STEADILY INCREASING RESULTS AT COGECO.

Press release

For immediate release

Steadily increasing results at COGECO

Montréal, April 11, 2007 – Today, COGECO Inc. (TSX: CGO) announced its financial results for

the second quarter ended February 28, 2007.

In the second quarter of fiscal year 2007, COGECO’s results showed substantial growth, thanks to

the cable sector. On a consolidated basis, revenue increased by 47.2% standing at $261.1 million,

operating income before amortization increased by 44.8%, reaching $83.7 million, and net income,

excluding the gain on dilution attributable to the issuance of shares by the cable subsidiary,

increased by 32.7% compared to the same period last year. The cable subsidiary continued to add

revenue generating units (RGUs) and improved its overall financial results. The media sector is still

committed to gain market share and its results for the first six months were essentially stable.

Cable sector

Cogeco Cable has continued to exceed its last financial projections during the second quarter.

RGUs grew by 84,399, compared to 55,109 for the same period last year. For the Canadian

operations, RGUs increased by 64,133 compared to 55,109 for the same period last year, an

increase of 16%. For the Portuguese operations, with net additions of 20,266 RGUs, the total now

stands at 670,571.

Cogeco Cable’s revenue has increased by 57%, standing at $232 million and operating income

before amortization by 45.7%, reaching $86.8 million.

“We are exceeding our projections of last January. All our operating units are well positioned to

provide a premium customer service and a very competitive offering. We are very pleased with the

progression we are experiencing, thanks to our Portuguese subsidiary and the improvement in the

penetration of all of our services including our Digital Telephony in Canada,” said Mr. Louis Audet,

President and CEO of COGECO.

Media Sector

“RYTHME FM revenue echoes our position in the markets. TQS continues to invest in

programming to recapture market share and to counteract the difficult market conditions that

continue to prevail for generalist televisions. Furthermore the sector was impacted by the warm

weather of the first half of the second quarter which had an incidence on the advertising

enthusiasm in these markets,” added Mr. Audet.

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Improved 2007 financial projections

The second quarter results lead the Company to adjust upwardly its financial projections for fiscal

2007. Consolidated revenue should reach between $1,075 million and $1,080 million, operating

income before amortization should increase to $365 million and net income should increase to

approximately $50 million.

Cogeco Cable has recently implemented rate increases in Canada and in Portugal. In addition,

debt reduction from the issuance in early February of subordinate voting shares will diminish

financial expense. The combination of these factors will improve Cogeco Cable revenue, operating

income before amortization and net income. For fiscal 2007, Cogeco Cable’s consolidated revenue

should reach $945 million, operating income before amortization should reach approximately

$365 million, while the operating margin should increase to about 39%. For the media sector,

management maintains its initial 2007 financial projections.

”COGECO will exceed its original goals for fiscal 2007. Our cable subsidiary revised its guidelines

to reflect its ability to deliver good results and our media sector is maintaining its pace to fulfill its

objectives,” concluded Mr. Audet.

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FINANCIAL HIGHLIGHTS

Quarters ended February 28,

Six months ended February 28,

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

(unaudited)

2007 2006

Change

2007 2006

Change

Revenue $

261,120

177,359 47.2 $

524,412 $ 357,837 46.6

Operating income before amortization

83,669

57,765 44.8 172,036 118,358

45.4

Net income 34,546

2,679 -

41,297

7,272 -

Cash flow from operations

(1)

59,266

41,644 42.3 125,301 88,486 41.6

Less:

Capital expenditures and increase in deferred

charges

53,386

40,316 32.4 128,001 74,359

72.1

Free cash flow

(1)

5,880

1,328 - (2,700) 14,127 -

Per share data

Basic net income 2.08

0.16 - 2.49 0.44 -

(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.

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 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 indicated.

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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,

constant 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 focuses 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 operating income before amortization growth, free cash flow

and RGU

growth for the cable

sector. Below are the first semester achievements of the cable and media sectors in furtherance of

COGECO’s objectives.

Tight control over costs, business processes

• During the second quarter and the first six months of fiscal 2007, the Company’s operating

costs increased by 48.4% and 47.1 %, respectively, over the same period last year,

essentially in line with revenue growth;

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

still 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. During the

first quarter of fiscal 2007, the employees of the media sector have received the corporate

Code of Ethics. Other than this remediation, there have been no changes to the identified

material weaknesses since August 31, 2006. The documentation and remediation of

internal controls are progressing.

Cable sector

Sustained corporate growth

Canadian operations

• Digital Television services:

o Addition to Cogeco On Demand of “Académie de hockey McDonald” in Québec;

o Signature of an agreement with Twentieth Century Fox Film Corporation for the

VOD offering;

o Addition of three HD channels to the HD offering in Ontario

• Digital Telephony service:

o Available to 74% of homes passed in Cogeco Cable’s territories, as at February 28,

2007;

o Since January 11, 2007, deployment of the Digital Telephony service in

Leamington, Kingsville and Brockville in Ontario, as well as Asbestos in Québec.

• High Speed Internet service:

o Access to F-Secure security service to Cogeco Cable business customers, free of

charge;

o Access to Wi-Fi connection for Cogeco Cable Ontario customers in Burlington,

Oakville and Hamilton.

Portuguese operations and its integration

• Cabovisão -Televisão por Cabo, S.A. (Cabovisão) is in the process of completing its plan to

launch its Digital Television service during fiscal 2007;

See “Non-GAAP financial” section for explanations.

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

- 5 -

• The integration process is essentially completed.

Continuous improvement of networks and equipment

• During the first six months of fiscal 2007, Cogeco Cable has invested in its infrastructure

including head-ends and upgrade/rebuild for an amount approximating $49 million.

Effective management of capital

• Cogeco Cable, the cable subsidiary, issued 5 million subordinate voting shares at a price of

$38.50 for total net proceeds of $184.2 million which was used to reduce long-term debt;

• Cogeco Cable reimbursed its $125 million 8.44% Second Secured Debentures due July 31,

2007, as well as a portion of its $900 million Term Facility including its bank indebtedness

from the proceeds of the subordinate voting shares issue.

Media sector

• During the second quarter, TQS has continued to invest in its programming in order to

recapture market share thus resulting in an improvement of the year to date audience

market share compared to last year.

• RYTHME FM is committed to keeping its leadership position in the Montreal market. Across

Québec, other RYTHME FM stations and station 93

in Québec City are consolidating their

position.

RGU growth

During the first six months of fiscal 2007, the consolidated number of RGUs increased by 9% to

reach almost 2.4 million units, en route towards the achievement of Cogeco Cable’s January 2007

revised projections of 13% to 14% for the fiscal year 2007.

Revenue and Operating income before amortization growth

During the second quarter and first six months, consolidated revenue increased respectively by

47.2% to reach $261.1 million and by 46.6% to reach $524.4 million. For the same periods,

operating income before amortization grew by $25.9 million, or 44.8%, to reach $83.7 million and

by $53.7 million, or 45.4%, to reach $172 million, mainly due to stronger RGU growth and to the

consolidation of the financial results of Cabovisão acquired on August 1, 2006 in the cable sector.

Considering the improved performance of the cable sector during the first six months of fiscal

2007, management has revised upwards its projections for the fiscal year 2007 to reflect rate

increases to occur in Canada and in Portugal and the strengthening of the euro currency over the

Canadian dollar. Subsequent to these adjustments, revenue is now expected to reach between

$1,075 million and $1,080 million while operating income before amortization should increase to

$365 million. Please consult the ‘’Fiscal 2007 financial guidelines’’ section for further details.

Free cash flow

In the second quarter of fiscal 2007, COGECO generated free cash flow of $5.9 million, compared

to $1.3 million for the same period last year. For the six month period ended February 28, 2007,

the Company generated a negative free cash flow of $2.7 million compared to a positive free cash

flow of $14.1 million for the same period the year before, mainly due to higher capital expenditures

necessary to sustain RGU growth in the cable sector. The increase in capital expenditures for the

cable sector in the semester also includes the acquisition of customer premise equipment

amounting to approximately $10 million to serve expected RGU growth in the coming months.

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Capital expenditures and deferred charges amounted to $53.4 million and $128 million for the

second quarter and first six months of 2007. Considering the strong demand for HSI and Digital

Telephony services in Canada in the first six months of fiscal 2007 in the cable sector, Cogeco

Cable has revised the level of capital expenditures required in its infrastructure to increase its

capacity. Fiscal 2007 capital expenditures and deferred charges are now expected to reach

$267 million. The revised free cash flow for fiscal 2007 should be between $10 million to

$15 million. Please consult the ‘’Fiscal 2007 financial guidelines’’ section for further details.

OPERATING RESULTS – CONSOLIDATED OVERVIEW

Quarters ended February 28,

Six months ended February 28,

($000s, except percentages)

2007

2006

Change

2007 2006

Change

Revenue $ 261,120 $

177,359 47.2 $

524,412 $ 357,837 46.6

Operating costs 177,451 119,594 48.4 352,376 239,479 47.1

Operating income before amortization

83,669 57,765 44.8 172,036 118,358 45.4

Operating margin 32.0 %

32.6 %

32.8 % 33.1 %

Revenue

Revenue, for the second quarter and the first six months of 2007 rose by $83.8 million, or 47.2%,

to reach $261.1 million and by $166.6 million, or 46.6%, to reach $524.4 million respectively,

compared to the same periods last year. Cable revenue, driven by a strong RGU growth together

with rate increases and the consolidation of the financial results of Cabovisão, went up by

$84.2 million, or 57%, and $162.8 million, or 55.9%, respectively, in the second quarter and the

first six months of fiscal 2007. Media revenue decreased by $0.4 million or 1.5% in the second

quarter essentially due to a decrease in television advertising revenue, and increased by

$3.8 million, or 5.7%, in the first six months due to higher television and radio advertising revenue.

Operating income before amortization

Operating income before amortization grew by $25.9 million, or 44.8%, to reach $83.7 million in

the second quarter of fiscal 2007 and by $53.7 million, or 45.4%, to reach $172 million in the first

six months of fiscal 2007 compared to the corresponding periods of last year. The cable sector

contributed to an increase of $27.2 million and $53.6 million during the second quarter and the first

six months. For the same periods, the media sector had a negative impact of $0.4 million in the

quarter and a positive impact of $0.2 million in the first six months.

FIXED CHARGES

Quarters ended February 28,

Six months ended February 28,

($000s, except percentages)

2007

2006 %

Change

2007 2006

Change

Amortization $ 45,112 $ 30,217 49.3 $ 90,951 $ 60,100 51.3

Financial expense

24,181

14,231 69.9

45,940

28,192 63.0

Amortization amounted to $45.1 million and $91 million during the second quarter and the first six

months of fiscal 2007 compared to $30.2 million and $60.1 million for the same periods the year

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before. Amortization increased mainly as a result of the consolidation of the financial results of

Cabovisão and to the increased capital expenditures arising from the customer growth resulting in

higher demand for customer premise equipment, scalable infrastructure, upgrade/rebuild, support

capital and deferred charges in the cable sector.

During the second quarter and first six months of fiscal 2007, financial expense increased by

$10 million and $17.7 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, in the cable sector. In

addition, in the second quarter, there was a one-time charge of $2.6 million related to the early

repayment of the Second Secured Debentures Series A of Cogeco Cable. The cable subsidiary

has revised its guidelines to reflect the impact of the share issuance on the financial expense.

Please consult the ‘’Fiscal 2007 financial guidelines’’ section for further details.

INCOME TAXES

For the second quarter of fiscal 2007, income taxes amounted to $2.6 million compared to

$5.7 million in fiscal 2006. For the first six months of fiscal 2007, income taxes amounted to

$9 million compared to $12.3 million for the same period last year. The income tax decreases were

attributable to the cable sector’s and mainly due to the elimination of Canadian federal capital tax

on January 1, 2006 and to the recognition of benefits related to prior years’ minimum income tax

paid.

NON-CONTROLLING INTEREST

The non-controlling interest represents an interest of approximately 65% in Cogeco Cable’s results

and a 40% interest in TQS Inc. The non-controlling interest in Cogeco Cable’s results increased

from approximately 61% to approximately 65% during the second quarter following the completion

of a public offering of 5,000,000 subordinate voting shares on February 2, 2007 made by the cable

subsidiary, Cogeco Cable. During the second quarter and first six months of fiscal 2007, the non-

controlling interest amounted to $8.2 million and $15.8 million, mainly due to the cable sector

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

$4.8 million and $10.3 million respectively.

NET INCOME

Net income for the second quarter of fiscal 2007 amounted to $34.5 million, or $2.08 per share,

compared to $2.7 million, or $0.16 per share, for the same period last year. For the first six months

of fiscal 2007, net income stood at $41.3 million, or $2.49 per share, compared to $7.3 million, or

$0.44 per share for the comparable period last year. Excluding a gain on dilution of $31 million

attributable to the issuance of shares by Cogeco Cable, net income for the second quarter would

have amounted to $3.6 million or $0.21 per share and to $10.3 million or $0.62 per share for the

first six months of 2007. The net income increase, excluding the gain on dilution, is the result of the

rise in operating income before amortization outpacing fixed charges growth.

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CASH FLOW AND LIQUIDITY

Quarters ended February 28,

Six months ended February 28,

($000s)

2007

2006

2007

2006

Operating Activities

Cash flow from operations $

59,266

41,644

125,301

88,486

Changes in non-cash operating items

4,328

2,828

(81,430) (49,085)

63,594

44,472

43,871

39,401

Investing Activities

(1)

(52,725)

(59,092)

(127,022)

(93,135)

Financing Activities

(1)

10,157

(6,063)

49,953

53,734

Net change in cash and cash equivalents $

21,026

(20,683)

(33,198) $ -

Effect of exchange rate changes on cash and cash

equivalents denominated in currencies

1,644

3,260

Cash and cash equivalents at beginning

18,908

20,683

71,516

Cash and cash equivalents at end $

41,578

(1) Excludes assets acquired under capital leases.

During the second quarter of 2007, cash flow from operations reached $59.3 million, 42.3% 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 a decline

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

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

increases in accounts payable and accrued liabilities and decreases in prepaid expenses, partly

offset by variations in income tax receivables and payables combined with an increase in

broadcasting rights.

During the first six months of fiscal 2007, cash flow from operations reached $125.3 million, an

increase of 41.6% 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 greater cash outflows than 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 subsidiary in accordance with the terms of the

acquisition, and by increases in accounts and income tax receivables, partly offset by a lower

increase in broadcast rights.

On March 9, 2007, Cogeco Cable and Cable Satisfaction International Inc. have come to an

agreement for a final adjustment of the working capital which was still outstanding since the date of

acquisition, and consequently, the preliminary goodwill has been reduced by $3.3 million. The

remaining adjustment to the purchase price is due to the re-evaluation of costs related to the

acquisition of Cabovisão.

In the second quarter of fiscal 2007, investing activities stood at $52.7 million mainly due to capital

expenditures of $45.3 million and an increase in deferred charges of $6 million. For the first six

months, investing activities stood at $127 million due capital expenditures of $112.5 million and an

increase in deferred charges of $13.3 million.

During the second quarter and first six months of fiscal 2007, the increases related to capital

expenditures compared to the same periods last year are mainly due to the integration of

Cabovisão and the following factors in the cable sector:

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¾ The increase in customer premise equipment expenditures resulted from a greater demand

for HSI and Digital Telephony services, from a rise in the number of digital terminals rented

to customers and from a greater ratio of digital terminals per digital home. Furthermore,

customer premise equipment representing approximately $10 million was acquired by

Cogeco Cable during the first semester to serve expected RGU growth in the coming

months.

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

support of the Digital Telephony roll-out 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, 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 91% as at February 28, 2006 to 93% as at February 28, 2007.

¾ The Portuguese operations capital expenditures amounted to $10.8 million and

$20.4 million respectively for the second quarter and the first six months of fiscal 2007,

essentially to support RGU growth.

The second quarter and first six months of fiscal 2007 increases in deferred charges are explained

by higher reconnect costs attributable to the significant level of RGU growth.

In the second quarter of fiscal 2007, the Company generated free cash flow in the amount of

$5.9 million compared to $1.3 million the preceding year. For the first six months of fiscal 2007, the

Company incurred a deficit in free cash flow in the amount of $2.7 million compared to a surplus of

$14.1 million for the same period the year before. The second 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 Digital Telephony service roll-out and by the increase

in financial expense. The first six months 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

(including the acquisition of customer premise equipment amounting to approximately $10 million

to serve RGU growth in the coming months), deferred charges generated by RGU growth, to

support the Digital Telephony service roll-out and by the increase in financial expense, partly offset

by the growth in operating income before amortization.

On February 2, 2007, the cable subsidiary, Cogeco Cable, announced the completion of a public

offering of 5,000,000 subordinate voting shares for gross proceeds of $192.5 million. The offering

resulted in net proceeds to Cogeco Cable of approximately $184.2 million which was used to

reduce long-term indebtedness and working capital deficiency.

During the second quarter of 2007, the level of Indebtedness decreased by $176 million. On

February 2, 2007, the cable subsidiary, Cogeco Cable, gave notice of redemption and offered to

purchase all of its 8.44% Second Secured Debentures, Series A, in the aggregate principal

amount of $125 million due July 31, 2007 (the ‘’Notes’’). As at February 28, 2007, $89.3 million of

the Notes have been repaid and the remainder was repaid on March 5, 2007. The decrease in

Indebtedness was also due to the repayment of a portion of Cogeco Cable’s Term Facility

amounting to $81.3 million including its bank indebtedness. For the same period last year,

Indebtedness decreased by $5.5 million mainly due to free cash flow of $1.3 million, a rise in non-

cash operating items of $2.8 million and a net decrease in cash and cash equivalents of

$20.7 million, partly offset by an increase in restricted cash of $20.3 million. In addition, a dividend

of $0.07 per share for subordinate and multiple voting shares, totalling $1.2 million, was paid

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during the second quarter of fiscal 2007 compared to a dividend of $0.0625 per share or $1 million

for the second quarter of fiscal 2006.

During the first half of fiscal 2007, the level of Indebtedness decreased by $134.5 million mainly

due to the repayment of the Notes for $89.3 million and the repayment of $49.1 million of Cogeco

Cable’s Term Facility. For the same period last year, Indebtedness grew by $56.3 million mainly

due to a decline in non-cash operating items of $49.1 million and an increase in restricted cash of

$20.3 million partly offset by generated free cash flow of $14.1 million. In addition, dividends

totalling $2.2 million were paid during the first six months of fiscal 2007 compared to $2.1 million

for the same period the year before.

As at February 28, 2007, the working capital deficiency was reduced by an amount of

$126.5 million mainly as a result of the $125 million portion of the net proceeds of the share

issuance being used to reimburse $89.3 million of the Senior Secured debentures Series A on

February 12, 2007 in the cable subsidiary. The remaining portion of $35.7 million, presented as

cash and cash equivalents as at February 28, 2007, was used to reimburse the remainder of these

debentures, on March 5, 2007. 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 February 28, 2007, the cable subsidiary had used $617.2 million of its $900 million Term

Facility and the Company had drawn $16.5 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 ‘’Fixed Assets’’, ‘’Preliminary Goodwill’’,

‘’Accounts Payable and accrued liabilities’’, ‘’Accounts receivable’’, ‘’Indebtedness’’, ‘’Cash and

cash equivalents’’, ‘’Non-controlling interest’’ and ‘’Foreign currency translation adjustment’’.

The $61.7 million rise in fixed assets is mainly related to increased capital expenditures to sustain

RGU growth in the cable sector during the first six months as well as anticipated growth in the

coming months. The increase of $32.8 million in preliminary goodwill is mainly the result of the

appreciation of the euro currency over the Canadian dollar partly offset by an adjustment of

$6 million to the purchase price following a resolution of the working capital adjustments and the

reevaluation of costs related to the acquisition of Cabovisão in the cable sector. The $20.5 million

increase in accounts receivable is essentially due to an increase in the general level of receivables

in line with the revenue growth, the resolution of the working capital adjustments and to the euro

currency appreciation over the Canadian dollar in the cable sector. The $57.5 million and

$29.9 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

$15.9 million increase in foreign currency translation adjustment is the result of the appreciation of

the euro currency over the Canadian dollar. The non-controlling interest rise of $174.2 million is

due to the impact of the share issuance of Cogeco Cable and the decrease in indebtedness by

$89.3 million is the result of the factors previously discussed in the “Cash Flow and Liquidity”

section.

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A description of COGECO’s share data as at March 31, 2007 is presented in the table below:

Number of shares/

options

Amount

($000s)

Common Shares

Multiple voting shares

Subordinate voting shares

1,849,900

14,745,231

117,997

Options to Purchase Subordinate Voting Shares

Outstanding options

Exercisable options

273,279

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 $49.1 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, the 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 amoun t of €5.7 million, should Cabovisão fail

to pay such required amounts.

DIVIDEND DECLARATION

At its April 11, 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 May 9, 2007, to

shareholders of record on April 25, 2007.

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CABLE SECTOR

CUSTOMER STATISTICS

Canadian operations

Net additions % of Penetration

(1) (4)

Quarters ended

February 28,

Six months ended

February 28,

2007 2007 2006 2007 2006 2007 2006

RGUs

(2)

1,713,084 64,133 55,109 157,148 115,879

Basic service customers

854,694 5,277 3,505 21,517 14,408

HSI service customers

(3)

392,443 20,428 17,460 49,363 40,453 49.3 41.9

Digital Television service customers

362,549 13,961 24,547 35,185 45,962 43.3 35.8

Digital Telephony service customers 103,398 24,467 9,597 51,083 15,056 16.2 5.7

(1)

As a percentage of basic service customers in areas served.

(2)

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

(3)

Customers subscribing only to Internet services totalled 63,884 as at February 28, 2007 compared to 59,292 as at February 28, 2006.

(4)

An audit of homes pas sed in Ontario has been c ompleted durin g the first quarter of fiscal 2 007 and, as a result, t he number of homes passed

has been reduced by 42,386.

All services generated higher growth in the second quarter of 2007 compared to the same period

last year, except for the Digital Television service. During the second quarter, Digital Telephony

customers grew by 24,467 to reach 103,398 compared to a growth of 9,597 for the same period

last year. This growth is mostly attributable to the launch of the service in new markets. Coverage

of homes passed has now reached 74% compared to 34% last year. The net additions of basic

service customers in the second quarter reached 5,277, compared to 3,505 for the same period

last year. The number of net additions of HSI service stood at 20,428 compared to 17,460 for the

same period last year. The growth of HSI and basic service customers compared to the same

period last year is mostly due to the enhancement of the product offering, the impact of the

bundled offer of Television, HSI and Digital Telephony services (Cogeco Complete Connection),

and promotional activities.

The net additions of Digital Television service customers stood at 13,961 compared to 24,547 for

the same period last year. The decrease in net additions this quarter compared to the same

quarter last year reflects a maturing of the digital TV segment following a period of robust growth,

especially in the second quarter of fiscal 2006. Nevertheless, customers continue to demonstrate

strong interest in HD technology. Secondly, Cogeco Cable adjusted the service offering and price

gap differential between analog TV 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 the first

half of fiscal 2006.

Portuguese operations

Net additions % of Penetration

(1)

February 28,

2007

Quarter ended

February 28, 2007

Six months ended

February 28, 2007

RGUs

(2)

670,571 20,266

41,530

Basic service customers

283,553 6,606

13,859

HSI service customers

151,663 7,308

15,385

53.5

Telephony service customers 235,355 6,352 12,286 83.0

(1)

As a percentage of basic service customers in areas served.

(2)

Represent the sum of basic service, HSI service and Telephony service customers.

- 13 -

For the second quarter, all services generated customer growth in line with Cogeco Cable’s

guidelines. Basic service grew by 6,606 customers, HSI by 7,308 customers and Telephony by

6,352 customers.

OPERATING RESULTS

Quarters ended February 28,

Six months ended February 28,

($000s, except percentages)

2007

2006

Change

2007

2006 % Change

Revenue $ 231,952 $

147,757 57.0 $ 453,954 $ 291,170 55.9

Operating costs 141,033 85,232 65.5 274,933 168,475 63.2

Management fees - COGECO

Inc.

4,128 2,957 39.6 8,568 5,825 47.1

Operating income before

amortization

86,791 59,568 45.7 170,453 116,870 45.8

Operating margin 37.4 %

40.3 %

37.5 % 40.1 %

Revenue

In the second quarter of fiscal 2007, consolidated revenue grew by $84.2 million, or 57%, to reach

$232 million and by $162.8 million, or 55.9% to reach $454 million for the first six months of 2007,

mainly due to strong RGU growth, the consolidation of the financial results of the Portuguese

operations acquired on August 1, 2006 and rate increases. Canadian operations revenue, driven

by an increased number of customers in basic, HSI, Digital Telephony and Digital television

services as well as rate increases, went up by $27.2 million, or 18.4% in the second quarter and by

$51.7 million, or 17.8%, in the first six months. The Portuguese operations revenue amounted to

$57 million for the second quarter of fiscal 2007 and to $111.1 million for the first six month period

of fiscal 2007.

Operating costs

For the second quarter and the first six months, operating costs excluding management fees

payable to COGECO Inc. increased by $55.8 million and $106.5 million to reach $141 million and

$274.9 million respectively, an increase of 65.5% and 63.2% compared to last year. The increase

in operating costs is mainly attributable to the inclusion of the operating costs of Cabovisão, the

introduction of Digital Telephony service and to servicing additional RGU in Canada.

Operating income before amortization

Operating income before amortization, for the second quarter and the first six months, increased

by $27.2 million, or 45.7%, to reach $86.8 million and by $53.6 million, or 45.8% to reach

$170.5 million, as a result of RGU growth, Cabovisão acquisition and rate increases outpacing

operating costs. Cogeco Cable’s second quarter and first six months’ operating margin declined

respectively from 40.3% to 37.4% and from 40.1% to 37.5% respectively as a result of the Digital

Telephony deployment in Canada and the consolidation of the Portuguese operations lower

operating margin.

- 14 -

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 US 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 CDN$1.5910. Amounts due under the US$150 million Senior

Secured Notes Series A increased by CDN$9.7 million at the end of the second quarter compared

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

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

Note 7 of the second quarter 2007 interim financial statements. The CDN$63.2 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, the cable subsidiary’s investment in the

Portuguese subsidiary, Cabovisão, is 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 CDN$15.9 million

in the first six months of fiscal 2007 which is deferred and recorded in the foreign currency

translation adjustment. The exchange rate used by the cable subsidiary to convert the euro

currency into Canadian dollar for the balance sheet accounts as at February 28, 2007 was

$1.5479 per euro compared to $1.4156 per euro as at August 31, 2006. The average exchange

rate used to convert the operating results of the Portuguese operations for the second quarter and

the first six months of fiscal 2007 were $1.5146 per euro and $1.4818 per euro, respectively.

MEDIA SECTOR

OPERATING RESULTS

Quarters ended February 28,

Six months ended February 28,

($000s, except percentages)

2007

2006

Change

2007 2006

Change

Revenue $ 29,219 $

29,653 (1.5) $ 70,560 $ 66,769 5.7

Operating costs 32,559 32,545 - 70,846 67,212 5.4

Operating income (loss)

before amortization

(3,340) (2,892) (15.5)

(286) (443) 35.4

Operating margin

(11.4) %

(9.8) % (0.4) %

(0.7) %

Revenue

During the second quarter of fiscal 2007, revenue stood at $29.2 million, a slight decrease of

$0.4 million, or 1.5%, compared to the same period last year. For the first six month period of

2007, revenue increased by $3.8 million, or 5.7% to reach $70.6 million. Radio revenue has

increased by 12% and 15.2% respectively, mainly due to improved audience ratings. Television

revenue has decreased by 4.5% in the second quarter mainly due to the warmer climate that

occurred in its first half, coupled with a difficult market for generalist television services. In addition,

as opposed to the same quarter in fiscal 2006, Loft Story wasn’t aired during the second quarter of

- 15 -

fiscal 2007, impacting slightly TQS advertising revenue. For the first six months, television revenue

has increased by 3.6% due to improved audience market share; TQS was the only conventional

television network in the Francophone market to have improved its audience ratings during the first

six month period of fiscal 2007.

Operating income before amortization

The operating income before amortization declined by $0.4 million in the second quarter of fiscal

2007 and slightly increased by $0.2 million in the first six months of fiscal 2007 compared to last

year. For the second quarter and first six months, TQS’s operating income before amortization

decreased as a result of greater investment in television programming, combined with lower

revenue growth. Radio’s operating income before amortization decreased in the second quarter

due to an increase in operating expenses and improved for the first six months due to revenue

growth.

FISCAL 2007 FINANCIAL GUIDELINES

Cable sector

Given the improved performance of the cable sector during the first six months of fiscal 2007,

management has revised upward its guidelines in that sector for the fiscal year 2007 to reflect rate

increases in Canada and in Portugal, the strengthening of the euro currency over the Canadian

dollar, the impact of the share issuance, the repayment of long-term debt and the reduction of

financial expense.

Subsequent to these adjustments, projected revenue and operating income before amortization

were revised upward, operating margin should increase at about 39% and financial expense

should decrease following the repayment of long-term debt. The increase in projected revenue

should come essentially from the Canadian operations mainly due to the strong RGU growth

during the first six months of fiscal 2007 as well as rate increases of $3 per Digital Television

customer, representing approximately $1 per basic service customer, effective in March 2007 in

Ontario and in April 2007 in Quebec. Furthermore, Analog Value Pack rates will also increase by

$1.50 per customer in April 2007 in Ontario. For the Portuguese operations, rate increases of

approximately €0.65 (CDN$1) per basic service customer were implemented effective in March

2007. These rate increases should generate approximately $6.8 million of additional revenue

during the current fiscal year. At last, the revised guidelines reflect the improvement of the euro

currency compared to the Canadian dollar and as a result, for guideline purposes, the euro is

converted at an average rate of $1.50 per euro while the Corporation was using an average rate of

$1.45 per euro last January.

Management is also raising its guidance for capital expenditures and deferred charges from

$255 million to $260 million to increase the capacity of its infrastructure to sustain growth. The

cable subsidiary should generate free cash flow of $15 million.

In furtherance of its existing line of business and external growth strategy, Cogeco Cable may

investigate further cable system acquisition opportunities, including cable systems located outside

Canada over time.

Media sector

Media sector is maintaining its 2007 original financial guidelines.

- 16 -

($ million, except customer data)

Revised Projections

April 11, 2007

Fiscal 2007

Revised Projections

January 10, 2007

Fiscal 2007

Consolidated Financial Guideli nes

Revenue 1,075 to 1,080 1,050 to 1,060

Operating income before amortization

365 356 to 358

Net income

50 15

Free Cash Flow

10 to 15 5 to 10

Cable sector–

Financial Guidelines

Revenue 945 925

Operating income before amortization 365 355

Operating margin About 39% About 38%

Financial expense 85 87

Amortization 192 192

Capital expenditures and deferred charges 260 255

Free cash flow 15 10 to 15

Customer Addition Guidelines

Basic service 37,000 to 40,000 37,000 to 40,000

HSI service 85,000 to 90,000 85,000 to 90,000

Digital Television service 60,000 to 65,000 60,000 to 65,000

Telephony services 105,000 to 110,000 105,000 to 110,000

RGU 287,000 to 305,000 287,000 to 305,000

Media sector–

Financial Guidelines

Revenue

131 to 135 131 to 135

Operating income before amortization

1 to 3 1 to 3

Amortization

7 7

Capital expenditures and deferred charges 7 7

UNCERTAINTIES AND MAIN RISK FACTORS

There has been no significant change in the risk factors and uncertainties facing COGECO as

described in the Company’s MD&A of the 2006 annual report.

ACCOUNTING POLICIES AND ESTIMATES

There has been no significant change in COGECO’s accounting policies and estimates and future

accounting pronouncements since August 31, 2006. A description of these policies and estimates

can be found in the Company’s 2006 annual MD&A.

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’” and “free cash flow”.

- 17 -

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 February 28,d

August 31,

Six months ended February 28,

2007

2006

2007

2006

Cash flow from operating activities $ 63,594 $ 44,472 $ 43,871 $ 39,401

Changes in non-cash operating items (4,328)

(2,828)

81,430 49,085

Cash flow from operations $ 59,266 $ 41,644 $ 125,301 $ 88,486

Free cash flow

Free cash flow is used, by COGECO’s management and investors, to measure its ability to repay

debt, distribute capital to its shareholders and finance its growth. Free cash flow is calculated as

follows:

($ 000)

Quarters ended February 28,

Six months ended February 28,

2007

2006

2007

2006

Cash flow from operations

59,266 $ 41,644 $

125,301 $

88,486

Acquisition of fixed assets

(45,313) (34,994) (112,511) (65,322)

Increase in deferred charges

(6,046) (3,784) (13,258) (7,499)

Assets acquired under capital leases – as per

Note 10 b) (2,027) (1,538) (2,232) (1,538)

Free cash flow

5,880 $ 1,328 $

(2,700) $

14,127

ADDITIONAL INFORMATION

This MD&A was prepared on April 11, 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 about 1,713,000 revenue-generating units (RGUs) to approximately 1,448,000

homes passed in its Canadian service territory and about 671,000 RGUs to approximately 835,000

homes passed in its Portuguese service territory. Through its two-way broadband cable networks,

Cogeco Cable provides its residential and commercial customers with analog and Digital

Television and services, High Speed Internet access as well as Telephony services. Through its

Cogeco Radio-Television subsidiary, COGECO holds a 60% interest and operates the TQS

network, six 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 (CGO). The subordinate voting shares of Cogeco Cable are also listed on the

Toronto Stock Exchange (CCA).

– 30 –

- 18 -

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: Thursday, April 12, 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:

1 877 704-5381

International Access Number: +

1 913 312-1295

Confirmation Code:

4397487

By Internet at: www.cogeco.ca/investors

A rebroadcast of the conference call will be available until

April 26, 2007 by dialling:

Canada and USA access number: 1 888 203-1112

International access number: + 1 719 457-0820

Confirmation code:

4397487

- 19 -

Supplementary Quarterly Financial Information

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

2007

(1)

2006 2006

(1)

2005 2006

(1)

2005 2006 2005

($000, except percentages

and per share data)

Revenue $ 261,120 $ 177,359 $ 263,292 $

180,478 $

199,351 $

164,210 $ 189,718 $

173,418

Operating income before

amortization

83,669

57,765 88,367

60,593

68,645

56,485

66,111

63,814

Operating margin 32.0% 32.6% 33.6% 33.6% 34.4% 34.4% 34.8% 36.8%

Amortization 45,112 30,217 45,839 29,883 36,446 30,769 30,658 32,783

Financial expense 24,181 14,231 21,759 13,961 16,864 14,366 14,120 14,441

Income taxes 2,580 5,706 6,463 6,611 (13,950)

5,052 8,461 5,869

Non-controlling interest 8,240 4,842 7,557 5,455 19,022 5,422 7,293 5,603

Gain (loss) on dilution 30,990 - (7)

- - - - 16

Net income 34,546 2,679 6,751 4,593 10,300 630 5,529 4,964

Cash flow from

operations

59,266 41,644 66,035 46,842 51,729 43,215 52,093 48,699

Net income per share $ 2.08 $ 0.16 $ 0.41 $

0.28 $

0.62 $

0.04 $ 0.33 $

0.30

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

Cable sector operating results are generally not subject to material seasonal ﬂuctuations.

However, the loss of basic service customers is usually greater, and the addition of HSI customers

is generally lower in the third 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. - 20 -

Customer Statistics

February 28, August 31,

2007 2006

Homes Passe

Ontario (1) 968 45

1 002 187

Québec 479 818 474 717

Canada 1 448 273 1 476 904

Portugal 835 461 826 369

Total 2 283 73

2 303 273

Revenue Generating Unit

Ontario 1 212 79

1 104 157

Québec 500 288 451 779

Canada 1 713 08

1 555 936

Portugal 670 571 629 041

Total 2 383 65

2 184 977

Basic Service Customer

Ontario 603 077 587 289

Québec 251 617 245 888

Canada 854 69

833 177

Portugal 283 553 269 694

Total 1 138 247 1 102 871

Discretionnary Service Customer

Ontario 473 010 463 783

Québec 200 537 192 895

Canada 673 547 656 678

Portugal - -

Total 673 547 656 678

Pay TV Service Customer

Ontario 88 756 84 425

Québec 42 241 38 455

Canada 130 997 122 880

Portugal 53 926 54 089

Total 184 923 176 969

High Speed Internet Service Customer

Ontario 303 471 269 328

Québec 88 972 73 752

Canada 392 443 343 080

Portugal 151 663 136 278

Total 544 106 479 358

Digital Video Service Customers

Ontario 235 424 213 556

Québec 127 125 113 808

Canada 362 549 327 364

Portugal - -

Total 362 549 327 364

Telephony Service Customer

Ontario 70 82

33 984

Québec 32 57

18 331

Canada 103 398 52 315

Portugal 235 35

223 069

Total 338 753 275 384

(1) An audit of homes passed in Ontario has been completed during the first quarter of fiscal 2007 and, as a result,

the number of homes passed has been reduced by 42,386

- 21 -

COGECO INC.

CONSOLIDATED STATEMENTS OF INCOME

Three months ended February 28, Six months ended Febr uary 28,

(In thousands of dollars, except per share data)

2007

2006

2007

2006

(unaudited) (unaudited) (unaudited)

(unaudited)

Revenue $ 261,120

$ 177,359

$ 524,412

$ 357,837

Operating costs

177,451

119,594

352,376

239,479

Operating income before amo rtizatio n 83,669

57,765

172,036

118,358

Amortization (note 3)

45,112

30,217

90,951

60,100

Operating income 38,557

27,548

81,085

58,258

Financial expense (note 7)

24,181

14,231

45,940

28,192

Income before income taxes and the following

items 14,376

13,317

35,145

30,066

Income taxes (note 4)

2,580

5,706

9,043

12,317

Non-controlling interest

8,240

4,842

15,797

10,297

Gain on dilution resulting from shares issue d b y a

subsidiary

(30,990)

(30,983)

Share in the earnings (loss) of a general partnership

(90)

(180)

Net income $ 34,546

$ 2,679

$ 41,297

$ 7,272

Earnings per share (no t e 5)

Basic

$2.08

$0.16

$2.49

$0.44

Diluted

2.07

0.16

2.48

0.44

- 22 -

COGECO INC.

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

Six months ended February 28,

(In thousands of dollars)

2007

2006

(unaudited)

Balance at beginning $ 204,734

$ 185,762

Net income

41,297

7,272

Dividends on multiple voting shares

(245)

(231)

Dividends on subordinate voting shares

(1,950)

(1,831)

Balance at end $ 243,836

$ 190,972

- 23 -

COGECO INC.

CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

February 28,

2007

August 31,

2006

(unaudited)

(audited)

Assets

Current

Cash and cash equivalents

$ 41,578

$ 71,516

Restricted cash

526

569

Accounts receivable

92,443

71,989

Income tax receivable

3,346

Prepaid expenses

6,679

7,204

Broadcasting rights

18,711

15,632

163,283

166,910

Income tax receivable

1,277

Broadcasting rights

18,864

18,083

Investments

539

Fixed assets

1,110,667

1,048,998

Deferred charges

50,791

49,433

Broadcasting licenses and customer base (note 6)

1,017,892

Preliminary goodwill (note 6)

454,884

422,108

$ 2,818,197

$ 2,723,963

Liabilities and Shareholders' equity

Liabilities

Current

Bank indebtedness

$ 15,361

$ 7,891

Accounts payable and accrued liab ilities

255,347

312,837

Broadcasting rights payable

13,686

7,721

Income tax liabilities

1,976

666

Deferred and prepaid income

28,096

26,737

Current portion of long-term debt (note 7)

38,077

126,904

352,543

482,756

Long-term debt (note 7)

1,201,352

1,209,254

Share in the partner’s deficiency of a general partnership

832

841

Deferred and prepaid income

11,713

10,525

Broadcasting rights payable

5,242

5,777

Pension plan liabilities and accrued emplo yee benefits

13,752

11,098

Future income tax liabilities

210,963

211,848

Non-controlling interest

646,811

472,605

2,443,208

2,404,704

Shareholders' equity

Capital stock (note 8)

118,009

117,552

Contributed surplus - stock-based compen sation

1,708

1,425

Retained earnings

243,836

204,734

Foreign currency translation adjustment (note 9)

11,436

(4,452)

374,989

319,259

$ 2,818,197

$ 2,723,963

- 24 -

COGECO INC.

CONSOLIDATED STATEMENTS OF CASH FLOW

Three months ended February 28, Six months ended February 28,

(In thousands of dollars)

2007

2006

2007

2006

(unaudited)

Cash flow from operating activities

Net income

$ 34,546

$ 2,679

$ 41,297

$ 7,272

Items not affecting cash and cash equivalents

Amortization (note 3)

45,112

30,217

90,951

60,100

Amortization of deferred financing costs

535

240

1,181

481

Future income taxes (note 4)

(500)

3,891

3,379

9,218

Non-controlling interest

8,240

4,842

15,797

10,297

Gain on dilution resulting from shares issued b y a

subsidiary

(30,990)

(30,983)

Stock-based compensation

2,121

(258)

3,088

170

Other

202

591

948

59,266

41,644

125,301

88,486

Changes in non-cash oper ating items (note 10a))

4,328

2,828

(81,430)

(49,085)

63,594

44,472

43,871

39,401

Cash flow from investing activities

Acquisition of fixed assets (not e 10b))

(45,313)

(34,994)

(112,511)

(65,322)

Increase in deferred charges

(6,046)

(3,784)

(13,258)

(7,499)

Decrease (increase) in restricted cash

(3)

(20,322)

Costs related to business acquisition

(1,385)

Other

(52,725)

(59,092)

(127,022)

(93,135)

Cash flow from financing activities

Increase (decrease) in bank i ndebtedness

(32,255)

5,952

7,470

27,621

Increase in long-term debt

30,000

Repayment of long-term debt

(143,730)

(11,450)

(142,000)

(1,321)

Issue of subordinate voting shares

337

1,274

457

1,274

Dividends on multiple voting shares

(129)

(115)

(245)

(231)

Dividends on subordinate voting shares

(1,031)

(918)

(1,950)

(1,831)

Issue of subordinate voting shares by a subsidiary to

non-controlling interest, net of issue costs

188,427

166

188,655

166

Dividends paid by a subsidiary to non-controlling

interest

(1,462)

(972)

(2,434)

(1,944)

10,157

(6,063)

49,953

53,734

Net change in cash and cas h equivalents 21,026

(20,683)

(33,198)

Effect of exchange rate changes on cash and cash

equivalents denominated i n foreign currencies

1,644

3,260

Cash and cash equivalents at beginning

18,908

20,683

71,516

Cash and cash equivalents at end $ 41,578

$ 41,578

See supplemental cash flow information in note 10.

- 25 -

COGECO INC.

Notes to Consolidated Financial Statements

February 28, 2007

(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 February 28, 2007 and August 31, 2006 as well as its results of

operations and its cash flow for the three and six month periods ended February 28, 2007 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 unaudited interim consolidated financial statements follow the

same accounting policies as the most recent annual consolidated financial statements.

2. Segmented Information

The Company’s activities are divided into two business segments: Cable and Media. The Cable segment is

comprised of cable, high-speed Internet access and telephony services, and the Media segment is comprised of radio

and television operations.

The principal financi al information per business segment is presented in the tables below:

Head Office

Cable Media and elimination Consolidated

Three months ended February 28,

(unaudited)

2007 2006 2007 2006 2007 2006 2007 2006

Revenue $ 231,952 $ 147,757 $ 29,219 $ 29,653 $ (51) $ (51) $ 261,120 $ 177,359

Operating costs 145,161 88,189 32,559 32,545 (269) (1,140) 177,451 119,594

Operating income (loss) before

amortization

86,791

59,568 (3,340) (2,892) 218

1,089

83,669 57,765

Amortization 43,572 28,656 1,496 1,522 44 39 45,112 30,217

Operating income (loss) 43,219 30,912 (4,836) (4,414) 174 1,050 38,557 27,548

Financial expense 23,551 13,776 292 208 338 247 24,181 14,231

Income taxe s 4,261 6,936 (1,872) (1,690) 191 460 2,580 5,706

Net assets employed

(1) (2)

$ 2,382,997 $ 2,210,823 $ 72,589 $ 70,550 $ 6,949 $ 7,477 $ 2,462,535 $ 2,288,850

Total assets

(2)

2,686,828 2,602,603 121,041 112,609 10,328 8,751 2,818,197 2,723,963

Fixed assets

(2)

1,084,918 1,021,538 25,172 26,794 577 666 1,110,667 1,048,998

Preliminary goodwill

(2)

454,884 422,108 - - - - 454,884 422,108

Acquisition of fixed assets 46,798 35,696 542 729 - 107 47,340 36,532

(1)

Total assets less cash and cash equivalents, accounts payable and accrued liabilities, broadcasting rights payable and deferred and prepaid income.

(2)

As at February 28, 2007 and August 31, 2006.

- 26 -

COGECO INC.

Notes to Consolidated Financial Statements

February 28, 2007

(amounts in tables are in thousands of dollars, except per share data)

2. Segmented Information (continued)

Head Office

Cable Media and elimination Consolidated

Six months ended February 28,

(unaudited)

2007 2006 2007 2006 2007 2006 2007 2006

Revenue $ 453,954 $ 291,170 $ 70,560 $ 66,769 $ (102) $ (102) $ 524,412 $ 357,837

Operating costs 283,501 174,300 70,846 67,212 (1,971) (2,033) 352,376 239,479

Operating income (loss) before

amortization

170,453

116,870 (286) (443) 1,869

1,931

172,036 118,358

Amortization 87,881 56,933 2,981 3,089 89 78 90,951 60,100

Operating income (loss) 82,572 59,937 (3,267) (3,532) 1,780 1,853 81,085 58,258

Financial expense 44,772 27,358 479 322 689 512 45,940 28,192

Income taxe s 9,858 13,381 (1,720) (1,727) 905 663 9,043 12,317

Net assets employed

(1) (2)

$ 2,382,997 $ 2,210,823 $ 72,589 $ 70,550 $ 6,949 $ 7,477 $ 2,462,535 $ 2,288,850

Total assets

(2)

2,686,828 2,602,603 121,041 112,609 10,328 8,751 2,818,197 2,723,963

Fixed assets

(2)

1,084,918 1,021,538 25,172 26,794 577 666 1,110,667 1,048,998

Preliminary goodwill

(2)

454,884 422,108 - - - - 454,884 422,108

Acquisition of fixed assets 113,969 65,709 774 1,044 - 107 114,743 66,860

(1)

Total assets less cash and cash equivalents, accounts payable and accrued liabilities, broadcasting rights payable and deferred and prepaid income.

(2)

As at February 28, 2007 and August 31, 2006.

The following tables sets out certain geo graphic market information based on client’s location:

Three months ended February 28, Six months ended February 28,

2007 2006 2007 2006

(unaudited) (unaudited) (unaudited) (unaudited)

Revenue

Canada $ 204,094 $ 177,359 $ 413,315 $ 357,837

Portugal 57,026 - 111,097 -

$ 261,120 $ 177,359 $ 524,412 $ 357,837

- 27 -

COGECO INC.

Notes to Consolidated Financial Statements

February 28, 2007

(amounts in tables are in thousands of dollars, except per share data)

2. Segmented Information (continued)

As at February 28, As at August 31,

2007 2006

(unaudited) (audited)

Fixed assets

Canada $ 807,707 $ 768,484

Portugal 302,960 280,514

Total $ 1,110,667 $ 1,048,998

Preliminary goodwill

Canada $- $-

Portugal 454,884 422,108

Total $ 454,884 $ 422,108

3. Amortization

Three months ended February 28, Six months ended February 28,

2007 2006 2007 2006

(unaudited) (unaudited) (unaudited) (unaudited)

Fixed assets $ 39,737 $ 24,661 $ 80,232 $ 48,837

Deferred charges 5,375 5,556 10,719 11,263

$ 45,112 $ 30,217 $ 90,951 $ 60,100

4. Income Taxes

Three months ended February 28, Six months ended Februa ry 28,

2007 2006 2007 2006

(unaudited) (unaudited) (unaudited) (unaudited)

Current $ 3,080 $ 1,815 $ 5,664 $ 3,099

Future (500) 3,891 3,379 9,218

$ 2,580 $ 5,706 $ 9,043 $ 12,317

- 28 -

COGECO INC.

Notes to Consolidated Financial Statements

February 28, 2007

(amounts in tables are in thousands of dollars, except per share data)

4. Income Taxes (continued)

The following table provides the reconciliation between Canadian statutory federal and provincial income taxes and

the consolidated income tax expense:

Three months ended February 28, Six months ended Februa ry 28,

2007 2006 2007 2006

(unaudited) (unaudited) (unaudited) (unaudited)

Income before income taxes $ 14,376 $ 13,227 $ 35,154 $ 29,886

Combined income tax rate 33.93% 34.84% 34.40% 34.84%

Income taxes at combined income tax rate $ 4,877 $ 4,608 $ 12,093 $ 10,412

Loss or income subject to lower or higher tax rates 557 266 524 266

Decrease in income taxes as a result of increase in

substantially enacted tax rates

(91)

Large corporation tax - 807 - 1,644

Effect of foreign income tax rate differences (1,425) - (2,249) -

Benefit related to prior years’ minimum income tax paid (1,475) - (1,475) -

Other 46 25 150 86

Income taxes at effective income tax rate $ 2,580 $ 5,706 $ 9,043 $ 12,317

5. Earnings per Share

The following table provides a recon ciliation between basic and dilu ted earnings per share:

Three months ended February 28, Six months ended February 28,

2007 2006 2007 2006

(unaudited) (unaudited) (unaudited) (unaudited)

Net income $ 34,546 $ 2,679 $ 41,297 $ 7,272

Weighted average number of multiple voting and subordinate

voting shares outstanding

16,569,120

16,497,105

16,562,691

16,473,425

Effect of dilutive stock options

(1)

116,223 111,718 106,424 135,205

Weighted average number of diluted multiple voting and

subordinate voting shares outstanding

16,685,343

16,608,823

16,669,115

16,608,630

Earnings per share

Basic $ 2.08 $ 0.16 $ 2.49 $ 0.44

Diluted 2.07 0.16 2.48 0.44

(1)

For the three and six month periods ended February 28, 2007, 36,443 (36,443 and 40,143 in 2006) stock options were excluded from the

calculation of diluted earnings per share since the exercise price of the options was greater than the average share price of the subordinate

voting shares.

- 29 -

COGECO INC.

Notes to Consolidated Financial Statements

February 28, 2007

(amounts in tables are in thousands of dollars, except per share data)

6. Preliminary Goodwill and Other Intangible Assets

Customer

base

Broadcasting

licenses

Total other

intangible

assets

Preliminary

goodwill

(unaudited) (unaudited) (unaudited) (unaudited)

Balance as at August 31, 2006 $ 989,772 $ 28,120 $ 1,017,892 $ 422,108

Adjustment to the purchase price - - - (5,955)

Foreign currency translation adjustment - - - 38,731

Balance as at February 28, 2007 $ 989,772 $ 28,120 $ 1,017,892 $ 454,884

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 which was outstanding since the date of acquisition.

According to the agreement, the Company’s subsidiary has recorded an account receivable of an amount of

€2,194,000 which was received on March 16, 2007 and as a result, the purchase price was reduced accordingly. The

remaining adjustment to the purchase price is due to the reevaluation of costs re lated to the acquisition of Cabovisão–

Televisão por Cabo, S.A. (“Cabovisão”).

In addition, as mentioned in the Company’s 2006 annual consolidated financial statements, management of the

Company’s subsidiary, Cogeco Cable Inc., is currently carrying ou t a more specific analysis and changes will be made

to the allocation of the excess of consideration over net assets acquired as the information becomes available. For

example, since the measurement of the fair value of fixed assets had not yet been completed at the time of the

preliminary allocation, fixed assets have been presented at cost. The measurement of indefinite and finite-lived

intangible assets is also under way. Furthermore, 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 an authorization is granted 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. These

losses have not been included in the preliminary purchase price allocation. As a result, the actual amounts allocated

to the identifiable assets acquired and liabilities assumed and the related operating results will vary according to the

amounts initially recorded, and such differences could be significant.

- 30 -

COGECO INC.

Notes to Consolidated Financial Statements

February 28, 2007

(amounts in tables are in thousands of dollars, except per share data)

7. Long-Term Debt

Maturity Interest rate

February 28,

2007

August 31,

2006

(unaudited) (audited)

Parent company

Term Facility 2010

(1)

6.69 %

(2)

$ 16,500 $ 19,000

Obligations under capital leases 2010 6.49 – 6.61 123 138

Subsidiaries

Term Facility

Term loan 2011 5.46

(2)

150,000 150,000

Term loan – € 17,358,700 2011 4.94

(2)

26,869 24,573

Revolving loan

Euro currency – €284,500,000 (€317,000,000 as at

August 31, 2006)

2011

4.94

(2)

440,378

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

(3)

175,470 165,795

Series B 2011 7.73 175,000 175,000

Second Secured Debentures Series A 2007

(4)

8.44 35,743 125,000

Deferred credit

(5)

2008 – 63,180 72,855

Obligations under capital leases 2010 6.32 – 8.18 6,136 5,009

Other – – 30 43

1,239,429 1,336,158

Less: current portion 38,077 126,904

$ 1,201,352 $ 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 February 28, 2007, including stamping fees.

(3)

Cross-currency swap agreements have resulted in an effective interest rate of 7.254% on the Canadian dollar equivalent of the U.S. denominated

debt of the Company’s subsidiary, Cogeco Cable Inc.

(4)

On February 2, 2007, the Company’s subsidiary, Cogeco Cable Inc., gave a notice of redemption 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.

(5)

The deferred credit represents the amount which would have been payable as at February 28, 2007 and August 31, 2006 under cross-currency

swaps entered into by the Company’s subsidiary, Cogeco Cable Inc., to hedge Senior Secured Notes Series A denominated in US dollars.

Interest on long-term debt for the three and six month periods ended February 28, 2007 amounted to $22,532,000

and $42,983,000 ($13,44 2,000 and $26,651,00 0 in 2006).

- 31 -

COGECO INC.

Notes to Consolidated Financial Statements

February 28, 2007

(amounts in tables are in thousands of dollars, except per share data)

8. 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.

February 28,

2007

August 31,

2006

(unaudited) (audited)

Issued

1,849,900 multiple voting shares $ 12 $ 12

14,745,231 subordinate voting shares (14,702,556 as at August 31, 2006) 117,997 117,540

$ 118,009 $ 117,552

During the period, subordinate voting share transactions were as fo llows:

Six months ended Twelve months ended

February 28, 2007 August 31, 2006

(unaudited) (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

42,675

457

102,452

1,385

Balance at end 14,745,231 $ 117,997 14,702,556 $ 117,540

- 32 -

COGECO INC.

Notes to Consolidated Financial Statements

February 28, 2007

(amounts in tables are in thousands of dollars, except per share data)

8. Capital Stock (continued)

Stock-based plans

The Company established, 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 the first six months, no stock options were granted to employees by COGECO Inc.

However, the Company’s subsidiary, Cogeco Cable Inc., granted 200,874 stock options (126,059 in 2006) with an

exercise price of $26.63 to $33.12 ($25.12 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

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 $640,000 and $901,000 ($203,000 and $366,000 in 2006) was recorded for the three and

six month periods ended February 28, 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 six month periods ended February 28, 2006 would have been

reduced to the following pro forma amounts:

Three months ended Six months ended

February 28, 2006 February 28, 2006

(unaudited) (unaudited)

Net income

As reported $ 2,679 $ 7,272

Pro forma 2,671 7,256

Basic and diluted earnings per share

As reported $ 0.16 $ 0.44

Pro forma 0.16 0.44

The fair value of stock options granted by the Company’s subsidiary, Cogeco Cable Inc., for the six month period

ended February 28, 2007 was $7.38 ($9.44 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 based 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 February 28, 2007, the Company had outstanding stock options providing for the subscription of 273,279

subordinate voting shares. These stock options can b e exercise d at various prices ranging fro m $10.00 to $37.50 and

at various dates up to October 19, 2011.

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 first six

months, 170,269 stock options (no stock options granted in 2006) were granted by TQS Inc. No compensation

expense ($124,000 and $154,000 in 2006) was recorded for the three and six month periods ended February 28,

2007 related to this plan.

- 33 -

COGECO INC.

Notes to Consolidated Financial Statements

February 28, 2007

(amounts in tables are in thousands of dollars, except per share data)

9. 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 operations 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 is as follows:

Six months ended Twelve months ended

February 28, 2007 August 31, 2006

(unaudited) (audited)

Effect of exchange rate variation on translation of net investments in self-

sustaining foreign subsidiaries

44,646

(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 $1,703,000 for the twelve month period ended August 31, 2006)

(33,210)

7,960

$ 11,436 $ (4,452)

10. Statements of Cash Flo w

a) Changes in non-cash operating items

Three months ended February 28, Six months ended February 28,

2007 2006 2007 2006

(unaudited) (unaudited) (unaudited) (unaudited)

Accounts receivable $ 3,258 $ 3,276 $ (15,391) $ (8,940)

Income tax receivable (2,847) (493) (4,519) (986)

Prepaid expenses 4,140 (1,181) 624 (540)

Broadcasting rights (3,464) (536) (3,860) (7,794)

Accounts payable and accrued liabilities 7,382 280 (67,484) (42,278)

Broadcasting rights payable (123) 1,758 5,430 9,845

Income tax liabilities (2,616) - 1,251 (299)

Deferred and prepaid income (1,402) (276) 2,519 1,907

$ 4,328 $ 2,828 $ (81,430) $ (49,085)

b) Other information

Three months ended February 28, Six months ended February 28,

2007 2006 2007 2006

(unaudited) (unaudited) (unaudited) (unaudited)

Fixed asset acquisitions through capital leases $ 2,027 $ 1,538 $ 2,232 $ 1,538

Interest paid 20,050 11,614 44,668 27,988

Income taxes paid 7,217 2,308 8,496 4,384

- 34 -

COGECO INC.

Notes to Consolidated Financial Statements

February 28, 2007

(amounts in tables are in thousands of dollars, except per share data)

11. Employee Future Benefits

The Company and its 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 consolidated financi al statements. The total expenses related to these plans are as follows:

Three months ended February 28, Six months ended February 28,

2007 2006 2007 2006

(unaudited) (unaudited) (unaudited) (unaudited)

Contributory defined benefit pension plans $ 807 $ 706 $ 1,626 $ 1,824

Defined contribution pension plan and collective registered

retirement savings plans

618

461

1,239

948

$ 1,425 $ 1,167 $ 2,865 $ 2,772

12. Contingencies and guarantees

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 va lue.

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.

- 35 -

COGECO INC.

Notes to Consolidated Financial Statements

February 28, 2007

(amounts in tables are in thousands of dollars, except per share data)

12. Contingencies and guarantees (continued)

Guarantees of payment to the Municipality of Seixal

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, should Cabovisão fail to pay such require d amounts.

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STEADILY INCREASING RESULTS AT COGECO.

SUSTAINABILITY

Cogeco Fund

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