STRONG FOURTH QUARTER AND YEAR-END FINANCIAL AND OPERATIONAL RESULTS FOR COGECO CABLE

PRESS RELEASE

For immediate release

STRONG FOURTH QUARTER AND YEAR-END FINANCIAL AND OPERATIONAL RESULTS

FOR COGECO CABLE

Montréal, October 26, 2007 – Today, Cogeco Cable Inc. (TSX: CCA) announced its financial results

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

Strong operating results in both Canada and Portugal have contributed to solid financial results.

For the fourth quarter and the full year:

• Consolidated revenue grew 39.7% to $244.3 million and 51.4% to $938.9 million,

respectively (essentially in line with July 10, 2007 guidelines);

• Consolidated operating income before amortization increased 40.6% to $102.4 million

and 46.6% to $370.8, million respectively (above July 2007 guidelines);

• Consolidated net income for the year amounted to $84.7 million up 29.2% and free cash

flow reached $30.6 million (above July 2007 guidelines);

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

units reaching 300,688 in fiscal 2007 (above July 2007 guidelines);

• Second public offering in fiscal 2007 of 3,000,000 subordinate voting shares resulted in

a gross proceed of $153,450,000;

• New Canadian operational structure was put in place to enable a stronger synergy

throughout our Canadian operations.

“Financially, Cogeco Cable’s fourth quarter results are was very positive. We are well positioned to

address the needs of our customers in the markets we serve, said Louis Audet, President and CEO

of Cogeco Cable. The relevance of our strategy has been recognized by the financial markets and

the stock has continued to perform very well. Our new management structure will enable the

Canadian operations to develop better synergies and therefore will have a positive impact in the way

we deliver our services. Our balance sheet is solid and we are looking forward to achieving a strong

fiscal 2008.”

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FINANCIAL HIGHLIGHTS

Quarters ended August 31,

(unaudited)

Years ended August 31,

(audited)

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

2007 2006 % Change

Revenue $ 244,314 $

174,875 39.7 $

938,880 $ 620,001 51.4

Operating income before amortization

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

Net income 36,368 33,987 7.0 84,691 65,556 29.2

Cash flow from operations

(1)

83,825 56,714 47.8 284,565 194,739 46.1

Less:

Capital expenditures and increase in

deferred charges

68,964 53,279 29.4 254,008 164,446 54.5

Free cash flow

(1)

14,861 3,435 30,557 30,293

Per share data

Basic net income $ 0.79 $

0.85 (7.1) $

1.96 $ 1.64 19.5

(1)

Cash flow from op erations and free cash flow do not have standard def initions prescribed by Canadian generally accepte d 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

“Uncertainties and main risk factors” of the Corporation’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 Corporation’s financial statements, and the notes thereto,

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

Report. Throughout this discussion, all amounts are in Canadian dollars unles s otherwise indicated.

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MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)

CORPORATE STRATEGIES AND OBJECTIVES

Cogeco Cable’s objectives are to improve profitability and create shareholder value. The strategies

for reaching those objectives are constant corporate growth through the diversification and the

improvement of products and services as well as clientele and territories; effective management of

capital; and tight cost control and business processes. The Corporation measures its performance,

with regard to these objectives, with revenue growth, RGU

growth and free cash flow

. Below are

the recent achievements in furtherance of Cogeco Cable’s objectives.

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;

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 a 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, the Corporation has invested approximately $102 million in its

infrastructure including headends and upgrade/rebuild.

Effective management of capital

• On August 9, the Corporation 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.

Tight control over costs, business processes

• For the fourth quarter 2007, Canadian operating costs, excluding management fees,

increased by 18.6%, essentially in line with revenue growth of 19.3% during this period;

• 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 Corporation 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 “Customer statistics” section for detailed explanations.

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

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RGU growth

During fiscal 2007, the consolidated number of RGUs increased by 13.8% to reach almost 2.5 million

units. In the third quarter of fiscal 2007, the Corporation 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.

Revenue growth

During fiscal 2007, revenue increased by $318.9 million, or 51.4%, to reach $938.9 million, mainly

due to the consolidation of the full-year operating results of Cabovisão and to RGU growth in

Canada. In its third quarter of fiscal 2007, the Corporation revised its 2007 guidelines and expected

to achieve revenue growth between 51% and 52%.

Free cash flow

In the fourth quarter of fiscal 2007, Cogeco Cable generated free cash flow of $14.9 million,

compared to $3.4 million for the same period last year, as a result of an increase in operating income

before amortization outpacing the increase in financial expense and in capital expenditures and

deferred charges for the Canadian operations as well as the consolidation of the financial results of

Cabovisão for the three-month period compared to only one month for the same period last year. F or

fiscal 2007, the Corporation increased its capital expenditures in order to sustain RGU growth and

build an inventory of home terminal devices to sustain growth for the forthcoming period. This

strategy generated free cash flow of $30.6 million in fiscal 2007 compared to $30.3 million the year

before. Capital expenditures and deferred charges amounted to $254 million for the year ended

August 31, 2007, of which $211.4 million was intended to support Canadian operations and the

remainder was earmarked for the Portuguese operations. The Corporation surpassed its 2007 free

cash flow revised guidelines of $20 million announced in the third quarter of fiscal 2007.

OPERATING RESULTS – CONSOLIDATED OVERVIEW

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

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

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

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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. This situation is mainly due to the consolidation of

the financial results of the 2007 three-month period of the Portuguese operations compared to a one-

month period in 2006. For fiscal 2007, operating costs increased mainly as a result of the inclusion of

the operating costs of Cabovisão and 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.

RELATED PARTY TRANSACTIONS

Cogeco Cable is a subsidiary of COGECO Inc., which holds 32.5% of the Corporation’s equity

shares, representing 82.8% of the votes attached to the Corporation’s voting shares. Under a

management agreement, the Corporation pays COGECO Inc. monthly management fees equal to

2% of its total revenue for certain executive, administrative, legal, regulatory, strategic and financial

planning, and additional services. In 1997, management fees were capped at $7 million per year,

subject to annual upward adjustments based on increases in the Consumer Price Index in Canada.

Accordingly, for fiscal 2007, management fees have been set at a maximum of $8.6 million, which

was reached in the second quarter, and therefore, no management fees were paid in the third and

fourth quarter of fiscal 2007. For fiscal 2006, management fees were set at a maximum of

$8.4 million fully paid during the first nine month period. Furthermore, Cogeco Cable granted

319,647 stock options to COGECO’s employees during fiscal 2007, compared to 31,743 for the same

period last year. Of these 319,647 stock options, 262,400 are conditional on the achievement of

certain yearly financial objectives by the Portuguese subsidiary, Cabovisão, over a period of three

years. During the fourth quarter of fiscal 2007, Cogeco Cable charged COGECO Inc. an amount of

$0.3 million for fiscal 2007 with regards to Cogeco Cable’s options granted to COGECO’s

employees. Details regarding the management agreement and stock options granted to COGECO

Inc.’s employees are provided in the MD&A of the Corporation’s 2006 annual report. There were no

other material related party transactions during the fourth quarter and fiscal year ended August 31,

2007 and 2006.

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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 $ 54,164 $

34,801 55.6 $

189,323 $ 120,782 56.7

Financial expense 18,524 16,374 13.1 84,569 57,366 47.4

For the fourth quarter and fiscal 2007, amortization amounted to $54.2 million and $189.3 million

respectively, compared to $34.8 million and $120.8 million for the same periods last year. The

increase in amortization expense for both periods of fiscal 2007 compared to fiscal 2006 is due to

several factors: the consolidation of the financial results of the Portuguese operations in 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 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 $2.2 million and

$27.2 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 $6.6 million compared to a

recovery of $12.3 million in fiscal 2006. The recovery has reduced mainly as a result of a non-cash

adjustment of $14.7 million in fiscal 2007 compared to a non-cash adjustment of $20 million recorded

in fiscal 2006. Excluding these adjustments, the 2007 fourth quarter income taxes increased due to

higher operating income before amortization net of fixed charges. For fiscal 2007, income taxes

amounted to $12.2 million compared to $9.3 million last year. This increase was mainly due to the

operating income before amortization growing faster than the increase in fixed charges for the

Canadian operations. 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

$16.2 million related to the recognition of benefits from prior years’ income tax losses, 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 $20 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 income tax adjustments for both years,

income taxes would have amounted to $28.4 million in fiscal 2007 compared to $29.3 million in fiscal

2006.

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NET INCOME

Net income for the fourth quarter amounted to $36.4 million, or $0.79 per share, compared to

$34 million, or $0.85 per share, for the same period last year. Net income for the fourth quarter of

both fiscal 2007 and fiscal 2006 included non-recurring adjustments of $14.7 million and $20 million

of income taxes, respectively. For fiscal 2007, net income amounted to $84.7 million, or $1.96 per

share, compared to $65.6 million, or $1.64 per share, for fiscal 2006. For the fourth quarter 2007, net

income excluding income tax adjustments would have amounted to $21.6 million, or $0.47 per share,

compared to $14 million, or $0.35 per share, for the fourth quarter 2006. For fiscal 2007, net income

excluding income tax adjustments would have stood at $68.5 million, or $1.58 per share, compared

to a net income of $45.6 million, or $1.14 per share, for fiscal 2006. Net income increases in the

fourth quarter and fiscal 2007, excluding income tax adjustments described above, were attributable

to the growth in operating income before amortization outpacing the fixed charge increases.

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 $

83,825 $

56,714 $

284,565 $

194,739

Changes in non-cash operating items 28,790

50,495

(72,755)

1,051

112,615 $

107,209 $

211,810 $

195,790

Investing Activities

(1)

(68,778) $

(630,523) $

(248,579) $

(739,022)

Financing Activities

(1)

(2,042) $

595,543 $

28,218 $

615,400

Net change in cash and cash equivalents

41,795 $

72,229 $

(8,551) $

72,168

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

22,656

- 71,516 61

Cash and cash equivalents at end

64,208 $

71,516

64,208 $

71,516

(1)

Excludes assets acquired under capital leases.

During the fourth quarter 2007, cash flow from operations reached $83.8 million, 47.8% higher than

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

amortization, partly offset by the increase in financial expense. Changes in non-cash operating items

generated lower cash inflows compared to 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.

During fiscal 2007, cash flow from operations reached $284.6 million, an increase of 46.1%

compared to the same period the year before, primarily due to the growth in operating income before

amortization, partly offset by the increase in financial expense. Changes in non-cash operating items

generated $72.8 million of cash outflows compared to a cash inflow of $1.1 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 subsidiary in accordance with the terms of the

acquisition. Increases in accounts receivable and income tax receivable, partly offset by an increase

in deferred and prepaid income, have also contributed to increase fiscal 2007 cash outflows.

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

On June 2, 2006, the Corporation 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 have been

consolidated as of the acquisition date.

Management has completed its valuations 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 can not 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 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

recognized as a reduction of goodwill upon realisation.

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Investing activities, including capital expenditures are segmented according to the National Cable

Television Association (NCTA) standard reporting categories as follows:

Quarters ended August 31,

(unaudited)

Years ended August 31,

(unaudited)

($000s)

2007

2006

2007

2006

Customer Premise Equipment

(1)

22,004 $

16,011 $ 98,192 $ 59,441

Scalable Infrastructure

11,692

10,195

43,392

25,298

Line Extensions

3,366

3,756

11,164

11,205

Upgrade / Rebuild

16,673

11,221

58,640

39,709

Support Capital

4,445

3,167

12,578

8,186

Total Capital Expenditures

(2)

58,180

44,350

223,966

143,839

Deferred charges and others

10,763

8,919

29,553

20,559

Business acquisition and adjustments

629

577,431

(1,265) 577,431

Decrease (increase) in restricted cash

(503)

(591) 91

Total investing activities

69,069

630,791

251,663

741,920

(1)

Includes mainly new and replacement drops as well as home terminal devices.

(2)

Includes capital leases, which are excluded from the statements of cash flow.

Capital expenditures increased during the fourth quarter and fiscal 2007 compared to last year mainly

as a result of the following factors:

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

$41.6 million for the fourth quarter and fiscal 2007, respectively, 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.

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, deferred charges increased as a result of higher reconnect

costs attributable to the significant level of RGU growth.

In the fourth quarter of fiscal 2007, the Corporation generated free cash flow of $14.9 million

compared to $3.4 million the preceding year. For fiscal 2007, the Corporation generated free cash

flow of $30.6 million compared to $30.3 million for the same period the year before. The fourth

quarter and fiscal 2007 free cash flow increases over the same periods last year are due to the

growth in operating income before amortization, partly offset by a higher level of capital expenditures

and deferred charges to serve RGU growth and to support Telephony service rollout and the

increase in financial expense.

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On August 9, 2007, the Corporation 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 $146.5 million. The

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

public offering net proceeds of $146.9 million.. For the same period last year, Indebtedness

increased by $607.2 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 $900 million, partly offset

by an increase in non-cash operating items of $50.5 million. In addition, a dividend of $0.08 per share

for subordinate and multiple voting shares, totalling $3.6 million, was paid during the fourth quarter of

fiscal 2007 compared to a dividend of $0.04 per share or $1.6 million for the fourth quarter of fiscal

2006.

During fiscal 2007, the level of Indebtedness decreased by $299.6 million. The decrease in the level

of Indebtedness is due to the completion of two public offerings totalling 8,000,000 subordinate voting

shares for 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

$30.6 million and a reduction of $7.3 million in cash and cash equivalents, partly offset by a decline of

$72.8 million in non-cash operating items. For the same period last year, Indebtedness grew by

$631.7 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 $30.3 million. In addition, dividends totalling

$10.3 million were paid during fiscal 2007 compared to $6.4 million for the same period the year

before.

As at August 31, 2007, the working capital deficiency was reduced by an amount of $194.2 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. Cogeco Cable maintains a working capital

deficiency due to a low level of accounts receivable since the majority of the Corporation’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 Corporation generally uses cash and

cash equivalents to reduce Indebtedness.

As at August 31, 2007, the Corporation had used $458.5 million of its $900 million Term Facility.

FINANCIAL POSITION

Since August 31, 2006, there have been major changes to “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”, “Indebtedness” and “Capital stock”.

The $98 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. The decrease of

$79.5 million in goodwill stems from the completion of the purchase price allocation of the acquisition

of Cabovisão, which gave rise to the valuation at the amount of $71.7 million of intangible assets,

partly offset by the appreciation of the euro currency over the Canadian dollar. The $3.2 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 $72.6 million and $7.3 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

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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 $48.4 million increase in future

income tax liabilities is mainly 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. The $18 million in future income tax assets is related to non-capital loss

carryforwards for the Canadian operations that will benefit the Corporation in the coming year.

Finally, Indebtedness decreased by $289.1 million and capital stock increased by $353.9 million as a

result of the factors previously discussed in the “Cash Flow and Liquidity” section.

A description of Cogeco Cable’s share data as of September 30, 2007 is presented in the table

below:

Number of

shares/options

Amount

($000s)

Common Shares

Multiple voting shares

Subordinate voting shares

15,691,100

32,663,587

98,346

886,059

Options to Purchase Subordinate Voting Shares

Outstanding options

Exercisable options

942,714

239,067

The number of outstanding options has increased significantly during fiscal 2007. With regards to the

acquisition of Cabovisão, the Corporation granted 376,000 conditional stock options with an exercise

price of $26.63. These options vest over a period of three years beginning one year after the day

such options are 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

over a period of three years

In the normal course of business, Cogeco Cable has incurred financial obligations, primarily in the

form of long-term debt, operating and capital leases and guarantees. Cogeco Cable’s obligations,

discussed in the 2006 annual MD&A, 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 discussed in the “Cash Flow and

Liquidity” section. Furthermore, during the second quarter of fiscal 2007, the Corporation 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 judgement, no longer subject to appeal, is rendered by the

Portuguese courts having jurisdiction in this matter. As a result, the Corporation may be required to

pay, upon written demand by the Municipality of Seixal, the required amounts following final

judgement, up to a maximum aggregate amount of €5.7 million, should Cabovisão fail to pay such

required amounts.

DIVIDEND DECLARATION

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

dividend of $0.10 per share for subordinate and multiple voting shares, an increase of 25%, payable

on November 23, 2007, to shareholders of record on November 9, 2007.

- 12 -

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 Can adian 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 8 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, the Corporation’s net investments in self-sustaining

foreign subsidiaries, are exposed to market risk attributable to fluctuations in foreign currency

exchange rates, 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, the Corporation 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 rates 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.

CANADIAN OPERATIONS

CUSTOMER STATISTICS

Net additions (losses) % of Penetration

(1)(4)

Fourth Quarters Fiscal Years

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 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 66% last year. The

net losses of Basic Cable service in the fourth quarter reached 2,627 customers, compared to a gain

- 13 -

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 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, the Corporation 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.

OPERATING RESULTS

Quarters ended August 31,

(unaudited)

Years ended August 31,

(audited)

($000s, except percentages)

2007 2006

Change

2007 2006

Change

Revenue $ 188,450 $

158,009 19.3 $

714,070 $ 603,135 18.4

Operating costs 106,869 90,116 18.6 412,602 346,736 19.0

Management fees - COGECO Inc.

- - - 8,568 8,392 2.1

Operating income before amortization

81,581 67,893 20.2 292,900 248,007 18.1

Operating margin 43.3 %

43.0 %

41.0 % 41.1 %

Revenue

For the fourth quarter and fiscal 2007, revenue grew by $30.4 million and $110.9

million to reach

$188.5 million and $714.1 million respectively, an increase of 19.3 % and 18.4% compared to fiscal

2006. This growth is explained mainly by an increase in the number of HSI, Telephony and Digital

Television service customers as mentioned in the “Customer Statistics” section, together with rate

increases implemented in June and August of 2006 as well as in March and April of 2007. Monthly

rate increases of at most $3 per customer and averaging $2 per Basic Cable service customer took

effect on June 15, 2006 in Ontario and on August 1, 2006 in Québec. During fiscal 2007, monthly

rate increases of $3 per Digital Television customer were effective in March 2007 in Ontario and in

April 2007 in Québec. In Ontario, the Analogue Value Pak rate was also increased by $1.50 per

customer effective in April 2007. The rate increases implemented in fiscal 2007 represent

approximately an average of $1.25 per Basic Cable service customer.

Operating costs

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

COGECO Inc., increased by $16.8 million and $65.9 million to reach $106.9 million and

$412.6

million respectively, an increase of 18.6% and 19% compared to last year. The increase in

operating costs is mainly attributable to the increased penetration of Telephony service and to

servicing additional RGUs.

- 14 -

Operating income before amortization

For the fourth quarter and fiscal 2007, operating income before amortization rose from $67.9 million

to $81.6 million and from $248 million to $292.9 million respectively, representing increases of 20.2%

and 18.1%, compared to the same periods last year. The rise in operating income before

amortization is the result of increased revenue outpacing the rise in operating costs. In addition,

Cogeco Cable’s operating margin for the Canadian operations increased from 43% to 43.3% in the

fourth quarter of fiscal 2007 due to new rate increases implemented during the third quarter of fiscal

2007. For fiscal 2007, operating margin slightly decreased from 41.1% to 41% mainly as a result of

the deployment of the Telephony service.

PORTUGUESE OPERATIONS

CUSTOMER STATISTICS

Net additions % of Penetration

(1)

Fourth Quarters

Fiscal Years

August 31,

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 the Corporation’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.

OPERATING RESULTS

Quarters ended August 31,

(unaudited)

Years ended August 31,

(audited)

($000s, except percentages)

2007

2006

(1)

2007 2006

(1)

Revenue $ 55,864 $ 16,866 $

224,810 $ 16,866

Operating costs 35,019 11,895 146,957 11,895

Operating income before amortization 20,845 4,971 77,853 4,971

Operating margin 37.3 % 29.5 %

34.6 %

29.5 %

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

- 15 -

Revenue

Revenue for the fourth quarter and fiscal 2007 amounted to $55.9 million and $224.8 million

respectively. The average exchange rates prevailing during the fourth quarter of fiscal 2007 used to

convert the operating results of the foreign subsidiaries was $1.4374 per euro and $1.4803 per euro

for fiscal 2007 compared to $1.4250 per euro for the quarter as per management’s third quarter

revised guidelines. Monthly rate increases of at most $3 (€2) per HSI and Telephony customer,

averaging $1 per Basic Cable customer, took effect on November 1, 2006, and of $1 (€0.65) per

Basic Cable service customer was effective in March 2007. Last year, revenue for a one-month

period amounted to $16.9 million.

Operating costs

For the fourth quarter and fiscal 2007, operating costs amounted to $35 million and to $147 million,

respectively, which is lower than management’s expectations. Last year, operating costs for a one-

month period amounted to $11.9 million.

Operating income before amortization

For the fourth quarter and fiscal 2007, operating income before amortization stood at $20.8 million

and $77.9 million respectively, which exceeded management’s objectives for its first full year of

operations as a subsidiary of Cogeco Cable. Cabovisão operating margin stood at 37.3% in the

fourth quarter and at 34.6% for fiscal 2007. Last year, the operating margin for the one-month period

amounted to 29.5%.

FISCAL 2008 FINANCIAL GUIDELINES

The Corporation has revised its consolidated projections to take into consideration the issuance 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, increase

net income from $90 million to $95 million and increase free cash flow from $60 million to $65 million.

The Corporation is maintaining all of its other guidelines for its Canadian and Portuguese operations.

Consolidated

(in millions of $, except customer data)

Revised projections

Fiscal 2008

Financial Guidelines

Revenue

1,050

Operating income before amortization

425

Operating margin

40% to 41%

Financial expense

(1)

Amortization

215

Net income

(1)

Capital expenditures and deferred charges

260

Free cash flow

(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

(1) Revised projections taking into account the issuance of 3,000,000 subordinate voting shares on August 9, 2007 for a gross proceed of

$153,450,000.

- 16 -

UNCERTAINTIES AND MAIN RISK FACTORS

This section outlines general as well as more specific risks faced by Cogeco Cable and its

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

Corporation. It does not purport to cover all contingencies, or to describe all possible factors that

might have an influence on the Corporation or its activities at any point in time. Furthermore, the ri sks

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

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

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

the Corporation’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

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 digital

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 (MVNO) arrangements with existing or future mobile operators, or otherwise through

new wireless alternatives. The capital and operating expenditures eventually required to offer

- 17 -

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, 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 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

- 18 -

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 the Corporation’s service areas may also have a significant effect on

the Corporation’s business and the competitiveness of its service offerings.

Technological Risks

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. The Corporation 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 the Corporation remains of the view that broadband wireline distribution over fibre

and 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 and efficient

MPEG-4 video compression standard and of other similar compression technologies promotes 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 Corporation and gradual disintermediation between video content suppliers and the

Corporation’s customers. In this context, revenue and margins derived from the Corporation’s HSI

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

Corporation’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 the Corporation’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 Corporation 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.

- 19 -

Regulatory Risks

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 are still required for the operation of larger (Class 1 and 2) cable

systems, while smaller (Class 3) cable systems are 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 Corporation’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 the Corporation 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 Corporation’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

Corporation 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 the Corporation 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 broadcasting distribution undertakings (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

- 20 -

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 PT has significant market power in most of these mark ets. 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 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 Communicações, 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 long-term on Cabovisão’s electronic communications activities and the future state of

competition for the provision of electronic communications in Portugal.

Risks Pertaining to Operating Costs

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 Cabovi são 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 Corporation may not be able to secure

further cost efficiencies 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. The Corporation 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,

- 21 -

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

The Corporation 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 Cabovisão are not yet integrated into this plan. Cabovisão’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. Cogeco Cable is not insured against the loss of data, hacking or malicious

interference with its electronic communications and systems, or against losses resulting from natural

disasters. In Canada, it relies on data protection and recovery systems that it has put in place with

third-party service providers. In Portugal, similar arrangements with third parties have not been

implemented as yet.

Financial Risks

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 Corporation’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 Corporation 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 Corporation, or to its direct or indirect subsidiaries, could adversely affect such

upstream flow of funds or the effectiveness of the Corporation’s existing debt financing structure.

The Corporation’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.

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 €461.8 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. The Corporation is still considering various options to extend the term with euro-

denominated alternate sources of financing.

- 22 -

Human Resources

Cogeco Cable maintains appropriate labour relations both in Canada and in Portugal, but there is no

assurance that requisite collective agreements will be established or renewed without conflict or

disruption to the provision of its services. Cogeco Cable maintains, as well, appropriate relations with

its key personnel. The Corporation’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

Corporation’s inability or failure to recruit, retain or adequately train its human resources may have a

materially adverse effect on the Corporation’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.

ACCOUNTING POLICIES AND ESTIMATES

Accounting changes

In July 2006, the Canadian Institute 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 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 Corporation will convert to these new standards according to the timetable set with

these rules. The Corporation will closely monitor changes arising from this convergence.

NON-GAAP FINANCIAL MEASURES

This section describes non-GAAP financial measures used by Cogeco Cable 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”.

- 23 -

Cash flow from operations

Cash flow from operations is used by Cogeco Cable’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 Corporation 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:

Quarters ended August 31,

(unaudited)

Years ended August 31,

(audited)

($ 000)

2007

2006

2007

2006

Cash flow from operating activities $ 112,615 $ 107,209 $ 211,810 $ 195,790

Changes in non-cash operating items

(28,790)

(50,495)

72,755 (1,051)

Cash flow from operations $ 83,825 $ 56,714 $ 284,565 $ 194,739

Free cash flow

Free cash flow is used, by Cogeco Cable’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:

Quarters ended August 31,

(unaudited)

Years ended August 31,

(audited)

($ 000)

2007

2006 2007 2006

Cash flow from operations

83,825 $

56,714 $

284,565 $ 194,739

Acquisition of fixed assets

(57,889)

(44,082)

(220,882) (140,941)

Increase in deferred charges

(10,784)

(8,929)

(30,042) (20,607)

Assets acquired under capital leases – as per

Note 11 b) (291)

(268)

(3,084) (2,898)

Free cash flow

14,861 $

3,435 $

30,557 $ 30,293

ADDITIONAL INFORMATION

This MD&A was prepared on October 26, 2007. Additional information relating to the Corporation,

including its Annual Information Form, is available on the SEDAR web site at www.sedar.com.

ABOUT COGECO CABLE

Cogeco Cable (www.cogeco.ca), a telecommunications company offering a diverse range of services

to its customers in Canada and in Portugal, is the second largest cable operator in Ontario, Québec

and Portugal, in terms of the number of Basic Cable service customers served. Through its two-way

broadband cable networks, Cogeco Cable provides its residential and commercial customers with

Analogue and Digital Television, High Speed Internet and Telephony services. The Corporation

provides 2,485,665 revenue-generating units (RGUs) to 2,343,466 homes passed in its Canadian

and Portuguese service territories. Cogeco Cable’s subordinate voting shares are listed on the

Toronto Stock Exchange (TSX: CCA).

– 30 –

- 24 -

Source: Cogeco Cable 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 dialing 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 dialing:

Canada and U.S. access number: 1 888 203-1112

International access number: + 1 647 436-0148

Confirmation code: 4118404

- 25 -

Supplementary Quarterly Financial Information

(unaudited)

Quarters ended

) Fiscal 2007 Fiscal 2006

(1)

Nov. 30 Feb. 28 May 31 Aug. 31 Nov. 30 Feb. 28 May 31 Aug. 31

(1)

($000, except percentages

and per share data)

Revenue $ 222,002 $ 231,952 $ 240,612 $

244,314 $

143,413 $

147,757 $ 153,956 $

174,875

Operating income

before amortization

83,662

86,791 97,874 102,426 57,302

59,568 63,244 72,864

Operating margin 37.7% 37.4% 40.7% 41.9% 40.0% 40.3% 41.1% 41.7%

Amortization 44,309 43,572 47,278 54,164 28,277 28,656 29,048 34,801

Financial expense 21,221 23,551 21,273 18,524 13,582 13,776 13,634 16,374

Income taxes (recovery) 5,597 4,261 8,942 (6,630)

6,445 6,936 8,191 (12,298)

Net income 12,535 15,407 20,381 36,368 8,998 10,200 12,371 33,987

Cash flow from

operations

62,060 62,264 76,416 83,825 43,389 44,940 49,696 56,714

Net income per share $ 0.31 $ 0.37 $ 0.45 $

0.79 $

0.23 $

0.26 $ 0.31 $

0.85

(1) Include operating results of 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.

Cogeco Cable’s operating results are not generally subject to material seasonal ﬂuctuations.

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

customers is generally lower in the third quarter, mainly due to students leaving campuses at the end

of the school year. Cogeco Cable offers its services in several university and college towns such as

Kingston, Windsor, St. Catharines, Hamilton, Peterborough, Trois-Rivières and Rimouski in Canada.

Furthermore, the third and fourth quarters’ operating margin is usually higher as lower or no

management fees are paid to COGECO Inc. Under a Management Agreement, Cogeco Cable pays

a fee equal to 2% of its total revenue subject to a maximum amount. For more details, please refer to

the ‘’Related Party Transactions’’ section.

COGECO CABLE INC. - 26 -

Customer Statistics

ugust 31, August 31,

2007 2006

Homes Passe

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 Unit

Ontario 1 256 24

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 Customer

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 Customer

Ontario 468 764 463 783

Québec 204 585 192 895

Canada 673 349 656 678

Portugal - -

Total 673 349 656 678

Pay TV Service Customer

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 Customer

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 Customer

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

- 27-

COGECO CABLE 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)

(audited)

Revenue

Service

$ 243,544

$ 174,494

$ 935,390

$ 617,806

Equipment

770

381

3,490

2,195

244,314

174,875

938,880

620,001

Operating costs

141,888

102,011

559,559

358,631

Management fees – COGECO Inc.

–

8,568

8,392

Operating income before amo rtizatio n 102,426

72,864

370,753

252,978

Amortization (note 4)

54,164

34,801

189,323

120,782

Operating income 48,262

38,063

181,430

132,196

Financial expense (note 8)

18,524

16,374

84,569

57,366

Income before income taxes 29,738

21,689

96,861

74,830

Income taxes (note 5)

(6,630)

(12,298)

12,170

9,274

Net income $ 36,368

$ 33,987

$ 84,691

$ 65,556

Earnings per share (no t e 6)

Basic

$0.79

$0.85

$ 1.96

$1.64

Diluted

0.78

0.85

1.94

1.63

- 28-

COGECO CABLE INC.

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

Twelve months ended August 31,

(In thousands of dollars)

2007

2006

(audited)

Balance at beginning $ 117,760

$ 58,604

Net income

84,691

65,556

Subordinate voting shares issue costs, net of related income taxes of $4,689,000

(10,151)

–

Dividends on multiple voting shares

(3,766)

(2,512)

Dividends on subordinate voting shares

(6,582)

(3,888)

Balance at end $ 181,952

$ 117,760

- 29-

COGECO CABLE INC.

CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

August 31,

2007

August 31,

2006

(audited)

Assets

Current

Cash and cash equivalents

$ 64,208

$ 71,516

Restricted cash

–

569

Accounts receivable

46,945

43,728

Income taxes receivable

1,112

–

Prepaid expenses

7,606

6,265

Future income tax assets

17,986

–

137,857

122,078

Income taxes receivable

1,345

–

Fixed assets

1,119,498

1,021,538

Deferred charges

54,645

47,327

Intangible assets (note 7)

1,058,410

989,552

Goodwill (note 7)

342,584

422,108

$ 2,714,339

$ 2,602,603

Liabilities and Shareholders’ equity

Liabilities

Current

Accounts payable and accrued li abilities

$ 210,496

$ 283,087

Income tax liabilities

953

444

Deferred and prepaid income

29,837

26,652

Current portion of long-term debt (note 8)

17,292

126,851

258,578

437,034

Long-term debt (note 8)

1,010,634

1,190,126

Deferred and prepaid income

11,501

10,525

Pension plan liabilities and accrued employee benefits

1,918

2,091

Future income tax liabilities

266,042

217,636

1,548,673

1,857,412

Shareholders’ equity

Capital stock (note 9)

984,405

630,458

Contributed surplus – stock-based compensation

2,419

1,425

Retained earnings

181,952

117,760

Foreign currency translation adjustment (note 10)

(3,110)

(4,452)

1,165,666

745,191

$ 2,714,339

$ 2,602,603

- 30-

COGECO CABLE 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

$ 36,368

$ 33,987

$ 84,691

$ 65,556

Adjustments for:

Amortization (note 4)

54,164

34,801

189,323

120,782

Amortization of deferred financing costs

513

416

2,226

1,140

Future income taxes (note 5)

(6,024)

(13,398)

7,511

5,200

Stock-based compensation

(891)

1,145

636

Loss on disposal of fixed assets

389

957

220

1,129

Other

(694)

(134)

(551)

296

83,825

56,714

284,565

194,739

Changes in non-cash oper ating items (note 11a))

28,790

50,495

(72,755)

1,051

112,615

107,209

211,810

195,790

Cash flow from investing activities

Acquisition of fixed assets (not e 11b))

(57,889)

(44,082)

(220,882)

(140,941)

Increase in deferred charges

(10,784)

(8,929)

(30,042)

(20,607)

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

489

(68,778)

(630,523)

(248,579)

(739,022)

Cash flow from financing activities

Decrease in bank indebtednes s

–

(7,693)

–

Increase in long-term debt

–

633,402

–

633,402

Repayment of long-term debt

(146,472)

(18,518)

(299,558)

(1,720)

Increase in deferred financing costs

–

(10,110)

–

(10,110)

Issue of subordinate voting shares

154,609

352,964

228

Subordinate voting shares issue costs

(6,551)

–

(14,840)

–

Dividends on multiple voting shares

(1,256)

(628)

(3,766)

(2,512)

Dividends on subordinate voting shares

(2,372)

(972)

(6,582)

(3,888)

(2,042)

595,543

28,218

615,400

Net change in cash and cas h equivalents 41,795

72,229

(8,551)

72,168

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

22,656

–

71,516

Cash and cash equivalents at end $ 64,208

$ 71,516

$ 64,208

$ 71,516

See supplemental cash flow information in note 11.

- 31-

COGECO CABLE 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 Cable Inc. as at August 31, 2007 and 2006 as well as its results of operations

and its cash flow for the three and the twelve month periods ended August 31, 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 Cable 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 finan cial 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, in the normal course of its business, the Corporation enters into non-monetary transactions. These non-

monetary transactions, which would otherwise be payable in cash, are accounted for at their fair market value.

2. Business Acquisition

Acquisition of Cabovisão – Televi são por Cabo, S.A.

On June 2, 2006, the Corporation 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.

- 32-

COGECO CABLE 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 completed 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 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 (see note 7b)).

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.

- 33-

COGECO CABLE 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 Corporation’s activities are comprised of Cable Television, High Speed Internet and Telephony services. The

Corporation considers its Cable Television, High Speed Internet and Telephony activities as a single operating

segment. The Corporation’s activities are carried out in Canada and in Europe.

The Europe segment includes operating results since the date of the acquisition of control on August 1, 2006.

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

Canada Europe Consolidated

Three months ended August 31,

(unaudited)

2007 2006 2007 2006 2007 2006

Revenue $ 188,450 $ 158,009 $ 55,864 $ 16,866 $ 244,314 $ 174,875

Operating costs 106,869 90,116 35,019 11,895 141,888 102,011

Management fees – – – – – –

Operating income before amortization 81,581 67,893 20,845 4,971 102,426 72,864

Amortization 34,992 30,373 19,172 4,428 54,164 34,801

Operating income 46,589 37,520 1,673 543 48,262 38,063

Financial expense 18,458 16,103 66 271 18,524 16,374

Income taxes (4,036) (12,612) (2,594) 314 (6,630) (12,298)

Net income (loss) 32,167 34,029 4,201 (42) 36,368 33,987

Net assets employed

(1) (2)

$ 1,744,616 $ 1,649,631 $ 653,681 $ 561,192 $ 2,398,297 $ 2,210,823

Total assets

(2)

1,955,218 1,842,312 759,121 760,291 2,714,339 2,602,603

Fixed assets

(2)

811,982 741,024 307,516 280,514 1,119,498 1,021,538

Goodwill

(2)

– – 342,584 422,108 342,584 422,108

Acquisition of fixed assets 45,559 40,145 12,621 4,205 58,180 44,350

(1)

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

(2)

As at August 31, 2007 and 2006.

- 34-

COGECO CABLE 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)

Canada Europe Consolidated

Twelve months ended August 31,

(audited)

2007 2006 2007 2006 2007 2006

Revenue $ 714,070 $ 603,135 $ 224,810 $ 16,866 $ 938,880 $ 620,001

Operating costs 412,602 346,736 146,957 11,895 559,559 358,631

Management fees 8,568 8,392 – – 8,568 8,392

Operating income before amortization 292,900 248,007 77,853 4,971 370,753 252,978

Amortization 131,383 116,354 57,940 4,428 189,323 120,782

Operating income 161,517 131,653 19,913 543 181,430 132,196

Financial expense 82,714 57,095 1,855 271 84,569 57,366

Income taxes 12,050 8,960 120 314 12,170 9,274

Net income (loss) 66,753 65,598 17,938 (42) 84,691 65,556

Net assets employed

(1) (2)

$ 1,744,616 $ 1,649,631 $ 653,681 $ 561,192 $ 2,398,297 $ 2,210,823

Total assets

(2)

1,955,218 1,842,312 759,121 760,291 2,714,339 2,602,603

Fixed assets

(2)

811,982 741,024 307,516 280,514 1,119,498 1,021,538

Goodwill

(2)

– – 342,584 422,108 342,584 422,108

Acquisition of fixed assets 182,374 139,634 41,592 4,205 223,966 143,839

(1)

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

(2)

As at August 31, 2007 and 2006.

4. Amortization

Three months ended August 31, Twelve months ended August 31,

2007 2006 2007 2006

(unaudited) (unaudited) (audited) (audited)

Fixed assets $ 46,272 $ 29,872 $ 166,298 $ 100,306

Deferred charges 5,331 4,929 20,464 20,476

Intangible assets 2,561 – 2,561 –

$ 54,164 $ 34,801 $ 189,323 $ 120,782

- 35-

COGECO CABLE 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 $ (606) $ 1,100 $ 4,659 $ 4,074

Future (6,024) (13,398) 7,511 5,200

$ (6,630) $ (12,298) $ 12,170 $ 9,274

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 $ 29,738 $ 21,689 $ 96,861 $ 74,830

Combined income tax rate 34.99 % 35.09 % 34.97 % 35.09 %

Income taxes at combined income tax rate $ 10,406 $ 7,611 $ 33,872 $ 26,258

Loss or income subject to lower or higher tax rates (812) (363) (1,285) (226)

Decrease in future income taxes as a result of decrease in

substantively enacted tax rates

(6,318)

(19,982)

(6,318)

(19,820)

Large corporation tax – (1,815) – 600

Income taxes arising from non-deductible expenses 636 1,430 636 1,430

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)

–

Other (73) 507 246 718

Income taxes at effective income tax rate $ (6,630) $ (12,298) $ 12,170 $ 9,274

- 36-

COGECO CABLE INC.

Notes to Consolidated Financial Statements

August 31, 20 07

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

6. Earnings per Share

The following table provides the 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 $ 36,368 $ 33,987 $ 84,691 $ 65,556

Weighted average number of multiple voting and

subordinate voting shares outstanding

46,080,398

39,993,757

43,246,025

39,990,239

Effect of dilutive stock options

(1)

427,920 129,091 349,854 172,784

Weighted average number of diluted multiple voting and

subordinate voting shares outstanding

46,508,318

40,122,848

43,595,879

40,163,023

Earnings per share

Basic $ 0.79 $ 0.85 $ 1.96 $1.64

Diluted 0.78 0.85 1.94 1.63

(1)

No stock options (172,844 in 2006) were excluded from the calculation of diluted earnings per share for the three month periods ended

August 31, 2007, and 35,884 stock options (150,647 in 2006) were excluded 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 g reater than the a verage shar e pri c e of the su b ordi nate voting

shares.

- 37-

COGECO CABLE INC.

Notes to Consolidated Financial Statements

August 31, 20 07

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

7. Goodwill and Other Intangible Assets

August 31,

2007

August 31,

2006

(audited) (audited)

Customer relationships $ 68,858 $ –

Customer base

989,552 989,552

1,058,410 989,552

Goodwill

342,584 422,108

$ 1,400,994 $ 1,411,660

a) Intangible assets

During the year 2007, intangible a ssets variations were as follows:

Customer

relationships

Customer

base

Total

(audited) (audited) (audited)

Balance as at August 31, 2006 $ – $ 989,552 $ 989,552

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 $ 989,552 $ 1,058,410

At August 31, 2007 and 2006, the Corporation tested the value of customer base for impairment and concluded that

no impairment existed.

- 38-

COGECO CABLE INC.

Notes to Consolidated Financial Statements

August 31, 20 07

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

7. Goodwill and Other Intangible Assets (continued)

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 Corporation 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 Corporation tested the value of goodwill for impairment and concluded that no impairment

existed.

- 39-

COGECO CABLE INC.

Notes to Consolidated Financial Statements

August 31, 20 07

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

8. Long-Term Debt

Maturity Interest rate

August 31,

2007

August 31,

2006

(audited) (audited)

Parent company

Term Facility

Term loan – €104,551,500 ($150,000,000 in 2006)

(1)

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

(3)

158,430 165,795

Series B 2011 7.73

175,000 175,000

Second Secured Debentures Series A 2007

(4)

8.44

– 125,000

Deferred credit

(5)

2008 –

80,220 72,855

Subsidiaries

Obligations under capital leases 2011 6.42 – 8.30

5,760 5,009

1,027,926 1,316,977

Less current portion

17,292 126,851

$ 1,010,634 $ 1,190,126

(1)

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.

(2)

Average interest rate on debt as at August 31, 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.

(4)

On February 2, 2007, the Corpora tion gave a notice of redempti on to purchase on March 5, 2007, all of its 8.44% Second Secured De bentures

Series A (the “Notes”) in the aggregate principal amount of $125,000,000. Concurrently, the Corporation also made an offer to purchase for

cancellation on February 12, 2007, all of the validly issued and hel d 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 February 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 that would have been payable as at August 31, 2007 and 2006 under cross-currency swaps

entered into by the Corporation to hedge 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 $18,163,000

and $80,066,000 ($15,67 5,000 and $55,240,000 in 2006).

- 40-

COGECO CABLE INC.

Notes to Consolidated Financial Statements

August 31, 20 07

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

9. Capital Stock

Authorized, an unlimited number

Class A Preference shares, without voting rights, redeemable by the Corporation and retractable at the option of the

holder at any time at a price of $1 per share, carrying a cumulative preferential cash dividend at a rate of 11% of the

redemption price per year.

Class B Preference shares, without voting rights, could be issued in series.

Multiple voting shares, 10 votes per share.

Subordinate voting shares, 1 vote per share.

August 31,

2007

August 31,

2006

(audited) (audited)

Issued

15,691,100 multiple voting shares $ 98,346 $ 98,346

32,663,587 subordinate voting shares (24,308,112 in 2006) 886,059 532,112

$ 984,405 $ 630,458

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 24,308,112 $ 532,112 24,293,486 $ 531,874

Shares issued for cash consideration 8,000,000 345,950 – –

Shares issued for cash under the Employee Stock Purchase Plan

and the Stock Option Plan

355,475

7,014

14,626

228

Compensation expense previously recorded in contributed

surplus for options exercised

–

983

–

Balance at end 32,663,587 $ 886,059 24,308,112 $ 532,112

On February 2, 2007, the Corporation issued 5,000,000 subordinate voting shares for a total consideration of

$192,500,000. Proceeds of this offering, net of issue costs, amounted to $184,211,000. On August 9, 2007, the

Corporation issued 3,000,000 subordinate voting shares for a total consideration of $153,450,000. Proceeds of this

offering, net of issue costs, amounted to $146,899,000.

- 41-

COGECO CABLE INC.

Notes to Consolidated Financial Statements

August 31, 20 07

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

9. Capital Stock (continued)

Stock-based plans

The Corporation 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 Corporation’s annual consolidated

financial statements. During fiscal year 2007, the Corporation 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 Corporation 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 are 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. During the fourth quarter of 2007, the Corporation charged an amount of $315,000 with regards to the

Corporation’s options granted to Cogeco Inc.’s employees. The Corporation records compensation expense for

options granted on or after September 1, 2003. As a result, a compensation expense of $223,000 and $1,662,000

($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 Corporation’s net income and earnings per share for the three

and twelve month periods ended Augu st 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 $ 33,987 $ 65,556

Pro forma 33,967 65,475

Basic earnings per share

As reported $ 0.85 $ 1.64

Pro forma 0.85 1.64

Diluted earnings per share

As reported $ 0.85 $ 1.63

Pro forma

0.85 1.63

The fair value of stock options granted for the twelve month period ended August 31, 2007 was $7.39 ($9.32 in 2006)

per option. The fair value of each option granted 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

- 42-

COGECO CABLE INC.

Notes to Consolidated Financial Statements

August 31, 20 07

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

9. Capital Stock (continued)

As at August 31, 2007, the Corporation had outstanding stock options providing for the subscription of 942,714

subordinate voting shares. These stock options, which include 376,000 conditional stock options, can be exercised at

various prices ranging from $7.05 to $4 4.54 and at various dates up to April 11, 2017.

The Corporation had also a Performance Unit Plan for key employees, which was terminated in June 2007. The value

of a performance unit granted was equal to the closing price of the subordinate voting shares of the Corporation 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 years 2007 and 2006, no performance units were granted to employees by the

Corporation. An amount of $1,125,000 was paid in the fourth quarter related to the termination of the plan. A

compensation expense of $11,000 and $608,000 ($279,000 and $139,000 in 2006) was recorded for the three and

twelve months periods ended August 31, 2007 related to this plan.

In April 2007, the Corporation 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 Corporation. 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 memb er of the Board or in the event of the death of a member.

10. 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)

- 43-

COGECO CABLE INC.

Notes to Consolidated Financial Statements

August 31, 20 07

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

11. Statements of Ca sh 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 $ 582 $ 1,023 $ (3,792) $ (1,131)

Income taxes receivable 58 178 (2,528) –

Prepaid expenses (738) 244 (1,324) (1,020)

Accounts payable and accrued liabilities 27,575 48,788 (69,807) 1,681

Income tax liabilities 158 450 507 (228)

Deferred and prepaid income 1,155 (188) 4,189 1,749

$ 28,790 $ 50,495 $ (72,755) $ 1,051

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 $ 2,898

Financial expense paid 13,705 11,805 82,787 54,892

Income taxes paid (received) (728) 478 6,255 4,308

12. Employee Future Benefits

The Corporation and its Canadian subsidiaries offer their employees contributory defined benefit pension plans, a

defined contribution pension plan or a collective registered retirement savings plan which are described in the

Corporation’s annual consolidated 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 $ 413 $ 426 $ 1,103 $ 1,044

Defined contribution pension plan and collective

registered retirement savings plan

604

407

2,307

1,522

$ 1,017 $ 833 $ 3,410 $ 2,566

- 44-

COGECO CABLE INC.

Notes to Consolidated Financial Statements

August 31, 20 07

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

13. Guarantees

Taxes for Municipal Rights of Way

During the second quarter, the Corporation 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 judgement no longer subject to appeal is rendered by the Portuguese courts having jurisdiction in this

matter. As a result, the Corporation may be required to pay, upon written demand by the Municipality of Seixal, the

required amounts following final judgement up to a maximum aggregate amount of €5.7 million ($8.3 million), should

Cabovisão fail to pay such required amounts.

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Press release details

STRONG FOURTH QUARTER AND YEAR-END FINANCIAL AND OPERATIONAL RESULTS FOR COGECO CABLE

SUSTAINABILITY

Cogeco Fund

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