COGECO COMMUNICATIONS INC 2018 ANNUAL REPORT FUTURE-DRIVEN RESOLUTELy 2018 ANNUAL REPORT PROFILE Cogeco Communications Inc. is a communications corporation. It is the 8th largest cable operator in North America, operating in Canada under the Cogeco Connexion name in Québec and Ontario, and in the United States under the Atlantic Broadband name in 11 states along the East Coast, from Maine to Florida. Cogeco Communications Inc. provides its residential and business customers with Internet, video and telephony services through its two-way broadband fibre networks. Through its subsidiary Cogeco Peer 1, Cogeco Communications Inc. provides its business customers with a suite of information technology services (colocation, network connectivity, hosting, cloud and managed services), by way of its 16 data centres, extensive FastFiber Network® and more than 50 points of presence in North America and Europe. Cogeco Communications Inc.’s subordinate voting shares are listed on the Toronto Stock Exchange (TSX: CCA). POWErful COnnEctiOns FOR OUR custOMErs GEnuinE COnnEctiOns WitH OUR custOMErs Table of contents THREE-YEAR FINANCIAL CONSOLIDATED FINANCIAL OPERATIONS INFORMATION PERFORMANCE STATEMENTS 116 2 66 CORPORATE INFORMATION FINANCIAL HIGHLIGHTS INVESTOR INFORMATION 117 3 111 MESSAGE TO SHAREHOLDERS CUSTOMER STATISTICS 4 113 MANAGEMENT’S DISCUSSION BOARD OF DIRECTORS AND AND ANALYSIS (“MD&A”) CORPORATE MANAGEMENt 7 114 COGECO COMMUNICATIONS inc. § 2018 ANNUAL REPORT § PROFILE § 1 THREE-YEAR FINANCIAL PERFORMANCE ADJUSTED EBITDA1 AND REVENUE ADJUSTED EBITDA MARGIN1 (in thousands of Canadian dollars) (in thousands of Canadian dollars, except percentages) 2018 2,423,549 2018 44.8% 1,085,985 2017 2,226,851 2017 45.1% 1,004,970 2016 2,176,149 2016 45.2% 983,449 PROFIT (LOSS) FOR THE YEAR CASH FLOW FROM OPERATING ACTIVITIES (in thousands of Canadian dollars) (in thousands of Canadian dollars) 694,100 2018 356,341 2018 956,657 2017 299,225 2017 745,168 2016 (189,628) 2016 ACQUISITIONS OF PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE AND OTHER ASSETS AND CAPITAL INTENSITY1 FREE CASH FLOW1 (in thousands of Canadian dollars, except percentages) (in thousands of Canadian dollars) 2018 2 21.3% 515,576 2018 326,460 2017 19.2% 428,057 2017 373,735 2016 21.5% 467,510 2016 280,998 1 The indicated terms do not have standardized definitions prescribed by International Financial Reporting Standards (“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 of the Management’s Discussion and Analysis (“MD&A”). 2 The definition of acquisitions of intangible and other assets excludes the purchases of Spectrum licenses. 2 § COGECO COmmunicatiOns inc. § 2018 ANNUAL REPORT § THREE-YEAR FINANCIAL PERFORMANCE FINANCIAL HIGHLIGHTS Change in Foreign YEARS ENDED AUGUST 31 constant exchange (in thousands of Canadian dollars, except percentages 2018 2017 Change currency 1 impact 2 and per share data) $ $ % % $ OPERATIONS Revenue 2,423,549 2,226,851 8.8 10.2 (29,377) Adjusted EBITDA 1,085,985 1,004,970 8.1 9.2 (11,658) Adjusted EBITDA margin 44.8% 45.1% Integration, restructuring and acquisition costs3 20,328 3,191 — Profit for the year 356,341 299,225 19.1 Profit for the year attributable to owners of the Corporation 347,150 299,225 16.0 CASH FLOW Cash flow from operating activities 694,100 956,657 (27.4) Acquisitions of property, plant and equipment, intangible and other assets4 515,576 428,057 20.4 22.4 (8,400) Free cash flow 326,460 373,735 (12.6) (13.1) 1,735 CAPITAL INTENSITY 21.3% 19.2% FINANCIAL CONDITION Cash and cash equivalents 84,725 211,185 (59.9) Short-term investments — 54,000 (100.0) Total assets 7,167,413 5,348,380 34.0 Indebtedness5 3,914,711 2,598,058 50.7 Equity attributable to owners of the Corporation 1,967,341 1,599,267 23.0 PER SHARE DATA6 Earnings per share Basic 7.04 6.08 15.8 Diluted 6.98 6.03 15.8 Dividends 1.90 1.72 10.5 1 The indicated terms do not have standardized definitions prescribed by the International Financial Reporting Standards (“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 of the MD&A. 2 Key performance indicators presented on a constant currency basis are obtained by translating financial results of the current period denominated in US dollars and GBP currency at the foreign exchange rates of the prior year. For the year ended August 31, 2017, the average foreign exchange rates used for translation were 1.3205 USD/CDN and 1.6711 GBP/CDN, respectively. 3 For fiscal years 2018 and 2017, integration, restructuring and acquisition costs were related to the MetroCast acquisition completed on January 4, 2018. 4 The definition of acquisitions of intangible and other assets excludes the purchases of Spectrum licenses. For the year ended August 31, 2018, acquisitions of property, plant and equipment, intangible and other assets in constant currency amounted to $524.0 million. 5 Indebtedness is defined as the aggregate of bank indebtedness, balance due on a business combination and principal on long-term debt. 6 Per multiple and subordinate voting share. COGECO COMMUNICATIONS inc. § 2018 ANNUAL REPORT § FINANCIAL HIGHLIGHTS § 3 MESSAGE TO SHAREHOLDERS Dear Fellow Shareholders, INITIATIVES Fiscal 2018 was a year of change at Cogeco Communications Inc. CANADIAN BROADBAND SERVICES SEGMENT (“Cogeco Communications” or the “Corporation”). We stepped into At Cogeco Connexion, fiscal 2018 was a year for consolidation and our 61st year proud of our history and what we’ve accomplished, enhancement of products, services and systems. yet with our eyes fixed firmly on the future. Our organic financial performance was stable despite increased market pressure, and At the midpoint of the fiscal year, the team undertook the much- we are mindful of the trust and expectations you and all of our anticipated and transformative task of upgrading its customer stakeholders have put in us as we continue to build a foundation management system, consolidating 22 different legacy systems for transformational change. into one integrated, advanced platform, supported by an industry leading supplier. Among its many benefits, this new system will Consolidated revenue increased by 8.8% in fiscal 2018 to reach allow Cogeco Connexion to provide improved customer service in $2.42 billion, while adjusted EBITDA reached $1.09 billion, up by 8.1%. terms of response time and greater digital interaction capabilities. Profit for the year reached $356.3 million and the Corporation This upgrade has come with its share of challenges and in some generated free cash flow of $326.5 million. Dividends paid to our cases disruptions. Cogeco Connexion teams worked tirelessly shareholders increased by 10.5% to $1.90 per share. for months, sparing no effort, to ensure these cases would be resolved as efficiently as possible and that we could continue to LAYING THE GROUNDWORK FOR A NEW CHAPTER provide the amazing customer service experience our customers deserve and for which Cogeco Connexion is recognized. This past fiscal year was marked by important milestones in each of our three operating segments: a significant acquisition Enhancements to existing products and services were also in our American broadband services subsidiary; a new advanced made during the year throughout Cogeco Connexion’s footprint. customer management system in our Canadian broadband The subsidiary enhanced uploading and downloading Internet services subsidiary; a change in leadership at our Business speeds while also further launching its new high-speed unlimited information and communications technology (“Business ICT”) UltraFibre 120 package for residential customers in different regions services subsidiary. We also took our first positive step in the of Québec, and announced the continuation of its 1 Gigabit network exploration of our options in the mobile wireless market with enhancement program, enabling the progressive roll-out of its Cogeco Connexion’s auction win of 23 licenses of 2,500 MHz and gigabit offering in Ontario and Québec markets. For its business 2,300 MHz spectrum, primarily in its Ontario and Québec footprint. customers, Cogeco Connexion enhanced its voice solutions offering This followed our acquisition of ten Spectrum licenses of 2,500 MHz with a new and superior hosted private branch exchange (“HPBX”) in non-metropolitan areas of Ontario from Kian Telecom. Unified Communications service. At the same time, the Board of Directors and I have determined Cogeco Connexion closed the fiscal year with the announcement that this is an opportune moment to elevate a new President that it will be offering customers the MediaFirst next generation and Chief Executive Officer as I move on to become Executive Internet protocol television (“IPTV”) platform in Canada, taking Chairman of the Board. The Board of Directors and I believe that its customers into the future with the introduction of MediaKind’s it is time to pass the leadership to the next generation of leaders state-of-the-art solution. This evolution toward IPTV will further in the spirit of continuity. Philippe Jetté became the President enhance Cogeco Connexion’s TV platform offering. and Chief Executive Officer of Cogeco Communications on September 1, 2018. He is part of the next generation of leaders who AMERICAN BROADBAND SERVICES SEGMENT can bring fresh, new perspectives and innovation to the business. Following the initial announcement made in July 2017, Atlantic Mr. Jetté who has been with Cogeco Communications since 2011, Broadband finalized its acquisition of the entire MetroCast cable most recently as President of Cogeco Peer 1, is such a leader. I systems, including close to 251,000 primary service units in New am confident that, supported by the full Board of Directors and his Hampshire, Maine, Pennsylvania, Maryland and Virginia.