Mr. Louis Audet reports

COGECO REPORTS STRONG RESULTS FOR THE THIRD QUARTER OF FISCAL 2014

Cogeco Inc. has released its financial results for the third quarter of fiscal 2014, ended May 31, 2014, in accordance with international financial reporting standards.

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

Third quarter revenue increased by $31.6-million, or 6.3 per cent, to reach $536.1-million mainly driven by growth in the cable segment through the organic growth from all of the company's operating segments, as well as favourable foreign exchange rates in the company's foreign operations. For the nine-month period ended May 31, 2014, revenue reached close to $1.6-billion, an increase of $242.0-million or 18.2 per cent. Revenue increase is mainly attributable to the full-year impact of the acquisitions, in the cable segment, of Atlantic Broadband and Peer 1 Hosting (2), which both occurred during fiscal 2013, combined with the organic growth from all of the company's operating segments and the favourable foreign exchange rates in the company's foreign operations.

Adjusted earnings before interest, taxes, depreciation and amortization (1) increased by 5.5 per cent to $233.1-million compared with the third quarter of fiscal 2013 and by 18.3 per cent to $678.9-million for the first nine months when compared with the same period of the prior year. The rapid progression for both periods resulted mainly from the recent acquisitions and the organic growth, as well as the favourable foreign exchange rates from the company's foreign operations compared with the same period of last year.

During the third quarter of fiscal 2014, the corporation's indirect cable subsidiary, Cogeco Cable Canada, recognized an impairment of $32.2-million of property, plant and equipment, capitalized wages, and borrowing costs related to an Internet protocol television solution project, on which its Canadian operations had worked. As a result of the unexpected performance issues encountered with the platform, it had to be abandoned by Cogeco Cable Canada.

Subsequently, to enhance its competitiveness, the Cogeco Cable Canada subsidiary has concluded a partnership with TiVo Inc., a global leader in next-generation television services that enable viewers to consume content across all screens in and out of the home to be launched at Cogeco Cable Canada by mid-fiscal 2015. The TiVo solution was launched in the first half of fiscal 2014 at Cogeco Cable's subsidiary Atlantic Broadband with great customer acceptance.

Profit for the third quarter amounted to $35.6-million, of which $11.5-million, or 69 cents per share, is attributable to owners of the corporation compared with profit of $50.0-million for the same period in fiscal 2013 of which $17.2-million, or $1.03 per share, is attributable to owners of the corporation. The decline for the quarter is attributable to the impairment of property, plant and equipment explained herein, partly offset by the improvement of the adjusted EBITDA. For the first nine months of fiscal 2014, profit for the period amounted to $150.9-million, of which $51.9-million, or $3.10 per share, is attributable to owners of the corporation compared with profit for the period of $146.1-million for the first nine months of fiscal 2013, of which $50.4-million, or $3.01 per share, is attributable to owners of the corporation. Profit progression for the period is mostly attributable to the improvement of the cable segment's adjusted EBITDA stemming from the recent acquisitions and organic growth, as well as the decrease in integration, restructuring and acquisition costs, partly offset by the impairment of property, plant and equipment explained herein, as well as the increases in financial expense and depreciation and amortization expense essentially related to the recent acquisitions.

Third quarter free cash flow (1) reached $91.5-million compared with $44.7-million in the comparable quarter of the prior year. This increase is mainly due to the improvement of adjusted EBITDA explained herein and the decrease in acquisitions of property, plant and equipment due to the timing of certain initiatives. For the nine-month period, free cash flow amounted to $255.6-million, compared with $97.1-million for the same period of fiscal 2013. The increase is mostly attributable to the improvement of adjusted EBITDA and the decrease in acquisitions of property, plant and equipment due to the timing of certain initiatives, as well as the decrease in integration, restructuring and acquisition costs, partly offset by the increase in financial expense as a result of higher indebtedness level from the recent acquisitions.

Third quarter fiscal 2014 cash flow from operating activities reached $184.7-million compared with $167.6-million, an increase of $17.1-million or 10.2 per cent, compared with the same period of the prior year. The increase is mainly attributable to the improvement of the adjusted EBITDA and the increase in non-cash operating activities, partly offset by the increase in financial expense paid. For the first nine months of fiscal 2014, cash flow from operating activities reached $432.6-million compared with $318.7-million, an increase of $113.8-million, or 35.7 per cent, compared with the same period in fiscal 2013. The increase is mainly attributable to the improvement of the adjusted EBITDA, as well as the decreases in integration, restructuring and acquisition costs and income taxes paid, partly offset by the increase in financial expense paid.

A quarterly dividend of 22 cents per share was paid to the holders of subordinate and multiple voting shares, an increase of three cents per share, or 15.8 per cent, when compared with a dividend of 19 cents per share paid in the third quarter of fiscal 2013. Dividend payments in the first nine months totalled 66 cents per share in fiscal 2014, compared with 57 cents per share in fiscal 2013.

On March 5, 2014, the corporation completed, pursuant to a private placement, the issuance of $50-million of senior unsecured notes for net proceeds of $48.7-million, net of transaction costs of approximately $1.3-million. These unsecured notes bear interest at 6.00 per cent per annum payable semi-annually and mature on March 5, 2020. The net proceeds of the senior unsecured notes were used to reimburse a portion of the corporation's term revolving facility of $100-million, which facility was consequently reduced to $50-million.

"I am happy to report that Cogeco has generated solid financial results for its third quarter of 2014. The cable segment continues to grow, and most of our performance indicators are on target with our objectives. These solid results demonstrate that, with strong cost controls and a dynamic marketing strategy, Cogeco Cable continues to grow in this highly competitive industry," declared Louis Audet, president and chief executive officer of Cogeco.

"Moreover, I am delighted that we were able to build on the success achieved by the TiVo video platform at our Atlantic Broadband subsidiary by extending our partnership to bring this world-leading platform to our Canadian customers at our Cogeco Cable Canada subsidiary. We expect to launch by mid-fiscal 2015. Excluding the impact of the impairment related to the prior attempt at developing an alternate IPTV video platform, we expect to meet our fiscal 2014 guidance," added Mr. Audet.

"We are also pleased with the financial results of our media business. The radio ratings of Cogeco Diffusion confirm our leadership in the Montreal market and good performance in most of our other markets across the province of Quebec. Furthermore, our transit advertising business, Cogeco Metromedia, continues to show improvements," concluded Mr. Audet.

Analyst conference call:  July 10, 2014, at 11 a.m. (Eastern Daylight Time)

Media representatives may attend as listeners only.

Please use a dial-in number to have access to the conference call by dialling five minutes before the start of the conference.

Canada/U.S. access number:  1-800-820-0231

International access number:  1-416-640-5926

Confirmation code:  2083261

By Internet:  At the Cogeco website on the investors page

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

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

International access number:  1-647-436-0148

Confirmation code:  2083261

                    FINANCIAL HIGHLIGHTS                               
     (in thousands of dollars, except per-share data) 

                        Quarters ended       Nine months ended
                      May 31,   May 31,      May 31,    May 31,
                        2014      2013         2014       2013 
Operations
Revenue             $536,067  $504,434   $1,571,515 $1,329,543
Adjusted
EBITDA               233,083   220,878      678,930    574,034
Impairment of
property, plant
and equipment         32,197        --       32,197         --
Profit for the
period                35,635    49,995      150,941    146,051
Profit for the
period
attributable to
owners of the
corporation           11,469    17,185       51,915     50,391
Per-share data
Earnings per
share
Basic                   0.69      1.03         3.10       3.01
Diluted                 0.68      1.02         3.08       2.99

(1) The indicated terms do not have standard definitions prescribed by international financial reporting standards and therefore may not be comparable with similar measures presented by other companies. For more details, please consult the non-IFRS financial measures section of management's discussion and analysis.

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

We seek Safe Harbor.