Cogeco Communications : Q3-2021 Shareholders' report

SHAREHOLDERS' REPORT

Three and nine-month periods ended May 31, 2021

FINANCIAL HIGHLIGHTS

			Three months ended May 31,			Nine months ended May 31,
				Change in	Foreign				Change in	Foreign
				constant	exchange				constant	exchange
	2021	2020	Change	currency (1)(2)	impact (1)	2021	2020	Change	currency (1)(2)	impact (1)
(In thousands of Canadian
dollars, except percentages	$					$
and per share data)	$	%	%	$	$	%	%	$
Operations
Revenue	624,308	605,821	3.1	8.8	(34,874)	1,877,769	1,779,115	5.5	8.1	(45,642)
Adjusted EBITDA (2)	296,999	294,717	0.8	5.8	(14,700)	915,086	854,194	7.1	9.4	(19,402)
Adjusted EBITDA margin (2)	47.6 %	48.6 %				48.7 %	48.0 %
Integration, restructuring and
acquisition costs (3)	1,225	12	-			4,770	5,531	(13.8)
Profit for the period	102,786	96,724	6.3			328,241	300,443	9.3
Profit for the period
attributable to owners of	95,702					305,317
the Corporation	90,771	5.4			284,340	7.4
Cash flow
Cash flows from operating	264,621					737,512
activities	282,229	(6.2)			663,074	11.2
Acquisition of property, plant
and equipment (4)	126,570	123,653	2.4	11.3	(11,093)	358,006	355,795	0.6	4.6	(14,187)
Free cash flow (2)	132,070	116,158	13.7	14.0	(386)	415,454	344,064	20.7	21.1	(1,070)
Capital intensity (2)	20.3 %	20.4 %				19.1 %	20.0 %
Financial condition (5)
Cash and cash equivalents						305,440	366,497	(16.7)
Total assets		6,804,197				7,020,030	6,804,197	3.2
Indebtedness (6)		3,179,926				3,128,047	3,179,926	(1.6)
Equity attributable to owners						2,348,645
of the Corporation		2,268,246				2,268,246	3.5
Per share data (7)
Earnings per share
Basic	2.02	1.89	6.9			6.42	5.84	9.9
Diluted	2.01	1.87	7.5			6.36	5.78	10.0
Dividends	0.64	0.58	10.3			1.92	1.74	10.3

1. Key performance indicators presented on a constant currency basis are obtained by translating financial results from the current periods denominated in US dollars at the foreign exchange rates of the comparable periods of the prior year. For the three and nine-month periods ended May 31, 2020, the average foreign exchange rates used for translation were 1.3994 USD/CDN and 1.3466 USD/CDN, respectively.
2. The indicated terms do not have standardized definitions prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. For more details, please consult the "Non-IFRS financial measures" section, including reconciliation to the most comparable IFRS financial measures.
3. For the three and nine-month periods ended May 31, 2021, integration, restructuring and acquisition costs resulted mostly from due diligence costs related to the acquisition of WideOpenWest's Ohio broadband systems, announced on June 30, 2021, and costs related to the acquisition and integration of DERYtelecom, which was completed on December 14, 2020. For the three and nine-month periods ended May 31, 2020, integration, restructuring and acquisition costs resulted primarily from organizational changes initiated across the Corporation resulting in cost optimization, as well as the acquisition and integration of Thames Valley Communications, which was completed on March 10, 2020.
4. For the three and nine-month periods ended May 31, 2021, acquisition of property, plant and equipment in constant currency amounted to $137.7 million and $372.2 million, respectively.
5. At May 31, 2021 and August 31, 2020.
6. Indebtedness is defined as the total of bank indebtedness and principal on long-term debt.
7. Per multiple and subordinate voting share.

COGECO COMMUNICATIONS INC. Q3 2021 FINANCIAL HIGHLIGHTS 2

MANAGEMENT'S DISCUSSION AND ANALYSIS ("MD&A")

Three and nine-month periods ended May 31, 2021

1. FORWARD-LOOKING STATEMENTS

Certain statements contained in this Management's Discussion and Analysis ("MD&A") may constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to Cogeco Communications Inc.'s ("Cogeco Communications" or the "Corporation") future outlook and anticipated events, business, operations, financial performance, financial condition or results and, in some cases, can be identified by terminology such as "may"; "will"; "should"; "expect"; "plan"; "anticipate"; "believe"; "intend"; "estimate"; "predict"; "potential"; "continue"; "foresee", "ensure" or other similar expressions concerning matters that are not historical facts. Particularly, statements regarding the Corporation's financial guidelines, future operating results and economic performance, objectives and strategies are forward- looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities, which Cogeco Communications believes are reasonable as of the current date. Refer in particular to the "Corporate objectives and strategies" and "Fiscal 2021 financial guidelines" sections of the Corporation's 2020 annual MD&A, and the "Fiscal 2021 revised financial guidelines" and "Fiscal 2022 preliminary financial guidelines" sections of the current MD&A for a discussion of certain key economic, market and operational assumptions we have made in preparing forward-looking statements. While management considers these assumptions to be reasonable based on information currently available to the Corporation, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what Cogeco Communications currently expects. These factors include risks such as competitive risks, business risks (including potential disruption to our supply chain), regulatory risks, public health crisis and emergencies such as the current COVID-19 pandemic, technology risks (including cybersecurity risk), financial risks (including variations in currency and interest rates), economic conditions, human-caused and natural threats to our network, infrastructure and systems, community acceptance risks, ethical behavior risks, ownership risks and litigation risks, many of which are beyond the Corporation's control. For more exhaustive information on these risks and uncertainties, the reader should refer to the "Uncertainties and main risk factors" sections of the Corporation's 2020 annual MD&A and of the current MD&A. These factors are not intended to represent a complete list of the factors that could affect Cogeco Communications and future events and results may vary significantly from what management currently foresees. The reader should not place undue importance on forward- looking information contained in this MD&A which represent Cogeco Communications' expectations as of the date of this MD&A (or as of the date they are otherwise stated to be made) and are subject to change after such date. While management may elect to do so, the Corporation is under no obligation (and expressly disclaims any such obligation) and does not undertake to update or alter this information at any particular time, whether as a result of new information, future events or otherwise, except as required by law.

All amounts are stated in Canadian dollars unless otherwise indicated. This report should be read in conjunction with the Corporation's condensed interim consolidated financial statements and the notes thereto for the three and nine-month periods ended May 31, 2021 prepared in accordance with the International Financial Reporting Standards ("IFRS") and the Corporation's 2020 Annual Report.

In preparing this MD&A, the Corporation has taken into account information available up to July 14, 2021, the date of this MD&A, unless otherwise indicated. Additional information relating to the Corporation, including its Annual Report and Annual Information Form, is available on the SEDAR website at www.sedar.comor on the Corporation's website at corpo.cogeco.com.

COGECO COMMUNICATIONS INC. Q3 2021 MD&A 4

2. CORPORATE OBJECTIVES AND STRATEGIES

COGECO COMMUNICATIONS INC. Q3 2021 MD&A 5