COGECO’S FOURTH QUARTER AND FISCAL YEAR 2007 BENEFIT FROM THE CABLE SECTOR’S PERFORMANCE.

Press release

For immediate release

COGECO’S FOURTH QUARTER AND FISCAL YEAR 2007 BENEFIT FROM THE CABLE

SECTOR’S PERFORMANCE

Montréal, October 29, 2007 – Today, COGECO Inc. (TSX: CGO) announced its financial results

for the fourth quarter and fiscal year 2007 ended August 31, 2007.

During the fourth quarter and fiscal 2007:

• Consolidated revenue grew by 35.1% to $269.3 million and by 43.4% to

$1,071.1 million respectively;

• Consolidated operating income before amortization rose by 43% to $98.2 million

and by 44.5% reaching $365.7 million (above July 2007 guidelines);

• Consolidated net income rose by $20.1 million reaching $30.4 million and free

cash flow grew by $7.8 million to $4.2 million. For fiscal 2007, consolidated net

income grew by more than three times reaching $74.7 million and free cash flow

stood at $19.4 million (above July 2007 guidelines).

Cable sector

• Strong subscriber growth continued with 49,576 net additions of revenue-

generating units (RGUs), for a total of 300,688 in fiscal 2007 (above July 2007

guidelines);

• The second public offering in fiscal 2007 of 3,000,000 subordinate voting shares

resulted in a gross proceed of $153,450,000;

• A new Canadian operational structure was put in place to foster increased synergy

throughout Canada.

Media sector

Radio

• 93

radio station in Québec City announced the arrival of new hosts, Gilles Parent

and Martin Pouliot;

• The RYTHME FM network continues to lead in the Montreal market, with a strong fall

programming line-up;

• COGECO and Corus Entertainment Inc. joined forces to create a new company,

called Groupe Force Radio that will combine the two media companies' national radio

sales teams. This new company will represent a total of 30 radio stations in Québec.

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Television

• On September 20, 2007, the Société Radio-Canada (SRC), the Canadian

Broadcasting Corporation (CBC) public French broadcaster, notified TQS that the

SRC affiliation in effect for three TQS “twinstick” local stations in Saguenay,

Sherbrooke and Trois-Rivières will end on March 31, 2009.

• Cogeco Radio-Television Inc. (CRTI) and CTV Television Inc. (CTV) the two indirect

shareholders of TQS, have retained CIBC World Markets to assist in assessing the

strategic options available to them in connection with TQS.

“COGECO’s fourth quarter is very positive. In the cable sector, we are well positioned to continue

to address the needs of our various customer segments. During the year, the financial markets

have recognized the relevance of our acquisition strategy outside Canada and our stock price has

grown from $23 to $38 between August 2006 and 2007. The new structure we implemented in

Canada will enable our Canadian operations to develop increased synergy and will impact

favorably the way in which we deliver our services. We are looking forward to achieving a strong

fiscal 2008 in this sector. In the media sector, we will strive to attract more audience for our radio

stations and assess promptly the strategic options available for our television stations,” said Louis

Audet, President and CEO of COGECO.

FINANCIAL HIGHLIGHTS

Quarters ended August 31,

Years ended August 31,

($000s, except percentages and per share data)

(unaudited)

(audited)

2007 2006

Change

2007 2006

Change

Revenue $

269,326

199,351 35.1 $

1,071,102 $ 746,906 43.4

Operating income before amortization

98,180

68,645 43.0 365,711 253,114

44.5

Net Income 30,384

10,300 -

74,740

23,101 -

Cash flow from operations

(1)

75,035

51,729 45.1 276,618 192,308 43.8

Less:

Capital expenditures and increase in deferred

charges

70,793

55,309 28.0 257,171 168,131 53.0

Free cash flow

(1)

4,242

(3,580)

- 19,447 24,177

Per share data

Basic net income $

1.82

0.62 - $

4.50 $ 1.40 -

(1)

Cash flow from operations and free cash flow do not have standard definitions prescribed by Canadian generally accepted accounting

principles (GAAP) and should be treated accordingly. For more details, please consult the “non-GAAP financial measures” section.

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FORWARD-LOOKING STATEMENT

Certain statements in this press release may constitute forward-looking information within the meaning of

securities laws. Forward-looking information may relate to our future outlook and anticipated events, our

business, our operations, our financial performance, our financial condition or our 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 our future

operating results and economic performance and our 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 we believe are

reasonable as of the current date. While we consider these assumptions to be reasonable based on

information currently available to us, they may prove to be incorrect. Forward-looking information is also

subject to certain factors, including risks and uncertainties (described in the section “Uncertainties and main

risk factors” of the Company’s 2006 annual Management’s Discussion and Analysis (MD&A) that could

cause actual results to differ materially from what we currently expect. These factors include technological

changes, changes in market and competition, governmental or regulatory developments, general economic

conditions, the development of new products and services, the enhancement of existing products and

services, and the introduction of competing products having technological or other advantages, many of

which are beyond our control. Therefore, future events and results may vary significantly from what we

currently foresee. You should not place undue importance on forward-looking information and should not rely

upon this information as of any other date. While we may elect to, we are under no obligation (and expressly

disclaim any such obligation) and do not undertake to update or alter this information before next quarter.

This analysis should be read in conjunction with the Company’s financial statements, and the notes thereto,

prepared in accordance with Canadian GAAP and the MD&A included in the Company’s 2006 Annual

Report. Throughout this discussio n, all amounts are in Canadian dollars unless otherwise indi cated.

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)

CORPORATE STRATEGIES AND OBJECTIVES

COGECO’s objectives are to maximize shareholder value by increasing profitability and by

ensuring continued growth. The strategies for reaching those objectives are, for the cable sector,

sustained corporate growth through the diversification and improvement of products and services

as well as clientele and territories, effective management of capital and tight cost control. The

media sector focusses on continuous improvement of its programming to increase its market

share, and therefore, its profitability. The Company measures its performance with regard to these

objectives with growth of operating income before amortization, free cash flow

and RGU

growth

for the cable sector. Below are the recent achievements of the cable and media sectors in

furtherance of COGECO’s objectives.

Tight control over costs and business processes

• During the fourth quarter and fiscal 2007, the Company’s operating costs increased by

30.9% and 42.9%, respectively, over the same periods last year, essentially in line with

revenue growth;

• The design of internal controls over financial reporting as per National Instrument 52-109 is

well underway. As discussed in the 2006 annual MD&A, the Company had identified

certain material weaknesses in the design of internal controls over financial reporting and

there have been improvements in the design of internal controls on some significant

processes during the year. The documentation and remediation of internal controls

weaknesses are progressing normally.

See the “non-GAAP financial measures” section for explanations.

See the “Customer statistics” section of the cable sector section for detailed explanations.

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Cable sector

Continuous improvement of the service offering and expansion of the customer base

Canadian operations

• Digital Television services:

o On June 5, addition of six high definition (HD) channels in its HD line-up in Québec;

o On July 17, addition of WGN HD to its HD line-up in Ontario;

o On September 4, addition of Setanta International Sports Pak to its digital line-up in

Ontario;

o On September 25, addition of MTV to its digital line-up in Québec;

o On October 3, addition of RDS HD to its HD line-up in Québec;

o On October 11, addition of Leafs TV HD to its HD line-up in Ontario.

• Telephony service:

o New International calling service with Gold Line as supplier of choice.

Portuguese operations

• Cabovisão - Televisão por Cabo, S.A. (Cabovisão) launched its Digital Television service in

July 2007;

• Growth of Basic Cable service by 4,756 customers.

Continuous improvement of networks and equipment

• During fiscal 2007, Cogeco Cable has invested approximately $102 million in its

infrastructure including head-ends and upgrade/rebuild.

Effective management of capital

• On August 9, Cogeco Cable announced the completion of a 3,000,000 subordinate voting

shares issue. The net proceed of $146.9 million was used to reduce long-term

indebtedness.

Media sector

• During the fourth quarter, TQS has continued its programming investment in order to

recapture market share. The financial situation of TQS remains however difficult and CRTI

and CTV, the two indirect shareholders of TQS, have retained the services of CIBC World

Markets to assist them in assessing the strategic options available to them in connection

with TQS.

• With the announcement of the last BBM survey, RYTHME FM was confirmed in top

position in the Montreal and Trois-Rivières markets and is gaining market share in its

Québec and Sherbrooke stations. The 93

continues to gain new listeners in a particularly

competitive market.

RGU growth

During fiscal 2007, the consolidated number of RGUs, in the cable sector, increased by 13.8% to

reach almost 2.5 million units. In the third quarter of fiscal 2007, Cogeco Cable revised its

guidelines and anticipated RGU growth of 13% to 14% for all of fiscal 2007. With better-than-

anticipated High Speed Internet (HSI), Basic Cable and Telephony customer growth, Cogeco

Cable reached the upper end of its most recent 2007 guidelines.

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Revenue and operating income before amortization growth

During the fourth quarter and fiscal 2007, consolidated revenue increased respectively by 35.1% to

reach $269.3 million, and by 43.4% to reach $1,071.1 million. For the same periods, operating

income before amortization grew by $29.5 million, or 43%, to reach $98.2 million and by

$112.6 million, or 44.5%, to reach $365.7 million. These increases are mainly due to stronger RGU

growth and the consolidation of the financial results of Cabovisão acquired on August 1, 2006 in

the cable sector.

Free cash flow

In the fourth quarter of fiscal 2007, COGECO generated free cash flow of $4.2 million, compared

to a negative cash flow of $3.6 million for the same period last year, as a result of the increase in

operating income before amortization in the cable sector. For fiscal 2007, the Company generated

a free cash flow of $19.4 million compared to $24.2 million for the same period the year before,

mainly due to higher capital expenditures in order to sustain RGU growth in the cable sector.

Capital expenditures and deferred charges amounted to $70.8 million and $257.2 million for the

fourth quarter and fiscal 2007.

OPERATING RESULTS – CONSOLIDATED OVERVIEW

Quarters ended August 31,

(unaudited)

Years ended August 31,

(audited)

(

$000s, except percentages)

2007

2006

Change

2007 2006

Change

Revenue $ 269,326 $

199,351 35.1 $

1,071,102 $ 746,906 43.4

Operating costs 171,146 130,706 30.9 705,391 493,792 42.9

Operating income before amortization

98,180 68,645 43.0 365,711 253,114 44.5

Operating margin 36.5 %

34.4 %

34.1 % 33.9 %

Revenue

For the fourth quarter 2007, revenue rose by $70 million, or 35.1%, to reach $269.3 million and, for

fiscal 2007, by $324.2 million, or 43.4%, to reach $1,071.1 million. Cable revenue, driven by a

strong RGU growth, together with rate increases and the consolidation of the financial results of

Cabovisão, went up by $69.4 million, or 39.7%, and $318.9 million, or 51.4%, respectively, in the

fourth quarter and fiscal 2007. Media revenue increased by $0.5 million, or 2.2%, in the fourth

quarter and by $5.3 million, or 4.2% in fiscal 2007, essentially due to higher radio advertising

revenue.

Operating income before amortization

Operating income before amortization grew by $29.5 million, or 43%, to reach $98.2 million in the

fourth quarter of fiscal 2007 and by $112.6 million, or 44.5%, to reach $365.7 million in fiscal 2007

compared to the corresponding periods of last year. The cable sector contributed to the growth by

$29.6 million and $117.8 million during the fourth quarter and fiscal 2007 respectively, and the

media sector contributed $1.2 million in the fourth quarter and $0.9 million for fiscal 2007. The

increase in operating income before amortization for the fourth quarter and fiscal 2007 were partly

offset by head office costs related to the termination of the Performance Unit Plan.

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FIXED CHARGES

Quarters ended August 31,

(unaudited)

Years ended August 31,

(audited)

($000s, except percentages)

2007

2006

Change

2007 2006

Change

Amortization $ 56,018 $ 36,446 53.7 $ 195,804 $ 127,204 53.9

Financial expense

19,190

16,864 13.8

86,981

59,176 47.0

For the fourth quarter and fiscal 2007, amortization amounted to $56 million and $195.8 million

compared to $36.4 million and $127.2 million for the same periods the year before. In the cable

sector, the rise in amortization expense is due to several factors: the consolidation of the financial

results of the Portuguese operations in fiscal 2007 while it was only applicable for one month in

2006, the amortization resulting from the completion of the purchase price allocation of the

Cabovisão acquisition including the valuation of tangible assets and intangible assets, as well as

the increased capital expenditures arising from the required customer premise equipment to

sustain RGU growth, scalable infrastructure, upgrade/rebuild, support capital and deferred charges

for the Canadian operations.

During the fourth quarter and fiscal 2007, financial expense increased by $2.3 million and

$27.8 million, respectively, compared to the same periods in fiscal 2006. This is due to the higher

level of Indebtedness (defined as bank indebtedness and long-term debt) required to finance the

acquisition of the Portuguese subsidiary, Cabovisão.

INCOME TAXES

For the fourth quarter of fiscal 2007, income tax recoveries amounted to $0.4 million compared to

a recovery of $14 million in fiscal 2006. The recovery was lower mainly as a result of non-cash net

adjustments of $7.3 million in fiscal 2007 compared to a non-cash adjustment of $19.8 million in

fiscal 2006. The 2007 fourth quarter net adjustments amounting to $7.3 million resulted from an

adjustment of $14.3 million in the cable sector, partly offset by an adjustment of $7 million in the

media sector. Excluding income tax adjustments, income taxes would have increased from $5.9

million to $6.9 million due to higher operating income before amortization outpacing the increase of

fixed charges.

For fiscal 2007, income tax amounted to $18.4 million compared to $6.8 million last year. This

increase was mainly due to the operating income before amortization growing faster than the rise

in fixed charges for the Canadian operations in the cable sector, and, in the media sector, by the

increase of $9.2 million in the valuation allowance with respect to future income tax assets since

management considers that the conditions to recognize these future income tax assets are no

longer met. The increase in income taxes for fiscal 2007 was partly offset by the elimination of

Canadian federal capital tax on January 1, 2006 and by non-cash adjustments of $15.7 million

related to the recognition of benefits from prior years’ income tax losses and minimum income tax

paid and a reduction of Canadian federal enacted income tax rate effective in January 2011. For

fiscal 2006, a non-cash adjustment of $19.8 million was also recorded to reduce future income

taxes due to the announcement, by the Canadian federal government, to reduce the corporate

income tax rate progressively from 21% to 19% effective in January 2010 and to eliminate the

corporate surtax of 1.12% on January 1, 2008. Excluding these adjustments, income taxes would

have amounted to $24.9 million, for fiscal 2007 compared to $26.6 million for the same period in

fiscal 2006.

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NON-CONTROLLING INTEREST

The non-controlling interest represents an interest of approximately 67.5% in Cogeco Cable’s

results and a 40% interest in TQS Inc. During the fourth quarter and fiscal 2007, the non-

controlling interest amounted to $19.8 million and $47.6 million, respectively, mainly due to the

cable sector results. The non-controlling interest for the comparable periods of last year amounted

to $19 million and $36.6 million, respectively.

GAIN ON DILUTION RESULTING FROM SHARES ISSUED BY A SUBSIDIARY

During fiscal 2007, the Company’s cable subsidiary, Cogeco Cable, completed two public offerings

totalling 8,000,000 subordinate voting shares for gross proceeds of $346 million. The offerings

resulted in net proceeds to Cogeco Cable of approximately $331.1 million, which were used to

reduce long-term indebtedness and working capital deficiency. Cogeco Cable also issued 7,344

subordinate voting shares pursuant to its Employee Stock Purchase Plan and 348,131 subordinate

voting shares pursuant to its Employee Stock Option Plan for cash consideration of $198,000 and

$6,816,000, respectively. As a result, COGECO’s interest in Cogeco Cable decrease from 39.2%

to 32.5% and gains on dilution of $27 million and $57.9 million were recorded respectively in the

fourth quarter and fiscal 2007

NET INCOME

Net income for the fourth quarter amounted to $30.4 million, or $1.82 per share, compared to

$10.3 million, or $0.62 per share, for the same period last year. For fiscal 2007, net income

amounted to $74.7 million, or $4.50 per share compared to $23.1 million or $1.40 per share for the

same period in fiscal 2006. For the fourth quarter 2007, net income excluding the gain on dilution

and income tax adjustments, net of non-controlling interest, would have amounted to $3.1 million,

or $0.18 per share, compared to $2.4 million, or $0.15 per share for the fourth quarter 2006. For

fiscal 2007, net income excluding the gain on dilution and income tax adjustments, net of non-

controlling interest, would have stood at $17.3 million, or $1.04 per share, compared to a net

income of $15.2 million, or $0.92 per share for fiscal 2006. Net income increases in the fourth

quarter and fiscal 2007, excluding the gain on dilution and income tax adjustments described

above, were mainly attributable to the growth in operating income before amortization outpacing

the fixed charge increases. See “non-GAAP financial measures” section for further details.

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CASH FLOW AND LIQUIDITY

Quarters ended August 31,

(unaudited)

Years ended August 31,

(audited)

($000s)

2007

2006

2007 2006

Operating Activities

Cash flow from operations $

75,035

51,729

276,618

192,308

Changes in non-cash operating items

39,705

57,288

(66,525) 3,645

114,740

109,017

210,093

195,953

Investing Activities

(1)

(70,700)

(632,547)

(251,830)

(742,594)

Financing Activities

(1)

(910)

595,759

34,542

618,870

Net change in cash and cash equivalents $

43,130

72,229

(7,195) $ 72,229

Effect of exchange rate changes on cash and cash

equivalents denominated in foreign currencies

(243)

(713)

1,243

(713)

Cash and cash equivalents at beginning

22,677

71,516

Cash and cash equivalents at end $

65,564

71,516

65,564

71,516

(1) Excludes assets acquired under capital leases.

During the fourth quarter of 2007, cash flow from operations reached $75 million, 45.1% higher

than for the comparable period last year, primarily due to the increase in operating income before

amortization, partly offset by an increase in financial expense in the cable sector and by an

increase in the operating income before amortization in the media sector. Changes in non-cash

operating items generated lower cash inflows than for the same period last year, mainly as a result

of a decrease in accounts payable and accrued liabilities from non-recurring payments made by

the cable Portuguese subsidiary in accordance with the terms of the acquisition.

During fiscal 2007, cash flow from operations reached $276.6 million, an increase of 43.8%

compared to the same period the year before, mostly due to the increase in operating income

before amortization, partly offset by an increase in financial expense in the cable sector. Changes

in non-cash operating items generated $66.5 million of cash outflows compared to cash inflows of

$3.6 million for the same period last year, mainly as a result of a decrease in accounts payable

and accrued liabilities from non recurring payments made by the Portuguese cable subsidiary in

accordance with the terms of the acquisition and by increases in accounts receivable.

Acquisition of Cabovisão – Televisão por Cabo, S.A.

On June 2, 2006, the Company’s subsidiary, Cogeco Cable, entered into an agreement with Cable

Satisfaction International Inc. (“CSII”), Catalyst Fund Limited Partnership I and Cabovisão, to

purchase, for a total consideration of €461.8 million ($667.5 million), all the shares of the second

largest cable telecommunications company in Portugal, an indirect wholly-owned subsidiary of

CSII. The price included the purchase of senior debt and reimbursement of certain other

Cabovisão liabilities. The acquisition was completed on August 1, 2006. The final purchase price

was determined following completion of a post-closing working capital adjustment that occurred on

March 9, 2007. According to the agreement, the final purchase price was reduced by an amount of

€2.2 million ($3.4 million). The acquisition was accounted for using the purchase method. The

results of Cabovisão were consolidated as of the acquisition date.

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Management has completed its valuation of tangible and intangible assets acquired and liabilities

assumed and the final allocation is as follows:

(amounts are in thousands of dollars)

Consideration paid

Purchase of shares $ 304,188

Working capital adjustment

(3,371)

Secured lenders debt and certain specified Cabovisão liabilities 274,761

Acquisition costs 6,299

$ 581,877

Net assets acquired

Cash and cash equivalents $ 5,711

Restricted cash 489

Accounts receivable 16,570

Prepaid expenses 1,324

Fixed assets 323,796

Customer relationships 71,684

Goodwill 344,004

Accounts payable and accrued liabilities assumed

(60,433)

Other specified Cabovisão liabilities assumed

(91,914)

Future income tax liabilities

(29,354)

581,877

The final allocation resulted in an increase in fixed assets of $36,144,000, an increase in customer

relationships of $71,684,000 and an increase in future income tax liabilities of $29,354,000, as well

as a decrease in accounts payable and accrued liabilities assumed of $4,849,000. The net impact

of these adjustments, combined with the reduction of the purchase price, reduced goodwill by

$87,020,000.

Also, in accordance with the Portuguese Companies Income Tax Code (CIRC), accumulated tax

losses cannot be deducted if the ownership of at least 50% of the social capital changes from the

moment when the tax losses were generated, unless an authorization is requested before such

change in the ownership takes place. To this effect, a request for preservation of tax losses was

filed by Cabovisão on July 28, 2006 and Cabovisão has not yet received a reply. Consequently,

the tax benefits of these losses have not been included in the purchase price allocation, but will be

recorded as a reduction of goodwill upon realisation.

In the fourth quarter of fiscal 2007, investing activities stood at $70.7 million mainly due to capital

expenditures of $57.9 million and an increase in deferred charges of $10.8 million in the cable

sector. During fiscal 2007, investing activities stood at $251.8 million due to capital expenditures of

$224.0 million and an increase in deferred charges of $30 million.

During the fourth quarter and fiscal 2007, the increases related to capital expenditures compared

to the same periods last year are mainly due to the following factors in the cable sector:

¾ The Portuguese operations capital expenditures amounted to $12.6 million and

$41.6 million, respectively, for the fourth quarter and fiscal 2007, essentially to support

RGU growth and the early stage of deployment of the Digital Television service.

¾ In Canada, the customer premise equipment expenditures increased as a result of a

greater demand for HSI and Telephony services, from a rise in the number of HD terminals

and from a greater ratio of digital terminals per digital home.

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¾ The growth in capital expenditures for scalable infrastructure was mainly attributable to the

support of the Telephony service rollout for the Canadian operations.

¾ The increase in capital expenditures associated with the network upgrade and rebuild

program for the Canadian operations was due to the acceleration of the program to expand

the bandwidth to 750 MHz and 550 MHz for the Ontario and Québec networks,

respectively, and to improve network reliability. An increase in the number of households

with access to two-way service was also a factor and the percentage of customers with

access to two-way service rose from 93% as at August 31, 2006 to 94% as at August 31,

2007.

In the fourth quarter and fiscal 2007, increases in deferred charges are explained by higher

reconnect costs attributable to the significant level of RGU growth.

In the fourth quarter of fiscal 2007, the Company generated free cash flow of $4.2 million

compared to a negative cash flow of $3.6 million the preceding year. For fiscal 2007, the Company

generated free cash flow of $19.4 million compared to $24.2 million for the same period the year

before. The fourth quarter free cash flow increase over the same period last year is attributable to

the cable sector and mainly due to growth in operating income before amortization, partly offset by

higher level of capital expenditures and deferred charges to serve RGU growth and to support

Telephony service rollout and by the increase in financial expense. The fiscal 2007 free cash flow

decrease compared to the same period in 2006 is attributable to the cable sector and mainly due

to a higher level of capital expenditures and deferred charges to serve RGU growth and to support

the Telephony service rollout and the increase in financial expense. These factors were partly

offset by the growth in operating income before amortization.

On August 9, 2007, the Company’s cable subsidiary, Cogeco Cable, announced the completion of

a public offering of 3,000,000 subordinate voting shares for a gross proceed of $153.5 million. The

offering resulted in a net proceed to Cogeco Cable of approximately $146.9 million, which was

used to reduce long-term indebtedness.

During the fourth quarter of fiscal 2007, the level of Indebtedness decreased by $145.8 million.

The decrease in the level of Indebtedness is essentially due to the repayment of the Term Facility

in the cable sector using the public offering net proceed of $146.9 million. For the same period last

year, Indebtedness increased by $607.7 million due to the Cabovisão acquisition, the increase in

cash and cash equivalents of $71.5 million and the fees related to the new Term Facility of

$900million in the cable sector, partly offset by an increase in non-cash operating items of $57.3

million. In addition, a dividend of $0.07 per share for subordinate and multiple voting shares,

totalling $1.2 million, was paid during the fourth quarter of fiscal 2007 compared to a dividend of

$0.0625 per share or $1 million for the fourth quarter of fiscal 2006.

During fiscal 2007, the level of Indebtedness decreased by $293.3 million. The decrease in the

level of Indebtedness is due to the completion of two public offerings in the cable sector, totalling

8,000,000 subordinate voting shares for combined net proceeds of approximately $331.1 million

that were used to reimburse the Second Secured Debentures Series A and a portion of the Term

Facility, the generated free cash flow of $19.4 million and a reduction of $7.2 million in cash and

cash equivalents, partly offset by a decline of $66.5 million in non-cash operating items. For the

same period last year, Indebtedness grew by $635.4 million due to the acquisition of Cabovisão

completed in the fourth quarter, the increase in cash and cash equivalents of $71.5 million and the

fees related to the new Term Facility of $900 million, partly offset by generated free cash flow of

$24.2 million. In addition, dividends totalling $4.5 million were paid during fiscal 2007 compared to

$4.1 million for the same period the year before.

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As at August 31, 2007, the working capital deficiency was reduced by an amount of $188.5 million

compared to August 31, 2006, mainly as a result of the net proceeds of the share issuances being

used to reimburse the Second Secured Debentures Series A and to the repayment of certain

suppliers subsequent to the Cabovisão acquisition in the cable sector. COGECO maintains a

working capital deficiency due to a low level of accounts receivable since the majority of the cable

subsidiary’s customers pay before their services are rendered, contrary to accounts payable and

accrued liabilities, which are paid after products or services are rendered. In addition, the cable

subsidiary generally uses cash and cash equivalents to reduce Indebtedness.

As at August 31, 2007, the cable subsidiary had used $458.5 million of its $900 million Term

Facility and the Company had drawn $25.5 million of its Term Facility.

Transfers of funds from non-wholly owned subsidiaries to COGECO are subject to approval by the

subsidiaries’ Board of Directors and may also be restricted under the terms and conditions of

certain debt instruments. In accordance with applicable corporate and securities laws, significant

transfers of funds from COGECO may be subject to approval by minority shareholders.

FINANCIAL POSITION

Since August 31, 2006, there have been major changes to the following balance sheet items:

‘’Fixed assets’’, ‘’Goodwill’’, Intangible assets’’, “Accounts receivable”, ‘’Accounts payable and

accrued liabilities’’, ‘’Cash and cash equivalents’’, ‘’Foreign currency translation adjustment’’,

‘’Future income tax liabilities’’, ‘’Future income tax assets’’, “Non-controlling interest” and

“Indebtedness”.

The $95.9 million rise in fixed assets is mainly related to increased capital expenditures to sustain

RGU growth and by the appreciation of the euro currency over the Canadian dollar in the cable

sector. The decrease of $79.5 million in goodwill stems from the finalization of the purchase price

allocation of the acquisition of Cabovisão, in the cable sector, which gave rise to the valuation at

an amount of $71.7 million of intangible assets, partly offset by the appreciation of the euro

currency over the Canadian dollar. The $4.4 million increase in accounts receivable is essentially

due to an increase in the general level of receivables related to the revenue growth and to the

appreciation of the euro currency over the Canadian dollar. The $63.5 million and $6 million

reductions in accounts payable and accrued liabilities and cash and cash equivalents respectively,

are related to payments made with regards to the acquisition of Cabovisão. The $1.3 million

increase in foreign currency translation adjustment is the result of the appreciation of the euro

currency over the Canadian dollar. The $55.8 million increase in future income tax liabilities is

partly due to the recognition of future income taxes of $29.4 million related to intangible assets and

to the difference between fair market value and net book value of tangible assets acquired in

Portugal and by the growth in operating income before amortization for the Canadian operations in

the cable sector, and, in the media sector, by the increase of $9.2 million in the valuation

allowance with respect to future income tax assets. The $18 million in future income tax assets is

related to non-capital loss carryforwards for the Canadian operations, in the cable sector, that will

benefit Cogeco Cable in the coming year. The non-controlling interest rise of $327.2 million is

mainly due to the impact of the public equity share issuances and the results of Cogeco Cable.

Finally, Indebtedness decreased by $282.8 million as a result of the factors previously discussed in

the “Cash Flow and Liquidity” section.

- 12 -

A description of COGECO’s share data as at September 30, 2007 is presented in the table below:

Number of shares/

options

Amount

($000s)

Common Shares

Multiple voting shares

Subordinate voting shares

1,842,860

14,829,792

119,066

Options to Purchase Subordinate Voting Shares

Outstanding options

Exercisable options

195,418

In the normal course of business, COGECO incurred financial obligations, primarily in the form of

long-term debt, operating and capital leases and guarantees. COGECO’s obligations, described in

the MD&A of the 2006 annual report, have not materially changed since August 31, 2006, except

for the repayment of the $125 million Second Secured Debentures Series A and the partial

repayment of approximately $175 million of the $900 million Term Facility in the cable sector

discussed in the “Cash Flow and Liquidity” section. Furthermore, during the second quarter,

Cogeco Cable has guaranteed the payment by Cabovisão of certain taxes for municipal rights of

way assessed by the Municipality of Seixal in Portugal for the years 2004 and 2005 totalling

€5.7 million (the «Tax Amounts»), which are currently being challenged by Cabovisão. Trustworthy

financial guarantees were required under applicable Portuguese law in order for Cabovisão to

challenge the Tax Amounts and withhold payment thereof until a final judgment, no longer subject

to appeal, is rendered by the Portuguese courts having jurisdiction in this matter. As a result,

Cogeco Cable may be required to pay, upon written demand by the Municipality of Seixal, the

required amounts following final judgment up to a maximum aggregate amount of €5.7 million,

should Cabovisão fail to pay such required amounts.

The Company and its subsidiary, Cogeco Cable Inc., have also adopted Performan ce Units Plans

for key employees, which are described in the Company’s annual consolidated financial

statements and which have been terminated. The Company has created a new senior executive

designated employee incentive unit plan. According to the new plan, senior executives and other

key employees periodically receive a given number of units which entitled the participant to receive

subordinate voting shares of the Company after three years less one day from the date of grant.

During fiscal 2007, the Company granted 25,895 units. The Company establishes the value of the

compensation related to the units granted based on the market value of the Company’s

subordinate voting shares at the date of grant and a compensation expense is recognized over the

vesting period, which is three years. A trust was created for the purpose of purchasing these

shares on the stock exchange in order to guard against stock price fluctuation. The Company

instructed the trustee to purchase 25,895 subordinate voting shares of the Company on the stock

market. These shares were purchased for a cash consideration of $1,054,000 and are held in trust

for participants until they are completely vested. The trust, considered as a variable interest entity,

is consolidated in the Company’s financial statement with the value of the acquired shares

presented as treasury shares in reduction of capital stock. The termination of the old plans had a

non recurring negative impact of approximately $0.1 million and $4.7 million during the fourth

quarter and fiscal 2007, respectively.

DIVIDEND DECLARATION

At its October 26, 2007 meeting, the Board of Directors of COGECO declared a quarterly eligible

dividend of $0.07 per share for subordinate and multiple voting shares, payable on November 23

2007, to shareholders of record on November 9, 2007.

- 13 -

FOREIGN EXCHANGE MANAGEMENT

Cogeco Cable has entered into cross-currency swap agreements to set the liability for interest and

principal payments on its US$150 million Senior Secured Notes. These agreements have the

effect of converting the U.S. interest coupon rate of 6.83% per annum to an average Canadian

dollar ﬁxed interest rate of 7.254% per annum. The exchange rate applicable to the principal

portion of the debt has been ﬁxed at CAN$1.5910. Amounts due under the US$150 million Senior

Secured Notes Series A decreased by CAN$7.4 million at the end of the fourth quarter compared

to August 31, 2006 due to the Canadian dollar’s appreciation. Since the Senior Secured Notes

Series A are fully hedged, the fluctuation is offset by a variation in deferred credit as described in

Note 9 of the fourth quarter 2007 interim financial statements. The CAN$80.2 million deferred

credit represents the difference between the quarter-end exchange rate and the exchange rate on

the cross-currency swap agreements, which determine the liability for interest and principal

payments on the Senior Secured Notes Series A.

As noted in the MD&A of the 2006 annual report, Cogeco Cable’s net investments in self-

sustaining foreign subsidiaries are exposed to market risk attributable to fluctuations in foreign

currency exchange rate, primarily changes in the values of the Canadian dollar versus the euro.

This risk is mitigated since the major part of the purchase price for Cabovisão was borrowed

directly in euros. This debt is designated as a hedge of net investments in self-sustaining foreign

subsidiaries and, accordingly, Cogeco Cable realized a foreign exchange gain of CAN$1.3 million

in fiscal 2007, which is deferred and recorded in the foreign currency translation adjustment. The

exchange rate used to convert the euro currency into Canadian dollars for the balance sheet

accounts as at August 31, 2007 was $1.4390 per euro compared to $1.4156 per euro as at August

31, 2006. The average exchange rate prevailing during the fourth quarter and fiscal 2007 used to

convert the operating results of the Portuguese operations were $1.4374 per euro and $1.4803 per

euro, respectively.

CABLE SECTOR

CUSTOMER STATISTICS

Canadian operations

Net additions (losses) % of Penetration

(1)(4)

Quarters ended

August 31,

Years ended

August 31,

2007 2007 2006 2007 2006 2007 2006

RGUs

(2)

1,788,508 39,656 44,243 232,572 208,203 - -

Basic Cable service customers

849,157 (2,627)

685 15,980 11,744 - -

HSI service customers

(3)

415,836 12,363 12,601 72,756 65,432 52.2 44.3

Digital Television service customers

379,879 8,747 10,563 52,515 80,160 45.8 40.0

Telephony service customers 143,636 21,173 20,394 91,321 50,867 21.7 10.4

(1)

As a percentage of Basic Cable service customers in areas served.

(2)

Represent the sum of Basic Cable, HSI, Digital Television and Telephony service customers.

(3)

Customers subscribing only to HSI or Telephony servic es totalled 68,367 as at August 31, 2007 compared to 61,208 as at August 31, 2006.

(4)

An audit of homes passed in Ontario was completed during the first quarter of fiscal 2007 and, as a result , the number of homes passed was reduced by 42,386.

In the fourth quarter of 2007, net additions were lower than for the same period last year mainly

due to a reduction in Basic Cable service customers and to a slower growth of Digital Television

service customers. During the fourth quarter, Telephony customers grew by 21,173 to reach

143,636 compared to a growth of 20,394 for the same period last year. This growth is mostly

attributable to the launch of the service in new markets and increased penetration in areas where

the service is already offered. Coverage of homes passed has now reached 78% compared to

- 14 -

66% last year. The net losses of Basic Cable service in the fourth quarter reached 2,627

customers, compared to a gain of 685 customers for the same period last year, mainly due to less

generous promotional offers to Basic Cable customers in the fourth quarter 2007 compared to the

same period the year before.

The number of net additions to HSI service stood at 12,363 customers compared to 12,601

customers for the same period last year. During the fourth quarter 2007, the HSI customer net

additions is mostly due to the enhancement of the product offering, the impact of the bundled offer

of Television, HSI and Telephony services (Cogeco Complete Connection), and promotional

activities.

The net additions of Digital Television service customers stood at 8,747 customers compared to

10,563 customers for the same period last year. The decrease in net additions this quarter

compared to the same quarter last year reflects a maturation of the digital TV segment following a

period of robust growth, especially in the second half of fiscal 2006. Nevertheless, customers

continue to demonstrate strong interest in HD technology. Furthermore, Cogeco Cable adjusted

the service offering and price gap differential between Analogue Television services and Digital

Television services in the second half of fiscal 2006, which has also contributed to a moderation of

the strong growth experienced in fiscal 2006.

Portuguese operations

Net additions % of Penetration

(1)

Quarters ended

August 31,

Years ended

August 31,

2007 2007

2006

(3)

2007

2006

(3)

2007 2006

RGUs

(2)

697,157 9,920

3,141

68,116

3,141 -

Basic Cable service customers

294,003 4,756

1,117

24,309

1,117 -

HSI service customers

160,023 2,936

1,165

23,745

1,165 54.4

50.5

Telephony service customers

243,131 2,228

859

20,062

859 82.7

82.7

(1)

As a percentage of Basic Cable service customers in areas served.

(2) Represent the sum of Basic Cable, HSI and Telephony service customers.

(3) Customer additions are for the month of August 2006.

For the fourth quarter, all services generated customer growth as anticipated from Cogeco Cable’s

guidelines, except for the Telephony service net additions, which were lower than expected, but

the service penetration compared to Basic Cable customers remained the same. Basic Cable

service grew by 4,756 customers, HSI service by 2,936 customers and Telephony service by

2,228 customers.

- 15 -

OPERATING RESULTS

Quarters ended August 31,

(unaudited)

Years ended August 31,

(audited)

($000s, except percentages)

2007 2006

(1)

Change

2007 2006

(1)

Change

Revenue $ 244,314 $

174,875

39.7 $

938,880 $ 620,001

51.4

Operating costs 141,888 102,011

39.1 559,559 358,631

56.0

Management fees - COGECO Inc.

- - - 8,568 8,392 2.1

Operating income before

amortization

102,426 72,864 40.6 370,753 252,978 46.6

Operating margin 41.9 %

41.7

39.5 % 40.8

(1) Include operating results of Cabovisão since the date of acquisition of control on August 1, 2006.

Revenue

In the fourth quarter of fiscal 2007, consolidated revenue grew by $69.4 million, or 39.7%, to reach

$244.3 million and by $318.9 million, or 51.4%, to reach $938.9 million for fiscal 2007. For the

fourth quarter 2007, revenue increased at a lower pace than that of fiscal 2007 mainly due to the

consolidation of the three-month period of the Portuguese operations financial results compared to

a one-month period in 2006. Canadian operations revenue, driven by an increased number of

customers in Basic Cable, HSI, Telephony and Digital Television services as well as rate

increases, went up by $30.4 million, or 19.3%, in the fourth quarter and by $110.9 million, or

18.4%, for fiscal 2007. Portuguese operations revenue amounted to $55.9 million for the fourth

quarter of fiscal 2007 and to $224.8 million for fiscal 2007 compared to a one-month period in 2006

of $16.9 million.

Operating costs

For the fourth quarter and fiscal 2007, operating costs excluding management fees payable to

COGECO Inc., increased by $39.9 million, or 39.1%, and by $200.9 million, or 56%, to reach

$141.9 million and $559.6 million, respectively. For the fourth quarter 2007, operating costs

increased at a lower pace than that of fiscal 2007 mainly due to the consolidation of the 2007

three-month period of the Portuguese operations financial results compared to a one-month period

in 2006. For fiscal 2007, operating costs increase was mainly due to the inclusion of the operating

costs of Cabovisão and to the servicing of additional RGUs, including the increased penetration of

Telephony service in Canada.

Operating income before amortization

For the fourth quarter and fiscal 2007, operating income before amortization increased by

$29.6 million, or 40.6%, to reach $102.4 million and by $117.8 million, or 46.6% to reach

$370.8 million, respectively, as a result of RGU growth, the consolidation of the Portuguese

operations and various rate increases outpacing operating cost increases. Cogeco Cable’s fourth

quarter 2007 operating margin increased to 41.9% from 41.7% due to rate increases implemented

during the third quarter of fiscal 2007 and the improvement of the operating margin of the

Portuguese operations from 29.5% in 2006 to 37.3% in the fourth quarter of fiscal 2007. For fiscal

2007, the operating margin declined to 39.5% from 40.8% as a result of the Telephony deployment

in Canada and the consolidation of the twelve-month period of the Portuguese operations’ lower

operating margin. The operating margin for fiscal 2007 is slightly higher than management’s third

quarter revised guidelines.

- 16 -

MEDIA SECTOR

OPERATING RESULTS

Quarters ended August 31,

(unaudited)

Years ended August 31,

(audited)

($000s, except percentages)

2007

2006

Change

2007

2006

Change

Revenue $

25,063 $

24,527 2.2 $

132,426 $ 127,109 4.2

Operating costs

26,602 27,315 (2.6)

132,142 127,730 3.5

Operating income

before amortization

(1,539)

(2,788)

284 (621) -

Operating margin

(6.1)

(11.4)

0.2 % (0.5) %

Revenue

During the fourth quarter of fiscal 2007, revenue stood at $25.1 million, an increase of $0.5 million,

or 2.2%, compared to the same period last year. For fiscal 2007, revenue increased by

$5.3 million, or 4.2%, to reach $132.4 million. During these periods, radio revenue increased by

4.3% and 13.8% respectively, mainly due to improved audience ratings. Television revenue

increased by 1.4% in the fourth quarter and by 1.8% for fiscal 2007, compared to last year, even if

the market conditions are difficult for general interest television services.

Operating income before amortization

The operating loss before amortization was reduced by $1.2 million and by $0.9 million in the

fourth quarter and fiscal 2007, respectively, compared to last year. For the fourth quarter and fiscal

2007, TQS’s operating loss before amortization decreased as a result of higher revenue growth,

and an overall reduction of operating costs. Radio’s operating income before amortization

remained essentially the same in the fourth quarter and increased for fiscal 2007 due to revenue

growth.

FISCAL 2008 FINANCIAL GUIDELINES

The Company has revised its consolidated projections to take into consideration the issuance by

Cogeco Cable of 3,000,000 subordinate voting shares on August 9, 2007 for a gross proceed of

$153,450,000. The result of this share issuance should reduce financial expense from $80 million

to $72 million and increase free cash flow from $60 million to $65 million in the cable sector, and

increase the Company’s net income from $28 million to $30 million and free cash flow from

$60 million to $65 million.

- 17 -

The Company is maintaining all of its other guidelines in the cable and media sectors.

($ million, except customer data)

Projections

Fiscal 2008

Consolidated Financial Guideli nes

Revenue 1,190

Operating income before amortization

425

Net income

(1)

Free cash flow 65

(1)

Cable sector–

Financial Guidelines

Revenue 1,050

Operating income before amortization 425

Operating margin 40% to 41%

Financial expense 72

(1)

Amortization 215

Capital expenditures and deferred charges 260

Free cash flow 65

(1)

Customer Addition Guidelines

Basic Cable service 30,000

HSI services 75,000

Digital Television service 54,000

Telephony service 100,000

RGUs 259,000

Media sector–

Financial Guidelines

Revenue 140

Operating income before amortization 1 to 3

Amortization

Capital expenditures and deferred charges

(1) Revised projections ta king into account the issuance of 3,000,000 subordinate voti ng shares by Cogeco Cable on August 9, 2007 for a gross

proceed of $153,450,000.

UNCERTAINTIES AND MAIN RISK FACTORS

This section outlines general as well as more specific risks faced by COGECO and its subsidiaries

that could significantly affect the financial condition, operating results or business of the Company.

It does not purport to cover all contingencies, or to describe all possible factors that might have an

influence on the Company or its activities at any point in time. Furthermore, the risks and

uncertainties outlined in this section may or may not materialize in the end, may evolve differently

than expected, or may have different consequences than those that are being presently

anticipated.

COGECO applies an on-going risk management process that includes a quarterly assessment of

risks for the Company and its subsidiaries, under the oversight of the Audit Committee. As part of

this process, the Company endeavours to identify risks that are liable to have a major impact on

the Company’s financial situation, revenue or activities, and to mitigate such risks proactively as

may be reasonable and appropriate in the circumstances. This section reflects management’s

current views on uncertainties and main risk factors.

Risks pertaining to markets and competition

- 18 -

Cable sector

Electronic communications markets are evolving rapidly both in Canada and Portugal and are

increasingly competitive. Rivalry between terrestrial wireline and wireless, as well as satellite

service providers is unfolding over individual as well as bundles of services, including fixed and

mobile voice communications, Internet access, data, audio and video content delivery, electronic

programming guides and navigation tools, security and other related or incidental services. In this

converged environment, competitors strive to meet all the electronic communications needs of

residential and business customers and thus obtain maximum share of their overall electronic

communications budget. Rivalry extends over several elements, including the features of individual

services, the composition of service bundles, prices and perceived value, promotional or

introductory offers, duration of the commitment by the customer, terminal devices and customer

service.

Cable telecommunications providers have successfully entered into the residential voice

communications markets traditionally dominated by the incumbent telephone companies and they

continue to attract a growing base of residential telephone customers. The telephone companies

are increasingly involved in competitive audio and video content delivery, both on their fixed and

mobile networks, and they continue to dominate the provision of voice and data services to

business customers.

The substantial cost of broadband facilities and broadband customer acquisition, combined with

the growth of revenue generating units achieved by competitors generally, tend to make outright

price wars on individual services and service bundles less appealing as a competitive strategy.

However, as markets mature and penetration gains for high speed Internet access, digital video

and telephony services abate, retail pricing strategies are likely to become more aggressive, with

resulting downward pressure on operating margins both for individual services and service

bundles.

Cogeco Cable provides “double-play” and “triple-play” service bundles both in Canada and in

Portugal, with various combinations of Telephony, HSI and Television services being offered at

attractive bundle prices. “Quadruple-play” service bundles that include mobile communications are

becoming available, but so far they have had limited effect on relative market shares for double-

play or triple-play service bundles. Cogeco Cable continues to focus on its existing lines of service

with a view to capturing the remaining growth opportunities for HSI, Digital Television and

Telephony services in its footprint, making the most efficient use of its own hybrid fibre-coaxial

(HFC) plant. As markets evolve and mobility becomes a more cost-effective substitute to wireline

communications, Cogeco Cable may need to add mobility components to its service bundles,

through suitable mobile virtual network arrangements with existing or future mobile operators, or

otherwise through new wireless alternatives. The capital and operating expenditures eventually

required to offer quadruple-play service bundles may not be offset by the incremental revenue that

such new bundles would generate, thus resulting in downward pressure on operating margins.

In Canada, Cogeco Cable faces competition in its service areas mainly from a few large integrated

telecommunications service providers. The largest, BCE Inc., offers through its various

subsidiaries and income trusts a full range of competitive voice, data and video services to

residential, as well as business, customers in the Provinces of Ontario and Québec through a

combination of fixed wireline (Bell Canada, Télébec), mobile wireless (Bell Mobility) and satellite

(Bell ExpressVu) platforms. BCE Inc. was the subject of a takeover earlier this year by a group of

institutional investors led by the Ontario Teachers’ Pension Plan, with closing of the transaction

expected to take place in the earlier part of 2008. It is not known at this time to what extent the

changes in the ownership and management of this major competitor will affect market dynamics in

the two Provinces, notably with respect to the anticipated rollout of IPTV services over its fixed

wireline platform. Telus Communications Company competes with all of Cogeco Cable’s services

in the Lower St. Lawrence area of the Province of Québec through the use of its wireline network,

- 19 -

and throughout Cogeco Cable’s Canadian footprint through the use of its mobile

telecommunications network. However, Cogeco Cable’s Telephony service is provided with the

assistance of certain Telus carrier services through a multi-year contractual arrangement. Star

Choice Television Network Incorporated, an indirect subsidiary of Shaw Communications Inc.,

competes for video and audio distribution services throughout Cogeco Cable’s Canadian footprint.

Rogers Wireless Communications Inc., a subsidiary of Rogers Communications Inc., operates a

mobile telecommunications network in Ontario and Québec and is the owner of the Inukshuk

broadband wireless network in partnership with Bell Mobility. Rogers Cablesystems Inc., the cable

subsidiary of Rogers Communications Inc. has recently applied for licensed service area

extensions covering the Burlington, Oakville and Milton areas, which are part of Cogeco Cable’s

footprint in Ontario. Videotron Ltd., an indirect subsidiary of Quebecor Inc., offers competitive

mobile telecommunications services in Cogeco Cable’s Québec footprint. Cogeco Cable also

competes with other telecommunications service providers, including Vonage, Primus and Rogers

Home Phone (formerly known as Sprint), and with alternative service providers that use resale or

third-party access arrangements in effect. It is anticipated that the federal Department of Industry

Canada will proceed soon with the advanced wireless spectrum (AWS) auction, which could lead

to new entrants entering the wireless telecommunications markets in Canada on a national,

regional or local basis, and incumbent wireless carriers obtaining more spectrum for the provision

of advanced voice, data and video services, thus resulting in increased competition for the voice,

data and video services of Cogeco Cable.

In Portugal, Cogeco Cable’s indirect subsidiary Cabovisão faces competition in its service areas,

for all its lines of business, mainly from incumbent telecommunications carrier Portugal Telecom,

SGPS, S.A. (PT) and its present subsidiary Portugal Telecom Multimedia, SGPS, S.A. (PTM), as

well as from Sonaecom, SGPS, S.A., a subsidiary of diversified Portuguese conglomerate Sonae,

SGPS, S.A. (Sonae), which recently purchased the fixed telephony and HSI residential business

from the operator of ONI, as well as all fixed telephony business previously owned by TELE2,

another indirect access telephony operator, and unsuccessfully attempted a takeover of PT or

PTM earlier this year. PT is expected to complete, before the end of the calendar year, the

distribution of the shares that it owns in PTM to its own shareholders and, thus, cease to hold a

controlling equity interest in PTM. PTM owns TV Cabo, the largest cable telecommunications

operator in Portugal, and also offers a direct-to-home satellite distribution service to the

Portuguese market. PTM’s cable plant overlaps a major part of Cabovisão’s footprint in Portugal.

PT’s national telephone network, PT Communicaçoes, which offers a full range of fixed wireline

and mobile wireless telecommunications services throughout Portugal, has recently started the

rollout of a competitive IPTV service over its telephone plant, starting with the Lisbon, Oporto and

Castelo Branco areas, with a view to offering triple-play service (voice, high speed Internet access

and video distribution), and PTM’s cable subsidiary, TV Cabo, started a full triple-play offer

covering all its footprint. Sonaecom owns and operates the Clix (Residential Fixed Telephony, HSI

and IPTV), Novis (Business Telephony Solutions) and Optimus (Wireless Telephony and Wireless

HSI) services, which provide voice, data, high speed Internet, video and mobile services to the

residential and business markets. Cabovisão is no longer the only provider of triple-play service

bundles in its footprint, as Sonaecom, PT and PTM now have competitive triple-play offers

available in the Portuguese market. Cabovisão has started the rollout of a Digital Television

service in order to improve signal security and quality, provide an expanded choice of

programming, make better use of the distribution capacity of its network and better compete with

the digital video service offerings of its competitors. This rollout will extend at least through 2008.

The Portuguese regulatory authorities are expected to award several licenses in 2008 for new

digital terrestrial television services providing both national and regional digital television signals

for free-to-air and paid reception. This will likely lead to increased competition for video distribution

throughout the areas served by Cabovisão in Portugal.

The level of piracy of video signals and the actual penetration of illicit reception of video distribution

services in households within Cogeco Cable’s service areas may also have a significant effect on

the cable subsidiary’s business and the competitiveness of its service offerings.

- 20 -

Media sector

COGECO’s media subsidiary, CRTI, conducts all its commercial radio and television activities in

the francophone market of the Province of Québec. TQS competes head-to-head for audience,

advertising revenue and programming content acquisition with three other French-language

conventional television networks operated respectively by Quebecor Media Inc. (TVA), SRC, a

federal public sector corporation and the Société de télédiffusion du Québec, a provincial public

sector corporation (Télé-Québec). TQS also competes with a variety of French-language specialty

and pay television services, most of which are controlled by Astral Communications Inc. and

Quebecor Media Inc. and are widely distributed by broadcasting distributors throughout the

Province of Québec. In the Montreal market, where a substantial part of the overall audience is

bilingual, TQS competes as well with a variety of English-language conventional, specialty and pay

television services. In the regional markets of Saguenay, Sherbrooke and Trois-Rivières, TQS

operates a combination of local stations affiliated respectively to the TQS network and to the SRC

network. Conventional television networks and stations continue to lose gradually audience and

advertising revenue share to specialty television services and content services available over the

Internet.

While the market for French-language conventional television advertising is slowly declining and

costs for conventional television network programming are rising, conventional television networks

are still prevented from obtaining subscription fees from broadcasting distribution undertakings

(BDUs) for the distribution of their signal. In a policy statement issued on May 17, 2007, the CRTC

decided to continue reserving subscription revenue to specialty television programming services,

which enjoy lower programming costs and rising audience shares. The issue of fees for

conventional television networks will likely be revisited as part of another CRTC proceeding

currently pending on the review of the regulatory frameworks for BDUs, specialty and pay

television services, but the nature and timing of a change in regulatory policy concerning fees for

conventional television networks are uncertain at this time. Meanwhile, the position of TQS has

not improved and its operations are subject to material risks and uncertainties going forward.

There is a material risk concerning the operations of the TQS “twinstick” local stations in

Saguenay, Sherbrooke and Trois-Rivières, which are presently affiliated to the French-language

conventional television network of SRC. On September 20, 2007, SRC notified TQS that the

affiliation in effect for these stations will end on March 31, 2009. The loss of the SRC affiliation and

twinstick operations will undermine the viability of the TQS local services in the three local markets

concerned and cause a deterioration of competitive position of TQS both on a local and national

basis.

Through separate subsidiary Cogeco Diffusion Inc., CRTI operates the RYTHME FM radio service,

with stations broadcasting in the Montreal, Québec City, Sherbrooke and Trois-Rivières markets,

and the 93

station broadcasting in Québec City. CRTI’s radio stations compete head-to-head with

stations controlled respectively by Astral Communications Inc., Corus Entertainment Inc. and

Radio Nord Communications Inc. While RYTHME FM continues to enjoy a leading position in the

Montreal and Trois-Rivières markets, competitors have the leading position in the Québec City and

Sherb

rooke markets served by CRTI.

- 21 -

Technological risks

Cable sector

The evolution of telecommunications technologies unfolds at breathtaking speed, fuelled by a

highly competitive global market for digital content, consumer electronics and broadband products

and services. Cogeco Cable continues to monitor the development of technologies used for the

transmission, distribution, reception and storage of data and their deployment by various existing

or potential competitors in the broadband telecommunications markets.

There are now several terrestrial and satellite transmission technologies available to deliver a

range of electronic communications services to homes and to commercial establishments with

varying degrees of flexibility and efficiencies, and thus compete with cable telecommunications. On

the other hand, cable telecommunications also continue to benefit from rapid improvements,

particularly in the areas of modulation, digital compression, fractioning of optoelectronic links,

multiplexing, HD distribution and switched video distribution.

Management of Cogeco Cable remains of the vie w that broadband wireline distribution over optic al

fibre-coaxial cable will continue to be an efficient, reliable, economical and competitive platform for

the distribution of a full range of electronic communications products and services for the

foreseeable future. The competitiveness of the cable broadband telecommunications platform will,

however, continue to require additional capital investment on a timely basis in an increasingly

competitive and uncertain market environment.

The growth in penetration of broadband connections of all types, the rapid increase in transmission

speeds offered by competitors in the market and the deployment of the more powerful MPEG-4

video standard and of other similar compression technologies promote the increased distribution

and consumption of video content directly over the Internet. This may lead eventually to

fragmentation of the retail market for existing Analogue and Digital Television services provided by

the cable subsidiary and gradual disintermediation between video content suppliers and Cogeco

Cable’s customers. In this context, revenue and margins derived from Cogeco Cable’s HSI

services may not entirely compensate for the loss of revenue or margin derived from the cable

subsidiary’s Television services in the future. Alternative voice and data communications services

are proliferating over the Internet as well, with the resulting risk that fragmentation and

disintermediation may also occur in the future with respect to Cogeco Cable’s Telephony service.

Electronic communications increasingly rely on advanced security technology, devices, control

systems and software to ensure conditional access, appropriate billing and service integrity.

Security and business systems technology is provided worldwide by a small pool of global

suppliers on a proprietary basis. As other providers of electronic communications, the Company

depends on the effectiveness of such technology for many of its services and the ability of

technological solutions providers to offer cost-effective and timely solutions to deal with security

breaches or new developments required in the marketplace.

Regulatory risks

Cable sector

In Canada, electronic communications facilities and services are subject to regulatory

requirements depending mainly on the type of facilities involved, the incumbent status of service

providers and their relative market power, the technology used and whether the activities are

categorized as telecommunications or broadcasting. Canadian cable telecommunications facilities

and services are subject to various requirements mainly under federal legislation governing

broadcasting, radiocommunication, telecommunications, copyright and privacy, and under

provincial legislation governing consumer protection and access to certain municipal property and

municipally-owned support structures. Licences and broadcasting certificates are still required for

the operation of larger (Class 1 and 2) cable systems, while smaller (Class 3) cable systems are

- 22 -

now mostly licence-exempt. Various licence and licence exemption conditions continue to apply in

Canada. Canadian cable telecommunications operators are also subject to Canadian ownership

and control requirements. Changes in the regulatory framework or licences, which are subject to

periodic renewal, may affect the Company’s existing business activities or future prospects.

The Canadian Radio-television and Telecommunications Commission (CRTC) has forborne from

regulating the residential and business local access telephone services of the incumbent

telephone companies in most of the geographic markets served by Cogeco Cable in Ontario and

Québec. As a result, Bell Canada and Telus are now free to price and bundle their residential and

business local access telephone services and to extend general or specific promotional offers

without prior regulatory approval in the forborne local exchange areas within the Cogeco Cable’s

footprint.

In Telecom Public Notice CRTC 2006-14, the CRTC has initiated a telecommunications

proceeding with a view to determining which telecommunications facilities and services should be

considered as essential, as well as the regulatory wholesale requirements that should apply to the

provision of essential facilities and services by Canadian telecommunications carriers in the future.

The outcome of this proceeding, expected in the second half of 2008, may have an impact on

whether the cable subsidiary is considered to have any essential facilities and whether it must

make such facilities available at certain regulated terms and conditions, including under third-party

Internet access tariffs currently in effect. It may also have an impact on the facilities and services

that Cogeco Cable will be capable of obtaining from other Canadian telecommunications carriers

under certain regulated terms and conditions in the future.

In Broadcasting Notice of Public Hearing CRTC 2007-5, the CRTC has initiated a broadcasting

proceeding on the diversity of voices within the Canadian broadcasting system and other media.

This notice raised various important structural issues such as the common ownership of

broadcasting undertakings (which include BDUs), concentration of ownership, cross-media

ownership or horizontal integration, vertical integration, the benefits policy, licence trafficking,

ownership of new media and the relationship between the CRTC and the Competition Bureau with

respect to ownership transfers of broadcasting undertakings. The final outcome of this proceeding

is expected to be known in the first half of 2008.

In Broadcasting Notice of Public Hearing CRTC 2007-10, the CRTC has also initiated a

broadcasting proceeding to review the regulatory frameworks for BDUs (cable, satellite and

microwave) and for discretionary programming services (specialty and pay television and audio

services). This notice generally proposes to streamline the regulatory requirements currently

applicable to BDUs and to allow for market forces to play a greater role in the distribution

arrangements between BDUs and discretionary programming services. The proceeding may,

however, give rise to further discussion of carriage fees and signal retransmission consent for the

signals of over-the-air broadcasters. The final outcome of this important policy review proceeding

is expected to be known in the second half of 2008.

The telecommunications markets in Portugal have been fully open to competition since January 1,

2000, and there are no foreign ownership restrictions applying to electronic communications

service providers or the ownership of broadband telecommunications facilities in Portugal. Much of

Autoridade Nacional de Communicações (ANACOM)’s regulatory oversight remains focussed on

the analysis of the competitive state of relevant telecommunications markets and the adoption of

selected measures, where significant market power by a competitor is found to exist in a relevant

market. ANACOM has analyzed 16 of the 18 relevant retail and wholesale markets identified by

the European Commission and found that Portugal Telecom (PT) has significant market power in

most of these markets. As a result, various specific regulatory requirements apply to the provision

of certain services by PT companies. In addition, pursuant to Directive 2002/77/EC of the

European Commission (Competition Directive), the cable television and telecommunications

network operations of incumbent telephone companies in EU member states must be kept

- 23 -

separate and be conducted through separate entities. TV Cabo, Cabovisão’s direct cable

competitor is, therefore, operated through PT Multimedia, an entity separate from PT

Communicaçoes, which operates PT’s telecommunications network, and services provided by

each of these entities are billed separately.

The European Commission launched, on June 29, 2006, a broad policy review initiative on

electronic communications with a view to boosting competition among telecommunications

operators of EU member states and building a single market for services that use radio spectrum.

The legislative proposals stemming from this policy review initiative are expected to be tabled in

November 2007. Their precise nature, the timing of their approval by the European Parliament and

their transposition into Portuguese domestic law are not known at this time, but they may

eventually have an impact in the medium- to lo ng-term on Cabovisão’s electronic communications

activities and the future state of competition for the provision of electronic communications in

Portugal.

Media sector

The television and radio stations also require broadcasting licences issued by the CRTC under the

authority of the Broadcasting Act (Canada) and broadcasting certificates issued by the Minister of

Industry under the authority of the Radiocommunication Act (Canada). The maximum term of

licence is seven years, but licences are usually renewed except in cases of serious and deliberate

breach of legal and regulatory obligations by the licensee. The broadcasting licences for the

television network and stations of TQS will expire on August 31, 2008. The CRTC has requested

that TQS file licence renewal applications November 23, 2007. CRTI and CTV, the two indirect

shareholders of TQS, will have to agree on a new business plan to be reflected in the licence

renewal applications. The licence conditions that would apply during the renewal terms are not

known at this time.

Risks pertaining to operating costs

Cable sector

Cogeco Cable applies itself to keeping its cost of goods sold in check so as to secure continued

operating margin growth. The two largest drivers of cost of goods sold are network fees paid to

audio and video service suppliers as well as data transport and connectivity charges, mostly for

Internet traffic.

The market for audio and video programming services in Canada is already characterized by high

levels of supplier integration and structural rigidities imposed by the CRTC’s regulatory framework

for broadcasting distribution, which is presently under review. While Cogeco Cable has been able

to conclude satisfactory distribution agreements with Canadian and foreign programming service

suppliers to date, there is no assurance that network fees will not increase by larger increments in

future years. There is also no assurance that programming service suppliers will not change other

material terms of distribution agreements or extend preferences for the distribution of their content

to competing distributors, or push for the distribution of their content over the Internet in the future.

In Portugal, the offering of new digital audio and video services by Cabovisão requires the

conclusion of suitable arrangements with program suppliers. The negotiation of these

arrangements is under way, but is not concluded as yet.

As the markets for data transport and connectivity remain very competitive in Canada and

Portugal, Cogeco Cable and Cabovisão have negotiated cost effective arrangements in the past

for voice and data traffic. However, as overall traffic increases and capacity on existing broadband

telecommunications facilities becomes more widely used, the cable subsidiary may not be able to

secure further cost efficiencies in the future.

- 24 -

Media sector

TQS relies on independent producers for the production of several key entertainment properties

and it licenses the concept for several programs, including Loft Story, from a third party. There is

no assurance that increases in the cost of programming broadcast by TQS can be offset by

incremental revenue derived from advertising, promotion and product placement in the future.

Risks pertaining to information systems

Flexible, reliable and cost-effective information systems are an essential requirement for the

handling of sophisticated service options, customer account management, internal controls,

provisioning, billing and the rollout of new services. Cogeco Cable uses different customer

relations management tools and databases for its operation respectively in Ontario, Québec and

Portugal. The agreement with the main third-party supplier of information systems in Ontario will

expire in 2008, and the terms that would apply for the continued use of the relevant information

systems in Ontario are under negotiation.

Risks pertaining to disasters and other contingencies

Cogeco Cable has a disaster recovery plan for dealing with the occurrence of natural disasters,

quarantine, power failures, terrorist acts, intrusions, computer hacking or data corruption, but the

operations and facilities of Cabovisao are not yet integrated into this plan. Cabovisao’s insurance

coverage has been integrated into Cogeco Cable’s insurance coverage. The emergency plans and

procedures that are in place cannot provide the assurance that the effect of any disaster can and

will be mitigated as planned. Neither Cogeco nor Cogeco Cable is insured against the loss of data

and Cogeco Cable relies on data protection and recovery systems that it has put in place with

third-party service providers.

Financial risks

Cable sector

Cable telecommunications is a very capital-intensive business that requires substantial and

recurring investment in property, plant, equipment and customer acquisition. Cogeco Cable

depends on capital markets for the availability of additional capital that it must deploy to support its

internal and external growth. There is no assurance that future capital requirements will be met

when needed, or that the cost to secure such needed incremental capital will not increase the

Cogeco Cable’s overall cost of capital.

Cogeco Cable’s debt financing structure involves the borrowing of money from third parties by

Cogeco Cable and the subsequent investment of equity and debt by the cable subsidiary into its

direct and indirect subsidiaries. This financing structure requires that Cogeco Cable be able to

receive upstream flows of funds from its subsidiaries through capital repayments, interest

payments, dividend payments, management fees or other distributions that are sufficient to meet

its corporate debt obligations. Future changes to corporate, tax, currency exchange and other legal

requirements applicable to the cable subsidiary, or to its direct or indirect subsidiaries, could

adversely affect such upstream flow of funds or the effectiveness of Cogeco Cable’s existing debt

financing structure.

The cable subsidiary’s leverage and corporate risk profile is liable to vary from time to time as a

result of new developments in its business activities and the investments required to support

internal growth as well as external growth through acquisitions. The development of new services

or additional lines of business, and the acquisition of new business properties, may not necessarily

generate the anticipated results or benefits. There is no assurance that Cogeco Cable will be able

to maintain or increase distributions to shareholders by way of dividends or otherwise.

- 25 -

The acquisition of Cabovisão has been financed through corporate credit facilities of Cogeco

Cable. The major part of the purchase price for the shares of Cabovisão (approximately

€465.7 million) was borrowed directly in euros and a second tranche of $150 million was borrowed

in Canadian dollars and subsequently converted into euros (€104 million). The remainder of the

purchase price is assumed liabilities. There are no financial hedging arrangements in effect at this

time for currency fluctuation risk on interest payments resulting from these borrowings, but there is

a natural hedging effect between the borrowings in euros and the inter-corporate debt interest

payments and cash distributions in euros originating from the European subsidiaries. Also, for the

purposes of this acquisition, Cogeco Cable has set up an acquisition structure involving one of its

operating Canadian subsidiaries and intermediate holding and financing entities located in

Luxembourg with a view to maximizing returns. Cogeco Cable is still considering various options to

extend the term with euro-denominated alternate sources of financing.

Media sector

TQS is suffering from recurring operating losses, which cause a need for funding to support its

operations. In addition to further capital injections required to support its operations, TQS faces the

need for substantial additional capital investment over the next four years to complete the

transition to HD broadcasting before the deadline set by the CRTC for the shutdown of analogue

television transmission on August 31, 2011. CRTI and CTV, the two indirect shareholders of TQS,

will have to agree on the further capital investments that are required to support the operations of

TQS going forward, and on a new business plan. The TQS’s borrowing capacity is based on the

level of its accounts receivable up to a maximum amount, pursuant to a demand loan expiring on

August 26, 2008. In the circumstances, CRTI and CTV will likely be called upon to make requisite

funding available to TQS from time to time. The shareholders agreement in effect between the

parties provides that the shareholders must both agree on capital investments or restructurings; it

also provides for put and call options between the parties starting on January 1

, 2009, and the

eventual putting up for sale of the company, should neither of the parties agree to purchase the

equity interest of the other party. CRTI and CTV have retained CIBC World Markets to assist them

in assessing the strategic options available to them in connection with TQS.

Human resources

The Company and its subsidiary Cogeco Cable maintain appropriate labour relations, but there is

no assurance that requisite collective agreements will be established or renewed without conflict or

disruption to the provision of services. The Company and its subsidiary Cogeco Cable maintain,

as well, appropriate relations with its key personnel. The Company’s success depends to a

significant extent on its ability to attract and retain its managers and skilled employees in an

increasingly competitive market. The Company’s inability or failure to recruit, retain or adequately

train its human resources may have a material adverse effect on the Company’s business and

future prospects.

Controlling shareholder and holding structure

Cogeco Cable is controlled by COGECO Inc. through the holding of multiple voting shares of

Cogeco Cable, and COGECO Inc. is in turn controlled by Gestion Audem Inc., a company

controlled by Mr. Henri Audet and members of his family (the Audet Family), through the holding of

multiple and subordinate voting shares of COGECO Inc. Both Cogeco Cable and COGECO Inc.

are reporting issuers with subordinate voting shares listed on the Toronto Stock Exchange.

Pursuant to the Conflicts Agreement in effect between Cogeco Cable and COGECO Inc., all cable

properties must be owned or controlled by Cogeco Cable. COGECO Inc. is otherwise free to own

and operate any other business or invest as it deems appropriate. It is possible that situations

could arise where the respective interests of the controlling shareholder COGECO Inc. and other

shareholders of Cogeco Cable, or the respective interests of the Audet Family and other

shareholders of COGECO Inc., could differ.

- 26 -

ACCOUNTING POLICIES AND ESTIMATES

Accounting changes

In July 2006, the Canadian Institute of Chartered Accountants (CICA) issued Section 1506,

Accounting Changes, which modifies certain aspects of the previous standard. A reporting entity

may not change its accounting method unless required by a primary source of GAAP or to provide

a more reliable and relevant presentation of the financial statements. In addition, changes in

accounting methods must be applied retroactively and additional information must be disclosed.

This section applies to interim and annual financial statements relating to fiscal years beginning on

or after January 1, 2007.

Harmonization of Canadian and International Standards

In March 2006, the Accounting Standards Board of the CICA released its new strategic plan, which

proposes to abandon Canadian GAAP and effect a complete convergence to the International

Financial Reporting Standards. At the end of a transitional period of approximately five years,

Canadian GAAP will cease to exist as a separate distinct basis of financial reporting for public

companies. The Company will convert to these new standards according to the timetable set with

these new rules. COGECO will closely monitor changes arising from this convergence.

NON-GAAP FINANCIAL MEASURES

This section describes non-GAAP financial measures used by COGECO throughout this MD&A. It

also provides reconciliations between these non-GAAP measures and the most comparable GAAP

financial measures. These financial measures do not have standard definitions prescribed by

Canadian GAAP and may not be comparable with similar measures presented by other

companies. These measures include “cash flow from operations”, “free cash flow” and “net income

excluding gain on dilution and income tax adjustments.

Cash flow from operations

Cash flow from operations is used by COGECO’s management and investors to evaluate cash

flow generated by operating activities, excluding the impact of changes in non-cash operating

items. This allows the Company to isolate the cash flow from operating activities from the impact of

cash management decisions. Cash flow from operations is subsequently used in calculating the

non-GAAP measure “free cash flow”. Cash flow from operations is calculated as follows:

($ 000)

Quarters ended August 31,d

((unaudited))August3,

Years ended August 31,

(audited)

2007

2006

2007 2006

Cash flow from operating activities $ 114,740 $ 109,017 $ 210,093 $ 195,953

Changes in non-cash operating items (39,705)

(57,288)

66,525 (3,645)

Cash flow from operations $ 75,035 $ 51,729 $ 276,618 $ 192,308

- 27 -

Free cash flow

Free cash flow is used by COGECO’s management and investors to measure COGECO’s ability

to repay debt, distribute capital to its shareholders and finance its growth. Free cash flow is

calculated as follows:

($ 000)

Quarters ended August 31,

(unaudited)

Years ended August 31,

(audited)

2007

2006

2007

2006

Cash flow from operations

75,035 $

51,729

276,618 $ 192,308

Acquisition of fixed assets

(59,718) (46,112)

(224,045) (144,469)

Increase in deferred charges

(10,784) (8,929)

(30,042) (20,657)

Assets acquired under capital leases – as per

Note 12 b) (291) (268)

(3,084) (3,005)

Free cash flow

4,242 $

(3,580)

19,447 $ 24,177

Net income excluding gain on dilution and income tax adjustments

Net income excluding gain on dilution and income tax adjustments is used by COGECO’s

management and investors in order to evaluate what would have been the net income excluding

the gain on dilution and the income tax adjustments. This allows the Company to isolate the one

time adjustments in order to evaluate the net income from ongoing activities.

($ 000)

Quarters ended August 31,

(unaudited)

Years ended August 31,

(audited)

2007

2006

2007 2006

Net income

$ 30,384 $ 10,300 $

74,740 $ 23,101

Adjustments

Gain on dilution

(27,011) - (57,930) -

Income tax adjustments net of non-

controlling interest (322) (7,866) 506 (7,866)

Net income excluding above adjustments

$ 3,051 $ 2,434 $

17,316 $ 15,235

ADDITIONAL INFORMATION

This MD&A was prepared on October 29, 2007. Additional information relating to the Company,

including its Annual Information Form, is available on the SEDAR web site at www.sedar.com.

ABOUT COGECO

COGECO is a diversified communications company. Through its Cogeco Cable subsidiary,

COGECO provides 2,485,665 revenue-generating units (RGUs) to 2,343,466 homes passed in its

Canadian and Portuguese service territories. Through its two-way broadband cable networks,

Cogeco Cable provides its residential and commercial customers with Analogue and Digital

Television, High Speed Internet as well as Telephony services. Through its Cogeco Radio-

Television subsidiary, COGECO holds a 60% interest and operates the TQS network, five TQS

television stations, and three French CBC-affiliated television stations in partnership with CTV

Television. Cogeco Radio-Television also wholly owns and operates the RYTHME FM radio

stations in Montréal, Québec City, Trois-Rivières and Sherbrooke as well as the 93

station in

Québec City. COGECO’s subordinate voting shares are listed on the Toronto Stock Exchange

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

Exchange (TSX: CCA).

– 30 –

- 28 -

Source: COGECO Inc.

Pierre Gagné

Vice President, Finance and Chief Financial Officer

Tel.: (514) 874-2600

Information: Media

Marie Carrier

Director, Corporate Communications

Tel.: (514) 874-2600

Analyst Conference Call: Monda y, October 29, 2007 at 11:00 A.M. (EDT)

Media representatives may attend as listeners only.

Please use the following dial-in number to have access to the

conference call by dialling 10 minutes before the start of the

conference:

Canada/USA Access Number: 1 866 904-6909

International Access Number: + 1 416 915-8331

Confirmation Code: 4118404

By Internet at www.cogeco.ca/investors

A rebroadcast of the conference call will be available until

November 5, by dialling:

Canada and US access number: 1 888 203-1112

International access number: + 1 647 436-0148

Confirmation code: 4118404

- 29 -

Supplementary Quarterly Financial Information

(unaudited)

Quarters ended

(2)

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

2007

(1)

2006

(1)

2007

(1)

2006 2007

(1)

2006 2006

(1)

2005

($000, except percentages

and per share data)

Revenue $ 269,326 $ 199,351 $ 277,364 $

189,718 $

261,120 $

177,359 $ 263,292 $

180,478

Operating income before

amortization

98,180

68,645 95,495

66,111 83,669

57,765 88,367

60,593

Operating margin 36.5% 34.4% 34.4% 34.8% 32.0% 32.6% 33.6% 33.6%

Amortization 56,018 36,446 48,835 30,658 45,112 30,217 45,839 29,883

Financial expense 19,190 16,864 21,851 14,120 24,181 14,231 21,759 13,961

Income taxes (recovery) (368) (13,950) 9,679 8,461 2,580 5,706 6,463 6,611

Non-controlling interest 19,763 19,022 12,007 7,293 8,240 4,842 7,557 5,455

Gain (loss) on dilution 27,011 - (64)

- 30,990 - (7)

Net income 30,384 10,300 3,059 5,529 34,546 2,679 6,751 4,593

Cash flow from

operations

75,035 51,729 76,282 52,093 59,266 41,644 66,035 46,842

Net income per share $ 1.82 $ 0.62 $ 0.18 $

0.33 $

2.08 $

0.16 $ 0.41 $

0.28

(1) Include operating results of the cable subsidiary, Cabovisão, since the date of acquisition of control on August 1, 2006.

(2) The addition of quarterly information may not correspond to the annual total given rounding.

Cable sector operating results are generally not subject to material seasonal ﬂuctuations.

However, the loss of Basic Cable service customers is usually greater, and the addition of HSI

service customers is generally lower in the fourth quarter, mainly due to students leaving

campuses at the end of the school year. However, the media sector’s operating results may be

subject to significant seasonal variations. The revenue depends on audience ratings and the

market for conventional radio and television advertising expenditures in the Province of Québec.

Advertising sales, mainly national advertising, are normally weaker in the second and fourth

quarters and, as a result, the operating margin is generally lower in those quarters.

COGECO INC. - 30 -

Customer Statistics

ugust 31, August 31,

2007 2006

Homes Passed

Ontario

(1)

997 498 1 002 187

Québec 486 592 474 717

Canada 1 484 090 1 476 904

Portugal 859 376 826 369

Total 2 343 466 2 303 273

Revenue Generating Units

Ontario 1 256 244 1 104 157

Québec 532 264 451 779

Canada 1 788 508 1 555 936

Portugal 697 157 629 041

Total 2 485 665 2 184 977

Basic Cable Service Customers

Ontario 594 889 587 289

Québec 254 268 245 888

Canada 849 157 833 177

Portugal 294 003 269 694

Total 1 143 160 1 102 871

Discretionnary Service Customers

Ontario 468 764 463 783

Québec 204 585 192 895

Canada 673 349 656 678

Portugal - -

Total 673 349 656 678

Pay TV Service Customers

Ontario 88 835 84 425

Québec 42 180 38 455

Canada 131 015 122 880

Portugal 54 723 54 089

Total 185 738 176 969

High Speed Internet Service Customers

Ontario 316 363 269 328

Québec 99 473 73 752

Canada 415 836 343 080

Portugal 160 023 136 278

Total 575 859 479 358

Digital Television Service Customers

Ontario 246 267 213 556

Québec 133 612 113 808

Canada 379 879 327 364

Portugal - -

Total 379 879 327 364

Telephony Service Customers

Ontario 98 725 33 984

Québec 44 911 18 331

Canada 143 636 52 315

Portugal 243 131 223 069

Total 386 767 275 384

(1) An audit of homes passed in Ontario was completed during the first quarter of fiscal 2007 and, as a result,

the number of homes passed was reduced by 42,386

- 31 -

COGECO INC.

CONSOLIDATED STATEMENTS OF INCOME

Three months ended August 31, Twelve months ended August 31,

(In thousands of dollars, except per share data)

2007

2006

2007

2006

(unaudited) (unaudited) (audited)

(audited)

Revenue $ 269,326

$ 199,351

$ 1,071,102

$ 746,906

Operating costs

171,146

130,706

705,391

493,792

Operating income before amo rtizatio n 98,180

68,645

365,711

253,114

Amortization (note 4)

56,018

36,446

195,804

127,204

Operating income 42,162

32,199

169,907

125,910

Financial expense (note 9)

19,190

16,864

86,981

59,176

Income before income taxes and the following

items 22,972

15,335

82,926

66,734

Income taxes (note 5)

(368)

(13,950)

18,354

6,828

Gain on dilution resulting from shares issue s by a

subsidiary (note 6)

(27,011)

–

(57,930)

–

Non-controlling interest

19,763

19,022

47,567

36,612

Share in the loss (earnings) of a genera l partnership

204

(37)

195

193

Net income $ 30,384

$ 10,300

$ 74,740

$ 23,101

Earnings per share (no t e 7)

Basic

$1.82

$0.62

$ 4.50

$1.40

Diluted

1.81

0.62

4.47

1.39

- 32 -

COGECO INC.

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

Twelve months ended August 31,

(In thousands of dollars)

2007

2006

(audited)

Balance at beginning $ 204,734

$ 185,762

Net income

74,740

23,101

Dividends on multiple voting shares

(503)

(462)

Dividends on subordinate voting shares

(4,025)

(3,667)

Balance at end $ 274,946

$ 204,734

- 33 -

COGECO INC.

CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

August 31,

2007

August 31,

2006

(audited)

Assets

Current

Cash and cash equivalents

$ 65,564

$ 71,516

Restricted cash

–

569

Accounts receivable

76,345

71,989

Income taxes receivable

3,138

–

Prepaid expenses

9,117

7,204

Broadcasting rights

14,647

15,632

Future income tax assets

17,986

–

186,797

166,910

Income taxes receivable

1,345

–

Broadcasting rights

17,456

18,083

Investments

739

539

Fixed assets

1,144,923

1,048,998

Deferred charges

55,450

49,433

Intangible assets (note 8)

1,086,750

1,017,892

Goodwill (note 8)

342,584

422,108

$ 2,836,044

$ 2,723,963

Liabilities and Shareholders' equity

Liabilities

Current

Bank indebtedness

$ 7,458

$ 7,891

Accounts payable and accrued liab ilities

249,343

312,837

Broadcasting rights payable

8,531

7,721

Income tax liabilities

1,350

666

Deferred and prepaid income

29,879

26,737

Current portion of long-term debt (note 9)

17,578

126,904

314,139

482,756

Long-term debt (note 9)

1,036,256

1,209,254

Share in the partners’ deficiency of a general partnership

1,036

841

Deferred and prepaid income

11,501

10,525

Broadcasting rights payable

4,408

5,777

Pension plan liabilities and accrued employee benefits

8,822

11,098

Future income tax liabilities

267,646

211,848

Non-controlling interest

799,776

472,605

2,443,584

2,404,704

Shareholders' equity

Capital stock (note 10)

119,078

117,552

Treasury shares (note 10)

(1,054)

–

Contributed surplus – stock-based compensation

2,600

1,425

Retained earnings

274,946

204,734

Foreign currency translation adjustment (note 11)

(3,110)

(4,452)

392,460

319,259

$ 2,836,044

$ 2,723,963

- 34 -

COGECO INC.

CONSOLIDATED STATEMENTS OF CASH FLOW

Three months ended August 31, Twelve months ended August 31,

(In thousands of dollars)

2007

2006

2007

2006

(unaudited)

(audited)

Cash flow from operating activities

Net income

$ 30,384

$ 10,300

$ 74,740

$ 23,101

Adjustments for:

Amortization (note 4)

56,018

36,446

195,804

127,204

Amortization of deferred financing costs

513

416

2,226

1,140

Future income taxes (note 5)

2,361

(14,900)

14,903

1,709

Non-controlling interest

19,763

19,022

47,567

36,612

Gain on dilution resulting from shares issue d b y a

subsidiary (note 6)

(27,011)

–

(57,930)

–

Stock-based compensation

(7,066)

(534)

(988)

356

Loss on disposal of fixed asse ts

289

963

126

1,135

Other

(216)

170

1,051

75,035

51,729

276,618

192,308

Changes in non-cash oper ating items (note 12a))

39,705

57,288

(66,525)

3,645

114,740

109,017

210,093

195,953

Cash flow from investing activities

Acquisition of fixed assets (not e 12b))

(59,718)

(46,112)

(224,045)

(144,469)

Increase in deferred charges

(10,784)

(8,929)

(30,042)

(20,657)

Business acquisition, net of cash and cash equivalents

acquired (note 2)

(629)

(577,431)

1,265

(577,431)

Decrease (increase) in restricted cash

503

(91)

591

(91)

Other

(72)

401

(70,700)

(632,547)

(251,830)

(742,594)

Cash flow from financing activities

Increase (decrease) in bank i ndebtedness

(8,639)

(6,165)

(433)

7,286

Increase in long-term debt

9,278

633,402

6,778

633,402

Repayment of long-term debt

(146,483)

(19,536)

(299,609)

(5,304)

Increase in deferred financing costs

–

(10,110)

–

(10,110)

Issue of subordinate voting shares

111

1,526

1,385

Acquisition of treasury shares (note 10)

–

(1,054)

–

Dividends on multiple voting shares

(129)

(115)

(503)

(462)

Dividends on subordinate voting shares

(1,038)

(918)

(4,025)

(3,667)

Issue of shares by subsidiaries to non-contr olling

interest, net of issue costs

148,378

338,444

228

Dividends paid by a subsidiary to non-controlling

interest

(2,372)

(972)

(6,582)

(3,888)

(910)

595,759

34,542

618,870

Net change in cash and cas h equivalents 43,130

72,229

(7,195)

72,229

Effect of exchange rate changes on cash and cash

equivalents denominated i n foreign currencies

(243)

(713)

1,243

(713)

Cash and cash equivalents at beginning

22,677

–

71,516

–

Cash and cash equivalents at end $ 65,564

$ 71,516

$ 65,564

$ 71,516

See supplemental cash flow information in note 12.

- 35 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

1. Basis of Presentation

In the opinion of management, the accompanying unaudited interim consolidated financial statements, prepared in

accordance with Canadian generally accepted accounting principles, contain all adjustments necessary to present

fairly the financial position of COGECO Inc. as at August 31, 2007 and August 31, 2006 as well as its results of

operations and its cash flow for the three and twelve month periods ended August 31, 200 7 and 2006.

While management believes that the disclosures presented are adequate, these unaudited interim consolidated

financial statements and notes should be read in conjunction with COGECO Inc.’s annual consolidated financial

statements for the year ended August 31, 2006. These audited consolidated financial statements follow the same

accounting policies as the most re cent annual consolidated financial statements, except as mentioned below.

Intangible assets with definite lives, such as customer relationships, are recorded at cost and amortized on a straight-

line basis over the average life of a customer’s subscription. In the case of the acquisition of Cabovisão — Televisão

por Cabo, S.A., the average life of a customer’s subscription i s eight years.

Also, The Company measures incentive share units granted to employees based on the market value of the

Company’s subordinate voting shares at the date of grant and a compensation expense is recognized over the

vesting period, which is three years, with a corresponding increase in the contributed surplus.

2. Business Acquisition

Acquisition of Cabovisão – Televisão por Cabo, S.A.

On June 2, 2006, the Company’s subsidiary, Cogeco Cable Inc., entered into an agreement with Cable Satisfaction

International Inc. (“CSII”), Catalyst Fund Limited Partnership I and Cabovisão – Televisão por Cabo, S.A. (Cabovisão),

to purchase, for a total consideration of €461.8 million ($667.5 million), all the shares of the second largest cable

telecommunications company in Portugal, an indirect wholly-owned subsidiary of CSII. The price includes the

purchase of senior debt and reimbursement of certain other Cabovisão liabilities. The acquisition was completed on

August 1, 2006 and the final purchase price has been determined following completion of a post-closing working

capital adjustment that occurred on March 9, 2007. According to the agreement, the final purchase price was reduced

by an amount of €2,194,000 ($3,371,000).

The acquisition was accounted for using the purchase method. The results of Cabovisão have been consolidated as

of the acquisition date.

- 36 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

2. Business Acquisition (continued)

Management has complete d its valuations of tangible and intangible assets acquired and liabilities assumed and the

final allocation is as follows:

2007

(audited)

Consideration paid

Share purchase price

$ 304,188

Working capital adjustment

(3,371)

Secured lenders debt and certain specified Cabovisão liabilities

274,761

Acquisition costs

6,299

$ 581,877

Net assets acquired

Cash and cash equivalents

$ 5,711

Restricted cash

489

Accounts receivable

16,570

Prepaid expense

1,324

Fixed assets

323,796

Customer relationships

71,684

Goodwill

344,004

Accounts payable and accrued liabilities assumed

(60,433)

Other specified Cabovisão liabilities assumed

(91,914)

Future income tax liabilities

(29,354)

$ 581,877

The final allocation resulted in an increase in fixed assets of $36,144,000, an increase in customer relationships of

$71,684,000 and an increase in future income tax liabilities of $29,354,000, as well as a decrease in accou nts payable

and accrued liabilities assumed of $4,849,000. The net impact of these adjustments, combined with the reduction of

the purchase price, reduced goodwill by $87,020,000 (see note 8b)).

Also in accordance with the Portuguese Companies Income Tax Code, accumulated tax losses cannot be deducted if

the ownership of at least 50% of the social capital changes from the moment when the tax losses were generated,

unless a request is filed before such change in the ownership takes place, subject to approval by the Portuguese tax

authorities. To this effect, a request for preservation of tax losses was filed by Cabovisão on July 28, 2006, and

Cabovisão has not yet received a reply. Consequently, these losses have not been included in the purchase price

allocation, but will be recognized as a reduction of goodwill upon realisation.

- 37 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

3. Segmented Information

The Company’s activities are divided into two business segments: Cable and Media. The Cable segment is

comprised of Cable Television, High Speed Internet and Telephony services, and the Media segment is comprised of

Radio and Television operations.

The principal financi al information per business segment is presente d in the tables below:

Head Office

Cable Media and elimination Consolidated

Three months ended August 31,

(unaudited)

2007 2006 2007 2006 2007 2006 2007 2006

Revenue $ 244,314 $ 174,875 $ 25,063 $ 24,527 $ (51) $ (51) $ 269,326 $ 199,351

Operating costs 141,888 102,011 26,602 27,315 2,656 1,380 171,146 130,706

Operating income (loss) before

amortization

102,426

72,864 (1,539) (2,788) (2,707)

(1,431)

98,180 68,645

Amortization 54,164 34,801 1,809 1,600 45 45 56,018 36,446

Operating income (loss) 48,262 38,063 (3,348) (4,388) (2,752) (1,476) 42,162 32,199

Financial expense 18,524 16,374 274 156 392 334 19,190 16,864

Income taxe s (6,630) (12,298) 6,992 (1,224) (730) (428) (368) (13,950)

Net assets employed

(1)(2)

$ 2,398,297 $ 2,210,823 $ 60,076 $ 70,550 $ 8,445 $ 7,477 $ 2,466,818 $ 2,288,850

Total assets

(2)

2,714,339 2,602,603 109,548 112,609 12,157 8,751 2,836,044 2,723,963

Fixed assets

(2)

1,119,498 1,021,538 24,937 26,794 488 666 1,144,923 1,048,998

Goodwill

(2)

342,584 422,108 – – – – 342,584 422,108

Acquisition of fixed assets 58,180 44,350 1,829 2,030 – – 60,009 46,380

(1)

Total assets less cash and cash equivalents, accounts payable and accrued liabilities, broadcasting rights payable and deferred and prepaid income.

(2)

As at August 31, 2007 and 2006.

- 38 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

3. Segmented Information (continued)

Head Office

Cable Media and elimination Consolidated

Twelve months ended August 31,

(audited)

2007 2006 2007 2006 2007 2006 2007 2006

Revenue $ 938,880 $ 620,001 $ 132,426 $ 127,109 $ (204) $ (204) $ 1,071,102 $ 746,906

Operating costs 568,127 367,023 132,142 127,730 5,122 (961) 705,391 493,792

Operating income (loss) before

amortization

370,753

252,978 284 (621) (5,326)

757

365,711 253,114

Amortization 189,323 120,782 6,303 6,251 178 171 195,804 127,204

Operating income (loss) 181,430 132,196 (6,019) (6,872) (5,504) 586 169,907 125,910

Financial expense 84,569 57,366 1,026 678 1,386 1,132 86,981 59,176

Income taxe s 12,170 9,274 7,234 (2,962) (1,050) 516 18,354 6,828

Net assets employed

(1)(2)

$ 2,398,297 $ 2,210,823 $ 60,076 $ 70,550 $ 8,445 $ 7,477 $ 2,466,818 $ 2,288,850

Total assets

(2)

2,714,339 2,602,603 109,548 112,609 12,157 8,751 2,836,044 2,723,963

Fixed assets

(2)

1,119,498 1,021,538 24,937 26,794 488 666 1,144,923 1,048,998

Goodwill

(2)

342,584 422,108 – – – – 342,584 422,108

Acquisition of fixed assets 223,966 143,839 3,163 3,528 – 107 227,129 147,474

(1)

Total assets less cash and cash equivalents, accounts payable and accrued liabilities, broadcasting rights payable and deferred and prepaid income.

(2)

As a August 31, 2007 and 2006.

The following tables sets out certain geo graphic market information based on client’s location:

Three months ended August 31, Twelve months ended August 31,

2007 2006 2007 2006

(unaudited) (unaudited) (audited) (audited)

Revenue

Canada $ 213,462 $ 182,485 $ 846,292 $ 730,040

Europe 55,864 16,866 224,810 16,866

$ 269,326 $ 199,351 $ 1,071,102 $ 746,906

- 39 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

3. Segmented Information (continued)

As at August 31, As at August 31,

2007 2006

(audited) (audited)

Fixed assets

Canada $ 837,407 $ 768,484

Europe 307,516 280,514

$ 1,144,923 $ 1,048,998

Goodwill

Canada $– $–

Europe 342,584 422,108

$ 342,584 $ 422,108

4. Amortization

Three months ended August 31, Twelve months ended August 31,

2007 2006 2007 2006

(unaudited) (unaudited) (audited) (audited)

Fixed assets $ 47,719 $ 31,139 $ 171,478 $ 105,213

Deferred charges 5,738 5,307 21,765 21,991

Intangible assets 2,561 – 2,561 –

$ 56,018 $ 36,446 $ 195,804 $ 127,204

- 40 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

5. Income Taxes

Three months ended August 31, Twelve months ended August 31,

2007 2006 2007 2006

(unaudited) (unaudited) (audited) (audited)

Current $ (2,729) $ 950 $ 3,451 $ 5,119

Future 2,361 (14,900) 14,903 1,709

$ (368) $ (13,950) $ 18,354 $ 6,828

The following table provides the reconciliation between Canadian statutory federal and provincial income taxes and

the consolidated income tax expense:

Three months ended August 31, Twelve months ended August 31,

2007 2006 2007 2006

(unaudited) (unaudited) (audited) (audited)

Income before income taxes $ 22,768 $ 15,372 $ 82,731 $ 66,541

Combined income tax rate 34.61% 35.51% 34.48% 35.51%

Income taxes at combined income tax rate $ 7,881 $ 5,804 $ 28,526 $ 23,631

Loss or income subject to lower or higher tax rates (519) (567) (447) (226)

Decrease in future income taxes as a result of decreases in

substantively enacted tax rates

(5,863)

(19,831)

(5,863)

(19,922)

Large corporation tax – (1,837) – 614

Income taxes arising form non-deductible expenses 1,016 1,593 1,016 1,593

Effect of foreign income tax rate differences (2,066) 314 (5,103) 314

Benefit related to prior years’ minimum income taxes paid

and non-capital loss carryforwards

(8,403)

–

(9,878)

–

Variation of the valuation allowance 6,983 (34) 9,163 (34)

Other 603 608 940 858

Income taxes at effective income tax rate $ (368) $ (13,950) $ 18,354 $ 6,828

- 41 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

6. Gain on dilution resulting from shares issued by a subsidiary

During fiscal year 2007, the Company’s subsidiary, Cogeco Cable Inc., completed two public offerings totaling

8,000,000 subordinate voting shares. The offerings resulted in gross proceeds of $345,950,000 and net proceeds of

$331,110,000. The Company’s subsidiary has also issued 7,344 subordinate voting shares pursuant to its Employee

Stock Purchase Plan and 348,131 subordinate voting shares pursuant to its Employee Stock Option Plan for cash

considerations of $198,000 and $6,816,000, respectively. As a result, the Company’s interest in Cogeco Cable Inc.

decrease from 39.2% to 32.5% and gains on dilution of $27,011,000 and $57,930,000 were recorded for the three

and twelve month periods ended August 31, 2007.

7. Earnings per Share

The following table provides a recon ciliation between basic and diluted earnings per share:

Three months ended August 31, Twelve months ended August 31,

2007 2006 2007 2006

(unaudited) (unaudited) (audited) (audited)

Net income $ 30,384 $ 10,300 $ 74,740 $ 23,101

Weighted average number of multiple voting and subordinate

voting shares outstanding

16,671,043

16,544,443

16,605,828

16,507,666

Effect of dilutive stock options

(1)

88,392 84,820 97,168 121,692

Weighted average number of diluted multiple voting and

subordinate voting shares outstanding

16,759,435

16,629,263

16,702,996

16,629,358

Earnings per share

Basic $ 1.82 $ 0.62 $ 4.50 $ 1.40

Diluted 1.81 0.62 4.47 1.39

(1)

No stock options (36,443 in 2006) were excluded from the calculation of diluted earnings per share for the three month periods ended August 31,

2007, and 18,222 stock options (38,293 in 2006) were e xcluded from the calculation of diluted earnings per share for the twelve month periods

ended August 31, 2007, since the exercise price of the options was greater than the average share price of the subordinate voting shares.

8. Goodwill and Other Intangible Assets

August 31,

2007

August 31,

2006

(audited) (audited)

Customer relationships $ 68,858 $ –

Broadcasting licenses

28,120 28,120

Customer base

989,772 989,772

1,086,750 1,017,892

Goodwill

342,584 422,108

$ 1,429,334 $ 1,440,000

- 42 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

8. Goodwill and Other Intangible Assets (continued)

a) Intangible assets

During the year 2007, intangible a ssets variations were as follows:

Customer

relationships

Broadcasting

licenses

Customer

base

Total

(audited) (audited) (audited) (audited)

Balance as at August 31, 2006 $ – $ 28,120 $ 989,772 $ 1,017,892

Business acquisition (note 2) 71,684 – – 71,684

Amortization (2,561) – – (2,561)

Foreign currency translation adjustment (265) – – (265)

Balance as at August 31, 2007 $ 68,858 $ 28,120 $ 989,772 $ 1,086,750

At August 31, 2007 and 2006, the Company’s subsidiaries, Cogeco Cable Inc. and Cogeco Radio-Télévision Inc.,

tested the value of customer base and broadcasting licenses for impairment and concluded that no impairment

existed.

b) Goodwill

During the years 2007 and 2006, goodwill variation was as follows:

2007 2006

(audited) (audited)

Balance as at August 31, 2006 $ 422,108 $ –

Business acquisition

– 431,024

Adjustment to the allocation of the purchase price (note 2)

(87,020) –

Foreign currency translation adjustment

7,496 (8,916)

Balance as at August 31, 2007 $ 342,584 $ 422,108

On March 9, 2007, the Company’s subsidiary, Cogeco Cable Inc., and Cable Satisfaction International Inc. came to

an agreement for a final adjustment to the working capital that was outstanding since the date of acquisition.

According to the agreement, the final purchase price was reduced by an amount of €2,194,000 ($3,371,000). Also,

during 2007, the purchase price allocation related to the 2006 acquisition of Cabovisão was adjusted to reflect final

valuations of tangible and intangible assets acquired and liabilities assumed on acquisition. The impact of these

adjustments reduced goodwill by $87,020,000 (see note 2).

At August 31, 2007 the Company’s subsidiary, Cogeco Cable Inc., tested the value of goodwill for impairment and

concluded that no impairment existed.

- 43 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

9. Long-Term Debt

Maturity Interest rate

August 31,

2007

August 31,

2006

(audited) (audited)

Parent company

Term Facility 2010

(1)

6.44%

(2)

$ 25,538 $ 19,000

Obligations under capital leases 2010 6.49 – 6.61 108 138

Subsidiaries

Term Facility

Term loan - €104,551,500 ($150,000,000 in 2006)

(3)

2011 5.44

(2)

150,450 150,000

Term loan – €17,358,700 2011 5.25

(2)

24,979 24,573

Revolving loan – €196,725,000 (€317,000,000 in 2006) 2011 5.02

(2)

283,087 448,745

Senior Secured Debentures Series 1 2009 6.75 150,000 150,000

Senior – Secured Notes

Series A – US$150 million 2008 6.83

(4)

158,430 165,795

Series B 2011 7.73 175,000 175,000

Second Secured Debentures Series A 2007

(5)

8.44 – 125,000

Deferred credit

(6)

2008 – 80,220 72,855

Obligations under capital leases 2011 6.42 – 8.30 5,760 5,009

Other – – 262 43

1,053,834 1,336,158

Less current portion 17,578 126,904

$ 1,036,256 $ 1,209,254

(1)

COGECO Inc’s Term Facility has been extended for an additional year in December 2006.

(2)

Average interest rate on debt as at August 31, 2007, including stamping fees.

(3)

On August 14, 2007, the Term Facility was amended to permit Euribor loans under the third tranche Term commitment in an amount not

exceeding $150,000,000, subject to reduction already determined.

(4)

Cross-currency swap agreem ents have resulted in an effective interest rate of 7.254% on the Canadian dollar equivalent of the U.S. denominate d

debt of the Company’s subsidiary, Cogeco Cable Inc.

(5)

On Febru ary 2, 2007, the Company’s subsidiary, Cogeco Cable Inc., gave a notice of re demption to purchase on March 5, 2007, all of its 8.44%

Second Secured Debentures Series A (“the Notes”) in the aggrega te principal amount of $125,000,000. Concurrently, the Company’s subsidiary

also made an offer to purchase for cancellation on February 12, 2007, all of the validly issued and held Notes upon receipt by the Trustee of a

written notice of acceptance by the holders of Notes. As a result, a total of $89,257, 000 of Notes were redeemed on Fe bruary 12, 2007, for a total

cash consideration of $91,038,000. The remaining Notes of $35,743,000 were redeemed on March 5, 2007, for a total cash consideration of

$36,550,000. The excess of the redemption price over the aggregate principal amount was recorded as financial expense.

(6)

The deferred credit represents the amount that would have been payable as at August 31, 2007 and August 31, 2006 under cross-currency swaps

entered into by the Company’s subsidiary, Cogeco Cable Inc., to h edge Senior Secured Notes Series A denominated in U.S. dollars.

Interest on long-term debt for the three and twelve month periods ended August 31, 2007 amounted to $18,477,000

and $81,266,000 ($15,89 2,000 and $56,020,000 in 2006).

- 44 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

10. Capital Stock

Authorized, an unlimited number

Preferred shares of first and second rank, could be issued in series and non-voting, except when specified in the

Articles of Incorporation of the Company or in the Law.

Multiple voting shares, 20 votes per share.

Subordinate voting share, 1 vote per share.

August 31,

2007

August 31,

2006

(audited) (audited)

Issued

1,842,860 multiple voting shares (1,849,900 in 2006)

(1)

$ 12 $ 12

14,829,792 subordinate voting shares (14,702,556 in 2006) 119,066 117,540

$ 119,078 $ 117,552

(1)

During the third quarter of 2007, 7,040 multiple voting shares were converted to subordinate voting shares.

During the period, subordinate voting share transactions were as follows:

Twelve months ended Twelve months ended

August 31, 2007 August 31, 2006

(audited) (audited)

Number of

Amount

Number of

Amount

Balance at beginning 14,702,556 $ 117,540 14,600,104 $ 116,155

Shares issued for cash under the Employee Stock Purchase Plan

and the Stock Option Plan

120,196

1,526

102,452

1,385

Conversion of multiple voting shares into subordinate voting

7,040

–

Balance at end 14,829,792 $ 119,066 14,702,556 $ 117,540

- 45 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

10. Capital Stock (continued)

Stock-based plans

The Company offers, for the benefit of its employees and those of its subsidiaries, an Employee Stock Purchase Plan

and a Stock Option Plan for certain executives which are described in the Company’s annual consolidated financial

statements. During fiscal year 2007 and 2006, no stock options were granted to employees by COGECO Inc.

However, the Company’s subsidiary, Cogeco Cable Inc., granted 201,587 stock options (136,059 in 2006) with an

exercise price of $26.63 to $44.54 ($24.15 to $29.05 in 2006), of which 57,247 stock options (31,743 in 2006) were

granted to COGECO Inc.’s employees. The Company’s subsidiary also granted 376,000 conditional stock options

with an exercise price of $26.63 of which 262,400 stock options were granted to COGECO Inc.’s employees. These

conditional options vest over a period of three years beginning one year after the day such options were granted and

are exercisable over ten years. The vesting of these options is conditional to the achievement of certain yearly

financial objectives by the Portuguese subsidiary, Cabovisão — Televisão por Cabo, S.A., over a period of three

years. The Company records compensation expense for options granted on or after September 1, 2003. As a result,

a compensation expense of $538,000 and $1,977,000 ($202,000 and $775,000 in 2006) was recorded for the three

and twelve month periods ended August 31, 2007. If compensation expense had been recognized using the fair

value-based method at the grant date for options granted between September 1, 2001 and August 31, 2003, the

Company’s net income and earnings per share for the three and twelve month periods ended August 31, 2006 would

have been reduced to the following pro forma amounts:

Three months ended Twelve months ended

August 31, 2006 August 31, 2006

(unaudited) (audited)

Net income

As reported $ 10,300 $ 23,101

Pro forma 10,292 23,069

Basic earnings per share

As reported $ 0.62 $ 1.40

Pro forma 0.62 1.40

Diluted earnings per share

As reported $ 0.62 $ 1.39

Pro forma 0.62 1.39

The fair value of stock options granted by the Company’s subsidiary, Cogeco Cable Inc., for fiscal year 2007 was

$7.39 ($9.32 in 2006) per option. The fair value was estimated at the grant date for purposes of determining stock-

based compensation expense using the binomial option pricing model ba sed on the following assumptions:

2007 2006

Expected dividend yield

1.27 % 1.27 %

Expected volatility

32 % 39 %

Risk-free interest rate

4.05 % 3.70 %

Expected life in years

4.0 4.0

As at August 31, 2007, the Company had outstanding stock options providing for the subscription of 195,418

subordinate voting shares. These stock options can be exercised at various prices ranging from $14.00 to $37.50 and

at various dates up to October 19, 2011.

- 46 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

10. Capital Stock (continued)

TQS Inc., an indirect subsidiary of the Company, has also a stock option plan for certain executives and key

employees which is described in the Company’s annual consolidated financial statements. During the twelve months,

period ended August 31, 2007, 156,156 stock options (206,341 in 2006) were granted by TQS Inc. No compensation

expense (none and $154,000 in 2006) was recorded for the three and twelve month periods ended August 31, 2007

related to this plan.

The Company and its subsidiary, Cogeco Cable Inc., had also Performance Unit Plans for key employees which

were terminated in June 2007. The value of a performance unit granted was equal to the closing price of the

subordinate shares of the Company and its subsidiary on the Toronto Stock Exchange on the trading day preceding

the date of grant of the unit. The units credited to the participant’s account became vested to the participant on the

third anniversary of the date of grant of the said performance units. During fiscal year 2007, no performance unit

(29,476 in 2006) were granted by the Company to its employees. No performance unit were granted to employees by

the Company’s subsidiary, Cogeco Cable Inc., during fiscal 2007 and 2006. An amount of $7,805,000 was paid in the

fourth quarter related to the termination of these plans. A compensation expense of $70,000 and $4,659,000 (a

reduction of expense of $308,000 and an expense of $18,000 in 2006) has been recorded for the three and twelve

months periods ended Au gust 31, 2007 related to these plans.

Effective October 13, 2006, the Company established a senior executives and designated employee incentive unit

plan (the “Incentive Share Unit Plan”) which, in effect, replaces the Performance Unit Plan. According to the plan,

senior executives and other designated employees periodically receive a given number of units (“Incentive Share

Units”) which entitled the participant to receive subordinate voting shares of the Company after three years less one

day from the date of grant. During fiscal year 2007, the Company granted 25,895 Incentive Share Units. The

Company establishes the value of the compensation related to the units granted based on the market value of the

Company’s subordinate voting shares at the date of grant and a compensation expense is recognized over the

vesting period, which is three years. A trust was created for the purpose of purchasing these shares on the stock

exchange in order to guard against stock price fluctuation. The Company instructed the trustee to purchase 25,895

subordinate voting shares of the Company on the stock market. These shares were purchased for a cash

consideration of $1,054,000 and are held in trust for participants until they are completely vested. The trust,

considered as a variable interest entity, is consolidated in the Company’s financial statements with the value of the

acquired shares presented as treasury shares in reduction of capital stock. A compensation expense of $53,000 and

$181,000 was recorde d for the three and twelve months periods e nded August 31, 2007 related to this plan.

In April 2007, the Company and its subsidiary, Cogeco Cable Inc., established a deferred share unit plan (“DSU Plan”)

to assist in the attraction and retention of qualified individuals to serve on the Board of the Company. Each existing or

new member of the Board may elect to be paid a percentage of the annual retainer in the form of deferred share units

(“DSUs”) with the balance, if any, being paid in cash. The number of DSUs that a member is entitled to receive is

based on the average closing price of the subordinate shares on the Toronto Stock Exchange for the twenty

consecutive trading days immediately preceding the day preceding the date of grant. Dividend equivalents are

awarded with respect to DSUs in a member’s account on the same basis as if the member was a shareholder of

record of subordinate shares on the relevant record date, and the dividend equivalents are credited to the individual’s

account as additional DSUs. DSUs are redeemable upon an individual ceasing to be a member of the Board or in the

event of the death of a member.

- 47 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

11. Foreign Currency Translation Adjustment

The change in the foreign currency translation adjustment included in shareholders’ equity is the result of the

fluctuation in the exchange rates on translation of net investments in self-sustaining foreign subsidiaries and foreign

exchange gains or losses related to long-term debt denominated in foreign currency used to hedge net investments.

The net change in foreign currency translation adjustment for 2007 and 2006 is as follows:

Twelve months ended Twelve months ended

August 31, 2007 August 31, 2006

(audited) (audited)

Effect of exchange rate variation on translation of net investments in self-sustaining

foreign subsidiaries

(3,512)

(12,412)

Effect of exchange rate variation on translation of long-term debt designated as hedge

of net investments in self-sustaining subsidiaries, net of income taxes of $18,000

($1,703,000 in 2006)

402

7,960

$ (3,110) $ (4,452)

12. Statements of Cash Flow

a) Changes in non-cash operating items

Three months ended August 31, Twelve months ended August 31,

2007 2006 2007 2006

(unaudited) (unaudited) (audited) (audited)

Accounts receivable $ 9,825 $ 9,283 $ (5,246) $ (348)

Income taxes receivable (1,665) 245 (4,554) –

Prepaid expenses 120 227 (1,896) (1,201)

Broadcasting rights 1,486 1,807 1,612 (3,471)

Accounts payable and accrued liabilities 31,642 48,369 (60,710) 4,536

Broadcasting rights payable (2,892) (3,116) (559) 2,049

Income tax liabilities 45 672 682 373

Deferred and prepaid income 1,144 (199) 4,146 1,707

$ 39,705 $ 57,288 $ (66,525) $ 3,645

b) Other information

Three months ended August 31, Twelve months ended August 31,

2007 2006 2007 2006

(unaudited) (unaudited) (audited) (audited)

Fixed asset acquisitions through capital leases $ 291 $ 268 $ 3,084 $ 3,005

Financial expense paid 14,204 12,242 85,135 56,429

Income taxes paid (received) (1,068) 39 6,898 4,752

- 48 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

13. Employee Future Benefits

The Company and its Canadian subsidiaries offer their employees contributory defined benefit pension plans, a

defined contribution pension plan or collective registered retirement savings plans which are described in the

Company’s annual consoli dated financial statements. The total expenses related to these plans are as follows:

Three months ended August 31, Twelve months ended August 31,

2007 2006 2007 2006

(unaudited) (unaudited) (audited) (audited)

Contributory defined benefit pension plans $ 1,045 $ 783 $ 3,447 $ 3,334

Defined contribution pension plan and collective registered

retirement savings plans

606

502

2,512

1,914

$ 1,651 $ 1,285 $ 5,959 $ 5,248

14. Contingencies and Gu arantees

Second Put and Call Options of TQS Inc.

On February 15, 2002, the shareholders of 3947424 Canada Inc. (“TQS Holdco”), Cogeco Radio-Télévision Inc.

(“CRTI”) and Bell Globemedia Inc. (“BGM”), entered into a shareholders agreement following the acquisition of TQS

Inc. (the “Shareholders Agreement”). On October 31, 2002, BGM transferred its shares in TQS Holdco to CTV

Television Inc. (“CTV”), a subsidiary of BGM. The Shareholders Agreement provides the right for CTV to notify CRTI,

during a 180 day period starting from February 15, 2007, of its offer to sell all its shares in TQS Holdco to CRTI for an

all-cash consideration calculated as the fair market value of TQS Holdco multiplied by the ratio of shares owned by

CTV to total shares issued and outstanding in the capital of TQS Holdco, and multiplied by 1.15. CRTI may elect to

acquire CTV’s shares within 90 days following receipt of the put notice by delivering a put exercise notice to CTV. If

CRTI elects not to exercise or fails to exercise its put option, CTV may within 90 days following such election or failure

to exercise by CRTI, deliver a call notice to CRTI to purchase all the shares of CRTI in TQS Holdco for an all-cash

consideration calculated as the fair market value of TQS Holdco multiplied by the ratio of shares owned by CRTI to

total shares issued and outstanding in the capital of TQS Holdco, and multiplied by 1.30. Unless the parties decide to

modify the Shareholders Agreement, in the event that CTV notifies CRTI of its offer to sell all its shares in TQS Holdco

to CRTI, CRTI does not buy them and CTV does not buy CRTI’s shares, CRTI and CTV have agreed to put up all

TQS Holdco shares for sale to a third party purchaser, subject to requisite governmental authorizations, with a view to

obtaining the highest possible price and maximizing shareholder value.

On August 31, 2006, BGM announced that it had closed off on its new ownership structure whereby BCE sold 48% of

its voting interest in BGM to The Woodbridge Company Limited and affiliates, the Ontario Teachers’ Pension Plan and

Torstar Corporation. This transaction constitutes a change of control under the Shareholders Agreement and,

accordingly, triggers certain purchase rights under the Agreement in favour of CRTI to purchase all, but not less than

all, of the shares owned by CTV.

On November 30, 2006, COGECO Inc. has confirmed that CRTI will not exercise its right to purchase the 40%

interest that CTV holds in TQS Holdco, following the change of control of BGM on August 31, 2006 that triggered the

right for CRTI to acquire all the shares of CTV in TQS Holdco.

Furthermore, CRTI, CTV and TQS Holdco have amended the Shareholder’s Agreement to postpone the beginning of

the Second Put Option Period provided in the Agreem ent from February 15, 2007 to January 1, 2009.

- 49 -

COGECO INC.

Notes to Consolidated Financial Statements

August 31, 20 07

(amounts in tables are in thousands of dollars, except per share data)

14. Contingencies and Gu arantees (continued)

Taxes for Municipal Rights of Way

During the second quarter, the Company’s subsidiary, Cogeco Cable Inc., has guaranteed the payment by Cabovisão

of certain taxes for municipal rights of way assessed by the Municipality of Seixal in Portugal for the years 2004 and

2005 totalling €5.7 million (the “Tax Amounts”), which are currently being challenged by Cabovisão. Trustworthy

financial guarantees were required under applicable Portuguese law in order for Cabovisão to challenge the Tax

Amounts and withhold payment thereof until a final judgment no longer subject to appeal is rendered by the

Portuguese courts having jurisdiction in this matter. As a result, the Company’s subsidiary may be required to pay,

upon written demand by the Municipality of Seixal, the required amounts following final judgment up to a maximum

aggregate amount of €5.7 million ($8.3 million), should Cabovisã o fail to pay such required amounts.

15. Subsequent event

On September 20, 2007, the Société Radio-Canada (“SRC”) notified the Company’s subsidiary, TQS Inc., that the

affiliation in effect for French-language local stations in Saguenay, Sherbrooke and Trois-Rivières will end on March

31, 2009. The Company is currently evaluating the impact of this notification on the consolidated financial statements.

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Press release details

COGECO’S FOURTH QUARTER AND FISCAL YEAR 2007 BENEFIT FROM THE CABLE SECTOR’S PERFORMANCE.

SUSTAINABILITY

Cogeco Fund

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