COGECO Inc.
TSX : CGO

COGECO Inc.

October 24, 2005 23:59 ET

Higher Revenue and More Television Investments for COGE

MONTREAL, Oct. 24 - Today, COGECO Inc. (TSX: CGO.SV)
announced its financial results for the fourth quarter and the fiscal year
ending August 31, 2005.

Revenues are up by $9.6 million, or 6.2%, in the fourth quarter compared
to the same period last year. The improved penetration of high-speed Internet
services (HSI) and higher rates for cable television services are mainly
responsible for this increase. Net income stands at $0.6 million, i.e. $0.04
per share, compared to $2.1 million or $0.13 per share in the previous fiscal
year. The net income dropped due to a reduction in operating income before
amortization in the media sector.

Cogeco Cable: Launch of digital telephony and financial results exceeding
expectations

"Among the quarter's milestones, the launch of our digital telephony
service really stood out. Customer response to this new product exceeded our
expectations in the areas where the service was introduced. Launched across
24% of our territory as of October 21, 2005, the service is now available to
all residents in the areas served, whether or not they are Cogeco Cable
customers. By August 2006, most of our major markets will benefit from this
attractive service," declared Louis Audet, Cogeco Cable's President and Chief
Executive Officer.
Operating income before amortization rose by 11.9%, surpassing the
initial growth objective of 8% to 9% and Free Cash Flow stands at
$45.3 million, within the projected range.

Media sector: Substantial investments in programming

On the radio side, revenues are up sharply thanks to excellent audience
ratings for the group's stations, which are rising in their respective
markets. RYTHME FM Montréal's number one position was confirmed in BBM surveys
conducted this past summer. In television, revenues are down due to a
difficult advertising environment for conventional television and increased
competition. TQS has made investments in programming and will continue to do
so, in order to improve its audience ratings and increase its profitability in
the seasons to come.

2006: Consolidation

Cogeco Cable expects to continue growing in fiscal 2006. The projections
are for a sustained increase in customers, particularly for digital and
telephony services. As a result of strong demand for its telephony service,
Cogeco Cable has revised its projected customer growth from between 7,000 and
8,000 to a range of 32,000 to 37,000.
In the media sector, radio should continue to grow and consolidate its
position in the various markets. In television, TQS's commitment to its "black
sheep" positionning is stronger than ever. The channel's bold programming is
blazing new trails for conventional television in an environment that is
fiercely competitive and constantly changing.


FINANCIAL HIGHLIGHTS

In fiscal 2005, Cogeco Cable exceeded virtually all of its financial and
customer additions objectives. However, the media sector did not achieve its
targets.


-------------------------------------------------------------------------
(in millions $, except
percentages and customer Original Actual Actual
statistics) Target(1) Results vs Target
----------------- -------- -------------
Cable sector
Revenue growth 4 to 5 % 5.3 % Exceeded
Operating income before
amortization growth 8 to 9 % 11.9 % Exceeded

Gain (loss) of basic
service customers 0 to 2,500 (2,422) Not achieved
HSI customers additions 32,000 to 37,000 38,040 Exceeded
Digital customers
additions 29,500 to 33,000 46,853 Exceeded
Digital telephony
customers additions NA 1,448
Digital terminal
additions 40,000 to 45,000 63,813 Exceeded

Medias sector
Growth (decline) in revenue 3 % (0.3)% Not achieved
Growth (decline) in
operating income before
amortization 9.5 to 23.8 % (35.2)% Not achieved

Net income (net loss)
of COGECO(1) 12 (19.8) Not achieved
Free Cash Flow(2)
of COGECO 51 to 56 44.7 Not achieved
-------------------------------------------------------------------------


-------------------------------------------------------------------------
Fourth Quarters ended Years ended
August 31, (unaudited) August 31(audited)
($000s, except
percentages and
per share data)
% %
2005 2004 Change 2005 2004(3) Change
--------- --------- ------- --------- --------- -------

Revenue $ 164,210 $ 154,652 6.2 $ 675,605 $ 648,101 4.2
Operating
income before
amortization 56,485 55,862 1.1 233,843 214,504 9.0

Net income
(loss) 630 2,117 (70.2) (19,813) (10,600) (86.9)

Cash flow from
operations 43,215 43,010 (0.5) 177,379 155,411 14.1
Less:
Capital
expenditures
and increase
in deferred
charges 49,360 36,838 34.0 132,648 108,234 22.6
--------- --------- --------- ---------
Free Cash
Flow(2) (6,145) 6,172 - 44,731 47,177 (5.2)

Per share data
Basic net
income
(loss) $ 0.04 $ 0.13 (69.2) $ (1.21) $ (0.65) 86.2
Cash flow
from
operations 2.63 2.63 - 10.80 9.51 13.6
-------------------------------------------------------------------------

(1) The net income objectives for 2005 were not achieved, primarily due
to the impairment of goodwill and other intangible assets in the
media sector, described in the section bearing that title in the
attached management report.
(2) Free Cash Flow is defined as cash flow from operations less capital
expenditures (including assets acquired under capital leases - as per
Note 9 b) in the accompanying financial statements - not reflected in
the statements of cash flow) and increase in deferred charges. Free
Cash Flow is not a defined term under Generally Accepted Accounting
Principles (GAAP) and should be treated accordingly.
(3) During the third quarter of fiscal 2004, Cogeco Cable, a subsidiary
of the Company, adopted new accounting standards regarding the
revenue recognition and certain related costs and the classification
of certain items as revenue or expense. These changes were made on a
retroactive basis in accordance with Abstracts 141 and 142 issued by
the Canadian Institute of Chartered Accountants' (CICA) Emerging
Issues Committee (EIC). See the section "Changes in Accounting
Policies" of the Management's Discussion and Analysis (MD&A) in the
accompanying interim financial statements for a detailed description.


MANAGEMENT'S DISCUSSION AND ANALYSIS

Certain statements in this quarterly report may constitute forward-
looking information within the meaning of securities laws. Forward-looking
information may relate to our future outlook and anticipated events, our
business, our operations, our financial performance, our financial condition
or our results and, in some cases, can be identified by terminology such as
"may", "will", "should", "expect", "plan", "anticipate", "believe", "intend",
"estimate", "predict", "potential", "continue" or other similar expressions
concerning matters that are not historical facts. Particularly, statements
regarding our future operating results and economic performance, our
objectives and strategies are forward-looking statements. These statements are
based on certain factors and assumptions including expected growth, results of
operations, performance and business prospects and opportunities, which we
believe are reasonable as of the current date. While we consider these
assumptions to be reasonable based on information currently available to us,
they may prove to be incorrect. Forward looking-information is also subject to
certain factors, including risks and uncertainties, which are described in the
section "Uncertainty and main risk factors" of this MD&A, the second and third
quarter reports of 2005 and the Company's 2004 annual MD&A, that could cause
actual results to differ materially from what we currently expect. These
factors include technological changes, changes in market and competition,
governmental or regulatory developments, general economic conditions, the
development of new products and services, the enhancement of existing products
and services, the risks pertaining to information systems, the introduction of
competing products having technological or other advantages, many of which are
beyond our control. Therefore, future events and results may vary
significantly from what we currently foresee. You should not place undue
importance on forward-looking information and should not rely upon this
information as of any other date. While we may elect to, we are under no
obligation (and expressly disclaim any such obligation) and do not undertake
to update or alter this forward-looking information before the next quarter.
This analysis should be read in conjunction with the Company's financial
statements and the notes thereto prepared in accordance with Canadian GAAP and
the MD&A included in the Company's Annual Report. Throughout this discussion,
all amounts are in Canadian dollars unless otherwise indicated.


ACCOUNTING POLICIES AND ESTIMATES

Revenue Recognition

During the third quarter of fiscal 2004, the Company adopted the CICA's
EIC Abstracts 141 and 142 issued in December 2003, regarding the timing of
revenue recognition and certain related costs and the classification of
certain items as revenue or expense. Consequently, COGECO adopted the
following changes in the cable sector:

- Installation revenues are now deferred and amortized over the average
life of a customer's subscription, which is four years. Previously,
these revenues were recognized immediately as they were considered as a
partial recovery of direct selling costs incurred. Upon billing, the
portion of unearned revenue is now recorded as deferred and prepaid
income.
- The costs to reconnect customers are now capitalized as deferred
charges up to a maximum amount not exceeding the revenue generated by
the reconnect activity, which are included in installation revenues,
and amortized over the average life of a customer's subscription, which
is four years. Previously, these costs, which included materials,
direct labour and certain overhead charges were capitalized to fixed
assets and generally amortized over a period of five years.
- Revenue on the sale of home terminal devices at a subsidized price,
which were recorded as a partial recovery of cost, are now recorded as
equipment revenue with an equal amount of operating cost.
- The portion of advertising expense incurred to expand the digital and
HSI customer base, which used to be recorded as a deferred charge, is
now recorded as an operating cost.

As a result of the above changes, operating income before amortization
was adjusted downward by $8 million in fiscal 2004. The adjustments related to
the reversal of capitalized advertising expense and reconnection costs
amounted to $3.7 million and $1.2 million in fiscal 2004. Cogeco Cable has
decided to apply these changes retroactively to enhance the comparability of
its financial disclosure. The changes, relating to revenue recognition, had
the following impact on our financial results and cash flow:

Quarter ended Year ended
August 31, 2004 August 31, 2004
---------------------- ----------------------
(in thousands of
dollars, except per
share data and Before After Before After
percentages) adoption adoption adoption adoption
---------- ---------- ---------- ----------

Revenue $ 153,947 $ 154,652 $ 641,374 $ 648,101
Operating income
before
amortization 58,128 55,862 222,482 214,504
Operating margin 37.8% 36.1% 34.7% 33.1%
Amortization 32,788 33,758 141,062 145,204
Income taxes 3,311 1,472 45,535 38,973
Non-controling
interest 4,925 4,077 (15,500) (18,874)
Net Income
(net loss) 2,666 2,117 (8,416) (10,600)
Basic and diluted
net income (net
loss) per share 0.16 0.13 (0.51) (0.65)


Amortization of Long-term Assets

In the first quarter of fiscal 2004, the Company reviewed the useful life
of its digital terminals, cable modems and certain other long-term assets. The
useful life of digital terminals was reduced from seven to five years, while
the useful life of cable modems was reduced from seven to three years. These
changes in accounting estimates, applied prospectively, increased the
amortization expense by $14 million for fiscal 2004.

Asset Retirement Obligations

In March 2003, the CICA issued Handbook section 3110, Asset Retirement
Obligations, which provides guidance for the recognition, measurement and
disclosure of liabilities for asset retirement obligations and the associated
costs. Some lease agreements include clauses requiring the Company's
subsidiaries to dismantle the facilities or remove the equipment in the event
that the lease agreement is not renewed. However, COGECO's subsidiaries expect
to renew the majority of their lease agreements, which are necessary for their
continued operation; consequently, the dismantling obligation, if any, is
deemed immaterial to the consolidated financial statements. In addition, in
the unlikely event that some of these lease agreements are not renewed, the
liability would be difficult to estimate, since there is a wide range of
potential expiration dates for these lease agreements.

Variable Interest Entities

In June 2003, the CICA issued Accounting Guideline 15 (AcG-15),
Consolidation of Variable Interest Entities, which defines Variable Interest
Entities (VIE) as entities that have insufficient equity or whose equity
investors lack one or more specified essential characteristics of a
controlling financial interest. The standard provides guidance for determining
when an entity is a VIE and whose entity, if anyone, should consolidate the
VIE. During fiscal 2005, the Company adopted this new accounting guideline and
concluded that it has no material impact on these consolidated financial
statements.
No other significant changes in critical accounting policies and
estimates occurred since August 31, 2004 and such policies and estimates are
described in the Company's 2004 annual MD&A.


OPERATING RESULTS

Revenue for the fourth quarter rose by $9.6 million, or 6.2% compared to
the same period last year. Cable revenues, driven by improved HSI access
penetration as well as rate increases, went up by $7.1 million or 5.4%. Media
revenue increased by $2.4 million, or 11.3%, mainly due to higher radio
advertising revenues.
Operating income before amortization climbed by 1.1% for the fourth
quarter compared to the same period last year. The cable sector contributed to
an increase of $6.4 million while that of the media had a negative impact of
$4.4 million.


IMPAIRMENT OF GOODWILL AND OTHER INTANGIBLE ASSETS

Subsequent to a viewership market share loss in conventional television
combined with a shift in conventional television advertising towards specialty
channels, impairment tests of goodwill and other intangible assets related to
the television operation of the media business unit have been performed at the
end of the second quarter. The Company concluded therefore that an impairment
existed and consequently wrote-off the $27.9 million of goodwill and reduced
the value of its television broadcasting licenses by $24.6 million. The impact
of the impairment of goodwill and other intangible assets on net income of
fiscal 2005 is as follows:

($ 000s)
Impairment of goodwill and other intangible assets 52,531
Income taxes 3,270
------------
Impairment losses net of related income taxes 49,261
Non-controlling interest 19,651
------------
Impairment losses net of related income taxes and
non-controlling interest 29,610
------------
------------


FIXED CHARGES

Quarters ended August 31, Years ended August 31
($000s, except
percentages)
% %
2005 2004 Change 2005 2004 Change
--------- --------- ------- --------- --------- -------
Amortization $ 30,769 $ 33,758 (8.9) $ 130,551 $ 145,204 (10.1)

Financial
expense $ 14,366 $ 14,305 0.4 $ 57,284 $ 59,578 (3.9)


Amortization amounted to $130.6 million during fiscal 2005 compared to
$131.2 million for the same period last year excluding the financial impact of
a $14 million adjustment for change in the estimated useful lives of home
terminal devices and of certain long-term assets in the cable sector.
Amortization declined during the fourth quarter of fiscal 2005 and in fiscal
2005 as many cable modems and digital terminals in the cable sector were fully
amortized.
During fiscal 2005, the decline in financial expense was mainly related
to lower levels of Indebtedness (defined as bank indebtedness and long-term
debt) due to the Free Cash Flow generated.


INCOME TAXES

Income taxes for the fourth quarter amounted to $5.1 million compared to
$1.5 million for the same period last year. Excluding a non-cash income tax
adjustment of $3.3 million for the impairment of goodwill and other intangible
assets of the television operations, income taxes for fiscal 2005 amounted to
$12.1 million compared to $11.4 million for the same period last year,
excluding the effect of non-cash income tax adjustments in the cable sector
described below. The income tax increases was mainly attributable to the cable
sector's growth in operating income before amortization.
During the first quarter of fiscal 2004, the Ontario government modified
its position for corporate income tax rates to decline in the future but would
instead rise to 14% effective January 1, 2004. Prior to this announcement, the
tax rate was expected to decline from 11% in 2004 to 8% in 2007. As a result,
a $32.5 million non-cash adjustment was recorded by the cable sector in the
first quarter of fiscal 2004 for future income tax liabilities. This amount
was partly offset by a non-cash reduction of future income tax liabilities of
$4.9 million at this same quarter. This reduction is related to the decline in
the carrying value of home terminal devices and certain other long-term assets
in the cable sector.


NON-CONTROLLING INTEREST

The non-controlling interest represents an interest of approximately 61%
in Cogeco Cable's results and a 40% interest in TQS Inc. During fiscal 2005,
the non-controlling interest included an adjustment of $19.7 million for the
television's impairment of goodwill and other intangible assets.


NET INCOME (NET LOSS)

Net income for the fourth quarter amounted to $0.6 million, or $0.04 per
share, compared to $2.1 million, or $0.13 per share for the same period of
2004. This drop is attributable to a decline in profitability in the media
sector. Net loss for fiscal 2005 amounted to $19.8 million, or $1.21 per share
compared to $10.6 million, or $0.65 per share for the same period last year.

The variances in net loss are essentially explained in the table below.

Fiscal year
($ million) 2005 2004
------------ ------------

Net loss per financial statements (19.8) (10.6)
Adjustments for the following items:
Change in the Ontario corporate income
tax rate(1) -- 12.8
Amortization adjustment related to a
change in useful lives of some cable
assets(2) -- 3.6
Impairment of goodwill and other intangible
assets(3) 29.6 --
------------ ------------
Net income excluding above adjustments $ 9.8 $ 5.8
------------ ------------
------------ ------------

(1) Reflects the $32.5 million non-cash adjustment recorded by the cable
sector multiplied by COGECO's 39.3% ownership in Cogeco Cable. See
section on "Income Taxes", on this page, for a detailed description
of this adjustment.
(2) Reflects the $14 million amortization adjustment partly offset by a
$4.9 million tax impact recorded by the cable sector multiplied by
COGECO's 39.3% ownership in Cogeco Cable. See section on
"Amortization of Long Term Assets", on page 4, for a detailed
description of this adjustment.
(3) See section on "Impairment of Goodwill and Other Intangible Assets",
on page 5, for a detailed description of this adjustment.


CASH FLOW AND LIQUIDITY

Quarters ended August 31, Years ended August 31,
($000s )
2005 2004 2005 2004
------------ ------------ ------------ ------------
Operating-
Activities
Cash flow from
operations $ 43,215 $ 43,010 $ 177,379 $ 155,411
Changes in
non-cash
operating
items 49,951 35,614 23,680 1,797
------------ ------------ ------------ ------------
$ 93,166 $ 78,624 $ 201,059 $ 157,208
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

Investing
Activities(1) $ (48,942) $ (35,854) $ (130,585) $ (105,085)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

Financing
Activities $ (44,224) $ (42,770) $ (70,474) $ (52,123)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

(1) Excludes assets acquired under capital leases.

For the fourth quarter, cash flow from operations was $43.2 million, or
0.5% higher than last year, due primarily to operating income before
amortization growth in the cable sector partly offset by a decline in
operating income before amortization recorded in the media sector. Net changes
in non-cash operating items generated greater cash inflows than last year
mainly as a result of a larger increase in accounts payable and accrued
liabilities caused by increased capital expenditures incurred late in fiscal
2005.
Investing activities related to capital expenditures and the increase in
deferred charges, including assets acquired under capital leases, rose by
$12.5 million and $24.4 million during the fourth quarter and fiscal 2005,
respectively. The $0.7 million and $6 million decline in deferred charges
during the fourth quarter and fiscal 2005, respectively, is mainly
attributable to the attractive rental program that was launched in the fourth
quarter of the 2004 fiscal year
During the fourth quarter and fiscal 2005, capital expenditures
(including capital leases) increased by $13.3 million and $30.4 million
respectively. The fluctuations are mainly attributable to the following
factors:

- Expenditures associated with the network upgrade and rebuild program
rose by $6.4 million and by $13.2 million in the fourth quarter and in
fiscal 2005 due to the acceleration of the program to expand the
bandwidth to 750 MHz and 550 MHz for the Ontario and Québec networks,
respectively, and to improvements in network reliability. An increase
in the number of households with access to two-way service was also a
factor. The percentage of customers with access to two-way service rose
from 87% as of August 31, 2004 to 89% as of August 31, 2005.
- The increase in customer premises equipment mainly results from a rise
in expenditures related to digital terminals and to telephony
equipment. The number of digital terminals rented to customers
increased as a result of an attractive rental plan launched during the
fourth quarter of fiscal 2004 and a greater number of terminals
purchased at year-end.
- In the media sector, capital expenditures remained stable at
$4.9 million for fiscal 2005 and 2004.

In the fourth quarter, a negative Free Cash Flow of $6.1 million was
attributable to the media sector, which recorded a loss in operating income
before amortization. For fiscal 2005, Free Cash Flow of $44.7 million is
mainly the result of an increase in cash flow from operations in the cable
sector, partly offset by the increase in capital expenditures in that sector.
During the fourth quarter, Indebtedness declined by $42.2 million mainly
due to an increase in non-cash operating items of $50 million partly offset by
negative Free Cash Flow of $6.1 million. For the same period last year,
Indebtedness declined by $42.1 million essentially due to an increase of
$35.6 million in non-cash operating items and generated Free Cash Flow of
$6.2 million. A dividend of $0.0625 per share and of $0.0525 for subordinate
and multiple voting shares, totalling $1 million and $0.9 million, was paid to
COGECO's shareholders during the fourth quarters of fiscal 2005 and 2004
respectively.
In fiscal 2005, Indebtedness declined by $65.7 million essentially due to
Free Cash Flow of $44.7 million and an increase in non-cash operating items of
$23.7 million. For the same period last year, Indebtedness declined by
$49.6 million essentially due to Free Cash Flow amounting to $47.2 million and
to an increase in non-cash operating items of $1.8 million. Dividends
totalling $3.6 million and $3.4 million were paid during fiscal 2005 and 2004
respectively.
As at August 31, 2005, the cable television subsidiary had not used its
$270 million Term Facility and the Company had drawn $22.5 million of its
$40 million Term Facility. Based on existing bank covenants, COGECO could have
used about $31 million under its bank facilities and Cogeco Cable had access
to the entire committed amounts. Going forward, COGECO and Cogeco Cable have
sufficient capacity to finance foreseeable growth and expect to continue to
generate Free Cash Flow to further reduce their leverage ratios.
Transfers of funds from non wholly-owned subsidiaries to COGECO are
subject to the subsidiaries' Board of Directors approval and may also be
restricted under the terms and conditions of certain debt instruments. In
accordance with applicable corporate and securities law, significant transfers
of funds from Cogeco Cable may be subject to minority shareholders approval.


FINANCIAL POSITION

Since August 31, 2004, significant changes in the balance sheet include
broadcasting licenses, goodwill, Indebtedness and shareholders' equity.
Indebtedness was reduced by $63.7 million, mainly due to Free Cash Flow of
$44.7 million, and an increase of $23.7 million in non-cash operating items.
As a result, COGECO's leverage ratio (Indebtedness/operating income before
amortization) has declined from 3.6x on August 31, 2004 to 3.1x on August 31,
2005. As a result of the television sector's impairment of goodwill and other
intangible assets recorded in the second quarter, the following balance sheet
items were all adjusted downward:

($ 000s) Adjustment
------------

Broadcasting licenses $ 24,606
Goodwill 27,925
------------
$ 52,531
------------
------------

Future income taxes $ 3,270
Non-controlling interest 19,651
Shareholders' equity 29,610
------------
$ 52,531
------------
------------

As at August 31, 2005, the Company has performed impairment tests of the
value of its broadcasting licenses and customer base, and concluded that no
impairment existed subsequently to the adjustment performed in the second
quarter of fiscal 2005.
A description of COGECO's share data as of September 30, 2005 is
presented in the table below:

Number
of shares/ Amount
options ($000s)
------------ ------------
Common Shares
Multiple voting shares 1,849,900 12
Subordinate voting shares 14,600,104 116,155

Options to Purchase Subordinate
Voting Shares
Outstanding options 429,276
Exercisable options 413,755


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 have not materially changed since
August 31, 2004 and are described in the 2004 annual MD&A.


DIVIDEND DECLARATION

At its October 21, 2005 meeting, the Board of Directors of COGECO
declared a quarterly dividend of $0.0625 per share for subordinate and
multiple voting shares, payable on November 18, 2005, to shareholders on
record as at November 4, 2005.


CABLE SECTOR
------------

Customer Statistics
Net additions (losses)
% Penetra-
tion(1)
Fourth Quarters Fiscal years August 31
--------------- -------------- -----------
August 31,
2005 2005 2004 2005 2004 2005 2004
--------- ------- -------- ------ ------- ----- -----
Revenue-
generating
units(2) 1,355,818 9,887 12,311 83,919 90,100
Basic service
customers 821,433 (5,891) (2,493) (2,422) 3,198
HSI service
customers(3) 277,648 2,775 1,769 38,040 40,999 37.7 33.4
Digital service
customers 255,289 11,555 13,035 46,853 45,903 31.7 25.8
Digital telephony
customers 1,448 1,448 NA 1,448 NA NA NA
Digital
terminals(4) 303,884 15,922 16,211 63,813 56,984 37.7 29.8

(1) As a percentage of basic service customers in areas served.
(2) Including basic service, digital service, Internet service and
digital telephony service customers.
(3) The number of Internet customers in fiscal 2004 has been restated to
reflect the number of customers based on the billing dates, which are
spread throughout the month, instead of the number of customers as at
the end of the fiscal year. This change produces a downward
adjustment of approximately 5,400 customers. Customers subscribing
only to Internet services amounted to 55,057 as at August 31, 2005
compared to 49,691 as at August 31, 2004.
(4) 69% of terminals as at August 31, 2005 were purchased compared to 82%
one year earlier.

RGU growth was slower in the fourth quarter than in the same period last
year, primarily due to a larger decline in basic service customers. The loss
of basic service customers is largely due to long distance telephone service
plans offered by the competition from June 2004 to July 2005, when the plans
were withdrawn.
The increase in the number of digital service customers stems from an
expanded line of services, such as the addition of digital and high-definition
(HD) channels, and from consumers' growing interest in this technology.
HSI customer additions were lower than last year due to a slowing demand
as the penetration rate increases. To stimulate demand in a more mature Québec
market, Cogeco Cable started offering the Lite service to new customers since
the second quarter.
During the fourth quarter, Cogeco Cable progressively launched its
digital telephony service in Burlington, Oakville and Windsor in Ontario as
well as in Trois-Rivières, Drummondville and St-Hyacinthe in Québec. By the
end of fiscal 2005, the number of customers subscribing to this new service
had reached 1,448 and pending orders had reached about 1,000, exceeding
management's expectations. During the first quarter of fiscal 2006, the
service was rolled out to all residents of these areas and to those of the
Kingston area, in Ontario, whether or not they were Cogeco Cable customers.
The service will be gradually extended to most of Cogeco Cable's major markets
during the 2006 fiscal year. The proven popularity of this new service leads
Cogeco Cable to revise upward its 2006 projections from a range of 7,000 to
8,000 to a range of 32,000 to 37,000 additional customers.

Operating Results


Quarters ended August 31 Years ended August 31
($000s, except
percentages)
% %
2005 2004 Change 2005 2004 Change
--------- --------- ------- --------- --------- -------

Revenue $ 140,178 $ 133,053 5.4 $ 554,404 $ 526,480 5.3

Operating
costs 79,458 78,500 1.2 318,704 315,208 1.1
Management fees
- COGECO Inc. - 263 - 8,179 8,026 1.9

Operating
income
before
amortization 60,720 54,290 11.8 227,521 203,246 11.9

Operating margin 43.3% 40.8% 41.0% 38.6%


Revenue

Revenue for fiscal 2005 has risen by $27.9 million or 5.3% compared to
fiscal 2004 mainly as a result of the improved HSI access penetration rate and
rate increases implemented in June and August of both fiscal 2004 and 2005.
Revenue for the fourth quarter has risen by $7.1 million or 5.4% compared to
the same period last year. This growth is mainly attributable to the improved
HSI access penetration rate and recent basic service rate increases. Monthly
rate increases of at most $3 per customer and averaging $0.50 per basic
service customer took effect on June 15 in Ontario and on August 1 in Québec.
As a result of these increases, the basic monthly rate is now $24.99 in the
large majority of networks in Ontario, and the number of different basic rates
has dropped from 22 to 7, ranging essentially between $20 and $27.50 per
month, in Québec. The monthly rate for certain bundle services has increased
by $1 in Ontario, and other limited rate increases for selective tier services
were implemented in Québec.

Operating Costs

Operating costs rose slightly, by $1 million or 1.2%. Since Cogeco Cable
has substantially outstripped its fiscal 2005 growth objectives for operating
income before amortization, an increase in the provision for employee bonuses
has been recorded. Furthermore, the rise in customer service expenses is
mainly attributable to a 6.6% increase in RGUs year over year. On the other
hand, the cost of sales, including equipment sold, network fees and IP
transport costs for HSI, has declined. The modest rise in operating costs for
fiscal 2005 is mainly attributable to the same reasons described for the
fourth quarter.

Operating Income before Amortization

Operating income before amortization for the fourth quarter and fiscal
2005 rose 11.8% and 11.9% compared to the same periods last year due to the
increase in revenue partially offset by a modest rise in operating costs.
Cogeco Cable's efforts to improve its operating margin resulted in an increase
in the margin from 40.8% to 43.3% for the fourth quarter and from 38.6% to 41%
for fiscal 2005.

Foreign Exchange Management

Cogeco Cable has entered into cross-currency swap agreements to fix the
liability for interest and principal payments on its US$150 million Senior
Secured Notes. These agreements have the effect of converting the US interest
coupon rate of 6.83% per annum to an average Canadian dollar fixed interest
rate of 7.254% per annum. The exchange rate applicable to the principal
portion of the debt has been fixed at CDN$1.5910. Amounts due under the
US$150 million Senior Secured Notes Series A decreased by CDN$10.2 million
during the fourth quarter due to the Canadian dollar's appreciation. Since the
Senior Secured Notes Series A are fully hedged, the fluctuation is fully
offset by a variation in deferred credit described in Note 6 of the fourth
quarter interim financial statements. The $60.6 million deferred credit
represents the difference between the quarter-end exchange rate and the
exchange rate on the cross currency swap agreements, which determine the
liability for interest and principal payments on the Senior Secured Notes
Series A.

MEDIA SECTOR
------------
Operating Results

Quarters ended August 31, Years ended August 31,
(in thousands $,
except
percentages)
% %
2005 2004 Change 2005 2004 Change
--------- --------- ------- --------- --------- -------
Revenue $ 24,082 $ 21,644 11.3 $ 121,386 $ 121,797 (0.3)
Operating
costs 25,770 18,933 36.1 114,587 111,308 3.0
Operating
income before
amortization (1,688) 2,711 - 6,799 10,489 (35.2)
Operating
margin (7.0)% 12.5% 5.6% 8.6%


Revenue

Radio and television advertising revenues rose by 39.4% and 6.2%
respectively in the fourth quarter. The increase in radio is mainly
attributable to the performance of the RYTHME FM station in Montréal, while
the increase on the television side is attributable to a better programming
grid in the fourth quarter compared to the same period last year.

Operating Income before Amortization

The decline in operating income before amortization for the quarter and
the fiscal year is due to greater investments in television programming,
combined with lower revenue growth.


FISCAL 2006 FINANCIAL GUIDELINES

Revised Preliminary
($ million except customer data) Projections(1) Projections(2)
---------------- -----------------
Cable sector -Financial Guidelines
Revenue 588 to 593 583 to 588
Operating income before
amortization 234 to 236 237 to 242
Operating margin About 40% 40 to 41%
Financial expense 56 55
Amortization 115 115
Capital expenditures and deferred
charges 140 132
Free Cash Flow 35 to 40 49 to 55
Customer Addition Guidelines
Basic service 0 to 3,000 0 to 3,000
HSI service 32,000 to 37,000 32,000 to 37,000
Digital service 47,000 to 52,000 47,000 to 52,000
Digital telephony service 32,000 to 37,000 7,000 to 8,000
Digital terminals 60,000 to 65,000 60,000 to 65,000

Media sector- Financial Guidelines
Revenue 124 to 126 124 to 126
Operating loss before amortization 2 to 3 2 to 3
Amortization 7 7
Capital expenditures and deferred
charges 5 to 6 5 to 6

Consolidated Financial Guidelines
Free Cash Flow 25 to 30 40 to 45
Net income 10 11

(1) As of October 24, 2005
(2) As of July 11, 2005


Cable Sector

Cogeco Cable is revising its financial projections for fiscal 2006
primarily as a result of stronger than expected demand for digital telephony
services, as well as a larger than expected decline in basic service customers
in the fourth quarter of 2005, a drop in rental fees for digital terminals in
the fourth quarter of fiscal 2005, an increase in programming fees for APTN
effective November 1, 2005, and an expected increase in network maintenance
costs. Digital telephony customer additions should be between 32,000 and
37,000, for an increase of between 25,000 and 29,000 customers over initial
projections.
Subsequent to these adjustments, projected revenues are being revised
upward to between $588 million and $593 million. However, operating income
before amortization should be lower, between $234 million and $236 million.
Approximately $2 million of the downward adjustment is tied to digital
telephony. As a result of stronger demand for digital telephony services,
capital expenditures and deferred charges should increase by approximately
$8 million. The capital expenditures and deferred charges rise during fiscal
2006 compared to fiscal 2005 will stem mainly from a $18.7 million increase in
digital telephony (compared to an amount of $5.3 million in fiscal 2005) and
from a $4.5 million increase (excluding telephony expenditures) in support
capital mainly for improvements in information systems. These increases should
be partially offset by a $10.4 million decline in expenditures as a large
amount of digital terminals were purchased late in fiscal 2005. Free Cash Flow
should decrease by approximately $15 million as a result of lower forecasted
operating income before amortization and higher capital expenditures and
deferred charges. Consequently, financial expenses should be slightly higher
than expected.
Cogeco Cable remains committed to its basic expansion strategy of organic
growth combined with appropriate acquisition opportunities, in or outside of
Canada, provided that they bring a significant number of customers at a fair
price to increase Cogeco Cable's growth and value.

Media Sector

The media sector maintains its preliminary financial projections for
fiscal 2006, which were announced in the third quarter.

Consolidated Financial Outlook

Based on the above-mentioned guidelines, net income of $10 million and
Free Cash Flow of between $25 million and $30 million should be generated.


RISK FACTORS AND UNCERTAINTIES

The following risk factors and uncertainties facing COGECO serve as an
update to the ones described in the Company's 2004 annual report as well as
those of the second and third quarters of fiscal 2005.

Cable Sector

Risks pertaining to markets and to competition

Combined offers of services delivered to the home and mobile services are
becoming increasingly common across the entire broadband telecommunications
market. Some mobile telephone services already carry audio and video content
in addition to Internet, email and telephone communications. Adding mobility
to the services provided by Cogeco Cable constitutes an important challenge in
the medium term. Cogeco Cable is also evaluating a number of solutions that
might enable it to combine fixed and mobile telecommunications in one service
offering, but it has yet to make a decision on the matter.

Risks pertaining to technology

Growth in the penetration of HSI access of all types and the emergence of
new, more sophisticated algorithms for audiovisual content, such as MPEG-4,
will promote the increased distribution and consumption of movies and
television programs on demand through an Internet connection. This trend opens
up the possibility that the market for existing analog and digital audiovisual
programming distribution services may become fragmented, especially for
movies, special events and specialized or repertory programs. In the event of
a significant migration of the audiovisual content offering to an IP platform,
it may happen that the revenues and margins derived from HSI access services
will not entirely outweigh the loss of revenues or reduction of margins
derived from analog and digital video services.

Risks pertaining to regulation

Provincial consumer protection laws also have a major impact on the way
these activities are carried out. During the last fiscal year, Cogeco Cable
was obliged to devote resources and review its sales and customer account
management processes in order to comply with the increased requirements of
regulations under the new Ontario law. Management believes that it has
implemented the information and verification measures required by the
regulations, but the new law nevertheless makes it easier for consumers to
take legal action, either individually or collectively.
As far as telephone services are concerned, Cogeco Cable decided to
launch a new, digital telephony service in the last fiscal year, despite
uncertainty surrounding the continuance of the regulatory framework governing
the local telephone services provided by incumbent telephone companies and its
application to their Voice over IP services. The Canadian Radio-television and
Telecommunications Commission (CRTC) has ruled that there are grounds for
applying the same regulatory framework to the incumbent telephone companies'
VoIP services until competition develops in the market. This ruling is being
challenged on two fronts: in the federal cabinet and in the Federal Court of
Appeal. Incidentally, the CRTC has initiated a proceeding to consider whether
it should forbear from regulating telephone services that are still subject to
regulatory control. The CRTC's decision on the criteria, conditions and
timetable for forbearance on these services will not become known until later
in the 2006 fiscal year.

Risks pertaining to information systems

Cogeco Cable still uses different customer account management systems in
Ontario and in Québec. The agreement for the use of the existing customer
account management system in Ontario will expire in 2008. Therefore, Cogeco
Cable must either negotiate a new agreement or find other solutions in the
medium term.

Media Sector

Risks pertaining to technology

Growth in the penetration of HSI access of all types and the emergence of
new, more sophisticated algorithms for audiovisual content, such as MPEG-4,
will promote the increased distribution and consumption of movies and
television programs on demand through an Internet connection. This trend is
also a challenge for the broadcasting sector, where activities are currently
founded on the offering of programmed audiovisual content broadcast over the
air and captured using conventional receivers that are not hooked up to the
Internet. The sector has begun to make the transition to digital broadcasting,
but the process is costly and will require a number of years. TQS has
completed the transition to digital for production, but over-the-air digital
and HD transmission are still pending. Cogeco Radio-Télévision will also have
to deal with an expanded offering of subscription digital satellite radio
services, but, for now, it is difficult to predict the impact such national
services will have on local radio audiences. Technological change also affects
viewing habits for advertisers' announcements on programmed services, as well
as the structure of audiovisual content broadcasting rights.

Risks pertaining to regulation

A broadcasting licence is required to operate television, radio and
broadcasting distribution networks and stations in Canada, barring an
exemption. The requirement helps keep competitors from entering the market,
but carries with it major obligations. Among others, television and radio
stations are respectively subject to a detailed regime of regulatory
requirements that are designed to encourage the production and broadcasting of
Canadian shows and music. In the context of the CHOI-FM case in Québec, the
Federal Court of Appeal upheld the CRTC's power to not renew a broadcasting
licence in the event of a failure to comply with requirements that deal with
such things as the content of programs the broadcaster puts on the air.


ADDITIONAL INFORMATION

This MD&A was prepared on October 21, 2005. Additional information
relating to the Company, including its Annual Information Form, is available
on the SEDAR Web site at www.sedar.com .


ABOUT COGECO

COGECO is a diversified communications company. Through its Cogeco Cable
subsidiary, COGECO provides about 1,356,000 revenue-generating units to
approximately 1,449,000 households in its service territory. Through its two-
way broadband cable infrastructure, Cogeco Cable provides its residential and
commercial customers with analog and digital video and audio services, high-
speed Internet access as well as digital telephony. Through its Cogeco Radio-
Television subsidiary, COGECO holds a 60% interest and operates the TQS
network, six TQS television stations, and three French CBC affiliated
television stations in partnership with CTV Television. Cogeco Radio-
Television also wholly owns and operates RYTHME FM radio network with stations
in Montreal, Québec City, Sherbrooke and Trois-Rivières as well as 933 station
in Québec City. COGECO's subordinate voting shares are listed on the Toronto
Stock Exchange (CGO.SV). The subordinate voting shares of Cogeco Cable are
also listed on the Toronto Stock Exchange (CCA.SV).


Analyst Conference Call: Monday October 24, 2005, at 11:00 a.m. EDT
By Internet at www.cogeco.ca/investors
By telephone: 1-888-208-1812
(confirmation code 5732974)
Media are invited to participate in listen mode
only.
Re-broadcast of the call available until
October 31: 1-888-203-1112
(confirmation code 5732974)



Supplementary Quarterly Financial Information

Fiscal 2005
------------------------------------------------------
Quarters ended(1) Nov. 30 Feb. 28. May 31 Aug. 31
($000, except
percentages and
per share data)

Revenue $ 171,411 $ 166,566 $ 173,418 $ 164,210
Operating income
before
amortization 58,928 54,616 63,814 56,485
Operating margin 34.4% 32.8% 36.8% 34.4%
Amortization 33,616 33,383 32,783 30,769
Financial expense 14,240 14,237 14,441 14,366
Impairment losses - 52,531 - -
Income taxes 4,582 (130) 5,869 5,052
Non-controlling
interest 3,256 (16,940) 5,603 5,422
Net income (loss) 3,117 (28,524) 4,964 630

Cash flow from
operations $ 44,503 $ 40,962 $ 48,699 $ 43,215

Net income (loss)
per share
Basic and
diluted $ 0.19 $ (1.74) $ 0.30 $ 0.04


Fiscal 2004
------------------------------------------------------
Quarters ended(1) Nov. 30 Feb. 29. May 31 Aug. 31
($000, except (restated) (restated)
percentages and
per share data)

Revenue $ 166,913 $ 158,144 $ 168,392 $ 154,652
Operating income
before
amortization 50,214 49,021 59,407 55,862
Operating margin 30.1% 31.0% 35.3% 36.1%
Amortization 44,517 33,606 33,323 33,758
Financial expense 15,247 15,213 14,813 14,305
Impairment losses - - - -
Income taxes 30,640 1,815 5,046 1,472
Non-controlling
interest (24,799) (561) 2,409 4,077
Net income (loss) (15,391) (1,142) 3,816 2,117

Cash flow from
operations $ 34,421 $ 33,853 $ 44,127 $ 43,010

Net income (loss)
per share
Basic and
diluted $ (0.94) $ (0.07) $ 0.23 $ 0.13

(1) The addition of quarterly information may not correspond to the
annual total given rounding.

Cable sector operating results are not generally subject to material
seasonal fluctuations. However, the loss in basic service customers is usually
greater, and the addition of HSI customers is generally lower in the third
quarter, mainly because students leave their campus at the end of the school
year. However, the media sector's operating results may be subject to
significant seasonal variations. The revenue depends on audience ratings and
the market for conventional radio and television advertising expenditures in
the Province of Québec. Advertising sales, mainly national advertising, are
normally weaker in the second and fourth quarters and, as a result, the
operating margin before amortization is generally lower.
The large net loss of COGECO in the first quarter of fiscal 2004 was
attributable to COGECO's 39.3% share of the cable sector's non-cash
adjustments for amortization and income taxes totaling $16.4 million. Those
non-cash adjustments are discussed in the "Fixed Charges" and "Income Taxes"
sections. The large net loss of COGECO in the second quarter of fiscal 2005
was attributable to COGECO's 60% share of the television sector's impairment
of goodwill and other intangible assets amounting to $29.6 million. This loss
is discussed in the "Impairment of goodwill and other intangible assets"
section.


COGECO INC.
Cable Statistics

August 31, August 31,
2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Homes Passed
Ontario 986 401 972 964
Québec 462 332 450 292
-------------------------------------------------------------------------
1 448 733 1 423 256
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Revenue Generating Units
Ontario 976 834 917 551
Québec 378 984 354 348
-------------------------------------------------------------------------
1 355 818 1 271 899
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Basic Service Customers
Ontario 581 631 584 686
Québec 239 802 239 169
-------------------------------------------------------------------------
821 433 823 855
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Discretionnary Service Customers
Ontario 461 038 463 217
Québec 183 320 178 022
-------------------------------------------------------------------------
644 358 641 239
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Pay TV Service Customers
Ontario 80 817 80 567
Québec 35 407 32 246
-------------------------------------------------------------------------
116 224 112 813
-------------------------------------------------------------------------
-------------------------------------------------------------------------

High Speed Internet Service Customers
Ontario 226 133 198 197
Québec 51 515 41 411
-------------------------------------------------------------------------
277 648 239 608
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Digital Service Customers
Ontario 167 819 134 668
Québec 87 470 73 768
-------------------------------------------------------------------------
255 289 208 436
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Digital Terminals
Ontario 209 662 161 731
Québec 94 222 78 340
-------------------------------------------------------------------------
303 884 240 071
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Digital Telephony
Ontario 1 251
Québec 197
-------------------------------------------------------------------------
1 448
-------------------------------------------------------------------------
-------------------------------------------------------------------------


COGECO INC.
CONSOLIDATED STATEMENTS OF INCOME


Three months Twelve months
ended August 31, ended August 31,
-------------------------------------------------------------------------
(In thousands of
dollars, except
per share data) 2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (audited) (audited)

Revenue $ 164,210 $ 154,652 $ 675,605 $ 648,101

Operating costs 107,725 98,790 441,762 433,597
-------------------------------------------------------------------------

Operating income
before
amortization 56,485 55,862 233,843 214,504
Amortization 30,769 33,758 130,551 145,204
-------------------------------------------------------------------------

Operating income 25,716 22,104 103,292 69,300
Financial expense 14,366 14,305 57,284 59,578
-------------------------------------------------------------------------

Income before
income
taxes and the
following items 11,350 7,799 46,008 9,722

Impairment of
goodwill and
other intangible
assets (note 5) - - 52,531 -

Income taxes
(note 3) 5,052 1,472 15,373 38,973

Non-controlling
interest 5,422 4,077 (2,659) (18,874)

Loss on dilution
resulting from
shares issued by
a subsidiary - 122 108 122

Share in the loss
of a general
partnership 246 11 468 101
-------------------------------------------------------------------------

Net income (loss) $ 630 $ 2,117 $ (19,813) $ (10,600)
-------------------------------------------------------------------------

Earnings (loss)
per share (note 8)
Basic and
diluted $ 0.04 $ 0.13 $ (1.21) $ (0.65)
-------------------------------------------------------------------------
-------------------------------------------------------------------------


COGECO INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

Twelve months ended August 31,
-------------------------------------------------------------------------
(In thousands of dollars) 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(audited) (audited)

Balance at beginning
As previously reported $ 209,188 $ 234,903
Changes in accounting policies (note 2d)) - (11,650)
-------------------------------------------------------------------------
As restated 209,188 223,253

Net loss (19,813) (10,600)
Excess of price paid over the attributed
value of subordinate voting shares redeemed - (34)
Dividends on multiple voting shares (407) (388)
Dividends on subordinate voting shares (3,206) (3,043)
-------------------------------------------------------------------------

Balance at end $ 185,762 $ 209,188
-------------------------------------------------------------------------
-------------------------------------------------------------------------


COGECO INC.
CONSOLIDATED BALANCE SHEETS


-------------------------------------------------------------------------
(In thousands of dollars) August 31, August 31,
2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(audited) (audited)

Assets

Current
Accounts receivable $ 55,529 $ 57,210
Income tax receivable - 304
Prepaid expenses 4,704 5,529
Broadcasting rights 14,168 13,304
-------------------------------------------------------------------------
74,401 76,347
-------------------------------------------------------------------------

Broadcasting rights 16,076 15,124
Investments 539 539
Fixed assets 726,270 716,444
Deferred charges 41,797 50,768
Broadcasting licenses and customer
base (note 5) 1,017,892 1,042,498
Goodwill (note 5) - 27,925
-------------------------------------------------------------------------

$ 1,876,975 $ 1,929,645
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Liabilities and Shareholders' equity

Liabilities

Current
Bank indebtedness $ 605 $ 4,551
Accounts payable and accrued liabilities 151,985 134,604
Broadcasting rights payable 7,337 7,243
Income tax payable 299 -
Deferred and prepaid income 25,034 22,778
Current portion of long-term debt (note 6) 1,400 2,603
-------------------------------------------------------------------------
186,660 171,779
-------------------------------------------------------------------------

Long-term debt (note 6) 713,739 772,332
Share in the partner's deficiency of
a general partnership 648 180
Deferred and prepaid income 10,522 9,829
Broadcasting rights payable 4,112 2,149
Pension plans liabilities and accrued
employee benefits 10,628 8,132
Future income tax liabilities 208,434 196,379
Non-controlling interest 439,643 443,818
-------------------------------------------------------------------------
1,574,386 1,604,598
-------------------------------------------------------------------------

Shareholders' equity

Capital stock (note 7) 116,167 115,621
Retained earnings 185,762 209,188
Contributed surplus - stock-based compensation 660 238
-------------------------------------------------------------------------
302,589 325,047
-------------------------------------------------------------------------

$ 1,876,975 $ 1,929,645
-------------------------------------------------------------------------
-------------------------------------------------------------------------


COGECO INC.
CONSOLIDATED STATEMENTS OF CASH FLOW


Three months Twelve months
ended August 31, ended August 31,
-------------------------------------------------------------------------
(In thousands
of dollars) 2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (audited) (audited)

Cash flow from
operating
activities
Net income (loss) $ 630 $ 2,117 $ (19,813) $ (10,600)
Items not
affecting
cash and cash
equivalents
Amortization 30,769 33,758 130,551 145,204
Amortization of
deferred
financing costs 241 315 1,102 1,542
Impairment of
goodwill and
other intangible
assets (note 5) - - 52,531 -
Future income
taxes (note 3) 5,419 2,623 12,055 35,974
Non-controlling
interest 5,422 4,077 (2,659) (18,874)
Other 734 120 3,612 2,165
-------------------------------------------------------------------------
Cash flow from
operations 43,215 43,010 177,379 155,411
Changes in non-cash
operating items
(note 9a)) 49,951 35,614 23,680 1,797
-------------------------------------------------------------------------
93,166 78,624 201,059 157,208
-------------------------------------------------------------------------

Cash flow from
investing
activities
Acquisition of
fixed assets
(note 9b)) (43,725) (29,962) (115,354) (84,375)
Increase in
deferred
charges (5,217) (5,953) (15,316) (21,276)
Other - 61 85 566
-------------------------------------------------------------------------
(48,942) (35,854) (130,585) (105,085)
-------------------------------------------------------------------------

Cash flow from
financing
activities
Increase (decrease)
in bank
indebtedness (14,966) (9,823) (3,946) 1,516
Increase in
long-term debt 1,000 - 557 3,500
Repayment of
long-term debt (28,278) (32,255) (62,332) (54,583)
Issue of
subordinate
voting shares - 151 546 535
Purchase of
subordinate voting
shares for
cancellation - - - (61)
Dividends on
multiple
voting shares (116) (97) (407) (388)
Dividends on
subordinate voting
shares (912) (761) (3,206) (3,043)
Issue of
subordinate
voting shares by
a subsidiary to
non-controlling
interest, net of
issue cost 20 15 742 401
Dividends paid by
a subsidiary to
non-controlling
interest (972) - (2,428) -
-------------------------------------------------------------------------
(44,224) (42,770) (70,474) (52,123)
-------------------------------------------------------------------------

Net change in
cash and cash
equivalents and
cash and cash
equivalents
at end $ - $ - $ - $ -
-------------------------------------------------------------------------
-------------------------------------------------------------------------

See supplemental cash flow information in note 9.


COGECO INC.
Notes to Consolidated Financial Statements
August 31, 2005
(amounts in tables are in thousands of dollars, except per share data)


1. Basis of Presentation

In the opinion of management, the accompanying unaudited interim
consolidated financial statements, prepared in accordance with Canadian
generally accepted accounting principles, contain all adjustments necessary to
present fairly the financial position of COGECO Inc. as at August 31, 2005 and
2004 as well as its results of operations and its cash flow for the three and
twelve month periods ended August 31, 2005 and 2004.
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. These unaudited interim consolidated financial statements follow
the same accounting policies as the most recent annual consolidated financial
statements, except as noted below.
These interim consolidated financial statements have not been subject to
a review by the Company's external auditors.


2. Recent accounting pronouncements and changes in accounting policies

a) Asset retirement obligations

In March 2003, the Canadian Institute of Chartered Accountants ("CICA")
issued Handbook section 3110, Asset Retirement Obligations, which provides
guidance for the recognition, measurement and disclosure of liabilities for
asset retirement obligations and the associated asset retirement costs. The
standard applies to legal or contractual obligations associated with the
retirement of a tangible long-lived asset that result from acquisition,
construction, development or normal operations. The standard requires the
Company to record the fair value of a liability for an asset retirement
obligation in the year in which it is incurred and when a reasonable estimate
of fair value can be made. The standard describes the fair value of a
liability for an asset retirement obligation as the amount at which that
liability could be settled in a current transaction between willing parties,
that is, other than in a forced or liquidation transaction. The Company is
subsequently required to allocate that asset retirement cost to the expense
using a systematic and rational method over the asset's useful life. The
standard applies to fiscal years beginning on or after January 1, 2004.
Certain of the Company's subsidiaries' lease agreements contain provisions
requiring them to restore facilities or remove equipment in the event that the
lease agreement is not renewed. However, the Company's subsidiaries expects to
renew most of their lease agreements related to the continued operation of
their business and consequently, any liabilities related to the removal
provisions on non-renewed leases, if any, are considered not significant to
these consolidated financial statements.

b) Variable Interest Entities

In June 2003, the CICA issued Accounting Guideline 15 ("AcG-15"),
Consolidation of Variable Interest Entities, which defines Variable Interest
Entities as entities that have insufficient equity or their equity investors
lack one or more specified essential characteristics of a controlling
financial interest. The standard provides guidance for determining when an
entity is a Variable Interest Entity and which entity, if anyone, should
consolidate the Variable Interest Entity. The Guideline applies to all annual
and interim periods beginning on or after November 1, 2004. During the second
quarter, the Company adopted this new accounting guideline and concluded that
it has no significant impact on the consolidated financial statements.

c) Amortization of long-term assets

During the first quarter of last fiscal year, the Company's subsidiary,
Cogeco Cable Inc., reviewed the useful life of its decoders and modems,
commonly referred to as home terminal devices, and of certain other long-term
assets. The useful life of decoders was changed from seven to five years while
the useful life of modems was changed from seven to three years. These changes
in accounting estimates, applied prospectively, increased amortization expense
by $14.0 million for the twelve month period ended August 31, 2004.

d) Revenue recognition

On December 17, 2003, the Emerging Issues Committee issued EIC-141,
Revenue recognition, which provides general interpretative guidance on the
application of CICA 3400, Revenue, and summarizes the principles set forth in
"Staff Accounting Bulletin" No. 101 ("SAB 101") published in the United
States. In addition, EIC-141 also provides additional guidance on the
capitalization of direct incremental costs in connection with up-front
revenues. At the same time, the committee also issued EIC-142, Revenue
arrangements with multiple deliverables, which addresses how to determine when
an arrangement involving multiple deliverables contains more than one unit of
accounting and if so, how the arrangement consideration should be measured and
allocated among each separate unit of accounting.
During the third quarter of last fiscal year, the Company's subsidiary,
Cogeco Cable Inc., applied these new recommendations and determined that it
has multiple revenue arrangements comprised of installation services, sales of
home terminal devices and related subscription services. Based on the criteria
of EIC-142, the Company's subsidiary determined that the sale of home terminal
devices is considered a single unit of accounting of a multiple element
arrangement, while installation and related subscription services must be
assessed as an integrated package. In addition, certain direct incremental
costs in connection with installation revenues may be deferred over the same
term as the related revenue. Accordingly, the following changes were adopted
retroactively:

- Installation revenues are now deferred and amortized over the average
life of a customer's subscription, which is four years. Previously,
these revenues were recognized immediately as they were considered as a
partial recovery of direct selling costs incurred. Upon billing, the
portion of unearned revenue is now recorded as deferred and prepaid
income;
- The costs to reconnect customers are now recorded as deferred charges
up to a maximum amount not exceeding the revenues generated by the
reconnect activity, which are included in installation revenues, and
amortized over the average life of a customer's subscription, which is
four years. Previously, these costs, which include materials, direct
labor and certain overhead charges were capitalized to fixed assets and
generally amortized over a period of five years;
- Revenue from the sale of home terminal devices at a subsidized price,
which were recorded as a partial recovery of costs, are now recorded as
equipment revenue with an equal amount included in operating costs;
- The portion of advertising expense incurred to expand the digital and
high-speed Internet customer base that used to be recorded as deferred
charges is now recorded as operating costs.

These changes, relating to revenue recognition, have been applied
retroactively and had the following impact on the Company's consolidated
statements of income for the three and twelve month periods ended August 31,
2004:

-------------------------------------------------------------------------
Three months ended Twelve months ended
-------------------------------------------------------------------------
August 31, 2004 August 31, 2004
-------------------------------------------------------------------------
Before After Before After
adoption adoption adoption adoption
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (audited) (audited)

Revenue $ 153,947 $ 154,652 $ 641,374 $ 648,101
Operating costs 95,819 98,790 418,892 433,597
Amortization 32,788 33,758 141,062 145,204
Income taxes 3,311 1,472 45,535 38,973
Non-controlling
interest 4,925 4,077 (15,500) (18,874)
Net income (loss) 2,666 2,117 (8,416) (10,600)
-------------------------------------------------------------------------
Earnings (loss)
per share
Basic and
diluted $ 0.16 $ 0.13 $ (0.51) $ (0.65)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Consequently, retained earnings have been reduced by $11.7 million as at
September 1, 2003 following these changes.


3. Income taxes

Three months Twelve months
ended August 31, ended August 31,
-------------------------------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (audited) (audited)

Current $ (367) $ (1,151) $ 3,318 $ 2,999
Future 5,419 2,623 12,055 35,974
-------------------------------------------------------------------------
$ 5,052 $ 1,472 $ 15,373 $ 38,973
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The following table provides the reconciliation between statutory federal
and provincial income taxes and the consolidated income tax expense:

Three months Twelve months
ended August 31, ended August 31,
-------------------------------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (audited) (audited)

Income tax at
combined
income tax rate
of 34.15%
(33.42% in 2004) $ 3,717 $ 2,743 $ (2,387) $ 3,216
Loss or income
subject to lower
or higher tax rates 339 (559) 2,060 131
Increase in income
taxes as a result
of increases in
substantially
enacted tax rates - - - 32,483
Large corporation tax 127 846 1,534 3,825
Income taxes arising
from the non-
deductible impairment
of goodwill and
broadcasting licenses - - 10,570 -
Variation of the
valuation allowance 1,624 - 4,078 -
Other (755) (1,558) (482) (682)
-------------------------------------------------------------------------
Income tax at
effective income
tax rate $ 5,052 $ 1,472 $ 15,373 $ 38,973
-------------------------------------------------------------------------
-------------------------------------------------------------------------


4. Segmented Information

The Company's activities are divided into two business segments: Cable
and Media. The Cable segment is comprised of all cable and high-speed Internet
access and digital telephony services, and the Media segment is comprised of
radio and television operations.

The principal financial information per business segment is presented in
the table below:

Cable Media
-------------------------------------------------------------------------
Three months ended
August 31,(unaudited) 2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Revenue $ 140,178 $ 133,053 $ 24,082 $ 21,643
Operating costs 79,458 78,763 25,770 18,935
Operating income
(loss) before
amortization 60,720 54,290 (1,688) 2,708
Amortization 29,460 32,476 1,329 1,223
Operating income
(loss) 31,260 21,814 (3,017) 1,485
Financial expense 14,004 13,871 133 211
Income taxes 6,220 1,474 (3,637) 319
-------------------------------------------------------------------------
Net assets
employed(1) $ 1,595,216 $ 1,619,540 $ 75,561 $ 126,688
Total assets 1,755,796 1,761,379 114,393 160,390
Goodwill - - - 27,925
Acquisition of
fixed assets 41,443 29,281 2,647 1,604
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Head Office
and elimination Consolidated
--------------------------------------------- --------------------------
Three months ended
August 31, (unaudited) 2005 2004 2005 2004
--------------------------------------------- --------------------------
--------------------------------------------- --------------------------

Revenue $ (50) $ (44) $ 164,210 $ 154,652
Operating costs 2,497 1,092 107,725 98,790
Operating income
(loss) before
amortization (2,547) (1,136) 56,485 55,862
Amortization (20) 59 30,769 33,758
Operating income
(loss) (2,527) (1,195) 25,716 22,104
Financial expense 229 223 14,366 14,305
Income taxes 2,469 (321) 5,052 1,472
--------------------------------------------- --------------------------
Net assets
employed (1) $ 7,208 $ 6,814 $ 1,677,985 $ 1,753,042
Total assets 6,786 7,876 1,876,975 1,929,645
Goodwill - - - 27,925
Acquisition of
fixed assets 54 - 44,144 30,885
--------------------------------------------- --------------------------
--------------------------------------------- --------------------------

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


Cable Media
-------------------------------------------------------------------------
Twelve months ended
August 31, (audited) 2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Revenue $ 554,404 $ 526,480 $ 121,386 $ 121,797
Operating costs 326,883 323,234 114,587 111,308
Operating income
(loss) before
amortization 227,521 203,246 6,799 10,489
Amortization 125,088 140,214 5,306 4,829
Operating income
(loss) 102,433 63,032 1,493 5,660
Financial expense 55,692 57,957 528 520
Impairment of
goodwill and
other intangible
assets - - 52,531 -
Income taxes 18,020 37,269 (2,899) 1,085
-------------------------------------------------------------------------
Net assets
employed(1) $ 1,595,216 $ 1,619,540 $ 75,561 $ 126,688
Total assets 1,755,796 1,761,379 114,393 160,390
Goodwill - - - 27,925
Acquisition of
fixed assets 112,289 81,222 4,940 4,913
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Head Office
and elimination Consolidated
--------------------------------------------- --------------------------
Twelve months ended
August 31, (audited) 2005 2004 2005 2004
--------------------------------------------- --------------------------
--------------------------------------------- --------------------------

Revenue $ (185) $ (176) $ 675,605 $ 648,101
Operating costs 292 (945) 441,762 433,597
Operating income
(loss) before
amortization (477) 769 233,843 214,504
Amortization 157 161 130,551 145,204
Operating income
(loss) (634) 608 103,292 69,300
Financial expense 1,064 1,101 57,284 59,578
Impairment of
goodwill and
other intangible
assets - - 52,531 -
Income taxes 252 619 15,373 38,973
--------------------------------------------- --------------------------
Net assets
employed(1) $ 7,208 $ 6,814 $ 1,677,985 $ 1,753,042
Total assets 6,786 7,876 1,876,975 1,929,645
Goodwill - - - 27,925
Acquisition of
fixed assets 104 823 117,333 86,958
--------------------------------------------- --------------------------
--------------------------------------------- --------------------------

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


5. Goodwill and other intangible assets

-------------------------------------------------------------------------
Broadcasting Customer
Goodwill licenses base Total
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(audited) (audited) (audited) (audited)

Balance as at
August 31, 2004 $ 27,925 $ 52,726 $ 989,772 $ 1,070,423
Impairment (27,925) (24,606) - (52,531)
-------------------------------------------------------------------------
Balance as at
August 31, 2005 $ - $ 28,120 $ 989,772 $ 1,017,892
-------------------------------------------------------------------------
-------------------------------------------------------------------------

In accordance with the recommendations of CICA 3062, Goodwill and Other
Intangible Assets, impairment tests of the goodwill and the broadcasting
licenses related to television operation of the media business unit have been
performed during the second quarter, using a valuation approach based on
discounted cash flow techniques. The impairment tests were necessary following
market share losses, emerging business trends and the competitive environment
that impact expected future operating results of television. As a result, the
Company has recorded a reduction of $24,606,000 in the carrying value of its
broadcasting licenses and written-off its goodwill of $27,925,000 during the
second quarter, based on revised future estimates of its cash flows.


6. Long-term debt

-------------------------------------------------------------------------
Maturity Interest August 31, August 31,
rate 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(audited) (audited)
Parent company
Term Facility 2008(1) 5.00%(2) $ 22,500 $ 22,000
Obligation under
capital lease 2010 6.61 55 -

Subsidiaries
Term Facility 2007 - - 58,000
Senior Secured
Debentures Series 1 2009 6.75 150,000 150,000
Senior -
Secured Notes
Series A -
US $150 million 2008 6.83(3) 178,065 196,950
Series B 2011 7.73 175,000 175,000
Second Secured
Debentures Series A 2007 8.44 125,000 125,000
Deferred credit (4) 2008 - 60,585 41,700
Obligations under
capital leases 2010 5.87 - 8.36 3,831 3,225
Preferred shares (5) - - - 2,920
Other - - 103 140
-------------------------------------------------------------------------
715,139 774,935
Less current portion 1,400 2,603
-------------------------------------------------------------------------
$ 713,739 $ 772,332
-------------------------------------------------------------------------
-------------------------------------------------------------------------

(1) COGECO Inc.'s $40,000,000 Term Facility has been extended for an
additional year in December 2004.
(2) Average interest rate on debt as of August 31, 2005, including
stamping fees.
(3) Cross-currency swap agreements have resulted in an effective interest
rate of 7.254% on the Canadian dollar equivalent of the U.S.
denominated debt.
(4) The deferred credit represents the amount which would have been
payable as at August 31, 2005 and 2004 under cross-currency swaps
entered into by the Company's subsidiary, Cogeco Cable Inc., to hedge
Senior Secured Notes Series A denominated in US dollars.
(5) 2,920,000 preferred shares in 2004, 5.5% cumulative dividend,
redeemed in the fourth quarter of 2005 for a cash consideration of
$3,004,000.


7. 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 shares, 1 vote per share.

-------------------------------------------------------------------------
August 31, August 31,
2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(audited) (audited)
Issued

1,849,900 multiple voting shares $ 12 $ 12
14,600,104 subordinate voting shares
(14,522,456 in 2004) 116,155 115,609
-------------------------------------------------------------------------
$ 116,167 $ 115,621
-------------------------------------------------------------------------
-------------------------------------------------------------------------


During the period, subordinate voting shares transactions were as
follows:

Twelve months ended Twelve months ended
August 31, 2005 August 31, 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(audited) (audited)
-------------------------------------------------------------------------
Number of Number of
shares Amount shares Amount
-------------------------------------------------------------------------

Balance at
beginning 14,522,456 $ 115,609 14,465,777 $ 115,101
Shares issued for
cash under the
Employee Stock
Purchase Plan
and the Stock
Option Plan 77,648 546 60,079 535
Purchase of shares
for cancellation - - (3,400) (27)
-------------------------------------------------------------------------
Balance at end 14,600,104 $ 116,155 14,522,456 $ 115,609
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Stock-based plans

The Company established, for the benefit of its employees and those of
its subsidiaries, an Employee Stock Purchase Plan and a Stock Option Plan for
certain executives which are described in the Corporation's annual
consolidated financial statements. During the year, no stock options were
granted to employees by COGECO Inc. However, the Company's subsidiary, Cogeco
Cable Inc., granted 140,766 stock options (164,980 in 2004) with an exercise
price of $21.50 ($15.70 to $18.12 in 2004), of which 38,397 stock options
(48,037 in 2004) 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 $132,000 and $484,000 ($63,000 and $238,000
in 2004) were recorded for the three and twelve month periods ended August 31,
2005. If compensation cost had been recognized using the fair value-based
method at the grant date for options granted between September 1, 2001 and
August 31, 2003, the Company's net income (loss) and earnings (loss) per share
for the three and twelve month periods ended August 31, 2005 and 2004 would
have been reduced (increased) to the following pro forma amounts:

Three months Twelve months
ended August 31, ended August 31,
-------------------------------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (audited) (audited)
Net income (loss)
As reported $ 630 $ 2,117 $ (19,813) $ (10,600)
Pro forma 550 2,037 (20,133) (10,920)

Basic earnings
(loss) per share
As reported $ 0.04 $ 0.13 $ (1.21) $ (0.65)
Pro forma 0.03 0.12 (1.23) (0.67)

Diluted earnings
(loss) per share
As reported $ 0.04 $ 0.13 $ (1.21) $ (0.65)
Pro forma 0.03 0.12 (1.23) (0.67)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The fair value of stock options granted by the Company's subsidiary,
Cogeco Cable Inc., for the twelve month period ended August 31, 2005 was $7.46
($6.53 in 2004) per option. The fair value was estimated on the grant date for
purposes of determining stock-based compensation expense using the Binomial
option pricing model based on the following assumptions:

-------------------------------------------------------------------------
2005 2004
-------------------------------------------------------------------------
Expected dividend yield 1.27% 1.27%
Expected volatility 43% 49%
Risk-free interest rate 3.70% 4.04%
Expected life in years 4.0 3.9
-------------------------------------------------------------------------

As at August 31, 2005, the Company had outstanding stock options
providing for the subscription of 429,276 subordinate voting shares. These
stock options can be exercised at various prices ranging from $6.50 to $37.50
and at various dates up to October 19, 2011.
TQS Inc., an indirect subsidiary of the Company, also adopted a stock
option plan for certain executives and key employees which is described in the
financial statements for the year ended August 31, 2004. During the year, TQS
Inc. granted 77,000 stock options (97,179 in 2004). A compensation expense of
$41,000 and $162,000 was recorded for the three and twelve month periods ended
August 31, 2005 related to this plan.


8. Earnings (loss) per share

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

Three months Twelve months
ended August 31, ended August 31,
-------------------------------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (audited) (audited)

Net income (loss) $ 630 $ 2,117 $ (19,813) $ (10,600)
Weighted average
number of
multiple voting
and subordinate
voting shares
outstanding 16,450,004 16,355,530 16,419,584 16,343,673
Effect of dilutive
stock options(1) 171,548 142,481 - -
-------------------------------------------------------------------------
Weighted average
number of diluted
multiple voting
and subordinate
voting shares
outstanding 16,621,552 16,498,011 16,419,584 16,343,673
-------------------------------------------------------------------------

Earnings (loss)
per share
Basic and
diluted $ 0.04 $ 0.13 $ (1.21) $ (0.65)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

(1) For the twelve month period ended August 31, 2005, the effect of
366,400 stock options (331,850 in 2004) was not included in diluted
loss per share, as the affect of their inclusion was antidilutive.
Also, for the three month period ended August 31, 2005, 43,843 stock
options (191,976 in 2004) were excluded from the calculation of
diluted earnings per share since the exercise price of the options
was greater than the average share price of the subordinate voting
shares.


9. Statements of cash flow

a) Changes in non-cash operating items

Three months Twelve months
ended August 31, ended August 31,
-------------------------------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (audited) (audited)

Accounts
receivable $ 5,843 $ 10,444 $ 1,681 $ 5,823
Income tax
receivable - (304) 304 (264)
Prepaid expenses 891 (2,029) 825 (1,637)
Broadcasting rights (2,265) 420 (1,816) 1,568
Accounts payable
and accrued
liabilities 46,018 24,301 17,381 (2,151)
Broadcasting
rights payable 138 3,943 2,057 (3,723)
Income tax payable (850) (1,505) 299 -
Deferred and
prepaid income (242) 1,184 2,949 3,117
Other 418 (840) - (936)
-------------------------------------------------------------------------
$ 49,951 $ 35,614 $ 23,680 $ 1,797
-------------------------------------------------------------------------
-------------------------------------------------------------------------


b) Other information

Three months Twelve months
ended August 31, ended August 31,
-------------------------------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (audited) (audited)

Fixed assets
acquisitions
through capital
leases $ 419 $ 923 $ 1,979 $ 2,583
Interest paid 11,701 11,111 55,817 58,395
Income taxes paid 483 658 2,715 3,263
-------------------------------------------------------------------------
-------------------------------------------------------------------------


10. Employees future benefits

The Company and its subsidiaries offer their employees defined
contributory benefit pension plans, a defined contribution pension plan or
collective registered retirement savings plans which are described in the
Corporation's annual consolidated financial statements. The total expenses
related to these plans are as follows:

Three months Twelve months
ended August 31, ended August 31,
-------------------------------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (audited) (audited)

Defined
contributory
benefit pension
plans $ 703 $ 664 $ 2,285 $ 1,961
Defined
contribution
pension plan
and collective
registered
retirement
savings plans 388 315 1,593 1,543
-------------------------------------------------------------------------
$ 1,091 $ 979 $ 3,878 $ 3,504
-------------------------------------------------------------------------
-------------------------------------------------------------------------


11. Comparative figures

Certain comparative figures have been reclassified in order to conform to
the presentation adopted in the current period.

Contact Information

  • Media, Marie Carrier,
    Director, Corporate Communications,
    (514) 874-2600;

    Source: Pierre Gagné,
    Vice President, Finance
    and Chief, Financial Officer,
    COGECO Inc.,
    (514) 874-2600