) was included in share-based compensation liability.
10. SEASONALITY AND QUARTERLY RESULTS
Historically, Cineplex’s revenues have been seasonal, coinciding with the timing of major film releases as the most
marketable motion pictures were traditionally released during the summer and holiday seasons in Canada. This
caused changes from quarter to quarter in theatre attendance, affecting theatre exhibition and Cinema Media
revenues and operating cash flows. The seasonality of theatre attendance has become less pronounced as film
studios have trended to releasing content more evenly throughout the year, but the unexpected emergence of a hit
film can impact seasonality results. The timing, quantity, and quality of film releases can have a significant impact
on Cineplex’s results of operations, and the results of one period are not necessarily indicative of future results.
Cineplex’s diversification into other businesses such as digital media and location-based entertainment, which are
not dependent on motion picture content, has contributed to reduce the impact of this seasonality on Cineplex’s
consolidated results. To meet working capital requirements during lower revenue quarters, Cineplex can draw upon
the 2024 Credit Facility, which had nil drawn at December 31, 2024 and had cash on hand of $83.9 million available
as of December 31, 2024, subject to restrictions described above (Section 7.4, Long-term debt).
Cineplex Inc.
Management’s Discussion and Analysis
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Summary of Quarterly Results (in thousands of dollars except per share, per patron, theatre attendance and theatre
location and screen data, unless otherwise noted):
2024
2023
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
(Section
1) (iv)
(Section
1) (iv)
(Section
1) (iv)
Revenues
Box office revenues
$ 147,728
$ 174,884
$ 114,478
$ 125,061
$ 123,841
$ 188,233
$ 164,491
$ 123,338
Food service revenues
120,309
143,259
96,658
101,826
104,453
146,228
131,392
101,076
Media revenues
51,924
31,421
29,136
22,350
41,302
28,957
26,100
22,296
Amusement revenues
22,448
23,926
20,541
25,776
22,502
26,158
21,686
26,161
Other revenues
20,334
22,110
16,523
19,746
22,980
24,964
24,252
18,484
362,743
395,600
277,336
294,759
315,078
414,540
367,921
291,355
Expenses
Film cost
78,628
100,175
60,296
64,827
65,357
101,510
90,471
66,074
Cost of food service
27,088
33,294
23,240
24,504
25,786
33,220
30,744
24,237
Depreciation - right-of-use assets
22,467
23,303
23,919
24,471
22,259
21,894
21,971
21,533
Depreciation and amortization - other
20,439
20,491
21,064
21,795
21,819
21,959
22,230
22,873
Loss (gain) on disposal of assets
218
836
(8,315)
(391)
1,553
128
336
893
Other costs
169,748
173,366
151,742
158,072
156,394
162,885
158,431
147,061
318,588
351,465
271,946
293,278
293,168
341,596
324,183
282,671
Subtotal
$
44,155
$ 44,135
$ 5,390
$ 1,481
$ 21,910
$ 72,944
$ 43,738
$ 8,684
Adjusted EBITDA (i)
$
84,749
$ 89,969
$ 42,472
$ 46,735
$ 65,902
$ 116,448
$ 87,893
$ 52,719
Adjusted EBITDAaL (i)
$
40,275
$ 47,482
$
925
$ 4,585
$ 24,178
$ 74,614
$ 47,194
$ 11,377
Net income (loss) from continuing
operations
$
3,332
$ (24,734)
$ (21,312)
$ (62,970)
$ (12,102)
$ 24,467
$ 158,863
$ (33,177)
Net (loss) income from discontinued
operations, including gain on
disposition
—
—
(127)
68,130
3,148
5,279
17,682
3,004
Net income (loss) (iii)
$
3,332
$ (24,734)
$ (21,439)
$ 5,160
$ (8,954)
$ 29,746
$ 176,545
$ (30,173)
Earnings (loss) per share from continuing
operations - basic
$
0.05
$ (0.39)
$ (0.33)
$ (0.99)
$ (0.19)
$
0.39
$
2.51
$ (0.52)
Earnings per share from discontinued
operations - basic
$
—
$
—
$
—
$
1.07
$
0.05
$
0.08
$
0.28
$
0.04
Earnings (loss) per share - basic
$
0.05
$ (0.39)
$ (0.33)
$
0.08
$ (0.14)
$
0.47
$
2.79
$ (0.48)
Earnings (loss) per share from continuing
operations - diluted
$
0.05
$ (0.39)
$ (0.33)
$ (0.99)
$ (0.19)
$
0.34
$
1.80
$ (0.52)
Earnings per share from discontinued
operations - diluted
$
—
$
—
$
—
$
1.07
$
0.05
$
0.06
$
0.19
$
0.04
Earnings (loss) per share - diluted
$
0.05
$ (0.39)
$ (0.33)
$
0.08
$ (0.14)
$
0.40
$
1.99
$ (0.48)
Cash provided by (used in) operating
activities from continuing operations
$ 105,754
$ 16,374
$
997
$ 35,954
$ 83,385
$ 36,646
$ 82,722
$ (7,065)
Cash used in investing activities from
continuing operations
(24,129)
(15,552)
(12,917)
(15,758)
(19,331)
(8,786)
(16,732)
(17,526)
Cash (used in) provided by financing
activities from continuing operations
(29,722)
(25,704)
(23,573)
(105,807)
(27,790)
(53,916)
(50,796)
2,513
Effect of exchange rate differences on
cash from continuing operations
176
(37)
39
55
(68)
64
(49)
34
Net change in cash from continuing
operations
$
52,079
$ (24,919)
$ (35,454)
$ (85,556)
$ 36,196
$ (25,992)
$ 15,145
$ (22,044)
Cash flows (used in) provided by
discontinued operations
$
—
$
—
$
(127)
$ 141,182
$ (18,562)
$ 5,029
$ 5,151
$ 7,069
BPP (ii)
$
13.26
$ 13.19
$ 13.11
$ 12.74
$ 12.90
$ 12.00
$ 12.84
$ 12.63
CPP (ii)
$
9.41
$
9.85
$
9.56
$
8.95
$
9.28
$
8.44
$
9.21
$
8.85
Film cost percentage (ii)
53.2 %
57.3 %
52.7 %
51.8 %
52.8 %
53.9 %
55.0 %
53.6 %
Theatre attendance (in thousands of
patrons) (ii)
11,141
13,255
8,731
9.819
9,599
15,690
12,806
9,767
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Management’s Discussion and Analysis
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Theatre locations (at period end)
156
155
156
158
155
155
156
158
Theatre screens (at period end)
1,617
1,612
1,618
1,631
1,612
1,612
1,618
1,631
(i) Represents a non-GAAP financial measure. See Section 17, Non-GAAP and other financial measures.
(ii) Represents a supplementary financial measure. See Section 17, Non-GAAP and other financial measures.
(iii) 2024 includes the loss on the 2024 Refinancing of $nil during the fourth quarter and $56.0 million for full year, and expenses related to other
transactions or litigation outside the normal course of business in the amount of $nil during the fourth quarter (2023 - $0.6 million) and $2.5 million
(2023 - $3.4 million) for full year. The full year also includes the $39.2 million provision for the Competition Tribunal’s administrative monetary
penalty.
(iv) The results of discontinued operations (P1AG) have been excluded from prior period figures as applicable per IFRS 5 to conform to current
period presentation. All amounts are from continuing operations unless noted. See Section 13, Accounting policies.
Summary of adjusted free cash flow by quarter
Management calculates adjusted free cash flow per share as follows (see Section 17, Non-GAAP and other financial
measures, for a discussion of adjusted free cash flow) (in thousands of dollars except per share data and number of
shares outstanding):
2024
2023
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
(Section
1) (iii)
(Section
1) (iii)
(Section
1) (iii)
Cash provided by (used in) operating
activities
$ 105,754 $
16,374 $
997 $
35,954 $
83,385 $
36,646 $
82,722 $
(7,065)
Less: Total capital expenditures net of
proceeds on sale of assets
(22,586)
(14,135)
(7,847)
(14,554)
(18,595)
(6,897)
(12,181)
(14,804)
Standardized free cash flow
83,168
2,239
(6,850)
21,400
64,790
29,749
70,541
(21,869)
Add/(Less):
Changes in operating assets and liabilities
(50,952)
40,150
11,614
(32,244)
(47,152)
51,380
(22,646)
29,770
Changes in operating assets and liabilities
of joint ventures
(82)
(27)
(37)
(92)
(732)
229
(415)
754
Provision for Competition Tribunal’s
administrative monetary penalty
—
(39,215)
—
—
—
—
—
—
Principal component of lease obligations
(25,127)
(23,663)
(23,573)
(25,769)
(24,135)
(24,916)
(24,796)
(26,487)
Principal portion of cash rent paid not
pertaining to current period
(410)
(409)
(410)
1,237
(398)
(397)
(398)
1,201
Growth capital expenditures and other
16,200
11,358
5,706
12,300
8,220
4,198
8,279
12,277
Share of income of joint ventures, net of
non-cash depreciation
(2,530)
1,204
414
(621)
(1,640)
(476)
(382)
(1,264)
Financing fees
—
—
87
17,784
—
—
—
406
Adjusted free cash flow (i)
$
20,267 $
(8,363) $ (13,049) $
(6,005) $
(1,047) $
59,767 $
30,183 $
(5,212)
Average number of shares outstanding
63,324,212 63,652,129 63,684,281 63,684,281 63,477,036 63,376,721 63,376,043 63,375,471
Adjusted free cash flow per share (ii)
$
0.320 $
(0.131) $
(0.205) $
(0.094) $
(0.016) $
0.943 $
0.476 $
(0.082)
(i) Represents a non-GAAP financial measure. See Section 17, Non-GAAP and other financial measures.
(ii) Represents a non-GAAP ratio. See Section 17, Non-GAAP and other financial measures.
(iii) The results of discontinued operations (P1AG) have been excluded from prior period figures as applicable per IFRS 5 to conform to current
period presentation. All amounts are from continuing operations unless noted. See Section 13, Accounting policies.
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11. RELATED PARTY TRANSACTIONS
Cineplex may have transactions in the normal course of business with entities whose management, directors or
trustees are also directors of Cineplex. Any such transactions are in the normal course of operations and are
measured at market-based exchange amounts. Unless otherwise noted, these transactions are not considered related
party transactions for financial statement purposes.
12. MATERIAL ACCOUNTING JUDGMENTS AND ESTIMATION UNCERTAINTIES
Cineplex makes estimates and assumptions concerning the future that may not equal actual results. The following
are the estimates and judgments applied by management that most material impact Cineplex’s consolidated financial
statements. These estimates and judgments have a risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year.
Goodwill and long lived assets - recoverable amount
Cineplex tests at least annually whether goodwill suffered any impairment. Assessment of impairment for long-lived
assets, including property, equipment, leaseholds, right-of-use assets, intangible assets and goodwill is performed as
specific events or circumstances dictate triggering events and changes in circumstances indicate that the carrying
amount of the asset group may not be fully recoverable. Management makes assumptions and estimates in
determining the recoverable amount of its long lived assets and groups of CGUs’ goodwill, including significant key
assumptions relating to attendance and the related revenue growth rates and discount rates. Further, other
assumptions are required pertaining to variable and fixed cash flows, and operating margins.
At the end of each future reporting period Cineplex will assess whether there are indications that the impairment loss
recognized for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists,
Cineplex will estimate the recoverable amount of that asset and may reverse previously recorded impairment.
Revenue recognition - gift cards and prepaid certificates
Management estimates the value of gift cards that are not expected to be redeemed by customers, based on the terms
of the gift cards and historical redemption patterns, including industry data. The estimates are reviewed annually, or
when evidence indicates the existing estimate is not valid.
Income taxes
The timing of reversal of timing differences and the expected income allocation to various tax jurisdictions within
Canada affect the effective income tax rate used to compute the deferred income tax asset. During the second quarter
of 2023, Cineplex assessed the recoverability of net deferred income tax assets and determined that the continued
strong return to profitability provided a reasonable expectation that previously derecognized net deferred income tax
assets will be utilized to offset future periods of taxable income, resulting in income taxes recovery of approximately
$150.2 million. In addition, management occasionally estimates the current or future deductibility of certain
expenditures, affecting current or deferred income tax balances and expenses.
Lease terms
Some leases of property contain extension options exercisable by Cineplex up to one year before the end of the non-
cancellable contract period. Where practicable, Cineplex seeks to include extension options in new leases to provide
operational flexibility. In determining the lease term, Cineplex considers all facts and circumstances that create an
economic incentive to exercise an extension option, or not exercise a termination option. The assessment is reviewed
upon a trigger by a significant event or a significant change in circumstances.
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13. ACCOUNTING POLICIES
Basis of preparation and measurement
Management of Cineplex reviews all changes to the IFRS when issued. The International Accounting Standards
Board (“IASB”) has published a number of amendments to existing accounting standards effective for years
beginning on or after January 1, 2024. The following amendments have been adopted or are being evaluated by
Cineplex:
IAS 1, Classification of liabilities as current or non-current
In December 2020 the IASB issued classification of liabilities as current or non-current (2020 amendments). The
2020 amendments clarified aspects of how entities classify liabilities as current or non-current. The amendments are
effective for annual reporting periods beginning on or after January 1, 2024, with earlier application permitted.
Cineplex has determined that the changes have no material impact on Cineplex’s interim condensed consolidated
financial statements.
IFRS 16, Lease Liability in a Sale and Leaseback
In September 2022, the IASB issued amendments to IFRS 16, Leases relating to sale leaseback transactions for
seller-lessees. The amendment adds a requirement that measuring lease payments or revised lease payments shall not
result in the recognition of a gain or loss that relates to the right-of-use asset retained by the seller-lessee. The
amendments are effective for annual reporting periods beginning on or after January 1, 2024. Cineplex assessed the
impact of the amendments and determined there to be no material impact on the consolidated financial statements.
IAS 7, Supplier Finance Arrangements
In May 2023, the IASB issued amendments to IAS 7, Statement of Cash Flows and IFRS 7, Financial Instruments:
Disclosures. The amendments add requirements to disclose information that allows users to assess how supplier
finance arrangements affect an entity’s liabilities, cash flows, and exposure to liquidity risk. The amendments are
effective for annual reporting periods beginning on or after January 1, 2024. Cineplex assessed the impact of the
amendments and determined there to be no material impact on the consolidated financial statements.
IFRS 8, Disclosure of Revenues and Expenses for Reportable Segments
In July 2024, the IASB approved an Interpretations Committee agenda decision in relation to segment reporting. The
decision deals with specified items of revenue and expenses that need to be disclosed for each reportable segment.
As a result of this agenda decision Cineplex made updates to the expenses disclosed for each reportable segment.
IAS 21, Lack of Exchangeability
In August 2023, the IASB issued amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates in
relation to Lack of Exchangeability. The amendments require entities to apply a consistent approach in assessing
whether a currency can be exchanged into another currency and in determining the exchange rate to use and the
disclosures to provide when it cannot. These amendments are effective for annual reporting periods beginning on or
after January 1, 2025, with early adoption permitted. Cineplex assessed the impact of the amendments and
determined there to be no material impact on the consolidated financial statements.
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IFRS 9, Classification and Measurement of Financial Instruments
In May 2024, the IASB issued amendments to IFRS 9, Financial Instruments and IFRS 7, Financial Instruments:
Disclosures. The amendments relate to settling financial liabilities using an electronic payment system and assessing
contractual cash flow characteristics of financial assets, including those with Environmental, Social, and Governance
(ESG)-linked features. The IASB also amended disclosure requirements relating to investments in equity
instruments designated at FVOCI and added disclosure requirements for financial instruments with contingent
features. The amendments are effective for annual periods beginning on or after January 1, 2026, with early adoption
permitted. Cineplex is assessing the impacts to the consolidated financial statements.
IFRS 18, Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued the new standard IFRS 18, Presentation and Disclosure in Financial Statements that
will replace IAS 1, Presentation of Financial Statements. The new standard introduces newly defined subtotals on
the income statement, requirements for aggregation and disaggregation of information, and disclosure of
Management Performance Measures (MPMs) in the financial statements. The new standard is effective for annual
reporting periods beginning on or after January 1, 2027, with early adoption permitted. Cineplex is assessing the
impacts to the consolidated financial statements.
14. RISKS AND UNCERTAINTIES
Cineplex is exposed to a number of risks and uncertainties in the normal course of business that have the potential to
affect operating performance. Cineplex has operating and risk management strategies and insurance programs to
help minimize these operating risks and uncertainties. In addition, Cineplex has entity level controls and governance
procedures including a corporate code of business conduct and ethics, whistle blowing procedures, clearly
articulated corporate values and detailed policies outlining the delegation of authority within Cineplex.
Cineplex conducts an annual enterprise risk management assessment which is overseen by Cineplex’s executive
management team and the Audit Committee, and is reported to the Board. The enterprise risk management
framework sets out principles and tools for identifying, evaluating, prioritizing and managing risk effectively and
consistently across Cineplex. On an annual basis, all members of senior management participate in a detailed review
of enterprise risk in four major categories: environment risks, process risks, information risks and business unit
risks. The results of such analysis are presented to the Audit Committee for its review and then reviewed with the
whole of the Board. In addition, Cineplex monitors risks and changing economic conditions on an ongoing basis and
adapts its operating strategies as required.
This section describes the principal risks and uncertainties that could have a material adverse effect on Cineplex’s
business and financial results. The risks and uncertainties described below are not the only risks that may impact
Cineplex’s business. Additional risks not currently known to Cineplex or that management currently believes are
immaterial may also have a material adverse effect on future business and operations. Any discussion about risks
should be read in conjunction with “Forward-Looking Statements”.
Competition Bureau’s Allegation that Cineplex’s Online Booking Fee constitutes Misleading Advertising and Drip
Pricing
On May 18, 2023, the Competition Bureau filed a Notice of Application, commencing legal action against Cineplex,
alleging that Cineplex’s online booking fee was misleading and constituted “drip pricing”. The Competition Bureau
did not contest Cineplex’s right to charge the online booking fee; it is only contesting the manner in which the online
booking fee is presented to consumers.
The trial of this matter was held in February, 2024, and on September 23, 2024, the Competition Tribunal issued a
decision in the Competition’ Bureau’s favour, ordering Cineplex to pay an administrative penalty of $39.0 million
plus certain legal and other costs.
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On September 23, 2024, Cineplex announced its intention to appeal the Tribunal’s decision to the Federal Court of
Appeal. Cineplex plans to mount a vigorous defence that the manner in which it presented the online booking fee
fully complied with the letter and spirit of the law.
On October 23, 2024, Cineplex filed its Notice of Appeal with the Federal Court of Appeal and, with the
Competition Bureau’s consent, was granted a stay regarding payment of the administrative monetary penalty,
pending the Federal Court of Appeal’s decision.
Class Action Lawsuits regarding Cineplex’s Online Booking Fee
In January, 2024, class-action lawsuits were initiated in British Columbia and Quebec with respect to Cineplex’s
online booking fee. Both lawsuits allege that the online booking fee is misleading and constitutes “drip pricing”.
The lawsuits seek to include all Canadians who purchased a Cineplex movie ticket and were charged an online
booking fee.
Both lawsuits are in their preliminary stages and have not yet received the necessary judicial authorization for them
to proceed in their respective jurisdictions.
Cineplex believes that these matters will not have a material adverse effect on its operating results, financial
position, or cash flows, and no amount has been accrued in Cineplex’s consolidated financial statements as at
December 31, 2024.
The online booking fee revenue continues to be recognized. Cineplex has recognized approximately $61.0 million in
online booking fee revenues since inception through December 31, 2024.
General Economic Conditions
Entertainment companies compete for guests’ entertainment time and spending, and as such can be sensitive to
global, national or regional economic conditions and any changes in the economy may either adversely influence
these revenues in times of an economic downturn or positively influence these revenue streams should economic
conditions improve. Historical data shows that movie theatre attendance has not been negatively affected by
economic downturns over the past 25 years.
Business Continuity Risk
Cineplex’s primary sources of revenues are derived from providing an out-of-home entertainment experience.
Business results could be significantly impacted by a terrorist threat, severe weather incidents, or general fear of
community gatherings that may cause people to stay away from public places including movie theatres, malls and
amusement and leisure locations. Cineplex operates in locations throughout Canada which mitigates the risk to a
specific location or locations. Cineplex has procedures to manage such events should they occur. These procedures
identify risks, prioritize key services, plan for large staff absences and clarify communication and public relations
processes. However, should there be a large-scale threat or occurrence, it is uncertain to what extent Cineplex could
mitigate this risk and the costs that may be associated with any such crises. Further, Cineplex purchases insurance
coverage from third-party insurance companies to cover certain operational risks, and is self-insured for other
matters.
Customer Risk
In its consumer-facing entertainment businesses, Cineplex competes for the leisure time and disposable income of
all potential customers. All other forms of entertainment are substantial competitors to the movie-going experience
including home and online consumption of content, sporting events, streaming services, gaming, live music
concerts, live theatre, other entertainment venues and restaurants. Cineplex aims to deliver value to its guests
through a wide variety of entertainment experiences and price points. Significant price increases may deter
consumer spending on entertainment options to other alternatives which will negatively impact Cineplex’s business
operations. Cineplex monitors pricing in all markets to ensure that it offers a reasonably priced out-of-home
experience compared to other entertainment alternatives. If Cineplex is too aggressive in raising ticket prices or
concession prices, there may be an adverse effect on theatre attendance and food service revenues.
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To mitigate this risk, Cineplex offers CineClub membership, providing members with benefits accessible across
Cineplex’s businesses nationwide including Cineplex theatres, and LBE venues. Cineplex also offers the Scene+
loyalty program, which rewards guests for their patronage with special offers as well as the ability to earn and
redeem points. Cineplex monitors customer needs to try and ensure that its entertainment experiences meet the
anticipated needs of key demographic groups. Cineplex is differentiating the movie-going experience by providing
premium alternatives such as UltraAVX, IMAX, VIP, 4DX, ScreenX, Cineplex Clubhouse and D-BOX seating.
Cineplex also includes XSCAPE Entertainment Centres in select theatres and provides alternative programming
which appeals to specific demographic groups.
Cineplex continues to improve the quality of its theatre assets through ongoing renovations and theatre recliner
retrofits. If Cineplex does not consistently meet or exceed customer expectations due to poor customer service or
poor quality of assets, movie theatre attendance may be adversely affected. Cineplex monitors customer satisfaction
through surveys and focus groups and maintains a guest services department to address customer concerns. Guest
satisfaction is tied to performance measures, ensuring alignment between corporate and operational objectives.
There is the potential for misinformation to be spread virally through social media relating to Cineplex’s assets as
well as the quality of its customer service. In response to this risk, Cineplex monitors commentary on social media
in order to respond quickly to potential social media misinformation or service issues.
Regarding its Cinema media sales, certain of Cineplex’s media customers have signed contracts of finite lengths or
that allow for early termination. There is a risk that these customers could choose not to renew these contracts at
their maturity, or take steps to terminate them prior to maturity, which would have adverse effects on Cineplex’s
media revenues.
In its digital place-based media and amusement solutions businesses, Cineplex engages with multiple businesses
where it provides products and services. These arrangements include the risk that businesses could decide to source
the same products or similar services from a competitor, delay the timing of contract fulfillment or curtail spending
due to economic conditions, which would have a negative impact on Cineplex’s results.
Film Entertainment and Content Risk
Cineplex’s ability to operate successfully depends upon the availability, diversity and appeal of filmed content, the
ability of Cineplex to license films and the performance of these films in Cineplex’s markets. Cineplex primarily
licenses first-run films, the success of which is dependent upon their quality, as well as on the marketing efforts of
film studios and distributors. To mitigate this risk, Cineplex continues to diversify its entertainment offerings.
Nonetheless, Cineplex is highly dependent on film product and film performance, including the number and success
of blockbuster films. A reduction in quality or quantity of film product, any disruption or delay in the production or
release of films, the introduction of new delivery platforms for first run product, a strike or threat of a strike in film
production, a reduction in the marketing efforts of film studios and distributors or a significant change in film
release patterns, would have a negative effect on movie theatre attendance and adversely affect Cineplex’s business
and results of operations.
As a result of marketing and production delays related to the impact of the writers’ and actors’ strikes in 2023, the
strike affected the distribution of film content into 2024. While agreements are now in place, Cineplex cannot
predict the impact of future labour disputes.
The evolving streaming landscape has seen studios and other producers experiment with a reduced theatrical
window, premium video on demand (“PVOD”) and redirection of a limited number of theatrical releases to
streaming services. Certain film studios have also launched their own streaming services resulting in a change in
release strategies, but distributors and industry observers have increasingly expressed their support of a reasonable
theatrical window to drive maximum value from films.
Cineplex’s box office revenues depend upon movie production and its relationships with film distributors, including
a number of major Hollywood and Canadian distributors. In 2024, five major film distributors accounted for
approximately 79% of Cineplex’s box office revenues, which is consistent with industry standards. Deterioration in
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Cineplex’s relationships with any of the major film distributors or an increase in studio concentration or
consolidation could affect its ability to negotiate film licenses on favourable terms or its ability to obtain
commercially successful films. Cineplex actively works on maintaining good relations with these distributors, as this
affects its ability to negotiate commercially favourable licensing terms for first-run films or to obtain licenses at all.
In addition, a change in the type and breadth of movies offered by studios may adversely affect the demographic
base of moviegoers, resulting in an increased dependence on international content.
Cineplex competes with other consumption platforms, including cable, satellite, internet television, as well as
TVOD, subscription video-on-demand (“SVOD”) and other over the top operators via the Internet. The release date
of a film in other channels of distribution such as over the top internet streaming, pay television and SVOD is at the
discretion of each distributor and day and date release or earlier release windows for these or new alternative
channels including PVOD models could have a negative impact on Cineplex’s business.
Exhibition Industry Risk
Cineplex operates in each of its local markets with other forms of entertainment, as well as in some of its markets
with national and regional film exhibition circuits and independent film exhibitors. In respect of other film
exhibitors, Cineplex primarily competes with respect to film licensing, attracting guests and acquiring and
developing new theatre sites and acquiring existing theatres. Movie-goers are generally not brand conscious and
usually choose a theatre based on its location, the films showing, show-times available and the theatre’s amenities.
As a result, the building of new theatres, renovations or upgrades to existing theatres, or the addition of screens to
existing theatres by competitors in areas in which Cineplex operates theatres may result in reduced theatre
attendance levels at Cineplex’s theatres.
In response to this risk, management continually reviews and upgrades its existing locations. Cineplex also fosters
strong ties with the real estate and development communities and monitors potential development sites. Most prime
locations in larger markets have been developed such that significant further development would be generally
uneconomical. In addition, the exhibition industry is capital intensive with high operating costs and long-term
contractual commitments. Significant increases in construction and real estate costs could make it increasingly
difficult to develop new sites profitably.
In response to risks to theatre attendance, Cineplex continues to pursue other revenue opportunities including media
in the form of in-theatre and out-of-home advertising, and alternative uses of its theatres during non-peak hours.
Amusement revenues include, in-theatre gaming locations, XSCAPE Entertainment Centres, entertainment at
Junxion locations and location-based entertainment including The Rec Room and Playdium. Cineplex’s ability to
achieve its business objectives may depend in part on its ability to successfully increase these revenue streams.
Media Risk
Media revenue has been shown to be particularly sensitive to economic conditions and any changes in the economy
may either adversely influence this revenue stream in times of a downturn or positively influence this revenue
stream should economic conditions improve. Cineplex has numerous large media and digital place-based media
customers, the loss of which could impact Cineplex’s results. There is no guarantee that Cineplex could replace the
revenues generated by these large customers if their business was lost.
The majority of Cineplex’s advertising revenue is earned at Cineplex theatres and is directly correlated with
attendance. There is a risk of decreased attendance at theatres and a reduction of advertising spending due to adverse
economic conditions. This could result in media customers electing to reduce their spending in cinemas and
advertise through alternative channels. Cineplex’s media advertising arrangements are impacted by theatre
attendance levels which drive impressions and ultimately impact media revenue generated by Cineplex.
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Amusement and LBE Risk
Cineplex’s amusement and LBE operations compete against other offerings for guests’ entertainment spending. In
each of the local markets in which Cineplex operates and will operate, it faces competition from local, national or
international brands that also offer a wide variety of restaurant and/or amusement and gaming experiences, including
sporting events, bowling alleys, entertainment centres, nightclubs and restaurants. Competition for guests’
entertainment time and spending also extends to in-home entertainment such as internet, video gaming, or social
media sites such as YouTube and TikTok, and other in-home leisure activities. Cineplex’s inability to compete
effectively with other entertainment options could have a material adverse effect on Cineplex’s business, results of
operations and financial condition. Additionally, new competitive locations could negatively impact the performance
of Cineplex’s current locations.
Any new Cineplex location-based entertainment locations may not meet or exceed the performance of its existing
locations or its performance targets. New locations may even operate at a loss, which could have an adverse effect
on the overall operating results.
Cineplex’s results of operations are subject to fluctuations due to the timing of location-based entertainment
openings which may result in fluctuations in quarterly performance. Cineplex typically incurs most cash pre-opening
costs for a new location within the two months immediately preceding, and the month of, the location’s opening. In
addition, the labor and operating costs for a newly opened store during the first three to six months of operation are
generally materially greater than what can be expected after that time, both in aggregate dollars and as a percentage
of revenues.
To mitigate these risks, Cineplex leverages its core competencies in food service execution, its partnership in Scene+
and its knowledge of the trends in amusement and gaming to continuously update its amusement offerings in order
to provide guests with the most compelling offerings available in Canada.
Cineplex’s procurement of games and amusement offerings is dependent upon a few suppliers and the ability to
continue to procure new games, amusement offerings and other entertainment-related equipment. To the extent that
the number of suppliers declines, Cineplex could be subject to the risk of distribution delays, pricing pressure, lack
of innovation and other associated risks. In addition, any increase in cost or decrease in availability of new
amusement offerings that appeal to customers could have a negative impact on Cineplex’s revenues from its
amusement and leisure businesses.
Cineplex competes with other providers of amusement and gaming services across Canada. Cineplex manages the
risk of customers switching gaming providers by continually monitoring the performance of its amusement offerings
and reacting quickly to replace underperforming offerings with newer or more relevant equipment. Cineplex’s
expertise and experience in the industry and proven success maximizing revenue for its customers helps mitigate this
switching risk. A material amount of Cineplex’s revenue is dependent on customer traffic in venues in which it
operates. Any reduction in traffic or permanent shutdown of venues could have a material impact on its business.
Technology Risk
Technological advances have made it easier to create, transmit and electronically share unauthorized high-quality
copies of films during theatrical release. Some consumers may choose to obtain unauthorized copies of films rather
than attending the theatre which may have an adverse effect on Cineplex’s business. In addition, as home
entertainment technology becomes more sophisticated and additional technologies become available such as virtual
and augmented reality, consumers may choose alternative technology options to consume content rather than
attending a theatre.
To mitigate these risks, Cineplex continues to enhance the out of home experience through the addition of new
technologies and experiences including 3D, VIP, UltraAVX, D-BOX, 4DX, ScreenX and laser projection in order to
further differentiate the theatrical product from the home product.
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Cineplex relies on various information technology solutions to provide its services to guests and customers, as well
in running its operations from its various office locations. Cineplex may be subject to information technology
malfunctions, outages, thefts or other unlawful acts that could result in loss of communication, unauthorized access
to data, change in data, or loss of data which could compromise Cineplex’s operations and/or the privacy of
Cineplex’s guests, customers and suppliers.
Cyber Security and Information Management Risk
Cineplex needs effective information technology infrastructure including hardware, networks, software, people and
processes to effectively support the current and future needs of the business in an efficient, cost-effective and well-
controlled fashion. Cineplex is continually upgrading systems and infrastructure and implementing best practices to
meet business needs.
Cineplex requires relevant and reliable information to support the execution of its business model and reporting on
performance. The integrity, reliability and security of information are critical to Cineplex’s daily and strategic
operations. Inaccurate, incomplete or unavailable information or inappropriate access to information could lead to
incorrect financial or operational reporting, poor decisions, privacy breaches or inappropriate disclosure of sensitive
information.
At select times during the normal course of business, Cineplex and its joint venture partners including Scene+, store
sensitive data, including intellectual property, point balances and gift card and certificate balances, proprietary
business information including data with respect to suppliers, employees and business partners, as well as some
personally identifiable information of their customers and employees. Further, Cineplex regularly works with third
party suppliers in the delivery of services to its customers and employees where such data is provided in the normal
course of the commercial relationship. The secure processing, maintenance and transmission of this information is
critical to Cineplex’s operations and business strategies. As such Cineplex adheres to industry standards for the
payment card industry (“PCI”) data security standard (“DSS”) compliance, as well as undertaking commercially
reasonable efforts to safeguard non-financial data.
Cineplex recognizes that security breaches of the information systems of Cineplex, its joint venture partners
including Scene+, or any one of its third-party suppliers could compromise this information and expose Cineplex to
liability, which could cause its businesses or reputation to suffer. Despite security measures, information technology
and infrastructure may be vulnerable to unforeseen attacks by hackers or breached due to employee error,
malfeasance, computer viruses, malware, phishing, denial of service attacks, unauthorized access to confidential,
proprietary or sensitive information, industrial espionage or other disruptions. Any such breach could compromise
networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access,
disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect
the privacy of personal information, regulatory penalties, disrupt operations and the services provided to customers,
damage reputation and cause a loss of confidence in products and services, which could adversely affect business,
financial condition, results of operations and cash flows. In response to these risks, Cineplex has a team of
technology and cybersecurity professionals whose role is to monitor information technology and processes and
collaborate with joint venture partners and third-party suppliers to ensure appropriate security and controls are in
place. Cineplex continues to place an increased focus on its cybersecurity environment through analysis of internal
and external threats and alerting of suspicious incidents to its technology environment. Currently, as the majority of
Cineplex’s corporate employees have moved to a hybrid work place model, there is an increased risk to Cineplex’s
technology systems. In response, Cineplex has implemented additional security measures, including training,
monitoring and testing and contingency plans, to protect systems.
Real Estate Risk
The acquisition and development of potential operating locations by Cineplex is dependent on the ability of
Cineplex to identify, acquire and develop suitable sites for these locations with favourable economic terms in both
new and existing markets, while competing with other entertainment and non-entertainment companies for site
locations. The cost to develop a new building is substantial and its success is not assured. A future economic
downturn could magnify Cineplex’s inflationary risks, increase the costs to executing planned capital investments
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and disrupt the timing of these investments, potentially delaying Cineplex’s ability to achieve profitability on such
investments. While Cineplex is diligent in selecting sites, the significant time lag from identifying a new site to
opening can result in a change in local market circumstances and could negatively impact the location’s chance of
success. In addition, competitors’ building new operating locations or renovating existing locations may draw
audiences away from existing sites operated by Cineplex. Cineplex considers the overall return for the theatres and
LBE locations in a geographic area when making the decision to build new locations. The majority of Cineplex’s
operating sites are subject to long-term leases. In accordance with the terms of these leases, Cineplex is responsible
for costs associated with property maintenance, utilities consumed at the location and property taxes associated with
the location. Cineplex has no control over these costs and these costs have been increasing over the last number of
years. Cineplex continues to focus on lease optimization strategies through its negotiations with landlord partners
with respect to reductions in rent payments and/or capital contributions towards upgrades for applicable periods.
Sourcing Risk
Cineplex relies on a small number of companies for the distribution of a substantial portion of its concession
supplies. If these distribution relationships were disrupted, Cineplex could be forced to negotiate a number of
substitute arrangements with alternative distributors that could, in the aggregate, be less favourable to Cineplex than
the current arrangements.
Substantially all of Cineplex’s non-alcohol beverage concessions are products of one major beverage company. If
this relationship was disrupted, Cineplex may be forced to negotiate a substitute arrangement that could be less
favourable to Cineplex than the current arrangement. Any such disruptions could therefore increase the cost of
concessions and harm Cineplex’s operating margins, which would adversely affect its business and results of
operations.
Cineplex relies on one major supplier to source popcorn seed, and has entered contracts with this supplier to
guarantee a fixed supply. As crop yields can be affected by drought or other environmental factors, the supplier may
be unable to fulfill the whole of its contractual commitments, such that Cineplex would need to source the remaining
needed corn product from other suppliers at a potentially higher cost.
In order to minimize these operating risks, Cineplex actively monitors and manages its relationships with its key
suppliers.
Human Resources Risk
Cineplex’s success depends upon the retention of senior executive management, including its Chief Executive
Officer, Ellis Jacob. The loss of services of one or more members of the management team could adversely affect
Cineplex’s business, results of operations and Cineplex’s ability to effectively pursue its business strategy. Cineplex
does not maintain key-man life insurance for any of its employees but does provide long-term incentive programs to
retain key personnel and undertakes a comprehensive succession planning program.
Cineplex typically employs over 10,000 people, most of whom are hourly workers whose compensation is based on
the prevailing provincial minimum wages with incremental adjustments as required to match market conditions.
Wage inflation and any increase in minimum wages will have an adverse effect on employee related costs. In order
to mitigate the impact of the proposed increases, Cineplex works to expand automation, take advantage of
technological efficiencies and continually reviews pricing. Approximately 7% of Cineplex’s employees are
represented by unions, located primarily in the province of Ontario and Quebec. Because of the small percentage of
employees represented by unions, the impact of labour disruption nationally is low.
There is a risk due to labour supply shortages that Cineplex may not be able to hire enough staff to maintain current
levels of operations.
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Health and Safety Risk
Cineplex is subject to risks associated with food safety, alcohol consumption by guests, product handling and the
operation of machinery. Cineplex is in compliance with health and safety legislation and conducts employee
awareness and training programs on a regular basis. Health and safety issues related to our guests such as pandemics
and bedbug concerns are risks that may deter people from attending places of public gathering, potentially including
movie theatres, gaming centres, malls and dining locations. For those risks that it can control, Cineplex has
programs in place to mitigate its exposure.
Environment/Sustainability Risk
Cineplex’s approach to environmental, social and governance factors (“ESG”) has its foundation in three key pillars:
Good Governance, Environmental Sustainability and Business & Social Responsibility. Cineplex’s ESG practices
permit positive social, cultural and environmental changes at the national and local levels, benefiting Cineplex’s
employees, guests, partners and drives and creates value for shareholders.
Cineplex’s business is primarily a service and retail business which delivers guest experiences rather than physical
commercial products and thus does not have substantial environmental risk. Cineplex operates multiple locations in
major urban markets and does not anticipate any significant changes to operations due to climate change. Severe
weather incidents (as a result of environmental changes or otherwise) have potential to negatively impact Cineplex’s
operation. See “Business Continuity Risk” above.
Cineplex has a plan in place to address existing and anticipated legislation and regulation requiring reporting of ESG
matters, including carbon emissions and environmental impacts. Cineplex anticipates this will result in minimal cost
increases or changes to operating procedures.
Financial and Markets Risk
Cineplex requires efficient access to capital in order to fund growth, execute strategies and generate future financial
returns. For this reason Cineplex entered into the 2024 Credit Facility. Cineplex’s exposure to currency and
commodity risk is minimal as the majority of its transactions are in Canadian dollars and commodity costs are not a
significant component of the overall cost structure. Upon the maturity of the 2024 Credit Facility in March 2027,
there is a risk that Cineplex may not be able to renegotiate under favourable terms in the then current economic
environment. Upon maturity of the Convertible Debentures and 2024 Notes Payable, Cineplex may have insufficient
liquidity to repay the principal balance owing, impacting its ability to obtain additional funding at favourable terms.
Cineplex may have difficulty executing its recently announced refinancing plan.
There is a risk that Cineplex may not be able to find timely sources of financing, which could have an adverse effect
on its business, financial condition and results of operations.
Foreign Currency and Tariff Risk
Cineplex is exposed to minimum foreign currency risk related to transactions in its normal course of business that
are denominated in currencies other than the Canadian dollar. Cineplex’s foreign currency exposure to asset and
service purchases denominated in US dollars is largely mitigated by the relatively small proportion of US dollar
expenditures, and Cineplex’s ability to reasonably defer expenditures if exchange rates are unfavorable.
While Cineplex anticipates the potential impact of US and Canadian import tariffs and any direct effects to be
minimal, as 99.3% of its revenue is generated within Canada, the full effects of any tariffs are currently uncertain
and may have material impacts on the business dependent on the final regulations.
Interest Rate Risk
Cineplex is exposed to risk on the interest rates applicable on its 2024 Credit Facility. The balance drawn on the
2024 Credit Facility is expected to remain at minimal levels, which mitigates this risk. Cineplex will continue to
consider its interest rate exposure in conjunction with its overall capital strategy.
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Cineplex is exposed to the risk of refinancing its debt obligations at higher interest rates, negatively impacting its
future cash flows.
Inflation Risk
The largest expenses either vary in relation to revenues, such as film cost, or are contractually fixed for set periods,
such as lease payments of interest and principal. The remainder of Cineplex’s fixed and variable operating costs are
exposed to inflation risk. Cineplex also considers the prices of its products and services in response to market
conditions including inflation and competition to provide fair pricing to its customers.
Legal, Regulatory, Taxation and Accounting Risk
Changes to any of the various international, federal, provincial and municipal laws, tariffs, treaties, rules and
regulations related to Cineplex’s business could have a material impact on its financial results. Compliance with any
changes could also result in significant cost to Cineplex. Failure to fully comply with various laws, rules and
regulations may expose Cineplex to proceedings which may materially affect its performance.
On an ongoing basis, Cineplex may be involved in various judicial, administrative, regulatory and litigation
proceedings concerning matters arising in the ordinary course of business operations, including but not limited to,
personal injury claims, landlord-tenant disputes, alcohol-related incidents, commercial disputes, tax disputes,
employment disputes and other contractual disputes. Many of these proceedings seek an indeterminate amount of
damages.
To mitigate these risks, Cineplex promotes a strong ethical culture through its values and code of conduct. Cineplex
employs in-house counsel and uses third party tax and legal experts to assist in structuring significant transactions
and contracts. Cineplex has systems and controls that ensure efficient and orderly operations. Cineplex also has
systems and controls that ensure the timely production of financial information in order to meet contractual and
regulatory requirements and has implemented disclosure controls and internal controls over financial reporting
which are tested for effectiveness on an ongoing basis. In situations where management believes that a loss arising
from a proceeding is probable and can be reasonably estimated, Cineplex records the amount of the probable loss.
As additional information becomes available, any potential liability related to these proceedings is assessed and the
estimates are revised, if necessary.
Litigation Arising Out of the Cineworld Transaction and Bankruptcy
Cineplex commenced an action against Cineworld Group plc (Cineworld”) as a result of Cineworld’s repudiation of
the arrangement agreement pursuant to which Cineworld agreed to acquire all of the outstanding shares of Cineplex..
On September 7, 2022, Cineworld and certain of its subsidiaries filed a petition in the United States Bankruptcy
Court commencing Chapter 11 bankruptcy proceedings. Cineworld’s Chapter 11 proceedings stayed Cineplex’s
$1.24 billion judgement against Cineworld, awarded by the Ontario Superior Court of Justice on December 14,
2021. Cineworld filed a proposed plan of reorganization (the “Chapter 11 Plan”) on April 11, 2023, which.was
confirmed by the U.S. Bankruptcy Court on June 28, 2023 and made effective on July 31, 2023. The Chapter 11
Plan contemplates holders of general unsecured claims (which includes Cineplex’s litigation claim of $1.24 billion)
receiving, in aggregate, (i) USD $10 million in cash and (ii) interests in a litigation trust relating to certain class
actions against credit card issuers (collectively, the “Recovery Pool”). Allocations and distributions from the
Recovery Pool remain to be finalized. Cineplex’s portion of the Recovery Pool is not expected to be a material
amount and has not been accrued as a receivable in Cineplex’s financial statements as at December 31, 2024. Please
refer to Cineplex’s Annual MD&A for the year ended December 31, 2022, for details on Cineplex’s litigation
against Cineworld that occurred prior to the year ended December 31, 2024.
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15. CONTROLS AND PROCEDURES
15.1 DISCLOSURE CONTROLS AND PROCEDURES
Cineplex’s management is responsible for establishing and maintaining disclosure controls and procedures for
Cineplex as defined under National Instrument 52-109 issued by the Canadian Securities Administrators.
Management has designed such disclosure controls and procedures, or caused them to be designed under its
supervision, to provide reasonable assurance that material information relating to Cineplex, including its
consolidated subsidiaries, is made known to the Chief Executive Officer and the Chief Financial Officer by others
within those entities, particularly during the period in which the annual filings are being prepared.
Management has evaluated the design and operation of Cineplex’s disclosure controls and procedures as of
December 31, 2024 and has concluded that such disclosure controls and procedures are effective.
15.2 INTERNAL CONTROLS OVER FINANCIAL REPORTING
Cineplex’s management is responsible for designing and evaluating the effectiveness of internal controls over
financial reporting for Cineplex as defined under National Instrument 52-109 issued by the Canadian Securities
Administrators. Management has designed such internal controls over financial reporting using the Integrated
Control - Integrated Framework: 2017 issued by the Committee of Sponsoring Organizations of the Treadway
Commission, or caused them to be designed under its supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of the financial statements for external purposes in accordance
with GAAP.
Management has used the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”), to evaluate the effectiveness of internal controls over
financial reporting, which is a recognized and suitable framework developed by COSO.
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with policies
and procedures may deteriorate.
Management has evaluated the design and operation of Cineplex’s internal controls over financial reporting as of
December 31, 2024, and has concluded that such controls over financial reporting are effective. There are no
material weaknesses that have been identified by management in this regard.
There has been no change in Cineplex’s internal controls over financial reporting that occurred during the most
recently completed interim period that has materially affected, or is reasonably likely to materially affect, Cineplex’s
internal control over financial reporting.
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16. OUTLOOK
The following discussion is qualified in its entirety by the caution regarding forward-looking statements at the
beginning of this MD&A and Section 14, Risks and uncertainties.
FILM ENTERTAINMENT AND CONTENT
Theatre Exhibition
A number of films shifted release to the remainder of 2024 and 2025, as a result of film release date shifting and
production delays related to the impact of the writers’ and actors’ strikes. Cineplex believes that compelling content
will continue to strengthen consumer enthusiasm for the theatrical movie-going experience and will bring people to
Cineplex theatres in 2025. Looking forward to 2025, there is a strong slate of films scheduled for release including:
Dogman, Captain America: Brave New World, Snow White, A Working Man, A Minecraft Movie, Thunderbolts*,
Mission: Impossible – The Final Reckoning, Lilo & Stitch, Karate Kid: Legends, Ballerina, Elio, How to Train Your
Dragon, 28 Years Later, F1, M3GAN 2.0, Jurassic World Rebirth, Superman: Legacy, The Fantastic Four: First
Steps, The Bad Guys 2, Saw XI, Michael, Tron: Ares, The Black Phone 2, The Running Man, Wicked: For Good,
Zootopia 2, Five Nights at Freddy’s 2, and Avatar: Fire and Ash. In addition, Cineplex remains encouraged by the
commitments from non-traditional studios and international content which further validate the importance of the
cinematic experience and the role theatrical exhibition plays in elevating content to its full potential. In 2025, the
number of wide releases is projected to be 110 compared to 95 in 2024.
Cineplex continues to focus on providing guests with a variety of premium viewing options through which to enjoy
the theatre experience. These premium-priced offerings, which include UltraAVX, VIP Cinemas, IMAX, D-BOX,
3D, 4DX, Cineplex Clubhouse and ScreenX generate higher revenues per patron and expand the customer base.
Cineplex believes that these premium formats provide an enhanced guest experience and will continue to charge a
ticket price premium for films and events presented in these formats. Cineplex will continue to expand those
offerings throughout its circuit during 2025 and beyond. In addition, Cineplex offers CineClub membership,
providing members with benefits accessible across Cineplex’s businesses nationwide including Cineplex theatres,
and LBE venues.
Cineplex will continue to use data analytics and marketing personalization to drive theatrical and LBE visitation, and
food and gaming purchase incidence. Cineplex continues to hold its North American leadership position in
alternative programming, with 10.2% of fourth quarter box office revenues coming from international films,
compared to those films having a 3.7% North-American share.
Cineplex is also focused on maintaining and improving the guest experience, including recliner seating, and will
continue to expand those offerings throughout its circuit. VIP Cinemas and other premium viewing options are a key
component to Cineplex’s theatre exhibition strategy, and continue to be valued by audiences.
Cineplex operates Cineplex Junxion Kildonan in Winnipeg, Manitoba and Cineplex Junxion Erin Mills in
Mississauga, Ontario. The Cineplex Junxion entertainment concept features a cinema with reclining seats, an open
lobby and stage for events and performances, amusement gaming, and expanded food offerings.
Cineplex opened the new Cineplex Cinema Royalmount in Montreal, Quebec on November 25, 2024.
Theatre Food Service
Cineplex’s core focus is on operational execution, marketing and providing the optimal product mix to provide
further growth in this area. As part of this strategy, Cineplex continues to expand its product offering through its in-
house brands across the circuit, as well as leveraging digital menu board technologies which provide guests with
enhanced messaging during visits to the theatre food service locations and expanding VIP cinema menu offerings.
Cineplex also leverages mobile technology to enhance the food service experience in its theatres and has VIP in-seat
ordering. Cineplex continues to focus on its home delivery services of concessions in partnership with Uber Eats,
Skip The Dishes, DoorDash and others.
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Management’s Discussion and Analysis
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Alternative Programming & Distribution
Cineplex Pictures focuses on the acquisition of feature film rights for both theatrical release and in home release in
Canada for various licensors for all markets or selected markets within Canada. Upcoming films that will be
distributed as part of the distribution partnership with Lionsgate include: Flight Risk and The Unbreakable Boy.
Cineplex offers a wide variety of alternative programming, including international film programming; the popular
Metropolitan Opera Live in HD series; sports programming; and various concert performances by popular recording
artists. Cineplex continues to look for compelling content to offer as alternative content to attract a wider audience to
its locations, in addition to adding dedicated event screens.
MEDIA
Cinema Media
Research has shown that cinema media advertising reaches the most sought-after demographics, as well as Canada’s
high-income households and educated populations. In March of 2024, Cineplex Media released the results of its
proprietary Canadian Cinema Attention Results from Lumen, a well known and respected global research company.
These results were consistent with studies undertaken in the USA, UK and Australia and demonstrated the superior
impact of the big screen in terms of advertising viewability, attention to the creative and brand recall. Cinema
advertising stands out as the ultimate attention leader, with 100% of audiences viewing ads on the big screen, an
average of 80% active attention across all demographics and ad lengths, and attention scores 2-5X higher than linear
and CTV, and up to 9X higher than digital video channels. Attention, as a means of measuring advertising impact
and effectiveness, is gaining traction in the media community. With a strong slate for 2025 and beyond, Cineplex
believes its cinema media business will continue to grow through its advertising and attention metrics and innovative
media opportunities within Cineplex’s theatres, including data services to clients. Cineplex Media also sells media
for CDM DOOH clients and LBE. Cineplex Media’s revenues are impacted by venue traffic, economic factors, and
client marketing strategies. As attendance continues to rebound, Cineplex expects advertisers to continue to return to
cinema, resulting in a positive upturn in media revenues. Cineplex is leveraging data to better serve its advertising
customers and grow revenues.
Cineplex Media’s membership and collaboration with COMMB will enhance audience measurement capabilities,
providing advertisers with accurate, privacy-compliant, and COMMB-accredited measurement and reporting.
Digital Place-Based Media
Cineplex’s digital place-based media business will continue to roll out its world-class solutions in quick service
restaurants, financial services and retail sectors as well as immersive DOOH media networks including at Cadillac
Fairview and Cominar properties. The DOOH coverage in Canada includes 95 malls and 9 of the top 10 busiest
malls in Canada. Cineplex will continue to explore opportunities across North America, in order to better service its
current customer base, to attract new clients and roll out retail media networks. Cineplex believes that the strengths
of its digital place-based media business makes Cineplex a leader in the indoor digital signage industry and will
provide a platform for significant growth throughout Canada and the United States.
AMUSEMENT AND LOCATION-BASED ENTERTAINMENT
Amusement
Cineplex continues to enhance the guest experience in-theatre gaming, including XSCAPE amusement revenues
through electronic payments, meeting strong consumer demand for out-of-home entertainment.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
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Location-Based Entertainment
Cineplex’s LBE business features entertainment destination locations that cater to a wide range of guests through
The Rec Room, a social entertainment destination targeting millennials featuring a wide range of entertainment
options including simulation, redemption, video, recreational gaming, attractions, and a live entertainment venue for
watching a wide range of entertainment programming, and Playdium, complexes specially designed for teens and
families. The Rec Room is complemented with an upscale casual dining environment, as well as an expansive bar
with a wide range of digital monitors and a large screen for watching sporting events and bookings for corporate
events. Cineplex opened three new locations in the fourth quarter of 2024, The Rec Room Granville in Vancouver,
British Columbia, The Rec Room Royalmount in Mont-Royal, Quebec, and a Playdium Fairview in Toronto,
Ontario. Cineplex will continue to add attractions to enhance the guest experience and build new locations to drive
growth.
Cineplex’s LBE revenues and adjusted EBITDAaL are expected to increase driven by additional locations, strong
consumer demand and operational efficiencies.
LOYALTY
Membership in the Scene+ loyalty program increased to over 15 million members as at December 31, 2024. The
growth in the Scene+ loyalty program provides Cineplex with opportunities to grow its customer base across all of
its businesses, including Scene+ ability to engage members who are not existing Cineplex customers.
FINANCIAL OUTLOOK
Cineplex remains confident in the long-term fundamentals of theatrical exhibition and the other businesses it
operates. Over the last year, Cineplex executed several important strategic initiatives designed to reduce leverage,
improve financial flexibility, and position Cineplex for accelerated long-term growth.
On October 23, 2024, Cineplex filed its Notice of Appeal with the Federal Court of Appeal and, with the
Commissioner’s consent, was granted a stay regarding payment of the administrative monetary penalty, pending the
Federal Court of Appeal’s ruling.
With its strategic initiatives and an encouraging film slate on the horizon, Cineplex is on the path of achieving its
target leverage ratio of 2.5x to 3.0x. Once its leverage target leverage ratio is achieved on a sustained basis, Cineplex
will assess other shareholder capital return options, including the re-introduction of dividends.
17. NON-GAAP AND OTHER FINANCIAL MEASURES
National Instrument 52-112, Non-GAAP and Other Financial Measures Disclosure (“NI 52-112”) imposes
obligations regarding disclosure of non-GAAP financial measures, non-GAAP ratios, and other financial measures.
Cineplex reports on certain non-GAAP measures, non-GAAP ratios, supplementary financial measures and total
segment measures that are used by management to evaluate Cineplex’s performance. The following measures
included in this MD&A do not have a standardized meaning under GAAP and may not be comparable to similar
measures provided by other issuers. Cineplex includes these measures because management believes that they assist
investors in assessing financial performance. These non-GAAP and other financial measures are used throughout
this report and are defined below.
NON-GAAP FINANCIAL MEASURES
A non-GAAP financial measure is defined in 52-112 as a financial measure disclosed that (a) depicts the historical
or expected future financial performance, financial position or cash flow of an entity, (b) with respect to its
composition, excludes an amount that is included in, or includes an amount that is excluded from, the composition
of the most directly comparable financial measure disclosed in the primary financial statements of the entity, (c) is
not disclosed in the financial statements of the entity, and (d) is not a ratio, fraction, percentage or similar
representation.
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Management’s Discussion and Analysis
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NON-GAAP RATIOS
A non-GAAP ratio is defined in NI 52-112 as a financial measure disclosed that (a) is in the form of a ratio, fraction,
percentage or similar representation, (b) has a non-GAAP financial measure as one or more of its components, and
(c) is not disclosed in the financial statements.
Below are non-GAAP financial measures or non-GAAP ratios for continuing operations that are reported by
Cineplex.
17.1 EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDAaL
Management defines EBITDA as earnings before interest income and expense, income taxes and depreciation and
amortization expense. Adjusted EBITDA excludes the change in fair value of financial instrument, loss (gain) on
disposal of assets, foreign exchange, and impairment, depreciation, amortization, interest and taxes of Cineplex’s
other joint ventures and associates, and other items that do not in management’s view represent a factor relevant to
the ongoing performance of the business such as the Competition Tribunal’s administrative monetary penalty.
Adjusted EBITDAaL modifies adjusted EBITDA to deduct current period cash rent paid or payable related to lease
obligations.
Subsequent to the adoption of IFRS 16, Leases, by Cineplex effective January 1, 2019, the calculation of EBITDA
no longer includes a charge for amounts paid or payable with respect to leased property and equipment. Given the
majority of Cineplex’s businesses are carried on in leased premises, Cineplex introduced the measure of adjusted
EBITDAaL which includes a deduction for cash rent paid/payable related to lease obligations. Cineplex’s
management believes that adjusted EBITDAaL is an important supplemental measure of Cineplex’s profitability at
an operational level and provides analysts and investors with comparability in evaluating and valuing Cineplex’s
performance period over period. EBITDA, adjusted for various unusual items, is also used to define certain financial
covenants in Cineplex’s 2024 Credit Facility. Management calculates adjusted EBITDAaL margin by dividing
adjusted EBITDAaL by total revenues.
EBITDA, adjusted EBITDA and adjusted EBITDAaL are non-GAAP measures generally used as an indicator of
financial performance and they should not be seen as a measure of liquidity or a substitute for comparable metrics
prepared in accordance with GAAP. Cineplex’s EBITDA, adjusted EBITDA and adjusted EBITDAaL may differ
from similar calculations as reported by other entities and accordingly may not be comparable to EBITDA, adjusted
EBITDA or adjusted EBITDAaL reported by other entities.
Adjusted Store Level EBITDAaL Metrics
Cineplex reviews and reports adjusted EBITDAaL at the location level for LBE which is calculated as total LBE
revenues from all locations less total LBE operating expenses, which excludes pre-opening costs and overhead
relating to the management of LBE.
Adjusted Store Level EBITDAaL Margin
Calculated as adjusted store level EBITDAaL divided by total revenues for LBE for the period.
Cineplex Inc.
Management’s Discussion and Analysis
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MANAGEMENT’S DISCUSSION & ANALYSIS
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The following represents management’s calculation of EBITDA, adjusted EBITDA, and adjusted EBITDAaL
(expressed in thousands of dollars):
Reconciliation of reported net income (loss) to adjusted EBITDAaL
Year ended December 31,
2024
2023
2022
(Section 1) (v)
Net (loss) income (iv)
$
(105,684) $
138,051 $
(9,679)
Depreciation and amortization - other
83,789
88,881
89,466
Depreciation - right-of-use assets
94,160
87,657
93,512
Interest expense - lease obligations
73,394
66,493
61,256
Interest expense - other
71,361
88,445
60,835
Interest income
(1,356)
(897)
(277)
Current income tax recovery
(2,721)
(839)
(724)
Deferred income tax expense recovery
(27,797)
(146,724)
—
EBITDA
$
185,146 $
321,067 $
294,389
(Gain) loss on disposal of assets, including businesses
(7,652)
2,910
(57,748)
Loss (income) on financial instruments recorded at fair value and loss on
extinguishment of debt
46,598
(2,610)
6,260
Canadian Digital Cinema Partnership (CDCP) equity loss (income) (i)
—
—
(489)
Provision for Competition Tribunal administrative monetary penalty
39,215
—
—
Foreign exchange (gain) loss
(269)
834
(2,930)
Reversal of long-lived assets
—
—
(19,880)
Depreciation and amortization - joint ventures and associates (ii)
863
739
517
Taxes and interest of joint ventures and associates (ii)
24
22
49
Adjusted EBITDA
$
263,925 $
322,962 $
220,168
Cash rent paid/payable related to lease obligations
(170,666)
(165,607)
(165,967)
Cash rent paid not pertaining to current period
8
8
—
Adjusted EBITDAaL (iii)
$
93,267
157,363
54,201
Adjusted EBITDAaL from discontinued operations (iii)
$
508 $
35,732 $
27,471
Adjusted EBITDAaL including discontinued operations (iii)
$
93,775 $
193,095 $
81,672
(i) CDCP equity income is not included in adjusted EBITDA as CDCP is a limited-life financing vehicle that is funded by virtual print
fees collected from distributors. On December 16, 2022, Cineplex divested its investment in CDCP.
(ii) Includes the joint ventures with the exception of CDCP (see (i) above).
(iii) See Section 17, Non-GAAP and other financial measures.
(iv) 2024 includes the loss on the 2024 Refinancing of $56.0 million for full year, and expenses related to other transactions or litigation
outside the normal course of business in the amount of $2.5 million (2023 - $3.4 million) for full year. The full year also include the $39.2
million provision for the Competition Tribunal’s administrative monetary penalty.
(v) The results of discontinued operations (P1AG) have been excluded from prior period figures as applicable per IFRS 5 to conform to
current period presentation. All amounts are from continuing operations unless noted. See Section 13, Accounting policies.
Cineplex Inc.
Management’s Discussion and Analysis
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MANAGEMENT’S DISCUSSION & ANALYSIS
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17.2 ADJUSTED FREE CASH FLOW
Free cash flow is a non-GAAP measure generally used by Canadian corporations as an indicator of financial
performance and it should not be viewed as a measure of liquidity or a substitute for comparable metrics prepared in
accordance with GAAP. Standardized free cash flow adjusts the amount of cash from operating activities to deduct
capital expenditures net of proceeds on sale of assets in ordinary business operations. Standardized free cash flow is
a non-GAAP measure recommended by the CICA in its 2008 interpretive release, Improved Communication with
Non-GAAP Financial Measures: General Principles and Guidance for Reporting EBITDA and Free Cash Flow, and
is designed to enhance comparability. Adjusted free cash flow is also a non-GAAP measure used by Cineplex to
modify standardized free cash flow to exclude certain cash flow activities and to measure the amount available for
activities such as repayment of debt, dividends to owners and investments in future growth through acquisitions.
Adjusted free cash flow includes repayments of lease obligations that represented the principal portion of rent
expenses that were included in net income calculation prior to the adoption of accounting standard IFRS 16, Leases,
by Cineplex. Given that the materiality of the principal portion of the rent expenses and comparability of adjusted
free cash flow disclosure for comparative periods, adjusted free cash flow also adjusts standard free cash flow to
deduct principal amount of repayment of lease obligation.
Cineplex presents standardized free cash flow and adjusted free cash flow per share because they are key measures
used by investors to value and assess Cineplex. Cineplex’s management defines adjusted free cash flow as
standardized free cash flow adjusted for certain items, and considers adjusted free cash flow the amount available for
distribution to shareholders. Standardized free cash flow is defined by the CICA as cash from operating activities as
reported in the GAAP financial statements, less total capital expenditures minus proceeds from the disposition of
capital assets other than those of discontinued operations, as reported in the GAAP financial statements; and
dividends, when stipulated, unless deducted in arriving at cash flows from operating activities. The standardized free
cash flow calculation excludes common dividends and others that are declared at the Board’s discretion.
Management calculates adjusted free cash flow per share as follows (expressed in thousands of dollars except shares
outstanding and per share data):
Cineplex Inc.
Management’s Discussion and Analysis
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MANAGEMENT’S DISCUSSION & ANALYSIS
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Reconciliation of reported cash provided by (used in) operating activities to
adjusted free cash flow per share
Year ended December 31,
2024
2023
2022
(Section 1) (iv)
Cash provided by operating activities
$
159,079 $
196,094 $
78,279
Less: Total capital expenditures net of proceeds on sale of assets
(59,122)
(52,477)
(53,161)
Standardized free cash flow
99,957
143,617
25,118
Add/(Less):
Changes in operating assets and liabilities (i)
(31,432)
11,352
28,586
Changes in operating assets and liabilities of joint ventures and associates (i)
(238)
(164)
1,214
Provision for Competition Tribunal’s administrative monetary penalty
(39,215)
—
—
Repayments of lease obligations - principal
(98,132)
(100,334)
(105,618)
Principal portion of cash rent paid not pertaining to current period
8
8
—
Growth capital expenditures and other (ii)
45,564
32,974
34,342
Share of income of joint ventures and associates, net of non-cash depreciation
(1,533)
(3,762)
(2,531)
Financing fees
17,871
—
—
Net cash received from CDCP (iii)
—
—
5,380
Adjusted free cash flow
$
(7,150) $
83,691 $
(13,509)
Average number of shares outstanding
63,585,187
63,401,529
63,359,240
Adjusted free cash flow per share
$
(0.112) $
1.320 $
(0.213)
(i) Changes in operating assets and liabilities are not considered a source or use of adjusted free cash flow. Refer to note 24, Changes in
operating assets and liabilities of Cineplex’s 2024 Annual Consolidated Financial Statements for further details.
(ii) Growth capital expenditures and other represent expenditures on Board approved projects, exclude maintenance capital expenditures
and are net of proceeds on asset sales. The 2024 Credit Facility (discussed above in Section 7.4, Long-term debt) is available to Cineplex
to fund Board approved projects.
(iii) Excludes the share of income or loss of CDCP, as CDCP was a limited-life financing vehicle funded by virtual print fees collected
from distributors. Cash invested into CDCP, as well as distributions received from CDCP, were considered to be uses and sources of
adjusted free cash flow. CDCP was wound up in 2022.
(iv) The results of discontinued operations (P1AG) have been excluded from prior period figures as applicable per IFRS 5 to conform to current
period presentation. All amounts are from continuing operations unless noted. See Section 13, Accounting policies.
Cineplex Inc.
Management’s Discussion and Analysis
CINEPLEX INC. 2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
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Alternatively, the calculation of adjusted free cash flow using adjusted EBITDAaL as a reference point would be as
follows (expressed in thousands of dollars):
Reconciliation of adjusted EBITDAaL to adjusted free cash flow
Year ended December 31,
2024
2023
2022
(Section 1) (i)
Adjusted EBITDAaL
$
93,267 $
157,363 $
54,201
Adjust for:
Interest expense - other
(71,361)
(88,445)
(60,835)
Interest rate swap agreements - non-cash interest
(1,020)
6,337
(22,072)
Accretion of convertible debentures and notes payable
10,527
21,551
18,677
Non-cash share-based compensation
4,283
6,229
6,382
Foreign exchange
269
(834)
2,930
Interest income
1,356
897
277
Maintenance capital expenditures
(13,558)
(19,503)
(18,820)
Provision for Competition Tribunal’s administrative monetary penalty
(39,215)
—
—
Net cash received from CDCP (ii)
—
—
5,380
Cash received from unwinding swap
4,583
—
—
Current income taxes
2,721
839
724
Cash foreign exchange
998
(743)
(353)
Adjusted free cash flow
$
(7,150) $
83,691 $
(13,509)
(i) The results of discontinued operations (P1AG) have been excluded from prior period figures as applicable per IFRS 5 to conform to current
period presentation. All amounts are from continuing operations unless noted. See Section 13, Accounting policies.
(ii) Excludes the share of income or loss of CDCP, as CDCP was a limited-life financing vehicle funded by virtual print fees collected
from distributors. Cash invested into CDCP, as well as distributions received from CDCP, were considered to be uses and sources of
adjusted free cash flow. CDCP was wound up in 2022.
SUPPLEMENTARY FINANCIAL MEASURES
Supplementary financial measures are financial measures that are not (a) presented in the financial statements and
(b) is, or is intended to be, disclosed periodically to depict the historical or expected future financial performance,
financial position or cash flow, that is not a non-GAAP financial measure or a non-GAAP ratio as defined in the
instrument. Below are supplementary financial measures that Cineplex uses to depict its financial performance,
financial position or cash flows.
Earnings (loss) per Share Metrics
Cineplex has presented basic and diluted earnings (loss) per share net of this item to provide a more comparable loss
per share metric between the current periods and prior year periods. In the non-GAAP and other financial measures,
earnings is defined as net income or net loss attributable to Cineplex excluding the change in fair value of financial
instruments.
Per Patron Revenue Metrics
Cineplex reviews per patron metrics as they relate to box office revenue, theatre food service revenue and cinema
media revenue such as BPP, CPP, BPP excluding premium priced product, concession margin per patron, and
CMPP, as these are key measures used by investors to value and assess Cineplex’s performance, and are widely used
in the theatre exhibition industry. Cineplex’s management defines these metrics as follows:
Theatre attendance: Theatre attendance is calculated as the total number of paying patrons that frequent Cineplex’s
theatres during the period.
BPP: Calculated as total box office revenues divided by total paid theatre attendance for the period.
Cineplex Inc.
Management’s Discussion and Analysis
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MANAGEMENT’S DISCUSSION & ANALYSIS
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BPP excluding premium priced product: Calculated as total box office revenues for the period, less box office
revenues from 3D, 4DX, UltraAVX, VIP, ScreenX and IMAX product; divided by total paid theatre attendance for
the period, less paid theatre attendance for 3D, 4DX, UltraAVX, VIP, ScreenX and IMAX product.
CPP: Calculated as total theatre food service revenues divided by total paid theatre attendance for the period.
CMPP: Calculated as total cinema media revenues divided by total paid theatre attendance for the period.
Premium priced product: Defined as 3D, 4DX, UltraAVX, IMAX, ScreenX and VIP film product.
Theatre concession margin per patron: Calculated as total theatre food service revenues less total theatre food
service cost, divided by theatre attendance for the period.
Same Theatre Analysis
Cineplex reviews and reports same theatre metrics relating to box office revenues, theatre food service revenues,
theatre rent expense and theatre payroll expense, as these measures are widely used in the theatre exhibition industry
as well as other retail industries.
Same theatre metrics are calculated by removing the results for all theatres that have been opened, acquired, closed
or otherwise disposed of subsequent to the start of the prior year comparative period. For the three months ended
December 31, 2024 the impact of one location that was opened or acquired and three locations that were closed or
otherwise disposed of have been excluded, resulting in 155 theatres being included in the same theatre metrics. For
the year ended December 31, 2024 the impact of one location that was opened or acquired and four locations that
were closed or otherwise disposed of have been excluded, resulting in 155 theatres being included in the same
theatre metrics.
Cost of sales percentages
Cineplex reviews and reports cost of sales percentages for its two largest revenue sources; box office revenues and
food service revenues, as these measures are widely used in the theatre exhibition industry. These measures are
reported as film cost percentage and concession cost percentage, respectively, and are calculated as follows:
Film cost percentage: Calculated as total film cost expense divided by total box office revenues for the period.
Theatre concession cost percentage: Calculated as total theatre food service costs divided by total theatre food
service revenues for the period.
LBE food cost percentage: Calculated as total LBE food costs divided by total LBE food service revenues for the
period.
Cineplex Inc.
Management’s Discussion and Analysis
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MANAGEMENT’S DISCUSSION & ANALYSIS
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Management’s Report to Shareholders
Management is responsible for the preparation of the accompanying consolidated financial statements and all other
information contained in this Annual Report. The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards, which involve management’s best estimates and
judgments, based on available information.
Management maintains a system of internal accounting controls designed to provide reasonable assurance that`
transactions are authorized, assets are safeguarded, and financial records are reliable for preparing consolidated
financial statements.
The Board of Directors of Cineplex Inc. (the “Board” of the “Company”) is responsible for ensuring that
management fulfills its responsibilities for financial reporting and internal control. The Board is assisted in
exercising its responsibilities through the Audit Committee of the Board (the “Audit Committee”). The Audit
Committee meets periodically with management and the independent auditor to satisfy itself that management’s
responsibilities are properly discharged and to recommend approval of the consolidated financial statements to the
Board.
PricewaterhouseCoopers LLP serves as the Company’s auditor. PricewaterhouseCoopers LLP’s report on the
accompanying consolidated financial statements follows. It outlines the extent of its examination as well as an
opinion on the consolidated financial statements.
“Ellis Jacob”
“Gord Nelson”
Ellis Jacob
Gord Nelson
Chief Executive Officer
Chief Financial Officer
Toronto, Ontario
February 10, 2025
79
PricewaterhouseCoopers LLP
PwC Tower, 18 York Street, Suite 2500, Toronto, Ontario, Canada M5J 0B2
T.: +1 416 863 1133, F.: +1 416 365 8215, Fax to mail: ca_toronto_18_york_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Independent auditor’s report
To the Shareholders of Cineplex Inc.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of Cineplex Inc. and its subsidiaries (together, the Company) as at December 31,
2024 and 2023, and its financial performance and its cash flows for the years then ended in accordance
with International Financial Reporting Standards as issued by the International Accounting Standards
Board (IFRS Accounting Standards).
What we have audited
The Company’s consolidated financial statements comprise:
the consolidated balance sheets as at December 31, 2024 and 2023;
the consolidated statements of operations for the years then ended;
the consolidated statements of comprehensive income (loss) for the years then ended;
the consolidated statements of changes in equity for the years then ended;
the consolidated statements of cash flows for the years then ended; and
the notes to the consolidated financial statements, comprising material accounting policy information
and other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities
in accordance with these requirements.
80
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2024. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Impairment assessment of goodwill and
indefinite-lived intangible assets
Refer to note 10 – Intangible assets, note 11 –
Impairment of long-lived assets and note 28 –
Material accounting policies, judgments and
estimation uncertainty to the consolidated financial
statements.
As at December 31, 2024, the Company had
$620 million of goodwill and $64 million of
indefinite-lived intangible assets from continuing
operations.
Goodwill and indefinite-lived intangible assets are
tested for impairment annually or more frequently if
specific events or circumstances dictate that the
carrying amount of the asset group may not be fully
recoverable. For the purpose of measuring
recoverable amounts, assets are grouped at the
lowest levels for which there are separately
identifiable cash inflows relating to the relevant
intangible asset (cash-generating units or CGUs). A
group of CGUs represents the lowest level within
the entity at which the goodwill is monitored for
internal management purposes.
An impairment loss, if estimated, is recognized for
the amount by which the CGU’s or group of CGUs’
carrying value exceeds its recoverable amount. The
recoverable amounts were determined based on
the fair value less costs to sell (the method) using
discounted cash flow models. The significant key
assumptions applied by management in estimating
the recoverable amounts of the groups of CGUs
Our approach to addressing the matter included the
following procedures, among others:
Evaluated how management determined the
recoverable amounts of goodwill and indefinite-
lived intangible assets groups of CGUs, which
included the following:
–
Tested the appropriateness of the method
used and the mathematical accuracy of the
discounted cash flow models.
–
Tested the reasonableness of the
significant key assumptions used by
management, including attendance
(applicable for the exhibition CGUs only)
and the related revenue growth rates
applied by management by comparing
them to the budget, management’s
strategic plans approved by the Board of
Directors and industry forecasts and
historical trends.
–
Professionals with specialized skill and
knowledge in the field of valuation assisted
in testing the reasonableness of the
discount rates applied by management
based on available data of comparable
companies.
–
Tested the underlying data used in the
discounted cash flow models.
81
Key audit matter
How our audit addressed the key audit matter
included attendance (applicable for the exhibition
CGUs only) and the related revenue growth rates
and discount rates.
No impairment loss was required for goodwill and
indefinite-lived intangible assets.
We considered this a key audit matter due to
significant judgment made by management in
determining the recoverable amounts of the
goodwill and indefinite-lived intangible assets
groups of CGUs, including the use of significant key
assumptions. This has resulted in a high degree of
subjectivity and audit effort in performing audit
procedures to test the significant key assumptions
used by management. Professionals with
specialized skill and knowledge in the field of
valuation assisted us in performing our procedures.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis, which we obtained prior to the date of this auditor’s report and the information,
other than the consolidated financial statements and our auditor’s report thereon, included in the annual
report, which is expected to be made available to us after that date.
Our opinion on the consolidated financial statements does not cover the other information and we do not
and will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard. When we read the information, other
than the consolidated financial statements and our auditor’s report thereon, included in the annual report,
if we conclude that there is a material misstatement therein, we are required to communicate the matter to
those charged with governance.
82
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
87
83
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business units within the Company as a basis for forming an opinion on
the consolidated financial statements. We are responsible for the direction, supervision and review of
the audit work performed for purposes of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Adam Boutros.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Ontario
February 10, 2025
84
Notes
December 31,
December 31,
2024
2023
Assets
Current assets
Cash and cash equivalents
3
$
83,871
$
36,666
Trade and other receivables
4
116,533
97,689
Income taxes receivable
8
5,529
2,766
Inventories
5
20,724
17,624
Prepaid expenses and other current assets
11,003
11,481
Fair value of interest rate swap agreements
26
—
3,217
Assets held for sale
2
—
93,322
237,660
262,765
Non-current assets
Property, equipment and leaseholds
6
399,115
394,382
Right-of-use assets
7
773,372
754,793
Deferred income taxes
8
149,547
146,784
Fair value of interest rate swap agreements
26
—
1,109
Interests in joint ventures and associates
9
6,771
4,896
Intangible assets
10
81,132
80,873
Derivative financial instrument
15
19,420
5,590
Goodwill
11
620,300
620,300
$
2,287,317
$
2,271,492
Contingent liabilities and assets
25
Cineplex Inc.
Consolidated Balance Sheets
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars)
The accompanying notes are an integral part of these consolidated financial statements.
CINEPLEX INC. 2024 ANNUAL REPORT
CONSOLIDATED BALANCE SHEETS
85
Notes
December 31,
December 31,
2024
2023
Liabilities
Current liabilities
Accounts payable and accrued liabilities
12
$
236,612
$
172,482
Provision for Competition Tribunal administrative monetary penalty
25
39,215
—
Income taxes payable
8
92
173
Deferred revenue and other
19
189,989
197,329
Lease obligations
14
88,669
85,030
Liabilities related to assets held for sale
2
—
27,241
554,577
482,255
Non-current liabilities
Share-based compensation
13
12,689
4,470
Long-term debt
15
736,468
817,439
Lease obligations
14
1,010,505
993,404
Post-employment benefit obligations
16
6,889
7,114
Other liabilities
17
5,889
6,245
1,772,440
1,828,672
Total liabilities
2,327,017
2,310,927
Shareholders’ deficit
Share capital
18
853,667
856,696
Deficit
(1,017,713)
(981,973)
Contributed surplus
123,986
85,235
Cumulative translation adjustment
360
607
Total shareholders’ deficit
(39,700)
(39,435)
$
2,287,317
$
2,271,492
Approved by the Board of Directors
“Phyllis Yaffe”
“Janice Fukakusa”
Director
Director
Cineplex Inc.
Consolidated Balance Sheets...continued
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars)
The accompanying notes are an integral part of these consolidated financial statements.
CINEPLEX INC. 2024 ANNUAL REPORT
CONSOLIDATED BALANCE SHEETS
86
Year ended December 31,
Notes
2024
2023
20
(Revised - Note
20)
Revenues
19
Box office
$
562,151
$
599,903
Food service
462,052
483,149
Media
134,831
118,655
Amusement
92,691
96,507
Other
78,713
90,680
1,330,438
1,388,894
Expenses
Film cost
303,926
323,412
Cost of food service
108,126
113,987
Depreciation - right-of-use assets
94,160
87,657
Depreciation and amortization - other assets
83,789
88,881
(Gain) loss on disposal of assets
6
(7,652)
2,910
Employee wages, salaries and benefits
296,523
278,694
Provision for Competition Tribunal’s administrative monetary penalty
25
39,215
—
Other costs
20
356,405
346,077
Share of loss of joint ventures and associates
9
2,420
4,523
Interest expense - lease obligations
14
73,394
66,493
Interest expense - other
71,361
88,445
Interest income
(1,356)
(897)
Foreign exchange
(269)
834
Loss (income) on financial instruments recorded at fair value and loss on
extinguishment of debt
15
46,598
(2,610)
1,466,640
1,398,406
Loss from continuing operations before income taxes
(136,202)
(9,512)
Income taxes recovery
8
Current
(2,721)
(839)
Deferred
(27,797)
(146,724)
(30,518)
(147,563)
Net (loss) income from continuing operations
(105,684)
138,051
Net income from discontinued operations, net of taxes
2
68,003
29,113
Net (loss) income
$
(37,681)
$
167,164
Cineplex Inc.
Consolidated Statements of Operations
For the years ended December 31, 2024 and 2023
————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
The accompanying notes are an integral part of these consolidated financial statements.
CINEPLEX INC. 2024 ANNUAL REPORT
CONSOLIDATED STATEMENTS OF OPERATIONS
87
Year ended December 31,
2024
2023
Net (loss) income from continuing operation
$
(105,684)
$
138,051
Other comprehensive (loss) income
Items that will be reclassified subsequently to net income:
Foreign currency translation adjustment
123
(70)
Items that will not be reclassified to net income:
Actuarial income (loss) of post-employment benefit obligations, net of
deferred income taxes expense of $35 (2023- $60 recovery)
97
(167)
Comprehensive (loss) income from continuing operations
(105,464)
137,814
Net income from discontinued operations, net of taxes
2
68,003
29,113
Foreign currency translation adjustment from discontinued operations
2
—
(776)
Total comprehensive (loss) income
$
(37,461)
$
166,151
(Loss) earnings per share from continuing operations - basic
21
$
(1.66)
$
2.18
Earnings per share from discontinued operations - basic
21
$
1.07
$
0.46
(Loss) earnings per share - basic
21
$
(0.59)
$
2.64
(Loss) earnings per share from continuing operations - diluted
21
$
(1.66)
$
1.80
Earnings per share from discontinued operations -diluted
21
$
1.07
$
0.32
(Loss) earnings per share - diluted
21
$
(0.59)
$
2.12
Cineplex Inc.
Consolidated Statements of Comprehensive Income (Loss)
For the years ended December 31, 2024 and 2023
————————————————————————————————————————————
(expressed in thousands of Canadian dollars)
The accompanying notes are an integral part of these consolidated financial statements.
CINEPLEX INC. 2024 ANNUAL REPORT
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
88
Share
capital
Contributed
surplus
Cumulative
translation
adjustment
Deficit
Total
January 1, 2024
$
856,696
$
85,235
$
607 $
(981,973)
$
(39,435)
Net loss
—
—
—
(37,681)
(37,681)
Other comprehensive income
—
—
123
97
220
Total comprehensive loss (income)
—
—
123
(37,584)
(37,461)
Share option expense
—
1,529
—
—
1,529
PSU/RSU expense
—
2,755
—
—
2,755
Settlement of vested PSU/RSU
4,960
(4,960)
—
—
—
Issuance of shares on exercise of
options
491
(491)
—
—
—
Reclassification of cumulative
translation adjustment
—
370
(370)
—
—
Shares repurchased and cancelled
(8,480)
—
—
1,844
(6,636)
Fair value of conversion right
extinguished (note 15)
—
(14,800)
—
—
(14,800)
Issuance of convertible debentures
(note 15)
—
54,348
—
—
54,348
December 31, 2024
$
853,667
$
123,986
$
360 $
(1,017,713)
$
(39,700)
January 1, 2023
$
852,697
$
83,006
$
1,453 $
(1,148,970)
$
(211,814)
Net income
—
—
—
167,164
167,164
Other comprehensive loss
—
—
(846)
(167)
(1,013)
Total comprehensive loss (income)
—
—
(846)
166,997
166,151
Share option expense
—
1,289
—
—
1,289
PSU/RSU expense
—
4,939
—
—
4,939
Settlement of vested PSU/RSU
3,955
(3,955)
—
—
—
Issuance of shares on exercise of
options
44
(44)
—
—
—
December 31, 2023
$
856,696
$
85,235
$
607 $
(981,973)
$
(39,435)
Cineplex Inc.
Consolidated Statements of Changes in Equity
For the years ended December 31, 2024 and 2023
————————————————————————————————————————————
(expressed in thousands of Canadian dollars)
The accompanying notes are an integral part of these consolidated financial statements.
CINEPLEX INC. 2024 ANNUAL REPORT
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
89
Year ended December 31,
Notes
2024
2023
Cash provided by (used in)
Operating activities
Net (loss) income from continuing operations
$
(105,684)
$
138,051
Adjustments to reconcile net (loss) income to net cash provided by
operating activities
Depreciation and amortization - other assets
83,789
88,881
Depreciation - right-of-use assets
94,160
87,657
Unrealized foreign exchange
—
(124)
Interest rate swap agreements - non-cash interest
(1,020)
6,337
Accretion of convertible debentures and notes payable
10,527
21,551
Other non-cash interest
1,858
601
(Gain) loss on disposal of assets
6
(7,652)
2,910
Deferred income taxes
8
(27,797)
(146,724)
Non-cash share-based compensation
4,283
6,229
Loss (gain) on fair value of financial instruments and extinguishment
of debt
15
46,598
(2,610)
Financing fees
15
(17,871)
—
Net change in interests in joint ventures and associates
2,658
4,687
Net cash received from unwinding swap
26
4,583
—
Provision for Competition Tribunal administrative monetary penalty
25
39,215
—
Changes in operating assets and liabilities
24
31,432
(11,352)
Net cash provided by operating activities from continuing operations
159,079
196,094
Net cash provided by operating activities from discontinued operations
2,934
13,037
Net cash provided by operating activities
162,013
209,131
Investing activities
Proceeds from disposal of assets, including asset related insurance
recoveries
6,7
12,892
1
Purchases of property, equipment and leaseholds
6,24
(72,014)
(52,478)
Intangible assets additions
(10,343)
(10,974)
Tenant inducements
5,642
10,010
Investment in joint ventures and associates
(4,533)
(8,934)
Net cash used in investing activities from continuing operations
(68,356)
(62,375)
Net cash provided by (used in) investing activities from discontinued
operations
2
138,301
(10,560)
Net cash provided by (used in) investing activities
69,945
(72,935)
Financing activities
Repayments under credit facilities, net
15
(298,000)
(29,000)
Repayments of lease obligations - principal
(98,132)
(100,334)
Issuance of notes payable
15
575,000
—
Common Shares repurchased and cancelled
18
(6,636)
—
Settlement of former notes payable
15
(254,688)
—
Financing Fees
—
(1,061)
Settlement of convertible debentures
15
(102,350)
—
Net cash used in financing activities from continuing operations
(184,806)
(130,395)
Net cash used in financing activities from discontinued operations
(297)
(3,944)
Net cash used in financing activities
(185,103)
(134,339)
Cineplex Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars)
The accompanying notes are an integral part of these consolidated financial statements.
CINEPLEX INC. 2024 ANNUAL REPORT
CONSOLIDATED STATEMENTS OF CASH FLOWS
90
Year ended December 31,
Notes
2024
2023
Effect of exchange rate differences on cash from continuing operations
233
(19)
Effect of exchange rate differences on cash from discontinued operations
117
154
Effect of exchange rate differences on cash
350
135
Increase in cash and cash equivalents
47,205
1,992
Cash and cash equivalents - Beginning of period
36,666
34,674
Cash and cash equivalents - End of period
$
83,871
$
36,666
Supplemental information
Cash paid for interest - lease obligation from continuing operations
$
71,713
$
66,457
Cash paid for interest - lease obligation from discontinued operations
$
69
$
542
Cash paid for interest - lease obligation
$
71,782
$
66,999
Cash paid for interest - other from continuing operations
$
50,307
$
57,864
Cash paid for interest - other from discontinued operations
$
134
$
65
Cash paid for interest - other
$
50,441
$
57,929
Cash paid for income taxes, net from continuing operations
$
(49)
$
(93)
Cash paid for income taxes, net from discontinued operations
$
—
$
4,415
Cash paid for income taxes, net
$
(49)
$
4,322
Cineplex Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars)
The accompanying notes are an integral part of these consolidated financial statements.
CINEPLEX INC. 2024 ANNUAL REPORT
CONSOLIDATED STATEMENTS OF CASH FLOWS
91
1. General information
Cineplex Inc. (“Cineplex”) an Ontario, Canada corporation, is one of Canada’s largest entertainment organizations,
with theatres and location-based entertainment venues in ten provinces. Cineplex also operates businesses in digital
commerce, cinema media, digital place-based media and amusement solutions through its wholly owned
subsidiaries, Cineplex Entertainment Limited Partnership (the “Partnership”), Famous Players Limited Partnership
(“Famous Players”), Galaxy Entertainment Inc. (“GEI”), and Cineplex Digital Media Inc. (“CDM”). Cineplex is
headquartered at 1303 Yonge Street, Toronto, Ontario, M4T 2Y9.
The Board of Directors approved these consolidated financial statements on February 10, 2025.
2. Assets held for sale and discontinued operations
On November 22, 2023, Cineplex Entertainment Limited Partnership (“CELP”) announced it had entered into a
definitive share purchase agreement to sell 100% of the issued and outstanding shares of Player One Amusement
Group Inc. (“P1AG”) for cash proceeds of $155,000, subject to customary post-closing adjustments (the “Sale
Transaction”). The Sale Transaction closed on February 1, 2024. On closing of the Sale Transaction, P1AG and
CELP entered into a long-term agreement under which P1AG will continue to supply and service amusement games
in Cineplex’s theatres and location-based entertainment venues. The proceeds from the Sale Transaction were used
to repay bank debt. Cineplex recognized a material gain of $67,156 in connection with the sale of P1AG during the
year ended December 31, 2024.
The gain on sale of P1AG was comprised of the following:
Initial cash proceeds, after closing adjustments
$
146,271
Deferred proceeds
2,840
Carrying value of P1AG
(66,423)
Selling costs, including professional services
(6,376)
Gain on sale before income taxes
76,312
Estimated income taxes expense
$
(9,156)
Gain on sale of P1AG
$
67,156
Net income from discontinued operations up until date of
sale
$
847
Total net income from discontinued operations, net of
taxes
$
68,003
Cineplex has measured, presented and disclosed financial information of P1AG as a discontinued operation in
accordance with IFRS 5, Non-current assets held for sale and discontinued operations. Under this standard,
Cineplex met the criteria to record P1AG as a discontinued operation effective with the year ended December 31,
2023, and P1AG’s financial performance and cash flows have been presented in these annual consolidated financial
statements as discontinued operations on a retroactive basis. All other notes to the financial statements include
amounts for continuing operations, unless indicated otherwise.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
92
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount
as after tax profit or loss from discontinued operations in the consolidated statement of operations and comparative
periods have been revised.
The major classes of assets and liabilities at December 31, 2023 classified as held for sale were as follows:
Trade and other receivables
$
11,526
Inventories
22,116
Prepaid expenses and other current assets
2,633
Property, equipment and leaseholds
25,083
Right-of-use assets
7,831
Deferred income taxes
8,515
Goodwill
15,618
Assets held for sale
$
93,322
Accounts payable and accrued liabilities
$
10,407
Income taxes payable
2,174
Deferred revenue and other
2,515
Lease obligations
8,895
Other liabilities
14
Deferred income taxes
3,236
Liabilities related to assets held for sale
$
27,241
Net assets held for sale
$
66,081
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
93
The following table discloses revenues, expenses, net income and comprehensive income of the discontinued
operations for the year ended December 31, 2023 and 1 month of P1AG ownership in January 2024:
Year ended December 31,
2024
2023
Revenues
Amusement
$
14,743 $
193,759
Expenses
Depreciation - right-of-use assets
—
2,640
Depreciation and amortization - other assets
—
10,680
Loss (gain) on disposal of assets
1
(430)
Employee wages, salaries and benefits
2,782
26,518
Other costs
11,086
127,016
Interest expense - lease obligations
69
673
Interest expense - other
134
65
Foreign exchange
(176)
(447)
13,896
166,715
Income before income taxes
847
27,044
Income tax expense
Current
—
3,210
Deferred
—
(5,279)
—
(2,069)
Gain on disposition of business
67,156
—
Net income from discontinued operations
$
68,003 $
29,113
Other comprehensive income
Items that will be reclassified subsequently to net income:
Foreign currency translation adjustment from discontinued
operations
—
(776)
Comprehensive income from discontinued operations
$
68,003 $
28,337
Earnings per share from discontinued operations - basic
$
1.07 $
0.46
Earnings per share from discontinued operations - diluted
$
1.07 $
0.32
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
94
3. Cash and cash equivalents
Cash and cash equivalents comprise the following:
2024
2023
Cash at bank and on hand, net of outstanding cheques
$
83,871 $
36,666
4. Trade and other receivables
Trade and other receivables comprise the following:
2024
2023
Trade receivables
$
95,444 $
85,073
Other receivables
21,089
12,616
$
116,533 $
97,689
5. Inventories
Inventories comprise the following:
2024
2023
Food service inventories
$
10,871 $
11,805
Other inventories, including work-in-progress
9,853
5,819
$
20,724 $
17,624
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
95
6. Property, Equipment, and Leaseholds
Property, equipment and leaseholds consist of:
Land
Buildings and
leasehold
improvements
Equipment
Construction-
in-progress
Total
At January 1, 2024
Cost
$
9,024
$
873,744
$
794,026
$
12,717
$
1,689,511
Accumulated depreciation
—
(620,749)
(674,380)
—
(1,295,129)
Net book value
$
9,024
$
252,995
$
119,646
$
12,717
$
394,382
Year ended December 31, 2024
Opening net book value
$
9,024
$
252,995
$
119,646
$
12,717
$
394,382
Additions, net of transfers
—
45,163
43,629
(6,141)
82,651
Disposals
(3,259)
(872)
(135)
—
(4,266)
Depreciation for the year from continuing
operations
—
(38,517)
(35,135)
—
(73,652)
Closing net book value
$
5,765
$
258,769
$
128,005
$
6,576
$
399,115
At December 31, 2024
Cost
$
5,765
$
910,655
$
833,183
$
6,576
$
1,756,179
Accumulated depreciation
—
(651,886)
(705,178)
—
(1,357,064)
Net book value
$
5,765
$
258,769
$
128,005
$
6,576
$
399,115
At January 1, 2023
Cost
$
9,024
$
847,421
$
880,631
$
16,918
$
1,753,994
Accumulated depreciation
—
(580,314)
(724,185)
—
(1,304,499)
Net book value
$
9,024
$
267,107
$
156,446
$
16,918
$
449,495
Year ended December 31, 2023
Opening net book value
$
9,024
$
267,107
$
156,446
$
16,918
$
449,495
Additions, net of transfers
—
27,565
37,884
(3,295)
62,154
Assets reclassified to held for sale
—
(1,066)
(24,017)
—
(25,083)
Disposals
—
9
(1,271)
(906)
(2,168)
Foreign exchange rate changes
—
(16)
(370)
—
(386)
Depreciation for the year from continuing
operations
—
(40,345)
(38,901)
—
(79,246)
Depreciation for the year from discontinued
operations
—
(259)
(10,125)
—
(10,384)
Closing net book value
$
9,024
$
252,995
$
119,646
$
12,717
$
394,382
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
96
7. Right-of-use-assets
The following tables present right-of-use assets for Cineplex for the year ended December 31, 2024 and 2023:
Property
Equipment
Total
At December 31, 2024
Cost
$
1,320,920
$
62,480
$
1,383,400
Accumulated depreciation
(586,021)
(24,007)
(610,028)
Net book value
$
734,899
$
38,473
$
773,372
Year ended December 31, 2024
Opening net book value
$
749,326
$
5,467
$
754,793
Additions
2,399
43,344
$
45,743
Extensions and modifications
66,996
—
$
66,996
Depreciation for the period from continuing operations
(83,822)
(10,338)
$
(94,160)
Closing net book value
$
734,899
$
38,473
$
773,372
Property
Equipment
Total
At December 31, 2023
Cost
$
1,254,470
$
19,136
$
1,273,606
Accumulated depreciation
(505,144)
(13,669)
(518,813)
Net book value
$
749,326
$
5,467
$
754,793
Year ended December 31, 2023
Opening net book value
$
766,167
$
6,811
$
772,978
Additions
26,724
148
26,872
Extensions and modifications
52,276
1,056
53,332
Assets reclassified to held for sale
(7,831)
—
(7,831)
Disposals
—
(181)
(181)
Foreign exchange rate changes
(80)
—
(80)
Depreciation for the period from continuing operations
(85,293)
(2,364)
(87,657)
Depreciation for the period from discontinued operations
(2,637)
(3)
(2,640)
Closing net book value
$
749,326
$
5,467
$
754,793
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
97
8. Deferred income taxes
Based on substantively enacted corporate tax rates, expected timing of reversals and expected taxable income
allocation to various tax jurisdictions, deferred income taxes are as follows:
December 31, 2024
December 31, 2023
Deferred income tax assets
Property, equipment and leaseholds and deferred tenant
inducements - difference between net carrying value and
undepreciated capital cost
$
8,106 $
7,936
Accounting provisions not currently deductible
91,437
88,832
Deferred revenue
1,448
1,240
Income tax credits available
3,763
3,763
Operating losses available for carry-forward
105,247
101,913
Other
7,604
12,512
Total gross deferred income tax assets
217,605
216,196
Future deferred tax liabilities
Intangible assets
(13,433)
(13,152)
Interest rate swap agreements
(96)
(1,198)
Goodwill
(33,556)
(31,086)
Convertible debentures
(20,973)
(23,976)
Total gross deferred income tax liabilities
(68,058)
(69,412)
Net deferred income tax asset recognized
$
149,547 $
146,784
At December 31, 2020 the recoverability of the net deferred income tax assets was uncertain and accordingly the net
deferred tax assets were derecognized. During the second quarter of 2023, Cineplex assessed the recoverability of
net deferred income tax assets and determined that the expected return to profitability provided a reasonable
expectation that previously derecognized net deferred income tax assets will be utilized to offset future periods of
taxable income, resulting in income tax recovery of approximately $150,225 in the second quarter of 2023.
Cineplex will utilize a portion of its net operating losses against the taxable gain from the sale of P1AG, which
resulted in no taxes payable resulting from the disposition. Cineplex will continue to evaluate the recoverability of
net deferred tax assets in the ordinary course of business at each balance sheet date.
Cineplex’s combined statutory income tax rate at December 31, 2024 was 26.3% (2023 - 26.3%). The provision for
the Competition Tribunal’s administrative monetary penalty is not deductible for income tax purposes.
By Notice of Reassessment (“NOR”) dated January 22, 2019, the Canada Revenue Agency (“CRA”), disallowed the
deduction of $26,600 of losses of AMC Ventures Inc. (“AMC”) that Cineplex had obtained on the acquisition of
AMC in 2012. The disallowance of the losses, which offset taxable income generated in 2014, increased taxes and
interest payable by approximately $8,600, 50% of which was required to be paid immediately (interest continues to
accrue on the unpaid amount). Cineplex disagrees with the CRA’s position, and has commenced an appeal to the
Tax Court of Canada in respect of the NOR. On June 28, 2021, Cineplex received a response from the Attorney
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
98
General of Canada representing the CRA confirming its position with respect to the disallowance of the losses. The
appeals process is continuing and Cineplex believes that it should prevail in defending its original filing position,
although no assurance can be given in this regard as the appeal process proceeds.
The provision for income taxes included in the consolidated statement of operations differs from the statutory
income tax rate for the years ended December 31, 2024 and 2023 as follows:
2024
2023
Loss before income taxes from continuing operations
$
(136,202)
$
(9,512)
Combined statutory income tax rates for the current year
26.27 %
26.27 %
Income taxes receivable at statutory rate
(35,780)
(2,499)
Adjustments relating to prior periods
(2,473)
1,918
Recognition of deferred income tax assets
—
(148,979)
Other permanent differences (i)
7,735
1,997
Provision for income taxes from continuing operations
$
(30,518)
$
(147,563)
(i) Includes $10,302 related to the Competition Tribunal’s administrative monetary penalty, which is non-deductible for income tax purposes.
Adjustments relating to prior periods include differences between the prior year provision and the income tax returns
as filed.
Non-capital losses available for carry-forward from continuing operations as at December 31, 2024 expire as follows
(in thousands of dollars):
2027
$2,292
2028
7,530
2029
5,122
2030
2,184
2032
254
2034
1,947
2035
2,770
2036
2,749
2037
—
2038
3,110
2040
—
2041
233,534
2042
113,237
2043
4,243
2044
21,228
$
400,200
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
99
9. Interests in joint ventures and associates
Cineplex participates in incorporated and unincorporated joint ventures with other parties and accounts for its
interests using the equity method.
As part of the reorganization of Scene GP (“SCENE”) which began in December 2020, Cineplex and its loyalty
partner launched Scene+ on December 13, 2021. As a result of the December 13, 2021 step in the reorganization,
Cineplex equity accounts for its interest in Scene LP (“Scene+”), and continues to consolidate 50% of SCENE
which holds the deferred revenue obligation for SCENE points issued up to December 12, 2021. During the third
quarter of 2022, Empire Company Limited became a one-third partner of Scene+ and Cineplex continues to
maintain a 33.3% interest in Scene+.
Other joint ventures include a 50% interest in a theatre operation (2023 - 50%).
The joint ventures and associates are headquartered in Canada.
The net interest in joint ventures is summarized as follows as at December 31, 2024 and 2023:
2024
Scene+
Other
Total
Ownership percentage
33.3%
50%
Voting percentage
33.3%
50%
Equity (Deficit)
$
4,032
$
(3,627) $
405
Economic interest
33.3%
50%
$
1,343
$
(1,814) $
(471)
Accounts receivable
5,620
1,622 $
7,242
Net interest in joint ventures and associates
$
6,963
$
(192) $
6,771
Interest at beginning of year
$
5,088
$
(192) $
4,896
Investment
4,533
—
4,533
Net change in receivable or payable
—
(238)
(238)
Share of net (loss) income
(2,658)
238
(2,420)
Net interest in joint ventures and associates
$
6,963
$
(192) $
6,771
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
100
2023
Scene+
Other
Total
Ownership percentage
33.3%
50
%
Voting percentage
33.3%
50
%
Equity (Deficit)
$
21,187
$
(3,563) $
17,624
Economic interest
33.3%
50%
$
7,055
$
(1,782) $
5,273
Accounts (payable) receivable
(1,967)
1,590
(377)
Net interest in joint ventures and associates
$
5,088
$
(192) $
4,896
Interest at beginning of year
$
842
$
(192) $
650
Investment
8,934
—
8,934
Net change in receivable or payable
—
(164)
(164)
Share of net (loss) income
(4,688)
164
(4,524)
Net interest in joint ventures and associates
$
5,088
$
(192) $
4,896
The summarized balance sheets including 100% of the assets, liabilities and equity of each of the joint ventures at
December 31 each year are as follows:
2024
Scene+
Other
Total
Assets
Cash and cash equivalents
$
22,513 $
—
$
22,513
Receivables and other current assets
46,819
39
46,858
69,332
39
69,371
Equipment
8,372
—
8,372
Total assets
$
77,704 $
39
$
77,743
Liabilities
Accounts payable and accrued liabilities
$
72,884 $
25
$
72,909
Long-term debt
—
3,641
3,641
Lease obligations
788
—
788
Total liabilities
73,672
3,666
77,338
Equity (Deficit)
4,032
(3,627)
405
Total liabilities and equity
$
77,704 $
39
$
77,743
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
101
2023
Scene+
Other
Total
Assets
Cash and cash equivalents
$
26,649
$
—
$
26,649
Receivables and other current assets
61,228
39
61,267
87,877
39
87,916
Equipment
5,905
—
5,905
Total assets
$
93,782
$
39
$
93,821
Liabilities
Accounts payable and accrued liabilities
$
71,636
$
925
$
72,561
Long-term debt
—
2,677
2,677
Lease obligations
958
—
958
Total liabilities
72,594
3,602
76,196
Equity (Deficit)
21,188
(3,563)
17,625
Total liabilities and equity
$
93,782
$
39
$
93,821
The summarized statements of comprehensive income (loss) including 100% of the revenue, expenses and income
of each of the joint ventures for the years ending December 31 are as follows:
2024
Scene+
Other
Total
Revenues
$
46,470 $
3,345 $
49,815
Depreciation and amortization
2,590
—
2,590
Other expenses
68,086
2,935
71,021
Total expenses
70,676
2,935
73,611
Net (loss) income and comprehensive (loss) income
$
(24,206)
$
410 $
(23,796)
2023
Scene+
Other
Total
Revenues
$
46,513 $
3,149 $
49,662
Depreciation and amortization
2,094
—
2,094
Other expenses
58,482
2,910
61,392
Total expenses
60,576
2,910
63,486
Net (loss) income and comprehensive (loss) income
$
(14,063)
$
239 $
(13,824)
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
102
SCENE
In addition to the joint ventures which are equity accounted, Cineplex consolidates its 50% share of assets,
liabilities, revenues and expenses of its joint operation, SCENE.
The summarized balance sheets of SCENE at December 31 are as follows:
2024
2023
Assets
Cash and cash equivalents
$
3,242 $
8,349
Trade and other receivables
264
635
3,506
8,984
Promissory notes receivable from partners
19,000
19,000
Total assets
$
22,506 $
27,984
Liabilities
Accounts payable and accrued liabilities
$
4,173 $
4,170
Deferred revenue
23,923
31,974
Total liabilities
28,096
36,144
Deficiency
(5,590)
(8,160)
$
22,506 $
27,984
The summarized results of operations of SCENE are as follows:
2024
2023
Revenues
$
8,051 $
12,915
Expenses
15,482
24,726
Net loss
$
(7,431)
$
(11,811)
Cineplex and the other partner of SCENE contribute capital as required to fund SCENE’s future redemption costs.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
103
10. Intangible assets
Intangible assets consist of the following:
Customer
relationships
Software and
other
Trademarks
and
trade names
Total
At January 1, 2024
Cost
$
33,204
$
80,707
$
63,599
$
177,510
Accumulated amortization
(33,204)
(63,433)
—
(96,637)
Net book value
$
—
$
17,274
$
63,599
$
80,873
Year ended December 31, 2024
Opening net book value
$
—
$
17,274
$
63,599
$
80,873
Additions
—
10,394
—
10,394
Amortization for the year from continuing operations
—
(10,135)
—
(10,135)
Closing net book value
$
—
$
17,533
$
63,599
$
81,132
At December 31, 2024
Cost (i)
$
21,060
$
73,270
$
63,599
$
157,929
Accumulated amortization (i)
(21,060)
(55,737)
—
$
(76,797)
Net book value
$
—
$
17,533
$
63,599
$
81,132
At January 1, 2023
Cost
$
33,494
$
70,328
$
63,599
$
167,421
Accumulated amortization
(33,196)
(53,797)
—
(86,993)
Net book value
$
298
$
16,531
$
63,599
$
80,428
Year ended December 31, 2023
Opening net book value
$
298
$
16,531
$
63,599
$
80,428
Additions
—
10,378
—
10,378
Foreign exchange rate changes
(2)
—
—
(2)
Amortization for the year from continued operations
—
(9,635)
—
(9,635)
Amortization for the year from discontinued
operations
(296)
—
—
(296)
Closing net book value
$
—
$
17,274
$
63,599
$
80,873
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
104
11. Impairment of long-lived assets
Cineplex generally performs its annual test for impairment of goodwill and indefinite-lived intangible assets in the
fourth quarter. Assessment of impairment for long-lived assets, including property, equipment, leaseholds, right-of-
use assets, intangible assets and goodwill is performed more frequently as specific events or circumstances dictate
triggering events and changes in circumstances indicate that the carrying amount of the asset group may not be fully
recoverable. In addition, for assets other than goodwill and indefinite-lived intangible assets, indicators are assessed
considering whether an impairment loss previously recognized may no longer exist or may have decreased.
Fair value less cost to sell is determined using discounted cash flow models that incorporate significant key
assumptions relating to attendance (applicable for the exhibition CGUs only) and the related revenue growth rates,
and discount rates. Further, other assumptions are required pertaining to variable and fixed cash flows, and operating
margins. Cineplex projects revenue, operating margins and cash flows for a period of five years, and applies a
perpetual long-term growth rate thereafter.
The attendance and revenue growth rates are derived from Cineplex’s Board approved budget which considers
projected attendance based on film releases, past experience, as well as economic, industry and market trends.
Discount rates applied to the groups of goodwill cash-generating units (“CGUs”) represent Cineplex’s assessment of
the risks specific to each group of CGUs regarding the time value of money and individual risks of the underlying
assets. Cineplex used discount rates between 9.6% and 12.9% (2023 - between 9.7% and 15.2%), and perpetual
growth rates between 0.5% and 1.0% (2023 - between 0.5% and 1.0%), which are consistent with the observed long-
term average growth rates in the exhibition, amusement and leisure, and digital media industries.
The determination of fair value less costs of disposal is sensitive to the growth rates, discount rates, and long-term
growth rates used. The risk premiums expected by market participants related to uncertainties about the industry and
assumptions relating to future cash flows may differ, depending on economic conditions and other events.
Accordingly, it is reasonably possible that future changes in assumptions may negatively impact future assessments
of the recoverable amount for groups of CGUs.
For the exhibition CGUs, a 20% change in forecasted attendance and related revenue growth rates would result in a
material impairment loss however management does not believe this is reasonably likely. For the CDM CGU, a 45%
change in the revenue growth rates would result in a material impairment loss. Cineplex determined that no other
reasonable change in assumptions would cause the recoverable amount of any of its CGUs to fall below its carrying
value.
At the end of each future reporting period Cineplex will assess whether there are indications that the impairment loss
recognized for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists,
Cineplex will estimate the recoverable amount of that asset and may reverse previously recorded impairment losses.
Based on Cineplex’s assessment for long-lived asset CGUs, no indicators of impairment or reversals were present
and therefore no impairment testing was performed in the current period.
The following table discloses the change in goodwill for the years ended December 31:
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
105
2024
2023
Balance - Beginning of year
$
620,300 $
636,134
Foreign exchange rate changes
(216)
Assets reclassified to held for sale
—
(15,618)
Balance - End of year
$
620,300 $
620,300
For the purpose of impairment testing, goodwill has been allocated to CGUs or groups of CGUs. Total goodwill of
the reporting segments are as follows:
2024
2023
Exhibition
$
413,915 $
413,915
Media
206,385
206,385
Amusement and leisure
—
$
620,300 $
620,300
12. Accounts payable and accrued liabilities
Accounts payable and accrued liabilities consist of:
2024
2023
Accounts payable - trade
$
115,844 $
80,898
Film payables and accruals
35,990
25,444
Accrued salaries and benefits
30,857
27,898
Sales taxes payable
7,673
12,160
Accrued occupancy costs
3,099
2,437
Other payables and accrued liabilities
43,149
23,645
$
236,612 $
172,482
13. Share-based compensation
Omnibus Incentive Plan
Cineplex has an Omnibus Incentive Plan (the “Incentive Plan”) in which all employees and consultants are eligible
to participate. The Incentive Plan consists of stock options, RSUs and PSUs. Awards of RSUs and PSUs granted
during a service year subject to a service period as determined by management at the time of issuance. The
aggregate number of Shares that may be issued under the Incentive Plan is 3,170,875 provided that no more than
387,989 Shares may be issued in aggregate pursuant to the settlement of RSUs and PSUs. The base Share
equivalents granted as RSU and PSU awards attract compounding notional dividends at the same rate as outstanding
Shares, which are notionally re-invested as additional base Share equivalents. PSU and RSU awards may be settled
in Shares issued from treasury, cash, or a mix of Shares and cash, at Cineplex’s option at the time of settlement. As
at December 31, 2024, 510,419 (2023 - 787,113) Shares are available to be issued under the Incentive Plan. Options
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
106
that were issued prior to the Incentive Plan and are subsequently cancelled are available to be issued under the
Incentive Plan.
Stock Options
Stock options issued under the Incentive Plan are administered by the Board of Directors which establishes the
exercise price at the time each option is granted, which in all cases is not less than the market price on the grant date.
All of the options must be exercised over specified periods not to exceed ten years from the date granted. Options
issued under the Incentive Plan may be exercised for cash or on a cashless basis, both of which result in the issuance
of Shares from treasury. Options granted are accounted for as equity-settled.
Cineplex recorded $1,529 of employee benefits expense with respect to the options during the year ended December
31, 2024 (2023 - $1,289). The intrinsic value of vested share options at December 31, 2024 is $2,460 (2023 -
$2,464), based on the closing Share price of $12.20 per share (2023 - $8.37).
A summary of option activities in 2024 and 2023 is as follows:
2024
2023
Weighted
average
remaining
contractual life
(years)
Number of
underlying
shares
Weighted
average
exercise
price
Number of
underlying
shares
Weighted
average
exercise
price
Options outstanding, January 1
6.71
2,360,605
$
16.51
2,102,818
$
18.90
Granted
641,553
8.03
461,786
8.71
Forfeited
(108,829)
16.37
(190,122)
24.65
Exercised
(157,460)
8.31
(13,877)
8.25
Options outstanding, December 31
6.54
2,735,869
$
15.00
2,360,605
$
16.51
At December 31, 2024 and 2023, options are vested and exercisable as follows:
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
107
2024
2023
Options vested and exercisable at $8.03
87,742
—
Options vested and exercisable at $13.39
103,177
53,097
Options vested and exercisable at $12.41
126,316
131,546
Options vested and exercisable at $12.87
194,414
129,616
Options vested and exercisable at $8.25
319,458
363,790
Options vested and exercisable at $25.05
444,601
471,120
Options vested and exercisable at $33.59
321,640
336,627
Options vested and exercisable
1,597,348
1,485,796
The fair value of options granted in 2024 and 2023 were determined using the Black-Scholes valuation model using
the following significant inputs:
2024
2023
Number of options granted
641,553
461,786
Share price
$
8.03
$
8.71
Exercise price
$
8.03
$
8.71
Expected option life (years)
4.0
4.0
Volatility
39.85%
51.31%
Annual risk-free rate
3.86%
3.19%
Fair value of options granted
$
2.92
$
2.90
Upon cashless exercises, the options exercised in excess of Shares issued are cancelled and returned to the pool
available for future grants. At December 31, 2024, 813,258 options (2023 - 1,239,385) are available for grant.
RSU and PSU awards
PSU Share
equivalents
granted
RSU Share
equivalents
granted
PSU Share
equivalents
minimum payout
PSU Share
equivalents
maximum payout
2024 LTIP awards granted in Q1 2024
381,265
541,347
—
762,530
2023 LTIP awards granted in Q1 2023
307,551
477,254
—
615,102
2022 LTIP awards granted in Q1 2022
177,973
284,661
—
355,946
RSU
During the first quarter of 2024, Cineplex issued 541,347 equity settled RSUs with a fair value $8.03 per unit (total
fair value of $4,347 on issuance). The fair value was assessed based on Cineplex’s closing Share price on the grant
date. The RSU and PSU awards issued will vest in the third quarter of 2026.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
108
A summary of RSU activities during the years ended December 31, 2024 and 2023 is as follows:
2024
2023
RSUs outstanding, January 1
709,517
565,278
Granted
541,347
477,254
Settled
(265,967)
(250,563)
Forfeited
(73,210)
(82,452)
RSUs outstanding, December 31
911,687
709,517
PSU
During the first quarter of 2024, Cineplex issued 381,265 equity settled PSUs with a fair value of $8.03 per unit
(total fair value of $3,062 on issuance). The fair value was assessed based on Cineplex’s closing Share price on the
grant date. The PSU awards issued will vest in the fourth quarter of 2026. Compensation expense is recorded based
on the number of units expected to vest, the current market price of Cineplex’s Shares, and the application of a
performance multiplier that ranges from a minimum of zero to a maximum of two. Performance multipliers are
developed based on Total Shareholder Return percentile rank relative to a select peer group and composite group.
Participants will receive fully paid Shares issued from treasury that can vary depending on the achievement of
established performance targets. Performance conditions are reflected in Cineplex’s estimate of the grant-date fair
value for equity instruments granted.
A summary of PSU activities during the years ended December 31, 2024 and 2023 is as follows:
2024
2023
PSUs outstanding, January 1
468,885
331,532
Granted
381,265
307,551
Settled
(104,471)
(96,018)
Forfeited
(72,277)
(74,180)
PSUs outstanding, December 31
673,402
468,885
Incentive Plan costs are estimated at the grant date based on expected performance results then accrued and
recognized on a graded basis over the vesting period. Forfeitures are estimated to be nominal, based on historical
forfeiture rates. For the year ended December 31, 2024, Cineplex recognized compensation cost of $7,408 (2023 -
$4,910) under the Incentive Plan relating to RSU and PSU awards. At December 31, 2024, $4,653 (2023 - $0) was
included in share-based compensation liability and $3,185 in contributed surplus (2023 - $5,390).
The RSUs and PSUs associated with the 2021 and 2022 LTIP were equity-settled in 2023 and 2024, respectively.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
109
Deferred equity units
Members of the Board of Directors and certain officers of Cineplex may elect to defer a portion of their
compensation in the form of deferred equity units. Cineplex recognized compensation expense of $2,516 during the
year ended December 31, 2024 (2023 - $128) associated with the deferred equity units. At December 31, 2024,
$8,036 (2023 - $4,470) was included in non-current share-based compensation liability.
14. Lease obligations
The following table presents lease obligations for Cineplex for the year ended December 31, 2024 and 2023:
Property
Equipment
Total
Year ended December 31, 2024
Opening balance
$
1,072,097
$
6,337
1,078,434
Additions
2,478
43,344
45,822
Extensions and modifications
67,067
—
67,067
Tenant inducement
4,976
—
4,976
Lease payment
(160,355)
(10,165)
(170,520)
Interest expense from continuing operations
70,599
2,795
73,394
Disposals
1
—
1
Closing lease obligations
$
1,056,863
$
42,311
$
1,099,174
Less: current portion
79,499
9,170
88,669
Non-current portion of lease obligations of continuing
operations
$
977,364
$
33,141
$
1,010,505
Property
Equipment
Total
Year ended December 31, 2023
Opening balance
$
1,091,282
$
9,357
$
1,100,639
Additions
26,724
148
26,872
Extensions and modifications
52,457
1,055
53,512
Reclassified to held for sale
(8,895)
—
(8,895)
Tenant inducement
10,292
—
10,292
Lease payment
(166,388)
(4,483)
(170,871)
Interest expense from continuing operations
66,037
456
66,493
Interest expense from discontinued operations
673
—
673
Disposals
—
(196)
(196)
Foreign exchange rate changes
(85)
—
(85)
Closing lease obligations
$
1,072,097
$
6,337
$
1,078,434
Less: current portion
82,848
2,182
85,030
Non-current portion of lease obligations
$
989,249
$
4,155
$
993,404
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
110
Current portion of lease obligations are net of estimated tenant inducements.
The following table discloses the undiscounted cash flow for lease obligations as of December 31:
2024
2023
Less than one year
$
174,535 $
166,482
One to five years
668,592
659,731
More than five years
688,770
855,867
Total undiscounted lease obligations
$
1,531,897 $
1,682,080
The following table provides the lease amounts recognized in the statement of operations for the periods ended
December 31:
2024
2023
Depreciation expense on right-of-use assets
$
94,160 $
87,657
Interest expense on lease obligations
$
73,394 $
66,493
Expense relating to variable lease payments not included in the measurement
of the lease obligations (i)
$
53,414 $
51,230
(i) Variable lease payments include realty taxes and insurance.
Cineplex conducts a significant part of its operations in leased premises. Leased premises include leases for theatre
locations, location-based entertainment venues, and offices. Cineplex also leases equipment for use in its theatre
operations and offices. Leases for premises generally provide for minimum rentals and, in certain situations,
percentage rentals based on sales volume or other identifiable targets; and may require the tenant to pay a portion of
realty taxes and other property operating expenses. Property lease terms generally range from 15 to 20 years and
contain various renewal options, generally, in intervals of five to ten years. Equipment lease terms generally range
from one to five years and may contain renewal options.
Some of the property leases in which Cineplex is the lessee contain fixed lease payments and variable lease
payments that are derived from sales or attendance generated from the leased properties. Variable payments related
to these leases for the period ended December 31, 2024 were $5,165.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
111
15. Long-term debt
Long-term debt consists of the following as at December 31, 2024 and December 31, 2023:
December 31, 2024
December 31, 2023
Book Value (i)
Face Value
Book Value (i)
Face Value
Credit Facilities
$
— $
— $
298,000 $
298,000
Convertible Debentures -
7.75% due March 1, 2030
161,468
216,250
—
—
Notes Payable - 7.625% due
March 31, 2029
575,000
575,000
—
—
Convertible Debentures -
5.75% due September 30, 2025
—
—
272,469
316,250
Notes Payable - 7.5% due
February 26, 2026
—
—
246,970
250,000
Total
$
736,468 $
791,250 $
817,439 $
864,250
(i) Book value represents the carrying value of the debt component, which is the initial fair value of the
instrument, plus cumulative accretion.
Interest expense
Full Year
2024
2023
Interest expense on long-term debt
$
60,859 $
59,331
Lease interest expense (i)
71,708
66,058
Financing fees
823
1,060
Sub-total - cash interest expense from continuing operations
$
133,390 $
126,449
Deferred financing fee accretion and other non-cash interest, net
1,858
601
Accretion expense on Debentures and Notes Payable
10,527
21,551
Interest rate swap - non-cash
(1,020)
6,337
Sub-total - non-cash interest expense from continuing operations
11,365
28,489
Total interest expense from continuing operations
$
144,755 $
154,938
Total cash interest paid from continuing operations
$
122,020 $
124,321
(i) Represents total cash interest paid and accrued cash interest related to lease obligations.
2024 Refinancing
On March 4, 2024, Cineplex completed a comprehensive refinancing plan (the “2024 Refinancing”). The 2024
Refinancing resulted in cash fees of $21,525 and loss on fair value of financial instruments of $55,956.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
112
The following table illustrates the components of the loss on financial instruments recorded at fair value and loss on
extinguishment of debt:
Loss on financial instruments recorded at fair value
Year ended December 31, 2024
Bank Fees and other fees
$
2,027
Loss on settlement of notes
14,165
Loss on settlement of debentures
39,764
Loss on 2024 Refinancing
55,956
Remeasurement of financial instruments recognized in profit or loss
(9,358)
Loss on financial instruments recorded at fair value
$
46,598
Credit facilities
2024 Credit Facility
On March 4, 2024, Cineplex entered into a new credit agreement with a syndicate of banks led by Scotiabank (the
“2024 Credit Agreement”), terminating and replacing the Eighth Amended and Restated Credit Agreement in its
entirety. The 2024 Credit Agreement provides for a new $100 million “covenant-lite” revolving credit facility with a
maturity date of March 4, 2027 (the “2024 Credit Facility”).
At Cineplex’s election, borrowings under the 2024 Credit Agreement will bear interest at a floating rate based on the
Canadian dollar prime rate, U.S. Base Rate, SOFR (Secured Overnight Financing Rate) or CORRA (Canadian
Overnight Repo Rate Average) plus, in each case, an applicable margin to those rates. Borrowings are available in
either Canadian or US dollars.
The 2024 Credit Agreement does not contain financial maintenance covenants, unless borrowings utilized under the
agreement (including issued letters of credit) exceed 40% (the “Utilization Threshold”) of the total available credit
facility measured as at the end of a fiscal quarter of Cineplex. In the event that Utilization Threshold is exceeded,
Cineplex will be required to maintain a Total Leverage Ratio of not greater than 4.75 to 1 thereafter until the
borrowings drop below 40% utilization.
As a so-called “covenant-lite” credit facility, as long as the Utilization Threshold has not been exceeded, the 2024
Credit Agreement does not restrict the discretion of Cineplex’s management with respect to matters such as the
payment of dividends or making certain other payments, making investments, loans and guarantees and otherwise
being able to sell or dispose of assets. Cineplex’s ability to take such actions when the Utilization Threshold has
been exceeded require that Cineplex’s Total Leverage Ratio be less than 4.25 to 1.00, on a pro forma basis after
giving effect to such payment or transaction.
The obligations under the 2024 Credit Agreement are guaranteed jointly and severally, by Cineplex and each direct
or indirect restricted subsidiary of Cineplex , other than certain excluded immaterial subsidiaries.
This summary of the 2024 Credit Facility is qualified in its entirety by reference to the provisions of the Credit
Agreement which contains a complete statement of those terms and conditions, and was filed on SEDAR+ on March
4, 2024.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
113
The 2024 Credit Facility is drawn upon and repaid on a regular basis and as such is presented on a net basis in the
Statement of Cash flows.
Available
Drawn
Reserved
Remaining
Revolving Facility
$
100,000 $
— $
7,965 $
92,035
At December 31, 2024, Cineplex was subject to a margin of 3.25% (2023 - 1.75%) on the prime rate and margin of
4.25% (2023 - 2.75% on bankers’ acceptances) on the CORRA advances and SOFR advances, plus a 0.25% (2023 -
0.25%) per annum fee for letters of credit issued. Cineplex pays a commitment fee on the daily unadvanced portion
of the 2024 Credit Agreement, which will vary based on the Total Leverage Ratio and was 0.85% at December 31,
2024 (2023 - 0.6875%).
Convertible debentures
Cineplex’s 7.75% convertible unsecured subordinated debentures are due March 1, 2030 (the “Convertible
Debentures”), with interest paid semi-annually on March 1 and September 1.
The Convertible Debentures are not redeemable by Cineplex prior to March 1, 2027. On or after March 1, 2027 and
prior to March 1, 2029, Cineplex may, at its option, redeem the Convertible Debentures in whole or in part from
time to time provided that the volume weighted average trading price of the share on the Toronto Stock Exchange
(the “TSX”) during the 20 consecutive trading days ending on the fifth trading day preceding the date on which the
notice of redemption is given is not less than 125% of the conversion price. On or after March 1, 2029, the
Convertible Debentures may be redeemed in whole or in part from time to time at the option of Cineplex at a price
equal to their principal amount plus accrued and unpaid interest. Redemption may be in the form of cash or in the
form of shares, at the option of Cineplex.
At the holder’s option, the Convertible Debentures may be converted into shares at a conversion price of $10.29 per
share at any time prior to the close of business on the earlier of: (i) five business days prior to the Maturity Date, and
(ii) if called for redemption, five business days immediately preceding the dated fixed for redemption of the
Convertible Debentures, at a conversion price to be determined at the time of pricing. Holders who convert their
Convertible Debentures into shares will receive accrued and unpaid interest for the period from the date of the latest
interest payment date to the date of conversion. Conversion of outstanding Convertible Debentures will result in the
issuance of shares from treasury.
The foregoing is a summary of the key terms of the Convertible Debentures. This summary is qualified in its entirety
by reference to the provisions of the Convertible Debentures trust indenture which contains a complete statement of
those terms and conditions. The trust indenture for the Convertible Debentures and the Supplemental Indenture were
filed on SEDAR+ on July 15, 2020 and March 4, 2024, respectively.
The fair value of the liability component of the Convertible Debentures was assessed at inception based on an
estimated market discount rate of 14.88% , and will be accreted to the full face value of $216,250 over the term of
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
114
the Convertible Debentures. The residual value of $54,348 ($70,191 net of $15,843 deferred income taxes) was
allocated to the equity component less the pro-rata portion of transaction costs as prescribed by IFRS 9, Financial
instruments and IAS 32, Financial instruments: Presentation.
The Unaccreted deferred financing fees and discount as at December 31, 2024 related to the 7.75% Convertible
Debentures due March 1, 2030 is $54,782.
Cineplex recorded cash interest expense on the Debentures during the year ended December 31, 2024 of $16,821
(2023 - $18,184) and recorded accretion expense during the year ended December 31, 2024 of $10,142 (2023 -
$20,390), both of which are included as part of the interest expense in the consolidated statement of operations. As
at December 31, 2024, Cineplex has $216,250 principal amount of Convertible Debentures outstanding.
Notes Payable
During the year ended December 31, 2024, Cineplex recorded cash interest expense on the Notes Payable of
$39,432 (2023 - $18,750) and Cineplex recorded accretion expense during the year ended December 31, 2024 of
$385 (2023 - $1,160), both of which are included as part of interest expense in the consolidated statement of
operations. As at December 31, 2024, Cineplex has $575,000 principal amount of 2024 Notes outstanding.
Cineplex’s derivative financial instrument on the outstanding 2021 Notes and 2024 Notes, as applicable, relates to
the early prepayment option that fluctuates in value based on market interest rates. The fair value of the embedded
derivative was determined using an option pricing model with observable market inputs and are consistent with
accepted methods for valuing financial instruments, and is categorized as level 2 in the fair value hierarchy.
Cineplex has estimated the fair value of this embedded derivative at $19,420 as at December 31, 2024 (2023 -
$5,590) which is presented on the consolidated balance sheets as a derivative financial instrument.
2024 Notes
On March 4, 2024, in connection with the 2024 Refinancing, Cineplex closed a private placement offering of
$575,000 aggregate principal amount of 7.625% senior secured notes due March 31, 2029. The 2024 Notes were
issued pursuant to an indenture entered into among Cineplex and TSX Trust Company, as trustee and collateral
agent, dated March 4, 2024 (the “2024 Notes Indenture”). Interest is paid semi-annually on January 31 and July 31.
The 2024 Notes are fully and unconditionally guaranteed, jointly and severally, by Cineplex and each direct or
indirect restricted subsidiary of Cineplex that is a borrower or guarantees the obligations of Cineplex or any other
borrower under the 2024 Credit Facility.
At any time from and after January 31, 2026, Cineplex may, at its option, redeem the 2024 Notes, in whole or in
part, at the redemption prices set forth in the 2024 Notes Indenture, plus accrued and unpaid interest thereon to, but
excluding, the applicable redemption date. In addition, at any time prior to January 31, 2026, the Cineplex may, at
its option, on one or more occasions, redeem up to 40% of the aggregate principal amount of the 2024 Notes at a
redemption price equal to 107.625% of the aggregate principal amount thereof redeemed plus accrued and unpaid
interest thereon to, but excluding, the applicable redemption date, with the net cash proceeds of one or more equity
offerings; provided that (a) the aggregate principal amount of the 2024 Notes outstanding immediately after the
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
115
occurrence of each such redemption is equal to not less than 60% of the original aggregate principal amount of the
2024 Notes; and (b) each such redemption occurs within 90 days of the date of closing of each such equity offering.
If Cineplex sells certain assets without applying the proceeds in a permitted manner within 365 days of receipt
thereof, Cineplex must make an offer to each holder of 2024 Notes to purchase all or a portion of its Notes at 100%
of the aggregate principal amount of the 2024 Notes so repurchased plus accrued and unpaid interest to, but not
including, the date of repurchase. If Cineplex undergoes certain change of control events, Cineplex must make an
offer to repurchase the 2024 Notes at a purchase price equal to 101% of the aggregate principal amount of the 2024
Notes so repurchased plus accrued and unpaid interest to, but not including, the date of repurchase.
If Cineplex, any guarantor or other payor is required to withhold or deduct any amount for or on account of taxes
from any payment made under or with respect to the 2024 Notes or any guarantee, as the case may be, Cineplex,
such guarantor or other payor, as applicable, will pay (together with such payment) such additional amounts as may
be necessary so that the net amount received by each holder or beneficial owner of a 2024 Note after such
withholding or deduction (including any such withholding or deduction from such additional amounts) will not be
less than the amount the holder or beneficial owner would have received if such taxes had not been withheld or
deducted (subject to certain exceptions).
In addition to the restrictions on asset sales and change of control events described above, the 2024 Notes Indenture
contains covenants that restrict, among other things, Cineplex’s ability to incur liens other than permitted liens,
make restricted payments, incur certain indebtedness and enter into certain transactions with affiliates, in each case,
subject to certain conditions.
The 2024 Notes Indenture contains customary events of default substantially similar to those set out in the trust
indenture governing the 2021 Notes, and as more specifically set out in the 2024 Notes Indenture. Upon the
occurrence of an event of default under the 2024 Notes Indenture, the trustee thereunder, acting on the instruction of
the requisite majority of holders of the 2024 Notes, and subject to the Intercreditor Agreement, would be entitled to
accelerate all amounts outstanding under the 2024 Notes and, upon such acceleration, to instruct the collateral agent
under the Intercreditor Agreement to enforce the security granted to the lenders by Cineplex and the guarantors.
Following repayment of the lenders under the 2024 Credit Facility and any other priority lien obligations under the
Intercreditor Agreement, the holders of the 2024 Notes would then be repaid from the proceeds of such security,
using all available assets. Only after such repayment and the payment of any other secured and unsecured creditors
would the holders of common shares of Cineplex (the “Common Shares”) receive any proceeds from the liquidation
of Cineplex’s assets.
The foregoing is a summary of the key terms of the 2024 Notes. This summary is qualified in its entirety by
reference to the provisions of the 2024 Notes Indenture which contains a complete statement of those terms and
conditions. The 2024 Notes Indenture was filed on SEDAR+ on March 4, 2024.
Security and Ranking
The obligations under both the 2024 Credit Facility and the 2024 Notes are secured by charges granted in favour of
TSX Trust Company, as collateral agent, over substantially all of the personal and real property owned by Cineplex
its subsidiaries that are guarantors of such debt, other than certain excluded immaterial subsidiaries. The priorities of
the liens securing the obligations under the 2024 Credit Agreement and the 2024 Notes are governed by the terms of
a collateral agent and intercreditor agreement (the “Intercreditor Agreement”). Pursuant to the Intercreditor
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
116
Agreement and the security granted in connection therewith: (i) the 2024 Notes rank effectively junior, to the extent
of the value of the collateral, to Cineplex’s and the guarantor’s obligations under the 2024 Credit Agreement and
any other priority lien debt set out therein; (ii) rank pari passu in right of payment with all existing and future senior
indebtedness of Cineplex and the guarantors and senior in right of payment to any future subordinated indebtedness
of Cineplex and the guarantors; (iii) rank effectively senior to any existing and future unsecured obligations of
Cineplex and the guarantors to the extent of the value of the collateral securing the 2024 Notes (subject to the prior
payment of any priority lien debt including under the 2024 Credit Agreement); and (iv) are structurally subordinated
to all existing and future indebtedness, claims of holders of preferred stock and other liabilities of subsidiaries of
Cineplex that do not guarantee the 2024 Notes.
16. Post-employment benefit obligations
Cineplex sponsors a defined benefit supplementary executive retirement plan (“DB SERP”). The DB SERP has a
defined benefit obligation of $7,748 at December 31, 2024 (December 31, 2023 - $7,965), which is substantially
unfunded. Annual benefits payable are $650 upon retirement of the sole beneficiary. The DB SERP does not have a
material effect on the operations or cash flows of Cineplex.
Cineplex also sponsors the Retirement Plan for Salaried Employees of Famous Players Limited Partnership, a
defined benefit pension plan, and the Famous Players Retirement Excess Plan (collectively known as the “Famous
Players Plans”). Effective October 23, 2005, Cineplex elected to freeze future accrual of defined benefits under the
Famous Players Plans. The Famous Players Plans do not have a material effect on the operations, cash flows or
financial position of Cineplex.
Cineplex also provides a group registered retirement plan for the benefit of full-time employees.
The net post-retirement benefit obligation for each of the plans is as follows:
2024
2023
DB SERP obligation, net of assets
$
5,757 $
5,974
Famous Players Plans obligations
1,132
1,140
Net post-retirement benefit obligation
$
6,889 $
7,114
Reconciliation of the net post-retirement benefit obligations
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
117
2024
2023
Accrued benefit obligations
Balance - Beginning of year
$
9,105 $
8,961
Interest cost
416
454
Benefits paid
(119)
(115)
Actuarial gains
(522)
(195)
Balance - End of year
$
8,880 $
9,105
Less: Fair value of plan assets
$
1,991 $
1,991
Net post-retirement benefit obligation
$
6,889 $
7,114
Significant assumptions
2024
2023
Accrued benefit obligations at December 31
Discount rate - all plans
4.40%
4.60%
Health care cost trend rates at December 31
Initial rate
4.00%
4.00%
Ultimate rate
4.00%
4.00%
Year ultimate rate reached
2041
2041
Sensitivity analysis
The following table shows the impact of a 1% increase or decrease of the discount rate on the defined benefit
obligation at the end of the year.
2024
2023
Impact of 1% increase in the discount rate
$
(753)
$
(792)
Impact of 1% decrease in the discount rate
$
869 $
919
17. Other liabilities
Other liabilities consist of the following:
2024
2023
Asset retirement obligations
$
2,468 $
2,698
Licensing obligations - non-current
167
249
Deferred consideration - AMC business acquisition
3,134
3,134
Other, including provisions
120
164
$
5,889 $
6,245
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
118
18. Share capital
Cineplex is authorized to issue an unlimited number of common shares and 10,000,000 preferred shares of which
none are outstanding.
Share capital balances at December 31, 2024 and 2023 and transactions during the periods are as follows:
2024
Amount
Number of Common
Shares issued and
outstanding
Share capital
Balance - December 31, 2023
63,684,281 $
856,696
Issuance of shares on exercise of options
50,863
491
Issuance of shares on settlement of RSU/PSU units
308,141
4,960
Shares repurchased and cancelled under the normal course issuer bid
(620,275)
(8,480)
Balance - December 31, 2024
63,423,010 $
853,667
2023
Amount
Number of Common
Shares issued and
outstanding
Share capital
Balance - December 31, 2022
63,375,400 $
852,697
Issuance of shares on exercise of options
1,566 $
44
Issuance of shares on settlement of RSU/PSU units
307,315
3,955
Balance - December 31, 2023
63,684,281 $
856,696
19. Revenue
The following tables disclose the changes in deferred revenue and other for the year ended December 31, 2024 and
2023:
December 31, 2023
Additions
Recognized
December 31, 2024
Gift cards
$
161,608 $
96,677 $
105,917 $
152,368
SCENE loyalty program
15,987
—
4,026
11,961
Advances, deposits and other
19,734
47,431
41,505
25,660
$
197,329 $
144,108 $
151,448 $
189,989
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
119
December 31,
2022
Additions
Recognized
Reclassified to
held for sale
December 31,
2023
Gift cards
$
172,615 $
94,793 $
105,800 $
— $
161,608
SCENE loyalty program
22,445
—
6,458
—
15,987
Advances, deposits and other
25,467
44,782
48,000
2,515
19,734
$
220,527 $
139,575 $
160,258 $
2,515 $
197,329
SCENE loyalty program deferred revenue balance relates to SCENE point obligations issued up to December 12,
2021. New Scene+ points issued are recognized as advertising and promotion in other costs in the Consolidated
Statement of Operations and are not reflected in deferred revenue on the balance sheet.
The following tables provide the disaggregation of revenue into categories by nature for the year ended December
31, 2024 and 2023:
Box revenues
Year ended December 31,
2024
2023
Box office revenues
$
562,151
$
599,903
Food service revenues
Year ended December 31,
2024
2023
Food service - theatres
$
406,784
$
425,865
Food delivery - theatres
7,802
8,568
Food service - location-based entertainment
47,466
48,716
Total food service revenues
$
462,052
$
483,149
Media revenues
Year ended December 31,
2024
2023
Cinema media
$
79,149
$
80,057
Digital place-based media
55,682
38,598
Total media revenues
$
134,831
$
118,655
Amusement revenues
Year ended December 31,
2024
2023
Amusement revenue - exhibition
$
14,867
$
16,207
Amusement revenue - LBE
77,824
80,300
Total amusement revenues
$
92,691
$
96,507
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
120
Other revenues
Year ended December 31,
2024
2023
Online booking fees
$
22,184
$
27,283
Other revenues
56,529
63,397
Total Other revenues
$
78,713
$
90,680
20. Other costs
In the prior year, other costs included employee wages, salaries and benefits as part of the total balance and
breakdown. For the year ended December 31, 2024, employee wages, salaries and benefits are presented as a
separate line item on the Consolidate Statement of Operations and the prior year amount has been reclassified
accordingly.
Year ended December 31,
2024
2023
Variable rent
$
5,165
$
4,209
Realty and occupancy taxes and maintenance fees
74,661
71,514
Utilities
31,867
32,611
Services including operating facilities cleaning, maintenance and security
67,844
71,750
Other inventories consumed, including amusement and digital place-based media
26,676
24,580
Repairs and maintenance
47,851
42,805
Advertising and promotion
42,717
40,633
Office and operating supplies
11,706
11,835
Licenses and franchise fees
16,012
16,355
Insurance
5,773
6,463
Professional and consulting fees
8,851
9,394
Telecommunications and data
5,088
4,649
Bad debts
432
145
Equipment rental
1,898
1,528
Business interruption insurance proceeds
(16)
(1,136)
Other costs
9,880
8,742
$
356,405
$
346,077
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
121
21. Earnings (loss) per share
Basic
Basic earnings (loss) per share is calculated by dividing the net loss by the weighted average number of shares
outstanding during the period.
Year ended December 31,
2024
2023
Net (loss) income from continuing operations
$
(105,684)
$
138,051
Weighted average number of shares outstanding
63,585,187
63,401,529
(Loss) earnings per share from continuing operations - basic
$
(1.66)
$
2.18
Earnings per share from discontinued operations - basic
$
1.07
$
0.46
(Loss) earnings per share - basic
$
(0.59)
$
2.64
Diluted
Diluted earnings (loss) per share is calculated by adjusting the weighted average number of shares outstanding to
assume conversion of all dilutive potential shares. A calculation is done to determine the number of shares that could
have been acquired at fair value (determined as the average market share price of the outstanding shares for the
period), based on the monetary value of the rights attached to the potentially dilutive shares. The number of shares
calculated above is compared with the number of shares that would have been issued assuming exercise of
conversions, exchanges or options. For the periods ended December 31, 2024 and 2023, the options and debentures
are anti-dilutive and the anti-dilutive shares that have been excluded in the current period were 21,149,629 potential
shares that would be issued under the if-converted method relating to debenture units outstanding.
Year ended December 31,
2024
2023
Net (loss) income from continuing operations
$
(105,684)
$
138,051
Adjustments for convertible debentures
—
28,430
Diluted net (loss) income
$
(105,684)
$
166,481
Weighted average number of shares outstanding
63,585,187
63,402
Adjustments for stock options
—
26,191
Adjustments for convertible debentures
—
28,907,678
Weighted average number of shares for diluted EPS
63,585,187
92,335,398
(Loss) earnings per share from continuing operations - diluted
$
(1.66)
$
1.80
Earnings per share from discontinued operations - diluted
$
1.07
$
0.32
(Loss) earnings per share - diluted
$
(0.59)
$
2.12
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
122
22. Operating segments
Cineplex has three reportable segments; Film Entertainment and Content, Media, and Location-Based
Entertainment. The reportable segments are business units offering differing products and services and managed
separately due to their distinct natures. These three reportable segments have been determined by Cineplex’s chief
operating decision makers. The Film Entertainment and Content reporting segment does not charge an access fee to
the Media reporting segment. All other inter-segment transactions are eliminated in the Corporate and other
category, which includes all corporate general and administrative costs not directly associated with a segment.
Film Entertainment and Content
The Film Entertainment and Content reporting segment includes all direct and ancillary revenues from theatre
attendance, including box office and food service revenues and the associated costs to provide those products and
services. Also included in the Film Entertainment and Content segment are in-theatre amusement, theatre rentals and
digital commerce rental and sales and associated costs.
Media
The Media reporting segment is comprised of the aggregation of two operating segments, cinema media and digital
place-based media businesses. Cinema media consists of all in-theatre advertising revenues and costs, including pre-
show, showtime and lobby advertising. Digital place-based media is comprised of revenues and costs associated
with the design, installation and operations of digital signage networks, along with advertising on certain networks.
Aggregation of these operating segments is based on the segments having similar economic characteristics.
Location-Based Entertainment
Location-based entertainment is comprised of the social entertainment destinations featuring gaming, entertainment
and dining. These entertainment options are complemented with an upscale casual dining environment, featuring an
open kitchen and contemporary menu, as well as a larger bar with a wide range of digital monitors and a large screen
for watching sporting and other major events.
In accordance with IFRS 8, Operating Segments, Cineplex discloses information about its reportable segments based
upon the measures used by management in assessing the performance of those reportable segments. Cineplex uses
adjusted EBITDAaL to measure the performance of its reportable segments.
Management defines EBITDA as earnings before interest income and expense, income taxes and depreciation and
amortization expense. Adjusted EBITDA excludes the change in fair value of financial instrument, loss on disposal
of assets, foreign exchange, and impairment, depreciation, amortization, interest and taxes of Cineplex’s other joint
ventures and associates, and other items that do not in management’s view represent a factor relevant to the ongoing
performance of the business such as the Competition Tribunal’s administrative monetary penalty. Adjusted
EBITDAaL modifies adjusted EBITDA to deduct current period cash rent paid or payable related to lease
obligations.
Cineplex’s management believes that adjusted EBITDAaL is an important supplemental measure of Cineplex’s
profitability at an operational level and provides analysts and investors with comparability in evaluating and valuing
Cineplex’s performance period over period. EBITDA, adjusted for various unusual items, is also used to define
certain financial covenants in Cineplex’s Credit Facilities.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
123
Cineplex’s cash management and other treasury functions are centralized; interest expense not related to the lease
obligations and interest income are not allocated to segments. Income taxes are accounted for by entity, and cannot
be attributable to individual segments. Cineplex does not report balance sheet information by segment because that
information is not used to evaluate performance or allocate resources between segments.
Amusement Solutions (P1AG)
Through the third quarter of 2023, Cineplex reported a fourth reportable segment, Amusement Solutions, which was
comprised of revenues and costs associated with operating and distributing amusement, gaming and vending
equipment.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
124
The following tables disclose the results of the Film Entertainment and Content, Media, and Location-Based
Entertainment segments for the year ended December 31, 2024 and 2023:
Year ended December 31, 2024
Film
Entertainment
and Content
(i)
Media (i)
Location-
Based
Entertainment
Corporate and
other (iii)
Consolidated
Continuing
Operations
Discontinued
Operations
Amusement
Solutions
(P1AG)
Major product and service lines
Box office
$
562,151
$
— $
— $
— $
562,151 $
—
Food service
414,586
—
47,466
—
462,052
—
Media
—
133,801
1,030
—
134,831
—
Amusement
14,867
—
77,824
—
92,691
14,743
Other
76,418
—
2,295
—
78,713
—
Total revenues
$ 1,068,022
$
133,801 $
128,615 $
— $
1,330,438 $
14,743
Timing of revenue recognition
Transferred at a point in time
$ 1,068,022
$
19,475 $
128,615 $
— $
1,216,112 $
14,743
Transferred over time
—
114,326
—
—
114,326
—
Total revenues
$ 1,068,022
$
133,801 $
128,615 $
— $
1,330,438 $
14,743
Film cost
$
303,926
$
— $
— $
— $
303,926 $
—
Cost of food service
95,009
—
13,117
—
108,126
—
Employee wages, salaries and benefits
161,035
30,364
43,780
61,344
296,523
2,782
Occupancy (incl. cash lease payments)
219,185
586
18,380
3,779
241,930
—
Other Expenses
201,302
37,704
33,586
14,074
286,666
11,453
$
980,457
$
68,654 $
108,863 $
79,197 $
1,237,171 $
14,235
Adjusted EBITDAaL
$
87,565
$
65,147 $
19,752 $
(79,197) $
93,267 $
508
Difference between the sum of depreciation of right-of-use assets and interest expense related to the lease
obligations as compared to the cash rent paid or payable related to lease obligations with respect to the
current period:
(3,104)
(298)
Other adjustments (ii)
39,564
(175)
Provision for Competition Tribunal’s administrative monetary penalty
39,215
—
Depreciation and amortization - other
assets
83,789
—
Interest expense - other
71,361
134
Interest income
(1,356)
—
Gain on the sale of discontinued
operations
—
(67,156)
Provision for income taxes
(30,518)
—
Net (loss) income from continuing operations and discontinued operations
$
(105,684) $
68,003
Other operating segment disclosures
Depreciation - right-of-use assets
$
77,891
$
10,198 $
5,634 $
437 $
94,160 $
—
Depreciation and amortization - other
assets
$
62,936
$
3,446 $
17,407 $
— $
83,789 $
—
Interest expense - lease obligations
$
62,701
$
2,757 $
7,244 $
692 $
73,394 $
69
Goodwill balance
$
413,915
$
206,385 $
— $
— $
620,300 $
—
(i) The Film Entertainment and Content reporting segment does not charge an access fee to the Media reporting segment for in-theatre
advertising.
(ii) Other adjustments include change in fair value of financial instruments, loss on extinguishment of debt, (loss)/gain on disposal of assets,
foreign exchange, non-controlling interest adjusted EBITDA, depreciation and amortization for joint ventures, and taxes and interest - joint
ventures.
(iii) Corporate and other represents the cost of centralized corporate overhead.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
125
Year ended December 31, 2023
Film
Entertainment
and Content
(i)
Media (i)
Location-
Based
Entertainment
Corporate and
other (iii)
Consolidated
Continuing
Operations
Discontinued
Operations
Amusement
Solutions
(P1AG)
Major product and service lines
Box office
$
599,903 $
— $
— $
— $
599,903 $
—
Food service
434,433
—
48,716
—
483,149
—
Media
—
117,281
1,374
—
118,655
—
Amusement
16,207
—
80,300
—
96,507
193,759
Other
88,692
—
1,988
—
90,680
—
Total revenues
$
1,139,235 $
117,281 $
132,378 $
— $
1,388,894 $
193,759
Timing of revenue recognition
Transferred at a point in time
$
1,139,235 $
12,680 $
132,378 $
— $
1,284,293 $
193,759
Transferred over time
—
104,601
—
—
104,601
—
Total revenues
$
1,139,235 $
117,281 $
132,378 $
— $
1,388,894 $
193,759
Film cost
$
323,412 $
— $
— $
— $
323,412 $
—
Cost of food service
100,428
—
13,559
—
113,987
—
Employee wages, salaries and benefits
157,954
27,096
40,098
53,546
278,694
26,518
Occupancy (incl. cash lease payments)
218,943
752
16,770
4,009
240,474
—
Other Expenses
207,261
23,919
30,237
13,547
274,964
131,509
$
1,007,998 $
51,767 $
100,664 $
71,102 $
1,231,531 $
158,027
Adjusted EBITDAaL
$
131,237 $
65,514 $
31,714 $
(71,102) $
157,363 $
35,732
Difference between the sum of depreciation of right-of-use assets and interest expense related to the lease
obligations as compared to the cash rent paid or payable related to lease obligations with respect to the
current period:
(11,449)
(1,180)
Other adjustments (ii)
1,895
(877)
Depreciation and amortization - other
assets
88,881
10,680
Interest expense - other
88,445
65
Interest income
(897)
—
Provision for income taxes
(147,563)
(2,069)
Net income from continuing operations and discontinued operations
$
138,051 $
29,113
Other operating segment disclosures
Depreciation - right-of-use assets
$
80,623 $
2,091 $
4,501 $
442 $
87,657 $
2,640
Depreciation and amortization - other
assets
$
65,411 $
4,983 $
18,487 $
— $
88,881 $
10,680
Interest expense - lease obligations
$
59,677 $
429 $
5,612 $
775 $
66,493 $
673
Goodwill balance
$
413,915 $
206,385 $
— $
— $
620,300 $
15,818
(i) The Film Entertainment and Content reporting segment does not charge an access fee to the Media reporting segment for in-theatre
advertising.
(ii) Other adjustments include change in fair value of financial instruments, (loss)/gain on disposal of assets, foreign exchange, non-controlling
interest adjusted EBITDA, depreciation and amortization for joint ventures, and taxes and interest - joint ventures.
(iii) Corporate and other represents the cost of centralized corporate overhead.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
126
23. Related party transactions
Cineplex may have transactions in the normal course of business with entities whose management, directors or
trustees are also directors of Cineplex. Any such transactions are in the normal course of operations and are
measured at market-based exchange amounts. Unless otherwise noted, these transactions are not considered related
party transactions for financial statement purposes.
Joint ventures
Cineplex performs certain management services for the joint ventures in which it is either a joint venturer or an
associate. During the year ended December 31, 2024, Cineplex earned revenue of $528 for these services (2023 -
$526).
Cineplex incurred marketing expenses related to Scene+ point issuances from Scene LP in the amount of $24,462
for the year ended December 31, 2024 (2023 - $24,904).
Compensation of key management
Compensation recognized in employee benefits for key management, who are defined as the Named Executive
Officers, included:
2024
2023
Salaries and short-term employee benefits
$
4,436 $
4,553
Post-employment benefits
118
113
Share-based compensation
4,002
2,827
$
8,556 $
7,493
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
127
24. Changes in operating assets and liabilities
The following summarizes the changes in operating assets and liabilities:
Year ended December 31,
2024
2023
Trade and other receivables
$
(16,106)
$
16,451
Inventories
(3,051)
(311)
Prepaid expenses and other current assets
(12,973)
253
Accounts payable and accrued liabilities
66,061
(7,792)
Income taxes receivable
(2,753)
(759)
Deferred revenue
(7,408)
(19,718)
Post-employment benefit obligations
(128)
(24)
Share-based compensation
8,242
696
Other liabilities
(452)
(148)
$
31,432 $
(11,352)
Property, equipment and leasehold purchases included in accounts payable and accrued liabilities as at December
31, 2024, are $20,628 (2023 - $9,991).
25. Commitments and contingencies
Commitments
As of December 31, 2024, Cineplex has aggregate capital commitments as follows:
Capital commitments for operating locations to be completed or renovated during 2025
$
12,485
Contingencies
Provision: Competition Bureau’s Allegation that Cineplex’s Online Booking Fee Constitutes Misleading Advertising
and Drip Pricing
On May 18, 2023, the Competition Bureau filed a Notice of Application, commencing legal action against Cineplex,
alleging that Cineplex’s online booking fee was misleading and constituted “drip pricing”. The Competition Bureau
did not contest Cineplex’s right to charge the online booking fee; it is only contesting the manner in which the online
booking fee is presented to consumers.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
128
The trial of this matter was held in February, 2024, and on September 23, 2024, the Competition Tribunal issued a
decision in the Competition’ Bureau’s favour, ordering Cineplex to pay an administrative penalty of $38,978 plus
certain legal and other costs.
On September 23, 2024, Cineplex announced its intention to appeal the Tribunal’s decision to the Federal Court of
Appeal. Cineplex plans to mount a vigorous defence that the manner in which it presented the online booking fee
fully complied with the letter and spirit of the law.
On October 23, 2024, Cineplex filed its Notice of Appeal with the Federal Court of Appeal and, with the
Competition Bureau’s consent, was granted a stay regarding payment of the administrative monetary penalty,
pending the Federal Court of Appeal’s decision on Cineplex’s appeal.
Notwithstanding Cineplex’s Notice of Appeal, an amount of $39,215 has been accrued in Cineplex’s consolidated
financial statements in relation to the Competition Tribunal order and related online booking fee matters.
Contingent liability: Class Action Lawsuits regarding Cineplex’s Online Booking Fee
In January, 2024, class-action lawsuits were initiated in British Columbia and Quebec with respect to Cineplex’s
online booking fee. Both lawsuits allege that the online booking fee is misleading and constitutes “drip pricing”.
The lawsuits seek to include all Canadians who purchased a Cineplex movie ticket and were charged an online
booking fee. Cineplex believes that this matter will not have a material adverse effect on its operating results,
financial position, or cash flows, and no amount has been accrued in Cineplex’s consolidated financial statements as
at December 31, 2024.
Cineplex has recognized approximately $61,000 in online booking fee revenues since inception through December
31, 2024.
26. Financial instruments
Fair value of financial instruments
The carrying value and fair value of Cineplex’s financial instruments at December 31, 2024 and 2023 are as follows:
2024
2023
Liability (Asset)
Input
level
Carrying
value
Fair
value
Carrying
value
Fair
value
Convertible debentures
1
231,659
297,603
339,268
315,618
Notes payable
2
575,000
601,749
246,970
252,264
Credit Facility
2
—
—
298,000
298,000
Other liabilities - equipment liabilities
2
249
249
413
413
Deferred consideration - AMC
2
3,134
3,134
3,134
3,134
Embedded derivative on notes payable
2
19,420
19,420
5,590
5,590
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
129
Cash and cash equivalents, trade and other receivables, accounts payable and accrued liabilities and dividends
payable are reflected in the consolidated financial statements at carrying values that approximate fair values because
of the short-term maturities of these financial instruments.
The Credit Facility bank debt is considered a Level 2 fair value measurement. The carrying value of the Credit
Facility reflects the fair value, as the debt bears floating interest at market rates.
The equipment liabilities are recorded at amortized cost, as derived from expected cash outflows and Cineplex’s
estimated incremental borrowing rate at the date of entering into the lease arrangement, 6.7%. The equipment
liabilities are included in accounts payable and accrued liabilities (current portion) and in other liabilities on the
balance sheet.
The deferred consideration for AMC (an undiscounted amount of $3,134 based on estimated non-capital losses
arising from the 2012 acquisition of AMC Ventures Inc.) is recorded at fair value and included in other liabilities
(note 17, Other liabilities). There was no change in fair value of $3,134 for the year ended December 31, 2024.
The convertible debentures are publicly traded on the TSX, and are recorded at amortized cost (note 15, Long-term
debt).
The notes payable are publicly traded and are recorded at amortized cost based on Cineplex’s expected cash
outflows and reflects a monthly effective interest rate of 0.64% (note 15, Long-term debt).
The fair market value of the embedded derivative on notes payable was determined using an option pricing model
with observable market inputs consistent with accepted methods for valuing financial instruments (note 15, Long-
term debt).
In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical financial assets
or financial liabilities that Cineplex has the ability to access.
Fair values determined by Level 2 inputs use inputs other than the quoted prices included in Level 1 that are
observable for the financial asset or financial liability, either directly or indirectly. Level 2 inputs include quoted
prices for similar financial assets and financial liabilities in active markets, and inputs other than quoted prices that
are observable for the financial assets or financial liabilities. Cineplex uses market interest rates and yield curves that
are observable at commonly quoted intervals in the valuation of its interest rate swap agreements. The derivative
positions are valued using models developed internally by the respective counterparty that uses as its basis readily
observable market parameters (such as forward yield curves) and are classified within Level 2 of the valuation
hierarchy. Cineplex considers its own credit risk as well as the credit risk of its counterparties when evaluating the
fair value of its derivatives.
Level 3 inputs are unobservable inputs for the financial asset or financial liability, and include situations where there
is little, if any, market activity for the financial asset or financial liability. Cineplex’s assessment of the significance
of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to
the financial asset or financial liability.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
130
Credit risk
Credit risk is the risk of financial loss to Cineplex if a customer or counterparty to a financial instrument fails to
meet its contractual obligation. Management believes the credit risk on cash and cash equivalents is low because the
counterparties are banks with high credit ratings.
Accounts receivable include trade and other receivables. Trade receivables are amounts billed to customers for the
sales of goods and services, and represent the maximum exposure to credit risk of those financial assets, exclusive of
the expected credit loss. Normal credit terms for amounts due from customers call for payment within 30 to 45 days.
Other receivables include amounts due from suppliers and landlords and other miscellaneous amounts. Cineplex’s
credit risk is primarily related to its trade receivables, as other receivables generally are recoverable through ongoing
business relationships with the counterparties.
Cineplex grants credit to customers in the normal course of business. Cineplex typically does not require collateral
or other security from customers; however, credit evaluations are performed prior to the initial granting of credit
when warranted and periodically thereafter. Cineplex records a reserve for estimated uncollectible amounts, which
management believes reduces credit risk. See note 28, Significant accounting policies, judgments and estimation
uncertainty, for Cineplex’s policy on impairment of financial assets.
The following schedule reflects the balance and age of trade receivables at December 31, 2024 and 2023:
2024
2023
Trade receivables carrying value
$
95,444
$
85,073
Percentage past due
21%
20%
Percentage outstanding more than 120 days
3%
2%
The following schedule reflects the changes in the expected credit loss for trade receivables during the years ended
December 31, 2024 and 2023:
2024
2023
Expected credit loss for trade receivables - Beginning of year
$
469 $
907
Expected credit loss (reversed) or recorded
35
(182)
Amounts written off
(203)
(314)
Reclassified to held for sale
—
58
Expected credit loss for trade receivables - End of year
$
301 $
469
Due to Cineplex’s diversified client base, management believes Cineplex does not have a significant concentration
of credit risk.
Liquidity risk
Liquidity risk is the risk that Cineplex will encounter difficulty in meeting obligations associated with its financial
liabilities.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
131
The table below reflects the contractual maturity of Cineplex’s undiscounted cash flows for its financial liabilities
and interest rate swap agreements:
2024
Payments due by period
Contractual obligations
Total
Within
1 year
2 - 3
years
4 - 5
years
After
5 years
Accounts payable and accrued liabilities
$ 236,612 $ 236,612 $
— $
— $
—
Equipment obligations
249
156
93
—
—
Deferred consideration - AMC
3,134
—
3,134
—
—
Convertible debentures
216,250
—
—
—
216,250
Convertible debentures interest
86,552
16,759
33,519
33,565
2,709
Notes payable
575,000
—
—
575,000
—
Notes payable interest
186,307
43,844
87,688
54,775
—
Total contractual obligations
$ 1,304,104 $ 297,371 $ 124,434 $ 663,340 $ 218,959
2023
Payments due by period
Contractual obligations
Total
Within
1 year
2 - 3
years
4 - 5
years
After
5 years
Accounts payable and accrued liabilities
$ 172,482 $ 172,482 $
— $
— $
—
Long-term debt
298,000
—
298,000
—
—
Interest on long-term debt
31,409
16,831
14,578
—
—
Equipment obligations
413
160
253
—
—
Deferred consideration - AMC
3,134
—
3,134
—
—
Convertible debentures
316,250
—
316,250
—
—
Convertible debentures interest
31,785
18,184
13,601
—
—
Notes payable
250,000
—
250,000
—
—
Notes payable interest
40,454
18,750
21,704
—
—
Total contractual obligations
$ 1,143,927 $ 226,407 $ 917,520 $
— $
—
Existing lease commitments are disclosed in note 14, Lease obligations. Cineplex also has significant new theatre
and other capital commitments (note 25, Commitments and contingencies), as well as contingent obligations in the
form of letters of credit, guarantees and the Incentive Plan for options, RSUs, and PSUs.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
132
New capital commitments not funded through cash flows from operations will be funded through Cineplex's
Revolving Facility. Management believes that Cineplex's cash flows from operations and the Revolving Facility will
be adequate to support all of its financial liabilities.
Currency risk
Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of the
changes in foreign currency exchange rates.
The majority of Cineplex’s revenues and expenses are in Canadian dollars. Management considers currency risk to
be low and does not hedge its currency risk.
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of
changes in market interest rates.
Cineplex is exposed to interest rate risk on its Credit Facility, which bears interest at floating rates. The majority of
Cineplex’s long-term debt bears interest at fixed rates that are not directly impacted by fluctuations of changes in
market interest rates. Management considers the interest rate risk to be low and does not currently hedge its interest
rate risk.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
133
27. Capital disclosures
Cineplex’s objectives when managing capital are to:
a) maintain financial flexibility to preserve its ability to meet financial obligations and growth objectives,
including future investments;
b) deploy capital to provide an appropriate investment return to its shareholders; and
c) maintain a capital structure that allows multiple financing options, should a financing need arise.
Cineplex defines its capital as follows:
a) equity;
b) long-term debt, convertible debentures, notes payable and finance lease obligations, including the current
portion;
c) fair value of equipment liabilities, including the current portion; and
d) cash and cash equivalents.
Where borrowings on the Credit Facility are less than the Utilization Threshold, distributions are limited to the Free
Cash Flow. Where borrowings exceed the Utilization Threshold, distributions will be limited and only permitted
when the Total Leverage ratio is less than 4.25 to 1 as required under Credit Facility, both prior to and immediately
after giving effect to any such distribution.
Cineplex is subject to certain covenants on its credit facilities agreement, which defines certain non-GAAP terms
and measures. The 2024 Credit Agreement does not contain financial maintenance covenants, unless borrowings
utilized under the agreement (including issued letters of credit) exceed 40% (the “Utilization Threshold”) of the total
available credit facility measured as at the end of a fiscal quarter of Cineplex. For additional details, see note 15,
Long-term debt. Annual growth capital expenditures up to $100,000 are permitted with no restrictions. Growth
capital expenditures above $100,000 are permitted subject to a pro forma Total Leverage covenant of 4.25 to 1, both
prior to and immediately after giving effect to any such growth capital expenditures
The basis for Cineplex’s capital structure is dependent on Cineplex’s expected growth and changes in the business
and regulatory environments. To maintain or adjust its capital structure, Cineplex may purchase shares for holding
or cancellation, issue new shares, raise debt or refinance existing debt with different characteristics.
Objectives and strategies are reviewed periodically by management. During 2021, Cineplex completed the offering
of Notes Payable for $250,000 aggregate principal amount and repaid its Term Facility in full. In 2022 and 2021,
Cineplex’s capital composition, objectives or strategies all changed in response to the substantial business
challenges of COVID-19. During 2024, Cineplex completed its comprehensive refinancing plan resulting in the
application of proceeds from the sale of P1AG, extended maturities, removed restrictions, and modified the relative
composition of its long-term debt, convertible debentures, and notes payable.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
134
28. Material accounting policies, judgments and estimation uncertainty
Material accounting policies
The material accounting policies used in the preparation of these consolidated financial statements are described
below.
Basis of preparation and measurement
Cineplex prepares its consolidated financial statements in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”). The
preparation of consolidated financial statements in accordance with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise judgment in applying Cineplex’s accounting policies.
The areas involving a higher degree of judgment or complexity, or areas where assumptions are significant to the
consolidated financial statements are disclosed later in this note.
These consolidated financial statements have been prepared under the historical cost convention, except for the
revaluation of certain financial assets and financial liabilities to fair value, including derivative instruments and
available-for-sale investments.
Reportable operating segments
Cineplex is comprised of three reportable operating segments, Film Entertainment and Content, Media, and
Location-Based Entertainment. The reportable segments are business units offering differing products and services.
Details of Cineplex’s three reportable operating segments are provided in (note 22, Operating segments).
Consolidation
Subsidiaries are all entities over which Cineplex has control. Cineplex controls an entity when it is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
Cineplex. They are deconsolidated from the date that control ceases.
Cineplex applies the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of
the acquiree and the equity interests issued by Cineplex. The consideration transferred includes the fair value of any
asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date. Cineplex recognizes any non-controlling interest in the acquiree at fair value of the recognized
amounts of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
135
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously
held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising
from such re-measurement are recognized in profit or loss.
Any contingent consideration to be transferred by Cineplex is recognized at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is
recognized in accordance with IFRS 9 in profit or loss. Contingent consideration that is classified as equity is not re-
measured, and its subsequent settlement is accounted for within equity.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net
assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognized
and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the
case of a bargain purchase, the difference is recognized directly in the statement of operations.
Inter-company transactions, balances and unrealized gains and losses on transactions between Cineplex entities are
eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with Cineplex’s
accounting policies.
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity
transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value
of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is
recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
Associates are all entities over which Cineplex has significant influence but not control, generally accompanying a
shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the
equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the
carrying amount is increased or decreased to recognize the investor’s share of the profit or loss of the investee after
the date of acquisition. Cineplex’s investment in associates includes goodwill identified on acquisition.
Cineplex determines at each reporting date whether there is any objective evidence that the investment in the
associate is impaired. If this is the case, Cineplex calculates the amount of impairment as the difference between the
recoverable amount of the associate and its carrying value and recognizes the amount in the statement of operations.
Profits and losses resulting from upstream and downstream transactions between Cineplex and its associate are
recognized in the group’s financial statements only to the extent of unrelated investor’s interests in the associates.
Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Accounting policies of associates have been changed where necessary to ensure consistency with the policies
adopted by Cineplex.
Dilution gains and losses arising in investments in associates are recognized in the consolidated statement of
operations.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
136
Investments in joint ventures and associates
Investments in joint arrangements are classified either as joint operations and proportionately consolidated or as
joint ventures or associates and equity-accounted, depending on the contractual rights and obligations of each
investor.
Under the equity method of accounting, interests in joint ventures and associates are initially recognized at cost and
adjusted thereafter to recognize Cineplex’s share of the post-acquisition profits or losses and movements in OCI.
When Cineplex’s share of losses in a joint venture or an associate equals or exceeds its interests in that joint venture
or associate (which includes any long-term interests that, in substance, form part of Cineplex’s net investment in the
joint ventures), Cineplex does not recognize further losses, unless it has incurred obligations or made payments on
behalf of the joint venture or associate.
Unrealized gains on transactions between Cineplex and its joint ventures and associates are eliminated to the extent
of Cineplex’s interest in the joint ventures and associates. Unrealized losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures
have been changed where necessary to ensure consistency with the policies adopted by Cineplex.
Cineplex assesses at each year-end whether there is any objective evidence that its interests in joint ventures and
associates are impaired. In determining the value-in-use of an investment, Cineplex estimates its share of the present
value of the estimated cash flows expected to be generated by the joint venture or associate, including the cash flows
from the operations of the joint venture or associate and the proceeds on the ultimate disposal of the investment, or
the present value of the estimated future cash flows expected to arise from dividends to be received from the joint
venture or associate and its ultimate disposal. If impaired, the carrying value of Cineplex’s share of the underlying
assets of joint ventures or associates is written down to its estimated recoverable amount (being the higher of fair
value less costs of disposal and value in use) and charged to the consolidated statements of operations.
Cineplex has interests in a jointly controlled entity and accounts for its share of assets and liabilities, revenue and
expenses of the joint operation. Cineplex conducts a portion of its business through Scene GP, a joint operation
whereby the joint operation participants are bound by contractual agreements establishing joint control. Joint control
exists when unanimous consent of the joint operation participants is required regarding strategic, financial and
operating policies of the joint operation. Cineplex’s share of results from Scene GP has been recognized in
Cineplex’s consolidated financial statements. Inter-company transactions between Cineplex and Scene GP are
eliminated to the extent of Cineplex’s interest. As part of the ongoing reorganization of Scene GP which began in
December 2020, Cineplex and its loyalty partner launched Scene+ on December 13, 2021 and as a result, Cineplex
began equity accounting for its then 50% economic interest in Scene LP, the operator of the Scene+ loyalty program.
Cineplex holds a 1/3rd ownership interest in Scene LP as at December 31, 2024.
Foreign currency translation
Functional and presentation currency
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
137
Cineplex determines its subsidiaries’ functional currency by reviewing the currency of the primary economic
environment in which each entity operates (the “functional currency”). The functional currency of all entities of the
Cineplex group is the Canadian dollar.
The consolidated financial statements are presented in Canadian dollars.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Generally, foreign exchange gains and losses resulting from the settlement of foreign
currency transactions and from the translation at fiscal year-end exchange rates of monetary assets and liabilities
denominated in currencies other than an operation’s functional currency are recognized in the consolidated
statements of operations.
Subsidiaries
The results and balance sheet of the subsidiaries that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet;
• income and expenses for each statement of profit or loss and statement of comprehensive income are
translated at average exchange rates, and
• all resulting exchange differences are recognized in other comprehensive income.
Goodwill recognized on the acquisition of a subsidiary are treated as assets and liabilities of the subsidiary and
translated at the closing rate.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held with banks, and other short-term highly liquid
investments with original maturities of three months or less. Cash equivalents are readily converted into known
amounts of cash, and are subject to an insignificant risk of changes in value.
Financial instruments
Financial assets and financial liabilities are recognized when Cineplex becomes a party to the contractual provisions
of the financial instrument. Financial assets are derecognized when the rights to receive cash flows from the
financial assets have expired or have been transferred and Cineplex has transferred substantially all risks and
rewards of ownership. Financial liabilities are derecognized when the contractual obligations are discharged,
canceled or expire. Regular purchases and sales of financial assets are recognized on the trade-date, the date on
which Cineplex commits to purchase or sell the asset.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
138
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheets
when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net
basis, or realize the financial asset and settle the financial liability simultaneously.
IFRS 9 contains three classification categories for financial assets and liabilities measured at amortized cost, fair
value through profit or loss (“FVPL”) and fair value through other comprehensive income (“FVOCI”).
At initial recognition, Cineplex classifies its financial instruments in the following categories depending on the
purpose for which the financial instruments were acquired:
i.
Financial assets and financial liabilities at FVPL: The only instruments held by Cineplex classified in
this category are certain equipment purchase liabilities, and the deferred consideration payable for
business combinations. Derivatives are included in this category unless they are designated as hedges.
Financial instruments in this category are recognized initially and subsequently at fair value.
Transaction costs are expensed in the consolidated statements of operations. Gains and losses arising
from changes in fair value are presented in the consolidated statements of operations. Financial assets
and financial liabilities at fair value through profit or loss are classified as current, except for the
portion expected to be realized or paid beyond 12 months of the consolidated balance sheet date,
which is classified as non-current. Financial assets and liabilities at FVPL are presented within
changes in operating assets and liabilities in the consolidated statements of cash flows.
ii.
Financial assets and liabilities at amortized cost: Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are not quoted in an active market. Cineplex’s loans
and receivables comprise trade receivables and cash and cash equivalents, and are included in current
assets due to their short-term nature. Loans and receivables are initially recognized at the amount
expected to be received, less, when material, a discount to reduce the loans and receivables to fair
value. Subsequently, loans and receivables are measured at amortized cost using the effective interest
method, less a provision for impairment.
Financial liabilities at amortized cost include trade payables, dividends and distributions payable,
bank indebtedness and long-term debt and the non-derivative component of convertible debentures.
Trade payables are initially recognized at the amount required to be paid, less, when material, a
discount to reduce the payables to fair value. Subsequently, trade payables are measured at amortized
cost using the effective interest method. Bank indebtedness and long-term debt, and the non-
derivative component of convertible debentures are recognized initially at fair value, net of any
transaction costs incurred and, subsequently, at amortized cost using the effective interest method.
Financial liabilities are classified as current liabilities if payment is due within 12 months. Otherwise,
they are presented as non-current liabilities.
Equity investments are required to be measured fair value with all changes recognized at FVPL. At
initial recognition, Cineplex can make an irrevocable election to classify the instruments at FVOCI,
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
139
with all subsequent changes in fair value being recognized in OCI. Cineplex has not classified any
equity instruments at FVOCI.
iii.
Financial instruments at FVOCI: Cineplex ceased the use of hedge accounting for its interest rate
swap agreements during the fourth quarter of 2019 as a result of the terms of the Arrangement
Agreement. The interest rate swap are measured at fair market value at each reporting period with
changes in fair market value recognized in the consolidated statement of operations.
Impairment of financial assets
At each reporting date, Cineplex assesses whether there is objective evidence that a financial asset is impaired. If
such evidence exists, Cineplex recognizes an impairment loss. IFRS 9 uses forward-looking Expected Credit Loss
(“ECL”), Cineplex applies the impairment model to financial asset measured at amortized cost or FVOCI, except for
investments in equity instruments, and to contract assets.
Under IFRS 9, expected credit losses will be measured on either of the following bases:
i.
12-month ECLs which are ECLs that result from possible default events within 12 months after the
reporting date; and
ii.
lifetime ECLs which are ECLs that result from all possible default events over the expected life of a
financial instruments.
Cineplex applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected
credit loss for all trade receivables. Impairment losses on financial assets carried at amortized cost or FVOCI are
reversed in subsequent years if the amount of the loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognized.
Inventories
Inventories consist of food service inventories, gaming inventories and other inventories, including work in
progress.
Food service inventories, merchandise that is used as redemption prizes and work-in progress inventories are stated
at the lower of cost and net realizable value. Cost is determined on average cost methodology. Net realizable value is
the estimated selling price less applicable selling expenses.
Gaming inventories includes gaming equipment purchased for re-sale or transferred from property, equipment and
leaseholds and merchandise that is used as redemption prizes for certain games. Gaming equipment cost is
determined on a specific-item basis, and includes equipment that has been transferred from property, equipment and
leaseholds to inventory when it is no longer in route operations and it will be sold or auctioned to third parties at the
discretion of management. Gaming equipment is transferred to inventory at its net book value and stated at the lower
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
140
of the net book value or net realizable value. Net realizable value is the estimated selling price less applicable
selling expenses.
Other inventories include consumable supplies and work-in-progress being assembled for sale or installation by
CDM.
Impairment of non-financial assets
Property, equipment and leaseholds and intangible assets subject to amortization are tested for impairment when
events or changes in circumstances indicate that the carrying value may not be recoverable. Long-lived assets that
are not amortized are subject to an annual impairment test. For the purpose of measuring recoverable amounts,
assets are grouped at the lowest levels for which there are separately identifiable cash inflows relating to the relevant
intangible asset (“cash-generating units” or “CGUs”). Cineplex considers each theatre a CGU. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use (being the present value of the
expected future cash flows of the relevant asset or CGU). An impairment loss, if estimated, is recognized for the
amount by which the CGU’s carrying value exceeds its recoverable amount. Management makes assumptions and
estimates in determining the recoverable amount of its long lived assets and groups of CGUs’ goodwill, including
significant key assumptions relating to attendance and the related revenue growth rates and discount rates. Further,
other assumptions are required pertaining to variable and fixed cash flows, and operating margins. (See note 11,
Impairment of long-lived assets).
Goodwill is reviewed for impairment annually or at any time if an indicator of impairment exists.
Goodwill acquired through a business combination is allocated to each CGU or group of CGUs that is expected to
benefit from the related business combination. A group of CGUs represents the lowest level within the entity at
which the goodwill is monitored for internal management purposes, which is not higher than an operating segment.
Cineplex groups theatre CGUs based on geographical regions of financial management responsibility in testing
goodwill for impairments.
Cineplex groups CGUs based on trade name in testing indefinite-lived trade names for impairment.
A reversal of impairment, if estimated, is recognized to a limit of increasing the carrying amount to the lower of the
recoverable amount and the carrying amount that would have been determined (net of depreciation) had no
impairment loss been recognized in prior periods.
Property, equipment and leaseholds
Property, equipment and leaseholds are stated at cost less accumulated depreciation and accumulated impairment
losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are
included in the asset’s carrying value or recognized as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to Cineplex and the cost can be measured reliably. The
carrying value of a replaced asset is derecognized when replaced. Repairs and maintenance costs are charged to the
consolidated statements of operations during the year in which they are incurred.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
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(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
141
The major categories of property, equipment and leaseholds are depreciated on a straight-line basis as follows:
Buildings
30 - 40 years
Equipment
3 - 10 years
Leasehold improvements
term of lease but not in excess of the useful lives
For owned buildings constructed on leased property, the useful lives do not exceed the terms of the land leases.
Cineplex allocates the amount initially recognized in respect of an item of property, equipment and leaseholds to its
significant parts and depreciates separately each such part. Residual values, method of depreciation and useful lives
of the assets are reviewed at least annually or whenever events or circumstances suggest a change that may
otherwise indicate an impairment exists and adjusted if appropriate. Construction-in-progress is depreciated from the
date the asset is ready for productive use.
Gains and losses on disposals of property, equipment and leaseholds are determined by comparing the proceeds with
the carrying value of the asset and are included as part of other gain or loss on the sale of assets in the consolidated
statements of operations.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of Cineplex’s share of the net
identifiable assets of the acquired business at the date of acquisition.
Identifiable intangible assets
Intangible assets include trademarks, trade names, leases, software and customer relationships acquired by Cineplex.
As Cineplex intends to use certain of the trademarks and trade names of the Partnership and GEI for the foreseeable
future, the useful lives of those trademarks and trade names are indefinite and no amortization is recorded. Other
trade names are expected to be substantially discontinued and are amortized over their expected useful lives (note
10, Intangible assets). Management tests indefinite-lived intangible assets for impairment at least annually, and
considers at least annually or whenever events or circumstances indicate that the life of an indefinite-lived intangible
asset may be finite. The advertising contracts have limited lives and are amortized over their useful lives, estimated
to be between five to nine years. The estimated fair value of lease contract assets is amortized on a straight-line basis
over the remaining term of the lease into amortization expense.
The major categories of intangible assets are amortized on a straight-line basis as follows:
Internally generated software
3 - 5 years
Customer relationships
5 - 10 years
Trade names
not amortized
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
142
Leases
Cineplex conducts a significant part of its operations in leased premises. In assessing whether a contract is, or
contains a lease, Cineplex applies the definition of a lease and related guidance set out in IFRS 16 for all lease
contracts entered into or modified. A contract is, or contains a lease if the contract conveys the right to control the
use of an identified asset for a period of time in exchange for consideration. Under the provisions of IFRS 16,
substantially all of Cineplex’s leases are recorded as lease obligations and right-of-use assets.
Lease payments included in the measurement of the lease obligation are comprised of the following:
i.
Fixed lease payments, including in-substance fixed payments;
ii.
Variable lease payments that depend on an index or rate, initially measured using the index or rate at the
commencement date;
iii. Amounts expected to be payable under a residual value guarantee;
iv. The exercise price of purchase options that Cineplex is reasonably certain to exercise, lease payments in an
option renewal period if Cineplex is reasonably certain to exercise the extension option, and penalties for
early termination of the lease unless Cineplex is reasonably certain not to terminate early; and
v.
Less any lease incentives receivable.
Variable payments for leases that do not depend on an index or rate are not included in the measurement of the lease
liability. The variable payments are recognized as an expense in the period in which they are incurred and are
included in the consolidated statement of operations.
Cineplex accounts for any lease and associated non-lease components separately, as opposed to a single
arrangement, which is permitted under IFRS 16. Cineplex records non-lease components such as common area
maintenance as an expense in the period in which they are incurred and are included in the consolidated statement of
operations.
Interest on the lease obligations is calculated using the effective interest method with rent payments reducing the
liability. The lease obligation is remeasured whenever a lease contract is modified and the lease modification is not
accounted for as a separate lease, or there is a change in the assessment of the exercise of an extension option. The
lease obligation is remeasured by discounting the revised lease payments using a revised discount rate resulting in a
corresponding adjustment to the right-of-use asset or is recorded in gain or loss if the carrying amount of the right-
of-use asset has been reduced to zero or the modification results in a reduction in the scope of the lease.
The right-of-use assets are depreciated on a straight-line basis from the date of commencement to the earlier of the
end of the useful life of the asset or the end of the lease term.
Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36, Impairment of Assets.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
143
Borrowing costs
Borrowing costs attributable to the acquisition, construction or production of qualifying assets are added to the cost
of those assets, until such time as the assets are substantially ready for their intended use. All other borrowing costs
are recognized as interest expense in the consolidated statements of operations in the year in which they are incurred.
Employee benefits
Cineplex is the sponsor of a number of employee benefit plans. These plans include a defined benefit pension plan,
additional unfunded defined benefit obligations for former Famous Players employees, and a group registered
retirement savings plan.
i. Post-employment benefit obligations
For defined benefit plans, the level of benefit provided is based on the length of service and annual
earnings of the person entitled.
The cost of defined benefit plans is determined using the projected unit credit method. The related benefit
liability recognized in the consolidated balance sheets is the present value of the defined benefit
obligation at the consolidated balance sheet dates less the fair value of plan assets. The cost of the group
registered retirement savings plan is charged to expense as the contributions become payable.
Actuarial valuations for defined benefit plans are carried out periodically and considered at each annual
consolidated balance sheet date. The discount rate applied in arriving at the present value of the benefit
liability represents yields on high-quality corporate bonds that are denominated in Canadian dollars, the
currency in which the benefits will be paid, and that have terms to maturity approximating the terms of
the related benefit liability.
The net defined benefit liability (asset) is recognized on the balance sheet without any deferral of actuarial
gains and losses. Past service costs are recognized in net income when incurred. Post-employment
benefits expense includes the net interest on the net defined benefit liability (asset) calculated using a
discount rate based on market yields on high quality bonds. Remeasurements consisting of actuarial gains
and losses, the actual return on plan assets (excluding the net interest component) and any change in the
asset ceiling are recognized in other comprehensive income without recycling to the consolidated
statements of operations.
Employee benefits are classified as long-term employee benefits if payments are not expected to be made
within the next 12 months.
ii. Share-based compensation - options
Cineplex grants stock options to certain employees. Each tranche in an award is considered a separate
award with its own vesting period and grant date fair value. Until December 16, 2019 the options were
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
144
considered equity-settled, and fair value of each tranche was measured at the date of grant using the
Black-Scholes option pricing model. Compensation expense was based on the number of awards expected
to vest and was recognized over the tranche’s vesting period, included as employee benefits expense in
other costs. On December 16, 2019 as a result of the terms of the Arrangement Agreement, the options
were considered cash-settled, and the fair value of the excess of outstanding options in excess of the
exercise price was recognized as a current share-based compensation liability, and changes in value were
reflected in the statement of operations. Stock options impacted by the termination of the Arrangement
Agreement were revalued and accounted for as equity-settled and any previously recognized share based
compensation liability was reclassified to contributed surplus. The accelerated recognition of unvested
options was reversed and is being recognized over their remaining vesting periods at the value determined
at March 31, 2020. Forfeitures are estimated to be nominal, based on historical forfeiture rates.
iii. Share-based compensation - other plans
Cineplex has a number of other cash-settled share-based compensation plans. The obligation for these
plans is recorded at fair value on a percentage vested basis. Changes in the obligation are reflected in
employee benefits in other costs in the consolidated statements of operations. Cineplex also issues RSUs
and PSUs that will be equity settled and will fully vest at the completion of the performance period
determined by management at the time of issuance.
Provisions
Provisions for asset retirement obligations, theatre shutdowns and legal claims, where applicable, are recognized
when Cineplex has a present legal or constructive obligation as a result of past events, it is more likely than not that
an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions
are measured at management’s best estimate of the expenditure required to settle the obligation at the end of the
reporting period, and are discounted to present value where the effect is material. Cineplex performs evaluations to
identify onerous contracts and, where applicable, records provisions for such contracts. Provisions are included in
other liabilities on the consolidated balance sheets.
Income taxes
Income taxes comprise current and deferred income taxes. Income taxes are recognized in the consolidated
statements of operations, except to the extent that they relate to items recognized directly in equity or in OCI, in
which case, the income taxes are also recognized directly in equity or in OCI.
Current income taxes are the expected taxes payable on the taxable income for the year, using income tax rates
enacted or substantively enacted, at the end of the reporting period, and any adjustment to income taxes payable in
respect of previous years.
In general, deferred income taxes are recognized in respect of temporary differences arising between the income tax
bases of assets and liabilities and their carrying values in the consolidated financial statements. Deferred income
taxes are determined on a non-discounted basis using income tax rates and laws that have been enacted or
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
145
substantively enacted at the consolidated balance sheet dates and are expected to apply when the deferred income tax
asset or liability is settled. Deferred income tax assets are recognized to the extent that it is probable that the assets
can be recovered.
Deferred income taxes are provided on temporary differences arising on investments in subsidiaries and joint
ventures, except, in the case of subsidiaries, where the timing of the reversal of the temporary difference is
controlled by Cineplex and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are presented as non-current.
Share capital
Common shares are classified as equity. Incremental costs directly attributable to the issuance of common shares are
recognized as a deduction from equity.
Dividends
Dividends on common shares are recognized in the consolidated financial statements in the year in which the
dividends are approved by the Board of Directors of Cineplex.
Revenue
Film Entertainment and Content
Cineplex generates box office revenues from the sale of admission tickets for theatrical releases purchased by
customers in theatres, online at Cineplex.com or through the Cineplex mobile app. Revenue is recognized at the time
the obligation is satisfied which is when the movie for which the ticket purchased has played. Amounts collected on
advanced tickets sales are recorded as deferred revenue and recognized when the movie has played. Cineplex also
generates revenues from the sale of food service which is comprised of food and beverage sales. Food service
revenue is recognized when control of the food service has transferred. Payment of the transaction price is due
immediately at the point the customer purchases the concessions. Until December 12, 2021, Cineplex recorded
deferred revenue for Scene points issued with respect to retail transaction, based on the relative stand-alone selling
price of the points issued. The deferred revenue associated with the points redeemed were recognized as revenue
when points were redeemed by customers or in accordance with Cineplex’s accounting policy for breakage.
Beginning December 13, 2021, as a result of the launch of Scene+, Scene+ points issued in association with
Cineplex revenue transactions are accounted for as marketing expense.
Cineplex sells gift cards directly to individual customers and vouchers to both wholesale resellers and directly to
individual customers. The transaction price received from the sales of gift cards and vouchers is due at the time of
sale and is recorded as deferred revenue. Revenues from gift cards and vouchers are recognized either on redemption
or in accordance with Cineplex's accounting policy for breakage. Breakage income is included in other revenues and
represents the estimated value of gift cards and vouchers that are not expected to be redeemed by customers. It is
estimated based on historical redemption patterns. The sale of a voucher creates a future obligation from Cineplex to
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
146
provide an admission ticket or a combination of admission ticket(s) and concessions. The transaction price of the
voucher is allocated between box office and concessions based on a relative stand-alone selling price basis.
Media
The media segment principally generates revenue from providing advertising services, sales of digital hardware for
digital signage networks, installation of digital hardware, digital software services subscriptions, software
maintenance and support services, creative services, printing services and warranties. Products and services may be
sold separately or in bundled packages. For bundled packages, Cineplex determines whether individual products and
services are distinct (if a product or service is separately identifiable from other items in the bundled package and if
a customer can benefit from it). The consideration is allocated between separate products and service in a bundle
based on their relative stand-alone selling prices.
Advertising Media
Media revenues consist primarily of advertising revenues generated from customers who advertise their products
and services through Cineplex’s media offerings which include onscreen, online, magazine, and digital out of home.
Revenue for advertising is recognized over time as services are delivered. The transaction price allocated to these
services is recognized as the media runs from the start to the end dates specified in the contracts with the customer.
The transaction price allocated to the distinct services to be provided is based on the stand-alone selling prices of the
distinct services. Amounts collected on advanced media sales are recorded as deferred revenue and recognized over
the period that the media is presented.
Each contract with a customer is also evaluated to determine whether Cineplex is the principal or agent in the
transaction. For transactions which Cineplex is the principal, revenues are recorded on a gross basis and for
transactions where Cineplex is the agent, revenues are recorded on a net basis.
Installation and Digital Hardware for digital signage network
Cineplex sells digital hardware, installation and other professional services for digital signage networks. The
installation and other professional services that Cineplex provides are not a significant integration service, does not
customize or modify the hardware and can be performed by another party. The installation and other professional
services are therefore accounted for as a separate performance obligation and the transaction price is allocated to
each performance obligation based on the stand-alone selling prices. Revenue for installation and other professional
services are recognized upon completion of the installation of the digital hardware at the individual site being
installed for the customer. If contracts include the purchase of hardware, revenue for the hardware is recognized at
the point in time when hardware is delivered to the customer. Delivery occurs when the hardware has been shipped
to the customer’s specific location, the legal title has passed and the customer has accepted the hardware.
Digital software services subscription
Cineplex sells software service subscriptions to customers which provides the functionality for the digital signage
network, the customer portal, the content management tool and media player software at the customer’s location.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
147
Cineplex also sells maintenance and support services for the software service subscriptions. Software service
subscription and maintenance and support services are considered to represent a single performance obligation and
revenue is recognized over time over the life of the contract. For software service subscriptions, customers have
payment options of either equal monthly payments over the term of the contract or a single lump sum payment at the
inception of the contract. Amounts collected as advanced payments are recorded as deferred revenue and recognized
equally over the term of the contract unless the contract contains a renewal option with an embedded material right
which provides the customer a material right (such as a free or discounted good or service) and gives rise to a
separate performance obligation. If an embedded material right exists, revenue is recognized on a straight-line basis
over the term of the contract including the renewal period. Contracts are evaluated to determine whether renewal
options provide the customer with an embedded material right and whether a significant financing arrangement
exists. For maintenance and support services, the transaction price is paid monthly in equal payments over the term
of the contract as service is provided.
Creative Services
Cineplex provides creative services producing content to be run on customer’s digital display networks. For creative
services, revenue is recognized at a point in time when the project is completed and the customer has accepted the
final product. Creative services are based on an hourly rate and the transaction price recognized as revenue is the
amount to which Cineplex has a right to invoice based on the amount of hours required to complete the project.
Payment of the transaction price is due at completion of the project.
Location-based Entertainment
The location-based entertainment segment principally generates revenue from the sale of food services and
entertainment at location based entertainment venues.
Cineplex also sells rechargeable cards to be used for gameplay. IFRS 15 requires unused cash values on the
rechargeable cards to be deferred. Revenue from the rechargeable cards is recognized upon redemption or in
accordance with Cineplex’s policy for breakage based on historical redemption patterns.
Food and beverage sales at location-based entertainment venues are recognized when control of the goods has
transferred, being at the point the customer purchases and receives the goods. Payment of the transaction price is due
at the point the customer purchases food and/or beverages.
Income per share
Basic EPS is calculated by dividing the net income for the year attributable to equity owners of Cineplex by the
weighted average number of common shares outstanding during the year.
Diluted EPS is calculated by adjusting the weighted average number of common shares outstanding for dilutive
instruments. The number of shares included with respect to options and similar instruments is computed using the
treasury stock method. Cineplex’s potentially dilutive common shares include stock options granted to employees
and the conversion feature of the convertible debentures.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
148
Film rental costs
Film rental costs are recorded based on the terms of the respective film license agreements. In some cases, the final
film cost is dependent on the ultimate duration of the film’s play and, until this is known, management uses its best
estimate of the final settlement of these film costs. Film costs and the related film costs payable are adjusted to the
final film settlement in the year Cineplex settles with the distributors. Actual settlement of these film costs could
differ from those estimates.
Consideration received from vendors
Cineplex receives rebates from certain vendors with respect to the purchase of concession goods. In addition,
Cineplex receives payments from vendors for advertising undertaken by the theatres on behalf of the vendors.
Cineplex recognizes rebates earned for purchases of each vendor’s product as a reduction of concession costs and
recognizes payments received for services delivered to the vendor as media or other revenue.
Significant accounting judgments and estimation uncertainties
Critical accounting estimates and judgments
Cineplex makes estimates and assumptions concerning the future that may not equal actual results. The following
are the estimates and judgments applied by management that most significantly impact Cineplex’s consolidated
financial statements. These estimates and judgments have a significant risk of causing a material adjustment to the
carrying values of assets and liabilities within the next financial year.
a)
Goodwill and recoverable amount of long lived assets
Recoverable amount
Cineplex tests at least annually whether goodwill suffered any impairment. Assessment of impairment for
long-lived assets, including property, equipment, leaseholds, right-of-use assets, intangible assets and
goodwill is performed more frequently as specific events or circumstances dictate triggering events and
changes in circumstances indicate that the carrying amount of the asset group may not be fully
recoverable. Management makes key assumptions and estimates in determining the recoverable amount
of its long lived assets and groups of CGUs’ goodwill, including attendance and the related revenue
growth rates, variable and fixed cash flows, operating margins and discount rates (note 11, Impairment of
long-lived assets).
b) Financial instruments
Fair value of over-the-counter derivatives
Cineplex has a prepayment option on the Notes Payable. The fair market value of prepayment option on
Notes Payable was determined using an option pricing model with observable market inputs consistent
with accepted methods for valuing financial instruments.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
149
c) Revenue recognition
Gift cards
Management estimates the value of gift cards that are not expected to be redeemed by customers, based
on the terms of the gift cards and historical redemption patterns, including industry data. The estimates
are reviewed annually, or when evidence indicates the existing estimate is not valid.
SCENE
The timing and number of points redeemed by Scene+ members affects the timing and amount of both
revenue and cost of redemptions recognized by Cineplex. If the number of points actually redeemed by
members is lower than Cineplex’s estimate of points expected to be redeemed, the estimate of average
revenue per point will be prospectively revised, and net income would be higher over time.
d) Income taxes
The timing of reversal of timing differences and the expected income allocation to various tax
jurisdictions within Canada affect the effective income tax rate used to compute the deferred income tax
asset. During the second quarter of 2023, Cineplex assessed the recoverability of net deferred income tax
assets and determined that the expected return to profitability provided a reasonable expectation that
previously derecognized net deferred income tax assets will be utilized to offset future periods of taxable
income, resulting in income tax recovery of approximately $150,225 in the second quarter of 2023.
Management estimates the reversals and income allocation based on historical and budgeted operating
results and income tax laws existing at the consolidated balance sheet dates. In addition, management
occasionally estimates the current or future deductibility of certain expenditures, affecting current or
deferred income tax balances and expenses.
e) Fair value of identifiable assets acquired and liabilities assumed in business combinations
Significant judgment is required in identifying tangible and intangible assets and liabilities of the acquired
businesses, as well as determining their fair values.
f) Share-based compensation
Management is required to make certain assumptions and to estimate future financial performance to
estimate the fair value of share-based awards at each consolidated balance sheet date. Significant
estimates and assumptions relating to the option plan are disclosed in note 13, Share-based compensation.
The LTIP and Incentive Plan requires management to estimate future non-GAAP earnings measures,
future revenue growth relative to specified industry peers, and total shareholder return, both absolutely
and relative to specified industry peers. Future non-GAAP earnings are estimated based on current
projections, updated at least annually, taking into account actual performance since the grant of the award.
Future revenue growth relative to peers is based on historical performance and current projections,
updated at least annually for actual performance since the grant of the award by Cineplex and its peers.
Total shareholder return for Cineplex and its peers is updated at each consolidated balance sheet date
based on financial models, taking into account financial market observable inputs.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
150
g) Lease terms
Some leases of property contain extension options exercisable by Cineplex up to one year before the end
of the non-cancellable contract period. Where practicable, Cineplex seeks to include extension options in
new leases to provide operational flexibility. In determining the lease term, Cineplex considers all facts
and circumstances that create an economic incentive to exercise an extension option, or not exercise a
termination option. The assessment is reviewed upon a trigger by a significant event or a significant
change in circumstances.
IFRS 5, Non-current assets held for sale and discontinued operations
Cineplex has met the criteria of recording Player One Amusement Group as a discontinued operation under IFRS 5,
Non-current assets held for sale and discontinued operations. Additional disclosures regarding presentation of
financials for the year ended December 31, 2024 and 2023 are provided in note 2, Assets held for sale and
discontinued operations.
As per IFRS 5, non-current assets and disposal groups should be classified as held for sale if their carrying amounts
will be recovered principally through a sale transaction rather than through continuing use, and measured at the
lower of their carrying amount and fair value less costs to sell and are no longer depreciated or amortized. Costs to
sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs
and income tax expense.
The criteria for held for sale classification are regarded as met only when the sale is highly probable and the asset or
disposal group is available for immediate sale in its present condition. Actions required to complete the sale should
indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be
withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed
within one year from the date of the classification.
Assets and liabilities classified as held for sale are presented separately as current items on the consolidated balance
sheet. A disposal group qualifies as discontinued operation if it is a component of an entity that either has been
disposed of, or is classified as held for sale and:
•
represents a separate major line of business or geographical area of operations,
•
is part of a single coordinated plan to dispose of a separate major line of business or geographical area of
operations or
•
is a subsidiary acquired exclusively with a view to resale.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount
as after tax profit or loss from discontinued operations in the consolidated statement of operations and comparative
periods have been restated.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
—————————————————————————————————————————————
(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
151
Amendments to existing accounting standards
The International Accounting Standards Board (“IASB”) has published a number of amendments to existing
accounting standards effective for years beginning on or after January 1, 2024.
The following amendments have been adopted or are being evaluated by Cineplex:
IAS 1, Classification of liabilities as current or non-current
In December 2020 the IASB issued classification of liabilities as current or non-current (2020 amendments). The
2020 amendments clarified aspects of how entities classify liabilities as current or non-current. The amendments are
effective for annual reporting periods beginning on or after January 1, 2024, with earlier application permitted.
Cineplex has determined that the changes have no material impact on Cineplex’s consolidated financial statements.
IFRS 16, Lease Liability in a Sale and Leaseback
In September 2022, the IASB issued amendments to IFRS 16, Leases relating to sale leaseback transactions for
seller-lessees. The amendment adds a requirement that measuring lease payments or revised lease payments shall not
result in the recognition of a gain or loss that relates to the right-of-use asset retained by the seller-lessee. The
amendments are effective for annual reporting periods beginning on or after January 1, 2024. Cineplex assessed the
impact of the amendments and determined there to be no material impact on the consolidated financial statements.
IAS 7, Supplier Finance Arrangements
In May 2023, the IASB issued amendments to IAS 7, Statement of Cash Flows and IFRS 7, Financial Instruments:
Disclosures. The amendments add requirements to disclose information that allows users to assess how supplier
finance arrangements affect an entity’s liabilities, cash flows, and exposure to liquidity risk. The amendments are
effective for annual reporting periods beginning on or after January 1, 2024. Cineplex assessed the impact of the
amendments and determined there to be no material impact on the consolidated financial statements.
IFRS 8, Disclosure of Revenues and Expenses for Reportable Segments
In July 2024, the IASB approved an Interpretations Committee agenda decision in relation to segment reporting. The
decision deals with specified items of revenue and expenses that need to be disclosed for each reportable segment.
As a result of this agenda decision Cineplex made updates to the expenses disclosed for each reportable segment
(note 22, Operating segments).
IAS 21, Lack of Exchangeability
In August 2023, the IASB issued amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates in
relation to Lack of Exchangeability. The amendments require entities to apply a consistent approach in assessing
whether a currency can be exchanged into another currency and in determining the exchange rate to use and the
disclosures to provide when it cannot. These amendments are effective for annual reporting periods beginning on or
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
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(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
152
after January 1, 2025, with early adoption permitted. Cineplex assessed the impact of the amendments and
determined there to be no material impact on the consolidated financial statements.
IFRS 9, Classification and Measurement of Financial Instruments
In May 2024, the IASB issued amendments to IFRS 9, Financial Instruments and IFRS 7, Financial Instruments:
Disclosures. The amendments relate to settling financial liabilities using an electronic payment system and assessing
contractual cash flow characteristics of financial assets, including those with Environmental, Social, and Governance
(ESG)-linked features. The IASB also amended disclosure requirements relating to investments in equity
instruments designated at FVOCI and added disclosure requirements for financial instruments with contingent
features. The amendments are effective for annual periods beginning on or after January 1, 2026, with early adoption
permitted. Cineplex is assessing the impacts to the consolidated financial statements.
IFRS 18, Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued the new standard IFRS 18, Presentation and Disclosure in Financial Statements that
will replace IAS 1, Presentation of Financial Statements. The new standard introduces newly defined subtotals on
the income statement, requirements for aggregation and disaggregation of information, and disclosure of
Management Performance Measures (MPMs) in the financial statements. The new standard is effective for annual
reporting periods beginning on or after January 1, 2027, with early adoption permitted. Cineplex is assessing the
impacts to the consolidated financial statements.
Cineplex Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
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(expressed in thousands of Canadian dollars, except per share amounts)
CINEPLEX INC. 2024 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
153
BOARD OF DIRECTORS
INVESTOR RELATIONS
Jordan Banks (4)
Gord Nelson
Corporate Director
Chief Financial Officer
Toronto, ON
Cineplex Inc.
Robert Bruce (5)
Rayhan Azmat
Corporate Director
Vice President, Investor Relations,
Toronto, ON
Corporate Development and
Financial Planning & Analysis
Joan Dea (4)
Cineplex Inc.
Corporate Director
Ross, CA
Address: Cineplex Inc.
1303 Yonge Street
Janice Fukakusa, C.M. (3)(5)
Toronto, ON M4T 2Y9
Corporate Director
Email: investorrelations@cineplex.com
Toronto, ON
STOCK EXCHANGE LISTING
Donna Hayes (5)
The Toronto Stock Exchange CGX
Corporate Director
Toronto, ON
AUDITORS
PricewaterhouseCoopers LLP
Ellis Jacob, C.M., O.Ont.
Toronto, ON
President and Chief Executive Officer
Cineplex Inc.
TRANSFER AGENT
Toronto, ON
TSX Trust Company
Toronto, ON
Sarabjit (Sabi) Marwah (4)(6)
416-682-3860
Corporate Director
800-387-0825
Toronto, ON
Email: shareholderinquiries@tmx.com
Nadir Mohamed, C.M. (2) (4)
ANNUAL AND SPECIAL MEETING
Corporate Director
Wednesday May 21, 2025
Toronto, ON
9:00AM EDT
Virtual
Phyllis Yaffe, C.M. (1) (4)
Corporate Director
Toronto, ON
(1) Chair of the Board of Directors of Cineplex Inc.
(2) Chair of the Compensation, Nominating and Corporate Governance Committee from January 1, 2024 until November 5, 2024
(3) Chair of the Audit Committee
(4) Member of the Compensation, Nominating and Corporate Governance Committee
(5) Member of the Audit Committee
(6) Chair of the Compensation, Nominating and Corporate Governance Committee from November 6, 2024 until December 31, 2024
Cineplex Inc.
Investor Information
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CINEPLEX INC. 2024 ANNUAL REPORT
INVESTOR INFORMATION
154