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Cogeco Cable's First Quarter Results on the Rise

(January 26, 2012)

MONTREAL, QUEBEC -- (Marketwire) -- 01/26/12 -- Today, Cogeco Cable Inc. (TSX:CCA) ("Cogeco Cable" or the "Corporation") announced its financial results for the first quarter of fiscal 2012, ended November 30, 2011, in accordance with the newly adopted International Financial Reporting Standards ("IFRS").

For the first quarter of fiscal 2012:

-- Revenue increased by 8% to reach $356.9 million; -- Operating income before depreciation and amortization(1) increased by 5.5% to $136.6 million when compared to the first quarter of fiscal 2011; -- Operating margin(1) decreased to 38.3% from 39.2% in the first quarter when compared to the same period of the prior year, mainly as a consequence of the expenditures incurred to migrate Television service customers from analog to digital distribution; -- Profit for the period increased by 24.2% to reach $43 million when compared to $34.6 million for the same period of the previous fiscal year; -- In the first quarter of the year, a positive free cash flow(1) of $21 million was generated compared to a negative free cash flow of $30 million for the same period of the prior year. This variance is mostly attributable to the difference in the recognition of current income tax expense for both periods combined with the improvement of operating income before depreciation and amortization, partly offset by the increase in acquisition of property, plant and equipment; -- A quarterly dividend of $0.25 per share was paid to the holders of subordinate and multiple voting shares, an increase of $0.08 per share, or 47.1%, when compared to a dividend paid of $0.17 per share in the first quarter of fiscal 2011; -- Primary service units ("PSU")(2) grew by 45,129 net additions in the quarter, for a total of 2,609,683 PSU at November 30, 2011.

"Cogeco Cable's results for the first quarter of fiscal 2012 improved and most of our performance indicators were positive. Our sales and marketing strategies for attracting new customers were particularly successful. Despite fierce competition, we recorded an overall increase of 45,129 PSU for the first quarter. Although these results improved compared to last year, we must remain vigilant and disciplined with our operating metrics, given ongoing worldwide economic uncertainty. We continue to invest in preserving the long term superiority of our networks and the competitiveness of our offerings. More than ever, our growth will be driven by our ability to maintain focus on our clients' priorities and to efficiently meet their ever-increasing needs", declared Louis Audet, President and CEO of Cogeco Cable.


(1) The indicated terms do not have standardized definitions prescribed by IFRS and therefore, may not be comparable to similar measures presented by other companies. For more details, please consult the "Non-IFRS financial measures" section.

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

ABOUT COGECO CABLE

Cogeco Cable (www.cogeco.ca) is a telecommunications corporation and is the second largest hybrid fibre coaxial cable operator in Ontario, Quebec and Portugal. Through its two-way broadband cable networks, Cogeco Cable provides its residential customers with Audio, Analogue and Digital Television, as well as HSI and Telephony services. Cogeco Cable also provides to its commercial customers, through its subsidiary Cogeco Data Services, data networking, e-business applications, video conferencing, hosting services, Ethernet, private line, VoIP, HSI access, data storage, data security, co-location services, managed IT services, cloud services and other advanced communication solutions. Cogeco Cable's subordinate voting shares are listed on the Toronto Stock Exchange (TSX:CCA).

Analyst Conference Call: Thursday, January 26, 2012 at 9:30 a.m. (EST) Media representatives may attend as listeners only. Please use the following dial-in number to have access to the conference call by dialling five minutes before the start of the conference: Canada/USA Access Number: 1 888 820-0231 International Access Number: + 1 416 640-5926 Confirmation Code: 8378457 By Internet at www.cogeco.ca/investors A rebroadcast of the conference call will be available until April 26, 2012, by dialling: Canada and USA access number: 1 888 203-1112 International access number: + 1 647 436-0148 Confirmation code: 8378457

SHAREHOLDERS' REPORT

First quarter ended November 30, 2011

FINANCIAL HIGHLIGHTS

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended November 30, 2011 2010 Change ($000, except percentages and per share data) $ $ % ---------------------------------------------------------------------------- (unaudited) (unaudited) Operations Revenue 356,939 330,467 8.0 Operating income before depreciation and amortization(1) 136,571 129,507 5.5 Operating margin(1) 38.3% 39.2% - Operating income 70,459 67,676 4.1 Profit for the period 42,966 34,590 24.2 ---------------------------------------------------------------------------- Cash Flow Cash flow from operating activities 19,939 55,046 (63.8) Cash flow from operations(1) 101,701 36,486 - Acquisitions of property, plant and equipment and intangible assets 80,717 66,490 21.4 Free cash flow(1) 20,984 (30,004) - ---------------------------------------------------------------------------- Financial Condition(2) Property, plant and equipment 1,268,721 1,254,217 0.1 Total assets 2,671,900 2,712,679 (0.2) Indebtedness(3) 1,021,620 981,214 4.1 Shareholders' equity 1,061,823 1,033,252 2.8 ---------------------------------------------------------------------------- Primary service units(4) growth 45,129 49,220 (8.3) ---------------------------------------------------------------------------- Per Share Data(5) Earnings per share Basic 0.88 0.71 23.9 Diluted 0.88 0.71 23.9 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) The indicated terms do not have standardized definitions prescribed by International Financial Reporting Standards ("IFRS") and therefore, may not be comparable to similar measures presented by other companies. For more details, please consult the "Non-IFRS financial measures" section of the Management's discussion and analysis. (2) At November 30, 2011 and August 31, 2011. (3) Indebtedness is defined as the total of bank indebtedness, principal on long-term debt, balance due on a business acquisition and obligations under derivative financial instruments. (4) Represents the sum of Television, High Speed Internet ("HSI") and Telephony service customers. (5) Per multiple and subordinate voting share.

MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)

First quarter ended November 30, 2011

TRANSITION TO IFRS

On January 1, 2011, the Canadian generally accepted accounting principles ("GAAP"), as used by publicly accountable enterprises, were fully converged to International Financial Reporting Standards ("IFRS"). Accordingly, the Corporation has prepared its first condensed interim consolidated financial statements for the three-month period ended November 30, 2011 in accordance with IFRS. Prior to the adoption of IFRS, for all periods up to and including the year ended August 31, 2011, the Corporation's consolidated financial statements were prepared in accordance with Canadian GAAP. IFRS uses a conceptual framework similar to Canadian GAAP, but there are significant differences related to recognition, measurement and disclosures.

The date of the opening balance sheet under IFRS and the date of transition to IFRS are September 1, 2010. The financial data for fiscal 2011 have therefore been restated. The Corporation is also required to apply IFRS accounting policies retrospectively to determine its opening statement of financial position, subject to certain exemptions. However, the Corporation is not required to restate figures for periods prior to September 1, 2010 that were previously prepared in accordance with Canadian GAAP.

The new significant accounting policies under IFRS are disclosed in Note 2 to the condensed interim consolidated financial statements for the three-month period ended November 30, 2011, while Note 15 explains adjustments made by the Corporation in preparing its IFRS opening consolidated balance sheet as of September 1, 2010 and in restating its previously published Canadian GAAP condensed interim consolidated financial statements for the three-month period ended November 30, 2010 and the year ended August 31, 2011. Note 15 also provides details on exemption choices made by the Corporation with respect to the general principle of retrospective application of IFRS. The changes to critical accounting policies as a result of IFRS, and their impacts on accounting estimates, are described under "Changes in critical accounting policies and estimates" below.

FORWARD-LOOKING STATEMENTS

Certain statements in this Management's Discussion and Analysis ("MD&A") may constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to Cogeco Cable's future outlook and anticipated events, business, operations, financial performance, financial condition or results and, in some cases, can be identified by terminology such as "may"; "will"; "should"; "expect"; "plan"; "anticipate"; "believe"; "intend"; "estimate"; "predict"; "potential"; "continue"; "foresee", "ensure" or other similar expressions concerning matters that are not historical facts. In particular, statements regarding the Corporation's future operating results and economic performance and its objectives and strategies are forward-looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities, which Cogeco Cable believes are reasonable as of the current date. While management considers these assumptions to be reasonable based on information currently available to the Corporation, they may prove to be incorrect. The Corporation cautions the reader that the economic downturn experienced over the past few years makes forward-looking information and the underlying assumptions subject to greater uncertainty and that, consequently, they may not materialize, or the results may significantly differ from the Corporation's expectations. It is impossible for Cogeco Cable to predict with certainty the impact that the current economic uncertainties may have on future results. Forward-looking information is also subject to certain factors, including risks and uncertainties (described in the "Uncertainties and main risk factors" section of the Corporation's 2011 annual MD&A) that could cause actual results to differ materially from what Cogeco Cable currently expects. These factors include technological changes, changes in market and competition, governmental or regulatory developments, general economic conditions, the development of new products and services, the enhancement of existing products and services, and the introduction of competing products having technological or other advantages, many of which are beyond the Corporation's control. Therefore, future events and results may vary significantly from what management currently foresee. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While management may elect to, the Corporation is under no obligation (and expressly disclaims any such obligation), and does not undertake to update or alter this information before the next quarter.

All amounts are stated in Canadian dollars unless otherwise indicated. This report should be read in conjunction with the Corporation's consolidated financial statements and MD&A for the fiscal year ended August 31, 2011 included in the Corporation's 2011 Annual Report. It should also be read in conjunction with the information on the adjustments to the fiscal 2011 financial figures upon adoption of IFRS, explained in Note 15 of the condensed interim consolidated financial statements for the three-month period ended November 30, 2011.

Corporate strategies and objectives

Cogeco Cable Inc.'s ("Cogeco Cable" or the "Corporation") objectives are to improve profitability and create shareholder value. The strategies for reaching those objectives are sustained growth through the diversification and the improvement of products, services, clientele and territories, as well as the continuous improvement of networks and equipment and tight controls over costs and business processes. The Corporation measures its performance, with regard to these objectives by monitoring operating income before depreciation and amortization((1), operating margin(1), primary service units ("PSU")((2) growth and free cash flow(1).

During the first three months of fiscal 2012, the Corporation invested approximately $33 million in its network infrastructure and equipment to upgrade its capacity, improve its robustness and extend its territories in order to better serve and increase its service offerings for new and existing clientele.

PSU growth and penetration of service offerings

During the first quarter ended November 30, 2011, the number of PSU increased by 45,129, or 1.8%, to reach 2,609,683 PSU, mainly as a result of targeted marketing initiatives in the Canadian operations and of the continuing interest for high definition ("HD") television service which offset the loss in the European operations resulting primarily from a decreased demand for services. As of fiscal 2012, Cogeco Cable has modified its key performance indicator for growth to a PSUconcept instead of a revenue-generating units ("RGU") concept. Cogeco Cable expects a PSU growth of 90,000 net additions for the fiscal 2012 year which amounts in terms of RGU to 225,000 net additions for fiscal 2012 year as presented in the Fiscal 2012 financial guidelines of the 2011 Annual Report.

Operating income before depreciation and amortization and operating margin

First-quarter operating income before depreciation and amortization increased by 5.5% when compared to the first quarter of fiscal 2011 to reach $136.6 million and operating margin decreased to 38.3% from 39.2%.

Free cash flow

For the three-month period ended November 30, 2011, Cogeco Cable reports positive free cash flow of $21 million, compared to negative free cash flow of $30 million for the first quarter of the previous fiscal year, representing an increase of $51 million. This variance is mostly attributable to the difference in the recognition of current income tax expense for both periods combined with the improvement of operating income before depreciation and amortization, partly offset by the increase in acquisition of property, plant and equipment.

OPERATING RESULTS - CONSOLIDATED OVERVIEW

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended November 30, 2011 2010 Change ($000, except percentages) $ $ % ---------------------------------------------------------------------------- (unaudited) (unaudited) Revenue 356,939 330,467 8.0 Operating costs(1) 213,226 194,316 9.7 Management fees - COGECO Inc. 7,142 6,644 7.5 ------------------------------------------------------------- Operating income before depreciation and amortization 136,571 129,507 5.5 ------------------------------------------------------------- Operating margin 38.3% 39.2% ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 1. Represents the sum of salaries, employee benefits and outsourced services as well as other external purchases included in the Interim Consolidated Statements of Profit or Loss.

Revenue

Fiscal 2012 first-quarter revenue rose by $26.5 million, or 8%, to reach $356.9 million, when compared to the prior year. For further details on the Corporation's operating results, please refer to the "Canadian operations" and "European operations" sections.

Operating costs

For the first quarter of fiscal 2012, operating costs, excluding management fees payable to COGECO Inc., increased by $18.9 million, to reach $213.2 million, an increase of 9.7% compared to the first quarter of the prior year. For further details on the Corporation's operating results, please refer to the "Canadian operations" and "European operations" sections.

Operating income before depreciation and amortization and operating margin

Fiscal 2012 first-quarter operating income before depreciation and amortization increased by 5.5% to reach $136.6 million. Cogeco Cable's first-quarter operating margin decreased to 38.3% from 39.2% in the comparable period of the prior year. For further details on the Corporation's operating results, please refer to the "Canadian operations" and "European operations" sections.

(1) The indicated terms do not have standardized definitions prescribed by IFRS and therefore, may not be comparable to similar measures presented by other companies. For more details, please consult the "Non-IFRS financial measures" section.

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

RELATED PARTY TRANSACTIONS

Cogeco Cable is a subsidiary of COGECO Inc., which holds 32.1% of the Corporation's equity shares, representing 82.6% of the votes attached to the Corporation's voting shares. Under a management agreement, the Corporation pays COGECO Inc. monthly management fees equal to 2% of its total revenue, capped annually and subject to an adjustment based on the increase in the Consumer Price Index in Canada, for certain executive, administrative, legal, regulatory, strategic and financial planning and additional services to the Corporation and its subsidiaries. Accordingly, for fiscal 2012, management fees have been set at a maximum of $9.5 million, which is expected to be paid within the first six months of the fiscal year. For fiscal 2011, management fees were capped at $9.2 million, and were fully paid in the first half of the year.

Cogeco Cable granted 46,400 stock options to COGECO Inc.'s employees during the first three months of fiscal 2012, compared to 35,800 for the same period last year. During the first quarter, Cogeco Cable charged COGECO Inc. an amount of $74,000 with regards to Cogeco Cable's options granted to COGECO Inc.'s employees, compared to $49,000 in the first quarter of the prior year.

Cogeco Cable also granted 10,700 incentive share units to COGECO Inc.'s employees during the first three months of fiscal 2012, compared to 10,000 incentive share units in the first three months of fiscal 2011. During the first quarter, the Corporation charged COGECO Inc. an amount of $76,000 with respect to these incentive share units, compared to $39,000 in the comparable period of the previous fiscal year.

Details regarding the management agreement and stock options and incentive share units granted to COGECO Inc.'s employees are provided in the Corporation's 2011 Annual Report.

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

FIXED CHARGES

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended November 30, 2011 2010 Change ($000, except percentages) $ $ % ---------------------------------------------------------------------------- (unaudited) (unaudited) Depreciation and amortization 66,112 61,831 6.9 Financial expense 16,718 16,657 0.4 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

First-quarter 2012 depreciation and amortization amounted to $66.1 million, compared to $61.8 million for the same period of the prior year. The increase is mainly due to additional acquisitions of property, plant and equipment in the Canadian operations arising mainly from customer premise equipment acquisitions to support PSU growth as well as reduction of the depreciation period for some home terminal devices in Canada, partly offset by the write-down of property, plant and equipment in Portugal in the third quarter of 2011.

For the first quarter 2012, financial expense was essentially the same at $16.7 million when compared to the prior year.

INCOME TAXES

Fiscal 2012 first-quarter income tax expense amounted to $10.8 million, compared to $16.4 million in the prior year. Fiscal 2012 first quarter income tax expense decrease is mainly due to the implementation of certain tax measures of the 2011 federal budget limiting the tax deferrals for corporations with a significant interest in a partnership. Under the transitional relief measures, some income will be taxed over a period of five years rather than being taxed all in fiscal 2012 and, with the effect of the decrease in income tax rates over the next five years, resulted in a tax expense reduction of $3.5 million in the first quarter of fiscal 2012.

The changes limiting the tax deferrals described above will have an additional cash outflow impact of approximately $13 million for the Corporation during the fiscal 2012, none of which have been disgorged during the quarter.

PROFIT FOR THE PERIOD

Fiscal 2012 first quarter profit for the period amounted to $43 million, or $0.88 per share, compared to $34.6 million, or $0.71 per share, for the same period in fiscal 2011. Profit progression for the period has resulted mainly from the operating income before depreciation and amortization growth and the decrease in income tax expense in the first three months of the 2012 fiscal year.

CASH FLOW AND LIQUIDITY

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended November 30, 2011 2010 ($000) $ $ ---------------------------------------------------------------------------- (unaudited) (unaudited) Operating activities Cash flow from operations 101,701 36,486 Changes in non-cash operating activities (63,323) (57,712) Amortization of deferred transaction costs and discounts on long-term debt (675) (731) Income taxes received (paid) (34,225) 2,647 Current income tax expense 19,662 78,056 Financial expense paid (19,919) (20,357) Financial expense 16,718 16,657 ---------------------------------------------------------------------------- 19,939 55,046 ---------------------------------------------------------------------------- Investing activities (80,512) (66,490) ---------------------------------------------------------------------------- Financing activities 25,399 173,484 ---------------------------------------------------------------------------- Effect of exchange rate changes on cash and cash equivalents denominated in a foreign currency (338) (229) ---------------------------------------------------------------------------- Net change in cash and cash equivalents (35,512) 161,811 Cash and cash equivalents, beginning of period 55,447 35,842 ---------------------------------------------------------------------------- Cash and cash equivalents, end of period 19,935 197,653 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

Fiscal 2012 first-quarter cash flow from operations reached $101.7 million compared to $36.5 million for the same period last year. This increase of $65.2 million is primarily due to the reduction in current income tax recovery, partly offset by the increase in operating income before depreciation and amortization. Changes in non-cash operating activities generated cash outflows of $63.3 million compared to $57.7 million for the same period in fiscal 2011, mainly as a result of a decrease in trade and other payables for both periods.

Investing activities, including acquisitions of property, plant and equipment segmented according to the National Cable Television Association ("NCTA") standard reporting categories, are as follows:

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended November 30, 2011 2010 ($000) $ $ ---------------------------------------------------------------------------- (unaudited) (unaudited) Customer premise equipment(1) 34,969 26,946 Scalable infrastructure 20,126 16,004 Line extensions 6,347 3,890 Upgrade / Rebuild 6,526 10,229 Support capital 8,805 6,183 ---------------------------------------------------------------------------- Acquisition of property, plant and equipment 76,773 63,252 ---------------------------------------------------------------------------- Acquisition of intangible assets and others 3,739 3,238 ---------------------------------------------------------------------------- Total investing activities 80,512 66,490 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 1. Includes mainly home terminal devices as well as new and replacement drops.

Fiscal 2012 first quarter acquisition of property, plant and equipment amounted to $76.8 million, an increase of 21.4% when compared to $63.3 million in the first quarter of the prior year due to the following factors:

-- An increase in customer premise equipment spending mainly due to the timing of equipment purchases to support PSU and Digital Television growth in the Canadian operations and conversion from analog to digital distribution. This increase was partly offset by the decrease in customer premise equipment spending reflecting PSU loss in the European operations; -- An increase in scalable infrastructure in the Canadian operations to improve network capacity in existing areas served; -- An increase in support capital spending stemming from the construction and acquisition of new facilities in the Canadian operations.

Acquisition of intangible assets and others are mainly attributable to reconnect and additional service activation costs as well as other customer acquisition costs. For the first quarter, the acquisition of intangible assets and others amounted to $3.7 million, slightly higher when compared to $3.2 million for the first quarter of the 2011 fiscal year.

In the first quarter, positive free cash flow amounted to $21 million, compared to negative free cash flow of $30 million in the comparable period of fiscal 2011, representing an increase of $51 million. The growth in free cash flow over the prior year is due to the increase in operating income before depreciation and amortization combined with the current income tax expense reduction, partly offset by the increase in property, plant and equipment acquisitions.

In the first three months of fiscal 2012, Indebtedness affecting cash increased by $40.4 million mainly due to the cash outflows of $63.3 million from the changes in non-cash operating activities, to $14.6 million and $3.2 million of income tax and financial expense payments made during the quarter but recorded in 2011 fiscal year and dividend payment of $12.2 million, partly offset by the positive free cash flow of $21 million and the decrease in cash and cash equivalents of $35.5 million. In the first three months of fiscal 2011, Indebtedness affecting cash increased by $183.7 million mainly due the cash outflows of $57.7 million from the changes in non-cash operating activities, the increase in cash and cash equivalents of $161.8 million, negative free cash flow of $30 million and the dividend payment of $8.2 million, partly offset by $78.1 million of income tax expense recorded in the first quarter of fiscal 2011 but not paid due to modifications made to the corporate structure. Indebtedness mainly increased in 2011 through the issuance of $200 million Senior Secured Debentures Series 2, partly offset by a net repayment of $13.8 million on the Corporation's Term Revolving Facility.

During the first quarter of fiscal 2012, a dividend of $0.25 per share was paid to the holders of subordinate and multiple voting shares, totalling $12.2 million, compared to a dividend of $0.17 per share, or $8.2 million the year before.

As at November 30, 2011, the Corporation had a working capital deficiency of $151.4 million compared to $ 178.2 million at August 31, 2011. The decrease in the deficiency is mainly attributable to a decrease in trade and other payables and income tax liabilities, partly offset by decreases in cash and cash equivalents and in income taxes receivable and by an increase in bank indebtedness. As part of the usual conduct of its business, Cogeco Cable maintains a working capital deficiency due to a low level of accounts receivable as a large portion of the Corporation's customers pay before their services are rendered, unlike trade and other payables, which are paid after products are delivered or services are rendered, thus enabling the Corporation to use cash and cash equivalents to reduce Indebtedness.

At November 30, 2011, the Corporation had used $151.2 million of its $750 million Term Revolving Facility for a remaining availability of $598.8 million.

FINANCIAL POSITION

Since August 31, 2011, there have been significant changes to the balances of, "trade and other payables", "property, plant and equipment", "income taxes receivable", "income tax liabilities", "future income tax liabilities", "long-term debt", "derivative financial instruments", "cash and cash equivalents" and "bank indebtedness".

The $68.3 million decrease in trade and other payables is related to the timing of payments made to suppliers. The $14.5 million increase in property, plant and equipment reflects the acquisitions discussed in the "Cash flow and Liquidity" section net from the depreciation expense. The decrease of $25.2 million in income taxes receivable, of $39.7 million in income tax liabilities and of $7.9 million in future income tax liabilities primarily reflect the timing of the recognition of income tax liabilities as a result of modifications made to the corporate structure combined with the increase in operating income before depreciation and amortization. The increase of $21 million in bank indebtedness, of $27.8 million in long-term debt and the decrease of $35.5 million in cash and cash equivalents are due to the factors previously discussed in the "Cash Flow and Liquidity" section. The $7 million decrease in derivative financial instruments is due to the factors discussed in the "Financial management" section.

A description of Cogeco Cable's share data as of December 31, 2011 is presented in the table below:

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Number of Amount shares/options ($000) ---------------------------------------------------------------------------- Common shares Multiple voting shares 15,691,100 98,346 Subordinate voting shares 33,117,508 899,997 Options to purchase Subordinate voting shares Outstanding options 607,925 Exercisable options 406,565 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

In the normal course of business, Cogeco Cable has incurred financial obligations, primarily in the form of long-term debt, operating and finance leases and guarantees. Cogeco Cable's obligations, as discussed in the 2011 Annual Report, have not materially changed since August 31, 2011, except as mentioned below.

On November 22, 2011, Cogeco Cable renewed its credit agreement for a $750 million credit facility, with an option to increase to a total amount of up to $1 billion, subject to lenders' participation, in the form of a five year Term Revolving Facility. The renewed Term Revolving Facility was arranged by a group of financial institutions led by Canadian Imperial Bank of Commerce and Bank of Montreal. The renewed Term Revolving Facility will mature on November 22, 2016, but may be extended by additional one-year periods on an annual basis, subject to lenders' approval. The Term Revolving Facility is indirectly secured by a first priority fixed and floating charge on substantially all present and future real and personal property and undertaking of every nature and kind of the Corporation and certain of its subsidiaries, and provides for certain permitted encumbrances, including purchased money obligations, existing funded obligations and charges granted by any subsidiary prior to the date when it becomes a subsidiary, subject to a maximum amount.

DIVIDEND DECLARATION

At its January 25, 2012 meeting, the Board of Directors of Cogeco Cable declared a quarterly eligible dividend of $0.25 per share for multiple voting and subordinate voting shares, payable on February 22, 2012, to shareholders of record on February 8, 2012. The declaration, amount and date of any future dividend will continue to be considered and approved by the Board of Directors of the Corporation based upon the Corporation's financial condition, results of operations, capital requirements and such other factors as the Board of Directors, at its sole discretion, deems relevant. There is therefore no assurance that dividends will be declared, and if declared, the amount and frequency may vary.

FINANCIAL MANAGEMENT

The Corporation has entered into cross-currency swap agreements to set the liability for interest and principal payments on its US$190 million Senior Secured Notes Series A maturing on October 1, 2015. These agreements have the effect of converting the U.S. interest coupon rate of 7.00% per annum to an average Canadian dollar interest rate of 7.24% per annum. The exchange rate applicable to the principal portion of the debt has been fixed at $1.0625 per US dollar. During the first three months of fiscal 2012, amounts due under the US$190 million Senior Secured Notes Series A increased by $7.8 million due to the US dollar's appreciation relative to the Canadian dollar. The fair value of cross-currency swaps increased by a net amount of $7 million, of which an increase of $7.8 million offsets the foreign exchange loss on the debt denominated in US dollars. The difference of $0.7 million was recorded as a decrease of other comprehensive income, net of income taxes. In the first quarter of fiscal 2011, amounts due under the US$190 million Senior Secured Notes Series A decreased by $7.6 million due to the US dollar's depreciation over the Canadian dollar. The fair value of cross-currency swaps decreased by a net amount of $6.3 million, of which $7.6 million offsets the foreign exchange gain on the debt denominated in US dollars. The difference of $1.2 million was recorded as an increase of other comprehensive income, net of income taxes.

Furthermore, the Corporation's net investment in self-sustaining foreign subsidiaries is exposed to market risk attributable to fluctuations in foreign currency exchange rates, primarily changes in the values of the Canadian dollar versus the Euro. The Corporation recorded a foreign exchange loss of $0.3 million in the first quarter, compared to a foreign exchange loss of $1.9 million in the comparable period of the prior year, which was deferred and recorded in the interim consolidated statement of comprehensive income, net of income taxes. The exchange rate used to convert the Euro currency into Canadian dollars for the balance sheet accounts as at November 30, 2011 was $1.3706 per Euro compared to $1.4071 per Euro as at August 31, 2011. The average exchange rate prevailing during the first quarter of fiscal 2012 used to convert the operating results of the European operations was $1.3891 per Euro compared to $1.3833 per Euro in the first quarter of fiscal 2011. Since the Corporation's condensed interim consolidated financial statements are expressed in Canadian dollars but a portion of its business is conducted in the Euro currency, exchange rate fluctuations can increase or decrease revenue, operating income before depreciation and amortization, profit for the period and the carrying value of assets and liabilities.

The following table shows the Canadian dollar impact of a 10% fluctuation in the average exchange rate of the Euro currency into Canadian dollars on European operating results for the three month period ended November 30, 2011:

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Exchange rate Three months ended November 30, 2011 As reported impact ($000) $ $ ---------------------------------------------------------------------------- (unaudited) (unaudited) Revenue 41,515 4,152 Operating income before depreciation and amortization 4,748 475 Profit for the period 3,399 340 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

The Corporation is also impacted by foreign currency exchange rates, primarily changes in the values of the US dollar relative to the Canadian dollar with regards to purchases of certain equipment, as the majority of customer premise equipment is purchased and subsequently paid in US dollars. Please consult the "Foreign Exchange Risk" section in Note 14 of the Condensed interim consolidated financial statements for further details.

CANADIAN OPERATIONS

CUSTOMER STATISTICS

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- % of Net additions Penetration(1) Quarters ended November 30, November 30, November 30, 2011 2011 2010 2011 2010 ---------------------------------------------------------------------------- PSU 1,943,648 46,179 41,776 Television service customers (2) 882,437 4,452 7,038 54.2 55.1 HSI service customers 618,499 17,285 16,872 38.0 36.0 Telephony service customers 442,712 24,442 17,866 27.2 23.5 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) As a percentage of Homes Passed. (2) The number of Television service customers includes 727,219 Digital Television service customers.

Fiscal 2012 first-quarter PSU net additions were higher than in the comparable period of the prior year, and the Canadian operations continue to generate PSU growth despite higher penetration rates, category maturity and aggressive competition. The net customer additions for Television service customers stood at 4,452 for the first quarter, compared to 7,038 for the same period of the prior year. Television service customers net additions in fiscal 2012 is mainly due to the back to school period for college and university students, to network expansions and the bundling effect of continued growth in HSI and Telephony services. In the quarter, Telephony service customers grew by 24,442 compared to 17,866 for the same period last year, and the number of net additions to the HSI service stood at 17,285 customers compared to 16,872 customers in the first quarter of the prior year. HSI and Telephony net additions continue to stem from the enhancement of the product offering, the impact of the bundled offer (Cogeco Complete Connection) of Television, HSI and Telephony services, and promotional activities. For the three month period ended November 30, 2011, additions to the Digital Television service which are included in the Television service customers, stood at 48,893 compared to 28,914 for the comparable period of the prior year. Digital Television service net additions are due to targeted marketing initiatives to improve penetration, the launch of new HD channels, the continuing interest for HD television service and the deployment of Digital Terminal Adapters technology to migrate customer from analog to digital services.

OPERATING RESULTS

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended November 30, 2011 2010 Change ($000, except percentages) $ $ % ---------------------------------------------------------------------------- (unaudited) (unaudited) Revenue 315,424 287,204 9.8 Operating costs(1) 176,459 155,324 13.6 Management fees - COGECO Inc. 7,142 6,644 7.5 ------------------------------------------------------------- Operating income before depreciation and amortization 131,823 125,236 5.3 ------------------------------------------------------------- Operating margin 41.8% 43,6% ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 1. Represents the sum of salaries, employee benefits and outsourced services as well as other external purchases included in the Interim Consolidated Statements of Profit or Loss.

Revenue

Revenue for the first quarter of fiscal 2012 rose by $28.2 million, or 9.8%, to reach $315.4 million. The increase in revenue was driven by PSU growth, rate increases implemented in October 2011 and April 2011 combined with the acquisitions of MTO Telecom Inc. ("MTO") and Quiettouch Inc. ("QTI").

Operating costs

For the three months ended November 30, 2011, operating costs increased by $21.1 million, or 13.6%, at $176.5 million. The increase in operating costs is mainly attributable to servicing additional PSU, the launch of new HD channels, additional programming costs, deployment and support costs related to the migration of Television service customers from analog to digital and the acquisitions of MTO and QTI.

Operating income before depreciation and amortization

Operating income before depreciation and amortization rose by $6.6 million, or 5.3%, to reach $131.8 million in the first quarter, mainly due to the increased revenue exceeding the increase in operating costs. Cogeco Cable's Canadian operations' operating margin decreased to 41.8% in the first quarter compared to 43.6% for the same period of the prior year mainly due to the incremental deployment and support costs for the migration of Television service customers from analog to digital.

EUROPEAN OPERATIONS

CUSTOMER STATISTICS

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net additions % of (losses) Penetration(1) Quarters ended November 30, November 30, November 30, 2011 2011 2010 2011 2010 ---------------------------------------------------------------------------- PSU 666,035 (1,050) 7,444 Television service customers (2) 254,782 (995) 588 28.1 28.8 HSI service customers 162,224 (212) 3,592 17.9 18.4 Telephony service customers 249,029 157 3,264 27.5 27.5 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 1. As a percentage of Homes Passed. 2. The number of Television service customers includes 159,642 Digital Television service customers.

The economic environment in Portugal continued to decline and the government has implemented financial reforms which include increases in sales and income taxes combined with reductions in government spending on social programs, thus reducing consumer disposable income. These measures have generated consumer spending constraints while the intensity of the competitive environment remained. The rate of growth for our services has diminished in this environment, with net customer losses in Television and HSI service customers. The number of Television service customers decreased by 995 during the first quarter of fiscal 2012, compared to a growth of 588 for the comparable period of the prior year. HSI service customers decreased by 212 during the quarter compared to an increase of 3,592 in the first quarter of fiscal 2011. The number of Telephony service customers increased by 157 in the first quarter of fiscal 2012, compared to 3,264 for the same period in 2011.

OPERATING RESULTS

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended November 30, 2011 2010 Change ($000, except percentages) $ $ % ---------------------------------------------------------------------------- (unaudited) (unaudited) Revenue 41,515 43,263 (4.0) Operating costs(1) 36,767 38,992 (5.7) ------------------------------------------------------------- Operating income before depreciation and amortization 4,748 4,271 11.2 ------------------------------------------------------------- Operating margin 11.4% 9.9% ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 1. Represents the sum of salaries, employee benefits and outsourced services as well as other external purchases included in the Interim Consolidated Statements of Profit or Loss.

Revenue

In the first quarter of fiscal 2012 revenue decreased by $1.7 million, or 4%, at $41.5 million as a result of a decreased demand for services, partly offset by a higher value of the Euro over the Canadian dollar when compared to prior year. Revenue from the European operations in the local currency for the 2012 first quarter amounted to EUR29.9 million, a decrease of EUR1.4 million, or 4.4%, when compared to the same period of the prior year.

Operating costs

Fiscal 2012 first-quarter operating costs decreased by $2.2 million, or 5.7%, at $36.8 million, mainly due to the PSU losses and timing of marketing initiatives partly offset by a higher value of the Euro over the Canadian dollar when compared to prior year. Operating costs of the European operations for the first quarter in the local currency amounted to EUR26.5 million, a decrease of EUR1.7 million, or 6.1% when compared to the corresponding period of the prior year.

Operating income before depreciation and amortization

Operating income before depreciation and amortization increased to $4.7 million in the first quarter from $4.3 million for the same period of the prior year, representing an increase of $0.5 million, or 11.2%, mainly due to decreases in operating costs which outpaced the decreases in revenue. European operations' operating margin increased to 11.4% from 9.9% in the first quarter of fiscal 2012. Operating income before depreciation and amortization in the local currency amounted to EUR3.4 million compared to EUR3.1 million in the first quarter of the prior year, representing an increase of 10.7%.

CONTROLS AND PROCEDURES

The President and Chief Executive Officer ("CEO") and the Senior Vice President and Chief Financial Officer ("CFO"), together with Management, are responsible for establishing and maintaining adequate disclosure controls and procedures and internal controls over financial reporting, as defined in NI 52-109. Cogeco Cable's internal control framework is based on the criteria published in the report "Internal Control-Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission and is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

The CEO and CFO, supported by Management, evaluated the design of the Corporation's disclosure controls and procedures and internal controls over financial reporting as at November 30, 2011, and have concluded that they were adequate. Furthermore, no significant changes to the internal controls over financial reporting occurred during the quarter ended November 30, 2011.

UNCERTAINTIES AND MAIN RISK FACTORS

There has been no significant change in the uncertainties and main risk factors faced by the Corporation since August 31, 2011. A detailed description of the uncertainties and main risk factors faced by Cogeco Cable can be found in the 2011 Annual Report.

CHANGES IN CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Corporation adopted the IFRS conceptual framework for its accounting policies on September 1, 2011 (see "Transition to IFRS" above"). Accordingly, the following paragraphs provide an analysis of accounting policies considered to be critical for which changes required under the adoption of IFRS were determined to be material. This "Changes in critical accounting policies and estimates" section should be read in conjunction with the Corporation's annual MD&A for the 2011 year, which provides a description of other accounting policies considered to be critical but for which the adoption of IFRS did not have a significant impact.

A. IMPAIRMENT OF NON FINANCIAL ASSETS

At the end of each reporting period, the Corporation reviews the carrying value of its property, plant and equipment and intangible assets with finite useful lives to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any.

Goodwill and intangible assets with indefinite useful lives are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

For the purpose of impairment testing, assets that cannot be tested on an individual basis are grouped together into the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets ("cash-generating unit" or "CGU"). Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual CGU, or otherwise they are allocated to the smallest group of CGU for which a reasonable and consistent allocation basis can be identified.

An impairment loss is recognized when the carrying amount of an asset or a CGU exceeds its recoverable amount for the amount of this excess. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis. The impairment loss is recognized immediately in profit or loss in the period in which the loss is incurred.

Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. A reversal of an impairment loss is recognized immediately in profit or loss.

For the purpose of impairment testing, goodwill is allocated to each of the Corporation's CGUs that are expected to benefit from the synergies of the related business combination. An impairment loss recognized for goodwill cannot be reversed.

B. PROVISIONS

Provisions represent liabilities of the Corporation for which the amount or timing is uncertain. A provision is recorded when the Corporation has a legal or constructive present obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized represents management's best estimate of the amount required to settle the obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When the effect of the time value of money is material, the amount of a provision is determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as financial expense.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

C. EMPLOYEE BENEFITS

DEFINED BENEFIT PENSION PLANS

Pension costs for defined benefit pension plans are determined using the projected unit credit method, (sometimes known as the accrued benefit method pro-rated on service) with actuarial valuations being carried out at the end of each reporting period and are funded through contributions determined in accordance with this method. The Corporation's net obligation in respect of defined benefit pension pl
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