Press release details

• Revenue increased by $16.2 million, or 2.9%, to reach $574.0 million;

• Adjusted EBITDA(1) increased by $6.2 million, or 2.5%, to reach $253.2 million compared to $247.0 million for the third quarter of fiscal 2015;
• Free cash flow(1) reached $91.9 million, an increase of $14.0 million, or 18.0%;

• A quarterly eligible dividend of $0.295 per share was declared, an increase of 15.7% compared to the same period of fiscal 2015; and

• Cogeco Communications recorded a non-cash impairment of goodwill and intangible assets of $450 million related to its Business information and communications technology ("Business ICT") services segment during the third quarter of fiscal 2016.

Montréal, July 6, 2016 – Today, Cogeco Inc. (TSX: CGO) (“Cogeco” or the “Corporation”) announced its financial results for the third quarter ended May 31, 2016, in accordance with International Financial Reporting Standards (“IFRS”).

For the third quarter of fiscal 2016:

• Revenue increased by $16.2 million, or 2.9%, to reach $574.0 million driven by growth in the Communications segment mainly through the improvement of its American broadband services operations combined with favorable foreign exchange rate for the US dollar over the Canadian dollar compared to the same period of the prior year, partly offset by lower revenue in the media activities attributable to the sale of Métromédia CMR Plus Inc. ("Métromédia") on January 5, 2016;

• Adjusted EBITDA increased by $6.2 million, or 2.5%, to reach $253.2 million compared to the same period of fiscal 2015 as a result of the improvement in the Communications segment combined with favorable foreign exchange rate for the US dollar over the Canadian dollar compared to the same period of the prior year;

• During the third quarter of fiscal 2016, Cogeco Communications recognized a non-cash pre-tax impairment loss of $450 million in its Business ICT services segment resulting from changing industry dynamics and related valuations, and lower expectations for future revenue, profitability and cash flow growth;

• Loss for the period amounted to $381.9 million of which $117.7 million, or $7.03 per share, was attributable to owners of the Corporation compared to profit for the period of $66.3 million for the third quarter on fiscal 2015 of which $22.6 million, or $1.35 per share, was attributable to the owners of the Corporation. The decrease is mainly due to the non- cash pre-tax impairment of goodwill and intangible assets of $450.0 million and from $10.5 million related to the claims and litigations which both occurred in the Communications segment. The remaining variation is explained by the improvement of adjusted EBITDA combined with the decreases in financial expense, income taxes and integration, restructuring and acquisition costs, partly offset by the increase in depreciation and amortization. Excluding the impact of the impairment of goodwill and intangible assets and the claims and litigations, the earnings per share for the quarter were positively impacted as a result of higher management fees of $4.6 million paid by Cogeco Communications to the Corporation under the Amended and Restated Management Services Agreement. Under the new agreement, management fees are payable on a monthly basis. In the previous fiscal year, management fees were fully paid in the first quarter, contributing to lower profit attributable to owners of the Corporation for the second, third and fourth quarters;

• Free cash flow reached $91.9 million compared to $77.9 million, an increase of $14.0 million, or 18.0%, compared to the same quarter of the prior year resulting from the improvement of adjusted EBITDA combined with the decreases in acquisitions of property, plant and equipment, intangible and other other assets, in integration, restructuring and acquisitions costs and in financial expense, partly offset by the claims and litigations;

• Cash flow from operating activities reached $186.2 million compared to $200.7 million, representing a decrease of $14.5 million compared to fiscal 2015 third-quarter. The decrease is mostly attributable to the increase in income taxes paid and the claims and litigations, partly offset by the improvement adjusted EBITDA combined with the increase in changes in non-cash operating activities primarily due to changes in working capital and the decrease in integration, restructuring and acquisition costs;

• A quarterly eligible dividend of $0.295 per share was paid to the holders of subordinate and multiple voting shares, an increase of $0.04 per share, or 15.7%, compared to an eligible dividend of $0.255 per share paid in the third quarter of fiscal 2015;

• The Corporation revised its financial guidelines for the 2016 fiscal year mainly as a result of lower than expected operating results from the Business ICT services segment of Cogeco Communications combined with the appreciation of the Canadian dollar over the US dollar and higher capital expenditures related to a large colocation contract;

• The Corporation released its fiscal 2017 preliminary financial guidelines and expects revenue to grow between 1.5% and 2%, adjusted EBITDA to grow between 2% and 3% and free cash flow between 31% and 34%;

• At its July 6, 2016 meeting, the Board of Directors of Cogeco declared a quarterly eligible dividend of $0.295 per share for multiple voting and subordinate voting shares payable on August 3, 2016; and

• On May 31, 2016, Cogeco Communications' subsidiary, Atlantic Broadband, extended the maturity of its Revolving and Term Loan A Facilities from November 30, 2017 to September 2, 2019.

For the nine-month period ended May 31, 2016:

• Revenue increased by $102.3 million, or 6.3%, to reach $1.74 billion driven by growth in the Communications segment mainly through the improvement of its American broadband services operations combined with favorable foreign exchange rates compared to the same period of the prior year;

• Adjusted EBITDA increased by $50.4 million, or 7.1%, to reach $760.4 million compared to the same period of fiscal 2015 as a result of the improvement in the Communications segment combined with favorable foreign exchange rates compared to the same period of the prior year and the improvement in the media activities;

• Loss for the period amounted to $239.4 million of which $59.1 million, or $3.54 per share, was attributable to owners of the Corporation compared to profit for the period of $186.7 million for the same period of fiscal 2015, of which $64.2 million, or $3.84 per share, was attributable to the owners of the Corporation. The decrease is mainly due to the non- cash pre-tax impairment of goodwill and intangible asset of $450.0 million and from $10.5 million related to the claims and litigations which both occurred in the Communications segment. The remaining variation is explained by the improvement of adjusted EBITDA combined with the decrease in financial expense and the gain on disposal of Métromédia, partly offset by increases in depreciation and amortization and income taxes;

• Free cash flow reached $210.0 million compared to $217.6 million, a decrease of $7.5 million, or 3.5%, compared to the same period of the prior year resulting from the timing of the acquisitions of property, plant and equipment, the claims and litigations and an increase in current income taxes, partly offset by the improvement of adjusted EBITDA and the decrease of financial expense; and

• Cash flow from operating activities reached $487.9 million compared to $418.6 million, representing an increase of $69.3 million, or 16.6%, compared to the first nine months of fiscal 2015. The increase is mostly attributable to the improvement in adjusted EBITDA combined with a decrease in changes in non-cash operating activities primarily due to changes in working capital, partly offset by the increase in income taxes paid and the claims and litigations.

(1)     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 of the Management’s discussion and analysis (“MD&A”).