COGECO reports strong results for the third quarter of fiscal 2014

PRESS RELEASE

For immediate release

• Adjusted EBITDA

(1)

increased by 5.5% and 18.3% compared to the third quarter and the first nine

months periods of the prior year; and

• Quarterly dividend of $0.22 per share, an increase of 15.8% compared to the same period last year.

Montréal, July 9, 2014 – Today, COGECO Inc. (TSX: CGO) (“COGECO” or the “Corporation”) announced its financial results

for the third quarter of fiscal 2014, ended May 31, 2014, in accordance with International Financial Reporting Standards (“IFRS”).

For the third quarter and first nine months of fiscal 2014:

• Third quarter revenue increased by $31.6 million, or 6.3%, to reach $536.1 million mainly driven by growth in the Cable

segment through the organic growth from all of our operating segments as well as favorable foreign exchange rates

in our foreign operations. For the nine-month period ended May 31, 2014, revenue reached close to $1.6 billion, an

increase of $242.0 million or 18.2%. Revenue increase is mainly attributable to the full year impact of the acquisitions,

in the Cable segment, of Atlantic Broadband and Peer 1 Hosting

(2)

("the recent acquisitions") which both occurred

during fiscal 2013 combined with the organic growth from all of our operating segments and the favorable foreign

exchange rates in our foreign operations;

• Adjusted EBITDA

(1)

increased by 5.5% to $233.1 million compared to the third quarter of fiscal 2013, and by 18.3% to

$678.9 million for the first nine months when compared to the same period of the prior year. The rapid progression for

both periods resulted mainly from the recent acquisitions and the organic growth as well as the favorable foreign

exchange rates from our foreign operations compared to the same period of last year;

• During the third quarter of fiscal 2014, the Corporation's indirect cable subsidiary, Cogeco Cable Canada, recognized

an impairment of $32.2 million of property, plant and equipment, capitalized wages and borrowing costs related to an

Internet Protocol Television ("IPTV") solution project on which its Canadian operations had worked. As a result of the

unexpected performance issues encountered with the platform, it had to be abandoned by Cogeco Cable Canada.

Subsequently, in order to enhance its competitiveness, the Cogeco Cable Canada subsidiary has concluded a

partnership with TiVo Inc. (“TiVo”), a global leader in next-generation television services that enable viewers to consume

content across all screens in and out-of-the home to be launched at Cogeco Cable Canada by mid-fiscal 2015. The

TiVo solution was successfully launched in the first half of fiscal 2014 at Cogeco Cable's subsidiary, Atlantic Broadband

with great customer acceptance;

(1) The indicated terms do not have standard 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.

(2) Peer 1 Hosting refers to Peer 1 Network (USA) Holdings Inc., Peer 1 (UK) Ltd. and Peer 1 Network Enterprises, Inc.

• Profit for the third quarter amounted to $35.6 million of which $11.5 million, or $0.69 per share, is attributable to owners

of the Corporation compared to profit of $50.0 million for the same period in fiscal 2013 of which $17.2 million, or $1.03

per share, is attributable to owners of the Corporation. The decline for the quarter is attributable to the impairment of

property, plant and equipment explained above, partly offset by the improvement of the adjusted EBITDA. For the first

nine months of fiscal 2014, profit for the period amounted to $150.9 million of which $51.9 million, or $3.10 per share,

is attributable to owners of the Corporation compared to profit for the period of $146.1 million for the first nine months

of fiscal 2013 of which $50.4 million, or $3.01 per share is attributable to owners of the Corporation. Profit progression

for the period is mostly attributable to the improvement of the Cable segment's adjusted EBITDA stemming from the

recent acquisitions and organic growth as well as the decrease in integration, restructuring and acquisition costs, partly

offset by the impairment of property, plant and equipment explained above as well as the increases in financial expense

and depreciation and amortization expense essentially related to the recent acquisitions;

• Third quarter free cash flow

(1)

reached $91.5 million compared to $44.7 million in the comparable quarter of the prior

year. This increase is mainly due to the improvement of adjusted EBITDA explained above and the decrease in

acquisitions of property, plant and equipment due to the timing of certain initiatives. For the nine-month period, free

cash flow amounted to $255.6 million, compared to $97.1 million for the same period of fiscal 2013. The increase is

mostly attributable to the improvement of adjusted EBITDA, the decrease in acquisitions of property, plant and

equipment due to the timing of certain initiatives as well as the decrease in integration, restructuring and acquisition

costs, partly offset by the increase in financial expense as a result of higher indebtedness level from the recent

acquisitions;

• Fiscal 2014 third-quarter cash flow from operating activities reached $184.7 million compared to $167.6 million, an

increase of $17.1 million or 10.2%, compared to the same period of the prior year. The increase is mainly attributable

to the improvement of the adjusted EBITDA and the increase in non-cash operating activities, partly offset by the

increase in financial expense paid. For the first nine months of fiscal 2014, cash flow from operating activities reached

$432.6 million compared to $318.7 million, an increase of $113.8 million, or 35.7%, compared to the same period in

fiscal 2013. The increase is mainly attributable to the improvement of the adjusted EBITDA as well as the decreases

in integration, restructuring and acquisition costs and income taxes paid, partly offset by the increase in financial

expense paid;

• A quarterly dividend of $0.22 per share was paid to the holders of subordinate and multiple voting shares, an increase

of $0.03 per share, or 15.8%, when compared to a dividend of $0.19 per share paid in the third quarter of fiscal 2013.

Dividend payments in the first nine-months totaled $0.66 per share in fiscal 2014, compared to $0.57 per share in

fiscal 2013; and

• On March 5, 2014, the Corporation completed, pursuant to a private placement, the issuance of $50 million of Senior

Unsecured Notes for net proceeds of $48.7 million, net of transaction costs of approximately $1.3 million. These

unsecured notes bear interest at 6.00% per annum payable semi-annually and mature on March 5, 2020. The net

proceeds of the Senior Unsecured Notes was used to reimburse a portion of the Corporation's Term Revolving Facility

of $100 million which facility was consequently reduced to $50 million.

"I am happy to report that COGECO has generated solid financial results for its third quarter of 2014. The cable segment continues

to grow and most of our performance indicators are on target with our objectives. These solid results demonstrate that with

strong cost controls and a dynamic marketing strategy, Cogeco Cable continues to grow in this highly competitive industry,”

declared Louis Audet, President and Chief Executive Officer of COGECO Inc.

“Moreover, I am delighted that we were able to build on the success achieved by the TiVo video platform at our Atlantic Broadband

subsidiary by extending our partnership to bring this world leading platform to our Canadian customers at our Cogeco Cable

Canada subsidiary. We expect to launch by mid-fiscal 2015. Excluding the impact of the impairment related to the prior attempt

at developing an alternate IPTV video platform, we expect to meet our fiscal 2014 guidance” added Louis Audet.

“We are also pleased with the financial results of our media business. The radio ratings of Cogeco Diffusion confirm our leadership

in the Montreal market and good performance in most of our other markets across the province of Quebec. Furthermore, our

transit advertising business, Cogeco Métromédia, continues to show improvements,” concluded Louis Audet.

(1) The indicated terms do not have standard 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.

ABOUT COGECO

COGECO (www.cogeco.ca) is a diversified holding corporation. Through its Cogeco Cable Inc. subsidiary, COGECO provides to its residential

and business customers analogue and digital television, high speed Internet and telephony services with its two-way broadband fibre networks.

Cogeco Cable Inc. operates in Canada under the Cogeco Cable Canada name in Quebec and Ontario, and in the United States under the Atlantic

Broadband name in Western Pennsylvania, Southern Florida, Maryland/Delaware and South Carolina. Through its subsidiaries, Cogeco Data

Services and Peer 1 Hosting, Cogeco Cable Inc. provides to its commercial customers a suite of information technology services (colocation,

managed and dedicated Hosting, managed IT, cloud and connectivity services) with 20 data centres, extensive fibre networks in Montreal and

Toronto as well as points-of-presence in North America and Europe. Through its subsidiary, Cogeco Diffusion, COGECO owns and operates 13

radio stations across most of Quebec with complementary radio formats serving a wide range of audiences as well as Cogeco News, its news

agency. COGECO also operates Métromédia, an out-of-home advertising company specialized in the public transit sector. COGECO’s subordinate

voting shares are listed on the Toronto Stock Exchange (TSX: CGO). The subordinate voting shares of Cogeco Cable Inc. are also listed on the

Toronto Stock Exchange (TSX: CCA).

- 30 -

Source: COGECO Inc.

Pierre Gagné

Senior Vice President and Chief Financial Officer

Tel.: 514-764-4700

Information: Media

René Guimond

Vice-President, Public Affairs and Communications

Tel.: 514-764-4700

Analyst Conference Call: Thursday, July 10, 2014 at 11:00 a.m. (Eastern Daylight Time) Media representatives may attend

as listeners only.

Please use the following dial-in number to have access to the conference call by dialing five minutes

before the start of the conference:

Canada/USA Access Number: 1 800-820-0231

International Access Number: + 1 416-640-5926

Confirmation Code: 2083261

By Internet at www.cogeco.ca/investors

A rebroadcast of the conference call will be available until July16, 2014, by dialing:

Canada and US access number: 1 888-203-1112

International access number: + 1 647-436-0148

Confirmation code: 2083261

SHAREHOLDERS’ REPORT

Three and nine-month periods ended May 31, 2014

COGECO INC. Q3 2014 2

FINANCIAL HIGHLIGHTS

Quarters ended Nine months ended

(in thousands of dollars, except percentages and per share

data)

May 31,

2014

May 31,

2013

(2)

Change

May 31,

2014

May 31,

2013

(2)

Change

$ $ % $ $ %

Operations

Revenue 536,067 504,434 6.3 1,571,515 1,329,543 18.2

Adjusted EBITDA

(1)

233,083 220,878 5.5 678,930

574,034

18.3

Impairment of property, plant and equipment 32,197 — — 32,197 — —

Profit for the period 35,635 49,995 (28.7) 150,941

146,051

3.3

Profit for the period attributable to owners of the Corporation 11,469 17,185 (33.3) 51,915 50,391 3.0

Cash Flow

Cash flow from operating activities 184,706 167,641 10.2 432,552

318,731

35.7

Cash flow from operations

(1)

176,491 158,172 11.6 509,128

399,797

27.3

Acquisitions of property, plant and equipment, intangible and

other assets 84,960 113,492 (25.1) 253,537

302,666

(16.2)

Free cash flow

(1)

91,531 44,680 — 255,591 97,131 —

Financial Condition

(3)

Property, plant and equipment — — — 1,794,227 1,874,866

(4.3

)

Total assets — — — 5,407,774 5,453,835

(0.8

)

Indebtedness

(4)

— — — 2,964,153 3,054,275

(3.0

)

Equity attributable to owners of the Corporation — — — 500,119

456,905

9.5

Per Share Data

(5)

Earnings per share

Basic 0.69 1.03 (33.0) 3.10 3.01 3.0

Diluted 0.68 1.02 (33.3) 3.08 2.99 3.0

(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) Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed

interim consolidated financial statements.

(3) At May 31, 2014 and August 31, 2013.

(4) Indebtedness is defined as the aggregate of bank indebtedness, principal on long-term debt, balance due on a business combination and obligations under

derivative financial instruments.

(5) Per multiple and subordinate voting share.

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)

Three and nine-month periods ended May 31, 2014

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 4

FORWARD-LOOKING STATEMENTS

Certain statements 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’s 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. In particular, statements regarding the Corporation’s future operating results and economic performance and its

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 believes are reasonable as of the current

date. While management considers these assumptions to be reasonable based on information currently available to the Corporation, they may

prove to be incorrect. The Corporation cautions the reader that the economic downturn experienced over the past few years makes forward-

looking information and the underlying assumptions subject to greater uncertainty and that, consequently, they may not materialize, or the results

may significantly differ from the Corporation’s expectations. It is impossible for COGECO to predict with certainty the impact that the current

economic uncertainties may have on future results. Forward-looking information is also subject to certain factors, including risks and uncertainties

(described in the “Uncertainties and main risk factors” section of the Corporation’s 2013 annual MD&A as well as in the present MD&A) that could

cause actual results to differ materially from what COGECO currently expects. These factors include namely risks pertaining to markets and

competition, technology, regulatory developments, operating costs, information systems, disasters or other contingencies, financial risks related

to capital requirements, human resources, controlling shareholder and holding structure, many of which are beyond the Corporation’s control.

Therefore, future events and results may vary significantly from what management currently foresees. The reader should not place undue

importance on forward-looking information and should not rely upon this information as of any other date. While management may elect to, the

Corporation is under no obligation and does not undertake to update or alter this information at any particular time, except as may be 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, 2014, prepared in accordance

with the International Financial Reporting Standards (“IFRS”) and the MD&A included in the Corporation’s 2013 Annual Report.

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 5

CORPORATE OBJECTIVES AND STRATEGIES

COGECO's objectives are to provide outstanding service to its customers and maximize shareholder value by increasing profitability and ensuring

continued revenue growth. The strategies employed to reach these objectives, supported by tight controls over costs and business processes,

are specific to each segment. The main strategies used to reach COGECO's objectives in the Cable segment focus on expanding its service

offering, enhancing its existing services and bundles, improving customer experience and business processes as well as keeping a sound capital

management and a strict control over spending. The radio activities focus on continuous improvement of its programming in order to increase its

market share and thereby its profitability. The Corporation measures its performance, with regard to these objectives by monitoring adjusted

EBITDA

(1)

and free cash flow

(1)

KEY PERFORMANCE INDICATORS

ADJUSTED EBITDA

For the nine-month period ended May 31, 2014, adjusted EBITDA increased by 18.3% to reach $678.9 million compared to the same period of

fiscal 2013. Improvement in the adjusted EBITDA is mainly attributable to the acquisitions, in the Cable segment, of Atlantic Broadband and Peer

1 Hosting

(2)

(the "recent acquisitions") which occurred at the end of the first quarter and in the second quarter of fiscal 2013, respectively, combined

with the favorable foreign exchange rates benefiting our foreign operations and the financial results improvement from organic growth.

FREE CASH FLOW

For the nine-month period ended May 31, 2014, COGECO reported free cash flow of $255.6 million, an increase of $158.5 million compared to

$97.1 million for the same period of the previous fiscal year. This variance is mostly attributable to the improvement of adjusted EBITDA explained

above, the decrease in acquisitions of property, plant and equipment due to the timing of certain initiatives as well as the decrease in integration,

restructuring and acquisition costs, partly offset by the increase in financial expense due to higher indebtedness level from the recent acquisitions.

BUSINESS DEVELOPMENTS AND OTHER

BBM Canada's spring 2014 survey in the Montréal region, conducted with the Portable People Meter (“PPM”), reported that 98.5 FM is the leading

radio station in the Montreal French market amongst all listeners as well as men two years old and over (“2+”), while Rythme FM has maintained

its leadership position in the women 2+ segment among the musical stations. Regarding the Montreal English market, The Beat is the leading

radio station in the women 35-64 segment. In most of the Quebec regions, our radio stations registered good ratings.

During the third quarter of fiscal 2014, the Corporation's indirect cable subsidiary, Cogeco Cable Canada, recognized an impairment of $32.2

million of property, plant and equipment, capitalized wages and borrowing costs related to an Internet Protocol Television ("IPTV") solution project

on which its Canadian operations had worked. As a result of the unexpected performance issues encountered with the platform, it had to be

abandoned by Cogeco Cable Canada. Subsequently, in order to enhance its competitiveness, the Cogeco Cable Canada subsidiary has concluded

a partnership with TiVo Inc. (“TiVo”), a global leader in next-generation television services that enable viewers to consume content across all

screens in and out-of-the home to be launched at Cogeco Cable Canada by mid-fiscal 2015. The TiVo solution was successfully launched in the

first half of fiscal 2014 at Cogeco Cable's subsidiary, Atlantic Broadband with great customer acceptance.

On June 30, 2014, Cogeco Cable's subsidiary, Atlantic Broadband, amended its First Lien Credit Facilities. Pursuant to the amendment, US$15

million of the Term Loan A Facility was converted into the Revolving Facility. In addition, the Revolving Facility was increased by US$35 million

of which the proceeds were used to reimburse a portion of the Term Loan B. Giving effect to this amendment, the combined amounts borrowed

under the Term Loan A, Term Loan B and the Revolving Facility have not changed. All other terms and conditions related to covenants, interest

rates and maturity remained the same. In connection with the amendment, transaction costs of US$0.4 million were incurred which are expected

to be more than off-set by interest expense savings over the next year.

(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.

(2) Peer 1 Hosting refers to Peer 1 Network (USA) Holdings Inc., Peer 1 (UK) Ltd. and Peer 1 Network Enterprises, Inc.

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 6

OPERATING AND FINANCIAL RESULTS

OPERATING RESULTS

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

(1)

Change

May 31,

2014

May 31,

2013

(1)

Change

(in thousands of dollars, except percentages) $ $ % $ $ %

Revenue 536,067 504,434 6.3 1,571,515 1,329,543 18.2

Operating expenses 302,984 283,556 6.9 892,585

755,509

18.1

Adjusted EBITDA 233,083 220,878 5.5 678,930

574,034

18.3

(1) Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed

interim consolidated financial statements.

REVENUE

Fiscal 2014 third-quarter revenue increased by $31.6 million or 6.3%, to reach $536.1 million. For the first nine months, revenue amounted to

approximately $1.6 billion, an increase of $242.0 million, or 18.2% compared to the first nine months of fiscal 2013. The increase for both periods

is mainly attributable to the Cable segment as explained below as well as from the improvement of the media business activities for the first nine

months.

In the Cable segment, fiscal 2014 third-quarter revenue increased by $32.0 million, or 6.9%, to reach $496.4 million compared to the same period

of last year. Revenue increased organically from all of our operating units combined with favorable foreign exchange rates for our foreign

operations. For the first nine months of fiscal 2014, revenue amounted to approximately $1.5 billion, an increase of $235.4 million, or 19.3%,

compared to the same period of fiscal 2013. Revenue increased was mainly attributable to the full year impact of the recent acquisitions which

both occurred during fiscal 2013 combined with the organic growth from all of our operating segments and favorable foreign exchange rates in

our foreign operations. For further details on the Cable segment's revenue, please refer to the "Cable segment" section.

OPERATING EXPENSES

For the third quarter of fiscal 2014, operating expenses increased by $19.4 million, to reach $303.0 million, an increase of 6.9% compared to the

prior year. For the first nine months of the fiscal year, operating expenses amounted to $892.6 million, an increase of $137.1 million, or 18.1%,

compared to the same period of fiscal 2013. The increase is mainly attributable to the Cable segment operating results.

Operating expenses in the Cable segment for the third quarter of fiscal 2014 increased by $17.7 million, to reach $267.1 million, an increase of

7.1% compared to the prior year. For the first nine months of the fiscal year, operating expenses amounted to $785.2 million, an increase of

$130.9 million, or 20.0%, compared to the same period of fiscal 2013. Operating expenses increased was due to the full year impact of the recent

acquisitions and the appreciation of the US dollar and British Pound currency compared to the Canadian dollar.

ADJUSTED EBITDA

Fiscal 2014 third-quarter adjusted EBITDA increased by $12.2 million, or 5.5%, to reach $233.1 million, of which the Cable segment contributed

$229.4 million to the consolidated adjusted EBITDA. For the first nine months of fiscal 2014, the adjusted EBITDA increased by $104.9 million,

or 18.3%, to reach $678.9 million, of which $662.5 million was contributed by the Cable segment. The increase for the quarter in the Cable

segment is mainly attributable to the improvement from all of our operating segments as well as the favorable foreign exchange rates from our

foreign operations compared to the same periods of last year while the increase for the first nine months is largely attributable to the full impact

of the recent acquisitions. For further details on Cogeco Cable's operating results, please refer to the "Cable segment" section.

FIXED CHARGES

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

(1)

Change

May 31,

2014

May 31,

2013

(1)

Change

(in thousands of dollars, except percentages) $ $ % $ $ %

Depreciation and amortization 118,926

112,867

5.4 350,475

272,831

28.5

Financial expense 34,071 36,776 (7.4) 102,485 84,899 20.7

(1) Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed

interim consolidated financial statements.

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 7

For the three and nine-month periods ended May 31, 2014, depreciation and amortization expense amounted to $118.9 million and $350.5 million,

respectively, compared to $112.9 million and $272.8 million for the same periods of last year. The increase for the quarter is mostly attributable

to the appreciation of the US dollar and the British Pound currency compared to the Canadian dollar. The increase for the first nine months of

fiscal 2014 results mainly from the full year impact of the recent acquisitions, which occurred at the end of the first quarter and in the second

quarter of fiscal 2013 and by the currency appreciation of the US dollar and the British Pound compared to the Canadian dollar.

Fiscal 2014 third-quarter financial expense decreased by $2.7 million, or 7.4%, amounting to $34.1 million compared to $36.8 million in fiscal

2013 third-quarter as a result of a lower indebtedness level. For the first nine months of fiscal 2014, financial expense increased by $17.6 million,

or 20.7%, at $102.5 million, compared to $84.9 million in the prior year as a result of the full year impact of financing costs related to the recent

acquisitions in the Cable segment.

IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT

During the third quarter of fiscal 2014, the Corporation's indirect cable subsidiary, Cogeco Cable Canada, recognized an impairment of $32.2

million of property, plant and equipment, capitalized wages and borrowing costs related to an IPTV solution project on which its Canadian operations

had worked. As a result of the unexpected performance issues encountered with the platform, it had to be abandoned by Cogeco Cable Canada.

INCOME TAXES

For the three and nine-month periods ended May 31, 2014, income tax expense amounted to $9.1 million and $39.1 million, respectively, compared

to $19.1 million and $53.3 million, respectively, for the comparable periods in the prior year. The decrease is mostly attributable to the impairment

of property, plant and equipment, the increase in fixed charges as well as the favorable impact of the tax structure following the recent acquisitions

in the Cable segment, partly offset by the improvement in adjusted EBITDA.

PROFIT FOR THE PERIOD

For the three and nine-month periods ended May 31, 2014, profit for the period amounted to $35.6 million and $150.9 million, of which $11.5

million and $51.9 million, or $0.69 and $3.10 per share, are attributable to owners of the Corporation. For the comparable periods of fiscal 2013,

profit for the period amounted to $50.0 million and $146.1 million, of which $17.2 million and $50.4 million, or $1.03 and $3.01 per share, was

attributable to owners of the Corporation. The decline for the third quarter is attributable to the impairment of property, plant and equipment

explained above, partly offset by the improvement of the adjusted EBITDA. Profit progression for the first nine months of fiscal 2014 is mostly

attributable to the improvement of the adjusted EBITDA explained above as well as the decrease in integration, restructuring and acquisition

costs, partly offset by the impairment of property, plant and equipment and the increase in fixed charges explained above.

The non-controlling interest represents a participation of approximately 68% in Cogeco Cable's results. For fiscal 2014 three and nine-month

periods, the profit for the period attributable to non-controlling interest amounted to $24.2 million and $99.0 million compared to $32.8 million and

$95.7 million in fiscal 2013.

CASH FLOW ANALYSIS

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

(2)

May 31,

2014

May 31,

2013

(2)

(in thousands of dollars)

$ $ $ $

Cash flow from operations

(1)

176,491 158,172

509,128 399,797

Changes in non-cash operating activities 13,340 (5,443) (82,379) (80,194)

Amortization of deferred transaction costs and discounts on long-term debt (2,007) (3,520)

(5,856

)

(7,237

)

Income taxes paid (16,672) (17,031) (55,888) (79,490)

Current income tax expense 23,693 27,563 72,378 76,227

Financial expense paid (44,210) (28,876) (107,316) (75,271)

Financial expense 34,071 36,776

102,485

84,899

Cash flow from operating activities 184,706 167,641

432,552 318,731

Cash flow from investing activities (84,935) (135,812) (252,932) (2,308,490)

Cash flow from financing activities (123,482) (35,540) (194,277) 1,812,085

Effect of exchange rate changes on cash and cash equivalents denominated in

foreign currencies (535) 1,089

1,390 1,794

Net change in cash and cash equivalents (24,246) (2,622) (13,267) (175,880)

Cash and cash equivalents, beginning of the period 54,772 42,265 43,793

215,523

Cash and cash equivalents, end of the period 30,526 39,643 30,526 39,643

(1) The indicated terms do not have standard 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.

(2) Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed

interim consolidated financial statements.

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 8

OPERATING ACTIVITIES

Fiscal 2014 third-quarter cash flow from operating activities reached $184.7 million compared to $167.6 million, an increase of $17.1 million or

10.2%, compared to the same period of prior year. The increase is mainly explained by the improvement of adjusted EBITDA of $12.2 million

and by the increase of $18.8 million in non-cash operating activities as a result of an increase in trade and other payables compared to a decrease

in the comparable period, partly offset by an increase of financial expense paid of $15.3 million. For the first nine months of fiscal 2014, cash

flow from operating activities reached $432.6 million compared to $318.7 million, an increase of $113.8 million, or 35.7%, compared to the same

period in fiscal 2013. The increase is mainly explained by the improvement of adjusted EBITDA of $104.9 million combined with a decrease of

$23.6 million in income taxes paid and a decrease of $13.1 million in integration, restructuring and acquisition costs, partly offset by an increase

of financial expense paid of $32.0 million.

For the three and nine-month periods ended May 31, 2014, cash flow from operations amounted to $176.5 million and $509.1 million, respectively,

compared to $158.2 million and $399.8 million for the comparable periods in fiscal 2013 representing increases of $18.3 million, or 11.6%, and

$109.3 million, or 27.3%, respectively. For both periods, the increases are mainly explained by the improvement of adjusted EBITDA of $12.2

million and $104.9 million, respectively.

INVESTING ACTIVITIES

For the three and nine-month periods ended May 31, 2014, investing activities amounted to $84.9 million and $252.9 million, respectively, mainly

due to the acquisitions of property, plant and equipment, intangible and other assets. For the comparable periods of fiscal 2013, investing activities

amounted to $135.8 million and $2.3 billion explained below.

BUSINESS COMBINATIONS IN FISCAL 2013

On January 31, 2013 and on April 3, 2013, the Corporation's subsidiary, Cogeco Cable Inc., acquired 100% of the issued and outstanding shares

of Peer 1 Hosting one of the world's leading internet infrastructure providers, specializing in managed hosting, dedicated servers, cloud services

and colocation. During the second quarter of fiscal 2014, Cogeco Cable finalized the purchase price allocation of Peer 1 Hosting which had no

impact on the statement of profit or loss and comprehensive income for the three and nine-month periods ended May 31, 2013. The impact of

the finalization on the statement of financial position at August 31, 2013, increased income tax receivable by $0.7 million, increased deferred tax

assets by $4.4 million, decreased intangibles assets by $0.9 million, decreased goodwill by $2.8 million, increased deferred tax liabilities by $2.5

million, decreased accumulated other comprehensive income by $0.4 million and decreased non-controlling interest by $0.8 million.

On November 30, 2012, the Corporation's subsidiary, Cogeco Cable Inc., completed the acquisition of all the outstanding shares of Atlantic

Broadband, an independent cable system operator formed in 2003, providing Analogue and Digital Television, as well as HSI and Telephony

services to residential and small and medium business customers. During the first quarter of fiscal 2014 Cogeco Cable finalized the purchase

price allocation of Atlantic Broadband which remained unchanged since the last adjustments made in the fourth quarter of fiscal 2013.

The final purchase price allocations of Atlantic Broadband and Peer 1 Hosting are as follows:

Peer 1

Hosting

Atlantic

Broadband TOTAL

Final Final Final

$ $ $

Consideration

Paid

Purchase of shares 494,796

337,779 832,575

Working capital adjustments —

5,415 5,415

Repayment of secured debts and settlement of options outstanding 170,872 1,021,854 1,192,726

665,668 1,365,048 2,030,716

Net assets acquired

Cash and cash equivalents 10,840

5,480

16,320

Restricted cash 8,729 —

8,729

Trade and other receivables 12,772 12,012 24,784

Prepaid expenses and other 3,855

1,370 5,225

Income tax receivable 2,797

3,907 6,704

Other assets 2,462 —

2,462

Property, plant and equipment 150,013

302,211 452,224

Intangible assets 144,231

711,418 855,649

Goodwill 410,454

522,215 932,669

Deferred tax assets 8,872 98,592

107,464

Trade and other payables assumed (26,512) (27,620) (54,132)

Provisions —

(721

)

(721

)

Deferred and prepaid revenue and other liabilities assumed (3,388)

(7,697

) (11,085)

Long-term debt assumed (1,735) —

(1,735

)

Deferred tax liabilities (57,722) (256,119) (313,841)

665,668 1,365,048 2,030,716

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 9

ACQUISITIONS OF PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE AND OTHER ASSETS

For the three and nine-month periods ended May 31, 2014, acquisition of property, plant and equipment amounted to $80.0 million and $239.9

million compared to $109.0 million and $289.0 million for the same periods of fiscal 2013, respectively, mainly as a result of the following factors

in the Cable segment:

• A decrease in the quarter and for the nine-month period ended May 31, 2014 in scalable infrastructure and network upgrades and

rebuild due to the deployment in fiscal 2012 and early fiscal 2013 of advanced technologies such as DOCSIS 3.0 and Switched Digital

Video in existing areas served; and

• An increase in customer premise equipment for the three and nine-month periods ended May 31, 2014 mainly due to the launch of

TiVo's digital entertainment services in the United States.

For the third quarter and the first nine months of fiscal 2014, the acquisition of intangible and other assets amounted to $4.9 million and $13.7

million, compared to $4.5 million and $13.7 million for the same periods last year, respectively.

FREE CASH FLOW AND FINANCING ACTIVITIES

In the third quarter of fiscal 2014, free cash flow amounted to $91.5 million, an increase of $46.9 million compared to fiscal 2013. This increase

is mainly due to the improvement of adjusted EBITDA and the decrease in acquisitions of property, plant and equipment due to the timing of

certain initiatives for the Cable segment. For the nine-month period, free cash flow amounted to $255.6 million, $158.5 million, higher than the

same period of last year. This variance is mostly attributable to the improvement of adjusted EBITDA, the decrease in acquisitions of property,

plant and equipment due to the timing of certain initiatives as well as the decrease in integration, restructuring and acquisition costs, partly offset

by the increase in financial expense due to higher indebtedness level from the recent acquisitions in the Cable segment.

In the third quarter of fiscal 2014, cash decrease of $110.4 million was mainly due to a lower Indebtedness level provided from repayments of

$163.6 million under the revolving facilities and of long-term debt amounting to $4.8 million, partly offset by an increase in bank indebtedness of

$9.4 million and the issuance by COGECO Inc. of long-term debt of $48.7 million. In the third quarter of fiscal 2013, a higher Indebtedness level

provided a cash increase of $22.0 million mainly due to the issuance, in the Cable segment, of $300 million Senior Secured Debentures Series

"4" (the "Debentures") for a net proceed of $297.1 million, net of transaction costs of $2.9 million and the issuance of $410.4 million (US$400

million) Senior Unsecured Notes (the "2020 Notes") for a net proceed of $402.6 million (US$392.4 million), net of transaction costs of $7.8 million

(US$7.6 million). In addition, the net proceeds under the Debentures and the 2020 Notes were used to repay the Canadian Term Facility amounting

to $175 million, the US Term Facility amounting to $230.8 million (US$225 million), the $114.7 Revolving loan in connection with the financing of

the acquisition of Peer 1 Hosting in the Cable segment and $192.4 million Term Revolving Facility.

For the nine-month period of fiscal 2014, a cash decrease of $148.2 million was mainly due to a lower Indebtedness level from repayments of

$186.1 million under the revolving facilities and of long-term debt amounting to $10.9 million, partly offset by the issuance of long-term debt by

COGECO Inc. of $48.7 million. For the nine-month period of fiscal 2013, a higher Indebtedness level provided for a cash increase of $1.9 billion,

mainly due to the issuance of the 2020 Notes and the Debentures, described above, as well as draw-down on the existing Term Revolving Facility

of $411.9 million (US$420 million) including the repayments made during the quarter explained above and the First Lien Credit of $637.4 million

(US$660 million for a net proceed of US$641.5 million, net of transaction costs of US$18.5 million) to finance the acquisition of Atlantic Broadband

as well the draw-down of $125.1 million, under Secured Credit Facilities to finance the acquisition of Peer 1 Hosting, net of the repayments made

during the third quarter explained above.

During the third quarter of fiscal 2014, a quarterly dividend of $0.22 per share was paid to the holders of subordinate and multiple voting shares,

totaling $3.7 million, compared to a dividend of $0.19 per share, or $3.2 million in the third quarter of fiscal 2013. Dividend payments in the first

nine months totaled $0.66 per share, or $11.1 million, compared to $0.57 per share, or $9.5 million the year before. In addition, dividends paid

by a subsidiary to non-controlling interest in the third quarter amounted to $9.9 million and $29.7 million for the first nine months, compared to

$8.6 million and $25.7 million, respectively, for the comparable periods of the prior year.

As at May 31, 2014, the Corporation had a working capital deficiency of $164.9 million compared to $223.1 million at August 31, 2013. The $58.2

million deficiency reduction is mainly due to the decrease of $83.9 million in trade and other payables and the increase of $14.3 million in trade

and other receivables, partly offset by the decrease of $13.3 million in cash and cash equivalents and the increase of income tax liabilities of

$21.7 million as a result of generated free cash flow. As part of the usual conduct of its business, COGECO maintains a working capital deficiency

due to a low level of accounts receivable since a large proportion of the Corporation’s customers pay before their services are rendered, unlike

trade and other payables, which are usually paid after products are delivered or services are rendered, thus enabling the Corporation to use cash

and cash equivalents to reduce Indebtedness.

At May 31, 2014, the Corporation had used $17.1 million of its $50 million Term Revolving Facility for a remaining availability of $32.9 million and

Cogeco Cable had used $476.2 million of its $800 million amended and restated Term Revolving Facility for a remaining availability of $323.8

million. In addition, two subsidiaries of Cogeco Cable also benefit from a Revolving Facility of $108.4 million (US$100 million) related to its

acquisition of Atlantic Broadband, of which $1.1 million (US$1.0 million) was used at May 31, 2014 for a remaining availability of $107.3 million

(US$99 million).

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 10

FINANCIAL POSITION

Since August 31, 2013, the following balances have changed significantly: "trade and other receivables", “property, plant and equipment”,

“goodwill”, “trade and other payables”, "income tax liabilities", "deferred tax liabilities", “cash and cash equivalents” and “long-term debt”.

Trade and other receivable increased by $14.3 million due to the timing of billings made to customers. Property, plant and equipment decreased

by $80.6 million mainly due to the impairment of property, plant and equipment of $32.2 million in the Cable segment as well as depreciation

expense exceeding the acquisitions discussed in the "Cash flow analysis" section, taking into account the impact of the US dollar and British

Pound currency appreciation against the Canadian dollar. Goodwill increased by $29.3 million as a result of the US dollar and the British Pound

currency appreciation against the Canadian dollar during the first nine months of fiscal 2014. The decrease of $83.9 million in trade and other

payables is related to the timing of payments made to suppliers. The income tax liabilities increase of $21.7 million is due to the excess of current

income tax expense over income tax paid. The decrease of $28.6 million in deferred tax liabilities result of the impairment of property, plant and

equipment and the increase in current income taxes. The decreases of $13.3 million in cash and cash equivalents and of $91.2 million in long-

term debt are due to the factors previously discussed in the "Cash flow analysis" section, partly offset by the appreciation of the US dollar and

British Pound currency compared to the Canadian dollar.

OUTSTANDING SHARE DATA

A description of COGECO’s share data at June 30, 2014 is presented in the table below. Additional details are provided in note 12 of the condensed

interim consolidated financial statements.

Number of

Amount

(in thousands

of dollars)

Common shares

Multiple voting shares 1,842,860

Subordinate voting shares 14,989,338

121,976

FINANCING

In the normal course of business, COGECO has incurred financial obligations, primarily in the form of long-term debt, operating and finance

leases and guarantees. COGECO’s obligations, as discussed in the 2013 Annual Report, have not materially changed since August 31, 2013,

except as mentioned below.

On March 5, 2014, the Corporation completed, pursuant to a private placement, the issuance of $50 million of Senior Unsecured Notes for net

proceeds of $48.7 million, net of transaction costs of approximately $1.3 million. These unsecured notes bear interest at 6.00% per annum payable

semi-annually and mature on March 5, 2020. Half of the Senior Unsecured Notes are guaranteed on a senior unsecured basis, jointly and severally,

by its subsidiaries except for the unrestricted subsidiaries. The net proceeds of the Senior Unsecured Notes was used to reimburse a portion of

the Corporation's Term Revolving Facility of $100 million which facility was consequently reduced to $50 million.

On December 20, 2013, the Corporation amended its Term Revolving Facility. Under the terms of the amendment, the maturity was extended by

an additional year until February 1, 2018. In addition, the amendment reduced the margin for the calculation of the interest rate and reduced

restrictions on some covenants including financial ratios.

On November 22, 2013, the Corporation's subsidiary, Cogeco Cable, amended and restated its Term Revolving Facility of $800 million with a

syndicate of lenders. The maturity was extended until January 22, 2019 and can be further extended annually. The amendments reduced the

margin for the calculation of the interest rate and reduced restrictions on some covenants. The amended and restated Term Revolving Facility

also replaced Cogeco Cable’s Secured Credit Facilities coming to maturity on January 27, 2017 which was fully repaid on November 22, 2013.

This amended and restated Term Revolving Facility is comprised of two tranches: a first tranche, a Canadian tranche, amounting to $788 million

and the second tranche, a UK tranche, amounting to $12 million. Both Cogeco Cable and Peer 1 (UK) Ltd. can borrow under the UK tranche.

The Canadian tranche is available in Canadian dollars, US dollars, Euros and British Pound and interest rates are based on banker's acceptance,

US dollar base rate loans, LIBOR loans in US dollars, Euros or British Pound, plus the applicable margin. The UK tranche is available in British

Pounds and interest rates are based on British Pounds base rate loans and British Pounds LIBOR loans. The Term Revolving Facility is indirectly

secured by first priority fixed and floating charges and a security interest on substantially all present and future real and personal properties and

undertaking of every nature and kind of Cogeco Cable and certain of its subsidiaries, and provides for certain permitted encumbrances, including

purchased money obligations, existing funded obligations and charges granted by any subsidiary prior to the date when it becomes a subsidiary,

subject to a maximum amount. The provisions under this facility provide for restrictions on the operations and activities of Cogeco Cable. Generally,

the most significant restrictions relate to permitted investments and dividends on multiple and subordinate voting shares, as well as incurrence

and maintenance of certain financial ratios primarily linked to operating income before amortization, financial expense and total indebtedness.

FINANCIAL MANAGEMENT

The Corporation's subsidiary, Cogeco Cable Inc., had entered into cross-currency swap agreements to set the liability for interest and principal

payments on its US$190 million Senior Secured Notes Series A maturing on October 1, 2015. These agreements have the effect of converting

the U.S. interest coupon rate of 7.00% per annum to an average Canadian dollar interest rate of 7.24% per annum. The exchange rate applicable

to the principal portion of the debt has been fixed at $1.0625 per US dollar. Cogeco Cable elected to apply cash flow hedge accounting on these

derivative financial instruments. During the first nine months of fiscal 2014, amounts due under the US$190 million Senior Secured Notes Series

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 11

A increased by $5.9 million due to the US dollar’s appreciation relative to the Canadian dollar. The fair value of cross-currency swaps asset

increased by a net amount of $6.1 million, of which an increase of $5.9 million offsets the foreign exchange loss on the debt denominated in US

dollars. The difference of $0.2 million was recorded as an increase of other comprehensive income. During the first nine months of fiscal 2013,

amounts due under the US$190 million Senior Secured Notes Series A increased by $9.7 million due to the US dollar’s appreciation over the

Canadian dollar. The fair value of cross-currency swaps liability decreased by a net amount of $9.3 million, of which a decrease of $9.7 million

offsets the foreign exchange loss on the debt denominated in US dollars. The difference of $0.4 million was recorded as a decrease of other

comprehensive income.

In addition, on July 22, 2013, the Corporation's subsidiary, Cogeco Cable Inc., had entered into interest rate swap agreements to fix the interest

rate on US$200 million of its LIBOR based loans. These agreements have the effect of converting the floating US LIBOR base rate at an average

fixed rate of 0.39625% under the Term Revolving Facility until July 25, 2015. Cogeco Cable elected to apply hedge accounting on these derivative

financial instruments. During the first nine months of fiscal 2014, the fair value of interest rate swaps asset decreased by a net amount of $0.8

million which was recorded as a decrease of other comprehensive income.

The sensitivity of the Corporation’s annual financial expense to a variation of 1% in the interest rate applicable to the Term Revolving Facilities

and First Lien Credit Facilities is approximately $6.5 million based on the outstanding debt at May 31, 2014.

Furthermore, Cogeco Cable’s investment in foreign operations is exposed to market risk attributable to fluctuations in foreign currency exchange

rates, primarily changes in the values of the Canadian dollar versus the US dollar and British Pound. This risk was mitigated since the major part

of the purchase prices for Atlantic Broadband and Peer 1 Hosting were borrowed directly in US dollars and British Pounds. At May 31, 2014, the

investments for Atlantic Broadband and Peer 1 Hosting amounted to US$1.1 billion and £62.7 million while long-term debt hedging these

investments were US$859.5 million and £56.0 million.The exchange rate used to convert the US dollar currency and British Pound currency into

Canadian dollars for the statement of financial position accounts at May 31, 2014 was $1.0842 per US dollar and $1.8173 per British Pound. The

impact of a 10% change in the exchange rate of the US dollar and British Pound into Canadian dollars would change other comprehensive income

by approximately $26.9 million.

Since Cogeco Cable's condensed interim consolidated financial statements are expressed in Canadian dollars but a portion of its business is

conducted in US dollar and British Pound currency, exchange rate fluctuations can increase or decrease the Corporation's operating results. For

the three and nine-month periods ended May 31, 2014, the average rates prevailing used to convert the operating results of the Cable segment

were as follows:

Quarters ended Nine months ended

May 31,

2014

May 31,

2013 Change

May 31,

2014

May 31,

2013 Change

$ $ % $ $ %

US dollar vs Canadian dollar 1.0997 1.0211 7.7 1.0759 1.0091 6.6

British Pound vs Canadian dollar 1.8405 1.5545 18.4 1.7664 1.5565 13.5

The following table highlights in Canadian dollars, the impact of a 10% increase in US dollar or British Pound against the Canadian dollar as the

case may be, of Cogeco Cable's operating results for the three and nine-month periods ended May 31, 2014:

Cable segment

Quarters ended Nine months ended

As reported

Exchange rate

impact

As reported

Exchange rate

impact

(in thousands of dollars) $ $ $ $

Revenue 496,448 13,990 1,457,436 40,388

Operating expenses 267,059 9,370

785,235

26,497

Management fees - COGECO Inc. — —

9,674

—

Adjusted EBITDA 229,389 4,620

662,527

13,891

Acquisitions of property, plant and equipment, intangible and other assets 84,452 4,578

250,347

13,110

DIVIDEND DECLARATION

At its July 9, 2014 meeting, the Board of Directors of COGECO declared a quarterly eligible dividend of $0.22 per share for multiple voting and

subordinate voting shares, payable on August 6, 2014, to shareholders of record on July 23, 2014. The declaration, amount and date of any

future dividend will continue to be considered and approved by the Board of Directors of the Corporation based upon the Corporation’s financial

condition, results of operations, capital requirements and such other factors as the Board of Directors, at its sole discretion, deems relevant.

There is therefore no assurance that dividends will be declared, and if declared, the amount and frequency may vary.

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 12

CABLE SEGMENT

CUSTOMER STATISTICS

Consolidated

Net additions (losses) Net additions (losses)

Consolidated UNITED STATES CANADA Quarters ended Nine months ended

May 31, 2014

May 31, 2014 May 31, 2013 May 31, 2014 May 31, 2013

PSU (1) 2,452,118 495,674 1,956,444 (2,509) (1,079) (15,539) 20,783

Television service customers 1,034,991 227,160

807,831

(9,620) (8,407) (31,961) (21,143)

HSI service customers 865,597 188,795

676,802

7,811 4,603 27,152 27,340

Telephony service customers 551,530 79,719

471,811

(700) 2,725 (10,730) 14,586

(1) Represents the sum of Television, High Speed Internet ("HSI") and Telephony service customers.

At May 31, 2014, PSU reached 2,452,118 of which 1,956,444 came from Canada and 495,674 came from the United States. For the three and

nine-month periods ended May 31, 2014, PSU net losses stood at 2,509 and 15,539 compared to 1,079 and net additions of 20,783 for the

comparable periods of fiscal 2013, respectively. Fiscal 2014 third-quarter and first nine months net losses for Television service customers stood

at 9,620 and 31,961 compared to 8,407 and 21,143, HSI service customers grew by 7,811 and 27,152 compared to 4,603 and 27,340 and the

Telephony service customers net losses stood at 700 and 10,730 compared to net additions of 2,725 and 14,586 for the comparable periods of

fiscal 2013. HSI net additions continued to stem from the enhancement of the product offering and the positive impact of the bundle offer.

In Canada, PSU decreased by 5,633 for the third-quarter of fiscal 2014, compared to a decrease of 1,013 for the comparable period last year.

For the first nine months of fiscal 2014, PSU decreased by 23,678, compared to an increase of 17,089 for the comparable period in 2013. The

decrease is explained by service category maturity and a much more competitive environment for all services.

In the United States, PSU increased by 3,124 for the third-quarter of fiscal 2014, compared to a decrease of 66 for the same period of prior year.

For the first nine months of fiscal 2014, PSU increased by 8,139, compared to an increase of 3,694 for the comparable period in 2013. The

increase is explained by additional HSI and Telephony services, offset by losses in the Television service.

OPERATING AND FINANCIAL RESULTS

OPERATING RESULTS

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

(1)

Change

May 31,

2014

May 31,

2013

(1)

Change

(in thousands of dollars, except percentages) $ $ % $ $ %

Revenue 496,448 464,497 6.9 1,457,436 1,222,080 19.3

Operating expenses 267,059 249,315 7.1 785,235 654,327 20.0

Management fees – COGECO Inc. — — — 9,674 9,569

1.1

Adjusted EBITDA 229,389 215,182 6.6 662,527 558,184 18.7

Operating margin 46.2% 46.3% 45.5% 45.7%

REVENUE

Fiscal 2014 third-quarter revenue increased by $32.0 million, or 6.9%, to reach $496.4 million driven by the organic growth from all of our operating

segments combined with favorable foreign exchange rates for our foreign operations. For the nine-month period ended May 31, 2014, revenue

reached approximately $1.5 billion, an increase of $235.4 million, or 19.3% mainly as a result of the full year impact of the recent acquisitions

which both occurred during fiscal 2013 combined with the organic growth from all of our operating segments and favorable foreign exchange

rates in our foreign operations.

OPERATING EXPENSES AND MANAGEMENT FEES

For the third quarter of fiscal 2014, operating expenses increased by $17.7 million, to reach $267.1 million, an increase of 7.1% compared to the

prior year. For the first nine months of the fiscal year, operating expenses amounted to $785.2 million, an increase of $130.9 million, or 20.0%,

compared to the same period of fiscal 2013. Operating expenses increased is due to the full year impact of the recent acquisitions and the

appreciation of the US dollar and British Pound currency against the Canadian dollar.

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 13

For the third quarter of fiscal 2014 and 2013, there was no management fees paid to COGECO Inc. For the first nine months of the fiscal year

2014, management fees paid to COGECO Inc. amounted to $9.7 million, 1.1% higher compared to $9.6 million in the comparable period of fiscal

2013.

ADJUSTED EBITDA

For the three and nine-month periods ended May 31, 2014, adjusted EBITDA increased by $14.2 million, or 6.6%, to reach $229.4 million, and

by $104.3 million, or 18.7%, to reach $662.5 million, respectively, compared to the comparable periods of the prior year. The increases for the

quarter is mainly attributable to the improvement from all our operating segments as well as the favorable foreign exchange rates compared to

the same periods of last year while the increase for the first nine months is largely attributable to the full year impact of the recent acquisitions.

FISCAL 2014 REVISED FINANCIAL GUIDELINES

As a result of revised projections in the Cable segment described below, the Corporation revised its consolidated projection for the 2014 fiscal

year. Profit for the year should decrease from $240 million to $215 million and consequently, profit for the year attributable to owners of the

Corporation should amount to $70 million compared to $77 million for the revised projections issued on April 9, 2014.

Fiscal 2014 revised guidelines are as follows:

Revised projections

July 9, 2014

Revised projections

April 9, 2014

Fiscal 2014 Fiscal 2014

(in millions of dollars) $ $

Financial guidelines

Revenue 2,105

2,105

Adjusted EBITDA 915 915

Integration, restructuring and acquisition costs 4 —

Financial expense 137 137

Current income tax expense

103

Profit for the year 215 240

Profit for the year attributable to owners of the Corporation

70 77

Acquisitions of property, plant and equipment, intangible and other assets 430 430

Free cash flow

(1)

245 245

(1) Free cash flow is calculated as adjusted EBITDA less, integration, restructuring and acquisition costs, financial expense, current income tax expense and

acquisitions of property, plant and equipment, intangible and other assets.

CABLE SEGMENT

Giving effect to the impairment of property, plant and equipment of $32.2 million which occurred during the third quarter of fiscal 2014 in the

Canadian operations as well as additional integration, restructuring and acquisitions costs related to restructuring activities, Cogeco Cable revised

downwards its fiscal 2014 projected profit for the year compared to the one issued on April 9, 2014. Profit for the year is now expected to reach

$210 million, a decrease of $25 million, or 10.6%, compared to the April 9, 2014 projections.

Fiscal 2014 revised financial guidelines are as follows:

Revised projections

July 9, 2014

Revised projections

April 9, 2014

Fiscal 2014 Fiscal 2014

(in millions of dollars, except operating margin and capital intensity) $ $

Financial guidelines

Revenue 1,955 1,955

Adjusted EBITDA 895 895

Operating margin 45.8% 45.8%

Integration, restructuring and acquisition costs 4 —

Depreciation and amortization 470 470

Financial expense 130 130

Current income tax expense 96 100

Profit for the year 210 235

Acquisitions of property, plant and equipment, intangible and other assets 425 425

Free cash flow

(1)

240 240

Capital intensity 21.7% 21.7%

(1) Free cash flow is calculated as adjusted EBITDA less, integration, restructuring and acquisition costs, financial expense, current income tax expense and

acquisitions of property, plant and equipment, intangible and other assets.

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 14

FISCAL 2015 PRELIMINARY FINANCIAL GUIDELINES

For fiscal 2015, COGECO expects revenue to reach $2.19 billion and adjusted EBITDA should reach $945 million, as a result of the Cable

segment's 2015 preliminary guidelines and the projected results of the radio and transit advertising activities. Free cash flow should reach

approximately $270 million and profit for the year attributable to the owners of the Corporation $88 million.

Preliminary

projections

Revised

projections

July 9, 2014

Fiscal 2015 Fiscal 2014

(in millions of dollars) $ $

Financial guidelines

Revenue

2,185 2,105

Adjusted EBITDA 945 915

Integration, restructuring and acquisition costs — 4

Financial expense 132 137

Current income tax expense 105

Profit for the year 265 215

Profit for the year attributable to owners of the Corporation

88 70

Acquisitions of property, plant and equipment, intangible and other assets 438 430

Free cash flow

(1)

270 245

(1) Free cash flow is calculated as adjusted EBITDA less integration, restructuring and acquisition costs, financial expense, current income tax expense and acquisitions

of property, plant and equipment, intangible and other assets.

CABLE SEGMENT

Fiscal 2015 preliminary financial guidelines take into consideration the current uncertain global economic and the intense competitive environment

that prevails in Canada, the United States and Europe by the incumbent telecommunications or IT infrastructure providers, as the case may be.

In addition, these preliminary financial guidelines are supported by Cogeco Cable's objectives which are to improve profitability to create shareholder

value. Cogeco Cable focus on customer's needs by offering services at attractive prices, expanding its offering with respect to geography and

by diversifying its product and services. As Cogeco Cable operates in an industry characterized by rapid technological innovation which requires

substantial capital, Cogeco Cable will continue the expansion and upkeep of its networks and data centre facilities as well as the launch and

expansion of new or additional services. Cogeco Cable recognizes that customer service is a key brand attribute that has potential to differentiate

its services compared to its competitors and that superior customer service earns their loyalty and retention. As the cost containment is a core

element of financial performance and remains a key factor to maintain strong operating margins, Cogeco Cable intends to continue executing its

strategy of tight operating and capital cost controls and rigorous customer-related processes.

For fiscal 2015, Cogeco Cable expects to achieve revenue of $2.03 billion, representing a growth of $75 million or 3.8% compared to the revised

fiscal 2014 projection issued on July 9, 2014. In the Cable segment, revenue should stem primarily from targeted marketing initiatives to improve

penetration rates of HSI and Telephony services in the commercial and business sector while the penetration of residential Telephony and

Television services should slow in Canada, reflecting service category maturity and intense competition. Furthermore, Digital video and HSI

services should continue to benefit from customers' ongoing interest in TiVo's digital entertainment services in the United States as well as the

projected launch of TiVo services in Canada. Cable segment will also benefit from the impact of rate increases in most of its services. In its

Enterprise services operations, revenue growth should stem primarily from managed hosting and colocation services due to the expansion of

Barrie data centre facility as well as from the migration of services in the portfolio that generate revenue with higher margins. In addition, the

construction of a new data centre facility in Kirkland, Montreal,is expected be completed in the first half of fiscal 2015 and should begin generating

revenue. The revenue growth should also be driven by connectivity services as a result of network expansions and new customer installations.

Fiscal 2015 operating expenses are expected to expand by approximately $45 million, or 4.2%, compared to the 2014 revised projections due

to additional expenditures to support the Enterprise services segment growth, salary increases as well as the continuation of the marketing

initiatives and retention strategies. These increases should be partly offset by cost reduction initiatives from improved systems and processes

and by the restructuring activities that was completed in fiscal 2014.

For fiscal 2015, Cogeco Cable expects adjusted EBITDA of $925 million, an increase of $30 million, or 3.4%, compared to the 2014 revised

projections. The operating margin is expected to reach approximately 45.6% in fiscal 2015, compared to the revised projections for the 2014

fiscal year of 45.8%, reflecting lower margins business activities from the Enterprise services operations as well as operating expenses increasing

slightly faster than the revenue.

Cogeco Cable expects the depreciation and amortization of property, plant and equipment and intangible assets to decrease by $5 million for

fiscal 2015, mainly from the increase in capital expenditures with longer useful lives resulting in lower depreciation and amortization expense for

fiscal 2015. Cash flows from operations should finance capital expenditures which are expected to reach $430 million compared to $425 million

for the 2014 revised projections. Fiscal 2015 capital expenditures should increase mainly due to the completion of the expansion of the Barrie

data centre facility and the construction of a new data centre in Kirkland in the Enterprise services segment.

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 15

Fiscal 2015 free cash flow is expected to amount to $270 million, an increase of $30 million, or 12.5% compared to the projected free cash flow

of $240 million due to the adjusted EBITDA growth, partly offset by additional capital expenditures. As a result, generated free cash flow will

reduce Indebtedness net of cash and cash equivalent, thus improving Cogeco Cable's net leverage ratios. Financial expense should amount to

$125 million, a decrease of $5 million, or 3.8%, from lower Indebtedness level. Finally, profit for the year should reach approximately $260 million

compared to $210 million for the 2014 revised projections.

Fiscal 2015 preliminary financial guidelines are as follows:

Preliminary

projections

Revised projections

July 9, 2014

Fiscal 2015 Fiscal 2014

(in millions of dollars, except operating margin and capital intensity) $ $

Financial guidelines

Revenue 2,030 1,955

Adjusted EBITDA 925 895

Operating margin 45.6% 45.8%

Integration, restructuring and acquisition costs — 4

Depreciation and amortization 465 470

Financial expense 125 130

Current income tax expense 100 96

Profit for the year 260 210

Acquisitions of property, plant and equipment, intangible and other assets 430 425

Free cash flow

(1)

270 240

Capital intensity 21.2% 21.7%

(1) Free cash flow is calculated as adjusted EBITDA less, integration, restructuring and acquisition costs, financial expense, current income tax expense and

acquisitions of property, plant and equipment, intangible and other assets.

CONTROLS AND PROCEDURES

Internal control over financial reporting ("ICFR") is a process designed to provide reasonable, but not absolute, assurance regarding the reliability

of financial reporting and of the preparation of financial statements for external purposes in accordance with IFRS. The President and Chief

Executive Officer (“CEO”) and the Senior Vice President and Chief Financial Officer (“CFO”), together with Management, are responsible for

establishing and maintaining adequate disclosure controls and procedures ("DC&P") and ICFR, as defined in National Instrument 52-109.

COGECO’s internal control framework is based on the criteria published in the updated version released in May 2013 of the report Internal

Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The CEO and CFO, supported by Management, evaluated the design of the Corporation's DC&P and ICFR as at May 31, 2014, and concluded

that, as described below, there exists a material weakness in ICFR at Peer 1 Hosting. A material weakness in ICFR exists if there exists a

deficiency or combination of deficiencies in ICFR such that there is a reasonable possibility that a material misstatement of the annual or interim

consolidated financial statements will not be prevented or detected on a timely basis.

The Corporation's subsidiary, Cogeco Cable, acquired 96.57% of the issued and outstanding shares of Peer 1 Hosting on January 31, 2013

pursuant to the public offer made by Cogeco Cable, through its indirectly wholly-owned subsidiary 0957926 B.C. LTD. The remaining shares

of Peer 1 Hosting were acquired on April 3, 2013. Management has been working diligently since the acquisition to complete its review of the

design of ICFR at Peer 1 Hosting. Despite these efforts, Management has not to date completed its review. During the course of the portion of

the review that has been completed, Management identified certain deficiencies in ICFR at Peer 1 Hosting principally relating to the financial

statements close and inadequate segregation of duties over certain information system access controls.

Management has committed additional resources in order to complete the review of Peer 1 Hosting's ICFR and bring them in line with Cogeco

Cable's design standards by 2014 calendar year, and has progressed in terms of the implementation of a number of measures to address the

deficiencies described above. More specifically, Management has implemented several detailed review processes that provide for a more granular

level of analysis. Moreover, access rights are being adjusted to reflect proper segregation of duties, and a series of corporate policies have been

introduced to enhance Peer 1 Hosting's overall control environment. The Corporation cannot currently assess the potential impact of any further

design deficiencies which may be identified during the completion of its review of Peer 1 Hosting's ICFR.

Based on the review completed to date, the CEO and the CFO believe that (i) the Corporation's interim filings for the three and nine-month

periods ended May 31, 2014 do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that

is necessary to make a statement not misleading in light of the circumstances under which it was made, and (ii) the interim financial report

together with the other financial information included in the interim filings fairly present, in all material respects, the financial condition, financial

performance and cash flows of COGECO for the three and nine-month periods ended May 31, 2014.

Peer 1 Hosting represents 10% of revenue, -16% of profit for the period, 15% of total assets, 17% of current assets, 15% of non current assets,

6% of current liabilities and 16% of non current liabilities of the condensed consolidated interim financial statements for the nine-month period

ended May 31, 2014.

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 16

UNCERTAINTIES AND MAIN RISK FACTORS

A detailed description of the uncertainties and main risk factors faced by the Corporation can be found in the 2013 Annual Report, available at

<www.sedar.com> and <www.cogeco.ca>. Except as described below, there has been no significant change in the uncertainties and main risk

factors faced by the Corporation since August 31, 2013.

On October 24, 2013, the Canadian Radio-television and Telecommunications Commission ("CRTC") issued Broadcasting Notice of Invitation

inviting Canadians to express their views on the future of the television system in Canada. The initial phases of the "Let’s Talk TV" public proceeding

and the issuance by the federal government on November 11, 2013 of Order in Council PC 2013-1167 directing the CRTC to report on the ability

of Canadian consumers to subscribe to pay and specialty television services on a service-by-service basis have led to the issuance by the CRTC

on April 24, 2014 of Notice of Public Hearing CRTC 2014-190 setting up a proposed new broadcasting regulatory approach. If adopted at the

conclusion of this proceeding, the new regulatory framework would provide, among other things, that broadcasting distribution undertakings

("BDUs") offer to their customers: a) a small basic service comprised only of local television stations, mandatory services under subsection 9(1)

(h) of the Broadcasting Act, as well as the relevant provincial educational services, the community channel and the provincial legislature service

in the area served by the BDU; and b) all other licensed or exempted programming services and non-Canadian services as discretionary services

on a pick-and-pay and on a build-your-own-package basis. BDUs would however be allowed to continue offering discretionary programming

services in pre-assembled packages to subscribers in the same manner as they do now. This new regulatory framework would have a significant

impact on the broadcasting distribution business of Cogeco Cable and other BDUs by forcing the removal of American conventional television

networks and of popular sports and other specialty services from the basic service tier and requiring the handling of pick-and-pay and build-your-

own-package options for all discretionary programming services. On June 27, 2014, Cogeco Cable filed a comprehensive intervention with the

CRTC as part of this proceeding and has requested to appear at a public hearing to be held by the CRTC starting on September 8, 2014. At this

time, it is not possible to determine the final outcome of this important regulatory proceeding, the timetable for its implementation or its impact

on the broadcasting distribution activities and future financial outlook of Cogeco Cable.

On November 26, 2013, Rogers Communications and the National Hockey League ("NHL") announced that they had concluded a twelve-year

comprehensive broadcast and multimedia licensing agreement respecting all national rights to NHL games on all platforms in all languages in

Canada, beginning with the 2014-2015 season. Rogers Communications also announced that it had selected CBC and TVA for separate

sublicensing deals for English-language broadcasts of “Hockey Night in Canada” and all national French-language multimedia rights, respectively.

Cogeco Cable has concluded multi-years agreements for the distribution of the Sportsnet and TVA Sport specialty programming services which

include NHL hockey games in their respective programming. These agreements are factored into the financial guidelines issued by Cogeco Cable.

FUTURE ACCOUNTING DEVELOPMENTS IN CANADA

A number of new standards, interpretations and amendments to existing standards issued by the International Accounting Standard Board (“IASB”)

are effective for annual periods starting on or after January 1, 2013 and have been applied in preparing the condensed interim consolidated

financial statements for the three and nine-month periods ended May 31, 2014.

NEW ACCOUNTING STANDARDS

The Corporation adopted the following new accounting standards on September 1, 2013. The impacts of the application of this standard are

described in Note 2 of the condensed interim consolidated financial statements.

• Amendment to IAS 19, Employee Benefits : The principal difference in the amended standard is that the expected long-term rate of

return on plan assets will no longer be used to calculate the defined benefit pension costs. The defined benefit pension costs concepts

of "interest cost" and "expected return on plan assets" are replaced by the concept of "net interest" calculated by applying the discount

rate to the net liability or asset. The net interest cost takes into account the change any contributions and benefit payments have on

the net defined benefit liability or asset during the period.

The Corporation also adopted the following standards on September 1, 2013 which had no impact on the condensed interim consolidated financial

statements.

• Amendments to IFRS 7 Financial Instruments: Disclosures

• IFRS 10 Consolidated Financial Statements

• IFRS 12 Disclosure of Interest in Other Entities

• IFRS 13 Fair Value Measurement

CHANGES IN CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There has been no significant change in COGECO’s accounting policies, estimates and future accounting pronouncements since August 31,

2013. A description of the Corporation’s policies and estimates can be found in the 2013 Annual Report, available at <www.sedar.com> and

<www.cogeco.ca>.

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 17

NON-IFRS FINANCIAL MEASURES

This section describes non-IFRS financial measures used by COGECO throughout this MD&A. It also provides reconciliations between these

non-IFRS measures and the most comparable IFRS financial measures. These financial measures do not have standard definitions prescribed

by IFRS and therefore, may not be comparable to similar measures presented by other companies. These measures include “cash flow from

operations”, “free cash flow” and “adjusted EBITDA”.

CASH FLOW FROM OPERATIONS AND FREE CASH FLOW

Cash flow from operations is used by COGECO’s management and investors to evaluate cash flows generated by operating activities, excluding

the impact of changes in non-cash operating activities, amortization of deferred transaction costs and discounts on long-term debt, income taxes

paid, current income tax expense, financial expense paid and financial expense. This allows the Corporation to isolate the cash flows from

operating activities from the impact of cash management decisions. Cash flow from operations is subsequently used in calculating the non-IFRS

measure, “free cash flow”. Free cash flow is used, by COGECO’s management and investors, to measure its ability to repay debt, distribute

capital to its shareholders and finance its growth.

The most comparable IFRS measure is cash flow from operating activities. Cash flow from operations is calculated as follows:

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

(1)

May 31,

2014

May 31,

2013

(1)

(in thousands of dollars) $ $ $ $

Cash flow from operating activities 184,706 167,641

432,552 318,731

Changes in non-cash operating activities (13,340) 5,443 82,379 80,194

Amortization of deferred transaction costs and discounts on long-term debt 2,007 3,520

5,856 7,237

Income taxes paid 16,672 17,031 55,888 79,490

Current income tax expense (23,693) (27,563) (72,378) (76,227)

Financial expense paid 44,210 28,876

107,316

75,271

Financial expense (34,071) (36,776) (102,485) (84,899)

Cash flow from operations 176,491 158,172

509,128 399,797

(1) Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed

interim consolidated financial statements.

Free cash flow is calculated as follows:

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

(1)

May 31,

2014

May 31,

2013

(1)

(in thousands of dollars) $ $ $ $

Cash flow from operations 176,491 158,172

509,128 399,797

Acquisition of property, plant and equipment (80,017) (108,976) (239,865) (289,016)

Acquisition of intangible and other assets (4,943) (4,516) (13,672) (13,650)

Free cash flow 91,531 44,680

255,591

97,131

(1) Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed

interim consolidated financial statements.

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 18

ADJUSTED EBITDA

Adjusted EBITDA is used by COGECO’s management and investors to assess the Corporation’s ability to seize growth opportunities in a cost

effective manner, to finance its ongoing operations and to service its debt. Adjusted EBITDA is a proxy for cash flows from operations excluding

the impact of the capital structure chosen, and is one of the key metrics used by the financial community to value the business and its financial

strength.

The most comparable IFRS financial measure is profit for the period. Adjusted EBITDA is calculated as follows:

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

(1)

May 31,

2014

May 31,

2013

(1)

(in thousands of dollars)

$ $ $ $

Profit for the period 35,635 49,995

150,941 146,051

Income taxes 9,068 19,080 39,052 53,341

Financial expense 34,071 36,776

102,485

84,899

Impairment of property, plant and equipment 32,197 — 32,197 —

Depreciation and amortization 118,926 112,867

350,475 272,831

Integration, restructuring and acquisitions costs 3,186 2,160

3,780

16,912

Adjusted EBITDA 233,083 220,878

678,930 574,034

(1) Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed

interim consolidated financial statements.

SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION

Quarters ended May 31, February 28, November 30, August 31,

(in thousands of dollars, except per

share data)

2014 2013

(2)

2014 2013

(2)

2013 2012

(2)

2013

(2)

2012

$ $ $ $ $ $ $ $

Revenue 536,067 504,434

518,477

458,501 516,971 366,608

504,714 356,685

Adjusted EBITDA 233,083 220,878

221,807

196,272 224,040 156,884

224,608 163,617

Impairment of property, plant and

equipment 32,197 — — — — — — —

Income taxes 9,068 19,080 14,147 15,089 15,837 19,172 10,374 33,625

Profit for the period 35,635 49,995 58,467 48,950 56,839 47,106 43,770 44,900

Profit for the period attributable to

owners of the Corporation 11,469 17,185 17,391 14,676 23,055 18,530 13,869 13,889

Cash flow from operating activities 184,706 167,641

187,611

157,095 60,235 (6,005)

233,464 203,193

Cash flow from operations 176,491 158,172

173,415

140,124 159,222 101,501

162,138 119,612

Acquisitions of property, plant and

equipment, intangible and other

assets 84,960 113,492 81,997 106,019 86,580 83,155

108,756 124,638

Free cash flow 91,531 44,680 91,418 34,105 72,642 18,346 53,382

(5,026

)

Earnings per share

(1)

Basic 0.69 1.03 1.04 0.88 1.38 1.11 0.83 0.83

Diluted 0.68 1.02 1.03 0.87 1.37 1.10 0.82 0.83

(1) Per multiple and subordinate voting share.

(2) These figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits.

Management discussion and analysis (“MD&A”) COGECO INC. Q3 2014 19

SEASONAL VARIATIONS

COGECO’s operating results are not generally subject to material seasonal fluctuations except as follows. In the Cable segment, the number of

customers in the Television service and HSI service are generally lower in the second half of the fiscal year as a result of a decrease in economic

activity due to the beginning of the vacation period, the end of the television season, and students leaving their campuses at the end of the school

year. Cogeco Cable offers its services in several university and college towns such as Kingston, Windsor, St.Catharines, Hamilton, Peterborough,

Trois-Rivières and Rimouski in Canada and in the Pennsylvania region, and to a lesser extent in South Carolina, Maryland/Delaware in the United

States. In the United States, the Miami region is also subject to seasonal fluctuations due to the winter season residents returning home from

late Spring through the Fall.

ADDITIONAL INFORMATION

This MD&A was prepared on July 9, 2014. Additional information relating to the Corporation, including its Annual Information Form, is available

on the SEDAR website at www.sedar.com.

/s/ Jan Peeters /s/ Louis Audet

Jan Peeters Louis Audet

Chairman of the Board President and Chief Executive Officer

COGECO Inc.

Montréal, Québec

July 9, 2014

CONDENSED INTERIM CONSOLIDATED FINANCIAL

STATEMENTS

Three and nine-month periods ended May 31, 2014

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 21

COGECO INC.

INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

(unaudited)

Three months ended May 31, Nine months ended May 31,

2014 2013 2014 2013

(In thousands of Canadian dollars, except per share data) $ $ $ $

(restated, note 2) (restated, note 2)

Revenue 536,067 504,434 1,571,515 1,329,543

Operating expenses (note 5) 302,984 283,556

892,585

755,509

Integration, restructuring and acquisition costs 3,186 2,160

3,780

16,912

Depreciation and amortization (note 6) 118,926 112,867

350,475

272,831

Impairment of property, plant and equipment (note 7) 32,197 — 32,197 —

Financial expense (note 8) 34,071 36,776

102,485

84,899

Income taxes (note 9) 9,068 19,080 39,052 53,341

Profit for the period 35,635 49,995

150,941

146,051

Profit for the period attributable to:

Owners of the Corporation 11,469 17,185 51,915 50,391

Non-controlling interest 24,166 32,810 99,026 95,660

35,635 49,995

150,941

146,051

Earnings per share (note 10)

Basic 0.69 1.03 3.10 3.01

Diluted

0.68 1.02 3.08 2.99

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 22

COGECO INC.

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

Three months ended May 31, Nine months ended May 31,

2014 2013 2014 2013

(In thousands of Canadian dollars) $ $ $ $

(restated, note 2) (restated, note 2)

Profit for the period 35,635 49,995 150,941

146,051

Other comprehensive income (loss)

Items to be subsequently reclassified to profit or loss

Cash flow hedging adjustments

Net change in fair value of hedging derivative financial instruments (4,919) 1,343

5,324 9,288

Net change in fair value of hedging derivative financial instruments

reclassified to financial expense 4,408 (1,026)

(5,928

)

(9,709

)

Income tax recovery (expense) on cash flow hedging adjustments 178 (119)

(120

)

(304

)

(333) 198

(724

)

(725

)

Foreign currency translation adjustments

Net foreign currency translation differences on net investments in foreign

operations (14,392) 2,394 23,087 31,487

Net changes in unrealized adjustments on translation of long-term debt

designated as hedges of net investments in foreign operations 8,524 (712) (13,234) (19,517)

(5,868) 1,682

9,853

11,970

Items not to be subsequently reclassified to profit or loss

Defined benefit pension plans actuarial adjustments

Employee defined benefit pension plans actuarial re-measurements (200) 5,530 667

7,599

Income tax recovery (expense) on defined benefit pension plans actuarial

adjustments 59 (1,487)

(172

)

(2,042

)

(141) 4,043 495

5,557

Other comprehensive income (loss) for the period (6,342) 5,923

9,624

16,802

Comprehensive income for the period 29,293 55,918 160,565

162,853

Comprehensive income for the period attributable to:

Owners of the Corporation 9,291 21,060 54,948 58,177

Non-controlling interest 20,002 34,858 105,617

104,676

29,293 55,918 160,565

162,853

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 23

COGECO INC.

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(unaudited)

Equity attributable to owners of the Corporation

capital

Share-based

payment

reserve

Accumulated

other

comprehensive

income

Retained

earnings

Equity

attributable to

non-controlling

interest

Total shareholders'

equity

(In thousands of Canadian dollars)

$ $ $ $ $ $

(note 12) (note 12) (note 13)

(restated, note 2) (restated, note 3)(restated, note 3)

(restated,

notes 2 and 3)

Balance at August 31, 2012 117,936 5,338

1,036

273,236 806,606 1,204,152

Profit for the period — — — 50,391 95,660

146,051

Other comprehensive income for the period — —

3,613

4,173

9,016

16,802

Comprehensive income for the period — —

3,613

54,564 104,676

162,853

Share based payment — 1,757 — —

1,596 3,353

Issuance of subordinate voting shares by a

subsidiary to non-controlling interest — (81) — — 798 717

Dividends on multiple voting shares — — — (1,050) —

(1,050

)

Dividends on subordinate voting shares — — — (8,484) (25,703) (34,187)

Effect of changes in ownership of a subsidiary

on non-controlling interest — — — (36)

—

Acquisition of subordinate voting shares held in

trust under the Incentive Share Unit Plan (1,201) — — — —

(1,201

)

Distribution to employees of subordinate voting

shares held in trust under the Incentive

Share Unit Plan

1,034 (1,041) — 7 — —

Acquisition by a subsidiary from non-controlling

interest of subordinate voting shares held in

trust under the Incentive Share Unit Plan — — — —

(4,076

)

(4,076

)

Distribution by a subsidiary to non-controlling

interest of subordinate voting shares held in

trust under the Incentive Share Unit Plan — (457) — 3 454 —

Non-controlling interest acquired as a result of a

business combinations — — — — 16,962 16,962

Acquisition of non-controlling interest — — — — (17,424) (17,424)

Total contributions by and distributions to

shareholders (167) 178 — (9,560) (27,357) (36,906)

Balance at May 31, 2013 117,769 5,516

4,649

318,240 883,925 1,330,099

Balance at August 31, 2013 117,769 6,007

6,177

326,952 911,311 1,368,216

Profit for the period — — — 51,915 99,026

150,941

Other comprehensive income for the period — —

2,925

108

6,591 9,624

Comprehensive income for the period — —

2,925

52,023 105,617

160,565

Share-based payment — 2,628 — —

2,936 5,564

Issuance of subordinate voting shares by a

subsidiary to non-controlling interest — (489) — —

5,470 4,981

Dividends on multiple voting shares — — — (1,216) —

(1,216

)

Dividends on subordinate voting shares — — — (9,846) (29,738) (39,584)

Effect of change in ownership of a subsidiary on

non-controlling interest — — — 131

(131

) —

Acquisition of subordinate voting shares held in

trust under the Incentive Share Unit Plan (1,941) — — — —

(1,941

)

Distribution to employees of subordinate voting

shares held in trust under the Incentive

Share Unit Plan 1,629 (1,543) — (86) — —

Acquisition by a subsidiary from non-controlling

interest of subordinate voting shares held in

trust under the Incentive Share Unit Plan — — — —

(6,934

)

(6,934

)

Distribution by a subsidiary to non-controlling

interest of subordinate voting shares held in

trust under the Incentive Share Unit Plan — (1,010) — 9

1,001

—

Total contributions by and distributions to

shareholders (312) (414) — (11,008) (27,396) (39,130)

Balance at May 31, 2014 117,457 5,593

9,102

367,967 989,532 1,489,651

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 24

COGECO INC.

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(unaudited)

May 31, 2014 August 31, 2013

(In thousands of Canadian dollars) $ $

(restated,

notes 2 and 3)

Assets

Current

Cash and cash equivalents 30,526 43,793

Trade and other receivables (note 16 A)) 132,659

118,312

Income taxes receivable 24,465 18,372

Prepaid expenses and other 18,045 14,182

205,695

194,659

Non-current

Other assets 10,037 11,046

Property, plant and equipment 1,794,227 1,874,866

Intangible assets 1,994,599 2,002,677

Goodwill 1,257,618 1,228,356

Derivative financial instruments 6,157 833

Deferred tax assets 139,441

141,398

5,407,774 5,453,835

Liabilities and Shareholders’ equity

Liabilities

Current

Bank indebtedness 13,217 13,166

Trade and other payables 210,163

294,014

Provisions 17,617 12,800

Income tax liabilities 45,608 23,924

Deferred and prepaid revenue 57,015 56,656

Balance due on a business combination, bank prime rate plus 1% 2,000

2,000

Current portion of long-term debt (note 11) 24,994 15,216

370,614

417,776

Non-current

Long-term debt (note 11) 2,893,555 2,984,740

Deferred and prepaid revenue and other liabilities 25,441 21,287

Pension plan liabilities and accrued employees benefits 16,739 21,459

Deferred tax liabilities 611,774

640,357

3,918,123 4,085,619

Shareholders’ equity

Equity attributable to owners of the Corporation

Share capital (note 12) 117,457

117,769

Share-based payment reserve 5,593

6,007

Accumulated other comprehensive income (note 13) 9,102

6,177

Retained earnings 367,967

326,952

500,119

456,905

Non-controlling interest 989,532

911,311

1,489,651 1,368,216

5,407,774 5,453,835

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 25

COGECO INC.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Three months ended May 31, Nine months ended May 31,

2014 2013 2014 2013

(In thousands of Canadian dollars)

$ $ $ $

(restated, note 2) (restated, note 2)

Cash flow from operating activities

Profit for the period 35,635 49,995

150,941 146,051

Adjustments for:

Depreciation and amortization (note 6) 118,926 112,867

350,475 272,831

Impairment of property, plant and equipment (note 7) 32,197 — 32,197 —

Financial expense (note 8) 34,071 36,776

102,485

84,899

Income taxes (note 9) 9,068 19,080 39,052 53,341

Share-based payment (note 12) 2,763 1,693

7,166 4,149

Loss on disposals and write-offs of property, plant and equipment 770 13

2,065 1,837

Defined benefit pension plans contributions, net of expense (1,182) (1,433)

(6,246

)

(9,184

)

Other — — —

(238

)

232,248 218,991

678,135 553,686

Changes in non-cash operating activities (note 14) 13,340 (5,443) (82,379) (80,194)

Income taxes paid (16,672) (17,031) (55,888) (79,490)

Financial expense paid (44,210) (28,876) (107,316) (75,271)

184,706 167,641

432,552 318,731

Cash flow from investing activities

Acquisition of property, plant and equipment (80,017) (108,976) (239,865) (289,016)

Acquisition of intangible and other assets (4,943) (4,516) (13,672) (13,650)

Business combination, net of cash and cash equivalents acquired (note 3) — (22,377) — (2,006,129)

Other 25 57 605 305

(84,935) (135,812) (252,932) (2,308,490)

Cash flow from financing activities

Increase (decrease) in bank indebtedness 9,351 (3,993)

51 (741

)

Net increases (repayments) under the revolving facilities (163,598) (305,691) (186,088)

547,488

Issuance of long-term debt, net of discounts and transaction costs 48,670 694,651 48,670 1,728,617

Repayments of long-term debt (4,819) (406,956) (10,870) (408,640)

Increase in deferred transaction costs — (1,960)

(1,346

)

(4,317

)

Repayment of balance due on a business combination — — — (10,525)

Acquisition of subordinate voting shares held in trust under the

Incentive Share Unit Plan (note 12) (12) —

(1,941

)

(1,201

)

Dividends paid on multiple voting shares (405) (350)

(1,216

)

(1,050

)

Dividends paid on subordinate voting shares (3,298) (2,807)

(9,846

)

(8,484

)

Issuance of subordinate voting shares by a subsidiary to non-controlling interest 553 130

4,981

717

Acquisition by a subsidiary from non-controlling interest of subordinate voting

shares held in trust under the Incentive Share Unit Plan (note 12) — —

(6,934

)

(4,076

)

Dividends paid on subordinate voting shares by a subsidiary to non-controlling

interest (9,924) (8,564) (29,738) (25,703)

(123,482) (35,540) (194,277) 1,812,085

Effect of exchange rate changes on cash and cash equivalents

denominated in foreign currencies (535) 1,089

1,390 1,794

Net change in cash and cash equivalents (24,246) (2,622) (13,267) (175,880)

Cash and cash equivalents, beginning of the period 54,772 42,265 43,793

215,523

Cash and cash equivalents, end of the period 30,526 39,643 30,526 39,643

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 26

NATURE OF OPERATIONS

COGECO Inc. (the “Corporation” or the “Parent Corporation”) is a Canadian public corporation whose shares are listed on the Toronto Stock

Exchange (“TSX”). The Corporation is engaged in Cable Television, High Speed Internet (“HSI”), Telephony, managed information technology

and infrastructure, and other telecommunications services to its residential and commercial customers in Canada, in the United States of America

(“United States”), in the United Kingdom ("UK") and in France through Cogeco Cable Inc. ("Cogeco Cable"), in radio broadcasting through Cogeco

Diffusion Acquisitions Inc. (“Cogeco Diffusion”) and in out-of-home advertising specialized in the public transit sector through Métromédia CMR

Plus Inc. (“Métromédia”) (see note 4 for a detailed description of operations).

The Corporation's registered office is located at 5 Place Ville Marie, Suite 1700, Montréal, Québec, H3B 0B3.

1. BASIS OF PRESENTATION

These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standards

(“IAS”) 34 Interim Financial Reporting and do not include all of the information required for full annual financial statements. Certain information

and footnote disclosure normally included in annual financial statements were omitted or condensed where such information is not considered

material to the understanding of the Corporation's interim financial information. As such, these condensed interim consolidated financial

statements should be read in conjunction with the Corporation's 2013 annual consolidated financial statements.

These condensed interim consolidated financial statements have been prepared with the accounting policies the Corporation adopted in its

2013 annual consolidated financial statements. The accounting policies have been applied consistently to all periods presented in the

condensed interim consolidated financial statements unless otherwise indicated.

The condensed interim consolidated financial statements have been prepared on a going concern basis using historical cost except for

derivative financial instruments and cash-settled share-based payment arrangements, which are measured at fair value and for the pension

plan liabilities and accrued employee benefits, which are measured at present value.

Financial information is presented in Canadian dollars, which is the functional currency of COGECO Inc.

The results of operations for the interim period are not necessarily indicative of the results of operations for the full year. The Corporation

does not expect seasonality to be a material factor in quarterly results except for the number of customers in the Cable Television and HSI

service of the Cable segment which are generally lower in the second half of the fiscal year as a result of a decrease in economic activity

due to the beginning of the vacation period, the end of the television season, and students leaving their campuses at the end of the school

year in Canada, and in the US, due to the winter season residents returning home from late spring through the fall in the Miami area.

The condensed interim consolidated financial statements were approved by the Board of Directors of COGECO Inc. at its meeting held on

July 9, 2014.

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 27

2. ACCOUNTING POLICY DEVELOPMENTS

As described in note 3 of the audited consolidated financial statements for the year ended August 31, 2013, the following standards issued

by the International Accounting Standard Board ("IASB") were adopted by the Corporation on September 1, 2013, and unless otherwise

indicated, have no effect on the financial performance of the Corporation:

• Amendments to IFRS 7 Financial Instruments: Disclosures

• IFRS 10 Consolidated Financial Statements

• IFRS 12 Disclosure of Interest in Other Entities

• IFRS 13 Fair Value Measurement

• Amendments to IAS 19 Employee Benefits: Relative to the pre-fiscal 2014 accounting policies, presentation and disclosure practices,

the principal difference in the amended standard impacting the Corporation is that the expected long-term rate of return on plan assets

will no longer be used to calculate the defined benefit pension costs. The defined benefit pension costs concepts of "interest cost" and

"expected return on plan assets" are replaced by the concept of "net interest". The Employee defined benefit pension plans net interest

is the product of the plan's surplus (deficit) multiplied by the discount rate. The amended standard does not prescribe the classification

within the statement of profit or loss of Employee defined benefit pension plans net interest. The Corporation has decided to include

the net interest expense or income in financial expense.

The variance between the actual rate of return on defined plan assets and the discount rate, as well as the related impact of the limit

on defined benefit assets, if any, is included in other comprehensive income as employee defined benefit pension plans re-

measurements.

The amended standard has been applied retrospectively for all prior periods presented in these condensed interim consolidated financial

statements. The impact on profit or loss and other comprehensive income (loss) is as follows:

Three months ended May 31, 2013

As previously

reported

Effects of

amended IAS 19

As currently

reported

$ $ $

Operating expenses

Salaries, employee benefits and outsourced services 96,811 (304) 96,507

Financial expense 36,487 289 36,776

Income taxes 19,076 4 19,080

Profit for the period 49,984

49,995

Other comprehensive income

Employee defined benefit pension plans re-measurements 5,461

69 5,530

Income tax expense on defined benefit pension plan actuarial adjustments (1,469) (18)

(1,487

)

Earnings per share

Basic 1.02 — 1.03

Diluted 1.02 — 1.02

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 28

Nine months ended May 31, 2013

As previously

reported

Effects of

amended IAS 19

As currently

reported

$ $ $

Operating expenses

Salaries, employee benefits and outsourced services 256,093 (912)

255,181

Financial expense 84,032 867 84,899

Income taxes 53,329

53,341

Profit for the period 146,018

33 146,051

Other comprehensive income

Employee defined benefit pension plans re-measurements 7,392 207

7,599

Income tax expense on defined benefit pension plan actuarial adjustments (1,988) (54)

(2,042

)

Earnings per share

Basic 3.01 — 3.01

Diluted 2.99 — 2.99

The impact on the retained earnings is as follows:

As previously

reported

Effects of

amended IAS 19

As currently

reported

$ $ $

Retained earnings, balance at August 31, 2012 273,489 (253)

273,236

Retained earnings, balance at August 31, 2013

326,964 (12)

326,952

3. BUSINESS COMBINATIONS

BUSINESS COMBINATIONS IN FISCAL 2013

On November 30, 2012, the Corporation's subsidiary, Cogeco Cable Inc., completed the acquisition of all the outstanding shares of Atlantic

Broadband, an independent cable system operator formed in 2003, then serving about 485,000 primary service units and providing Analogue

and Digital Television, as well as HSI and Telephony services. The acquisition is an attractive entry point into the American market, providing

a significant increase in Primary Service Units base with further growth potential, a high quality network infrastructure and the ability for the

Corporation’s management to leverage its core knowledge and operational experience. The transaction, valued at US$1.36 billion, was

financed through a combination of cash on hand, a draw-down on the existing Term Revolving Facility of approximately US$588 million and

US$660 million of borrowings under a new committed non-recourse debt financing at Atlantic Broadband. Atlantic Broadband operates cable

systems in Western Pennsylvania, Southern Florida, Delaware/Maryland and South Carolina.

On January 31, 2013, the Corporation's subsidiary, Cogeco Cable Inc., acquired approximately 96.57% of the issued and outstanding shares

of Peer 1 Network Enterprises, Inc. ("Peer 1 Hosting”). The transaction, valued at approximately $649 million, was financed by new secured

revolving credit facilities in the amount of approximately $250 million as well as new secured term credit facilities in the amount of approximately

$400 million both having a maturity of four years. On April 3, 2013, Cogeco Cable completed the acquisition of the remaining 3.43% of the

issued and outstanding shares of Peer 1 Hosting pursuant to the compulsory acquisition provisions in Section 300 of the Business Corporations

Act ("British Columbia") for a cash consideration of $17 million. Peer 1 Hosting is one of the world's leading internet infrastructure providers,

specializing in managed hosting, dedicated servers, cloud services and colocation. This acquisition enhances Cogeco Cable's footprint and

builds on its strategic initiatives by increasing scale in an attractive industry segment with significant growth prospects in the state of the art

data centre platforms. Cogeco Cable has the resources to serve additional businesses worldwide through 20 data centres and 56 points-

of-presence across North America and Europe. Peer 1 Hosting's primary network centre and head office are located in Vancouver, Canada.

During the first quarter of fiscal 2014, Cogeco Cable finalized the purchase price allocation of Atlantic Broadband which remained unchanged

from that presented in the 2013 Annual consolidated financial statements. The purchase price allocation of Peer 1 Hosting was finalized

by Cogeco Cable during the second quarter of fiscal 2014.

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 29

The final purchase price allocations of Atlantic Broadband and Peer 1 Hosting are as follows:

Peer 1

Hosting

Atlantic

Broadband TOTAL

Final Final Final

$ $ $

Consideration

Paid

Purchase of shares 494,796 337,779

832,575

Working capital adjustments — 5,415

5,415

Repayment of secured debts and settlement of options outstanding 170,872 1,021,854 1,192,726

665,668 1,365,048 2,030,716

Net assets acquired

Cash and cash equivalents 10,840 5,480 16,320

Restricted cash 8,729 —

8,729

Trade and other receivables 12,772 12,012 24,784

Prepaid expenses and other 3,855 1,370

5,225

Income tax receivable 2,797 3,907

6,704

Other assets 2,462 —

2,462

Property, plant and equipment 150,013 302,211

452,224

Intangible assets 144,231 711,418

855,649

Goodwill 410,454 522,215

932,669

Deferred tax assets 8,872 98,592

107,464

Trade and other payables assumed (26,512) (27,620) (54,132)

Provisions — (721)

(721

)

Deferred and prepaid revenue and other liabilities assumed (3,388) (7,697) (11,085)

Long-term debt assumed (1,735) —

(1,735

)

Deferred tax liabilities (57,722) (256,119) (313,841)

665,668 1,365,048 2,030,716

The finalization of the purchase price allocation of Peer 1 Hosting during the second quarter ended February 28, 2014 had no impact on

the statement of profit or loss and comprehensive income for the three and nine-month periods ended May 31, 2013 while the impact on

the statement of financial position at August 31, 2013 is as follows:

As previously

reported Adjustments

As currently

reported

$ $ $

Income tax receivable 17,714 658 18,372

Intangible assets 2,003,581 (904) 2,002,677

Goodwill 1,231,140 (2,784) 1,228,356

Deferred tax assets 137,046 4,352

141,398

Deferred tax liabilities 637,883 2,474

640,357

Accumulated other comprehensive income

6,545

(368)

6,177

Non-controlling interest

912,095

(784)

911,311

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 30

4. OPERATING SEGMENTS

The Corporation's profit for the year are reported in two operating segments: Cable and other.

The Cable segment provides a wide range of Television, HSI and Telephony services primarily to residential customers. It also provides

business solutions, including data networking, Ethernet, Web hosting, HSI access and Voice over Internet Protocol (“VoIP”) services, to

small and medium sized businesses. The segment also provides through its data centres, colocation, managed and dedicated hosting,

managed IT and cloud services to small, medium and large enterprises and public sector customers as well as connectivity services

provisioned over its optical networks.

The Other segment is comprised of radio, out of home advertising specialized in the public transit sector, head office activities as well as

inter-segment eliminations.

The activities of the Cable segment are carried out in Canada, in the United States and in Europe, mostly in the United Kingdom, and the

activities of the Other segment are carried out in Canada.

The Corporation assesses the performance of each segment based on segment profit. Transactions between segments are measured at

agreed to amounts between the parties.

Three months ended May 31,

Cable Other Consolidated

2014 2013 2014 2013 2014 2013

$ $ $ $ $ $

(restated, note 2) (restated, note 2) (restated, note 2)

Revenue

(1)

496,448 464,497 39,619 39,937 536,067

504,434

Operating expenses 267,059 249,315 35,925 34,241 302,984

283,556

Integration, restructuring and acquisition

costs 3,186 2,101 — 59 3,186

2,160

Depreciation and amortization 117,653 111,445 1,273 1,422 118,926

112,867

Impairment of property, plant and equipment 32,197 — — — 32,197 —

Financial expense 32,038 35,146 2,033 1,630 34,071 36,776

Income taxes 8,801 18,411 267 669 9,068 19,080

Profit for the period 35,514 48,079 121 1,916 35,635 49,995

Acquisition of property, plant and equipment 79,509 108,325 508 651 80,017

108,976

Acquisition of intangible and other assets 4,943 4,516 — — 4,943

4,516

(1) For the three-month period ended May 31, 2014, revenue by geographic market included $396,172 in Canada ($381,388 in 2013), $129,833 in the

United States ($115,931 in 2013) and $10,062 in Europe ($7,115 in 2013).

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 31

Nine months ended May 31,

Cable Other Consolidated

2014 2013 2014 2013 2014 2013

$ $ $ $ $ $

(restated,

notes 2 and 3) (restated, note 2)

(restated,

notes 2 and 3)

Revenue

(1)

1,457,436 1,222,080 114,079 107,463 1,571,515 1,329,543

Operating expenses 785,235 654,327 107,350 101,182 892,585

755,509

Management fees – COGECO Inc. 9,674 9,569 (9,674) (9,569) — —

Integration, restructuring and acquisition

costs 3,780 16,865 — 47 3,780 16,912

Depreciation and amortization 346,540 268,611 3,935 4,220 350,475

272,831

Impairment of property, plant and equipment 32,197 — — — 32,197 —

Financial expense 97,505 80,068 4,980 4,831 102,485 84,899

Income taxes 36,912 51,615 2,140 1,726 39,052 53,341

Profit for the period 145,593 141,025 5,348 5,026 150,941

146,051

Total assets

(2)

5,206,189 5,254,419 201,585 199,416 5,407,774 5,453,835

Property, plant and equipment

(2)

1,773,325 1,854,155 20,902 20,711 1,794,227 1,874,866

Intangible assets

(2)

1,902,947 1,910,089 91,652 92,588 1,994,599 2,002,677

Goodwill

(2)

1,218,493 1,189,231 39,125 39,125 1,257,618 1,228,356

Acquisition of property, plant and equipment 236,675 286,457 3,190 2,559 239,865

289,016

Acquisition of intangible and other assets 13,672 13,650 — — 13,672 13,650

(1) For the nine-month period ended May 31, 2014 revenue by geographic market included $1,167,506 in Canada ($1,110,256 in 2013), $376,042 in the United

States ($209,851 in 2013) and $27,967 in Europe ($9,436 in 2013).

(2) At May 31, 2014 and August 31, 2013.

The following table sets out certain geographic information at May 31, 2014 and August 31, 2013:

At May 31, 2014

Canada United States Europe Total

$ $ $ $

Property, plant and equipment 1,347,276 392,988 53,963 1,794,227

Intangible assets 1,174,486 808,260 11,853 1,994,599

Goodwill 372,835 832,938 51,845 1,257,618

At August 31, 2013

Canada United States Europe Total

$ $ $ $

(restated, note 3) (restated, note 3) (restated, note 3) (restated, note 3)

Property, plant and equipment 1,430,471 394,359 50,036 1,874,866

Intangible assets 1,186,613 804,034 12,030 2,002,677

Goodwill 372,835 808,968 46,553 1,228,356

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 32

5. OPERATING EXPENSES

Three months ended May 31, Nine months ended May 31,

2014 2013 2014 2013

$ $ $ $

(restated, note 2) (restated, note 2)

Salaries, employee benefits and outsourced services

103,999

96,507 302,680

255,181

Service delivery costs

(1)

148,808

141,135 445,907

373,739

Customer related costs

(2)

20,891 20,713 60,415 54,764

Other external purchases

(3)

29,286 25,201 83,583 71,825

302,984

283,556 892,585

755,509

(1) Include cost of equipment sold, content and programming costs, payments to other carriers, data US center expenses, franchise fees and network

costs.

(2) Include advertising and marketing expenses, selling costs, billing expenses, bad debts and collection expenses.

(3) Include office building expenses, professional service fees, Canadian Radio-television and Telecommunications Commission (“CRTC”) fees and other

administrative expenses.

6. DEPRECIATION AND AMORTIZATION

Three months ended May 31, Nine months ended May 31,

2014 2013 2014 2013

$ $ $ $

Property, plant and equipment

103,209

96,622 302,775 237,990

Intangible assets 15,717 16,245 47,700 34,841

118,926

112,867 350,475 272,831

7. IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT

During the third quarter of fiscal 2014, the Corporation's indirect cable subsidiary, Cogeco Cable Canada, recognized an impairment of $32.2

million of property, plant and equipment, capitalized wages and borrowing costs related to an Internet Protocol Television ("IPTV") solution

project on which its Canadian operations had worked. As a result of the unexpected performance issues encountered with the platform, it

had to be abandoned by Cogeco Cable Canada. At May 31, 2014, these costs were not yet depreciated.

8. FINANCIAL EXPENSE

Three months ended May 31, Nine months ended May 31,

2014 2013 2014 2013

$ $ $ $

(restated, note 2) (restated, note 2)

Interest on long-term debt 33,304 36,993 99,293 83,216

Net foreign exchange losses (gains)

(336

) 186 (373) 924

Amortization of deferred transaction costs 488 (141) 1,454

1,038

Capitalized borrowing costs

(1)

(867

) (995) (2,232)

(2,792

)

Other

1,482

733 4,343

2,513

34,071 36,776 102,485 84,899

(1) For the three and nine-month periods ended May 31, 2014, the weighted average interest rate used for the capitalization of borrowing costs was 4.5%

(6% in 2013).

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 33

9. INCOME TAXES

Three months ended May 31, Nine months ended May 31,

2014 2013 2014 2013

$ $ $ $

(restated, note 2) (restated, note 2)

Current 23,693 27,563 72,378 76,227

Deferred (14,625) (8,483) (33,326) (22,886)

9,068

19,080 39,052 53,341

The following table provides the reconciliation between income tax expense at the Canadian statutory federal and provincial income tax

rates and the consolidated income tax expense:

Three months ended May 31, Nine months ended May 31,

2014 2013 2014 2013

$ $ $ $

(restated, note 2) (restated, note 2)

Profit before income taxes 44,703 69,075 189,993 199,392

Combined Canadian income tax rate 25.81% 25.47% 26.62% 26.60%

Income tax expense at combined income tax rate 11,537 17,604 50,576 53,031

Adjustment for losses or profit subject to lower or higher tax rates 1,726 3,191 1,770 2,798

Income taxes arising from non-deductible expenses 1,368 819 103 5,241

Tax impacts related to investments in foreign operations (4,928) (3,501) (13,445) (6,908)

Changes in valuation allowance — (961) — (2,203)

Other (635) 1,928 48 1,382

Income tax expense 9,068 19,080 39,052 53,341

10. EARNINGS PER SHARE

The following table provides the reconciliation between basic and diluted earnings per share:

Three months ended May 31, Nine months ended May 31,

2014 2013 2014 2013

$ $ $ $

(restated, note 2) (restated, note 2)

Profit for the period attributable to owners of the Corporation 11,469 17,185 51,915 50,391

Weighted average number of multiple and subordinate voting shares

outstanding

16,729,177

16,725,074 16,729,701

16,725,745

Effect of dilutive incentive share units

102,646

107,124 103,475

107,810

Weighted average number of diluted multiple and subordinate voting

shares outstanding

16,831,823

16,832,198 16,833,176

16,833,555

Earnings per share

Basic 0.69 1.03 3.10 3.01

Diluted 0.68 1.02 3.08 2.99

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 34

11. LONG-TERM DEBT

Maturity Interest rate May 31, 2014 August 31, 2013

% $ $

Parent Corporation

Term Revolving Facility

Revolving loans February 2018

(1)

2.83

(2)

14,972 72,891

Unsecured Debentures November 2021 6.50 34,734 34,707

Senior Unsecured Notes

March 2020 6.00 48,716 —

Finance lease January 2017 3.23 73

Subsidiaries

Term Revolving Facility

Canadian Revolving Facility

Revolving loan – US$244.5 million

(US$206 million at August 31, 2013) January 2019 1.85

(2) (3)

265,087

216,918

Revolving loans January 2019 2.89

(2)

104,801

219,561

Revolving loan – £56 million January 2019 2.19

(2)

101,769 —

Secured Credit Facilities

Revolving Facility

Revolving loan – £52.2 million at August 31, 2013 — — — 85,180

Revolving loan – US$21.9 million at August 31, 2013 — — — 23,061

UK Revolving Facility – £3.4 million at August 31, 2013 — — —

5,548

Senior Secured Notes

Series A – US$190 million October 2015 7.00

(4)

205,528

199,349

Series B October 2018 7.60 54,715 54,672

Senior Secured Notes - US$215 million June 2025 4.30 231,656

224,872

Senior Secured Debentures Series 2 November 2020 5.15 198,801

198,686

Senior Secured Debentures Series 3 February 2022 4.93 198,497

198,379

Senior Secured Debentures Series 4 May 2023 4.18 297,180

296,989

Senior Unsecured Debenture March 2018 5.94 99,856 99,829

Senior Unsecured Notes – US$400 million May 2020 4.88 426,886

413,674

First Lien Credit Facilities

Term Loan A Facility – US$184 million

(US$190 million at August 31, 2013) November 2017 2.28

(2)

195,522

195,193

Term Loan B Facility – US$413.7 million

(US$416.85 million at August 31, 2013) November 2019 3.25

(2)

434,434

423,528

Revolving Facility – US$33 million at August 31, 2013 November 2017 —

(2)

— 34,749

Term Revolving Facility

UK Revolving Facility – £2.3 million January 2019 2.20

(2)

4,180 —

Finance leases January 2015 3.27

(5)

1,142

2,077

2,918,549 2,999,956

Less current portion 24,994 15,216

2,893,555 2,984,740

(1) On December 20, 2013, the Corporation amended its Term Revolving Facility of which the maturity was extended by an additional year until February 1,

2018.

(2) Interest rate on debt includes applicable margin.

(3) Interest rate swap agreements have resulted in an effective interest rate of 2.10% at May 31, 2014 on a notional amount of US$200 million, including

applicable margin.

(4) Cross-currency swap agreements have resulted in an effective interest rate of 7.24% on the Canadian dollar equivalent of the US denominated debt.

(5) Weighted average interest rate on finance leases.

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 35

a) On March 5, 2014, the Corporation completed, pursuant to a private placement, the issuance of $50 million of Senior Unsecured Notes

for net proceeds of $48.7 million, net of transaction costs of approximately $1.3 million. These unsecured notes bear interest at 6.00%

per annum payable semi-annually and mature on March 5, 2020. Half of the Senior Unsecured Notes are guaranteed on a senior

unsecured basis, jointly and severally, by its subsidiaries except for the unrestricted subsidiaries. The net proceeds of the Senior

Unsecured Notes was used to reimburse a portion of the Corporation's Term Revolving Facility of $100 million which facility was

consequently reduced to $50 million.

b) On November 22, 2013, the Corporation's subsidiary, Cogeco Cable Inc., amended and restated its Term Revolving Facility of $800

million with a syndicate of lenders. The maturity was extended until January 22, 2019 and can be further extended annually. The

amendments also reduced the margin for the calculation of the interest rate and reduced restrictions on certain covenants. The amended

and restated Term Revolving Facility also replaced Cogeco Cable’s Secured Credit Facilities coming to maturity on January 27, 2017

which was fully repaid on November 22, 2013. This amended and restated Term Revolving Facility is comprised of two tranches: a first

tranche, a Canadian tranche, amounting to $788 million and the second tranche, a UK tranche, amounting to $12 million. Both Cogeco

Cable and Peer 1 (UK) Ltd. can borrow under the UK tranche. The Canadian tranche is available in Canadian dollars, US dollars, Euros

and British Pounds and interest rates are based on banker's acceptance, US dollar base rate loans, LIBOR loans in US dollars, Euros

or British Pounds, plus the applicable margin. The UK tranche is available in British Pounds and interest rates are based on British

Pounds base rate loans and British Pounds LIBOR loans. The Term Revolving Facility is indirectly secured by first priority fixed and

floating charges and a security interest on substantially all present and future real and personal properties and undertaking of every

nature and kind of Cogeco Cable and certain of its subsidiaries, and provides for certain permitted encumbrances, including purchased

money obligations, existing funded obligations and charges granted by any subsidiary prior to the date when it becomes a subsidiary,

subject to a maximum amount. The provisions under this facility provide for restrictions on the operations and activities of Cogeco Cable.

Generally, the most significant restrictions relate to permitted investments and dividends on multiple and subordinate voting shares, as

well as incurrence and maintenance of certain financial ratios primarily linked to operating income before amortization, financial expense

and total indebtedness.

12. SHARE CAPITAL

A) AUTHORIZED

Unlimited number of:

Preferred shares of first and second rank, issuable in series and non-voting, except when specified in the Articles of Incorporation of the

Corporation or in the Law.

Multiple voting shares, 20 votes per share.

Subordinate voting shares, 1 vote per share.

B) ISSUED AND PAID

May 31, 2014 August 31, 2013

$ $

1,842,860 multiple voting shares 12

14,989,338 subordinate voting shares 121,976

121,976

121,988

102,846 subordinate voting shares held in trust under the Incentive Share Unit Plan (107,124 at

August 31, 2013)

(4,531)

(4,219

)

117,457

117,769

During the first nine months of fiscal 2014, subordinate voting shares held in trust under the Incentive Share Unit Plan transactions were as

follows:

Number of shares Amount

Balance at August 31, 2013 107,124

4,219

Subordinate voting shares acquired 40,074

1,941

Subordinate voting shares distributed to employees (44,352)

(1,629

)

Balance at May 31, 2014 102,846

4,531

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 36

C) DIVIDENDS

For the nine-month period ended May 31, 2014, quarterly dividends of $0.22 per share, for a total of $0.66 per share, were paid to the holders

of multiple and subordinate voting shares, totaling $11.1 million, compared to quarterly dividends of $0.19 per share, for a total of $0.57 per

share or $9.5 million for the nine-month period ended May 31, 2013.

D) SHARE-BASED PAYMENT PLANS

The Corporation and its subsidiary, Cogeco Cable Inc., offer to certain of its executives Stock Option Plans, which are described in the

Corporation’s annual consolidated financial statements. For the nine-month period ended May 31, 2014 and 2013, no stock options were

granted to employees by COGECO Inc. under the Stock Option Plan of the Corporation and no options were outstanding at May 31, 2014

and August 31, 2013. However, for the nine-month period ended May 31, 2014, the Corporation's subsidiary, Cogeco Cable Inc., granted

311,650 stock options (207,142 in 2013) with an exercise price of $50.10 to $58.12 ($38.08 to $45.60 in 2013) of which 84,250 stock options

(71,233 in 2013) were granted to COGECO Inc.’s senior executives who are also executives of Cogeco Cable. These options vest equally

over a period of five years beginning one year after the day such options are granted and are exercisable over ten years. During the three

and nine-month periods ended May 31, 2014, Cogeco Cable charged COGECO Inc. amounts of $124,000 and $286,000 ($99,000 and

$275,000 in 2013) with respect to its options granted to COGECO Inc.’s senior executives. As a result, a compensation expense of $301,000

and $820,000 ($200,000 and $549,000 in 2013) was recorded for the three and nine-month periods ended May 31, 2014.

The weighted average fair value of stock options granted by Cogeco Cable for the nine-month period ended May 31, 2014 was $10.56 ($7.77

in 2013) per option. The weighted average fair value of each option granted was estimated at the grant date for purposes of determining

stock-based compensation expense using the Black-Scholes option pricing model based on the following assumptions:

2014 2013

% %

Expected dividend yield 2.05 2.60

Expected volatility 24.87 26.59

Risk-free interest rate 1.87 1.49

Expected life in years 6.3 6.2

Under the Stock Option Plan of Cogeco Cable, the following options were granted and are outstanding at May 31, 2014:

Options

Weighted

average

exercise

price

Outstanding at August 31, 2013 725,093 37.14

Granted 311,650 50.12

Exercised

(1)

(161,563) 30.83

Cancelled (77,824) 45.29

Balance at May 31, 2014 797,356 42.71

Exercisable at May 31, 2014 297,899 36.83

(1) The weighted average share price for options exercised during the period was $51.91.

The Corporation and its subsidiary, Cogeco Cable Inc., also offer to certain of its executive and designated employee Incentive Share Unit

Plans (“ISU Plans”), which are described in the Corporation’s annual consolidated financial statements. For the nine-month period ended

May 31, 2014, the Corporation and its subsidiary granted 40,074 (35,630 in 2013) and 137,071 (103,947 in 2013) incentive share units

(“ISUs”), respectively. The Corporation and its subsidiary establish the value of the compensation related to the ISUs granted based on the

fair value of the subordinate voting shares at the date of grant and a compensation expense is recognized over the vesting period, which is

three years less one day. Two trusts were created for the purpose of purchasing these shares on the stock market in order to protect against

stock price fluctuation. The Corporation and its subsidiary instructed the trustees to purchase 40,074 (35,630 in 2013) and 137,416 (101,047

in 2013) subordinate voting shares on the stock market. These shares were purchased for cash consideration aggregating $1,941,000

($1,201,000 in 2013) and $6,934,000 ($4,076,000 in 2013) and are held in trust for the participants until they are fully vested. The trusts,

considered as special purpose entities, are consolidated in the Corporation’s financial statements with the value of the acquired shares

presented as subordinate voting shares held in trust under the ISU Plan in reduction of share capital or non-controlling interest. A compensation

expense of $1,703,000 and $4,744,000 ($978,000 and $2,804,000 in 2013) was recorded for the three and nine-month periods ended May 31,

2014, respectively, related to these plans. During the three and nine-month periods ended May 31, 2014, Cogeco Cable Inc. charged COGECO

Inc. amounts of $122,000 and $440,000 ($117,000 and $336,000 in 2013), respectively, with respect to ISUs granted to COGECO's senior

executives.

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 37

Under the ISU Plan of the Corporation, the following ISUs were granted and are outstanding at May 31, 2014:

Outstanding at August 31, 2013

107,124

Granted 40,074

Distributed (44,352)

Outstanding at May 31, 2014

102,846

Under the ISU Plan of Cogeco Cable Inc., the following ISUs were granted and are outstanding at May 31, 2014:

Outstanding at August 31, 2013

209,608

Granted

137,071

Distributed (73,171)

Cancelled (14,700)

Outstanding at May 31, 2014

258,808

The Corporation and its subsidiary, Cogeco Cable Inc., offer Deferred Share Unit Plans (“DSU Plans”) for members of the Board of directors

which is described in the Corporation’s annual consolidated financial statements. For the nine-month period ended May 31, 2014, the

Corporation and its subsidiary issued respectively 9,120 and 7,228 deferred share units (“DSUs”) (8,139 and 5,573 in 2013) to the participants

in connection with the DSU Plans. A compensation expense of $759,000 and $1,602,000 ($275,000 and $556,000 in 2013) was recorded for

the three and nine-month periods ended May 31, 2014, respectively, for the increase in liability related to this plan.

Under the DSU Plan of the Corporation, the following DSUs were issued and are outstanding at May 31, 2014:

Outstanding at August 31, 2013 30,854

Issued

9,120

Dividend equivalents 470

Outstanding at May 31, 2014 40,444

Under the DSU Plan of Cogeco Cable Inc., the following DSUs were issued and are outstanding at May 31, 2014:

Outstanding at August 31, 2013 23,745

Issued

7,228

Dividend equivalents 481

Outstanding at May 31, 2014

31,454

13. ACCUMULATED OTHER COMPREHENSIVE INCOME

Cash flow hedge

reserve

Foreign currency

translation Total

$ $ $

(restated, note 3) (restated, note 3)

Balance at August 31, 2012 1,005

31 1,036

Other comprehensive income (loss) (232) 3,845

3,613

Balance at May 31, 2013 773 3,876

4,649

Balance at August 31, 2013 846 5,331

6,177

Other comprehensive income (loss) (232) 3,157

2,925

Balance at May 31, 2014 614 8,488

9,102

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 38

14. STATEMENTS OF CASH FLOWS

CHANGES IN NON-CASH OPERATING ACTIVITIES

Three months ended May 31, Nine months ended May 31,

2014 2013 2014 2013

$ $ $ $

Trade and other receivables

(2,847

) (3,835) (14,505)

(6,942

)

Prepaid expenses and other 420 (378) (3,773) 427

Trade and other payables 13,339 (3,862) (70,759) (80,722)

Provisions

(768

) 122 2,938

(960

)

Deferred and prepaid revenue and other liabilities

3,196

2,510 3,720

8,003

13,340 (5,443) (82,379) (80,194)

15. EMPLOYEE BENEFITS

The Corporation and its subsidiaries offer their employees contributory defined benefit pension plans, defined contribution pension plans or

collective registered retirement savings plans, which are described in the Corporation’s annual consolidated financial statements.

The total expense related to these plans is as follows:

Three months ended May 31, Nine months ended May 31,

2014 2013 2014 2013

$ $ $ $

(restated, note 2) (restated, note 2)

Recognized in:

Operating expenses

Salaries, employee benefits and outsourced services

Current service costs

2,705

2,598 9,910

7,989

Past service costs — — 565 —

Financial expense

Other 199 289 614 867

2,904

2,887 11,089 8,856

16. FINANCIAL INSTRUMENTS

A) FINANCIAL RISK MANAGEMENT

Management’s objectives are to protect COGECO Inc. and its subsidiaries against material economic exposures and variability of results,

and against certain financial risks including credit, liquidity, interest rate and foreign exchange risk.

Credit risk

Credit risk represents the risk of financial loss for the Corporation if a customer or counterparty to a financial asset fails to meet its contractual

obligations. The Corporation is exposed to credit risk arising from the derivative financial instruments, cash and cash equivalents and trade

accounts receivable, the maximum exposure of which is represented by the carrying amounts reported on the statement of financial position.

Credit risk from derivative financial instruments arises from the possibility that counterparties to the cross-currency swaps and interest rate

swaps may default on their obligations in instances where these agreements have positive fair values for the Corporation. The Corporation

reduces this risk by completing transactions with financial institutions that carry a credit rating equal to or superior to its own credit rating.

The Corporation assesses the creditworthiness of the counterparties in order to minimize the risk of counterparties default under the

agreements. At May 31, 2014, management believes that the credit risk relating to its derivative financial instruments is minimal, since the

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 39

lowest credit rating of the counterparties to the agreements is “A” by Standard & Poor’s rating services (“S&P”) and “AA (low)” by Dominion

Bond Rating Services (“DBRS”).

Cash and cash equivalents consist mainly of highly liquid money market short-term investments. The Corporation has deposited the cash

and cash equivalents with reputable financial institutions, for which management believes the risk of loss to be remote. At May 31, 2014,

management believes that the credit risk relating to its short-term investments is minimal, since the credit rating related to such investment

is “A-1+” by S&P.

The Corporation is also exposed to credit risk in relation to its trade accounts receivable. To mitigate such risk, the Corporation continuously

monitors the financial condition of its customers and reviews the credit history or worthiness of each new large customer. At May 31, 2014

and August 31, 2013, no customer balance represented a significant portion of the Corporation’s consolidated trade accounts receivable.

The Corporation establishes an allowance for doubtful accounts based on specific credit risk of its customers by examining such factors as

the number of overdue days of the customer’s balance outstanding as well as the customer’s collection history. The Corporation believes

that its allowance for doubtful accounts is sufficient to cover the related credit risk. The Corporation has credit policies in place and has

established various credit controls, including credit checks, deposits on accounts and advance billing, and has also established procedures

to suspend the availability of services when customers have fully utilized approved credit limits or have violated existing payment terms.

Since the Corporation has a large and diversified clientele dispersed throughout its market areas in Canada, in the United States and in

Europe, there is no significant concentration of credit risk.

The following table provides further details on the Corporation's trade accounts receivable, net of allowance for doubtful accounts:

May 31, 2014 August 31, 2013

$ $

Trade accounts receivable 128,150

112,018

Allowance for doubtful accounts (7,782)

(4,687

)

120,368

107,331

Other accounts receivable 12,291 10,981

132,659

118,312

Trade accounts receivable past due is defined as amount outstanding beyond normal credit terms and conditions for the respective customers.

A large portion of the Corporation’s customers are billed and pay before their services are rendered. The Corporation considers amount

outstanding at the due date as trade accounts receivable past due. The following table provides further details on trade accounts receivable

past due net of allowance for doubtful accounts at May 31, 2014 and August 31, 2013:

May 31, 2014 August 31, 2013

$ $

Less than 60 days overdue 48,333 44,161

60 to 90 days overdue 4,948 4,062

More than 90 days overdue 5,833 2,860

59,114 51,083

Liquidity risk

Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they become due. The Corporation manages

liquidity risk through the management of its capital structure and access to different capital markets. It also manages liquidity risk by

continuously monitoring actual and projected cash flows to ensure sufficient liquidity to meet its obligations when due. At May 31, 2014, the

available amount of the Corporation’s Term Revolving Facility and Cogeco Cable Inc.'s Term Revolving Facility was $356.7 million.

Management believes that the committed Term Revolving Facilities will, until their maturities in February 2018 and January 2019, provide

sufficient liquidity to manage its long-term debt maturities and support working capital requirements. Two subsidiaries of Cogeco Cable also

benefit from a Revolving Facility of US$100 million related to its acquisition of Atlantic Broadband, of which US$99 million ($107.3 million)

was available at May 31, 2014.

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 40

The following table summarizes the contractual maturities of the financial liabilities and related capital amounts:

Contractual cash flows

Carrying

amount

2014

2015

2016

2017

2018

Thereafter

Total

Bank indebtedness

13,217 13,217 — — — — — 13,217

Trade and other payables

(1)

191,827 191,827 — — — — —

191,827

Long-term debt

(2)

2,917,334 4,391 27,322 240,475 35,779 231,878 2,411,999 2,951,844

Balance due on a business combination

2,000 2,000 — — — — —

2,000

Other liabilities

1,955 — 736 1,253 1,253 48 —

3,290

Derivative financial instruments

(6,157) — — (4,123) — — —

(4,123

)

Finance leases

(3)

1,215 349 842 28 12 — —

1,231

3,121,391 211,784 28,900 237,633 37,044 231,926 2,411,999 3,159,286

(1) Excluding accrued interest.

(2) Principal excluding finance leases.

(3) Including interest.

The following table is a summary of interest payable on long-term debt (excluding interest on finance leases) that is due for each of the next

five years and therereafter, based on the principal amount and interest rate prevailing on the outstanding debt at May 31, 2014 and their

respective maturities:

2014 2015 2016 2017 2018 Thereafter Total

$ $ $ $ $ $ $

Interest payments on long-term debt 17,515 123,557

115,494

107,336 104,370 272,936

741,208

Interest receipts on derivative financial

instruments

(81) (14,718)

(7,210

) — — — (22,009)

Interest payments on derivative financial

instruments

215 15,401

7,307

— — — 22,923

17,649 124,240

115,591

107,336 104,370 272,936

742,122

Interest rate risk

The Corporation is exposed to interest rate risks for both fixed interest rate and floating interest rate instruments. Fluctuations in interest

rates will have an effect on the valuation and collection or repayment of these instruments. At May 31, 2014, all of the Corporation’s long-

term debt was at fixed rate, except for the Corporation’s Term Revolving Facilities and First Lien Credit Facilities. To mitigate such risk,

Cogeco Cable has entered on July 22, 2013 into interest rate swap agreements to fix the interest rate on $US200 million of its LIBOR based

loans. These agreements have the effect of converting the floating US LIBOR base rate at an average fixed rate of 0.39625% under the

Term Revolving Facility until July 25, 2015. Cogeco Cable elected to apply hedge accounting on these derivative financial instruments. The

sensitivity of the Corporation’s annual financial expense to a variation of 1% in the interest rate applicable to the Term Revolving Facilities

and First Lien Credit Facilities is approximately $6.5 million based on the outstanding debt at May 31, 2014.

Foreign exchange risk

The Corporation is exposed to foreign exchange risk related to its long-term debt denominated in US dollars that is not designated as a

hedge on its US dollar net investments. In order to mitigate this risk, the Corporation has established guidelines whereby cross-currency

swap agreements can be used to fix the exchange rates applicable to its US dollar denominated long-term debt. All such agreements are

exclusively used for hedging purposes. Accordingly, on October 2, 2008, the Corporation's subsidiary, Cogeco Cable Inc., entered into cross-

currency swap agreements to set the liability for interest and principal payments on its US$190 million Senior Secured Notes Series A issued

on October 1, 2008. These agreements have the effect of converting the US interest coupon rate of 7.00% per annum to an average Canadian

dollar interest rate of 7.24% per annum. The exchange rate applicable to the principal portion of the debt has been fixed at $1.0625. The

Corporation elected to apply cash flow hedge accounting on these derivative financial instruments. The impact of a 10% change in the

exchange rate of the US dollar and British Pounds into Canadian dollars would change financial expense by approximatively $5.8 million

based on the outstanding debt at May 31, 2014.

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 41

The Corporation is also exposed to foreign exchange risk on cash and cash equivalents, bank indebtedness, trade and other receivables

and trade and other payables and provisions denominated in US dollars, Euros or British Pounds. The Corporation’s exposure to foreign

currency risk is as follows:

May 31, 2014 August 31, 2013

US Euros

British

Pounds

US Euros

British

Pounds

$ $ $ $ $ $

Financial assets (liabilities)

Cash and cash equivalents — 353 265 7,536

1,171

257

Trade and other receivables 2,449 — — — — —

Bank indebtedness (508) — — — — —

Trade and other payables and provisions (4,874) (7,390) — (16,554) (6,933 ) —

(2,933) (7,037) 265 (9,018) (5,762) 257

Due to their short-term nature, the risk arising from fluctuations in foreign exchange rates is usually not significant. The impact of a 10%

fluctuation in the foreign exchange rates (US dollar, Euro and British Pound) would change financial expense by approximately $1 million.

Furthermore, Cogeco Cable’s investment in foreign operations is exposed to market risk attributable to fluctuations in foreign currency

exchange rates, primarily changes in the values of the Canadian dollar versus the US dollar and British Pounds. This risk was mitigated

since the major part of the purchase prices for Atlantic Broadband and Peer 1 Hosting were borrowed directly in US dollars and British

Pounds. At May 31, 2014, the investments for Atlantic Broadband and Peer 1 Hosting amounted to US$1.1 billion and £62.7 million while

long-term debt hedging these investments were US$859.5 million and £56 million.The exchange rate used to convert the US dollar currency

and British Pounds currency into Canadian dollars for the statement of financial position accounts at May 31, 2014 was $1.0842 per US

dollar and $1.8173 per British Pound. The impact of a 10% change in the exchange rate of the US dollar and British Pound into Canadian

dollars would change other comprehensive income by approximately $26.9 million.

Fair value of financial instruments

Fair value is the amount at which willing parties would accept to exchange a financial instrument based on the current market for instruments

with the same risk, principal and remaining maturity. Fair values are estimated at a specific point in time, by discounting expected cash flows

at rates for debts of the same remaining maturities and conditions. These estimates are subjective in nature and involve uncertainties and

matters of significant judgement, and therefore, cannot be determined with precision. In addition, income taxes and other expenses that

would be incurred on disposition of these financial instruments are not reflected in the fair values. As a result, the fair values are not necessarily

the net amounts that would be realized if these instruments were settled. The Corporation has determined the fair value of its financial

instruments as follows:

a) The carrying amount of cash and cash equivalents, trade and other receivables, bank indebtedness and trade and other payables

approximates fair value because of the short-term nature of these instruments.

b) Interest rates under the terms of the Corporation’s Term Revolving Facilities and First Lien Credit Facilities are based on Bankers’

acceptance, LIBOR, EURIBOR, bank prime rate loan or US or British Pounds base rate loan plus applicable margin. Therefore, the

carrying value approximates fair value for these facilities, since they have conditions similar to those currently available to the Corporation.

c) The fair value of the Senior Secured Debentures Series 2, 3 and 4, Senior Secured Notes Series A and B, Senior Secured Notes,

Senior Unsecured Notes, Senior Unsecured Debenture and Unsecured Debentures are based upon current trading values for similar

financial instruments.

d) The fair values of finance leases are not significantly different from their carrying amounts.

The carrying value of all the Corporation’s financial instruments approximates fair value, except as otherwise noted in the following table:

May 31, 2014 August 31, 2013

Carrying value Fair value Carrying value Fair value

$ $ $ $

Long-term debt 2,918,549 3,045,366 2,999,956 3,039,908

COGECO INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

(amounts in tables are in thousands of Canadian dollars, except number of shares and per share data)

Condensed Interim Consolidated Financial Statements COGECO INC. Q3 2014 42

All financial instruments recognized at fair value on the consolidated statement of financial position must be measured based on the three

fair value hierarchy levels, which are as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices)

or indirectly (i.e., derived from prices); and

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Corporation considers that its derivative financial instruments are classified as Level 2 under the fair value hierarchy. The fair value of

derivative financial instruments are estimated using valuation models that reflect projected future cash flows over contractual terms of the

derivative financial instruments and observable market data, such as interest and currency exchange rate curves.

B) CAPITAL MANAGEMENT

The Corporation’s objectives in managing capital are to ensure sufficient liquidity to support the capital requirements of its various businesses,

including growth opportunities. The Corporation manages its capital structure and makes adjustments in light of general economic conditions,

the risk characteristics of the underlying assets and the Corporation’s working capital requirements. Management of the capital structure

involves the issuance of new debt, the repayment of existing debts using cash generated by operations and the level of distribution to

shareholders.

The capital structure of the Corporation is composed of shareholders’ equity, cash and cash equivalents, bank indebtedness, long-term debt,

balance due on business combination and assets or liabilities related to derivative financial instruments.

The provisions of the financing agreements provide for restrictions on the operations and activities of the Corporation. Generally, the most

significant restrictions relate to permitted investments and dividends on multiple and subordinate voting shares, as well as the maintenance

of certain financial ratios primarily linked to the operating income before depreciation and amortization, financial expense and total

indebtedness. At May 31, 2014 and August 31, 2013 the Corporation was in compliance with all of its debt covenants and was not subject

to any other externally imposed capital requirements.

The following table summarizes certain of the key ratios used to monitor and manage the Corporation’s capital structure:

May 31, 2014 August 31, 2013

Net senior indebtedness

(1)(2)

/ operating income before depreciation and amortization

(3)

2.3 2.7

Net indebtedness

(2)(4)

/ operating income before depreciation and amortization

(3)

3.1 3.4

Operating income before depreciation and amortization

(3)

/ financial expense

(3)

6.3 6.2

(1) Net secured indebtedness is defined as the total of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments,

less cash and cash equivalents and principal on Unsecured Debentures, Senior Unsecured Debenture and Senior Unsecured Notes.

(2) Excluding Atlantic Broadband and other non-significant unrestricted subsidiaries' cash and cash equivalents and non-recourse First Lien Credit Facilities.

(3) Calculation based on operating income before depreciation and amortization and financial expense for the twelve-month period ended May 31, 2014 and

August 31, 2013 excluding Atlantic Broadband and other non-significant unrestricted subsidiaries and including Peer 1 Hosting results for the twelve-

month period ended May 31, 2014 and seven-month period ended August 31, 2013.

(4) Net indebtedness is defined as the total of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments, balance

due on a business combination less cash and cash equivalents.

17. SUBSEQUENT EVENT

On June 30, 2014, Cogeco Cable's subsidiary, Atlantic Broadband, amended its First Lien Credit Facilities. Pursuant to the amendment, US

$15 million of the Term Loan A Facility was converted into the Revolving Facility. In addition, the Revolving Facility was increased by US$35

million of which the proceeds were used to reimburse a portion of the Term Loan B. Giving effect to this amendment, the combined amounts

borrowed under the Term Loan A, Term Loan B and the Revolving Facility have not changed. All other terms and conditions related to

covenants, interest rates and maturity remained the same. In connection with the amendment, transaction costs of US$0.4 million were

incurred.

Cable segment customer statistics COGECO INC. Q3 2014 43

CABLE SEGMENT CUSTOMER STATISTICS

May 31,

2014

February 28,

2014

November 30,

2013

August 31,

2013

May 31,

2013

Primary service units

(1)

2,452,118 2,454,627 2,464,932 2,467,657 2,481,017

CANADA

1,956,444 1,962,077 1,975,502 1,980,122 1,992,143

UNITED STATES

495,674 492,550 489,430 487,535 488,874

Television service customers

1,034,991 1,044,611 1,057,859 1,066,952 1,079,285

CANADA

807,831 815,852 827,649 834,771 845,344

Penetration as a percentage of homes passed 47.9% 48.5% 49.3% 49.9% 50.7%

UNITED STATES 227,160 228,759 230,210 232,181 233,941

Penetration as a percentage of homes passed 43.8% 44.2% 44.5% 44.9% 45.3%

High Speed Internet service customers

865,597 857,786 848,897 838,445 837,348

CANADA

676,802 672,981 668,257 661,337 661,178

Penetration as a percentage of homes passed

40.2% 40.0% 39.8% 39.5% 39.7%

UNITED STATES

188,795 184,805 180,640 177,108 176,170

Penetration as a percentage of homes passed

36.4% 35.7% 34.9% 34.3% 34.1%

Telephony service customers

551,530 552,230 558,176 562,260 564,384

CANADA 471,811 473,244 479,596 484,014 485,621

Penetration as a percentage of homes passed

28.0% 28.1% 28.6% 28.9% 29.1%

UNITED STATES

79,719 78,986 78,580 78,246 78,763

Penetration as a percentage of homes passed

15.4% 15.3% 15.2% 15.1% 15.2%

(1) Represents the sum of Television, High Speed Internet (“HSI”) and Telephony service customer.

Back to press release

Press release details

COGECO reports strong results for the third quarter of fiscal 2014

SUSTAINABILITY

Cogeco Fund

Contact us