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U.S. SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

Form 40-F

Check One

|  |  |                                                                                        
|- |  | ---------------------------------------------------------------------------------------
|o |  | Registration Statement Pursuant to Section 12 of the Securities Exchange Act of 1934   
| 
|þ |  | Annual Report Pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

|                                          |  |                                 
|----------------------------------------- |  | --------------------------------
|For the fiscal year ended August 31, 2003 |  | Commission File Number: 333-7582

Shaw Communications Inc.(Exact name of Registrant as specified in its charter)

N/A
(Translation of Registrants name into English (if applicable))

Alberta Canada
(Province or other jurisdiction of incorporation or organization)

4841
(Primary Standard Industrial Classification Code Number (if applicable))

N/A
(I.R.S. Employer Identification Number (if applicable))

Suite 900, 630  3rd Avenue S.W., Calgary, Alberta, Canada T2P 4L4
(403) 750-4500
(Address and telephone number of Registrants principal executive offices)

CT Corporation System, 1633 Broadway, New York, NY 10019 (212) 664-1666
(Name, address (including zip code) and telephone number (including area code)
of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

|                                                                  |  |                                          
|----------------------------------------------------------------- |  | -----------------------------------------
|Title of each class                                               |  | Name of each exchange on which registered
|                                                                  |  |                                          
|Class B Non-Voting
Participating Shares                           |  | New York Stock Exchange                  
|                                                                  |  |                                          
|8.45% Canadian Originated Preferred
Securities (Series A COPrS) |  | New York Stock Exchange                  
|                                                                  |  |                                          
|8.5% Canadian Originated Preferred
Securities (COPrS)           |  | New York Stock Exchange                  

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

8.54% Series B Capital Securities due 2027
8.25% Senior Notes due 2010
7.25% Senior Notes due 2011
7.50% Senior Notes due 2013
7.20% Senior Notes due 2011
(Title of Class)

For annual reports, indicate by check mark the information filed with this
Form:

|                         |  |                                     
|------------------------ |  | ------------------------------------
|oAnnual Information form |  | þAudited annual financial statements

Indicate the number of outstanding shares of each of the issuers classes
of capital or common stock as of the close of the period covered by the annual
report.

|                                                                         |  |                                                                     
|------------------------------------------------------------------------ |  | --------------------------------------------------------------------
|Class A
Participating Shares 
Class B Non-Voting Participating Shares  |  | 11,360,432 issued and outstanding
220,496,092 issued and outstanding

Indicate by check mark whether the Registrant by filing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
(the Exchange Act).If Yes is marked, indicate the filing number assigned
to the Registrant in connection with such Rule

|     |  |    
|---- |  | ---
|Yeso |  | Noþ

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 of 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

|     |  |    
|---- |  | ---
|Yesþ |  | Noo

***********

Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to: the securities registered pursuant to Form 40-F arises; the
securities in relation to which the obligation to file an annual report on Form
40-F arises; or transactions in said securities.



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|                                                   |  |  |  |  |  |  |  | 
|-------------------------------------------------- |  |  |  |  |  |  |  | 
|SIGNATURES                                        
|REPORT TO SHAREHOLDERS                            
|CORPORATE GOVERNANCE                              
|MANAGEMENTS DISCUSSION AND ANALYSIS              
|MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING
|AUDITORS REPORT                                   
|FINANCIAL STATEMENTS                              
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        
|FIVE YEARS IN REVIEW                              
|CABLE AND INTERNET STATISTICS                     
|SHAREHOLDER INFORMATION                           
|CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER        
|CERTIFICATE OF THE CHIEF FINANCIAL OFFICER        
|CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS      



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SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies
that it meets all of the requirements for filing on Form 40-F and has duly
caused this annual report to be signed on its behalf by the undersigned,
thereto duly authorized.

|                  |  |                                       |  |                                                                             
|----------------- |  | ------------------------------------- |  | ----------------------------------------------------------------------------
|                  |  | SHAW COMMUNICATIONS INC.
(Registrant)
|                 
|                  |  |                                       |  |                                                                             
|                 
|December 19, 2003 |  | By:                                   |  | /s/ R.D. RogersR.D. Rogers
Senior Vice President and
Chief Financial Officer





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(SHAW LOGO)

SHAW COMMUNICATIONS INC.

ANNUAL REPORT 2003





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Shaw Communications Inc.

ANNUAL REPORT 2003
August 31, 2003

In our ongoing efforts to contain costs, Shaw Communications Inc. no longer
publishes a formal annual
report. This document includes the Report to Shareholders, Managements
Discussion and Analysis and
Shaws Financial Statements for fiscal 2003.

CONTENTS
    
    PageReport to Shareholders
    
    
    3Corporate Governance
    
    
    5Managements Discussion and Analysis
    
    
    6Managements Responsibility for Financial Reporting
    
    
    37Auditors Report
    
    
    38Financial Statements
    
    
    39Notes to the Consolidated Financial Statements
    
    
    42Five Years in Review
    
    
    98Cable and Internet Statistics
    
    
    99Shareholder Information
    
    
    100Corporate Information
    
    
    101


The Annual General Meeting of Shareholders will be held on January 21st, 2004
at 2pm in the Lobby of Shaw Court, 630  3rd Avenue S.W., Calgary, Alberta
T2P 4L4.





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Shaw Communications Inc.

REPORT TO SHAREHOLDERS
August 31, 2003

Dear Fellow Shareholders:

Last year, we announced aggressive consolidated free cash flow targets for
fiscal 2003 set originally at
negative $9 million compared to a negative amount of $563 million last year.
However there were always
nagging questions  was Shaw doing too much too fast, would the drive for free
cash flow sacrifice future
growth through reduced investment in growth opportunities, and was this an
achievable target? Well, the
performance this year should remove all doubt. Shaws senior management and
dedicated employees
performed a delicate balancing act  Shaw outperformed its free cash flow
targets and we increased our
Canadian customer base by 18,935 in basic subscribers, 39,813 in digital
customers, 125,933 in Internet
customers and 48,502 DTH customers. Furthermore, at the same time we introduced
innovative product
offerings such as Video-On-Demand, HDTV and new bundled services. As a result,
Shaw posted strong
financial results:



| |  |  | Consolidated free cash flow improved to $97 million compared to
a negative amount of $563 million last year.
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | Consolidated revenue, excluding the US cable systems sold effective June 30, 2003, grew by 9.1%.
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | Consolidated operating income before amortization, excluding the US cable systems, grew by 31.3%.
| | - |  | -------------------------------------------------------------------------------------------------

These outstanding accomplishments were achieved through several initiatives:
bundling of unique products and services, price increases, re-positioning and
restructuring of operations, (including prudent
management of capital expenditures), strategic divestitures and acquisitions
and the refinancing and
repayment of debt.

Bundling
A key driver to Shaws success in building and retaining its customer base is
its bundling strategy. This
year we focused on creating new bundled product offerings to our customers. As
a result, 38% of Shaw
cable customers subscribe to a bundled service compared to 28% last year. The
benefits of bundling to
customers are the convenience of one stop shopping, savings and greater
choice. The benefits to Shaw
are incremental penetration as customers upgrade to additional services, churn
reduction and operational
efficiencies through centralized billing and customer care. In addition, the
introduction of HDTV plus the
unique service of Video-On-Demand creates extra value for the Shaw customer,
bolstering the retention
value of the bundled packages.

Price increases
During the past year, price increases have been implemented industry-wide in
DTH and cable. Many
customers of Shaw had not had a price increase in five years and in the case of
cable, were sometimes
paying $3 per month less than customers using competitive services. As a
result, we implemented various price increases throughout the year which
contributed significantly to our strong financial performance. To ensure that
customers would remain loyal to Shaw, Shaw integrated its pricing and bundling
strategies as described above. The bundling was key to this strategy and the
effectiveness is evident by the growth in our customer base.

Repositioning and restructuring
In the last 18 months, Shaw underwent a series of restructurings and
implemented a number of cost-saving initiatives. Most significantly, Shaw
created a capital expenditure committee which included the CEO and President.
The most important mandate of this committee is to strike a balance between
capital spending without sacrificing customer service or growth. Capital
expenditures and equipment subsidies decreased from $854 million last year to
$401 million this year. However, despite decreased capital expenditures, our

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Shaw Communications Inc.

REPORT TO SHAREHOLDERS
August 31, 2003

customer base increased as highlighted above, and we continued to roll out new
value-added service
offerings such as VOD and HDTV.

Strategic divestitures and acquisitions
Effective June 30, 2003, we successfully completed the sale of our US cable
systems. In addition, we
announced the pending purchase of certain cable systems in Alberta and southern
British Columbia from
Monarch Cablesystems Ltd. Our cable systems are concentrated almost entirely in
western Canada.
Besides the obvious synergies this affords, it also increases our focus on a
concentrated customer base,
enabling us to provide high quality service while delivering an attractive
array of services and thus be better positioned in an increasing competitive
market place.

Refinancing and repayment of debt
As a result of the sale of the US cable systems and the strong growth in free
cash flow, Shaw has access to over $1 billion of bank credit facilities. During
the year, Shaw restructured its debt portfolio to obtain
greater flexibility in its operations and to obtain a lower overall cost of
borrowing. For example, we refinanced/repaid some of Cancoms and Star Choices
outstanding debt. The refinancing underscores the continued confidence that
Shaws lenders have in the Company and, based on existing market rates, it
should generate significant annual interest savings.

Translation of improved performance into shareholder value
The total return on Shaw stock for the year was 14.3%. Although we exceeded the
Standard and Poors
500 performance, our belief is that Shaw shareholders have yet to be fully
rewarded for the accomplishments that the Company has delivered. Shaw is
financially and operationally strong, and utilizes creative and aggressive
strategies to meet the competitive challenges of the current marketplace. Most
importantly, we have over 6,000 employees who are dedicated to serving the
interest of our shareholders and customers with pride and passion which bodes
well for our performance in the future.

[Signed]
    
    [Signed]JR Shaw
    
    Jim ShawExecutive Chair
    
    Chief Executive Officer


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CORPORATE GOVERNANCE

We at Shaw take good corporate governance seriously and place a high value on
doing it right, both in terms of the spirit and intent of best corporate
practices. As a public enterprise with a controlling shareholder, we realize
the importance of maintaining the confidence of public investors and a
governance and management system that adds value and growth to our enterprise.
We also place a high value on the quality and reliability of our financial
reporting.

The Corporate Governance Committee of the board of directors of Shaw is
mandated to review and develop the corporate governance practices and policies
of the Corporation, ensuring that the Corporation operates in compliance with,
and shows due regard for, applicable laws and regulations. The Corporate
Governance Committee has undertaken, and continues to undertake, a
comprehensive review of the practices and policies of the Corporation to ensure
that Shaw meets current expectations and complies with best practices.
Highlights of Shaws recent corporate governance initiatives include the
following:

Board Independence The Corporate Governance Committee is satisfied that the
board is appropriately comprised of knowledgeable individuals having expertise
in our businesses as well as others having regulatory, government or related
backgrounds. Out of 14 board members as at the end of the fiscal year,
11 of our directors are independent of management or of the majority
shareholder of Shaw. Subsequent to year end, we also appointed an additional
independent director who qualifies as a financial expert under applicable
regulatory requirements. We continue to enhance our on-going programs and
processes for educating and evaluating the board and its committees to ensure
that our directors are able to fulfill all of their duties and
responsibilities.

Board and Committee Charters Formal, written charters have been developed
for Shaws board of directors and each of the committees of the board
(executive, audit, corporate governance and human resources).

Director Compensation Shaw has reviewed the compensation that it pays to its
directors and has adopted a new policy governing the retainer of directors for
special projects. We have also approved new requirements for shareholdings by
non-management directors that will require each director to invest, at a
minimum, the equivalent of $250,000 in Shaw shares. In addition, we have
implemented appropriate director and officer indemnity and insurance
arrangements.

Certification of Financial Statements Shaw has formalized and documented the
process used to prepare its quarterly and annual financial statements and other
public disclosure. This process culminates in the written certification of
Shaws financial statements by the Chief Executive Officer and the Chief
Financial Officer in accordance with the rules of the Securities and Exchange
Commission.

Code of Conduct Shaw has updated its Business Conduct Standards to ensure
that it meets best corporate practices. Our Business Conduct Standards, which
apply to all of Shaws directors, officers and employees, outline the Shaw
way of business, including with respect to customer care, relations with
coworkers and stakeholders and our expectation of fairness and integrity in all
that we do. The Corporate
Governance Committee is responsible for monitoring compliance with Shaws
Business Conduct Standards and for approving waivers of the standards.

Related Party Transactions Shaw has adopted a formal policy for the approval
and disclosure of related party transactions. All such transactions are placed
before the Corporate Governance Committee for review to ensure fairness and
appropriate disclosure.

Corporate Policies and Guidelines Under the guidance of the Corporate
Governance Committee, Shaw has strengthened, updated and formalized corporate
policies and guidelines, such as our insider trading guidelines and our
corporate disclosure policies.

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

FORWARDCertain statements in this report may constitute forward-looking statements.
Such forward-looking statements involve risks, uncertainties and other factors
which may cause actual results, performance or achievements of the Company to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Included herein is a
Caution Concerning Forward-Looking Statements section which should be read in
conjunction with this report.

Tabular dollars are in thousands of Canadian dollars, except per share amounts
or unless otherwise indicated. All per share amounts reflect common per share
amounts, and are based on unrounded amounts. Percentage changes are based on
rounded amounts.

INDEX

CONTENTS
    
    PageOutlineI.
    
    
    
    INTRODUCTION TO OUR BUSINESS
    
    
    7A.
    

Company
overview  core business and strategies
    
    
    7B.
    
    Key performance drivers
    
    
    8C.
    
    Critical accounting policies
    
    
    9D.
    
    Related party transactions
    
    
    13E.
    
    New accounting standards
    
    
    13F.
    
    Known events, trends, risks and uncertainties
    
    
    14II.
    
    
    
    RESULTS OF OPERATIONS
    
    
    19III.
    
    
    
    FINANCIAL POSITION
    
    
    32IV.
    
    
    
    CONSOLIDATED CASH FLOW ANALYSIS
    
    
    33V.
    
    
    
    LIQUIDITY AND CAPITAL RESOURCES
    
    
    34


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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

I.   INTRODUCTION TO OUR BUSINESS

A.   Company overview  core business and strategies

(i)   Shaw Communications Inc.
Shaw Communications Inc. (Shaw or the Company) is a diversified Canadian
communications company whose core business is providing broadband cable
television, Internet and satellite direct-to-home (DTH) services to over 2.9
million customers. Shaws mission is to provide its customers with high-quality
entertainment, information and communications services, utilizing a variety of
distribution technologies.

Shaws strategy is to maximize shareholder value by focusing on growing free
cash flow. Shaw delivers this strategy on several fronts: delivering products
and services to our customers in a cost effective manner; increasing customer
penetration; delivering quality customer service; implementing of strategic
price increases; leveraging our network infrastructure and generating operating
efficiencies through innovative practices.

Shaw is organized into three major divisions. The representation of each of the
divisions as a percentage of consolidated revenue in fiscal 2003 is as follows:
Cable  71.5%; DTH  23.7%; and Satellite Services  4.8%.

(ii)   Cable
The Cable division is comprised of Shaws cable television, Internet and Big
Pipe operations. Shaw is the largest cable television provider in Western
Canada with approximately 2.1 million cable television customers in five
provinces (British Columbia, Alberta, Saskatchewan, Manitoba and Ontario),
representing approximately 28% of the Canadian cable television market. Through
its technologically advanced broadband network, Shaw also had 886,220 Internet
customers and 473,870 digital cable customers as at August 31, 2003. In
addition, the Cable division established Big Pipe in 2000 to develop and
operate the fibre network that serves as the primary Internet backbone for
Shaws broadband Internet customers and provides Internet and data connectivity
services to large businesses and other organizations.

In past years, Shaw has enhanced the quality, depth and capacity of its plant
and network infrastructure through
significant capital investment. The plant and network is now essentially fully
digital and two-way capable.
Shaws strategy is to leverage its network by providing additional services
beyond traditional cable such as
Video-on-Demand (VOD) and High-Definition TV (HDTV). The VOD service
enables customers to select
programming from a library of titles through an online ordering system and view
the programming on their
television at a time of their choosing with full VCR/DVD functionality
including pause, rewind and fast
forward using their remote control. This is a value-added service that Shaw
anticipates will provide it with a
competitive advantage over satellite, which does not have two-way network
capability. VOD is viewed by the
Company as an effective retention tool and is expected to provide further
revenue opportunities. In addition, it
is expected to support growth in Internet and digital as customers must have
these services to access VOD.
Shaw also leverages its network through increased penetration rates of digital
cable, residential High-Speed,
High-Speed Lite Internet and Business Internet (SOHO). Shaw has the highest
digital penetration rate as a
percentage of basic cable in Canada (23%) and the highest penetration of
Internet in North America with 43%.

Shaw also has a customer-centric strategy designed to deliver service,
simplicity and savings to its customers
via unique bundled service offerings. Creating value for our customers equals
value for Shaw through reduced
churn, incremental penetration and operational efficiencies. Approximately 38%
of Shaw cable customers
subscribe to bundled services compared to 28% last year.

Shaw creates value through its clustering strategy, which involves
geographical consolidation and realignment
of its cable systems to take advantage of potential administrative, operating
and marketing synergies
that arise from larger, focused operations. Over a number of years, Shaw has
acquired and divested various
cable systems to complement its cable clusters. As a result, Shaw has
consolidated its position as the dominant
provider of cable television services in Western Canada. This year, Shaw
completed the sale of its US cable
systems and announced the pending acquisition of certain cable systems in
Alberta and southern British
Columbia from Monarch Cablesystem Ltd.

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

Finally, Shaw senior management and employees constantly re-evaluate operations
to ensure that Shaw
continues to be one of the best run cable companies in North America. In the
last 18 months, Shaw underwent a
series of restructurings and implemented a number of cost-saving initiatives.

(iii)   DTH (Star Choice)
DTH (Star Choice) distributes digital video and audio programming services via
DTH satellite to Canadian
residences and commercial establishments. It is one of two active DTH satellite
operators licensed by the
Canadian Radio-television and Telecommunications (CRTC) to deliver digital
subscription video and audio
programming services via satellite directly to subscribers homes and
businesses. Star Choice began the
national roll-out of its digital DTH services in October, 1997 and, at August
31, 2003 had 808,526 subscribers
across Canada.

Star Choices customer acquisition strategy has migrated from households not
served by cable or underserved
by cable (i.e.served by cable systems that offer fewer than 80 channels) to
households that receive full service
cable. As its customer acquisition focus has shifted, Star Choice has
concentrated on differentiating itself from
alternative video services through unique product offerings such as
time-shifting of programming.

Star Choice and Satellite Services share a strategy to leverage a common
satellite infrastructure. The two
divisions distribute largely the same digital video and audio signals to
different markets (residential and
business), thereby allowing Shaw to derive distinct revenue streams from
different customers using a common
platform. Similar operational, revenue and cost synergies exist between the
businesses. In addition, in 2002
the CRTC modified certain structural separation licence conditions so as to
allow DTH and Cable to integrate
accounting and other administrative functions subject to the establishment of
procedures to protect confidential
information. Therefore over the last 18 months Star Choice has and is
continuing to restructure its operations to
take advantage of shared facilities with Cable where possible. For example, in
July 2002, Star Choice
converted to the same billing system as Cable.

(iv)   Satellite Services
Satellite Services has three principal lines of business: (a) redistributing
television and radio signals via satellite
to cable operators and other multi-channel system operators in Canada and the
US, referred to as satellite relay
distribution undertaking (SRDU) services; (b) providing uplink and network
management services for
conventional and specialty broadcasters on a contract basis and (c) through
Cancom Tracking Solutions,
providing mobile tracking and messaging services to approximately 450 companies
making it the largest
provider of such services in the long-haul trucking industry in Canada, with
approximately 26,000 vehicles
using its services. The Business Television business which built and maintained
satellite interactive distance
learning (SIDL) networks was sold in March 2003.

B.   Key performance drivers
Shaw measures the success of its strategies using a number of key performance
drivers. We have outlined these
below, including a discussion as to their relevance, definitions, calculation
methods and underlying
assumptions.

(i)   Revenue
Revenue is a measurement defined by Canadian and US generally accepted
accounting principles (GAAP). It
is the inflow of cash, receivables or other consideration arising from the sale
of product and services. Revenue
is net of items such as trade or volume discounts and certain excise and sales
taxes. It is the base on which free
cash flow, a key performance indicator, is determined; therefore, it measures
the potential to deliver free cash
flow as well as indicating our growth in a competitive market place.

The following key performance indicators are not measurements in according with
Canadian or US
GAAP and should not be considered as an alternative to net income or any other
measure of
performance by Canadian or US GAAP.

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

(ii)   Operating income before amortization and operating margin
Operating income before amortization is calculated as revenue less operating,
general and administrative
expenses. In the case of the analysis of our business segments, it excludes
one-time income and expense items
such as restructuring, recovery of cable litigation accrual and inventory
write-downs. It is intended to indicate
the Companys ability to service and/or incur debt, and therefore it is
calculated before amortization, (a non-cash
expense) and interest. Operating income before amortization is also one of the
measures used by the
investing community to value the business. Operating margin is calculated by
dividing operating income before
amortization by revenue.

Relative increases period over period in operating income before amortization
and in operating margin are
indicative of the Companys success in delivering valued products and services
to our customers in a cost
effective manner.

(iii)   Free cash flow
Free cash flow is calculated as operating income before amortization (as
defined above), less interest,
entitlements on equity instruments net of current taxes, cash taxes on net
income, equipment subsidies and
capital expenditures (excluding capital expenditures in respect of the Burrard
Landing Lot 2 Partnership (the
Partnership), which the Company is required to proportionately consolidate).
As the Partnership is financed
by its own credit facility, this is a non-cash item for the Company. We focus
on free cash flow as it measures
our ability to repay debt, finance the business and pay dividends.

(iv)   Subscriber counts, including penetration
We measure the count of our customers in Cable and DTH (Star Choice). In Cable,
we include service
categories such as basic, tier, digital terminals, digital customers, Internet
and stand-alone Internet. Cable
includes in its count only those customers who are on billing and are paying a
fee for service. The customer
count for Internet also includes scheduled installations due to the high-growth
nature of this product. Cable
measures penetration for basic services as a percentage of homes passed and in
the case of all other services, as a percentage of basic customers.

The count of Star Choice customers includes those who are on billing and are
paying a fee for service and also
includes seasonal customers who have indicated their intention to reconnect
within the next six months.

Subscriber counts and penetration statistics measure market share and our
potential customer base and also
indicate the success of our bundling and pricing strategies.

(v)   Equipment and customer churn
Customer churn is calculated as the number of new customer activations less the
net gain of customers during
the period divided by the average of the opening and closing customers for the
applicable period of calculation.
Equipment churn is calculated on the same basis except that the number of units
of equipment is used in the
calculation instead of the number of customers. Churn provides some measure of
customer satisfaction and
preferences in addition to physical movement of the customer.

C.   Critical accounting policies
An understanding of our accounting policies is necessary for a complete
analysis of our results, financial
position, liquidity and trends. Refer to Note 1 to the Consolidated Financial
Statements for additional
information on our accounting policies and to Note 21 to the Consolidated
Financial Statements for additional
information on Canadian-US GAAP differences. We prepared our Consolidated
Financial Statements
according to Canadian GAAP. This section discusses key estimates and
assumptions that management has
made under these principles and how they affect the amounts reported in the
Consolidated Financial Statements
and notes. It also describes significant accounting policies where alternatives
exist. We focus your attention to
the following critical accounting policies:

(i)   Revenue recognition
Revenue is considered earned as services are performed, provided that at the
time of performance, ultimate
collection is reasonably assured. Such performance is regarded as having been
achieved when reasonable

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

assurance exists regarding the measurement of the consideration that will be
derived from rendering the service.
Revenue from cable, Internet and DTH customers includes subscriber service
revenue when earned. The
revenue is considered earned as the period of service relating to the customer
billing elapses. Revenue includes
subscriber connection fees which is considered appropriate, as the performance
of the installation is completed
and is measurable. In addition, it provides appropriate matching of the
subscriber connection fees to the initial
selling expenses and related administrative and general office expenses
incurred in respect of the installation.
Subscriber connection and installation costs are capitalized as part of the
Companys distribution system as the
service potential of our distribution system is enhanced by the ability to
generate future subscriber revenue.
Costs of disconnections are expensed as incurred as the activity does not
generate future revenue. The sale of
modems, digital cable terminals (DCT) and DTH receiving equipment and the
subscription for the related
service are considered one transaction to generate future revenue. Therefore,
the sale of modems, DCT and
DTH receiving equipment is recognized only when subscriber service is
activated. Satellite service and
telecommunications revenue is recognized in the period in which the services
are rendered to customers. The
sale of satellite service equipment is recognized when goods are shipped.

(ii)   Allowance for doubtful accounts
The majority of the Companys revenues are earned from selling on credit to
individual subscribers. Because
there are some customers who do not pay their debts, selling on credit
necessarily involves credit losses. The
Company is required to make an estimate of an appropriate allowance for
doubtful accounts on its receivables.
The Company considers factors such as the number of days the subscriber account
is past due, the status of a
subscribers account with respect to whether or not they are continuing to
receive service, the Companys past
collection history and changes in business circumstances. The estimated
allowance required is a matter of
judgement and the actual loss eventually sustained may be more or less than the
estimate, depending on events
which have yet to occur and which cannot be foretold, such as future business,
personal and economic
conditions. Conditions causing deterioration or improvement in the aging of
subscriber accounts and
collections will increase or decrease bad debt expense.

(iii)   Property, plant and equipment  capitalization of direct labour and
overhead
As outlined in the recommendations of the Canadian Institute of Chartered
Accountants (CICA) with respect
to property, plant and equipment, capitalization of costs include the
consideration expended to acquire,
construct, develop or better an item of property, plant and equipment and
includes all costs directly attributable
to the acquisition, construction, development or betterment of the assets
including installation at the location
and in the condition necessary for its intended use. Costs include installation
costs such as architectural, design
and engineering fees, legal fees, survey costs, site preparation costs, freight
charges, transportation insurance
costs, duties, testing and preparation charges. The cost of an item of
property, plant and equipment includes
direct construction or development costs (such as materials and labour) and
overhead costs directly attributable
to the construction or development activity. The cost to enhance the service
potential of an item of property,
plant and equipment is considered a betterment. Service potential may be
enhanced where there is an increase
of the previously assessed physical output or service capacity, associated
operation costs are lowered, the life or
useful life is extended, or the quality of output is improved. Costs incurred
in the maintenance of the service
potential of an item of property, plant and equipment are expensed as incurred.

We capitalize direct labour and direct overhead incurred to construct new
assets, upgrade existing assets and
connect new subscribers. These costs are capitalized as they include the
construction costs directly attributable
to the acquisition, construction, development or betterment of our plant
through either increased service
capacity or lowered associated operating costs. Repairs and maintenance
expenditures are charged to operating
expenses as incurred. Although interest costs may be capitalized during
construction, it is Shaws policy not to
capitalize interest. In addition, Shaw does not capitalize the internal direct
labour and direct overhead costs
incurred on the construction of buildings, as it is not a major portion of our
business activity.

We capitalize costs in three principal areas:



| | 1. |  | Corporate engineering, which is primarily involved in overall planning
and development of the
cable/Internet infrastructure. Labour and overhead costs directly
related to this activity are capitalized as the activities directly
relate to the planning and design of the construction of our
distribution system.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003



| | 2. |  | Cable regional construction departments, which are principally involved
in constructing, rebuilding
and upgrading the cable/Internet infrastructure. Labour and overhead
costs directly related to the
construction activity are capitalized as the activities directly
relate to the construction or upgrade of our distribution system.
Capital projects include, but are not limited to, projects such as
new subdivision builds, decrease of node sizes, and upgrades of the
plant to 750 MHz capacity.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. |  | Subscriber related activities such as installation of new
drops, satellite dishes and Internet services. The labour and
overhead directly related to the installation of new services are
capitalized as the activity involves the installation of capital
assets (e.g. wiring, dishes, filters, software, etc.) which enhance
the service potential of our distribution system through the ability
to earn future service revenues. Costs associated with service calls,
collection, disconnects and reconnects that do not involve the
installation of a capital asset are expensed.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Amounts of direct labour and direct overhead capitalized fluctuate from year to
year depending on the level of
customer growth and plant upgrades for new services. In addition, the level of
capitalization fluctuates
depending on the proportion of internal labour versus external contractors used
in construction projects. For
example, beginning in fiscal 2002, we directly employed unit-based employees
(UBEs) that were previously
involved in customer installations, ongoing plant upgrades and a portion of new
builds as contractors of Shaw.

The percentage of direct labour capitalized in many cases is determined by the
nature of employment in a
specific department. For example, all labour and direct overhead of the cable
regional construction departments
is capitalized as a result of the nature of the activity performed by those
departments. Capitalization is also
based on reference to piece rate work performed by UBEs which is tracked
directly. In some cases, the amount
of capitalization depends on the level of maintenance versus capital activity
that a department performs. In
these cases, an analysis of work activity is applied to determine this
percentage split; however, such analysis is
subject to overall reasonability checks on the percentage capitalization based
on known capital projects and
customer growth.

(iv)   Deferred charges  deferred marketing costs and equipment subsidies
Under Canadian generally accepted accounting principles (GAAP), expenses that
are linked to revenue
generating activities in a cause and effect relationship are normally matched
with the revenue in the accounting
period in which the revenue is recognized.

DEFERRED MARKETING COSTS:

Shaw defers costs to launch new services and to position itself in new markets
that have been acquired. These
costs are amortized over two years, the period during which these costs are
estimated to provide benefit. Shaw
incurs significant marketing costs during the first few months of the launch of
new services, such as new digital
tier launches. These costs are often incurred during our free trial periods. We
therefore benefit from this initial
cost in future periods as customers subscribe to the new services after the
trial periods. Our experience
indicates that it takes approximately two years for the new services to reach
maturity level in terms of customer
acceptance. Therefore, we match the costs of the launch of the new services to
the period in which the
revenues from the new services will be recognized.

EQUIPMENT SUBSIDIES:

We subsidize the cost of equipment sold to subscribers to access subscription
cable and DTH services. The
subsidy creates an asset in the form of a customer which generates future
revenues. Since both the customer
and the Company make an investment, a relationship is created that provides
future value for both. This
relationship has resulted in a lower rate of turnover which also adds value.
The sale of the equipment and
subscription for service is considered as one transaction. Accordingly, our
policy of amortizing the subsidies
over a future period matches the cost of the subsidy with the anticipated
future revenues generated from the
customer subscription. As the term is not specified for which the customer will
receive the services, we have
considered our customer churn rate in determining that the amortization period
of two years is reasonable. Our
actual churn rate could justify a longer amortization period but we have
selected a more conservative period to
account for uncertainty related to potential changes in our competitive
environment.

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MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

The amortization of equipment subsidies and deferred marketing costs is
included in the amortization line of the
Consolidated Statement of Loss and is disclosed in Note 7 to the Consolidated
Financial Statements. The cost
of the subsidies is also highlighted in our segmented results in Note 15 to the
Consolidated Financial
Statements.

Under US GAAP, marketing costs and equipment subsidies are expensed as
incurred. We recognize the
Canadian-US GAAP difference on deferred equipment subsidies and marketing costs
in Note 21 to the
Consolidated Financial Statements.

(v)   Asset impairment
The valuations of all long-lived assets, including broadcast licenses and
goodwill, investments in
unconsolidated entities and capital assets are subject to annual review for
impairment. We compare the
carrying value of broadcast licenses and goodwill and capital assets to
valuations using unlevered discounted
cash flow analysis. A two-step process determines impairment of capital assets.
The first step determines when
impairment is recognized and compares the carrying value of a capital asset to
the sum of the undiscounted cash
flows expected to result from its use and eventual disposition. If the carrying
value exceeds this sum, a second
step is performed which measures the amount of the impairment as the difference
between the carrying value of
the capital asset and its fair value calculated using quoted market price or
discounted cash flows. Investments
are compared to quoted market values (where available) or estimated net
realizable value, and are reviewed to
determine whether such impairment is other than temporary. An impaired asset is
written down to its estimated
fair market value based on the information available at that time. Considerable
management judgment is
necessary to estimate discounted cash flows. Assumptions used in these cash
flows are consistent with internal
forecasts and are compared for reasonability to forecasts prepared by external
analysts. Significant changes in
assumptions with respect to the competitive environment could result in
impairment of these assets.

(vi)   Employment benefit plans
This year, Shaw implemented a defined benefit pension plan for key senior
executives. The amounts reported
in the financial statements relating to the defined benefit pension plan are
determined using actuarial valuations
that are based on several assumptions. We performed a valuation of the plan on
August 31, 2002 and August
31, 2003. The valuation uses managements assumptions for the discount rate,
rate of compensation increase,
and expected average remaining years of service of employees. While we believe
these assumptions are
reasonable, differences in actual results or changes in assumptions could
affect employee benefit obligations
and related income statement impact. We account for differences between actual
and assumed results by
recognizing differences in benefit obligations and plan performance over the
working lives of the employees
who benefit from the plan. The most significant assumption used to calculate
the net employee benefit plan
expense is the discount rate. The discount rate is the interest rate used to
determine the present value of the
future cash flows that we expect will be needed to settle employee benefit
obligations. It is usually based on the
yield on long-term high-quality corporate fixed income investments. We
determine the appropriate discount
rate at the end of every year. Our discount rate was 6.50% at August 31, 2003
and 6.75% at August 31, 2002.
Changes in the discount rate do not have a significant effect on our earnings.
They do, however, have a
significant effect on the projected benefit obligation. A lower discount rate
results in a higher obligation.

(vii)   Future income taxes
We have recognized future income tax assets in respect of losses of certain of
Shaws subsidiaries. Realization
of future income tax assets is dependent upon generating sufficient taxable
income during the period in which
the temporary differences are deductible. We have evaluated the likelihood of
realization of future income tax
assets based on forecasts of taxable income of future years and based on our
ability to reorganize our corporate
structure to accommodate use of taxable losses in future years. Assumptions
used in these taxable income
forecasts are consistent with internal forecasts and are compared for
reasonability to forecasts prepared by
external analysts. Significant changes in assumptions with respect to internal
forecasts or the inability to
implement tax-planning strategies could result in future impairment of these
assets.

(viii)   Commitments and contingencies
We are subject to various claims and contingencies related to lawsuits, taxes
and commitments under
contractual and other commercial obligations. We recognize liabilities for
contingencies and commitments

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MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

when a loss is probable and capable of being estimated. Our contractual and
other commercial obligations
primarily relate to network fees and operating lease agreements for use of
transmission facilities, including
maintenance of satellite transponders and lease of premises in the normal
course of business. Significant
changes in our assumptions as to the likelihood and estimates of the amount of
a loss could result in recognition
of an additional liability.

(ix)   Equity instruments
We have the ability to satisfy interest and redemption obligations on various
financial instruments through the
issuance of Class B Non-Voting Shares. As the satisfaction of the obligations
by cash versus equity is at our
discretion, we have included these instruments in shareholders equity and any
payments thereon, net of taxes,
are recorded as dividends. Under US GAAP, these instruments would be classified
as debt and interest thereon
would be recorded as interest expense. We recognize the Canadian-US GAAP
difference on equity instruments
in Note 21 to the Consolidated Financial Statements.

D.   Related party transactions
All related party transactions are reviewed and approved by Shaws Corporate
Governance Committee. Refer
to Note 18 to the Consolidated Financial Statements for information on related
party transactions.

E.   New accounting standards
We adopted the following policies in fiscal 2003:

(i)   Foreign currency translation
Shaw retroactively adopted the amended Canadian standard for foreign currency
translation which is consistent
with US standards and eliminates the deferral and amortization method of
accounting for unrealized translation
gains and losses on non-current monetary assets and liabilities that are not
hedged. Exchange gains and losses
are now included in net income in the period they are incurred.

(ii)   Stock-based compensation and other stock-based payments
Shaw adopted the new Canadian standard for stock-based compensation and other
stock-based payments which
requires that all stock-based awards granted to non-employees be accounted for
at fair value. With limited
exceptions relating to direct awards of stock, awards required or expected to
be settled in cash and stock
appreciation rights, the new standard permits the Company to continue its
current policy of not recording any
compensation cost on the grant of stock options to employees.

(iii)   Impairment of long-lived assets
Shaw prospectively adopted the new accounting pronouncement, Impairment of
Long-lived Assets which
establishes standards for the recognition, measurement and disclosure of the
impairment of long-lived assets
held for use and harmonizes Canadian requirements with US GAAP impairment
provisions. Previously, under
Canadian GAAP, the impairment of long-lived assets was measured as the
difference between the carrying
value of the asset and the future undiscounted net cash flows expected to be
generated by the asset. Under the
new pronouncement, this measurement is used to determine if impairment has
occurred, and the amount of
impairment is measured as the difference between the carrying value of the
asset and its fair value, calculated
using quoted market price or discounted cash flows.

The following polices will be adopted in future fiscal periods:

(i)   Hedging relationships
In fiscal 2004, Shaw will adopt Accounting Guideline (AcG) 13, Hedging
Relationships. This guideline
requires that hedging relationships be adequately documented to qualify for
hedge accounting. There will be no
impact as a result of adopting this policy as Shaw has already documented the
effectiveness of its hedging
relationships.

(ii)   Asset retirement obligations
In 2005, the Company will retroactively adopt the new Canadian standard, Asset
Retirement Obligations, which
establishes standards for the recognition, measurement and disclosure of asset
retirement obligations and the

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MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

related asset retirement costs. This new standard applies to obligations
associated with the retirement of
property, plant and equipment when those obligations result from the
acquisition, construction, development or
normal operation of the assets. The standard requires the recognition of all
legal obligations associated with the
retirement, whether by sale, abandonment, recycling or other disposal of an
asset. The Company is currently
assessing the impact of the adoption of this new accounting policy.

F.   Known events, trends, risks and uncertainties
Below is an analysis of known events, trends, risks and uncertainties that
could cause reported financial
information to not necessarily be indicative of future operating results or of
future financial position.

The principal risks to which we are exposed are:



| |  |  | Competition and technological change, including change in regulatory risks
| | - |  | --------------------------------------------------------------------------



| |  |  | Interest rate, foreign exchange and market value risks
| | - |  | ------------------------------------------------------



| |  |  | Contingencies
| | - |  | -------------



| |  |  | Uninsured risks of loss
| | - |  | -----------------------

(i)   Competition and technological change
Shaws businesses currently face competition from entities utilizing other
existing communications
technologies and may face competition in the future from other technologies
being developed or to be
developed. Recent regulatory and public policy trends also generally favour the
emergence of a more
competitive environment in Canada.

CABLE TELEVISION

Shaws cable television systems compete with the direct reception by antenna of
unencrypted over-the-air local
and regional broadcast television signals. Shaw also either currently competes
or may in the future compete
with other distributors of television signals, including DTH satellite
services, satellite master antenna systems
(SMATV), multichannel, multipoint distribution systems (MMDS), other
competitive cable television
undertakings and telephone companies offering video service using Digital
Subscriber Line technology
(DSL), all of which offer services to subscribers for a fee.

DTH delivers programming via signals sent directly to receiving dishes from
medium and high-powered
satellites, as opposed to via broadcast, cable delivery or lower powered
transmissions. DTH services presently
provide more channels than some of Shaws cable systems and are fully digital.
Two licensed operators, Star
Choice and Bell ExpressVu, are currently providing DTH services in Canada.
These DTH operators have
achieved rapid subscriber growth and together provide service to approximately
2.1 million Canadian
households. In addition, grey and black market DTH providers (i.e. providers of
US-based digital DTH
programming services available in Canada without authorization from the CRTC or
from the US DTH
providers) also provide competitive services. The Supreme Court of Canada
recently held that grey and black
market DTH providers are violating the Radiocommunication Act(Canada), and are
therefore providing an
illegal service.

MMDS delivers television programming by unobstructed line-of-sight microwave
transmission to subscribers
equipped with special antennae. Since 1995, the CRTC has approved MMDS
applications to compete with
cable television service in given service areas. In particular, the CRTC has
granted licenses to Skycable Inc.
and Image Wireless Communications to provide MMDS in certain cable service
areas in Manitoba,
Saskatchewan and British Columbia. The CRTC has also issued licenses to Look TV
and Look Télé to operate
MMDS undertakings in southern Ontario and in Quebec and eastern Ontario,
respectively. Look TV recently
emerged from protection from its creditors under the Companies Creditors
Arrangement Act.

In recent years, the CRTC has also licensed a number of competitive cable
television undertakings to operate
within the authorized service areas of incumbent cable licensees. One of these
competitive undertakings, Novus
Entertainment, operates within one of Shaws licensed service areas in
Vancouver.

Since 1998, telephone companies have been eligible to hold full scale
broadcasting distribution licenses from
the CRTC. A number of telephone companies have been granted broadcasting
distribution licenses by the

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MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

CRTC including Telus Corporation, in Alberta and British Columbia; SaskTel in
Saskatchewan; Manitoba Tel
in Manitoba.

To date, none of these competitors has had a material impact on Shaws cable
television operations. However,
there can be no assurance that increased competition will not have a material
adverse effect on Shaws results of
operations. Most of Shaws cable systems are concentrated in major urban
markets, with the remainder in
smaller clusters, linked via fiber optic distribution systems either to each
other or to larger markets. Through
this clustering strategy, Shaw maximizes the benefits of operating
efficiencies, enabling it to be a low-cost
service provider, which is a necessary component in strengthening its
competitive position. In addition, Shaw
plans to continue to deploy new technologies to increase channel capacity, to
take advantage of its existing
infrastructure to expand the range and quality of its services and to expand
its programming and communication
service offerings.

INTERNET

There are a number of different types of Internet service providers (ISPs)
offering residential and business
Internet access services that compete with the Shaw High-Speed Internet
service. These include on-line service
and content providers (such as AOL Canada), independent basic access service
providers (both national and
regional), incumbent telephone companies and wireless communications companies.

Many ISPs provide telephone dial-up Internet access services that are limited
to access speeds of up to 56 kbps.
Such services are provided by incumbent telephone companies and independent
ISPs (mainly through the use of
the telephone companies facilities and services).

High-speed Internet access services are principally provided through cable
modem and DSL technology. High-speed services enable users to transmit and
receive print, video, voice and data in digital form at significantly
faster access speeds than dial-up access through a regular telephone line.
Internet access services through cable
modem technology is primarily provided by cable companies. The CRTC has
authorized third-party ISPs to
access cable companies facilities to deliver high-speed Internet services. DSL
services are principally offered
by incumbent telephone companies such as BCE Inc. and its affiliates and Telus
Corporation.

The ISPs have requested access to cable companies facilities to use the
network to deliver their services. In
November 2000, the CRTC approved a monthly rate for ISP access of $21.25 per
end-user for Shaw. Other
connection and installation charges will also apply, the rates for which are
being reviewed by the CRTC. Until
competing ISPs have access to high-speed access services pursuant to this
third-party Internet access tariff,
cable operators have been directed by the CRTC to provide access to their
distribution systems to ISPs for
resale at a 25% discount off the lowest retail rate charged by the cable
operator for these services. To date,
there has not been a great deal of interest by ISPs for either third-party
Internet access or resale access services;
however, in June 2003 Cybersurf Corp filed an application with the CRTC
requesting remedies from the CRTC
respecting the terms and conditions of resale of Shaws retail Internet access
service. The matter is currently
before the CRTC.

In September 2003, Shaw filed an application with the CRTC asking the
Commission to order Telus to stop its
anti-competitive pricing of DSL Internet services and to ensure fair and
sustainable competition in the high-speed
Internet access market. The application cited examples over a period of five
months, where Telus offered
at least 18 different promotions for Internet access service to customers in
Alberta and British Columbia. Shaw
believes these promotions are priced well below Telus cost of service and
extend beyond reasonably accepted
periods of time for promotions. Shaw is in favour of fair and sustainable
competition because it is in the best
interests of the consumer, however, if anti-competitive pricing practices are
permitted to continue it could
significantly reduce competition in the Internet access market in Western
Canada, which is not in the best
interests of serving Internet customers. Shaw has specifically asked in its
application that the CRTC forbid
Telus from offering Internet promotional pricing at below-cost rates for
periods in excess of three months. It
also asks that the CRTC prevent Telus from offering competitive service bundles
that include local telephone
service in contravention of CRTC regulations.

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MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

Although operating in a competitive environment, Shaw expects that consumer
desire for Internet access
services, generally, and for bandwidth-intensive applications on the Internet
(including streaming video, digital
downloading and interactive gaming), in particular, will lead to continued,
growth for high-speed Internet
services such as Shaw High-Speed Internet.

DTH

The Star Choice DTH business faces much the same competitive environment as
cable television companies.
Competitors include Bell ExpressVu (the only other licensed DTH satellite
service currently operating in
Canada), cable television companies, grey and black market satellite service
providers and other competitors
such as wireless operators, telephone companies and off-air television
broadcasters.

SATELLITE SERVICES

In its Canadian SRDU business, Cancom faces competition principally from Bell
ExpressVu, which received an
SRDU license from the CRTC in 1999. At present, Cancom and Bell ExpressVu are
the only licensed SRDU
operators in Canada. Cancom also faces competition from the expansion of fiber
distribution systems into
territories previously only served by SRDU operators. This expansion permits
delivery of distant US and
Canadian conventional television stations to more remote locations without the
use of satellite transmission.

TELECOMMUNICATIONS

Through its Big Pipe subsidiaries, Shaw competes with other telecommunications
carriers in providing high-speed
broadband communications services (data and video transport and Internet
connectivity services) to
businesses, ISPs and other telecommunications providers. The telecommunications
services industry in Canada
is highly competitive, rapidly evolving and subject to constant change. Big
Pipes competitors include
incumbent local exchange carriers (such as Telus and Bell Canada), competitive
access providers, competitive
local exchange carriers, ISPs, private networks built by large end users and
other telecommunications
companies. In addition, the development and implementation of new technologies
by others could give rise to
significant new competitors.

(ii)   Interest rate, foreign exchange and market value risks
Shaw manages its exposure to floating interest rates and US dollar foreign
exchange fluctuation through the use
of interest rate and cross-currency exchange agreements or swaps. In order to
minimize the risk of
counterparty default under its swap agreements, Shaw assesses the
creditworthiness of its swap counterparties.
Currently 100% of our total swap portfolio is held by financial institutions
with Standard & Poors ratings (or
the equivalent) ranging from AA- to A-1.

Shaw has the following financial exposures to risk in its day-to-day
operations:



| | (a) |  | Interest rates: Due to the capital-intensive nature of Shaws
operations, the Company utilizes
long-term financing extensively in its capital structure. The primary
components of this
structure are:
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 1. |  | Banking facilities of Shaw as more fully described in Note 9 to the
Consolidated
Financial Statements.
| | -- |  | ------------------------------------------------------------------------------------------------------



| | 2. |  | Various Canadian and US denominated senior notes and debentures with terms
of
varying maturities issued in the public and private markets as
more fully described in
Note 9 to the Consolidated Financial Statements.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. |  | Equity instruments issued in Canadian and US dollars with original terms of
5 - 99
years as more fully described in Note 11 to the Consolidated
Financial Statements.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Interest on bank indebtedness is based on floating rates, while the
debentures and COPrS are
fixed-rate obligations. Shaw utilizes its credit facility to finance
day-to-day operations and,
depending on market conditions, periodically converts the bank loans
to fixed-rate
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003



| |  |  | instruments through public market debt issues. Shaw also uses
interest rate swap transactions
to fix the interest rates on a portion of its bank debt. At August
31, 2003 Shaw had swapped
out $527.0 million of its $606.8 million Canadian floating-rate bank
indebtedness by means
of two Canadian interest rate swap transactions entered into with a
major Canadian chartered
bank. The first swap fixes interest on a notional amount of bank
debt of $177 million at a rate
of between 9.49% to 11.64% depending on debt to cash flow ratios. The
effective rate at
August 31, 2003 was 9.74%. The termination of the interest rate swap
matches the maturity
of the underlying principal of the hedged bank debt, such that
one-third of it terminates each
year commencing April 30, 2004 until fully terminated April 30, 2007.
The second swap fixes
interest on $350 million of the term loan to maturity at a rate
between 4.9525% and 7.0775%
depending on debt to cash flow ratios. At August 31, 2003, the
effective rate was 5.9525%.
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As at August 31, 2003, approximately 97% of Shaws consolidated
long-term debt was fixed
with respect to interest rates. The equity instruments are also fixed
with respect to interest
rates, but are subject to the foreign exchange fluctuations described
below.
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | Foreign exchange: As the Company has grown to become Canadas largest
video broadband
service provider, it has accessed the US capital markets for a
portion of its financings. Since
Shaws revenues and assets are primarily denominated in Canadian
dollars, it faces significant
potential foreign exchange risks in respect of the servicing of the
interest and principal
components of its US $ denominated debt. In view of this, the
Companys policy with respect
to US debt is that at least 70% of the amounts maturing within the
next ten years be hedged to
protect against exchange fluctuations, and at August 31, 2003
approximately 94% of the
maturities were hedged. The Company utilizes cross-currency interest
rate transactions,
where appropriate, to hedge its exposures on US $ denominated bank
and debenture
indebtedness.
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | There is also an exchange risk present with respect to the US $
denominated COPrS included
in equity instruments which require quarterly interest payments and
potential redemption in
US dollars. However, because of the long period of time until
mandatory redemption (43 and
93 years), it is not practical to hedge these requirements. In
respect of the quarterly interest
payments, Shaw has entered into a five-year extendible forward US $
purchase contract with a
major Canadian bank whereby it buys US dollars at a fixed rate on the
quarterly interest
payment dates to make these payments. The current agreement enables
Shaw to purchase US
dollars at an exchange rate of $1.4078 Cdn. until March 31, 2005. The
counterparty to this
agreement has the option to extend this agreement for a further five
years at this rate.
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) |  | Market value: Shaws most significant investment is in Motorola, Inc.
which represents 27%
and 56% respectively of the carrying value and market value of the
Companys publicly
traded investments. The value of this investment is subject to market
risk. To protect against
future stock market volatility, Shaw monetized this investment
through the issuance of a zero
coupon loan which resulted in proceeds to Shaw based upon the then
current trading values of
Motorola. Upon maturity, the Zero Coupon Loan is repayable by
tendering the underlying
security of the Motorola shares or by issuing of Shaw Class B
Non-Voting Shares or paying
cash. Since we have the option of settling the Zero Coupon Loan by
delivery of the Motorola
shares, the respective foreign exchange risk and market risk on the
Zero Coupon Loan and the
Motorola investment are eliminated.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

The following tables summarize the impact of changes in the Cdn/US dollar
exchange rate on the unhedged
portion of Shaws US denominated debt and equity instruments.

Change in
    
    Change in
    
    Change in
    
    Impact onCdn $ vs.
    
    principal
    
    interest
    
    loss perUS $
    
    amount
    
    expense
    
    share(1)($millions Cdn)Debt
    
    $
    0.01
    
    
    
    0.6
    
    
    
    
    
    
    $
    0.001$
    0.03
    
    
    
    1.7
    
    
    
    0.1
    
    
    $
    0.008$
    0.05
    
    
    
    2.9
    
    
    
    0.2
    
    
    $
    0.013




Change in
    
    Change in
    
    Change in
    
    Impact onCdn$ vs.
    
    principal
    
    entitlement
    
    loss perEquity Instruments
    
    US $
    
    amount(2)
    
    payments
    
    share($millions Cdn)COPrS
    
    $
    0.01
    
    
    
    3.2
    
    
    
    N/A
    
    
    
    N/A$
    0.03
    
    
    
    9.5
    
    
    
    N/A
    
    
    
    N/A$
    0.05
    
    
    
    15.8
    
    
    
    N/A
    
    
    
    N/AZero Coupon Loan
    
    $
    0.01
    
    
    
    0.2
    
    
    
    0.02
    
    
    
    $
    0.03
    
    
    
    0.7
    
    
    
    0.05
    
    
    
    $
    0.05
    
    
    
    1.1
    
    
    
    0.09
    
    
    
    




---

|(1) |  | Assumes income tax recovery of 36% and includes the impact of foreign
exchange gain or loss, interest and dividend
entitlements.                                                                                                                                                                                                                                                                                                                                    
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Under Canadian GAAP, equity instruments are classified as equity and are
measured using historical values, therefore the
principal amount stated in the financial statements does not change with
foreign exchange rate fluctuations. Under US GAAP,
equity instruments are classified as debt and are translated at the
year-end rate of exchange; therefore the principal amount is
affected by foreign exchange rate fluctuations as outlined in the table
above.

(iii)   Contingencies
The Company and its subsidiaries are involved in litigation arising in the
ordinary course and conduct of its
business. As per the discussion above of our critical accounting policies, we
recognize liabilities for
contingencies when a loss is probable and capable of being estimated. As at
August 31, 2003, there were no
actions, suits or proceedings pending by or against the Company or its
subsidiaries which would, in
managements estimation, likely be determined in such a manner as to have a
material adverse effect on the
business of the Company.

(iv)   Uninsured risks of loss
Last year, Telesat Canada (Telesat), the sole provider of satellite
facilities in Canada, first disclosed that it
observed power degradation of the Anik F1 satellite. Shaw uses Anik F1 in its
DTH and Satellite Services
operations. Telesat has since provided the following update in its press
release of February 4, 2003:

Telesat announced today that it has signed a contract with Astrium, Europes
largest space company, for a new
satellite targeted for launch in 2005 to replace the Anik F1 satellite and
ensure continuity of service for its
customers. The new satellite, Anik F1R, will carry telecommunications,
broadcasting and Internet services.

Based on the foregoing, we do not anticipate any incremental cost to the
Company or disruption to our DTH
and Satellite Services customers.

Last year we disclosed that a plan put forward by Satmex (a Mexican satellite
operator) to launch and operate a
new satellite adjacent to the satellites used by Star Choice, might cause
significant interference to Star Choice.
We have since learned that the governments of Canada and Mexico intend to
conclude a new Satellite
Coordination Agreement to accommodate the operation of a new Mexican satellite
network according to the

18



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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

terms and parameters included in the 2000 Coordination Agreement. This would
ensure that the operation of a
new Mexican satellite will not interfere with the Anik satellites used by Star
Choice. As a result, Shaw no
longer considers this issue as a significant potential risk to Star Choices
DTH operations.

We are unable to obtain business interruption insurance covering damage or loss
to one or more of the satellites
that we use in our DTH and Satellite Services business. In respect of purchased
transponders, we have rights to
certain limited insurance proceeds which may be received by Telesat during the
first five years following
launch. Telesat has also made certain commitments to us for access to spare
transponders on Anik F1 in the case
of interruption. There is no assurance such transponders would be available. In
respect of leased transponders,
we currently lease satellite capacity from Telesat on Anik E2 and Anik F1 on an
unprotected preemptible
service level basis (the same level as all of Telesats broadcast customers).
Therefore, in the event of satellite
failure, our service will only be restored as additional capacity becomes
available, unless backup stand-by
systems can be arranged. Restoration of our satellite service on a US satellite
may require repositioning or repointing of consumers receiving dishes. In such
event, consumers level of service may be diminished or they
may require a larger dish. There have been two in-orbit failures of the Anik E
satellite series. One or more
failures of satellites used by us could cause customers to deactivate their DTH
subscriptions or otherwise have a
material adverse effect on our business and results of operations.

We self-insure our plant in our cable and Internet distribution system as the
cost of insurance is generally
prohibitive. The risk of loss is however mitigated as most of our cable plant
is located underground. In
addition, it is likely that damages caused by any one incident would be limited
to a localised geographic area
and therefore resulting business interruption and financial damages would be
limited. Further, we have back-up
disaster recovery plans in the event of plant failure and we have redundant
capacity with respect to certain
portions of our system. In the past, we have successfully recovered from
damages caused by natural disasters,
without significant cost or disruption of service.

II.   RESULTS OF OPERATIONS

OVERVIEW OF FISCAL 2003 CONSOLIDATED RESULTS

2003
    
    2002
    
    2001($000s Cdn except per share amounts)Operations:Revenue
    
    
    2,076,740
    
    
    
    1,914,284
    
    
    
    1,552,776Operating income before
amortization(1)
    
    
    820,600
    
    
    
    632,673
    
    
    
    460,340Operating margin
    
    
    39.5
    %
    
    
    33.1
    %
    
    
    29.6
    %Cash flow from operations
    
    
    534,766
    
    
    
    332,109
    
    
    
    210,514Net loss
    
    
    (47,828
    )
    
    
    (286,324
    )
    
    
    (157,273
    )Per share data(2):Cash flow per share(3)
 basic
    
    $
    2.13
    
    
    $
    1.25
    
    
    $
    0.77Loss per share  basic and diluted
    
    
    ($0.38
    )
    
    
    ($1.42
    )
    
    
    ($0.89
    )Weighted average number of
participating shares outstanding
during period (000s)
    
    
    231,848
    
    
    
    231,820
    
    
    
    221,079




---

|(1) |  | See Key performance drivers on page 8.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | After deducting after-tax entitlements on equity instruments of $40,193
or $0.17 per share [2002  $42,331 or $0.18 per share; 2001  $40,123 or
$0.18 per share] for the year.                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(3) |  | Cash flow per share is presented because it is an indicator of the
maximum potential distribution to shareholders on a per share basis. It is
calculated by dividing cash flow from operations as presented in the
Consolidated Statement of Cash Flows adjusted for (2) above divided by the
weighted average number of participating shares outstanding during the
period. Cash flow per share is not a measurement in accordance with
Canadian or US GAAP and should not be considered an alternative to
earnings per share or any other measure of performance as required by
Canadian or US GAAP.

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

Highlights



| |  |  | Consolidated net free cash flow was $96.8 million or $22.1 million better than our latest revised
guidance of $74.7 million. This compares to a negative amount of $563.4 million last year. This
improvement demonstrates Shaws dedication and focus in the past 18 months to achieve free cash
flow.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Cable division free cash flow was $205.2 million compared to negative $349.4 million last year.
Satellite division negative cash flow improved to $108.4 million compared to negative $214.0 million
last year.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Digital and Internet subscriber base growth, excluding the US cable systems sold effective June 30,
2003, was 39,813 and 125,933 respectively. Canadian basic cable subscriber growth was 18,935
compared to a loss of 32,556 last year. DTH subscribers grew by 48,502.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Shaw sold its US cable systems effective June 30, 2003 for gross proceeds of US $188.5 million and
used a portion of the proceeds to redeem the US $150 million Senior
secured notes of Star Choice,
resulting in savings in interest of US $19.5 million. The US cable systems
generated operating income
before amortization of US $17 million based on annualized results to the
date of sale.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Revenue and operating expenses

Change2003
    
    20022003
    
    2002
    
    2001
    
    %
    
    %(In $000s Cdn)Revenue
    
    
    2,076,740
    
    
    
    1,914,284
    
    
    
    1,552,776
    
    
    
    8.5
    
    
    
    23.3Operating income before amortization
    
    
    820,600
    
    
    
    632,673
    
    
    
    460,340
    
    
    
    29.7
    
    
    
    37.4Operating margin
    
    
    39.5
    %
    
    
    33.1
    %
    
    
    29.6
    %
    
    
    6.4
    
    
    
    3.5


2003 vs 2002
Consolidated revenue increased 8.5% over last year. Excluding the US cable
systems sold effective June 30,
2003, consolidated revenue improved by 9.1%. The increase was due to growth in
the customer base, rate
increases and sale of additional digital services, the launch of HDTV and
increased VOD offerings.

Operating income before amortization exceeded revenue growth with an increase
of 29.7%. Excluding the US
cable systems, the increase was 31.3%. The increase resulted from revenue
growth combined with the positive
impact of cost saving initiatives and restructuring in all divisions plus the
elimination of the Excite@Home fee
in December 2001. These improvements do not reflect the impact of increased
restructuring charges of $4.3
million over last year, a one-time $4.4 million write-down of DTH inventory in
2003 and the recovery of a
Cable litigation accrual of $12.0 million.

In April 2002 the CRTC modified certain structural separation license
requirements to allow DTH and Cable to
integrate accounting and other administrative functions subject to the
establishment of procedures to protect
confidential information. In light of this, the Satellite division developed a
restructuring plan to streamline its
operations. In respect of the restructuring plan, a $4.8 million provision was
taken in the first quarter of this
year to cover severance costs of approximately $4 million in respect of 400
employees and $0.8 million of exit
costs to centralize certain operational functions in Calgary. The restructuring
is expected to result in
approximate annual savings of $6 million. As of August 2003, approximately $3.5
million of severance costs
have been incurred in respect of the restructuring.

As part of the restructuring process implemented by the Company during the 2002
fiscal year, and consistent
with its stated objectives to improve profitability and increase net free cash
flow, the Company carried out a
further review of its activities and operations at the corporate, cable and
satellite locations during 2003. Based
upon this review, it developed a restructuring plan which eliminated a further
350 positions. The plan, which
was communicated to our employees in June 2003, will entail severance costs of
approximately $4 million, and

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

should result in annual savings of $15 million. The costs of the restructuring
were recognized in the fourth
quarter. As of August 2003, approximately $3.5 million of severance costs have
been incurred in respect of this
restructuring. During the operations review, Star Choice evaluated its
inventory and distribution logistics with
respect to replacement of customers DTH receivers and as a result, determined
its inventory was overstated by
$4.4 million. Accordingly, in the third quarter the Company recorded a
corresponding one-time charge against
operating income before amortization.

Given a recent favourable ruling from the Supreme Court of Canada, the
authority of the CRTC to determine
conditions upon which a cable company may gain access rights to public streets
to construct transmission lines,
including reasonable terms of payment, was upheld. As a result, in the fourth
quarter the Company reversed a
$12 million litigation accrual. In managements view, the Supreme Court of
Canada ruling strongly supports
Shaws position in respect of similar litigation commenced against the Company
relating to access to a
municipalitys streets for a period of ten years and therefore the accrual is
no longer required.

2002 vs 2001
In 2002, revenue increased 23.3%. The impact of the Moffat acquisition, Rogers
exchange and Viewers Choice
acquisition, net of the Access systems sale, enhanced revenue by 6%. The
remaining increase in revenue, or
17%, was due to organic growth from increased Internet, digital, DTH and Big
Pipe customers, price increases
and the introduction of a new digital tier. Operating income before
amortization increased 37.4% and operating
margin improved 3.5%. The increase reflected the favourable margin impact of
higher effective net pricing for
cable, Internet and DTH and increased volume through organic subscriber growth
of Internet, digital and DTH.
It also reflected the cost savings arising from the restructuring of the cable
and Internet division, the elimination
of the Excite@Home fee in December 2001 and the prior years inclusion of a
one-time incentive payment for
all staff totaling $9 million. The incentive payment was in recognition of
employees achievement in meeting
record Internet subscriber growth targets in 2001. These improvements were
partially offset by the impact of a
$4.6 million restructuring charge in 2002 incurred on severance costs in
respect of the reduction of employment
of 800 employees and contractors. The Company incurred $4.1 million of
severance costs in respect of the
reorganization last year and incurred the remaining costs in fiscal 2003.

Fixed charges

Change2003
    
    20022003
    
    2002
    
    2001
    
    %
    
    %(In $000s Cdn)Amortization Property, plant and equipment
    
    
    413,381
    
    
    
    409,335
    
    
    
    288,165
    
    
    
    1.0
    
    
    
    42.0Deferred charges
    
    
    184,808
    
    
    
    175,996
    
    
    
    113,875
    
    
    
    5.0
    
    
    
    54.6Intangibles
    
    
    
    
    
    
    
    
    
    
    71,081
    
    
    
    
    
    
    
    (100.0
    )598,189
    
    
    
    585,331
    
    
    
    473,121
    
    
    
    2.2
    
    
    
    23.7Amortization of deferred IRU revenue
    
    
    (11,984
    )
    
    
    (11,517
    )
    
    
    (4,902
    )
    
    
    4.1
    
    
    
    134.9Interest
    
    
    259,702
    
    
    
    267,323
    
    
    
    206,935
    
    
    
    (2.9
    )
    
    
    29.2


In 2003, amortization on property, plant and equipment increased by 1% due to
high levels of cable, Internet,
Internet back-bone and transponder capital expenditures prior to February 2002.
Amortization should decrease
in fiscal 2004 due to the sale of the US cable systems.

In 2002, amortization on plant, property and equipment increased by 42% due to
the Moffat acquisition
effective March 1, 2001, the incremental effect of the Rogers exchange
effective November 1, 2000 and the
high level of cable, Internet, Internet back-bone and transponder capital
expenditures over the past few years.

In 2003, amortization of deferred charges increased by 5.0% primarily due to
deferred equipment subsidies,
which included a full year amortization of modem subsidies resulting from the
purchase program introduced in
June 2002 and the amortization of subsidies on DTH satellite dishes commencing
January 2003. From
September 2001 to January 2003, as part of the Simple Satellite promotional
program, Star Choice retained

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

ownership of the DTH satellite dishes, and therefore the dishes were previously
capitalized as part of plant,
property and equipment as opposed to equipment subsidies.

In 2002, comparable amortization of deferred charges increased 54.6% primarily
due to the higher amortization
of equipment subsidies which resulted from higher growth of digital and DTH
subscribers in recent years.

As a result of adopting the new accounting policy for goodwill and intangibles
discussed previously, no
amortization was recorded on intangibles in 2003 and 2002.

Amortization of deferred IRU revenue resulted from the sale of the FiberLink
operation in February 2000.
Shaw granted an indefeasible right to use certain specifically identified
existing fibers in the Companys fiber
optic cable networks for 60 years (Shaw IRU). The prepayment on the Shaw IRU
of $525.2 million, in the
form of cash plus shares of GT Group Telecom Inc. (GT), is being amortized
into income on a straight-line
basis over the 60-year period. In addition, the Company also recorded a
prepayment on an IRU of $96.8 million
in respect of certain specifically identified existing fibers acquired on the
Moffat acquisition (Moffat IRU)
effective March 1, 2001. The prepayment on the Moffat IRU is being amortized
into income on a straight-line
basis over 30 years. In 2003, amortization of deferred IRU revenue remained
unchanged. In 2002, it increased
by 134.9% over 2001 due to the full year inclusion of the Moffat IRU and the
first-time amortization of the
future build component of the Shaw IRU that was completed in 2002.

In 2003, interest expense decreased by 2.9% due to reduced consolidated debt
levels which resulted primarily in
the latter portion of 2003 when Shaw began generating positive free cash flow
on a consolidated basis and on
repayment of debt with the sale of the US assets on June 30, 2003. In addition,
Shaws weighted average
borrowing rate decreased from 7.69% as at August 31, 2002 to 7.37% as at August
31, 2003 due to restructuring
of its debt including the repayment of the US $150 million Senior secured notes
of Star Choice, the Cancom
credit facility and the Cancom subordinated credit facility. As a result of
continued generation of free cash
flow and the reduced effective borrowing rate, interest expense should continue
to decrease in 2004.

In 2002, interest expense increased by 29.2% over 2001 due to increased
borrowing required to finance the
Moffat acquisition, the Rogers exchange and capital expenditures.

Investment activity gains and losses

Increase (decrease)in income2003
    
    2002
    
    2001
    
    2003
    
    2002(In $000s Cdn)Gain (loss) on sale of investments
    
    
    1,957
    
    
    
    2,321
    
    
    
    (106,716
    )
    
    
    (364
    )
    
    
    109,037Write-down of investments
    
    
    (15,000
    )
    
    
    (330,466
    )
    
    
    (163,454
    )
    
    
    315,466
    
    
    
    (167,012
    )Gain on redemption of SHELS
    
    
    119,521
    
    
    
    218,327
    
    
    
    
    
    
    
    (98,806
    )
    
    
    218,327Dilution gain (loss) on issuance of stock by
equity investee
    
    
    
    
    
    
    (571
    )
    
    
    4,525
    
    
    
    571
    
    
    
    (5,096
    )


Gain (loss) on sale of investments
In 2003 the gain on sale of investments primarily related to the sale of
1,100,000 Cogeco Cable Inc. (Cogeco)
shares and the sale of a minority interest in a small cable company in British
Columbia. Last year the gain on
sale of investments of $2.3 million primarily related to the sale of
approximately 673,000 Terayon
Communications Systems (Terayon) shares. In 2001, the loss on sale of $106.7
million was due to a loss on
the sale of 360networks shares of $137.6 million less net gains of $30.9
million on the sale of other investments.

Write-down of investments
The comparable write-down of investments is outlined in Note 5 to the
Consolidated Financial Statements.

In 2003, Shaw reviewed the carrying value of its privately and publicly held
investments and recorded a $15
million write-down. In 2002, the write-down of investments of $330.5 million
related to the write-down of GT

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

($269.0 million), Cogeco ($33.6 million), Liberty Media Corporation (Liberty)
($4.0 million) and private
companies portfolio ($23.9 million). In 2001, the write-down of $163.5 million
was in respect of Liberty ($103
million), TippingPoint Technologies Inc. ($21 million), other public companies
($6 million) and private
companies ($33 million).

Gain on redemption of SHELS
In the third quarter of 2003, Liberate Technologies shares were surrendered to
settle the SHELS III and IV
equity linked debentures, which resulted in a gain of $75.3 million ($61.8
million after tax). In the second
quarter, Terayon shares were surrendered to settle the SHELS V equity linked
debentures, which resulted in a
gain of $44.2 million ($36.2 million after tax) for a total gain of $119.5
million. The settlement of the three
series of SHELS will improve annual cash flow by approximately $3.5 million
(before tax) with the elimination
of the annual dividend entitlements. Last year, At Home Corporation shares were
surrendered to settle the
SHELS I and II equity linked debentures, which resulted in a gain of $218.3
million.

Dilution gain/(loss) on issuance of stock by investee
The dilution gain and loss reported in 2002 and 2001 arose in connection with
Shaws previous investment in
GT.

Other non-operating income and expenses

Increase(decrease) in income2003
    
    2002
    
    2001
    
    2003
    
    2002(In $000s Cdn)Gain on sale of cable systems
    
    
    
    
    
    
    
    
    
    
    66,595
    
    
    
    
    
    
    
    (66,595
    )Loss on sale of satellite assets
    
    
    (3,800
    )
    
    
    (1,281
    )
    
    
    
    
    
    
    (2,519
    )
    
    
    (1,281
    )Debt restructuring costs
    
    
    (10,634
    )
    
    
    
    
    
    
    (8,590
    )
    
    
    (10,634
    )
    
    
    8,590Foreign exchange gain (loss) on
unhedged long-term debt
    
    
    32,617
    
    
    
    (1,658
    )
    
    
    (15,188
    )
    
    
    34,275
    
    
    
    13,530Loss on sale and write-down of assets
    
    
    (124,674
    )
    
    
    
    
    
    
    
    
    
    
    (124,674
    )
    
    
    Other revenue (expense)
    
    
    9,338
    
    
    
    6,048
    
    
    
    (665
    )
    
    
    3,290
    
    
    
    6,713


On August 31, 2001 the Company sold its interest in its Nova Scotia cable
systems for $210 million which
resulted in the gain on sale of cable systems of $66.6 million.

During 2003, Shaw sold its Star Choice Business Television division for $6.5
million which resulted in a $3.8
million loss. The loss of $1.3 million in the prior year relates to the sale of
the uplink and SRDU business in the
Caribbean.

In August 2003, the Company redeemed US $150 million Senior secured notes of
Star Choice with part of the
proceeds from the sale of the US cable systems. In connection with the
redemption Shaw incurred $10.6
million in costs including early redemption premiums of US $9.8 million and the
purchase of outstanding Star
Choice warrants for US $2.4 million. These costs were partially offset by the
reversal of a mark-to-market
credit related to the notes. The Senior secured notes, which were due December
15, 2005 bore interest at 13%
or US $19.5 million per annum. In November 2000, the Company incurred $8.6
million of debt restructuring
charges in respect of the repayment of the Fundy 11% senior secured second
priority notes.

Shaw recorded foreign exchange gains and losses on the translation of its
foreign denominated unhedged long-term debt, which included US $57.2 million of
bank debt and, until August 2003, the Star Choice US $150
million Senior secured notes. Due to the strengthening of the Cdn $ relative to
the US $, the Company recorded
a $32.6 million foreign exchange gain. Next year the impact of fluctuations in
the US $ relative to the Cdn $
should reduce, as foreign exchange gains or losses should only arise in respect
of the Companys translation of
US $57.2 million of bank debt. In prior years, the foreign exchange losses
arose due to the weakening Cdn $
relative to the US $.

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

Effective June 30, 2003, the US cable systems were sold for net proceeds of
$257.4 million. In previous
quarters, the Company recorded a loss provision of $80.0 million on the pending
sale. Subsequent to the write-down, a slight recovery of the US $ relative to
the Cdn $ reduced the final loss on sale to $74.7 million. In
addition, the Company performed its annual valuation of intangible assets using
discounted cash flow analysis
and recorded a downward adjustment of $50 million to the carrying value of
goodwill.

In 2003, other income increased by $3.3 million primarily due to foreign
exchange gains which arose on the
settlement of US denominated accounts payable. In 2002, other income increased
by $6.7 million due to one-time
interest income on the settlement of final accounts owing by Corus
Entertainment Inc. on the sale of the
Womens Television Network (WTN) and reduced foreign exchange losses on the
translation and settlement
of US denominated accounts payable.

Income tax expense (recovery)
The income tax expense (recovery) was calculated using current statutory income
tax rates of 38%, 40% and
43% for the years 2003, 2002 and 2001 respectively, and was adjusted for the
reconciling items identified in
Note 14 to the Consolidated Financial Statements. Of particular note is the
income tax provision for 2001
which included a $250.2 million future income tax recovery as a result of
income tax rate reductions. In
consequence of adopting the tax liability method of accounting in that year, as
required by GAAP, future
income tax assets and liabilities, previously measured using income tax rates
at that time, were re-measured
using reduced income tax rates substantially enacted as a result of provincial
and federal budget proposals and
the release of draft legislation causing a large reduction in the Companys net
future tax liability position in
2001.

Equity loss on investees

Increase in income2003
    
    2002
    
    2001
    
    2003
    
    2002(In $000s Cdn)Total
    
    
    (1,921
    )
    
    
    (53,487
    )
    
    
    (71,282
    )
    
    
    51,566
    
    
    
    17,795


The equity loss on investees in the current year is in respect of Shaws
interest in three specialty channels, The
Biography Channel (Canada), TechTV Canada and MSNBC Canada. These networks
commenced commercial
operations in January 2002, and as a result, effective January 1, 2002, Shaw
recorded its first equity losses in
respect of its 33.3% programming interests in each of these companies. The
equity loss in prior years is
primarily in respect of Shaws previous investment in GT. Pursuant to a
reorganization of the company in
2003, Shaw no longer has an ownership interest in GT.

Investment in Burrard Landing Lot 2 Holdings Partnership
As of August 2003, Shaws investment in the Partnership is $7.5 million. As
described in Note 1 to the
Consolidated Financial Statements, Shaw proportionately consolidates the assets
and liabilities of its 38.3%
interest in the Partnership. As the construction of the building being
developed by the Partnership is in
progress, all costs, including interest, have been capitalized to the cost of
the building and no income or loss has
been recorded by Shaw in respect of its interest in the Partnership.

24



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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

Net loss

Change2003
    
    20022003
    
    2002
    
    2001
    
    %
    
    %(In $000s Cdn)Net loss
    
    
    (47,828
    )
    
    
    (286,324
    )
    
    
    (157,273
    )
    
    
    83.3
    
    
    
    (82.1
    )Loss per share  basic and diluted(1)
    
    
    ($0.38
    )
    
    
    ($1.42
    )
    
    
    ($0.89
    )
    
    
    73.2
    
    
    
    (59.6
    )Weighted average number of
participating share outstanding during period (000s)
    
    
    231,848
    
    
    
    231,820
    
    
    
    221,079
    
    
    
    
    
    
    
    4.9




---

|(1) |  | After deducting after-tax entitlements on equity instruments of $40,193
or $0.17 per share [2002  $42,331 or $0.18 per share; 2001  $40,123 or
$0.18 per share] for the year.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In 2003, earnings improved by 83.3% due to a number of offsetting items. On an
after-tax basis, approximately
half or $117 million of the improvement of $238 million was due to increased
operating income before interest
expense, whereas the remaining increase was in respect of one-time items such
as a reduction in write-down of
investments. The improvement in the loss per share of 73.2% is less than the
83.3% improvement in the net
loss due to the effect of deducting the after-tax entitlements on equity
instruments in calculating loss per share.

In 2002, the net loss increased by 82.1% primarily due to an income tax
recovery of $250 million recorded the
previous year as a result of income tax rate reductions. The increase in loss
per share of 59.6% was less than
the 82.1% increase in the reported net loss, as the per share calculation
reflects the spread of the losses over a
larger weighted average number of shares as a result of the Moffat and Cancom
acquisitions in 2001. In
addition, the loss per share calculation is affected by the deduction of
after-tax entitlement on equity instruments.

SEGMENTED OPERATIONS REVIEW
Additional information concerning our operating segments is presented in Note
15 to the Consolidated Financial
Statements.

CABLE

FINANCIAL HIGHLIGHTS

% Change2003
    
    2002
    
    2001
    
    2003
    
    2002($000s Cdn)Revenue (third party)(1)
    
    
    1,486,322
    
    
    
    1,393,287
    
    
    
    1,136,067
    
    
    
    6.7
    
    
    
    22.6Operating income before amortization, corporate
restructuring charge and recovery of Cable
litigation accrual(2)
    
    
    727,458
    
    
    
    608,916
    
    
    
    470,700
    
    
    
    19.5
    
    
    
    29.4Less:Interest
    
    
    190,002
    
    
    
    196,120
    
    
    
    156,714
    
    
    
    (3.1
    )
    
    
    25.1Entitlements on equity instruments, net of current taxes
    
    
    40,193
    
    
    
    42,331
    
    
    
    40,123
    
    
    
    (5.1
    )
    
    
    5.5Cash taxes on net income
    
    
    34,809
    
    
    
    36,523
    
    
    
    43,354
    
    
    
    (4.7
    )
    
    
    (15.8
    )Cash flow before the following:
    
    
    462,454
    
    
    
    333,942
    
    
    
    230,509
    
    
    
    38.5
    
    
    
    44.9Capital expenditures and equipment subsidies(3)
    
    
    257,276
    
    
    
    683,325
    
    
    
    751,761
    
    
    
    (62.3
    )
    
    
    (9.1
    )Free cash flow(2)
    
    
    205,178
    
    
    
    (349,383
    )
    
    
    (521,252
    )
    
    
    158.7
    
    
    
    33.0Operating margin(2)
    
    
    48.9
    %
    
    
    43.7
    %
    
    
    41.4
    %
    
    
    5.2
    
    
    
    2.3




---

|(1) |  | In order to be consistent with the approach taken for DTH equipment sales,
during the current year the Company has retroactively
changed the presentation of equipment revenue and cost of sales in respect
of the sale of DCT and modem equipment at a subsidized cost. Revenue
includes equipment revenue received on the sale of DCT and modem equipment
of $26,489 [2002  $25,724; 2001  $15,823] offset by an equal cost of
sale. There is no impact on operating income or earnings as a result of
this change.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | See Key performance drivers on page 8.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(3) |  | Excludes $10,976 of capital expenditures in respect of the Partnership
which the Company is required to proportionately consolidate. As the
Partnership is financed by its own credit facility, this is a non-cash
item for the Company.                                                                                                                                                                                                                                                                               

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

2003 vs. 2002

OPERATING HIGHLIGHTS



| |  |  | Basic rate deregulation was completed in late October 2002. Effective
January 2003, Shaw
implemented basic rate price increases ranging from $0.16 to $2 per
month per subscriber depending on the level of tiered service the
customer received. This affected approximately 1.2 million basic
analogue non-bundled subscribers and generated additional revenue of
approximately $0.9 million per month.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | During the second quarter, a new bundle of services was created
for customers who subscribe to all three specialty service tiers.
This change, which was instituted as a means of increasing the
competitiveness of Shaws service bundles, resulted in a reduction of
second outlet revenue of
approximately $0.6 million per month.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Effective May 1, 2003 Shaw increased its monthly charge on
certain packages affecting approximately 550,000 customers which
generated approximately $1 million of additional monthly revenue.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Effective June 30, 2003, Shaw increased its monthly charge on
its unbundled basic and FCS bundled packages. This affected
approximately 1.1 million customers and generated additional monthly
revenue of approximately $2 million when it was fully implemented by
August 31, 2003.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The US cable systems were sold effective June 30, 2003. These
systems generated US $17 million of annual operating income before
amortization.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Digital and Internet subscribers base growth, excluding the US
cable systems, was 39,813 and 125,933 respectively. Canadian basic
cable subscriber growth was 18,935 compared to a loss of 32,556 last
year.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Shaw launched VOD in Calgary in September 2002; greater Vancouver area in January 2003;
Saskatoon and Fort McMurray in April 2003; and Edmonton in May 2003.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Shaw introduced HDTV services in Calgary, greater Vancouver, Saskatoon and Edmonton during 2003. The line-up continues to grow and contains up to five channels
broadcasting in full HDTV.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Cable division exceeded its free cash flow target for the year by $28.7
million with the generation of
$205.2 million free cash flow in 2003 compared to negative free cash flow of
$349.4 million last year. In 2004,
Shaw intends to continue driving improvements in free cash flow and anticipates
that it will achieve free cash
flow of approximately $235-$270 million. This is based on targeted operating
income of $775-$800 million
through growth of revenue via new service offerings, increased bundling of
services, subscriber growth and rate
increases plus reduced expenses as a result of continued cost reduction
programs. This also anticipates that
capital expenditures will be between $290-$300 million.

Cable revenue increased 6.7% over last year. Excluding the US cable systems
sold effective June 30, 2003,
cable revenue increased by 7.6%. Substantially all of this increase was due to
rate increases on Internet, tiers
and bundled packages and unbundled services implemented during 2002 and 2003
and customer growth in
basic, Internet and digital services.

Operating income before amortization increased 19.5% over last year. Excluding
the US cable systems,
operating income before amortization increased 20.7%. The improvement
materialized from the impact of rate
increases, customer growth in Internet and digital services, decreases in
bandwidth costs, the elimination of the
Excite@Home fee in December 2001 and cost savings resulting from restructuring
programs.

During the year, Shaw took a number of steps to strengthen its competitive
position with the offering of new
services and products to its customers such as the introduction of the next
generation of cable modems and
increased VOD and PPV content. The product enhancements will enable Shaw to
offer unique-to-cable
services to our customers and further increases the value and attractiveness of
the Shaw Internet bundle.

Shaw intends to deploy an advanced generation of cable modems based on the
DOCSIS 2.0 specifications.
Initial deployments will take place in Calgary and Vancouver beginning in the
fall of 2003. This advanced
generation of cable modem technology will enable Shaw to increase the
capabilities and reliability of its high-speed data network by increasing the
capacity and throughput in both the upstream and downstream portions of

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

the cable plant, creating a network that has up to 30 megabit per second (Mbps)
capacity in both directions,
which represents about 400% increase over the capacity of current cable modem
systems.

Shaw reached long-term agreements with two major Hollywood studios, Twentieth
Century Fox and Universal
Studios, to provide movies and other programming content for Shaws VOD and PPV
services. This represents
a significant expansion in the variety and quality of content available to
Shaws VOD customers from two of
Hollywoods leading studios.

2002 vs 2001
Negative free cash flow improved from $521.3 million in 2001 to a negative
amount of $349.4 in 2002. The
improvement began in the last half of 2002, when Shaw focused on achieving
strong growth in a sustainable
free cash flow environment. As a result in the three months ended August 31,
2002, the Cable division grew
operating income before amortization by 24% over the three months ended
February, and achieved breakeven
cash flow compared to a negative cash flow of $185 million.

Approximately 65% of revenue growth in 2002 was organic growth resulting from
rate increases, new customer
gains and new services. Rate increases during the year included a $3 per month
increase on the Internet, tiers
and bundled packages effective May 2002. Including the US cable systems,
Internet subscribers increased by
174,303 and digital deployment increased by 132,688. New services introduced
during the year included the
new digital tiers launched in January 2002 and the Lite-Speed Internet product
launched in February 2002. The
remaining increase in revenue was attributable to the net effect of the
acquisitions of Moffat and Viewers
Choice plus the Rogers exchange, net of the sale of Access systems. The Moffat
acquisition, which included
approximately 383,000 basic subscribers and 46,000 Internet subscribers,
occurred on March 1, 2001.
Therefore the results for the Moffat systems were included for a full year in
2002 versus six months the
previous year. Fiscal 2002 also included three months of results from the June
2002 acquisition of Viewers
Choice, which operates a PPV service in Western Canada. The Rogers exchange,
which resulted in a net gain
of 22,000 subscribers, occurred in November 2000; therefore fiscal 2002
includes a full year of the results of
this transaction compared to ten months in 2001. Offsetting these increases was
the sale effective August 31,
2001 of the Access systems, which served approximately 71,000 basic
subscribers.

As a result of price increases, customer growth and cost reduction measures
introduced in the third quarter of
fiscal 2002, operating income before amortization improved 29.4% over 2001.
During the first half of 2002,
Shaw incurred additional costs associated with new marketing campaigns and the
cost of converting customers
to Shaws Internet network of approximately $4 million. These increased costs
were primarily offset in the
latter part of the year with the introduction of cost savings measures
including the reduction of employment of
approximately 800 employees and contractors. Other cost reduction programs
included cutback on travel and
cell phone usage, which generated annualized savings of approximately $6
million. Further, effective
December 1, 2001, Shaw saved approximately $5 per month per Internet subscriber
on the fees previously paid
to the Excite@Home email service.

Previously, Shaws Internet service was provided solely through the rental of
cable modems. In June 2002,
Shaw began providing Internet services via cable modems purchased by customers
at a subsidized price. The
subsidy on the modem purchase is accounted for in the same manner as the
subsidies on DCTs.

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

CAPITAL EXPENDITURES AND EQUIPMENT SUBSIDIES  CABLE

Actual
    
    % Change2003
    
    2002
    
    2001
    
    2003
    
    2002(In $000s Cdn)Capital expenditures and equipment
subsidies:New housing development
    
    
    83,009
    
    
    
    106,231
    
    
    
    95,155
    
    
    
    (21.9
    )
    
    
    11.6Success based
    
    
    71,301
    
    
    
    182,760
    
    
    
    227,315
    
    
    
    (61.0
    )
    
    
    (19.6
    )Upgrades and enhancement
    
    
    62,133
    
    
    
    270,033
    
    
    
    342,749
    
    
    
    (77.0
    )
    
    
    (21.2
    )Replacement
    
    
    15,016
    
    
    
    28,437
    
    
    
    31,492
    
    
    
    (47.2
    )
    
    
    (9.7
    )Buildings/Other
    
    
    25,817
    
    
    
    95,864
    
    
    
    55,050
    
    
    
    (73.1
    )
    
    
    74.1257,276
    
    
    
    683,325
    
    
    
    751,761
    
    
    
    (62.3
    )
    
    
    (9.1
    )


Capital expenditure categories listed above may be described as follows:



| | (1) |  | Capital on new housing development includes the build out of mainline cable
and the addition of drops in
new subdivisions.
| | --- |  | --------------------------------------------------------------------------------------------------------------------------



| | (2) |  | Success based includes capital and equipment subsidies related to the
acquisition of new customers,
including installation of modems, digital cable terminals (DCTs),
filters and commercial drops for Big
Pipe customers.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) |  | Upgrades and enhancement capital includes upgrades to the plant from 550
MHz to 750 MHz, build up of
fiber backbone to avoid cost of leased circuit networks and decrease in
Internet node size.
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) |  | Replacement capital includes normal replacement of aged assets such as
drops, vehicles and other
equipment.
| | --- |  | -----------------------------------------------------------------------------------------------------------

2003 vs. 2002
Capital expenditures (including corporate) and equipment subsidies decreased
$426.0 million or 62.3% over last
year. Upgrades and enhancements decreased $207.9 million as a result of the
completion of the second Internet
Data Center (IDC) and major cable plant upgrades last year. Success based
spending decreased by $111.5
million as a result of reduced Internet and digital activations compared to
last year. Buildings and other
decreased by $70.0 million as a result of the completion of major building
projects last year. In 2003, Shaw
predominantly used internal labour on new housing development compared to the
first half of 2002 where
higher cost external contractors were used extensively. As a result, and due to
more efficient management of
resources including selective pre-wiring and coordination of construction with
developers, new housing
development expenditures decreased by $23.2 million. Replacement expenditures
decreased by $13.4 million
as a result of a more focused program of managing capital spending. This
focused program also caused actual
expenditures to be 10% below planned expenditures of $285 million for 2003. The
decline in capital
expenditures has not impaired customer growth as evidenced by our subscriber
gains highlighted below.

2002 vs. 2001
The decrease of $68.4 million in capital expenditures and equipment subsidies
reflects the capital expenditure
reduction program implemented in the third quarter as most of the cable plant
upgrade was completed. In
addition, higher expenditures were incurred in 2001 due to the incremental
addition of subscribers in 2001,
(70,000 in both Internet and digital), the completion of the IDC at a cost of
$100 million and the purchase of our
southern fiber route from 360networks as described below. These decreases were
offset by expenditures in
2002 on the second IDC of $26 million and the accelerated delivery of the
northern fiber route under our
agreement with 360networks of approximately $45.5 million plus $17 million
incurred to activate the fiber. The
northern route provides for increased capacity for the future and redundancy
for the existing southern route. As
part of the northern route, Big Pipe acquired 8 fiber strands between Edmonton
and Toronto and 6 fiber strands
between Buffalo and Albany and Albany to New York City for $45.5 million. The
purchase price was partially
satisfied in March 2002 by the application of a $15.8 million deposit from June
2001 plus a further $18.2
million payment. The remaining payment of $11.5 million was satisfied in
September 2002.

28



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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

SUBSCRIBER STATISTICS

2003
    
    20022003
    
    2002(1)
    
    2001(1)
    
    Change
    
    %
    
    Change
    
    %CABLE:Basic service:Actual
    
    
    2,051,919
    
    
    
    2,032,984
    
    
    
    2,065,540
    
    
    
    18,935
    
    
    
    0.9
    
    
    
    (32,556
    )
    
    
    (1.6
    )Penetration as a % of homes passed
    
    
    68.2
    %
    
    
    69.2
    %
    
    
    71.3
    %Full Cable Service:Tier I
    
    
    1,639,187
    
    
    
    1,651,383
    
    
    
    1,682,847
    
    
    
    (12,196
    )
    
    
    (0.7
    )
    
    
    (31,464
    )
    
    
    (1.9
    )Penetration as % of basic
    
    
    79.9
    %
    
    
    81.2
    %
    
    
    81.5
    %Tier II
    
    
    1,565,041
    
    
    
    1,559,678
    
    
    
    1,570,017
    
    
    
    5,363
    
    
    
    0.3
    
    
    
    (10,339
    )
    
    
    (0.7
    )Penetration as % of basic
    
    
    76.3
    %
    
    
    76.7
    %
    
    
    76.0
    %Tier III
    
    
    1,398,450
    
    
    
    1,344,993
    
    
    
    1,301,445
    
    
    
    53,457
    
    
    
    4.0
    
    
    
    43,548
    
    
    
    3.3Penetration as a % of basic
    
    
    68.2
    %
    
    
    66.2
    %
    
    
    63.0
    %Digital subscribers
    
    
    473,870
    
    
    
    434,057
    
    
    
    318,240
    
    
    
    39,813
    
    
    
    9.2
    
    
    
    115,817
    
    
    
    36.4Digital deployment (DCTs)
    
    
    527,256
    
    
    
    470,163
    
    
    
    342,931
    
    
    
    57,093
    
    
    
    12.1
    
    
    
    127,232
    
    
    
    37.1INTERNET:Connected and scheduled installations
    
    
    886,220
    
    
    
    760,287
    
    
    
    592,341
    
    
    
    125,933
    
    
    
    16.6
    
    
    
    167,946
    
    
    
    28.4Penetration as % of basic
    
    
    43.2
    %
    
    
    37.4
    %
    
    
    28.7
    %Stand-alone Internet not included in
Basic cable
    
    
    102,708
    
    
    
    90,234
    
    
    
    24,546
    
    
    
    12,474
    
    
    
    13.8
    
    
    
    65,688
    
    
    
    267.6




---

|(1) |  | August 31, 2001 and August 31, 2002 statistics restated for comparative
purposes to adjust subscribers as if the sale of the US
cablesystems had occurred on August 31, 2001.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Shaw gained 18,935 basic cable subscribers compared to a loss of 32,556 last
year. During the third quarter,
Shaw introduced a successful campaign of offering promotional analogue basic
services packages to stand-alone
Internet customers and households that recently disconnected their cable
service or that had never been a
Shaw customer. The intent of the offer is that these customers will develop
viewing habits that enable them to
perceive value in the monthly cable subscription and therefore continue as
customers after the end of the
promotional period. At August 31, 2003 approximately 22,000 customers were
participating in this program.

In 2003, digital and Internet customers increased by 39,813 and 125,933
respectively compared to respective
increases of 115,817 and 167,946 in 2002. Although these services still
represent a high growth area of Shaws
business, the rate of growth has slowed due to further maturation of these
markets. However, of significant
note, is that during the last quarter of 2003, Shaw added 4,158 and 18,929
Digital and Internet customers
respectively. This represents a marked improvement compared to last years
comparative quarter loss of 1,836
and gain of 11,505 respectively. A driving factor in Shaws success in
retaining and building its customer base
is its bundling strategy. Approximately 38% of Shaw customers subscribe to
bundled services compared to 28%
last year. In addition, the introduction of new services such as HDTV plus the
unique service of VOD creates
extra value for the Shaw customer, bolstering the retention value of the
bundled packages. This is evidenced
by Shaws reduction in its churn rate as follows:

Churn(1)
    
    2003
    
    2002Digital equipment
    
    
    22.1
    %
    
    
    31.4
    %Internet customers
    
    
    15.9
    %
    
    
    30.2
    %




---

|(1) |  | Calculated as the number of new equipment/customer activations less the
net gain of equipment/customers during the period divided by the average
of the opening and closing equipment/customers for the applicable period.
See Key performance drivers page 8.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

COMBINED SATELLITE (DTH and Satellite Services)

FINANCIAL HIGHLIGHTS

Change2003
    
    20022003
    
    2002
    
    2001
    
    %
    
    %($000s Cdn)Revenue (third party)
    
    
    590,418
    
    
    
    520,997
    
    
    
    416,709
    
    
    
    13.3
    
    
    
    25.0Operating income (loss) before amortization,
restructuring charge and inventory write-down
    
    
    94,392
    
    
    
    28,357
    
    
    
    (10,360
    )
    
    
    232.9
    
    
    
    373.7Less:Interest
    
    
    69,700
    
    
    
    71,203
    
    
    
    50,221
    
    
    
    (2.1
    )
    
    
    41.8Cash taxes on net income
    
    
    897
    
    
    
    801
    
    
    
    (4,975
    )
    
    
    12.0
    
    
    
    (116.1
    )Cash flow before the following
    
    
    23,795
    
    
    
    (43,647
    )
    
    
    (55,606
    )
    
    
    154.5
    
    
    
    21.5Less capital expenditures and equipment subsidies:Success
    
    
    126,862
    
    
    
    133,981
    
    
    
    143,215
    
    
    
    (5.3
    )
    
    
    (6.4
    )Transponders
    
    
    
    
    
    
    14,400
    
    
    
    82,543
    
    
    
    (100.0
    )
    
    
    (82.6
    )Other
    
    
    5,336
    
    
    
    21,961
    
    
    
    34,913
    
    
    
    (75.7
    )
    
    
    (37.1
    )132,198
    
    
    
    170,342
    
    
    
    260,671
    
    
    
    (22.4
    )
    
    
    (34.7
    )Free cash flow
    
    
    (108,403
    )
    
    
    (213,989
    )
    
    
    (316,277
    )
    
    
    49.3
    
    
    
    32.3


SATELLITE (DTH and Satellite Services)

In 2003, the Satellite division was cash flow negative by $108.4 million versus
$214.0 million in fiscal 2002
and $316.3 million in fiscal 2001. The results were in line with the divisions
target of negative $102 million.
Most of the improvement over last year is due to increased operating income
before amortization of $66.0
million resulting from economies of scale on a larger DTH subscriber base and
rate increases. The remainder
is the result of reduced spending on success-based capital, which includes the
capital cost of satellite dishes and
equipment subsidies related to the acquisition of customers, as a result of
lower customer activations in 2003,
reduced transponder commitments and completion of building projects in fiscal
2002.

Next year, the divisions goal is to reduce negative free cash flow to $20 -
$40 million and to achieve positive
free cash flow on a run-rate basis during the year. This goal includes
increasing Satellite operating income
before amortization from $94.4 million to a range of $120 - $130 million in
2004 through growth of revenue via
subscriber growth and rate increases. Further, this anticipates capital
expenditures and equipment subsidies will
be in the $100 - $110 million range in 2004 or an approximate 20% decrease over
2003 as a result of lower
anticipated equipment subsidies.

DTH (Star Choice)

FINANCIAL HIGHLIGHTS

Change2003
    
    20022003
    
    2002
    
    2001
    
    %
    
    %(In $000s Cdn)Revenue (third party)(1)
    
    
    491,637
    
    
    
    415,551
    
    
    
    307,988
    
    
    
    18.3
    
    
    
    34.9Operating income (loss) before
amortization(2)
    
    
    52,814
    
    
    
    (14,103
    )
    
    
    (58,512
    )
    
    
    474.5
    
    
    
    75.9Operating margin(2)
    
    
    10.7
    %
    
    
    (3.4
    %)
    
    
    (19.0
    %)
    
    
    14.1
    
    
    
    15.6




---

|(1) |  | Includes equipment revenue received on sale of DTH equipment of $41,461,
$54,435 and $50,076 for 2003, 2002 and 2001
respectively.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | See Key performance drivers page 8.                                                                                               

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

CUSTOMER STATISTICS

Star Choice customers
    
    2003
    
    2002
    
    2001Beginning of year
    
    
    760,024
    
    
    
    628,806
    
    
    
    445,000Additions
    
    
    48,502
    
    
    
    153,793
    
    
    
    183,806Adjustments(1)
    
    
    
    
    
    
    (22,575
    )
    
    
    End of year
    
    
    808,526
    
    
    
    760,024
    
    
    
    628,806% increase in additions
    
    
    6.4
    %
    
    
    24.5
    %
    
    
    41.3
    %




---

|(1) |  | In 2002, Star Choice converted to the same billing system used by Shaw. It
became evident during the billing conversion that there
was an account aging problem, which resulted in the reduction of 15,000
customers. In addition, the conversion itself caused some
difficulties in the customer service area resulting in the loss of
approximately 8,000 customers.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Three months ended August 31,
    
    Year ended August 31,Churn (1)
    
    2003
    
    2002
    
    2003
    
    2002Star Choice customers
    
    
    4.2
    %
    
    
    5.9
    %
    
    
    17.2
    %
    
    
    14.4
    %




---

|(1) |  | Calculated as the number of new customer activations less the net gain of
customers during the period divided by the average of the
opening and closing customers for the applicable period. See Key
performance drivers page 8.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2003 vs. 2002

OPERATING HIGHLIGHTS



| |  |  | Effective September 2002 Star Choice implemented a $3 per month rate
increase on most of its
packages and changed its programming credits such that they are
spread over three to four months. Previously the customer received
the entire programming credit in the first month.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Effective January 1, 2003, the price of most French programming
packages was increased by $3.00 per month affecting approximately
100,000 customers.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Effective January 2003, Star Choice discontinued the Simple Satellite
program introduced
September 2001. Under the original program, customers received free
installation and Star Choice retained ownership of the dish.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Effective April 1, 2003, Star Choice implemented a $3.00 rate increase
affecting most of the
programming packages that were not included in the September 2002
rate increase affecting 150,000 customers.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Effective June 1, 2003, Star Choice implemented a rate increase of $3.00
affecting the majority of
customers, which generated revenues of approximately $1.8 million per
month when it was fully
implemented.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Subscriber growth and rate increases implemented throughout the period grew
revenue by 18.3% over the
comparative year. These same factors, combined with the positive impact of cost
reduction initiatives,
increased annual operating income before amortization to $52.8 million compared
to an operating loss before
amortization of $14.1 million last year. Star Choice continued to benefit from
increased economies of scale on
its larger DTH subscriber base and from the synergies realized on the
integration of its accounting and other
administrative functions with Shaw as a result of the modified structural
separation requirements issued by the
CRTC in April 2002.

Customer growth was 48,502 or 6.4% compared to 153,793 (before one-time
adjustments) last year. The
decline in growth is partially reflective of the black market, competition
from cable and a maturing growth
cycle. Fourth quarter churn improved compared to the same quarter last year as
a result of the new system for
billing and customer care performing to expectations. Annual churn increased
over last year due to transitional
issues incurred during the implementation of the new billing system.

31



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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

In an effort to expand its service offerings to its customers, during the
fourth quarter, Star Choice announced the
introduction of its new Integrated High-Definition (HD) receiver, the
Motorola DSR 500. The receiver
provides integrated HD decoding and an advanced on-screen program guide. The
receiver has been introduced
at a net price of $399 (after program credits). In support of its HD platform,
Star Choice now offers six HD
channels.

2002 vs. 2001
In the third quarter of 2002, Star Choice achieved a significant milestone by
reaching positive operating income
before amortization for the first time in its history. In 2002, comparable
revenue increased 34.9% due to
increased subscriber growth, increased services and rate increases. With
respect to price increases, in
September 2001, Star Choice raised monthly rates on its Platinum, Gold and
Silver packages by $2 and the
Bronze package by $1. Also effective March 2002, Star Choice introduced a
charge of $4.99 per month on
second receivers on all packages except Platinum and Ultimate packages. With
respect to increased services, in
January 2002, Star Choice offered 30 new digital service offerings. Operating
loss before amortization
decreased by 75.9% due to the price increases and increased economies of scale.

Satellite Services

FINANCIAL HIGHLIGHTS

Change2003
    
    20022003
    
    2002
    
    2001
    
    %
    
    %(In $000s Cdn)Revenue (third party)
    
    
    98,781
    
    
    
    105,446
    
    
    
    108,721
    
    
    
    (6.3
    )
    
    
    (3.0
    )Operating income before amortization
    
    
    41,578
    
    
    
    42,460
    
    
    
    48,152
    
    
    
    (2.1
    )
    
    
    (11.8
    )Operating margin
    
    
    42.1
    %
    
    
    40.3
    %
    
    
    44.3
    %
    
    
    1.8
    
    
    
    (4.0
    )


2003 vs. 2002
Satellite Services revenue, consisting of Broadcast, Truck Tracking and
Business Television decreased 6.3%
over last year primarily as a result of the sale of the SRDU and uplink
business in the Caribbean (Gulfcom) in
May 2002, and the sale of the Business Television division effective March 21,
2003. Annualized sales and
operating income before amortization related to this business was approximately
$11 million and $2 million
respectively. Operating income before amortization decreased by 2.1% primarily
as the result of the sale of
Business Television and Gulfcom.

2002 vs. 2001
Revenue decreased 3% primarily due to the previous years one-time uplift of $6
million on the settlement of
various contract disputes. Operating income before amortization decreased
accordingly and also decreased due
to increased third-party contract costs in the truck tracking division.
Effective May 31, 2002 Gulfcom was
sold for approximately $1 million. Annual sales and operating income before
amortization related to these
assets were approximately US $2 million and US $0.3 million.

III.   FINANCIAL POSITION

Total assets at August 31, 2003 were $7.6 billion compared to $8.5 billion at
August 31, 2002. The following
discussion describes the significant changes in the balance sheet since August
31, 2002.

Current assets decreased by $87.0 million principally due to a $57.0 million
reduction in accounts receivable
and $47.0 million decrease in inventories offset by increased cash of $20.8
million. The decrease in accounts
receivable is primarily due to collection of miscellaneous receivables, payment
received on the Access
Communications Inc. promissory note and a decrease in subscriber receivables as
a result of the sale of the US
cable systems. Inventories decreased as the result of improved management of
supply and demand and lower
levels of customer activations.

32



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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

Investments decreased by $84.2 million principally due to the third quarter
write-down of $15.0 million and due
to the removal of $74.6 million of net book value on the sale of Cogeco shares
and the surrender of the Liberate
and Terayon shares on the settlement of the SHELS.

Property, plant and equipment decreased by $362.0 million due mainly to the
disposal of approximately $132
million of plant, property and equipment on the US cable systems dispositions
and due to current year
amortization being in excess of capital expenditures.

Deferred charges decreased by $50.9 million due to amortization of financing
and other costs of $21.2 million
and a $43.3 million reduction in foreign exchange losses on the translation of
hedged US denominated debt as a
result of the strengthening of the Canadian dollar since August 31, 2002. These
decreases were partially offset
by a net increase in unamortized equipment subsidies of $8.6 million and an
increase in other deferred charges
of $5.1 million.

Broadcast licenses decreased by $249.5 million primarily due to the removal of
$253.2 million of net book
value in respect of the US cable systems which were sold in 2003. Goodwill
decreased by $66.9 million due to
$16.9 million on the sale of Star Choice Business Television and the $50
million write-down of goodwill during
the third quarter.

Current liabilities (excluding current portion of long-term debt) decreased by
$89.8 million primarily due to a
reduction in accounts payable and accrued liabilities of $97.4 million
resulting from the payment of August
2002 accrued capital expenditures, repayments under the vendor financing
facility and lower interest accruals
resulting from a decreased debt level. The increase in unearned revenue is
primarily due to an increase in
prepayments from retailers on DTH equipment.

Long-term debt (including current portion) decreased by $552.6 million due to
the net repayment of the
Companys debt of $352.9 million and a decrease of $199.7 million relating to
the translation of the US
denominated debt.

Deferred credits increased by $102.1 million primarily due to a $123.8 million
increase in foreign exchange
gains on the translation of hedged US denominated debt which was offset by
$12.0 million in amortization of
prepaid IRU rental revenue and a $6.5 million mark-to-market credit removed as
part of the Star Choice US
$150 million Senior secured note redemption.

Future incomes taxes have decreased $76.3 million primarily due to the sale of
the US cable systems.

Share capital decreased by $183.5 million as a result of the settlement of the
SHELS III, IV and V equity linked
debentures by delivery of the underlying Liberate and Terayon share security.

IV.   CONSOLIDATED CASH FLOW ANALYSIS

Operating activities

Change2003
    
    20022003
    
    2002
    
    2001
    
    %
    
    %($000s Cdn)Cash flow from operations
    
    
    534,766
    
    
    
    332,109
    
    
    
    210,514
    
    
    
    61.0
    
    
    
    57.8Net change in non-cash working
capital balances related to
operations
    
    
    3,675
    
    
    
    3,303
    
    
    
    79,470
    
    
    
    11.3
    
    
    
    (95.8
    )538,441
    
    
    
    335,412
    
    
    
    289,984
    
    
    
    60.5
    
    
    
    15.7


Cash flow from operations increased year over year mainly as a result of the
strong growth in profitability in the
cable and Star Choice divisions and also in 2003, due to decreased interest
expense of $7.6 million over the

33



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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

comparative year. Cash flow from working capital fluctuates primarily with the
timing of accounts payable and
accrued liabilities payments.

Investing activities

Increasein cash flow2003
    
    2002
    
    2001
    
    2003
    
    2002($000s Cdn)Cash flow (used in) provided by
investing activities
    
    
    (95,037
    )
    
    
    (825,558
    )
    
    
    (1,242,367
    )
    
    
    730,521
    
    
    
    416,809


In 2003, the cash outlay required for investing activities was $730.5 million
lower than the year ended August
2002 due to the proceeds of $257.4 million received on sale of the US cable
systems and due to a $485.9
million reduction in capital expenditures.

The cash outlay required for investing activities was $416.8 million lower in
2002 than 2001 primarily due to
the acquisition of Moffat and the Rogers exchange in 2001.

Financing activities

The changes in financing activities during the year were as follows:

2003
    
    2002
    
    2001(In millions Cdn)Star Choice note redemption, including restructuring costs
    
    
    (228.2
    )
    
    
    
    
    
    
    Bank loans  net borrowings (repayments)
    
    
    (141.8
    )
    
    
    (15.9
    )
    
    
    322.9Dividends
    
    
    (50.6
    )
    
    
    (53.2
    )
    
    
    (50.3
    )Other, including change in bank indebtedness
    
    
    (2.0
    )
    
    
    (8.1
    )
    
    
    20.7Issue of:US $300 million senior notes
    
    
    
    
    
    
    476.8
    
    
    
    Shels
    
    
    
    
    
    
    90.5
    
    
    
    42.77.2% senior notes
    
    
    
    
    
    
    
    
    
    
    300.07.25% US $225 million senior notes
    
    
    
    
    
    
    
    
    
    
    349.08.875% COPrS
    
    
    
    
    
    
    
    
    
    
    147.2Cancom structured note
    
    
    
    
    
    
    
    
    
    
    250.0Repayment of:
    
    
    
    
    
    
    US $91.9 million Fundy senior secured notes, including restructuring costs
    
    
    
    
    
    
    
    
    
    
    (143.9
    )Moffat acquired debt
    
    
    
    
    
    
    
    
    
    
    (247.0
    )Debt of subsidiaries sold
    
    
    
    
    
    
    
    
    
    
    (39.0
    )Cash flow provided by (used in) financing activities
    
    
    (422.6
    )
    
    
    490.1
    
    
    
    952.3


V.   LIQUIDITY AND CAPITAL RESOURCES

The Companys financial condition continues to be a significant strength for
Shaw. Our future liquidity hinges
on three components; free cash flow from operations, access to available credit
facilities and sale of non-strategic
assets.

First, we grew free cash flow in the Cable division from negative $349.4
million last year to positive $205.2
million this year. Further, the satellite division, including satellite
services and DTH, reduced its cash
requirements by $105.6 million over last year, and is making substantial
progress towards becoming free cash
flow positive next year. As we continue growing free cash flow, it will become
an increasing source of
liquidity.

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

Second, as a result of the sale of the US cable systems and the strong growth
in free cash flow, Shaw has access
to approximately $1 billion of available credit facilities. Based on our
existing business which generates
positive free cash flow after meeting its day-to-day operating expenses
(including capital expenditures), access
to approximately $1 billion of available credit facilities and scheduled
long-term debt repayments as outlined in
Note 9 to the Consolidated Financial Statements, we believe Shaw has sufficient
liquidity to meet both current
and foreseeable future commitments.

And finally, with respect to the sale of non-strategic assets to increase
liquidity, Shaw sold its US cable assets
with approximately 75,000 subscribers for gross proceeds of Cdn $260 million.
In addition, a number of
redundant properties and other non-strategic assets were sold, resulting in
proceeds of approximately $22.5
million.

Debt structure
A number of steps were taken during 2003 to improve the Companys existing debt
structure which will result
in lower interest costs in the future. During the second quarter, Cancoms
credit facility was re-financed
through a $350 million term loan obtained by Shaw from a new syndicate of
banks, which includes a number of
banks who are part of Shaws main banking syndicate. Interest on this loan was
fixed via hedges at a rate which
may range from 4.9525% and 7.0775% depending on debt to cashflow ratios. At
August 31, 2003 the rate was
5.9525%. In addition, Shaw repaid and cancelled Cancoms $40 million
subordinated credit facility. These
changes to Cancoms debt will, based on current rates, generate interest
savings of approximately $7 million
next year. Finally, utilizing a portion of the proceeds from the sale of the
Florida and Texas cable systems, the
Company redeemed the Star Choice US $150 million Senior secured notes in August
2003. These notes had an
interest rate of 13% and were due December 15, 2005. The early redemption
entailed redemption premium and
other costs amounting to $10.6 million, however, this will be more than offset
by interest savings resulting from
the redemption.

Shaw structures its borrowings generally on a stand-alone basis. The borrowings
of Shaw are unsecured. The
borrowings of Videon are unsecured, but are guaranteed by the subsidiaries of
Videon. The demand operating
line of credit of $10 million of Cancom is secured by assets and undertakings
of certain of Cancoms
subsidiaries. There are restrictions in the various credit facilities that
would prevent Cancom and Star Choice
from transferring funds to Shaw, however there are no restrictions that would
prevent Shaw from funding these
entities. There are no further restrictions that prevent the remaining
subsidiaries of the Company from
transferring funds to Shaw. The various borrowings generally do not provide for
cross-collateralization, cross-defaults between groups, or guarantees, other
than the guarantee in respect of the Partnership described below
and the guarantees of the Videon subsidiaries.

There are however mechanisms within the Cancom $250 million Structured Note
that may affect Shaw as more
fully described in Note 9 to the Consolidated Financial Statements. Shaws
intention is to repay the note by
either drawing on its existing credit facilities or through the issue of
replacement debt by Shaw.

Off-balance sheet arrangements and guarantees
It is not Shaws business practice to enter into off-balance sheet
arrangements. Generally it is not our policy to
issue guarantees to non-controlled affiliates or third parties; however, we
have entered into certain agreements
as more fully described in Note 16 to the Consolidated Financial statements. As
disclosed thereto, we believe it
is remote that these agreements would require any cash payment.

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Shaw Communications Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2003

CAUTION CONCERNING FORWARD LOOKING STATEMENTS

Certain statements included and incorporated by reference herein constitute
forward-looking statements. When used, the words anticipate, believe,
expect, plan, intend, target, guideline, goal, and similar
expressions are intended to identify forward-looking statements. These
forward-looking statements include, but are not limited to, references to
future capital expenditures (including the amount and nature thereof), business
strategies and measures to implement strategies, competitive strengths, goals,
expansion and growth of Shaws business and operations, plans and references to
the future success of Shaw. These forward-looking statements are based on
certain assumptions and analyses made by Shaw in light of its experience and
its perception of historical trends, current conditions and expected future
developments as well as other factors it believes are appropriate in the
circumstances. However, whether actual results and developments will conform
with the expectations and predictions of Shaw is subject to a number of risks
and uncertainties, including, but not limited to, general economic, market or
business conditions; the opportunities (or lack thereof) that may be presented
to and pursued by Shaw; increased competition in the markets in which Shaw
operates and from the development of new markets for emerging technologies;
changes in laws, regulations and decisions by regulators in Shaws industries
in both Canada and the United States; Shaws status as a holding company with
separate operating subsidiaries; changing conditions in the entertainment,
information and communications industries; risks associated with the economic,
political and regulatory policies of local governments and laws and policies of
Canada and the United States; and other factors, many of which are beyond the
control of Shaw. Should one or more of these risks materialize, or should
assumptions underlying the forward-looking statements prove incorrect, our
actual results may vary materially from those as described herein.
Consequently, all of the forward-looking statements made in this report and the
documents incorporated by reference herein are qualified by these cautionary
statements, and there can be no assurance that the actual results or
developments anticipated by Shaw will be realized or, even if substantially
realized, that they will have the expected consequences to, or effects on,
Shaw.

You should not place undue reliance on any such forward-looking statements.
Further, any forward-looking statement (and such risks, uncertainties and other
factors) speak only as of the date on which it was originally made and we
expressly disclaim any obligation or undertaking to disseminate any updates or
revisions to any forward-looking statement contained in this document to
reflect any change in our expectations with regard to those statements or any
other change in events, conditions or circumstances on which any such statement
is based, except as required by law. New factors emerge from time to time, and
it is not possible for us predict what factors will arise or when. In
addition, we cannot assess the impact of each factor on our business or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking statements.

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##### Table of Contents






Shaw Communications Inc.
MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING
August 31, 2003

The accompanying consolidated financial statements of Shaw Communications Inc.
and all the information in this annual report are the responsibility of
management and have been approved by the Board of Directors.

The financial statements have been prepared by management in accordance with
Canadian generally accepted accounting principles. When alternative accounting
methods exist, management has chosen those it deems most appropriate in the
circumstances. Financial statements are not precise since they include certain
amounts based on estimates and judgements. Management has determined such
amounts on a reasonable basis in order to ensure that the financial statements
are presented fairly, in all material respects. Management has prepared the
financial information presented elsewhere in the annual report and has ensured
that it is consistent with the financial statements.

Shaw Communications Inc. maintains systems of internal accounting and
administrative controls of high quality, consistent with reasonable cost. Such
systems are designed to provide reasonable assurance that the financial
information is relevant, reliable and accurate and that the Companys assets
are appropriately accounted for and adequately safeguarded.

The Board of Directors is responsible for ensuring management fulfils its
responsibilities for financial reporting and is ultimately responsible for
reviewing and approving the financial statements. The Board carries out this
responsibility through its Audit Committee.

The Audit Committee is appointed by the Board and its members are outside
unrelated directors. The Committee meets periodically with management, as well
as the external auditors, to discuss internal controls over the financial
reporting process, auditing matters and financial reporting issues; to satisfy
itself that each party is properly discharging its responsibilities; and, to
review the annual report, the financial statements and the external auditors
report. The Committee reports its findings to the Board for consideration when
approving the financial statements for issuance to the shareholders. The
Committee also considers, for review by the Board and approval by the
shareholders, the engagement or reappointment of the external auditors.

The financial statements have been audited by Ernst & Young LLP, the external
auditors, in accordance with Canadian generally accepted auditing standards on
behalf of the shareholders. Ernst & Young LLP has full and free access to the
Audit Committee.

|                        |  |                          
|----------------------- |  | -------------------------
|[Signed]                |  | [Signed]                 
|                        |  |                          
|Jim Shaw                |  | Ron D. Rogers            
|Chief Executive Officer |  | Senior Vice President and
|                        |  | Chief Financial Officer  

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##### Table of Contents






AUDITORS REPORT

To the Shareholders ofShaw Communications Inc.

We have audited the consolidated balance sheets of Shaw Communications
Inc.as at August 31, 2003 and 2002 and the consolidated statements of
loss and retained earnings (deficit) and cash flows for each of the
years in the three year period ended August 31, 2003. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with Canadian generally accepted
auditing standards. Those standards require that we plan and perform an
audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly,
in all material respects, the financial position of the Company as at
August 31, 2003 and 2002 and the results of its operations and its cash
flows for each of the years in the three year period ended August 31,
2003 in accordance with Canadian generally accepted accounting
principles.

As discussed in note 1 to the consolidated financial statements, in 2003
the Company changed its method of accounting for foreign currency
translation.

|                 |  |                        
|---------------- |  | -----------------------
|Calgary, Canada  |  | -s- Ernst and Young LLP
|October 10, 2003 |  | Chartered Accountants  

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Shaw Communications Inc.

CONSOLIDATED BALANCE SHEETS

As at August 31

|                                                         |                           |   |           |           |      |  |                     |           | 
|-------------------------------------------------------- | ------------------------- | - | --------- | --------- | ---- |  | ------------------- | --------- | 
|                                                         |                           |   | 2003      |           | 2002
|[thousands of Canadian dollars]                          |                           | $ |           | $        
|                                                         |                           |   |           |          
|                                                         |                           |   |           |           |      |  | (Restated - Note 1)
|ASSETS[note 9]                                           |                           |   |           |           |      |  |                     |          
|Current                                                  |                           |   |           |           |      |  |                     |          
|Cash                                                     |                           |   | 20,753    |           |      |  |                    |          
|Accounts receivable [note 3]                             |                           |   | 140,998   |           |      |  | 197,963             |          
|Inventories [note 4]                                     |                           |   | 81,787    |           |      |  | 128,811             |          
|Prepaids and other                                       |                           |   | 16,783    |           |      |  | 20,588              |          
|                                                         |                           |   |           |           |      |  |                     |          
|                                                         |                           |   | 260,321   |           |      |  | 347,362             |          
|Investments and other assets [notes 5 and 11]            |                           |   | 49,415    |           |      |  | 133,602             |          
|Property, plant and equipment [note 6]                   |                           |   | 2,415,662 |           |      |  | 2,777,697           |          
|Deferred charges [note 7]                                |                           |   | 169,045   |           |      |  | 219,916             |          
|Intangibles
[notes 1 and 8]                             |                           |   |           |           |      |  |                     |          
|                                                         | Broadcast licenses        |   |           | 4,627,728 |      |  |                     | 4,877,256 | 
|                                                         | Goodwill                  |   |           | 78,948    |      |  |                     | 145,865   | 
|                                                         |                           |   |           |           |      |  |                     |          
|                                                         |                           |   | 7,601,119 |           |      |  | 8,501,698           |          
|                                                         |                           |   |           |           |      |  |                     |          
|LIABILITIES AND SHAREHOLDERS EQUITY                     |                           |   |           |           |      |  |                     |          
|Current                                                  |                           |   |           |           |      |  |                     |          
|Bank indebtedness [note 9]                               |                           |   |          |           |      |  | 2,303               |          
|Accounts payable and accrued liabilities [note 13]       |                           |   | 413,712   |           |      |  | 511,106             |          
|Income taxes payable                                     |                           |   | 15,725    |           |      |  | 10,631              |          
|Unearned revenue                                         |                           |   | 95,918    |           |      |  | 91,095              |          
|Current portion of long-term debt [note 9]               |                           |   | 271,520   |           |      |  |                    |          
|                                                         |                           |   |           |           |      |  |                     |          
|                                                         |                           |   | 796,875   |           |      |  | 615,135             |          
|Long-term debt [note 9]                                  |                           |   | 2,645,548 |           |      |  | 3,469,637           |          
|Deferred credits [note 10]                               |                           |   | 735,353   |           |      |  | 633,259             |          
|Future income taxes [note 14]                            |                           |   | 928,277   |           |      |  | 1,004,559           |          
|                                                         |                           |   |           |           |      |  |                     |          
|                                                         |                           |   | 5,106,053 |           |      |  | 5,722,590           |          
|                                                         |                           |   |           |           |      |  |                     |          
|Commitments and contingencies[note, 5, 9, 16, 17 and 18] |                           |   |           |           |      |  |                     |          
|Shareholders equity                                     |                           |   |           |           |      |  |                     |          
|Share
capital [note 11]                                 |                           |   |           |           |      |  |                     |          
|                                                         | Class A Shares            |   |           | 2,491     |      |  |                     | 2,493     | 
|                                                         | Class B Non-Voting Shares |   |           | 2,107,464 |      |  |                     | 2,107,367 | 
|                                                         | Equity instruments        |   |           | 724,923   |      |  |                     | 908,472   | 
|Deficit                                                  |                           |   | (340,294  | )         |      |  | (240,737            | )        
|Cumulative translation adjustment [note 12]              |                           |   | 482       |           |      |  | 1,513               |          
|                                                         |                           |   |           |           |      |  |                     |          
|                                                         |                           |   | 2,495,066 |           |      |  | 2,779,108           |          
|                                                         |                           |   |           |           |      |  |                     |          
|                                                         |                           |   | 7,601,119 |           |      |  | 8,501,698           |          
|                                                         |                           |   |           |           |      |  |                     |          

See accompanying notes

On behalf of the Board:

|         |  |                      
|-------- |  | ---------------------
|[Signed] |  | [Signed]             
|JR Shaw  |  | Donald F. Mazankowski
|Director |  | Director             

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Shaw Communications Inc.

CONSOLIDATED STATEMENTS OF LOSS
AND RETAINED EARNINGS (DEFICIT)

Years ended August 31

|                                                                      |                                          |      |           |         |   |      |                     |         |                     |  |           |         |  
|--------------------------------------------------------------------- | ---------------------------------------- | ---- | --------- | ------- | - | ---- | ------------------- | ------- | ------------------- |  | --------- | ------- | -
|[thousands of Canadian dollars                                        |                                          | 2003 |           | 2002    |   | 2001
|except per share amounts]                                             |                                          | $    |           | $       |   | $   
|                                                                      |                                          |      |           |         |   |     
|                                                                      |                                          |      |           |         |   |      | (Restated - Note 1) |         | (Restated - Note 1)
|Revenue
[note 15]                                                     |                                          |      | 2,076,740 |         |   |      | 1,914,284           |         |                     |  | 1,552,776 |        
|Operating, general and administrative expenses                        |                                          |      | 1,256,140 |         |   |      | 1,281,611           |         |                     |  | 1,092,436 |        
|                                                                      |                                          |      |           |         |   |      |                     |         |                     |  |           |        
|Operating income before amortization [note 15]                        |                                          |      | 820,600   |         |   |      | 632,673             |         |                     |  | 460,340   |        
|Amortization [notes 6, 7 and 8]                                       |                                          |      | 598,189   |         |   |      | 585,331             |         |                     |  | 473,121   |        
|Amortization of deferred IRU revenue [notes 2 and 10]                 |                                          |      | (11,984   | )       |   |      | (11,517             | )       |                     |  | (4,902    | )      
|                                                                      |                                          |      |           |         |   |      |                     |         |                     |  |           |        
|Operating income (loss)                                               |                                          |      | 234,395   |         |   |      | 58,859              |         |                     |  | (7,879    | )      
|Interest [notes 9, 10 and 13]                                         |                                          |      | 259,702   |         |   |      | 267,323             |         |                     |  | 206,935   |        
|                                                                      |                                          |      |           |         |   |      |                     |         |                     |  |           |        
|                                                                      |                                          |      | (25,307   | )       |   |      | (208,464            | )       |                     |  | (214,814  | )      
|Gain (loss) on sale of investments [note 5]                           |                                          |      | 1,957     |         |   |      | 2,321               |         |                     |  | (106,716  | )      
|Write-down of investments [note 5]                                    |                                          |      | (15,000   | )       |   |      | (330,466            | )       |                     |  | (163,454  | )      
|Gain on redemption of SHELS [note 5]                                  |                                          |      | 119,521   |         |   |      | 218,327             |         |                     |  |          |        
|Dilution gain (loss) on issuance of stock by equity
investee [note 2] |                                          |      |          |         |   |      | (571                | )       |                     |  | 4,525     |        
|Gain on sale of cable systems [note 2]                                |                                          |      |          |         |   |      |                    |         |                     |  | 66,595    |        
|Loss on sale of satellite assets [note 2]                             |                                          |      | (3,800    | )       |   |      | (1,281              | )       |                     |  |          |        
|Debt restructuring costs [note 9]                                     |                                          |      | (10,634   | )       |   |      |                    |         |                     |  | (8,590    | )      
|Foreign exchange gain (loss) on unhedged long-term
debt               |                                          |      | 32,617    |         |   |      | (1,658              | )       |                     |  | (15,188   | )      
|Loss on sale and write-down of assets [note 2]                        |                                          |      | (124,674  | )       |   |      |                    |         |                     |  |          |        
|Other revenue (expense) [note 1]                                      |                                          |      | 9,338     |         |   |      | 6,048               |         |                     |  | (665      | )      
|                                                                      |                                          |      |           |         |   |      |                     |         |                     |  |           |        
|Loss before income taxes                                              |                                          |      | (15,982   | )       |   |      | (315,744            | )       |                     |  | (438,307  | )      
|Income tax expense (recovery) [note 14]                               |                                          |      | 29,925    |         |   |      | (82,907             | )       |                     |  | (351,591  | )      
|                                                                      |                                          |      |           |         |   |      |                     |         |                     |  |           |        
|Loss before the following                                             |                                          |      | (45,907   | )       |   |      | (232,837            | )       |                     |  | (86,716   | )      
|Equity loss on investees [note 5]                                     |                                          |      | (1,921    | )       |   |      | (53,487             | )       |                     |  | (71,282   | )      
|Non-controlling interest                                              |                                          |      |          |         |   |      |                    |         |                     |  | 725       |        
|                                                                      |                                          |      |           |         |   |      |                     |         |                     |  |           |        
|Net loss[note 1]                                                      |                                          |      | (47,828   | )       |   |      | (286,324            | )       |                     |  | (157,273  | )      
|Retained earnings (deficit), beginning of year
as previously reported |                                          |      | (230,327  | )       |   |      | 111,830             |         |                     |  | 310,250   |        
|Adjustment for change in accounting policy [note 1]                   |                                          |      | (10,410   | )       |   |      | (12,378             | )       |                     |  | (2,526    | )      
|                                                                      |                                          |      |           |         |   |      |                     |         |                     |  |           |        
|Retained earnings (deficit), beginning of year as restated            |                                          |      | (240,737  | )       |   |      | 99,452              |         |                     |  | 307,724   |        
|                                                                      |                                          |      |           |         |   |      |                     |         |                     |  |           |        
|                                                                      |                                          |      | (288,565  | )       |   |      | (186,872            | )       |                     |  | 150,451   |        
|Dividends
                                                           |                                          |      |           |         |   |      |                     |         |                     |  |           |        
|                                                                      | Class A and Class B Non-Voting Shares    |      |           | (11,536 | ) |      |                     | (11,534 | )                   |  |           | (10,876 | )
|                                                                      | Equity instruments (net of income taxes) |      |           | (40,193 | ) |      |                     | (42,331 | )                   |  |           | (40,123 | )
|                                                                      |                                          |      |           |         |   |      |                     |         |                     |  |           |        
|Retained earnings (deficit), end of year                              |                                          |      | (340,294  | )       |   |      | (240,737            | )       |                     |  | 99,452    |        
|                                                                      |                                          |      |           |         |   |      |                     |         |                     |  |           |        
|Loss per share[note 11]                                               |                                          |      |           |         |   |      |                     |         |                     |  |           |        
|                                                                      | Basic and diluted                        |      |           | (0.38   | ) |      |                     | ($1.42  | )                   |  |           | ($0.89  | )
|                                                                      |                                          |      |           |         |   |      |                     |         |                     |  |           |        

See accompanying notes

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Shaw Communications Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended August 31

|                                                                      |                                          |   |          |         |      |   |                     |         |                     |  |            |         |  
|--------------------------------------------------------------------- | ---------------------------------------- | - | -------- | ------- | ---- | - | ------------------- | ------- | ------------------- |  | ---------- | ------- | -
|                                                                      |                                          |   | 2003     |         | 2002 |   | 2001               
|[thousands of Canadian dollars]                                       |                                          | $ |          | $       |      | $
|                                                                      |                                          |   |          |         |      |  
|                                                                      |                                          |   |          |         |      |   | (Restated - Note 1) |         | (Restated - Note 1)
|OPERATING ACTIVITIES[note 20]                                         |                                          |   |          |         |      |   |                     |         |                     |  |            |        
|Cash flow from operations                                             |                                          |   | 534,766  |         |      |   | 332,109             |         |                     |  | 210,514    |        
|Net change in non-cash working capital balances related
to operations |                                          |   | 3,675    |         |      |   | 3,303               |         |                     |  | 79,470     |        
|                                                                      |                                          |   |          |         |      |   |                     |         |                     |  |            |        
|                                                                      |                                          |   | 538,441  |         |      |   | 335,412             |         |                     |  | 289,984    |        
|                                                                      |                                          |   |          |         |      |   |                     |         |                     |  |            |        
|INVESTING ACTIVITIES                                                  |                                          |   |          |         |      |   |                     |         |                     |  |            |        
|Additions to property, plant and equipment                            |                                          |   | (257,683 | )       |      |   | (743,568            | )       |                     |  | (828,727   | )      
|Additions to equipment subsidies                                      |                                          |   | (162,876 | )       |      |   | (121,654            | )       |                     |  | (165,492   | )      
|Net reduction (addition) to inventories                               |                                          |   | 59,708   |         |      |   | 15,397              |         |                     |  | (36,798    | )      
|Cable and MDU business acquisitions [note 2]                          |                                          |   | (3,634   | )       |      |   | (40,454             | )       |                     |  | (555,977   | )      
|Cancom acquisition [note 2]                                           |                                          |   |         |         |      |   |                    |         |                     |  | (6,148     | )      
|Proceeds (costs) on sale of satellite assets [note 2]                 |                                          |   | 6,461    |         |      |   | (631                | )       |                     |  |           |        
|Proceeds received on assets held for sale [note 2]                    |                                          |   |         |         |      |   | 89,500              |         |                     |  | 150,000    |        
|Proceeds on sale of cable systems [note 2]                            |                                          |   | 257,435  |         |      |   |                    |         |                     |  | 193,288    |        
|Proceeds on sale of investments and other assets                      |                                          |   | 22,469   |         |      |   | 18,489              |         |                     |  | 170,428    |        
|Costs on redemption of SHELS                                          |                                          |   | (2,113   | )       |      |   | (3,134              | )       |                     |  |           |        
|Acquisition of investments                                            |                                          |   | (9,662   | )       |      |   | (28,158             | )       |                     |  | (138,534   | )      
|Additions to deferred charges                                         |                                          |   | (5,142   | )       |      |   | (11,345             | )       |                     |  | (24,407    | )      
|                                                                      |                                          |   |          |         |      |   |                     |         |                     |  |            |        
|                                                                      |                                          |   | (95,037  | )       |      |   | (825,558            | )       |                     |  | (1,242,367 | )      
|                                                                      |                                          |   |          |         |      |   |                     |         |                     |  |            |        
|FINANCING ACTIVITIES                                                  |                                          |   |          |         |      |   |                     |         |                     |  |            |        
|Increase (decrease) in bank indebtedness                              |                                          |   | (2,303   | )       |      |   | 514                 |         |                     |  | (25,214    | )      
|Proceeds on pre-payment of IRU                                        |                                          |   | 235      |         |      |   |                    |         |                     |  |           |        
|Payment to terminate interest rate swaps                              |                                          |   |         |         |      |   | (9,400              | )       |                     |  |           |        
|Debt restructuring costs [note 9]                                     |                                          |   | (17,134  | )       |      |   |                    |         |                     |  | (8,590     | )      
|Increase in long-term debt                                            |                                          |   | 505,599  |         |      |   | 1,049,520           |         |                     |  | 2,377,238  |        
|Long-term debt repayments                                             |                                          |   | (858,510 | )       |      |   | (588,644            | )       |                     |  | (1,535,353 | )      
|Issue of equity instruments, net of after-tax expenses                |                                          |   |         |         |      |   | 90,481              |         |                     |  | 189,928    |        
|Issue of Class B Non-Voting Shares, net of after-tax
expenses         |                                          |   | 95       |         |      |   | 792                 |         |                     |  | 4,547      |        
|Dividends
paid                                                       |                                          |   |          |         |      |   |                     |         |                     |  |            |        
|                                                                      | Class A and Class B Non-Voting Shares    |   |          | (11,536 | )    |   |                     | (11,534 | )                   |  |            | (10,876 | )
|                                                                      | Equity instruments, net of current taxes |   |          | (39,084 | )    |   |                     | (41,618 | )                   |  |            | (39,413 | )
|                                                                      |                                          |   |          |         |      |   |                     |         |                     |  |            |        
|                                                                      |                                          |   | (422,638 | )       |      |   | 490,111             |         |                     |  | 952,267    |        
|                                                                      |                                          |   |          |         |      |   |                     |         |                     |  |            |        
|Effect of currency translation on cash balances and
cash flows        |                                          |   | (13      | )       |      |   | 35                  |         |                     |  | 116        |        
|                                                                      |                                          |   |          |         |      |   |                     |         |                     |  |            |        
|Increase in cash                                                      |                                          |   | 20,753   |         |      |   |                    |         |                     |  |           |        
|Cash, beginning of the year                                           |                                          |   |         |         |      |   |                    |         |                     |  |           |        
|                                                                      |                                          |   |          |         |      |   |                     |         |                     |  |            |        
|Cash, end of the year                                                 |                                          |   | 20,753   |         |      |   |                    |         |                     |  |           |        
|                                                                      |                                          |   |          |         |      |   |                     |         |                     |  |            |        

See accompanying notes

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Shaw Communications Inc.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|1. |  | SIGNIFICANT ACCOUNTING POLICIES
|-- |  | -------------------------------

Shaw Communications Inc. (the Company) is a public company whose shares
are listed on the Toronto and New York Stock Exchanges. The Company is a
diversified Canadian communications company whose core operating business
is providing cable television services, high-speed Internet access and
Internet infrastructure services (Cable); Direct-to-home (DTH) (Star
Choice) satellite services and satellite distribution services
(Satellite). The Company also has investment interests in Internet
infrastructure and interactive television companies.

The consolidated financial statements are prepared by management on the
historical cost basis in accordance with Canadian generally accepted
accounting principles. The effects of differences between the
application of Canadian and US GAAP on the financial statements of the
Company are described in note 21.

Basis of consolidation

The consolidated financial statements include the accounts of the
Company and those of its subsidiaries. Intercompany transactions and
balances are eliminated on consolidation. The results of operations of
subsidiaries acquired during the year are included from their respective
dates of acquisition.

The accounts also include the Companys 38.3% interest in the Burrard Landing
Lot 2 Holdings Partnership (the Partnership).

Acquisitions subject to CRTC approval may be held in trust by a trustee
who exercises control over the business until such time as the CRTC
renders a decision on the proposed acquisition. Accordingly, such
acquisitions are recorded at cost until a decision is rendered and the
Company is able to exercise significant influence or control and
determine the appropriate form of accounting.

Investments

Investments in other entities are accounted for using the equity method or cost
basis depending upon the level of ownership and/or the Companys ability to
exercise significant influence over the operating and financial policies of the
investee. Equity method investments include GT Group Telecom Inc. (GT) until
February 4, 2003 (at which time GT was reorganized and resulted in the
disposition of the Companys interest in GT), The Biography Channel (Canada) Corp.,
MSNBC Canada (Holdings) Inc., TechTV
Canada Holdings Inc., and Halifax Cablevision Limited (Halifax) until August
31, 2001 (at which time Halifax was sold). Investments of this nature are
recorded at original cost and adjusted periodically to recognize the Companys
proportionate share of the investees net income or losses after the date of
investment, additional contributions made and dividends received. When net
losses from an equity accounted for investment exceed its carrying amount, the
investment balance is reduced to zero and additional losses are not provided
for unless the Company is committed to provide financial support to the

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

investee. The Company resumes accounting for the investment under the
equity method when the entity subsequently reports net income and the
Companys share of that net income exceeds the share of net losses not
recognized during the period the equity method was suspended.
Investments are written down only when there is clear evidence that a
decline in value that is other than temporary has occurred.

When an equity accounted for investee issues its own shares, the subsequent
reduction in the Companys proportionate interest in the investee is
reflected in income as a deemed dilution gain or loss on disposition.

Revenue and expenses

Revenue from cable, Internet and satellite customers includes subscriber
service revenue when earned. Revenue includes subscriber connection
fees, as they are considered to represent a partial recovery of initial
selling expenses and related administrative and general office expenses.
Subscriber connection costs are capitalized as part of the distribution
system and costs of disconnections and reconnections are expensed as
incurred.

Sales of DTH receiving equipment, digital cable terminals (DCTs) and
modems are recognized when subscriber service is activated.

Satellite services and telecommunications service revenue is recognized
in the period in which the services are rendered to customers. The sale
of satellite service equipment is recognized when goods are shipped.

Advertising costs are charged to income (loss) when incurred with the
exception of marketing costs incurred to launch new specialty services,
which are deferred and amortized over a two-year period. Advertising
expenses for 2003, 2002 and 2001 were $28,098, $51,276, and $54,155
respectively.

To be consistent with other practices throughout the Company, in fiscal
2003, the Company retroactively changed the presentation of equipment
revenue and cost of sales in respect of sale of DCT and modem equipment
at a subsidized cost to cable and Internet subscribers. Prior to fiscal
2003, the Company accounted for the price charged to the subscriber for
a DCT or modem as a cost recovery on the equipment provided as part of
the service connection process. The price charged to the subscriber for
a DCT or modem is now recorded as equipment revenue offset by an equal
cost of sale. As a result of the change in accounting
presentation, Cable revenue and expenses have increased by $26,489,
$25,724 and $15,823 for 2003, 2002 and 2001, respectively.

Inventories

Inventories include subscriber equipment such as digital cable
terminals, modems and DTH receivers, which are held pending rental or
sale at a subsidized price. When subscriber equipment is sold at a
subsidized price, the subsidized cost is deferred and amortized over two
years. When

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

the subscriber equipment is rented, it is transferred to property, plant
and equipment and amortized over its useful life. Inventories are stated
at cost due to the eventual capital nature as either an addition to
property, plant and equipment or deferred equipment subsidies,
determined on a first-in, first-out basis. Inventories are classified
as a current asset as proceeds for sale will be received on the majority
of the subscriber equipment.

Property, plant and equipment

Property, plant and equipment are recorded at purchase cost. Direct
labour and direct overhead incurred to construct new assets, upgrade
existing assets and connect new subscribers are capitalized. Repairs and
maintenance expenditures are charged to operating expense as incurred.
Amortization is recorded on a straight-line basis over the estimated
useful lives of assets as follows:

|                                                                              |  |                       |  | 
|----------------------------------------------------------------------------- |  | --------------------- |  | 
|Asset                                                                         |  | Estimated useful life
|                                                                              |  |                      
|Cable and telecommunications distribution system                              |  | 10-15 years          
|Digital cable terminals and modems                                            |  | 5-7 years            
|Decoders                                                                      |  | 5 years              
|Satellite audio, video and data network equipment
and DTH receiving
equipment |  | 3-7 years            
|Buildings                                                                     |  | 20-40 years          
|Data processing                                                               |  | 4 years              
|Other                                                                         |  | 3-10 years           

The Company reviews property, plant and equipment for impairment
whenever events or changes in circumstances indicate that the carrying
value may not be recoverable. An impairment is recognized when the
carrying amount of an asset is greater than the future undiscounted net
cash flows expected to be generated by the asset. The impairment is
measured as the difference between the carrying value of the asset and
its fair value calculated using quoted market prices or discounted cash
flows.

Deferred charges

Deferred charges primarily include (i) financing costs and credit
facility arrangement fees related to the issue of long-term debt,
amortized on a straight-line basis over the period to maturity of the
related debt; (ii) marketing costs incurred to launch new specialty
services and to launch the DTH services under the new satellite Anik F1,
amortized on a straight-line basis over a two-year period commencing
with the commercial offering of the service; (iii) foreign exchange
losses on translating hedged long-term debt; and (iv) equipment
subsidies.

Equipment subsidies incurred in order to expand the Companys customer
base include the cost of subsidizing equipment sold to subscription
cable and DTH customers. These subsidies are deferred and amortized on
a straight-line basis over a two-year period.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Intangibles

The excess of the cost of acquiring cable and satellite businesses over
the fair value of related net identifiable tangible and intangible
assets acquired is allocated to goodwill. Net identifiable intangible
assets acquired consist of amounts allocated to broadcast licenses.

Effective September 1, 2001, the Company adopted the recommendations of
the Canadian Institute of Chartered Accountants relating to Business
Combinations and Goodwill and Other Intangible Assets. Similar
standards were adopted in the United States. As the Company has always
accounted for business combinations using the purchase method, adoption of
this standard had no impact on the consolidated financial statements.
Under the goodwill and other intangible assets standard, goodwill and
intangible assets with an indefinite life are no longer amortized but are
subject to an annual review for impairment which consists of a comparison
of the fair value of the assets to their carrying value. The Company
evaluated intangible assets acquired in prior business combinations and
allocated the amounts to broadcast licenses, which represent identifiable
assets with indefinite useful lives, and to goodwill in those cases where
specific intangible assets could not be identified. This change in
accounting resulted in a reduction in amortization expense of $83,104 for
2002. The adjusted net income and reported loss per share (basic and
diluted) for 2001 would have been ($105,384) and ($0.66) respectively if
results were restated to remove amortization of broadcast licenses and
goodwill.

Prior to September 1, 2001, amounts allocated to broadcast licenses on
cable acquisitions were amortized using the increasing charge method
with an interest rate of 4% over forty years, amounts allocated to DTH
and satellite services licenses were amortized on a straight-line basis
over 35 years and amounts allocated to goodwill were amortized on a
straight-line basis over forty years. These assets were written down if
there was evidence of a permanent impairment in their value to the
Company. The potential impairment of these assets was measured against
the undiscounted value of expected future operating income before
amortization, taxes and interest.

Deferred credits

Deferred credits include: (i) prepayments received under indefeasible
right to use (IRU) agreements amortized on a straight-line basis into
income over the term of the agreement; (ii) fair value adjustments on
debt assumed on acquisitions amortized on a straight-line basis over the
term of the debt; and (iii) foreign exchange gains on translating hedged
long-term debt.

Income taxes

The Company accounts for income taxes using the liability method,
whereby future tax assets and liabilities are determined based on
differences between the financial reporting and tax bases of assets and
liabilities measured using substantially enacted tax rates and laws that
will be in effect when the differences are expected to reverse. Income
tax expense for the period is the tax payable for the period and any
change during the period in future income tax assets and liabilities.

45



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Equity instruments

The Company has the ability to satisfy interest and redemption obligations
on various financial instruments through the issuance of Class B Non-Voting
Shares. Accordingly, these instruments are included in shareholders
equity and payments thereon, net of taxes, are recorded as dividends.

Foreign currency translation

The financial statements of foreign subsidiaries, all of which are
self-sustaining, are translated using the current rate method, whereby
assets and liabilities are translated at year-end exchange rates and
revenues and expenses at average exchange rates for the year.
Adjustments arising from the translation of the financial statements are
deferred and included in a separate component of shareholders equity.

Transactions originating in foreign currencies are translated into
Canadian dollars at the exchange rate at the date of the transaction.
Monetary assets and liabilities are translated at the year-end rate of
exchange and non-monetary items are translated at historic exchange
rates. The net foreign exchange gain (loss) recognized on the
translation and settlement of current monetary assets and liabilities
was $8,032 (2002  $667; 2001  ($2,868)) and is included in other
revenue (expense).

Commencing September 1, 2002, the Company retroactively adopted the
amended Canadian standard for foreign currency translation which is
consistent with US standards and eliminates the deferral and
amortization method of accounting for unrealized translation gains and
losses on non-current monetary assets and liabilities that are not hedged
and requires exchange gains and losses to be included in net income in
the period they are incurred. Upon adoption of this amended standard
September 1, 2002, deferred unamortized foreign exchange losses net of
gains amounting to $2,526 (net of taxes) were eliminated and charged
against the opening retained earnings as at September 1, 2000. As prior
years were restated upon adoption, the Companys net loss for 2002 and
2001 increased (decreased) by ($1,968) (($0.01) per share) and $9,852
($0.04 per share) respectively.

Exchange gains and losses on translating hedged long-term debt are
included in deferred charges or deferred credits.

Financial instruments

The Company uses derivative financial instruments to manage risks from
fluctuations in exchange and interest rates. These instruments include
interest rate swaps, currency swaps, and foreign currency forward
purchase contracts. All such instruments are only used for risk
management purposes. The Company accounts for these financial
instruments as hedges and as a result the carrying values of the
financial instruments are not adjusted to reflect their current market
value.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

The net receipts or payments arising from financial instruments relating
to the management of interest risks are recognized in interest expense
over the term of the instrument. Foreign exchange gains or losses
arising on cross-currency agreements used to hedge US dollar denominated
debt are deferred until the hedged item is settled, at which time they
are offset against the gain or loss on the hedged item.

Those instruments that have been entered into by the Company to hedge exposure
to interest rate risk are periodically examined by the Company to ensure that
the instruments are matched with underlying liabilities, reduce the Companys
risk relating to interest rates and, through value and sensitivity analysis, maintain a high correlation to the interest
expense of the hedged item. For those instruments that do not meet the above
criteria, variations in their fair value are marked-to-market on a current
basis in the Companys Consolidated Statements of Loss.

Employee Benefit Plans

The Company accrues its obligations and related costs under its employee
benefit plans. The cost of pensions and other retirement benefits earned
by employees is actuarially determined using the projected benefit method
pro rated on service and managements best estimate of salary escalation
and retirement ages of employees. Past service costs from plan
initiation and amendments are amortized on a straight-line basis over the
average remaining service period of employees active at the date of
recognition of past service unless identification of a circumstance would
suggest a shorter amortization period is appropriate. Actuarial gains or
losses occur because assumptions about benefit plans relate to a long
time frame. These assumptions may need to be revised based on actual
experience of the plan such as changes in discount rates, expected
retirement age and projected salary increases. The excess of the net
cumulative unamortized actuarial gain (loss) over 10% of the accrued
benefit obligation is amortized over the average remaining service period
of active employees. The average remaining service period of the active
employees covered by the defined benefit pension plan is 8.4 years (2002
 11.9 years). When the restructuring of a benefit plan gives rise to
both a curtailment and a settlement of obligations, the curtailment is
accounted for prior to the settlement.

Stock-based compensation

Commencing September 1, 2002, the Company adopted the new Canadian
standard for stock-based compensation and other stock-based payments
which requires that all stock-based awards granted to non-employees be
accounted for at fair value. With limited exceptions relating to direct
awards of stock, awards required or expected to be settled in cash and
stock appreciation rights, the new standard permits the Company to
continue its current policy of not recording any compensation cost on
the grant of stock options to employees. No restatement of prior
periods was required as a result of the adoption of the new standard.

The Company has a stock option plan for directors, officers, employees
and consultants to the Company. The options must be issued at not less
than their fair value. Any consideration paid by employees on the
exercise of stock options is credited to share capital.

47



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Guarantees

The Company adopted Accounting Guideline 14  Disclosures of Guarantees
(AG 14)(see note 16). It requires a guarantor to disclose significant
information about certain types of guarantees that it has provided,
including certain types of indemnities and the indirect guarantees of
indebtedness to others, without regard to whether it will have to make
any payments under the guarantees. This guideline is in addition to the
existing disclosure required by Contingencies.

Use of estimates

The preparation of consolidated financial statements in conformity with
Canadian generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the year. Actual
results could differ from those estimates.

The Company has invested in a number of development projects and in
companies utilizing and developing new distribution technologies.
Control of Cancom and its wholly-owned subsidiary Star Choice
Communications Inc. (Star Choice), a DTH satellite operator, was
acquired in 2000. Star Choice commenced commercial operations on October
1, 1997 and has experienced significant operating losses. These
operating losses are expected to continue as Star Choice continues to
build its customer base.

The Company has estimated the useful lives of its property, plant and
equipment and the recoverability of deferred costs, development projects
and broadcast licenses using current business plans. Significant
changes in the assumptions with respect to the competitive environment,
technology changes and the DTH market could result in an impairment of
such assets.

The Company has tested the amounts allocated to broadcast licenses and
goodwill for impairment using discounted cash flows based on current
business plans. Significant changes in assumptions with respect to the
competitive environment could result in impairment of intangible assets.

Recent Canadian accounting pronouncements



|(i) |  | Hedging relationships
|--- |  | ---------------------

In November 2001, Accounting Guideline (AcG) 13, Hedging Relationships,
was approved which establishes conditions for applying hedge accounting
which will become effective for the 2004 fiscal period.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|(ii) |  | Asset Retirement Obligations
|---- |  | ----------------------------

In 2005, the Company will retroactively adopt the new Canadian standard,
Asset Retirement Obligations, which establishes standards for the
recognition, measurement and disclosure of asset retirement obligations
and the related asset retirement costs. This new standard applies to
obligations associated with the retirement of property, plant and
equipment when those obligations result from the acquisition,
construction, development or normal operation of the assets. The
standard requires the recognition of all legal obligations associated
with the retirement, whether by sale, abandonment, recycling or other
disposal of an asset. The Company is currently assessing the impact of
the adoption of this new accounting policy standard.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|2. |  | BUSINESS ACQUISITIONS AND DIVESTITURES
|-- |  | --------------------------------------

Cable and MDU business acquisitions

|                        |  |      |       |         |  |          |   |          |  |       |       | 
|----------------------- |  | ---- | ----- | ------- |  | -------- | - | -------- |  | ----- | ----- | 
|                        |  | 2003
|                        |  |     
|                        |  |      |       |         |  |          |   |          |  | Total
|                        |  |      |       |         |  | Accounts |   | purchase
|                        |  | Cash |       | payable |  | price   
|                        |  | $    |       | $       |  | $       
|                        |  |      |       |         |  |         
|(i) Cable systems in US |  |      | 3,634 |         |  |          |  |          |  |       | 3,634 | 

|                                          |  |      |        |         |  |          |       |          |  |       |        | 
|----------------------------------------- |  | ---- | ------ | ------- |  | -------- | ----- | -------- |  | ----- | ------ | 
|                                          |  | 2002
|                                          |  |     
|                                          |  |      |        |         |  |          |       |          |  | Total
|                                          |  |      |        |         |  | Accounts |       | purchase
|                                          |  | Cash |        | payable |  | price   
|                                          |  | $    |        | $       |  | $       
|                                          |  |      |        |         |  |         
|(i) Cable systems in US                   |  |      | 3,608  |         |  |          | 354   |          |  |       | 3,962  | 
|(ii) Cable systems in Canada              |  |      | 4,336  |         |  |          | 150   |          |  |       | 4,486  | 
|(iii) Direct-to-Home pay-per-view service |  |      | 32,510 |         |  |          | 4,000 |          |  |       | 36,510 | 
|                                          |  |      |        |         |  |          |       |          |  |       |        | 
|                                          |  |      | 40,454 |         |  |          | 4,504 |          |  |       | 44,958 | 
|                                          |  |      |        |         |  |          |       |          |  |       |        | 

|                        |  |          |         |      |  |            |         |             |  |          |         |          |  |       |        |  |  |  |           | 
|----------------------- |  | -------- | ------- | ---- |  | ---------- | ------- | ----------- |  | -------- | ------- | -------- |  | ----- | ------ |  |  |  | --------- | 
|                        |  | 2001    
|                        |  |         
|                        |  | Issue of |         |      |  |            |         | Application |  |          |         |          |  | Total
|                        |  | Class    |         |      |  |            |         | of opening  |  | Accounts |         | purchase
|                        |  | B Shares |         | Cash |  | investment |         | payable     |  | price   
|                        |  | $        |         | $    |  | $          |         | $           |  | $       
|                        |  |          |         |      |  |            |         |             |  |         
|(iv) Moffat             |  |          | 765,238 |      |  |            | 465,365 |             |  |          | 105,138 |          |  |       | 4,661  |  |  |  | 1,340,402 | 
|(v) Rogers exchange     |  |          |        |      |  |            | 78,662  |             |  |          | 661     |          |  |       | 24,844 |  |  |  | 104,167   | 
|(vi) MDU business       |  |          |        |      |  |            | 10,604  |             |  |          |        |          |  |       |       |  |  |  | 10,604    | 
|(i) Cable systems in US |  |          |        |      |  |            | 1,346   |             |  |          |        |          |  |       | 1,344  |  |  |  | 2,690     | 
|                        |  |          |         |      |  |            |         |             |  |          |         |          |  |       |        |  |  |  |           | 
|                        |  |          | 765,238 |      |  |            | 555,977 |             |  |          | 105,799 |          |  |       | 30,849 |  |  |  | 1,457,863 | 
|                        |  |          |         |      |  |            |         |             |  |          |         |          |  |       |        |  |  |  |           | 

50



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

A summary of net assets acquired on cable and MDU business acquisitions,
accounted for as purchases, is as follows:

|                                                         |  |      |       |      |  |      |        |  |  |  |           | 
|-------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ------ |  |  |  | --------- | 
|                                                         |  | 2003 |       | 2002 |  | 2001
|                                                         |  | $    |       | $    |  | $   
|                                                         |  |      |       |      |  |     
|Identifiable net assets acquired at assigned
fair values |  |      |       |      |  |      |        |  |  |  |           | 
|Assets held for sale                                     |  |      |      |      |  |      |       |  |  |  | 239,500   | 
|Investments and other assets                             |  |      |      |      |  |      |       |  |  |  | 7         | 
|Property, plant and equipment                            |  |      |      |      |  |      | 964    |  |  |  | 353,500   | 
|Deferred charges                                         |  |      |      |      |  |      |       |  |  |  | 4,634     | 
|Broadcast licenses  DTH                                 |  |      |      |      |  |      |       |  |  |  | 9,886     | 
|Broadcast
licenses  cable                               |  |      | 3,634 |      |  |      | 57,309 |  |  |  | 1,760,672 | 
|                                                         |  |      |       |      |  |      |        |  |  |  |           | 
|                                                         |  |      | 3,634 |      |  |      | 58,273 |  |  |  | 2,368,199 | 
|                                                         |  |      |       |      |  |      |        |  |  |  |           | 
|Working capital deficiency                               |  |      |      |      |  |      | 603    |  |  |  | 29,506    | 
|Long-term debt                                           |  |      |      |      |  |      | 644    |  |  |  | 372,000   | 
|IRU agreements                                           |  |      |      |      |  |      |       |  |  |  | 96,800    | 
|Future income taxes                                      |  |      |      |      |  |      | 12,068 |  |  |  | 394,821   | 
|Deferred credits                                         |  |      |      |      |  |      |       |  |  |  | 17,209    | 
|                                                         |  |      |       |      |  |      |        |  |  |  |           | 
|                                                         |  |      |      |      |  |      | 13,315 |  |  |  | 910,336   | 
|                                                         |  |      |       |      |  |      |        |  |  |  |           | 
|Purchase price                                           |  |      | 3,634 |      |  |      | 44,958 |  |  |  | 1,457,863 | 
|                                                         |  |      |       |      |  |      |        |  |  |  |           | 



|(i)   |  | The Company purchased 854
subscribers (2002  1,045; 2001  710) in
Florida under a commitment to purchase which expired May 31, 2003.                                                                     
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|(ii)  |  | Effective September 30, 2001, December 1, 2001, and June 1, 2002
the Company purchased three small cable television systems serving
approximately 2,300 subscribers in the province of British Columbia.   
|     
|(iii) |  | Effective June 1, 2002, the Company acquired from Corus
Entertainment Inc. (Corus) (see note 18) 100% of Corus VC Ltd.
(Viewers Choice), which operates a pay-per-view video service in
Western Canada.
|     
|(iv)  |  | Effective March 1, 2001, the Company acquired 100% of Moffat
Communications Limited (Moffat). The principal operations and assets
of Moffat consisted of:                                                



| | (a) |  | Cable television and Internet distribution systems serving
312,000 basic cable subscribers and 43,000 high-speed Internet
subscribers in Alberta, Manitoba and Northern Ontario;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Cable television and Internet distribution systems serving
approximately 71,000 basic subscribers and 3,000 high-speed
Internet subscribers in Florida and Texas;               

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



| | (c) |  | WTN, a nationally distributed specialty television
network; and
| | --- |  | ---------------------------------------------------------------
|
| | (d) |  | CKY-TV (CKY), a CTV television network
affiliate in Manitoba.



|     |  | In conjunction with the
Companys plans to acquire Moffat, agreements were made to
dispose of Moffats interest in WTN for $202,500 to Corus
effective November 2001 (see
note 18) and its interest in CKY for $37,000 to CTV Inc. effective
September 2001. Accordingly, the WTN and CKY assets were reflected in
the balance sheet as assets held for sale at the agreed upon selling
price less a deposit for $150,000 received from Corus on the WTN sale.
No gain or loss resulted on these dispositions.                                                                                                                                                                                                               
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(v)  |  | Effective November 1, 2000, the Company and Rogers Communications Inc.
(Rogers) exchanged certain cable television and Internet assets resulting in
the Company acquiring Rogers approximately 626,000 subscribers in Vancouver
and surrounding area in exchange for the Companys approximately 604,000 subscribers in
Southern Ontario and New Brunswick plus cash for the cost of the incremental
subscribers acquired in the exchange. The exchange of cable systems was
undertaken by both companies to consolidate their respective cable television
operations. No gain or loss was recorded in this exchange of assets. The
incremental subscribers acquired have been recorded at their cash cost to the
Company.
|    
|(vi) |  | Between January 31, 2001 and April 27, 2001, approximately 13,533
DTH satellite subscribers were purchased in Ontario, Quebec and Western
Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Cancom acquisition

On August 31, 1999, Cancom and Star Choice completed a share exchange
transaction resulting in Star Choice becoming a wholly-owned subsidiary
of Cancom. Cancom provides satellite-based solutions for business and
Star Choice provides DTH satellite television services. Prior to this
transaction, the Company held a 9.5% interest in Cancom, accounted for
on a cost basis, and a 49.9% interest on a diluted basis in Star Choice,
accounted for using the equity method. After the share exchange, the
Company held approximately 35% of Cancom, which was accounted for using
the equity method.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

During 2000, the Company purchased additional interests in Cancom
resulting in Cancom becoming a subsidiary (94.3% interest) for
consolidation purposes effective July 1, 2000. During 2001, the Company
purchased the remaining 5.7% equity interest in Cancom. A summary of
the net assets acquired at assigned fair values and the consideration
given for the 5.7% interest in Cancom is summarized as follows:

|                                                         |  |      |         |  
|-------------------------------------------------------- |  | ---- | ------- | -
|                                                         |  | 2001
|                                                         |  | $   
|                                                         |  |     
|Identifiable net assets acquired at assigned fair values |  |      |         |  
|Broadcast licenses                                       |  |      | 111,260 |  
|                                                         |  |      |         |  
|Future income tax liability                              |  |      | 30,720  |  
|Non-controlling interest                                 |  |      | (12,691 | )
|                                                         |  |      |         |  
|                                                         |  |      | 18,029  |  
|                                                         |  |      |         |  
|Purchase price                                           |  |      | 93,231  |  
|                                                         |  |      |         |  

Consideration:

|                          |  |      |        | 
|------------------------- |  | ---- | ------ | 
|                          |  | 2001
|                          |  | $   
|                          |  |     
|Cash                      |  |      | 6,148  | 
|Class B Non-Voting Shares |  |      | 87,083 | 
|                          |  |      |        | 
|                          |  |      | 93,231 | 
|                          |  |      |        | 

Divestitures



|(i)   |  | Effective June 30, 2003, the Company sold its US cable systems for
net proceeds of $257,435. Prior to the sale, the Company had written
down the US cable system broadcast licences by $80,000. Subsequent to
the write-down, a recovery of the US$ relative to the Cdn$, reduced the
final loss on sale to $74,674.      
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|(ii)  |  | Effective March 21, 2003 the Company sold its Star Choice Business
Television division for $6,461 which resulted in a pre-tax loss of
$3,800.                                                                                                                                                                             
|     
|(iii) |  | During 2003, 360networks acquired GT. The transaction did not
result in any recovery for the shareholders of GT. In prior years, GT
issued equity which reduced the
Companys equity interest (2002  23.28% to 23.22%; 2001
 23.65% to 23.28%) and resulted in a dilution gains (losses)
(2002  $(571); 2001  $4,525).
|     
|(iv)  |  | Effective May 31, 2002, the Company sold its uplink and SRDU
business in the Caribbean for $1,113 which resulted in a pre-tax loss of
$1,281.                                                                                                                                                                             

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|(v) |  | Effective August 31, 2001, the Company sold to Bragg Communications
Inc., a company controlled by a former director of the Company, its 75%
interest in Access (including its 45% interest in Halifax) and its 100%
interest in Access Cable Television Bedford/Sackville Limited for
$209,629 ($193,288 cash and $16,341 promissory notes at prime plus
0.5%). A pre-tax gain of $66,595 was recognized on the sale.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|3.  |  | ACCOUNTS RECEIVABLE                                                                                                                                                                                                                                                                                                                                                                                                  

|                                                    |  |      |         |      |  |  |         |  
|--------------------------------------------------- |  | ---- | ------- | ---- |  |  | ------- | -
|                                                    |  | 2003 |         | 2002
|                                                    |  | $    |         | $   
|                                                    |  |      |         |     
|Subscriber and trade receivables                    |  |      | 155,211 |      |  |  | 175,774 |  
|Officers and employees                              |  |      | 69      |      |  |  | 173     |  
|Due from related parties [note 18]                  |  |      | 563     |      |  |  | 5,627   |  
|Promissory notes                                    |  |      |        |      |  |  | 5,000   |  
|Miscellaneous receivables including commodity taxes |  |      | 7,887   |      |  |  | 30,729  |  
|                                                    |  |      |         |      |  |  |         |  
|                                                    |  |      | 163,730 |      |  |  | 217,303 |  
|Less allowance for doubtful accounts                |  |      | (22,732 | )    |  |  | (19,340 | )
|                                                    |  |      |         |      |  |  |         |  
|                                                    |  |      | 140,998 |      |  |  | 197,963 |  
|                                                    |  |      |         |      |  |  |         |  

Included in operating, general and administrative expenses is a
provision for doubtful accounts of $35,019 (2002  $26,727; 2001

$19,625).



|4. |  | INVENTORIES
|-- |  | -----------

|                     |  |      |        |      |  |  |         | 
|-------------------- |  | ---- | ------ | ---- |  |  | ------- | 
|                     |  | 2003 |        | 2002
|                     |  | $    |        | $   
|                     |  |      |        |     
|Subscriber equipment |  |      | 77,218 |      |  |  | 124,515 | 
|Other                |  |      | 4,569  |      |  |  | 4,296   | 
|                     |  |      |        |      |  |  |         | 
|                     |  |      | 81,787 |      |  |  | 128,811 | 
|                     |  |      |        |      |  |  |         | 

Subscriber equipment includes cable modems, digital set-top boxes and
related customer premise equipment.

54



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|5. |  | INVESTMENTS AND OTHER ASSETS
|-- |  | ----------------------------

|                                                                                            |  |      |        |      |  |  |         | 
|------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- |  |  | ------- | 
|                                                                                            |  | 2003 |        | 2002
|                                                                                            |  | $    |        | $   
|                                                                                            |  |      |        |     
|Investments, at cost net of write-downs:                                                    |  |      |        |      |  |  |         | 
|Liberty
Media Corporation (Liberty) (market value 
$5,752;
2002  $4,469)                |  |      | 4,469  |      |  |  | 4,469   | 
|Motorola,
Inc. (Motorola)(market value  $33,858; 2002 
$33,858)                         |  |      | 8,925  |      |  |  | 8,925   | 
|Terayon
Communication Systems (Terayon) (market value 
2002  $90,481)                   |  |      |       |      |  |  | 45,872  | 
|Liberate
Technologies (Liberate) (market value  2002 
$93,068)                          |  |      |       |      |  |  | 16,043  | 
|Canadian Hydro Developers, Inc. (Canadian Hydro) (market
value  $20,454; 2002  $12,216) |  |      | 19,111 |      |  |  | 17,036  | 
|Cogeco
Cable Inc. (Cogeco) (market value  2002 
$12,650)                                |  |      |       |      |  |  | 12,650  | 
|Investments in private technology companies                                                 |  |      | 6,813  |      |  |  | 15,735  | 
|Investments at equity:                                                                      |  |      |        |      |  |  |         | 
|Investments in specialty channel networks                                                   |  |      | 1,106  |      |  |  | 2,918   | 
|Other assets:                                                                               |  |      |        |      |  |  |         | 
|Employee home relocation mortgages and loans [note 18]                                      |  |      | 7,299  |      |  |  | 8,161   | 
|Other                                                                                       |  |      | 1,692  |      |  |  | 1,793   | 
|                                                                                            |  |      |        |      |  |  |         | 
|                                                                                            |  |      | 49,415 |      |  |  | 133,602 | 
|                                                                                            |  |      |        |      |  |  |         | 

The Motorola shares have been pledged as collateral for the outstanding
Zero Coupon Loan (see note 11).

The market value of the Motorola shares is reflected at the amount
recorded in the accounts for the Zero Coupon Loan as the Company has
entered into an equity forward sale contract on an equivalent number of
Motorola shares for amounts to coincide with the maturity of the loan.

Terayon

In 2002, the Company sold 673,173 shares of Terayon resulting in a pre-tax gain
of $2,545.

On February 28, 2003, the Company redeemed the Series V SHELS by
delivering the underlying security of 5,326,827 Terayon shares resulting
in a gain of $44,179.

Liberate

On May 31, 2003, the Company redeemed the Series III and IV SHELS by
delivering the underlying security of 1,452,506 Liberate shares
resulting in a gain of $75,342.

55



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Canadian Hydro

Canadian Hydro, a Canadian public corporation, develops and operates
electrical generating plants. A summary of the holdings in Canadian
Hydro is as follows:

|          |                                     |  |                             |            |      |  |           |           | 
|--------- | ----------------------------------- |  | --------------------------- | ---------- | ---- |  | --------- | --------- | 
|          |                                     |  | 2003                        |            | 2002
|          |                                     |  |                             |            |     
|          |                                     |  | (number of shares/warrants)
|Shares:   |                                     |  |                             |            |      |  |           |          
|          | Free trading                        |  |                             | 10,330,364 |      |  |           | 2,450,000 | 
|          | Subject to hold periods             |  |                             |           |      |  |           | 4,096,580 | 
|Warrants: |                                     |  |                             |            |      |  |           |          
|          | Vested
 exercise price of $3.27(1) |  |                             | 1,000,000  |      |  |           | 1,000,000 | 
|          | Vested  exercise price of $2.35    |  |                             | 1,100,000  |      |  |           | 1,100,000 | 
|          |                                     |  |                             |            |      |  |           |           | 
|          |                                     |  | 12,430,364                  |            |      |  | 8,646,580 |          
|          |                                     |  |                             |            |      |  |           |           | 



---

|(1) |  | 500,000 warrants have a cashless exercise option.
|--- |  | -------------------------------------------------

Cogeco

During the year, the Company sold 1,100,000 shares of Cogeco resulting in a
gain of $758.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Investments at cost, write-downs

As a result of the dynamic changing condition of the technology sector,
management reviews of the carrying value of investments in this sector
have resulted in the following write-downs:

|                       |  |      |        |      |  |      |        |  |  |  |         | 
|---------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  |  | ------- | 
|                       |  | 2003 |        | 2002 |  | 2001
|                       |  | $    |        | $    |  | $   
|                       |  |      |        |      |  |     
|TippingPoint           |  |      |       |      |  |      |       |  |  |  | 21,180  | 
|Liberty                |  |      |       |      |  |      | 4,042  |  |  |  | 103,268 | 
|Cogeco                 |  |      |       |      |  |      | 33,605 |  |  |  |        | 
|Canadian Hydro         |  |      | 4,925  |      |  |      |       |  |  |  |        | 
|Other public companies |  |      | 27     |      |  |      | 173    |  |  |  | 6,203   | 
|Private companies      |  |      | 10,048 |      |  |      | 23,718 |  |  |  | 32,803  | 
|                       |  |      |        |      |  |      |        |  |  |  |         | 
|                       |  |      | 15,000 |      |  |      | 61,538 |  |  |  | 163,454 | 
|                       |  |      |        |      |  |      |        |  |  |  |         | 

Investments at equity

In June 2001, the Company increased its ownership interest in the outstanding
voting shares of GT to 40.1% with an acquisition of an additional 3,000,000
Class A Voting Shares of GT. The Companys equity interest in GT at August 31,
2002 was 23.2%. As a result of the significant deterioration in the market
value of the GT shares and the announcement by GT in June 2002 that the company
was unlikely to meet certain of its bank covenants and would seek court
protection from its creditors, the Company wrote-down the balance of its
investment in GT of $268,928. Pursuant to a reorganization of GT in 2003, Shaw
no longer has an ownership interest in the company.

The Company has a one-third interest in three specialty channel networks.

Equity loss on investees consists of the following:

|                           |  |      |        |      |  |      |         |   |  |  |         |  
|-------------------------- |  | ---- | ------ | ---- |  | ---- | ------- | - |  |  | ------- | -
|                           |  | 2003 |        | 2002 |  | 2001
|                           |  | $    |        | $    |  | $   
|                           |  |      |        |      |  |     
|GT                         |  |      |       |      |  |      | (51,300 | ) |  |  | (70,730 | )
|Specialty channel networks |  |      | (1,898 | )    |  |      | (1,862  | ) |  |  |        |  
|Other                      |  |      | (23    | )    |  |      | (325    | ) |  |  | (552    | )
|                           |  |      |        |      |  |      |         |   |  |  |         |  
|                           |  |      | (1,921 | )    |  |      | (53,487 | ) |  |  | (71,282 | )
|                           |  |      |        |      |  |      |         |   |  |  |         |  

57



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|6. |  | PROPERTY, PLANT AND EQUIPMENT
|-- |  | -----------------------------

|                                                                              |  |      |           |              |  |             |           |              |  |  |           |             |  |  |           | 
|----------------------------------------------------------------------------- |  | ---- | --------- | ------------ |  | ----------- | --------- | ------------ |  |  | --------- | ----------- |  |  | --------- | 
|                                                                              |  | 2003 |           | 2002        
|                                                                              |  |      |           |             
|                                                                              |  |      |           |              |  | Accumulated |           |              |  |  |           | Accumulated
|                                                                              |  | Cost |           | amortization |  | Cost        |           | amortization
|                                                                              |  | $    |           | $            |  | $           |           | $           
|                                                                              |  |      |           |              |  |             |           |             
|Cable and telecommunications
distribution system                              |  |      | 2,609,599 |              |  |             | 908,769   |              |  |  | 2,613,527 |             |  |  | 720,859   | 
|Digital cable terminals and
modems                                            |  |      | 449,861   |              |  |             | 271,974   |              |  |  | 512,922   |             |  |  | 213,241   | 
|Decoders                                                                      |  |      | 42,573    |              |  |             | 19,371    |              |  |  | 43,715    |             |  |  | 13,373    | 
|Satellite audio, video and data
network equipment and DTH
receiving equipment |  |      | 223,370   |              |  |             | 67,031    |              |  |  | 208,158   |             |  |  | 32,498    | 
|Buildings                                                                     |  |      | 237,594   |              |  |             | 38,283    |              |  |  | 213,927   |             |  |  | 29,742    | 
|Data processing                                                               |  |      | 81,698    |              |  |             | 55,645    |              |  |  | 76,282    |             |  |  | 37,613    | 
|Other assets                                                                  |  |      | 222,241   |              |  |             | 186,354   |              |  |  | 218,854   |             |  |  | 157,481   | 
|                                                                              |  |      |           |              |  |             |           |              |  |  |           |             |  |  |           | 
|                                                                              |  |      | 3,866,936 |              |  |             | 1,547,427 |              |  |  | 3,887,385 |             |  |  | 1,204,807 | 
|Land                                                                          |  |      | 52,953    |              |  |             |          |              |  |  | 51,919    |             |  |  |          | 
|Satellite transponders under
construction                                     |  |      | 43,200    |              |  |             |          |              |  |  | 43,200    |             |  |  |          | 
|                                                                              |  |      |           |              |  |             |           |              |  |  |           |             |  |  |           | 
|                                                                              |  |      | 3,963,089 |              |  |             | 1,547,427 |              |  |  | 3,982,504 |             |  |  | 1,204,807 | 
|                                                                              |  |      |           |              |  |             |           |              |  |  |           |             |  |  |           | 
|Net book value                                                                |  |      | 2,415,662 |              |  | 2,777,697   |          
|                                                                              |  |      |           |              |  |             |           |             

Amortization provided in the accounts on property, plant and equipment
for 2003 amounted to $413,381 (2002  $409,335; 2001  $288,165).

Included in the cable and telecommunications distribution system assets
is the cost of right-to-use fibers under IRU agreements with terms
extending to 60 years totalling $61,811 (2002  $61,698;
2001 
$42,669).

58



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|7. |  | DEFERRED CHARGES
|-- |  | ----------------

|                                                             |  |      |         |              |  |             |         |              |  |  |         |             |  |  |         | 
|------------------------------------------------------------ |  | ---- | ------- | ------------ |  | ----------- | ------- | ------------ |  |  | ------- | ----------- |  |  | ------- | 
|                                                             |  | 2003 |         | 2002        
|                                                             |  |      |         |             
|                                                             |  |      |         |              |  | Accumulated |         |              |  |  |         | Accumulated
|                                                             |  | Cost |         | amortization |  | Cost        |         | amortization
|                                                             |  | $    |         | $            |  | $           |         | $           
|                                                             |  |      |         |              |  |             |         |             
|Financing costs and credit facility
arrangement fees         |  |      | 65,121  |              |  |             | 44,160  |              |  |  | 63,093  |             |  |  | 27,848  | 
|Marketing costs to launch new
services                       |  |      | 14,211  |              |  |             | 13,436  |              |  |  | 14,977  |             |  |  | 9,508   | 
|Foreign exchange losses on
translating hedged long-term debt |  |      |        |              |  |             |        |              |  |  | 43,252  |             |  |  |        | 
|Equipment subsidies                                          |  |      | 468,983 |              |  |             | 325,765 |              |  |  | 401,019 |             |  |  | 266,493 | 
|Other                                                        |  |      | 6,808   |              |  |             | 2,717   |              |  |  | 6,482   |             |  |  | 5,058   | 
|                                                             |  |      |         |              |  |             |         |              |  |  |         |             |  |  |         | 
|                                                             |  |      | 555,123 |              |  |             | 386,078 |              |  |  | 528,823 |             |  |  | 308,907 | 
|                                                             |  |      |         |              |  |             |         |              |  |  |         |             |  |  |         | 
|Net book value                                               |  |      | 169,045 |              |  | 219,916     |        
|                                                             |  |      |         |              |  |             |         |             

Amortization provided in the accounts on deferred charges for 2003
amounted to $184,808 (2002  $175,996; 2001  $113,875).



|8. |  | INTANGIBLES
|-- |  | -----------

|                   |                            |  |                 |           |      |  |           |           | 
|------------------ | -------------------------- |  | --------------- | --------- | ---- |  | --------- | --------- | 
|                   |                            |  | Carrying amount
|                   |                            |  |                
|                   |                            |  | 2003            |           | 2002
|                   |                            |  | $               |           | $   
|                   |                            |  |                 |           |     
|Broadcast licenses |                            |  |                 |           |      |  |           |          
|                   | Cable systems              |  |                 | 3,644,596 |      |  |           | 3,894,124 | 
|                   | DTH and satellite services |  |                 | 983,132   |      |  |           | 983,132   | 
|                   |                            |  |                 |           |      |  |           |           | 
|                   |                            |  | 4,627,728       |           |      |  | 4,877,256 |          
|Goodwill           |                            |  | 78,948          |           |      |  | 145,865   |          
|                   |                            |  |                 |           |      |  |           |           | 
|Net book value     |                            |  | 4,706,676       |           |      |  | 5,023,121 |          
|                   |                            |  |                 |           |      |  |           |           | 

Commencing September 1, 2001, broadcast licenses and goodwill are no
longer amortized (see note 1) and are presented at their carrying
amounts. Amortization provided in the accounts on broadcast licenses
amounted to $71,081 in 2001.

59



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

The changes in the carrying amount of intangibles for the year ended
August 31, 2003 are as follows:

|                                |  |                    |           |          |  |  |         |  
|------------------------------- |  | ------------------ | --------- | -------- |  |  | ------- | -
|                                |  | Broadcast licenses |           | Goodwill
|                                |  | $                  |           | $       
|                                |  |                    |           |         
|Balance as of September 1, 2002 |  |                    | 4,877,256 |          |  |  | 145,865 |  
|Business acquisition [note 2]   |  |                    | 3,634     |          |  |  |        |  
|Business divestitures [note 2]  |  |                    | (173,162  | )        |  |  | (16,917 | )
|Write-downs                     |  |                    | (80,000   | )        |  |  | (50,000 | )
|                                |  |                    |           |          |  |  |         |  
|Balance as of August 31, 2003   |  |                    | 4,627,728 |          |  |  | 78,948  |  
|                                |  |                    |           |          |  |  |         |  

During the year, the Company tested the amounts allocated to broadcast
licenses and goodwill and determined that the following write-downs were
required:



|(a) |  | $80,000 with respect to broadcast licenses of the US cable systems
which were sold in 2003 due to the decline in the value of US cable
systems in the last year, plus the strengthening of the Canadian dollar
since November, 2002 (see note 2).                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | $50,000 with respect to goodwill attributed to the non-regulated
business operations of the satellite division because of the decrease in
the market value of these operations that has occurred in the past year.
This write-down has been included in the caption Loss on sale and
write-down of assets in the Consolidated Statements of Loss.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|9. |  | LONG-TERM DEBT
|-- |  | --------------

|                                                                               |                                   |  |                    |      |      |  |           |         |  |  |           |         | 
|------------------------------------------------------------------------------ | --------------------------------- |  | ------------------ | ---- | ---- |  | --------- | ------- |  |  | --------- | ------- | 
|                                                                               |                                   |  | Effective          |      |      |  |           |         |  |  |          
|                                                                               |                                   |  | interest rates     |      | 2003 |  | 2002     
|                                                                               |                                   |  | %                  |      | $    |  | $        
|                                                                               |                                   |  |                    |      |      |  |          
|Corporate                                                                      |                                   |  |                    |      |      |  |           |         |  |  |           |        
|Bank loans                                                                     |                                   |  | Fixed and variable |      |      |  | 606,798   |         |  |  | 425,106   |        
|Senior notes                                                                  |                                   |  |                    |      |      |  |           |         |  |  |           |        
|                                                                               | Due April 11, 2005                |  |                    | 7.05 |      |  |           | 275,000 |  |  |           | 275,000 | 
|                                                                               | Due October 17, 2007              |  |                    | 7.40 |      |  |           | 300,000 |  |  |           | 300,000 | 
|                                                                               | US $440,000 due April 11, 2010    |  |                    | 7.88 |      |  |           | 609,708 |  |  |           | 685,872 | 
|                                                                               | US $225,000 due April 6, 2011     |  |                    | 7.68 |      |  |           | 311,783 |  |  |           | 350,729 | 
|                                                                               | US $300,000 due December 15, 2011 |  |                    | 7.61 |      |  |           | 415,710 |  |  |           | 467,640 | 
|                                                                               |                                   |  |                    |      |      |  |           |         |  |  |           |        
|                                                                               |                                   |  |                    |      |      |  | 2,518,999 |         |  |  | 2,504,347 |        
|                                                                               |                                   |  |                    |      |      |  |           |         |  |  |           |        
|Cancom                                                                         |                                   |  |                    |      |      |  |           |         |  |  |           |        
|Bank loans                                                                     |                                   |  | Variable           |      |      |  |          |         |  |  | 253,800   |        
|Subordinated credit facility                                                   |                                   |  | Variable           |      |      |  |          |         |  |  | 40,000    |        
|Structured Note, due December 15, 2003                                         |                                   |  | 7.00               |      |      |  | 250,000   |         |  |  | 250,000   |        
|                                                                               |                                   |  |                    |      |      |  |           |         |  |  |           |        
|                                                                               |                                   |  |                    |      |      |  | 250,000   |         |  |  | 543,800   |        
|                                                                               |                                   |  |                    |      |      |  |           |         |  |  |           |        
|Star Choice                                                                    |                                   |  |                    |      |      |  |           |         |  |  |           |        
|US $150,000 Senior secured notes                                               |                                   |  | 13.00              |      |      |  |          |         |  |  | 233,820   |        
|                                                                               |                                   |  |                    |      |      |  |           |         |  |  |           |        
|Other subsidiaries and entities                                                |                                   |  |                    |      |      |  |           |         |  |  |           |        
|Videon CableSystems Inc. 8.15% Senior
Debentures Series A due April 26, 2010 |                                   |  | 7.63               |      |      |  | 130,000   |         |  |  | 130,000   |        
|Big Pipe Ventures, L.P.                                                        |                                   |  | Variable           |      |      |  |          |         |  |  | 50,000    |        
|Burrard Landing Lot 2 Holdings Partnership                                     |                                   |  | Variable           |      |      |  | 18,069    |         |  |  | 7,670     |        
|                                                                               |                                   |  |                    |      |      |  |           |         |  |  |           |        
|                                                                               |                                   |  |                    |      |      |  | 148,069   |         |  |  | 187,670   |        
|                                                                               |                                   |  |                    |      |      |  |           |         |  |  |           |        
|Total consolidated debt                                                        |                                   |  |                    |      |      |  | 2,917,068 |         |  |  | 3,469,637 |        
|Less current portion                                                           |                                   |  |                    |      |      |  | 271,520   |         |  |  |          |        
|                                                                               |                                   |  |                    |      |      |  |           |         |  |  |           |        
|                                                                               |                                   |  |                    |      |      |  | 2,645,548 |         |  |  | 3,469,637 |        
|                                                                               |                                   |  |                    |      |      |  |           |         |  |  |           |        

Interest on long-term debt included in interest expense amounted to
$262,306 (2002  $266,596; 2001  $211,294).

Corporate

Bank loans

The Company has a $50,000 revolving operating loan facility with
interest rates and borrowing options the same as those contained in the
credit facility described below.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

A syndicate of banks has provided the Company with an unsecured credit
facility, which at August 31, 2003 amounted to a maximum of $1,415,198,
of which a maximum of $1,200,000 is revolving. Under the facility, the
syndicate of banks has placed $1,150,000 of the revolving facility and
has until October 30, 2003 to place the remaining $50,000. As at August
31, 2003, $1,107,092 (net of committed letters of credit of $1,308) of
the $1,150,000 portion of the unsecured facility was not utilized. The
balance of the facility, which has been fully drawn, is non-revolving
term repayable in eight semi-annual increasing installments such that the
loan is repaid by April 30, 2007. Funds are available to the Company in
both Canadian and US dollars. At August 31, 2003, the US portion of the
bank loans was US $57,233 ($79,309 Canadian).
Interest rates fluctuate with Canadian bankers acceptance and US
libor rates and averaged 3.65% for the year
(2002  4%; 2001 
7.4%).

The amount available under the revolving facility amortizes such that
the facility expires April 30, 2007 as follows:

|                 |  |                  |           |   |  |  |      | 
|---------------- |  | ---------------- | --------- | - |  |  | ---- | 
|Date             |  | Amount Available |           | %
|                 |  |                  |           |  
|August 31, 2003  |  | $                | 1,150,000 |   |  |  | 100  | 
|October 31, 2003 |  |                  | 1,092,500 |   |  |  | 95   | 
|April 30, 2004   |  |                  | 1,035,000 |   |  |  | 90   | 
|October 31, 2004 |  |                  | 948,750   |   |  |  | 82.5 | 
|April 30, 2005   |  |                  | 862,500   |   |  |  | 75   | 
|October 31, 2005 |  |                  | 718,750   |   |  |  | 62.5 | 
|April 30, 2006   |  |                  | 575,000   |   |  |  | 50   | 
|October 31, 2006 |  |                  | 287,500   |   |  |  | 25   | 
|April 30, 2007   |  |                  |          |   |  |  |     | 

A syndicate of banks has provided the Company with an unsecured term
loan in the amount of $350,000 due February 10, 2006. Although
currently drawn in Canadian dollars, the loan is also available in an
equivalent amount of US dollars. Interest rates fluctuate with Canadian
bankers acceptance or US libor rates as applicable and averaged 5.32%
for the year. The loan is subject to essentially the same terms and
conditions as the existing unsecured credit facility. In May 2003, the
Company entered into interest rate hedges to fix the interest for the
duration of the loan at a rate between 4.9525% and 7.0775% depending on
debt to cash flow ratios. At August 31, 2003 the effective rate was
5.9525%.

At August 31, 2003, interest on $177,000 of Canadian dollar borrowings
were fixed by means of an interest rate swap originally placed in April
1994 at a rate which may range between 9.49% to 11.64% depending on debt
to cash flow ratios. At August 31, 2003 the effective rate was 9.74%.
In March 2002, the Company unwound interest rate swaps of $210,000 on
Canadian dollar borrowings which were fixed at rates ranging from 6.12%
to 6.17%.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Senior notes

The Senior notes are unsecured obligations and rank equally and ratably
with all existing and future senior indebtedness. The notes are
redeemable at the Companys option at any time, in whole or in part,
prior to maturity at 100% of the principal amount plus a make-whole
premium.

The Company has entered into cross-currency interest rate agreements to
fix the liability for interest and principal payments over the life of
the US $ Senior notes. The table below outlines the US $ principal, the
interest coupon rate, the effective interest rate on the Canadian $
equivalent of the US debt as a result of the agreements, and the
exchange rate applicable to the principal portion of the debt (Exchange
rate):

|               |  |             |      |               |  |               |      |  |  |  |        | 
|-------------- |  | ----------- | ---- | ------------- |  | ------------- | ---- |  |  |  | ------ | 
|US Senior      |  |             |      |               |  | Effective     |      |  |  | 
|note principal |  | Coupon rate |      | interest rate |  | Exchange rate
|$              |  | %           |      | %             |  | Cdn $ vs US $
|               |  |             |      |               |  |              
|440,000        |  |             | 8.25 |               |  |               | 7.88 |  |  |  | 1.4605 | 
|225,000        |  |             | 7.25 |               |  |               | 7.68 |  |  |  | 1.5815 | 
|300,000        |  |             | 7.20 |               |  |               | 7.61 |  |  |  | 1.5895 | 

Cancom

Bank loans

Cancom has a $10,000 demand operating line of credit that is available
in Canadian dollars or the US dollar equivalent of which $1,112 has been
drawn as committed letters of credit. Interest rates fluctuate with
Canadian prime rate and US base rates. The operating line is
collateralized by a first ranking fixed and floating charge and security
interest in all of the Canadian assets and undertakings of Cancom and two
of Cancoms subsidiaries, (excluding assets located in the province of
Quebec). The effective interest rate on the line of credit was 6.60%
(2002  7.04%; 2001  9.66%).

In February 2003, the amounts drawn under Cancoms $350,000 senior credit
facility were repaid in full and the facility was then cancelled. The
effective interest rate on the facility was 6.88% for the period to February
2003 (2002  6.62%; 2001  8.87%).

Subordinated credit facility

In May 2003, the $40,000 standby Subordinated credit facility was repaid
and cancelled. The effective interest rate on this facility was 8.93%
for the period to May 2003 (2002  7.99%; 2001  9.29%).

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Structured Note

On August 31, 2001 Cancom issued a $250,000 7% Structured Note due
December 15, 2003 with interest payable quarterly. The note is
subordinate to the Cancom bank loans. The parent company has entered
into a support arrangement on the note whereby in the event of
continuing default on the note, the parent company has agreed to satisfy
the obligations through either subscribing for additional shares of
Cancom to yield sufficient cash proceeds to satisfy the repayment of the
note or, at its option, by purchasing, for cash or sufficient Class B
Non-Voting Shares of the Company, the note from the holders at an amount
equal to the principal plus accrued interest.

Other subsidiaries and entities

Videon CableSystems Inc.

Videon CableSystems Inc. (Videon) has issued 8.15% Senior Debentures
that are due April 26, 2010. Interest is payable semi-annually.

Pursuant to the inter-creditor agreement between the debenture holders
and the syndicate of banks which had provided a credit facility to
Videon, the debenture holders were required to release the debenture
security when the credit facilities were repaid. As a result, the
debentures are unsecured. The debentures are non-recourse to the parent
company. The Senior Debentures are guaranteed by the subsidiaries of
Videon. The effective interest rate on the debentures is 7.63% after
giving effect to the fair value adjustments on the debt at the date of
the Moffat acquisition which adjustments are included in deferred
credits.

Burrard Landing Lot 2 Holdings Partnership

The Company has a 38.3% interest in the Partnership. The Partnership is
building the Shaw Tower project in Vancouver, B.C. and will own it when
complete. The Partnership has an available construction facility of
$121,000 which is repayable no later than December 31, 2005 (if
extended) and bears interest at bank prime rate plus 0.5%. The loan is
secured by a general security agreement and a $150,000 fixed and
floating charge debenture registered in a first priority position with
respect to the land and project building. The loan is severally
guaranteed by the Company and other two partners in the Partnership in
the amount of $47,838. The Companys portion of the debt guarantee is
$18,338.

Senior secured notes redemptions

In August 2003, the Company redeemed the Star Choice US $150,000 Senior
secured notes. In connection with the redemption, the Company incurred
restructuring costs of $10,634 comprised of an early redemption premium
of US $9,750 ($13,722 Cdn), costs to purchase the outstanding Cancom
warrants of US $2,440 ($3,379 Cdn), and legal costs of $33, offset by
the write-off of the fair value adjustment on the debt in deferred
credits of $6,500.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

In 2001, the Company called for redemption of the US $91,916 11% senior
secured priority notes and incurred restructuring fees of $8,590.

Debt covenants

The Company and its subsidiaries have undertaken to maintain certain
covenants in respect of the credit agreements and trust indentures
described above. The Company and its subsidiaries were in compliance
with these covenants at August 31, 2003.

Long-term debt repayments

Mandatory principal repayments on all long-term debt in each of
the next five years are as follows:

|           |  |   |           | 
|---------- |  | - | --------- | 
|           |  | $
|           |  |  
|2004       |  |   | 271,520   | 
|2005       |  |   | 325,348   | 
|2006       |  |   | 403,800   | 
|2007       |  |   | 149,200   | 
|2008       |  |   | 300,000   | 
|Thereafter |  |   | 1,467,200 | 
|           |  |   |           | 
|           |  |   | 2,917,068 | 
|           |  |   |           | 

65



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|10. |  | DEFERRED CREDITS
|--- |  | ----------------

|                                                            |  |      |         |              |  |             |        |              |  |  |         |             |  |  |        | 
|----------------------------------------------------------- |  | ---- | ------- | ------------ |  | ----------- | ------ | ------------ |  |  | ------- | ----------- |  |  | ------ | 
|                                                            |  | 2003 |         | 2002        
|                                                            |  |      |         |             
|                                                            |  |      |         |              |  | Accumulated |        |              |  |  |         | Accumulated
|                                                            |  | Cost |         | amortization |  | Cost        |        | amortization
|                                                            |  | $    |         | $            |  | $           |        | $           
|                                                            |  |      |         |              |  |             |        |             
|IRU agreements                                              |  |      | 622,258 |              |  |             | 31,421 |              |  |  | 622,023 |             |  |  | 19,437 | 
|Fair value adjustments on debt
assumed on acquisitions      |  |      | 21,535  |              |  |             | 17,126 |              |  |  | 21,535  |             |  |  | 7,180  | 
|Foreign exchange gains on
translating hedged long-term
debt |  |      | 138,107 |              |  |             |       |              |  |  | 14,318  |             |  |  |       | 
|Deposit on future fiber purchase                            |  |      | 2,000   |              |  |             |       |              |  |  | 2,000   |             |  |  |       | 
|                                                            |  |      |         |              |  |             |        |              |  |  |         |             |  |  |        | 
|                                                            |  |      | 783,900 |              |  |             | 48,547 |              |  |  | 659,876 |             |  |  | 26,617 | 
|                                                            |  |      |         |              |  |             |        |              |  |  |         |             |  |  |        | 
|Net book value                                              |  |      | 735,353 |              |  | 633,259     |       
|                                                            |  |      |         |              |  |             |       

IRU agreements are in place for periods between 30 and 60 years and are
being amortized to income over the agreement periods. Amortization in
respect of the IRU agreements for 2003 amounted to $11,984 (2002

$11,517; 2001  $4,902) and amortization in respect of fair value
adjustments on debt amounted to $3,446 (2002  $4,151; 2001  $4,359)
and was offset against interest expense. In connection with the
redemption of the Star Choice US $150,000 Senior secured notes, the
remaining unamortized fair value adjustment on the notes of $6,500 was
written off and recorded as part of debt restructuring costs (see
note 9).

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|11. |  | SHARE CAPITAL
|--- |  | -------------

Authorized

The Company is authorized to issue an unlimited number of Class A voting
participating shares (Class A Shares), Class B non-voting participating
shares (Class B Non-Voting Shares), Class 1 preferred shares, Class 2
preferred shares, Class A preferred shares, Class B preferred shares,
Canadian Originated Preferred Securities (COPrS), Variable Rate Equity
Linked Exchangeable Debentures (SHELS) and Zero Coupon Loans.

|                     |             |      |  |  |             |  |  |                                                    |  |      |           |      |  |  |           | 
|-------------------- | ----------- | ---- |  |  | ----------- |  |  | -------------------------------------------------- |  | ---- | --------- | ---- |  |  | --------- | 
|                     |             |      |  |  |             |  |  |                                                    |  | 2003 |           | 2002
|                     |             |      |  |  |             |  |  |                                                    |  | $    |           | $   
|                     |             |      |  |  |             |  |  |                                                    |  |      |           |     
|Number of securities |             |      |  |  |             |  |  |                                                    |  |     
|                     |             |      |  |  |             |  |  |                                                    |  |     
|2003                 |             | 2002 |  | 
|                     |             |      |  |  |             | 
|                     | 11,360,432  |      |  |  | 11,373,972  |  |  | Class A Shares                                     |  |      | 2,491     |      |  |  | 2,493     | 
|                     | 220,496,092 |      |  |  | 220,473,552 |  |  | Class B Non-Voting Shares                          |  |      | 2,107,464 |      |  |  | 2,107,367 | 
|                     |             |      |  |  |             |  |  |                                                    |  |      |           |      |  |  |           | 
|                     | 231,856,524 |      |  |  | 231,847,524 |  |  |                                                    |  |      | 2,109,955 |      |  |  | 2,109,860 | 
|                     |             |      |  |  |             |  |  |                                                    |  |      |           |      |  |  |           | 
|
|                     |             |      |  |  |             |  |  | EQUITY
INSTRUMENTS COPrS                          |  |      |           |      |  |  |           | 
|                     | 5,700,000   |      |  |  | 5,700,000   |  |  | 8.45% Series A US $142,500, due September 30, 2046 |  |      | 192,871   |      |  |  | 192,871   | 
|                     | 100,000     |      |  |  | 100,000     |  |  | 8.54% Series B, due September 30, 2027             |  |      | 98,467    |      |  |  | 98,467    | 
|                     | 6,900,000   |      |  |  | 6,900,000   |  |  | 8.50% Series US $172,500, due September 30, 2097   |  |      | 252,525   |      |  |  | 252,525   | 
|                     | 6,000,000   |      |  |  | 6,000,000   |  |  | 8.875% Series, due September 28, 2049              |  |      | 147,202   |      |  |  | 147,202   | 
|                     |             |      |  |  |             |  |  | SHELS                                             |  |      |           |      |  |  |           | 
|                     |            |      |  |  | 33,923      |  |  | Series III  US $33,923                            |  |      |          |      |  |  | 50,342    | 
|                     |            |      |  |  | 28,853      |  |  | Series IV  US $28,853                             |  |      |          |      |  |  | 42,726    | 
|                     |            |      |  |  | 57,583      |  |  | Series V  US $57,583                              |  |      |          |      |  |  | 90,481    | 
|                     |             |      |  |  |             |  |  | Zero Coupon Loan US $22,835                        |  |      | 33,858    |      |  |  | 33,858    | 
|                     |             |      |  |  |             |  |  |                                                    |  |      |           |      |  |  |           | 
|                     |             |      |  |  |             |  |  |                                                    |  |      | 724,923   |      |  |  | 908,472   | 
|                     |             |      |  |  |             |  |  |                                                    |  |      |           |      |  |  |           | 
|                     |             |      |  |  |             |  |  |                                                    |  |      | 2,834,878 |      |  |  | 3,018,332 | 
|                     |             |      |  |  |             |  |  |                                                    |  |      |           |      |  |  |           | 

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Class A and Class B Non-Voting Shares

Class A Shares are convertible at any time into an equivalent number of
Class B Non-Voting Shares. The Class B Non-Voting Shares are
convertible into an equivalent number of Class A Shares in limited
circumstances.

Changes in Class A and Class B Share capital in 2003, 2002 and 2001 are as
follows:

|                             |                           |  |                |   |                           |  |        |   |   |  |             |            |  |  |           |         | 
|---------------------------- | ------------------------- |  | -------------- | - | ------------------------- |  | ------ | - | - |  | ----------- | ---------- |  |  | --------- | ------- | 
|                             |                           |  | Class A Shares |   | Class B Non-Voting Shares
|                             |                           |  |                |   |                          
|                             |                           |  | Number         |   | $                         |  | Number |   | $
|                             |                           |  |                |   |                           |  |        |   |  
|August 31, 2000              |                           |  | 11,419,972     |   |                           |  | 2,503  |   |   |  | 194,204,919 |            |  |  | 1,249,697 |        
|Class A Share conversions    |                           |  | (16,000        | ) |                           |  | (4     | ) |   |  | 16,000      |            |  |  | 4         |        
|Stock option plan issuances  |                           |  |               |   |                           |  |       |   |   |  | 454,671     |            |  |  | 4,581     |        
|Issues in respect of:        |                           |  |                |   |                           |  |        |   |   |  |             |            |  |  |           |        
|                             | Cable system acquisitions |  |                |  |                           |  |        |  |   |  |             | 23,007,524 |  |  |           | 765,238 | 
|                             | Cancom acquisition        |  |                |  |                           |  |        |  |   |  |             | 2,685,243  |  |  |           | 87,083  | 
|Share issue costs            |                           |  |               |   |                           |  |       |   |   |  |            |            |  |  | (34       | )      
|                             |                           |  |                |   |                           |  |        |   |   |  |             |            |  |  |           |        
|August 31, 2001              |                           |  | 11,403,972     |   |                           |  | 2,499  |   |   |  | 220,368,357 |            |  |  | 2,106,569 |        
|Class A Share conversions    |                           |  | (30,000        | ) |                           |  | (6     | ) |   |  | 30,000      |            |  |  | 6         |        
|Stock option plan issuances  |                           |  |               |   |                           |  |       |   |   |  | 75,195      |            |  |  | 792       |        
|                             |                           |  |                |   |                           |  |        |   |   |  |             |            |  |  |           |        
|August 31, 2002              |                           |  | 11,373,972     |   |                           |  | 2,493  |   |   |  | 220,473,552 |            |  |  | 2,107,367 |        
|Class A Share conversions    |                           |  | (13,540        | ) |                           |  | (2     | ) |   |  | 13,540      |            |  |  | 2         |        
|Stock option plans issuances |                           |  |               |   |                           |  |       |   |   |  | 9,000       |            |  |  | 95        |        
|                             |                           |  |                |   |                           |  |        |   |   |  |             |            |  |  |           |        
|August 31, 2003              |                           |  | 11,360,432     |   |                           |  | 2,491  |   |   |  | 220,496,092 |            |  |  | 2,107,464 |        
|                             |                           |  |                |   |                           |  |        |   |   |  |             |            |  |  |           |        

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Equity instruments

COPrS

The COPrS rank as unsecured junior subordinated debt. The Company has
the right to defer payments of interest on the securities for a period
up to 20 consecutive quarterly periods provided that no extension period
may extend beyond the stated maturity of the securities. Except in
certain limited circumstances, the Company may not pay or declare
dividends on any of its capital stock (including capital stock
classified as debt) (except by way of stock dividend) at any time when
any interest on the securities is either in default or is being
deferred. There may be multiple extension periods of varying lengths,
each of up to 20 consecutive quarterly periods, throughout the terms of
the securities. During any extension period, interest will accrue but
will not compound. The Company may satisfy its obligation to pay
deferred interest on any applicable interest payment date through the
issuance to the trustee of Class B Non-Voting Shares of the Company, in
which event the holders of the securities shall be entitled to receive
cash payments equal to the deferred interest from the proceeds of the
sale of the requisite Class B Non-Voting Shares by the trustee.

The COPrS are redeemable, at the Companys September 30, 2002 (8.45% Series A),
September 30, 2003 (8.50% Series), October 17, 2005 (8.875% Series) or
September 30, 2007 (8.54% Series B) at a redemption price equal to 100% of the
principal amount of the securities to be redeemed plus accrued and unpaid
interest thereon to the date of such redemption. The Company has the ability
to satisfy redemption obligations through the issuance of Class B Non-Voting
Shares.

The Company has purchased a five-year extendible forward purchase
contract which expires on March 31, 2005 to provide the US funds
required for the quarterly interest payments on the US denominated
securities at an exchange rate of $1.4078 Cdn. The counterparty has the
option to extend the contract at the same rate for five years on March
31, 2005.

SHELS

During the year, the SHELS Series III and IV, having total underlying
security of 1,452,506 Liberate common shares and SHELS Series V, having
underlying security of 5,326,827 Terayon common shares were redeemed by
transferring to
the holders of the SHELS the underlying security in satisfaction of the
SHELS obligation resulting in the Company recording a gain of $119,521.
In the prior year, the SHELS I and II having total underlying security
of 4,361,186 At Home Corporation common shares were redeemed in the same
manner resulting in the Company recording a gain of $218,327.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Zero Coupon Loan

The Zero Coupon Loan is collateralized by a forward contract entered
into by the Company in respect of 732,237 Motorola shares. The loan
bears interest at 7.53% compounded annually with principal and interest
payable in 4 equal weekly installments commencing July 19, 2005. The
Company may satisfy its obligation to pay principal and interest at
maturity through the issuance of Class B Non-Voting Shares.

Concurrent with receipt of the Zero Coupon Loan proceeds, the Company
entered into an equity forward sale contract in respect of 732,237
Motorola shares whereby the Company has agreed to forward sell the
shares at dates that coincide with the maturity dates of the Zero Coupon
Loan.

Until May 27, 2005, the Company has the option to elect to deliver the
required number of Motorola shares in exchange for cash payments that
equal the payments required under the Zero Coupon Loan at each
respective maturity date. If the Company does not elect to physically
settle the forward contract, a cash settlement will be made between the
parties for the difference between the fair market value of the Motorola
shares at maturity and the forward sale price of US $44.7567 per share.

Stock option plan

Under a stock option plan, directors, officers, employees and
consultants of the Company are eligible to receive stock options to
acquire Class B Non-Voting Shares with terms not to exceed 10 years from
the date of grant. Twenty-five percent of the options are exercisable
on each of the first four anniversary dates from the date of the
original grant. The options must be issued at not less than the fair
market value of the Class B Non-Voting Shares at the date of grant. The
maximum number of Class B Non-Voting Shares issuable under this plan and
the warrant plan described below may not exceed 16,000,000 of which
8,392,500 are still available for issue as at August 31, 2003.

The changes in options in 2003, 2002 and 2001 are as follows:

|                                 |  |        |            |      |  |          |       |   |  |        |            |          |  |  |       |  |  |          |            |   |  |  |       | 
|-------------------------------- |  | ------ | ---------- | ---- |  | -------- | ----- | - |  | ------ | ---------- | -------- |  |  | ----- |  |  | -------- | ---------- | - |  |  | ----- | 
|                                 |  | 2003   |            | 2002 |  | 2001    
|                                 |  |        |            |      |  |         
|                                 |  |        |            |      |  | Weighted |       |   |  |        |            | Weighted |  |  |       |  |  | Weighted
|                                 |  |        |            |      |  | average  |       |   |  |        |            | average  |  |  |       |  |  | average 
|                                 |  |        |            |      |  | exercise |       |   |  |        |            | exercise |  |  |       |  |  | exercise
|                                 |  |        |            |      |  | price    |       |   |  |        |            | price    |  |  |       |  |  | price   
|                                 |  | Shares |            | $    |  | Shares   |       | $ |  | Shares |            | $       
|                                 |  |        |            |      |  |          |       |   |  |        |            |         
|Outstanding at beginning
of year |  |        | 8,303,000  |      |  |          | 32.58 |   |  |        | 7,640,500  |          |  |  | 32.57 |  |  |          | 5,450,000  |   |  |  | 32.49 | 
|Granted                          |  |        | 1,093,250  |      |  |          | 32.62 |   |  |        | 2,116,750  |          |  |  | 32.64 |  |  |          | 3,510,000  |   |  |  | 32.73 | 
|Exercised                        |  |        |           |      |  |          |      |   |  |        | (11,750    | )        |  |  | 32.63 |  |  |          | (16,000    | ) |  |  | 32.62 | 
|Forfeited                        |  |        | (1,788,750 | )    |  |          | 32.64 |   |  |        | (1,442,500 | )        |  |  | 32.67 |  |  |          | (1,303,500 | ) |  |  | 32.66 | 
|                                 |  |        |            |      |  |          |       |   |  |        |            |          |  |  |       |  |  |          |            |   |  |  |       | 
|Outstanding at end of year       |  |        | 7,607,500  |      |  |          | 32.58 |   |  |        | 8,303,000  |          |  |  | 32.58 |  |  |          | 7,640,500  |   |  |  | 32.57 | 
|                                 |  |        |            |      |  |          |       |   |  |        |            |          |  |  |       |  |  |          |            |   |  |  |       | 

70



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

The following table summarizes information about the options outstanding at
August 31, 2003:

|                |  |                     |           |                     |  |          |     |                |  |          |       |  |  |  |           |  |  |   |       | 
|--------------- |  | ------------------- | --------- | ------------------- |  | -------- | --- | -------------- |  | -------- | ----- |  |  |  | --------- |  |  | - | ----- | 
|                |  | Options outstanding |           | Options exercisable
|                |  |                     |           |                    
|                |  | Number              |           | Weighted            |  | Weighted |     | Number         |  | Weighted
|                |  | outstanding at      |           | average             |  | average  |     | exercisable at |  | average 
|                |  | August 31,          |           | remaining           |  | exercise |     | August 31,     |  | exercise
|Range of prices |  | 2003                |           | contractual life    |  | price    |     | 2003           |  | price   
|                |  |                     |           |                     |  |          |     |                |  |         
|$29.70 - $34.08 |  |                     | 7,607,500 |                     |  |          | 7.7 |                |  | $        | 32.58 |  |  |  | 3,336,486 |  |  | $ | 32.36 | 

For all common share options granted to employees, had the Company
determined compensation costs based on the fair values at grant dates of
the common share options consistent with the method prescribed under
CICA Handbook Section 3870, the Companys loss per share for 2003 would
have been reported as the proforma amount indicated below:

|                        |  |  |         |  
|----------------------- |  |  | ------- | -
|Net loss                |  |  | (47,828 | )
|Proforma net loss       |  |  | (68,664 | )
|Proforma loss per share |  |  | (0.47   | )

The weighted average estimated fair value at the date of the grant for
common share options granted for the year ended August 31, 2003 was
$1.36 per option. The fair value of each option granted was estimated
on the date of the grant using the Black-Scholes option pricing model
with the following assumptions:

|                                                                                            |  |         |      |  
|------------------------------------------------------------------------------------------- |  | ------- | ---- | -
|Dividend yield                                                                              |  |         | 0.33 | %
|Risk-free interest rate                                                                     |  |         | 3.19 | %
|Expected life of options                                                                    |  | 4 years
|Expected volatility factor of the future expected market price of
Class B
Non-Voting Shares |  |         | 40.4 | %

For the purposes of proforma disclosures, the estimated fair value of the
options is amortized to expense over the options vesting period on a
straight-line basis.

Other stock options

In conjunction with the acquisition of Cancom, holders of Cancom options
elected to receive 0.9 of one of the Companys Class B
Non-Voting Shares in lieu of one Cancom share which would be received upon the
exercise of a Cancom option under the Cancom option plan.

At August 31, 2003 there were 78,002 Cancom options outstanding with
exercise prices between $7.75 and $23.25 and a weighted average price of
$12.89. The weighted average remaining contractual life of the Cancom
options is 3.6 years. At August 31, 2003, 65,002 Cancom options were
exercisable into 58,502 Class B Non-Voting Shares of the Company at a
weighted average price of $14.13 per Class B Share.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Warrants

Prior to the Companys acquisition and consolidation of Cancom effective July
1, 2000, Cancom and Star Choice had established a plan to grant Cancom warrants
to acquire Cancom common shares at a price of $22.50 per share to distributors
and dealers. The Company provided for this obligation (using $25 per
equivalent Shaw Class B Non-Voting Share) in assigning fair values to the
assets and liabilities in the purchase equation on consolidation based on the
market price of the Shaw Class B Non-Voting Shares at that time. Accordingly,
the issue of the warrants under the plans had no impact on earnings of the
Company.

A total of 262,807 warrants remain outstanding and vest evenly over a
four-year period. At August 31, 2003, 122,929 warrants have vested.

Share transfer restriction

The Articles of Arrangement of the Company empower the directors to
refuse to issue or transfer any share of the Company that would
jeopardize or adversely affect the right of Shaw Communications Inc. or
any subsidiary to obtain, maintain, amend or renew a license to operate
a broadcasting undertaking pursuant to the Broadcasting Act (Canada).

Loss per share

The Company uses the treasury stock method of calculating diluted
earnings per share. This method assumes that any proceeds from the
exercise of stock options and other dilutive instruments would be used
to purchase Class B Non-Voting Shares at the average market price during
the period.

Loss per share calculations are as follows:

|                                                                                                           |  |      |             |      |  |      |             |   |  |  |             |  
|---------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | ---- |  | ---- | ----------- | - |  |  | ----------- | -
|                                                                                                           |  | 2003 |             | 2002 |  | 2001
|                                                                                                           |  | $    |             | $    |  | $   
|                                                                                                           |  |      |             |      |  |     
|Net loss                                                                                                   |  |      | (47,828     | )    |  |      | (286,324    | ) |  |  | (157,273    | )
|Equity entitlements, net of tax                                                                            |  |      | (40,193     | )    |  |      | (42,331     | ) |  |  | (40,123     | )
|                                                                                                           |  |      |             |      |  |      |             |   |  |  |             |  
|                                                                                                           |  |      | (88,021     | )    |  |      | (328,655    | ) |  |  | (197,396    | )
|                                                                                                           |  |      |             |      |  |      |             |   |  |  |             |  
|Loss per share  basic and diluted                                                                         |  |      | (0.38       | )    |  |      | (1.42       | ) |  |  | (0.89       | )
|                                                                                                           |  |      |             |      |  |      |             |   |  |  |             |  
|Weighted average number of Class A and
Class B Non-Voting Shares used as
denominator in above calculations |  |      | 231,848,000 |      |  |      | 231,820,000 |   |  |  | 221,079,000 |  
|                                                                                                           |  |      |             |      |  |      |             |   |  |  |             |  

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Options to purchase 7,677,702 (2002 
8,382,202; 2001  7,806,788) Class B Non-Voting Shares were outstanding under the Companys stock option
plan and the Cancom option plan at August 31, 2003, warrants to issue
262,807 Class B Non-Voting Shares (2002  262,807) were outstanding at
August 31, 2003, and the Company has the right to issue Class B
Non-Voting Shares in satisfaction of its redemption obligations on equity
instruments included in share capital. These potentially dilutive
securities are anti-dilutive (decreases loss per share) and are therefore
not included in calculating diluted loss per share.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|12. |  | FOREIGN CURRENCY CUMULATIVE TRANSLATION ADJUSTMENT
|--- |  | --------------------------------------------------

|                                               |  |      |         |      |  |  |       | 
|---------------------------------------------- |  | ---- | ------- | ---- |  |  | ----- | 
|                                               |  | 2003 |         | 2002
|                                               |  | $    |         | $   
|                                               |  |      |         |     
|Balance, beginning of year                     |  |      | 1,513   |      |  |  | 1,331 | 
|Current
years deferred translation adjustment |  |      | (20,083 | )    |  |  | 182   | 
|Disposition of US cable systems                |  |      | 19,052  |      |  |  |      | 
|                                               |  |      |         |      |  |  |       | 
|Balance, end of year                           |  |      | 482     |      |  |  | 1,513 | 
|                                               |  |      |         |      |  |  |       | 



|13. |  | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|--- |  | ----------------------------------------

|                          |  |      |         |      |  |  |         | 
|------------------------- |  | ---- | ------- | ---- |  |  | ------- | 
|                          |  | 2003 |         | 2002
|                          |  | $    |         | $   
|                          |  |      |         |     
|Trade                     |  |      | 60,918  |      |  |  | 58,812  | 
|Vendor financing facility |  |      |        |      |  |  | 40,000  | 
|Accrued liabilities       |  |      | 130,546 |      |  |  | 179,527 | 
|Accrued network fees      |  |      | 88,427  |      |  |  | 94,921  | 
|Interest and dividends    |  |      | 83,394  |      |  |  | 93,245  | 
|Due to related parties    |  |      | 17,503  |      |  |  | 18,847  | 
|Pension plan liability    |  |      | 9,679   |      |  |  |        | 
|Other                     |  |      | 23,245  |      |  |  | 25,754  | 
|                          |  |      |         |      |  |  |         | 
|                          |  |      | 413,712 |      |  |  | 511,106 | 
|                          |  |      |         |      |  |  |         | 

Interest on the vendor financing facility included in interest expense
amounted to $842 (2002  $4,878; 2001  $nil). The vendor facility was
repaid in 2003 and bore interest at rates specified by the vendor. For
the period to March 2002, the stated interest rate was 8.4% and was
reduced to 7.4% thereafter.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|14. |  | INCOME TAXES
|--- |  | ------------

Future income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Companys future tax liabilities and assets are as follows:

|                                |                                |  |           |           |      |  |           |           | 
|------------------------------- | ------------------------------ |  | --------- | --------- | ---- |  | --------- | --------- | 
|                                |                                |  | 2003      |           | 2002
|                                |                                |  | $         |           | $   
|                                |                                |  |           |           |     
|Future income tax liabilities:  |                                |  |           |           |      |  |           |          
|                                | Property, plant and equipment  |  |           | 180,727   |      |  |           | 221,872   | 
|                                | Broadcast licenses             |  |           | 1,165,646 |      |  |           | 1,210,084 | 
|                                | Deferred charges               |  |           | 16,017    |      |  |           | 16,003    | 
|                                | Partnership income             |  |           | 200,822   |      |  |           | 161,291   | 
|                                |                                |  |           |           |      |  |           |          
|                                |                                |  | 1,563,212 |           |      |  | 1,609,250 |          
|                                |                                |  |           |           |      |  |           |          
|Future income tax assets:       |                                |  |           |           |      |  |           |          
|                                | Non-capital loss carryforwards |  |           | 622,634   |      |  |           | 560,280   | 
|                                | Investments                    |  |           | 12,301    |      |  |           | 44,411    | 
|                                |                                |  |           |           |      |  |           |          
|                                |                                |  | 634,935   |           |      |  | 604,691   |          
|                                |                                |  |           |           |      |  |           |          
|Net future income tax liability |                                |  | 928,277   |           |      |  | 1,004,559 |          
|                                |                                |  |           |           |      |  |           |          

Realization of future income tax assets is dependent on generating
sufficient taxable income during the period in which the temporary
differences are deductible. Although realization is not assured,
management believes it is more likely than not that all future income tax
assets will be realized based on reversals of future income tax
liabilities, projections of operating results and tax planning strategies
available to the Company and its subsidiaries.

The Company realized a capital loss on the sale of the US cable systems of
$99,000 in 2003 for which no future income tax asset has been recognized
in the accounts.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

The income tax expense or recovery differs from the amount computed by
applying Canadian statutory rates to loss before income taxes for the
following reasons:

|                                              |                                                                                                         |  |        |        |      |  |          |        |  |  |          |          |  
|--------------------------------------------- | ------------------------------------------------------------------------------------------------------- |  | ------ | ------ | ---- |  | -------- | ------ |  |  | -------- | -------- | -
|                                              |                                                                                                         |  | 2003   |        | 2002 |  | 2001    
|                                              |                                                                                                         |  | $      |        | $    |  | $       
|                                              |                                                                                                         |  |        |        |      |  |         
|Current statutory income tax rate             |                                                                                                         |  | 38     | %      |      |  | 40       | %      |  |  | 43       | %       
|                                              |                                                                                                         |  |        |        |      |  |          |        |  |  |          |         
|Income tax benefit at current statutory rates |                                                                                                         |  | (6,073 | )      |      |  | (126,298 | )      |  |  | (188,472 | )       
|Increase (decrease) in taxes resulting from:  |                                                                                                         |  |        |        |      |  |          |        |  |  |          |         
|                                              | Effect of future tax rate reductions                                                                    |  |        |       |      |  |          |       |  |  |          | (250,227 | )
|                                              | Large corporations tax                                                                                  |  |        | 8,632  |      |  |          | 7,945  |  |  |          | 7,456    |  
|                                              | Non-taxable portion of foreign exchange losses
and amounts on sale/write-down of assets and investments |  |        | 5,268  |      |  |          | 18,659 |  |  |          | 38,310   |  
|                                              | Writedown of non-deductible goodwill                                                                    |  |        | 19,000 |      |  |          |       |  |  |          |         |  
|                                              | Amortization on amounts assigned to assets on
business combinations not deductible for tax
purposes     |  |        |       |      |  |          |       |  |  |          | 5,188    |  
|                                              | Originating temporary differences recorded at
future tax rates expected to be in effect when
realized   |  |        | 1,664  |      |  |          | 16,757 |  |  |          | 34,711   |  
|                                              | Other                                                                                                   |  |        | 1,434  |      |  |          | 30     |  |  |          | 1,443    |  
|                                              |                                                                                                         |  |        |        |      |  |          |        |  |  |          |         
|Income tax expense (recovery)                 |                                                                                                         |  | 29,925 |        |      |  | (82,907  | )      |  |  | (351,591 | )       
|                                              |                                                                                                         |  |        |        |      |  |          |        |  |  |          |         

Significant components of the provision for income taxes are as follows:

|                                                                                       |  |      |        |      |  |      |          |   |  |  |          |  
|-------------------------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | -------- | - |  |  | -------- | -
|                                                                                       |  | 2003 |        | 2002 |  | 2001
|                                                                                       |  | $    |        | $    |  | $   
|                                                                                       |  |      |        |      |  |     
|Current tax expense                                                                    |  |      | 35,706 |      |  |      | 37,324   |   |  |  | 38,379   |  
|Future income tax benefit related to origination
and reversal of temporary differences |  |      | (5,781 | )    |  |      | (120,231 | ) |  |  | (139,743 | )
|Future income tax recovery resulting from rate
changes                                 |  |      |       |      |  |      |         |   |  |  | (250,227 | )
|                                                                                       |  |      |        |      |  |      |          |   |  |  |          |  
|Income tax expense (recovery)                                                          |  |      | 29,925 |      |  |      | (82,907  | ) |  |  | (351,591 | )
|                                                                                       |  |      |        |      |  |      |          |   |  |  |          |  

Current and future income taxes payable have been reduced by the benefit
of income tax deductions attributable to dividends on equity instruments,
considered as interest for income tax purposes, and equity issue costs in
the amount of $24,634 (2002  $28,656; 2001  $32,547). The income tax
benefits have been credited to equity in each respective year.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|15. |  | BUSINESS SEGMENT INFORMATION
|--- |  | ----------------------------

The Company provides cable television services, high-speed Internet access
and Internet infrastructure services (Cable); DTH (Star Choice)
satellite; and satellite distribution services (Satellite). All of
these operating segments are located in Canada except for two small cable
television systems acquired in the Moffat acquisition located in the
United States, which were sold effective June 30, 2003.

The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. Management evaluates
divisional performance based on revenues and operating income before
charges such as amortization, restructuring costs, recoveries on
litigation and inventory write-downs.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|---------------------------------------------------------------------------------------- |  | ----- | --------- | --- |  | --------- | ------- | ----- |  | --------- | ------- | - |  |  | --------- | - |  |  | --------- | -
|                                                                                         |  | 2003 
|                                                                                         |  |      
|                                                                                         |  |       |           |     |  | Satellite |         |       |  |          
|                                                                                         |  |       |           |     |  |           |         |       |  |          
|                                                                                         |  |       |           |     |  |           |         |       |  | Satellite |         |   |  |  |           |   |  | 
|                                                                                         |  | Cable |           | DTH |  | services  |         | Total |  | Total    
|                                                                                         |  | $     |           | $   |  | $         |         | $     |  | $        
|                                                                                         |  |       |           |     |  |           |         |       |  |          
|Revenue  total                                                                          |  |       | 1,488,929 |     |  |           | 496,804 |       |  |           | 116,782 |   |  |  | 613,586   |   |  |  | 2,102,515 |  
|Inter segment                                                                            |  |       | (2,607    | )   |  |           | (5,167  | )     |  |           | (18,001 | ) |  |  | (23,168   | ) |  |  | (25,775   | )
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|                                                                                         |  |       | 1,486,322 |     |  |           | 491,637 |       |  |           | 98,781  |   |  |  | 590,418   |   |  |  | 2,076,740 |  
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Operating income before
amortization, restructuring
charges and DTH inventory write-down |  |       | 727,458   |     |  |           | 52,814  |       |  |           | 41,578  |   |  |  | 94,392    |   |  |  | 821,850   |  
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Satellite restructuring charge                                                           |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | (4,850    | )
|Corporate restructuring charge                                                           |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | (4,000    | )
|DTH write-down of inventory                                                              |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | (4,400    | )
|Recovery of Cable litigation
accrual                                                     |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 12,000    |  
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Operating income before
amortization                                                     |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 820,600   |  
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Operating income as % of external
revenue                                                |  |       | 48.9      | %   |  |           | 10.7    | %     |  |           | 42.1    | % |  |  | 16.0      | % |  |  | 39.5      | %
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Segment assets                                                                           |  |       | 5,771,952 |     |  |           | 965,510 |       |  |           | 556,844 |   |  |  | 1,522,354 |   |  |  | 7,294,306 |  
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Corporate assets including equity
investees                                              |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 306,813   |  
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Total assets                                                                             |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 7,601,119 |  
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Capital expenditures by segment 
accrual basis                                          |  |       | 163,835   |     |  |           | 35,038  |       |  |           | 1,912   |   |  |  | 36,950    |   |  |  | 200,785   |  
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Corporate expenditures                                                                   |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 36,789    |  
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 237,574   |  
|Working capital change                                                                   |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 20,109    |  
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Capital expenditures cash flow                                                           |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 257,683   |  
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Equipment subsidies                                                                      |  |       | 67,628    |     |  |           | 95,248  |       |  |           |        |   |  |  | 95,248    |   |  |  | 162,876   |  
|Total capital expenditures on an
accrual basis and equipment
subsidies                   |  |       | 268,252   |     |  |           | 130,286 |       |  |           | 1,912   |   |  |  | 132,198   |   |  |  | 400,450   |  
|                                                                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|---------------------------------------------------------------------- |  | ----- | --------- | --- |  | --------- | ------- | ----- |  | --------- | ------- | - |  |  | --------- | - |  |  | --------- | -
|                                                                       |  | 2002 
|                                                                       |  |      
|                                                                       |  |       |           |     |  | Satellite |         |       |  |          
|                                                                       |  |       |           |     |  |           |         |       |  |          
|                                                                       |  |       |           |     |  |           |         |       |  | Satellite |         |   |  |  |           |   |  | 
|                                                                       |  | Cable |           | DTH |  | services  |         | Total |  | Total    
|                                                                       |  | $     |           | $   |  | $         |         | $     |  | $        
|                                                                       |  |       |           |     |  |           |         |       |  |          
|Revenue  total                                                        |  |       | 1,395,103 |     |  |           | 416,981 |       |  |           | 119,774 |   |  |  | 536,755   |   |  |  | 1,931,858 |  
|Inter segment                                                          |  |       | (1,816    | )   |  |           | (1,430  | )     |  |           | (14,328 | ) |  |  | (15,758   | ) |  |  | (17,574   | )
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|                                                                       |  |       | 1,393,287 |     |  |           | 415,551 |       |  |           | 105,446 |   |  |  | 520,997   |   |  |  | 1,914,284 |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Operating income (loss) before
amortization and restructuring
charge   |  |       | 608,916   |     |  |           | (14,103 | )     |  |           | 42,460  |   |  |  | 28,357    |   |  |  | 637,273   |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Corporate restructuring charge                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | (4,600    | )
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Operating income before
amortization                                   |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 632,673   |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Operating income (loss) as % of
external revenue                       |  |       | 43.7      | %   |  |           | (3.4    | %)    |  |           | 40.3    | % |  |  | 5.4       | % |  |  | 33.1      | %
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Segment assets                                                         |  |       | 6,520,696 |     |  |           | 999,372 |       |  |           | 637,371 |   |  |  | 1,636,743 |   |  |  | 8,157,439 |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Corporate assets including equity
investees                            |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 344,259   |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Total assets                                                           |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 8,501,698 |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Capital expenditures by segment 
accrual basis                        |  |       | 543,760   |     |  |           | 80,558  |       |  |           | 20,576  |   |  |  | 101,134   |   |  |  | 644,894   |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Corporate expenditures                                                 |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 87,119    |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 732,013   |  
|Working capital change                                                 |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 11,555    |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Capital expenditures cash flow                                         |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  | 743,568   |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  
|Equipment subsidies                                                    |  |       | 52,446    |     |  |           | 69,208  |       |  |           |        |   |  |  | 69,208    |   |  |  | 121,654   |  
|Total capital expenditures on an
accrual basis and equipment
subsidies |  |       | 683,325   |     |  |           | 149,766 |       |  |           | 20,576  |   |  |  | 170,342   |   |  |  | 853,667   |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |   |  |  |           |   |  |  |           |  

79



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|---------------------------------------------------------------------- |  | ----- | --------- | --- |  | --------- | --------- | ----- |  | --------- | ------- | - |  |  | --------- | -- |  |  | --------- | -
|                                                                       |  | 2001 
|                                                                       |  |      
|                                                                       |  |       |           |     |  | Satellite |           |       |  |          
|                                                                       |  |       |           |     |  |           |           |       |  |          
|                                                                       |  |       |           |     |  |           |           |       |  | Satellite |         |   |  |  |           |    |  | 
|                                                                       |  | Cable |           | DTH |  | services  |           | Total |  | Total    
|                                                                       |  | $     |           | $   |  | $         |           | $     |  | $        
|                                                                       |  |       |           |     |  |           |           |       |  |          
|Revenue  total                                                        |  |       | 1,136,798 |     |  |           | 307,988   |       |  |           | 123,684 |   |  |  | 431,672   |    |  |  | 1,568,470 |  
|Inter segment                                                          |  |       | (731      | )   |  |           |          |       |  |           | (14,963 | ) |  |  | (14,963   | )  |  |  | (15,694   | )
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|                                                                       |  |       | 1,136,067 |     |  |           | 307,988   |       |  |           | 108,721 |   |  |  | 416,709   |    |  |  | 1,552,776 |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|Operating income (loss) before
amortization                            |  |       | 470,700   |     |  |           | (58,512   | )     |  |           | 48,152  |   |  |  | (10,360   | )  |  |  | 460,340   |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|Operating income (loss) as % of
external revenue                       |  |       | 41.4      | %   |  |           | (19.0     | %)    |  |           | 44.3    | % |  |  | (2.5      | %) |  |  | 29.6      | %
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|Segment assets                                                         |  |       | 6,258,871 |     |  |           | 1,148,046 |       |  |           | 558,809 |   |  |  | 1,706,855 |    |  |  | 7,965,726 |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|Corporate assets including equity
investees                            |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  | 812,463   |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|Total assets                                                           |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  | 8,778,189 |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|Capital expenditures by segment
 accrual basis                        |  |       | 674,714   |     |  |           | 41,709    |       |  |           | 111,747 |   |  |  | 153,456   |    |  |  | 828,170   |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|Corporate expenditures                                                 |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  | 18,770    |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  | 846,940   |  
|Working capital change                                                 |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  | (18,213   | )
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|Capital expenditures cash flow                                         |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  | 828,727   |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|Equipment subsidies                                                    |  |       | 58,277    |     |  |           | 107,215   |       |  |           |        |   |  |  | 107,215   |    |  |  | 165,492   |  
|Total capital expenditures on an
accrual basis and equipment
subsidies |  |       | 751,761   |     |  |           | 148,924   |       |  |           | 111,747 |   |  |  | 260,671   |    |  |  | 1,012,432 |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  

80



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|16. |  | COMMITMENTS AND CONTINGENCIES
|--- |  | -----------------------------

Commitments



|(i)  |  | During 2001 the Company, through one of its subsidiaries, purchased 28
Ku-band transponders and leased 3 C-band transponders on the Anik F1
satellite from Telesat Canada (Telesat). The Company has posted a
letter of credit with Telesat to secure the monthly lease payments for the
term of the lease, which is five years. The posting of this letter of
credit reduces the available funds that can be drawn under Cancoms
operating line of credit (see note 9). The Company, through another one
of its subsidiaries, has entered into an agreement with Telesat to
purchase 16 Ku-band transponders on the Anik F2 satellite, scheduled to be
launched in 2004 at a cost of $48,000. Under the terms of this agreement
the Company has made three cash deposits totalling $43,200 and is
committed to make a final deposit of $4,800 upon acceptance. Under the
Ku-band F2 transponder purchase agreements, the Company is committed to
paying an annual transponder maintenance fee for each transponder acquired
from the time the satellite becomes operational for a period of fifteen
years.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(ii) |  | The Company has various long-term commitments for the maintenance of
satellite transponders, lease of transmission facilities, and lease of
premises as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|           |  |   |         | 
|---------- |  | - | ------- | 
|           |  | $
|           |  |  
|2004       |  |   | 106,830 | 
|2005       |  |   | 92,374  | 
|2006       |  |   | 84,974  | 
|2007       |  |   | 80,207  | 
|2008       |  |   | 75,362  | 
|Thereafter |  |   | 541,409 | 
|           |  |   |         | 
|           |  |   | 981,156 | 
|           |  |   |         | 

Transponder maintenance expenses of $35,010 (2002  $35,029; 2001 
$18,489) and rental expenses of $85,025 (2002  $84,052; 2001  $82,653)
have been included in operating, general and administrative expenses in
the Consolidated Statements of Loss.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Contingencies

The Company and its subsidiaries are involved in litigation matters arising out
of the ordinary course and conduct of its business. Although such matters
cannot be predicted with certainty, management does not consider the Companys
exposure to litigation to be material to these financial statements.

Guarantees

As described in note 2, the Company adopted AG 14 which requires a
guarantor to disclose information about certain types of guarantees that
it has provided. Generally, it is not Company policy to issue guarantees
to non-controlled affiliates or third parties; however, we do in the
normal course of business enter into indemnification agreements and have
issued irrevocable standby letters of credit and performance bonds with
and to third parties. In addition, we have guaranteed a portion of the
indebtedness of the Partnership.

Indemnities

Many of our agreements related to acquisitions and dispositions of
business assets include indemnification provisions where the Company may
be required to make payment to a vendor or purchaser for breach of
contractual terms of the agreement with respect to matters such as
litigation, income taxes payable or refundable or other ongoing disputes.
The indemnification period usually covers a period of two to four years.
Also, in the normal course of business, the Company has provided
indemnifications in various commercial agreements, customary for the
telecommunications industry, which may require payment by the Company for
breach of contractual terms of the agreement. Counterparties to these
agreements provide the Company with comparable indemnifications. The
indemnification period generally covers, at maximum, the period of the
applicable agreement plus the applicable limitations period under law.

The maximum potential amount of future payments that the Company would be
required to make under these indemnification agreements is not reasonably
quantifiable as certain indemnifications are not subject to limitation.
However, the Company enters into indemnification agreements only when an
assessment of the business circumstances would indicate that the risk of
loss is remote. At August 31, 2003 management believes it is remote that
the indemnification provisions would require any material cash payment. To
the extent of any actual claims under these agreements, the Company
maintains provisions for such items, which it considers appropriate.

The Company indemnifies its directors and officers against any and all
claims or losses reasonably incurred in the performance of their service
to the Company to the extent permitted by law. The Company has acquired
and maintains liability insurance for its directors and officers as well
as those of its subsidiaries as a group.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Irrevocable standby letters of credit and performance bonds

The Company and certain of its subsidiaries have granted irrevocable standby
letters of credit and performance bonds, issued by high rated financial
institutions, to third parties to indemnify them in the event the Company does
not perform its contractual obligations. As of August 31, 2003, the guarantee
instruments amounted to $2,490. The Company has not recorded any additional
liability with respect to these guarantees, as the Company does not expect to
make any payments in excess of what is recorded on the Companys
financial statements. The guarantee instruments mature at
various dates between fiscal 2004 and 2006.

Indirect guarantee of indebtedness of another party

As described in Note 9, the Company has severally guaranteed $47.8 million of
the Partnership total credit facilities of $121.0 million, with
Shaws portion being $18.3 million. The Partnership was
formed by Shaw, Westbank Projects Corporation and Ledcor Industries to build a
unique mixed-use structure, with office/retail space and living/working space
in Coal Harbour, Vancouver. When construction is completed in approximately one
year, Shaw will make the Burrard Landing site the headquarters for its Lower
Mainland operations. The total cost of the project is anticipated to be
approximately $145 million and is financed primarily through the Partnerships
own credit facilities of $121.0 million plus equity from the
partners of approximately $26 million. The Partnership loans will be
repaid through the proceeds on the sale of residential condominium units of
approximately $100 million plus rental income from the office building.

The terms of the loan guarantee are intended to preserve the structure of
the Partnerships separation from Shaw and payment would only be triggered
if the Partnership failed to perform under its debt obligations. A review
of the project in September indicates that over 90% of the residential
units have been pre-sold and the project is ahead of plan while costs are
in line with the business plan. Accordingly, as of August 2003, we
believe it is remote that these guarantees would require any cash payment.

83



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|17. |  | PENSION PLAN
|--- |  | ------------

The Company has defined contribution pension plans for all non-union employees
and contributes amounts based on earnings to a maximum of 5%. For union
employees, the Company contributes amounts up to 7.5% of earnings to the
individuals costs incurred during the year were $5,582 (2002  $5,931; 2001
 $4,367).

Effective September 1, 2002, the Company established a new non-contributory
defined benefit pension plan for certain of its senior executives.
Benefits under this plan are based on the employees length of service and
rate of pay. The plan is unfunded and is not guaranteed by the Company.
The table below shows the change in benefit obligations.

|                                                |  |      |         |  
|----------------------------------------------- |  | ---- | ------- | -
|                                                |  | 2003
|                                                |  | $   
|                                                |  |     
|Projected benefit obligation, beginning of year |  |      | 30,543  |  
|Current service cost                            |  |      | 1,546   |  
|Interest cost                                   |  |      | 2,166   |  
|Actuarial losses                                |  |      | 10,063  |  
|Past service cost                               |  |      | 3,400   |  
|                                                |  |      |         |  
|Projected benefit obligation, end of year       |  |      | 47,718  |  
|Plan value of assets, end of year               |  |      |        |  
|                                                |  |      |         |  
|Plan deficit, end of year                       |  |      | (47,718 | )
|                                                |  |      |         |  

|                                          |  |      |        | 
|----------------------------------------- |  | ---- | ------ | 
|                                          |  | 2003
|                                          |  | $   
|                                          |  |     
|Unamortized past service costs            |  |      | 27,976 | 
|Unamortized actuarial loss                |  |      | 10,063 | 
|                                          |  |      |        | 
|Balance of unamortized pension obligation |  |      | 38,039 | 
|                                          |  |      |        | 

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

The table below shows the significant weighted-average assumptions we used
to measure the pension obligation.

|                              |  |      |      |      |  |  |      | 
|----------------------------- |  | ---- | ---- | ---- |  |  | ---- | 
|                              |  | 2003 |      | 2002
|                              |  | %    |      | %   
|                              |  |      |      |     
|Discount rate                 |  |      | 6.50 |      |  |  | 6.75 | 
|Rate of compensation increase |  |      | 3.00 |      |  |  | 3.00 | 

The table below shows the components of the net benefit plan expense.

|                                              |  |      |       | 
|--------------------------------------------- |  | ---- | ----- | 
|                                              |  | 2003
|                                              |  | $   
|                                              |  |     
|Current service cost                          |  |      | 1,546 | 
|Interest cost                                 |  |      | 2,166 | 
|Amortization of past service costs            |  |      | 5,967 | 
|                                              |  |      |       | 
|Pension expense and accrued pension liability |  |      | 9,679 | 
|                                              |  |      |       | 



|18. |  | RELATED PARTY TRANSACTIONS
|--- |  | --------------------------

Normal course transactions

The Company has entered into certain transactions and agreements in the
normal course of business with certain of its related parties as follows:

Corus Entertainment Inc. (Corus)

The Company and Corus are subject to common voting control. During the
year, network fees of $87,957 (2002  $98,211; 2001  $77,314),
advertising fees of $337 (2002  $1,245; 2001  $1,746) and programming
fees of $1,414 (2002  $967) were paid to various Corus subsidiaries and
entities subject to significant influence. In addition, the Company
provided cable system distribution access to Digital ADventure, the
advertising division of Corus, for $240 (2002  $761; 2001  $3,416),
administrative services to Corus for $1,419 (2002  $1,539; 2001  $1,166)
and uplink of television signals to Corus for $3,372 (2002  $5,233; 2001
 $3,185).

The Company provided Corus with television advertising spots in return for
radio advertising. No monetary consideration was exchanged for these
transactions which were both valued at $1,036 (2002  $207; 2001 
$1,318).

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

GT Group Telecom Inc. (GT)

On February 4, 2003, GT was reorganized resulting in the disposition of the
Companys interest. Accordingly, only transactions between the Company and GT
up to that date are included as related party transactions.

GT has been granted an IRU relating to certain specifically identified
existing fibers in the fiber optic cable networks of the Company for 30 to
60 years. The Company performed maintenance for GT in respect of the
fiber subject to the IRU for $2,695 (2002  $4,803; 2001  $3,650), and
provided GT with Internet services for $730 (2002  $6,456; 2001 
$5,174). During the year, leased circuit charges of $695 (2002  $3,696;
2001  $3,510) were paid to GT.

In 2001, transition costs were incurred by the Company and GT. The
Company paid GT $5,121 for web-hosting and telecommunications services
during the construction of the Companys Internet data centre and
broadband communications network. GT paid Shaw $1,341 for support during
development of its information and processing systems.

In addition, the Company paid GT $2,573 and $2,998 in 2002 and 2001,
respectively, for fibre and equipment for its distribution system.

These transactions are in the normal course of operations and are measured
at the exchange amount, which is the amount of consideration established
and agreed to by the related parties.

Specialty Channels

The Company has equity interests in The Biography Channel (Canada) Corp.,
MSNBC Canada (Holdings) Inc. and Tech TV Canada Holdings Inc., all of
which commenced commercial operations in January 2002. During the year,
the Company paid network fees of $2,384 (2002  $1,182) and provided
uplink television signals for $621 (2002  $730), in respect of these
speciality channels.

Other

The Company has entered into certain transactions with companies, senior
officers and directors of the Company and are as follows:

The Company agreed to acquire certain cable systems of Monarch
Cablesystems Ltd. (Monarch) for $90 million including $25 million of
either cash or assumption of debt and the balance through the issuance of
Class B Non-Voting Shares of Shaw at $17.39 per share. The cable systems
serve approximately 35,000 basic subscribers in the Medicine Hat (Medicine
Hat, Taber, Brooks), Canmore (Canmore, Banff, Lake Louise) and southern
B.C. (Hope, Fernie, Kimberley) regions. The transaction is subject to
approval by the CRTC and the Toronto Stock Exchange. Monarch is
controlled by a Director of the Company. The transaction was reviewed and
approved by an independent committee of the Board of Directors.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Under a policy of supporting employee and officer relocations, the Company
has granted non-interest bearing loans for a period of five years
collateralized by mortgages on the personal residences. Other loans have
in the past been granted to executive officers in connection with their
employment for periods ranging up to ten years. In 2002, two real estate
properties, initially acquired by the Company, were sold to an officer of
the Company for the greater of cost or fair market value. In 2002, a
10-year loan for an amount up to $6,000 was taken back as consideration
and a mortgage on each of the properties is held as collateral. Effective
June 25, 2003 the loan bore interest at 4% per annum, subject to annual
review. Previously, the loan was non-interest bearing. At August 31,
2003, the total amount outstanding on all employee and officer loans was
$7,299 (2002  $8,161).

In 2002, the Company sold its interest in WTN to Corus for $202,500 (see
note 2) and purchased from Corus Viewers Choice, the Western Canadian
pay-per-view service, for $33,000 (before costs of acquisition). Corus
paid interest of $2,440 to Shaw on settlement of final amounts owing in
respect of the sale.

Effective August 31, 2001, the Company sold to Bragg Communications Inc.,
a company controlled by a former director of the Company, its interest in
certain cable systems located in Atlantic Canada (see note 2).

In 2001, the Company sold its interest in the Astral Media, Inc. to Corus
for $109,768, recording a gain on the sale of $17,661.

87



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|19. |  | FINANCIAL INSTRUMENTS
|--- |  | ---------------------

Fair values

The fair value of financial instruments has been determined as follows:



|(i)  |  | Current assets and current liabilities                                                                                                               
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | The fair value of financial instruments included in current assets and
liabilities approximates their carrying amount due to their short-term
nature.
|    
|(ii) |  | Investments and other assets                                                                                                                         



| | (a) |  | The fair value of publicly traded shares included in this
category is determined by the closing market values for those
investments except in those cases where investments are subject to
the rights of holders of SHELS to exchange the SHELS for an
underlying investment at predetermined conversion rates, in which
case the fair value is set at the amount recorded in the accounts
on the receipt of proceeds on the SHELS issued. Similarly, the fair
value of investments subject to forward sale agreements, which are
pledged as collateral for the Zero Coupon Loan and match the
maturity of the loan, are valued at the proceeds received on the
loan.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | The fair value of other investments in this category
approximates their carrying value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



|(iii) |  | Long -term debt
|----- |  | ---------------



| | (a) |  | The carrying value of bank loans approximates their fair value
because interest charges under the terms of the bank loans are based
upon current Canadian bank prime and bankers acceptance rates
and on US bank base and libor rates.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | The fair value of publicly traded notes is based upon current
trading values. Other notes and debentures are valued based upon
current trading values for similar instruments.                                                         



|(iv) |  | Derivative financial instruments                                                                                                                                      
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | The fair value of interest and cross-currency interest exchange
agreements and US currency contracts is based upon quotations by the
counterparties to the agreements.

88



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

The estimated fair values of long-term debt and related derivative
financial instruments are as follows:

|                                   |                                                    |  |           |   |            |  |           |         |            |  |           |   |  |  |           |          |  
|---------------------------------- | -------------------------------------------------- |  | --------- | - | ---------- |  | --------- | ------- | ---------- |  | --------- | - |  |  | --------- | -------- | -
|                                   |                                                    |  | 2003      |   | 2002      
|                                   |                                                    |  |           |   |           
|                                   |                                                    |  | Carrying  |   | Estimated  |  | Carrying  |         | Estimated 
|                                   |                                                    |  | amount    |   | fair value |  | amount    |         | fair value
|                                   |                                                    |  | $         |   | $          |  | $         |         | $         
|                                   |                                                    |  |           |   |            |  |           |         |           
|Long-term debt                     |                                                    |  | 2,917,068 |   |            |  | 2,953,902 |         |            |  | 3,469,637 |   |  |  | 3,190,657 |         
|Derivative financial instruments  |                                                    |  |           |   |            |  |           |         |            |  |           |   |  |  |           |         
|                                   | Interest exchange agreements                       |  |           |  |            |  |           | 26,590  |            |  |           |  |  |  |           | 29,093   |  
|                                   | Cross-currency interest rate exchange
agreements   |  |           |  |            |  |           | 131,636 |            |  |           |  |  |  |           | (123,226 | )
|                                   | US currency purchase and purchase
option contracts |  |           |  |            |  |           | 10,531  |            |  |           |  |  |  |           | (15,963  | )
|                                   |                                                    |  |           |   |            |  |           |         |            |  |           |   |  |  |           |         
|                                   |                                                    |  | 2,917,068 |   |            |  | 3,122,659 |         |            |  | 3,469,637 |   |  |  | 3,080,561 |         
|                                   |                                                    |  |           |   |            |  |           |         |            |  |           |   |  |  |           |         

A hypothetical one percentage point decrease in interest rates would have the
effect of increasing the estimated fair value of the Companys
debt instruments to $3.2 billion at August 31, 2003 (2002  $3.3
billion).

Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial
instrument. These estimates are subjective in nature and involve
uncertainties and matters of significant judgement and, therefore, cannot
be determined with precision. Changes in assumptions could significantly
affect the estimates.

Credit risks

Credit risks associated with interest and cross-currency interest exchange
agreements and US currency contracts arise from the ability of
counterparties to meet the terms of the contracts. In the event of
non-performance by the counterparties, the Companys accounting loss would
be limited to the net amount that it would be entitled to receive under
the contracts and agreements. These risks are mitigated by dealing with
major creditworthy financial institutions.

Accounts receivable are not subject to any significant concentrations of
credit risk with the exception of amounts receivable by Star Choice from
its distributor to franchise dealers. Amounts owing by the distributor
represented approximately 2% of consolidated accounts receivable as at
August 31, 2003 (2002  3%).

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Additional disclosures with respect to the Consolidated Statements of Cash
Flows are as follows:



|(i) |  | Cash flow from operations
|--- |  | -------------------------

|                          |                                                          |  |         |          |      |  |          |          |   |  |          |          |  
|------------------------- | -------------------------------------------------------- |  | ------- | -------- | ---- |  | -------- | -------- | - |  | -------- | -------- | -
|                          |                                                          |  | 2003    |          | 2002 |  | 2001    
|                          |                                                          |  | $       |          | $    |  | $       
|                          |                                                          |  |         |          |      |  |         
|Net loss                  |                                                          |  | (47,828 | )        |      |  | (286,324 | )        |   |  | (157,273 | )       
|                          | Non-cash items:                                          |  |         |          |      |  |          |          |   |  |          |          |  
|                          | Amortization                                             |  |         | 598,189  |      |  |          | 585,331  |   |  |          | 473,121  |  
|                          | Amortization of deferred IRU revenue                     |  |         | (11,984  | )    |  |          | (11,517  | ) |  |          | (4,902   | )
|                          | Future income tax recovery                               |  |         | (5,781   | )    |  |          | (120,231 | ) |  |          | (389,970 | )
|                          | Write-down of investments                                |  |         | 15,000   |      |  |          | 330,466  |   |  |          | 163,454  |  
|                          | Gain on redemption of SHELS                              |  |         | (119,521 | )    |  |          | (218,327 | ) |  |          |         |  
|                          | Loss (gain) on sale of investments                       |  |         | (1,957   | )    |  |          | (2,321   | ) |  |          | 106,716  |  
|                          | Gain on sale of cable systems                            |  |         |         |      |  |          |         |   |  |          | (66,595  | )
|                          | Loss on sale of satellite assets                         |  |         | 3,800    |      |  |          | 1,281    |   |  |          |         |  
|                          | Loss (gain) on issuance of stock by equity investee      |  |         |         |      |  |          | 571      |   |  |          | (4,525   | )
|                          | Equity loss on investees                                 |  |         | 1,921    |      |  |          | 53,487   |   |  |          | 71,282   |  
|                          | Non-controlling interest                                 |  |         |         |      |  |          |         |   |  |          | (725     | )
|                          | Debt restructuring costs                                 |  |         | 10,634   |      |  |          |         |   |  |          | 8,590    |  
|                          | Foreign exchange (gain) loss on unhedged long-
term debt |  |         | (32,617  | )    |  |          | 1,658    |   |  |          | 15,188   |  
|                          | Loss on sale and write-down of assets                    |  |         | 124,674  |      |  |          |         |   |  |          |         |  
|                          | Other                                                    |  |         | 236      |      |  |          | (1,965   | ) |  |          | (3,847   | )
|                          |                                                          |  |         |          |      |  |          |          |   |  |          |         
|Cash flow from operations |                                                          |  | 534,766 |          |      |  | 332,109  |          |   |  | 210,514  |         
|                          |                                                          |  |         |          |      |  |          |          |   |  |          |         



|(ii) |  | Changes in non-cash working capital balances related to operations
include the following:
|---- |  | -----------------------------------------------------------------------------------------

|                                         |  |      |         |      |  |      |         |   |  |  |         |  
|---------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                         |  | 2003 |         | 2002 |  | 2001
|                                         |  | $    |         | $    |  | $   
|                                         |  |      |         |      |  |     
|Accounts receivable                      |  |      | 49,864  |      |  |      | 6,082   |   |  |  | (72,366 | )
|Prepaids and other                       |  |      | 3,369   |      |  |      | 1,568   |   |  |  | (6,949  | )
|Accounts payable and accrued liabilities |  |      | (67,085 | )    |  |      | (38,682 | ) |  |  | 141,389 |  
|Income taxes payable/recoverable         |  |      | 8,655   |      |  |      | 18,737  |   |  |  | 320     |  
|Unearned revenue                         |  |      | 8,872   |      |  |      | 15,598  |   |  |  | 17,076  |  
|                                         |  |      |         |      |  |      |         |   |  |  |         |  
|                                         |  |      | 3,675   |      |  |      | 3,303   |   |  |  | 79,470  |  
|                                         |  |      |         |      |  |      |         |   |  |  |         |  

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|(iii) |  | Interest and income taxes paid (recovered) and classified as
operating activities are as follows:
|----- |  | -------------------------------------------------------------------------------------------------

|             |  |      |         |      |  |      |         |   |  |  |         | 
|------------ |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | 
|             |  | 2003 |         | 2002 |  | 2001
|             |  | $    |         | $    |  | $   
|             |  |      |         |      |  |     
|Interest     |  |      | 272,110 |      |  |      | 257,609 |   |  |  | 183,416 | 
|Income taxes |  |      | 3,151   |      |  |      | (10,443 | ) |  |  | 4,761   | 



|(iv) |  | Non-cash transactions
|---- |  | ---------------------

The Consolidated Statements of Cash Flows exclude the following non-cash
transactions:

|                                              |  |      |   |      |  |      |   |  |  |  |         | 
|--------------------------------------------- |  | ---- | - | ---- |  | ---- | - |  |  |  | ------- | 
|                                              |  | 2003 |   | 2002 |  | 2001
|                                              |  | $    |   | $    |  | $   
|                                              |  |      |   |      |  |     
|Common shares issued on acquisitions [note 2] |  |      |  |      |  |      |  |  |  |  | 852,321 | 

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|21. |  | UNITED STATES ACCOUNTING PRINCIPLES
|--- |  | -----------------------------------

The consolidated financial statements of the Company are prepared in
Canadian dollars in accordance with accounting principles generally
accepted in Canada (Canadian GAAP). The following adjustments and
disclosures would be required in order to present these consolidated
financial statements in accordance with accounting principles generally
accepted in the United States (US GAAP).



| | (a) |  | Reconciliation to accounting principles generally accepted in the United
States
| | --- |  | -------------------------------------------------------------------------------

|                                                              |                                                                                               |                                                                     |          |         |         |      |          |         |          |   |          |         |          |  
|------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------- | -------- | ------- | ------- | ---- | -------- | ------- | -------- | - | -------- | ------- | -------- | -
|                                                              |                                                                                               |                                                                     |          | 2003    |         | 2002 |          | 2001   
|                                                              |                                                                                               |                                                                     |          | $       |         | $    |          | $      
|                                                              |                                                                                               |                                                                     |          |         |         |      |          |        
|Net loss using Canadian GAAP                                  |                                                                                               |                                                                     | (47,828  | )       |         |      | (286,324 | )       |          |   | (157,273 | )      
|                                                              | Add (deduct) adjustments for:                                                                 |                                                                     |          |         |         |      |          |         |          |   |          |         |         
|                                                              | Amortization of intangible assets (1) (5) (6)                                                 |                                                                     |          |        |         |      |          |        |          |   |          | (39,099 | )       
|                                                              | Deferred charges (2)                                                                          |                                                                     |          | (9,849  | )       |      |          | 35,594  |          |   |          | (72,204 | )       
|                                                              | Foreign exchange gains (losses) (3)                                                           |                                                                     |          | 54,527  |         |      |          | 1,370   |          |   |          | (51,906 | )       
|                                                              | Equity in loss of investees (4)                                                               |                                                                     |          | 2,001   |         |      |          | (19,901 | )        |   |          | (7,963  | )       
|                                                              | Gain on sale of cable systems (6)                                                             |                                                                     |          |        |         |      |          |        |          |   |          | 3,339   |         
|                                                              | Entitlement payments on equity instruments (8)                                                |                                                                     |          | (64,827 | )       |      |          | (70,551 | )        |   |          | (70,394 | )       
|                                                              | Adjustment to write-down of GT Group Telecom Inc. (11)                                        |                                                                     |          |        |         |      |          | 28,374  |          |   |          |        |         
|                                                              | Income tax effect of adjustments                                                              |                                                                     |          | 18,005  |         |      |          | 13,631  |          |   |          | 76,412  |         
|                                                              | Effect of future income tax rate reductions on differences                                    |                                                                     |          |        |         |      |          |        |          |   |          | 32,793  |         
|                                                              |                                                                                               |                                                                     |          |         |         |      |          |         |          |   |          |        
|Net income (loss) using US GAAP                               |                                                                                               |                                                                     | (47,971  | )       |         |      | (297,807 | )       |          |   | (286,295 | )      
|                                                              |                                                                                               |                                                                     |          |         |         |      |          |         |          |   |          |        
|                                                              | Unrealized foreign exchange gain on (loss) translation of self-
sustaining foreign operations |                                                                     |          | (1,031  | )       |      |          | 1,513   |          |   |          |        |         
|                                                              | Unrealized gains on available-for-sale securities, net of tax (7)                             |                                                                     |          |         |         |      |          |         |          |   |          |         |         
|                                                              |                                                                                               | Unrealized holding gains (losses) arising during the year           |          |         | 1,361   |      |          |         | 59,406   |   |          |         | (351,019 | )
|                                                              |                                                                                               | Less: reclassification adjustments for gains included in net
income |          |         | (95,879 | )    |          |         | (180,425 | ) |          |         | (76,282  | )
|                                                              |                                                                                               |                                                                     |          |         |         |      |          |         |          |   |          |        
|                                                              |                                                                                               |                                                                     | (95,549  | )       |         |      | (119,506 | )       |          |   | (427,301 | )      
|Cumulative effect of accounting change (9)                    |                                                                                               |                                                                     |         |         |         |      |         |         |          |   | (27,376  | )      
|Adjustment to fair value of derivatives (9)                   |                                                                                               |                                                                     | (224,341 | )       |         |      | 53,293   |         |          |   | 66,726   |        
|Foreign exchange gains (losses) on hedged long-term debt (10) |                                                                                               |                                                                     | 136,975  |         |         |      |         |         |          |   |         |        
|Minimum liability for pension plan (12)                       |                                                                                               |                                                                     | (1,928   | )       |         |      |         |         |          |   |         |        
|Effect of future income tax rate reductions on differences    |                                                                                               |                                                                     |         |         |         |      |         |         |          |   | 128,625  |        
|                                                              |                                                                                               |                                                                     |          |         |         |      |          |         |          |   |          |        
|                                                              |                                                                                               |                                                                     | (184,843 | )       |         |      | (66,213  | )       |          |   | (259,326 | )      
|                                                              |                                                                                               |                                                                     |          |         |         |      |          |         |          |   |          |        
|Comprehensive loss using US GAAP                              |                                                                                               |                                                                     | (232,814 | )       |         |      | (364,020 | )       |          |   | (545,621 | )      
|                                                              |                                                                                               |                                                                     |          |         |         |      |          |         |          |   |          |        
|Loss per share  basic and diluted                            |                                                                                               |                                                                     |          |         |         |      |          |         |          |   |          |        
|                                                              | Net loss per share using US GAAP                                                              |                                                                     |          | (0.21   | )       |      |          | (1.28   | )        |   |          | (1.30   | )       
|                                                              | Comprehensive loss per share using US GAAP                                                    |                                                                     |          | (1.00   | )       |      |          | (1.57   | )        |   |          | (2.47   | )       
|                                                              |                                                                                               |                                                                     |          |         |         |      |          |         |          |   |          |        

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Balance sheet items using US GAAP

|                                              |  |          |           |      |  |          |           |      |  |  |           |  |  |  |           | 
|--------------------------------------------- |  | -------- | --------- | ---- |  | -------- | --------- | ---- |  |  | --------- |  |  |  | --------- | 
|                                              |  | 2003     |           | 2002
|                                              |  |          |           |     
|                                              |  | Canadian |           | US   |  | Canadian |           | US  
|                                              |  | GAAP     |           | GAAP |  | GAAP     |           | GAAP
|                                              |  | $        |           | $    |  | $        |           | $   
|                                              |  |          |           |      |  |          |           |     
|Investments and other assets (7)              |  |          | 49,415    |      |  |          | 74,758    |      |  |  | 133,602   |  |  |  | 280,231   | 
|Derivatives instruments asset (9)             |  |          |          |      |  |          |          |      |  |  |          |  |  |  | 110,096   | 
|Deferred charges (2) (10) (12)                |  |          | 169,045   |      |  |          | 70,044    |      |  |  | 219,916   |  |  |  | 59,532    | 
|Broadcast licenses (1) (5) (6)                |  |          | 4,627,728 |      |  |          | 4,602,494 |      |  |  | 4,877,256 |  |  |  | 4,852,022 | 
|Accounts payable and accrued
liabilities (12) |  |          | 413,712   |      |  |          | 444,700   |      |  |  | 511,106   |  |  |  | 511,106   | 
|Deferred credits (10)                         |  |          | 735,353   |      |  |          | 597,246   |      |  |  | 633,259   |  |  |  | 618,941   | 
|Derivatives instruments liability (9)         |  |          |          |      |  |          | 168,757   |      |  |  |          |  |  |  |          | 
|Future income taxes                           |  |          | 928,277   |      |  |          | 891,358   |      |  |  | 1,004,559 |  |  |  | 1,007,287 | 
|Long-term debt (8)                            |  |          | 2,645,548 |      |  |          | 3,363,685 |      |  |  | 3,469,637 |  |  |  | 4,433,869 | 
|Shareholders equity                          |  |          | 2,495,066 |      |  |          | 1,653,318 |      |  |  | 2,779,108 |  |  |  | 1,897,573 | 

The cumulative effect of these adjustments on
consolidated shareholders equity is as follows:

|                                         |  |      |           |      |  |  |           |  
|---------------------------------------- |  | ---- | --------- | ---- |  |  | --------- | -
|                                         |  | 2003 |           | 2002
|                                         |  | $    |           | $   
|                                         |  |      |           |     
|Shareholders equity using Canadian GAAP |  |      | 2,495,066 |      |  |  | 2,779,108 |  
|Amortization of intangible assets (1)    |  |      | (123,542  | )    |  |  | (123,542  | )
|Deferred charges (2)                     |  |      | (34,130   | )    |  |  | (29,579   | )
|Equity in loss of investees (4)          |  |      | (36,202   | )    |  |  | (37,843   | )
|Gain on sale of subsidiary (5)           |  |      | 13,822    |      |  |  | 13,822    |  
|Gain on sale of cable systems (6)        |  |      | 47,501    |      |  |  | 47,501    |  
|Equity instruments (8)                   |  |      | (709,540  | )    |  |  | (942,848  | )
|Accumulated other comprehensive income   |  |      | 825       |      |  |  | 192,467   |  
|Cumulative translation adjustment        |  |      | (482      | )    |  |  | (1,513    | )
|                                         |  |      |           |      |  |  |           |  
|Shareholders equity using US GAAP       |  |      | 1,653,318 |      |  |  | 1,897,573 |  
|                                         |  |      |           |      |  |  |           |  

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]

Included in shareholders equity under
US GAAP is accumulated other comprehensive income, which refers to revenues, expenses,
gains and losses that under US GAAP are included in comprehensive income but
are excluded from income (loss) as these amounts are recorded directly as an
adjustment to shareholders comprehensive income is comprised of the
following:

|                                                                                      |  |      |          |      |  |  |         |  
|------------------------------------------------------------------------------------- |  | ---- | -------- | ---- |  |  | ------- | -
|                                                                                      |  | 2003 |          | 2002
|                                                                                      |  | $    |          | $   
|                                                                                      |  |      |          |     
|Unrealized foreign exchange gain on translation of
self-sustaining
foreign operations |  |      | 482      |      |  |  | 1,513   |  
|Unrealized gains on investments (7)                                                   |  |      | 20,721   |      |  |  | 122,038 |  
|Fair value of derivatives (9)                                                         |  |      | (131,698 | )    |  |  | 92,643  |  
|Foreign exchange gains (losses) on hedged
long-term debt (10)                         |  |      | 113,248  |      |  |  | (23,727 | )
|Minimum liability for pension plan (12)                                               |  |      | (1,928   | )    |  |  |        |  
|                                                                                      |  |      |          |      |  |  |         |  
|                                                                                      |  |      | 825      |      |  |  | 192,467 |  
|                                                                                      |  |      |          |      |  |  |         |  

Areas of material difference between accounting principles generally
accepted in Canada and the United States and their impact on the
consolidated financial statements are as follows:



|(1) |  | Amortization of intangible assets                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Until September 1, 2001, under Canadian GAAP amounts allocated to
broadcast licenses were amortized using an increasing charge method which
commenced in 1992. Under US GAAP, these intangibles were amortized on a
straight-line basis over forty years. Effective September 1, 2001,
broadcast licenses are considered to have an indefinite life and are no
longer amortized under Canadian and US GAAP.
|   
|(2) |  | Deferred charges                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | Marketing costs to launch new services and equipment subsidies are
deferred and amortized under Canadian GAAP. Under US GAAP, these costs
are expensed as incurred.                                                                                                                                                                                                                                        
|   
|(3) |  | Foreign exchange gains (losses) on equity instruments                                                                                                                                                                                                                                                                                                                                                      
|   
|    |  | US GAAP requires exchange gains (losses) on translation of equity
instruments treated as debt as described in item 8 below, to be included
in income or expense.                                                                                                                                                                                                                                           
|   
|(4) |  | Equity in loss of investees                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | The earnings of investees determined under Canadian GAAP have been
adjusted to reflect US GAAP.                                                                                                                                                                                                                                                                                                            

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|    |  | Under Canadian GAAP, the investment in Star Choice was accounted for
using the cost method until CRTC approval was received for the
acquisition. When the Company received CRTC approval, the amount
determined under the cost method became the basis for the purchase
price allocation and equity accounting commenced. Under US GAAP, equity
accounting for the investment was applied retroactively to the date the
Company first acquired shares in Star Choice.                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(5) |  | Gain on sale of subsidiary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | In 1997, the Company acquired a 54% interest in Star Choice in
exchange for the shares of HomeStar Services Inc., a wholly-owned
subsidiary at that time. Under Canadian GAAP the acquisition of the
investment in Star Choice was a non-monetary transaction that did not
result in the culmination of the earnings process, as it was an exchange
of control over similar productive assets. As a result, the carrying
value of the Star Choice investment was recorded at the book value of
assets provided as consideration on the transaction. Under US GAAP the
transaction would have been recorded at the fair value of the shares in
HomeStar Services Inc. This would have resulted in a gain on disposition
of the consideration the Company exchanged for its investment in Star
Choice and an increase in the acquisition cost for Star Choice.
|   
|(6) |  | Gain on sale of cable systems                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | The gain on sale of cable systems determined under Canadian GAAP has
been adjusted to reflect the lower net book value of broadcast licenses
under US GAAP as a result of item (1) adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | Under Canadian GAAP, no gain was recorded in 1995 on an exchange of
cable systems with Rogers Communications Inc. on the basis that this was
an exchange of similar productive assets. Under US GAAP the gain net of
applicable taxes is recorded and amortization adjusted as a result of the
increase in subscriber base upon the recognition of the gain.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(7) |  | Unrealized gains (losses) on investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | Under US GAAP, equity securities having a readily determinable fair
value and not classified as trading securities, are classified as
available-for-sale securities and reported at fair value, with
unrealized gains and losses included in comprehensive income and reported
as a separate component of shareholders equity net of related future income taxes.
Gains and losses on the sale of available-for-sale securities are
determined using the specific identification method. Declines in the fair
value of individual available-for-sale securities below their cost that
are other than temporary result in write-downs of the individual
securities to their fair value. The related write-downs are included in
earnings as realized losses.                                                                                              

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|     |  | Under Canadian GAAP, available-for-sale securities are carried at
cost and written down only when there is evidence that a decline in value,
that is other than temporary, has occurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(8)  |  | Equity instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|     |  | Equity instruments are classified as equity under Canadian GAAP and
interest thereon net of taxes is recorded as dividends. Under US GAAP,
these instruments would be classified as debt and interest thereon
recorded as interest expense.                                                                                                                                                                                                                                                                                                                                                                                                                           
|    
|(9)  |  | Derivative instruments and hedging activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|     |  | Under US GAAP, all derivatives are recognized in the balance sheet at
fair value. Derivatives that are not hedges are adjusted to fair value
through income. Derivatives that are hedges, are adjusted through income,
or other comprehensive income until the hedged item is recognized in
income, depending on the nature of the hedge. Under Canadian GAAP,
derivatives are not recognized in the balance sheet.                                                                                                                                                                                                                                                   
|    
|     |  | Accounting for derivatives under US GAAP commenced September 1, 2000.
The transition adjustments resulting from adoption have been recognized
in other comprehensive income (loss) as a cumulative effect of an
accounting change.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|(10) |  | Foreign exchange gains (losses) on hedged long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    
|     |  | Foreign exchange gains (losses) on translation of hedged long-term
debt are deferred under Canadian GAAP but included in comprehensive income
(loss) for US GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    
|(11) |  | Adjustment to write-down of GT Group Telecom Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    
|     |  | Write-down of GT Group Telecom Inc. has been adjusted due to a lower
investment carrying value under US GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|(12) |  | Minimum liability for pension plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|     |  | The Companys new
unfunded non-contributory defined benefit pension plan for certain of new unfunded
its senior executives has an accumulated benefit obligation of $40,667.
Under US GAAP, an additional minimum liability is to be recorded for the
difference between the accumulated benefit obligation and the accrued
pension liability. The additional liability is offset in deferred
charges up to an amount not exceeding the unamortized past service
costs. The remaining difference is recognized in other comprehensive
income, net of tax. Under Canadian GAAP, the accumulated benefit
obligation and additional minimum liability are not recognized.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2003, 2002 and 2001
[all amounts in thousands of Canadian dollars except per share amounts]



|(b) |  | Stock-based compensation
|--- |  | ------------------------

The Company applies APB Opinion 25 Accounting for Stock Issued to
Employees in accounting for common share options granted to employees and
officers for US GAAP purposes. Pro forma disclosures of net income (loss)
and net income (loss) per share are presented below as if the Company had
adopted the cost recognition requirements under FASB Statement No. 123,
Accounting for Stock-Based Compensation. Pro forma disclosures are not
likely to be representative of the effects on reported income for future
years.

|                                     |  |             |  |  |         |      |  |      |          |      |  |  |          |   |  | 
|------------------------------------ |  | ----------- |  |  | ------- | ---- |  | ---- | -------- | ---- |  |  | -------- | - |  | 
|                                     |  |             |  |  |         | 2003 |  | 2002 |          | 2001
|                                     |  |             |  |  |         | $    |  | $    |          | $   
|                                     |  |             |  |  |         |      |  |      |          |     
|Net income (loss), US GAAP           |  | As reported |  |  | (47,971 | )    |  |      | (297,807 | )    |  |  | (286,295 | )
|                                     |  | Pro forma   |  |  | (68,807 | )    |  |      | (318,009 | )    |  |  | (300,996 | )
|Net income (loss) per share,
US GAAP |  | As reported |  |  | (0.21   | )    |  |      | (1.28    | )    |  |  | (1.30    | )
|                                     |  | Pro forma   |  |  | (0.30   | )    |  |      | (1.37    | )    |  |  | (1.36    | )

The fair value of common share options granted in 2003 was $1,487 (2002 
$11,978; 2001  $20,532). The fair value of common share options granted
is estimated as at the grant date using the Black-Scholes option pricing
model, using the following assumptions:

|                        |  |         |      |         |  |         |      |   |  |  |      |  
|----------------------- |  | ------- | ---- | ------- |  | ------- | ---- | - |  |  | ---- | -
|                        |  | 2003    |      | 2002    |  | 2001   
|                        |  |         |      |         |  |        
|Dividend yield          |  |         | 0.33 | %       |  |         | 0.22 | % |  |  | 0.17 | %
|Risk-free interest rate |  |         | 3.19 | %       |  |         | 2.75 | % |  |  | 5.25 | %
|Expected life           |  | 4 years |      | 4 years |  | 4 years
|Expected volatility     |  |         | 40.4 | %       |  |         | 44   | % |  |  | 25   | %



|22. |  | COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS
|--- |  | ---------------------------------------------

Certain of the comparative figures have been reclassified to conform to
the presentation adopted in the current year.



|23. |  | SUBSEQUENT EVENTS AND PENDING TRANSACTIONS
|--- |  | ------------------------------------------

As further disclosed in Note 18 to the Consolidated Financial Statements,
the Company agreed to acquire certain cable systems of Monarch.

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Shaw Communications Inc.




FIVE YEARS IN REVIEW
August 31, 2003

|                                                                                      |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  
|------------------------------------------------------------------------------------- |  | ---------------------------------------------------- | --------- | ---- |  | ---- | --------- | ---- |  | ------- | --------- | - |  |  | --------- | - |  |  | --------- | -
|                                                                                      |  | 2003                                                 |           | 2002 |  | 2001 |           | 2000 |  | 1999(1)
|                                                                                      |  |                                                      |           |      |  |      |           |      |  |        
|                                                                                      |  | ($000's except per share and per subscriber amounts)
|Revenue                                                                               |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  
|Cable (2)                                                                             |  |                                                      | 1,486,322 |      |  |      | 1,393,287 |      |  |         | 1,136,067 |   |  |  | 889,286   |   |  |  | 678,578   |  
|DTH (3)                                                                               |  |                                                      | 491,637   |      |  |      | 415,551   |      |  |         | 307,988   |   |  |  | 38,418    |   |  |  |          |  
|Satellite (3)                                                                         |  |                                                      | 98,781    |      |  |      | 105,446   |      |  |         | 108,721   |   |  |  | 20,124    |   |  |  |          |  
|FiberLink                                                                             |  |                                                      |          |      |  |      |          |      |  |         |          |   |  |  | 20,756    |   |  |  | 31,591    |  
|                                                                                      |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  
|                                                                                      |  |                                                      | 2,076,740 |      |  |      | 1,914,284 |      |  |         | 1,552,776 |   |  |  | 968,584   |   |  |  | 710,169   |  
|                                                                                      |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  
|Operating income (loss) before amortization
restructuring and inventory write-down(4) |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  
|Cable                                                                                 |  |                                                      | 727,458   |      |  |      | 608,916   |      |  |         | 470,700   |   |  |  | 391,874   |   |  |  | 298,262   |  
|DTH (3)                                                                               |  |                                                      | 52,814    |      |  |      | (14,103   | )    |  |         | (58,512   | ) |  |  | (5,970    | ) |  |  |          |  
|Satellite (3)                                                                         |  |                                                      | 41,578    |      |  |      | 42,460    |      |  |         | 48,152    |   |  |  | 4,438     |   |  |  |          |  
|FiberLink                                                                             |  |                                                      |          |      |  |      |          |      |  |         |          |   |  |  | 7,321     |   |  |  | 11,611    |  
|Corporate restructuring and inventory write-down                                      |  |                                                      | (13,250   | )    |  |      | (4,600    | )    |  |         |          |   |  |  |          |   |  |  |          |  
|Recovery of Cable litigation accrual                                                  |  |                                                      | 12,000    |      |  |      |          |      |  |         |          |   |  |  |          |   |  |  |          |  
|                                                                                      |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  
|                                                                                      |  |                                                      | 820,600   |      |  |      | 632,673   |      |  |         | 460,340   |   |  |  | 397,663   |   |  |  | 309,873   |  
|                                                                                      |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  
|Income (loss) before discontinued operations(6)                                       |  |                                                      | (47,828   | )    |  |      | (286,324  | )    |  |         | (157,273  | ) |  |  | 144,491   |   |  |  | 55,871    |  
|Discontinued paging operations                                                        |  |                                                      |          |      |  |      |          |      |  |         |          |   |  |  |          |   |  |  | (456      | )
|Separation of media division                                                          |  |                                                      |          |      |  |      |          |      |  |         |          |   |  |  |          |   |  |  | (301      | )
|                                                                                      |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  
|Net income (loss)(6)                                                                  |  |                                                      | (47,828   | )    |  |      | (286,324  | )    |  |         | (157,273  | ) |  |  | 144,491   |   |  |  | 55,114    |  
|                                                                                      |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  
|Earnings (loss) per share  basic(6)                                                  |  |                                                      | (0.38     | )    |  |      | (1.42     | )    |  |         | (0.89     | ) |  |  | 0.59      |   |  |  | 0.18      |  
|                                                                                      |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  
|Cash flow from operations                                                             |  |                                                      | 534,766   |      |  |      | 332,109   |      |  |         | 210,514   |   |  |  | 237,789   |   |  |  | 207,894   |  
|Cash flow per share  basic (5)                                                       |  |                                                      | 2.13      |      |  |      | 1.25      |      |  |         | 0.77      |   |  |  | 1.08      |   |  |  | 1.08      |  
|                                                                                      |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  
|Balance sheet                                                                         |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  
|Total assets (6)                                                                      |  |                                                      | 7,601,119 |      |  |      | 8,501,698 |      |  |         | 8,778,189 |   |  |  | 6,395,398 |   |  |  | 3,714,150 |  
|Long-term debt (including current portion)                                            |  |                                                      | 2,917,068 |      |  |      | 3,469,637 |      |  |         | 3,010,348 |   |  |  | 1,777,654 |   |  |  | 1,410,659 |  
|                                                                                      |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  
|Cash dividends declared per share                                                     |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  
|Class A                                                                               |  |                                                      | 0.045     |      |  |      | 0.045     |      |  |         | 0.045     |   |  |  | 0.040     |   |  |  | 0.035     |  
|Class B                                                                               |  |                                                      | 0.050     |      |  |      | 0.050     |      |  |         | 0.050     |   |  |  | 0.045     |   |  |  | 0.040     |  
|                                                                                      |  |                                                      |           |      |  |      |           |      |  |         |           |   |  |  |           |   |  |  |           |  



---

|(1) |  | The Company has applied the provisions of the new Canadian accounting
standard for income taxes commencing in 2000. Under the new standard the
Company accounts for future income tax assets or future income tax liabilities
at the rates that are expected to apply when the asset or liability is settled.
The prior year, 1999 has not been restated and reflects the use of the
deferral method of tax allocation.                                                                                                                                                  
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Prior year revenue has been restated to include revenue in respect of the
sale of DCT and modem equipment. Previously, this revenue was recorded as a
cost recovery on the equipment provided as part of the service connection
process (see Note 1 to Consolidated Financial Statements).                                                                                                                                                                                                                                                                               
|   
|(3) |  | The DTH and satellite divisions were consolidated effective July 1, 2000.
As a result, there are only two months of operations reflected in the fiscal
2000 year in respect of DTH and satellite.                                                                                                                                                                                                                                                                                                                                                                        
|   
|(4) |  | See Key performance drivers on page 8.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(5) |  | Cash flow per share is presented because it is an indicator of the maximum
potential distribution to shareholders on a per share basis. It is calculated
by dividing cash flow from operations less after tax entitlements on equity
instruments divided by the weighted average number of participating shares
outstanding during the period. Cash flow per share is not a measurements in
accordance with Canadian or US GAAP and should not be considered an alternative
to earnings per share or any other measure of performance as required by
Canadian or US GAAP.
|   
|(6) |  | Restated for the retroactive adoption of the amended Canadian accounting
standard for foreign currency translation which eliminates the deferral and
amortization of unrealized foreign exchange gains and losses on unhedged
non-current monetary assets and liabilities and requires exchange gains and
losses to be included in net income in the period incurred.                                                                                                                                                                                                    

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Shaw Communications Inc.




CABLE AND INTERNET STATISTICS
August 31, 2003

|                                                                    |  |             |           |                 |  |            |         |             |  |  |         |  |  |  |         | 
|------------------------------------------------------------------- |  | ----------- | --------- | --------------- |  | ---------- | ------- | ----------- |  |  | ------- |  |  |  | ------- | 
|                                                                    |  | Basic       |           | Internet        |  | Digital    |         | Digital    
|Region                                                              |  | subscribers |           | subscribers (1) |  | deployment |         | subscribers
|                                                                    |  |             |           |                 |  |            |         |            
|Vancouver Island including Victoria/Duncan/
Nanaimo and area        |  |             | 223,108   |                 |  |            | 112,567 |             |  |  | 48,439  |  |  |  | 43,279  | 
|Vancouver/Kamloops/Chilliwack/Kelowna/
Penticton/Vernon and area    |  |             | 828,136   |                 |  |            | 354,937 |             |  |  | 237,310 |  |  |  | 207,812 | 
|Calgary/Red Deer/Edmonton/Hinton/
Fort McMurray/Lethbridge and area |  |             | 632,414   |                 |  |            | 299,276 |             |  |  | 156,402 |  |  |  | 148,343 | 
|Saskatoon/Prince Albert/Moose Jaw/Swift
Current                     |  |             | 74,564    |                 |  |            | 29,324  |             |  |  | 21,260  |  |  |  | 18,708  | 
|Winnipeg/Thunder Bay/Sault St. Marie and area                       |  |             | 293,697   |                 |  |            | 90,116  |             |  |  | 63,845  |  |  |  | 55,728  | 
|                                                                    |  |             |           |                 |  |            |         |             |  |  |         |  |  |  |         | 
|Total cable systems                                                 |  |             | 2,051,919 |                 |  |            | 886,220 |             |  |  | 527,256 |  |  |  | 473,870 | 
|                                                                    |  |             |           |                 |  |            |         |             |  |  |         |  |  |  |         | 



---

|(1) |  | Connected and scheduled installations
|--- |  | -------------------------------------

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Shaw Communications Inc.




SHAREHOLDER INFORMATION
August 31, 2003

Share Capital and Listings

The Company is authorized to issue an unlimited number of Class A participating
and Class B Non-Voting participating shares. At August 31, 2003, the Company
had 11,360,432 Class A Shares and 220,496,092 Class B Non-Voting Shares
outstanding. The Class A Shares are listed on the TSX Venture Stock Exchange
under the symbol SJR.A. The Class B Non-Voting Shares are listed on The
Toronto Stock Exchange under SJR.B and on the New York Stock Exchange under the
symbol SJR. The 8.45% Series A and 8.50% Series of Preferred Securities
(COPrS) are listed on the New York Stock Exchange under SJRPRA and SJRPRB
respectively. The 8.875% Preferred Securities are listed on The Toronto Stock
Exchange under SJR.PRA.

Trading Range of Class B Non-Voting Shares on The Toronto Stock Exchange

|                                     |  |            |       |           |             |              |       |  |  |  |            | 
|------------------------------------ |  | ---------- | ----- | --------- | ----------- | ------------ | ----- |  |  |  | ---------- | 
|Quarter                              |  | High Close |       | Low Close |             | Total Volume
|                                     |  |            |       |           |             |             
|September 1, 2002 to August 31, 2003 |  |            |       |           |             |              |       |  |  |  |            | 
|First                                |  |            | 18.20 |           |             |              | 10.65 |  |  |  | 38,445,035 | 
|Second                               |  |            | 18.82 |           |             |              | 13.05 |  |  |  | 30,836,122 | 
|Third                                |  |            | 17.75 |           |             |              | 12.69 |  |  |  | 27,698,588 | 
|Fourth                               |  |            | 18.80 |           |             |              | 16.64 |  |  |  | 39,178,835 | 
|                                     |  |            |       |           |             |              |       |  |  |  |            | 
|Closing price, August 31, 2003       |  | 17.14      |       |           | 136,158,580 |             
|                                     |  |            |       |           |             |              |       |  |  | 

Share Splits

There have been three splits of the Companys
shares  February 7, 2000 (2 for 1), May 18, 1994 (2
for 1), and September 23, 1987 (3 for 1).
In addition, as a result of the Arrangement referred to in the Management
Information Circular dated July 22, 1999, a Shareholders Adjusted Base Cost
(ACB) was reduced for tax purposes. For details on the calculation of the
revised ACB, please refer to the Companys September 1, 1999 and September 13,
1999 press releases on our Investor Relations website at www.shaw.ca/investors.

Quarterly Information

|        |  |                                      |           |                  |  |                  |         |            |  |              |          |           |  |              |       |            |  |         |         |  |  |  |      |  |  |  |      | 
|------- |  | ------------------------------------ | --------- | ---------------- |  | ---------------- | ------- | ---------- |  | ------------ | -------- | --------- |  | ------------ | ----- | ---------- |  | ------- | ------- |  |  |  | ---- |  |  |  | ---- | 
|        |  |                                      |           |                  |  | Operating income |         |            |  |              |          | Basic and |  | Cash flow    |       | Basic cash |  | Diluted
|        |  |                                      |           |                  |  | before           |         | Net income |  | diluted loss |          | from      |  | flow per     |       | cash flow 
|Quarter |  | Revenue                              |           | amortization (1) |  | (loss)           |         | per share  |  | operations   |          | share(2)  |  | per share(2)
|        |  |                                      |           |                  |  |                  |         |            |  |              |          |           |  |             
|        |  | ($000s Cdn except per share amounts)
|2003    |  |                                      |           |                  |  |                  |         |            |  |              |          |           |  |              |       |            |  |         |         |  |  |  |      |  |  |  |      | 
|Fourth  |  |                                      | 520,319   |                  |  |                  | 224,851 |            |  |              | 4,144    |           |  |              | (0.03 | )          |  |         | 156,140 |  |  |  | 0.63 |  |  |  | 0.57 | 
|Third   |  |                                      | 521,659   |                  |  |                  | 206,449 |            |  |              | (13,240  | )         |  |              | (0.10 | )          |  |         | 138,339 |  |  |  | 0.55 |  |  |  | 0.47 | 
|Second  |  |                                      | 521,379   |                  |  |                  | 200,251 |            |  |              | (19,747  | )         |  |              | (0.13 | )          |  |         | 127,427 |  |  |  | 0.51 |  |  |  | 0.45 | 
|First   |  |                                      | 513,383   |                  |  |                  | 189,049 |            |  |              | (18,985  | )         |  |              | (0.13 | )          |  |         | 112,860 |  |  |  | 0.44 |  |  |  | 0.38 | 
|        |  |                                      |           |                  |  |                  |         |            |  |              |          |           |  |              |       |            |  |         |         |  |  |  |      |  |  |  |      | 
|Total   |  |                                      | 2,076,740 |                  |  |                  | 820,600 |            |  |              | (47,828  | )         |  |              | (0.38 | )          |  |         | 534,766 |  |  |  | 2.13 |  |  |  | 1.81 | 
|        |  |                                      |           |                  |  |                  |         |            |  |              |          |           |  |              |       |            |  |         |         |  |  |  |      |  |  |  |      | 
|2002    |  |                                      |           |                  |  |                  |         |            |  |              |          |           |  |              |       |            |  |         |         |  |  |  |      |  |  |  |      | 
|Fourth  |  |                                      | 498,351   |                  |  |                  | 185,215 |            |  |              | (74,353  | )         |  |              | (0.36 | )          |  |         | 107,258 |  |  |  | 0.42 |  |  |  | 0.40 | 
|Third   |  |                                      | 492,731   |                  |  |                  | 171,757 |            |  |              | (79,328  | )         |  |              | (0.39 | )          |  |         | 98,559  |  |  |  | 0.38 |  |  |  | 0.36 | 
|Second  |  |                                      | 474,922   |                  |  |                  | 139,593 |            |  |              | (77,983  | )         |  |              | (0.38 | )          |  |         | 63,007  |  |  |  | 0.23 |  |  |  | 0.23 | 
|First   |  |                                      | 448,280   |                  |  |                  | 136,108 |            |  |              | (54,660  | )         |  |              | (0.29 | )          |  |         | 63,285  |  |  |  | 0.22 |  |  |  | 0.22 | 
|        |  |                                      |           |                  |  |                  |         |            |  |              |          |           |  |              |       |            |  |         |         |  |  |  |      |  |  |  |      | 
|Total   |  |                                      | 1,914,284 |                  |  |                  | 632,673 |            |  |              | (286,324 | )         |  |              | (1.42 | )          |  |         | 332,109 |  |  |  | 1.25 |  |  |  | 1.23 | 
|        |  |                                      |           |                  |  |                  |         |            |  |              |          |           |  |              |       |            |  |         |         |  |  |  |      |  |  |  |      | 



---

|(1) |  | See Key performance drivers on page 8.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Cash flow per share is presented because it is an indicator of the maximum
potential distribution to shareholders on a per share basis. It is calculated
by dividing cash flow from operations less after tax entitlements on equity
instruments divided by the weighted average number of participating shares
outstanding during the period. Cash flow per share is not a measurements in
accordance with Canadian or US GAAP and should not be considered an alternative
to earnings per share or any other measure of performance as required by
Canadian or US GAAP.

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Shaw Communications Inc.

CORPORATE INFORMATION  Fiscal 2003
August 31, 2003

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|DIRECTORS JR
Shaw(4)
Executive Chair,
Shaw Communications Inc. Adrian
Burns (3)
Corporate Director James
F. Dinning(1)
Executive Vice President
TransAlta Corporation George
F. Galbraith(1)(4)
Corporate Director Ronald
V. Joyce(4)
Senior Chairman and
Co-Founder,
The TDL Group Charles
V. Keating(3)
Corporate Director Rt.
Hon. Donald F.
Mazankowski(3)(4)
Corporate Director Harold
A. Roozen(1)
President and Chief
Executive Officer,
CCI Thermal
Technologies Inc. Jeffrey
Royer(2)(4)
Corporate Director Bradley
S. Shaw
Senior Vice President,
Operations
Star Choice Communications Inc. Jim
Shaw
Chief Executive Officer
Shaw Communications Inc. J.C.
Sparkman(2)
Corporate Director John
S. Thomas(3)
President, Delta Cable
Communications Ltd. & Coast
Cable Communications Ltd. Willard
(Bill) H. Yuill(2)
Chairman
The Monarch Corporation |  | SENIOR OFFICERS JR
Shaw
Executive Chair Jim
Shaw
Chief Executive Officer Michael
F. Abram
President, Shaw Ventures Jackie
L. Altwasser
Vice President, Finance Peter
J. Bissonnette
President Michael
DAvella
Senior Vice President, Planning Robert
A. (Randy) Elliot
Senior Vice President,
Technical Operations
Shaw Cablesystems G.P. William
A. MacDonald
Senior Vice President, Operations
Shaw Cablesystems G.P. Ronald
D. Rogers
Senior Vice President and
Chief Financial Officer Bradley
S. Shaw
Senior Vice President, Operations
Star Choice Communications Inc. Ken
C.C. Stein
Senior Vice President
Corporate and Regulatory Affairs David
Taniguchi
Senior Counsel and Assistant
Corporate Secretary 
CORPORATE
SECRETARY:Douglas J. Black, Q.C. 
HONORARY
SECRETARY:
Louis Desrochers, CM, AOE, QC,
LLD (1) Audit
Committee(2) Human Resources Committee(3) Corporate Governance
Committee(4) Executive Committee |  | CORPORATE OFFICE
Shaw
Communications Inc.
Suite 900, 630  3 Avenue S.W.
Calgary, Alberta T2P 4L4
Tel: (403) 750-4500
Facsimile (403) 750-4501
Website www.shaw.ca CORPORATE
GOVERNANCE
Information concerning Shaws
corporate governance policies are
contained in the Information
Circular and is also available by
contacting the Company. INTERNET
HOME PAGE
Shaws Annual Report,
Annual Information Form,
Quarterly Reports, Press
Releases and other relevant
investor relations information
are available electronically on
the Internet at www.shaw.ca. AUDITORS
Ernst
& Young LLP PRIMARY
BANKER
The Toronto-Dominion Bank TRANSFER
AGENTS
CIBC Mellon Trust Company
Calgary
1-800-387-0825 
Chase
Mellon Shareholder
Services, L.L.C.,
New York
1-800-526-0801
 DEBENTURE
TRUSTEES
Computershare Trust
Company of Canada
Bank of New York |  | FURTHER
INFORMATION
Financial analysts,
portfolio managers,
other investors and
interested parties may
contact the Company
at (403) 750-4500 or
visit our website at
www.shaw.ca for
further information.
 
To receive additional
copies of the Annual
Report for Shaw
Communications Inc.,
please fax your
request to
(403) 750-7469 or
email
angela.haigh@sjrb.ca
 
For further inquiries
relating to Shaws
philanthropic
practices, please call
(403) 750-6998.
 
All trademarks used in this
annual report are used with the
permission of the owners of
such trademarks.

101



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(SHAW LOGO)











630  3rd Avenue S.W.
Suite 900
Calgary, Alberta
T2P 4L4





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SHAW COMMUNICATIONS INC.
CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER

I, Jim Shaw, Chief Executive Officer of Shaw Communications Inc., certify that:



|1. |  | I have reviewed the annual report (the Annual Report) on Form 40-F of
Shaw Communications Inc. (the Registrant) for the year ended August 31,
2003;                                                                                                                                                                   
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, the Annual Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
the Annual Report;    
|  
|3. |  | Based on my knowledge, the financial statements for the year ended August
31, 2003, and other financial information included in the Annual Report,
fairly present in all material respects the financial condition, results
of operations and cash flows of the Registrant as of, and for, the year
ended August 31, 2003;
|  
|4. |  | The Registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant
and have:                                                                                              



| | a. |  | Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which the Annual
Report is being prepared;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Evaluated the effectiveness of the Registrants
disclosure controls and procedures as of August 31, 2003; and                                                                                                                                                                                                                                                                       
|
| | c. |  | Disclosed in the Annual Report any change in the
Registrants internal control over financial reporting that
occurred during the Registrants period covered by the Annual
Report that has materially affected, or is reasonably likely to
materially affect, the Registrants internal control over
financial reporting; and                                                       





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##### Table of Contents





| | d. |  | Disclosed in the Annual Report any change in the
Registrants internal control over financial reporting that
occurred during the year ended August 31, 2003 that has
materially affected, or is reasonably likely to materially
affect, the Registrants internal control over financial
reporting; and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The Registrants other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the Registrants auditors and the audit committee of Registrants board
of directors (or persons performing the equivalent functions):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | All significant deficiencies and material weaknesses
in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
Registrants ability to record, process, summarize and report
financial information; and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
Registrants internal control over financial reporting.                                                                                               

Date: December 22, 2003



/s/ Jim Shaw

Jim Shaw
Chief Executive Officer
Shaw Communications Inc.

2



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SHAW COMMUNICATIONS INC.
CERTIFICATE OF THE CHIEF FINANCIAL OFFICER

I, Ronald D. Rogers, Senior Vice President and Chief Financial Officer of Shaw
Communications Inc., certify that:



|1. |  | I have reviewed the annual report (the Annual Report) on Form 40-F of
Shaw Communications Inc. (the Registrant) for the year ended August 31,
2003;                                                                                                                                                                   
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, the Annual Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
the Annual Report;    
|  
|3. |  | Based on my knowledge, the financial statements for the year ended August
31, 2003, and other financial information included in the Annual Report,
fairly present in all material respects the financial condition, results
of operations and cash flows of the Registrant as of, and for, the year
ended August 31, 2003;
|  
|4. |  | The Registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant
and have:                                                                                              



| | a. |  | Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which the Annual
Report is being prepared;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Evaluated the effectiveness of the Registrants
disclosure controls and procedures as of August 31, 2003; and                                                                                                                                                                                                                                                                       
|
| | c. |  | Disclosed in the Annual Report any change in the
Registrants internal control over financial reporting that
occurred during the Registrants period covered by the Annual
Report that has materially affected, or is reasonably likely to
materially affect, the Registrants internal control over
financial reporting; and                                                       





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##### Table of Contents





| | d. |  | Disclosed in the Annual Report any change in the
Registrants internal control over financial reporting that
occurred during the year ended August 31, 2003 that has
materially affected, or is reasonably likely to materially
affect, the Registrants internal control over financial
reporting; and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The Registrants other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the Registrants auditors and the audit committee of Registrants board
of directors (or persons performing the equivalent functions):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | All significant deficiencies and material weaknesses
in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
Registrants ability to record, process, summarize and report
financial information; and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
Registrants internal control over financial reporting.                                                                                               

Date: December 22, 2003



/s/ Ronald D. Rogers

Ronald D. Rogers
Senior Vice President and Chief Financial Officer
Shaw Communications Inc.

2



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CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS

We consent to the incorporation by reference in the Annual Report (Form 40-F)
of Shaw Communications Inc. of our report dated October 10, 2003 included in
the 2003 annual report to shareholders of Shaw Communications Inc.



|                  |  |                                  
|----------------- |  | ---------------------------------
|Calgary, Canada   |  | -s- Ernst and Young LLP Signature
|December 22, 2003 |  | Chartered Accountants