Cogeco Cable Inc. posts solid third quarter results for fiscal 2014

PRESS RELEASE

For immediate release

• Third quarter revenue increased by $32.0 million, or 6,9%, to reach $496.4 million;

• Adjusted EBITDA

(1)

increased by 6.6% to $229.4 million compared to the third quarter of fiscal

2013;

• Quarterly dividend of $0.30 per share, an increase of 15.4%, compared to the same period last

year.

Montréal, July 9, 2014 – Today, Cogeco Cable Inc. (TSX: CCA) (“Cogeco Cable” or the “Corporation”) announced its financial

results for the third quarter of fiscal 2014, ended May 31, 2014, in accordance with International Financial Reporting Standards

(“IFRS”).

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

• Third quarter revenue increased by $32.0 million, or 6.9%, to reach $496.4 million driven by growth of 3.5% in the

Canadian cable services segment, of 12.2% in the American cable services segment and of 15.3% in the Enterprise

services segment. Revenue increased organically from all of our operating units combined with favorable foreign

exchange rates in our foreign operations. For the nine-month period ended May 31, 2014, revenue reached close to

$1.5 billion, an increase of $235.4 million, or 19.3% driven by growth of 2.4% in the Canadian cable services segment,

of 65.7% in the American cable services segment and of 75.4% in the Enterprise services segment. Revenue increased

mainly attributable to the full year impact of the acquisitions of Atlantic Broadband and Peer 1 Hosting

(2)

("the recent

acquisitions") which both occurred during fiscal 2013 combined with the organic growth from all of our operating

segments and favorable foreign exchange rates in our foreign operations;

• Adjusted EBITDA

(1)

increased by 6.6% to $229.4 million compared to the third quarter of fiscal 2013, and by 18.7% to

$662.5 million for the first nine months compared to the same period of the prior year. The rapid progression for both

periods resulted mainly from the recent acquisitions, the improvement in all of our operating segments as well as the

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

• Operating margin

(1)

slightly decreased to 46.2% in the quarter and to 45.5% in the first nine months compared to 46.3%

and 45.7% for the same periods of the prior year as a result of lower margins from the business activities of the

American cable services and Enterprise services segments;

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

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

Television ("IPTV") solution project on which its Canadian cable services segment had worked. As a result of the

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

Subsequently, in order to enhance its competitiveness, Cogeco Cable Canada has concluded a partnership with TiVo

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

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

successfully launched in the first half of fiscal 2014 at the Corporation’s Atlantic Broadband subsidiary with great

customer acceptance;

(1) The indicated terms do not have standard definitions prescribed by IFRS and therefore, may not be comparable to similar measures presented by other

companies. For more details, please consult the "Non-IFRS financial measures" section of the Management's discussion and analysis.

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

• Profit for the third quarter amounted to $35.5 million compared to $48.1 million in fiscal 2013. The decline for the quarter

is attributable to the impairment of property, plant and equipment explained above, partly offset by the improvement

of the adjusted EBITDA. For the first nine months of fiscal 2014, profit for the period amounted to $145.6 million

compared to $141.0 million for the comparable period of the prior year. Profit progression for the period is mostly

attributable to the improvement of the adjusted EBITDA explained above combined with the decrease in integration,

restructuring and acquisition costs, partly offset by the impairment of property, plant and equipment also explained

above as well as the increases in financial expense and depreciation and amortization expense essentially related to

the recent acquisitions;

• Third quarter free cash flow

(1)

increased by $48.1 million to reach $91.1 million compared to $43.0 million in the third

quarter of fiscal 2013. This increase is mainly due to the improvement of adjusted EBITDA and the decrease in

acquisitions of property, plant and equipment due to the timing of certain initiatives. For the first nine months, free cash

flow increased by $156.6 million to reach $252.5 million compared to $95.9 million for the same period of fiscal 2013.

This variance is mostly attributable to the improvement of adjusted EBITDA, the decrease in acquisitions of property,

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

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

acquisitions;

• Fiscal 2014 third-quarter cash flow from operating activities reached $184.4 million compared to $167.0 million, an

increase of $17.5 million, or 10.5%, compared to fiscal 2013 third-quarter. The increase is mainly attributable to the

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

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

$429.2 million compared to $316.8 million, an increase of $112.4 million, or 35.5%, compared to the same period in

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

in integration, restructuring and acquisitions costs and in income tax paid, partly offset by the increase in financial

expense paid; and

• A quarterly dividend of $0.30 per share was paid to the holders of subordinate and multiple voting shares, an increase

of $0.04 per share, or 15.4%, compared to a dividend of $0.26 per share paid in the third quarter of fiscal 2013. Dividend

payments in the first nine months totaled $0.90 per share in fiscal 2014 compared to $0.78 per share in the comparable

period of fiscal 2013.

“We continue to be pleased with our solid quarterly results. The improvement of our adjusted EBITDA, in these highly competitive

industries, stemmed from generating more revenue from current and new customers while maintaining appropriate cost controls.

This enabled us to keep growing and achieving the Corporation’s financial objectives,” declared Louis Audet, President and Chief

Executive Officer of Cogeco Cable Inc.

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

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

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

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

ABOUT COGECO CABLE

Cogeco Cable Inc. (www.cogeco.ca) is a telecommunications corporation. It is the 11th largest cable operator in North America operating in

Canada under the Cogeco Cable Canada name in Quebec and Ontario, and in the United States under the Atlantic Broadband name in Western

Pennsylvania, South Florida, Maryland/Delaware and South Carolina. Its two-way broadband fibre networks provide to its residential and business

customers analogue and digital television, high speed Internet and telephony services. Through its subsidiaries Cogeco Data Services and

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

dedicated hosting, managed IT, cloud and connectivity services), with 20 data centres, extensive fibre networks in Montreal and Toronto as well

as points-of-presence in North America and Europe. Cogeco Cable Inc.’s subordinate voting shares are listed on the Toronto Stock Exchange

(TSX: CCA).

(1) The indicated terms do not have standard definitions prescribed by IFRS and therefore, may not be comparable to similar measures presented by other

companies. For more details, please consult the "Non-IFRS financial measures" section of the Management's discussion and analysis.

- 30 -

Source: Cogeco Cable Inc.

Pierre Gagné

Senior Vice President and Chief Financial Officer

Tel.: 514-764-4700

Information: Media

René Guimond

Vice-President, Public Affairs and Communications

Tel.: 514-764-4700

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

Media representatives may attend as listeners only.

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

before the start of the conference:

Canada/United States Access Number: 1 800-820-0231

International Access Number: + 1 416-640-5926

Confirmation Code: 2083261

By Internet at www.cogeco.ca/investors

A rebroadcast of the conference call will be available until July 16, 2014, by dialing:

Canada and United States access number: 1 888-203-1112

International access number: + 1 647-436-0148

Confirmation code: 2083261

SHAREHOLDERS’ REPORT

Three and nine-month periods ended May 31, 2014

COGECO CABLE INC. Q3 2014 2

FINANCIAL HIGHLIGHTS

Quarters ended Nine months ended

(in thousands of dollars, except percentages and

per share data)

May 31,

2014

May 31,

2013

(2)

Change

May 31,

2014

May 31,

2013

(2)

Change

$ $ % $ $ %

Operations

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

Adjusted EBITDA

(1)

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

Operating margin

(1)

46.2% 46.3% — 45.5% 45.7%

—

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

Profit for the period 35,514 48,079 (26.1) 145,593 141,025 3.2

Profit for the period attributable to owners of the

Corporation 35,514 47,877 (25.8) 145,593 141,025 3.2

Cash Flow

Cash flow from operating activities 184,435 166,976 10.5 429,173 316,780 35.5

Cash flow from operations

(1)

175,595 155,868 12.7 502,872 396,000 27.0

Acquisitions of property, plant and equipment, intangible

and other assets 84,452 112,841 (25.2) 250,347 300,107 (16.6)

Free cash flow

(1)

91,143 43,027 — 252,525 95,893 —

Financial Condition

(3)

Property, plant and equipment — — — 1,773,325 1,854,155

(4.4

)

Total assets — — — 5,206,189 5,254,419

(0.9

)

Indebtedness

(4)

— — — 2,858,303 2,944,182

(2.9

)

Shareholders' equity — — — 1,456,730 1,342,940 8.5

Capital intensity

(1)

17.0% 24.3% — 17.2% 24.6% —

Per Share Data

(5)

Earnings per share

Basic 0.73 0.98 (25.5) 2.99 2.90 3.1

Diluted 0.72 0.98 (26.5) 2.96 2.88 2.8

(1) The indicated terms do not have standardized definitions prescribed by International Financial Reporting Standards (“IFRS”) and therefore, may not be

comparable to similar measures presented by other companies. For more details, please consult the “Non-IFRS financial measures” section of the

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

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

interim consolidated financial statements.

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

(4) Indebtedness is defined as the aggregate of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments.

(5) Per multiple and subordinate voting share.

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)

Three and nine-month periods ended May 31, 2014

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

FORWARD-LOOKING STATEMENTS

Certain statements in this Management’s Discussion and Analysis (“MD&A”) may constitute forward-looking information within the meaning of

securities laws. Forward-looking information may relate to Cogeco Cable’s future outlook and anticipated events, business, operations, financial

performance, financial condition or results and, in some cases, can be identified by terminology such as "may"; "will"; "should"; "expect"; "plan";

"anticipate"; "believe"; "intend"; "estimate"; "predict"; "potential"; "continue"; "foresee", "ensure" or other similar expressions concerning matters

that are not historical facts. In particular, statements regarding the Corporation’s future operating results and economic performance and its

objectives and strategies are forward-looking statements. These statements are based on certain factors and assumptions including expected

growth, results of operations, performance and business prospects and opportunities, which Cogeco Cable believes are reasonable as of the

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

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

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

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

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

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

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

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

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

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

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

Corporation is under no obligation and does not undertake to update or alter this information at any particular time, except as may required by

law.

All amounts are stated in Canadian dollars unless otherwise indicated. This report should be read in conjunction with the Corporation’s condensed

interim consolidated financial statements and the notes thereto for the three and nine-month periods ended May 31, 2014, prepared in accordance

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

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

CORPORATE OBJECTIVES AND STRATEGIES

Cogeco Cable Inc.’s (“Cogeco Cable” or the “Corporation”) objectives are to provide outstanding service to its customers, improve profitability

and create shareholder value. To achieve these objectives, the Corporation has developed strategies that focus on expanding its service offering

and enhancing its existing services or bundles, improving the networks, improving customer experience and business processes as well as

keeping a sound capital management and a strict control over spending. The Corporation measures its performance, with regard to these objectives

by monitoring adjusted EBITDA

(1)

, operating margin

(1)

, free cash flow

(1)

and capital intensity

(1)

KEY PERFORMANCE INDICATORS

ADJUSTED EBITDA AND OPERATING MARGIN

For the nine-month period ended May 31, 2014, adjusted EBITDA increased by 18.7% to reach $662.5 million compared to the same period of

fiscal 2013 and operating margin slightly decreased to 45.5% from 45.7%. Improvement in the adjusted EBITDA is mainly attributable to the full

impact of the acquisitions of Atlantic Broadband and Peer 1 Hosting

(2)

(the "recent acquisitions") which occurred at the end of the first quarter

and in the second quarter of fiscal 2013, respectively, combined with the favorable foreign exchange rates benefiting our foreign operations as

well as the organic growth in the Canadian cable services segment.

FREE CASH FLOW

For the nine-month period ended May 31, 2014, Cogeco Cable reported free cash flow of $252.5 million, an increase of $156.6 million compared

to $95.9 million for the same period of the previous fiscal year. This variance is mostly attributable to the improvement of adjusted EBITDA

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

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

acquisitions.

CAPITAL INTENSITY AND ACQUISITIONS OF PROPERTY, PLANT AND

EQUIPMENT, INTANGIBLE AND OTHER ASSETS

During the nine-month period ended May 31, 2014, the acquisitions of property, plant and equipment, intangible and other assets amounted to

$250.3 million and revenue close to $1.5 billion for a capital intensity ratio of 17.2% compared to 24.6% in the comparable period of the prior

year. Capital intensity ratio has declined mainly as result of higher revenue for the first nine months of fiscal 2014 as a result of the full impact of

the recent acquisitions combined with lower acquisitions of property, plant and equipment, intangible and other assets due to the timing of certain

initiatives compared to the same period of the prior year. For further details on the Corporation’s capital expenditures please refer to the “Cash

flow analysis” section.

BUSINESS DEVELOPMENTS AND OTHER

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

plant and equipment, capitalized wages and borrowing costs related to an Internet Protocol Television ("IPTV") solution project on which its

Canadian cable services segment had worked. As a result of the unexpected performance issues encountered with the platform, it had to be

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

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

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

2014 at the Corporation’s Atlantic Broadband subsidiary with great customer acceptance.

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

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

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

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

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

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

(1) The indicated terms do not have standardized definitions prescribed by IFRS and therefore, may not be comparable to similar measures presented by other

companies. For more details, please consult the "Non-IFRS financial measures" section.

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

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

OPERATING AND FINANCIAL RESULTS

OPERATING RESULTS

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

(1)

Change

May 31,

2014

May 31,

2013

(1)

Change

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

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

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

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

1.1

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

Operating margin 46.2% 46.3% 45.5% 45.7%

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

interim consolidated financial statements.

REVENUE

Fiscal 2014 third-quarter revenue increased by $32.0 million, or 6.9%, to reach $496.4 million driven by growth of 3.5% in the Canadian cable

services segment, of 12.2% in the American cable services segment and of 15.3% in the Enterprise services segment. Revenue increased

organically from all of our operating units combined with favorable foreign exchange rates for our foreign operations. For the nine-month period

ended May 31, 2014, revenue reached approximately $1.5 billion, an increase of $235.4 million, or 19.3% driven by growth of 2.4% in the Canadian

cable services segment, of 65.7% in the American cable services segment and of 75.4% in the Enterprise services segment. Revenue increased

mainly attributable to the full year impact of the recent acquisitions which both occurred during fiscal 2013 combined with the organic growth from

all of our operating segments and favorable foreign exchange rates in our foreign operations. For further details on the Corporation’s revenue,

please refer to the “Segmented operating results" section.

OPERATING EXPENSES AND MANAGEMENT FEES

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

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

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

appreciation of the US dollar and British Pound currency compared to the Canadian dollar. For further details on the Corporation’s operating

expenses, please refer to the “Segmented operating results" section.

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

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

2013. For further details on the Corporation’s management fees, please refer to the “Related party transactions” section.

ADJUSTED EBITDA AND OPERATING MARGIN

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

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

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

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

the recent acquisitions. Cogeco Cable’s third-quarter operating margin slightly decreased to 46.2% from 46.3% and to 45.5% from 45.7% for the

first nine months of fiscal 2014 compared to the comparable periods of the prior year essentially due to lower margin business activities from the

American cable services and Enterprise services segments. For further details on the Corporation’s adjusted EBITDA and operating margin,

please refer to the “Segmented operating results" section.

FIXED CHARGES

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

(1)

Change

May 31,

2014

May 31,

2013

(1)

Change

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

Depreciation and amortization 117,653

111,445

5.6 346,540 268,611 29.0

Financial expense 32,038 35,146 (8.8) 97,505 80,068 21.8

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

interim consolidated financial statements.

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

For the three and nine-month periods ended May 31, 2014, depreciation and amortization expense amounted to $117.7 million and $346.5 million,

respectively, compared to $111.4 million and $268.6 million for the same periods of the prior year. The increase for the quarter is mostly attributable

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

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

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

Fiscal 2014 third-quarter financial expense decreased by 8.8% to $32.0 million compared to $35.1 million in fiscal 2013 third-quarter as a result

of a lower indebtedness level. For the first nine months of fiscal 2014, financial expense increased by $17.4 million, or 21.8%, at $97.5 million,

compared to $80.1 million in the prior year as a result of the full year impact of financing costs related to the recent acquisitions.

IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT

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

plant and equipment, capitalized wages and borrowing costs related to an IPTV solution project on which its Canadian Cable services segment

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

INCOME TAXES

For the three and nine-month periods ended May 31, 2014, income tax expense amounted to $8.8 million and $36.9 million, respectively, compared

to $18.4 million and $51.6 million, respectively, for the comparable periods in the prior year. The decrease is mostly attributable to the impairment

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

partly offset by the improvement in adjusted EBITDA.

PROFIT FOR THE PERIOD

For the third quarter of fiscal 2014, profit for the period amounted to $35.5 million, or $0.73 per share, compared to $48.1 million, or $0.98 per

share last year. The decline for the quarter is attributable to the impairment of property, plant and equipment explained above, partly offset by

the improvement of the adjusted EBITDA. For the nine-month period ended May 31, 2014, profit for the period amounted to $145.6 million, or

$2.99 per share, compared to $141.0 million, or $2.90 for the comparable period. Profit progression for the period is mostly attributable to the

improvement of the adjusted EBITDA explained above as well as the decrease in integration, restructuring and acquisition costs, partly offset by

the impairment of property, plant and equipment and the increase in fixed charges explained above.

CUSTOMER STATISTICS

Consolidated

Net additions (losses) Net additions (losses)

Consolidated UNITED STATES CANADA Quarters ended Nine months ended

May 31, 2014

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

PSU

(1)

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

Television service customers 1,034,991 227,160

807,831

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

HSI service customers 865,597 188,795

676,802

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

Telephony service customers 551,530 79,719

471,811

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

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

At May 31, 2014, PSU reached 2,452,118 of which 1,956,444 came from the Canadian cable services segment and 495,674 came from the

American cable services segment. For the three and nine-month periods ended May 31, 2014, PSU net losses stood at 2,509 and 15,539,

respectively, compared to 1,079 and net additions of 20,783 for the comparable periods of fiscal 2013. Fiscal 2014 third-quarter and first nine

months net losses for Television service customers stood at 9,620 and 31,961 compared to 8,407 and 21,143, HSI service customers grew by

7,811 and 27,152 compared to 4,603 and 27,340 and the Telephony service customers net losses stood at 700 and 10,730 compared to net

additions of 2,725 and 14,586 for the comparable periods of fiscal 2013. HSI net additions continued to stem from the enhancement of the product

offering and the positive impact of the bundle offer.

In the Canadian cable services segment, PSU decreased by 5,633 for the third-quarter of fiscal 2014, compared to a decrease of 1,013 for the

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

comparable period in 2013. The decrease is explained by service category maturity and a much more competitive environment for all services.

In the American cable services segment, PSU increased by 3,124 for the third-quarter of fiscal 2014, compared to a decrease of 66 for the same

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

in 2013. The increase is explained by additional HSI and Telephony services, offset by losses in the Television service.

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

RELATED PARTY TRANSACTIONS

Cogeco Cable Inc. is a subsidiary of COGECO Inc., which holds 32.0% of the Corporation’s equity shares, representing 82.5% of the Corporation’s

voting shares. On September 1, 1992, Cogeco Cable Inc. executed a management agreement with COGECO Inc. under which the parent company

agreed to provide certain executive, administrative, legal, regulatory, strategic and financial planning services and additional services to the

Corporation and its subsidiaries (the “Management Agreement”). These services are provided by COGECO Inc.’s senior executives, including

the President and Chief Executive Officer, the Senior Vice President and Chief Financial Officer, the Vice President, Corporate Affairs, Chief Legal

Officer and Secretary, the Vice President, Regulatory Affairs and Copyright, the Vice President, Corporate Development, the Vice President and

Treasurer, the Vice President, Public Affairs and Communications and the Vice President, Internal Audit and Risk Management. No direct

remuneration is payable to such senior executives by the Corporation. However, the Corporation granted 84,250 stock options (71,233 in 2013)

to these senior executives as senior executives of Cogeco Cable during the first nine months of fiscal year 2014. During the third quarter and

first nine months of fiscal 2014, the Corporation charged COGECO Inc. amounts of $124,000 and $286,000 ($99,000 and $275,000 in 2013)

with regards to the Corporation’s stock options granted to these senior executives.

During the first nine months of fiscal 2014 the Corporation also granted 12,550 (12,280 in 2013) Incentive Share Units (“ISUs”) to these senior

executives as senior executives of Cogeco Cable. During the third quarter and first nine months of fiscal 2014, the Corporation charged COGECO

Inc. amounts of $122,000 and $440,000 ($117,000 and $336,000 in 2013) with regards to the Corporation’s ISUs granted to these senior executives.

Under the Management Agreement, the Corporation pays monthly fees equal to 2% of its total revenue to COGECO Inc. for the above-mentioned

services. The management fees are subject to annual upward adjustment based on increases in the Consumer Price Index in Canada. This limit

can be increased under certain circumstances upon request to that effect by COGECO Inc. For fiscal year 2014, management fees have been

set at a maximum of $9.7 million ($9.6 million in 2013), which were paid within the first half of the fiscal year. For fiscal year 2013, management

fees were also fully paid in the first half of the year. In addition, the Corporation reimburses COGECO Inc.’s out-of-pocket expenses incurred with

respect to services provided to the Corporation under the Management Agreement.

Details regarding the Management Agreement and stock options and ISUs granted to COGECO Inc.’s senior executives are provided in the

Corporation’s 2013 Annual Report.

There were no other material related party transactions during the periods covered.

CASH FLOW ANALYSIS

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

(2)

May 31,

2014

May 31,

2013

(2)

(in thousands of dollars)

$ $ $ $

Cash flow from operations

(1)

175,595 155,868

502,872 396,000

Changes in non-cash operating activities 15,397 (2,526) (77,388) (78,708)

Amortization of deferred transaction costs and discounts on long-term debt (1,898) (3,580)

(5,628

)

(7,043

)

Income taxes paid (15,995) (16,894) (53,538) (76,902)

Current income tax expense 22,162 25,789 68,932 73,907

Financial expense paid (42,864) (26,827) (103,582) (70,542)

Financial expense 32,038 35,146 97,505 80,068

Cash flow from operating activities 184,435 166,976

429,173 316,780

Cash flow from investing activities (84,427) (135,161) (249,742) (2,305,469)

Cash flow from financing activities (123,719) (31,688) (189,870) 1,809,398

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

foreign currencies

(535) 1,089

1,390 1,794

Net change in cash and cash equivalents (24,246) 1,216

(9,049

) (177,497)

Cash and cash equivalents, beginning of the period 54,772 36,678 39,575

215,391

Cash and cash equivalents, end of the period 30,526 37,894 30,526 37,894

(1) The indicated terms do not have standard definitions prescribed by IFRS and therefore, may not be comparable to similar measures presented by other companies.

For more details, please consult the "Non-IFRS financial measures" section of the Management's discussion and analysis.

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

interim consolidated financial statements.

OPERATING ACTIVITIES

Fiscal 2014 third-quarter cash flow from operating activities reached $184.4 million compared to $167.0 million, an increase of $17.5 million, or

10.5%, compared to fiscal 2013 third-quarter. The increase is mainly explained by the improvement of adjusted EBITDA of $14.2 million and by

the increase of $17.9 million in non-cash operating activities as a result of an increase in trade and other payables compared to a decrease in the

comparable period, partly offset by a lower decrease in trade and other receivables compared to the prior year and an increase of financial expense

paid of $16.0 million. For the first nine months of fiscal 2014, cash flow from operating activities reached $429.2 million compared to $316.8 million,

an increase of $112.4 million, or 35.5%, compared to the same period in fiscal 2013. The increase is mainly explained by the improvement of

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

adjusted EBITDA of $104.3 million combined with a decrease of $23.4 million in income taxes paid and a decrease of $13.1 million in integration,

restructuring and acquisition costs, partly offset by an increase of financial expense paid of $33.0 million.

For the three and nine-month periods ended May 31, 2014, cash flow from operations amounted to $175.6 million and $502.9 million, respectively,

compared to $155.9 million and $396.0 million for the comparable periods in fiscal 2013, representing increases of $19.7 million, or 12.7%, and

$106.9 million, or 27.0%, respectively. For both periods, the increases are mainly explained by the improvement of adjusted EBITDA of $14.2

million and $104.3 million, respectively.

INVESTING ACTIVITIES

For the three and nine-month periods ended May 31, 2014, investing activities amounted to $84.4 million and $249.7 million, respectively, mainly

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

amounted to $135.2 million and $2.3 billion explained below.

BUSINESS COMBINATIONS IN FISCAL 2013

On January 31, 2013 and on April 3, 2013, the Corporation acquired 100% of the issued and outstanding shares of Peer 1 Hosting one of the

world's leading internet infrastructure providers, specializing in managed hosting, dedicated servers, cloud services and colocation. During the

second quarter of fiscal 2014, the Corporation finalized the purchase price allocation of Peer 1 Hosting which had no impact on the statement of

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

of financial position at August 31, 2013, increased income tax receivable by $0.7 million, increased deferred tax assets by $4.4 million, decreased

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

other comprehensive income by $1.2 million.

On November 30, 2012, the Corporation completed the acquisition of all the outstanding shares of Atlantic Broadband, an independent cable

system operator formed in 2003, providing Analogue and Digital Television, as well as HSI and Telephony services to residential and small and

medium business customers. During the first quarter of fiscal 2014 the Corporation finalized the purchase price allocation of Atlantic Broadband

which remained unchanged since the last adjustments made in the fourth quarter of fiscal 2013.

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

Peer 1

Hosting

Atlantic

Broadband TOTAL

Final Final Final

$ $ $

Consideration

Paid

Purchase of shares

494,796 337,779 832,575

Working capital adjustments —

5,415 5,415

Repayment of secured debts and settlement of options outstanding

170,872

1,021,854 1,192,726

665,668

1,365,048 2,030,716

Net assets acquired

Cash and cash equivalents 10,840

5,480

16,320

Restricted cash

8,729

—

8,729

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

Prepaid expenses and other

3,855 1,370 5,225

Income tax receivable

2,797 3,907 6,704

Other assets

2,462

—

2,462

Property, plant and equipment

150,013 302,211 452,224

Intangible assets

144,231 711,418 855,649

Goodwill

410,454 522,215 932,669

Deferred tax assets

8,872

98,592

107,464

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

Provisions —

(721

)

(721

)

Deferred and prepaid revenue and other liabilities assumed

(3,388

)

(7,697

) (11,085)

Long-term debt assumed

(1,735

) —

(1,735

)

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

665,668

1,365,048 2,030,716

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

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

Investing activities, including acquisition of property, plant and equipment segmented according to the National Cable Television Association

(“NCTA”) standard reporting categories, are as follows:

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

May 31,

2014

May 31,

2013

(in thousands of dollars) $ $ $ $

Customer premise equipment

(1)

25,327 18,000 68,872 55,874

Scalable infrastructure

(2)

17,867 21,512 53,341 78,428

Line extensions 5,677 5,961 17,095 14,081

Upgrade / Rebuild 6,658 10,924 17,225 26,574

Support capital 6,979 4,552 15,711 14,935

Acquisition of property, plant and equipment - Cable services

(3)

62,508 60,949

172,244 189,892

Acquisition of property, plant and equipment - Enterprise services

(4)

17,001 47,376 64,431 96,565

Acquisitions of property, plant and equipment 79,509 108,325

236,675 286,457

Acquisition of intangible and other assets - Cable services

(3)

3,368 3,933 10,513 12,048

Acquisition of intangible and other assets - Enterprise services

(4)

1,575 583

3,159 1,602

Acquisitions of intangible and other assets 4,943 4,516 13,672 13,650

84,452 112,841

250,347 300,107

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

(2) Includes mainly head-end equipment, digital video and telephony transport as well as HSI equipment.

(3) Fiscal 2013 nine-months period include only six months of operating results of American cable services.

(4) Fiscal 2013 nine-month period includes only four month of operating results of Peer 1 Hosting.

For the three and nine-month periods ended May 31, 2014, acquisition of property, plant and equipment in the Cable services amounted to $62.5

million and $172.2 million compared to $60.9 million and $189.9 million for the comparable periods of fiscal 2013, respectively.

In the Canadian cable services, fiscal 2014 third-quarter acquisition of property, plant and equipment amounted to $39.6 million, a decrease of

16.9% when compared to $47.6 million in the third quarter of the prior year. For the nine-month period ended May 31, 2014, acquisition of property,

plant and equipment amounted to $120.9 million, a decrease of 26.0% when compared to the prior year.

For the third quarter of fiscal 2014, acquisition of property, plant and equipment in the American cable services segment amounted to $22.9 million

compared to $13.3 million for the same period of fiscal 2013. For the nine-month period ended May 31, 2014, acquisition of property, plant and

equipment amounted to $51.4 million compared to $26.5 million in the prior year as a result of nine months of operating results compared to six

months in fiscal 2013.

The decreases in the Canadian and American cable services segments are mainly attributable to the following factors:

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

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

in existing areas served; and

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

digital entertainment services in the American cable services segment.

Fiscal 2014 third-quarter and first nine months acquisition of property, plant and equipment in the Enterprise services segment amounted to $17.0

million and $64.4 million compared to $47.4 million and $96.6 million for the same periods of fiscal 2013, respectively. The decrease for both

periods is mainly due to the construction of a new data centre facility in Barrie (north of Toronto), Canada, in fiscal 2013 and the timing of initiatives.

Acquisition of intangible and other assets are mainly attributable to reconnect and additional service activation costs as well as other customer

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

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

FREE CASH FLOW AND FINANCING ACTIVITIES

For the third quarter of fiscal 2014, free cash flow amounted to $91.1 million, an increase of $48.1 million compared to fiscal 2013. This increase

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

initiatives. For the nine-month period, free cash flow amounted to $252.5 million, $156.6 million higher than the same period of last year. This

variance is mostly attributable to the improvement of adjusted EBITDA, the decrease in acquisitions of property, plant and equipment due to the

timing of certain initiatives as well as the decrease in integration, restructuring and acquisition costs, partly offset by the increase in financial

expense due to higher indebtedness level from the recent acquisitions.

In the third quarter of fiscal 2014, a cash decrease of $109.6 million was mainly due to a lower Indebtedness from the repayments under the

revolving facilities of $112.6 million. In the third quarter of fiscal 2013, a cash decrease of $17.2 million was mainly due to a higher level of

Indebtedness from the issuance of $300 million Senior Secured Debentures Series "4" (the "Debentures") for a net proceed of $297.1 million, net

of transaction costs of $2.9 million and the issuance of $410.4 million (US$400 million) Senior Unsecured Notes (the "2020 Notes") for a net

proceed of $402.6 million (US$392.4 million), net of transaction costs of $7.8 million (US$7.6 million). In addition, Cogeco Cable used the net

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

proceeds under the Debentures and the 2020 Notes to repay the Canadian Term Facility amounting to $175 million, the US Term Facility amounting

to $230.8 million (US$225 million), the $114.7 million Revolving loan in connection with the acquisition of Peer 1 Hosting and the $192.4 million

Term Revolving Facility.

For the nine-month period of fiscal 2014, a cash decrease of $142.8 million was mainly due to a lower level of Indebtedness from the repayments

under the revolving facilities of $128.2 million and of long-term debt amounting to $10.9 million. For the nine-month period of fiscal 2013, a cash

increase of $1.9 billion was mainly due to a higher level of Indebtedness provided from the issuance of the 2020 Notes and the Debentures,

described above, as well as draw-down on the existing Term Revolving Facility of $411.9 million (US$420 million) including the repayments made

during the quarter explained above and the new First Lien Credit Facilities of $637.4 million (US$660 million for a net proceed of US$641.5 million,

net of transaction costs of US$18.5 million) to finance the acquisition of Atlantic Broadband as well the draw-down of $125.1 million, under Secured

Credit Facilities to finance the acquisition of Peer 1 Hosting, net of the repayments made during the third quarter explained above.

During the third quarter of fiscal 2014, a quarterly dividend of $0.30 per share was paid to the holders of subordinate and multiple voting shares,

totaling $14.6 million, compared to a dividend paid of $0.26 per share, or $12.6 million in the third quarter of fiscal 2013. Dividend payments in the

first nine months totaled $0.90 per share, or $43.9 million, compared to $0.78 per share, or $37.9 million the year before.

As at May 31, 2014, the Corporation had a working capital deficiency of $160.3 million compared to $223.5 million at August 31, 2013. The $63.2

million deficiency reduction is mainly due to a decrease of $85.5 million in trade and other payables, partly offset by an increase of income tax

liabilities of $20.2 million as a result of generated free cash flow. As part of the usual conduct of its business, Cogeco Cable maintains a working

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

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

to use cash and cash equivalents to reduce Indebtedness.

At May 31, 2014, the Corporation had used $476.2 million of its $800 million amended and restated Term Revolving Facility for a remaining

availability of $323.8 million. In addition, two subsidiaries of the Corporation also benefit from a Revolving Facility of $108.4 million (US$100 million)

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

$107.3 million (US$99 million).

FINANCIAL POSITION

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

"income tax liabilities", “long-term debt” and "deferred tax liabilities".

Property, plant and equipment decreased by $80.8 million due to the impairment of property, plant and equipment of $32.2 million as well as

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

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

British Pound currency appreciation against the Canadian dollar during the first nine months of fiscal 2014. The decrease of $85.5 million in trade

and other payables is related to the timing of payments made to suppliers. The income tax liabilities increase of $20.2 million is due to the excess

of current income tax expense over income tax paid. The decrease of $28.3 million in deferred tax liabilities results from the impairment of property,

plant and equipment and the increase in current income taxes. The decrease of $82.0 million in long-term debt is due to the factors previously

discussed in the "Cash flow analysis" section, partly offset by the appreciation of the US dollar and British Pound currency compared to the

Canadian dollar.

OUTSTANDING SHARE DATA

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

condensed interim consolidated financial statements.

Number of

shares/options

Amount

(in thousands

of dollars)

Common shares

Multiple voting shares 15,691,100 98,346

Subordinate voting shares 33,367,186

909,678

Options to purchase subordinate voting shares

Outstanding options 797,356

Exercisable options 297,899

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

FINANCING

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

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

except as mentioned below.

On November 22, 2013, the Corporation amended and restated its Term Revolving Facility of $800 million with a syndicate of lenders. The maturity

was extended until January 22, 2019 and can be further extended annually. The amendments reduced the margin for the calculation of the interest

rate and reduced restrictions on some covenants. The amended and restated Term Revolving Facility also replaced Cogeco Cable’s Secured

Credit Facilities coming to maturity on January 27, 2017 which was fully repaid on November 22, 2013. This amended and restated Term Revolving

Facility is comprised of two tranches: a first tranche, a Canadian tranche, amounting to $788 million and the second tranche, a UK tranche,

amounting to $12 million. Both Cogeco Cable and Peer 1 (UK) Ltd. can borrow under the UK tranche. The Canadian tranche is available in

Canadian dollars, US dollars, Euros and British Pounds and interest rates are based on banker's acceptance, US dollar base rate loans, LIBOR

loans in US dollars, Euros or British Pounds, plus the applicable margin. The UK tranche is available in British Pounds and interest rates are

based on British Pounds base rate loans and British Pounds LIBOR loans. The Term Revolving Facility is indirectly secured by first priority fixed

and floating charges and a security interest on substantially all present and future real and personal properties and undertaking of every nature

and kind of the Corporation and certain of its subsidiaries, and provides for certain permitted encumbrances, including purchased money obligations,

existing funded obligations and charges granted by any subsidiary prior to the date when it becomes a subsidiary, subject to a maximum amount.

The provisions under this facility provide for restrictions on the operations and activities of the Corporation. Generally, the most significant

restrictions relate to permitted investments and dividends on multiple and subordinate voting shares, as well as incurrence and maintenance of

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

FINANCIAL MANAGEMENT

The Corporation has entered into cross-currency swap agreements to set the liability for interest and principal payments on its US$190 million

Senior Secured Notes Series A maturing on October 1, 2015. These agreements have the effect of converting the U.S. interest coupon rate of

7.00% per annum to an average Canadian dollar interest rate of 7.24% per annum. The exchange rate applicable to the principal portion of the

debt has been fixed at $1.0625 per US dollar. The Corporation elected to apply cash flow hedge accounting on these derivative financial instruments.

During the first nine months of fiscal 2014, amounts due under the US$190 million Senior Secured Notes Series A increased by $5.9 million due

to the US dollar’s appreciation relative to the Canadian dollar. The fair value of cross-currency swaps asset increased by a net amount of $6.1

million, of which an increase of $5.9 million offsets the foreign exchange loss on the debt denominated in US dollars. The difference of $0.2 million

was recorded as an increase of other comprehensive income. During the first nine months of fiscal 2013, amounts due under the US$190 million

Senior Secured Notes Series A increased by $9.7 million due to the US dollar’s appreciation over the Canadian dollar. The fair value of cross-

currency swaps liability decreased by a net amount of $9.3 million, of which a decrease of $9.7 million offsets the foreign exchange loss on the

debt denominated in US dollars. The difference of $0.4 million was recorded as a decrease of other comprehensive income.

In addition, on July 22, 2013, Cogeco Cable had entered into interest rate swap agreements to fix the interest rate on US$200 million of its LIBOR

based loans. These agreements have the effect of converting the floating US LIBOR base rate at an average fixed rate of 0.39625% under the

Term Revolving Facility until July 25, 2015. The Corporation elected to apply hedge accounting on these derivative financial instruments. During

the first nine months of fiscal 2014, the fair value of interest rate swaps asset decreased by a net amount of $0.8 million which was recorded as

a decrease of other comprehensive income.

The sensitivity of the Corporation’s annual financial expense to a variation of 1% in the interest rate applicable to these facilities is approximately

$6.4 million based on the current debt at May 31, 2014.

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

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

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

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

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

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

compared to $1.0530 per US dollar and $1.6318 per British Pound at August 31, 2013. The impact of a 10% fluctuation in the exchange rates of

the US dollar and British Pound into Canadian dollars would change other comprehensive income by approximately $26.9 million.

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

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

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

services and a portion of the Enterprise services were as follows:

Quarters ended Nine months ended

May 31,

2014

May 31,

2013 Change

May 31,

2014

May 31,

2013 Change

$ $ % $ $ %

US dollar vs Canadian dollar 1.0997 1.0211 7.7 1.0759 1.0091 6.6

British Pound vs Canadian dollar 1.8405 1.5545 18.4 1.7664 1.5565 13.5

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

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

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

Canadian cable services American cable services Enterprise services

Quarter ended May 31, 2014

reported

Exchange

rate

impact

reported

Exchange

rate

impact

reported

Exchange

rate

impact

(in thousands of dollars)

$ $ $ $ $ $

Revenue

317,072

— 101,435 10,144 78,573

3,846

Operating expense

153,337

522 56,610 5,661 54,407

3,187

Adjusted EBITDA 163,735

(522)

44,825 4,483 24,166 659

Acquisitions of property, plant and equipment, intangible and other assets 42,455 1,433 23,421 2,343 18,576 802

Canadian cable services American cable services Enterprise services

Nine months ended May 31, 2014

reported

Exchange

rate

impact

reported

Exchange

rate

impact

reported

Exchange

rate

impact

(in thousands of dollars) $ $ $ $ $ $

Revenue

939,750

— 292,032 29,193

227,284

11,195

Operating expenses

463,882

1,704 162,396 16,226

150,062 8,567

Adjusted EBITDA

475,868

(1,704)

129,636 12,967 77,222

2,628

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

130,046

4,954 52,711 5,238 67,590

2,918

DIVIDEND DECLARATION

At its July 9, 2014 meeting, the Board of Directors of Cogeco Cable declared a quarterly eligible dividend of $0.30 per share for multiple voting

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

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

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

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

SEGMENTED OPERATING RESULTS

The Corporation reports its operating results in three operating segments: Canadian cable services, American cable services and Enterprise

services. The reporting structure reflects how the Corporation manages the business activities to make decisions about resources to be allocated

to the segment and to assess its performance.

CANADIAN CABLE SERVICES

CUSTOMER STATISTICS

Net additions (losses) % of penetration

(1)

Quarters ended Nine months ended

May 31,

2014

May 31,

2014

May 31,

2013

May 31,

2014

May 31,

2013

May 31,

2014

May 31,

2013

PSU

(2)

1,956,444 (5,633)

(1,013

) (23,678) 17,089

Television service customers 807,831 (8,021)

(7,363

) (26,940) (17,771) 47.9 50.7

HSI service customers 676,802 3,821

3,412

15,465 20,723 40.2 39.7

Telephony service customers 471,811 (1,433)

2,938

(12,203) 14,137 28.0 29.1

(1) As a percentage of homes passed.

(2) Represents the sum of Television, HSI and Telephony service customers.

Fiscal 2014 third-quarter and first nine months PSU net losses amounted to 5,633 and 23,678 compared to net losses of 1,013 and net additions

of 17,089 for the comparable periods of the prior year, mainly as a result of service category maturity, competitive offers in the industry and

tightening of our customer qualifications. For the third quarter and first nine months of fiscal 2014, net customer losses for Television service

stood at 8,021 and 26,940 compared to 7,363 and 17,771 for the same periods last year. Television service customer net losses are mainly due

to the promotional offers of competitors for the video service, service category maturity and the IPTV footprint growth from competitors. For the

third quarter and first nine months of fiscal 2014, net additions for HSI service customers stood at 3,821 and 15,465, respectively, compared to

3,412 and 20,723 for the comparable periods of fiscal 2013. HSI net additions continue to stem from the enhancement of the product offering,

the impact of the bundled offer of Television, HSI and Telephony services, and promotional activities. Net losses for the Telephony service amounted

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

to 1,433 and 12,203, respectively, for the third quarter and first nine months of fiscal 2014, compared to net additions of 2,938 and 14,137 for the

same periods of prior year.

Furthermore, as at May 31, 2014, 69% (68% in 2013) of the Canadian cable services customers subscribed to two or more services. The distribution

of customers by number of services for the Canadian cable services were: 31% who subscribe to the single play (32% in 2013), 33% to the double

play (31% in 2013) and 36% to the triple play (37% in 2013).

OPERATING RESULTS

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

(1)

Change

May 31,

2014

May 31,

2013

(1)

Change

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

Revenue 317,072 306,401 3.5 939,750 917,389 2.4

Operating expenses 153,337 153,238 0.1 463,882 465,218

(0.3

)

Adjusted EBITDA 163,735 153,163 6.9 475,868 452,171 5.2

Operating margin 51.6% 50.0% 50.6% 49.3%

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

interim consolidated financial statements.

Revenue

Fiscal 2014 third-quarter revenue increased by $10.7 million, or 3.5%, to reach $317.1 million, compared to the same period last year. For the

first nine months, revenue amounted to $939.8 million, an increase of 2.4% compared to the first nine months of fiscal 2013. Revenue increase

is mainly attributable to rate increases implemented in June 2013 and April 2014 in Quebec and Ontario, partly offset by PSU losses.

Operating expenses

For the third quarter ended May 31, 2014, operating expenses remained essentially the same at $153.3 million compared to $153.2 million last

year. For the first nine months, operating expenses amounted to $463.9 million, a decrease of $1.3 million compared to the same period of the

prior year. The decrease is mainly attributable to cost reduction initiatives and the restructuring activities which occurred in the fourth quarter of

fiscal 2013 and in the first nine months of fiscal 2014.

Adjusted EBITDA and operating margin

Fiscal 2014 third-quarter adjusted EBITDA amounted to $163.7 million, or 6.9% higher than in the same period of the prior year. For the first nine

months of fiscal 2014, adjusted EBITDA amounted to $475.9 million, or 5.2% higher than the comparable period of the prior year. Both increases

in adjusted EBITDA are mainly attributable to revenue growth exceeding operating expenses. Consequently, operating margin increased to 51.6%

from 50.0% compared to fiscal 2013 third-quarter and to 50.6% from 49.3% for the first nine months of fiscal 2014 compared to the prior year.

AMERICAN CABLE SERVICES

On November 30, 2012, the Corporation completed the acquisition of Atlantic Broadband, an independent cable system operator formed in 2003

and providing Analogue and Digital Television, as well as HSI and Telephony services. Atlantic Broadband operates cable systems in Western

Pennsylvania, Southern Florida, Maryland/Delaware and South Carolina.

CUSTOMER STATISTICS

Net additions (losses) % of penetration

(1)

Quarters ended Nine months ended

May 31,

2014

May 31,

2014

May 31,

2013

May 31,

2014

May 31,

2013

May 31,

2014

May 31,

2013

PSU

(2)

495,674 3,124 (66) 8,139 3,694

Television service customers 227,160 (1,599)

(1,044

) (5,021) (3,372) 43.8 45.3

HSI service customers 188,795 3,990

1,191

11,687 6,617 36.4 34.1

Telephony service customers 79,719 733

(213

) 1,473 449 15.4 15.2

(1) As a percentage of homes passed.

(2) Represents the sum of Television, HSI and Telephony service customers.

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

Fiscal 2014 third-quarter and first nine months PSU net additions amounted to 3,124 and 8,139, respectively, compared to net losses of 66 and

net additions of 3,694 for the comparable periods of the prior year. The comparable figures for the first nine months of the prior year include only

six months of operating results since the acquisition of Atlantic Broadband occurred at the end of first quarter of fiscal 2013. Net customer losses

for the Television service stood at 1,599 and 5,021, respectively, for the third quarter and first nine months of fiscal 2014, compared to net losses

of 1,044 and 3,372 for the comparable periods of last year as a result of competitive offers in the industry. For the third quarter and first nine

months of fiscal 2014, net customer additions for HSI service amounted to 3,990 and 11,687 compared to 1,191 and 6,617 for the same periods

of the prior year mainly due to additional marketing initiatives which focused on bundle package offerings, thus increasing overall demand for the

HSI residential services as well as increased commercial HSI customers. The net customer additions for Telephony service stood at 733 and

1,473 for the three and nine-month periods ended May 31, 2014, compared to net losses of 213 and net additions of 449 for the same periods

of fiscal 2013.

Furthermore, as at May 31, 2014, 59% (59% in 2013) of the American cable services customers subscribed to two or more services. The distribution

of customers by number of services for the American cable services were: 41% who subscribe to the single play (41% in 2013), 38% to the double

play (37% in 2013) and 21% to the triple play (22% in 2013).

OPERATING RESULTS

Quarters ended Nine months ended

May 31,

2014

May 31,

2013 Change

May 31,

2014

May 31,

2013 Change

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

Revenue 101,435 90,394 12.2 292,032 176,244 65.7

Operating expenses 56,610 49,145 15.2 162,396 95,774 69.6

Adjusted EBITDA 44,825 41,249 8.7 129,636 80,470 61.1

Operating margin 44.2% 45.6% 44.4% 45.7%

Revenue

Fiscal 2014 third-quarter revenue increased by $11.0 million, or 12.2%, to reach $101.4 million compared to the same period last year. Revenue

increased due to the PSU growth, rate increases implemented in fiscal 2014 as well as favorable foreign exchange rates compared to last year.

For the first nine months, revenue amounted to $292.0 million, an increase of $115.8 million compared to the first nine months of fiscal 2013.

This increase is mainly due to nine months of operating results included in fiscal 2014 compared to six months for the comparable period since

Atlantic Broadband was acquired at the end of the first quarter of fiscal 2013, on November 30, 2012.

For the third quarter and first nine months of fiscal 2014, revenue in local currency amounted to US$92.2 million and US$271.4 million, compared

to US$88.5 million and US$174.6 million for the same periods last year.

Operating expenses

Fiscal 2014 third-quarter operating expenses amounted to $56.6 million, an increase of 15.2% compared to the same period last year. The

increase is mainly attributable to servicing additional PSU, additional programming costs, the deployment of TiVo's digital entertainment services

as well as marketing initiatives to improve PSU growth and by the appreciation of the US dollar over the Canadian dollar. For the first nine months,

operating expenses amounted to $162.4 million, an increase of $66.6 million compared to the first nine months of fiscal 2013. This increase is

mainly due to nine months of operating results included in fiscal 2014 compared to six months for the comparable period since Atlantic Broadband

was acquired at the end of the first quarter of fiscal 2013, on November 30, 2012.

Operating expenses in local currency for the for the third quarter and first nine months of fiscal 2014 amounted to US$51.5 million and US$150.8

million, compared to US$48.1 million and US$94.9 million for the comparable periods of last year.

Adjusted EBITDA and operating margin

Fiscal 2014 third-quarter adjusted EBITDA increased by 8.7% to reach $44.8 million compared to last year as a result of the factors previously

discussed. For the first nine months of fiscal 2014, adjusted EBITDA amounted to $129.6 million compared to $80.5 million for the same period

of fiscal 2013 as a result of nine months of operating results compared to six months for the comparable period and to the factors previously

discussed. As a result of operating expenses growth exceeding revenue growth, operating margin for the three and nine-month periods ended

May 31, 2014 decreased to 44.2% from 45.6% and to 44.4% from 45.7% for the comparable periods of the prior year.

Fiscal 2014 third-quarter adjusted EBITDA in local currency amounted to US$40.8 million compared to US$40.4 million for the same period last

year and US$120.5 million compared to US$79.7 million for the first nine months of fiscal 2013.

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

ENTERPRISE SERVICES

Quarters ended Nine months ended

May 31,

2014

May 31,

2013 Change

May 31,

2014

May 31,

2013 Change

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

Revenue 78,573 68,130 15.3 227,284 129,610 75.4

Operating expenses 54,407 44,710 21.7 150,062 82,063 82.9

Adjusted EBITDA 24,166 23,420 3.2 77,222 47,547 62.4

Operating margin 30.8% 34.4% 34.0% 36.7%

OPERATING RESULTS

Revenue

Fiscal 2014 third-quarter revenue increased by $10.4 million, or 15.3%, to reach $78.6 million, compared to the same period last year. Revenue

increased due to the organic growth from data centre, managed IT and connectivity services as well as the appreciation of the US dollar and

the British Pound against the Canadian dollar for our foreign operations. For the first nine months of fiscal 2014, revenue amounted to $227.3

million, an increase of $97.7 million compared to fiscal 2013. The increase is mainly due to the full year impact of the acquisition of Peer 1 Hosting

which occurred during the second quarter of fiscal 2013 combined with the organic growth from data centre, managed IT and connectivity services

and favorable foreign exchange rates for our foreign operations compared to last year. Revenue for the quarter and the first nine months of fiscal

2014 of Peer 1 Hosting have been negatively impacted by non recurring billing adjustments and credit notes as a result of improved controls and

procedures related to the certification process that is still underway.

Operating expenses

For the third quarter of fiscal 2014 operating expenses increased by $9.7 million, to $54.4 million due to the organic growth combined with the

appreciation of the US dollar and the British Pound against the Canadian dollar. For the first nine months of fiscal 2014, operating expenses

amounted to $150.1 million, an increase of $68.0 million compared to last year due to the full year impact of Peer 1 Hosting acquisition, the

organic growth as well as the appreciation of the US dollar and the British Pound against the Canadian dollar. During the third quarter of fiscal

2014, Peer 1 Hosting reviewed and enhanced its collection process resulting in an increase in the impairment of trade and other receivables.

Furthermore, Peer 1 Hosting incurred non recurring additional costs with regards to certain initiatives.

Adjusted EBITDA and operating margin

As a result of revenue growth exceeding the increase in operating expenses, fiscal 2014 third-quarter adjusted EBITDA increased by $0.7 million,

or 3.2%, to reach $24.2 million and by $29.7 million, or 62.4%, in the first nine months to reach $77.2 million, compared to the same periods of

the prior year. The above non-recurring revenue and operating expenses items have negatively impacted the adjusted EBITDA by approximately

$3.0 million for the third quarter ended May 31, 2014. Operating margin decreased to 30.8% from 34.4% in the third quarter and to 34.0% from

36.7% for the first nine months compared to fiscal 2013 as a result of lower margins business activities from Peer 1 Hosting as well as non

recurring adjustments recorded in the third quarter.

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

FISCAL 2014 REVISED FINANCIAL GUIDELINES

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

Canadian cable services segment as well as additional integration, restructuring and acquisitions costs related to restructuring activities, Cogeco

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

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

Fiscal 2014 revised financial guidelines are as follows:

Revised projections

July 9, 2014

Revised projections

April 9, 2014

Fiscal 2014 Fiscal 2014

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

Financial guidelines

Revenue 1,955 1,955

Adjusted EBITDA 895 895

Operating margin 45.8% 45.8%

Integration, restructuring and acquisition costs 4 —

Depreciation and amortization 470 470

Financial expense 130 130

Current income tax expense 96 100

Profit for the year 210 235

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

Free cash flow

(1)

240 240

Capital intensity 21.7% 21.7%

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

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

FISCAL 2015 PRELIMINARY FINANCIAL GUIDELINES

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

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

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

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

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

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

launch and expansion of new or additional services. The Corporation recognizes that customer service is a key brand attribute that has potential

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

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

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

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

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

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

and Television services should slow in the Canadian cable services, reflecting service category maturity and intense competition. Furthermore,

Digital video and HSI services should continue to benefit from customers' ongoing interest in TiVo's digital entertainment services in the American

cable services segment as well as the projected launch of TiVo services in the Canadian cable services segment. Cable services segment will

also benefit from the impact of rate increases in most of its services. In the Enterprise services segment, revenue growth should stem primarily

from managed hosting and colocation services due to the expansion of Barrie data centre facility as well as from the migration of services in the

portfolio that generate revenue with higher margins. In addition, the construction of a new data centre facility in Kirkland, Montreal, is expected

to be completed in the first half of fiscal 2015 and should begin generating revenue. The revenue growth should also be driven by connectivity

services as a result of network expansions and new customer installations.

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

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

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

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

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

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

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

slightly faster than the revenue.

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

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

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

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

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

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

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

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

reduce Indebtedness net of cash and cash equivalent, thus improving the Corporation's net leverage ratios. Financial expense should amount

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

million compared to $210 million for the 2014 revised projections.

Fiscal 2015 preliminary financial guidelines are as follows:

Preliminary

projections

Revised projections

July 9, 2014

Fiscal 2015 Fiscal 2014

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

Financial guidelines

Revenue 2,030 1,955

Adjusted EBITDA 925 895

Operating margin 45.6% 45.8%

Integration, restructuring and acquisition costs — 4

Depreciation and amortization 465 470

Financial expense 125 130

Current income tax expense 100 96

Profit for the year 260 210

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

Free cash flow

(1)

270 240

Capital intensity

21.2% 21.7%

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

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

CONTROLS AND PROCEDURES

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

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

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

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

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

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

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

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

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

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

Cogeco Cable acquired 96.57% of the issued and outstanding shares of Peer 1 Hosting on January 31, 2013 pursuant to the public offer made

by Cogeco Cable, through its indirectly wholly-owned subsidiary 0957926 B.C. LTD. The remaining shares of Peer 1 Hosting were acquired on

April 3, 2013. Management has been working diligently since the acquisition to complete its review of the design of ICFR at Peer 1 Hosting.

Despite these efforts, Management has not to date completed its review. During the course of the portion of the review that has been completed,

Management identified certain deficiencies in ICFR at Peer 1 Hosting principally relating to the financial statements close and inadequate

segregation of duties over certain information system access controls.

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

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

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

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

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

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

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

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

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

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

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

Peer 1 Hosting represents 10% of revenue, -16% of profit for the period, 15% of total assets, 21% of current assets, 15% of non current assets,

7% of current liabilities and 17% of non current liabilities of the condensed consolidated interim financial statements for the nine-month period

ended May 31, 2014.

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

UNCERTAINTIES AND MAIN RISK FACTORS

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

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

factors faced by the Corporation since August 31, 2013.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

FUTURE ACCOUNTING DEVELOPMENTS IN CANADA

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

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

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

NEW ACCOUNTING STANDARDS

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

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

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

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

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

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

the net defined benefit liability or asset during the period.

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

statements.

• Amendments to IFRS 7 Financial Instruments: Disclosures

• IFRS 10 Consolidated Financial Statements

• IFRS 12 Disclosure of Interest in Other Entities

• IFRS 13 Fair Value Measurement

CHANGES IN CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

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

www.cogeco.ca.

Management discussion and analysis (“MD&A”) COGECO CABLE INC. Q3 2014 20

NON-IFRS FINANCIAL MEASURES

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

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

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

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

CASH FLOW FROM OPERATIONS AND FREE CASH FLOW

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

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

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

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

the non-IFRS measure, “free cash flow”. Free cash flow is used, by Cogeco Cable’s management and investors, to measure its ability to repay

debt, distribute capital to its shareholders and finance its growth.

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

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

(1)

May 31,

2014

May 31,

2013

(1)

(in thousands of dollars) $ $ $ $

Cash flow from operating activities 184,435 166,976

429,173 316,780

Changes in non-cash operating activities (15,397) 2,526 77,388 78,708

Amortization of deferred transaction costs and discounts on long-term debt 1,898 3,580

5,628 7,043

Income taxes paid 15,995 16,894 53,538 76,902

Current income tax expense (22,162) (25,789) (68,932) (73,907)

Financial expense paid 42,864 26,827

103,582

70,542

Financial expense (32,038) (35,146) (97,505) (80,068)

Cash flow from operations 175,595 155,868

502,872 396,000

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

interim consolidated financial statements.

Free cash flow is calculated as follows:

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

(1)

May 31,

2014

May 31,

2013

(1)

(in thousands of dollars) $ $ $ $

Cash flow from operations 175,595 155,868

502,872 396,000

Acquisition of property, plant and equipment (79,509) (108,325) (236,675) (286,457)

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

Free cash flow 91,143 43,027

252,525

95,893

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

interim consolidated financial statements.

Management discussion and analysis (“MD&A”) COGECO CABLE INC. Q3 2014 21

ADJUSTED EBITDA AND OPERATING MARGIN

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

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

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

strength. Operating margin is a measure of the proportion of the Corporation's revenue which is available, before income taxes, to pay for its

fixed costs, such as interest on Indebtedness. Operating margin is calculated by dividing adjusted EBITDA by revenue.

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

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

(1)

May 31,

2014

May 31,

2013

(1)

(in thousands of dollars, except percentages)

$ $ $ $

Profit for the period 35,514 48,079 145,593 141,025

Income taxes 8,801 18,411 36,912 51,615

Financial expense 32,038 35,146 97,505 80,068

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

Depreciation and amortization 117,653 111,445 346,540 268,611

Integration, restructuring and acquisitions costs 3,186 2,101 3,780 16,865

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

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

Operating margin 46.2% 46.3% 45.5% 45.7%

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

interim consolidated financial statements.

CAPITAL INTENSITY

Capital intensity is used by Cogeco Cable’s management and investors to assess the Corporation’s investment in capital expenditures in order

to support a certain level of revenue. Capital intensity ratio is defined as amount spent for acquisitions of property, plant and equipment, intangible

and other assets divided by revenue.

Capital intensity is calculated as follows:

Quarters ended Nine months ended

May 31,

2014

May 31,

2013

May 31,

2014

May 31,

2013

(in thousands of dollars, except percentages)

$ $ $ $

Acquisition of property, plant and equipment 79,509 108,325 236,675 286,457

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

Total capital expenditures 84,452 112,841 250,347 300,107

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

Capital intensity 17.0% 24.3% 17.2% 24.6%

Management discussion and analysis (“MD&A”) COGECO CABLE INC. Q3 2014 22

SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION

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

(in thousands of dollars, except

percentages and per share data)

2014 2013

(2)

2014 2013

(2)

2013 2012

(2)

2013

(2)

2012

$ $ $ $ $ $ $ $

Revenue 496,448 464,497 486,008 429,672 474,980 327,911 470,386 324,768

Adjusted EBITDA 229,389 215,182 221,616 195,826 211,522 147,176 222,539 160,825

Operating margin 46.2% 46.3% 45.6% 45.6% 44.5% 44.9% 47.3% 49.5%

Impairment of property, plant and

equipment 32,197 — — — — — — —

Income taxes 8,801 18,411 14,838 15,821 13,273 17,383 11,159 32,987

Profit for the period 35,514 48,079 60,381 50,833 49,698 42,113 43,870 45,705

Profit for the period attributable to

owners of the Corporation 35,514 47,877 60,381 51,035 49,698 42,113 43,870 45,705

Cash flow from operating activities 184,435 166,976 181,628 150,084 63,110 (280) 228,230 203,343

Cash flow from operations 175,595 155,868 174,013 140,401 153,264 99,731 161,581 126,946

Acquisitions of property, plant and

equipment, intangible and other

assets 84,452 112,841 80,806 104,433 85,089 82,833 108,095 124,392

Free cash flow 91,143 43,027 93,207 35,968 68,175 16,898 53,486 2,554

Capital intensity 17.0% 24.3% 16.6% 24.3% 17.9% 25.3% 23.0% 38.3%

Earnings per share

(1)

Basic 0.73 0.98 1.24 1.05 1.02 0.87 0.90 0.94

Diluted

0.72

0.98

1.23 1.04

1.01 0.86 0.89 0.93

(1) Per multiple and subordinate voting share.

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

SEASONAL VARIATIONS

Cogeco Cable’s operating results are not generally subject to material seasonal fluctuations except as follows. In the Canadian and American

cable services segment the number of customers in the Television service and HSI service are generally lower in the second half of the fiscal

year as a result of a decrease in economic activity due to the beginning of the vacation period, the end of the television season, and students

leaving their campuses at the end of the school year. Cogeco Cable offers its services in several university and college towns such as Kingston,

Windsor, St.Catharines, Hamilton, Peterborough, Trois-Rivières and Rimouski in Canada and in the Pennsylvania region, and to a lesser extent

in South Carolina, Maryland/Delaware in the United States. In the American cable services segment, the Miami region is also subject to seasonal

fluctuations due to the winter season residents returning home from late Spring through the Fall. Furthermore, the second, third and fourth quarter’s

operating margin is usually higher as very low or no management fees are paid to COGECO Inc. Under the Management Agreement, Cogeco

Cable pays a fee equal to 2% of its total revenue subject to a maximum amount. As the maximum amount has been reached in the second quarter

of fiscal 2014, Cogeco Cable will not pay management fees in the second half of fiscal 2014. Similarly, as the maximum amount was paid in the

first six months of fiscal 2013, Cogeco Cable paid no management fees in the second half of the previous fiscal year.

ADDITIONAL INFORMATION

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

on the SEDAR website at www.sedar.com.

/s/ Jan Peeters /s/ Louis Audet

Jan Peeters Louis Audet

Chairman of the Board President and Chief Executive Officer

Cogeco Cable Inc.

Montréal, Québec

July 9, 2014

CONDENSED INTERIM CONSOLIDATED FINANCIAL

STATEMENTS

Three and nine-month periods ended May 31, 2014

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 24

COGECO CABLE INC.

INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

(unaudited)

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

2014 2013 2014 2013

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

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

Revenue

496,448

464,497 1,457,436 1,222,080

Operating expenses (note 5)

267,059

249,315

785,235

654,327

Management fees – COGECO Inc. — —

9,674

9,569

Integration, restructuring and acquisition costs

3,186

2,101

3,780

16,865

Depreciation and amortization (note 6)

117,653

111,445

346,540

268,611

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

Financial expense (note 8) 32,038 35,146 97,505 80,068

Income taxes (note 9)

8,801

18,411 36,912 51,615

Profit for the period 35,514 48,079

145,593

141,025

Profit for the period attributable to:

Owners of the Corporation 35,514 47,877

145,593

141,025

Non-controlling interest — 202 — —

35,514 48,079

145,593

141,025

Earnings per share (note 10)

Basic 0.73 0.98 2.99 2.90

Diluted

0.72

0.98

2.96

2.88

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 25

COGECO CABLE INC.

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

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

2014 2013 2014 2013

(In thousands of Canadian dollars) $ $ $ $

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

Profit for the period 35,514 48,079

145,593 141,025

Other comprehensive income (loss)

Items to be subsequently reclassified to profit or loss

Cash flow hedging adjustments

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

5,324 9,288

Net change in fair value of hedging derivative financial instruments

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

(5,928

)

(9,709

)

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

(120

)

(304

)

(333) 198

(724

)

(725

)

Foreign currency translation adjustments

Net foreign currency translation differences on net investments in foreign

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

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

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

(5,868) 1,682

9,853

11,970

Items not to be subsequently reclassified to profit or loss

Defined benefit pension plans actuarial adjustments

Employee defined benefit pension plans re-measurements 103 1,801 770

2,788

Income tax expense on defined benefit pension plans actuarial adjustments (27) (484)

(207

)

(749

)

76 1,317 563

2,039

Other comprehensive income (loss) for the period (6,125) 3,197

9,692

13,284

Comprehensive income for the period 29,389 51,276

155,285 154,309

Comprehensive income for the period attributable to:

Owners of the Corporation 29,389 51,451

155,285 154,309

Non-controlling interest — (175) — —

29,389 51,276

155,285 154,309

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 26

COGECO CABLE INC.

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(unaudited)

Equity attributable to owners of the Corporation

capital

Share-based

payment

reserve

Accumulated

other

comprehensive

income Retained earnings

Equity

attributable to

non-controlling

interest

Total

shareholders'

equity

(In thousands of Canadian dollars)

$ $ $ $ $ $

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

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

(restated,

notes 2 and 3)

Balance at August 31, 2012 992,164 9,749 3,105 183,413 — 1,188,431

Profit for the period — — — 141,025 —

141,025

Other comprehensive income for the period — — 11,245 2,039 — 13,284

Comprehensive income for the period — — 11,245 143,064 —

154,309

Issuance of subordinate voting shares under

the Stock Option Plan 717 — — — — 717

Share-based payment — 2,351 — — —

2,351

Share-based payment previously recorded in

share-based payment reserve for options

exercised 251 (251) — — — —

Dividends on multiple voting shares — — — (12,239) — (12,239)

Dividends on subordinate voting shares — — — (25,703) — (25,703)

Acquisition of subordinate voting shares held in

trust under the Incentive Share Unit Plan (4,076) — — — —

(4,076

)

Distribution to employees of subordinate voting

shares held in trust under the Incentive

Share Unit Plan 1,415 (1,420) — 5 — —

Non-controlling interest acquired as a result of

business combination — — — — 16,962 16,962

Acquisition of non-controlling interest — — — — (16,962) (16,962)

Total contributions by and distributions to

shareholders (1,693) 680 — (37,937) — (38,950)

Balance at May 31, 2013 990,471 10,429 14,350 288,540 — 1,303,790

Balance at August 31, 2013 992,673 10,884 19,102 320,281 — 1,342,940

Profit for the period — — — 145,593 —

145,593

Other comprehensive income for the period — — 9,129 563 —

9,692

Comprehensive income for the period — — 9,129 146,156 —

155,285

Issuance of subordinate voting shares under

the Stock Option Plan 4,981 — — — —

4,981

Share-based payment — 4,318 — — —

4,318

Share-based payment previously recorded in

share-based payment reserve for options

exercised 1,530 (1,530) — — — —

Dividends on multiple voting shares — — — (14,122) — (14,122)

Dividends on subordinate voting shares — — — (29,738) — (29,738)

Acquisition of subordinate voting shares held in

trust under the Incentive Share Unit Plan (6,934) — — — —

(6,934

)

Distribution to employees of subordinate voting

shares held in trust under the Incentive

Share Unit Plan 3,117 (3,151) — 34 — —

Total contributions by and distributions to

shareholders 2,694 (363) — (43,826) — (41,495)

Balance at May 31, 2014 995,367 10,521 28,231 422,611 — 1,456,730

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 27

COGECO CABLE INC.

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(unaudited)

May 31, 2014 August 31, 2013

(In thousands of Canadian dollars) $ $

(restated, note 3)

Assets

Current

Cash and cash equivalents 30,526 39,575

Trade and other receivables (note 16 A)) 95,736 86,985

Income taxes receivable 23,301 17,593

Prepaid expenses and other 16,997 13,338

166,560

157,491

Non-current

Other assets

9,540

10,472

Property, plant and equipment 1,773,325 1,854,155

Intangible assets 1,902,947 1,910,089

Goodwill 1,218,493 1,189,231

Derivative financial instruments

6,157

833

Deferred tax assets 129,167

132,148

5,206,189 5,254,419

Liabilities and Shareholders’ equity

Liabilities

Current

Bank indebtedness

9,440

13,166

Trade and other payables 175,652

261,115

Provisions 17,367 12,550

Income tax liabilities 44,127 23,924

Deferred and prepaid revenue 55,353 55,079

Current portion of long-term debt (note 11) 24,968 15,190

326,907

381,024

Non-current

Long-term debt (note 11) 2,795,086 2,877,075

Deferred and prepaid revenue and other liabilities 23,487 19,124

Pension plan liabilities and accrued employees benefits

5,269 7,275

Deferred tax liabilities 598,710

626,981

3,749,459 3,911,479

Shareholders’ equity

Equity attributable to owners of the Corporation

Share capital (note 12) 995,367

992,673

Share-based payment reserve 10,521 10,884

Accumulated other comprehensive income (note 13) 28,231 19,102

Retained earnings 422,611

320,281

1,456,730 1,342,940

5,206,189 5,254,419

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 28

COGECO CABLE INC.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

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

2014 2013 2014 2013

(In thousands of Canadian dollars)

$ $ $ $

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

Cash flow from operating activities

Profit for the period 35,514 48,079

145,593 141,025

Adjustments for:

Depreciation and amortization (note 6) 117,653 111,445

346,540 268,611

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

32,197 —

Financial expense (note 8) 32,038 35,146

97,505 80,068

Income taxes (note 9) 8,801 18,411

36,912 51,615

Share-based payment (note 12) 2,015 945

4,982 2,620

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

2,065 1,837

Defined benefit pension plans contributions, net of expense (1,091) (816)

(2,113

)

(2,844

)

227,897 213,223

663,681 542,932

Changes in non-cash operating activities (note 14) 15,397 (2,526)

(77,388

)

(78,708

)

Income taxes paid (15,995) (16,894)

(53,538

)

(76,902

)

Financial expense paid (42,864) (26,827) (103,582)

(70,542

)

184,435 166,976

429,173 316,780

Cash flow from investing activities

Acquisition of property, plant and equipment (79,509) (108,325) (236,675) (286,457)

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

(13,672

)

(13,650

)

Business combinations, net of cash and cash equivalents acquired (note 3) — (22,377)

— (2,005,667

)

Other 25 57

605 305

(84,427) (135,161) (249,742)

(2,305,469

)

Cash flow from financing activities

Increase (decrease) in bank indebtedness 7,812 —

(3,726

)

—

Net increases (repayments) under the revolving facilities (112,640) (304,915) (128,239)

545,470

Issuance of long-term debt, net of discounts and transaction costs — 694,651

—

1,728,617

Repayments of long-term debt (4,813) (406,950)

(10,851

) (408,621)

Increase in deferred transaction costs — (1,960)

(1,241

)

(4,242

)

Repayment of balance due on a business combination — —

— (10,525

)

Issuance of subordinate voting shares (note 12) 553 130

4,981 717

Acquisition of subordinate voting shares held in trust under the

Incentive Share Unit Plan (note 12) — —

(6,934

)

(4,076

)

Dividends paid on multiple voting shares (4,707) (4,080)

(14,122

)

(12,239

)

Dividends paid on subordinate voting shares (9,924) (8,564)

(29,738

)

(25,703

)

(123,719) (31,688) (189,870) 1,809,398

Effect of exchange rate changes on cash and cash equivalents denominated

in foreign currencies (535) 1,089

1,390 1,794

Net change in cash and cash equivalents (24,246) 1,216

(9,049

) (177,497)

Cash and cash equivalents, beginning of the period 54,772 36,678

39,575 215,391

Cash and cash equivalents, end of the period 30,526 37,894

30,526 37,894

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 29

NATURE OF OPERATIONS

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

Exchange (“TSX”). The Corporation’s core business through its subsidiaries is providing Cable Television, High Speed Internet (“HSI”), Telephony,

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

America (“United States”), in the United Kingdom ("UK") and in France (see note 4 for a detailed description of operations).

The Corporation is a subsidiary of COGECO Inc., which holds 32% of the Corporation’s equity shares, representing 82.5% of the votes attached

to the Corporation’s voting shares.

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

1. BASIS OF PRESENTATION

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

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

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

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

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

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

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

condensed interim consolidated financial statements unless otherwise indicated.

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

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

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

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

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

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

service which are generally lower in the second half of the fiscal year as a result of a decrease in economic activity due to the beginning of

the vacation period, the end of the television season, and students leaving their campuses at the end of the school year and in the US, due

to the winter season residents returning home from late spring through the fall in the Miami area. Furthermore, the third and fourth quarter’s

operating margin is usually higher as no management fees are paid to COGECO Inc. Under the Management Agreement, the Corporation

pays a fee equal to 2% of its total revenue subject to a maximum amount. As the maximum amount was reached in the second quarter of

fiscal 2014, the Corporation will not pay management fees in the fourth quarter of fiscal 2014.

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

on July 9, 2014.

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 30

2. ACCOUNTING POLICY DEVELOPMENTS

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

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

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

• Amendments to IFRS 7 Financial Instruments: Disclosures

• IFRS 10 Consolidated Financial Statements

• IFRS 12 Disclosure of Interest in Other Entities

• IFRS 13 Fair Value Measurement

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

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

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

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

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

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

the net interest expense or income in financial expense.

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

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

measurements.

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

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

Three months ended May 31, 2013

As previously

reported

Effects of

amended IAS 19

As currently

reported

$ $ $

Operating expenses

Salaries, employee benefits and outsourced services 76,868 (50) 76,818

Financial expense 35,032 114 35,146

Income taxes 18,428 (17) 18,411

Profit for the period 48,126 (47) 48,079

Other comprehensive income

Employee defined benefit pension plans re-measurements 1,737

64 1,801

Income tax expense on defined benefit pension plan actuarial adjustments (467) (17)

(484

)

Earnings per share

Basic 0.99 — 0.98

Diluted 0.98 — 0.98

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 31

Nine months ended May 31, 2013

As previously

reported

Effects of

amended IAS 19

As currently

reported

$ $ $

Operating expenses

Salaries, employee benefits and outsourced services 198,029 (150)

197,879

Financial expense 79,726 342 80,068

Income taxes 51,666 (51) 51,615

Profit for the period 141,166 (141)

141,025

Other comprehensive income

Employee defined benefit pension plans re-measurements 2,596 192

2,788

Income tax expense on defined benefit pension plan actuarial adjustments (698) (51)

(749

)

Earnings per share

Basic 2.90 — 2.90

Diluted 2.88 — 2.88

3. BUSINESS COMBINATIONS

BUSINESS COMBINATIONS IN FISCAL 2013

On November 30, 2012, the Corporation completed the acquisition of all the outstanding shares of Atlantic Broadband, an independent cable

system operator formed in 2003, then serving about 485,000 primary service units and providing Analogue and Digital Television, as well

as HSI and Telephony services. The acquisition is an attractive entry point into the American market, providing a significant increase in

Primary Service Units base with further growth potential, a high quality network infrastructure and the ability for the Corporation’s management

to leverage its core knowledge and operational experience. The transaction, valued at US$1.36 billion, was financed through a combination

of cash on hand, a draw-down on the existing Term Revolving Facility of approximately US$588 million and US$660 million of borrowings

under a new committed non-recourse debt financing at Atlantic Broadband. Atlantic Broadband operates cable systems in Western

Pennsylvania, Southern Florida, Delaware/Maryland and South Carolina.

On January 31, 2013, the Corporation acquired approximately 96.57% of the issued and outstanding shares of Peer 1 Network Enterprises,

Inc. ("Peer 1 Hosting”). The transaction, valued at approximately $649 million, was financed by new secured revolving credit facilities in the

amount of approximately $250 million as well as new secured term credit facilities in the amount of approximately $400 million both having

a maturity of four years. On April 3, 2013, Cogeco Cable Inc. completed the acquisition of the remaining 3.43% of the issued and outstanding

shares of Peer 1 Hosting pursuant to the compulsory acquisition provisions in Section 300 of the Business Corporations Act ("British

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

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

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

platforms. The Corporation has the resources to serve additional businesses worldwide through 20 data centres and 56 points-of-presence

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

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

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

the Corporation during the second quarter of fiscal 2014.

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 32

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

Peer 1 Hosting

Atlantic

Broadband TOTAL

Final Final Final

$ $ $

Consideration

Paid

Purchase of shares

494,796

337,779

832,575

Working capital adjustments — 5,415

5,415

Repayment of secured debts and settlement of options outstanding

170,872

1,021,854 1,192,726

665,668

1,365,048 2,030,716

Net assets acquired

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

Restricted cash

8,729

—

8,729

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

Prepaid expenses and other

3,855

1,370

5,225

Income tax receivable

2,797

3,907

6,704

Other assets

2,462

—

2,462

Property, plant and equipment

150,013

302,211

452,224

Intangible assets

144,231

711,418

855,649

Goodwill

410,454

522,215

932,669

Deferred tax assets

8,872

98,592

107,464

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

Provisions — (721)

(721

)

Deferred and prepaid revenue and other liabilities assumed

(3,388

) (7,697) (11,085)

Long-term debt assumed

(1,735

) —

(1,735

)

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

665,668

1,365,048 2,030,716

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

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

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

As previously

reported Adjustments

As currently

reported

$ $ $

Income tax receivable 16,935 658 17,593

Intangible assets 1,910,993 (904) 1,910,089

Goodwill 1,192,015 (2,784) 1,189,231

Deferred tax assets 127,796 4,352

132,148

Deferred tax liabilities 624,507 2,474

626,981

Accumulated other comprehensive income 20,254 (1,152) 19,102

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 33

4. OPERATING SEGMENTS

The Corporation’s profit for the period are reported in three operating segments: Canadian cable services, American cable services and

Enterprise services.

The Canadian and American cable services segments provide a wide range of Television, HSI and Telephony services primarily to residential

customers in Canada and in the United States, respectively. The Canadian and American cable services segments also provide business

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

medium sized businesses.

The Enterprise services segment provides through its data centres, colocation, managed and dedicated hosting, managed IT and cloud

services to small, medium and large enterprises and public sector customers as well as connectivity services provisioned over its optical

networks. The activities of the Enterprise services segment are carried out in Canada, in the United States and in Europe, mostly in the

United Kingdom.

The Corporation assesses the performance of each segment based on its profit. Financial expense and income taxes are managed on a

total corporation basis and, accordingly, are not reflected in segmented results. The inter-segment eliminations and other eliminate any

intercompany transactions included in each segment’s results and include head office activities. Transactions between segments are

measured at the amounts agreed to between the parties.

Three months ended May 31, 2014

Canadian cable

services

American cable

services

Enterprise

services

Inter-segment

eliminations

and other Consolidated

$ $ $ $ $

Revenue

(1)

317,072 101,435 78,573

(632

)

496,448

Operating expenses 153,337 56,610 54,407

2,705 267,059

Integration, restructuring and acquisition costs 1,663 11

1,512

—

3,186

Depreciation and amortization 60,155 25,778 31,720 —

117,653

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

32,197

Segment profit (loss) 69,720 19,036

(9,066

)

(3,337

)

76,353

Financial expense

32,038

Income taxes

8,801

Profit for the period

35,514

Acquisition of property, plant and equipment 39,587 22,921 17,001 —

79,509

Acquisition of intangible and other assets 2,868 500

1,575

—

4,943

(1)

Revenue by geographic market include $356,553 in Canada, $129,833 in the United States and $10,062 in Europe.

Three months ended May 31, 2013

Canadian cable

services

American cable

services

Enterprise

services

Inter-segment

eliminations and

other Consolidated

$ $ $ $ $

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

Revenue

(1)

306,401 90,394 68,130

(428

)

464,497

Operating expenses 153,238 49,145 44,710

2,222 249,315

Integration, restructuring and acquisition costs — 175

1,926

—

2,101

Depreciation and amortization 60,803 22,402 28,240 —

111,445

Segment profit (loss) 92,360 18,672

(6,746

)

(2,650

)

101,636

Financial expense 35,146

Income taxes 18,411

Profit for the period 48,079

Acquisition of property, plant and equipment 47,640 13,309 47,376 —

108,325

Acquisition of intangible and other assets 3,442 491 583 —

4,516

(1) Revenue by geographic market include $341,451 in Canada, $115,931 in the United States and $7,115 in Europe.

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 34

Nine months ended May 31, 2014

Canadian cable

services

American cable

services

Enterprise

services

Inter-segment

eliminations

and other Consolidated

$ $ $ $ $

Revenue

(1)

939,750 292,032

227,284 (1,630

) 1,457,436

Operating expenses 463,882 162,396

150,062 8,895 785,235

Management fees – COGECO Inc. — — —

9,674 9,674

Integration, restructuring and acquisition costs 1,663 527

1,590

—

3,780

Depreciation and amortization 177,738 73,210 95,592 —

346,540

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

32,197

Segment profit (loss) 264,270 55,899 (19,960) (20,199)

280,010

Financial expense

97,505

Income taxes

36,912

Profit for the period

145,593

Property, plant and equipment

(2)

1,072,956 317,424

382,945

— 1,773,325

Intangible assets

(2)

992,906 745,544

164,497

— 1,902,947

Goodwill

(2)

4,662 569,770

644,061

— 1,218,493

Acquisition of property, plant and equipment 120,880 51,364 64,431 —

236,675

Acquisition of intangible and other assets 9,166 1,347

3,159

—

13,672

(1) Revenue by geographic market include $1,053,427 in Canada, $376,042 in the United States and $27,967 in Europe.

(2) At May 31, 2014.

Nine months ended May 31, 2013

Canadian cable

services

American cable

services

Enterprise

services

Inter-segment

eliminations and

other Consolidated

$ $ $ $ $

(restated, note 2) (restated, note 3) (restated, notes 2 and 3)

Revenue

(1)

917,389 176,244

129,610 (1,163

) 1,222,080

Operating expenses 465,218 95,774 82,063 11,272

654,327

Management fees – COGECO Inc. — — —

9,569 9,569

Integration, restructuring and acquisition costs — 9,424

7,441

—

16,865

Depreciation and amortization 169,211 43,772 55,628 —

268,611

Segment profit (loss) 282,960 27,274 (15,522) (22,004)

272,708

Financial expense

80,068

Income taxes

51,615

Profit for the period

141,025

Property, plant and equipment

(2)

1,153,287 317,086

383,782

— 1,854,155

Intangible assets

(2)

993,352 737,312

179,425

— 1,910,089

Goodwill

(2)

4,662 553,373

631,196

— 1,189,231

Acquisition of property, plant and equipment 163,384 26,508 96,565 —

286,457

Acquisition of intangible and other assets 11,215 833

1,602

—

13,650

(1) Revenue by geographic market include $1,002,793 in Canada, $209,851 in the United States and $9,436 in Europe.

(2) At August 31, 2013.

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 35

The following tables set out certain geographic information at May 31, 2014 and August 31, 2013:

At May 31, 2014

Canada United States Europe Total

$ $ $ $

Property, plant and equipment 1,326,374 392,988 53,963 1,773,325

Intangible assets 1,082,834 808,260 11,853 1,902,947

Goodwill 333,710 832,938 51,845 1,218,493

At August 31, 2013

Canada United States Europe Total

$ $ $ $

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

Property, plant and equipment 1,409,760 394,359 50,036 1,854,155

Intangible assets 1,094,025 804,034 12,030 1,910,089

Goodwill 333,710 808,968 46,553 1,189,231

5. OPERATING EXPENSES

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

2014 2013 2014 2013

$ $ $ $

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

Salaries, employee benefits and outsourced services 83,075 76,818 240,331

197,879

Service delivery costs

(1)

141,328

133,388 422,495

352,010

Customer related costs

(2)

17,522 17,222 50,965 44,500

Other external purchases

(3)

25,134 21,887 71,444 59,938

267,059

249,315 785,235

654,327

(1) Include cost of equipment sold, content and programming costs, payment to other carriers, data US centre expenses, franchise fees and network

costs.

(2) Include advertising and marketing expenses, selling costs, billing expenses, bad debts and collection expenses.

(3) Include office building expenses, professional service fees, Canadian Radio-television and Telecommunications Commission (“CRTC”) fees and other

administrative expenses.

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 36

6. DEPRECIATION AND AMORTIZATION

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

2014 2013 2014 2013

$ $ $ $

Property, plant and equipment

102,248

95,512 299,775 234,705

Intangible assets 15,405 15,933 46,765 33,906

117,653

111,445 346,540 268,611

7. IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT

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

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

which its Canadian Cable services segment had worked. As a result of the unexpected performance issues encountered with the platform,

it had to be abandoned by Cogeco Cable Canada. At May 31, 2014, these costs were not yet depreciated.

8. FINANCIAL EXPENSE

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

2014 2013 2014 2013

$ $ $ $

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

Interest on long-term debt 31,817 35,810 95,582 79,700

Net foreign exchange losses (gains)

(351

) 186 (418) 924

Amortization of deferred transaction costs 425 (197) 1,272 874

Capitalized borrowing costs

(1)

(867

) (995) (2,232)

(2,792

)

Other

1,014

342 3,301

1,362

32,038 35,146 97,505 80,068

(1) For the three and nine-month periods ended May 31, 2014, the weighted average interest rate used for the capitalization of borrowing costs was 4.5%

(6% in 2013).

9. INCOME TAXES

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

2014 2013 2014 2013

$ $ $ $

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

Current 22,162 25,789 68,932 73,907

Deferred (13,361) (7,378) (32,020) (22,292)

8,801

18,411 36,912 51,615

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 37

The following table provides the reconciliation between income tax expense at the Canadian statutory federal and provincial income tax

rates and the consolidated income tax expense:

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

2014 2013 2014 2013

$ $ $ $

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

Profit before income taxes 44,315 66,490 182,505 192,640

Combined Canadian income tax rate 25.80% 25.46% 26.61% 26.59%

Income tax expense at combined income tax rate 11,433 16,933 48,564 51,214

Adjustment for losses or profit subject to lower or higher tax rates 1,726 3,191 1,770 2,798

Income taxes arising from non-deductible expenses 1,358 812 85 5,229

Tax impacts related to investments in foreign operations (4,928) (3,501) (13,445) (6,908)

Changes in valuation allowance — (961) — (2,203)

Other (788) 1,937 (62) 1,485

Income tax expense 8,801 18,411 36,912 51,615

10. EARNINGS PER SHARE

The following table provides the reconciliation between basic and diluted earnings per share:

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

2014 2013 2014 2013

$ $ $ $

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

Profit for the period attributable to owners of the Corporation 35,514 47,877 145,593

141,025

Weighted average number of multiple and subordinate voting shares

outstanding 48,767,121 48,632,635 48,720,853

48,643,069

Effect of dilutive stock options

(1)

227,844

155,767 179,779

128,409

Effect of dilutive incentive share units

268,452

201,205 261,397

180,234

Weighted average number of diluted multiple and subordinate voting shares

outstanding 49,263,417 48,989,607 49,162,029

48,951,712

Earnings per share

Basic 0.73 0.98 2.99 2.90

Diluted 0.72 0.98 2.96 2.88

(1) For the three and nine-month periods ended May 31, 2013, 157,470 and 161,860 stock options respectively were excluded from the calculation of diluted

earnings per share as the exercise price was greater than the average share price of the subordinate voting shares.

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 38

11. LONG-TERM DEBT

Maturity Interest rate May 31, 2014 August 31, 2013

% $ $

Parent Corporation

Term Revolving Facility

Canadian Revolving Facility

Revolving loan – US$244.5 million

(US$206 million at August 31, 2013)

January 2019 1.85

(1)(2)

265,087

216,918

Revolving loans January 2019 2.89

(1)

104,801

219,561

Revolving loan – £56 million January 2019 2.19

(1)

101,769 —

Secured Credit Facilities

Revolving Facility

Revolving loan – £52.2 million at August 31, 2013 — — — 85,180

Revolving loan – US$21.9 million at August 31, 2013 — — — 23,061

UK Revolving Facility – £3.4 million at August 31, 2013 — — —

5,548

Senior Secured Notes

Series A – US$190 million October 2015 7.00

(3)

205,528

199,349

Series B October 2018 7.60 54,715 54,672

Senior Secured Notes - US$215 million June 2025 4.30 231,656

224,872

Senior Secured Debentures Series 2 November 2020 5.15 198,801

198,686

Senior Secured Debentures Series 3 February 2022 4.93 198,497

198,379

Senior Secured Debentures Series 4 May 2023 4.18 297,180

296,989

Senior Unsecured Debenture March 2018 5.94 99,856 99,829

Senior Unsecured Notes – US$400 million May 2020 4.88 426,886

413,674

Subsidiaries

First Lien Credit Facilities

Term Loan A Facility – US$184 million

(US$190 million at August 31, 2013) November 2017 2.28

(1)

195,522

195,193

Term Loan B Facility – US$413.7 million

(US$416.85 million at August 31, 2013)

November 2019 3.25

(1)

434,434

423,528

Revolving Facility – US$33 million at August 31, 2013 November 2017 —

(1)

— 34,749

Term Revolving Facility

UK Revolving Facility – £2.3 million January 2019 2.20

(1)

4,180 —

Finance leases January 2015 3.27

(4)

1,142

2,077

2,820,054 2,892,265

Less current portion 24,968 15,190

2,795,086 2,877,075

(1) Interest rate on debt includes applicable margin.

(2) Interest rate swap agreements have resulted in an effective interest rate of 2.10% at May 31, 2014 on a notional amount of US$200 million, including

applicable margin.

(3) Cross-currency swap agreements have resulted in an effective interest rate of 7.24% on the Canadian dollar equivalent of the US denominated debt.

(4) Weighted average interest rate on finance leases.

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 39

a) On November 22, 2013, the Corporation amended and restated its Term Revolving Facility of $800 million with a syndicate of lenders.

The maturity was extended until January 22, 2019 and can be further extended annually. The amendments also reduced the margin for

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

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

22, 2013. This amended and restated Term Revolving Facility is comprised of two tranches: a first tranche, a Canadian tranche, amounting

to $788 million and the second tranche, a UK tranche, amounting to $12 million. Both Cogeco Cable and Peer 1 (UK) Ltd. can borrow

under the UK tranche. The Canadian tranche is available in Canadian dollars, US dollars, Euros and British Pounds and interest rates

are based on banker's acceptance, US dollar base rate loans, LIBOR loans in US dollars, Euros or British Pounds, plus the applicable

margin. The UK tranche is available in British Pounds and interest rates are based on British Pounds base rate loans and British Pounds

LIBOR loans. The Term Revolving Facility is indirectly secured by first priority fixed and floating charges and a security interest on

substantially all present and future real and personal properties and undertaking of every nature and kind of the Corporation and certain

of its subsidiaries, and provides for certain permitted encumbrances, including purchased money obligations, existing funded obligations

and charges granted by any subsidiary prior to the date when it becomes a subsidiary, subject to a maximum amount. The provisions

under this facility provide for restrictions on the operations and activities of the Corporation. Generally, the most significant restrictions

relate to permitted investments and dividends on multiple and subordinate voting shares, as well as incurrence and maintenance of

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

12. SHARE CAPITAL

A) AUTHORIZED

Unlimited number of:

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.

B) ISSUED AND PAID

May 31, 2014 August 31, 2013

$ $

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

33,367,186 subordinate voting shares (33,205,623 at August 31, 2013) 909,678

903,167

1,008,024 1,001,513

270,953 subordinate voting shares held in trust under the Incentive Share Unit Plan (206,708 at

August 31, 2013)

(12,657)

(8,840

)

995,367

992,673

During the first nine months of fiscal 2014, subordinate voting share transactions were as follows:

Number of shares Amount

Balance at August 31, 2013 33,205,623

903,167

Shares issued for cash under the Stock Option Plan 161,563

4,981

Compensation expense previously recorded in share-based compensation reserve for options exercised —

1,530

Balance at May 31, 2014 33,367,186

909,678

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 40

During the first nine months of fiscal 2014, subordinate voting shares held in trust under the Incentive Share Unit Plan transactions were as

follows:

Number of shares Amount

Balance at August 31, 2013 206,708

8,840

Subordinate voting shares acquired 137,416

6,934

Subordinate voting shares distributed to employees (73,171)

(3,117

)

Balance at May 31, 2014 270,953 12,657

C) DIVIDENDS

For the nine-month period ended May 31, 2014, quarterly dividends of $0.30 per share, for a total of $0.90 per share, were paid to the holders

of multiple and subordinate voting shares, totaling $43.9 million, compared to quarterly dividends of $0.26 per share, for a total of $0.78 per

share or $37.9 million for the nine-month period ended May 31, 2013.

D) SHARE-BASED PAYMENTS PLANS

The Corporation offers to certain of its executives a Stock Option Plan, which is described in the Corporation’s annual consolidated financial

statements. For the nine-month period ended May 31, 2014, the Corporation granted 311,650 stock options (207,142 in 2013) with an exercise

price of $50.10 to $58.12 ($38.08 to $45.60 in 2013) of which 84,250 stock options (71,233 in 2013) were granted to COGECO Inc.’s senior

executives who are also executives of Cogeco Cable. These options vest equally over a period of five years beginning one year after the day

such options are granted and are exercisable over ten years. During the three and nine-month periods ended May 31, 2014, the Corporation

charged COGECO Inc. amounts of $124,000 and $286,000 ($99,000 and $275,000 in 2013) with respect to the Corporation’s options granted

to COGECO Inc.’s senior executives. As a result, a compensation expense of $177,000 and $534,000 ($101,000 and $274,000 in 2013) was

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

The weighted average fair value of stock options granted for the nine-month period ended May 31, 2014 was $10.56 ($7.77 in 2013) per

option. The weighted average fair value of each option granted was estimated at the grant date for purposes of determining stock-based

compensation expense using the Black-Scholes option pricing model based on the following assumptions:

2014 2013

% %

Expected dividend yield 2.05 2.60

Expected volatility 24.87 26.59

Risk-free interest rate 1.87 1.49

Expected life in years 6.3 6.2

Under the Stock Option Plan, the following options were granted by the Corporation and are outstanding at May 31, 2014:

Options

Weighted

average

exercise

price

Outstanding at August 31, 2013 725,093 37.14

Granted 311,650 50.12

Exercised

(1)

(161,563) 30.83

Cancelled (77,824) 45.29

Balance at May 31, 2014 797,356 42.71

Exercisable at May 31, 2014 297,899 36.83

(1) The weighted average share price for options exercised during the period was $51.91.

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 41

The Corporation also offers to certain of its executives and designated employee Incentive Share Unit Plan (“ISU Plan”), which is described

in the Corporation’s annual consolidated financial statements. For the nine-month period ended May 31, 2014, the Corporation granted

137,071 (103,947 in 2013) incentive share units (“ISUs”) of which 12,550 (12,280 in 2013) ISUs were granted to COGECO Inc.’s senior

executives who are also executives of Cogeco Cable. The Corporation establishes the value of the compensation related to the ISUs granted

based on the fair value of the Corporation’s subordinate voting shares at the date of grant and a compensation expense is recognized over

the vesting period, which is three years less one day. A trust was created for the purpose of purchasing these shares on the stock market in

order to protect against stock price fluctuation. The Corporation instructed the trustee to purchase 137,416 (101,047 in 2013) subordinate

voting shares of the Corporation on the stock market. These shares were purchased for cash consideration aggregating $6,934,000 ($4,076,000

in 2013) and are held in trust for the participants until they are fully vested. The trust, considered as a special purpose entity, is consolidated

in the Corporation’s financial statements with the value of the acquired shares presented as subordinate voting shares held in trust under the

ISU Plan in reduction of share capital. A compensation expense of $1,208,000 and $3,058,000 ($523,000 and $1,466,000 in 2013) was

recorded for the three and nine-month periods ended May 31, 2014 related to this plan. During the three and nine-month periods ended

May 31, 2014, the Corporation charged COGECO Inc. amounts of $122,000 and $440,000 ($117,000 and $336,000 in 2013) with respect to

the Corporation’s ISUs granted to COGECO Inc.’s executives.

Under the ISU Plan, the following ISUs were granted by the Corporation and are outstanding at May 31, 2014:

Outstanding at August 31, 2013

209,608

Granted

137,071

Distributed (73,171)

Cancelled (14,700)

Outstanding at May 31, 2014

258,808

The Corporation offers a Deferred Share Unit Plan (“DSU Plan”) for members of the Board of directors which is described in the Corporation’s

annual consolidated financial statements. For the nine-month period ended May 31, 2014, the Corporation issued 7,228 deferred share units

(“DSUs”) (5,573 in 2013) to the participants in connection with the DSU Plan. A compensation expense of $384,000 and $664,000 ($105,000

and $269,000 in 2013) was recorded for the three and nine-month periods ended May 31, 2014 for the increase in liability related to this plan.

Under the DSU Plan, the following DSUs were issued by the Corporation and are outstanding at May 31, 2014:

Outstanding at August 31, 2013 23,745

Issued

7,228

Dividend equivalents 481

Outstanding at May 31, 2014 31,454

13. ACCUMULATED OTHER COMPREHENSIVE INCOME

Cash flow hedge

reserve

Foreign currency

translation Total

$ $ $

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

Balance at August 31, 2012 3,105 —

3,105

Other comprehensive income (loss) (725) 11,970 11,245

Balance at May 31, 2013 2,380 11,970 14,350

Balance at August 31, 2013 2,608 16,494 19,102

Other comprehensive income (loss) (724) 9,853

9,129

Balance at May 31, 2014 1,884 26,347 28,231

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 42

14. STATEMENTS OF CASH FLOWS

CHANGES IN NON-CASH OPERATING ACTIVITIES

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

2014 2013 2014 2013

$ $ $ $

Trade and other receivables

2,393

6,332 (8,907) 650

Prepaid expenses and other 272 (370) (3,570) 954

Trade and other payables 10,161 (11,180) (72,000) (87,654)

Provisions

(768

) 122 2,938

(960

)

Deferred and prepaid revenue and other liabilities

3,339

2,570 4,151

8,302

15,397 (2,526) (77,388) (78,708)

15. EMPLOYEE BENEFITS

The Corporation and its subsidiaries offer their employees either contributory defined benefit pension plans, defined contribution pension

plans or, collective registered retirement savings plans, which are described in the Corporation’s annual consolidated financial statements.

The total expense related to these plans is as follows:

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

2014 2013 2014 2013

$ $ $ $

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

Recognized in:

Operating expenses

Salaries, employee benefits and outsourced services

Current service costs

2,100

1,968 7,765

6,133

Past service costs — — 555 —

Financial expense

Other

114 217 342

2,167

2,082 8,537

6,475

16. FINANCIAL INSTRUMENTS

A) FINANCIAL RISK MANAGEMENT

Management’s objectives are to protect Cogeco Cable Inc. and its subsidiaries against material economic exposures and variability of results,

and against certain financial risks including credit, liquidity, interest rate and foreign exchange risks.

Credit risk

Credit risk represents the risk of financial loss for the Corporation if a customer or counterparty to a financial asset fails to meet its contractual

obligations. The Corporation is exposed to credit risk arising from the derivative financial instruments, cash and cash equivalents and trade

accounts receivable, the maximum exposure of which is represented by the carrying amounts reported on the statement of financial position.

Credit risk from derivative financial instruments arises from the possibility that counterparties to the cross-currency swaps and interest rate

swaps may default on their obligations in instances where these agreements have positive fair values for the Corporation. The Corporation

reduces this risk by completing transactions with financial institutions that carry a credit rating equal to or superior to its own credit rating.

The Corporation assesses the creditworthiness of the counterparties in order to minimize the risk of counterparties default under the

agreements. At May 31, 2014, management believes that the credit risk relating to its derivative financial instruments is minimal, since the

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 43

lowest credit rating of the counterparties to the agreements is “A” by Standard & Poor’s rating services (“S&P”) and “AA (low)” by Dominion

Bond Rating Services (“DBRS”).

Cash and cash equivalents consist mainly of highly liquid money market short-term investments. The Corporation has deposited the cash

and cash equivalents with reputable financial institutions, for which management believes the risk of loss to be remote. At May 31, 2014,

management believes that the credit risk relating to its short-term investments is minimal, since the credit rating related to such investment

is “A-1+” by S&P.

The Corporation is also exposed to credit risk in relation to its trade accounts receivable. To mitigate such risk, the Corporation continuously

monitors the financial condition of its customers and reviews the credit history or worthiness of each new large customer. At May 31, 2014

and August 31, 2013, no customer balance represented a significant portion of the Corporation’s consolidated trade accounts receivable.

The Corporation establishes an allowance for doubtful accounts based on specific credit risk of its customers by examining such factors as

the number of overdue days of the customer’s balance outstanding as well as the customer’s collection history. The Corporation believes

that its allowance for doubtful accounts is sufficient to cover the related credit risk. The Corporation has credit policies in place and has

established various credit controls, including credit checks, deposits on accounts and advance billing, and has also established procedures

to suspend the availability of services when customers have fully utilized approved credit limits or have violated existing payment terms.

Since the Corporation has a large and diversified clientele dispersed throughout its market areas in Canada, in the United States and in

Europe, there is no significant concentration of credit risk.

The following table provides further details on trade accounts receivable, net of allowance for doubtful accounts:

May 31, 2014 August 31, 2013

$ $

Trade accounts receivable 92,562 82,292

Allowance for doubtful accounts (6,062)

(3,322

)

86,500 78,970

Other accounts receivable 9,236

8,015

95,736 86,985

Trade accounts receivable past due is defined as amount outstanding beyond normal credit terms and conditions for the respective customers.

A large portion of the Corporation’s customers are billed and pay before their services are rendered. The Corporation considers amount

outstanding at the due date as trade accounts receivable past due. The following table provides further details on trade accounts receivable

past due net of allowance for doubtful accounts at May 31, 2014 and August 31, 2013:

May 31, 2014 August 31, 2013

$ $

Less than 60 days overdue 31,976 29,546

60 to 90 days overdue 2,467 1,626

More than 90 days overdue 4,863 1,732

39,306 32,904

Liquidity risk

Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they become due. The Corporation manages

liquidity risk through the management of its capital structure and access to different capital markets. It also manages liquidity risk by

continuously monitoring actual and projected cash flows to ensure sufficient liquidity to meet its obligations when due. At May 31, 2014, the

available amount under the Corporation’s Term Revolving Facility was $323.8 million. Management believes that the committed Term

Revolving Facility will, until its maturity in January 2019, provide sufficient liquidity to manage its long-term debt maturities and support

working capital requirements. Two subsidiaries of the Corporation also benefit from a Revolving Facility of US$100 million related to its

acquisition of Atlantic Broadband, of which US$99 million ($107.3 million) was available at May 31, 2014.

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 44

The following table summarizes the contractual maturities of the financial liabilities and related capital amounts:

Contractual cash flows

Carrying

amount

2014

2015

2016

2017

2018

Thereafter

Total

Bank indebtedness 9,440 9,440 — — — — —

9,440

Trade and other payables

(1)

158,223 158,223 — — — — —

158,223

Long-term debt

(2)

2,818,912 4,391 27,322 240,475 35,779 216,878 2,326,999 2,851,844

Derivative financial instruments

(6,157) — — (4,123) — — —

(4,123

)

Finance leases

(3)

1,142 343 815 — — — —

1,158

2,981,560 172,397 28,137 236,352 35,779 216,878 2,326,999 3,016,542

(1) Excluding accrued interest.

(2) Principal excluding finance leases.

(3) Including interest.

The following table is a summary of interest payable on long-term debt (excluding interest on finance leases) that is due for each of the next

five years and thereafter, based on the principal amount and interest rate prevailing on the outstanding debt at May 31, 2014 and their

respective maturities:

2014 2015 2016 2017 2018 Thereafter Total

$ $ $ $ $ $ $

Interest payments on long-term debt 17,408 117,857

109,794

101,636 98,918 258,974

704,587

Interest receipts on derivative financial

instruments

(81) (14,718)

(7,210

) — — — (22,009)

Interest payments on derivative financial

instruments

215 15,401

7,307

— — — 22,923

17,542 118,540

109,891

101,636 98,918 258,974

705,501

Interest rate risk

The Corporation is exposed to interest rate risks for both fixed and floating interest rate instruments. Interest rate fluctuations will have an

effect on the valuation and collection or repayment of these instruments. At May 31, 2014, all of the Corporation’s long-term debt was at

fixed rate, except for the Corporation’s Term Revolving Facility and First Lien Credit Facilities. To mitigate such risk, the Corporation has

entered on July 22, 2013 into interest rate swap agreements to fix the interest rate of $US200 million of its LIBOR based loans. These

agreements have the effect of converting the floating US LIBOR base rate at an average fixed rate of 0.39625% under the Term Revolving

Facility until July 25, 2015. The Corporation has elected to apply hedge accounting on these derivative financial instruments. The sensitivity

of the Corporation’s annual financial expense to a variation of 1% in the interest rate applicable to these facilities is approximately $6.4

million based on the current debt at May 31, 2014.

Foreign exchange risk

The Corporation is exposed to foreign exchange risk related to its long-term debt denominated in US dollars that is not designated as a

hedge on its US dollar net investments. In order to mitigate this risk, the Corporation has established guidelines whereby cross-currency

swap agreements can be used to fix the exchange rates applicable to its US dollar denominated long-term debt. All such agreements are

exclusively used for hedging purposes. Accordingly, on October 2, 2008, the Corporation entered into cross-currency swap agreements to

set the liability for interest and principal payments on its US$190 million Senior Secured Notes Series A issued on October 1, 2008. These

agreements have the effect of converting the US interest coupon rate of 7.00% per annum to an average Canadian dollar interest rate of

7.24% per annum. The exchange rate applicable to the principal portion of the debt has been fixed at $1.0625. The Corporation elected to

apply cash flow hedge accounting on these derivative financial instruments. The impact of a 10% change in the exchange rate of the US

dollar and British Pounds into Canadian dollars would change financial expense by approximately $5.8 million based on the outstanding

debt at May 31, 2014.

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 45

The Corporation is also exposed to foreign exchange risk on cash and cash equivalents, trade and other receivables, bank indebtedness

and trade and other payables and provisions denominated in US dollars, Euros or British Pounds. The Corporation’s exposure to foreign

currency risk is as follows:

May 31, 2014 August 31, 2013

US Euro

British

Pounds US Euro

British

Pounds

$ $ $ $ $ $

Financial assets (liabilities)

Cash and cash equivalents — 353 265 7,394

1,171

257

Trade and other receivables 2,449 — — — — —

Bank indebtedness (1,164) — — — — —

Trade and other payables and provisions (4,874) (7,390) — (16,554)

(6,933

) —

(3,589) (7,037) 265 (9,160)

(5,762

) 257

Due to their short-term nature, the risk arising from fluctuations in foreign exchange rates is usually not significant. The impact of a 10%

fluctuation in the foreign exchange rates (US dollar, Euro and British Pound) would change financial expense by approximately $1 million.

Furthermore, the Corporation’s investment in foreign operations is exposed to market risk attributable to fluctuations in foreign currency

exchange rates, primarily changes in the values of the Canadian dollar versus the US dollar and British Pounds. This risk was mitigated

since the major part of the purchase prices for Atlantic Broadband and Peer 1 Hosting were borrowed directly in US dollars and British

Pounds. At May 31, 2014, the investments for Atlantic Broadband and Peer 1 Hosting amounted to US$1.1 billion and £62.7 million while

long-term debt hedging these investments were US$859.5 million and £56.0 million.The exchange rate used to convert the US dollar currency

and British Pounds currency into Canadian dollars for the statement of financial position accounts at May 31, 2014 was $1.0842 per US

dollar and $1.8173 per British Pound. The impact of a 10% change in the exchange rate of the US dollar and British Pound into Canadian

dollars would change other comprehensive income by approximately $26.9 million.

Fair value of financial instruments

Fair value is the amount at which willing parties would accept to exchange a financial instrument based on the current market for instruments

with the same risk, principal and remaining maturity. Fair values are estimated at a specific point in time, by discounting expected cash flows

at rates for debts of the same remaining maturities and conditions. These estimates are subjective in nature and involve uncertainties and

matters of significant judgment, and therefore, cannot be determined with precision. In addition, income taxes and other expenses that would

be incurred on disposition of these financial instruments are not reflected in the fair values. As a result, the fair values are not necessarily

the net amounts that would be realized if these instruments were settled. The Corporation has determined the fair value of its financial

instruments as follows:

a) The carrying amount of cash and cash equivalents, trade and other receivables, bank indebtedness and trade and other payables

approximates fair value because of the short-term nature of these instruments.

b) Interest rates under the terms of the Corporation’s Term Revolving Facility and First Lien Facilities are based on Bankers’ acceptance,

LIBOR, EURIBOR, bank prime rate loan or US or British Pounds base rate loan plus applicable margin. Therefore, the carrying value

approximates fair value for these facilities, since they have conditions similar to those currently available to the Corporation.

c) The fair value of the Senior Secured Debentures Series 2, 3 and 4, Senior Secured Notes Series A and B, Senior Secured Notes,

Senior Unsecured Notes and Senior Unsecured Debenture are based upon current trading values for similar financial instruments.

d) The fair values of finance leases are not significantly different from their carrying amounts.

The carrying value of all the Corporation’s financial instruments approximates fair value, except as otherwise noted in the following table:

May 31, 2014 August 31, 2013

Carrying value Fair value Carrying value Fair value

$ $ $ $

Long-term debt 2,820,054 2,943,144 2,892,265 2,932,422

COGECO CABLE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2014

(unaudited)

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

Condensed Interim Consolidated Financial Statements COGECO CABLE INC. Q3 2014 46

All financial instruments recognized at fair value on the consolidated statement of financial position must be measured based on the three

fair value hierarchy levels, which are as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices)

or indirectly (i.e., derived from prices); and

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Corporation considers that its derivative financial instruments are classified as Level 2 under the fair value hierarchy. The fair value of

derivative financial instruments are estimated using valuation models that reflect projected future cash flows over contractual terms of the

derivative financial instruments and observable market data, such as interest and currency exchange rate curves.

B) CAPITAL MANAGEMENT

The Corporation’s objectives in managing capital are to ensure sufficient liquidity to support the capital requirements of its various businesses,

including growth opportunities. The Corporation manages its capital structure and makes adjustments in light of general economic conditions,

the risk characteristics of the underlying assets and the Corporation’s working capital requirements. Management of the capital structure

involves the issuance of new debt, the repayment of existing debts using cash generated by operations and the level of distribution to

shareholders.

The capital structure of the Corporation is composed of shareholders’ equity, cash and cash equivalents, bank indebtedness, long-term debt,

and assets or liabilities related to derivative financial instruments.

The provisions of financing agreements provide for restrictions on the activities of the Corporation. Generally, the most significant restrictions

relate to permitted investments and dividends on multiple and subordinate voting shares, as well as the maintenance of certain financial

ratios primarily linked to the operating income before depreciation and amortization, financial expense and total indebtedness. At May 31,

2014 and August 31, 2013 the Corporation was in compliance with all of its debt covenants and was not subject to any other externally

imposed capital requirements.

The following table summarizes certain of the key ratios used to monitor and manage the Corporation’s capital structure:

May 31, 2014 August 31, 2013

Net senior indebtedness

(1)(2)

/ operating income before depreciation and amortization

(3)

2.3 2.6

Net indebtedness

(2)(4)

/ operating income before depreciation and amortization

(3)

3.1 3.4

Operating income before depreciation and amortization

(3)

/ financial expense

(3)

6.5 6.2

(1) Net senior indebtedness is defined as the total of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments,

less cash and cash equivalents and principal on Senior Unsecured Debenture and Senior Unsecured Notes.

(2) Excluding Atlantic Broadband and other non-significant unrestricted subsidiaries' cash and cash equivalents and non-recourse First Lien Credit

Facilities.

(3) Calculation based on operating income before depreciation and amortization and financial expense for the twelve-month period ended May 31, 2014

and August 31, 2013 excluding Atlantic Broadband and other non-significant unrestricted subsidiaries and including Peer 1 Hosting results for the

twelve-month period ended May 31, 2014 and seven-month period ended August 31, 2013.

(4) Net indebtedness is defined as the total of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments, less

cash and cash equivalents.

17. SUBSEQUENT EVENT

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

$15 million of the Term Loan A Facility was converted into the Revolving Facility. In addition, the Revolving Facility was increased by US$35

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

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

covenants, interest rates and maturity remained the same. In connection with the amendment, transaction costs of US$0.4 million were

incurred.

Customer Statistics COGECO CABLE INC. Q3 2014 47

CUSTOMER STATISTICS

May 31,

2014

February 28,

2014

November 30,

2013

August 31,

2013

May 31,

2013

Primary service units

(1)

2,452,118 2,454,627 2,464,932 2,467,657 2,481,017

CANADA

1,956,444 1,962,077 1,975,502 1,980,122 1,992,143

UNITED STATES

495,674 492,550 489,430 487,535 488,874

Television service customers

1,034,991 1,044,611 1,057,859 1,066,952 1,079,285

CANADA

807,831 815,852 827,649 834,771 845,344

Penetration as a percentage of homes passed 47.9% 48.5% 49.3% 49.9% 50.7%

UNITED STATES 227,160 228,759 230,210 232,181 233,941

Penetration as a percentage of homes passed 43.8% 44.2% 44.5% 44.9% 45.3%

High Speed Internet service customers

865,597 857,786 848,897 838,445 837,348

CANADA

676,802 672,981 668,257 661,337 661,178

Penetration as a percentage of homes passed

40.2% 40.0% 39.8% 39.5% 39.7%

UNITED STATES

188,795 184,805 180,640 177,108 176,170

Penetration as a percentage of homes passed

36.4% 35.7% 34.9% 34.3% 34.1%

Telephony service customers

551,530 552,230 558,176 562,260 564,384

CANADA 471,811 473,244 479,596 484,014 485,621

Penetration as a percentage of homes passed

28.0% 28.1% 28.6% 28.9% 29.1%

UNITED STATES

79,719 78,986 78,580 78,246 78,763

Penetration as a percentage of homes passed

15.4% 15.3% 15.2% 15.1% 15.2%

(1) Represents the sum of Television, High Speed Internet (“HSI”) and Telephony service customer.

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Cogeco Cable Inc. posts solid third quarter results for fiscal 2014

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