Press release

For immediate release

Continued growth for COGECO despite

the difficult economic climate

Montreal, January 14, 2009 – Today, COGECO Inc. (TSX: CGO) (“COGECO” or the “Company”) announced its financial

results for the first quarter of 2009, ende d November 30, 2008.

For the first quarter of fiscal 2009:

• Consolidated revenue incre ased by 18.5% to $308.4 million;

• Consolidated operating income from continuing operations before amortization

(1)

grew by 24.5% to reach

$124.7 million;

• Consolidated net income a mounted to $11.1 million compared to a net loss of $10 million;

• Free cash flow

(1)

reached $21.8 million, a decrease of 5.2% compared to $23 million the year before;

• Operating margin

(1)

grew to 40.4% from 38.5%, in the first quarter of fiscal 2009;

• In the cable sector, revenue-generating units (“RGU”)

(2)

grew by 52,714 net additions, for a total of 2,769,588

RGU at November 30, 2008.

“Both the radio and the cable sector reported solid financial performance for the first quarter. All of COGECO’s key

performance indicators increased compared to the prior year with the exception of a decrease in free cash flow caused by

the increases in capital expenditures required in the cable sector to support the enhanced demand for the HD Television

service in Canada and the deployment of Digital Television in Portugal. Our Canadian cable operations are benefiting

from continued organic growth despite the early signs of maturation in some services. In the cable sector’s commercial

activities, Cogeco Data Services successfully bid on a long term contract to provide innovative and cost-efficient solutions

for the telecommunications needs of the Toronto District School Board. In our European cable operations, the continuing

unfavorable economic environment and highly competitive dynamics negatively impacted the RGU growth in all of our

services, with the exception of the Digital Television service which has contributed steady increases in subscriptions to the

service since its launch in the second half of fiscal 2008. We are pleased with our financial results to date and will

continue to strive to be the first choice for telecommunications services to the customers in all of our territories. On the

radio side, the fall BBM Canada survey conducted with the new Portable People Meter showed that the RYTHME FM

network continues to be the preferred choice of audiences in the adult and female categories in the Montréal market,”

declared Louis Audet, Pres ident and CEO of COGECO.

(1)

The indicated terms do not have standardiz ed def inition s prescr ibed by Canadia n Generally Acc epted Accounting Pri nciples (“GA AP”) and ther efore, may not be

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

Management’s discussion and analysis.

(2)

Represents the sum of Basic Cable, High Speed Internet (HSI), Digital Television and Telephony service customers.

- 2 -

FINANCIAL HIGHLIGHTS

Quarters ended November 30,

($000, except percentages and per share data) 2008 2007

(1)

Change

$ $ %

(unaudited) (unaudited)

Revenue 308,375 260,255 18.5

Operating income from contin ui ng op erati ons befor e amortiz at io n

(2)

124,704 100,174 24.5

Operating income from contin ui ng op erati ons

60,641 47,135 28.7

Income from continuing operations

11,053 7,656 44.4

Loss from discontinued operations

– (17,632)

–

Net income (l oss)

11,053 (9,976)

–

Cash flow from operating activities from continuing operations 30,470 46,604 (34.6)

Cash flow from operations from continuing operations

(2)

95,626 81,377 17.5

Capital expenditures and increase in deferred charges 73,855 58,403 26.5

Free cash flow

(2)

21,771 22,974 (5.2)

Earnings (loss) per share

Basic

Income from continuing operations

0.66 0.46 43.5

Loss from discontinued operations

– (1.06)

–

Net income

0.66 (0.60)

–

Diluted

Income from continuing operations

0.66 0.46 43.5

Loss from discontinued operations

– (1.06)

–

Net income

0.66 (0.60)

–

(1)

Certain comp arati ve figur es have b een rec lassifi ed t o c onform to t he cur rent y ear’s present ation. Fi nanc ial inf ormat ion for the previous year h as b een r estate d to

reflect the termina tion of our investm ent in the TQS Group, w hich is no longer c onsolidated s ince December 18, 2007 (see note 1 4 to the conso lidated financ ial

statement), and to reflect the presentation of foreign exchange gains or losses as financial expense instead of operating costs.

(2)

The indicated terms do not have standardiz ed def inition s prescr ibed by Canadia n Generally Acc epted Accounting Pri nciples (“GAAP ”) and therefo re, may not be

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

Management’s discussion and analysis.

FORWARD-LOOKING STATEMENTS

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

Forward-looking information may relate to COGECO’s future outlook and anticipated events, business, operations,

financial performance, financial condition or results and, in so me 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 Company’s future operating results and economic performance and its objectives and strategies are forward-looking

statements. These statements are based on certain factors and assumptions including expected growth, results of

operations, performance and business prospects and opportunities, which COGECO believes are reasonable as of the

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

to the Company, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including

risks and uncertainties (described in the “Uncertainties and main risk factors” section of the Company’s 2008 annual

Management’s Discussion and Analysis (MD&A) that could cause actual results to differ materially from what COGECO

currently expects. These factors include technological changes, changes in market and competition, governmental or

regulatory developments, general economic conditions, the development of new products and services, the enhancement

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

many of which are beyond the Company’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 Company is under no

obligation (and expressly disclaims any such obligation), and does not undertake to update or alter this information before

the next quarter.

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

prepared in accordance with Canadian GAAP and the MD&A included in the Company’s 2008 Annual Report. Throughout

this discussion, all amounts are in Canadian dollars unless otherwise indicated.

- 3 -

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)

CORPORATE STRATEGI ES AND OBJECTIVES

COGECO Inc.’s (“COGECO” or the “Company”) objectives are to maximize shareholder value by increasing profitability

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

and business processes, are specific to each sector. For the cable sector, sustained corporate growth and the continuous

improvement of networks and equipment are the main strategies used. The radio activities focus on continuous

improvement of programming in order to increase market share, and, thereby, profitability. COGECO uses growth of

operating income before amortization

(1)

, free cash flow

(1)

and revenue-generating units (“RGU”)

(2)

growth in order to

measure its performance against these objectives for the cable sector. Below are the Company’s recent achievements in

furthering the corporate obj ectives.

Tight control over costs and business processes

• For the first quarter of 2009, the Company’s operating costs increased over last year by 14.7% compared to a

revenue growth of 18.5%;

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

discussed in the 2008 annual MD&A, the Company identified certain material weaknesses in the design of

internal controls over financial reporting and has been working to improve the design and efficiency of internal

controls on some significant processes during the quarter. The documentation and remediation of key internal

controls are progressi ng normally.

Cable sector

Sustained corporate growth

Canadian operations

• Digital Television service:

o On December 4, launch of TSN2 HD, TELETOON Retro and Canal Indigo HD on the High Definition

(“HD”) Television service in Québec;

o During the first quarter, the following Di gital and HD Television services were launched:

• TELETOON On Demand and TSN2 in Ontario and Québec;

• TELETOON Jr. On Demand and TSN HD in Québec;

• CBS College Sports, Speed HD, Raptors HD, TSN2 HD a nd Super Channel HD in Ontario.

• Telephony service:

o During the first quarter, the Telephony servi ce was launched in the following cities:

• Vineland, Stevensville, Port Robinson, Tecumseh and LaSalle, Ontario;

• Bromptonville, Richmond and Windsor, Québec.

• Customer service;

o On November 20, the Cogeco Cable Québec call centre won a Flèche d’or - Contact Centre of the Year,

Best Employer Award from the Québec Relation ship Marketing Association (RMA);

o On November 18, for a second consecutive year, Cogeco Cable’s call centres, located in Trois-Rivières,

Québec, and in Burlington, Ontario, received from the Service Quality Measurement Group (“SQM”) the

Highest Customer Satisfaction Award as well as the First Call resolution Merit Award which recognizes

the best improvement in first call resolution.

• Cogeco Data Services

o On December 15, announcement of a 10-year, $39 million contract with the Toronto District School Board

(“TDSB”).

European operations

• Digital Television service:

o Continued deployment of Cabovisão - Televisão por Cabo, S.A. (“Cabovisão”)‘s Digital Television service;

o Launch of Sony AXN, Disney and Benfica channel s;

o Launch of a new PVR box.

(1)

The indicated terms do not have standardized definitions prescribed by Canadian Generally Accepted Accounting Principles (“GAAP”) and therefore, may not be

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

(2)

Represents the sum of Basic Cable, High Speed Internet (HSI), Digital Television and Telephony service customers.

- 4 -

Continuous improv ement of networks and equipment

• During the first quarter of fiscal 2009, the Company invested approximately $23 million in its cable infrastructure

including head-ends and upgrades and rebuilds.

Other

• Fall’s BBM Canada survey conducted with the Portable People Meter (“PPM”) shows that RYTHME FM has

maintained its leadership position with audiences in the adult and female categories in the Montréal market. The

other RYTHME FM stations and the 93

station in the Québec City continue to expand their audiences.

Discontinued Operations

In October 2007, the Board of Directors of TQS, an indirect subsidiary of the Company, engaged CIBC World Markets to

advise on and assess strategic options for the TQS network in the face of financial difficulties. On December 18, 2007, the

Québec Superior Court issued an order under the Companies’ Creditors Arrangement Act (Canada) protecting TQS, its

subsidiaries and its parent 3947424 Canada Inc. (“TQS Group”) from claims by their creditors. On June 26, 2008, the

Canadian Radio-television and Telecommunications Commission (“CRTC”) approved the proposed transfer of ownership

and control of TQS to Remstar Corporation Inc. (“Remstar”) and on August 29, 2008, the transfer of ownership and

control of TQS to Remstar was completed, which allowed the new ownership group to pursue the broadcasting activities

of TQS.

Effective December 18, 2007, the Company has ceased to consolidate the financial statements of the TQS Group.

Accordingly, the results of operations and cash flow for the three month period ended November 30, 2007, has been

reclassified as discontinued operations.

The results of the discontinued operations were as follows:

Quarters ended November 30,

($000)

2008 2007

$ $

(unaudited)

Revenue – 32,758

Operating costs – 29,957

Operating income before amort iz ati o n – 2,801

Amortization – 1,116

Operating income – 1,685

Financial expens e – 238

Impairment of assets – 30,298

Loss before income taxes and the following items – (28,851)

Income taxes – –

Non-controlling interest – 11,219

Loss from discontinued operations – (17,632)

- 5 -

The cash flows of the discontinued ope rations were as follows:

Quarters ended November 30,

($000)

2008 2007

$ $

(unaudited) (unaudited)

Cash flow from operating activities

– (5,743)

Cash flow from investing activities – (85)

Cash flow from financing activities – 5,828

Cash flow from discontinued operations

– –

Continuing Operations

RGU growth in the cable sector

During the quarter ended November 30, 2008, the consolidated number of RGU increased by 52,714, or 1.9% to reach

2,769,588 RGU, on target to attain the Company’s annual RGU growth projections of 100,000 net additions issued on

October 29, 2008, which represents approximately 3.7%, for the fiscal year ending August 31, 2009.

Revenue and operating income from continuing operations before amortization growth

For the first quarter of fiscal 2009, revenue increased by $48.1 million, or 18.5%, to reach $308.4 million while operating

income before amortizatio n grew by $24.5 million, or 24.5%, to reach $124.7 million.

Free cash flow

In the first quarter of fiscal 2009, COGECO generated free cash flow of $21.8 million compared to $23 million for the same

period last year. This decrease results mainly from the cable sector and is attributable to an increase in capital

expenditures and deferred charges to support HD and Digital Television services as well as to acquire a power generator

for the newly acquired Canadian data communications subsidiary, and by the impact of the rapid appreciation of the US

dollar over the Canadian dollar. This increase was partly offset by the increase in cash flow from operations resulting

primarily from the improvement of the Company’s operating income before amortization.

OPERATING RESULTS – CONSOLIDATED OVERVIEW

Quarters ended November 30,

($000, except percentages) 2008 2007

(1)

Change

$ $ %

(unaudited) (unaudited)

Revenue 308,375 260,255 18.5

Operating costs 183,671 160,081 14.7

Operating income from contin ui ng op erati ons befor e amortiz at io n 124,704 100,174 24.5

Operating margin

(2)

40.4% 38.5%

(1)

Certain comp arati ve figur es have b een rec lassifi ed t o c onform to t he cur rent y ear’s present ation. Fi nanc ial inf ormat ion for the previous year h as b een r estate d to

reflect the termina tion of our investm ent in the TQS Group, w hich is no longer c onsolidated s ince December 18, 2007 (see note 1 4 to the conso lidated financ ial

statement), and to reflect the presentation of foreign exchange gains or losses as financial expense instead of operating costs.

(2)

Operating margin does not have a standardize d definition prescribed by Canadia n GAAP and therefore, may not be comparable to simi lar measures presented

by other companies. For more details, please consult the “Non-GAAP financial measures” section.

- 6 -

Revenue

Fiscal 2009 first-quarter revenue improved, mainly in its cable sector, by $48.1 million, or 18.5%, to reach $308.4 million.

Cable revenue, driven by an increased number of RGU combined with rate increases and the acquisition of MaXess

Networx®, FibreWired Burlington Hydro Communications and Cogeco Data Services (the “recent acquisitions”) in the

second half of fiscal 2008, went up by $47.6 million, or 18.9%, in the first quarter of the 2009 fiscal year.

Operating costs

For the first quarter, operating costs increased by $23.6 million, or 14.7%, compared to the prior year, to reach

$183.7 million. The increase in operating costs was mainly attributable to the cable sector in servicing additional RGU and

to the impact of the recent acquisitions in Can ada in the cable sector.

Operating income from continuing operation s before amortization

Operating income from continuing operations before amortization grew, essentially by its cable segment, by $24.5 million,

or 24.5%, to reach $124.7 million in the first quarter of fiscal 2009 compared to the corresponding period of the prior year.

The cable sector contributed to the growth by $22.4 million during the first quarter.

FIXED CHARGES

Quarters ended November 30,

($000, except percentages) 2008 2007

(1)

Change

$ $ %

(unaudited) (unaudited)

Amortization 64,063 53,039 20.8

Financial expens e 23,778 16,333 45.6

(1)

Certain comp arati ve figur es have b een rec lassifi ed t o c onform to t he cur rent y ear’s present ation. Fi nanc ial inf ormat ion for the previous year h as b een r estate d to

reflect the termina tion of our investm ent in the TQS Group, w hich is no longer c onsolidated s ince December 18, 2007 (see note 1 4 to the conso lidated financ ial

statement), and to reflect the presentation of foreign exchange gains or losses as financial expense instead of operating costs.

For the quarter ended November 30, 2008, amortization amounted to $64.1 million compared to $53 million for the

corresponding period the year before. The increase in amortization expense was mainly due to the following factors in the

cable sector: additional capital expenditures arising from customer premise equipment acquisitions to sustain RGU growth

in Canada and the deployment of the Digital Television service in Portugal, and to the rece nt acquisitions.

First-quarter financial expense increased by $7.4 million compared to the same period in fiscal 2008 due to the rapid

appreciation of the US dollar and the Euro over the Canadian dollar, the increase in the level of Indebtedness (defined as

bank indebtedness, derivative financial instruments and long-term debt) and by an increase in the average cost of

Indebtedness. More specifically, financial expense in the cable sector was adversely impacted by foreign exchange losses

amounting to $3.8 million in the first quarter of fiscal 2009 as the majority of customer premise equipment is purchased

and subsequently paid in US dollars. These losses were essentially due to the unusually high US dollar volatility, with the

Bank of Canada closing rate fluctuating from CA$1.0620 per US dollar at August 31, 2008 to CA$1.2370 per US dollar at

November 30, 2008, reaching a maximum of CA$1.2935 per US dollar on November 20, 2008. For the corresponding

period of the prior year, the cable subsidiary recorded a foreign exchange gain of $1 million.

INCOME TAXES

Fiscal 2009 first-quarter income tax expense amounted to $9.8 million compared to $9.3 million in fiscal 2008. The

increase is mainly due to the increase in operating income before amortization surpassing that of the fixed charges in the

cable sector.

- 7 -

NON-CONTROLLING INTEREST

The non-controlling interest represents a participation of approximately 67.7% in Cogeco Cable’s results. During the first

quarter of fiscal 2009 the non-controlling interest amounted to $15.9 million due to the cable sector’s strong results. The

non-controlling interest for the comparable period of last year amounted to $13.8 million.

NET INCOME

Fiscal 2009 first-quarter net income amounted to $11.1 million, or $0.66 per share, compared to a net loss of $10 million,

or $0.60 per share, for the same period last year. The net loss in the prior year was due to a loss from discontinued

operations of $17.6 million, or $1.06 per share. Income from continuing operations for the first quarter of fiscal 2009

amounted to $11.1 million, or $0.66 per share, compared to $7.7 million, or $0.46 per share the year before. Income from

continuing operations increased due to the increase in operating in come before amortization in the cable sector.

CASH FLOW AND LIQUIDITY

Quarters ended November 30,

($000) 2008 2007

(1)

$ $

(unaudited) (unaudited)

Operating activities from continuing operations

Cash flow from operations

(2)

95,626 81,377

Changes in non-cash operating items (65,156) (34,773)

30,470 46,604

Investing activities from continuing operations

(3)

(72,900) (58,329)

Financing activities from continuing operations

(3)

38,776 (36,257)

Effect of exchange rate changes on cash and cash equivalents denominated in foreign currencies 687 (153)

Net change in cash and cash equivalents from continuing operations (2,967) (48,135)

Net change in cash and cash equivalents from discontinued operations – –

Cash and cash equivalents, beginning of period 37,472 66,279

Cash and cash equivalents, end of period 34,505 18,144

(1)

Certain comp arati ve figur es have b een rec lassifi ed t o c onform to t he cur rent y ear’s present ation. Fi nanc ial inf ormat ion for the previous year h as b een r estate d to

reflect the termina tion of our investm ent in the TQS Group, w hich is no longer c onsolidated s ince December 18, 2007 (see note 1 4 to the conso lidated financ ial

statement).

(2)

Cash flow from operations does not have a standardized definition prescribed by Canadian GAAP and therefore, may not be comparable to similar measures

presented by other companies. For more details, please consult the “Non-GAAP financial measures” section.

(3)

Excludes assets acquired under capital leases.

Fiscal 2009 first quarter cash flow from operations reached $95.6 million, 17.5% higher than the comparable period last

year, primarily due to the increase in operating income before amortization in the cable sector. Changes in non-cash

operating items generated greater cash outflows compared to the same period last year, mainly as a result of a decrease

in accounts payable and accrued liabilities and in income tax liabilities. The significant decrease in income tax liabilities is

due to payments made during the first quarter of 20 09 related to the 2008 fiscal year.

- 8 -

In the first quarter of fiscal 2009, investing activities from continuing operations including assets acquired under capital

leases stood at $73.8 million due to capital expenditures of $66.6 million and from an increase of $7.2 million in deferred

charges in the cable sector. The capital expenditures, stemming essentially from the cable sector, increased compared to

the same period last year due to the following factors:

• An increase in customer premise equipment capital spending resulting from RGU growth fuelled in part by

increased interest for the HD Television service for the Canadian operations combined with the deployment of

Digital Television in Portugal;

• An increase in support capital spending due to the acquisition of a power generator for the newly acquired

Canadian data communications subsidiary;

• An increase in scalable infrastructure capital spending mainly due to the timing of the expansion and head-end

improvements, system powering and equipment reliability to sustain increased customer demand for HSI and

Telephony services in Canada;

• The appreciation of the US dollar and the Euro over the Canadian dollar also had a significant impact on the total

capital expenditures in the first quarter of 2009.

Deferred charges and others are mainly attributable to reconnect costs in the cable sector. The increase in deferred

charge for the first quarter amounted to $7.2 million compared to $7.5 million for the same period the year before. Slower

RGU growth explained the lower increase recorded in fiscal 2009.

In the first quarter, the Company generated free cash flow amounting to $21.8 million compared to $23 million for the

same period of the preceding year. The lower free cash flow is mainly due to the cable sector and attributable to an

increase in capital expenditures, partly offset by an increase in operating income before amortization net of financial

expense. The aggregate amount of total capital expenditures and deferred charges increased by $15.4 million for the

quarter ended November 30, 2008 compared to the corresponding perio d of last year due to the factors expl ained above.

In the first quarter of 2009, Indebtedness affecting cash increased by $43.8 million due to the reduction of non-cash

operating items of $65.2 million, partly offset by the free cash flow of $21.8 million. Indebtedness was increased through

the issuance on October 1, 2008, in the cable sector, of Senior Secured Notes, Series A and B, maturing October 1, 2015

and October 1, 2018, respectively, for net proceeds of approximately $255 million, net of the repayment of US$150 million

Senior Secured Notes Series A and the related derivative financial instrument of $88.7 million, both maturing on

October 31, 2008, for a total of $238.7 million, and by an increase of $23.5 million in bank indebtedness. For the same

period of the prior year, Indebtedness affecting cash decreased by $34.4 million due to the use of cash and cash

equivalents of $48.1 million and generated free cash flow of $23 million partly offset by the net disbursement of $34.8

million arising from changes in non-cash operating items. In addition, dividends of $0.08 per share for subordinate and

multiple voting shares, totalling $1.3 million, were paid by the Company during the first quarter of fiscal 2009, compared to

$0.07 per share, totalling $1.2 million in the first quarter of fiscal 2008. Dividends paid by a subsidiary to non-controlling

interests amounted to $3.9 million during the first quarter of fiscal 2009, for consolidated dividend payments of

$5.3 million.

As at November 30, 2008, the Company had a working capital deficiency of $337.2 million compared to $611.8 million as

at August 31, 2008. The decrease in the deficiency is mainly attributable to the cable sector and is due to the repayment

of the US$150 million Senior Secured Notes, Series A and the related derivative financial instrument for a total of

$238.7 million on October 31, 2008 using the proceeds of issuance of the Senior Secured Notes, Series A and B. As part

of the usual conduct of its cable business, COGECO maintains a working capital deficiency due to a low level of accounts

receivable as a large portion of the cable subsidiary’s customers pay before their services are rendered, unlike accounts

payable and accrued liabilities, which are paid after products are delivered or services are rendered, thus enabling

Cogeco Cable to use cash and cash e quivalents to reduce Indebtedness.

As at November 30, 2008, Cogeco Cable had used $513.7 million of its $885 million Term Facility for a remaining

availability of $371.3 million and the Company had drawn $16.4 million of its $50 million Term Facility, for a remaining

availability of $33.6 million.

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

Directors and may also be restricted under the terms and conditions of certain debt instruments. In accordance with

applicable corporate and securities laws, significant transfers of funds from COGECO may be subject to approval by

minority shareholders.

- 9 -

FINANCIAL POSITION

Since August 31, 2008, there have been major changes to the balance of “fixed assets”, “accounts payable and accrued

liabilities”, “income tax liabilities”, “Indebtedness” and “non-controlling interest”.

The $14.5 million increase in fixed assets is mainly related to the cable sector and attributable to increased capital

expenditures to sustain RGU growth, to the recent acquisitions in Canada and to the appreciation of the Euro and the US

dollar over the Canadian dollar. The $43.9 million decrease in accounts payable and accrued liabilities is related to the

timing of payments made to suppliers net of the impact of the recent acquisitions in the cable sector. The $17 million

decrease in income tax liabilities is mainly due to income tax payments relating to fiscal 2008 that were made in the first

quarter of fiscal 2009. Indebtedness has increased by $51,9 million as a result of the unfavourable impact of the

appreciation of the US dollar and the Euro over the Canadian dollar and to the factors previously discussed in the “Cash

Flow and Liquidity” section, partly offset by the increase of $29.2 million in the fair value of the cross-currency swaps

related to the Senior Secured Notes Series A issued on October 1, 2008. The $12.5 million increase in non-controlling

interest is mainly due to the improved results in the ca ble sector.

A description of COGECO’s share data as at December 31, 2008 is pre se nted in the table below:

Number of shares/options Amount

($000)

Common shares

Multiple voting shares

Subordinate voting shares

1,842,860

14,898,762

120,058

Options to purchase subordinate voting shares

Outstanding options

Exercisable options

123,758

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

operating and capital leases and guarantees. COGECO’s obligations, discussed in the 2008 annual MD&A, have not

materially changed since August 31, 2008, except for the new financing in the cable sector discussed in the “Cash Flow

and Liquidity” section.

DIVIDEND DECLARATION

At its January 13, 2009 meeting, the Board of Directors of COGECO declared a quarterly eligible dividend of $0.08 per

share for subordinate and multiple voting shares, payable on February 10, 2009, to shareholders of record on

January 27, 2009. The declaration, amount and date of any future dividend will continue to be considered and approved

by the Board of Directors of the Company based upon the Company’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 declar ed, and if declared, their amount and periodicity may vary.

FINANCIAL MANAGEME NT

The Company’s subsidiary, Cogeco Cable 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 in 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 CA$1.0625

per US dollar. Since the issuance on October 1, 2008, amounts due under the US$190 million Senior Secured Notes

Series A increased by $33.2 million due to the US dollar’s appreciation over the Canadian dollar. The fair value of cross-

currency swaps increased by a net amount of $29.2 million, which offsets the foreign exchange loss of $33.2 million on

the US dollar denominated debt. The difference of $4 million was recorded as a decrease of other comprehensive income,

net of income taxes of $1.1 million and non-controlling interest of $2 million.

Cogeco Cable’s net investment in the self-sustaining foreign subsidiary, Cabovisão, is exposed to market risk attributable

to fluctuations in foreign currency exchange rates, primarily changes in the value of the Canadian dollar versus the Euro.

This risk is mitigated since the major part of the purchase price for Cabovisão was borrowed directly in Euros. This debt is

designated as a hedge of net investments in self-sustaining foreign subsidiaries and, accordingly, Cogeco Cable realized

a foreign exchange gain of $2.7 million in the first quarter of fiscal 2009, which is presented net of non-controlling interest

of $1.8 million in other comprehensive income. The exchange rate used to convert the Euro into Canadian dollars for the

balance sheet accounts as at November 30, 2008 was $1.5711 per Euro compared to $1.5580 per Euro as at

- 10 -

August 31, 2008. The average exchange rates prevailing during the first quarter used to convert the operating results of

the European operations was $1.5462 per Euro, compared to $1.4119 per Euro for the same period last year.

The following table shows the Canadian dollar impact of a 10% change in the average exchange rate of the Euro currency

into Canadian dollars on European operating results in the cable sector for the first quarter ended November 30, 2008:

Quarter ended November 30, 2008 As reported

Exchange rate

impact

($000) $ $

(unaudited) (unaudited)

Revenue 62,064 6,206

Operating income before amort iz ati o n 20,857 2,086

Net income 1,754 175

CABLE SECTOR

CUSTOMER STATISTICS

Net additions % of Penetration

(1)

November 30,

Quarters ended

November 30,

2008 2008 2007 2008 2007

RGU 2,769,588 52,714 83,024 – –

Basic Cable service customers

1,154,027 798 12,997 – –

HSI service customers

(2)

647,068 14,300 29,100 58.1 54.8

Digital Television service customers 489,815 23,617 16,253 43.0 47.3

Telephony service customers

(3)

478,678 13,999 24,674 45.9 42.5

(1)

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

(2)

Customers subscribing only to the HSI service totalled 84,730 as at November 30, 2008 compared to 79,499 at November 30, 2007.

(3)

Customers subscribing only to the Telephony service totalled 11,141 as at November 30, 2008 compared to 9,640 at November 30, 2007

In the cable sector, first-quarter RGU net additions were lower than for the same period last year and reflect an early sign

of maturation in some services. The number of net additions for Basic Cable stood at 798 customers compared to

12,997 customers for the same period last year. This decrease is primarily due to net customer losses in the European

operations reflecting a continuing unfavourable economic environment in the Iberian Peninsula, aggressive advertising

campaigns by competitors and the emergence of multiple triple-play service providers in the Portuguese market, net of

increases in Canadian operations stemming from continuous improvements to the service offering, targeted marketing

activities and an upswing in subscription activity in border markets due to the impending over-the-air digital conversion in

the United States. The number of net additions to HSI service stood at 14,300 customers compared to 29,100 customers

for the same period last year. The growth in HSI customer net additions continues to stem from the enhancement of the

product offering, the impact of the bundled offer (Cogeco Complete Connection) of Television, HSI and Telephony

services, and promotional activities in Canadian operations offset by net customer losses in European operations due to

the factors mentioned above. The Digital Television service net additions stood at 23,617 customers compared to 16,253

customers for the same period in the prior year due to targeted marketing initiatives in the second half of fiscal 2008 and

in 2009 to improve market penetration and to the continuing strong interest for the HD Television service in Canadian

operations, as well as the launch of the Digital Television service in Portugal in the third quarter of fiscal 2008. Telephony

customers grew by 13,999 to reach 478,678 compared to a growth of 24,674 for the same period last year. The lower

growth is mostly attributable to the increased penetration in areas where the service is already offered and to fewer new

areas where the service was launched in Canadian operations offset by net customer losses in European operations due

to the unfavourable economic environment. Telephony service coverage in Canada, as a percentage of homes passed,

has now reached 87% compared to 78% at November 30, 2007. The service is offered in all of the Company’s territories

in Portugal.

- 11 -

OPERATING RESULTS

Quarters ended November 30,

($000, except percentages) 2008 2007

(1)

Change

$ $ %

(unaudited) (unaudited)

Revenue 299,438 251,833 18.9

Operating costs 173,734 149,496 16.2

Management fees - COGECO Inc. 5,981 5,035 18.8

Operating income from contin ui ng op erati ons before amortization 119,723 97,302 23.0

Operating margin 40.0% 38.6%

(1)

Certain comp arati ve figur es have b een rec lassifi ed t o c onform to t he cur rent y ear’s present ation. Fi nanc ial inf ormat ion for the previous year h as b een r estate d to

reflect the termina tion of our investm ent in the TQS Group, w hich is no longer c onsolidated s ince December 18, 2007 (see note 1 4 to the conso lidated financ ial

statement), and to reflect the presentation of foreign exchange gains or losses as financial expense instead of operating costs.

Revenue

Fiscal 2009 first-quarter consolidated revenue improved by $47.6 million, or 18.9%, to reach $299.4 million. Driven by an

increased number of RGU combined with rate increases and the recent acquisitions in the second half to fiscal 2008,

2009 first-quarter Canadian operatio ns revenue went up by $41.1 million, or 21%.

Fiscal 2009 first-quarter European operations revenue increased by $6.5 million, or 11.6%, to reach $62.1 million

compared to the same period last year. The increase is essentially due to the strength of the Euro against the Canadian

dollar. Rate increases also generated highe r revenue despite a RGU loss in the first quarter.

Operating costs

For the first quarter of fiscal 2009, operating costs, excluding management fees payable to COGECO Inc., increased by

$24.2 million, or 16.2% compared to the prior year, to reach $173.7 million. Operating costs increased due to the servicing

of additional RGU and the impact of the recent acqui sitions in Canada.

Operating income before amortization

Operating income before amortization increased by $22.4 million, or 23%, to reach $119.7 million in the first quarter of

fiscal 2009, as a result of various rate increases, recent acquisitions, and RGU growth generating additional revenues

which outpaced operating cost increases. Cogeco Cable’s 2009 first-quarter operating margin increased to 40% from

38.6% for the same period of fiscal 2008. The operating margin in Canada increased for the first quarter of 2009 to 41.6%

compared to 40.7% and in Europe improved to 33.6% from 31.3% in the same period of the prior year.

UNCERTAINTIES AND M AIN RISK FACTORS

There has been no significant change in the uncertainties and main risk factors faced by the Company since

August 31, 2008, except as described below. A detailed description of the uncertainties and main risk factors faced by

COGECO can be found in the 2008 annual MD&A.

Cogeco Cable’s footprint includes certain regions in Ontario (Burlington and Windsor) and in Portugal (Palmela) where the

automobile industry is a significant driver of economic activity. The sharp downturn experienced by the automobile

industry in recent months may have an adverse impact on the level of economic activity and consumer expenditures on

goods and services within those communities. In previous recessionary periods, demand for cable telecommunications

services has generally proved to be resilient. However, there is no assurance that demand will remain resilient in a

prolonged global recession.

Despite Cogeco Cable’s strong balance sheet and the proactive management of debt maturities, the present situation in

financial markets and the credit crisis may result in reduced availability of capital in both the debt and equity markets in

the coming years. As Cogeco Cable’s current credit facilities and other sources of financing reach their respective

maturities, the terms of bank and other debt facilities may be less favourable upon renewal.

The Company is exposed to interest rate risks for both fixed interest rate and ﬂoating interest rate instruments.

- 12 -

Fluctuations in interest rates will have an effect on the valuation and the collection or repayment of these instruments

which could result in a significant impact on the Comp any’s financial expense.

The current volatility of currency exchange and interest rates in the financial markets is unusually high and could lead to

an increase in the level of risk on hedging instruments to which Cogeco Cable is a party should one or more of the

counterparts to these instruments become financially distressed and unable to meet their obligations.

ACCOUNTING POLICIES AND ESTIMATES

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

pronouncements since August 31, 2008, except as described below. A description of the Company’s policies and

estimates can be found in the 2008 annual MD&A.

Financial instruments

Effective September 1, 2008, the Company adopted the Canadian Institute of Chartered Accountants (“CICA”) Handbook

Section 1535, Capital Disclosures, Section 3862, Financial Instruments – Disclosures and Section 3863, Financial

Instruments – Presentation.

Capital disclosures

Section 1535 of the CICA Handbook requires that an entity disclose information that enables users of its financial

statements to evaluate the entity’s objectives, policies and processes for managing capital, including disclosures of any

externally imposed capital requirements and the consequences for non-compliance. These new disclosures are included

in note 13 of the Company’s interim consolidated financial statements.

Financial instruments

Section 3862 on financial instrument disclosures requires the disclosure of information about the significance of financial

instruments for the entity's financial position and performance and the nature and extent of risks arising from financial

instruments to which the entity is exposed during the period and at the balance sheet date, and how the entity manages

those risks.

Section 3863 establishes standards for presentation of financial instruments and non-financial derivatives. It deals with the

classification of financial instruments, fr om the perspective of the issuer, between liabilities and equities, the classification

of related interest, dividends, gains and losses, and circumstances in which financial assets and financial liabilities are

offset.

The adoption of these standards did not have any impact on the classification and measurements of the Company’s

financial instruments. The new disclosures pursuant to these new Sections are included in note 13 of the Company’s

interim consolidated financial statement s.

General standards of financial sta tement presentation

The CICA amended Section 1400 of the CICA Handbook, General Standards of Financial Statement Presentation, to

include a requirement for management to make an assessment of the entity’s ability to continue as a going concern when

preparing financial statements. These changes, including the related disclosure requirements, were adopted by the

Company on September 1, 2008 and had no impact on the interim consolidated financial statements.

FUTURE ACCOUNTING PRO NOUN CEMENTS

Harmonization of Canadian and International accounting standards

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

Canadian GAAP and effect a complete convergence to the International Financial Reporting Standards (“IFRS”) for

publicly accountable entities.

In April 2008, the CICA published an exposure draft as guidance which requires the transition to IFRS to replace

Canadian GAAP as currently employed by Canadian publicly accountable enterprises. The changeover will occur no later

than fiscal years beginning on or after January 1, 2011. Accordingly, the Company expects that its first interim

consolidated financial statements presented in accordance with IFRS will be for the three-month period ending

- 13 -

November 30, 2011, and its first annual consolidated financial statements presented in accordance with IFRS will be for

the year ending August 31, 2012.

IFRS uses a conceptual framework similar to Canadian GAAP, but there are significant differences in recognition,

measurement and disclosure requirements. As a result, the Company is developing a plan to convert its consolidated

financial statements to IFRS. The plan highlights the need to identify key accounting polic y changes as the first step in the

conversion process. Once these changes have been identified, other elements of the plan will be addressed. The

Company has selected an external advisor to assist with the project and is currently in the process of assessing the

differences between IFRS and the Company’s current accounting policies.

As implications of the conversion are identified, information technology and data system impacts as well as impacts on

business activities will be assessed. Changes in accounting policies are likely. These changes may materially impact the

Company’s consolidated financial statements. The conversion project is progressing according to the plan established by

management.

NON-GAAP FINANCI AL MEASURES

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

reconciliations between these non-GAAP measures and the most comparable GAAP financial measures. These financial

measures do not have standard definitions prescribed by Canadian GAAP and may not be comparable with similar

measures presented by other companies. These measures include “cash flow from operations from continuing

operations”, “free cash flow”, “operating income from contin uing operations before amortization” and “opera ting margin”.

Cash flow from operations from continuing operations and free cash flow

Cash flow from operations from continuing operations is used by COGECO’s management and investors to evaluate cash

flows generated by operating activities excluding the impact of changes in non-cash operating items. This allows the

Company to isolate the cash flows from operating activities from the impact of cash management decisions. Cash flow

from operations from continuing operations is subsequently used in calculating the non-GAAP measure “free cash flow”.

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

capital to its shareholders and finance its growth.

The most comparable Canadian GAAP financial measure is cash flow from operating activities from continuing

operations. Cash flow from operations from continuing operations is calculated as follows:

Quarters ended November 30,

($000) 2008 2007

(1)

$ $

(unaudited) (unaudited)

Cash flow from operating activities from continuing operations 30,470 46,604

Changes in non-cash operating items 65,156 34,773

Cash flow from operations from continuing operations 95,626 81,377

(1)

Certain comp arati ve figur es have b een rec lassifi ed t o c onform to t he cur rent y ear’s present ation. Fi nanc ial inf ormat ion for the previous year h as b een r estate d to

reflect the termina tion of our investm ent in the TQS Group, w hich is no longer c onsolidated s ince December 18, 2007 (see note 1 4 to the conso lidated financ ial

statement).

- 14 -

Free cash flow is calculated as follows:

Quarters ended November 30,

($000) 2008 2007

(1)

$ $

(unaudited) (unaudited)

Cash flow from operations from continuing operations 95,626 81,377

Acquisition of fixed assets (65,709) (50,813)

Increase in deferred charges (7,207) (7,517)

Assets acquired under capital leases – as per note 11 b) (939) (73)

Free cash flow 21,771 22,974

(1)

Certain comp arati ve figur es have b een rec lassifi ed t o c onform to t he cur rent y ear’s present ation. Fi nanc ial inf ormat ion for the previous year h as b een r estate d to

reflect the termina tion of our investm ent in the TQS Group, w hich is no longer c onsolidated s ince December 18, 2007 (see note 1 4 to the conso lidated financ ial

statement).

Operating income from continuing operation s before amortization and operating margin

Operating income from continuing operations before amortization is used by COGECO’s management and investors to

assess the Company’s ability to seize growth opportunities in a cost effective manner, to finance its ongoing operations

and to service its debt. Operating income from continuing operations before amortization 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

Company's revenue which is left over, before taxes, to pay for its fixed costs, such as interest on Indebtedness. Operating

margin is calculated by dividing operating income fro m continuing operations before amortization by revenu e.

The most comparable Canadian GAAP financial measure is operating income from continuing operations. Operating

income from continuing operations before amortization and operating margin are calculated as follows:

Quarters ended November 30,

($000, except percentages) 2008 2007

(1)

$ $

(unaudited) (unaudited)

Operating income from continuing operations 60,641 47,135

Amortization 64,063 53,039

Operating income from continuing operations before amortization 124,704 100,174

Revenue 308,375 260,255

Operating margin 40.4% 38.5%

(1)

Certain comp arati ve figur es have b een rec lassifi ed t o c onform to t he cur rent y ear’s present ation. Fi nanc ial inf ormat ion for the previous year h as b een r estate d to

reflect the termina tion of our investm ent in the TQS Group, w hich is no longer c onsolidated s ince December 18, 2007 (see note 1 4 to the conso lidated financ ial

statement), and to reflect the presentation of foreign exchange gains or losses as financial expense instead of operating costs.

ADDITIONAL INFORMATION

This MD&A was prepared on January 13, 2009. Additional information relating to the Company, including its Annual

Information Form, is available on the SEDAR website at www.sedar.com.

- 15 -

ABOUT COGECO

COGECO is a diversified communications company. Through its Cogeco Cable subsidiary, COGECO provides its

residential customers with Audio, Analogue and Digital Television, as well as HSI and Telephony services using its two-

way broadband cable networks. Cogeco Cable also provides, to its commercial customers, data networking, e-business

applications, video conferencing, hosting services, Ethernet, private line, VoIP, HSI access, dark fibre, data storage, date

security and co-location services and other advanced communication solutions. Through its Cogeco Diffusion subsidiary,

COGECO owns and operates the RYTHME FM radio stations in Montréal, Québec City, Trois-Rivières and Sherbrooke,

as well as the 93

station in Québec City. COGECO’s subordinate voting shares are listed on the Toronto Stock Exchange

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

– 30 –

Source: COGECO Inc.

Pierre Gagné

Vice President, Finance and Chief Financial Officer

Tel.: 514-764-4700

Information: Media

Marie Carrier

Director, Corporate Communications

Tel.: 514-764-4700

Analyst Conference Call: Wednesday, January 14, 2009 at 11:0 0 A.M. (EST)

Media representatives may attend as listeners only.

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

five minutes before the start of the conference:

Canada/USA Access Nu mber: 1 866-321-8231

International Access Number: + 1 416-642-5213

Confirmation Code: 4963066

By Internet at www.cogeco.ca/investors

A rebroadcast of the conference call will be available until January 19, by dialing:

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

International access number: + 1 647-436-0148

Confirmation code: 4963066

- 16 -

Supplementary Quarterly Financial Information

(unaudited)

Quarters ended November 30, August 31, May 31, February 29 / 28,

($000, except percentages and per

share data)

2008

2007

(1)

2008

(1)

2007

(1)

2008

(1)

2007

(1)

2008

(1)

2007

(1)

Revenue 308,375 260,255 292,873 251,300 283,878 249,424 271,894 238,378

Operating income from contin ui ng

operations before amortization

(2)

124,704 100,174 122,019 100,755 117,206 94,533 109,523 88,065

Operating margin

(2)

40.4% 38.5% 41.7% 40.1% 41.3% 37.9% 40.3% 36.9%

Amortization 64,063 53,039 61,775 54,723 58,564 47,725 56,346 44,018

Operating income from contin ui ng

operations 60,641 47,135 60,244 46,032 58,642 46,808 53,177 44,047

Financial expens e 23,778 16,333 19,066 19,084 17,748 20,345 17,550 24,502

Income taxes 9,848 9,277 9,849 (7,480)

10,285 8,055 (14,426) 4,233

Loss (gain) on dilution 26 107 19 (27,011)

3 64 (25) (30,990)

Non-controlling interest 15,936 13,762 21,559 24,240 21,068 13,318 33,763 9,647

Income from continuing operations 11,053 7,656 9,656 37,097 9,538 5,025 16,315 36,655

Loss from discontinued operations - (17,632)

– (6,713)

– (1,966) (425) (2,109)

Net income (l oss) 11,053 (9,976)

9,656 30,384 9,538 3,059 15,890 34,546

Cash flow from operations from

continuing operations

(2)

95,626 81,377 99,969 78,153 96,068 76,862 85,374 63,353

Cash flow from operating activities from

continuing operations 30,470 46,604 146,052 107,155 112,893 51,669 92,942 61,484

Free cash flow

(2)

21,771 22,974 20,981 9,131 37,107 19,052 19,374 10,461

Earnings (loss) per share

Basic

Income from continuing operations 0.66 0.46 0.58 2.23 0.57 0.30 0.98 2.21

Loss from discontinued operations – (1.06)

– (0.40)

– (0.12) (0.03) (0.13)

Net income (l oss) 0.66 (0.60)

0.58 1.83 0.57 0.18 0.95 2.08

Diluted

Income from continuing operations 0.66 0.46 0.58 2.21 0.57 0.30 0.97 2.20

Loss from discontinued operations – (1.06)

– (0.40)

– (0.12) (0.03) (0.13)

Net income (l oss) 0.66 (0.60)

0.58 1.81 0.57 0.18 0.95 2.07

(1)

Certain comparative figur es have been reclass ified to conform to th e current year’s pr esentation. F inancial informat ion for the fi rst quarter of fisca l 2008 and the

second through f ourth quarters of fiscal 2007 h as been restated to refle ct the termination of our investm ent in the TQS Group, which is no longer consolidated

since December 18, 2007 (see note 14 to the consolidated financial statement). Financial information for the four quarters of fiscal 2008 and second through

fourth quarters of fiscal 2007 reflects the presentation of foreign exchange gains or losses as financial expense instead of operating costs.

(2)

The indicated terms do not have standardiz ed def inition s prescr ibed by Canadia n Generally Acc epted Accounting Pri nciples (“GAAP ”) and therefo re, may not be

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

Management’s discussion and analysis.

The cable sector’s operating results are not generally subject to material seasonal ﬂuctuations. However, the loss in Basic

Cable service customers is usually greater, and the addition of HSI service customers is generally lower in the third

quarter, mainly because students leave their campus 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 Aveiro, Covilhã, Evora, Guarda and Coimbra in Portugal.

The radio activities’ operating results may be subject to signiﬁcant seasonal variations. Advertising revenue depends on

audience ratings and the market for radio advertising expenditures in the Province of Québec. Audience ratings may vary

due to a number of factors, including on-air personalities, programming content and promotional activities. Advertising

level may also vary due to many factors, including general economic and consumer retail market conditions and cycles.

Advertising sales, mainly for national advertising, are normally weaker in the second and fourth quarters and, accordingly,

the operating margin is generally lower in those quarters.

COGECO INC. - 17 -

Customer Statistics

November 30, August 31,

2008 2008

Homes Passe

Ontario

1 033 452 1 029 121

Québec 506 850 502 490

Canada 1 540 302 1 531 611

Portugal 900 328 895 923

Total 2 440 630 2 427 534

Revenue Generating Unit

Ontario 1 428 230 1 387 054

Québec 629 141 604 854

Canada 2 057 371 1 991 908

Portugal 712 217 724 966

Total 2 769 588 2 716 874

Basic Cable Service Customer

Ontario 601 511 596 229

Québec 264 416 260 865

Canada 865 927 857 094

Portugal 288 100 296 135

Total 1 154 027 1 153 229

Discretionnary Service Customer

Ontario 493 642 493 858

Québec 220 916 215 820

Canada 714 558 709 678

Portugal - -

Total 714 558 709 678

Pay TV Service Customer

Ontario 103 74

97 753

Québec 50 009 47 075

Canada 153 75

144 828

Portugal 59 398 57 715

Total 213 152 202 543

High Speed Internet Service Customer

Ontario 365 810 352 553

Québec 127 166 120 914

Canada 492 976 473 467

Portugal 154 092 159 301

Total 647 068 632 768

Digital Television Service Customers

Ontario 299 887 288 345

Québec 160 079 153 401

Canada 459 966 441 746

Portugal 29 849 24 452

Total 489 81

466 198

Telephony Service Customer

Ontario 161 022 149 927

Québec 77 480 69 674

Canada 238 502 219 601

Portugal 240 176 245 078

Total 478 678 464 679

- 18 -

COGECO INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

Three months ended November 30,

(In thousands of dollars, except per share data)

2008

2007

Revenue

308,375

260,255

Operating costs

183,671

160,081

Operating income from continuing operations before amortization

124,704

100,174

Amortization (note 3)

64,063

53,039

Operating income from continuing operations

60,641

47,135

Financial expense (note 4)

23,778

16,333

Income from continuing operations before income taxes and the following items

36,863

30,802

Income taxes (note 5)

9,848

9,277

Loss on dilution resulting from shares issued by a subsidiary

107

Non-controlling interest

15,936

13,762

Income from continuing operations

11,053

7,656

Loss from discontinued operations (note 14)

─

(17,632)

Net income (loss)

11,053

(9,976)

Earnings (loss) per share (note 6)

Basic

Income from continuing operations

0.66

0.46

Loss from discontinued operations

─

(1.06)

Net income (loss)

0.66

(0.60)

Diluted

Income from continuing operations

0.66

0.46

Loss from discontinued operations

─

(1.06)

Net income (loss)

0.66

(0.60)

- 19 -

COGECO INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

Three months ended November 30,

(In thousands of dollars)

2008

2007

Net income (loss)

11,053

(9,976)

Other comprehensive income

Unrealized gains (losses) on derivative financial instruments designated as cash flow hedges, net of

income taxes expense of $3,387,000 and non-controlling interest of $17,451,000 (income taxes

recovery of $1,143,000 and non-controlling interest of $4,500,000 in 2007)

8,338

(2,153)

Reclassification to net income of realized gains (losses) on derivative financial instruments

designated as cash flow hedges, net of income taxes expense of $4,323,000 and non-controlling

interest of $19,211,000 (income taxes recovery of $1,345,000 and non-controlling interest of

$4,792,000 in 2007)

(9,180)

2,293

Unrealized gains on translation of a net investment in self-sustaining foreign subsidiaries, net of non-

controlling interest of $4,114,000 ($6,994,000 in 2007)

1,966

3,346

Unrealized losses on translation of long-term debts designated as hedges of a net investment in self-

sustaining foreign subsidiaries, net of non-controlling interest of $2,273,000 ($4,313,000 in 2007)

(1,086)

(2,063)

1,423

Comprehensive income (loss)

11,091

(8,553)

- 20 -

COGECO INC.

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

(unaudited)

Three months ended November 30,

(In thousands of dollars) 2008 2007

$ $

Balance at beginning, as reported 295,808 274,946

Changes in accounting policies ─ 424

Balance at beginning, as restated 295,808 275,370

Net income (loss) 11,053 (9,976)

Dividends on multiple voting shares (147) (129)

Dividends on subordinate voting shares (1,192) (1,038)

Balance at end 305,522 264,227

- 21 -

COGECO INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(In thousands of dollars) November 30, 2008 August 31, 2008

$ $

Assets

Current

Cash and cash equivalents 34,505 37,472

Accounts receivable 68,220 64,910

Income taxes receivable 6,479 3,569

Prepaid expenses 11,944 13,271

Future income tax assets 5,378 8,661

126,526 127,883

Investments 739 739

Fixed assets 1,276,137 1,261,610

Deferred charges 58,864 57,841

Intangible assets (note 7) 1,113,006 1,116,382

Goodwill (note 7) 490,923 487,805

Derivative financial instruments 29,176 ─

Future income tax assets 6,089 7,221

3,101,460 3,059,481

Liabilities and Shareholders' equity

Liabilities

Current

Bank indebtedness 33,761 10,302

Accounts payable and accrued liabilities 215,129 259,038

Income tax liabilities 3,797 20,793

Deferred and prepaid income 33,180 32,859

Derivative financial instruments ─ 79,791

Current portion of long-term debt (note 8) 177,832 336,858

463,699 739,641

Long-term debt (note 8) 1,033,513 737,055

Deferred and prepaid income and other liabilities 12,767 11,859

Pension plan liabilities and accrued employees benefits 10,220 9,645

Future income tax liabilities 253,945 256,307

Non-controlling interest 896,428 883,948

2,670,572 2,638,455

Shareholders' equity

Capital stock (note 9) 120,049 120,049

Treasury shares (note 9) (1,522) (1,522)

Contributed surplus 1,837 1,727

Retained earnings 305,522 295,808

Accumulated other comprehensive income (note 10) 5,002 4,964

430,888 421,026

3,101,460 3,059,481

- 22 -

COGECO INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Three months ended November 30,

(In thousands of dollars)

2008 2007

$ $

Cash flow from operating activities

Income from continuing operations 11,053 7,656

Adjustments for:

Amortization (note 3)

64,063 53,039

Amortization of deferred transaction costs

717 722

Future income taxes (note 5)

2,824 5,178

Non-controlling interest

15,936 13,762

Loss on dilution resulting from shares issued by a subsidiary

26 107

Stock-based compensation

89 388

Loss on disposal of fixed assets

223 342

Other

695 183

95,626 81,377

Changes in non-cash operating items (note 11 a)) (65,156) (34,773)

Cash flow from operating activities from continuing operations 30,470 46,604

Cash flow from operating activities from discontinued operations (note 14) ─ (5,743)

30,470 40,861

Cash flow from investing activities

Acquisition of fixed assets (note 11 b)) (65,709) (50,813)

Increase in deferred charges (7,207) (7,517)

Other 16 1

Cash flow from investing activities from continuing operations (72,900) (58,329)

Cash flow from investing activities from discontinued operations (note 14) ─ (85)

(72,900) (58,414)

Cash flow from financing activities

Increase in bank indebtedness 23,459 206

Increase in long-term debt, net of transaction costs 277,457 51

Repayment of long-term debt (257,139) (34,663)

Acquisition of treasury shares ─ (468)

Dividends on multiple voting shares (147) (129)

Dividends on subordinate voting shares (1,192) (1,038)

Issue of shares by a subsidiary to non-controlling interest 278 3,056

Dividends paid by a subsidiary to non-controlling interest (3,940) (3,272)

Cash flow from financing activities from continuing operations 38,776 (36,257)

Cash flow from financing activities from discontinued operations (note 14) ─ 5,828

38,776 (30,429)

Effect of exchange rate changes on cash and cash equivalents denominated in foreign currencies 687 (153)

Net change in cash and cash equivalents (2,967) (48,135)

Cash and cash equivalents at beginning 37,472 66,279

Cash and cash equivalents at end 34,505 18,144

See supplemental cash flow information in note 11.

- 23 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

1. Basis of Presentation

In the opinion of management, the accompanying unaudited interim consolidated financial statements, prepared in

accordance with Canadian generally accepted accounting principles, present fairly the financial position of

COGECO Inc. (“the Company”) as at November 30, 2008 and August 31, 2008 as well as its results of operations and

its cash flows for the three month periods ended November 30, 2008 and 2007.

While management believes that the disclosures presented are adequate, these unaudited interim consolidated

financial statements and notes should be read in conjunction with COGECO Inc.’s annual consolidated financial

statements for the year ended August 31, 2008. These unaudited interim consolidated financial statements follow the

same accounting policies as the most recent annual consolidated financial statements, except for the adoption of the

new accounting policies described below.

Financial instrume nts

Effective September 1, 2008, the Company adopted the Canadian Institute of Chartered Accountants (“CICA”)

Handbook Section 1535, Capital Disclosures, Section 3862, Financial Instruments – Disclosures and Section 3863,

Financial Instruments – Presentation.

Capital disclosures

Section 1535 of the CICA Handbook requires that an entity disclose information that enables users of its financial

statements to evaluate the entity’s objectives, policies and processes for managing capital, including disclosures of

any externally imposed capital requirements and the consequences for non-compliance. These new disclosures are

included in note 13.

Financial instruments

Section 3862 on financial instrument disclosures requires the disclosure of information about the significance of

financial instruments for the entity's financial position and performance and the nature and extent of risks arising from

financial instruments to which the entity is exposed during the period and at the balance sheet date, and how the

entity manages those risks.

Section 3863 establishes standards for presentation of financial instruments and non-financial derivatives. It deals

with the classification of financial instruments, from the perspective of the issuer, between liabilities and equities, the

classification of related interest, dividends, gains and losses, and circumstances in which financial assets and

financial liabilities are offset.

The adoption of these standards did not have any impact on the classification and measurements of the Company’s

financial instruments. The new disclosures pursuant to these new Sections are included in note 13.

General standards of financial statement presentation

The CICA amended Section 1400 of the CICA Handbook, General Standards of Financial Statement Presentation, to

include a requirement for management to make an assessment of the entity’s ability to continue as a going concern

when preparing financial statements. These changes, including the related disclosure requirements, were adopted by

the Company on September 1, 200 8 and had no impact on the consolidated financial statements.

- 24 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

2. Segmented Information

The principal financi al information per business segment is pre se nted in the tables below:

Cable Other

(1)

Consolidated

Three months ended November 30, 2008

2007

2008

2007

2008

2007

Revenue 299,438

251,833

8,937

8,422

308,375

260,255

Operating costs 179,715

154,531

3,956

5,550

183,671

160,081

Operating income from continuing

operations before amortization

119,723

97,302

4,981

2,872

124,704

100,174

Amortization 63,922

52,687

141

352

64,063

53,039

Operating income from continuing

operations

55,801

44,615

4,840

2,520

60,641

47,135

Financial expense 23,394

15,877

384

456

23,778

16,333

Income taxes 8,856

8,375

992

902

9,848

9,277

Loss on dilution resulting from shares

issued by a subsidiary

─

107

Non-controlling interest ─

─

15,936

13,762

15,936

13,762

Income (loss) from continuing operations 23,551

20,363

(12,498)

(12,707)

11,053

7,656

Loss from discontinued operations ─

─

(17,632)

─

(17,632)

Total assets

(2)

3,059,451

3,019,155

42,009

40,326

3,101,460

3,059,481

Fixed assets

(2)

1,272,586

1,257,965

3,551

3,645

1,276,137

1,261,610

Intangible assets

(2)

1,087,666

1,091,042

25,340

1,113,006

1,116,382

Goodwill

(2)

490,923

487,805

─

490,923

487,805

Acquisition of fixed assets

(3)

66,606

50,727

159

66,648

50,886

(1)

Includes radio operations, head office activities and eliminations.

(2)

At November 30, 2008 and August 31, 2008.

(3)

Includes capital leases that are excluded from the consolidated statements of cash flows.

- 25 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

2. Segmented Information (continued)

The following tables set out certain geog raphic market information based on client location:

Three months ended November 30,

2008 2007

$ $

Revenue

Canada 246,311 204,663

Europe 62,064 55,592

308,375 260,255

November 30, 2008 August 31, 2008

$ $

Fixed assets

Canada 963,578 944,328

Europe 312,559 317,282

1,276,137 1,261,610

Intangible assets

Canada 1,051,414 1,052,608

Europe 61,592 63,774

1,113,006 1,116,382

Goodwill

Canada 116,890 116,890

Europe 374,033 370,915

490,923 487,805

3. Amortization

Three months ended November 30,

2008 2007

$ $

Fixed assets 54,406 45,022

Deferred charges 5,788 5,574

Intangible assets 3,869 2,443

64,063 53,039

- 26 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

4. Financial expense

Three months ended November 30,

2008 2007

$ $

Interest on long-term debt 20,270 16,843

Foreign exchange losses (gains) 3,784 (1,035)

Amortization of deferred transaction costs 407 407

Other (683) 118

23,778 16,333

5. Income Taxes

Three months ended November 30,

2008 2007

$ $

Current 7,024 4,099

Future 2,824 5,178

9,848 9,277

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

consolidated income tax expen se:

Three months ended November 30,

2008 2007

$ $

Income before income taxes 36,863 30,802

Combined income tax rate 32.46% 34.03 %

Income taxes at combined income tax rate 11,966 10,481

Adjustments for loss or income subject to lower or higher tax rates

(194) (387)

Income taxes arising from non-deductible expenses 117 124

Effect of foreign income tax rate differences (1,604) (1,164)

Other (437) 223

Income taxes at effective income tax rate 9,848 9,277

- 27 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

6. Earnings (Loss) per Share

The following table provides a reconciliation between basic and diluted earnings (loss) per share:

Three months ended November 30,

2008 2007

$ $

Income from continuing operations 11,053 7,656

Loss from discontinued operations ─ (17,632)

Net income (loss) 11,053 (9,976)

Weighted average number of multiple voting and subordinate voting shares outstanding 16,740,446 16,672,652

Effect of dilutive stock options

(1)

20,386 ─

Weighted average number of diluted multiple voting and subordinate voting shares outstanding 16,761,832 16,672,652

Earnings (loss) per share

Basic

Income from continuing operations 0.66 0.46

Loss from discontinued operations ─ (1.06)

Net income (loss) 0.66 (0.60)

Diluted

Income from continuing operations 0.66 0.46

Loss from discontinued operations ─ (1.06)

Net income (loss) 0.66 (0.60)

(1)

For the three month period ended November 30, 2008, 32,782 stock options (36,443 in 2007) were excluded from the calculation of diluted earnings per

share as the exercise price of the options was greater than the average share price of the subordinate voting shares. The weighted average dilutive number

of subordinate voting shares, which were anti-dilutive for the three month period ended November 30, 2007, amounted to 82,154.

- 28 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

7. Goodwill and Other Intangible Assets

November 30, 2008 August 31, 2008

$ $

Customer relationships 98,114 101,490

Broadcasting licenses

25,120 25,120

Customer base

989,772 989,772

1,113,006 1,116,382

Goodwill

490,923 487,805

1,603,929 1,604,187

a) Intangible assets

During the first three months, intangible assets variations were as follows:

Customer

relationships

Broadcasting

licenses

Customer

Base

Total

$ $ $ $

Balance as at August 31, 2008 101,490 25,120 989,772 1,116,382

Amortization (3,869) ─ ─ (3,869)

Foreign currency translation adjustment 493 ─ ─ 493

Balance as at November 30, 2008 98,114 25,120 989,772 1,113,006

b) Goodwill

During the first three months, goodwill variation was as follows:

Balance as at August 31, 2008 487,805

Foreign currency translation adjustment 3,118

Balance as at November 30, 2008 490,923

- 29 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

8. Long-Term Debt

Maturity Interest rate November 30, 2008 August 31, 2008

% $ $

Parent company

Term Facility 2011

(1)

4.68

(2)

15,814 18,748

Obligations under capital leases 2010 6.49 – 6.61 69 77

Subsidiaries

Term Facility

Term loan – €94,096,350 2011 5.94

(2)

147,166 145,832

Term loan – €17,358,700 2011 5.94

(2)

27,108 26,881

Revolving loan – €117,000,000 (€126,000,000 as at August 31, 2008) 2011 5.81

(2)

183,819 196,308

Revolving loan 2011 3.62

(2)

116,980 94,375

Senior Secured Debentures Series 1 2009 6.75 149,873 149,814

Senior Secured Notes

Series A – US$150 million 2008 6.83

(3)

─ 159,233

Series B 2011 7.73 174,386 174,338

Senior Secured Notes

(4)

Series A – US$190 million 2015 7.00 233,417 ─

Series B 2018 7.60 54,552 ─

Senior Unsecured Debenture 2018 5.94 99,772 99,768

Obligations under capital leases 2013 6.42 – 8.30 8,347 8,492

Other ─ ─ 42 47

1,211,345 1,073,913

Less current portion 177,832 336,858

1,033,513 737,055

(1)

In December 2008, the Term Facility has been extended for an additional year.

(2)

Average interest rate on debt as at November 30, 2008, including stamping fees.

(3)

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

Company’s subsidiary, Cogeco Cable Inc.

(4)

On October 1, 2008, the Company’s subsidiary, Cogeco Cable Inc., issued US$190 million Senior Secured Notes Series A maturing October 1, 2015, and

$55 million Senior Secured Notes Series B maturing October 1, 2018, net of transaction costs of $2.1 million. The Senior Secured Notes Series B bear

interest at the coupon rate of 7.60% per annum, payable semi-annually. The Company’s subsidiary has entered into cross-currency swap agreements to fix

the liability for interest and principal payments on the Senior Secured Notes Series A in the amount of US$190 million, which bear interest at the coupon rate

of 7.00% per annum, payable semi-annually. Taking into account these agreements, the effective interest rate on the Senior Secured Notes Series A is 7.24%

and the exchange rate applicable to the principal portion of the US dollar-denominated debt has been fixed at $1.0625.

- 30 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

9. Capital Stock

Authorized, an unlimited number

Preferred shares of first and second rank, issuable in series and non-voting, except when specified in the Articles of

Incorporation of the Company or in the Law.

Multiple voting shares, 20 votes per share.

Subordinate voting share, 1 vote per share.

November 30, 2008 August 31, 2008

$ $

Issued

1,842,860 multiple voting shares 12 12

14,897,586 subordinate voting shares 120,037 120,037

120,049 120,049

Stock-based plans

The Company offers, for the benefit of its employees and those of its subsidiaries, an Employee Stock Purchase Plan

and a Stock Option Plan for certain executives, which are described in the Company’s annual consolidated financial

statements. During the first quarter of 2009 and 2008, no stock options were granted to employees by COGECO Inc.

However, the Company’s subsidiary, Cogeco Cable Inc., granted 133,381 stock options (97,214 in 2007) with an

exercise price of $34.46 ($49.82 in 2007), of which 29,711 stock options (22,683 in 2007) were granted to COGECO

Inc.’s employees. The Company records compensation expense for options granted on or after September 1, 2003.

As a result, a compensation expense of $101,000 ($320,000 in 2007) was recorded for the three month period ended

November 30, 2008.

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

ended November 30, 2008 was $8.96 ($12.88 in 2007) per option. The fair value was estimated at the grant date for

purposes of determining the stock-based compensation expense using the binomial option pricing model based on

the following assumptions:

2008 2007

% %

Expected dividend yield

1.40 0.90

Expected volatility

29 27

Risk-free interest rate

4.22 4.25

Expected life in years

4.0 4.0

- 31 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

9. Capital Stock (continued)

At November 30, 2008, the Company had outstanding stock options providing for the subscription of 123,358

subordinate voting shares. These stock options can be exercised at various prices ranging from $20.95 to $37.50 and

at various dates up to October 1 9, 2011.

The Company also offers a senior executives and designated employee incentive unit plan (the “Incentive Share Unit

Plan”) which is described in the Company’s annual consolidated financial statements. During the first quarter, the

Company granted 17,702 Incentive Share Units (12,852 in 2007). These shares were purchased in December 2008

for a cash consideration of $326,000 ($468,000 in 2007) and are held in trust for participants until they are completely

vested. The trust, considered as a variable interest entity, is consolidated in the Company’s financial statements with

the value of the acquired shares presented as treasury shares in reduction of capital stock. A compensation expense

of $108,000 ($68,000 in 2007) was recorded for the three month period ended November 30, 2008 related to this

plan.

The Company and its subsidiary, Cogeco Cable Inc., offer deferred share unit plans (“DSU Plans”) which are

described in the Company’s annual consolidated financial statements. During the first quarter, the Company and its

subsidiary did not award any deferred share unit to the participants in connection with the DSU Plans. A reduction of

$120,000 was recorded for the three month period ended November 30, 2008 for the liabilities related to these plans.

10. Accumulated Other Comprehensive Income

Translation of a net

investment in self-

sustaining foreign

subsidiaries

Cash flow hedges

Total

$ $ $

Balance as at August 31, 2008 5,064 (100) 4,964

Other comprehensive income 880 (842) 38

Balance as at November 2008 5,944 (942) 5,002

- 32 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

11. Statements of Cash Flows

a) Changes in non-cash operating items

Three months ended November 30,

2008 2007

$ $

Accounts receivable (3,189) (1,899)

Income taxes receivable (2,885) 827

Prepaid expenses 1,337 1,836

Accounts payable and accrued liabilities (44,644) (38,794)

Income tax liabilities (17,001) 2,282

Deferred and prepaid income and other liabilities 1,226 975

(65,156) (34,773)

b) Other information

Three months ended November 30,

2008 2007

$ $

Fixed asset acquisitions through capital leases 939 73

Interest paid 21,751 21,194

Income taxes paid 26,916 478

12. Employees Future Benefits

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

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

Company’s annual con solidated financial statements. The total expenses related to these plans are as follows:

Three months ended November 30,

2008 2007

$ $

Contributory defined benefit pension plans 747 658

Defined contribution pension plan and collective registered retirement savings plans 923 708

1,670 1,366

- 33 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

13. Financial and Capital Management

a) Financial management

Management’s objectives are to protect COGECO Inc. and its subsidiaries against material economic exposures and

variability of results and against certain financial risks including credit risk, liquidity risk, interest rate risk and foreign

exchange risk.

Credit risk

Credit risk represents the risk of financial loss for the Company if a customer or counterpart to a financial asset fails to

meet its contractual obligations. The Company is exposed to credit risk arising from the derivative financial

instruments, cash equivalents and trade accounts receivable, the maximum exposure of which is represented by the

carrying amounts reported on the balance sheet.

Credit risk from the derivative financial instruments arises from the possibility that counterparts to the cross-currency

swap agreements may default on their obligations in instances where these agreements have positive fair values for

the Company. The Company reduces this risk by completing transactions with financial institutions that carry a credit

rating equal to or superior to its own credit rating. The Company assesses the creditworthiness of the counterparts in

order to minimize the risk of counterparts default under the agreements. At November 30, 2008, management

believes that the credit risk relating to cross-currency swaps is minimal, since the lowest credit rating of the

counterparts to the agreements is A

–

Cash equivalents consist mainly of highly liquid investments, such as money market deposits. The Company has

deposited the cash equivalents with reputable financial institutions, from which management believes the risk of loss

to be remote.

The Company is also exposed to credit risk in relation to its trade accounts receivable. The Company continuously

monitors the financial condition of its customers and reviews the credit history or worthiness of each new major

customer. At November 30, 2008, no customer balance represents a significant portion of the Company’s

consolidated trade receivables. The Company 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 Company believes that its allowance for doubtful accounts is

sufficient to cover the related credit risk. The Company 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 Company has a large and diversified clientele dispersed throughout Canada and Portugal,

there is no significant concentration of credit risk. The following table provides further details on the Company’s

accounts receivable balances:

November 30, 2008 August 31, 2008

$ $

Trade accounts receivable 77,185 73,160

Allowance for doubtful accounts

(15,144) (13,181)

62,041 59,979

Other accounts receivable

6,179 4,931

68,220 64,910

- 34 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

13. Financial and Capital Management (continued)

The following table provides further details on trade accounts receivable, net of allowance for doubtful accounts.

Trade accounts receivable past due is defined as amount outstanding beyond normal credit terms and conditions for

the respective customers. A large portion of Cogeco Cable Inc.’s customers are billed in advance and are required to

pay before their services are rendered. The Company considers amount outstanding at the due date as trade

accounts receivable past due.

November 30, 2008 August 31, 2008

$ $

Net trade accounts receivable not past due 43,997 43,659

Net trade accounts receivable past due

18,044 16,320

62,041 59,979

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The

Company 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 November 30, 2008, the available amount of the Company’s Term

Facilities was $404.9 million. Management believes that the committed Term Facilities will, until their maturities in July

2011 and December 2011, provide sufficient liquidity to manage its long-term debt maturities and support working

capital requirements.

The following table summarizes the contractual maturities of the financial liabilities and related capital amo unts:

2009 2010 2011 2012 2013 Thereafter Total

$ $ $ $ $ $ $

Bank indebtedness 33,761 − − − − − 33,761

Accounts payable and accrued liabilities 215,129 − − − − − 215,129

Long-term debt

(1)

174,657 41,089 410,221 191,000 − 390,030 1,206,997

Derivative financial instruments

Cash outflows (Canadian dollar) − − − − − 201,875 201,875

Cash inflows (Canadian dollar

equivalent of US dollar)

− − − − − (235,030) (235,030)

Obligations under capital leases

(2)

2,961 3,178 1,929 1,195 25 − 9,288

426,508 44,267 412,150 192,195 25 356,875 1,432,020

(1)

Principal excluding obligations under capital leases.

(2)

Including interest.

- 35 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

13. Financial and Capital Management (continued)

The following table is a summary of interest payable on long-term debt (excluding interest on capital leases) that are

due for each of the next five years and thereafter, based on the current debt at November 30, 2008 and their

respective maturities:

2009 2010 2011 2012 2013 Thereafter Total

$ $ $ $ $ $ $

Interest payments on long-term debt 54,559 64,492 60,472 29,040 26,568 82,236 317,367

Interest payments on derivative

financial instruments

10,960 14,614 14,614 14,614 14,614 30,445 99,861

Interest receipts on derivative financial

instruments

(12,339) (16,452) (16,452) (16,452) (16,452) (34,275) (112,422)

53,180 62,654 58,634 27,202 24,730 78,406 304,806

Interest rate risk

The Company is exposed to interest rate risks for both fixed interest rate and ﬂoating interest rate instruments.

Fluctuations in interest rates will have an effect on the valuation and collection or repayment of these instruments. At

November 30, 2008, all of the Company’s long-term debt was at fixed rate, except for the Company’s Term Facilities.

The sensitivity of the Company’s annual financial expense to a variation of 1% in the interest rate applicable to the

Term Facilities is approximately $4.9 million based on the cu rrent debt at November 30, 2008.

Foreign exchange risk

The Company is exposed to foreign exchange risk related to its long-term debt denominated in US dollars. In order to

mitigate this risk, the Company has established guidelines whereby currency swap agreemen ts 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 Company’s subsidiary, Cogeco Cable Inc., entered into

cross-currency swap agreements to set the liability for interest and principal payments on its US$190 million Senior

Secured Notes Series A issued on October 1, 2008. These agreements have the effect of converting the US interest

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

applicable to the principal portio n of the debt has been fixed at $1.0625.

The Company is also exposed to foreign exchange risk on cash and cash equivalents, bank indebtedness and

accounts payable denominated in US dollars or Euros. At November 30, 2008, cash and cash equivalents

denominated in US dollars amounted to US$240,000 (bank indebtedness of US$286,000 as at August 31, 2008)

while accounts payable denominated in US dollars amounted to US$9,946,000 (US$16,121,000 as at August 31,

2008). At November 30, 2008, Euro-denominated cash and cash equivalents amounted to €670,000 (€219,000 as at

August 31, 2008) while accounts payable denominated in Euros amounted to €1,767,000 (€163,000 as at August 31,

2008). Due to their short-term nature, the risk arising from fluctuations in foreign exchange rates is usually not

significant, except for the unusual high volatility of the US dollar compared to the Canadian dollar during the first three

months of fiscal 2009. During the three month period ended November 30, 2008, the exchange rate increased from

$1.0620 at September 1, 2008, to $1.2370 at November 30, 2008, reaching a maximum of $1.2935 on November 20,

2008. The impact of a 10% change in the foreign exchange rates (US dollar and Euros) would change financial

expense by approximately $1.4 million.

- 36 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

13. Financial and Capital Management (continued)

Furthermore, the Company’s net investment in self-sustaining foreign subsidiaries is exposed to market risk

attributable to fluctuations in foreign currency exchange rates, primarily changes in the values of the Canadian dollar

versus the Euro. This risk is mitigated since the major part of the purchase price for Cabovisão-Televisão por Cabo,

S.A. was borrowed directly in Euros. At November 30, 2008, the net investment amounted to €437,051,000

(€446,051,000 as at August 31, 2008) while long-term debt denominated in Euros amounted to €228,455,000

(€237,455,000 as at August 31, 2008). The exchange rate used to convert the Euro currency into Canadian dollars for

the balance sheet accounts at November 30, 2008 was $1.5711 per Euro compared to $1.5580 per Euro at August

31, 2008. The impact of a 10% change in the exchange rate of the Euro into Canadian dollars would change financial

expense by approximately $2.1 million and other comprehensive income by approximately $10.6 million.

Fair value

Fair value is the amount at which willing parties would accept to exchange a financial instrument based on the current

market for instruments with the same risk, principal and remaining maturity. Fair values are estimated at a specific

point in time, by discounting expected cash flows at rates for debts of the same remaining maturities and conditions.

These estimates are subjective in nature and involve uncertainties and matters of significant judgement, and

therefore, cannot be determined with precision. In addition, income taxes and other expenses that would be incurred

on disposition of these financial instruments are not reflected in the fair values. As a result, the fair values are not

necessarily the net amounts that would be realized if these instruments were settled. The carrying value of all of the

Company’s financial instru ments approximates fair value, except as otherwise noted in the following table.

November 30, 2008 August 31, 2008

Carrying value

Fair value Carrying value Fair value

Long-term debt 1,211,345 1,169,090 1,073,913 1,068,469

b) Capital management

The Company’s objectives in managing capital are to ensure su fficient liquidity to support the capital requirements of

its various businesses, including growth opportunities. The Company manages its capital structure and makes

adjustments in light of general economic conditions, the risk characteristics of the underlying assets and the

Company’s working capital requirements. Management of the capital structure involves the issuance of new debt, the

repayment of existing debts using cash g enerated by operations and the level of distribution to shareholders.

The capital structure of the Company is composed of shareholders’ equity, bank indebtedness, long-term debt and

assets or liabilities related to derivative financial instru ments.

The provisions under the Term Facilities provide for restrictions on the operations and activities of the Company.

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 the operating

income before amortization, financial expense and total Indebtedness. At November 30, 2008, the Company was in

compliance with all debt covenants a nd was not subject to any other externally imposed capital requirements.

- 37 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

13. Financial and Capital Management (continued)

The following table summarizes certain of the key ratios used to monitor and manage the Company’s capital structure:

November 30, 2008 August 31, 2008

Net indebtedness

(1)

/ Shareholders’ equity 2.7 2.7

Net indebtedness

(1)

/ Operating income before amortization

(2)

2.5 2.5

Operating income before amortization / Financial expense

5.2 6.3

(1)

Net indebtedness is defined as the total of bank indebtedness, long-term debt and derivative financial instrument liability, less cash and cash equivalents and

assets related to derivative financial instruments.

(2)

Calculation based on operating income before amortization for the last twelve month period ended November 30, 2008.

14. Discontinued Operations

In October 2007, the Board of Directors of TQS, an indirect subsidiary of the Company, engaged CIBC World Markets

to advise on and assess strategic options for the TQS network in the face of financial difficulties. On December 18,

2007, the Québec Superior Court issued an order under the Companies’ Creditors Arrangement Act (Canada)

protecting TQS, its subsidiaries and its parent 3947424 Canada Inc. (“TQS Gr oup”) from claims by their creditors. On

June 26, 2008, the Canadian Radio-television and Telecommunications Commission (“CRTC”) approved the

proposed transfer of ownership and control of TQS to Remstar Corporation Inc. (“Remstar”) and on August 29, 2008,

the transfer of ownership and control of TQS to Remstar was completed, which allowed the new ownership group to

pursue the broadcasting activities of TQS.

Effective December 18, 2007, the Company has ceased to consolidate the financial statements of the TQS Group.

Accordingly, the results of operations and cash flows for the three month period ended November 30, 2007, has been

reclassified as disco ntinued operations. The results of the discontin ued operations were as follows:

Three months ended November 30,

2008 2007

$ $

Revenue

─

32,758

Operating costs

─

29,957

Operating income before amortization

─

2,801

Amortization

─

1,116

Operating income

─

1,685

Financial expense

─

238

Impairment of assets

─

30,298

Loss before income taxes and the following items

─

(28,851)

Income taxes

─

Non-controlling interest

─

11,219

Loss from discontinued operations

─

(17,632)

- 38 -

COGECO INC.

Notes to Consolidated Financial Statements

November 30, 2008

(unaudited)

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

15. Comparative figures

Certain comparative figures have been reclassified to conform to the current year’s presentation. Financial information

for the previous year has been restated to reflect the termination of our investment in the TQS Group, which is no

longer consolidated since December 18, 2007 (see note 14), and to reflect the reclassification of foreign exchange

gains or losses from operating co sts to financial expense.