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(1) The indicated terms do not have standard definitions prescribed by IFRS and therefore, may not be comparable to similar measures presented by other companies. For more details, please consult the "Non-IFRS financial measures" section of the Management's discussion and analysis ("MD&A").

"I am delighted to report solid financial results for the first quarter of fiscal year 2015, as we continue to show our ability to grow profitably in a context of intense competition, changing market dynamics and rapid technology advances," declared Louis Audet, President and Chief Executive Officer of COGECO Inc.

"One of the highlights at our subsidiary, Cogeco Cable Inc., was the groundbreaking Canadian launch of the Cogeco TiVo Service, a game-changer in the cable market. Cogeco Cable Canada successfully introduced the service in our Ontario footprint and will launch it in Québec this coming spring. I am happy to report that we are already seeing the positive impact of last year's successful TiVo launch at our American subsidiary, Atlantic Broadband, as we continue to demonstrate our ability to understand the needs of our customers and offer them the leading-edge services and solutions they expect and deserve. At Cogeco Diffusion, we are continuing to focus on providing our advertisers with compelling and innovative platforms. We've done this both in our radio business by maintaining excellent ratings and at Cogeco Métromédia by evolving our network of display advertising," continued Louis Audet.

"We have begun our fiscal year with a strong performance and I am confident that COGECO will continue on its growth path and deliver on its 2015 projections," concluded Louis Audet.

ABOUT COGECO

COGECO (www.cogeco.ca) is a diversified holding corporation. Through its Cogeco Cable subsidiary, COGECO provides to its residential and business customers analogue and digital television, high speed Internet and telephony services with its two-way broadband fibre networks. Cogeco Cable operates in Canada under the Cogeco Cable Canada name in Québec and Ontario, and in the United States under the Atlantic Broadband name in Western Pennsylvania, South Florida, Maryland/Delaware and South Carolina. Through its subsidiaries, Cogeco Data Services and Peer 1 Hosting, Cogeco Cable provides to its commercial customers a suite of information technology services (colocation, managed and dedicated hosting, managed IT, cloud and connectivity services) with 20 data centres, extensive fibre networks in Montréal and Toronto as well as points-of-presence in North America and Europe. Through its subsidiary, Cogeco Diffusion, COGECO owns and operates 13 radio stations across most of Québec with complementary radio formats serving a wide range of audiences as well as Cogeco News, its news agency. COGECO also operates Métromédia, an out-of-home advertising company specialized in the public transit sector. COGECO's subordinate voting shares are listed on the Toronto Stock Exchange (CGO.TO). The subordinate voting shares of Cogeco Cable are also listed on the Toronto Stock Exchange (CCA.TO).

SHAREHOLDERS' REPORT

Three-month period ended November 30, 2014

FINANCIAL HIGHLIGHTS

MANAGEMENT'S DISCUSSION AND ANALYSIS ("MD&A")

Three-month period ended November 30, 2014

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'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 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 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 2014 annual MD&A) that could cause actual results to differ materially from what COGECO currently expects. These factors include namely risks pertaining to markets and competition, technology, regulatory developments, operating costs, information systems, disasters or other contingencies, financial risks related to capital requirements, human resources, controlling shareholder and holding structure, many of which are beyond the Corporation's control. Therefore, future events and results may vary significantly from what management currently foresees. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While management may elect to, the Corporation is under no obligation and does not undertake to update or alter this information at any particular time, except as may be required by law.

All amounts are stated in Canadian dollars unless otherwise indicated. This report should be read in conjunction with the Corporation's condensed interim consolidated financial statements and the notes thereto for the three-month period ended November 30, 2014, prepared in accordance with the International Financial Reporting Standards ("IFRS") and the MD&A included in the Corporation's 2014 Annual Report.

CORPORATE OBJECTIVES AND STRATEGIES

COGECO's objectives are to increase profitability and create shareholder value. The strategies employed to reach these objectives, supported by strict control over spending and improved business processes, are specific to each segment. The main strategies used to reach COGECO's objectives in the Cable and Enterprise data services segment focus on expanding its service offering, enhancing its existing services or bundles, improving the networks, improving customer experience and business processes as well as keeping a sound capital management and a strict control over spending. The radio and out-of-home advertising activities focus on continuous improvement of its programming and by diversifying its product portfolio in order to increase its market share and thereby its profitability. The Corporation measures its performance, with regard to these objectives by monitoring adjusted EBITDA⁽¹⁾ and free cash flow⁽¹⁾.

(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.

KEY PERFORMANCE INDICATORS

ADJUSTED EBITDA

For the three-month period ended November 30, 2014, adjusted EBITDA increased by 4.4% to reach $234.0 million compared to the same period of fiscal 2014. Progression in the adjusted EBITDA is mainly attributable to the financial results improvement from our operating segments combined with the favorable foreign exchange rates benefiting our foreign operations compared to the same period of last year.

FREE CASH FLOW

For the three-month period ended November 30, 2014, COGECO reported free cash flow of $70.7 million, a decrease of $1.9 million compared to $72.6 million for the same period of the previous fiscal year. The decrease is mostly attributable to the increase in acquisitions of property, plant and equipment, partly offset by the improvement of adjusted EBITDA explained above.

BUSINESS DEVELOPMENTS AND OTHER

Numeris's fall 2014 survey in the Montréal region, conducted with the Portable People Meter ("PPM"), reported that 98.5 FM is the leading radio station in the Montreal French market amongst all listeners as well as men two years old and over ("2+"), while Rythme FM has maintained its leadership position in the women 2+ segment among the musical stations. The Beat is the leading radio station in the women 35-64 segment in the Montréal English market. Most of our other regional radio stations in Québec registered good ratings.

On December 12, 2014, the Corporation amended its Term Revolving Facility. Under the terms of the amendment, the maturity was extended by two additional years until February 1, 2020. Similarly, on the same date, the Corporation's subsidiary, Cogeco Cable Inc., has also amended its Term Revolving Facility to extend the maturity by an additional year until January 22, 2020.

OPERATING AND FINANCIAL RESULTS

OPERATING RESULTS

REVENUE

Fiscal 2015 first-quarter revenue increased by $21.4 million or 4.1%, to reach $538.4 million compared to prior year. The increase is mainly attributable to the Cable and Enterprise data services segment.

In the Cable and Enterprise data services segment, fiscal 2015 first-quarter revenue increased by $22.0 million, or 4.6%, to reach $497.0 million. Revenue increased organically from most of our operating units combined with the favorable foreign exchange rates for our foreign operations compared to the same period of last year. For further details on the Cable and Enterprise data services segment's revenue, please refer to the "Cable and Enterprise data services segment" section.

OPERATING EXPENSES

For the first quarter of fiscal 2015, operating expenses increased by $11.5 million, to reach $304.4 million, an increase of 3.9% compared to the prior year. The increase is mainly attributable to the Cable and Enterprise data services segment operating results.

Operating expenses in the Cable and Enterprise data services segment for the first quarter of fiscal 2015 increased by $14.3 million to reach $268.3 million, representing an increase of 5.6% compared to the prior year. Operating expenses increased organically from all of our operating units combined with the appreciation of the US dollar and British Pound currency compared to the Canadian dollar. For further details on the Cable and Enterprise data services segment's operating expenses, please refer to the "Cable and Enterprise data services segment" section.

ADJUSTED EBITDA

Fiscal 2015 first-quarter adjusted EBITDA increased by $9.9 million, or 4.4%, to reach $234.0 million, of which the Cable and Enterprise data services segment contributed $218.9 million to the consolidated adjusted EBITDA. The increase for the quarter in the Cable and Enterprise data services segment is mainly attributable to the improvement from most of our operating segments as well as the favorable foreign exchange rates from our foreign operations compared to the same period of last year. For further details on Cogeco Cable's operating results, please refer to the "Cable and Enterprise data services segment" section.

FIXED CHARGES

For the three-month period ended November 30, 2014, depreciation and amortization expense amounted to $116.0 million, compared to $117.1 million for the same period of last year mainly as a result of certain intangible assets being fully amortized since the end of the fourth quarter of fiscal 2014, partly offset by the appreciation of the US dollar and the British Pound currency compared to Canadian dollar and from additional acquisitions of property, plant and equipment.

Fiscal 2015 first-quarter financial expense increased by $3.5 million, or 10.3%, amounting to $37.5 million compared to $34.0 million in fiscal 2014 first-quarter as a result of the appreciation of the US dollar and British Pound currency compared to the Canadian dollar.

INCOME TAXES

For the three-month period ended November 30, 2014, income taxes amounted to $15.0 million compared to $15.8 million for the comparable period in the prior year. The decrease is mostly attributable to the increase in fixed charges as well as the favorable impact of the tax structure implemented at the time of the acquisitions of Atlantic Broadband and Peer 1 Hosting⁽¹⁾ during fiscal 2013, partly offset by the improvement in adjusted EBITDA.

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

PROFIT FOR THE PERIOD

For the three-month period ended November 30, 2014, profit for the period amounted to $65.4 million, of which $26.8 million or $1.60 per share, is attributable to owners of the Corporation. For the comparable period of fiscal 2014, profit for the period amounted to $56.8 million, of which $23.1 million or $1.38 per share, was attributable to owners of the Corporation. The increase for the first quarter is attributable to the improvement of the adjusted EBITDA, partly offset by the increase in financial expense.

The non-controlling interest represents a participation of approximately 68% in Cogeco Cable's results. For fiscal 2015 three-month period, the profit for the period attributable to non-controlling interest amounted to $38.6 million compared to $33.8 million in fiscal 2014.

CASH FLOW ANALYSIS

OPERATING ACTIVITIES

Fiscal 2015 first-quarter cash flow from operating activities reached $19.0 million compared to $60.2 million, a decrease of $41.2 million or 68.5%, compared to the same period of the prior year. The decrease is mainly attributable to the increases of $42.2 million in non-cash operating activities as a result of a higher decrease in trade and other payables compared to the same period of last year, combined with increases of $5.2 million in financial expense paid and of $3.1 million in income taxes paid, partly offset by the improvement of $9.9 million of adjusted EBITDA;

For the three-month period ended November 30, 2014, cash flow from operations amounted to $174.3 million compared to $159.2 million for the comparable period in fiscal 2014 representing increases of $15.0 million, or 9.4%, mainly explained by the increase of $9.9 million of adjusted EBITDA and the decrease of $9.1 million of current income taxes, partly offset by the increase of $3.5 million in financial expense.

INVESTING ACTIVITIES

For the three-month period ended November 30, 2014, investing activities amounted to $103.4 million compared to $86.2 million for the comparable period of fiscal 2014, mainly due to the acquisitions of property, plant and equipment, intangible and other assets as explained below.

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

For the three-month period ended November 30, 2014, acquisition of property, plant and equipment amounted to $100.1 million compared to $82.5 million for the same period of fiscal 2014, mainly as a result of the following factors in the Cable and Enterprise data services segment:

• the increase in capital expenditures related to data centre facilities mainly due to the construction by Cogeco Data Services of all remaining pods (pods 2, 3 and 4) at the Barrie, Ontario, data centre as well as the expansion of its data centre footprint with the initial construction of a new data centre in Montréal, Québec; and

• additional customer premise equipment for the Canadian launch of TiVo digital advanced television services on November 3, 2014 in Ontario and the continued deployment in the United States. Moreover, the increase of property, plant and equipment is also attributable to the PSU growth as well as the increase in scalable infrastructure to extend and improve network capacity in the areas served, partly offset by the timing of certain initiatives.

Acquisition of intangible and other assets are mainly attributable to reconnect and additional service activation costs as well as other customer acquisition costs. For the first quarter of fiscal 2015, the acquisition of intangible and other assets amounted to $3.5 million compared to $4.1 million for the same period last year due to lower reconnect activities in Canada.

FREE CASH FLOW AND FINANCING ACTIVITIES

In the first quarter of fiscal 2015, free cash flow amounted to $70.7 million, a decrease of $1.9 million compared to fiscal 2014. This decrease is mainly due to the increase of $17.6 million in acquisitions of property, plant and equipment, partly offset by the increase of $9.9 million of adjusted EBITDA and of $3.5 million in financial expense.

In the first quarter of fiscal 2015, a higher Indebtedness level resulted in a cash increase of $58.9 million mainly due to the increase of $59.1 million under the revolving facilities and of $16.5 million in bank indebtedness, partly offset by the repayments of $16.7 million of long-term debt. In the first quarter of fiscal 2014, a higher Indebtedness level resulted in a cash increase of $28.7 million, essentially due to the increase of $29.4 million under the revolving facilities.

During the first quarter of fiscal 2015, a quarterly eligible dividend of $0.255 per share was paid to the holders of subordinate and multiple voting shares, totaling $4.3 million, compared to a quarterly eligible dividend paid of $0.22 per share, or $3.7 million in the first quarter of fiscal 2014. In addition, dividends paid by a subsidiary to non-controlling interest in the first quarter amounted to $11.6 million compared to $9.9 million for the comparable period of the prior year.

At November 30, 2014, the Corporation had a working capital deficiency of $376.5 million compared to $277.5 million at August 31, 2014. The $99.0 million deficiency increase is mainly due to the increase of $209.1 million in the current portion of long-term debt as a result of the US$190 million Senior Secured Notes Series A maturing in October 2015 and the decrease of cash and cash equivalents of $47.3 million, partly offset by the decrease of $137.9 million in trade and other payables and the increase of $11.2 million in trade and other receivables. As part of the usual conduct of its business, COGECO maintains a working capital deficiency due to a low level of accounts receivable since a large proportion of the Corporation's customers pay before their services are rendered, unlike trade and other payables, which are usually paid after products are delivered or services are rendered, thus enabling the Corporation to use cash and cash equivalents to reduce Indebtedness.

At November 30, 2014, the Corporation had used $21.0 million of its $50 million Term Revolving Facility for a remaining availability of $29.0 million and Cogeco Cable had used $266.4 million of its $800 million amended and restated Term Revolving Facility for a remaining availability of $533.6 million. In addition, two subsidiaries of Cogeco Cable also benefit from a Revolving Facility of $171.6 million (US$150 million), of which $47.1 million (US$41.2 million) was used at November 30, 2014 for a remaining availability of $124.5 million (US$108.8 million).

FINANCIAL POSITION

Since August 31, 2014, the following balances have changed significantly: "cash and cash equivalents", "property, plant and equipment", "intangible assets", "goodwill", "trade and other payables", "current portion of long-term debt" and "long-term debt".

Cash and cash equivalent decreased by $47.3 million mainly due to the decrease of $137.9 million in trade and other payables related to the timing of payments made to suppliers. Property, plant and equipment and intangible assets increased by $18.6 million and $29.9 million, respectively, due to the appreciation of the US dollar and British Pound currency appreciation against the Canadian dollar, partly offset by the the depreciation and amortization expense exceeding acquistions. Goodwill increased by $43.1 million as a result of the US dollar and the British Pound currency appreciation against the Canadian dollar during the first three months of fiscal 2015. The increase of $209.1 million in the current portion of long-term debt is mainly due to the US$190 million Senior Secured Notes Series A maturing in October 2015. The decrease of $74.2 million in long-term debt is mainly due to the increase in the current portion of long-term debt, partly offset by the timing of suppliers payments and the appreciation of the US dollar and British Pound currency appreciation against the Canadian dollar.

OUTSTANDING SHARE DATA

A description of COGECO's share data at December 31, 2014 is presented in the table below. Additional details are provided in Note 10 of the condensed interim consolidated financial statements.

FINANCING

In the normal course of business, COGECO has incurred financial obligations, primarily in the form of long-term debt, operating and finance leases and guarantees. COGECO's obligations, as reported in the 2014 Annual Report, have not materially changed since August 31, 2014.

FINANCIAL MANAGEMENT

The Corporation is exposed to interest rate risks for both fixed and floating interest rate instruments. Interest rate fluctuations will have an effect on the valuation and collection or repayment of these instruments. At November 30, 2014, all of the Corporation's long-term debt was at fixed rate, except for the Corporation's Term Revolving Facilities and First Lien Credit Facilities. To mitigate such risk, the Corporation's subsidiary, Cogeco Cable Inc., entered on July 22, 2013 into interest rate swap agreements.

The following table shows the interest rate swaps outstanding at November 30, 2014:

The sensitivity of the Corporation's annual financial expense to a variation of 1% in the interest rate applicable to these facilities is approximately $4.3 million based on the current debt at November 30, 2014.

In addition, the Corporation is exposed to foreign exchange risk related to its long-term debt denominated in US dollars that is not designated as a hedge on its US dollar net investments. In order to mitigate this risk, the Corporation has established guidelines whereby cross-currency swap agreements can be used to fix the exchange rates applicable to its US dollar denominated long-term debt. All such agreements are exclusively used for hedging purposes. Accordingly, on October 2, 2008, the Corporation's subsidiary, Cogeco Cable Inc., entered into cross-currency swap agreements to set the liability for interest and principal payments on its Senior Secured Notes Series A.

The following table shows the cross-currency swaps outstanding at November 30, 2014:

The impact of a 10% change in the exchange rate of the US dollar and British Pound into Canadian dollars would change financial expense by approximately $6.3 million based on the outstanding debt at November 30, 2014.

Furthermore, the Corporation's investments in foreign operations is exposed to market risk attributable to fluctuations in foreign currency exchange rates, primarily changes in the values of the Canadian dollar versus the US dollar and British Pound. This risk was mitigated since the major part of the purchase prices for Atlantic Broadband and Peer 1 Hosting were borrowed directly in US dollars and British Pounds.

The following table shows the investments in foreign operations outstanding at November 30, 2014:

The exchange rate used to convert the US dollar currency and British Pound currency into Canadian dollar for the statement of financial position accounts at November 30, 2014 was $1.1440 per US dollar and $1.7890 per British Pound. The impact of a 10% change in the exchange rate of the US dollar and British Pound into Canadian dollars would change other comprehensive income by approximately $28.2 million.

For the three-month period ended November 30, 2014, the average rates prevailing used to convert the operating results of the Cable and Enterprise data services segment were as follows:

The following table highlights in Canadian dollars, the impact of a 10% increase in US dollar or British Pound against the Canadian dollar as the case may be, of Cogeco Cable's operating results for the three-month period ended November 30, 2014:

DIVIDEND DECLARATION

At its January 13, 2015 meeting, the Board of Directors of COGECO declared a quarterly eligible dividend of $0.255 per share for multiple voting and subordinate voting shares, payable on February 10, 2015, to shareholders of record on January 27, 2015. 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.

CABLE AND ENTERPRISE DATA SERVICES SEGMENT

CUSTOMER STATISTICS

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

At November 30, 2014, PSU reached 2,453,272 of which 1,951,317 were in Canada and 501,955 were in the United States. For the three-month period ended November 30, 2014, PSU net additions stood at 11,088 compared to PSU net losses of 2,725 for the comparable period of fiscal 2014. Fiscal 2015 first-quarter net losses for Television service customers stood at 8,465 compared to 9,093 mainly as a result of service category maturity and competitive offers in the industry. HSI service customers grew by 18,535 compared to 10,452 and the Telephony service customers net additions stood at 1,018 compared to net losses of 4,084 for the comparable period of fiscal 2014. HSI net additions continued to stem from the enhancement of the product offering, the positive impact of bundle offers and the growth in the business sector. The increase in Telephony services customers is mainly attributable to the United States, partly offset by net losses in Canada as a result of the increasing mobile penetration rate and various unlimited offers launched by mobile operators causing customers to cancel their landline Telephony services for mobile services only.

In Canada, PSU increased by 5,295 for the first-quarter of fiscal 2015, compared to decrease of 4,620 for the same period last year. The PSU growth stems primarily from additional HSI services, partly offset by a slightly higher decrease in the Television services.

In the United States, PSU increased by 5,793 for the first-quarter of fiscal 2015, compared to 1,895 for the same period of prior year. The PSU growth stems primarily from additional HSI and Telephony services.

OPERATING AND FINANCIAL RESULTS

OPERATING RESULTS

REVENUE

Fiscal 2015 first-quarter revenue increased by $22.0 million, or 4.6%, to reach $497.0 million, compared to prior year, driven by growth of 1.8% in the Canadian cable services segment, 15.2% in the American cable services segment and 3.5% in the Enterprise data services segment. Revenue increased organically in most of our operating units mainly as a result of PSU growth and rate increases combined with the favorable foreign exchange rates for our foreign operations compared to the same period of last year.

OPERATING EXPENSES AND MANAGEMENT FEES

For the first quarter of fiscal 2015, operating expenses increased by $14.3 million to reach $268.3 million, representing an increase of 5.6% compared to the prior year. Operating expenses increased organically from all of our operating units as a result of additional marketing initiatives related to the launch of TiVo digital advanced television services in Canada as well as to support the PSU growth, combined with significant increases in programming costs and the appreciation of the US dollar and British Pound currency compared to the Canadian dollar.

For the first three months of the fiscal year 2015, management fees paid to COGECO Inc. amounted to $9.9 million, 3.9% higher compared to $9.5 million in the same period of fiscal 2014. For fiscal 2015, management fees have been set at a maximum of $9.9 million ($9.7 million in 2014), which were fully paid in the first quarter of fiscal 2015.

ADJUSTED EBITDA AND OPERATING MARGIN

For the three-month period ended November 30, 2014, adjusted EBITDA increased by $7.3 million, or 3.5%, to reach $218.9 million, compared to the same period of the prior year. The increase for the quarter is mainly attributable to the improvement in the Canadian and American cable services segments as well as the favorable foreign exchange rates for our foreign operations compared to the same period of last year. Cogeco Cable's first-quarter operating margin slightly decreased to 44.0% from 44.5% compared to the comparable period of the prior year mainly as a result of lower margin business activities from the Enterprise data services segment, partly offset by the improvement in the Canadian cable services segment.

CONTROLS AND PROCEDURES

Internal control over financial reporting ("ICFR") is a process designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and of the preparation of financial statements for external purposes in accordance with IFRS. The President and Chief Executive Officer ("CEO") and the Senior Vice President and Chief Financial Officer ("CFO"), together with Management, are responsible for establishing and maintaining adequate disclosure controls and procedures ("DC&P") and ICFR, as defined in National Instrument 52-109. COGECO's internal control framework is based on the criteria published in the updated version released in May 2013 of the report Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

At August 31, 2014, Management disclosed the existence of a material weakness in ICFR at Peer1 Hosting. A material weakness in ICFR exists if there is a deficiency or combination of deficiencies in ICFR such that there is a reasonable possibility that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

The deficiencies in ICFR at Peer1 Hosting related mainly to the financial statement close process and inadequate segregation of duties over certain information system access controls. Since then, the material weakness previously identified has now been addressed and corrected. Several detailed review and monitoring processes have been implemented to facilitate and enhance proper oversight over operations. Furthermore, access rights were reviewed and adjusted accordingly to reflect proper segregation of duties.

The CEO and CFO, supported by Management, evaluated the design of the Corporation's DC&P and ICFR at November 30, 2014, and concluded that they are adequate. Furthermore, except as explained above, no significant changes to the internal controls over financial reporting occurred during the quarter ended November 30, 2014.

UNCERTAINTIES AND MAIN RISK FACTORS

A detailed description of the uncertainties and main risk factors faced by the Corporation can be found in the 2014 Annual Report, available at www.sedar.com and www.cogeco.ca. There has been no significant change in the uncertainties and main risk factors faced by the Corporation since August 31, 2014.

FUTURE ACCOUNTING DEVELOPMENTS IN CANADA

A number of new standards, interpretations and amendments to existing standards issued by the International Accounting Standards Board ("IASB") are effective for annual periods starting on or after January 1, 2014 and have been applied in preparing the condensed interim consolidated financial statements for the three-month period ended November 30, 2014.

NEW ACCOUNTING STANDARDS

The following standards issued by the IASB were adopted by the Corporation on September 1, 2014 and had no effect on the financial performance of the Corporation:

• Amendments to IAS 19 Defined Benefits Plans: Employee Contributions which applies to contributions from employees or third parties to defined benefit plans. The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary; and

• IFRIC 21 Levies which sets out the accounting for an obligation to pay a levy that is not income taxes. The interpretation addresses what an obligating event is that gives rise to pay a levy and when should a liability be recognized.

CHANGES IN CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There has been no significant change in COGECO's accounting policies, estimates and future accounting pronouncements since August 31, 2014. A description of the Corporation's policies and estimates can be found in the 2014 Annual Report, available on the SEDAR website at www.sedar.com or on the Corporation's website at www.cogeco.ca.

NON-IFRS FINANCIAL MEASURES

This section describes non-IFRS financial measures used by COGECO throughout this MD&A. It also provides reconciliations between these non-IFRS measures and the most comparable IFRS financial measures. These financial measures do not have standard definitions prescribed by IFRS and therefore, may not be comparable to similar measures presented by other companies. These measures include "cash flow from operations", "free cash flow" and "adjusted EBITDA".

CASH FLOW FROM OPERATIONS AND FREE CASH FLOW

Cash flow from operations is used by COGECO's management and investors to evaluate cash flows generated by operating activities, excluding the impact of changes in non-cash operating activities, amortization of deferred transaction costs and discounts on long-term debt, income taxes paid, current income taxes, financial expense paid and financial expense. This allows the Corporation to isolate the cash flows from operating activities from the impact of cash management decisions. Cash flow from operations is subsequently used in calculating the non-IFRS measure, "free cash flow". Free cash flow is used, by COGECO's management and investors, to measure its ability to repay debt, distribute capital to its shareholders and finance its growth.

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

ADJUSTED EBITDA

Adjusted EBITDA is a benchmark commonly used in the telecommunications industry, as it allows comparisons with companies that have different capital structures and is a more current measures since it excludes the impact of historical investments in assets. Adjusted EBITDA evolution assesses COGECO's ability to seize growth opportunities in a cost-effective manner, to finance its ongoing operations and to service its debt. Adjusted EBITDA is a proxy for cash flow from operations. Consequently, adjusted EBITDA is one of the key metrics used by the financial community to value the business and its financial strength.

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

SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION

(1) Per multiple and subordinate voting share.

SEASONAL VARIATIONS

COGECO's operating results are not generally subject to material seasonal fluctuations except as follows. In the Cable and Enterprise data services segment, the number of customers in the Television services and HSI services are generally lower in the second half of the fiscal year as a result of a decrease in economic activity due to the beginning of the vacation period, the end of the television season, and students leaving their campuses at the end of the school year. Cogeco Cable offers its services in several university and college towns such as Kingston, Windsor, St.Catharines, Hamilton, Peterborough, Trois-Rivières and Rimouski in Canada and in the Pennsylvania region, and to a lesser extent in South Carolina, Maryland and Delaware in United States. In the United States, the Miami region is also subject to seasonal fluctuations due to the winter season residents returning home from late spring through the fall.

ADDITIONAL INFORMATION

This MD&A was prepared on January 13, 2015. Additional information relating to the Corporation, including its Annual Information Form, is available on the SEDAR website at www.sedar.com or the Corporation's website at www.cogeco.ca.